Telson Mining

Overview

Telson Mining Corporation (TSXV:TSN, OTCBB:SOHFF) holds two properties in premier mining locations within Mexico, Tahuehueto and Campo Morado. Both of Telson’s properties have significant historical exploration results and one was last in production between 2009 and 2014. Telson expects both properties to have further exploration and production opportunities beyond what is currently identified.

Telson’s Tahuehueto project was acquired by the company in 1997. The majority of exploration activities were performed between 2005 and 2008 and the company is now in position to carry the property to production. In anticipation of this, Telson collected and processed a 3,500 tonne initial bulk sample in early 2017, which enabled the sale of 259 dry tonnes of zinc concentrate and 201 tonnes of lead concentrate for US$1.47 million. The success of this initial bulk sample allowed the company to initiate preproduction mining with toll milling at an off-site processing plant.

Telson purchased the Campo Morado polymetallic mine in April 2017 for US$20 million and commenced commercial production in May 2018. Within 2018, the mill processed 585,601 tonnes of mineralized material with an average grade of 4.26 percent zinc, 0.37 percent copper, 1.10 percent lead, 1.02 g/t gold and 118 g/t silver. By the end of the year, the mill was processing over 1,800 tonnes per day and achieved maximum daily rates of over 2,200 tonnes per day. Telson sold approximately 36.26 million pounds of zinc, 4.03 million pounds of lead, 373,333 pounds of copper, 2,870 ounces of gold and 622,309 ounces of silver from the mine. The company’s estimated all-in operating costs were US$32.46 million.

Company Highlights

• Two projects in pre-production in prime gold mining Mexican jurisdictions.
• Prefeasibility study for Tahuehueto outlines an after-tax NPV (8 percent) of US$77 million, an IRR of 36 percent and a 21-year mine life based on a 550 tonnes per day operation.
• Telson has initiated construction of a mine capable of processing at least 1000 tonnes per day in order to achieve better economics by shortening the mine life by 50 percent or more.
• Tahuehueto hosts probable reserves of 3.26 million tonnes with grades of 3.40 g/t gold, 41.80 g/t silver, 0.35 percent copper, 1.19 percent lead and 2.24 percent zinc.
• Tahuehueto measured and indicated resource of 6.11 million tonnes grading of 2.48 g/t gold, 42.82 g/t silver, 0.31 percent copper, 1.20 percent lead and 2.15 percent zinc. Inferred resources add another 3.5 million tonnes of 1.31 g/t gold, 37.6 g/t silver, 0.27 percent copper, 1.34 percent lead and 2.44 percent zinc.
• Tahuehueto resources contain an estimated 634,000 ounces of gold and adding silver as a gold equivalent elevates this number to 815,000 ounces gold equivalent.
• Purchase of Campo Morado property included full infrastructure, surface and underground mining equipment for 2,500 tonne per day production.
• Campo Morado measured and indicated resource of 16.6 million tonnes with grades of 1.70 g/t gold, 123 g/t silver, 0.80 percent copper, 0.93 percent lead and 4.01 percent zinc. Inferred resource of 988,000 tonnes with 1.32 g/t gold, 116 g/t silver, 0.64 percent copper, 0.92 percent lead and 3.2 percent zinc.
• Telson commenced commercial production at Campo Morado in May 2018.
• Telson intends to increase production capacity to 3,000 tonnes per day at Campo Morado.
• Renewable power agreement expected to save C$2 million during the first year in operating costs.
• Tightly held share structure with management and inside major shareholders holding approximately 55 percent of shares.