TALISMAN MINING LIMITED — Investor Presentation 2017

Oct 15, 2017

F o c u s e d A u s t r a l i a n m i n e r a l r e s o u r c e s c o m p a n y

Discovering & Developing Opportunities in Copper-Gold & Nickel

Investor Presentation: 121 Conference, Hong Kong, October 2017

F o c u s e d A u s t r a l i a n m i n e r a l r e s o u r c e s c o m p a n y

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This presentation has been prepared by Talisman Mining Limited.

This document contains background information about Talisman Mining Ltd current at the date of this presentation. The presentation is in summary form, has not been independently verified and does not purport be all inclusive or complete nor does it contain all the information that a prospective investor may require in evaluating a possible investment in Talisman Mining Ltd or its assets.

Recipients should conduct their own investigations and perform their own analysis in order to satisfy themselves as to the accuracy and completeness of the information, statements and opinions contained in this presentation.

This presentation is for information purposes only. Neither this presentation nor the information contained in it constitutes an offer, invitation, solicitation or recommendation in relation to the purchase or sale of securities in any jurisdiction. This document is not a prospectus and does not contain all of the information which would be required to be disclosed in a prospectus. This presentation may not be distributed in any jurisdiction except in accordance with the legal requirements applicable in such jurisdiction. Recipients should inform themselves of the restrictions that apply in their own jurisdiction. A failure to do so may result in a violation of securities laws in such jurisdiction.

This presentation does not constitute investment advice and has been prepared without taking into account the recipient's investment objectives, financial circumstances or particular needs and the opinions and recommendations in this presentation are not intended to represent recommendations of particular investments to particular persons. Recipients should seek their own professional, legal, tax, business and/or financial advice when deciding if an investment is appropriate. All securities transactions involve risks, which include (among others) the risk of adverse or unanticipated market, financial or political developments. To the fullest extent permitted by law, Talisman Mining Ltd and its related bodies corporate, its directors, officers, employees and representatives (including its agents and advisers), disclaim all liability and take no responsibility for any part of this presentation, or for any errors in or omissions from this presentation arising out of negligence or otherwise and do not make any representation or warranty, express or implied, as to the currency, accuracy, reliability or completeness of any information, statements, opinions, estimates, forecasts, conclusions or other representations contained in this presentation. This presentation may include forward-looking statements. These forward-looking statements are not historical facts but rather are based on Talisman Mining Ltd.'s current expectations, estimates and assumptions about the industry in which Talisman Mining Ltd operates, and beliefs and assumptions regarding Talisman Mining Ltd.'s future performance. Words such as “anticipates”, “expects”, “intends”, “plans”, “believes”, “seeks”, “estimates”, “potential” and similar expressions are intended to identify forward-looking statements. Forward-looking statements are only predictions and are not guaranteed, and they are subject to known and unknown risks, uncertainties and assumptions, some of which are outside the control of Talisman Mining Ltd. Past performance is not necessarily a guide to future performance and no representation or warranty is made as to the likelihood of achievement or reasonableness of any forward-looking statements or other forecast. Actual values, results or events may be materially different to those expressed or implied in this presentation. Given these uncertainties, recipients are cautioned not to place reliance on forward looking statements. Any forward looking statements in this presentation speak only at the date of issue of this presentation. Subject to any continuing obligations under applicable law and the ASX Listing Rules, Talisman Mining Ltd does not undertake any obligation to update or revise any information or any of the forward looking statements in this presentation or any changes in events, conditions or circumstances on which any such forward looking statement is based.

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Rare Investment Opportunity

• ♦ Mix of near-term production, development and exploration across copper and nickel in a Tier 1 jurisdiction

One of few ASX listed companies with unique exposure to

• ♦ High grade copper mine – Monty Ore Reserve = 8.7% Cu

• ♦ Tier 1 jurisdiction –Doolgunna Region of Bryah Basin in Western Australia

• ♦ Currently finalising debt financing –100% of TLM share of Monty pre-production capital

• ♦ Monty mine development underway– forecast production start in approx. 12 months

Significant exploration value and potential at Springfield Project

• ♦ Underpinned by proven VMS camp with proximal high grade Cu-Au deposits (DeGrussa and Monty)

Significant optionality to nickel prices with 100% owned Sinclair Nickel Operation

• ♦ 350ktpa processing plant & associated infrastructure

• ♦ Prospective tenure package and mineralised extensions at historic Sinclair underground mine

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Advanced projects in Western Australia

30% interest in Springfield Cu-Au Joint Venture

• ♦ High grade Monty deposit located 10km from DeGrussa

• ♦ Monty FS complete with outstanding forecast returns

• ♦ Construction and mine development underway

• ♦ First production targeted for Q4 CY 2018

• ♦ Located in proven world-class VMS province with multiple prospective corridors and ongoing exploration

100% owned Sinclair Nickel Project

• ♦ Extensive tenement holding in fertile nickel belt with potential to host significant deposits

• ♦ Multiple near-mine & regional exploration opportunities

• ♦ Extensive infrastructure including processing plant with potential fast-track route to production

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“Maximise value to shareholders through exploration, discovery and development of complementary opportunities in base and precious metals”.

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Experienced and diverse Executive Team and Board

Dan Madden – Managing Director

• ♦ +15 years experience across base and precious metals from exploration through to operations

Tony Greenaway – General Manager Geology

• ♦ +25 years base and precious metal exploration experience from grass roots evaluation through to advanced feasibility studies

Shaun Vokes – Chief Financial Officer and Company Secretary

• ♦ +25 years experience in senior commercial and financial roles from project evaluation/development through to financing and metals marketing

Capital Structure
Shares on Issue	185.7M
Unlisted Options	9.7M
Market Capitalisation (at 25c)	A$ 46M
Cash (30 Jun 2017)	A$ 11.6M
Substantial Shareholders
Kerry Harmanis	~18%
Institutional Investors	~11%

Capital Structure
Shares on Issue	185.7M
Unlisted Options	9.7M
Market Capitalisation (at 25c)	A$ 46M
Cash (30 Jun 2017)	A$ 11.6M
Substantial Shareholders
Kerry Harmanis	~18%
Institutional Investors	~11%

Non Executive Directors	Non Executive Directors
Jeremy Kirkwood(Non-Exec. Chair)	Investment Banking, Corporate Strategy
Karen Gadsby(Non-Exec. Dir)	Finance, Commercial & Board Experience
Brian Dawes(Non-Exec. Dir)	Operational Executive
Alan Senior(Non-Exec. Dir)	Resources Project Development

Recent Research click here

Philosophy and Core Beliefs

• ♦ Behave and act as business owners

• ♦ Be accountable for our decisions and actions

• ♦ What we say is what we do

• ♦ Engage with stakeholders in meaningful and clear way

• ♦ Develop mutually beneficial partnerships and opportunities

• ♦ Build strong commitment across our team and with stakeholders

• ♦ Collaborative approach

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Springfield JV (30% Talisman)

Development of the world’s highest grade copper mine underway

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Monty provides tremendous confidence in the exceptional exploration potential of the Springfield JV

• ♦ Talisman 30% interest in JV with Sandfire Resources NL (70% and JV Manager)

• ♦ Proven world-class VMS province and geological model

• ♦ Multiple VMS horizons are key areas of exploration focus

• ♦ Includes high-grade and high value Monty Cu-Au deposit:

• ♦ TLM 30% share Monty Ore Reserve[1] = 280kt @ 8.7% Cu &

• 1.4g/t Au

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1 Refer Appendix 1 Note ii

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A high value deposit that underpins strong forecast financial returns

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♦ Fast-tracked towards development

• ♦ Discovery hole – June 2015

• ♦ Resource Estimate – April 2016

• ♦ Feasibility Study (FS) – April 2017

• ♦ Mining Proposal Approved – July 2017

• ♦ Decline Commenced – October 2017

• ♦ Strong Feasibility Study outcomes

• ♦ Technically sound and highly financially viable underground project

• ♦ Low capital and low risk development pathway

• ♦ Signed agreements to allow JV mining and ore sales to Sandfire

• ♦ Taurus Funds Management mandated to debt fund 100% of TLM’s share of preproduction capital ($22M)

• ♦ Targeted first production in Q4 CY 2018

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Low capital and low risk development pathway with outstanding forecast returns

Initial ore production life = 30 months

Total payable production = 19.9kt Cu and 5.7koz Au

Forecast pre-tax[1] free cash flow = A$64M

Pre-production capital cost = A$22M Notional AISC = A$1.90/lb payable Cu (US$1.37)

Pre-tax NPV (8% discount rate) = A$46M

Notional C1 cash cost

= A$1.56/lb payable Cu (US$1.13)

Pre-tax IRR = 78%

Payback period (from 1[st] prod) = 17 months

Talisman retains full upside (and downside) exposure to variations in Monty FS revenue and cost estimates on:

COSTS

REVENUE

• ♦ Total ore mined and delivered

• ♦ Underground mining costs

• ♦ Ore head grades

• ♦ Ore haulage costs

• ♦ Metal prices

• ♦ Closure costs

• ♦ Development timeline

• ♦ Capital costs

Forecast Monty Operating costs (excl royalties)

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1 Estimated Talisman consolidated tax losses available to offset Monty life of mine taxable income at 30 June 2017 A$44M

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Site works commenced and first Monty production targeted for Q4 calendar 2018

• ♦ All regulatory approval received for Monty development and production

• ♦ Earthworks nearing completion including 14km haul road to DeGrussa plant

• ♦ Box-cut completed and decline commenced

• ♦ Mining contract awarded to Byrnecut Australia Pty Ltd

• ♦ Development plan leverages off existing DeGrussa infrastructure

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Target Monty project development 1Q 2Q 3Q 4Q 1Q 2Q 3Q
timeline FY18 FY18 FY18 FY18 FY19 FY19 FY19
Detailed design and engineering P
Early mobilisation and preliminary site
P P
activities
Mining Proposal Approval P
Decline Development P
First Ore Production
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A conventional underground operation

• ♦ Ore reserve consists of Upper Zone (UZ) and Lower Zone (LZ)

• ♦ Current Mine Plan includes higher-grade, higher-tonnage LZ only

• ♦ First ore targeted for 12 months from portal cut

• ♦ Conventional 1-in-7 gradient decline

• ♦ Grade control (10m x 10m) once access established

• ♦ Longitudinal long-hole open stoping with backfill

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3D schematic of Monty decline and
underground mine design
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• ♦ Maximum planned mining rate of approx. 400ktpa

Monty Ore Reserve as at 31 March 2017[2]

Deposit Reserve Category Tonnes (t) Copper (%) Gold (g/t) Cont. Cu (t) Cont. Au (oz)	Deposit Reserve Category Tonnes (t) Copper (%) Gold (g/t) Cont. Cu (t) Cont. Au (oz)	Deposit Reserve Category Tonnes (t) Copper (%) Gold (g/t) Cont. Cu (t) Cont. Au (oz)	Deposit Reserve Category Tonnes (t) Copper (%) Gold (g/t) Cont. Cu (t) Cont. Au (oz)	Deposit Reserve Category Tonnes (t) Copper (%) Gold (g/t) Cont. Cu (t) Cont. Au (oz)	Deposit Reserve Category Tonnes (t) Copper (%) Gold (g/t) Cont. Cu (t) Cont. Au (oz)
Monty (100% basis) Proved - - - - - Probable 920,000 8.7 1.4 80,000 42,000 Total 920,000 8.7 1.4 80,000 42,000	-	-	-	-	-

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2 Refer Appendix 1 Note ii

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OSA reduces risk with full exposure to revenue and cost upside

• ♦ Ore Sales Agreement (OSA) provides a low capital, low risk and high return development route for Talisman:

• ♦ Retains optionality in relation to any future discoveries on the Springfield JV tenements

• ♦ No plant build (attractive (low) pre-production capital intensity and lower risk)

• ♦ Independent third-party calculation of mined grade

• ♦ Fixed metal recovery formulae and high fixed payabilities

  • ♦ Recognises expected Monty ore processing performance and concentrate quality

  • ♦ Eliminates Talisman exposure to metallurgical processing and product marketing risks

• ♦ Commercial, highly competitive and transparent Ore Treatment Fee (OTF)

  • ♦ Incorporates all downstream costs (processing, G&A, transport and conc. treatment/refining)

  • ♦ Closely aligned with actual DeGrussa processing, G&A and downstream costs

  • ♦ Transparency of cost components (linkage to industry benchmarks or annual indexation)

• ♦ Exploration JV Agreement covers ongoing exploration activities of the Springfield JV

• ♦ Mining JV Agreement covers rights/obligations for development and mining activities

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See Appendix 2 for further explanation of OSA and OTF

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Monty Deposit provides ‘proof of concept’ for Doolgunna VMS Camp

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NORANDA VMS MINING CAMP
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• ♦ VMS deposits can and do occur at multiple stratigraphic levels within the prospective sequence, eg Noranda VMS mining camp

• ♦ Bryah Basin VMS Camp now with three VMS Deposits ( DeGrussa, Monty, Horseshoe Lights ) and four VMS occurrences at different stratigraphic levels within the prospective Karalundi sequence

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Springfield – Multiple Prospective Horizons

• ♦ Potential for multiple host horizons within prospective corridors

• ♦ Monty

• ♦ Homer

• ♦ Southern Volcanics

• ♦ Central

• ♦ Limited diamond and RC drilling by JV outside of Monty Resource

• ♦ ~90% of JV diamond holes drilled for resource definition purposes

• ♦ 16km Southern Volcanics Corridor has 6 RC holes and no diamond drilling to date

• ♦ Evolving and improving geological understanding and interpretations

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Untested potential for further mineralisation in Monty near mine environment

• ♦ Lower Zone (LZ) growth potential with grade control drilling

• ♦ Potential for excluded Upper Zone (UZ) to enter mine plan with grade control drilling

• ♦ Represents one limited stratigraphic package within the wider prospective Monty Corridor

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New interpretations at multiple locations to be tested in the current quarter

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Monty NE
Homer South
Monty Host Stratigraphy
Monty East (new interpreted position
Monty Off-Set
Monty Deposit
Monty Host Stratigraphy
♦ Recently identified opportunities and interpretations (new interpreted position
include Monty NE , Monty East and Homer South Trend :
♦ Monty NE significant intersection of 5m @ 4.11% Cu [3]
♦ RC drilling planned at Monty NE to test a second and
separate bottom of hole aircore anomaly in this area
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• ♦ RC drilling planned at Monty NE to test a second and separate bottom of hole aircore anomaly in this area

3 Refer to ASX Announcement 13 September 2016

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New interpretations at
Homer South
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Monty is a low risk, high return copper project with outstanding potential upside

• ♦ Low capital, low risk development path utilising DeGrussa plant

• ♦ Pre-production Capital of $22M (TLM share) expected to be fully debt funded

• ♦ JV Partner (Sandfire) a proven project developer/operator

• ♦ All regulatory approvals received and development underway

• ♦ First production targeted for December quarter 2018

• ♦ with Springfield JV tenure in a proven world-class VMS province multiple prospective corridors

• ♦ Potential remains to increase known mineralisation with further systematic exploration

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Sinclair Nickel Project

Advanced opportunity in a proven nickel province

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Premium surface and underground assets with extensive infrastructure

• ♦ Located in the world-class Agnew-Wiluna Greenstone belt

• ♦ +9Mt historical nickel production

• ♦ $8M acquisition from Glencore in Nov 2014

• ♦ Previous Sinclair mine production (2008-13)

• ♦ 1.58Mt @ 2.44% Ni for 38,599t of contained Ni

• ♦ Existing asset base includes infrastructure with approx. A$120M replacement value

• ♦ Low capital, fast track option to nickel production

• ♦ Excellent exploration prospectivity

• ♦ Prospects in close proximity to existing infrastructure

• ♦ Regional opportunities along Sinclair trend (8km basal contact)

• ♦ Results at Delphi North incl. 9m @ 4.2% Ni[4]

• ♦ Active on-ground exploration continuing

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4 Refer to ASX Announcement 27 October 2016

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Potential for discovery of nickel sulphide mineralisation close to existing infrastructure

• ♦ Resource targets for

• known mineralisation at Sinclair mine extension plus Sinclair remnants

• ♦ Other potential resource targets at Skye/Stirling

• ♦ Proven mineralisation at regional prospects

• ♦ Numerous regional prospects at early stages

• ♦ Future potential exploration work to include regional aircore, RC/DD & geophysics – surface & DHEM

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5.6m @ 2.64% Ni
9.3m @ 2.31% Ni
6.3m @ 3.32% Ni
9.3m @ 2.77% Ni
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Significant infrastructure in place with replacement value of approx. A$120M

• ♦ 350ktpa concentrator

  • ♦ Operated at ~440ktpa

• ♦ Open pit, decline and underground mine

• ♦ 200-person accommodation village

• ♦ Administration buildings

• and stores

• ♦ Exploration office and core yard

• ♦ Mining contractor facilities

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A re-commencement of operations at Sinclair, subject to near-mine exploration success, has the potential for low capital intensity and fast-tracked transition to production

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• ♦ Aligned with core exploration expertise and added at low cost

• ♦ Located within the Cobar/Mineral Hill region of central NSW

  • ♦ Richly mineralised district hosting a number of base/precious metal mines

  • ♦ Highly prospective geology with numerous large, high-grade discoveries

• ♦ Two additional exploration licence applications north-east of

• Cobar

♦ Review of historical exploration completed

• ♦ Multiple areas show evidence of base and precious metals

• endowment

♦ Little modern exploration

  - ♦ Significant potential for further substantial base/precious metal discoveries

• ♦ On-ground field work expected to commence in 2018 following

• the finalisation of land access and other statutory agreements.

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The Talisman Investment Case

Emerging metals producer with exceptional prospectivity

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Emerging metals producer with exceptional prospectivity

• ♦ Monty a high-grade, high-returning copper-gold project

• ♦ Development underway

• ♦ JV with a proven development and operating partner

• ♦ Low risk, low capital driven by ore sales arrangement

• ♦ Currently finalising pre-production capital financing

• ♦ First production targeted December quarter 2018

• ♦ Outstanding exploration upside potential to be tested

• ♦ Sinclair a low start-up cost, fast track nickel production option

• ♦ Within a highly endowed exploration address

♦ Upcoming activities

• ♦ Testing of exploration targets at Springfield (Q3 CY 2017)

• ♦ Progression of decline (Q4 CY 2017)

• ♦ Sinclair field activities ongoing (Q4 CY 2017)

• ♦ Progressing quality opportunities to create value which are complementary to our assets, experience and expertise

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Discovering & Developing Opportunities in Copper-Gold & Nickel

Investor Presentation: 121 Conference, Hong Kong, October 2017

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Note i: Mineral Resources

Information in this presentation that relates to the Monty JORC Mineral Resource estimate is information previously published by Sandfire Resources NL (“Sandfire”) and is available on the Sandfire and ASX websites (see announcement “Maiden High-Grade Mineral Resource for Monty VMS Deposit: 99,000t of Copper and 55,000oz of Gold”, dated 13 April 2016 (Sandfire Announcement)). For full details of the Monty Resource estimate, including the Competent Person’s Statement related to the estimation of the Monty Mineral Resource, please refer to the Sandfire Announcement.

Talisman confirms that it is not aware of any new information or data that materially affects the information included in the Sandfire Announcement, and that all material assumptions and technical parameters underpinning the estimates in the Sandfire Announcement continue to apply and have not materially changed and confirms that the form and context in which the Competent Person’s findings are presented have not been materially modified from the original Sandfire Announcement.

Note ii: Ore Reserves

Information in this presentation that relates to Ore Reserves and Exploration Results and Exploration Targets as defined under the 2012 Edition of the “Australian Code for Reporting of Mineral Resources and Ore Reserves”, is information previously published by Talisman Mining Ltd (“Talisman”) and is available on the Talisman and ASX websites (see announcement “Monty Feasibility Study Results”, dated 5 April 2017 (Talisman Announcement)). For full details of the Ore Reserve estimate, including the Competent Person’s Statement related to the estimation of the Ore Reserve, please refer to the Talisman Announcement.

Talisman confirms that it is not aware of any new information or data that materially affects the information included in the Talisman Announcement, and that all material assumptions and technical parameters underpinning the estimates in the Talisman Announcement continue to apply and have not materially changed and confirms that the form and context in which the Competent Person’s findings are presented have not been materially modified from the original Talisman Announcement.

Exploration Results and Exploration Targets

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

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Appendix 2

Additional Monty Feasibility Study Detail

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Logical and low risk pathway with economic benefits shared between JV partners

Mining Joint Venture Agreement (MJVA)

Ore Sale Agreement (OSA)

• ♦ Establishes the rights and obligations of the Springfield JV parties related to activities associated with the development, mining and ultimate decommissioning of mineral discoveries

• ♦ Development and mining of Monty will operate under the terms of this MJVA

• ♦ Applies to Monty ore (and near-Monty extensions)

• ♦ Potential future Springfield JV discoveries subject to separate OSA at discretion of both JV parties

• ♦ Monty ore (at a max rate of approx. 0.4Mtpa) blended with Sandfire’s existing DeGrussa ore feed

Exploration Joint Venture Agreement (EJVA)

• ♦ Point of ore sale to Sandfire is at a dedicated weighbridge near DeGrussa ROM pad

• ♦ Covers the ongoing exploration activities of the Springfield JV on the JV tenements and outlines the rights and obligations of the JV parties

• ♦ Provides a mechanism to progress future mineral discoveries, including the option to utilise the existing MJVA

• ♦ TLM receives net ore sale revenue payment on equivalent payable metal-in-concentrate basis after deduction of Ore Treatment Fee (OTF) per tonne of delivered ore and Royalties

• ♦ Ore sales revenue derived from (independently) calculated head grade, prevailing metal prices, fixed recovery formulae and fixed payabilities

• ♦ Certain components of OTF are subject to annual indexation and/or pegged to annual industry determined benchmarks

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Springfield JV exposure
OPEX variables (ex royalties):
♦ Underground mining costs
Underground
♦ Ore haulage costs to DeGrussa
mining
♦ Closure costs
Fixed exposure (with indexation):
Ore haulage to ♦ Ore Treatment Fee (OTF) – covers
DeGrussa plant all Sandfire downstream costs and
plant usage charge
REVENUE variables:
♦ Ore volumes and grades
♦ Metal prices
POINT OF
ORE SALES Fixed exposure:
♦ Process recovery formulae
♦ Metal payabilities
Business service
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Talisman economics

Monty Feasibility Study OPEX estimates (TLM 30% basis)

• ♦ 239kt mined ore

• ♦ Underground mining + ore haulage cost = A$126/t

• ♦ Sandfire Ore Treatment Fee (OTF) = A$211/t

• ♦ Fixed Sandfire monthly management fee = equates to ~A$1/t

• ♦ Total operating costs (excl royalties and closure) = A$81M

• ♦ Implied operating cost per tonne ore = A$338/t

Monty Feasibility Study REVENUE estimates (TLM 30% basis)

• ♦ 239kt mined ore containing 22.3kt Cu, 11.5koz Au & 124koz Ag

• ♦ LOM average prices: US$6118/t Cu, US$1369/oz Au, US$18.7/oz Ag & 0.723 A$

• ♦ Implied gross revenue = A$181M

• ♦ Implied gross revenue per tonne ore = A$758/t

• ♦ Copper revenue received / metal-in-ore value = 89.0%*

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♦ Metal payabilities ♦ * Feasibility Study LOM average copper recovery of 92.8% multiplied by payability of 95.9%
Sandfire exposure (cost volatility mitigated with indexation of OTF)
Business service Concentrate Concentrate Treatment and Metals
Ore processing
support (G&A) product transport refining charges production
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Monty ore ownership and risks transfer at this point

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Mined
DeGrussa plant
Monty ore Dedicated weighbridge at
Springfield JV mining/ore haulage risk Sandfire processing/downstream risk processing and
(TLM 30% DeGrussa ROM pad
concentrate sales
Basis)
Talisman 30% of Monty ore
Monty ore Calculated Calculated Ore sale
HEAD Calculated METAL METAL METAL
tonnes metal-in- payable revenue per
GRADES metal-in-ore RECOVERIES PAYABILITIES PRICES
weighed concentrate metal tonne
Head grades calculated directly Fixed metal recovery Fixed metal payabilities Prevailing LME and
from block model once grade formulae are applied to are applied to calculated Comex metal prices are
control (GC) drilling on each stope calculated metal-in-ore. metal-in-concentrate. applied to calculated
is complete. GC drilling on a 10m x payable metal.
10m basis and calculations carried
out by an independent third party.
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TALISMAN

Ore sale revenue per Monty ore tonne Ore Treatment Fee (OTF) of A$211 per Monty ore tonne delivered to DeGrussa. (equiv. U$0.83/lb payable Cu) Fixed monthly management fee (equates to ~A$1 per Monty ore tonne delivered) Forecast government and native title royalty payments based on calculated payable metal

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SANDFIRE RESOURCES
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♦ Ore Treatment Fee (OTF) of approx. A$211/t ore

• ♦ Recognises all downstream costs post ore sale:

• ♦ Ore processing and associated business services/G&A

• ♦ Concentrate transport and refining costs (~55% of OTF)

• ♦ A dedicated plant usage charge

• ♦ Closely aligned with actual DeGrussa processing, G&A and downstream costs

• ♦ Appears elevated on a per tonne of ore basis due to the extremely high grade nature of Monty ore

• ♦ Concentrate costs actually levied per tonne of conc/Cu

• ♦ Equates to US$0.86/lb payable Cu metal (at spot A$)

• ♦ Modest plant usage charge allows Talisman to avoid a substantial investment in dedicated processing, site services, transport and marketing infrastructure

• ♦ Plus removes all accompanying risk exposures

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DeGrussa opex as per quarterly US$ operating data released by Sandfire and avg. 1HFY17 A$/US$ rate of 0.75; all A$/US$ conversions above at this rate.

Adjustments to reflect high Monty ore grade

DeGrussa processing/G&A costs applied to Monty Feasibility Study operating parameters to arrive at notional per pound unit costs.

DeGrussa opex expressed on a per pound contained metal basis; Monty OTF and implied usage charge expressed on a per pound payable metal basis.

DeGrussa transport, treatment and refining cost notionally adjusted back to a per tonne ore cost utilising Monty Feasibility Study operating parameters.

This is an indicative analysis only. The calculation of specific OTF components is notional and derived solely on an implied basis utilising DeGrussa 1HFY17 actual opex. Talisman does not warrant that these implied component amounts align in any way with the specific component amounts of the aggregate OTF within the OSA.

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A technically sound and highly economic underground project

All costs borne by the Springfield Joint Venture under the OSA are incorporated in the Monty financial analysis on a 100% basis. As such, Talisman’s underlying economic interest in the development of Monty equates to its 30% interest in the Springfield Joint Venture and is therefore represented by its simple 30% share of forecast financial returns as outlined below.

Operating parameters (TLM 30% basis)	Units	FS (Mar 2017)
Pre-production mine development	months	12
Oreproduction mine life	months	30
Total mined and milled ore	kt	239
Copper headgrade(LOM avg)	% Cu	9.35
Gold headgrade(LOM avg)	g/t Au	1.50
Silver headgrade(LOM avg)	g/t Ag	16.2
Total copper-in-ore mined	kt	22.3
Totalgold-in-ore mined	koz	11.5
Total silver-in-ore mined	koz	124.0
Totalpayable copper metal	kt	19.9
Totalpayablegold metal	koz	5.7
Totalpayable silver metal	koz	56.2

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Financial parameters (TLM 30% basis)	Units	FS (Mar 2017)
Forecast copperprice(LOM avg)	US$/t	6,118
Forecastgoldprice(LOM avg)	US$/oz	1,369
Forecast silverprice(LOM avg)	US$/oz	18.76
Forecast A$/US$(LOM avg)	USc	0.723
Totalgross revenue	A$M	181
Total net revenue(post royalties)	A$M	173
Total cash operatingcosts	A$M	89
Pre-tax operatingcashflow	A$M	92
Pre-production capital cost	A$M	22
LOM sustainingcapital cost	A$M	5
Ungeared,pre-tax free cashflow	A$M	64
Notional C1 costi	A$/lbpayCu	1.56
Notional All-in-sustaining-cost(AISC)i	A$/lbpayCu	1.90
Pre-tax NPV(8% discount rate, real)	A$M	46
Pre-tax IRR	%	78
Paybackperiod(from firstproduction)	months	17
Ore reserve life - to -paybackperiod	x	1.8
NPV /pre-production capex	x	2.1

iC1 and AISC are calculated on the basis of notionally including the OSA Ore Treatment Fee as a production cost. AISC is defined as the operating cash cost of production (net of by-product credits) plus royalties and sustaining capital and closure costs but exclusive of any finance costs or corporate overhead allocation.

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Capital cost composition (TLM 30% basis)

Capital item	A$M
Surface infrastructure	9.9
Underground mine development	9.5
Underground mine infrastructure	2.4
Total pre-production capital	21.8
Sustaining capital 5.5
Closure costs	1.0
Total capital cost	28.3

Commodity Price Assumptions

Commodity / FX	CY 2017	CY 2018	CY 2019	CY 2020	CY 2021
Copper – U$/lb	2.51	2.74	2.81	2.78	2.68
Gold – U$/Oz	1310	1398	1375	1374	1296
Silver – U$/Oz	17.95	19.14	18.84	18.83	17.75
Currency AUD:USD	0.733	0.730	0.725	0.720	0.715

Operating cost parameters (TLM 30% basis)

Operating item	A$M	A$/t ore
Underground mining	28.8	120.5
Ore transport to DeGrussa	1.4	5.8
Ore Treatment Fee (OTF)	50.4	211.0
Sandfire management fee 0.2 1.0
Royalties	8.1	34.0
Total operating cost	88.9	372.3

Operating item	A$M	A$/lb payable Cu
Underground mining	28.8	0.65
Ore transport	1.4	0.03
Ore Treatment Fee(OTF)	50.4	1.15
Sandfire management fee	0.2	0.01
Gold and silver credits	(12.3)	(0.28)
Notional C1i cost	68.5	1.56
Royalties – gov’t and native title	8.1	0.19
Sustaining capital 5.5 0.13
Closure costs	1.0	0.02
Total notional AISCi	83.1	1.90

i C1 and AISC are calculated on the basis of notionally including the OSA Ore Treatment Fee as a production cost. AISC is defined as the operating cash cost of production (net of by-product credits) plus royalties and sustaining capital and closure costs but exclusive of any finance costs or corporate overhead allocation.

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Mineralisation Style	Mineral Resource Category	Tonnes (t)	Copper (%)	Gold (g/t)	Contained Copper (t)	Contained Gold (oz)
Massive Sulphides	Indicated	754,000	12.0	2.1	91,000	51,000
	Inferred	9,000	20.7	2.7	2,000	1,000
	Total	763,000	12.1	2.1	92,000	52,000
Halo	Indicated	287,000	2.2	0.3	6,000	3,000
	Inferred	-	-	-	-	-
	Total	287,000	2.2	0.3	6,000	3,000
Total	Indicated	1,041,000	9.3	1.6	97,000	54,000
	Inferred	9,000	20.7	2.7	22,000	1,000
	Total	1,050,000	9.4	1.6	99,000	55,000

5 Refer Appendix 1 Note Figures in this table are rounded to the nearest thousand.

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Ore Reserve estimate and Mine Plan on 100% Basis as at 31 March 2017	Ore Reserve estimate and Mine Plan on 100% Basis as at 31 March 2017	Ore Reserve estimate and Mine Plan on 100% Basis as at 31 March 2017	Ore Reserve estimate and Mine Plan on 100% Basis as at 31 March 2017	Ore Reserve estimate and Mine Plan on 100% Basis as at 31 March 2017	Ore Reserve estimate and Mine Plan on 100% Basis as at 31 March 2017
Reserve Category	Tonnes(t)	Copper(%)	Gold(g/t)	Contained Copper(t)	Contained Gold(oz)
Proved - - - - - Probable 920,000 8.7 1.4 80,000 42,000 Total 920,000 8.7 1.4 80,000 42,000 Mine Plan 800,000 9.4 1.5 74,000 38,000 Ore Reserve estimate and Mine Plan for the Monty deposit (100% basis)	-	-	-	-	-
	920,000	8.7	1.4	80,000	42,000
	920,000	8.7	1.4	80,000	42,000
	800,000	9.4	1.5	74,000	38,000
Ore Reserve estimate and Mine Plan on Talisman 30% Basis as at 31 March 2017
Reserve Category	Tonnes (t)	Copper (%)	Gold (g/t)	Contained Copper (t)	Contained Gold (oz)
Proved - - - - - Probable 280,000 8.7 1.4 24,000 13,000 Total 280,000 8.7 1.4 24,000 13,000 Mine Plan 240,000 9.4 1.5 22,000 11,000 Ore Reserve estimate and Mine Plan for the Monty deposit(30% basis)	-	-	-	-	-
	280,000	8.7	1.4	24,000	13,000
	280,000	8.7	1.4	24,000	13,000
	240,000	9.4	1.5	22,000	11,000

6 Refer Appendix 1 Note ii Figures in this table rounded to the nearest thousand

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