Avino Silver & Gold Mines Ltd.'s (ASM:TSX.V; ASM:NYSE.MKT; GV6:FSE) Q1/24 financial results were as Alliance Global Partners expected, reported analyst Jake Sekelsky in a May 13 research note.
"We expect the Avino mine to continue to operate at a steady state in a cash flow positive manner at current metals prices as management continues to focus on the significant growth opportunity at La Preciosa," Sekelsky wrote.
Rating Buy, upside 102%
Based on the quarter's results, the analyst reiterated Alliance Global's Buy rating and target price on the British Columbia-based producer.
The target is $1.70 per share on Avino, and its current price is about $0.84 per share. Thus, the implied return to target is 102%.
Declining cash costs
Sekelsky presented the highlights of Avino's Q1/24 results. Revenue was $12.4 million ($12.4M), in line with Alliance Global's estimate of $13.6M.
Adjusted net earnings per share also was as expected, at $0.02 per share.
Costs at the Avino mine in Mexico were lower quarter over quarter (QOQ) for the second quarter in a row, the analyst pointed out, an indication management's cost effective measures are working.
Cash costs in Q1/24 averaged $14.89 per ounce ($14.89/oz), compared to $15.04/oz in the previous quarter. Similarly, the all-in sustaining cost in Q1/24 was $20.23/oz versus $21.67/oz in Q4/23.
Sekelsky also noted improved metals prices drove EBITDA of $1.7M for Q1/24, about 50% higher QOQ.
Next leg of growth
The La Preciosa project, which according to Sekelsky is "to drive stepchange growth" for Avino Silver & Gold Mines, is in the last stages of permitting. Avino expects capex for this asset to be low as the company intends to process ore from La Preciosa through the Avino mill.
Once La Preciosa is developed, it could more than double Avino's current production rate to more than 8,000,000 ounces of Ag eq per year, wrote Sekelsky.
"We believe La Preciosa presents Avino with the opportunity to transition from a junior silver producer to an intermediate producer—driving a rerating of shares over the next year," the analyst added.
On the horizon
One upcoming event that could boost Avino's stock price is the start of processing, through the Avino mill, material from surface stockpiles at La Preciosa, which could happen as early as this quarter, Q2/24, noted Sekelsky.
Another catalyst, likely to occur in H2/24 is Avino receiving the remaining permits it needs to advance La Preciosa.
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