Telson Mining Corporation

We at Telson believe we have a mission to create enduring, sustainable value for all our shareholders, employees and the communities where we work.

Event ImageTahuehueto lies within the prolific Sierra Madre mineral belt, which hosts a series of historic and producing mines and most of Mexico’s active exploration and development projects. The project is situated approximately 100 kilometers southwest of silver mines in the Guanacevi region and about 25 kilometers north of the silver mines at Topia.

Consisting of 28 mining concessions grouped into five non-contiguous blocks that total approximately 7,492 hectares the Tahuehueto is in an advanced stage of development with mine construction plan during 2017 and targeting commercial production within the first quarter of 2018. Telson Mining Corporation owns 100% of the project through a 99.9% share ownership in its Mexican subsidiary company.

Significant exploration upside potential exists both on the existing reserve/resource explored structures along strike and down dip of the known mineralization which is open in all directions as well as within numerous other mineralized but unexplored structures known to occur within the core 700 ha concession area. Further exploration potential exists outside of the core area where Telson controls approximately an additional 6700 hectares of concessions. Telson’s concessions cover about 80% of the mineralized District Tahuehueto, and there is a significant amount of prospective ground within this government recognized geological district.

Telson’s plan is to get into production with the reserves outlined in the core 500 ha area, continue to expand the reserves on structures where there are defined reserves and resources, and start to look at our less explored structures within this core 500 ha area. A Greenfields type of exploration program will also be designed and implemented after production is achieved to explore the regional District potential within Telson’s concession area.

Ni 43-101 Pre-feasibility Study, Mineral Reserve Estimate And Updated Mineral Resource Estimate

In January 2017, Telson announced the results of a NI 43– 101 compliant Prefeasibility Study (the “PFS”) for its Tahuehueto Project located in Durango, Mexico. A summary of the results from this study are found in the table below.

Summary Of Economic Results From 2017 Pre-feasibility Study
Average Annual Revenues ("EBITDA") US $16.7 million
NPV @ 8% Annual Discount Rate (Post Tax) US $77 million
Internal Rate of Return (IRR) 36%
Payback Period 3 years
Mine Life 21 years
Average Cost per Tonne (incl mining, processing and G&A, smelting, refining & royalties) US $91.26
Average Cost per Ounce AuEq US $494.95
Metal Prices
Gold US$ 1,180.00/oz
Silver US$ 16.70/oz
Lead US$ 0.87/lb
Zinc US$ 0.92/lb
Copper US$ 2.65/lb

Recent Developments At Tahuehueto

On January 23, 2017, the Company released its most recent NI-43-101 compliant report, a Pre-Feasibility Study (“PFS”) completed by the fully independent mining engineering firm of Metal Mining Consultants Inc. based out of Colorado, USA. The study evaluated an owner-operated 790 tpd underground mine with mill feed being processed in a 550 tpd comminution circuit consisting of primary and secondary crushing, grinding in a single ball mill followed by three flotation circuits producing lead, copper and zinc concentrates which will be trucked from site for smelting and refining. The report provided robust economics on the project including a post-tax IRR of 36% and an NPV using an 8% discount of US$77 million with a 21 year mine life. Telson has internally evaluated the economics of a 12 year mine life with increased tonnage throughput of an expanded mill and mining operation and plans to increase the mining rate to 1,000 tonnes per day or more in the first year of production.

On February 16, 2017, the Company announced the completion of an agreement for the acquisition of a sulfide flotation mineral processing facility, (the Tahuehueto Mineral Processing Facility”). The equipment purchased consists of the majority of milling equipment necessary, once installed and operational, to process Tahuehueto ore at an estimated capacity as envisioned within the PFS and Telson management assesses the purchased Tahuehueto Mineral Processing Facility to be capable of processing up to 1000 tonnes of ore per day with the addition of only a small amount equipment.

On February 23, 2017, Telson reported the final sale results from its 3500 tonne industrial scale bulk sample collected from the El Creston zone at Tahuehueto, trucked it 270 km to a toll mill located Guanacevi, Durango, and processed producing 259 tonnes of zinc concentrate and 201 tonnes of lead concentrate which were sold generating cash receipts of USD $1.47 million.

On July 6, 2017, Telson announced that it had entered into a mineral processing agreement for the processing during 2017 of at least 21,000 tonnes of Tahuehueto ore at the nearby Atocha Mill. Subsequently, on August 7, 2016 the Company announced that the first shipment of lead and zinc concentrates processed at the Atocha Mill had been delivered to Mercuria Commodities Trading as per this agreement. On August 14, 2017 it was announced that a second shipment of lead and zinc concentrates processed at the Atocha Mill was delivered to Mercuria Commodities Trading.

On August 22, 2017, Telson announced that it had obtained two Semarnat Permits, one for the reactivation of the existing tailings disposal facility and a second for the construction of a new, larger tailings facility. The permit granted for the new tailings facility allows for the installation of a facility that will easily accommodate the mine plan envisioned with the Company's December 6, 2016 Pre-Feasibility Study.

On October 10, 2017, Telson announced that it had received from the Mexican Federal Government, Secretaria De Medio Ambiente Y Recursos Naturales a permit authorizing the construction of a mineral processing facility, related mining facilities, plus infrastructure and necessary underground development at the Tahuehueto Project.

On December 18, 2017 the Company announced that it had secured a US$15 million loan facility and Offtake Agreement with Trafigura Mexico S.A. de C.V. which provides the full funding required to finalize mine construction. Telson's plan is to advance the project into full on-site production by the end of 2018 beginning at a rate of 550 tpd and increasing this production to the 1,000 tpd maximum of the current mill specifications during the first year of operations. Telson Mining Corporation is managed by a team experienced in mining engineering, metallurgy and geology plus other mining professionals employed and committed to adding value to Tahuehueto and increasing shareholder returns through cost-effective programs conducted in a socially and environmentally progressive manner.

Telson Mining Corporation controls 100% of the Tahuehueto Project through a 99%-owned subsidiary, and acquired the district-scale property for its potential to host multiple deposits and discoveries. The project lies within the Sierra Madre mineral belt, which hosts most of Mexico’s producing mines and active exploration and development projects, and has geological similarities to epithermal deposits being exploited in nearby mining districts. In addition to vast geological potential, Mexico offers the advantages of social and political stability and a favorable investment climate.