Mr. Ralph Shearing reports
TELSON PROVIDES FULL YEAR 2018 OPERATIONAL UPDATE FOR ITS CAMPO MORADO MINE AND REPORTS CONCENTRATE THEFT
Telson Mining Corp. has provided an operational and financial update for
full year 2018 for its 100-per-cent-owned Campo Morado mine, located in Guerrero state, Mexico.
Campo Morado 2018 preproduction and commercial production highlights:
Mill processed 585,601 tonnes of mineralized resources during 2018
(231,757 tonnes of preproduction to May 15, 2018, and 353,844 of
commercial production since May 16, 2018), average head grade of 4.26 per cent
zinc, 0.37 per cent copper, 1.10 per cent lead, 1.02 g/t gold, 118 g/t silver;
Sold on a combined basis an estimated total of 39,333 tonnes of zinc
concentrate with estimated average grades of 41.82 per cent Zn, 363 g/t Ag and
1.27 g/t Au for estimated total gross proceeds of $35.17-million (U.S.) (1);
Sold on a combined basis an estimated total of 7,666 tonnes of lead
concentrate with estimated average grades of 23.93 per cent Pb, 662 g/t Ag,
5.15 g/t, Au and 2.21 per cent Cu for estimated gross proceeds of $5.58-million (U.S.) (1);
Combined estimated total all-in operating costs, including mining,
milling, freight, royalties, smelter costs, were $32.46-million (U.S.), resulting on an estimated cost per ton of $55 (U.S.) per tonne;
Combined estimated total metal sold of 36.26 million pounds (16,449
tonnes) zinc, 4.03 million lbs (1,834 tonnes) lead, 373,333 lbs (169
tonnes) copper, 2,870 ounces gold and 622,309 oz silver (1);
Mill throughput processing rate increased from 1,500 tonnes per day in
January to an average of over 1,800 tonnes per day by year-end, achieving
maximum daily rates of over 2,200 tonnes per day;
Total estimated mineralized resources mined was 582,521 tonnes during
the year. Mine development totalled 2,659 metres: 1,682 metres
developed in mineralized resources, and 977 metres in waste (access
ramps and auxiliary workings).
Jose Antonio Berlanga, chief executive officer and director, states: "Telson's growth in the
past three years has been remarkable. After Telson's restructuring in
November, 2015, the company has grown significantly from having one
advanced exploration project, Tahuehueto at the [preliminary economic assessment] stage, to having
acquired the Campo Morado mine, advancing it back into full commercial
production and advancing its Tahuehueto project through prefeasibility
studies into preproduction by toll milling. At Tahuehueto we are now in
late-stage mine construction of an on-site, 1,000-tonne-per-day milling
and underground mining operation which we expect to commission in 2019.
"Two thousand eighteen marked a significant milestone in the history of the company. It
was the first time since its foundation that the company recorded
revenues from concentrate sales on its financial statements, after
declaring commercial production at Campo Morado. Revenues produced
during commercial production from Campo Morado, and preproduction cash
sales from both Campo Morado and Tahuehueto mines during 2018 resulted
in estimated gross concentrate sales of $45.56-million (U.S.) ($40.75
(U.S.) from Campo Morado and $4.81-million (U.S.) from Tahuehueto). We believe we
are in the right track to become a mid-size mining operator in Mexico
with two mines soon to be full operation, once Tahuehueto construction is
completed during 2019.
"Unfortunately, the theft of concentrates (explained below) plus some
increase in costs, such as electricity which increased by 110 per cent since
year-end 2017, affected the expected profitability of the Campo Morado
mine. Management is taking proper measures to correct this situation for
"Telson is fully confident of its capability to advance into a mid-tier
successful producer by continuing to advance its success story with
operational improvements at Campo Morado and with initiation of on-site
processing at Tahuehueto upon completion of mine construction.
Shareholder value is sure to increase as Telson's management delivers on
its goals towards becoming a significant producer in Mexico."
Campo Morado concentrate thefts
Management has determined from inconsistent assay results between
sampling of concentrate loaded on trucks at the mine site and check
assaying competed at the point of sale in Manzanillo that Campo Morado
concentrates were subjected to dilution by theft while in transit. The
company has identified that some of the concentrate trucks were received
in Trafigura warehouses with lower concentrate grades than reported by
the Campo Morado mine site laboratory. After considerable analysis with
the various labs and with security contractors, Telson has concluded
that there was a sophisticated criminal operation to intercept certain
concentrate trucks in transit, remove some part of the Campo Morado
concentrate load from the trailer and replace same with lower-quality
concentrates. For additional information, view an interview with Ralph
Shearing, president, on-line.
Once the company received the preliminary findings of its investigation
into the theft, it has taken various measures to eliminate this issue
with increased security, including performing monitored and guarded
concentrate transport from the mine to point of sale, 24-hours-a-day, seven-days-a-week GPS (global positioning system) tracking,
having all transport trucks now travel together in a convoy non-stop to
point of sale, and increasing assay monitoring on a truck-by-truck basis at
point of sale with more rapid turnaround of results to quickly compare
results at delivery with assays from mine site at truck departure.
Furthermore, Telson immediately had all drivers compromised in the theft
process employment terminated. Telson is considering all available legal
remedies in conjunction with continuing investigations by the appropriate
authorities and based on recent results believes it has substantially
eliminated the concentrate transit theft.
The estimated impact in the yearly cash selling value, although
difficult to determine accurate numbers, has been estimated by management
through a rigorous statistical analysis to range between $2-million (U.S.) to
$3-million (U.S.), to a maximum of approximately 7 per cent of total annual sales
from Campo Morado.
(1) Management points out that if not for the above-noted concentrate
theft, concentrate gross sales from the Campo Morado mine would have
increased by the value of the concentrate stolen. In addition, the
average grade of zinc concentrates sold, as quoted above, would have
been higher by approximately 2 per cent.
About Telson Mining Corp.
Telson Mining is a Canadian-based mining company with two
Mexican gold, silver and base-metal mining projects. Effective May 15,
2018, Telson declared commercial production at its 100-per-cent-owned Campo
Morado mine. Telson is currently producing zinc and lead concentrates
with gold, silver and copper as byproducts.
This press release was prepared under the supervision and review of
Ralph Shearing, PGeol, president and director of Telson Mining, 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 and underground development, and discussing work programs and
results with geology and mining personnel.
We seek Safe Harbor.
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