Bulk samples are taken at prospective mines to get a sense of how the grade runs, what the metallurgy is like in real, rather than laboratory circumstances, determine metal recoveries and potential concentrate grades and to prove up what the drill cores have suggested. At Telson Resources’ (V.TSN) Tahuehueto Project deposit in Mexico the company took a bulk sample of some 3500 tonnes.
Mining the bulk sample itself was straightforward. “We went into the side of the mountain with a new underground 5 x 5 meter development at the El Creston Zone. The size of the portal allowed us to extract the ore with a scoop tram driving it out to stockpile on the portal patio.” said Shearing “Then we loaded it into dump trucks and trucked it 270 km to the toll mill. This trucking added considerable cost to the process however, in spite of this, we did better than anticipated. We were planning to break even.”
Telson reported cash receipts of USD $1,470,499.00 from the sale of the concentrates produced from its bulk sample. The 3500 tonnes of ore produced 201 Tonnes of Lead and 259 Tonnes of Zinc Concentrates which contained 27.9 kg of gold and 192.6 kg of silver.
In the press release announcing these results, Señor Antonio Berlanga, CEO of Telson stated, Telson’s management is very pleased with the bulk sample testing results and with the concentrate sale proceeds generated, considering that the Andes mill was not ideally configured for processing Tahuehueto ore, we have obtained quality saleable lead and zinc concentrates with high precious metal content. We are very confident in our ability to improve these results once we have installed and commissioned our recently purchased Tahuehueto Mineral Processing Plant on site, as it will be engineered to utilize a mill configuration and design ideally suited for the unique characteristics of the Tahuehueto project’s mineralization.”
Telson is planning to collect two more large bulk samples similar in size to its first, with at least one being shipped to the same toll mill for processing. Telson is working with the toll mill’s management in order to modify the processing facility and adjust recovery processes in order to optimize the separation of zinc and thereby obtain the best concentrates possible. These modifications will be implemented prior to the shipment of the second industrial scale bulk sample. “The Project’s second bulk sample will be collected from the new Haulage Level Portal, about 250 meters below where we took the first bulk sample. We expect to see a bit more copper as we decrease elevation.” said Shearing, “With the toll mill reconfigured to our specifications we are confident we’ll get higher zinc and lead concentrations and still maintain our great gold and silver recoveries which make up around 60% or more of the concentrate value.”
“We are planning to collect the third bulk sample from the Cinco de Mayo zone, about 600 m lower than the first bulk sample collection site and if we are able to successfully install some of our own processing equipment that we recently purchased on site in time, we may even process the third sample on site at Tahuehueto to save the trucking transportation costs.” said Shearing.
The underground work conducted over the past several months to collect the initial bulk sample and drive in the 5X5 meter haulage level portal demonstrated low-cost underground development costs are achievable and expected. “The rock quality is very good and very competent within our recent underground developments without the need of a single rock bolt to date” states Shearing.
While Telson continues its bulk sampling it is also preparing to install its own, on-site, processing facility to allow full-scale mining operations expected in early 2018.
“We’ve purchased 80% of the equipment we need to build a full scale sulphide processing mill facility,” said Shearing. “This equipment was originally destined for another mine in Mexico. It was fully refurbished in 2007 – 2008, but then the market collapsed changing the previous owners plans, and it has been sitting around ever since waiting for a home.”
“We purchased it for CDN $1.4 million dollars. It lacks a primary crusher and there are other miscellaneous pieces of equipment we’ll need as well. Probably another $750,000 to a million dollars more to purchase the missing equipment,” said Shearing. “Even then, the purchase of this mill will shave off around USD $3 million from the CAPEX for the processing facility that was estimated in the projects Pre-Feasibility Study. The equipment is strategically located in Durango State, Mexico reasonably close, within 350 km by road, to our project.”
“We’re four to six months away from shipping the equipment to site. With the mill we know the specs for the equipment and we’re working on the engineering drawings now.” said Shearing. “On site we expect that we’ll be pouring the concrete foundations soon.”
The goal is to have an onsite facility which can process the Prefeasibility Study’s plan of an initial production rate of 550 tonnes per day. Which, of course, eliminates the transportation and toll milling costs that was associated with the initial bulk sampling. Plus, Telson will be able to optimize its own mill to process the rock from Tahuehueto which will likely result in higher value concentrate grades during long-term future production.
All of this requires funding but Shearing is confident that will happen. “Funding is going pretty well and we are in discussions with several funding groups now. Our major shareholder has provided us with $150 million Mexican Peso loan facility to continue to move the project forward and discussions with potential funding partners are underway to secure the balance of capital required to build the mine.”
Put all of this together and, on the assumption that Telson will see slightly better results from its own mill than it saw from the toll mill but without the trucking costs. A throughput of at least 550 tonnes per day is 3750 tons per week which means Tahuehueto looks like a moneymaking project. Telson indicates that they are planning to increase production in the first year of operations from 550 tonnes per day to at least 1000 tonnes per day indicating that very little additional capital cost will be necessary to achieve these increase production numbers as the Company is planning to over build the processing facility to handle the anticipated increased capacity.
At time of writing Telson was trading at $0.32 with 93.8 million shares outstanding and a market cap of 30.1 million dollars.