AVINO SILVER & GOLD MINES LTD (Form: 6-K, Received: 12/26/2018 14:48:18)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the Month of December 2018

Commission File Number: 001-35254

AVINO SILVER & GOLD MINES LTD.

Suite 900, 570 Granville Street, Vancouver, BC V6C 3P1

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F. x Form 20-F ¨ Form 40-F

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ¨

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ¨

Explanatory Note.

Avino Silver & Gold Mines Ltd. is filing this Form 6-K to file its Amended Mineral Resource Estimate Update for the Avino Property, Durango, Mexico in response to certain comments raised by British Columbia Securities Commission.

Incorporation by Reference

Exhibit 10.1 set forth in this report on Form 6-K is hereby incorporated by reference into the Company’s Registration Statement on Form F-3 as filed on August 21, 2018, and declared effective on September 5, 2018 (No. 333-226963).

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	Avino Silver & Gold Mines, Ltd.

Date: December 26, 2018	By:	/s/ Dorothy Chin
		Dorothy Chin
		Corporate Secretary

EXHIBIT INDEX

The following exhibits are filed as part of this Form 6-K:

Exhibit		Description

10.1		Amended Mineral Resource Estimate Update for the Avino Property, Durango, Mexico dated December 19, 2018.

EXHIBIT 10.1

Report to:

Avino Gold & Silver Mines Ltd.

Amended Mineral Resource Estimate Update for the
Avino Property, Durango, Mexico

704-EG-VMIN03003-02

Report to:

AVINO GOLD & SILVER MINES LTD.

AMENDED MINERAL RESOURCE ESTIMATE UPDATE

FOR THE

AVINO PROPERTY, DURANGO, MEXICO

EFFECTIVE DATE: FEBRUARY 21, 2018

AMENDED DATE: DECEMBER 19, 2018

Prepared by:

Hassan Ghaffari, P. Eng

Michael F. O’Brien, P.Geo., M.Sc., Pr.Sci,Nat., FAusIMM, FSAIMM

Mark Horan, P.Eng.

Jianhui (John) Huang, Ph.D., P.Eng.

HG/vc

Suite 1000, 885 Dunsmiur Street, Vancouver, British Columbia V6C 1N5

Phone: 604.408.3788 Fax: 604.684.6241

REVISION HISTORY

REV. NO	ISSUE DATE	PREPARED BY AND DATE	REVIEWED BY AND DATE	APPROVED BY AND DATE	DESCRIPTION OF REVISION
	29 Mar 18	All QPs	All QPs	Hassan Ghaffari	Draft to Client
	03 Apr 18	All QPs	All QPs	Hassan Ghaffari	Draft to Client
	04 Apr 18	All QPs	All QPs	Hassan Ghaffari	Final Report
	06 Apr 18	All QPs	All QPs	Hassan Ghaffari	Final Report (Revised)
	18 Dec 18	All QPs	All QPs	Hassan Ghaffari	Ammended Report (Draft)

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TABLE OF CONTENTS

1.0

SUMMARY

1-1

1.1

INTRODUCTION

1-1

1.2

PROPERTY DESCRIPTION AND LOCATION

1-1

1.3

GEOLOGY AND MINERALIZATION

1-2

1.3.1

THE AVINO VEIN

1-4

1.3.2

THE SAN GONZALO VEIN

1-4

1.3.3

THE OXIDE TAILINGS

1-4

1.4

RESOURCE ESTIMATES

1-5

1.5

MINERAL PROCESSING, METALLURGICAL TESTING AND RECOVERY METHODS

1-7

1.5.1

AVINO VEIN

1-7

1.5.2

SAN GONZALO VEIN

1-8

1.5.3

OXIDE TAILINGS

1-8

1.5.4

SULPHIDE TAILINGS

1-8

1.6

MINING METHODS

1-9

1.6.1

AVINO VEIN

1-9

1.6.2

SAN GONZALO VEIN

1-10

1.6.3

OXIDE TAILINGS

1-10

1.7

PROJECT INFRASTRUCTURE

1-11

1.8

ENVIRONMENTAL

1-11

1.9

CAPITAL AND OPERATING COSTS

1-12

1.9.1

CAPITAL COST ESTIMATES

1-12

1.9.2

OPERATING COST ESTIMATES

1-13

1.10

ECONOMIC ANALYSIS

1-15

1.10.1

AVINO AND SAN GONZALO VEINS

1-15

1.10.2

TAILINGS RESOURCES

1-15

1.11

RECOMMENDATIONS

1-16

2.0

INTRODUCTION

2-1

2.1

EFFECTIVE DATES

2-1

2.2

QUALIFIED PERSONS

2-1

2.3

INFORMATION AND DATA SOURCES

2-3

2.4

UNITS OF MEASUREMENT

2-3

3.0

RELIANCE ON OTHER EXPERTS

3-1

4.0

PROPERTY DESCRIPTION AND LOCATION

4-1

4.1

LOCATION

4-1

4.2

PROPERTY OWNERSHIP

4-2

4.3

MINERAL CONCESSIONS AND AGREEMENTS

4-3

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704-EG-VMIN03003-02

5.0	ACCESSIBILITY, CLIMATE, INFRASTRUCTURE, LOCAL RESOURCES, AND PHYSIOGRAPHY			5-1
	5.1	TOPOGRAPHY, ELEVATION AND VEGETATION		5-1
	5.2	ACCESSIBILITY AND LOCAL RESOURCES		5-1
	5.3	CLIMATE AND LENGTH OF OPERATING SEASON		5-1
	5.4	INFRASTRUCTURE		5-1

6.0	HISTORY			6-1
	6.1	AVINO MINE, 1555-1968		6-1
		6.1.1	AVINO VEIN SYSTEM DEPOSIT	6-1
	6.2	SAN GONZALO VEIN DEPOSIT		6-2
	6.3	GUADALUPE VEIN DEPOSIT		6-2
	6.4	SAN JUVENTINO VEIN DEPOSIT		6-2

7.0	GEOLOGICAL SETTING AND MINERALIZATION			7-1
	7.1	REGIONAL GEOLOGY		7-1
	7.2	PROPERTY GEOLOGY AND MINERALIZATION		7-2
		7.2.1	AVINO VEIN	7-3
		7.2.2	SAN GONZALO VEIN	7-5
		7.2.3	OXIDE AND SULPHIDE TAILINGS	7-5

8.0	DEPOSIT TYPES			8-1

9.0	EXPLORATION			9-1
	9.1	EARLY EXPLORATION (PRIOR TO MINE CLOSURE), 1968 TO 2001		9-1
	9.2	RECENT EXPLORATION, 2001 TO PRESENT		9-2
		9.2.1	TAILINGS INVESTIGATIONS (OXIDES), 2003 AND 2004	9-2
		9.2.2	TAILINGS SAMPLING (SULPHIDES), 2005	9-3
		9.2.3	BULK SAMPLE PROGRAM OF SAN GONZALO VEIN, 2011	9-3
		9.2.4	UNDERGROUND CHANNEL SAMPLING OF SAN GONZALO AND AVINO VEINS, 2010 TO PRESENT	9-3
		9.2.5	UNDERGROUND CHANNEL SAMPLING OF SAN GONZALO AND ANGELICA VEINS, 2010-PRESENT	9-5

10.0	DRILLING			10-1
	10.1	EARLY DRILLING (PRIOR TO MINE CLOSURE), 1968 TO 2001		10-1
		10.1.1	AVINO VEIN	10-1
		10.1.2	OXIDE TAILINGS, 1990 TO 1991	10-1
	10.2	RECENT DRILLING (POST-MINE CLOSURE), 2001 TO PRESENT		10-1
		10.2.1	AVINO VEIN	10-2
		10.2.2	SAN GONZALO VEIN	10-2
		10.2.3	SAN JUVENTINO AND GUADALUPE VEINS	10-2
		10.2.4	OXIDE TAILINGS	10-8
		10.2.5	SPECIFIC GRAVITY RESULTS	10-12

11.0	SAMPLE PREPARATION, ANALYSIS AND SECURITY			11-1
	11.1	DRILLING AND TRENCHING OF OXIDE TAILINGS, 1990 TO 1991		11-1

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704-EG-VMIN03003-02

	11.2	TAILINGS INVESTIGATIONS (TEST PITS IN OXIDE TAILINGS), 2004		11-1
	11.3	DRILLING PROGRAM, SAN GONZALO, 2007 TO PRESENT		11-2
	11.4	DRILLING PROGRAMS, ET ZONE OF THE AVINO VEIN, 2006 TO PRESENT		11-3
	11.5	UNDERGROUND CHANNEL SAMPLING OF SAN GONZALO VEIN, 2010 TO PRESENT		11-3
	11.6	AVINO LABORATORY		11-4
	11.7	SPECIFIC GRAVITY SAMPLES		11-4
		11.7.1	CALIPER VOLUME CALCULATION METHOD	11-4
		11.7.2	WATER DISPLACEMENT METHOD	11-5
	11.8	QP OPINION		11-5

12.0	DATA VERIFICATION			12-1
	12.1	AVINO AND SAN GONZALO VEIN DRILLHOLE DATABASE VERIFICATION		12-1
		12.1.1	COLLAR AND ASSAY DATA	12-1
		12.1.2	DOWNHOLE SURVEY DATA	12-3
		12.1.3	GEOLOGY DATA AND INTERPRETATION	12-3
		12.1.4	REVIEW OF DRILLHOLE QUALITY ASSURANCE/QUALITY CONTROL SAMPLES	12-3

	12.2	BULK DENSITY		12-16
		12.2.1	AVINO AND SAN GONZALO VEIN BULK DENSITY	12-16
	12.3	OXIDE TAILINGS DRILLHOLE DATABASE		12-17
		12.3.1	ASSAY VERIFICATION OF 1990/1991 DRILLHOLES IN OXIDE TAILINGS	12-17
		12.3.2	OXIDE TAILINGS VERIFICATION SAMPLES	12-17
	12.4	SITE VISIT		12-18
	12.5	ARANZ GEO CONCLUSIONS AND OPINION		12-18
		12.5.1	AVINO AND SAN GONZALO VEINS	12-18
		12.5.2	OXIDE TAILINGS	12-19
		12.5.3	QP OPINION	12-19

13.0	MINERAL PROCESSING AND METALLURGICAL TESTING			13-1
	13.1	AVINO VEIN		13-1
	13.2	SAN GONZALO VEIN		13-2
	13.3	OXIDE TAILINGS		13-2
	13.4	SULPHIDE TAILINGS		13-21

14.0	MINERAL RESOURCE ESTIMATES			14-1
	14.1	RESOURCE SUMMARY		14-1
	14.2	DATA		14-4
	14.3	AVINO VEIN		14-4
		14.3.1	GEOLOGICAL INTERPRETATION	14-4
		14.3.2	WIREFRAMING	14-4
	14.4	SAN GONZALO VEIN		14-7
		14.4.1	GEOLOGICAL INTERPRETATION	14-7
		14.4.2	WIREFRAMING	14-7
	14.5	OXIDE TAILINGS		14-9
		14.5.1	GEOLOGICAL INTERPRETATION	14-9

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		14.5.2	WIREFRAMING	14-10
	14.6	EXPLORATORY DATA ANALYSIS		14-11
		14.6.1	RAW DATA ASSAYS AND STATISTICS	14-11
		14.6.2	OUTLIER MANAGEMENT AND CAPPING STRATEGY	14-14
		14.6.3	DRILLHOLE COMPOSITING	14-15
	14.7	DENSITY		14-15
		14.7.1	DENSITY DATA	14-15
	14.8	BISMUTH		14-16
	14.9	VARIOGRAPHY AND SPATIAL ANALYSIS		14-17
	14.10	INTERPOLATION PLAN AND KRIGING PARAMETERS		14-24
		14.10.1	AVINO	14-25
		14.10.2	SAN GONZALO	14-25
		14.10.3	OXIDE TAILINGS	14-25
	14.11	RESOURCE BLOCK MODELS		14-28
		14.11.1	BLOCK MODEL CONFIGURATIONS	14-28
		14.11.2	INTERPOLATION	14-29
	14.12	MODEL VALIDATION		14-29
		14.12.1	STATISTICS	14-29
		14.12.2	SECTIONS	14-32
		14.12.3	SWATH PLOTS	14-38
	14.13	MINERAL RESOURCE CLASSIFICATION		14-55
		14.13.1	INTRODUCTION	14-55
	14.14	MINERAL RESOURCE TABULATION		14-59
		14.14.1	CUT-OFFS AND SILVER EQUIVALENT CALCULATIONS	14-59
		14.14.1	GRADE-TONNAGE TABLES	14-62
		14.14.2	GRADE-TONNAGE GRAPHS	14-64
	14.15	SULPHIDE TAILINGS		14-69

15.0	MINERAL RESERVE ESTIMATES			15-1

16.0	MINING METHODS			16-1
	16.1	MINING AT THE AVINO PROPERTY		16-1
	16.2	AVINO VEIN		16-1
	16.3	SAN GONZALO VEIN		16-2
		16.3.1	BULK SAMPLE PROGRAM	16-3
		16.3.2	PRODUCTION	16-4
		16.3.3	MINE DESIGN	16-4
	16.4	OXIDE TAILINGS		16-5
		16.4.1	SCHEDULE	16-5
		16.4.2	EQUIPMENT	16-5
		16.4.3	MODIFYING SITE CONSIDERATIONS	16-5
	16.5	SULPHIDE TAILINGS		16-5

17.0	RECOVERY METHODS			17-1
	17.1	AVINO VEIN		17-1
	17.2	SAN GONZALO VEIN		17-4

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704-EG-VMIN03003-02

	17.3	TAILINGS MATERIAL		17-4
		17.3.1	OXIDE TAILINGS	17-5
		17.3.2	SULPHIDE TAILINGS	17-10

18.0	PROJECT INFRASTRUCTURE			18-1
	18.1	INTRODUCTION		18-1
	18.2	ACCESSIBILITY		18-3
	18.3	POWER		18-3
	18.4	WATER SUPPLY		18-3
	18.5	WATER TREATMENT PLANT		18-3

19.0	MARKET STUDIES AND CONTRACTS			19-1
	19.1	MINED MATERIAL HAULAGE FROM UNDERGROUND		19-1
	19.2	FLOTATION CONCENTRATES		19-1
	19.3	GOLD-SILVER DORÉ		19-1

20.0	ENVIRONMENTAL STUDIES, PERMITTING, AND SOCIAL OR COMMUNITY IMPACT			20-1
	20.1	ENVIRONMENTAL STUDIES		20-1
		20.1.1	ENVIRONMENTAL SETTING	20-1
	20.2	ENVIRONMENTAL PERMITTING		20-3
		20.2.1	CURRENT PERMITS FOR THE OXIDE TAILINGS	20-4
		20.2.2	CURRENT PERMITS FOR THE SAN GONZALO MINE (ADJACENT)	20-4
		20.2.3	APPLICABLE LEGISLATION	20-5
	20.3	ENVIRONMENTAL MONITORING AND REPORTING		20-7
	20.4	ENVIRONMENTAL MANAGEMENT		20-7
	20.5	WATER MANAGEMENT		20-7
	20.6	SULPHIDE TAILINGS MANAGEMENT		20-7
	20.7	MINE CLOSURE AND RECLAMATION		20-8
	20.8	SOCIO-ECONOMIC AND COMMUNITY CONSIDERATIONS		20-9
		20.8.1	PROJECT LOCATION	20-9
		20.8.2	CONSULTATION WITH COMMUNITIES	20-9

21.0	CAPITAL AND OPERATING COST ESTIMATES			21-1
	21.1	AVINO AND SAN GONZALO VEINS		21-1
		21.1.1	CAPITAL COSTS	21-1
		21.1.2	OPERATING COSTS	21-2
	21.2	TAILINGS RESOURCES		21-3
		21.2.1	OXIDE TAILINGS	21-3
		21.2.2	SULPHIDE TAILINGS	21-3

22.0	ECONOMIC ANALYSIS			22-1
	22.1	AVINO AND SAN GONZALO VEINS		22-1
	22.2	TAILINGS RESOURCES		22-1
		22.2.1	OXIDE TAILINGS	22-1
		22.2.2	SULPHIDE TAILINGS	22-3

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23.0	ADJACENT PROPERTIES			23-1

24.0	OTHER RELEVANT DATA AND INFORMATION			24-1

25.0	INTERPRETATIONS AND CONCLUSIONS			25-1
	25.1	GEOLOGY		25-1
	25.2	RESOURCE ESTIMATES		25-1
	25.3	MINERAL PROCESSING		25-4
	25.4	MINING		25-4
	25.5	CAPITAL AND OPERATING COSTS		25-4
		25.5.1	AVINO VEIN AND SAN GONZALO VEIN	25-4
		25.5.2	TAILINGS RESOURCES	25-5
	25.6	ECONOMIC ANALYSIS		25-6

26.0	RECOMMENDATIONS			26-1
	26.1	GEOLOGY		26-1
		26.1.1	DATABASE MANAGEMENT	26-1
		26.1.2	UNDERGROUND SAMPLING	26-1
		26.1.3	SPECIFIC GRAVITY SAMPLING AND ANALYSIS	26-2
		26.1.4	QA/QC SAMPLING	26-2
		26.1.5	SULPHIDE TAILINGS DRILLING	26-2
		26.1.6	DENSITY MEASUREMENTS	26-2
		26.1.7	BISMUTH	26-3
		26.1.8	RESOURCE ESTIMATION	26-3
		26.1.9	EXPLORATION FOR THE WESTERN EXTENSION OF THE AVINO VEIN	26-3
	26.2	MINING		26-3
		26.2.1	LONG-TERM MINE PLANNING	26-3
		26.2.2	SUBLEVEL MINING (WITH ROOM AND PILLAR ON SUBLEVELS)	26-3
	26.3	PROCESS		26-4
		26.3.1	AVINO AND SAN GONZALO VEINS	26-4
		26.3.2	OXIDE AND SULPHIDE TAILINGS	26-4
	26.4	ENVIRONMENTAL		26-5
	26.5	MINING OF OXIDE TAILINGS		26-5
	26.6	PROJECT DEVELOPMENT		26-5

27.0	REFERENCES			27-1

APPENDICES

APPENDIX A

TITLE OPINION

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704-EG-VMIN03003-02

LIST OF TABLES

Table 1.1

Mineral Resources at the Avino Property

1-6

Table 1.2

Recent Production from the Avino Vein

1-9

Table 1.3

Recent Production from the San Gonzalo Vein

1-10

Table 1.4

Capital Costs for the Avino Vein (US$)

1-12

Table 1.5

Capital Costs for the San Gonzalo Vein (US$)

1-13

Table 1.6

Operating Costs for the Avino Vein (US$)

1-14

Table 1.7

Operating Costs for the San Gonzalo Vein (US$)

1-14

Table 2.1

Summary of QPs

2-2

Table 4.1

Summary of Property Ownership

4-3

Table 4.2

Mineral Concessions – Avino Property

4-4

Table 9.1

Summary Underground Channel Sampling by Level for the Avino (ET) Underground Mines

9-4

Table 9.2

Summary of Underground Channel Sampling by Level for the San Gonzalo Mine

9-4

Table 10.1

Drillholes Completed from 2007 to 2016 on the San Gonzalo Vein

10-3

Table 10.2

Drillholes Completed from 2001 to 2017 at ET Mine (includes San Luis, Avino vein and Chirumbo

10-6

Table 10.3

Drillholes Completed from 2017 to 2018 at Guadalupe and San Juventino

10-8

Table 10.4

Drillholes Drilled on Oxide Tailings 2003-2016

10-9

Table 10.5

Avino and San Gonzalo Density Data Summary

10-12

Table 12.1

Number of Records and Discrepancies for the Avino Drillhole Data

12-2

Table 12.2

Standards Specification and Performance

12-4

Table 14.1

Avino Mine – Mineral Resources

14-2

Table 14.2

Metal Grade Statistics for 2 m Composites for the Avino and San Gonzalo Vein Systems

14-12

Table 14.3

Oxide Tailings Samples by Sampling Campaign

14-13

Table 14.4

Oxide Tailings Assays by Unit

14-14

Table 14.5

Avino Vein System Density Data Summary

14-15

Table 14.6

San Gonzalo Vein System Density Data Summary

14-15

Table 14.7

Avino Vein System Variogram and Search Parameters

14-26

Table 14.8

San Gonzalo Vein System: Variogram and Search Parameters

14-27

Table 14.9

Oxide Tailings Deposit: Variogram and Search Parameters

14-27

Table 14.10

Estimation Block Model Specifications

14-28

Table 14.11

Explanation of Table 14-10

14-28

Table 14.12

Avino Vein: Block Estimates and Composite Sample Grades

14-30

Table 14.13

San Gonzalo Vein: Block Estimates and Composite Sample Grades

14-31

Table 14.14

Oxide Tailings: Block Estimates and Composite Sample Grades

14-32

Table 14.15

Criteria for Classification of Underground Mineral Resources

14-58

Table 14.16

Silver Equivalent Based Metal Prices and Operational Recovery Parameters

14-59

Table 14.17

Mineral Resource Statement for the Avino Property

14-60

Table 14.18

Avino Vein (ET and San Luis) – High Confidence/Measured

14-62

Table 14.19

Avino Vein (ET and San Luis) – Medium Confidence/Indicated

14-62

Table 14.20

Avino Vein (ET and San Luis) – Low Confidence/Inferred

14-62

Table 14.21

San Gonzalo Vein – High Confidence/Measured

14-63

Table 14.22

San Gonzalo – Medium Confidence/Indicated

14-63

Table 14.23

San Gonzalo – Low Confidence/Inferred

14-63

Table 14.24

Oxide Tailings – Medium Confidence/Indicated

14-64

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704-EG-VMIN03003-02

Table 14.25	Oxide Tailings – Low Confidence/Inferred	14-64
Table 16.1	Recent Production from the Avino Vein	16-2
Table 16.2	Recent Production from the San Gonzalo Vein	16-3
Table 16.3	Mining Production Schedule	16-5
Table 17.1	Avino Vein Mill Production	17-2
Table 17.2	San Gonzalo Vein Mill Production	17-4
Table 20.1	Mammal Species Listed by NOM-059-SEMARNAT-2001 or in CITES within the San Gonzalo Mine	20-2
Table 20.2	Bird Species Listed by NOM-059-SEMARNAT-2001 or in CITES within the San Gonzalo Mine	20-2
Table 20.3	Reptile Species Listed by NOM-059-SEMARNAT-2001 or in CITES within the San Gonzalo Mine	20-3
Table 20.4	Amphibian Species Listed by NOM-059-SEMARNAT-2001 or in CITES within the San Gonzalo Mine	20-3
Table 21.1	Capital Costs for the Avino Vein (US$)	21-1
Table 21.2	Capital Costs for the San Gonzalo Vein (US$)	21-2
Table 21.3	Operating Costs for the Avino Vein (US$)	21-2
Table 21.4	Operating Costs for the San Gonzalo Vein (US$)	21-2
Table 25.1	Mineral Resources at the Avino Mine Property	25-2

LIST OF FIGURES

Figure 1.1

General Location of the Property

1-2

Figure 1.2

Perspective View of the Property Looking North and Showing the Three Deposits

1-4

Figure 4.1

General Location of the Property

4-1

Figure 4.2

Local Property Location

4-2

Figure 4.3

Map of Avino Property Concessions

4-5

Figure 6.1

Avino Mine: Vertical Section View Showing Development and Stoping

6-2

Figure 6.2

San Gonzalo Mine: Vertical Section View Showing Development and Stoping

6-3

Figure 7.1

General Map of Property Geology

7-2

Figure 7.2

Orthogonal View of the Oxide Tailings Deposit and Drillholes

7-6

Figure 9.1

Channel and Drillhole Samples, Colour Coded by Silver Grade, within the Avino System

9-5

Figure 9.2

Channel Samples, Colour Coded by Silver Grade, within the San Gonzalo Vein System

9-5

Figure 10.1

Drillholes Completed from 2016 to 2017 on the Avino-San Luis Infill and Chirumbo, Guadalupe and San Juventino Areas

10-2

Figure 10.2

Location of Drillholes Completed from 2016 to 2017 on Drillholes Completed from 2016 to 2017 on the Guadalupe and San Juventino Veins

10-3

Figure 10.3

Location of Drillholes Completed from 2015 to 2016 on the Oxide Tailings

10-11

Figure 12.1

Standard 1307_ME-1307 – Gold Performance

12-5

Figure 12.2

Standard CDN-ME-1307 – Silver Performance

12-6

Figure 12.3

Standard CDN-ME-1307 – Copper Performance

12-6

Figure 12.4

Standard CDN-ME-1414 – Gold Performance

12-7

xi

704-EG-VMIN03003-02

Figure 12.5	Standard CDN-ME-1414 – Silver Performance	12-8
Figure 12.6	Standard CDN-ME-1414 – Copper Performance	12-8
Figure 12.7	Blank – Gold Performance	12-9
Figure 12.8	Blank – Silver Performance	12-10
Figure 12.9	Blank – Copper Performance	12-10
Figure 12.10	Gold – Duplicate Correlation	12-11
Figure 12.11	Gold – Half Absolute Relative Difference Chart	12-12
Figure 12.12	Silver – Duplicate Correlation	12-13
Figure 12.13	Silver – Half Absolute Relative Difference Chart	12-14
Figure 12.14	Copper – Duplicate Correlation	12-15
Figure 12.15	Copper – Half Absolute Relative Difference Chart	12-16
Figure 14.1	Oblique View, Looking North, of the Avino Vein System Model	14-5
Figure 14.2	Silver Grade Profiles Across the Avino Vein System Contacts	14-6
Figure 14.3	Copper Grade Profile Across the Avino Vein System Contacts	14-7
Figure 14.4	Oblique View, Looking North, of the San Gonzalo Vein System Model	14-8
Figure 14.5	Silver and Gold Grade Profiles Across the Main San Gonzalo Vein Contacts	14-8
Figure 14.6	Perspective View of Oxide Tailings Drilling and Silver Assays	14-9
Figure 14.7	Section View, Looking Northeast, Showing Silver Grades in Oxide Tailings Benches	14-10
Figure 14.8	Linear Regression Model Coefficients for Bismuth Estimation	14-16
Figure 14.9	Avino Vein: Main Zone Experimental and Modelled Silver Variograms	14-18
Figure 14.10	Avino Vein: Main Zone Experimental and Modelled Gold Variograms	14-19
Figure 14.11	Avino Vein: Main Zone Experimental and Modelled Copper Variograms	14-20
Figure 14.12	San Gonzalo Vein: SG1 Experimental and Modelled Silver Variograms	14-21
Figure 14.13	San Gonzalo Vein: SG1 Experimental and Modelled Gold Variograms	14-22
Figure 14.14	Oxide Tailings: Domain 10 Experimental Silver Variograms	14-23
Figure 14.15	Oxide Tailings: Domain 10 Experimental Silver Variograms	14-24
Figure 14.16	Avino Vein: Typical Transverse Section, Looking East through Drillhole ET07-10, Showing the Block Model Centroids Colour Coded by Silver Grade	14-33
Figure 14.17	Avino Vein: Longitudinal Section Showing the Block Model Centroids Colour Coded by Silver Grade	14-34
Figure 14.18	Avino Vein: Longitudinal Section Showing the Block Model Centroids Colour Coded by Gold Grade	14-34
Figure 14.19	Avino Vein: Longitudinal Section Showing the Block Model Centroids Colour Coded by Coper Grade	14-35
Figure 14.20	San Gonzalo Vein: Typical Transverse Section, Looking East Aligned Along Drillhole SG1115 Showing the Block Model Centroids Colour Coded by Silver Grade	14-36
Figure 14.21	San Gonzalo Vein: Longitudinal Section Showing the Block Model Centroids Colour Coded by Silver Grade	14-37
Figure 14.22	San Gonzalo Vein: Longitudinal Section Showing the Block Model Centroids Color Coded by Gold Grade	14-37
Figure 14.23	San Gonzalo Vein: Longitudinal Section Showing the Block Model Centroids Colour Coded by Silver Equivalent	14-38
Figure 14.24	Avino Vein, Swathplot for Silver, Eastings	14-39
Figure 14.25	Avino Vein, Swathplot for Gold Eastings	14-40
Figure 14.26	Avin Vein, Swathplot for Copper, Eastings	14-41
Figure 14.27	Avino Vein, Swathplot for Silver, Elevation	14-42
Figure 14.28	Avino Vein, Swathplot for Gold, Elevation	14-43
Figure 14.29	Avino Vein, Swathplot for Copper, Elevation	14-44
Figure 14.30	San Gonzalo Vein, Swathplot for Silver, Eastings	14-45

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Figure 14.31	San Gonzalo Vein, Swathplot for Silver, Northings	14-46
Figure 14.32	San Gonzalo Vein, Swathplot for Silver, Elevation	14-47
Figure 14.33	San Gonzalo Vein, Swathplot for Gold, Eastings	14-48
Figure 14.34	San Gonzalo Vein, Swathplot for Gold, Northings	14-49
Figure 14.35	San Gonzalo Vein, Swathplot for Gold, Elevation	14-50
Figure 14.36	Oxide Tailings Deposit, Swathplot for Silver, Easting	14-51
Figure 14.37	Oxide Tailings Deposit, Swathplot for Gold, Easting	14-52
Figure 14.38	Oxide Tailings Deposit, Swathplot for Silver, Northing	14-53
Figure 14.39	Oxide Tailings Deposits, Swathplot for Gold, Northing	14-53
Figure 14.40	Oxide Tailings Deposit, Swathplot for Silver, Elevation	14-54
Figure 14.41	Oxide Tailings Deposit, Swathplot for Gold, Elevation	14-54
Figure 14.42	Grade Tonnage Graph of Avino Vein Material at Measured Confidence Level	14-65
Figure 14.43	Grade Tonnage Graph of Avino Vein Material at Indicated Confidence Level	14-65
Figure 14.44	Grade Tonnage Graph of Avino Vein Material at Inferred Confidence Level	14-66
Figure 14.45	Grade Tonnage Graph of San Gonzalo Vein Material at Measured Confidence Level	14-66
Figure 14.46	Grade Tonnage Graph of San Gonzalo Vein Material at Indicated Confidence Level	14-67
Figure 14.47	Grade Tonnage Graph of San Gonzalo Vein Material at Inferred Confidence Level	14-67
Figure 14.48	Grade Tonnage Graph of Oxide Tailings Material at Indicated Confidence Level	14-68
Figure 14.49	Grade Tonnage Graph of Oxide Tailings Material at Inferred Confidence Level	14-68
Figure 17.1	Simplified Flowsheet – Avino Vein	17-3
Figure 17.2	Proposed Process Flowsheet – Oxide Tailings	17-5

GLOSSARY

UNITS OF MEASURE

above mean sea level

amsl

acre

ac

ampere

A

annum (year)

a

billion

B

billion tonnes

Bt

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billion years ago		Ga
British thermal unit		BTU
centimetre		cm
cubic centimetre		cm ³
cubic feet per minute		cfm
cubic feet per second		ft ³ /s
cubic foot		ft ³
cubic inch		in ³
cubic metre		m ³
cubic yard		yd ³
Coefficients of Variation		CVs
day		d
days per week		d/wk
days per year (annum)		d/a
dead weight tonnes		DWT
decibel adjusted		dBa
decibel		dB
degree		°
degrees Celsius		°C
diameter		ø
dollar (American)		US$
dollar (Canadian)		Cdn$
dry metric ton		dmt
foot		ft
gallon		gal
gallons per minute (US)		gpm
Gigajoule		GJ
gigapascal		GPa
gigawatt		GW
gram		g
grams per litre		g/L
grams per tonne		g/t
greater than		>
hectare (10,000 m ² )		ha
hertz		Hz
horsepower		hp
hour		h
hours per day		h/d
hours per week		h/wk
hours per year		h/a
inch		in
kilo (thousand)		k
kilogram		kg
kilograms per cubic metre		kg/m ³
kilograms per hour		kg/h

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kilograms per square metre		kg/m ²
kilometre		km
kilometres per hour		km/h
kilopascal		kPa
kilotonne		kt
kilovolt		kV
kilovolt-ampere		kVA
kilovolts		kV
kilowatt		kW
kilowatt hour		kWh
kilowatt hours per tonne		kWh/t
kilowatt hours per year		kWh/a
less than		<
litre		L
litres per minute		L/m
megabytes per second		Mb/s
megapascal		MPa
megavolt-ampere		MVA
megawatt		MW
metre		m
metres above sea level		masl
metres Baltic sea level		mbsl
metres per minute		m/min
metres per second		m/s
microns		µm
milligram		mg
milligrams per litre		mg/L
millilitre		mL
millimetre		mm
million		M
million bank cubic metres		Mbm ³
million bank cubic metres per annum		Mbm ³ /a
million tonnes		Mt
minute (plane angle)		'
minute (time)		min
month		mo
ounce		oz
pascal		Pa
centipoise		mPa∙s
parts per million		ppm
parts per billion		ppb
percent		%
pound(s)		lb
pounds per square inch		psi
pounds per square inch (gauge)		psig

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revolutions per minute		rpm
second (plane angle)		"
second (time)		s
short ton (2,000 lb)		st
short tons per day		st/d
short tons per year		st/y
specific gravity		SG
square centimetre		cm ²
square foot		ft ²
square inch		in ²
square kilometre		km ²
square metre		m ²
three-dimensional		3D
tonne (1,000 kg) (metric ton)		t
tonnes per day		t/d
tonnes per hour		t/h
tonnes per year		t/a
tonnes seconds per hour metre cubed		ts/hm ³
volt		V
week		wk
weight/weight		w/w
wet metric ton		wmt
yard		yd

ABBREVIATIONS AND ACRONYMS

acid-base accounting

ABA

Aranz Geo Expert Services

Aranz Geo

atomic absorption

AA

Avino Silver & Gold Mines Ltd.

Avino

caliper volume

CV

Canadian Institute of Mining, Metalurgy, and Petroleum

CIM

Cannon-Hicks & Associates Ltd.

Cannon-Hicks

certified reference material

CRM

Compañía Minera Mexicana de Avino

CMMA

Compañía Minera Mexicana de Avino, S.A. de C.V.

Avino Mexico

Convention on International Trade in Endangered Species of Wild Fauna and Flora

CITES

copper sulphate

CuS0 ₄

copper

Cu

dissolved oxygen

dO ₂

east

E

Electrometals Electrowinning

EMEW

Elena Toloso Mine

ET

San Gonzalo Mine

SG

Environmental Impact Assessment Matter Regulation/

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Reglamento en Materia de Evaluacion del Impacto Ambiental		REIA
Environmental Impact Assessment/Evaluación de Impacto Ambiental		EIA
Environmental Impact Statement/Manifestación de Impacto Ambiental		EIS/MIA
Environmental Quality Monitoring Program/
Programa de Seguimiento de la Calidad Ambiental		EQMP
Federal Attorney for Environmental Protection/
Procuraduría Federal de Proteccíon al Ambiente		PROFEPA
general and administrative		G&A
General Law for the Prevention and Comprehensive Management of Waste/
Ley General Para la Prevención y Gestión Integral de Residuos		LGPyGIR
General Law for the Prevention and Management of Waste/
Ley General Para la Prevención y Gestión Integral de los Residuos		LGPGIR
General Law of Ecological Equilibrium and Environmental Protection/
Ley General del Equilibrio Ecológico y la Protección al Ambiente		LGEEPA
global positioning system		GPS
gold equivalent		AuEQ
gold		Au
induced polarization		IP
inductively coupled plasma		ICP
inductively coupled plasma-method spectroscopy		ICP-MS
internal rate of return		IRR
International Organization for Standardization		ISO
inverse distance squared		ID ²
kriging neighbourhood analysis		KRN
lead		Pb
life-of-mine		LOM
Minerales de Avino, Sociedad Anonima de Capital Variable		Minerales
MineStart Management Inc.		MMI
Ministry of Environment and Natural Resources/
Secretaría de Medio Ambiente y Recursos Naturales		MENR/SEMARNAT
National Instrument 43-101		NI 43-101
nearest neighbour		NN
net present value		NPV
net smelter return		NSR
north		N
ordinary kriging		OK
potassium amyl xanthate		PAX
preliminary economic assessment		PEA
PricewaterhouseCoopers		PwC
Process Research Associates Ltd.		PRA
Qualified Person		QP
quality assurance		QA
quality control		QC
silver equivalent		Ag_Eq
silver		Ag

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sodium carbonate		Na ₂ CO ₃
sodium cyanide		NaCN
south		S
special mining duty		SMD
standard reference material		SRM
tailings storage facility		TSF
the Avino Mine		the Property or
		the Project
Toronto Stock Exchange		TSX
Universal Transverse Mercator		UTM
water displacement		WD
west		W
zinc		Zn

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1.0 SUMMARY

1.1 INTRODUCTION

Avino Silver & Gold Mines Ltd. (Avino) is a Canadian-based mining and exploration company listed on the Toronto Stock Exchange (TSX) and the NYSE-American with precious metal properties in Mexico and Canada.

The Avino Mine (the Property or the Project), near Durango, Mexico, is Avino’s principal asset and is the subject of this Technical Report, which includes a current Mineral Resource estimate for the Avino Veins at the Elena Tolosa Mine (ET), San Gonzalo Veins at the San Gonzalo Mine (SG) and for the oxide tailings deposit.

Avino holds a 99.67% interest in the Property through its subsidiary companies called Compañía Minera Mexicana de Avino, S.A. de C.V. (CMMA) and Promotora Avino, S.A. de C.V. Avino commenced development, including drilling and bulk sampling, on the San Gonzalo Vein in 2010 and this work is ongoing. This marks the resumption of activity on the Property since 2001, when low metal prices and the closure of a key smelter caused the mine to close after having been in operation continuously for 27 years. Between 1976 and 2001, the mine produced approximately 497 t of silver, 3 t of gold, and 11,000 t of copper (Slim 2005a) as well as an apparently undocumented amount of lead.

The majority of the information has been sourced from the data provided by Avino: Avino internal reports; Tetra Tech (2013); Tetra Tech (2017); Slim (2005d), and Gunning (2009). The majority of the information was provided in English, but some information was written in Spanish and subsequently translated into English.

The purpose of this report is to support an updated Mineral Resource estimated as a result of modified current metal price parameters, new drilling information at the ET Mine (Avino and San Luis) and improved interpretation of the San Gonzalo mineralization trends. There has been no change to the oxide tailings estimate.

1.2 PROPERTY DESCRIPTION AND LOCATION

The Property is located in Durango State in North Central Mexico, within the Sierra Madre Silver Belt, 82 km northeast of Durango City (Figure 1.1). The current Property is comprised of 23 mineral concessions, totalling 1,103.934 ha. Of these, 22 mineral concessions, totalling 1,005.104 ha, are held by CMMA (Avino’s Mexican subsidiary company), by Promotora Avino SA de CV, and by Susesion de la Sra. Elena del Hoyo Algara de Ysita.

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Figure 1.1 General Location of the Property

Avino entered into an agreement (the Agreement) on February 18, 2012 through its subsidiary company, with Minerales de Avino, Sociedad Anonima de Capital Variable (Minerales), whereby Minerales has indirectly granted to Avino the exclusive mining and occupation rights to the La Platosa concession. The La Platosa concession covers 98.83 ha and hosts the Avino Vein and ET Zone (ET Zone).

Pursuant to the Agreement, Avino has the exclusive right to explore and mine the concession for an initial period of 15 years, with the option to extend the agreement for another 5 years. In consideration of the grant of these rights, Avino has paid to Minerales the sum of US$250,000 by the issuance of 135,189 common shares of Avino. Avino has also agreed to pay to Minerales a royalty equal to 3.5% of net smelter returns (NSRs), at the commencement of commercial production from the concession.

All concessions are current and up to date based on information received. Mineral concessions in Mexico do not include surface rights and Avino has entered into agreements with communal landowners (Ejidos) of San Jose de Avino, Panuco de Coronado and Zaragoza for the temporary occupation and surface rights of the concessions.

1.3 GEOLOGY AND MINERALIZATION

The Property is located within the Sierra de Gamon, on the east flank of the Sierra Madre Occidental. The area is a geological window into the Lower Volcanic series and consists of volcanic rocks of mainly Andesitic affiliation with other rock types occurring more sparsely to the north (Slim 2005d).

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Durango, Mexico

A large monzonitic intrusion is observed in the region in the form of dykes and small stocks, which may be related to the Avino Vein mineralization. Several younger thin mafic sills are also found in various parts of the region.

The Avino concession is situated within a 12 km north-south by 8.5 km caldera, which hosts numerous low sulphidation epithermal veins, breccias, stockwork and silicified zones. These zones grade into a “near porphyry” environment in the general vicinity of the Avino property. The caldera has been uplifted by regional north trending block faulting (a graben structure), exposing a window of andesitic pyroclastic rocks of the lower volcanic sequence which is a favourable host rock. The upper volcanic sequence consists of rhyolite to trachytes with extensive ignimbrite and is intruded by monzonite bodies. The basal andesite-bearing conglomerate and underlying Paleozoic basement sedimentary rocks (consisting of shales, sandstones and conglomerates) have been identified on the Avino concession in the south-central portion of the caldera, covering the Guadalupe, Santiago, San Jorge, the San Gonzalo Trend, Malinche, Porterito and Yolanda areas.

A northerly trending felsic dyke, probably a feeder to the upper volcanic sequence, transects the Property and many of the veins. The Aguila Mexicana low temperature vein system, with significant widths but overall low precious metal values, trends north-northwest, similar to the felsic dyke and with similar continuity across the Property. The two structures may occupy deep crustal faults that controlled volcanism and mineralization, with the felsic dyke structure controlling the emplacement of the Avino, Nuestra Senora and El Fuerte-Potosina volcanic centres and the Aguila Mexicana controlling the Cerro San Jose and El Fuerte-Potosina volcanic centres (Paulter 2006).

Silver- and gold-bearing veins crosscut the various lithologies and are generally oriented north-northwest to south-southeast (the Avino Vein trend) and northwest to southeast the San Gonzalo trend). In Mexico, these vein deposits may have large lateral extents, but can be limited in the vertical continuity of grades due to the effects of pressure on boiling levels for mineralizing fluids. The rocks have been weathered and leached in the upper sections, as a result of contact with atmospheric waters. The oxide tailings material is derived primarily from these shallow zones, whereas the sulphide tailings are predominantly from material sourced at depth from the underground workings.

The valuable minerals found during the period of mining of the oxide zone are reported to be argentite, bromargyrite, chalcopyrite, chalcocite, galena, sphalerite, bornite, native silver and gold, and native copper.

Three deposits, the Avino Vein, the San Gonzalo Vein and the oxide tailings deposit, are the subject of Mineral Resource estimates disclosed in this report. Recent exploration drilling reported at the Guadalupe and San Juventino veins is at an early stage and no Mineral Resources have been estimated for these two veins.

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Figure 1.2 Perspective View of the Property Looking North and Showing the Three Deposits

1.3.1 THE AVINO VEIN

The Avino Vein (see Figure 1.2 for location) has been and continues to be the primary deposit mined on the Property since at least the 19 ^th century. It is 1.6 km long and up to 60 m wide on the surface. The deepest level is at the 1,930 m amsl level (430 m below surface).

1.3.2 THE SAN GONZALO VEIN

The San Gonzalo Vein system (see Figure 1.2 for location), including the crosscutting Angelica vein, is located 2 km northeast of the Avino Vein. It constitutes a strongly developed vein system over 25 m across, trending 300 to 325°/80° northeast to 77° south. Banded textures and open-space filling are common and individual veins have an average width of less than 2 m. The vein was mined historically and underground workings extend approximately 1.1 km along strike and to the 1,970 m amsl (300 m below surface).

1.3.3 THE OXIDE TAILINGS

The oxide tailings deposit (see Figure 1.2 for location) comprises historic recovery plant residue material that was wasted from processing plants during the earlier period of open pit mining of the Avino Vein. The oxide tailings are partially covered by younger unconsolidated sulphide tailings on the northwest side.

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1.4 RESOURCE ESTIMATES

The Avino system, San Gonzalo system, and oxide tailings Mineral Resources were modelled and estimated using Leapfrog EDGE™ software version 4.2.3. The reported Mineral Resource estimated by ARANZ Geo Expert Services (ARANZ Geo) was interpolated using ordinary kriging (OK) and capped grades and inverse distance squared (ID ² ) and nearest neighbour (NN) for model validation purposes. The Avino system was estimated for silver, gold, copper. The San Gonzalo Vein system and oxide tailings were estimated for silver and gold. Under current economic and technical conditions gold and silver and copper are recoverable from the Avino system and all three metals are included in the mineral resource and for the silver equivalent (AgEQ) calculation for the Avino system. Under current economic and technical conditions only gold and silver are recoverable from the San Gonzalo system and the oxide tailings and consequently only silver and gold are included in the Mineral Resource and for the silver equivalent calculation for the San Gonzalo system and oxide tailings. Cut-off reporting (to consider “eventual prospects for eventual economic extraction”) utilizes an AgEQ calculation where the total metal value is converted into an in situ silver resource. For reporting purposes, a base-case AgEQ cut-off of 60 g/t is used for the Avino system, an AgEQ cut-off of 130 g/t is used for the San Gonzalo system, and an AgEQ cut-off of 50 g/t is used for the oxide tailings based on current economic parameters.

Table 1.1 is the Mineral Resource statement. Other grade tonnage graphs and tables found in Section 14.0 are intended to show sensitivity of the mineralized material and must not be considered Mineral Resources.

It must be noted that no Mineral Resource has been estimated for the sulphide tailings portion of the Property.

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Table 1.1 Mineral Resources at the Avino Property

Grade

Metal Contents

Resource Category

Deposit

Cut-off(AgEQ

g/t)

Tonnes

(t)

AgEQ

(g/t)

Ag

(g/t)

Au

(g/t)

Cu

(%)

AgEQ(million tr oz)*

Ag(million tr oz)

Au(thousand tr oz)

Cu

(t)

Measured and Indicated Mineral Resources

Measured

Avino – ET

60

3,890,000

141

71

0.54

0.55

17.6

8.9

67.4

21,000

Measured

Avino – San Luis

60

650,000

142

67

0.70

0.49

3.0

1.4

14.6

3,000

Measured

San Gonzalo System

130

290,000

397

314

1.65

0.00

3.7

2.9

15.4

0

Total Measured

All Deposits

-

4,830,000

156

85

0.63

0.51

24.3

13.2

97.4

24,000

Indicated

Avino – ET

60

2,640,000

105

49

0.56

0.34

8.9

4.2

47.6

9,000

Indicated

Avino – San Luis

60

1,620,000

126

54

0.82

0.36

6.6

2.8

42.9

6,000

Indicated

San Gonzalo System

130

240,000

319

257

1.25

0.00

2.5

2.0

9.6

0

Indicated

Oxide Tailings

50

1,330,000

124

98

0.46

0.00

5.3

4.2

19.8

0

Total Indicated

All Deposits

-

5,830,000

124

70

0.64

0.25

23.3

13.1

119.8

15,000

Total Measured and Indicated

All Deposits

-

10,660,000

139

77

0.63

0.37

47.5

26.3

217.2

39,000

Inferred Mineral Resources

Inferred

Avino – ET

60

2,380,000

111

58

0.51

0.33

8.5

4,4

39.1

8,000

Inferred

Avino – San Luis

60

1,780,000

124

57

0.72

0.38

7.1

3.2

41.2

7,000

Inferred

San Gonzalo System

130

120,000

262

219

0.86

0.00

1.0

0.8

3.3

0

Inferred

Oxide Tailings

50

1,810,000

113

88

0.44

0.00

6.6

5.1

25.6

0

Total Inferred

All Deposits

-

6,090,000

118

70

0.56

0.24

23.2

13.6

109.2

15,000

Notes:

Figures may not add to totals shown due to rounding.

Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.

The Mineral Resource estimate is classified in accordance with the Canadian Institute of Mining, Metallurgy and Petroleum’s (CIM) Definition Standards

For Mineral Resources and Mineral Reserves incorporated by reference into National Instrument 43-101 (NI 43-101) Standards of Disclosure for Mineral Projects.

Mineral Resources are reported at cut-off grades 60 g/t, 130 g/t, and 50 g/t AgEQ grade for ET, San Gonzalo, an oxide tailings, respectively.

AgEQ or silver equivalent ounces are notational, based on the combined value of metals expressed as silver ounces

Cut-off grades were calculated using the following assumptions:

For Avino (ET and San Luis), San Gonzalo: gold price of US$1,300/oz, silver price of US$17.50/oz, and copper price of US$3.00/lb

For Oxide Tailings: gold price of US$1,250/oz, silver price of US$19.50/oz

A net smelter return (NSR) was calculated and the silver equivalent was back calculated using the following formulas:

For ET: AgEQ = (24.06 x Au (g/t) + 0.347 x Ag (g/t) + 43.0 x Cu (%) – 151.8 x Bi (%)) / 0.347

For San Gonzalo: AgEQ = (0.03 x Au (g/t) + 0.385 x Ag (g/t) – 4.03/0.385

For Oxide Tailings: AqEQ = 69.37 x Au (g/t) + Ag (g/t)

No Mineral Resource has been estimated for the sulphide tailings portion of the Property.

Au – gold; Ag – silver; Cu – copper.

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1.5 MINERAL PROCESSING, METALLURGICAL TESTING AND RECOVERY METHODS

There are three separate mineralization sources in the Property, including the Avino and San Gonzalo mines, which are currently in operation, and the potential tailings resource from previous milling operations. The San Gonzalo Mine entered commercial production in October 2012, followed by reopening the Avino Mine in January 2015. The two mines feed a conventional flotation mill that has three separate circuits and a capacity of 1,500 t/d.

From January 2017, Avino has been constructing a new separate processing line identified as Circuit #4. The addition of Circuit #4 will have an identical throughput capacity as Circuit #3 which currently used for processing the materials from the Avino mine. The mill expansion is expected to increase overall mill capacity to 2,500 t/d.

The existing crushing plant will be upgraded to accommodate the higher throughput with a new larger tertiary cone crusher. The equipment in grinding, flotation and dewatering circuits planned for the expansion are similar in size to the existing equipment used for Circuit #3. The initial mill feed to Circuit #4 will be from the existing surface stockpiles although the additional circuit will be mainly used for processing the materials from San Luis of the Avino mine.

Avino has not based its production decisions on a Feasibility Study or Mineral Reserves demonstrating economic and technical viability, and as a result there is increased uncertainty and multiple technical and economic risks of failure that are associated with these production decisions. These risks, among others, include areas that would be analyzed in more detail in a Feasibility Study, such as applying economic analysis to Mineral Resources and Mineral Reserves, more detailed metallurgy, and a number of specialized studies in areas such as mining and recovery methods, market analysis, and environmental and community impacts. Information in this section was provided by Avino.

1.5.1 AVINO VEIN

Avino is currently conducting mining activity on the Avino Vein and processing Avino Vein material at the mine plant. Historically, prior to the mine shutting down in 2001, Avino operated a 1,000 t/d processing plant, achieving up to 1,300 t/d, producing a copper concentrate that was sold to a smelter in San Luis Potosi for approximately 27 years. The mine and mill operations were then suspended. Following several years of redevelopment, Avino completed the Avino Mine and mill expansion in Q4 2014. On January 1, 2015, full scale operations commenced and commercial production was declared effective April 1, 2016 following a 19 month advancement and test period.

The plant consists of a conventional three-stage crushing circuit with the tertiary crusher in closed circuit with a screen. The crushed material is fed to a ball mill and classified with a hydrocyclone at a grind size of approximately 65% passing 200 mesh. The fines from the hydrocyclone reports to the flotation circuit where typical flotation reagents for copper minerals are used. The concentrates from the rougher and scavenger circuits are upgraded in a cleaner circuit with the final concentrate reporting to a thickener and pressure filter. The moisture of the filter cake is approximately 8% and then shipped for sale overseas. Flotation tailing is pumped to the permitted tailings impoundment where decant water is reclaimed for process use.

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1.5.2 SAN GONZALO VEIN

Avino is currently conducting mining activity on the San Gonzalo Vein, including processing of San Gonzalo Vein material at the mill plant at the Avino Mine site.

The process plant consists of crushing and grinding circuits, followed by a gravity and flotation to recover and upgrade silver and gold from the feed material. Common reagents are used within the flotation circuit. The flotation concentrate is thickened, filtered to 9.9% moisture content, and sent to the concentrate stockpile for subsequent shipping to customers.

The final flotation tailings is disposed of in the existing permitted tailings storage facility.

1.5.3 OXIDE TAILINGS

Currently there is no metal recovery operation on the stored tailings. As reported by MineStart Management Inc. (MMI) and Process Research Associates Ltd. (PRA), several metallurgical work programs were conducted to investigate silver and gold recovery from the tailings.

The test work investigated various treatment methods, including gravity separation, flotation, and cyanide leaching (tank leaching and heap leaching). The preliminary test results appear to show that the tailings materials responded reasonably well to the cyanide leaching treatment, including tank leaching and column leaching testing procedures. An updated preliminary economical assessment was conducted in 2017 to evaluate the recovery of silver and gold from the oxide tailings using heap leaching technology followed by the Merrill Crown treatment on the pregnant leach solution .

The processing step will consist of tailings reclamation, agglomeration, and cyanide heap leaching followed by the Merrill-Crowe process to recover silver and gold from the pregnant solution. The process plant will operate at a throughput rate of 1,370 t/d on a 24 h/d, 365 d/a basis, with an overall utilization of 90%.

1.5.4 SULPHIDE TAILINGS

Avino is not currently conducting mining activity on the sulphide tailings. Because some of the oxide tailings and sulphide tailings were co-deposited, and the oxide tailings are partially covered by younger unconsolidated sulphide tailings on the northwest side of the tailings storage dam, the sulphide tailings materials will be reclaimed as required during the oxide tailings reclamation. The reclaimed sulphide tailings is planned to be stored in a separate sulphide tailings storage facility for further evaluation, while some of the sulphide tailings could be used for constructing the heap leach pad and facilities for the oxide tailings retreatment; however, no quantities have been estimated at this stage. In addition, no recovery methods are currently proposed for the sulphide tailings, which have been excluded from this estimate.

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1.6 MINING METHODS

1.6.1 AVINO VEIN

Avino is currently conducting mining activity on the Avino Vein using sublevel stoping and room and pillar mining methods.

Production from the Avino Vein is summarized in Table 1.2.

Table 1.2 Recent Production from the Avino Vein

Production Description	2015		2016		2017
Mill Feed Tonnage
Tonnes Milled (t)		396,113		429,289		460,890
Feed Grade
Silver (g/t)		65		67		64
Gold (g/t)		0.29		0.42		0.52
Copper (%)		0.62		0.50		0.48
Recovery
Silver (%)		87		85		85
Gold (%)		75		64		69
Copper (%)		87		90		89
Total Metal Produced
Silver Produced (oz)		717,901		789,372		803,438
Gold Produced (oz)		2,757		3,691		5,259
Copper Produced (lb)		4,743,691		4,206,585		4,373,166
AgEQ Produced (oz)		1,801,997		1,606,272		1,911,428

Source: Avino (2018c; 2017a; 2017b)

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1.6.2 SAN GONZALO VEIN

Avino is currently conducting mining activity on the San Gonzalo Vein using cut-and-fill and shrinkage stoping mining methods.

Production from the San Gonzalo Vein is summarized in Table 1.3.

Table 1.3 Recent Production from the San Gonzalo Vein

Production Description	2012		2013		2014		2015		2016		2017
Mill Feed Tonnage
Total Mill Feed (t)		19,539		78,415		79,729		121,774		115,047		81,045
Feed Grade
Silver (g/t)		259		288		337		279		267		269
Gold (g/t)		1.04		1.34		1.88		1.48		1.25		1.32
Recovery
Silver (%)		79		83		84		83		83		84
Gold (%)		70		73		78		75		74		78
Total Produced
Silver (oz)		128,607		602,233		724,931		907,384		822,689		590,765
Gold (oz)		455		2,473		3,740		4,326		3,427		2,675
AgEQ Produced (oz)		151,372		751,462		958,702		1,218,351		1,073,062		789,157

Source: Avino (2018c; 2017a; 2017b)

1.6.3 OXIDE TAILINGS

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 production schedule has been developed for the oxide tailings based on a treatment rate of 500 kt/a, which 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.

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1.7 PROJECT INFRASTRUCTURE

The Property is easily accessible by road and is an important part of the local community from which skilled workers are available. The history of operations at the Avino Mine provides ample evidence of sufficient infrastructure and services in the area. The San Gonzalo Mine entered commercial production in October 2012, followed by reopening the Avino Mine in January 2015. The two mines feed a conventional flotation mill that has three separate circuits and a capacity of 1,500 t/d. From January 2017, Avino has been constructing a new separate processing line identified as Circuit #4. The addition of Circuit #4 will have an identical throughput capacity as Circuit #3 which currently used for processing the materials from the Avino mine. The existing crushing plant will be upgraded to accommodate the higher throughput with a new larger tertiary cone crusher. The mill expansion is expected to increase overall mill capacity to 2,500 t/d.

The existing tailings deposition facility has been upgraded and is fully permitted and operational for approximately another 500,000 t of tailings. The offices, miner’s quarters, secured explosives storage facilities, warehouse, laboratory and other associated facilities are all in place. The proposed tailings leach facilities are planned to be located southeast of the existing tailings storage pond.

Before 2016, the mill was serviced with an existing power line providing only 1,000 kW of power with 500 kW servicing the mill, 400 kW for San Gonzalo and the balance for the well at Galeana, employee accommodation facility, and water reclaim from the tailings dam. The new power line from Guadelupe Victoria to the mine site was completed in June 2016. The power line was energized and tested on June 8 ^th , 2016. The line was fully functional at the design capacity of 5 MW. Current power consumption at the mine is approximately 2 MW, leaving sufficient additional power for potential future expansion projects, including the planned Circuit #4 mill expansion, the proposed oxide tailings retreatment project using heap leach followed by gold and silver recovery by Merrill-Crowe precipitation and possible further expansion or upgrading of the processing plant. Additionally, the existing power line was left in place to service local communities and provide backup power for the mine. A C-27 CAT diesel power generator, which can produce 700 kW, is now used as backup.

There is a water treatment plant for treating excess water from the Avino underground mine operation before discharging to El Caracol Dam. The effluent is being monitored on a daily basis when the treatment plant is operational.

1.8 ENVIRONMENTAL

Environmental settings, permits and registrations, and environmental management strategies that may be required for the Project are summarized in Section 20.0. 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.

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1.9 CAPITAL AND OPERATING COSTS

1.9.1 CAPITAL COST ESTIMATES

AVINO VEIN AND SAN GONZALO VEIN

Avino is currently conducting mining activity on the Avino and San Gonzalo veins. There is no cost estimate applicable and all costs are based on actual expenditure.

The actual capital expenditures (in US dollars) to date on the Avino Vein and San Gonzalo Vein operations are summarized in Table 1.4 and Table 1.5, respectively. The capital expenditures have been broken down by year and area.

Table 1.4 Capital Costs for the Avino Vein (US$)

Description	Q1-Q3 2017		2016		2015		2014
Office Furniture		19,035		8,625		7,093		6,521
Computer Equipment		5,023		14,913		17,233		33,178
Mill Machinery and Processing Equipment		703,475		70,653		525,067		2,832,627
Mine Machinery and Transportation Equipment		203,922		1,985,446		1,918,764		2,125,229
Buildings and Construction		1,985,450		485,757		590,639		313,875
ET Mineral Property		609,423		4,330,125		0		0
Total Capital Costs		3,526,327		6,895,518		3,058,796		5,311,429

Source: Avino

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Table 1.5 Capital Costs for the San Gonzalo Vein (US$)

Description	Q1-Q3 2017		2016		2015		2014
Office Furniture		16,119		7,248		3,725		6,521
Computer Equipment		4,973		12,575		17,233		32,937
Mill Machinery and Processing Equipment		951,881		188,884		100,537		264,178
Mine Machinery and Transportation Equipment		181,954		40,294		133,248		646,981
Buildings and Construction		76,773		443,135		55,819		356,300
San Gonzalo Vein Mineral Property		332,073		1,080,889		577,462		697,107
ET Mineral Property		0		0		0		0
Total Capital Costs		1,563,774		1,773,024		888,024		2,004,023

Source: Avino

TAILINGS RESOURCES

The capital costs for retreating the oxide tailings portion of the Property, including reclaiming the oxide tailings, constructing the heap leach pad and the treatment facilities, were estimated and reported in the technical report entitled “Technical Report on the Avino Property”, dated April 11, 2017.

The estimated capital cost was US$28.8 million (US$24.4 million of initial capital plus US$4.4 million sustaining capital).

A PEA should not be considered to be a Prefeasibility or Feasibility study, as the economics and technical viability of the Project have not been demonstrated at this time. The PEA is preliminary in nature and includes Inferred Mineral Resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as Mineral Reserves. Furthermore, there is no certainty that the conclusions or results reported in the PEA will be realized. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.

Avino is not currently conducting mining activity on the sulphide tailings portion of the Property. No capital costs have been estimated for any potential mining activity on the sulphide tailings portion of the Property.

1.9.2 OPERATING COST ESTIMATES

AVINO VEIN AND SAN GONZALO VEIN

Avino is currently conducting mining activity on the Avino and San Gonzalo veins. There is no cost estimate applicable and all costs are based on actual expenditures.

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The actual operating costs (in US dollars) for the Avino Vein and the San Gonzalo Vein in 2016 and 2017 are presented in Table 1.6 and Table 1.7.

The mine and milling costs include operating and maintenance labour together with the operation associated consumable supplies. The cost for electrical power is included in the milling costs. The geological component is mostly related to technical labour.

Table 1.6 Operating Costs for the Avino Vein (US$)

Description	Q1-Q3 2017		2016
Mining Cost		5,046,904		5,306,208
Milling Cost		3,214,053		2,947,585
Geological and Other		2,571,758		2,300,243
Royalties		544,571		610,797
Depletion and Depreciation		1,079,003		919,756
Total Direct Costs		12,456,289		12,084,590
G&A		3,295,481		2,817,256
Total Operating Costs		15,751,770		14,901,845

Source: Avino

Table 1.7 Operating Costs for the San Gonzalo Vein (US$)

Description	Q1-Q3 2017		2016
Mining Cost		2,340,070		1,798,503
Milling Cost		495,546		212,467
Geological and Other		487,751		318,843
Royalties		0		0
Depletion and Depreciation		675,072		485,732
Total Direct Costs		3,998,439		2,815,545
G&A		1,063,226		607,351
Total Operating Costs		5,061,666		3,422,897

Source: Avino

TAILINGS RESOURCES

The operating costs for retreating the oxide tailings portion of the Property, including reclaiming the oxide tailings, were estimated to be US$15.06/t. The detailed estimates are reported in the technical report entitled “Technical Report on the Avino Property”, dated April 11, 2017.

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Avino is not currently conducting mining activity on the sulphide tailings portion of the Property. No operating costs have been estimated for any potential mining activity on the sulphide tailings portion of the Property.

1.10 ECONOMIC ANALYSIS

1.10.1 AVINO AND SAN GONZALO VEINS

Avino is currently conducting mining activity, including mineral processing, on the Avino and San Gonzalo Veins. There is no economic analysis performed on both the Veins.

Avino has not based its production decisions on a Feasibility study or Mineral Reserves demonstrating economic and technical viability, and as a result there is increased uncertainty and multiple technical and economic risks of failure, which are associated with these production decisions. These risks, among others, include areas that would be analyzed in more detail in a Feasibility study, such as applying economic analysis to Mineral Resources and Mineral Reserves, more detailed metallurgy, and a number of specialized studies in areas such as mining and recovery methods, market analysis, and environmental and community impacts.

1.10.2 TAILINGS RESOURCES

In 2017, Tetra Tech prepared a preliminary economic assessment (PEA) technical report for the silver and gold recoveries from the oxide tailings, entitled “Technical Report on the Avino Property”, dated April 11, 2017.

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The report includes a preliminary economic evaluation for the oxide tailings retreatment based on a pre-tax financial model. Metal prices used in the base case for the preliminary economic evaluation were:

	·	gold – US$1,250/oz

	·	silver – US$18.50/oz.

The pre-tax financial results were:

	·	48.4% internal rate of return (IRR)

	·	2.0-year payback period

	·	US$40.5 million net present value (NPV) at an 8% discount rate.

Avino commissioned PricewaterhouseCoopers (PwC) in Vancouver to prepare the tax component of the model for the post-tax economic evaluation for this updated PEA with the inclusion of applicable income and mining taxes.

The following post-tax financial results were calculated:

	·	32% IRR

	·	2.6-year payback period

	·	US$22.2 million NPV at an 8% discount rate.

Avino is not currently conducting mining activity on the sulphide tailings portion of the Property. No economical assessments have been conducted for any potential mining activity on the sulphide tailings portion of the Property.

1.11 RECOMMENDATIONS

The recommendations for the further Mineral Resource estimates are presented in Section 26.0.

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2.0 INTRODUCTION

Avino is a Canadian-based mining and exploration company listed on the TSX and the NYSE-American trading under the symbol ASM. Avino has precious metal properties in Mexico and Canada and has a head office located at 900-570 Granville Street, Vancouver, British Columbia, Canada, V6C 3P1.

Avino retained Tetra Tech, in conjuction with ARANZ Geo, to prepare an update of resource estimate on the Avino Property in Durango, Mexico. The purpose of this report is to disclose three updated mineral resource estimates for the Avino Vein, the San Gonzalo Vein and Oxide Tailings portions of the Property. The report also includes a summary of the information previously disclosed in Tetra Tech report filed in 2017, comprising preliminary economic assessment on the oxide tailings portion of the Property. This report has been prepared in accordance with National Instrument 43-101 (NI 43-101) and Form 43-101F.

2.1 EFFECTIVE DATES

The effective date of this report is February 21, 2018 and the amended date is December 19th, 2018. The effective date of the Mineral Resource estimate is January 31, 2018.

2.2 QUALIFIED PERSONS

A summary of the Qualified Persons (QPs) responsible for this report is provided in Table 2.1. The following QPs conducted site visits of the Property:

	·	Hassan Ghaffari, P.Eng. M.A.Sc., visited the site March 30, 2011 and December 12, 2017 for two days.

	·	Mark Horan, P.Eng. M.Sc., visited the site December12, 2017 for one day.

	·	Michael F. O’Brien, P.Geo., M.Sc., Pr.Scit.Nat., FAusIMM, FSAIMM visited the site June 12 to 15, 2017, inclusive.

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Table 2.1 Summary of QPs

Report Section	Company	QP
1.0 Summary	All	Sign-off by Section
2.0 Introduction	Tetra Tech	Hassan Ghaffari, P.Eng.
3.0 Reliance on Other Experts	ARANZ Geo Tetra Tech	Michael F. O’Brien, P.Geo., M.Sc., Pr.Sci.Nat., FAusIMM, FSAIMM Mark Horan., P.Eng. Jianhui (John) Huang, Ph.D., P.Eng. Hassan Ghaffari, P.Eng.
4.0 Property Description and Location	ARANZ Geo	Michael F. O’Brien, P.Geo., M.Sc., Pr.Sci.Nat., FAusIMM, FSAIMM
5.0 Accessibility, Climate, Local Resources, Infrastructure and Physiography	ARANZ Geo	Michael F. O’Brien, P.Geo., M.Sc., Pr.Sci.Nat., FAusIMM, FSAIMM
6.0 History	ARANZ Geo	Michael F. O’Brien, P.Geo., M.Sc., Pr.Sci.Nat., FAusIMM, FSAIMM
7.0 Geological Setting and Mineralisation	ARANZ Geo	Michael F. O’Brien, P.Geo., M.Sc., Pr.Sci.Nat., FAusIMM, FSAIMM
8.0 Deposit Types	ARANZ Geo	Michael F. O’Brien, P.Geo., M.Sc., Pr.Sci.Nat., FAusIMM, FSAIMM
9.0 Exploration	ARANZ Geo	Michael F. O’Brien, P.Geo., M.Sc., Pr.Sci.Nat., FAusIMM, FSAIMM
10.0 Drilling	ARANZ Geo	Michael F. O’Brien, P.Geo., M.Sc., Pr.Sci.Nat., FAusIMM, FSAIMM
11.0 Sample Preparation, Analyses and Security	ARANZ Geo	Michael F. O’Brien, P.Geo., M.Sc., Pr.Sci.Nat., FAusIMM, FSAIMM
12.0 Data Verification	ARANZ Geo	Michael F. O’Brien, P.Geo., M.Sc., Pr.Sci.Nat., FAusIMM, FSAIMM
13.0 Mineral Processing and Metallurgical Testing	Tetra Tech	Jianhui (John) Huang, Ph.D., P.Eng.
14.0 Mineral Resource Estimates	ARANZ Geo	Michael F. O’Brien, P.Geo., M.Sc., Pr.Sci.Nat., FAusIMM, FSAIMM
15.0 Mineral Reserve Estimates	Tetra Tech	Mark Horan, P.Eng.
16.0 Mining Methods	Tetra Tech	Mark Horan, P.Eng.
17.0 Recovery Methods	Tetra Tech	Jianhui (John) Huang, Ph.D., P.Eng.
18.0 Infrastructure	Tetra Tech	Hassan Ghaffari, P.Eng.
19.0 Market Studies and Contracts	Tetra Tech	Hassan Ghaffari, P.Eng.
20.0 Environmental Studies, Permitting and Social or Community Impact	Tetra Tech	Hassan Ghaffari, P.Eng.
21.0 Capital and Operating Costs	Tetra Tech	Hassan Ghaffari, P.Eng..
22.0 Economic Analysis	Tetra Tech	Hassan Ghaffari, P.Eng.
23.0 Adjacent Properties	ARANZ Geo	Michael F. O’Brien, P.Geo., M.Sc., Pr.Sci.Nat., FAusIMM, FSAIMM
24.0 Other Relevant Data and Information	Tetra Tech	Hassan Ghaffari, P.Eng.
25.0 Interpretation and Conclusions	All	Sign-off by Section
26.0 Recommendations	All	Sign-off by Section
27.0 References	All	Sign-off by Section
28.0 Certificates of Qualified Person	All	Sign-off by Section

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2.3 INFORMATION AND DATA SOURCES

In preparation of this report, various historical engineering, geological and management reports compiled about the Project or site were reviewed and supplemented by direct site examinations and investigations. All the data files reviewed for this study were provided by Avino in the form of hard copy documents, electronic .pdf reports, .xls files, email correspondence, and personal communication with management and personnel from Avino. Work completed by Avino includes several decades of open pit and underground mining, drilling and sampling, trenching, metallurgical testing, and geophysical surveying.

The main sources of information in preparing this report are:

	·	Gunning, D. (2009). Resource Estimate on the San Gonzalo Vein – A Part of the Avino Mine, Durango, Mexico, for Avino Silver and Gold Mines Ltd. Prepared by Orequest. August 31, 2009.

	·	Slim, B. (2005d). A Tailings Resource. Prepared for Avino Silver & Gold Mines Ltd. Report prepared by Bryan Slim, MineStart Management Inc. October 25, 2005.

	·	Tetra Tech and QG Australia (Pty) Ltd. (2016). Amended Resource Estimate Update for the Avino Property, Durango, Mexico. Prepared for Avino Silver & Gold Mined Ltd. October 27, 2016.

	·	Tetra Tech (2017). Technical Report on the Avino Property, Durango, Mexico. Prepared for Avino Silver & Gold Mined Ltd. April 11, 2017.

A complete list of references is provided in Section 27.0.

2.4 UNITS OF MEASUREMENT

All units of measurement used in this technical report and resource estimate are in metric, and currency is expressed in US dollars, unless otherwise stated.

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3.0 RELIANCE ON OTHER EXPERTS

This Technical Report Update has been prepared by Michael O’Brien, P.Geo, of ARANZ Geo, and Hassan Ghaffari, P.Eng, Jianhui Huang, Ph.D. P.Eng. and Mark Horan, P.Eng, all of Tetra Tech. All authors are independent QPs as defined within the requirements of NI 43-101.

The information, conclusions, opinions, and estimates contained herein are based on:

	·	information available to the authors at the time the report was prepared

	·	assumptions, conditions, and qualifications as outlined in this report

	·	production and expenditure data, reports, and other information supplied by Avino and other third-party sources.

Avino reported to the authors that, to the best of its knowledge, there is no known litigation that could potentially affect the Project.

Note: The authors of this report are not qualified to provide extensive commentary on legal or political issues associated with the Property, which are considered to be outside the scope of this report. For the portions of this report (Sections 1.2, 4.2 and 4.3) that deal with the types and numbers of mineral tenures and licenses; the nature and extent of title and interest in the Property and the terms of any royalties, back-in rights, payments or other agreements and encumbrances to which the Property is subject, we have relied upon the title opinion dated February 1, 2018 by Juan Manuel Gonzalez Olguin of the Mexican law firm Bufete Gonazalez Olguin, S.C., (a copy of which is appended to this report, see Appendix A).

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4.0 PROPERTY DESCRIPTION AND LOCATION

4.1 LOCATION

The Property is in Durango State in North Central Mexico, within the Sierra Madre Silver Belt on the eastern edge of the Sierra Madre Occidental mountain range. The nearest major centre is the city of Durango, 82 km to the southwest of the Property. The Property is within the municipality of Pánuco de Coronado between the towns of Pánuco de Coronado and San José de Avino. The Property is located at latitude N 24° 53’, longitude W 104° 31’, 14 km northwest of Highway 40D.

The Property location is situated as illustrated in Figure 4.1 and Figure 4.2.

Figure 4.1 General Location of the Property

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Figure 4.2 Local Property Location

4.2 PROPERTY OWNERSHIP

The current Property comprises 23 mineral concessions, totalling 1,103.934 ha.

In 1968, Avino Mines and Resources Ltd. acquired a 49% interest in the company CMMA and Minera San José de Avino SA, which together held mineral claims totalling 2,626 ha (6,488 ac). Avino Mines and Resources Ltd. retained Vancouver based Cannon-Hicks & Associates Ltd. (Cannon-Hicks), a mining consulting firm, to conduct the exploration and development of the Property. Cannon-Hicks’s exploration activities included surface and underground sampling and diamond drilling (VSE 1979).

On July 17, 2006, the Company completed the acquisition of Compañía Minera Mexicana de Avino, S.A. de C.V. (Avino Mexico), a Mexican corporation, through the acquisition of an additional 39.25% interest in Avino Mexico which combined with the Company’s pre-existing 49% share of Avino Mexico, brought the Company’s ownership interest in Avino Mexico to 88.25%. The additional 39.25% interest in Avino Mexico was obtained through the acquisition of 79.09% of the common shares of Promotora Avino S.A. de C.V., referred to as “Promotora”, which in turn owns 49.75% of Avino Mexico’s common shares, and the direct acquisition of 1% of the common shares of Avino Mexico.

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The July 17, 2006 acquisition was accomplished by a share exchange by which the Company issued 3,164,702 shares as consideration, which we refer to as the “Payment Shares”, for the purchase of the additional 39.25% interest in Avino Mexico. The Payment Shares were valued based on the July 17, 2006 closing market price of the Company’s shares on the TSX.

The Company acquired a further 1.1% interest in Avino Mexico through the acquisition from an estate subject to approval and transfer of the shares to the Company by the trustee for the estate. On December 21, 2007 approval was received and the Company obtained the 1.1% interest from the estate for no additional consideration.

On February 16, 2009, the Company converted existing loans advanced to Avino Mexico into new additional shares of Avino Mexico. As a result, the Company’s ownership interest in Avino Mexico increased to 99.28%.

On June 4, 2013, the Company converted existing loans advanced to Avino Mexico into new additional shares of Avino Mexico, resulting in the Company’s ownership increasing by 0.38% to an effective 99.67%. The issuance of shares to the Company by Avino Mexico on June 4, 2013 resulted in a reduction in the non-controlling interest from 0.72% to 0.34%.

On August 26, 2015, the Company converted existing loans advanced to Avino Mexico into new additional shares, resulting in an increase of the Company’s ownership by 0.01% to an effective 99.67%. The intercompany loans and investments are eliminated upon consolidation of the financial statements. The Company had a pre-existing effective ownership interest of 99.66% in Avino Mexico prior to the 0.01% increase. The issuance of shares to the Company by Avino Mexico on August 26, 2015, resulted in a reduction in the non-controlling interest from 0.34% to 0.33%.

4.3 MINERAL CONCESSIONS AND AGREEMENTS

The current Property comprises 23 mineral concessions, totalling 1,103.934 ha (Figure 4.3). Of these, 22 mineral concessions totalling 1,005.104 ha, are held by CMMA (Avino’s Mexican subsidiary company), Promotora Avino SA de CV, and Susesion de la Sra. Elena del Hoyo Algara de Ysita. Ownership proportions and mineral concessions are summarized in Table 4.1 and Table 4.2, respectively.

Table 4.1 Summary of Property Ownership

Company

Relationship to Avino

Silver and Gold
Mines Ltd.

Effective

Ownership
of Avino Mine Property (%)

CMMA

Subsidiary

98.45

Promotora Avino, S.A. de C.V.

Subsidiary

1.22

Total Effective Ownership of Avino Mine Property

-

99.67

Estate of Ysita

Non-controlling interest

0.33

Total

-

100.00

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Table 4.2 Mineral Concessions – Avino Property

Concession Name	Concession No.		Location		Hectares (ha)		Date Acquired		Expiration Date		Cost (US$/ha)		Payment (US$)
Agrupamiento San Jose (Purisma Chica)		155597	Pánuco			136.708	30/09/1971		29/09/2021			124.74		17,052.91
Agrupamiento (San Jose)		164985	Pánuco			8.000	13/08/1979		12/8/2029			124.74		997.92
Agrupamiento San Jose (El Trompo)		184397	Pánuco			81.547	13/10/1989		12/10/2039			124.74		10,172.12
Agrupamiento San Jose (Gran Lucero)		189477	Pánuco			161.468	5/12/1990		4/12/2040			124.74		20,141.57
Agrupamiento San Jose (San Carlos)		117411	Pánuco			4.451	5/2/1961		16/12/2061			124.74		555.16
Agrupamiento San Jose (San Pedro Y San Pablo)		139615	Pánuco			12.000	22/06/1959		21/06/2061			124.74		1,496.88
Aguila Mexicana		215733	Pánuco			36.768	12/3/2004		29/06/2044			70.88		2,606.12
Ampliacion La Malinche		204177	Pánuco			6.010	18/12/1996		17/12/2046			124.74		749.72
Ampliacion San Gonzalo		191837	Pánuco			5.850	19/12/1991		18/12/2041			124.74		729.67
Avino Grande Ix		216005	Pánuco			19.558	2/4/2002		1/4/2052			70.88		1,386.24
Avino Grande Viii		215224	Pánuco			22.882	14/02/2002		13/02/2052			70.88		1,621.85
El Caracol		215732	Pánuco			102.382	12/3/2002		28/04/2044			70.88		7,256.84
El Potrerito		185328	Pánuco			9.000	14/12/1989		13/12/2039			124.74		1,122.66
Fernando		205401	Pánuco			72.129	29/08/1997		28/08/2047			124.74		8,997.33
La Estela		179658	Pánuco			14.000	11/12/1986		12/12/2036			124.74		1,746.36
La Malinche		203256	Pánuco			9.000	28/06/1996		27/06/2046			124.74		1,122.66
Los Angeles		154410	Pánuco			23.713	25/03/1971		24/03/2021			124.74		2,957.96
Negro Jose		218252	Pánuco			58.000	17/10/2002		16/10/2052			70.88		4,111.04
San Gonzalo		190748	Pánuco			12.000	29/04/1991		28/04/2041			124.74		1,496.88
San Martin De Porres		222909	Pánuco			30.000	15/09/2004		14/09/2054			70.88		2,126.40
Santa Ana		195678	Pánuco			136.182	14/09/1992		13/09/2042			124.74		16,987.38
Yolanda		191083	Pánuco			43.458	29/04/1991		28/04/2041			124.74		5,420.91
Total		-		-		1005.106		-		-		110.29		110,856.58

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Figure 4.3 Map of Avino Property Concessions

Source: after Tetra Tech (2013)

In May 1970, Avino Mines and Resources Ltd. signed a formal agreement with Selco Mining and Development (Selco), a division of Selection Trust Company. Due to other commitments, Selco abandoned its interest in the Project in 1973 (VSE 1979). On February 18, 2012, through its subsidiary company CMMA, Avino re-entered into an agreement (the Agreement) with Minerales, whereby Minerales has indirectly granted to Avino the exclusive mining and occupation rights to the La Platosa concession. The La Platosa concession covers 98.83 ha and hosts the Avino Vein and ET Zone.

Pursuant to the Agreement, Avino has the exclusive right to explore and mine the concession for an initial period of 15 years, with the option to extend the agreement for another 5 years. In consideration of the grant of these rights, Avino has paid to Minerales the sum of US$250,000, by the issuance of 135,189 common shares of Avino. Avino will have a period of 24 months for the development of mining facilities.

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Avino has agreed to pay to Minerales a royalty equal to 3.5% of NSRs, at the commencement of commercial production from the concession. In addition, after the development period, if the minimum monthly processing rate of the mine facilities is less than 15,000 t, then Avino must pay to Minerales in any event a minimum royalty equal to the applicable NSR royalty based on processing at a minimum monthly rate of 15,000 t. In the event of a force majeure, Avino shall pay the minimum royalty as follows:

· first quarter: payment of 100% of the minimum royalty

· second quarter: payment of 75% of the minimum royalty

· third quarter: payment of 50% of the minimum royalty

· fourth quarter: payment of 25% of the minimum royalty

· in the case of force majeure still in place after one-year of payments, payment shall recommence at a rate of 100% of the minimum royalty and shall continue being made as per the quarterly schedule.

Minerales has also granted to Avino the exclusive right to purchase a 100% interest in the concession at any time during the term of the Agreement (or any renewal thereof), upon payment of US$8 million within 15 days of Avino’s notice of election to acquire the Property. The purchase would be completed under a separate purchase agreement for the legal transfer of the concession. This agreement replaces all other previous agreements.

During the month of May of each year, Avino must file assessment work made on each concession for the immediately preceding calendar year. During the months of January and July of each year, Avino must pay in advance the mining taxes which are based on the surface of the concession and the number of years that have elapsed since it was issued.

Consistent with the mining regulations of Mexico, cadastral surveys have been carried out for all the listed mineral concessions as part of the field staking prior to recording (Slim 2005d). It is believed that all concessions are current and up to date. Mineral concessions in Mexico do not include surface rights. Avino has entered into agreements with communal land owners (Ejidos) of San José de Avino, for the temporary occupation and surface rights of the concessions.

A current title opinion dated February 1, 2018, has been prepared by Juan Manuel González Olguin of the Mexican law firm Bufete González Olguin S.C. (a copy of which is appended to this report [Appendix A]).

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5.0 ACCESSIBILITY, CLIMATE, INFRASTRUCTURE, LOCAL RESOURCES, AND PHYSIOGRAPHY

5.1 TOPOGRAPHY, ELEVATION AND VEGETATION

The average elevation of the Property is approximately 2,200 masl. Local relief is estimated to be roughly 100 m ranging from the bottom bench of the tailings to the top of the open pit.

Vegetation is sparse and consists of shrubs and grasses typical of the high desert.

5.2 ACCESSIBILITY AND LOCAL RESOURCES

The Property is easily accessible by road and the mine is an important employer of the local community from which skilled workers are available. Access is provided by Highway 40, a four-lane highway leading from Durango, past the airport and on to the city of Torreon in Coahuila. Successive turn-offs for the Property are at Francisco I Madero, Ignacio Zaragoza, and San José de Avino (Slim 2005d). The Avino mineral concessions are covered by a network of dirt roads, which provide easy transport access between all areas of interest on the Property and the mill at the main Avino Mine (Gunning 2009).

The nearest major city is Durango, with a population of approximately 465,000. Durango is a major mining centre in Mexico where experienced labour and services can be obtained. The two towns nearest the mine are Pánuco de Coronado and San José de Avino, where the majority of the employees lived while working at the mine when it was in operation. Pánuco de Coronado has a population of approximately 12,000, and San José de Avino is a small centre with a population of less than 1,000.

5.3 CLIMATE AND LENGTH OF OPERATING SEASON

The climate is temperate and semi-arid. In the region, the mean annual rainfall is 580.6 mm and the average annual temperature is 16.9°C. July and January average temperatures are 21.8°C and 11.3°C, respectively (www.worldclimate.com – Durango). The majority of the rainfall occurs between June and September. In the winter months, the temperature can drop below freezing and frost and even light snowfall can occur.

Exploration, development, and mining activities may take place throughout the year without any significant seasonal impact.

5.4 INFRASTRUCTURE

Infrastructure is disclosed in Section 18.0.

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6.0 HISTORY

6.1 AVINO MINE, 1555-1968

The Avino deposit was originally discovered around 1555 by the Spanish conquistador, Don Francisco de Ibarra. In 1562, Francisco de Ibarra, was appointed governor of the newly formed province of Nueva Vizcaya, in the Viceroyalty of Nueva España (New Spain) and, in 1563, founded the town of Durango. Francisco de Ibarra led several expeditions in search of silver deposits in the region and is recognized as having established Minas de Avino, present day Avino Mine; San Martín, Durango; and Pánuco, Sinaloa. Mining operations at the Avino Mine are said to have commenced in 1562-1563 and have been in production until the early 1900s. Operations at the Avino Mine continued up to the onset of the War of Independence (1810) when operations were interrupted but then restarted and continued through to the early 1900s.

In 1880, the mines were taken over by Avino Mines Ltd., a company controlled by American and British interests. The introduction of more modern industrial technology helped the Avino Mine develop into a significant mining operation at the beginning of the 20 ^th century. By 1908, the Avino Mine was considered one of the largest open pit mines in the world and equipped with one of the largest lixification smelters (Gallegos 1960; VSE 1979; Slim 2005d).

During the early phases of the Mexican Revolution in 1910, proceeds from the mine supplied funds to the revolutionary forces. Since much of the fighting occurred in and around Durango and the risk posed by brigands hiding in the mountains was high, the mine was abandoned in 1912.

Between 1912 and 1968, the mine was worked intermittently on a small scale (Avino Annual Report 1980). There is no documentary record of production from the Avino Mine during this period.

The Property was acquired under current ownership in 1968.

6.1.1 AVINO VEIN SYSTEM DEPOSIT

The Avino Vein System was the mainstay of historic exploitation and is situated adjacent to the mine offices and processing plant. The upper portion of the deposit was extensively mined in an open pit and the lower portion is currently accessible via a ramp and has been extensively developed and mined from more than 6 km of horizontal drifts, with vertical spacings between 15 and 25 m. The Avino (ET Mine) workings extend to a maximum depth of 360 m vertically below the portal of the Avino ramp. An old vertical shaft, no longer used for hoisting, is used for ventilation and to supply water and power for development and mining. A vertical section of Avino Mine is shown in Figure 6.1 . The western historically mined portion of the Avino Vein system is referred to as the San Luis. In 2016-2017, the focus of exploration drilling was on the region between the ET Mine and San Luis. The eastern extension of the Avino Vein system is known as Chirumbo.

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Figure 6.1 Avino Mine: Vertical Section View Showing Development and Stoping

6.2 SAN GONZALO VEIN DEPOSIT

Shallow workings from an old mine are present in the San Gonzalo Vein, and consist of small underground workings which were originally accessed by a five-level vertical shaft.

Current access to the San Gonzalo Deposit is via a ramp that is being actively developed. All old working levels have been dewatered. The deposit has been explored and exploited by more than 4 km of horizontal drifts with upper levels at 40 m vertical spacing and lower levels at 25 m vertical spacing. A vertical section of the San Gonzalo Mine is shown in Figure 6.2 .

6.3 GUADALUPE VEIN DEPOSIT

The Guadalupe Vein (see Figure 7.1) extends between the Avino Vein and the San Gonzalo Vein and is a current exploration target.

6.4 SAN JUVENTINO VEIN DEPOSIT

The San Juventino Vein (see Figure 7.1) is adjacent to the eastern end of the Avino Vein and is a current exploration target.

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Figure 6.2 San Gonzalo Mine: Vertical Section View Showing Development and Stoping

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7.0 GEOLOGICAL SETTING AND MINERALIZATION

7.1 REGIONAL GEOLOGY

The Property is located within the Sierra de Gamon, on the east flank of the Sierra Madre Occidental. The area is a geological window into the Lower Volcanic series and consists mainly of volcanic flows, sills, and tuffaceous layers of andesite, rhyolite, and trachyte. Individual rock units typically vary from 300 to 800 m in thickness. Andesitic rocks outcrop over most of the region with other rock types occurring more sparsely to the north (Slim 2005d).

A large monzonitic intrusion is observed in the region in the form of dykes and small stocks, which appear to be linked to the onset of the Avino Vein mineralization. Other post-mineralization dykes of intermediate to felsic composition crop out in various areas and appear to cause minor structural displacements. Occurrences of thin mafic sills are also found in various parts of the region and are believed to be related to recent volcanism.

Higher areas of the Sierra Madre Occidental surrounding the mine are composed of rhyolites and ignimbrites of the Upper Volcanic Series, with thicknesses approaching 1,500 m.

The Laramide orogenic event is believed to have affected the Avino district. Later extrusive and intrusive igneous events appear to have caused the formation of various systems of pre-mineralization faulting. These fault systems usually produced normal displacement of the pre-existing rocks, and generally strike northwest-southeast (subparallel to the Avino Vein System). Additional normal fault systems are also observed in the region, striking northeast-southwest and dipping towards the south (subparallel to the San Gonzalo Vein System).

The rugged topography is a result of erosion of the post-mineralization faulted blocks. One of the most significant regional features of the district is the Avino Fault which strikes northwest 20° southeast, dips southeast and which appears to terminate the Avino Vein mineralization, juxtaposing the Upper and Lower Volcanic series (Figure 7.1).

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Figure 7.1 General Map of Property Geology

7.2 PROPERTY GEOLOGY AND MINERALIZATION

The Avino concession is located within a 12 km (north-south) by 8.5 km (east-west) caldera. The Property contains numerous low-sulphidation epithermal veins, breccias, stockwork, and silicified zones that grade into a “near porphyry” environment, particularly in the Avino Mine area. The caldera has been uplifted by regional north-trending block faulting (a graben structure), exposing a window of andesitic pyroclastic rocks of the lower volcanic sequence within the caldera. The Lower Volcanic Sequence is overlain by the Upper Volcanic Sequence, consisting of rhyolite to trachyte flows and extensive ignimbrites and intruded by monzonite bodies.

The basal andesite-bearing conglomerate and underlying Paleozoic basement sedimentary rocks (consisting of shales, sandstones and conglomerates) have been identified on the Avino concession in the south-central portion of the caldera, covering the Guadalupe, Santiago, San Jorge, the San Gonzalo Trend, Malinche, Porterito and Yolanda areas. A northerly trending felsic dyke, possibly a feeder to the upper volcanic sequence, transects the Property and many of the veins. The Aguila Mexicana low temperature vein system, trends north-northwest at a similar orientation to the felsic dyke and with similar continuity across the Property. The two structures have been interpreted to occur along deep crustal faults that controlled volcanism and mineralization, with the felsic dyke structure controlling the emplacement of the Avino, Nuestra Senora and El Fuerte-Potosina volcanic centres and the Aguila Mexicana structure controlling the Cerro San Jose and El Fuerte-Potosina volcanic centres (Paulter 2006).

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Silver- and gold-bearing veins cross-cut the various lithologies and are generally oriented north northwest-south southeast and northwest-southeast (Figure 7.1). The rocks have been weathered and leached in the upper sections, as a result of contact with atmospheric waters; the oxide tailings material (Section 7.2.3) is primarily from this source, whereas the sulphide tailings are predominantly from material sourced at depth, below the leached zone. In Mexico, these types of deposits can have large lateral extents, but can be limited in the vertical continuity of grades.

In the oxide zone, mineralization is primarily hosted by the minerals argentite, bromargyrite, chalcopyrite, chalcocite, galena, sphalerite, bornite, native silver, gold, and native copper. Other minerals present in mineralized areas, but not hosting the metals of interest, include hematite, chlorite, quartz, barite, pyrite, arsenopyrite and pyrrhotite. Malachite, anglesite and limonite are common in the quartz zones of the weathered parts of the oxide material.

7.2.1 AVINO VEIN

Geology and mineralization of the Avino Vein are summarized from Slim (2005d).

The Avino Vein is 1.6 km long and 60 m wide on the surface. The Avino Vein is the most striking and important example of the epithermal mineralization of the district whose structures are normally weathered and leached in their upper section as a result of contact with atmospheric waters producing a band of oxide minerals and zones of supergene enrichment to a depth of about 70 m.

In the oxide portion of the Avino Vein, the common minerals encountered include hematite, limonite, anglesite and copper carbonate in white or green, somewhat chloritized, quartz zones. The common primary and secondary minerals encountered are argentite, bromargyrite, chalcopyrite, chalcocite, galena sphalerite, bornite, native silver, free gold, and native copper. Other minerals present in mineralized areas include quartz, pyrite, chlorite, barite, arsenopyrite, pyrrhotite and specularite.

Higher silver values are reported to decrease overall with depth, except at vein intersections and vein inflections, where higher values persist to depth. The same can be said for gold, although the higher values start just below the onset of silver mineralization, at or near the surface. In contrast, higher copper values coincide with vein intersections and may increase with depth. Sporadic, localized copper enrichment occurs toward the footwall contact and may represent a different phase of fluid emplacement. Despite the overall decrease in precious metal grade with depth, local increases in metal grades are apparent in the mine sampling and exploration drilling, possible reflecting changes in boiling level with pressure variations in the epithermal system.

The Avino Vein has been followed longitudinally for more than 1,300 m and vertically for more than 600 m. It strikes north 66° east with an east-west splay, and dips to the south and southeast at 60° to 70°. Steeply dipping, high grade zones within the vein and stock-work zones are frequently found in the upper part of the vein, as well as at its intersections with a number of lateral veins. An example of a higher-grade area of mineralization encountered with major lateral vein intersecting the Avino was the El Hundido, which exceeded 40 m in thickness. In the lower areas of the vein and mine, mineralized cross-veins, branch-veins, and stockwork zones have been found in the footwall at San Luis and at El Hundido, and are assumed to persist with depth.

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The hanging wall of the Avino Vein is andesite, while the footwall is a monzonite intrusive with andesite sections. A post-mineralization fault parallel with the vein occurs in the hanging wall at a distance of several metres in the area of San Luis, while in the central part of El Hundido, this fault is located at the contact with the vein over a distance of about 300 m, up to the area of Santa Elena and San Antonio. From that point, and proceeding toward the El Chirumbo Mine, this fault cuts the vein between the face at San Carlos and the exposure at the underground ramp. The fault then enters the footwall where it remains until a point about 30 m east of the west face of the Chirumbo area, producing a downward displacement of the vein of between 50 to 100 m.

At Chirumbo, the fault largely replaces the vein due to strong leaching by post-mineralization circulating of water in the gouge. On the east face at Chirumbo, the fault again enters the hanging wall; in this zone the vein is composed of branches and stockwork and to the east of this point the fault crosses the vein numerous times.

The deposit is epithermal and made up of veins and dependent stockwork structures, mainly in the hanging wall and often associated with vein intersections. Four vein systems have been described which, in decreasing order of importance, are:

	·	system striking east-west, dipping south at 60° to 70°, including the Avino Vein and its possible extension in the Cerro de San Jose

	·	system striking north 60° to 70° west, dipping 60° to 80° southwest, comprising the following important veins: El Trompo, San Juventino, San Jorge, Platosa, Los Reyes, Potosina, El Fuerte, and Conejo

	·	system striking north 20° to 30° west, dipping between 60° to 80° to either the southwest or northeast, comprising the following significant veins: San Gonzalo, Aguila Mexicana, and La Calcita, as well as the Stockwork La Potosina, and the Stockwork El Fuerte

	·	systems striking north 60° to 80° east, dipping 60° to 80° southeast, comprising the following veins: Santiago, Retana, Nuestra Senora, and San Pedro and San Pablo.

Alteration has been reported in three main types:

	·	Propylitic alteration is most common in andesite, giving the andesite a greenish tint.

	·	Argillaceous alteration appears mainly in the upper parts of the veins and manifests itself as a whitening of the country rock due to alunite and montmorillonite clays.

	·	Silicification, chloritization, and pyritization alteration is observed in the hanging wall and footwall, and is more prominent closer to the vein.

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7.2.2 SAN GONZALO VEIN

The San Gonzalo Vein is located approximately 1.4 km northeast of the eastern modelled extent of the Avino Vein. The San Gonzalo Vein system constitutes a strongly developed vein system over 25 m wide, trending 300° to 325°/80° northeast to 77° south. It is characterized by banded textures and open-space filling. The main vein has an average width of 2 m, but the silica-pyrite or iron oxide-sericite alteration with additional stock working extends across 300 m, south of the main San Gonzalo Vein to the Los Angeles Vein.

The San Gonzalo is a typical narrow vein precious metal deposit with some erratic values and extends approximately 2 km to the northwest to the Santa Ana-Malinche area (Gunning 2009).

The Cerro San Jose-La Estella-San Gonzalo Cerro San Jose represents a distinct hydrothermal centre with similar characteristics to the Avino system which include the following (Paulter 2006):

	·	occur on a topographic high

	·	strong to intense silicification and brecciation

	·	easterly trending stockwork system similar to the trend of the Avino Vein

	·	similar temperatures of formation to Avino

	·	presence of an intersecting northwesterly trending vein system (la Estella at San Jose and San Juventino at Avino)

	·	emplacement along a northerly trending, deep crustal fault zone (defined by the Aguila Mexicana Vein at Cerro San Jose and the felsic dyke at Avino).

7.2.3 OXIDE AND SULPHIDE TAILINGS

The Avino tailings dam is located approximately 500 m west-southwest of the main shaft to the old underground workings and 2.5 km southwest of the San Gonzalo Vein. An orthogonal view of the oxide tailings deposit, looking northwards and with the drillholes indicated, is shown in Figure 7.2.

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Figure 7.2 Orthogonal View of the Oxide Tailings Deposit and Drillholes

Within the tailings dam, there are three distinct benches:

	·	lower oxide bench

	·	middle oxide bench

	·	upper bench or sulphide bench.

Due to the historical processing sequence, the oxide tailings are primarily derived from weathered and oxidized rocks close to the surface on the Property, whereas the sulphide tailings are predominantly derived from material sourced at depth from the underground workings, below the weathered/leached zone.

The oxide tailings (both the middle and lower benches) have been analyzed in greater details than the sulphide tailings, and are included in the current mineral resource for the oxide tailings. The sulphide tailings, in the absence of any definitive sampling data penetrating the depth of the pile, are an exploration target (Section 14.15).

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8.0 DEPOSIT TYPES

Regionally, the Property is situated within a 12 km by 8.5 km caldera that hosts numerous low- to intermediate-sulphidation silver-gold epithermal veins, breccias, stockwork and silicified zones, grading into a “near porphyry” environment in the Avino Mine area.

The historic mining on the Property was on the Avino Vein, a silver-gold-copper rich epithermal vein. The San Gonzalo Vein, however, has a much lower copper content than the Avino Vein and is more equivalent to other silver-lead-zinc deposits of the Sierra Madres.

Low-sulphidation vein systems are commonly characterized by low concentrations of sulphide minerals, alteration mineralogy dominated by quartz-adularia-sericite, and a lack of extensive wall-rock alteration. Conversely, high-sulphidation vein systems are commonly characterized by sulphur saturation leading to the presence of native sulphur and sulphide minerals, quartz-alunite alteration, and extensive wall-rock alteration. The Mexican silver deposits are usually within the intermediate sulphidation range, rather than either of the end member classifications.

In Mexico, and particularly within the Mexican Silver Belt, these types of deposits can have large lateral extents, but may be limited vertically. There are many silver-gold mines in Mexico, some of which form large mining districts, and others that exploit multiple veins over limited vertical horizons that are sometimes only 100 m in depth (Gunning 2009).

On the Property, the oxide tailings have been predominantly sourced from earlier open pit operations and the sulphide tailings have been predominantly sourced from later underground workings. Exposure to surface weathering and historic process activities has homogenised the oxide tailings material to produce a deposit with little or no sulphides.

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9.0 EXPLORATION

9.1 EARLY EXPLORATION (PRIOR TO MINE CLOSURE), 1968 TO 2001

Exploration on the Property has been ongoing since before production commenced, and the majority of the recorded work has been focused on the main Avino Vein and surrounding area. The following is a summary of significant exploration work conducted either by Avino, or on behalf of Avino, until the mine closed in 2001.

Pre-production exploration was carried out by CMMA and others, and covered 2,500 m of drifting and cross-cuts, as well as 8,000 m of surface and underground diamond drilling. Extensive rehabilitation was completed involving Selco, including connecting three of the old—possibly pre-1900—underground mine workings.

In 1970, a contract was signed with Selco, who spent more than US$1 million in exploration and feasibility studies before returning the Property back to CMMA in 1972, reportedly because of low metal prices. The majority of the documentation examined covered feasibility work and was related to investigations of old underground workings that were likely developed in the late 1800s. A contract was signed in October 1973 with S.G.L. Ltd. and Sheridan Geophysics Ltd., under which a new 500 t/d plant was completed in May 1974.

Since 1992 exploration in/for the mine has been limited to traditional underground mine development with associated sampling and planning for production feed. In the late 1990s it appears that development was not kept up as company monthly reports showed decreasing historical reserve allocations for production and mill feed.

The only recorded property exploration, apart from limited prospecting, is documented in the 1993 report by Servicios Administratos Luismin, SA de CV, the engineering branch of Cía Minera de San Luis Exploration. The study reported on detailed analysis and sampling of the then known showings on the Property with the emphasis on the Avino Vein and Potosina/El Fuerte area. The extensive underground sampling program carried out by Luismin provided later direction for underground mining. The report made recommendations for follow-up for drilling and underground development for the main Avino Vein, as well as trenching and drilling recommendations for the Potosina/El Fuerte area. It is believed that these recommendations were never implemented for the prospective areas. Additionally, the report included a property-scale geological mapping and lithogeochemical sampling program which was contoured and coloured for gold, silver, copper, lead, zinc, arsenic, antimony and mercury.

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Durango, Mexico

Other notable observations from the study include the following:

	·	All mineralization, except for Nuestra Senora and Potosina/El Fuerte radiate outwards in a west to north-west direction from the Cerro San Jose. The Cerro San Jose is a silicified and partly hornfelsed body of volcanic rock probably overlying an intrusive stock, which could have been the source of most mineralization on the Property.

	·	Mineralization in all radiating structures is described as being strongest 2 to 3 km from Cerro San Jose. This resembles many of the gold deposits in Nevada where the source of mineralization is a near surface acid-intrusive but with mineralized bodies lying 1 to 5 km away along high angle faults.

	·	The two strongest and widest structures appear to be the Avino and Aguila Mexicana veins.

	·	The Avino Vein has three main mineralized zones—San Luis, ET (La Gloria/Hundido) and Chirumbo areas—which rake to the west and are open at depth.

	·	The existence of other mineralization cutting the Cerro San Jose mineralization in the Nuestra Senora and Potosina/El Fuerta areas could offer the potential for bulk mineable stockwork zones.

Assay values from outcrop sampling of surface-mapped veins towards the San Jose hill ranged from lows of 2 g/t silver and trace gold over true thicknesses from 0.1 to 2.3 m up to a high of 755 g/t silver with a corresponding 1.5 g/t gold over a thickness of 0.45 m.

No systematic sampling, trenching or drilling of either the outcrops or the veins is known to have occurred during the program undertaken in 1993.

9.2 RECENT EXPLORATION, 2001 TO PRESENT

Since mine closure in 2001, Avino has intermittently conducted exploration work on the Property, with the intention of expanding and better defining known areas of mineralization. Historic near-to-surface mining activities are being relied upon for guidance, and modern techniques are being employed to integrate, manage and interpret results. Included in the list of exploration activities is an induced polarization (IP) geophysical survey, 1,500 soil samples, satellite imagery, mapping, trenching, tailings investigations, bulk sampling, and underground channel sampling.

9.2.1 TAILINGS INVESTIGATIONS (OXIDES), 2003 AND 2004

Two specific mineralogical assessments were conducted in 2003 and 2004 on samples from the tailings on the Property. The purpose of the program was to provide data for independent investigation of the 1990 drilling results on the oxide tailings (discussed in Section 10.0) in terms of verifying assay grades and volumes, as well to examine the metallurgical characteristics of the material. The results and implications of these findings are discussed further in Section 13.0.

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Durango, Mexico

The following information regarding the 2004 sampling is summarized from Slim (2005d).

The 2004 tailings field-work was under the direction of MineStart and excavation of the sample pits was under contract to Desarrollos Rod Construcciones of Durango. Given the hydraulic deposition of the tailings, four important factors required examination: anomaly characteristics of the samples and total population, assay comparison by fence, examination of downstream decrease in assays and factors arising from the downstream construction.

Comparison of the 2004 assays with those from 1990 show consistency in assay values and provide confidence in the 1990 sampling and assaying program.

The preliminary investigations in 2003 showed the need for a sampling of the oxide tailings to validate the assay results of the 1990 drilling and to carry out metallurgical characterization, the latter requiring large samples.

The sampling exercise carried out in 2004, using shallow (4 m deep) backhoe trenches and hand-dug pits, represented a local corroboration of the previous sampling but could not be considered to constitute a representative random sampling of the oxide tailings.

The trench sampling material (Z-series) from the 1993 campaign was also considered to be non-representative.

9.2.2 TAILINGS SAMPLING (SULPHIDES), 2005

Some sampling was carried out in 2005 by means of hand-dug pits on the “upper bench” of sulphide tailings. The silver and gold values generally ranged from 40.0 to 100.0 g/t and 0.3 to 0.6 g/t, respectively. While these values give a general idea of the potential grade of the sulphide tailings, they have not been verified to be representative of the sulphide tailings, even at a local scale.

9.2.3 BULK SAMPLE PROGRAM OF SAN GONZALO VEIN, 2011

Avino completed a 10,000 t bulk sample program at the San Gonzalo deposit following a comprehensive review of the data and discussions with Tetra Tech. The bulk sample feed grade was 261 g/t silver and 0.9 g/t gold. Silver and gold recoveries were stated to be 76% and 59%, respectively, and 232 dry tonnes of flotation concentrate were produced.

9.2.4 UNDERGROUND CHANNEL SAMPLING OF SAN GONZALO AND AVINO VEINS, 2010 TO PRESENT

Underground channel sampling began in 2010 and has continued to the present at ET Mine (Avino Vein System) and San Gonzalo Mine. Channel sampling generated since 2010 data are summarized in

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Durango, Mexico

Table 9.1 Summary Underground Channel Sampling by Level for the Avino (ET) Underground Mines


Level	Elevation (m)	Number of Channels	Total Sampled (m)	Average Channel Length (m)	Ag (g/t)	Au (g/t)	Cu (%)
6.5	2,271.0	97	373.6	3.9	113.01	0.98	0.51
7	2,241.8	195	1,197.6	6.1	72.50	0.42	0.44
7.5	2,212.8	33	230.5	7.0	66.15	0.49	0.50
8	2,199.1	79	486.3	6.2	141.32	1.14	0.22
8.5	2,171.9	87	576.9	6.6	123.19	1.37	0.48
9	2,147.1	178	1,343.8	7.5	121.65	1.52	0.57
9.5	2,128.0	84	768.2	9.1	122.42	2.26	0.76
10	2,115.0	399	2,905.9	7.3	72.12	0.60	0.49
10.5	2,101.0	207	1,468.0	7.1	106.90	0.77	0.65
11	2,083.0	127	1,214.7	9.6	87.57	0.48	0.73
11.5	2,067.2	171	1,289.9	7.5	89.65	0.44	0.63
12	2,051.0	133	1,092.0	8.2	94.87	0.41	0.76
12.5	2,034.3	173	1,356.5	7.8	84.94	0.51	0.69
13	2,016.1	106	645.8	6.1	61.64	0.24	0.63
13.5	1,995.5	75	386.3	5.2	57.01	0.24	0.51
14	1,975.0	107	578.0	5.4	54.56	0.13	0.52
14.5	1,954.3	419	2,622.4	6.3	54.18	0.38	0.56
15	1,932.5	390	2,341.1	6.0	63.98	0.48	0.58
15.5	1,910.0	379	2,182.4	5.8	59.15	0.41	0.57
16	1,886.5	63	433.6	6.9	49.69	0.28	0.51

Table 9.2 Summary of Underground Channel Sampling by Level for the San Gonzalo Mine


Level	Elevation (m)	Number of Channels	Total Sampled (m)	Average Channel Length (m)	Ag (g/t)	Au (g/t)	Cu (%)
1	2,311.9	114	272.8	2.4	157.65	0.43	-
2	2,265.3	314	840.6	2.7	115.75	0.40	-
3	2,218.3	378	1,046.1	2.8	119.92	0.41	-
4	2,180.0	685	1,814.2	2.6	241.59	1.15	-
5	2,138.5	740	2,031.9	2.7	285.70	1.57	-
6	2,091.8	603	1,667.8	2.8	186.70	1.14	-
6.5	2,064.4	243	682.4	2.8	177.17	0.86	-
7	2,046.9	190	517.4	2.7	111.50	0.71	-
7.5	2,020.0	114	295.6	2.6	179.90	1.01	-

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9.2.5 UNDERGROUND CHANNEL SAMPLING OF SAN GONZALO AND ANGELICA VEINS, 2010-PRESENT

Underground channel sampling began in 2010 and has continued to the present. Channel sampling between 2010 and 2012 was summarized in Tetra Tech (2013). Results of underground sampling since 2013 are summarized in Table 9.2.

Figure 9.1 and Figure 9.2 show the location of all channels, colour coded by grade, included in the current resource estimate (Section 14.2), within and adjacent to the Avino and San Gonzalo Vein systems respectively. Drillholes are also shown for orientation.

Figure 9.1 Channel and Drillhole Samples, Colour Coded by Silver Grade, within the Avino System

Figure 9.2 Channel Samples, Colour Coded by Silver Grade, within the San Gonzalo Vein System

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Durango, Mexico

10.0 DRILLING

Drilling activities performed by Avino since acquisition of the Property are summarized in the following sections. Drillhole assay results have been previously reported (except ET-12-07 to ET-12-09; Appendix A) by Gunning (2009), Tetra Tech (2012) and Tetra tech (2013) and are not disclosed here.

10.1 EARLY DRILLING (PRIOR TO MINE CLOSURE), 1968 TO 2001

10.1.1 AVINO VEIN

Between 1968 and 2001, at least 25 diamond drillholes, ranging in length from 132.20 to 575.20 m, are reported to have been drilled from surface into the Avino Vein. Included in this total are 10 holes that were drilled by Selco in 1970 when they were re-habilitating some of the old underground workings to provide access for sampling (Slim 2005d). No further information on these drillholes was available to ARANZ Geo and they are not included in the resource estimate for the Avino Vein.

10.1.2 OXIDE TAILINGS, 1990 TO 1991

Between November 10 and December 5, 1990 and March 8 and May 30, 1991, Avino completed six trenches and 28 vertical drillholes in the tailings (Table 10.1) along 7 fences at a spacing of roughly 50 m by50 m (Figure 10.1) (Benitez Sanchez 1991). Drilling was completed transversely to the drainage pattern of the tailings. Cut at 1 m vertical increments, 461 samples were assayed for silver and gold at the mine assay lab and occasional moisture contents were reported. Assay results from these drillholes have been previously reported (Tetra Tech 2012). Although the Z-series trenches are included in Table 10.1 and Figure 10.1, they are not included in the oxide tailings resource estimate (Section 14.3) as they are not considered representative of the tailings at a local scale (see Section 9.2.1). During 2015 and 2016 further drilling was carried out on the oxide tailings.

10.2 RECENT DRILLING (POST-MINE CLOSURE), 2001 TO PRESENT

A total of 37 drillholes have been completed on the Avino Vein system and 101 holes 21,253 m San Gonzalo Vein system, totalling almost 34,100 m. Additional exploration holes have been drilled elsewhere on the Property, but those drilling results are not considered material. Most holes were surveyed downhole using a Tropari single-shot magnetic instrument.

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Durango, Mexico

10.2.1 AVINO VEIN

Since 2016, 5,510 m (34 holes see Figure 10.1) were drilled in an infill program in the San Luis/Avino Vein system. In 2017, 1,478 m (7 holes, see Figure 10.1) were drilled in the Chirumbo section (eastern extension) of the Avino Vein. A total of 20,967 m (85 holes, see Table 10.1) of documented drilling has been used for Mineral Resource estimation on the Avino Vein system.

10.2.2 SAN GONZALO VEIN

A total of 22, 617 m (110 holes, see Table 10.4 of documented drilling has been used for Mineral Resource estimation on the San Gonzalo vein system.

Figure 10.1 Drillholes Completed from 2016 to 2017 on the Avino-San Luis Infill and Chirumbo, Guadalupe and San Juventino Areas

10.2.3 SAN JUVENTINO AND GUADALUPE VEINS

During 2016 and 2017, exploration drilling was carried out on the San Juventino and Guadalupe veins (see Figure 10.2 and Table 10.5). These veins are strategically positioned next close to and between the ET and San Gonzalo mining operations. A total of 936 m (6 holes) of documented drilling has been drilled on the Guadalupe Vein. A total of 846 m (5 holes) of documented drilling has been drilled on the San Juventino Vein.

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Durango, Mexico

Figure 10.2 Location of Drillholes Completed from 2016 to 2017 on Drillholes Completed from 2016 to 2017 on the Guadalupe and San Juventino Veins

Table 10.1 Drillholes Completed from 2007 to 2016 on the San Gonzalo Vein

Hole ID

Azimuth

(°)

Dip

(°)

Easting

(m)

Northing

(m)

Elevation

(m)

Depth

(m)

SG-07-01

43

60

571713

2713982

2,297

386.8

SG-07-02

38

48

571714

2713983

2,297

323.7

SG-07-03

74

43

571714

2713981

2,297

315.0

SG-07-04

53

49

571651

2714059

2,276

312.7

SG-07-05

59

69

571650

2714058

2,276

137.0

SG-07-06

55

58

571650

2714058

2,276

387.2

SG-07-07

44

44

571578

2714117

2,281

281.6

SG-07-08

43

55

571578

2714116

2,281

383.7

SG-07-09

38

45

571677

2714137

2,277

106.6

SG-07-10

53

58

571677

2714136

2,277

162.9

SG-07-11

15

49

571676

2714135

2,277

158.6

SG-07-12

89

53

571678

2714133

2,277

175.5

SG-07-13

55

49

571770

2713993

2,315

160.6

SG-07-14

54

53

571716

2713972

2,297

295.2

SG-07-15

218

49

571689

2714268

2,296

96.2

SG-07-16

219

54

571552

2714354

2,285

99.9

SG-07-17

252

55

571428

2714421

2,268

69.8

SG-07-18

218

65

571765

2714318

2,293

238.1

table continues…

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Durango, Mexico

Hole ID

Azimuth

(°)

Dip

(°)

Easting

(m)

Northing

(m)

Elevation

(m)

Depth

(m)

SG-07-19

257

66

571763

2714320

2,293

344.9

SG-07-20

215

67

571650

2714345

2,281

247.4

SG-07-21

38

53

571713

2713979

2,297

295.0

SG-07-22

218

54

572007

2714128

2,343

232.5

SG-07-23

216

70

572007

2714128

2,343

303.5

SG-07-24

217

53

571969

2714077

2,351

124.4

SG-07-25

216

65

571969

2714078

2,351

190.5

SG-07-26

216

69

572033

2714172

2,337

395.4

SG-07-27

218

55

572078

2714077

2,345

237.8

SG-07-28

218

74

572078

2714078

2,345

319.5

SG-07-29

221

43

572033

2714010

2,356

103.6

SG-07-30

221

64

572034

2714010

2,356

158.4

SG-07-31

218

43

571954

2714056

2,352

104.8

SG-07-32

223

70

572122

2714135

2,330

408.0

SG-07-33

211

43

572069

2714009

2,353

130.6

SG-07-34

210

58

572069

2714010

2,353

183.1

SG-07-35

211

68

572069

2714010

2,353

272.2

SG-07-36

215

41

572050

2713959

2,358

102.2

SG-07-37

219

53

572115

2713975

2,351

154.4

SG-07-38

221

67

572115

2713975

2,351

214.2

SG-07-39

220

73

572120

2713898

2,353

128.1

SG-07-40

220

74

571899

2714211

2,321

516.1

SG-08-01

35

51

571776

2713974

2,314

210.1

SG-08-02

215

57

571964

2714167

2,335

269.1

SG-08-03

215

70

571964

2714168

2,335

332.0

SG-08-04

215

63

572029

2714121

2,343

270.0

SG-08-05

35

55

571701

2713893

2,285

475.3

SG-08-06

48

64

571679

2714137

2,277

226.4

SG-11-01

215

59

571981

2714009

2,357

101.0

SG-11-02

215

63

571995

2714030

2,355

141.2

SG-11-03

215

44

572020

2713994

2,357

98.5

SG-11-04

212

54

571969

2714079

2,351

176.5

SG-11-05

40

43

571892

2713832

2,317

151.4

SG-11-06

189

44

571732

2714379

2,274

122.3

SG-11-07

30

68

572030

2713946

2,358

74.0

SG-11-08

37

67

572043

2713888

2,360

125.4

SG-11-09

181

48

571585

2714366

2,278

71.1

SG-11-10

201

61

571240

2714538

2,235

78.4

SG-11-11

201

61

571329

2714397

2,274

92.0

SG-11-12

218

71

571811

2714288

2,305

312.2

SG-11-13

218

71

571847

2714258

2,310

345.4

SG-11-14

209

61

571939

2714214

2,326

330.5

table continues…

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Hole ID

Azimuth

(°)

Dip

(°)

Easting

(m)

Northing

(m)

Elevation

(m)

Depth

(m)

SG-11-15

211

68

572030

2714172

2,337

363.5

SG-11-16

209

62

572092

2714173

2,331

334.3

SG-11-17

210

70

571836

2714336

2,306

383.1

SG-11-18

218

71

571765

2714321

2,293

318.2

SG-14-01

287

54

571858

2714156

2,086

156.6

SG-14-02

258

60

571858

2714155

2,086

120.1

SG-14-03

160

71

571861

2714153

2,086

173.0

SG-14-04

199

70

571688

2714270

2,296

120.0

SG-14-05

219

70

572157

2714044

2,330

346.8

SG-14-06

207

79

572158

2714044

2,331

411.0

SG-14-07

210

27

572284

2714059

2,297

248.3

SG-14-08

209

58

572285

2714061

2,298

336.0

SG-14-09

208

68

572285

2714061

2,297

401.8

SG-14-10

213

50

572293

2713911

2,300

235.3

SG-14-11

37

-2

571865

2714159

2,087

224.2

SG-14-12

286

52

571896

2714157

2,044

185.0

SG-14-13

209

62

571898

2714156

2,043

213.4

SG-14-14

208

33

572294

2713912

2,300

192.2

SG-14-15

210

72

572294

2713912

2,300

257.4

SG-15-01

237

40

571874

2714128

2,043

75.2

SG-15-02

187

42

571875

2714128

2,043

81.7

SG-15-03

148

30

571878

2714126

2,043

75.8

SG-15-04

280

43

571873

2714130

2,043

98.8

SG-15-05

163

52

571878

2714127

2,043

58.0

SG-15-06

242

73

571876

2714129

2,043

106.4

SG-15-07

258

0

572234

2713841

2,139

44.0

SG-15-08

13

0

572255

2713906

2,138

16.2

SG-15-09

215

36

572255

2713894

2,138

99.6

SG-15-10

260

32

572252

2713896

2,137

90.5

SG-15-11

204

71

571672

2714298

2,292

150.0

SG-15-12

192

83

571672

2714298

2,291

200.8

SG-15-13

240

0

572288

2713887

2,138

74.5

SG-15-14

216

58

571652

2714345

2,280

145.8

SG-15-15

216

76

571652

2714346

2,280

195.7

SG-15-16

90

0

572288

2713888

2,138

100.8

SG-15-17

226

68

571593

2714352

2,282

145.3

SG-15-18

215

30

572479

2713867

2,284

209.8

SG-15-19

214

52

572480

2713868

2,283

290.9

SG-15-20

210

52

572586

2713740

2,309

218.8

SG-15-21

212

20

572584

2713739

2,309

145.6

SG-15-22

218

71

572570

2713772

2,303

350.0

SG-15-23

213

59

572702

2713747

2,284

251.8

table continues…

Avino Silver & Gold Mines Ltd.

10-5

704-ENG-VMIN03003-02

Amended Mineral Resource Estimate Update for the

Avino Property,

Durango, Mexico

Hole ID

Azimuth

(°)

Dip

(°)

Easting

(m)

Northing

(m)

Elevation

(m)

Depth

(m)

SG-15-24

215

28

572700

2713745

2,284

187.7

SG-16-01

250

68

571428

2714421

2,268

147.7

SG-16-02

250

77

571428

2714421

2,268

167.8

SG-16-03

208

51

571339

2714462

2,256

74.8

SG-16-04

193

79

571340

2714463

2,256

111.0

SG-16-05

190

75

571347

2714495

2,248

159.6

SG-16-06

215

69

571300

2714500

2,245

171.7

SG-16-07

215

54

571299

2714499

2,245

89.5

Note: Datum NAD27 Mexico

Table 10.2 Drillholes Completed from 2001 to 2017 at ET Mine (includes San Luis, Avino vein and Chirumbo

Hole ID

Azimuth

(°)

Dip

(°)

Easting

(m)

Northing

(m)

Elevation

(m)

Depth

(m)

BDD-5-1

329

0

570712

2712933

2,242

53.3

BDVD1

38

55

570374

2712575

2,248

100.1

CH-06-03

331

51

571013

2712796

2,208

454.3

DDH-1-1950

340

45

570481

2712348

2,193

433.1

DDH-1-2200

359

45

570025

2712487

2,232

151.1

DDH-2-2075

340

45

570296

2712488

2,221

287.1

DDH-2-2200

0

50

570155

2712550

2,252

178.8

DDH-3-2200

0

50

570286

2712594

2,258

175.1

DDH-4-1950

340

70

570302

2712480

2,220

331.7

DDH-8-2200

0

45

569961

2712489

2,232

162.0

ET-06-01

337

55

570271

2712262

2,187

431.2

ET-06-02

340

50

570337

2712309

2,190

416.7

ET-06-03

339

48

570457

2712361

2,194

421.2

ET-06-04

340

50

570501

2712468

2,215

444.1

ET-07-01

1

70

570176

2712453

2,222

298.6

ET-07-02

358

75

570206

2712467

2,224

311.9

ET-07-03

336

71

570344

2712498

2,226

349.5

ET-07-04

331

56

570440

2712511

2,226

318.7

ET-07-05

333

66

570440

2712510

2,226

351.5

ET-07-06

336

55

570520

2712524

2,225

320.1

ET-07-07

330

57

570585

2712569

2,230

304.9

ET-07-08

346

69

570584

2712569

2,231

399.7

ET-07-09

336

62

570629

2712604

2,235

328.6

ET-07-10

338

62

570645

2712650

2,245

308.7

ET-07-11

337

69

570682

2712654

2,241

329.8

ET-07-12

337

48

570735

2712654

2,234

284.7

ET-08-01

329

45

570807

2712712

2,236

221.5

ET-08-02

330

55

570341

2712549

2,244

234.5

table continues…

Avino Silver & Gold Mines Ltd.

10-6

704-ENG-VMIN03003-02

Amended Mineral Resource Estimate Update for the

Avino Property,

Durango, Mexico

Hole ID

Azimuth

(°)

Dip

(°)

Easting

(m)

Northing

(m)

Elevation

(m)

Depth

(m)

ET-08-03

330

65

570341

2712549

2,244

265.1

ET-08-04

336

65

570588

2712568

2,231

358.7

ET-08-05

336

67

570658

2712629

2,245

371.1

ET-08-06

336

60

570676

2712654

2,243

292.5

ET-08-07

336

60

570747

2712656

2,234

160.4

ET-08-08

336

45

570906

2712766

2,227

269.1

ET-12-01

336

63

570354

2712501

2,226

288.2

ET-12-02

337

53

570507

2712472

2,214

360.9

ET-12-03

336

59

570507

2712471

2,214

367.8

ET-12-04

339

64

570544

2712497

2,216

373.6

ET-12-05

336

62

570566

2712508

2,218

369.2

ET-12-06

334

70

570589

2712523

2,219

396.1

ET-12-07

334

63

570678

2712594

2,227

327.6

ET-12-08

333

71

570678

2712594

2,227

384.4

ET-12-09

329

72

570646

2712555

2,222

395.4

ET-16-01

338

21

570395

2712660

2,278

151.3

ET-16-02

336

44

570396

2712658

2,277

152.4

ET-16-03

338

47

570325

2712641

2,273

161.8

ET-16-04

340

45

570275

2712634

2,270

126.6

ET-16-05

339

42

570295

2712566

2,251

196.0

ET-16-06

6

74

570221

2712667

2,291

118.0

ET-16-07

320

73

570183

2712656

2,287

89.5

ET-16-08

337

47

570399

2712606

2,261

194.3

ET-16-09

337

49

570411

2712570

2,247

237.5

ET-16-10

9

21

570195

2712466

2,224

254.2

ET-16-11

2

44

570179

2712458

2,224

265.1

ET-16-12

359

63

570148

2712465

2,226

266.6

ET-17-01

360

62

569935

2712576

2,263

103.8

ET-17-02

358

55

569881

2712568

2,243

100.8

ET-17-03

360

34

569861

2712588

2,244

85.9

ET-17-04

251

90

569861

2712585

2,244

182.7

ET-17-05

321

89

569830

2712600

2,244

91.5

ET-17-06

338

48

570301

2712635

2,271

144.5

ET-17-07

337

29

570301

2712635

2,271

121.5

ET-17-08

336

54

570264

2712631

2,269

119.3

ET-17-09

337

31

570263

2712632

2,269

101.5

ET-17-10

339

23

570349

2712649

2,274

129.3

ET-17-11

336

24

570436

2712672

2,280

143.4

ET-17-12

348

60

570200

2712661

2,288

80.7

ET-17-13

349

29

570200

2712663

2,288

62.2

ET-17-14

339

31

570375

2712735

2,311

61.0

ET-17-15

341

19

570304

2712697

2,302

80.3

table continues…

Avino Silver & Gold Mines Ltd.

10-7

704-ENG-VMIN03003-02

Amended Mineral Resource Estimate Update for the

Avino Property,

Durango, Mexico

Hole ID

Azimuth

(°)

Dip

(°)

Easting

(m)

Northing

(m)

Elevation

(m)

Depth

(m)

ET-17-16

1

21

570197

2712460

2,223

247.6

ET-17-17

358

53

570197

2712460

2,223

261.6

ET-17-18

355

38

570236

2712452

2,219

249.5

ET-17-19

356

52

570155

2712467

2,226

225.7

ET-17-20

336

51

570369

2712554

2,243

220.3

ET-17-21

336

59

570357

2712552

2,243

248.4

ET-17-22

357

9

570236

2712454

2,220

234.9

ET-17-23

345

50

570999

2712915

2,225

190.6

ET-17-24

337

45

570964

2712882

2,230

208.2

ET-17-25

339

38

570965

2712962

2,232

140.8

ET-17-26

338

38

570888

2712934

2,268

160.0

ET-17-27

341

46

570926

2712854

2,229

223.3

SELCO-2-1800

342

68

570435

2712337

2,194

575.2

SELCO-3

339

53

570357

2712451

2,217

325.7

SELCO-4A

350

60

570070

2712396

2,214

251.0

Note: Datum NAD27 Mexico

Table 10.3 Drillholes Completed from 2017 to 2018 at Guadalupe and San Juventino

Hole ID	Azimuth (°)	Dip (°)	Easting (m)	Northing (m)	Elevation (m)	Depth (m)
GPE-17-01	208	51	571382	2713655	2,298	179.7
GPE-17-02	208.1	39	571489	2713624	2,291	179.7
GPE-17-03	208	44	571290	2713657	2,298	92.5
GPE-17-04	199	32	571554	2713639	2,292	193.2
GPE-17-05	181.5	56	571554	2713522	2,326	110.4
GPE-17-06	180	48	571708	2713531	2,341	180.8
SJV-17-01	19	41	571077	2713002	2,243	180.9
SJV-17-02	348	35	571038	2713020	2,251	140.9
SJV-17-03	19	35	571037	2713025	2,251	222
SJV-17-04	16	48	571091	2712908	2,221	190.2
SJV-17-05	337	35	571007	2712994	2,237	112.1

Note: Datum NAD27 Mexico

10.2.4 OXIDE TAILINGS

During 2015 and 2016, Avino drilled 57 new holes on the oxide tailings deposit. Collar coordinates are provided in Table 10.4. Drillholes completed before 2015 on the oxide tailings have been previously reported (Tetra Tech 2013). A location map of oxide tailings drillholes is provided in Figure 10.3. The 2015/16 holes are indicated in red.

Avino Silver & Gold Mines Ltd.

10-8

704-ENG-VMIN03003-02

Amended Mineral Resource Estimate Update for the

Avino Property,

Durango, Mexico

Table 10.4 Drillholes Drilled on Oxide Tailings 2003-2016

Hole ID

Azimuth

(°)

Dip

(°)

Easting

(m)

Northing

(m)

Elevation

(m)

Depth

(m)

A1

0

90

570205

2712340

2,203.8

5.2

A2

0

90

570184

2712306

2,203.5

7.2

A3

0

90

570192

2712267

2,203.1

8.2

A4

0

90

570167

2712236

2,203.0

9.2

A5

0

90

570175

2712197

2,202.9

15.2

A6

0

90

570152

2712167

2,202.0

18.2

A7

0

90

570159

2712128

2,201.0

16.2

A8

0

90

570150

2712094

2,200.4

8.2

B1

0

90

570132

2712365

2,217.1

10.2

B2

0

90

570114

2712318

2,216.7

19.2

B3

0

90

570101

2712268

2,216.4

26.6

B4

0

90

570079

2712207

2,216.1

23.7

B5

0

90

570082

2712140

2,214.3

18.2

C1

0

90

570085

2712383

2,217.6

8.7

C2

0

90

570077

2712354

2,217.1

15.2

C4

0

90

570049

2712250

2,216.1

24.2

C5

0

90

570028

2712164

2,216.0

14.2

C6

0

90

570017

2712117

2,216.4

10.2

D1

0

90

570029

2712373

2,217.6

13.2

D2

0

90

570018

2712329

2,216.7

19.2

D3

0

90

570003

2712273

2,217.6

19.7

D4

0

90

569962

2712167

2,215.9

6.2

E1

0

90

569977

2712369

2,216.5

13.2

E2

0

90

569960

2712311

2,216.1

18.7

E3

0

90

569952

2712267

2,215.8

12.2

F1

0

90

569936

2712401

2,216.4

18.7

F2

0

90

569926

2712364

2,216.1

16.2

F3

0

90

569915

2712324

2,215.8

15.2

PJ-15-01

0

90

570191

2712415

2,219.5

6.5

PJ-15-02

0

90

570183

2712386

2,219.2

12.4

PJ-15-03

0

90

570173

2712357

2,218.6

13.4

PJ-15-04

0

90

570168

2712327

2,217.7

18.9

PJ-15-05

0

90

570160

2712298

2,216.8

21.8

PJ-15-06

0

90

570153

2712269

2,216.4

8.3

PJ-15-06A

0

90

570155

2712277

2,216.5

26.8

PJ-15-07

0

90

570143

2712241

2,215.7

28.5

PJ-15-08

0

90

570128

2712212

2,219.5

28.0

PJ-15-09

0

90

570093

2712157

2,214.9

21.2

PJ-15-10

0

90

570101

2712184

2,215.2

27.0

PJ-15-11

0

90

570109

2712215

2,216.8

28.5

PJ-16-01

0

90

570116

2712245

2,216.7

27.9

table continues…

Avino Silver & Gold Mines Ltd.

10-9

704-ENG-VMIN03003-02

Amended Mineral Resource Estimate Update for the

Avino Property,

Durango, Mexico

Hole ID

Azimuth

(°)

Dip

(°)

Easting

(m)

Northing

(m)

Elevation

(m)

Depth

(m)

PJ-16-02

0

90

570124

2712274

2,217.2

26.4

PJ-16-03

0

90

570132

2712305

2,217.4

23.0

PJ-16-04

0

90

570139

2712335

2,218.0

18.0

PJ-16-05

0

90

570135

2712371

2,218.5

12.0

PJ-16-06

0

90

570154

2712393

2,219.2

8.0

PJ-16-07

0

90

570156

2712422

2,220.3

3.9

PJ-16-08

0

90

570111

2712340

2,218.8

18.0

PJ-16-09

0

90

570099

2712313

2,217.8

22.9

PJ-16-10

0

90

570091

2712284

2,216.9

27.5

PJ-16-11

0

90

570083

2712255

2,216.6

23.0

PJ-16-12

0

90

570078

2712223

2,216.0

24.1

PJ-16-13

0

90

570066

2712197

2,216.0

24.0

PJ-16-14

0

90

570057

2712168

2,215.9

20.0

PJ-16-15

0

90

570057

2712138

2,215.1

14.5

PJ-16-16

0

90

570020

2712120

2,215.8

9.5

PJ-16-17

0

90

570028

2712145

2,216.0

14.0

PJ-16-18

0

90

570035

2712177

2,215.9

13.1

PJ-16-19

0

90

570042

2712206

2,216.0

21.0

PJ-16-20

0

90

570050

2712234

2,217.1

26.0

PJ-16-21

0

90

570056

2712261

2,217.5

24.5

PJ-16-22

0

90

570029

2712232

2,218.2

21.5

PJ-16-23

0

90

570014

2712210

2,217.7

20.0

PJ-16-24

,0

90

569999

2712152

2,215.8

8.9

PJ-16-25

0

90

570004

2712125

2,216.2

8.4

PJ-16-26

0

90

570227

2712405

2,207.6

0.6

PJ-16-27

0

90

570219

2712377

2,206.3

0.5

PJ-16-27A

0

90

570218

2712373

2,206.0

0.7

PJ-16-28

0

90

570211

2712349

2,205.0

0.6

PJ-16-29

0

90

570188

2712322

2,205.5

7.9

PJ-16-30

0

90

570179

2712289

2,205.3

13.5

PJ-16-31

0

90

570173

2712261

2,205.8

16.0

PJ-16-32

0

90

570166

2712232

2,204.9

19.6

PJ-16-33

0

90

570159

2712206

2,204.5

17.0

PJ-16-34

0

90

570152

2712176

2,203.8

20.5

PJ-16-35

0

90

570141

2712147

2,202.9

13.7

PJ-16-36

0

90

570138

2712120

2,201.3

8.1

PJ-16-37

0

90

570130

2712090

2,200.6

4.3

PJ-16-38

0

90

570109

2712094

2,200.9

2.0

PJ-16-39

0

90

570116

2712122

2,201.7

6.0

PJ-16-40

0

90

570144

2712093

2,200.6

0.6

PJ-16-41

0

90

570049

2712386

2,245.9

28.5

PJ-16-42

0

90

570019

2712393

2,245.4

21.0

table continues…

Avino Silver & Gold Mines Ltd.

10-10

704-ENG-VMIN03003-02

Amended Mineral Resource Estimate Update for the

Avino Property,

Durango, Mexico

Hole ID

Azimuth

(°)

Dip

(°)

Easting

(m)

Northing

(m)

Elevation

(m)

Depth

(m)

PJ-16-43

0

90

570061

2712412

2,245.5

20.0

PJ-16-44

0

90

570052

2712443

2,245.5

5.0

Z1

100

30

570206

2712408

2,203.7

9.0

Z2

100

30

570189

2712363

2,203.7

16.0

Z3

100

30

570185

2712313

2,203.7

13.0

Z4

100

30

570174

2712266

2,203.7

13.0

Z5

100

30

570162

2712219

2,203.7

13.0

Z6

100

30

570150

2712173

2,203.7

14.0

Note: Datum NAD27 Mexico

Figure 10.3 Location of Drillholes Completed from 2015 to 2016 on the Oxide Tailings

Avino Silver & Gold Mines Ltd.

10-11

704-ENG-VMIN03003-02

Amended Mineral Resource Estimate Update for the

Avino Property,

Durango, Mexico

10.2.5 SPECIFIC GRAVITY RESULTS

Bulk density samples were analyzed from all 2006-2012 drilling programs on both the Avino and San Gonzalo Veins. Analytical procedures are discussed in Section 11.7. Table 10.5 summarizes the results of these specific gravity measurements.

Table 10.5 Avino and San Gonzalo Density Data Summary

Domain	Number	Minimum	Maximum	Mean	Variance	Coefficient of Variation
Avino Vein System
10 (Main)	40	2.53	3.00	2.71	0.02	0.05
20	42	2.43	2.90	2.68	0.01	0.03
wall rock	93	2.29	3.00	2.65	0.04	0.07
Combined	175	2.29	3.00	2.67	0.03	0.06
San Gonzalo Vein System
10	50	2.40	3.00	2.64	0.03	0.07
20	2	2.73	2.78	2.76	0.00	0.01
Wall Rock	41	2.40	3.00	2.69	0.02	0.05
Combined	93	2.40	3.00	2.67	0.03	0.06

Avino Silver & Gold Mines Ltd.

10-12

704-ENG-VMIN03003-02

Amended Mineral Resource Estimate Update for the

Avino Property,

Durango, Mexico

11.0 SAMPLE PREPARATION, ANALYSIS AND SECURITY

11.1 DRILLING AND TRENCHING OF OXIDE TAILINGS, 1990 TO 1991

The oxide tailings were sampled prior to institution of NI 43-101 and associated quality assurance (QA)/quality control (QC) requirements, and as such no QA/QC measures were utilized during the 1990-1991 program. As a result, the resource estimate for the oxide tailings in Section 14.3 is all classified as Inferred. Twenty-eight holes were drilled and six trenches completed, from which a total of 461 samples were collecting for assaying. The analyses were completed in the on-site laboratory, which is described in Section 11.7 and was visited during the site visit, as summarized in Section 12.4.

Avino’s current on-site, non-certified, laboratory facility consists of sample preparation, crushing and pulverizing, a fire assay and an atomic absorption (AA) section. However, the procedures and facilities used in 1990 to 1991 may be different from the current sample analysis procedures. Because of the uncertainty associated with these analyses, two separate verification exercises have been completed. Slim (2005d) collected several samples from the oxide tailings, and the results of this verification are discussed in Section 11.2. In 2012, Mr. M.F. O’Brien, QP, collected numerous verification samples from the oxide tailings, and these results are discussed in Section 12.3.2.

11.2 TAILINGS INVESTIGATIONS (TEST PITS IN OXIDE TAILINGS), 2004

The sampling method and approach adopted by Slim (2005d) on the test pits in the oxide tailings incorporated the following steps:

1. A backhoe was used to excavate sample pits to a depth of 4 m. Hand samples were taken at 1 m vertical increments from the sidewalls of each pit.

2. The sample mass collected from each sampling point generally amounted to between 2 and 5 kg.

3. The sampling program was ostensibly based on the 1990 CMMA sampling program. Fourteen sample pits were excavated to a depth of 4 m and generated 86 samples.

The samples were air-freighted to PRA labs in Vancouver, British Columbia, from Durango, Mexico. The samples had been initially bagged and sealed with identification tags attached. The samples were allotted new identification numbers, and were subsequently un-bagged and dried. The dry samples were individually mixed and blended, and then split into four one-quarter fractions as directed by Slim (2005d). One fraction was used to determine the head grade assay, while another quarter was used to create composite samples used for the subsequent metallurgical test work program. Instructions were followed with the compositing of the samples, and the test work program.

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Excess sample was archived for future test work or analyses. For analytical techniques employed during the test work program, the standard fire assay (with AA spectrophotometric finish) was initially used for the silver analyses.

However, this method is not very accurate for silver values of less than 100 g/t. Subsequently, the inductively coupled plasma spectroscopy method (ICP-MS), which uses multi-acid digestion, was used for silver. This method also resulted in analyses being obtained for other elements of interest (e.g. copper, zinc, lead, etc.). The standard fire assay method was used for gold analyses. Cyanide and lime concentrations were measured using standard titrimetric methods. Total sulphur was measured using a standard Leco furnace, and sulphide sulphur assays were measured using the standard wet chemical gravimetric analysis (Slim 2005d).

The PRA labs (part of Inspectorate labs) in Nevada and British Columbia are International Organization for Standardization (ISO) 9001:2008 certified, full service laboratories that are independent of Avino. ARANZ Geo did not independently verify nor compare the results of the sampling program.

11.3 DRILLING PROGRAM, SAN GONZALO, 2007 TO PRESENT

For the drilling programs at San Gonzalo, core is sawed at Avino's core storage facility at the secure mine site. Samples of vein material, usually from a few centimeters to 1.5 m, are placed and sealed in plastic bags, which are collected by personnel from Inspectorate Labs in Durango at the mine site facilities. Samples are prepared in Durango, and pulps are sent to the Inspectorate facility in Sparks, Nevada for analysis. Since 2016, all drill core samples have been sent to SGS Durango for sample preparation and assaying. Switch was made for faster turnaround times.

Sample preparation in Durango involves the initial drying of the entire sample. Two-stage crushing is used to create a product which is at least 80% minus 10 mesh. A Jones riffle splitter is then used to separate a nominal 300 g portion of the sample. This 300 g sub-sample is then pulverized to more than 90% passing a 150-mesh screen. Inspectorate Labs states that they use sterile sand to clean the pulverizer between samples (Gunning 2009).

Gold analyses are by 30 g fire assay with an AA finish. silver, zinc, and lead are analyzed as part of a multi-element inductively coupled argon plasma package using a four-acid digestion with over-limit results for silver being reanalyzed with assay procedures using fire assay and gravimetric. Avino employs a rigorous quality control program that includes standardized material, blanks, and core duplicates. However, for the 2007 program, Avino did not perform any independent QA/QC and relied on the internal QA/QC procedures completed by the labs (Gunning 2009).

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Inspectorate Labs in Nevada and British Columbia are ISO 9001:2008 certified, full service laboratories that are independent of Avino.

Avino used a series of standard reference materials (SRMs), blank reference materials (blanks) and duplicates as part of their QA/QC program during analysis of assays from San Gonzalo Vein drillholes. ARANZ Geo compiled and reviewed these results in Section 12.1.4.

11.4 DRILLING PROGRAMS, ET ZONE OF THE AVINO VEIN, 2006 TO PRESENT

Sample lengths of NQ drill core were diamond sawed into halves by mine staff and shipped to Inspectorate Labs in Durango for preparation into pulps and rejects. Pulps were analyzed at Inspectorate Labs in Sparks, Nevada. Gold and silver were analyzed by fire assay using aqua regia leach and AA finish. Other elements are reported from a 29-element ICP-MS package. Inspectorate Labs in Nevada and British Columbia are ISO 9001:2008 certified, full service laboratories that are independent of Avino. Sample preparation and analysis and QA/QC procedures are as described in Section 11.3.

Avino used a series of certified reference materials (CRMs), blank reference materials (blanks) and duplicates as part of their QA/QC program during analysis of assays from Avino Vein drillholes. ARANZ Geo compiled and reviewed these results in Section 12.1.4.

11.5 UNDERGROUND CHANNEL SAMPLING OF SAN GONZALO VEIN, 2010 TO PRESENT

Samples from channels cut across the San Gonzalo Vein were assayed by Inspectorate Labs. Samples were crushed and ground in Durango with pulps assayed in Richmond, British Columbia using fire assay and AA finish for gold, four acid digestion and AA for most silver with fire assay and gravimetric finish for very high silver. Base metals were analyzed via aqua regia digestion and ICP-MS. Inspectorate Labs in Durango and British Columbia are ISO 9001:2008 certified, full service laboratories that are independent of Avino. Sample preparation and analysis and QA/QC procedures are as described in Section 11.3.

For the 2011 bulk sampling program of San Gonzalo, samples were obtained from channels cut across the vein, and were assayed by Inspectorate Labs. Samples were crushed and ground in Durango with pulps assayed in Richmond, British Columbia using fire assay and AA finish for gold, four acid digestion and AA for most silver with fire assay and gravimetric finish for very high silver. Base metals were analyzed via aqua regia digestion and ICP-MS for base metals. Inspectorate Labs in Nevada and British Columbia are ISO 9001:2008 certified, full service laboratories that are independent of Avino.

Samples from 2012 and 2013 underground channel sampling of the San Gonzalo Vein are shipped to Inspectorate Labs for analysis for gold, silver, arsenic, bismuth, copper, molybdenum, lead, antimony, zinc, and mercury. Samples are crushed and ground in Durango with pulps assayed in Reno, Nevada using fire assay and AA finish for gold, four acid digestion and AA for most silver with fire assay and gravimetric finish for very high silver, and aqua regia digestion and ICP-MS for base metals. Inspectorate Labs in Nevada and British Columbia are ISO 9001:2008 certified, full service laboratories that are independent of Avino. Sample QA/QC procedures are as described in Section 11.3.

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11.6 AVINO LABORATORY

The Avino laboratory has fire assay, AA and sieving analysis equipment and has been recently upgraded with new AA equipment. A high standard of neatness and cleanliness is being maintained to reduce the risk of contamination. The laboratory was reviewed by Mr. O’Brien during site visits in 2012 and 2016.

11.7 SPECIFIC GRAVITY SAMPLES

Avino completed specific gravity measurements on drillcore from both the Avino and San Gonzalo Veins. All measurements were completed by Avino staff on the mine site. Two different methods were employed to obtain these specific gravity values: caliper volume calculation (CV) and water displacement (WD). The procedures followed for each method are summarized in the following sections.

A total of 262 samples were measured for bulk density, 110 from the Avino Vein and 152 from the San Gonzalo Vein. ARANZ Geo provides recommendations regarding specific gravity sampling procedures in Section 26.1.4 and a QP opinion in Section 12.5.1.

11.7.1 CALIPER VOLUME CALCULATION METHOD

The CV method of determining the specific gravity of drillcore samples involved the following procedures, based on the methodology outlined by Lipton (2001):

	·	Each measurement involves pieces of whole core with the ends neatly cut perpendicular to the core axis.

	·	The core diameter is determined using a pair of vernier calipers, and the diameter should be measured at several points along the length of core and averaged.

	·	The core length is measured using a tape measure.

	·	The mass is determined by weighing the core; weighing should be completed once the core is dried.

	·	The dry bulk density is calculated by: density = mass/volume where volume = Pi x (average core diameter/2) ² x core length.

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11.7.2 WATER DISPLACEMENT METHOD

The WD method of determining the specific gravity of drill core samples involved the following procedures, based on Archimedes’ Principle:

	·	The mass is determined by weighing the core; weighing should be completed once the core is dried.

	·	A graduated cylinder, of an appropriate size to completely submerse the core, is used to determine the volume. The volume of water in the graduated cylinder is measured prior to submersing the core.

	·	The core is then submersed in water in the graduated cylinder and the total volume is measured.

	·	The difference in the volume of water before and after sample submersion is the volume of the sample.

	·	The dry bulk density = mass/volume.

11.8 QP OPINION

ARANZ Geo is not aware of any drilling, sampling or recovery factors affecting the reliability of the samples. It is ARANZ Geo’s opinion that the sample preparation, security and analytical procedures followed by Avino are fit for the purpose of this Technical Report.

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12.0 DATA VERIFICATION

12.1 AVINO AND SAN GONZALO VEIN DRILLHOLE DATABASE VERIFICATION

ARANZ Geo compiled the drillhole data provided by Avino on a hole-by-hole basis, including drillhole collar, survey, lithology, and assay data.

During the site visit in June 2016, ARANZ Geo selected the following drillholes for verification in the core shack: ET-06-02, ET-07-01, ET-07-03, SG-15-03 and SG-14-02. Logging and cores showed good correspondence with no significant differences.

Collars for exploration drillholes are marked by concrete monuments and the collars have been surveyed. Subsequent collars have been similarly marked and were observed during a site visit in June 2016.

A check of the coordinates with a handheld global positioning system (GPS) during a site visit in 2016 revealed a possible 4 m constant error, which may indicate the existence of a small surveying error on the Property.

The QP opinion of the reliability of the Avino drillhole data is discussed in Section 12.5.1 and detailed recommendations are provided in Section 26.1.

12.1.1 COLLAR AND ASSAY DATA

Table 12.1 summarizes the database validation results. The Avino Vein lithology data for the older drillholes and upper portion of the mine, is very sparse owing to the age of the records. The upper part of the deposit model has consequently been modelled using assay data and development mapping information. As the deficient lithology information pertains mainly to parts of the deposit that have been mined out, ARANZ Geo does not consider it to be a material deficiency.

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Table 12.1 Number of Records and Discrepancies for the Avino Drillhole Data

Avino Vein

Number of
Records

Discrepancies

Discrepancy Rate
(%)

Avino Vein

Survey Data

3,330

-

2.2

No Surveys for Collar

2

Duplicate Collar and Surveys

3

Duplicate Survey Depths

67

Assays

16,906

0.3

No Sample for Collars

24

Overlapping Segments

8

Collar Max Depth Exceeded

15

Lithology

4,059

54.2

From to Depth Overelap

280

No Samples for Collar

1,916

Collar Max Depth Exceeded

2

San Gonzalo Vein

Survey Data

3,506

0.1

No Survey for Collar

1

Duplicate Collar and Surveys

0

Duplicate Survey Depths

0

Incomplete Survey Data

2

Assays

16,077

0.2

No Samples for Collars

23

Overlapping Segments

8

Collar Max Depth Exceeded

6

Lithology

15,043

0.3

From to Depth Overlap

0

No Samples for Collar

52

Collar Max Depth Exceeded

0

A previous validation exercise was completed for assay results from post-2009 drilling by Tetra Tech (2012). Original assay certificates were compared against the data as reported by Avino. Assay results from drillholes SG-11-13 to SG-11-17, and ET-12-01 to ET-12-09 were verified. For all metals in the database (gold, silver, copper, lead, zinc, and bismuth), the error incidence was less than 1%.

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12.1.2 DOWNHOLE SURVEY DATA

Downhole survey data exists for 87 of the 98 drillholes completed in the Avino and San Gonzalo Veins. Most drillholes have three or fewer downhole survey points, which is less frequent than typical industry practice. Many of these holes contain a survey data point at the collar and near the end of hole, and sometimes part-way down the hole. However, 26 of the 87 holes for which downhole survey data exists were not surveyed to within 10 m of the end of the hole. All measurements were completed by a magnetic survey method, which is not recommended in general, and particularly not in locations with extensive underground infrastructure such as those present on the Property. Given the abundance of historical infrastructure on the Property and the potential for any drillholes to intersect active workings, downhole survey measurements should be collected at a frequency of at least every 10 m and all drillholes should be cemented following completion.

Downhole survey data for hole SG-07-06 was disregarded below 50 m depth due to an unrealistic kink in the drillhole orientation below this depth, which could be due to an instrument malfunction or to magnetic interference.

12.1.3 GEOLOGY DATA AND INTERPRETATION

ARANZ Geo has the following observations on the Avino geology database and interpretation:

To ARANZ Geo knowledge, routine photography of drillcore and underground drifts is being completed. A digital photographic record is kept of all drillcore and underground drifts for future reference, and to facilitate consistent core logging and geology interpretation.

12.1.4 REVIEW OF DRILLHOLE QUALITY ASSURANCE/QUALITY CONTROL SAMPLES

QA/QC samples were submitted in the sample stream during all 2006 to 2012 drilling programs on both the Avino and San Gonzalo veins, although not in a consistent manner. These results were reviewed in detail by Tetra Tech and were discussed in Tetra Tech’s 2013 report. Avino used a number of SRMs, blank reference materials (blanks) and duplicates as part of their 2015/2016 QA/QC program.

STANDARDS FOR OXIDE TAILINGS CAMPAIGN 2015-2016

Three standards were analyzed during 2015-2016 oxide tailings drilling campaign. Three laboratory-certified standards (see Table 12-2) were used and the silver and gold results are discussed below.

The standards were submitted at a rate of 10% (total of 561 samples) which is higher than the industry norm of 5%. They were submitted to both Inspectorate and SGS Laboratories.

The three standards appear to have been determined within the limits in most of cases, but standard CDN-ME-1305 showed some anomalies for silver, notably one high grade return above the upper limit and a run of four over the upper limit returns for the Inspectorate results. This is a high-grade silver sample, so it may be that the standard was not well mixed and is showing some nugget behaviour.

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Standards for Exploration Drilling 2016-2017

During the period March 2016 to February 2018, 5,912 samples were submitted for assay, 5,462 to SGS Durango and 450 to Inspectorate America Corporation. Totals of 628 standard samples, 181 blanks and 138 duplicates were submitted. Thus, a relative submission rate of 10.6% standard reference materials, 3.1% blanks and 2.3% duplicate samples was maintained during the period. This is within industry norms.

Nine different reference standards, bracketing the expected ranges of grades for gold, silver and copper, were analyzed during the 2016-2017 period drilling campaigns for Avino-ET, San Gonzalo, Guadalupe and San Juventino. The silver, gold and copper results are discussed below.

Table 12.2 Standards Specification and Performance

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The standards performances are colour-coded in the two right hand columns of Table 12.1. Shades of red indicate relatively high percentage of assay returns recorded outside the two and three standard deviation confidence limits, while shades of green reflect low percentage of assays falling outside the limits. The pattern of performance for all three metals is similar for each of the standards. CDN-ME-1307 is the worst performer for gold, silver and copper.

Performance graphs showing the results for CDN-ME-1307 are shown as an example of a poorly performing standard in Figure 12.1 through Figure 12.3 for gold, silver and copper respectively. In the following graphs, good performance is indicated by consistent appearance of the assays within the red lines (representing three standard deviations from the mean of the material) and the brown lines (representing two standard deviations from the mean of the material). Poor performance is indicated by assays falling outside the confidence limits.

Figure 12.1 Standard 1307_ME-1307 – Gold Performance

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Figure 12.2 Standard CDN-ME-1307 – Silver Performance

Figure 12.3 Standard CDN-ME-1307 – Copper Performance

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Standard CDN-ME-1307 has produced quite erratic results for all three metals. This standard was not employed for a period of six months, between May and November, 2016. Standard materials can become less homogenous and thus less amenable to act as a standard material, if they allowed to remain in place for a long period of time, particularly if they are subjected to low frequency consistent vibration. This may occur on a mine site with heavy equipment or a laboratory crushing equipment in frequent prolonged use. This is one possibility for the pattern of assay results. It is best to keep consistently using a standard material unit lit is used up as it may deteriorate, through physical segregation of light and heavy particles and also possibly undergo chemical changes that can affect assay performance.

Performance graphs showing the results for CDN-ME-1414 are shown as an example of a well performing standard in Figure 12.4 through Figure 12.6 for gold, silver and copper respectively.

Figure 12.4 Standard CDN-ME-1414 – Gold Performance

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Figure 12.5 Standard CDN-ME-1414 – Silver Performance

Figure 12.6 Standard CDN-ME-1414 – Copper Performance

CDN-ME-1414 displays consistent results and was frequently used during the period July 2017 to March 2018.

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BLANKS

Blank performance is shown in Figure 12.7, Figure 12.8 and Figure 12.9, for gold, silver and copper, respectively. All three graphs cover the period May 2016 to March 2018. Clusters of anomalous grades are present for all three metals, from November 2016 to March 2017 and may represent laboratory contamination that could be due to:

· consignments of high volumes of samples or

· high grade material from another operation or

· end of year staff turnover.

In any case, these sporadic incidents of blank failure are relatively few and contamination does not appear to be significant. Nevertheless, Avino should continue to monitor blanks and inform external laboratories if failures occur in clusters.

Figure 12.7 Blank – Gold Performance

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Figure 12.8 Blank – Silver Performance

Figure 12.9 Blank – Copper Performance

DUPLICATE ASSAYS

Duplicate results for gold silver and copper are summarized in Figure 12.10 to Figure 12.15. Scatterplots (Figure 12.10, Figure 12.12, and Figure 12.14) show good correspondence across the spectrum of assay values. Power fit curves have been generated to show the relationships telescoped across the logarithmic axes.

Half Absolute Relative Difference (HARD) Charts are useful for assessing the precision of a set of duplicates and are shown in Figure 12.11, Figure 12.13, and Figure 12.15, for gold, silver and copper, respectively. In all three cases the plots do not pass through the nominal target of 90 ^th percentile passing 20% half absolute relative difference for pulp duplicates.

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This could be due to:

	·	retaining low-grade data close to detection limit level data (high variability)

	·	too small as sample, or

	·	insufficient crushing before splitting, or

	·	insufficient pulverising before splitting

ARANZ Geo recommends that some experiments be carried out to improve assay precision.

Figure 12.10 Gold – Duplicate Correlation

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Figure 12.11 Gold – Half Absolute Relative Difference Chart

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Figure 12.12 Silver – Duplicate Correlation

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Figure 12.13 Silver – Half Absolute Relative Difference Chart

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Figure 12.14 Copper – Duplicate Correlation

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Figure 12.15 Copper – Half Absolute Relative Difference Chart

The correlation graphs for the three metals (Figure 12.10, Figure 12.12, and Figure 12.14) show no significant bias between originals and repeats.

12.2 BULK DENSITY

12.2.1 AVINO AND SAN GONZALO VEIN BULK DENSITY

A limited number of specific gravity measurements were originally collected by Avino from drillholes in the Avino and San Gonzalo Veins. These measurements were not representative of the veins spatially or by drilling program, and Tetra Tech (2012) requested additional specific gravity measurements be completed on drillcore from both veins. These additional measurements were completed by Avino in 2013. Review of these measurements (see Section 14.6) suggests that they are a limited basis for spatial estimation. Consequently, the long-term historic production average value of 2.63 has been assigned as a density factor to the Avino and San Gonzalo Mineral Resources disclosed in Section 14.0.

A QP opinion of the reliability of the Avino specific gravity data is discussed in Section 12.5.1.

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12.3 OXIDE TAILINGS DRILLHOLE DATABASE

Tetra Tech (2012) compiled the assay data used in the oxide tailings resource estimate by referring to original mine sections and verification of this data is described below. The 1:1,000 scale plans drafted for this exercise were scanned and used to verify the positions of the old drillholes. One transposition error on a collar elevation in mine coordinates was observed and subsequently corrected (drillhole E3 was incorrectly recorded at an elevation of 2,275 m, and was corrected to 2,257 m).

Avino provided the following formulae to convert the collar coordinate data from local mine grid coordinates to Universal Transverse Mercator (UTM) coordinates:

	·	local mine grid X + 560421.245 = X UTM

	·	local mine grid Y + 2707618.312 = Y UTM

	·	local elevation - 41.306 = elevation amsl.

Since the trenches (named with Z-series) from the 1990 to 1991 program represent incomplete surface sampling of an unrepresentative part of the pile (at the wall where the outlets for the hydraulic emplacement of the material were sited), these data were not used in the oxide tailings resource estimate.

12.3.1 ASSAY VERIFICATION OF 1990/1991 DRILLHOLES IN OXIDE TAILINGS

Tetra Tech (2013) verified 54% of drillholes in this database (15 of 28 drillholes) and 58% of both silver and gold assays (444 of 766 values) used for this estimation. QG Consulting verified the oxide tailings data in 2016 and ARANZ Geo reviewed the work again in 2017 and is not aware of any significant errors.

The QP opinion of the reliability of the 1990 to 1991 oxide tailings assays is discussed in Section 12.5.2.

12.3.2 OXIDE TAILINGS VERIFICATION SAMPLES

As was reported by Tetra Tech (2013), during a previous site visit conducted on June 7 and 8, 2012, Michael F. O’Brien visited the tailings heaps and supervised the collection of eight samples from the oxide tailings (3 to 4 kg each). The samples were collected from gulleys that had eroded into the tailings pile and provided a vertical section through the tailings. It is believed that while such samples cannot provide a statistically representative reflection of overall grade, they do provide some insight into the grade of the tailings near surface. The eight samples were each split into three separate sub-samples, which were submitted in turn to the Avino Mine laboratory together with SGS laboratories in Durango and Vancouver.

Statistical analysis of the three sets of results demonstrated that there is good correlation between the three laboratories and this conclusion remains valid.

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The sampling exercise in 2012 provided the opportunity to review the artificial sedimentary deposit that comprises the Avino oxide tailings and supported the previous assumptions of the tailings, such as regarding the oxide tailings as two superimposed units with slightly different chemical and particle size characteristics and pronounced horizontal continuity. The source data and plans prepared more than 20 years ago after the initial drilling campaign, were examined at the mine and found to be of professional standard and provide support for their use in the estimation of the oxide tailings. The overall homogeneity of the material, horizontal continuity and relatively high confidence in the volume and tonnage, mitigate any uncertainty in the historical data set. The pattern of sample grades (see Figure 14.6) from the 2015/2016 drill campaigns the earlier drilling form a coherent pattern with no obvious discontinuity between campaigns.

12.4 SITE VISIT

Michael F. O’Brien conducted site visits on June 7 and 8, 2012, June 6 and 7, 2016, and June 12 to 15, 2017. During the latest visit, Mr. O’Brien visited Avino and San Gonzalo underground mines to review the Avino and San Gonzalo Vein systems. The surface drill sites and exposure to the Guadalupe Vein were examined.

12.5 ARANZ GEO CONCLUSIONS AND OPINION

The drill dataset has been produced over a long period of time within a brownfield property. All data used for this study is obtained from work carried out by staff of the current issuer, which has owned the Property continuously since the start of this work.

12.5.1 AVINO AND SAN GONZALO VEINS

DRILLHOLE DATABASE

A single, compiled database containing all relevant drilling information does not exist for the Property. A variety of partially-compiled data sources were provided to ARANZ Geo.

DOWNHOLE SURVEY DATA

Downhole survey data and the location of the Avino and San Gonzalo Vein intersections observed in drillholes has been verified by both surface and underground mapping, providing confidence in the location, orientation, and true width of both veins.

GEOLOGY DATA AND INTERPRETATION

The legacy data from the Avino Vein is understandably deficient in recorded lithology data. Modelling of the Avino Vein and San Gonzalo Vein Systems made use of grade as well as lithology data. Consequently, ARANZ Geo regards the lithology database adequate and fit for purposes of resource estimation. The recent mining history provides comfort that the potentially economic units persistently demonstrate continuity as new exposures become available.

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SPECIFIC GRAVITY SAMPLES

Based on a review of specific gravity data from drillholes in the Avino and San Gonzalo veins, ARANZ Geo concludes that future bulk density measurements should be completed using a water displacement method. A comparison of the two measurement techniques used for these specific gravity samples indicates that the results are acceptable for this study. However, ARANZ Geo considers that the current level of data is inadequate for meaningful spatial estimation and recommends that the frequency at which specific gravity measurements are collected should be increased. To supplement the specific gravity data generated from drillhole samples, ARANZ Geo recommends that large grab samples be obtained from the underground development at approximately 30 m intervals and subjected to the water displacement method of specific gravity determination.

QA/QC SAMPLES

The rate of QA/QC standard reference materials, blanks and duplicates insertions meets recommended industry standards. HARD charts indicate less assay precision than would be expected for pulp duplicates.

ARANZ Geo has found no evidence of systematic laboratory bias, indicating that the assay results are reliable but ARANZ Geo recommends that some experiments be carried out to improve assay precision.

12.5.2 OXIDE TAILINGS

The identified grade pattern is similar in character to other tailings deposits, such as overall homogeneity and a pronounced horizontal continuity.

Verification samples taken by Mr. O’Brien have confirmed the presence of gold and silver mineralization at grades similar to those obtained in the original tailings drilling campaign, with a low silver bias consistent with the superficial position of the samples in the zone most likely to have suffered surface leaching. The verification samples also confirm that the mine lab assays are not materially different from those of external labs.

12.5.3 QP OPINION

There were no limitations on or failure to conduct data verification.

In ARANZ Geo’s opinion the assay, sample location, vein lithology, and specific gravity data from the Avino and San Gonzalo Veins are reliable to support the purpose of this Technical Report and a current mineral resource on both veins and the oxide tailings.

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13.0 MINERAL PROCESSING AND METALLURGICAL TESTING

There are three separate mineralization sources in the Avino property, including the Avino and San Gonzalo Mines, which are currently in operation, and the potential tailings resource from previous milling operations. The San Gonzalo Mine entered commercial production in October 2012, followed by reopening of the Avino Mine in January 2015. The two mines feed a conventional flotation mill that has three separate circuits and a capacity of 1,500 t/d.

13.1 AVINO VEIN

The Avino vein material is currently been processed at the Avino mill using froth flotation to produce a marketable copper concentrate with silver and gold credits. The material has been successfully processed in the past. Bismuth was identified as a deleterious material in the concentrate and there are plans for test work to reduce the bismuth content in the concentrate to improve on the smelter return. No mineral processing or metallurgical test work has been performed in the preparation of this report.

The Avino Vein was mined during the 27 years of open pit and underground production prior to 2001. From 1997 to 2001, the mine and mill production averaged 1,000 t/d and achieved up to 1,300 t/d. The mine and mill operations were then suspended. Following several years of redevelopment, in Q4 2014 Avino completed its Avino Mine and mill expansion. On January 1, 2015, full-scale operations commenced and commercial production was declared effective April 1, 2016 following a 19-month advancement and test period.

The mill feed from the Avino Mine has been processed using froth flotation to produce a copper concentrate with silver and gold credits. In 2017 operation, the average copper, silver and gold recoveries reporting to a copper concentrate of 20.3% copper, 2,560 g/t silver and 16.7 g/t gold were 89%, 85%, and 69% respectively. The total material processed was 460,890 t.

The Company has not based its production decisions on a feasibility study or mineral reserves demonstrating economic and technical viability, and as a result there is increased uncertainty and there are multiple technical and economic risks of failure, which are associated with these production decisions. These risks, among others, include areas that would be analyzed in more detail in a feasibility study, such as applying economic analysis to resources and reserves, more detailed metallurgy, and a number of specialized studies in areas such as mining and recovery methods, market analysis, and environmental and community impacts.

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13.2 SAN GONZALO VEIN

The San Gonzalo treatment scheme was based on the bulk sample test carried out in 2012. The feed grade of the bulk sample tested was 261 g/t silver and 0.9 g/t gold. Silver and gold recoveries were 76% and 59% respectively and 232 dry tonnes of flotation concentrate were produced from 10,000 t of feed. Conventional froth flotation was used to produce the flotation concentrate with the silver and gold values. Since then, a gravity circuit had been installed to improve the silver and gold recoveries. In 2017, a total of 81,045 t of mill feed with average grades of 269 g/t silver and 1.32 g/t gold has been processed. The silver and gold recoveries to the silver and gold concentrate were 84% and 78%, respectively.

13.3 OXIDE TAILINGS

This study assesses the potential for processing the oxide tailings resource from previous milling operations. The subsections summarize the metallurgical characterization obtained from previous test work and the study conducted by MMI in 2005 (Slim 2005c). MMI’s report used the metallurgical results obtained and conclusions drawn by PRA (Huang 2003; Huang and Tan 2005). The revised and final report by MMI was dated October 2005 (Slim 2005d).

The following sections are reproduced from the 2013 PEA (Tetra Tech 2013), with some minor modifications to summarize the findings of the metallurgical test programs conducted so far.

H ISTORICAL M E TALLURGICAL T EST R ESULTS

A number of metallurgical evaluations have been completed on various samples from the oxide tailings dam, according to the MMI report produced in 2003 (Slim 2003). Apparently, the first cyanidation tests were conducted in 1982, followed by further tests performed over the years. The summarized cyanidation test results are shown in Table 13.1 taken from the 2003 MMI report (Slim 2003), while the reported flotation test results are given in Table 13.2. The results obtained from the test work program initiated by MMI in 2003 and 2004 were reported in the MMI 2005 technical report (Slim 2005d) and are included in Table 13.1 for purposes of comparison. The results will be discussed in greater detail later in this section.

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Table 13.1 Cyanidation Test Results

Date of

Extraction (%)

Leaching

Particle

Author

Test

Ag

Au

Time (h)

Size (µm)

Denver Equipment

1982

69.3

66.7

24

66.6% <149

Penoles

1987

78.3

88.9

24

87% <74

Maja

1990

85.9

80.9

24

100% <105

Chryssoulis

1990

85.9

80.9

24

no data

Rosales

1996

83.9

76.9

23

75% <74

MMI

2003

77.1

71.4

24

86% <74

MMI

2003

88.8

88.4

48

86% <74

Source: Slim (2003)

Table 13 . 2 Flotation Test Results

	Date of	Recovery (%)		Particle
Author	Test	Ag	Au	Size (µm)
Penoles	1987	60.2	47.1	87% <74
Rosales	1996	69.4	66.9	75% <74

For the tests outlined in Table 13.1 and Table 13.2, no details have been provided regarding:

· the location or the manner in which the samples were taken

· why these particular samples were taken

· the test parameters employed

· the assay techniques used, etc.

The first set of results for tests conducted on MMI samples from the 2003 sampling campaign indicate a silver extraction of 77.1% and gold extraction 71.4%. However, these results cannot be verified since the origin of this set of numbers as quoted in the MMI technical report (Slim 2005d) is not known. The second set of results was reported in the 2003 PRA report (Huang 2003). Considered in general terms, it would appear as if the cyanidation test results are reasonably consistent over the indicated period of time. However, no specific conclusions should be drawn since nothing is known about the head grades of the samples, the samples used, or the test and assay procedures used at the time that these tests were conducted.

The flotation results vary widely for similar particle sizes with recoveries ranging from 60% to 69% for silver and 47% to 67% for gold. However, the test details of these reported cyanidation and flotation tests are unknown.

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THE MMI TECHNICAL REPORT

Avino commissioned MMI to produce a document that was NI 43-101 compliant with respect to detailing the indicated oxide tailings resource (subsequently referred to as an Inferred Resource) and to define the metallurgical characterization and assay results for this material. The proposed economic processing of this tailings material could then be used to form the financial basis for restarting the mine.

The first report prepared by MMI was titled "Tailings Valuation" and was dated November 2003 (Slim 2003). Two further reports by MMI titled "Preliminary Feasibility" (Slim 2005a) and "Tailings Valuation" (Slim 2005b) were produced in May 2005. The “Tailings Valuation” report (Slim 2005b) was subsequently revised and re-titled "A Tailings Resource" in July 2005 (Slim 2005c). This July 2005 MMI report (Slim 2005c) was reviewed by the Canadian Securities Administrators and returned to MMI for revision. The revised MMI report was re-issued as "A Tailings Resource" and dated October 2005 (Slim 2005d) and was resubmitted to the CSRA for review. The October 2005 report (Slim 2005d) was produced for Avino Mines, Cia Minera Mexicana, Durango, Mexico, by Bryan Slim, of MMI, North Vancouver, British Columbia, Canada. The document was submitted as a Technical Report to the CSRA.

Two sets of test programs were conducted by PRA under direction of MMI. One was conducted during 2003, for which no sample origin can be determined (Huang 2003), and the other, more detailed test program, was conducted during 2004 (Huang and Tan 2005). The 2004 test work and assaying program was designed and supervised by MMI. It was conducted on samples collected from the tailings dam by MMI during 2004, while also using the results from the preliminary metallurgical scoping tests completed during 2003 as a guide. PRA staff, at their facilities in Vancouver, British Columbia, conducted all the test work from both MMI test programs.

I NTRODUCTION TO THE MMI 2003 M ETALLURGICAL T EST P R OGRAM

The 2003 test program consisted of the following tests as summarized in Table 13.3. The cyanidation extraction results obtained were used in a preliminary report by MMI (Slim 2003). MMI considered using a 2,000 t/d vat leaching process to recover the silver and gold from the oxide tailings; however, this treatment process option was revised when the results of the 2004 test program became available.

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Table 13.3 Test Procedures MMI 2003 Test Program

Process/Procedure

Details of Test

Sample Identify

Sample Preparation

No details documented

Sample L and Sample U

Head Assays

Fire assays, AA, and ICP multi-acid

Composite of L and U

Specific Gravity

Standard pycnometer test

Composite of L and U

Cyanidation Leach

P80 = 68 µm; 40% solids; pH 10.5; 1.0 g/L NaCN;

48 h; dO2 > 7.9 mg/L 0.4 kg sample

Composite of L and U

Flotation

Rougher and 2 scavenger stages; P80 = 85 µm;

35% solids; pH 5.5; PAX & A208 with MIBC; 1 kg sample

Composite of L and U

Mineralogical

Examination of flotation tailings

Composite of L and U

Note: dO2 – dissolved oxygen; PAX – potassium amyl xanthate; NaCN – sodium cyanide

Source: Slim (2003)

The exact origin of Sample L and Sample U is not known and does not appear to have been documented. The manner in which each of the samples was collected by MMI has apparently also not been documented. The size of both samples, namely 0.8 kg for Sample L and 0.9 kg for Sample U, is small and its representation is questioned. Also, there appears to be no documentation relating to the arrival and receipt of these samples at PRA. There is no receiving log in the PRA Report No. 0302303 (Huang 2003). Also, no assay certificates have been recovered to date. Even though these tests were considered to be scoping tests only, the results cannot be validated. When considering all the above factors, it is apparent that these results cannot be used with any degree of validity in the review of process options for the recovery of silver and gold.

I NTRODUCTION TO THE MMI 2004 M ETALLURGICAL T EST P R OGRAM

The 2004 test program was a better structured program, which included the pre- concentration processes such as gravity concentration and flotation, both with and without regrinding, in an attempt to upgrade the material into a smaller mass for the subsequent treatment for the recovery of silver and gold. Also, cyanidation leach tests were conducted on as-received samples, as well as samples that were reground in order to attempt to improve the liberation of silver and gold from the associated minerals. A single column leach test was also performed.

Additional work completed included establishing the specific gravity and bulk density of the material, determining the Bond Mill Work Index on an oxide sample from the open pit, settling and filtration tests following cyanidation tests, and electrowinning tests using Electrometals Electrowinning (EMEW) technology. All the different test procedures are summarized in Table 13.4.

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Table 13.4 Test Procedures – MMI 2004 Test Program

Process/Procedure

Details of Test

Sample Identify

Sample Preparation

Individually numbered; dried; weighed;

subsequently composited

Composites A, B and C

Head Assays

Fire assays, AA and ICP multi-acid

Individual samples, and

Composites A, B and C

Specific Gravity

Standard pycnometer test

Composites A, B and C

Bulk Density

Standard volume displacement test

Composites A, B and C

Mineralogical Examination

Examination of as-received samples

Selected Samples

Test Product Assays

Fire assays, AA and ICP multi-acid

All test products

Bond Mill Work Index

Six cycles; closing screen size 150 µm

Oxide sample

Size-assay Distribution

Screened and assayed the size fractions

Selected samples

Gravity Concentration

Various test conditions

Composites A, B and C

Cyanidation Leach

Various test conditions

Composites A, B and C

Flotation

Various test conditions

Composites A, B and C

Column Leach Test

Agglomerated feed; 81 d duration; 0.5 to

1.0 g/L NaCN; pH 10.5; 0.05 mL/s

Composite of A and B

EMEW

Various test conditions

PLS from leach test

ABA

Acid generation tests

Composites A, B and C

The results obtained from this test program led MMI to include the heap leach process as the recommended treatment option in their report dated May 2005 (Slim 2005a).

E VALUATION AND R EVIEW OF M ETALLURGICAL T ESTS

Tetra Tech reviewed the metallurgical tests conducted during the MMI 2004 test program. The most promising process option will be selected as the recommended process treatment route based on the evaluation of the results obtained from the test program. This process option will then be evaluated with respect to capital and operating cost estimates. The process implications of the procedures and processes investigated, and the results obtained, are discussed in this section.

Sample Preparation and Characteristics

Bagged samples carrying the MMI identification tags were prepared at Avino Mine under the direct supervision of MMI personnel. These samples were then transported from the mine site to Durango, Mexico, and shipped via airfreight to Vancouver, British Columbia. The samples were delivered to the PRA facility, and unpacked in the presence of MMI personnel to ensure that no tampering had occurred to the samples en route. The samples were subsequently renumbered by MMI prior to PRA staff un-bagging and drying the samples. These details are shown on the PRA sample receiving log (Huang and Tan 2005). The individual samples were initially air-dried, followed by a low-temperature of less than 50°C, of oven drying.

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The individual samples were subsequently homogenized and riffled and split into four one-quarter fractions. One of these fractions was used for head assay determinations. A second fraction was used for compositing selected individual samples to create the sample Composite A, representing the oxide material of the lower bench of the tailings dam. Similarly, Composite B, representing the oxide material of the middle bench of the tailings dam, was prepared by compositing selected individual samples, as was Composite C, representing the sulphide tailings of the upper bench.

Although the samples had arrived at PRA from Avino Mine without any indication of tampering, it is the sampling regime itself, which is considered to be deficient. First, the sampling of the oxide section of the tailings dam was incomplete. The sampling did not replicate the 1990 CMMA program, and certain parts of the tailings dam were not sampled. Second, the samples that were taken by MMI only represented the first 4 m of depth of the tailings dam. Indications are, however, that the overall depth of the oxide section of the tailings dam varies between 7 and 27 m. These two major deficiencies were also recognized by the Canadian Securities Administrators as deficiencies during their review. Both these items were addressed in the final MMI report dated October 2005 (Slim 2005d). The October 2005 report recommended a more detailed program of sampling of the whole tailings dam up to bedrock or ground soil level, as well as conducting metallurgical characterization tests using representative material from this more detailed sampling process whenever this is to be performed. However, since the MMI Technical Report (as reviewed by the Canadian Securities Administrators subsequently referred to the oxide tailings as an Inferred Resource (Slim 2005d), this and other sampling discrepancies noted in the MMI test program, will not be discussed any further.

Moisture Content

The moisture contents of the samples as received from the Avino Mine tailings dam were found to vary widely, namely from a low value of 5.12% to a high value of 28.25% moisture. A frequency distribution for moisture content of all the oxide tailings samples as received by PRA is given in Table 13.5. The bi-nodal distribution is apparent.

Table 13.5 Moisture Content of Samples

Frequency Distribution

Moisture Content

Range

(%)

Number

5.00-7.50

9

7.51-10.00

14

10.01-12.50

19

12.51-15.00

16

15.01-17.50

5

17.51-20.00

5

20.01-22.50

12

22.51-25.00

5

25.01-27.50

0

27.51 -30.00

1

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The particular presence of these high moisture content values in the tailings dam apparently confirms the high moisture content values found during the 1990 sampling program conducted by CMMA. Although the precise sampling procedure and drying conditions are unrecorded, a data sheet provided by Avino Mines as ostensibly related to this sampling program, provides assay values and moisture contents obtained during the program. The moisture values obtained varied from a low moisture value of 13.89% to a high value of 29.4%, and a calculated average of 22.87% moisture.

A possible reason for the high moisture content of the tailings material is that the mine was operational during this period when the sampling program was undertaken, i.e. 1990, and that routine tailings deposition was still in progress.

The specific reason for the relatively high moisture contents found during the 2004 MMI sampling program, is not apparent. The MMI Technical Report (Slim 2005d) has referred to the possibility of the original manner of deposition of the tailings which has resulted in the localized areas of high moisture content. Also, the presence of artesian springs under the tailings dam has also been mentioned as a possible reason. It was also observed that any rain water run-off from the higher levels above the tailings dam would collect at the head of the tailings dam and subsequently seep through the dam exiting at the foot of the dam. Whatever the reason(s) may be, areas of high moisture content do exist and will influence the method of recovery of the tailings and the subsequent agglomeration process.

Head Assays and Test Products Assays

Gold assaying was completed using the standard fire assay procedure. Initially the silver was also analyzed by the fire assay procedure followed by an AA spectrophotometric finish. However, this fire assay-based method for silver is not very accurate in the low concentration range of less than 100 g/t for silver. Assaying for silver was then done using ICP-MS preceded by the total digestion of the sample in a suite of mineral acids. A further method was also investigated, namely that of total acid digestion followed by an AA finish. The results obtained with this acid digestion and AA method were similar to the ICP-MS. The assay method selected for all the silver assays was therefore the ICP-MS method preceded by the total digestion of the sample in a suite of mineral acids (ICP- MS). All the other analyses for the various products arising from the metallurgical tests were done by the standard and universal methods using titration, ICP-MS or AA methods.

All the various head sample analyses conducted during the test program are listed in Table 13.6. The reference to the test number relates to the stage of the test work that the sample was submitted for analysis. The average values for the four different composite samples tested, namely Composite A, Composite B, Composite C, and the Composite A + B blended sample, have all been calculated and are given in the table together with the respective standard deviation values. The standard deviation of the head samples representing Composite A and Composite B are shown to be within 10% of the deviation from the average value. This is considered to be reasonable.

However, the average silver value of all the head assay analyses assayed as head samples representing both Composite A and Composite B together is only 86.8 g/t silver.

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This average silver grade is less than the 95.5 g/t silver as given in the MMI Technical Report as being the overall silver grade of the material of the whole oxide tailings dam (Slim 2005d). Similarly, the average gold value of all the head assay analyses assayed as head samples representing both Composite A and Composite B (i.e. representing the oxide tailings dam) taken during the test work program, is 0.44 g/t gold which also is less than the 0.53 g/t gold, as quoted in the MMI Technical Report (Slim 2005d). For silver, this amounts to a difference of about 9% based on the MMI quoted head grade of 95.5 g/t silver, while for gold the difference is larger at 17% based on the MMI quoted gold value of 0.53 g/t gold. It is of interest that the average head assay for the Composite A + B sample is closer to the calculated average for Composite A and for Composite B, namely 89.6 g/t compared with 86.8 g/t for silver, and 0.41 g/t compared with 0.44 g/t for gold. The above discussion assumes that the tonnages of the tailings dam labelled Composite A (lower bench) will be mixed in equal proportion to the area of the tailings dam designated as Composite B (middle bench). In the absence of specific tailings dam volumes, or tonnages, this assumption may be an oversimplification and may therefore not be entirely valid. However, the assay values for the Composite B is lower than the overall average head grade of the tailings samples collected.

Table 13 . 6 Head Assays

Assays

(g/t)

Assays

(g/t)

Test No.

Ag

Au

Test No.

Ag

Au

Composite A

Composite B

SA9

99.8

0.37

SA10

88.3

00.55

Ave. 1

103.4

0.34

Ave. 1

82.6

0.68

Ave. 2

105.3

0.36

Ave. 2

88.4

0.51

C1

95.2

0.35

C4

76.3

0.52

C2

94.3

0.35

C5

70.6

0.49

C3

94.1

0.36

C6

71.4

0.50

C7

88.7

0.36

C9

70.3

0.52

C8

88.7

0.36

C10

70.3

0.52

C13

95.9

0.28

C15

77.2

0.49

C14

98.9

0.37

C16

78.3

0.52

C17

95.2

0.35

C18

77.2

0.49

Average Value

96.32

0.350

Average Value

77.35

0.526

Standard Deviation

5.27

0.025

Standard Deviation

6.72

0.054

Composite C

Column Composite A+B

C11

39.8

0.34

C4

87.4

0.42

C12

39.8

0.34

C5

90.1

0.40

Ave. 1

31.7

0.29

C6

91.4

0.42

Ave. 2

39.8

0.39

C9

-

-

Average Value

37.78

0.340

Average Value

89.63

0.413

Standard Deviation

4.05

0.041

Standard Deviation

2.04

0.012

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A further comment regarding the assay results above relates to the methods employed for the assaying techniques for silver from these samples. The MMI Technical Report (Slim 2005d) states that for the CMMA 1990 tailings drilling program, the silver assaying was completed using the mine standard practice of fire assay followed by acid digestion and AA finish. The PRA metallurgical test work program used multi-acid digestion followed by ICP assay method for silver analyses. It is anticipated that there will not be a significant difference between the silver assays as reported in 1990 and those from the MMI test program as conducted by PRA, but the extent of this difference cannot be quantified in this review. Similarly, no comment can be given as to the accuracy of the assays conducted by CMMA since the standards of precision of sampling, sample preparation and detailed methodology of the assaying methods are unknown. However, a summary sheet containing assay values has been provided by Avino as being the silver and gold grades obtained from the 1990 CMMA sampling program. No calculations have been performed using these assay values and it is only included in this report since it is part of the CMMA sampling program. The MMI report (Slim 2005d) provides a grid map identifying the various sample holes.

Mineralogical Evaluation

At the start of the 2004 metallurgical test program, MMI requested that a sample from some of the individual samples be submitted for mineralogical analysis. The mineralogical findings have not been reported in the PRA Report No. 0406407 (Huang and Tan 2005), and also were not alluded to in the MMI Technical Report (Slim 2005d), nor in any of the preceding reports. The reason(s) why these results have apparently not been communicated to Avino or to the investigators of the test program at PRA, is not known.

Bond Ball Mill Work Index

Although this information was not required for the treatment of the oxide tailings dam material, a Bond Ball Mill Work Index determination test was done on an oxide material sample. The work index was determined to be 12.3 kWh/t using a closing screen size of 74 µm (200 mesh) with convergence of the specific energy input (grams of product per revolution) found after five cycles of testing. This makes the sample tested a moderately hard rock type. The details regarding the origin of this sample have not been documented and its relevance as data is therefore questioned.

Bulk Density and Specific Gravity

Bulk density and specific gravity determinations were conducted on samples specifically identified by MMI. The specific gravity measurements were done using the standard pycnometric method, while the bulk density values were obtained by measuring the volume of dry solids in a measuring cylinder. The values obtained are reproduced in Table 13.7.

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Table 13.7 Bulk Density and Specific Gravity

Location/

Bench

Sample

Identify

P80 Size

(µm)

Bulk Density

(g/cm3)

Specific

Gravity

Upper Bench

S2

226

1.66

2.74

Lower Bench

S10

326

1.73

2.62

Lower Bench

S22

367

1.73

2.76

Middle Bench

S45

254

1.60

2.76

Middle Bench

S50

201

1.63

2.74

Upper Bench

S74

301

1.57

2.72

Average

-

-

1.653

2.723

The bulk density values determined for the oxide tailings material were found to vary between 1.57 and 1.73 g/cm3 with an average of 1.653 g/cm3. This average value is in reasonable accord with the bulk density of 1.605 g/cm3 as quoted in the MMI Technical Report. The specific values obtained were generally consistent with an average value of 2.723.

Particle Size – Assay Analysis

A particle size–fraction analysis was done on the same samples as were used for the bulk density and specific gravity determinations. These tests were conducted to determine whether the silver and gold were predominantly occurring in a particular particle size range. The size-assay analyses indicated that the metal distributions were varied according to the location, but that all displayed the bi-nodal distribution for silver, gold and mass to varying degrees.

Sample S10 from Composite A from the Lower Bench of the tailings dam indicated one maximum metal distribution occurring in the size range 149 to 210 µm, and another in the minus 37 µm size range. The maximum mass distributions are generally similar although it occurs over a wider size range in the coarse size, namely 105 to 210 µm. The second sample from this bench, Sample S22, was similar but with a shifted maximum metal and mass distribution in the 210 to 297 µm size range, and a secondary maximum metal and mass distribution in the minus 37 µm size range.

Sample S45 from the Middle Bench of the tailings dam, and part of Composite B, indicated maximum metal distribution in the 149 to 210 µm size range with maximum mass distribution in the 105 to 149 µm size range. The secondary maximum metal and mass distribution was found in the minus 37 µm size range. The second sample from the Middle Bench, namely Sample S50, had the maximum metal and mass distributions in the 105 to 149 µm size range as well as the minus 37 µm size range.

The two samples from the Upper Bench of the tailings dam of Composite C displayed totally different particle size distributions. Sample S2 was bi-nodal with one maximum for metal and mass distribution in the size range 105 to 149 µm and the second maximum occurring for the size range of minus 37 µm. Sample S74 displayed only one maximum metal and mass distribution over the relatively wide coarse particle size range of 105 to 297 µm. This sample was almost entirely devoid of slimes, or minus 37 µm material.

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These samples reflect the operating discharge conditions and history at the time of plant operations and tailings deposition. The results typify the use of a tailings cyclone situated on the tailings dam wall discharging the coarse undersize material onto the wall area with the finer cyclone overflow material flowing downstream and settling within the tailings dam. Changes in the size distribution would be anticipated with downstream distance from the point of discharge by the cyclones at the tailings dam wall. This is typified by the size distribution of Sample S74 which purports to be a cyclone underflow sample taken at the point of discharge and which was found to be almost totally devoid of fines, or minus 37 µm material.

Gravity Concentration Tests

Pre-concentration tests using the centrifugal gravity concentration method were conducted to evaluate the potential upgrading of silver and gold. The laboratory size concentrator used was the Falcon Model SB40 centrifugal concentrator. The tests were conducted on samples from Composites A, B and C. MMI dictated the test parameters used for these tests, including a set of tests where the samples were reground prior to conducting the gravity concentration test. The results from the gravity concentration tests are summarized in Table 13.8.

Table 13 . 8 Summary of Results of Gravity Concentration Tests

Head Grade

Concentrate

Grade

Recovery

(%)

Remarks

Sample

Identify

Ag

(g/t)

Au

(g/t)

Ag

(g/t)

Au

(g/t)

Mass

Ag

Au

P80

(µm)

(Note: All tests

are 3-pass tests)

Composite A

93.8

0.35

124.7

0.52

24.1

32.1

36.5

269

Pressure 1.5 psig; no regrind

Composite B

70.3

0.50

96.9

0.71

23.6

32.5

33.3

180

-

Composite C

39.7

0.33

58.0

0.65

24.1

35.2

47.0

254

-

Composite A

92.1

0.33

126.1

0.71

19.7

27.2

42.1

76

Pressure 1.0 psig; reground

Composite B

70.5

0.56

96.5

1.29

22.4

30.7

51.5

77

-

Composite C

40.7

0.38

65.5

0.98

24.8

39.9

64.3

79

-

Note: psig = pounds per square inch (gauge)

The mass recoveries varied between 20 and 25% indicating that the tests were performed in a uniform and consistent manner. The highest silver recovery obtained was 40% (after regrind) for Composite C and decreasing to 31% for Composite B (after regrind) and about 27% for Composite A, also after regrind. The gold recoveries were higher than the equivalent silver recoveries, particularly after regrind, indicating that the liberation of the precious metals could be incomplete.

However, the upgrading factor for both silver and gold is very low, namely about 1.4 for silver and up to 2.3 for gold. No further upgrading or silver and gold recovery tests were conducted on the gravity concentrates produced possibly as a result of the relatively low grades and recoveries obtained. Also of interest is the fact that no historical test work was documented by MMI where gravity concentration was used to produce a saleable high-grade concentrate.

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Flotation

Different scoping flotation tests were conducted on samples from Composite A and Composite B using various reagent schemes and conditions as dictated by MMI. The results of the flotation tests are summarized in Table 13.9. The test results reported led to the following conclusions.

For Composite A, a regrind from a P80 size of 238 µm (as received particle size) to a P80 of 72 µm, improved the flotation recovery of silver from 18 to 23%, and that of gold from 18 to 39%. The standard suite of reagents was used for these tests (Tests F1, F3 and F4). For Composite B, a regrind from a P80 size of 173 µm (as received particle size) to a P80 of 74 µm, improved the flotation recovery of silver from 22 to 33%, and that of gold from 12 to 32% (Tests F2, F5 and F6). A particle size fraction analysis distribution conducted on the tailings of Test F4 (Composite A) indicated that the major proportion of the mass and the silver and gold is present in the slimes, or minus 37 µm size fraction. However, significant losses of silver, and particularly gold, occurred in the coarser sizes, namely the size range 53 to 105 µm. This indicates that the degree of liberation could be improved and that some metal appears to be occluded in the coarser particle sizes. Some silver may also occur within secondary oxide minerals and be unrecoverable by flotation. A similar mass and metal distribution was obtained in the case of Test F9 (also Composite A) which was a flotation test performed using a sulphidization reagent.

In testing the various flotation reagent suites, variable mass and metal recoveries and concentrate grades were obtained. However, the maximum silver grade obtained for a rougher concentrate was 909 g/t silver, while the overall recoveries for silver could not be improved beyond approximately 40%. This indicated that mineral surface alteration or oxidation, or occlusion of precious metals in gangue, was inhibiting the concentration by the flotation process. Since the silver recoveries obtained were deemed low and unsatisfactory, no further flotation tests were conducted and no extraction tests were performed on flotation concentrates.

The head assays obtained during the flotation testing stage gave inconsistent results. Table 13.9 shows the actual head assays obtained for each flotation test compared with the head assay obtained for silver for the composite samples. For Composite A, the individual silver head values for each flotation test conducted are all higher than the assay for the composite sample, except in the case of Test F11. The gold (and silver) values obtained for Tests F7, F8 and F9, are known to have been the result of poor sampling technique adopted for these three tests. The composite head assay gold value of 0.36 g/t gold is probably a reasonably representative assay value for Composite A. For Composite B, the silver head value for the composite sample is slightly lower than the assays for the individual flotation tests. For gold, the composite sample value is higher at 0.52 g/t gold than the assays for the individual tests.

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The historical results of the flotation tests reported in Table 13.2 are significantly higher at 60 to 69% recovery for silver and 47 to 67% for gold. However, in the absence of information regarding the origins of these samples, the lack of head grade data and the absence of sampling and flotation procedures involved, these results will not be taken into consideration in selecting of the processing options for the oxide tailings dam material.

Table 13 . 9 Summary of Results of Flotation Tests

Head

Grade

Concentrate

Grade

Recovery

(%)

Sample Identify &

Test No.

Ag

(g/t)

Au

(g/t)

Ag

(g/t)

Au

(g/t)

Mass

Ag

Au

P80

(µm)

Remarks

Composite A/F1

112.2

0.35

908.7

3.17

2.1

17.8

18.4

238

3-stage ro., pH 8;

Composite A/F3

119.2

0.39

734.6

3.88

2.6

21.0

30.4

103

Conditioning NaCN +

Composite A/F4

104.6

0.40

630.9

3.36

3.8

22.6

38.6

72

Na2CO3; A404, PAX

Composite A/F7

111.9

1.39

654.6

5.56

2.3

16.3

34.9

~75

2-stage ro., nil NaCN

Composite A/F8

108.5

2.38

887.2

11.91

0.9

7.8

30.7

~75

2-stage ro., nil NaCN

Composite A/F9

114.5

1.67

723.9

5.86

2.7

20.8

45

~75

2-stage ro., NaS2, PAX

Composite A/F10

103.5

0.58

401.3

1.62

8.9

34.6

39.8

~75

with NaCO3, CuSO4

Composite A/F11

99.6

0.34

484.8

1.83

8.8

42.2

48.3

~75

with CuSO4, A208

Composite B/F2

88.4

0.42

695.4

2.65

2.6

22.0

12.2

173

3-stage ro., pH 8

Composite B/F5

89.7

0.47

806.1

4.18

2.9

27.0

24.6

92

conditioning NaCN +

Composite B/F6

89.9

0.51

867.1

5.45

2.9

32.5

32.1

74

Na2CO3; A404, PAX

Composite A: Head

99.8

0.36

-

-

-

-

-

-

-

Composite B: Head

88.3

0.52

-

-

-

-

-

-

-

Note: CuSO4 = copper sulphate; NaCO3 = sodium carbonate

Cyanidation Tests

Cyanide leaching tests were conducted on samples from Composite A, Composite B and Composite C using different leaching conditions. The first set of tests were to determine the effect of regrinding the tailings samples prior to leaching while subsequent tests determined the effect of cyanide concentration in the leach solution.

For Composite A, the silver extractions varied from 66% for the un-milled (as received) sample to 80% for the samples that were reground, while the gold extractions varied from 82 to 89% respectively. For Composite B, the silver extractions ranged between 69% for as-received material, to 77% for samples that were reground. The corresponding gold extractions varied between 82 and 87%. Although the cyanide consumption increased with the regrinding of samples tested for both Composite A and Composite B, the increase in extraction may compensate for the additional cost of cyanide reagent and regrinding provided that the filtration characteristics are not detrimentally affected. Higher cyanide concentrations in the leach solution tended to improve the extractions of silver and gold but increased the cyanide consumption significantly as well.

The results from the sulphide tailings, namely Composite C, indicate that between 73 and 87% of the silver can be extracted, with between 77 and 85% of the gold. However, the cyanide consumption values were higher than the results from the oxide tailings. Only two leach tests were conducted on reground samples from Composite C, each having a P80 of about 69 µm. A summary of the cyanide leach test results is given in Table 13.10.

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Table 13.10 Summary of Results of PRA Cyanidation Tests

Sample Identify &

Extraction

(%)

Reagent Usage

(kg/t)

NaCN

Concentration

P80

Test No.

Ag

Au

NaCN

Lime

(g/L)

(µm)

Composite A+/C1

66.4

81.5

1.8

1.4

1.0

269

Composite A+/C2

79.3

85.7

1.6

1.8

1.0

103

Composite A+/C3

80.4

89.1

2.6

1.6

1.0

78

Composite A+/C7

78.6

82.7

2.2

1.8

0.5

74

Composite A+/C8

89.7

85.5

5.1

0.8

2.0

74

Composite A*/C13

79.7

86.8

1.5

1.3

0.5

74

Composite A*/C14

83.1

82.1

3.7

0.8

2.0

74

Composite A*/C17

79.4

90.9

1.0

1.2

1.0

74

Composite B+/C4

69.1

82.0

2.6

1.8

1.0

180

Composite B+/C5

77.1

88.3

1.7

1.8

1.0

100

Composite B+/C6

77.3

86.9

1.7

1.9

1.0

84

Composite B+/C9

73.2

86.0

2.6

1.2

0.5

84

Composite B+/C10

79.5

86.4

4.5

1.0

2.0

84

Composite B*/C15

72.9

82.6

1.6

2.0

0.5

84

Composite B*/C16

75.4

83.4

3.8

1.0

2.0

84

Composite B*/C18

67.7

78.6

0.9

1.3

1.0

84

Composite C+/C11

73.8

77.3

4.0

2.8

1.0

69

Composite C+/C12

86.6

85.0

7.3

2.6

2.0

67

Notes:

“+” indicates Original Composite Sample.

“*” indicates New Composite Sample.

Tests C17 & C18 = 24 h leach duration; other tests + 72 h leach duration.

During the cyanide leach test program, a new Composite A and Composite B sample had to be prepared since the original composite samples had been exhausted. Comparison of results from the two composite samples indicated similar behaviour patterns, although there are some noticeable differences in the extractions. Also, the cyanide and lime consumption values as recorded are inconsistent. This indicates that absolute numbers cannot be assigned to a single test although any observed trends would be valid. The averages of similar tests would more likely predict the overall responses more accurately. It is also apparent that non-systematic variations in the assay results could have arisen from subtle variations in mineralogy, sample preparation, the sample regrinding process and possibly daily variations in temperature.

The cyanide leach extraction results quoted by MMI in Table 13.1, and the averaged results from the present test program, are summarized below in Table 13.11, and will be discussed in the following section.

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Table 13.11 Summary of Cyanidation Test Results Used by the MMI Reports

Sample Identify &

Extraction

(%)

Test No.

Ag

Au

Remarks

Composite A/C1

66

82

As-received; 1.0 g/L NaCN

Composite A/C7 & C13

80

85

Average; reground; 0.5 g/L NaCN

Composite B/C4

69

82

As-received; 1.0 g/L NaCN

Composite B/C9 & C15

73

84

Average; reground; 0.5 g/L NaCN

MMI 2003

77

71

Results from 2003 test program

MMI 2003

88

88

Origin of results unrecorded

MMI 2004/C8 & C10

85

86

Average; reground; 2.0 g/L NaCN

The average extraction results obtained from samples from Composite A and Composite B in the present study are generally lower than the results from the historical test work as detailed in Table 13.11. However, in the absence of details, these historical results cannot be used in the overall evaluation of this process. The MMI claim of a 77% silver extraction, based on the MMI (2003) test program, cannot be considered an acceptable result since only one test was done. The sample origin is purported to be four holes dug at approximately 25 m intervals with samples scraped into a bag, one for the lower bench and one for the upper bench of the oxide tailings dam. Clearly, a sample collected in this manner cannot be considered to be representative. Also, the other MMI (2003) claim for an extraction result of 89% silver and 88% gold cannot be validated. All these test results can therefore not be considered as valid and will not be used in any further discussions or evaluations.

The MMI (2004) results, as claimed in the Technical Report and listed in Table 13.11 above, are also considered unusable. The reasons for this statement are that these results were obtained with a reground sample and leached at a high cyanide concentration of 2.0 g/L sodium cyanide, whereas the other tests were done using 1.0 g/L sodium cyanide. Both these conditions, that is, the regrinding of the tailings material and a high cyanide concentration leach condition, will not be implemented in a recovery process and these results are considered to be unrealistic.

The extraction results from the cyanidation tests obtained using as-received samples from Composite A and Composite B, namely 66 to 69% for silver and 82% for gold, were encouraging.

Column Leach Test

One column leach test was conducted on a 30.9 kg sample being an equal mix of material from Composite A and Composite B. The sample was mixed with water, Portland Cement and lime and then agglomerated to a P80 size of 2,614 µm. After curing, the sample was put into a column with a diameter of 102 mm and a height of 3 m. The column test was run for a total of 81 days after the solution flowrate and pH had been stabilized. The silver extraction obtained was 73.0% while the gold extraction was 78.9%.

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These results compare very well to the average extraction values calculated from the cyanidation tests of the individual composite samples leached in the as-received condition, namely 67.8% for silver and 81.8% for gold. The cyanide consumption values are also comparable. The results obtained from the column test, as well as the calculated average extraction values obtained from the tests conducted on the as-received samples of Composite A and Composite B, have been summarized in Table 13.12.

Table 13 . 12 Summary of Results of Column Leach Tests

Sample &

Extraction

(%)

Reagent Consumption

(kg/t)

NaCN

Concentration

P80

Test No.

Ag

Au

NaCN

Lime

Cement

(g/L)

(µm)

Remarks

Column Test, Composites A and B

73.0

78.9

2.32

13.73

21.8

0.5 & 2.0

2,614

pH 11;

flowrate

0.05 mL/s

Composites A and B Average,

Tests C1&C4

67.8

81.8

2.18

1.59

-

1.0

225

pH

10.5/11;

bottle roll

The kinetics of leaching had slowed down significantly by Day 81 when the test was terminated, although there was evidence that some leaching was still in progress.

A particle size assay analysis of the leach residue of the column test found that the highest unleached (undissolved) silver grade was in the coarsest size range of plus 210 µm, while the highest gold value was found in the minus 37 µm size range. This suggests both inadequate liberation of the silver grains and/or minerals, and occlusion of gold possibly by clay minerals, or the presence of tarnished/coated mineral surfaces, or the presence of refractory minerals. The subsequent leaching of de-agglomerated column leach test residue resulted in a negligible extraction of silver and gold. This indicates that the column leach test had virtually reached its maximum potential extraction, which confirms the observation that the leaching rate had slowed down.

Only one column leach test was conducted. Also, the material tested was a mixture of samples from Composite A and Composite B, that is, a mixture of material from the lower and the middle benches of the oxide tailings dam. During the test, flow problems were encountered which resulted in the column having to be unloaded and the material having to be re-agglomerated with the test subsequently re-started after filling the column. In general terms, the results from one test only cannot be regarded as representative of the whole oxide tailings dam. However, despite these limitations and problems encountered, the encouraging results obtained and the close comparison with the bottle-roll tests, implies that the results are relatively reliable. The extraction values obtained from the column test, namely 73.0% for silver and 78.9% for gold, will therefore be used in the evaluation of this treatment process. The reagent consumption values also appear to be very high, namely 13.73 kg/t for lime, 21.8 kg/t for cement and 2.32 kg/t for cyanide. However, lime and cement consumption values obtained in laboratory tests generally approximate commercial operations although, in this case, they seem to be unrealistically high. The cyanide consumption of a commercial operation would typically only be 30 to 50% of that measured in a laboratory test.

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Acid-base Accounting

The ABA results predict the overall acid generating potential of selected samples. A net acid general potential was found for the sulphide tailings but not the oxide tailings. The processing of the sulphide tailings for silver and gold recovery could modify the ABA and increase the stability of the ultimate residues. Alternatively, the sulphide tailings would require the addition of lime during the process of relocating this material. This would ensure that the sulphide tailings would not cause acid-generating environmental problems.

Electrowinning

Electrowinning metal recovery tests were conducted using EMEW technology (from the Electrometals Electrowinning company), specifically designed for the electrodeposition of metals from dilute solution tenors. The tests were carried out using filtered cyanide leach pregnant solutions. Although the test results were favourable, it appears unlikely at this stage that this technology could be applied in this situation given the high solution volumes generated and the very low silver concentrations anticipated in the pregnant solution from the heap. However, further test work using the EMEW metal recovery system should be undertaken if the Project advances to the Feasibility Study level because the potential for savings in capital cost and operating cost needs to be investigated.

T EST R ESULT R EVIEW

Gravity Concentration

Review of Results

As indicated in Table 13.8, the upgrading for silver from the as-received oxide tailings was poor with a maximum concentrate grade of 125 g/t silver at a mass recovery of 20%. The upgrading of gold is similarly poor. The re-grinding of the samples prior to gravity concentration leads to an almost negligible improvement in the upgrading of silver to 126 g/t silver, while for gold a maximum concentrate grade of 1.29 g/t gold was obtained. The sulphide tailings response to gravity concentration is equally poor with even lower grade gravity concentrates being obtained despite slightly improved recoveries being observed for both silver and gold.

Conclusion

The poor results obtained in that no high-grade metal concentrate could be produced, coupled with the fact that no extraction tests for silver and gold were conducted on the gravity concentrates produced, has resulted in the gravity concentration treatment option not being selected for further consideration.

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Flotation

Review of Results

The flotation results have been summarized in Table 13.9. The results indicate that the overall recoveries for both silver and gold are low, namely between 8 and 42% for silver and 12 to 48% for gold. The re-grinding of both the tailings samples (Composite A and Composite B) are seen to improve the recoveries, while the testing of various reagent regimes also resulted in improvements to the overall recoveries of both silver and gold in some cases. However, the overall recoveries are generally considered to be low at less than 40% for silver and less than 48% for gold, and this is coupled with a very low-grade concentrate being produced. This poor flotation response is probably the result of surface alterations and/or inadequate liberation of the silver and gold bearing minerals. No extraction tests were conducted on any of the flotation concentrates produced and so the total extent of extraction is not known. No tests were conducted on the sulphide tailings material (Composite C) and its response to flotation as a pre-concentration process is therefore not known.

Conclusion

Flotation will not be considered as a treatment option for the recovery of silver and gold from the oxide tailings dam material. For the reasons specified above, namely a generally low recovery of silver and gold, the option of using flotation to recover silver and gold will not be considered as a processing method in the treatment of the oxide tailings dam material.

Cyanide Leaching

Review of Results

Cyanidation leach tests were done on samples from Composite A and Composite B under different conditions of particle size and solution cyanide concentration. The results have been summarized in Table 13.10. The results generally indicated that cyanidation was still occurring after 72 h of the leaching time used for the laboratory tests, but at a much reduced rate. The base metals copper and zinc also dissolved during the cyanide leach and will contribute to the overall consumption of cyanide. Increasing the cyanide concentration in the leach solution generally improved the extraction of silver and gold, but also increased the overall cyanide consumption. The extraction of silver and gold from Composite A increased with fineness of grind, while Composite B did not improve the extraction for finer grinds than P80 of 100 µm. The cyanide consumption figures are inconsistent in some cases although trends are apparent. Although limited test work was done on material from Composite C, namely the sulphide tailings, a set of results have been included in Table 13.13 below for purposes of comparison.

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Table 13.13 Cyanide Leaching Parameters

Head Grade

Extraction

(%)

Reagent

Consumption

(kg/t)

NaCN

Sample

Identify

Ag

(g/t)

Au

(g/t)

Ag

(g/t)

Au

(g/t)

NaCN

Lime

Concentration

(g/l)

P80

(µm)

Remarks

Composite A

94.7

0.35

66.4

81.5

1.8

1.4

1.0

269

As-received sample

Composite B

95.9

0.28

69.1

82.0

2.6

1.8

1.0

180

Average of A

& B

95.3

0.32

67.8

81.8

2.2

1.6

1.0

225

Composite A

94.7

0.35

79.3

85.7

1.6

1.8

1.0

103

Reground sample

Composite B

70.3

0.52

77.1

88.3

1.7

1.8

1.0

100

Average of A

& B

82.5

0.44

78.2

87.0

1.7

1.8

1.0

102

Composite C

39.8

0.34

73.8

77.3

4.0

2.8

1.0

69

Conclusions

As-received (unmilled) and reground tailings dam material will be expected to show the following extraction results under normal leaching conditions of approximately 68% for silver and 82% for gold. The reground material will give higher extractions at approximately 78% for silver and 87% for gold (see results in Table 13.12). Although the regrinding of tailings material is considered to be an expensive treatment method, cyanidation with and without regrinding as a treatment option will be reviewed and discussed in Sections 17.1.

Column Leach Test

Review of Results

One column leach test was conducted using a blend of equal proportions of as-received (unmilled) Composite A and Composite B oxide tailings material. Despite interruptions in the leaching cycle as a result of the de-agglomeration of material in the column and the resultant percolation of fines, the overall extraction of silver was 73% and 79% for gold (see Table 13.12 for the results). Although the test was terminated after a total leaching time of 81 d, indications were that the leaching process was nearing completion but had not finalized at that stage. The above extraction results compare very well with the average extraction results obtained from the bottle roll leach tests, namely 68% extraction for silver and 82% for gold. The cyanide consumption of 2.3 kg/t for the column test was also comparable with that obtained for the bottle roll leach tests, namely 2.2 kg/t. The lime consumption for the column test was significantly higher probably as a result of the two repeated agglomeration exercises.

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Conclusions

Although only one column leach test was performed, the extraction results are in keeping with those obtained from the bottle roll tests. The results as given in Table 13.12 will be used for developing the process design criteria.

Precious Metal Recovery

Review of Results

Only one technology was tested for recovering precious metals from cyanide leach solutions. The pregnant solution arising from leach tests performed on oxide tailings material was used to conduct electrowinning tests. Three tests were conducted using the EMEW technology. These tests indicated that silver could be electrowon from solutions with a starting concentration of about 58 mg/L silver to a depleted electrolyte with about 3 mg/L silver. The deposition was also shown to be very selective with respect to the co-deposition of base metals. However, the pregnant solution from a leaching heap is expected to be significantly less than 58 mg/l silver, possibly as low as 16 mg/L silver. It is unclear whether the EMEW technology could operate efficiently under such low silver tenors.

The alternative process options for the recovery of precious metals would likely be either activated carbon, or the zinc precipitation method. No tests were conducted on these two process options. The use of an activated carbon circuit to recover silver is not recommended because of the added operational complexity. Also, the relatively high- grade of the silver in solution will result in the treating of relatively large amounts of carbon, which will add to the cost of the Project.

Conclusions

No other historical test work results were reported by MMI, nor are any alternative technology results known to have taken place, which tested the recovery of silver from the Avino Mine tailings material. The Merrill-Crowe process will therefore be the preferred technology to recover the silver and gold from pregnant leach solution.

13.4 SULPHIDE TAILINGS

Limited test work has been completed on material from the sulphide tailings before 2012. The two sets of the results on the reground sulphide samples indicate that 73% and 87% of the silver and 77% and 85% of the gold can be extracted using 1 and 2 g/L cyanide solutions, respectively. However, the cyanide consumptions were higher than the results from the oxide tailings. No further testing has been conducted on the sulphide tailings samples after 2012.

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14.0 MINERAL RESOURCE ESTIMATES

14.1 RESOURCE SUMMARY

The following tables provide a synopsis of the reported Mineral Resources reported in this section. Table 14.1 summarizes the base case values for all current Mineral Resources on the Property.

The reporting cut-off for the Avino Vein is 60 g/t AgEQ and the cut-off for the San Gonzalo Vein is 130 g/t AgEQ. These cut-offs were determined by Avino based on actual mining scenarios and a silver price of $18.50/oz.

The reporting cut-off for the oxide tailings is 50 g/t AgEQ.

No Mineral Resource for the sulphide tailings is disclosed in this Technical Report.

Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.

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Table 14.1 Avino Mine – Mineral Resources

Resource Category

Deposit

Cut-off AgEQ

( g/t)

Tonnes

(t)

Grade

Metal Contents

AgEQ

(g/t)

Ag

(g/t)

Au

(g/t)

Cu

(%)

AgEQ(million tr oz) *

Ag (million

tr oz)

Au (thousand

tr oz)

Cu

(t)

Measured and Indicated Mineral Resources

Measured

Avino – ET

60

3,890,000

141

71

0.54

0.55

17.6

8.9

67.4

21,000

Measured

Avino – San Luis

60

650,000

142

67

0.70

0.49

3.0

1.4

14.6

3,000

Measured

San Gonzalo System

130

290,000

397

314

1.65

0.00

3.7

2.9

15.4

0

Total Measured

All Deposits

-

4,830,000

156

85

0.63

0.51

24.3

13.2

97.4

24,000

Indicated

Avino – ET

60

2,640,000

105

49

0.56

0.34

8.9

4.2

47.6

9,000

Indicated

Avino – San Luis

60

1,620,000

126

54

0.82

0.36

6.6

2.8

42.9

6,000

Indicated

San Gonzalo System

130

240,000

319

257

1.25

0.00

2.5

2.0

9.6

0

Indicated

Oxide Tailings

50

1,330,000

124

98

0.46

0.00

5.3

4.2

19.8

0

Total Indicated

All Deposits

-

5,830,000

124

70

0.64

0.25

23.3

13.1

119.8

15,000

Total Measured and Indicated

All Deposits

-

10,660,000

139

77

0.63

0.37

47.5

26.3

217.2

39,000

Inferred Mineral Resources

Inferred

Avino – ET

60

2,380,000

111

58

0.51

0.33

8.5

4,4

39.1

8,000

Inferred

Avino – San Luis

60

1,780,000

124

57

0.72

0.38

7.1

3.2

41.2

7,000

Inferred

San Gonzalo System

130

120,000

262

219

0.86

0.00

1.0

0.8

3.3

0

Inferred

Oxide Tailings

50

1,810,000

113

88

0.44

0.00

6.6

5.1

25.6

0

Total Inferred

All Deposits

-

6,090,000

118

70

0.56

0.24

23.2

13.6

109.2

15,000

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14.2 DATA

Drillhole data for the Avino and San Gonzalo resource estimates was supplied by Avino to ARANZ Geo in the form of several Microsoft ^® Excel spreadsheet and Microsoft ^® Access files, and this data was verified and compiled into .csv files (see Section 12.1).

Wireframe meshes (.dxf files) of the topography, underground development, previous 3D models of the San Gonzalo and Avino Veins and cross-section and plan view images were supplied by Avino. Drillhole data was imported into Leapfrog Geo ^™ software (version 4.2.3).

Data includes underground channel sampling and diamond drill data.

14.3 AVINO VEIN

14.3.1 GEOLOGICAL INTERPRETATION

The Avino Vein and the surrounding system are interpreted as part of a low- to intermediate-sulphidation system of silver-gold epithermal veins, breccias, stockworks, and silicified zones. The Avino system is relatively thick (up to 40 m thick in places) and exhibits lower silver but higher copper grades than the San Gonzalo Vein system.

Historically, exposure and sampling of the deposit in underground development has been understandably biased towards the higher end of the silver grade spectrum. This presents problems when making decisions on what should be considered to be mineralized vein material, as the position of the mineralization to barren interface was either not exposed or recorded in the development data. In many cases the edge of the mineralized zones was approximated by the end of sampling, the edge of the development or a 40 g/t silver grade.

14.3.2 WIREFRAMING

Mineralized zones were independently modeled by ARANZ Geo in Leapfrog Geo ^™ software, utilizing the drillhole data, topography and the underground development information. Wireframes and scans of cross-sectional interpretations and underground mappings supplied by Avino assisted in modelling the deposit.

The modelling was carried out independently by ARANZ Geo using Leapfrog Geo ^™ software applying an implicit “vein system”-style of modelling workflow to produce a series of seamless 3D units.

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The Avino mineralized vein system was modelled as four subparallel but cross-cutting veins including the main most persistent body consisting of vein material sandwiched between two prominent and siliceous breccias and three subsidiary units (NW1, NW2, NE1). Lithology information and grade information were both used to interpret the extents of the veins and to flag sampled and logged intervals as country rock or as one of the units of interest. Lithology information is often not available for the mined-out areas and grade interpretations had to be used. Material outside the veins and most likely of low grade has usually not been recorded in the legacy data for obvious reasons. Where there is absence of recorded intersections of the vein margins, ARANZ Geo has erred on the side of caution by interpreting the edges of the vein to the last samplings with appreciable grades.

Figure 14.1 Oblique View, Looking North, of the Avino Vein System Model

To test the robustness of the model, grade contact profiles were generated.

Grade contact profiles demonstrate how well the wireframe meshes segregate the metal, based on the assayed samples. These contact profiles were generated by determining the average grades for sampled metals within successive 5 m wide slices inside and outside the Avino Vein System models for a range of distances from -10 m (inside the system) to +50 m (outside) from the contact.

The profiles are shown in graphs in Figure 14.2 and the number of samples per 5 m slice is shown in Figure 14.3. There is a moderately rapid decrease with increasing distance from the vein contacts in silver, gold, zinc and copper profiles (as shown in Figure 14.2). To better display the profiles on a single graph, silver has been re-scaled to fit and copper and zinc are in percentage units. For example, the silver grade is generally in excess of 80 g/t within the vein but decreases to an average of less than 30 g/t at a distance of 30 m from the vein contact. Zinc appears to be a good indicator element for the mineralized system and rapidly decreases in abundance within 5 m of the contact. This may be used to advantage in future modelling of the system.

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As can be seen (Figure 14.3), there is a rapid decrease of information at ranges greater than 20 m from the contact (contact is represented by “0” on the horizontal axis). This is to be expected as the information has been generated in underground workings that have been designed to preferentially expose and sample material that is better mineralized in the vein system. Information is biased towards the underground excavations and the understandable historic tendency to only sample material at any distances away from the known veins that display good mineralization characteristics. However, the profiles do provide an indication that the Avino Vein System has a gradational or soft boundary tendency from an estimation point of view. Silver, gold and copper show the gradational profile, while zinc has relatively sharp profile. This should be followed up to develop future estimation strategies.

Figure 14.2 Silver Grade Profiles Across the Avino Vein System Contacts

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Figure 14.3 Copper Grade Profile Across the Avino Vein System Contacts

14.4 SAN GONZALO VEIN

14.4.1 GEOLOGICAL INTERPRETATION

The San Gonzalo Vein is interpreted as part of a low- to intermediate-sulphidation system of silver-gold epithermal veins and silicified zones. The individual veins in the San Gonzalo system are relatively narrow (mostly less than 3 m thick in places) and exhibit higher silver but lower copper grades than the Avino Vein system.

14.4.2 WIREFRAMING

The system was modelled using Leapfrog Geo ^™ software as six sub parallel but cross-cutting veins consisting of a main vein (SG1) and five subsidiary units (SG2 through SG6). Lithology information and grade information were both used to interpret the extents of the veins and to flag sampled and logged intervals as country rock or as one of the units of interest. Figure 14.4 displays the modeling results graphically.

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Figure 14.4 Oblique View, Looking North, of the San Gonzalo Vein System Model

To assess the level to which the interpreted San Gonzalo Veins have honoured the selection, contact profiles were generated to examine how well the wireframe meshes segregate the metal, based on the assayed samples. The San Gonzalo Veins are more compact than the Avino Veins and the metal grades at San Gonzalo are confined to the vein material. The contact profiles were generated by determining the average grades for several metals within successive 5 m wide slices inside and outside the San Gonzalo Vein System models for a range of distances from -1.5 m (inside the system) to +1.7 m (outside) from the contact. The profiles are shown in Figure 14.5. There is a rapid decrease with increasing distance from the vein contacts in silver, gold and copper profiles.

Figure 14.5 Silver and Gold Grade Profiles Across the Main San Gonzalo Vein Contacts

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For example, the silver grade is generally in excess of 200 g/t within the vein but decreases to an average of less than 50 g/t at a distance of 1 m from the vein contact.

For gold the contacts were less conspicuous, but average grade data still showed that the populations were statistically distinct. All contacts between mineralized and wall rock populations were treated as hard boundaries in estimation.

The San Gonzalo Vein System model is more robust when compared to the data and displays more abrupt metal profiles than the equivalent for the Avino Vein. This may reflect real differences in the mineralization styles (thickness and metal grade differences also support a different process) but may also to some degree be a result of the sparse legacy lithology data in the upper part of the Avino Mine.

14.5 OXIDE TAILINGS

14.5.1 GEOLOGICAL INTERPRETATION

In the Avino oxide tailings, a prominent bench separates the lower portion of the deposit (referred to as the “oxide lower bench” in various documents) from the upper portion of the oxide tailings (the “middle bench”). Overlying the oxide tailings is a volume of sulphide tailings material (the “upper bench” or “sulphide tailings”). The sulphide tailings material lacks representative sampling data.

Figure 14.6 is a perspective view looking north, showing the oxide lower bench, oxide lower bench and sulphide tailings and the positions of drillholes and silver assays.

Figure 14.6 Perspective View of Oxide Tailings Drilling and Silver Assays

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14.5.2 WIREFRAMING

The tailings deposit was modelled using topography information supplied by Avino and bedrock contact information from the drilling data.

Figure 14.7 Section View, Looking Northeast, Showing Silver Grades in Oxide Tailings Benches

The grade pattern of the upper and lower and middle benches has been better defined by the addition of the recent drilling information (more than doubling the amount of assays, see Table 14.2). Previously, the middle and lower oxide benches were considered separately from an estimation perspective based on the colour difference, the middle bench appearing to be more reddish than the lower material. This may reflect a change in iron content but not necessarily the gold or silver grades. The sampling data (see Figure 14.7) shows a pattern of silver depletion at the top of the middle bench with enrichment immediately below.

The spatial pattern indicates gradational changes between the middle and lower oxide benches, except for silver which appears to have been leached downwards from the top of the middle bench. While the colour difference between the two units may be significant for iron-bearing species, there is not a great statistical difference between the silver and gold grades in the middle and lower benches, and the leaching effect (see Figure 14.6) appears to affect the upper portion of the middle bench. Consequently, it was decided to estimate the middle and lower bench as a single domain. The use of a variogram and search ellipse, flattened in the horizontal direction also reduces the risk of smearing grade vertically. In future it may be preferable to evaluate the leached cap of the tailings separately from the remainder. The risk of not doing so at this time, is ameliorated by the horizontal variogram continuity which reduces the risk of mixing.

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14.6 EXPLORATORY DATA ANALYSIS

14.6.1 RAW DATA ASSAYS AND STATISTICS

AVINO AND SAN GONZALO

Table 14.2 shows the length-weighted metal statistics for the sample data for the Avino and San Gonzalo mineralization. Assayed metals include silver, gold, and copper. Metals considered in the Avino ET resource estimate include silver, gold, and copper. Metals considered in the San Gonzalo Vein resource estimate include silver and gold.

Oxide Tailings

The drillhole dataset included 91 drillholes with a total metreage of 1,396 m that was completed in the tailings from 1990 to 2016. Only the gold and silver are considered to be of economic interest in the oxide tailings deposit.

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Table 14.2 Metal Grade Statistics for 2 m Composites for the Avino and San Gonzalo Vein Systems

Metal

Domain

Number of
Composites

Minimum

Maximum

Mean

Variance

CV

Capping
Value

Number
Capped

Avino Vein

Ag

Main

6,508

0.01

1,289.96

96.60

7151.54

0.88

1000

2

Ag

NE1

191

0.01

233.32

47.70

1795.62

0.89

-

0

Ag

NW1

99

0.01

421.00

100.74

7468.03

0.86

-

0

Ag

NW2

50

0.01

514.49

104.15

13902.29

1.13

-

0

Ag

HW01

121

0.01

366.67

49.25

4621.60

1.38

-

0

Ag

HW02

168

1.58

310.52

42.55

1969.53

1.04

-

0

Au

Main

6,508

0.00

127.29

0.71

7.55

3.85

50

6

Au

NE1

191

0.00

2.25

0.24

0.08

1.16

-

0

Au

NW1

99

0.01

5.60

0.89

0.62

0.89

-

0

Au

NW2

50

0.01

4.00

0.93

0.50

0.76

-

0

Au

HW01

121

0.01

8.96

0.73

1.16

1.48

-

0

Au

HW02

168

0.01

7.65

0.99

1.32

1.16

-

0

Bi

Main

259

0.00

0.47

0.05

0.00

1.26

-

0

Bi_2

Main

6,465

0.00

0.81

0.05

0.00

1.14

-

0

Bi_2

NE1

183

0.00

0.14

0.03

0.00

0.80

-

0

Bi_2

NW1

96

0.00

0.23

0.04

0.00

1.22

-

0

Bi_2

NW2

47

0.00

0.30

0.05

0.00

1.35

-

0

Bi_2

HW01

113

0.00

0.18

0.01

0.00

2.49

-

0

Bi_2

HW02

168

0.00

0.15

0.01

0.00

2.05

-

0

Cu

Main

6,508

0.00

7.07

0.65

0.28

0.82

-

0

Cu

NE1

191

0.01

3.07

0.57

0.24

0.86

-

0

Cu

NW1

99

0.01

2.04

0.55

0.20

0.81

-

0

Cu

NW2

50

0.01

2.15

0.41

0.19

1.07

-

0

Cu

HW01

121

0.01

8.96

0.73

1.16

1.48

-

0

Cu

HW02

168

0.01

7.65

0.99

1.32

1.16

-

0

San Gonzalo Vein

Ag

SG1

6,669

0.00

14,768.40

283.66

349,328.43

2.08

25

5000

Ag

SG2

117

0.90

890.24

72.32

6,500.57

1.11

-

0

Ag

SG3

38

1.69

604.45

95.94

17,852.42

1.39

-

0

Ag

SG4

168

3.72

5,265.20

200.05

315,058.50

2.81

2

3000

Ag

SG5

40

1.50

708.10

111.98

36,807.33

1.71

2

600

Ag

SG6

54

0.70

331.20

40.25

6,418.32

1.99

-

0

Au

SG1

6,669

0.00

204.17

1.48

17.22

2.80

-

0

Au

SG2

117

0.01

3.79

0.56

0.35

1.04

-

0

Au

SG3

38

0.02

3.05

0.58

0.38

1.07

-

0

Au

SG4

168

0.01

13.96

0.69

2.41

2.24

2

10

Au

SG5

40

0.01

9.84

0.74

2.78

2.26

2

4

Au

SG6

54

0.00

2.77

0.30

0.39

2.08

-

0

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Table 14.3 Oxide Tailings Samples by Sampling Campaign

By campaign

Pre-2012

2015-16

Campaign

0

1

Number (Ag)

448

561

Number (Au)

448

556

Number (Cu)

0

566

Number (Pb)

0

563

Number (Zn)

0

566

Mean Ag (g/t)

95.39

97.81

Mean Au (g/t)

0.53

0.47

Mean Cu (%)

-

0.14

Mean Pb (%)

-

0.99

Mean Zn (%)

-

0.19

Variance Ag

814.94

1073.20

Variance Au

0.03

0.06

Variance Cu

-

0.01

Variance Pb

-

0.18

Variance Zn

-

0.04

Minimum Ag

11.00

4.00

Minimum Au

0.10

0.01

Minimum Cu

-

0.00

Minimum Pb

-

0.00

Minimum Zn

-

0.00

Maximum Ag

222.00

309.00

Maximum Au

1.28

2.02

Maximum Cu

-

0.66

Maximum Pb

-

3.26

Maximum Zn

-

1.65

CV Ag

0.09

0.11

CV Au

0.10

0.26

CV Cu

-

0.53

CV Pb

-

0.18

CV Zn

-

1.19

The oxide tailings data have been subdivided by unit and the metal assay statistics are summarized in Table 14.4.

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Table 14.4 Oxide Tailings Assays by Unit

Unit

Unknown

Lower

Middle

Bedrock

Length (m)

139.7

608.9

619.2

28.2

Number (Ag)

50

497

482

11

Number (Au)

50

497

482

11

Number (Cu)

41

186

207

3

Number (Pb)

41

186

207

3

Number (Zn)

41

186

207

3

Mean Ag (g/t)

97.72

103.85

89.27

77.55

Mean Au (g/t)

0.39

0.47

0.51

0.29

Mean Cu (%)

0.15

0.13

0.12

0.14

Mean Pb (%)

1.24

1.12

0.85

1.28

Mean Zn (%)

0.18

0.18

0.12

0.20

Variance Ag

20.60

20.60

52.00

20.60

Variance Au

0.20

0.11

0.13

0.11

Variance Cu

0.00

0.00

0.00

0.00

Variance Pb

0.00

0.00

0.00

0.00

Variance Zn

0.00

0.00

0.00

0.00

Minimum Ag

148.13

182.01

193.13

115.00

Minimum Au

0.74

1.08

1.21

0.44

Minimum Cu

0.27

0.27

0.26

0.15

Minimum Pb

1.75

1.83

2.02

1.50

Minimum Zn

0.34

0.38

0.26

0.22

Maximum Ag

542.01

428.63

525.92

1257.48

Maximum Au

0.01

0.02

0.01

0.01

Maximum Cu

24.41

22.01

9.75

3.51

Maximum Pb

479.10

531.34

528.62

453.94

Maximum Zn

18.67

25.97

12.96

6.20

CV Ag

0.00

0.00

0.01

0.00

CV Au

1.30

0.52

0.48

1.34

CV Cu

0.00

0.00

0.00

0.00

CV Pb

0.00

0.00

0.00

0.00

CV Zn

0.00

0.00

0.00

0.00

14.6.2 OUTLIER MANAGEMENT AND CAPPING STRATEGY

It is common practice in the mineral industry to restrict the influence of high assays through “top-cutting” or “capping”. Capping was implemented for each element and for each domain, after to sample length compositing. Capping limits were chosen based on a review of sampling histograms using Snowden Supervisor ^™ software and examination of coefficient of variation statistic for each domain. The coefficient of variation, also known as relative standard deviation (RSD), is a standardized measure of dispersion of a probability distribution and provides an indication of the presence of significant outliers. Coefficient of variation statistics greater than two and the visual detection of irregular behaviour in the upper portion of log histogram of the data were used as an indicator that capping should be applied.

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14.6.3 DRILLHOLE COMPOSITING

Compositing is carried out to ensure a common ‘change of support’ length. If samples are not composited, small length samples with a high grade (and the converse) might bias the estimation process.

Inspection of the raw data from the Avino and San Gonzalo systems, indicated that a common composite length of 2 m would accommodate most sample lengths as the majority of sample lengths were less than 2 m and 2 m was used as the standard composite length for the deposit.

Compositing in Leapfrog ^™ included all samples in the composites with a minimum width of 1.0 m within the mineralized zones. New composites were thus created each time the domain changed.

14.7 DENSITY

14.7.1 DENSITY DATA

Density data was supplied by Avino in the form of a set of measurements made at site. Summary statistics for these measurements are provided in Table 14.5 and Table 14.6.

Table 14.5 Avino Vein System Density Data Summary

Domain

Number

Minimum

Maximum

Mean

Variance

Coefficient of
Variation

10 (Main)

40

2.53

3.00

2.71

0.02

0.05

HW01

42

2.43

2.90

2.68

0.01

0.03

Wall Rock

93

2.29

3.00

2.65

0.04

0.07

Combined

175

2.29

3.00

2.67

0.03

0.06

Table 14.6 San Gonzalo Vein System Density Data Summary

Domain

Number

Minimum

Maximum

Mean

Variance

Coefficient of
Variation

SG1

50

2.40

3.00

2.64

0.03

0.07

SG2

2

2.73

2.78

2.76

0.00

0.01

Wall Rock

41

2.40

3.00

2.69

0.02

0.05

Combined

93

2.40

3.00

2.67

0.03

0.06

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The Avino Vein System density data is widely spaced in drillholes across the lower portion of the mine and more than half of the measurements are not in the vein material. The San Gonzalo Vein System density data is more comprehensive but more than 40% of the measurements are not in the vein material.

A global average of 2.63 t/m ³ was used for the resource tonnage estimation as it reflects the historic average used at the mine for both the Avino and the San Gonzalo Vein Systems.

Avino conducted bulk density measurements on 432 samples from 20 drillholes in the oxide tailings. Based on these data, Slim (2005d) determined a global average specific gravity value of 1.605 for the oxide tailings. No new specific gravity data that can be considered representative of the tailings pile has been collected, so ARANZ Geo used the specific gravity value of 1.605 for the current oxide tailings estimate.

14.8 BISMUTH

Bismuth is relevant as a penalty element in the Avino Vein material at ET Mine and San Luis. The spatial distribution of the bismuth grade is important for any future planning for possible selective mining or blending. However, there are only 2,462 bismuth assays, compared with 25,074 silver assays. Statistical analysis of the coordinated assay data shows that bismuth is correlated with silver and copper. A linear model was developed using open source R statistical software (R Project 2013) to predict bismuth for samples that have been analysed for silver and copper. The model is summarized in Figure 14.8.

Figure 14.8 Linear Regression Model Coefficients for Bismuth Estimation

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Durango, Mexico

The model was verified against the real bismuth grade assays and the model fit was statistically significant. The linear model was used to estimate bismuth into the block model for the Avino Vein System using the linear relationship Bi = 0.0003574 * [Ag] + 0.0230816 * [Cu] + 0.001615.

In ARANZ Geo’s opinion, this method of estimating bismuth as a penalty element is useful to estimate in situ bismuth. In the future bismuth should be assayed at the same rate as copper to provide more detailed information for mine planning.

14.9 VARIOGRAPHY AND SPATIAL ANALYSIS

Variography was conducted utilizing Snowden Supervisor ^™ software. The experimental variograms were modelled parallel to the orientations of the veins in the case of the Avino and San Gonzalo Veins and horizontal for the oxide tailings.

Experimental variograms were modelled for the Avino Vein system and the oxide tailings, for all domains and for the relevant potentially useful metals, silver, gold and copper. Experimental variograms were modelled for the San Gonzalo Vein system for all domains and for the relevant potentially useful metals, silver and gold. The variogram models for San Gonzalo have been revised since 2016 to incorporate the observed sub-horizontal trends in grade that appear to reflect telescoping of the mineralization into a vertical window some two to three hundred metres in vertical extent.

Figure 14.9 through to Figure 14.15 show representative variograms. Variograms were modelled in a normal scores transform, using Snowden Supervisor ^™ and then back-transformed and used for estimation on the untransformed grade data in Leapfrog Edge™. Nearest neighbour (NN) and inverse distance (ID) estimates used the same search ellipses applied for the corresponding ordinary kriged (OK) estimators.

Avino Silver & Gold Mines Ltd.

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Figure 14.9 Avino Vein: Main Zone Experimental and Modelled Silver Variograms

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Figure 14.10 Avino Vein: Main Zone Experimental and Modelled Gold Variograms

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Figure 14.11 Avino Vein: Main Zone Experimental and Modelled Copper Variograms

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Figure 14.12 San Gonzalo Vein: SG1 Experimental and Modelled Silver Variograms

Avino Silver & Gold Mines Ltd.

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Figure 14.13 San Gonzalo Vein: SG1 Experimental and Modelled Gold Variograms

Avino Silver & Gold Mines Ltd.

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Figure 14.14 Oxide Tailings: Domain 10 Experimental Silver Variograms

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Figure 14.15 Oxide Tailings: Domain 10 Experimental Silver Variograms

14.10 INTERPOLATION PLAN AND KRIGING PARAMETERS

Estimation for the Avino and San Gonzalo Vein systems was carried out using Leapfrog Edge ^™ software and parameters optimized by kriging neighbourhood analysis (KNA) carried out using Supervisor ^™ software. Optimization was achieved by minimising the number of negative kriging weights and maximising the theoretical slope of regression of the estimates.

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14.10.1 AVINO

A sub-blocked block model was created to cover the Avino system. The parent block size of 20 m by 10 m by 10 m was used for block model and resource estimate. Sub-blocks of 5 m by 1 m by 2 m were used to better fill the vein system model shapes. Sub-blocks were populated with grades corresponding to those estimated in the parent blocks. The interpolation method used for populating the block model was OK following a kriging neighbourhood specification tested in Snowden Supervisor ^™ software. A minimum of 8 and maximum of 32 composites were used per block with a maximum of 5 samples per drillhole.

Estimation parameters for the Avino Vein System are summarised in Table 14.7.

14.10.2 SAN GONZALO

A single block model was created to cover the San Gonzalo system. A block size of 10 m by 10 m by 10 m was used for block model and resource estimate. The interpolation method used for populating the block model was OK following a kriging neighbourhood specification tested in Snowden Supervisor ^™ software. A minimum of 16 and maximum of 48 composites were used per block with a maximum of 40 samples per drillhole.

Estimation parameters used for the San Gonzalo System are summarised in Table 14.8.

14.10.3 OXIDE TAILINGS

A single block model was created to cover the Avino oxide tailings deposit. A block size of 20 m by 20 m by 2 m was used for block model and resource estimate, as the average distance between sample drillholes approximates 30 m and the composite length is 2 m. The interpolation method used for populating the block model was OK following a kriging neighbourhood specification tested in Snowden Supervisor ^™ software. A minimum of 8 and maximum of 32 composites were used per block with a maximum of 40 samples per drillhole.

Estimation parameters used for the oxide tailings deposit are summarised in Table 14.9.

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Table 14.7 Avino Vein System Variogram and Search Parameters

Ellipsoid

Rotation

Min

Max

Metal

Domain

Nugget C0

C1

C2

R11

R12

R13

R21

R22

R23

Dip

Azimuth

Pitch

Comps

Comps

Ag

Main

2390

2940

1740

8

8

8

61

38

18

66

161

157

8

32

Ag

NE1

724

704

380

8

8

8

61

38

18

73

147

80

8

32

Ag

NW1

2390

3473

3030

9

8

8

61

38

18

48

177

76

8

32

Ag

NW2

5240

4860

5500

8

8

8

60

38

18

41

180

110

8

32

Ag

HW01

530

1200

880

8

8

8

61

38

18

59

183

76

8

32

Ag

HW02

980

302

800

9

8

8

62

38

18

63

162

82

8

32

Au

Main

1.35

1.9

4.28

8

8

6

35

25

10

66

161

157

8

32

Au

NE1

0.036

0.036

0.029

7.8

8

6

35

25

10

73

147

80

8

32

Au

NW1

0.28

0.26

0.3

8

8

8

37

25

10

48

177

76

8

32

Au

NW2

0.28

0.26

0.3

8

8

8

35

25

10

41

180

110

8

32

Au

HW01

1.35

1.9

4.28

8

8

6

35

25

10

59

183

76

8

32

Au

HW02

0.5

0.5

0.3

8

8

6

35

25

10

63

162

82

8

32

Bi

Main

0.0012

0.00067

0.0009

8

7

6

83

46

18

57

158

128

8

32

Bi

NE1

0.00017

0.00039

0.00014

6

8

9

63

38

26

73

147

78

8

32

Bi

NW1

0.00015

0.00015

0.00038

10

8

8

62

25

12

48

177

76

8

32

Bi

NW2

0.0000048

0.00017

0.00025

11

11

10

63

41

19

41

180

110

8

32

Bi

HW01

0.00011

0.0002

0.00023

11

8

4

59

25

10

59

183

76

8

32

Bi

HW02

0.00026

0.0001

0.000036

13

9

6

45

23

9

63

162

82

8

32

Cu

Main

0.075

0.095

0.07

7

5

5

50

40

20

66

161

157

8

32

Cu

NE1

0.075

0.095

0.07

7

5

5

50

40

20

73

147

78

8

32

Cu

NW1

0.1

0.07

0.06

7

5

5

50

40

20

48

177

76

8

32

Cu

NW2

0.1

0.07

0.06

7

5

5

50

40

20

41

180

110

8

32

Cu

HW01

1.35

1.9

4.28

8

8

6

35

25

10

59

183

76

8

32

Cu

HW02

0.5

0.5

0.3

8

8

6

35

25

10

63

162

82

8

32

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Table 14.8 San Gonzalo Vein System: Variogram and Search Parameters

Ellipsoid

Rotation

Metal

Domain

Nugget C0

C1

C2

R11

R12

R13

R21

R22

R23

Dip

Azimuth

Pitch

Min

Comps

Max

Comps

Ag

SG1

165000

200000

109160

16

16

6

92

84

13

76

32

170

8

32

Ag

SG2

4060

6156

900

16

16

6

92

84

16

84

358

168

8

32

Ag

SG3

5000

9000

4013

16

16

6

92

84

16

73

42

166

8

32

Ag

SG4

160000

180000

72635

16

16

6

92

84

16

86

9

117

8

32

Ag

SG5

10000

15000

6487

16

16

6

92

84

16

76

198

14

8

32

Ag

SG6

2000

2000

1400

16

16

6

92

84

16

87

34

168

8

32

Au

SG1

11

7.5

3.94

13

10

3

71

51

10

76

32

170

8

32

Au

SG2

0.17

0.1

0.071

13

10

3

71

51

10

82

358

12

8

32

Au

SG3

0.27

0.2

0.069

13

10

3

71

51

10

73

42

166

8

32

Au

SG4

2.03

0.7

0.33

13

10

3

71

51

10

86

9

168

8

32

Au

SG5

1.6

0.9

0.66

13

10

3

71

51

10

76

198

14

8

32

Au

SG6

0.16

0.1

0.06

13

10

3

71

51

10

87

34

89

8

32

Table 14.9 Oxide Tailings Deposit: Variogram and Search Parameters


Domain 10
Metal	Nugget	C1	R11	R12	R13	C2	R21	R22	R23	Angle1	Angle2	Angle3	mincomps	maxcomps
Ag	0.37	0.49	30	7	68	0.14	130	20	170	0	-90	135	8	32
Au	0.39	0.51	55	8	16	0.1	100	20	92	0	-90	135	8	32
Cu	0.2	0.59	68	8	24	0.21	195	19	112	0	-90	135	8	32
Pb	0.45	0.35	63	13	70	0.2	269	14	170	0	-90	135	8	32
Zn	0.23	0.42	190	11	51	0.35	191	12	165	0	-90	135	8	32

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14.11 RESOURCE BLOCK MODELS

14.11.1 BLOCK MODEL CONFIGURATIONS

The specifications for the estimation block models for the Avino Vein System and the San Gonzalo Vein System (built using Leapfrog Edge ^™ ) and the oxide tailings (built using Datamine Studio ^™ )are summarized in Table 14.10. Both the hard rock vein deposit models for the Avino and San Gonzalo systems are rotated about a vertical axis passing through the bottom left hand corner to better conform to the strike of the veins. Sub-blocking was used to optimize volume filling of the vein models by preferentially minimizing block dimension in the Y-dimension for the vein models while the sub-blocking used for the oxide tailings block model minimized the block dimension in the vertical direction. The block models were not inclined, to avoid potential geometric confusion when the models are used for planning and reconciliation.

Table 14.10 Estimation Block Model Specifications

Model

X0

Y0

Z0

NX

NY

NZ

DX

DY

DZ

MinDX

MinDY

MinDZ

RotV

Avino Vein (Leapfrog)

569840

2712270

1800

137

44

65

20

10

10

5

1

2

335

San Gonzalo Vein (Leapfrog)

571065

2714432.5

2355

163

72

56

10

5

10

2.5

0.25

2.5

35

Oxide Tailings (Datamine)

569680

2712020

2170

16

15

37

40

40

2

4

4

0.2

0

Table 14.11 Explanation of Table 14-10

Variable

Meaning

X0

minimum easting

Y0

minimum northing

Z0

minimum elevation

NX

number of primary blocks in easting direction

NY

number of primary blocks in northing direction

NZ

number of primary blocks in elevation direction

DX

primary easting block dimension

DY

primary northing block dimension

DZ

primary vertical block dimension

MinDX

minimum sub-block easting dimension

MinDY

minimum sub-block northing dimension

MinDZ

minimum sub-block vertical dimension

RotV

Rotation angle of model about a vertical axis

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14.11.2 INTERPOLATION

The reported resource relies on OK as the best unbiased linear estimator of grade. Other methods of interpolation, including ID ² and NN were employed for model validation purposes and are retained in the block models.

14.12 MODEL VALIDATION

14.12.1 STATISTICS

Mean metal grade values (silver, gold, and copper) for estimated blocks using OK and ID ² for the Avino Vein System domains are shown in Table 14.12. The two types of estimates are comparable particularly in the Main Zone, which is the largest domain.

Mean metal grade values (Ag and Au) for estimated blocks ordinary kriged (OK) and inverse distance to the second power (ID) for the Avino Vein system domains are shown in Table 14.13. The two types of estimates are comparable particularly in the Main Zone, which is the largest domain.

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Table 14.12 Avino Vein: Block Estimates and Composite Sample Grades

Name

Block Count

Volume

Mean

Std. Dev.

CV

Variance

Minimum

L. Quartile

Median

U. Quartile

Maximum

HW01

72,150

721,500

Ag_ID_all

60,031

600,310

46.55

28.80

0.62

829.67

5.50

22.79

39.04

66.40

157.22

AgOK_all

60,031

600,310

40.89

19.34

0.47

373.86

7.65

24.31

37.85

54.52

112.68

Au_ID_all

54,142

541,420

0.77

0.34

0.44

0.11

0.04

0.52

0.72

0.98

3.08

AuOK_all

54,142

541,420

0.73

0.23

0.31

0.05

0.24

0.57

0.72

0.86

2.23

Cu_ID_all

54,142

541,420

0.15

0.09

0.62

0.01

0.03

0.09

0.12

0.19

0.82

CuOK_all

54,142

541,420

0.16

0.07

0.45

0.01

0.05

0.10

0.13

0.21

0.40

HW02

79,666

856,360

Ag_ID_all

73,252

792,220

39.54

14.24

0.36

202.78

9.11

30.22

38.01

47.55

94.83

AgOK_all

73,252

792,220

38.63

10.01

0.26

100.22

10.34

32.28

38.33

45.44

74.15

Au_ID_all

71,897

778,670

0.84

0.61

0.72

0.37

0.10

0.39

0.66

1.18

3.64

AuOK_all

71,897

778,670

0.87

0.51

0.58

0.26

0.12

0.47

0.77

1.22

2.51

Cu_ID_all

71,897

778,670

0.13

0.12

0.94

0.02

0.03

0.06

0.11

0.17

2.21

CuOK_all

71,897

778,670

0.13

0.07

0.56

0.01

0.04

0.07

0.12

0.16

0.59

Main

526,988

5,598,230

Ag_ID_all

453,966

4,860,050

78.90

41.73

0.53

1741.18

0.14

50.99

70.94

98.90

518.61

AgOK_all

453,966

4,860,050

77.40

37.54

0.49

1409.54

0.50

50.87

70.70

97.49

326.15

Au_ID_all

453,966

4,860,050

0.63

0.57

0.90

0.32

0.01

0.26

0.49

0.83

9.20

AuOK_all

453,966

4,860,050

0.61

0.51

0.83

0.26

0.01

0.26

0.51

0.83

6.23

Cu_ID_all

453,966

4,860,050

0.55

0.31

0.55

0.09

0.01

0.34

0.52

0.72

2.99

CuOK_all

453,966

4,860,050

0.55

0.29

0.52

0.08

0.02

0.35

0.51

0.71

2.23

NE1

64,820

648,200

Ag_ID_all

33,557

335,570

40.81

21.03

0.52

442.38

1.64

27.69

37.69

50.05

156.58

AgOK_all

33,557

335,570

43.02

17.40

0.40

302.59

13.15

29.28

39.00

56.42

94.32

Au_ID_all

33,557

335,570

0.24

0.18

0.76

0.03

0.01

0.08

0.22

0.38

1.80

AuOK_all

33,557

335,570

0.24

0.18

0.73

0.03

0.01

0.07

0.22

0.39

0.88

Cu_ID_all

33,557

335,570

0.45

0.21

0.47

0.05

0.02

0.29

0.45

0.58

1.40

CuOK_all

33,557

335,570

0.45

0.16

0.36

0.03

0.11

0.35

0.45

0.55

1.04

NW1

13,119

131,190

Ag_ID_all

12,438

124,380

72.01

48.30

0.67

2333.35

6.18

36.95

56.73

93.36

250.23

AgOK_all

12,438

124,380

73.33

46.15

0.63

2129.74

11.81

40.83

60.19

92.86

235.98

Au_ID_all

12,653

126,530

0.74

0.41

0.56

0.17

0.20

0.45

0.60

0.87

2.49

AuOK_all

12,653

126,530

0.75

0.34

0.46

0.12

0.31

0.55

0.62

0.78

2.11

Cu_ID_all

12,438

124,380

0.46

0.20

0.43

0.04

0.10

0.30

0.44

0.59

1.24

CuOK_all

12,438

124,380

0.47

0.17

0.37

0.03

0.16

0.35

0.45

0.59

0.98

NW2

11,546

115,460

Ag_ID_all

10,756

107,560

71.55

64.14

0.90

4114.02

4.98

15.82

43.15

122.52

276.46

AgOK_all

10,756

107,560

68.15

49.78

0.73

2478.49

12.90

20.04

51.94

109.94

204.36

Au_ID_all

10,756

107,560

0.91

0.27

0.30

0.07

0.18

0.72

0.92

1.16

1.51

AuOK_all

10,756

107,560

0.85

0.14

0.16

0.02

0.39

0.76

0.84

0.91

1.31

Cu_ID_all

10,756

107,560

0.33

0.22

0.65

0.05

0.04

0.13

0.24

0.52

1.20

CuOK_all

10,756

107,560

0.36

0.18

0.51

0.03

0.10

0.13

0.36

0.52

0.87

Avino Silver & Gold Mines Ltd.

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Table 14.13 San Gonzalo Vein: Block Estimates and Composite Sample Grades

Name

Block Count

Volume

Mean

Std. Dev.

CV

Variance

Minimum

L. Quartile

Median

U. Quartile

Maximum

SG1

356842

568531.25

Ag_ID

318859

509182.81

159.86

195.31

1.22

38144.29

2.30

37.33

94.93

211.95

3946.41

Ag_OK

318859

509182.81

156.18

181.65

1.16

32995.31

3.04

42.33

100.38

203.94

2301.70

Au_ID

271130

434606.25

0.81

1.19

1.47

1.41

0.01

0.19

0.41

0.99

28.14

Au_OK

271130

434606.25

0.81

1.23

1.51

1.50

0.02

0.19

0.41

1.01

23.15

SG2

47936

74900.00

Ag_ID

36088

56387.50

38.81

30.67

0.79

940.36

5.98

21.94

31.47

44.11

624.41

Ag_OK

36088

56387.50

47.95

33.71

0.70

1136.40

10.92

20.70

37.65

69.21

257.38

Au_ID

24189

37795.31

0.31

0.27

0.85

0.07

0.05

0.09

0.16

0.50

1.16

Au_OK

24189

37795.31

0.33

0.24

0.73

0.06

0.05

0.11

0.24

0.50

1.06

SG3

10025

15664.06

Ag_ID

5840

9125.00

78.37

23.01

0.29

529.47

22.23

65.38

79.68

92.21

200.60

Ag_OK

9693

15145.31

80.66

24.89

0.31

619.35

29.95

70.31

75.23

82.29

249.26

Au_ID

4535

7085.94

0.40

0.18

0.44

0.03

0.18

0.35

0.37

0.39

1.67

Au_OK

4535

7085.94

0.40

0.17

0.43

0.03

0.22

0.32

0.34

0.38

1.24

SG4

122062

190721.88

Ag_ID

27942

43659.38

255.74

179.66

0.70

32277.38

27.03

105.08

179.65

416.42

1466.25

Ag_OK

27942

43659.38

263.03

174.03

0.66

30285.34

33.52

100.17

239.88

402.12

821.71

Au_ID

13551

21173.44

0.84

0.56

0.67

0.32

0.12

0.46

0.68

1.06

5.07

Au_OK

13551

21173.44

0.91

0.61

0.67

0.37

0.21

0.47

0.64

1.49

2.75

SG5

47581

74345.31

Ag_ID

24108

37668.75

98.25

80.16

0.82

6426.00

14.83

19.64

80.86

170.84

326.19

Ag_OK

24108

37668.75

94.40

64.34

0.68

4139.40

13.57

22.95

93.00

156.26

259.26

Au_ID

14339

22404.69

0.68

0.63

0.93

0.40

0.06

0.12

0.43

1.23

2.42

Au_OK

14339

22404.69

0.67

0.57

0.85

0.33

0.09

0.14

0.48

1.29

2.02

SG6

100563

157129.69

Ag_ID

45332

70831.25

47.82

44.86

0.94

2012.74

4.21

10.78

29.16

77.66

197.34

Ag_OK

45332

70831.25

48.69

28.05

0.58

786.74

3.76

22.14

48.89

68.46

123.33

Au_ID

26683

41692.19

0.30

0.31

1.04

0.10

0.01

0.05

0.16

0.49

1.57

Au_OK

26683

41692.19

0.39

0.28

0.73

0.08

0.01

0.11

0.37

0.66

0.94

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Mean values for estimated blocks and composites used for the estimation in the oxide tailings model are shown in Table 14.14. The block estimates show lower silver grades than the composites due to the declustering effect of kriging and the large numbers of relatively high-grade composites in the development sampling.

Table 14.14 Oxide Tailings: Block Estimates and Composite Sample Grades

Estimator

Ag
(g/t)

Au
(g/t)

Cu
(%)

Pb
(%)

Zn
(%)

Ordinary Kriging

93.24

0.48

0.130

0.950

0.150

Nearest Neighbour

92.56

0.48

0.129

0.930

0.150

Inverse Distance

93.94

0.48

0.128

0.949

0.151

Composites

96.48

0.46

0.125

0.958

0.153

Number of Blocks

45,607

-

-

-

-

14.12.2 SECTIONS

The spatial pattern of metal grade distributions for the Avino Vein is shown in Figure 14.16 to Figure 14.19, inclusive. Figure 14.16 shows a typical transverse section illustrating the interaction between the secondary (NE1) zone developed on the footwall side of the main the Avino Vein system. Figure 14.17 to Figure 14.19 are longitudinal sections viewed from the south showing silver, gold and copper grades with high-grade zones tending to plunge at about 40° to the west (Horner 2017).

Avino Silver & Gold Mines Ltd.

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Durango, Mexico

Figure 14.16 Avino Vein: Typical Transverse Section, Looking East through Drillhole ET07-10,

Showing the Block Model Centroids Colour Coded by Silver Grade

Avino Silver & Gold Mines Ltd.

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Durango, Mexico

Figure 14.17 Avino Vein: Longitudinal Section Showing the Block Model Centroids Colour

Coded by Silver Grade

Figure 14.18 Avino Vein: Longitudinal Section Showing the Block Model Centroids Colour

Coded by Gold Grade

Avino Silver & Gold Mines Ltd.

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Durango, Mexico

Figure 14.19 Avino Vein: Longitudinal Section Showing the Block Model Centroids Colour

Coded by Coper Grade

The spatial pattern of metal grade distributions for the San Gonzalo Vein is shown in Figure 14.20 to Figure 14.23, inclusive. Figure 14.20 shows a typical transverse section illustrating the relatively narrow San Gonzalo Vein and the Anjelica vein (SG4). Figure 14.21 to Figure 14.23 are longitudinal sections viewed from the south showing silver, gold and copper grades with high-grade zones with a subhorizontal tendency despite some local steepening. It has become clear by continued underground mapping and sampling that the San Gonzalo mineralization is depth-constrained within a 250 m interval, probably due to pressure constraining boiling levels during the residence time of the mineralizaing fluids.

Avino Silver & Gold Mines Ltd.

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Durango, Mexico

Figure 14.20 San Gonzalo Vein: Typical Transverse Section, Looking East Aligned Along Drillhole

SG1115 Showing the Block Model Centroids Colour Coded by Silver Grade

Avino Silver & Gold Mines Ltd.

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Durango, Mexico

Figure 14.21 San Gonzalo Vein: Longitudinal Section Showing the Block Model Centroids

Colour Coded by Silver Grade

Figure 14.22 San Gonzalo Vein: Longitudinal Section Showing the Block Model Centroids

Color Coded by Gold Grade

Avino Silver & Gold Mines Ltd.

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Durango, Mexico

Figure 14.23 San Gonzalo Vein: Longitudinal Section Showing the Block Model Centroids

Colour Coded by Silver Equivalent

14.12.3 SWATH PLOTS

Swath plots were generated for the underground vein deposits to compare trends in the estimated grades for the three estimation methods (ordinary kriging, inverse distance and nearest neighbour) in the block models to the source sampling data. The estimation methods for comparison are ordinary kriging (OK, green), nearest neighbour (NN, red) and inverse distance squared (ID ² , blue) block estimates for the silver, gold, and copper) and averages were generated for slices oriented parallel to the eastings, northings and elevations. The widths of the swaths (or slices) are 20 m for eastings and 10 m for elevations and the number of blocks is also plotted as histograms to show the number of blocks. The average of assay composites is shown as a black line.

Figure 14.24 through Figure 14.29 displays the swath plots for the Avino deposit, comparing block model estimates and sample grades.

Avino Silver & Gold Mines Ltd.

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Durango, Mexico

Figure 14.24 Avino Vein, Swathplot for Silver, Eastings

Avino Silver & Gold Mines Ltd.

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Durango, Mexico

Figure 14.25 Avino Vein, Swathplot for Gold Eastings

Avino Silver & Gold Mines Ltd.

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Durango, Mexico

Figure 14.26 Avin Vein, Swathplot for Copper, Eastings

Avino Silver & Gold Mines Ltd.

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Durango, Mexico

Figure 14.27 Avino Vein, Swathplot for Silver, Elevation

Avino Silver & Gold Mines Ltd.

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Durango, Mexico

Figure 14.28 Avino Vein, Swathplot for Gold, Elevation

Avino Silver & Gold Mines Ltd.

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Durango, Mexico

Figure 14.29 Avino Vein, Swathplot for Copper, Elevation

Figure 14.30 through Figure 14.35 displays the swath plots for San Gonzalo Deposit, comparing block model estimates and sample grades.

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Durango, Mexico

Figure 14.30 San Gonzalo Vein, Swathplot for Silver, Eastings

Avino Silver & Gold Mines Ltd.

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Durango, Mexico

Figure 14.31 San Gonzalo Vein, Swathplot for Silver, Northings

Avino Silver & Gold Mines Ltd.

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Durango, Mexico

Figure 14.32 San Gonzalo Vein, Swathplot for Silver, Elevation

Avino Silver & Gold Mines Ltd.

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Durango, Mexico

Figure 14.33 San Gonzalo Vein, Swathplot for Gold, Eastings

Avino Silver & Gold Mines Ltd.

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Durango, Mexico

Figure 14.34 San Gonzalo Vein, Swathplot for Gold, Northings

Avino Silver & Gold Mines Ltd.

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Durango, Mexico

Figure 14.35 San Gonzalo Vein, Swathplot for Gold, Elevation

Figures 14-31 and 14-34 illustrate the restricted vertical interval within which the pressure conditions for silver and gold grade mineralization were operative in the San Gonzalo mineralization event. Figure 14-27 shows a similar pattern for gold in the Avino Vein. However, Figures 14-26 and 14-28 indicate that the silver and copper mineralization window for the Avino Vein system is more persistent with depth.

Figure 14.36 through Figure 14.41 displays the swath plots for the oxide tailings deposit, comparing block model estimates and sample grades.

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Durango, Mexico

Figure 14.36 Oxide Tailings Deposit, Swathplot for Silver, Easting

Avino Silver & Gold Mines Ltd.

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Durango, Mexico

Figure 14.37 Oxide Tailings Deposit, Swathplot for Gold, Easting

Avino Silver & Gold Mines Ltd.

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Durango, Mexico

Figure 14.38 Oxide Tailings Deposit, Swathplot for Silver, Northing

Figure 14.39 Oxide Tailings Deposits, Swathplot for Gold, Northing

Avino Silver & Gold Mines Ltd.

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Durango, Mexico

Figure 14.40 Oxide Tailings Deposit, Swathplot for Silver, Elevation

Figure 14.41 Oxide Tailings Deposit, Swathplot for Gold, Elevation

Avino Silver & Gold Mines Ltd.

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Durango, Mexico

The swath plot comparisons show reasonable correspondence between block estimates and sampling data. As expected, the OK and ID estimates show less extreme values than the NN estimates particularly near the edges of the models.

14.13 MINERAL RESOURCE CLASSIFICATION

14.13.1 INTRODUCTION

CIM Definition Standards (adopted by the CIM Council on May 10, 2014) for reporting on mineral resources are stated below:

Mineral Resource

Mineral Resources are sub-divided, in order of increasing geological confidence, into Inferred, Indicated and Measured categories. An Inferred Mineral Resource has a lower level of confidence than that applied to an Indicated Mineral Resource. An Indicated Mineral Resource has a higher level of confidence than an Inferred Mineral Resource but has a lower level of confidence than a Measured Mineral Resource.

A Mineral Resource is a concentration or occurrence of solid material of economic interest in or on the Earth’s crust in such form, grade or quality and quantity that there are reasonable prospects for eventual economic extraction.

The location, quantity, grade or quality, continuity and other geological characteristics of a Mineral Resource are known, estimated or interpreted from specific geological evidence and knowledge, including sampling.

Material of economic interest refers to diamonds, natural solid inorganic material, or natural solid fossilized organic material including base and precious metals, coal, and industrial minerals.

The term Mineral Resource covers mineralization and natural material of intrinsic economic interest which has been identified and estimated through exploration and sampling and within which Mineral Reserves may subsequently be defined by the consideration and application of Modifying Factors. The phrase ‘reasonable prospects for eventual economic extraction’ implies a judgment by the Qualified Person in respect of the technical and economic factors likely to influence the prospect of economic extraction. The Qualified Person should consider and clearly state the basis for determining that the material has reasonable prospects for eventual economic extraction. Assumptions should include estimates of cutoff grade and geological continuity at the selected cut-off, metallurgical recovery, smelter payments, commodity price or product value, mining and processing method and mining, processing and general and administrative costs. The Qualified Person should state if the assessment is based on any direct evidence and testing.

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Durango, Mexico

Interpretation of the word ‘eventual’ in this context may vary depending on the commodity or mineral involved. For example, for some coal, iron, potash deposits and other bulk minerals or commodities, it may be reasonable to envisage ‘eventual economic extraction’ as covering time periods in excess of 50 years. However, for many gold deposits, application of the concept would normally be restricted to perhaps 10 to 15 years, and frequently to much shorter periods of time.

Inferred Mineral Resource

An Inferred Mineral Resource is that part of a Mineral Resource for which quantity and grade or quality are estimated on the basis of limited geological evidence and sampling. Geological evidence is sufficient to imply but not verify geological and grade or quality continuity.

An Inferred Mineral Resource has a lower level of confidence than that applying to an Indicated Mineral Resource and must not be converted to a Mineral Reserve. It is reasonably expected that the majority of Inferred Mineral Resources could be upgraded to Indicated Mineral Resources with continued exploration.

An Inferred Mineral Resource is based on limited information and sampling gathered through appropriate sampling techniques from locations such as outcrops, trenches, pits, workings and drill holes. Inferred Mineral Resources must not be included in the economic analysis, production schedules, or estimated mine life in publicly disclosed Pre-Feasibility or Feasibility Studies, or in the Life of Mine plans and cash flow models of developed mines. Inferred Mineral Resources can only be used in economic studies as provided under NI 43-101.

There may be circumstances, where appropriate sampling, testing, and other measurements are sufficient to demonstrate data integrity, geological and grade/quality continuity of a Measured or Indicated Mineral Resource, however, quality assurance and quality control, or other information may not meet all industry norms for the disclosure of an Indicated or Measured Mineral Resource. Under these circumstances, it may be reasonable for the Qualified Person to report an Inferred Mineral Resource if the Qualified Person has taken steps to verify the information meets the requirements of an Inferred Mineral Resource.

Indicated Mineral Resource

An Indicated Mineral Resource is that part of a Mineral Resource for which quantity, grade or quality, densities, shape and physical characteristics are estimated with sufficient confidence to allow the application of Modifying Factors in sufficient detail to support mine planning and evaluation of the economic viability of the deposit.

Geological evidence is derived from adequately detailed and reliable exploration, sampling and testing and is sufficient to assume geological and grade or quality continuity between points of observation.

An Indicated Mineral Resource has a lower level of confidence than that applying to a Measured Mineral Resource and may only be converted to a Probable Mineral Reserve.

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Durango, Mexico

Mineralization may be classified as an Indicated Mineral Resource by the Qualified Person when the nature, quality, quantity and distribution of data are such as to allow confident interpretation of the geological framework and to reasonably assume the continuity of mineralization. The Qualified Person must recognize the importance of the Indicated Mineral Resource category to the advancement of the feasibility of the project. An Indicated Mineral Resource estimate is of sufficient quality to support a Pre-Feasibility Study which can serve as the basis for major development decisions.

Measured Mineral Resource

A Measured Mineral Resource is that part of a Mineral Resource for which quantity, grade or quality, densities, shape, and physical characteristics are estimated with confidence sufficient to allow the application of Modifying Factors to support detailed mine planning and final evaluation of the economic viability of the deposit.

Geological evidence is derived from detailed and reliable exploration, sampling and testing and is sufficient to confirm geological and grade or quality continuity between points of observation.

A Measured Mineral Resource has a higher level of confidence than that applying to either an Indicated Mineral Resource or an Inferred Mineral Resource. It may be converted to a Proven Mineral Reserve or to a Probable Mineral Reserve.

Mineralization or other natural material of economic interest may be classified as a Measured Mineral Resource by the Qualified Person when the nature, quality, quantity and distribution of data are such that the tonnage and grade or quality of the mineralization can be estimated to within close limits and that variation from the estimate would not significantly affect potential economic viability of the deposit. This category requires a high level of confidence in, and understanding of, the geology and controls of the mineral deposit.

The Avino resource has estimates for silver, gold, copper, zinc, and lead but reports silver, gold and copper. Silver, gold and copper are recovered from the Avino material and gold and copper are included in the silver equivalent calculation.

The San Gonzalo resource estimates silver, gold, copper, zinc, and lead but reports only silver and gold. This is because copper, lead and zinc are not current payable metals at San Gonzalo and only gold is additional in the silver equivalent estimate.

Resource classification for both Avino and San Gonzalo is in part based on kriging variance, geological consideration and the practical geometry of distance from data.

The 2014 CIM Definition Standards of indicated Mineral Resources includes the phrase that “quantity, grade or quality, densities, shape and physical characteristics are estimated with sufficient confidence to allow the application of Modifying Factors in sufficient detail to support mine planning and evaluation of the economic viability of the deposit”.

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Durango, Mexico

ARANZ Geo has noted that, in our opinion, the current information available for estimating in situ density is insufficient to support localized (block) estimates to the same level of detail as the metal grades. However, the current data shows that the wall-rock and vein material of the Avino and San Gonzalo deposits have small differences (density difference of vein to wall-rock less than 2%) and very low variability within the veins as measured by the coefficient of variation (less than 0.08, see Table 14.5). The variability of the metal grades shows levels of variability orders of magnitude higher as measured by the coefficient of variation (between 0.4 and 4.4, see Table 14.2). It would be ideal to have density measurements sufficient for local block estimation. However, potential error resulting from the use of a global density mean is likely to be less than 2%. No significant density anomalies have been reported during the current phase of production at the Avino property. Based on the data from the Avino and San Gonzalo veins, grade is a much more material risk factor than the density information. ARANZ Geo considers the restricted amount of density information to be less material and significant than the metal grade variability. ARANZ Geo used the kriging variance of the silver grade estimates as the main factor for resource classification.

ARANZ Geo has also noted that, despite the lack of metallurgical bulk sampling, there have been several years of metal production from ore of all operating levels on the Avino and San Gonzalo Veins using current processing facilities and that there has been no report of unforeseen metallurgical recovery issues. ARANZ Geo considers that this production history mitigates the lack of a formal bulk sampling program or density data and has allowed mineral resources to be defined with sufficient confidence to support detailed mine planning and evaluation of the economic viability of the deposit.

Table 14.15 Criteria for Classification of Underground Mineral Resources

Avino

Measured:

Ag_kvar <=0.75 (up to 20 m from sampled development)

Indicated:

Ag_kvar <=0.50 (35 m from sampling, contiguous with development and measured)

Inferred:

Up to 200 m from sampling data (with demonstrated vein continuity)

San Gonzalo

Measured:

Ag_kvar <=0.18 (up to 15 m from sampled development)

Indicated:

Ag_kvar <=0.24 (up to 30 m from sampling, contiguous with development and measured)

Inferred:

Up to 200 m from at least 3 holes data (with demonstrated vein continuity)

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Durango, Mexico

14.14 MINERAL RESOURCE TABULATION

14.14.1 CUT-OFFS AND SILVER EQUIVALENT CALCULATIONS

The San Gonzalo and Avino reported Mineral Resources are tabulated on the basis of AgEQ cut-offs (Table 14.16).

Table 14.16 Silver Equivalent Based Metal Prices and Operational Recovery Parameters

Metal

Price

Unit

Recovery
(%)

Rev.
($/t)

AgEQ

per Grade
Unit

San Gonzalo Vein System

Ag

17.50

$/oz

83

0.52

1.00

Au

1,300.00

$/oz

73

29.34

56.38

Avino Vein System

Ag

17.50

$/oz

86

0.54

1.00

Au

1,300.00

$/oz

75

30.14

55.90

Cu

3.00

$/lb

85

39.35

72.99

Bi

Penalty

Variable

-

70

Avino Oxide Tailings

Ag

19.50

$/oz

73

0.46

1.00

Au

1,250.00

$/oz

79

31.75

69.37

Silver equivalent was calculated from metal grade estimates using operational recovery parameters and the metal prices based on price trends over the last three years. The gold price used is $1,300/oz for the Avino and San Gonzalo Veins and $1,300/oz for the oxide tailings. The silver price used is $17.50/oz for the Avino and San Gonzalo Veins and $19.50/oz for the oxide tailings. The copper price used is $3.00/lb. Copper was only used in the equivalent calculation for the Avino System, the only mineralization where the copper grade justifies extraction.

Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.

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Durango, Mexico

Table 14.17 Mineral Resource Statement for the Avino Property

Grade

Metal Contents

Resource Category

Deposit

Cut-off(AgEQ

g/t)

Tonnes

(t)

AgEQ (g/t)

Ag (g/t)

Au (g/t)

Cu (%)

AgEQ

(million

tr oz) ^*

Ag

(million

tr oz)

Au (thousand

tr oz)

Cu (t)

Measured and Indicated Mineral Resources

Measured

Avino – ET

60

3,890,000

141

71

0.54

0.55

17.6

8.9

67.4

21,000

Measured

Avino – San Luis

60

650,000

142

67

0.70

0.49

3.0

1.4

14.6

3,000

Measured

San Gonzalo System

130

290,000

397

314

1.65

0.00

3.7

2.9

15.4

0

Total Measured

All Deposits

-

4,830,000

156

85

0.63

0.51

24.3

13.2

97.4

24,000

Indicated

Avino – ET

60

2,640,000

105

49

0.56

0.34

8.9

4.2

47.6

9,000

Indicated

Avino – San Luis

60

1,620,000

126

54

0.82

0.36

6.6

2.8

42.9

6,000

Indicated

San Gonzalo System

130

240,000

319

257

1.25

0.00

2.5

2.0

9.6

0

Indicated

Oxide Tailings

50

1,330,000

124

98

0.46

0.00

5.3

4.2

19.8

0

Total Indicated

All Deposits

-

5,830,000

124

70

0.64

0.25

23.3

13.1

119.8

15,000

Total Measured and Indicated

All Deposits

-

10,660,000

139

77

0.63

0.37

47.5

26.3

217.2

39,000

Inferred Mineral Resources

Inferred

Avino – ET

60

2,380,000

111

58

0.51

0.33

8.5

4,4

39.1

8,000

Inferred

Avino – San Luis

60

1,780,000

124

57

0.72

0.38

7.1

3.2

41.2

7,000

Inferred

San Gonzalo System

130

120,000

262

219

0.86

0.00

1.0

0.8

3.3

0

Inferred

Oxide Tailings

50

1,810,000

113

88

0.44

0.00

6.6

5.1

25.6

0

Total Inferred

All Deposits

-

6,090,000

118

70

0.56

0.24

23.2

13.6

109.2

15,000

Avino Silver & Gold Mines Ltd.

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Durango, Mexico

Avino Silver & Gold Mines Ltd.

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Durango, Mexico

14.14.1 GRADE-TONNAGE TABLES

Table 14.18 to Table 14.25 inclusive, provide a summary of the grade and tonnage for the Avino, San Gonzalo and Tailings models at a series of cutoffs. These tables show the grade and tonnages for mineralized material at confidence levels of confidence (see Table 14.14) equivalent to measured, indicated and inferred for the three deposits. Each table contains a grey-highlighted line that represents the selection used for the Mineral Resource summarized in Table 14.17.

Table 14.18 Avino Vein (ET and San Luis) – High Confidence/Measured

Cut-off

AuEQ
(g/t)

Tonnes
(t)

AgEQ
(g/t)

Ag
(g/t)

Au
(g/t)

Cu
(%)

20

4,720,000

137.5

68.0

0.5

0.5

40

4,650,000

139.0

69.0

0.6

0.5

60

4,540,000

141.0

70.4

0.6

0.5

80

3,960,000

152.3

77.6

0.6

0.6

100

3,450,000

161.4

82.5

0.6

0.6

Table 14.19 Avino Vein (ET and San Luis) – Medium Confidence/Indicated

Cut-off

AuEQ
(g/t)

Tonnes
(t)

AgEQ
(g/t)

Ag
(g/t)

Au
(g/t)

Cu
(%)

20

4,430,000

110.6

49.4

0.65

0.34

40

4,390,000

111.4

49.9

0.65

0.34

60

4,260,000

113.1

50.9

0.66

0.35

80

3,030,000

131.8

61.2

0.74

0.40

100

2,300,000

145.3

68.2

0.78

0.46

Table 14.20 Avino Vein (ET and San Luis) – Low Confidence/Inferred

Cut-off

AuEQ
(g/t)

Tonnes
(t)

AgEQ
(g/t)

Ag
(g/t)

Au
(g/t)

Cu
(%)

20

4,870,000

113.5

55.0

0.58

0.36

40

4,770,000

115.2

56.0

0.59

0.36

60

4,160,000

116.5

57.4

0.60

0.35

80

3,620,000

130.8

64.4

0.67

0.40

100

2,840,000

142.1

70.0

0.71

0.44

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Table 14.21 San Gonzalo Vein – High Confidence/Measured

Cut-off

AuEQ
(g/t)

Tonnes
(t)

AgEQ
(g/t)

Ag
(g/t)

Au
(g/t)

90

360,000

338.8

267.5

1.43

110

320,000

366.6

290.1

1.53

130

290,000

396.8

314.4

1.65

150

260,000

425.4

336.8

1.77

170

230,000

456.1

361.3

1.90

Table 14.22 San Gonzalo – Medium Confidence/Indicated

Cut-off

AuEQ
(g/t)

Tonnes
(t)

AgEQ
(g/t)

Ag
(g/t)

Au
(g/t)

90

330,000

265.4

213.5

1.04

110

280,000

293.9

236.4

1.15

130

240,000

319.1

256.8

1.25

150

220,000

336.6

270.9

1.31

170

190,000

360.2

290.2

1.40

Table 14.23 San Gonzalo – Low Confidence/Inferred

Cut-off

AuEQ
(g/t)

Metric
(t)

AgEQ
(g/t)

Ag
(g/t)

Au
(g/t)

90

160,000

220.7

184.6

0.72

110

140,000

245.3

204.9

0.81

130

120,000

262.3

219.2

0.86

150

110,000

276.9

231.1

0.92

170

90,000

293.0

244.7

0.96

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Table 14.24 Oxide Tailings – Medium Confidence/Indicated

Cut-off

AgEQ
(g/t)

Tonnes
(t)

AgEQ
(g/t)

Ag
(g/t)

Au
(g/t)

50

1,329,680

123.69

97.85

0.46

90

1,329,680

123.69

97.85

0.46

100

1,246,533

125.43

99.52

0.46

110

1,113,074

127.88

101.94

0.46

120

817,672

132.45

105.81

0.48

130

412,200

140.02

111.51

0.51

140

165,903

148.05

117.76

0.54

150

49,547

156.67

126.68

0.54

Table 14.25 Oxide Tailings – Low Confidence/Inferred

Cut-off

AgEQ
(g/t)

Tonnes
(t)

AgEQ
(g/t)

Ag
(g/t)

Au
(g/t)

50

1,810,640

112.51

87.91

0.44

70

1,810,640

112.51

87.91

0.44

80

1,672,985

115.39

88.76

0.48

90

1,630,901

116.14

88.82

0.49

100

1,580,804

116.71

89.23

0.49

110

994,997

123.72

95.01

0.51

120

541,494

131.80

102.11

0.53

130

290,153

137.97

107.37

0.55

140

112,432

143.11

111.60

0.56

150

3,657

154.09

122.29

0.57

14.14.2 GRADE-TONNAGE GRAPHS

Figure 14.42 to Figure 14.49 show the grade-tonnage curves for the mineralized material in the Avino and San Gonzalo Vein systems and the oxide tailings. The graphs correspond to the information shown in Table 14.18 to Table 14.25 inclusive, provide a summary of the grade and tonnage for the Avino, San Gonzalo and Tailings models at a series of cut-offs. These tables show the grade and tonnages for mineralized material at confidence levels of confidence (see Table 14.14Table 14.14) equivalent to measured, indicated and inferred for the three deposits. Each table contains a grey-highlighted line that represents the selection used for the Mineral Resource summarized in Table 14.17.

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Figure 14.42 Grade Tonnage Graph of Avino Vein Material at Measured Confidence Level

Figure 14.43 Grade Tonnage Graph of Avino Vein Material at Indicated Confidence Level

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Figure 14.44 Grade Tonnage Graph of Avino Vein Material at Inferred Confidence Level

Figure 14.45 Grade Tonnage Graph of San Gonzalo Vein Material at Measured Confidence Level

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Figure 14.46 Grade Tonnage Graph of San Gonzalo Vein Material at Indicated Confidence Level

Figure 14.47 Grade Tonnage Graph of San Gonzalo Vein Material at Inferred Confidence Level

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Figure 14.48 Grade Tonnage Graph of Oxide Tailings Material at Indicated Confidence Level

Figure 14.49 Grade Tonnage Graph of Oxide Tailings Material at Inferred Confidence Level

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14.15 SULPHIDE TAILINGS

There is no current resource estimate for the sulphide tailings (The upper bench of the tailings heap shown in Figure 14.6).

Some sampling was carried out in 2005 by means of hand-dug pits on the “upper bench” of sulphide tailings but this information does not provide an unbiased sample, being restricted to the top surface of the deposit and consequently no estimation can be carried out with any confidence on the sulphide tailings.

The volume of the deposit can be estimated, but the tonnage and recoverable metal are not quantifiable. At best, the sulphide tailings are considered a target for further exploration.

No Mineral Resource for the sulphide tailings is disclosed in this Technical Report.

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15.0 MINERAL RESERVE ESTIMATES

There are currently no Mineral Reserves on the Property.

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16.0 MINING METHODS

A PEA should not be considered to be a Prefeasibility or Feasibility study, as the economics and technical viability of the Project have not been demonstrated at this time. The PEA is preliminary in nature and includes Inferred Mineral Resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as Mineral Reserves. Furthermore, there is no certainty that the conclusions or results reported in the PEA will be realized. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.

16.1 MINING AT THE AVINO PROPERTY

Tetra Tech mining engineer, Mr. M. Horan, conducted a site visit to the Avino mine, Durango, Mexico on the 19 ^th of December 2017. An underground visit was conducted to mining operations on both the Avino vein and the San Gonzalo veins.

The site visit included review of mining methods and reviewing short term mining plans.

16.2 AVINO VEIN

Avino is currently mining on the Avino Vein using sublevel stoping and room and pillar mining methods. Levels are spaced 20 m apart and accessed via crosscuts from the main ramp.

The room and pillar methods is used on each sublevel to mine out each level to the extents of the mineralisation. Longholes are then drilled between the sublevels to facilitate blasting of the mineralisation between the sublevels.

Avino has not yet developed a LOM plan for the Mineral Resources in the Avino Vein; however, mine development and production have been scheduled on a monthly basis for 2018 to 2022.

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From 1997 to 2001, mining in the Avino Vein consistently yielded 1,000 t/d of mill feed. During that period, mine production was comprised of ore development mining (drift and slash) and longhole stoping. In contrast, Avino’s strategy for 2015 and 2016 was to produce 1,000 t/d of mill feed by ore development mining until reaching Level 17. The longhole stoping and sublevel caving will then be employed to extract the mineralized material between Levels 9.5, when mining ceased in 2001, to Level 17. In Q4 2014, approximately 35,000 t of mill feed was stockpiled near the mine portal as operations started ramping up. The average mining rate during the first 12 days of January 2015 was 700 t/d and a steady state mining rate of 1,100 t/d has been achieved since then.

Production from the Avino Vein is summarized in Table 16.1.

Table 16.1 Recent Production from the Avino Vein


Production Description	2015	2016	2017
Mill Feed Tonnage
Tonnes Milled (t)	396,113	429,289	460,890
Feed Grade
Silver (g/t)	65	67	64
Gold (g/t)	0.29	0.42	0.52
Copper (%)	0.62	0.50	0.48
Recovery
Silver (%)	87	85	85
Gold (%)	75	64	69
Copper (%)	87	90	89
Total Metal Produced
Silver Produced (oz)	717,901	789,372	803,438
Gold Produced (oz)	2,757	3,691	5,259
Copper Produced (lb)	4,743,691	4,206,585	4,373,166
Ag_Eq Produced (oz)	1,801,997	1,606,272	1,911,428

Source: Avino (2018c; 2017a; 2017b)

16.3 SAN GONZALO VEIN

Avino is currently mining on the San Gonzalo Vein using cut-and-fill and shrinkage stoping methods.

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Production from the San Gonzalo Vein is summarized in Table 16.2.

Table 16.2 Recent Production from the San Gonzalo Vein


Production Description	2012	2013	2014	2015	2016	2017
Mill Feed Tonnage
Total Mill Feed (t)	19,539	78,415	79,729	121,774	115,047	81,045
Feed Grade
Silver (g/t)	259	288	337	279	267	269
Gold (g/t)	1.04	1.34	1.88	1.48	1.25	1.32
Recovery
Silver (%)	79	83	84	83	83	84
Gold (%)	70	73	78	75	74	78
Total Produced
Silver (oz)	128,607	602,233	724,931	907,384	822,689	590,765
Gold (oz)	455	2,473	3,740	4,326	3,427	2,675
Ag_Eq Produced (oz)	151,372	751,462	958,702	1,218,351	1,073,062	789,157

Source: Avino (2018c; 2017a; 2017b)

16.3.1 BULK SAMPLE PROGRAM

Note that information in this section was provided by Avino.

No formal Prefeasibility study has been commissioned, but a 10,000 t bulk sample program was carried out in 2011, and in July 2011 the results were announced. The bulk sample was intended to allow Avino to assess the economics of the zone by confirming mineral grades obtained through earlier diamond drilling. The bulk sample program was completed during Q1 2011.

The overall bulk sample feed grade was 261 g/t silver and 0.9 g/t gold. Silver and gold recoveries were 76% and 59%, respectively, and 232 dry tonnes of flotation concentrate were produced, of which 188 t were sold for net proceeds of US$1.83 million. If the entire production were sold under the same contract terms, the net proceeds would have been US$2.26 million.

Evaluation costs relating to mining, milling, and overhead for the bulk sample program were US$567,045 or US$7.62/oz Ag_Eq, including the costs for the raises and stopes. The cost per tonne produced was US$53.91 and proceeds on 188 t of concentrate sold at US$1.83 million. (The contract prices per ounce of silver and gold were US$36.75 and US$1,511.31, respectively.)

On the basis of internal modelling of the bulk sampling program, Avino proceeded with their mine plan to develop the third, fourth, and fifth levels and to provide mill feed at the rate of 250 t/d on a sustained basis.

It should be noted this production decision is being made without Mineral Reserves or any studies of economic viability that have been prepared in accordance with NI 43-101.

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16.3.2 PRODUCTION

Note that information in this section was provided by Avino.

Recent production for the Avino Vein and San Gonzalo Vein are summarized in Table 16.1 and Table 16.2, respectively.

Concentrate has been sold on a regular basis to a concentrate-trading firm, with shipments taking place monthly. The Q3 2017 financial results indicated that the cost as cash per ounce silver for the San Gonzalo and Avino Veins was US$9.74. Mining and milling operations continue, even though there has been no Prefeasibility or Feasibility study commissioned after the bulk sample program.

16.3.3 MINE DESIGN

Note that information in this section was provided by Avino.

Access to the underground mining on the San Gonzalo Vein is via a 4 m by 4 m decline developed at -12%. Ground conditions are good. Ground support is mainly bolting, as required.

San Gonzalo uses shrinkage mining for the narrower material, approximately 1.4 m in width, and cut-and-fill mining for mineralized material wider than 2 m.

During shrinkage mining, miners use hand-held jacklegs and stopers to drill and blast in stopes. Material is drilled and blasted using jacklegs to breast horizontally, with two miners from two ends of the stope, with several breasts worked on at once. After each blast, the swell (approximately 40% of the broken material) is mucked from the extraction drift below to allow room for the miners to drill the next lift. Materials and supplies are carried into the stopes by hand down a small raise equipped with steel ladders and a rope. Only 40% of the material is extracted during mining, with the remainder extracted after all mining has been completed; meaning more stopes are required in the development stage at one time to sustain production targets. Scoops are used to muck from the extraction drift below and the material is trammed to a mineralized material pass.

Cut-and-fill mining is more mechanized, as access for scoops is maintained in the stopes from the main ramp by a smaller access attack decline/incline ramp. This access means less manhandling of materials and provides material on a steady basis from each lift while mining takes place. This method requires that waste fill be placed after each lift of material has been mined prior to mining the next lift. Stopers are used to drill vertical holes, with half the stope being blasted at once. A two-yard scoop is used in the stope to place waste and muck material. It is 1.2 m wide and requires 2.0 m wide to operate. No mill discharge is used for backfilling.

The mine is able to achieve a production rate of 230 t/d, with three shrinkage stopes and one cut-and-fill stope developed/mined at once, plus two headings in mineralized material or the shrinkage undercut. The mine works 6 d/wk, or 26 d/mo. A mining contractor has been hired for material haulage.

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16.4 OXIDE TAILINGS

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.

16.4.1 SCHEDULE

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 one year of pre-production 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. The production schedule is shown in Table 16.3.

Table 16.3 Mining Production Schedule


Year	Mineralized Material (t)	Head Grade		Waste (t)	Total Material Moved (t)
Year	Mineralized Material (t)	Ag (g/t)	Au (g/t)	Waste (t)	Total Material Moved (t)
-1	-	-	-	500,000	500,000
1	350,000	88.83	0.51	558,906	908,906
2	500,000	100.11	0.48	497,101	997,101
3	500,000	94.95	0.44	498,995	998,995
4	500,000	78.28	0.45	75,148	575,148
5	499,673	82.99	0.44	500,327	1,000,000
6	500,000	87.95	0.36	295,829	795,829
7	272,641	76.27	0.28	12,405	285,046
LOM	3,122,314	87.75	0.43	2,938,711	6,061,025

16.4.2 EQUIPMENT

The mining operations include loading and trucking. Loading/trucking operations will be conducted in two, 12 h shifts per day. A 3.85 m ³ rated (5.0 yd ³ ) front-end loader will be used to load 3, 24 t articulated truck that will either deliver the sulphide tailings to the sulphide waste stockpile or the oxide tailings to the oxide tailings hopper.

16.4.3 MODIFYING SITE CONSIDERATIONS

Certain areas of the tailings might contain high amounts of moisture that can lead to equipment getting stuck. To mitigate this challenge, wider, oversized tires with chains will be installed on the front-end loader. Also, the front-end loader bucket will be downsized to 3.06 m ³ (4.0 yd ³ ). This will lighten the load on the front tires preventing them from sinking into saturated material. The trucks will not enter the soft zones so there will be no modifications to the trucks.

16.5 SULPHIDE TAILINGS

Avino is not currently conducting treatment activity on the sulphide tailings. In this study, sulphide tailings are considered as waste.

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17.0 RECOVERY METHODS

As mentioned in Section 13.0, there are three separate mineralization sources in the Property, including the Avino and San Gonzalo mines, which are currently in operation, and the potential tailings resource from previous milling operations. The San Gonzalo Mine entered commercial production in October 2012, followed by reopening the Avino Mine in January 2015. The two mines feed a conventional flotation mill that has three separate circuits and a capacity of 1,500 t/d.

Currently, there is no operation for the tailings resource. The PEA study conducted in 2017 proposed heap leaching treatment for the silver and gold recovery from the oxide tailings portion of the Property. The proposed treatment was discussed in details in the technical report entitled “Technical Report on the Avino Property”, dated April 11, 2017.

Avino is not currently conducting mining activity on the sulphide tailings. No recovery methods are currently proposed for the sulphide tailings.

17.1 AVINO VEIN

Avino is currently conducting mining activity on the Avino Vein and processing Avino Vein material at the mine plant.

Historically, prior to the mine shutting down in 2001, Avino operated a 1,000 t/d processing plant, producing a copper concentrate that was sold to a smelter in San Luis Potosi for approximately 27 years. From 1997 to 2001, the mill process rate averaged 1,000 t/d and achieved up to 1,300 t/d. The mine and mill operations were then suspended. Following several years of redevelopment, Avino completed the Avino Mine and mill expansion in Q4 2014. On January 1, 2015, full scale operations commenced and commercial production was declared effective April 1, 2016 following a 19 month advancement and test period.

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The plant consists of a conventional three-stage crushing circuit with the tertiary crusher in closed circuit with a screen. The crushed material is fed to a ball mill and the ball discharge is classified with a hydrocyclone at a grind size of approximately 65% passing 200 mesh. Lime is added in the ball mill to raise the flotation pH to about 10.5 to depress pyrite. Flotation reagents used include Aeroflot 208, 404 and Aerophine 3418, together with a glycol frother. The concentrates from the rougher and scavenger circuits are upgraded in a cleaner circuit with the final concentrate reporting to a dewatering circuit. The final concentrate is dewatered to approximately 8% moisture and then shipped to the smelter. Flotation tailings is pumped to the permitted tailings impoundment where decant water is reclaimed for process use.

A single stage of cleaning is used for the rougher and scavenger concentrates to produce a final copper concentrate grading 20 to 25% copper. Typical copper recoveries range from 85 to 90%, silver in the mid 80’s, and gold between 60 and 70% depending on the source of the material. Process optimization should focus on reducing the bismuth content in the concentrate and on improving gold recovery.

A summary of the mill production and balance for 2015, 2016, and 2017 is provided in Table 17.1.

Table 17.1 Avino Vein Mill Production


Production Description	2015	2016	2017
Mill Feed Tonnage
Tonnes Milled (t)	396,113	429,289	460,890
Feed Grade
Silver (g/t)	65	67	64
Gold (g/t)	0.29	0.42	0.52
Copper (%)	0.62	0.50	0.48
Recovery
Silver (%)	87	85	85
Gold (%)	75	64	69
Copper (%)	87	90	89
Total Metal Produced
Silver Produced (oz)	717,901	789,372	803,438
Gold Produced (oz)	2,757	3,691	5,259
Copper Produced (lb)	4,743,691	4,206,585	4,373,166
AgEQ Produced (oz)	1,801,997	1,606,272	1,911,428

Source: Avino (2018; 2017a,)

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The simplified flowsheet, including grinding and flotation circuits, is shown in Figure 17.1.

Figure 17.1 Simplified Flowsheet – Avino Vein

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17.2 SAN GONZALO VEIN

The San Gonzalo Mine entered commercial production in October 2012. The current process plant consists of crushing and grinding facilities, followed by a gravity and flotation process circuit to recover and upgrade silver and gold from the feed material. Aeroflot 208 and Aerophine 3418, together with a glycol frother, are used within the flotation circuit. The flotation concentrate is thickened, filtered to approximately 8% moisture content, and sent to the concentrate stockpile for subsequent shipping to customers. A gravity concentrator has been incorporated into the grinding circuit to recover electrum and to improve the overall silver and gold recoveries.

The final flotation tailings is disposed of in the existing permitted tailings storage facility. A summary of the material and metallurgical balances from April 2013 is outlined in Table 17.2. The process flowsheet is similar to the one used for the Avino vein as shown in Figure 17.1.

Table 17.2 San Gonzalo Vein Mill Production


Production Description	2012	2013	2014	2015	2016	2017
Mill Feed Tonnage
Total Mill Feed (t)	19,539	78,415	79,729	121,774	115,047	81,045
Feed Grade
Silver (g/t)	259	288	337	279	267	269
Gold (g/t)	1.04	1.34	1.88	1.48	1.25	1.32
Recovery
Silver (%)	79	83	84	83	83	84
Gold (%)	70	73	78	75	74	78
Total Produced
Silver (oz)	128,607	602,233	724,931	907,384	822,689	590,765
Gold (oz)	455	2,473	3,740	4,326	3,427	2,675
AgEQ Produced (oz)	151,372	751,462	958,702	1,218,351	1,073,062	789,157

Source: Avino (2018; 2017a)

17.3 TAILINGS RESOURCES

There are two types of the tailings produced from the previous mining operations: oxide tailings and sulphide tailings. Currently there is no operation to recover metals from both the tailings resources.

A PEA Update study was conducted in 2017, focusing on the oxide tailings treatment for the recovery of silver and gold from the tailings dam.

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17 .3 . 1 O X I D E T A I LI N G S

T REATMENT S ELECTION

An earlier PEA was conducted in 2012 (Tetra Tech 2013) to compare three potential processing treatment routines for the oxide tailings retreatment project, including:

· cyanidation (tank leaching) of the oxide tailings without regrinding

· cyanidation (tank leaching) of the oxide tailings with regrinding

· heap leaching of the oxide tailings without regrinding.

A preliminary economical evaluation, at a mill feed rate of 1,370 t/d, shows that heap leaching treatment is more favourable than the other two treatment options, in terms of initial capital cost and operating cost. The 2017 PEA Update was based on the heap leaching treatment technology that was used for the previous PEA (Tetra Tech 2013).

PROCESS FLOWSHEET

The proposed treatment plant will consist of agglomeration and cyanide heap leaching, followed by a Merrill-Crowe process to recover silver and gold from pregnant solution. The process plant will operate on a 24 h/d, 365 d/a basis, with an overall utilization of 90%.

The simplified flowsheet is shown in Figure 17.2.

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Figure 17.2 Simplified Process Flowsheet

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MAJOR DESIGN CRITERIA

The heap leach was designed to process 0.5 Mt/a of oxide tailings. This would be equivalent to a throughput rate of 1,370 t/d and equivalent to 63.4 t/h at a 90% running time.

The major criteria used in the design are outlined in Table 17.3

Table 17.3 Major Design Criteria

Criteria

Unit

Number

Operating Year

d

365

Overall Plant Availability

%

90

Annual Processing Rate

t

500,000

Daily Processing Rate

t/d

1,370

Tailing Bulk Density

t/m3

1.605

Agglomerated Tailing Bulk Density

t/m3

1.24

Agglomerated Feed Size, P80 Passing

µm

225

Agglomerated Product Size, P80 Passing

mm

6 to 15

Moisture Content of Agglomerated Feed

%

12.5

Total Loading/Curing/Leaching/Rinsing Cycle

d

142

Cyanide Solution Strength

g/L

0.5

The design parameters were based on test work results obtained by PRA but directed by MMI, using the results from Huang (2005) and Slim (2005d).

PROCESS PLANT DESCRIPTION

For an oxide tailings treatment rate of 0.5 Mt/a, an equivalent throughput rate of 1,370 t/d or 63.4 t/h is required. This will give an overall Project duration of approximately seven years. This seven-year period will exclude the time required for site establishment and remediation of the heap after the leaching process has been completed.

The mining equipment will operate on a different schedule than the process plant. Loading operations will be conducted during one 8 h shift per day, 365 d/a. A 3.85 m3 rated (5.0 yd3) front-end loader will be used to load a 24 t articulated truck that will either deliver the sulphide tailings to the sulphide stockpile or the oxide tailings to the 160 t oxide tailings hopper. Once the hopper is filled, excess tailings will be stockpiled around the hopper to be loaded by the process plant group.

Certain areas of the tailings might contain high amounts of moisture that can lead to equipment getting stuck. To mitigate this challenge, wider, oversized tires with chains will be installed on the front-end loader. Also, the front-end loader bucket will be downsized to 3.06 m3 (4.0 yd3). This will lighten the load on the front tires preventing them from sinking into saturated material. The trucks will not enter the soft zones so there will be no modifications to the trucks.

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A dribble chute will feed the tailings from the hopper onto a conveyor belt. Cement and lime will be added to the tailings at controlled addition rates. Although some operations add solid dry, flake cyanide to the agglomerator feed material, this option will not be exercised in this case. The cement and lime will be added from their respective bulk storage silos. A 50 t capacity cement storage silo equipped with a dust collection filter and a cement blower will be required, as well as a 30 t capacity lime storage silo similarly equipped with a dust collection filter and a lime blower. Each reagent delivery system will be controlled by a weightometer prior to feeding the reagents to the tailings material conveyor belt feeding the agglomerator drum. The design treatment rate will be 63.4 t/h of tailings material with an average moisture content of 10%. Water, or barren solution, will be added to the agglomerator to provide for an overall moisture content of approximately 12.5 to 15% to the leach pad feed material. Two, 1 t capacity cyanide mixing and storage tanks will be positioned at the Merrill-Crowe facility. Cyanide preparation system will produce a cyanide solution with a strength of 20% sodium cyanide. The cyanide solution will then be injected into the solution distribution system going to the heap pad and precipitation filter press.

The agglomerator will be a drum type unit with a diameter of 1.8 m and a length of 6.7 m rotating at 10.5 rpm and with a variable angle of 2.5, 5.0 or 7.5°. Agglomerated material will be discharged onto a conveyor belt, then on to a series of jump conveyors, and then deposited on the heap leach pad by a radial telestacker. A curing time of 5 d will be allowed before spraying of the agglomerates with cyanide-bearing leach solution commences.

There will be only one leach pad. The leach heap pad dimensions are estimated to be 288 m wide and 428 m long and includes a surrounding berm of 6.5 m in width. There will be four lifts over the seven-year treatment period. Each lift will be 6.5 m high giving the heap an overall height of 26 m.

The heap leach process will operate with three solution ponds:

· a barren solution pond

· a pregnant solution pond

· an event or overflow pond.

Solution from the barren solution pond will be pumped to the leach heap. Concentrated cyanide solution will be added to the barren solution pond where it will be mixed to give a controlled cyanide concentration of approximately 0.5 g/L sodium cyanide strength. The pH will be maintained at 10.5. This solution will be distributed over the leach pad using irrigation pipes and drips for an overall solution feeding rate of approximately 7.3 L/h/m2 (0.002 L/s/m2). A total leaching duration of 130 d will be allowed, followed by a wash/rinse cycle of seven days resulting in a total loading, leaching and rinsing cycle of 142 d.

The total calculated amount of area of pad under irrigation per day will be approximately 22,000 m2, with 1,210 m2 being rinsed every day. The calculated volume of solution pumped to the heap will be 173 m3/h of which a nominal 9 m3/h will be rinse solution. A total solution evaporation loss of 10% is assumed.

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The 173 m3/h pregnant solution collected from the leach pad will be directed to the pregnant solution pond. The solution from the pregnant solution pond will be pumped to the Merrill-Crowe plant for silver and gold recovery by precipitation with zinc dust and filtration of the precipitate. The barren solution will then be returned to the barren solution pond. Solution from the pregnant solution pond can overflow into the barren solution pond should this be required. Solution from the barren solution pond can also overflow into the overflow solution pond. This overflow solution pond will also collect excess water and drainage solution from the heaps and the plant environs. The overflow solution pond will also supply make-up water to the process by pumping the water back to the barren solution pond. Alternatively, excess solution from this pond will be treated with calcium hypochlorite in an agitated treatment tank to reduce the cyanide levels to acceptable limits prior to discharging this water to the environment or re-using this water as process water.

The Merrill-Crowe section will receive the pregnant solution, which will be pumped to the clarifier filter together with filter aid pre-coat and body feed. The slurry from the backwash cycles will be pumped to an inactive part of leach heap. The clarified solution will be pumped to the de-aeration tower where the solution will be de-oxygenated and a slurry of zinc dust, lead nitrate, cyanide and filter aid will be pumped into the de-aerated solution after the tower but ahead of the precipitate filters. The zinc dust, lead nitrate and filter aid will be made up into a slurry at the required dosage rate in the precipitate mixing tank and cyanide will be added as needed. The cementation reaction occurs at the point of introduction of the slurry to the de-aerated solution. This reaction normally requires approximately 2 to 5 minutes for completion. The reaction should be complete by the time the new-barren solution exits the precipitate filter to barren solution tank and from there it will flow into the barren solution pond where the pH will be adjusted to 10.5 with lime if necessary and then be pumped back to the heap pad for leaching after cyanide concentration is adjusted to approximately 0.5 g/L sodium cyanide.

The addition of zinc dust has been calculated on the basis of 10 g of zinc dust per 1 g of silver plus gold in order to ensure that the cementation reaction will be driven to completion. Although precipitation efficiencies are normally considered to be higher than 99.5%, in this case 96% has been selected since no test work has been conducted on the pregnant solution from this material. The cyanide concentration of the pregnant solution should be a minimum of about 100 mg/L as free cyanide and will be monitored on a regular basis. The lead nitrate addition will be added to improve the precipitation efficiency and its dosage is based on approximately 2 mg lead nitrate per litre of solution. Approximately 50% of the total required amount of the lead nitrate will be added to the pregnant solution prior to the clarifier filter where impurities present in the solution will be removed by the clarifier filter. Although no anti-scalant reagents have been included in the study, any reagents of this nature should be tested to determine its effect on the precipitation efficiency.

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The silver-rich precipitate which contains the gold and excess zinc will flow to the acid vat tank where the excess zinc can be dissolved by mixing with adequate amount of sulphuric acid and from there it will be pumped to the digest precipitate filter press. This precipitate from the filter press will be dried in an oven prior to being melted in a smelting furnace for doré production. It is anticipated that the total metal precipitate production per day will be approximately 420 kg (dry basis) with approximately 20% of silver and gold, or approximately 85 kg of silver and gold.

HEAP LEACH LAYOUT

The maximum height has been restricted to 26 m as a result of the proximity of the proposed heap leach facility to the community of San Jose de Avino and possibly weak compressive strength of the agglomerates. This proposed height for the heap would require geotechnical verification. The relatively low heap pad height proposed has resulted in a relatively large surface area being required for the leach pad. The site layout and available space, site drainage, and pad size have been designed according to the area topography and the best available information. However, the close proximity of the proposed heap leach facility to the community of San Jose de Avino, and its agricultural workings, may yet result in site and/or layout revisions.

17.3.2 SULPHIDE TAILINGS

Avino is not currently conducting mining activity on the sulphide tailings. No recovery methods are currently proposed for the sulphide tailings.

Because some of the oxide tailings and sulphide tailings were co-deposited, and the oxide tailings are partially covered by younger unconsolidated sulphide tailings on the northwest side of the tailings storage dam, the sulphide tailings materials will be reclaimed as required during the oxide tailings reclamation. As the 2017 PEA, the reclaimed sulphide tailings was planned to store in a separate sulphide tailings storage facility for further exploration. While some of the sulphide tailings could be used for constructing the proposed heap leach pad and facilities for the oxide tailings retreatment, no quantities were estimated for the PEA.

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18.0 PROJECT INFRASTRUCTURE

18.1 INTRODUCTION

The history of operations at the Avino Mine provides ample evidence of sufficient infrastructure and services in the area. The San Gonzalo Mine entered commercial production in October 2012, followed by reopening the Avino Mine in January 2015. The two mines feed a conventional flotation mill that has three separate circuits and a capacity of 1,500 t/d.

The proposed tailings leach facilities are planned to be located southeast of the existing tailings storage pond. The preliminary arrangement for these facilities is shown in Figure 18.1 and has been detailed in the technical report entitled “Technical Report on the Avino Property”, dated April 11, 2017.

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Figure 18.1 Overall Tailings Heap Leach Facility Layout

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18.2 ACCESSIBILITY

The Property is easily accessible by road and is an important part of the local community from which skilled workers are available. Access is provided by Highway 40, a four-lane highway leading from Durango, past the airport and on to the city of Torreon in Coahuila. Successive turn-offs for the Property are at Francisco I Madero, Ignacio Zaragoza, and San Jose de Avino (Slim 2005d). The Avino mineral concessions are covered by a network of dirt roads which provide easy transport access between the San Gonzalo deposit and the mill at the main Avino Mine (Gunning 2009). In 2008, a 1.7 km road accessing to the San Gonzalo deposit was widened and upgraded so it would be suitable for use by the mineralized material haul trucks and heavy equipment.

18.3 POWER

The Avino Mine was connected to the local power grid with a line capacity quoted at 4 MW when the mine last operated in 2001. With the shutdown, much of this excess power was diverted to the surrounding towns in the district. Before 2016, the existing power line provides only 1,000 kW of power with 500 kW servicing the mill, 400 kW for San Gonzalo and the balance for the well at Galeana, employee accommodation facility, and water reclaim from the tailings dam. The San Gonzalo power line was built in 2009 to replace the contractor’s diesel generator used during mine development.

The new power line from Guadelupe Victoria to the mine site was completed in June 2016. The power line was energized and tested on June 8 ^th , 2016. The test was successful and the line was then fully functional at the design capacity of 5 MW. Current power consumption at the mine is approximately 2 MW, leaving sufficient additional power for potential future expansion projects, including the planned Circuit #4 mill expansion, the proposed oxide tailings retreatment project using heap leach followed by gold and silver recovery by Merrill-Crowe precipitation and possible further expansion or upgrading of the processing plant. Additionally, the existing power line was left in place to service local communities and provide backup power for the mine.

A C-27 CAT diesel power generator, which can produce 700 kW, is now used as backup.

18.4 WATER SUPPLY

While water supply was found to be limiting in the past, Avino has taken the necessary steps to secure adequate supply. To supplement the 1 Mm ³ dam built by Avino in 1989, a well (Galeana) was drilled to the west of the mine site in 1996 to a depth of 400 m and is reported to have a water level at 40 m below the collar. From this, a pipeline connection has been installed to the mine. Additionally, CMMA, in cooperation with the government, has repaired a government dam (El Caracol) and raised the dam wall by 6 m. A pipeline to the mine has also been installed. This dam is shared with the population of Pánuco de Coronado for their irrigation needs, as 60% for the mine and 40% for the town, with government setting the annual total take to which percent sharing applies. Mine site water use is from a combination of tailings water reclaim, El Caracol, and Galeana with preference given to mine site sources for which no water conservation charge was applicable (Slim 2005). The dewatered water from San Gonzalo and Avino underground mines are used as mill processing and agricultural irrigation.

18.5 WATER TREATMENT PLANT

Underground mine water at the Avino Mine is acidic. Since October 2012, dewatering of the Avino Mine began and a water treatment plant using lime to raise the pH and to precipitate the heavy metals was constructed and built. The water treatment facility is a typical Mexican design and the effluent water quality had to meet the agricultural standards for discharge. Test results to date show the results do meet the required agricultural standards and being discharged to the El Caracol Dam via gravity. Treatment of the Avino underground water had been completed with the commencement of production in 2015. The water treatment plant is in place for treating excess water before discharging to El Caracol Dam. The effluent is being monitored on a daily basis when the treatment plant is operational. Sludge, which is considered low density, is sent to the tailings dam.

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19.0 MARKET STUDIES AND CONTRACTS

19.1 MINED MATERIAL HAULAGE FROM UNDERGROUND

Haulage of the materials from the San Gonzalo and Avino mines is contracted out and the contract terms are within industry norms.

19.2 FLOTATION CONCENTRATES

There is a ready market for both the San Gonzalo silver/gold flotation concentrate and the Avino copper, silver, and gold flotation concentrate. These concentrates are currently being sold under contract to Samsung C&T UK Ltd. The terms and conditions of these contracts are based on industry norms and the terms have been used to establish the revenues from both mining operations.

Under the terms of the agreement, the concentrates are delivered by truck to the Port of Manzanillo, located on the Pacific coast of Mexico, loaded into containers and shipped to smelters located overseas.

The metal prices used for the payable metals namely copper, silver and gold are based on the average market prices of the first month after the month of delivery to the loading port.

In 2016, Avino announced that the concentrate prepayment agreement with Samsung C&T UK Ltd. had been extended from July 2017 to July 2021.

19.3 GOLD-SILVER DORÉ

For the doré produced from the proposed oxide tailings retreatment project, currently there are no letters of interest or letters of intent from potential smelters or buyers of gold and silver doré

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20.0 ENVIRONMENTAL STUDIES, PERMITTING, AND SOCIAL OR COMMUNITY IMPACT

20.1 ENVIRONMENTAL STUDIES

Construction of the new tailings storage facility was halted pending a review of tailing for use as underground backfill and for storage in the open pit. This study is ongoing and decisions will be made once the path forward on ground stability underground has been determined.

The assessment work currently underway is part of the recommendations contained in the 2013 PEA (Tetra Tech 2013), intended to advance the tailings resource towards a production decision for a Merrill-Crowe precipitation heap leach operation.

In November 2015, in order to get a head start on the assessment work, Avino began a program of sampling the lower oxide bench in areas not in use. The program consisted of using a hydraulic drill with a 2 m split spoon auger to drill vertical holes to a depth of 20 to 30 m; 12 holes were drilled by the end of 2015 totalling 227 m. By the end of February 2016, a further 40 holes had been drilled, totalling over 650 m; assays have been received and are currently being compiled.

Once the plan for the tailings storage is made, whether used in the underground as backfill or storage in the open pit, Avino will decommission the current tailings storage facility and begin installing wells that will be used to pump out the retained water in the dam. This will speed up the sonic drilling program planned for the upper benches, provide samples for the metallurgical program, and increase confidence in the oxide resource located below the sulphide tailings.

20.1.1 ENVIRONMENTAL SETTING

Flora and fauna of the surrounding San Gonzalo Property is anticipated to be similar to what may be found in the area of oxide tailings, although presence of these species has not been confirmed at the oxide tailings site. Vegetation observed on the San Gonzalo Property at the time of permitting includes catclaw mimosa; cactus species, such as paddle cactus and desert christmas cactus; needle bush, gobernadora; and persimmon trees.

Within the adjacent San Gonzalo Mine Project area, there were 15 species of major mammals, 51 species of birds, 10 species of reptiles, and 3 species of amphibious reported at the time of permitting. Of these species, four mammal species, 14 species of birds, 9 reptiles, and 3 amphibians species are listed by Official Mexican Standard NOM-059-SEMARNAT-2001 or in the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) (Ministry of Environment and Natural Resources [MENR 2008a) (Table 20.1 to Table 20.4).

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Table 20.1 Mammal Species Listed by NOM-059-SEMARNAT-2001 or in CITES within the San Gonzalo Mine


Common Name	Gender and Species	Status under NOM-059-SEMARNAT-2001 or CITES
Squirrel*	Sciurus aberti	Resident. Endemic. Special Protection
Mouse	Neotoma albigula	Resident. Endemic. Threatened.
Desert Fox	Vulpex velox	Resident. Endemic. Threatened.
Badger	Taxidea Taxus	Resident. Threatened.

Notes: *No English Common Name translation

Source: MENR (2008a)

Table 20.2 Bird Species Listed by NOM-059-SEMARNAT-2001 or in CITES within the San Gonzalo Mine


Common Name	Gender and Species	Status under NOM-059-SEMARNAT-200 or CITES
Heron	Ardea herodias	Migratory. Special protection.
Cerceta aliazul	Anas discors	Migratory. Special protection. Hunting.
Black eagle	Buteogallus anthracinus	Resident. Special Protection. Indicator.
Red tailed eagle	Buteo jamaicensis	Resident. Indicator.
Owl with horns	Bubo virginianus	Resident. Threatened.
Cernicalo	Falco sparverius	Resident. Indicator.
Quail with flakes	Callipepla squamata	Resident. Endemic. Self-consume.
Blue mulato	Melanotis caerulescens	Resident. Endemic. Threatened. Esthetic.
Northern cenzontle	Mimus polyglotos	Resident. Esthetic.
Cuitlacoche with curved beak	Toxostoma curvirostre	Resident. Esthetic.
Gray capulinero	Ptilogonys cinereus	Resident. Endemic.
Golden vireo	Vireo hypochryseus	Resident. Endemic.
Desert cardinal	Cardinalis sinuatus	Resident. Esthetic.
Colorin seven colours	Passerina ciris	Migratory. Esthetic.

Source: MENR (2008a)

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Table 20.3 Reptile Species Listed by NOM-059-SEMARNAT-2001 or in CITES within the San Gonzalo Mine


Common Name	Gender and Species	Status under NOM-059-SEMARNAT-2001 or CITES
Black iguana	Ctenosaura pectinata	Resident. Endemic. Threatened.
Chivilla *	Xantusia bolsonae	Resident. Endemic. Threatened.
Lizard *	Sceloporus horridus	Resident. Endemic.
Water snake	Nerodia melanogaster	Resident. Endemic. Threatened.
Chirrionera snake	Pituophis deppei	Resident. Endemic. Threatened.
Water snake	Thamnophis eques	Resident. Threatened.
Rattle snake	Crotalus atrox	Resident. Special protection.
Rattle snake	Crotalus molossus	Resident. Special protection.
Water turtle	Chrysemys scripta	Resident. Special protection.

Notes: *No English common name translation

Source: MENR (2008a)

Table 20.4 Amphibian Species Listed by NOM-059-SEMARNAT-2001 or in CITES within the San Gonzalo Mine


Common Name	Gender and Species	Status under NOM-059-SEMARNAT-2001 or CITES
Ajolote (Mexican mole lizard)	Ambystoma rosaceum	Resident. Endemic. Special protection.
Toad *	Bufo mazatlensis	Resident. Endemic.
Frog *	Rana pustulosa	Resident. Endemic. Special protection.

Notes: *No English common name translation

Source: MENR (2008a)

20.2 ENVIRONMENTAL PERMITTING

Permits and authorizations required for the Project operation include:

	·	an operating permit

	·	an application for surface tenures

	·	a waste water discharge registration

	·	a hazardous waste generator's registration.

An environmental impact assessment (EIA) or Evaluación de Impacto Ambiental under the Ley General del Equilibrio Ecológico y la Protección al Ambiente (LGEEPA), article 28 (General Law of Ecological Equilibrium and Environmental Protection), is required by the Ministry of Environment and Natural Resources (Secretaría de Medio Ambiente y Recursos Naturales (SEMARNAT)). Prior to this EIA, an authorization regarding environmental impact matters is required by the SEMARNAT.

Additional surface tenures will likely be required for the re-location of any tailings to areas outside of the current surface tenure rights.

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20.2.1 CURRENT PERMITS FOR THE OXIDE TAILINGS

There are no current operating permits for the mining and exploitation of the oxide tailings. However, a conditionally approved Environmental Impact Statement (EIS) (Manifestación de Impacto Ambiental (MIA)) for the exploitation and associated transmission line is in place for the Avino Mine where the tailings are located. Changes to the operating methods may be required if mining of the tailings was not included in the original mining plan. Based on this information, revisions to the permits will be required. If new operating permits are required, an EIA and EIS (MIA) will be mandatory.

20.2.2 CURRENT PERMITS FOR THE SAN GONZALO MINE (ADJACENT)

In order to obtain an authorization regarding environmental impact matters, Avino must prepare an EIS or MIA. Avino prepared an EIS, known as “Manifestación de Impacto Ambiental, modalidad Particular” (MIA-P) for the San Gonzalo Mine and submitted it to the MENR in August of 2008. The applicable regulations fall under Federal jurisdiction, Article 28, sections II, III and VII of the LGEEPA and the Reglamento en Materia de Evaluacion del Impacto Ambiental (REIA), sections K, L and O (Environmental Impact Assessment Matter Regulation).

Given the planned activities for the site, the Ministry also required an assessment in “Environmental Impact Matter for Change of Land Use” (Materia de Impacto Ambiental para el Cambio de Uso de Suelo) for forested areas and mining infrastructure and electrification, for a surface area of 9.08 ha.

The authorization from the Ministry also requires the mine to present mitigation measures for all potential environmental impacts, as per Article 30, LGEEPA and Article 44, REIA, which Avino detailed in its EIS to the authorities.

Based on the information provided by Avino to the Mexican authorities, a conditional authorization was granted, subject to additional prevention and mitigation measures in order to avoid, minimize, or compensate for any environmental impacts during the different stages of the adjacent San Gonzalo Mine (Article 35, section II, LGEEPA), which include an assessment of the “Environmental Impact Matter for Change of Land Use” described above. This permit is valid for 11 years from the date it was issued, to perform various activities on-site. Any modification to the Project must be sent to the MENR in writing before commencing changes.

Aside from complying with all prevention, protection, control and mitigation measures laid out in the proposed MIA-P, Avino must develop an Environmental Quality Monitoring Program (EQMP) or ‘Programa de Seguimiento de la Calidad Ambiental’. The proposed EQMP must be presented to the MENR within six months of receiving the conditional authorization. Once the MENR has assessed the monitoring program, Avino needs to deliver progress reports semi-annually for a period of at least five years. Lastly, Avino must obtain proper authorization from the MENR for “Change of Land Use” as well as the corresponding “Change of Use for Forested Ground to Mining Infrastructure”.

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It is important to note that the current conditional authorization can be cancelled for many reasons, one of them includes improper disposal of liquid/solid waste (hazardous or non-hazardous).

A second permit for “Change of Forest Land Use to Mining Infrastructure” (Cambio de Utilización de Terreno Forestal a Infraestructura Minera) was requested to the SEMARNAT and granted in September of 2008 for the adjacent San Gonzalo Mine. The corresponding legislation is Article 62, section IX of the “Ley General de Desarrollo Forestal Sustentable” (General Law for Sustainable Forest Development) and Article 27 of the Regulation. . In addition, the Official Mexican Standard NOM-060-SEMARNAT-1994 and NOM-061-SEMARNAT-1994 must be adhered to. As per the authorization, Avino must complete its change in land use within 18 months of the date of the permit.

20.2.3 APPLICABLE LEGISLATION

In order to remain in compliance with current permits for the San Gonzalo Mine, the following eight applicable Official Mexican Standards for the Project must be complied with:

· Official Mexican Standards NOM-001-SEMARNAT-1996, which establishes the maximum limits allowed for contaminants in waste water discharges in national waters and goods

· Official Mexican Standard NOM-041-SEMARNAT-1999; which establishes the maximum limits allowed for the emission of polluted gas generated from the exhaust pipe of automotive vehicles circulating, which utilize gas as fuel

· Official Mexican Standard NOM-043-SEMARNAT-1993, which establishes the maximum levels allowed for emissions from fixed sources of solid particles to the atmosphere

· Official Mexican Standard NOM-045-SEMARNAT-1996, which establishes the maximum levels of emission (smokes opacity) generated from of automotive vehicles circulating, which utilize diesel or mixtures that include diesel as fuel

· Official Mexican Standard NOM-052-SEMARNAT-2005, which establishes the characteristics, the process of identification, classification and listing of hazardous waste

· O fficial Mexican Standard NOM-054-SEMARNAT-1993, which establishes the procedure to determine the incompatibility between two or more types of residues considered as harmful by NOM-052-SEMARNAT-2005

· Official Mexican Standard NOM-059-SEMARNAT-2001, which regulates the environmental protection-Mexico’s native species of wild flora and fauna and specifications for their inclusion, exclusion or change-list of species in risk

· Official Mexican Standard NOM-060-SEMARNAT-1994, which establishes protection measures for forestry grounds.

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In addition, other Official Mexican Standards regarding change in land use and mining must be followed and may include:

· Official Mexican Standard NOM-061-SEMARNAT-1994, which refers to the specifications to mitigate the adverse effects caused to the Wild Animals and Uncultivated Vegetation as a result of the forestry utilization, and which nomenclature was modified

· Official Mexican Standard NOM-062-SEMARNAT-1994 establishes specifications to mitigate adverse effects on biodiversity that are caused by change of land use in forested areas

· Official Mexican Standard NOM-120-SEMARNAT-1997 establishes environmental protection specifications for mining exploration activities in dry and temperate climate regions

· Official Mexican Standard NOM-141-SEMARNAT-2003 establishes requirements for tailings characterization, and specifications and criteria for site preparation, design, construction, operation and post-operation of tailings dams.

Dependent on the mining plan, additional Official Mexican Standards for mining operations will also be required for the Project:

	·	Official Mexican Standard NOM-147-SEMARNAT/SSA1-2004, which establishes criteria for determining the concentrations of remediation of soils contaminated with arsenic, barium, beryllium, cadmium, hexavalent chromium, mercury, nickel, silver, lead, selenium, thallium and/or vanadium; published in the Official Gazette on March 2, 2007

	·	Draft Official Mexican standard, PROY-NOM-XXX-SEMARNAT-2009, which establishes the elements and procedures to implement management plans for mining waste

	·	Draft Official Mexican Standard NOM-155-SEMARNAT-2007, which establishes environmental protection requirements for systems leaching gold and silver ores

	·	General Law for the Prevention and Management of Waste (Ley General para la Prevención y Gestión Integral de los Residuos (LGPGIR)) and applicable regulations, which regulated the following registrations and authorizations:

	·	Hazardous Waste Generator's Registration and other compliance documents; such as Manifest, Monthly Log of Hazardous Waste Generation; Ecological Waybills for the Importation and/or Exportation of hazardous Materials and Wastes; Semi-annual Report on Hazardous Wastes Sent to Recycling, Treatment or Final Disposition; and Accidental Hazardous Waste Spill Manifest

	·	LGEEPA

	·	Official Mexican Standard NOM-023-STPS-2003, which establishes standards for work in mines and health and safety conditions at these sites

	·	Official Mexican Standard NOM-055-SEMARNAT-2003, which establishes the requirements to be met by sites that will use a hazardous waste landfill

	·	Official Mexican Standard NOM-147-SEMARNAT/SSA1-2004, which establishes criteria for determining the concentrations of remediation of soils contaminated by arsenic, barium, beryllium, cadmium, chromium.

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20.3 ENVIRONMENTAL MONITORING AND REPORTING

The conditional authorization sets out the requirements for environmental monitoring and reporting, on a semi-annual basis, for a minimum of five years. Details are provided in Section 20.2.

20.4 ENVIRONMENTAL MANAGEMENT

Brownfields, or site recycling as it is called within the Mexican environmental legislation, looks at the environmental liabilities (pasivos ambientales) as per Articles 68, 69 and 70 of the Ley General Para la Prevención y Gestión Integral de Residuos (LGPyGIR) or General Law for the Prevention and Comprehensive Management of Waste. It is based on the “polluter pay” principle, according to the LGEEPA, and the LGPyGIR. The federal government coordinates with both provincial and municipal authorities to manage the environmental liabilities, whether the sites are orphaned or not. The LGPyGIR requires complete clean-up of contaminated sites.

20.5 WATER MANAGEMENT

Fresh water for the Project is available from a well drilled in 1996, west of the mine site and surface water from a dam which is divided 60%/40% with the town of Panuco de Coronado. The Project has previously been charged annually for water use. Piping infrastructure from these water sources is still in place.

Additional water was also obtained from underground workings, and re-circulation from the tailings. There is potential for the water from the underground workings to be acid producing (Slim 2005d). Treatment of water from the underground workings may be required prior to use depending on the water quality.

20.6 SULPHIDE TAILINGS MANAGEMENT

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.

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Three preliminary options have been identified for the management of the sulphide tailings:

	·	reprocessing the tailings

	·	retreating of the tailings on the heap

	·	re-location and treatment for remediation.

The feasibility of these options are not known at this stage.

The absence of complete sulphide tailings metallurgical information makes identification of feasibility of the options difficult. A detailed trade-off study should be undertaken to characterize current conditions of the tailings and to determine whether the retreatment of this material would contribute to the profitability of the Project. However, at this stage only limited metallurgical test data is available since no detailed metallurgical test work was undertaken on this material during the MMI 2004 test program.

Alternatively, the treatment of the sulphide tailings for gold recovery will afford an opportunity to recover silver and gold from the material as well as treating this material with the lime to ensure that this material will not be a net acid producer. Indications are that the sulphide tailings will also require treatment for environmental remediation purposes in the future. These costs could be partially or completely be off-set by treating this material separately or together with the oxide material by the heap leach process.

Re-locating the sulphide tailings may afford a more expedient option to address this potential environmental problem. For the purposes of this preliminary economic assessment, it will be assumed that the sulphide tailings will be moved to another location north-east of the proposed site for the leach pad.

20.7 MINE CLOSURE AND RECLAMATION

An updated mine closure plan and reclamation will be required for the Project. The mine closure plan should include information; such as:

	·	justification for the closure plan considering technical, environmental and legal aspects

	·	objectives and how they will be met

	·	photo evidence and details of the environmental situation prior to commencing closure activities

	·	schedule of activities

	·	the progressive reclamation of the site during the life of the operation

	·	the design of tailings disposal areas

	·	the reclamation and re-vegetation of the surface disturbances wherever practicable

	·	a cost estimate of the work required to close and reclaim the mine

	·	a plan for ongoing and post-closure monitoring and reporting at the site.

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No cost estimates have been generated at this time to ensure the Project meets the environmental requirements once the processing of the heap material has been terminated.

As per federal regulations, under LGEEPA, both the SEMARNAT and Procuraduría Federal de Proteccíon al Ambiente (PROFEPA) (Federal Attorney for Environmental Protection) ministries require Avino to present in its first semi-annual report for a General Plan to Remediate the Site dates, activities, techniques, costs that will guarantee restoration of affected areas, considering complete reforestation of impacted sites, removal of foundations and infrastructure that is no longer useful, roads that no longer have any use, remove all rubbish and properly dispose of, closing off adits that are no longer needed and restoration of the tailings facility when its operational life is finished. Avino will also need to present a reforestation program for the entire surface area affected during mining operations. This program will include caveats to safeguard flora and fauna.

20.8 SOCIO-ECONOMIC AND COMMUNITY CONSIDERATIONS

This socio-economic section of the Technical Report:

	·	identifies communities that may potentially be affected by the development of the Project

	·	identifies potential positive and adverse effects of the Project on local communities

	·	advises on further study requirements.

20.8.1 PROJECT LOCATION

The Project is located approximately 82 km northeast of the City of Durango, in the state of Durango. The Property lies between the communities of Panuco de Coronado and San Jose de Avino.

20.8.2 CONSULTATION WITH COMMUNITIES

The implementation of an effective community engagement program is fundamental to the successful environmental permitting of mining projects. As part of a comprehensive community engagement program, should be initiated as soon as possible. Consultation will include addressing concerns of the leap-leach pile that may be present within or adjacent to the Property.

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Consultation and the development of a working relationship with local communities typically involves the development of a series of agreements that lay the groundwork for conversations. These include:

	·	memorandums of understanding

	·	protocol agreements

	·	community consultation/participation agreements.

As project exploration and development proceeds, other agreements will become necessary, including:

	·	socio-economic/community economic benefits agreements

	·	environmental monitoring agreements

	·	training agreements

	·	accommodation/impact benefit agreements.

POTENTIAL POSITIVE EFFECTS ON LOCAL COMMUNITIES

Potential positive effects of the proposed project development include:

	·	long-term, meaningful employment in mining operations and related positions (e.g., environmental monitors, service industry sector)

	·	economic development and contract opportunities for local communities (existing and new businesses), and community infrastructure improvements.

POTENTIAL ADVERSE EFFECTS ON LOCAL COMMUNITIES

For potential adverse effects of the proposed project development, it will be assumed that the sulphide tailings will be moved to another location northeast of the proposed site for the leach pad. Again, it should also be mentioned that this proposed site is very close to the town of San Jose de Avino and this may result in objections from the local community.

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21.0 CAPITAL AND OPERATING COST ESTIMATES

21.1 AVINO AND SAN GONZALO VEINS

Avino is currently conducting mining activity, including mineral processing, on the Avino and San Gonzalo Veins. There is no cost estimate applicable and all costs below are based on actual expenditure.

21.1.1 CAPITAL COSTS

The actual capital expenditures to date on the Avino and San Gonzalo Veins are summarized in Table 21.1 and Table 21.2, respectively.

Mine and mill capital costs were attributed to equipment purchases.

Table 21.1 Capital Costs for the Avino Vein (US$)

Description

Q1-Q3 2017

2016

2015

2014

Office Furniture
19,035 8,625 7,093 6,521

Computer Equipment
5,023 14,913 17,233 33,178

Mill Machinery and Processing Equipment
703,475 70,653 525,067 2,832,627

Mine Machinery and Transportation Equipment
203,922 1,985,446 1,918,764 2,125,229

Buildings and Construction
1,985,450 485,757 590,639 313,875

Elena Toloso Mineral Property - Avino
609,423 4,330,125 0 0

Total Capital Costs
3,526,327 6,895,518 3,058,796 5,311,429

Source: Avino

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Table 21.2 Capital Costs for the San Gonzalo Vein (US$)


Description	Q1-Q3 2017		2016		2015		2014
Office Furniture		16,119		7,248		3,725		6,521
Computer Equipment		4,973		12,575		17,233		32,937
Mill Machinery and Processing Equipment		951,881		188,884		100,537		264,178
Mine Machinery and Transportation Equipment		181,954		40,294		133,248		646,981
Buildings and Construction		76,773		443,135		55,819		356,300
San Gonzalo Vein Mineral Property		332,073		1,080,889		577,462		697,107
Total Capital Costs		1,563,774		1,773,024		888,024		2,004,023

Source: Avino

21.1.2 OPERATING COSTS

The mine and milling costs included operating and maintenance labour together with the operation associated consumable supplies. The cost for electrical power was included in the milling costs. The geological component was mostly related to technical labour.

Table 21.3 Operating Costs for the Avino Vein (US$)


Description	Q1-Q3 2017		2016
Mining Cost		5,046,904		5,306,208
Milling Cost		3,214,053		2,947,585
Geological and Other		2,571,758		2,300,243
Royalties		544,571		610,797
Depletion and Depreciation		1,079,003		919,756
Total Direct Costs		12,456,289		12,084,590
G&A		3,295,481		2,817,256
Total Operating Costs		15,751,770		14,901,845

Source: Avino

Table 21.4 Operating Costs for the San Gonzalo Vein (US$)


Description	Q1-Q3 2017		2016
Mining Cost		2,340,070		1,798,503
Milling Cost		495,546		212,467
Geological and Other		487,751		318,843
Royalties		0		0
Depletion and Depreciation		675,072		485,732
Total Direct Costs		3,998,439		2,815,545
G&A		1,063,226		607,351
Total Operating Costs		5,061,666		3,422,897

Source: Avino

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21.2 TAILINGS RESOURCES

21.2.1 OXIDE TAILINGS

The capital costs and operating costs for retreating the oxide tailings portion of the Property, including reclaiming the oxide tailings, constructing the heap leach pad and the treatment facilities, were estimated and reported in the technical report entitled “Technical Report on the Avino Property”, dated April 11, 2017.

The estimated capital cost was US$28.8 million (US$24.4 million of initial capital plus US$4.4 million sustaining capital) and the estimated operating cost was US$15.06/t.

The updated capital costs for the Project were developed based on 1,370 t/d or 500,000 t/a treatment of oxide tailings and construction of the heap leach pad in two phases.

The updated capital cost estimate includes the following items:

· An updated equipment list was generated with process engineering and new quotations for major equipment were obtained and replace the previous costs.

· Other items in the previous estimate in 2012 were escalated to reflect the 2016 Q4 costs.

21.2.2 BASIS OF ESTIMATE

The estimate was a PEA, Class IV estimate prepared in accordance with industry standard. The accuracy of the estimate is -25%/+40%.

P RICING AND C URRENCY

This PEA estimate was prepared with a base date of Q4 2016 and had not included any escalation beyond this date.

For major equipment, costing was based on budgetary quotations from vendors. Other mechanical equipment costs were based on in-house data.

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All capital costs are expressed in US dollars. No provision was made for fluctuations in the currency exchange rates.

The currency exchange rates used in the estimate are shown in Table 21.5.

Table 21 . 5 Currency Exchange Rate

Currency

Exchange

CDN$1.00

US$0.7454

MXN$19.23

US$1.0000

C ONSTRUCTION L ABOUR R ATES

A blended labour rate of US$13.50/h had been used and calculated based on the assessment of current labour conditions as compared to the labour rate of US$12.68 in the previous estimate from 2012.

I NFLATION R ATE

An inflation rate had been applied to reflect the PEA’s cost of the Project (Table 21.6). The escalation was based on inflation rate (consumer prices) in Mexico (Trading Economics 2016 www.tradingeconomics.com).

Table 21 . 6 Inflation Rates in Mexico

Year

Rate

(%)

2013

4.4

2014

5.6

2015

2.7

2016

3.5

An average rate of inflation from 2012 to 2016 is 17%. Due to a combination of factors such as inflation, supply/demand, and other effects such as environmental, technological, and political changes, an escalation of 2% per year was applied in the updated capital cost estimate.

D IRECT C OSTS

The equipment list had been updated based on the process flow diagram document. The cost of equipment was estimated based on changes to the process flow diagram.

Disciplines other than mechanical equipment used costs from the previous cost estimate, with escalation applied only.

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I NDIRECT C OSTS

All indirect costs were estimated based on a percentage of direct costs.

C ONTINGENCY AND R ISK

A contingency assessment was completed and applied to various areas of the direct and indirect costs to meet anticipated, foreseen, but incompletely defined costs to satisfy the approved scope.

Table 21 . 7 Contingency by Area

Contingency (%) by Area

12.0% of Mining, Agglomeration & Pad Loading

20.0% of Process Facilities

15.0% of Reagents / Auxiliary Services

15.0% of Buildings

30.0% of Leach Pad & Infrastructure

20.0% of Power Supply and Distribution

15.0% of EPCM & Vendor Representatives

15.0% of Freight & Construction Indirects

10.0% of Owners Costs

2 1.2 . 3 C A P I TA L C OS T S U M M A R Y

The capital cost for the Project had been assessed at US$28.8 million (including initial capital of US$24.4 million) and is summarized in Table 21.8.

Table 21 . 8 Capital Cost Summary

Item/Description

Total Initial Capital Cost (US$000)

Total Sustaining Capital Cost (US$000)

Direct Costs

Mining, Agglomeration, and Pad Loading

2,899

818

Process Facilities

3,979

Reagents/Auxiliary Services

526

Buildings

1,003

Leach Pad and Infrastructure

4,522

1,819

Power Supply and Distribution

1,571

Total Direct Costs

14,500

2,637

Indirect Costs

Engineering, Procurement, Construction Management, Quality Assurance and Vendor Representatives

2,338

386

Freight and Construction Indirects

2,898

430

Owner’s Costs

725

132

Contingency

3,902

767

Total Indirect Costs

9,863

1,715

Total Capital Costs

24,363

4,352

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M INING , A GG LOMERATION AND P AD L OADING

These costs included the facilities required for transferring the tailings from the existing tailing dam to the dump bin for oxide tailings and to the sulphide stockpile for the sulphide tailings, using the front-end loader and trucks. It also included the facilities required for the loading of the tailings into a bin to feed the conveyor to the agglomerator and included the agglomerator and its structural supports as well as the ancillary equipment. These costs also included the lime and cement silos.

P ROCESS F A CILITIES

The costs in this section included the various items of equipment, the tanks and their attendant pumps and agitators (if equipped), the Merrill-Crowe circuit (supplied as a modular package unit) and other miscellaneous process-related equipment. The process equipment was estimated as new-cost items.

R EAGENTS AND A UXILIARY S ERVICES

The costs derived for this section included reagent preparation and holding tanks and related equipment as well as civil construction costs. Water was assumed to be supplied from the existing sources, namely from the dams and/or the wells. The costs shown for the fresh water supply included the refurbishing of the equipment and pumps. Safety items related to reagent handling had also been included.

B UILDINGS

The existing buildings and offices of the Avino Mine will be utilized for the Project. An allowance had been included for the refurbishment of these facilities. No costs had been allocated for the truck shop since it was intended to have a transport contractor to provide all the transportation needs for the Project. An allowance had been included for the procurement/refurbishing of laboratory equipment. The costs for constructing building to house the Merrill-Crowe circuit and reagent preparation related equipment had been included in the cost estimates.

L EACH P AD AND I NFRASTRUCTURE

The leach pad with liners and a leak detection system will be constructed in two phases. The barren, pregnant and event solution ponds will all be lined. Also included is the cost of fencing off the plant area, the telephone system, sewage disposal, water supply and treatment, and fuel storage facilities. The existing fuel storage facilities will be used but this will require refurbishing and this cost had been provided in the cost estimate.

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P OWER S UPPLY AND D ISTRIBUTION

The refurbishing and expanding of the existing electrical power supply system, along with lighting, had been included in this section. It also included power to the agglomerated area and the Merrill-Crowe area.

I NDIRECT C OSTS

Indirect costs had been included as costs associated with construction services, consulting services, spare parts, and freight. Contingency had been included in the indirect costs.

No sunk costs or taxes had been added to the capital cost estimate.

2 1.2 . 4 O P ER A T I N G C OS T S S U M M A R Y

The LOM overall operating costs for the Project, including the costs for mining, process and G&A, had been estimated to be approximately $15.06/t milled. Table 21.9 gives the LOM overall unit operating cost summary, based on a nominal processing rate of 1,370 t/d. The operating cost estimate was reported in US dollar with an exchange rate of Mexican Peso to US Dollar at 19.23.

Table 21 . 9 LOM Unit Operating Cost Estimate Summary

Description

Personnel

Unit Cost

(US$/t treated)

Mining

15 *

1.13

Process

39

12.53

G&A

11

1.41

Total Operating Cost

65

15.06

Note: *labour requirement for trucking of the tailings and waste is excluded as it will be by a contractor.

M INING O PERATING C OSTS

Mining production cycle consists of loading, hauling and unloading, no drilling or blasting is required. Oxide tailing materials will be loaded using a 3.8 m3 wheel loader and hauled to the leach pad using a 24 t articulated truck. Sulphide tailing materials are treated as waste and will be hauled to the waste dump. Trucking of oxide and sulphide materials will be performed by a contractor. Table 21.10 summarizes the mining operating costs.

Table 21 . 10 Mining Cost Summary

Mining Cost Item

LOM Cost*

(US$ 000)

Unit Cost

(US$/t mined)

Loading

226

0.037

Hauling

969

0.160

Support Equipment

649

0.107

Ancillary Equipment

274

0.045

Dewatering

252

0.042

Labour

1,153

0.190

Total Costs

3,523

0.581

Note: *excludes pre-production costs

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P ROCESS O PERATING C OST E S TIMATE

The process operating cost for the Project included the costs for agglomeration, heap leaching, solution handling and Merrill-Crowe refinery plant to produce a silver/gold doré.

Table 21.11 gives the overall LOM process operating cost summary based on a nominal processing rate of 1,370 t/d with an availability of 90% and 365 operating days per year.

The LOM annual average operating cost for the process facilities was estimated to be US$6.0 million per year or US$12.53/t of tailings treated.

Table 21 . 11 LOM Process Operating Cost

Description

Personnel

Annual Cost

(US$)

Unit Cost

(US$/t treated)

Process Manpower

Maintenance Labour

7

105,200

0.221

Operations Labour

25

318,100

0.667

Laboratory

7

89,600

0.188

Subtotal

39

512,900

1.076

Process Supplies

Operating Supplies

-

4,617,600

9.679

Maintenance Supplies

-

569,000

1.193

Power Supply

-

276,900

0.581

Subtotal

-

5,463,500

11.453

Total Process Operating Costs

39

5,976,400

12.529

The annual operating cost included the following:

· staffing and maintenance manpower complements, and base salaries including an average burden of 60% (salary information is based on staffing complements, similar project salary costs as supplied by Avino, and Tetra Tech in-house data)

· power consumption based on the estimated power drawn by the equipment

· reagent consumption rates and associated costs based on test work results and recent prices received from reagent suppliers

· estimated maintenance costs based on approximately 10% of equipment costs.

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G&A COST ESTIMATE

Average LOM G&A operating cost was estimated to be US$672,000 per year, or US$1.41/t of tailings treated. Table 21.12 and Table 21.13 detail the manpower requirement estimates, annual G&A expenses and LOM unit G&A expenses operating cost.

Table 21 . 12 G&A Manpower Requirements

Description

Manpower

Annual Cost/ Employee (US$)

Total Annual Cost Payroll (US$)

Unit Cost (US$/t milled)

General Manager

1

64,514

64,515

0.135

Administration Manager

1

35,574

35,574

0.075

First Aid Attendant

1

10,821

10,821

0.023

Purchasing Agent

1

17,380

17,380

0.036

Office Clerk

1

9,623

9,623

0.020

Computer Technician

1

9,623

9,623

0.020

Safety and Security

2

22,650

45,300

0.095

Warehouse Staff

2

10,663

21,325

0.045

Environmental Supervisor

1

22,650

22,650

0.047

Total G&A Manpower

11

-

236,811

0.496

Table 21 . 13 G&A Expenses

Description

Total Cost

(US$/a)

Unit Cost

(US$/t milled)

Communications

36,000

0.076

Consulting

30,000

0.063

Human Resources and Employee Costs

10,000

0.021

Vehicle Costs

15,000

0.032

Site Costs

24,000

0.050

Office Costs

24,000

0.050

Safety and Security

24,000

0.050

Travel

36,000

0.076

Water Costs

24,000

0.050

Housing Costs

30,000

0.063

Insurance

60,000

0.126

General & Others

50,000

0.105

Environmental

Consumables and Supplies

24,000

0.050

Permitting

24,000

0.050

Water Analysis

24,000

0.050

Total G&A Expenses

435,000

0.912

21.2.5 SULPHIDE TAILINGS

Avino is not currently conducting mining activity on the sulphide tailings portion of the Property. No capital or operating costs have been estimated for any potential mining activity on the sulphide tailings portion of the Property.

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22.0 ECONOMIC ANALYSIS

22.1 AVINO AND SAN GONZALO VEINS

Avino is currently conducting mining activity, including mineral processing, on the Avino and San Gonzalo Veins. There is no economic analysis performed on both the Veins.

22.2 TAILINGS RESOURCES

22.2.1 OXIDE TAILINGS

In 2017, Tetra Tech prepared a PEA technical report for the silver and gold recoveries from the oxide tailings, entitled “Technical Report on the Avino Property”, dated April 11, 2017.

	·	gold – US$1,250/oz

	·	silver – US$18.50/oz.

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The pre-tax financial results were:

·
48.4% IRR

·
2.0-year payback period

·
US$40.5 million NPV at an 8% discount rate.

Avino commissioned PwC in Vancouver to prepare the tax component of the model for the post-tax economic evaluation for this updated PEA with the inclusion of applicable income and mining taxes.

The following post-tax financial results were calculated:

	·	32% IRR

	·	2.6-year payback period

	·	US$22.2 million NPV at an 8% discount rate.

The assessments are no longer current.

The pre-tax financial model was established on a 100% equity basis, excluding debt financing, and loan interest charges. The financial results for the base case are presented in Table 22.1.

Table 22.1 Summary of Pre-tax Financial Results

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

Initial 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

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

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The post-tax financial results estimated by the 2017 PEA Update are summarized in Table 22.2.

Table 22.2 Summary of Post-tax Financial Results

Unit

Base Case

Gold

US$/oz

1250.00

Silver

US$/oz

18.50

Undiscounted NCF

US$ million

40.743

NPV (at 5%)

US$ million

28.006

NPV (at 8%)

US$ million

22.187

NPV (at 10%)

US$ million

18.892

IRR

%

32.0

Payback

years

2.6

22.2.2 SULPHIDE TAILINGS

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23.0 ADJACENT PROPERTIES

There are no material properties adjacent to the Property.

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24.0 OTHER RELEVANT DATA AND INFORMATION

There is no additional information or explanation necessary to make the technical report understandable and not misleading.

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25.0 INTERPRETATIONS AND CONCLUSIONS

25.1 GEOLOGY

The Property is located in Durango State in North Central Mexico, within the Sierra Madre Silver Belt, and 82 km northeast of Durango City. The current Property is comprised of 23 mineral concessions, totalling 1,103.934 ha.

The Property is located within a large caldera which hosts numerous epithermal veins and breccias, grading into a “near porphyry” environment. The dominant rock types in the region of the Avino Mine include andesitic, rhyolitic and trachytic pyroclastic rocks. The area was intruded by monzonite dykes and stocks, which appear to be related to mineralization. Silver- and gold-bearing veins crosscut the various lithologies and are generally oriented north-northwest to south-southeast and northwest to southeast. The rocks have been weathered and leached in the upper sections from contact with atmospheric waters, resulting in an oxidized and a reduced, or sulphide, portion of the mine.

Four deposits are present on the Property: the Avino Vein, the San Gonzalo Vein, and the tailings dam (which includes an oxide and a sulphide portion). Current Mineral Resource estimates are reported in this study for the Avino and San Gonzalo veins, as well as the oxide tailings.

25.2 RESOURCE ESTIMATES

The Mineral Resources of the Property are summarized in Table 25.1.

It must be noted that no Mineral Resource has been estimated for the sulphide tailings portion of the Property.

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Table 25.1 Mineral Resources at the Avino Mine Property

Resource Category

Deposit

Cut-off (AgEQ

g/t)

Tonnes

(t)

Grade

Metal Contents

AgEQ

(g/t)

Ag

(g/t)

Au

(g/t)

Cu

(%)

AgEQ

(million tr oz) ^*

Ag

(million

tr oz)

Au (thousand

tr oz)

Cu

(t)

Measured and Indicated Mineral Resources

Measured

Avino – ET

60

3,890,000

141

71

0.54

0.55

17.6

8.9

67.4

21,000

Measured

Avino – San Luis

60

650,000

142

67

0.70

0.49

3.0

1.4

14.6

3,000

Measured

San Gonzalo System

130

290,000

397

314

1.65

0.00

3.7

2.9

15.4

0

Total Measured

All Deposits

-

4,830,000

156

85

0.63

0.51

24.3

13.2

97.4

24,000

Indicated

Avino – ET

60

2,640,000

105

49

0.56

0.34

8.9

4.2

47.6

9,000

Indicated

Avino – San Luis

60

1,620,000

126

54

0.82

0.36

6.6

2.8

42.9

6,000

Indicated

San Gonzalo System

130

240,000

319

257

1.25

0.00

2.5

2.0

9.6

0

Indicated

Oxide Tailings

50

1,330,000

124

98

0.46

0.00

5.3

4.2

19.8

0

Total Indicated

All Deposits

-

5,830,000

124

70

0.64

0.25

23.3

13.1

119.8

15,000

Total Measured and Indicated

All Deposits

-

10,660,000

139

77

0.63

0.37

47.5

26.3

217.2

39,000

Inferred Mineral Resources

Inferred

Avino – ET

60

2,380,000

111

58

0.51

0.33

8.5

4,4

39.1

8,000

Inferred

Avino – San Luis

60

1,780,000

124

57

0.72

0.38

7.1

3.2

41.2

7,000

Inferred

San Gonzalo System

130

120,000

262

219

0.86

0.00

1.0

0.8

3.3

0

Inferred

Oxide Tailings

50

1,810,000

113

88

0.44

0.00

6.6

5.1

25.6

0

Total Inferred

All Deposits

-

6,090,000

118

70

0.56

0.24

23.2

13.6

109.2

15,000

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Notes:

Figures may not add to totals shown due to rounding.

Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.

The Mineral Resource estimate is classified in accordance with the CIM Definition Standards

For Mineral Resources and Mineral Reserves incorporated by reference into NI 43-101 Standards of Disclosure for Mineral Projects.

Mineral Resources are reported at cut-off grades 60 g/t, 130 g/t, and 50 g/t AgEQ grade for ET, San Gonzalo, an oxide tailings, respectively..

AgEQ or silver equivalent ounces are notational, based on the combined value of metals expressed as silver ounces

Cut-off grades were calculated using the following assumptions:

For Avino (ET and San Luis), San Gonzalo: gold price of US$1,300/oz, silver price of US$17.50/oz, and copper price of US$3.00/lb

For Oxide Tailings: gold price of US$1,250/oz, silver price of US$19.50/oz

A net smelter return (NSR) was calculated and the silver equivalent was back calculated using the following formulas:

For ET: AgEQ = (24.06 x Au (g/t) + 0.347 x Ag (g/t) + 43.0 x Cu (%) – 151.8 x Bi (%)) / 0.347

For San Gonzalo: AgEQ = (0.03 x Au (g/t) + 0.385 x Ag (g/t) – 4.03/0.385

For Oxide Tailings: AqEQ = 69.37 x Au (g/t) + Ag (g/t)

No Mineral Resource has been estimated for the sulphide tailings portion of the Property.

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25.3 MINERAL PROCESSING

Avino is currently conducting mining activities on the Avino Vein and the San Gonzalo Vein, including processing of the materials from both the properties at the flotation processing plant at the Avino Vein site. Production decisions for both the existing operations were being made without Mineral Reserves or any studies of economic viability that have been prepared in accordance with NI 43-101. As a result there is increased uncertainty and multiple technical and economic risks of failure, which are associated with these production decisions. These risks, among others, include areas that would be analyzed in more detail in a Feasibility study, such as applying economic analysis to Mineral Resources and Mineral Reserves, more detailed metallurgy, and a number of specialized studies in areas such as mining and recovery methods, market analysis, and environmental and community impacts.

For the oxide tailings, the preliminary test results indicate that the tailings samples responded well to cyanide leaching, including column leaching treatment. The proposed gold and silver extraction was by heap leaching. Further evaluations are required to better understanding the metallurgical performance of the oxide tailings and the economics of reprocessing the tailings.

For the sulphide tailings, Avino is not currently conducting mining activity on the tailings. No recovery methods are currently proposed for the sulphide tailings. The gold and silver recovery from the sulphide tailings has been excluded from this study.

25.4 MINING

Avino is currently conducting mining activity on the San Gonzalo and the Avino Veins. Cut and fill method, sublevel stoping and shrinkage stoping methods are used to feed the mill (more information can be found in Section 16.0).

The oxide tailings Mineral Resource is proposed to be mined/moved using a conventional truck/loader surface mining method. The production cycle will consist of loading and trucking. 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.

25.5 CAPITAL AND OPERATING COSTS

25.5.1 AVINO VEIN AND SAN GONZALO VEIN

Avino is currently conducting mining activity on the Avino and San Gonzalo veins. There is no cost estimate applicable and all costs are based on actual expenditures. The capital and operating costs are detailed in Section 21.0.

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25.5.2 TAILINGS RESOURCES

The capital costs and operating costs for retreating the oxide tailings portion of the Property, including reclaiming the oxide tailings, constructing the heap leach pad and the treatment facilities, were detailed in Section 21.0 and reported in the technical report entitled “Technical Report on the Avino Property”, dated April 11, 2017. The 2017 PEA Update results are summarized in the following subsections.

C APITAL C OSTS

The capital cost for the oxide tailing tailings part of the Property had been developed based on the treatment of 1,370 t/d, or 500,000 t/a of oxide tailings. A total initial capital cost of US$24.4 million, including contingency, was estimated for the oxide tailings retreatment by the proposed heap leaching processing. The breakdown of the estimate is shown in Table 25.2. The exchange rate used for the cost estimates was Mexican Peso to US Dollar at 19.23.

Table 25 . 2 Capital Cost Summary


Item/Description	Total Initial Capital Cost (US$ 000)		Total Sustaining Capital Cost (US$ 000)
Direct Costs
Mining, Agglomeration, and Pad Loading		2,899		818
Process Facilities		3,979
Reagents/Auxiliary Services		526
Buildings		1,003
Leach Pad and Infrastructure		4,522		1,819
Power Supply and Distribution		1,571
Total Direct Costs		14,500		2,637
Indirect Costs
Engineering, Procurement, Construction Management, Quality Assurance and Vendor Representatives		2,338		386
Freight and Construction Indirects		2,898		430
Owner’s Costs		725		132
Contingency		3,902		767
Total Indirect Costs		9,863		1,715
Total Capital Costs		24,363		4,352

O PERATING C O STS

The LOM overall operating cost for the oxide tailings retreatment, including costs for mining, process and G&A, had been estimated to be approximately US$15.06/t milled and is detailed in Table 25.3. The LOM overall unit operating cost estimate was based on a nominal processing rate of 1,370 t/d.

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Table 25 . 3 LOM Unit Operating Cost Estimate Summary

Description

Personnel

Unit Cost

(US$/t treated)

Mining

15*

1.13

Process

39

12.53

G&A

11

1.41

Total Operating Cost

65

15.06

Note: *labour requirement for trucking of the tailings and waste was excluded as it will be by a contractor.

25.6 ECONOMIC ANALYSIS

Avino is currently conducting mining activity, including mineral processing, on the Avino and San Gonzalo Veins. There is no economic analysis performed on both the Veins.

In 2017, Tetra Tech prepared an economic evaluation (“Technical Report on the Avino Property”, dated April 11, 2017) for the oxide tailings retreatment based on a pre-tax financial model. The assessment results are detailed in Section 22.0 and the Technical Report dated on April 11, 2017.

The economic evaluation for the oxide tailings retreatment was based on a pre-tax financial model. Metal prices used in the base case were:

· gold – US$1,250/oz

· silver – US$18.50/oz.

The pre-tax financial results were:

· 48.4% IRR

· 2.0-year payback period

· US$40.5 million NPV at an 8% discount rate.

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Avino commissioned PwC in Mexico to prepare the tax component of the model for the post-tax economic evaluation for the updated PEA with the inclusion of applicable income and mining taxes.

The following post-tax financial results were calculated:

· 32.0% IRR

· 2.6-year payback period

· US$22.2 million NPV at an 8% discount rate.

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26.0 RECOMMENDATIONS

26.1 GEOLOGY

ARANZ Geo’s recommendations are itemized in the following subsections. These recommendations are not required for continued mine development on the Property, and therefore a cost estimate for this work is not provided.

26.1.1 DATABASE MANAGEMENT

Tetra Tech has the following recommendations regarding Avino database management:

Tetra Tech (2013) previously recommended that all drillhole data (including collar, survey, assay, geology, and specific gravity data) should be maintained in a single, compiled database for both the Avino and San Gonzalo Veins. The data has been not consolidated to date. ARANZ Geo reiterates this recommendation but goes further to recommend that tailings sampling data also be included.

ARANZ Geo recommends that underground channel sampling and QA/QC data be incorporated into the same unified system together with the exploration drilling data to form a single repository or “version of the truth”.

Avino currently possess Surpac ^™ software that should be adequate to manage a more centralized database. The ability to select data by type and location for assaying and logging should be managed through the judicious use of codes to allow selective extraction and summarization as and when required.

26.1.2 UNDERGROUND SAMPLING

ARANZ Geo has the following recommendations regarding Avino geology data and interpretation:

ARANZ Geo recommends that level sampling strategy at the Avino Vein be improved. Currently the development drifts bracketing the individual bodies are manually sampled across the width of the tunnels.

The Avino Vein is very wide (in excess of 30 m in places) and subsequent sampling across the full width of the orebodies, creates a potential for bias in the frequency of sampling in the orebody between the drifts is lower. ARANZ Geo recommends that the drift on the footwall side be driven in advance of the hanging wall drift.

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Advantages are:

· allow fans of short holes to be drilled at intervals (estimated 15 to 25 m)

· to provide advanced and balanced sample coverage

· optimal positioning of hanging wall drift to preserve the geotechnical integrity of the hanging wall of the orebody and

· allow the possibility of stoping on retreat (with improved safety and planning flexibility).

26.1.3 SPECIFIC GRAVITY SAMPLING AND ANALYSIS

ARANZ Geo recommends that Avino continues to develop the database for specific gravity data using drill cores. ARANZ Geo also recommends that grab samples from controlled underground exposures (location, and lithology description) be used to supplement the data. ARANZ Geo further recommends that some large samples be cut from the faces of the oxide tailings deposit weighed and measured to determine specific gravity for the deposit.

26.1.4 QA/QC SAMPLING

ARANZ Geo recommends that standards and blank submissions be included in the master database for the Property to avoid the difficulty of locating such data when it is resides in separate spreadsheet reports.

ARANZ Geo recommends that QA/QC performance graphs be updated on a monthly basis to allow questionable sample batches to be repeated timeously.

26.1.5 SULPHIDE TAILINGS DRILLING

Drill the sulphide tailings when it has been dewatered. A hole spacing of 80 to 100 m (based on experience with the oxide tailings) should be sufficient to allow an Inferred Mineral Resource to be declared, provided sufficient mineralization is present.

26.1.6 DENSITY MEASUREMENTS

ARANZ GEo recommends that further density measurements be generated. Access to most of the levels in the Avino Mine and San Gonzalo Mine provides the opportunity to rapidly supplement density measurements from underground exposures in the form of grab samples from known positions for the major vein units. Density measurements from the accessible oxide tailings heap can be obtained by carefully removing and measuring volumes of material and drying and weighing the material. ARANZ Geo suggests representative volumes of 0.3 m x 0.3 m x 0.3 m adjacent to the collars of every second drill hole should be captured.

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26.1.7 BISMUTH

Bismuth is a significant deleterious penalty element and should be assayed at the same rate as copper to provide detailed information for the mine planning at ET/San Luis.

26.1.8 RESOURCE ESTIMATION

An internal capacity to perform mineral resource estimation, using geostatistical methods should be developed. The Surpac ^™ software should provide the tools to be able to do this in the long term.

26.1.9 EXPLORATION FOR THE WESTERN EXTENSION OF THE AVINO VEIN

Horner (2017), in his recent structural geology report, concludes that the known portion of the Avino Vein system west of San Luis terminates on a post mineralization fault and recommends that the extension to the system be investigated. ARANZ Geo supports this investigation.

26.2 MINING

26.2.1 LONG-TERM MINE PLANNING

Tetra Tech recommends that Avino prepare a long-term mine plan based on the resource estimate, to enable Avino to declare mineral reserves and ensure that the mineral resources disclosed can be included in a long-term mine plan.

26.2.2 SUBLEVEL MINING (WITH ROOM AND PILLAR ON SUBLEVELS)

A key feature of the mining method used at Avino is to mine out the sublevels from hangingwall to footwall, leaving pillars, as a means of limiting unsupported spans. In addition, much of the current production is from conducting room and pillar on the sublevels as opposed to long hole blasting between sublevels.

Furthermore, Tetra Tech has noted that Avino plans to leave pillars behind and potentially to backfill the mined-out stopes.

A number of potential problems may arise with the current mining practice:

	·	The stability of the spans created by slashing out from hangingwall to footwall is not well understood and the large unsupported spans on the sublevels may not remain stable once long hole stoping becomes a greater portion of the mining activity

	·	Instability on one of the sublevels could compromise ventilation and escape way access as well as the ability to mine between sublevels

	·	Rib pillars (dip pillars) may have larger heights (distance from hanging wall to footwall) that the planned widths (20 to 25 m), which will affect pillar stability

	·	The use of backfilling in the stope is challenged by the potential need to barricade the slashed-out widths and heights of the sublevels

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As such Tetra Tech recommends the following:

· The current method be subjected to a detailed geotechnical review, including a review of pillar stability for mining of the current sublevels using long hole stoping

· Avino alter the mining method from slashing out of sublevels as they are advanced, to one where the slashing out of sublevels is delayed to immediately prior to long hole blasting between sublevels. This will reduce the time that the large spans are needed and will ensure that mining personnel will work in smaller span ore drifts, which can have support installed as needed as may occur due to increased induced horizontal stress during bulk mining. Smaller drifts will also make backfilling easier.

· As with Point 2 above, this could be done in conjunction with uphole blastholes, with mining done on retreat towards the crosscut. This could avoid the need to have personnel and equipment enter large unsupported excavations underground.

· Avino investigate the use of backfill for continued mining of the Avino vein

· Ventilation airways and escapeways are developed in waste away from stopes

26.3 PROCESS

26.3.1 AVINO AND SAN GONZALO VEINS

Avino is currently conducting mining activities on the Avino and San Gonzalo veins, including metal recovery using flotation processes. Tetra Tech recommends that Avino further optimize the processing conditions, including metallurgical tests, to improve metallurgical performances for both the Avino and San Gonzalo vein mill feeds.

26.3.2 OXIDE AND SULPHIDE TAILINGS

Further tests are recommended to evaluate the metallurgical performances of the tailings samples, including the sulphide tailings samples. The test work should be conducted on samples that better represent the tailings Mineral Resources. The test work should include:

	·	head characterization and mineralogical determination

	·	leaching condition optimization, including cyanide concentration, leaching retention time, agglomeration binding material types and dosages

	·	determination of the effect of the particle size distribution on metal extraction and agglomeration

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· further confirmation of the effect of flotation pre-concentration on improving overall metal recovery

· residual cyanide management tests, including residual cyanide management and valuable metal recoveries from the barren solution

· further evaluations to compare heap leach vs tank leach should be investigated.

For the sulphide tailings, systematic test work should be conducted to effectively recover silver and gold values from the tailings, including co-processing of the sulfide tailings with the oxide tailings.

The estimated costs for the test work, excluding sampling, is approximately Cdn$150,000.

26.4 ENVIRONMENTAL

The cost of permitting has not been considered at this stage of the Project. Government agencies should be consulted prior to the permitting process to determine if current permits for the San Gonzalo Mine can been revised. The cost of expropriating agricultural land for the leach pad, and the cost of water which would have to be redirected to the heap leach project but which is currently used for agricultural purposes have also not been assessed. Once the mine plan, site layout and tailings management plan are further along and have definitive locations, the cost of these factors should be addressed. The cost for monitoring environmental effects post mine closure needs to be estimated.

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.

26.5 MINING OF OXIDE TAILINGS

Potential for handling sulphide tailings as a mineralized material, rather than waste material, should be investigated based on appropriate metallurgical tests. Further optimization of the mine plan for the oxide tailings should be conducted.

26.6 PROJECT DEVELOPMENT

Tetra Tech recommends that a preliminary economic assessment be completed for the entire Property, including the Avino Vein, the San Gonzalo Vein, the oxide tailings, and the sulphide tailings.

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27.0 REFERENCES

Audited Annual Financial Report & MD&A for the year ended December 31, 2015.

Audited Annual Financial Report & MD&A for the year ended December 31, 2016.

Avino Annual Reports www.avino.com.

Avino Silver & Gold Mines Ltd., 2001. Internal Report – Avino Operating Records, October 2001.

Avino Silver & Gold Mines Ltd., 2011a. News Release: Avino Reports Results of San Gonzalo Bulk Sample July 11, 2011.

Avino Silver & Gold Mines Ltd., 2011b. Consolidated Financial Statements for the years ended December 31, 2011 and 2010. Retrieved July 17, 2013 from www.avino.com.

Avino Silver & Gold Mines Ltd., 2012. Consolidated Financial Statements for the years ended December 31, 2012, 2011, and 2010. Retrieved July 17, 2013 from www.avino.com.

Avino Silver & Gold Mines Ltd., 2013a. Avino May Production Report June 06, 2013. Retrieved July 17, 2013 from www.avino.com.

Avino Silver & Gold Mines Ltd., 2013b. Condensed Consolidated Interim Financial Statements for the Three Months Ended March 31, 2013 and 2012. Retrieved July 17, 2013 from www.avino.com.

Avino Silver & Gold Mines Ltd. 2016a. News Release: Avino Reports New Power Line Energized and Final Permits Received for New Tailings Storage Facility. June 13, 2016.

Avino Silver & Gold Mines Ltd. 2016b. News Release: Avino Announces Extension of Concentrates Prepayment Agreement with Samsung C&T. June 29, 2016.

Avino Silver & Gold Mines Ltd. 2017a. News Release: Avino Announces Fourth Quarter and Full Year 2016 Production Results from its Avino Property. January 17, 2017.

Avino Silver & Gold Mines Ltd. 2017b. News Release: Avino Announces Q1 2017 Production Results. April 13, 2017.

Avino Silver & Gold Mines Ltd., 2017c. News Release: Avino Silver and Gold Mines Provides Update on its Avino Property, May 08, 2017

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Avino Silver & Gold Mines Ltd., 2018a. News Release: Avino Announces Results from its Current Exploration Drill Programs on the Chirumbo, Guadelupe and San Juventino Areas of the Avino Mine Property February 6, 2018

Avino Silver & Gold Mines Ltd., 2018b. News Release: Avino Announces an Updated Mineral Resource Estimate at the Avino Property February 21, 2018

Avino Silver & Gold Mines Ltd., 2018c. Avino Announces Fourth Quarter and Full Year 2017 Production Results from its Avino Property, January 16, 2018

Avino Silver & Gold Mines Ltd., 2018d. News Release: Avino Provides 2017 Year End Summary and Outlook for 2018, February 13, 2018

Benitez, Sanchez, 1991. Memorandum: Informe Final de la Cubicacion de Presa de Jales. Prepared for Ing. Rene Cuellar Torres, Cia Minera Mexicana de Avino, S.A. de C.v. June 6, 1991, 5 pages.

Bermúdez Fernández, Jesús, 2012. Legal agreement between Minerales de Avino, Sociedad Anónima de Capital Variable and Compañía Minera Mexicana de Avino, Sociedad Anónima de Capital Variable on the La Platosa Concession. Volume seven hundred and twenty-six/mbq* number fifteen thousand one hundred and ninety-seven. February 18, 2012, 14 pages.

Emsley, J., 2003. Nature’s Building Blocks: an A-Z Guide to the Elements. Oxford University Press, 538 pages.

Gallegos, J.I., 1960. Durango Colonial, 1563–1821, Mexico City: Editorial Jus, p. 78.

González Olguin, Juan Manuel, 2017. Current title opinion prepared by Bufete González Olguin S.C. Law Firm for Avino Silver and Gold Mines, Ltd. February 3, 2017, 9 pages.

Gunning, D., 2009. Resource Estimate on the San Gonzalo Vein – A Part of the Avino Mine, Durango, Mexico, for Avino Silver and Gold Mines Ltd. Prepared by Orequest. Effective date August 31, 2009.

Hall, R., 2006. Technical Report: Tailings Retreatment – Process Option. Prepared by Ron Hall, Wardrop Engineering Inc. for Avino Silver & Gold Mines Ltd. March 31, 2006

Horner, J., 2017. Structural Study Avino Mine, Durango, Mexico – Intersection Avino-San Juventino. IC Consulenten Ziviltechniker GesmbH, Niederlassung Salzburg.

Huang, J. and Tan, G., 2005. Metallurgical Test Work on Avino Tailings, Durango, Mexico. Project No, 0406407. Report prepared by John Huang and Gie Tan, Process Research Associates Ltd. for Bryan Slim, MineStart Management Inc. March 28, 2005.

Huang, J., 2003. Flotation and Cyanidation Scoping Tests and Specific Gravity. Project No. 0302303. Report prepared by John Huang, Process Research Associates Ltd. for Bryan Slim, MineStart Management Inc. March 28, 2003.

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Index Mundi 2011 http://www.indexmundi.com/

Paulter, J., 2006. Regional Exploration Evaluation and Recommendations. Unpublished internal report for Avino.

QG Australia (Pty) Ltd. (2016). Amended Resource Estimte Update for the Avino Property Durango, Mexio. Prepared for Avino Silver & Gold Mines Ltd. October 27, 2016.

R Core Team (2013). R: A language and environment for statistical computing. R Foundation for Statistical Computing, Vienna, Austria. URL http://www.R-project.org/.

Servicios Administratos Luismin, 1993. Unpublished Report on the Potential of the Avino Property. SA de CV, the engineering branch of Cía Minera de San Luis Exploration

Slim, B., 2003. Tailings Valuation. Prepared for Avino Silver & Gold Mines Ltd. Report prepared by Bryan Slim, MineStart Management Inc. November 2003.

Slim, B., 2005a. Preliminary Feasibility. Prepared for Avino Silver & Gold Mines Ltd. Report prepared by Bryan Slim, MineStart Management Inc. May 2005.

Slim, B., 2005b. Tailings Valuation. Prepared for Avino Silver & Gold Mines Ltd. Report prepared by Bryan Slim, MineStart Management Inc. May 2005.

Slim, B., 2005c. A Tailings Resource. Prepared for Avino Silver & Gold Mines Ltd. Report prepared by Bryan Slim, MineStart Management Inc. July 21, 2005.

Slim, B., 2005d. A Tailings Resource. Prepared for Avino Silver & Gold Mines Ltd. Report prepared by Bryan Slim, MineStart Management Inc. October 25, 2005.

Tetra Tech, 2012. Technical Report on the Avino Property. Prepared for Avino Silver & Gold Mines Ltd. Effective Date: July 24, 2012. www.sedar.com

Tetra Tech, 2013. Technical Report on the Avino Property. Prepared for Avino Silver & Gold Mines Ltd. Effective Date: July 19, 2013. www.sedar.com Document No. 1251920100-REP-R0001-02.1

Tetra Tech and QG Australia (Pty) Ltd, 2016. Amended Resource Estimate Update for the Avino Property. Prepared for Avino Silver & Gold Mines Ltd. Effective Date: October 27, 2016. www.sedar.com Document No. 1251920100-REP-R0001-02.1

Tetra Tech 2017. Technical Report on the Avino Property, Durango, Mexico. Prepared for Avino Silver & Gold Mines Ltd. Effective Date: April 11, 2017. www.sedar.com Document No. 735-1651920100-REP-R0001-03.

VSE, 1977. Vancouver Stock Exchange Review. September 1979.

Wikipedia Durango entry: http://en.wikipedia.org/wiki/Durango

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704-ENG-VMIN03003-02

Amended Mineral Resource Estimate Update for the

Avino Property,

Durango, Mexico


	Report to:
	Avino Gold & Silver Mines Ltd.
	Amended Mineral Resource Estimate Update for the Avino Property, Durango, Mexico
	704-EG-VMIN03003-02

		Report to:
		AVINO GOLD & SILVER MINES LTD.
		AMENDED MINERAL RESOURCE ESTIMATE UPDATE FOR THE AVINO PROPERTY, DURANGO, MEXICO
		EFFECTIVE DATE: FEBRUARY 21, 2018 AMENDED DATE: DECEMBER 19, 2018
		Prepared by:		Hassan Ghaffari, P. Eng
				Michael F. O’Brien, P.Geo., M.Sc., Pr.Sci,Nat., FAusIMM, FSAIMM
				Mark Horan, P.Eng.
				Jianhui (John) Huang, Ph.D., P.Eng.



		HG/vc




		Suite 1000, 885 Dunsmiur Street, Vancouver, British Columbia V6C 1N5 Phone: 604.408.3788 Fax: 604.684.6241

1.0	SUMMARY			1-1
	1.1	INTRODUCTION		1-1
	1.2	PROPERTY DESCRIPTION AND LOCATION		1-1
	1.3	GEOLOGY AND MINERALIZATION		1-2
		1.3.1	THE AVINO VEIN	1-4
		1.3.2	THE SAN GONZALO VEIN	1-4
		1.3.3	THE OXIDE TAILINGS	1-4
	1.4	RESOURCE ESTIMATES		1-5
	1.5	MINERAL PROCESSING, METALLURGICAL TESTING AND RECOVERY METHODS		1-7
		1.5.1	AVINO VEIN	1-7
		1.5.2	SAN GONZALO VEIN	1-8
		1.5.3	OXIDE TAILINGS	1-8
		1.5.4	SULPHIDE TAILINGS	1-8
	1.6	MINING METHODS		1-9
		1.6.1	AVINO VEIN	1-9
		1.6.2	SAN GONZALO VEIN	1-10
		1.6.3	OXIDE TAILINGS	1-10
	1.7	PROJECT INFRASTRUCTURE		1-11
	1.8	ENVIRONMENTAL		1-11
	1.9	CAPITAL AND OPERATING COSTS		1-12
		1.9.1	CAPITAL COST ESTIMATES	1-12
		1.9.2	OPERATING COST ESTIMATES	1-13
	1.10	ECONOMIC ANALYSIS		1-15
		1.10.1	AVINO AND SAN GONZALO VEINS	1-15
		1.10.2	TAILINGS RESOURCES	1-15
	1.11	RECOMMENDATIONS		1-16

2.0	INTRODUCTION			2-1
	2.1	EFFECTIVE DATES		2-1
	2.2	QUALIFIED PERSONS		2-1
	2.3	INFORMATION AND DATA SOURCES		2-3
	2.4	UNITS OF MEASUREMENT		2-3

3.0	RELIANCE ON OTHER EXPERTS			3-1

4.0	PROPERTY DESCRIPTION AND LOCATION			4-1
	4.1	LOCATION		4-1
	4.2	PROPERTY OWNERSHIP		4-2
	4.3	MINERAL CONCESSIONS AND AGREEMENTS		4-3

Table 1.1	Mineral Resources at the Avino Property	1-6
Table 1.2	Recent Production from the Avino Vein	1-9
Table 1.3	Recent Production from the San Gonzalo Vein	1-10
Table 1.4	Capital Costs for the Avino Vein (US$)	1-12
Table 1.5	Capital Costs for the San Gonzalo Vein (US$)	1-13
Table 1.6	Operating Costs for the Avino Vein (US$)	1-14
Table 1.7	Operating Costs for the San Gonzalo Vein (US$)	1-14
Table 2.1	Summary of QPs	2-2
Table 4.1	Summary of Property Ownership	4-3
Table 4.2	Mineral Concessions – Avino Property	4-4
Table 9.1	Summary Underground Channel Sampling by Level for the Avino (ET) Underground Mines	9-4
Table 9.2	Summary of Underground Channel Sampling by Level for the San Gonzalo Mine	9-4
Table 10.1	Drillholes Completed from 2007 to 2016 on the San Gonzalo Vein	10-3
Table 10.2	Drillholes Completed from 2001 to 2017 at ET Mine (includes San Luis, Avino vein and Chirumbo	10-6
Table 10.3	Drillholes Completed from 2017 to 2018 at Guadalupe and San Juventino	10-8
Table 10.4	Drillholes Drilled on Oxide Tailings 2003-2016	10-9
Table 10.5	Avino and San Gonzalo Density Data Summary	10-12
Table 12.1	Number of Records and Discrepancies for the Avino Drillhole Data	12-2
Table 12.2	Standards Specification and Performance	12-4
Table 14.1	Avino Mine – Mineral Resources	14-2
Table 14.2	Metal Grade Statistics for 2 m Composites for the Avino and San Gonzalo Vein Systems	14-12
Table 14.3	Oxide Tailings Samples by Sampling Campaign	14-13
Table 14.4	Oxide Tailings Assays by Unit	14-14
Table 14.5	Avino Vein System Density Data Summary	14-15
Table 14.6	San Gonzalo Vein System Density Data Summary	14-15
Table 14.7	Avino Vein System Variogram and Search Parameters	14-26
Table 14.8	San Gonzalo Vein System: Variogram and Search Parameters	14-27
Table 14.9	Oxide Tailings Deposit: Variogram and Search Parameters	14-27
Table 14.10	Estimation Block Model Specifications	14-28
Table 14.11	Explanation of Table 14-10	14-28
Table 14.12	Avino Vein: Block Estimates and Composite Sample Grades	14-30
Table 14.13	San Gonzalo Vein: Block Estimates and Composite Sample Grades	14-31
Table 14.14	Oxide Tailings: Block Estimates and Composite Sample Grades	14-32
Table 14.15	Criteria for Classification of Underground Mineral Resources	14-58
Table 14.16	Silver Equivalent Based Metal Prices and Operational Recovery Parameters	14-59
Table 14.17	Mineral Resource Statement for the Avino Property	14-60
Table 14.18	Avino Vein (ET and San Luis) – High Confidence/Measured	14-62
Table 14.19	Avino Vein (ET and San Luis) – Medium Confidence/Indicated	14-62
Table 14.20	Avino Vein (ET and San Luis) – Low Confidence/Inferred	14-62
Table 14.21	San Gonzalo Vein – High Confidence/Measured	14-63
Table 14.22	San Gonzalo – Medium Confidence/Indicated	14-63
Table 14.23	San Gonzalo – Low Confidence/Inferred	14-63
Table 14.24	Oxide Tailings – Medium Confidence/Indicated	14-64

Figure 1.1	General Location of the Property	1-2
Figure 1.2	Perspective View of the Property Looking North and Showing the Three Deposits	1-4
Figure 4.1	General Location of the Property	4-1
Figure 4.2	Local Property Location	4-2
Figure 4.3	Map of Avino Property Concessions	4-5
Figure 6.1	Avino Mine: Vertical Section View Showing Development and Stoping	6-2
Figure 6.2	San Gonzalo Mine: Vertical Section View Showing Development and Stoping	6-3
Figure 7.1	General Map of Property Geology	7-2
Figure 7.2	Orthogonal View of the Oxide Tailings Deposit and Drillholes	7-6
Figure 9.1	Channel and Drillhole Samples, Colour Coded by Silver Grade, within the Avino System	9-5
Figure 9.2	Channel Samples, Colour Coded by Silver Grade, within the San Gonzalo Vein System	9-5
Figure 10.1	Drillholes Completed from 2016 to 2017 on the Avino-San Luis Infill and Chirumbo, Guadalupe and San Juventino Areas	10-2
Figure 10.2	Location of Drillholes Completed from 2016 to 2017 on Drillholes Completed from 2016 to 2017 on the Guadalupe and San Juventino Veins	10-3
Figure 10.3	Location of Drillholes Completed from 2015 to 2016 on the Oxide Tailings	10-11
Figure 12.1	Standard 1307_ME-1307 – Gold Performance	12-5
Figure 12.2	Standard CDN-ME-1307 – Silver Performance	12-6
Figure 12.3	Standard CDN-ME-1307 – Copper Performance	12-6
Figure 12.4	Standard CDN-ME-1414 – Gold Performance	12-7

above mean sea level		amsl
acre		ac
ampere		A
annum (year)		a
billion		B
billion tonnes		Bt

acid-base accounting		ABA
Aranz Geo Expert Services		Aranz Geo
atomic absorption		AA
Avino Silver & Gold Mines Ltd.		Avino
caliper volume		CV
Canadian Institute of Mining, Metalurgy, and Petroleum		CIM
Cannon-Hicks & Associates Ltd.		Cannon-Hicks
certified reference material		CRM
Compañía Minera Mexicana de Avino		CMMA
Compañía Minera Mexicana de Avino, S.A. de C.V.		Avino Mexico
Convention on International Trade in Endangered Species of Wild Fauna and Flora		CITES
copper sulphate		CuS0 ₄
copper		Cu
dissolved oxygen		dO ₂
east		E
Electrometals Electrowinning		EMEW
Elena Toloso Mine		ET
San Gonzalo Mine		SG
Environmental Impact Assessment Matter Regulation/

Avino Silver & Gold Mines Ltd.	1-1	704-ENG-VMIN03003-02
Amended Mineral Resource Estimate Update for the Avino Property, Durango, Mexico

						Grade								Metal Contents
Resource Category	Deposit	Cut-off(AgEQ g/t)		Tonnes (t)		AgEQ (g/t)		Ag (g/t)		Au (g/t)		Cu (%)		AgEQ(million tr oz)*		Ag(million tr oz)		Au(thousand tr oz)		Cu (t)
Measured and Indicated Mineral Resources
Measured	Avino – ET		60		3,890,000		141		71		0.54		0.55		17.6		8.9		67.4		21,000
Measured	Avino – San Luis		60		650,000		142		67		0.70		0.49		3.0		1.4		14.6		3,000
Measured	San Gonzalo System		130		290,000		397		314		1.65		0.00		3.7		2.9		15.4		0
Total Measured	All Deposits		-		4,830,000		156		85		0.63		0.51		24.3		13.2		97.4		24,000
Indicated	Avino – ET		60		2,640,000		105		49		0.56		0.34		8.9		4.2		47.6		9,000
Indicated	Avino – San Luis		60		1,620,000		126		54		0.82		0.36		6.6		2.8		42.9		6,000
Indicated	San Gonzalo System		130		240,000		319		257		1.25		0.00		2.5		2.0		9.6		0
Indicated	Oxide Tailings		50		1,330,000		124		98		0.46		0.00		5.3		4.2		19.8		0
Total Indicated	All Deposits		-		5,830,000		124		70		0.64		0.25		23.3		13.1		119.8		15,000
Total Measured and Indicated	All Deposits		-		10,660,000		139		77		0.63		0.37		47.5		26.3		217.2		39,000
Inferred Mineral Resources
Inferred	Avino – ET		60		2,380,000		111		58		0.51		0.33		8.5		4,4		39.1		8,000
Inferred	Avino – San Luis		60		1,780,000		124		57		0.72		0.38		7.1		3.2		41.2		7,000
Inferred	San Gonzalo System		130		120,000		262		219		0.86		0.00		1.0		0.8		3.3		0
Inferred	Oxide Tailings		50		1,810,000		113		88		0.44		0.00		6.6		5.1		25.6		0
Total Inferred	All Deposits		-		6,090,000		118		70		0.56		0.24		23.2		13.6		109.2		15,000

Company	Relationship to Avino Silver and Gold Mines Ltd.	Effective Ownership of Avino Mine Property (%)
CMMA	Subsidiary		98.45
Promotora Avino, S.A. de C.V.	Subsidiary		1.22
Total Effective Ownership of Avino Mine Property	-		99.67
Estate of Ysita	Non-controlling interest		0.33
Total	-		100.00

	·	first quarter: payment of 100% of the minimum royalty

	·	second quarter: payment of 75% of the minimum royalty

	·	third quarter: payment of 50% of the minimum royalty

	·	fourth quarter: payment of 25% of the minimum royalty

	·	in the case of force majeure still in place after one-year of payments, payment shall recommence at a rate of 100% of the minimum royalty and shall continue being made as per the quarterly schedule.

SG-07-19	257	66	571763	2714320	2,293	344.9
SG-07-20	215	67	571650	2714345	2,281	247.4
SG-07-21	38	53	571713	2713979	2,297	295.0
SG-07-22	218	54	572007	2714128	2,343	232.5
SG-07-23	216	70	572007	2714128	2,343	303.5
SG-07-24	217	53	571969	2714077	2,351	124.4
SG-07-25	216	65	571969	2714078	2,351	190.5
SG-07-26	216	69	572033	2714172	2,337	395.4
SG-07-27	218	55	572078	2714077	2,345	237.8
SG-07-28	218	74	572078	2714078	2,345	319.5
SG-07-29	221	43	572033	2714010	2,356	103.6
SG-07-30	221	64	572034	2714010	2,356	158.4
SG-07-31	218	43	571954	2714056	2,352	104.8
SG-07-32	223	70	572122	2714135	2,330	408.0
SG-07-33	211	43	572069	2714009	2,353	130.6
SG-07-34	210	58	572069	2714010	2,353	183.1
SG-07-35	211	68	572069	2714010	2,353	272.2
SG-07-36	215	41	572050	2713959	2,358	102.2
SG-07-37	219	53	572115	2713975	2,351	154.4
SG-07-38	221	67	572115	2713975	2,351	214.2
SG-07-39	220	73	572120	2713898	2,353	128.1
SG-07-40	220	74	571899	2714211	2,321	516.1
SG-08-01	35	51	571776	2713974	2,314	210.1
SG-08-02	215	57	571964	2714167	2,335	269.1
SG-08-03	215	70	571964	2714168	2,335	332.0
SG-08-04	215	63	572029	2714121	2,343	270.0
SG-08-05	35	55	571701	2713893	2,285	475.3
SG-08-06	48	64	571679	2714137	2,277	226.4
SG-11-01	215	59	571981	2714009	2,357	101.0
SG-11-02	215	63	571995	2714030	2,355	141.2
SG-11-03	215	44	572020	2713994	2,357	98.5
SG-11-04	212	54	571969	2714079	2,351	176.5
SG-11-05	40	43	571892	2713832	2,317	151.4
SG-11-06	189	44	571732	2714379	2,274	122.3
SG-11-07	30	68	572030	2713946	2,358	74.0
SG-11-08	37	67	572043	2713888	2,360	125.4
SG-11-09	181	48	571585	2714366	2,278	71.1
SG-11-10	201	61	571240	2714538	2,235	78.4
SG-11-11	201	61	571329	2714397	2,274	92.0
SG-11-12	218	71	571811	2714288	2,305	312.2
SG-11-13	218	71	571847	2714258	2,310	345.4
SG-11-14	209	61	571939	2714214	2,326	330.5
table continues…

SG-11-15	211	68	572030	2714172	2,337	363.5
SG-11-16	209	62	572092	2714173	2,331	334.3
SG-11-17	210	70	571836	2714336	2,306	383.1
SG-11-18	218	71	571765	2714321	2,293	318.2
SG-14-01	287	54	571858	2714156	2,086	156.6
SG-14-02	258	60	571858	2714155	2,086	120.1
SG-14-03	160	71	571861	2714153	2,086	173.0
SG-14-04	199	70	571688	2714270	2,296	120.0
SG-14-05	219	70	572157	2714044	2,330	346.8
SG-14-06	207	79	572158	2714044	2,331	411.0
SG-14-07	210	27	572284	2714059	2,297	248.3
SG-14-08	209	58	572285	2714061	2,298	336.0
SG-14-09	208	68	572285	2714061	2,297	401.8
SG-14-10	213	50	572293	2713911	2,300	235.3
SG-14-11	37	-2	571865	2714159	2,087	224.2
SG-14-12	286	52	571896	2714157	2,044	185.0
SG-14-13	209	62	571898	2714156	2,043	213.4
SG-14-14	208	33	572294	2713912	2,300	192.2
SG-14-15	210	72	572294	2713912	2,300	257.4
SG-15-01	237	40	571874	2714128	2,043	75.2
SG-15-02	187	42	571875	2714128	2,043	81.7
SG-15-03	148	30	571878	2714126	2,043	75.8
SG-15-04	280	43	571873	2714130	2,043	98.8
SG-15-05	163	52	571878	2714127	2,043	58.0
SG-15-06	242	73	571876	2714129	2,043	106.4
SG-15-07	258	0	572234	2713841	2,139	44.0
SG-15-08	13	0	572255	2713906	2,138	16.2
SG-15-09	215	36	572255	2713894	2,138	99.6
SG-15-10	260	32	572252	2713896	2,137	90.5
SG-15-11	204	71	571672	2714298	2,292	150.0
SG-15-12	192	83	571672	2714298	2,291	200.8
SG-15-13	240	0	572288	2713887	2,138	74.5
SG-15-14	216	58	571652	2714345	2,280	145.8
SG-15-15	216	76	571652	2714346	2,280	195.7
SG-15-16	90	0	572288	2713888	2,138	100.8
SG-15-17	226	68	571593	2714352	2,282	145.3
SG-15-18	215	30	572479	2713867	2,284	209.8
SG-15-19	214	52	572480	2713868	2,283	290.9
SG-15-20	210	52	572586	2713740	2,309	218.8
SG-15-21	212	20	572584	2713739	2,309	145.6
SG-15-22	218	71	572570	2713772	2,303	350.0
SG-15-23	213	59	572702	2713747	2,284	251.8
table continues…

SG-15-24	215	28	572700	2713745	2,284	187.7
SG-16-01	250	68	571428	2714421	2,268	147.7
SG-16-02	250	77	571428	2714421	2,268	167.8
SG-16-03	208	51	571339	2714462	2,256	74.8
SG-16-04	193	79	571340	2714463	2,256	111.0
SG-16-05	190	75	571347	2714495	2,248	159.6
SG-16-06	215	69	571300	2714500	2,245	171.7
SG-16-07	215	54	571299	2714499	2,245	89.5

ET-08-03	330	65	570341	2712549	2,244	265.1
ET-08-04	336	65	570588	2712568	2,231	358.7
ET-08-05	336	67	570658	2712629	2,245	371.1
ET-08-06	336	60	570676	2712654	2,243	292.5
ET-08-07	336	60	570747	2712656	2,234	160.4
ET-08-08	336	45	570906	2712766	2,227	269.1
ET-12-01	336	63	570354	2712501	2,226	288.2
ET-12-02	337	53	570507	2712472	2,214	360.9
ET-12-03	336	59	570507	2712471	2,214	367.8
ET-12-04	339	64	570544	2712497	2,216	373.6
ET-12-05	336	62	570566	2712508	2,218	369.2
ET-12-06	334	70	570589	2712523	2,219	396.1
ET-12-07	334	63	570678	2712594	2,227	327.6
ET-12-08	333	71	570678	2712594	2,227	384.4
ET-12-09	329	72	570646	2712555	2,222	395.4
ET-16-01	338	21	570395	2712660	2,278	151.3
ET-16-02	336	44	570396	2712658	2,277	152.4
ET-16-03	338	47	570325	2712641	2,273	161.8
ET-16-04	340	45	570275	2712634	2,270	126.6
ET-16-05	339	42	570295	2712566	2,251	196.0
ET-16-06	6	74	570221	2712667	2,291	118.0
ET-16-07	320	73	570183	2712656	2,287	89.5
ET-16-08	337	47	570399	2712606	2,261	194.3
ET-16-09	337	49	570411	2712570	2,247	237.5
ET-16-10	9	21	570195	2712466	2,224	254.2
ET-16-11	2	44	570179	2712458	2,224	265.1
ET-16-12	359	63	570148	2712465	2,226	266.6
ET-17-01	360	62	569935	2712576	2,263	103.8
ET-17-02	358	55	569881	2712568	2,243	100.8
ET-17-03	360	34	569861	2712588	2,244	85.9
ET-17-04	251	90	569861	2712585	2,244	182.7
ET-17-05	321	89	569830	2712600	2,244	91.5
ET-17-06	338	48	570301	2712635	2,271	144.5
ET-17-07	337	29	570301	2712635	2,271	121.5
ET-17-08	336	54	570264	2712631	2,269	119.3
ET-17-09	337	31	570263	2712632	2,269	101.5
ET-17-10	339	23	570349	2712649	2,274	129.3
ET-17-11	336	24	570436	2712672	2,280	143.4
ET-17-12	348	60	570200	2712661	2,288	80.7
ET-17-13	349	29	570200	2712663	2,288	62.2
ET-17-14	339	31	570375	2712735	2,311	61.0
ET-17-15	341	19	570304	2712697	2,302	80.3
table continues…

ET-17-16	1	21	570197	2712460	2,223	247.6
ET-17-17	358	53	570197	2712460	2,223	261.6
ET-17-18	355	38	570236	2712452	2,219	249.5
ET-17-19	356	52	570155	2712467	2,226	225.7
ET-17-20	336	51	570369	2712554	2,243	220.3
ET-17-21	336	59	570357	2712552	2,243	248.4
ET-17-22	357	9	570236	2712454	2,220	234.9
ET-17-23	345	50	570999	2712915	2,225	190.6
ET-17-24	337	45	570964	2712882	2,230	208.2
ET-17-25	339	38	570965	2712962	2,232	140.8
ET-17-26	338	38	570888	2712934	2,268	160.0
ET-17-27	341	46	570926	2712854	2,229	223.3
SELCO-2-1800	342	68	570435	2712337	2,194	575.2
SELCO-3	339	53	570357	2712451	2,217	325.7
SELCO-4A	350	60	570070	2712396	2,214	251.0

PJ-16-02	0	90	570124	2712274	2,217.2	26.4
PJ-16-03	0	90	570132	2712305	2,217.4	23.0
PJ-16-04	0	90	570139	2712335	2,218.0	18.0
PJ-16-05	0	90	570135	2712371	2,218.5	12.0
PJ-16-06	0	90	570154	2712393	2,219.2	8.0
PJ-16-07	0	90	570156	2712422	2,220.3	3.9
PJ-16-08	0	90	570111	2712340	2,218.8	18.0
PJ-16-09	0	90	570099	2712313	2,217.8	22.9
PJ-16-10	0	90	570091	2712284	2,216.9	27.5
PJ-16-11	0	90	570083	2712255	2,216.6	23.0
PJ-16-12	0	90	570078	2712223	2,216.0	24.1
PJ-16-13	0	90	570066	2712197	2,216.0	24.0
PJ-16-14	0	90	570057	2712168	2,215.9	20.0
PJ-16-15	0	90	570057	2712138	2,215.1	14.5
PJ-16-16	0	90	570020	2712120	2,215.8	9.5
PJ-16-17	0	90	570028	2712145	2,216.0	14.0
PJ-16-18	0	90	570035	2712177	2,215.9	13.1
PJ-16-19	0	90	570042	2712206	2,216.0	21.0
PJ-16-20	0	90	570050	2712234	2,217.1	26.0
PJ-16-21	0	90	570056	2712261	2,217.5	24.5
PJ-16-22	0	90	570029	2712232	2,218.2	21.5
PJ-16-23	0	90	570014	2712210	2,217.7	20.0
PJ-16-24	,0	90	569999	2712152	2,215.8	8.9
PJ-16-25	0	90	570004	2712125	2,216.2	8.4
PJ-16-26	0	90	570227	2712405	2,207.6	0.6
PJ-16-27	0	90	570219	2712377	2,206.3	0.5
PJ-16-27A	0	90	570218	2712373	2,206.0	0.7
PJ-16-28	0	90	570211	2712349	2,205.0	0.6
PJ-16-29	0	90	570188	2712322	2,205.5	7.9
PJ-16-30	0	90	570179	2712289	2,205.3	13.5
PJ-16-31	0	90	570173	2712261	2,205.8	16.0
PJ-16-32	0	90	570166	2712232	2,204.9	19.6
PJ-16-33	0	90	570159	2712206	2,204.5	17.0
PJ-16-34	0	90	570152	2712176	2,203.8	20.5
PJ-16-35	0	90	570141	2712147	2,202.9	13.7
PJ-16-36	0	90	570138	2712120	2,201.3	8.1
PJ-16-37	0	90	570130	2712090	2,200.6	4.3
PJ-16-38	0	90	570109	2712094	2,200.9	2.0
PJ-16-39	0	90	570116	2712122	2,201.7	6.0
PJ-16-40	0	90	570144	2712093	2,200.6	0.6
PJ-16-41	0	90	570049	2712386	2,245.9	28.5
PJ-16-42	0	90	570019	2712393	2,245.4	21.0
table continues…

PJ-16-43	0	90	570061	2712412	2,245.5	20.0
PJ-16-44	0	90	570052	2712443	2,245.5	5.0
Z1	100	30	570206	2712408	2,203.7	9.0
Z2	100	30	570189	2712363	2,203.7	16.0
Z3	100	30	570185	2712313	2,203.7	13.0
Z4	100	30	570174	2712266	2,203.7	13.0
Z5	100	30	570162	2712219	2,203.7	13.0
Z6	100	30	570150	2712173	2,203.7	14.0

	1.	A backhoe was used to excavate sample pits to a depth of 4 m. Hand samples were taken at 1 m vertical increments from the sidewalls of each pit.

	2.	The sample mass collected from each sampling point generally amounted to between 2 and 5 kg.

	3.	The sampling program was ostensibly based on the 1990 CMMA sampling program. Fourteen sample pits were excavated to a depth of 4 m and generated 86 samples.


Avino Vein	Number of Records		Discrepancies		Discrepancy Rate (%)
Avino Vein
Survey Data		3,330		-		2.2
No Surveys for Collar				2
Duplicate Collar and Surveys				3
Duplicate Survey Depths				67
Assays		16,906				0.3
No Sample for Collars				24
Overlapping Segments				8
Collar Max Depth Exceeded				15
Lithology		4,059				54.2
From to Depth Overelap				280
No Samples for Collar				1,916
Collar Max Depth Exceeded				2
San Gonzalo Vein
Survey Data		3,506				0.1
No Survey for Collar				1
Duplicate Collar and Surveys				0
Duplicate Survey Depths				0
Incomplete Survey Data				2
Assays		16,077				0.2
No Samples for Collars				23
Overlapping Segments				8
Collar Max Depth Exceeded				6
Lithology		15,043				0.3
From to Depth Overlap				0
No Samples for Collar				52
Collar Max Depth Exceeded				0

	·	consignments of high volumes of samples or

	·	high grade material from another operation or

	·	end of year staff turnover.

	Date of	Extraction (%)		Leaching	Particle
Author	Test	Ag	Au	Time (h)	Size (µm)
Denver Equipment	1982	69.3	66.7	24	66.6% <149
Penoles	1987	78.3	88.9	24	87% <74
Maja	1990	85.9	80.9	24	100% <105
Chryssoulis	1990	85.9	80.9	24	no data
Rosales	1996	83.9	76.9	23	75% <74
MMI	2003	77.1	71.4	24	86% <74
MMI	2003	88.8	88.4	48	86% <74

	·	the location or the manner in which the samples were taken

	·	why these particular samples were taken

	·	the test parameters employed

	·	the assay techniques used, etc.

Process/Procedure	Details of Test	Sample Identify
Sample Preparation	No details documented	Sample L and Sample U
Head Assays	Fire assays, AA, and ICP multi-acid	Composite of L and U
Specific Gravity	Standard pycnometer test	Composite of L and U
Cyanidation Leach	P80 = 68 µm; 40% solids; pH 10.5; 1.0 g/L NaCN; 48 h; dO2 > 7.9 mg/L 0.4 kg sample	Composite of L and U
Flotation	Rougher and 2 scavenger stages; P80 = 85 µm; 35% solids; pH 5.5; PAX & A208 with MIBC; 1 kg sample	Composite of L and U
Mineralogical	Examination of flotation tailings	Composite of L and U

Frequency Distribution
Moisture Content Range (%)	Number
5.00-7.50	9
7.51-10.00	14
10.01-12.50	19
12.51-15.00	16
15.01-17.50	5
17.51-20.00	5
20.01-22.50	12
22.51-25.00	5
25.01-27.50	0
27.51 -30.00	1

	Assays (g/t)			Assays (g/t)
Test No.	Ag	Au	Test No.	Ag	Au
Composite A			Composite B
SA9	99.8	0.37	SA10	88.3	00.55
Ave. 1	103.4	0.34	Ave. 1	82.6	0.68
Ave. 2	105.3	0.36	Ave. 2	88.4	0.51
C1	95.2	0.35	C4	76.3	0.52
C2	94.3	0.35	C5	70.6	0.49
C3	94.1	0.36	C6	71.4	0.50
C7	88.7	0.36	C9	70.3	0.52
C8	88.7	0.36	C10	70.3	0.52
C13	95.9	0.28	C15	77.2	0.49
C14	98.9	0.37	C16	78.3	0.52
C17	95.2	0.35	C18	77.2	0.49
Average Value	96.32	0.350	Average Value	77.35	0.526
Standard Deviation	5.27	0.025	Standard Deviation	6.72	0.054
Composite C			Column Composite A+B
C11	39.8	0.34	C4	87.4	0.42
C12	39.8	0.34	C5	90.1	0.40
Ave. 1	31.7	0.29	C6	91.4	0.42
Ave. 2	39.8	0.39	C9	-	-
Average Value	37.78	0.340	Average Value	89.63	0.413
Standard Deviation	4.05	0.041	Standard Deviation	2.04	0.012

Location/ Bench	Sample Identify	P80 Size (µm)	Bulk Density (g/cm3)	Specific Gravity
Upper Bench	S2	226	1.66	2.74
Lower Bench	S10	326	1.73	2.62
Lower Bench	S22	367	1.73	2.76
Middle Bench	S45	254	1.60	2.76
Middle Bench	S50	201	1.63	2.74
Upper Bench	S74	301	1.57	2.72
Average	-	-	1.653	2.723

	Head Grade		Concentrate Grade		Recovery (%)				Remarks
Sample Identify	Ag (g/t)	Au (g/t)	Ag (g/t)	Au (g/t)	Mass	Ag	Au	P80 (µm)	(Note: All tests are 3-pass tests)
Composite A	93.8	0.35	124.7	0.52	24.1	32.1	36.5	269	Pressure 1.5 psig; no regrind
Composite B	70.3	0.50	96.9	0.71	23.6	32.5	33.3	180	-
Composite C	39.7	0.33	58.0	0.65	24.1	35.2	47.0	254	-
Composite A	92.1	0.33	126.1	0.71	19.7	27.2	42.1	76	Pressure 1.0 psig; reground
Composite B	70.5	0.56	96.5	1.29	22.4	30.7	51.5	77	-
Composite C	40.7	0.38	65.5	0.98	24.8	39.9	64.3	79	-

	Head Grade		Concentrate Grade		Recovery (%)
Sample Identify & Test No.	Ag (g/t)	Au (g/t)	Ag (g/t)	Au (g/t)	Mass	Ag	Au	P80 (µm)	Remarks
Composite A/F1	112.2	0.35	908.7	3.17	2.1	17.8	18.4	238	3-stage ro., pH 8;
Composite A/F3	119.2	0.39	734.6	3.88	2.6	21.0	30.4	103	Conditioning NaCN +
Composite A/F4	104.6	0.40	630.9	3.36	3.8	22.6	38.6	72	Na2CO3; A404, PAX
Composite A/F7	111.9	1.39	654.6	5.56	2.3	16.3	34.9	~75	2-stage ro., nil NaCN
Composite A/F8	108.5	2.38	887.2	11.91	0.9	7.8	30.7	~75	2-stage ro., nil NaCN
Composite A/F9	114.5	1.67	723.9	5.86	2.7	20.8	45	~75	2-stage ro., NaS2, PAX
Composite A/F10	103.5	0.58	401.3	1.62	8.9	34.6	39.8	~75	with NaCO3, CuSO4
Composite A/F11	99.6	0.34	484.8	1.83	8.8	42.2	48.3	~75	with CuSO4, A208
Composite B/F2	88.4	0.42	695.4	2.65	2.6	22.0	12.2	173	3-stage ro., pH 8
Composite B/F5	89.7	0.47	806.1	4.18	2.9	27.0	24.6	92	conditioning NaCN +
Composite B/F6	89.9	0.51	867.1	5.45	2.9	32.5	32.1	74	Na2CO3; A404, PAX
Composite A: Head	99.8	0.36	-	-	-	-	-	-	-
Composite B: Head	88.3	0.52	-	-	-	-	-	-	-

Sample Identify &	Extraction (%)		Reagent Usage (kg/t)		NaCN Concentration	P80
Test No.	Ag	Au	NaCN	Lime	(g/L)	(µm)
Composite A+/C1	66.4	81.5	1.8	1.4	1.0	269
Composite A+/C2	79.3	85.7	1.6	1.8	1.0	103
Composite A+/C3	80.4	89.1	2.6	1.6	1.0	78
Composite A+/C7	78.6	82.7	2.2	1.8	0.5	74
Composite A+/C8	89.7	85.5	5.1	0.8	2.0	74
Composite A*/C13	79.7	86.8	1.5	1.3	0.5	74
Composite A*/C14	83.1	82.1	3.7	0.8	2.0	74
Composite A*/C17	79.4	90.9	1.0	1.2	1.0	74
Composite B+/C4	69.1	82.0	2.6	1.8	1.0	180
Composite B+/C5	77.1	88.3	1.7	1.8	1.0	100
Composite B+/C6	77.3	86.9	1.7	1.9	1.0	84
Composite B+/C9	73.2	86.0	2.6	1.2	0.5	84
Composite B+/C10	79.5	86.4	4.5	1.0	2.0	84
Composite B*/C15	72.9	82.6	1.6	2.0	0.5	84
Composite B*/C16	75.4	83.4	3.8	1.0	2.0	84
Composite B*/C18	67.7	78.6	0.9	1.3	1.0	84
Composite C+/C11	73.8	77.3	4.0	2.8	1.0	69
Composite C+/C12	86.6	85.0	7.3	2.6	2.0	67