Mr. Ralph Shearing reports

TELSON RESOURCES INC. ANNOUNCES NI 43-101 PRE-FEASIBILITY STUDY FOR ITS TAHUEHUETO PROJECT IN DURANGO, MEXICO HAS BEEN FILED ON SEDAR

Telson Resources Inc., further to the company's news release dated Dec. 6, 2016, has filed the independent National Instrument 43-101-compliant prefeasibility study (PFS) for its Tahuehueto project in Durango, Mexico, on SEDAR. This PFS has been prepared by Metal Mining Consultants Inc. based in Highlands Ranch, Colo. Metal Mining Consultants is a full-service mining engineering firm, specializing in all aspects of exploration, mine development and mine operations.

The Tahuehueto project is an advanced exploration-stage polymetallic project. The mineralization consists of epithermal gold-silver veins and brecciated structures with lead, zinc and copper, and is located in the Durango state 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 configuration evaluated in this PFS is an owner-operated 790-tonne-per-day underground mine that will utilize overhand cut and fill mining with conventional mining equipment in a blast/load/haul operation. Mill feed will be processed in a 550-tonne-per-day comminution circuit consisting of primary and secondary crushing, grinding in a single ball mill, followed by three floatation circuits producing lead, copper and zinc concentrates. The concentrates will be trucked from site for smelting and refining.

The highlights of this prefeasibility study report include:

• Posttax net present value (NPV), using an 8-per-cent discount, of $77-million, with an internal rate of return (IRR) of 36 per cent and a payback period of three years;
• Pretax NPV, using an 8-per-cent discount, of $138-million, with an IRR of 56 per cent;
• Financial analysis completed on base-case metal price forecasts of 87 cents per pound for lead, 92 cents per pound for zinc, $2.65 per pound for copper, $1,180 per ounce for gold and $16.70 per ounce for silver;
• Metal prices lower than three-year averages;
• Average annual earnings before interest, taxes, depreciation and amortization (earnings before interest, taxes, depreciation and amortization) of $16.7-million per year and $352-million over the life of the project;
• Probable mineral reserves of 3.3 million tonnes, grading 3.4 grams per tonne gold, 41.8 grams per tonne silver, 0.31 per cent copper, 1.1 per cent lead and 2 per cent zinc;
• 21-year mine life, with average annual production of 16,100 ounces of gold, 177,100 ounces of silver, 900,000 pounds of copper, 3.2 million pounds of lead and 5.6 million pounds of zinc;
• Preproduction capital costs of $32.2-million, including $17.2-million of surface site development, including mill construction, and $14.9-million of mining equipment and preliminary underground development.

Due diligence during the finalization of the technical report discovered that gold and silver revenues in the copper concentrate were not accounted for during first nine years of production. Correcting this oversight has resulted in an increase to the NPV, IRR and EBITDA as disclosed in the company's Dec. 6, 2016, press release to the current disclosure of this press release as follows:

• Posttax net present value, using an 8-per-cent discount, has increased by $7-million from $70-million to $77-million, and the posttax internal rate of return has increased by 3 per cent from 33 per cent to 36 per cent.
• Pretax NPV, using an 8-per-cent discount, has increased by $12-million from $126-million to $138-million, and the pretax internal rate of return has increased by 6 per cent from 50 per cent to 56 per cent.
• Average annual earnings before interest, taxes, depreciation and amortization have increased by $18-million from $334-million to $352-million over the life of the project.

"With the delivery of this prefeasibility study, we are now able to present shareholders a clear path forward to achieve the company's goal of commercial production at Tahuehueto. Management is committed to this goal and will continue with its numerous initiatives already in progress to secure the necessary mine build funding, as well as to progress development and engineering work currently under way on site, advancing the project towards production throughout the coming year," stated Ralph Shearing, PGeol, president of Telson.

The complete PFS, dated Jan. 20, 2017, is available through the Internet under the company's profile on SEDAR and on the company's website.

Qualified person

The qualified person (as such term is defined in NI 43-101) who prepared the mineral resource estimates disclosed in this press release is Scott Wilson, BA (geology), a certified professional geologist and a member of the American Institute of Professional Geologists, in Denver, Colo. Mr. Wilson is the independent resource estimate consultant for Telson Resources and has reviewed the technical information contained in this press release. The NI 43-101-compliant report related to this press release has been filed on SEDAR and has been posted on the company's website within the time frame specified by NI 43-101. Mr. Wilson is the president of Metal Mining Consultants, and is independent of Telson as determined by the definitions and criteria set forth in NI 43-101. There is no affiliation between Mr. Wilson and Telson except that of an independent consultant/client relationship.

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