Talisman Mining Limited Annual Report 2018

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FY2018 Annual Report · Talisman Mining Limited

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2018
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

Level 11 – 2 Mill Street

Perth WA 6000

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

2018 ANNUAL REPORT

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TABLE OF CONTENTS

Letter from the Chairman . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Review of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Directors’ Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

Remuneration Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

Auditor’s Independence Declaration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

Independent Auditor’s Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

Index to the Financial Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

Notes to the Consolidated Financial Statements . . . . . . . . 49

Directors’ Declaration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77

Additional Securities Exchange Information . . . . . . . . . . . . . . . . . 78

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2018 ANNUAL REPORT

LETTER FROM
THE CHAIRMAN

Dear Talisman Shareholder,

I am pleased to present to you Talisman’s Annual Report for the 2018 Financial Year.

The 12-month period was highlighted by a number of important milestones and culminated in the proposal to realise significant
value from the sale of our 30% share in the Doolgunna Project Joint Venture, which includes the Monty-Copper Gold Mine, to our joint
venture partner Sandfire Resources NL.

This transaction is subject to a vote of Talisman shareholders on 4 October 2018 and, if the proposed resolutions are approved, will
facilitate the return of up to A$46.5 million to shareholders and leave the Company well capitalised to continue its growth strategy.

Following the finalisation of the Monty project financing package in October 2017, development activities were broadly tracking to
plan. The exploration program at Springfield continued throughout the period as several targets were tested, both near-Monty and
regionally.

At the start of FY18 Talisman made its first strategic move into the Lachlan Fold region of New South Wales based on the outcomes
of a large targeting exercise by our exploration team. By the end of FY18, Talisman controlled a large 3,084km2 land package
prospective for copper-gold, gold and base metal deposits. Our low-cost entry gives us a fantastic opportunity to create value for
shareholders.

Our team is adopting a methodical approach to exploration in NSW to ensure targets are identified and thoroughly tested. The high
potential of the area was clearly demonstrated by the number of targets generated and, critically, the results of our first RC drilling
program in NSW. Good widths of high-grade copper were returned at the Blind Calf Prospect which warrant immediate follow up.
Activities at Blind Calf and across the Lachlan Cu-Au Project will gather momentum during FY19.

The Sinclair Nickel Project remains a valuable strategic asset. In FY18 drilling was completed on a number of regional targets and
further work is planned for all of these prospects. Sinclair’s prospectivity, the extensive mining and processing infrastructure already
in place and growing strategic interest in nickel assets ensures Sinclair will receive a greater level of focus in FY19.

The last financial year was a period of great achievement for Talisman and on behalf of the Board, I would like to extend my
appreciation to the Company’s talented team of staff, contractors and consultants for their continued efforts.

I would also like to acknowledge the support of our shareholders in the Company’s activities. We believe FY18 has been a definitive
period where significant value has been realised for Talisman shareholders and the Company has been strongly positioned for the
next phase of its growth.

Yours faithfully,

Jeremy Kirkwood
Chairman

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REVIEW OF
OPERATIONS

OVERVIEW

The past twelve months saw ongoing development of the
Monty Copper-Gold Mine (“Monty”) located within Talisman
Mining Limited’s (“Talisman” or the “Company” (ASX: TLM))
Doolgunna Projects Joint Venture (the “Joint Venture”) with
Sandfire Resources NL (“Sandfire” (ASX: SFR)). Siteworks at
Monty continued throughout the year with the completion
of the boxcut on 22 September 2017. The mine portal and
underground decline development commenced in October
2017 and at the end of the financial year total development
advance was 2,163 metres. In addition, all on-site construction
activities related to pre-production surface and underground
infrastructure was completed.

Subsequent to the end of the financial year, the Company
reached agreement with its Joint Venture partner, Sandfire, to sell
to Sandfire the subsidiary that holds its 30% share of the Joint
Venture for A$72.3 million less the amounts owing under the
Company’s financing arrangements with Taurus Mining Finance
Fund. The sale transaction includes the granting to the Company
of an uncapped and perpetual 1% net smelter return royalty
applying to 100% of all contained copper and gold in ore mined

and sold from within the Joint Venture tenement area above the
respective contained metal levels in the Monty mine plan (based
on the Monty Feasibility Study released in April 2017).

The Company continued to grow its footprint in the prospective
eastern Lachlan Fold Belt (the “Lachlan Cu-Au Project”) in
New South Wales (“NSW”) where it now controls 3,084km2
of exploration tenure through its 100% owned Crowl Creek
Project, and joint ventures with Peel Mining NL and Bacchus
Resources Pty Ltd. The Company commenced on-ground
exploration during the financial year including geological
mapping and systematic geochemical sampling. Additionally,
the Company completed its maiden reverse circulation (“RC”)
drilling campaign at Crowl Creek, targeting the Blind Calf
Prospect which returned wide, high-grade copper results
including: 13m @ 5.71% Cu1, from 129m downhole, 11m
@ 4.78% Cu1, from 127m downhole, and 7m @ 5.68% Cu1,
from 98m downhole. The Company is continuing to build an
extensive geological and geochemical database for the wider
Lachlan Cu-Au Project area, which is resulting in the definition
of new target areas that will be systematically drill tested over
the coming financial year.

Figure 1: Talisman Project locations

Refer to Talisman ASX release dated 18 June 2018 and 5 July 2018 for details.

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At the Sinclair Nickel Project, the Company continued its
strategy of completing staged, cost effective exploration
focused on the identification of additional shallow nickel
sulphide mineralisation. Exploration activities during the year
included mapping and rock-chip sampling, shallow systematic
air-core drilling and deeper RC drill testing with DHEM
geophysical surveys.

DOOLGUNNA PROJECTS
(JV WITH SANDFIRE RESOURCES NL)

The Doolgunna Projects Joint Venture is between the Company
and Sandfire with Sandfire acting as Joint Venture Manager.
The Joint Venture encompasses the Springfield and Halloween
Projects (30%:70%, TLM:SFR) and the Halloween West Project
(19%:81%, TLM:SFR) which are volcanogenic massive sulphide
(“VMS”) copper-gold exploration projects in the Bryah Basin
region of Western Australia (Figure 2).

Initial mine development commenced at Monty in July 2017
following the completion of a successful feasibility study and

approval of the Mining Proposal and Mine Closure Plan by the
Western Australian Department of Mines, Industry Regulation
and Safety (“DMIRS”). During the financial year, the Company
also completed debt financing with Taurus Mining Finance
Fund (“Taurus”) for 100% of the Company’s forecast share of
Monty pre-production development costs.

Subsequent to the financial year end, the Company reached
agreement with Sandfire for Sandfire to acquire the Company’s
30% interest in the Joint Venture via the acquisition of the
subsidiary holding the Company’s 30% interest for $72.3
million less the amounts owing at transaction completion
under the Company’s financing arrangements with Taurus.
The sale transaction also includes the grant to the Company
of an uncapped and perpetual 1% net smelter return royalty
applying to 100% of all contained copper and gold in ore mined
and sold from within the Joint Venture tenement area above
the respective contained metal levels in the Monty mine plan.
In addition, Sandfire agreed to assume the obligations for the
2.25% gross revenue royalty on the Company’s share of Monty
production that was put in place as part of the Taurus funding
for Monty development.

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Figure 2: Doolgunna Projects Joint Venture – Springfield and Halloween West Project locations.

REVIEW OF OPERATIONSFigure 3: Monty Cu-Au Project: site office, power generators and associated infrastructure.

Springfield Project

(30% Talisman Mining Ltd – Joint Venture with Sandfire
Resources NL)

The Springfield Project comprises a 303km2 ground package
located approximately 150km north-east of Meekatharra in
the northern Murchison Goldfields region of Western Australia.
The project area is 4km directly along strike, to the east from
Sandfire’s DeGrussa Copper-Gold Mine and hosts the high-
grade Monty Deposit, within one of several corridors that are
prospective for VMS style mineralisation. These VMS corridors
are Monty, Homer, Central and Southern Volcanics (Figure 2).

The maiden Ore Reserve estimate for Monty, as at 31 March
2017, totals 0.92Mt at 8.7% copper and 1.4g/t gold2. Contained
metal stands at 80kt copper and 42koz gold. All the current
Ore Reserve estimate is contained in the Probable Ore Reserve
category. The Company’s 30% share of the defined Probable
Ore Reserve estimate is 24kt copper and 13koz gold, being
0.28Mt at 8.7% copper and 1.4g/t gold.

Monty Mining Development

On the 4 July 2017, the Company received advice that the
DMIRS (formerly Department of Mines and Petroleum) had
approved the Mining Proposal and Mine Closure Plan

See Talisman ASX announcement dated 13 April 2016.

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2018 ANNUAL REPORT

for Monty, facilitating the commencement of on-ground
earthworks.

On-site construction activities for Monty progressed throughout
the financial year (Figure 3). Significant Infrastructure
milestones included:

• Works Approval by Western Australian Department
of Water and Environmental Regulation to allow for
dewatering;

• Completion of all contracted bulk earthworks and civils

including:

• Boxcut;

• Monty haul road;

• Water supply pipeline to Monty site;

• Site infrastructure;

• Commencement of underground mine development;

• Completion of ventilation shaft (blind sink to approximately

40m);

• Completion of high-voltage infrastructure (including

underground substation commissioning); and

• Breakthrough of the return air-drive to the base of the vent

shaft.

2018 ANNUAL REPORT

REVIEW OF OPERATIONSFigure 4: Monty Cu-Au Project: charging of the decline face, December 2017.

The underground mining contractor, Byrnecut Australia Pty Ltd,
continued to progress Monty development and at the end of
June 2018 the decline had advanced to 1,013 metres (Figure 4)
with total development advance at 2,163 metres. Initial stope
production is planned to commence in 2019.

Springfield Exploration

Exploration throughout the financial year continued to focus
on enhancing geological and structural knowledge to unlock
the regional potential of the broader Joint Venture area.
Exploration activities carried out included:

• air-core, RC and diamond drilling;

• down-hole and surface geophysical surveys; and

• geological studies.

Drilling across the Springfield Project area comprised:

Springfield Project Drilling Statistics

Hole Type

Number of Holes

Total Metres

Air-core

Diamond

TOTAL:

238

259

10,736

3,193

3,918

17,847

Table 1: Springfield Project drilling statistics 1 July 2017 – 30 June 2018

Regional systematic air-core drilling across a number of
prospect areas including Monty NE, Monty South, Southern
Volcanics and Homer, provided geological and geochemical
data to better delineate the host sedimentary units within the
prospective stratigraphic sequence.

In addition, RC and diamond drilling were used to:

• provide additional structural and geotechnical data in the

Upper Zone of the Monty Deposit;

•

follow up geological interpretations of the potential Monty
off-set; and

follow up litho-geochemical anomalies identified in air-core
drilling.

Monty Upper Zone

A program of infill diamond drilling of the Monty Upper Zone
was conducted by the Joint Venture Manager to provide
additional geotechnical, geological and analytical data on the
Upper Zone

This program provided infill drilling between the existing
resource definition drill holes in selected areas. All the
completed drill holes into the Monty Upper Zone intersected
massive sulphide mineralisation and results show a good
correlation with the current orebody model used for the existing
Monty JORC Resource.

The Upper Zone is not included in the current mine plan for
Monty and further work is required by the Joint Venture to
assess the Monty Upper Zone orebody including the potential
impact of localised fault structures and to further develop the
interpretation of Upper Zone mineralisation.

Monty Off-set

RC drilling to the west of the Mataro fault confirmed the
interpreted position of the Monty host stratigraphy with target
lithologies intersected in both completed holes. (Figure 5).

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REVIEW OF OPERATIONSFigure 5: Monty offset geological interpretation showing updated geological interpretation.

Figure 6: Monty Deposit projected long section with diamond holes, interpreted DHEM coverage and interpreted orientation of the Mataro Fault,
showing TLDD0114 pierce point to the west of the Mataro Fault.

One diamond hole (TLDD0114) was completed (Figure 6) to
further test for any off-set mineralisation to the west of the
Mataro fault. The hole intersected the host lithology at depth to
the west of the Mataro fault and provided a deep platform for
a subsequent downhole electromagnetic (“DHEM”) survey. The

DHEM survey of TLDD0114 provided geophysical coverage
off-hole of TLDD0114 and immediately to the west of the
Mataro Fault. There were no geochemical or geophysical
indicators observed in the existing RC or deep diamond drilling
completed below the Monty Deposit.

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REVIEW OF OPERATIONSFigure 7: Monty region interpreted surface geology.

Monty East & Monty NE

Halloween West

RC and diamond drilling were utilised to test the potential host
stratigraphy to the east and north-east of the Monty Deposit.
A number of target areas were tested to in-fill interpreted
gaps in previous drill testing along the Monty East trend and
to follow-up a weak geophysical anomaly associated with
low-grade shallow copper mineralisation in air-core drilling at
Monty NE (Figure 7).

Drilling at Monty NE and the Monty East trend intersected
the host stratigraphy, confirming geological interpretations.
DHEM surveys were completed in all drill holes. No significant
copper mineralisation was encountered during the drilling, and
subsequent DHEM surveys did not identify any conductive
bodies within the search limits of the surveys.

Halloween

(30% Talisman Mining Ltd – Joint Venture with Sandfire
Resources)

The Halloween Project is located approximately 17km west
south-west of Sandfire’s DeGrussa Copper-Gold Mine. The
Halloween Project covers the interpreted western extension
of the Narracoota Volcanic Formation that locally hosts the
DeGrussa Copper-Gold Deposit

No on-ground exploration work was completed on the
Halloween Project tenement during the financial year.
Exploration work by the Joint Venture Manager has been
limited to desktop studies and a review of historic work
completed over the project.

(18.8% Talisman Mining Ltd – Joint Venture with Sandfire
Resources NL)

The Halloween West Project is located immediately to the west
of the Halloween Project and approximately 20km west south-
west of Sandfire’s DeGrussa Copper-Gold Mine.

No on-ground exploration work was completed on the
Halloween West Project tenement during the financial year.
Exploration work by the Joint Venture Manager has been
limited to desktop studies and a review of historic work
completed over the project.

NSW LACHLAN COPPER - GOLD
PROJECT

Throughout the financial year the Company continued to
evaluate new opportunities and grow its on-ground footprint
in NSW through the submission of new exploration license
applications, joint ventures and project acquisitions. As at 30
June 2018 the Company’s Lachlan Cu-Au Project consists of
3,084km2 of exploration tenure straddling the regional Gilmore
Suture fault zone which is prospective for epithermal copper/
gold and base metal mineralisation, as well as ‘Cobar Style’
structurally controlled mineralisation. (Figure 8 & Figure 9).

The Company has divided the Lachlan Cu-Au Project area
into three regions; the Northern, Central and Southern regions
(Figure 9) and one sub-project, the Michelago project which is
located to the south-east of Canberra. The Lachlan
Cu-Au Project area has seen little to no modern systematic
exploration, with previous exploration comprising sporadic

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REVIEW OF OPERATIONSFigure 8: NSW mineralogical provinces map, showing Lachlan Cu-Au Project tenure and broad deposit style provinces.

rock-chip and soil sampling and limited shallow drilling beneath
historic workings. Work completed by the Company throughout
the year included extensive historical data compilation and
evaluation, land access negotiations, regional prospecting/
first pass mapping and rock-chip sampling, systematic auger
geochemical sampling, detailed structural mapping, and RC
drilling with DHEM geophysical surveys (Table 2).

Lachlan Cu-Au Project

Drilling Statistics

Hole Type

Number of Holes

Total Metres

TOTAL:

984

Table 2: Lachlan Cu-Au Project - Drill hole information summary.

Peel Mining Ltd - Farm-in Agreement

In late 2017, the Company signed a farm-in agreement with
Peel Mining Ltd (“Peel”), whereby the Company has the
right to earn up to a 75% interest in two granted exploration
licences held by Peel, EL8414 and EL8451, covering an area
of approximately 450km2 in the Lachlan Fold Belt through
on-ground expenditure of $700,000 over a five-year period.
EL8451 is located in the south-east of the Lachlan Fold Belt
and forms the Company’s Michelago Project.

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REVIEW OF OPERATIONSBacchus Resources Pty Ltd - Farm-in Agreement

• Should the Company elect to continue to farm-in, further

In early 2018, the Company signed a farm-in agreement with
Bacchus Resources Pty Ltd (“Bacchus”) whereby the Company
has the right to earn up to an 80% interest in six granted
exploration licences held by Bacchus (EL8547, EL8571,
EL8638, EL8657, EL8658 and EL8680) covering an area of
approximately 1,067km2 in the Lachlan Fold Belt through on-
ground expenditure of $2.3 million over a four-year period.

In accordance with the farm-in agreement, the Company will
undertake staged farm-in with expenditure as follows:

• $1.3 million in the first 36 months from commencement to

earn a 51% interest; and

expenditure of $1.0 million over 12 months to earn an 80%
interest.

Once the Company has earned its final interest in the licenses
held by Bacchus, a formal joint venture will be entered into
which provides that Bacchus will be free carried for 10% of its
joint venture interest until a decision to mine. Post a decision to
mine, Bacchus can then elect to contribute, or the Company has
a right to acquire Bacchus’ interest in the joint venture for 95% of
fair value as agreed by the joint venture participants. In addition,
at the end of the farm-in period, the Company will transfer to
Bacchus a 20% interest in the three granted exploration licences
(EL8615, EL8659, and EL8677) that the Company currently
holds on a 100% basis. Bacchus’s interest in these tenements
will form part of the formal joint venture and as such, Bacchus
will contribute to expenditure on the terms outlined above.

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Figure 9: Lachlan Cu-Au Project tenure and simplified regional geology.

REVIEW OF OPERATIONSLachlan Cu-Au Project - Southern Region

The Southern region tenements comprise both the Company’s
and Bacchus farm-in (the Company earning 80%) tenure and
contain the historic Blind Calf mining centre and are adjacent to
and along strike from the existing Mineral Hill Mine (Figure 10).

Work completed by the Company during the financial year in
the Southern Region included land holder access negotiations,
reconnaissance mapping and rock-chip sampling, systematic
auger sampling and, at the Blind Calf Prospect, RC drilling with
DHEM geophysical surveys.

Figure 10: Lachlan Cu-Au Project - Southern Region, indicating areas of Stage 1 auger sampling, reconnaissance mapping and Stage 3 RC drilling.

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REVIEW OF OPERATIONSFigure 11: Lachlan Cu-Au Project - Southern Region, Blind Calf historic workings

Copper mineralisation at the Blind Calf Prospect is associated
with a sheared quartz lode system with moderate sulphide
mineralisation (chalcopyrite/pyrite) logged in RC drill chips. The
main quartz lode is encased in a zone of altered siliceous host
rock with disseminated sulphides, which has returned copper
grades of between 0.5% – 1% copper for some distance on
both the hanging wall and foot wall. Further drilling, including
diamond core, is required to fully understand the geological
setting and nature of this high-grade copper system.

DHEM surveys were completed on five of the seven drill holes.
The survey results have shown several coherent off-hole
conductors, which appear to be mapping the high-grade core
of copper mineralisation (Figure 13). The modelled DHEM
plates are coincident with the >5% copper intersections
reported in completed RC drilling and extend down-dip beyond
the limit of the existing drilling.

A similar, separate, moderate off-hole DHEM anomaly has
been modelled in an untested zone beneath the current drill
testing of the adjacent Dunbar lode.

Blind Calf Prospect

The Blind Calf Prospect comprises a cluster of 13 historic (early
1900’s) mining shafts developed on a series of shear hosted
sulphide rich quartz lodes with mapped outcrop strike extents
of between 40 metres to 100 metres and widths of 5 metres at
surface (Figure 11).

The Company completed seven holes for 984 metres to a
maximum depth of 187 metres, and intersected quartz veining
and sulphide mineralisation in all holes ranging from broad
zones of disseminated sulphides (pyrite and chalcopyrite) in
siliceous host rocks to zones of foliated quartz veining with up
to 50% sulphides logged in drill cuttings.

Results included wide zones of high-grade mineralisation
within sulphidic quartz veins and show a broadening of
the Blind Calf copper lode at depth, as well as a significant
increase in the grades compared to those reported by previous
explorers (Figure 12 & Figure 13).

Best results included3:

• BCRC005: 7m @ 5.68% Cu, from 98m downhole

Inc. 4m @ 7.85% Cu from 100m downhole;

• BCRC006: 13m @ 5.71% Cu, from 129m downhole

Inc. 4m @ 11.06% Cu from 136m downhole

• BCRC007:

11m @ 4.78% Cu, from 127m downhole
Inc. 4m @ 8.40% Cu from 127m downhole;

Refer to Talisman ASX release dated 18 June 2018 and 5 July 2018 for details.

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Figure 12: Blind Calf Prospect – showing interpreted mineralised corridor, outcropping mineralised lodes and Talisman drill collars.

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REVIEW OF OPERATIONSFigure 13: Blind Calf Prospect long section showing historic drilling, and recent high-grade Intersections from Talisman drilling.

Lachlan Cu-Au Project - Central Region

The Central Region tenements comprise Bacchus farm-in
(the Company earning 80%), and Peel farm-in (the Company
earning 75%) tenure, along strike to the north of the Mineral
Hill Mine (Figure 9). The project area contains a number of
historic mining centers including the Rip & Tear lead mine and
the Babinda copper mine.

Work completed by the Company in the Central Region
during the financial year included extensive systematic auger
geochemical sampling at the Rip & Tear, Noisy Ned and
Cumbine Prospects, the latter of which contains an untested
historic induced polarisation anomaly that is associated with
anomalous gold in rock-chip/soil sampling completed by
previous explorers (Figure 14).

Portable XRF analysis identified a strong coincident copper-
zinc-lead anomaly (Noisy Ned) in the northern most area
covered by sampling. The anomaly extends over three of
the 300 metre spaced traverses and shows consistently
high copper, zinc and lead grades for over 400 – 600 metres
across strike, defined by greater than 300ppm zinc (Figure
15). The coincident base-metal anomalies are associated
with abundant brecciated and gossanous iron rich quartz
vein outcrop and strong manganese alteration of the
surrounding host rocks, which is indicative of epithermal style
mineralisation.

A number of other geochemical anomalies were identified
that require follow-up testing with RC and/or additional auger
sampling.

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REVIEW OF OPERATIONSFigure 14: Lachlan Cu-Au Project Central Region - Phase 1 Auger drilling campaign.

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REVIEW OF OPERATIONSFigure 15: Noisy Ned Prospect auger geochemistry showing copper (right hand side) and zinc (left hand side) anomalism

Lachlan Cu-Au Project - Northern Region

SINCLAIR NICKEL PROJECT

The Northern Region comprises a single tenement which
is part of the Bacchus farm-in (the Company earning 80%)
(Figure 9). The tenement contains a number of historic
copper and gold occurrences and during the financial year the
Company successfully completed a number of land access
negotiations that allow the Company access to the highest
priority areas.

Lachlan Cu-Au Project - Michelago Project

The Michelago project comprises a single tenement to the
south-east of Canberra, which forms part of the Peel farm-in
agreement, where the Company is earning a 75% interest
through on-ground exploration expenditure.

During the financial year the Company commenced land
access negotiations with landholders located over higher
priority areas within the tenement.

The Company’s Sinclair Nickel Project (“Sinclair”) is located in
the world-class Agnew-Wiluna Greenstone Belt in Western
Australia’s north-eastern Goldfields. The Sinclair Nickel
Deposit, developed and commissioned in 2008 and operated
successfully 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 16 &
Figure 17).

During the financial year the Company continued to advance
Sinclair through cost efficient, staged exploration focused
across the project. The Company completed air-core and
RC drilling (Table 3) at the Delphi, Delphi North, Mt Clifford,
Schmitz Well South and Sturt Meadows Prospects (Figure
18). The aim of this work was to in-fill areas where there had
been no or minimal regional drill testing of the target ultramafic
sequences and to follow-up selected previously identified
nickel sulphide mineralisation.

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REVIEW OF OPERATIONSFigure 16: Sinclair Nickel Project regional geology, nickel production
centres and reported contained nickel (MINDEX 2012) of the Agnew-
Wiluna Belt.

Figure 17: Sinclair Nickel Project – Prospect locations

Sinclair NICKEL Project Drilling Statistics

Hole Type

Number of Holes

Total Metres

Air-core

TOTAL:

114

119

6,758

1,123

7,881

Table 3: Sinclair Nickel Project - Drill hole information summary,

Delphi

The Delphi Prospect is located on the Sinclair ultramafic trend
approximately 8km south of Sinclair, and 2.5km south of Delphi
North (where drilling in late 2016 returned massive sulphide
intersections of 9m @ 4.20% Ni in hole SNRC0194, Figure 18).

During the financial year four air-core traverses were drilled
(totaling 32 holes for 2,099m) across an area covering
approximately 500m of prospective ultramafic stratigraphy
that had not been previously drilled. No significant assay

results were returned from this drilling. The Company will
complete detailed interpretation of the results from this
program to understand the geological context and potential to
host massive nickel sulphide mineralisation.

Delphi North

The Company completed one RC drill hole during the financial
year to further understand the interpreted massive and
disseminated nickel sulphide mineralisation in the vicinity of
high conductance electromagnetic (EM) conductors identified
from previous drilling5. The drill hole intersected the lower
edge of previously modelled EM conductors and encountered
massive and disseminated nickel sulphide mineralisation on
the basal contact (Figure 18). Assays returned:

• SNRC031:

2m @ 1.95% Ni from 198m down-hole
Inc.: 1m @ 2.97% Ni from 199m down-hole

Previous RC and diamond drilling returned significant results as
shown in Figure 18.

4
5

Refer to ASX announcement dated 27 October 2016 for full details and JORC tables.
Refer to ASX announcements dated 07 October 2016 and 9 January 2017 for full details and JORC tables.

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2018 ANNUAL REPORT

REVIEW OF OPERATIONS

Figure 18: Delphi North projected long section showing new and existing nickel massive sulphide intersections, newly modelled (and historic) DHEM
conductors, and an interpreted Massive Sulphide Envelope.

Schmitz Well South Prospect

Historic RC drilling by the Company at Schmitz Well South
intersected broad zones of prospective high-MgO ultramafic
rocks containing multiple zones of trace to disseminated (cloud)
nickel sulphides.

Three air-core drill traverses were completed in July 2017 in
close proximity to the previous nickel sulphide intersections to
follow-up from this previous drilling. Three broadly spaced air-
core drill traverses were also completed to the north to provide
confirmation of the continuation of the fertile ultramafic trend
where no previous drilling had been completed.

Moderate to high magnesian ultramafic rocks were
successfully intersected in all six drill traverses completed,
confirming the continuity of the fertile Sinclair ultramafic trend
at Schmitz Well South. Oxide material after disseminated and
stringer nickel sulphides was logged within the ultramafic rock
sequence in two holes to the north along strike from the

Refer Talisman ASX release 23 August 2017.

previously intersected cloud sulphides (Figure 19), returning
nickel intersections6 of:

• SNAC0083

1m @ 0.68% Ni from 27m.

• SNAC0096

5m @ 0.50% Ni from 50m; and
4m @ 1.30% Ni from 57m.

The anomalous results intersected in hole SNAC0096 included
very high copper values and elevated platinum & palladium
values which are indicative of komatiite hosted, magmatic
nickel sulphide mineralisation.

A series of four RC holes for 880m were drilled beneath, and
along strike from the air-core drilling at Schmitz Well South
(Figure 19). The drill holes intersected a thick sequence of
high-magnesian ultramafic rocks including localised visible
disseminated sulphide mineralisation that are interpreted to
represent a fertile sequence with the potential to host nickel
sulphide mineralisation. No significant assays were returned
from this drilling.

2018 ANNUAL REPORT

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REVIEW OF OPERATIONS

Figure 19: Plan view of Schmitz Well South showing magnetics, interpreted ultramafic unit under cover and completed air-core and RC drill holes

Mt Clifford Prospect

Sturt Meadows (Au)

The Mt Clifford Prospect tenements were granted to the
Company in August 2016. They cover a very sparsely explored
sequence of ultramafic rocks that the Company interprets to
have the potential to host massive nickel sulphides. The area
has the potential to host a significant strike length of ultramafic
as well as potential extensions to the Marriotts nickel deposit.

As part of early evaluation of the prospect, the Company
completed a single traverse of air-core drilling (a total of 12
holes for 364m) across the interpreted ultramafic sequence
to provide geological information and assess the potential
fertility of the ultramafic sequence. Drilling identified areas
of high-magnesian ultramafic rocks that require additional
interpretation and potential exploration.

The Company’s 2017 targeting review highlighted a gold
anomaly from historic RAB drilling in an area of structural
complexity and interpreted to potentially be along strike
from the historic Bannockburn gold mine. An air-core drilling
program consisting of 38 holes for 2,998m on three traverses
was undertaken covering the most significant parts of the
historic anomaly. No significant assay results were returned.

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2018 ANNUAL REPORT

REVIEW OF OPERATIONS2018 MINERAL RESOURCE AND ORE RESERVE STATEMENT

Monty Mineral Resource – 100% Basis

The Mineral Resource estimate for the Monty Deposit
(previously announced by the Company refer ASX
announcement “Monty Maiden Resource Estimate” published
on 13 April 2016), prepared in accordance with JORC (2012)
and detailed in Table 4, 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

Mineral Resource estimate on 100% Basis7 as at 31 March 2016

Mineralisation
Style

Massive
Sulphides

Halo

Indicated

754,000

Inferred

Total

Indicated

Inferred

Total

9,000

763,000

287,000

Total

Indicated

1,041,000

Inferred

9,000

Total

1,050,000

Note: Mineral Resource is based on a 1.0% Cu cut-off

Table 4: Mineral Resource estimate for the Monty Deposit (100% basis).

and this has allowed for an Indicated classification across
almost all of the Mineral Resource estimate. The Company
confirms that it is not aware of any new information or data
that materially affects the information included in the original
market announcement and that all material assumptions
and technical parameters underpinning the estimate in the
original market announcement continue to apply and have not
materially changed.

Grade

Ctd Metal

12.0

20.7

12.1

2.2

9.3

20.7

9.4

2.1

2.7

2.1

0.3

1.6

2.7

1.6

Cu (t)7

91,000

2,000

92,000

6,000

97,000

2,000

99,000

Au (oz)7

51,000

1,000

52,000

3,000

54,000

1,000

55,000

Classification

Tonnes (t)7

Cu (%)

Au (g/t)

The maiden Ore Reserve estimate for the Monty Deposit (previously announced by the Company refer ASX announcement “Monty
Feasibility Study Results” published on 6 April 2017), contains 920kt at 8.7% copper and 1.4g/t gold (Table 5). 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. The Company confirms that it is not aware of any
new information or data that materially affects the information included in the original market announcement and that all material
assumptions and technical parameters underpinning the estimate in the original market announcement continue to apply and have
not materially changed.

Ore Reserve estimate 100% Basis as at 31 March 2017

Reserve Category

Tonnes (t)7

Copper (%)

Gold (g/t)

Contained Copper (t)7

Contained Gold (oz)7

Proved

Probable

Total

920,000

8.7

1.4

80,000

42,000

Table 5: Ore Reserve estimate for the Monty Deposit (100% basis)

Ore Reserve estimate on Talisman 30% Basis as at 31 March 2017

Reserve Category

Tonnes (t)7

Copper (%)

Gold (g/t)

Contained Copper (t)7

Contained Gold (oz)7

Proved

Probable

Total

280,000

8.7

1.4

24,000

13,000

Table 6: Ore Reserve estimate and Mine Plan for the Monty Deposit (30% basis)

Data is rounded to reflect appropriate precision in the estimates and differences may occur due to the rounding

2018 ANNUAL REPORT

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REVIEW OF OPERATIONSSinclair Nickel Project Mineral Resource

For the avoidance of doubt, the Mineral Resource and Ore
Reserve Statement is stated as at 30 June 2018. Although
not forming part of the Mineral Resource and Ore Reserve
Statement, subsequent to the end of the financial year, the
Company announced to the ASX a JORC (2012) Mineral
Resource estimate and Exploration Target for the Sinclair
Nickel Project (refer ASX announcement on 31 August 2018
“Sinclair Nickel - Talisman Maiden JORC Mineral Resource”
which contains the relevant JORC tables and competent
persons’ statements (Sinclair Announcement)). The Company
confirms that it is not aware of any new information or data
that materially affects the information included in the Sinclair
Announcement and that all material assumptions and
technical parameters underpinning the estimates in the Sinclair
Announcement continue to apply and have not materially
changed.

Mineral Resource and Ore Reserve
Governance

The Monty Mineral Resource and Ore Reserve estimates
are reported in accordance with the JORC (2012) guidelines.
Information that relates to the Monty JORC 2012 compliant
Mineral Resource and Ore Reserve 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 and “Positive Monty Feasibility Study
Paves Way for Development of New High-Grade Copper Mine”,
dated 6 April 2017).

The Monty Mineral Resource and Ore Reserve estimates were
completed by or under the supervision of a suitably qualified
Sandfire Competent Person. The Company is satisfied
with the procedures Sandfire advised it had in place for the
estimation of the Monty Mineral Resource and Ore Reserve.
Suitably qualified Company personnel have also reviewed
relevant underlying documentation and are satisfied with the
methodologies used by Sandfire in this estimate.

Competent Persons’ Statement –
Exploration Results and Targets

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.

No new information that is considered material is included
in this document. All information relating to exploration
results has been previously released to the market and is
appropriately referenced in this document. JORC tables are not
considered necessary to accompany this document.

Competent Persons’ Statement –
Monty Mineral Resources

The information in this report that relates to the Monty Mineral
Resource is based on information compiled by Mr Callum
Browne who is a Member of The Australasian Institute of
Mining and Metallurgy. Mr Browne is a permanent employee
of Sandfire Resources NL and has sufficient experience that
is relevant to the style of mineralisation and type of deposit
under consideration and to the activity which he is undertaking
to qualify as Competent Person as defined in the 2012 Edition
of the Australasian Code for Reporting of Exploration Results,
Mineral Resource and Ore Reserve. Mr Browne consents to the
inclusion in the report of the matters based on his information
in the form and context in which it appears.

Competent Persons’ Statement –
Monty Ore Reserves

The information in this report that relates to the Monty Ore
Reserve is based on information compiled by Mr Neil Hastings
who is a Member of The Australasian Institute of Mining and
Metallurgy. Mr Hastings is a permanent employee of Sandfire
Resources NL and has sufficient experience that is relevant
to the style of mineralisation and type of deposit under
consideration and to the activity which he is undertaking to
qualify as Competent Person as defined in the 2012 Edition
of the Australasian Code for Reporting of Exploration Results,
Mineral Resources and Ore Reserves. Mr Hastings consents
to the inclusion in the report of the matters based on his
information in the form and context in which it appears.

Information in this report that relates to the relevant part of
the Monty Ore Reserves and which also specifically relates to
the Company (being its 30% share of the Monty Ore Reserves
and the financial impact on the Company resulting from the
application of the Mining Joint Venture Agreement and Ore Sale
Agreement) is based on, and fairly represents, information and
supporting documentation prepared by Mr Benjamin Wilson,

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2018 ANNUAL REPORT

REVIEW OF OPERATIONSwho 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 the Company’s current expectations,
estimates and assumptions about the industry in which the
Company operates, and beliefs and assumptions regarding the
Company’s 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 the Company. 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 presentation. Given these uncertainties, recipients are
cautioned not to place reliance on forward looking statements.
Any forward looking statements in this announcement speak
only at the date of issue of this announcement. Subject to
any continuing obligations under applicable law and the ASX
Listing Rules, the Company does not undertake any obligation
to update or revise any information or any of the forward
looking statements in this announcement or any changes in
events, conditions or circumstances on which any such forward
looking statement is based.

2018 ANNUAL REPORT

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23

REVIEW OF OPERATIONSTENEMENT SCHEDULE

As at date of report

Project / Tenement

Location and
Blocks (Area)

Tenement
Status

Talisman
Equity (%)

Expiry Date

Joint Venture Partner
/ Farm-In Party

HALLOWEEN WEST

Western Australia

E52/2275

Granted

18.8%

08-02-19

HALLOWEEN

Western Australia

P52/1528

(200 HA)

Granted

30%

31-08-20

SPRINGFIELD

Western Australia

E52/2282

E52/2313

E52/2466

E52/3423

E52/3424

E52/3425

E52/3466

E52/3467

L52/170

M52/1071

(246.4HA)

(1,642HA)

Granted

30%

24-11-19

05-04-20

13-02-22

09-03-22

16-02-38

29-03-38

JV - Sandfire
Resources NL

Project /Tenement

SINCLAIR NICKEL
PROJECT

Location and
Blocks (Area)

Tenement
Status

Talisman
Equity (%)

Expiry Date

Joint Venture Partner
/ Farm-In Party

Western Australia

E36/650

E37/903

E37/1231

L36/198

L37/175

M36/444

M36/445

M36/446

M37/362

M37/383

M37/384

M37/385

M37/386

M37/424

M37/426

M37/427

M37/590

M37/692

M37/735

(103.1 HA)

(83.9 HA)

(568.0 HA)

(973.0 HA)

(843.0 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)

(136.1 HA)

(959.0 HA)

Granted

100%

15-10-18

21-09-18

28-08-21

19-04-28

27-03-29

20-05-34

28-01-35

03-02-36

27-03-29

N/A

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2018 ANNUAL REPORT

REVIEW OF OPERATIONSProject /Tenement

Location and
Blocks (Area)

Tenement
Status

Talisman
Equity (%)

Expiry Date

Joint Venture Partner
/ Farm-In Party

M37/816

M37/818

M37/819

M37/1063

M37/1089

M37/1090

M37/1126

M37/1127

M37/1136

M37/1137

M37/1148

M37/1168

M37/1223

M37/1275

P37/7228

P37/7233

Project /Tenement

LACHLAN PROJECT

EL8615

EL8659

EL8677

EL8414

EL8547

EL8571

EL8638

EL8657

EL8658

EL8680

EL8718

EL8719

OTHER

EL8451

(818.4 HA)

(806.5 HA)

(380.2 HA)

(604.0 HA)

(574 HA)

(478 HA)

(603 HA)

(986 HA)

(850 HA)

(44.78 HA)

(190 HA)

(675 HA)

(1,961 HA)

(61.57 HA)

(116.01 HA)

Granted

100%

27-03-29

28-08-29

27-03-29

22-04-29

27-03-29

29-07-28

Location and
Blocks (Area)

Tenement
Status

Talisman
Equity (%)

Expiry Date

Joint Venture Partner
/ Farm-In Party

NSW

(726km2)

(373km2)

(193km2)

(174km2)

(205km2)

(258km2)

(192km2)

(134m2)

(256km2)

(20km2)

(86km2)

(191km2)

NSW

Granted

100%

07-07-23

18-10-23

08-12-23

02-12-18

03-04-22

23-05-22

31-08-22

10-10-22

13-10-22

08-12-22

27-03-24

Bacchus Resources
Pty Ltd|
(right to 20% interest)

Peel Mining Ltd
(TLM earning up to
75%)

Bacchus Resources
Pty Ltd
(TLM earning up to
80%)

N/A

(276km2)

Granted

16-07-19

Peel Mining Ltd
(TLM earning up to 75%)

2018 ANNUAL REPORT

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REVIEW OF OPERATIONSCORPORATE 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

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2018 ANNUAL REPORT
2018 ANNUAL REPORT

2018 ANNUAL REPORT

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 2018. In order to comply with the provisions of the
Corporations Act 2001, the Directors report as follows:

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.

DIRECTORS

Alan Senior

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.

Asscshp Mech Eng, FIEAUST, FAusIMM

Non-Executive Director
7 November 2007 - current

Non-Executive Director (Independent)

Jeremy Kirkwood

BCom ANU

Non-Executive Chairman
1 April 2016 - current

Chairman (Non-Executive/Independent)

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
(ASX: ZNT) resigning on 5 March 2018. He was appointed as
the Chairman of Kin Mining Ltd (ASX: KIN) in February 2018.
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

BComACC, ACA, Governance Institute of Australia

Managing Director
1 July 2016 - current

Managing Director (Executive/Non-Independent)

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.

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.

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.

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

B. Sc. Mining, MAusIMM

Non-Executive Director
17 June 2009 – current

Non-Executive Director (Independent)

Brian is a mining engineer with extensive international mining
industry experience. He holds a BSc in Mining from the
University of Leeds in the United Kingdom, and is Member of
the Australasian Institute of Mining and Metallurgy.

He has worked in the United Kingdom, 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

2018 ANNUAL REPORT
2018 ANNUAL REPORT

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2018 ANNUAL REPORT

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 was appointed as Non-Executive Director of Kin Mining
Ltd (ASX: KIN) in February 2018.

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

B. Comm., FCA, MAICD

Non-Executive Director
3 April 2008 - current

Non-Executive Director (Independent)

Karen is a professional Non-Executive Director with over 30
years’ finance and commercial experience across several
sectors.

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 was appointed as a non-executive director of
Joyce Corporation Pty Ltd on 1 July 2017, 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.

COMPANY SECRETARIES

Shaun Vokes

BBus, CPA

Co-Company Secretary
1 May 2016 - current

Co-Company Secretary

Shaun joined Talisman in February 2016. He is a finance
professional with over 26 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

BSc, FCA (ICAEW), ACIS

Co-Company Secretary
1 May 2016 - current

Co-Company Secretary

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.

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

The Directors do not recommend the payment of a dividend
and no amount has been paid or declared by way of a dividend
to the date of this report.

FINANCIAL PERFORMANCE AND
FINANCIAL POSITION

Financial performance

During the financial year, the Group reported an operating loss
after tax of $10.5 million (2017: loss after tax $8.7 million).

Revenue for the year of $0.06 million (2017: $0.4 million)
consisted primarily of bank interest earned on the Group’s
short-term deposits held during the year.

Financial position

As at 30 June 2018, the Group had net assets of $11.6 million
(2017: $21.6 million) including $0.4 million of cash and cash
equivalents (2016: $11.6 million).

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2018 ANNUAL REPORT

DIRECTORS’ REPORTSUBSEQUENT EVENTS

On 8 June 2018, the Company announced to ASX that it had
reached in-principle agreement with Sandfire Resources NL
(“Sandfire”), its partner in the Monty Mining Joint Venture
and Springfield Exploration Joint Venture (collectively the
“Doolgunna Projects”), for the Company to dispose of its entire
interest in the share capital of its wholly owned subsidiary
Talisman A Pty Ltd (the holder of the Company’s 30% joint
venture interest in the Doolgunna Projects) (“Sale Shares”), to
Sandfire (“Share Sale”).

Subsequently, as the Company announced to ASX on 8 August
2018, the Company and Sandfire entered into the Share Sale

Agreement to fully document the Share Sale. The Company,
Talisman A and Sandfire have also executed an NSR Royalty
Deed as part of the Share Sale, for further information see
Note 27.

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, 12 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

Directors

Eligible to
attend

Attended

Eligible to
attend

Attended

Eligible to
attend

Attended

Eligible to
attend

Attended

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:

Fully paid ordinary shares

Share Options

Directors

Jeremy Kirkwood

Daniel Madden

Alan Senior

Brian Dawes

Karen Gadsby

Number

419,000

50,000

116,666

353,333

311,334

Number

750,000

3,000,000

500,000

2018 ANNUAL REPORT

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DIRECTORS’ REPORT
SHARE OPTIONS

Share options granted to Directors and key management personnel

At the date of this report, share options granted to the Directors and key management personnel of the Company and the entities it
controlled as part of their remuneration are:

Directors and senior
management

Jeremy Kirkwood

Daniel Madden

Alan Senior

Brian Dawes

Karen Gadsby

Shaun Vokes

Anthony Greenaway

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

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

Issuing entity

Grant Date

Expiry date
of options

Number of
shares under
option

Exercise price of
options

Fair

Value Vesting Date

Talisman Mining Limited

11-Nov-16

31-Oct-18

1,755,000

$0.48

$0.23

11-Nov-16

Talisman Mining Limited

11-Nov-16

31-Oct-19

1,550,000

$0.52

$0.27

30-Jun-17

Talisman Mining Limited

11-Nov-16

31-Oct-19

1,540,000

$0.56

$0.23

30-Jun-18

Talisman Mining Limited

11-Nov-16

31-Oct-21

1,540,000

$0.62

$0.32

30-Jun-19

Talisman Mining Limited

11-Nov-16

31-Oct-21

1,540,000

$0.66

$0.32

30-Jun-20

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.

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2018 ANNUAL REPORT

DIRECTORS’ REPORTAUDITOR 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 37 and forms part of this Directors’ report for
the year ended 30 June 2018.

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

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 2018 and is included on page 32.

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 2018.

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 26 to the financial statements. The Directors are satisfied
that the provision of non-audit services is compatible with the
general standard of independence for auditors imposed by the
Corporations Act 2001.

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.

2018 ANNUAL REPORT

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DIRECTORS’ REPORTREMUNERATION 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 2018. 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.

• Executive Directors and key management personnel are

motivated to pursue long term growth and success of the
Group 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.

KEY MANAGEMENT PERSONNEL
DETAILS

The key management personnel of Talisman Mining Limited
during the year were:

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

Anthony Greenaway
Shaun Vokes

General Manager – Geology
Chief Financial Officer/
Co-Company Secretary

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 Group. The
main principles of the policy when considering remuneration
are as follows:

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 2018 and 30 June 2017.

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.

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2018 ANNUAL REPORT
2018 ANNUAL REPORT

2018 ANNUAL REPORT

Potential discretionary bonus

A potential discretionary bonus may be paid to Executive
Directors and other key management personnel. Any potential
bonus paid is at the discretion of the Remuneration Committee
and will typically be made in recognition of contribution to the
Group’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 2018, the Remuneration Committee recommended
bonuses totaling $75,000 be paid to three key management
personnel. This amount has been accrued at balance date.

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
30 June 2016 General Meeting. For the financial year ended
30 June 2018, this pool was utilised to a level of $251,850
(inclusive of superannuation). The fee paid for the 2018
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 formalised in an employment
contract. The major provisions of the agreements related to the
remuneration are set out below.

Key
Management
Personnel

Term of Agreement

Key Agreement Terms

Daniel
Madden

Ongoing employment
agreement

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

Ongoing employment
agreement

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

Ongoing employment
agreement

Termination benefit payable on early termination by the Group (other than
for gross misconduct) is equal to one months’ 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.

2018 ANNUAL REPORT

2018 ANNUAL REPORT
2018 ANNUAL REPORT

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REMUNERATION REPORTREMUNERATION 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

Post-
employment
benefits

Salary &
fees

Bonus

Non-
monetary

Super-
annuation

Share-
based
payment

Options (i)

Long
service
leave
accrual

Total

% of
compensation
linked to
performance

2018

Directors

Jeremy Kirkwood

80,000

7,600

55,380

142,980

Daniel Madden

350,000

25,000

24,196

33,250

5,833

221,520

659,799

Alan Senior

Brian Dawes

Karen Gadsby

Executives

50,000

Shaun Vokes

216,666

25,000

Anthony Greenaway

216,666

25,000

4,750

20,583

36,920

91,670

36,920

91,670

36,920

91,670

38.73%

37.36%

40.27%

73,840

336,089

73,840

336,089

29.41%

1,013,332

75,000

24,196

96,266

5,833

535,340

1,749,967

2017

Directors

Jeremy Kirkwood

80,000

7,600

111,821

199,421

Daniel Madden

350,000

30,000

16,271

36,100

44,367

447,285

924,023

Alan Senior

Brian Dawes

Karen Gadsby

Executives

50,000

Shaun Vokes

200,000

20,000

Anthony Greenaway

200,000

10,000

Ben Wilson (ii)

184,471

4,750

20,900

19,950

17,525

74,547

129,297

74,547

129,297

48,405

103,155

149,095

389,995

114,618

344,568

46,260

248,256

56.07%

51.65%

57.66%

46.92%

43.36%

36.17%

18.63%

1,164,471

60,000

16,271

116,325

44,367

1,066,578

2,468,012

(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. The

values above represent the accounting expense recorded over the vesting period of the options. The options were granted in the 2017 financial year.

(ii) Ben Wilson’s salary and fees detailed above include annual leave entitlements paid on resignation effective 12 May 2017.

SHARE-BASED REMUNERATION GRANTED AS COMPENSATION

No options were granted as remuneration this financial year.

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2018 ANNUAL REPORT

REMUNERATION REPORT

EXERCISED

No options granted as compensation in the current and/or prior year were exercised.

FORFEITED / LAPSED / CANCELLED DURING THE YEAR

No options were forfeited, lapsed, or called during the year by key management personnel.

OTHER INFORMATION

Shares Held by Key Management Personnel

Opening
balance at
1 July

Shares
received on
exercise of
options

Net other
change

Balance on
resignation

Closing
balance at
30 June

Balance held
nominally

Number

2018

Directors

Jeremy Kirkwood

Alan Senior

Daniel Madden

Brian Dawes

Karen Gadsby

Executives

Shaun Vokes

Anthony Greenaway

2017

Directors

Jeremy Kirkwood

Alan Senior

Daniel Madden

Brian Dawes

Karen Gadsby

Executives

Shaun Vokes

Ben Wilson

Anthony Greenaway

219,000

116,666

50,000

353,333

311,334

1,050,333

119,000

116,666

353,333

311,334

8,000

908,333

200,000

100,000

50,000

N/A

8,000

N/A

419,000

116,666

50,000

353,333

311,334

20,000

66,667

1,250,333

86,667

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

2018 ANNUAL REPORT

35
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35

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

2018

Directors

Jeremy Kirkwood

750,000

Daniel Madden

3,000,000

500,000

Alan Senior

Brian Dawes

Karen Gadsby

Executives

Shaun Vokes

1,000,000

Anthony Greenaway

1,000,000

7,250,000

2017

Directors

Jeremy Kirkwood

750,000

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

N/A

750,000

N/A 3,000,000

N/A

500,000

N/A 1,000,000

150,000

450,000

600,000 1,800,000

100,000

300,000

100,000

300,000

100,000

300,000

200,000

600,000

200,000

600,000

- 7,250,000

- 1,450,000 4,350,000

N/A

750,000

300,000

(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

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 2018

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2018 ANNUAL REPORT
2018 ANNUAL REPORT

2018 ANNUAL REPORT

REMUNERATION REPORT

AUDITOR'S INDEPENDENCE DECLARATION

AUDITOR’S INDEPENDENCE DECLARATION

As lead auditor for the audit of the consolidated financial report of Talisman Mining Limited for the
year ended 30 June 2018, I declare that, to the best of my knowledge and belief, there have been no
contraventions of:

(a)

the auditor independence requirements as set out in the Corporations Act 2001 in relation to
the audit; and

(b)

any applicable code of professional conduct in relation to the audit.

Perth, Western Australia

28 September 2018

L Di Giallonardo

Partner

2018 ANNUAL REPORT

2018 ANNUAL REPORT
2018 ANNUAL REPORT

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HLB Mann Judd (WA Partnership) ABN 22 193 232 714

Level 4 130 Stirling Street Perth WA 6000 | PO Box 8124 Perth BC WA 6849 | Telephone +61 (08) 9227 7500 | Fax +61 (08) 9227 7533

Email: mailbox@hlbwa.com.au | Website: www.hlb.com.au

Liability limited by a scheme approved under Professional Standards Legislation

HLB Mann Judd (WA Partnership) is a member of International, a world-wide organisation of accounting firms and business advisers

INDEPENDENT AUDITOR'S REPORT

Independent Auditor’s Report
To the Members of Talisman Mining Limited

REPORT ON THE AUDIT OF THE FINANCIAL REPORT

Opinion

We have audited the financial report of Talisman Mining Limited (“the Company”) and its controlled
entities (“the Group”), which comprises the consolidated statement of financial position as at 30 June
2018, the consolidated statement of comprehensive income, the consolidated statement of changes in
equity and the consolidated statement of cash flows for the year then ended, and notes to the financial
statements, including a summary of significant accounting policies, and the directors’ declaration.

In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
Act 2001, including:

a) giving a true and fair view of the Group’s financial position as at 30 June 2018 and of its financial

performance for the year then ended; and

b) complying with Australian Accounting Standards and the Corporations Regulations 2001.

Basis for Opinion

We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (“the Code”) that are relevant to our audit of the financial report in Australia. We have also
fulfilled our other ethical responsibilities in accordance with the Code.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report of the current period. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters.

We have determined the matters described below to be the key audit matters to be communicated in
our report.

HLB Mann Judd (WA Partnership) ABN 22 193 232 714

Level 4 130 Stirling Street Perth WA 6000 | PO Box 8124 Perth BC WA 6849 | Telephone +61 (08) 9227 7500 | Fax +61 (08) 9227 7533

Email: mailbox@hlbwa.com.au | Website: www.hlb.com.au

Liability limited by a scheme approved under Professional Standards Legislation

HLB Mann Judd (WA Partnership) is a member of International, a world-wide organisation of accounting firms and business advisers

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2018 ANNUAL REPORT

INDEPENDENT AUDITOR'S REPORT

Key Audit Matter

How our audit addressed the key audit
matter

Carrying value of Property, Plant and Equipment
Refer to Notes 11 and 1(d) of the Financial Statements

The Group has property, plant and equipment of
$2,771,549 at balance date.

The Group is required to assess whether there are
any indicators of impairment in relation to this class
of assets.

Management has determined that an indicator of
impairment existed at balance date, in relation to
the Sinclair Nickel plant and equipment that is on
care and maintenance with a carrying value of
has
$2,636,002. Accordingly, management
conducted an
the
carrying amount of property, plant and equipment,
and concluded that no impairment expense was
required to be recognised in respect of property,
plant and equipment at balance date.

impairment assessment of

Our procedures included but were not
limited to the following:
- We obtained an understanding of the
key controls associated with
the
assessment of impairment;
evaluated

management’s
assessment of the recoverable value
of property, plant and equipment; and
- We assessed the appropriateness of
the

included

- We

the disclosures
financial report.

The assessment of impairment of the carrying value
of property, plant and equipment is a key audit
matter as there are a number of judgements
required in determining the recoverable value of
these assets.

Deferred Exploration and Evaluation Expenditure
Refer to Notes 13 and 1(d) of the Financial Statements

In accordance with AASB 6 Exploration for and
Evaluation of Mineral Resources,
the Group
capitalises acquisition costs of rights to explore and
applies the cost model after recognition. The Group
has $14,000,000 of capitalised exploration
expenditure as at 30 June 2018 in relation to the
Sinclair Nickel Project.

We focused on this matter because this is one of
the significant assets of the Group and due to the
fact that judgement is required in determining the
existence of any indicators of impairment and
whether the continued recognition requirements are
met.

Our procedures included but were not
limited to the following:
- We obtained an understanding of the
key processes associated with
management’s
the
exploration and evaluation asset
carrying values;

review

- We

considered

the Directors’
assessment of potential indicators of
impairment;

- We obtained evidence that the Group
has current rights to tenure of the
Sinclair Nickel Project;

- We examined the exploration budget
for future periods and discussed with
management the nature of planned
ongoing activities; and

- We examined the disclosures made in

the financial report.

Discontinued Operations and Assets and Liabilities
Classified as Held for Sale
Refer to Notes 5 and 27 of the Financial Statements

On 8 June 2018, the Group announced its intention
to sell its interest in the Springfield Joint Venture to
Sandfire Resources NL. As a result of this
is
transaction,

the Springfield Joint Venture

Our procedures included but were not
limited to the following:
- We read and considered the sale
agreement giving effect to the sale of

2018 ANNUAL REPORT

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INDEPENDENT AUDITOR'S REPORT

Key Audit Matter

accounted for as a discontinued operation and the
assets and liabilities of the Springfield Joint Venture
are classified as held for sale.

financial report

The recognition and disclosure of this transaction in
the
is complex and required
significant audit attention, as the Group needed to
separate its assets, liabilities and operations into
continuing and discontinued business operations
which has a significant impact on the financial
results and financial position of the Group.

We considered this to be a key audit matter as it is
important to users’ understanding of the financial
statements as a whole.

How our audit addressed the key audit
matter

the Group’s interest in the Springfield
Joint Venture;

- We recalculated the carrying value of
the assets and liabilities as identified
in the sale agreement to test that
these were accurately separated from
the continuing business;

- We considered the tax implications of

the sale; and

- We

examined

disclosures
included in the financial report in
relation to this transaction.

the

Information Other than the Financial Report and Auditor’s Report Thereon

The directors are responsible for the other information. The other information comprises the information
included in the Group’s annual report for the year ended 30 June 2018, but does not include the financial
report and our auditor’s report thereon.

Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon.

In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of the Directors for the Financial Report

The directors of the Company are responsible for the preparation of the financial report that gives a true
and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and
for such internal control as the directors determine is necessary to enable the preparation of the financial
report that gives a true and fair view and is free from material misstatement, whether due to fraud or
error.

In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.

Auditor’s Responsibilities for the Audit of the Financial Report

Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with Australian Auditing Standards will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are considered material if, individually
or in the aggregate, they could reasonably be expected to influence the economic decisions of users
taken on the basis of this financial report.

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2018 ANNUAL REPORT

INDEPENDENT AUDITOR'S REPORT

As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgement and maintain professional scepticism throughout the audit. We also:



Identify and assess the risks of material misstatement of the financial report, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a
material misstatement resulting from fraud is higher than for one resulting from error, as fraud may
involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal
control.

 Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Group’s internal control.

 Evaluate the appropriateness of accounting policies used and the reasonableness of accounting

estimates and related disclosures made by the directors.

 Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events
or conditions that may cast significant doubt on the Group’s ability to continue as a going concern.
If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s
report to the related disclosures in the financial report or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of
our auditor’s report. However, future events or conditions may cause the Group to cease to
continue as a going concern.

 Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events in
a manner that achieves fair presentation.

 Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the financial report. We are
responsible for the direction, supervision and performance of the Group audit. We remain solely
responsible for our audit opinion.

We communicate with the directors regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.

We also provide the directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with the directors, we determine those matters that were of most
significance in the audit of the financial report of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.

REPORT ON THE REMUNERATION REPORT

Opinion on the Remuneration Report

We have audited the Remuneration Report included in the directors’ report for the year ended 30 June
2018.

In our opinion, the Remuneration Report of Talisman Mining Limited for the year ended 30 June 2018
complies with section 300A of the Corporations Act 2001.

2018 ANNUAL REPORT

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INDEPENDENT AUDITOR'S REPORT

Responsibilities

The directors of the Company are responsible for the preparation and presentation of the Remuneration
Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express
an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian
Auditing Standards.

HLB Mann Judd
Chartered Accountants

Perth, Western Australia
28 September 2018

L Di Giallonardo
Partner

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2018 ANNUAL REPORT

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2018 ANNUAL REPORT

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43

INDEX TO THE FINANCIAL
REPORT

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

CONSOLIDATED STATEMENT OF CASH FLOWS

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note 1: Statement of Significant Accounting Policies

Note 2: Revenue and Expenses

Note 3: Income tax

Note 4: Segment Reporting

Note 5: Discontinued Operations and Assets and Liabilities Classified as Held for Sale

Note 6: Earnings/Loss Per Share

Note 7: Cash and Cash Equivalents

Note 8: Trade and Other Receivables

Note 9: Other Financial Assets

Note 10: Joint Arrangements

Note 11: Property, plant and equipment

Note 12: Intangible Assets

Note 13: Deferred exploration and evaluation expenditure

Note 14: Mine Properties and Development

Note 15: Trade and Other Payables

Note 16: Borrowings

Note 17: Provisions

Note 18: Issued Capital

Note 19: Reserves

Note 20: Share-Based Payment Plans

Note 21: Financial Instruments

Note 22: Commitment and Contingencies

Note 23: Related Party Disclosures

Note 24: Interest in Subsidiaries

Note 25: Parent Entity Disclosures

Note 26: Auditor’s Remuneration

Note 27: Subsequent Events

ADDITIONAL SECURITIES EXCHANGE INFORMATION

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2018 ANNUAL REPORT

CONSOLIDATED STATEMENT
OF FINANCIAL POSITION

AS AT 30 JUNE 2018

Assets

Current Assets

Cash and cash equivalents

Trade and other receivables

Assets classified as held for sale

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

Liabilities directly associated with assets held for sale

Total Current Liabilities

Non-Current Liabilities

Provisions

Total Non-Current Liabilities

Total Liabilities

Net Assets

Equity

Issued capital

Reserves

Accumulated losses

Total Equity

Note

30 Jun 18

30 Jun 17

$ `000

470

11,595

253

222

21,350

22,073

11,817

179

121

2,772

2,905

2,098

14,000

16,975

19,223

39,048

31,040

788

845

17,774

18,612

889

8,792

8,536

8,792

8,536

27,404

9,425

11,644

21,615

60,882

1,679

1,307

(50,917)

(40,574)

11,644

21,615

2018 ANNUAL REPORT

45
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45

The accompanying notes form part of these financial statements.

CONSOLIDATED STATEMENT
OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 30 JUNE 2018

Continuing operations

Revenue

Other income

Exploration expenditure expensed as incurred

Employee benefits expense

Legal and Corporate Advisory Expenses

Care and Maintenance expense

Administrative expenses

Occupancy expenses

Unwinding of discount on provisions

Impairment of available-for-sale financial assets

Depreciation and amortisation expense

Note

30 Jun 18

Restated(i)
30 Jun 17

$ `000

(3,179)

(1,626)

(437)

(455)

(451)

(119)

(256)

(107)

(77)

394

(3,480)

(1,791)

(430)

(647)

(639)

(122)

(249)

(60)

Loss before income tax expense from continuing operations

(6,607)

(7,021)

Income tax benefit

Loss after tax from continuing operations

Loss after tax from discontinued operation

Net loss for the year

Other comprehensive income for the period, net of tax

Items that have been reclassified to profit or loss

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

Other comprehensive loss for the period, net of tax

Total comprehensive loss for the period

Loss per share:

Basic loss per share (cents per share)

Diluted loss per share (cents per share)

Basic loss per share from continuing operations (cents per share)

Diluted loss per share from continuing operations (cents per share)

(i) The comparatives have been restated for the discontinued operation.

(6,607)

(3,916)

(7,021)

(1,644)

(10,523)

(8,665)

(14)

(10,537)

(8,665)

(5.67)

n/a

(3.56)

n/a

(4.67)

n/a

(3.78)

n/a

The accompanying notes form part of these financial statements.

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2018 ANNUAL REPORT

CONSOLIDATED STATEMENT OF
CASH FLOWS

FOR THE YEAR ENDED 30 JUNE 2018

Cash flows from operating activities

Payments to suppliers and employees

Payments for exploration and evaluation

Transaction finance costs

Receipts of R&D tax rebate

Interest received

Note

30 Jun 18

30 Jun 17

$ `000

inflows/(outflows)

(2,495)

(4,066)

(1,659)

100

(2,692)

(5,012)

516

Net cash used in operating activities

(8,036)

(7,188)

Cash flows from investing activities

Payments for mine properties and development

Payments for property, plant and equipment

Reallocation of cash to available for sale assets

Net cash used in investing activities

Cash flows from financing activities

Proceeds from borrowings

Net cash provided by financing activities

Net decrease in cash held

Cash and cash equivalents at the beginning of the period

Cash and cash equivalents at the end of the period

(6,026)

(7,099)

(4,879)

(1,244)

(217)

(18,004)

(1,461)

14,915

(11,125)

11,595

470

(8,649)

20,244

11,595

The accompanying notes form part of these financial statements.

2018 ANNUAL REPORT

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CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY

FOR THE YEAR ENDED 30 JUNE 2018

Issued
Capital

Accumulated
Losses

Asset
Revaluation
Reserve

Share-
based
Payments
Reserve

Total Equity

$ `000

60,882

(32,025)

394

29,265

(8,665)

116

60,882

(40,574)

60,882

(40,574)

(10,523)

180

60,882

(50,917)

(14)

(10,523)

(14)

1,015

(116)

1,293

(8,665)

1,015

21,615

1,293

21,615

566

(180)

(10,523)

(14)

(10,537)

566

1,679

11,644

Balance at 1 July 2016

Loss for the period

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

Total comprehensive loss for the period

Shares issued during the year

Recognition of share-based payments

Unlisted options lapsing

Balance at 30 June 2017

Balance at 1 July 2017

Loss for the period

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

Total comprehensive loss for the period

Shares issued during the year

Recognition of share-based payments

Unlisted options lapsed

Balance at 30 June 2018

The accompanying notes form part of these financial statements.

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2018 ANNUAL REPORT

NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS

NOTE 1: STATEMENT OF SIGNIFICANT
ACCOUNTING POLICIES

(b) Adoption of new and revised

standards

Talisman Mining Limited (the Company) is a public company
listed on the Australian Securities Exchange (trading under the
symbol “TLM”) and incorporated and operating in Australia.

The Company’s Registered Office and its principal place of
business are as follows:

Standards and Interpretations applicable to 30 June 2018

In the year ended 30 June 2018, the Directors have reviewed all
of the new and revised Standards and Interpretations issued
by the AASB that are relevant to the Group and effective for
the current annual reporting period.

Level 11 / 2 Mill Street
Perth
Western Australia 6000

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 Group’s principal activities are exploration for, and
development of, base metals and other minerals, including
copper, copper-gold, gold and nickel.

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 Group 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 2018
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

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
standard. The changes in the Group’s accounting policies
from the adoption of AASB 9 will be applied from 1 July 2018
onwards.

AASB 15 Revenue from Contracts with Customers

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

2018 ANNUAL REPORT

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49

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 leases. As at 30 June 2018, the Group has
$427,425 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 expects an increase in reported earnings before interest,
tax, depreciation and amortisation (EBITDA) and an 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
2018.

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 20.

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2018 ANNUAL REPORT

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFair 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.

Provision for restoration and rehabilitation

The provision for restoration and rehabilitation 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 restoration and
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 restoration and
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
restoration and 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.

Exploration and evaluation expenditure carried forward

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.

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 Sinclair plant and equipment that is on care
and maintenance. The Group commissioned an independent
valuation of the Sinclair Nickel Project plant and equipment in
August 2017. This concluded that no impairment expense was
required to be recognised in respect of these assets at that
time. Since that time, the Directors have continued to review
the carrying value of these assets and maintain their belief that
no impairment expense is required to be recorded.

(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;

• potential voting rights held by the Company, other

vote holders or other parties; rights arising from other
contractual arrangements; and

2018 ANNUAL REPORT

51
51
51

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS• 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 the 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.

Revenue

Bank interest received and receivable

Other Income

Other income

Profit on disposal of asset

Other Expenses

Loss for the year includes the following expenses:

Non-cash share based payment expense

Other employee benefits

Operating lease rental expense

Legal and Corporate Advisory Expenses

Corporate advisory fees

Other legal fees

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2018 ANNUAL REPORT

30 Jun 18

30 Jun 17

$ `000

394

30 Jun 18

30 Jun 17

$ `000

30 Jun 18

30 Jun 17

$ `000

566

1,060

119

1,014

777

122

30 Jun 18

30 Jun 17

$ `000

136

128

301

302

437

430

2018 ANNUAL REPORT

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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 differences 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.

R&D tax rebates are presented with the government grant
approach. The credit will be recognised in profit before tax over
the periods necessary to match the benefit of the credit with
the costs for which it is intended to compensate. These periods
will then depend on whether the R&D costs are capitalised or
expensed as incurred.

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.

2018 ANNUAL REPORT

53
53
53

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSThe 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

(10,523)

(8,665)

30 Jun 18

30 Jun 17

$`000

Income tax benefit calculated at 30% (2017: 30%)

Non-deductible expenses

Tax losses and deferred tax balances not recognised

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

Income Tax expense not recognised directly in equity during the year

(3,157)

149

(3,008)

(2,600)

429

2,171

30 Jun 18

30 Jun 17

$`000

14,787

2,175

745

17,707

707

13,071

2,151

(217)

15,005

1,536

360

1,896

297

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.

54
54
54

2018 ANNUAL REPORT

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4: SEGMENT REPORTING

Talisman management has determined the operating
segments based on the reports reviewed by the Board
for strategic decision making. The Group operates in one
geographical segment, being Australia and has identified the
following operating segments: Monty Operation and Regional
Exploration.

The Monty Operation represents the Group’s 30% joint
venture interest in the Monty Cu-Au Project (Monty). Sandfire
Resources NL (Sandfire) is the manager of Monty and holds

the remaining 70% interest. Work programs and budgets are
provided by Sandfire and are considered for approval by the
Company’s Board.

The Group’s General Manager Geology is responsible for
budgets and expenditures relating to the Group’s Regional
Exploration activities. Regional Exploration activities do not
normally derive any income. Should a project generated by
Regional Exploration activities commence generating income or
lead to the development of a mining operation, that operation
would then be disaggregated from Regional Exploration and
become reportable in a different segment.

Segment Results

30 June 2018

Segment revenues/income

Segment (loss)/profit before income tax expenses

Segment assets

Segment liabilities

30 June 2017

Segment revenues/income

Segment (loss)/profit before income tax expenses

Segment assets

Segment liabilities

Continuing
Operations

Discontinued
Operation

Regional
Exploration

$ `000

(3,891)

16,737

Monty
Project

$ `000

154

(3,916)

21,350

(8,831)

(17,774)

Unallocated

Items Consolidated

$ `000

254

(2,716)

(10,523)

961

(799)

39,048

(27,404)

(3,057)

16,649

(8,536)

(1,644)

2,774

(421)

397

(3,964)

11,617

(468)

397

(8,665)

31,040

(9,425)

2018 ANNUAL REPORT

55
55
55

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5: DISCONTINUED
OPERATIONS AND ASSETS AND
LIABILITIES CLASSIFIED AS HELD
FOR SALE

Non-current assets (or disposal groups) are classified as held
for sale if their carrying amount will be recovered principally
through a sale transaction rather than through continuing
use. This condition is regarded as met only when the asset (or
disposal group) is available for immediate sale in its present
condition subject only to terms that are usual and customary
for sales for such asset (or disposal groups) and the sale
is highly probable. Management must be committed to the
sale, which should be expected to qualify for recognition as a
complete sale within one year from the date of classification.

When the Group is committed to a sale plan involving loss of
control of a subsidiary, all of the assets and liabilities of that
subsidiary are classified as held for sale when the criteria
described above are met, regardless of whether the Group will
retain a non-controlling interest in its former subsidiary, after
the sale.

When the Group is committed to a sale plan involving
disposal of an investment, or a portion of an investment, in

an associate or joint venture, the investment or the portion of
the investment that will be disposed of is classified as held for
sale when the criteria described above are met, and the Group
discontinues the use of the equity method in relation to the
portion that is classified as held for sale. Any retained portion
of an investment in an associate or joint venture that has not
been classified as held for sale continues to be accounted for
using the equity method. The Group discontinues the use of the
equity method at the time of disposal when the disposal results
in the Group losing significant influence over the associate or
joint venture.

After the disposal takes place, the Group accounts for any
retained interest in the associate or joint venture in accordance
with AASB 139 unless the retained interest continues to be an
associate or a joint venture, in which case the Group uses the
equity method.

On 8 June 2018 the Group announced its intention to sell its
interest in the Doolgunna Projects Joint Venture to Sandfire
Resources NL, for further information please see Note 27.

Financial Performance

The financial performance of the discontinued operation is
presented below:

Financial performance of discontinued operations

Other Income

Expenses

Exploration expenditure expensed as incurred

Employee benefits expense

Borrowing costs

Unrealised foreign exchange

Administration expenses

Loss before income tax

Income tax

Loss after income tax

30 Jun 18

30 Jun 17

$ `000

154

(1,434)

(35)

(1,659)

(644)

(298)

(1,644)

(3,916)

(1,644)

(3,916)

(1,644)

56
56
56

2018 ANNUAL REPORT

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The major classes of assets and liabilities comprising the operation classified as held for sale at balance date are as follows:

ASSETS

Cash

Other receivables

Assets under construction(i)

Mine Development(ii)

LIABILITIES

Trade Creditors

Rehab, restoration and dismantling provision(iii)

Loan - Project Financing(iv)

Net assets classified as held for sale

(i) Refer to Note 11
(ii) Refer to Note 14
(iii) Refer to Note 17
(iv) Refer to Note 16

30 Jun 18

$ `000

4,879

240

7,199

9,032

21,350

1,307

908

15,559

17,774

3,576

NOTE 6: EARNINGS/LOSS PER SHARE

Basic earnings/loss per share is calculated as net profit/loss
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/loss
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

Basic loss per share from continuing operations

Net loss for the year

Net loss for the year from continuing operations

30 Jun 18

30 Jun 17

cents

(5.67)

(3.56)

(10,523)

(6,607)

Number

cents

(4.67)

(3.78)

(8,665)

(7,021)

Number

Weighted average number of ordinary shares for the purpose of basic loss per share

185,699,879

2018 ANNUAL REPORT

57
57
57

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 7: 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 18

30 Jun 17

$ `000

390

1,966

9,629

470

11,595

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:

Loss for the year after tax

Adjustments for:

Gain on disposal of asset

Depreciation and amortisation included in income statement

Unwinding discount rate on mine closure provision

Impairment of available-for-sale financial assets

Equity settled share-based payments

Unrealised foreign exchange

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

30 Jun 18

30 Jun 17

$ `000

(10,523)

(8,665)

(40)

256

107

249

566

1,014

644

(392)

1,263

(8,036)

(7,188)

58
58
58

2018 ANNUAL REPORT

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 8: 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. There are no
receivables at balance date that are past-due.

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.

Current Assets

Goods and services tax recoverable

Other debtors

Prepayments

Non-Current Assets

Other debtors - security bonds

30 Jun 18

30 Jun 17

$ `000

121

168

253

222

179

NOTE 9: 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.

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.

2018 ANNUAL REPORT

59
59
59

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Other Financial Assets

Non-Current

30 Jun 18

30 Jun 17

$ `000

Available-for-sale listed investments carried at fair value

121

The Group’s available-for-sale listed investment have been
impaired during the year as the investments were delisted from
the Australian Securities Exchange.

NOTE 10: 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 been executed between Talisman and Sandfire for the
Joint Venture (collectively Joint Venture Agreements). The EJVA
covers the ongoing exploration activities of the Doolgunna
Projects 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 now funded jointly by the Group
and Sandfire on a 30%:70% basis in accordance with the Joint
Venture Agreements. Following the discovery of high grade
copper-gold mineralisation at the Monty Deposit in 2015,
the joint venture completed a positive feasibility study and
commenced initial mine development for Monty during the
2017 financial year. On-site construction activities for Monty
have progressed during the 2018 financial year with pre-
production surface and underground infrastructure installed
and in-use. First ore production remains on schedule for the
second half of the 2019 financial year.

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 Doolgunna
Projects. Sandfire acts as the Joint Venture Manager of the
Halloween West Joint Venture.

On 8 June 2018, the Company announced to ASX that it had
reached in-principle agreement with Sandfire, its partner in the
Monty Mining Joint Venture and Springfield Exploration Joint
Venture (collectively the Doolgunna Projects), for the Company
to dispose of its entire interest in the share capital of its wholly
owned subsidiary Talisman A Pty Ltd. For further information
see Note 27.

The Group is entitled to a proportionate share of the income
received and bears a proportionate share of the joint
operation’s expenses.

60
60
60

2018 ANNUAL REPORT

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Joint Operation

Principal activity

Country of
incorporation

Ownership interest

2018

30%

19%

2017

30%

19%

30 Jun 18

30 Jun 17

$ `000

1,513

54,107

55,620

4,352

3,030

7,382

2,315

7,293

9,608

1,761

100

2,291

(2,191)

5,488

(5,478)

48,238

14,471

7,847

2,354

Doolgunna Joint Venture

Halloween West Joint Venture

Copper and Gold

Australia

Statement of financial position

Current assets

Non-current assets

Total assets

Current liabilities

Non-current liabilities

Total liabilities

Statement of comprehensive income

Revenue

Profit/ (Loss) for the year

Exploration and evaluation

Total comprehensive income

Reconcilation of summarised financial information to the carrying amount of the
interest in associate

Net asset of the associate

Carrying value of the Group’s interest in associate

NOTE 11: 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

Motor vehicles

Leasehold improvements

2-6 years

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.

2018 ANNUAL REPORT

61
61
61

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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
improve-
ments

Plant and
equipment

Motor
vehicles

$ `000

(33)

103

(31)

703

(600)

103

626

(567)

(1)

(26)

(25)

2,786

7,049

(7,199)

2,636

150

2,786

2,636

2,786

(26)

(28)

277

(244)

276

(217)

Total

$ `000

2,905

7,126

(7,199)

(60)

2,772

2,789

176

(60)

2,905

3,642

(870)

2,772

3,714

(809)

2,905

Year ended 30 June 2018

At 1 July 2017, net of accumulated depreciation

Additions

Disposals

Reclass to available for sale assets (i)

Depreciation charge for the year

Year ended 30 June 2017

At 1 July 2016, net of accumulated depreciation

Additions

Disposals

Depreciation charge for the year

At 30 June 2018

Cost or fair value

Accumulated depreciation

Net carrying amount

At 30 June 2017

Cost or fair value

Accumulated depreciation

Net carrying amount

(i) Refer Note 5.

The carrying value of plant and equipment held under finance lease and hire purchase contracts as at 30 June 2018 is nil (2017: nil).

62
62
62

2018 ANNUAL REPORT

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 12: 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.

Software license

Cost

Accumulated amortisation

Carrying value at end of financial year

NOTE 13: 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.

30 Jun 18

$ `000

30 Jun 17

$ `000

(17)

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 year

Expenditure incurred

Transfer to Mine Development

Exploration expensed as incurred

Carrying value at end of financial year

30 Jun 18

30 Jun 17

$ `000

14,000

14,544

4,613

5,124

(544)

18,613

19,124

(4,613)

(5,124)

14,000

2018 ANNUAL REPORT

63
63
63

2018 ANNUAL REPORT

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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 18

30 Jun 17

$ `000

5,872

1,697

4,175

2,824

28,056

1,434

26,622

2,214

587

1,482

Sinclair

Springfield(i)

Halloween West JV

Lachlan Copper

Other Exploration Expenses

36,087

4,613

31,474

5,124

(i) Includes the previous Halloween Project

NOTE 14: 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.

The net carrying value of each area of interest is reviewed
regularly and to the extent to which this value exceeds its

Mine Development

Opening Balance

Cost

Restoration and rehabilitation provision capitalised

Reclassification to available for sale assets(i)

Net carrying amount at end of financial year.

(i) Refer Note 5

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.

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.

30 Jun 18

30 Jun 17

$ `000

2,098

544

6,026

1,554

908

(9,032)

2,098

64
64
64

2018 ANNUAL REPORT

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 15: 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.

Current

Trade payables

Employee benefits

Other payables

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.

30 Jun 18

30 Jun 17

$ `000

482

253

788

618

146

845

NOTE 16: BORROWINGS

Borrowings

Borrowings are initially recognised at fair value, net of
transaction costs incurred. Borrowings are subsequently
measured at amortised cost. Any difference between the
proceeds (net of transaction costs) and the redemption amount
is recognised in profit or loss over the period of the borrowings
using the effective interest method. Fees paid on the
establishment of loan facilities are recognised as transaction
costs of the loan to the extent that it is probable that some or
all of the facility will be drawn down. In this case, the fee is
deferred until the draw down occurs. To the extent there is
no evidence that it is probable that some or all of the facility

will be drawn down, the fee is capitalised as a prepayment for
liquidity services and amortised over the period of the facility to
which it relates.

Borrowings are removed from the statement of financial
position when the obligation specified in the contract is
discharged, cancelled or expired. The difference between
the carrying amount of a financial liability that has been
extinguished or transferred to another party and the
consideration paid, including any non-cash assets transferred
or liabilities assumed, is recognised in profit or loss as other
income or finance costs.

Borrowings are classified as current liabilities unless the Group
has an unconditional right to defer settlement of the liability for
at least 12 months after the reporting period.

Secured

Project Finance Facility

Total secured borrowings

30 Jun 18

30 Jun 17

$ `000

2018 ANNUAL REPORT

65
65
65

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Balance as at as at 1 July 2017

Drawdown of loan facility

Exchange differences

Reclass to available for sale assets(i)

Balance as at 30 June 2018

(i) Refer Note 5

Fair value disclosures

Details of the fair value of the Group’s borrowings are set out in
Note 21.

Summary of borrowing arrangements

On 27 October 2017, the Group entered into a secured Project
Financing Facility (PFF) with Taurus Mining Finance Fund
(Taurus) for US$20 million. The PFF is guaranteed by the
parent company and secured by the Group’s interest in the
Monty project and is subject to a fixed interest rate of 6.75%
p.a. The PFF matures on 30 September 2020.

The PFF also includes a royalty of 2.25% on the Group’s gross
payable copper and gold metal-in-ore sales receipts from
Monty. The obligation to pay the royalty ceases once the
Group has received revenue from Monty sales containing
29,700 tonnes of copper and 16,500 ounces of gold.

in United States Dollars

Total Facilities

Project Facility

Working Capital Facility

Facilities used at balance date

Project Facility

Working Capital Facility

Facilities unused at balance date

Project Facility

Working Capital Facility

Total facilities

Facilities used at balance date

Facilities unused at balance date

66
66
66

2018 ANNUAL REPORT

Project Finance
Facility

$`000

14,915

644

(15,559)

Under the terms of the PFF, the Group is subject to certain
financing covenants including debt coverage ratios and
distribution restrictions. There have been no events of review of
default under the PFF during the full year.

On 28 June 2018, the Group entered into a secure Working
Capital Facility (WCF) with Taurus for US$ 3 million. The WCF
is secured by the Company’s shares in Haverford Holdings
Pty Ltd (a 100% owned subsidiary that holds the Company’s
interest in its NSW tenement) and Talisman Nickel Pty Ltd (a
100% owned subsidiary that holds the Company’s interest
in the Sinclair Nickel Project). The WCF is subject to a fixed
interest rate of 6.75% and matures on 30 June 2020. There
have been no events of review or default under the WCF
during the full year.

Financing Facilities Available

At balance date, the following financing facilities had been
negotiated and were available:

30 Jun 18

30 Jun 17

$ `000

20,000

3,000

23,000

11,500

8,500

3,000

11,500

23,000

2018 ANNUAL REPORT

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Borrowing Costs

Upfront Fees

Foreign Exchange - Unrealised

Interest Expense

Commitment Fee

Total borrowing costs

30 Jun 18

30 Jun 17

$ `000

795

644

683

181

2,303

The borrowing transaction costs have been expensed to profit and loss as the loan will be settled as part of the divestment of the
Group’s interest in the Doolgunna Projects Joint Venture.

NOTE 17: PROVISIONS

Employee benefits

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 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

Unwinding and discount rate adjustment

Restoration and rehabilitation recognised for Monty Development

Reclassification of Monty restoration and rehabilitation provision to available for sale(i)

Long service leave arising during the year

Balance at the end of financial year

(i) Refer to Note 5

Employee
Benefits

Restoration and
rehabilitation

$ `000

8,536

256

908

(908)

8,792

2018 ANNUAL REPORT

67
67
67

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Current

Employee benefits

Non-Current

Restoration and rehabilitation

NOTE 18: ISSUED CAPITAL

Ordinary shares

Issued and fully paid

Movements in ordinary shares on issue

At 1 July

At 30 June

30 Jun 18

30 Jun 17

$ `000

8,792

8,536

8,792

8,536

30 Jun 18

30 Jun 17

60,881,617

30 Jun 18

30 Jun 17

Number

185,699,879

60,881,617

185,699,879

60,881,617

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 entitled 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

NOTE 19: 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

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 20.

This reserve is used to record the value of equity benefits
provided to employees and Directors as part of their
remuneration. Refer to Note 20 for further details of these
plans.

68
68
68

2018 ANNUAL REPORT

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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 18

30 Jun 17

$ `000

(40,574)

(32,025)

(10,523)

(8,665)

180

116

(50,917)

(40,574)

1,679

1,293

1,679

1,307

Movement in these reserves are set out in the Statement of Changes in Equity

NOTE 20: SHARE-BASED 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.

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:

Grant Date

05-Dec-14

04-Mar-15

Expiry date of
options

Number of shares
under option

Exercise price
of options

Fair Value Vested Date

Number
Lapsed

31-Oct-17

625,000

31-Oct-17

625,000

01-Mar-18

125,000

01-Mar-18

125,000

01-Mar-18

125,000

01-Mar-18

125,000

$0.41

$0.49

$0.40

$0.50

$0.60

$0.70

$0.11

25-May-15

(625,000)

$0.10

24-Nov-15

(625,000)

$0.11

01-Sep-15

(125,000)

$0.10

01-Mar-16

(125,000)

$0.10

01-Sep-16

(125,000)

$0.09

01-Mar-17

(125,000)

The following options were forfeited during the financial year:

Grant Date

Expiry date of options

Number of shares
under option

Exercise price
of options

Fair Value Vested Date

11-Nov-16

31-Oct-19

31-Oct-21

10,000

$0.56

$0.62

$0.66

$0.23

30-Jun-18

$0.32

30-Jun-19

$0.32

30-Jun-20

Number
Forfeited

(10,000)

No options were issued during the financial year.

2018 ANNUAL REPORT

69
69
69

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The following share-based arrangements were in place at the end of the financial year:

Issuing entity

Grant Date

Expiry date
of options

Number of
shares under
option

Exercise
price of
options

Fair

Value Vested Date

Talisman Mining Limited

11-Nov-16

31-Oct-18

1,755,000

$0.48

$0.23

11-Nov-16

Talisman Mining Limited

11-Nov-16

31-Oct-19

1,550,000

$0.52

$0.27

30-Jun-17

Talisman Mining Limited

11-Nov-16

31-Oct-19

1,540,000

$0.56

$0.23

30-Jun-18

Talisman Mining Limited

11-Nov-16

31-Oct-21

1,540,000

$0.62

$0.32

30-Jun-19

Talisman Mining Limited

11-Nov-16

31-Oct-21

1,540,000

$0.66

$0.32

30-Jun-20

There has been no alteration of the terms and conditions of the above share-based payment arrangement since grant date.

30 Jun 18

30 Jun 17

Number

Movements in options over ordinary shares on issue

At 1 July

9,705,000

1,292,836

5,650,000

395,389

Directors’ and employees’ remuneration

569,794

8,775,000

1,252,411

Unlisted options forfeited

Unlisted options cancelled

Unlisted options lapsed

At 30 June

(30,000)

(3,692)

(820,000)

(92,334)

(1,150,000)

(146,185)

(1,750,000)

(180,102)

(2,750,000)

(116,445)

7,925,000

1,678,836

9,705,000

1,292,836

The fair value of options granted during the year was nil as no options were granted during the year. (2017: $2,273,195).

The fair value of the equity-settled share options granted under the option plan 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

$ 0.48

$ 0.52

$ 0.56

$ 0.62

$ 0.66

Grant date share price (5 day VWAP)

$ 0.425

Expected volatility

Risk-free interest rate

Dividend yield (%)

Expected life of options (years)

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.

NOTE 21: FINANCIAL INSTRUMENTS

(a) Introduction

The Group has exposure to the following risks arising from financial instruments:

• Credit risk

• Liquidity risk

•

Interest rate risk

• Capital risk

• Foreign currency risk

70
70
70

2018 ANNUAL REPORT

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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

(includes assets classified as held for sale and associated liabilities)

Financial assets

Cash and cash equivalents

Receivables

Available-for-sale investments

Financial liabilities

Trade and other payables

Borrowings

30 Jun 18

30 Jun 17

$ `000

5,349

618

5,967

2,095

15,559

17,654

11,595

280

121

11,996

845

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 a loss being recognised of
$106,500 (2017: Nil) in the statement of comprehensive
income. Additionally, as a result of this assessment a loss
of $14,000 (2017: Nil) was recognised in the line item “Net
change in the fair value of available-for-sale financial assets”.

The Directors consider that the carrying amounts of financial
assets and financial liabilities recorded in the financial
statements approximate their fair value.

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.

(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.

2018 ANNUAL REPORT

71
71
71

2018 ANNUAL REPORT

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2018

Financial Assets

Non-interest bearing

Variable interest rate

Fixed interest rate

Financial Liabilities

Non-interest bearing

Fixed interest rate

2017

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

Total

$ `000

618

5,269

5,887

1,893

1,439

694

4,549

5,080

6,682

5,080

202

15,559

15,761

700

146

618

5,269

5,967

2,095

15,559

17,654

1,439

694

9,629

11,762

846

(e) Interest rate risk

(f) Capital risk management

The Group is not exposed to interest rate risk on existing
finance facilities as the Group’s borrowings are at fixed
interest rates for the respective terms of the facilities. (Refer to
Note 16).

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 $26,000 (2017: net loss reduced
by $3,472).

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) Foreign currency exchange rate risk

management

The Group undertakes certain borrowing transactions
denominated in United States Dollars, hence exposures to
exchange rate fluctuations arises.

72
72
72

2018 ANNUAL REPORT

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities at balance date are as
follows:

US Dollars

Consolidated

Liabilities

Assets

2018

$’000

11,500

2017

$’000

2018

$’000

321

2017

$’000

Foreign currency sensitivity analysis

The sensitivity analysis below details the Group’s sensitivity to
an increase/decrease in the Australian dollar against the United
States dollar. The sensitivity analysis includes only outstanding
foreign currency denominated monetary items, including
external loans within the Group where the denomination of the
loan is in a currency other than the currency of the lender or the
borrower and adjusts their translation at balance date by a 1%
increase in foreign currency rates.

A 1% increase in the currency rate is the sensitivity rate used
when reporting foreign currency risk internally to management
and represents management’s assessment of the possible
change in foreign exchange rates.

At balance date, if foreign exchange rates had been 1% higher
and all other variables were held constant, the Group’s

• net loss would increase by $151,249 (2017: $Nil) and

• equity reserves would increase/decrease by $Nil (2017: $Nil).

(h) 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 2018 and 30
June 2017.

Level 1
$ `000

Level 2
$ `000

Level 3
$ `000

Total
$ `000

2018

Assets

Available-for-sale financial assets

2017

Assets

Available-for-sale financial assets

121

NOTE 22: 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 18

30 Jun 17

3,367

2,849

11,458

9,929

17,710

19,873

32,535

32,651

2018 ANNUAL REPORT

73
73
73

2018 ANNUAL REPORT

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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.

Operating leases

Operating lease arrangements comprise an agreement for the
rental of office space with a lease term of 1 or 3 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 18

30 Jun 17

160

117

267

177

427

294

NOTE 23: 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
Daniel Madden
Alan Senior
Brian Dawes
Karen Gadsby

Executives

Non-Executive Chairman
Managing Director
Non-Executive Director
Non-Executive Director
Non-Executive Director

Shaun Vokes
Anthony Greenaway General Manager – Geology

Chief Financial Officer/ Company Secretary

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)

Total key management personnel compensation

30 Jun 18

30 Jun 17

1,112,528

1,240,742

96,266

116,325

5,833

44,367

535,340

1,066,578

1,749,967

2,468,012

(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 24: INTEREST IN SUBSIDIARIES

The consolidated financial statements include the financial statements of Talisman Mining Limited and the subsidiaries listed in the
following table:

Country of
Incorporation

Australia

Equity Interest

Investment

2018

2017

2018

2017

100

68,000

Name

Talisman A Pty Ltd

Talisman Nickel Pty Ltd

Haverford Holdings Pty Ltd

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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.

Investments in subsidiaries, associates and joint venture entities

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.

Details of transactions between the Group and other related
entities are disclosed below.

Share-based payments

NOTE 25: 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.

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 2018 and for the year then ended in
relation to Talisman Mining Limited as a single entity are noted
below.

30 Jun 18

30 Jun 17

$ `000

Assets

Current assets

Non-current assets

Total assets

Liabilities

Current liabilities

Total liabilities

Net assets

Equity

Issued capital

Asset revaluation reserve

Share based payment reserve

Retained earnings

Total equity

Loss for the year

573

346

919

801

118

60,882

1,679

(62,443)

118

11,229

396

11,625

361

11,264

60,882

1,293

(50,925)

11,264

Year ended

30 Jun 18

30 Jun 17

$ `000

(11,518)

(9,803)

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

(14)

Total comprehensive loss

(11,532)

(9,803)

2018 ANNUAL REPORT

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 26: AUDITOR’S REMUNERATION

The auditor of Talisman Mining Limited is HLB Mann Judd.

Preparation of Fringe Benefit Tax Return

Audit or review of the financial report

Total Remuneration of Auditors

NOTE 27: SUBSEQUENT EVENTS

Sandfire Transaction

Subsequently, as the Company announced to ASX on 8 August
2018, the Company and Sandfire entered into a Share Sale
Agreement to fully document the Share Sale. The Company,
Talisman A and Sandfire have also executed an NSR Royalty
Deed, described below.

Completion of the Share Sale is conditional on the Company
convening a general meeting for the purposes of its
shareholders considering, and if thought fit, passing a
resolution approving the sale of the Sale Shares to Sandfire.
As the Company announced to the ASX on 28 August 2018,
the general meeting is scheduled for 4 October 2018 and it
is anticipated that the Share Sale should complete, assuming
shareholders vote in favour, by 12 October 2018.

Share Sale Agreement and NSR Royalty

In consideration for the Share Sale, at completion the Company
is to receive net cash from Sandfire equal to A$72.3 million
less the amounts to be paid at completion to the Taurus Mining
Finance Fund AIV L.P. and Taurus Mining Finance Annex Fund
AIV L.P. (the Taurus Lenders) by Sandfire on behalf of:

• Talisman A, to repay debt owed at completion by Talisman

A (to the extent Talisman A’s cash reserves at completion
are insufficient) under the Monty Project Finance Facility;
and

•

the Company, equal to the amount owed at completion by
the Company under the Taurus Working Capital Facility
announced by the Company to the ASX on 28 June 2018.

As at the date of this financial report the current drawn amount
of the Monty Project Finance Facility is US$11.5 million and the

30 Jun 18

30 Jun 17

2,000

37,500

37,300

39,500

39,300

current drawn amount of the Taurus Working Capital Facility
is US$1.5 million, which may vary prior to completion of the
Share Sale.

Sandfire will assume, via its acquisition of Talisman A, an
amended form of the existing 2.25% gross revenue royalty held
by the Taurus Lenders over Talisman A’s 30% share of Monty.

Sandfire has further agreed that it will pay any additional
capital contributions which Talisman A would otherwise be
obliged to pay as a joint venture party under any cash calls
made from 5 June 2018 for the Doolgunna Projects, including
for Monty development (subject to completion of the Share
Sale). As at the date of this financial report, cash calls paid
by Sandfire on behalf of Talisman A totaled A$3.567 million.
No additional forecast cash calls are expected to be paid by
Sandfire on behalf of Talisman A prior to completion of the
Share Sale. If the Share Sale Agreement is terminated without
completion of the Share Sale occurring, the Company must pay
back to Sandfire the aggregate cash calls within 20 Business
Days of the termination of the Share Sale Agreement.

In addition, the Company, Talisman A and Sandfire have also
executed a NSR Royalty Deed (NSR Royalty Deed) pursuant
to which Talisman A grants to the Company an uncapped and
perpetual 1.0% Net Smelter Return (NSR) Royalty applying
to 100% of all contained copper and gold in ore mined and
sold from within the Doolgunna Projects tenement area above
the respective contained metal levels in the Monty Mine Plan
(based on the Monty Feasibility Study released in April 2017)
(NSR Royalty).

Payment of the NSR Royalty is guaranteed by Sandfire. Each
of Sandfire and Talisman A may sell, assign or otherwise
dispose of part or all of their interest in the Doolgunna Projects
tenement area, provided that the relevant buyer or assignee
agrees to assume, be bound by and perform the obligations
under the NSR Royalty Deed of whichever of Sandfire or
Talisman A sold or assigned their interest. The Company has
granted a right of last refusal to Talisman A (or any subsequent
buyer or assignee of Talisman A’s obligations under the NSR
Royalty) on any sale or disposal of the Company’s rights to the
NSR Royalty. If the Share Sale Agreement is terminated, the
NSR Royalty Deed also terminates.

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2018 ANNUAL REPORT
2018 ANNUAL REPORT

2018 ANNUAL REPORT

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DIRECTORS’ DECLARATION

The Directors of the Company declare that:

1. The consolidated financial statements, comprising the Consolidated Statement of Comprehensive Income, Consolidated

Statement of Financial Position, Consolidated Statement of Cash Flows, Consolidated Statement of Changes in Equity, and
accompanying notes, as set out on pages 45 to 76 are in accordance with the Corporations Act 2001, and:

(a) comply with Accounting Standards and the Corporations Regulations 2001; and

(b) give a true and fair view of the financial position as at 30 June 2018 and of the performance for the year ended on that date

of the Group;

2. The Managing Director and the Chief Financial Officer of the Group have each declared as required by Section 295A that:

(a) the financial records of the Group for the financial year have been properly maintained in accordance with Section 286 of the

Corporations Act 2001;

(b) the financial statements and notes for the financial year comply with the Accounting Standards; and

3. 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.

4. The Group has included in the notes to the financial statements an explicit and unreserved statement of compliance with

International Financial Reporting Standards.

Signed in accordance with a resolution of Directors made pursuant to s.298(5) of the Corporations Act 2011.

On behalf of the Directors

Daniel Madden
Managing Director

Perth, 28 September 2018

2018 ANNUAL REPORT

2018 ANNUAL REPORT
2018 ANNUAL REPORT

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ADDITIONAL SECURITIES
EXCHANGE INFORMATION

AS AT 24 SEPTEMBER 2018

1. NUMBER OF HOLDERS OF EQUITY SECURITIES

(a) Distribution of holders of equity securities

Range

1 to 1,000

1,001 to 5,000

5,001 to 10,000

10,001 to 100,000

100,001 and Over

Total

(b) Voting rights

No. of holders

161

570

456

878

243

2,308

Securities

81,067

1,758,541

3,987,286

33,167,547

146,705,438

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.

The number of shareholders holding less than a marketable parcel is 246 (holding a total of 195,504 shares) given a share value of
$0.28 cents per share.

(d) Substantial Shareholdings:

Mr Kerry Kyriakos Harmanis

34,259,138

Ordinary Shareholders

Fully paid ordinary shares

Number

18.45%

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:
Level 11, 2 Mill Street
Perth, Western Australia 6000
Telephone +61 8 9380 4230

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2018 ANNUAL REPORT

ADDITIONAL SECURITIES EXCHANGE INFORMATION

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

TWYNAM AGRICULTURAL GROUP PTY LTD

HARMANIS HOLDINGS PTY LTD

TYCHE HOLDINGS PTY LTD

GROSVENOR PIRIE MANAGEMENT LTD

JETOSEA PTY LTD

TYCHE HOLDINGS PTY LTD

HARMANIS HOLDINGS PTY LTD

JAYLEAF HOLDINGS PTY LTD

HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED

BACK9 INVESTMENT MANAGEMENT PTY LTD

INVESTMENT HOLDINGS PTY LTD

CITICORP NOMINEES PTY LIMITED

NATIONAL NOMINEES LIMITED

J P MORGAN NOMINEES AUSTRALIA LIMITED

MR WILLIAM ANTHONY MURRAY

SIREB PTY LTD

SYDNEY FUND MANAGERS LIMITED

BT PORTFOLIO SERVICES LIMITED

TYCHE HOLDINGS PTY LTD

Number

11,111,111

6,400,001

5,665,000

4,437,575

3,850,000

3,800,000

3,748,583

3,510,000

3,080,451

3,000,000

2,916,099

2,800,000

2,500,000

2,259,740

2,243,814

2,187,445

2,100,000

1,904,464

1,500,000

1,470,000

5.98

3.45

3.05

2.39

2.07

2.05

2.02

1.89

1.66

1.62

1.57

1.51

1.35

1.22

1.21

1.18

1.13

1.03

0.81

0.79

2018 ANNUAL REPORT

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ADDITIONAL SECURITIES EXCHANGE INFORMATION

7. UNQUOTED EQUITY SECURITIES

Class

Exercise Price

Expiry Date

Number

Unlisted options

$ 0.48

$ 0.52

$ 0.56

$ 0.62

$ 0.66

31-Oct-18

1,755,000

31-Oct-19

1,550,000

31-Oct-19

1,540,000

31-Oct-21

1,540,000

31-Oct-21

1,540,000

Number of
holders

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.

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2018 ANNUAL REPORT

Address:
Level 11 , 2 Mill Street
Perth WA 6000

PO Box 7446 Cloisters Square
Perth WA 6850

Phone:
+61 8 9380 4230

Fax:
+61 8 9382 8200