Telson Mining Corporation (TSXV:TSN, OTCBB:SOHFF) is extremely pleased to announce the start of commercial production at its 100% owned Campo Morado Mine (“Campo Morado” or the “Project”) located in Guerrero State, Mexico, with over 60 days of operational steady state production at 75% of management’s targeted mill capacity of 2,500 tonnes per day, achieving zinc recoveries and concentrate grades within management’s expectations.
José Antonio Berlanga, Director and CEO, states: “Achieving commercial production at Campo Morado is a major milestone for Telson. When we commenced pre-production activities in October 2017, we provided guidance that we expected to declare commercial production in Q3, 2018. To do so mid Q2, a full 3 months ahead of schedule, is a testament to the tremendous skill and expertise of our mining team and the hard work of our employees. We would like to thank all the stakeholders, especially the local communities that have supported us during this restart. We have successfully implemented a new bulk mining method at Campo Morado (sub level caving rather than room and pillar mining) and in April 2018 we transitioned from processing development mineralized material to mining mineralized material within one area of the El Largo Zone. As a result, our grades, recoveries and cash flows improved dramatically from Q1. We generated approximately US$7.7M in cash flow during the three months of Q1, and increased to US$5.2M in April alone, which based on costs of approximately US$3.5M resulted in net cash flow for the month of US$1.7M. For the first time in Telson’s history we will now start booking revenues. Our goal at Campo Morado is to increase throughput at the mill to 2,500 tonnes per day by Q3/Q4. We are also investigating new technologies to improve precious metals recoveries.”
Campo Morado Production Milestones
- Mill processed 112,480.9 Tonnes of mineralized material during the past 60 operational days at an average daily rate of 1,875 tonnes per day.
- Average Zinc recoveries of approximately 73% obtained during the past 60 operational days.
- Zinc concentrate average grade of approximately 44% zinc, 404 g silver/tonne and 1.42g gold/ tonne achieved during the past 60 operational days.
- Bulk underground mining methods underway after extensive development phase to allow production rate increase towards planned 2,500 tonnes per day.
- Highlights of pre-production since reporting on 1st quarter ending March 31st, 2018 (see News Release dated April 18, 2018) to start of commercial production May 15, 2018 (45-day period) as follows:
- 84,588.8 tonnes processed through milling facility at an average daily rate of 1,900 tonnes/day.
- Produced 6,708.8 tonnes of zinc concentrate with average grades for April (4,635.5 tonnes) of 43.82% Zn, 2.95% Pb, 373 g/t Ag, 1.31 g/t Au and for first 15 days of May (2,073.3 tonnes) 44.93% Zn, 2.48% Pb, 444 g/t Ag, 1.42 g/t Au.
- Produced 1065.8 tonnes of lead concentrate with average grades for April (633.4 tonnes) of 37.22% Pb, 9.12% Zn, 859 g/t Ag, 7.51 g/t Au and for first 15 days of May (432.4 tonnes) 27.7% Pb, 9.33% Zn, 713 g/t Ag, 6.17 g/t Au.
- Recoveries of approximately 73% zinc, 31% lead, 31% silver and 20% gold.
- Delivered 5,631 tonnes of zinc concentrate and 1027 tonnes of lead concentrate to buyer.
- Concentrate pre-production April 1 – May 15, 2018, management’s estimated 100% concentrate sale value for 45 days ending May 15, 2018 (start of commercial production) – US $7.7 million.
- April 1 – 30th – US $5.2 million
- May 1 – 15th – US $2.5 million
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.
Cautionary note on non-IFRS (international financial reporting standards) performance measures related to cash sales of concentrates and direct site operation costs as outlined above.
Readers should be cautioned that cash sales should not be equated with revenues. Any proceeds from the sale of concentrates during preproduction are considered under IFRS to be applied as an offset to development costs and not counted as revenues on Telson’s income statement. As Telson has now declared commercial production at Campo Morado, proceeds from concentrate sales from May 15, 2018 forward will be reflected as revenues on its income statement. Telson is not, during the pre-production stage, able to disclose the costs/expenses associated with generating such cash sales or provide guidance on profitability (if any), however, Telson intends to commence reporting on a quarterly basis commencing Q2 2018, now that it has declared commercial production at Campo Morado.
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.
Direct site costs – Telson is reporting direct site costs on per tonne of mineral processed. Sale proceeds reported are from 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.
Telson is currently in production at its 100% owned Campo Morado Mine in Guerrero, Mexico. Telson acquired …read more
From:: Investing News Network