**UNITED
      STATES**
      **SECURITIES
      AND EXCHANGE COMMISSION**
      **WASHINGTON,
      D.C. 20549**
      **__________________**
      
      **FORM
      20-F**
      **_________________________**
      
      [
      ]REGISTRATION
      STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF*THE
      SECURITIES EXCHANGE ACT OF 1934.*
      
      [X]ANNUAL
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE*SECURITIES
      EXCHANGE ACT OF 1934*
      For
      the fiscal year ended January 31, 2003
      
      [
      ]TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE*SECURITIES
      EXCHANGE ACT OF 1934*
      
      For
      the Transaction Period from ______________ to
      ___________________
      
      Commission
      File Number 0-9266
      
      **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, 2003 was
      6,188,525
      
      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
    10Item
      5.Operating
      and Financial Review and Prospects
    17Item
      6.Directors,
      Senior Management and Employees
    21Item
      7.Major
      Shareholders and Related Party Transactions
    26Item
      8.Financial
      Information
    27Item
      9.The
      Offer and Listing
    27Item
      10.Additional
      Information
    28Item
      11.Quantitative
      and Qualitative Disclosures About Market Risk
    35Item
      12.Description
      of Securities Other than Equity Securities
    36Part
      II
    36Item
      13.Defaults,
      Dividend Arrearages and Delinquencies
    36Item
      14.Material
      Modifications to the Rights of Security Holders and Use of
      Proceeds
    36Item
      15.Controls
      and Procedures
    36Item
      16.[Reserved]
    36Item
      16A.Audit
      Committee Financial Expert
    36Item
      16B.Code
      of Ethics
    36Item
      16C.Principal
      Accountant Fees and Services
    36Item
      16D.Exemptions
      from the Listing Standards for Audit Committees
    37Item
      16E.Purchases
      of Equity Securities by the Issuer and Affiliated
    Purchasers
    37Part
      III
    37Item
      17.Financial
      Statements
    37Item
      18.Financial
      Statements
    37Item
      19.Exhibits
    37
 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.
 
 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.
  4
 ***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.
  ***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
 ***preliminary
feasibility study*** advancedto 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, 2003, 2002, 2001, 2000, and 1999, is derived from
the audited financial statements of the Company. The audited financial
statements and notes for each of the years in the three year period ended
January 31, 2003, 2002 and 2001 are included in this Annual Report. The selected
historical financial information for the years ended January 31, 2000 and 1999,
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,****2003**
    
    **2002**
    
    **2001**
    
    **2000**
    
    **1999****Summary**
      **of** **Operations:**Interest
      and miscellaneous Income
    
    $
    197
    
    $
    1,195
    
    $
    643
    
    $
    2,567
    
    $
    3,563Expenses
      General and administrative
    
    
    147,091
    
    
    364,610
    
    
    341,778
    
    
    474,152
    
    
    562,953Write-down
      of mining Properties
    
    
    -
    
    
    1,664,905
    
    
    -
    
    
    -
    
    
    1,000,000Equity
      in loss of Mexican Affiliate
    
    
    -
    
    
    1,259,438
    
    
    770,296
    
    
    199,954
    
    
    244,806Capital
      Tax
    
    
    -
    
    
    -
    
    
    -
    
    $
    12,260
    
    
    -Loss
      in sale of Joint Venture
    
    
    40,097
    
    
    -
    
    
    -
    
    
    -
    
    
    -Write-down
      of investment
    
    
    -
    
    
    2,824
    
    
    7,060
    
    
    -
    
    
    296,000Net Income (loss)
      for year
    
    
    (186,991
    )
    
    (3,290,582
    )
    
    (1,118,491
    )
    
    (683,799
    )
    
    (2,107,175
    )Income
      (loss) per share
    
    
    (0.03
    )
    
    (0.68
    )
    
    (0.24
    )
    
    (0.15
    )
    
    (0.19
    )**As at January
    31,****2003**
    
    
    **2002**
    
    
    **2001**
    
    
    **2000**
    
    
    **1999****Balance
      Sheet Data:**Total
      assets
    
    
    814,546
    
    
    2,239,468
    
    
    5,026,775
    
    
    5,807,362
    
    
    6,367,962Cash
      and term deposits
    
    
    20,104
    
    
    1,317
    
    
    6,267
    
    
    5,600
    
    
    134,724Note
      ("Debenture") payable
    
    
    -
    
    
    1,629,171
    
    
    1,415,960
    
    
    1,365,175
    
    
    1,339,744Total
      liabilities
    
    
    380,070
    
    
    2,032,601
    
    
    1,865,914
    
    
    1,528,010
    
    
    1,439,081Shareholders'
      equity
    
    
    434,476
    
    
    206,867
    
    
    3,160,861
    
    
    4,279,352
    
    
    4,928,881Number
      of Shares Issued
    
    
    6,188,525
    
    
    5,463,525
    
    
    4,577,686
    
    
    4,577,686
    
    
    4,519,635**United
      States GAAP:**
    
    **Year
      Ended January 31,****2003**
    
    
    **2002**
    
    
    **2001**
    
    
    **2000**
    
    
    **1999****Summary
      of Operations:**Net
      Income (loss) per Canadian GAAP
    
    $
    (186,991
    )
    $
    (3,290,582
    )
    $
    (1,118,491
    )
    $
    (683,799
    )
    $
    (2,107,175
    )Adjustments
    
    
    (204,000
    )
    
    729,466
    
    
    (7,383
    )
    
    169,244
    
    
    82,674Net
      Income (loss) per US GAAP
    
    
    (390,991
    )
    
    (2,561,116
    )
    
    (1,125,874
    )
    
    (514,555
    )
    
    (2,024,501
    )Adjustments
    
    
    305,005
    
    
    89,750
    
    
    (255,093
    )
    
    (6,530
    )
    
    285,000Net
      comprehensive income (loss)
    
    
    (85,986
    )
    
    (2,471,366
    )
    
    (1,380,967
    )
    
    (521,085
    )
    
    (1,739,501
    )Net
      Income (loss) per share per US GAAP
    
    
    (0.06
    )
    
    (0.47
    )
    
    (0.25
    )
    
    (0.11
    )
    
    (0.45
    )**As at January
    31,****2003**
    
    
    **2002**
    
    
    **2001**
    
    
    **2000**
    
    
    **1999****Balance
      Sheet Data:**Total
      assets under Canadian GAAP
    
    
    814,546
    
    
    2,239,468
    
    
    5,026,775
    
    
    5,807,362
    
    
    6,367,962Adjustments
    
    
    101,004
    
    
    (175,901
    )
    
    (1,024,938
    )
    
    (762,462
    )
    
    (819,723
    )Total
      assets under US GAAP
    
    
    915,550
    
    
    2,063,567
    
    
    4,001,837
    
    
    5,044,900
    
    
    5,548,239Total
      equity under Canadian GAAP
    
    
    434,476
    
    
    206,867
    
    
    3,160,861
    
    
    4,279,352
    
    
    4,928,881Adjustments
    
    
    101,004
    
    
    (175,901
    )
    
    (1,024,938
    )
    
    (762,462
    )
    
    (913,095
    )Total
      equity under US GAAP
    
    
    535,480
    
    
    30,966
    
    
    2,135,923
    
    
    3,516,890
    
    
    4,015,786
 
 **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**1999
    1.4897
    1.5095
    1.5770
    1.40752000
    1.4803
    1.4517
    1.5286
    1.43502001
    1.4899
    1.4995
    1.5600
    1.44172002
    1.5568
    1.5915
    1.6128
    1.49332003
    1.5655
    1.5286
    1.6112
    1.5108
 
 6
 The
following table sets forth the high and low exchange rate for the past six
months. As of August 9, 2005, the exchange rate was CDN$1.2140 for each
US$1.
 
 **Month**
    
    **High**
    
    **Low**February
      2005
    
    
    1.2562
    
    
    1.2294March
      2005
    
    
    1.2463
    
    
    1.2017April
      2005
    
    
    1.2568
    
    
    1.2146May
      2005
    
    
    1.2703
    
    
    1.2373June
      2005
    
    
    1.2578
    
    
    1.2256July
      2005
    
    
    1.2437
    
    
    1.2048
 ****
 **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,
2003, we had a net loss of $186,991 and an accumulated deficit on January 31,
2003 of $12,995,009. 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.
 
 7
 *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.
 
 8
 *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.
 
 9
 *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 2003 fiscal year, the Company's common share price fluctuated between a low
of $0.32 and a high of $1.74. 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.
 
 10
 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 2000 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,
$319,864 has been spent on the care and maintenance of the Avino 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.
 
 11
 **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.
 
 **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".
  12
  
  **Eagle
Property**
 
 *Ownership.* The Eagle
property is wholly owned by the Company and was acquired in December 2002 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.
  **Aumax
Property**
  *Ownership.* The Aumax
Property is wholly owned by the Company and was acquired in August 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.
  13
 *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.
 
 14
 *History.* Drilling
began on the Olympic-Kelvin property in January 2003, 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 2003 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.
  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.
  15
 *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 $319,864 on the care and
maintenance of the mine.
 
 The Avino
Mine and mill were historically serviced by a heavy equipment repair shop, a
mechanical and electrical shop, an assay office, a metallurgical laboratory, a
warehouse and other auxiliary facilities. Electric power can be supplied by the
government-owned Federal Electricity Commission, referred to as the "FEC" which
presently is capable of supplying up to 2500 HP to the Avino Mine and mill. As
the mill is expanded, additional power must be obtained from the FEC. In order
to obtain the additional electric power, it has been necessary for the FEC in
1983 to construct a new power line approximately 12 miles in length which is
capable of supplying an additional 2750 HP, sufficient for the maximum proposed
increase in mill capacity.
 
 Water for
use at the mill is primarily obtained from: (i) wells; (ii) old underground
workings; and (iii) earth dams. In prior years, the water supply has been
insufficient to increase the capacity of the mill. In 1989, Cia Minera
constructed a dam in hope of storing water for use in the dry season. The dam
has a capacity of 1,000,000 cubic meters. Cia Minera had entered into an
agreement with the Federal Government of Mexico for the repair and improvement
of a government dam located approximately five and one-half kilometers from the
mine. The contract provides that the Government and Cia Minera will each
contribute 50% of the cost of repairing the dam and raising the height by six
meters and to construct a new spillway. The work was substantially completed
during 1989, and Cia Minera installed a pipeline system allowing water to flow
from the Government dam to the mill. The contract provides that Cia Minera will
share the use of the Government dam with local farmers. The local farmers have
priority for the use of a specific volume of the water and the balance is
available for use by the mine. The water can be transmitted to the mine by means
of five kilometers of pipe which has been installed by Cia Minera. In early
1996, Cia Minera also drilled a well 400 meters in depth on a property owned by
Cia Minera, ten kilometers from the mill site. A pipeline has been constructed,
and Cia Minera has sufficient water for its own needs. Further, from 1995 to
1998, Mexico experienced a drought. While the drought adversely affected
operations in late 1995 until April 1996, Cia Minera believes that the new well
will adequately meet its water requirements. In addition, Cia Minera utilizes
water conservation practices, such as recirculation of water and capturing rain
water in earth dams.
 
 16
 *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-Pioneer Gold Mines Ltd., referred to as
"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 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, 2003, 2002 and 2001 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.
 
 17
 **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. 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.
 
 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.
 
 18
 **Fiscal
year ended January 31, 2003 compared to fiscal year ended January 31,
2002**
 
 The
Company reported a net loss of $186,991 or $0.03 per share, for the fiscal year
ended January 31, 2003, compared to a net loss of $3,290,582 or $0.68 per share
for the corresponding period in 2002. The Company had no operating revenues.
 
 There
were no write-downs or write-off during the 2003 fiscal year. The comparative
figures for 2002 include a write-down of the Bralorne Project of $1,664,905 and
an equity loss in Cia Minera of $1,259,438. Also included in the comparative
figures for 2002 was $105,294 in interest expense and $120,268 in foreign
exchange loss compared to no such expenses or losses being incurred in 2003. The
Company assigned the debentures to Bralorne-Pioneer Gold Mines Ltd. and
therefore did not accrue interest or foreign exchange during the year. Included
in the loss this year is $40,097 representing the loss on the sale of the joint
venture to Bralorne-Pioneer Gold Mines Ltd.
 
 The
balance of the loss for 2003 relates to administrative expenses, excluding stock
based compensation and general mineral exploration costs, of $119,638 compared
to $139,048 for the 2002 fiscal year. Audit and accounting fees have decreased
by approximately $3,010 as a result, in part, of re-categorizing certain
expenses to office and miscellaneous resulting in its increase during the year
and as a result of additional audit work being carried out in 2002 related to
Cia Minera and the joint venture with Bralorne in 2002. Legal fees have declined
by $6,053 from $8,161 in 2002 to $2,108 in 2003 due, in part, to preparing
certain general corporate documentation in house.
 
 Shareholder
information costs have decreased by $13,726 and salaries and benefits have
decreased by $6,029. The reduction in costs is a result of the company reducing
the investor relations activity during the year. Regulatory and compliance fees
have increased by $3,385 as a result of the increase in fees charged by the
regulatory bodies for filing certain documentation.
 
 **Fiscal
year ended January 31, 2002 compared to fiscal year ended January 31,
2001**
 
 The
Company reported a net loss of $3,290,582, or $0.68 per share, for the year
ended January 31, 2002, compared to a net loss of $1,118,491 or $0.24 per share,
for the year ended January 31, 2001. The Company had no operating revenues in
either 2002 or 2001. The Company recorded an equity loss in Cia Minera of
$1,259,438 to reduce the carrying value to a nominal $1 given that the
production operations are uneconomical at present and have been shut down. The
Company also wrote-down its deferred exploration expenditures related to the
100% owned mineral claims in Bralorne and the 50% owned mineral claims in
Bralorne for a total of $1,664,905 to $1,600,000, being the book value of
limited recourse debt secured by the property net of its share of sundry current
assets of the joint venture. Subsequent to the year-end, Avino transferred all
of its interest in the Bralorne project to Bralorne-Pioneer Gold Mines Ltd.,
together with the liabilities under the debentures for unpaid principal and
accrued interest. The Company wrote-down the investment in Levon Resources Ltd.
by $2,824 to quoted market value of $4,236 at January 31, 2002. The Company
recorded a loss on foreign exchange of $120,268, and accrued interest on the
debentures of $105,294 during the year. The balance of the loss of $139,048 was
other administrative expenses.
 
 **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.
 
 19
 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, 2003 the Company had working capital deficit of
$196,610. 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.
 
 **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, 2003, the Company did not have any outstanding contractual
obligations:
 
 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.
 
 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, 2003. The directors were re-elected by the Company’s
shareholders on July 17, 2003 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. In August of 2003, David Wolfin was appointed President of the
Company and Louis Wolfin resigned as President. Ernest Calvert resigned as Vice
President in August of 2003 as well.
 
 21
 **Name
      and Present Position****with
      the Company**
    **Principal
      Occupation**
    **Director/Officer
      Since**Michael
      Baybak
      Director
    Business
      Consultant
    June
      1990Ernest
      Calvert
      Director
    Vice
      President and Director of the Company; Director of three other public
      companies (Bralorne Gold Mines Ltd., formerly Bralorne-Pioneer Gold Mines
      Ltd., Coral Gold Resources Ltd., formerly Coral Gold Corp., and Levon
      Resources Ltd.)
    June
      1990William
      Glasier
      Director
    Director
      of four other public companies (President of Mill Bay Ventures Inc.,
      Bralorne Gold Mines Ltd., formerly Bralorne-Pioneer Gold Mines Ltd., Coral
      Gold Resources Ltd., formerly Coral Gold Corp., and Levon Resources
      Ltd.)
    August
      1990William
      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(1)
      Director
    Director
      of three other public companies (Bralorne Gold Mine Ltd., formerly
      Bralorne-Pioneer Gold Mines Ltd., Coral Gold Resources Ltd., formerly
      Coral Gold Corp. and Gray Rock Resources Ltd.).
    October
      1995Louis
      Wolfin
      Director/President
    President
      of the Company;
      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 Mill Bay Ventures Inc.)
    August
      1969Andrea
      Regnier
      Secretary
    Director
      and/or officer of several public companies.
    July
      1995
 (1)  Mr. David
Wolfin is the son of Mr. Louis Wolfin.
 
 **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, 2003, 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 471,000 shares of the Company as
at January 31, 2003. See "Options to Purchase Securities of the
Company".
 
 22
 The
following table sets forth details of the compensation paid during the Company's
fiscal year ended January 31, 2003 to senior management:
 
 **Name/
      Principal**
      **Position**
    **Year****(1)**
    **Annual
      Compensation**
    **Long-Term
      Compensation**
    **All
      Other Compensation**
      **$****Awards**
    **Payouts****Salary**
      **$**
    **Bonus**
      **$**
    **Other
      Annual Compensation**
      **$**
    **Securities
      Under Options/ SARs Granted**
      **(#)**
    **Restricted
      Shares/or Restricted Share Units**
      **$**
    **LTIP
      Payouts**
      **$**Louis
      Wolfin
      President
    2003
      2002
      2001
    30,000
      30,000
      30,000
    -
      -
      -
    -
      -
      -
    -
      150,000
      150,000
    -
      -
      -
    -
      -
      -
    -
      -
      -
 Notes:  (1) Year
ended January 31.
 
 **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 comprised of six directors. The size and experience of the board
is important for providing the Company with effective governance in the mining
industry. The board’s mandate and responsibilities can be effectively and
efficiently administered at its current size. The board has functioned, and is
of the view that it can continue to function, independently of management as
required. At the Annual General Meeting, held on July 17, 2003, the shareholders
elected Messrs. Baybak, Calvert, Glasier, Kocken, Wolfin and Wolfin as
directors.
 
 The board
has considered the relationship of each director to the Company and considers
four of the six directors to be "unrelated" (Messrs. Baybak, Calvert, Glasier
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.
 
 23
 **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.
 
 The audit
committee consists of three directors (Messrs. William Glasier, David Wolfin and
Ernest Calvert) two of whom are unrelated (Messrs. Glasier and Calvert) 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.
 
 It is
intended that this committee eventually will be comprised solely of unrelated
directors.
 
 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.
 
 24
 **D.**  **Employees**
 
 The
Company had no employees as at January 31, 2003.
 
 **E.**  **Share
Ownership**
 
 The
following table sets forth the share ownership of the directors and officers of
the Company as of January 31, 2003. No person owned more than 10% of the
outstanding common shares.
 
 **Name
      of Beneficial Owner**
    **Number
      of Shares**
    **Percent**Michael
      Baybak
    -
    -Ernest
      Calvert
    -
    -William
      Glasier
    37,500
    *William
      Kocken
    25,000
    *David
      Wolfin
    -
    -Louis
      Wolfin
    293,761
    4.75Andrea
      Regnier
    -
    -
 * 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
    
    
    225,000
    
    $
    0.58
    
    
    October
      23, 2002
    
    
    October
      23, 2007Ernest
      Calvert
    
    
    25,000
    
    $
    0.58
    
    
    October
      23, 2002
    
    
    October
      23, 2007William
      Glasier
    
    
    25,000
    
    $
    0.58
    
    
    October
      23, 2002
    
    
    October
      23, 2007William
      Kocken
    
    
    25,000
    
    $
    0.58
    
    
    October
      23, 2002
    
    
    October
      23, 2007Michael
      Baybak
    
    
    25,000
    
    $
    0.58
    
    
    October
      23, 2002
    
    
    October
      23, 2007Andrea
      Regnier
    
    
    20,000
    
    $
    0.58
    
    
    October
      23, 2002
    
    
    October
      23, 2007Michael
      Baybak
    
    
    25,000
    
    $
    0.60
    
    
    February
      3, 1998
    
    
    February
      3, 2003***Other
      Insiders****Nil*
 
 As at
January 31, 2003, there was an aggregate of 471,000 options outstanding and
there were no options granted during fiscal 2003.
 
 25
 **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, 2003, 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, 2003:
 
 **Name**
    **Number
      of Shares of****Common
      Stock Owned**
    **Percent
      of Class**All
      Officers and Directors as a Group (seven persons)
    356,261
    5.76%
 
 **B.**  **Related
Party Transactions**
 
 Consulting
fees of $32,581 were paid to a private company owned by a director of the
Company in 2003. In 2002, $30,822 was paid to the same private
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 $29,355 was charged to operations in relation to the
cost sharing agreement referred to above. In 2002, the amount was $30,414.
 
 The
Company entered into an accounting and administrative services consulting
agreement with Dawn Pacific Management Ltd. at a rate of $1,500 per month. 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.
 
 The
Company did not make any reimbursements to Oniva for its share of
the Bralorne project joint venture mineral property expenditures in 2003. 
In 2002, the Company made reimbursements of $54,027 to Oniva.
 
 The
Company did not receive any reimbursement from Coral Gold Corporation,
a company with common management and common directors, in regards to the
Bralorne and Loco property and the Avino/Bralorne-Pioneer joint venture in
2003.  In 2002, the Company received $29,263.
 
 Due to
related parties consists of $53,004 (2002: $20,422) to Frobisher Securities
Ltd.; $258,639 (2002: $258,890) to Oniva; and $52,500 (2002: $52,500) to the
president of the Company.
 
 Due from
related parties consists of $33,852 (2002: $33,010) from Coral Gold Corporation;
$124,780 (2002: $129,922) from Bralorne-Pioneer Gold Mines Ltd. and $1,684
(2002: $2,049) from Levon Resources Ltd.
 
 The
amounts due to Frobisher Securities Ltd. and Oniva are non-interest bearing,
non-secured and due on demand. The amounts due to the president of the Company
bear interest at 7% and are non-secured and due on demand.
  As at the
end of fiscal 2002, the Company held a 50% joint venture interest in 154 Crown
granted mineral claims, five reverted Crown granted mineral claims, four located
mineral claims and two placer leases with Bralorne, a public company with common
directors. Effective June 20, 2002, the Company transferred its interest in the
joint venture property to Bralorne for a nominal amount and recognized a loss of
$40,097 on the disposition.
 
 As at the
end of fiscal 2003, the Company held 1,791,392 common shares of Bralorne at a
carrying amount of $422,848 (2002: $422,848) and 141,200 common shares of Levon
Resources Ltd., a public company with common directors, at a carrying amount of
$4,236 (2002: $4,236).
 
 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.
 
 26
 **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, 2003 and 2002.
 Statement
of Operations and Deficit for the years ended January 31, 2003, 2002, and
2001.
 Statement
of Cash flows for the years ended January 31, 2003, 2002, and 2001.
 Notes to
Financial Statements for the years ended January 31, 2003, 2002, and
2001.
 
 *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, 2003, there were 707 holders of record in the United States holding
69.18% of the
Company’s outstanding common shares representing approximately 44.95 % of the
total shareholders. The Company’s common shares are issued in registered form
and the percentage of shares reported to be held by record holders in the United
States is taken from the records of the Pacific
Corporate Trust Company in the
City of Vancouver, the registrar and transfer agent for the common
shares.
 
 The
following sets forth the high and low prices expressed in Canadian dollars on
the TSX
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**2003
    
    
    1.74
    
    
    0.322002
    
    
    0.75
    
    
    0.182001
    
    
    0.63
    
    
    0.182000
    
    
    0.93
    
    
    0.351999
    
    
    0.93
    
    
    0.35**2002-2003**
    
    
    **High**
    
    
    **Low**Fourth
      Quarter ended January 31, 2003
    
    
    1.40
    
    
    0.68Third
      Quarter ended October 31, 2002
    
    
    0.95
    
    
    0.60Second
      Quarter ended July 31, 2002
    
    
    1.74
    
    
    0.32First
      Quarter ended April 30, 2002
    
    
    0.54
    
    
    0.33**2001-2002**
    
    
    **High**
    
    
    **Low**Fourth
      Quarter ended January 31, 2002
    
    
    0.50
    
    
    0.30Third
      Quarter ended October 31, 2001
    
    
    0.59
    
    
    0.29Second
      Quarter ended July 31, 2001
    
    
    0.75
    
    
    0.25First
      Quarter ended April 30, 2001
    
    
    0.50
    
    
    0.18**Last
      Six Months**
    
    
    **High**
    
    
    **Low**July
      2005
    
    
    1.44
    
    
    1.15June
      2005
    
    
    1.66
    
    
    1.22May
      2005
    
    
    1.59
    
    
    1.13April
      2005
    
    
    1.60
    
    
    1.23March
      2005
    
    
    1.90
    
    
    1.32February
      2005
    
    
    1.99
    
    
    1.02
 
 27
 **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.
 
 **Item
10. Additional Information**
 
 **A.**  **Share
Capital**
 
 Not
Applicable.
 
 **B.**  **Memorandum
and Articles of Association**
 
 28
 **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.”
 
 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.
 
 29
 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.
 
 30
 **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.
 
 **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.
 
 31
 **Each
U.S. Holder is advised to obtain tax and legal advice applicable to such U.S.
Holder’s particular circumstances.**
 
 Every
U.S. Holder is liable to pay a Canadian withholding tax on every dividend that
is or is deemed to be paid or credited to the U.S. Holder on the U.S. Holder’s
common shares. The statutory rate of withholding tax is 25% of the gross amount
of the dividend paid. The Treaty reduces the statutory rate with respect to
dividends paid to a U.S. Holder for the purposes of the Treaty. Where
applicable, the general rate of withholding tax under the Treaty is 15% of the
gross amount of the dividend, but if the U.S. Holder is a company that owns at
least 10% of the voting stock of the Company and beneficially owns the dividend,
the rate of withholding tax is 5% for dividends paid or credited after 1996 to
such corporate U.S. Holder. The Company is required to withhold the applicable
tax from the dividend payable to the U.S. Holder, and to remit the tax to the
Receiver General of Canada for the account of the U. S. Holder.
 
 Pursuant
to the Tax Act, a U.S. Holder will not be subject to Canadian capital gains tax
on any capital gain realized on an actual or deemed disposition of a common
share, including a deemed disposition on death, provided that the U.S. Holder
did not hold the common share as capital property used in carrying on a business
in Canada, and that neither the U.S. Holder nor persons with whom the U.S.
Holder did not deal at arms length (alone or together) owned or had the right or
an option to acquire 25% or more of the issued shares of any class of the
Company at any time in the five years immediately preceding the
disposition.
 
 **United
States Federal Income Tax Consequences**
 
 *Passive
Foreign Investment Company*
 
 The
Company believes that it is a passive foreign investment company, referred to as
a "PFIC" for United States federal income tax purposes with respect to a United
States Investor. The Company will be a PFIC with respect to a United States
Investor if, for any taxable year in which such United States Investor held the
Company’s shares, either (i) at least 75 % of the gross income of the Company
for the taxable year is passive income, or (ii) at least 50% of the Company’s
assets are attributable to assets that produce or are held for the production of
passive income. In each case, the Company must take into account a pro-rata
share of the income and the assets of any company in which the Company owns,
directly or indirectly, 25% or more of the stock by value (the "look-through"
rules). Passive income generally includes dividends, interest, royalties, rents
(other than rents and royalties derived from the active conduct of a trade or
business and not derived from a related person), annuities and gains from assets
that produce passive income. As a publicly traded corporation, the Company would
apply the 50% asset test based on the value of the Company’s
assets.
 
 Because
the Company believes it qualifies as a PFIC, unless a United States Investor who
owns shares in the Company (i) elects (a section 1295 election) to have the
Company treated as a "qualified electing fund" (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.
 
 32
 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.
 
 33
 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).
 
 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).
 
 34
 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).
 
 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.
 
 35
 **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.
 
 **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, formerly Hoogendoorn &
Company).
 
 **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, 2003 was $10,000 and January 31, 2002 was
$17,700.
 
 **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, 2003 and 2002.
 
 36
 **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, 2003 was
$1,250 and January 31, 2002 was $1,325. 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, 2003 and 2002.
 
 The audit
committee approved 100% of the fees paid to the principal accountant for
audit-related, tax and other fees in the fiscal year 2003. 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.
 **Part
III**
 
 **Item
17. Financial Statements**
 
 The
following Financial Statements pertaining to the Company are filed as part of
this annual report:
 
 Auditors
      Report
    40Balance
      Sheets
    41Statements
      of Operations and Deficit
    42Statements
      of Cash Flows
    43Notes
      to Financial Statements
    44
      thru 56
 
 **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.
  37
   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:  August
12, 2005     AVINO
SILVER & GOLD MINES LTD **.**
 
 
 By: */s/ David Wolfin*
 David
Wolfin, President
 (Chief
Executive Officer)
 
 
 
   38
   
 
 
 
 
 
 
 **Avino
Silver & Gold Mines Ltd.**
  Financial
Statements
  January
31, 2003, 2002 and 2001
     
 39
 
 **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, 2003 and 2002 and the statements of operations and deficit and cash
flows for the years ended January 31, 2003, 2002 and 2001. These financial
statements are the responsibility of the Company’s management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
 
 We
conducted our audit in accordance with generally accepted auditing standards in
Canada and the United States of America. 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, 2003 and 2002 and the
results of its operations and its cash flows for the years ended January 31,
2003, 2002 and 2001 in accordance with generally accepted accounting principles
in Canada.
 
 
 **Vancouver,
Canada** **"Hoogendoorn
Vellmer"**
 **May
2,
2003** **Chartered
Accountants**
 
 
 
 **COMMENTS
BY AUDITORS FOR U.S. READERS ON CANADA-U.S. 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 May 2,
2003 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.
 
 
 **Vancouver,
Canada** **"Hoogendoorn
Vellmer"**
 **May
2,
2003** **Chartered
Accountants**
   40
 
 **AVINO
SILVER & GOLD MINES LTD.**
 **Balance
Sheets**
 **As
at January 31, 2003 and 2002**
 **2003**
    
    **2002**$
    
    
    $**ASSETS**CurrentCash
    
    
    20,104
    
    
    1,317Accounts
      receivable and prepaid expenses
    
    
    3,040
    
    
    8,242Due
      from related parties (Note 10(d))
    
    
    160,316
    
    
    164,981183,460
    
    
    174,540Mineral
      properties interests (Notes 1, 3)
    
    
    204,001
    
    
    1,600,000Investment
      in Mexican affiliate (Note 4)
    
    
    1
    
    
    1Investments
      in related companies****(Note
      5)
    
    
    427,084
    
    
    427,084Other
      assets (Note 6)
    
    
    -
    
    
    37,843814,546
    
    
    2,239,468**LIABILITIES**CurrentAccounts
      payable and accrued liabilities
    
    
    15,927
    
    
    71,618Due
      to related parties (Note 10(e))
    
    
    364,143
    
    
    331,812380,070
    
    
    403,430Debentures
      payable (Note 7)
    
    
    -
    
    
    1,629,171380,070
    
    
    2,032,601**SHAREHOLDERS’
      EQUITY**Share
      capital (Note 8(a))
    
    
    13,346,387
    
    
    12,931,787Contributed
      surplus (Note 8(b))
    
    
    184,967
    
    
    184,967Deficit
    
    
    (12,995,009
    )
    
    (12,808,018
    )536,345
    
    
    308,736Deduct:
      14,180 shares held for future disposition****-
      at cost
    
    
    (101,869
    )
    
    (101,869
    )434,476
    
    
    206,867814,546
    
    
    2,239,468
 **Nature
and continuance of operations (Note 1)**
 
 Approved
by the Board of Directors:
 
 “ *Louis
Wolfin* ” Director  *“David
Wolfin”* Director
 ****
 ****
 41
 ****
 **AVINO
SILVER & GOLD MINES LTD.**
 **Statements
of Operations and Deficit**
 **Years
ended January 31, 2003, 2002 and 2001**
 **2003**
    
    **2002**
    
    **2001**$
    
    
    $
    
    
    $**Revenues**Interest
      and other
    
    
    197
    
    
    1,195
    
    
    643**Expenses**Accounting
      and audit
    
    
    12,150
    
    
    15,160
    
    
    15,752Amortization
      of deferred financing charges
    
    
    -
    
    
    -
    
    
    41,139Debenture
      interest
    
    
    -
    
    
    105,294
    
    
    101,636Foreign
      exchange loss
    
    
    -
    
    
    120,268
    
    
    44,783General
      mineral exploration costs
    
    
    4,853
    
    
    -
    
    
    -Legal
    
    
    2,108
    
    
    8,161
    
    
    9,840Management
      fees
    
    
    30,000
    
    
    30,000
    
    
    30,000Office
      and miscellaneous
    
    
    40,904
    
    
    35,539
    
    
    30,977Regulatory
      and compliance fees
    
    
    16,712
    
    
    13,327
    
    
    11,516Salaries
      and benefits
    
    
    7,970
    
    
    13,999
    
    
    29,326Shareholder
      and investor relations
    
    
    4,954
    
    
    18,680
    
    
    22,811Stock-based
      compensation
    
    
    22,600
    
    
    -
    
    
    -Travel
      and entertainment
    
    
    4,840
    
    
    4,182
    
    
    3,998147,091
    
    
    364,610
    
    
    341,778**Loss
      before the following:**
    
    
    (146,894
    )
    
    (363,415
    )
    
    (341,135
    )Equity
      in loss of Mexican affiliate
    
    
    -
    
    
    (1,259,438
    )
    
    (770,296
    )Loss
      on sale of joint venture interest (Note 3(c)(i))
    
    
    (40,097
    )
    
    -
    
    
    -Write-down
      of mineral property interest
    
    
    -
    
    
    (1,664,905
    )
    
    -Write-down
      of investments
    
    
    -
    
    
    (2,824
    )
    
    (7,060
    )**LOSS
      FOR THE YEAR**
    
    
    (186,991
    )
    
    (3,290,582
    )
    
    (1,118,491
    )**DEFICIT**,
      beginning of year
    
    
    (12,808,018
    )
    
    (9,517,436
    )
    
    (8,398,945
    )**DEFICIT**,
      end of year
    
    
    (12,995,009
    )
    
    (12,808,018
    )
    
    (9,517,436
    )**BASIC
      LOSS PER SHARE**
    
    
    (0.03
    )
    
    (0.68
    )
    
    (0.24
    )**WEIGHTED
      AVERAGE NUMBER OF SHARES**
    
    
    5,625,498
    
    
    4,872,966
    
    
    4,577,686
 
 42
 **AVINO
SILVER & GOLD MINES LTD.**
 **Statements
of Cash Flows**
 **Years
ended January 31, 2003, 2002 and 2001**
 
 **2003**
    
    **2002**
    
    **2001**$
    
    
    $
    
    
    $**CASH
      PROVIDED BY (USED IN):****OPERATING
      ACTIVITIES**Loss
      for the year
    
    
    (186,991
    )
    
    (3,290,582
    )
    
    (1,118,491
    )Items
      not affecting cash:Amortization
      of deferred financing charges
    
    
    -
    
    
    -
    
    
    41,139Stock-based
      compensation
    
    
    22,600
    
    
    -
    
    
    -Equity
      in loss of affiliate
    
    
    -
    
    
    1,259,438
    
    
    770,296Loss
      on sale of joint venture interest
    
    
    346
    
    
    -
    
    
    -Foreign
      exchange loss on debentures
    
    
    -
    
    
    115,943
    
    
    44,661Write-down
      of mineral property interest
    
    
    -
    
    
    1,664,905
    
    
    -Write-down
      of investment
    
    
    -
    
    
    2,824
    
    
    7,060(164,045
    )
    
    (247,472
    )
    
    (255,335
    )Net
      change in non-cash working capital items (Note 12)
    
    
    (13,310
    )
    
    258,700
    
    
    282,674(177,355
    )
    
    11,228
    
    
    27,339**FINANCING
      ACTIVITIES**Debenture
      interest deferred
    
    
    -
    
    
    133,127
    
    
    -Shares
      issued for cash
    
    
    195,000
    
    
    -
    
    
    -195,000
    
    
    133,127
    
    
    -**INVESTING
      ACTIVITIES**Mineral
      properties acquisitions
    
    
    (4,000
    )
    
    -
    
    
    -Mineral
      property expenditures
    
    
    -
    
    
    (28,067
    )
    
    (26,672
    )Advances
      from (to) Bralorne-Pioneer Gold Mines Ltd.
    
    
    5,142
    
    
    (129,922
    )
    
    -Other
      assets liquidated
    
    
    -
    
    
    8,684
    
    
    -46,985
    
    
    (149,305
    )
    
    (26,672
    )Increase
      (decrease) in cash
    
    
    18,787
    
    
    (4,950
    )
    
    667**CASH,**beginning
      of year
    
    
    1,317
    
    
    6,267
    
    
    5,600**CASH,**end
      of year
    
    
    20,104
    
    
    1,317
    
    
    6,267**SUPPLEMENTARY
      DISCLOSURE OF NON-CASH FINANCING AND INVESTING ACTIVITIES**Marketable
      securities acquired in settlement of related party
    receivable
    
    
    -
    
    
    -
    
    
    397,848Mineral
      properties interests acquired by issuance of share capital
    
    
    200,000
    
    
    -
    
    
    -Share
      capital issued in settlement of liabilities
    
    
    -
    
    
    336,588
    
    
    -**SUPPLEMENTARY
      DISCLOSURE OF STATEMENTS OF CASH FLOWS
INFORMATION**Interest
      expense
    
    
    -
    
    
    105,294
    
    
    101,636Taxes
    
    
    -
    
    
    -
    
    
    -
 
 43
 **AVINO
SILVER & GOLD MINES LTD.**
 **Notes
to Financial Statements**
 **January
31, 2003, 2002 and 2001**
  **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 and in
Mexico. It is in the process of exploring its mineral properties interests and
has not yet determined whether these properties contain ore reserves which are
economically recoverable.
 
 The
recoverability of amounts shown for mineral property interests and related
deferred costs is dependent upon the discovery of economically recoverable
reserves, confirmation of the Company’s interest in mineral claims, the ability
of the Company to obtain necessary financing to complete development, and future
profitable production or proceeds from the sale of all or an interest in its
mineral claims.
 
 The
Company has a working capital deficiency of $193,610 at January 31, 2003. These
financial statements have been prepared in accordance with generally accepted
accounting principles applicable to a going concern, which assumes that the
Company will realize its assets and discharge its liabilities in the normal
course of business. The Company will be required to raise new financing through
the sale of shares to maintain operations. Realization values may be
substantially different from carrying values as shown in these financial
statements should the Company be unable to continue as a going
concern.
 
 **2**  **SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES**
 
 **Basis
of presentation**
 
 These
financial statements have been prepared in accordance with accounting principles
generally accepted in Canada. Differences between Canadian and United States of
America generally accepted accounting principles are disclosed in Note 14. All
amounts shown in these financial statements are in Canadian dollars unless
otherwise stated.
 
 **Joint
venture**
 
 Avino
held a joint venture interest with Bralorne-Pioneer Gold Mines Ltd.
(“Bralorne-Pioneer”), a public company with common directors, until June 20,
2002, when it transferred its joint venture interest to Bralorne-Pioneer. The
Company has accounted for its interest in the joint venture by the proportionate
consolidation method. Accordingly, the balance sheet as at January 31, 2002
includes the Company’s proportionate share of the assets and liabilities of the
joint venture; and the statements of operations and cash flows for the years
ended January 31, 2003, 2002 and 2001 include the Company’s proportionate share
of the expenses and cash flows of the joint venture to the date of disposition.
The balance sheet as at January 31, 2003 does not include any of the assets or
liabilities of the joint venture.
 
 **Investments**
 
 Investments
in the shares of companies over which Avino has the ability to exercise
significant influence 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
continues recording its share of the investee’s losses, unless it has determined
that it has no further obligations or commitments towards the investee.
 
 Investments
in the shares of other companies are accounted for at cost. Investments are
written down when there is a decline in value that is considered other than
temporary .
 
 
 44
 **AVINO
SILVER & GOLD MINES LTD.**
 **Notes
to Financial Statements**
 **January
31, 2003, 2002 and 2001**
  **2** **SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (Continued)**
 
 **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.
 
 **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.
 
 **Deferred
financing costs**
 
 The costs
associated with the issue of debentures payable were amortized to operations on
a straight line basis over the period to maturity on issue.
 
 **Convertible
debentures**
 
 Upon
issuance, the convertible debentures were classified into equity and financial
liability components at their present value. The financial liability was
accreted by way of a charge to earnings over the conversion term of the
debt.
 
 **Financial
instruments**
 
 The
Company’s financial instruments include cash, accounts receivable, amounts due
from related parties, amounts due from Bralorne-Pioneer Gold Mines Ltd, 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, credit or currency risk arising
from these financial instruments.
 
 **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 is not presented where anti-dilutive.
 
 45
 **AVINO
SILVER & GOLD MINES LTD.**
 **Notes
to Financial Statements**
 **January
31, 2003, 2002 and 2001**
  **2**
    **SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)**
 
 **Use
of estimates**
 
 The
preparation of financial statements in conformity with 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.
 
 **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.
 
 **Stock
based compensation**
 
 In
accordance with the new *CICA
Handbook Section 3870*  *(“Section
3870”)*  *Stock-Based
Compensation and other Stock-Based Payments* Avino
recognizes compensation expense for the estimated fair value of stock options
granted to non-employees after January 1, 2002. Further, as permitted in *Section
3870* , Avino
has adopted the disclosure-only method of reporting for stock options granted to
employees. Prior to the enactment of *Section
3870* , no
compensation expense was recognized when stock options were granted.
 
 **3**
    **MINERAL
      PROPERTIES INTERESTS**
 **2003**
    
    **2002**$
    
    
    $**Eagle
      property**(Note 3 (a)):Acquisition
      cost
    
    
    100,000
    
    
    -**Aumax
      property**(Note 3 (b)):Acquisition
      cost
    
    
    104,000
    
    
    -**Bralorne
      property**(Note 3 (c)):**(i)
      Joint venture property (50% owned):**Acquisition
      cost
    
    
    -
    
    
    1,273,222Exploration
      and development
    
    
    -
    
    
    1,807,182Mine
      and plant construction
    
    
    -
    
    
    1,159,334-
    
    
    
    
    
    4,239,738Less:
      accumulated write-down
    
    
    -
    
    
    (1,939,738
    )option
      payments received
    
    
    -
    
    
    (700,000
    )-
    
    
    
    
    
    1,600,000**(ii)
      100% owned property:**Acquisition
      cost
    
    
    222,900
    
    
    222,900Exploration
      and development
    
    
    505,613
    
    
    505,613728,513
    
    
    728,513Less:
      accumulated write-down
    
    
    (728,512
    )
    
    (728,513
    )1
    
    
    -204,001
    
    
    1,600,000
 
 46
 **AVINO
SILVER & GOLD MINES LTD.**
 **Notes
to Financial Statements**
 **January
31, 2003, 2002 and 2001**
  **3**
    **MINERAL
      PROPERTY INTERESTS (Continued)**
 
 **(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 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.
 
 The
Company’s interest in the claims is subject to a debenture assigned to a related
company (Note 7).
 
 **(c)**  **Bralorne
property**
 
 As at
January 31, 2002 the Company held the following interests in the Bralorne
property in the Lillooet Mining Division of British Columbia,
Canada:
 
 (i)  Joint
venture property (50% owned):
 
 50%
interest in 154 Crown granted mineral claims, 5 reverted Crown granted mineral
claims, 4 located mineral claims and 2 placer leases, and the Avino-Bralorne
joint venture.
 
 Effective
June 20, 2002, the Company transferred its interest in the joint venture
property to Bralorne-Pioneer for a nominal amount. The Company recognized a loss
of $40,097 on the disposition, and removed the following assets and liabilities
from consolidation:
 
 $Assets
      transferred:Term
      deposit - hypothecated (Note 6)
    
    
    33,995Other
      short term assets
    
    
    2,678Bralorne
      property
    
    
    1,600,000Deferred
      charges (Note 6)
    
    
    3,8481,640,521Liabilities
      transferred:Accounts
      payable
    
    
    (11,003
    )Debenture
      payable (Note 7)
    
    
    (1,629,171
    )(1,640,174
    )Interest
      on debenture paid
    
    
    39,750Loss
      on sale of joint venture interest
    
    
    40,097
 
 There
were no other expenses or exploration and development expenditures relating to
Avino’s interest in the joint venture incurred during the year ended January 31,
2003.
 ****
 47
 **AVINO
SILVER & GOLD MINES LTD.**
 **Notes
to Financial Statements**
 **January
31, 2003, 2002 and 2001**
  **3**  **MINERAL
PROPERTY INTERESTS (Continued)**
 
 **(c)** **Bralorne
property (continued)**
 
 (ii)  100%
owned property :
 
 100%
interest in 8 Crown granted mineral claims and 32 reverted Crown granted mineral
claims.
 
 As at
January 31, 2003, the Company retains it interest in the 100% owned property.
The property was written down to a nominal value of $1 in fiscal
2002.
 
 The
Company’s interest in the claims is subject to a debenture assigned to a related
company (Note 7).
 
 **4**
    **INVESTMENT
      IN MEXICAN AFFILIATE**
 **2003**
    
    **2002**$
    
    
    $Cia
      Minera Mexicana de Avino, S.A. de C.V. (“Cia Minera”)
    
    
    1
    
    
    1
 
 Avino
owns 49% of the issued common shares of Cia Minera, a company incorporated in
Mexico. Cia Minera is involved in the mining of commercial ores and resource
exploration and development, including the operation of a silver mine. The
silver mine was shut down in fiscal 2002 when operations became uneconomical.
 
 The
Company accounts for its investment in Cia Minera using the equity method (Note
2), and accordingly charged its 49% interest in the losses of Cia Minera to
operations and reduction of the carrying value of its investment as follows:
 
 Fiscal
      Year
    $2003
    -2002
    1,086,4482001
    770,296
 
 During
fiscal 2002, Avino recorded a further charge to operations in the amount of
$172,990 to write-down the carrying value of the Company’s investment to a
nominal $1, given that the production operations were shut down.
 
 **5**  **INVESTMENTS
IN RELATED COMPANIES**
 
 **2003**
    
    **2002**$
    
    
    $**Investments
      carried at cost:**Bralorne-Pioneer
      Gold Mines Ltd.
    
    
    422,848
    
    
    422,848Levon
      Resources Ltd.
    
    
    4,236
    
    
    4,236427,084
    
    
    427,084
 ****
 48
 **AVINO
SILVER & GOLD MINES LTD.**
 **Notes
to Financial Statements**
 **January
31, 2003, 2002 and 2001**
  **5**
    **INVESTMENTS
      IN RELATED COMPANIES (Continued)**
 
 **Bralorne-Pioneer
Gold Mines Ltd.**
 
 Avino’s
investment in Bralorne-Pioneer consists of 1,791,392 common shares with a quoted
market value of $716,557 (2002 - $250,795).
 
 **Levon
Resources Ltd. (“Levon’)**
 
 Avino’s
investment in Levon consists of 141,200 common shares. The investment was
written down to quoted market value of $7,060 at January 31, 2001 by a charge to
operations of $7,060, and quoted market value of $4,236 at January 31, 2002 by a
charge to operations of $2,824 in the year. The quoted market value as at
January 31, 2003 is $15,532.
 
 Levon is
a public company with common directors.
 
 **6**
    **OTHER
      ASSETS**
 
 **2003**
    
    **2002**$
    
    
    $Deferred
      foreign exchange loss on debentures payable
    
    
    -
    
    
    3,848Term
      deposits - hypothecated
    
    
    -
    
    
    33,995-
    
    
    
    
    
    37,843
 
 These
assets were removed from consolidation in fiscal 2003 on the sale of the
Company’s interest in the Avino-Bralorne joint venture (Note 3 (c)(i)).
 
 **7**
    **DEBENTURES
      PAYABLE**
 
 As
consideration for acquiring the Company’s interest in the Avino-Bralorne Joint
Venture (Note 3(c)(i)), Bralorne-Pioneer assumed all of the Company’s
obligations with respect to debentures payable. The Company’s liability with
respect to the debentures was limited to its interest in the joint venture
assets, and other mineral properties interests in British Columbia. At January
31, 2003 the Aumax claims (Note 3(b)) and the 100% owned Bralorne claims (Note
3(c)(ii)) are subject to the debenture agreements, and to the extent of its
interest in the Aumax claims and its interest in the Bralorne claims, the
Company is contingently liable in the event Bralorne-Pioneer should be unable to
satisfy the debenture obligations.
 
 The
debentures bear interest at 7% payable annually, and matured on October 25,
2002. To date Bralorne-Pioneer has not retired the debentures.
 
 49
 **AVINO
SILVER & GOLD MINES LTD.**
 **Notes
to Financial Statements**
 **January
31, 2003, 2002 and 2001**
  **7**
    **DEBENTURES
      PAYABLE (Continued)**
 
 The
Company’s proportionate share of the carrying values of the debenture payable is
as follows:
 
 **2003**
    
    **2002**$
    
    
    $Balance,
      beginning of year
    
    
    1,629,171
    
    
    1,415,960Foreign
      exchange
    
    
    -
    
    
    80,084Accrued
      interest deferred
    
    
    -
    
    
    133,1271,629,171
    
    
    1,629,171Transfer
      of debenture obligation to Bralorne-Pioneer (Note 3(c)(i))
    
    
    (1,629,171
    )
    
    -Balance,
      end of year
    
    
    -
    
    
    1,629,171
 
 **8**
    **SHARE
      CAPITAL**
 
 **(a)**  **Authorized** :
25,000,000 common shares without par value
 
 **Issued** :
 
 **2003**
    
    **2002****Shares**
    
    **Amount**
    
    **Shares**
    
    **Amount**$
    
    
    
    
    
    $Balance,
      beginning of year
    
    
    5,463,525
    
    
    12,931,787
    
    
    4,577,686
    
    
    12,595,199Shares
      issued for cash:-
      exercise of stock options
    
    
    325,000
    
    
    195,000
    
    
    -
    
    
    -less:
      consideration receivable from a Director
    
    
    -
    
    
    (3,000
    )
    
    -
    
    
    -Shares
      issued for non-cash consideration:-
      acquisition of mineral properties
    
    
    400,000
    
    
    200,000
    
    
    -
    
    
    --
      settlement of liabilities
    
    
    -
    
    
    -
    
    
    885,839
    
    
    336,588Stock-based
      compensation to non-employees:
    
    
    -
    
    
    22,600725,000
    
    
    414,600
    
    
    885,839
    
    
    336,588Balance,
      end of Year
    
    
    6,188,525
    
    
    13,346,387
    
    
    5,463,525
    
    
    12,931,787
 
 **(b)**  **Contributed
surplus:**
 
 **2003**
    
    **2002**$
    
    
    $Equity
      component of debentures-conversion
      options expired (Note 7)
    
    
    184,967
    
    
    184,967
 
 50
 **AVINO
SILVER & GOLD MINES LTD.**
 **Notes
to Financial Statements**
 **January
31, 2003, 2002 and 2001**
  **8**  **SHARE
CAPITAL (Continued)**
 
 **(c)**  **Stock
options:**
 
 **Underlying****shares**
    
    **Exercise****price**Stock
      options outstanding, January 31, 2001
    
    
    392,500
    
    $
    0.60
      - $2.58Expired
    
    
    (42,500
    )
    $
    0.60
      - $2.58Stock
      options outstanding, January 31, 2002
    
    
    350,000
    
    $
    0.60Granted
    
    
    446,000
    
    $
    0.58Exercised
    
    
    (325,000
    )
    $
    0.60Stock
      options outstanding, January 31, 2003
    
    
    471,000
    
    $
    0.58-$0.60
 
 The
following stock options were outstanding as at January 31, 2003:
 
 Stock
      Options Outstanding
    Expiry
      Date
    Exercise
      Price25,000
    February
      3, 2003
    $0.60446,000
    October
      23, 2007
    $0.58
 
 In
accordance with the new *CICA
Handbook Section 3870*  *(“Section
3870”)*  *Stock-Based
Compensation and other Stock-Based Payments* Avino
recognizes compensation expense for the estimated fair value of stock options
granted to non-employees after January 1, 2002. 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. The stock options remain outstanding as at
January 31, 2003.
 
 As
permitted by *Section
3870* , the
Company has elected to not record compensation expense when stock options are
granted to employees. In the third quarter of fiscal 2003, the Company 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. 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.
 
 *Section
3870* requires
the following pro forma disclosure assuming this additional compensation
expense:
 
 **Year**
      **Ended****January
      31, 2003**$Pro
      forma loss excluding additional compensation
    
    
    186,991Pro
      forma stock based compensation
    
    
    179,000Pro
      forma loss including additional compensation
    
    
    365,991Pro
      forma basic and diluted loss per share
    
    $
    (0.07
    )
 
 
 51
 
 **AVINO
SILVER & GOLD MINES LTD.**
 **Notes
to Financial Statements**
 **January
31, 2003, 2002 and 2001**
  **8**  **SHARE
CAPITAL (Continued)**
 
 **(c)**  **Stock
options (continued):**
 
 The fair
value of the options granted to both employees and non-employees 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
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.
 
 **(d)**  **Warrants:**
 **Underlying**
      **shares**
    
    **Exercise**
      **price**Warrants
      outstanding, January 31, 2000
    
    
    137,659
    
    $
    0.59
      - $1.45Expired
    
    
    (79,608
    )
    $
    1.39
      - $1.45Warrants
      outstanding, January 31, 2001
    
    
    58,051
    
    $
    0.68Expired
    
    
    (58,051
    )
    $
    0.68Warrants
      outstanding, January 31, 2003 and 2002
    
    
    -
    
    
    -
 
 **9**
    **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:
 
 **2003**
    
    **2002**
    
    **2001**Statutory
      rate
    
    
    40
    %
    
    44
    %
    
    45
    %Income
      taxes recovered at the Canadian statutory rate
    
    $
    66,000
    
    $
    1,448,000
    
    $
    503,000Effect
      of lower tax rates in foreign jurisdictions
    
    
    -
    
    
    (67,000
    )
    
    (54,000
    )66,000
    
    
    1,381,000
    
    
    449,000Benefit
      of tax losses not recognized in year
    
    
    (66,000
    )
    
    (1,381,000
    )
    
    (449,000
    )Income
      tax recovery (expense) recognized in the year
    
    $
    -
    
    $
    -
    
    $
    -
 ****
 ****
 52
 **AVINO
SILVER & GOLD MINES LTD.**
 **Notes
to Financial Statements**
 **January
31, 2003, 2002 and 2001**
  **9**  **INCOME
TAXES (Continued)**
 
 The
approximate tax effects of each type of temporary difference that gives rise to
future tax assets are as follows:
 **2003**
    
    **2002**$
    
    
    $Operating
      loss carry forwards, expiring 2004 - 2010
    
    
    885,000
    
    
    1,417,000Canadian
      exploration expenses,Canadian
      development expenses and foreign exploration, and development expenses
      inexcess
      of book value of mineral properties
    
    
    1,454,000
    
    
    895,000Impairment
      of investments
    
    
    1,327,000
    
    
    1,460,000Undeducted
      capital cost allowance
    
    
    388,000
    
    
    427,000Deferred
      tax assets
    
    
    (4,054,000
    )
    
    4,199,000Less:
      valuation allowance
    
    
    (4,054,000
    )
    
    (4,199,000
    )Net
      deferred tax assets
    
    
    -
    
    
    -
 
 **10**
    **RELATED
      PARTY TRANSACTIONS**
 
 Transactions
with related parties not disclosed elsewhere in these financial statements are
as follows:
 
 Oniva
International Services Corporation (“Oniva”) provides Avino with certain office
and administrative services. Oniva is controlled by two Directors of the
Company.
 
 Avino
paid or accrued the following amounts for administrative services and expenses
to Oniva:
 
 **2003**
    
    **2002**
    
    **2001**$
    
    
    $
    
    
    $Salaries
      and benefits
    
    
    7,869
    
    
    13,998
    
    
    29,325Office
      and miscellaneous
    
    
    21,486
    
    
    16,416
    
    
    34,95529,355
    
    
    30,414
    
    
    64,280
 
 Avino
reimbursed the following to Oniva as its share of the Bralorne project joint
venture costs:
 
 **2003**
    
    **2002**
    
    **2001**$
    
    
    $
    
    
    $Mineral
      properties expenditures
    
    
    -
    
    
    54,027
    
    
    41,194
   53
 **AVINO
SILVER & GOLD MINES LTD.**
 **Notes
to Financial Statements**
 **January
31, 2003, 2002 and 2001**
  **10**
    **RELATED
      PARTY TRANSACTIONS (Continued)**
 
 The
Company paid or accrued the following amounts for consulting fees and expenses
to Frobisher Securities Ltd., a private company controlled by a
director:
 
 2003
    
    $
    32,5812002
    
    $
    30,8222001
    
    $
    34,074
 
 Avino
recorded reimbursements of $nil in fiscal 2003 (2002: $29,263; 2001: $22,471)
from Coral Gold Corporation (“Coral”) under the terms of the option agreement,
under which Coral could earn a 25% interest (50% of Avino’s 50% interest) in the
Bralorne project, and the Avino-Bralorne Joint Venture. Coral abandoned its
option during the year ended January 31, 2002. Coral is a public company with
common directors.
 
 Due from
related parties comprises the following accounts receivable:
 
 **2003**
    
    **2002**$
    
    
    $Bralorne
      - Pioneer
    
    
    124,780
    
    
    129,922Coral
      Gold Corporation
    
    
    33,852
    
    
    33,010Levon
      Resources Ltd.
    
    
    1,684
    
    
    2,049160,316
    
    
    164,981
 
 The
amounts due from related parties are non-interest bearing, non-secured and due
on demand.
 
 (e)  Due to
related parties comprise the following accounts payable:
 
 **2003**
    
    **2002**$
    
    
    $Frobisher
      Securities Ltd.
    
    
    53,004
    
    
    20,422Louis
      Wolfin (President)
    
    
    52,500
    
    
    52,500Oniva
    
    
    258,639
    
    
    258,890364,143
    
    
    331,812
 
 The
amounts due to Frobisher Securities Ltd. and Oniva are non-interest bearing,
non-secured and due on demand. The amounts due to Louis Wolfin bear annual
interest at 7% and are non-secured and due on demand.
 
 In fiscal
2002, the Company settled liabilities totaling $276,347 with related parties by
the issuance of 727,309 shares at a price of $0.38 per share (fiscal 2003:
$nil).
 
 All
related party transactions are recorded at the value agreed upon by the Company
and the related party.
 
 **11**
    **SEGMENTED
      INFORMATION**
 
 Substantially
all of Avino’s operations are in one industry, the exploration of precious
metals. All mineral property interests held by Avino are located in
Canada.
 ****
 54
 **AVINO
SILVER & GOLD MINES LTD.**
 **Notes
to Financial Statements**
 **January
31, 2003, 2002 and 2001**
  **12**
    **NET
      CHANGE IN NON-CASH CURRENT ASSETS AND
  LIABILITIES**
 
 **2003**
    
    **2002**$
    
    
    $Accounts
      receivable and prepaid expenses
    
    
    (476
    )
    
    1,638Due
      from related parties
    
    
    (477
    )
    
    (33,002
    )Accounts
      payable and accrued liabilities
    
    
    (44,688
    )
    
    263Due
      to related parties
    
    
    32,331
    
    
    289,801(13,310
    )
    
    258,700
 
 **13**
    **SUBSEQUENT
      EVENT**
 
 Subsequent
to the year end, the Company issued 83,000 shares for total proceeds of $48,140
on the exercise of stock options at a price of $ 0.58 per share.
 
 **14**
    **DIFFERENCES
      BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING
      PRINCIPLES**
 
 The
consolidated financial statements of Avino 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 Avino’s consolidated
financial statements are summarized as follows:
 
 **2003**
    
    **2002**
    
    **2001****Consolidated
      statements of operations**
    
    $
    
    
    $
    
    
    $Loss
      for the year under Canadian GAAP
    
    
    (186,991
    )
    
    (3,290,582
    )
    
    (1,118,491
    )Adjustment
      of book value of securities to market (i)
    
    
    305,005
    
    
    89,750
    
    
    (255,093
    )Foreign
      exchange amortized (deferred) (ii)
    
    
    -
    
    
    5,859
    
    
    (6,124
    )Exploration
      and other expenses (iii)
    
    
    (204,000
    )
    
    723,607
    
    
    (1,259
    )Loss
      for the year under U.S. GAAP (iv)
    
    
    (85,986
    )
    
    (2,441,366
    )
    
    (1,380,967
    )Loss
      per share under U.S. GAAP (iv)
    
    
    (0.20
    )
    
    (0.50
    )
    
    (0.30
    )
 
 55
 **AVINO
SILVER & GOLD MINES LTD.**
 **Notes
to Financial Statements**
 **January
31, 2003, 2002 and 2001**
  **14**
    **DIFFERENCES
      BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING
      PRINCIPLES (Continued)**
  **2003**
    
    **2002****Canadian**
    
    **U.S.**
    
    **Canadian**
    
    **U.S.****GAAP**
    
    **GAAP**
    
    **GAAP**
    
    **GAAP****Consolidated
      balance sheets (vi)**
    
    $
    
    
    $
    
    
    $
    
    
    $Investments
      (i)
    
    
    427,084
    
    
    732,089
    
    
    427,085
    
    
    255,032Other
      assets (ii)
    
    
    -
    
    
    -
    
    
    37,843
    
    
    33,995Mineral
      properties interests (iii)
    
    
    204,001
    
    
    -
    
    
    1,600,000
    
    
    1,600,000Debentures
      - Equity (v)
    
    
    -
    
    
    -
    
    
    (194,702
    )
    
    -Deficit
    
    
    (12,995,009
    )
    
    (12,875,024
    )
    
    (12,808,018
    )
    (12,789,038)
 
 **(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)**  **Deferred
foreign exchange gains and losses**
 
 Under
U.S. GAAP, foreign exchange gains and losses are expensed in the period
incurred. Under Canadian GAAP, foreign exchange gains and losses relating to
long-term monetary items, such as the debentures payable, were deferred and
amortized in the relevant years.
 
 **(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.
 
 **(v)**  **Convertible
debentures**
 
 U.S. GAAP
requires that convertible debentures be classified entirely as a liability.
Canadian GAAP requires that convertible debentures be split between their debt
and equity components.
 
 **(vi)**   **Joint
Venture**
 
 U.S. GAAP
requires that joint ventures be accounted for using the equity method; however,
the Securities and Exchange Commission permits the use of the proportionate
consolidation method under IAS standards. Canadian GAAP requires that the
proportionate consolidation method be used.
   
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