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EXPLORATION AND EVALUATION ASSETS | 3 Months Ended
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Mar. 31, 2022
Exploration And Evaluation Assets |
8. | EXPLORATION AND EVALUATION ASSETS
The Company has accumulated the following acquisition, exploration and evaluation costs which are not subject to depletion:
|  | Avino, Mexico |  |  | La Preciosa, Mexico |  |  | British Columbia & Yukon, Canada |  |  | Total |
Balance, January 1, 2021 |  | $ | 10,051 |  |  | $ | - |  |  | $ | 1 |  |  | $ | 10,052 |
Costs incurred during 2021: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Drilling and exploration |  |  | 1,047 |  |  |  | - |  |  |  | - |  |  |  | 1,047 |
Assessments and taxes |  |  | 68 |  |  |  | - |  |  |  | - |  |  |  | 68 |
Effect of movements in exchange rates |  |  | 3 |  |  |  | - |  |  |  | - |  |  |  | 3 |
Option income |  |  | (117 | ) |  |  | - |  |  |  | - |  |  |  | (117 | )
Balance, December 31, 2021 |  | $ | 11,052 |  |  | $ | - |  |  | $ | 1 |  |  | $ | 11,053 |
Costs incurred during 2022: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Acquisition costs - Note 4 |  |  | - |  |  |  | 33,449 |  |  |  | - |  |  |  | 33,449 |
Drilling and exploration |  |  | 123 |  |  |  | - |  |  |  | - |  |  |  | 123 |
Assessments and taxes |  |  | 71 |  |  |  | - |  |  |  | - |  |  |  | 71 |
Effect of movements in exchange rates |  |  | 14 |  |  |  | - |  |  |  | - |  |  |  | 14 |
Option income |  |  | (25 | ) |  |  | - |  |  |  | - |  |  |  | (25 | )
Balance, March 31, 2022 |  | $ | 11,235 |  |  | $ | 33,449 |  |  | $ | 1 |  |  | $ | 44,685 |
Additional information on the Company’s exploration and evaluation properties by region is as follows:
| (a) | Avino, Mexico
The Company’s subsidiary Avino Mexico owns 42 mineral claims and leases four mineral claims in the state of Durango, Mexico. The Company’s mineral claims in Mexico are divided into the following four groups:
| (i) | Avino mine area property
The Avino mine area property is situated around the towns of Panuco de Coronado and San Jose de Avino and surrounding the historic Avino mine site. There are four exploration concessions covering 154.4 hectares, 24 exploitation concessions covering 1,284.7 hectares, and one leased exploitation concession covering 98.83 hectares. Within the Avino mine site area is the Company’s San Gonzalo Mine, which achieved production at levels intended by management as of October 1, 2012, and on this date accumulated exploration and evaluation costs were transferred to mining properties.
| (ii) | Gomez Palacio/Ana Maria property
The Ana Maria property is located near the town of Gomez Palacio, and consists of nine exploration concessions covering 2,549 hectares, and is also known as the Ana Maria property. Option Agreement – Silver Wolf Exploration Ltd. (formerly Gray Rock Resources Ltd.) (“Silver Wolf”) During the three months ended March 31, 2022, the Company was informed that Silver Wolf received TSX Venture Exchange approval on the previously-announced entrance into an option agreement to grant Silver Wolf the exclusive right to acquire a 100% interest in the Ana Maria and El Laberinto properties in Mexico (the “Option Agreement”). In exchange, Avino received Silver Wolf share purchase warrants to acquire 300,000 common shares of Silver Wolf at an exercise price of C$0.20 per share for a period of 36 months from the date of the TSX Venture Exchange’s final acceptance of the Option Agreement (the “Approval Date”). In order to exercise the option, Silver Wolf will:
| 1. | Issue to Avino a total of C$600 in cash or common shares of Silver Wolf as follows:
| a. | C$50 in common shares of Silver Wolf within 30 days of March 8, 2021 (received on March 26, 2021 – see Note 7 for details);
| b. | A further C$50 in cash or shares of Silver Wolf at Avino’s discretion on or before March 8, 2023 (received on March 30, 2022 – See Note 7 for details);
| c. | A further C$100 in cash or shares of Silver Wolf at Avino’s discretion on or before March 8, 2024;
| d. | A further C$200 in cash or shares of Silver Wolf at Avino’s discretion on or before March 8, 2024; and
| e. | A further C$200 in cash or shares of Silver Wolf at Avino’s discretion on or before March 8, 2025; and
| 2. | Incur a total of C$750 in exploration expenditures on the properties, as follows:
| a. | C$50 on or before March 8, 2022;
| b. | A further C$100 on or before March 8, 2023; and
| c. | A further C$600 on or before March 8, 2025.
Under the Option Agreement, all share issuances will be based on the average volume weighted trading price of Silver Wolf’s shares on the TSX Venture Exchange for the ten (10) trading days immediately preceding the date of issuance of the shares, and the shares will be subject to resale restrictions under applicable securities legislation for 4 months and a day from their date of issue. The Option Agreement between the Company and Silver Wolf is considered a related party transaction as the two companies have directors in common.
| (iii) | Santiago Papasquiaro property
The Santiago Papasquiaro property is located near the village of Santiago Papasquiaro, and consists of four exploration concessions covering 2,552.6 hectares and one exploitation concession covering 602.9 hectares.
| (iv) | Unification La Platosa properties
The Unification La Platosa properties, consisting of three leased concessions in addition to the leased concession described in note (i) above, are situated within the Avino mine area property near the towns of Panuco de Coronado and San Jose de Avino and surrounding the Avino Mine. In February 2012, the Company’s wholly-owned Mexican subsidiary entered into a new agreement with Minerales de Avino, S.A. de C.V. (“Minerales”) whereby Minerales has indirectly granted to the Company the exclusive right to explore and mine the La Platosa property known as the “ET zone”. The ET zone includes the Avino Mine, where production at levels intended by management was achieved on July 1, 2015. Under the agreement, the Company has obtained the exclusive right to explore and mine the property for an initial period of 15 years, with the option to extend the agreement for another 5 years. In consideration of the granting of these rights, the Company issued 135,189 common shares with a fair value of C$250 during the year ended December 31, 2012. The Company has agreed to pay to Minerales a royalty equal to 3.5% of net smelter returns (“NSR”). In addition, after the start of production, if the minimum monthly processing rate of the mine facilities is less than 15,000 tonnes, then the Company must pay to Minerales a minimum royalty equal to the applicable NSR royalty based on the processing at a monthly rate of 15,000 tonnes. Minerales has also granted to the Company the exclusive right to purchase a 100% interest in the property at any time during the term of the agreement (or any renewal thereof), upon payment of $8 million within 15 days of the Company’s notice of election to acquire the property. The purchase would be subject to a separate purchase agreement for the legal transfer of the property.
| (b) | La Preciosa, Mexico
During the three months ended March 31, 2022, the Company received approval for the closing of the acquisition of the La Preciosa property from Coeur Mining Inc. (“Coeur”). La Preciosa consists of 15 exploration concessions totaling 6,011 hectares located in Durango, Mexico, within the municipalities of Panuco de Coronado and Canatlan. The property is located within 20 kilometres of the Company’s current Avino mining operations. For further details on the transaction, see Note 4.
| (c) | British Columbia, Canada
| (i) | Minto and Olympic-Kelvin properties
Subsequent to March 31, 2022, the Company has granted Endurance Gold Corporation the right to acquire an option to earn 100% ownership of the former Minto Gold Mine, Olympic and Kelvin gold prospects contained within a parcel of crown grant and mineral claims (the “Olympic Claims”). Under the terms of the letter agreement, Endurance can earn a 100% interest in the Olympic Claims if they pay Avino a total cash consideration in the aggregate amount of C$100, issue up to a total of 1,500,000 common shares (“Shares”) of Endurance and incur exploration expenditures in the aggregate amount of C$300; all of which is to be incurred by December 31, 2024. In the event that Endurance earns the 100% interest, the Olympic Claims will be subject to a 2% net smelter return royalty (“NSR”), of which 1% NSR can be purchased by the Endurance for C$750 and the remaining balance of the NSR can be purchased for C$1,000. As part of the final requirement to earn its interest, Endurance agreed to grant to Avino 750,000 share purchase warrants (“Warrants”) by December 31, 2024, that offer Avino the option to purchase additional shares in the Company for a period of three years from the date of issuance. The exercise price of the Warrants will be set at a 25% premium to the 20-day VWAP share price at the issuance date. During the Option, if Endurance is successful in defining a compliant mineral resource of at least 500,000 gold-equivalent ounces on the Olympic Claims then Endurance will be obliged to pay Avino a C$1,000 discovery bonus. The Option agreement is subject to the TSX Venture Exchange acceptance, and any Shares or Warrants to be issued will be subject to a four-month hold period on issuance as per the policies of the TSX Venture Exchange.
| (ii) | Yukon, Canada
The Company has a 100% interest in 14 quartz leases located in the Mayo Mining Division of Yukon, Canada, which collectively comprise the Eagle property.

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