SOHFF - Telson Arranges US$25 Million to Complete Tahuehueto Gold Mine Construction

(TheNewswire)

Vancouver, British Columbia - TheNewswire - February 23, 2021 - Telson MiningCorporation (“ Telson ” orthe “ Company ”)(TSXV:TSN ) ( OTC:SOHFF )( Frankfurt:TSGN) is very pleased to announce that it hasexecuted a Letter of Intent with Accendo Banco S.A. deC.V., Empress Royalty Corp., & Endeavour Financial (the“ AccendoSyndicate ”) to provide up to US$25 million offinancing (collectively the “ Financing ”) to complete the construction andramp-up of Telson’s 100% owned Tahuehueto Gold Mine project(“ Tahuehueto ” and/or “ Mine ”), meet debt service obligations andfor working capital purposes. Also, Telson, Accendo Syndicateand Trafigura Mexico S.A. de C.V. (“ Trafigura ”) have executed a MOU that provides a non-bindingframework with terms to be used by the Parties to negotiate thepotential entry into the Definitive Agreements of the proposedtransactions including, the potential restructuring of Telson’s debtobligations to Trafigura and Nyrstar Canada (Holdings) Ltd (“ Nyrstar ”). The MOU includes anexclusivity period of 45 days after which if Definitive Agreements arenot finalized it shall, unless mutually extended, be terminated andremain with no effect (the “ Termination Date ”).

Tahuehueto capital expenditure (“ CAPEX ”) investment required to complete mine constructionand commissioning of the project is estimated at US$15.4 million. Thisincludes US$12.6 million for equipment and construction including a15% contingency, plus US$2.8 million of working capital to support theoperations until the Mine has achieved positive cash flow.  Work onthe project will begin immediately upon closing the non-brokeredprivate placement that forms part of the Financing. Further, theAccendo Syndicate members are investing by way of debt, a silverstream, and equity as described below:

• - Accendo Banco S.A. de C.V. - US$12 million LoanFacility as previously announced June 16, 2020 expected to close March2021.

  • - US$500,000 advanced to date, with the balance of the funds to bemade available, net of fees, within six business days from the date ofthis announcement in an acceptable financial institution in an escrowor similar structure.

• - Empress Royalty Corp. – US$5 million SilverStream

  • - Telson is to deliver 100% the payable silverproduction (“ SilverStream ”) from the Mine for the first 1,250,000payable ounces; thereafter, the Silver Stream Percentage delivery willstep-down to 20% of the payable silver production.

    - All Streaming obligations fully terminate after 10years.

    - The signing of the Stream agreement and the initialdeposit of US$2 million is expected to be paid first week of March,subject to standard conditions precedent, with the balance paid uponclosing of formal agreements, including the Accendo Banco Loan.

    - The US$5 million Silver Stream to be fully securedwith a third-place ranking over Tahuehueto assets.

• - US$8 million Equity Private Placement(“PP”)

  • - Endeavour Financial and Affiliates, Accendo Banco andAffiliates, and third parties will arrange a non-brokered unit privateplacement consisting of up to US$8 million which is expected to closefirst week of March.

    - Terms of the private placement will result in theissuance of up to 50.4 million units where each unit is priced atC$0.20 per unit with half a warrant at C$0.30/share strike price fortotal proceeds of up to C$10.08 million.

    - The PP is part and parcel of the overall Financingand a necessary component of this transaction.

This funding package allows Telson to now negotiate a potentialrestructuring of the Company’s loan debt with Trafigura and Nyrstaras contemplated within previously announced Waiver Agreements (seeApril 17 and June 18, 2020 news releases). As part of this debtrestructuring Telson and Nyrstar have agreed to the exercise of theUS$4million option to purchase the Campo Morado Variable Purchase Price (Royalty) (see news release datedApril 27, 2017) in exchange for 14,600,000 Telson shares.  Thisexercise price at current exchange rates is equivalent to approximateC$0.345/share, roughly a 64% premium to current TSN.V trading prices.Additionally, Telson will make payment in cash of US$838,935.85 ofpast due royalty. which cash payment forms part of the overall debtrestructuring at closing of the Financing. Trafigura’s andNyrstar’s loan restructuring remains subject to final negotiationsand is conditional to certain conditions precedent being met.

Strengthening of Telson Management Team

The Accendo Syndicate and Telson have further agreed to restructureTelson’s Board where the Accendo Syndicate will appoint three newdirectors to the Company’s Board of Directors which will consist ofa total of seven persons. The Accendo Syndicate will also have theright to appoint a Chief Operating Officer (“COO”) to Telson’smanagement.  On closing of the PP, David Rhodes will be appointed asDirector and Chairman and Armando Alexandri as Chief Operating Officer(“COO”) of the Company.

David Rhodes is the Managing Director of Endeavour Financial.  Hisexperience in the natural resource business spans more than thirtyyears, having arranged, structured, and advised on over US$10 billionof resource related projects around the world.  Mr. Rhodes careerprior to joining Endeavour was at Standard Bank, Barclays Capital, andRoyal Bank of Scotland.  Mr. Rhodes has a BSc (Hons) in FinancialServices.  Endeavour is one of the top global mining financialinvestment banks, with an award-winning track record of success in themining industry, specializing in arranging multi-sourced fundingsolutions for development companies.  Endeavour additionally has anasset management and insurance business.

Mr. Alexandri is a Mining Engineer with over 40 years of experience inthe mining industry, mostly in Mexico but also in Peru, Ecuador, andChile. He has designed, built, and operated mines and mills inChihuahua, Guerrero, Guanajuato, Nuevo Leon, Coahuila, Sonora, Oaxacaand elsewhere. He was responsible for growing operations from 500 tpdto 2,000 tpd at the Bolivar mine in Chihuahua, from 4000 tpm to 16,000tpm at the Impact Silver operations in Guerrero, and from nil to 800tpd at the Nukay operations (renamed Los Filos and currently operatedby Equinox Gold) in Guerrero. He has served as the Chief OperatingOfficer for several companies, responsible for the design andoptimization of processes and operations at various mines and millsthroughout Mexico. He currently serves as COO of Impact Silver Corp(TSX-V) and was the President of the American Institute of MiningEngineers (Mexico) in 1999-2000.

“ After many months of extensivehard work and negotiation, I am delighted on behalf of the Telson Teamto deliver to Telson shareholders and investors this excellentnews ,” states Ralph Shearing, President and CEO.  “ This funding package now allows Telson toimmediately reinitiate construction at the Tahuehueto mine site after which we expect to rapidly advance construction targeting to commence initialpre-production within 10 to 12 months and full - scale production 12 to 14 months after funding. I welcome the appointmentof Mr. Rhodes to our Board of Directors which will further strengthen our Boardand am excited to gain the vast mill building and operating experienceof Mr. Alexandri as the Company’s new COO . ”

The financing was led by Accendo Syndicate, an existing strategicinvestor and lender to Telson.  Accendo is the leading mining bank inMexico and has a proven track-record in offering financial servicesand solutions in the Mexican mining sector. “ We truly appreciate the continued supportand confidence that Accendo has shown in Telson and are confident thatthis will prove to be well-founded as we execute on our strategicplans for the future.” Ralph Shearing commented.

“ Over the past several months, wehave partnered with Telson and been able to witness and validatefirst-hand that Tahuehueto is one of the premier gold assets in Mexicowith an excellent exploration upside,” commented JavierReyes, CEO & Chairman of Accendo. “ We are excited to be able to provide thisfull package of growth capital to Telson and look forward tosupporting the team as the business grows .” added JavierReyes.

In addition, Telson Mining is pleased to announce the retention ofPeak Investor Marketing Corp., a boutique firm which providesfull-service marketing and consulting services focused on the juniormining sector. Peak is an independent arms-length entity that willassist Telson with marketing strategy and planning, corporatecommunications and public relations, with the goal of increasingmarket awareness for the Company. The contract is for a 12-month term,with a fee of $12,000 per month. Peak will also receive 300,000 stockoptions vested over 12 months (as to one-quarter every 3 months), inaccordance with the terms of the Company’s stock option plan, at thetime of the Company’s next option grants, at a price to bedetermined.

All transactions described in this news release are subject to TSXVenture Exchange approval.

About Telson Mining Corporation

Telson Mining Corporation is a Canadian based miningcompany with two 100% owned Mexican gold, silver, and base metalmining projects.

Telson's Tahuehueto mining project, located innorth-western Durango State, Mexico where construction has beenadvanced to an estimated 60% of completion.  With final funding inplace Telson expects to finish construction of a 1,000 tonne per dayprocessing facility and related assets to produce gold, silver, leadand zinc in concentrates within its own on-site mineral processingfacility. The Company is targeting completion of construction late2021, within 10 to 12 months.

Campo Morado is a polymetallic base metal mine with mining and millingequipment currently producing at an average ofapproximately 2,150 tonnes per day. Four monthsafter purchasing Campo Morado, Telson brought the mine backinto operation initiating preproduction in October 2017 anddeclared commercial production in May 2018, operating themine continuously for 22 months until August 2019 when the projectwas put on care and maintenance.  Telson brought the mine out ofcare and maintenance and reinitiated mining andmilling operations during January 2020.

Visit: www.telsonmining.com

On behalf of the board ofdirectors

(signed) “Ralph Shearing”

Ralph Shearing, P.Geol, President andDirector

Cautionary Note Regarding ProductionDecisions and Forward-Looking Statements

It should be noted that Telsondeclared commercial production at Campo Morado prior to completing afeasibility study of mineral reserves demonstrating economic andtechnical viability. Accordingly, readers should be cautioned thatTelson’s production decision has been made without a comprehensivefeasibility study of established reserves such that there is greaterrisk and uncertainty as to future economic results from the CampoMorado mine and a higher technical risk of failure than would be thecase if a feasibility study were completed and relied upon to make aproduction decision. Telson has completed a preliminary economicassessment (“PEA”) mining study on the Campo Morado mine thatprovides a conceptual life of mine plan and a preliminary economicanalysis based on the previously identified mineral resources (seeNews Release dated November 8, 2017 and April 4,2018).

Statements contained in this newsrelease that are not historical facts are “forward-lookinginformation” or “forward-looking statements” (collectively,“Forward-Looking Information”) within the meaning of applicableCanadian securities laws. Forward Looking Information includes, but isnot limited to, disclosure regarding the planned recommencement ofmining operations at Campo Morado; and other possible events,conditions or financial performance that are based on assumptionsabout future economic conditions and courses of action; the timing andcosts of future activities on the Company’s properties, such asproduction rates and increases; success of exploration, developmentand bulk sample processing activities, and timing for processing atits own mineral processing facility on the Tahuehueto project site. Incertain cases, Forward-Looking Information can be identified usingwords and phrases such as “plans”, “expects”, “scheduled”,“estimates”, “forecasts”, “intends”, “anticipates” orvariations of such words and phrases. In preparing the Forward-LookingInformation in this news release, the Company has applied severalmaterial assumptions, including, but not limited to, that the currentexploration, development, environmental and other objectivesconcerning the Campo MoradoMine and the Tahuehueto Project can be achieved; that recommencementof operations at Campo Morado will proceed as planned; the continuityof the price of gold and other metals, economic and politicalconditions, and operations. Forward-Looking Information involves knownand unknown risks, uncertainties and other factors which may cause theactual results, performance, or achievements of the Company to bematerially different from any future results, performance orachievements expressed or implied by the Forward-Looking Information.There can be no assurance that Forward-Looking Information will proveto be accurate, as actual results and future events could differmaterially from those anticipated in such statements. Accordingly,readers should not place undue reliance on Forward-LookingInformation. Except as required by law, the Company does not assumeany obligation to release publicly any revisions to Forward-LookingInformation contained in this news release to reflect events orcircumstances after the date hereof or to reflect the occurrence ofunanticipated events.

Neither TSX Venture Exchange nor itsRegulation Services Provider (as that term is defined in the policiesof the TSX Venture Exchange) accepts responsibility for the adequacyor accuracy of this release

For further informationabout Telson Mining Corporation, please contact:

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

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