Avino Silver Asks, “You Like Mining?”

Louis Wolfin did, in 1969, and today sits proudly on the mountain of minerals that is Avino Silver and Gold Mines Ltd. (TSX.V:ASM). Now in their 41st year in business, Louis and son David have succeeded in bringing new life to the Avino mine once dubbed “The Mountain of Silver” by Spanish Conquistadors in 1562.

David Wolfin, President and Director of Avino, started as a geologist’s assistant in Nevada, a metallurgist’s assistant at the Avino mine in Mexico and later in a number of mining and exploration-related capacities, David eventually found himself on the floor of the Vancouver Stock Exchange in the late 1980’s.

After successful tenures at several brokerage houses, he gained a solid foundation in the finance side of the industry. Studying Business and Geology at Colorado State University, David continued on to work for the group of resource companies, including Avino Silver & Gold Mines Ltd., where his father Louis reigns as Chief Financial Officer and Director. A long way from a Beverly Hills cocktail party in 1969, which of course is where the story begins.

Louis Wolfin was approached by a wealthy Mexican politician and simply asked “You like mining?”. Learning that the politician had purchased a large library of geological reports from the government, Wolfin Senior promptly dispatched a geologist to go through the library, which was essentially geological reports, with the idea of looking for mines that closed around the time of the revolution. Uncovering 5, Avino being one of them, they surveyed their dusty discoveries and Avino came out on top with the best potential.

As David Wolfin recounts the history of Avino, a sense of nostalgia seeps inadvertently into his yarn. Thought to be the fifth mine found by the Spaniards in the 1500’s, Avino is actually referred to in Mexican literature when the Conquistadors found the mountain of silver and began to exploit in kicking off the mines nearly 500 year history.

“There’s old working there we don’t know anything about… … you just see holes in the ground, you don’t want to fall into one of them you’re gone forever.” David warns. Danger as well as Conquistador mysticism? Shaping up to be quite the tale isn’t it?

Making the decision to get involved, Louis Wolfin came across a small stumbling block in the form of Mexian Law. Forbidding foreign investors to own more than 49% of any business the question was then; 49% of Avino, or 100% of nothing? Wolfin wanted in, and in he got, sourcing the money from family and hiring geologists and engineers to build a small operation. Bringing in 300/400 tons a day, Avino began production in 1974 and operated continuously for 27 years. In 1990

Avino went from open pit to underground mining. To assist in this transition, Don Pedro Sanchez Majorada, the President of Industrial Penoles and an influential mining figure in Mexico, was asked to join the Avino board. The appointment of Sanchez Maharada eased the transition from open pit to underground mining significantly and increased the company’s recovery rates from 50% to over 80%. As a result, capacity of the mill was raised to over 1000 tons per day.

Unfortunately, 2001 saw in the closure of the mine due to low silver prices and the closure of a key smelter. In 2003, David Wolfin commissioned MineStart Management to examine the existing ore base, the feasibility of re-opening the mine and also the feasibility of processing the large tailings reserve. He then embarked upon an arduous 3 years of negotiation to convince the 51% Mexican ownership to sell their shares. Falling back on his financial skills, David Wolfin managed to raise 15 million dollars, non-brokered, from 2003 to 2006. With the proceeds in hand, David then assembled a team to commence exploration drilling.

From 2006 until the present day, Avino has completed 30,000 metres of aggressive drilling, encountering new zones of silver, gold, zinc and lead. Updating their equipment in the process; current drilling, I.P. geophysics, satellite imagery, and 3D modelling have actually indicated new mineral zones in under-explored areas of the property. This provides the company targeted areas that could expand their resources significantly.

The original Avino vein produced a thousand tons a day, was a mile long on the surface and 200 feet wide, but is not the current focus after the recent drilling discovered a high grade narrow vein system located near the surface. To accommodate the ore from the new zone, refurbishing of a separate 250 tpd circuit has been completed, now providing 2 circuits capable of a total 1250 tons per day. The discovery of ore in San Ganzalo ads even more momentum to the snowballing progress of Avino. There are some antiquated workings associated with San Gonzalo that date back to the Spanish Colonial period still intact. The area that Avino intends to mine is directly below the old mine site.

With new funding, discoveries and enthusiasm, Avino is now embarking on a four-pronged strategy to

Explore and expand resources in the surrounding concessions.
Expand the current minable resource at San Gonzalo
Re-furbish and upgrade the mine for re-opening and
Exploit the large tailings resource.
From an investment point of view, at shutdown, when silver sold for around $4.40 per ounce and gold about $270 per ounce, the Avino Mine essentially broke even. Today, with metals prices having more than doubled, studies show the mine should operate profitably with improvements to equipment and infrastructure.

(NI) 43- 101 reports, at the close of the Canadian market on February 3rd 2010, indicate a total of 104.61 K oz in gold, 14.65 M oz in silver, 4.44. K t in lead and 6.66 K t in zinc. Still from an investor’s standpoint, new vehicles such as the U.S. bullion purchase program and silver-specific Exchange Traded Funds are proving increasingly attractive to investors. With silvers 5 year price climb, fabrication demand continues to outstrip supply. Combined with the increasing investment demand, the market will likely remain very strong.

In a press release issued by David Wolfin on January 28th 2010, we learn that things are happening fast down at Avino. Considered a significant milestone for the company, their power proposal has been accepted by the Comision Federal de Electricidad (CFE), and plans are now in place to have the power transmission lines reconnected in the first week of February in order to service the 250tpd milling operation.

Located in Durango State, Mexico, Avino Silver & Gold Mines Ltd. is rare find. Also holding precious metals properties in British Columbia and the Yukon Territory, it’s a company seeped in historical lore, yet still full of fresh enthusiasm and potential. I believe we have yet to see the best that the company has to offer. From the Conquistadors in the 1500’s to a cocktail party in the 60’s to fresh findings in 2003, the story of Avino continues. Stay tuned for the next chapter, ‘cause baby, there ain’t no mountain high enough for Avino.

SOURCE: http://www.midasletter.com/news/10031201_Avino-Silver-Asks-You-Like-Mining.php