Talisman Mining Limited
Annual Report 2017

Plain-text annual report

2017 ANNUAL REPORT CORPORATE DIRECTORY DIRECTORS Mr Jeremy Kirkwood Non-Executive Chairman Mr Daniel Madden Managing Director Mr Alan Senior Non-Executive Director Mr Brian Dawes Non-Executive Director Ms Karen Gadsby Non-Executive Director COMPANY SECRETARY Mr Shaun Vokes Mr Alex Neuling REGISTERED & PRINCIPAL OFFICE Ground Floor, 6 Centro Avenue Subiaco, Western Australia 6008 Telephone +61 8 9380 4230 Facsimile +61 8 9382 8200 Website: www.talismanmining.com.au AUDITORS HLB Mann Judd Level 4, 130 Stirling Street Perth, Western Australia 6000 Telephone +61 8 9227 7500 Facsimile +61 8 9227 7533 SHARE REGISTRY Link Market Services Level 12, QV1 Building 250 St Georges Terrace Perth, Western Australia 6000 Telephone +61 8 9211 6670 SECURITIES EXCHANGE LISTING Australian Securities Exchange Limited Level 40, Central Park 152-158 St Georges Terrace Perth, Western Australia 6000 ASX Code: TLM 1 TABLE OF CONTENTS Letter from the Chairman . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Review of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Directors’ Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Remuneration Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Auditor’s Independence Declaration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 Independent Auditor’s Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Index to the Financial Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 Directors’ Declaration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 Notes to the Consolidated Financial Statements . . . . . . . . 44 Additional Securities Exchange Information . . . . . . . . . . . . . . . . . 68 2 ANNUAL REPORTLETTER FROM THE CHAIRMAN Dear Talisman Shareholder, I am pleased to present the Talisman Annual Report for the 2017 Financial Year. The period has been highlighted by the completion of the Feasibility Study for the Monty copper-gold deposit and development approval for the asset. The Feasibility Study, released in April 2017 by Talisman’s partner in the Doolgunna Joint Venture, Sandfire Resources NL, concluded the development of Monty would be very robust from both a financial and technical perspective. The outcomes of the study gave the Talisman Board of Directors sufficient confidence to approve the development of Monty, subject to obtaining the outstanding regulatory approvals and financing for Talisman’s 30% share of pre-production capital. The key final environmental approval was received for the development of Monty in July 2017 which facilitated the start of work on critical path earthworks, including the start of the box- cut of the underground mine. Based on the current timeline, first production from Monty is scheduled to take place in late 2018. In conjunction with the Feasibility Study, the Joint Venture released a maiden Ore Reserve for Monty of 80,000 tonnes of copper and 42,000 ounces of gold. The exceptionally high copper grade of 8.7% will rank Monty as one of the world’s highest grade copper mines at a time when average mined copper grades are falling globally. The high-grade of Monty is one of the key factors that is forecast to drive strong future profitability. Monty is forecast to have highly competitive cash costs of copper produced1, placing it in a favorable position on the cost curve amongst global copper producers. The development of Monty will be undertaken using a low risk and low capital intensity route by utilising Sandfire’s existing DeGrussa processing plant and infrastructure, located just 10 kilometres from Monty. In May 2017 Talisman mandated Taurus Mining Finance Fund2 to provide debt funding for its share of estimated pre-production capital costs. Making the transition from a pure mineral explorer to a revenue generating copper and gold producer is an important milestone for Talisman shareholders, however exploration success remains the key driver for the next leg of the Company’s growth. Significant potential remains to make new discoveries within the Doolgunna Joint Venture area as approximately 90% of diamond drill holes across the project area to date have been focused on resource definition drilling at Monty. A prime example of this exploration prospectivity exists at the 16-kilometer-long Southern Volcanics Corridor where only five RC holes and no diamond drilling has been conducted. Regional opportunities also exist at Monty North East and the Monty fault offset position, both located within the 8 kilometer Monty Corridor, and also within the Homer Corridor to the northeast. These multiple, prospective corridors contain large areas that have only been subjected to initial aircore geochemical testing by the Joint Venture, with limited selected horizons tested by deeper RC and diamond drilling, leaving much work to be completed. In addition to drill testing, the constant evolution and upgrading of surface and down hole ground penetrating geophysical techniques provides opportunities to revisit areas once thought to have been adequately tested. Outside of the Doolgunna Joint Venture, Talisman continued to test exploration targets at its 100% owned Sinclair Nickel Project in Western Australia. Sinclair is located in the world-class Agnew-Wiluna greenstone belt and has extensive infrastructure that offers a low capital, fast track option to nickel production. A project-wide targeting review at Sinclair followed by selective programs of aircore and RC drilling of early stage targets was completed during the year. The aim of this approach is to identify areas with the potential to deliver large, new nickel sulphide discoveries in an efficient and cost-effective manner. Results achieved during the period confirmed the fertile nature of the nickel system and the methodical generation and assessment of new targets will continue over the next 12 months. As part of its overall growth strategy, Talisman examines opportunities to acquire gold and base metal exploration projects in Australia that align with its core exploration expertise and have potential to yield additional value for its shareholders. This strategy resulted in the application for two exploration licenses in the Cobar region of Central New South Wales. The two applications were granted in July 2017 and on-ground field work will begin in the first quarter of 2018. On behalf of the Talisman Board, I would like to extend my appreciation to the Company’s dedicated team of staff and consultants for their hard work and achievements during the year. Finally, and most importantly, I thank shareholders for their continued support during the 2017 Financial Year. Your company is building a strong foundation from which to grow. Yours faithfully, Jeremy Kirkwood Chairman 1 Refer to “Monty Feasibility Study Results” released to the ASX 6 April 2017. 2 Refer to “Monty Cu-Au Project – Debt Financing Mandate” released to the ASX 5 May 2017. 3 REVIEW OF OPERATIONS Overview The past twelve months have seen Talisman Mining Limited’s (“Talisman” or the “Company”, ASX: TLM) Doolgunna Projects Joint Venture (the “Joint Venture”) with Sandfire Resources NL (“Sandfire”, ASX: SFR) make substantial progress toward the development of the Monty Copper-Gold deposit (“Monty”) through the completion of a positive feasibility study for the establishment of an underground mining operation. The Company and Sandfire formed a 30%:70% Joint Venture over the Company’s Doolgunna Projects in December 2015, following Sandfire’s sole funded expenditure of $15 million on the Doolgunna Projects. Following the delineation of a maiden JORC 2012 Indicated and Inferred Mineral Resource of 1.05 million tonnes grading 9.4% copper and 1.6g/t gold3 for 99,000 tonnes of contained copper and 55,000 ounces of contained gold at Monty in April 2016, the Joint Venture commenced a feasibility study on an underground mining operation to extract high-grade ore from the Monty Deposit. The feasibility study was completed in March 2017 resulting in a Probable Ore Reserve of 0.92Mt @ 8.7% copper and 1.4g/t gold4, and expected financial returns (Company’s 30% share) of A$64M pre-tax cash flow, pre-tax NPV of A$46M and 78% pre-tax IRR5. Exploration activities by the Joint Venture outside of the current resource envelope at Monty have included: regional first-pass air-core drilling aimed at identifying prospective host stratigraphy; a number of discrete isolated reverse circulation (“RC”) drill holes to test geochemical anomalies and stratigraphic positions, and deeper diamond drilling beneath the defined Monty resource envelope to test for additional mineralisation lenses below and along strike from the Monty deposit. Exploration activities are ongoing. The Company also completed several reverse circulation and diamond drilling campaigns over targets identified from a comprehensive geological review and interpretation process at its 100% owned Sinclair Nickel Project (“Sinclair”). The outcome of this work has led to the identification of additional massive sulphide mineralisation including 9m @ 4.20% Ni from 131m down-hole6 at the Delphi North Prospect and previously unknown wide zones of prospective high-MgO ultramafic rocks at the Schmitz Well South Prospect. Additionally, the Company acquired 100% owned tenure over highly prospective and relatively under-explored base and precious metals areas in the Cobar Basin region of New South Wales (Figure 1). Two areas of vacant ground were pegged for new mineral exploration licenses, with the first tenement covering approximately 750km2 being granted in late June 2017. The areas are interpreted to be prospective for orogenic and VMS style copper-gold and poly-metallic base metal mineralisation, with numerous recorded mineral occurrences at surface and coincident base metal soil and RAB anomalies in open-file data. 3 For details relating to the Monty JORC Mineral Resource see Sandfire Resources NL ASX announcement dated 13 April 2016, available on the Sandfire and ASX websites. 4 For details relating to the Monty JORC Mineral Reserve see Talisman Mining Limited ASX announcement dated 6 April 2017, available on the Talisman and ASX websites. 5 For details relating to the Monty Feasibility Study see Talisman Mining Limited ASX announcement dated 6 April 2017, available on the Talisman and ASX websites. 6 For further details refer to Talisman ASX release dated 07 October 2016. 4 DARWIN Katherine Wyndham Broome Derby Cooktown Karumba CAIRNS Halls Creek Tennant Creek TOWNSVILLE Port Hedland Newman Springfield Cu Project Mt Isa Cloncurry Winton Alice Springs Longreach Carnavon Meekatharra Mt Magnet Geraldton PERTH Sinclair Ni Project Kalgoorlie Broken Hill Esperance ADELAIDE Charleville Cunnamulla Bourke Moree GLADSTONE Gympie BRISBANE Grafton Coffs Harbour Mildura Bobadah Cu-Au Project CANBERRA Mt Gambier Albury MELBOURNE HOBART Figure 1: Talisman Project Locations Doolgunna Projects (Joint Venture with Sandfire Resources NL) Talisman’s Doolgunna Projects Joint Venture with Sandfire (Sandfire acting as Joint Venture Manager) encompasses the Springfield Project (30%:70%, TLM:SFR) and the Halloween West Project (19%:81%, TLM:SFR) which are high quality VMS copper-gold exploration projects in the emerging world class Bryah Basin region of Western Australia (Figure 2). Following the discovery of the exceptionally high grade copper-gold Monty deposit in 2015, the Joint Venture delivered a maiden high grade Mineral Resource estimate in 2016 and has subsequently completed a positive feasibility study and commenced initial mine development during the 2017 financial year. The discovery of Monty has confirmed the significant exploration potential of the Joint Venture tenements. 5 Figure 2: Doolgunna Project Joint Venture – Springfield and Halloween West Project Locations An Ore Sale Agreement (OSA) has been executed between the Company and Sandfire with the Company’s 30% share of ore mined from Monty, and mineralised extensions to the Monty deposit, being sold to Sandfire for subsequent treatment at Sandfire’s nearby DeGrussa Copper-Gold Operation (“DeGrussa”) process plant allowing the Company to benefit from established infrastructure. Further economic discoveries made within the broader Joint Venture area will be subject to a new OSA at the discretion of the Joint Venture parties and negotiated at that time. A Mining Joint Venture Agreement (MJVA) and an Exploration Joint Venture Agreement (EJVA) have also been executed between the Company and Sandfire for the Joint Venture. Springfield Project (30% Talisman Mining Ltd – Joint Venture with Sandfire Resources NL) The Springfield Project comprises of a 303km2 ground package located approximately 150km north-east of Meekatharra in the northern Murchison Goldfields region of Western Australia. The Springfield Project area is 4km directly along strike to the east of Sandfire’s DeGrussa operation and hosts the high-grade Monty deposit, within one of a number of corridors that are prospective for VMS style mineralisation. These VMS corridors are Monty, Homer, Central and Southern Volcanics (Figure 3). 6 REVIEW OF OPERATIONSFigure 3: Springfield Project VMS Corridors Monty Deposit Geology Copper and gold mineralisation at Monty is hosted in a sequence of sediments (siltstone, sandstones and conglomerates) and basaltic rocks. Mineralisation occurs in a series of massive sulphide lenses that are interpreted to have been deposited at different stratigraphic levels within the sedimentary package. The modelled mineralisation at Monty is contained within seven stacked lenses of massive sulphide that encapsulate the massive sulphide mineralisation. Over 87% of the contained metal is within two main lenses. Adjacent to these massive sulphide lenses, the host sequence shows moderate to strong chlorite alteration with disseminated and/or blebby sulphides throughout. This zone of altered, sulphidic host rock is known as ‘halo mineralisation’ which has been modelled both internal to the main massive sulphide lenses and as an external skin that sits directly adjacent to the high-grade massive sulphides. Two separate lenses of high-grade bornite mineralisation have been modelled by Sandfire within the two main massive sulphide lenses. Mineralisation in these bornite-containing zones is of significantly higher tenor than that in the normal (i.e. non-bornite containing) massive sulphide zones. Based on drill hole geometry and core observations, the bornite zones are interpreted by Sandfire to be approximately orthogonal to lithological layering. Monty Feasibility Study In April 2017, Talisman announced the completion of the feasibility study and maiden Ore Reserve for Monty. The Monty deposit is located approximately 900km north of Perth and 10km east of Sandfire’s DeGrussa operation. Monty was discovered in mid-2015 and an initial Mineral Resource estimate for the deposit was reported in April 2016, notable for its very high copper grade. A Mining Lease Application (MLA) for Monty was submitted in July 2016 and was granted on the 30th March 2017. The detailed feasibility study concluded development of the deposit is both technically and financially viable. Full details of the feasibility study and its key agreements can be found in the announcement and presentation released to the Australian Securities Exchange on 6 April 2017. 7 Key agreements An Ore Sale Agreement (OSA) has been executed between Talisman and Sandfire with Talisman’s share of the ore mined from Monty – and mineralised extensions to the Monty deposit – to be sold to Sandfire for subsequent treatment at Sandfire’s nearby DeGrussa processing plant, allowing Talisman to benefit from the established infrastructure. Further economic discoveries made within the broader Joint Venture area will be subject to a new OSA at the discretion of the Joint Venture parties and negotiated at that time. A Mining Joint Venture Agreement (MJVA) and an Exploration Joint Venture Agreement (EJVA) have also been executed between Talisman and Sandfire for the Joint Venture (collectively Joint Venture Agreements). Under the OSA, Talisman will receive payment for ore delivered to a purpose-built Monty weighbridge at the DeGrussa processing plant based on payable metal content at monthly average commodity prices. Payable metal is calculated on an independently assessed ore mined grade and delivered tonnage to which fixed recovery formulae (derived from detailed feasibility study metallurgical test work) and fixed percentage payability (set at industry determined benchmarks) are applied. An Ore Treatment Fee (OTF) and applicable royalties are then deducted from the calculated revenue. The OTF recognises all costs of processing the ore including downstream logistical and marketing costs associated with the production and sale of copper concentrate which are converted to a per tonne of ore basis. The OTF also includes a capital charge for use of the DeGrussa processing plant and associated infrastructure. The cost components of the OTF are closely aligned with actual DeGrussa capital, processing, administration and downstream costs. Based on the feasibility study results, the OTF would equate to approximately A$211 per ore tonne mined (equivalent to US$0.83/lb copper). Talisman will also contribute its 30% share of costs associated with pre-production capital and the mining and hauling of Monty ore under the terms of the Mining Joint Venture Agreement. A schematic summary of the OSA and MJVA mechanics is illustrated in Figure 4. Figure 4: Schematic summary of OSA and MJVA mechanics Ore Reserve The maiden Ore Reserve estimate for Monty, as at 31 March 2017, totals 0.92Mt at 8.7% copper and 1.4g/t gold7. Contained metal stands at 80kt copper and 42koz gold. All the current Ore Reserve estimate is contained in the Probable Ore Reserve category. Talisman’s 30% share of the currently defined Probable Ore Reserve estimate is 24kt copper and 13koz gold, being 0.28Mt at 8.7% copper and 1.4g/t gold. The Ore Reserve estimate is based on the Indicated Mineral Resource estimate for Monty, released on 13 April 20168. The Probable Ore Reserve estimate includes both the defined Upper and Lower Zones of mineralisation at Monty. 7 For details relating to the Monty JORC Mineral Reserve see Talisman Mining Limited ASX announcement dated 6 April 2017, available on the Talisman and ASX websites. 8 For details relating to the Monty JORC Mineral Resource see Sandfire Resources NL ASX announcement dated 13 April 2016, available on the Sandfire and ASX websites. 8 REVIEW OF OPERATIONS Feasibility Study: Operating and financial outputs Monty is one of the highest grade copper-gold discoveries made globally in recent decades. The proximity of the deposit to Sandfire’s DeGrussa processing infrastructure provides an expedited and low risk pathway to production with a low development capital intensity compared globally to other greenfield copper discoveries. The Monty feasibility study details forecast total production of 74.4kt of contained copper (plus 38.4koz contained gold and 413.4koz contained silver) over an initial ore production life of 30 months. This production profile is a function of Monty being scheduled to be mined and processed through the DeGrussa plant at a maximum throughput rate of approximately 0.4Mtpa with a 4.5% Cu cut-off grade. Talisman’s share of total estimated pre-production capital cost for the development of Monty is A$22M. The key pre-production capital items comprise (on a 100% basis): • Surface infrastructure including haul/access roads and drainage, box-cut and owner’s team costs (A$33M). • Underground mine development including portal and decline establishment (A$32M). • Underground mine infrastructure including ventilation shaft and fan (A$8M). Talisman’s share of forecast life-of-mine sustaining capital is A$5.5M. The estimated notional C1 Operating cash cost (excl. royalties) of production for Monty is A$1.56/lb of payable copper (US$1.13/lb). The notional All-in Sustaining Cost (AISC) is A$1.90/lb of payable copper (US$1.37/lb)9. Monty is forecast to yield more than A$64M in forecast ungeared pre-tax free cash flow to Talisman, inclusive of all capital expenditure. This delivers a pre-tax Net Present Value (NPV) of A$46M at a real 8% discount rate. The forecast pre-tax internal rate of return (IRR) is 78%. Talisman’s underlying operating and economic interest in Monty is illustrated below in Figure 5. Figure 5: Talisman’s underlying operating and economic interest in Monty Monty Mining Development The Monty feasibility study outcomes, coupled with the OSA and Joint Venture Agreements executed with Sandfire resulted in Talisman’s Board of Directors giving approval in April 2017 for Talisman to proceed with the development of the Monty deposit. On the 5 May 2017, a mandate was issued for Taurus Mining Finance Fund (Taurus) to provide debt finance facilities of approximately A$23 million to fully cover Talisman’s share of forecast pre-production costs for the development of Monty. 9 C1 and AISC are calculated on the basis of notionally including the OSA Ore Treatment Fee as a production cost. AISC is defined as the operating cash cost of production (net of by-product credits) plus royalties and sustaining capital and closure costs but exclusive of any finance costs or corporate overhead allocation. 9 On the 4 July 2017, Talisman received advice that the Western Australian Department of Mines, Industry Regulation and Safety (DMIRS) (formerly Department of Mines and Petroleum) had approved the Mining Proposal and Mine Closure Plan for Monty facilitating the commencement of on-ground earthworks. Civils and earthworks contractor Yagahong mobilised a portion of its fleet to the DeGrussa site in early June to commence preliminary earthworks at DeGrussa and facilitate the immediate start of the Monty boxcut and critical path earthworks once DMIRS approvals were received. Preliminary Monty early works included: • relocating existing stockpiled topsoil at DeGrussa in the path of the planned Monty haul road; • establishing the water pipeline route at DeGrussa including clearing; and • constructing an additional access ramp to the existing DeGrussa ROM pad to allow for road-train access from Monty. Following the receipt of approval for the Monty Mining Proposal, Yagahong mobilised to the Monty site to commence initial earthworks. Works completed and underway on the Monty site include: • the clearing of the haul-road centreline; • stripping and stockpiling of topsoil from the Monty boxcut; and • commencement of the Monty boxcut (approx. 2m depth as at 20 July 2017) (Figure 6). Figure 6: Monty boxcut development In addition, the underground mining contract for development and production activities at Monty has been awarded to Byrnecut Australia Pty Ltd (Byrnecut), a leading Australian specialist underground mining contractor. 10 REVIEW OF OPERATIONSSpringfield Exploration While considerable resources were focused on the completion of the Monty feasibility study, exploration within the wider Springfield Joint Venture project continued in line with the exploration strategy throughout the financial year. On-ground exploration included air-core, RC and diamond drilling and, in addition, geological investigations and trials of alternate geophysical techniques. Exploration focused on enhancing geological and structural knowledge to unlock the regional potential of the broader Joint Venture area including: • air-core, RC and diamond drilling; • down-hole and surface geophysical surveys; and • geological studies. Drilling across the Springfield Project area is detailed on Table 1: Springfield Project Drilling Statistics Hole Type Monty Regional Exploration Number of Holes Total Metres Number of Holes Total Metres Air-core RC Diamond TOTAL: - 6 37 43 - 2,495 6,608 9,103 767 17 1 785 56,238 6,880 562 63,680 Table 1: Springfield Project drilling statistics 1 July 2016 – 30 June 2017 Air-core drilling across a number of prospect areas including Monty North-East and the Southern Volcanics has provided initial geological and geochemical data to aid in the identification and delineation of potential host sedimentary units within the prospective stratigraphic sequence. RC drilling has been used to follow-up litho-geochemical anomalies identified in air-core drilling. Limited diamond exploration drilling focusing on the potential for repetitions of massive sulphide copper-gold mineralisation below and along strike from the Monty deposit were also completed during the year. Halloween West (18.8% Talisman Mining Ltd – Joint Venture with Sandfire Resources NL) The Halloween West Joint Venture Project is located approximately 20km west south-west of Sandfire’s DeGrussa operation. The Halloween West Joint Venture was formed in 2012 when Talisman reached agreement with Chrysalis Resources Limited (“Chrysalis”, ASX: CYS) to farm into the Halloween West Copper-Gold Project. In October 2014, Sandfire acquired the interest held by Chrysalis and the Joint Venture is now between Talisman and Sandfire. Exploration work by the Joint Venture Manager during the year has been limited to desktop studies and a review of historic work completed over the project. Future Activities As a result of the exploration activities completed during the current financial year, prospectivity of the Monty, Southern Volcanics and Homer corridors remains significant with a number of targets to be drill tested in the coming year. Additionally, as Joint Venture understanding of the geological setting improves and surface and down-hole geophysical technology continues to evolve, the Joint Venture will utilise geophysical methods to refine target generation over the Joint Venture tenement package. 11 Sinclair Nickel Project (100% Talisman Mining Ltd) Sinclair is located in the world-class Agnew-Wiluna Greenstone Belt in WA’s north-eastern Goldfields (Figure 7). The Sinclair Nickel Deposit, developed and commissioned in 2008 and operated successfully before by Xstrata/Glencore before being placed on care and maintenance in August 2013, produced approximately 38,500 tonnes of nickel at an average life-of-mine head grade of 2.44% Ni. Sinclair has extensive infrastructure and includes a substantial 290km2 tenement package covering more than 80km strike of prospective ultramafic contact within a 35km radius of the existing processing plant and infrastructure (Figure 8). During the year Talisman continued to advance the Sinclair Nickel Project through cost efficient, staged exploration focused on priority exploration targets across the project tenements. Talisman completed air-core, RC and diamond drilling (Table 2) at Delphi, Sinclair, Stirling, Parnassus and Schmitz Well South (Figure 8). Sinclair Project Drilling Statistics Hole Type Air-core RC Diamond Table 2: Sinclair drilling statistics 1 July 2016 - 30 June 2017 TOTAL: Number of Holes Total Metres 3 18 9 30 308 3,367 2,742 6,471 Figure 7: The Sinclair Nickel Project showing regional geology nickel production centres and reported contained nickel* of the Agnew-Wiluna Belt (*MINDEX 2012) 12 REVIEW OF OPERATIONS Figure 8: Sinclair Project – Prospect Locations 13 Delphi North Delphi North is a target corridor (Figure 9) that displays a strong correlation with the Sinclair mine geological environment. It has confirmed historic nickel sulphide mineralisation over a strike length of 700m and is interpreted to represent a fertile mineralised environment with potential to host significant mineralisation. A series of RC and diamond drill holes were completed at Delphi in the first half of the financial year to test the potential to host significant nickel sulphide mineralisation (Figure 9 and Figure 10). Results from this drilling confirmed near surface high-tenor nickel sulphide mineralisation in multiple zones of massive and stringer nickel sulphide mineralisation with significant intersections10 including: • SNRC010: 4m @ 4.79% Ni from 154m down-hole; • SNRC012: 5m @ 2.39% Ni from 73m down-hole, and • SNRC019: 9m @ 4.20% Ni from 131m down-hole. • SND010: 2.52m @ 3.35% Ni from 206.66m down-hole including 1.55m @ 4.85% Ni from 206.66m; and 3.06m @ 1.60% Ni from 224.08m down-hole. Figure 9: Delphi North drill collar plan showing recent and historic collar locations, simplified geology and Priority Target position Figure 10: Delphi North projected long section showing new and existing nickel massive sulphide intersections, newly modelled (and historic) DHEM conductors for SND010, SND012 and SND013, and an interpreted Massive Sulphide Envelope. 10 Significant intersections are calculated on the basis of >0.5% Ni and may include up to 1m of internal dilution, with a minimum composite grade of 1% Ni. 14 REVIEW OF OPERATIONS Schmitz Well South Prospect A fence of RC drill holes at Schmitz Well South to test an interpreted extension of the ultramafic unit under cover identified by Talisman was completed (Figure 11) during the first half of the financial year. Talisman secured a grant from the Western Australian Department of Mines of up to $55,000 ($110,000 total drill cost split 50/50) for the co-funding of this exploration drilling. Drilling intersected broad zones of prospective high-MgO ultramafic rocks, containing multiple zones of trace to disseminated (cloud) sulphides throughout. Assay results returned anomalous nickel grades with the highest grade received to date being 1m @ 0.97% Ni 11 from 193m down-hole in SNRC015. The presence of fertile, high-MgO ultramafic units at Schmitz Well South validated Talisman’s original interpretation that Schmitz Well South represents a continuation of the fertile Schmitz Well and Sinclair ultramafic trend. Detailed interpretation of the results from this drilling informed Talisman’s interpretation and guided further exploration activities in the area which were undertaken in August 2017, the results of which have led to further planned work in the first quarter of the financial year ending 30 June 2018. Figure 11: Plan view of Schmitz Well South showing magnetics, interpreted ultramafic unit under cover and completed RC drill holes 11 For details relating to the Schmitz Well South drilling see Talisman Mining Limited ASX announcement dated 27 October 2016, available on the Talisman and ASX websites. 15 Regional Aircore Drilling As part of Talismans staged approach to exploration at Sinclair a project wide targeting review was conducted that identified several prospective exploration targets. Detailed lithogeochemical assessment of the main ultramafic host units across the project has highlighted prospective areas that have undergone very little previous exploration. An aircore drilling program was commenced late in the financial year to test several of these targets and further inform the Company's geological understanding of Sinclair. This program is scheduled for completion early in the 2018 financial year. Future Activities On-ground exploration during the current financial year represents the continuation of an efficient, staged and ongoing exploration focus at Sinclair. As a result of exploration drilling and ongoing review, multiple targets have been identified that remain to be tested. These targets will be subject to further review and prioritisation as on-ground exploration activities at Sinclair progress. Subsequent work within the Sinclair Trend will be focused on following up successful drilling completed to date at Delphi North and Schmitz Well South, as well as further defining potential additional targets for proposed future on-ground exploration testing, with work to potentially include: • Geological mapping; • Ongoing data review, interpretation and targeting; and • RC/diamond and air-core drilling campaigns. 16 REVIEW OF OPERATIONS2017 Mineral Reserve and Ore Statement Monty Mineral Resource – 100% Basis The Mineral Resource estimate for the Monty deposit (previously announced on 13 April 2016), prepared in accordance with JORC (2012) and detailed in Table 3, has been classified as an Indicated and Inferred Mineral Resource based primarily on geological interpretation, grade continuity and sample spacing. Most of the deposit has been drilled to within a 40m nominal spacing and this has allowed for an Indicated classification across almost all of the Mineral Resource estimate. Mineral Resource estimate on 100% Basis12 Mineral Resources June 2017 Mineral Resources June 2016 Classification Tonnes (t)12 Grade Ctd Metal Tonnes (t)12 Grade Ctd Metal Mineralisation Style Massive Sulphides Indicated 754,000 Inferred 9,000 Total 763,000 Halo Indicated 287,000 Inferred - Total 287,000 Total Indicated 1,041,000 Cu (%) 12 20.7 12.1 2.2 - 2.2 9.3 Au (g/t) Cu (t)12 Au (oz)12 Cu (%) Au (g/t) Cu (t)12 Au (oz)12 2.1 91,000 51,000 754,000 12 2.1 91,000 51,000 2.7 2,000 1,000 9,000 20.7 2.7 2,000 1,000 2.1 92,000 52,000 763,000 12.1 2.1 92,000 52,000 0.3 6,000 3,000 287,000 2.2 0.3 6,000 3,000 - - - - 0.3 6,000 3,000 287,000 1.6 97,000 54,000 1,041,000 - 2.2 9.3 - - - 0.3 6,000 3,000 1.6 97,000 54,000 Inferred 9,000 20.7 2.7 2,000 1,000 9,000 20.7 2.7 2,000 1,000 Total 1,050,000 9.4 1.6 99,000 55,000 1,050,000 9.4 1.6 99,000 55,000 Table 3: Mineral Resource estimate for the Monty deposit (100% basis) There has been no change to the Company’s reported Mineral Resources from June 2016 to June 2017, with no additional resource definition drilling completed nor changes to the understanding of geological controls. The maiden Ore Reserve estimate for Monty, as at 31 March 2017, contains 920kt at 8.7% copper and 1.4g/t gold. It is based on the Indicated Mineral Resource estimate and includes both the defined Upper and Lower Zones of mineralisation at Monty. All of the current Ore Reserve estimate is contained in the Probable Ore Reserve category. Ore Reserve estimate and Mine Plan on 100% Basis as at 31 March 2017 Reserve Category Tonnes (t)12 Copper (%) Gold (g/t) Proved Probable Total Mine Plan - 920,000 920,000 800,000 - 8.7 8.7 9.4 Table 4: Ore Reserve estimate and Mine Plan for the Monty deposit (100% basis) Contained Copper (t)12 Contained Gold (oz)12 - 80,000 80,000 74,000 - 42,000 42,000 38,000 - 1.4 1.4 1.5 Ore Reserve estimate and Mine Plan on Talisman 30% Basis as at 31 March 2017 Reserve Category Tonnes (t)12 Copper (%) Gold (g/t) Contained Copper (t)12 Contained Gold (oz)12 Proved Probable Total Mine Plan - 280,000 280,000 240,000 - 8.7 8.7 9.4 - 1.4 1.4 1.5 - 24,000 24,000 22,000 Table 5: Ore Reserve estimate and Mine Plan for the Monty deposit (30% basis) 12 Figures rounded to the nearest thousand - 13,000 13,000 11,000 17 Mineral Resource and Ore Reserve Governance Competent Person’s Statement – Ore Reserves The Monty Mineral Resource as at 31 March 2016 is reported in accordance with the JORC (2012) guidelines. Information that relates to the Monty JORC 2012 compliant Mineral Resource estimate is information previously published by Sandfire Resources NL (“Sandfire”, ASX: SFR) and is available on the Sandfire and ASX websites (see announcement “Maiden High- Grade Mineral Resource for Monty VMS Deposit: 99,000t of Copper and 55,000oz of Gold”, dated 13 April 2016). The Monty Ore Reserve as at 31 March 2017 is reported in accordance with the JORC (2012) guidelines. Information that relates to the Monty JORC 2012 Ore Reserve estimate is information previously published by Talisman Mining Limited ("Talisman" ASX:TLM) and is available on the Talisman and ASX websites (see announcement “Monty Feasibility Study Results”, dated 5 April 2017). The Monty Mineral Resource and Ore Reserve estimates were completed by or under the supervision of a suitably qualified Sandfire Competent Person. Competent Persons’ Statement Information in this report that relates to Exploration Results and Exploration Targets is based on information completed by Mr Anthony Greenaway, who is a member of the Australasian Institute of Mining and Metallurgy. Mr Greenaway is a full time employee of Talisman Mining Ltd and has sufficient experience which is relevant to the style of mineralisation and types of deposits under consideration and to the activities undertaken to qualify as a Competent Person as defined in the 2012 Edition of the “Australian Code for Reporting of Mineral Resources and Ore Reserves”. Mr Greenaway consents to the inclusion in this report of the matters based on information in the form and context in which it appears. Competent Persons’ Statement – Mineral Resources Information in this report that relates to Mineral Resources as defined under the 2012 Edition of the “Australian Code for Reporting of Mineral Resources and Ore Reserves”, is based on information compiled by Mr Ekow Taylor, who is a member of the Australasian Institute of Mining and Metallurgy. Mr Taylor has sufficient experience which is relevant to the style of mineralisation and types of deposit under consideration and to the activities undertaken to qualify as a Competent Person as defined in the 2012 Edition of the “Australian Code for Reporting of Mineral Resources and Ore Reserves”. Mr Taylor consents to the inclusion in this report of the matters based on information in the form and context in which it appears. Information in this report that relates to Ore Reserves is based on, and fairly represents, information and supporting documentation prepared by Mr Neil Hastings, who is a member of the Australasian Institute of Mining and Metallurgy. Mr Hastings is a full-time employee of Sandfire Resources NL and has sufficient experience which is relevant to the style of mineralisation and types of deposits under consideration and to the activities undertaken to qualify as a Competent Person as defined in the 2012 Edition of the “Australian Code for Reporting of Mineral Resources and Ore Reserves”. Mr Hastings consents to the inclusion in this report of the Ore Reserves and the supporting information, and the matters based on that information, in the form and context in which it appears. Information in this report that relates to the relevant part of the Ore Reserves and which also specifically relates to Talisman (being its 30% share of the Monty Ore Reserve and the financial impact on Talisman resulting from the application of the MJVA and OSA agreements) is based on, and fairly represents, information and supporting documentation prepared by Mr Benjamin Wilson, who is a member of the Australasian Institute of Mining and Metallurgy. Mr Wilson has sufficient experience which is relevant to the style of mineralisation and types of deposits under consideration and to the activities undertaken to qualify as a Competent Person as defined in the 2012 Edition of the “Australian Code for Reporting of Mineral Resources and Ore Reserves”. Mr Wilson consents to the inclusion in this report of the matters based on that information in the form and context in which it appears. Forward-Looking Statements This report may include forward-looking statements. These forward-looking statements are not historical facts but rather are based on Talisman current expectations, estimates and assumptions about the industry in which Talisman operates, and beliefs and assumptions regarding Talisman future performance. Words such as “anticipates”, “expects”, “intends”, “plans”, “believes”, “seeks”, “estimates”, “potential” and similar expressions are intended to identify forward-looking statements. Forward-looking statements are only predictions and are not guaranteed, and they are subject to known and unknown risks, uncertainties and assumptions, some of which are outside the control of Talisman. Past performance is not necessarily a guide to future performance and no representation or warranty is made as to the likelihood of achievement or reasonableness of any forward-looking statements or other forecast. Actual values, results or events may be materially different to those expressed or implied in this report. Given these uncertainties, recipients are cautioned not to place reliance on forward looking statements. Any forward looking statements in this report speak only at the date of issue of this report. Subject to any continuing obligations under applicable law and the ASX Listing Rules, Talisman does not undertake any obligation to update or revise any information or any of the forward looking statements in this report or any changes in events, conditions or circumstances on which any such forward looking statement is based. 18 REVIEW OF OPERATIONSTENEMENT SCHEDULE As at date of report Project Tenement Blocks/Area Halloween West / Doolgunna West Talisman Equity (%) JV Partner Expiry Annual Commitment E51/1825 E51/1826 E52/2275 E52/3530 3.0 1.0 6.0 1.0 - - 18.8% - E52/2282 70.0 30.0% E52/2313 14.0 30.0% E52/2466 14.0 30.0% - - Sandfire Resources NL - Sandfire Resources NL Sandfire Resources NL Sandfire Resources NL - - - - - - - - - Springfield Sinclair NSW Projects E51/1767 E52/3423 E52/3424 E52/3425 E52/3466 E52/3467 L52/170 M52/1071 P52/1528 E36/0650 E37/1231 E37/0903 L36/0198 L37/0175 M36/0444 M36/0445 M36/0446 M37/1063 M37/1089 M37/1090 M37/1126 M37/1127 M37/1136 M37/1137 M37/1148 M37/1168 M37/1223 M37/1275 M37/0362 M37/0383 M37/0384 M37/0385 M37/0386 M37/0424 M37/0426 M37/0427 M37/0590 M37/0692 M37/0735 M37/0816 M37/0818 M37/0819 EL 8615 ELA 5485 ELA 5487 14.0 1.0 1.0 6.0 12.0 20.0 246.4 HA 1642.0 HA 2000.0 HA 16.0 3.0 13.0 103.1 HA 83.9 HA 568.0 HA 973.0 HA 843.0 HA 604.0 HA 574.0 HA 478.0 HA 603.0 HA 603.0 HA 986.0 HA 850.0 HA 44.7 HA 190.0 HA 675.0 HA 1961.0 HA 981.5 HA 841.7 HA 536.7 HA 926.8 HA 983.8 HA 891.0 HA 505.0 HA 821.0 HA 120.0 HA 136.0 HA 959.0 HA 818.4 HA 806.5 HA 380.1 HA - - - - - - - - - 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% Comments Application Application - - 8-02-19 - - $ 50,000 - - Application 24-11-19 $ 140,000 24-11-19 $ 50,000 5-04-20 $ 50,000 - - - - - - - - - 15-10-18 28-08-21 21-09-18 19-04-28 19-04-28 27-03-29 27-03-29 27-03-29 27-03-29 22-04-29 22-04-29 27-03-29 27-03-29 27-03-29 27-03-29 27-03-29 27-03-29 27-03-29 29-07-28 20-05-34 28-01-35 28-01-35 28-01-35 28-01-35 3-02-36 3-02-36 3-02-36 27-03-29 27-03-29 27-03-29 27-03-29 27-03-29 28-08-29 - - - - - - - - - Application Application Application Application Application Application Application Application Application $ 70,000 $ 15,000 $ 70,000 - - $ 56,800 $ 97,300 $ 84,300 $ 60,400 $ 57,400 $ 47,800 $ 60,300 $ 60,300 $ 98,600 $ 85,000 $ 10,000 $ 19,000 $ 67,500 $ 196,100 $ 98,200 $ 84,200 $ 53,700 $ 92,700 $ 98,400 $ 90,600 $ 48,300 $ 81,900 $ 12,100 $ 13,700 $ 95,900 $ 81,900 $ 80,700 $ 38,100 250.0 112.0 15.0 100.0% 100.0% 100.0% - - - - - - $ 150,000 - - Application Application 19 CORPORATE GOVERNANCE STATEMENT The Company’s Corporate Governance Statement can be found on the Company’s website at www.talismanmining.com.au/about-us/ corporate-governance.html under the heading marked “Corporate Governance Statement”. The following governance-related documents can also be found on the Company’s website: Charters • Board • Audit Committee • Nomination Committee • Remuneration Committee • Risk Committee Constitution • Constitution of Talisman Mining Limited Board • Code of Conduct – summary • Policy and Procedure for the Selection and (Re)Appointment of Directors • Process for Performance Evaluation Compliance, Controls and Policies • Risk Management Policy – summary • Continuous Disclosure Policy – summary • Securities Trading Policy • Diversity Policy • Remuneration Policy Shareholder Communication • Shareholder Communication and Investor Relations Policy 20 REVIEW OF OPERATIONSDIRECTORS’ REPORT Your Directors present their report together with the financial statements of the Group consisting of Talisman Mining Limited and the entities it controlled for the financial year ended 30 June 2017. In order to comply with the provisions of the Corporations Act 2001, the Directors report as follows: Directors The names of Directors who held office during or since the end of the year and until the date of this report are as follows. Directors were in office for this entire period unless otherwise stated. Name Particulars Jeremy Kirkwood Chairman (Non-Executive/Independent) BCom ANU Non-Executive Chairman 1 April 2016 - current Jeremy Kirkwood joined Talisman in April 2016 and has extensive experience in corporate strategy, investment banking and global capital markets and provides invaluable strategic input and guidance to the Company’s board and management team. Jeremy is a principal of Pilot Advisory Group and was previously a Managing Director at Credit Suisse, Morgan Stanley and Austock. He has primarily worked in public markets, undertaking merger and acquisitions and capital raisings for companies principally in the metals and mining, energy and infrastructure sectors. In the 3 years immediately before the end of the financial year, Jeremy also served as a Director of ASX listed Zenitas Ltd (formerly BGD Corporation). He is also the Chair of Geelong Grammar School and a Director of Independent Schools Victoria. Jeremy serves on the Company’s Audit, Nomination and Remuneration Committees. With extensive industry experience, Jeremy is considered qualified to hold these responsibilities. Daniel Madden Managing Director (Executive/Non-Independent) BComACC, ACA, Governance Institute of Australia Dan Madden was appointed as Managing Director on 1 July 2016 and has been with Talisman since 2009 in his previous roles as acting CEO and Chief Financial Officer and Company Secretary. Dan has more than 16 years’ experience in the resource sector, including Xstrata Nickel Australasia, Jubilee Mines NL and Perilya Ltd. Managing Director 1 July 2016 - current He graduated from the University of Birmingham with a degree in Commerce and Accounting before joining Deloitte in the UK and Australia. He is an Associate Member of the Institute of Chartered Accountants of England and Wales and a member of the Governance Institute of Australia. 21 Name Particulars Alan Senior Non-Executive Director (Independent) Asscshp Mech Eng, FIEAUST, FAusIMM Alan graduated from the West Australian Institute of Technology (Curtin University) with an Associateship in Mechanical Engineering in 1968. He is an engineer with extensive experience in design and project development, mainly associated with the mining and mineral processing industry in Australia. Non-Executive Director 7 November 2007 - current Prior to joining Talisman, Alan operated as an independent consultant servicing the mineral processing industry. Before joining the Board of Jubilee in 2003, he led the team which completed the feasibility study for the Cosmos Nickel Project and its successful implementation, followed three years later by the transition from open cut to underground mining. Alan was a non-executive Director of Jubilee Mines NL up until its purchase by Xstrata. Non-Executive Chairman 7 November 2007 - 31 March 2016 In the 3 years immediately before the end of the financial year, Alan also served as a Director at Amex Resources Ltd; he resigned in May 2015. Alan was the Chairman of Talisman for over 8 years. He serves on the Company’s Audit, Nomination and Remuneration Committees. With extensive industry experience and being financially literate, Alan is considered qualified to hold these responsibilities. Brian Dawes Non-Executive Director (Independent) B. Sc. Mining, MAusIMM Brian is a mining engineer with extensive international mining industry experience. He holds a BSc in Mining from the University of Leeds UK, and is Member of the Australasian Institute of Mining and Metallurgy. Non-Executive Director 17 June 2009 – current He has worked in the UK, Africa, the Middle East and across Australia and holds several First Class Mine Managers’ Certificates of Competency. Brian’s diverse expertise covers all key industry aspects from exploration through the discovery, feasibility, funding, approvals, project construction, commissioning, operations, optimisation, logistics, marketing, and closure phases. This includes site management and corporate responsibilities in a diversity of challenging and successful underground and open pit operations across many commodities and geographies; mainly in copper, nickel, gold, zinc and lead, with iron ore, graphite, and coal. Prior to joining Talisman, Brian held senior positions with Jubilee Mines NL, Western Areas, LionOre Australia, WMC, Normandy Mining, and Aberfoyle. In the 3 years immediately before the end of the financial year, Brian did not hold any other directorships. Brian serves on the Company’s Audit, Nomination and Remuneration Committees. With extensive industry experience and being financially literate, Brian is considered qualified to hold these responsibilities. Karen Gadsby Non-Executive Director (Independent) B. Comm., FCA, MAICD Karen is a professional Non-Executive Director with over 30 years’ finance and commercial experience across several sectors. Non-Executive Director 3 April 2008 - current She worked as an Executive for North Ltd throughout Australia for 13 years including at Robe River Iron Associates and Energy Resources of Australia Ltd. In the 3 years immediately before the end of the financial year, Karen also served as Chair of Strategen Environmental Consulting Pty Ltd and Community First International Ltd, and as a director of Landgate. Karen is the Chair of the Audit Committee and a member of the Nomination and Remuneration Committees. With her extensive experience in finance and having chaired a number of Audit Committees, Karen is considered qualified to hold these responsibilities. 22 DIRECTORS’ REPORT Company Secretaries Name Particulars Shaun Vokes Co-Company Secretary BBus, CPA Co-Company Secretary 1 May 2016 - current Shaun joined Talisman in February 2016. He is a finance professional with over 25 years’ experience in the metalliferous resources industry gained predominantly in senior operational and management roles within Australia and Africa. Prior to joining Talisman, Shaun spent five years as Manager, Business Services/CFO for Kabanga Nickel Company Ltd in Tanzania. Shaun’s experience includes project evaluation and financing, business development, contract negotiation, metals marketing, risk management and corporate and financial governance for both private and ASX-listed entities across a range of base and precious metals. Shaun is a graduate of Curtin University and holds a Bachelor of Business degree and is a member of the Australian Society of Certified Practicing Accountants. Alex Neuling Co-Company Secretary BSc, FCA (ICAEW), ACIS Alex Neuling is a Chartered Accountant and Chartered Secretary with extensive corporate and financial experience including as Director, Chief Financial Officer and / or Company Secretary of various ASX-listed companies in the mining, mineral exploration, oil & gas and other sectors. Co-Company Secretary 1 May 2016 - current Prior to those roles, Alex worked at Deloitte in London and Perth. Alex also holds an honours degree in chemistry from the University of Leeds in the United Kingdom and is principal of Erasmus Consulting which provides company secretarial and financial management consultancy services to a variety of ASX-listed and other companies. Principal activities The principal activity of Talisman Mining Limited during the course of the financial year was exploration for, and development of, base metals and other minerals, including copper, copper-gold, gold and nickel. Review of operations and future developments A detailed review of operations during the financial year and commentary on future developments is set out in the section titled “Review of Operations” in this Annual Report. Dividends No dividends have been paid or declared since the start of the financial year. No recommendation for the payment of a dividend has been made. Financial performance and financial position Financial performance During the financial year, the Group reported an operating loss after tax of $8.7 million (2016: loss after tax $8.0 million). Revenue for the year of $0.4 million (2016: $0.3 million) consisted primarily of bank interest earned on the Group’s short-term deposits held during the year. Financial position As at 30 June 2017, the Group had net assets of $21.6 million (2016: $29.3 million) including $11.6 million of cash and cash equivalents (2016: $20.2 million). Subsequent events There has not been any other matter or circumstances occurring subsequent to end of the financial year that has significantly affected, or may significantly affect the operations of the Group, the results of those operations, or the state of affairs of the Group in future financial years. 23 Directors’ meetings The following table sets out the number of Directors’ meetings (including meetings of committees of Directors) held during the financial year and the number of meetings attended by each director (while they were a director or committee member). During the financial year, 15 board meetings, 2 audit committee meetings, 1 remuneration committee meeting and 1 nomination committee meeting were held. Board of directors Audit committee Remuneration committee Nomination committee Eligible to attend Attended Eligible to attend Attended Eligible to attend Attended Eligible to attend Attended 15 15 15 15 15 15 15 15 13 15 2 2 2 2 2 2 2 2 2 2 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 Directors Jeremy Kirkwood Alan Senior Daniel Madden Brian Dawes Karen Gadsby Note: Executive Directors attending committee meetings during the year attended all or part of the meeting by invitation of the relevant Committee. Directors’ shareholdings The following table sets out each Director’s relevant interest in shares, and rights or options in shares of the Company or a related body corporate as at the date of this report: Directors Number Number Fully paid ordinary shares Share Options Jeremy Kirkwood Daniel Madden Alan Senior Brian Dawes Karen Gadsby Share options 219,000 50,000 116,666 353,333 311,334 750,000 3,000,000 500,000 500,000 500,000 Share options granted to Directors and key management personnel At the date of this report, share options granted to the Directors of the Company and the entities it controlled as part of their remuneration are: Number of options granted Issuing Entity Number of ordinary shares under option 750,000 3,000,000 500,000 500,000 500,000 1,000,000 1,000,000 Talisman Mining Ltd Talisman Mining Ltd Talisman Mining Ltd Talisman Mining Ltd Talisman Mining Ltd Talisman Mining Ltd Talisman Mining Ltd 750,000 3,000,000 500,000 500,000 500,000 1,000,000 1,000,000 Directors and senior management Jeremy Kirkwood Daniel Madden Alan Senior Brian Dawes Karen Gadsby Shaun Vokes Anthony Greenaway 24 DIRECTORS’ REPORT Details of unissued shares or interests under option as at the date of this report are: Issuing entity Talisman Mining Limited Talisman Mining Limited Talisman Mining Limited Talisman Mining Limited Talisman Mining Limited Talisman Mining Limited Talisman Mining Limited Talisman Mining Limited Talisman Mining Limited Talisman Mining Limited Talisman Mining Limited Number of shares under option Class of shares Exercise price of options Expiry date of options 625,000 625,000 125,000 125,000 125,000 125,000 1,755,000 1,550,000 1,550,000 1,550,000 1,550,000 Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary $0.41 $0.49 $0.40 $0.50 $0.60 $0.70 $0.48 $0.52 $0.62 $0.56 $0.66 31-Oct-17 31-Oct-17 1-Mar-18 1-Mar-18 1-Mar-18 1-Mar-18 31-Oct-18 31-Oct-19 31-Oct-21 31-Oct-19 31-Oct-21 The holders of these options do not have the right, by virtue of the option, to participate in any share issue or interest issue of any other body corporate or registered scheme. Remuneration Report general standard of independence for auditors imposed by the Corporations Act 2001. The Remuneration Report, which forms part of the Directors’ report, outlines the remuneration arrangements in place for the Key Management Personnel of Talisman Mining Limited for the financial year ended 30 June 2017 and is included on page 26. Environmental regulations The Group’s environmental obligations are regulated under both State and Federal legislation. Performance with respect to environmental obligations is monitored by the Board of Directors and subjected from time to time to government agency audits and site inspections. No significant or material environmental breaches have been notified by any government agency during the year ended 30 June 2017. Indemnification of officers and auditors The Company has agreed to indemnify all the Directors of the Company for any liabilities to another person (other than the Company or related body corporate) that may arise from their position as Directors of the Company and its controlled entities, except where the liability arises out of conduct involving a lack of good faith. During the financial year the Company paid a premium in respect of a contract insuring the Directors and officers of the Company and its controlled entities against any liability incurred in the course of their duties to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium. Non-Audit Services Details of amounts paid or payable to the auditor for non-audit services provided during the year by the auditor are outlined in Note 24 to the financial statements. The Directors are satisfied that the provision of non-audit services is compatible with the The Directors are of the opinion that the services do not compromise the auditor’s independence as all non-audit services have been reviewed to ensure that they do not impact the impartiality and objectivity of the auditor and none of the services undermine the general principles relating to auditor independence as set out in Code of Conduct APES 110 Code of Ethics for Professional Accountants issued by the Accounting Professional & Ethical Standards Board. Auditor Independence and Non-Audit Services Section 307C of the Corporations Act 2001 requires our auditors, HLB Mann Judd, to provide the Directors of the Company with an Independence Declaration in relation to the audit of the annual report. This Independence Declaration is set out on page 32 and forms part of this Directors’ report for the year ended 30 June 2017. Proceedings on behalf of the Company No person has applied for leave of court to bring proceedings on behalf of the Company or intervene in any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings. Rounding off of amounts The company has applied the relief available to it in ASIC Legislative Instrument 2016/91, and accordingly certain amounts included in this report and in the financial report have been rounded off to the nearest $1,000 (where rounding is applicable), under the option available to the Company under ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191. The Company is an entity to which this instrument applies. 25 REMUNERATION REPORT This report, which forms part of the Directors’ report, outlines the remuneration arrangements in place for the Key Management Personnel of Talisman Mining Limited for the year ended 30 June 2017. The information provided in this remuneration report has been audited as required by Section 308(3C) of the Corporations Act 2001. The Remuneration Report details the remuneration arrangements for Key Management Personnel who are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the Group, directly or indirectly, including any Director (whether executive or otherwise) of the Group. Key management personnel details The key management personnel of Talisman Mining Limited during the year were: Remuneration policy and relationship between the remuneration policy and Company performance Directors Jeremy Kirkwood Daniel Madden Alan Senior Brian Dawes Karen Gadsby Non-Executive Chairman Managing Director Non-Executive Director Non-Executive Director Non-Executive Director Other Key Management Shaun Vokes Chief Financial Officer/ Co-Company Secretary Anthony Greenaway General Manager – Geology Ben Wilson General Manager – Project Development (July 2016- May 2017) Except as noted, the named persons held their current positions for the whole of the financial year and since the financial year. Key management personnel (excluding Non-Executive Directors) The Board is responsible for determining the remuneration policies for the Group, including those affecting Executive Directors and other key management personnel. The Board may seek appropriate external advice to assist in its decision making. The Company’s remuneration policy for Executive Directors and key management personnel is designed to promote superior performance and long term commitment to the Company. The main principles of the policy when considering remuneration are as follows: • Executive Directors and key management personnel are motivated to pursue long term growth and success of the Company within an appropriate control framework; • • interests of key leadership are aligned with the long-term interests of the Company’s shareholders; and there is a clear correlation between performance and remuneration. The remuneration policy for Executive Directors and other key management personnel has three main components, fixed remuneration, long term incentive and a potential discretionary bonus. Fixed remuneration Fixed remuneration is reviewed annually by the Remuneration Committee. The process consists of a review of relevant comparative remuneration in the market and internally and, where appropriate, external advice on policies and practices. The Remuneration Committee has access to external, independent advice where necessary. 26 Executive Directors and other key management personnel are given the opportunity to receive their fixed (primary) remuneration in a variety of forms including cash and fringe benefits such as motor vehicles and expense payment plans. It is intended that the manner of payment chosen will be optimal for the recipient without creating undue cost for the Group. The fixed remuneration component is detailed in the remuneration for key management personnel tables for the years ended 30 June 2017 and 30 June 2016. bonus paid is at the discretion of the Remuneration Committee and will typically be made in recognition of contribution to the Company’s performance and other significant efforts of Executive Directors and key management personnel in applicable and appropriate circumstances. For the financial year ended 30 June 2017, the Remuneration Committee recommended bonuses totaling $60,000 be paid to three key management personnel. Long term incentives To align the interests of key management personnel with the long-term objectives of the Group and its shareholders, the Group’s policy, having regard to the stage of development of its assets, is to issue share options under the shareholder approved ‘Executive and Employee Option Plan’ (EEOP) and at the discretion of the Board, subject to shareholder approval for Directors. The issue of share options as remuneration represents cost effective consideration to Directors and key management personnel for their commitment and contribution to the Group and are used as a strategic tool to recruit and retain high calibre personnel. Options issued during the year vest at various periods during the life of the options and value is only realised by Directors and key management personnel upon growth at various premiums to the 5-day volume weighted share of the Company’s share price from the date of the grant of the options. Vesting conditions relating to the performance of the Group are not considered appropriate having regard to the stage of development of the Group’s assets. Potential discretionary bonus A potential discretionary bonus may be paid to Executive Directors and other key management personnel. Any potential Non-Executive Directors The Group’s Non-Executive Directors receive fees (including statutory superannuation) for their services and the reimbursement of reasonable expenses. The fees paid to the Group’s Non-Executive Directors reflect the demands on, and responsibilities of, the Directors. They do not receive any retirement benefits (other than compulsory superannuation). The Board decides annually the level of fees to be paid to Non- Executive Directors with reference to market standards. Non-Executive Directors may also receive share options where this is considered appropriate by the Board as a whole and with regard to the stage of the Group’s development. Such options vest across the life of the option and are primarily designed to provide an incentive to Non-Executive Directors to remain with the Group. Options issued to Non-Executive Directors are subject to shareholder approval. A Non-Executive Directors’ fee pool limit of $300,000 per annum was originally approved by the shareholders at the General Meeting on 19 May 2008 and re-approved at the 2016 General Meeting. During the 2017 financial year, this was utilised to a level of $251,850 (inclusive of superannuation) for the financial year ended 30 June 2017. The fee paid for the 2017 financial year to the Chairman was $80,000 per annum and $50,000 per annum for the Non-Executive Directors (excluding statutory superannuation). Key terms of employment contracts Remuneration and other terms of employment of Directors and key management personnel are formalized in an employment contract. The major provisions of the agreements related to the remuneration are set out below. Key Management Personnel Terms of Agreement Daniel Madden Payment of a termination benefit on early termination by the Group (other than for gross misconduct) at the end of the notice period, is three months’ base salary. Where the Group elects to dispense with the notice period and terminate employment, six months’ base salary applies. Notice Period 3 months Shaun Vokes Termination benefit payable on early termination by the Group (other than for gross misconduct) is equal to three months’ base salary 3 months Anthony Greenaway Termination benefit payable on early termination by the Group (other than for gross misconduct) is equal to one month base salary 1 month Remuneration for Executive Directors and key management personnel consists of a base salary, superannuation and performance incentives. Long term performance incentives may include options granted at the discretion of the Board subject to obtaining the relevant approvals. The remuneration of the Managing Director is recommended to the Board by the Remuneration Committee. Remuneration of key management personnel (excluding Non-Executive Directors) is recommended annually by the Remuneration Committee in consultation with the Managing Director or equivalent. 27 Remuneration of key management personnel Details of the nature and amount of each element of the remuneration for key management personnel during the year are set out in the following tables: Short-term employee benefits Salary & fees Bonus Non- monetary $ $ $ Other $ Post- employment benefits Super- annuation Long service leave accrual Share- based payment Options (i) $ $ $ % of compensation linked to performance Total $  2017 Directors Jeremy Kirkwood Daniel Madden Alan Senior Brian Dawes Karen Gadsby Executives  Shaun Vokes Anthony Greenaway Ben Wilson(ii) 2016 Directors Jeremy Kirkwood(iii) Alan Senior(iv) Gary Lethridge(v) Brian Dawes Karen Gadsby Executives Daniel Madden(vi) Shaun Vokes(vii) Ben Wilson Anthony Greenaway (viii) 80,000 - - - 7,600 - 111,821 199,421 56.07% 350,000 30,000 16,271 - 36,100 44,367 447,285 924,023 51.65% 50,000 50,000 50,000 - - - - - - - 4,750 4,750 - - 4,750 200,000 20,000 - - 20,900 200,000 10,000 - - 19,950 - - - - - 74,547 129,297 57.66% 74,547 129,297 57.66% 48,405 103,155 46.92% 149,095 389,995 43.36% 114,618 344,568 36.17% 184,471 1,164,471 - 60,000 - 16,271 - - 17,525 116,325 - 248,256 46,260 44,367 1,066,578 2,468,012 18.63% 20,000 65,981 281,242 45,900 45,900 252,962 58,513 180,000 54,000 - - - - - - - - - - - - - 1,900 6,268 - - - 21,900 1,299 73,548 13,327 - 30,688 41,792 25,748 392,797 0.00% 1.77% 6.56% - - 4,361 - - 4,361 4,330 - 24,031 - - - 5,559 - 17,100 - - 5,130 - - - - - - 866 51,127 1.69% 18,721 68,982 27.14% 1,732 283,055 0.61% - 64,072 16,407 213,507 0.00% 7.68% 18,674 77,804 24.00% 1,004,498 - 17,657 - 99,398 41,792 83,447 1,246,792 The value of share based payments shown in the table are non-cash values based on an accounting valuation calculated under the Black Scholes option pricing method. Ben Wilson’s salary and fees detailed above include annual leave entitlements paid on resignation effective 12 May 2017. Jeremy Kirkwood was appointed 1 April 2016 as Non-Executive Chairman. (i) (ii) (iii) (iv) Alan Senior was Non-Executive Chairman from 1 July 2015 to 31 March 2016 and Non-Executive Director 31 March 2016 to 30 June 2016. (v) (vi) Daniel Madden was appointed Acting Chief Executive Officer from 1 April 2016. (vii) Shaun Vokes was appointed from 29 February 2016. (viii) Anthony Greenaway was appointed from 15 February 2016. Gary Lethridge’s salaries and fees detailed above include long service leave and annual leave entitlements paid on resigned effective 31 March 2016 28 REMUNERATION REPORT        Share-based remuneration Options granted during the financial year were approved by shareholders at the Company’s 2016 Annual General Meeting. For details of share-based payments granted during year refer Note 18. Options issued during the year During the financial year Name Number granted Number vested and exercisable % of grant vested % of grant forfeited % of compensation for the year consisting of options Jeremy Kirkwood 750,000 300,000 Daniel Madden 3,000,000 1,200,000 500,000 500,000 500,000 1,000,000 200,000 200,000 200,000 400,000 1,000,000 400,000 Alan Senior Brian Dawes Karen Gadsby Shaun Vokes Anthony Greenaway Exercised 40% 40% 40% 40% 40% 40% 40% N/A N/A N/A N/A N/A N/A N/A 57.56% 48.41% 57.66% 57.66% 57.66% 38.23% 39.33% No options granted as compensation in the current and/or prior year were exercised. Forfeited / lapsed / cancelled during the year Name Alan Senior Brian Dawes Daniel Madden Karen Gadsby Anthony Greenaway Ben Wilson Ben Wilson Number forfeited/lapsed/ cancelled during the year Financial year granted 750,000 500,000 1,000,000 500,000 500,000 500,000 800,000 FY 13/14 FY 13/14 FY 13/14 FY 14/15 FY 15/16 FY 14/15 FY 15/16 29 Other Information Shareholdings by Key Management Personnel Opening balance at 1 July Shares received on exercise of options Net other change Balance on resignation Balance at 30 June Balance held nominally Number Number Number Number Number Number - - - - - - - - - - - - - - - - - - - 100,000 - 50,000 - - - - - N/A N/A N/A N/A N/A N/A 8,000 N/A 219,000 116,666 50,000 353,333 311,334 - - - - - - 20,000 66,667 - 8,000 - 150,000 8,000 1,050,333 94,667 119,000 - - - - - - 8,000 - N/A N/A 1,666,667 N/A N/A N/A N/A N/A N/A 119,000 116,666 - 353,333 311,334 - - 8,000 - - - - 20,000 66,667 - - 8,000 - 127,000 1,666,667 908,333 94,667 119,000 116,666 - 353,333 311,334 - 8,000 - 908,333 N/A 116,666 1,666,667 353,333 311,334 - - - - 2,448,000 2017 Directors Jeremy Kirkwood Alan Senior Daniel Madden Brian Dawes Karen Gadsby Executives Shaun Vokes Ben Wilson Anthony Greenaway 2016 Directors Jeremy Kirkwood Alan Senior Gary Lethridge Brian Dawes Karen Gadsby Executives Daniel Madden Shaun Vokes Ben Wilson Anthony Greenaway 30 REMUNERATION REPORT  Options held by Key Management Personnel Opening balance at 1 July Granted as remuneration Options Exercised Net other change Balance on resignation Closing balance at 30 June Vested but not exercisable Vested during the year Vested and exercisable at 30 June Number Number Number Number Number Number Number Number Number 2017 Directors Jeremy Kirkwood - 750,000 - N/A 750,000 - 300,000 300,000 Daniel Madden 1,000,000 3,000,000 Alan Senior 750,000 500,000 Brian Dawes 500,000 500,000 Karen Gadsby 500,000 500,000 Executives Shaun Vokes - 1,000,000 Ben Wilson 500,000 1,000,000 Anthony Greenaway 500,000 1,000,000 3,750,000 8,250,000 2016 Directors Jeremy Kirkwood N/A Alan Senior 750,000 Gary Lethridge 2,500,000 Brian Dawes 500,000 Karen Gadsby 500,000 Executives Daniel Madden 1,000,000 Shaun Vokes N/A Ben Wilson 500,000 - - - - - - - - Anthony Greenaway N/A 500,000 5,750,000 500,000 - - - - - - - - - - - - - - - - - - (1,000,000) N/A 3,000,000 - 1,200,000 1,200,000 (750,000) (500,000) (500,000) N/A N/A N/A 500,000 500,000 500,000 - N/A 1,000,000 (1,300,000) 200,000 - (500,000) N/A 1,000,000 - - - - - - 200,000 200,000 200,000 200,000 200,000 200,000 400,000 400,000 200,000 200,000 400,000 400,000 (4,550,000) 200,000 7,250,000 - 3,100,000 3,100,000 - - N/A - N/A 750,000 (1,250,000) 1,250,000 - - - - - - - N/A N/A 500,000 500,000 N/A 1,000,000 N/A N/A N/A - 500,000 500,000 - - - - - - - - - - - 187,500 750,000 625,000 1,250,000 125,000 500,000 250,000 375,000 250,000 1,000,000 - - 500,000 500,000 - - (1,250,000) 1,250,000 5,000,000 - 1,937,500 4,375,000 This Directors’ report is signed in accordance with a resolution of Directors made pursuant to s.298(2) of the Corporations Act 2001. On behalf of the Directors Daniel Madden Managing Director Perth, 28 September 2017 31 Auditor’s Independence Declaration 32 Independent Auditor’s Report 33 Independent Auditor’s Report 34 Independent Auditor’s Report 35 Independent Auditor’s Report 36 37 INDEX TO THE FINANCIAL REPORT DIRECTORS’ DECLARATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME . . . . . . . . . . 40 CONSOLIDATED STATEMENT OF FINANCIAL POSITION . . . . . . . . . . . . . . . 41 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY . . . . . . . . . . . . . . . 42 CONSOLIDATED STATEMENT OF CASH FLOWS . . . . . . . . . . . . . . . . . . . . . . 43 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS . . . . . . . . . . . . 44 Note 1: Statement of significant accounting policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 Note 2: Revenue and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 Note 3: Income tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 Note 4: Segment Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 Note 5: Earnings Per Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 Note 6: Cash and Cash Equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 Note 7: Trade and Other Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 Note 8: Other Financial Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 Note 9: Joint Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 Note 10: Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 Note 11: Deferred exploration and evaluation expenditure . . . . . . . . . . . . . . . . . . . . . . 55 Note 12: Mine Properties and Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 Note 13: Intangible Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 Note 14: Trade and Other Payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 Note 15: Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 Note 16: Issued Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58 Note 17: Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 Note 18: Share-Base Payment Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 Note 19: Financial Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 Note 20: Commitment and Contingencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 Note 21: Related Party Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 Note 22: Interest in Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 Note 23: Parent Entity Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 Note 24: Auditor’s Remuneration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 Note 25: Subsequent Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 ADDITIONAL SECURITIES EXCHANGE INFORMATION . . . . . . . . . . . . . . . . 68 1. Number of Holders of Equity Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 2. Company Secretary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 3. Registered office and principal administrative office . . . . . . . . . . . . . . . . . . . . . . . . . 69 4. Securities exchange listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 5. Restricted securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 6. Twenty largest holders of ordinary shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 7. Unquoted equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 8. On-market buy back . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 38 DIRECTORS’ DECLARATION The Directors declare that: (a) (b) in the Directors’ opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. in the Directors’ opinion, the attached financial statements, notes and additional disclosures of the consolidated entity are in accordance with the Corporations Act 2001, including: i. ii. complying with Australian Accounting Standards and the Corporations Regulations 2001; and giving a true and fair view of the consolidated entity’s financial position as at 30 June 2017 and performance for the year then ended. (c) in the Directors’ opinion the attached financial statements and notes thereto are in accordance with International Financial Reporting Standards issued by the International Accounting Standards Board. (d) the Directors have been given the declarations required by s.295A of the Corporations Act 2001. Signed in accordance with a resolution of the Directors made pursuant to s.295(5) of the Corporations Act 2001. On behalf of the Directors Daniel Madden, Managing Director Perth, 28 September 2017 39 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2017 Continuing operations Other income Employee benefits expense Exploration expenditure expensed as incurred Care and Maintenance expense Occupancy expenses Legal and Corporate Advisory Expenses Administrative expenses Unwinding of discount on provisions Depreciation and amortisation expense Impairment of available-for-sale financial assets Loss before income tax expense Income tax benefit 30 Jun 17 30 Jun 16 Note $ `000 $ `000 2 2 11 397 348 (1,791) (814) (5,124) (5,809) (647) (431) 2 (122) (170) (430) (208) (639) (622) 15 (249) (241) (60) (60) - (3) (8,665) (8,010) 3 -  - Loss after tax from continuing operations (8,665) (8,010) Net loss for the period (8,665) (8,010) Other comprehensive income for the period, net of tax Items that may be reclassified to profit or loss Net change in the fair value of available-for-sale financial assets - (7) Other comprehensive income for the period, net of tax - (7) Total comprehensive loss for the period (8,665) (8,017) Loss per share: Basic loss per share (cents per share) Diluted loss per share (cents per share) 5 5 (4.67) (5.06) n/a n/a The accompanying notes form part of these financial statements. 40                                                                           CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2017 Assets Current Assets Cash and cash equivalents Trade and other receivables Total Current Assets Non-Current Assets Receivables Other financial assets Property, plant and equipment Intangible assets Mine properties and development Deferred exploration and evaluation expenditure Total Non-Current Assets Total Assets Liabilities Current Liabilities Trade and other payables Provisions Total Current Liabilities Non-Current Liabilities Provisions Total Non-Current Liabilities Total Liabilities Net Assets Equity Issued capital Reserves Accumulated losses Total Equity The accompanying notes form part of these financial statements. Note 30 Jun 17 $ `000 30 Jun 16 $ `000 6 7 7 8 10  13 12 11 14 15 11,595 20,244 222 257 11,817 20,501 58 60 121 121 2,905 2,789 41 - 2,098 - 14,000 14,545 19,223 17,515 31,040 38,016 845 464 44 - 889 464 15 8,536 8,287 8,536 8,287 9,425 8,751 21,615 29,265 16 17 17 60,882 60,882 1,307 408 (40,574) (32,025) 21,615 29,265 41                                                                                                       CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2017 Issued Capital Accumulated Losses Asset Revaluation Reserve Share-based Payments Reserve Total Equity $ `000 $ `000 $ `000 $ `000 $ `000 Balance at 1 July 2015 37,404 (24,305) 21 448 13,568 Loss for the period - (8,010) - - (8,010) Net change in fair value of available-for-sale financial assets Total comprehensive income/(loss) for the period - - (7) - (7) - (8,010) (7) - (8,017) Shares issued during the year 23,478 - - - 23,478 Recognition of share-based payments - - - 236 236 Unlisted options lapsing - 290 - (290) - Balance at 30 June 2016 60,882 (32,025) 14 394 29,265 Balance at 1 July 2016 60,882 (32,025) 14 394 29,265 Loss for the period - (8,665) - - (8,665) Net change in fair value of available-for-sale financial assets Total comprehensive income/(loss) for the period - - - - - - (8,665) - - (8,665) Recognition of share-based payments - - 1,015 1,015 Unlisted options lapsed Balance at 30 June 2017 -  116 60,882 (40,574) - 14 (116) - 1,293 21,615 The accompanying notes form part of these financial statements. 42                                           CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2017 Cash flows from operating activities Payments to suppliers and employees Payments for exploration and evaluation Interest received Note 30 Jun 17 $ `000 30 Jun 16 $ `000 inflows/(outflows) (2,692) (1,584) (5,012) (6,173) 516 242 Net cash used in operating activities 6 (7,188) (7,515) Cash flows from investing activities Payments for mine properties and development Payments for property, plant and equipment Net cash used in investing activities Cash flows from financing activities Proceeds from issue of shares Payments for share issue costs Net cash provided by financing activities (1,244) (545) (217) (39) (1,461) (584) - 24,713 - (1,236) - 23,477 Net increase /(decrease) in cash held (8,649) 15,378 Cash and cash equivalents at the beginning of the period 20,244 4,866 Cash and cash equivalents at the end of the period 6 11,595 20,244 The accompanying notes form part of these financial statements. 43                                                                       NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Note 1 - Statement of significant accounting policies Talisman Mining Limited (the Company) is a public company listed on the Australian Securities Exchange (trading under the symbol “TLM”) and operating in Australia. The Company’s Registered Office and its principal place of business are as follows: Registered Office 6 Centro Avenue Subiaco Western Australia 6008 Principal place of business 6 Centro Avenue Subiaco Western Australia 6008 The nature of the operations and principal activities of the Company are described in the Directors’ report. SIGNIFICANT ACCOUNTING POLICIES a. Basis of preparation These financial statements are general purpose financial statements, which have been prepared in accordance with the requirements of the Corporations Act 2001, Accounting Standards and Interpretations and comply with other requirements of the law. The financial statements comprise the consolidated financial statements for the Group. For the purposes of preparing the consolidated financial statements, the Company is a for-profit entity. The accounting policies detailed below have been consistently applied to all of the years presented unless otherwise stated. The financial statements are for the Group consisting of Talisman Mining Limited and its subsidiaries. The financial statements have been prepared on a historical cost basis, except for available-for-sale investments which have been measured at fair value. Historical cost is based on the fair values of the consideration given in exchange for goods and services. The financial statements are presented in Australian dollars and all values are rounded to the nearest thousand dollars ($’000) unless otherwise stated as permitted by the option available to the Company under ASIC Corporations (Rounding in Financial/ Director’s Reports) Instrument 2016/191. The Company is an entity to which this instrument applies. The Company is a listed public Company, incorporated in Australia and operating in Australia. The entity’s principal activities are exploration for, and development of, base metals and other minerals, including copper, copper-gold, gold and nickel. b. Adoption of new and revised standards Standards and Interpretations applicable to 30 June 2017 In the year ended 30 June 2017, the Directors have reviewed all of the new and revised Standards and Interpretations issued by the AASB that are relevant to the Company and effective for the current annual reporting period. As a result of this review, the Directors have determined that there is no material impact of the new and revised Standards and Interpretations on the Company and, therefore, no material change is necessary to Group accounting policies. Standards and interpretations in issue not yet adopted Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2017 reporting periods. Those which may have a significant impact on the Group are set out below. The Group does not plan to adopt these standards early. AASB 9 Financial Instruments (2014) AASB 9 (2014), published in December 2014, replaces the existing guidance AASB 9 (2009), AASB 9 (2010) and AASB 139 Financial Instruments: Recognition and Measurement and is effective for annual reporting periods beginning on or after 1 January 2018, with early adoption permitted. The new standard results in changes to accounting policies for financial assets and liabilities covering classification and measurement, hedge accounting and impairment. The Group has assessed these changes and determined that based on the current financial assets and liabilities held at reporting date, the Group will need to reconsider its accounting policies surrounding impairment recognition. The new impairment requirements for financial assets are based on a forward looking ‘expected loss model’ (rather than the current ‘incurred loss model’). The Group does not expect a significant effect on the financial statements resulting from the change of this standard however the Group is in the process of evaluating the impact of the new financial instrument standard. The changes in the Group’s accounting policies from the adoption of AASB 9 will be applied from 1 July 2018 onwards. 44 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AASB 15 Revenue from Contracts with Customers c. Statement of compliance AASB 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognised, including in respect of multiple element arrangements. It replaces existing revenue recognition guidance, AASB 111 Construction Contracts, AASB 118 Revenue and AASB 1004 Contributions. AASB 15 is effective from annual reporting periods beginning on or after 1 January 2018, with early adoption permitted. The core principle of AASB 15 is that it requires identification of discrete performance obligations within a transaction and associated transaction price allocation to these obligations. Revenue is recognised upon satisfaction of these performance obligations, which occur when control of goods or services is transferred, rather than on transfer of risks and rewards. Revenue received for a contract that includes a variable amount is subject to revised conditions for recognition, whereby it must be highly probable that no significant reversal of the variable component may occur when the uncertainties around its measurement are removed. Whilst the new revenue standard would not have a material impact on existing revenue streams, the Group has commenced the process of evaluating the potential impact of the new standard on future revenue streams and will first apply AASB 15 in the financial year beginning 1 July 2018. AASB 16 Leases AASB 16 replaces the current AASB 117 Leases standard. AASB 16 removes the classification of leases as either operating leases or finance leases, for the lessee, effectively treating all leases as finance leases. Most leases will be capitalised on the balance sheet by recognising a ‘right-of-use’ asset and a lease liability for the present value obligation. This will result in an increase in the recognised assets and liabilities in the statement of financial position as well as a change in expense recognition, with interest and deprecation replacing operating lease expense. Lessor accounting remains similar to current practice, i.e. lessors continue to classify leases as finance and operating leases. AASB 16 is effective from annual reporting periods beginning on or after 1 January 2019, with early adoption permitted for entities that also adopt AASB 15. This standard will primarily affect the accounting for the Group’s operating lease. As at 30 June 2017, the Group has $294,751 of non-cancellable operating lease commitments, predominantly relating to a property lease. The Group is considering the available options to account for this transition but the Group expects an increase in reported earnings before interest, tax, depreciation and amortisation (EBITDA) and increase in lease assets and liabilities recognition. This will however be dependent on the lease arrangements in place when the new standard is effective. The Group has commenced the process of evaluating the impact of the new lease standard. No other new standards, amendments to standards and interpretations are expected to affect the Group’s consolidated financial statements. The financial report was authorised for issue on 28 September 2017. The financial report complies with Australian Accounting Standards, which include Australian equivalents to International Financial Reporting Standards (AIFRS). Compliance with AIFRS ensures that the financial report, comprising the financial statements and notes thereto, complies with International Financial Reporting Standards (IFRS). d. Significant accounting estimates and judgements The application of accounting policies requires the use of judgements, estimates and assumptions about carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions are recognised in the period in which the estimate is revised if it affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. Useful lives of depreciable assets Management reviews its estimate of the useful lives of depreciable assets at each reporting date, based on the expected utility of the assets. Uncertainties in these estimates relate to technical obsolescence that may change the utility of certain software and IT equipment. Impairment of available-for-sale financial assets The Group follows the guidance of AASB 139 Financial Instruments: Recognition and Measurement to determine when an available-for-sale financial asset is impaired. This determination requires significant judgement. In making this judgement, the Group evaluates, among other factors, the duration and extent to which the fair value of an investment is less than its cost and the financial health of, and short-term business outlook for, the investee including factors such as industry and sector performance, changes in technology and operational and financing cash flows. Share-based payment transactions The Group measures the cost of equity-settled transactions with employees and Directors by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined by utilising a Black Scholes model, using the assumptions detailed in Note 18. Fair value of financial instruments Management uses valuation techniques to determine the fair value of financial instruments (where active market quotes are not available) and non-financial assets. This involves developing estimates and assumptions consistent with how market participants would price the instrument. Management bases its assumptions on observable data as far as possible but this is not always available. In that case management uses the best information available. Estimated fair values may vary from the actual prices that would be achieved in an arm’s length transaction at the reporting date. 45 Mine development expenditure carried forward Exploration and evaluation expenditure carried forward The recoverability of the carrying amount of mine development expenditure carried forward has been reviewed by the Directors. In conducting the review, the recoverable amount has been assessed by reference to the higher of “fair value less costs to sell” and “value in use”. In determining value in use, future cash flows are based on: The recoverability of the carrying amount of exploration and evaluation expenditure carried forward has been reviewed by the Directors. The recoverability of the carrying amount of the exploration and evaluation assets is dependent on the successful development and commercial exploitation, or alternatively, sale of the respective area of interest. • estimates of ore reserves and mineral resources for which there is a high degree of confidence of economic extraction; • estimated production and sales levels; • estimate future commodity prices; • future costs of production; • future capital expenditure; and • future exchange rates. Variations to expected future cash flows, and timing thereof, could result in significant changes to the impairment test results, which in turn could impact future financial results. Provision for mine closure The provision for mine closure is based on the net present value of the estimated cost of restoring the environmental disturbance that has occurred up to the reporting date. Significant estimates and assumptions are made in determining the provision for rehabilitation of the mine as there are numerous factors that will affect the ultimate liability payable. These factors include estimates of the extent and costs of rehabilitation activities, technological changes, regulatory changes, cost increases as compared to inflation rates and changes in discount rates. These uncertainties may result in future actual expenditure differing from the amounts currently provided. The provision at reporting date represents management’s best estimate of the present value of the future rehabilitation costs required. Ore reserve and resource estimates The Group estimates its ore reserves and mineral resources based on information compiled by Competent Persons (as defined in the 2012 edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves [the JORC Code]). Reserves determined in this way are taken into account in the calculation of depreciation, amortisation, impairment, deferred mining costs, rehabilitation and environmental expenditure. In estimating the remaining life of the mine for the purposes of amortisation and depreciation calculations, due regard is given, not only to remaining recoverable metals contained in proved and probable ore reserves, but also to limitations which could arise from the potential for changes in technology, demand, and other issues which are inherently difficult to estimate over a lengthy time frame. Where a change in estimated recoverable metals contained in proved and probable ore reserves is made, depreciation and amortisation is accounted for prospectively. The determination of ore reserves and remaining mine life affects the carrying value of a number of the Group’s assets and liabilities including deferred mining costs and the provision for rehabilitation. The Group reviews the carrying value of exploration and evaluation expenditure on a regular basis to determine whether economic quantities of reserves have been found or whether further exploration and evaluation work is underway or planned to support continued carry forward of capitalised costs. This assessment requires judgement as to the status of the individual projects and their estimated recoverable amount. Consideration of impairment of property, plant and equipment The Group considered the requirements of AASB 136 Impairment of Assets, and specifically whether an indicator of impairment existed in relation to the carrying value of the Group’s property, plant and equipment. The Group has property, plant and equipment with a carrying value of $2.6 million in relation to the Sinclair Nickel plant and equipment that is on care and maintenance. The Group commissioned an independent valuation of the Sinclair Nickel plant and equipment, which concluded that no impairment expense was required to be recognised in respect of these items at balance date. e. Going concern The financial report has been prepared on the going concern basis, which contemplates continuity of normal business activities and the realisation of assets and settlements of liabilities in the ordinary course of business. f. Basis of Consolidation The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company and its subsidiaries. Control is achieved when the Company: • has power over the investee; • is exposed, or has rights, to variable returns from its involvement with the investee; and • has the ability to use its power over the investee to affect its returns. The Company reassess whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements listed above. When the Company has less than a majority of the voting rights in an investee, it has the power over the investee when the voting rights are sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally. The Company considers all relevant facts and circumstances in assessing whether or not the Company’s voting rights are sufficient to give it power, including: • the size of the Company’s holding of voting rights relative to the size and dispersion of holdings of the other vote holders; 46 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS• potential voting rights held by the Company, other vote holders or other parties; rights arising from other contractual arrangements; and • any additional facts and circumstances that indicate that the Company has, or does not have, the current ability to direct the relevant activities at the time that decisions need to be made, including voting patterns at previous shareholder meetings. Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated statement of comprehensive income from the date the Company gains control until the date when the Company ceases to control the subsidiary. Note 2: Revenue and Expenses Revenue is measured at fair value of the consideration received or receivable. Amounts disclosed as revenue are net of returns, trade allowances, rebates and amounts collected on behalf of third parties. Interest income Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Group and the amount of revenue can be reliably measured. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that assets’ net carrying amount on initial recognition. Other income Bank interest received and receivable Other income Expenses Loss for the year includes the following expenses: Non-cash share based payment expense Other Employee Benefits Operating lease rental expense 30 Jun 17 $ `000 30 Jun 16 $ `000 394 3 397 348 - 348 30 Jun 17 $ `000 30 Jun 16 $ `000 1,014 777 122 237 577 170 Note 3: Income tax The income tax expense or benefit for the period is the tax payable on the current period’s taxable income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary difference and to unused tax losses. The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in the countries where the Company’s subsidiaries and associates operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities. Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the balance date. Deferred income tax is provided on all temporary differences at the balance date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred income tax liabilities are recognised for all taxable temporary differences except: • when the deferred income tax liability arises from the initial recognition of an asset or liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or • when the taxable temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures, and the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry-forward of unused tax credits and unused tax losses can be utilised, except: 47                       • when the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or • when the deductible temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures, in which case a deferred tax asset is only recognised to the extent that it is probable that the temporary difference will reverse in the foreseeable future and taxable profit will be available against which the temporary difference can be utilised. The carrying amount of deferred income tax assets is reviewed at each balance date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. Unrecognised deferred income tax assets are reassessed at each balance date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance date. Income taxes relating to items recognised directly in equity are recognised in equity and not in profit or loss. Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority. 30 Jun 17 30 Jun 16 $`000 $`000 The prima facie income tax expense on pre-tax accounting loss from operations reconciles to the income tax benefit in the financial statements as follows: Accounting loss before income tax (8,665) (8,010) Income tax benefit calculated at 30% (2016: 30%) Non-deductible expenses (2,600) (2,403) 429 73 Tax losses and deferred tax balances not recognised 2,171 2,331 Income tax benefit reported in the statement of comprehensive income - - Unrecognised deferred tax balances Deferred tax assets compromise of: Tax losses carried forward Impairment of financial assets Other deferred tax balances Deferred tax liabilities compromise of: Exploration expenditure capitalised Mine development Other deferred tax balances 30 Jun 17 30 Jun 16 $`000 $`000 13,071 11,285 2,151 2,151 (217) 405 15,005 13,841 1,536 1,366 360 - - 37 1,896 1,403 Income Tax expense not recognised directly in equity during the year 297 371 48 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                          Tax consolidation legislation The Company and its 100% owned Australian resident subsidiaries have implemented the tax consolidation legislation. Current and deferred tax amounts are accounted for in each individual entity as if each entity continued to act as a taxpayer on its own. The Company recognises its own current and deferred tax amounts and those current tax liabilities, current tax assets and deferred tax assets arising from unused tax credits and unused tax losses which it has assumed from its controlled entities within the tax consolidated Group. Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as amounts payable or receivable from or payable to other entities in the Group. Any difference between the amounts receivable or payable under the tax funding agreement are recognised as a contribution to (or distribution from) controlled entities in the tax consolidated Group. Other taxes Revenues, expenses and assets are recognised net of the amount of GST except: • when the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and • receivables and payables, which are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the statement of financial position. Cash flows are included in the statement of cash flows on a gross basis and the GST component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority are classified as operating cash flows. Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority. Note 4: Segment Reporting AASB 8 Operating Segments requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the Chief Operating Decision Maker in order to allocate resources to the segment and to assess its performance. The Group’s operating segments have been determined with reference to the monthly management accounts used by the Chief Operating Decision maker to make decisions regarding the Group’s operations and allocation of working capital. Due to the size and nature of the Group, the Board as a whole has been determined as the Chief Operating Decision Maker. Based on the quantitative thresholds included in AASB 8, there is only one reportable segment, being Australia and one geographical segment, namely Western Australia. The revenues and results of this segment are those of the Group as a whole and are set out in the consolidated statement of comprehensive income and the assets and liabilities of the Group as a whole are set out in the consolidated statement of financial position. Note 5: Earnings Per Share Basic earnings per share is calculated as net profit attributable to members of the parent, adjusted to exclude any costs of servicing equity (other than dividends) and preference share dividends, divided by the weighted average number of ordinary shares, adjusted for any bonus element. Diluted earnings per share is calculated as net profit attributable to members of the parent, adjusted for: • costs of servicing equity (other than dividends) and preference share dividends; • the after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as expenses; and • other non-discretionary changes in revenues or expenses during the period that would result from the dilution of potential ordinary shares; divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element. The Group does not report diluted earnings per share on incurring an operating loss for the financial year. Basic loss per share Net loss for the period Weighted average number of ordinary shares for the purpose of basic loss per share 30 Jun 17 cents 30 Jun 16 Cents (4.67) (5.06) $`000 $`000 (8,665) (8,010) Number Number 185,699,879 158,424,209 49         Note 6: Cash and Cash Equivalents Cash comprises cash at bank and in hand. Cash equivalents are short term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. For the purposes of the statement of cash flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts. Cash at bank and on hand Short-term deposits 30 Jun 17 $ `000 30 Jun 16 $ `000 1,966 1,236 9,629 19,008 11,595 20,244 Cash at bank earns interest at floating rates based on daily bank deposit rates. Short-term deposits are made for varying periods of between one day and three months, depending on the immediate cash requirements of the Group, and earn interest at the respective short-term deposit rates. Reconciliation to the Statement of Cash Flows: For the purposes of the statement of cash flows, cash and cash equivalents comprise cash on hand and at bank and investments in money market instruments, net of outstanding bank overdrafts. Cash and cash equivalents as shown in the statement of cash flows is reconciled to the related items in the statement of financial position as follows: 30 Jun 17 $ `000 30 Jun 16 $ `000 Loss for the year after tax (8,665) (8,010) Impairment of available-for-sale financial assets Depreciation and amortization Unwinding discount rate on mine closure provision Equity settled share-based payments Changes in net assets and liabilities (Increase)/decrease in assets: Trade and other receivables Increase/(decrease) in liabilities: Trade and other payables Provisions Net cash used in operating activities - 3 60 60 249 241 1,014 237 39 (56) 25 (18) 90 28 (7,188) (7,515) 50 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                      Note 7: Trade and Other Receivables Trade receivables are measured on initial recognition at fair value and are subsequently measured at amortised cost using the effective interest rate method, less any allowance for impairment. Trade receivables are generally due for settlement within periods ranging from 30 days to 45 days. Impairment of trade receivables is continually reviewed and those that are considered to be uncollectible are written off by reducing the carrying amount directly. An allowance account is used when there is objective evidence that the Group will not be able to collect all amounts due according to the original contractual terms. Factors considered by the Group in making this determination include known significant financial difficulties of the debtor, review of financial information and significant delinquency in making contractual payments to the Group. The impairment allowance is set equal to the difference between the carrying amount of the receivable and the present value of estimated future cash flows, discounted at the original effective interest rate. Where receivables are short-term discounting is not applied in determining the allowance. The amount of the impairment loss is recognised in the statement of comprehensive income within other expenses. When a trade receivable for which an impairment allowance had been recognised becomes uncollectible in a subsequent period, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against other expenses in the statement of comprehensive income. Trade and other receivables Current Assets Goods and services tax recoverable Other debtors Prepayments and accrued income Non-Current Asset Other debtors - security bonds Note 8: Other Financial Assets Financial assets in the scope of AASB 139 Financial Instruments: Recognition and Measurement are classified as either financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, or available-for-sale investments, as appropriate. When financial assets are recognised initially, they are measured at fair value plus, in the case of investments not at fair value through profit or loss, directly attributable transaction costs. The Group determines the classification of its financial assets after initial recognition and, when allowed and appropriate, re-evaluates this designation at each financial year-end. All regular way purchases and sales of financial assets are recognised on the trade date i.e. the date that the Group commits to purchase the asset. Regular way purchases or sales are purchases or sales of financial assets under contracts that require delivery of the assets within the period established generally by regulation or convention in the marketplace. 30 Jun 17 30 Jun 16 $ `000 $ `000 168 65 22 1 32 191 222 257 58 60 58 60 Available-for-sale investments Available-for-sale investments are those non-derivative financial assets that are designated as available-for-sale or are not classified as any other category. After initial recognition available-for sale investments are measured at fair value with gains or losses being recognised as a separate component of equity until the investment is derecognised or until the investment is determined to be impaired, at which time the cumulative gain or loss previously reported in equity is recognised in profit or loss. The fair value of investments that are actively traded in organised financial markets is determined by reference to quoted market bid prices at the close of business on the balance date. For investments with no active market, fair value is determined using valuation techniques. Such techniques include using recent arm’s length market transactions, reference to the current market value of another instrument that is substantially the same, discounted cash flow analysis and option pricing models. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are carried at amortised cost using the effective interest method. 51                   Other Financial Assets Non-Current 30 Jun 17 $ `000 30 Jun 16 $ `000 Available-for-sale listed investments carried at fair value 121 121 Note 9: Joint Arrangements Interest in joint arrangements – Joint Operations A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control. When a group entity undertakes its activities under joint operations, the Group as a joint operator recognises in relation to its interests in a joint operation: • its assets, including its share of any assets held jointly; • • • • its liabilities, including its share of any liabilities incurred jointly; its revenue from the sale of its share of the output arising from the joint operation; its share of the revenue from the sale of the output by the joint operation; and its expenses, including its share of any expenses incurred jointly. The Group accounts for the assets, liabilities, revenues and expenses relating to its interest in a joint operation in accordance with the relevant standards and interpretations applicable to the particular assets, liabilities, revenues and expenses. When a group entity transacts with a joint operation in which a group entity is a joint operator (such as a sale or contribution of assets), the Group is considered to be conducting the transaction with the other parties to the joint operation, and gains and losses resulting from the transactions are recognised in the Group’s consolidated financial statements only to the extent of the other parties’ interests in the joint operation. When a group entity transacts with a joint operation in which a group entity is a joint operator (such as a purchase of assets), the Group does not recognise its share of the gains and losses until it resells those assets to a third party. The Company and Sandfire formed a 30%:70% Joint Venture (with Sandfire acting as Joint Venture Manager) over the Company’s Doolgunna Projects in December 2015, following Sandfire’s sole funded expenditure of $15 million on the Doolgunna Projects. A Mining Joint Venture Agreement (MJVA) and an Exploration Joint Venture Agreement (EJVA) have also been executed between Talisman and Sandfire for the Joint Venture (collectively Joint Venture Agreements). The EJVA covers the ongoing exploration activities of the Doolgunna Joint Venture on the Joint Venture tenements and outlines the rights and obligations of the Joint Venture parties. The MJVA establishes the rights and obligations of the Joint Venture parties related to activities associated with the development, mining and ultimate decommissioning of mineral discoveries. The development and mining of Monty will operate under the terms of this MJVA. Joint Venture expenditure is funded jointly by the Group and Sandfire on a 30%:70% basis in accordance with the Joint Venture Agreements. Following the delineation of the Monty maiden JORC 2012 Indicated and Inferred Mineral Resource of 1.05 million tonnes grading 9.4% copper and 1.6g/t gold13 in April 2016, the Joint Venture commenced a feasibility study on an underground mining operation to extract high-grade ore via conventional stoping techniques. A Mining Lease Application (MLA) for Monty was submitted in July 2016 and was granted on the 30th March 2017. The detailed Monty feasibility study concluded development of the deposit is both technically and financially viable. Full details of the feasibility study and its key agreements can be found in the announcement and presentation released to the Australian Securities Exchange on 6 April 2017. As a result of the Joint Venture Agreements, the Group’s interest in the Halloween West Joint Venture was reduced to 18.8% (2015: 62.9%). The Halloween West Joint Venture was originally formed in 2012 when the Company reached agreement with Chrysalis Resources Ltd (“Chrysalis”) to farm into the Halloween West Copper-Gold Project. In October 2014 Sandfire acquired the interest held by Chrysalis and subsequently farmed-into the Halloween West Project concurrently with the Springfield Projects. Sandfire acts as the Joint Venture Manager of the Halloween West Project. The Group is entitled to a proportionate share of the income received and bears a proportionate share of the joint operation’s expenses. 13 For details relating to the Monty JORC Mineral Resource see Sandfire Resources NL ASX announcement dated 13 April 2016, available on the Sandfire and ASX websites. 52 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS          Investment in joint operations Joint Operation  Principal activity Doolgunna Joint Venture Copper and Gold Halloween West Joint Venture Copper and Gold Summarised financial information 30 Jun 17 30 Jun 16 $`000 $`000 7,110 3,858 Country of incorporation Australia Australia Ownership interest 2017 % 30% 19% 2016 % 30% 19% Statement of financial position Current Assets Non-Current Assets Total Asset Current liabilities Total Liabilities Net Assets Statement of comprehensive income Revenue Exploration and evaluation Total Comprehensive Loss 30 Jun 17 $ `000 30 Jun 16 $ `000 2,315 1,448 7,293 1,815 9,608 3,263 1,761 781 1,761 781 7,847 2,482 10 2 5,488 10,379 (5,478) (10,377) Reconcilation of summarised financial information to the carrying amount of the interest in associate Net assets of the associate Carrying value of the Group’s interest in associate 7,847 2,482 2,354 744 Note 10: Property, plant and equipment Plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses. Such cost includes the cost of replacing parts that are eligible for capitalisation when the cost of replacing the parts is incurred. Similarly, when each major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement only if it is eligible for capitalisation. Land and buildings are measured at fair value less accumulated depreciation on buildings and less any impairment losses recognised after the date of the revaluation. Depreciation is calculated on a straight-line basis over the estimated useful life of the assets as follows: Mine site plant and equipment Units of Production Office furniture and equipment 2-6 years Motor vehicles Leasehold improvements 8-10 years 10 years 53                                             The assets’ residual values, useful lives and amortisation methods are reviewed, and adjusted if appropriate, at each financial year end. Impairment The carrying values of plant and equipment are reviewed for impairment at each balance date, with recoverable amount being estimated when events or changes in circumstances indicate that the carrying value may be impaired. The recoverable amount of plant and equipment is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash inflows, recoverable amount is determined for the cash- generating unit to which the asset belongs, unless the asset’s value in use can be estimated to approximate fair value. An impairment exists when the carrying value of an asset or cash-generating unit exceeds its estimated recoverable amount. The asset or cash-generating unit is then written down to its recoverable amount. For plant and equipment, impairment losses are recognised in the statement of comprehensive income. However, because land and buildings are measured at revalued amounts, impairment losses on land and buildings are treated as a revaluation decrement. Derecognition and disposal An item of property, plant and equipment is derecognised upon disposal or when no further future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the year the asset is derecognised. Office furniture and equipment Leasehold improvements Plant and equipment Motor vehicles Total $ `000 $ `000 $ `000 $ `000 $ `000 Year ended 30 June 2017 At 1 July 2016, net of accumulated depreciation 64 2 2,636 87 2,789 Additions Disposals Depreciation charge for the year (31) (1) 26 - 150 - - 59 1 2,786 - - - - (28) 59 176 - (60) 2,905 Year ended 30 June 2016 At 1 July 2015, net of accumulated depreciation 53 7 2,636 115 2,811 Additions Disposals 38 - - - Depreciation charge for the year (27) (5) - - - 64 2 2,636 - - (28) 87 38 - (60) 2,789 At 30 June 2017 Cost or fair value Accumulated depreciation Net carrying amount At 30 June 2016 Cost or fair value Accumulated depreciation Net carrying amount 54 626 26 2,786 276 3,714 (567) (25) - (217) (809) 59 1 2,786 59 2,905 600 26 2,636 276 3,538 (536) (24) - (189) (749) 64 2 2,636 87 2,789 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                                                                    The carrying value of plant and equipment held under finance lease and hire purchase contracts as at 30 June 2017 is nil (2016: nil). Plant and equipment at a value of $150,484 was acquired during the financial year ended 30 June 2017 as part of the development of the Monty Cu-Au Project. Note 11: Deferred exploration and evaluation expenditure Exploration for and evaluation of Mineral Resources is the search for Mineral Resources after the entity has obtained legal rights to explore in a specific area, as well as the determination of the technical feasibility and commercial viability of extracting the Mineral Resource. Exploration and evaluation expenditure is expensed to the profit or loss as incurred except in the following circumstances in which case the expenditure may be capitalised: • the existence of a mineral deposit has been established however additional expenditure is required to determine the technical feasibility and commercial viability of extraction and it is anticipated that future economic benefits are more likely than not to be generated as a result of the expenditure; and • the exploration and evaluation activity is within an area of interest which was acquired as an asset acquisition or in a business combination and measured at fair value on acquisition. A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest. An impairment exists when the carrying value of expenditure exceeds its estimated recoverable amount. The area of interest is then written down to its recoverable amount and the impairment losses are recognised in the statement of comprehensive income. Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in previous years. Upon approval for the commercial development of an area of interest, exploration and evaluation assets are tested for impairment and transferred to ‘Mine properties and development’. No amortisation is charged during the exploration and evaluation phase. Costs carried forward in respect of areas of interest in the following phases: Exploration and evaluation phase – at cost Balance at beginning of period Carrying value of tenements sold Expenditure capitalised Transferred to mine development Exploration expensed as incurred 30 Jun 17 $ `000 30 Jun 16 $ `000 14,544 14,000 - - - 544 (544) - 14,000 14,544 5,124 5,809 5,124 5,809 The recoupment of costs carried forward in relation to the areas of interest in the exploration and evaluation phases is dependent on the successful development and commercial exploitation or the sale of the respective areas. Life to date project expenditure expensed Project Expenditure expensed in the period Life to date project expenditure expensed Project Expenditure expensed in the period 30 Jun 17 30 Jun 16 $ `000 $ `000 $ `000 $ `000 Sinclair Springfield (i) 4,175 2,824 1,351 2,425 26,622 2,214 24,408 3,376 Halloween West JV 587 - 587 4 Other Exploration Expenses 90 86 4 4 31,474 5,124 26,350 5,809 (i) Includes the previous Halloween project 55                             Note 12: Mine Properties and Development Mine properties represent the accumulation of all exploration, evaluation and development expenditure incurred in respect of areas of interest in which mining has commenced or in the process of commencing. When further development expenditure is incurred in respect of mine property after the commencement of production, such expenditure is carried forward as part of the mine property only when substantial future economic benefits are thereby established, otherwise such expenditure is classified as part of the cost of production. Amortisation is provided on a unit of production basis (other than restoration and rehabilitation expenditure detailed below) which results in a write off of the cost proportional to the depletion of the proven and probable mineral reserves. Before the reclassification of Monty capitalised expenditure from exploration and evaluation expenditure to development expenditure, the Company assessed the future economic benefits to be received from the Monty Cu-Au Project using the principles in AASB 136 Impairment of Assets. The recoverable amount of the project has been determined based on the value in use calculation using cash flow projections based on the financial forecast approved by senior management covering a 4 year period. The discount rate applied to cash flow projections is 8.0% real. The net carrying value of each area of interest is reviewed regularly and to the extent to which this value exceeds its recoverable amount, the excess is either fully provided against or written off in the financial year in which this is determined. The Group provides for environmental restoration and rehabilitation at each project site which includes any costs to dismantle and remove certain items of plant and equipment. The cost of an item includes the initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located, the obligation for which an entity incurs when an item is acquired or as a consequence of having used the item during that period. This asset is depreciated on the basis of the current estimate of the useful life of the asset. The recoverable amount estimation was based on the estimated value in use and was determined at the cash- generating unit level. The cash generating unit consist of the operating assets associated with the Monty project in Australia, which comprises of mine properties and development ($2.1 million) and plant and equipment ($0.2 million). In accordance with AASB 137 Provisions, Contingent Liabilities and Contingent Assets an entity is also required to recognise as a provision the best estimate of the present value of expenditure required to settle the obligation. The present value of estimated future cash flows is measured using a current market discount rate. Mine Development Transfer from exploration and evaluation expenditure Cost Accumulated depreciation/ amortisation Carrying value as at 30 June 2017 30 Jun 17 30 Jun 16 $`000 544 $`000 1,554 - - - 2,098 - Note 13: Intangible Assets Intangible assets acquired separately Intangible assets acquired separately are recorded at cost less accumulated amortisation and impairment. Amortisation is charged on a straight-line basis over their estimated useful lives. The estimated useful life and amortisation method is reviewed at the end of each annual reporting period, with any changes in these accounting estimates being accounted for on a prospective basis. Impairment of tangible and intangible assets other than goodwill The Group assesses at each balance date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the asset’s recoverable amount. An asset’s recoverable amount is the higher of its fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets and the asset’s value in use cannot be estimated to be close to its fair value. In such cases the asset is tested for impairment as part of the cash- generating unit to which it belongs. When the carrying amount of an asset or cash-generating unit exceeds its recoverable amount, the asset or cash-generating unit is considered impaired and is written down to its recoverable amount. 56 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                 Software license Cost Accumulated amortisation Carrying value as at 30 June 2017 30 Jun 17 $ `000 30 Jun 16 $ `000 41 -  - - 41 - Note 14: Trade and Other Payables Trade and other payables Trade payables and other payables are carried at amortised cost and represent liabilities for goods and services provided to the Group prior to the end of the financial year that are unpaid and arise when the Group becomes obliged to make future payments in respect of the purchase of these goods and services. Trade and other payables are presented as current liabilities unless payment is not due within 12 months. Employee leave benefits Wages, salaries, annual leave and sick leave Liabilities accruing to employees in respect of wages and salaries, annual leave, and sick leave expected to be settled within 12 months of the balance date are recognised in other payables in respect of employees’ services up to the balance date. They are measured at the amounts expected to be paid when the liabilities are settled. Liabilities for non-accumulating sick leave are recognised when the leave is taken and are measured at the rates paid or payable. Liabilities accruing to employees in respect of wages and salaries, annual leave, and sick leave not expected to be settled within 12 months of the balance date are recognised in non-current other payables in respect of employees’ services up to the balance date. They are measured as the present value of the estimated future outflows to be made by the Group. Trade and Other Payables Current Trade payables Other payables Employee benefits Note 15: Provisions Employee benefits 30 Jun 17 $ `000 30 Jun 16 $ `000 618 309 81 55 146 100 845 464 The provision for employee benefits represents vested long service leave entitlements accrued. The liability for long service leave is recognised in the provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees up to the balance date. Consideration is given to expected future wage and salary levels, experience of employee departures, and period of service. Expected future payments are discounted using market yields at the balance date on national government bonds with terms to maturity and currencies that match, as closely as possible, the estimated future cash outflows. 57                       Restoration and rehabilitation A provision for restoration and rehabilitation is recognised when there is a present obligation as a result of development activities undertaken, it is probable that an outflow of economic benefits will be required to settle the obligation, and the amount of the provision can be measured reliably. The estimated future obligations include the costs of abandoning sites, removing facilities and restoring the affected areas. The provision for future restoration costs is the best estimate of the present value of the expenditure required to settle the restoration obligation at the balance date. Future restoration costs are reviewed annually and any changes in the estimate are reflected in the present value of the restoration provision at each balance date. The initial estimate of the restoration and rehabilitation provision is capitalised into the cost of the related asset and amortised on the same basis as the related asset, unless the present obligation arises from the production of inventory in the period, in which case the amount is included in the cost of production for the period. Changes in the estimate of the provision for restoration and rehabilitation are treated in the same manner, except that the unwinding of the effect of discounting on the provision is recognised as a finance cost rather than being capitalised into the cost of the related asset. Balance at beginning of financial year 2015/16 Unwinding and discount rate adjustment Long service leave arising during the year Balance at the end of financial year 2016/17 Note 16: Issued Capital Ordinary shares Issued and fully paid Employee Benefits Restoration and rehabilitation $ `000 $ `000 - 8,287 - 249 44 - 44 8,536 30 Jun 17 30 Jun 16 $ $ 60,881,617 60,881,617 30 Jun 17 30 Jun 16 Number $ Number $ Movements in ordinary shares on issue At 1 July 185,699,879 60,881,617 131,538,627 37,404,278 Share placement at 47c cents - - 17,021,277 8,000,000 Share placement at 45c cents - - 37,139,975 16,712,989 Share issue costs At 30 June - - - (1,235,650) 185,699,879 60,881,617 185,699,879 60,881,617 Fully paid ordinary shares carry one vote per share and carry the right to dividend Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to the number of and amounts paid on the shares held. On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote. Ordinary shares have no par value and the Company does not have a limited amount of authorised capital. Share Options The Company has one share-based payment option scheme under which options to subscribe for the Company’s shares have been granted to certain Directors, other key management personnel and all employees, refer Note 18. 58 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                Note 17: Reserves Nature and purpose of reserves Asset revaluation reserve The asset revaluation reserve is used to record temporary fluctuations between the market value of available for sale investments and the acquisition price. The reserve can only be used to pay dividends in limited circumstances. Share-based payments reserve This reserve is used to record the value of equity benefits provided to employees and Directors as part of their remuneration. Refer to Note 18 for further details of these plans. Retained earnings and reserve Accumulated Losses Balance at beginning financial year Net loss for the year Transfer on expiry of unexercised options Balance at end of financial year Reserves Asset revaluation reserve Share-based payment reserve Balance at end of financial year 30 Jun 17 $ `000 30 Jun 16 $ `000 (32,025) (24,305) (8,665) (8,010) 116 290 (40,574) (32,025) 14 14 1,293 394 1,307 408 Note 18: Share-Base Payment Plans Employee Share Option Plan (“ESOP”) The Group has an Employee Share Option Plan (“ESOP”) for executives and employees of the Group. In accordance with the provisions of the ESOP, as approved by shareholders at a previous Annual General Meeting, executives and employees may be granted options at the discretion of the Directors. Each employee share option converts into one ordinary share of Talisman Mining Limited on exercise. No amounts are paid or payable by the recipient on receipt of the option. The options carry neither rights to dividends nor voting rights. Options may be exercised at any time from the date of vesting to the date of their expiry. The number of options granted is at the sole discretion of the Directors subject to the total number of outstanding options being issued under the ESOP not exceeding 5% of the Company’s issued capital at any one time. Options issued to Directors are not issued under the ESOP but are subject to approval by shareholders and attach vesting conditions as appropriate. There are no cash settlement alternatives. The contractual life of each option granted is 2 to 5 years. There are no cash settlement alternatives. 59                   The following options lapsed during the financial year: Number Grant date Expiry date Vesting date Exercise price Fair value per option at grant date Number forfeited 562,500 25-Nov-13 31-Oct-16 26-May-14 562,500 25-Nov-13 31-Oct-16 25-Nov-14 562,500 25-Nov-13 31-Oct-16 26-May-15 562,500 25-Nov-13 31-Oct-16 25-Nov-15 150,000 05-Mar-15 30-Sep-16 11-Jul-15 175,000 05-Mar-15 30-Sep-16 12-Oct-15 175,000 05-Mar-15 30-Sep-16 12-Jun-16 $ $0.43 $0.51 $0.60 $0.69 $0.40 $0.50 $0.60 $ $0.04 $0.04 $0.04 $0.03 $0.07 $0.06 $0.06 (562,500) (562,500) (562,500) (562,500) (150,000) (175,000) (175,000) The following options were cancelled and replaced with new options during the financial year: Number Grant date Expiry date Vesting date Exercise price Fair value per option at grant date Number Cancelled 125,000 05-Dec-14 31-Oct-17 25-May-15 125,000 05-Dec-14 31-Oct-17 24-Nov-15 125,000 05-Dec-14 31-Oct-17 24-May-16 125,000 05-Dec-14 31-Oct-17 24-Nov-16 150,000 11-Aug-15 30-Jun-17 31-Dec-15 125,000 04-Apr-16 31-Mar-19 30-Sep-16 125,000 04-Apr-16 31-Mar-19 31-Mar-17 125,000 04-Apr-16 31-Mar-19 30-Sep-17 125,000 04-Apr-16 31-Mar-19 31-Mar-18 The following options were forfeited during the financial year: $ $0.41 $0.49 $0.56 $0.64 $0.90 $0.80 $0.90 $0.95 $1.00 $ $0.11 $0.10 $0.10 $0.10 $0.37 $0.15 $0.14 $0.13 $0.13 (125,000) (125,000) (125,000) (125,000) (150,000) (125,000) (125,000) (125,000) (125,000) Number Grant date Expiry date Vesting date Exercise price Fair value per option at grant date Forfeited 205,000 11-Nov-16 31-Oct-19 30-Jun-17 205,000 11-Nov-16 31-Oct-19 30-Jun-18 205,000 11-Nov-16 31-Oct-21 30-Jun-19 205,000 11-Nov-16 31-Oct-21 30-Jun-20 The following options were issued during the financial year: $ $0.52 $0.56 $0.62 $0.66 $ $0.27 $0.26 $0.32 $0.32 (205,000) (205,000) (205,000) (205,000) Number Grant date Expiry date Vesting date Exercise price Fair value per option at grant date Issued during the year $ $ 1,755,000 11-Nov-16 11-Nov-16 31-Oct-18 $ 0.48 $ 0.23 1,755,000 1,755,000 11-Nov-16 30-Jun-17 31-Oct-19 $ 0.52 $ 0.27 1,755,000 1,755,000 11-Nov-16 30-Jun-18 31-Oct-19 $ 0.56 $ 0.26 1,755,000 1,755,000 11-Nov-16 30-Jun-19 31-Oct-21 $ 0.62 $ 0.32 1,755,000 1,755,000 11-Nov-16 30-Jun-20 31-Oct-21 $ 0.66 $ 0.32 1,755,000 60 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSThe following share-based arrangements were in place at the end of the financial year: Issuing entity Grant Date Expiry date of options Number of shares under option Exercise price of options Fair Value Vested Date Talisman Mining Limited 05-Dec-14 31-Oct-17 Talisman Mining Limited 04-Mar-15 01-Mar-18 Talisman Mining Limited 05-Dec-14 31-Oct-17 Talisman Mining Limited 04-Mar-15 01-Mar-18 Talisman Mining Limited 04-Mar-15 01-Mar-18 625,000 125,000 625,000 125,000 125,000 Talisman Mining Limited 11-Nov-16 31-Oct-18 1,755,000 Talisman Mining Limited 11-Nov-16 31-Oct-19 1,550,000 Talisman Mining Limited 11-Nov-16 31-Oct-19 1,550,000 Talisman Mining Limited 11-Nov-16 31-Oct-21 1,550,000 Talisman Mining Limited 11-Nov-16 31-Oct-21 1,550,000 Talisman Mining Limited 04-Mar-15 01-Mar-18 125,000 $0.41 $0.40 $0.49 $0.50 $0.60 $0.48 $0.52 $0.56 $0.62 $0.66 $0.70 $0.11 25-May-15 $0.11 01-Sep-15 $0.10 24-Nov-15 $0.10 01-Mar-16 $0.10 01-Sep-16 $0.23 30-Jun-17 $0.27 30-Jun-18 $0.23 30-Jun-19 $0.32 30-Jun-20 $0.32 30-Jun-21 $0.09 01-Mar-17 There has been no alteration of the terms and conditions of the above share-based payment arrangement since grant date. 30 Jun 17 30 Jun 16 Number $ Number $ Movements in options over ordinary shares on issue At 1 July 5,650,000 395,389 7,250,000 448,632 Directors and employees remuneration 8,775,000 1,252,411 650,000 236,946 Unlisted options forfeited (820,000) (92,334) - - Unlisted options cancelled (1,150,000) (146,185) -  - Unlisted options lapsed (2,750,000) (116,445) (2,250,000) (290,189) At 30 June 9,705,000 1,292,836 5,650,000 395,389 The fair value of options granted during the year was $2,273,195 (2016: $123,987). The fair value of the equity-settled share options granted under both the option and the loan plans is estimated as at the date of grant using the Black-Scholes model taking into account the terms and conditions upon which the options were granted. Inputs into model Exercise price Grant date share price (5 day VWAP) Expected volatility Risk-free interest rate Dividend yield (%) Expected life of options (years) 1 2 3 4 5 $ 0.48 $ 0.52 $ 0.56 $ 0.62 $ 0.66 $ 0.425 $ 0.425 $ 0.425 $ 0.425 $ 0.425 113% 1.77% Nil 2.00 113% 1.77% Nil 3.00 113% 1.77% Nil 3.00 113% 1.77% Nil 5.00 113% 1.77% Nil 5.00 The expected life of the options is based on historical data and is not necessarily indicative of exercise patterns that may occur. The expected volatility reflects the assumption that the historical volatility is indicative of future trends, which may also not necessarily be the actual outcome. No other features of options granted were incorporated into the measurement of fair value. The carrying amount of the liability relating to the share-based payment at 30 June 2017 is $930,326 (2016: $395,388). 61     Note 19: Financial Instruments a. Introduction The Group has exposure to the following risks arising from financial instruments: • Credit risk • Liquidity risk • • Capital risk Interest rate risk This note presents information about the Group’s exposure to each of the above risks, their objectives, policies and processes for measuring and managing risk and the management of capital. Further quantitative disclosures are included throughout this note and the financial report. The Board of Directors has overall responsibility for the establishment and oversight of the risk management framework. Risk management policies are established to identify and analyse risks faced by the Group, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group‘s activities. The Group’s aim is to develop a disciplined and constructive control environment in which all employees understand their roles and obligations. b. Categories of financial instruments Financial assets Cash and cash equivalents Receivables Available-for-sale investments Financial liabilities Trade and other payables $ `000 $ `000 11,595 20,244 280 317 121 121 11,996 20,682 845 464 845 464 Fair value of financial assets and liabilities The carrying amount of financial assets and financial liabilities recorded in the financial statements represents their respective net fair values, determined in accordance with the accounting policies disclosed in Note 1. During the year, an assessment of the fair value of available-for-sale investments resulted in no loss recognised (2016: loss of $7,000) in the statement of comprehensive income in the line item “Net change in the fair value of available-for-sale financial assets” and no impairment (2016: $3,000) in the statement of comprehensive income. The Directors consider that the carrying amounts of financial assets and financial liabilities recorded in the financial statements approximate their fair value. c. Credit risk management Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral where appropriate, as a means of mitigating the risk of financial loss from defaults. The Group only transacts with entities that are rated the equivalent of investment grade and above. This information is supplied by independent rating agencies where available and, if not available, the Group uses publicly available financial information and its own trading record to rate its major customers. The Group’s exposure and the credit ratings of its counterparties are continuously monitored and the aggregate value of transactions concluded is spread amongst approved counterparties. Credit exposure is controlled by counterparty limits that are reviewed and approved by the Risk Management Committee annually. The Group does not have any significant credit risk exposure to any single counterparty or any Group of counterparties having similar characteristics. The credit risk on liquid funds and derivative financial instruments is limited because the counterparties are banks with high credit ratings assigned by international credit rating agencies. The carrying amount of financial assets recorded in the financial statements, net of any allowance for losses, represents the Group’s maximum exposure to credit risk without taking account of the value of any collateral obtained. 62 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                    d. Liquidity Risk Management Ultimate responsibility for liquidity risk management rests with the board of Directors, who have built an appropriate liquidity risk management framework for the management of the Group’s short, medium and long-term funding and liquidity management requirements. The Group manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities. The following table details the Company’s and the Group’s expected contractual maturity for its non-derivative financial liabilities. These have been drawn up based on undiscounted contractual maturities of the financial asset and liabilities based on the earliest date the Group can be required to repay. The tables include both interest and principal cash flows. 2017 Financial Assets Non-interest bearing Variable interest rate Fixed interest rate Financial Liabilities Non-interest bearing Fixed interest rate 2016 Financial Assets Non-interest bearing Variable interest rate Fixed interest rate Financial Liabilities Non-interest bearing Fixed interest rate Less than 1 month 1 to 3 months 3 months to 1 year 1 to 5 years 5+ years No fixed term $ `000 $ `000 $ `000 $ `000 $ `000 $ `000 1,439 694 4,549 6,682 700 - 700 66 1,235 18,360 19,661 362 - 362 - - 5,080 5,080 - - - - - 586 586 - - - - - - - 146 - 146 - - - - 100 - 100 - - - - - - - - - 164 164 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Total $ `000 1,439 694 9,629 11,762 846 - 846 66 1,235 19,109 20,410 463 - 463 e. Interest rate risk The Group is not exposed to interest rate risk as it has not borrowed funds at fixed/variable interest rates. Some of the Group’s assets are subject to interest rate risk but the Group is not dependent on this income. Interest rate sensitivity analysis The sensitivity analysis of the Group’s exposure to interest rate risk at the reporting date has been determined based on a change of 50 basis points in interest rates taking place at the beginning of the financial year and held constant throughout the year. At reporting date, if interest rates had been 50 basis points higher and all other variables were constant, the Group’s net loss would have reduced by $3,472 (2016: net loss reduced by $6,177). 63                                                                                                                                 f. Capital risk management The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The capital structure of the Group consists of equity only, comprising issued capital and reserves, net of accumulated losses. The Group’s policy is to use capital market issues and debt funding to meet the funding requirements of the Group. There were no changes in the Group’s approach to capital management during the year. The Group is not subject to externally imposed capital requirements. g. Fair value of financial instruments AASB 7 Financial Instruments: Disclosures which require disclosure of fair value measurements by level of the following fair value measurement hierarchy: • Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1); • Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices) (level 2); and • Inputs for the asset or liability that are not based on observable market data (unobservable inputs) (level 3). The following table presents the Group’s assets and liabilities measured and recognised at fair value at 30 June 2017 and 30 June 2016. Level 1 $ `000 Level 2 $ `000 Level 3 $ `000 Total $ `000 2017 Assets Available-for-sale financial assets 121 - - 121 2016 Assets Available-for-sale financial assets 121 - - 121 Note 20: Commitment and Contingencies In order to maintain current rights of tenure to exploration tenements, the Group is required to perform exploration work to meet the minimum expenditure requirements specified by various State governments. These obligations are not provided for in the financial report and are payable as follows: Exploration expenditure Within one year After one year but not more than five years Greater than five years 30 Jun 17 30 Jun 16 $`000 $`000 2,849 2,368 9,929 8,637 19,873 19,117 32,651 30,122 If the Group decides to relinquish certain exploration tenements and/or does not meet these obligations, assets recognised in the statement of financial position may require review to determine the appropriateness of carrying values. The sale, transfer or farm- out of exploration rights to third parties will reduce or extinguish these obligations. 64 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                Operating leases Operating lease arrangements comprise an agreement for the rental of office space with a lease term of 1 years; and a motor vehicle operating lease with a term of 3 years. Future minimum rentals payable under non-cancellable operating leases are as follows: Non-cancellable operating lease commitments Within one year After one year but not more than five years Greater than five years 30 Jun 17 30 Jun 16 $`000 $`000 117 177 131 23 - - 294 154 Note 21: Related Party Disclosures Other transactions with key management personnel No member of the key management personnel appointed during the period received a payment as part of his or her consideration for agreeing to hold the position. Details of key management personnel The key management personnel of Talisman Mining Limited during the year were: Directors Jeremy Kirkwood Non-Executive Chairman Daniel Madden Managing Director Alan Senior Non-Executive Director Brian Dawes Non-Executive Director Karen Gadsby Non-Executive Director Executives Shaun Vokes Chief Financial Officer/ Company Secretary Anthony Greenaway General Manager – Geology Ben Wilson General Manager – Project Development (July 2016- May 2017) Key management personnel compensation is disclosed in the Remuneration Report which forms part of the Directors’ Report and has been audited. The total remuneration paid to key management personnel of the Company and the Group during the year was as follows: Short-term employee benefits Post-employment benefits Other long-term benefits Share-based payments (i) 30 Jun 17 30 Jun 16 $ $ 1,240,742 1,022,155 116,325 44,367 1,066,578 99,398 41,792 83,447 Total key management personnel compensation 2,468,012 1,246,792 (i) The value of share-based payments shown in the table are non-cash values based on an accounting valuation calculated under the Black Scholes option pricing method. 65               Note 22: Interest in Subsidiaries The consolidated financial statements include the financial statements of Talisman Mining Limited and the subsidiaries listed in the following table: Name Country of Incorporation Equity Interest Investment 2017 % 2016 % 2017 $ 2016 $ Talisman A Pty Ltd Talisman Nickel Pty Ltd Haverford Holdings Pty Ltd Australia Australia Australia 100 100 10 10 100 100 1 1 100 100 68,000 68,000 Talisman Mining Limited is the ultimate parent entity and ultimate parent of the Group. Balances and transactions between the Company and its subsidiaries, which are related parties of the Company, have been eliminated on consolidation. Details of transactions between the Group and other related entities are disclosed below. Note 23: Parent Entity Disclosures The financial information for the parent entity, Talisman Mining Limited, has been prepared on the same basis as the consolidated financial statements, except as set out below. Investments in subsidiaries, associates and joint venture entities are accounted for at cost in the parent entity’s financial statements. Dividends received from associates are recognised in the parent entity’s profit or loss, rather than being deducted from the carrying amount of these investments. Share-based payments The grant by the Company of options over its equity instruments to the employees of subsidiary undertakings in the Group is treated as a capital contribution to that subsidiary undertaking. The fair value of employee services received, measured by reference to the grant date fair value, is recognised over the vesting period as an increase to investment in subsidiary undertakings, with a corresponding credit to equity. Disclosures as at 30 June 2017 and for the year then ended in relation to Talisman Mining Limited as a single entity are noted below. Assets Current assets Non-current assets Total assets Liabilities Current liabilities Non-current liabilities Total liabilities Net assets 66 30 Jun 17 $ `000 30 Jun 16 $ `000 11,229 20,067 396 330 11,625 20,397 361 228 - - 361 228 11,264 20,169 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                        Equity Issued capital Asset revaluation reserve Share based payment reserve Retained earnings Total equity Loss for the year 30 Jun 17 $ `000 30 Jun 16 $ `000 60,881 60,881 14 14 1,293 395 (50,925) (41,121) 11,264 20,169 Year ended 30 Jun 17 $ `000 30 Jun 16 $ `000 (9,803) (8,748) Net change in the fair value of available for sale financial assets - (7) Total comprehensive loss (9,803) (8,755) Exploration expenditure Within one year After one year but not more than five years Greater than five years Note 24: Auditor’s Remuneration The auditor of Talisman Mining Limited is HLB Mann Judd. Agreed upon procedures and reporting thereon in relation to Sandfire Resource NL farm in spend on Springfield JV. Preparation for Fringe Benefit Tax Return Audit or review of the financial report Total Remuneration of Auditors 30 Jun 17 $ `000 30 Jun 16 $ `000 - 184 - 460 - - - 835 30 Jun 17 30 Jun 16 $ $ - 15,500 2,000 - 37,300 34,500 39,300 50,000 Note 25: Subsequent Events There has not been any other matter or circumstance occurring subsequent to end of the financial year that has significantly affected, or may significantly affect the operations of the Group, the results of those operations, or the state of affairs of the Group in future financial years. 67                             ADDITIONAL SECURITIES EXCHANGE INFORMATION AS AT 25 SEPTEMBER 2017 1. Number of holders of equity securities a. Distribution of holders of equity securities Range Number of Holders Fully paid ordinary shares 1 to 1,000 1,001 to 5,000 5,001 to 10,000 10,001 to 100,000 100,001 and over b. Voting rights 163 85,942 603 1,833,120 438 3,794,627 897 34,215,171 218 145,771,019 2,319 185,699,879 Each ordinary share is entitled to one vote when a poll is called, otherwise each member present at a meeting or by proxy has one vote on a show of hands. c. Less than marketable parcel of shares The number of shareholders holding less than a marketable parcel is 384 (holding a total of 453,601 shares) given a share value of $0.222 cents per share. d. Substantial Shareholdings: Ordinary Shareholders Fully paid ordinary shares Mr Kerry Kyriakos Harmanis Number 33,564,138 % 18.07 Set out above is an extract from the Company’s register of last substantial shareholder notices as received by the Company and/or lodged at the ASX. Shareholdings and percentages reported in the table are as reported in the most recent notifications received, however these may differ from current holdings as substantial holders are required to notify the Company only in respect of changes which act to increase or decrease their percentage holding by at least 1% of total voting rights. 2. Company secretary The name of the company secretaries are Shaun Vokes and Alexander Neuling. 68 3. Registered office and principal administrative office Registered and principal administrative office: Ground Level, 6 Centro Avenue Subiaco Western Australia 6008 Telephone +61 8 9380 4230 Registered securities are held at the following address: Link Market Services Limited Level 12, QV1 Building 250 St Georges Terrace Perth, Western Australia 6000 4. Securities exchange listing Quotation has been granted for all the ordinary shares of the Company on all Member Exchanges of the Australian Securities Exchange Limited. 5. Restricted securities There are no restricted securities or securities in voluntary escrow at the date of this report. 6. Twenty largest holders of ordinary shares Ordinary Shareholders 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 HARMAN NOMINEES PTY LTD TYCHE HOLDINGS PTY LTD NEON CAPITAL LTD 3RD WAVE INVESTORS LTD GROSVENOR PIRIE MANAGEMENT LTD ZERO NOMINEES PTY LTD J P MORGAN NOMINEES AUSTRALIA LIMITED HARMANIS HOLDINGS PTY LTD HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED TYCHE HOLDINGS PTY LTD TYCHE HOLDINGS PTY LTD HARMANIS HOLDINGS PTY LTD BACK9 INVESTMENT MANAGEMENT PTY LTD NATIONAL NOMINEES LIMITED BNP PARIBAS NOMINEES PTY LTD MORGAN STANLEY AUSTRALIA SECURITIES (NOMINEE) PTY LIMITED INVESTMENT HOLDINGS PTY LTD JAYLEAF HOLDINGS PTY LTD SIREB PTY LTD MRS JASMINE KAILIS Number 11,111,111 6,400,001 6,334,848 6,000,000 5,600,000 5,154,219 4,284,022 4,117,575 3,922,182 3,850,000 3,510,000 3,080,451 3,000,000 2,943,793 2,772,772 2,644,583 2,500,000 2,191,296 1,904,464 1,563,000 % 5.98 3.45 3.41 3.23 3.02 2.78 2.31 2.22 2.11 2.07 1.89 1.66 1.62 1.59 1.49 1.42 1.35 1.18 1.03 0.84 82,884,317 44.63 69 7. Unquoted equity securities Class Exercise Price Expiry Date Number Number of holders Unlisted options Unlisted options Unlisted options Unlisted options Unlisted options Unlisted options Unlisted options Unlisted options Unlisted options Unlisted options Unlisted options $ $ 0.41 31-Oct-17 625,000 $ 0.49 31-Oct-17 625,000 $ 0.40 01-Mar-18 125,000 $ 0.50 01-Mar-18 125,000 $ 0.60 01-Mar-18 125,000 $ 0.70 01-Mar-18 125,000 $ 0.48 31-Oct-18 1,755,000 $ 0.52 31-Oct-19 1,550,000 $ 0.56 31-Oct-19 1,550,000 $ 0.62 31-Oct-21 1,550,000 $ 0.66 31-Oct-21 1,550,000 1 1 1 1 1 1 14 12 12 12 12 All options have no voting rights. 8. On-market buy back At the date of this report the Company is not involved in an on-market buy-back. 70 ADDITIONAL SECURITIES EXCHANGE INFORMATION    This page is intentionally left blank 71 This page is intentionally left blank 72 Address: 6 Centro Avenue, Subiaco WA 6008 PO Box 1262, Subiaco WA 6904 Phone: +61 8 9380 4230 Fax: +61 8 9382 8200 

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