Telson Mining Corporation Releases First Quarter 2018 Pre-Production Results from the Campo Morado Mine

VANCOUVER, British Columbia--()--Telson Mining Corporation (“Telson” or the “Company”) (TSX Venture: TSN.V)(OTCBB: SOHFF)(Frankfurt: TSGN.F)(Shares Issued: 125,726,075) is pleased to present pre-production results of development mining, concentrate production and metallurgical balances for the first three months of 2018 at its 100% owned Campo Morado Mine ("Campo Morado" or the "Project") located in Guerrero State, Mexico.

Campo Morado 1st Quarter 2018 Preproduction Highlights

  • Mill processed 148,676 Tonnes of mineralized development material during first quarter 2018 with,
  • Average head grade of 3.65% Zinc, 0.41% Copper, 0.90% Lead, 1.14 g/t Gold, 108 g/t Silver,
  • Produced 8,206 wet tonnes of Zinc concentrate with average grades of 45.16% Zn, 1.26% Cu, 1.94% Pb, 436 g/t Ag, 2.08 g/t Au
  • Produced 1,365 wet tonnes of Lead concentrate with average grades of 24.94% Pb, 8.29% Zn, 2.11% Cu, 616 g/t Ag, 8.92 g/t Au
  • Produced 82.22 wet tonnes of copper concentrate 9.87% Cu, 1,753 g/t Ag, 11.88 g/t Au, 10.54% Pb, 5.76% Zn (Copper concentrate only produced for two week of the period)
  • Estimated 100% cash selling value for 7,297.27 tonnes of shipped zinc concentrates is US $6,918,452 and for 1,157.44 tonnes of shipped lead concentrates is US $785,670, totaling US $7,704,122
  • Mill throughput processing rate increased from 1,500 tonnes/day in January to 1,900+ tonnes per day early April 2018
  • Underground development totaled 1225 meters with 896m in mineralized material and 329m in waste
  • Total mineralized material mined was 113,477 tonnes during the quarter

Note: Shipped concentrates are paid at 90% estimated metal content less deductions upon delivery to Trafigura warehouse in Manzanillo. The estimated 100% 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% is paid.

José Antonio Berlanga, CEO and Director, states: "As we near the end of the El Largo Zone development phase in preparation of initiating bulk mining methods within the next few weeks, we have been improving efficiencies at the mill resulting in successfully increasing zinc concentrate grades to an average of 43.54% zinc and lead concentrate grades to an average of 34.88% lead during the first two weeks of April 2018. During this same two-week period, we have achieved improved zinc metal recoveries averaging 72.7% zinc into the zinc concentrates. As soon as we initiate the bulk mining methods, within the next several weeks, the mine will be able to deliver a more consistent mineralized mill feed, without excess dilution of mining development material from various areas within the large El Largo Zone. Processing mineralized mill feed of more consistent grade and quality, containing less dilution, should allow us to further improve concentrate grades and recoveries. In addition, bulk mining methods will allow us to ramp up pre-production towards the 2,500 t/d capacity of the mill and further reduce direct site costs of approximately US $48.5 per tonne. These current direct site costs are approximately 33% lower than the estimated direct site costs of US $72.26 per tonne used for the same categories in our recently published independent Preliminary Economic Assessment.”

The above referenced Preliminary Economic Assessment ("PEA") dated March 31, 2018 was prepared in accordance with National Instrument 43-101 and has been published on SEDAR or is also available on the Company’s web site, www.telsonmining.com.

Non-IFRS (international financial reporting standards) performance measures - This news release refers to total direct site costs, which are non-IFRS performance measures. The Company believes that these measures, in addition to conventional measures prepared in accordance with IFRS, provide investors an improved ability to evaluate the underlying performance of the Company. The non-IFRS measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. These measures do not have any standardized meaning prescribed under IFRS and therefore may not be comparable with other issuers.

For accounting purposes, any sale proceeds from preproduction prior to the Company declaring commercial production at the Campo Morado Mine are considered directly attributable toward advancing the asset to the condition necessary for it to be capable of operating in the manner intended by management, therefore these are recorded as a reductions of development expenses.

Direct site costs - Telson is reporting direct site costs on per tonne of mineral processed. Sale proceeds reported are from preproduction during the mines commissioning period. The Company believes that, in addition to conventional measures prepared in accordance with IFRS, certain investors use this information to evaluate the Company's performance and ability to generate operating earnings and cash flow from its mining operations. Management also uses this metric as an important tool to monitor operating performance. Direct site costs are calculated using costs such as costs incurred in mining, processing and site administration divided by total tonnages processed. Costs are exclusive of depreciation and other non-cash items. Other companies may calculate this measure differently.

January 1 - March 31, 2018    
AVERAGE METALLURGICAL BALANCE 1ST QUARTER
Feed Grade (From Mass Balance)
      Tonnes       Grade
                                 
          Zn%       Cu%       Pb%       Au g/t       Ag g/t
Ore Tonnes     148,676       3.65       0.41       0.9       1.14       108
                                               
  Recovery
    WMT %       Zn%       Cu%       Pb%       Au%       Ag%
Zn Concentrate 5.5% 68.2%       17.0%       11.9%       10.1%       22.2%
Cu Concentrate 0.1% 0.1% 1.3% 0.6% 0.6% 0.9%
Pb Concentrate     0.9%       2.1%       4.7%       25.4%       7.2%       5.2%
                                               
  Tonnes Grade
          Zn%       Cu%       Pb%       Au g/t       Ag g/t
Zn Concentrate 8,206.22 45.16 1.26 1.94 2.08 436
Cu Concentrate 82.22 5.76 9.87 10.54 11.88 1,753
Pb Concentrate     1,365.66       8.29       2.11       24.94       8.92       616
                                 
  Content
      Zn, t       Cu, t       Pb, t       Au, Kg       Ag, Kg
Zn Concentrate 3,705.92 103.58 159.44 17.04 3,579.24
Cu Concentrate 4.74 8.11 8.66 0.98 144.10
Pb Concentrate       113.16       28.77       340.57       12.18       841.76
 

Following table presents average metal recoveries obtained during March 2018

          Average Recovery - March 1 - 31, 2018    
          WMT %         Zn%         Cu%         Pb%         Au%         Ag%
Zn Concentrate         6.3%         70.5%         16.9%         14.1%         10.1%         23.3%
Pb Concentrate         1.1%         2.5%         4.0%         28.3%         7.5%         6.0%
 

Grant of Options

The Company has granted a total of 400,000 stock options to a Director and a service provider under the terms of the Company’s stock option plan. The stock options have a five-year term from the date of the grant and are exercisable at a price of $0.73 per share.

About Telson Mining Corporation

Telson Mining Corporation is a Canadian based junior resource mining company currently in pre-production at two Mexican gold, silver and base metal mining projects and is advancing both towards commercial production, Campo Morado in the coming months of 2018 and Tahuehueto in early 2019. At the Campo Morado Mine in Guerrero, Mexico, Telson has re-commenced mining and processing operations with pre-production from mine development on a trial basis that commenced at an average 1,400 tonnes per day and is currently processing approximately 2,000 tonnes of mineralized development material per day during the recommissioning stage and intends to advance towards commercial production during 2018, increasing towards full capacity of approximately 2,500 tonnes per day. Telson's Tahuehueto Project, located in north-western Durango State, Mexico is currently in pre-production at approximately 135 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 Q1, 2019. Regular metal concentrate delivery and sales are underway from both projects.

Visit: www.telsonmining.com

On behalf of the board of directors

(signed) “Ralph Shearing”

Ralph Shearing, P.Geol, President and Director

Qualified Persons

This press release was prepared under the supervision and review of Ralph Shearing, P.Geol., President and Director of Telson Mining Corporation, a Professional Geologist registered in Alberta as a member of the professional association APEGA, and a Qualified Person as defined by NI 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.

Cautionary Note Regarding Production Decisions and Forward-Looking Statements

It should be noted that Telson has commenced pre-production mining at Campo Morado without the benefit of pre-feasibility or feasibility studies that outline mineral reserves. Furthermore, it is likely that Telson will declare commercial production at Campo Morado prior to completing a feasibility study of mineral reserves demonstrating economic and technical viability. Accordingly, readers should be cautioned that Telson’s production decision will likely be made without a comprehensive feasibility study of established reserves such that there is greater risk and uncertainty as to future economic results from the Campo Morado mine and a higher technical risk of failure than would be the case if a feasibility study was completed and relied upon to make a production decision. Telson has completed a preliminary economic assessment (“PEA”) mining study on the Campo Morado mine that provides a conceptual life of mine plan and a preliminary economic analysis based on the previously identified mineral resources (see News Release dated November 8, 2017 and April 4,2018). This will soon be replaced by a pre-feasibility study (“PFS”) that will allow the application of modifying factors to the mineral resources to allow a portion of them to be converted to mineral reserves; and will support the pre-production activities to bring the Campo Morado mine into commercial production.

Statements contained in this news release that are not historical facts are “forward-looking information” or “forward-looking statements” (collectively, “Forward-Looking Information”) within the meaning of applicable Canadian securities laws. Forward Looking Information includes, but is not limited to, disclosure regarding possible events, conditions or financial performance that is based on assumptions about future economic conditions and courses of action; the timing and costs of future activities on the Company’s properties, such as production rates and increases; success of exploration, development and bulk sample processing activities; timing for the restart of continuous mining operations at the Campo Morado Mine, and timing for processing at its own mineral processing facility on the Tahuehueto project site. In certain cases, Forward-Looking Information can be identified by the use of words and phrases such as “plans”, “expects”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or variations of such words and phrases. In preparing the Forward-Looking Information in this news release, the Company has applied several material assumptions, including, but not limited to, that the current exploration, development, environmental and other objectives concerning the Campo Morado Mine and the Tahuehueto Project can be achieved, the continuity of the price of gold and other metals, economic and political conditions and operations. Forward-Looking Information involves known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the Forward-Looking Information. There can be no assurance that Forward-Looking Information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on Forward-Looking Information. Except as required by law, the Company does not assume any obligation to release publicly any revisions to Forward-Looking Information contained in this news release to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Contacts

Telson Mining Corporation
Glen Sandwell, +1 604-684-8071
Corporate Communications Manager
ir@telsonmining.com

Release Summary

Telson Mining Corporation Releases First Quarter 2018 Pre-Production Results from the Campo Morado Mine

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Contacts

Telson Mining Corporation
Glen Sandwell, +1 604-684-8071
Corporate Communications Manager
ir@telsonmining.com