ASM 20-F DEF-14A Report Dec. 31, 2010

AVINO SILVER & GOLD MINES LTD

20-Fs

20-F	Fiscal year ended Dec. 31, 2021
20-F	Fiscal year ended Dec. 31, 2020
20-F	Fiscal year ended Dec. 31, 2019
20-F	Fiscal year ended Dec. 31, 2018
20-F	Fiscal year ended Dec. 31, 2017
20-F	Fiscal year ended Dec. 31, 2016
20-F	Fiscal year ended Dec. 31, 2015
20-F	Fiscal year ended Dec. 31, 2014
20-F	Fiscal year ended Dec. 31, 2013
20-F	Fiscal year ended Dec. 31, 2012
20-F	Fiscal year ended Dec. 31, 2011
20-F	Fiscal year ended Dec. 31, 2010
20-F	Fiscal year ended Dec. 31, 2009

20-F 1 avino_20f.htm FORM 20-F avino_20f.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 20-F

o	REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2010

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________ to ________________

o	SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report______________

Commission File Number 0-9266

AVINO SILVER & GOLD MINES LTD.

(Exact name of Registrant as specified in its charter)

Not Applicable

(Translation of Registrant’s name into English)

British Columbia, Canada

(Jurisdiction of incorporation or organization)

570 Granville Street, Suite 900 Vancouver, British Columbia V6C 3P1, Canada

(Address of principal executive offices)

David Wolfin, 570 Granville Street, Suite 900 Vancouver, British Columbia V6C 3P1, Canada,

Tel: 604-682-3701, Email: dwolfin@avino.com

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Not Applicable		Not Applicable
Title of Each Class		Name of Each Exchange on Which Registered

Securities registered or to be registered pursuant to Section 12(g) of the Act:

Common Shares, without Par Value

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

Not Applicable

(Title of Class)

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.

There were 26,157,227 common shares, without par value, issued and outstanding as of December 31, 2010.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. o Yes x No

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. o Yes x No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes o No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). o Yes o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated File o Accelerated Filer o Non-Accelerated Filer x

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP o	International Financial Reporting Standards as issued	Other x
	by the International Accounting Standards Board o

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. Item 17 x Item 18 o

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS.)

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes o No o

		Page
Introduction		2
Currency		2
Forward-looking Statements		2
Cautionary Note to United States Investors Concerning Estimate of Measured and Indicated Mineral Resources		3
Glossary of Mining Terms		4

Part I		6

Item 1.	Identity of Directors, Senior Management and Advisors	6
Item 2.	Offer Statistics and Expected Timetable	6
Item 3.	Key Information	6
Item 4.	Information on the Company	14
Item 5.	Operating and Financial Review and Prospects	45
Item 6.	Directors, Senior Management and Employees	50
Item 7.	Major Shareholders and Related Party Transactions	60
Item 8.	Financial Information	61
Item 9.	The Offer and Listing	62
Item 10.	Additional Information	64
Item 11.	Quantitative and Qualitative Disclosures About Market Risk	70
Item 12.	Description of Securities Other than Equity Securities	70

Part II		71

Item 13.	Defaults, Dividend Arrearages and Delinquencies	71
Item 14.	Material Modifications to the Rights of Security Holders and Use of Proceeds	71
Item 15T.	Controls and Procedures	71
Item 16A.	Audit Committee Financial Expert	72
Item 16B.	Code of Ethics	72
Item 16C.	Principal Accountant Fees and Services	73
Item 16D.	Exemptions from the Listing Standards for Audit Committees	73
Item 16E.	Purchases of Equity Securities by the Issuer and Affiliated Purchasers	73
Item 16F.	Changes in Registrants Certifying Accountant	73
Item 16G.	Corporate Governanace	73

Part III		74

Item 17.	Financial Statements	74
Item 18.	Financial Statements	74
Item 19.	Exhibits	74

INTRODUCTION

In this Annual Report on Form 20-F, which we refer to as the “Annual Report”, except as otherwise indicated or as the context otherwise requires, the “Company”, “we”, “our” or “us” refers to Avino Silver & Gold Mines Ltd.

We were incorporated by Memorandum of Association under the laws of the Province of British Columbia on May 15, 1969, and on August 22, 1969, by virtue of an amalgamation with Ace Mining Company Ltd., became a public company whose common shares are registered under the United States Securities Exchange Act of 1934 , as amended, and changed its name to Avino Mines & Resources Limited. On April 12, 1995, we changed our corporate name to International Avino Mines Ltd. and affected a reverse stock split of one common share for every five common shares outstanding. On August 29, 1997, we changed our corporate name to Avino Silver & Gold Mines Ltd. to better reflect our business of exploring for and mining silver and gold. Our principal executive office is located at Suite 900, 570 Granville Street, Vancouver, British Columbia V6C 3P1, Canada.

You should rely only on the information contained in this Annual Report. We have not authorized anyone to provide you with information that is different. The information in this Annual Report may only be accurate on the date of this Annual Report or on or as at any other date provided with respect to specific information.

CURRENCY

Unless we otherwise indicate in this Annual Report, all references to “Canadian Dollars”, “CDN$” or “$” are to the lawful currency of Canada and all references to “U.S. Dollars” or “US$” are to the lawful currency of the United States.

FORWARD-LOOKING STATEMENTS

Certain statements contained in this document, other than statements of historical fact, including, without limitation, those concerning the economic outlook for the silver mining industry, expectations regarding silver prices, production, cash costs and other operating results, growth prospects and outlook of the Company’s operations, individually or in the aggregate, including the completion and commencement of commercial operations of certain of the Company’s exploration and production projects, the Company’s liquidity and capital resources and capital expenditure, and the outcome and consequences of any potential or pending litigation or regulatory proceedings, contain forward-looking statements regarding the Company’s operations, economic performance and financial condition.

These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the Company’s actual results, performance or achievements to differ materially from the anticipated results, performance or achievements expressed or implied in these forward-looking statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. Accordingly, results could differ materially from those set out in the forward-looking statements as a result of, amongst other factors, changes in economic and market conditions, success of business and operating initiatives, changes in the regulatory environment and other government actions, fluctuations in silver prices and exchange rates, political changes in Mexico, competition for resource properties and infrastructure in the mineral exploration industry, the Company’s ability to obtain additional financing, and business and operational risk management and other factors as determined in “Item 3D.: Risk Factors” and elsewhere in this annual report. These factors are not necessarily all of the important factors that could cause the Company’s actual results to differ materially from those expressed in any forward-looking statements. Other unknown or unpredictable factors could also have material adverse effects on future results.

The Company undertakes no obligation to update publicly or release any revisions to these forward-looking statements to reflect events or circumstances after the date of this annual report or to reflect the occurrence of unanticipated events. All subsequent written or oral forward-looking statements attributable to the Company or any person acting on its behalf are qualified by the cautionary statements herein.

CAUTIONARY NOTE TO UNITED STATES INVESTORS CONCERNING ESTIMATE OF MEASURED AND INDICATED MINERAL RESOURCES

In Canada, an issuer is required to provide technical information with respect to mineralization, including reserves and resources, if any, on its mineral exploration properties in accordance with Canadian requirements, which differ significantly from the requirements of the Securities and Exchange Commission (the “SEC”) applicable to registration statements and reports filed by United States companies pursuant to the United States Securities Act of 1933, as amended (the “Securities Act”), or the United States Securities Exchange Act of 1934, as amended (the “Exchange Act”). As such, information contained in this annual report concerning descriptions of mineralization under Canadian standards may not be comparable to similar information made public by United States companies subject to the reporting and disclosure requirements of the SEC. In particular, this annual report on Form 20-F includes the terms “mineral resource,” “measured mineral resource,” “indicated mineral resource” and “inferred mineral resource”. Investors are advised that these terms are defined in and required to be disclosed under Canadian rules by National Instrument 43-101 (“NI 43-101”). U.S. Investors are cautioned not to assume that any part of the mineral deposits in these categories will ever be converted into reserves. However, these terms are not defined terms under SEC Industry Guide 7 and are not permitted to be used in reports and registration statements filed with the SEC by U.S. domestic issuers. In addition, NI 43-101 permits disclosure of “contained ounces” of mineralization. In contrast, the SEC only permits issuers to report mineralization as in place tonnage and grade without reference to unit measures.

The definitions of proven and probable reserves used in NI 43-101 differ from the definitions in SEC Industry Guide 7. Under SEC Industry Guide 7 (under the Exchange Act), as interpreted by the staff of the SEC, mineralization may not be classified as a “reserve” for United States reporting purposes unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time the reserve determination is made. Among other things, all necessary permits would be required to be in hand or issuance imminent in order to classify mineralized material as reserves under the SEC standards.

United States investors are cautioned not to assume that any part or all of the mineral deposits identified as an “indicated mineral resource,” “measured mineral resource” or “inferred mineral resource” will ever be converted to reserves as defined in NI 43-101 or SEC Industry Guide 7. Further, “inferred mineral resources” have a great amount of uncertainty as to their existence and economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian securities legislation, estimates of inferred mineral resources may not form the basis of feasibility or pre-feasibility studies, or economic studies. U.S. investors are cautioned not to assume that part or all of an inferred mineral resource exists, or is economically or legally mineable.

GLOSSARY OF MINING TERMS

agglomeration	Cementing crushed or ground rock particles together into larger pieces, usually to make them easier to handle; used frequently in heap-leaching operations.
anomalous	A value, or values, in which the amplitude is statistically between that of a low contrast anomaly and a high contrast anomaly in a given data set.
anomaly	Any concentration of metal noticeably above or below the average background concentration.
assay	An analysis to determine the presence, absence or quantity of one or more components.
breccia	A rock in which angular fragments are surrounded by a mass of finer-grained material.
cretaceous	The geologic period extending from 135 million to 65 million years ago.
cubic meters or m3	A metric measurement of volume, being a cube one meter in length on each side.
cyanidation	A method of extracting exposed gold or silver grains from crushed or ground ore by dissolving it in a weak cyanide solution.
diamond drill	A rotary type of rock drill that cuts a core of rock that is recovered in long cylindrical sections, two centimeters or more in diameter.
fault	A fracture in a rock where there has been displacement of the two sides.
grade	The concentration of each ore metal in a rock sample, usually given as weight percent. Where extremely low concentrations are involved, the concentration may be given in grams per tonne (g/t or gpt) or ounces per ton (oz/t). The grade of an ore deposit is calculated, often using sophisticated statistical procedures, as an average of the grades of a very large number of samples collected from throughout the deposit.
heap leaching	A process whereby valuable metals, usually gold and silver, are leached from a heap, or pad, of crushed ore by leaching solutions percolating down through the heap and collected from a sloping, impermeable liner below the pad.
hectare or ha	An area totaling 10,000 square meters.
highly anomalous	An anomaly which is 50 to 100 times average background, i.e. it is statistically much greater in amplitude.
lp induced polarization	A method of ground geophysics surveying employing an electrical current to determine indications of mineralization, also referred to as “IP”.
laterite	A residual product of rock decay that is red in colour and has a high content in the oxides of iron and hydroxide of aluminum.
mineral reserve	The economically mineable part of a measured or indicated mineral resource demonstrated by at least a preliminary feasibility study. This study must include adequate information on mining, processing, metallurgical, economic and other relevant factors that demonstrate, at the time of the reporting, that economic extraction can be justified. A mineral reserve includes diluting materials and allowances for losses that may occur when the material is mined. Mineral resources are sub-divided in order of increasing confidence into “probable” and “proven” mineral reserves. A probable mineral reserve has a lower level of confidence than a proven mineral reserve. The term “mineral reserve” does not necessarily signify that extraction facilities are in place or operative or that all governmental approvals have been received. It does signify that there are reasonable expectations of such approvals.

mineral resource	The estimated quantity and grade of mineralization that is of potential economic merit. A resource estimate does not require specific mining, metallurgical, environmental, price and cost data, but the nature and continuity or mineralization must be understood. Mineral resources are sub-divided in order of increasing geological confidence into “inferred”, “indicated”, and “measured” categories. An inferred mineral resource has a lower level of confidence than that applied to an indicated mineral resource. An indicated mineral resource has a higher level of confidence than an inferred mineral resource, but has a lower level of confidence than a measured mineral resource. A mineral resource is a concentration or occurrence of natural, solid, inorganic or fossilized organic material in or on the earth’s crust in such form and quantity and of such grade or quality that it has reasonable prospects for economic extraction.
mineralization	Usually implies minerals of value occurring in rocks.
net smelter or NSR Royalty	Payment of a percentage of net mining profits after deducting applicable smelter charges.
NQ	Denotes a definition of drill size of approximately 2-1/2 inches.
oxide	A compound of oxygen and some other element.
ore	A natural aggregate of one or more minerals which may be mined and sold at a profit, or from which some part may be profitably separated.
outcrop	An exposure of rock at the earth’s surface.
possible or inferred ore	Term used to describe ore where the mineralization is believed to exist on the basis of some geological information, but the size, shape, grade, and tonnage are a matter of speculation.
prefeasibility study and preliminary feasibility study	Each means a comprehensive study of the viability of a mineral project that has advanced to a stage where mining method, in the case of underground mining, or the pit configuration, in the case of open pit mining, has been established, and which, if an effective method of mineral processing has been determined, includes a financial analysis based on reasonable assumptions of technical, engineering, operating and economic factors, and the evaluation of other relevant factors which are sufficient for a qualified person, acting reasonably, to determine if all or part of the mineral resource may be classified as a mineral reserve.
probable mineral reserve	The economically mineable part of an indicated, and in some circumstances, a measured mineral resource demonstrated by at least a prefeasibility study. This study must include adequate information on mining, processing, metallurgical, economic, and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified.
proven mineral reserve	The economically mineable part of a measured mineral resource demonstrated by at least a prefeasibility study. This study must include adequate information on mining, processing, metallurgical, economic, and other relevant factors that demonstrate, at the time of reporting, that economic extraction is justified. The term should be restricted to that part of the deposit where production planning is taking place and for which any variation in the estimate would not significantly affect potential economic viability.
quartz	Silica or SiO2, a common constituent of veins, especially those containing gold and silver mineralization.
tailings	Material rejected from a mill after most of the recoverable valuable minerals have been extracted.
ton	Imperial measurement of weight equivalent to 2,000 pounds.
tonne	Metric measurement of weight equivalent to 2,205 pounds (1,000 kg)
tpd	Tonnes per day.
trench	A long, narrow excavation dug through overburden, or blasted out of rock, to expose a vein or ore structure.
veins	The mineral deposits that are found filling openings in rocks created by faults or replacing rocks on either side of faults.

PART I

Item 1. Identity of Directors, Senior Management and Advisors

Not applicable.

Item 2. Offer Statistics and Expected Timetable

Not applicable.

Item 3. Key Information

A. Selected Financial Data

The selected historical financial information presented in the table below for each of the years ended December 31, 2010, December 31, 2009, December 31, 2008, December 31, 2007 ( 1 ) and January 31, 2007, is derived from the audited financial statements of the Company. The audited consolidated financial statements and notes for the years ended December 31, 2010, December 31, 2009 and December 31, 2008 are included in this Annual Report. The selected historical financial information for the eleven month period ended December 31, 2007 and the year ended January 31, 2007, presented in the table below are derived from financial statements of the Company that are not included in this Annual Report. The selected financial information presented below should be read in conjunction with the Company’s consolidated financial statements and the notes thereto (Item 17) and the Operating and Financial Review and Prospects (Item 5) included elsewhere in this Annual Report.

The selected financial data has been prepared in accordance with Canadian generally accepted accounting principles, which we refer to as “Canadian GAAP”. The consolidated financial statements included in Item 17 in this Annual Report are also prepared under Canadian GAAP. Included within these consolidated financial statements in Note 20 is a reconciliation between Canadian GAAP and United States generally accepted accounting principals, referred to as “US GAAP”, which differ, among other things, in respect to the recording of deferred exploration expenditures and stock-based compensation expense for non-service orientated equity awards.
_________________

( 1 ) In 2007, the Company changed its financial year end from January 31 to December 31. Consequently, the period ended December 31, 2007 is an 11 month fiscal year. (referred hereinafter as fiscal year end “2007-II”)

Canadian GAAP										Eleven Months Ended			Year Ended
	Years Ended December 31,									December 31,			January 31,
	2010			2009			2008			2007			2007
Summary of Operations:
Revenue	$	-		$	-		$	-		$	-		$	-
Interest Income		14,206			68,224			146,386			359,339			430,231
Expenses
Operating and administrative		1,130,679			669,178			1,575,913			868,527			4,014,734
Write-down of mineral properties		-			608,118			-			-			-
Equity losses in Cia Minera Mexicana de Avino, S.A. de C.V.		-			-			-			-			33,581
Litigation settlement		-			-			-			(759,302	)		-
Misappropriation loss		-			-			-			(86,155	)		-
Mineral property option revenue		-			-			25,000			-			-
Future income tax benefit (expense)		(332,141	)		239,562			(98,653	)		501,083			-
Net loss		(1,490,194	)		(987,759	)		(1,538,876	)		(885,863	)		(3,648,539	)
Loss per share		(0.07	)		(0.05	)		(0.07	)		(0.04	)		(0.20	)

Weighted average number of shares outstanding		21,059,008			20,584,727			20,584,727			20,584,727			18,385,007

	As at December 31,								As at January 31,
	2010		2009		2008		2007		2007
Balance Sheet Data:
Total assets	$	27,048,567	$	19,206,278	$	20,126,230	$	21,190,940	$	23,295,039
Cash and cash equivalents		9,051,456		2,829,605		3,575,241		6,342,481		11,045,106
Total liabilities		2,669,485		2,241,179		2,508,776		2,532,414		3,789,083
Shareholders’ equity		24,379,082		16,965,099		17,617,454		18,658,526		19,505,956

United States GAAP										Eleven Months Ended			Year Ended
	Years Ended December 31,									December 31,			January 31,
	2010			2009			2008			2007			2007
Summary of Operations:
Net loss per Canadian GAAP	$	(1,490,194	)	$	(987,759	)	$	(1,538,876	)	$	(885,863	)	$	(3,648,539	)
Adjustments		(396,664	)		(95,108	)		(1,851,231	)		(2,833,433	)		(10,277,556	)
Net loss per US GAAP		(1,886,858	)		(1,082,867	)		(3,390,107	)		(3,719,296	)		(13,926,095	)
Loss per share per US GAAP		(0.09	)		(0.05	)		(0.17	)		(0.18	)		(0.76	)

	As at December 31,												As at January 31,
	2010			2009			2008			2007			2007
Balance Sheet Data:
Total assets under Canadian GAAP	$	27,048,567		$	19,206,278		$	20,126,230		$	21,190,940		$	23,295,039
Adjustments		(15,302,311	)		(14,573,506	)		(14,861,524	)		(13,096,805	)		(10,747,339	)
Total assets under US GAAP		11,746,256			4,632,772			5,264,706			8,094,135			12,547,700

Total equity under Canadian GAAP		24,379,082			16,965,099			17,617,454			18,658,526			19,505,956
Adjustments		(13,276,163	)		(12,879,499	)		(12,927,955	)		(11,261,889	)		(10,747,339	)
Total equity under US GAAP		11,102,919			4,085,600			4,689,499			7,396,637			8,758,617

Exchange Rates

The following table sets forth information as to the period end, average, the high and the low exchange rate for Canadian Dollars and U.S. Dollars for the periods indicated based on the noon buying rate in New York City for cable transfers in Canadian Dollars as certified for customs purposes by the Federal Reserve Bank of New York (Canadian dollar = US$1).

Fiscal Year Ended	Average		Period End		High		Low

2007		1.1357		1.1792		1.1824		1.0989
2007 II		1.0651		0.9913		1.1853		0.9170
2008		1.0660		1.2246		1.2969		0.9719
2009		1.1420		1.0466		1.3000		1.0292
2010		1.0299		0.9946		1.0778		0.9946

The following table sets forth the high and low exchange rate for the past six months based on the noon buying rate. As of June 30, 2011, the exchange rate was CDN$0.9643 for each US$1.

Month	High		Low
January 2011		1.0022		0.9862
February 2011		0.9955		0.9739
March 2011		0.9918		0.9686
April 2011		0.9691		0.9486
May 2011		0.9809		0.9486
June 2011		0.9861		0.9643

B. Capitalization and Indebtedness

Not Applicable.

C. Reasons for the Offer and Use of Proceeds

Not Applicable.

D. Risk Factors

In addition to the other information presented in this Annual Report, the following should be considered carefully in evaluating the Company and its business. This Annual Report contains forward-looking statements that involve risks and uncertainties. The Company’s actual results may differ materially from the results discussed in the forward-looking statements. Factors that might cause such a difference include, but are not limited to, those discussed below and elsewhere in this Annual Report.

We will be required to raise additional capital to mine our properties. The Company is currently in the exploration stage on its properties. The Company is currently focusing on creating an effective plan to mine its San Gonzalo orebody. Our ability to raise funds will depend on several factors, including, but not limited to, current economic conditions, our properties, our prospects, metal prices, businesses competing for financing and our financial condition. There can be no assurance that we will be able to raise funds, or to raise funds on commercially reasonable terms.

We have incurred net losses since our inception and expect losses to continue. We have not been profitable since our inception. For the year ended December 31, 2010, we had a net loss of $1,490,194 and an accumulated deficit on December 31, 2010 of $25,660,878. The Company has not generated revenues from operations since 2001 and does not expect to generate revenues from operations until one or more of its properties are placed in production. There is no assurance that any of the Company’s properties will be placed in production or that the Company’s operations will be profitable in the future.

The mining industry is highly speculative and involves substantial risks. Even when mining is conducted on properties known to contain significant quantities of mineral deposits it is generally accepted in the mining industry that most exploration projects do not result in the discovery of mineable deposits of ore that can be extracted in a commercially economical manner. There may be limited availability of water, which is essential to milling operations, and interruptions may be caused by adverse weather conditions. Operations are subject to a variety of existing laws and regulations relating to exploration and development, permitting procedures, safety precautions, property reclamation, employee health and safety, air quality standards, pollution and other environmental protection controls. Mining activities are subject to substantial operating hazards, some of which are not insurable or may not be insured for economic reasons.

The commercial quantities of ore cannot be accurately predicted. Whether an ore body will be commercially viable depends on a number of factors including the particular attributes of the deposit, such as size, grade and proximity to infrastructure, as well as mineral prices and government regulations, including regulations relating to prices, taxes, royalties, land tenure, land use, importing and exporting of minerals and environmental protection. The exact effect of these factors cannot be accurately predicted, but the combination of these factors may result in a mineral deposit being unprofitable.

There are no assurances that we can produce minerals on a commercially viable basis. The Company’s ability to generate revenue and profit is expected to occur through exploration of its existing properties as well as through acquisitions of interests in new properties. Substantial expenditures will be incurred in an attempt to establish the economic feasibility of mining operations by identifying mineral deposits and establishing ore reserves through drilling and other techniques, developing metallurgical processes to extract metals from ore, designing facilities and planning mining operations. The economic feasibility of a project depends on numerous factors, including the cost of mining and production facilities required to extract the desired minerals, the total mineral deposits that can be mined using a given facility, the proximity of the mineral deposits to refining facilities, and the market price of the minerals at the time of sale. There is no assurance that existing or future exploration programs or acquisitions will result in the identification of deposits that can be mined profitably.

Mining operations and exploration activities are subject to various federal, provincial and local laws and regulations. Laws and regulation govern the development, mining, production, importing and exporting of minerals, taxes, labour standards, occupational health, waste disposal, protection of the environment, mine safety, toxic substances, and other matters. In many cases, licenses and permits are required to conduct mining operations. Amendments to current laws and regulations governing operations and activities of mining companies or more stringent implementation thereof could have a substantial adverse impact on the Company. Applicable laws and regulations will require the Company to make certain capital and operating expenditures to initiate new operations. Under certain circumstances, the Company may be required to close an operation once it is started until a particular problem is remedied or to undertake other remedial actions.

Operating Hazards and Risks. The operation and development of a mine or mineral property involves many risks which even a combination of experience, knowledge and careful evaluation may not be able to overcome. These risks include:

·	environmental hazards;

·	industrial accidents and explosions;

·	the encountering of unusual or unexpected geological formations;

·	ground fall and cave-ins;

flooding;

·	earthquakes; and

·	periodic interruptions due to inclement or hazardous weather conditions.

These occurrences could result in environmental damage and liabilities, work stoppages and delayed production, increased production costs, damage to, or destruction of, mineral properties or production facilities, personal injury or death, asset write downs, monetary losses and other liabilities. Liabilities that the Company incurs may exceed the policy limits of its insurance coverage or may not be insurable, in which event the Company could incur significant costs that could adversely impact its business, operations or profitability.

Market price is highly speculative. The market price of metals is highly speculative and volatile. Instability in metal prices may affect the interest in mining properties and the development of and production of such properties.

Penny stock rules may make it more difficult to trade the Company’s common shares. The Securities and Exchange Commission (the “SEC”) has adopted regulations which generally define a “penny stock” to be any equity security that has a market price, as defined, less than US$5.00 per share or an exercise price of less than US$5.00 per share, subject to certain exceptions. Our securities may be covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and accredited investors such as institutions with assets in excess of US$5,000,000 or an individual with net worth in excess of US$1,000,000 or annual income exceeding US$200,000 or US$300,000 jointly with his or her spouse. For transactions covered by this rule, the broker-dealers must make a special suitability determination for the purchase and receive the purchaser’s written agreement of the transaction prior to the sale. Consequently, the rule may affect the ability of broker-dealers to sell our securities and also affect the ability of our investors to sell their shares in the secondary market.

Title risks. The validity and ownership of mining property holdings can be uncertain and may be contested. Although the Company’s properties in Canada are currently wholly owned by the Company, there are currently a number of pending and potential native title or traditional land owner claims in Canada. Accordingly, there can be no assurance that the Company’s properties in Canada will not be affected.

Competition for mineral land . There is a limited supply of desirable mineral lands available for acquisition, claim staking or leasing in the areas where the Company contemplates expanding its operations and conducting exploration activities. Many participants are engaged in the mining business, including large, established mining companies. Accordingly, there can be no assurance that the Company will be able to compete successfully for new mining properties.

Competition for recruitment and retention of qualified personnel . We compete with other exploration companies, many of which have greater financial resources than us or are further in their development, for the recruitment and retention of qualified employees and other personnel. Competition for exploration resources at all levels is currently very intense, particularly affecting the availability of manpower, drill rigs and supplies. If we require and are unsuccessful in acquiring additional personnel or other exploration resources, we will not be able to grow at the rate we desire or at all.

Uncertainty of exploration and development programs . The Company’s profitability is significantly affected by the costs and results of its exploration and development programs. As mines have limited lives based on proven and probable mineral reserves, the Company actively seeks to expand its mineral reserves, primarily through exploration, development and strategic acquisitions. Exploration for minerals is highly speculative in nature, involves many risks and is frequently unsuccessful. Among the many uncertainties inherent in any gold and silver exploration and development program are the location of economic ore bodies, the development of appropriate metallurgical processes, the receipt of necessary governmental permits and the construction of mining and processing facilities. Assuming the discovery of an economic deposit, depending on the type of mining operation involved, several years may elapse from the initial phases of drilling until commercial operations are commenced and, during such time, the economic feasibility of production may change. Accordingly, the Company’s exploration and development programs may not result in any new economically viable mining operations or yield new mineral reserves to expand current mineral reserves.

Licenses and permits . The operations of the Company require licenses and permits from various governmental authorities. The Company believes that it holds all necessary licenses and permits under applicable laws and regulations and believes that it is presently complying in all material respects with the terms of such licenses and permits. However, such licenses and permits are subject to change in various circumstances. There can be no guarantee that the Company will be able to obtain or maintain all necessary licenses and permits as are required to explore and develop its properties, commence construction or operation of mining facilities and properties under exploration or development or to maintain continued operations that economically justify the cost.

Political or economic instability or unexpected regulatory change. Certain of our properties are located in countries, provinces and states more likely to be subject to political and economic instability, or unexpected legislative change, than is usually the case in certain other countries, provinces and states. Our mineral exploration activities could be adversely effected by:

·	political instability and violence;

·	war and civil disturbances;

·	expropriation or nationalization;

·	changing fiscal regimes;

·	fluctuations in currency exchange rates;

·	high rates of inflation;

·	underdeveloped industrial and economic infrastructure;

·	changes in the regulatory environment governing mineral properties; and

·	unenforceability of contractual rights,

any of which may adversely affect our business in that country.

We may be adversely affected by fluctuations in foreign exchange rates . We maintain our bank accounts mainly in Canadian and U.S. Dollars. Any appreciation in the currency of Mexico or other countries where we may carryout exploration activities against the Canadian or U.S. Dollar will increase our costs of carrying out operations in such countries. In addition, any decrease in the U.S. Dollar against the Canadian Dollar will result in a loss on our books to the extent we hold funds in U.S. Dollars.

Land reclamation requirements . Although variable depending on location and the governing authority, land reclamation requirements are generally imposed on mineral exploration companies (as well as companies with mining operations) in order to minimize the long term effects of land disturbance. Reclamation may include requirements to control dispersion of potentially deleterious effluents and reasonably re-establish pre-disturbance land forms and vegetation. In order to carry out reclamation obligations imposed on us in connection with our mineral exploration we must allocate financial resources that might otherwise be spent on further exploration programs.

Litigation. Although the Company is not currently subject to litigation, it may become involved in disputes with other parties in the future which may result in litigation. Any litigation could be costly and time consuming and could divert our management from our business operations. In addition, if the Company is unable to resolve any litigation favourably, it may have a material adverse impact on the Company’s financial performance, cash flow and results of operations.

Acquisitions . The Company undertakes evaluations of opportunities to acquire additional gold and silver mining properties. Any resultant acquisitions may be significant in size, may change the scale of the Company’s business, and may expose the Company to new geographic, political, operating, financial and geological risks. The Company’s success in its acquisition activities depends on its ability to identify suitable acquisition candidates, acquire them on acceptable terms, and integrate their operations successfully. Any acquisitions would be accompanied by risks, such as a significant decline in the price of gold or silver, the ore body proving to be below expectations, the difficulty of assimilating the operations and personnel of any acquired companies, the potential disruption of the Company’s ongoing business, the inability of management to maximize the financial and strategic position of the Company through the successful integration of acquired assets and businesses, the maintenance of uniform standards, controls, procedures and policies, the impairment of relationships with customers and contractors as a result of any integration of new management personnel and the potential unknown liabilities associated with acquired mining properties. In addition, the Company may need additional capital to finance an acquisition. Historically, the Company has raised funds through equity financing and the exercise of options and warrants. However, the Company’s ability to raise capital to acquire and explore resource properties may be adversely affected by the market prices for natural resources which are highly speculative and volatile. There can be no assurance that the Company would be successful in overcoming these risks or any other problems encountered in connection with such acquisitions.

Conflict of interest. Certain directors and officers of the Company are officers and/or directors of, or are associated with, other natural resource companies that acquire interests in mineral properties. Such associations may give rise to conflicts of interest from time to time. The directors are required by law, however, to act honestly and in good faith with a view to the best interests of the Company and to disclose any personal interest which they may have in any material transaction which is proposed to be entered into with the Company and to abstain from voting as a director for the approval of any such transaction.

Dependence on management . We are dependent on the services of key executives including our President and Chief Executive Officer and other highly skilled and experienced executives and personnel focused on advancing our corporate objectives as well as the identification of new opportunities for growth and funding. Due to our relatively small size, the loss of these persons or our inability to attract and retain additional highly skilled employees required for our activities may have a material adverse effect on our business and financial condition.

Uncertainty of continuing as a going concern. The continuation of the Company depends upon its ability to develop a self-supporting business and generate cash flow from operations and/or to raise equity capital through the sale of its securities. The Company will be required to raise new financing through the sale of shares or issuance of debt to continue with the exploration and development of its mineral properties. As a result, there is uncertainty about the Company’s ability to continue as a going concern. The Company’s consolidated financial statements do not include the adjustments that would be necessary if the Company were unable to continue as a going concern.

Limited and volatile trading volume. Although the Company’s common shares are listed on the TSX Venture Exchange, referred to as the “TSX-V” and the Frankfurt Stock Exchange, referred to as the “FSE” and quoted in the United States on the OTC Bulletin Board, referred to as the “OTC BB”, the volume of trading has been limited and volatile in the past and is likely to continue to be so in the future, reducing the liquidity of an investment in the Company’s common shares and making it difficult for investors to readily sell their shares in the open market. Without a liquid market for the Company’s common shares, investors may be unable to sell their shares at favorable times and prices and may be required to hold their shares in declining markets or to sell them at unfavorable prices.

Volatility of share price. In recent years, securities markets in Canada have experienced a high level of price volatility. The market price of many resource companies, particularly those, like the Company, that are considered speculative exploration companies, have experienced wide fluctuations in price, resulting in substantial losses to investors who have sold their shares at a low price point. These fluctuations are based only in part on the level of progress of exploration, and can reflect general economic and market trends, world events or investor sentiment, and may sometimes bear no apparent relation to any objective factors or criteria. During the 2010 fiscal year, the Company’s common share price fluctuated between a low of $0.65 and a high of $2.95. Subsequent to the 2010 fiscal year and as of June 17, 2011, the Company’s common share price has fluctuated between a low of $1.93 and a high of $3.47. Significant fluctuations in the Company’s common share price is likely to continue, and could potentially increase in the future.

Difficulty for United States investors to effect services of process against the Company. The Company is incorporated under the laws of the Province of British Columbia, Canada. Consequently, it will be difficult for United States investors to affect service of process in the United States upon the directors or officers of the Company, or to realize in the United States upon judgments of United States courts predicated upon civil liabilities under the United States Securities Exchange Act of 1934 , as amended. The majority of the Company’s directors and officers are residents of Canada and all of the Company’s assets are located outside of the United States. A judgment of a United States court predicated solely upon such civil liabilities would probably be enforceable in Canada by a Canadian court if the United States court in which the judgment was obtained had jurisdiction, as determined by the Canadian court, in the matter. There is substantial doubt whether an original action could be brought successfully in Canada against any of such persons or the Company predicated solely upon such civil liabilities.

Item 4. Information on the Company

Cautionary Note to United States Investors

A. History and Development of the Company

The Company was incorporated by Memorandum of Association under the laws of the Province of British Columbia on May 15, 1969, and on August 22, 1969, by virtue of an amalgamation with Ace Mining Company Ltd., became a public company whose common shares are registered under the United States Securities Exchange Act of 1934 , changing its name to Avino Mines & Resources Limited. On April 12, 1995, the Company changed its corporate name to International Avino Mines Ltd. and affected a reverse stock split of one common share for every five common shares outstanding. On August 29, 1997, the Company changed its corporate name to Avino Silver & Gold Mines Ltd., its current name, to better reflect the business of the Company of exploring for and mining silver and gold. In January 2008, the Company announced the change of its financial year end from January 31 to December 31. The change was completed in order to align the Company’s financial statement reporting requirements with its Mexico subsidiaries which operate on a calendar fiscal year.

The Company is a reporting issuer in the Province of British Columbia and Alberta, a foreign issuer with the SEC and trades on the TSX Venture Exchange under the symbol “ASM”, on the OTC Bulletin Board under the symbol “ASGMF” and on the Frankfurt Stock Exchange under the symbol “GV6”. The principal executive office of the Company is located at Suite 900, 570 Granville Street, Vancouver, British Columbia V6C 3P1, and its telephone number is 604-682-3701.

The Company is a natural resource company, primarily engaged in the acquisition, exploration and development of natural resource properties. The Company’s principal business activities have been the exploration of a mineral property located in the State of Durango, Mexico and other mineral properties in Canada, specifically British Columbia and the Yukon Territory.

Significant Acquisitions and Significant Dispositions

On July 17, 2006, the Company completed the acquisition of Compañía Minera Mexicana de Avino, S.A. de C.V. (“Cia Minera”), a Mexican corporation, through the acquisition of an additional 39.25% interest in Cia Minera which combined with the Company’s pre-existing 49% share of Cia Minera, brought the Company’s ownership interest in Cia Minera to 88.25%. The additional 39.25% interest in Cia Minera was obtained though the acquisition of 76.88% of the common shares of Promotora Avino S.A. De C.V., referred to as “Promotora”, which in turn owns 49.75% of Cia Minera’s common shares, and the direct acquisition of 1% of the common shares of Cia Minera.

The July 17, 2006 acquisition was accomplished by a share exchange by which the Company issued 3,164,702 shares as consideration, which we refer to as the “Payment Shares”, for the purchase of the additional 39.25% interest in Cia Minera. The Payment Shares were valued based on the July 17, 2006 closing market price of the Company’s shares on the TSX-V.

The Company acquired a further 1.1% interest in Cia Minera through the acquisition from an estate subject to approval and transfer of the shares to the Company by the trustee for the estate. On December 21, 2007 approval was received and the Company obtained the 1.1% interest from the estate for no additional consideration.

On February 16, 2009, the Company converted existing loans advanced to Cia Minera in to new additional shares of Cia Minera. As a result, the Company’s ownership interest in Cia Minera increased to 99.28%.

The Company has no other significant acquisitions or dispositions of property, except as disclosed in this Annual Report.

B. Business Overview

Operations and Principal Activities

The Company is a Canadian-based resource firm focused on silver and gold exploration. The Company has a long prior history of operation, beginning in 1968 with the development of the Avino Silver Mine, located in the state of Durango, Mexico (the “Avino Mine”). From 1974 to 2001, the Avino Mine produced silver, gold, copper and lead and provided hundreds of jobs for the Durango region before closing due to depressed metal prices and closing of smelter. Beginning in 2002, the Company re-directed its corporate strategy to focus almost entirely on silver and began acquiring silver properties in North America. The Company acquired the Eagle property in Canada’s Yukon Territory and the Aumax silver and gold property in British Columbia. Each property produced positive assays for silver through drilling and sampling. The Avino Mine in Mexico and surrounding mineral leases continue to hold silver potential. These properties, along with other silver and gold projects, will remain the Company’s principal focus for the foreseeable future.

Presently, the Company is an “exploration stage company”, as all of the Company’s properties are currently in the exploratory stage of development. In order to determine if a commercially viable mineral deposit exists in any of the Company’s properties, further geological work will need to be done and a final evaluation based upon the results obtained to conclude economic and legal feasibility.

Competition

The mining industry in which the Company is engaged is highly competitive. Competitors include well-capitalized mining companies, independent mining companies and other companies having financial and other resources far greater than those of the Company. The Company competes with other mining companies in connection with the acquisition of gold, silver and other precious metal properties. In general, properties with a higher grade of recoverable mineral and/or which are more readily mined afford the owners a competitive advantage in that the cost of production of the final mineral product is lower. In 2010, demand for silver exceeded supply and worldwide demand is expected to increase through 2011. This, in part, has fueled the increases in silver prices over the same period. Thus, a degree of competition exists between those engaged in the mining industry to acquire the most valuable properties. As a result, the Company may eventually be unable to acquire attractive gold or silver mining properties.

Seasonality

Certain of our operations are conducted in British Columbia and the Yukon Territory. The weather during the colder seasons in these areas can be extreme and can cause interruptions or delays in our operations. As a result, the preferable time for activities in these regions is the spring and summer when costs are more reasonable and access to the properties is easier. In the summer months, however, if the weather has been unusually hot and dry, access to the Company’s properties may be limited as a result of access restrictions being imposed to monitor the risks of forest fires.

Governmental Regulation

The current and anticipated future operations of the Company, including development activities and commencement of production on its properties, require permits from various federal, territorial and local governmental authorities and such operations are and will be governed by laws and regulations governing prospecting, development, mining, production, exports, taxes, labor standards, occupational health, waste disposal, toxic substances, land use, environmental protection, mine safety and other matters. Companies engaged in the development and operation of mines and related facilities generally experience increased costs and delays in production and other schedules as a result of the need to comply with applicable laws, regulations and permits. Such operations and exploration activities are also subject to substantial regulation under these laws by governmental agencies and may require that the Company obtain permits from various governmental agencies. The Company believes it is in substantial compliance with all material laws and regulations which currently apply to its activities. There can be no assurance, however, that all permits which the Company may require for construction of mining facilities and conduct of mining operations will be obtainable on reasonable terms or that such laws and regulations, or that new legislation or modifications to existing legislation, would not have an adverse effect on any exploration or mining project which the Company might undertake.

Mineral exploration and mining in Mexico is covered under the Mining Law as first published in June 1992, and amended in April 2005. Mining operations in Mexico are administered by the Ministry of Economy. Environmental regulations are covered under “Ley General del Equilibrio Ecológio y la Protección al Ambiente” (General Law of Ecological Balance and Environmental Protection) and its regulations. Certain other environmental laws, including “Ley de Aguas Nacionales” (Law of National Waters) and “Ley Forestal” (Forestry Law) and their associated regulations may also cover certain operations. The kind of permits or authorizations required to conduct mining or mineral exploration operations in Mexico depend upon the type of operation. Common exploration activities do not require prior environmental authorization or licenses, but it is advisable to request a confirmation from the National Water Commission that planned operations will not affect the water table. It is also necessary to confirm that any planned operations will not be conducted in protected natural areas.

The Company believes it has obtained all necessary permits and authorizations required for its current exploration. The Company has had no material costs related to compliance and/or permits in recent years, and anticipates no material costs in the next year. Unfavorable amendments to current laws, regulations and permits governing operations and activities of resource exploration companies, or more stringent implementation thereof, could have a materially adverse impact on the Company and cause increases in capital expenditures which could result in a cessation of operations by the Company.

Failure to comply with applicable laws, regulations and permitting requirements may result in enforcement actions thereunder, including orders issued by regulatory or judicial authorities causing operations to cease or be curtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment or remedial actions. Parties engaged in exploration and mining operations may be required to compensate those suffering loss or damage by reason of the mining activities and may have civil or criminal fines or penalties imposed for violation of applicable laws or regulations.

The enactment of new laws or amendments to current laws, regulations and permits governing operations and activities of mining companies, or more stringent implementation thereof, could have a material adverse impact on the Company and cause increases in capital expenditures or production costs or reduction in levels of production at producing properties or require abandonment or delays in the development of new mining properties.

C. Organizational Structure

The Company’s Mexican subsidiaries are the wholly owned subsidiary of Oniva Silver and Gold Mines S.A. de C.V., referred to as “Oniva”, Promotora, in which the Company has direct ownership of 79.09%, and Cia Minera in which the Company has a 96.6% direct ownership and an additional 2.68% of Cia Minera is held through Promotora. The Company’s total effective ownership interest in Cia Minera is 99.28%.

All of the above subsidiaries are incorporated under the laws of Mexico.

D. Property, Plants and Equipment

The Company is exploring five silver and gold projects in Canada and Mexico. All of the Company’s mineral property interests in Canada are wholly-owned by the Company. In Mexico, the Company has a 99.28% interest in Cia Minera, a Mexican company which is involved in the mining of commercial ores and resource exploration and development, including the operation of the Avino Mine. Cia Minera is not involved with any exploration activities in Canada. The Company owns and manages these properties. Exploration in Canada has in recent years, been limited to prospecting, trenching and drill programs on our Eagle, Olympic-Kelvin, Minto, and Aumax properties.

The Company uses detailed sampling to provide the basis for quality estimates and grades of its mineral discoveries. Samples are collected under the supervision of a qualified person who then follows procedures for the collection, sample preparation and chain of custody guidelines for the shipment of the samples to a certified commercial laboratory as set out in National Instrument 43-101. These commercial labs have standard Quality Assurance/Quality Control protocols in place for the various assaying methods that are being used on the samples. In addition, blanks, standards and duplicates are generally used to confirm the validity of the results before they are reported.

Avino Property, Durango, Mexico

Ownership . The Company has a 99.28% ownership interest in Cia Minera, a company incorporated under the laws of Mexico. Cia Minera owns the Avino Property. The Company acquired its initial 49% interest in Cia Minera in 1968, an additional interest of 39.25% in July 2006, 1.1% interest in December 2007 and most recently 9.93% in February 2009.

In addition to its wholly owned claims, Cia Minera leases four core mineral claims in consideration for royalties. While the mine was producing, we operated under a lease which expired October 31, 2010. The Company is currently negotiating the renewal.

Property Description and Location. The Avino Property is located approximately 74 km’s to the NE of the city of Durango and covers approximately 4,364 hectares. The property is accessible via a paved public road. The Avino Mine had been an open pit operation until March 1993, at which time Cia Minera commenced underground operations. Mineralized rock was broken by ripping, drilling and blasting and trucked to the processing plant, approximately 400 meters from the pit, where it was processed. The Avino Mine was an underground operation at the time of closure in November 2001.

History. The Avino Mine operated from 1974 to 2001, producing about 497 tons of silver, three tons of gold, and 11,000 tons of copper until the suspension of mining operations in November 2001.

The Avino Mine and processing plant were historically serviced by a heavy equipment repair shop, mechanical and electrical shops, assay office, metallurgical laboratory, warehouse and other auxiliary facilities. Electric power was supplied by the government-owned Federal Electricity Commission.

Water for use at the mill is obtained from: (i) the Galeana Well; (ii) the El Caracol Reservoir.

The property was dormant from 2002 to 2006, largely due to low copper and silver prices. As stated above, Avino gained control of the property in July 2006 and exploration resumed that year; this lead to the discovery of new mineralization at the San Gonzalo and resulting production in the fall of 2010.

Processing Plant

In September 2006, the Company commissioned an independent plant audit by Herb Osborne and Associates to conduct a full review of the plant, including the condition of all equipment, capacity of each circuit, and efficiency of the plant. The report was an order of magnitude cost estimate for the processing plant.

The Company’s processing plant was built initially in the 1970’s refurbished and capacity increased in 1993. Most of the infrastructure was in place for both a 250 tpd and 1,000 tpd operation. At the time of shutdown in 2001 with low commodity prices and closure of smelter, the mill was operating at an average rate of 1,130 tpd.

The report concluded that the process plant can be brought back into operation in as little as three months contingent upon the availability of operators and mechanics for about US $1 million at 1000 tpd for an operating life of 5 to 10 years.

The 250 tpd circuit in the mill was subsequently renovated in the last few years in order to process ore from the San Gonzalo bulk sample.

Geophysical Surveys: Induced Polarization (IP)

In December 2006, Avino contracted Peter E. Walcott & Associates to carry out an 80 km line deep penetrating IP Survey at the property. IP geophysics helps identify drill targets. The IP Survey was completed in 2007 and the final report was received from Peter E. Walcott & Associates in 2008. Avino did follow-up soil geochemical, satellite imagery and other surveys to better define targets in the covered areas.

Tailings

In April 2006, Wardrop Engineering Inc. (“Wardrop Engineering”), completed a study on “Tailings Retreatment Process Options for the Avino Tailings Project in Durango, Mexico”. The report concluded the oxide tailing is amenable to cyanidation with agglomerated heap leach as the method of choice followed by Merril Crowe precipitation of the silver and gold. The sulphide tailing would require sampling and further metallurgical test work before a proper assessment can be made.

The preliminary evaluation of the oxide tailings suggested the capital cost for a 500,000 ton per year, 4 year operation of US$1.62m and the cost to operate per ton of tailings is US$8.64. Capital costs for a plant twice the size and half the life was US$22.7m. The internal rate of return and the net present value favoured the 4 year operation.

The disclosure of the implied values is preliminary in nature and includes inferred mineral resources that are considered to be too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the preliminary assessment will be realized.

Mr. Rick Alexander P. Eng., an independent qualified person as defined by applicable Canadian rules prepared the capital cost estimate and co-coordinated Wardrop Engineering’s work on the Avino Tailings Project.

In 2011, Avino engaged Wardrop Engineering to update the 2006 Tailings Scoping Study where the cost estimates were based on a heap leach operation. The updated study will utilize the continuous vat leach technology (CVL) in the revised cost estimates for comparative purposes. Samples of oxide and sulphide tailings were collected to determine if the tailings characteristics would be amenable in a CVL system.

Drilling & Programs 2007 – 2011

In 2008 the Company drilled seven holes on the Avino Mexicana structure, two at La Blanca, six holes at San Jose, and four at Santa Ana, of which two holes at Aquila Mexicana intersected significant mineralization.

Details are as follows:

AM-08-02

Intersected 5.05 metres @ 0.49 g/t gold 75.38 g/t silver.

Detailed intersections

From (m)	To (m)	Length (m)	Au (g/t)	Ag (g/t)	Cu (ppm)	Pb (ppm)	Zn (ppm)
195.05	195.90	.85	.221	189.4	155	238	438
195.90	196.80	.90	.100	19.1	139	155	384
196.80	197.90	1.10	.245	82,6	738	14400	34000
197.90	199.10	1.20	.905	42.1	467	13800	46500
199.10	200.10	1.00	1.046	77.1	1552	3977

AM-08-04

Intersected 3.30 metres grading 0.34 g/t gold and 151 g/t silver.

Detailed intersections

From (m)	To (m)	Length (m)	Au (g/t)	Ag (g/t)	Cu (ppm)	Pb (ppm)	Zn (ppm)
205.10	206.15	1.05	0.309	85.4	1092	4672	4835
206.15	207.15	1.00	0.259	132.7	3278	6780	1116
207.15	207.80	.65	0.600	277.4	1017	1979	1020
207.80	208.40	.60	0.243	159.4	693	786	693

AM-08-02 and AM-08-04 generated the first good drill values from the Aguila Mexicana zone, and they represent viable targets for follow up.

Avino Main Vein (Veta Avino) Elena Tolosa Area (ET )

During 2007 and 2008 Avino drilled 18 holes to explore the ET area of the main Avino deposit below level 11.5 where mining had ended in November 2001. Holes ET07-01 through ET-07-10 were in 2007 and ET-08-01 through ET-08-08 were drilled in 2008.

The programs explored in the vein system below the original workings to ensure that vein widths and copper/silver values continued at depth. Location of the 2007 and 2008 holes on map and section can be seen on the Avino website.

Details are as follows:

ET-07-01 (Bearing 001 - Dip 69 - Length 298.6m)

Total vein intersection: 216.35 – 293.65m (77.3m)

Significant intersection: 284.90 – 290.0m (5.1m), 0.055 g/t gold, 114 g/t silver (0.002oz/t gold, 3.32oz/ton silver), 8385 ppm copper.

Detailed intersections

From (m)	To (m)	Length (m)	Description	Au (g/t)	Ag (g/t)	Cu (ppm)
284.90	285.85	0.95	Avino vein. Silicified quartz with diss-cpy-py-specularite	0.068	201.7	3149
285.85	286.80	0.95		0.025	35.4	969
286.80	287.00	0.20		0.226	808.8	100200
287.00	288.50	1.50		0.045	27.3	2540
288.50	290.00	1.50		0.052	101.6	10000

ET-07-02 (Bearing 358 - Dip 75 - Length 311.9m)

Intersected Avino vein: 243.45 – 300.7m (57.25m)

No significant assays.

ET-07-03 (Bearing 336 – Dip 71 – Length 349.5m)

Intersected Avino vein: 280.75 – 331.75m (51.0m)

Detailed intersections

From (m)	To (m)	Length (m)	Description	Au (g/t)	Ag (g/t)	Cu (ppm)
280.75	282.25	1.50	Avino vein. Oxidized material	7.680	121.9	6048
282.25	283.75	1.50		6.034	196.3	5034
283.75	285.25	1.50		1.692	69.9	10400
285.25	286.75	1.50		13.988	295.3	19600
286.75	288.25	1.50		4.731	104.7	16100
288.25	289.75	1.50		2.158	103.7	3948
289.75	291.25	1.50		0.158	31.5	3789
291.25	292.75	1.50		2.411	60.0	2683
292.75	294.25	1.50		2.733	27.5	2793
294.25	295.75	1.50		0.548	89.6	7268
295.75	297.25	1.50		3.086	161.8	5934
297.25	298.75	1.50		7.954	75.7	1476
298.75	300.25	1.50		2.265	97.0	10500
300.25	301.75	1.50		1.057	60.4	1486
301.75	303.25	1.50		1.911	42.0	3258

ET-07-04 (Bearing 331 – Dip 56 – Length 318.7m)

Intersected Avino vein: 271.45 – 304.45m (33.0m)

Detailed intersections

From (m)	To (m)	Length (m)	Description	Au (g/t)	Ag (g/t)	Cu (ppm)
271.45	272.95	1.50	Avino vein. Wh qtz veining w/ fine grain diss cpy-py	0.155	44.1	3618
272.95	274.45	1.50		0.397	106.1	2842
274.45	275.95	1.50		1.080	76.1	3862
275.95	277.45	1.50		1.314	126.9	4010
277.45	278.95	1.50		0.874	53.0	381
278.95	280.45	1.50		0.534	61.4	675
280.45	281.95	1.50		0.436	97.3	2649
287.95	289.45	1.50		0.250	63.5	7555
289.45	290.95	1.50		0.101	31.4	5156
290.95	292.45	1.50		1.115	138.6	3558
292.45	293.95	1.50		0.151	86.3	4162
293.95	295.45	1.50		0.161	34.9	3521
295.45	296.95	1.50		0.568	41.6	5047
296.95	298.45	1.50		0.115	29.1	10000
298.45	300.10	1.65		0.080	29.8	8408

ET-07-05 (Bearing 333 – Dip 66 – Length 351.5m)

Intersected Avino vein: 271.45 – 304.45m (33.0m)

Detailed intersections

From (m)	To (m)	Length (m)	Description	Au (g/t)	Ag (g/t)	Cu (ppm)
301.95	303.45	1.50	Avino vein. Wh qtz stkwk-veining w/diss f.g. cpy+py+spec	1.152	83.0	1971
303.45	304.95	1.50		1.483	26.7	683
304.95	306.45	1.50		2.119	36.9	2030
312.45	312.95	0.50		1.752	10.7	533
312.95	315.45	2.50		1.015	119.7	1268
315.45	316.95	1.50		0.195	204.2	8565
316.95	318.45	1.50		0.075	123.6	2212
319.95	321.45	1.50		0.155	86.2	20300
321.45	322.95	1.50		0.120	30.4	13000
322.95	324.45	1.50		0.115	45.2	15400
324.45	325.95	1.50		0.075	40.2	18400
325.95	327.45	1.50		0.070	27.5	10200
327.45	328.95	1.50		0.050	48.1	17500
328.95	330.45	1.50		0.053	38.2	16700
330.45	331.95	1.50		0.095	61.9	20200
331.95	333.45	1.50		0.144	75.2	18900
333.45	334.95	1.50		0.130	45.7	15800
337.95	339.45	1.50		0.328	69.0	12200
339.45	340.95	1.50		0.236	41.0	12200

ET-07-06 (Bearing 336 – Dip 55 – Length 320.05m)

Intersected Avino vein: 289.00 – 309.6m (19.6m)

Detailed intersections

From (m)	To (m)	Length (m)	Description	Au (g/t)	Ag (g/t)	Cu (ppm)
289.00	290.50	1.50	Avino vein. Wh qtz stockwork veining textures w’diss py-cpy	0.950	228.9	23200
298.00	299.50	1.50		0.165	72.3	14800
299.50	301.00	1.50		0.485	54.6	8401
301.00	302.50	1.50		0.090	40.8	11500
302.50	304.00	1.50		0.147	55.6	14400
304.00	305.50	1.50		0.093	55.8	8321
305.50	307.00	1.50		1.590	90.4	15100
307.00	308.60	1.60		0.150	73.8	8729
308.60	310.10	1.50		0.040	54.6	5962
310.10	311.60	1.50		0.075	98.0	6217
311.60	313.10	1.50		0.075	81.9	10800
313.10	314.60	1.50		0.040	97.9	7765

ET-07-07 (Bearing 330 – Dip 59 – Length 304.85m)

Intersected Avino vein: 272.30 – 295.15m (22.85m), 0.11 g/t gold, 115 g/t silver (0.003 oz/t gold 3.35 oz/t silver), 13810 ppm copper

Detailed intersections

From (m)	To (m)	Length (m)	Description	Au (g/t)	Ag (g/t)	Cu (ppm)
272.30	273.80	1.50	Avino vein. Wh qtz veining w/moderate diss cpy and strong py.	0.615	80.6	2199
273.80	275.30	1.50		0.148	160.9	20500
275.30	276.80	1.50		0.118	203.5	19700
276.80	278.30	1.50		0.280	172.8	17800
278.30	279.80	1.50		0.368	441.4	24600
279.80	281.30	1.50		0.220	327.0	12600
281.30	282.80	1.50		0.081	110.8	3002
282.80	284.30	1.50		0.065	184.6	3317
284.30	285.80	1.50		0.070	89.2	8786
285.80	287.30	1.50		0.070	209.3	54400
287.30	288.80	1.50		0.035	32.8	13200
288.80	290.30	1.50		0.047	76.1	29300
290.30	291.80	1.50		0.126	339.7	44300
291.80	293.30	1.50		0.060	20.8	6361
293.30	295.15	1.85		0.202	166.9	55500

ET-07-08 (Bearing 346 – Dip 69 – Length 399.7m)

Intersected Avino vein: 346.65 – 366.7m (20.05m)

Detailed intersections

From (m)	To (m)	Length (m)	Description	Au (g/t)	Ag (g/t)	Cu (ppm)
355.85	357.35	1.50	Avino vein. Moderate diss cpy-py	0.111	257.5	6959
357.35	359.15	1.80	Avino vein. Moderate diss cpy-py	0.125	170.0	9341

ET-07-09 (Bearing 336 – Dip 62 – Length 328.6m)

Intersected Avino vein: 272.80 – 319.10m (46.3m)

Detailed intersections

From (m)	To (m)	Length (m)	Description	Au (g/t)	Ag (g/t)	Cu (ppm)
290.80	292.30	1.50	Avino vein with massive chalcopyrite	0.040	101.9	12100
292.30	293.80	1.50		0.160	23.7	11500
295.30	296.80	1.50		0.146	32.3	11200
299.80	301.30	1.50		0.070	51.2	6327
301.30	302.80	1.50		0.360	40.4	14600
302.80	304.30	1.50		0.015	18.1	8029
304.30	305.80	1.50		0.020	28.2	8475

ET-07-10 (Bearing 336 – Dip 63 – Length 308.7m)

Intersected Avino vein: 243.80 – 299.10m (55.3m)

Detailed intersections

From (m)	To (m)	Length (m)	Description	Au (g/t)	Ag (g/t)	Cu (ppm)
257.30	258.80	1.50	Avino quartz vein with sulphides	0.160	85.3	15700
258.80	260.30	1.50		0.080	86.6	23400
260.30	261.80	1.50		0.125	27.7	14100
261.80	263.30	1.50		0.101	21.8	15400
263.30	264.80	1.50		0.098	20.3	13500
266.30	267.80	1.50		0.574	43.4	6613
267.80	269.30	1.50		0.457	39.8	4211
269.30	270.80	1.50		0.089	19.3	15200
282.80	284.30	1.50		0.020	9.3	16000
284.30	285.80	1.50		0.010	10.2	19300
285.80	287.30	1.50		0.035	27.0	31600
287.30	288.80	1.50		0.070	37.4	21500
288.80	290.30	1.50		0.049	27.1	34200
290.30	291.80	1.50		0.065	51.3	72600
291.80	293.30	1.50		0.020	14.8	33300
293.30	294.80	1.50		0.335	28.8	15000
294.80	295.80	1.00		0.035	23.2	17200
295.80	297.30	1.50		1.310	37.9	16100
297.30	299.10	1.80		0.510	51.5	7570

A further eight holes ET-08-01 through ET-08-08 on the ET zone were released in November 2008.

ET-08-01

Drilled on the eastern side of the ET shoot below level 9. The hole intersected the Avino vein but gold and silver values are low.

Avino vein 196.90 – 213.40m (16.5m).

Detailed intersections

From (m)	To (m)	Length (m)	Description	g/t		Ppm
From (m)	To (m)	Length (m)	Description	Au	Ag	Cu	Pb	Zn
196.90	198.40	1.50	Avino Vein	0.322	3.6	259	149	719
198.40	199.90	1.50		0.020	7.8	97	68	554
199.90	201.40	1.50		0.054	5.2	331	180	665
201.40	202.90	1.50		<0.005	2.4	306	45	2079
202.90	204.40	1.50		0.090	1.6	271	54	5950
204.40	205.90	1.50		0.005	0.6	456	25	2784
205.90	207.40	1.50		<0.005	0.8	168	16	4381
207.40	208.90	1.50		<0.005	0.8	229	18	2361
208.90	210.40	1.50		0.040	1.3	178	34	3494
210.40	211.90	1.50		0.015	0.3	320	23	2502
211.90	213.40	1.50		0.005	3.0	621	29	3957

ET-08-02

Drilled on west side of ET shoot 50 m west of workings on level 10.

The hole intersected gold values in the hanging wall of the main Avino vein, 189.75 – 194.25m (4.50m) 2.66 g/t gold 19.7 g/t silver. The overall vein was intersected 189.75 – 213.50m (23.75m).

Detailed intersections

From (m)	To (m)	Length (m)	Description	g/t		Ppm
From (m)	To (m)	Length (m)	Description	Au	Ag	Cu	Pb	Zn
189.75	191.25	1.50	Avino Vein	2.635	19.4	692	724	817
191.25	192.75	1.50		3.225	12.0	113	95	612
192.75	194.25	1.50		2.080	27.7	224	125	595
194.25	195.75	1.50		<0.005	40.5	1734	454	847
195.75	197.25	1.50		<0.005	3.4	28	184	1074
197.25	198.75	1.50		<0.005	4.0	42	168	690
198.75	200.25	1.50		<0.005	4.9	201	352	1042
200.25	201.75	1.50		<0.005	10.6	276	162	670
201.75	203.25	1.50		0.035	20.3	68	320	1091
203.25	204.75	1.50		<0.005	12.7	228	413	871
204.75	206.25	1.50		<0.005	32.2	751	317	530
206.25	207.75	1.50		<0.005	8.5	1200	83	410
207.75	209.25	1.50		<0.005	10.3	957	134	660
209.25	210.75	1.50		<0.005	25.5	1180	185	522
210.75	212.25	1.50		<0.005	22.9	2220	423	3806
212.25	213.50	1.25		<0.005	36.9	400	473	2021

ET-08-03

Also drilled on the west side of ET workings approximately 50m beyond end of level 11 ½. Intersected a mineralized breccia in the hanging wall rock 80.40 – 84.50m (4.1m) 3.82 g/t gold, 103 g/t silver. The main vein was intersected 214.55 – 257.85m (43.3m) 0.52 g/t gold, 43 g/t silver.

Detailed intersections

From (m)	To (m)	Length (m)	Description	g/t		Ppm
From (m)	To (m)	Length (m)	Description	Au	Ag	Cu	Pb	Zn
79.75	80.40	0.65	Breccia Zone	0.020	14.7	409	40	2080
80.40	81.90	1.50		1.396	48.0	2641	148	435
81.90	83.20	1.30		6.720	174.4	2456	327	21
83.20	84.50	1.30		3.703	96.4	1815	818	94
214.55	216.05	1.50	Main Avino Vein	0.135	21.2	315	241	217
216.05	217.55	1.50		0.109	40.6	257	618	318
217.55	219.05	1.50		3.017	113.2	5264	177	123
219.05	220.55	1.50		0.096	7.9	1528	298	330
220.55	222.05	1.50		0.025	8.8	405	253	275
222.05	223.66	1.50		0.128	11.9	520	687	391
223.56	225.05	1.50		0.049	9.6	1592	5318	570
225.05	226.55	1.50		0.105	8.4	631	331	750
226.55	228.05	1.50		0.084	21.1	432	167	487
226.05	229.55	1.50		0.100	21.7	517	1910	584
229.55	231.05	1.50		0.723	82.3	484	4282	3006
231.05	232.55	1.50		1.310	94.9	3753	565	674

From (m)	To (m)	Length (m)	Description	g/t		Ppm
From (m)	To (m)	Length (m)	Description	Au	Ag	Cu	Pb	Zn
232.55	234.05	1.50	Main Avino Vein	1.890	58.4	574	474	619
234.05	235.55	1.50		1.658	69.1	1117	412	687
235.55	237.05	1.50		2.756	53.0	2590	396	711
237.05	238.55	1.50		1.065	28.7	1816	280	410
238.55	240.05	1.50		0.219	66.5	1263	916	416
240.05	241.55	1.50		0.185	45.3	369	191	424
241.55	243.05	1.50		0.167	42.0	1220	482	438
243.05	244.55	1.50		0.382	48.1	8097	525	2111
244.55	246.05	1.50		0.648	60.7	1638	766	716
246.05	247.55	1.50		0.506	49.7	1311	549	415
247.55	249.05	1.50		0.125	39.7	1343	911	475
249.05	250.55	1.50		0.160	78.1	3430	790	737
250.55	252.05	1.50		0.135	92.9	3617	551	506
252.05	253.55	1.50		0.130	44.4	5739	351	603
253.55	255.05	1.50		0.070	42.6	3395	796	357
255.05	256.55	1.50		0.045	30.0	2971	365	374
256.55	257.85	1.30		0.025	31.4	5772	1510	686

ET-08-04

Hit the Avino vein 75m below the lowest working level 12 of the mine, it intersected the Avino vein from 321.00 - 341.10m (20.1m) which includes 327.00 – 330.00m 3m 1.17 g/t gold, 133 g/t silver.

337.50 – 341.10m (3.6m) 0.04 g/t gold, 128 g/t silver and 327.00 – 341.10m (14.1m) 81 g/t silver, 0.726 copper.

Detailed intersections

From (m)	To (m)	Length (m)	Description	g/t		Ppm
From (m)	To (m)	Length (m)	Description	Au	Ag	Cu	Pb	Zn
321.00	322.50	1.50	Main Avino Vein	0.501	34.2	2378	264	426
322.50	324.00	1.50		1.146	71.0	3147	421	496
324.00	325.50	1.50		0.904	55.2	4652	230	288
325.50	327.00	1.50		0.262	54.9	1395	230	236
327.00	328.50	1.50		2.174	165.0	8408	509	286
328.50	330.00	1.50		0.173	101.9	7194	8582	3727
330.00	331.50	1.50		0.053	56.0	4926	5923	18300
331.50	333.00	1.50		0.095	54.9	4081	2559	561
333.00	334.50	1.50		0.080	23.1	1089	1199	301
334.50	336.00	1.50		0.052	56.6	11000	536	597
336.00	337.50	1.50		0.030	49.7	10900	170	618
337.50	339.00	1.50		0.032	156.6	14700	395	853
339.00	340.00	1.00		0.025	48.4	6149	174	595
340.00	341.10	1.10		0.064	161.8	8252	2170	1765

ET-08-05

Drilled approximately 80m east of hole ET-08-04 intersected the Avino vein 293.35 – 302.70 (9.35m). It is well off the ET shoot and did not intersect significant gold or silver values but copper values are of interest:

Detailed intersections

From (m)	To (m)	Length (m)	Description	g/t		Ppm
From (m)	To (m)	Length (m)	Description	Au	Ag	Cu	Pb	Zn
290.95	292.30	1.35	Main Avino Vein	0.172	16.7	533	3964	643
292.30	293.35	1.05		0.096	0.5	581	5078	2842
293.35	294.85	1.50		0.379	30.8	2116	8000	559
294.85	296.35	1.50		0.050	12.3	2654	7063	582
296.35	297.60	1.25		0.568	67.3	3564	3688	164
297.60	299.10	1.50		0.062	42.4	5360	1771	688
299.10	300.60	1.50		0.020	31.8	14900	896	3473
300.60	301.70	1.10		0.060	34.4	11300	282	1743
301.70	302.70	1.00		0.130	44.2	10000	469	1265

ET-08-06

Intersects the Avino vein 60m east of final working face on level 11 ½. The Avino vein is wide: 237.60 – 288.70m (51.10m) but gold and silver values are low although some high copper grades were intersected on the foot wall side of the vein:

Detailed intersections

From (m)	To (m)	Length (m)	Description	g/t		Ppm
From (m)	To (m)	Length (m)	Description	Au	Ag	Cu	Pb	Zn
237.60	238.25	0.65	Main Avino Vein	0.140	74.2	3526	7260	909
238.25	239.75	1.50		0.065	22.4	2260	344	383
239.75	241.25	1.50		0.020	8.7	883	43	528
241.25	242.75	1.50		0.115	10.1	2249	374	1981
242.75	244.25	1.50		0.045	8.7	2641	40	631
244.25	245.75	1.50		0.105	14.4	3472	87	651
245.75	247.25	1.50		0.072	17.1	4780	41	876
247.25	248.75	1.50		0.053	20.5	6107	100	950
248.75	250.25	1.50		0.100	11.0	4619	191	1044
250.25	251.75	1.50		0.120	10.4	4869	282	784
251.75	253.25	1.50		0.035	4.0	1261	45	662
253.25	254.75	1.50		0.163	14.9	2553	78	835
254.75	256.25	1.50		0.045	25.4	6483	95	734
256.25	257.75	1.50		0.015	12.0	5544	40	871
257.75	259.25	1.50		0.025	39.8	5758	217	521
259.25	260.75	1.50		0.025	20.6	6136	89	465
260.75	262.25	1.50		0.015	10.5	3202	74	327
262.25	263.75	1.50		0.059	24.0	3670	105	533
263.75	265.25	1.50		0.049	28.7	3252	183	718
265.25	266.75	1.50		0.053	14.2	6129	112	584
266.75	268.25	1.50		0.156	47.3	7192	217	399
268.25	269.75	1.50		0.102	19.8	3342	125	326
269.75	271.25	1.50		0.030	9.1	4101	38	414
271.25	272.75	1.50		0.010	9.3	2611	94	455
272.75	274.25	1.50		0.020	7.9	3355	41	391
274.25	275.75	1.50		0.020	16.5	4405	58	496
275.75	277.25	1.50		0.076	82.7	4570	422	979
277.25	278.75	1.50		0.084	58.4	5545	956	593
278.75	280.25	1.50		0.010	16.6	5749	74	659
280.25	281.75	1.50		0.020	18.7	4592	68	575
281.75	283.25	1.50		0.015	16.1	4219	74	651
283.25	284.75	1.50		0.038	23.6	3526	7260	909
284.75	286.25	1.50	Main Avino Vein	<0.005	6.7	2841	22	1225
286.25	287.75	1.50		0.092	49.4	25700	44	2712
287.75	288.70	0.95		0.105	62.5	27200	57	2669

ET-08-08

Drilled approximately 100m east of the ET-08-01 it intersected the main Avino vein 192.95 – 203.25m (10.3m)

Detailed intersections

From (m)	To (m)	Length (m)	Description	g/t		Ppm
From (m)	To (m)	Length (m)	Description	Au	Ag	Cu	Pb	Zn
192.95	194.45	1.50	Main Avino Vein	1.456	4.6	318	57	508
194.45	195.95	1.50		0.431	4.4	329	256	502
195.95	197.10	1.15		0.325	13.5	1523	2446	3813
197.10	198.60	1.50		0.100	2.5	133	355	1688
198.60	199.70	1.10		0.048	4.4	101	36	1206
199.70	200.80	1.10		0.046	5.7	69	72	896
200.80	201.75	0.95		0.203	27.2	120	301	627
201.75	203.25	1.50		0.030	6.5	431	43	1048

San Gonzalo Deposit

During 2006 and 2007, Avino drilled 82 holes totaling approximately 18,000 m to explore targets across the Avino property. The Company decided to focus on the San Gonzalo vein system. The San Gonzalo structure strikes NW/SE and dips very steeply (85-90°) to SW. During 2007, Avino drilled 40 holes totaling 9,204 meters to explore San Gonzalo. Results of these holes were released as assays became available (See Avino’s website for news releases). The 2007 drill results were compiled into the “Resource Estimate on the San Gonzalo vein” by David Gunning P.Eng, of Orequest Consultants, August 31, 2009.

Details are as follows:

NI 43-101 Resource Calculation

An NI 43-101 resource calculation for San Gonzalo, completed by Orequest Consultants, estimates that the zone contains 4.75 million ounces of silver and 37,300 ounces of gold, calculated as follows:

Tonnes Ag g/t Au g/t Zinc % Lead %

444,250 332 2.61 1.5 1.0

These figures were compiled from 2007 surface drilling at San Gonzalo (January to December 2007, 40 holes, 9,204 metres), which produced some significant silver intersections.

In 2008, Avino drilled a further 8 holes at San Gonzalo as follows:

Hole SG-08-01 on the San Gonzalo vein intersected a 2.75-metre zone 1.13 g/t gold and 155 g/t silver of gold and silver mineralization with the following values:

SG-08-01

Detailed intersections

From (m)	To (m)	Length (m)	Au (g/t)	Ag (g/t)	Cu (ppm)	Pb (ppm)	Zn (ppm)
143.05	144.40	1.35	1.330	168.6	309	530	3598
144.40	145.80	1.40	0.930	142.1	131	560	1540

Hole SG-08-02 intersected two zones of mineralization. The first zone, located above the San Gonzalo vein in the hanging wall, measured 1.60 metres grading 1.72 g/t gold and 704 g/t silver. The second zone, located within the vein, measured 3.0 metres grading 10.28 g/t gold and 545 g/t silver. Intersection and grade details were as follows:

SG-08-02

Detailed intersections

From (m)	To (m)	Length (m)	Au (g/t)	Ag (g/t)	Cu (ppm)	Pb (ppm)	Zn (ppm)
257.50	258.05	.55	.420	150.2	318	2832	5393
258.05	258.70	.65	3.840	1564.4	264	13100	13900
258.70	259.10	.40	0.075	68.1	79	266	502

263.05	263.75	.70	10.765	1275.6	7394	106000	146000
263.75	263.95	.20	0.115	62.3	364	4916	31000
263.95	264.70	.75	2.606	587.4	4327	76200	200000
264.70	265.30	.60	7.337	224.1	2363	146000	355000
264.30	266.05	.75	22.560	204.2	917	80000	126000

SG-08-02 was drilled to explore a gap between previous holes SG-07-14 (5.40 m @ 1.52 g/t gold and 774 g/t silver) and hole SG-07-22 (2.26 m. @ 1.497 g/t gold 152g/t silver).

Aguila Mexicana: Seven holes – AM-08-01 thru 07

SG-08-03

Intersected San Gonzalo vein 322.20-325.7m (3.7m) 0.41 g/t gold 119 g/t silver which includes 322.00-323.70 m (1.7m) 0.2 g/t gold 74.7 g/t silver and 323.70 – 325.7m (2.0m) 0.58 g/t gold 156 g/t silver.

Detailed intersections

From (m)	To (m)	Length (m)	Description	g/t		ppm
From (m)	To (m)	Length (m)	Description	Au	Ag	Cu	Pb	Zn
321.40	322.00	0.60	Andesite volcanic with quartz veins	0.016	1.6	33	126	423
322.00	322.85	0.65		0.215	74.1	409	11500	2725
322.85	323.70	0.85		0.195	75.2	389	2665	3405
323.70	324.10	0.40		0.109	221.0	3668	65000	3569
324.10	324.90	0.80	San Gonzalo vein with quartz breccia	0.925	55.0	264	6449	3610
324.90	325.70	0.80		0.457	223.5	729	15500	4012
325.70	327.00	1.30		0.288	31.8	483	2241	2408

SG-08-04

Intersected San Gonzalo vein 261.25-264.6m (3.35m) 0.5 g/t gold 59 g/t silver.

Detailed intersections

From (m)	To (m)	Length (m)	Description	g/t		ppm
From (m)	To (m)	Length (m)	Description	Au	Ag	Cu	Pb	Zn
261.25	261.75	0.50	San Gonzalo Vein	0.802	81.0	145	754	1251
261.75	262.75	1.00		0.331	61.4	234	1014	2002
262.75	263.15	0.40		0.040	11.2	39	109	353
263.15	263.70	0.55		0.990	85.0	119	396	794
263.70	264.60	0.90		0.424	49.7	208	440	702

SG-08-05

Did not intersect the San Gonzalo vein but hit a breccia zone which may be part of the vein system. Values were low:

Detailed intersections

From (m)	To (m)	Length (m)	Description	g/t		ppm
From (m)	To (m)	Length (m)	Description	Au	Ag	Cu	Pb	Zn
437.75	438.50	0.75	Breccia Zone	0.030	0.1	5	33	32
438.50	438.90	0.40		<0.005	<0.1	6	22	76
438.90	439.55	0.65		0.015	<0.1	7	18	65
439.55	440.35	0.80		0.010	<0.1	8	14	30

SG-08-06

Intersected San Gonzalo 214.05 – 219.70m (5.65m) 0.88 g/t gold, 235 g/t silver.

Detailed intersections

From (m)	To (m)	Length (m)	Description	g/t		ppm
From (m)	To (m)	Length (m)	Description	Au	Ag	Cu	Pb	Zn
214.05	214.85	0.80	San Gonzalo vein with Sulphide Minerals	0.729	204.0	2944	21400	17600
214.85	215.95	1.10		0.523	95.0	1189	5264	6417
215.95	216.80	0.65		0.335	47.5	398	1486	2918
216.80	218.00	1.20		0.360	87.3	1960	5342	7772
218.00	218.85	0.85		3.228	758.9	3731	18500	19000
218.85	219.70	0.85		0.402	316.1	7094	17500	14800

San Gonzalo Bulk Sample Program:

In 2009 and the early part of 2010, Avino’s main focus was to lay the ground work for a bulk sampling program to firm up the grade and the metallurgy of the San Gonzalo deposit. The sampling program was also to provide the needed concentrate material for further evaluation by various smelters and trading companies and for on-site processing if deemed feasible.

Applications for permits to the various regulatory agencies were submitted early in 2009 and the permits were granted within 8 to 12 weeks after the applications were filed.

A major portion of the work and investment over the last couple of years has centered on improving and upgrading the existing mill and equipment.

In December 2009, the Company announced that contract terms had been finalized with Desarrollo Minero Guadalupe S.A. de C.V. (“DMG”) for the mining of the 10,000 tonne bulk sample from the San Gonzalo deposit.

The mining contract included collaring of the portal, driving 1,000 meters of development consisting of a decline, crosscuts and raises and the extraction of 10,000 tonnes of mineralized vein material.

In January 2010, DMG began driving the first decline to the 2,260 m elevation for development work and extraction of the bulk sample. The San Gonzalo vein was intersected in May 2010 and a smaller splay vein was intersected two months later. A second decline was driven to the 2,306m level.

By July 2010 both levels had intersected the San Gonzalo vein. The Upper Level 1 has been driven northwest along the San Gonzalo Vein and broke in to the old San Gonzalo workings. The exploration drift on the Lower Level 2 (2260 m) along the San Gonzalo vein was also advanced to the northwest towards the old San Gonzalo workings.

On October 6, 2010, the two levels were connected with the completion of the first raise allowing the start of stoping (cut and fill) for the bulk sample. Within four days an initial 731 tonnes had been produced from the block of ground which was estimated to contain approximately 11,000 tonnes. The rock was stockpiled for approximately 6 to 8 weeks while the mill completed its program of flotation concentration of the stockpiled ore from the ET zone of the main Avino vein. By mid-November, approximately 2,000 tonnes of mineralized vein rock had been broken from the first stope and assays confirmed a calculated average grade of 1.9g/t gold and 340 g/t silver.

Samples from channels cut across the San Gonzalo vein were as follows: (from west to east)

Length along vein (metres)	Width (metres)	Gold (g/t)	Silver (g/t)	Lead (ppm)	Zinc (ppm)	Copper (ppm)
21.04	2.83	1.146	394	3580	3112	502
27.24	2.41	1.231	342	4999	2202	442
11.37	1.61	1.752	532	9651	11438	1605

In November, 2010, assays from initial sampling in the eastern raise were received. Samples are as follows:

Line	Width (m)	Gold g/t	Silver g/t	Lead g/t	Zinc g/t	Copper g/t
1	0.75	1.112	227	4012	1772	930
2	1.10	3.621	508	7007	4295	657
3	1.05	2.243	384	4817	718	1263
4	1.25	6.120	216	2563	1206	2398
5	1.15	2.221	380	5712	1330	1689
6	1.25	1.436	260	3921	1925	852
7	1.30	1.391	727	5667	1305	448
8	1.15	0.670	313	1656	1339	667
9	1.10	1.413	344	4322	904	1394
10	1.25	2.078	276	12255	1762	891
11	1.60	1.077	315	2339	482	815
12	1.30	3.642	514	5893	698	745
13	1.35	1.698	707	3323	610	372
14	1.65	1.493	422	4202	896	258
15	1.10	1.518	588	2304	610	173
16	1.60	1.122	366	3234	824	334
17	1.30	4.030	171	10609	633	509
18	1.25	1.769	224	12334	1161	1091
Average:	1.25	2.135	389	5313	1197	831

The samples were assayed by Inspectorate Labs. Samples were crushed and ground in Durango with pulps assayed in Richmond, British Columbia using fire assay and AA finish for gold, four acid digestions, AA for most silver with fire assay and gravimetric finish for silver, and Aqua Regia digestion and ICP for base metals.

Development for the extraction of the 10,000 tonne bulk sample was completed by the mining contractor DMG in early January 2011.

The processing of the San Gonzalo bulk sample began on January 18, 2011. Monthly totals to February 11, 2011 were 1,550 tonnes milled for production of 47 tonnes of concentrate grading 8.4kg/t silver. Average month to date silver feed grade for February was 329g/t at 77% recovery. The feed grade result was similar to the estimated resource grade of 332g/t in the NI 43-101 report by Orequest 2009.

Silver recovery of 77% was an improvement over January results of 70% when 1793 tonnes were processed for the production of 72 tonnes of concentrate grading 5 Kg/t silver and 28.3 g/t gold. The mineralized zone where the bulk sample has been extracted is partially oxidized and near the surface. Efforts are continuing to be made at the plant to improve the recovery. With the extraction of the bulk sample complete, Wardrop mining engineers visited San Gonzalo underground workings in late March. Wardrop Engineering has recommended development by a 12% ramp (decline) in the foot wall approximately 40m from and parallel with the San Gonzalo vein. The vein can then be drilled in detail by close spaced underground drilling from cross cuts off the ramp. This will permit stope design. Wardrop's engineers believe that the planned production of 250 tonnes per day is achievable and requires three active stopes at all times.

The Company is mining a new stope and two sets of back (ie roof) sample results have been received from Inspectorate Labs. The values are as follows:

Assay Values (ppm)
		Width	Gold	Silver	Lead	Zinc	Copper
Line 2		1.15	0.977	423	1137	3928	509
Line 3		1.50	0.513	333	1471	4066	767
Line 4		1.40	0.828	402	1340	1931	522
	Average	1.35	0.754	383	1331	3289	609

Line 5		1.50	0.459	176	2612	2889	392
Line 6		1.00	0.219	91	3786	4630	513
Line 7		1.25	0.679	223	737	1341	131
Line 8		1.85	1.301	178	1188	1316	240
Line 9		1.80	0.904	274	2204	774	230
Line 10		2.35	1.551	392	2819	1238	397
	Average	1.63	0.968	244	2197	1782	313

II Line 1		2.60	0.778	165	1261	1483	135
II Line 2		2.00	0.518	238	1635	1830	222

II Line 3		2.10	1.692	536	2566	2875	276
Includes Sample 158328		0.5	3.156	1151.6	3914	6096	540

II Line 4		1.80	1.841	397	1051	601	374
Includes Sample 158332		0.6	3.384	761.2	2310	886	725

II Line 5		2.50	0.546	191	692	1981	356
	Average	2.20	1.026	293	1415	1780	267

The San Gonzalo vein in the new stope 2-200 shows strong values of gold, silver, lead and zinc over mineable widths. These support the assays from the adjoining raise (L1 through L19) taken in meter intervals over a 19 meter length. The average width was 1.23m, 2.071 g/t gold, 381 g/t silver, 5349 ppm lead, 1182 ppm zinc.

2011 Drill Program.

The Company started a new regional exploration drill program on January 27, 2011 and the first hole SG-11-01 was finished January 30, 2011. The program is expected to cover over seven thousand meters through 56 core holes. The program is designed to both increase resources at San Gonzalo and explore new targets on other areas of the property. A commercial production decision will be made pending the outcome of this economic analysis. Mining and milling operations will continue during the economic analysis process.

The proposed in house mine plan options are currently undergoing review. The aim is to select the most cost effective plan to mine the entire San Gonzalo orebody and to provide a sustained mill production rate of 250 tonnes per day. A development schedule together with the selected mining method will be made once the review has been completed.

Eagle Property

Ownership. The wholly owned Eagle property was acquired in 2003 when Avino purchased a 100% interest in 14 quartz leases by issuing 200,000 common shares at a price of $0.50 per share for total consideration of $100,000. The property was written down to a nominal value of $1 in fiscal 2006 by a charge to operations of $103,242 and currently has a deferred value of $2,504.

Property Description and Location. The 516 ha property is located in the Yukon Territory approximately kilometers west of Keno City. It is currently in its Phase I stage of exploration. The property is accessed by a road. Whitehorse, the nearest major city, is approximately 380 kilometres to the south of the village of Mayo. The village of Mayo is 60 kilometers to the southeast of Keno City. The Eagle property lies on the south-east facing slope of Galena Hill where the elevations range from about 1350 to 1540 m. Permafrost, while thin to non-existent in places, is reported to be found under accumulations of surface rubble left from glaciation.

History. The Eagle property has produced positive assays for silver since exploration first occurred there in 1964. The initial drill program, consisting of 29 holes, encountered assays of 6,900 grams per tonne of silver over 1.2 metres in hole #23 and 1,708 grams per tonne of silver over 2.1 metres in hole JB1. Follow-up drilling in 1978 was designed to expand on the discoveries of hole #23. This discovery became known as the Eagle vein. The Eagle property is part of the historic Keno Hill mining camp.

The Eagle Property includes historic surface trenches that expose a section of the Eagle vein, a strong transverse vein-fault hosted in Keno Hill Quartzite. The Eagle vein varies from 0.6 to 4.9 metres wide with mineralized lenses of galena, tetrahedrite and sphalerite. Yukon Government files report that a total of 33 holes totalling 3,075.5 metres have been drilled along 300 metres of vein strike on the property in two programs (1964 and 1978/79). The best intercepts are reported in the following table.

EAGLE VEIN – HISTORIC REPORTED DRILLING (YTG MinFile 105M 021)
Year	Operator	Reported Structure	Reported Intercept (m)	Silver g/t	Lead %	Zinc %
1964	Jersey Yukon Mines Ltd.	Branch Vein	2.1	1,885.7	12.8	4.2
		Main Vein (parallel intercepts)	0.15	7,624.9	1.2
			0.4	682.3	11.6
1978/79	Teck Corporation	Main Vein (DDH JB3)	1.5	366.6	5.4	6.8

Soil sampling conducted in 1971 by United Keno Hill Mines Ltd. outlined a strong 300 metre long Pb-Ag anomaly across the southern boundary of Mega Silver Inc.’s (“Mega Silver”, now known as “Mega Precious Metals”) adjoining Man claim that apparently represents the untested northeast extension of the Eagle vein.

On November 12, 2008 and amended April 1, 2009, the Company entered into an option agreement (the “Option Agreement”) with Mega Silver, whereby Mega Silver can earn the exclusive right and option to acquire a 100% title and interest in the Eagle Property located in the Yukon Territory. In October 2009, Mega Silver returned the Eagle property to the Company due to a change in its corporate exploration objective.

During 2008, the Company received $25,000 upon execution of the Option Agreement which was recorded in income.

During 2009, Mega Silver completed six NTW diamond drill holes on the Eagle property totalling 1,897.1 metres. The work program was successful in indentifying strong silver-gold-indium enriched zinc and lead mineralization hosted in the Eagle vein fault, a known and proven host of significant intercepts of Pb-Zn-Ag mineralization, including a reported 7,624.9 g/t Ag, 1.2% Pb and 1.5% Zn over 0.15metres (hole E64-23). The work has also established that indium, used in plasma screens, is present in significant concentrations in the sphalerite enriched Eagle vein.

Hole D09EE-02 intersected three vein structures within a 23.7m wide zone assaying 47.1 g/t Ag, 0.38 % Pb, 3.85% Zn and 37.7 g/t In, and includes the upper vein which assayed 0.3g/t Au, 284.3 g/t Ag, 3.16% Pb, 7.11% Zn and 57.9 g/t In. In addition, hole D09EE-01 intercepted possible replacement-style disseminated arsenopyrite and pyrite mineralization that assayed 1.26 g/t Au over 1.5m (351.0-352.5m), indicating a possible new gold exploration target in the camp similar to the skarns of the Newry (Aurex) gold prospect roughly 13 km to the west-southwest.

The 2009 Eagle Project work program was successful in identifying strong silver-gold-indium enriched zinc and lead mineralization hosted in the Eagle vein fault, a known and proven host of significant intercepts of Pb-Zn-Ag mineralization, including a reported 7,624.9 g/t Ag, 1.2% Pb and 1.5% Zn over 0.15metres (hole E64-23). The 2009 work has also established that indium, used in plasma screens, is present in significant concentrations of up to 285.4 g/t indium (In) over 1.8m (Hole D09EE-11) in the sphalerite enriched Eagle vein.

EAGLE PROPERTY - DIAMOND DRILL RESULTS SUMMARY
Hole Number	Intercept						Analytical Results*
Hole Number	Target	Drill Section	From (m)		To (m)	Width (m)	Au (ppb)	Ag (g/t)	Pb (ppm)	Zn (ppm)	In (g/t)
D09EE-01	Eagle Vein	L40+00E		328.6	332.7	4.1	16	15.1	554	1.16%	11.3
				346.3	352.5	6.2	425	12.2	489	1.86%	22.9
			Incl.	351.0	352.5	1.5	1263	15.7	138	797	0.1
D09EE-02	Eagle Vein	L40+00E		272.9	296.6	23.7	60	47.1	3750	3.85%	37.1
			Incl.	272.9	274.2	1.3	312	284.3	3.16%	7.11%	57.9
			Incl.	283.7	284.8	1.1	222	110.8	1.90%	12.01%	89.4
			Incl.	288.3	296.0	7.7	46	20.9	1008	4.89%	65.8
D09EE-03	Eagle / McLeod	L33+50E		267.7	268.4	0.7	8	29.4	3120	5262	n/a
D09EE-04	McLeod Fault	n/a		-	-	-	No significant results.
D09EE-10	Eagle Vein	L39+00E		305.1	305.9	0.8	160	28.1	0.35%	3.23%	n/a
D09EE-11	Eagle Vein	L42+00E		232.7	241.1	8.4	181	10.3	668	1.09%	n/a
			Incl.	232.7	234.1	1.4	934	18.6	482	2.53%	n/a
				244.5	265.5	19.0	58	29.1	2805	2.79%	n/a
			Incl.	252.5	254.5	2.0	112	145.0	1.03%	3.17%	20.3
			And	262.8	264.6	1.8	230	31.9	626	18.52%	285.4

* Analytical results reported in ppb (Au) and ppm (Pb, Zn) and g/t (In) unless otherwise indicated .

Mega Silver has returned the Eagle property to the Company due to a change in its corporate exploration objective which is now focused in the Red Lake gold camp in northwest Ontario.

In 2010, the Company commissioned Jean Pautler, a qualified person to review all historic data from previous work done on the property and make a recommendation for future work program. Pautler’s recommendations are based on a property visit on June 28, 2008, previous experience in the Keno silver mining camp, a review of the historical data and a review of the 2009 work program carried out by Mega Silver while the property was under option from the Company.

Proposed Work Program. The 2009 work program identified strong results which the company believes warrant further exploration. The Company is currently evaluating other possibilities.

Aumax Property

Ownership. The Aumax Property is wholly owned by the Company. In 2003, the Company acquired a 100% interest in six Crown granted mineral claims, located in the Lillooet Mining Division of British Columbia, Canada by issuing 200,000 common shares at a price of $0.50 per share and paying $4,000 in cash for total consideration of $104,000. During the fiscal year ended January 31, 2007, these mineral claims were converted into one claim encompassing all of the original claims. During the fiscal year ended December 31, 2009, the Company wrote down the value of these exploration costs to a nominal value of $1 by an impairment charge to operations of $187,852.

Property Description and Location. The property is located in southern British Columbia approximately 16 kilometers southwest of the town of Lillooet. The property can be accessed from Lillooet by a logging road. The upper zone of the Aumax property can be accessed by hiking a further 1.5 km to the southwest. The property covers approximately 975 hectares and is located between Cayoosh Creek and Phair Creek. The showings were discovered in 1999. The showings have economically interesting gold and silver values.

History. Cayoosh Creek has a history of limited placer gold production starting in the 1860’s. Some of this production occurred immediately downstream of the property, near the mouth of Downtown Creek.

A limited exploration program of prospecting, rock and soil sampling and mechanized trenching was carried out in October of 1999. Trenching on the Aumax showing was inconclusive. Many highly anomalous quartz-carbonate boulders were excavated but bedrock was not reached in critical areas. Chip samples of veins exposed in the trenches were highly anomalous, generally in the hundreds of parts per billion gold. Further prospecting and soil sampling of the southeast (upslope) of the Aumax showing was recommended.

Limited soil sampling and prospecting in 1999 on the Upper Zone returned extremely anomalous soil samples. A grid geochemical sampling and further prospecting in this area was recommended.

The Company has placed a reclamation bond of $1,500 at December 31, 2010 (December 31, 2009:$1,500), registered in the name of the Ministry of Finance of British Columbia, as security for estimated future reclamation costs.

Proposed Work Program. Geological studies conducted late in 2002 concluded that the discoveries to date lie downslope of the mineral source. A subsequent report in November 2004 recommended a Phase 1 program of more prospecting, geological mapping and additional soil sampling to determine the source of the mineralization. Based on the results of this program, Phase 2 exploration would include trenching and possible diamond drilling but to date, no work program has been proposed.

Olympic-Kelvin Property

Ownership. The Olympic-Kelvin property is wholly owned by the Company and was acquired in 1987 when it acquired a 100% interest in 20 reverted Crown granted mineral claims, one located mineral claim and three fractions located in the Lillooet Mining Division of British Columbia. The property was written down entirely in fiscal 2002. During the fiscal year ended January 31, 2007, these original mineral claims and fractions were converted into six claims encompassing all of the original claims. The Company recommenced exploration of the property in fiscal 2004 and ceased exploration activities in fiscal 2006. During the fiscal year ended December 31, 2009, the Company wrote down the value of these exploration costs to a nominal value of $1 by an impairment charge to operations of $163,466. The Company will maintain these claims in good standing and may decide to commence exploration again on the Olympic-Kelvin Property. However, the current focus of the Company is its exploration activities in Mexico.

Property Description and Location. The Olympic-Kelvin property totals approximately 662.5 hectares and is located on the south side of Carpenter Lake, five kilometers northeast of Goldbridge in the Lillooet Mining Division, British Columbia.

The Olympic-Kelvin property is easily accessible by the all-weather, publicly maintained, Gray Rock logging road which runs northeast from Goldbridge. Access on the Olympic-Kelvin property is possible on a number of cat trails built by the Company and previous operators.

The Olympic-Kelvin property covers rocks of the Pioneer Formation and Bridge River Terrane. These rocks are cut by northwest trending regional scale structures sub-parallel to the Ferguson and Cadwallader Structures. The structures on the Olympic-Kelvin property are roughly the same distance from the Upper Cretaceous-Tertiary granitic Bendor Intrusions as the Bralorne/Pioneer mines. A similar flexure is present in the northwest trending structures on the Olympic-Kelvin property. These structures on the property are mineralized with gold and silver and have received considerable past work, including at least four adits.

History. The Company recommenced exploration on the Olympic-Kelvin property in January 2004, following up on work completed in 1988 that outlined two prospective areas for gold and silver, the Margarita Zone and the Enigma Zone.

In the Margarita Zone, hole OLY 88-4 returned 24 grams per tonne of gold over 0.85 metres within a much wider intersection of 8.2 grams per tonne of gold over 3.48 metres. The true width of this zone is estimated to be 1.47 metres. A large part of the zone is listwanite, indicating the potential for better grade mineralization immediately below this intersection. Hole OLY 88-6 cut the same zone 75 metres to the northwest and returned 4.26 grams per tonne of gold over 1.34 metres within an eight metre section (5.6 m true width) of mainly listwanite. The area of these intersections is approximately 50 metres off of the Gray Rock Road and could be accessed for mining purposes by an underground ramp from the road.

The Enigma Zone is a colour anomaly on the south shore of Carpenter Lake on Lot 6280, approximately 700 metres east, north-east of the Margarita Zone. Trenching revealed a quartz stock work zone with areas of abundant stibnite. Sampling returned 1.7 grams per tonne of gold over 21 metres within a 75 metre mineralized zone. This is a very wide zone for the Bridge River Camp and, if the zone has significant strike length, it could be amenable to open pit mining. Hole 04-0k-04 was drilled 154 metres under the Enigma Zone and returned highly anomalous gold values. Detailed geological mapping and geochemical sampling has been recommended.

Drilling in January of 2005 was unsuccessful in intersecting the Margarita Zone. One hole was drilled from the east to attempt to intersect the zone. This hole was abandoned at 21.3 metres because of bad ground conditions. No values of economic interest were returned from samples taken from the hole.

The Company has placed a reclamation bond of $1,500 at December 31, 2010 (December 31, 2009: $1,500), registered in the name of the Ministry of Finance of British Columbia, as security for estimated future reclamation costs.

Proposed Work Program. No further work is proposed at this time.

Minto Property

Ownership. The Minto Property is wholly owned by the Company and was acquired in early 1985 when it acquired its 100% interest in eight Crown granted mineral claims, eight reverted Crown granted mineral claims and one located mineral claim, situated in the Lillooet Mining Division of British Columbia. During the January 31, 2007 year end these mineral claims were converted into one claim encompassing all of the original claims. The property was written down to a nominal value of $1 in fiscal 2002. The Company recommenced exploration of the property in fiscal 2006 and ceased exploration activities in fiscal 2007 and during the 2009 year end wrote down the value to a nominal amount of $1 by an impairment charge to operations of $256,800. The Company will maintain these claims in good standing and may decide to commence exploration again on the Minto Property. However, the current focus of the Company is its exploration activities in Mexico.

Property Description and Location. The Minto Property is situated about ten kilometers east of Goldbridge in the Bridge River gold district of British Columbia and adjoins the Olympic-Kelvin Property. The property covers approximately 204 hectares. The claims occupy the lake bed and north side of Carpenter Lake. Access from Goldbridge is made via an all-weather gravel road which skirts the north shore of Carpenter Lake.

Gold Bridge can be reached from Vancouver via Hope and Lillooet, a distance of 445 kilometers, or via Pemberton using the four-wheel-drive Hurley Pass route, a distance of 225 km.

The terrain is rugged, typical of the eastern margin of the Coast Range Mountains. The claim group ranges in elevation from 650 meters on Carpenter Lake to a maximum of 1020 meters.

The climate of the Bridge River District is transitional between humid coastal belt and more arid interior plateau. Annual precipitation is modest with a significant proportion falling as snow in the winter. Summers tend to be warm to hot depending on the altitude, and winters are moderately cold.

History. The claim group has been explored intermittently for over sixty years and several gold-bearing structures are known on the property. Production from the Minto mine between 1934 and 1940 amounted to 88,900 tons of ore returning 17,558 ounces of gold and 50,582 ounces of silver. During 1985, geological, geochemical, and geophysical (VLF-EM) surveys were conducted and trenches were excavated in anomalous areas. In-fill soil geochemistry and further trenching were undertaken in 1987.

A mechanized trenching program was carried out on the Minto Property in June, 2005 to test the Minto North and Jumper Zones. Seven trenches were excavated, sampled, mapped and reclaimed, usually in a one day period. Chip samples from all the trenches returned values from anomalous to economic levels in gold.

In December 2006, the Company announced the results of the 2006 drilling program on the Minto Property. The four diamond core holes were drilled to explore down dip extensions of gold bearing structures originally discovered in trench 827 on the Minto North Zone.

Holes MO-06-01 and 02 were drilled from a site approximately 10 metres west of trench 827. Hole MO-06-03 was drilled from a site approximately 2 metres north and 7 metres east of MO-06-01 and 02. Hole MO-06-04 was drilled from the same set-up.

The gold bearing structures consist of sets of parallel narrow (1-2 mm) fractures containing quartz, carbonate, grey sulphide veinlets. Assay samples from the four holes drilled conveyed from 1.04 grams per ten to 45.4 grams per tonne.

The Company has placed a reclamation bond of $2,500 at December 31, 2010 (December 31, 2009: $2,500), registered in the name of the Ministry of Finance of British Columbia, as security for estimated future reclamation costs.

Proposed Work Program. No further work program has been proposed.

Item 4A. Unresolved Staff Comments

Not Applicable.

Item 5. Operating and Financial Review and Prospects

The following discussion and analysis of the operations, results and financial position of the Company for the year ended December 31, 2010, and December 31, 2009, should be read in conjunction with the Company’s Consolidated Financial Statements and the notes thereto.

The financial statements are prepared in accordance with Canadian GAAP which has notable differences from US GAAP. Canadian GAAP permits the deferral of acquisition and exploration costs, subject to periodic adjustments for impairment, whereas US GAAP requires that such costs be expensed in the period incurred. In addition, US GAAP requires the recognition of a stock-based compensation expense associated with the extension of the expiry date of outstanding warrants whereas Canadian GAAP has no clear guidance on non-service orientated equity awards. See Note 20 to the financial statements which sets out a reconciliation between Canadian and US GAAP.

A. Operating Results

Developments for 2010

Bulk Sampling to Confirm Grades and Recoveries

The ongoing 10,000 tonne bulk sample program on San Gonzalo will allow the Company to assess the economics of the zone and confirm mineral grades and metallurgical recoveries obtained from earlier diamond drilling. With positive results from the bulk sample Company will move into full production.

Mill Rehabilitation Complete

In 2010, the Company completed a three year program that brought extensive modernization to our mill. The upgrades include a new 250 t/day circuit to accommodate high grade ore from the San Gonzalo zone. This facility now has a new electrical system that meets the electrical code, an upgraded crushing plant that included major repairs to the cone crusher, vibrating screens and conveyors. In addition, the on-site assay lab was put into service along with a new AAS unit to provide on-site control assays. The water supply system from the tailings pond and la Caricol were completed and are now fully functional.

Milling Operations

In the second half of the year the Company tested the newly re-furbished mill by processing stockpiled ore left behind from previous mining of the ET Zone. This was done to fine tune the mill for the San Gonzalo bulk sample. By the end of October, the mill had processed over 17,500 tonnes of material to produce approximately 600 tonnes of concentrate. This concentrate was shipped to Manzanillo and sold to MRI trading AG. The mineral at San Gonzalo is silver, gold, lead, and zinc; while the ET stockpile on the main vein is silver, copper, and gold. The rock from ET, while harder than the San Gonzalo material, served as a trial run for the bulk sample.

In November, following the processing of 17,500 tonnes of stockpiled ore left behind from previous mining of the ET zone, relining of the ball mill and the changeover of several conveyor belts in the crushing plant was undertaken. Following the tune up, processing of the San Gonzalo development material began with a daily treatment rate of approximately 180 tonnes per day. This rate was maintained until the development material was finished in January 2011. During this period, a total of 5,896 tonnes of development ore was processed for the production of 192 tonnes of concentrate grading 11.54g/t gold, 3.617kg/t silver with minor amounts of copper, lead and zinc. Feed grade averaged 205g/t Ag and 0.78g/t Au.

Underground Mining

In January 2010, our mining contractor, DMG began driving the first decline at the 2260 m elevation for development work and extraction of the bulk sample. The San Gonzalo vein was intersected in May. A second decline was driven to the 2306m level. The two declines are known as San Gonzalo vein 1 and San Gonzalo. By July both levels had intersected the San Gonzalo vein. On October 13 the two levels were connected with the completion of two raises allowing the start of stoping (cut and fill) for the bulk sample. By mid-November, approximately 2000 tonnes of mineralized vein rock had been broken from the first stope and assays confirmed a calculated and average grade of 1.9g/t gold and 340 g/t silver. This compared well with the original inferred resource, which estimated 444,250 tonnes at San Gonzalo grading 2.61 g/t gold, 322 g/t silver, 1% lead and 1.5% zinc. (Orequest August 31, 2009 NI 43-101 compliant report)

Financing

In late 2010, Sprott Asset Management LP completed two financings to aid the Company’s ongoing development. The financings raised more than $8 million for the Company and helped elevate its profile in the investment community. Sprott participated in the financings on behalf of certain funds and managed accounts including investors introduced by Sprott Private Wealth LP. Sprott has been instrumental in the development of many successful mining ventures and is a leading independent asset manager dedicated to achieving long-term superior returns for its clients.

Results of Operations

The results of operations are based on the fiscal years ended December 31, 2010, 2009 and 2008.

Twelve months ended December 31, 2010 compared with the twelve months ended December 31, 2009.

Operating and administrative expenses

Operating and administrative expenses were $1,130,679 for year ended December 31, 2010 as compared with $669,178 for the year ended December 31, 2009, which is an increase of $461,501.The main increases were $113,941 in office and miscellaneous due to a re-allocation of mineral property costs in one of the Company’s Mexican subsidiaries, and an increase in stock-based compensation expense of $123,897 due to additional options being granted in 2010 and at higher fair value than in 2009. The Company also recorded a provision of $42,478 for uncollectible IVA sales tax whereas in 2009 a recovery of $181,456 was recorded. The fluctuation in the provision for uncollectible IVA sales tax is due to the timing of payments from Mexican Government. Travel and promotion expenses increased by $16,097 due to an increase in travel to Mexico.

Loss for the period

The loss for the year ended December 31, 2010 was $1,490,194 compared with a loss of $987,759 for the twelve month period ended December 31, 2009, an increase of $502,435. As discussed above, there was an increase in operating and administrative expenses of $461,501. The Company also recorded a future income tax expense of $332,141 as compared to a recovery in 2009 of $239,562. These increases were offset by a decrease of $608,118 in an impairment charge to mineral properties in 2009. No impairment charge was recorded in 2010.

Twelve months ended December 31, 2009 compared with the twelve months ended December 31, 2008.

Operating and administrative expenses

Operating and administrative expenses were $669,178 for the twelve month period ended December 31, 2009 as compared with of $1,575,913 for the twelve months ended December 31, 2008, which is a decrease of $906,735. The primary differences are attributable to decreases of $368,113 in stock-based compensation, $82,961 in investor relations and $395,108 in recovery of sales tax. Other decreases include $10,815 in travel and promotion, $8,529 in general exploration, $16,805 in office and miscellaneous, and $27,194 in salaries. The Company recorded $181,456 as a recovery to the Mexican Value-Added Tax (“VAT”) that was written off during the year end December 31, 2008. The Company received the majority of this tax back in cash refunds. The stock based compensation was lower as a result of fewer stock options granted in 2009. The lower expense in investor relations is due to a reduction in research reports and publications. The decline in travel expenses is a result of attending fewer trade shows.

Loss for the period

The loss for the twelve month period ended December 31, 2009 was $987,759 compared with a loss of $1,538,876 for the twelve month period ended December 31, 2008, a difference of $551,117. The decrease of $906,735 in operating and administrative expenses was offset by a reduction in interest income of $78,162, a reduction of $25,000 in option revenue and a write down on British Columbia mineral properties of $608,118. The Company also recorded a future income tax recovery of $239,562 as compared to an expense in 2008 of $98,653, a difference of $338,215. These were offset by a reduction in foreign exchange loss of $17,447, the difference between the loss of $18,249 in 2009 and $38,481 in 2008.

B. Liquidity and Capital Resources

The Company entered into a cost sharing agreement dated October 1, 1997, and amended November 1, 2003 to reimburse Oniva for a percentage of its overhead expenses, to reimburse 100% of its out-of-pocket expenses incurred on behalf of the Company, and to pay a percentage fee based on the total overhead and corporate expenses. The agreement may be terminated with one-month notice by either party. Transactions and balances with Oniva, which is a related company, are disclosed in the transactions with related parties section.

During the year ended December 31, 2010, the Company incurred expenditures that increased its mineral property carrying value on its Mexican properties by $728,055, net of $1,046,005 copper concentrate sales. The Company also incurred expenditures that increased property, plant and equipment by $334,705. At this time, the Company has no operating revenues but earned interest and other income of $14,206 during the year ended December 31, 2010.

At December 31, 2010, the Company had working capital of $8,794,042 and cash equivalents of $9,051,456. The Company is continuing its exploration and drilling program at this time. In 2011, the Company entered into an agreement for the sale of bulk concentrate which the Company believes will generate additional cash.

The Company’s mineral properties are in the exploration stage until such time that the Avino Mine is re-opened. The investment in and expenditures for the mineral properties comprise most of the Company’s assets along with a lesser asset amount in regards to the Avino Mine facilities and equipment. The recoverability of amounts shown for its mineral property interest and related deferred costs is dependent upon the discovery of economically recoverable reserves and the ability of the Company to obtain the financing necessary to complete development and the achievement profitable operations in the future. The outcome of these matters cannot be predicted at this time.

Mineral exploration and development is capital extensive, and in order to re-commence operations at the Avino Mine, the Company may be obliged to raise new equity capital in the future. There is no assurance that the Company will be successful in raising additional new equity capital.

C. Research and Development, Patents and Licenses, etc.

As the Company is a mineral exploration company with no research and development, the information required by this section is not applicable.

D. Trend Information

As at the time of filing this Annual Report and as otherwise disclosed in this Annual Report, the Company is not aware of any specific trends, uncertainties, demands, commitments or events that are reasonably likely to have a material effect on the Company’s net sales or revenues, income from continuing operations, profitability, liquidity or capital resources, or that would cause reported financial information not necessarily to be indicative of future operating results or financial condition. Many factors that are beyond the control of the Company can affect the Company’s operations, including, but not limited to, the price of minerals, the economy on a global scale, land and exploration permitting, and the appeal of investments in exploration companies. The appeal of exploration companies as investment alternatives could effect the liquidity of the Company and thus future exploration, development and financial conditions of the Company. Other factors such as retaining qualified mining personnel and contractor availability and costs could also impact the Company’s operations.

E. Off-Balance Sheet Arrangements

The Company has no off-balance sheet arrangements.

F. Tabular Disclosure of Contractual Obligations

As at December 31, 2010, the Company had the following contractual obligations:

	Payment due by period
	Total		<1 year		1-3 Years		3-5 Years		More than 5 years
Drilling Contract	$	302,358	$	302,358		-		-		-
Future Income Tax Liabilities		2,026,148		-		-		-		2,026,148
Total	$	2,328,506	$	302,358		-		-	$	2,026,148

G. Safe Harbor

Certain statements in this Annual Report, including those appearing under this Item 5, constitute "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended. Additionally, forward-looking statements may be made orally or in press releases, conferences, reports, on our website or otherwise, in the future, by us or on our behalf. Such statements are generally identifiable by the terminology used such as "plans", "expects", "estimates", "budgets", "intends", "anticipates", "believes", "projects", "indicates", "targets", "objective", "could", "may", or other similar words.

The forward-looking statements are subject to known and unknown risks and uncertainties and other factors that may cause actual results, levels of activity and achievements to differ materially from those expressed or implied by such statements. Such factors include, among others: market prices for metals; the results of exploration and development drilling and related activities; economic conditions in the countries and provinces in which we carry on business, especially economic slowdown; actions by governmental authorities including increases in taxes, changes in environmental and other regulations, and renegotiations of contracts; political uncertainty, including actions by insurgent groups or other conflict; the negotiation and closing of material contracts; and the other factors discussed in Item 3 Key Information – "Risk Factors", and in other documents that we file with the SEC. The impact of any one factor on a particular forward-looking statement is not determinable with certainty as such factors are interdependent upon other factors; our course of action would depend upon our assessment of the future considering all information then available. In that regard, any statements as to future production levels; capital expenditures; the allocation of capital expenditures to exploration and development activities; sources of funding of our capital program; drilling; expenditures and allowances relating to environmental matters; dates by which certain areas will be developed or will come on-stream; expected finding and development costs; future production rates; ultimate recoverability of reserves; dates by which transactions are expected to close; cash flows; uses of cash flows; collectability of receivables; availability of trade credit; expected operating costs; expenditures and allowances relating to environmental matters; debt levels; and changes in any of the foregoing are forward-looking statements, and there can be no assurances that the expectations conveyed by such forward-looking statements will, in fact, be realized.

Although we believe that the expectations conveyed by the forward-looking statements are reasonable based on information available to us on the date such forward-looking statements were made, no assurances can be given as to future results, levels of activity, achievements or financial condition.

Readers should not place undue reliance on any forward-looking statement and should recognize that the statements are predictions of future results, which may not occur as anticipated. Actual results could differ materially from those anticipated in the forward-looking statements and from historical results, due to the risks and uncertainties described above, as well as others not now anticipated. The foregoing statements are not exclusive and further information concerning us, including factors that could materially affect our financial results, may emerge from time to time. We do not intend to update forward-looking statements to reflect actual results or changes in factors or assumptions affecting such forward-looking statements.

Item 6. Directors, Senior Management and Employees

A. Directors and Senior Management

The following is a list of the Company’s directors and senior management as at June 30, 2011 . The directors are elected for a term of one year at the annual meeting of shareholders. This year’s annual meeting was held on June 23, 2011.

Name and Present Position with the Company	Principal Occupation	Director/Officer Since
Michael Baybak	A business consultant.	June 1990
Director
Gary Robertson	Certified Financial Planner, Director of Bralorne Gold Mines Ltd., Coral Gold Resources Ltd., Levon Resources Ltd., Mill Bay Ventures Inc. and Sage Gold Inc.	August 2005
Director
David Wolfin (1)	Director and VP Finance of Berkley Resources Inc., Director and VP Finance, of Levon Resources Ltd., President and Director of Coral Gold Resources Ltd. and Gray Rock Resources Ltd. and Director of Bralorne Gold Mines Ltd., Mill Bay Ventures Ltd. and Cresval Capital Corp.	October 1995
Director/President/CEO
Jasman Yee	Metallurgical Engineer	January 2011
Director
Dorothy Chin	Corporate Secretary of Bralorne Gold Mines Ltd., Coral Gold Resources Ltd., Gray Rock Resources Ltd., and Levon Resources Ltd.	September 2008
Corporate Secretary
Lisa Sharp	Chief Financial Officer of Bralorne Gold Mines Ltd., Coral Gold Resources Ltd., Gray Rock Resources Ltd., Levon Resources Ltd., Mill Bay Ventures Inc. and Venerable Ventures Ltd.	June 2008
Chief Financial Officer

B. Compensation

During the last completed fiscal year of the Company, the Company had three executive officers, namely, its CEO, David Wolfin, its former CEO, Louis Wolfin, and its CFO, Lisa Sharp. At the Company’s Annual General Meeting on June 24, 2010, Louis Wolfin resigned as CEO and a Director. David Wolfin was appointed CEO and President of the Company.

1)	Compensation Discussion and Analysis

The Company does not have a compensation program other than paying base salaries, incentive bonuses, and incentive stock options to its executive officers. The Company recognizes the need to provide compensation package that will attract and retain qualified and experienced executives, as well as align the compensation level of each executive to that executive’s level of responsibility. The objectives of base salary are to recognize market pay, and acknowledge the competencies and skills of individuals. The objectives of incentive bonuses in the form of cash payments are designed to add a variable component of compensation, based on corporate and individual performances for executive officers and employees. No incentive bonuses were paid to executive officers and employees during the most recently completed fiscal year. The objectives of the stock option are to reward achievement of long-term financial and operating performance and focus on key activities and achievements critical to the ongoing success of the Company. Implementation of a new incentive stock option plan and amendments to the existing stock option plan are the responsibility of the Company’s Compensation Committee.

The Company has no other forms of compensation, although payments may be made from time to time to individuals or companies they control for the provision of consulting services. Such consulting services are paid for by the Company at competitive industry rates for work of a similar nature by reputable arm’s length services providers.

The process for determining executive compensation relies solely on discussions amongst the board of directors of the Company (the “Board”) with the input from and upon the recommendations of the Compensation Committee, without any formal objectives criteria and analysis.

Actual compensation will vary based on the performance of the executives relative to the achievement of goals and the price of the Company’s securities.

Compensation Element	Description	Compensation Objectives
Annual Base Salary	Salary is market-competitive, fixed level of compensation	Retain qualified leaders, motivate strong business performance.
Incentive Bonuses	Cash payment to add variable component to compensation	Based on corporate and individual performances of key personnel.
Incentive Stock Option	Equity grants are made in the form of stock options. The amount of grant will be dependent on individual and corporate performance.	Retain qualified leaders, motivate strong business performance.

2)	Summary Compensation Table

The following table sets forth particulars concerning the compensation paid or accrued for services rendered to the Company in all capacities during the most recently completed financial year ended December 31, 2010 of the Company to its executive officers:

Name and principal position	Year	Salary ($)	Share-based awards ($) 1	Option-based awards ($) 2	Non-equity incentive plan compensation ($) 3		Pension value ($) 3	All other compensation ($)	Total compensation ($)
Name and principal position	Year	Salary ($)	Share-based awards ($) 1	Option-based awards ($) 2	Annual incentive plans	Long-term incentive plans	Pension value ($) 3	All other compensation ($)	Total compensation ($)
DAVID Wolfin (4) President , CEO & Director	2010	$96,000	NIL	$65,300	NIL	NIL	NIL	NIL	$161,300
	2009	$96,000	NIL	NIL	NIL	NIL	NIL	NIL	$96,000
	2008	$96,000	NIL	$72,150	NIL	NIL	NIL	NIL	$168,150
LOUIS Wolfin (4) Former CEO & Director	2010	NIL	NIL	$31,750	NIL	NIL	NIL	NIL	$31,750
	2009	NIL	NIL	NIL	NIL	NIL	NIL	NIL	NIL
	2008	NIL	NIL	$72,150	NIL	NIL	NIL	NIL	$72,150
Lisa Sharp CFO	2010	$20,992	NIL	$18,300	NIL	NIL	NIL	NIL	$39,292
	2009	$19,800	NIL	$19,500	NIL	NIL	NIL	NIL	$39,300
	2008	$11,106	NIL	NIL	NIL	NIL	NIL	NIL	$11,106

1	The Company does not currently have any share-based award plans.

The methodology used to calculate the grant date fair value is based on the Black-Scholes Option Pricing Model. The Company used the following weighted average assumptions in the model to determine the award recorded above: Dividend Yield – Nil; Expected Life – 5 years; Volatility – 77.47%; Risk Free Interest Rate – 2.19%.

3	The Company does not have any non-equity incentive plans or any pension plans

4	On June 24, 2010, Mr. Louis Wolfin resigned as CEO and director and Mr. David Wolfin was appointed CEO. Mr. David Wolfin’s salary was paid to Intermark Capital Corp., a private BC corporation controlled by David Wolfin.

Annual Base Salary

Base Salary for the executive officers is determined by the Board upon the recommendation of the Compensation Committee and its recommendations are reached primarily by comparison of the remuneration paid by other reporting issuers with the same size and industry and with publicly available information on remuneration that the Compensation Committee feels is suitable.

The Annual Base Salary paid to the executive officers shall, for the purpose of establishing appropriate increases, be reviewed annually by the Board upon the recommendation of the Compensation Committee thereof as part of the annual review of executive officers. The decision on whether to grant an increase to the executive’s base salary and the amount of any such increase shall be in the sole discretion of the Board and Compensation Committee thereof.

Long Term Incentive Plan (LTIP)

The Company does not have a LTIP, pursuant to which cash or non-cash compensation intended to serve as an incentive for performance (whereby performance is measured by reference to financial performance or the price of the Company’s securities), was paid or distributed to the executive officers during the most recently completed financial year ended December 31, 2010.

Option Based Award

An Option Based Award is in the form of the grant of an incentive stock option. The objective of the incentive stock option is to reward executive officers, employees and directors’ individual performance at the discretion of the Board upon the recommendation of the Compensation Committee. The plan currently used by the Company is the 2010 Stock Option Plan.

The Company currently maintains a formal stock option plan (the “Plan”), under which stock options have been granted and may be granted to purchase a number equal to 10% of the Company’s issued capital from time to time.

The 2010 Stock Option Plan is administered by the Compensation Committee pursuant to the 2010 Stock Option Plan. The process the Company uses to grant option-based awards to executive officers is upon the recommendations of the Compensation Committee to the Board of Directors.

The role of the Compensation Committee is to recommend to the Board the compensation of the Company’s directors and the executive officers which the Committee believes is suitable.

As of December 31, 2010, stock options to purchase a total of up to 1,605,000 shares have been granted and remain outstanding under the Plan, leaving 1,010,723 options available for issuance. All previous grants of option-based awards are taken into account when considering new grants.

3)	Incentive Plan Awards

Outstanding share-based awards and option-based awards

The following table sets forth the options granted to the executive officers to purchase or acquire securities of the Company outstanding at the end of the most recently completed financial year ended December 31, 2010:

	Option-based Awards				Share-based Awards
Name	Number of securities underlying unexercised options (#)	Option exercise price ($)	Option expiration date	Value of unexercised in-the-money options ($) 1	Number of shares or units of shares that have not vested (#)	Market or payout value of share-based awards that have not vested ($) 1
David Wolfin President, CEO & Director	65,000	$0.75	Feb. 27, 2013	$131,300	Nil	Nil
	15,000	$0.81	Jan 14, 2015	$29,400	Nil	Nil
	95,000	$1.05	Sept 15, 2015	$163,400	Nil	Nil
Louis Wolfin, Former CEO & Director	65,000	$0.75	Feb. 27, 2013	$131,300	Nil	Nil
	15,000	$0.81	Jan 14, 2015	$29,400	Nil	Nil
	40,000	$1.05	Sept 15, 2015	$68,800	Nil	Nil
Lisa Sharp CFO	40,000	$0.75	Sept. 22, 2014	$80,800	Nil	Nil
Lisa Sharp CFO	30,000	$1.05	Sep 10, 2015	$51,600	Nil	Nil

1 In-the-Money Options is the difference between the market value of the underlying securities at December 31, 2010 and the exercise price of the option. The closing market price of the Company's common shares as at December 31, 2010 was $2.77 per common share.

Incentive plan awards – value vested or earned during the year

The following table sets forth the value vested or earned during the year of option-based awards, share-based awards and non-equity incentive plan compensation paid to executive officers during the most recently completed financial year ended December 31, 2010:

Name	Option-based awards – Value vested during the year ($) (1)	Share-based awards – Value vested during the year ($)	Non-equity incentive plan compensation – Value earned during the year ($)
David Wolfin (2) President, CEO and Director	Nil	Nil	Nil
Louis Wolfin (2) Former CEO and Director	Nil	Nil	Nil
Lisa Sharp CFO	Nil	Nil	Nil

(1)	The options have no value since the exercise price was higher than the market price at the grant date.

(2)	On June 24, 2010 Louis Wolfin resigned as CEO and director, and David Wolfin was appointed President and CEO.

4)	Pension Plan Benefits

No pension plan or retirement benefit plans have been instituted by the Company and none are proposed at this time.

5)	Termination and Change of Control Benefits

The Company does not have any employment contracts with the executive officers, and there are no contractual provisions for termination of employment or change in responsibilities.

6)	Director Compensation

The following table sets forth the value of all compensation paid to the directors during the most recently completed financial year ended December 31, 2010:

Name	Fees earned ($)	Share-based awards ($)	Option-based awards ($) (1)	Non-equity incentive plan compensation ($)	Pension value ($)	All other compensation ($)	Total ($)
Michael Baybak*	$3,000	NIL	$19,550	NIL	NIL	NIL	$22,550
Gary Robertson*	$6,000	NIL	$25,650	NIL	NIL	NIL	$31,650
David Wolfin	NIL	NIL	NIL	NIL	NIL	NIL	NIL
Louis Wolfin	NIL	NIL	NIL	NIL	NIL	NIL	NIL

*Independent & Non-Employee Directors

(1) The methodology used to calculate the grant date fair value is the last closing price of the Company’s shares before the date of the stock option grant less the exercise price.

The Company pays its independent directors $750 per quarter. Each independent director is also paid $250 per quarter for each committee he serves as a member.

Incentive stock options have been granted to non-NEO directors of the Company as follows:

Name	Number of options	Option exercise price ($)	Option expiration date	Option Exercised	Balance of Option Un-Exercised
Michael Baybak	25,000	$0.75	Feb 27, 2013	Nil	25,000
	15,000	$0.81	Jan 14, 2015	Nil	15,000
	20,000	$1.05	Sep 10, 2015	Nil	20,000
Gary Robertson	25,000	$0.75	Feb 27, 2013	Nil	25,000
	15,000	$0.81	Jan 14, 2015	Nil	15,000
	30,000	$1.05	Sep 10, 2015	Nil	30,000
TOTAL:	130,000			-	130,000

Termination of Employment, Changes in Responsibilities and Employment Contracts

There are no employment contracts between the Company and its executive officers and the Company has no compensatory plan or arrangement with respect to its executive officers in the event of the resignation, retirement or any other termination of the executive officers’ employment with the Company or in the event of a change of control of the Company or in the event of a change in the executive officers’ responsibilities following a change in control, where in respect of the executive officers the value of such compensation exceeds $100,000.

C. Board Practices

The Board is currently comprised of four directors. The size and experience of the Board is important for providing the Company with effective governance in the mining industry. The Board’s mandate and responsibilities can be effectively and efficiently administered at its current size. The Board has functioned, and is of the view that it can continue to function, independently of management as required. Directors are elected for a term of one year at the annual general meeting. At the Annual General Meeting, held on June 23, 2011, the shareholders elected Messrs. Michael Baybak, Gary Robertson, David Wolfin, and Jasman Yee as directors.

The Board has considered the relationship of each director to the Company and currently considers three of the four directors to be “unrelated” (Messrs. Baybak, Robertson and Yee). “Unrelated director” means a director who is independent of management and free from any interest and any business or other relationship which could reasonably be perceived to materially interfere with the director’s ability to act with a view to the best interest of the Company, other than interests and relationships arising solely from shareholdings.

Procedures are in place to allow the Board to function independently. At the present time, the Board has experienced directors that have made a significant contribution to the Company’s success, and are satisfied that it is not constrained in its access to information, in its deliberations or in its ability to satisfy the mandate established by law to supervise the business and affairs of the Company. Committees meet independent of management and other directors.

Mandate of the Board of Directors, its Committees and Management

The role of the Board is to oversee the conduct of the Company’s business, including the supervision of management, and determining the Company’s strategy. Management is responsible for the Company’s day to day operations, including proposing its strategic direction and presenting budgets and business plans to the Board for consideration and approval. The strategic plan takes into account, among other things, the opportunities and risks of the Company’s business. Management provides the Board with periodic assessments as to those risks and the implementation of the Company’s systems to manage those risks. The Board reviews the personnel needs of the Company from time to time, having particular regard to succession issues relating to senior management. Management is responsible for the training and development of personnel. The Board assesses how effectively the Company communicates with shareholders, but has not adopted a formal communications policy. Through the Audit Committee, and in conjunction with its auditors, the Board assesses the adequacy of the Company’s internal control and management information systems. The Board looks to management to keep it informed of all significant developments relating to or effecting the Company’s operations. Major financings, acquisitions, dispositions and investments are subject to board approval. A formal mandate for the Board of Directors, the Chief Executive Officer and the Chief Financial Officer has not been considered necessary since the relative allocation of responsibility is well understood by both management and the Board. The Board meets as required. The Board and committees may take action at these meetings or at a meeting by conference call or by written consent.

Committees

Audit Committee

The Audit Committee assists the Board in its oversight of the Company’s financial statements and other related public disclosures, the Company’s compliance with legal and regulatory requirements relating to financial reporting, the external auditors, qualifications and independence and the performance of the internal audit function and the external auditors. The Audit Committee has direct communications channels with the Company’s auditors. The Audit Committee reviews the Company’s financial statements and related management’s discussion and analysis of financial and operating results. The Audit Committee can retain legal, accounting or other advisors.

The Audit Committee currently consists of three directors (Messrs. Jasman Yee, Michael Baybak, and Gary Robertson). All of the members are independent and all of whom are financially literate, and have accounting or related financial expertise. “Financially literate” means the ability to read and understand a balance sheet, an income statement, and a cash flow statement. “Accounting or related financial expertise” means the ability to analyze and interpret a full set of financial statements, including the notes attached thereto, in accordance with Canadian GAAP.

The Board has adopted a charter for the Audit Committee which is reviewed annually and sets out the role and oversight responsibilities of the Audit Committee with respect to:

·	its relationship with and expectation of the external auditors, including the establishment of the independence of the external auditor and the approval of any non-audit mandates of the external auditor;

·	determination of which non-audit services the external auditor is prohibited from providing;

·	the engagement, evaluation, remuneration, and termination of the external auditors;

·	appropriate funding for the payment of the auditor’s compensation and for any advisors retained by the audit committee;

·	its relationship with and expectation of the internal auditor;

·	its oversight of internal control;

·	disclosure of financial and related information; and

·	any other matter that the audit committee feels is important to its mandate or that which the board chooses to delegate to it.

Compensation Committee

The Compensation Committee recommends to the Board the compensation of the Company’s Directors and the Chief Executive Officer which the Compensation Committee feels is suitable. Its recommendations are reached primarily by comparison of the remuneration paid by the Company with publicly available information on remuneration paid by other reporting issuers that the Compensation Committee feels are similarly placed within the same business of the Company.

The Compensation Committee consists of three directors, Messrs. Yee, Robertson and Baybak, all are unrelated.

Corporate Governance Committee

The Corporate Governance Committee assists the Board in establishing the Company’s corporate governance policies and practices generally, identifying individuals qualified to become members of the Board, reviewing the composition and functioning of the Board and its committees and making recommendations to the Board as appropriate. When considering nominees to the Board, the Corporate Governance Committee’s mandate requires that it consider the current composition of the Board and give consideration to candidates having experience in the industry, life experience and background. The Corporate Governance Committee is also responsible for the Company’s corporate governance guidelines. The Corporate Governance Committee may retain legal or other advisors.

The Corporate Governance Committee currently consists of three directors, Messrs. Yee, Robertson and Baybak, all are unrelated.

D. Employees

As at December 31, 2010, the Company has 40 employees located in Mexico. The Company’s senior management as well as administrative and corporate services are located in Canada; however, these people are not considered employees of the Company in a legal sense. Senior management and administrative staff are contracted by the Company through their companies or through the Company’s cost sharing agreement for overhead and corporate services with Oniva International Services Corp.

As at December 31, 2009, the Company had 17 employees located in Mexico and as at December 31, 2008, the Company had 11 employees located in Mexico.

E. Share Ownership

The following table sets forth the share ownership of the individuals referred to in “Compensation” as of June 30, 2011:

Name of Beneficial Owner	Number of Shares		Percent

Michael Baybak		102,400		*
Gary Robertson		75,000		*
David Wolfin		303,084		*
Louis Wolfin (1)		4,345		*
Jasman Yee		22,500		*
Lisa Sharp	Nil			N/A

*Less than one percent

(1) Louis Wolfin resigned as a director and CEO on June 24, 2010

Outstanding Options

The following information, as of June 30, 2011, reflects outstanding options held by the individuals referred to in “Compensation”:

	No. of Shares	Date of Grant	Exercise Price	Expiration Date

David Wolfin	65,000	Feb. 27, 2008	$0.75	Feb. 27, 2013
President, CEO and Director	15,000	January 14, 2010	$0.81	January 14, 2015
	95,000	Sept 10, 2010	$1.05	Sept 10, 2015
	410,000	Jan 18, 2011	$2.30	Jan 18, 2016

Louis Wolfin	65,000	Feb. 27, 2008	$0.75	Feb. 27, 2013
Former CEO & Director	15,000	January 14, 2010	$0.81	January 14, 2015
	40,000	Sept 10, 2010	$1.05	Sept 10, 2015

Lisa Sharp	40,000	Sept. 22, 2009	$0.75	Sept. 22, 2014
CFO	30,000	Sept 10, 2010	$1.05	Sept 10, 2015
	50,000	Jan 18, 2011	$2.30	Jan 18, 2016

Michael Baybak	25,000	Feb. 27, 2008	$0.75	Feb. 27, 2013
Director	15,000	January 14, 2010	$0.81	January 14, 2015
	20,000	Sept 10, 2010	$1.05	Sept 10, 2015
	100,000	Jan 18, 2011	$2.30	Jan 18, 2016

Gary Robertson	25,000	Feb. 27, 2008	$0.75	Feb. 27, 2013
Director	15,000	January 14, 2010	$0.81	January 14, 2015
	30,000	Sept 10, 2010	$1.05	Sept 10, 2015
	100,000	Jan 18, 2011	$2.30	Jan 18, 2016

Jasman Yee	15,000	Sept. 22, 2009	$0.75	Feb. 27, 2013
Director	30,000	Sept 10, 2010	$1.05	Sept 10, 2015
	100,000	Jan 18, 2011	$2.30	Jan 18, 2016

Item 7. Major Shareholders and Related Party Transactions

A.	Major Shareholders

To the knowledge of the Company, it is not directly or indirectly owned or controlled by any other corporation or by the Canadian Government, or any foreign government, or by any other natural or legal person.

As of June 30, 2011, to the knowledge of the Company, no person who owned more than five (5%) percent of the outstanding shares of each class of the Company’s voting securities.

As of June 23, 2011, there were 26,888,727 common shares issued and outstanding. Of those common shares issued and outstanding, 21,886,743 common shares were held by 65 shareholders whose addresses were in Canada.

B.	Related Party Transactions

During the year ended December 31, 2010, the Company paid, or made provision for the future payment of the following amounts to related parties:

$168,527 (2009 - $148,754; 2008 - $188,158) for administrative expenses (rent, salaries, office supplies and other miscellaneous disbursements) to Oniva International Services Corp (“Oniva”), a private company beneficially owned by the Company and a number of other public companies related through common directors;

ii)	$96,000 (2009 - $96,000; 2008 - $96,000) to a private company controlled by a Director for management fees;

iii)	$30,000 (2009 - $30,000; 2008 - $30,000) to a private company controlled by a director of a related company for consulting fees;

iv)	$24,954 (2009 - $10,344; 2008 - $34,698) to a private company controlled by a director of a related company for geological consulting services;

v)	$13,500 (2009 - $15,000; 2008 - $15,000) to Directors for Directors fees.

The amounts due to related parties consist of $153,289 (December 31, 2009 - $145,120) due to Oniva; $10,500 (December 31, 2009 - $18,000) due to Directors for Directors fees; $789 (December 31, 2009 - $1,054) due to a private company controlled by a Director of a related company for geological services; and $4,687 (December 31, 2009 - $516) due to a private company controlled by a Director for an expense reimbursement.

All related party transactions are recorded at the value agreed upon by the Company and the related party. The amounts due from and due to related parties are non-interest bearing, non-secured and with no stated terms of repayment.

C.	Interests of Experts and Counsel

Not Applicable.

Item 8. Financial Information

A.	Consolidated Statements and Other Financial Information

The following financial statements of the Company are attached to this Annual Report:

·	Audit Report of Independent Registered Public Accounting Firm;

·	Consolidated Balance Sheets as at December 31, 2010 and December 31, 2009;

·	Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2010, December 31, 2009 and 2008;

·	Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2010, 2009 and 2008;

·	Consolidated Statements of Cash Flows for the years ended December 31, 2010, 2009 and 2008; and

·	Notes to the Consolidated Financial Statements for the years ended December 31, 2010, 2009 and 2008.

Dividend Policy

The Company has never paid any dividends and does not intend to in the near future.

B.	Significant Changes

None.

Item 9.

The Offer and Listing

A.	Offer and Listing Details

The following sets forth the high and low prices expressed in Canadian Dollars on the TSX-V for the Company’s common shares for the past five years, for each quarter for the last two fiscal years, and for the last six months.

	TSX-V (Canadian Dollars)				OTCBB (United States Dollars)
Last Six Months	High		Low		High		Low
June 2011		2.57		1.93		2.63		1.99
May 2011		2.82		2.20		2.95		2.27
April 2011		3.46		2.30		3.60		2.48
March 2011		3.47		2.27		3.55		2.27
February 2011		3.31		2.51		3.38		2.57
January 2011		2.95		2.00		2.95		2.20
2010	High		Low		High		Low
Fourth Quarter ended December 31, 2010		2.95		1.10		2.89		1.10
Third Quarter ended September 30, 2010		1.30		0.71		1.27		0.68
Second Quarter ended June 30, 2010		0.86		0.66		0.878		0.63
First Quarter ended March 31, 2010		0.88		0.67		0.84		0.64

2009	High		Low		High		Low
Fourth Quarter ended December 31, 2009		0.99		0.57		0.95		0.52
Third Quarter ended September 30, 2009		0.71		0.49		0.69		0.44
Second Quarter ended June 30, 2009		0.82		0.38		0.75		0.30
First Quarter ended March 31, 2009		0.83		0.50		0.70		0.50

Last Five Fiscal Years	High		Low		High		Low

2010		2.95		0.66		2.89		0.63
2009 2008 2007 II		0.99 1.78 2.75		0.38 0.18 1.46		0.95 1.79 2.42		0..30 0.20 1.44
2007		4.48		1.50		4.00		1.32

B.	Plan of Distribution

Not Applicable.

Markets

The common shares of the Company are listed on the TSX-V under the symbol “ASM”, on the FSE under the symbol “GV6” and quoted in the United States on the OTCBB, under the symbol “ASGMF”. The Company is currently in the process of applying for a listing of its common shares on the NYSE Amex. There is no guarantee that the Company’s application will be successful.

D.	Selling Shareholders

Not Applicable.

Dilution

Not Applicable.

F.	Expenses of the Issue

Not Applicable.

Item 10. Additional Information

A.	Share Capital

Not Applicable.

B.	Memorandum and Articles of Association

Common Shares

All issued and outstanding common shares are fully paid and non-assessable. Each holder of record of common shares is entitled to one vote for each common share so held on all matters requiring a vote of shareholders, including the election of directors. The holders of common shares will be entitled to dividends on a pro-rata basis, if and when as declared by the board of directors. There are no preferences, conversion rights, preemptive rights, subscription rights, or restrictions or transfers attached to the common shares. In the event of liquidation, dissolution, or winding up of the Company, the holders of common shares are entitled to participate in the assets of the Company available for distribution after satisfaction of the claims of creditors.

Powers and Duties of Directors

The directors shall manage or supervise the management of the affairs and business of the Company and shall have authority to exercise all such powers of the Company as are not, by the British Columbia Business Corporations Act or by the Memorandum or the Articles, required to be exercised by the Company in a general meeting.

Directors will serve as such until the next annual meeting. In general, a director who is, in any way, directly or indirectly interested in an existing or proposed contract or transaction with the Company whereby a duty or interest might be created to conflict with his duty or interest as a director, shall declare the nature and extent of his interest in such contract or transaction or the conflict or potential conflict with his duty and interest as a director. Such director shall not vote in respect of any such contract or transaction with the Company in which he is interested and if he shall do so, his vote shall note be counted, but he shall be counted in the quorum present at the meeting at which such vote is taken. However, notwithstanding the foregoing, directors shall have the right to vote on determining the remuneration of the directors.

The directors may from time to time on behalf of the Company: (a) borrow money in such manner and amount from such sources and upon such terms and conditions as they think fit; (b) issue bonds, debentures and other debt obligations; and (c) mortgage, charge or give other security on the whole or any part of the property and assets of the Company.

The directors of the Company must be persons of the full age of 18 years. There is no minimum share ownership to be a Director. No person shall be a director of the Company who is not capable of managing their own affairs; is an undischarged bankrupt; convicted of an offense in connection with the promotion, formation or management of a corporation or involved in fraud within the last five years; or a person that has had a registration in any capacity under the British Columbia Securities Act or the British Columbia Mortgage Brokers Act canceled within the last five years.

Shareholders

An annual general meeting shall be held once in every calendar year at such time and place as may be determined by the directors. A quorum at an annual general meeting and special meeting shall be two shareholders or one or more proxy holders representing two shareholders, or one shareholder and a proxy holder representing another shareholder. There is no limitation imposed by the laws of Canada or by the charter or other constituent documents of the Company on the right of a non-resident to hold or vote the common shares, other than as provided in the Investment Canada Act, referred to as the “Investment Act”, discussed below under “Item 10. Additional Information, D. Exchange Controls.”

In accordance with British Columbia law, directors shall be elected by an “ordinary resolution” which means: (a) a resolution passed by the shareholders of the Company at a general meeting by a simple majority of the votes cast in person or by proxy; or (b) a resolution that has been submitted to the shareholders of the Company who would have been entitled to vote on it in person or by proxy at a general meeting of the Company and that has been consented to in writing by such shareholders of the Company holding shares carrying not less than the requisite majority of the votes entitled to be cast on it.

Under British Columbia law certain items such as an amendment to the Company’s articles or entering into a merger requires approval by a special resolution which means: (a) a resolution passed by a majority of not less than the requisite majority of the votes cast by the shareholders of the Company who, being entitled to do so, vote in person or by proxy at a general meeting of the company; or (b) a resolution consented to in writing by every shareholder of the Company who would have been entitled to vote in person or by proxy at a general meeting of the Company, and a resolution so consented to is deemed to be a special resolution passed at a general meeting of the Company.

C.	Material Contracts

The Company has a commitment related to the exploration of its mineral properties in Durango, Mexico, from an agreement signed in January 2011 that requires drilling a minimum of 4,000 meters.

In February 2011, the Company entered into a lease agreement for office space for its Canadian operations. The term of the lease is for five years, commencing in April 2011, with a five year renewal option.

In March 2011, the Company entered into an agreement with Wardrop Engineering to provide a tailings study and review of the San Gonzalo project. The total estimated cost is approximately $190,000.

Please refer to Note 13 of the financial statements included elsewhere in this Annual Report (Item 17) for further disclosure regarding material commitments.

D.	Exchange Controls

Canada has no system of exchange controls. There are no Canadian restrictions on the repatriation of capital or earnings of a Canadian public company to non-resident investors. There are no laws in Canada or exchange restrictions affecting the remittance of dividends, profits, interest, royalties and other payments to non-resident holders of the Issuer’s securities, except as discussed below under “Item 10. Additional Information, E. Taxation.”

There are no limitations under the laws of Canada or in the organizing documents of the Company on the right of foreigners to hold or vote securities of the Company, except that the Investment Canada Act may require review and approval by the Minister of Industry (Canada) of certain acquisitions of “control” of the Company by a “non-Canadian”. The threshold for acquisitions of control is generally defined as being one-third or more of the voting shares of the Company. “Non-Canadian” generally means an individual who is not a Canadian citizen, or a corporation, partnership, trust or joint venture that is ultimately controlled by non-Canadians.

Taxation

Canadian Federal Income Tax Consequences

The following summarizes the principal Canadian federal income tax consequences applicable to the holding and disposition of common shares in the capital of the Company by a United States resident, and who holds common shares solely as capital property, referred to as a “U.S. Holder”. This summary is based on the current provisions of the Income Tax Act (Canada), referred to as the “Tax Act”, the regulations thereunder, all amendments thereto publicly proposed by the government of Canada, the published administrative practices of Revenue Canada, Customs, Excise and Taxation, and the current provisions of the Canada-United States Income Tax Convention, 1980, as amended, referred to as the “Treaty”. Except as otherwise expressly provided, this summary does not take into account any provincial, territorial or foreign (including without limitation, any United States) tax law or treaty. It has been assumed that all currently proposed amendments will be enacted substantially as proposed and that there is no other relevant change in any governing law or practice, although no assurance can be given in these respects.

Each U.S. Holder is advised to obtain tax and legal advice applicable to such U.S. Holder’s particular circumstances.

Every U.S. Holder is liable to pay a Canadian withholding tax on every dividend that is or is deemed to be paid or credited to the U.S. Holder on the U.S. Holder’s common shares. The statutory rate of withholding tax is 25% of the gross amount of the dividend paid. The Treaty reduces the statutory rate with respect to dividends paid to a U.S. Holder for the purposes of the Treaty. Where applicable, the general rate of withholding tax under the Treaty is 15% of the gross amount of the dividend, but if the U.S. Holder is a company that owns at least 10% of the voting stock of the Company and beneficially owns the dividend, the rate of withholding tax is 5% for dividends paid or credited after 1996 to such corporate U.S. Holder. The Company is required to withhold the applicable tax from the dividend payable to the U.S. Holder, and to remit the tax to the Receiver General of Canada for the account of the U.S. Holder.

Pursuant to the Tax Act, a U.S. Holder will not be subject to Canadian capital gains tax on any capital gain realized on an actual or deemed disposition of a common share, including a deemed disposition on death, provided that the U.S. Holder did not hold the common share as capital property used in carrying on a business in Canada, and that neither the U.S. Holder nor persons with whom the U.S. Holder did not deal at arms length (alone or together) owned or had the right or an option to acquire 25% or more of the issued shares of any class of the Company at any time in the five years immediately preceding the disposition.

United States Federal Income Tax Consequences

Passive Foreign Investment Company

The Company believes that it is a passive foreign investment company, referred to as a “PFIC” for United States federal income tax purposes with respect to a United States Investor. The Company will be a PFIC with respect to a United States Investor if, for any taxable year in which such United States Investor held the Company’s shares, either (i) at least 75 % of the gross income of the Company for the taxable year is passive income, or (ii) at least 50% of the Company’s assets are attributable to assets that produce or are held for the production of passive income. In each case, the Company must take into account a pro-rata share of the income and the assets of any company in which the Company owns, directly or indirectly, 25% or more of the stock by value (the “look-through” rules). Passive income generally includes dividends, interest, royalties, rents (other than rents and royalties derived from the active conduct of a trade or business and not derived from a related person), annuities and gains from assets that produce passive income. As a publicly traded corporation, the Company would apply the 50% asset test based on the value of the Company’s assets.

Because the Company believes it qualifies as a PFIC, unless a United States Investor who owns shares in the Company (i) elects (a section 1295 election) to have the Company treated as a “qualified electing fund”, referred to as a “QEF” (described below), or (ii) marks the stock to market (described below), the following rules apply:

Distributions made by the Company during a taxable year to a United States Investor who owns shares in the Company that are an “excess distribution” (defined generally as the excess of the amount received with respect to the shares in any taxable year over 125% of the average received in the shorter of either the three previous years or such United States Investor’s holding period before the taxable year) must be allocated ratably to each day of such shareholder’s holding period. The amount allocated to the current taxable year and to years when the corporation was not a PFIC must be included as ordinary income in the shareholder’s gross income for the year of distribution. The remainder is not included in gross income but the shareholder must pay a deferred tax on that portion. The deferred tax amount, in general, is the amount of tax that would have been owed if the allocated amount had been included in income in the earlier year, plus interest. The interest charge is at the rate applicable to deficiencies in income taxes.

The entire amount of any gain realized upon the sale or other disposition of the shares will be treated as an excess distribution made in the year of sale or other disposition and as a consequence will be treated as ordinary income and, to the extent allocated to years prior to the year of sale or disposition, will be subject to the interest charge described above.

A shareholder that makes a section 1295 election will be currently taxable on his or her pro-rata share of the Company’s ordinary earnings and net capital gain (at ordinary income and capital gain rates, respectively) for each taxable year of the Company, regardless of whether or not distributions were received. The shareholder’s basis in his or her shares will be increased to reflect taxed but undistributed income. Distributions of income that had previously been taxed will result in a corresponding reduction of basis in the shares and will not be taxed again as a distribution to the shareholder.

A shareholder may make a section 1295 election with respect to a PFIC for any taxable year of the shareholder (shareholder’s election year). A section 1295 election is effective for the shareholder’s election year and all subsequent taxable years of the shareholder. Procedures exist for both retroactive elections and filing of protective statements. Once a section 1295 election is made it remains in effect, although not applicable, during those years that the Company is not a PFIC. Therefore, if the Company re-qualifies as a PFIC, the section 1295 election previously made is still valid and the shareholder is required to satisfy the requirements of that election. Once a shareholder makes a section 1295 election, the shareholder may revoke the election only with the consent of the Commissioner.

If the shareholder makes the section 1295 election for the first tax year of the Company as a PFIC that is included in the shareholder’s holding period, the PFIC qualifies as a pedigreed QEF with respect to the shareholder. If a QEF is an unpedigreed QEF with respect to the shareholder, the shareholder is subject to both the non-QEF and QEF regimes. Certain elections are available which enable shareholders to convert an unpedigreed QEF into a pedigreed QEF thereby avoiding such dual application.

A shareholder making the section 1295 election must make the election on or before the due date, as extended, for filing the shareholder’s income tax return for the first taxable year to which the election will apply. A shareholder must make a section 1295 election by completing Form 8621, attaching said Form to its federal income tax return, and reflecting in the Form the information provided in the PFIC Annual Information Statement, or if the shareholder calculated the financial information, a statement to that effect. The PFIC Annual Information Statement must include the shareholder’s pro-rata shares of the ordinary earnings and net capital gain of the PFIC for the PFIC’s taxable year or information that will enable the shareholder to calculate its pro-rata shares. In addition, the PFIC Annual Information Statement must contain information about distributions to shareholders and a statement that the PFIC will permit the shareholder to inspect and copy its permanent books of account, records, and other documents of the PFIC necessary to determine that the ordinary earnings and net capital gain of the PFIC have been calculated according to federal income tax accounting principles. A shareholder may also obtain the books, records and other documents of the foreign corporation necessary for the shareholder to determine the correct earnings and profits and net capital gain of the PFIC according to federal income tax principles and calculate the shareholder’s pro-rata shares of the PFIC’s ordinary earnings and net capital gain. In that case, the PFIC must include a statement in its PFIC Annual Information Statement that it has permitted the shareholder to examine the PFIC’s books of account, records, and other documents necessary for the shareholder to calculate the amounts of ordinary earnings and net capital gain. A shareholder that makes a Section 1295 election with respect to a PFIC held directly or indirectly for each taxable year to which the Section 1295 election applies must comply with the foregoing submissions.

Because the Company’s stock is “marketable” under section 1296(e), a United States Investor may elect to mark the stock to market each year. In general, a PFIC shareholder who elects under section 1296 to mark the marketable stock of a PFIC includes in income each year an amount equal to the excess, if any, of the fair market value of the PFIC stock as of the close of the taxable year over the shareholder’s adjusted basis in such stock. A shareholder is also generally allowed a deduction for the excess, if any, of the adjusted basis of the PFIC stock over the fair market value as of the close of the taxable year. Deductions under this rule, however, are allowable only to the extent of any net mark to market gains with respect to the stock included by the shareholder for prior taxable years. While the interest charge regime under the PFIC rules generally does not apply to distributions from and dispositions of stock of a PFIC where the United States Investor has marked to market, coordination rules for limited application will apply in the case of a United States Investor that marks to market PFIC stock later than the beginning of the shareholder’s holding period for the PFIC stock.

Special rules apply with respect to the calculation of the amount of the foreign tax credit with respect to excess distributions by a PFIC or inclusions under a QEF.

Controlled Foreign Corporations

Sections 951 through 964 and Section 1248 of the Internal Revenue Code, referred to as the “Code”, relate to controlled foreign corporations, referred to as “CFCs”. A foreign corporation that qualifies as a CFC will not be treated as a PFIC with respect to a shareholder during the portion of the shareholder’s holding period after December 31, 1997, during which the shareholder is a 10% United States shareholder and the corporation is a CFC. The PFIC provisions continue to apply in the case of a PFIC that is also a CFC with respect to shareholders that are less than 10% United States shareholders.

The 10% United States shareholders of a CFC are subject to current United States tax on their pro-rata shares of certain income of the CFC and their pro-rata shares of the CFC’s earnings invested in certain United States property. The effect is that the CFC provisions may impute some portion of such a corporation’s undistributed income to certain shareholders on a current basis and convert into dividend income some portion of gains on dispositions of stock, which would otherwise qualify for capital gains treatment.

The Company does not believe that it will be a CFC. It is possible that the Company could become a CFC in the future. Even if the Company were classified as a CFC in a future year, however, the CFC rules referred to above would apply only with respect to 10% shareholders.

Personal Holding Company/Foreign Personal Holding Company/Foreign Investment Company

A corporation will be classified as a personal holding company, or a “PHC”, if at any time during the last half of a tax year (i) five or fewer individuals (without regard to their citizenship or residence) directly or indirectly or by attribution own more than 50% in value of the corporation’s stock and (ii) at least 60% of its ordinary gross income, as specially adjusted, consists of personal holding company income (defined generally to include dividends, interest, royalties, rents and certain other types of passive income). A PHC is subject to a United States federal income tax of 39.6% on its undistributed personal holding company income (generally limited, in the case of a foreign corporation, to United States source income).

A corporation will be classified as a foreign personal holding company, or an “FPHC”, and not a PHC if at any time during a tax year (i) five or fewer individual United States citizens or residents directly or indirectly or by attribution own more than 50% of the total combined voting power or value of the corporation’s stock and (ii) at least 60% of its gross income consists of foreign personal holding company income (defined generally to include dividends, interest, royalties, rents and certain other types of passive income). Each United States shareholder in a FPHC is required to include in gross income, as a dividend, an allocable share of the FPHC’s undistributed foreign personal holding company income (generally the taxable income of the FPHC, as specially adjusted).

A corporation will be classified as a foreign investment company, or an “FIC”, if for any taxable year it: (i) is registered under the Investment Company Act of 1940, as amended, as a management company or share investment trust or is engaged primarily in the business of investing or trading in securities or commodities (or any interest therein); and (ii) 50% or more of the value or the total combined voting power of all the corporation’s stock is owned directly or indirectly (including stock owned through the application of attribution rules) by United States persons. In general, unless an FIC elects to distribute 90% or more of its taxable income (determined under United States tax principles as specially adjusted) to its shareholders, gain on the sale or exchange of FIC stock is treated as ordinary income (rather than capital gain) to the extent of such shareholder’s ratable share of the corporation’s earnings and profits for the period during which such stock was held.

The Company believes that it is not and will not be a PHC, FPHC or FIC. However, no assurance can be given as to the Company’s future status.

United States Information Reporting and Backup Withholding

Dividends are generally subject to the information reporting requirements of the Code. Dividends may be subject to backup withholding at the rate of 31% unless the holder provides a taxpayer identification number on a properly completed Form W-9 or otherwise establishes an exemption.

The amount of any backup withholding will not constitute additional tax and will be allowed as a credit against the United States Investor’s federal income tax liability.

Filing of Information Returns

Under a number of circumstances, a United States Investor acquiring shares of the Company may be required to file an information return. In particular, any United States Investor who becomes the owner, directly or indirectly, of 10% or more of the shares of the Company will be required to file such a return. Other filing requirements may apply and United States Investors should consult their own tax advisors concerning these requirements.

F.	Dividends and Paying Agents

Not Applicable.

G.	Statement by Experts

Not Applicable.

H.	Documents on Display

The Company files annual reports and furnishes other information with the SEC. You may read and copy any document that we file at the SEC’s Public Reference Room at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549 or by accessing the Commission’s website (http://www.sec.gov). The Company also files its annual reports and other information with the Canadian Securities Administrators via SEDAR (www.sedar.com).

Copies of the Company’s material contracts are kept in the Company’s administrative headquarters.

I.	Subsidiary Information

None.

Item 11. Quantitative and Qualitative Disclosures about Market Risk

Not Applicable.

Item 12. Description of Securities Other than Equity Securities

Not Applicable.

Part II

Item 13. Defaults, Dividend Arrearages and Delinquencies

None.

Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds

None.

Item 15. Controls and Procedures

Disclosure Controls and Procedures

As required by paragraph (b) of Rules 13a-15 or 15d-15 under the Exchange Act, our principal executive officer and principal financial officer evaluated our company’s disclosure controls and procedures (as defined in rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the period covered by this annual report on Form 20-F. Based on the evaluation, these officers concluded that as of the end of the period covered by this Annual Report on Form 20-F, our disclosure controls and procedures were not effective to ensure that the information required to be disclosed by our company in reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time period specified in the rules and forms of the Securities and Exchange Commission. These disclosure controls and procedures include controls and procedures designed to ensure that such information is accumulated and communicated to our company’s management, including our company’s principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure. The conclusion that our disclosure controls and procedures were not effective was due to the presence of material weaknesses in internal control over financial reporting as identified below under the heading “Management’s Report on Internal Control Over Financial Reporting.”

Management anticipates that such disclosure controls and procedures will not be effective until the material weaknesses are remediated. Our company intends to remediate the material weaknesses as set out below.

Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, if any, within our company have been detected.

Management’s Report on Internal Control Over Financial Reporting

Our company’s management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) for our company. Our company’s internal control over financial reporting is designed to provide reasonable assurance, not absolute assurance, regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with Canadian generally accepted accounting principles. Internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our company’s assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with Canadian generally accepted accounting principles, and that our company’s receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on our financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions and that the degree of compliance with the policies or procedures may deteriorate.

Our management, including our principal executive officer and principal financial officer, along with an independent consultant, conducted an evaluation of the design and operation of our internal control over financial reporting as of December 31, 2010 based on the criteria set forth in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. This evaluation included review of the documentation of controls, evaluation of the design effectiveness of controls, testing of the operating effectiveness of controls and a conclusion on this evaluation. Based on this evaluation, our management concluded our internal control over financial reporting was not effective as at December 31, 2010 due to the following material weaknesses: (i) inadequate segregation of duties and effective risk assessment; (ii) insufficient written policies and procedures for accounting, financial reporting and corporate governance; and (iii) insufficient disaster recovery plans.

Our company has taken steps to enhance and improve the design of our internal controls over financial reporting, however these steps were not complete as of December 31, 2010. During the period covered by this annual report on Form 20-F, we have not been able to remediate the material weaknesses identified above. To remediate such weaknesses, we plan to implement the following changes during our fiscal year ending December 31, 2011: (i) address inadequate segregation of duties and ineffective risk management; (ii) adopt sufficient written policies and procedures for accounting, financial reporting and corporate governance; and (iii) implement a disaster recovery plan.

This annual report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s independent registered public accounting firm pursuant to the rules of the Securities and Exchange Commission that permit us to provide only management’s report in this annual report.

Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake.

Changes in Internal Control Over Financial Reporting

There were no changes in internal control over financial reporting in the year ended December 31, 2010. However, as a result of the evaluation of our internal control over financial reporting as of December 31, 2010, conducted by our principal executive officer, principal financial officer and an independent consultant, we expect to make such changes in the year ended December 31, 2011.

Item 16. [Reserved]

Item 16A. Audit Committee Financial Expert

The Board determined that Mr. Gary Robertson is qualified as an Audit Committee Financial Expert. Mr. Robertson is independent as determined by the NASDAQ listing rules.

Item 16B. Code of Ethics

The Company has not currently adopted a code of ethics but is evaluating its internal procedures to determine the necessity of same. In the event that it is determined a code of ethics is necessary, an appropriate code will be implemented.

Item 16C. Principal Accountant Fees and Services

The independent auditor for the years ended December 31, 2010, December 31, 2009 and, December 31, 2008 was Manning Elliott LLP.

Audit Fees

The aggregate fees billed by Manning Elliott LLP for professional services rendered for the audit of the Company’s year ended December 31, 2010 were $59,000 (2009: $69,000; 2008: $64,500).

Audit-Related Fees

The audit-related fees billed by Manning Elliott LLP for the year ended December 31, 2010 were $4,000 (2009: $4,000; 2008: $2,880).

Tax Fees

The tax fees billed by Manning Elliott LLP for the year ended December 31, 2010 are estimated to be $3,500 (2009: $3,500; 2008: $3,200).

All Other Fees

The aggregate fees billed by Manning Elliott LLP for advisory and review services relating to the Company’s annual report on Form 20-F for the year ended December 31, 2010 are estimated to be $5,000 (2009 $5,000; 2008: $5,000).

The Audit Committee approved 100% of the fees paid to the principal accountant for audit-related, tax and other fees in the fiscal year 2010. The Audit Committee pre-approves all non-audit services to be performed by the auditor in accordance with the Audit Committee Charter. There were no hours expended on the principal accountant’s engagement to audit the Company’s financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant’s full-time, permanent employees.

Item 16D. Exemptions from the Listing Standards for Audit Committees

Not applicable.

Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers

None.

Item 16F. Changes in Registrants Certifying Accountant

None.

Item 16G. Corporate Governance

Not applicable.

Part III

Item 17. Financial Statements

The following financial statements pertaining to the Company are filed as part of this Annual Report:	75

Audit Report of Independent Registered Public Accounting Firm	76

Consolidated Balance Sheets as at December 31, 2010 and December 31, 2009	77

Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2010, 2009 and 2008	78

Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2010, 2009 and 2008	79

Consolidated Statements of Cash Flows for the years ended December 31, 2010, 2009 and 2008	80

Notes to the Consolidated Financial Statements for the years ended December 31, 2010, 2009 and 2008 70 thru	81

Item 18. Financial Statements

See Item 17.

Item 19.

Exhibits

Exhibit Number		Name

1.1		Memorandum of Avino Silver & Gold Mines Ltd.*
1.2		Articles of Avino Silver & Gold Mines Ltd.*
4.1		Share Purchase Agreement dated March 22, 2004*
8.1		List of Subsidiaries
12.1		Certification of the Principal Executive Officer
12.2		Certification of the Principal Financial Officer
13.1		Certificate under the Sarbanes-Oxley Act of the Principal Executive Officer
13.2		Certificate under the Sarbanes-Oxley Act of the Principal Financial Officer

___________________________

* Previously filed.

AVINO SILVER & GOLD MINES LTD.

Consolidated Financial Statements

For the years ended December 31, 2010, December 31, 2009 and

December 31, 2008

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders of

Avino Silver & Gold Mines Ltd.

We have audited the accompanying consolidated financial statements of Avino Silver & Gold Mines Ltd. which comprise the consolidated balance sheets as at December 31, 2010 and 2009, and the consolidated statements of operations, comprehensive loss, shareholders’ equity and cash flows for the years ended December 31, 2010, 2009 and 2008, and the related notes comprising a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with Canadian generally accepted accounting principles, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the Company’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. The Company is not required to have, nor were we engaged to perform, an audit of the Company’s internal control over financial reporting; accordingly we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Avino Silver & Gold Mines Ltd. as at December 31, 2010 and 2009, and the results of its operations and its cash flows for the years ended December 31, 2010, 2009 and 2008 in accordance with Canadian generally accepted accounting principles.

/s/ “Manning Elliott LLP”

CHARTERED ACCOUNTANTS

Vancouver, British Columbia

April 29, 2011

AVINO SILVER & GOLD MINES LTD.

Consolidated Balance Sheets

As at December 31, 2010 and 2009

(Expressed in Canadian dollars)

	2010			2009

ASSETS
Current
Cash and cash equivalents	$	9,051,456		$	2,829,605
Interest receivable		4,142			146
Sales taxes recoverable (Note 8)		233,378			88,725
Amounts receivable (Note 6)		117,940			-
Prepaid expenses and other assets		30,463			49,614
		9,437,379			2,968,090

Property, Plant & Equipment (Note 5)		1,786,017			1,455,146
Reclamation Bonds		5,500			5,500
Mineral Properties (Note 6)		15,302,311			14,573,506
Investments in Related Companies (Note 7)		517,360			204,036
	$	27,048,567		$	19,206,278

LIABILITIES
Current
Accounts payable and accrued liabilities	$	474,072		$	382,482
Amounts due to related parties (Note 11(a))		169,265			164,690
		643,337			547,172

Future Income Tax Liability (Note 16)		2,026,148			1,694,007
		2,669,485			2,241,179
SHAREHOLDERS' EQUITY
Share Capital (Note 9)		39,132,349			33,112,072
Contributed Surplus		10,702,206			8,131,629
Treasury Shares (14,180 Shares, at cost)		(101,869	)		(101,869	)
		49,732,686			41,141,832

Accumulated Other Comprehensive Loss		307,274			(6,049	)
Deficit		(25,660,878	)		(24,170,684	)
		(25,353,604	)		(24,176,733	)
		24,379,082			16,965,099
	$	27,048,567		$	19,206,278

Subsequent Events – Note 18

Approved by the Board of Directors:


/s/ Gary Robertson	Director	/s/ David Wolfin	Director

The accompanying notes are an integral part of these consolidated financial statements

AVINO SILVER & GOLD MINES LTD.

Consolidated Statements of Operations and Comprehensive Loss

Years ended December 31, 2010, 2009 and 2008

(Expressed in Canadian dollars)

	2010			2009			2008

Operating and Administrative Expenses
Amortization	$	3,834		$	2,328		$	2,869
General exploration		-			294			8,823
Investor relations		99,450			90,031			172,992
Management fees		96,000			96,000			96,000
Office and miscellaneous		218,489			104,548			121,353
Professional fees		127,711			183,911			179,299
Regulatory and compliance fees		26,028			24,540			25,821
Salaries and benefits		109,873			82,160			109,354
Sales tax write-down (recovery) (Note 8)		42,478			(181,456	)		213,652
Stock-based compensation (Note 10)		361,784			237,887			606,000
Travel and promotion		45,032			28,935			39,750
		1,130,679			669,178			1,575,913

Loss before other items and income tax		(1,130,679	)		(669,178	)		(1,575,913	)

Other Income (Expenses)
Interest income		14,206			68,224			146,386
Foreign exchange loss		(41,580	)		(18,249	)		(35,696	)
Impairment of mineral properties (Note 6)		-			(608,118	)		-
Mineral property option revenue (Note 6)		-			-			25,000

LOSS BEFORE INCOME TAX		(1,158,053	)		(1,227,321	)		(1,440,223	)
Future income tax (expense) recovery (Note 16)		(332,141	)		239,562			(98,653	)
NET LOSS		(1,490,194	)		(987,759	)		(1,538,876	)

Other Comprehensive Income (Loss)
Unrealized gain (loss) on investments in related companies (Note 7)		313,323			97,517			(108,196	)

COMPREHENSIVE LOSS	$	(1,176,871	)	$	(890,242	)	$	(1,647,072	)

Loss per Share - Basic and Diluted	$	(0.07	)	$	(0.05	)	$	(0.07	)

Weighted Average Number of Shares Outstanding		21,059,008			20,584,727			20,584,727

The accompanying notes are an integral part of these consolidated financial statements

AVINO SILVER & GOLD MINES LTD.

Consolidated Statements of Shareholders’ Equity

For the years ended December 31, 2010, 2009 and 2008

(Expressed in Canadian dollars)

	Number of Common Shares		Share Capital			Treasury Shares			Contributed Surplus			Deficit			Accumulated Other Comprehensive Income (Loss)			Total Shareholders’ Equity

Balance, December 31, 2007		20,584,727	$	33,112,072		$	(101,869	)	$	7,287,742		$	(21,644,049	)	$	4,630		$	18,658,526

Stock based compensation (Note 10)		-		-			-			606,000			-			-			606,000
Net loss for year		-		-			-			-			(1,538,876	)		-			(1,538,876	)
Unrealized loss on investments		-		-			-			-			-			(108,196	)		(108,196	)

Balance, December 31, 2008		20,584,727		33,112,072			(101,869	)		7,893,742			(23,182,925	)		(103,566	)		17,617,454

Stock based compensation (Note 10)		-		-			-			237,887			-			-			237,887
Net loss for year		-		-			-			-			(987,759	)		-			(987,759	)
Unrealized gain on investments		-		-			-			-			-			97,517			97,517

Balance, December 31, 2009		20,584,727		33,112,072			(101,869	)		8,131,629			(24,170,684	)		(6,049	)		16,965,099

Common shares issued for cash:
Private placement (Note 9)		5,100,000		5,107,614			-			3,202,468			-			-			8,310,082
Share issuance costs		-		(435,387	)		-			-			-			-			(435,387	)
Exercise of stock options		472,500		354,375			-			-			-			-			354,375
Fair value of stock options exercised		-		993,675			-			(993,675	)		-			-			-
Stock-based compensation (Note 10)		-		-			-			361,784			-			-			361,784
Net loss for the year		-		-			-			-			(1,490,194	)		-			(1,490,194	)
Unrealized gain on investments		-		-			-			-			-			313,323			313,323

Balance, December 31, 2010		26,157,227	$	39,132,349		$	(101,869	)	$	10,702,206		$	(25,660,878	)	$	307,274		$	24,379,082

The accompanying notes are an integral part of these consolidated financial statements

AVINO SILVER & GOLD MINES LTD.

Consolidated Statements of Cash Flows

For the years ended December 31, 2010, 2009 and 2008

(Expressed in Canadian dollars)

	2010			2009			2008

CASH PROVIDED BY (USED IN):

OPERATING ACTIVITIES
Net loss	$	(1,490,194	)	$	(987,759	)	$	(1,538,876	)
Adjustments for non-cash items:
Amortization		3,834			2,328			2,869
Sales tax write-down provision		42,478			8,873			213,652
Stock-based compensation		361,784			237,887			606,000
Impairment of mineral properties		-			608,118			-
Future income tax expense (recovery)		332,141			(239,562	)		98,653

		(749,957	)		(370,115	)		(617,702	)

Net change in non-cash working capital (Note 12)		(75,811	)		226,040			(291,327	)

		(825,768	)		(144,075	)		(909,029	)


FINANCING ACTIVITIES
Shares issued for cash, net of issuance costs		8,229,069			-			-

INVESTING ACTIVITIES
Mineral property exploration expenditures		(846,745	)		(320,100	)		(1,764,719	)
Property, plant and equipment purchases		(334,705	)		(281,461	)		(93,492	)

		(1,181,450	)		(601,561	)		(1,858,211	)

Increase (decrease) in cash and cash equivalents		6,221,851			(745,636	)		(2,767,240	)

CASH AND CASH EQUIVALENTS, Beginning		2,829,605			3,575,241			6,342,481

CASH AND CASH EQUIVALENTS, Ending	$	9,051,456		$	2,829,605		$	3,575,241


SUPPLEMENTARY CASH FLOW DISCLOSURES
Cash paid for:
Interest expense	$	-		$	-		$	-
Income taxes		-			-			-

The accompanying notes are an integral part of these consolidated financial statements

AVINO SILVER & GOLD MINES LTD.

Notes to the Consolidated Financial Statements

For the years ended December 31, 2010, 2009 and 2008

(Expressed in Canadian dollars)

1. NATURE OF OPERATIONS

Avino Silver & Gold Mines Ltd. (the “Company” or “Avino”) was incorporated in 1969 under the laws of the Province of British Columbia, Canada. The Company’s principal business activities include the acquisition, exploration and development of mineral properties. The Company owns interests in mineral properties located in Durango, Mexico and in British Columbia and the Yukon, Canada.

The Company is in the exploration stage and is in the process of determining whether these properties contain ore reserves which are economically recoverable.

The recoverability of amounts recorded as mineral properties and related deferred costs is dependent upon the discovery of economically recoverable reserves, maintenance of the Company’s legal interests in its mineral claims, obtaining further financing for exploration and development of its mineral claims, re-development of its mining and processing operations and commencement of future profitable production, or receiving proceeds from the sale of all or an interest in its mineral properties.

2. SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

These consolidated financial statements are expressed in Canadian dollars and prepared in accordance with Canadian generally accepted accounting principles (“Canadian GAAP”) and include the accounts of the Company and its Mexican subsidiaries. A summary of the differences between accounting principles generally accepted in Canada and those generally accepted in the United States are contained in Note 20. All significant inter-company balances and transactions have been eliminated on consolidation. The Company’s Mexican subsidiaries are Oniva Silver and Gold Mines S.A., (“Oniva Silver”) which is wholly-owned, Promotora Avino, S.A. De C.V. (“Promotora”) in which the Company has a direct 79.09% ownership, and Compania Minera Mexicana de Avino, S.A. de C.V. (“Cia Minera”) in which the Company has a 96.60% direct ownership and an additional 2.68% indirect effective ownership held through Promotora. The ownership interests in Cia Minera combine for an effective 99.28% held by the Company as at December 31, 2010 and 2009 (see Note 3).

ii)	Cash and cash equivalents The Company considers all highly liquid instruments with original maturities of three months or less on the date of purchase to be cash equivalents. Cash equivalents are carried at cost, plus accrued interest, which approximates fair value.

iii)	Property, plant and equipment Property, plant and equipment is stated at cost less accumulated amortization. Amortization is recorded over the estimated useful lives of the assets on the declining balance basis at the following annual rates:

Office equipment, furniture and fixtures	20%
Computer equipment	30%
Mine facilities and equipment	20%

The mine mill, machinery, plant facilities and certain equipment are not in active use, as the Company is in the process of refurbishing these assets. Accordingly, these assets are considered to be under reconstruction and no amortization has been recorded on them. Once commercial production has commenced, mine, mill, machinery, plant facilities, and certain equipment are depreciated using the units of production method, if sufficient reserve information is available or the straight-line method over their estimated useful lives, not to exceed the life of the mine to which the assets relate.

AVINO SILVER & GOLD MINES LTD.

Notes to the Consolidated Financial Statements

For the years ended December 31, 2010, 2009 and 2008

(Expressed in Canadian dollars)

2. SIGNIFICANT ACCOUNTING POLICIES (Continued)

iv)

Mineral properties, deferred exploration and development expenditures

The Company follows CICA Accounting Guideline 11 , Enterprises in the Development Stage . Mineral property acquisition, exploration and development costs are deferred until the property to which they relate is placed into production, sold, allowed to lapse or abandoned. Mineral property acquisition costs include the cash consideration and the fair value of common shares issued for mineral property interests based on the observed trading price of the shares. Mineral exploration costs such as field labour and consultants, geology and assaying, and mining claims are capitalized and carried at cost until the properties to which they relate are placed into production, sold or management determines a permanent impairment in value. Development costs incurred to access ore bodies identified in the current mining plan will be expensed as incurred after production has commenced.

Development costs necessary to extend a mine beyond those areas identified in the current mining plan and which are incurred to access additional reserves are deferred until the incremental reserves are mined. Mineral properties and development costs, including the mineral acquisition and direct mineral exploration costs relating to the current mining plan, will be depleted and amortized using the units-of-production method over the estimated life of the ore body based on proven and probable reserves once commercial production commences. Incidental revenues and operating costs are included in mineral properties and development costs prior to commercial production.

Investments

Investments in shares of public companies traded on an active market over which Avino does not have control or exercises significant influence are classified as available-for-sale and accounted for at fair market value, based upon quoted market share prices at the consolidated balance sheet date. Unrealized gains or losses on these investments are recorded as other comprehensive income or loss, unless a decline in value is considered to be other than temporary. Purchases and sales of investments are measured on a settlement date basis.

vi)

Translation of foreign currencies and foreign subsidiaries

The Company’s integrated Mexican foreign subsidiaries are financially and operationally dependent on the Company. The Company uses the temporal method to translate the accounts of its integrated foreign operations into Canadian dollars. Monetary assets and liabilities are translated at the exchange rates in effect at the balance sheet date. Non-monetary assets and liabilities are translated at historical rates. Revenues and expenses are translated at rates in effect during the period, except for amortization, which is translated on the same basis as the related assets. The resulting exchange gains or losses are recognized in income.

vii)

Comprehensive loss

Comprehensive loss is comprised of the sum of the net loss and other comprehensive income or loss which includes unrealized gains or losses from changes in the fair market value of available-for-sale investments, changes in the fair market value of derivative instruments designated as cash flow hedges and currency translation adjustments on self-sustaining foreign operations. The Company does not have any derivative instruments or self-sustaining foreign operations and currently the Company’s other comprehensive income (loss) is comprised only of changes in the fair value of the Company’s available-for-sale investments.

AVINO SILVER & GOLD MINES LTD.

Notes to the Consolidated Financial Statements

For the years ended December 31, 2010, 2009 and 2008

(Expressed in Canadian dollars)

2. SIGNIFICANT ACCOUNTING POLICIES (Continued)

viii)

Financial instruments

(a)

Classification

Financial instruments are classified into one of five categories: held-for-trading, held-to-maturity investments, loans and receivables, available-for-sale financial assets or other financial liabilities. All financial instruments are measured at fair value except for loans and receivables, held-to-maturity investments and other financial liabilities which are measured at amortized cost. Subsequent measurement and accounting for changes in the value of these investments will depend on their initial classification as follows: held-for-trading financials assets are measured at fair value with changes in fair value recognized in operations. Available-for-sale financial instruments are measured at fair value with changes in fair value recorded in other comprehensive income until the change in value is realized or the instrument is derecognized or permanently impaired.

(b)	Transaction costs Transaction costs attributable to the acquisition or issue of financial assets or financial liabilities, other than those classified as held-for-trading, are added to the initial fair value amount to match the costs with the related transactions.

ix)

Use of estimates

The preparation of financial statements in accordance with Canadian GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported periods. Significant areas requiring the use of estimates relate to the recoverability or valuation of sales taxes recoverable, property, plant, equipment, and mineral properties, the valuation of asset retirement obligations, useful lives for amortization, recognition and disclosure of future income tax assets and liabilities, and stock-based compensation. Actual results could differ from those estimates.

Income taxes

The Company follows the asset and liability method of accounting for income taxes. Future income tax assets and liabilities are determined based on temporary differences between the accounting and taxes bases for existing assets and liabilities, and are measured using the tax rates expected to apply when these differences reverse. A valuation allowance is recorded against any future income tax asset if it is more likely than not that the asset will not be realized.

The Company follows CICA Emerging Issues Committee Abstract 146 Flow-Through Shares . Canadian tax legislation permits a company to issue securities referred to as flow-through shares whereby the Company assigns the tax deductions arising from the related resource expenditures, to the shareholders. When resource expenditures are renounced to the investors and the Company has reasonable assurance that the expenditures will be completed, a future income tax liability is recognized for the net tax effect of the deductions renounced, and share capital is reduced.

If the Company has sufficient unrecognized tax losses carried forward or other unrecognized future income tax assets to offset all or part of this future income tax liability, a portion of such unrecognized future income tax assets is recorded as a future income tax recovery up to the amount of the future income tax liability that would otherwise be recognized.

AVINO SILVER & GOLD MINES LTD.

Notes to the Consolidated Financial Statements

For the years ended December 31, 2010, 2009 and 2008

(Expressed in Canadian dollars)

2. SIGNIFICANT ACCOUNTING POLICIES (Continued)

xi) Revenue Recognition

The Company recognizes revenue from the sale of concentrate upon delivery when persuasive evidence of a sale agreement exists, the risks of ownership are transferred to the customer, collection is reasonably assured, and price is readily determinable. Revenue is based on quoted market prices during the quotation period published in the metal bulletin less treatment, refining charges, and penalties. Prior to commercial production concentrate sales incidental to the exploration of mineral properties is recorded net of production costs as a reduction of deferred mineral property exploration costs.

xii) Stock-based compensation

The Company recognizes stock-based compensation expense for the estimated fair value of stock-based payments. Compensation costs attributable to stock options or similar equity instruments granted to employees are measured at the fair value at the grant date using the Black-Scholes option pricing model, and are expensed over the expected vesting period. Transactions in which goods or services are received from non-employees in exchange for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. Consideration received on the exercise of stock options is recorded as share capital with a corresponding reduction in the contributed surplus related to the options exercised.

xiii) Loss per share

Basic loss per share is calculated using the weighted average number of common shares outstanding during the year. Diluted loss per share is calculated giving effect to the potential dilution that would occur if securities or other contracts to issue common shares were exercised or converted to common shares using the treasury method. The treasury method assumes that proceeds received from the exercise of stock options and warrants are used to repurchase common shares at the prevailing market rate. Stock options and warrants are dilutive when the average market prices of the common shares during the year exceed the exercise prices of the options and warrants.

For the years ended December 31, 2010, 2009 and 2008, the existence of warrants and options affects the calculation of loss per share on a fully diluted basis. As the affect of this dilution is to reduce the reported loss per share (anti-dilutive), fully diluted loss per share information has not been shown.

xiv) Asset retirement obligations

The Company recognizes the fair value of its liability for asset retirement obligations (“ARO”), including site restoration costs in the period in which such liabilities are incurred and can be reasonably estimated. Upon recognition of an ARO, the site restoration costs are capitalized as a part of the mineral property. In periods subsequent to initial measurement, the ARO is adjusted for both the passage of time and revisions to the original estimates. If the obligation is settled for other than the carrying amount of the liability, a gain or loss on the settlement is recognized. The Company estimated its site restoration costs as at December 31, 2010 to be $nil (2009 - $nil).

AVINO SILVER & GOLD MINES LTD.

Notes to the Consolidated Financial Statements

For the years ended December 31, 2010, 2009 and 2008

(Expressed in Canadian dollars)

2. SIGNIFICANT ACCOUNTING POLICIES (Continued)

xv) Impairment of long-lived assets

The recoverability of long-lived assets, which includes property, plant, equipment, and mineral properties are assessed for impairment annually or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Recoverability is based on factors such as future asset utilization and the future undiscounted cash flows expected to result from the use or sale of the related assets. An impairment loss is recognized when the carrying amount of an asset that is held and used exceeds the projected undiscounted future net cash flows expected from its use and disposal less costs to sell, and is measured as the amount by which the carrying amount of the asset exceeds its fair value, which is measured based on discounted cash flows when quoted market prices are not available.

Impairment in the carrying value of non-producing mineral properties may occur when one of the following conditions exists:

(a)	the Company's work program on a property has significantly changed, so that previously identified resource targets or work programs are no longer being pursued;

(b)	exploration results are not promising and no more work is being planned in the foreseeable future on the property; or

(c)	the remaining lease terms for the property are insufficient to conduct necessary studies, exploration work, or mineral extraction.

Once impairment has been determined in the carrying value of a mineral property, it will be written-down to fair value. Amounts shown for mineral properties reflect costs incurred to date, less impairments, and are not intended to reflect present or future values.

xvi) Recent Accounting Pronouncements

(a)

In February 2008, the CICA announced that Canadian GAAP for publicly accountable enterprises will be replaced by International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”) for interim and annual financial statements for fiscal years beginning on or after January 1, 2011. The pronouncement also requires that comparative figures for 2010 be based on IFRS. The Company has completed the planning and diagnostic stages to identify the impact of adopting IFRS and will continue to invest in training and necessary resources to complete the conversion. The Company continues to monitor and assess the impact of convergence of Canadian GAAP and IFRS. The Company will adopt IFRS commencing with the first quarter of fiscal 2011.

AVINO SILVER & GOLD MINES LTD.

Notes to the Consolidated Financial Statements

For the years ended December 31, 2010, 2009 and 2008

(Expressed in Canadian dollars)

2. SIGNIFICANT ACCOUNTING POLICIES (Continued)

xvi) Recent Accounting Pronouncements (continued)

(b)

CICA Section 1582 Business Combinations , which replaces Section 1581, Business Combinations ; CICA Section 1601 Consolidated Financial Statement and Section 1602 Non-Controlling Interests , which replace Section 1600, Consolidated Financial Statements . These new standards are based on the International Financial Reporting Standard 3, Business Combinations . These new standards replace the existing guidance on business combination and consolidated financial statements. These new standards require that most assets acquired and liabilities assumed, including contingent liabilities, to be measured at fair value and all acquisition costs to be expensed. These new standards also require non-controlling interests to be recognized as a separate component of equity and net earnings to be calculated without a deduction for non-controlling interests. The objective of these new standards is to harmonize Canadian accounting for business combinations with the International and United States accounting standards. The new standards are to be applied prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after January 1, 2011, with earlier application permitted. This standard is effective for the Company for interim and annual financial statements beginning on January 1, 2011. The Company does not expect a significant impact on the adoption of this standard on its consolidated financial statements.

3. SUBSIDIARY COMPANIA MINERA MEXICANA DE AVINO, S.A. DE C.V.

On February 16, 2009 the Company converted existing loans advanced to its subsidiary Compania Minera Mexicana de Avino, S.A. de C.V. (“Cia Minera”) into new additional shares, resulting in the Company’s ownership increasing by 9.93% to an effective 99.28%. The inter-company loans and the investment in shares of Cia Minera have been eliminated upon consolidation of the financial statements. The Company had a pre-existing effective ownership interest of 89.35% in Cia Minera prior to the 9.93% increase. The issuance of shares to the Company by Cia Minera on February 16, 2009 resulted in a reduction in the non-controlling interest from 10.65% to 0.72% (see Note 4).

The historic operations of Cia Minera involved the mining of commercial grade ores which produced silver, gold and copper. This plant and mine ceased operations in November 2001 due to low metal prices and the closure of a smelter. The Company is evaluating the re-activation of the mine and has commenced exploration activities on Cia Minera’s mineral properties in the state of Durango, Mexico (see Note 6).

4. NON-CONTROLLING INTEREST

As at December 31, 2010 the Company has an effective 99.28% interest in its subsidiary Cia Minera, and the remaining 0.72% portion is a non-controlling interest, reflecting a change in ownership interests resulting from the shares that Cia Minera issued to the Company on February 16, 2009 (the “Cia Minera Share Transaction”) as described in Note 3. In fiscal 2008 the non-controlling interest of Cia Minera was 10.65% and the 9.93% change in the fiscal 2009 ownership results in a reduction of the non-controlling interest.

Cia Minera’s operations have generated recurring losses since the Company acquired control of Cia Minera on July 17, 2006 and the owners of the minority interest have not funded and are not required to fund their share of Cia Minera’s net losses and have not demonstrated any commitment for funding. Accordingly, the non-controlling interest in Cia Minera operating losses are not recognized as a recoverable asset in these financial statements and there is no allocation of consolidated net losses to the minority interests.

AVINO SILVER & GOLD MINES LTD.

Notes to the Consolidated Financial Statements

For the years ended December 31, 2010, 2009 and 2008

(Expressed in Canadian dollars)

4. NON-CONTROLLING INTEREST (Continued)

The Cia Minera Share Transaction is accounted for as a capital transaction and the funds that were previously advanced to Cia Minera are consolidated in the financial statements as assets, expenditures or deficit according to the full use of the funds in 2009 or past years. The minority interest has not contributed any assets or funds for Cia Minera’s operations and no past losses have been attributed as recoverable from the minority interest, therefore upon the reduction of the minority interest in fiscal 2009 there were no adjustments affecting the balances presented in the consolidated financial statements.

5. PROPERTY, PLANT AND EQUIPMENT

	Cost		Accumulated Amortization		2010 Net Book Value		2009 Net Book Value
Office equipment, furniture and fixtures	$	6,482	$	4,796	$	1,686	$	955
Computer equipment		27,642		7,853		19,789		21,055
Mine mill, machinery and processing plant		1,706,542		-		1,706,542		1,387,082
Mine facilities and equipment		62,691		4,691		58,000		46,054
	$	1,803,357	$	17,340	$	1,786,017	$	1,455,146

6. MINERAL PROPERTIES

				British
	Durango			Columbia			Yukon
	Mexico			Canada			Canada		Total

Balance, December 31, 2008	$	14,251,649		$	608,121		$	1,754	$	14,861,524

Exploration costs incurred during year:
Assays		9,480			-			-		9,480
Assessment and taxes		40,948			-			-		40,948
Drilling		156,612			-			-		156,612
Geological		143,149			-			-		143,149
Sale of concentrate		(30,089	)		-			-		(30,089	)
Less write down on properties		-			(608,118	)		-		(608,118	)
Balance, December 31, 2009	$	14,571,749		$	3		$	1,754	$	14,573,506

Exploration costs incurred during year:
Assays		56,032			-			-		56,032
Assessment and taxes		45,893			-			-		45,893
Drilling and exploration		1,470,996			-			-		1,470,996
Geological		201,139			-			750		201,889
Sale of concentrate		(1,046,005	)		-			-		(1,046,005	)

Balance, December 31, 2010	$	15,299,804		$	3		$	2,504	$	15,302,311

AVINO SILVER & GOLD MINES LTD.

Notes to the Consolidated Financial Statements

For the years ended December 31, 2010, 2009 and 2008

(Expressed in Canadian dollars)

6. MINERAL PROPERTIES (Continued)

The Company is in the exploration stage and therefore proceeds from the sale of concentrate are recorded as a reduction in mineral properties. The Company’s concentrate sales are based on quoted market prices less treatment and refining charges and penalties. During the year ended December 31, 2010, the Company recorded concentrate sales of $1,046,005 (2009 - $30,089). At December 31, 2010, $117,940 (2009 - $Nil) of the total sales amount was receivable from the customer. The receivable was collected in January 2011.

Additional information on the Company’s mineral properties by region is as follows:

(a) Durango, Mexico

The Company’s subsidiary Cia Minera owns 42 mineral claims in the state of Durango, Mexico. In addition four mineral claims are under leased concessions – exploitation rights to and for the Unification La Platosa, are granted by a lease agreement, to Cia Minera from Minerales de Avino SA de CV. The two concessions, Primer Rey and Avino y Emma, are included in the lease agreement, but are discrete and lie under the town of San Jose de Avino. The agreement expired on October 31, 2010 and the Company is currently renegotiating the agreement.

The Company’s mineral claims in Mexico are summarized in the following property groups:

(i)

Avino mine area property

The Avino mine property is situated around the towns of Panuco de Coronado and San Jose de Avino and surrounding the formerly producing Avino mine. 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.

(ii)	Gomez Palacio property The Gomez Palacio property is located near the town of Gomez Palacio, Durango, Mexico. There are nine exploration concessions covering 2,549 hectares.

(iii)

Papas Quiero property

The Papas Quiero property is located near the village of Papas Quiero, Durango, Mexico. There are four exploration concessions covering 2,552.6 hectares and one exploitation concession covering 602.9 hectares.

(ix)

Stackpole area property

The Stackpole area property is situated with the Avino mine property around the towns of Panuco de Coronado and San Jose de Avino and surrounding the formerly producing Avino mine. Under a royalty agreement covering three mineral concessions, Cia Minera shall pay to Minerales de Avino royalties of 3.5% on mineral extracted, processed and sold from the Unification La Platosa, San Carlos and San Jose concessions. The royalties are to be calculated on a base of net sales (net smelter payment less the cost of sales) less other commercialization and transportation costs. The lease agreement expired on October 31, 2010 and is currently under renegotiation.

AVINO SILVER & GOLD MINES LTD.

Notes to the Consolidated Financial Statements

For the years ended December 31, 2010, 2009 and 2008

(Expressed in Canadian dollars)

6. MINERAL PROPERTIES (Continued)

(b) British Columbia, Canada

The Company’s mineral claims in British Columbia encompass the following three properties:

(i)

Aumax property

The Company owns a 100% interest in a Crown granted mineral claim, located in the Lillooet Mining Division of British Columbia, Canada that was acquired in 2003 by issuing 200,000 common shares at a price of $0.50 per share and paying $4,000 in cash for total consideration of $104,000.

(ii)	Minto property The Company has a 100% interest in a Crown granted mineral claim situated in the Lillooet Mining Division of British Columbia.

(iii)

Olympic-Kelvin property

The Company has a 100% interest in six Crown granted mineral claims located in the Lillooet Mining Division of British Columbia.

In 2009, the Company wrote down the value of the three British Columbia properties to a nominal value of $1 each. The Company is keeping all claims in good standing however no exploration is currently planned for these properties.

(a) Yukon, Canada

In 2003 the Company acquired a 100% interest in 14 quartz leases, located in the Mayo Mining Division of the Yukon, Canada by issuing 200,000 common shares at a price of $0.50 per share for total consideration of $100,000. The property was written down to a nominal value of $1 in fiscal 2006.

On November 12, 2008 and amended April 1, 2009, the Company entered into an option agreement with Mega Silver Inc. (“Mega Silver”), whereby Mega Silver can earn the excusive right and option to acquire a 100% title and interest in the Eagle Property located in the Yukon Territory. During 2008 the Company received $25,000 upon execution of the agreement which was recorded in income. In 2009 the Company received a notice from Mega Silver which terminated the option agreement.

AVINO SILVER & GOLD MINES LTD.

Notes to the Consolidated Financial Statements

For the years ended December 31, 2010, 2009 and 2008

(Expressed in Canadian dollars)

7. INVESTMENTS IN RELATED COMPANIES

Investments in related companies comprise the following:

			Accumulated		Fair		Fair
			Unrealized		Value		Value
	Cost		Gains		2010		2009

(a) Bralorne Gold Mines Ltd.	$	205,848	$	23,463	$	229,311	$	143,319
(b) Levon Resources Ltd.		4,236		283,812		288,048		60,716
(c) Oniva International Services Corp.		1		-		1		1

	$	210,085	$	307,275	$	517,360	$	204,036

During 2010 the Company recorded a $313,324 (2009 - $97,517) unrealized gain on investments in related companies classified as available-for-sale in other comprehensive income, representing the increase in fair value during the year.

(a) Bralorne Gold Mines Ltd. (“Bralorne”)

The Company’s investment in Bralorne consists of 179,149 common shares with a quoted market value of $229,311 as at December 31, 2010 (2009 - $143,319). Bralorne is a public company with common directors.

(b) Levon Resources Ltd. (“Levon”)

The Company’s investment in Levon consists of 141,200 common shares with a quoted market value of $288,048 as at December 31, 2010 (2009 - $60,716). Levon is a public company with common directors.

The Company owns a 16.67% interest in Oniva, a private company with common management, which provides office and administration services to the Company. The remaining 83.33% is shared equally between five other companies that are related by some common directors and management. See Note 13 for disclosure on the Company’s commitment to Oniva.

8. SALES TAXES RECOVERABLE

The Company’s sales tax recoverable consists of the Mexican I.V.A. a Value-Added Tax (“VAT”) and the Canadian Harmonized Sales Tax (“HST”) recoverable.


	2010			2009

VAT recoverable	$	267,084		$	92,706
Write-down provision		(50,887	)		(8,873	)

VAT net carrying amount		216,197			83,833
HST recoverable		17,181			4,892

Sales tax recoverable	$	233,378		$	88,725

The Company records the VAT net of a write-down provision, reflecting an estimate of the amount of the VAT recoverable based on past collection history and the length of time amounts are outstanding. During 2010 the Company received VAT refunds including interest totalling $147,462 for past claims included in the December 31, 2010 and December 31, 2009 balances of VAT recoverable.

AVINO SILVER & GOLD MINES LTD.

Notes to the Consolidated Financial Statements

For the years ended December 31, 2010, 2009 and 2008

(Expressed in Canadian dollars)

9. SHARE CAPITAL

(a)	Authorized: Unlimited common shares without par value

(b)

Issued

(i)

On December 20, 2010, the Company closed a non-brokered private placement issuing 2,700,000 units at a price of $1.90 per unit for gross proceeds of $5,130,000. Each unit is comprised of one common share and one non-transferrable share purchase warrant. Each share purchase warrant is exercisable for a term for a term of three years into one common share at a price of $2.50 per share until December 22, 2013.

The Company paid a cash commission equal to 5% of the applicable gross proceeds from units sold to such investors ($210,900) and compensation warrants to purchase common shares of the Company equal to 5% of the units sold under the offering (111,000 units).

The fair value of the warrants and compensation warrants have been estimated using the Black-

Scholes option pricing model using the following assumptions: risk-free interest rate of 1.90%, dividend yield of nil, volatility of 84.87%, and an expected life of three years. Of the $5,130,000 total aggregate proceeds raised $3,252,285 was attributed to common shares and the residual amount of $1,877,715 was attributed to the common share purchase warrants, which has been recorded in contributed surplus. The fair value of the compensation warrants were valued at $180,082.

(ii)

On November 10, 2010, the Company closed a non-brokered private placement issuing 2,400,000 units at a price of $1.25 per unit for gross proceeds of $3,000,000. Each unit is comprised of one common share and one non-transferrable share purchase warrant. Each share purchase warrant is exercisable for a term for a term of three years into one common share at a price of $1.52 per share until November 10, 2013.

The fair value of the warrants has been estimated using the Black-Scholes option pricing model using the following assumptions: risk-free interest rate of 1.94%, dividend yield of nil, volatility of 83.86%, and an expected life of three years. Of the $3,000,000 total aggregate proceeds raised $1,855,329 was attributed to common shares and the residual amount of $1,144,671 was attributed to common share purchase warrants, which has been recorded in contributed surplus.

(c)

Warrants

	Underlying Shares			Weighted Average Exercise Price
Balance, December 31, 2009 and 2008		2,498,750		$	2.50

Issued		5,211,000		$	2.05
Expired		(2,498,750	)	$	2.50

Balance, December 31, 2010		5,211,000		$	2.05

AVINO SILVER & GOLD MINES LTD.

Notes to the Consolidated Financial Statements

For the years ended December 31, 2010, 2009 and 2008

(Expressed in Canadian dollars)

9. SHARE CAPITAL (Continued)

Details of share purchase warrants outstanding as of December 31, 2010 and 2009 are:

Number of Warrants Outstanding and Exercisable
2010		2009		Exercise Price per Share		Expiry Date

	2,400,000		-	$	1.52	November 10, 2013
	2,811,000		-	$	2.50	December 22, 2013
	-		2,498,750	$	2.50	March 10, 2010

	5,211,000		2,498,750

(d)

Stock options

The Company has a stock option plan under which it may grant stock options up to 10% of the Company’s total number of shares issued and outstanding on a non-diluted basis. The stock option plan provides for the granting of stock options to regular employees and persons providing investor-relation or consulting services up to a limit of 5% and 2% respectively of the Company’s total number of issued and outstanding shares per year. The stock options vest on the date of grant, except for those issued to persons providing investor-relation or consulting services, which vest over a period of one year. The option price must be greater or equal to the discounted market price on the grant date and the option term cannot exceed five years from the grant date.

	Underlying Shares			Weighted Average Exercised Price

Stock options outstanding, December 31, 2008		1,854,500		$	2.85
Granted		160,000		$	0.75
Expired or cancelled		(195,000	)	$	2.49

Stock options outstanding, December 31, 2009		1,819,500		$	0.88	*
Granted		520,000		$	1.05
Expired or cancelled		(262,000	)	$	0.85
Exercised		(472,500	)	$	0.75

Stock options outstanding, December 31, 2010		1,605,000		$	0.97	*

AVINO SILVER & GOLD MINES LTD.

Notes to the Consolidated Financial Statements

For the years ended December 31, 2010, 2009 and 2008

(Expressed in Canadian dollars)

9. SHARE CAPITAL (Continued)

(e)	Stock options

Details of stock options outstanding are:

Expiry Date	Exercise Price			2010 Stock Options Outstanding		2009 Stock Options Outstanding

April 5, 2010	$	1.35			-		42,500
April 5, 2010	$	0.75	*		-		219,500
September 26, 2010	$	0.75	*		-		52,500
April 26, 2011	$	3.99			60,000		60,000
April 26, 2011	$	0.75	*		600,000		865,000
February 26, 2013	$	1.65			10,000		10,000
February 26, 2013	$	0.75	*		340,000		410,000
December 9, 2013	$	2.00			20,000		-
September 22, 2014	$	0.75			75,000		160,000
January 14, 2015	$	0.81			75,000		-
September 10, 2015	$	1.05			425,000		-

					1,605,000		1,819,500

* Repriced during the year ended December 31, 2009, the Company’s shareholders and the TSX Venture Exchange approved a re-pricing of options for directors and employees. See Note 10.

As of December 31, 2010, 1,605,000 stock options (2009 – 1,819,500) were exercisable with a weighted average remaining contractual life of 2.24 years (2009 – 1.87 years).

10. STOCK-BASED COMPENSATION

During 2010 the Company granted stock options to various directors, officers, employees, consultants, and investor relations of the Company to purchase up to a total of 520,000 common shares at a weighted average exercise price of $1.05 per share pursuant to the Company’s stock option plan. The options vest on dates ranging from the grant date to September 30, 2011. The options are exercisable on or before September 10, 2015. The Company recorded stock-based compensation expense of $361,784 for these stock options.

The Company recorded total amount of stock based compensation expense in the amount of $361,784 (2009 - $237,887; 2008 - $606,000).

Investor relations expenses consist of expenses relating to disseminated publications and other communications with shareholders, required by regulatory or other authorities. During 2010, investor relations consultants were granted 25,000 options (2009 - Nil, 2008 - 20,000). The fair value of these investor relations options are $28,880 (2009 – $Nil, 2008 - $20,200) which have been included in stock-based compensation expense.

AVINO SILVER & GOLD MINES LTD.

Notes to the Consolidated Financial Statements

For the years ended December 31, 2010, 2009 and 2008

(Expressed in Canadian dollars)

10. STOCK-BASED COMPENSATION (Continued)

The fair value of stock options vesting to investor relations consultants were calculated using the following assumptions: risk-free rate ranging from 2.56% to 2.41%, dividend yield rate of nil, volatility of 79% and an expected life ranging from 4.7 years to 4.75 years.

During 2009, the TSX Venture Exchange approved an amendment to the terms of 1,547,000 outstanding options held by directors and employees by adjusting the exercise price to $0.75 per share. The options previously had exercise prices ranging from $1.35 to $3.99. There were no adjustments to the life of the options. Additional stock based compensation of $175,487 in 2009 relates to the re-pricing of the options.

Option-pricing requires the use of highly subjective estimates and assumptions including the expected stock price volatility. Changes in the underlying assumptions can materially affect the fair value estimates. The fair value of the options re-priced and granted to officers, directors, consultants, and employees was calculated using the Black-Scholes model with following weighted average assumptions and resulting grant date fair value:

	2010			2009			2008
Weighted average assumptions:
Risk-free interest rate		2.08	%		1.38	%		3.32	%
Expected dividend yield		–			–			-
Expected option life (years)		4.83			2.27			5
Expected stock price volatility		74.95	%		94.84	%		78.23	%
Weighted average fair value at grant date	$	0.67		$	0.16		$	1.01

11. RELATED PARTY TRANSACTIONS AND BALANCES

In the normal course of operations the Company transacts with companies related to Avino’s directors or officers. The balances and transactions with related parties not disclosed elsewhere in these financial statements are as follows:

(a)	Amounts due to related parties:

	2010		2009
Directors	$	10,500	$	18,000
Frobisher Securities Ltd.		4,687		516
Oniva International Services Corp.		153,289		145,120
Sampson Engineering Inc.		789		1,054
	$	169,265	$	164,690

The amounts due to related parties are non-interest bearing, unsecured and due on demand.

(b)	The Company recorded the following amounts for management and consulting services provided by the following companies:

	2010		2009		2008

Intermark Capital Corp	$	96,000	$	96,000	$	96,000
Wear Wolfin Design Ltd.		30,000		30,000		30,000
	$	126,000	$	126,000	$	126,000

AVINO SILVER & GOLD MINES LTD.

Notes to the Consolidated Financial Statements

For the years ended December 31, 2010, 2009 and 2008

(Expressed in Canadian dollars)

11. RELATED PARTY TRANSACTIONS AND BALANCES (Continued)

(c)	The Company recorded the following amounts for other services provided by the following companies:

	2010		2009		2008

Chevillon Exploration Consulting	$	-	$	4,331	$	16,789
Sampson Engineering Inc.		24,954		10,344		34,698
	$	24,954	$	14,675	$	51,487

(d)	The Company recorded the following amounts for administrative services and expenses provided by Oniva International Services Corp.:

	2010		2009		2008

Salaries and benefits	$	108,086	$	81,841	$	109,354
Office and miscellaneous		60,441		66,913		78,804

	$	168,527	$	148,754	$	188,158

All related party transactions are recorded at the exchange amount, representing the value agreed upon by the Company and the related party, which management believes approximates fair value.

12. SUPPLEMENTARY CASH FLOW INFORMATION

	2010			2009			2008
Net change in non-cash working capital items:
Interest receivable	$	(3,995	)	$	2,793		$	16,244
Sales taxes recoverable		(187,131	)		289,409			(206,110	)
Prepaid expenses		19,151			(38,127	)		20,830
Accounts payable and accrued liabilities		91,589			(21,925	)		(116,303	)
Due to related parties		4,575			(6,110	)		(5,988	)
	$	(75,811	)	$	226,040		$	291,327

AVINO SILVER & GOLD MINES LTD.

Notes to the Consolidated Financial Statements

For the years ended December 31, 2010, 2009 and 2008

(Expressed in Canadian dollars)

13. COMMITMENTS

The Company has a cost sharing agreement to reimburse Oniva for a percentage of its overhead expenses, to reimburse 100% of its out-of-pocket expenses incurred on behalf of the Company, and to pay a percentage fee based on the total overhead and corporate expenses. The agreement may be terminated with one-month notice by either party. Transactions and balances with Oniva are disclosed in Note 11.

The Company and its subsidiary have various lease agreements for their office premises, use of land, drilling and equipment at the mine site.

The Company has commitments over the next five years as follows:

	Amount

2011	$	750,793
2012		238,046
2013		242,040
2014		246,234
2015		250,638
	$	1,727,751

14. CAPITAL MANAGEMENT

The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern in order to pursue the exploration and development of its properties and to maintain flexible capital structure for its projects for the benefit of its stakeholders. In the management of capital, the Company includes the components of shareholders’ equity as well as cash and cash equivalents.

The Company manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust the capital structure, the Company may attempt to issue new shares or adjust the amount of cash and cash equivalents. Management reviews the capital structure on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable. The Company is not subject to externally imposed capital requirements.

15. SEGMENTED INFORMATION

The Company’s operations are limited to one industry segment, being the acquisition, exploration and development of mineral properties. Regional geographic information pertaining to the Company’s mineral properties is disclosed in Note 6.

AVINO SILVER & GOLD MINES LTD.

Notes to the Consolidated Financial Statements

For the years ended December 31, 2010, 2009 and 2008

(Expressed in Canadian dollars)

16. INCOME TAXES

The components of the income tax provision including, the statutory tax rate, effective tax rate and the effect of the valuation allowance are as follows:

	2010			2009			2008

Statutory rate		28.5	%		30.00	%		31.00	%

Income taxes recovered at the Canadian statutory rate	$	330,045		$	368,196		$	446,469

Less permanent differences:
Stock-based compensation		(103,108	)		(71,366	)		(181,598	)
Investor relations expense for stock options granted		-			-			(6,262	)
Reduction for effect of lower Mexican tax rates		3,736			1,394			(7,160	)
Other non-tax deductible expenses		(758	)		(363	)		(762	)

Non-capital losses expired		(489,600	)		(271,284	)		-
Change in enacted rates		(102,398	)		(206,652	)		-

Valuation allowance on benefit of tax loss		(62,595	)		180,075			(301,758	)

Benefit of tax attributes not recognized (recognized) and other items		92,537			239,694			(47,582	)

Income tax (expense) recovery recognized in the year	$	(332,141	)	$	239,694		$	(98,653	)

AVINO SILVER & GOLD MINES LTD.

Notes to the Consolidated Financial Statements

For the years ended December 31, 2010, 2009 and 2008

(Expressed in Canadian dollars)

16. INCOME TAXES (Continued)

The approximate tax effects of each type of temporary difference that gives rise to potential future income tax assets are as follows:

	2010			2009

Expected tax recovery rate		25	%		26	%

Non-capital tax losses carried forward	$	1,239,395		$	1,141,325

Capital losses carried forward		184,026			191,387

Canadian exploration expenses, Canadian development expenses and foreign exploration, and development expenses in excess of book value of Canadian mineral properties		507,015			540,234

Share issuance costs		51,061			42,833

Tax basis of investments in related companies in excess of book value		27,125			28,210

Undeducted capital cost allowance in excess of book value of Canadian equipment		52,187			54,225

Future income tax assets		2,060,809			1,998,214

Less: valuation allowance		(2,060,809	)		(1,998,214	)

Net tax assets	$	–		$	–

The potential benefit of Canadian net operating tax loss carry-forwards and other Canadian future income tax assets has not been recognized in the financial statements since the Company cannot be assured that it is more likely than not that such benefit will be utilized in future years.

The future income tax liability presented in these consolidated financial statements is due to the difference in the carrying amounts and tax bases of the Mexican mineral properties, mine plant and equipment, which were acquired in the purchase of Cia Minera. The carrying values of the Mexican mineral properties, mine plant and equipment includes an estimated fair value adjustment recorded upon the July 17, 2006 acquisition of control of Cia Minera that was based on a share exchange, while the tax bases of these assets are historical undeducted tax amounts that were nil on acquisition. The future tax liability is attributable to assets in the tax jurisdiction of Mexico and is presented net of Mexican tax losses carried forward. The approximate tax effects of each type of temporary difference that gives rise to future income tax liabilities are as follows:

	2010			2009

Mexican statutory rate		28	%		28	%

Book value of mineral properties in excess of tax bases	$	3,676,031		$	3,472,175
Book value of plant and equipment in excess of tax bases		366,045			333,676
Less: Mexican tax losses carried forward		(2,015,928	)		(2,111,844	)

Future income tax liability	$	2,026,148		$	1,694,007

AVINO SILVER & GOLD MINES LTD.

Notes to the Consolidated Financial Statements

For the years ended December 31, 2010, 2009 and 2008

(Expressed in Canadian dollars)

16. INCOME TAXES (Continued)

The Company has capital losses of $1,472,210 carried forward and $4,957,581 in non-capital tax losses carried forward available to reduce future Canadian taxable income. The capital losses can be carried forward indefinitely unless used. Additionally, the Company has $7,199,744 (denominated in MXN$77,252,750) in tax losses which are available to reduce future Mexican taxable income. The Company’s Canadian non-capital tax losses and Mexican tax losses, if unused, expire as follows:

Year of Expiry	Canada		Mexico

2014	$	568,450	$	–
2018		–		5,220,380
2019		–		1,078,275
2020		–		901,089
2025		799,044		–
2026		646,331		–
2027		643,498		–
2028		774,118		–
2029		727,183		–
2030		798,957		–

	$	4,957,581	$	7,199,744

17. FINANCIAL INSTRUMENTS AND RISKS

(a) Classification

The Company has classified its cash and cash equivalents as held-for-trading. Investments in related companies are classified as available-for-sale. Accounts payable and amounts due to related parties are classified as other liabilities. Interest receivable is classified as held for trading.

The following table summarizes information regarding the carrying values of the Company’s financial instruments:

	2010		2009

Held for trading (i)	$	9,055,598	$	2,829,751
Loan and receivables (ii)		117,940		-
Available for sale (iii)		517,360		204,036
Other financial liabilities (iv)		566,337		465,172

(i)	Cash and cash equivalents and interest receivable

(ii)	Amounts receivable

(iii)

Investments in related companies

(iv)	Accounts payable and amounts due to related parties

(b)	Fair values

The Company’s financial instruments consist of cash and cash equivalents, amounts receivable, interest receivable investments in related companies, accounts payable and amounts due to related parties. The carrying amounts of these short-term financial instruments are a reasonable estimate of their fair value because of their current nature, and the investments in related companies are carried at fair values based on quoted market prices.

AVINO SILVER & GOLD MINES LTD.

Notes to the Consolidated Financial Statements

For the years ended December 31, 2010, 2009 and 2008

(Expressed in Canadian dollars)

17. FINANCIAL INSTRUMENTS AND RISKS (Continued)

(b)	Fair values (continued)

The Company classifies its fair value measurements in accordance with an established hierarchy that prioritizes the inputs in valuation techniques used to measure fair value as follows:

Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities;

Level 2 – Inputs other than quoted prices that are observable for the asset or liability either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

Level 3 – Inputs that are not based on observable market date.

The following table sets forth the Company’s financial assets measured at fair value by level within the fair value hierarchy:

							Total
	Level 1		Level 2		Level 3		2010

Cash and cash equivalents	$	9,051,456	$	-	$	-	$	9,051,456
Investments in related companies		517,360		-		-		517,360
	$	9,568,816	$	-	$	-	$	9,568,816

(c)	Interest rate risk In management’s opinion, the Company is not exposed to significant interest rate risk as the Company has no interest bearing debt.

(d)

Foreign exchange rate risk

The operations and financial instruments of the Company’s subsidiaries are denominated in Mexican pesos (“MXN”) and are converted into Canadian dollars as the reporting currency in these financial statements. Fluctuations in the exchange rates between the Mexican peso and the Canadian dollar could have a material effect on the Company’s business and on the reported amounts of the Company’s financial instruments. The Company is exposed to foreign exchange rate risk relating to cash denominated in Mexican pesos totalling $273,867 (MXN$3,398,701), and accounts payable denominated in pesos totalling $374,067 (MXN$4,642,180). The Company does not utilize any financial instruments or cash management policies to mitigate the risks arising from changes in foreign currency rates.

(e)

Credit risk

The Company's cash and equivalents are primarily held in bank accounts with Canadian financial institutions, and as at December 31, 2010 cash and cash equivalents substantially exceed the amounts covered under federal deposit insurance. To minimize the credit risk on cash and cash equivalents the Company uses high quality financial institutions. As at December 31, 2010 the Company has no financial assets that are past due or impaired due to credit risk defaults.

(f)

Liquidity risk

The Company ensures its holding of cash and cash equivalents is sufficient to meet its operational requirements. The Company handles its liquidity risk through the management of its capital structure. All of the Company’s financial liabilities have contractual maturities of approximately 30 days or are due on demand and are subject to normal trade terms.

100

AVINO SILVER & GOLD MINES LTD.

Notes to the Consolidated Financial Statements

For the years ended December 31, 2010, 2009 and 2008

(Expressed in Canadian dollars)

17. FINANCIAL INSTRUMENTS AND RISKS (Continued)

(g)

Market risk

Market risk is the risk that the fair value of, or future cash flows from, the Company’s financial instruments will significantly fluctuate due to changes in market prices. The sale of the financial instruments can be affected by changes in interest rates, foreign exchange rates, and equity prices. The Company is exposed to market risk in trading its investments, and unfavourable market conditions could result in dispositions of investments at less than favourable prices. The Company’s investments are accounted for at estimated fair values and are sensitive to changes in market prices, such that changes in market prices result in a proportionate change in the carrying value of the Company’s investments. The Company’s ability to raise capital to fund mineral resource exploration is subject to risks associated with fluctuations in mineral resource prices. Management closely monitors commodity prices, individual equity movements, and the stock market to determine the appropriate course of action to be taken by the Company.

(h)

Sensitivity analysis

The Company has completed a sensitivity analysis to estimate the impact on net loss for the year which a change in foreign exchange rates would have had. A change of +/- 10% in MXN$ foreign exchange rate would have an impact of approximately +/- $25,000 on the Company’s net loss. This impact results from the Company’s MXN$ based balances of monetary assets and liabilities.

18. SUBSEQUENT EVENTS

On January 18, 2011, the Company granted 1,010,000 stock options to directors, officers, employees, and consultants at an exercise price of $2.30 per share. The options expire on January 18, 2016.

On March 11, 2011, the Company entered into an agreement with a consulting firm to provide a tailings retreatment scoping study and a review of the San Gonzales project. The expected costs and outlays relating to this project are $190,960.

Subsequent to year end, 725,000 options were exercised for gross proceeds of $564,150.

101

AVINO SILVER & GOLD MINES LTD.

Notes to the Consolidated Financial Statements

For the years ended December 31, 2010, 2009 and 2008

(Expressed in Canadian dollars)

19. COMPARATIVE FIGURES

Certain prior year comparative figures have been reclassified to conform to the financial statements presentation adopted for fiscal 2010.

20. DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES

The consolidated financial statements of the Company have been prepared in accordance with Canadian generally accepted accounting principles (“Canadian GAAP”), which in most respects conform to accounting principals generally accepted in the United States (“US GAAP”). There are certain material differences between Canadian and US GAAP and if these consolidated financial statements were prepared in accordance with US GAAP, the impact would be as follows:

	2010			2009
Balance sheets
Total assets under Canadian GAAP	$	27,048,567		$	19,206,278
Deferred exploration expenditures and mineral property acquisition costs (ii)		(15,302,311	)		(14,573,506	)
Total assets under US GAAP	$	11,746,256		$	4,632,772

Total liabilities under Canadian GAAP	$	2,669,485		$	2,241,179
Future income taxes related to mineral properties (ii)		(2,026,148	)		(1,694,007	)
Total liabilities under US GAAP	$	643,337		$	547,172

Total shareholders’ equity under Canadian GAAP	$	24,379,082		$	16,965,099
Future income taxes related to mineral properties (ii)		2,026,148			1,694,007
Deferred exploration expenditures (ii)		(15,302,311	)		(14,573,506	)
Total shareholders’ equity under US GAAP	$	11,102,919		$	4,085,600

102

AVINO SILVER & GOLD MINES LTD.

Notes to the Consolidated Financial Statements

For the years ended December 31, 2010, 2009 and 2008

(Expressed in Canadian dollars)

20. DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (Continued)

	2010			2009			2008
Consolidated statements of operations
Loss for year under Canadian GAAP	$	(1,490,194	)	$	(987,759	)	$	(1,538,876	)
Future income taxes related to mineral properties (i)		332,141			(239,562	)		98,653
Current period exploration costs (i)		(728,805	)		(320,100	)		(1,764,719	)
Addback of impairment in mineral properties		-			608,118			-
Stock based compensation expense (ii)		-			(143,564	)		(185,165	)
Net loss for the year under US GAAP (ii)	$	(1,886,858	)	$	(1,082,867	)	$	(3,390,107	)
Loss per share under US GAAP - basic and diluted	$	(0.09	)	$	(0.05	)	$	(0.17	)

	2010			2009			2008
Statements of cash flows
Cash flows used in operating activities under Canadian GAAP	$	(825,768	)	$	(144,075	)	$	(909,029	)
Mineral properties expenditures (i)		(846,745	)		(320,100	)		(1,764,719	)
Cash flows used in operating activities under US GAAP	$	(1,672,513	)	$	(464,175	)	$	(2,673,748	)

Cash flows used in investing activities under Canadian GAAP	$	(1,181,450	)	$	(601,561	)	$	(1,858,211	)
Mineral properties expenditures (ii)		846,745			320,100			1,764,719
Cash flows used in investing activities under US GAAP	$	(334,705	)	$	(281,461	)	$	(93,492	)

i)	Mineral properties and deferred exploration expenditures

Canadian GAAP permits the deferral of costs for the acquisition of mineral properties and exploration expenditures subject to periodic assessments for impairment. US GAAP requires that mineral exploration costs relating to unproven mineral properties be expensed. Under US GAAP the acquisition costs of mineral properties are initially capitalized with an assessment for impairment under ASC 360 performed at each reporting period. For US GAAP cash flow statement purposes, mineral property exploration expenditures would be shown under operating activities rather than investing activities.

Once commercial production has commenced, mine mill, machinery, plant facilities and certain equipment are depreciated using the units of production method, if sufficient reserve information is available or the straight line method over their useful lives, not to exceed the life of the mine to which the assets relate. Under US GAAP, the Company expects to use the units of production method based on reserves as defined under SEC Industry Guide 7 once such reserve amounts are determinable.

103

AVINO SILVER & GOLD MINES LTD.

Notes to the Consolidated Financial Statements

For the years ended December 31, 2010, 2009 and 2008

(Expressed in Canadian dollars)

20.	DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (Continued)

ii)	Stock-based compensation

Under ASC 718 US GAAP requires the recognition of a stock-based compensation expense associated with the extension of the expiry date of outstanding warrants whereas Canadian GAAP has no clear guidance on non-service orientated equity awards. During the year ended December 31, 2010, there were no warrants modified, in 2009 the Company calculated this expense using the Black-Scholes option pricing model with the following assumptions for the fair value of the original warrants at the date of amendment and the fair value of the amended warrants at the date of the amendment respectively: risk-free interest rates 1.27% (2008 - 3.05%), dividend yield of nil and nil, volatility of 104% and 155% (2008 –26.61% and 44.12%) and an expected life of 0.06 years and 1.06 years (2008 - 0.05 years and 1.05 years).

iii)	Recently adopted accounting standards

Accounting for Transfer of Financial Assets

In December 2009, the FASB issued ASU 2009-16, “Transfers and Servicing (Topic 860), and Amendment of the Accounting Transfers of Financial Assets” (formerly SFAS 166, Accounting for Transfers of Financial Assets”). This ASU significantly changes how companies account for transfers of financial assets. The ASU provides revised guidance in a number of areas including the elimination of the qualifying special purpose entity concept, the introduction of a new “participating interest” definition that must be met for transfers of portions of financial assets to be eligible for sale accounting, clarification and amendments to the derecognition criteria for a transfer accounted for as a sale when beneficial interests are received by the transferor, and extensive new disclosures.

The provisions of this ASU are to be applied to transfers of financial assets occurring in years beginning after November 15, 2009. The adoption of this ASU did not impact our financial results or disclosures as at December 31, 2010

Consolidation of Variable Interest Entities

In December 2009, the FASB issued ASU 2009-17, “Consolidations (Topic 810), Improvements to Financial Reporting Enterprises Involved with Variable Interest Entities” (formerly SFAS 167, “Amendments to FASB Interpretation No 46 (R)”) which amends the consolidation guidance for variable interest entities. (“VIE”) The changes include the elimination of the exemption for qualifying special purpose entities and a new approach for determining who should consolidate a VIE. In addition, the changes to when it is necessary to reassess who should consolidate a VIE have also been made.

In determining the primary beneficiary, or entity required to consolidate a VIE, quantitative analysis of who absorbs the majority of the expected losses or receives a majority of the expected residual returns or both of the VIE is no longer required. Under ASU 2009-17, an entity is required to assess whether its variable interest or interests in an entity give it a controlling financial interest in the VIE, which involves more qualitative analysis.

Additional disclosures will be required under this ASU to provide more transparent information regarding an entity’s involvement with a VIE. The provisions of this ASU are to be applied for years beginning after November 15, 2009, for interim periods within those years, and for interim annual reporting periods thereafter. The adoption of this ASU did not impact our financial results or disclosures as at December 31, 2010.

104

AVINO SILVER & GOLD MINES LTD.

Notes to the Consolidated Financial Statements

For the years ended December 31, 2010, 2009 and 2008

(Expressed in Canadian dollars)

20.	DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (Continued)

iii) Recently adopted accounting standard

Fair Value Measurement and Disclosures

In January 2010, the FASB issued ASU 2010-16, “Fair Value Measurements and Disclosures (Topic 810) “Improving Disclosures About Fair Value Measurements.” This ASU provides further disclosure requirements for recurring and non-recurring fair value measurements. These disclosure requirements include transfers in and out of Level 1 and 2 and additional information relating to activity in Level 3 fair value measurements. The ASU also provides clarification on the level of disaggregation for disclosure of fair value measurement.

The new disclosure and clarifications are effective for interim and annual periods beginning after December 31, 2009, except for disclosures about activity in Level 3 fair value measurements, which are effective for fiscal years beginning after December 15, 2010 and for interim periods within those fiscal years. The adoption of this ASU did not impact our financial results or disclosures as at December 31, 2010.

iv) Recently issued accounting standards

We will transition to International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”) on January 1, 2011 and will no longer be required to prepare a reconciliation to US GAAP. Accordingly, we have not assessed the impact of adopting recent US accounting pronouncements with an application date of January 1, 2011 or beyond on our financial statements and disclosures.

105

SIGNATURE

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this Annual Report on its behalf.

	AVINO SILVER & GOLD MINES LTD.

Date: July 7, 2011	By:	/s/ David Wolfin
		David Wolfin, Chief Executive Officer (Principal Executive Officer)

106

Exhibit Number		Name

1.1		Memorandum of Avino Silver & Gold Mines Ltd.*
1.2		Articles of Avino Silver & Gold Mines Ltd.*
4.1		Share Purchase Agreement dated March 22, 2004*
8.1		List of Subsidiaries
12.1		Certification of the Principal Executive Officer
12.2		Certification of the Principal Financial Officer
13.1		Certificate under the Sarbanes-Oxley Act of the Principal Executive Officer
13.2		Certificate under the Sarbanes-Oxley Act of the Principal Financial Officer

___________________________

* Previously filed.

107

TABLE OF CONTENTS

Part I Item 1. Identity Of Directors, Senior Management and Advisors Item 2. Offer Statistics and Expected Timetable Item 3. Key Information Item 4. Information on The Company Item 4A. Unresolved Staff Comments Item 5. Operating and Financial Review and Prospects Item 6. Directors, Senior Management and Employees Item 7. Major Shareholders and Related Party Transactions Item 8. Financial Information Item 9. The Offer and Listing Item 10. Additional Information Item 11. Quantitative and Qualitative Disclosures About Market Risk Item 12. Description Of Securities Other Than Equity Securities Part II Item 13. Defaults, Dividend Arrearages and Delinquencies Item 14. Material Modifications To The Rights Of Security Holders and Use Of Proceeds Item 15. Controls and Procedures Item 16. [reserved]Item 16A. Audit Committee Financial Expert Item 16B. Code Of Ethics Item 16C. Principal Accountant Fees and Services Item 16D. Exemptions From The Listing Standards For Audit Committees Item 16E. Purchases Of Equity Securities By The Issuer and Affiliated Purchasers Item 16F. Changes in Registrants Certifying Accountant Item 16G. Corporate Governance Part III Item 17. Financial Statements Item 18. Financial Statements Item 19. Exhibits

ASM 20-F Report ended Dec. 31, 2010