Share this story:

Telson Curtails Mining Operations at Campo Morado and Plans to Focus on Construction of Mine at Tahuehueto Gold Project





Vancouver, British Columbia - TheNewswire - August 14, 2019 - Telson Mining Corporation ("Telson" or the "Company" (TSXV:TSN) (OTCPink:SOHFF) (Frankfurt:TSGN (formerly SQ82)) has decided to indefinitely curtail operations at its Campo Morado mine in Guerrero State, Mexico and place the mining project into care and maintenance.

Telson's management and its Board of Directors have taken into account the following facts and events in coming to the decision to suspend mining operations at Campo Morado: i) As a result of certain activities in the vicinity of Campo Morado, the Company is concerned about the health and welfare of its workforce. Following an extended scheduled shut down for maintenance work, the Company has experienced a work stoppage at the mine. A significant portion of Campo Morado's current local work force and trucking companies, including their drivers have advised that they are unable to continue providing services to the Campo Morado mine as they claimed concerns with the relationship with the local Community. This has resulted in workers resigning their current positions at the mine making it difficult to continue mining operations. Additionally, the transportation issues make it very difficult to move concentrates out of the Campo Morado mine to the point of sale at the port of Manzanillo. As a result, a significant amount of concentrate is being stored at the mine site; ii) The substantial decline in zinc prices which negatively affects Campo Morado mine's profitability.

Neither of these issues alone would have necessarily led to the decision to curtail operation at Campo Morado, however, Telson's management and Board of Directors believe that the Company's focus in an improving gold market should be to complete construction of the Company's Tahuehueto gold mine in Durango State, Mexico. Tahuehueto is Telson's flagship asset and once in production will shift the market's perception of Telson from primarily a base metals producer to a gold producer.

Tahuehueto Gold Mine Construction


Click Image To View Full Size

Telson has advanced Tahuehueto, a district scale epithermal mineralized system, by exploring only one of numerous known mineralized vein structures from exploration through to the publication in January 2017 of a mineral resource and pre-feasibility study (the "2017 PFS") which initiated management's decision to advance the project into mine construction to achieve production as soon as possible.

We note that the Tahuehueto 2017 PFS envisioned an underground mining operation mining 790 tons per day and processing 550 tons of ore through the milling circuit. The 2017 PFS results showed robust economics with a 21 year mine life (completed on base case metal price forecasts of $1,180/oz for gold, $16.70/oz for silver, $0.87/lb for lead, $0.92/lb for zinc and $2.65/lb for copper- all Metal Prices significantly lower than current and 3-year averages), however, in management's opinion did not optimize the mining plan.

The Company's management has considerable experience mining in Mexico and, notwithstanding the model suggested in the 2017 PFS, determined to build a mining operation capable of processing up to 1000 tonnes per day. Mine construction has currently advanced to approximately 70% completion.

Tahuehueto' s current published reserves and resources are listed below.

January 2017 Tahuehueto Reserve Estimate Summary

Classification

kTonnes

Au Grade (gpt)

Cont Au kOz

Ag Grade (gpt)

Cont Ag kOz

Cu Grade (%)

Cont Cu klbs

Pb Grade (%)

Cont Pb klbs

Zn Grade (%)

Cont Zn klbs

Probable Reserves

3,264

3.40

356

41.80

4,387

0.35

25,028

1.19

85,762

2.24

161,314

Tahuehueto Project Measured, Indicated, and Inferred Mineral Resource Estimate

Classification

kTonnes

Au Grade (gpt)

Cont Au kOz

Ag Grade (gpt)

Cont Ag kOz

Cu Grade (%)

Cont Cu klbs

Pb Grade (%)

Cont Pb klbs

Zn Grade (%)

Cont Zn klbs

Total Measured

2,771

2.77

247

44.70

3,982

0.31

18,914

1.27

77,827

2.29

139,821

Total Indicated

3,343

2.23

240

41.26

4,435

0.30

22,466

1.15

84,455

2.04

155,687

Total Measured and Indicated

6,114

2.48

487

42.82

8,417

0.31

41,380

1.20

162,282

2.15

295,508

Total Inferred

3,501

1.31

147

37.59

4,230

0.27

20,469

1.34

103,080

2.44

188,409

Canadian Institute of Mining, Metallurgy and Petroleum standards were followed in the estimation of the Mineral Reserves. Mineral Reserves are estimated using metal price forecasts of $0.60/lb for lead, $0.75/lb for zinc, $2.10/lb for copper, $1,000/oz for gold and $19.12/oz for silver.

Mineral resources are inclusive of mineral reserves. Mineral resources that are not mineral reserves do not have demonstrated economic viability. Mineral resource estimates do not account for mineability, selectivity, mining loss and dilution. These mineral resource estimates include inferred mineral resources that are normally considered too speculative geologically to have economic considerations applied to them that would enable them to be categorized as mineral reserves. There is also no certainty that these inferred mineral resources will be converted to either Measured or Indicated categories through further drilling, or into mineral reserves, once economic considerations are applied. AuEq based on the financial model metal price of $1,180 / oz.

The Company has identified and surface sampled numerous veins outside of the current published reserves and resources and subject to securing funding, the Company intends to conduct an extensive drill campaign with the goal of increasing the resources to evaluate the possibilities of expanding Tahuehueto operations.

Furthermore, Telson advises that new mineralization has very recently been discovered within underground developments on the project's El Perdido Zone within a major through-going vein structure where drifting at El Perdido has advanced at least 125 m in continuous mineralization past the last drill hole intersection, Figures 1,2 and 3 below. (Please see press release issued June 25, 2019 and February 22, 2019 for additional detail). This newly discovered mineralization has the potential to increase the projects resources within any future published technical report.

Figure 1


Click Image To View Full Size

Figure 2


Click Image To View Full Size

Figure 3


Click Image To View Full Size

Campo Morado Closure Cont.

Telson regrets the negative publicity that this mine closure will have towards the state of Guerrero, Mexico. Telson especially regrets that the closure of the mine will directly affect over 300 mine employees now out of work and numerous persons and businesses located in and around the city of Arcelia that have directly benefited from the mine's short two years of operation under Telson's ownership.

Telson will continue its efforts to improve the relationship with local community leaders, the local municipal government and others to come up with a suitable arrangement that can guarantee the long term operation of the Campo Morado mine. As described above, Campo Morado is a significant revenue generator for the city/town of Arcelia, and Telson is hopeful that the community at large will recognize the multiplier benefit of long-term production from same. In the event the Company is unsuccessful with these negotiations, the Campo Morado mine will indefinitely cease production and continue under care and maintenance.

Telson's management would like to point out that despite a number of challenges faced at the Campo Morado mine during the past 21 months (including significant concentrate theft last year), mining operations have been mostly profitable returning a mine operating profit of $3.05 million for the three months ended March 31, 2019, $2.28 million during Q4-2018. Telson will continue to investigate technologies for increasing gold and silver recoveries at the Campo Morado mine so that, if overall conditions improve the Company is able to reopen the Campo Morado mine with a better profitability.

Telson will now focus its efforts towards securing final funding required to complete the construction of its 1,000 tonne per day flagship Tahuehueto mining project, where construction efforts have advanced to approximately 70% completion. Once funding has been secured it is estimated that the Tahuehueto mine's final construction phase will take about six months allowing mill start-up and commissioning.

About Telson Mining Corporation

Telson Mining Corporation is a Canadian based mining company with two 100% owned Mexican gold, silver and base metal mining projects.

Telson's Tahuehueto mining project, located in north-western Durango State, Mexico is currently under development and waiting for final funding to complete construction of the processing plant and related assets to produce concentrates in its own on-site mineral processing plant, with a designed capacity of at least 1,000 tonnes per day, targeting completion of construction near end of Q1 2020.

Campo Morado is a polymetallic base metal mine with mining and milling equipment capable of producing up to 2,500 tons per day; which as of the date of this news release has been placed into care and maintenance pending better economic conditions and community relationships allowing for a restart of mining operations.

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.

Visit: www.telsonmining.com

On Behalf of the Board of Directors

(signed) "Antonio Berlanga"

Antonio Berlanga, CEO and Director

Cautionary Note Regarding References to Resources and Reserves

This news release uses the terms "measured and indicated resources" and "inferred resources". We advise U.S. investors that while these terms are defined in, and permitted by, Canadian regulations, these terms are not defined terms under SEC Industry Guide 7 and not normally permitted to be used in reports and registration statements filed with the SEC. "Inferred resources" have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of a feasibility study or prefeasibility studies, except in rare cases. The SEC normally only permits issuers to report mineralization that does not constitute SEC Industry Guide 7 compliant "reserves", as in-place tonnage and grade without reference to unit measures. U.S. investors are cautioned not to assume that any part or all of mineral deposits in this category will ever be converted into reserves. U.S. investors are cautioned not to assume that any part or all of an inferred resource exists or is economically or legally minable.

Cautionary Note Regarding Production Decisions and Forward-Looking Statements

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, 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.

For further information about Telson Mining Corporation, please contact:

Glen Sandwell
Corporate Communications Manager
ir@telsonmining.com
Tel: +1 (604) 684-8071