TALISMAN MINING LIMITED — Capital/Financing Update 2012

Jul 18, 2012

**Diamond

Drilling
Confirms
VMS
Mineralising System
at
Halloween
Project**

19[th] July 2012

COMPANY SNAPSHOT Board of Directors

Alan Senior Non-Executive Chairman

Gary Lethridge Managing Director

Graeme Cameron Technical Director

Brian Dawes Non-Executive Director

Karen Gadsby Non-Executive Director

Highlights:

• High-grade gold, copper and silver results returned in two out of three diamond holes from the Halloween Project, located 11.5km SW of DeGrussa Copper Project, including:

• HWD004 – 4m @ 5.34 g/t Au and 3.12 g/t Ag (including 1m @ 9.79 g/t Au and 6.54 g/t Ag);

• HWD004 – 1m @ 2.04 g/t Au; and

• HWD002 – 0.15m @ 2.62% Cu, 5.52 g/t Ag and 0.28 g/t Au

• Pathfinder elements returned in copper mineralised intervals are consistent with geochemical signature of the DeGrussa deposit

Contact Details

6 Centro Avenue Subiaco, Western Australia, 6008 Australia Telephone: + 61 8 9380 4230 Facsimile:

• 61 8 9382 8200

Email: info@talismanmining.com.au Website: www.talismanmining.com.au

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

Options on Issue: 14,800,000 (Unlisted)

ASX: TLM

• Follow-up RC drilling to commence by end of July

• Detailed soil program now complete with Fixed Loop ElectroMagnetic survey to commence shortly at the Halloween West Joint Venture Project

Talisman Mining Limited (ASX: TLM) is pleased to announce that initial results from recently completed diamond drilling at its Halloween Project , located 11.5km south-west of the high-grade DeGrussa VMS Copper Project in WA (see Figure 1 ), have provided strong evidence of the presence of a VMS mineralising system.

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Figure
1
–
Simplified
interpreted
Geological
Location
Plan
for
Halloween
and
Halloween
West
Projects

**Talisman
Mining
Ltd

ABN
71
079
536
495**

6
Centro
Avenue,
Subiaco
Western
Australia
6008

www.talismanmining.com.au

Halloween
Drilling
Update

Of particular note, the drilling results have returned a series of significant high-grade gold, copper and silver assays, including individual intersections of up to 9.79g/t gold and 2.62% copper.

These results, combined with the consistently elevated pathfinder elements associated with the copper mineralised intervals (zinc, selenium, tellurium, molybdenum and bismuth), are encouraging as they are strongly indicative of the presence of a VMS mineralising environment.

This suite of pathfinder elements is consistent with the geochemical signature associated with the nearby DeGrussa VMS high grade copper-gold deposit.

Halloween Drilling Update

First-pass RC drilling undertaken at Halloween earlier this year comprised 16 holes on four broadly-spaced traverses. These holes were drilled to test several copper-gold soil anomalies along an interpreted basaltic volcano-sedimentary sequence.

Significant gold assay results were returned in four holes ( HRC001, HRC002, HRC006 and HRC015 – refer ASX announcement 13/04/2012 ) along three out of the four wide-spaced drill traverses (see Figure 2 ). The best results included:

• HRC002:

• 1m @ 14g/t Au from 86m; and

• 9m @ 3.80g/t Au from 84m ( including 4m @ 7.37g/t Au from 84m)

• HRC006:

• 6m @ 1.52g/t Au from 18m

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Figure
2
–
Simplified
geological
plan
with
drill
hole
locations
showing
significant
mineralised
intercepts

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Halloween
Drilling
Update

Three diamond drill holes (HWD001, HWD002 and HWD004; see Appendix 1 ) were recently completed to:

• test the prospective volcanic horizon for VMS mineralisation associated with the high-grade gold intercepts below HRC002; and

• target a late-time Fixed Loop electromagnetic (FLEM) anomaly located 250 metres along strike and to the west of HRC002 (see Figure 2 above).

Hole HWD003 was commenced, but halted due to significant lifting of the hole and was replaced by HWD004.

Holes HWD001 and HWD004 were drilled to test the prospective mineralised horizon for VMS copper-gold mineralisation immediately down-dip from the peak gold results in HRC002 (see Figure 3 below).

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Figure
3
–
Interpreted
Drill
section
717200E
looking
west
showing
interpreted
geology
and
significant
gold
intercepts

Both drill holes intersected the down-dip extension of the target VMS horizon with intensely deformed volcanic-derived sediments showing strong silicification and chlorite-carbonate alteration with abundant disseminations and thin bands of near-massive, bedded exhalative sulphides – principally pyrrhotite and pyrite with lesser chalcopyrite (see Figure 4 ).

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Halloween
Drilling
Update

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Figure
4
–
HWD004
Target
VMS
horizon
showing
bedded
sulphide
(pyrite-­‐pyrrhotite-­‐chalcopyrite)
in
silicified
cherts
and
shale

The better gold and silver results are associated with these sulphide bands in HWD004 and include:

• 4m @ 5.34 g/t Au, 3.12 g/t Ag from 297m (including 1m @ 9.79 g/t Au, 6.54 g/t Ag from 299m);

• 1m @ 2.04 g/t Au from 288m;

• 1m @ 1.11 g/t Au from 281m; and

• 2m @ 0.99 g/t Au from 253m.

Hole HWD002 was designed to test an electro-magnetic conductor defined in a recently completed FLEM program, which is located along the prospective VMS corridor in the centre of the project (see Figure 2 ).

The hole intersected an intensely sheared, sulphide-bearing volcano-sedimentary sequence (similar to that encountered in HWD001 and HWD004) with discrete bands of siliceous chalcopyrite-bearing sediment that are thought to explain the conductor.

Although no massive sulphides were intersected in HWD002, significant disseminated chalcopyrite mineralisation was identified and is associated with an interval of highly sheared, silica-altered volcanic sediments.

The best result from this interval was 0.15m @ 2.62% Cu, 5.52 g/t Ag and 0.28 g/t Au from 164.73m (see Figure 5 below).

Of particular note are the elevated pathfinder elements associated with the copper mineralised intervals in both HWD004 and HWD002.

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In addition to copper, gold and silver, the zinc, selenium, tellurium, molybdenum and bismuth values are consistently elevated and are particularly encouraging as they are consistent with the geochemical signature associated with the nearby DeGrussa VMS high grade coppergold deposit.

A 3,000 metre in-fill RC drilling program has been developed to follow-up these results. This drill program will attempt to better define the mineralised trend at Halloween. Additionally, some of the planned drill holes will establish a platform for deeper diamond drilling beneath, and along strike, from HWD004 (see Figure 2 ) later in the year.

Preparatory site works have commenced and an RC drill rig will arrive at Halloween later this month in order to undertake this trend definition drill program.

Figure
5
–
HWD002
Significant
disseminated
chalcopyrite
mineralisation
associated
with
highly-­‐sheared,
silica-­‐altered
volcanic
sediments

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Halloween
Drilling
Update

Halloween West JV (formerly Doolgunna West)

Talisman is farming into a 60% joint venture interest in the Halloween West JV Copper Gold Project from Chrysalis Resources (ASX: CYS – refer ASX release 16/05/12). Halloween West is located immediately to the west of the 100%-owned Halloween Project and is interpreted to host the continuation of the Halloween VMS trend (see Figure 6 below) .

Talisman has recently completed a detailed 100m x 25m soil geochemical program (totalling 1,455 samples) covering the portion of the Halloween West JV Project immediately along strike of the Halloween VMS horizon (see Figure 6 below). Assay results from this program are pending.

The Company will shortly undertake detailed geological mapping and an extension of the Halloween FLEM survey at Doolgunna West in order to better define prospective stratigraphic horizons across the project and to assist in targeting future RC drilling later this year.

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Figure
6
–
Halloween
West
JV
Project
showing
proposed
soil
and
FLEM
area
of
coverage
over
regional
magnetics

Comment

The geological and geochemical evidence that Talisman is accumulating at the Halloween Project confirms that a VMS mineralising system may be present within the Halloween sequence.

This evidence and the growing supportive observations from Talisman’s Springfield Project (located to the east of DeGrussa) support the Company’s view that there is excellent potential to discover additional VMS copper-gold deposits within the Bryah Basin.

Talisman’s Managing Director, Gary Lethridge, said the recent diamond drilling results from Halloween were very encouraging, providing strong indications that the Halloween trend could represent a significant VMS mineralising environment.

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Halloween
Drilling
Update

“The combination of high-grade gold, silver and copper intercepts, significant pathfinder elements and the geology we are seeing in the drill core gives us great encouragement that we are in the right location and applying the correct techniques and approach to make a potential discovery.

“This vindicates our continuing patient, but focused Bryah Basin exploration effort, and gives our exploration team another very exciting exploration front in this region, alongside our Springfield Project, where we are currently ramping up drilling efforts as announced earlier this week.

“We are very much looking forward to the next round of drilling, which kicks off later this month.”

Ends

For further information, please contact: Gary Lethridge – Managing Director on +61 8 9380 4230

For media inquiries, please contact: Nicholas Read – Read Corporate on +61 419 929 046

Competent Persons’ Statement

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

**Appendix

1
-­‐
Halloween
Diamond
Drillhole
Locations**

Hole ID	Hole Type	Depth(m)	East MGA94	North MGA94
HWD001	RC_DDH	297.2	717214	7168107
HWD002	DDH	300.4	716945	7167990
HWD003	RC_DDH	162.1	717189	7168009
HWD004	DDH	399.5	717189	7168007

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