Avino’s First Reserve in 57 Years Resets La Preciosa’s Risk Profile

127 million silver-equivalent ounces. That is the number Avino Silver & Gold Mines formally declared as proven and probable reserves, and it is the first reserve of any kind in the company’s 57-year history. This is not a routine operational update. It is a structural threshold, and it changes how the asset at the centre of the story, La Preciosa, should be valued.

The timing sharpens the point. Avino crossed this reserve line while silver traded near multi-decade highs, while the company held roughly US$145 million in cash with zero debt, and while live drill intercepts from the Gloria and Abundancia veins ran four to five times the declared reserve grade.

After this analysis, you will understand what the reserve declaration actually changes about Avino’s risk profile, what a standalone La Preciosa operation looks like in practical terms, and which variables will decide whether the asset re-rates.

What the first reserve declaration in 57 years actually changes

For most of Avino’s existence, it produced silver without a formally declared reserve. That ended with the NI 43-101-compliant consolidated reserve authored by Tetra Tech, effective 31 October 2025 and announced around 16 April 2026. National Instrument 43-101 is the Canadian regulatory standard governing how mining companies publicly disclose technical information about their projects.

Here is the distinction that matters. A mineral resource is a concentration of minerals with reasonable prospects for eventual economic extraction, but it carries no guarantee of profitability. A mineral reserve is the portion of that resource proven to be economically mineable, demonstrated through a feasibility study or, in Avino’s case, through an alternate revenue threshold.

The distinction between a mineral resource and a mineral reserve sits at the core of how investors should read Avino’s announcement: mineral resource estimates represent geological probability, while reserves carry the additional economic hurdle that institutions and lenders require before committing capital.

Avino qualified by surpassing the US$90 million revenue requirement that NI 43-101 permits as an alternative to a completed feasibility study. That is the technical gateway. The consequence is where the analytical interest lies.

The reserve figures break down as follows:

• Consolidated reserve: 27.19 million tonnes at 144.89 g/t AgEq, containing 127 million silver-equivalent ounces proven and probable
• La Preciosa subset: 11 million tonnes at 206 g/t silver and 0.37 g/t gold, containing 72 million silver ounces and 128,000 gold ounces
• Measured and indicated resources: 301 million silver-equivalent ounces, which frames the reserve as a starting point rather than a ceiling

Reserve life advantage La Preciosa carries an estimated reserve life of approximately 14 years, according to CEO David Wolfin, against a peer average of roughly 8 years.

What this tells you is straightforward. The reserve declaration moves Avino out of the “resource company with production” category and into the “reserve-backed producer” category. That shift widens the pool of institutional investors permitted to own the stock, and it opens the door to non-dilutive financing: project-level debt, streaming agreements, and short-form prospectus offerings all become more accessible once a reserve sits on file. The ounce count matters, but the credential it confers matters more.

From development rock to reserve ore: how La Preciosa is being built underground

A declared reserve is paper. Turning it into ore feeding a mill is physical work, and La Preciosa’s underground development is where the gap between the two narrows. The progression has been steady since permitting cleared.

The operational sequence has run in this order:

1. Permit received in early January 2025
2. Field development commenced in April 2025
3. Level 3 of the Abundancia and Gloria veins now nearing long-hole production readiness
4. Throughput ramp targeting up to 500 tpd from La Preciosa

As of September 2026, approximately 2,300 metres of underground development have been completed, including a 350-metre tunnel drilled to intersect the mineral veins. New drilling equipment was financed through agreements with Caterpillar and Sandvik.

The throughput picture requires care. In 2025, development material from La Preciosa was processed at the Avino facility at an average of roughly 200 tpd. CEO Wolfin has since described current throughput at 400-500 tpd, with a target of 500 tpd feeding the mill. Treat the higher figure as a forward-looking target rather than a settled run-rate.

The 2025 output gives you the factual base: over 24,000 tonnes mined at La Preciosa, of which 11,995 tonnes of mineralised material were processed at Avino, 19 kilometres away.

Ore composition La Preciosa ore is approximately 90% silver and 10% gold, with no copper content.

That 19-kilometre haul to the Avino mill (a facility with 2,500 tpd capacity across four independent circuits) is not a footnote. It is the central cost variable that will determine whether a standalone plant becomes economically necessary. Read the throughput data with that decision in mind.

Why the choice of mining method carries grade implications

Four to five mining methods are under evaluation, including shrinkage stoping, long-hole, and cut-and-fill. The choice is not cosmetic. Long-hole stoping is faster and cheaper per tonne, but it can pull in waste rock alongside ore, diluting the material that reaches the mill and dragging realised head grades below the declared reserve grade.

Cut-and-fill is more selective and better at grade control, but slower and more costly. The method selected will directly influence how closely production grades track the 206 g/t reserve grade, and the outcome will feed both the standalone plant feasibility study and the next reserve update.

The drill program and the re-rating signal buried in the intercepts

The declared reserve rests on data from the prior asset owner. None of the infill holes drilled under Avino’s current program have been incorporated into it yet. That single fact reframes the reserve as a backward-looking snapshot, and the 2026 drilling is what will bring it forward.

As of the Q2 2026 update on 12 August 2026, two drills were active at La Preciosa with a third en route, and 6,591 metres had been completed toward a planned 15,000-metre program for the year. The program has shifted from infill work to step-out and exploration holes, meaning results now carry the potential to expand the resource boundary rather than merely confirm it.

Three points define the significance of the drilling:

• Step-out scope: exploration holes can grow the resource footprint, not just refine known blocks
• Live intercept grade multiple: intercepts from Gloria and Abundancia are running four to five times the reserve average of 144.89 g/t AgEq consolidated
• Q1 reserve update as catalyst: updated resource and reserve estimates are expected in Q1 of the year following the declaration

The high-grade potential is a property-level characteristic, not a recent fluke. Historical drilling by Orko Silver in the mid-2000s recorded bonanza intercepts across the property, including a separate result of 6 metres at 550 g/t silver.

Historical grade anchor Orko Silver’s mid-2000s drilling returned 7.9 metres grading 1,600 g/t silver and 2 g/t gold, illustrating the grade the property is capable of hosting.

Avino has engaged a globally recognised structural geologist and is using the Verify platform with its AI tool, Dora, to identify less obvious targets. The analytical read is this: because the current reserve excludes every 2026 infill hole by design, the upcoming Q1 update carries genuine potential to close the gap between the declared grade and what live drilling is actually returning. For a commercially minded reader, that update is the near-term catalyst worth marking on the calendar.

The standalone plant decision: what US$200-300 million buys and what it risks

Everything so far leads to one decision. A standalone processing plant would convert La Preciosa from a satellite feeding the Avino mill into an independently operated mine with its own infrastructure and cost structure. This is the fulcrum of the entire story.

The capital picture is honest and close. CEO Wolfin estimates a dedicated 2,500 tpd plant, comparable in scale to the existing Avino mill, would cost approximately US$200-300 million. Against that sits roughly US$144.8 million in cash as of 30 June 2026, with working capital of about US$140.8 million and zero debt. Preliminary feasibility studies, run by an independent engineering firm, were 8-10 months from completion as of the interview date.

The financing side carries real tension. The ATM equity program has already raised roughly US$59 million of its US$60 million ceiling by early 2026, so further equity issuance to fund a large build would test dilution tolerance. This is precisely where the reserve declaration earns its value, because it makes project-level debt and streaming agreements structurally feasible as alternatives to selling more shares.

Streaming agreements and project-level debt have become the structurally preferred capital tools for reserve-backed developers precisely because they avoid the dilution cost of equity issuance, and the mechanics governing how royalty and streaming counterparties price those transactions against reserve life and grade have grown considerably more sophisticated since 2020.

The long-term prize is the reason the decision matters at all: a production target of 8-10 million silver-equivalent ounces, planned for announcement within the following year, against 2025 actual production of 2,606,155 ounces.

Avino’s valuation range, which spans from a bear-case US$2.50 to a bull-case US$12.75 depending on which assumptions govern the standalone plant decision and silver price trajectory, illustrates precisely why the reserve credential matters: it narrows the distribution of plausible outcomes by removing the financing ambiguity that previously compressed the multiple.

Risks the feasibility study will need to answer

The execution risks are not a generic caveat list. Each is a specific question the feasibility study must resolve:

• Long-hole dilution: will the chosen mining method hold head grades near the 206 g/t reserve grade?
• Haulage cost: can the 19-kilometre haul stay economic, or does it force the standalone build?
• Peso pressure: how much does a stronger Mexican peso lift operating costs, flagged by management in August 2026 commentary?
• Timing and cost overrun: does prioritising development over near-term output strain cash and all-in sustaining costs?
• Silver price sensitivity: does the plant economics survive a reversion from current highs toward the cost curve?

The 8-10 million ounce target is predicated entirely on La Preciosa reaching standalone operation. Any slippage in feasibility timing or capex estimate pushes that milestone materially further out.

What the reserve milestone means before the next update arrives

The reserve declaration matters not because 127 million ounces is the destination, but because it is the credential that unlocks the next phase of capital access and development. That is the core finding, and it holds regardless of where silver trades next week.

Three variables will decide whether the milestone translates into a re-rating or a waiting period. Track them in this order:

1. The Q1 resource and reserve update: does the grade gap between live intercepts and the 144.89 g/t declared reserve begin to close?
2. The feasibility study outcome: do the standalone plant economics work at prevailing silver prices?
3. The throughput ramp: is the 500 tpd target at La Preciosa actually being hit?

The macro backdrop is supportive but volatile. Silver sat in a fifth consecutive annual deficit in 2025, and prices have climbed sharply, though high prices have also curtailed some fabrication demand.

Silver supply deficits have persisted for five consecutive years through 2025, a structural backdrop that shapes the discount rate assumptions embedded in any long-duration reserve valuation and makes the 14-year reserve life at La Preciosa more sensitive to price trajectory than a shorter-lived peer asset would be.

Silver price context Spot silver traded at approximately US$65.57/oz on 8 September 2026, against a 2025 average of roughly US$40.03/oz, itself a 42% year-on-year rise.

With a reserve life near 14 years, short-term price swings matter less than the capital allocation decisions being made now. The honest read the data supports: the reserve milestone has lowered Avino’s risk profile materially, the drill program could improve it further in Q1, and the standalone plant remains the binary catalyst that will either validate or defer the 8-10 million ounce aspiration.

This article is for informational purposes only and should not be considered financial advice. Investors should conduct their own research and consult with financial professionals before making investment decisions. Past performance does not guarantee future results. Financial projections are subject to market conditions and various risk factors, and forward-looking statements are speculative and subject to change based on market developments and company performance.