Telson’s New Agreements to Further Develop its Mexican Assets

Telson Mining Corporation (Telson) announced it has purchased the Variable Purchase Price Royalty (VPP Royalty) for its Campo Morado mine, which will allow the company to increase its production. Furthermore, Telson announced that the construction of its Tahuehueto gold mine has been accelerated. 

In a previous press release, the company announced a US$25 million agreement with Accendo Syndicate, which will be used to complete the construction of its Tahuehueto minemeet its debt obligations and for capital purposes. In addition, Accendo Syndicate and Trafigura Mexico executed a Memorandum of Understanding (MOU) to negotiate the possible entry of Definite Agreements, which include the restructuring of the company's obligations with Trafigura and Nystar Canada.

To close the VPP Royalty, Telson issued 14,600,000 shares at a price of CAD$0.345 (US$.28) per share, which was a 64 percent over Telson's trading price on February 22, when the parties reached the VPP Royalty acquisition letter agreement.

"The closing of the VPP Royalty is a major positive step for Telson and the Campo Morado Mine and will increase revenue at Campo Morado on an ongoing basis. To put this into context, at average March 2021 realized zinc sale prices, purchasing the VPP Royalty, that would have been at its highest variable rate of 4.25 percent on the production of zinc, Telson has realized additional revenue of over US$450,000 for March 2021 production, said Ralph Shearing, Telson's President and CEO.

Improving production and recoveries at Campo Morado has been a constant objective for the company.  At Mexico Mining Forum 2021, Shearing said that the company has managed to get higher recoveries using so-called Leachox testing. “Using Leachox testing, we can improve recoveries from current levels of gold at 15-20 percent and silver 30-40 percent, which would significantly increase the mines profitability by increasing the ounces of gold and silver produced.”

In addition, Telson also announced that construction work at the Tahuehueto mine was accelerated last week. The new construction crews have restarted the assembly work of the mineral processing facility and are preparing to start major infrastructure works, such as the tailings storage facility, the water pump station and the water line that will supply water to its operations.

The CAPEX investment required to complete construction and start using the mine is US$ 15.4 million; US$12.6 million for equipment and construction and US$2.8 million to support operations until the mine has positive cash flow, reported the company.

In March, Telson closed a private placement of CAD$10.08 million (US$8.12 million) and last week signed the Empress Silver Stream agreement to acquire an additional US$5 million for the construction of Tahuehueto. The agreement with Accendo Banco for a US$12 million loan is expected to be closed in the coming weeks along with the restructuring of Telson's loans with Trafigura and Nyrstar.

“Our technical mining team has come to know the Tahuehueto gold project well and Accendo Banco is convinced that it is one of Mexico's premier advanced gold mines under development and will soon reach production with our financial assistance,” said Javier Reyes, CEO of Accendo Banco in a press release. Reyes added that the company is committed to helping Telson's project reach production soon and affirmed that Accendo Banco will use its financial knowledge and network to help it.