Falling Silver Demand Will Burden Outlook As Alternatives Gain Traction

Key Takeaways

• Shrinking silver demand, substitution, and tighter ESG regulations could pressure Avino's revenues, margins, and long-term growth prospects.
  
• Heavy regional dependence and ongoing capital requirements expose Avino to risks of operational disruption, cash flow strain, and potential shareholder dilution.
  
• Strong operational improvements, project expansion, and ongoing efficiency investments position Avino for robust profit margins and resilience amid rising silver demand in green technologies.

Catalysts

Engages in the acquisition, exploration, and advancement of mineral properties in Mexico.

• Demand for primary mined silver may decline structurally over the next decade as the global focus on decarbonization accelerates the adoption of alternative materials and recycling in clean energy and electronics markets, which would severely limit Avino's ability to grow its revenues despite its investments in production capacity.
  
• Continued progress in silver substitution and resource recirculation could shrink the addressable end-market for silver producers, undermining the long-term pricing environment and potentially driving sustained downward pressure on Avino's future sales volumes and topline revenue.
  
• As ESG regulations tighten globally, especially in mining jurisdictions such as Mexico, Avino is likely to face persistently higher compliance costs and greater scrutiny over operational practices, which could erode operating margins and negatively impact net earnings even as production expands.
  
• With its heavy reliance on a small number of mines in a single region, Avino remains acutely exposed to jurisdictional, regulatory, and operational risks; unexpected local disruptions, policy shifts, or resource depletion could sharply reduce production and threaten cash flows-heightening the risk of volatile or contracting earnings in the years ahead.
  
• The company's plans to accelerate internal growth will demand substantial ongoing capital outlays for mine development, exploration, and equipment, which may place persistent strain on free cash flow and, absent robust pricing, could force dilution through future equity raises-dampening long-term per-share earnings growth and shareholder value.

Avino Silver & Gold Mines Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more pessimistic perspective on Avino Silver & Gold Mines compared to the consensus, based on a Fair Value that aligns with the bearish cohort of analysts.
• The bearish analysts are assuming Avino Silver & Gold Mines's revenue will grow by 24.4% annually over the next 3 years.
• The bearish analysts assume that profit margins will increase from 18.1% today to 31.3% in 3 years time.
• The bearish analysts expect earnings to reach $43.9 million (and earnings per share of $0.3) by about July 2028, up from $13.1 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bearish analyst cohort, the company would need to trade at a PE ratio of 7.8x on those 2028 earnings, down from 37.8x today. This future PE is lower than the current PE for the US Metals and Mining industry at 18.5x.
• Analysts expect the number of shares outstanding to grow by 7.0% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 6.57%, as per the Simply Wall St company report.

Avino Silver & Gold Mines Future Earnings Per Share Growth

Risks

• Continued global demand growth for silver in green technologies such as solar panels, electric vehicles, and electronics may act as a tailwind for silver prices, which would enhance Avino's revenues and could support higher profit margins.
  
• Avino's recent record-breaking financial performance, including a 52 percent year-over-year surge in revenues and a gross profit margin of 56 percent, points to operational improvements and cost controls that could drive long-term net earnings higher than anticipated.
  
• The successful ramp-up of the La Preciosa project, with development on track and initial mining activities already underway, has the potential to meaningfully expand production volumes from 2026 onward, increasing future cash flows and potentially lifting earnings per share.
  
• Avino's strong balance sheet, with over $26 million in cash and no significant long-term debt, positions the company to self-fund organic growth, accelerate exploration, or withstand commodity price downturns, which could lead to more resilient net margins and reduced financial risk.
  
• Ongoing investment in technology, automation, and metallurgical improvements-with demonstrated increases in recovery rates and unit cost reductions-may support further efficiency gains, strengthening profit margins and supporting higher long-term valuations.

Valuation

• The assumed bearish price target for Avino Silver & Gold Mines is CA$2.2, which represents the lowest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of Avino Silver & Gold Mines's future earnings growth, profit margins and other risk factors from analysts on the more bearish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of CA$5.5, and the most bearish reporting a price target of just CA$2.2.
  
• In order for you to agree with the bearish analysts, you'd need to believe that by 2028, revenues will be $139.9 million, earnings will come to $43.9 million, and it would be trading on a PE ratio of 7.8x, assuming you use a discount rate of 6.6%.
  
• Given the current share price of CA$4.71, the bearish analyst price target of CA$2.2 is 114.1% lower. Despite analysts expecting the underlying buisness to improve, they seem to believe the market's expectations are too high.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.