Fundamental Research analyst Sid Rajeev provided an update report recently on Telson Mining (TSXV:TSN) and maintained a BUY rating on the company.
Some of the highlights include the following:
- “Telson Mining Corporation (“Telson”, “company”) sold US$46 million worth of concentrates from its Campo Morado mine (US$41 million) and the Tahuehueto mine (US$5 million). Note that 100% of these sales will not be reported as revenues in the income statements, as the company can only report revenues from commercial production.”
- “The operating cost at Campo Morado in 2018 was $55/t, which is significantly lower than the $99/t estimated by the 2018 PreliminaryEconomic Assessment (“PEA”). The company is evaluating processes to potentially increase the recovery of precious metals.”
- Revenues in the first nine months of 2018 were $21.24 million. Sid is raising the 2018 revenue forecast of Telson from $29 million to $33 million.
In conclusion, the analyst revised his fair value for Telson from $1.68 to $1.50 per share.
In another report written by Hallgarten & Company, Telson also received a favorable rating as the company “added a long position in Telson Mining to the Model Mining Portfolio” .
Chris Ecclestone, the analyst in the report stated Telson is “one of the few companies to have entered the Zinc mining space with not one but two mines, both located in Mexico”, “Production ramp-up is gaining pace with excellent volumes in 2018 and Q1 2019 and a significant reduction in operating costs from those projected in past studies and realized by past operators”.
Though the company still needs to pay off $5.5M by end of October 2019 for the balance of Campo Morado purchase price, Telson has other positive developments coming on as well.
Other important notes written in the report include the following:
- “Campo Morado with existing resources could feed the mill at 2500 tons per day for over 12 years and at Tahuehueto current reserves should provide for a 12-year mine life at 1,000 tonnes per day”
- “There are another three and a half million tons of resources that could extend the life by two times should Telson be able to convert the resources to reserves”
- “Strong exploration potential that could add new resources and reserves to allow production expansion and further add to mine life”
Chris Ecclestone is forecasting the Zinc price is to move closer to $2/lb in the next 18 months, so company like Telson will benefit from such a rise.
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