Unassociated Document

The following discussion and analysis of the operations, results and financial position of Avino Silver & Gold Ltd. (the "Company" or "Avino") should be read in conjunction with the Company's unaudited interim consolidated financial statements for the six month period ended June 30, 2009 and the audited financial statements for the year ended December 31, 2008.

This Management' Discussion and Analysis ("MD&A") is dated August 26, 2009 and discloses specified information up to that date. Avino is classified as a "venture issuer" for the purposes of National Instrument 51-102. The Company's financial statements are prepared in accordance with Generally Accepted Accounting Principles ("GAAP") in Canada. Unless otherwise cited, references to dollar amounts are Canadian dollars.

Throughout this report we refer to "Avino", the "Company", "we", "us", "our" or "its". All these terms are used in respect of Avino Silver & Gold Mines Ltd. We recommend that readers consult the "Cautionary Statement" on the last page of this report. Additional information relating to the Company is available on SEDAR at www.sedar.com.

Founded in 1968, Avino's principal business activities are the exploration and development of mineral properties. The Company holds an 99.28% equity interest in Compania Minera Mexicana de Avino, S.A. de C.V. ("Cia Minera"), a Mexican corporation which owns the Avino Silver Mine, located in the state of Durango, Mexico ("Avino Mine"). The Company also holds mineral claims in the Yukon and British Columbia, Canada.

Avino is a reporting issuer in British Columbia and Alberta, a foreign issuer with the Securities & Exchange Commission and trades on the TSX Venture Exchange under the symbol ASM, on the OTCBB under the symbol ASGMF and on the Berlin & Frankfurt Stock Exchanges under the symbol GV6. In November 2006, the Company's listing on the TSX Ventures Exchange was elevated to Tier 1 status. In January 2008, Avino announced the change of its financial year end from January 31 to December 31. The change was completed in order to align the Company's financial statements reporting requirement with its Mexico subsidiaries which operate on a calendar fiscal year.

Currently, Avino is planning to explore new areas of the property, expand upon discoveries made in 2008 and follow up on the 2008 mapping and sampling. At present, trenching and 9,000 metres (29,520 feet) of new drilling have been proposed for up to 15 areas of the property. The proposals are now under review by management.

In addition, the company is planning to conduct a bulk sampling program to firm up the grade and the metallurgy of the newly discovered San Gonzalo deposit. The bulk sample program will also provide the needed concentrate material for further evaluation by the various smelters and trading companies and for on-site processing if deemed feasible.

Applications for permits to the various regulatory agencies were submitted early in the year. Positive response was obtained in each case and we are in a position to proceed with the bulk sampling program once the reclamation plan has been submitted and approved. Cost of the program is currently being finalized and we are also working on completing the terms for the buyer of our bulk sample concentrate.

Some refurbishing work in the mill has already been done in anticipation that the bulk sample program will proceed. This work includes the reclaim water system, the fine ore bin, its discharge chutes and the take away conveyor. The process water tank has been cleaned and ready for service. The ball mill has been serviced and ready for dynamic testing when the power upgrade has been performed. Mill discharge pumps, cyclone and a bank of flotation cells have been refurbished. Additional work is required in the dewatering section of the plant. The plan is to thickened and vacuum filter the concentrate to produce a concentrate with no more than 12% moisture for bulk shipping in dump trucks.

Avino has operated continuously in Mexico since 1968, a period in which the Avino Mine produced for 27 years. During our long history, we have weathered a number of difficult economies. While the current market clearly presents challenges, our cash position of approximately C$3.3 million puts us in a strong position for continued growth and our goal of bringing the mine back into production. We will continue to invest aggressively in exploration and development.

We believe Avino is uniquely positioned among the many emerging producers in Mexico. Through our majority ownership in the Avino Mine, recovery plant and surrounding property holdings may provide our shareholders to leverage in the strong metals markets that we believe lay ahead. We remain committed to returning to profitable mining operations and are very excited about the opportunity to build this company into a significant producer of precious and base metals. We adhere to the highest standards of environmental responsibility, to supporting the local community with our highest standards of business practices and to the long term success of our shareholders.

In November, 2008, the Company entered into an option agreement with Mega Silver Inc. ("Mega Silver"), whereby Mega Silver can earn the exclusive right and option to acquire a 100% title and interest in the Eagle Property located in the historic Keno Hill silver district, Yukon Territory. This area has produced over 200 million ounces of silver. The property area is located roughly 38 kilometers northeast of Mayo and 350 kilometers due north of the capital of Whitehorse.

The Eagle Property includes historic surface trenches that expose a section of the Eagle Vein, a strong transverse vein-fault hosted in Keno Hill Quartzite. The Eagle Vein varies from 0.6 to 4.9 metres wide with mineralized lenses of galena, tetrahedrite and sphalerite. Yukon Government files report that a total of 33 holes totaling 3,075.5 metres have been drilled along 300 metres of vein strike on the property in two programs (1964 and 1978/79). The best intercepts are reported in the following table.

Year	Operator	Reported Structure	Reported Intercept (m)	Silver g/t	Lead %	Zinc %
1964	Jersey Yukon Mines Ltd.	Branch Vein	2.1	1,885.7	12.8	4.2
		Main Vein (parallel intercepts)	0.15	7,624.9	1.2
			0.4	682.3	11.6
1978/79	Teck Corporation	Main Vein (DDH JB3)	1.5	366.6	5.4	6.8

Soil sampling conducted in 1971 by United Keno Hill Mines Ltd. outlined a strong 300 metre long Pb-Ag anomaly across the southern boundary of Mega Silver's adjoining Man claim that apparently represents the untested northeast extension of the Eagle Vein. The core of the soil anomaly measures roughly 200 by 100 metres and contains peak values of 2,280 ppm lead and 10.8 ppm silver (UKHM 1973. Assessment Report #060116).

After earning a 75% interest, Mega Silver may either elect to form a Joint Venture with Avino, or earn an additional 25% interest, whereby Mega Silver must commence Commercial Production and upon Mega Silver commencing Commercial Production it will have been deemed to have acquired 25% interest free and clear of all Encumbrances with no further action required by it.

If the Production Decision is made by Mega Silver at any time from the fifth anniversary of November 17, 2008, the Exchange Approval Date until the date that is six months following the fifth anniversary of November 17, 2008, Mega Silver may decide to proceed to Commercial Production (the "Production Decision"), Mega Silver shall

Operating and administrative expenses were $142,049 for the three month period ended June 30, 2009 as compared with of $222,920 for the three months ended June 30, 2008, a decrease of $80,871. Generally all operating and administrative expenses were lower including decreases of $44,982 in investor relations, $8,468 in general exploration, $19,031 in professional fees, $7,654 in salaries, $2,936 in travel and promotion, and $14,107 in office and miscellaneous. These decreases were offset by increases of $2,813 in regulatory and compliance fees and $13,200 in stock-based compensation. The lower expense in investor relations is due to a reduction in research reports and publications. The decline in travel expenses is a result of attending fewer trade shows. Office and salaries are lower as compared to the prior due to lower costs for the services provided by Oniva. During the prior year, professional fees were higher due to additional audit fees recorded which were related to the 2007 fiscal year end audit.

The loss for the three month period ended June 30, 2009 was $118,778 compared with a loss of $300,847 for the three month period ended June 30, 2008, a difference of $182,069. The difference is as a result of the decrease in operating and administrative expenses of $80,871, as discussed above, and an increase of $123,743 on foreign exchange. During the period, there was a gain on foreign exchange of $17,357 as compared to a loss in 2008 of $106,386. These decreases were offset by a decrease in interest income of $22,545. Interest income was $5,914 as compared to $28,459 during the same period in the prior year. This is as a result of a lower cash balance and significantly lower interest rates at the financial institutions.

Operating and administrative expenses were $274,946 for the six month period ended June 30, 2009 as compared with of $815,136 for the six months ended June 30, 2008, a decrease of $540,190. The primary difference is attributable to decreases of $382,800 in stock-based compensation and $87,726 in investor relations. Other decreases include $13,005 in travel and promotion, $9,618 in general exploration, $20,590 in office and miscellaneous, $8,023 in professional fees and $12,952 in salaries. The significant decrease in stock-based compensation was resulting from 600,000 stock options granted in the prior year. The lower expense in investor relations is due to a reduction in research reports and publications. The decline in travel expenses is a result of attending fewer trade shows. The only cost increase in the current period was in regulatory and compliance fees, which was slightly higher over the prior year by $1,229.

The loss for the six month period ended June 30, 2009 was $229,316 compared with a loss of $834,565 for the six month period ended June 30, 2008, a difference of $605,249. In addition to the decrease of $540,190 in operating and administrative expenses, there was a gain of $124,599 on foreign exchange attributing to this difference. These were offset by a decline of $59,540 in interest income as the interest income for the six month period was $26,186 as compared to $85,726 in the prior year.

Period ended	2009Jun 30 Q2	2009Mar 31 Q1	2008 Dec 31 Q4	2008 Sept 30 Q3	2008Jun 30 Q2	2008 Mar 31 Q1	2007 Dec 31 Q4	2007 Oct. 31 Q3
	$	$	$	$	$	$	$	$
Gain (Loss) forthe period	(118,778)	(110,538)	(869,144)	164,833)	(300,847)	(533,718)	(168,616)	(232,414)
Loss per share	(0.01	(0.01)	(0.04)	0.01	(0.01)	(0.03)	(0.01)	(0.01)
Total assets	19,934,900	20,010,900	20,126,230	20,820,081	20,726,621	21,106,036	21,190,940	22,600,515

The quarterly losses were previously influenced by site assessment costs pertaining to Cia Minera including feasibility studies and associated overhead costs pertaining to traveling to Mexico on numerous occasions. These costs have been partially replaced with general exploration and administrative costs associated with expanding exploration activities on Cia Minera's mineral properties. After acquiring control of Cia Minera in July of 2006, the costs associated with Cia Minera are consolidated with the

Company and exploration expenditures are capitalized, thereby not impacting the loss for the period. Since the $10 million private placement that took place in 2006, there have been consistent efforts on shareholder and investor relations' activities and company promotion. Stock-based compensation, future income tax and foreign exchange variances are items that cause significant swings in the losses between the quarters. The lower loss in the second quarter of fiscal 2009 was resulting from the reduction in activities in investor relations along with no stock-based compensation recognized in the period.

During the six month period ended June 30, 2009, the Company incurred expenditures that increased its mineral property carrying value on its Mexican properties by $164,795. There was very little activity on its British Columbia properties. At this time the Company has no operating revenues but has earned interest income of $26,186 during the first six months of the fiscal year. The Company will continue to have significant cash on hand to earn interest income throughout the current fiscal year. However, the Company's cash and cash equivalents will continue to be drawn down by operations and there has been downward pressure on interest rates as well so interest income is expected to decrease as the current year progresses.

At June 30, 2009, the Company had working capital of $3,007,476 and cash and cash equivalents of $3,337,678. The Company is continuing its exploration program and refurbishing of its mine facility for a bulk sampling program in Mexico. By the end of the last fiscal year, the Company had incurred approximately $1,000,000 of the annual drilling cost for Mexico which was estimated at $1,200,000. The annual cost for the bulk sampling program was estimated at $2,000,000 for capital costs and $400,000 for operating costs. The Company has no significant plans for the British Columbia properties during the remainder of the fiscal year. The Company has sufficient cash on hand to finance the planned exploration work on its mineral properties and maintain administrative operations through December 31, 2009.

The Company continues in the exploration stage until such time that the Avino mine is re-opened. The investment in and expenditures for the mineral properties comprise most of the Company's assets along with a lesser asset amount in regards to the Avino mine facilities and equipment. The recoverability of amounts shown for its mineral property interest and related deferred costs and the Company's ability to continue as a going concern is dependent upon the continued support from its directors, the discovery of economically recoverable reserves and the ability of the Company to obtain the financing necessary to complete development and achieve profitable operations in the future. The outcome of these matters cannot be predicted at this time.

Mineral exploration and development is capital extensive, and in order to re-commence operations at the Avino Mine, the Company may be obliged to raise new equity capital in the future. There is no assurance that the Company will be successful in raising additional new equity capital.

$74,401 (June 30, 2008 - $103,876) for administrative expenses (rent, salaries, office supplies and other miscellaneous disbursements) to Oniva International Services Corp ("Oniva"), a private company beneficially owned by the Company and a number of other public companies related through common directors;

The amounts due to related parties consist of $146,024 (December 31, 2008 - $145,011) due to Oniva; $16,500 (December 31, 2008 - $9,000) due to Directors for Directors fees; $Nil (December 31, 2008 -$16,789) due to a Director for geological services; and $399 (December 31, 2008 - $Nil) due to a Director for expense reimbursement.

During the six month period ended June 30, 2009, $48,000 was paid to the President for services as director and officer of the Company; $6,480 was paid to the Corporate Secretary for services as an officer of the Company; and $9,900 was paid to the Chief Financial Officer for services as an officer of the Company.

Effective January 1, 2009, the Company adopted the following new accounting standards issued by the Canadian Institute of Chartered Accountants ("CICA"). Adoption of these requirements did not have a significant impact. For details of the specific accounting changes, refer to Note 2 (iii) of the Company's Interim Consolidated Financial Statements for the six months ended June 30, 2009:

Recent Canadian accounting pronouncements that have been issued but are not yet effective, and which may affect the Company's financial reporting are summarized below. For details of the specific accounting changes, refer to Note 2 (iv) of the Company's Interim Consolidated Financial Statements for the six months ended June 30, 2009:

In addition to these changes, in February 2008 the CICA announced that Canadian GAAP for publicly accountable enterprises will be replaced by International Financial Reporting Standards ("IFRS") for the interim and annual financial statements for fiscal years beginning on or after January 1, 2011. The standard also requires that comparative figures for 2010 be based on IFRS.

The Company is developing an IFRS conversion plan which will include an in-depth analysis of the IFRS standards, with priority being placed on those that have been identified as possibly having a significant impact. Analysis will include identifying the differences between IFRS and the Company's accounting policies and assessing the impact of the difference. Changes in accounting policies are likely to impact the Company's consolidated financial statements.

Expiry Date	Exercise Price Per Share			Number of Shares Remaining Subject to Options (Jun 30/09)		Number of Shares Remaining Subject to Options (August 26/09)
April 5, 2010	$	0.75	*		247,000		247,000
September 26, 2010	$	0.75	*		52,500		52,500
April 26, 2011	$	3.99			930,000		50,000
April 26, 2011	$	0.75	*		-		865,000
February 27, 2013	$	1.65			450,000		20,000
February 27, 2013	$	0.75	*		-		410,000
					1,679,500		1,644,500

These options were re-priced to $0.75 on August 25, 2009. The original prices for these options were granted at various prices of $1.35, $1.65 and $3.99. Disinterested shareholders' approval was obtained on June 26, 2009 for the re-pricing of the options to insiders. The foregoing is subject to acceptance of the TSX Venture Exchange.

The Company entered into a cost sharing agreement dated October 1, 1997, and amended November 1, 2003 to reimburse Oniva for a percentage of its overhead expenses, to reimburse 100% of its out-of-pocket expenses incurred on behalf of the Company, and to pay a percentage fee based on the total overhead and corporate expenses. Either party may terminate the agreement with one-month notice. Transactions and balances with Oniva, which is a related company, are disclosed in the transactions with related parties section.

The Chief Executive Officer and the Chief Financial Officer of the Company are responsible for evaluating the effectiveness of the Company's disclosure controls and procedures and have concluded, based on our evaluation, that they are effective as at June 30, 2009 to ensure that information required to be disclosed in reports filed or submitted under Canadian securities legislation is recorded, processed, summarized and reported within the time period specified in those rules and regulations.

The Chief Executive Officer and the Chief Financial Officer of the Company are responsible for designing internal controls over financial reporting, or causing them to be designed under their supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with Canadian GAAP. The Company assessed the design of the internal controls over financial reporting as at June 30, 2009 and concluded that there are material weaknesses in internal controls over financial reporting, which are as follows:

The weaknesses and their related risks are not uncommon in a company the size of the Company because of limitations in size and number of staff. The Company believes it has taken steps to mitigate these risks by increasing financial reporting personnel, consulting outside advisors and involving the Audit Committee and Board of Directors in reviews and consultations where necessary. However, these weaknesses in internal controls over financial reporting could result in a more than remote likelihood that a material misstatement would not be prevented or detected. The Company believes that it must take additional steps to further mitigate these risks by consulting outside advisors on a more regular and timely basis and continuing to do periodic on-site inspections of the accounting records in Mexico.

There have been no changes in the Company's internal controls over financial reporting that occurred during the quarter ended June 30, 2009 that have materially affected, or are reasonably likely to materially affect, the Company's internal controls over financial reporting.

This MD&A is based on a review of the Company's operations, financial position and plans for the future based on facts and circumstances as of August 26, 2009. Except for historical information or statements of fact relating to the Company, this document contains "forward-looking statements" within the meaning of applicable Canadian securities regulations. There can be no assurance that such statements will prove to be accurate, and future events and actual results could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from our expectations are disclosed in the Company's documents filed from time to time via SEDAR with the Canadian regulatory agencies to whose policies we are bound. Forward-looking statements are based on the estimates and opinions of management on the date the statements are made, and we do not undertake any obligation to update forward-looking statements should conditions or our estimates or opinions change. These statements involve known and unknown risks, uncertainties, and other factor that may cause the Company's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievement expressed or implied by these forward-looking statements.

Expiry Date	Exercise Price Per Share		Number of Underlying Shares (June 30 /09)		Number of Underlying Shares (August 26/09)
March 20, 20101	$	2.50		2,498,750		2,498,750
March 20, 20101				2,498,750		2,498,750