Telson Resources Inc. Announces Closing of the Purchase of the Campo Morado Mine, Guerrero State, Mexico from Nyrstar Mining Ltd.
Telson Resources Inc. Announces Closing of the Purchase of the Campo Morado
Mine, Guerrero State, Mexico from Nyrstar Mining Ltd.
Vancouver, British Columbia, June 14, 2017 – Telson Resources Inc. (“Telson” or the “Company”) (TSX
Venture – TSN.V) is pleased to announce that it has received final TSX Venture Exchange (“TSXV”) approval
for and has closed its acquisition of the Campo Morado mine, located in Guerrero State, Mexico (the “Campo
Morado Mine ”). Further to its news release of April 27, 2017, Telson has closed the Share Purchase
Agreement, as amended (the “ Agreement”) with Nyrstar Mining Ltd. and Nyrstar Mexico Resources Corp.
(collectively “Nyrstar”) and has purchased all of the shares of Nyrstar’s Mexican sub sidiary companies that
make up and own 100% of the Ca mpo Morado Mine, such that these subsidiary companies are now wholly-
owned subsidiaries of Telson.
Under the terms of the Agreement, Telson will pay a total purchase price of US$20 million plus any Variable
Purchase Price. US $800,000 was paid at signing of the Agreeme nt, US $2.0 million was paid immediately
before today’s closing, US $700,000 is due by June 30, 2017 and US $16.5 million is due by June 13, 2018,
as the anniversary of closing.
Nyrstar also retains the right to receive a Variable Purchase P rice on future zinc production on the first 10
million tons of ore processed by Telson at the Campo Morado Min e when the price of zinc is at or above US
$2,100 per tonne. Telson shall pay Nyrstar the greater of either of (a) or (b) below:
(a) US$20 per tonne of zinc sold if the zinc price received is over US$2,100 per tonne; or
(b) a percentage of the Net Smelter Revenue received from zinc from the Campo Morado Mine
based upon the following:
(i) if the zinc price received is greater than US$2,100 per tonne and less than or equal to
US$2,200 per tonne, then 0.5% of the Net Smelter Revenue;
(ii) if the zinc price received is greater than US$2,200 per tonne and less than or equal to
US$2,300 per tonne, then 1.5% of the Net Smelter Revenue;
(iii) if the zinc price received is greater than US$2,300 per tonne and less than or equal to
US$2,400 per tonne, then 2.5% of the Net Smelter Revenue;
(iv) if the zinc price received is greater than US$2,400 per tonne and less than or equal to
US$2,500 per tonne, then 3.5% of the Net Smelter Revenue; and
(v) if the zinc price received is greater than US$2,500 per tonne, then 4.25% of the Net
Smelter Revenue.
Telson maintains the right under the Agreement to purchase 100% of the Variable Purchase Price at any time
for US $4 million. Nyrstar also has a right of first refusal, on the same commercial terms and conditions
offered by an arm’s length third party to enter into an offtake agreement for the purchase of zinc concentrates.
The Campo Morado Mine is an underground multi-metal mine locate d in Guerrero State, Mexico, with
infrastructure, installations and equipment capable of processi ng 2,500 metric tonnes of ore per day. The
Telson Resources Inc.
(TSX.V: TSN OTCBB: SOHFF
Shares Issued: 94,016,995
property area comprises approximately 12,045 hectares in six mining concessions that are some 160 kilometers
south- southwest of Mexico City.
Previous exploration conducted by both Nyrstar and Farallon at Campo Morado has consisted of 577,155
cumulative metres of diamond drilling in 3,036 surface and unde rground diamond drill holes, extensive
geochemical and geophysical surveying (gravity, magnetic, IP an d radiometric), metallurgy, geological
mapping etc.
The most recent NI 43-101 compliant mineral resources as publicly disclosed by Nyrstar on April 29, 2015 are
presented in the following.
(This table presents depleted resources and does not include the mined-out former resources of the G9 and G9 Del Oro zones.)
The Campo Morado Mine was commissioned and commenced operations in 2009. Production was suspended
in January 2015 and the mine was placed on care and maintenance due to deteriorating industry conditions.
During 2014, the mine processed 657,000 tons of ore with an average grade of 1.2g/t Au, 115.7 g/t Ag, 4.6%
Zn, 1.2% Cu and 0.9% Pb. The concentrates produced in the same year were 48,000 tons of Zn concentrate at
47% Zn and 29,000 tons of Cu concentrate at 13%, including 6 koz of Au and 0.9mm of Ag.
Telson intends to recommence mining activities at Campo Morado in the near future upon securing necessary
operating capital.
At a recent site visit to Campo Morado, Telson’s management tea m was able to meet with the leaders of the
local community, municipality representatives, members of the f ormer mining union and current mine
employees, all of whom have pledged their support with Telson’s plan to reactivate the mine.
Antonio Berlanga, CEO, stated “Telson’s management is very plea sed to successfully complete the Campo
Morado Mine acquisition, which we see as a unique and positive way to quickly add value for our Company’s
shareholders. We are in advanced discussions with several conc entrate offtake purchasers to secure the
operating capital required to recommence mining operations and once funding is successfully achieved, hope
to bring the Campo Morado Mine back on stream, producing concen trate before the end of 2017 or earlier
There are no assurances that we will successfully complete an offtake agreement to facilitate recommencement
of operations on the above schedule, however we are working diligently to finalize same.”
The Company is also pleased to announce that it has received TS XV approval and is concurrently closing on
US $2.8M of its previously announced private placement financing. Gross proceeds received by the Company
were CDN$3,791,919.69 and were used to fund the initial US $2.8M payments under the Agreement. A total
of 8,399,319 shares will be issued (3,448,774 shares at 31 cents per share and 4,950,545 shares at 55 cents per
share). All shares issued under the private placement are subject to a four month and one day resale restriction
under applicable securities laws. The funding was received fro m two corporate entities, each controlled by
Estratégica Corporativa en Finan zas, a related party of the Com pany. The related party is a significant
shareholder with a control position in the Company, for which t he Company previously received shareholder
consent in late 2015, in accordance with TSXV policy.
The balance of the private placement to the same party for 1,73 2,691 shares at CDN$0.55 per common share
is expected to close before the end of June to fund the further US $700,000 payment under the Agreement due
by June 30, 2017.
The issuance of private placement securities to a non-arms’ len gth party also constitutes a related-party
transaction under Multilateral Inst rument 61-101 (“MI 61-101”). Because the Company’s shares trade only
on the TSXV, the issuance of securities is exempt from the formal valuation requirements of Section 5.4 of MI
61-101 pursuant to Subsection 5.5(b) of MI 61-101 and fits with in an exemption from the minority approval
requirements of Section 5.6 of MI 61-101.
Qualified Person
This press release was prepared under the supervision and revie w of Ralph Shearing, P.Geol., President and
Director of Telson Resources Inc., a Professional Geologist reg istered in Alberta as a member of the
professional organization APEGA, and a Qualified Person as defined by NI 43-101
On behalf of the board of directors
(signed) “Ralph Shearing”
Ralph Shearing, President
Cautionary Note Regarding Forward-Looking Statements
Statements contained in this news release that are not historical facts are “forward-looking information” or
“forward-looking statements” (collectively, “Forw ard-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 perfor mance that is based on assumptions about future
economic conditions and courses of action; the timi ng and costs of future activities on the Company’s
properties; the ability of the Company to negotiate and enter into one or more offtake agreements to fund
rehabilitation and recommencement of operations at the Campo Morado Mine; success of exploration,
development and bulk sample processing activities; antic ipated results of check assay results and the closing
of the Campo Morado purchase contemplated by the Agreement. 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 va riations 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 explora tion, development, environmental and other objectives
concerning the Campo Morado Mine can be achieved, including converting historical mineral resources into
current mineral resources; the contin uity of the price of gold and other metals, economic and political
conditions and operations. Forward- Looking Information involves know n and unknown risks, uncertainties
and other factors which may cause the actual results, p erformance or achievements of the Company to be
materially different from any future results, perform ance 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 assu me 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.
Cautionary Note Regarding References to Resources and Reserves
This news release uses the terms "measured and indi cated resources" and "inferred resources". We advise
U.S. investors that while these term s 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 upgrade d to a higher category. Under Canadian rules,
estimates of inferred mineral resources ma y not form the basis of a feasibility study or prefeasibility studies,
except in rare cases. The SEC normally only permits issuers to report minera lization 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 par t or all of mineral deposits in this category will ever
be converted into reserves. U.S. in vestors are cautioned not to assume that any part or all of an inferred
resource exists or is economically or legally minable.
Contacts
Glen Sandwell, Telson Resources Inc.
Corporate Communications
Tel: +1(604)684-8071