The New York-listed, Canada headquartered company is a primary silver producer in Mexico that has been producing silver at its namesake Avino mine since the late 1960s. But having significantly expanded that facility over the past decade, it has now also added two more metals producing assets and expects to triple its output over the next five years.
That transformational growth in production will be driven by both an increase in production at the Avino flagship itself, but also the development and eventual onboarding of a neighbouring facility at La Preciosa west of the Avino site and its Oxide Tailings Project to the east.
Having just released an updated mineral resource estimate, Avino currently controls mineral resources, as per NI 43-101, that total 368 million silver equivalent ounces, within their district-scale land package.
In terms of production at its existing asset, ASM has already performed strongly over recent years. Avino produced 2.6 M AqEq oz in 2022, a 215% increase on the 842,000 AqEq oz it produced in 2021. Now, ASM president and CEO David Wolfin expects that figure to leap to 3 M AqEq oz in 2023 before reaching as high as 4 M Aq Eq oz in 2024.
Such an impressive ramping up of production is driven chiefly by the extension of the main vein a further 315 metres, with extensive drilling taking place below current levels. At the end of Q4 2022, a total of 15,582 metres had been drilled at the site, with results suggesting significantly higher copper mineralization.
While the continuing exploration and production at Avino is an important driver for growth, the real transformation for ASM will come with the developments of the two new projects which could see overall annual production rise to as much as 10 M AqEq oz, according to Mr Wolfin.
La Preciosa, which was acquired from Coeur Mining in March 2022, marks a major milestone in ASM's progress toward becoming an intermediate producer. The location, at only 15-20km from the Avino mine and mill facility, offers clear synergies with existing assets and reduces both the development timeline and the environmental footprint of development.
Mr Wolfin says that ASM competed with more than a dozen other bidders for the opportunity to take over the asset. "A lot of companies were cashed up because metal prices took off during Covid," he explains. "But they have no infrastructure there, so eventually the seller went exclusive with us, because they wanted to bring the mine back online."
La Preciosa was acquired for US$30m, with a further US$40-50m spent on exploration, which has included 1,500 drill holes. ASM already has mineral rights on the project, is carrying out community engagement and is hoping a surface agreement can be reached imminently. With an entirely Mexican workforce, Mr Wolfin hopes that the promise of more, well-paid jobs will also help speed the process.
"They want jobs in this area," he says. "It's a farming community and we're going to create higher paying jobs."
The company has already carried out a technical resource estimate at La Preciosa and, subsequently, has raised the cut-off grade for the silver produced. "It made sense for us to have a low, small footprint and truck it to our mill [at Avino], says Mr Wolfin.
Meanwhile, the Oxide Tailings Project will seek to recover historic plant residue material deposited when the Avino vein was first mined as an open pit, when process plant recovery rates for silver and gold were significantly worse than they are now.
"The material that was being mined in the 1970s and ‘80s was open pit which is nearer the surface and which is exposed to elements and oxidization," says Mr Wolfin. "Typically oxidized material doesn't recover well under conventional milling methods, so we had poor recoveries back then. And so there's a large endowment of precious metal sitting in our tailings today."
ASM first carried out a preliminary economic assessment (PEA) on the tailings site in 2017, which achieved results that Mr Wolfin describes as "very positive", with an IRR of close to 50% at UA$12.50 gold and US$17 silver. However, the company could not act on the PEA as it was an active tailings dam, so drilling would have been too dangerous.
The Covid lockdown of 2020, when the Avino mine was closed, provided the opportunity for the dam to dry out to the point where a drill could be placed on top. "We put in 150 drill holes on into the tailings and we tripled the size of the resource," recalls Mr Wolfin.
What was estimated to be around 2m tonnes of oxide tailings material in that original PEA is now estimated at 6m tonnes. The next stage is to compile the data from the metallurgical testing that was done on the drill holes, which will go into a pre-feasibility study (PFS), which ASM hopes to make available to investors later this year.
Mr Wolfin estimates that between US$35-40m of investment will be required for the Tailings Project, which is more than the US$29m identified in the 2017 PEA, but that increase in investment will be reflected in better returns.
The major advantage that ASM has when it comes to getting both La Preciosa and the Tailings Project online efficiently is the pre-existing infrastructure associated with Avino - infrastructure which has been upgraded significantly in recent years.
There is a 20km dedicated power line, capable of handling 5MW, while work is due to complete shortly on new conveyors and a new dry tailings storage facility, capable of handling the increase in production from what will soon be a triptych of assets. The plant is also being automated, with digital sensors and a centralised computer monitoring room added.