EX-99.2 3 ex99_2.htm EXHIBIT 99.02 Exhibit 99.02

AVINO SILVER & GOLD MINES LTD.
Balance Sheets
(Prepared by Management)
As at:
  
July 31, 2005
  
January 31, 2005
  
 
   $    
$
 
  
   
(Unaudited
 )  
(Audited
)
ASSETS
              
               
Current
              
Cash and cash equivalents
    
2,001,090
    
2,283,535
  
Accounts receivable
    
11,449
    
33,138
  
Prepaid expenses and deposits
    
10,675
    
22,348
  
Due from related parties (Note 6(b))
    
26,164
    
-
  
               
     
2,049,378
    
2,339,021
  
               
Office Furniture and Equipment 
    
2,331
    
2,823
  
Mineral Properties Interests (Note 3)
    
345,164
    
315,501
  
Investment in Cia Minera Mexicana de Avino, S.A. de C.V. 
    
1
    
1
  
Investments in Related Companies
    
427,084
    
427,084
  
Restricted Cash
    
3,000
    
-
  
               
 
    
2,826,958
    
3,084,430
  
               
LIABILITIES
              
               
Current
              
Accounts payable and accrued liabilities
    
33,478
    
64,529
  
Due to related parties (Note 6(c))
    
8,250
    
141,644
  
               
 
    
41,728
    
206,173
  
               
SHAREHOLDERS' EQUITY
              
               
Share Capital (Note 5)
    
17,357,189
    
17,030,084
  
Contributed Surplus
    
989,073
    
502,973
  
Treasury Shares (14,180 Shares, at cost)
    
(101,869
)
  
(101,869
)
Deficit
    
(15,459,163
)
  
(14,552,931
)
               
 
    
2,785,230
    
2,878,257
  
               
 
    
2,826,958
    
3,084,430
  
 
Note 1 - Nature of Operations

Approved by the Board of Directors:
 
“Louis Wolfin” Director    “David Wolfin” Director
 

AVINO SILVER & GOLD MINES LTD.
Interim Statements of Operations and Deficit
(Unaudited - Prepared by Management)
   
Three Months ended July 31,
  
Six Months ended July 31,
  
 
  
2005
  
2004
  
2005
  
2004
  
    $    
$
 
   $    
$
 
  
                           
Operating and Administrative Expenses
                          
Amortization
    
190
    
303
    
492
    
605
  
Interest
    
-
    
65
    
-
    
65
  
Management fees
    
15,000
    
15,000
    
30,000
    
30,000
  
Office and miscellaneous
    
26,305
    
28,216
    
58,188
    
48,742
  
Professional fees
    
32,498
    
8,629
    
42,776
    
13,999
  
Regulatory and compliance fees
    
8,470
    
24,413
    
15,008
    
31,814
  
Salaries and benefits
    
19,323
    
2,511
    
38,261
    
16,974
  
Shareholder and investor relations
    
24,561
    
16,429
    
48,063
    
20,756
  
Stock-based compensation
    
-
    
30,578
    
486,100
    
61,156
  
Travel and entertainment
    
17,278
    
13,478
    
35,292
    
37,679
  
                           
Loss from operations
    
(143,625
)
  
(139,622
)
  
(754,180
)
  
(261,790
)
                           
Other Income and Expenses
                          
Interest income
    
11,251
    
5,850
    
20,415
    
18,422
  
Due diligence review of Cia de Minera Mexicana de Avino, S.A. de C.V
    
(91,900
)
  
(76,688
)
  
(172,467
)
  
(163,099
)
                           
LOSS FOR THE PERIOD
    
(224,274
)
  
(210,460
)
  
(906,232
)
  
(406,467
)
                           
DEFICIT, beginning of period
    
(15,234,889
)
  
(13,636,607
)
  
(14,552,931
)
  
(13,440,600
)
                           
DEFICIT, end of period
    
(15,459,163
)
  
(13,847,067
)
  
(15,459,163
)
  
(13,847,067
)
                           
                           
LOSS PER SHARE
    
($0.02
)
  
($0.02
)
  
($0.08
)
  
($0.04
)
                           
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
    
10,750,152
    
10,503,525
    
10,694,756
    
10,331,400
  

 

AVINO SILVER & GOLD MINES LTD.
Interim Statements of Cash Flows
(Unaudited - Prepared by Management)
   
Three Months ended July 31,
  
Six Months ended July 31,
  
 
  
2005
  
2004
  
2005
  
2004
  
    $    
$
 
   $    
$
 
  
CASH PROVIDED BY (USED IN):
                          
                           
OPERATING ACTIVITIES
                          
Loss for the period
    
(224,274
)
  
(210,460
)
  
(906,232
)
  
(406,467
)
Items not affecting cash:
                          
- Amortization
    
190
    
303
    
492
    
605
  
- Stock-based compensation
    
-
    
30,578
    
486,100
    
61,156
  
                           
     
(224,084
)
  
(179,579
)
  
(419,640
)
  
(344,706
)
                           
Net change in non-cash working capital items:
                          
- Accounts receivable
    
7,053
    
14,653
    
21,689
    
15,982
  
- Prepaid expenses and deposits
    
113,177
    
-
    
11,673
    
-
  
- Due from related parties
    
(26,164
)
  
-
    
(26,164
)
  
-
  
- Accounts payable and accrued liabilities
    
6,346
    
(20,038
)
  
(31,051
)
  
85,432
  
- Due to related parties
    
(103,330
)
  
(6,125
)
  
(133,394
)
  
3,349
  
                           
 
    
(227,002
)
  
(191,089
)
  
(576,887
)
  
(239,943
)
                           
FINANCING ACTIVITIES
                          
Shares issued for cash
    
66,301
    
9,660
    
327,105
    
423,590
  
                           
 
    
66,301
    
9,660
    
327,105
    
423,590
  
                           
INVESTING ACTIVITIES
                          
Reclamation bond
    
-
    
-
    
(3,000.00
)
  
-
  
Mineral property expenditures
    
(27,820
)
  
(7,387
)
  
(29,663
)
  
(62,424
)
                           
 
    
(27,820
)
  
(7,387
)
  
(32,663
)
  
(62,424
)
                           
Increase (decrease) in cash and cash equivalents
    
(188,521
)
  
(188,816
)
  
(282,445
)
  
121,223
  
                           
CASH AND CASH EQUIVALENTS
                          
Beginning of period
    
2,189,611
    
3,142,496
    
2,283,535
    
2,832,457
  
                           
CASH AND CASH EQUIVALENTS
                          
End of period
    
2,001,090
    
2,953,680
    
2,001,090
    
2,953,680
  
 
 
AVINO SILVER & GOLD MINES LTD.
Interim Notes to Financial Statements
July 31, 2005
(Unaudited - Prepared by Management)

Note 1 - Nature of Operations

Avino Silver & Gold Mines Ltd. (“Avino”) was incorporated under the laws of the Province of British Columbia. Its principal business activities include the exploration for and development of mineral properties. The Company owns interests in mineral properties in British Columbia and Yukon, Canada.

Avino is in the exploration stage of its mineral properties interests in Canada and has not yet determined whether these properties contain ore reserves which are economically recoverable.

Avino owns 49% of the issued common shares of Cia Minera Mexicana de Avino, S.A. de C.V. (“Cia Minera”) a company incorporated in Mexico. Cia Minera’s operations involve the mining of commercial ores and resource exploration and development, including the operation of a silver mine in Mexico. The silver mine has been shut down since November 2001, when operations became uneconomical.

Note 2 - Basis of Presentation

These unaudited interim financial statements have been prepared in accordance with the instructions for the preparation of such financial statements contained in the CICA Handbook Section 1751. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such instructions. These unaudited interim financial statements should be read in conjunction with the audited financial statements and accompanying notes thereto for the fiscal year ended January 31, 2005. These interim financial statements have not been reviewed by an auditor.

In the opinion of the Company’s management, all adjustments considered necessary for a fair presentation of these unaudited financial statements have been included and all such adjustments are of a normal recurring nature. Operating results for the three month period ended July 31, 2005 are not necessarily indicative of the results that can be expected for the year ended January 31, 2006.

Note 3 - Mineral Properties Interests

The following is a summary of mineral property expenditures for the six months ended July 31, 2005:

Balance, January 31, 2005
        
$
315,501
  
               
Expenditures in the period:
              
Olympic/Kelvin property:
              
Assays
  
$
1,293
        
Exploration
    
3,800
        
Geological
    
750
        
Field supply and services
    
797
        
           
6,640
  
Aumax property:
              
Exploration
    
77
        
Geological
    
250
        
           
327
  
Minto property:
              
Assays
    
4983
        
Exploration
    
10,862
        
Field supply and services
    
458
        
Geological
    
6393
        
           
22,696
  
               
Balance, July 31, 2005
        
$
345,164
  
 

AVINO SILVER & GOLD MINES LTD.
Interim Notes to Financial Statements
July 31, 2005
(Unaudited - Prepared by Management)

Note 4 - Investment In Cia De Minera Mexicana De Avino, S.A. De C.V.

   
2005
  
2004
  
               
Cia de Minera Mexicana de Avino, S.A. de C.V. (”Cia de Minera”)
  
$
1
  
$
1
  
               

Avino owns 49% of the issued common shares of Cia de Minera, a private company incorporated in Mexico. Cia de Minera is involved in the mining of commercial ores and resource exploration and development, including the operation of a silver mine in the Province of Durango, Mexico. Cia de Minera ceased operations in fiscal 2002 when the operations of its silver mine became uneconomical.

During the year ended January 31, 2005 Avino signed an agreement to purchase the remaining 51% of the issued common shares of Cia de Minera by issuing 4,000,000 of its common shares. The proposed acquisition remains subject to shareholder and regulatory approval and will be recorded as a business combination when shareholder and regulatory approval has been obtained.

During the period ended July 31, 2005 Avino has incurred due diligence costs of $172,467 which is comprised of $57,010 for assaying, engineering, and metallurgical services and $115,457 for advances to Cia de Minera on account of its operations.
 
Note 5 - Share Capital

(a) Authorized: Unlimited common shares without par value

(b) Issued:

   
2005
  
2004
  
 
  
Shares
  
Amount
  
Shares
  
Amount
  
                   
Balance, January 31
    
10,521,775
  
$
17,030,084
    
9,869,775
  
$
16,574,340
  
                           
Shares issued for cash:
                          
- exercise of stock options
   
-
    
-
    
137,000
    
158,350
  
- exercise of warrants
    
176,380
    
260,804
    
491,500
    
255,580
  
                           
Balance, April 30
    
10,698,155
    
17,290,888
    
10,498,275
    
16,981,920
  
                           
Shares issued for cash:
                          
-exercise of warrants
    
126,920
    
66,301
    
10,500
    
5,460
  
Prior year share subscriptions received
    
-
    
-
    
-
    
10,550
  
                           
Balance, July 31
    
10,825,075
  
$
17,357,189
    
10,508,775
  
$
16,997,930
  
 

AVINO SILVER & GOLD MINES LTD.
Interim Notes to Financial Statements
July 31, 2005
(Unaudited - Prepared by Management)
 
Note 5 - Share Capital (continued)

(c) Share Purchase Warrants:

   
Underlying Shares
  
Weighted Average
Exercise Price
  
           
Warrants outstanding, January 31, 2005
    
2,433,250
  
$
1.44
  
Exercised
    
(176,380
)
$
1.48
  
 
Warrants outstanding, April 30, 2005
    
2,256,870
  
$
1.44
  
Exercised
    
(126,920
)
$
0.52
  
 
Warrants outstanding, July 31, 2005
    
2,129,950
  
$
1.49
  

The following share purchase warrants were outstanding as at July 31, 2005:

Warrants Outstanding
Expiry Date
Exercise Price
     
174,500
August 14, 2005
$0.52
1,955,450
December 19, 2005
$1.58

(d)  Stock Options:

During the three months ended July 31, 2005, there were no stock options granted by the Company.

A summary of the stock options granted and exercised at the period ended July 31, 2005 is as follows:

   
Underlying Shares
  
Weighted Average Exercise Price
  
           
Stock options outstanding, January 31, 2005
    
450,000
  
$
1.09
  
Granted
    
572,500
  
$
1.35
  
               
Stock options outstanding, April 30, 2005
    
1,022,500
  
$
1.24
  
Granted / Exercised
    
-
    
-
  
               
Stock options outstanding, July 31, 2005
    
1,022,500
  
$
1.24
  

The following stock options were outstanding as at April 30, 2005:

Stock Options Outstanding
  
Expiry Date
  
Exercise Price
  
           
80,000
    
October 23, 2007
  
$
0.58
  
370,000
    
October 21, 2008
  
$
1.20
  
572,500
    
April 5, 2010
  
$
1.35
  



AVINO SILVER & GOLD MINES LTD.
Interim Notes to Financial Statements
July 31, 2005
(Unaudited - Prepared by Management)
 
Note 6 - Related Party Transactions

Balances and transactions with related parties not disclosed elsewhere in these financial statements are as follows:

(a) During the period the company paid, or made provision for the future payment of the following amounts to related parties:

i) $91,185 for administrative expenses (rent, salaries, office supplies and other miscellaneous disbursements) to a private company beneficially owned by the Company and a number of other public companies related through common directors;

ii)  $30,000 to a private company controlled by a Director for management fees;

iii) $15,000 to a private company controlled by a director of a related company for consulting fees.

iv) $2,000 to a private company controlled by a director of a related company for consulting fees.

(b) Amounts due from related parties consist of $26,164 from a private company referred to in (a)(i) above.

(c) Amounts due to related parties consist of $8,250 to a public company with common directors.

The amounts due from and due to related parties are non-interest bearing, non-secured and due on demand.
 
Note 7 - Subsequent Events

Subsequent to the period end, 174,500 share purchase warrants were exercised at a price of $0.52.

The Company has entered into a 12 month Investor Relations Agreement with Investor Relations Services Group John Mullen & Partners (“IRS”) to provide investor relations services in Europe. In consideration for the services rendered, the Company has agreed to pay IRS fees totaling $18,000 plus expenses.

Note 8 - Comparative Figures

Certain fiscal 2004 comparative figures have been reclassified to conform to the financial statement presentation adopted for 2005.