Telson Provides Full Year 2018 Operational Update for its Campo Morado Mine and Reports Concentrate Theft

VANCOUVER, British Columbia–(BUSINESS WIRE)–lt;a href=”https://twitter.com/search?q=%24TSN&src=ctag” target=”_blank”gt;$TSNlt;/agt; lt;a href=”https://twitter.com/hashtag/concentrate?src=hash” target=”_blank”gt;#concentratelt;/agt;–Telson Mining Corporation (“Telson” or the “Company”) (TSX Venture –
TSN.V) is pleased to present an operational and financial update for
full year 2018 for its 100% owned Campo Morado Mine (“Campo Morado”)
located in Guerrero State, Mexico.

Campo Morado 2018 Pre-Production and Commercial Production Highlights

  • Mill processed 585,601 Tonnes of mineralized resources during 2018,
    (231,757 tonnes of pre-production to May 15, 2018 and 353,844 of
    commercial production since May 16, 2018) Average head grade of 4.26%
    Zinc, 0.37% Copper, 1.10% 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% Zn, 363 g/t Ag and
    1.27 g/t Au for estimated total gross proceeds of US $35.17 million. *
  • Sold on a combined basis an estimated total of 7,666 tonnes of lead
    concentrate with estimated average grades of 23.93% Pb, 662 g/t Ag,
    5.15 g/t, Au and 2.21% Cu for estimated gross proceeds of US $5.58
    million. *
  • Combined estimated total all in operating costs, including mining,
    milling, freight, royalties, smelter costs, etc. were US $32.46
    million, resulting on an estimated cost per ton of US $55/tonne.
  • Combined estimated total metal sold – 36.26 million lbs (16,449
    tonnes) zinc, 4.03 million lbs (1,834 tonnes) lead, 373,333 lbs (169
    tonnes) copper, 2,870 oz gold and 622,309 oz silver. *
  • Mill throughput processing rate increased from 1,500 tonnes/day in
    January to an average of 1,800+ tonnes per day by year end, achieving
    maximum daily rates of over 2,200 tonnes/day.
  • Total estimated mineralized resources mined was 582,521 tonnes during
    the year. Mine development totaled 2,659 meters: 1,682 meters
    developed in mineralized resources and 977 meters in waste (access
    ramps and auxiliary workings).

José Antonio Berlanga, CEO 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 PEA stage, to having
acquired the Campo Morado mine, advancing it back into full commercial
production and advancing its Tahuehueto project through pre-feasibility
studies into pre-production 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.

2018 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 pre-production cash
sales from both Campo Morado and Tahuehueto mines during 2018 resulted
in estimated gross concentrate sales of US $45.56 million (US $40.75
from Campo Morado and US $4.81 million from Tahuehueto) We believe we
are in the right track to become a mid-size mining operator in Mexico
with 2 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% since
year end 2017, affected the expected profitability of the Campo Morado
Mine. Management is taking proper measures to correct this situation for
2019.

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 at https://youtu.be/ZJY9xngY5D8

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, 24X7 GPS tracking,
having all transport trucks now travel together in a convey non-stop to
point of sale, increasing assay monitoring on a truck by truck basis at
point of sale with more rapid turn-around of results to quickly compare
results at delivery to 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 ongoing 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 US$2 million to
US$3 million, to a maximum of approximately 7% of total annual sales
from Campo Morado.

*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%.

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 and
or Tahuehueto Mines are considered directly attributable toward
advancing those assets to the condition necessary for them 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 inclusive of
preproduction during the mine’s 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.

About Telson Mining Corporation

Telson Mining Corporation 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% owned Campo
Morado Mine. Telson is currently producing zinc and lead concentrates
with gold, silver and copper as by-products.

Telson’s 100% owned Tahuehueto Project, located in north-western Durango
State, Mexico is currently in construction development. Pre-production
commenced at Tahuehueto in August 2017, currently mining at a rate
averaging approximately 200 tonnes per day and shipping ore to a
third-party toll mill for processing. Management has a targeted timeline
at Tahuehueto to be producing with its own on-site mineral processing
plant, with a designed capacity of at least 1,000 tonnes per day, in
2019.

Regular metal concentrate deliveries and sales are well 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, Telson
declared 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 was 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).

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

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