**UNITED
                  STATES**
                **SECURITIES
                  AND EXCHANGE COMMISSION**
                **WASHINGTON,
                  D.C. 20549**
                **__________________**
                
                **FORM
                    20-F/A**
                  **Amendment
                    No. 1**
                **_________________________**
                
                [
                  ]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, 2005
                
                [
                  ]TRANSITION
                  REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE*SECURITIES
                  EXCHANGE ACT OF 1934*
                
                For
                  the Transaction Period from ______________ to
                  ___________________
                
                Commission
                  File Number0-9266
                
                **AVINO
                  SILVER & GOLD MINES LTD.**
                *(Exact
                  name of Registrant 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, no 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, 2005 was
                  10,521,775
                
                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 which financial statement item the Company has elected
                  to
                  follow.
                Item
                  17 [X]Item
                  18 [ ]
                
                (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
  
  **TABLE
        OF CONTENTS**
 
 Introduction
              3Currency
              3Forward-looking
                  Statements
              3Cautionary
                  Note to U.S. Investors Concerning Estimate of Measured and
                Indicated
                  Mineral Resources
              3Glossary
                  of Mining Terms
              4Part
                  I
              6Item
                  1.Identity
                  of Directors, Senior Management and Advisors
              6Item
                  2.Offer
                  Statistics and Expected Timetable
              6Item
                  3.Key
                  Information
              6Item
                  4.Information
                  on the Company
              11Item
                  5.Operating
                  and Financial Review and Prospects
              18Item
                  6.Directors,
                  Senior Management and Employees
              23Item
                  7.Major
                  Shareholders and Related Party Transactions
              27Item
                  8.Financial
                  Information
              28Item
                  9.The
                  Offer and Listing
              28Item
                  10.Additional
                  Information
              30Item
                  11.Quantitative
                  and Qualitative Disclosures About Market Risk
              37Item
                  12.Description
                  of Securities Other than Equity Securities
              37Part
                  II
              37Item
                  13.Defaults,
                  Dividend Arrearages and Delinquencies
              37Item
                  14.Material
                  Modifications to the Rights of Security Holders and Use of
                  Proceeds
              37Item
                  15.Controls
                  and Procedures
              37Item
                  16.[Reserved]
              37Item
                  16A.Audit
                  Committee Financial Expert
              37Item
                  16B.Code
                  of Ethics
              37Item
                  16C.Principal
                  Accountant Fees and Services
              37Item
                  16D.Exemptions
                  from the Listing Standards for Audit Committees
              38Item
                  16E.Purchases
                  of Equity Securities by the Issuer and Affiliated
                  Purchasers
              38Part
                  III
              39Item
                  17.Financial
                  Statements
              39Item
                  18.Financial
                  Statements
              39Item
                  19.Exhibits
              39
 
 
 
 
 
   2
   **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 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
        effected 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.
  This
          Form
          20-F/A is being filed by Avino Silver & Gold Mines Ltd. as Amendment No. 1
          to its annual report on Form 20-F filed on July 22, 2005. The purpose of
          this
          Amendment No. 1 is to include the revised report of our independent registered
          public accounting firm. Except to reflect the changes described above,
          this
          Amendment No. 1 does not, and does not purport to, modify or update the
          disclosure contained in the annual report on Form 20-F.
 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
        Note to U.S. Investors Concerning Estimate of Measured and**
 **Indicated
        Mineral Resources**
 
 We
        advise
        U.S. investors that although the terms "measured resources" and "indicated
        resources" are recognized and required by Canadian regulations, the U.S.
        Securities and Exchange Commission, referred to as the "SEC", does not recognize
        them. U.S. 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
 **GLOSSARY
        OF MINING TERMS**
 
 ***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.
  ***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.
  ***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.
 
 ***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.
  ***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.
  ***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.
 
 ***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.
  4
 ***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***
              Each
                  means a comprehensive study of the viability of a mineral project
                  that
                  has******advanced
 ***preliminary
                  feasibility study***
              to
                  a stage where mining method, in the case of underground mining,
                  or the pit
                  configuration, in the case of open pit mining, has been established,
                  and
                  which, if an effective method of mineral processing has been determined,
                  includes a financial analysis based on reasonable assumptions of
                  technical, engineering, operating and economic factors, and the
                  evaluation
                  of other relevant factors which are sufficient for a qualified
                  person,
                  acting reasonably, to determine if all or part of the mineral resource
                  may
                  be classified as a mineral reserve.
 
 ***probable
                  mineral reserve***
              The
                  economically mineable part of an indicated, and in some circumstances,
                  a
                  measured mineral resource demonstrated by at least a prefeasibility
                  study.
                  This study must include adequate information on mining, processing,
                  metallurgical, economic, and other relevant factors that demonstrate,
                  at
                  the time of reporting, that economic extraction can be justified.
  ***proven
                  mineral reserve*****
              The
                  economically mineable part of a measured mineral resource demonstrated
                  by
                  at least a prefeasibility study. This study must include adequate
                  information on mining, processing, metallurgical, economic, and
                  other
                  relevant factors that demonstrate, at the time of reporting, that
                  economic
                  extraction is justified. The term should be restricted to that
                  part of the
                  deposit where production planning is taking place and for which
                  any
                  variation in the estimate would not significantly affect potential
                  economic viability.
  ***quartz*****
              Silica
                  or SiO2,
                  a
                  common constituent of veins, especially those containing gold and
                  silver
                  mineralization.
  ***ton***
              Imperial
                  measurement of weight equivalent to 2,000 pounds.
  ***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.
 
 5
   **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, 2005, 2004, 2003, 2002 and 2001, 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, 2005,
        2004 and 2003 are included in this Annual Report. The selected historical
        financial information for each year ended January 31, 2002 and 2001, 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 filing are also prepared
        under
        Canadian GAAP. Included within these financial statements in Note 14 is a
        reconciliation between Canadian GAAP and United States generally accepted
        accounting principals, which is referred to as "U.S. GAAP", which differ,
        among
        other things, in respect to the recording of the foreign exchange (gains)
        and
        losses, deferred exploration expenditures and recognition of compensation
        expense upon the issuance of stock options.
  **Canadian
                  GAAP**
                
                **Year
                    Ended January
                    31,****2005**
                
                **2004**
                
                **2003**
                
                **2002**
                
                **2001****Summary
                  of Operations:**Interest
                    and miscellaneous Income
                
                $
                41,999
                
                $
                8,299
                
                $
                197
                
                $
                1,195
                
                $
                643ExpensesGeneral and administrative
                
                
                506,010
                
                
                331,446
                
                
                147,091
                
                
                364,610
                
                
                341,778Write-down
                  of mining Properties
                
                
                -
                
                
                -
                
                
                -
                
                
                1,664,905
                
                
                -Equity
                  in loss of Mexican Affiliate
                
                
                -
                
                
                -
                
                
                -
                
                
                1,259,438
                
                
                770,296Loss
                  in sale of Joint Venture
                
                
                -
                
                
                -
                
                
                40,097
                
                
                -
                
                
                -Wriet-down
                  of investment
                
                
                -
                
                
                -
                
                
                -
                
                
                2,824
                
                
                7,060Due
                  diligence review of Cia MineraMexicana de Avino, S.A. de C.V.
                
                
                391,899
                
                
                122,444
                
                
                -
                
                
                -
                
                
                -Net
                  Income (loss) for year
                
                
                (814,710
                )
                
                (445,591
                )
                
                (186,991
                )
                
                (3,290,582
                )
                
                (1,118,491
                )Income
                  (loss) per share
                
                
                (0.08
                )
                
                (0.06
                )
                
                (0.03
                )
                
                (0.68
                )
                
                (0.24
                )**As
                    at January
                    31,****2005**
                
                
                **2004**
                
                
                **2003**
                
                
                **2002**
                
                
                **2001****Balance****Sheet****Data:**Total
                    assets
                
                
                3,084,430
                
                
                3,522,548
                
                
                814,546
                
                
                2,239,468
                
                
                5,026,775Cash
                  and term deposits
                
                
                2,283,535
                
                
                2,832,457
                
                
                20,104
                
                
                1,317
                
                
                6,267Note
                  ("Debenture") payable
                
                
                -
                
                
                -
                
                
                -
                
                
                1,629,171
                
                
                1,415,960Total
                  liabilities
                
                
                206,173
                
                
                305,170
                
                
                380,070
                
                
                2,032,601
                
                
                1,865,914Shareholders'
                  equity
                
                
                2,878,257
                
                
                3,216,838
                
                
                434,476
                
                
                206,867
                
                
                3,160,861Number
                  of Shares Issued
                
                
                10,521,775
                
                
                9,869,775
                
                
                6,188,525
                
                
                5,463,525
                
                
                4,577,686**United
                  States GAAP:****Year
                    Ended January 31,****2005**
                
                
                **2004**
                
                
                **2003**
                
                
                **2002**
                
                
                **2001****Summary****of****Operations:**Net
                  Income (loss) per Canadian GAAP
                
                $
                (814,710
                )
                $
                (445,591
                )
                $
                (186,991
                )
                $
                (3,290,582
                )
                $
                (1,118,491
                )Adjustments
                
                
                (132,600
                )
                
                (20,100
                )
                
                (204,000
                )
                
                732,290
                
                
                (7,383
                )Net
                  Income (loss) per US GAAP
                
                
                (947,310
                )
                
                (465,691
                )
                
                (390,991
                )
                
                (2,558,292
                )
                
                (1,125,874
                )Income
                  (loss) per share per US GAAP
                
                
                (0.09
                )
                
                (0.07
                )
                
                (0.07
                )
                
                (0.52
                )
                
                (
                    0.25
                )**As
                    at January
                    31,****Balance****Sheet****Data:**
                
                
                **2005**
                
                
                **2004**
                
                
                **2003**
                
                
                **2002**
                
                
                **2001**Total
                  assests under Canadian GAAP
                
                
                3,084,430
                
                
                3,522,548
                
                
                814,546
                
                
                2,239,468
                
                
                5,026,775Adjustments
                
                
                (264,090
                )
                
                624,675
                
                
                101,004
                
                
                (175,901
                )
                
                (1,024,938
                )Total
                  assets under US GAAP
                
                
                2,820,340
                
                
                4,147,223
                
                
                915,550
                
                
                2,063,567
                
                
                4,001,837Total
                  equity under Canadian GAAP
                
                
                2,878,257
                
                
                3,216,838
                
                
                434,476
                
                
                206,867
                
                
                3,160,861Adjustments
                
                
                (264,090
                )
                
                624,675
                
                
                101,004
                
                
                (175,901
                )
                
                (1,024,938
                )Total
                  equity under US GAAP
                
                
                2,614,167
                
                
                3,841,513
                
                
                535,480
                
                
                30,966
                
                
                2,135,923
  6
 **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**2001
              1.4899
              1.4995
              1.5600
              1.44172002
              1.5568
              1.5915
              1.6128
              1.49332003
              1.5655
              1.5286
              1.6112
              1.51082004
              1.3803
              1.3265
              1.5315
              1.26902005
              1.2961
              1.2396
              1.3970
              1.1775
 
 The
        following table sets forth the high and low exchange rate for the past six
        months. As of July 14 ,
        2005,
        the exchange rate was CN$1.2071 for each US$1.
 
 **Month**
              **High**
              **Low**January
                  2005
              1.2422
              1.1982February
                  2005
              1.2562
              1.2294March
                  2005
              1.2463
              1.2017April
                  2005
              1.2568
              1.2146May
                  2005
              1.2703
              1.2373June
                  2005
              1.2578
              1.2256
 
 7
 **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,
        2005, we had a net loss of $814,710 and an accumulated deficit on January
        31,
        2005 of $14,552,931. 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.
 
 8
 *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, labor 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.
        In
        Mexico, the Company currently has a 49% interest in Cia Minera Mexicana de
        Avino, S.A. de C.V. ("Cia Minera"). Although the Company is in the process
        of
        acquiring a 100% interest in Cia Minera, there can be no assurance that this
        acquisition will complete.
 
 *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.
 
 9
 *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.
 
 *Litigation.* Although
        the Company is not currently subject to litigation, it may become involved
        in
        disputes with other parties in the future which may result in litigation.
        Any
        litigation could be costly and time consuming and could divert our management
        from our business operations. In addition, if the Company is unable to resolve
        any litigation 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.
 
 10
 *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 and quoted
        in
        the United States on the pink sheets, 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 2005 fiscal year, the Company's common share price fluctuated between
        a low
        of $1.00 and a high of $2.50. Subsequent to the 2005 fiscal year, the Company's
        common share price has fluctuated between a low of $1.02 and a high of $1.99.
        Significant fluctuations in the Company's common share price is likely to
        continue, and could potentially increase in the future.
 
 *Difficulty
        for U.S. 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 U.S. court predicated solely
        upon
        such civil liabilities would probably be enforceable in Canada by a Canadian
        court if the U.S. 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 U.S. 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. U.S. 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 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 effected
        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.
 
 11
 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 $370,239
        on the
        properties in Canada. These capital expenditures consist of $103,243 which
        was
        spent on the Eagle property, $120,815 on the Aumax property, $91,713 on the
        Olympic-Kelvin property, and $54,468 on the Bralorne property. The Avino
        Mine in
        Mexico is owned by Cia Minera of which the Company owns 49% 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,
        $315,188 has been spent on the care and maintenance of the mine. 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 silver mine in Durango State, Mexico,
        which we refer to as 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.
 
 **Significant
        Acquisitions and Significant Dispositions**
  We
        have
        no 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 2005,
        demand for silver exceeded supply and worldwide demand is expected to increase
        through 2006. 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.
 
 12
 **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.
 
 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 has no subsidiaries.
 
 13
 **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 49% 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. The
        Company is in the process of acquiring the remaining 51% interest in Cia
        Minera,
        although there can be no assurance that this acquisition will complete. See
        Item
        10 "Additional Information - C. Material Contracts".
 
 Location 1
                Location 2
 **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.
  *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 CDN$160,000 has been proposed to carry out further work on the
        Eagle
        property. Our management is presently considering this proposal.
  14
 **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.
  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.
 
 *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. A budget of $85,000 has been proposed to carry
        out
        further work on this property consisting of $60,000 for drilling and $25,000
        for
        trenching. Our management is presently considering the proposal.
 
 **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.
 15
 *History.* Drilling
        began 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.
 
 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. Further trenching
        and
        drilling to evaluate targets to the south are planned for the spring and
        summer
        of 2005.
 
 *Proposed
        Work Program.* A
        trenching and drilling program outlined two very interesting areas that
        management believes warrant more work. Three diamond drill holes, totaling
        480
        metres, are planned to test the Margarita Zone, while one diamond drill hole
        will test the Enigma Zone. A budget of $200,000 has been proposed to carry
        out
        further work on this property and the Minto property and management is currently
        considering this proposal.
 
 **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.
  *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.
  16
 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.
  *Proposed
        Work Program.* The
        Minto
        Property has reached the stage where diamond drilling is required to explore
        the
        depth extension of gold-bearing shear zones established on surface by
        geochemistry and trenching via the Ponderosa, Winter, Rainbow, View and Minto
        North Zones. Some additional trenching is needed to define drill targets,
        especially in the Minto North Zone. A budget of $200,000 has been proposed
        to
        carry out further work at this property and the Olympic-Kelvin property and
        our
        management is presently considering the proposal.
  **Avino
        Mine**
 
 *Ownership.* The
        Company owns 49% 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 interest in Cia Minera in 1968.
 
 *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.
 
 *History.* During
        November 2001, the Company decided to shut down its operations at Cia Minera
        due
        to depressed silver prices. Recently the price of silver has increased to
        make
        the mining of silver more feasible. As a result, pursuant to the Company’s
        announcement made March 23, 2004, the Company entered into an agreement to
        purchase the remaining 51% equity interest in Cia Minera by the issuance
        of a
        total of four million shares of the Company to the vendors. None of the vendors
        acted jointly or in concert or as a group, and there will be no change in
        the
        effective control of the Company as a result of this transaction. The agreement
        is subject to the completion of the Company’s due diligence review, which
        included an audit and the preparation of an independent technical report.
        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 $315,188 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.
 
 17
 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.
 
 *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.
   **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 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.
  **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, 2005, 2004 and 2003 should be
        read
        in conjunction with the consolidated financial statements and the related
        notes
        attached hereto.
 
 **A.
        Operating Results**
 
 The
        Company’s principal business activities are the exploration and development of
        mineral properties. The Company is in the process of exploring and developing
        its mineral properties and has not yet determined whether its mineral properties
        contain ore reserves that are economically recoverable. The recoverability
        of
        amounts shown for mineral properties is dependent upon the discovery of
        economically recoverable ore reserves in its mineral properties, the ability
        of
        the Company to obtain the necessary financing to complete development,
        confirmation of the Company’s interest in the underlying mineral claims and
        leases and future profitable production or sufficient proceeds from the
        disposition of its mineral properties. The Company is continually investigating
        new exploration opportunities, and mineral exploration is carried out on
        properties identified by management of the Company as having favorable
        exploration potential. Interests in such properties are acquired in various
        ways. In some cases, the Company, through its own efforts, stakes mineral
        claims
        or acquires exploration permits. In other cases the Company acquires an interest
        in mineral properties from third parties. An acquisition from a third party
        is
        typically made by way of an option agreement, which requires the Company
        to make
        specific option payments and to incur a specified amount of exploration costs
        on
        the property. Once the Company has incurred the specified exploration
        expenditures, the parties will enter into a joint venture requiring each
        party
        to contribute towards future exploration and development costs, based on
        its
        percentage interest in the property, or suffer dilution of its interest.
        The
        Company advances its projects to varying degrees by prospecting, mapping,
        geophysics and drilling. Once a property is determined to have limited
        exploration potential, the property is abandoned or sold. In cases where
        exploration work on the property reaches a stage where the expense and risk
        of
        further exploration and development are too high, the Company may seek a
        third
        party to earn an interest by furthering development. Optioning a property
        to a
        third party allows the Company to retain an interest in further exploration
        and
        development while limiting its obligation to commit a large amount of capital
        to
        any one project. The mineral exploration business is high risk and most
        exploration projects will not become mines.
 
 18
 **Current
        Operations**
 
 The
        Company holds mineral claims in the Yukon and in British Columbia, Canada.
        The
        Company also holds a 49% equity interest in Cia Minera, a Mexican corporation
        which owns the Avino Mine, located in Durango, Mexico. The Company’s 49%
        interest in Cia Minera consists of several mineral claims and leases and
        includes a silver mine. The Mine operated from 1976 to 2001, producing about
        497
        tons of silver, three tons of gold, and 11,000 tons of copper. Depressed
        silver
        prices during the period 2000-2001 led to the suspension of mine operations
        at
        the end of 2001. Since 2001, the mine, plant and equipment have been on care
        and
        maintenance.
 
 In
        the
        Yukon, the Company holds a 100% interest in 14 quartz leases known as the
        Eagle
        property located in the Mayo Mining Division. A quartz lease is for 21 years
        and
        the Company’s leases expire on April 29, 2021.
 
 In
        British Columbia, the Company has three separate mineral properties all of
        which
        are located in the Lillooet Mining Division and are wholly owned by the Company.
        They are as follows: (i) the Aumax property consisting of six unpatented
        mineral
        claims; (ii) the Olympic-Kelvin property consisting of 20 reverted Crown
        granted
        minerals claims, one located mineral claim and three fractions; and (iii)
        the
        Minto property consisting of eight Crown granted mineral claims, eight reverted
        Crown granted mineral claims and one located mineral claim.
 
 **Year
        in Review**
 
 *Cia
        Minera.* The
        Company has been in the process of negotiating to acquire the remaining 51%
        interest in Cia Minera. At present the Company holds a 49% equity interest
        and
        several other venders own the other 51%. In addition, four core mineral claims
        are subject to a lease agreement under which royalties are paid. Management
        has
        spent the larger portion of the year negotiating a purchase transaction.
        In June
        of 2004, the vendors of the 51% interest entered into a purchase agreement
        committing to sell their interest to the Company subject to certain terms
        and
        conditions. The Company continues to negotiate with the royalty holders.
 
 Under
        the
        terms of the purchase agreement dated June 9, 2004 the vendors agreed to
        sell to
        the Company their 51% interest in Cia Minera for four million common shares
        in
        the Company. The agreement is subject to the Company completing due diligence,
        including an audit of Cia Minera, and an independent technical report supporting
        the transaction, which should be completed in 2005. Once the Report is accepted
        by the TSX Venture Exchange, it will be made available to the public.
        Preliminary approval of the report was received from the TSX Venture Exchange,
        subject to the completion of a preliminary feasibility study. Since, to the
        Company’s knowledge, none of the vendors act jointly or in concert or as a
        group, there will be no change in the effective control of the Company as
        a
        result of this transaction. At the report date, the Company has made application
        to the TSX Venture Exchange seeking approval of this transaction.
 
 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
        $3,770,000. Cia Minera has accrued $807,000 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 for 25% of 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.
 
 *Other
        Properties.* Exploration
        during the past few years on our Canadian projects was limited to drill programs
        on the Olympic-Kelvin property.
 
 19
 **Fiscal
        year ended January 31, 2005 compared to fiscal year ended January 31,
        2004**
 
 Operating
        and administrative expenses totaled $506,010 for the fiscal year ended January
        31, 2005 compared with $331,446 for the fiscal year ended January 31, 2004,
        an
        increase of $174,564. The increase is primarily due to increases of $40,770
        in
        stock based compensation, $39,808 in salaries and benefits, $14,140 in
        professional fees, $22,500 in management fees, $32,086 in office and
        miscellaneous expenses, $24,849 in travel and entertainment and $15,016 in
        shareholder and investor relations expenses. These increases are all attributed
        to increased efforts in promoting the Company and providing the framework
        to
        support increased exploration and development activities, including the pursuit
        of acquiring the remaining 51% of Cia Minera.
 
 The
        loss
        for the twelve months ended January 31, 2005 was $814,710 compared with a
        loss
        of $445,591 for the twelve months ended January 31, 2004, an increase of
        $369,119. Higher administrative expenses as discussed above and an increase
        of
        $269,455 being charged against operations for the Cia Minera due diligence
        work
        are the primary reasons.
 
 Interest
        income increased in the 2005 fiscal year by $33,700. This was a result of
        $2,000,000 being held in guaranteed investment certificates during the entire
        twelve month period.
 
 **Fiscal
        year ended January 31, 2004 compared to fiscal year ended January 31,
        2003**
 
 The
        Company reported a net loss for the fiscal year ended January 31, 2004 of
        $445,591 or $0.06 per share compared to a net loss of $186,991 or $0.03 for
        the
        fiscal year ended January 31, 2003. The Company has no revenues but recorded
        interest income of $8,299 in 2004 compared to $197 in 2003. In 2003 the Company
        recorded a loss on the sale of the Joint Venture interest of $40,097 and
        in 2004
        the Company charged to operations $122,444 which was incurred during the
        due
        diligence review of Cia Minera as discussed above. In addition, the Company
        charged $40,770 during the year ended January 31, 2004 and $22,600 during
        the
        year ended January 31, 2003 to operations in accordance with the CICA Handbook,
        Section 3870, where the fair value of stock options granted to non-employees
        is
        accounted for and expensed; in this case the charge relates to 150,000 options
        granted to non-employees. The Company capitalized $20,100 during fiscal 2004
        and
        $204,000 during fiscal 2003 on account of mineral property interests relating
        to
        the Olympic-Kelvin property, Aumax property, and the Eagle property. The
        Company
        raised $3,187,183 during 2004 net of issuance costs of $220,225, by the issuance
        of 3,151,250 units (common shares plus warrants); 319,000 common shares on
        the
        exercise of stock options; and 211,000 common shares on the exercise of warrants
        and raised $195,000 during 2003.
 
 Administrative
        expenses, net of stock based compensation, increased from $124,491 for fiscal
        2003 to $290,676 in fiscal 2004 primarily as a result of increased financing
        and
        investigating activities. The Company’s two private placements in 2004 raised
        approximately $2,901,263 net of issuance costs of $220,225 compared to the
        previous year in which no funds were raised. Under normal circumstances,
        when a
        company’s financing and investigating activities increase, expenses tend to
        increase due to the need for more support staff, regulatory fees for filing
        corporate documentation, and professional fees for legal and accounting advice.
        The Company incurred $39,156 in travel expenses in the year ended 2004 compared
        to $4,840 in 2003. The increase was due to traveling to Mexico several times
        in
        connection with Cia Minera, and the cost to participate in investment
        conferences. The Company took a more aggressive approach to investor awareness
        this year by attending several conferences. When a company seeks financing,
        it
        is usually necessary to take a more aggressive approach to investor
        awareness.
 
 20
 **Government
        Regulation**
 
 We
        are
        subject to various federal and provincial laws and regulations including
        environmental laws and regulations. Environmental regulations impose, among
        other things, restrictions, liabilities and obligations in connection with
        the
        generation, handling, use, storage, transportation, treatment and disposal
        of
        hazardous substances and waste and in connection with spills, releases and
        emissions of various substances to the environment. Environmental regulation
        also requires that facility sites and other properties associated with our
        operations be operated, maintained, abandoned and reclaimed to the satisfaction
        of applicable regulatory authorities. In addition, certain types of operations,
        including exploration and development projects and changes to certain existing
        projects, may require the submission and approval of environmental impact
        assessments or permit applications. Compliance with environmental regulation
        can
        require significant expenditures, including expenditures for clean up costs
        and
        damages arising out of contaminated properties and failure to comply with
        environmental regulations may result in the imposition of fines and penalties.
        We believe that we are in substantial compliance with such laws and regulations.
        However, such laws and regulations may change in the future in a manner which
        will increase the burden and cost of compliance.
 
 Certain
        laws and governmental regulations may impose liability on us for personal
        injuries, clean-up costs, environmental damages and property damages, as
        well as
        administrative, civil and criminal penalties. We maintain limited insurance
        coverage for sudden and accidental environmental damages, but do not maintain
        insurance coverage for the full potential liability that could be caused
        by
        sudden and accidental environmental damage. Accordingly, we may be subject
        to
        liability or may be required to cease production from properties in the event
        of
        such damages.
 
 **B.**  **Liquidity
        and Capital Resources**
 
 At
        this
        time, the Company has no operating revenues and does not anticipate having
        any
        operating revenues until the Company is able to find, acquire, place in
        production and operate a resource property. Historically, the Company has
        raised
        funds through equity financing and the exercise of options and warrants to
        fund
        its operations. The market price of natural resources is highly speculative
        and
        volatile. Instability in prices may affect the interest in resource properties
        and the development of and production from such properties. This may adversely
        affect the Company’s ability to raise capital to acquire and explore resource
        properties. At January 31, 2005 the Company had working capital of $2,132,848.
        The Company feels it has sufficient working capital to meet its current
        obligations and operating expenses. However, if the Company should proceed
        with
        the acquisition of Cia Minera, it will need to refinance.
 
 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 14 to the financial statements which sets out a reconciliation
        between Canadian and US GAAP.
 
 21
 **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 inapplicable.
 
 **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, 2005, the Company had the following contractual
        obligations:
 
 **Total**
              **<
                  1 year**
              **1-3
                  years**
              **3-5
                  years**
              **More
                  than 5 years**Lease
                  obligation
              12,081.60
              503.40
              11,578.20
              -
              -Total
              12,081.60
              503.40
              11,578.20
              -
              -
 
 **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.
 
 22
 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
        January 31, 2005. The directors were re-elected by the Company’s
        shareholders on June 24, 2005 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.
 
 **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. and a Director of the Company
                June
                    2005(1)Michael
                    Baybak
                  Director
                Business
                    Consultant
                June
                    1990Ernest
                    Calvert
                  Director
                Director
                    of four other public companies (Bralorne Gold Mines Ltd., formerly
                    Bralorne-Pioneer Gold Mines Ltd., Coral Gold Resources Ltd.,
                    formerly
                    Coral Gold Corp., Levon Resources Ltd., and Cresval Capital
                    Corp.)
                June
                    1990(2)William
                    G. Kocken
                  Director
                Director
                    of three other public companies (President of Bralorne Gold Mines
                    Ltd.,
                    formerly Bralorne-Pioneer Gold Mines Ltd., Coral Gold Resources
                    Ltd.,
                    formerly Coral Gold Corp., and Mill Bay Ventures Inc.)
                September
                    1997David
                    Wolfin(3)
                  Director/President
                President
                  Director
                    of four other public companies (Bralorne Gold Mine Ltd., formerly
                    Bralorne-Pioneer Gold Mines Ltd., Coral Gold Resources Ltd.,
                    formerly
                    Coral Gold Corp., Mill Bay Ventures Ltd., and Cresval Capital
                    Corp.)
                October
                    1995Louis
                    Wolfin(3)
                  Director
                Director
                    of five other public companies (Chief Executive Officer of Bralorne
                    Gold
                    Mine Ltd., formerly Bralorne-Pioneer Gold Mines Ltd., Berkley
                    Resources
                    Inc., Coral Gold Resources Ltd., formerly Coral Gold Corp., Levon
                    Resources Ltd., and Cresval Capital Corp.)
                August
                    1969Connie
                    Lillico
                  Secretary
                Secretary
                    of the Company, officer of five other reporting issuers; formerly
                    an
                    office administrator and paralegal
                July
                    2004
 (1)  Lloyd
        Andrews was elected as a director of the Company on June 24, 2005.
 (2)  Mr.
        Calvert resigned effective July 15, 2005.
 (3)  Mr.
        David
        Wolfin is the son of Mr. Louis Wolfin.
 
 23
 **B.**  **Compensation**
 
 The
        directors of the Company have not been paid fees or other cash compensation
        in
        their capacity as directors. The Company has no arrangements, standard or
        otherwise, pursuant to which its current directors are compensated by the
        Company for their services in their capacity as directors, or for committee
        participation, or involvement in special assignments during the most recently
        completed financial year ended January 31, 2005, except that directors may
        be
        reimbursed for actual expenses reasonably incurred in connection with the
        performance of their duties as directors and certain directors may be
        compensated for services as consultants or experts. Incentive stock options,
        however, have been granted to directors and executive officers of the Company
        and are outstanding to purchase an aggregate of 320,000 shares of the Company
        as
        at January 31, 2005. See "Options to Purchase Securities of the
        Company".
 
 The
        following table sets forth details of the compensation paid during the Company's
        fiscal year ended January 31, 2005 to senior management:
 
 **Name/
                    Principal**
                  **Position**
                **Year****(1)**
                **Annual
                    Compensation**
                **Long-Term
                    Compensation**
                **All
                    Other Compensation $****Awards**
                **Payouts****Salary**
                  **$****(2)**
                **Bonus
                    $**
                **Other
                    Annual Compensation $**
                **Securities
                    Under Options/ SARs Granted (#)**
                **Restricted
                    Shares/or Restricted Share Units $**
                **LTIP
                    Payouts $**David
                    Wolfin President (CEO)
                2005
                  2004
                60,000
                  30,000
                Nil
                  Nil
                Nil
                  Nil
                80,000
                  100,000
                Nil
                  Nil
                Nil
                  Nil
                Nil
                  NilLouis
                    Wolfin
                  Former
                  President
                  (CEO)
                2004
                  2003
                7,500
                  30,000
                N/A
                  Nil
                N/A
                  Nil
                N/A
                  150,000
                N/A
                  Nil
                N/A
                  Nil
                N/A
                  Nil
 Notes:  (1)
        Year
        ended January 31.
 (2) No member of the senior management team earned in excess of
        $100,000.
 
 **Termination
        of Employment, Changes in Responsibilities and Employment
        Contracts**
 
 There
        are
        no employment contracts between the Company and its executive officers and
        the
        Company has no compensatory plan or arrangement with respect to its executive
        officers in the event of the resignation, retirement or any other termination
        of
        the executive officers' employment with the Company or in the event of a
        change
        of control of the Company or in the event of a change in the executive officers'
        responsibilities following a change in control, where in respect of the
        executive officers the value of such compensation exceeds $100,000.
 
 **C.**  **Board
        Practices**
 
 The
        board
        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 June 24, 2005, the shareholders elected Messrs.
        Andrews, Baybak, Calvert, Kocken, Wolfin and Wolfin as directors. Mr. Calvert
        subsequently resigned on July 15, 2005.
 
 24
 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 Kocken). "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.
 
 As
        a
        result of the resignation of Mr. Calvert, the audit committee currently consists
        of two directors (Messrs. William Kocken and Michael Baybak) all of whom
        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 Company is currently seeking
        to
        replace Mr. Calvert.
 
 It
        is
        intended that this committee eventually will be comprised solely of unrelated
        directors.
 
 25
 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.
 
 **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 January 31, 2005. No person owned more than 10% of the
        outstanding common shares.
 
 **Name
                  of Beneficial Owner**
              **Number
                  of Shares**
              **Percent**Michael
                  Baybak
              2,700
              *Ernest
                  Calvert
              2,500
              *William
                  Kocken
              -
              -David
                  Wolfin
              177,384
              1.69Louis
                  Wolfin
              109,261
              1.04Connie
                  Lillico
              -
              -
 *
              Less
                  than one percent
 
 **Options
                  to Purchase Securities of the Company****Name
                  of Optionee**
              **No.
                  of Shares**
              **Exercise
                  Price Per Share**
              **Date
                  of Grant**
              **Expiry
                  Date*****Executive******Officers/Directors***David
                  Wolfin
              80,000
              $0.58
              October
                  23, 2002
              October
                  23, 2007Ernest
                  Calvert
              30,000
              $1.20
              October
                  22, 2003
              October
                  22, 2008William
                  Kocken
              30,000
              $1.20
              October
                  22, 2003
              October
                  22, 2008Michael
                  Baybak
              30,000
              $1.20
              October
                  22, 2003
              October
                  22, 2008Louis
                  Wolfin
              150,000
              $1.20
              October
                  22, 2003
              October
                  22, 2008***Other
                  Insiders****Nil*
 
 26
 As
        at
        January 31, 2005, there was an aggregate of 450,000 options outstanding.
        There
        were no options granted during the 2005 fiscal year.
 
 **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
        January 31, 2005, 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. The following table sets forth the total shares owned by the
        officers and directors as a group as of January 31, 2005:
 
 **Name**
              **Number
                  of Shares of**
                **Common
                  Stock****Owned**
              **Percent
                  of**
                **Class**All
                  Officers and Directors as a Group (7 persons)
              291,845
              2.77%
 
 **B.**  **Related
        Party Transactions**
 
 In
        2005,
        $60,000 in consulting fees were paid to a private company owned by a director
        of
        the Company and $12,500 in consulting fees were paid to a private company
        controlled by a director of a related company. In 2004, $30,000 and $7,500
        were
        paid as consulting fees to private companies owned each by a director of
        the
        Company.
 
 The
        Company entered into a cost sharing agreement dated October 1, 1997 to reimburse
        a company under common control, Oniva International Services Corp., referred
        to
        as "Oniva", for 20% of its overhead expenses, to reimburse 100% of its out
        of
        pocket expenses incurred on behalf of the Company and to pay a 10% fee based
        on
        the total overhead and corporate expenses referred to above. The agreement
        may
        be terminated by either party giving to the other party one months notice.
        During the year, a total of $124,146 was charged to operations in relation
        to
        the cost sharing agreement referred to above. In 2004, the amount was $86,159.
        Included in amounts due to related parties is an amount of $138,499 due to
        Oniva
        for expenses paid on behalf of the Company. In 2004 the amount was $258,336.
        The
        Company is negotiating with Oniva to settle this debt by the issuance of
        common
        shares.
 
 A
        further
        amount due to related parties of $3,145 is due to a company with common
        directors in regards to exploration and development expenditures paid for
        by the
        related party on behalf of the Company.
 
 The
        Company has an investment in Bralorne Gold Mines Ltd. consisting of 179,149
        common shares and a value of $422,848 and in Levon Resources Ltd. consisting
        of
        141,200 common shares and a value of $4,236. These companies are related
        by way
        of common directors and common management.
 
 27
 All
        related party transactions are recorded at the value agreed upon by the Company
        and the related party. The amounts due to related parties are non-interest
        bearing, non-secured and due on demand.
 
 The
        Company entered into an agreement, dated August 23, 2003, to receive accounting
        and administrative services at a rate of $1,800 per month with Dawn Pacific
        Management Ltd., a private company owned by an officer of the Company. The
        agreement was for an initial term of one year and could be renewed at the
        end of
        its term or renewal term for further successive annual terms until such time
        that either party has given notice of termination in writing at least 30
        days
        prior to the end of a term. This agreement was terminated in fiscal
        2005.
 
 None
        of
        the Company's directors, executive or senior officers, proposed nominees
        for
        election as directors, or associates or affiliates of any of them, is or
        has
        been indebted to the Company at any time since the Company’s last completed
        financial year.
 
 **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, 2005 and 2004.
 Statement
        of Operations and Deficit for the years ended January 31, 2005, 2004, and
        2003.
 Statement
        of Cash flows for the years ended January 31, 2005, 2004, and 2003.
 Notes
        to
        Financial Statements for the years ended January 31, 2005, 2004, and
        2003.
 
 *Dividend
        Policy*
 
 The
        Company has never paid any dividends and does not intend to in the near
        future.
 
 **B.**  **Significant
        Changes**
 
 None.
 
 **Item
        9.**  **The
        Offer and Listing**
 
 **A.**  **Offer
        and Listing Details**
 
 The
        common shares of the Company are listed on the TSX
        Venture Exchange  under
        the
        symbol "ASM" and quoted in the United States on the pink sheets, under the
        symbol "ASGMF".
 
 As
        of
        January 31, 2005, there were 694 holders of record in the United States holding
        27.88% of the
        Company’s outstanding common shares representing approximately 68.78 % 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.
 
 28
 The
        following sets forth the high and low prices expressed in Canadian dollars
        on
        the TSX
        Venture Exchange 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****Venture Exchange**
                **(Canadian
                  Dollars)****Last
                  Five Fiscal Years**
              **High**
              **Low**2005
              2.50
              1.002004
              3.00
              0.332003
              1.74
              0.322002
              0.75
              0.182001
              0.63
              0.18**2003-2004**
              **High**
              **Low**Fourth
                  Quarter ended January 31, 2004
              3.00
              1.65Third
                  Quarter ended October 31, 2003
              2.55
              0.71Second
                  Quarter ended July 31, 2003
              0.83
              0.33First
                  Quarter ended April 30, 2003
              1.00
              0.59**2004-2005**
              **High**
              **Low**Fourth
                  Quarter ended January 31, 2005
              1.60
              1.02Third
                  Quarter ended October 31, 2004
              1.77
              1.23Second
                  Quarter ended July 31, 2004
              1.42
              1.00First
                  Quarter ended April 30, 2004
              2.50
              1.25**Last
                  Six Months**
              **High**
              **Low**June
                  2005
              1.66
              1.22May
                  2005
              1.59
              1.13April
                  2005
              1.60
              1.23March
                  2005
              1.90
              1.32February
                  2005
              1.99
              1.02January
                  2005
              1.47
              1.07
 
 **B.**  **Plan
        of Distribution**
 
 Not
        Applicable.
 
 **C.**  **Markets**
 
 The
        Company’s common stock is listed on the TSX
        Venture Exchange under
        the symbol "ASM" and in the United States on the pink sheets under the symbol
        "ASGMF".
 
 **D.**  **Selling
        Shareholders**
 
 Not
        Applicable.
 
 **E.**  **Dilution**
 
 Not
        Applicable.
 
 **F.**  **Expenses
        of the Issue**
 
 Not
        Applicable.
 
 29
 **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 Company Act or by the Memorandum or the Articles,
        required to be exercised by the Company in a general meeting.
 
 Directors
        will serve as such until the next annual meeting. In general, a director
        who is,
        in any way, directly or indirectly interested in an existing or proposed
        contract or transaction with the Company whereby a duty or interest might
        be
        created to conflict with his duty or interest as a director, shall declare
        the
        nature and extent of his interest in such contract or transaction or the
        conflict or potential conflict with his duty and interest as a director.
        Such
        director shall not vote in respect of any such contract or transaction with
        the
        Company in which he is interested and if he shall do so, his vote shall note
        be
        counted, but he shall be counted in the quorum present at the meeting at
        which
        such vote is taken. However, notwithstanding the foregoing, directors shall
        have
        the right to vote on determining the remuneration of the directors.
 
 The
        directors may from time to time on behalf of the Company: (a) borrow money
        in
        such manner and amount from such sources and upon such terms and conditions
        as
        they think fit; (b) issue bonds, debentures and other debt obligations; and
        (c)
        mortgage, charge or give other security on the whole or any part of the property
        and assets of the Company.
 
 The
        directors of the Company must be persons of
        the
        full age of 18 years. There is no minimum share ownership to be a Director.
        No
        person shall be a Director of the Company who is not capable of managing
        their
        own affairs; is an undischarged bankrupt; convicted of an offense in connection
        with the promotion, formation or management of a corporation or involved
        in
        fraud within the last five years; or a person that has had a registration
        in any
        capacity under the "BC Securities Act" or the "BC 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 (the “Investment Act”) discussed below
        under “Item 10. Additional Information, D. Exchange Controls.”
 
 30
 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.
 
 **Recent
        Developments**
 
 On
        March
        29, 2004, the British Columbia legislature enacted the British Columbia Business
        Corporations Act ("BCBCA") and repealed the British Columbia Company Act
        (the
        "Company Act"). The BCBCA removes many of the restrictions contained in the
        Company Act, including restrictions on the residency of directors, the location
        of annual general meetings and limits on authorized share capital. As well,
        the
        BCBCA uses new forms and terminology and has replaced the Memorandum with
        a
        Notice of Articles. At the Company's annual and special general meeting held
        on
        June 24, 2005, shareholders were asked to approve:
  1.
              a
                  special resolution to remove the application of the Pre-existing
                  Company
                  Provisions, as defined in the Business Corporations Act (British
                  Columbia);
  2.
              a
                  special resolution to alter the Company's share structure to an
                  unlimited
                  number of common shares without par value; and
  3. a
        special
        resolution to approve new articles for the Company.
  The
        regulations under the BCBCA effectively added certain provisions, called
        the
        "Pre-Existing Company Provisions" or "PCPs", to every company's Notice of
        Articles. The PCPs provide that the number of votes required to pass a special
        resolution (formerly also referred to as a special resolution under the Company
        Act) or a special separate resolution is at least three-quarters of the votes
        cast by shareholders present in person or by proxy at the meeting. This is
        the
        majority that was required under the Company Act. The BCBCA allows a special
        resolution to be passed by at least two-thirds of the votes cast by shareholders
        present in person or by proxy at the meeting. The Company proposes to amend
        its
        Notice of Articles to delete the PCPs so that the provisions of the BCBCA
        permitting a two-thirds majority will apply to the Company.
  The
        shareholders have approved the above resolutions and therefore special
        resolutions will require a two-thirds majority vote, instead of a three-quarters
        majority vote. The authorized share capital of the Company will also be an
        unlimited number of common shares without par value. Management believes
        that
        this provides the Company with greater flexibility for future corporate
        activities and is consistent with special resolution requirements for companies
        in other jurisdictions.
 
 **C.**  **Material
        Contracts**
 
 The
        Company entered into a share exchange agreement dated for reference the
        9 th day of
        June, 2004 with Pedro Sanchez Mejorada, Fernando 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 Avino, S.A. de C.V. in
        connection with the acquisition of the remaining 51% interest in Cia Minera
        which the Company does not currently own. The consideration to be paid by
        the
        Company consists of four million common shares of the Company. This agreement
        is
        subject to a number of conditions including a satisfactory due diligence
        review
        and final regulatory approval.
 
 31
 **D.**  **Exchange
        Controls**
 
 There
        is
        no law, governmental decree or regulation in Canada that restricts the export
        or
        import of capital or affects the remittance of dividends, interest or other
        payments to a non-resident holder of common shares other than withholding
        tax
        requirements. Any such remittances to United States residents are subject
        to
        withholding tax. See "Taxation".
 
 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 Act. The
        following discussion summarizes the principal features of the Investment
        Act for
        a non-resident who proposes to acquire the common shares.
 
 The
        Investment Act generally prohibits implementation of a reviewable investment
        by
        an individual, government or agency thereof, corporation, partnership, trust
        or
        joint venture (each an "entity") that is not a "Canadian" as defined in the
        Investment Act (a "non-Canadian"), unless after review, the Director of
        Investments appointed by the minister responsible for the Investment Act
        is
        satisfied that the investment is likely to be of net benefit to Canada. An
        investment in the common shares by a non-Canadian other than a "WTO Investor"
        (as that term is defined by the Investment Act, and which term includes entities
        which are nationals of or are controlled by nationals of member states of
        the
        World Trade Organization) when the Company was not controlled by a WTO Investor,
        would be reviewable under the Investment Act if it was an investment to acquire
        control of the Company and the value of the assets of the Company, as determined
        in accordance with the regulations promulgated under the Investment Act,
        equals
        or exceeds $5 million for direct acquisitions and over $50 million for indirect
        acquisitions, or if an order for review was made by the federal cabinet on
        the
        grounds that the investment related to Canada's cultural heritage or national
        identity, regardless of the value of the assets of the Company. An investment
        in
        the common shares by a WTO Investor, or by a non-Canadian when the Company
        was
        controlled by a WTO Investor, would be reviewable under the Investment Act
        if it
        was an investment to acquire control of the Company and the value of the
        assets
        of the Company, as determined in accordance with the regulations promulgated
        under the Investment Act, was not less than a specified amount, which for
        2004
        is any amount in excess of $137 million. A non-Canadian would acquire control
        of
        the Company for the purposes of the Investment Act if the non-Canadian acquired
        a majority of the common shares. The acquisition of one third or more, but
        less
        than a majority of the common shares, would be presumed to be an acquisition
        of
        control of the Company unless it could be established that, on the acquisition,
        the Company was not controlled in fact by the acquirer through the ownership
        of
        the common shares.
 
 Certain
        transactions relating to the common shares would be exempt from the Investment
        Act, including: (i) an acquisition of the common shares by a person in the
        ordinary course of that person's business as a trader or dealer in securities;
        (ii) an acquisition of control of the Company in connection with the realization
        of security granted for a loan or other financial assistance and not for
        a
        purpose related to the provisions of the Investment Act; and (iii) an
        acquisition of control of the Company by reason of an amalgamation, merger,
        consolidation or corporate reorganization following which the ultimate direct
        or
        indirect control in fact of the Company, through the ownership of the common
        shares, remained unchanged.
 
 32
 **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
        U.S.)
        tax law or treaty. It has been assumed that all currently proposed amendments
        will be enacted substantially as proposed and that there is no other relevant
        change in any governing law or practice, although no assurance can be given
        in
        these respects.
 
 **Each
        U.S. Holder is advised to obtain tax and legal advice applicable to such
        U.S.
        Holder’s particular circumstances.**
 
 Every
        U.S. Holder is liable to pay a Canadian withholding tax on every dividend
        that
        is or is deemed to be paid or credited to the U.S. Holder on the U.S. Holder’s
        common shares. The statutory rate of withholding tax is 25% of the gross
        amount
        of the dividend paid. The Treaty reduces the statutory rate with respect
        to
        dividends paid to a U.S. Holder for the purposes of the Treaty. Where
        applicable, the general rate of withholding tax under the Treaty is 15% of
        the
        gross amount of the dividend, but if the U.S. Holder is a company that owns
        at
        least 10% of the voting stock of the Company and beneficially owns the dividend,
        the rate of withholding tax is 5% for dividends paid or credited after 1996
        to
        such corporate U.S. Holder. The Company is required to withhold the applicable
        tax from the dividend payable to the U.S. Holder, and to remit the tax to
        the
        Receiver General of Canada for the account of the U. S. Holder.
 
 Pursuant
        to the Tax Act, a U.S. Holder will not be subject to Canadian capital gains
        tax
        on any capital gain realized on an actual or deemed disposition of a common
        share, including a deemed disposition on death, provided that the U.S. Holder
        did not hold the common share as capital property used in carrying on a business
        in Canada, and that neither the U.S. Holder nor persons with whom the U.S.
        Holder did not deal at arms length (alone or together) owned or had the right
        or
        an option to acquire 25% or more of the issued shares of any class of the
        Company at any time in the five years immediately preceding the
        disposition.
 
 **United
        States Federal Income Tax Consequences**
 
 *Passive
        Foreign Investment Company*
 
 The
        Company believes that it is a passive foreign investment company, referred
        to as
        a "PFIC" for United States federal income tax purposes with respect to a
        United
        States Investor. The Company will be a PFIC with respect to a United States
        Investor if, for any taxable year in which such United States Investor held
        the
        Company’s shares, either (i) at least 75 % of the gross income of the Company
        for the taxable year is passive income, or (ii) at least 50% of the Company’s
        assets are attributable to assets that produce or are held for the production
        of
        passive income. In each case, the Company must take into account a pro-rata
        share of the income and the assets of any company in which the Company owns,
        directly or indirectly, 25% or more of the stock by value (the "look-through"
        rules). Passive income generally includes dividends, interest, royalties,
        rents
        (other than rents and royalties derived from the active conduct of a trade
        or
        business and not derived from a related person), annuities and gains from
        assets
        that produce passive income. As a publicly traded corporation, the Company
        would
        apply the 50% asset test based on the value of the Company’s
        assets.
 
 33
 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" (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.
 
 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.
 
 34
 Because
        the Company’s stock is "marketable" under section 1296(e), a U.S. 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 U.S.
        Investor has marked to market, coordination rules for limited application
        will
        apply in the case of a U.S. 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 U.S. 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 U.S. 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).
 
 35
 A
        corporation will be classified as a foreign personal holding company, or
        an
        "FPHC", and not a PHC if at any time during a tax year (i) five or fewer
        individual United States citizens or residents directly or indirectly or
        by
        attribution own more than 50% of the total combined voting power or value
        of the
        corporation’s stock and (ii) at least 60% of its gross income consists of
        foreign personal holding company income (defined generally to include dividends,
        interest, royalties, rents and certain other types of passive income). Each
        United States shareholder in a FPHC is required to include in gross income,
        as a
        dividend, an allocable share of the FPHC’s undistributed foreign personal
        holding company income (generally the taxable income of the FPHC, as specially
        adjusted).
 
 A
        corporation will be classified as a foreign investment company, or an "FIC",
        if
        for any taxable year it: (i) is registered under the Investment Company Act
        of
        1940, as amended, as a management company or share investment trust or is
        engaged primarily in the business of investing or trading in securities or
        commodities (or any interest therein); and (ii) 50% or more of the value
        or the
        total combined voting power of all the corporation’s stock is owned directly or
        indirectly (including stock owned through the application of attribution
        rules)
        by United States persons. In general, unless an FIC elects to distribute
        90% or
        more of its taxable income (determined under United States tax principles
        as
        specially adjusted) to its shareholders, gain on the sale or exchange of
        FIC
        stock is treated as ordinary income (rather than capital gain) to the extent
        of
        such shareholder’s ratable share of the corporation's earnings and profits for
        the period during which such stock was held.
 
 The
        Company believes that it is not and will not be a PHC, FPHC or FIC. However,
        no
        assurance can be given as to the Company’s future status.
 
 *U.S.
        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).
 
 36
 Copies
        of
        the Company’s material contracts are kept in the Company’s administrative
        headquarters.
 
 **I.**  **Subsidiary
        Information**
 
 None.
 
 **Item
        11. Quantitative and Qualitative Disclosures about Market
        Risk**
 
 As
        the
        Company is a small business issuer, this section is inapplicable.
 
 **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
        Company carried out an evaluation, under the supervision and with the
        participation of the Company's management, including the Company's chief
        executive officer along with the Company's principal financial officer, of
        the
        effectiveness of the design and operation of the Company's disclosure controls
        and procedures pursuant to Exchange Act Rule 13a-14. Based upon that evaluation,
        the Company's chief executive officer along with the Company's principal
        financial officer concluded that the Company's disclosure controls and
        procedures as of the end of the fiscal year covered by this Form 20-F are
        effective in timely alerting them to material information relating to the
        Company required to be included in this Form 20-F.
 
 **Item
        16. [Reserved]**
 
 **Item
        16A. Audit Committee Financial Expert**
 
 The
        board
        of directors determined that Mr. Ernest Calvert is qualified as an Audit
        Committee Financial Expert. Mr. Ernest Calvert is independent as determined
        by
        the NASD listing standards.  Mr. Calvert resigned offective July 15, 2005
        and the Company is currently seeking to replace him.
 
 **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.
 
 **Item
        16C. Principal Accountant Fees and Services**
 
 The
        independent auditor for the last two fiscal years was Vellmer & Chang,
        Chartered Accountants (formerly Hoogendoorn Vellmer, Chartered
        Accountants).
 
 37
 **Audit
        Fees**
 
 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, 2005 was $15,200  and
        January 31, 2004 was $13,200.
 
 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, 2005 was $15,200 and January 31, 2004 was
        $13,200.
 
 **Audit-Related
        Fees**
 
 There
        were no aggregate fees billed for assurance and related services by the
        principal accountant that were reasonably related to the performance of the
        audit or review of the Company's financial statements for the years ended
        January 31, 2005 and 2004.
 
 **Tax
        Fees**
 
 The
        aggregate fees billed for tax compliance, tax advice and tax planning rendered
        by our independent auditors for the fiscal year ended January 31, 2005 was
        $1,200 and January 31, 2004 was $1,200. The services comprising these fees
        include the preparation of corporate tax returns.
 
 **All
        Other Fees**
 
 Other
        than referred to above, there were no aggregate fees billed for any other
        professional services rendered by the Company’s independent auditors for the
        fiscal year ended January 31, 2005. For the year ended January 31, 2004,
        the
        aggregate fees billed, other than referred to above, were $17,700 for a due
        diligence audit of Cia Minera.
 
 The
        audit
        committee approved 100% of the fees paid to the principal accountant for
        audit-related, tax and other fees in the fiscal year 2005. 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.
 
 
 
 38
 
 
 **Part
        III**
 
 **Item
        17. Financial Statements**
 
 The
        following Financial Statements pertaining to the Company are filed as part
        of
        this annual report:
 
 Auditors
        Report. 41
 Balance
        Sheets 42
 Statements
        of Operations and Deficit 43
 Statements
        of Cash Flows 44
 Notes
        to
        Financial Statements 46
        thru
        63
 
 **Item
        18. Financial Statements**
 
 See
        Item
        17.
 
 **Item
        19. Exhibits**
 
 Exhibit
        Number   Name
 
 1.1 Memorandum
        of Avino Silver & Gold Mines Ltd.*
 1.2 Articles
        of Avino Silver & Gold Mines Ltd.*
 12.1 Certification
        of the Principal Executive Officer under the Sarbanes-Oxley Act.
 12.2 Certification
        of the Principal Financial Officer under the Sarbanes-Oxley Act.
 13 Certificate
        under section 906.
 ___________________________
 *
        Previously filed.
  39




**AVINO
        SILVER & GOLD MINES LTD.**
 
  Financial
        Statements
  
  January
        31, 2005, 2004 and 2003
  
 
  40
  ***Vellmer
          & Chang***
 ***Chartered
          Accountants ****
 *Suite
          505 - 815 Hornby Street*
 *Vancouver,
          B.C., V6Z 2E6, Canada*
 *Tel:
          604-687-3776, Fax: 604-687-3778*
 **
          denotes a firm of incorporated professionals*
 
 ***AUDITORS’
          REPORT***
 
 To
          the
          Shareholders of
 **Avino
          Silver & Gold Mines Ltd.**
 
 We
          have
          audited the balance sheets of Avino Silver & Gold Mines Ltd.  as
          at
          January 31, 2005 and 2004 and the statements of operations and deficit
          and cash
          flows for the years ended January 31, 2005, 2004 and 2003. 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 audits.
 
 We
          conducted our audits in accordance with generally accepted auditing standards
          in
          Canada 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 financial statements present fairly, in all material respects,
          the financial position of the Company as at January 31, 2005 and 2004 and
          the
          results of its operations and its cash flows for the years ended January
          31,
          2005, 2004 and 2003 in accordance with Canadian generally accepted accounting
          principles. As required by the Company Act (British Columbia), we report
          that,
          in our opinion, these principles have been applied on a consistent basis.
 
 ***“Vellmer
          & Chang”***
 *Vancouver,
          Canada(formerly
          “Hoogendoorn Vellmer”)*
 *April
          29,
          2005Chartered
          Accountants*
 
 **COMMENTS
          BY AUDITORS ON**
 **CANADA
          - UNITED STATES OF AMERICA REPORTING DIFFERENCES**
 
 In
          the
          United States of America reporting standards for auditors require the addition
          of an explanatory paragraph (following the opinion paragraph) when the
          financial
          statements are affected by conditions 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. Our report to the shareholders dated
          April
          29, 2005 is expressed in accordance with Canadian reporting standards which
          do
          not permit a reference to such conditions in the auditors’ report when these are
          adequately disclosed in the financial statements.
 
 ***“Vellmer
          & Chang”***
 *Vancouver,
          Canada(formerly
          “Hoogendoorn Vellmer”)*
 *April
          29,
          2005Chartered Accountants*
   41
 **AVINO
        SILVER & GOLD MINES LTD.**
 **Balance
        Sheets**
 **As
        at January 31, 2005 and 2004**
 **(In
        Canadian Dollars)**
  **2005**
                
                **2004**$
                
                
                $**ASSETS****Current**Cash
                    and cash equivalents
                
                
                2,283,535
                
                
                2,832,457Accounts
                    receivable
                
                
                33,138
                
                
                19,706Prepaid
                    expenses
                
                
                22,348
                
                
                12,282Due
                    from related parties (Note 9(a))
                
                
                -
                
                
                2,8842,339,021
                
                
                2,867,329**Office
                    Furniture and Equipment**(Note
                    3)
                
                
                2,823
                
                
                4,033**Mineral
                    Properties Interests**(Note 4)
                
                
                315,501
                
                
                224,101**Investment
                    in Cia de Minera Mexicana de Avino, S.A. de C.V.**(Note 5)
                
                
                1
                
                
                1**Investments
                    in Related Companies**(Note
                    6)
                
                
                427,084
                
                
                427,0843,084,430
                
                
                3,522,548**LIABILITIES****Current**Accounts
                    payable and accrued liabilities
                
                
                64,529
                
                
                45,482Due
                    to related parties (Note 9(b))
                
                
                141,644
                
                
                260,228206,173
                
                
                305,710
 **SHAREHOLDERS’
                  EQUITY****Share
                  Capital**(Note
                  7(a))
              
              
              17,030,084
              
              
              16,574,340**Contributed
                  Surplus**(Note 7(b))
              
              
              502,973
              
              
              184,967**Treasury
                  Shares (14,180 Shares, at cost)**
              
              
              (101,869
              )
              
              (101,869
              )**Deficit**
              
              
              (14,552,931
              )
              
              (13,440,600
              )2,878,257
              
              
              3,216,8383,084,430
              
              
              3,522,548
 
 
 Approved
        by the Board of Directors:
 
 
 “ *Louis
        Wolfin* ” Director     *“David
        Wolfin”* Director
   42
 **AVINO
        SILVER & GOLD MINES LTD.**
 **Statements
        of Operations and Deficit**
 **Years
        ended January 31, 2005, 2004 and 2003**
 **(In
        Canadian Dollars)**
 
 **2005**
              
              **2004**
              
              **2003**$
              
              
              $
              
              
              $**Operating
                  and Administrative Expenses**Amortization
              
              
              1,210
              
              
              711
              
              
              -Interest
              
              
              65
              
              
              7,798
              
              
              -Foreign
                  exchange (gain) loss
              
              
              (29
              )
              
              3,786
              
              
              -General
                  mineral exploration costs
              
              
              -
              
              
              -
              
              
              4,853Management
                  fees
              
              
              60,000
              
              
              37,500
              
              
              30,000Office
                  and miscellaneous
              
              
              112,591
              
              
              80,505
              
              
              43,054Professional
                  fees
              
              
              34,993
              
              
              20,853
              
              
              12,108Regulatory
                  and compliance fees
              
              
              39,463
              
              
              43,019
              
              
              16,712Salaries
                  and benefits
              
              
              69,310
              
              
              29,502
              
              
              7,970Shareholder
                  and investor relations
              
              
              42,862
              
              
              27,846
              
              
              4,954Stock-based
                  compensation
              
              
              81,540
              
              
              40,770
              
              
              22,600Travel
                  and entertainment
              
              
              64,005
              
              
              39,156
              
              
              4,840**Loss
                  from operations**
              
              
              (506,010
              )
              
              (331,446
              )
              
              (147,091
              )**Other
                  income and expenses**Interest
                  income
              
              
              41,999
              
              
              8,299
              
              
              197Loss
                  on sale of joint venture interest
              
              
              -
              
              
              -
              
              
              (40,097
              )Due
                  diligence review of Cia de Minera Mexicana
                de
                  Avino, S.A. de C.V.
              
              
              (391,899
              )
              
              (122,444
              )
              
              -**Loss
                  before income taxes**
              
              
              (855,910
              )
              
              (445,591
              )
              
              (186,991
              )Future
                  income tax benefit recognized on the renouncement of qualified
                  exploration
                  expenditures (Note 8)
              
              
              41,200
              
              
              -
              
              
              -**LOSS
                  FOR THE YEAR**
              
              
              (814,710
              )
              
              (445,591
              )
              
              (186,991
              )**DEFICIT**,
                  beginning of year:As
                  previously reported
              
              
              (13,440,600
              )
              
              (12,995,009
              )
              
              (12,808,018
              )Adjustment
                  for change in accounting for stock-based compensation (Note
                  7(d))
              
              
              (297,621
              )
              
              -
              
              
              -**RESTATED
                  DEFICIT,**beginning
                  of year
              
              
              (13,738,221
              )
              
              (12,995,009
              )
              
              (12,808,018
              )**DEFICIT**,
                  end of year
              
              
              (14,552,931
              )
              
              (13,440,600
              )
              
              (12,995,009
              )**BASIC
                  LOSS PER SHARE**
              
              
              (0.08
              )
              
              (0.06
              )
              
              (0.03
              )**WEIGHTED
                  AVERAGE NUMBER OF SHARES OUTSTANDING**
              
              
              10,410,379
              
              
              7,015,604
              
              
              5,625,498
  43
 **AVINO
        SILVER & GOLD MINES LTD.**
 **Statements
        of Cash Flows**
 **Years
        ended January 31, 2005, 2004 and 2003**
 **(In
        Canadian Dollars)**
 
 **2005**
              
              **2004**
              
              **2003**$
              
              
              $
              
              
              $**CASH
                  PROVIDED BY (USED IN):*****OPERATING
                  ACTIVITIES***Loss
                  for the year
              
              
              (814,710
              )
              
              (445,591
              )
              
              (186,991
              )Items
                  not affecting cash:-
                  Amortization
              
              
              1,210
              
              
              711
              
              
              --
                  Stock-based compensation
              
              
              81,540
              
              
              40,770
              
              
              22,600-
                  Loss on sale of joint venture interest
              
              
              -
              
              
              -
              
              
              346-
                  Future income tax benefit recognized on the renouncement of qualified
                  exploration expenditures
              
              
              (41,200
              )
              
              -
              
              
              -(773,160
              )
              
              (404,110
              )
              
              (164,045
              )Net
                  change in non-cash working capital items (Note 11)
              
              
              (120,151
              )
              
              64,124
              
              
              (13,310
              )(893,311
              )
              
              (339,986
              )
              
              (177,355
              )**FINANCING
                  ACTIVITIES**Shares
                  issued for cash
              
              
              435,789
              
              
              3,187,183
              
              
              195,000435,789
              
              
              3,187,183
              
              
              195,000**INVESTING
                  ACTIVITIES**Advances
                  from Bralorne Gold Mines Ltd.
              
              
              -
              
              
              -
              
              
              5,142Reclamation
                  bond
              
              
              -
              
              
              (10,000
              )
              
              -Purchase
                  of office equipment
              
              
              -
              
              
              (4,744
              )
              
              -Mineral
                  properties acquisitions
              
              
              -
              
              
              -
              
              
              (4,000
              )Mineral
                  properties exploration expenditures
              
              
              (91,400
              )
              
              (20,100
              )
              
              -(91,400
              )
              
              (34,844
              )
              
              1,142**(Decrease)
                  increase in cash and cash equivalents**
              
              
              (548,922
              )
              
              2,812,353
              
              
              18,787**CASH
                  AND CASH EQUIVALENTS,**beginning
                  of year
              
              
              2,832,457
              
              
              20,104
              
              
              1,317**CASH
                  AND CASH EQUIVALENTS,**end
                  of year
              
              
              2,283,535
              
              
              2,832,457
              
              
              20,104
  44
  **AVINO
        SILVER & GOLD MINES LTD.**
 **Statements
        of Cash Flows (Continued)**
 **Years
        ended January 31, 2005, 2004 and 2003**
 **(In
        Canadian Dollars)**
 
 **2005**
              
              **2004**
              
              **2003**$
              
              
              $
              
              
              $**SUPPLEMENTARY
                  DISCLOSURE OF NON-CASH FINANCING AND INVESTING ACTIVITIES**Share
                  issuance costs paid by issuance of shares
              
              
              -
              
              
              220,225
              
              
              -Stock-based
                  compensation
              
              
              81,540
              
              
              40,770
              
              
              22,600Future
                  income tax benefit recognized on the renouncement of qualified
                  exploration
                  expenditures
              
              
              41,200
              
              
              -
              
              
              -Mineral
                  properties interests acquired by Issuance of share capital
              
              
              -
              
              
              -
              
              
              200,000**SUPPLEMENTARY
                  DISCLOSURE OF****STATEMENTS
                  OF CASH FLOWS INFORMATION**Interest
                  expense
              
              
              65
              
              
              7,798
              
              
              -Income
                  taxes
              
              
              -
              
              
              -
              
              
              -
 
 45
  **AVINO
        SILVER & GOLD MINES LTD.**
 **Notes
        to Financial Statements**
 **January
        31, 2005, 2004 and 2003**
 **(In
        Canadian Dollars)**
 
 **NOTE
        1 - NATURE AND CONTINUANCE OF OPERATIONS**
 
 Avino
        Silver & Gold Mines Ltd. (“Avino”) was incorporated under the laws of the
        Province of British Columbia. Its principal business activities include the
        exploration for and development of mineral properties. The Company owns
        interests in mineral properties in British Columbia and Yukon,
        Canada.
 
 Avino
        is
        in the exploration stage of its mineral properties interests in Canada and
        has
        not yet determined whether these properties contain ore reserves which are
        economically recoverable.
 
 Avino
        owns 49% of the issued common shares of Cia Minera Mexicana de Avino, S.A.
        de
        C.V. (“Cia Minera”) a company incorporated in Mexico. Cia Minera’s operations
        involve the mining of commercial ores and resource exploration and development,
        including the operation of a silver mine in Mexico. The silver mine has been
        shut down since March 2002, when operations became uneconomical (Note
        5).
 
 The
        recoverability of amounts shown for mineral property interests and property
        and
        related deferred costs is dependent upon the discovery of economically
        recoverable reserves, confirmation of the Company’s legal interest in mineral
        claims, further financing for exploration of its mineral claims, re-development
        of its mining and processing operations and commencement of future profitable
        production, or proceeds from the sale of all or an interest in its mineral
        properties interests.
 
 These
        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 property interests.  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 financial statements do not include any adjustments that might
        result from the outcome of this uncertainty.
 
 **NOTE
        2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**
 
 **(i)** **Cash
        and Cash Equivalents**
 
 The
        Company considers all highly liquid instruments with a maturity of three
        months
        or less at the time of issuance to be cash equivalents. As at January 31,
        2005,
        the Company has cash and cash equivalents in the amount of $2,223,535 which
        are
        over the federally insured limit (2004 - $2,772,457).
 
 
 **(ii)**
              **Office
                  furniture and equipment**
 
 Office
        furniture and equipment are recorded at cost on acquisition and amortized
        over
        their estimated useful lives at a rate of 30% declining balance per
        annum.
 
 Office
        furniture and equipment are written down to their net realizable value if
        it is
        determined that their carrying values exceed estimated future benefits to
        the
        Company.
 
 46
 
 **AVINO
        SILVER & GOLD MINES LTD.**
 **Notes
        to Financial Statements**
 **January
        31, 2005, 2004 and 2003**
 **(In
        Canadian Dollars)**
 
 **NOTE
        2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)**
 
 **(iii)**
              **Mineral
                  properties interests**
 
 Avino
        capitalizes all acquisition costs and related exploration and development
        expenditures until such time as the property to which they relate is brought
        into production, abandoned, or deemed not to contain economic reserves. The
        costs will be amortized on a unit-of-production basis following commencement
        of
        production or written off to operations if the property is sold, abandoned
        or
        deemed to not contain economic reserves. Proceeds received from option payments
        are netted against capital costs and related exploration and development
        expenditures of the optioned property. The amounts shown for mineral properties
        interests and deferred exploration and development costs represent net costs
        incurred to date and do not necessarily reflect present or future values.
 
 **(iv)**
              **Investments**
 
 Investments
        in the shares of companies over which Avino has the ability to exercise
        significant influence, but not control, are accounted for by the equity method.
        Accordingly, the Company includes its share of the investee’s net income or loss
        for the year in operations. In those instances where the Company’s share in the
        investee’s net losses exceeds the carrying amount of the Company’s investment,
        the Company records its share of the investee’s losses only if it has determined
        that it has obligations or commitments towards the investee.
 
 Investments
        in the shares of companies over which Avino does not have control or exercises
        significant influence are accounted for at cost. They are written down when
        there is a decline in value that is considered other than
        temporary.
 
 **(v)**
              **Foreign
                  currency translation**
 
 The
        foreign currency balances of the Company are translated into Canadian dollars
        using the temporal method as follows:
 
 Monetary
        assets and liabilities are translated at the year-end exchange
        rate.
 
 Non-monetary
        assets are translated at the rate of exchange in effect at their acquisition,
        unless such assets are carried at market or nominal value, in which case
        they
        are translated at the year-end exchange rate.
 
 Revenue
        and expense items are translated at the average exchange rate for the
        year.
 
 Foreign
        exchange gains and losses are included in operations.
 
 **(vi)**
              **Financial
                  instruments**
 
 The
        Company’s financial instruments include cash, accounts receivable, accounts
        payable and accrued liabilities, and amounts due to related parties. The
        carrying values of these financial instruments approximate their fair
        values.
 
 The
        Company is not exposed to significant interest or credit risk. It is subject
        to
        currency risk to the extend that the operations of its Mexican affiliate
        Cia
        Minera are conducted in Mexican currency.
  47
 **AVINO
        SILVER & GOLD MINES LTD.**
 **Notes
        to Financial Statements**
 **January
        31, 2005, 2004 and 2003**
 **(In
        Canadian Dollars)**
 
 **NOTE
        2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)**
 
 **(vii)**
              **Use
                  of estimates**
 
 The
        preparation of financial statements in conformity with Canadian generally
        accepted accounting principles requires management to make estimates and
        assumptions which affect the reported amounts of assets and liabilities and
        the
        disclosure of contingent assets and liabilities at the date of the financial
        statements and revenues and expenses for the periods reported. These estimates
        are reviewed periodically, and as adjustments become necessary, they are
        reported in operations in the period in which they become known.
 
 **(viii)**
              **Income
                  taxes**
 
 Future
        income tax assets and liabilities are recorded where the accounting net book
        values of assets and liabilities differ from their corresponding tax bases.
        The
        benefit of future income tax assets is only recognized when their realization
        is
        considered more likely than not.
 
 Effective
        March 19, 2004, the Company has adopted the CICA Emerging Issues Committee
        Abstract 146 (“EIC-146”) *Flow-Through
        Shares* and
        accordingly recognizes a future income tax liability on the renouncement
        of
        qualified exploration expenditures to its flow-through share investors. The
        Company further recognizes in operations the benefit of previously unrecorded
        future income tax assets on the effective date of renouncement of flow-through
        share related qualified exploration expenditures.
 
 **(ix)**
              **Stock-based
                  compensation**
 
 Effective
        February 1, 2004 the Company adopted new CICA Handbook Section 3870 *Stock
        Based Compensation and Other Stock-Based Payments* (“S3870”).
        Accordingly the Company recognizes stock-based compensation expense for the
        estimated fair value of equity-based instruments granted to both employees
        and
        non-employees. Compensation costs attributable to stock options or similar
        equity instruments granted to employees are measured at the fair value at
        the
        grant date, and 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.
 
 Prior
        to
        adopting S3870, the Company had adopted the disclosure-only method for reporting
        the estimated fair value of stock options granted to employees. The cumulative
        effect of the non-recognized fair value of stock options granted to employees
        in
        the period from February 1, 2003 to January 31, 2004, in the amount of $297,621,
        has been charged to opening deficit in the 2005 fiscal year without restatement
        of prior periods (see Note 7(d)).
 
 **(x)**  **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 on the potential exercise
        of
        options or warrants is not presented where anti-dilutive.
  48
 **AVINO
        SILVER & GOLD MINES LTD.**
 **Notes
        to Financial Statements**
 **January
        31, 2005, 2004 and 2003**
 **(In
        Canadian Dollars)**
 
 **NOTE
        2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)**
 
 **(xi)**  **Site
        restoration liability**
 
 The
        Company recognizes the fair value of its liability for asset retirement
        obligations, which in the mining industry are categorized as “site restoration
        costs”, in the year in which such liability is incurred and can be estimated.
        Upon recognition of an asset retirement obligation, the capitalized cost
        of the
        mineral properties interest is increased by the same amount as the liability.
        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 evaluated
        its site restoration costs to be $nil as at January 31, 2005 (2004 -
        $nil).
 
 **NOTE
        3 -** **OFFICE
        FURNITURE AND EQUIPMENT**
 
 **2005**
              
              
              
              **2004****Cost**
              
              **Accumulated
                  Amortization**
              
              **Net
                  Book Value**
              
              **Net
                  Book Value**$
              
              
              $
              
              
              $
              
              
              $Office
                  furniture and equipment
              
              
              4,744
              
              
              1,921
              
              
              2,823
              
              
              4,033
 
 **NOTE
        4 - MINERAL PROPERTIES INTERESTS**
 
 Mineral
        properties interests costs are comprised of the following:
 
 **2005**
              
              **2004**$
              
              
              $**Eagle
                  property**(Note 4 (a)):Acquisition
                  cost, beginning of year
              
              
              100,000
              
              
              100,000Additions
              
              
              -
              
              
              -Acquisition
                  cost, end of year
              
              
              100,000
              
              
              100,000Exploration
                  and development, beginning of year
              
              
              51
              
              
              -Assays
              
              
              961
              
              
              51Travel
              
              
              2,231
              
              
              -Exploration
                  and development, end of year
              
              
              3,243
              
              
              51Total
              
              
              103,243
              
              
              100,051**Aumax
                  property**(Note 4 (b)):Acquisition
                  cost, beginning of year
              
              
              104,000
              
              
              104,000Additions
              
              
              -
              
              
              -Acquisition
                  cost, end of year
              
              
              104,000
              
              
              104,000Exploration
                  and development, beginning of year
              
              
              1,467
              
              
              -Assays
              
              
              2,910Assessment
                  / taxes
              
              
              780
              
              
              192Geological
              
              
              11,658
              
              
              1,275Exploration
                  and development, end of year
              
              
              16,815
              
              
              1,467Total
              
              
              120,815
              
              
              105,467**Balance
                  carry-forward**
              
              
              224,058
              
              
              205,518
 49
 **AVINO
        SILVER & GOLD MINES LTD.**
 **Notes
        to Financial Statements**
 **January
        31, 2005, 2004 and 2003**
 **(In
        Canadian Dollars)**
 
 **NOTE
        4 - MINERAL PROPERTIES INTERESTS (Continued)**
 
 **2005**
              
              **2004**$
              
              
              $**Balance
                  carried forward**
              
              
              224,058
              
              
              205,518**Minto
                  property**(Note 4 (c)):Acquisition
                  cost
              
              
              129,400
              
              
              129,400Exploration
                  and development
              
              
              238,043
              
              
              238,043367,443
              
              
              367,443Less
                  accumulated write-down
              
              
              (367,442
              )
              
              (367,442
              )Total
              
              
              1
              
              
              1**Olympic-Kelvin
                  property**(Note
                  4(d)):Acquisition
                  cost
              
              
              93,500
              
              
              93,500Exploration
                  and development, beginning of year
              
              
              286,152
              
              
              267,570Assessment
                  / taxes
              
              
              -
              
              
              236Field
                  supply and services
              
              
              1,025
              
              
              -Geological
              
              
              25,932
              
              
              2,500Drilling
              
              
              45,903
              
              
              15,846Exploration
                  and development, end of year
              
              
              359,012
              
              
              286,152452,512
              
              
              379,652Less
                  accumulated write-down
              
              
              (361,070
              )
              
              (361,070
              )Total
              
              
              91,442
              
              
              18,582**Total
                  mineral properties interests**
              
              
              315,501
              
              
              224,101
 
 **(a)**
              **Eagle
                  property**
 
 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.
 
 **(b)**
              **Aumax
                  property**
 
 In
        2003
        the Company acquired a 100% interest in 6 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.
 
 **(c)**  **Minto
        property**
 
 The
        Company has a 100% interest in 8 Crown granted mineral claims, 8 reverted
        Crown
        granted mineral claims and one located mineral claim, located in the Lillooet
        Mining Division of British Columbia. The property was written down to a nominal
        value of $1 in fiscal 2002.
 
 50
 **AVINO
        SILVER & GOLD MINES LTD.**
 **Notes
        to Financial Statements**
 **January
        31, 2005, 2004 and 2003**
 **(In
        Canadian Dollars)**
 
 **NOTE
        4 - MINERAL PROPERTIES INTERESTS (Continued)**
 
 **(d)**  **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.
 
 Avino
        recommenced exploration of the property in fiscal 2004 and costs incurred
        since
        then have been deferred.
 
 **NOTE
        5 - INVESTMENT IN CIA DE MINERA MEXICANA DE AVINO, S.A. DE
        C.V.**
 
 **2005**
              
              **2004**$
              
              
              $Cia
                  de Minera Mexicana de Avino, S.A. de C.V. (”Cia de
                  Minera”)
              
              
              1
              
              
              1
 
 Avino
        owns 49% of the issued common shares of Cia de Minera, a private company
        incorporated in Mexico. Cia de Minera is involved in the mining of commercial
        ores and resource exploration and development, including the operation of
        a
        silver mine in the Province of Durango, Mexico. Cia de Minera ceased operations
        in fiscal 2002 when the operations of its silver mine became uneconomical.
 
 During
        the year ended January 31, 2005 Avino signed an agreement to purchase the
        remaining 51% of the issued common shares of Cia de Minera by issuing 4,000,000
        of its common shares. The proposed acquisition remains subject to shareholder
        and regulatory approval and will be recorded as a business combination when
        shareholder and regulatory approval has been obtained.
 
 During
        the years ended January 31, 2005 and 2004, Avino has incurred due diligence
        costs on its intended purchase of Cia de Minera as follows:
 
 **2005**
              
              **2004**$
              
              
              $Geological
                  assessment
              
              
              128,419
              
              
              16,261Professional
                  fees
              
              
              22,964
              
              
              26,835Advances
                  to Cia de Minera on account of its operations
              
              
              240,516
              
              
              79,348391,899
              
              
              122,444
 The
        Company did not incur any due diligence costs in 2003.
 
 The
        Company continues to account for its 49% investment in Cia de Minera using
        the
        equity method. For fiscal 2005 and 2004 the Company’s share in Cia de Minera’s
        net losses exceeded the carrying amount of the Company’s investment. The Company
        does not have a commitment or obligation towards Cia de Minera. Accordingly,
        the
        Company has not recorded its equity interest in the losses of Cia de Minera.
        If
        Cia de Minera returns to profitable operations, the Company’s equity share in
        the net income will first be applied against the Company’s equity interest in
        previously unrecorded losses of Cia de Minera. As at January 31, 2005 the
        total
        cumulative amount of losses of Cia de Minera that the Company has not recorded
        is approximately $Cdn 779,463.
 
 51
 **AVINO
        SILVER & GOLD MINES LTD.**
 **Notes
        to Financial Statements**
 **January
        31, 2005, 2004 and 2003**
 **(In
        Canadian Dollars)**
 
 **NOTE
        5 - INVESTMENT IN CIA DE MINERA MEXICANA DE AVINO, S.A. DE C.V.
        (Continued)**
 
 The
        summarized balance sheet of Cia de Minera applying Canadian generally accepted
        accounting principles as at December 31, 2004 is as follows:
 
 **ASSETS**$Current
                  Assets
              
              
              141,557Long
                  Term Investment in Securities
              
              
              2Mineral
                  Properties Interests
              
              
              2Property,
                  Plant and Equipment
              
              
              275.555Incorporation
                  costs
              
              
              1,707418,823**LIABILITIES**Current
                  Liabilities
              
              
              1,810,389Due
                  to Shareholder
              
              
              264,1832,074,572**SHAREHOLDERS’
                  DEFICIENCY**Share
                  Capital
              
              
              680,400Contributed
                  Surplus
              
              
              169,242Deficit
              
              
              (2,505,391
              )(1,655,749
              )418,823
 
 
 There
        were no material transactions for the one month period of January 2005 requiring
        disclosure in these financial statements.
 
 As
        at
        December 31, 2004 Cia de Minera has a working capital deficit of $Cdn 1,668,832
        and is dependent upon the financial support of its shareholders to re-commence
        its operations, to re-commence exploration for economically recoverable mineral
        reserves and to re-develop its mining and processing operations. It is not
        determinable whether Cia de Minera’s shareholders will be able to provide the
        financial support to continue the financing of Cia de Minera’s operating losses
        until it has reached self-sustaining operations.
 
 As
        at
        December 31, 2004 Cia de Minera is subject to the following
        contingency:
 
 Cia
        de
        Minera leases 4 core mineral claims in consideration for royalties. The lessor
        is currently contesting the underlying royalty agreement, and has filed a
        legal
        action claiming royalties owing in the amount of approximately $Cdn 3,770,000.
        Cia de Minera has accrued a $Cdn 807,000 liability and has paid an additional
        amount of $Cdn 244,000 into trust on account of royalties owing for past
        mineral
        production. Cia de Minera holds the position that it has fully provided for
        the
        royalty liability in its accounts, and intends to contest the action vigorously.
        The likely outcome of the claim is not determinable at this time.
 
 52
 **AVINO
        SILVER & GOLD MINES LTD.**
 **Notes
        to Financial Statements**
 **January
        31, 2005, 2004 and 2003**
 **(In
        Canadian Dollars)**
 
 **NOTE
        6 - INVESTMENTS IN RELATED COMPANIES**
 
 **2005**
              
              **2004**$
              
              
              $**Investments
                  carried at cost:**Bralorne
                  Gold Mines Ltd.
              
              
              422,848
              
              
              422,848Levon
                  Resources Ltd.
              
              
              4,236
              
              
              4,236427,084
              
              
              427,084
 **Bralorne
        Gold Mines Ltd. (“Bralorne”)**
 
 Avino’s
        investment in Bralorne consists of 179,149 common shares with a quoted market
        value of $465,787 (2004 - $1,253,974). Bralorne is a public company with
        common
        directors.
 
 **Levon
        Resources Ltd. (“Levon”)**
 
 Avino’s
        investment in Levon consists of 141,200 common shares with a quoted market
        value
        of $12,708 (2003 - $21,886). Levon is a public company with common
        directors.
 
 **NOTE
        7 - SHARE CAPITAL**
 
 **(a)**  **Authorized** :  100,000,000
        common shares without par value
 
 **Issued** :
 **2005**
              
              **2004****Shares**
              
              **Amount**
              
              **Shares**
              
              **Amount**$
              
              
              
              
              
              $Balance,
                  beginning of year
              
              
              9,869,775
              
              
              16,574,340
              
              
              6,188,525
              
              
              13,346,387Shares
                  issued for cash:-
                  private placements
              
              
              -
              
              
              -
              
              
              3,151,250
              
              
              3,121,488-
                  consideration (receivable) received
              
              
              -
              
              
              10,549
              
              
              -
              
              
              (11,820
              )-
                  exercise of stock options
              
              
              145,000
              
              
              161,600
              
              
              319,000
              
              
              185,020-
                  consideration received on prior year’s stock options
              
              
              -
              
              
              -
              
              
              -
              
              
              3,000-
                  exercise of warrants
              
              
              507,000
              
              
              263,640
              
              
              211,000
              
              
              109,720Stock-based
                  compensation on the exercise of stock options (Note 7(b)):
              
              
              -
              
              
              61,155
              
              
              -
              
              
              40,770Future
                  income tax liability on issuance of flow-through shares (Note
                  8):
              
              
              -
              
              
              (41,200
              )
              
              -
              
              
              -Share
                  issuance costs:
              
              
              -
              
              
              -
              
              
              -
              
              
              (220,225
              )652,000
              
              
              455,744
              
              
              3,681,250
              
              
              3,227,953Balance,
                  end of year
              
              
              10,521,775
              
              
              17,030,084
              
              
              9,869,775
              
              
              16,574,340
 
 53
 **AVINO
        SILVER & GOLD MINES LTD.**
 **Notes
        to Financial Statements**
 **January
        31, 2005, 2004 and 2003**
 **(In
        Canadian Dollars)**
 
 **NOTE
        7 - SHARE CAPITAL (Continued)**
  **(b)**  **Contributed
        surplus**
 
 **2005**
              
              **2004**$
              
              
              $Balance,
                  beginning of year
              
              
              184,969
              
              
              184,967Stock-based
                  compensation on stock options granted during the year
              
              
              81,540
              
              
              -Adjustment
                  for change in accounting for stock-based compensation (Note
                  7(d))
              
              
              297,621
              
              
              -Stock-based
                  compensation on stock options exercised during the year (Note
                  7(a))
              
              
              (61,155
              )
              
              -Balance,
                  end of year
              
              
              502,973
              
              
              184,967
 
 **(c)**  **Warrants:**
 Underlying
                  Shares
              
              Weighted
                  Average
                Exercise
                  PriceWarrants
                  outstanding, January 31, 2003
              
              
              -
              
              
              -Granted
              
              
              3,151,250
              
              $
              1.23Exercised
              
              
              (211,000
              )
              $
              0.52Warrants
                  outstanding, January 31, 2004
              
              
              2,940,250
              
              $
              1.28Exercised
              
              
              (507,000
              )
              $
              0.52Warrants
                  outstanding, January 31, 2005
              
              
              2,433,250
              
              $
              1.44
 
 The
        following share purchase warrants were outstanding as at January 31,
        2005:
 
 Warrants
                  Outstanding
              Expiry
                  Date
              Exercise
                  Price318,000
              August
                  14, 2005
              $0.522,115,250
              December
                  19, 2005
              $1.58
  54
 **AVINO
        SILVER & GOLD MINES LTD.**
 **Notes
        to Financial Statements**
 **January
        31, 2005, 2004 and 2003**
 **(In
        Canadian Dollars)**
 
 **NOTE
        7 - SHARE CAPITAL (Continued)**
 
 **(d)**  **Stock
        options:**
 Underlying
                  Shares
              
              Weighted
                  Average Exercise PriceStock
                  options outstanding, January 31, 2003
              
              
              471,000
              
              $
              0.58Granted
              
              
              515,000
              
              $
              1.20Exercised
              
              
              (319,000
              )
              $
              0.58Expired
              
              
              (52,000
              )
              $
              0.59Stock
                  options outstanding, January 31, 2004
              
              
              615,000
              
              $
              1.01Exercised
              
              
              (145,000
              )
              $
              1.11Expired
              
              
              (20,000
              )
              $
              1.20Stock
                  options outstanding, January 31, 2005
              
              
              450,000
              
              $
              1.09
 
 The
        following stock options were outstanding as at January 31, 2005:
 
 Stock
                  Options Outstanding
              Expiry
                  Date
              Exercise
                  Price80,000
              October
                  23, 2007
              $0.58370,000
              October
                  21, 2008
              $1.20
 
 The
        Company established a stock option plan in fiscal 2005, under which it may
        grant
        stock options totaling in aggregate 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 are fully vestable on the date of grant, except 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 expiry date can
        not
        exceed five years after the grant date.
 
 Effective
        February 1, 2004 the Company adopted the new CICA Handbook Section 3870 *Stock
        Based Compensation and Other Stock-Based Payments* (“S3870”).
        Accordingly, the Company ** recognizes
        stock-based compensation expense for the estimated fair value of stock options
        granted to both employees and non-employees. Compensation costs are measured
        at
        the fair value at the grant date, and expensed over the expected vesting
        period.
        The Company did not grant any stock options in fiscal 2005. Prior to adopting
        S3870, the Company had adopted the disclosure-only method for reporting the
        estimated fair value of stock options granted to employees.
 
 55
 **AVINO
        SILVER & GOLD MINES LTD.**
 **Notes
        to Financial Statements**
 **January
        31, 2005, 2004 and 2003**
 **(In
        Canadian Dollars)**
 
 **NOTE
        7 - SHARE CAPITAL (Continued)**
  **(d)**  **Stock
        options (continued):**
 
 In
        the
        third quarter of fiscal 2004, the Company granted 150,000 stock options to
        non-employee consultants, having a remaining life of 5 years to employees,
        exercisable at a price of $1.20 per share. Accordingly, the Company recorded
        in
        fiscal 2004 consulting expenses totaling $40,770 relating to fair value of
        these
        stock options which vested in 2004. The Company recorded in fiscal 2005
        consulting expenses totaling $81,540 relating to the fair value of the
        corresponding stock options which vested in 2005. In the third quarter of
        fiscal
        2004, the Company further granted 365,000 stock options to employees, having
        a
        remaining life of 5 years and exercisable at a price of $1.20 per share.
        Had
        compensation cost for the stock-based employee compensation been recorded,
        based
        upon the fair value of stock options, additional compensation expense for
        the
        year ended January 31, 2004 would have been $297,621. The $297,621 cumulative
        effect of the non-recognized fair value of stock options granted to employees
        in
        2004 has been charged to opening deficit in the 2005 fiscal year without
        restatement of prior periods.
 
 In
        the
        third quarter of fiscal 2003, the Company granted 50,000 stock options to
        non-employee consultants, having a remaining weighted average life of 5 years
        and exercisable at a price of $0.58 per share. The Company recorded consulting
        expense totaling $22,600 on account of these stock options. In the third
        quarter
        of fiscal 2003, the Company further granted 396,000 stock options to employees,
        having a remaining weighted average life of 5 years and exercisable at a
        price
        of $0.58 per share. Prior to adopting S3870 as at April 1, 2004, the Company
        had
        adopted the disclosure-only method for reporting the estimated fair value
        of
        stock options granted to employees. Had compensation cost for the stock-based
        employee compensation been recorded, based upon the fair value of stock options,
        additional compensation expense for the year ended January 31, 2003 would
        have
        been $179,000. In accordance with the transitional provisions of S3879, the
        Company did not recognize this compensation expense in its accounts.
 
 The
        fair
        value of the options granted to both employees and non-employees in fiscal
        2004
        was estimated at the date of granting using the Black-Scholes option pricing
        model with the following assumptions: risk free interest rate of 3.0%, dividend
        yield of 0%, volatility factor of 52%, and a weighted average life of 5 years.
        The weighted average grant date fair value of the stock options granted in
        fiscal 2004 was $0.82. The fair value of the options granted to both employees
        and non-employees in 2003 was estimated at the date of granting using the
        Black-Scholes option pricing model with the following assumptions: risk free
        interest rate of 3.0%, dividend yield of 0%, volatility factor of 65%, and
        a
        weighted average life of 5 years. The weighted average grant date fair value
        of
        the stock options granted in fiscal 2003 was $0.45.
  The
        Black-Scholes valuation model was developed for use in estimating the fair
        value
        of traded options which are fully transferable and freely traded. In addition,
        option valuation models require the input of highly subjective assumptions
        including the expected stock price volatility. Because the Company’s stock
        options have characteristics significantly different from those of traded
        options, and because changes in the subjective input assumptions can materially
        affect the fair value estimate, in management’s opinion, the existing models do
        not necessarily provide a reliable single measure of the fair value of its
        employee stock options.
 
 Pro
        forma
        results of operations may be materially different than actual results
        realized .
  56
 
 
 **AVINO
        SILVER & GOLD MINES LTD.**
 **Notes
        to Financial Statements**
 **January
        31, 2005, 2004 and 2003**
 **(In
        Canadian Dollars)**
 **NOTE
        7 - SHARE CAPITAL (Continued)**
  **(e)**  **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
          are claimable only by the investors of the flow-through common shares.
 As
        at
        January 31, 2005, the Company has a commitment to incur a further $258,378
        of
        qualifying Canadian exploration expenditures (as defined in the Canadian
        Income
        Tax Act) pursuant to the terms of exercise of flow-through share purchase
        warrants of which $57,200 are to be incurred by December 31, 2005 and $201,178
        by March 31, 2006.
 
 **NOTE
        8 - INCOME TAXES**
 
 The
        potential benefit of net operating loss carry forwards 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
        components of the net deferred tax asset, the statutory tax rate, the effective
        tax rate and the elected amount of the valuation allowance are as
        follows:
 
 **2005**
              
              **2004**
              
              **2003**Statutory
                  rate
              
              
              36
              %
              
              39
              %
              
              40
              %$
              
              
              $
              
              
              $Income
                  taxes recovered at the Canadian statutory rate
              
              
              293,000
              
              
              170,000
              
              
              66,000Less
                  permanent differences:Stock-based
                  compensation
              
              
              (29,400
              )
              
              -
              
              
              -Benefit
                  of tax losses not recognized in year
                -
                  valuation allowance
              
              
              (263,600
              )
              
              (170,000
              )
              
              (66,000
              )Benefit
                  of future income tax asset recognized on renouncement of flow-through
                  share related qualifying exploration expenditures
              
              
              41,200
              
              
              -
              
              
              -Income
                  tax recovery (expense) recognized in the year
              
              
              41,200
              
              
              -
              
              
              -
 
 57
 **AVINO
          SILVER & GOLD MINES LTD.**
 **Notes
          to Financial Statements**
 **January
          31, 2005, 2004 and 2003**
 **(In
          Canadian Dollars)**
  **NOTE
        8 - INCOME TAXES (Continued)**
  The
        approximate tax effects of each type of temporary difference that gives rise
        to
        future tax assets are as follows:
 
 **2005**
              
              **2004**$
              
              
              $Operating
                  loss carry forwards, expiring 2006 - 2012
              
              
              1,145,000
              
              
              1,152,000Canadian
                  exploration expenses, Canadian development expenses and foreign
                  exploration, and development expenses in excess of  book value of
                  mineral properties
              
              
              604,000
              
              
              715,000Undeducted
                  capital cost allowance
              
              
              73,500
              
              
              79,500Deferred
                  tax assets
              
              
              1,822,500
              
              
              1,946,500Less:
                  valuation allowance
              
              
              (1,822,500
              )
              
              (1,946,500
              )Net
                  deferred tax assets
              
              
              -
              
              
              -
  Effective
        March 19, 2004, the Company has adopted the CICA Emerging Issues Committee
        Abstract 146 (“EIC-146”) *Flow-Through
        Shares* in
        accounting for the future tax liability related to the renouncement of qualified
        exploration expenditures to investors of the Company’s flow-through share
        issuances. Accordingly, in 2005, the Company recognized a future tax liability
        on the date that the qualified exploration expenditures were effectively
        renounced in the amount of $41,200 and reduced its share capital correspondingly
        (see Note 7 (a)).
 
 Further
        in 2004, in accordance with EIC-146, the Company recognized in operations
        the
        benefit of previously unrecorded future income tax assets on the renouncement
        of
        flow-through share related qualified exploration expenditures in the amount
        of
        $41,200.
 
 The
        EIC146 has been applied to flow-through shares issued subsequent to March
        19,
        2004.
 
 **NOTE
        9 - RELATED PARTY BALANCES AND TRANSACTIONS**
 
 Balances
        and transactions with related parties not disclosed elsewhere in these financial
        statements are as follows:
 
 (a) Due
        from
        related parties comprises the following accounts receivable:
 
 **2005**
              
              **2004**$
              
              
              $Gray
                  Rock Resources Ltd.
              
              
              -
              
              
              2,884-
              
              
              2,884
 
 The
        amount due from the related party was non-interest bearing, non-secured and
        due
        on demand. Gray Rock Resources Ltd. is a company with a common
        director.
  58
 **AVINO
          SILVER & GOLD MINES LTD.**
 **Notes
          to Financial Statements**
 **January
          31, 2005, 2004 and 2003**
 **(In
          Canadian Dollars)**
 (b)
              Due
                  to related parties comprise the following accounts
                  payable:
 
 **2005**
                
                **2004**$
                
                
                $Bralorne
                
                
                3,145
                
                
                1,000Frobisher
                    Securities Ltd. - company controlled by a director
                
                
                -
                
                
                892Oniva
                    International Services Corporation (“Oniva”)
                
                
                138,499
                
                
                258,336141,644
                
                
                260,228
 
 **NOTE
        9 - RELATED PARTY BALANCES AND TRANSACTIONS (Continued)**
 
 (c)
              Oniva
                  provides the Company with certain office and administrative services.
                  Oniva is a private company controlled by two Directors of the Company.
 
 The
        Company paid or accrued the following amounts for administrative services
        and
        expenses to Oniva:
 
 **2005**
              
              **2004**
              
              **2003**$
              
              
              $
              
              
              $Salaries
                  and benefits
              
              
              59,884
              
              
              29,298
              
              
              7,869Office
                  and miscellaneous
              
              
              64,262
              
              
              57,517
              
              
              21,486124,146
              
              
              86,159
              
              
              29,355
 
 
 (d)
              The
                  Company paid or accrued the following amounts for management and
                  consulting to related companies, as
                  follows:
 
 **2005**
              
              **2004**
              
              **2003**$
              
              
              $
              
              
              $Intermark
                  Capital Corp. - company controlled by a director
              
              
              60,000
              
              
              30,000
              
              
              -Frobisher
                  Securities Ltd.
              
              
              -
              
              
              7,500
              
              
              32,581Wear
                  Wolfin Design Ltd. - company controlled by a director of a related
                  company
              
              
              12,500
              
              
              -
              
              
              -72,500
              
              
              37,500
              
              
              32,581
 
 All
        related party transactions are recorded at the value agreed upon by the Company
        and the related party.
 
 **NOTE
        10 - SEGMENTED INFORMATION**
 
 Substantially
        all of the Company’s operations are in one industry, the exploration of precious
        metals. All mineral property interests held directly by the Company are located
        in Canada.
  59
 **AVINO
          SILVER & GOLD MINES LTD.**
 **Notes
          to Financial Statements**
 **January
          31, 2005, 2004 and 2003**
 **(In
          Canadian Dollars)**
  **NOTE
        11 - NET CHANGE IN NON-CASH CURRENT ASSETS AND LIABILITIES**
 
 **2005**
              
              **2004**
              
              **2003**$
              
              
              $
              
              
              $Accounts
                  receivable and prepaid expenses
              
              
              (23,498
              )
              
              (28,948
              )
              
              (476
              )Due
                  from related parties
              
              
              2,884
              
              
              157,432
              
              
              (477
              )Accounts
                  payable and accrued liabilities
              
              
              19,047
              
              
              29,555
              
              
              (44,688
              )Due
                  to related parties
              
              
              (118,584
              )
              
              (93,915
              )
              
              32,331(120,151
              )
              
              64,124
              
              
              (13,310
              )
 **NOTE
        12 - SUBSEQUENT EVENTS**
 
 Subsequent
        to the fiscal year end the following events occurred:
 
 (i)
              The
                  Company issued 572,500 stock options with an exercise price of
                  $1.35 per
                  share and an expiry date of April 5,
                  2010.
 
 (ii)
              The
                  Company issued 176,380 common shares for total proceeds of $261,106
                  pursuant to the exercise of
                  warrants.
 
 (iii)
              The
                  Company has submitted an offer on the purchase of mining assets
                  in the
                  Yukon Territory, Canada and paid $100,000 as a deposit relating
                  thereto,
                  pursuant to a request for tender. The mining assets include mineral
                  claims, mining leases, Crown grants, mining equipment, buildings
                  and
                  infrastructure, surface leases and parcels of land. The offer is
                  firm and
                  irrevocable until June 15, 2004, at which time the vendor will
                  select a
                  preferred purchaser and return the $100,000 deposit to the non-selected
                  purchasers. The final purchase is subject to due diligence review
                  and
                  negotiations of subsidiary agreements by the preferred purchaser.
 
 **NOTE
        13 - COMPARATIVE FIGURES**
 
 Certain
        fiscal 2003 and 2004 comparative figures have been reclassified to conform
        to
        the financial statement presentation adopted for 2005.
 
 60
 **AVINO
          SILVER & GOLD MINES LTD.**
 **Notes
          to Financial Statements**
 **January
          31, 2005, 2004 and 2003**
 **(In
          Canadian Dollars)**
 **NOTE
        14 - DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED
        ACCOUNTING PRINCIPLES**
 
 The
        consolidated financial statements of the Company have been prepared in
        accordance with Canadian generally accepted accounting principles (“Canadian
        GAAP”), which 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
        consolidated financial statements are summarized as follows:
 
 **2005**
              
              **2004**
              
              **2003****Consolidated
                  statements of operations**
              
              $
              
              
              $
              
              
              $Loss
                  for year under Canadian GAAP
              
              
              (814,710
              )
              
              (445,591
              )
              
              (186,991
              )Future
                  income tax benefit on renouncement of qualified Canadian exploration
                  expenditures (ii)
              
              
              (41,200
              )
              
              -
              
              
              -Exploration
                  and other expenses (iii)
              
              
              (91,400
              )
              
              (20,100
              )
              
              (204,000
              )Net
                  loss for the year under U.S. GAAP (iv)
              
              
              (947,310
              )
              
              (465,691
              )
              
              (390,991
              )Comprehensive
                  income (loss) items:Unrealized
                  gain (loss) on investments (i)
              
              
              (797,365
              )
              
              543,771
              
              
              477,058Net
                  comprehensive income (loss) items
              
              
              (1,744,675
              )
              
              78,080
              
              
              (86,067
              )Income
                  (loss) per share under U.S. GAAP (iv)
              
              
              (0.09
              )
              
              (0.07
              )
              
              (0.07
              )
  **2005**
              
              **2004****Consolidated
                  balance sheets**
              
              $
              
              
              $Total
                  assets under Canadian GAAP
              
              
              3,084,430
              
              
              3,522,548Deferred
                  exploration expenditures (iii)
              
              
              (315,501
              )
              
              (224,101
              )Investments
                  (i)
              
              
              51,411
              
              
              848,776Total
                  assets under US GAAP
              
              
              2,820,340
              
              
              4,147,223Total
                  equity under Canadian GAAP
              
              
              2,878,257
              
              
              3,216,838Deferred
                  exploration expenditures (iii)
              
              
              (315,501
              )
              
              (224,101
              )Investments
                  (i)
              
              
              51,411
              
              
              848,776Total
                  equity under US GAAP
              
              
              2,614,167
              
              
              3,841,513
   61
 **AVINO
          SILVER & GOLD MINES LTD.**
 **Notes
          to Financial Statements**
 **January
          31, 2005, 2004 and 2003**
 **(In
          Canadian Dollars)**
  **NOTE
            14 - DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED
            ACCOUNTING PRINCIPLES (Continued)**
 **2005**
              
              **2004**
              
              **2003****Statements
                  of cash flows**
              
              $
              
              
              $
              
              
              $Cash
                  flows used in operating activities under Canadian GAAP
              
              
              (893,311
              )
              
              (339,986
              )
              
              (177,355
              )Mineral
                  properties expenditures (iii)
              
              
              (91,400
              )
              
              (20,100
              )
              
              (4,000
              )Cash
                  flows used in operating activities under US GAAP
              
              
              (984,711
              )
              
              (360,086
              )
              
              (181,355
              )Cash
                  flows (used in) from investing activities under Canadian
                  GAAP
              
              
              (91,400
              )
              
              (34,844
              )
              
              1,142Mineral
                  properties expenditures (iii)
              
              
              91,400
              
              
              20,100
              
              
              4,000Cash
                  flows (used in) from investing activities under US GAAP
              
              
              -
              
              
              (14,744
              )
              
              5,142
  **(i)**
              **Investments**
 
 U.S.
        GAAP
        requires investments held for sale to be recorded at market. 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.
 
 **(ii)**
              **Flow-through
                  shares**
 
 Under
        Canadian income tax legislation a company is allowed to issue flow-through
        shares pursuant to which the Company renounces qualifying 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 qualifying exploration expenditures at the amount that
        the
        carrying value of the flow-through shares exceeds their tax basis. Under
        U.S.
        GAAP, the recognition of this future income tax benefit is limited to the
        extent
        that the 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 U.S. GAAP, however, unexpended flow-through funds are considered to
        be
        restricted and not part of cash and cash equivalents. As at January 31, 2005,
        the Company had $258,378 of restricted, unexpended flow-through funds (2004
        -
        $242,100).
   62
 **AVINO
            SILVER & GOLD MINES LTD.**
 **Notes
          to Financial Statements**
 **January
          31, 2005, 2004 and 2003**
 **(In
          Canadian Dollars)**
  **NOTE
            14 - DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED
            ACCOUNTING PRINCIPLES (Continued)**
 **(iii)**
              **Mineral
                  properties interests**
 
 U.S.
        GAAP
        requires acquisition and exploration costs to be expensed in the period
        occurred, whereas Canadian GAAP allows for the deferral of these costs subject
        to periodic assessment for impairment.
 
 **(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.
 
   63
   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:  January
        17, 2006    AVINO
        SILVER & GOLD MINES LTD **.**
 
 By:  */s/ David Wolfin*
 David
        Wolfin, President
 (Chief Executive Officer)
         64