Avino Silver Navigates Rising Development Costs to Drive Long-Term Output

2026-11-08 companies

Vancouver, Sunday, 8 November 2026.
Avino boosted revenue by 59% in the third quarter of 2026, driven by higher realized silver prices, while advancing development at its Mexican operations toward full production mining.

Third-Quarter Momentum Amidst Rising Cost Pressures

Avino Silver & Gold Mines Ltd. (TSX: ASM, NYSE American: ASM) reported a 59% year-over-year revenue increase to $33.4 million in Q3 2026, driven by a 66% surge in the average realized silver price to $63.33 per ounce [1][5]. The company’s operational performance was buoyed by a 15% year-over-year increase in silver production to 303,189 ounces, despite a 10% decline in gold output to 1,732 ounces and an 8% drop in copper production to 1,202,821 pounds [1][5]. While gross profit margins reached 44%—or 49% on a cash basis excluding depreciation and depletion—the strengthening Mexican peso against the U.S. dollar exerted pressure on margins, with the peso averaging 7% to 10% stronger in Q3 2026 compared to Q3 2025 [1]. Operating cash flow surged by 52% year-over-year to $12.7 million, while free cash flow totaled $6 million [1][5].

La Preciosa’s Transition to Production Mining Faces Cost Challenges

The La Preciosa project in Durango, Mexico, remains a focal point of Avino’s growth strategy, with mining rates exceeding 450 tons per day in Q3 2026 and over 3,000 meters of underground development completed year-to-date [1][5]. However, the project’s transition to production mining has been accompanied by elevated development costs, which weighed on the company’s net income of $6.1 million for the quarter—a decline from $7.7 million in Q3 2025 [4][6]. Management noted that grades at La Preciosa have fallen short of initial plans, though recent infill drilling has revealed wider and higher-grade vein structures at the La Gloria and Abundancia veins, suggesting potential upside once integrated into updated resource models [5][8]. Avino’s updated 2026 production guidance now targets 2.2 million to 2.5 million silver-equivalent ounces, with cash costs and all-in sustaining costs (AISC) per ounce set at midpoints of $23 and $31, respectively [1][5].

Strategic Expansion Plans and Shareholder Sentiment

Avino’s long-term growth trajectory hinges on its ability to scale production at La Preciosa while maintaining operational discipline. The company anticipates a mining rate of 500 tons per day at La Preciosa, with infrastructure capable of scaling to 1,000 tons per day through the addition of larger circuits [5]. Mechanical improvements and new equipment, scheduled for commissioning in Q1 2027, are expected to enhance recovery rates and support the transition to production mining [5]. Meanwhile, Avino’s balance sheet remains robust, with $138 million in cash and $142 million in working capital as of September 30, 2026, following the extinguishment of an $8.75 million royalty payment [5][8]. Despite these operational advancements, Avino’s stock has underperformed in 2026, with shareholders down 20.8% including dividends year-to-date as of November 5, 2026 [4]. Analysts remain divided, with 100% of tracked analysts issuing ‘BUY’ ratings and an average price target of $10.51, representing a 55.76% upside from the current price of $4.65 [3].

Market Signals and Future Outlook

Avino’s operational updates arrive at a time of heightened investor scrutiny, with the company’s performance serving as a bellwether for mid-tier precious metals producers navigating rising costs and volatile commodity prices [7]. High-grade silver drilling results at La Preciosa, combined with strong precious-metal prices, have drawn additional market attention, though execution risks remain tied to permitting, community engagement, and the successful ramp-up of production mining [7][8]. Looking ahead, Avino expects to complete its 15,000-meter exploration program by year-end 2026 and integrate new drilling data into an updated resource and reserve model in 2027 [5][8]. The company’s disciplined approach to capital allocation and self-funded growth—supported by a strong balance sheet—positions it to capitalize on the long-term demand for silver and gold as safe-haven assets, though near-term cost pressures may continue to weigh on profitability [1][5].

Sources

Silver mining Precious metals