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TALISMAN MINING LTD A.B.N. 71 079 536 495

Corporate Governance Statement

Approach to Corporate Governance

Talisman Mining Limited ("Company") has adopted systems of control and accountability as the basis for the administration of corporate governance, the key features of which are set out in this Statement. The Board is committed to administering the policies and procedures with openness and integrity, pursuing the true spirit of corporate governance commensurate with the Company's needs and individual circumstances.

In establishing its corporate governance framework the Company has referred to the recommendations set out in the ASX Corporate Governance Council's Corporate Governance Principles and Recommendations 3rd edition ("Principles and Recommendations"). The Company has followed each recommendation where the Board has considered the recommendation to be an appropriate benchmark for its corporate governance practices. Where the Company's corporate governance practices follow a recommendation, the Board has made appropriate statements reporting on the adoption of the recommendation. In compliance with the "if not, why not" reporting regime, where, after due consideration the Company's corporate governance practices do not follow a recommendation, the Board has explained its reasons for not following the recommendation and disclosed what, if any, alternative practices the Company has adopted instead of those in the recommendation.

The following governance-related documents can be found on the Company's website at www.talismanmining.com.au, under the section marked "Corporate Governance".

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

  The Company reports below on whether it has followed each of the recommendation during the year ended 30 June 2016 ("Reporting Period"). The information in this Statement is current at, and was approved by, a resolution of the Board on 29 September 2016.

  Principle 1 - Lay solid foundations for management and oversight

  Recommendation 1.1

  The Company has established the respective roles and responsibilities of its Board and management, and those matters expressly reserved for the Board and those delegated to management and has documented this in its Board Charter, a copy of which is available on the Company's website.

  Recommendation 1.2

  The Company undertakes appropriate checks before appointing a person, or putting forward to shareholders a candidate for election as a director and provides shareholders with all material information in its possession relevant to a decision on whether or not to elect or re- elect a director.

  The checks which are undertaken, and the information provided to shareholders are set out in the Company's Policy and Procedure for the Selection and (Re)Appointment of Directors, a copy of which is available on the Company's website.

  Recommendation 1.3

  The Company has a written agreement with each director and senior executive setting out the terms of their appointment. The material terms of any employment, service or consultancy agreement the Company, or any of its child entities, has entered into with its Managing Director, any of its directors, and any other person or entity who is related party of the Managing Director or any of its directors has been disclosed in accordance with ASX Listing Rule 3.16.4 (taking into consideration the exclusions from disclosure outlined in that rule).

  Recommendation 1.4

  The Company Secretary is accountable directly to the Board, through the Chair, on all matters to do with the proper functioning of the Board as outlined in the Company's Board Charter.

  Recommendation 1.5

  The Company has a Diversity Policy, a copy of which is available on the Company's website. However, the Diversity Policy does not include requirements for the Board to set measurable objectives for achieving gender diversity and to assess annually both the objectives and the Company's progress in achieving them. Nor has the Board set measurable objectives for achieving gender diversity. Given the Company's stage of development as an exploration company and the number of employees, the Board considers that it is not practical to set measurable objectives for achieving gender diversity at this time.

  The respective proportions of men and women on the Board, in senior executive positions and across the whole organisation as at 30 June 2016 are set out in the following table. "Senior Executive" for these purposes means those persons who have the opportunity to materially influence the integrity, strategy and operation of the Company and its financial performance.

  Proportion of women
  Whole organisation	4 out of 11 (36%)
  Senior executive positions	0 out of 4 (0%)
  Board	1 out of 4 (25%)

  Recommendation 1.6

  The Chair is responsible for evaluation of the Board and, when deemed appropriate, Board committees and individual directors in accordance with the process disclosed in the Company's Process for Performance Evaluation, a copy of which is available on the Company's website.

  During the Reporting Period an evaluation of the Board, its committees, and individual directors took place in the Reporting Period in accordance with the process disclosed in the Company's Process for Performance Evaluation.

  Recommendation 1.7

  The Managing Director is responsible for evaluating the performance of senior executives in accordance with the process disclosed in the Company's Process for Performance Evaluations.

  The Nomination Committee is responsible for evaluating the performance of the Managing Director in accordance with the process disclosed in the Company's Process for Performance Evaluations.

  During the Reporting Period an evaluation of senior executives took place in accordance with the process disclosed.

  Principle 2 - Structure the board to add value

  Recommendation 2.1

  The Board has established a Nomination Committee comprising four independent non- executive directors; Jeremy Kirkwood (Chair), Alan Senior, Karen Gadsby and Brian Dawes. The Nomination Committee is structured in accordance with Recommendation 2.1.

  Details of director attendance at Nomination Committee meetings during the Reporting Period are set out in a table in the Directors' Report on page 24 of the Company's 2016 Annual Report.

  The Board has adopted a Nomination Committee Charter which describes the role, composition, functions and responsibilities of the Nomination Committee and is disclosed on the Company's website.

  Recommendation 2.2

  The Board has a skills matrix covering the following key areas of knowledge and experience:

• Strategy

• Financial performance

• Risk and compliance oversight

• Corporate governance

• Executive management

• Legal understanding

• Geological understanding

• Mining/Engineering

• Project Development/Operations

• Health, Safety and Environment

• Finance (markets)

• Commercial

The Board is of the opinion that having a diverse mix of experience, gender and culture across the Board leads to better outcomes for the Company and shareholders.

The Board is comfortable with the skills matrix represented by the current Board.

Recommendation 2.3

The Board considers the independence of directors having regard to the relationships listed in Box 2.3 of the Principles & Recommendations. The independent directors of the Company are Jeremy Kirkwood, Alan Senior, Brian Dawes and Karen Gadsby.

The length of service of each director is set out in the Directors' Report on pages 18 and 19 of the Company's 2016 Annual Report.

Recommendation 2.4

The Board has a majority of directors who are independent.

Recommendation 2.5

The independent Chair of the Board is Jeremy Kirkwood.

Recommendation 2.6

The Company has an induction program that it uses when new directors join the Board and when new senior executives are appointed. The goal of the program is to assist new directors to participate fully and actively in Board decision-making at the earliest opportunity and to assist senior executives to participate fully and actively in management decision- making at the earliest opportunity.

The Nomination Committee regularly reviews whether the directors as a group have the skills, knowledge and familiarity with the Company and its operating environment required to fulfil their role on the Board and the Board committees effectively, using a Board skills matrix. Where any gaps are identified, the Nomination Committee considers what training or development should be undertaken to fill those gaps. In particular, the Nomination Committee ensures that any director who does not have specialist accounting skills or knowledge has a sufficient understanding of accounting matters to fulfil his or her responsibilities in relation to the Company's financial statements. Directors also receive ongoing education on developments in accounting standards.

Principle 3 - Act ethically and responsibly

Recommendation 3.1

The Company has established a Code of Conduct for its directors, senior executives and employees, a summary of which is disclosed on the Company's website.

Principle 4 - Safeguard integrity in corporate reporting

Recommendation 4.1

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