TALISMAN MINING LIMITED - Annual Report 2009

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TALISMAN MINING LIMITED ABN 71 079 536 495

Annual report for the financial year ended 30 June 2009

`Annual financial report for the financial ended 30 June 2009 year`

	Page
Corporatedirectory	2
Chairman’sletter	3
Reviewofoperations	4
Corporategovernancestatement	12
Directors’report	17
Auditor’sindependencedeclaration	26
Independentauditor’sreport	27
Directors’declaration	29
Indextothefinancialreport	30
Incomestatement	31
Balancesheet	32
Statementofchangesinequity	33
Cashflowstatement	34
Notestothefinancialstatements	35

Talisman Mining Limited Corporate directory

Corporate Directory

Directors

Mr Alan Senior Non � Executive Chairman Mr Gary Lethridge Managing Director Mr Brian Dawes Executive Director Mr Peter Langworthy Technical Director Ms Karen Gadsby Non � Executive Director

Company Secretary

DarrenCrawte

Registered Office

Level 1, 47 � 49 Stirling Highway NEDLANDS Western Australia 6009

Principal Office

GroundLevel
6CentroAvenue
SUBIACOWesternAustralia6008

Telephone:+61893804230
Facsimile:+61893828200
Website:www.talismanmining.com.au

Auditors

HLBMannJudd
15RheolaStreet
WESTPERTHWesternAustralia6005

Share Registry

AdvancedShareRegistryServices
150StirlingHighway
NEDLANDSWesternAustralia6009

POBox1156
NEDLANDSWesternAustralia6909

Telephone:+61893898033

Securities Exchange

AustralianSecuritiesExchangeLimited
Level8,ExchangePlaza
2TheEsplanade
PERTHWesternAustralia6000

ASXCodes:TLM
TLMO

Talisman Mining Limited Chairman’s letter

Chairman’s letter

DearShareholder,

OnbehalfoftheBoardofDirectors,IampleasedtopresenttoyoutheCompany’s2009AnnualReport.

ExplorationactivitiesattheWonmunnaironoreprojectsituatedintheEastPilbaraIronOreProvinceofWesternAustraliawere
completed.ThisworkresultedinanupgradedJORCInferredresourceof78.3Mt@56%iron([email protected]%iron).Following
thisworkthecompanycompletedascopingstudywhichidentifiedpotentialdevelopmentroutesfortheproject.

The2009financialyearhasbeenadifficultyearforexplorationcompaniesgenerallywithmostjuniorcompanieshavingtoreconsider
theirstrategiesinlightofadversemarketchangesinordertohavecontinuingmarketrelevanceandsupport.ForTalismanithasbeena
timeofchange.

IampleasedtosaythatTalismanhasrespondedpositivelytothechallengesfollowingtheresignationofStevenElliottlatelastyearand
thenewworldorder,byrecruitingournewmanagingdirector,GaryLethridgetotheCompany.

Mr.LethridgehasattractedPeterLangworthyandBrianDawestoseniorexecutivepositionswiththeCompany,whichhasintroduceda
depthofmanagementexpertiseandindustryknowledgethatwillstandtheCompanyingoodsteadmovingforward.Subsequently
PeterandBrianwereappointedtotheTalismanBoardcompletingtherestructure.

Thenewmanagementteamhasdevelopedandisimplementingarejuvenatedcorporatestrategyfocusedupontheachievementof
‘qualityfirst’growthandshareholderreturns.Thefocusinthepastsixmonthshasbeentheredirectionofstrategiceffortstowards:

the advancement of the exciting new Springfield copper/gold project which lies immediately along strike from Sandfire Resources Limited’s DeGrussa discovery;
completion of the scoping study on the Wonmunna iron ore project and the investigation of associated value realisation alternatives;
an initial recapitalisation of the Company which culminated in a $5.2 million share placement in late May and which was approved by shareholders in July;
the acquisition of advanced nickel sulphide exploration opportunities; and
the review and assessment of the Company’s existing exploration portfolio.

WehaveonlyjustbeguntakingourfirststepstowardsourcorporategoalofcreatingaqualityAustralianminingandexploration
companyfocusedongeneratingprofitsandshareholderreturns,butourinitialbuildingblocksarebeingputinplace.

ThefinancialyearalsosawtheresignationofMickBunyardasanonexecutivedirector.Iwouldliketotakethisopportunitytothank
bothSteveandMickfortheirrespectivecontributionstotheCompanyovertheyears.

Finally,IwishtothankouremployeesfortheirhardworkandcommitmentandIlookforwardtotheircontinuedsupportoverthenext
twelvemonths.

Yoursfaithfully

AlanSenior
Chairman

Talisman Mining Limited Review of operations

Review of operations

EXPLORATION STRATEGY

Thestartofcalendar2009hasseenTalismanrealignitsexplorationstrategytofocusonthefollowing:

Gain exposure to copper and copper � gold projects both within existing projects and from newly identified projects;
Complete the Scoping Study for the Wonmunna Project and determine the most appropriate path forward to realise maximum value from this important asset;
Identification, acquisition and subsequent exploration of advanced nickel sulphide exploration opportunities;
Review the entire exploration portfolio to ensure that only quality projects are supported and advanced.

PROJECTS

SPRINGFIELD PROJECT (Cu�Au)

(100% Talisman Mining Ltd)

The Springfield Project is located approximately 150km north east of Meekatharra in the northern Murchison Goldfield of Western Australia and adjacent to Sandfire Resources NL’s Doolgunna Project, which hosts the recently discovered DeGrussa high � grade copper � gold volcanogenic massive sulphide (VMS) deposit.

The Springfield Project comprises three Exploration Licence Applications (ELA’s) which are expected to be granted in early 2010. The ELA’s were pegged by Talisman as part of a strategy targeting prospective formations within the Peak Hill district for gold and copper mineralisation ( see Figure 1 ).

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Figure 1 – Springfield Project Location

Talisman Mining Limited Review of operations

The recent discovery of high � grade copper � gold mineralisation at DeGrussa, combined with the fact that this style of deposit typically occurs in clusters, has opened up Talisman’s Springfield Project as one of the most prospective exploration properties in Western Australia for high � grade VMS deposits.

Accordingly,TalismanhasdecidedtoadvancetheSpringfieldProjectonaprioritybasis.

InitialreconnaissanceexplorationbyTalismanatSpringfieldhasidentifiedthecontinuationofthesameprospectiveUpperNarracoota
VolcanicFormationthroughtheSpringfieldProjectarea,whichliesimmediatelyeastoftheDoolgunnaProject.

ExplorationcompletedbyTalismantodateattheSpringfieldProjectincludes:

Reconnaissance field investigations focusing primarily on lithostructural mapping, together with rock chip sampling and orientation geochemical sampling. This mapping and sampling work has confirmed that the prospective Upper Narracoota Volcanic Formation extends from Sandfire’s DeGrussa prospect along strike into Talisman’s Springfield Project. In addition, up to approximately 25km of strike of this prospective stratigraphy is interpreted to occur within the Springfield Project area around the margin of a large synclinal fold ( see Figure 2 );

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Figure 2 – Springfield Project Geology

A review and compilation of historical open file data which has identified a previous extensive soil and LAG geochemical sampling survey that was completed over parts of the Upper Narracoota Formation along strike from the DeGrussa Prospect and other parts of the identified prospective horizon ( see Figure 3 ). This data has identified a robust, highly anomalous copper response over an area measuring approximately 4km by 1.25km immediately along strike from the DeGrussa Prospect. The anomalous area is also supported by sporadic high gold values; and

Talisman Mining Limited Review of operations

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Figure 3 – Springfield Project Historical Soil Geochemistry

Sourcing regional data sets including satellite imagery, airborne magnetic data and gravity data to enable construction of a regional geological context to establish a platform for new target identification.

Inlightoftheextremelyencouraginggeochemicalsamplingresults,Talismanplanstobeundertakingprogramsofexplorationoverthe
nexttwelvemonthsthatinclude:

Detailed multi � element geochemical infill soil sampling covering approximately 5km of the immediate strike extension of the prospective Upper Narracoota Volcanic Formation ( see Figure 4) . This program is designed to confirm and enhance the existing copper anomaly and provide support from other indicator minerals (eg, gold).
A program of regional reconnaissance lag and soil sampling to provide a first � pass test of approximately 15km strike of the prospective target Narracoota Formation stratigraphy ( Figure 4 ). The aim of this work is to quickly identify areas that require more detailed in � fill soil sampling.
Programs of moving loop electromagnetic surveys (MLEM) as follow � up to high priority geochemical anomalies.
Programs of drilling (aircore, RC percussion and diamond) to follow � up targets generated by the MLEM and geochemical surveys. These drilling programs are subject to the grant of the exploration licences.
Detailed lithostructural regolith mapping and gossan search.

Talisman Mining Limited Review of operations

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Figure 4 – Springfield Project Exploration Programs

WONMUNNA PROJECT (Fe)

(100% Talisman Mining Ltd)

The Wonmunna Iron Project is strategically located in the heartland of the East Pilbara iron ore mining industry, with three major operating iron ore mines (West Angelas, Area C and Hope Downs) located within 20km of the lease boundary. The Wonmunna Project comprises three primary iron deposits, (North Marra Mamba, Central Marra Mamba and South Marra Mamba) which are prospective for Marra Mamba iron mineralisation and numerous exploration targets prospective for both Marra Mamba and Channel Iron Deposit (CID) mineralisation. To date, JORC inferred resources totalling 78.3Mt @ 56.0% (50% Fe lower cut � off) have been estimated for the Project.

During the year Talisman received the Wonmunna Scoping Study , undertaken by AMC Consultants Pty Ltd. The Scoping Study considered 54 potential operating scenarios for the Wonmunna Project, estimating associated mining, processing, transportation and other capital and operating costs for each scenario to an accuracy of + � 30% commensurate with the usual degree of accuracy for such Studies.

The Scoping Study was based on the Inferred Mineral Resource estimate for the Wonmunna Project (at a 50% Fe cut � off grade) of;

78.3 million tonnes @ 56.0% Fe, 6.6% Si2O3, 3.6% Al2O3, 0.08% P, 9.2% LOI.

This Inferred Mineral Resource estimate includes a high � grade Direct Shipping Ore (DSO) component (using a 60% Fe cut � off grade) of;

10.0 million tonnes @ 61.3% Fe, 3.1% Si2O3, 1.7% Al2O3, 0.08% P, 7.3% LOI.

Pit optimisations were conducted by AMC using both the high � grade (60% Fe cut � off grade) and lower � grade (50% Fe cut � off grade) resource models, enabling both high � grade mining scenarios with relatively short mine life and lower � grade mining scenarios with a longer mine life to be assessed. Mining and processing scenarios considered a suite of operating options based on owner and/or contract operations.

Talisman Mining Limited Review of operations

Scopingstudiesgenerallyarerelativelyhighleveltechnicalandeconomicassessmentsofvariouspotentialdevelopmentandoperating
pathwaysformineralresourcesprojectsthatprovideanopportunitytoidentifypreferabledevelopmentandoperatingscenariosfor
moredetailedandfocusedassessmentinthefuture.

The Scoping Study concluded that the Wonmunna Project is potentially economic based on high � grade and low � grade options with ore sold to nearby mines at production rates of 2 Mtpa to 5 Mtpa.

TalismanbelievestheresultsoftheAMCScopingStudyontheWonmunnaProjectareencouragingandinlightofthis,theCompanyis
continuingtoevaluatetheprojectincludingconsideringstrategicalternativesrelatedtomarketingandsalesoptionsforWonmunna.
Thismayincludethepotentialforminegatesales,infrastructuresharingorotherarrangements,strategicoptionsforajointventure,or
othermechanismtorealisevaluefromtheWonmunnaProject.

Table 1: Wonmunna Inferred Iron Ore Mineral Resources.

Prospect
NorthMarraMamba
CentralMarraMamba
SouthMarraMamba
WonmunnaTotal Fecut�off
Tonnage
(Mt)
Grade
Fe%
SiO2%
Al2O3%
P%
LOI%
50%
47.2
55.9
6.9
3.7
0.07
8.9
60%
6.2
61.4
3.0
1.8
0.07
7.2
50%
15.2
56.8
5.7
3.3
0.10
9.5
60%
2.4
61.2
3.3
1.7
0.10
7.4
50%
15.9
55.3
6.7
3.8
0.07
9.7
60%
1.4
61.2
2.9
1.6
0.06
7.6
50%
78.3
56.0
6.6
3.6
0.08
9.2
60%
10.0
61.3*
3.1
1.7
0.08
7.3

*In accordance with Clause 24 of the JORC Code, tonnages have been rounded to the nearest 0.1Mt.

Talisman Mining Limited Review of operations

WANDANYA, YILGALONG and GANGARRIGAN PROJECTS (Mn)

(100% Talisman Mining Ltd)

Talisman has recently consolidated a number of key projects (Wandanya, Gangarrigan and Yilgalong) that are prospective for manganese deposits in close proximity to the Woodie Woodie Manganese Mine in the East Pilbara Mineral Field (Figure 5).

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Figure 5 – Manganese Projects Location

ReconnaissanceexplorationattheWandanyaProjectincludingmapping,rockchipsamplingofoutcropandairborneelectromagnetic
surveyshaveidentifiedaseriesofinterpretedstructurallycontrolledtargetsthatarehighlyprospectivefornearsurfacedepositsof
manganese.Rockchipsamplinghasreturnedresultsupto65%Mn.

AreviewofthegoldpotentialwasundertakenattheYilgalongProjectresultinginadecisiontorelinquishtwotenements.The
remaininggroundremainshighlyprospectiveformanganesemineralisation.

Theprojectsarewelllocatedwithregardtoaccessandinfrastructureandassuchprovideasignificantopportunitytorealisevaluein
theshorttomediumterm.Optionstoadvanceandrealisevaluefromtheseprojectsarecurrentlybeinginvestigatedandconsidered.

UAROO PROJECT (Au, Cu�Au, Ni�Cu�PGE)

(100% Talisman Mining Ltd)

TheUarooProjectlieswithintheAshburtonMineralFieldapproximately370kmnortheastofCarnarvonalongtheNorthwestCoastal
HighwayneartheUarooHomesteadinWesternAustralia.TheProjectcoversaprospectivesuiteofrocksthathavehadlittleeffective
historicexplorationfortheirgoldandbasemetalspotential.

TodateworkcompletedatUaroobyTalismanhasincludeddrainageandrockchipsamplingwhichhasproducedveryencouraging
initialexplorationresultsthatrequireprogramsoffollowupexploration.

TheprojectislocatedongrantedNativeTitleandsubjecttoanegotiationprocessthatisunlikelytoseefurtherfieldbasedexploration
undertakenonthetenementstilllatein2010.

Talisman Mining Limited Review of operations

TRILLBAR PROJECT (Au, Fe, Talc)

(80% Talisman Mining Ltd)

The Trillbar Project is located in the northern Murchison gold field, approximately 120km north west of Meekatharra. Exploration at Trillbar has defined the Boundary Gold JORC Resources (for 50,000 ozs gold) and has shown the existence of many other gold anomalies through the project area. The project is also deemed prospective for iron � ore, talc and uranium.

Table 2: Boundary Inferred Gold Resource.

			st01Mt BoundaryTotal Tonnage(Mt) Grade(g/tAu) 1.0 1.57 0.4 2.55*
Aucut�off	LodeDomain	SupergeneDomain	BoundaryTotal
	Tonnage(Mt) Grade(g/tAu)*	Tonnage(Mt) Grade(g/tAu)*	Tonnage(Mt) Grade(g/tAu)*
`0.5g/t`	`0.97` `1.59`	`0.02` `1.68`	1.0 1.57
`1.0g/t`	`0.41` `2.55`	`0.01` `2.69`	0.4 2.55
*Inaccorda	cewithClause24oftheJORCCodetonnageshavebeenroundedtotheneare

*In accordance with Clause 24 of the JORC Code, tonnages have been rounded to the nearest 0.1Mt.

During the year the project tenement holdings have been consolidated to include ground prospective for Iron � Ore (an extension to the Northern Iron Formation), gold (extensions to the Livingstone’s Find gold workings) and talc (the Livingstone’s Talc Deposit).

AspartofthebroaderexplorationstrategytheTrillbarProjectwillbereviewedtodeterminewhetherithastheattributesthatsatisfy
thecompany’scriteriamovingforwardandwhatopportunitiesexisttorealisevalue.

MAITLAND PROJECT (Au, Fe, U)

(80% Talisman Mining Ltd)

TheMaitlandProjectislocatedinthenorthernMurchisongoldfield,approximately120kmnorthwestofMeekatharra.

TheMaitlandProjectcoversasequenceofArcheanmafic,ultramaficandsedimentaryrocksthathaveshownbyreconnaissance
explorationbyTalismantobeprospectiveforgoldmineralisationhostedinaseriesoflodesacrosstheproject.

In addition to gold, the project is considered prospective for high grade iron ore as hematite � enriched BIF � hosted deposits (Midwest style), with results up to 55% Fe returned from channel sampling, as well as potential for calcrete � hosted uranium deposits (as carnotite) developed within drainages from the surrounding Archean granite/gneiss terrain. The nearby Fairstar Uranium Prospect has returned rock chip results up to 2410ppm U.

Thisprojectwillbesubjecttoreviewduringthe2010financialyear.

MILGUN PROJECT (Au, Cu�Au)

(100% Talisman Mining Ltd)

TheMilgunProjectislocatedinthenorthernMurchisongoldfield,approximately180kmnorthwestofMeekatharra.

The project covers a sequence of dominantly mafic rocks and sediments interpreted to be part of the Upper Narracoota Formation that are prospective for gold and copper � gold mineralisation. The project is in relatively close proximity to the Labouchere and Fortnum Gold Operations.

The Milgun Project to date has largely been viewed as a gold project, however the recent discovery of the DeGrussa Deposit at Sandfire Resources Ltd Doolgunna Project, has highlighted the potential of the Upper Narracoota Formation to host high grade Cu � Au volcanic hosted massive sulphide deposits.

On this basis a full data compilation and review has commenced to identify potential targets for follow � up exploration. Access to the project is currently delayed by Native Title access negotiations.

Talisman Mining Limited Review of operations

OTHER PROJECTS

Anticline

(100% Talisman Mining Ltd)

FortescueMetalsGroup(FMG)holdsalltherightstoironorewithTalismanretainingatonnagebasedroyaltycappedat$8m.FMG’s
EliwanaProspectispartiallylocatedonTalisman’stenementsandhasbeensubjecttosomeresourcedefinitionactivitiesoverthepast
12months.

Talismanhasnotundertakenanygoldorbasemetalsexplorationontheprojectduringtheyear.

Tom Price

(100% Talisman Mining Ltd)

Fortescue Metals Group (FMG) holds all the rights to iron ore with Talisman retaining a tonnage based royalty capped at $8m. FMG are yet to drill � test the iron ore potential of the Spring Creek channel iron deposit (CID), and Talisman considers there is real (as yet untested) potential for Marra Mamba hosted iron ore adjacent to the Tom Price Marra Mamba Deposit.

Talismanhasnotundertakenanygoldorbasemetalsexplorationontheprojectduringtheyear.

Yamada

(100% Talisman Mining Ltd)

TheYamadaProjectislocatedwithintheProterozoicageEaraheedyBasinsome300kmnortheastofMeekatharra.

Theprojectwaspeggedasanewgenerationironoreplaythathasdemonstratedsomepotentialforgoodtomoderategradehematite
mineralisationintheformofgranularironmineralisation(GIF).GiraliaResourcesNLhaverecentlyreportedencouragingresultsinclose
proximitytoYamada.

Nofieldbasedexplorationisplannedpendingthegrantoftheexplorationlicence.

Yamarna

(100% Talisman Mining Ltd)

YamarnaisagoldandnickelprojectpeggedoveranoutcroppingArcheangreenstonebeltapproximately160kmnortheastofLaverton.
TheprojectislargelywithintheCosmoNewberryAboriginalreserveanditisexpectedthatgrantofthetenementswilltakesometime.

Competent Persons Statement:

Information in this report that relates to Exploration Results and Mineral Resources is based on information compiled by Mr Harry Cornelius, who is a member of the Australasian Institute of Mining and Metallurgy. Mr Harry Cornelius is a full time employee of Talisman Mining Ltd and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity undertaken to qualify as a Competent Person as defined in the 2004 Edition of the “Australian Code for Reporting of Mineral Resources and Ore Reserves”. Mr Harry Cornelius consents to the inclusion in this report of the matters based on information in the form and context in which it appears.

Talisman Mining Limited Corporate governance statement

Corporate governance statement

INTRODUCTION

TheCompanyiscommittedtoimplementingsoundstandardsofcorporategovernance.Indeterminingwhatthosestandardsshould
involve,theCompanyhashadregardtotheASXCorporateGovernanceCouncil’sCorporateGovernancePrinciplesand
Recommendations2[nd]Edition2007(“Recommendations”).

FurtherinformationabouttheCompany’scorporategovernancepracticesissetoutontheCompany’swebsiteat
www.talismanmining.com.au.InaccordancewiththeASXPrinciplesandRecommendations,informationpublishedontheCompany’s
websiteincludescharters(fortheBoardanditscommittees),theCompany’scodeofconductandotherpoliciesandproceduresrelating
totheBoardanditsresponsibilities.

PRINCIPLE 1: LAY SOLID FOUNDATIONS FOR MANAGEMENT AND OVERSIGHT

Recommendation 1.1 – Establish and disclose the functions reserved to the board and those delegated to senior executives.

Theboardhasestablishedfunctionsthatarereservedfortheboard,asseparatefromthosefunctionsdischargedbytheManaging
DirectorandaresummarisedintheCompany’sBoardCharterwhichisavailableontheCompany’swebsite.

TheBoardretainsresponsibilityforthefollowingkeyareas:

(a) Providing leadership for and supervision of the Company’s senior management. The Board provides the strategic direction of the Company and regularly measures the progression by senior management of that strategic direction.
(b) overseeing the Company, including its control and accountability systems;
(c) appointing the chief executive officer, or equivalent, for a period and on terms as the directors see fit and, where appropriate, removing the chief executive officer, or equivalent;
(d) ratifying the appointment and, where appropriate, the removal of senior executives
(e) approving the Company's policies on risk oversight and management, internal compliance and control, Code of Conduct , and legal compliance;
(f) satisfying itself that senior management has developed and implemented a sound system of risk management and internal control in relation to financial reporting risks and reviewed the effectiveness of the operation of that system;
(g) assessing the effectiveness of senior management's implementation of systems for managing material business risk including the making of additional enquiries and to request assurances regarding the management of material business risk, as appropriate;
(h) monitoring, reviewing and challenging senior management's performance and implementation of strategy;
(i) ensuring appropriate resources are available to senior management;
(j) approving and monitoring the progress of major capital expenditure, capital management, and acquisitions and divestitures;
(k) monitoring the financial performance of the Company;
(l) ensuring the integrity of the Company's financial and other reporting (with the assistance of the Audit Committee, if applicable) through approval and monitoring;
(m) providing overall corporate governance of the Company, including conducting regular reviews of the balance of responsibilities within the Company to ensure division of functions remain appropriate to the needs of the Company;
(n) appointing the external auditor (where applicable, based on recommendations of the Audit Committee) and the appointment of a new external auditor when any vacancy arises, provided that any appointment made by the Board must be ratified by shareholders at the next annual general meeting of the Company;
(o) engaging with the Company’s external auditors and Audit Committee;

Talisman Mining Limited Corporate governance statement

(p) monitoring compliance with all of the Company's legal obligations, such as those obligations relating to the environment, native title, cultural heritage and occupational health and safety; and
(q) make regular assessment of whether each non � executive director is independent in accordance with the Company's Policy on Assessing the Independence of Directors .

TheManagingDirectorisresponsibleforrunningtheaffairsoftheCompanyunderdelegatedauthorityfromtheBoardandto
implementthepoliciesandstrategysetbytheBoard.TheManagingDirectormustalsoreporttotheBoardinatimelymanneronthose
mattersincludedintheCompany'sriskprofile,allrelevantoperationalmattersandanyothermaterialmatter.

ThefunctionsandresponsibilitiesoftheBoardcomparedwiththosedelegatedtomanagementarereflectiveoftheRecommendations.

TheManagingDirectorisalsoresponsibleforappointingand,whereappropriate,removingseniorexecutives,includingthechief
financialofficerandthecompanysecretary,withtheapprovaloftheBoard.TheManagingDirectorisalsoresponsibleforevaluating
theperformanceofseniorexecutives.

Recommendation 1.2 – Disclose the process for evaluating the performance of senior executives.

TheRemunerationCommitteeischargedwithperiodicreviewofthejobdescriptionandperformanceoftheManagingDirector
accordingtoagreedperformanceparameters.

TheManagingDirectorandseniorexecutiveswerethesubjectofinformalevaluationsagainstbothindividualperformanceandoverall
businessmeasures.Theseevaluationswereundertakenprogressivelyandperiodically.

TheCompany’swebsitecontainsasectionformallysettingouttheCompany’sProcessforPerformanceEvaluation.

Recommendation 1.3 – Provide the information in the guide to reporting on Recommendations.

TheCompanyisnotawareofanydeparturefromRecommendations1.1or1.2.Performanceevaluationsforseniorexecutiveshave
takenplaceinthereportingperiodinaccordancewiththeprocessdisclosed.

Theboardcharterispublicallyavailableatwww.talismanmining.com.auanditincludesadescriptionofwhatmattersarereservedfor
theboardorseniorexecutivesrespectively.

PRINCIPLE 2: STRUCTURE THE BOARD TO ADD VALUE

Recommendation 2.1 – A majority of the Board should be independent directors.

For the majority of the year the Board had a majority of independent directors. From 17[th] June 2009, 2 further executive director appointments were made following a Board re � structure. From this date the Company does not have a majority of independent directors and does not comply with Recommendation 2.1.

TheBoardofTalismanbelievesthatthecurrentstructureisthemostappropriatefortheCompanyhavingregardtoitssize,itscurrent
levelofoperationsanditsstrategyofminimisingoperatingcosts.AstheCompanygrowsand/orcircumstanceschange,theBoardmay
makefurtherappointmentsofindependentdirectorsifconsideredappropriate.

Recommendation 2.2 – The chairperson should be an independent director.

AlanSenior,theChairmanofthecompanyisanindependentdirector.

Recommendation 2.3 –The roles of chairperson and chief executive officer should not be exercised by the same individual.

The role of the Chairperson is filled by Alan Senior (independent non � executive Director).

TheroleoftheManagingDirectorandCEOisfilledbyGaryLethridge.

Recommendation 2.4 – The Board should establish a nomination committee.

TheCompanyhasaseparatenominationcommittee,comprisingtheindependentdirectorsofthecompanyatanyonetime.The
committeemettwiceduringtheyearandattendancesbycommitteemembersarerecordedintheDirectors’Report.

Recommendation 2.5 – Disclose the process for evaluating the performance of the Board, its committees and individual directors.

TheBoardischargedwithBoardandBoardCommitteemembership,successionplanningandperformanceevaluation,aswellasBoard
memberinduction,educationanddevelopment.

Talisman Mining Limited Corporate governance statement

TheCompanyhasadoptedpoliciesandproceduresconcerningtheevaluationanddevelopmentofitsdirectors,executivesandBoard
committee.ProceduresincludeaninternalBoardperformanceassessment,aninductionprotocolandongoingdiscussionswithregard
totheperformanceoftheBoardanditsdirectors.

TheCompany’sProcessforPerformanceEvaluationisavailableontheCompany’swebsite.

Recommendation 2.6 – Provide the information indicated in Guide to reporting on Principle 2.

ContainedintheDirectors’ReportsectionofthisAnnualReportaredetailsoftheskills,experienceandexpertiseheldbyeachDirector
inofficeatthedateofthisAnnualReport;

The terms of office, and their status as executive/non � executive/independent, for each director for the year ending 30 June 2009 were as follows (with all directors noted as continuing in office as at 30 June 2009 and still being in office at the date of this annual report):

`AlanSenior`	`Non`�`executive/independent` `(appointed7November2007)`
`GaryLethridge`	`Executive/non`�`independent` `(appointed2February2009)`
`PeterLangworthy`	`Executive/non`�`independent` `(appointed17June2009)`
`BrianDawes`	`Executive/non`�`independent` `(appointed17June2009)`
`KarenGadsby`	`Nonexecutive/independent` `(appointed3rdApril2008)`

TheCompanyhasacceptedthedefinitionof“independence”intheRecommendationsinmakingtheaboveassessmentsof
independence.

TheCompany’sCorporateGovernanceCharterempowersadirectortotakeindependentprofessionaladviceattheexpenseofthe
Company.

InaccordancewiththeProcessforPerformanceEvaluation,anevaluationofBoardPerformancetookplaceduringtheperiodin
accordancewiththisprocess.

TheCompany’sprocedurefortheselectionandappointmentofnewdirectorsisavailableontheCompany’swebsitealongwithacopy
oftheNominationCommitteeCharter.

`P` RINCIPLE 3: PROMOTE ETHICAL AND RESPONSIBLE DECISION MAKING

Recommendation 3.1: Establish a code of conduct and disclose the code, or a summary as to:

3.1.1 the practices necessary to maintain confidence in the company’s integrity;

3.1.2 the practices necessary to take into account legal obligations and reasonable expectations of stakeholders;

3.1.3 the responsibility and accountability of individuals for reporting and investigating reports of unethical practices.

TheCompanyhasestablishedaformalcodeofconducttoguidetheDirectors,theManagingDirectorandtheCFO(orequivalent)with
respecttothepracticesnecessarytomaintainconfidenceintheCompany’sintegrity,thepracticesnecessarytotakeintoaccountlegal
obligationsandreasonableexpectationsofstakeholders,andtheresponsibilityandaccountabilityofindividualsforreportingand
investigatingreportsofunethicalpractices.Thecodeofconductisdisclosedonthecompany’swebsite.

Recommendation 3.2: Establish and disclose the Policy Concerning Trading in Company Securities by directors, officers and employees.

TheCompany’spolicyconcerningtradinginCompanysecuritiesbyDirectors,officersandemployeesissetoutontheCompany’s
website.

Talisman Mining Limited Corporate governance statement

Recommendation 3.3: Provide the Information Indicated in Guide to Reporting on Principle 3.

TheCompanyisnotawareofanydeparturesfromRecommendations3.1,3.2or3.3.

CopiesoftheCompany’sCodeofConductanditsShareTradingPolicyarepubliclyavailableontheCompany’swebsite.

PRINCIPLE 4: SAFEGUARD INTEGRITY IN FINANCIAL REPORTING

Recommendation 4.1, 4.2, 4.3 and 4.4: The Board should establish an Audit Committee.

TheBoardhasestablishedaseparateAuditCommitteecomprisingtheindependentdirectors.TheCommitteemet5timesduringthe
yearandattendancesbycommitteemembersarerecordedintheDirectors’Report.

MsKarenGadsby,theChairoftheAuditCommitteehasheldanumberofAuditCommitteepositions,isaqualifiedChartered
AccountantandisdeemedtohavetherelevantknowledgeandexperiencetoguidetheCommittee.

AcopyoftheCompany’sAuditCommitteeCharterisavailableontheCompany’swebsite.TheCompany’sprocessfortheselection,
appointmentandrotationoftheCompany’sexternalauditorsisalsoavailableontheCompany’swebsite.

PRINCIPLE 5: MAKE TIMELY AND BALANCED DISCLOSURE

Recommendation 5.1: Establish written policies designed to ensure compliance with ASX Listing Rule disclosure requirements and to ensure accountability at a senior executive level for that compliance and disclose those policies or a summary of them.

TheCompanyhasestablishedwrittenpoliciesandproceduresdesignedtoensurecompliancewithASXListingRuledisclosure
requirementsandtoensureaccountabilityatseniorexecutivelevelforthatcompliance.

Recommendation 5.2: Provide the information indicated in Guide to reporting on Principle 5.

TheCompanyisnotawareofanydeparturefromRecommendations5.1or5.2.

TheCompany’sPolicyonASXListingRuleComplianceispubliclyavailableontheCompany’swebsite.

PRINCIPLE 6: RESPECT THE RIGHTS OF SHAREHOLDERS

Recommendation 6.1: Design and disclose a communications policy for promoting effective communication with shareholders and encouraging their participation at general meetings.

TheCompanyhasadoptedpoliciesformallysettingouttheCompany’scommunicationsstrategywithitsstakeholdersincludingthe
effectiveuseofelectroniccommunications.

TheboardencouragestheattendanceofshareholdersattheShareholders’MeetingsandsetsthetimeandplaceofeachShareholders
Meetingtoallowmaximumattendancebyshareholders.

Recommendation 6.2: Provide the information indicated in Guide to reporting on Principle 6.

DetailsofhowtheCompanywillcommunicatewithitsshareholderspubliclyissetoutundertheheading“ShareholderCommunication
Policy”whichispubliclyavailableontheCompany’swebsite.

TheCompanyisnotawareofanydeparturefromRecommendations6.1or6.2.

PRINCIPLE 7: RECOGNISE AND MANAGE RISK

Recommendation 7.1: Companies should establish policies for the oversight and management of material business risks and disclose a summary of those policies.

TheBoardhasadoptedaformalpolicyonriskoversightandmanagement.

AsummaryoftheCompany’spolicyonthesemattersissetoutundertheheading“SummaryofRiskManagementPolicy”whichis
publiclyavailableontheCompany’swebsite.

Recommendation 7.2: The Board to require management to design and implement the risk management and internal control system to manage the Company’s material business risks, and report to it on whether those risks are being managed effectively. Board to disclose that management has reported to it as to the effectiveness of the Company’s management of its material business risks.

Talisman Mining Limited Corporate governance statement

TheCompanyhasinplaceasystemofriskmanagementthatidentifiesandcategorisesandmanagesmaterialbusinessrisksfacedby
theCompany.AriskregisterisupdatedandtabledatappropriateBoardmeetingsthroughouttheyear.Keyrisksaddressedinclude

Occupational Health and Safety;
Protection of assets
Market risk
Liquidity risk
Compliance risk

TheBoardrecognisesthatastheCompanydevelops.thecurrentsystemmaynotbeappropriate.Assuch,theBoardhasrequired
managementtoprogressmattersandreporttoitintermsofthisRecommendation.Itisenvisagedthatanupdatedsystemfor
managingongoingandfuturematerialbusinessriskswillbeimplementedduringthenextfinancialyear.

Recommendation 7.3: Board to disclose whether it has received assurance from the Managing Director (or equivalent) and the CFO (or equivalent) that the declaration provided in accordance with S.295A of the Corporations Act is founded on a sound system of risk management and internal control and that the system is operating effectively in all material respects in relation to financial reporting risks.

TheCompany’sManagingDirectorandCFO(orequivalent)providedtheBoardassuranceincompliancewiththisRecommendationthat
thedeclarationprovidedinaccordancewithS.295AoftheCorporationsActwasfoundedonasoundsystemofriskmanagementand
internalcontrolandthatsystemwasoperatingeffectivelyinallmaterialrespectsinrelationtofinancialreportingrisks.

Recommendation 7.4: Provide the information indicated in Guide to reporting on Principle 7.

TheCompanyisnotawareofanydeparturefromRecommendations7.1,7.2or7.3althoughnotesitiscontinuingtodevelopandrefine
itsriskmanagementandinternalcontrolprocesses.

AsummaryoftheCompany’spoliciesonriskoversightandmanagementofmaterialbusinessrisksispubliclyavailableunderthe
heading“RiskManagementPolicy”intheCharterontheCompany’swebsitealthoughitisacknowledgedthatamoredetailedpolicy
willbeintroducedoncethereviewcontemplatedabovehasbeencompleted.

PRINCIPLE 8: REMUNERATE FAIRLY AND RESPONSIBLY

Recommendation 8.1: The Board should establish a remuneration committee.

TheBoardhasestablishedaRemunerationCommitteecomprisingtheindependentdirectors.3meetingswereheldduringtheyear
withandattendancesbycommitteemembersarerecordedintheDirectors’Report.

Recommendation 8.2: Clearly distinguish the structure of non�executive directors’ remuneration from that of executive directors and senior executives.

The structure of non � executive remuneration is clearly distinguishable from that of executive directors and senior executives.

ThelevelofremunerationpackagesandpoliciesapplicabletodirectorsaredetailedintheRemunerationReportwhichformspartof
theDirectors’ReporttothisAnnualReport.

Recommendation 8.3: Provide the information indicated in Guide to reporting on Principle 8

Non Executive Director Retirement Benefits

Non � executive directors are entitled to statutory superannuation. There are no other schemes for retirement benefits for non � executive directors.

Limiting Risk

Directorsareprohibitedfromenteringintotransactionswhichlimittheriskofparticipatinginunvestedentitlementsunderanyequity
basedremunerationscheme.

Information Publicly Available

TheCompany’swebsitecontainsasectionformallysettingouttheRemunerationCommittee.

Talisman Mining Limited Directors’ report

Directors’ report

ThedirectorsofTalismanMiningLimitedsubmitherewiththeannualfinancialreportoftheCompanyforthefinancialyearended
30June2009.InordertocomplywiththeprovisionsoftheCorporationsAct2001,thedirectorsreportasfollows:

Information about directors

ThenamesandparticularsofthedirectorsoftheCompanyduringorsincetheendofthefinancialyearare:

Name	Particulars
MrAlanSenior	Non�ExecutiveChairman
`AsscshpMechEng,FIEAUST,`	`Alanhasextensiveexperienceatallstagesofprojects,frompre`�`feasibilitythroughto`
`CPEng,FAusIMM`	`commissioningandoperation,forplantshandlingand/orprocessingironore,gold,copper,bauxite,`
	`uranium,andcoal.ThroughouthiscareerAlanhasworkedfortheironoreindustry.Inthe1970’s`
	`andearly80’sheworkedasadesigneronmajorexpansionprojectsforMtNewmanMining(now`
	`BHPB)andHamersleyIron(nowCRA).`
	`AlangraduatedfromtheWestAustralianInstituteofTechnology(CurtinUniversity)withan`
	`AssociateshipinMechanicalEngineeringin1968.Heisanengineerwithover35yearsexperience`
	`indesignandprojectdevelopment,mainlyassociatedwiththeminingandmineralprocessing`
	`industryinAustralia`
	`Alanwasanon`�`executiveDirectorofJubileeMinesNLupuntilitspurchasebyXstrata.Before`
	`joiningtheboardofJubileein2003heledtheteamwhichcompletedthefeasibilitystudyforthe`
	`CosmosNickelprojectanditssuccessfulimplementation,followedthreeyearslaterbythe`
	`transitionfromopencuttoundergroundmining.Alanisalsoanon`�`executiveDirectorofTanami`
	`GoldNL.`
	`AlanisaFellowoftheInstitutionofEngineersAustralia,aFellowoftheAustralianInstituteof`
	`MiningandMetallurgy,andaCharteredProfessionalEngineer.`
MrGaryLethridge	ManagingDirector(appointed2February2009)
`B.Comm,CA,FCIS,MAICD`	`Garyhasspentthepast14yearswithintheresourcesindustryandhasbeeninvolvedinallphases`
	`andaspectsofgoldandbasemetalsresourcesprojects.PriortojoiningTalisman,heheldthe`
	`positionofExecutiveGeneralManagerCorporate/ChiefFinancialOfficerofthehighlysuccessful`
	`AustraliannickelproducerJubileeMinesNL.Beforethat,MrLethridgeheldseniorexecutive`
	`positionswithLionOreMiningInternationalLimitedinAustralia.Acharteredaccountant,he`
	`commencedhiscareerwithErnst&Youngin1984.`
MrBrianDawes	ExecutiveDirector(appointed16June2009)
`B.Sc.Mining,MAusIMM(CP)`	`Brianhasaminingengineeringbackgroundwithover25yearsexperienceincorporate,senior`
	`management,operational,consulting,andplanningroles.AgraduateofLeedsUniversity,hehas`
	`extensiveexperienceacrossadiversesetofbasemetalandgoldprojectsaround`
	`AustraliaandholdsfirstclassminemanagerscertificatesforWA,Queensland,Tasmania,andthe`
	`NT.HehaslivedinAfricaandtheMiddleEastworkingonestablishedandgreenfieldsbasemetal`
	`projects.PreviouslyBrianhasheldthepositionsof:EGMOperations&ProjectswithJubileeMines`
	`untilitssale,GMOperationswithWesternAreas,GroupMiningEngineerwithLionOreAustralia,`
	`andotherroleswithWMC,NormandyMining,Aberfoyle,MinprocandMIM.`
MrPeterLangworthy	TechnicalDirector(appointed16June2009)
`BscHons,MAusIMM`	`PeterisaGeologistwithover23yearsexperienceintheexplorationandminingindustry,including`
	`seniortechnical,managementandcorporateroles.PriortotakinghiscurrentrolewithTalismanhe`
	`heldtheroleofExecutiveGeneralManager–ExplorationwithJubileeMinesNLwhereheplayeda`
	`significantroleintheexploration,miningandmanagementofthecompany.Postthesuccessful`
	`takeoverofJubileebyXstrataNickelAustralasiaPtyLtd,PeteractedastheChiefOperatingOfficer`
	`andwasresponsiblefortheintegrationoftheJubileebusinessintotheXstrataNickelBusiness.`

Hehasextensiveexperienceinnickelsulphide,goldandbasemetalsexploration,extendingto
regionalexplorationandoperatingmines.

Talisman Mining Limited Directors’ report

Name Particulars

Ms Karen Gadsby B Comm, FCA, MAICD

Non�Executive Director

Karenhas24yearsexperienceinFinance,graduatedfromUWAwithaBachelorofCommercein
1984andqualifiedasaCharteredAccountantwithCoopersandLybrand(WA)in1987.

KarenworkedforNorthLtdthroughoutAustraliafor13yearsinvariousexecutiverolesincluding6
yearswithRobeRiverIronAssociatesinPerth.ShehasheldthepositionsofGeneralManager
Finance,CFOandCompanySecretary.

She now resides in WA, has been involved with boards for over 12 years and now predominately works as a non � executive director. She is currently a director of the following boards; Forest Products Commission; Community First International Ltd and Perth Home Care Services and was previously a director of AMES(Vic) GMHBA (Vic) and Western Health (Vic). Karen has been the Chair of the Finance, Audit and Risk Management committees for these boards. She also consults and advises in the areas of business and finance strategy, change management and executive mentoring.

KarenisaFellowoftheInstituteofCharteredAccountantsandisaMemberoftheAustralian
InstituteofCompanyDirectors.

Theabovenameddirectorsheldofficeduringandsincetheendofthefinancialyearexceptfor:

MrGaryLethridgeappointed2February2009
MrBrianDawesappointed16June2009
MrPeterLangworthyappointed16June2009
MrStevenElliottresigned24November2008
Michael(Mick)Bunyardresigned5June2009

Directorships of other listed companies

Directorshipsofotherlistedcompaniesheldbydirectorsinthe3yearsimmediatelybeforetheendofthefinancialyearareasfollows:

Name	Company	Appointed	Resigned
`AlanSenior` `JubileeMinesNL` `TanamiGoldNL` `14February2003` `31July2007` `7February2008` `current` `GaryLethridge` `FalconMineralsLtd` `NorthernStarResourcesLtd` `24January2005` `14April2004` `18February2008` `7February2008` `PeterLangworthy` `PioneerResourcesLtd(formerlyPioneerNickelLtd)` `NorthernStarResourcesLtd` `FalconMineralsLimited` `29November2004` `16June2006` `18February2008` `22July2009` `22April2009` `31July2009` `BrianDawes` � � � `KarenGadsby` � � � `StevenElliott` � � � `MickBunyard` � � �

Directors’ shareholdings

Thefollowingtablesetsouteachdirector’srelevantinterestinshares,andrightsoroptionsinsharesoftheCompanyorarelatedbody
corporateasatthedateofthisreport.

Directors	Fullypaidordinaryshares Number	Shareoptions Number
`AlanSenior` `116,666` `4,000,000` `GaryLethridge` `666,667` `4,000,000` `BrianDawes` `353,333` `2,000,000` `PeterLangworthy` `666,667` `4,000,000` `KarenGadsby` `244,667` `2,000,000`

Talisman Mining Limited Directors’ report

Remuneration of directors and senior management

InformationabouttheremunerationofdirectorsandseniormanagementissetoutintheRemunerationReportofthisDirectors’
Report.

Share options granted to directors and senior management

Duringandsincetheendofthefinancialyearanaggregate10,000,000shareoptionsweregrantedfollowingshareholderapprovalto
thefollowingdirectorsandthefivehighestremuneratedofficersofthecompanyaspartoftheirremuneration:

Directorsandseniormanagement	Number ofoptionsgranted	Issuingentity	Numberofordinary sharesunderoption
`GaryLethridge(i)` `4,000,000` `TalismanMiningLimited` `4,000,000` `BrianDawes(ii)` `2,000,000` `TalismanMiningLimited` `2,000,000` `PeterLangworthy(iii)` `4,000,000` `TalismanMiningLimited` `4,000,000`

(i)2.0millionoptionsvest17March2009;1.0millionoptionsvest30June2009;and1.0millionoptionsvest31December
2009.

(ii)0.25millionoptionsvest23July2009;0.5millionoptionsvest31December2009;0.5millionoptionsvest30June2010;0.5
millionoptionsvest31December2010;and0.25millionoptionsvest30June2011.

(iii)0.5millionoptionsvest23July2009;1.0millionoptionsvest31December2009;1.0millionoptionsvest30June2010;1.0
millionoptionsvest31December2010;and0.5millionoptionsvest30June2011.

Company secretary

Darren Crawte `LL.B (Hons), ACA`

DarrenisaqualifiedCharteredAccountantwith9yearsexperienceworkingwithinpublicpractice,specificallywithintheareaofaudit
andassurancebothinAustraliaandtheUnitedKingdom.HeisadirectorofOrdNexiaPtyLtd,alongestablishedcharteredaccountancy
firmandholdssimilarsecretarialrolesinvariousotherlistedpubliccompanies.

Principal activities

TheprincipalactivityofTalismanMiningLimitedduringthecourseofthefinancialyearwastheexplorationforbasemetals,ironore
andgold.

Review of operations

Adetailedreviewofoperationsduringthefinancialyearissetoutinthesectiontitled“ReviewofOperations”inthisAnnualReport.

Talisman Mining Limited Directors’ report

Changes in state of affairs

TherewasnosignificantchangeinthestateofaffairsoftheCompanyduringthefinancialyear.

Subsequent events

Therehasnotbeenanymatterorcircumstanceoccurringsubsequenttotheendofthefinancialyearthathassignificantlyaffected,or
maysignificantlyaffect,theoperationsoftheCompany,theresultsofthoseoperations,orthestateofaffairsoftheCompanyinfuture
financialyearsotherthan:

The Company issued an aggregate total of 6,219,997 fully paid ordinary shares at $0.30 each on 23 and 27 July 2009 following shareholder approval at the General Meeting held on 23 July 2009. This issue which raised a total of $1,866,000 (before costs of the issue) represented the final allocation under a general placement to raise $5,261,837.
On the 23 July 2009, pursuant to shareholder approval at the General Meeting held on that date, 6,000,000 unlisted incentive options exercisable at various prices between $0.50 to $0.70 at various vesting periods, expiring on 30 June 2013 were issued to Messrs Langworthy and Dawes. Further details on the terms of the options are detailed below in the Remuneration Report.

Future developments

DisclosureofinformationregardinglikelydevelopmentsintheoperationsoftheCompanyinfuturefinancialyearsandtheexpected
resultsofthoseoperationsislikelytoresultinunreasonableprejudicetotheCompany.Accordingly,thisinformationhasnotbeen
disclosedinthisreport.

Environmental regulations

TheCompany’senvironmentalobligationsareregulatedunderbothStateandFederallegislation.Performancewithrespectto
environmentalobligationsismonitoredbytheBoardofDirectorsandsubjectedfromtimetotimetogovernmentagencyauditsand
siteinspections.Noenvironmentalbreacheshavebeennotifiedbyanygovernmentagencyduringtheyearended30June2009.

Dividends

Nodividendshavebeenpaidordeclaredsincethestartofthefinancialyear.Norecommendationforthepaymentofadividendhas
beenmade.

Share options

Shares under option or issued on exercise of options

Detailsofunissuedsharesorinterestsunderoptionasatthedateofthisreportare:

Issuingentity	Numberof sharesunderoption	Classofshares	Exerciseprice ofoption	Expirydateofoptions
`TalismanMiningLimited` `24,652,257` `Ordinary` `$0.20` `31December2010` `TalismanMiningLimited` `2,222,000` `Ordinary` `$0.25` `31December2010` `TalismanMiningLimited` `1,400,000` `Ordinary` `$1.20` `31December2010` `TalismanMiningLimited` `1,500,000` `Ordinary` `$1.00` `30November2010` `TalismanMiningLimited` `1,500,000` `Ordinary` `$1.20` `30November2010` `TalismanMiningLimited` `1,000,000` `Ordinary` `$1.60` `30November2010` `TalismanMiningLimited` `1,000,000` `Ordinary` `$2.20` `30November2010` `TalismanMiningLimited` `500,000` `Ordinary` `$1.00` `31May2011` `TalismanMiningLimited` `500,000` `Ordinary` `$1.20` `31May2011` `TalismanMiningLimited` `500,000` `Ordinary` `$1.60` `31May2011` `TalismanMiningLimited` `500,000` `Ordinary` `$2.20` `31May2011` `TalismanMiningLimited` `4,000,000` `Ordinary` `$0.22` `31August2011` `TalismanMiningLimited` `2,250,000` `Ordinary` `$0.50` `30June2013` `TalismanMiningLimited` `1,500,000` `Ordinary` `$0.60` `30June2013` `TalismanMiningLimited` `2,250,000` `Ordinary` `$0.70` `30June2013`

Theholdersoftheseoptionsdonothavetheright,byvirtueoftheoption,toparticipateinanyshareissueorinterestissueofanyother
bodycorporateorregisteredscheme.

Talisman Mining Limited Directors’ report

Shares issued on exercise of options

Detailsofsharesorinterestsissuedduringorsincetheendofthefinancialyearasaresultoftheexerciseofoptionsare:

Issuingentity	Numberof sharesissued	Classofshares	Amount paidforshares	Amount unpaidonshares
`TalismanMiningLimited` `175,000` `Ordinary` `$0.20` �

Shares options that expired/lapsed

Detailsofshareoptionsthatexpiredorlapsedduringorsincetheendofthefinancialyearare:

Issuingentity	Numberof optionslapsed		Exerciseprice ofoptions	Expirydate ofoptions
		Classofshares
`TalismanMiningLimited` `500,000` `Ordinary` `$1.60` `30November2010` `TalismanMiningLimited` `500,000` `Ordinary` `$2.20` `30November2010`

Theaboveoptionslapsedunvestedfollowingtheresignationofadirector.

Indemnification of officers and auditors

Duringthefinancialyear,theCompanyenteredintoacontractinsuringthedirectorsandexecutiveofficersoftheCompanyandofany
relatedbodycorporateagainstaliabilityincurredasadirectororexecutiveofficertotheextentpermittedbytheCorporationsAct
2001.Thecontractofinsuranceprohibitsdisclosureofthenatureoftheliabilityandtheamountofthepremium.

TheCompanyhasnototherwise,duringorsincetheendofthefinancialyear,excepttotheextentpermittedbylaw,indemnifiedor
agreedtoindemnifyanofficerorauditoroftheCompanyorrelatedbodycorporateagainstaliabilityincurredasanofficerorauditor.

Directors’ meetings

Thefollowingtablesetsoutthenumberofdirectors’meetings(includingmeetingsofcommitteesofdirectors)heldduringthefinancial
yearandthenumberofmeetingsattendedbyeachdirector(whiletheywereadirectororcommitteemember).Duringthefinancial
year,11boardmeetings,5auditcommitteemeetings,3remunerationcommitteemeetingsand2nominationcommitteemeetingwere
held.

	Boardofdirectors	Boardofdirectors	Auditcommittee	Auditcommittee	Remunerationcommittee	Remunerationcommittee	Nominationcommittee	Nominationcommittee
Directors	Eligibleto attend	Attended	Eligibleto attend	Attended	Eligibleto attend	Attended	Eligibleto attend	Attended
`AlanSenior` `11` `10` `5` `4` `3` `3` `2` `2` `GaryLethridge` `4` `4` � � � � � � `BrianDawes` `1` `1` � � � � � � `PeterLangworthy` `1` `1` � � � � � � `KarenGadsby` `11` `11` `5` `5` `3` `3` `2` `2` `SteveElliott` `5` `5` � � � � � � `MickBunyard` `10` `10` `5` `5` `3` `2` `2` `2`

Proceedings on behalf of the company

Nopersonshaveappliedforleavepursuanttos.237oftheCorporationAct2001tobring,orintervenein,proceedingsonbehalfof
TalismanMiningLtd.

Non�audit services

There were no non � audit services performed during the year by the auditors (or by another person or firm on the auditor’s behalf).

Auditor’s independence declaration

Theauditor’sindependencedeclarationisincludedonpage26oftheannualreport.

Talisman Mining Limited Directors’ report

Remuneration report

This Remuneration Report, which forms part of the directors’ report, sets out information about the remuneration of Talisman Mining Limited’s key management personnel for the financial year ended 30 June 2009. Disclosures required under AASB 124 Related Party Disclosures have been transferred from the financial report and have been audited. The additional disclosures required by the Corporations Act 2001 and the Corporations Regulations 2001 have not been audited.

Theprescribeddetailsforeachpersoncoveredbythisreportaredetailedbelowunderthefollowingheadings:

key management personnel details;
remuneration policy and relationship between the remuneration policy and company performance;
remuneration of key management personnel; and
key terms of employment contracts

Key management personnel details

ThekeymanagementpersonnelofTalismanMiningLimitedduringtheyearorsincetheendoftheyearwere:

AlanSeniorChairman
GaryLethridgeManagingDirector,appointed2February2009
BrianDawesExecutiveDirectorappointed16June2009
PeterLangworthyTechnicalDirectorappointed16June2009
KarenGadsbyNonExecutiveDirector
SteveElliottManagingDirector,resigned24November2008
MickBunyardNonExecutiveDirectorresigned5June2009
HarryCorneliusExplorationManager

Includedinkeymanagementpersonnelabovearethe5highestremuneratedexecutivesoftheCompany.

Remuneration policy and relationship between the remuneration policy and company performance

Key management personnel (excluding non � executive directors)

TheBoardisresponsiblefordeterminingtheremunerationpoliciesfortheCompany,includingthoseaffectingexecutivedirectorsand
otherkeymanagementpersonnel.TheBoardmayseekappropriateexternaladvicetoassistinitsdecisionmaking.Remuneration
policiesandpracticesaredirectedprimarilyatattracting,motivatingandretainingkeymanagementpersonnel.

Theremunerationpolicyforexecutivedirectorsandotherkeymanagementpersonnelhastwomaincomponents:fixedremuneration
andlongtermincentive.

`Fixed remuneration`

Executivedirectorsandotherkeymanagementpersonnelreceivefixedremunerationintheformofabasesalary(inclusiveof
statutorysuperannuation).

`Long term incentive`

ToaligntheinterestsofkeymanagementpersonnelwiththelongtermobjectivesoftheCompanyanditsshareholders,the
Company’spolicy,havingregardtothestageofdevelopmentofitsassets,istoissueshareoptionsatthecompletediscretionof
theBoard,subjecttoshareholderapprovalfordirectors.Vestingconditionsrelatingtotheperformanceofthecompanyarenot
consideredappropriatehavingregardtothestageofdevelopmentoftheCompany’sassets.

`Non` � `executive directors`

The Company’s non � executive directors receive fees (including statutory superannuation) for their services and the reimbursement of reasonable expenses. The fees paid to the Company’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 Company’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 Company.

A non � executive directors’ fee pool limit of $300,000 per annum was approved by the shareholders at the General Meeting on 19 May 2008 and is currently utilised to a level of $130,000 per annum. The fee currently paid to the non executive Chairman is $80,000 per annum and $50,000 per annum for the non executive directors (excluding statutory superannuation).

Talisman Mining Limited Directors’ report

Remuneration of key management personnel

	Short�termemployeebenefits	Short�termemployeebenefits	Short�termemployeebenefits	Short�termemployeebenefits	Post� employment benefits	Other long�term employee benefits	Share� based payment	Total	%of compensation linkedto performance
	Salary &fees	Bonus	Non� monetary	Other(i)	Super� annuation		Options
2009	$	$	$	$	$	$	$	$	%
`Directors` `AlanSenior` `76,667` � � � `6,900` � `485,048` `568,615` `85%` `GaryLethridge` `108,541` � � � `9,769` � `760,716` `879,026` `86%` `BrianDawes` `10,200` � � � `918` � � `11,118` � `Peter` `Langworthy` `34,560` � � � � � � `34,560` � `KarenGadsby` `46,667` � � `13,000` `4,200` � `400,063` `463,930` `86%` `SteveElliott` `95,640` � � � `8,608` � � `104,248` � `MickBunyard` `43,462` � � � `3,912` � `110,857` `158,231` `70%` `Executives` `HarryCornelius` `157,728` � � � `14,195` � `79,300` `251,223` `32%` `573,465` � � `13,000` `48,502` � `1,835,984` `2,470,951`

(i)Relatestoaoneoffconsultingfeepaidonarmslengthstermsandconditions.

	Short�termemployeebenefits	Short�termemployeebenefits	Short�termemployeebenefits	Short�termemployeebenefits	Post� employment benefits	Otherlong� term employee benefits	Share� based payment	Total	%of compensation linkedto performance
	Salary &fees	Bonus	Non� monetary	Other	Super� annuation		Options
2008	$	$	$	$	$	$	$	$	%
`Directors` `AlanSenior` `42,518` � � � `3,827` � `468,975` `515,320` `91%` `StevenElliott` `145,000` � � � `13,050` � � `158,050` � `MickBunyard` `29,250` � � � `2,633` � `238,655` `270,538` `88%` `KarenGadsby` `9,450` � � � `850` � `99,874` `110,174` `91%` `IanMacpherson` `13,800` � � � � � � `13,800` � `Executives` `HarryCornelius` `137,500` � � � `12,375` � `57,532` `207,407` `28%` `377,518` � � � `32,735` � `865,036` `1,275,289`

Nodirectororexecutiveappointedduringtheyearreceivedapaymentaspartofhisorherconsiderationoragreeingtoholdthe
position.

Share based payments granted as compensation for the current financial year. Incentive share based payment arrangements

Duringthefinancialyearthefollowingsharebasedpaymentarrangementsforkeymanagementpersonnelwereinexistence:

	Grant	Expiry	Fairvalueperoptionat grantdate	Vesting
Optionsseries	date	date	$	date
`1)Issued3September2007` `11May2007` `31December2010` `0.08` `Vestsatdateofgrant` `2)Issued25March2008` `19May2008` `31December2010` `0.32` `Vestson30April2009` `3)Issued21May2008` `19May2008` `30November2010` `0.34` `Vestsatdateofgrant` `4)Issued21May2008` `19May2008` `30November2010` `0.31` `Vestson30November2008` `5)Issued21May2008` `19May2008` `30November2010` `0.27` `Vestson30November2009` `6)Issued21May2008` `19May2008` `30November2010` `0.23` `Vests30September2010` `7)Issued21May2008` `19May2008` `31May2011` `0.37` `Vests30November2008` `8)Issued21May2008` `19May2008` `31May2011` `0.35` `Vests31May2009` `9)Issued21May2008` `19May2008` `31May2011` `0.31` `Vests31May2010` `10)Issued21May2008` `19May2008` `31May2011` `0.27` `Vests31March2011` `11)Issued20March2009` `20March2009` `31August2011` `0.15` `Vestsatthegrantdate` `12)Issued20March2009` `20March2009` `31August2011` `0.15` `Vests30June2009` `13)Issued20March2009` `20March2009` `31August2011` `0.15` `Vests31December2009`

Therearenoperformancecriteriathatneedtobemetinrelationtooptionsgrantedunderseries1to13beforethebeneficialinterest
vestsintherecipient.However,keymanagementpersonnelreceivingoptionsunderseries1to13areonlyentitledtoreceivethe
beneficialinterestundertheoptioniftheycontinuetobeemployedwiththecompanyatthetimetheoptionvests.

Talisman Mining Limited Directors’ report

Thefollowinggrantsofsharebasedpaymentcompensationtokeymanagementpersonnelrelatetothecurrentfinancialyear:

		Duringthefinancialyear	Duringthefinancialyear	Duringthefinancialyear	Duringthefinancialyear	Duringthefinancialyear
Name	Optionsseries (asperprevioustable)	No.granted	No. Vestedand exercisable	%ofgrant vested	%ofgrant forfeited	%ofcompensation fortheyearconsisting ofoptions
`GaryLethridge` `11,12,13` `4,000,000` `3,000,000` `75%` `N/A` `86%`

The assessed fair value at grant date of options granted to the individuals in the above table is allocated equally over the period from grant date to vesting date, and the amount is included in the remuneration tables in this remuneration report. Fair values at grant date are determined using a Black � Scholes option pricing model that takes into account the exercise price, the term of the option, the share price at grant date, the expected price volatility of the underlying share and the risk free rate for the term of the option.

Themodelinputsforoptionsgrantedduringtheyearended30June2009areasfollows:

Input	Series11,12&13 (asperprevioustable)
`ExercisePrice(i)` `$0.22` `Grantdate` `17March2009` `Expirydate` `31August2011` `Sharepriceatgrantdate` `$0.29` `Expectedvolatility` `142%` `Riskfreerate` `3.73%`

(i) The terms of the options were agreed on the 22 December 2008, being the date Mr Lethridge accepted his appointment as Managing Director. The share price of the Company at that time was $0.09. The formal grant date was 17 March 2009 being the date shareholder approval was received.

Duringtheyear,nokeymanagementpersonnelexercisedoptionsthatweregrantedtothemaspartoftheircompensation.

Value of options issued to directors and executives

Thefollowingtablesummarisesthevalueofoptionsgranted,exercisedorlapsedduringtheannualreportingperiodtotheidentified
directorsandexecutives:

	Valueofoptionsgranted atthegrantdate(i)	Valueofoptionsexercised attheexercisedate	Valueofoptionslapsed atthedateoflapse(ii)	Total
Name	$	$	$	$
`GaryLethridge` `904,720` � � `904,720` `MickBunyard` � � `247,300` `247,300`

(i) The value of options granted during the period is recognised in compensation over the vesting period of the grant, in accordance with Australian accounting standards.
(ii) Options lapsed as the vesting conditions were not satisfied following the resignation of a Director.

Key terms of employment contracts

RemunerationandothertermsofemploymentforGaryLethridge,ManagingDirector,areformalisedinaserviceagreement.Major
provisionsofthisagreementaresetoutbelow:

Base fee reviewed annually, currently $275,000 per annum (exclusive of superannuation entitlements).
Three year employment contract commencing 2 February 2009, with an election for a further period of 2 years.
Notice period of three months.
Payment of a termination benefit on early termination by the Company, other than for gross misconduct, at the end of the notice period is three months salary. Where there Company elects to dispense with the notice period and terminate employment, six months salary applies.

RemunerationandothertermsofemploymentforPeterLangworthy,Executive/TechnicalDirector,areformalisedinaservice
agreement.Majorprovisionsofthisagreementaresetoutbelow:

Base fee reviewed annually, currently $270,000 per annum (exclusive of superannuation entitlements).
Employment contract is ongoing and is reviewed and extended annually.
Notice period of three months.
Payment of a termination benefit on early termination by the Company, other than for gross misconduct, at the end of the notice period is three months salary. Where there Company elects to dispense with the notice period and terminate employment, six months salary applies.

Talisman Mining Limited Directors’ report

RemunerationandothertermsofemploymentforBrianDawes,ExecutiveDirector,areformalisedinaserviceagreement.Major
provisionsofthisagreementaresetoutbelow:

Consultancy fee basis, currently at $120 per hour (exclusive of superannuation entitlements).
Notice period of three months.
Payment of a termination benefit on early termination by the Company, other than for gross misconduct, at the end of the notice period is three months average consultancy fees based on the previous six months. Where there Company elects to dispense with the notice period and terminate employment, six months average consultancy fees apply.

RemunerationandothertermsofemploymentforHarryCornelius,ExplorationManager,areformalisedinaletteragreement.Major
provisionsofthisagreementaresetoutbelow:

Base fee reviewed annually, currently $165,138 per annum (exclusive of superannuation entitlements).
Employment contract is ongoing and is reviewed and extended annually.
Notice period of four weeks.
Employment may be terminated by either the employee or the Company giving four weeks notice in writing. Alternatively, the employment may be terminated by the Company providing paid compensation instead of the required period of notice. In the event of serious misconduct the Company may terminate the employment without notice or compensation.

Thisdirectors’reportissignedinaccordancewitharesolutionofdirectorsmadepursuanttos.298(2)oftheCorporationsAct2001.

OnbehalfoftheDirectors

GaryLethridge
ManagingDirector
Perth,29September2009

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Auditor’s Independence Declaration

As lead auditor for the audit of the financial report of Talisman Mining Limited for the year ended 30 June 2009, I declare that to the best of my knowledge and belief, there have been:

a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
b) no contraventions of any applicable code of professional conduct in relation to the audit.

This declaration is in respect of Talisman Mining Limited.

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Perth, Western Australia L DI GIALLONARDO 29 September 2009 Partner, HLB Mann Judd

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

Level 2 15 Rheola Street West Perth 6005 PO Box 263 West Perth 6872 Western Australia. Telephone +61 (08) 9481 0977. Fax +61 (08) 9481 3686. Email: [email protected]. Website: http://www.hlb.com.au Liability limited by a scheme approved under Professional Standards Legislation HLB Mann Judd (WA Partnership) is a member of International and the HLB Mann Judd National Association of independent accounting firms

��

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INDEPENDENT AUDITOR’S REPORT

To the members of Talisman Mining Limited

Report on the Financial Report

We have audited the accompanying financial report of Talisman Mining Limited, which comprises the balance sheet as at 30 June 2009, the income statement, statement of changes in equity, cash flow statement and notes to the financial statements for the year ended on that date, and the directors’ declaration as set out on pages 31 to 53.

Directors’ Responsibility for the Financial Report

The directors of the company are responsible for the preparation and fair presentation of the financial report in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001. This responsibility includes establishing and maintaining internal controls relevant to the preparation and fair presentation of the financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

In Note 2, the directors also state, in accordance with Accounting Standard AASB 101: Presentation of Financial Statements, that compliance with the Australian equivalents to International Financial Reporting Standards ensures that the financial report, comprising the financial statements and notes, complies with International Financial Reporting Standards.

Auditor’s Responsibility

Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal controls relevant to the entity’s preparation and fair presentation of the financial report 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 entity’s internal controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report.

Our audit did not involve an analysis of the prudence of business decisions made by directors or management.

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

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

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

���

Independence

In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.

Auditor’s Opinion

In our opinion:

(a) the financial report of Talisman Mining Limited is in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the company’s financial position as at 30 June 2009 and of its performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001; and
(b) the financial report also complies with International Financial Reporting Standards as disclosed in Note 2.

Report on the Remuneration Report

We have audited the Remuneration Report included on pages 22 to 25 of the directors’ report for the year ended 30 June 2009. 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.

Auditor’s Opinion

In our opinion the Remuneration Report of Talisman Mining Limited for the year ended 30 June 2009 complies with section 300A of the Corporations Act 2001 .

==> picture [159 x 34] intentionally omitted <==

HLB MANN JUDD Chartered Accountants

==> picture [170 x 57] intentionally omitted <==

Perth, Western Australia 29 September 2009

L DI GIALLONARDO Partner

���

Talisman Mining Limited Directors’ declaration

Directors’ declaration

Thedirectorsdeclarethat:

(a) 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;
(b) in the directors’ opinion, the attached financial statements and notes thereto are in accordance with the Corporations Act 2001, including compliance with accounting standards and giving a true and fair view of the financial position and performance of the company; and
(c) the directors have been given the declarations required by s.295A of the Corporations Act 2001.

Signedinaccordancewitharesolutionofthedirectorsmadepursuanttos.295(5)oftheCorporationsAct2001.

OnbehalfoftheDirectors

GaryLethridge
ManagingDirector

Perth,29September2009

Talisman Mining Limited Index to the financial report

`Index to the financial report`

`Incomestatement`	`Incomestatement`	`31`
`Balancesheet`		`32`
`Statementofchangesinequity`		`33`
`Cashflowstatement`		`34`
`Notestothefinancialstatements`
`1`	`Generalinformation`	`35`
`2`	`Significantaccountingpolicies`	`35`
`3`	`Criticalaccountingjudgementsandkeysourcesofestimationuncertainty`	`40`
`4`	`Otherincome`	`40`
`5`	`Financecosts`	`40`
`6`	`Lossfortheyear`	`40`
`7`	`Incometaxes`	`41`
`8`	`Tradeandotherreceivables`	`41`
`9`	`Investmentsaccountedforusingtheequitymethod`	`42`
`10`	`Otherfinancialassets`	`42`
`11`	`Propertyplantandequipment`	`42`
`12`	`Explorationandevaluationexpenditure`	`43`
`13`	`Tradeandotherpayables`	`43`
`14`	`Borrowings`	`43`
`15`	`Provisions`	`43`
`16`	`Issuedcapital`	`44`
`17`	`Reserves`	`44`
`18`	`Losspershare`	`45`
`19`	`Commitmentforexpenditure`	`45`
`20`	`Contingentliabilitiesandcontingentassets`	`46`
`21`	`Notestothecashflowstatement`	`46`
`22`	`Financialinstruments`	`47`
`23`	`Share`�`basedpayments`	`49`
`24`	`Relatedpartytransactions`	`50`
`25`	`Segmentinformation`	`53`
`26`	`Remunerationofauditors`	`53`
`27`	`Subsequentevents`	`53`

Talisman Mining Limited Income statement

Income statement

for the financial year ended 30 June 2009

		2009	2008
	Note	$	$
`Otherincome`	`4`	`245,633`	`219,203`
`Employeebenefitsexpense`		`(2,375,054)`	`(1,063,946)`
`Explorationexpenditureexpensedasincurred`		`(596,190)`	�
`Impairmentofexplorationexpenditure`		`(302,098)`	`(243,838)`
`Occupancyexpenses`		`(160,616)`	`(144,546)`
`Administrationexpenses`		`(565,631)`	`(512,384)`
`Depreciationandamortisationexpense`		`(49,158)`	`(31,269)`
`Financecosts`	`5`	`(2,772)`	`(5,395)`
`Shareofprofitsofassociatesandjointlycontrolledentities`
`accountedforusingtheequitymethod`		�	`(2,653)`
`Provisionforimpairmentofinvestmentinassociate`		`(431)`	`(129,096)`
`Lossbeforeincometax`	`6`	`(3,806,317)`	`(1,913,924)`
`Incometaxbenefit`	`7`	`187,565`	`146,754`
Lossfortheyear		`(3,618,752)`	`(1,767,170)`
Losspershare
`Basic(centspershare)`	`18`	`(4.75)`	`(2.69)`
`Dilutedlosspersharehasnotbeencalculatedasitdoesnotincreaselosspershare`

Notestothefinancialstatementsareincludedonpages35to53.

Talisman Mining Limited Balance sheet

Balance sheet as at 30 June 2009

		2009	2008
	Note	$	$
Currentassets
`Cashandcashequivalents`	`21`	`6,588,990`	`7,388,898`
`Tradeandotherreceivables`	`8`	`112,225`	`361,549`
Totalcurrentassets		`6,701,215`	`7,750,447`
Non�currentassets
`Tradeandotherreceivables`	`8`	`157,526`	`54,976`
`Investmentsaccountedforusingtheequitymethod`	`9`	�	�
`Otherfinancialassets`	`10`	�	�
`Property,plantandequipment`	`11`	`118,926`	`137,444`
`Explorationandevaluationexpenditure`	`12`	`9,333,730`	`6,930,307`
Totalnon�currentassets		`9,610,182`	`7,122,727`
Totalassets		`16,311,397`	`14,873,174`
Currentliabilities
`Tradeandotherpayables`	`13`	`109,373`	`213,250`
`Borrowings`	`14`	`5,483`	`21,154`
`Provisions`	`15`	`40,451`	`26,568`
Totalcurrentliabilities		`155,307`	`260,972`
Non�currentliabilities
`Borrowings`	`14`	`510`	`5,993`
Totalnon�currentliabilities		`510`	`5,993`
Totalliabilities		`155,817`	`266,965`
Netassets		`16,155,580`	`14,606,209`
Equity
`Issuedcapital`	`16`	`19,785,934`	`16,458,284`
`Reserves`	`17`	`3,630,569`	`1,790,096`
`Accumulatedlosses`		`(7,260,923)`	`(3,642,171)`
Totalequity		`16,155,580`	`14,606,209`

Notestothefinancialstatementsareincludedonpages35to53.

Talisman Mining Limited Statement of changes in equity

Statement of changes in equity for the financial year ended 30 June 2009

				Share�
	Fullypaid	Share	Option	based
	ordinary	application	premium	payments	Accumulated
	shares	proceeds	reserve	reserve	losses	Total
	$	$	$	$	$	$
Balanceat1July2007	`4,933,096`	`421,500`	`176,326`	`348,339`	`(1,875,001)`	`4,004,260`
`Lossfortheperiod`	�	�	�	�	`(1,767,170)`	`(1,767,170)`
Totalrecognisedincomeandexpense	�	�	�	�	`(1,767,170)`	`(1,767,170)`
`Recognitionofshare`�`basedpayments`	�	�	�	`824,481`	�	`824,481`
`Recognitionofshare`�`basedpayments`�
`shareissuecosts`	�	�	�	`440,950`	�	`440,950`
`Transferfromshareapplicationproceeds`	`421,500`	`(421,500)`	�	�	�	�
`Issueofshares`	`12,084,076`	�	�	�	�	`12,084,076`
`Shareissuecosts`	`(980,388)`	�	�	�	�	`(980,388)`
Balanceat30June2008	`16,458,284`	�	`176,326`	`1,613,770`	`(3,642,171)`	`14,606,209`
Balanceat1July2008	`16,458,284`	�	`176,326`	`1,613,770`	`(3,642,171)`	`14,606,209`
`Lossfortheperiod`	�	�	�	�	`(3,618,752)`	`(3,618,752)`
Totalrecognisedincomeandexpense	�	�	�	�	`(3,618,752)`	`(3,618,752)`
`Recognitionofshare`�`basedpayments`	�	�	�	`1,840,473`	�	`1,840,473`
`Issueofshares`	`3,430,837`	�	�	�	�	`3,430,837`
`Shareissuecosts`	`(103,187)`	�	�	�	�	`(103,187)`
Balanceat30June2009	`19,785,934`	�	`176,326`	`3,454,243`	`(7,260,923)`	`16,155,580`

Notestothefinancialstatementsareincludedonpages35to53.

Talisman Mining Limited Cash flow statement

Cash flow statement for the financial year ended 30 June 2009

		2009	2008
	Note	$	$
Cashflowsfromoperatingactivities
`Interestreceived`		`218,001`	`219,341`
`Receiptofresearchanddevelopmentrebate`		`334,318`	�
`Paymentstosuppliersandemployees`		`(1,165,199)`	`(1,023,222)`
`Interestandothercostsoffinancepaid`		`(2,772)`	`(267)`
`Netcashusedinoperatingactivities`	`21(c)`	`(615,652)`	`(804,148)`
Cashflowsfrominvestingactivities
`Amountsadvancedtoassociate`		�	`(130,516)`
`Paymentsforproperty,plantandequipment`		`(35,273)`	`(84,121)`
`Proceedsfromsaleofproperty,plantandequipment`		`1,000`	�
`Paymentsforexplorationandevaluation`		`(3,456,479)`	`(3,716,241)`
`Netcashusedininvestingactivities`		`(3,490,752)`	`(3,930,878)`
Cashflowsfromfinancingactivities
`Proceedsfromissuesofequitysecurities`		`3,430,837`	`12,084,076`
`Paymentforshareissuecosts`		`(103,187)`	`(595,525)`
`Repaymentofborrowings`		`(21,154)`	`(31,937)`
`Netcashprovidedbyfinancingactivities`		`3,306,496`	`11,456,614`
Netincrease/(decrease)incashandcashequivalents		`(799,908)`	`6,721,588`
Cashandcashequivalentsatthebeginningofthefinancialyear		`7,388,898`	`667,310`

Cashandcashequivalentsattheendofthefinancialyear	`21(a)`	`6,588,990`	`7,388,898`

Notestothefinancialstatementsareincludedonpages35to53.

Talisman Mining Limited Notes to the financial statements

1. General information

TalismanMiningLimited(theCompany)isapubliccompanylistedontheAustralianSecuritiesExchange(tradingunderthesymbol
“TLM”and“TLMO”)andoperatinginAustralia.

TalismanMiningLimited’sregisteredofficeanditsprincipalplaceofbusinessareasfollows:

Registered office Principal place of business c/ Ord Nexia Pty Ltd 6 Centro Avenue Level 1, 47 � 49 Stirling Highway SUBIACO WA 6008 NEDLANDS WA 6009

Theentity’sprincipalactivityisexplorationforbasemetals,ironoreandgoldinAustralia.

2. Significant accounting policies

Statement of compliance

The financial report is a general purpose financial report which has been prepared in accordance with the Corporations Act 2001, Accounting Standards and Interpretations, and complies with other requirements of the law. Accounting Standards include Australian equivalents to International Financial Reporting Standards (‘A � IFRS’). Compliance with A � IFRS ensures that the financial statements and notes of the Company comply with International Financial Reporting Standards (‘IFRS’).

Thefinancialstatementswereauthorisedforissuebythedirectorson29September2009.

Basis of preparation

The financial report has been prepared on the basis of historical cost, except for the revaluation of certain non � current assets and financial instruments. Cost is based on the fair values of the consideration given in exchange for assets. All amounts are presented in Australian dollars, unless otherwise noted.

Critical accounting judgements and key sources of estimation uncertainty

IntheapplicationoftheCompany’saccountingpolicies,managementisrequiredtomakejudgements,estimatesandassumptions
aboutcarryingvaluesofassetsandliabilitiesthatarenotreadilyapparentfromothersources.Theestimatesandassociated
assumptionsarebasedonhistoricalexperiencesandotherfactorsthatareconsideredtoberelevant.Actualresultsmaydifferfrom
theseestimates.

Theestimatesandunderlyingassumptionsarereviewedonanongoingbasis.Revisionstotheaccountingestimatesarerecognisedin
theperiodinwhichtheestimateisrevisediftherevisionaffectsonlythatperiod,orintheperiodoftherevisionandfutureperiodsif
therevisionaffectsthecurrentandfutureperiods.

RefertoNote3foradiscussionofcriticaljudgementsinapplyingtheentity’saccountingpoliciesandkeysourcesofestimation
uncertainty.

Adoption of new and revised Accounting Standards

Changes in accounting policy on initial application of Accounting Standards

Inthecurrentyear,therehavebeennonewandrevisedStandardsandInterpretationsissuedbytheAustralianAccountingStandards
Board(theAASB)thatarerelevanttotheCompany’soperationsandeffectiveforthecurrentannualreportingperiod.

Talisman Mining Limited Notes to the financial statements

2. Significant accounting policies (contd)

Atthedateofauthorisationofthefinancialreport,thefollowingStandardsandInterpretationswerepublishedbutnotmandatoryfor
30June2009reportingperiods.

AASB 8 ‘Operating Segments’ and AASB 2007 � 3 ‘Amendments to Australian Accounting Standards arising from AASB 8’

AASB 101 ‘(revised September 2007) ‘presentation of Financial Statements’ and AASB 2007 � 8 ‘Amendments to Australian Accounting Standards arising from AASB 101’ and AASB 2007 � 10 ‘Further Amendments to Australian Accounting Standards arising from AASB 101’

AASB 123 ‘Borrowing Costs’ – revised Standard and AASB 2007 � 6 ‘Amendments to Australian Accounting Standards arising from AASB 123’

AASB 2008 �� 1 ‘Amendments to Australian Accounting Standards – Share Based Payments: Vesting Conditions and Cancellations’

Revised AASB 3 ‘Business Combinations, AASB 127 Consolidated and Separate Financial Statements and AASB 2008 � 3 Amendments to Australian Accounting Standards arising from AASB 3 and AASB 127’.

AASB 2008 � 08 Amendments to IAS 39 ‘Financial Instruments: Recognition and Measurements’

AASB 2008 � 6 Further Amendments to Australian Accounting Standards arising from the Annual Improvements Project

AASB 2008 � 7 Amendments to Australian Accounting Standards – Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate

Effectiveforannualreportingperiodsbeginningonor
after1January2009andtobeappliedbytheCompany
inthefinancialyearending30June2010
Effectiveforannualreportingperiodsbeginningonor
after1January2009andtobeappliedbytheCompany
inthefinancialyearending30June2010

Effectiveforannualreportingperiodsbeginningonor
after1January2009andtobeappliedbytheCompany
inthefinancialyearending30June2010

Effectiveforannualreportingperiodsbeginningonor
after1January2009andtobeappliedbytheCompany
inthefinancialyearending30June2010
Effectiveforannualreportingperiodsbeginningonor
after1July2009andtobeappliedbytheCompanyin
thefinancialyearending30June2010

Effectiveforannualreportingperiodsbeginningonor
after1July2009andtobeappliedbytheCompanyin
thefinancialyearending30June2010
Effectiveforannualreportingperiodsbeginningonor
after1July2009andtobeappliedbytheCompanyin
thefinancialyearending30June2010
Effectiveforannualreportingperiodsbeginningonor
after1July2009andtobeappliedbytheCompanyin
thefinancialyearending30June2010

ThedirectorsanticipatethattheadoptionoftheseStandardsandInterpretationsinfutureperiodswillhavenomaterialfinancial
impactonthefinancialstatementsoftheCompany.

TheseStandardsandInterpretationswillbefirstappliedinthefinancialreportoftheCompanythatrelatestotheannualreporting
periodbeginningaftertheeffectivedateofeachpronouncement.

Thefollowingsignificantaccountingpolicieshavebeenadoptedinthepreparationandpresentationofthefinancialreport:

(a) Cash and cash equivalents

Cashandcashequivalentscomprisecashonhand,cashinbanksandinvestmentsinmoneymarketinstruments,netof
outstandingbankoverdrafts.

(b) Employee benefits

Provisionismadeforbenefitsaccruingtoemployeesinrespectofwagesandsalaries,annualleaveandlongserviceleavewhen
itisprobablethatsettlementwillberequiredandtheyarecapableofbeingmeasuredreliably.Provisionsmadeinrespectof
employeebenefitsexpectedtobesettledwithin12months,aremeasuredattheirnominalvaluesusingtheremunerationrate
expectedtoapplyatthetimeofsettlement.Provisionsmadeinrespectofemployeebenefitswhicharenotexpectedtobe
settledwithin12monthsaremeasuredasthepresentvalueoftheestimatedfuturecashoutflowstobemadebytheentityin
respectofservicesprovidedbyemployeesuptoreportingdate.

(c) Financial assets

Investmentsarerecognisedandderecognisedontradedatewherepurchaseorsaleofaninvestmentisunderacontractwhose
termsrequiredeliveryoftheinvestmentwithinthetimeframeestablishedbythemarketconcerned,andareinitiallymeasured
atfairvalue,netoftransactioncosts.

Other financial assets are classified into the following specified categories: financial assets ‘at fair value through profit or loss’, ‘held � to � maturity’ investments, ‘available � for � sale’ financial assets, and ‘loans and receivables’. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.

Loansandreceivables

Tradereceivables,loans,andotherreceivablesarerecordedatamortisedcostlessimpairment.

Talisman Mining Limited Notes to the financial statements

2. Significant accounting policies (continued)

(d) Financial instruments issued by the Company

Debtandequityinstruments

Debtandequityinstrumentsareclassifiedaseitherliabilitiesorasequityinaccordancewiththesubstanceofthecontractual
arrangement.

Transactioncostsontheissueofequityinstruments

Transactioncostsarisingontheissueofequityinstrumentsarerecogniseddirectlyinequityasareductionoftheproceedsof
theequityinstrumentstowhichthecostsrelate.Transactioncostsarethecoststhatareincurreddirectlyinconnectionwith
theissueofthoseequityinstrumentsandwhichwouldnothavebeenincurredhadthoseinstrumentsnotbeenissued.

(e) Goods and services tax

Revenues,expensesandassetsarerecognisednetoftheamountofgoodsandservicestax(GST),except:

(i)wheretheamountofGSTincurredisnotrecoverablefromthetaxationauthority,itisrecognisedaspartofthe
costofacquisitionofanassetoraspartofanitemofexpense;or

(ii)forreceivablesandpayableswhicharerecognisedinclusiveofGST.

ThenetamountofGSTrecoverablefrom,orpayableto,thetaxationauthorityisincludedaspartofreceivablesorpayables.
Cashflowsareincludedinthecashflowstatementonagrossbasis.TheGSTcomponentofcashflowsarisingfrominvesting
andfinancingactivitieswhichisrecoverablefrom,orpayableto,thetaxationauthorityisclassifiedasoperatingcashflows.

(f) Impairment of assets

At each reporting date, the entity reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the entity estimates the recoverable amount of the cash � generating unit to which the asset belongs.

Intangibleassetswithindefiniteusefullivesandintangibleassetsnotyetavailableforusearetestedforimpairmentannually
andwheneverthereisanindicationthattheassetmaybeimpaired.

Recoverable amount 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 which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash � generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash � generating unit) is reduced to its recoverable amount. An impairment loss is recognised in profit or loss immediately, unless the relevant asset is carried at fair value, in which case the impairment loss is treated as a revaluation decrease.

Where an impairment loss subsequently reverses, the carrying amount of the asset (cash � generating unit) 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 (cash � generating unit) in prior years. A reversal of an impairment loss is recognised in profit or loss immediately, unless the relevant asset is carried at fair value, in which case the reversal of the impairment loss is treated as a revaluation increase.

(g) Income tax

`Current tax`

Currenttaxiscalculatedbyreferencetotheamountofincometaxespayableorrecoverableinrespectofthetaxableprofitor
taxlossfortheperiod.Itiscalculatedusingtaxratesandtaxlawsthathavebeenenactedorsubstantivelyenactedbyreporting
date.Currenttaxforcurrentandpriorperiodsisrecognisedasaliability(orasset)totheextentthatitisunpaid(orrefundable).

`Deferred tax`

Deferredtaxisaccountedforusingthecomprehensivebalancesheetliabilitymethodinrespectoftemporarydifferences
arisingfromdifferencesbetweenthecarryingamountofassetsandliabilitiesinthefinancialstatementsandthecorresponding
taxbaseofthoseitems.

Inprinciple,deferredtaxliabilitiesarerecognisedforalltaxabletemporarydifferences.Deferredtaxassetsarerecognisedto
theextentthatitisprobablethatsufficienttaxableamountswillbeavailableagainstwhichdeductibletemporarydifferencesor
unusedtaxlossesandtaxoffsetscanbeutilised.However,deferredtaxassetsandliabilitiesarenotrecognisedifthe
temporarydifferencesgivingrisetothemarisefromtheinitialrecognitionofassetsandliabilities(otherthanasaresultofa
businesscombination)whichaffectsneithertaxableincomenoraccountingprofit.

Deferredtaxliabilitiesarerecognisedfortaxabletemporarydifferencesarisingoninvestmentsinsubsidiaries,branches,
associatesandjointventuresexceptwheretheentityisabletocontrolthereversalofthetemporarydifferencesanditis
probablethatthetemporarydifferenceswillnotreverseintheforeseeablefuture.Deferredtaxassetsarisingfromdeductible
temporarydifferencesassociatedwiththeseinvestmentsandinterestsareonlyrecognisedtotheextentthatitisprobablethat
therewillbesufficienttaxableprofitsagainstwhichtoutilisethebenefitsofthetemporarydifferencesandtheyareexpected
toreverseintheforeseeablefuture.

Talisman Mining Limited Notes to the financial statements

2. Significant accounting policies (continued)

(g) Income tax (continued)

Deferredtaxassetsandliabilitiesaremeasuredatthetaxratesthatareexpectedtoapplytotheperiod(s)whentheassetand
liabilitygivingrisetothemarerealisedorsettled,basedontaxrates(andtaxlaws)thathavebeenenactedorsubstantively
enactedbyreportingdate.Themeasurementofdeferredtaxliabilitiesandassetsreflectsthetaxconsequencesthatwould
followfromthemannerinwhichtheentityexpects,atthereportingdate,torecoverorsettlethecarryingamountofitsassets
andliabilities.

Deferredtaxassetsandliabilitiesareoffsetwhentheyrelatetoincometaxesleviedbythesametaxationauthorityandthe
entityintendstosettleitscurrenttaxassetsandliabilitiesonanetbasis.

`Current and deferred tax for the period`

Currentanddeferredtaxisrecognisedasanexpenseorincomeintheincomestatement,exceptwhenitrelatestoitems
creditedordebiteddirectlytoequity,inwhichcasethedeferredtaxisalsorecogniseddirectlyinequity,orwhereitarisesfrom
theinitialaccountingforabusinesscombination,inwhichcaseitistakenintoaccountinthedeterminationofgoodwillor
excess.

(h) Exploration and evaluation expenditure

Explorationandevaluationexpendituresinrelationtoeachseparateareaofinterestarerecognisedasanexplorationand
evaluationassetintheyearinwhichtheyareincurredwherethefollowingconditionsaresatisfied:

(i) the rights to tenure of the area of interest are current; and
(ii) at least one of the following conditions is also met:
(a) the exploration and evaluation expenditures are expected to be recouped through successful development and exploration of the area of interest, or alternatively, by its sale; or
(b) exploration and evaluation activities in the area of interest have not, at the reporting date, reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant operations in, or in relation to, the area of interest are continuing.

Explorationandevaluationassetsareinitiallymeasuredatcostandincludeacquisitionofrightstoexplore,studies,exploratory
drilling,trenchingandsamplingandassociatedactivitiesandanallocationofdepreciationandamortisationofassetsusedin
explorationandevaluationactivities.Generalandadministrativecostsareonlyincludedinthemeasurementofexplorationand
evaluationcostswheretheyarerelateddirectlytooperationalactivitiesinaparticularareaofinterest.

Explorationandevaluationassetsareassessedforimpairmentwhenfactsandcircumstancessuggestthatthecarryingamount
ofanexplorationandevaluationassetmayexceeditsrecoverableamount.Therecoverableamountoftheexplorationand
evaluationassetisestimatedtodeterminetheextentoftheimpairmentloss(ifany).Whereanimpairmentlosssubsequently
reverses,thecarryingamountoftheassetisincreasedtotherevisedestimateofitsrecoverableamount,butonlytotheextent
thattheincreasedcarryingamountdoesnotexceedthevaryingamountthatwouldhavebeendeterminedhadnoimpairment
lossbeenrecognisedfortheassetinpreviousyears.

Where a decision is made to proceed with development in respect of a particular area of interest, the relevant exploration and evaluation asset is tested for impairment and the balance is then re � classified to development.

(i) Joint ventures

Jointlycontrolledassetsandoperations

Interestsinjointlycontrolledassetsandoperationsarereportedinthefinancialstatementsbyincludingtheentity’sshareof
assetsemployedinthejointventures,theshareofliabilitiesincurredinrelationtothejointventuresandtheshareofany
expensesincurredinrelationtothejointventuresintheirrespectiveclassificationcategories.

Jointlycontrolledentities

InterestsinjointlycontrolledentitiesareaccountedforunderthecostmethodintheCompanyfinancialstatements.

(j) Operating cycle

Theoperatingcycleoftheentitycoincideswiththeannualreportingcycle.

(k) Payables

Tradepayablesandotheraccountspayablearerecognisedwhentheentitybecomesobligedtomakefuturepaymentsresulting
fromthepurchaseofgoodsandservices.

(l) Presentation currency

TheentityoperatesentirelywithinAustraliaandthepresentationcurrencyisAustraliandollars.

Talisman Mining Limited Notes to the financial statements

2. Significant accounting policies (continued)

(m) Plant and equipment

Plantandequipmentarestatedatcostlessaccumulateddepreciationandimpairment.Costincludesexpenditurethatis
directlyattributabletotheacquisitionoftheitem.

Depreciationisprovidedonplantandequipment.Depreciationiscalculatedonadiminishingvaluebasisandonastraightline
basissoastowriteoffthenetcostorotherrevaluedamountofeachassetoveritsexpectedusefullifetoitsestimatedresidual
value.Theestimatedusefullives,residualvaluesanddepreciationmethodarereviewedattheendofeachannualreporting
period.

Thefollowingdepreciationratesusefullivesareusedinthecalculationofdepreciation:

ClassoffixedassetDepreciationeffectivelife
Officefurniture&equipment4–25years
Motorvehicle8–10years

(n) Leases

Leases are classified as finance leases when the terms of the lease transfer substantially all the risks and reward incidental to ownership of the leased asset to the lessee (note 14). Finance leases are capitalised at the lease’s inception at the fair value of the leased property, or if lower, the present value of the minimum lease payments. The corresponding rental obligations, net of finance charges, are included in other short � term and long � term payables. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to the income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The property, plant and equipment acquired under finance leases is amortised on a diminishing value basis over the estimated useful life of the asset.

All other leases are classified as operating leases. Operating lease payments are recognised as an expense on a straight � line basis over the lease term.

(o) Provisions

Provisionsarerecognisedwhentheentityhasapresentobligation,thefuturesacrificeofeconomicbenefitsisprobable,and
theamountoftheprovisioncanbemeasuredreliably.Theamountrecognisedasaprovisionisthebestestimateofthe
considerationrequiredtosettlethepresentobligationatreportingdate,takingintoaccounttherisksanduncertainties
surroundingtheobligation.Whereaprovisionismeasuredusingthecashflowsestimatedtosettlethepresentobligation,its
carryingamountisthepresentvalueofthosecashflows.Whensomeoralloftheeconomicbenefitsrequiredtosettlea
provisionareexpectedtoberecoveredfromathirdparty,thereceivableisrecognisedasanassetifitisvirtuallycertainthat
recoverywillbereceivedandtheamountofthereceivablecanbemeasuredreliably.

(p) Revenue recognition

Interestrevenue

Interestrevenueisrecognisedonatimeproportionatebasisthattakesintoaccounttheeffectiveyieldonthefinancialasset.

(q) Share�based payments

Equity � settled share � based payments are measured at fair value at the date of grant by use of the Black and Scholes model. The expected life used in the model has been adjusted, based on management’s best estimate, for the effects of non � transferability, exercise restrictions, and behavioural considerations.

The fair value determined at the grant date of the equity � settled share � based payments is expensed on a straight � line basis over the vesting period, based on the entity’s estimate of shares that will eventually vest.

For cash � settled share � based payments, a liability equal to the portion of the goods or services received is recognised at the current fair value determined at each reporting date.

(r) Earnings per share

Basicearningspershare

Basicearningspershareiscalculatedbydividingtheprofit/(loss)attributabletoequityholdersoftheCompany,excludingany
costsofservicingequityotherthanordinaryshares,bytheweightedaveragenumberofordinarysharesoutstandingduringthe
financialyear,adjustedforbonuselementsinordinarysharesissuedduringtheyear.

Dilutedearningspershare

Dilutedearningspershareadjuststhefiguresusedinthedeterminationofbasicearningspersharetotakeintoaccountthe
afterincometaxeffectofinterestandotherfinancingcostsassociatedwithdilutivepotentialordinarysharesandtheweighted
averagenumberofadditionalordinarysharesthatwouldhavebeenoutstandingassumingtheconversionofalldilutive
potentialordinaryshares.

Talisman Mining Limited Notes to the financial statements

3. Critical accounting judgements and key sources of estimation uncertainty

Judgements made by management in the application of A � IFRS that have significant effects on the financial statements and estimates with a significant risk of material adjustments in the next year are disclosed, where applicable, in the relevant note to the financial statements.

Thefollowingarethekeyassumptionsconcerningthefuture,andotherkeysourcesofestimationuncertaintyatthebalancesheet
date,thathaveasignificantriskofcausingamaterialadjustmenttothecarryingamountsofassetsandliabilitieswithinthenext
financialyear:

Impairment

TheCompanyassessesimpairmentateachreportingdatebyevaluatingconditionsspecifictotheCompanythatmayleadto
impairmentofassets.Whereanimpairmenttriggerexists,therecoverableamountoftheassetisdetermined.Otherthanexploration
expenditurewrittenofftotalling$302,098(2008:$243,838)duringtheyear,noimpairmentlosswasrecordedinthecurrentfinancial
year(2008:nil).

Share�based payments

TheCompanymeasuresthecostofequitysettledtransactionswithemployeesbyreferencetothefairvalueoftheequityinstruments
atthedateatwhichtheyaregranted.ThefairvalueisdeterminedusingaBlackScholesmodel,usingtheassumptionsdetailedin
Note23.

4. Other income

AnanalysisoftheCompany’sotherincomefortheyearisasfollows:

		2009				2008
		$				$
`Interestincome`		`245,633`				`219,203`

5. Finance costs

	2009	2008
	$	$
`Interestonobligationsunderfinanceleases`	`2,401`	`5,128`
`Otherfinancecosts`	`371`	`267`

	`2,772`	`5,395`

6. Loss for the year

Lossfortheyearincludesthefollowingexpenses:

	2009	2008
	$	$
`Lossondisposalofplantandequipment`	`3,631`	�
Employeebenefitexpense:
`Equity`�`settledshare`�`basedpayments`	`1,840,473`	`824,482`
Operatingleaserentalexpenses:
`Minimumleasepayments`	`160,616`	`146,542`

Talisman Mining Limited Notes to the financial statements

7. Income taxes

Income tax recognised in profit or loss

	2009	2008
	$	$
Taxbenefitcomprises:
`Currenttaxbenefit`	`187,565`	`146,754`
`Deferredtaxexpense/(income)relatingtotheoriginationandreversaloftemporary`
`differences`	�	�

	`187,565`	`146,754`
`Theprimafacieincometaxbenefitonpre`�`taxaccountinglossfromoperationsreconcilestotheincometaxbenefitinthefinancial`
`statementsasfollows:`
`Lossfromoperations`	`(3,806,317)`	`(1,913,924)`
`Incometaxbenefitcalculatedat30%`	`(1,141,895)`	`(574,177)`
`Effectofexpensesthatarenotdeductibleindeterminingtaxableprofit`	`643,476`	`360,540`
`Effectofnonassessableitemsindeterminingtaxableprofit`	`(8,290)`	`(93)`
`Effectoftaxconcessions(researchanddevelopment)`	`187,565`	`146,754`
`Effectofunusedtaxlossesandtaxoffsetsnotrecognisedasdeferredtaxassets`	`506,709`	`213,730`
	`187,565`	`146,754`

Thetaxrateusedintheabovereconciliationisthecorporatetaxrateof30%payablebyAustraliancorporateentitiesontaxable
profitsunderAustraliantaxlaw.Therehasbeennochangeinthecorporatetaxratewhencomparedwiththepreviousreporting
period.

Unrecognised deferred tax assets and liabilities

	2009	2008
	$	$
`Thefollowingdeferredtaxassetsand(liabilities)havenotbeenbroughttoaccount:`
`Taxlosses–revenue`	`3,667,417`	`2,499,735`
`Temporarydifferencesarisingfromexploration,evaluationanddevelopment`	`(2,800,119)`	`(2,079,093)`
`Temporarydifferences`	`16,830`	`25,322`
	`884,128`	`445,964`

8. Trade and other receivables

	2009	2008
	$	$
`Current`
`Goodsandservicestaxrecoverable`	`45,152`	`199,169`
`Otherdebtors`	`2,514`	`1,177`
`Prepaymentandaccruedincome`	`64,559`	`14,449`
`Researchanddevelopmenttaxconcessionreceivable`	�	`146,754`
	`112,225`	`361,549`
`Non`�`current`
`Otherdebtors–securitybonds`	`157,526`	`54,976`
	`157,526`	`54,976`

Talisman Mining Limited Notes to the financial statements

9. Investments accounted for using the equity method

==> picture [478 x 120] intentionally omitted <==

----- Start of picture text -----

2009 2008
$ $
Investments in jointly controlled entities �� 1
Provision for impairment �� (1)
��
Published
Ownership interest
fair value
Country of 2009 2008 2009 2008
Name of entity Principal activity incorporation % % $ $
Jointly controlled entities
Protal Metals Group Limited Uranium exploration Australia �� 50 ��
----- End of picture text -----

As at 30 June 2008, the Company had a 50% interest in the ordinary share capital of Protal Metals Group Limited. On 6 May 2009, Protal Metals Group Limited was de � registered. The Company holds no interests in jointly controlled entities at 30 June 2009.

10. Other financial assets

		2009	2008
		$	$
`Loanscarriedatamortisedcost:`
`Non`�`current`
`Loanstoassociates`		�	`129,096`
`Provisionfor`	`non`�`recoveryofloantoassociate`	�	`(129,096)`
		�	�

11. Property, plant and equipment

11.Property,plantandequipment
	Officefurniture	Motorvehicle
	andequipment	underfinance
	atcost	lease	Total
	$	$	$
Grosscarryingamount
Balanceat1July2007	`79,770`	`43,574`	`123,344`
`Additions`	`66,592`	`17,529`	`84,121`
Balanceat30June2008	`146,362`	`61,103`	`207,465`
`Additions`	`29,996`	`5,275`	`35,271`
`Disposals`	`(1,272)`	`(4,862)`	`(6,134)`
Balanceat30June2009	`175,086`	`61,516`	`236,602`
Accumulateddepreciation/amortisationandimpairment
Balanceat1July2007	`35,419`	`3,333`	`38,752`
`Depreciationexpense`	`23,719`	`7,550`	`31,269`
Balanceat30June2008	`59,138`	`10,883`	`70,021`
`Depreciationexpense`	`29,991`	`19,167`	`49,158`
`Disposals`	`(764)`	`(739)`	`(1,503)`
Balanceat30June2009	`88,365`	`29,311`	`117,676`
Netbookvalue
`Asat30June2008`	`87,224`	`50,220`	`137,444`
`Asat30June2009`	`86,721`	`32,205`	`118,926`

Thefollowingusefullivesareusedinthecalculationofdepreciation:

Office furniture and equipment 4 – 25 years Motor vehicle under finance lease 8 �� 10 years

Aggregatedepreciationallocated,whetherrecognisedasanexpenseorcapitalisedaspartofthecarryingamountofotherassets
duringtheyear:

	2009	2008
	$	$
`Officefurnitureandequipment`	`29,991`	`23,719`
`Motorvehicleunderfinancelease`	`19,167`	`7,550`
	`49,158`	`31,269`

Talisman Mining Limited Notes to the financial statements

12. Exploration and evaluation expenditure

	2009	2008
	$	$
`Balanceatbeginningoffinancialyear`	`6,930,307`	`3,406,682`
`Capitalisedduringtheyear`	`2,705,521`	`3,767,463`
`Explorationwrittenoffduringtheyear` `Balanceatendoffinancialyear`	`(302,098)` `9,333,730`	`(243,838)` `6,930,307`

Therecoverabilityofthecarryingamountoftheexplorationandevaluationassetsisdependentonthesuccessfuldevelopmentand
commercialexploitation,oralternatively,saleoftherespectiveareasofinterest.

13. Trade and other payables

	2009	2008
	$	$
`Tradepayables(i)`	`39,627`	`94,481`
`Accruals`	`16,800`	`26,169`
`Otherpayables`	`52,946`	`92,600`
	`109,373`	`213,250`

(i) The average credit period on purchases of goods and services is 30 days EOM after invoice. No interest is charged on the trade payables for the first 30 to 60 days from the date of the invoice. Thereafter, interest may be charged at various penalty rates. The Company has financial risk management policies in place to ensure that all payables are paid within the credit timeframe.

14. Borrowings

	2009	2009	2008
	$		$
`Current`
`Leaseliabilities(refernote19)`	`5,483`		`21,154`
`NonCurrent`
`Leaseliabilities(refernote19)`		`510`	`5,993`

15. Provisions

	2009	2008
	$	$
`Current`
`Employeebenefits`	`40,451`	`26,568`

Thecurrentprovisionforemployeebenefitsrelatetoannualleaveentitlementsaccruedtoemployees.

Talisman Mining Limited Notes to the financial statements

16. Issued capital

			2009	2008
			$	$
`86,782,503fullypaidordinaryshares`
`(2008:75,288,047)`			`19,785,934`	`16,458,284`
		2009		2008

	No.	$	No.	$
Fullypaidordinaryshares
`Balanceatbeginningoffinancialyear`	`75,288,047`	`16,458,284`	`45,504,671`	`4,933,096`
`Sharesissuedat14centseachpursuant`
`toaplacement`	�	�	`14,999,994`	`2,100,000`
`Exerciseofoptionsat20centseach`	`175,000`	`35,000`	`805,382`	`161,076`
`Exerciseofoptionsat25centseach`	�	�	`4,978,000`	`1,244,500`
`Shareissuedat$1.00eachpursuant`
`toaplacement`	�	�	`9,000,000`	`9,000,000`
`Shareissuedatt$0.30eachpursuant`
`toaplacement`	`11,319,456`	`3,395,837`	�	�
`Shareissuecosts`	�	`(103,187)`	�	`(980,388)`
`Balanceatendoffinancialyear`	`86,782,503`	`19,785,934`	`75,288,047`	`16,458,284`

Fullypaidordinarysharescarryonevotepershareandcarrytherighttodividends.

Share options on issue

ShareoptionsissuedbytheCompanycarrynorightstodividendsandnovotingrights.

Asat30June2009,theCompanyhas39,274,257shareoptionsonissue(2008:36,449,257)exercisableona1:1basisfor39,274,257
shares(2008:36,449,257)atvariousexerciseprices.Theoptionsexpirebetween30/11/10and31/08/11.Furtherdetailsofoptions
grantedtodirectorsandemployeesarecontainedinnote23tothefinancialstatements.

17. Reserves

17.Reserves
	2009	2008
	$	$
`Sharebasedpaymentsreserve`	`3,454,243`	`1,613,770`
`Optionpremiumreserve`	`176,326`	`176,326`
	`3,630,569`	`1,790,096`

The share based payment reserve arises on the grant of share options to executives and senior employees under the employee share option plan and to third parties, including consultants and advisors. Further information about share � based payments to employees is made in note 23 to the financial statements.

TheoptionpremiumreserverecordstheproceedsreceivedontheissueofshareoptionsbytheCompany.

Talisman Mining Limited Notes to the financial statements

18. Loss per share

	2009	2008
	Cents	Cents
	pershare	pershare


`Basiclosspershare`	`4.75`	`2.69`
`Basiclosspershare`
`Thelossandweightedaveragenumberofordinarysharesusedinthecalculationof`
`basiclosspershareareasfollows:`
	2009	2008
	$	$
`Netloss`	`3,618,752`	`1,767,170`
	2009	2008
	No.	No.

`Weightedaveragenumberofordinarysharesforthepurposesofbasiclosspershare`	`76,241,298`	`65,616,534`
`Dilutedlosspershare`
`Dilutedlosspersharehasnotbeencalculatedasitdoesnotincreaselosspershare`

19. Commitments for expenditure

	2009	2008
	$	$
(a)Capitalexpenditurecommitments
`Inordertomaintaincurrentrightsoftenuretoexplorationtenements,theGroupisrequiredtoperformexplorationworktomeet`
`theminimumexpenditurerequirementsspecifiedbyvariousStategovernments.Theseobligationsarenotprovidedforinthe`
`financialreportandarepayable:`
`Explorationexpenditure`
`Notlongerthan1year`	`754,568`	`704,000`
`Longerthan1yearandnotlongerthan5years`	`1,435,041`	`2,816,000`
`Longerthan5years`	�	�
	`2,189,609`	`3,520,000`

If the Company decides to relinquish certain leases and/or does not meet these obligations, assets recognised in the balance sheet 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.

`Leasing arrangements`

Financeleasesrelatetoequipmentwithleasetermsof3years.TheCompanyhasoptionstopurchasetheequipmentforanominal
amountattheconclusionoftheleaseagreements.

`Financeleaseliabilities`
`Notlongerthan1year`		`6,218`	`23,556`
`Longerthan1yearand`	`notlongerthan5years`	`518`	`6,736`
`Longerthan5years`		�	�
`Minimumfutureleasepayments*`		`6,736`	`30,292`
`Lessfuturefinancecharges`		`(743)`	`(3,145)`
`Presentvalueofminimumleasepayments`		`5,993`	`27,147`
`Includedinthefinancialstatementsas:(note14)`
`Currentborrowings`		`5,483`	`21,154`
`Non`�`currentborrowings`		`510`	`5,993`
		`5,993`	`27,147`

*Minimumfutureleasepaymentsincludetheaggregateofallleasepaymentsandanyguaranteedresidualpayments.

Talisman Mining Limited Notes to the financial statements

19. Commitments for expenditure (continued)

	2009	2008
	$	$
Operatingleases
`Leasingarrangements`
`Leasingarrangementscompriseanagreementfortherentalofofficespacewithaleasetermof5years.`
`Non`�`cancellableoperatingleasecommitments`
`Notlongerthan1year`	`192,140`	`161,191`
`Longerthan1yearandnotlongerthan5years`	`384,280`	`483,573`
`Longerthan5years`	�	�
	`576,420`	`644,764`

20. Contingent liabilities and contingent assets

IntheopinionoftheDirectors,therearenocontingentliabilitiesasat30June2009andnocontingentliabilitieswereincurredinthe
intervalbetweentheperiodendandthedateofthisfinancialreport.

21. Notes to the cash flow statement

(a) Reconciliation of cash and cash equivalents

Forthepurposesofthecashflowstatement,cashandcashequivalentsincludescashonhandandinbanksandinvestmentsin
moneymarketinstruments,netofoutstandingbankoverdrafts.Cashandcashequivalentsattheendofthefinancialyearasshown
inthecashflowstatementisreconciledtotherelateditemsinthebalancesheetasfollows:

	2009	2008
	$	$
`Cashandcashatbank`	`1,088,990`	`7,388,898`
`Termdeposit`	`5,500,000`	�
	`6,588,990`	`7,388,898`
(b)Non�cashfinancingandinvestingactivities

	2009	2008
	$	$
`Equitysettledshare`�`basedpaymentinconsiderationofshareplacementfee`	�	`649,050`
	�	`649,050`
(c)Reconciliationoflossfortheyeartonetcashflowsfromoperatingactivities

	2009	2008
	$	$
`Lossfortheyear`	`(3,618,752)`	`(1,767,170)`
`Shareofassociate’sloss`	�	`2,653`
`Depreciation`	`49,158`	`31,269`
`Provisionforimpairmentofinvestmentinassociate`	`431`	`129,096`
`Explorationexpenditureexpensedasincurred`	`596,190`	�
`Impairmentofexploration`	`302,098`	`243,838`
`Equity`�`settledshare`�`basedpayment`	`1,840,473`	`824,482`
`Lossonsaleofplantandequipment`	`3,631`	�
`(Increase)/decreaseinassets:`
`Tradeandotherreceivables`	`235,682`	`(344,281)`
`Increase/(decrease)inliabilities:`
`Tradeandotherpayables`	`(38,446)`	`78,557`
`Provisions`	`13,883`	`(2,592)`
`Netcashusedinoperatingactivities`	`(615,652)`	`(804,148)`

Talisman Mining Limited Notes to the financial statements

22. Financial instruments

Overview

TheCompanyhasexposuretothefollowingrisksfromtheiruseoffinancialinstruments:

Credit risk
Liquidity risk
Interest rate risk
Capital risk

ThisnotepresentsinformationabouttheCompany’sexposuretoeachoftheaboverisks,theirobjectives,policiesandprocessesfor
measuringandmanagingriskandthemanagementofcapital.Furtherquantitativedisclosuresareincludedthroughoutthisnoteand
thefinancialreport.

TheBoardofDirectorshasoverallresponsibilityfortheestablishmentandoversightoftheriskmanagementframework.Risk
managementpoliciesareestablishedtoidentifyandanalysetherisksfacedbytheCompany,tosetappropriaterisklimitsand
controlsandtomonitorrisksandadherencetolimits.Riskmanagementpoliciesandsystemsarereviewedregularlytoreflect
changesinmarketconditionsandtheCompany’sactivities.TheCompany’saimistodevelopadisciplinedandconstructivecontrol
environmentinwhichallemployeesunderstandtheirrolesandobligations.

Credit risk management

CreditriskreferstotheriskthatacounterpartywilldefaultonitscontractualobligationsresultinginfinanciallosstotheCompany.
TheCompanyhasadoptedapolicyofonlydealingwithcreditworthycounterpartiesandobtainingsufficientcollateralwhere
appropriate,asameansofmitigatingtheriskoffinanciallossfromdefaults.TheCompany’sexposureandthecreditratingsofits
counterpartiesaremonitored.CreditexposureiscontrolledbycounterpartylimitsthatarereviewedandapprovedbytheAudit
Committeeannually.Theconsolidatedentitymeasurescreditriskonafairvaluebasis.

The Company 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 is limited because the counterparties are banks with high credit � ratings assigned by international credit � rating agencies.

Liquidity risk

LiquidityriskistheriskthattheCompanywillnotbeabletomeetitsfinancialobligationsastheyfalldue.TheCompany’sapproach
tomanagingliquidityistoensure,asfaraspossible,thatitwillalwayshavesufficientliquiditytomeetitsliabilitieswhentheyfall
due,underbothnormalandstressedconditions,withoutincurringunacceptablelossesorriskingdamagetothecompany’s
reputation.

Liquidity risk management is the responsibility of the Board of Directors, who have built an appropriate liquidity risk management framework for the management of the Company’s short, medium and long � term funding and liquidity management requirements.

TheCompanymanagesliquidityriskbymaintainingadequatereserves,bankingfacilitiesandreserveborrowingfacilitiesby
continuouslymonitoringforecastandactualcashflowsandmatchingthematurityprofilesoffinancialassetsandliabilitiesand
identifyingwhenfurthercapitalraisinginitiativesarerequired.

`Liquidity and interest risk table`

The following tables detail the Company’s remaining contractual maturity for it non � derivative financial assets and liabilities and has been prepared on the following basis:

Financial assets – based on the undiscounted contractual maturities including interest that will be earned on those assets except where the Company anticipates that the cash flow will occur in a different period; and
Financial liabilities – based on undiscounted cash flows on the earliest date on which the Company can be required to pay, including both interest and principal cash flows.

	Lessthan1	1�3	3months		5+	Nofixed
	month	months	to1year	1�5years	years	term	Total
2009	$	$	$	$	$	$	$
Financialassets
`Non`�`interestbearing`	`673`	`47,666`	�	�	�	�	`48,339`
`Variableinterestrate`	`1,088,317`	�	�	�	�	�	`1,088,317`
`Fixedinterestrate`	�	`5,561,847`	�	`157,526`	�	�	`5,719,373`
	`1,088,990`	`5,609,513`	�	`157,526`	�	�	`6,856,029`
Financialliabilities
`Non`�`interestbearing`	`66,418`	`42,955`	`40,451`	�	�	�	`149,824`
`Fixedinterestrate`	`518`	`1,554`	`4,146`	`518`	�	�	`6,736`
	`66,936`	`44,509`	`44,597`	`518`	�	�	`156,560`

Talisman Mining Limited Notes to the financial statements

22. Financial instruments (continued)

	Lessthan1	1�3	3months		5+	Nofixed
	month	months	to1year	1�5years	years	term	Total
2008	$	$	$	$	$	$	$
Financialassets
`Non`�`interestbearing`	�	`347,100`	�	�	�	�	`347,100`
`Variableinterestrate`	`7,388,898`	�	�	�	�	�	`7,388,898`
`Fixedinterestrate`	�	�	�	`54,976`	�	�	`54,976`
	`7,388,898`	`347,100`	�	`54,976`	�	�	`7,790,974`
Financialliabilities
`Non`�`interestbearing`	`126,462`	`86,788`	`26,568`	�	�	�	`239,818`
`Fixedinterestrate`	`2,685`	`8,055`	`12,818`	`6,734`	�	�	`30,292`
	`129,147`	`94,843`	`39,386`	`6,734`	�	�	`270,110`

Interest rate risk

TheCompanyisexposedtointerestrateriskasithasborrowedfundsat(fixed/variable)interestrates.TheCompanymanagesthis
riskbykeepingsuchliabilitiestoafinanciallytolerablelevelandtakingintoaccountexpectedmovementsininterestrates.

Someofthecompany’sassetsaresubjecttointerestrateriskbutthecompanyisnotdependentonthisincome.Interestincomeis
onlyincidentaltothecompany’soperationsandoperatingcashflows.

`Interest rate sensitivity analysis`

ThesensitivityanalysisoftheCompany’sexposuretointerestrateriskatthereportingdatehasbeendeterminedbasedona
changeof50basispointsininterestratestakingplaceatthebeginningofthefinancialyearandheldconstantthroughouttheyear.

Atreportingdate,ifinterestrateshadbeen50basispointshigherandallothervariableswereconstant,theCompany’snetloss
wouldhavedecreasedby$5,442(2008:$36,411).Ifinterestrateshaddecreased,therewouldbeanequalandoppositeimpacton
theloss.

Capital management

TheBoard’spolicyistomaintainastrongcapitalbasesoastomaintaininvestor,creditorandmarketconfidenceandtosustain
futuredevelopmentofthebusiness.ThecapitalstructureoftheCompanyconsistsofequityonly,comprisingissuedcapitaland
reserves,netofaccumulatedlosses.TheCompany’spolicyistousecapitalmarketissuestomeetthefundingrequirementsofthe
Company.

TherewerenochangesintheCompany’sapproachtocapitalmanagementduringtheyear.

TheCompanyisnotsubjecttoexternallyimposedcapitalrequirements.

`Fair value of financial assets and liabilities`

Thecarryingamountoffinancialassetsandfinancialliabilitiesrecordedinthefinancialstatementsrepresentstheirrespectivenet
fairvalues,determinedinaccordancewiththeaccountingpoliciesdisclosedinnote2.TheDirectorsconsiderthatthecarrying
amountsoffinancialassetsandfinancialliabilitiesrecordedinthefinancialstatementsapproximatestheirfairvalue.

Talisman Mining Limited Notes to the financial statements

23. Share�based payments

Employee share options

TheCompanyhasanEmployeeShareOptionPlan(“ESOP”)forexecutivesandemployeesoftheCompany.Inaccordancewiththe
provisionsoftheESOP,asapprovedbyshareholdersatapreviousannualgeneralmeeting,executivesandemployeesmaybegranted
optionsatthediscretionofthedirectors.

EachemployeeshareoptionconvertsintooneordinaryshareofTalismanMiningLimitedonexercise.Noamountsarepaidorpayableby
therecipientonreceiptoftheoption.Theoptionscarryneitherrightstodividendsorvotingrights.Optionsmaybeexercisedatanytime
fromthedateofvestingtothedateoftheirexpiry.

Thenumberofoptionsgrantedisatthesolediscretionofthedirectorssubjecttothetotalnumberofoutstandingoptionsbeingissued
undertheESOPnotexceeding5%oftheCompany’sissuedcapitalatanyonetime.

OptionsissuedtodirectorsarenotissuedundertheESOPbutaresubjecttoapprovalbyshareholdersandattachvestingconditionsas
appropriate.

Share based payment arrangements in existence during period

The following share � based payment arrangements were in existence during the current and comparative reporting periods:

Optionsseries	Number	Grantdate	Expirydate	Exerciseprice $	Fairvalueat grantdate $
`(1)31December2010` `1,750,000` `22November2006` `31December2010` `0.25` `0.1100` `(2)31December2010` `472,000` `11May2007` `31December2010` `0.25` `0.0820` `(3)31December2010` `3,000,000` `3September2007` `31December2010` `0.20` `0.0600` `(4)31December2010` `1,000,000` `15February2008` `31December2010` `1.20` `0.4664` `(5)31December2010` `400,000` `19May2008` `31December2010` `1.20` `0.3172` `(6)30November2010` `1,500,000` `19May2008` `30November2010` `1.00` `0.3364` `(7)30November2010` `1,500,000` `19May2008` `30November2010` `1.20` `0.3104` `(8)30November2010` `1,500,000` `19May2008` `30November2010` `1.60` `0.2694` `(9)30November2010` `1,500,000` `19May2008` `30November2010` `2.20` `0.2252` `(10)31May2011` `500,000` `19May2008` `31May2011` `1.00` `0.3716` `(11)31May2011` `500,000` `19May2008` `31May2011` `1.20` `0.3478` `(12)31May2011` `500,000` `19May2008` `31May2011` `1.60` `0.3097` `(13)31May2011` `500,000` `19May2008` `31May2011` `2.20` `0.2676` `(14)31August2011` `2,000,000` `17March2009` `31August2011` `0.22` `0.2262` `(15)31August2011` `1,000,000` `17March2009` `31August2011` `0.22` `0.2262` `(16)31August2011` `1,000,000` `17March2009` `31August2011` `0.22` `0.2262`

(1)(2)(3)(4)(6)&(14)Optionsvestedatdateofissue.

(5)Optionsvest30April2009

(7)&(10)Optionsvest30November2008

(8)Optionsvest30November2009

(9)Optionsvest30September2010

(11)Optionsvest31May2009

(12)Optionsvest31May2010

(13)Optionsvest31March2011

(15)Optionsvest30June2009

(16)Optionsvest31December2009

Talisman Mining Limited Notes to the financial statements

23. Share�based payments (continued)

Thefairvalueoftheshareoptionsgrantedduringthefinancialyearis$904,720(2008:$2,695,430).OptionswerepricedusingaBlack&
Scholespricingmodel.Expectedvolatilityisbasedontheexpectedmovementoftheunderlyingsharepricearounditsaverageshareprice
overtheexpectedtermoftheoption.Basedonhistoricalexperience,thedirectorshavedeterminedtheexpectedperiodofexercisetobe
similartotheoptionlife.

Inputsintothemodel	Optionseries(14,15&16) 31August2011
`Grantdateshareprice` `$0.29` `Exerciseprice(i)` `$0.22` `Expectedvolatility` `142%` `Optionlife` `2.46years` `Dividendyield` `Nil` `Risk`�`freeinterestrate` `3.73%`

(i) The terms of the options were agreed on the 22 December 2008, being the date Mr Lethridge accepted his appointment as Managing Director. The share price of the Company at that time was $0.09. The formal grant date was 17 March 2009 being the date shareholder approval was received.

Thefollowingreconcilestheoutstandingshareoptionsgrantedassharebasedpaymentsatthebeginningandendofthefinancialyear:

		2009	2008	2008

		Weighted		Weighted
		average		average
	Numberof	exerciseprice	Numberof	exerciseprice
	options	$	options	$
`Balanceatbeginningofthefinancialyear`	`19,454,250`	`0.81`	`12,032,250`	`0.23`
`Grantedduringthefinancialyear–Directorsandemployees`	`4,000,000`	`0.22`	`8,400,000`	`1.44`
`Grantedduringthefinancialyear–Contractors/advisors`	�	�	`4,000,000`	`0.60`
`Lapsedduringthefinancialyear`	`(1,000,000)`	`1.90`	�	�
`Exercisedduringthefinancialyear`	�	�	`(4,978,000)`	�
`Balanceatendofthefinancialyear(i)`	`22,454,250`	`0.66`	`19,454,250`	`0.81`
`Exercisableatendofthefinancialyear`	`18,454,250`	`0.48`	`11,454,250`	`0.81`

Nooptionsissuedasaresultofsharebasedpaymentswereexercisedduringthefinancialyear.

(i) Balance at end of the financial year

Theshareoptionsoutstandingattheendofthefinancialyearhadaweightedaverageremainingcontractuallifeof1.64
(2008:2.5years).

24. Related party transactions

(a) Equity interests in related parties

Equityinterestsinassociatesandjointventures

Detailsofequityinterestsinassociatesaredisclosedinnote9tothefinancialstatements.

(b) Transactions with key management personnel

`(i) Key management personnel compensation`

DetailsofkeymanagementpersonnelcompensationaredisclosedintheRemunerationReportwhichformspartoftheDirectors’Report
andhasbeenaudited.

	2009	2008
	$	$
`Short`�`termemployeebenefits`	`586,465`	`377,518`
`Post`�`employmentbenefits`	`48,502`	`32,735`
`Share`�`basedpayments`	`1,835,984`	`865,036`
	`2,470,951`	`1,275,289`

Talisman Mining Limited

Notes to the financial statements

24. Related party transactions (continued)

(ii)Keymanagementpersonnelequityholdings

FullypaidordinarysharesofTalismanMiningLimited

	Balance at1July			Receivedon exerciseof options	Balanceon resignation	Balance at30June
		Balanceon	Netother
		appointment	change
	No.	No.	No.	No.	No.	No.
2009 `Directors` `AlanSenior` � `N/A` `50,000` � `N/A` `50,000` `GaryLethridge(i)` `N/A` � � � `N/A` � `BrianDawes(ii)` `N/A` `20,000` � � `N/A` `20,000` `PeterLangworthy(ii)` `N/A` � � � `N/A` � `KarenGadsby` � `N/A` `78,000` � `N/A` `78,000` `SteveElliott(iii)` `7,200,002` `N/A` � � `7,200,002` `N/A` `MickBunyard(iv)` � `N/A` � � � `N/A` `Executives` `HarryCornelius` `26,000` `N/A` � � `N/A` `26,000` `7,226,002` `20,000` `128,000` � `7,200,002` `174,000` 2008 `Directors` `AlanSenior` `N/A` � � � `N/A` � `StevenElliott` `5,100,002` `N/A` `(2,800,000)` `4,900,000` `N/A` `7,200,002` `MickBunyard` `N/A` � `(22,000)` `22,000` `N/A` � `KarenGadsby` `N/A` � � � `N/A` � `MichaelHannington(v)` `300,000` `N/A` � � `300,000` `N/A` `IanMacpherson(vi)` `1,800,000` `N/A` � � `1,800,000` `N/A` `Executives` `HarryCornelius` `N/A` `N/A` `(30,000)` `56,000` `N/A` `26,000` `7,200,002` � `(2,852,000)` `4,978,000` `2,100,000` `7,226,002`

(i)Appointed2February2009
(ii)Appointed16June2009

(iii)Resigned24November2008
(iv)Resigned5June2009
(v)Resigned31July2007
(vi)Resigned7November2007

Talisman Mining Limited

Notes to the financial statements

24. Related party transactions (continued)

ShareoptionsofTalismanMiningLimited

	Balance at1July	Balanceon appointment	Grantedas remuneration	Exercised	Netother change	Balanceon resignation	Balanceat 30June	Vested butnot exercisable	Vested duringthe year	Vestedand exercisable at30June
	No.	No.	No.	No.	No.	No.	No.	No.	No.	No.
2009 `Directors` `AlanSenior` `4,000,000` `N/A` � � � `N/A` `4,000,000` � `1,000,000` `2,000,000` `GaryLethridge(i)` `N/A` � `4,000,000` `N/A` `4,000,000` � `3,000,000` `3,000,000` `BrianDawes(ii)` `N/A` � � � � `N/A` � � � � `PeterLangworthy(ii)` `N/A` � � � � `N/A` � � � � `KarenGadsby` `2,000,000` `N/A` � � � `N/A` `2,000,000` � `1,000,000` `1,000,000` `SteveElliott(iii)` `1,666,668` `N/A` � � � `1,666,668` `N/A` `N/A` � `N/A` `MickBunyard(iv)` `2,028,000` `N/A` � � `(1,000,000)` `1,028,000` `N/A` `N/A` `500,000` `N/A` `Executives` `HarryCornelius` `744,000` `N/A` � � � `N/A` `744,000` � `300,000` `744,000` `10,438,668` � `4,000,000` � `(1,000,000)` `2,694,668` `10,744,000` � `5,800,000` `6,744,000` 2008 `Directors` `AlanSenior` `N/A` � `4,000,000` � � `N/A` `4,000,000` � `1,000,000` `1,000,000` `StevenElliott` `6,566,668` `N/A` � `(4,900,000)` � `N/A` `1,666,668` � `1,666,668` `MickBunyard` `N/A` � `2,050,000` `(22,000)` � `N/A` `2,028,000` � `528,000` `528,000` `KarenGadsby` `N/A` � `2,000,000` � � `N/A` `2,000,000` � � `MichaelHannington(v)` `850,000` `N/A` � � � `850,000` `N/A` `N/A` � `N/A` `IanMacpherson(vi)` `1,600,001` `N/A` � � � `1,600,001` `N/A` `N/A` � `N/A` `Executives` `HarryCornelius` � `N/A` `800,000` `(56,000)` � `N/A` `744,000` � `444,000` `444,000` `9,016,669` � `8,850,000` `(4,978,000)` � `2,450,001` `10,438,668` � `1,972,000` `3,638,668` `(i)` `Appointed2February2009` `(ii)` `Appointed16June2009` `(iii)` `Resigned24November2008` `(iv)` `Resigned5June2009` `(v)` `Resigned31July2007` `(vi)` `Resigned7November2007`

Furtherdetailsoftheemployeeshareoptionplanandofshareoptionsgrantedduringthe2009and2008financialyearsarecontained
innote23tothefinancialstatements.

iii.OthertransactionswithkeymanagementpersonneloftheCompany

TherewerenoothertransactionswithkeymanagementpersonneloftheCompanyduringthefinancialyear.

(c) Transactions with other related parties

Other related parties include Protal Metals Group Limited (“Protal”), an associate of the company. The Company was established with the objective of vending the Company’s uranium assets into a separate initial public offering. During 2008, this strategy was abandoned in the light of worsening economic conditions and Protal was subsequently de � registered during this financial year. Subsequent to being de � registered, the Company wrote off amounts advanced to that company totaling $129,527. The amount of this loan had been fully provided for at 30 June 2008.

Talisman Mining Limited Notes to the financial statements

25. Segment information

TheCompanyoperatespredominantlyinonegeographicalsegment,beingWesternAustralia,andinoneindustry,mineralminingand
exploration.

26. Remuneration of auditors

	2009	2008
	$	$
Auditoroftheparententity
`Auditorreviewofthefinancialreport`	`21,265`	`23,212`

TheauditorofTalismanMiningLimitedisHLBMannJudd.

27. Subsequent events

TheCompanyissuedanaggregatetotalof6,219,997fullypaidordinarysharesat$0.30eachon23and27July2009following
shareholderapprovalattheGeneralMeetingheldon23July2009.Thisissuewhichraisedatotalof$1,866,000(beforecostsofthe
issue)representedthefinalallocationunderageneralplacementtoraise$5,261,837.

Onthe23July2009,pursuanttoshareholderapprovalattheGeneralMeetingheldonthatdate,6,000,000unlistedincentiveoptions
exercisableatvariouspricesbetween$0.50to$0.70,expiringon30June2013wereissuedtoMessrsLangworthyandDawes.Further
detailsonthetermsoftheoptionsaredetailedbelowintheRemunerationReport.

AI assistant

TALISMAN MINING LIMITED — Annual Report 2009

65926_rns_2009-09-29_0afd4b16-81d0-4fd6-bfa3-535a7e69d313.pdf

TALISMAN MINING LIMITED ABN 71 079 536 495

Annual financial report for the financial ended 30 June 2009 year

Corporate Directory

Directors

Company Secretary

Registered Office

Principal Office

Auditors

Share Registry

Securities Exchange

Chairman’s letter

Review of operations

EXPLORATION STRATEGY

PROJECTS

SPRINGFIELD PROJECT (Cu�Au)

(100% Talisman Mining Ltd)

WONMUNNA PROJECT (Fe)

(100% Talisman Mining Ltd)

WANDANYA, YILGALONG and GANGARRIGAN PROJECTS (Mn)

(100% Talisman Mining Ltd)

UAROO PROJECT (Au, Cu�Au, Ni�Cu�PGE)

(100% Talisman Mining Ltd)

TRILLBAR PROJECT (Au, Fe, Talc)

(80% Talisman Mining Ltd)

MAITLAND PROJECT (Au, Fe, U)

(80% Talisman Mining Ltd)

MILGUN PROJECT (Au, Cu�Au)

(100% Talisman Mining Ltd)

OTHER PROJECTS

Anticline

(100% Talisman Mining Ltd)

Tom Price

(100% Talisman Mining Ltd)

Yamada

(100% Talisman Mining Ltd)

Yamarna

(100% Talisman Mining Ltd)

Competent Persons Statement:

Corporate governance statement

INTRODUCTION

PRINCIPLE 1: LAY SOLID FOUNDATIONS FOR MANAGEMENT AND OVERSIGHT

Recommendation 1.1 – Establish and disclose the functions reserved to the board and those delegated to senior executives.

Recommendation 1.2 – Disclose the process for evaluating the performance of senior executives.

Recommendation 1.3 – Provide the information in the guide to reporting on Recommendations.

PRINCIPLE 2: STRUCTURE THE BOARD TO ADD VALUE

Recommendation 2.1 – A majority of the Board should be independent directors.

Recommendation 2.2 – The chairperson should be an independent director.

Recommendation 2.3 –The roles of chairperson and chief executive officer should not be exercised by the same individual.

Recommendation 2.4 – The Board should establish a nomination committee.

Recommendation 2.5 – Disclose the process for evaluating the performance of the Board, its committees and individual directors.

Recommendation 2.6 – Provide the information indicated in Guide to reporting on Principle 2.

P RINCIPLE 3: PROMOTE ETHICAL AND RESPONSIBLE DECISION MAKING

3.1.1 the practices necessary to maintain confidence in the company’s integrity;

Recommendation 3.3: Provide the Information Indicated in Guide to Reporting on Principle 3.

PRINCIPLE 4: SAFEGUARD INTEGRITY IN FINANCIAL REPORTING

Recommendation 4.1, 4.2, 4.3 and 4.4: The Board should establish an Audit Committee.

PRINCIPLE 5: MAKE TIMELY AND BALANCED DISCLOSURE

Recommendation 5.1: Establish written policies designed to ensure compliance with ASX Listing Rule disclosure requirements and to ensure accountability at a senior executive level for that compliance and disclose those policies or a summary of them.

Recommendation 5.2: Provide the information indicated in Guide to reporting on Principle 5.

PRINCIPLE 6: RESPECT THE RIGHTS OF SHAREHOLDERS

Recommendation 6.2: Provide the information indicated in Guide to reporting on Principle 6.

PRINCIPLE 7: RECOGNISE AND MANAGE RISK

Recommendation 7.4: Provide the information indicated in Guide to reporting on Principle 7.

PRINCIPLE 8: REMUNERATE FAIRLY AND RESPONSIBLY

Recommendation 8.1: The Board should establish a remuneration committee.

Recommendation 8.3: Provide the information indicated in Guide to reporting on Principle 8

Non Executive Director Retirement Benefits

Limiting Risk

Information Publicly Available

Directors’ report

Information about directors

Name Particulars

Non�Executive Director

Directorships of other listed companies

Directors’ shareholdings

Remuneration of directors and senior management

Share options granted to directors and senior management

TALISMAN MINING LIMITED Annual Report 2009

`Annual financial report for the financial ended 30 June 2009 year`

`P` RINCIPLE 3: PROMOTE ETHICAL AND RESPONSIBLE DECISION MAKING

Darren Crawte `LL.B (Hons), ACA`

`Fixed remuneration`

`Long term incentive`

`Non` � `executive directors`

`Index to the financial report`

`Current tax`

`Deferred tax`

`Current and deferred tax for the period`