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Telson Resources Inc.A NEW MEXICAN PRODUCER
Producing From Two Precious and Base Metal Mines in Mexico
January 9, 2018 1
Disclaimer
This presentation may contain forward looking statements including but not limited to comments regarding the timing and content of upcoming work programs, geological interpretations, receipt of property titles, potential mineral recovery processes, etc. Forward looking statements address future events and conditions and therefore involve inherent risks and uncertainties.
We caution you that such “forward-looking statements” involve known and unknown risks and uncertainties that could cause actual and future events to differ materially from those anticipated in such statements.
Such risks and uncertainties include fluctuations in precious 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 and mining operations, changes in legal, social or political conditions in the jurisdictions where the Company operates, lack of appropriate funding and other risk factors, as discussed in the Company’s filings with the Canadian and United States Securities regulatory agencies. Actual results may differ materially from those currently anticipated in such statements.
Telson Resources Inc. relies upon litigation protection for forward-looking statements.
Ralph Shearing, P.Geol., President of Telson Resources Inc. is the Qualified Person for the Company as defined by 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 Resources Inc.
Dollar amounts expressed in Canadian dollars, unless otherwise indicated.
January 9, 2018 2
Precious Metal Contained in Company Resources
Campo MoradoGold – 960,580 M&I oz, Silver – 88M+ M&I oz Silver
2.2 million oz AuEq (Au & Ag only)
January 9, 2018 3
Tahuehueto ProjectGold – 634,000 oz, 12 million+ oz Silver
800,790 oz AuEq (Au & Ag only)
1.637 million ounces of gold3 million ounces AuEq (gold & silver only)
Both projects contain abundant base metals to potentially double the value of the precious metals – Pb, Zn and Cu.
Both projects also have excellent exploration potential with numerous identified targets requiring drilling follow up.
Our TeamStrong, hands-on team of professional Mexican and Canadian nationals with
over 200 years of combined experience in mining &
processing, exploration & development, capital &
public markets
January 9, 2018 4
Directors and Officers
January 9, 2018 5
Antonio Berlanga, P.EngCEO and Director
Ralph Shearing, P.GeolPresident and Director
Enrique Margalef, BA EconVP Corp Dev & Director
Arturo Bonillas, P.EngIndependent Director
Over 37 years experience in evaluation, design, planning, engineering, construction and operation of mining & metallurgical units.
Over 35 years experience in mineral exploration & development and 30 years senior management experience with publicly listed companies
Former investment banker with over 10 years experience in mergers & acquisitions, financial evaluations, analysis of financial statements and cash flow management
Former President and Co-Founder of Timmins Gold Corp. with over 34 years experience in Mexico exploration and mining industry. Evaluation, design, planning, construction and operations.
Directors and Officers
January 9, 20186
Rory GodinhoIndependent Director
Remigio Martinez, B.S.GeoIndependent Director
Yao Sun, CFA, CMA, CPAIndependent Director
Omar Garcia Abrego, CPA, CAChief Financial Officer
Worked entire career for Grupo Mexico since 1967, as a geophysicist, exploration geologist, manager of mine geology and Director of Exploration all over the world
Active member of the Chartered Financial Institute (CFA), the Certified Management Accountants (CMA) of Canada and the Certified Practicing Accountants (CPA) of Australia
More than 17 years of progressive international experience working in the mining industry as well as TSX public practice.
A lawyer and leader of the capital markets & securities group at Miller Thomson. Extensive experience with IPO’s, public/private equity and debt financings, M&A’s, reverse takeovers, corporate restructuring, alterations and continuous disclosure requirements.
PropertiesTelson is a Canadian based resource exploration and development company focused on near term production at Tahuehueto and Campo Morado
Campo Morado
Tahuehueto
January 9, 2018 7
Tahuehueto ProjectDurango, MexicoAu, Ag, Cu, Pb, Zn
Campo Morado ProjectGuerrero, MexicoAu, Ag, Cu, Pb, Zn
Tahuehueto & Campo Morado Gold Grades(Reserves at Tahuehueto and M&I Resources at Campo Morado) will Propel Telson into the top tier of Mexican Gold Producers
4.324.00
3.40
2.75 2.62 2.552.18 2.03 2.00
Mercedes San Dimas Tahuehueto El Aguila El Limon-Guajes Pinos Altos El Gallo CampoMorado
La Cienega
Average gold grade in Reserves (g/t)
2.9 Mt 4.0 Mt 3.3 Mt 1.9 Mt 43.1 Mt 17.4 Mt 3.8 Mt 13.2 Mt 12.7 Mt
Notes: Companies analyzed based on ranking presented by BNAmericas – Samuel Williams, Dec 12, 2016 (Telson added Pinos Altos, Tahuehueto and Campo Morado to the ranking for comparison purposes)Tonnage and grades based on Reserves as disclosed by each Company except Campo Morado where tonnage and grade are based on 2017 resource estimates by Eric Titley
Tonnage
January 9, 2018
Resourcesnot
Reserves
9
Tahuehueto ProjectDurango State, Mexico
January 9, 2018 10
Tahuehueto’s neighbouring projects host multi-million ounce deposits
January 9, 2018
El Gallo
TopiaLa Cienega
Metates
Mina Bacis
San Dimas~ 11 million oz Au and ~600 million oz produced
La ColoradaFresnillo
TAHUEHUETO487 kOz Au & 8.4 Moz Ag
11
January 9, 2018 12
El Creston
Cinco de Mayo
Explored Areas
Tahuehueto Mineralized District~90 Sq Km
Espinal
Southern exposed limit of ~8km mineralized structural trend
Santiago
PitalloTSN 7,492 HA land position covers ~80% of Tahuehueto Mineralized District
Strong Growth Potential
NI 43-101 Compliant Resource
Unexplored Structures - Future Drilling Targets
January 9, 2018
• Mineralization is telescoped and overprinted throughout entire 1.4 km of vertical elevation
• Numerous unexplored mineralized veins that are drilling targets
• Large greenfield exploration potential
• Las Vueltas River provides water all year round
TAHUEHUETO IS DESTINED TO BECOMEA MULTIMILLION OUNCE GOLD DEPOSIT
WITH EXPLORATION TO POTENTIALLYRIVAL THE SAN DIMAS MINING DISTRICT
660 MASL
2,200 MASL
13
Approx 500 Metres
Tahuehueto Long Section
Exploration potential of the main structure is still open in all directions
Plus multiple unexplored structures with similar potential
January 9, 2018 14
January 9, 2018 15
ECONOMIC RESULTS FROM 2017 PFS BASED ON A 550 TPD MILL THROUGHPUT RATE
Item 550 tpd
Average annual EBITDA $US 16.6 million
NPV @ 8% Annual Discount Rate (Post tax) $US 77 million
IRR 36 %
Payback Period 3 years
Mine Life 21 years
Average cost per ton(incl. mining, processing & G&A, smelting, refining, royalties)
$US 91.26
Average cost per AuEq ounce $US 494.95
Metal Prices Used: Au $1,180/oz, Ag $16.70/oz, Cu $2.65/lb, Pb $0.87/lb, Zn $0.92/lb
Source: Jan 2017 PFS – Metal Mining Consultants Inc.
Tahuehueto Mineral Reserves & Resources(Source: January 2017 PFS – Metal Mining Consultants Inc.)
TAHUEHUETO RESERVES
Class kTonnesAu Grade
(gpt)Ag Grade
(gpt)Cu Grade
(%)Pb Grade
(%)Zn Grade
(%)
Probable 3,264 3.40 41.80 0.35 1.19 2.24
January 9, 2018
TAHUEHUETO RESOURCES
Class kTonnesAu Grade
(gpt)Ag Grade
(gpt)Cu Grade
(%)Pb Grade
(%)Zn Grade
(%)
Measured 2,771 2.77 44.70 0.31 1.27 2.29
Indicated 3,343 2.23 41.26 0.30 1.15 2.04
Total M&I 6,114 2.48 42.82 0.31 1.20 2.15
Inferred 3,501 1.31 37.59 0.27 1.34 2.44
16
Two cut-offs were used to tabulate the gold, silver, copper, lead and zinc resources. A cut-off of 2.0g Au-equivalent/tonne was chosen to capture sulfide mineralization potentially available to underground extraction and flotation processing, while a cut-off of 3.0g Au-equivalent/tonne was applied to oxidized mineralization potentially available to underground extraction, which will likely yield lower flotation recoveries than the unoxidized material. This document was prepared under the supervision and review of Ralph Shearing, President and Director of Telson Resources Inc., a Professional Geologist registered in Alberta as a member of the professional organization APEGA, and a Qualified Person as defined by NI 43-101.
January 9, 2018 17
• Mining an average 166 tonnes per day during September 2017
• August processing produced 155 tonnes lead concentrate and 316 tonnes of zinc concentrate
• August production sold for US$ 1.58 million• Previously produced concentrates sold in
February 2017 for US$ 1.47 million• Total Tahuehueto concentrate sales to
September 1, 2017 - US$ 3.05 million• Pre-production to continue through mine
construction phase
Tahuehueto Pre-Production Commenced with Processing at Nearby Atocha Toll Mill
Tahuehueto Project
2017 Lot 2Atocha Concentrates
Processed during August2017 a total of 4,213tonnes of ore from Level10 El Creston Zone.
January 9, 2018
18
Payable Recoveries (Average of 4,213 tonnes processed)
Au % Ag % Pb % Zn %
83.58 89.29 81.49 75.37
Metallurgical Balance (Average of 4,213 tonnes processed)
Au (g/t) Ag (g/t) Pb % Zn %
Head Grade 6.26 60.35 2.08 5.63
Pb Concentrate 125.39 1047.51 42.15 14.13
Zn Concentrate 3.05 120.00 1.25 54.99
Permitting
• Permitting in place allowing construction of milling facility, underground development, bulk sampling etc..
• Permit granted Aug 2017 for reactivation of existing tailing facility
• Permit granted Aug 2017 for the construction of a new larger tailing disposal facility which will accommodate the current PFS 11 year mine plan
January 9, 2018 19
Purchased Mineral Processing Facility
January 9, 2018
• 1000 tpd mill equipment has already been purchased (Cdn$1.3 million)
• Mill site surveying and design complete
• Ready to commence mill construction with funding
20
Campo MoradoGuerrero State, Mexico
January 9, 2018 21
Campo Morado and Neighbours host Multi Million Oz Resources
January 9, 2018
Tizapa
Esperanza
Rey de Plata
Ana Paula
Limon-Guajes
Media LunaLos Filos
Bermejal
Campo Morado848 kOz Au & 57 Moz Ag
22
Campo Morado Mine• Farallon declared commercial production April 2009• C$420M friendly takeover of Farallon by Nyrstar in 2010• Production suspended January 2015 • 2014 production - 657,000 tonnes – Average grades
1.2g Au/t, 115.7g Ag/t, 4.6% Zn, 1.2% Cu and 0.9% Pbproducing 48,000 t Zn & 29,000 t Cu concentrates
• Telson signs agreement April 2017 to purchase 100% of Campo Morado for US $20 million.
• Community and municipality support confirmed to re-commence mining operations
• Secured US$ 5million operating capital from Trafigura allowing Oct 2017 restart of mining operations
January 9, 2018 23
Campo MoradoMine includes infrastructure, installations,
processing plant and mobile mining equipment capable of producing 2,500
tpd.
January 9, 2018
C
Campo Morado Mine includes infrastructure, installations, processing
plant and mobile mining equipment
capable of producing 2,500 tpd.
Campo MoradoInfrastructure
24
Campo Morado Installations
CampOffices
SubstationPlant
Tailings dam 1 Tailings dam 2
Mine portal
January 9, 2018 25
Campo Morado November 2017
NI 43-101 CompliantSource: (Eric Titley, P.Geo. of Titley Consulting Limited)
January 9, 201826
This resource estimate has been prepared by Eric Titley, P.Geo., aProfessional Geologist registered in British Columbia as amember of the Association of Professional Engineers andGeoscientists BC. Mr Titley is an independent qualified person,as defined in NI 43-101, who is responsible for the preparationof the technical information contained in the chart in accordancewith NI 43-101 and the CIM Definition Standards. Inferredmineral resources are considered to be too speculative to allowthe application of technical and economic parameters to supportmine planning and evaluation of the economic viability of theproject. Under Canadian rules, estimates of Inferred mineralresources may not form the basis of feasibility or pre-feasibilitystudies, or economic studies, except for Preliminary EconomicAssessments as defined under 43-101. It cannot be assumedthat all or any part of the Inferred resources will ever beupgraded to a higher category.
3,036 diamond drill holes totalling 577,155 metres drilled
The mineral resources were depleted to December 2014, the last phase of mining, by removing all material from the tabulation as found in the excavation solids models. Zinc equivalent calculations used metal prices of US$ 1.20/lb for zinc, US$ 2.80 for copper, US$ 17/oz for silver, US$ 1150/oz for gold and US$ 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.
A 5.5% ZnEq cut-off is considered to be appropriate for underground mining operations in Mexico. 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.
Some figures may not sum exactly due to rounding.
ZnEq (%) Tonnes Au (g/t) Ag (g/t) Cu (%) Pb (%) Zn (%)
Measured
9.47 9,321,000 1.84 137 .082 0.95 4.56
Indicated
8.79 7,399,000 1.72 200 0.79 0.92 3.30
Measured & Indicated
9.17 16,720,000 1.79 165 0.81 0.93 4.00
Inferred
7.64 997,000 1.33 150 0.67 0.92 3.20
Campo MoradoHistoric Regional Exploration Targets – Dec 2015
January 9, 2018 27
Excellent Potential to Expand Current Resources and Reserves
Geochemical Anomalies• 15 largely untested geochemical anomalies, many with coincident
geophysical anomalies
Geophysical Anomalies• 10 largely untested geophysical anomalies
• Gravity• Induced Polarization• Magnetic
Campo Morado
January 9, 2018
Geochemical Anomalies Geophysical Anomalies
10 largely untestedgeophysical anomalies,• Gravity• Induced Polarization• Magnetic
15 largely untestedgeochemicalanomalies, somewith coincedentgeophysicalanomalies
Historic Regional Exploration Targets
Dec 2015
Excellent Potential to Expand Current
Resources and Reserves
28
Currently identified resource zones
Telson Resources EconomicsA Compelling Reason to Invest
• 2 producing polymetallic mines by early 2018
• Precious and base metal components• Strong lead and zinc fundamentals• 100% ownership of both projects• Excellent capital structure ~51% held by
management & insiders• Proven Mexican hands-on management
teamJanuary 9, 2018 29
Share Structure (as at January 8, 2018)
Shares Outstanding 124,218,120
Share Price Cdn$ 0.71
Market Capitalization $88.1 million
Options (see appendix) 10,143,100
Warrants (see appendix) 5,520,034
Cash Available ~Cdn$ 2.9 million
TSX.V Listing TSN
OTCBB Listing SOHFF
51%49%
Ownership (Fully Diluted)
Insiders
Others
January 9, 2018
3 Year Stock Chart
30
Third Party CoverageBeacon Securities LimitedInitiated coverage October 24, 2017Analyst: Michael BandrowskiTel: (416) 643-3830Email: [email protected]
_______________________________________Fundamental ResearchInitiated coverage August 9, 2017Analyst: Siddarth RajeevTel: (604) 682-7050,Email: [email protected]
_______________________________________Jay Taylor – www.miningstocks.comInitiated coverage Mar 17, 2017Review complete report at https://goo.gl/yw7AWY
January 9, 2018 31
Canadian Head Office1090 West Georgia St.Suite 450Vancouver, BCV6E 3V7Tel: (604) [email protected]
Mexico OfficeInsurgentes Sur 682 piso 9,Col. Del ValleDel. Benito JuarezMexico, D.F., C.P. 03010Tel: (52) 55 5 553-3708
January 9, 2018 32
Appendices
January 9, 2018 33
Tahuehueto Industrial Bulk Sample and Mine Development Demonstrates…
• Excellent rock quality for large developments• No major support systems required in 168m
haulage level• Well defined vein structures• Ore is not abrasive and easy to crush & mill
resulting in relatively low power consumption• Industry standard drill steel and explosive
consumption• PFS cost per AuEq oz is $494.95
34
Tahuehueto 3D Plant Design
Primary Crusher
Lead circuit
Cu circuit
Zn cone filter
Cu cone filter
Lead cone filterZinc circuit
Mill
Fine ore bin
ScreenCoarse ore bin
Reagents
Secondary Crusher
January 9, 2018 35
Gravity Survey Anomolies and Drilled Massive Sulphide Zones
Information as of 2010 Farallon Technical Report
January 9, 2018
1.35 Million Tonnes2.13 g/t Au, 126 g/t Ag, 4.46% Zn
3.43 Million Tonnes3.19 g/t Au, 208 g/t Ag, 4.59% Zn
6.5 Million Tonnes0.89 g/t Au, 106 g/t Ag, 5.15% Zn
1.95 Million Tonnes2.13 g/t Au, 126 g/t Ag, 4.46% Zn
Substantially depleted by Nyrstar Mining3.02 Million Tonnes
3.15 g/t Au, 210 g/t Ag, 9.39% Zn
2010
Campo Morado
36
Campo Morado Ore Bodies
To End of 2014, 3,036 drill exploration diamond drill holes
344,925 m surface and 232,203 m underground
totalling 577,155 metres
January 9, 2018
RESOURCES2017 - 16.7 million tonnes of
Measured & Indicated Resources at grades of 1.79 g/t Au, 165 g/t Ag, 0.81% Cu, 0.93% Pb
and 4.00% Zn
37
This resource estimate has been prepared in accordance with NI 43-101 and the CIM Definition Standards. Inferred mineralresources are considered to be too speculative to allow the application of technical and economic parameters to support mineplanning and evaluation of the economic viability of the project. Under Canadian rules, estimates of Inferred mineral resources maynot form the basis of feasibility or pre-feasibility studies, or economic studies, except for Preliminary Economic Assessments asdefined under 43-101. It cannot be assumed that all or any part of the Inferred resources will ever be upgraded to a higher category.
Campo Morado Mine – Targets Near Existing Mine Workings
January 9, 2018 38
Anomalía III
Ext. 752
Anomalía IV
Anomalía V
Anomalía VI
Ext. SW
Ext. EstrellaDe Oro
Ext. Muñeco
AnomaliaI
AnomaliaII
No real exploration work conducted since H1 2015 due to Nyrstar suspending operations, but it is worth a quick reminder of the available targets near existing infrastructure, some of which could be low-iron VMS targets more akin to the nature of favorable G9 zone.
Pre-2015 TGI
Potential target areas underground for follow-up and future exploration looking for the second, stacked, favorable volcanic horizon in the edifice to host VMS mineralization based on drill holes and geophysical results
Campo Morado Mine –Exploration Targets Near
Known Ore Bodies
January 9, 2018 39
Pre-2015 TGI
Positioning of the possible second, stacked, favorable volcanic horizon that could host additional VMS mineralization based upon IP geophysical results that in the case of Anomaly 1, was drilled in 2012.
Stock Options & Warrants(As at January 8, 2018)
Stock Options and WarrantsSecurity Exercise Price Expiry Date No. of Shares Proceeds (Cdn$)
Stock Options $0.13 Mar 28, 2021 6,413,100 $833,703
$0.71 Nov 10, 2022 3,730,000 $2,648,300
Warrants $0.12 Apr 26, 2018 5,520,034 $662,404
January 9, 2018 40
