Telson Mining Corporations22.q4cdn.com/542568401/files/doc_presentations/2018/04/...Endeavour Silver Corp C$3.05 $302 $264 8.9x 4.7x Mexico Ag / Au 3 / 2 Great Panther Silver Ltd C$1.50

Telson Mining CorporationA New Multi-Mine Producer in Mexico

TSX.V: TSN OTCBB: SOHFF FSE: SQ82

Forward Looking Statements

April 20, 2018 PRIVATE PRESENTATION FOR ACCREDITED AND SOPHISTICATED INVESTORS ONLY

Cautionary Note Regarding Production Decisions and Forward-Looking StatementsStatements contained in this corporate presentation 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. Such risks and uncertainties includes fluctuations in metal prices, unpredictable results of exploration activities, uncertainties inherent in the estimation of mineral reserves and resources, fluctuations in the costs of goods and services, problems associated with exploration, mining and milling operations, changes in legal, social or political conditions in the jurisdictions in which Telson operates, lack of appropriate funding and other risk factors discussed in the Company’s filings with Canadian regulatory agencies. 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 corporate presentation to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Telson relies on litigation protection for Forward-Looking Information.

It should be noted that Telson has commenced pre-production mining at both projects without the benefit of pre-feasibility or feasibility studies that outline mineral reserves. Furthermore, it is likely that Telson will declare 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 will likely be 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 is currently completing a preliminary economic assessment (“PEA”) mining study on the Campo Morado mine that will provide 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). This will soon be replaced by a pre-feasibility study (“PFS”) that will allow the application of modifying factors to the mineral resources to allow a portion of them to be converted to mineral reserves; and will support the pre-production activities to bring the Campo Morado mine into commercial production. Telson expects that the PEA will be completed and published in March 2018 and that the PFS should follow within 6 months thereafter.

Ralph Shearing, P. Geol., President of Telson Mining Corporation is the Qualified Person for the Company as defined in national Instrument 43-101, and is responsible for ensuring that the technical information contained in this presentation is an accurate summary of the original reports and data provided to or developed by Telson Mining Corporation.

2

Telson: The Investment Window is Now• Development costs have already

been invested

• Infrastructure and equipment is in place

• Experienced Mexican management and mining personnel are in place

• Once commercial production begins, valuations are likely to rise—rapidly

• Not one, but two mines are going into production


Telson is entering Stage 3

Standard Exploration to Production Market Cycle

3

EV/EBITDA Comparables Detail

April 20, 2018 PRIVATE PRESENTATION FOR ACCREDITED AND SOPHISTICATED INVESTORS ONLY 4

Price Market Cap Enterprise EV / EBITDA Commodities EBITDA

US$ unless otherwise noted (Mar. 2, 2018) (US$mm) Value CY2017E CY2018E Country of Operation (Main/By-Product) # of Mines / Projects

Large Cap Mining

Alamos Gold Inc C$6.72 $2,030 $1,837 10.5x 7.4x Canada, Mexico Au 4 / 6

First Majestic Silver Corp C$7.15 $920 $832 11.5x 7.1x Mexico Ag / Au / Pb / Zn 6 / 3

Torex Gold Resources Inc C$9.28 $614 $953 8.9x 5.6x Mexico Au 1 / 2

McEwen Mining Inc $1.96 $661 $626 na na Mexico, U.S., Argentina Au / Ag 3 / 2

Fortuna Silver Mines Inc C$5.99 $745 $588 4.8x 4.8x Mexico, Peru Ag / Au / Pb / Zn 2 / 1

Premier Gold Mines Ltd C$3.15 $497 $403 5.3x 16.0x Mexico, U.S. Au 2 / 4

Argonaut Gold Inc C$2.48 $342 $336 7.2x 4.1x Mexico Au / Ag 3 / 3

Endeavour Silver Corp C$3.05 $302 $264 8.9x 4.7x Mexico Ag / Au 3 / 2

Great Panther Silver Ltd C$1.50 $197 $152 na na Mexico Ag / Au 3 / 1

Alio Gold Inc C$3.23 $112 $63 2.6x 2.1x Mexico Au 1 / 1

Excellon Resources Inc C$1.75 $129 $130 na na Mexico Ag / Pb / Zn 1 / 1

Marlin Gold Mining Ltd C$0.52 $68 $103 5.1x 11.7x Mexico, U.S. Au / Ag 1 / 2

GoGold Resources Inc C$0.39 $52 $38 na na Mexico Ag / Au 1 / 1

Impact Silver Corp C$0.36 $24 $19 na na Mexico Ag / Au 3 / 1

Goldgroup Mining Inc C$0.06 $9 $9 na na Mexico Au 1 / 2

Average(1) 7.4x 5.9x

Median 7.2x 5.6x

Telson Mining Corp C$0.80 $76 $83 na 3.2x Mexico Au / Ag / Pb / Zn / Cu 2 / 2

1) Excludes outliers

A New Multi-Mine Producer in MexicoA New Brand, a New Vision

Telson: A New Multi-Mine Producer in Mexico


• An experienced exploration company

• Now a mining company, with a new mission and vision:

– Turn around undervalued properties and unlock their potential

– Deliver low-cost production for high shareholder return

– Continue to grow with acquisitions

• Two major projects, both in pre-production, coming into commercial production in 2018 and 2019

• A significant buying opportunity now-while the mines are in pre-production

6

Campo Morado and Tahuehueto


Campo Morado Mine

• Guerrero State

• Gold, silver and base metal VMS mineral deposit

• commercial production expected in Q3 2018

Tahuehueto Mine

• Durango State

• Gold, silver and base metal epithermal mineral deposit

• commercial production expected early 2019

Tahuehueto

Campo Morado

7

Growing to a Mid-Tier Producer


Improved returns expected

• The first TSN turning point was October 2017,

when preproduction mining began at

Campo Morado

Campo Morado in 2018

• Commercial production of 2,000 tpd by Q3

• Increasing towards 2,500 tpd

• Aggressive exploration, drilling identified targets

Tahuehueto in 2018

• Complete mine construction

• Startup production of 1,000 tpd by year-end

• Aggressive exploration, drilling identified targets

8

Mexican Managed and OperatedFewer conflicts, better community relations, lower costs

• All-Mexican mine management

• Cost efficient (no expat salaries)

• Capable and experienced in building and operating mines

• Telson restarted operations at Campo Morado with full support from local communities, stakeholders and government

• Hands-on managers in tune with local labour force and communities

• Major progress since Mexican management took over two years ago


Coming Online in 2018 and 2019Two Major Projects: Campo Morado and Tahuehueto

Campo Morado, a Zinc/Gold Mine Coming into Production in 2018

Campo Morado


• Advanced project purchased for a fire sale price (US$20 million)

• Proven asset with significant resource, solid revenue potential

• Extremely low capital costs to bring the mine to production: US$5 million (from Telson)

• All equipment, infrastructure and exploration in place (US$150 million in development investment from previous owners)

• Strong support from local communities

12

Campo Morado at a Glance


• High confidence levels: over 3,000 core drill holes; over 570,000 metres drilled

• More than US$75 million drilling & analysis cost

• Gold, silver and base metal VMS mineral deposit

• Resources 10.4 Mn tonnes (Measured and Indicated)

▪ 7.0% Zinc Equivalent Cut-off

▪ 10.1% Zinc Equivalent

– Gold: 1.91 g/t - Silver: 146 g/t

– Zinc: 4.85% - Copper: 0.87%

– Lead: 1.11%

Notes: Mineral Resources have an effective date of November 5, 2017; Eric Titley, PGeo, Titley Consulting Ltd., is the Qualified Person responsible for the Mineral Resource estimate.

Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability. The Mineral Resources were depleted to December 2014, the last phase of mining, by removing all material from the tabulation found in the excavation

solids models provided by Telson Mining Corporation.

Zinc equivalent calculations used metal prices of USD 1.20/lb for zinc, USD 2.80/lb for copper, USD 17/oz for silver, USD 1150/oz for gold and USD 0.90/lb for lead and metallurgical recoveries of 70% for zinc, 68% for copper, 38% for silver, 25%

for gold, and 60% for lead. Metal price assumptions used in the ZnEq calculation are the same assumptions used in establishing the cut-off for the estimates and reasonable prospects of eventual economic extraction. A 5.5% ZnEq cut-off in bold is

considered to be appropriate for the sub-level caving mining method planned for extraction of the mineralization in the various deposits. All Mineral Resource estimates, cut-offs and metallurgical recoveries are subject to change as a consequence of

more detailed economic analyses that would be required in Pre-Feasibility and Feasibility studies. The 5.5% ZnEq cut-off in bold is considered the base case Mineral Resource estimate. Other estimates are reported in the context of cut-off grade

sensitivity analysis. Gold grade estimates are reported as grams per tonne rounded to two decimal places. Silver grade estimates are reported as grams per tonne rounded to an integer. Copper, lead, zinc and zinc equivalent estimates are reported

as percent rounded to two decimal places. Tonnages are reported as metric tonnes round to one thousand tonnes.

Rounding as required by reporting guidelines may result in apparent summation differences.

Metal prices of USD 1.20/lb for zinc, USD 2.80/lb for copper, USD 17/oz for silver, USD 1150/oz for gold and USD 0.90/lb for lead

13

Campo Morado Operational Improvements


• Infrastructure and equipment capable of processing 2,500 tpd

• Carbon removal flotation circuit added

• Mining method changed from room & pillar to sub-level caving

• Restarted operations October 2017 at 1,400 tpd

• Currently operating at 1900 tpd

• Ramping up to 2,500 tpd in 2018

• Higher recovery techniques under investigation including leaching of tailings

14

Campo Morado: Preproduction Details• Producing zinc and other metals in

preproduction phase

– Zinc prices are at a ten-year high

• Significant future potential to increase precious metal recoveries

– Gold prices are steadily increasing

• Preproduction began in Q4 2017, first sales in Q4 2017

– US$7.70 million generated in Q1 2018

• Commercial production expected in Q3 2018


149k tonnes of development ore processed in Q1 2018

Tonnes Au (g/t) Ag (g/t) Pb % Zn % Cu %

Head Grade 148,676 1.14 108 0.90 3.65 0.41

Zn Concentrate 8,206 2.08 436 1.94 45.16 1.26

Pb Concentrate 1,365 8.92 616 24.94 8.29 2.11

Cu Concentrate 82.22 11.88 1,753 10.54 5.76 9.87

15

Note: Copper concentrate only produced for two weeks of the period. Underground development during Q1 2018 totaled 1,225

meters with 896m in mineralized material and 329m in waste.

Investigating Precious Metals Recovery from Tailings

• Telson is conducting multi-leach metallurgical test to recover precious metals from existing tailings

Tonnes Au(g/t)

Ag(g/t)

Cu%

Au(oz)

Ag(oz)

AuEq

3,290,622 1.57 94 0.3 165,662 9,954,590 298,161


Drilled Area

Geochemical Anomalies

Geophysical Anomalies

Significant Exploration Potential Points to a Long Mine Life

Campo Morado PEA Highlights1 • Pre-tax NPV at 8% discount rate of US$81Mn

• After-tax NPV at 8% discount rate of US$65Mn

• Undiscounted cashflow before income & mining taxes of US$114Mn

• Undiscounted cashflow after income & miningtaxes of US$91Mn

• Life of Mine of 12 years @ 2,500 tpd.

• 9.7 million tonnes potential mill feed at average grades of 4.33% Zn, 1.00% Pb, 0.78% Cu, 131.9 g/t Ag and 1.71 g/t Au

• Recently achieved 33% reduction to PEA direct site costs of mining, milling & admin

• Site costs reduced from US$72.26 to Telson’s Q1 development mining costs of US$48.50 per tonne


(1) Preliminary Economic Assessment (“PEA”) March 31, 2018 prepared as a National Instrument 43-101 Technical Report for Telson Mining Corporation (Telson) by Titley Consulting Ltd (TCL) and Micon International Limited (Micon). The quality of

information, conclusions, and estimates contained herein is consistent with the level of effort involved in Titley Consulting Ltd and Micon’s services, based on i) information available at the time of preparation, ii) data supplied by outside sources, and iii)

the assumptions, conditions, and qualifications set forth in this report. This report is intended for use by Telson subject to terms and conditions of its contracts with TLC and Micon. Except for the purposed legislated under Canadian provincial and

territorial securities law, any other uses of this report by any third party is at that party’s sole risk. Cautionary statement NI 43-101: The PEA was prepared in accordance with National Instrument 43-101 Standards of Disclosure for Mineral Projects ("NI

43-101"). Note: The PEA is preliminary in nature and includes Inferred Mineral Resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as Mineral

Reserves, and there is no certainty that the PEA based will be realized. Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability. Calendar years used are for illustrative purposes. Some figures may not sum exactly

due to rounding.

Campo Morado: Commercial Production Will Transform Telson• Increased zinc production

• Production efficiencies

• Per-ounce costs drop

• Gold will gradually enter the production stream

• Telson’s valuation is expected to increase

• Further reductions to site operating costs anticipated upon completion of development phase commencing commercial production


Campo MoradoZinc Flotation Cells

Campo MoradoCamping and Dining Facilities

Campo MoradoMilling Facility 2,200 tpd

Campo MoradoConcentrates being Loaded for Delivery

19

Tahuehueto, a Gold and Base Metal MineComing into Production in 2019

TahuehuetoGold/silver/copper/lead/zinc: primary revenue is gold

• Building a 1,000+ tonne per day mine

• Proven asset with significant ore, solid revenue potential

• Major exploration potential (San Dimas-like district scale)

• Development mining underway and showing real promise

• Equipment, management and development investment in place

• Startup production expected by end of 2018

• Commercial production expected in early 2019


Tahuehueto Preproduction Details• Destined to be a multimillion ounce gold deposit

• 10+ veins that are drilling targets

• 6 months into early preproduction

• 143,000 tonnes at an average of 132 tonnes per day

• Generated US$5.34 million in 2017 (~30% operating profit)

• 12 year estimated mine life (at 1,000 tpd, with current reserves)


Tahuehueto at a Glance

• Reserves:

– Gold: 3.2Mn tonnes @ 3.4 g/t

– Silver: 41.8 g/t Ag

– plus base metals

• Resources (Measured and Indicated)

– Gold: 6.1Mn tonnes @ 2.4 g/t

– Silver: 42.8 g/t

– plus base metals


• Gold, silver and base metal epithermal mineral deposit

• Detailed mine plans are in place

• 95% of milling/production equipment is already

purchased

• Fully funded to finish construction now underway

• Currently toll milling at 132 tpd

• 14.3k tonnes mined and processed in 2017

• Generated US$5.34 million in 2017 (~30% operating

profit)

Tahuehueto – Expected Financial Figures


Item Units 550 tpd 1,000 tpd

Average annual EBITDA US$16.6 Mn Est 95% increase

NPV @ 8% Annual Discount Rate (Pre tax) US$137.8 Mn Est 63% increase

Mine Life 21 years 12 years

Average cost per ton(incl. mining, processing, G&A, freight, marketing and royalties)

US$67.35 Est US$52.14

Average cost per AuEq ounce US$494.95 Est US$415.00

Contained Gold Produced LOM kOz 340 336

Contained Silver Produced LOM kOz 3,720 3,732

Contained Lead Produced LOM kLb 73,100 72,400

Contained Copper Produced LOM kLb 20,800 21,100

Contained Zinc Produced LOM kLb 128,700 127,400

Metal Prices Used (US$): Au $1,180/oz, Ag $16.70/oz, Cu $2.65/lb, Pb $0.87/lb, Zn $0.92/lb

Notes: Figures taken from the January 2017 PFS – Metal Mining Consultants Inc.1,000 tpd calculations are non NI 43-101 compliant as they have not yet been published

24

Tahuehueto Exploration Potential • Telson’s concessions cover 7,400 hectares

representing approximately 80% of government

recognized Tahuehueto mineralized district.

• Tahuehueto is destined to become a multimillion

ounce gold deposit.

• 10+ vein structures with known surface

mineralization that are drilling targets

• Current resources and reserves are open to depth

and along strike in all directions.

• Reserves and resources easily expanded with

exploration.


Tahuehueto Mineralized District ~90 Sq Km

Current Reserves/Resources Based on El Crestón Structure

2018 Exploration Plan

•Develop and drill between El Crestónand Santiago

•Infill drilling between Cinco de Mayo and El Crestón

•Step out drilling along strike (north and south)

•Explore structure with underground drilling

•Surface drill identified mineralized vein structures


With Proven Track RecordsExperienced Leadership

Trusted, Experienced LeadershipTechnical and mine leadership is Mexican

• Respected by Mexican government, Mexican communities, suppliers and workers

• In Mexico, Telson is seen as a Mexican company

Capital market leadership is North American

• Connected to financial markets and the international mining industry

• Managing administration and public company aspects of Telson under stringent Canadian laws


Left to right: Enrique Margalef (VP Corporate Development), Rory Godinho (Director Capital Markets), Ralph Shearing (President), Yao Sun (Independent Director), Antonio Berlanga (CEO), Arturo Bonillas (Independent Director), Omar Garcia (CFO).

Experienced International Management


Ralph ShearingP.Geol.

President and Director

Over 35 years experience in mineral exploration &

development and 32 years senior management experience with publicly listed companies

Rory GodinhoDirector

Capital Markets

Rory Godinho is the Co-Chair of Miller Thomson’s Capital Markets &

Securities Group. He has extensive contacts in the Canadian capital

markets and has assisted several public and private companies with

raising equity.

Jose Antonio BerlangaP.Eng.

CEO and Director

42+ years in mining design, planning, engineering,

construction and operation.

Enrique MargalefBA Economics

VP Corp Development & Director

Former investment banker, 10+ years experience in M & A,

financial evaluations, analyses, and cash flow management

Omar Garcia AbregoCPA, CA

Chief Financial Officer

International experience in the mining industry and TSX public

practice.

30

Independent Directors


Arturo BonillasP.Eng. CEO

Independent Director

Former President and Co-Founder of Timmins Gold

Corp., 34+ years experience in Mexican mining industry.

Remigio Martinez MullerB.S. Geo. CEO


With Grupo Mexico since 1967. Experienced mining

geologist, geophysicist, and Director of Exploration.

Yao SunCFA, CMA, CPA


Chartered Financial Institute (CFA), the Certified

Management Accountants (CMA) of Canada and the

Certified Practicing Accountants (CPA) of Australia

31

Telson in 2018: Aggressive, Achievable Targets• Campo Morado:

– Commercial production at 2,000 tpd by Q3 2018

– Increasing towards 2,500 tpd

• Tahuehueto:

– Complete mine construction

– Startup production of 1,000+ tpd by year end 2018

• Both projects:

– Aggressive exploration, drilling identified targets

– Deliver Pre-Feasibility Studies


CAD$2Mn PP to restructure Telson –New Mexican Management

CAD$1.5Mn PP for PFS and permits

Securing MXN$150Mn line of credit

Processing of first Tahuehueto bulk sample

Completion ofTahuehueto PFSFirst sale ofTahuehueto concentrates

Acquisition of processing plant forTahuehueto

Cash receipts of US$1.4Mn from bulk sample in Tahuehueto

Campo Morado Acquisition from Nyrstar Mining

Tahuehueto starting preproduction operations

US$5Mn credit line from Trafigura for Campo Morado

Campo Morado restarts operations

Analyst Coverage intitiated giving CAD$1.8 and CAD$2.1 fair value target per share

US$15Mn credit line from Trafigura for Tahuehueto

Fully funded to finalize construction at Tahuehueto

Campo Morado delivers first concentrates

The Telson Mission: Unlocking Intrinsic Value

Nov 2015

Apr 2016

Jul 2016 Oct 2016

Dec 2016

Feb 2017

Jun 2017

Aug 2017 Nov 2017

Telson: The Investment Window is Now• Development costs have already

been invested

• Infrastructure and equipment is in place

• Experienced Mexican management and mining personnel are in place

• Once commercial production begins, valuations are likely to rise—rapidly

• Not one, but two mines are going into production


Telson is entering Stage 3

Standard Exploration to Production Market Cycle

34

Corporate Details

Canadian Head Office

450 – 1090 West Georgia Street

Vancouver, BC, V6E 3V7

T. (604) 684-8071

[email protected]

TECHNICAL AND ADMINISTRATION:

Ralph Shearing

T. (604) 684-8071 Ext 102

[email protected]

CAPITAL MARKETS:

Rory Godinho

T. (604) 961-6450

[email protected]

Mexico Office

Calle Insurgentes Sur No. 1811

Sexto piso, Col., Guadalupe Inn.

C.P. 01020 CD de Mexico

T. (52) 55 5 553-3708

TECHNICAL AND MINING OPERATIONS:

Jose Antonio Berlanga

CAPITAL MARKETS AND BUSINESS DEVELOPMENT:

Enrique Margalef

Shares Outstanding: 125,726,075

Share Price (4/13/2018): CAD$ 0.77

Market Capitalization: CAD$ 96.8 million

Options: 9,559,769

Warrants : 4,345,410

Cash Available: ~ CAD$ 8.27 million

TSX.V Listing: TSN

OTCBB Listing: SOHFF

Frankfurt Listing: TSGN.F

telsonmining.com

mailto:[email protected]



Thank You!

Documents

Telson Mining Corporations22.q4cdn.com/542568401/files/doc_presentations/2018/04/...Endeavour Silver Corp C$3.05 $302 $264 8.9x 4.7x Mexico Ag / Au 3 / 2 Great Panther Silver Ltd C$1.50