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Telson Mining Corp
Symbol TSN
Shares Issued 130,061,745
Close 2018-05-22 C$ 0.82
Market Cap C$ 106,650,631
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Telson starts commercial production at Campo Morado

2018-05-23 06:25 ET - News Release

Mr. Ralph Shearing reports

TELSON MINING CORPORATION DECLARES COMMERCIAL PRODUCTION AT ITS CAMPO MORADO MINE AS OF MAY 15, 2018, AND GENERATES US$7.7M CASH FLOW IN FINAL MONTH AND A HALF (APRIL 1 TO MAY 15, 2018) OF PRE-PRODUCTION

Telson Mining Corp. has started commercial production at its 100-per-cent-owned Campo Morado mine located in Guerrero state, Mexico, with over 60 days of operational steady-state production at 75 per cent of management's targeted mill capacity of 2,500 tonnes per day, achieving zinc recoveries and concentrate grades within management's expectations.

Telson Mining is extremely pleased to announce the start of commercial production at its 100-per-cent-owned Campo Morado mine located in Guerrero state, Mexico, with over 60 days of operational steady state production at 75 per cent of management's targeted mill capacity of 2,500 tonnes per day, achieving zinc recoveries and concentrate grades within management's expectations.

Jose Antonio Berlanga, director and chief executive officer, stated: "Achieving commercial production at Campo Morado is a major milestone for Telson. When we commenced preproduction activities in October, 2017, we provided guidance that we expected to declare commercial production in the third quarter of 2018. To do so mid-second quarter, a full three months ahead of schedule, is a testament to the tremendous skill and expertise of our mining team and the hard work of our employees. We would like to thank all the stakeholders, especially the local communities that have supported us during this restart. We have successfully implemented a new bulk mining method at Campo Morado (sublevel caving rather than room and pillar mining) and in April, 2018, we transitioned from processing development mineralized material to mining mineralized material within one area of the El Largo zone. As a result, our grades, recoveries and cash flows improved dramatically from the first quarter. We generated approximately $7.7-million (U.S.) in cash flow during the three months of the first quarter, and increased to $5.2-million (U.S.) in April alone, which based on costs of approximately $3.5-million (U.S.) resulted in net cash flow for the month of $1.7-million (U.S.). For the first time in Telson's history we will now start booking revenues. Our goal at Campo Morado is to increase throughput at the mill to 2,500 tonnes per day by the third quarter/fourth quarter. We are also investigating new technologies to improve precious metals recoveries."

Campo Morado production milestones:

  • Mill processed 112,480.9 tonnes of mineralized material during the past 60 operational days at an average daily rate of 1,875 tonnes per day;
  • Average zinc recoveries of approximately 73 per cent obtained during the past 60 operational days;
  • Zinc concentrate average grade of approximately 44 per cent zinc, 404 grams per tonne silver and 1.42 g/t gold achieved during the past 60 operational days;
  • Bulk underground mining methods under way after extensive development phase to allow production rate increase toward planned 2,500 tonnes per day;
  • Highlights of preproduction since reporting on first quarter ending March 31, 2018 (see news release dated April 18, 2018), to start of commercial production May 15, 2018 (45-day period) as follows:
    • 84,588.8 tonnes processed through milling facility at an average daily rate of 1,900 tonnes/day;
    • Produced 6,708.8 tonnes of zinc concentrate with average grades for April (4,635.5 tonnes) of 43.82 per cent zinc, 2.95 per cent lead, 373 g/t Ag, 1.31 g/t Au and for first 15 days of May (2,073.3 tonnes) 44.93 per cent Zn, 2.48 per cent Pb, 444 g/t Ag, 1.42 g/t Au;
    • Produced 1,065.8 tonnes of lead concentrate with average grades for April (633.4 tonnes) of 37.22 per cent Pb, 9.12 per cent Zn, 859 g/t Ag, 7.51 g/t Au and for first 15 days of May (432.4 tonnes) 27.7 per cent Pb, 9.33 per cent Zn, 713 g/t Ag, 6.17 g/t Au;
    • Recoveries of approximately 73 per cent zinc, 31 per cent lead, 31 per cent silver and 20 per cent gold;
    • Delivered 5,631 tonnes of zinc concentrate and 1,027 tonnes of lead concentrate to buyer;
    • Concentrate preproduction April 1 to May 15, 2018, management's estimated 100-per-cent concentrate sale value for 45 days ending May 15, 2018 (start of commercial production) -- $7.7-million (U.S.):
      • April 1 to April 30 -- $5.2-million (U.S.);
      • May 1 to May 15 -- $2.5-million (U.S.).

Note

Shipped concentrates are paid at 90-per-cent estimated metal content less deductions upon delivery to Trafigura warehouse in Manzanillo. The estimated 100-per-cent cash selling price is subject to minor changes once final assaying results are agreed to by the company and Trafigura at which time the final approximate 10 per cent is paid.

About Telson Mining Corp.

Telson Mining is a Canada-based mining company with two Mexican gold, silver and base metal mining projects.

Telson is currently in production at its 100-per-cent-owned Campo Morado mine in Guerrero, Mexico. Telson acquired Campo Morado in June, 2017, recommenced mining and processing operations in October, 2017, with preproduction from mine development on a trial basis that commenced at an average 1,400 tonnes per day and has just declared commercial production based on operating for 60 consecutive days at 75 per cent of the Campo Morado mill's nameplate capacity of 2,500 tonnes per day.

Telson's Tahuehueto project, located in northwestern Durango state, Mexico, is currently in preproduction at approximately 100 tonnes per day utilizing a toll mill for processing, and has entered a construction phase with a timeline to be producing on site in its own mineral processing plant capable of milling at least 1,000 tonnes per day in the first quarter of 2019.

Qualified persons

This press release was prepared under the supervision and review of Ralph Shearing, PGeol, president and director of Telson Resources, a professional geologist registered in Alberta as a member of the professional association APEGA, and a qualified person as defined by National Instrument 43-101. Data verification by Mr. Shearing includes personal inspection of the Campo Morado mine site, reviewing mining facilities, drill core, underground development, and discussing work programs and results with geology and mining personnel.

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