Avino Silver & Gold Mines Ltd.

Good day and welcome to the Avino Silver and Goldmine's fourth quarter and year-end 2025 financial results conference call and webcast. As a reminder, all participants are on a listen-only mode and this conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star then 1 on your telephone keypad. And should you need assistance during the conference, you may signal an operator by pressing star and zero. I would now like to turn the conference over to Jennifer North, Head of Investor Relations. Mom, please go ahead.

Thank you, Operator. Good morning, everyone, and welcome to Avino's Q4 and year-end 2025 earnings call and webcast. To join this webcast and conference call, there is a link in our news release of yesterday's date which can be found on our new website under Investor Center, then News and Media. In addition, a link can be found on the homepage of the Aveeno website. The full financial statements and MD&A are now available on our website under the Investor Center tab, then Reports and Financials. In addition, the full statements are available on Aveeno's profile, on Cedar Plus, and on EDGAR. Before we get started, I remind you to view our precautionary language regarding forward-looking statements. and the risk factors pertaining to these statements. And note that certain statements made today on this call by the management team may include forward-looking information within the meaning of applicable securities laws. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results to be materially different than those expressed by or implied by such forward-looking statements. For additional information, we refer you to our detailed cautionary note in the presentation related to this call or on our press release of yesterday's date. On the call today, we have the company's President and CEO, David Wolfen, our Chief Financial Officer, Nathan Hart, our Chief Operating Officer, Carlos Rodriguez, and our VP of Technical Services, Peter Lara. I would like to remind everyone that this conference call is being recorded and will be available for replay later today. The replay information and the presentation slides from this conference call and webcast will be available on the website. Also, please note that all figures stated are in U.S. dollars unless otherwise noted. Thank you. I will now hand over the call to Aveeno's President and CEO, David Wolfen. David?

Thanks, Jen. Good morning, everyone, and welcome to Aveeno's Q4 and year-end earnings call and webcast. We will cover the highlights of our financial operating performance, and then we will summarize our goals for 2026, followed by a Q&A. I'll start with the discussion on operations and overall performance, and then I will turn it over to Nathan Hart, Aveeno CFO, to discuss the financial performance for this period. Please turn to slide five. We are transforming Aveeno from a single mine operator into a multi-asset Mexican mid-tier producer. Aveeno achieved a number of important milestones in 2025, underpinned by strong performance at the Aveeno mine and the commencement of development and material extraction at La Preciosa. The fourth quarter of 2025 represents a return to being a primary silver producer, as silver production represented over 50% of our consolidated silver equivalent production and puts us on our way to our long-term target. Our continued investment in infrastructure development and mine optimization reflects a disciplined approach to being a scalable multi-asset production platform. As we look forward and focus remains on executing the next phase of our growth strategy and delivering long-term value for shareholders. The first key driver contributing to our success in 2025 is was our continued disciplined approach to financial management and capital allocation. At the end of the year, Aveeno achieved record revenues of $92.2 million and held cash of $102 million and working capital position of $99 million, providing another quarter of strong financial performance. A strong balance sheet will provide the foundation to support our transformational growth plan to become a Mexican-focused mid-tier primary silver producer. Nathan will provide a detailed overview of the financials later in the call. The next key drivers stem from increased development tonnage at La Preciosa. We commenced extraction, haulage, and processing of mineralized development material from La Preciosa during the quarter at an average rate of 200 tons per day. In total, 11,995 tons of material was processed at the Aveeno Milling and Processing Facility, which is located 19 kilometers away from the entrance of La Preciosa Mine. The third driver reflected portfolio optimization, highlighted by the August announcement of the acquisition of outstanding royalties and contingent payments on La Preciosa. This milestone reinforces the consolidation of ownership at La Preciosa, improving project economics and operational flexibility. Removing third-party obligation reduces complexity and strengthens Aveeno's asset portfolio. We believe this enhances shareholder value by strengthening our portfolio and positioning Aveeno for sustained growth. Another key driver underpinning our results is the commitment we have made to strategic exploration and drilling that further unlock additional resource potential. We reported drill results from La Preciosa in October 25, which followed up from August 2025 drilling. We also announced further holes in January of this year. The results exceeded our expectations. Highlights included 7.9 meters true width of 1.6 kilograms of silver, 2 grams gold, including 15 kilograms of silver and 1.55 grams gold over 0.37 meters of true width. Another significant intercept was over 5 meters of true width of 787 grams silver and half a gram of gold. The full results are available in the news release, which can be found on our website. The intercepts are significantly higher than the average grades outlined in our current resource, highlighting the potential we aim to capture by using underground mining methods. In addition, larger widths encountered at both La Gloria and Abundancia were welcome surprise, underscoring that there is still much to learn about the deposit despite the 1500 drill holes on the property and substantial exploration investment performed by previous operators. Since acquiring La Preciosa, we have learned that recent drilling intercepts suggest wider vein structures on Gloria. Original mine plan is evolving to reflect improved geological understanding. Optimization opportunities are being identified that could reduce mining costs. Engaged independent engineers to deliver a strategic plan that looks beyond the original project scope. The next driver was increasing silver revenues at the right time. A return to primary silver with 54% silver revenue in Q4 and record revenues, operational cash flow, and free cash flow generation in Q4. Our final driver for Q4 and year end included stronger metal prices alongside increasing market recognition. Higher metal prices at the end of 2025 and into early 2026 have supported our strong performance. Aveeno's continued growth and strengthened market recognition resulted in being named fifth among the top performing companies on the Toronto Stock Exchange 2025 TSX 30. For the three years ended June 30, 2025, Aveeno's share price performance increased 610% and market capitalization increased 778%. In addition to this, Avino has been added to several ETFs, including Market Vector's Junior Gold Miners Index, and VanEck's Junior Gold Miners ETF, the GDXJ, GlobalX, Silver Miners, and more. ETF inclusion signals institutional recognition while improving liquidity and expanding global investor access. These achievements demonstrate the meaningful progress made in advancing Aveeno's transformational growth strategy while reinforcing the company's investment case. Moving to slide six, we turn to our Q4 year-end 2025 production results, which were released in mid-January and reflect steady operational performance. On this slide, we show our production results compared to Q4 and year-end 2024, with production remaining consistent at approximately 2.6 million silver equivalent ounces, while total mill feed increased 14% year over year. On slide seven, we highlighted production by operation, showing contributions from both Aveeno and La Preciosa for the year. We were particularly pleased to add just under 12,000 tons of La Preciosa material to our production results. At this time, I will now hand it over to Nathan Hart, Aveeno's CFO, to present our record financial performance for Q4 and year-end 2025. Nathan?

Thank you, David, and thank you to all of you for taking the time to join us as we recap a record year with our financial and operating results for the fourth quarter and full year 2025. Here on slide eight, we have an overview of some key financial and operating highlights and our improved balance sheet with the full table on the next slide. In the fourth quarter, we generated record revenues of over $30 million and a further record of $92 million for the full year despite lower ounces sold. With higher silver production, the fourth quarter marks a return to primary silver with revenues of 54% being generated from silver in the quarter, with expectations of that to continue into 2026 and beyond. Gross profit was $17.8 million and on a cash basis $19 million after removing non-cash expenses. The gross profit margin was 58% inclusive of the non-cash items and 62% excluding these items. This is significantly improved from the 43% margin in the fourth quarter of last year, as well as the 46% in the third quarter. Abito earned its highest ever earnings for Q4 and the full year 2025 with $10.5 million in net income or $0.6 per share in the fourth quarter, beating last quarter's record of $7.7 million and $0.05 per share. For the full year 2025, net income was $26.6 million or $0.17 per share, a significant improvement over last year's net income of $8.1 million or $0.06 per share. Fourth quarter adjusted earnings were a record $16.3 million or $0.10 per share, compared to $10 million or $0.07 per share in Q4 of last year. The 2025 full year adjusted earnings were a record $46.5 million or $0.29 per share, compared to $21 million or $0.15 per share in 2024. Operating cash flows and free cash flow both improved in the fourth quarter, compared to last year, as well as compared to this previous quarter. We generated operating cash flows before working capital adjustments of $19 million or $0.12 per share. For the full year, Aveeno generated $35.3 million in operating cash flows, or $0.22 per share, with figures being quarterly and annual records. Fourth quarter free cash flow generation was $15.6 million, excluding La Preciosa development costs, and the annual free cash flow generation was just over $24 million. Moving to liquidity and treasury, our cash position was a record $102 million at the end of the year, and working capital was just shy of $100 million. Aveeno has no secure debt other than leases on operating equipment at both Aveeno and La Preciosa mining operations. And coming to slide nine, we see all other financial metrics for the fourth quarter and full year, as well as the year over year changes. As everyone can see, almost all categories saw meaningful increases. Highlighting again some of the key per share metrics for the quarter, where we saw six cents earnings per share and 10 cents on an adjusted earnings basis. Operating cash flows before working capital changes was $0.12 per share and free cash flow generated excluding La Preciosa was $15.6 million, translating to $0.09 per share. For the year, net income was $0.17 per share and adjusted earnings was $0.29 per share. Operating cash flows before working capital changes was $0.22 per share and free cash flow was $0.16 per share, or $24.3 million. Here on slide 10, we have an overview of operating results on a per ounce and ton basis. as well as margins at our operations. Cash cost per silver equivalent payable ounce for 2025 was $16.13, a 9% increase compared to 1484 in 2024. All in sustaining cash costs were 23.75 for the year, a 15% increase from 2057 in 2024. On a per ton basis, cash costs were 53.69, which was down 3% compared to 55.43 in 2024. and all-in costs per ton were flat compared to 2024, with both years being around $78 per ton, demonstrating the consistency of our operation. Our mine operating income and margins for 2025 were significantly increased from 2024, with margins at 53% on the year and $48.5 million in mine operating income generated, once again demonstrating the leverage producers have in this price environment. In the fourth quarter, we did see some increase in costs for a few reasons, One being the addition of processing La Preciosa development material. And I do want to remind everyone that this is development material running through the mill. We are in a unique position that a lot of the development at La Preciosa is in ore and has allowed us to offset some of the costs associated with development work we would have had to do regardless. These costs for La Preciosa are not indicative of long-term cost per ounce and per ton expectations. However, at current metal prices, each ton of development material mined is being done so at a profit. One other item to highlight is that the movement in silver price did have an impact on our silver equivalent payable ounce calculation, which did have an impact on our cash cost per ounce figures and all in sustaining cost per ounce figures. Using prices from our forecast at the beginning of 2025 of $30 silver, $2,700 per ounce of gold, and $9,200 per ton of copper, our cash cost per ounce for the fourth quarter and full year would have come in at $16.56 and $15.17, respectively. in line with our expectations when we set out at the beginning of 2025. On an all-in-sustaining cash cost basis, a similar story is told with the silver price impacting figures. Using the same budget prices, our all-in-sustaining silver equivalent payable ounce was $26.68. Our full-year 2025 figure would have been $22.43, once again, more in line with expectations. We look forward to further economies of scale as La Preciosa begins contributing more and more to our overall production profile in 2026 and the coming years. So going back to the revenue side, here are our expectations for production by metal moving forward. Given the recent price movement in silver, we expect that the silver portion as it relates to revenues will be higher than the estimated production by metal figures shown here. In the fourth quarter, Aveeno generated 54% of its revenues from silver, marking the first quarter with over 50% in silver revenues since we were operating the San Gonzalo mine prior to 2020, and delivering on our promise of a return to primary silver for our future. At this point, I will now turn it back over to David to run through upcoming activities.

Thanks, Nathan. As we summarize our key goals for 2026, our focus remains on strategic exploration and drilling to unlock the full potential of a resource base. This includes the integration of AI technology to enhance data analysis, improve target generation, and increase overall exploration efficiency. We are currently integrating our historical and ongoing geological data into AI-driven models to support the resource and reserve expansion and to identify new exploration opportunities. In 2026, we have planned approximately 30,000 meters of drilling, with 15,000 meters allocated to each of the Aveeno and La Preciosa projects. We also look forward to releasing updated mineral resource estimates and announcing our inaugural mineral reserves at the end of the first half of the year. At La Preciosa, our goal is to reach a production rate of 500 tons per day. As outlined on slide 13, I'd like to again highlight the company's growth strategy. Within a 20-kilometer footprint, we have three key assets, including the operating mill complex, which currently processes material from Avino and La Preciosa. We have access to water power tailing storage critical infrastructure that supports our ability to expand production efficiently. Collectively, our assets host 277 million silver equivalent ounces in the measured and indicated mineral resources and additional 94 million silver equivalent ounces in the deferred mineral resources. providing strong foundation for future growth. All of our operations are in the safe jurisdiction of Durango, Mexico, in an area of rolling farmland with several small communities located near both the Avino and La Preciosa projects. We are proud to be one of the largest employers in this area, supported by a 100% Mexican workforce drawn largely from the surrounding communities. Alongside our operational growth initiatives, we continue to advance our CSR programs across both Aveeno and La Preciosa, supporting local communities and contributing to long-term social and economic development in the region. Our investor relations team is currently preparing the company's second annual sustainability report, which will be published on our website upon completion. The report is intended to provide transparency on how responsible mining practices, strong governance, and community engagement support Aveeno's operational performance and long-term growth. Aveeno's strong operating foundation supports our long-term growth strategy. As you can see on this slide, our goal is to scale up by 2029 through contributions from our three key assets. By leveraging our existing infrastructure, assets, and resource base, we believe we are well positioned to execute our growth plans efficiently and effectively. We concluded the quarter and the year with more record-breaking financial metrics, which reflects the strength of our strategy and the dedication of our team, both which drive our success as we pursue the next phase of growth. On behalf of the leadership, thank you to our entire team for your efforts and contributions. With a clear growth strategy, a strong balance sheet, and significant resource potential across our assets, we believe Aveeno is well positioned to create lasting value for our shareholders. We would now like to move the call to the question and answer portion. Operator?

Thank you. Ladies and gentlemen, at this time we will be conducting our question and answer session. As a reminder, if you would like to ask a question, please press star 1 on your telephone keypad. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please, while we poll for questions. Thank you. Our first question is coming from Heiko Ehle with HC Wainwright. Your line is live.

Hello, David and team. Thanks for taking my questions. Hey, Heiko. Hey, Heiko. Hey, so just thinking out loud here, I mean, there is obviously a newfound fear in the market, you know, Just trying to see what you think this will do to M&A opportunities. I mean, we got silver at $85. We got gold just below $5,200. Is the opportunity that you're seeing offset by just the fear in the market? Or do you see discount rates being at a place where there might be interesting things out there? Just sort of what are you seeing?

Hey, Heiko. Nathan here. I'll take that one.

I think, and we always say this, but everything's for sale at the right price. I don't think the markets will generally dictate fully all the M&A moves in the industry. Given current prices and the discount rate environment, there's obviously some good stuff out there. But if we're looking at specifically how it affects us, I think we're focused on organic growth and what we already have.

Fair enough. Speaking of the things you already have, I mean, again, obviously price, the price environment has changed markedly over the past three, six, 12 months. What are you seeing with labor costs and should there be anything that maybe we should change in our model compared to where we were a year ago?

Yeah, I'll take this one again, Heiko. On labor costs, you know, it's, I think we saw a huge jump in 2025 and 2024. Obviously, the post-COVID inflation kind of hit everyone in the mining industry. That has stabilized a little bit based on what we're seeing. But obviously, in a rising price environment, there's generally a little bit of cost creep. So we're just doing our best to manage that. We're not expecting any material changes at this time.

Okay, so once we get the Q1 numbers, we can just sort of use those and trendline them a bit.

I would say that's fair, yeah. Thanks. I'll get back with you. Thank you, guys. Thanks, Eiko.

Thank you. Our next question is coming from Jake Sikalski with Alliance Global Partners.

Hey, David, Nathan, and team, thanks for taking my questions. Come on, Jake. Hey, Jake. Just looking at the strong balance sheet, I'm just curious, are there any levers you feel you might be able to pull in order to accelerate some of the planned work at La Preciosa?

We just ordered a new, well, actually a new jumbo, so that's going to help. Basically, it's underground development work, so we're working on that. SRK engineering, revising, looking at a larger mine plan. So these are the things that we're looking at. Anything else? That's it, Jake.

Okay, that's helpful. And on that larger mine plan scenario, when do you think we might see some news on that front?

Hey, Jake. Peter here. Yeah, we're evaluating a few different scenarios here, and we just want to take our time with it because obviously it's a volatile environment, and we really want to evaluate a number of different options because we do have all this optionality with the deposit, with the size that it is, and how we integrate those two operations now. including how that dovetails with the oxide tailings, that third leg in the stool. So we're really taking our time with that optimization. Got it.

Okay, that's all for me. Thanks again. Thanks, Jake.

Thank you. Our next question is coming from Richard Larson, who is an investor. Sir, your line is live.

Hello?

Hi there. Hello?

Yes, my question is about your share count and you're at the money. I realize silver prices have kind of sucked for 15 years, so it's tempting to issue shares, strengthen the balance sheet. But just looking out two, three, four years, you could be doing $8 million production at margins of $60, kind of mine operating income. And I guess I'm wondering, what's your strategy on that? you know, potential capital returns or at least minimizing the amount of, you know, share dilution? And how are you thinking about, you know, going forward, you know, that on the balance sheet, that sort of thing?

Yeah, that's a fair question. Nathan Hart here. So obviously, shareholder returns are pretty prevalent in the industry, and it's a big discussion point at this time. We do have a few levers we're looking at and some stuff that's in the works. But at this time, we're focused on delivering the organic growth, and that will require capital. Having said that, the use of the ATM has really been, as we've hit, 52-week or all-time highs. And so now, obviously, we've seen a little bit of a market pullback, so we're staying put at this time.

Okay. Yeah, thank you. Appreciate it.

Thanks, Nicole. No question.

Thank you. Our next question is coming from Joseph Rieger with Roth Capital Partners. Your line is live.

Hey, David, Nate, and team. Thanks for taking my questions. Jake kind of touched on this already, but just kind of thinking about you've got over $100 million on the balance sheet I realize you're going through options, but is it fair to say that we can start assuming there will be some form of mill expansion coming within the next year or two? Absolutely.

Yeah, that's a safe assumption, Joe. We're doing the work right now to figure out what's the appropriate size and whether it's at just a vino or potentially both. But yeah, we're, we'll let the market know once we've, we've made some ideas and decisions on that.

Okay. Okay. That's fair. Um, and then, you know, as you think about kind of the operating cost side, obviously inflation has been putting a lot of pressure on everybody, not just you guys. Um, You know, is there any optimization things that you guys can do to bring down operating costs? Or is it, you know, given margins are where they are, that that's not a huge focus?

Yeah, I think, you know, as you mentioned before, You know, inflation has hit the industry more so in previous years, not necessarily, you know, in the last year or so. But as far as operating costs go, we're seeing fairly consistent operating costs. Obviously, there's some volatility in the world with the, you know, diesel and gasoline prices. But on the labor side, we're seeing fairly stable, you know, increases as we reward our employees, but fairly stable. There's a ton of cost. Yeah. Yeah, our cost per ton has been, I think, the evidence is that is in our cost per ton. You see that year over year, and it's very steady.

Can you remind us how much exposure you guys have to diesel prices? What percentage of cost is fuel?

Yeah, it's not overly high, I'll be honest, unlike some of the fairly capital-intensive operations that are out there. But we're not talking high prices. double digits or anything like that. I'd have to give you an exact number offline if you want, but in Mexico, it's fairly subsidized by the government, and so prices don't get too out of whack.

Okay. Fair enough. I'll turn it over. Thanks, guys.

Thank you.

Thank you. Our next question is coming from Chen Lin with Lin Asset Management. Your line is live.

Thank you, David and Nathan, for taking my questions. A great year. Congratulations. I'm just curious, because some of my questions already got answered. I'm just curious, do you see any chance with the change in Mexico, you know, more pro-mining environment, La Preciosa can potentially be an open pit, or are you just going to continue the underground operation?

Thanks, Jen. That's one of the scenarios and the four scenarios we're looking at. CORE did a feasibility study back in 2013, so it's outdated, so we're revisiting that.

Okay, so if they potentially Mexico open for the open pit, what kind of impact they have for your production outlook, or you need to upgrade your meal much more significantly? Okay.

Yeah, Chen, Nathan here. I think, you know, it's premature to probably put any numbers on it, but I think if anyone wants to have a look, that study is still available on CDAR. But yeah, that's obviously, it would be a lot of growth.

Okay, great. Thank you. Thanks, Chen.

Thank you. If you have any further questions or comments, please indicate so now by pressing star one on your telephone keypad. Okay, as we have no further questions in the queue at this time, I'd like to hand it back over to management for any closing remarks.

Thank you. It's been a year and a final quarter of record-breaking achievements, and we remain focused on executing our organic growth plan We look forward to building on this momentum and delivering additional milestones and sustained growth for the Avino shareholders. Thank you again for participating in our webcast and conference call. Have a great day.

Thank you. Ladies and gentlemen, this does conclude today's conference, and you may disconnect your lines at this time. And we thank you for your participation.