David Wolfin
President and CEO
Avino Silver & Gold Mines
View from the Top

Internal Expansion for Organic Growth

Mon, 10/22/2018 - 17:18

Q: What are some of the challenges and successes Avino Silver & Gold has faced during its time in Mexico?
A: Avino Silver & Gold has 50 years of experience in the industry. We were working in Mexico before NAFTA although we could only own 49 percent of the subsidiary before the treaty came into force. During the tech bubble in 2001, metal prices dropped, causing the region to undergo economic hardship. I became president of the company and strived to re-hire people and re-open the mine.
As we have been working in Mexico and with national partners for such a long time, we have formed strong relationships with local communities, ejidos and surrounding villages. We have helped them with infrastructure development and other matters. They feel that they can come to us for help. It would be ideal if the Mexican government lived up to its promise and put the tax money back into communities but we have not yet seen this materialize. This has been disappointing because locals look to us for explanations as we are on the ground and they do not understand where the money goes or who is managing it.
In our operations, we find that our people take great pride in their work. They want to live and work close to their homes and their families, and we have provided that for them. Eighty percent of our labor force comes from the villages near our projects and the remaining 20 percent is from the rest of the country. But 100 percent of our labor force is Mexican, even our senior-level staff.
Q: What are your main projects in Mexico and how do you expect to continue growing?
A: Rather than acquire other projects, we prefer to grow our own projects, starting with a mill expansion and underground pit. The Oxide Tailings project was an open-pit mine we opened in the 1970s with poor recovery rates. With new modern technology we have been able to reprocess and produce more metals and this will continue to be among the expansion plans we prioritize over the next three years. We have to build the new tailings facility first. At the moment, the cost is US$29 million on a standalone basis. We think this is too high so our goal is to build with a US$22 million budget and produce another 1.5 million silver equivalent ounces. As for the mill expansion, it was completed with a US$10 million investment.
At the moment, we are listed on the NYSE and TSX. We want to attract more institutional investors and mutual funds, which tend to be less erratic or volatile than retail investors. We are striving to build up our institutional shareholder base. We have thought about joining the BMV but we do not yet qualify.
Q: How did the company achieve an exclusive partnership with Samsung?
A: They approached us three years ago at the European Gold Forum after Apple and Intel promoted their use of ethically-sourced raw materials. As ethical funds own part of Samsung’s stock, they were worried about assuring an ethical source to avoid a boycott. Samsung chose our company because they wanted to partner with a small company that was well-established with projects in expansion. They did not want to partner with a big operator such as Barrick or Goldcorp nor companies with projects in preproduction. They also liked that we are a family-based company with a good relationship with the locals. Many see Mexico as an ethical country were people are treated better than certain places in Africa. Securing raw materials from the source is the future and we will start to see more technological companies and automotive manufacturers reach out to the mining industry. The world population is about to explode and people need materials to support the infrastructure that will be required in effect.