- Avino Silver And Gold Mines Reports a 27% increase in silver production and a 47% increase in gold production.
- The company also finalized a deal to buy a third of junior gold mining company Bralorne Gold Mines for C$2.66 million.
- The first update confirms my thesis that the company can rapidly increase its production, making it an excellent stock for silver bulls.
- The second update shows the company is looking for opportunities elsewhere and it could be getting ready to buy Bralorne Gold Mines--speculators may want to consider taking a position.
- I remain bullish on the stock and encourage silver bulls to buy the shares on weakness.
Avino Silver and Gold Mines (NYSEMKT:ASM) recently reported two pieces of news that are significant for shareholders. The first is that the company continues to increase production. Silver production at the company's San Gonzalo Mine on its Avino Property rose 27% to 223,000 ounces. Gold production rose 47%, and silver equivalent production rose 32% to 296,000 ounces. For a company valued at just $77 million this is a lot of production, which indicates that the shares have significant upside in a rising silver market. Also, unlike many of its peers the company has been generating a profit, giving it cash-flow to fund deals the Bralorne deal.
The company also announced that it closed its acquisition of a third of Bralorne Gold Mines (OTCQX:BPMSF), which is a tiny company, although it can potentially have a big future. The company has a 3+ million ounce gold deposit in Vancouver. It is high risk, however, because production costs will be high once the mine goes into production. But if you are bullish on the gold price, as apparently Avino's management is, this looks like an intriguing speculation stock. Ultimately Avino is moving forward as I expected. Management is increasing production, and given the company's history of profitability despite a low silver price I expect that it will report a solid Q2 profit.
What was surprising was the second piece of news. While this is a small bet--C$2.66 million--it shows that the company has a strong enough balance sheet to look for opportunities elsewhere. Management may want to buy the entire company in the long term assuming Bralorne's management team can get the mine into production. While this is a risky bet the company can afford to make it, and in a rising gold price environment it can pay off. Investors should remain bullish, although expect the stock to be volatile and buy on weakness.
Editor's Note: This article covers a stock trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.