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TEL MIN
Closing in on first production at its se
SON NING
econd polymetallic project in Mexico
MINING | TELSON MINING
Telson Mining Corp is a Mexico-focused public company listed on the TSX Venture Exchange (TSXV) that was formed by current CEO Ralph Shearing and a colleague and close friend in the late 1990s. Not long after its founding, the nascent firm discovered the polymetallic Tahuehueto Project in the prolific Sierra Madre Mineral Belt within the state of Durango. Telson has gone on to retain the project to this day, advancing it through several cycles in the commodities sector. The company started to substantially explore the Tahuehueto concessions during the mining boom of 2004-08 before pulling back during the decline of 2015-16. Despite the difficult market conditions at that time, Telson managed to attract vital funding from a Mexican mining group in 2015, which allowed the company to complete bulk sampling work and economic studies that firmed up the project’s viability and convinced Trafigura Mexico to provide a loan facility for the construction of the mine. During this period, Telson also came across the Campo Morado Mine in Guerrero state – a base metals asset that Nyrstar had spent $500 million on but were looking to divest. Telson subsequently acquired the mine for a fee of $20 million in 2017.
“Campo Morado was a very
to put the mine into care and
good buy as we were able
maintenance in 2019, which
to quickly get the mine
stalled the construction of
back into production,” says
Tahuehueto. But, after further
Shearing. “At the same time,
COVID-19 related disruption
we were building our project
earlier this year, the company is
in Tahuehueto and the funding
now producing again at Campo
plan there required cash from
Morado and moving full steam
Campo Morado to slide over for
ahead to secure final funding
its construction.”
to complete construction at Tahuehueto.
Telson soon encountered some difficulties with the
“We have a very good
Campo Morado asset and had
operations team in Mexico, that group came in and funded us
MINING | TELSON MINING
five years ago, and we have a
Sierra Madre - which hosts
“It’s recognised as a
good blend of professionals in
a series of historic and
mineralised district. If you
mining and capital markets.
producing mines and most of
were to compare it to any
Together, we are working very
Mexico’s active exploration
other mineralised region in
effectively to move things
and development projects.
Mexico, the one that comes to
forward.”
mind is the San Dimas Mining The project is a ‘fantastic, rich
District,” he says before
deposit’ and of ‘district scale’
pointing out that San Dimas
according to Shearing, who
is about a third larger and has
tells RGN that Telson owns
been producing for 150 years,
Tahuehueto consists of 28
around 80% of the prospective
while the Tahuehueto district
mining concessions spread
ground in the region.
remains underexplored.
A fantastic polymetallic deposit across a large expanse of prospective ground in the
MINING | TELSON MINING
Down the years, the region has received less attention than San Dimas due to a perception of its remoteness in Mexico. However, based on Canadian standards, Shearing believes this not to be the case. “If I can drive to my project in one day, I don’t consider that remote,” he remarks. Telson’s exploration campaigns have identified gold-silver and base metals reserves at Tahuehueto, including copper, lead and zinc in the single structural zone the company has focused its efforts on thus far. Inside this structural zone, Telson has defined total probable reserves of 3.26 million tonnes (Mt) with average grades of 3.4 g/t gold, 41.8 g/t silver, 0.35% copper, 1.19% lead and 2.24% zinc. At present, gold resembles around 75% of the value of the project and the current grade estimations will make Telson one of the four highest grade producers in Mexico.
“We’ve really only explored along this one major structure and haven’t yet completed the exploration and development there. It remains open to mineralisation at depth and along strike in both directions. “In the structural corridor we are working on right now, we think there is likely to be around 7 km of strike length potential and we’ve explored about 2.4 km on that major structure,” says the CEO. “There are also seven or eight more mineralised structures exposed on surface within this corridor. We have to follow up with exploration on all of those as time carries on.” Telson is also developing an underground extension at Tahuehueto and has completed around 90% of the development work for the first three to four years of the operation. That development work has extended one tunnel at least 250 metres past known drill holes intercepts, where continuous mineralisation is already adding new
MINING | TELSON MINING
resources to the project, not
about by the COVID-19
some of the debt accumulated
yet quantified in a new NI 43-
pandemic this year, although
at Tahuehueto. At this stage,
101 technical report.
the company still managed to
the bank and bank associates
negotiate a US$12 million loan
have invested over $1 million
“We’re already growing the
facility with Accendo Banco
to propel the project through
asset with the underground
at the height of the global
to the final funding stage.
development, and as soon as
outbreak in June. The deal is
the company is in a healthier
expected to close very soon.
state we’ll be able to get drills
Once the deal reaches full closure, Telson will have the
turning again and bring in
Accendo Banco has even
funds available to resume
new resources and reserves,”
advanced $500,000 of the
construction and finish
assures Shearing.
loan figure to help bring in
building the mining operation,
additional funding and has
which should be completed
Here he alludes to the difficult
also helped clean up Telson’s
early next year according to
market conditions brought
balance sheet and paid off
Shearing.
MINING | TELSON MINING
RGN editor Jacob Ambrose Willson interviews Telson Mining Corp CEO Ralph Shearing, August 18, 2020
a plant with an intended
Back on track at Campo Morado
capacity of 1,000 tonnes
Campo Morado is an
per day (tpd) and targeting
underground polymetallic
to initiate production with
mine with a large resource
one ball mill in the 500 tpd
of 17.6 Mt (including high
range within eight months of
grade gold, silver, zinc, copper
securing final funding, and
and lead mineralisation) and
thereafter ramping up to 1,000
infrastructure, installations
tpd once the second ball mill
and equipment capable of
is installed later in 2021. “With
processing 2,300 tpd of ore.
The company is building
over 60% of construction already completed that is an
Although Shearing regards
achievable timeline once we
the 2017 acquisition as a
have the funding in place.”
good one for Telson, he notes
“Tahuehueto is an advanced in construction, highgrade gold mining project with silver and base metals byproducts, recoveries are great and the metallurgy could not be better. Our cash flow models predict very good profitability and excellent free cash flows at Tahuehueto,” - Ralph Shearing, Telson Mining CEO
T ELS O N M IN I N G
AT A G L A N C E
that it has previously been
improving its recovery rates at
regarded as a difficult asset
the mine.
to operate, predominantly for two reasons: Falling zinc
“A group out of the UK
prices and low metallurgical
conducted Leachox testing
recoveries.
which achieved up to 60% gold recoveries and 80% silver
STOCK TICKER TSXV:TSN
MARKET CAPITALISATION
US$33.08 million (as of September 21, 2020)
ja
On the latter point, metal
recoveries. This was first
grades are relatively high
phase testing and I have since
at Campo Morado - with
spoken to the group and they
average gold at 1.5 g/t and
think they can do better on the
silver grades of 90-100 g/t - but
second phase.
recoveries are languishing at around 15% gold and 30-
“If that is successful then we
40% silver. However, Telson is
have a path to significantly
currently investigating ways of
MINING | TELSON MINING
RALPH SHEARING, TELSON MINING CEO
improving the recoveries
“At 3,000 tpd, the economies
of the precious metals and
of scale will work to our
Growth potential at both projects
therefore improving the
advantage and certainly
In a similar vein at Tahehueto,
profitability of that project,”
improve profitability. At the
the company is planning for
says Shearing.
moment, we are running
a long-term expansion of
at 2,100 tpd and making
the plant towards 3,000 tpd,
In addition, Telson is looking
money. But with metal prices
based on adding resources and
at improving productivity at
[including zinc] improving,
reserves through exploration,
the mine by increasing the
we’ll be able to continually
to depth and along strike
plant capacity to 3,000 tpd, an
operate the project after some
on the current zones where
expansion which had already
interruptions in the last 12
resources and reserves
been started by Nyrstar and is
months. With some hard work
are already defined in the
currently 80% complete.
and ingenuity we will increase
company’s current mine plan,
the profitability of the mine.”
as well as exploring already identified vein structures
outside the current mine plan
stronger cash position and can
In conclusion, Telson is
area and finally initiating
subsequently get drills turning
nearing completion of its long-
greenfields exploration
again.
held Tahuehueto high grade
within the overall Tahuehueto mineralised district.
gold project in Durango state, The company currently
with the final funding solution
has its hands full with
the last piece of the jigsaw
Shearing states that both
development work schedules
ahead of its construction.
projects contain excellent
at Tahuehueto and Campo
Meanwhile, Campo Morado
organic growth potential
Morado, but is also monitoring
in Guerrero state is back into
which will be unlocked
additional opportunities for
production and primed for an
when Telson finds itself in a
external growth via potential
expansion which will boost
acquisitions in Mexico.
productivity and profitability.
MINING | TELSON MINING
TELSON MINING EXECUTIVES AT TAHUEHUETO
“Tahuehueto is an advanced
“Campo Morado has its
growth potential, building
in construction, high-grade
difficulties but if we are
towards becoming a mid-tier
gold mining project with silver
efficient and tackle it properly,
mining company in Mexico.”
and base metals, recoveries
we will be able to increase
are great and the metallurgy
recoveries and throughput
could not be better. Our cash
production to markedly
flow models predict very good
increase profitability in the
profitability and excellent free
future. And there is great
cash flows at Tahuehueto,”
exploration potential on both
Shearing asserts
projects, so Telson Mining Corporation has excellent
Published by Anderson Murray Media Ltd
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