26 July 2016

COMPANY SNAPSHOT

Board of Directors Jeremy Kirkwood

Non-Executive Chairman

Dan Madden

Managing Director

Alan Senior

Non-Executive Director

Brian Dawes

Non-Executive Director

Karen Gadsby

Non-Executive Director

Contact Details Telephone:

+61 8 9380 4230

Email:

[email protected]

Website:

www.talismanmining.com.au

Capital Structure

Shares on Issue:

185,699,879 (TLM)

Options on Issue:

5,650,000 (Unlisted)

Quarterly Activities Report June 2016

Springfield Cu-Au Project - (JV with Sandfire Resources NL)

• Monty high level study completed with no fatal flaws identified.

• Mining Lease Application lodged for the Monty Copper-Gold Project.

• Feasibility Study now being progressed by the Joint Venture with multiple work streams in progress; Feasibility Study targeted for completion in Q1 2017.

• Site based exploration completed during the quarter included:

  • Diamond drilling for Monty metallurgical and geotechnical samples;

  • On-going campaign of systematic regional air-core drilling at Monty East;

  • RC drilling and DHEM in Monty and Homer regions, and to test discrete air-core geochemical anomalies;

  • Detailed SQUID EM survey over Monty and immediate extensions; and

  • Orientation surface soil sampling over Monty deposit.

• Metallurgical test work to characterise high grade Monty ore has commenced.

• Drilling program undertaken with detailed structural interpretation of the Monty deposit nearing completion. Construction of a 3D geological model has commenced.

• Commercial negotiations continuing to progress formal exploration and mining joint venture agreements.

Sinclair Ni Project

Springfield

Sinclair

• Development of staged, systematic exploration campaign in and around the Sinclair Mine and wider regional trend set to commence in Q3 2016.

• First phase of on-ground activities at Sinclair will include:

  • DEHM of holes completed in the 2015 drilling campaign;

  • Re-logging of historic drill core; and

  • Diamond and RC drilling at Delphi and Schmitz Well prospects.

    Corporate

    • Appointment of Mr Dan Madden as Managing Director, effective 1 July 2016.

Doolgunna Projects (Joint Venture with Sandfire Resources NL)

The Doolgunna Projects Joint Venture is between Talisman Mining Ltd ("Talisman" or the "Company" (ASX: TLM)) and Sandfire Resources NL ("Sandfire" (ASX: SFR)) (the "Joint Venture") with Sandfire acting as Joint Venture Manager. The Joint Venture encompasses the Springfield Project (30%:70%, TLM:SFR) and Halloween West Project (19%:81%, TLM:SFR) which are high quality VMS copper-gold exploration projects in the emerging world class Bryah Basin region of Western Australia (see Appendix 1). The discovery of exceptionally high grade copper-gold mineralisation and the maiden high grade Mineral Resource estimate for the Monty Copper-Gold Project ("Monty") has confirmed the significant exploration potential of the projects.

Springfield Project

With the maiden mineral resource for the Monty deposit completed in the March quarter, Joint Venture activities have now split into two streams. The first stream is focussed on development preparation and studies for the Monty deposit, while the second is centred on unlocking the regional exploration potential of the broader Joint Venture area.

Following on from the high level study completed during the quarter, the Joint Venture commenced a Feasibility Study ("FS") for the development of the Monty deposit. The Joint Venture Manager is now focusing on progressing the FS which is aiming to maximise the value of the Monty deposit through optimising the development path for the Joint Venture partners.

In parallel with the FS, the Joint Venture Manager's exploration team have adjusted efforts away from inward focused resource development activities that have dominated the on-ground work at Springfield since the discovery of the Monty deposit in mid-2015. Exploration activities will now take a more project- wide viewpoint, employing district scale targeting techniques (such as technologically advanced ground- based SQUID EM and orientation surface sampling), to add to the Joint Venture Manager's on-going strategy of systematic air-core drilling to define interpreted prospective exhalative stratigraphic horizons.

In conjunction with this work, the Joint Venture Manager has engaged specialist external consultants to complete a detailed structural evaluation of the Monty diamond drill core. This work is designed to provide insight on the impact of localised fault structures on the known mineralisation at Monty, along with geological context to the setting of the deposit. Findings from this study will drive targeting for planned deeper drilling in and around Monty which is budgeted to be undertaken in the quarter ending 30 September 2016.

The Joint Venture completed 3,286m of diamond drilling, 6,529m of reverse circulation ("RC") drilling and 32,277m of air-core drilling during the quarter (Table 2).

Monty Development Studies

A high level study assessing potential for mining the Monty deposit was completed by the Joint Venture during the quarter. The purpose of the study was to identify any fatal flaws and to investigate optionality of various facets of Monty development including surface infrastructure location, site access, applicable mining methods and permitting and approval pathways.

Results of the study work were positive with no fatal flaws identified and the Joint Venture has approved and commenced the Monty FS, with a budget of A$3.9M (100% basis). The FS is scheduled for completion in the March 2017 quarter and several work streams are currently in progress including:

• Metallurgical test work with a specific focus on comminution and flotation;

• Geotechnical and structural geology studies following the completion of targeted geotechnical diamond drill-holes through the Monty ore body;

• Mine design engineering including stoping, ore access and ventilation work;

• A preferred box-cut location has been selected with follow-up geotechnical drilling to commence shortly; and

• Evaluation of a proposed haul road route between Sandfire's DeGrussa Copper-Gold Mine ("DeGrussa") and Monty with design work to follow.

  In parallel with the FS activities, Sandfire and Talisman are continuing to progress formal exploration and mining joint venture agreements and are investigating potential ore process routes and terms.

  Subsequent to the end of the quarter, on 14 July 2016 (see ASX release "Monty Mining Lease Application"), the Joint Venture Manager submitted a Mining Lease Application ("MLA") to the Department of Mines and Petroleum of Western Australia ("DMP"), on behalf of the Joint Venture over the Monty Copper-Gold Project (Figure 1).

  Figure 1: Monty Copper-Gold Project mining lease application location

  The area of the MLA is 16.42km2 and covers the footprint of the known mineralisation of the Monty VMS deposit as well as the surrounding area which will be required for a box-cut and decline portal and other supporting mine infrastructure.

  The MLA process will be progressed in parallel with consultations and negotiations with relevant stakeholders and preparations for future mining activities.

  Exploration

  The completion of the maiden resource estimate for the high grade Monty deposit has highlighted the prospectivity of the Springfield and Halloween West Projects, and confirmed the Bryah Basin as an emerging, world-class VMS district.

  The geological focus of the JV Manager's on-site exploration team has now shifted to the wider Springfield Project.

  Exploration activities during the quarter, to further refine the exploration tools and methodology currently being employed for regional assessment and targeting, within the wider Springfield Project area included:

• Ongoing systematic air-core drilling;

• RC and diamond drilling of discrete geochemical and stratigraphic targets;

• Ground based detailed SQUID EM survey;

• Detailed orientation soil sampling; and

• Targeted structural diamond drilling and 3D geological modelling.

  Reverse Circulation (RC) and Diamond Drilling

  RC Drilling

  Drilling commenced across the wider Springfield Project area as part of the regional RC program to follow up favourable geology and anomalous geochemistry intersected in first pass air-core drilling, as well as targeting the interpreted host horizon.

  Despite adverse weather conditions late in the quarter limiting on-site drill rig movements, a total of 6,529m of RC drilling and 3,286m of diamond drilling were completed during the quarter.

  Results from RC drilling of a number of isolated discrete geochemical anomalies and targeting the interpreted host horizon to the south of Monty, have confirmed the presence of a prospective exhalative sedimentary package interpreted to be similar to the host sequence of VMS mineralisation at Monty and DeGrussa. While no ore grade mineralisation was intersected, locating the stratigraphic position of the interpreted host exhalative package in these wide spaced isolated RC drill-holes is seen as a positive outcome and reaffirms the use of air-core drilling and litho-geochemical indices as an initial targeting tool to locate the prospective host stratigraphy. Data from the RC drilling will be integrated with the larger regional dataset to further develop the geological model and utilised for targeting future RC and diamond drilling.

  Metallurgical and Geotechnical Drilling

  The majority of diamond drilling during the quarter was aimed at providing metallurgical and geotechnical samples from within the currently defined Monty mineralisation envelope.

  Assay samples were collected from the geotechnical drilling, with results confirming previously reported ore grades and widths within the defined Monty Resource envelopes including:

  • TLGT0004: 14.0m @ 14.8% Cu and 15.0 g/t Au from 332.7m (down-hole width);

  • TLGT0007: 7.9m @ 22.3% Cu and 0.3 g/t Au from 344.2m (down-hole width); and

  • TLGT0009: 14.6m @ 13.5% Cu and 2.4 g/t Au from 409.1m (down-hole width).

A full list of results from RC and diamond drilling completed during the quarter is provided in Table 3.