SANDFIRE RESOURCES LIMITED — Capital/Financing Update 2014

Aug 17, 2014

18th August 2014

COMPANY SNAPSHOT

Board of Directors

Alan Senior Non-Executive Chairman

Gary Lethridge Managing Director

Graeme Cameron Technical Director

Brian Dawes Non-Executive Director

Karen Gadsby Non-Executive Director

Contact Details

6 Centro Avenue Subiaco, Western Australia, 6008 Australia

Telephone: + 61 8 9380 4230

Facsimile: + 61 8 9382 8200

Email: info@talismanmining.com.au

Website: www.talismanmining.com.au

.

Capital Structure

Shares on Issue: 131,538,627 (TLM)

Options on Issue: 8,250,000 (Unlisted)

ASX: TLM

Doolgunna Projects – Exploration Update

Highlights

• Multi-pronged exploration program by Sandfire Resources (ASX: SFR) gathering momentum with extensive programs of drilling, geophysics and litho-chemical analysis either underway or about to commence.
• Diamond drill hole TLD0001 successfully completed to a downhole depth of 1,099m (vertical depth 940m) at the Homer Prospect, ~5km east of the DeGrussa Copper Mine.
• TLD0001 was designed to test a late-time EM conductor located within the interpreted extension of the DeGrussa Mine Corridor on Talisman's Springfield Project and provide important stratigraphic information. Information received from Sandfire to date includes:
  • TLD0001 successfully intersected the interpreted DeGrussa host rocks with visual observations of minor blebby chalcopyrite (copper) mineralisation;
  • A high-powered down-hole electromagnetic (DHEM) geophysical survey has been completed in conjunction with detailed fixed loop electromagnetic (FLEM) surveys across the remainder of the Homer Trend;
  • Preliminary analysis of the DHEM does not provide a clear in-hole explanation for the late-time EM target with no definitive conductor detected within the immediate environs (80-100m) of TLD0001;
  • Detailed interpretation and full integration of the completed and upcoming EM surveys is required to validate the position of the original targeted EM plate;
  • Integration and interpretation of the combined DHEM and FLEM surveys is underway by geophysical consultants Newexco; and
  • Cutting of drill core has commenced and samples will be submitted for important detailed litho-chemical analysis.
• Based on this early encouragement and promising geological observations in core from TLD0001, Sandfire has advised that the following activities will be undertaken or have already commenced at Springfield, including:
  • Preparation of historical deep holes for high-powered DHEM surveys;
  • ~200-hole aircore drilling program along the Homer Trend commencing in the second half of August, to be followed by:
  • Geochemical aircore drilling programmes across the prospective sequence ;
  • Extensive high-powered FLEM surveys, over the prospective sequence; and
  • Detailed litho-chemical re-analysis of historical drill samples.
• The aim of current and upcoming exploration programmes is to assist Sandfire in generating robust DeGrussa style exploration targets within the Springfield Project.

Talisman Mining Ltd (ASX: TLM) is pleased to advise that ground-based exploration programs being conducted by Sandfire Resources (ASX: SFR) at its Springfield Project in the Doolgunna region of WA are gathering momentum on several fronts following encouraging results from the first phase of activity which commenced in June.

The current exploration program forms part of the $15 million exploration farm-in joint venture covering Talisman's interests in the Springfield, Halloween and Halloween West JV Projects (see Appendix 1).

Figure 1 - Talisman's Doolgunna Copper-Gold Projects subject to the $15M Exploration Farmin Joint Venture with Sandfire and interpreted DeGrussa Mine Corridor and regional geology

Early this year, Sandfire embarked on a comprehensive technical review of Talisman's high-quality Doolgunna Project datasets with a focus on identifying initial priority target areas along the extended DeGrussa Mine Corridor at Springfield (see Figure 1).

As a direct result of this work, Sandfire commenced ground-based activities in June that included highpowered FLEM and DHEM geophysical surveys across the eastern extension of the interpreted DeGrussa horizon at Springfield.

Sandfire also commenced a deep diamond drill hole, TLD0001, designed to gather critical stratigraphic geological information as well as to test a modelled latetime conductor identified from the geophysical surveys approximately 5km east of the DeGrussa Copper Mine.

The preliminary observations from this first phase of exploration have already delivered significant geological encouragement to Sandfire, confirming that the Springfield Project contains interpreted extensions of the volcanic rock package which hosts the DeGrussa VMS deposits.

Accordingly, several phases of extensive on-ground exploration have been planned by Sandfire with an in-fill 205-hole Aircore geochemical drilling programme along the Homer Trend commencing in the second half of August. A summary of preliminary results received to date and upcoming activities is provided below.

Diamond Drilling

Diamond hole TLD0001, which was successfully drilled to a final down hole depth of 1,099m (vertical depth 940m), was designed to test a modelled late-time EM conductor as well as to gather important geological and geochemical information across the Homer sequence (see Figure 2).

TLD0001 intersected a thick sequence of inter-bedded siltstone, sandstone, conglomerate and sedimentary breccia, intercalated with dolerite and peperitic basalt flows. The presence of peperite is encouraging as it indicates nearby volcanic activity as well as the presence of permeable contact horizons for possible replacement ore.

Importantly, strong hematite-silica (jasper) alteration with minor blebby chalcopyrite and disseminated pyrite was noted in laminated sediments, which are indicative of strong hydrothermal activity associated with volcanogenic exhalative processes.

Furthermore, it is interpreted that these altered sediments represent a possible stratigraphic equivalent of the Degrussa host sequence and, as such, represent an important marker horizon along the mine corridor. This intersection will provide invaluable constraints to assist Sandfire in developing an enhanced understanding of the 3D geology within the Springfield Project.

Figure 2: Springfield Project geology showing the interpreted DeGrussa Mine Corridor, the approximate positions of the Homer late-time EM conductor and diamond hole TLD0001 plus the areas of upcoming and completed ground based drilling and geophysical surveys.

Drill core for TLD0001 is currently being cut on-site in preparation for laboratory analysis and thin section examination. Select intervals will be submitted for low-level multi-element geochemical assaying to determine the nature and significance of the key litho-chemical signature of the possible target horizon seen in TLD0001. Samples are due to be submitted to the laboratory during August.

Ground Electro-magnetic Surveys

Sandfire has already demonstrated considerable capability using surface and down-hole geophysics with the successful discovery of the "blind" C4 and C5 mineralised lenses at DeGrussa using high-energy electromagnetic methods.

Diamond hole TLD0001 was designed to test a modelled late-time EM conductor detected in recent FLEM and DHEM surveys at a vertical depth of approximately 400m. Preliminary analysis of the DHEM does not provide a clear in-hole explanation for this original FLEM target and no definitive conductors were detected within the immediate environs (80-100m) of TLD0001.

Further detailed interpretation of the of the EM will require complete integration of the new FLEM data with all available DHEM data to validate and refine the position of the original targeted EM plate in TLD0001 as well as potentially identifying other additional EM conductors in the vicinity of the original EM target.

In conjunction with the DHEM, Sandfire has also now completed the outstanding portions of the planned highpowered FLEM surveys across the remainder of the Homer Corridor (see Figure 2).

The data from these EM surveys is currently being assessed by geophysical consultants Newexco, who will embark on detailed analysis and modelling to integrate the DHEM data from TLD0001 with current and future FLEM surveys.

Final analysis of the geophysical surveys will be concluded once all geochemical and geological data has been received by Sandfire for TLD0001. This approach is based on Sandfire's extensive experience in VMS exploration in the Doolgunna region which recognises the need to holistically integrate geochemical and geological data with the geophysical data in order to confidently define possible target areas.

VMS deposits such as DeGrussa, Conductor 1 and Conductor 4 have very small strike lengths and extremely subtle geophysical and geochemical signatures relative to the broader search space. Sandfire has developed and continues to evolve its use of sophisticated methodologies to vector in on potential target areas.

Next Steps

Sandfire has indicated that, based on the initial observations from diamond drill-hole TLD0001 and other recent work; it is able to confirm that the Homer sequence hosts the interpreted extension of the DeGrussa mine stratigraphy. As a result, Sandfire's regional exploration priority within the Doolgunna region in the near and medium term will be focused predominantly on Talisman's Springfield Project.

In addition to the current work at Homer, Sandfire has advised that further on-ground activities will now be undertaken at the Central Corridor, Monty Prospect and Southern Volcanics (see Figure 2). These programmes include:

• Further high-powered DHEM surveying of 18 deep holes drilled historically by Talisman across the Homer and Monty prospects as well as the Central Corridor. The DDH1 diamond rig which drilled TLD0001 is currently on-site at the Central Corridor preparing these holes for further DHEM surveys;
• In-fill Aircore geochemical drilling (205 holes) along the Homer Trend for the purpose of further detailed low-level geochemical analysis and geological assessment. This work is scheduled to commence in the second half of August 2014;
• Extensive geochemical aircore drilling programmes over the Central Corridor, Southern Volcanics and Monty Prospects to be completed in several phases over the coming 12 months;
• Three phases of extensive detailed high-powered FLEM surveying over the Central Corridor, Southern Volcanics and Monty Prospects to be completed between now and the end of the 2014 calendar year; and
• Samples have also been selected from historical drill holes to conduct detailed low-level geochemical analysis to better define potential areas with the characteristic DeGrussa litho-chemical signature. These samples will be submitted for analysis over the coming weeks and the results used to help guide in-fill Aircore drilling programmes.

The purpose of the work completed to date along with the upcoming, extensive exploration activities is to assist Sandfire in generating robust exploration targets, combining their extensive geological knowledge with a high level of sophisticated technical expertise enhanced from the discovery and development of the worldclass DeGrussa Copper-Gold deposit.

ENDS

For further information, please contact: For media inquiries, please contact: Gary Lethridge – Managing Director Nicholas Read – Read Corporate on +61 8 9380 4230 on +61 419 929 046

Competent Persons' Statement

Information in this ASX release that relates to Exploration Results and Mineral Resources is based on information compiled by Mr Graeme Cameron, who is a member of the Australasian Institute of Mining and Metallurgy. Mr Graeme Cameron is a full time employee of Talisman Mining Ltd and has sufficient experience which is relevant to the style of mineralisation and types of deposit under consideration and to the activities undertaken to qualify as a Competent Person as defined in the 2012 Edition of the "Australian Code for Reporting of Mineral Resources and Ore Reserves". Mr Graeme Cameron consents to the inclusion in this report of the matters based on information in the form and context in which it appear.

Appendix 1 – Talisman Mining Ltd Project locations

Appendix 2 - JORC TABLE 1

Section 1 Sampling Techniques and Data

(Criteria in this section apply to all succeeding sections)

Criteria	JORC Code explanation	Commentary
Samplingtechniques	Nature and quality of sampling (e.g.cut channels, random chips, or specificspecialised industry standardmeasurement tools appropriate to theminerals under investigation, such asdown-hole gamma sondes, or handheldXRF instruments, etc). These examplesshould not be taken as limiting the broadmeaning of sampling.Include reference to measures takento ensure sample representivity and theappropriate calibration of anymeasurement tools or systems used.Aspects of the determination ofmineralisation that are Material to thePublic Report.In cases where 'industry standard'work has been done this would berelatively simple (e.g. 'reverse circulationdrilling was used to obtain 1 m samplesfrom which 3 kg was pulverised toproduce a 30 g charge for fire assay'). Inother cases more explanation may berequired, such as where there is coarsegold that has inherent samplingproblems. Unusual commodities ormineralisation types (e.g. submarinenodules) may warrant disclosure ofdetailed information.	Sampling methods employed by Sandfire include half-coresampling of NQ2 core from diamond drilling (DD).Sampling is guided by Sandfire DeGrussa protocols andQAQC procedures as per industry standard.Pulpsamplesarefusedintoaglassbeadbythecombination of 0.4g of assay sample plus 9.0g flux XRFanalysis. A 40g and 0.15g assays charges are used for FAand mixed acid digest respectively.Sandfire core samples are routinely sampled for SGdetermination.
Drillingtechniques	Drill type (e.g. core, reverse circulation,open-hole hammer, rotary air blast,auger, Bangka, sonic, etc) and details(e.g. core diameter, triple or standardtube, depth of diamond tails, facesampling bit or other type, whether coreis oriented and if so, by what method,etc).	Sandfire diamond drilling is completed by DD rig with a coresize of NQ2.All surface drill collars are surveyed using RTK GPS.Holes are inclined at varying angles for optimal ore zoneintersection from the drilling position.All core where possible is oriented using a Reflex ACT II RDorientation tool with stated accuracy of +/-1% in the range 0to 88°.
Drill samplerecovery	Method of recording and assessingcore and chip sample recoveries andresults assessed.Measures taken to maximise samplerecovery and ensure representativenature of the samples.Whether a relationship existsbetween sample recovery and gradeand whether sample bias may haveoccurred due to preferential loss/gain offine/coarse material.	Sandfire core is meter marked and orientated to check againstthe driller's blocks, ensuring that all core loss is taken intoaccount.Diamond core recovery is logged and captured into thedatabase with weighted average core recoveries ofapproximately 99%. Sample quality is routinely captured inthe database.Samples are routinely weighed and captured into a centralsecured database.No sample recovery issues have impacted on potentialsample bias.

Logging	Whether core and chip sampleshave been geologically andgeotechnically logged to a level of detailto support appropriate Mineral Resourceestimation, mining studies andmetallurgical studies.Whether logging is qualitative orquantitative in nature. Core (or costean,channel, etc) photography.The total length and percentage ofthe relevant intersections logged.	Sandfire geological logging is completed for all holes andrepresentative across the ore body. The lithology, alteration,and structural characteristics of core are loggeddirectly to a digital format following standard proceduresand using Sandfire DeGrussa geological codes. Data isimported into the central database after validation inLogChief™.Logging is both qualitative and quantitative depending on fieldbeing logged.All cores are digitally photographed and stored.
Sub-samplingtechniques andsamplepreparation	If core, whether cut or sawn andwhether quarter, half or all core taken.If non-core, whether riffled, tubesampled, rotary split, etc and whethersampled wet or dry.For all sample types, the nature,quality and appropriateness of thesample preparation technique.Quality control procedures adoptedfor all sub-sampling stages to maximiserepresentivity of samples.Measures taken to ensure that thesampling is representative of the in situmaterial collected, including for instanceresults for field duplicate/secondhalf sampling.Whether sample sizes areappropriate to the grain size of thematerial being sampled.	Sandfire diamond coreorientationiscompletedwherepossibleandall aremarkedpriorto sampling. Half coresamples are produced using Almonte Core Saw. Samples areweighed and recorded.Sandfire sample preparation at UltraTrace in Perth involvesthe original samples being dried at 80° for up to 24 hours andweighed. DD Samples are then crushed through Jaquescrusher to nominal -10mm. Second stage crushing usesBoyd crusher to nominal -4mm Pulverising is completedusing LM5 mill to 90% passing 75%µm.Sandfirehasprotocolsthatcoverauditingofsamplepreparationatthelaboratories and the collection andassessment of data to ensure accurate steps in producingrepresentativesamples forthe analyticalprocess. Keyperformance indices include contamination index of 90% (thatis 90% blanks pass); Crush Size index of P95-10mm; GrindSize index of P90-75µm and Check Samples returning atworse 20% precision at 95% confidence interval and bias of5% or better.Duplicate analysis is routinely completed.The sample size is appropriate for the VHMS and Goldmineralisation styles.
Quality ofassay data andlaboratory tests	The nature, quality andappropriateness of the assaying andlaboratory procedures used and whetherthe technique is considered partial ortotal.For geophysical tools,spectrometers, handheld XRFinstruments, etc, the parameters used indetermining the analysis includinginstrument makeand model, reading times, calibrationsfactors applied and their derivation,etc.Nature of quality control proceduresadopted (e.g. standards, blanks,duplicates, external laboratory checks)and whether acceptable levels ofaccuracy (i.e. lack of bias) and precisionhave been established.	Sandfire samples submitted to Ultra Trace in Perth areassayed using Mixed 4 Acid Digest (MAD) 0.3g charge andMAD Hotbox 0.15g charge methods with ICPOES orICPMS. The samples are digested and refluxed with amixture of acids including Hydrofluoric, Nitric, Hydrochloricand Perchloric acids and conducted for multi elementsincluding Cu, Pb, Zn, Ag, As, Fe, S, Sb, Bi, Mo, Re, Mn, Co,Cd, Cr, Ni, Se, Te, Ti, Zr, V, Sn, W and Ba. The MAD Hotboxmethod is an extended digest method that approaches a totaldigest for many elements however some refractory mineralsare not completely attacked. The elements S, Cu, Zn, Co, Fe,Ca, Mg, Mn, Ni, Cr, Ti, K, Na, V are determined by ICPOES,and Ag, Pb, As, Sb, Bi, Cd, Se, Te, Mo, Re, Zr, Ba, Sn, W aredetermined by ICPMS. Samples are analysed for Au, Pd andPt by firing a 40g of sample with ICP AES/MS finish. Lowersample weights are employed where samples have very high Scontents. This is a classical FA process and results in totalseparation of Au, Pt and Pd in the samples.Sandfire DeGrussa QAQC protocol is considered industrystandard with standard reference material (SRM) submittedon regular basis with routine samples.Sandfire insert SRMs and blanks at a minimum of 5%frequency rate. A minimum of 2% of assays are routinely resubmitted as Check Assays and Check Samples throughblind submittals to external and primary laboratoriesrespectively. Adhoc umpire checks are completed annually.

Verification ofsampling andassaying	The verification of significantintersections by either independent oralternative company personnel.The use of twinned holes.Documentation of primary data, dataentry procedures, data verification, datastorage (physical and electronic)protocols.Discuss any adjustment to assaydata.	No significant drilling intersections are reported in this report.No twinned holes are being drilled as part of thisprogramme.Primary data is captured on field tough book laptops usingLogchief™ Software. The software has validation routines anddata is then imported into a secure central database.The primary data is always kept and is never replaced byadjusted or interpreted data.
Location ofdata points	Accuracy and quality of surveysused to locate drill holes (collar anddown- hole surveys), trenches, mineworkings and other locations used inMineral Resource estimation.Specification of the grid systemused.Quality and adequacy of topographiccontrol.	Sandfire DeGrussa Survey team undertakes survey worksunder the guidelines of best industry practice.Downhole survey completed by electronic multishot systems.MGA94 Zone 50 grid coordinate system is used.
Data spacingand distribution	Data spacing for reporting ofExploration Results.Whether the data spacing anddistribution is sufficient to establish thedegree of geological and gradecontinuity appropriate for the MineralResource and Ore Reserve estimationprocedure(s) and classifications applied.Whether sample compositing hasbeen applied.	Programme comprises a singular diamond drill hole(TLD0001).No drilling results are reported.
Orientation ofdata in relationto geologicalstructure	Whether the orientation of samplingachieves unbiased sampling of possiblestructures and the extent to which this isknown, considering the deposit type.If the relationship between thedrilling orientation and the orientation ofkey mineralised structures is consideredto have introduced a sampling bias, thisshould be assessed and reported ifmaterial.	Sandfire exploration holes are oriented to achieve highangles of intersection. Diamond drilling is used as requiredto determine structural orientations in regional programs.
Samplesecurity	The measures taken to ensuresample security.	All samples are prepared onsite under the supervision ofSandfire Geological staff.Sandfire samples are transported to the Perth Ultra Tracelaboratory by Toll IPEC or Nexus transport companies insealed bulka bags, or to the onsite laboratory by companypersonnel.The laboratories receipt received samples against the sampledispatch documents and issues a reconciliation report forevery sample batch.
Audits orreviews	 The results of any audits or reviews ofsampling techniques and data.	The Sandfire sampling techniques and data collectionprocesses are of industry standard and have been subjectedto multiple internal and external reviews.

Section 2 Reporting of Exploration Results

Criteria	JORC Code explanation	Commentary
Mineraltenement andland tenurestatus	Type, reference name/number, locationand ownership including agreements ormaterial issues with third parties such asjoint ventures, partnerships, overridingroyalties, native title interests, historicalsites, wilderness or national park andenvironmental settings.The security of the tenure held at thetime of reporting along with any knownimpediments to obtaining a licence tooperate in the area.	Diamond drilling by Farm-in Partner Sandfire is on tenementE52/2313. This lease is part of Talisman's 100% ownedSpringfield Project, 150km north-east of Meekatharra, WA. Thistenement falls within the Department of Conservation-managedDoolgunna pastoral lease.All Springfield tenements are current and in good standing.
Explorationdone by otherparties	Acknowledgment and appraisal ofexploration by other parties.	Exploration work at Springfield completed prior to Talisman'stenure included geochemical soil and rock chip samplingcombined with geological mapping. Some targeted RC drillingwas completed over gold and diamond targets.
Geology	Deposit type, geological setting andstyle of mineralisation.	Talisman's Doolgunna, Shelby, Milgun, Livingstone andKillara Projects lie within the Proterozoic-aged Bryah rift basinenclosed between the Archaean Marymia Inlier to the northand the Proterozoic Yerrida basin to the south.Talisman's Muddawerrie Projects lie within the Archaeanaged Mt Maitland greenstone belt 100km NW of Meekatharrain the Murchison region of Western AustraliaThe principal exploration targets at the Doolgunna Projectsare Volcanogenic Massive Sulphide (VMS) deposits locatedwith the Proterozoic Bryah Basin of Western Australia.The principal exploration targets at the Livingstone andMuddawerrie Projects are orogenic gold and magmatic nickelcopper-PGE sulphide deposits.The principal exploration targets at the Shelby and MilgunProjects are Iron-Oxide Copper-Gold (IOCG), magmatic NiCu-PGE and VMS deposits.
Drill holeInformation	A summary of all information material tothe understanding of the explorationresults including a tabulation of thefollowing information for all Material drillholes:oeasting and northing of the drill holecollaroelevation or RL (Reduced Level –elevation above sea level in metres) ofthe drill hole collarodip and azimuth of the holeodown hole length and interception depthohole length.If the exclusion of this information isjustified on the basis that the informationis not Material and this exclusion doesnot detract from the understanding ofthe report, the Competent Personshould clearly explain why this is thecase.	Diamond drill hole TLD0001Location: 740150E, 7174150N, 590.479mRL.Azimuth: 360Dip: -60Proposed Depth: 900m

Dataaggregationmethods	In reporting Exploration Results,weighting averaging techniques,maximum and/or minimum gradetruncations (e.g. cutting of high grades)and cut-off grades are usually Materialand should be stated.Where aggregate intercepts incorporateshort lengths of high grade results andlonger lengths of low grade results, theprocedure used for such aggregationshould be stated and some typicalexamples of such aggregations shouldbe shown in detail.The assumptions used for any reportingof metal equivalent values should beclearly stated.	No drilling intersections reported.
Relationshipbetweenmineralisationwidths andinterceptlengths	These relationships are particularlyimportant in the reporting of ExplorationResults.If the geometry of the mineralisation withrespect to the drill-hole angle is known,its nature should be reported.If it is not known and only the down holelengths are reported, there should be aclear statement to this effect (e.g. 'downhole length, true width not known').	No drilling intersections reported.
Diagrams	Appropriate maps and sections (withscales) and tabulations of interceptsshould be included for any significantdiscovery being reported These shouldinclude, but not be limited to a plan viewof drill hole collar locations andappropriate sectional views.	Appropriate maps with scale are included within the body ofthe accompanying document.No drilling intersections reported.
Balancedreporting	Where comprehensive reporting of allExploration Results is not practicable,representative reporting of both low andhigh grades and/or widths should bepracticed to avoid misleading reportingof Exploration Results.	The accompanying document is considered to represent abalanced report.
Othersubstantiveexplorationdata	Other exploration data, if meaningful andmaterial, should be reported including(but not limited to): geologicalobservations; geophysical surveyresults; geochemical survey results; bulksamples – size and method oftreatment; metallurgical test results; bulkdensity, groundwater, geotechnical androck characteristics; potentialdeleterious or contaminatingsubstances.	Other exploration data collected is not considered as materialto this document at this stage. Further data collection will bereviewed and reported when considered material.

Further work	The nature and scale of planned furtherwork (e.g. tests for lateral extensions ordepth extensions or large-scale step-outdrilling).Diagrams clearly highlighting the areasof possible extensions, including themain geological interpretations andfuture drilling areas, provided thisinformation is not commerciallysensitive.	Further work is contingent on the outcomes of current drillingand ground electromagnetic surveys.
--------------	-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------	------------------------------------------------------------------------------------------------------------