Talisman Mining Limited Annual Report 2017

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FY2017 Annual Report · Talisman Mining Limited

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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

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

ANNUAL REPORTLETTER 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.

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.

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.

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).

REVIEW OF OPERATIONSFigure 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.

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.

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.

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.

REVIEW OF OPERATIONSSpringfield 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

Diamond

TOTAL:

2,495

6,608

9,103

767

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.

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

Diamond

Table 2: Sinclair drilling statistics 1 July 2016 - 30 June 2017

TOTAL:

Number of Holes

Total Metres

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)

REVIEW OF OPERATIONS

Figure 8: Sinclair Project – Prospect Locations

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.

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.

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.

REVIEW OF OPERATIONS2017 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
(%)

20.7

12.1

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

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

800,000

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

74,000

42,000

38,000

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

240,000

8.7

9.4

1.4

1.5

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

11,000

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.

REVIEW OF OPERATIONSTENEMENT 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

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

REVIEW OF OPERATIONSDIRECTORS’ 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.

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.

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.

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

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

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

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

1,000,000

Talisman Mining Ltd

750,000

3,000,000

500,000

1,000,000

Directors and senior
management

Jeremy Kirkwood

Daniel Madden

Alan Senior

Brian Dawes

Karen Gadsby

Shaun Vokes

Anthony Greenaway

DIRECTORS’ REPORT
Details of unissued shares or interests under option as at the date of this report are:

Issuing entity

Talisman Mining Limited

Number of shares
under option

Class of shares

Exercise price of
options

Expiry date of
options

625,000

125,000

1,755,000

1,550,000

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

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.

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.

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.

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

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

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

4,330

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

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

1,000,000

200,000

400,000

1,000,000

400,000

Alan Senior

Brian Dawes

Karen Gadsby

Shaun Vokes

Anthony
Greenaway

Exercised

40%

N/A

57.56%

48.41%

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

Number forfeited/lapsed/
cancelled during the year

Financial year granted

750,000

500,000

1,000,000

500,000

800,000

FY 13/14

FY 14/15

FY 15/16

FY 14/15

FY 15/16

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

100,000

50,000

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

1,666,667

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

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

2017

Directors

Jeremy
Kirkwood

750,000

N/A

750,000

300,000

Daniel Madden 1,000,000

3,000,000

Alan Senior

750,000

500,000

Brian Dawes

500,000

Karen Gadsby

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)

N/A

500,000

N/A 1,000,000

(1,300,000)

200,000

(500,000)

N/A 1,000,000

200,000

400,000

200,000

400,000

(4,550,000)

200,000 7,250,000

- 3,100,000

3,100,000

N/A

750,000

(1,250,000)

1,250,000

N/A

500,000

N/A 1,000,000

N/A

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

(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

Auditor’s Independence Declaration

Independent Auditor’s Report

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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

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:

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

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

397

348

(1,791)

(814)

(5,124)

(5,809)

(647)

(431)

(122)

(170)

(430)

(208)

(639)

(622)

(249)

(241)

(60)

(3)

(8,665)

(8,010)

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)

(4.67)

(5.06)

n/a

The accompanying notes form part of these financial statements.

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

11,595

20,244

222

257

11,817

20,501

121

2,905

2,789

2,098

14,000

14,545

19,223

17,515

31,040

38,016

845

464

889

464

8,536

8,287

8,536

8,287

9,425

8,751

21,615

29,265

60,882

1,307

408

(40,574)

(32,025)

21,615

29,265

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

Balance at 1 July 2015

37,404

(24,305)

448

13,568

Loss for the period

(8,010)

Net change in fair value of available-for-sale
financial assets

Total comprehensive income/(loss)
for the period

(7)

(8,010)

(7)

(8,017)

Shares issued during the year

23,478

Recognition of share-based payments

236

Unlisted options lapsing

290

(290)

Balance at 30 June 2016

60,882

(32,025)

394

29,265

Balance at 1 July 2016

60,882

(32,025)

394

29,265

Loss for the period

(8,665)

Net change in fair value of available-for-sale
financial assets

Total comprehensive income/(loss)
for the period

(8,665)

Recognition of share-based payments

1,015

Unlisted options lapsed

Balance at 30 June 2017

116

60,882

(40,574)

(116)

1,293

21,615

The accompanying notes form part of these financial statements.

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

(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

11,595

20,244

The accompanying notes form part of these financial statements.

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.

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.

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;

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

397

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:

• 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

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

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

13,071

11,285

2,151

(217)

405

15,005

13,841

1,536

1,366

360

1,896

1,403

Income Tax expense not recognised directly in equity during the year

297

371

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

(8,665)

(8,010)

Number

185,699,879

158,424,209

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

249

241

1,014

237

(56)

(18)

(7,188)

(7,515)

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

168

191

222

257

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.

Other Financial Assets

Non-Current

30 Jun 17

$ `000

30 Jun 16

$ `000

Available-for-sale listed investments carried at fair value

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.

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.

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

7,110

3,858

Country of
incorporation

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

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

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

Year ended 30 June 2017

At 1 July 2016, net of accumulated depreciation

2,636

2,789

Additions

Disposals

Depreciation charge for the year

(31)

(1)

150

2,786

(28)

176

(60)

2,905

Year ended 30 June 2016

At 1 July 2015, net of accumulated depreciation

2,636

115

2,811

Additions

Disposals

Depreciation charge for the year

(27)

(5)

2,636

(28)

(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

626

2,786

276

3,714

(567)

(25)

(217)

(809)

2,786

2,905

600

2,636

276

3,538

(536)

(24)

(189)

(749)

2,636

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

Sinclair

Springfield (i)

4,175

2,824

1,351

2,425

26,622

2,214

24,408

3,376

Halloween West JV

587

Other Exploration Expenses

31,474

5,124

26,350

5,809

(i) Includes the previous Halloween project

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.

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

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

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.

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

8,287

249

8,536

30 Jun 17

30 Jun 16

60,881,617

30 Jun 17

30 Jun 16

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.

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)

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.

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

$0.03

$0.07

$0.06

(562,500)

(150,000)

(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

$0.37

$0.15

$0.14

$0.13

(125,000)

(150,000)

(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

(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

31-Oct-18

$ 0.48

$ 0.23

1,755,000

11-Nov-16

30-Jun-17

31-Oct-19

$ 0.52

$ 0.27

1,755,000

11-Nov-16

30-Jun-18

31-Oct-19

$ 0.56

$ 0.26

1,755,000

11-Nov-16

30-Jun-19

31-Oct-21

$ 0.62

$ 0.32

1,755,000

11-Nov-16

30-Jun-20

31-Oct-21

$ 0.66

$ 0.32

1,755,000

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSThe 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

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

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)

$ 0.48

$ 0.52

$ 0.56

$ 0.62

$ 0.66

$ 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).

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

11,595

20,244

280

317

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.

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

1,439

694

4,549

6,682

700

1,235

18,360

19,661

362

5,080

586

146

100

164

Total

$ `000

1,439

694

9,629

11,762

846

1,235

19,109

20,410

463

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).

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

2016

Assets

Available-for-sale financial assets

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

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.

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

117

177

131

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.

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

100

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

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

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.

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.

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

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

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

7. Unquoted equity securities

Class

Exercise Price

Expiry Date

Number

Number of holders

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

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.

ADDITIONAL SECURITIES EXCHANGE INFORMATION
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Address:
6 Centro Avenue, Subiaco WA 6008
PO Box 1262, Subiaco WA 6904

Phone:
+61 8 9380 4230

Fax:
+61 8 9382 8200