Mr. Antonio Berlanga reports

TELSON SECURES US$15 MILLION LOAN FACILITY AND OFFTAKE AGREEMENT WITH TRAFIGURA AND IS NOW FULLY FUNDED TO FINALIZE MINE CONSTRUCTION AT TAHUEHUETO

Telson Resources Inc. has entered into a loan facility and offtake agreement with Trafigura Mexico SA de CV, a market leader in the global commodities industry, to sell 100 per cent of the lead and zinc concentrate produced at the Tahuehueto mine from Jan. 1, 2018, to Dec. 31, 2022. Trafigura has provided Telson with a credit facility of $15-million (U.S.) thereby securing the capital requirements to construct and operate a continuing 1,000-tonne-per-day mining operation at Tahuehueto. The signing date was on Dec. 7, 2017.

Highlights:

• Executed secured loan facility with Trafigura for $15-million (U.S.) for Tahuehueto mine construction.
• Financing enables construction of mineral processing facility, related mining facilities, plus infrastructure and underground development at Tahuehueto.
• Finances available to the company in three tranches according to development progress and certain conditions, with first tranche of $7.5-million (U.S.) already received in Telson's bank account.
• The offtake agreements are for 100-per-cent production of zinc and lead concentrates with a minimum annual fixed tonnage, starting delivery in January, 2018, and continuing until December, 2022.

Key terms

$15-million (U.S.) loan facility

• Three-year term with 12-month grace period followed with 24 repayment instalments;
• Loan facility matures in December, 2020, with very competitive interest rates;
• No hedging conditions;
• No equity-based payments;
• $15-million (U.S.) available in three tranches as follows:
  • 1st tranche -- $7.5-million (U.S.) has been received by the company;
  • 2nd tranche -- $5.0-million (U.S.) will be available four months from the signing date and not later than six months after the signing date;*
  • 3rd tranche -- $2.5-million (U.S.) will be available six months from the signing date and not later than nine months after the signing date.*

Offtake agreement

• 60-month term ending December, 2022, for Tahuehueto Pb and Zn concentrate production;
• Fixed minimum tonnage to be sent during the offtake term;
• Very competitive industry payable metal terms at London Metal Exchange and London Bullion Market spot prices;
• Access to prompt payments five days after delivery, providing excellent liquidity to the operation;
• Competitive transport charges.

Telson has provided industry-standard security to Trafigura in the form of a corporate guarantee, a promissory note plus a pledge of the mining concessions and fixed assets of Telsons 100-per-cent-owned subsidiary company Real de la Bufa SA de CV. The extent of Telson's liability to Trafigura within the agreements under Mexican law is limited to the amount of the offtake loan plus interest.

Antonio Berlanga, chief executive officer of Telson, stated: "We are extremely happy to once again announce to our shareholders a major strategic funding and offtake agreement. This prepayment facility provided by Trafigura allows us to initiate construction of our planned 1,000-tonne-per-day mineral-processing facility plus related infrastructure on the Tahuehueto project site. We have already advanced more than 400 metres of underground development on the mine plan and previously purchased more than 85 per cent of the mill equipment which has been in storage in Tepehuanes. Our current construction plans are targeting to complete mine and mill construction late 2018 and then start to process gold and silver in lead and zinc concentrates at the project site. This prepayment facility and offtake agreement demonstrates the confidence our major concentrate buyer has in the Tahuehueto project and our ability to rapidly construct the mine and mill thereon."

*The second loan facility draw-down tranche as outlined in the key terms above requires Telson to secure additional financing of $5-million (U.S.) in the form of equity and/or loan and that at least $4.5-million (U.S.) of these finances have been invested on the Tahuehueto project's capital expenditures and the third loan facility draw down of $2.5-million (U.S.) requires Telson to secure additional financing of $2.5-million (U.S.) in the form of equity and/or loan and evidence that at least $2-million (U.S.) of these finances have been invested on the Tahuehueto project's capital expenditures. Management points out that the company still has available at least $5-million (U.S.) from its line of credit with its major shareholder as originally announced in a press release dated July 27, 2016, and thereby can draw down the $5-million (U.S.) required to secure the second tranche on the current Trafigura loan facility.

About Telson Resources Inc.

Telson Resources is a Canadian-based mining company producing gold, silver and base metals from its two Mexican mine projects. Telson's Tahuehueto project, located in northwestern Durango state, Mexico, and its recently acquired Campo Morado mine in Guerrero, Mexico, are both polymetallic deposits containing significant gold, silver, lead, zinc and copper. Telson is currently mining and processing at its 100-per-cent-owned Campo Morado mine at a rate of approximately 1,400 tonnes per day and at its 100-per-cent-owned Tahuehueto mine project at a rate of approximately 150 tonnes per day and direct shipping Tahuehueto preproduction ore to a toll mill for processing off site.

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