**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**





**FORM
      20-F**








[   ]
            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 January 31,
                2007





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





For
                the transition period from ______________ to
                ___________________





[   ]
            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 Company as specified in its charter)*





**A
      CORPORATION FORMED UNDER THE LAWS OF BRITISH COLUMBIA,
      CANADA**


*(Jurisdiction
      of Incorporation or Organization)*





455
      Granville Street, Suite 400


Vancouver,
      British Columbia V6C 1T1, Canada


*(Address
      of principal executive offices)*





Securities
      registered or to be registered pursuant to Section 12(b) of the
      Act:  NONE





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:  **None**





The
      number of outstanding Common Shares as of January 31, 2007 was
      20,584,727.





Indicate
      by check mark if the registrant is a well-known seasoned issuer, as defined
      in
      Rule 405 of the Securities Act.


[   ]
      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.  [   ]
      Yes  [X] No





Indicate
      by check mark whether the Company (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 Company was required
      to
      file such reports), and (2) has been subject to such filing requirements for
      the
      past 90 days.  [X] Yes  [  ] 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 on):


Large
      Accelerated File
      [   ]                                                      Accelerated
      Filer
      [   ]                                           Non-Accelerated
      Filer [X]





Indicate
      by check mark which financial statement item the registrant has elected to
      follow.  Item 17 [X]   Item 18
      [   ]





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
      [   ]  No [X]





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





Indicate
      by check mark whether the Company 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.  NOT APPLICABLE





1


**TABLE
      OF CONTENTS**





Introduction
            3Currency
            3Forward-looking
                Statements
            3Cautionary
                Note to United States Investors Concerning Estimate of Measured andIndicated
                Mineral Resources
            3Glossary
                of Mining Terms
            4Part
                I
            7Item
                1.                 Identity of Directors, Senior Management and
                Advisors
            7Item
                2.                 Offer Statistics and Expected Timetable
            7Item
                3.                 Key Information
            7Item
                4.                 Information on the Company
            13Item
                5.                 Operating and Financial Review and
                Prospects
            30Item
                6.                 Directors, Senior Management and
                Employees
            33Item
                7.                 Major Shareholders and Related Party
                Transactions
            38Item
                8.                 Financial Information
            39Item
                9.                 The Offer and Listing
            40Item
                10.                Additional Information
            41Item
                11.                Quantitative and Qualitative Disclosures
                About Market
                Risk
            48Item
                12.                Description of Securities Other than Equity
                Securities
            48Part
                II
            48Item
                13.                Defaults, Dividend Arrearages and
                Delinquencies
            48Item
                14.                Material Modifications to the Rights of Security
                Holders
                and Use of Proceeds
            48Item
                15.                Controls and Procedures
            48Item
                16A.             Audit Committee Financial Expert
            48Item
                16B.              Code of Ethics
            49Item
                16C.              Principal Accountant Fees and
                Services
            49Item
                16D.              Exemptions from the Listing Standards for
                Audit
                Committees
            49Item
                16E.               Purchases of Equity Securities by the Issuer
                and
                Affiliated Purchasers
            49Part
                III
            50Item
                17.                  Financial Statements
            50Item
                18.                  Financial Statements
            50Item
                19.                  Exhibits
            50





2
 Table
          of Contents






**Introduction**





Avino
      Silver & Gold Mines Ltd., which we refer to as 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*, as amended, and changed 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. to
      better reflect the business of the Company of exploring for and mining silver
      and gold.  Our principal executive office is located at Suite 400, 455
      Granville Street, Vancouver, British Columbia V6C 1T1, Canada.





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"
      or
      "us" refers to Avino Silver & Gold Mines Ltd.





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**





The
      following discussion contains forward-looking statements within the meaning
      of
      the United States *Private Securities Legislation Reform Act of 1995*concerning the Company's plans for its mineral properties which may
      affect
      the future operating results and financial position.  Such statements
      are subject to risks and uncertainties that could cause our actual results
      and
      financial position to differ materially from those anticipated in the
      forward-looking statements.  These factors include, but are not
      limited to, the factors set forth in the sections entitled "Risk Factors" in
      Item 3.D., and "Operating and Financial Review and Prospects" in
      Item 5.  Statements concerning reserves and resources may also be
      deemed to constitute forward-looking statements to the extent that such
      statements reflect the conclusion that deposits may be economically
      exploitable.  Any statements that express or involve discussions with
      respect to predictions, expectations, plans, projections, objectives,
      assumptions or future events or performance (often, but not always, using words
      or phrases such as "expects", "does not expect", "is expected", "anticipates",
      "does not anticipate", "plans", "estimates", or "intends", or stating that
      certain actions, events or results "may", "could", "would", or "will" be taken,
      occur or be achieved) are not statements of historical fact and may be
      "forward-looking statements".





**Cautionary
      Noteto United States Investors Concerning
      Estimate of Measured and**


**Indicated
      Mineral Resources**





We
      advise
      United States investors that although the terms "measured resources" and
      "indicated resources" are recognized and required by Canadian regulations,
      the
      United States Securities and Exchange Commission, referred to as the "SEC",
      does
      not recognize them.  United States investors are cautioned not to
      assume that all or any part of our mineral resources in these categories will
      ever be converted into mineral reserves.





3
 Table
          of Contents






**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 m******3***
            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 color 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.




4
 Table
          of Contents






***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.





***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.




5
 Table
          of Contents






***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.







***trench***
            A
                long, narrow excavation dug through overburden, or blasted out of
                rock, to
                expose a vein or ore structure.




***tonne***
            Metric
                measurement of weight equivalent to 1,000 kilograms (or 2,204.6
                pounds).




***veins***
            The
                mineral deposits that are found filling openings in rocks created
                by
                faults or replacing rocks on either side of
                faults.




































6
 Table
          of Contents






**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 January 31, 2007, 2006, 2005, 2004 and 2003, is derived
      from
      the audited financial statements of the Company. The audited financial
      statements and notes for each year in the three****years
      ended January 31, 2007, 2006 and 2005 are included in this Annual
      Report.  The selected historical financial information for each year
      ended January 31, 2004 and 2003, 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 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 financial statements included in Item 17 in this Annual
      Report are also prepared under Canadian GAAP.  Included within these
      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 the investments in marketable securities, deferred exploration
      expenditures and recognition of future income tax benefits on renouncement
      of
      Canadian exploration expenditures to flow-through investors.





**Canadian
              GAAP****Year
                  Ended January 31,****2007**
            
            
            **2006**
            
            
            **2005**
            
            
            **2004**
            
            
            **2003****Summary
                of Operations:**Revenue
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Interest
                Income
            
            $
            430,231
            
            
            $
            46,073
            
            
            $
            41,999
            
            
            $
            8,299
            
            
            $
            197ExpensesOperating
                and Administrative
            
            
            4,014,734
            
            
            
            1,416,788
            
            
            
            506,010
            
            
            
            331,446
            
            
            
            147,091Write-down
                of mining Properties
            
            
            -
            
            
            
            103,342
            
            
            
            -
            
            
            
            -
            
            
            
            -Equity
                losses in Cia Minera Mexicana de Avino, S.A. de C.V.
            
            
            33,5811
            
            
            
            342,596
            
            
            
            -
            
            
            
            -
            
            
            
            -Loss
                in sale of Joint Venture
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            40,097Write-down
                of investment
            
            
            -
            
            
            
            217,000
            
            
            
            -
            
            
            
            -
            
            
            
            -Due
                diligence review of Cia Minera Mexicana de Avino, S.A. de
                C.V.
            
            
            -
            
            
            
            355,921
            
            
            
            391,899
            
            
            
            122,444
            
            
            
            -Future
                income tax benefit
            
            
            -
            
            
            
            19,750
            
            
            
            41,200
            
            
            
            -
            
            
            
            -Net
                Income (loss) for year
            
            
            (3,648,539
            )
            
            
            (2,369,724
            )
            
            
            (814,710
            )
            
            
            (445,591
            )
            
            
            (186,991
            )Income
                (loss) per share
            
            
            (0.20
            )
            
            
            (0.22
            )
            
            
            (0.08
            )
            
            
            (0.06
            )
            
            
            (0.03
            )Weighted
                Average Number of Shares Outstanding
            
            
            18,385,007
            
            
            
            10,965,718
            
            
            
            10,410,379
            
            
            
            7,015,604
            
            
            
            5,625,498




7
 Table
          of Contents





**As
                  at January 31,****2007**
            
            
            **2006**
            
            
            **2005**
            
            
            **2004**
            
            
            **2003****Balance
                Sheet Data:**Total
                assets
            
            
            23,295,039
            
            
            
            3,901,160
            
            
            
            3,219,431
            
            
            
            3,522,548
            
            
            
            814,546Cash
                and cash equivalents
            
            
            11,045,106
            
            
            
            3,067,011
            
            
            
            2,283,535
            
            
            
            2,832,457
            
            
            
            20,104Total
                liabilities
            
            
            3,789,083
            
            
            
            586,714
            
            
            
            341,174
            
            
            
            305,170
            
            
            
            380,070Shareholders'
                equity
            
            
            19,505,956
            
            
            
            3,314,446
            
            
            
            2,878,257
            
            
            
            3,216,838
            
            
            
            434,476





**United
                States GAAP:****Year
                  Ended January 31,****2007**
            
            
            **2006**
            
            
            **2005**
            
            
            **2004**
            
            
            **2003****Summary
              of Operations:**Net
              Income (loss) per Canadian GAAP
            
            $
            (3,648,539
            )
            
            $
            (2,369,724
            )
            
            $
            (814,710
            )
            
            $
            (445,591
            )
            
            $
            (186,991
            )Adjustments
            
            
            (10,277,556
            )
            
            
            (74,147
            )
            
            
            (132,600
            )
            
            
            (20,100
            )
            
            
            (204,000
            )Net
              Income (loss) per US GAAP
            
            
            (13,962,095
            )
            
            
            (2,443,871
            )
            
            
            (947,310
            )
            
            
            (465,691
            )
            
            
            (390,991
            )Income
              (loss) per share per US GAAP
            
            
            (0.76
            )
            
            
            (0.22
            )
            
            
            (0.09
            )
            
            
            (0.07
            )
            
            
            (0.07
            )**As
                at January 31,****2007**
            
            
            **2006**
            
            
            **2005**
            
            
            **2004**
            
            
            **2003****Balance
              Sheet Data:**Total
              assets under Canadian GAAP
            
            
            23,295,039
            
            
            
            3,901,160
            
            
            
            3,219,431
            
            
            
            3,522,548
            
            
            
            814,546Adjustments
            
            
            (10,747,339
            )
            
            
            (260,955
            )
            
            
            (60,088
            )
            
            
            624,675
            
            
            
            101,004Total
              assets under US GAAP
            
            
            12,547,000
            
            
            
            3,640,205
            
            
            
            3,159,343
            
            
            
            4,147,223
            
            
            
            915,550Total
              equity under Canadian GAAP
            
            
            19,505,956
            
            
            
            3,314,446
            
            
            
            2,878,257
            
            
            
            3,216,838
            
            
            
            434,476Adjustments
            
            
            (10,747,339
            )
            
            
            (260,955
            )
            
            
            (60,088
            )
            
            
            624,675
            
            
            
            101,004Total
              equity under US GAAP
            
            
            8,758,617
            
            
            
            3,053,491
            
            
            
            2,818,169
            
            
            
            3,841,513
            
            
            
            535,480





**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).





**Year
                  Ended**
                **January
                  31,**
            **Average**
            **Period
                  End**
            **High**
            **Low**2003
            1.5655
            1.5286
            1.6112
            1.51082004
            1.3803
            1.3265
            1.5315
            1.26902005
            1.2961
            1.2396
            1.3970
            1.17752006
            1.2061
            1.1436
            1.2703
            1.14362007
            1.1357
            1.1792
            1.1824
            1.0989





The
      following table sets forth the high and low exchange rate for the past six
      months.  As of July 25, 2007, the exchange rate was CDN$1.0423 for
      each US$1.




8
 Table
          of Contents





**Month**
            **High**
            **Low**January
                2007
            1.1824
            1.1647February
                2007
            1.1852
            1.1586March
                2007
            1.181
            1.153April
                2007
            1.1583
            1.068May
                2007
            1.1136
            1.0707June
                2007
            1.0727
            1.0579





**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 of
      its properties.  If the Company determines based on its most recent
      information that it is feasible to begin operations on its properties, the
      Company will be required to raise additional capital in order to develop and
      bring the properties into production.





*We
      have incurred net losses since our inception and expect losses to
      continue.*  We have not been profitable since our
      inception.  For the fiscal year ended January 31, 2007, we had a net
      loss of $3,648,539 and an accumulated deficit on January 31, 2007 of
      $20,758,186.  The Company has not generated revenues from operations
      since 1998 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 ore deposits it is generally accepted in
      the
      mining industry that most exploration projects do not result in the discovery
      of
      mineable deposits of ore 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.





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*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 a user of the minerals, 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.





*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 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.





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*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.





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*Litigation.*Cia
      Minera Mexicana de Avino, S.A. de C.V., referred to as "Cia Minera", a
      subsidiary of the Company, leases four core mineral claims in consideration
      for
      royalties.  The lessor is currently contesting the underlying royalty
      agreement, and has filed a legal action claiming royalties are owing from prior
      years in the approximate amount of $3,487,223 plus interest.  The
      Company has accrued $738,302 on account of the royalties owing.  Cia
      Minera has held the position that it has fully provided for the royalty
      liability in its accounts and continues to contest the action in court, however,
      negotiations are being held as both parties are working towards an amicable
      settlement.The outcome of this litigation is not determinable and may have
      a
      material adverse impact on the Company.  For further information
      regarding this litigation, please see Note 18 of the financial statements
      included with this Annual Report at Item 17.  The Company is not
      currently subject to any other litigation but 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 favorably, 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 market prices for natural
      resources are highly speculative and volatile.  Accordingly,
      instability in prices may affect interest in resource properties and the
      development of and production from such properties that may adversely affect
      the
      Company's ability to raise capital to acquire and explore resource properties.
      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 its
      shareholders 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.





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*Uncertainty
      of continuing as a going concern.*The continuation of the
      Company depends upon its ability to attain profitable operations and generate
      cash flow from operations and/or to raise equity capital through the sale of
      its
      securities.  As a result, there is uncertainty about the Company's
      ability to continue as a going concern.  The Company's 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
      2007 fiscal year, the Company's common share price fluctuated between a low
      of
      $1.50 and a high of $4.48.  Subsequent to the 2007 fiscal year and as
      of July 1, 2007, the Company's common share price has fluctuated between a
      low
      of $1.69 and a high of $2.75.  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**




We
      describe our properties utilizing mining terminology such as "measured
      resources" and "indicated resources" that are required by Canadian regulations
      but are not recognized by the SEC.  **United States investors
      are cautioned not to assume that any part of the mineral deposits in these
      categories will ever be converted into reserves.**





**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.





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We
      are a
      natural resource company, primarily engaged in the acquisition, exploration
      and
      development of natural resource properties.  Our principal business
      activities have been the exploration of certain mineral properties located
      in
      Canada, specifically British Columbia and the Yukon Territory, and in
      Mexico.  Since fiscal 2001 we made aggregate principal capital
      expenditures of $605,879 on the properties in Canada.  These capital
      expenditures consist of $103,243 which was spent on the Eagle property,
      $184,834****on the Aumax property, $159,575 on the
      Olympic-Kelvin property, $54,739 and on the Bralorne
      property****$103,488 on the Minto property.  The
      Avino Mine in Mexico is owned by Cia Minera of which the Company owns 88.25%
      of
      the issued and outstanding securities and is accounted for using the equity
      method in the financial statements.  Since the suspension of
      operations at the Avino Mine, $515,816 has been spent on the care and
      maintenance of the mine.





On
      July
      17, 2006, the Company completed the acquisition of 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 has also acquired a further 1% interest in Cia Minera through the
      acquisition from an estate subject to approval and transfer of the shares to
      the
      Cmopany by the trustee for the estate.





The
      principal executive office of the Company is located at Suite 400, 455 Granville
      Street, Vancouver, British Columbia V6C 1T1, and its telephone number is
      604-682-3701.





**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 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.  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's most recent acquisitions, consisting
      of the Eagle property in Canada's Yukon Territory and the Aumax property in
      British Columbia, have produced positive assays for silver through drilling
      and
      sampling.  The Avino Mine 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.





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**Significant
      Acquisitions and Significant Dispositions**




On
      July
      17, 2006, the Company completed the acquisition of 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, 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 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 has also acquired a further 1% interest in Cia Minera through the
      acquisition from an estate subject to approval and transfer of the shares to
      the
      Cmopany by the trustee for the estate.





We
      have
      no other significant acquisitions or dispositions of property, other than as
      otherwise disclosed in this Annual Report.





**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 2006, demand for silver exceeded supply
      and worldwide demand is expected to increase through 2007.  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.





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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 Encologio y la Protection 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 has obtained all necessary permits and authorizations required for
      its
      current and anticipated 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 subsidiaries are the wholly-owned Oniva Silver and Gold Mines S.A.,
      referred to as "Oniva", Promotora in which the Company has direct ownership
      of
      76.88%, and Cia Minera in which the Company has a 50% direct ownership and
      an
      additional 49.75% of Cia Minera is held through Promotora.  The
      Company's total ownership of Cia Minera is 88.25%.  The Company has
      also acquired a further 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.





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





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**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 88.25%
      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.  Exploration in Canada has in recent
      years, has been limited to drill programs on our Olympic-Kelvin
      Property.





**Eagle
      Property**











*Ownership.*The
      Eagle property is wholly owned by the Company and was acquired in 2003 when
      it
      acquired its 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.





*Property
      Description and Location.*This property is located in the Yukon
      Territory approximately eight kilometers west of Keno City.  The
      property covers approximately 516 hectares.  It is currently in its
      Phase I stage of exploration.  The property is accessed by
      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 as high as 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, designed to expand on the
      discoveries of hole #23, encountered 18.7 metres of mineralization with values
      ranging from 11 to 132 grams per tonne of silver.  This discovery
      became known as the Eagle vein.  The Eagle property is part of the
      historic Keno Hill mining camp.  The Keno Hill mining camp has
      historically been one of Canada's most productive for silver, lead and
      zinc.  Between 1920 and 1988, the total reported production was
      4,787,423 tonnes with recovered grades of 1.3 kilograms per tonne of silver,
      5.6% lead and 3.1% zinc.  Subsequent exploration in the district has
      discovered additional mineral deposits which may become productive.





*Proposed
      Work Program.*A study carried out in August of 2002 recommended
      geochemical and geophysical exploration to examine the continuity of the Eagle
      vein. Drilling and underground exploration would follow based on the success
      of
      the first work.  A budget of $160,000 has been proposed to carry out
      further work on the Eagle property.  Our management is presently
      considering this proposal.





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**Aumax
      Property**











*Ownership.*The
      Aumax Property is wholly owned by the Company and was acquired in 2003 when
      it
      acquired a 100% interest in six unpatented mineral claims 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.





*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, up to 2.2 grams per tonne of gold and 305 grams per tonne of silver,
      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, with one sample over one gram per tonne
      of
      gold over 0.5 metres.  Further prospecting and soil sampling of the
      southeast (upslope) of the Aumax showing was recommended.





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Limited
      soil sampling and prospecting in 1999 on the Upper Zone returned extremely
      anomalous soil samples to 4,560 parts per billion gold.  A grid
      geochemical sampling and further prospecting in this area was
      recommended.





The
      Company has placed a deposit of $1,500 at January, 2007 (2006:$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.  The property was
      written down entirely in fiscal 2002.





*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, Grey 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.  These mines are the largest past
      producers in the Canadian Cordillera (4.1 million ounces).  The Bendor
      Intrusions are a postulated source for the gold mineralization at Bralorne,
      which is thought to be localized by a northwest to north flexure in the
      Cadwallader structure.  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 ton 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.  This hole returned highly anomalous gold values to 0.38 grams
      per tonne.  Detailed geological mapping and geochemical sampling has
      been recommended.





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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 deposit of $1,500 at January, 2007 (2006:$1,500),
      registered in the name of the Ministry of Finance of British Columbia, as
      security for estimated future reclamation costs.





No
      drilling on the Olympic Property was completed in 2006.





*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.  In fiscal 2002, the property was written down to a nominal
      value of $1.




*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 Minto property is situated in the Bralorne gold camp,
      about 160 kilometers, by air, north of Vancouver.  The claims occupy
      the lake bed and north flank of Carpenter Lake.  Access from
      Goldbridge is made via an all-weather gravel road which skirts the north shore
      of Carpenter Lake.




Gold
      Bridge itself 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.





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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
      ton.




The Company has placed a deposit of $2,500 at January, 2007 (2006:$Nil),
      registered in the name of the Ministry of Finance of British Columbia, as
      security for estimated future reclamation costs.




*Proposed
      Work Program.*One hole has been drilled to a depth of
      approximately 1,647 feet and the assay results are still pending.  No
      further work program has been proposed.





**Avino
      Mine**





*Ownership.*The
      Company owns 88.25% of the issued and outstanding securities of Cia Minera,
      a
      company incorporated under the laws of Mexico.  Cia Minera owns the
      Avino Mine.  The Company acquired its 49% interest in Cia Minera in
      1968 and the additional interest of 39.25% in July 2006.  The Company
      continues to consider its options with relation to the remaining equity
      interest.





Cia
      Minera leases four core mineral claims in consideration for
      royalties.  The lessor is currently contesting the underlying royalty
      agreement and has filed a legal action claiming for royalties owing in the
      amount of approximately $3,531,731.  Cia Minera has accrued $755,140
      and has paid an additional $244,000 into trust on account of the royalties
      owing
      for past mineral production. The Company has been in discussions with the lessor
      to settle the accrued liability based on the fact that the mine has not operated
      since shut down in 2001 and it may not re-open if a settlement is not
      reached.****The Company is also in discussions with the
      remaining royalty holders.





*Property
      Description and Location.*The Avino Mine is located
      approximately 74 kilometers to the northeast of the city of Durango and covers
      approximately 4,364 hectares.  The mine is accessible via
      road.  The Avino Mine had been an open pit operation until March 1993,
      at which time Cia Minera commenced underground
      operations.  Mineralized rock is broken by ripping, drilling and
      blasting and is trucked to the concentrator, approximately 415 meters from
      the
      pit, where it is processed. The Avino Mine was an underground operation at
      the
      time of closure.





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*History.*On
      July 17, 2006, the Company completed the acquisition of an additional 39.25%
      equity interest on Cia Minera in consideration of the issuance of an aggregate
      of 3,164,702 common shares of the Company.  As a result of this
      transaction, the Company increased its ownership in Cia Minera to 88.25% of
      total issued shares.  There was no change in the effective control of
      the Company as a result of this transaction. The Company has also acquired
      a
      further 1% interest in Cia Minera through the acquisition from an estate subject
      to approval and transfer of the shares to the Cmopany by the trustee for the
      estate.





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.  Since that time, the mine plant and equipment have
      been on care and maintenance and the Company has spent $515,816 on the care
      and
      maintenance of the mine.





The
      Avino
      Mine and mill were historically serviced by a heavy equipment repair shop,
      a
      mechanical and electrical shop, an assay office, a metallurgical laboratory,
      a
      warehouse and other auxiliary facilities.  Electric power can be
      supplied by the government-owned Federal Electricity Commission, referred to
      as
      the "FEC" which presently is capable of supplying up to 2500 HP to the Avino
      Mine and mill.  As the mill is expanded, additional power must be
      obtained from the FEC.  In order to obtain the additional electric
      power, it has been necessary for the FEC in 1983 to construct a new power line
      approximately 12 miles in length which is capable of supplying an additional
      2750 HP, sufficient for the maximum proposed increase in mill
capacity.





Water
      for
      use at the mill is primarily obtained from: (i) wells; (ii) old underground
      workings; and (iii) earth dams.  In prior years, the water supply has
      been insufficient to increase the capacity of the mill. In 1989, Cia Minera
      constructed a dam in hope of storing water for use in the dry
      season.  The dam has a capacity of 1,000,000 cubic
      meters.  Cia Minera had entered into an agreement with the Federal
      Government of Mexico for the repair and improvement of a government dam located
      approximately five and one-half kilometers from the mine.  The
      contract provides that the Government and Cia Minera will each contribute 50%
      of
      the cost of repairing the dam and raising the height by six meters and to
      construct a new spillway.  The work was substantially completed during
      1989, and Cia Minera installed a pipeline system allowing water to flow from
      the
      Government dam to the mill.  The contract provides that Cia Minera
      will share the use of the Government dam with local farmers.  The
      local farmers have priority for the use of a specific volume of the water and
      the balance is available for use by the mine.  The water can be
      transmitted to the mine by means of five kilometers of pipe which has been
      installed by Cia Minera. In early 1996, Cia Minera also drilled a well 400
      meters in depth on a property owned by Cia Minera, ten kilometers from the
      mill
      site.  A pipeline has been constructed, and Cia Minera has sufficient
      water for its own needs.  Further, from 1995 to 1998, Mexico
      experienced a drought.  While the drought adversely affected
      operations in late 1995 until April 1996, Cia Minera believes that the new
      well
      will adequately meet its water requirements. In addition, Cia Minera utilizes
      water conservation practices, such as recirculation of water and capturing
      rain
      water in earth dams.





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In
      April
      2006, Wardrop Engineering Inc., which we refer to as "Wardrop", completed the
      study on "Tailings Retreatment Process Options for the Avino Tailings Project
      in
      Durango, Mexico", referred to as the "Wardrop Report".  The Wardrop
      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 is US$16,200,000 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$22,700,000.  The internal rate of return
      and the net present value favoured the 4 year operation.





The
      capital cost estimate includes a 25% contingency and it is based on new
      equipment.  A reduction in capital cost can be accomplished with good
      used equipment.





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.





The
      heap
      leach process design in the study was based on a column test performed at
      Process Research Associates Limited from a composite of samples from the lower
      and middle bench. These samples were collected and documented in the October
      2005 report entitled "A Tailings Resource" by Minestart Management Inc. for
      whom
      the qualified person was Bryan Slim, MBA, P. Eng. Recovery of silver and gold
      from the column test was 73% and 78.9% respectively after 81 days.





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





In
      December 2006, the Company announced results of the first 6 diamond core drill
      holes exploring the Avino silver, gold and copper deposit at its wholly owned
      property 80 km northeast of Durango, Mexico.





The
      Company operated the mine from 1976 to 2001 when closure was caused by low
      silver, gold and copper prices and the local smelter closing for toll
      processing.  The 2006 drill program was designed to test for
      continuity down dip below the existing workings of the three principal areas
      of
      mineralization (San Luis, Elena-Tolosa, and Chirumbo). The Avino vein system
      strikes principally east west over 1.2 km and dips south at 60 -
      70 ̊.





The
      initial hole CH-06-03 intersected the Avino vein system 180 m below the original
      Chirumbo workings.  The hole intersected both the main Vein/Breccia
      zone and the footwall breccias as follows:





CH-06-03
      Azimuth 340 ̊ Dip - 50 ̊ length 453.75 m


Avino
      Vein 182.8 – 194.8 m, (12 m), 32.61 g/t Ag, 0.29% Cu


Footwall
      Breccia 204.8 m – 216.8 m, (12 m), 52.41 g/t Ag, 0.31% Cu





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 Table
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(Down
      Hole Lengths)  True widths are not known.





The
      four
      holes ET-06-01, 02, 03, 04 explored the down dip and down plunge, extension
      of
      the main ore shoot (Elena-Tolosa) on which most underground mining has occurred
      in the past.  Holes ET-06-01 and ET-06-02 intersected the Avino Vein
      System approximately 40 m below Level 11 1⁄2 (the last level in production when
      the mine closed in November 2001).  Holes ET-06-03 and ET-06-04
      intersected the ore-zone approximately 180 m below Level 11
1⁄2.  Results from the four holes were as follows:





(All
      lengths are down hole) True widths are not known.





•           ET-06-01                      AZ
      340                      Dip
–
50                      Length
      431.2 m


o
            Avino
                Vein 401.25 – 415.90 (14.65 m) 26.33 g/t Ag, 0.29%
                Cu


o
            (Intersects
                west of the ET shoot and is below ore grade but it contains 409.80
–
                411.85, 2.05 m, 109 g/t Ag, 0.5% Cu





•           ET-06-02                      AZ
      340                      Dip
–
50                      Length
      416.70 m


o
            Avino
                Vein 375.80 – 392.80 (17 m) 35.13 g/t Ag, 0.43%
                Cu





•           ET-06-03                      AZ
      340                      Dip
–
50                      Length
      421.15 m


o
            Avino
                Vein 368.25 – 386.65 (18.4 m) 0.18 g/t Au, 90 g/t Ag, 0.8%
                Cu





•           ET-06-04                      AZ
      340                      Dip
–
50                      Length
      444.05 m


o
            Avino
                Vein 318.5 – 339.5 (21 m) 0.24 g/t Au, 89.4 g/t Ag, 1.12%
                Cu


o
            Includes
                318.45 – 321-45 m (3 m) 0.14 g/t Au, 238 g/t Ag, 0.73%
                Cu





Hole
      SL-06-01 was drilled below the San Luis workings at the western end of the
      Avino
      Vein System.  Details were as follows:





•           SL-06-01
      Azimuth 000 Dip - 90 ̊, Length 219.2 m


o
            Avino
                Vein 130.90 – 155.95 (25.05 m)


o
            1.42
                g/t Au, 40.1 g/t Ag, 0.31% Cu





Drill
      core from the holes was assayed by Inspectorate Labs at their facilities in
      Durango Mexico and Sparks Nevada U.S.A.  The assay methods were gold
      (Au) fire assay with AA finish, silver (Ag) fire assay with gravimetric finish
      and copper (Cu) by 30 element ICP package.  Sampling procedures, chain
      of custody etc. are compliant with NI 43-101.





To
      date
      in 2007, the Company has drilled 42 holes on the Avino Property totaling 8,643
      metres.  Significant intersections are as follows:




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Vein
                or Structure
            Total
                Depth (m)
            From
                (m)
            To
                (m)
            Intersection
                (m)
            Au
                g/t
            Ag
                g/t
            Cu
                ppm
            Pb
                ppm
            Zn
                ppm**LA
                ESTELA VEIN****LE-06-01**
            200.00
            Did
                not intersect vein structure**LE-06-02**
            238.25
            215.05
            219.1
            4.05
            0.73
            239**Includes:
                Footwall La Estela Vein**
            
            215.05
            216.0
            0.95
            0.869
            52.5216.05
            217.10
            1.05
            0.025
            9.0217.10
            218.10
            1.00
            0.015
            14.8218.10
            218.60
            0.50
            0.052
            18.0**Hangingwall
                La Estela**
            
            218.60
            219.10
            0.50
            3.95
            1744.1
            9460
            24600
            5500**LE-06-03**
            251.85
            221.85
            223.70
            1.85
            0.85
            80**Includes**
            
            221.85
            222.85
            1.00
            1.37
            132.1222.85
            223.70
            0.85
            0.24
            18.4**CERRO
                SAN JOSE**  The two drill holes did not intersect the
                structure.**SJ-06-01**
            320.55**SJ-06-02**
            373.70**LOS
                ANGELES****LA-07-01**
            358.90
            327.25
            329.65
            2.40
            0.39
            119**Includes**
            
            327.25
            327.25
            0.30
            13.645
            711.9
            5602
            8259
            4220327.55
            328.35
            0.80
            0.368
            5.5
            141
            1192
            1490328.35
            329.25
            0.90
            0.044
            1.1
            29
            317
            1217329.25
            329.65
            0.40
            0.649
            168.7
            3346
            61700
            59000**LA-07-02**
            358.90
            100.35
            101.35
            1.00
            0.052
            15.5
            9
            76
            356101.35
            102.35
            1.00
            0.015
            3.3
            9
            301
            644102.35
            103.35
            1.00
            0.085
            7.2
            35
            259
            849103.35
            104.35
            1.00
            0.480
            45.5
            49
            229
            487**LA-07-03**
            185.30
            123.30
            124.30
            1.00
            0.130
            59.7
            135
            1994
            15800127.10
            127.75
            0.65
            0.040
            43.1
            602
            2952
            26000130.35
            131.30
            0.95
            0.319
            59.1
            1143
            1330
            3580132.15
            132.30
            0.15
            1.783
            71.2
            445
            64200
            60000**LA-07-04**
            140.40
            100.70
            107.4
            6.7100.70
            101.70
            1.00
            0.404
            48.8
            48
            402
            2189101.70
            102.80
            1.10
            0.630
            >200
            555
            1277
            3660102.80
            103.80
            1.00
            0.373
            45.3
            35
            470
            589103.80
            104.75
            0.95
            0.149
            20.9
            36
            258
            403104.75
            105.80
            1.05
            3.444
            67.9
            42
            285
            589105.80
            106.80
            1.00
            0.830
            >200
            210
            2519
            7532106.80
            107.40
            0.60
            0.329
            168.5
            78
            1103
            2762




25
 Table
          of Contents





**LA-07-05**
            115.25
            95.80
            96.60
            0.80
            0.093
            54.4
            1836
            806
            130099.80
            100.15
            0.35
            0.992
            87
            103
            248
            337100.55
            101.25
            0.70
            0.418
            174.2
            304
            2563
            13500**SANTIAGO
                STRUCTURE****ST-07-01**
            309.05
            51.00
            51.25
            0.25
            7.260
            37
            108
            >10000
            >1000055.45
            56.45
            1.00
            0.040
            55.9
            9940
            1038
            402**ST-07-02**
            200.05
            120.80
            121.10
            0.30
            0.09
            59.1
            2652
            14100
            37800





**SANTA
                ANA, SAN PEDRO & SAN PAUL: No significant
                intercepts****STA-07-01**
            315.30**SP&P-07-01**
            181.25**NUESTRA
                SENORA****NS-07-01**
            167.10
            99.40
            99.85
            0.45
            0.045
            258.2
            7184
            65500
            77800159.90
            161.05
            1.15
            3.291
            53.6
            14700
            157
            661161.05
            161.95
            0.90
            1.195
            33.8
            8469
            133
            359**NS-07-02**
            134.05**NS-07-03**
            121.35HOLES
                NS-07-02, AND 03 did not intersect the Nuestra Senora Vein (probably
                due
                to faulting).**NS-07-04**
            101.60
            68.90
            69.55
            0.65
            0.115
            38.8
            1669
            2968
            142990.55
            91.25
            0.70
            0.02
            53.9
            225
            518
            121391.25
            91.90
            0.65
            0.01
            22
            50
            763
            133591.90
            94.15
            2.25
            0.04
            143**Includes:**
            
            91.90
            92.90
            1.00
            0.03
            146
            233
            829
            226292.90
            93.40
            0.50
            0.015
            196.5
            578
            1728
            332193.40
            94.15
            0.75
            0.065
            103.4
            875
            >10000
            >10000**NS-07-05**
            124.85
            61.05
            61.45
            0.40
            0.195
            27.4
            126
            1115
            24561.45
            62.45
            1.00
            0.115
            19.6
            49
            1485
            60062.45
            63.15
            0.70
            0.150
            58.9
            314
            1189
            337





**GEOPHYSICAL
                – IP TARGET****Depth**
              **(m)**
            **From
                (m)**
            **To**
              **(m)**
            **Intersection**
              **(m)**
            **Au**
              **g/t**
            **Ag**
              **g/t**
            **Cu**
              **ppm**
            **Pb**
              **ppm**
            **Zn**
              **ppm****GFA-07-01**
            360.75
            260.30
            262.355
            2.05260.30
            261.20
            0.90
            0.055
            10.6
            33
            421
            1908261.20
            261.95
            0.75
            0.030
            4.7
            14
            286
            1668261.95
            262.35
            0.40
            0.790
            209.2
            554
            751
            3657





Sample
      lengths of the NQ drill core were diamond sawed into halves by mine staff and
      shipped to Inspectorate Labs in Durango, Mexico, for preparation into pulps
      and
      rejects. Pulps were analyzed at Inspectorate Labs in Sparks, Nevada. Gold and
      silver were analyzed by fire assay using Aqua Regia Leach and AA finish. Other
      elements are reported from a 29 element I.C.P. package.





Sample
      lengths of the NQ drill core were diamond sawed into halves by mine staff and
      shipped to Inspectorate Labs in Durango, Mexico, for preparation into pulps
      and
      rejects.  Pulps were analyzed at Inspectorate Labs in Sparks,
      Nevada.  Gold and silver were analyzed by fire assay using Aqua Regia
      Leach and AA finish.  Other elements are reported from a 29 element
      I.C.P. package.





26
 Table
          of Contents






The
      Company is now focusing on drilling the San Gonzalo vein system in order to
      establish a drill indicated resource for San Gonzalo.  The Company has
      also recently completed building a new drill core storage facility which will
      store in excess of 40,000 metres of core.





Subsequent
      to the year end, the Company announced the results of a seven hole diamond
      drill
      program on the San Gonzalo gold, silver, lead, zinc structure situated 2 km
      northeast of its former producing Avino mine (1976 – 2001).





The
      San
      Gonzalo structure strikes northwest/southeast and dips very steeply (85-90°)
      towards the southwest.  The principal intersections are:





**Vein
                or Structure**
            **From
                (metres)**
            **To
                (metres)**
            **Down
                Hole Lengths (m)**
            **Au
                (g/t)**
            **Ag
                (g/t)**
            **Pb%**
            **Zn(%)**Hole
                SG-07-01Santiago
                Vein
            147.0
            149.7
            2.70
            1.19
            227
            >
                1%
            >
                1%San
                Gonzalo Vein Hanging Wall Zone
            357.3
            362.15
            4.85
            0.64
            343.2
            0.36%
            0.63%San
                Gonzalo Vein Foot Wall Zone
            372.65
            375.05
            2.4
            2.41
            712.4
            0.5%
            0.13%Hole
                SG-07-02San
                Gonzalo Vein Hanging Wall Zone
            214.65
            219.10
            4.45
            6.11
            583.8
            1.4
            2.54San
                Gonzalo Vein Foot Wall Zone
            252.65
            256.00
            3.35
            6.91
            21.1
            1.55
            2.33Hole
                SG-07-03San
                Gonzalo Vein
            187.45
            188.70
            1.25
            3.57
            341
            0.6
            0.87Hole
                SG-07-04Santiago
                Vein
            18.55
            25.00
            6.45
            0.21
            364
            NS
            NS(includes)
            20.85
            21.9
            1.05
            0.29
            990
            0.21
            NS21.90
            22.8
            0.90
            0.49
            433
            0.16
            NSCross
                Vein
            31.00
            34.05
            3.05
            0.18
            86
            0.17
            NSSan
                Gonzalo HW
            248.15
            249.25
            1.10
            0.43
            58
            0.25
            0.26FW
            258.75
            259.00
            0.25
            2.66
            114
            4.8
            4.22Hole
                SG-07-05Santiago
                Vein
            28.70
            31.80
            3.10
            0.49
            201
            NS
            NSIncludes
            31.10
            31.80
            0.70
            1.54
            272
            NS
            NSHole
                SG-07-06Santiago
                Vein
            24.80
            28.30
            3.50
            0.40
            226
            NS
            NSCross
                Vein
            280.65
            280.90
            0.25
            0.50
            2,120
            7.82
            NSSan
                Gonzalo Vein
            367.35
            371.5
            3.85
            0.10
            11
            NS
            NSHole
                SG-07-07San
                Gonzalo Vein
            247.75
            250.35
            2.60
            2.85
            351
            1.04
            0.66





Hole
      SG-07-08 missed the ore shoot and encountered only low gold and silver values.
      For holes SG-07-09, 10 and 11 only gold results have been received to date.
      We
      will release results when silver and base metal assays are
      received.





The
      Company also announced significant intersections from holes SG-07-12 and
      SG-07-13 as follows:





SG-07-12
      (Dip 53 total length 175.45 m)





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 Table
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Down
      hole
      intersection length 165.65 -- 169.45 m (3.80 m) 9.5 g/t gold, 655 g/t silver,
      574 ppm copper, 2,872 ppm lead, 2503 ppm zinc.





Includes:





**From**
            **To**
            **Metres**
            **Au
                g/t**
            **Ag
                g/t**
            **Cu
                ppm**
            **Pb
                ppm**
            **Zn
                ppm**165.65
            166.40
            0.75
            22.902
            1,609.6
            840
            2,106
            3,692166.40
            167.05
            0.65
            8.366
            898.0
            262
            974
            2,266167.05
            167.75
            0.70
            13.508
            427.6
            261
            1,188
            1,282167.75
            168.55
            0.80
            1.890
            283.6
            1,169
            9,356
            4,652168.55
            169.45
            0.90
            2.792
            194.4
            293
            427
            723





SG-07-13
      (Dip 50 total length 160.55)





Down
      Hole
      Intersection Lengths 147.45 -- 153.00 m (5.55m)


1.12
      g/t
      gold, 189 g/t silver, 0.28% lead, 0.43% zinc.





Or





149.05
      --
      153.00 m (3.59m) 1.39 g/t gold, 230 g/t silver


544
      ppm
      Copper, 3,211 ppm Lead and 4368 Zinc





Includes:





**From**
            **To**
            **Metres**
            **Au
                g/t**
            **Ag
                g/t**
            **Cu
                ppm**
            **Pb
                ppm**
            **Zn
                ppm**147.45
            148.45
            1.00
            0.550
            91.5
            3,199
            2,205
            2,436148.45
            149.05
            0.60
            0.155
            77.9
            326
            724
            7,039149.05
            149.70
            0.65
            1.209
            150.8
            192
            1,284
            1,670149.70
            150.70
            1.00
            0.778
            500.6
            264
            1.779
            3,037150.70
            151.50
            0.80
            3.153
            238.9
            1,910
            11,000
            10,700151.50
            152.20
            0.70
            0.822
            121.3
            241
            922
            4,552152.20
            153.00
            0.80
            1.057
            44.5
            91
            783
            1,730





In
      September 2006, the Company commissioned an independent plant audit by Herb
      Osborne and Associates, a widely recognized expert in process plant evaluations,
      to conduct a full review of the plant, including the condition of all equipment,
      the capacity of each circuit, and the efficiency of plant.  The report
      was an order of magnitude cost estimate for the processing plant and is not
      NI
      43-101 compliant as it does not include underground development
      work.





The
      Avino
      process plant was built initially in the 1970’s refurbished and capacity
      increased in 1993.  Most of the infrastructure is in place for an
      ongoing 1000 TPD operation.  Some of the buildings will require
      cleanup and repair and refurbishment.  The plant was fully permitted
      but remains in temporary closure.  Permits will have to be brought
      current.





At
      the
      time of shutdown in 2001 with low commodity prices the mill was operating at
      an
      average rate of 1130 TPD.  The concentration ratio (weight) ranged
      from 2.5 to 3.5% i.e. producing 25-30 TPD of concentrate at a 20-25 g/t Au,
      2-4
      Kg/t Ag and 22-24% Cu.  Prior to shut down the average cost per ton
      milled was approximately US $16/ton and about US $7/ton for freight treatment
      and refining charges from the smelter.   A new mining value cut
      off grade was determined to be around US $30/ton.  This followed a
      review of the historical production and financial figures.





28
 Table
          of Contents






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 for an operating life of 5 to 10
      years.  A more realistic schedule would be nine months to accommodate
      the time required to ready the mine for continuous production.  The
      operating life of 5 to 10 years refers to the operating life of the processing
      plant after the capital expenditures and not the operating life of the mine.
      The
      Company has not completed a feasibility study and this should not be perceived
      as a projection.





The
      report also concluded that the existing tailings pond is near capacity and
      that
      there is adequate space with reasonable gradients adjacent to the existing
      tailings to construct a new tailings area as well as space for a future heap
      leach operation on previously disturbed ground.  Order of magnitude
      cost estimate for this tailings facility is based on a starter dam and
      monitoring devices necessary for a ten year life is a little over US $2
      million.





Total
      capital expenditure to achieve a 10 year operating plan is therefore estimated
      to be around US $3 million and a reasonable valuation of the property as an
      operating entity is US $40 million.  The valuation of US $40 million
      by Herb Osborne and Associates is the construction value for a new 1,000 TPD
      plant with new equipment and is not a value of the property as an operating
      entity.





The
      Company is also considering dewatering the main trackless decline ramp in
      2007.  This will allow access for development of underground workings
      and drilling to bring the ore blocks into NI 43-101 compliance.





In
      December 2006, the Company contracted Peter E. Walcott and Associates to carry
      out a 80 km line deep penetrating IP Survey at its Avino property in
      Mexico.  IP Geophysics will help identify drill targets for the
      upcoming year.





The
      survey explored several areas of Avino’s extensive holdings in the
      district.  Of particular interest was the Gap Zone between the former
      producing mine (1976 – 2001) and the Cerro San Jose area.  In addition
      the area west of the former producing mine will be explored at
      depth.





*Proposed
      Work Program.*We are currently completing a preliminary
      feasibility study for the recovery and processing of the oxide mine tailings
      deposited between 1974 and 1993.  The Wardrop Report recommends
      perimeter test work on tailings and advance to pre-feasibility
      study.  We are proposing to drill approximately 20 holes at San
      Gonzalo to a depth of approximately 2,400 meters at a cost of approximately
      US$0.6 million and a further 11 holes on the Main ET Vein to a depth of
      approximately 3,700 meters at a cost of approximately US$0.5
      million.





**Bralorne
      Mine Property**




On
      November 26, 1991, the Company acquired a 100% interest in a property consisting
      of 154 Crown granted mineral claims, five reverted Crown granted claims, four
      located mineral claims and two placer leases.  These interests are
      collectively referred to as the "Bralorne
      Property".    Pursuant to an option and joint venture
      agreement with Bralorne dated July 21, 1993 and amended on July 12, 1994,
      referred to as the "JV Agreement", Bralorne acquired the right to acquire a
      50%
      interest in the Bralorne Property.  We then entered into a further
      agreement with Bralorne Gold Mines Ltd., referred to as "Bralorne", dated July
      21, 1995 under which the original JV Agreement was amended.  Under the
      terms of the amended agreement, Bralorne acquired its 50% interest in the
      Bralorne Property.  The Bralorne Property was then operated as a joint
      venture between the Company and Bralorne.





Effective
      June 20, 2002, the Company transferred its interest in the Bralorne Property
      to
      Bralorne for a nominal amount of $1 and the assumption by Bralorne of the full
      amount of the principal of US$2,000,000 and interest payable under the mortgage
      bonds originally issued for a loan obtained by the Company and Bralorne in
      1995,
      the proceeds of which were to be used for further development of the Bralorne
      Property.  As a result of the disposition of the Bralorne Property,
      the Company recognized a loss of $40,097 and removed certain assets and
      liabilities from proportionate consolidation in 2003.




29
 Table
          of Contents






**Item
      5.   Operating and Financial Review and
      Prospects**





This
      discussion and analysis of the operating results and the financial position
      of
      the Company for the years ended January 31, 2007, 2006 and 2005 should be read
      in conjunction with the financial statements and the related notes attached
      hereto (item17).





Our
      financial statements are prepared in accordance with Canadian GAAP which has
      several 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.  Canadian GAAP also requires that investments
      available for sale be recorded at the lower of cost and market with long-term
      investments in marketable securities being written down to market when
      impairment is considered other than temporary, in which case the written down
      value becomes the new cost base.  US GAAP requires investments
      available for sale to be recorded at market and unrealized holding gains or
      losses to be charged to comprehensive income or loss. See. Note 20 to the
      financial statements which sets out a reconciliation between Canadian and US
      GAAP.





**A.           Operating
      Results**





**Fiscal
      year ended January 31, 2007 compared to fiscal year ended January 31,
      2006**





*Operating
      and administrative expenses*





General
      and administrative expenses totaled $4,014,734 for the year ended January 31,
      2007 compared with $1,416,797 for the year ended January 31, 2006, an increase
      of $2,597,937. The largest individual expense increase for the period is due
      to
      the recognition of stock based compensation for options to
      employees.  The amount charged to operations in the fiscal 2007 year
      was $2,860,603 compared to $725,125 in fiscal 2006, a difference of
      $2,135,478.  The stock-based compensation is not a cash
      expense.  It is the fair value attributed to the stock options granted
      in a particular period to employees and directors of the Company based on the
      Black-Scholes pricing model.  In fiscal 2007, there were a higher
      number of options granted compared to the previous year, thus resulting in
      a
      higher stock-based compensation.  Once the fair value of the stock
      options is determined, the amount is charged to operations over the vesting
      period along with a corresponding value applied to contributed
      surplus.





The
      balance of the increase in operation and administrative costs for fiscal 2007
      over fiscal 2006 is due to increases in amortization of $1,697, general
      exploration of $106,899, management fees of $27,000, office and miscellaneous
      costs of $26,484, regulatory and compliance fees of $12,726, salaries and
      benefits of $14,284, shareholder and investor relations of $267,476 and travel
      and entertainment of $19,457. The only reduction in operating and administrative
      expenses in fiscal 2007 was to professional fees for $13,564.  The
      higher general exploration costs, management fees, office and miscellaneous
      costs, salaries and benefits and travel and entertainment expenses in fiscal
      2007 are due to the same reasons discussed above for the three month period
      comparison.  Regulatory and compliance fees were higher in fiscal 2007
      due to the filing fees associated with the $10 million private
      placement.  In regards to significantly higher shareholder and
      investor relations costs in fiscal 2007, part of the reason was increased
      promotional and advertising efforts and investor relations service agreements
      that did not exist in fiscal 2006.  Another reason is that some
      investor relations service providers received more stock options in fiscal
      2007
      than fiscal 2006 as per terms of their agreements.  As described above
      for stock-based compensation on options granted to employees and directors,
      the
      value of these options are determined in the same manner but instead are charged
      to shareholder and investor relations as the options become
      vested.  Within the $464,806 in shareholder and investor relations
      expenses in fiscal 2007, $195,600 is for stock based compensation which is
      not
      paid in cash.  In comparison, in fiscal 2006 the shareholder and
      investor relations expense included an amount of $103,981 that was due to stock
      based compensation, a difference of $91,619.





30
 Table
          of Contents






*Loss
      for the period*





Loss
      for
      the year ended January 31, 2007 was $3,648,539 compared with a loss of
      $2,369,724 for the year ended January 31, 2006, an increase of
      $1,278,815.  This increase was due to larger operating and
      administrative expenses discussed above.  One factor that reduced the
      overall loss in fiscal 2007 was an increase of $384,158 in interest income
      over
      fiscal 2006 which partially offset the increase in operating and administrative
      expenses.  Other changes were an increase of $30,464 in foreign
      exchange losses in fiscal 2007 over fiscal 2006, and the year ended January
      31,
      2006 had several other expense items that were either not incurred or were
      much
      less in fiscal 2007.  These were the write-downs of marketable
      securities and mineral properties and a significantly higher equity loss in
      Cia
      Minera that were noted earlier in the fourth quarter loss
      comparison.





**Fiscal
      year ended January 31, 2005 compared to fiscal year ended January 31,
      2004**





*Operating
      and administrative expenses*





Operating
      and administrative expenses totaled $1,416,788 for the year ended January 31,
      2006 compared with $506,010 for the year ended January 31, 2005, an increase
      of
      $910,778.  In 2006 there was stock options granted to employees,
      directors and consultants of the Company which resulted in a stock-based
      compensation expense of $829,106 charged to operations compared to $ 81,540
      in
      the 2005 fiscal year.  When stock-based compensation is removed from
      both periods, the increase in operating and administrative expenses for fiscal
      2006 becomes $163,212.  This increase was primarily a result of an
      increase of $106,012 in professional fees, office and miscellaneous costs of
      $23,455, salary and benefit of $4,219, shareholder and investor relations of
      $34,305 and $13,269 in travel and entertainment.  There was a decrease
      in regulatory in compliance fees of $17,773.





Professional
      fees were extraordinarily high in year ended January 31, 2006 due to legal
      fees
      associated with completing SEC form 20-F filing requirements for each year
      dating back to 2001.  As well there were legal fees associated with
      the Company being listed on the Frankfurt Stock Exchange.  Share
      holder investor relations expense was higher due to the increased amount of
      distribution of shareholder information.  Travel costs were higher due
      to efforts associated with Cia Minera in Mexico and trips to Europe to attend
      trade shows and meet with potential investors.





*Loss
      for the period*





The
      loss
      for the year ended January 31, 2006 was $2,369,724 compared with a loss of
      $814,710 for the year ended January 31, 2005, an increase of $1,555,014. Higher
      operating and administrative expenses in YTD-2006 as discussed above accounted
      for $910,778 of the increase. In addition, there were write-downs of $217,000
      in
      marketable securities and $103,242 on the Eagle property.  Because of
      less costs concerning the feasibility study in regards to the proposed
      acquisition of the remaining 51% interest in Cia Minera, due diligence costs
      went from $391,899 in fiscal 2005 to $355,921 in fiscal 2006, a decrease of
      $35,978.   Due diligence charged to operations during the year
      ended January 31, 2006 is comprised of $133,915 for geological and metallurgical
      services, $26,054 in professional fees and $195,952 for advances to Cia de
      Minera on account of its operations compared to $128,419 for geological and
      metallurgical services, $22,964 in professional fees and $240,516 for advances
      to Cia de Minera on account of its operations during the year ended January
      31,
      2005.  Interest income increased from $41,999 in fiscal 2005 to
      $46,073 in fiscal 2006 as approximately $525,000 more cash was held in
      guaranteed investment certificates at January 31, 2006 compared to 2005. The
      difference is also attributed to slightly higher interest rates.





**B.           Liquidity
      and Capital Resources**





During
      the year ended January 31, 2007 the Company incurred expenditures that increased
      its mineral property carrying value on their British Columbian properties by
      $51,751 and $10,225,805 on their Mexican properties.  At this time the
      Company has no operating revenues but did earn interest income of $430,231
      in
      fiscal 2007 compared to $46,073 in fiscal 2006.





31
 Table
          of Contents






At
      January 31, 2007, the Company had working capital of $9,780,917 and cash and
      cash equivalents of $11,045,106.  During the fiscal 2007 year, the
      Company raised gross proceeds of $10,000,000 through a private placement of
      5,000,000 shares at a price of $2.00 per share. The Company also raised proceeds
      of $585,866 from the exercising of 456,700 stock options and $3,125 from the
      exercising of 1,250 warrants.  The Company is continuing its
      exploration programs in Mexico and British Columbia and the estimated drilling
      costs for the following year is $1,250,000 and $70,000
      respectively.  The Company has sufficient cash on hand at this time to
      finance their planned exploration work on its mineral properties and maintain
      administrative operations through January 31, 2008.





The
      Company is in the exploration stage until such time that the Avino mine is
      opened again. The investment in and expenditures on the mineral property
      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
      and
      the Company’s ability to continue as a going concern is dependent upon the
      continued support from its directors, the discovery of economically recoverable
      reserves and the ability of the Company to obtain the financing necessary to
      complete development and achieve 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 Cia Minera, the Company may be required to raise new equity
      capital in the future. There is no assurance that the Company will be successful
      in raising additional new equity capital.





The
      Company feels it has sufficient working capital to meet its current obligations
      and operating expenses. The Company has sufficient cash on hand at this time
      to
      finance planned exploration work on its mineral properties and maintain
      administrative operations. Mineral development is capital intensive, and in
      order to re-commence operations at Cia Minera, the Company may be required
      to
      raise new equity capital in the future. There is no assurance that the Company
      will be successful in raising 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
      the
      Company is a mineral exploration company with no currently producing properties,
      the information required by this section is not applicable.





**E.           Off-balance
      sheet arrangements**





The
      Company does not have any off-balance sheet arrangements.





**F.**
            **Tabular
                disclosure of contractual
                obligations**





As
      at
      January 31, 2007, the Company had the following contractual
      obligations:








**Total**
            
            
            **<
                  1 year**
            
            
            **1-3
                  years**
            
            
            **3-5
                  years**
            
            
            **More
                  than**
                **5
                  years**Investor
                Relations
            
            
            26,613
            
            
            
            26,613
            
            
            
            -
            
            
            
            -
            
            
            
            -Drilling
                Contract
            
            
            416,022
            
            
            
            416,022
            
            
            
            -
            
            
            
            -
            
            
            
            -Total
            
            
            442,635
            
            
            
            442,635





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**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
      July 18, 2007.  The directors were re-elected by the Company's
      shareholders on July 17, 2007 and are elected for a term of one year, which
      term
      expires at the election of the directors at the next annual meeting of
      shareholders.




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**Name
                  and Present Position with the Company**
            **Principal
                  Occupation**
            **Director/Officer
                  Since**Lloyd
                Andrews
              Director/Chairman
            Chairman
                and Director of Berkley Resources Inc., Bralorne Gold Mines Ltd.,
                Coral
                Gold Resources Ltd.
            June
                2005(1)Michael
                Baybak
              Director
            A
                Business Consultant.
            June
                1990Gary
                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(2)David
                Wolfin(3)
              Director/President
            Director
                and VP Finance of Berkley Resources Inc., Director and VP Finance
                of
                Bralorne Gold Mines Ltd., Director and VP, Finance, of Levon Resources
                Ltd., President and Director of Coral Gold Resources Ltd. and Gray
                Rock
                Resources Ltd. and Director of Mill Bay Ventures Ltd. and Cresval
                Capital
                Corp.
            October
                1995Louis
                Wolfin(3)
              Director
            Director
                and Chief Executive Officer of Bralorne Gold Mine Ltd., Coral Gold
                Resources Ltd. and Levon Resources Ltd. and Director of Cresval Capital
                Corp.
            August
                1969Connie
                Lillico
              Secretary
            Secretary
                of Berkley Resources Inc., Bralorne Gold Mines Ltd., Coral Gold Resources
                Ltd., Gray Rock Resources Ltd., Levon Resources Ltd. and Mill Bay
                Ventures
                Inc.; formerly an office administrator and paralegal
            July
                2004


(1)      Lloyd
      Andrews was elected as a director of the Company on June 24, 2005.


(2)      Director
      since August 2, 2005.


(3)      Mr.
      David Wolfin is the son of Mr. Louis Wolfin.





**B.           Compensation**





Beginning
      in the third quarter of the 2007 fiscal year, the independent directors of
      the
      Company have been compensated $750 per quarter by the Company in their
      capacities as directors.  The Chairman of each committee is also paid
      $250 per quarter.  During the year ended January 31, 2006, the Company
      paid an aggregate of $87,000 to Intermark Capital Corp., a private company
      controlled by David Wolfin, president and director of the Company for management
      advisory services.  The Company paid an aggregate of $53,837 to ABC
      Drilling Services Inc., a private company whose common directors include Louis
      Wolfin and David Wolfin for drilling services, referred to as "ABC
      Drilling".  The Company paid an aggregate of $84,279 to National Media
      Associates Inc., referred to as "National Media", a business significantly
      influenced by Michael Baybak, a director of the Company for investor relations
      services.  Incentive stock have been granted to non-executive
      directors and other insiders of the Company and are outstanding to purchase
      an
      aggregate of 180,000 common shares at a price of $1.20 per share exercisable
      on
      or before October 21, 2008, of which 138,200 have been exercised, 180,000 shares
      of the Company  at a price of $1.35 per share exercisable on or before
      April 5, 2010 and September 26, 2010, of which 7,500 have been exercised and
      380,000 shares of the Company at a price of $3.99 per share exercisable on
      or
      before April 26, 2011, none of which have been exercised.





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The
      following table sets forth particulars concerning the compensation paid or
      accrued for services rendered to the Company in all capacities during each
      of
      the last three financial years of the Company to its Chief Executive Officer,
      Chief Financial Officer and to the other executive officers of the Company
      who
      received a combined salary and bonus in excess of $150,000 (the “Named Executive
      Officers” during the financial year ended January 31, 2006).





**Summary
                  Compensation Table**(1)**Annual
                  Compensation**
            
            **Long-Term**
                **Compensation
                  Awards****Name/Principal**
                **Position**
            **Year**
            **Salary(2)**
                **$**
            **Bonus
                  for**
                **the
                  Year**
                **$**
            **Other
                  Annual Compensation**
                **$**
            **Securities
                  Under Options/SARs Granted**
                **(#)(3)**
            **Restricted
                  Shares/Units Awarded**
                **$**
            **All
                  Other Compensation**
                **$**David
                Wolfin
              President
                and Director
            2007
              2006
              2005
            87,000
              60,000
              60,000
            -
              -
              -
            17,500
              -
              -
            240,000
              100,000
              80,000
            -
              -
              -
            1,479
              1,389
              1,082Louis
                Wolfin
              Chief
                Executive Officer and Director
            2007
              2006
              2005
            -
              2,000
              -
            -
              -
              -
            -
              -
              -
            291,800
              228,000
              150,000
            -
              -
              -
            1,320
              1,718
              859


_________________________


(1)
            Certain
                columns are omitted because there has been no compensation awarded
                to,
                earned by or paid to any of the named executives required to be reported
                in this table.


(2)       
      No employee earned in excess of $100,000.


(3)       
      Represents total common shares under options as of the end of the fiscal
      year.





During
      the most recent fiscal year, stock options have been granted to the Named
      Executive Officers as follows:





Name
                  of Executive Officer
            Securities
                  Under Option Granted
            %
                  of Total Options Granted to Employees in Financial
                  Year
            Executive
                  or base Price ($/Security)
            Market
                  Value of Securities underlying Options on Date of Grant
                  ($/Security)
            Expiration
                  DateDavid
                Wolfin
            200,000
            20%
            $3.99
            $3.99
            April
                26, 2011Louis
                Wolfin
            180,000
            18%
            $3.99
            $3.99
            April
                26, 2011





The
      Company currently maintains a formal stock option plan, referred to as 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.  To date, stock options to purchase a total of up to 1,451,300
      shares have been granted and remain outstanding under the Plan, leaving options
      for 607,173 available for issuance.





**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.





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**C.           Board
      Practices**





The
      board
      of directors is currently comprised of five 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 chairman of the board is not a member of
      management.  The board has functioned, and is of the view that it can
      continue to function, independently of management as required.  At the
      Annual General Meeting, held on July 17, 2007, the shareholders elected Messrs.
      Andrews, Baybak, Robertson, Wolfin and Wolfin as directors.





The
      board
      has considered the relationship of each director to the Company and currently
      considers three of the five directors to be "unrelated" (Messrs. Andrews, Baybak
      and Robertson).  "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.





Two
      of
      the directors (Messrs. Wolfin and Wolfin) are related family
      members.





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 of directors 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 and the chief executive 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 committee has direct
      communications channels with the Company's auditors. The committee reviews
      the
      Company's financial statements and related management's discussion and analysis
      of financial and operating results.  The committee can retain legal,
      accounting or other advisors.





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The
      audit
      committee currently consists of three directors (Messrs. David Wolfin, Lloyd
      Andrews and Gary Robertson).  Two of the members are unrelated 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 of directors 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 two unrelated directors (Messrs. Robertson
      and Andrews) and one related director (Mr. D. Wolfin).  It is intended
      that the compensation committee will eventually be comprised of solely unrelated
      directors.





*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 of directors as appropriate.  When considering nominees to the
      board the 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 committee is also
      responsible for the Company’s corporate governance guidelines.  The
      committee may retain legal or other advisors.





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The
      corporate governance committee currently consists of three directors (Messrs.
      Lloyd Andrews, Gary Robertson and Louis Wolfin).  Messrs. Andrews and
      Robertson are unrelated directors.  It is intended that this committee
      will eventually be comprised solely of unrelated and independent
      directors.





**D.           Employees**





The
      Company has one employee located in Mexico.





**E.           Share
      Ownership**





The
      following table sets forth the share ownership of the directors and officers
      of
      the Company as of July 10, 2007.





**Name
                  of Beneficial Owner**
            **Number
                  of Shares**
            **Percent**Lloyd
                Andrews
            2,500
            *Michael
                Bayback
            2,400
            *Gary
                Robertson
            20,000
            *David
                Wolfin
            61,184
            *Louis
                Wolfin
            4,345
            *Connie
                Lillico
            2,500
            *


_______________


*  Less
      than one percent





*Outstanding
      Options*





The
      following information, as of July 10, 2007, reflects outstanding options held
      by
      the Named Executive Officers:





**No.
                  of Shares**
            **Date
                  of Grant**
            **Exercise
                  Price**
            **Expiration
                  Date**Louis
                Wolfin
            11,800
            October
                21, 2003
            $1.20
            October
                23, 2008David
                Wolfin
            40,000
            April
                5, 2005
            $1.35
            April
                5,2010Louis
                Wolfin
            100,000
            April
                5, 2005
            $1.35
            April
                5,2010David
                Wolfin
            200,000
            April
                26, 2006
            $3.99
            April
                26, 2011Louis
                Wolfin
            180,000
            April
                26, 2006
            $3.99
            April
                26, 2011




**Item
      7.  Major Shareholders and Related Party
      Transactions**





**A.           Major
      Shareholders**





As
      far as
      it is known to 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
      July 11, 2007 the Company knew of no person who owned more than five (5%)
      percent of the outstanding shares of each class of the Company's voting
      securities.




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 Table
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**B.**
            **Related
                Party Transactions**





During
      the twelve months ended January
      31, 2007, the Company paid, or made provision for the future payment, of the
      following amounts to related parties:





i)
            $119,857
                (2006 - $163,328; 2005 - $124,146) for administrative services and
                expenses to Oniva International Services Corp, referred to as "Oniva
                International", a private company that is 16.67% owned by the Company
                and
                with the remaining 83.33% shared equally between five other companies
                that
                are related by common directors and
                management;





ii)
            $87,000
                (2006 - $60,000; 2005 - $60,000) to a private company controlled
                by the
                President for management fees;





iii)
            $30,000
                (2006 - $30,000; 2005 - $12,500) to a private company controlled
                by a
                Director of a related company for consulting
                fees;





iv)
            $84,279
                (2006 - $Nil; 2005 - $Nil) for investor relations services to National
                Media, a business significantly influenced by a Director of the
                Company.





v)
            The
                Company paid or accrued $53,837 (2006 - $146,092; 2005 - $Nil) to
                ABC
                Drilling, a private company that is a 100% owned subsidiary of Oniva
                International for drilling services and $6,854 (2006 - $20,433; 2005
                -
                $Nil) to Bralorne, a public company with common directors and management,
                for exploration services.





There
      is
      an amount due from a related party of $64,933 (2006 - $83,000) from ABC
      Drilling.  The amount due is non-interest bearing, unsecured and has
      no stated terms of repayment.  The Company had also paid an
      exploration advance of $39,000 in a prior period of which the entire amount
      has
      been applied to drilling services performed during the current
      period.





Amounts
      due to related parties consist of $105 (2006 - $16,710) due to a private company
      controlled by a Director of the Company, $7,500 (2006 - $Nil) due to a directors
      and $133,919 (2006 - $161,563) due to Oniva.





**C.           Interests
      of Experts and Counsel**





Not
      Applicable.





**Item
      8.   Financial
      Information**





**A.           Statements
      and Other Financial Information**





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





Auditors
      Report.


Balance
      Sheet for years ended January 31, 2007 and 2006.


Statement
      of Operations and Deficit for the years ended January 31, 2007, 2006 and
      2005.


Statement
      of Cash flows for the years ended January 31, 2007, 2006, and 2005.


Notes
      to
      Financial Statements for the years ended January 31, 2007, 2006, and
      2005.





*Dividend
      Policy*





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





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**B.           Significant
      Changes**





None.





**Item
      9.  The Offer and Listing**





**A.           Offer
      and Listing Details**





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
      OTC BB, under the symbol "ASGMF".





As
      of
      July 6, 2007, there were 706 holders of record in the United States holding
      68.88% of the Company's outstanding common shares representing approximately
      23.43% of the total shareholders.  The Company's common shares are
      issued in registered form and the percentage of shares reported to be held
      by
      record holders in the United States is taken from the records of the Pacific
      Corporate Trust Company in the City of Vancouver, the registrar and transfer
      agent for the common shares.





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)****Last
                  Six Months**
            **High**
            **Low**June
                2007
            2.00
            1.69May
                2007
            2.24
            1.90April
                2007
            2.75
            2.05March
                2007
            2.33
            2.00February
                2007
            2.44
            1.83January
                2007
            2.23
            1.85**2006-2007**
            **High**
            **Low**Fourth
                Quarter ended January 31, 2007
            2.66
            1.80Third
                Quarter ended October 31, 2006
            2.45
            1.50Second
                Quarter ended July 31, 2006
            4.48
            1.70First
                Quarter ended April 30, 2006
            4.35
            2.00**2006-2005**
            **High**
            **Low**Fourth
                Quarter ended January 31, 2006
            2.29
            1.38Third
                Quarter ended October 31, 2005
            1.57
            1.20Second
                Quarter ended July 31, 2005
            1.66
            1.11First
                Quarter ended April 30, 2005
            1.99
            1.18**Last
                  Five Fiscal Years**
            **High**
            **Low**2007
            4.48
            1.502006
            2.29
            1.112005
            2.50
            1.002004
            3.00
            0.332003
            1.74
            0.32





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**B.           Plan
      of Distribution**





Not
      Applicable.





**C.           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
      OTC BB, under the symbol "ASGMF".





**D.           Selling
      Shareholders**





Not
      Applicable.





**E.           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.





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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 entered into a share exchange agreement dated for reference the 9th day of
      June, 2004
      with Pedro Sanchez Mejorada, Fernando Ysita Del Hoyo, Francisco Ysita del Hoyo,
      Bernardo Ysita del Hoyo, Carlos Ysita del Hoyo, Manuel Ysita del Hoyo, Eduardo
      Ysita del Hoyo, Mercedes Ysita del Hoyo, Cia Minera and Promotora in connection
      with the acquisition of the remaining 51% interest in Cia Minera.  The
      consideration to be paid by the Company for the 51% interest consists of four
      million common shares of the Company.  This agreement was subject to a
      number of conditions including a satisfactory due diligence review and final
      regulatory approval. The TSX-V approved the agreement on October 18, 2005 and
      the acquisition of an additional 39.25% interest in Cia Minera was completed
      on
      July 17, 2006 for consideration of 3,164,702 common shares of the
      Company.  The Company now owns 88.25% of the total issued shares of
      Cia Minera and continues to consider its options with relation to the balance
      of
      the interest.





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The
      Company entered into a cost sharing agreement dated October 1, 1997, and amended
      November 1, 2003 to reimburse Oniva International for a variable 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.





The
      Company entered into a 12 month
      agreement in with National Media to provide financial relations, media relations
      and public market development services. The Company has agreed to pay National
      Media US$6,000 per month, and the contract can be terminated after September
      15,
      2006 upon 30 days' notice by the Company.  The agreement with National
      Media expired on March 15, 2007, and the Company’s commitment under the
      agreement as at January 31, 2007 totaled $10,613 (US$9,000).





The
      Company entered into a 12 month Investor Relations Agreement with Investor
      Relations Group Inc., formerly called Investors Relations Services Group John
      Mullen & Partners, referred to as "IRS", to provide investor relations
      services in Europe. In consideration for the services rendered, the Company
      has
      agreed to pay IRS fees of $2,000 per month plus expenses.  The
      agreement with IRS expires on October 5, 2007, and the Company’s commitment
      under the agreement as at January 31, 2007 totaled $16,000.





The
      Company has a contractual minimum drilling commitment for the exploration of
      its
      mineral properties in Durango, Mexico.  As at January 31, 2007 the
      Company is committed to drilling services at an estimated cost of $416,022,
      which is denominated in U.S. dollars (US$352,800).  Management has
      determined that the Company’s exploration in fiscal 2008 will likely exceed the
      minimum commitment, and thus the minimum drilling cost will be paid in fiscal
      2008.





Please
      refer to note 19 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 in
*“10.E. Taxation”* below.





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.





**E.           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.





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**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:





1.
            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.




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2.
            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.





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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).





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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.





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**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**





The
      Chief Executive Officer and the
      Chief Financial Officer of the Company are responsible for designing internal
      controls over financial reporting, or causing them to be designed under their
      supervision, to provide reasonable assurance regarding the reliability of
      financial reporting and the preparation of financial statements for external
      purposes in accordance with Canadian GAAP.  The Company assessed the
      design of the internal controls over financial reporting as at January 31,
      2007
      and concluded that there are material weaknesses in internal controls over
      financial reporting, which are as follows:





a)
            Due
                to the limited number of staff resources, the Company believes there
                are
                instances where a lack of segregation of duties exist to provide
                effective
                controls; and





b)
            The
                Company is evaluating the effectiveness of its staff resources, as
                currently the Company seeks outside guidance to address complex accounting
                and tax issues that arise.





The
      weaknesses and their related risks
      are not uncommon in a company the size of Avino because of limitations in size
      and number of staff.  The Company believes it has taken initial steps
      to mitigate these risks by consulting outside advisors and involving the Audit
      Committee and Board of Directors in reviews and consultations where
      necessary.  However, these weaknesses in internal controls over
      financial reporting could result in a more than remote likelihood that a
      material misstatement would not be prevented or detected. The Company believes
      that it must take additional steps to further mitigate these risks by consulting
      outside advisors on a more regular and timely basis.





There
      have been no changes in the
      Company’s internal controls over financial reporting that occurred during the
      quarter ended January 31, 2007 that have materially affected, or are reasonably
      likely to materially affect, the Company’s internal controls over financial
      reporting.





**Item
      16A.  Audit Committee Financial
      Expert**





The
      board
      of directors determined that Mr. Gary Robertson is qualified as an Audit
      Committee Financial Expert.  Mr. Robertson is independent as
      determined by the National Association of Securities Dealers listing
      standards.





48
 Table
          of Contents






**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 last fiscal year was Manning Elliot
      LLP.  For the fiscal years ending January 31, 2006 and 2005 the
      independent auditor was Vellmer & Chang, Chartered Accountants (formerly
      Hoogendoorn Vellmer, Chartered Accountants).





**Audit
      Fees**





The
      aggregate fees billed by Manning Elliot LLP for professional services rendered
      for the audit of the Company's annual financial statements for the fiscal year
      ended January 31, 2007 was $101,800.  The aggregate fees billed by
      Vellmer & Chang for professional services rendered for the audit of the
      Company's annual financial statements for the fiscal year ended January 31,
      2006
      was $40,780.





**Audit-Related
      Fees**





There
      were no audit-related fees for the fiscal years ended January 31, 2007 and
      2006.





**Tax
      Fees**





The
      aggregate tax fees billed by the Company's independent auditors for the 2007
      fiscal year was $2,180, which is related to the preparation of the corporate
      tax
      return for the 2006 fiscal year.  The aggregate tax fees billed by the
      Company's independent auditors for the 2006 fiscal year was $1,315, which is
      related to the preparation of the corporate tax return for the 2005 fiscal
      year.





**All
      Other Fees**





There
      were no aggregate fees billed for any other professional services rendered
      by
      the Company's independent auditors for the year ended January 31,
      2007.  The aggregate fees billed by the Company's independent auditors
      for advisory and review services relating to the Company's annual report on
      Form
      20-F was $3,600 for the year ended January 31, 2006.





The
      audit
      committee approved 100% of the fees paid to the principal accountant for
      audit-related, tax and other fees in the fiscal year 2006.  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.





49
 Table
          of Contents






**Part
      III**





**Item
      17.  Financial Statements**





The
      following financial statements pertaining to the Company are filed as part
      of
      this annual report:




Auditors
              Report
            52 Consolidated
              Balance Sheets
            53 Consolidated
                Statements of Operations and Deficit
            54


Consolidated
                Statements of Cash Flows
            55


Notes
                to Financial Statements
            56
                thru 76





**Item
      18.  Financial Statements**





See
      Item
      17.





**Item
      19.  Exhibits**







Exhibit
              Number
            Name1.1
            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 Subsidiaries12.1
            Certification
              of the Principal Executive Officer12.2
            Certification
              of the Principal Financial Officer13.1
            Certificate
              under the Sarbanes-Oxley Act13.2
            Consent
              of Expert15.1
            Form
              43 -101F1 Technical Report: Tailings Retreatment – Process
              Options*





___________________________


*  Previously
      filed.








50
 Table
          of Contents




















**AVINO
                SILVER & GOLD MINES LTD.**
              **Consolidated
                Financial Statements**
              **For
                the Years Ended**
              **January
                31, 2007, 2006 and 2005**

































51
 Table
          of Contents











**AUDITORS’
        REPORT**





To
      the
      Shareholders of





Avino
      Silver & Gold Mines Ltd.





We
      have
      audited the consolidated balance sheet of Avino Silver & Gold Mines Ltd. as
      at January 31, 2007, and the consolidated statements of operations and
      deficit, and cash flows for the year ended January 31, 2007. These financial
      statements are the responsibility of the Company’s management. Our
      responsibility is to express an opinion on these financial statements based
      on
      our audit.





We
      conducted our audit 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 plan and perform an audit
      to
      obtain reasonable assurance whether the financial statements are free of
      material misstatement. An audit includes examining, on a test basis, evidence
      supporting the amounts and disclosures in the financial statements. An audit
      also includes assessing the accounting principles used and significant estimates
      made by management, as well as evaluating the overall financial statement
      presentation.





In
      our
      opinion, these consolidated financial statements present fairly, in all material
      respects, the financial position of the Company as at January 31, 2007 and
      the
      results of its operations and its cash flows for the year then ended in
      accordance with Canadian generally accepted accounting principles.





The
      balance sheet figures as at January 31, 2006 and the statements of operations
      and deficit, and cash flows for the years ended January 31, 2006 and 2005 were
      audited by another firm of chartered accountants, which expressed an opinion
      without reservation on those financial statements in their report dated May
      31,
      2006.





MANNING
      ELLIOTT LLP





CHARTERED
      ACCOUNTANTS


Vancouver,
      British Columbia


May
      7,
      2007








**COMMENTS
        BY AUDITORS ON CANADA AND UNITED STATES REPORTING
        DIFFERENCES**





The
      standards of the Public Company Accounting Oversight Board (U.S.) require the
      addition of an explanatory paragraph when the financial statements are affected
      by conditions and events that cast substantial doubt on the Company’s ability to
      continue as a going concern, such as those described in Note 1 to the financial
      statements. Although we conducted audits in accordance with both Canadian
      generally accepted auditing standards and the standards of the Public Company
      Accounting Oversight Board (U.S.), our report to the shareholders dated May
      7,
      2007 is expressed in accordance with Canadian reporting standards which do
      not
      permit a reference to such conditions and events in the auditor’s report when
      these are adequately disclosed in the financial statements.





MANNING
      ELLIOTT LLP





CHARTERED
      ACCOUNTANTS


Vancouver,
      British Columbia


May
      7,
      2007




52
 Table
          of Contents


**AVINO
          SILVER & GOLD MINES LTD.**
 Consolidated
          Balance Sheets
 As
          at
          January 31, 2007 and 2006
 (Expressed
        in Canadian Dollars)





**2007**
            
            
            **2006****ASSETS****Current**Cash
                and cash equivalents
            
            $
            11,045,106
            
            
            $
            3,067,011Interest
                receivable
            
            
            38,179
            
            
            
            –Taxes
                recoverable
            
            
            96,674
            
            
            
            35,009Prepaid
                expenses and amounts receivable
            
            
            54,042
            
            
            
            13,54411,234,001
            
            
            
            3,115,564Property,
                Plant and Equipment (Note 4)
            
            
            1,015,228
            
            
            
            2,611Reclamation
                Bonds
            
            
            5,500
            
            
            
            3,000Mineral
                Properties (Note 5)
            
            
            10,764,455
            
            
            
            486,900Advances
                to Related Companies (Note 14 (a))
            
            
            65,770
            
            
            
            83,000Investments
                in Related Companies (Note 6)
            
            
            210,085
            
            
            
            210,085$
            23,295,039
            
            
            $
            3,901,160**LIABILITIES****Current**Accounts
                payable and accrued liabilities
            
            $
            1,311,560
            
            
            $
            62,700Due
                to related parties (Note 14(b))
            
            
            141,524
            
            
            
            181,4181,453,084
            
            
            
            244,118Future
                Income Tax Liability (Note 13)
            
            
            2,335,999
            
            
            
            –Commitment
                towards equity loss in Cia Minera Mexicana de Avino, S.A. de C.V
                (Note
                8)
            
            
            –
            
            
            
            342,5963,789,083
            
            
            
            586,714**SHAREHOLDERS'
                EQUITY**Share
                Subscriptions Received in Advance
            
            
            –
            
            
            
            247,730Share
                Capital (Note 9(a))
            
            
            33,112,072
            
            
            
            19,264,265Shares
                Issued For Proceeds Receivable
            
            
            (5,940
            )
            
            
            (56,732
            )Contributed
                Surplus (Note 10)
            
            
            7,259,879
            
            
            
            1,070,699Treasury
                Shares (14,180 shares, at cost)
            
            
            (101,869
            )
            
            
            (101,869
            )Deficit
            
            
            (20,758,186
            )
            
            
            (17,109,647
            )19,505,956
            
            
            
            3,314,446$
            23,295,039
            
            
            $
            3,901,160





NATURE
      AND CONTINUANCE OF OPERATIONS – NOTE 1


CONTINGENT
      LIABILITY AND COMMITMENTS – NOTES 18 AND 19








Approved
      by the Board of Directors:





“*Louis
      Wolfin*”  Director                                                                           *“David
      Wolfin”*  Director




53
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          of Contents


**AVINO
          SILVER & GOLD MINES LTD.**
 Consolidated
          Statements of Operations and Deficit
 Years
          Ended January 31, 2007, 2006 and 2005
 (Expressed
        in Canadian Dollars)


**2007**
            
            
            **2006**
            
            
            **2005**Revenue
            
            $
            –
            
            
            $
            –
            
            
            $
            –**Operating
                and Administrative Expenses**Amortization
            
            
            2,677
            
            
            
            980
            
            
            
            1,210General
                exploration
            
            
            106,899
            
            
            
            –
            
            
            
            –Interest
            
            
            –
            
            
            
            –
            
            
            
            65Management
                fees
            
            
            87,000
            
            
            
            60,000
            
            
            
            60,000Office
                and miscellaneous
            
            
            146,348
            
            
            
            119,864
            
            
            
            96,409Professional
                fees
            
            
            127,441
            
            
            
            141,005
            
            
            
            34,993Regulatory
                and compliance fees
            
            
            34,416
            
            
            
            21,690
            
            
            
            39,463Salaries
                and benefits
            
            
            87,813
            
            
            
            73,529
            
            
            
            69,310Shareholder
                and investor relations (Note 11)
            
            
            464,806
            
            
            
            197,330
            
            
            
            59,044Stock-based
                compensation (Note 12)
            
            
            2,860,603
            
            
            
            725,125
            
            
            
            81,540Travel
                and entertainment
            
            
            96,731
            
            
            
            77,274
            
            
            
            64,0054,014,734
            
            
            
            1,416,797
            
            
            
            506,039(4,014,734
            )
            
            
            (1,416,797
            )
            
            
            (506,039
            )**Other
                income (expenses)**Interest
                income
            
            
            430,231
            
            
            
            46,073
            
            
            
            41,999Foreign
                exchange gain (loss)
            
            
            (30,455
            )
            
            
            9
            
            
            
            29Write-down
                of investment in related company
            
            
            –
            
            
            
            (217,000
            )
            
            
            –Write-down
                of mineral property
            
            
            –
            
            
            
            (103,242
            )
            
            
            –Site
                assessment costs for Cia Minera Mexicana de Avino, S.A. de C.V (Note
                8)
            
            
            –
            
            
            
            (355,921
            )
            
            
            (391,899
            )Equity
                losses in Cia Minera Mexicana de Avino, S.A. de C.V (Note
                8)
            
            
            (33,581
            )
            
            
            (342,596
            )
            
            
            –LOSS
                BEFORE INCOME TAXES
            
            
            (3,648,539
            )
            
            
            (2,389,474
            )
            
            
            (855,910
            )Future
                income tax benefit recognized on renouncement of Canadian exploration
                expenditures (Note 13)
            
            
            –
            
            
            
            19,750
            
            
            
            41,200**NET
                LOSS FOR THE YEAR**
            
            
            (3,648,539
            )
            
            
            (2,369,724
            )
            
            
            (814,710
            )**DEFICIT**,
                beginning of year
            
            
            (17,109,647
            )
            
            
            (14,739,923
            )
            
            
            (13,925,213
            )**DEFICIT**,
                end of year
            
            $
            (20,758,186
            )
            
            $
            (17,109,647
            )
            
            $
            (14,739,923
            )BASIC
                AND DILUTED LOSS PER SHARE
            
            $
            (0.20
            )
            
            $
            (0.22
            )
            
            $
            (0.08
            )BASIC
                WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
            
            
            18,385,007
            
            
            
            10,965,718
            
            
            
            10,410,379





54
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          of Contents


**AVINO
          SILVER & GOLD MINES LTD.**
 Consolidated
          Statements of Cash Flows
 Years
          Ended January 31, 2007, 2006 and 2005
 (Expressed
        in Canadian Dollars)





**2007**
            
            
            **2006**
            
            
            **2005****CASH
                PROVIDED BY (USED IN):****OPERATING
                ACTIVITIES**Loss
                for the year
            
            $
            (3,648,539
            )
            
            $
            (2,369,724
            )
            
            $
            (814,710
            )Adjustments
                for non-cash items:Amortization
            
            
            2,677
            
            
            
            980
            
            
            
            1,210Stock-based
                compensation
            
            
            2,860,603
            
            
            
            725,125
            
            
            
            81,540Fair
                value of options issued for investor relations services
            
            
            195,600
            
            
            
            103,981
            
            
            
            –Write-down
                of investment in related company
            
            
            –
            
            
            
            217,000
            
            
            
            –Write-down
                of mineral property interest
            
            
            –
            
            
            
            103,242
            
            
            
            –Equity
                loss on Cia Minera prior to acquisition of control
            
            
            33,581
            
            
            
            342,596
            
            
            
            –Future
                income tax benefit recognized on the renouncement of Canadian exploration
                expenditures
            
            
            –
            
            
            
            (19,750
            )
            
            
            (41,200
            )(556,078
            )
            
            
            (896,550
            )
            
            
            (773,160
            )Net
                change in non-cash working capital (Note 16)
            
            
            61,750
            
            
            
            (91,529
            )
            
            
            14,849(494,328
            )
            
            
            (988,079
            )
            
            
            (758,311
            )**FINANCING
                ACTIVITIES**Share
                subscriptions received in advance
            
            
            –
            
            
            
            247,730
            
            
            
            –Receipt
                of share proceeds receivable
            
            
            56,732
            
            
            
            –
            
            
            
            –Shares
                issued for cash, net
            
            
            9,511,593
            
            
            
            1,748,827
            
            
            
            435,7899,568,325
            
            
            
            1,996,557
            
            
            
            435,789**INVESTING
                ACTIVITIES**Reclamation
                bonds
            
            
            (2,500
            )
            
            
            (3,000
            )
            
            
            –Property,
                plant and equipment purchases
            
            
            (18,331
            )
            
            
            (768
            )
            
            
            –Mineral
                property exploration expenditures
            
            
            (777,586
            )
            
            
            (273,234
            )
            
            
            (91,400
            )Advances
                to a related party
            
            
            –
            
            
            
            52,000
            
            
            
            (135,000
            )Advances
                to Cia Minera prior to acquisition of control
            
            
            (297,485
            )
            
            
            –
            
            
            
            –(1,095,902
            )
            
            
            (225,002
            )
            
            
            (226,400
            )**Increase
                (decrease) in cash and cash equivalents**
            
            
            7,978,095
            
            
            
            783,476
            
            
            
            (548,922
            )**CASH
                AND CASH EQUIVALENTS**,****beginning of
                year
            
            
            3,067,011
            
            
            
            2,283,535
            
            
            
            2,832,457**CASH
                AND CASH EQUIVALENTS,**end of year
            
            $
            11,045,106
            
            
            $
            3,067,011
            
            
            $
            2,283,535





**SUPPLEMENTARY
                CASH FLOW DISCLOSURES**Cash
                paid for:Interest
                expense
            
            $
            16
            
            
            $
            –
            
            
            $
            65Income
                taxes
            
            
            –
            
            
            
            –
            
            
            
            –Non-cash
                investing activity:3,164,702
                shares issued in acquisition of controlling interest in Cia
                Minera
            
            
            7,215,520
            
            
            
            –
            
            
            
            –





55
 Table
          of Contents


**AVINO
              SILVER & GOLD MINES LTD.**
 Notes
              to
              Consolidated Financial Statements
 January
              31, 2007, 2006 and 2005
 (Expressed
                in Canadian Dollars)


**NOTE
      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 Yukon,
      Canada.





The
      Company is in the exploration stage with its mineral properties and has not
      yet
      determined whether these properties contain ore reserves which are economically
      recoverable.





The
      recoverability of amounts shown for mineral properties and related deferred
      costs is dependent upon the discovery of economically recoverable reserves,
      confirmation of the Company’s legal interest in mineral claims, obtaining
      further financing for exploration 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.





These
      consolidated financial statements have been prepared in accordance with
      generally accepted accounting principles applicable to a going concern, which
      assume that the Company will realize its assets and discharge its liabilities
      in
      the normal course of business. The Company will likely be required to raise
      new
      financing through the sale of shares to continue with the exploration for and
      development of its mineral properties. Management intends to secure additional
      financing through the issuance of common stock. However, there can be no
      assurance that management will be successful in its efforts to secure additional
      financing through the issuance of common stock, or that it will ever develop
      a
      self-supporting business. These factors together raise substantial doubt about
      the Company’s ability to continue as a going concern. The consolidated financial
      statements do not include any adjustments that might result from the outcome
      of
      this uncertainty.





**NOTE
      2 - SIGNIFICANT ACCOUNTING POLICIES**





**i)**
            **Basis
                of presentation**





These
      financial statements have been prepared in accordance with Canadian generally
      accepted accounting principles on a consolidated basis and include the accounts
      of the Company and its Mexican subsidiaries. All significant inter-company
      balances and transactions have been eliminated upon consolidation. The Company’s
      Mexican subsidiaries are the wholly-owned Oniva Silver and Gold Mines S.A.,
      Promotora Avino, S.A. De C.V. (“Promotora”) in which the Company has direct
      ownership of 76.88%, and Compania Minera Mexicana de Avino, S.A. de C.V. (“Cia
      Minera”) in which the Company has a 50% direct ownership and an additional
      49.75% of Cia Minera is held through Promotora.





The
      Company acquired control of Promotora and Cia Minera on July 17, 2006 (see
      Note
      3) and prior to the acquisition of control the Company accounted for its 49%
      ownership of Cia Minera using the equity method. Under the equity method, the
      Company’s original investment in Cia Minera was initially recorded at cost, and
      subsequently adjusted to reflect the Company’s share of earnings or loss in Cia
      Minera.





These
      consolidated financial statements include the operations of Promotora and Cia
      Minera subsidiaries on a consolidated basis beginning on July 17, 2006 and
      cover
      the period ending on December 31, 2006, which is a different period end date
      than the Company’s fiscal year-end, since the subsidiaries prepare annual
      financial statements following Mexican law requiring a December 31
      year-end.





**ii)**
            **Cash
                and cash equivalents**





The
      Company considers all highly liquid instruments with maturities of three months
      or less on the date of purchase to be cash equivalents.




56
 Table
          of Contents


**AVINO
              SILVER & GOLD MINES LTD.**
 Notes
              to
              Consolidated Financial Statements
 January
              31, 2007, 2006 and 2005
 (Expressed
                in Canadian Dollars)


**NOTE
      2 - SIGNIFICANT ACCOUNTING POLICIES (continued)**





**iii)**
            **Property,
                plant and equipment**





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





Office
                equipment, furniture and fixtures
            20%Computer
                equipment
            30%Mine
                mill, machinery and plant
            12%Mine
                facilities and equipment
            6%
                to 10%





The
      mine
      mill, machinery and plant were acquired on July 17, 2006 (see Note 3) and are
      not in active use, as the Company is in the process of evaluating the
      re-activation of the mine. Accordingly, the mine mill, machinery and plant
      are
      considered to be under reconstruction and no amortization is recorded on these
      assets during the 2007 year-end.





**iv)**
            **Mineral
                properties**





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 cash consideration
      and
      the fair market value of common shares issued for mineral property interests
      based on the trading price of the shares. These costs will be amortized over
      the
      estimated life of the property following commencement of commercial production,
      or written off if the property is sold, allowed to lapse or
      abandoned.





Once
      commercial production has commenced, the net costs of the applicable property
      will be charged to operations using the unit-of-production method based on
      estimated reserves. On an ongoing basis, the Company evaluates each property
      based on results to date to determine the nature of exploration work that is
      warranted in the future.





Impairment
      may occur in the carrying value of mineral properties 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 or exploration
                work.





Once
      impairment has been determined then a portion of the carrying value will be
      written-down to net realizable value. Amounts shown for mineral properties
      reflect costs incurred to date, less write-downs, and are not intended to
      reflect present or future values.





**v)**
            **Investments**





Investments
      in the shares of companies over which Avino has the ability to exercise
      significant influence, but not control, are accounted for using equity method.
      Accordingly, the Company includes its share of the investee’s net income or loss
      for the year in operations. The investment is initially recorded at cost and
      increased or decreased for the Company’s share of income or loss respectively.
      In those instances where the Company’s share in the investee’s cumulative net
      losses exceeds the carrying amount of the Company’s investment, the Company
      records its share of the investee’s losses as a liability only if it has
      determined that it has ongoing obligations or commitments towards the investee.
      In those circumstances where the Company has no ongoing obligations or
      commitments to support the investee, the Company records cumulative losses
      only
      to the extent of the carrying amount of the investment.





57
 Table
          of Contents


**AVINO
            SILVER & GOLD MINES LTD.** Notes
              to
              Consolidated Financial Statements
 January
              31, 2007, 2006 and 2005
 (Expressed
                in Canadian Dollars)




**NOTE
      2 - SIGNIFICANT ACCOUNTING POLICIES (continued)**





**v)            
      Investments (continued)**





Investments
      in the shares of companies over which Avino does not have control or exercises
      significant influence are accounted for at cost. These investments are written
      down when there is a decline in value that is considered other than
      temporary.





**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)**
            **Financial
                instruments**





(a)
            Fair
                values





The
      carrying values of cash and cash equivalents, amounts receivable, accounts
      payable, and amounts due from (to) related companies and related parties
      approximate their fair values due to the immediate or short-term maturity of
      these financial instruments.





(b)
            Interest
                rate risk





In
      management’s opinion, the Company is not exposed to significant interest rate
      risks.





(c)
            Foreign
                exchange currency 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 $96,471
      (MXN$903,287), amounts receivable denominated in pesos totalling $2,197
      (MXN$20,571), taxes recoverable denominated in pesos totalling $89,258
      (MXN$835,748), accounts payable denominated in pesos totalling $1,148,505
      (MXN$10,753,787).





(d)
            Credit
                risk





The
      Company's cash and equivalents are primarily held in accounts with Canadian
      financial institutions, and as at January 31, 2007 cash and cash equivalents
      substantially exceeds the amounts covered under federal deposit
      insurance.





**viii)**
            **Use
                of estimates**





The
      preparation of financial statements in conformity with Canadian generally
      accepted accounting principles 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
      recoverability or valuation of amounts receivable, property, plant, equipment,
      and mineral properties, the valuation of asset retirement obligations, useful
      lives for amortization, recognition of future income tax assets and liabilities,
      and stock-based compensation. Actual results could differ from those
      estimates.





58
 Table
          of Contents


**AVINO
            SILVER & GOLD MINES LTD.** Notes
              to
              Consolidated Financial Statements
 January
              31, 2007, 2006 and 2005
 (Expressed
                in Canadian Dollars)


**NOTE
      2 - SIGNIFICANT ACCOUNTING POLICIES (continued)**





**ix)**
            **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 of 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 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.





**x)**
            **Stock-based
                compensation**





The
      Company follows CICA Handbook Section 3870 *Stock Based Compensation and
      Other Stock-Based Payments*. Accordingly 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.





**xi)**
            **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 January 31, 2007, 2006 and 2005, 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.





59
 Table
          of Contents


**AVINO
              SILVER & GOLD MINES LTD.**
 Notes
              to
              Consolidated Financial Statements
 January
              31, 2007, 2006 and 2005
 (Expressed
                in Canadian Dollars)


**NOTE
      2 - SIGNIFICANT ACCOUNTING POLICIES (continued)**





**xii)**
            **Site
                restoration obligations**





The
      Company recognizes the fair value of its liability for asset retirement
      obligations, including site restoration costs in the year in which such
      liabilities are incurred and can be estimated. Upon recognition of an asset
      retirement obligation, the site restoration costs are capitalized as a part
      of
      the mineral property. In periods subsequent to initial measurement, the asset
      retirement obligation 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 to be $nil as at January 31, 2007
      (2006 - $nil) as significant disturbance of sites giving rise to restoration
      obligations had not yet occurred.





**xiii)**
            **Long-lived
                assets**





The
      recoverability of long-lived assets, which includes property, plant, equipment,
      and mineral properties is 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.





**NOTE
      3 - ACQUISITION OF COMPANIA MINERA MEXICANA DE AVINO, S.A. DE
      C.V.**





On
      July
      17, 2006 the Company acquired control of Compania Minera Mexicana de Avino,
      S.A.
      de C.V. (“Cia Minera”) 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 through the acquisition
      of
      76.88% of the common shares of Promotora Avino S.A. De C.V. (“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
      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 5).





The
      July
      17, 2006 acquisition was accomplished by a share exchange by which the Company
      issued 3,164,702 shares as consideration for the purchase of the additional
      39.25% interest in Cia Minera. The shares issued as consideration were valued
      based on the July 17, 2006 closing market price per share of $2.28. The
      acquisition was accounted for using the purchase method and these consolidated
      financial statements include the assets, liabilities and operations of these
      subsidiaries beginning on July 17, 2006, the date of acquisition of control.
      The
      acquisition of the 39.25% interest described above does not include a 1%
      interest acquired from an estate subject to approval and transfer of the shares
      to the Company by the trustee for that estate.





The
      cost
      of the acquisition of Cia Minera was comprised as follows:





Issuance
                of 3,164,702 shares issued as consideration
            
            $
            7,215,521Direct
                acquisition costs
            
            
            24,705Cash
                advances to Cia Minera prior to July 17, 2006
            
            
            297,485Assumption
                of equity based commitment made prior to July 17, 2006
            
            
            (376,177
            )$
            7,161,534




60
 Table
          of Contents


**AVINO
              SILVER & GOLD MINES LTD.**
 Notes
              to
              Consolidated Financial Statements
 January
              31, 2007, 2006 and 2005
 (Expressed
                in Canadian Dollars)


**NOTE
      3 - ACQUISITION OF COMPANIA MINERA MEXICANA DE AVINO, S.A. DE C.V.
      (continued)**





The
      cost
      of Cia Minera was allocated to the estimated fair values of the assets acquired
      and liabilities assumed as at July 17, 2006 as follows:





Cash
            
            $
            21,154Taxes
                and other amounts recoverable
            
            
            27,977Mine
                mill and processing plant
            
            
            934,654Mine
                facilities, machinery and equipment
            
            
            62,310Mineral
                properties
            
            
            9,525,575Accounts
                payable and accrued liabilities
            
            
            (864,816
            )Future
                income tax liability
            
            
            (2,335,999
            )Taxes
                payable
            
            
            (209,321
            )$
            7,161,534





Prior
      to
      the July 17, 2006 acquisition of the additional 39.25% in Cia Minera, the
      Company accounted for its original 49% interest using the equity
      method.





**NOTE
      4 - PROPERTY, PLANT AND EQUIPMENT**





Cost
            
            
            Accumulated
                Amortization
            
            
            **2007**
              Net
                Book Value
            
            
            **2006**
              Net
                Book ValueOffice
                equipment, furniture and fixtures
            
            $
            5,512
            
            
            $
            3,684
            
            
            $
            1,828
            
            
            $
            2,611Computer
                equipment
            
            
            19,015
            
            
            
            684
            
            
            
            18,331
            
            
            
            –Mine
                mill, machinery and processing plant
            
            
            934,654
            
            
            
            –
            
            
            
            934,654
            
            
            
            –Mine
                facilities and equipment
            
            
            62,310
            
            
            
            1,895
            
            
            
            60,415
            
            
            
            –$
            1,021,491
            
            
            $
            6,263
            
            
            $
            1,015,228
            
            
            $
            2,611





**NOTE
      5 - MINERAL PROPERTIES**





Durango
                Mexico
            
            
            British
                Columbia Canada
            
            
            Yukon
                Canada
            
            
            Total**2007**Carrying
                amounts, beginning of year
            
            $
            –
            
            
            $
            486,900
            
            
            $
            1
            
            
            $
            486,900Acquisition
                costs
            
            
            9,525,575
            
            
            
            –
            
            
            
            –
            
            
            
            9,525,575Exploration
                costs incurred during year:Assays
            
            
            –
            
            
            
            2,001
            
            
            
            –
            
            
            
            2,001Assessment
                and taxes
            
            
            –
            
            
            
            2,410
            
            
            
            –
            
            
            
            2,410Drilling
            
            
            609,518
            
            
            
            14,837
            
            
            
            –
            
            
            
            624,355Field
                supplies and services
            
            
            –
            
            
            
            11,242
            
            
            
            –
            
            
            
            11,242Geological
            
            
            90,712
            
            
            
            21,260
            
            
            
            –
            
            
            
            111,972Mineral
                properties, end of year
            
            $
            10,225,805
            
            
            $
            538,650
            
            
            $
            1
            
            
            $
            10,764,455




61
 Table
          of Contents


**AVINO
              SILVER & GOLD MINES LTD.**
 Notes
              to
              Consolidated Financial Statements
 January
              31, 2007, 2006 and 2005
 (Expressed
                in Canadian Dollars)


**NOTE
      5 - MINERAL PROPERTIES (continued)**





Durango
                Mexico
            
            
            British
                Columbia Canada
            
            
            Yukon
                Canada
            
            
            Total**2006**Carrying
                amounts, beginning of year
            
            $
            –
            
            
            $
            212,258
            
            
            $
            103,243
            
            
            $
            315,501Exploration
                costs incurred during year:Assays
            
            
            –
            
            
            
            11,158
            
            
            
            –
            
            
            
            11,158Assessment
                and taxes
            
            
            –
            
            
            
            2,965
            
            
            
            –
            
            
            
            2,965Drilling
            
            
            –
            
            
            
            193,396
            
            
            
            –
            
            
            
            193,396Field
                supplies and services
            
            
            –
            
            
            
            25,835
            
            
            
            –
            
            
            
            25,835Geological
            
            
            –
            
            
            
            35,560
            
            
            
            –
            
            
            
            35,559Surface
                work
            
            
            –
            
            
            
            5,727
            
            
            
            –
            
            
            
            5,728Less:
                write-down
            
            
            –
            
            
            
            –
            
            
            
            (103,242
            )
            
            
            (103,242
            )Mineral
                properties, end of year
            
            $
            –
            
            
            $
            486,899
            
            
            $
            1
            
            
            $
            486,900





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





(a)
            Durango,
                Mexico





The
      Company acquired the Durango mineral properties through the acquisition of
      Cia
      Minera during the 2007 year-end (see Note 3). The Company’s subsidiary Cia
      Minera owns 43 mineral claims in the state of Durango, Mexico.





In
      addition four core 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 is valid until October 31,
      2010. An ongoing dispute regarding royalties on the leased mineral claims exists
      (see Note 18).





The
      Company’s mineral claims in Mexico are divided into the following three
      properties:





(i)
            Avino
                mine area property





The
      Avino
      mine property is situated around the towns of Panucho de Coronado and San Jose
      de Avino and surrounding the formerly producing Avino mine. There are five
      exploration concessions covering 163.4 hectares, 24 exploitation concessions
      covering 1,284.7 hectares and one leased exploitation concession covering 98.83
      hectares. Under a royalty agreement covering three additional 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 the process costs
      at
      the mine.





(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.





62
 Table
          of Contents


**AVINO
              SILVER & GOLD MINES LTD.**
 Notes
              to
              Consolidated Financial Statements
 January
              31, 2007, 2006 and 2005
 (Expressed
                in Canadian Dollars)


**NOTE
      5 - MINERAL PROPERTIES (continued)**





(b)
            British
                Columbia, Canada





The
      Company’s mineral claims in British Columbia are divided into the following
      three properties:





(i)
            Aumax
                property





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 2007 year end these mineral
      claims were converted into one claim encompassing all of the original
      claims.





(ii)
            Minto
                property





The
      Company has a 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 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.
      Avino recommenced exploration of the property in fiscal 2006 and costs incurred
      since then have been deferred.





(iii)
            Olympic-Kelvin
                property





The
      Company has 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 2007 year end these original mineral claims and factions were
      converted into six claims encompassing all of the original claims. The Company
      recommenced exploration of the property in fiscal 2004 and costs incurred since
      then have been deferred.





(c)
            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 by a charge to operations of
      $103,242.





**NOTE
      6 - INVESTMENTS IN RELATED COMPANIES**





Investments
      carried at cost are comprised as follows:





**2007**
            
            
            **2006**Bralorne
                Gold Mines Ltd.
            
            $
            205,848
            
            
            $
            205,848Levon
                Resources Ltd.
            
            
            4,236
            
            
            
            4,236Oniva
                International Services Corporation
            
            
            1
            
            
            
            1$
            210,085
            
            
            $
            210,085





Bralorne
      Gold Mines Ltd. (“Bralorne”)





The
      Company’s investment in Bralorne consists of 179,149 common shares with a quoted
      market value of $206,021 as at January 31, 2007 (2006 - $324,259). Bralorne
      is a
      public company with common directors.





63
 Table
          of Contents


**AVINO
              SILVER & GOLD MINES LTD.**
 Notes
              to
              Consolidated Financial Statements
 January
              31, 2007, 2006 and 2005
 (Expressed
                in Canadian Dollars)


**NOTE
      6 - INVESTMENTS IN RELATED COMPANIES (continued)**





Levon
      Resources Ltd. (“Levon”)





The
      Company’s investment in Levon consists of 141,200 common shares with a quoted
      market value of $21,180 as at January 31, 2007 (2006 - $7,766). Levon is a
      public company with common directors.





Oniva
      International Services Corporation (“Oniva”)





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 common directors and management. See Note 19 for disclosure on the
      Company’s commitment to Oniva.





**NOTE
      7 - NON-CONTROLLING INTEREST**





The
      Company has an 88.25% interest in its subsidiary Cia Minera, and the remaining
      11.75% portion is presented as a non-controlling interest. The non-controlling
      interest has been recorded as a net obligation to the Company by Cia Minera,
      net
      of a valuation allowance, as the owners of the 11.75% minority interest in
      Cia
      Minera do not have a demonstrated commitment towards funding Cia Minera’s net
      losses. Accordingly, the non-controlling portion of Cia Minera operating losses
      are not recognized as an asset in these financial statements.





The
      carrying amount of the non-controlling interest is as follows:





Non-controlling
                interest portion in Cia Minera’s net obligation to the Company on
                July 17, 2006, the date of acquisition
            
            $
            111,874Non-controlling
                interest in Cia Minera’s net loss since acquisition
            
            
            20,437Loss
                valuation allowance
            
            
            (132,311
            )Non-controlling
                interest - net carrying amount
            
            $
            –





**NOTE
      8 - COMMITMENT AND SITE ASSESSMENT COSTS RELATED TO CIA
      MINERA**





The
      Company incurred the following site assessment costs in contemplation of its
      additional 39.25% acquisition of Cia Minera:





**2007**
            
            
            **2006**
            
            
            **2005**Geological
                assessment
            
            $
            –
            
            
            $
            133,915
            
            
            $
            128,419Professional
                fees
            
            
            –
            
            
            
            26,054
            
            
            
            22,964Site
                overhead and maintenance
            
            
            –
            
            
            
            195,952
            
            
            
            240,516$
            –
            
            
            $
            355,921
            
            
            $
            391,899





Prior
      to
      fiscal 2006, the Company had determined that it did not have a commitment or
      obligation to Cia Minera and accordingly did not record its equity interest
      in
      the losses of Cia Minera. During fiscal 2006 the Company determined that it
      had
      a commitment to Cia Minera. Accordingly, it began to recognize in operations
      its
      equity interest in the losses of Cia Minera. In fiscal 2006, Avino recognized
      into operations its interest in previously unrecorded equity losses of Cia
      Minera in the amount $342,596. During fiscal 2007 the company recorded a further
      $33,581 of equity losses in Cia Minera, resulting in a total of $376,177 in
      equity based losses in Cia Minera prior to the acquisition of control on July
      17, 2006 (see Note 3).





64
 Table
          of Contents


**AVINO
            SILVER & GOLD MINES LTD.** Notes
              to
              Consolidated Financial Statements
 January
              31, 2007, 2006 and 2005
 (Expressed
                in Canadian Dollars)


**NOTE
      9 - SHARE CAPITAL**





(a)
            Authorized:   Unlimited
                common shares without par value





Issued:





**2007**
            
            
            **2006**Shares
            
            
            Amount
            
            
            Shares
            
            
            AmountBalance,
                beginning of year
            
            
            11,962,075
            
            
            $
            19,264,265
            
            
            
            10,521,775
            
            
            $
            17,030,084Shares
                issued for cash:Private
                placement
            
            
            5,000,000
            
            
            
            10,000,000
            
            
            
            –
            
            
            
            –Less
                value of warrants on private placement transferred to contributed
                surplus
            
            
            –
            
            
            
            (3,578,383
            )
            
            
            –
            
            
            
            –Exercise
                of stock options
            
            
            456,700
            
            
            
            585,866
            
            
            
            249,500
            
            
            
            261,175Exercise
                of warrants
            
            
            1,250
            
            
            
            3,125
            
            
            
            1,190,800
            
            
            
            1,544,384Shares
                issued for Cia Minera acquisition (Note 3)
            
            
            3,164,702
            
            
            
            7,215,521
            
            
            
            –
            
            
            
            –Transferred
                from contributed surplus on exercise of stock options
            
            
            –
            
            
            
            443,831
            
            
            
            –
            
            
            
            448,372Exercise
                of warrants
            
            
            –
            
            
            
            1,575
            
            
            
            –
            
            
            
            –Future
                income tax liability on issuance of flow-through shares (Note
                13)
            
            
            –
            
            
            
            –
            
            
            
            –
            
            
            
            (19,750
            )Share
                issuance costs
            
            
            –
            
            
            
            (823,728
            )
            
            
            –
            
            
            
            –8,622,652
            
            
            
            13,847,807
            
            
            
            1,440,300
            
            
            
            2,234,181Balance,
                end of year
            
            
            20,584,727
            
            
            $
            33,112,072
            
            
            
            11,962,075
            
            
            $
            19,264,265





**Private
      placement**





During
      the year ended January 31, 2007, the Company completed a private placement
      of
      5,000,000 units at a price of $2.00 per unit, each unit consisted of one common
      share and one-half of a non-transferable share purchase warrant. Each whole
      warrant entitles the holder to purchase one additional share at a price of
      $2.50
      until March 20, 2008. The gross proceeds from the private placement was
      $10,000,000 and share issuance costs were $823,728 consisting of finders’ fees
      of $778,795 paid in cash and $44,933 in other costs. Consideration of $3,578,383
      was allocated to contributed surplus for the warrants issued under the
      placement.





(b)
            Warrants





Underlying
                Shares
            
            
            Weighted
                Average
              Exercise
                PriceWarrants
                outstanding, January 31, 2005
            
            
            2,433,250
            
            
            $
            1.44Exercised
            
            
            (1,190,800
            )
            
            $
            1.30Expired
            
            
            (1,242,450
            )
            
            $
            1.58Warrants
                outstanding, January 31, 2006
            
            
            –
            
            
            
            –Issued
            
            
            2,500,000
            
            
            $
            2.50Exercised
            
            
            (1,250
            )
            
            $
            2.50Warrants
                outstanding, January 31, 2007
            
            
            2,498,750
            
            
            $
            2.50





65
 Table
          of Contents


**AVINO
              SILVER & GOLD MINES LTD.**
 Notes
              to
              Consolidated Financial Statements
 January
              31, 2007, 2006 and 2005
 (Expressed
                in Canadian Dollars)


**NOTE
      9 - SHARE CAPITAL (continued)**





(b)           Warrants
      (continued)




Details
      of share purchase warrants outstanding:





Expiry
                Date
            
            Exercise
                Price
            
            
            **2007**
              Warrants
                Outstanding
            
            
            **2006**
              Warrants
                OutstandingMarch
                20, 2008
            
            $
            2.50
            
            
            
            2,498,750
            
            
            
            –





(c)
            Stock
                options





Underlying
                Shares
            
            
            Weighted
                Average Exercised PriceStock
                options outstanding, January 31, 2005
            
            
            450,000
            
            
            $
            1.01Granted
            
            
            642,500
            
            
            $
            1.35Exercised
            
            
            (249,500
            )
            
            $
            1.05Expired
                or cancelled
            
            
            (30,000
            )
            
            $
            1.20Stock
                options outstanding, January 31, 2006
            
            
            813,000
            
            
            $
            1.31Granted
            
            
            1,120,000
            
            
            $
            3.85Exercised
            
            
            (456,700
            )
            
            $
            1.28Stock
                options outstanding, January 31, 2007
            
            
            1,476,300
            
            
            $
            3.25




Details
      of stock options outstanding:




Expiry
                Date
            
            Exercise
                Price
            
            
            **2007**
              Stock
                Options Outstanding
            
            
            **2006**
              Stock
                Options OutstandingOctober
                21, 2008
            
            $
            1.20
            
            
            
            41,800
            
            
            
            233,000April
                5, 2010
            
            $
            1.35
            
            
            
            262,000
            
            
            
            510,000September
                26, 2010
            
            $
            1.35
            
            
            
            52,500
            
            
            
            70,000March
                15, 2011
            
            $
            2.72
            
            
            
            120,000
            
            
            
            –April
                26, 2011
            
            $
            3.99
            
            
            
            1,000,000
            
            
            
            –1,476,300
            
            
            
            813,000





As
      at
      January 31, 2007 1,443,800 stock options were exercisable and as at January
      31,
      2006 798,000 stock options were exercisable.





The
      Company amended its stock option plan in fiscal 2007, 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.





66
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          of Contents


**AVINO
              SILVER & GOLD MINES LTD.**
 Notes
              to
              Consolidated Financial Statements
 January
              31, 2007, 2006 and 2005
 (Expressed
                in Canadian Dollars)


**NOTE
      9 - SHARE CAPITAL (continued)**





(d)
            Flow-through
                common shares





The
      Company issues flow-through common shares to finance part of its exploration
      expenditures. The income tax deductions related to the exploration expenditures
      renounced may be claimed only by the investors of the flow-through common
      shares.





As
      at
      January 31, 2007, the Company has a commitment to incur a further $29,650 in
      qualifying Canadian exploration expenditures, as defined in the Canadian Income
      Tax Act, pursuant to which the Company must incur and renounce these qualifying
      expenditures to the flow-through shareholders.





(e)
            Flow-through
                warrants





Included
      in the warrants described in Note 9(c) are the following flow-through share
      purchase warrants as follows:





Underlying
                Shares
            
            
            Weighted
                Average Exercise PriceFlow-through
                warrants outstanding, January 31, 2005
            
            
            170,000
            
            
            $
            0.52Exercised
            
            
            (170,000
            )
            
            $
            0.52Flow-through
                warrants outstanding, January 31, 2006 and 2007
            
            
            –
            
            
            
            –





**NOTE
      10 – CONTRIBUTED SURPLUS**





**2007**
            
            
            **2006**Balance,
                beginning of year
            
            $
            1,070,699
            
            
            $
            689,965Value
                of stock options granted during the year (Note 12)
            
            
            2,860,603
            
            
            
            725,125Value
                of stock options issued for services (Note 11)
            
            
            195,600
            
            
            
            103,981Value
                of warrants on private placement (Note 9(a))
            
            
            3,578,383
            
            
            
            –Value
                of stock options exercised
            
            
            (443,831
            )
            
            
            (448,372
            )Value
                of warrants exercised
            
            
            (1,575
            )
            
            
            –Balance,
                end of year
            
            $
            7,259,879
            
            
            $
            1,070,699








67
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          of Contents


**AVINO
              SILVER & GOLD MINES LTD.**
 Notes
              to
              Consolidated Financial Statements
 January
              31, 2007, 2006 and 2005
 (Expressed
                in Canadian Dollars)


**NOTE
      11 – SHAREHOLDER AND INVESTOR RELATIONS EXPENSES**





The
      fair
      values of stock options granted to investor relations consultants are included
      in shareholder and investor relations expenses. The fair values of the stock
      options is calculated using the Black-Scholes option pricing model and is
      measured and expensed over the 12 month period over which services are provided
      and the options vest.  During fiscal 2007 investor relations
      consultants were granted 130,000 stock options ((2006 – 95,000) (2005 – nil))
      which are included in the stock options described in Note 9(c), and these
      options are exercisable at a price of $2.72 (2006 - $1.35) per share. The
      shareholder and investor relations expense for fiscal 2007 includes $195,600
      ((2006 - $103,981) (2005 - $nil)) for the fair value of stock options granted
      to
      investor relations consultants. The fiscal 2007 weighted average fair value
      of
      these options on date of grant was $1.74 (2006 - $1.33). The fair value of
      these
      options were calculated using the Black-Scholes model with following weighted
      average assumptions:





**2007**
            
            
            **2006**
            
            
            **2005**Assumptions:Risk-free
                interest rate (%)
            
            
            4.1
            
            
            
            3.4
            
            
            
            –Expected
                dividend yield (%)
            
            
            –
            
            
            
            –
            
            
            
            –Expected
                option life (years)
            
            
            4.7
            
            
            
            3
            
            
            
            –Expected
                stock price volatility (%)
            
            
            90
            
            
            
            180
            
            
            
            –





**NOTE
      12 – STOCK-BASED COMPENSATION**





In
      fiscal
      2007 the Company granted 990,000 (2006 – 547,500) options having a life of five
      years and exercisable at a price of $3.99 per share to directors, officers,
      and
      employees of the Company. In fiscal 2007 the Company recognized $2,860,603
      (2006
      - $725,125) in stock-based compensation representing the fair value of these
      stock options. In the fiscal 2005 year the $81,540 in stock-based compensation
      expense was recorded for the vesting of stock options granted in fiscal 2004.
      The fiscal 2007 weighted average fair value of the options on the date of grant
      was $2.89 ((2006 - $1.33) (2005 - $nil)). The fiscal 2007 fair value of these
      options were calculated using the Black-Scholes model with following weighted
      average assumptions:





**2007**
            
            
            **2006**
            
            
            **2005**Assumptions:Risk-free
                interest rate (%)
            
            
            4.4
            
            
            
            3.4
            
            
            
            3.0Expected
                dividend yield (%)
            
            
            –
            
            
            
            –
            
            
            
            –Expected
                option life (years)
            
            
            5
            
            
            
            3
            
            
            
            5Expected
                stock price volatility (%)
            
            
            91
            
            
            
            180
            
            
            
            52





68
 Table
          of Contents


**AVINO
              SILVER & GOLD MINES LTD.**
 Notes
              to
              Consolidated Financial Statements
 January
              31, 2007, 2006 and 2005
 (Expressed
                in Canadian Dollars)


**NOTE
      13 - INCOME TAXES**





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





**2007**
            
            
            **2006**
            
            
            **2005**Statutory
                rate
            
            
            34.12
            %
            
            
            34.5
            %
            
            
            36
            %Income
                taxes recovered at the Canadian statutory rate
            
            $
            1,244,882
            
            
            $
            817,555
            
            
            $
            293,000Less
                permanent differences:Stock-based
                compensation
            
            
            (976,038
            )
            
            
            (250,169
            )
            
            
            (29,400
            )Investor
                relations expense for stock options granted
            
            
            (66,739
            )
            
            
            (35,873
            )
            
            
            –Reduction
                for effect of lower Mexican tax rates
            
            
            (10,644
            )
            
            
            –
            
            
            
            –Equity
                based accounting loss for interest in Cia Minera Mexicana de Avino,
                S.A.
                de C.V.
            
            
            (11,458
            )
            
            
            (118,200
            )
            
            
            –Other
                non-tax deductible expenses
            
            
            (3,373
            )
            
            
            –
            
            
            
            –Effect
                of temporary differences:Share
                issuance costs
            
            
            71,239
            
            
            
            –
            
            
            
            –Write-down
                of investment
            
            
            –
            
            
            
            (74,900
            )
            
            
            –Write-down
                of mineral property
            
            
            –
            
            
            
            (35,600
            )
            
            
            –Geological
                exploration expenditures
            
            
            –
            
            
            
            (45,000
            )
            
            
            –Benefit
                of tax losses not recognized in year – valuation allowance
            
            
            (247,869
            )
            
            
            (257,813
            )
            
            
            (263,600
            )Benefit
                of future income tax asset recognized on renouncement  Canadian
                exploration expenditures to flow-through share investors
            
            
            –
            
            
            
            19,750
            
            
            
            41,200Future
                income tax recovery recognized in the year
            
            $
            –
            
            
            $
            19,750
            
            
            $
            41,200





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





**2007**
            
            
            **2006**Statutory
                rate
            
            
            34.12
            %
            
            
            34.5
            %Non-capital
                tax losses carried forward
            
            $
            1,392,852
            
            
            $
            1,244,000Capital
                tax losses carried forward
            
            
            251,159
            
            
            
            254,000Canadian
                exploration expenses, Canadian development expenses and foreign
                exploration, and development expenses in excess of book value of
                Canadian
                mineral properties
            
            
            557,738
            
            
            
            508,000Share
                issuance costs
            
            
            239,873
            
            
            
            30,000Tax
                basis of investments in related companies in excess of book
                value
            
            
            37,020
            
            
            
            37,433Undeducted
                capital cost allowance in excess of book value of Canadian
                equipment
            
            
            70,862
            
            
            
            69,700Future
                tax assets
            
            
            2,549,504
            
            
            
            2,143,133Less:
                valuation allowance
            
            
            (2,549,504
            )
            
            
            (2,143,133
            )Net
                tax assets
            
            $
            –
            
            
            $
            –





69
 Table
          of Contents


**AVINO
              SILVER & GOLD MINES LTD.**
 Notes
              to
              Consolidated Financial Statements
 January
              31, 2007, 2006 and 2005
 (Expressed
                in Canadian Dollars)


**NOTE
      13 - INCOME TAXES (continued)**





The
      potential benefit of net operating tax loss carry-forwards and other 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
      Company has capital losses of $1,472,210 carried forward and $4,049,022 in
      non-capital tax losses carried forward available to reduce future taxable
      income. The capital losses can be carried forward indefinitely unless used.
      The
      non-capital tax losses if unused expire as follows:





2008
            
            $
            351,1142009
            
            
            253,3362010
            
            
            245,3812011
            
            
            904,2792012
            
            
            343,6902016
            
            
            568,4502027
            
            
            799,0442028
            
            
            583,728$
            4,049,022





In
      addition, the $2,335,999 future income tax liability presented in these
      financial statements is due to the difference between the carrying amount and
      tax basis upon acquisition of the mineral properties, mine plant and equipment
      in the purchase of Cia Minera (see Note 3).





**NOTE
      14 - RELATED PARTY TRANSACTIONS AND BALANCES**





The
      balances and transactions with related parties are as follows:





(a)
            Advances
                to related parties:





**2007**
            
            
            **2006**ABC
                Drilling Services Inc. – a subsidiary of Oniva
            
            $
            64,933
            
            
            $
            83,000Oniva
                International Services Corp. – a company controlled by a director of
                Avino
            
            
            837
            
            
            
            –Advances
                to related parties
            
            $
            65,770
            
            
            $
            83,000





The
      advance to ABC Drilling Services Inc. is intended as an exploration advance
      for
      future drilling services.





(b)
            Amounts
                due to related parties:





**2007**
            
            
            **2006**Directors
            
            $
            7,500
            
            
            $
            -Frobisher
                Securities Ltd. – a company controlled by a director of
                Avino
            
            
            105
            
            
            
            16,710Bralorne
                Gold Mines Ltd. – a company with directors and management in common with
                Avino
            
            
            –
            
            
            
            3,145Oniva
                International Services Corp. – a company controlled by a director of
                Avino
            
            
            133,919
            
            
            
            161,563$
            141,524
            
            
            $
            181,418





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





70
 Table
          of Contents


**AVINO
              SILVER & GOLD MINES LTD.**
 Notes
              to
              Consolidated Financial Statements
 January
              31, 2007, 2006 and 2005
 (Expressed
                in Canadian Dollars)


**NOTE
      14 - RELATED PARTY TRANSACTIONS AND BALANCES (continued)**





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





**2007**
            
            
            **2006**
            
            
            **2005**Salaries
                and benefits
            
            $
            59,523
            
            
            $
            73,529
            
            
            $
            59,884Office
                and miscellaneous
            
            
            60,334
            
            
            
            89,799
            
            
            
            64,262$
            119,857
            
            
            $
            163,328
            
            
            $
            124,146





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





**2007**
            
            
            **2006**
            
            
            **2005**Intermark
                Capital Corp. – a company controlled by a director of
                Avino
            
            $
            87,000
            
            
            $
            60,000
            
            
            $
            60,000Frobisher
                Securities Ltd.
            
            
            –
            
            
            
            2,000
            
            
            
            –Wear
                Wolfin Design Ltd. – a company controlled by a director of a related
                company
            
            
            30,000
            
            
            
            30,000
            
            
            
            12,500$
            117,000
            
            
            $
            92,000
            
            
            $
            72,500





(e)
            The
                Company paid or accrued $53,837 (2006 - $146,092; 2005 - $Nil) to
                ABC
                Drilling Services Inc. for drilling services and $6,854 (2006 - $20,433;
                2005 - $Nil) to Bralorne Gold Mines Ltd. for exploration
                services.





(f)
            The
                Company paid or accrued $84,279 (2006 - $Nil; 2005 - $Nil) for investor
                relations services to National Media Associates, a business significantly
                influenced by a director of the
                Company.





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





**NOTE
      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
      5.





**NOTE
      16 - SUPPLEMENTARY CASH FLOW INFORMATION**





**2007**
            
            
            **2006**
            
            
            **2005**Changes
                in non-cash working capital items:Interest
                receivable
            
            $
            (38,179
            )
            
            $
            –
            
            
            $
            –Taxes
                recoverable
            
            
            (61,665
            )
            
            
            (1,871
            )
            
            
            (13,432
            )Prepaid
                expenses
            
            
            (40,497
            )
            
            
            8,804
            
            
            
            (10,066
            )Advances
                to related companies
            
            
            17,230
            
            
            
            –
            
            
            
            2,884Accounts
                payable and accrued liabilities
            
            
            224,755
            
            
            
            (3,235
            )
            
            
            19,047Due
                to related parties
            
            
            (39,894
            )
            
            
            (95,227
            )
            
            
            16,416Net
                change in non-cash working capital
            
            $
            61,750
            
            
            $
            (91,529
            )
            
            $
            14,849




71
 Table
          of Contents


**AVINO
              SILVER & GOLD MINES LTD.**
 Notes
              to
              Consolidated Financial Statements
 January
              31, 2007, 2006 and 2005
 (Expressed
                in Canadian Dollars)


**NOTE
      17 - COMPARATIVE FIGURES**





Certain
      fiscal 2005 and 2006 comparative figures have been reclassified to conform
      to
      the financial statement presentation adopted for 2007. These reclassifications
      do not affect the net loss or closing deficit of the comparative
      figures.





**NOTE
      18 - CONTINGENT LIABILITY**





The
      Company’s subsidiary Cia Minera leases four core mineral claims in consideration
      for royalties. The lessor is currently contesting the underlying royalty
      agreement, and has filed a legal action claiming royalties are owing from prior
      years in the approximate amount $3,487,223 (denominated in Mexican pesos
      $32,651,905) plus interest. The Company has accrued $738,302 (denominated in
      Mexican pesos $6,912,940) on account of the royalties owing. Cia Minera has
      held
      the position that it has fully provided for the royalty liability in its
      accounts and continues to contest the action in court, however, negotiations
      are
      being held as both parties are working towards an amicable
      settlement.





**NOTE
      19 - COMMITMENTS**





The
      Company entered into a 12 month Investor Relations Agreement with Investor
      Relations Group Inc., formerly called Investors Relations Services Group John
      Mullen & Partners (“IRS”), to provide investor relations services in Europe.
      In consideration for the services rendered, the Company has agreed to pay IRS
      fees of $2,000 per month plus expenses. The agreement with IRS expires on
      October 5, 2007, and the Company’s commitment under the agreement as at January
      31, 2007 totals $16,000.





The
      Company entered into a 12 month agreement with National Media Associates
      ("National Media") to provide financial relations, media relations and public
      market development services. The Company has agreed to pay National Media
      US$6,000 per month, and the contract can be terminated after September 15,
      2006 upon 30 days' notice by the Company. The agreement with National Media
      expires on March 15, 2007, and the Company’s commitment under the agreement
      as at January 31, 2007 totals $10,613 (US$9,000).





The
      Company entered into a cost sharing agreement dated October 1, 1997, and amended
      November 1, 2003 to reimburse Oniva for a variable 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 Note 14.





The
      Company has a contractual minimum drilling commitment for the exploration of
      its
      mineral properties in Durango, Mexico. As at January 31, 2007 the Company is
      committed to drilling services at an estimated cost of $416,022, which is
      denominated in U.S. dollars (US$352,800). Management has determined that the
      Company’s exploration in fiscal 2008 will likely exceed the minimum commitment,
      thus an amount in excess of the minimum drilling cost will likely be paid in
      fiscal 2008.





72
 Table
          of Contents


**AVINO
              SILVER & GOLD MINES LTD.**
 Notes
              to
              Consolidated Financial Statements
 January
              31, 2007, 2006 and 2005
 (Expressed
                in Canadian Dollars)


**NOTE
      20 - DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED
      ACCOUNTING PRINCIPLES**





These
      consolidated financial statements of the Company have been prepared in
      accordance with Canadian generally accepted accounting principles (“Canadian
      GAAP”), which differ in certain material respects from accounting principles
      generally accepted in the United States of America (“U.S. GAAP”). The material
      differences between Canadian and U.S. GAAP and their effect on the Company’s
      financial statements are summarized as follows:





**2007**
            
            
            **2006****Balance
                sheets**Total
                assets under Canadian GAAP
            
            $
            23,295,039
            
            
            $
            3,901,160Deferred
                exploration expenditures (iii)
            
            
            (10,764,455
            )
            
            
            (382,896
            )Investments
                (i)
            
            
            17,116
            
            
            
            121,941Total
                assets under US GAAP
            
            
            12,547,700
            
            
            
            3,640,205Total
                equity under Canadian GAAP
            
            
            19,505,956
            
            
            
            3,314,446Deferred
                exploration expenditures (iii)
            
            
            (10,764,455
            )
            
            
            (382,896
            )Investments
                (i)
            
            
            17,116
            
            
            
            121,941Total
                equity under US GAAP
            
            $
            8,758,617
            
            
            $
            3,053,491





**2007**
            
            
            **2006**
            
            
            **2005****Consolidated
                statements of operations**Loss
                for year under Canadian GAAP
            
            $
            (3,684,539
            )
            
            $
            (2,369,724
            )
            
            $
            (814,710
            )Future
                income tax benefit on renouncement of qualified Canadian exploration
                expenditures (ii)
            
            
            –
            
            
            
            (19,750
            )
            
            
            (41,200
            )Exploration
                expenses (iii)
            
            
            (10,277,556
            )
            
            
            (271,397
            )
            
            
            (91,400
            )Write-down
                of investment (i)
            
            
            –
            
            
            
            217,000
            
            
            
            –Net
                loss for the year under U.S. GAAP (iv)
            
            
            (13,962,095
            )
            
            
            (2,443,871
            )
            
            
            (947,310
            )Comprehensive
                income (loss) items:Unrealized
                gain (loss) on investments (i)
            
            
            17,116
            
            
            
            (146,470
            )
            
            
            (797,365
            )Net
                comprehensive income (loss) items
            
            $
            (13,944,979
            )
            
            $
            (2,590,341
            )
            
            $
            (1,744,675
            )Income
                (loss) per share under U.S. GAAP (iv)
            
            $
            (0.76
            )
            
            $
            (0.22
            )
            
            $
            (0.09
            )





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          of Contents


**AVINO
              SILVER & GOLD MINES LTD.**
 Notes
              to
              Consolidated Financial Statements
 January
              31, 2007, 2006 and 2005
 (Expressed
                in Canadian Dollars)


**NOTE
      20 - DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED
      ACCOUNTING PRINCIPLES (continued)**





**2007**
            
            
            **2006**
            
            
            **2005****Statements
                of cash flows**Cash
                flows used in operating activities under Canadian GAAP
            
            $
            (494,328
            )
            
            $
            (988,079
            )
            
            $
            (758,311
            )Mineral
                properties expenditures (iii)
            
            
            (751,981
            )
            
            
            (273,234
            )
            
            
            (91,400
            )Cash
                flows used in operating activities under US GAAP
            
            
            (1,246,309
            )
            
            
            (1,261,313
            )
            
            
            (849,711
            )Cash
                flows (used in) from investing activities
            
            
            (1,095,902
            )
            
            
            (225,002
            )
            
            
            (226,400
            )Under
                Canadian GAAPMineral
                properties expenditures (iii)
            
            
            751,981
            
            
            
            273,234
            
            
            
            91,400Cash
                flows (used in) from investing activities under US GAAP
            
            $
            (343,921
            )
            
            $
            48,232
            
            
            $
            (135,000
            )





**i)**
            **Investments**





U.S.
      GAAP
      requires investments held for sale to be recorded at market. The periodic
      fluctuation in value is recorded as part of comprehensive income (loss); under
      U.S. GAAP such fluctuations are not recognized into operations until the shares
      are sold. Canadian GAAP requires such investments to be recorded at the lower
      of
      cost and market; long-term investments in marketable securities are written
      down
      to market when impairment is considered other than temporary, in which case
      the
      written-down value becomes the new cost base, and the impairment is charged
      to
      operations.





**ii)**
            **Flow-through
                shares**





Under
      Canadian income tax legislation a company is allowed to issue flow-through
      shares pursuant to which the Company renounces Canadian exploration expenditures
      to the flow-through share investors for an amount equal to the share issuance
      price.





Under
      Canadian GAAP, the Company recognizes a future income tax benefit upon the
      renouncement of these exploration expenditures for the amount of the future
      tax
      value of the expenditures renounced. Under U.S. GAAP, the recognition of this
      future income tax benefit is limited to the extent that the issue price of
      the
      flow-through shares exceeds the fair value of the Company’s shares on the date
      that the flow-through shares are sold.





Under
      Canadian GAAP, unexpended flow-through funds are not classified as restricted.
      Under US GAAP, however, unexpended flow-through funds are considered restricted
      and not part of cash and cash equivalents. As at January 31, 2007 and 2006
      the
      Company had $120,401 of restricted, unexpended flow-through funds (2005 -
      $258,378).





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          of Contents


**AVINO
              SILVER & GOLD MINES LTD.**
 Notes
              to
              Consolidated Financial Statements
 January
              31, 2007, 2006 and 2005
 (Expressed
                in Canadian Dollars)


**NOTE
      20 - DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED
      ACCOUNTING PRINCIPLES (continued)**





**iii)**
            **Mineral
                properties interests**





Canadian
      GAAP allows for the deferral of the costs of acquisition of mineral property
      interests and exploration expenditures subject to periodic assessment for
      impairment.





U.S.
      GAAP
      requires that exploration expenditures be charged to operations in the period
      in
      which they are incurred. Effective April 30, 2004, U.S. GAAP, in accordance
      with
      Emerging Issues Task Force (“EITF”) 04-2, further requires that acquisition
      costs of mineral property interests be recognized as tangible assets. Prior
      to
      the issuance of EITF 04-2, acquisition costs of mineral properties interests
      were charged to operations in the period in which they were incurred. The
      adoption of EITF 04-2 is to be applied retroactively with a restatement of
      prior
      periods. The Company adopted EITF 04-2 as at February 1, 2005, and, accordingly,
      restated its mineral properties interest balance under U.S. GAAP from $nil
      to
      $204,002 as at January 31, 2005, resulting in an increase of $204,002 to total
      assets and total equity.





**iv)**
            **Loss
                per share**





The
      weighted average number of common shares used to calculate the loss per share
      under Canadian GAAP is equal to the weighted average number of common shares
      under U.S. GAAP.





**v)**
            **Recent
                Accounting Pronouncements**





In
      September 2006, the Financial Accounting Standards Board (“FASB”) issued SFAS
      No. 158, “Employers’ Accounting for Defined Benefit Pension and Other
      Postretirement Plans - an amendment of FASB Statements No. 87, 88, 106, and
      132(R)”. This statement requires employers to recognize the overfunded or
      underfunded status of a defined benefit postretirement plan (other than a
      multiemployer plan) as an asset or liability in its statement of financial
      position and to recognize changes in that funded status in the year in which
      the
      changes occur through comprehensive income of a business entity or changes
      in
      unrestricted net assets of a not-for-profit organization. This statement also
      requires an employer to measure the funded status of a plan as of the date
      of
      its year-end statement of financial position, with limited exceptions. The
      provisions of SFAS No. 158 are effective for employers with publicly traded
      equity securities as of the end of the fiscal year ending after December 15,
      2006. The adoption of this statement is not expected to have a material effect
      on the Company's future reported financial position or results of
      operations.





In
      September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”. The
      objective of SFAS No. 157 is to increase consistency and comparability in fair
      value measurements and to expand disclosures about fair value measurements.
      SFAS
      No. 157 defines fair value, establishes a framework for measuring fair value
      in
      generally accepted accounting principles, and expands disclosures about fair
      value measurements. SFAS No. 157 applies under other accounting pronouncements
      that require or permit fair value measurements and does not require any new
      fair
      value measurements. The provisions of SFAS No. 157 are effective for fair value
      measurements made in fiscal years beginning after November 15, 2007. The
      adoption of this statement is not expected to have a material effect on the
      Company's future reported financial position or results of
      operations.





In
      June
      2006, the FASB issued FASB Interpretation No. 48, “Accounting for Uncertainty in
      Income Taxes, an interpretation of FASB Statements No. 109” (“FIN 48”). FIN 48
      clarifies the accounting for uncertainty in income taxes by prescribing a
      two-step method of first evaluating whether a tax position has met a more likely
      than not recognition threshold and second, measuring that tax position to
      determine the amount of benefit to be recognized in the financial statements.
      FIN 48 provides guidance on the presentation of such positions within a
      classified statement of financial position as well as on derecognition, interest
      and penalties, accounting in interim periods, disclosure, and transition. FIN
      48
      is effective for fiscal years beginning after December 15, 2006. The adoption
      of
      this statement is not expected to have a material effect on the Company's future
      reported financial position or results of operations.





75
 Table
          of Contents


**AVINO
              SILVER & GOLD MINES LTD.**
 Notes
              to
              Consolidated Financial Statements
 January
              31, 2007, 2006 and 2005
 (Expressed
                in Canadian Dollars)


**NOTE
      20 - DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED
      ACCOUNTING PRINCIPLES (continued)**





**v)           
      Recent Accounting Pronouncements (continued)**





In
      March
      2006, the FASB issued SFAS No. 156, "Accounting for Servicing of Financial
      Assets, an amendment of FASB Statement No. 140, Accounting for Transfers and
      Servicing of Financial Assets and Extinguishments of Liabilities". This
      statement requires all separately recognized servicing assets and servicing
      liabilities be initially measured at fair value, if practicable, and permits
      for
      subsequent measurement using either fair value measurement with changes in
      fair
      value reflected in earnings or the amortization and impairment requirements
      of
      Statement No. 140. The subsequent measurement of separately recognized servicing
      assets and servicing liabilities at fair value eliminates the necessity for
      entities that manage the risks inherent in servicing assets and servicing
      liabilities with derivatives to qualify for hedge accounting treatment and
      eliminates the characterization of declines in fair value as impairments or
      direct write-downs. SFAS No. 156 is effective for an entity's first fiscal
      year
      beginning after September 15, 2006. The adoption of this statement is not
      expected to have a material effect on the Company's future reported financial
      position or results of operations.





In
      February 2006, the FASB issued SFAS No. 155, "Accounting for Certain Hybrid
      Financial Instruments-an amendment of FASB Statements No. 133 and 140", to
      simplify and make more consistent the accounting for certain financial
      instruments. SFAS No. 155 amends SFAS No. 133, "Accounting for Derivative
      Instruments and Hedging Activities", to permit fair value re-measurement for
      any
      hybrid financial instrument with an embedded derivative that otherwise would
      require bifurcation, provided that the whole instrument is accounted for on
      a
      fair value basis. SFAS No. 155 amends SFAS No. 140, "Accounting for the
      Impairment or Disposal of Long-Lived Assets", to allow a qualifying
      special-purpose entity to hold a derivative financial instrument that pertains
      to a beneficial interest other than another derivative financial instrument.
      SFAS No. 155 applies to all financial instruments acquired or issued after
      the
      beginning of an entity's first fiscal year that begins after September 15,
      2006,
      with earlier application allowed. The adoption of this statement is not expected
      to have a material effect on the Company's future reported financial position
      or
      results of operations.





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**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.





Dated:
      July 30,
      2007                                                                      **AVINO
      SILVER & GOLD MINES LTD.**








By: */s/
      David Wolfin*


David
      Wolfin, President


(Principal
      Executive Officer)








77
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          of Contents








Exhibit
              Number
            Name1.1
            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 Subsidiaries12.1
            Certification
              of the Principal Executive Officer12.2
            Certification
              of the Principal Financial Officer13.1
            Certificate
              under the Sarbanes-Oxley Act13.2
            Consent
              of Expert15.1
            Form
              43 -101F1 Technical Report: Tailings Retreatment – Process
              Options*





___________________________


*  Previously
      filed.