Avino Silver & Gold Mines Ltd. (Canada) 2026 Q2 Earnings Call

Please go ahead. Thank you, operator.

Good morning, everyone, and welcome to our Q2 2026 earnings call and webcast. To join this webcast and call, there is a link in our news release, which was disseminated this morning and can be found on our website under Investor Center, then News & Media. In addition, a link can be found on the homepage of the Avino website. The full financial statements in 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 Avino's profile on SEDAR+ 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 today's press release. On the call today, we have the company's President and CEO, David Wolfin, our Chief Financial Officer, Nathan Harte, our Chief Operating Officer, Carlos Rodriguez, our Senior Vice President of Technical Services, Peter Latta, and the newest member of the management team, Marc Turcotte, Senior Vice President of Corporate Development. I would like to remind everyone that this conference call is being recorded and will be available for replay later today. Replay information and the presentation slides from this conference call and webcast will be available on our website.

Please note that all figures stated are in USD unless otherwise noted. Thank you. I will now hand over the call to Avino's President and CEO, David Wolfin.

David? Thanks, Jen. Good morning, everyone, and welcome to Avino's second quarter 2026 earnings call and webcast.

We will cover the highlights of our financial and operating results and then provide an overview of what's coming up in the next quarter, followed by a Q&A session. Once I've gone through the operational highlights and overall progress, I will turn it over to Nathan Harte, Avino's CFO, to discuss the financial results for the period. Please turn to slide 5. We continue executing on our growth strategy, advancing Avino from a single mine operator towards a diversified, multi-asset, mid-tier producer in Mexico. The second quarter marked another significant step forward for Avino. We achieved an important milestone with the announcement of our inaugural mineral reserve and updated mineral resources, providing a strong foundation for our long-term growth strategy.

We also continued to make steady progress at La Preciosa, increasing development production as we advance towards commercial mining. Beyond our operations, we strengthened the company through key corporate initiatives, including an announcement of a Normal Course Issuer Bid and the appointment of Marc Turcotte as Senior Vice President of Corporate Development. Together, these achievements reflect our continued execution and our commitment to growing Avino. During the quarter, we had meaningful contributions from La Preciosa with a 59% increase in silver production as we continue to move the project forward. Mill performance remained solid during the quarter, with tonnes milled exceeding expectations, and contributions from La Preciosa development ore continued to increase throughout the quarter. Our strong second quarter performance was driven by several key drivers, including, firstly, our financial discipline and strategic capital allocation played an important role driving improvement across key financial metrics.

Quarterly revenue of $26.8 million, cash of $145 million, working capital position of $141 million. Our financial strength enables us to carry out our organic growth plan with a bulletproof balance sheet. Next, we announced the Normal Course Issuer Bid in April, and we have repurchased and canceled over 500,000 common shares in the quarter, which in turn decreased the issued and outstanding common shares by that amount. We believe that the NCIB is a flexible tool that is part of our overall capital allocation program, and we remain committed to returning value to shareholders by reducing the number of shares outstanding and increasing the percentage of ownership and earnings per share. The next key driver was the completion of a new mineral reserve estimate and updated mineral resource estimate. This was released on April 16th. Establishing mineral reserves across all properties is a transformational milestone for Avino.

For the first time, we have defined reserves that demonstrate the underlying quality, scale, and economic potential of our asset base, further advancing company towards multi-asset, mid-tier producer. The inaugural mineral reserve estimate is 127 million silver equivalent ounces across our three assets. This milestone is complemented by growth in our mineral resource base. This growth was achieved after accounting for depletion from ongoing mining activities, underscoring the strength and continuity of our ore bodies and mineralized systems. Together, these results reinforce the depth of our organic pipeline and positions Avino for continued growth and long-term value creation for shareholders. Next, La Preciosa was an important contributor to our operational progress this quarter. Development mining and haulage rates increased to allow Mill Circuit 2 to switch from ET Ore to La Preciosa development ore, and now Mill Circuit 1 and 2 are both processing La Preciosa development ore.

In addition, development and mine preparation work is nearly complete on level 3 of Abundancia and Gloria, allowing for production long hole mining to begin. This will result in higher grade ore being sent to the mill as compared to development ore processed to date, which is subject to additional mining dilution. Engineering and technical studies are ongoing at the mine level to evaluate optimum mining, hauling and processing rates for long term. Additionally, Avino is currently conducting trade-off studies between hauling and potential of standalone processing facility at La Preciosa. The next key factor underpinning our performance is the exploration programs. There are two drills currently turning at La Preciosa with 6,591 meters of drilling completed at the end of Q2 as part of the planned 15,000 meters of exploration for 2026.

Drilling has now shifted from infill holes to exploration and step out holes at high priority targets at vein intersections and projections. It is important to note that none of the infill holes completed to date were included in the mineral reserve update. Furthermore, most of the exploration holes are outside the current resource model. Next, at Avino Mine, we identified some surface mineralization material near its current workings, which was out of the current reserves. Given the ease of accessibility, along with low cost mining extraction and process flexibility of our four independent mill circuits, Avino elected to mine, haul and process material in one of the large mill circuits. Drilling remains ongoing in the same location as Q1 as we continue to understand the nature of the veining. The first drill was focused in the upper area of the eastern portion of the system.

The second drill was focused on extension drilling in the footwall breccia area of the upper east portion. Avino has been hosting geological consultants that are helping identify key geological features to target areas for resource expansion. Next, 54% of our revenue is from silver ounces sold, and 90% of our revenue comes from precious metals, silver and gold. During Q2, precious metal prices were volatile, but remained above historical averages, providing favorable pricing environment that supported our overall financial results. As we continue to execute our transformational growth strategy, we are seeing growing recognition from institutional investment community. New institutional funds and ETFs continue to join our shareholder base, reflecting increased awareness of Avino's growth profile and long-term potential. These achievements demonstrate meaningful progress in advancing Avino's transformational growth strategy while reinforcing the company's investment case.

Moving on to slide 6, we turn to our Q2 production results, which were released on July 22nd and reflect steady operational performance. On this slide, we show our production results compared to Q2 2025 and year to date 2025, and consolidated production of 535,000 silver equivalent ounces and 185,000 tons of total mill feed. On slide 7, we highlight production by operation, showing contributions from both Avino and La Preciosa for the year. At La Preciosa, development production increased 59% from Q1 2026, contributing just over 100,000 silver equivalent ounces and just shy of 85,000 silver ounces and 182 gold ounces. I was at La Preciosa last week and witnessed the rapid pace of development firsthand. The progress is being supported in part by additional new mining equipment, which is improving development efficiency, increasing productivity, and helping the team advance underground development.