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Telson Mining company says Mexico crime ring stole $2m-$3m

Staff Writer |
Telson Mining Corporation presented an operational and financial update for full year 2018 for its 100% owned Campo Morado Mine located in Guerrero State, Mexico.

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Combined estimated total all in operating costs, including mining, milling, freight, royalties, smelter costs, etc. were US $32.46 million, resulting on an estimated cost per ton of US $55/tonne.

Combined estimated total metal sold – 36.26 million lbs (16,449 tonnes) zinc, 4.03 million lbs (1,834 tonnes) lead, 373,333 lbs (169 tonnes) copper, 2,870 oz gold and 622,309 oz silver.

Mill throughput processing rate increased from 1,500 tonnes/day in January to an average of 1,800+ tonnes per day by year end, achieving maximum daily rates of over 2,200 tonnes/day.

Total estimated mineralized resources mined was 582,521 tonnes during the year. Mine development totaled 2,659 meters: 1,682 meters developed in mineralized resources and 977 meters in waste (access ramps and auxiliary workings).

The theft of concentrates plus some increase in costs, such as electricity which increased by 110% since year end 2017, affected the expected profitability of the Campo Morado Mine. Management is taking proper measures to correct this situation for 2019.

Management has determined from inconsistent assay results between sampling of concentrate loaded on trucks at the mine site and check assaying competed at the point of sale in Manzanillo, that Campo Morado concentrates were subjected to dilution by theft while in transit.

The Company has identified that some of the concentrate trucks were received in Trafigura warehouses with lower concentrate grades than reported by the Campo Morado mine site laboratory.

After considerable analysis with the various labs and with security contractors, Telson has concluded that there was a sophisticated criminal operation to intercept certain concentrate trucks in transit, remove some part of the Campo Morado concentrate load from the trailer and replace same with lower quality concentrates.

Once the Company received the preliminary findings of its investigation into the theft, it has taken various measures to eliminate this issue with increased security including performing monitored and guarded concentrate transport from the mine to point of sale, 24X7 GPS tracking, having all transport trucks now travel together in a convey non-stop to point of sale, increasing assay monitoring on a truck by truck basis at point of sale with more rapid turn-around of results to quickly compare results at delivery to assays from mine site at truck departure.

Furthermore, Telson immediately had all drivers compromised in the theft process employment terminated. Telson is considering all available legal remedies in conjunction with ongoing investigations by the appropriate authorities and based on recent results believes it has substantially eliminated the concentrate transit theft.

The estimated impact in the yearly cash selling value, although difficult to determine accurate numbers has been estimated by management through a rigorous statistical analysis to range between US$2 million to US$3 million, to a maximum of approximately 7% of total annual sales from Campo Morado.


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