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Summary

  • Avino just announced that it has restarted production at its namesake mine.
  • This is on schedule, and in line with my investment thesis last September.
  • This may be a catalyst although it was expected, and weak gold and silver prices could continue to put pressure on the shares short-term.

Avino Silver and Gold Mines (NYSEMKT:ASM) just announced that it has restarted production at its namesake mine after a 13 year hiatus. The mine stopped producing at the turn of the century due to low precious metal prices; however, over the past couple of years management has been working towards bringing the mine back into production.

This mine has the potential to produce over 2 million ounces of silver per year and if my September, 2013 calculations are correct, the mine is profitable at the current silver price with substantial leverage to the upside should the silver bear market end. This will bring the company's production to over 3 million ounces, which is substantial for a $65 million company. For instance this is half of Fortuna Silver's (NYSE:FSM) production but that company's valuation is 10 times higher.

This announcement could be the catalyst to send Avino higher even after a 75%+ gain for the year thus far. However, investors should be wary that the company does plan on selling stock onto the market in order to raise capital. Also the gold and silver markets have been weak and a lot of investors have a lot of profits in this name. So there are several things that could keep the price down in the near term, but any weakness should be exploited by gold and silver bulls and purchased aggressively.

Editor's Note: This article covers one or more stocks 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.

Source: Update: Avino Silver & Gold Mines Restarts Production At Its Namesake Mine