Small, rich resource for Avino (July 25, 2008)

Vancouver – A solid resource estimate for one vein near the historic Avino mine is bolstering hopes that Avino Silver & Gold Mines (ASM-V) will soon be able to restart the mine that Spaniards once described as a “mountain of silver.”

The Avino mine near Durango, in north-central Mexico, has been in intermittent operation since the 1500s. Avino Silver & Gold took over the site in the early 1970s and restarted the operation in 1974. Low metal prices forced closure in 2001; the mill has been on care and maintenance since.

Historically, mining at the site centred on the Avino vein. While Avino Silver & Gold notes that significant resources still remain in the primary vein system, its resource delineation focus has been on the San Gonzalo vein, where grades are generally higher.

Grades certainly are high. The new resource estimate, which covers only the San Gonzalo vein, pegs inferred resources at 444,250 tonnes grading 332 grams silver per tonne, 2.61 grams gold per tonne, 1.5% zinc, and 1% lead. The estimate was calculated using data from 40 surface diamond drill holes, totaling 9,200 metres, drilled in 2007.

The report author also notes that roughly 43,000 tonnes of material around the existing San Gonzalo mine workings are estimated to carry 596 grams silver, based on historic sampling results. The historic data do not include gold assay results and the figure must remain historic until drilling, already underway, can verify the information.

News of the resource boosted Avino Silver & Gold’s share price 4c in July 25 trading to close at $1.33. The junior has a 52-week trading range of $1.29 to $2.12 and has 20.6 million shares issued.

The resource estimate has given Avino Silver & Gold the confidence it needed to proceed with a 10,000-tonne bulk sample of the San Gonzalo ore. The bulk sample will provide grade confirmation for the core of the deposit while also providing concentrate for testing at various smelters.

Avino Silver & Gold is currently refurbishing the Avino mill to process the bulk sample. The company plans to re-commission the mill at 250 tonnes per day for the sample. Metallurgical testing of sample material from San Gonzalo earlier this year showed that up to 90% of the ore’s contained silver can be recovered into concentrates through conventional processing.

If milling and processing the 10,000-tonne bulk sample goes well the company plans to move towards re-starting larger-scale production at Avino. To do so would require extending the underground infrastructure from the main mine workings to the San Gonzalo zone as well as refurbishing the entire recovery plant. In addition, Avino Silver & Gold would have to pump out and treat groundwater from the mine workings and construct a new tailings disposal and treatment facility. Permitting would not, however, be a hurdle: the permit allowing the company to mine and process the bulk sample allows for continued operations thereafter.

The company is also actively seeking new resources to sustain a long-lived operation. Recent geophysical and geochemical work across the property has outlined several new drill targets. Exploration drilling is laready underway with one drill rig; the company bought and is currently refurbishing a second rig that will assist in exploration drilling as well as completing infill requirements at San Gonzalo and at the main Avino vein.

According to a 2006 report the tailings pile at Avino also holds considerable grades of precious metals. More specifically, 2.1 million inferred tonnes of oxide tailings grade 95 grams silver and 0.53 gram gold and 2.9 million tonnes of sulphide tailings average 37.8 grams silver and 0.34 gram gold.

Avino Silver & Gold ran the Avino mine from 1974 until 2001. In those 27 years the mine produced 16 million oz. silver, 96,000 oz. gold, and 24 million lbs. copper. When the mine closed down in 2001 silver was selling for $4.40 per oz. and gold for $270 per oz. At those prices the mine just broke even. Now, with metal prices more than double their 2001 levels, Avino Silver & Gold hopes to bring prosperity back to the mine that was the historic basis for the city of Durango.