2018 Annual Report

KEY HIGHLIGHTS DURING THE FINANCIAL YEAR o Commencement of operations at the Talisman Mine - on the 6th of June 2017 the company mobilised to establish operations at the Talisman Mine. This was an historic moment in the company's development with the mine having not been in an active state since 2006. The site is now fully established, all services are in place and more than 700m of the tunnel network, leading to the Mystery Vein, have been rehabilitated, supported and services installed. Concurrently, NTL have undertaken refurbishment of the Dubbo drive which is well ahead of schedule with less than 40m remaining before access to the BM37 zone is achieved. o Modelling and resource estimation of the Talisman Deeps - During the period the company undertook extensive upgrading of a significant portion of the mineral resource estimate to be compliant with JORC 2012 reporting standards. This was a continuation of the development of the historic database which was acquired in 2015, and due to the size, nature and grades of the resource of which a large proportion sits underneath the current Talisman activities was called "Talisman Deeps". Three modules of the Talisman Deeps resource area were released to the market between 12 July and 05 September covering Dubbo, Woodstock and the Talisman/Bonanza zones. The significant results of the revised Mineral Resource Estimate to JORC 2012 reporting standards more than doubled the measured, indicated and inferred resources from 229,000 Oz AuEq to 469,000 Oz AuEq at an average grade of 15.1g/t AuEq. This total includes some 312,000 Oz AuEq at an average grade of 21.98g/t contained in the Dubbo Zone of the mine. o Completion of Scoping Study on the Talisman Deeps - The scoping study demonstrates that the inferred resources below No 9 Level have a significant potential for economic extraction. The report is currently being reviewed by independent experts. o Completion of the 2018 updated Prefeasibility study "PFS" - The recently released PFS has demonstrated an increase in the Net Present Value, (NPV) from $15.4m to $35.9m at a 9% Discount Rate with an IRR of 118% as a result of increased gold production, grade and an extended mine life. o The return to 100% ownership of the Rahu project through the acquisition of Newcrest New Zealand Pty Ltd, now renamed Rahu Resources Pty Ltd, from Newcrest Mining under the terms of the binding agreement between the companies. o Completion of successful capital raising - The company completed another successful capital raising via an SPP with an attaching option raising a further $1.9m in total. The funds raised were for both the metallurgical testwork and concentrator plant development at Talisman and work on Rahu. Following NZPAM's recent approval of the acquisition of Newcrest New Zealand Pty Ltd, work on Rahu is expected to commence during the next half year. ANNUAL REPORT 2018 ANNUAL REPORT 2018 NEW TALISMAN GOLD 3 DIRECTORS' REPORT Dear Shareholders The 2018 Financial year is one which marks a significant milestone in the re-establishment of the Talisman Gold Mine. This year has seen the achievement of several other key milestones in the development of your company and one in which considerable value has been added for shareholders. At this time last year the company had only just commenced clearing the site area in preparation for prospecting. Your board is delighted to report that the aims outlined in the Annual Report last year to complete rehabilitation works through to the target areas of Mystery and Dubbo and commence prospecting activities have largely been achieved. The company had, at this time last year, compiled the Talisman Deeps database and has subsequently completed the Mineral Resource Estimate, modules for Talisman. This work provided a significant uplift in gold resources and grades at the Talisman mine. A revised 2017 mineral resource estimate, reported in compliance with the 2012 JORC code, which was underpinned by an independent review and Valuation by Geos Mining from Sydney provided a key catalyst for a significant increase in shareholder value. One of the key ambitions for the company noted this time last year, was to build and expand the scope of works in prospecting and resource definition to allow the upgrade of the prefeasibility study "PFS" which was completed in 2013. At that time we were optimistic that, with the completion of the updated mineral resource estimate to JORC 2012 reporting standards, the resulting PFS would provide further improvements in what were already very solid projected returns and gold outputs. The board commissioned and the technical team completed a JORC 2012 compliant Scoping Study on the inferred portion of the Talisman Deeps resource as a preliminary economic assessment for extracting this sizeable high-grade gold resource. This study is currently being reviewed by independent experts. It is with great pleasure the board advises the 2018 updated Pre-feasibility study has been completed with significant uplift in grades, reserves, recoverable gold and in turn revenues and economics. Key findings are outlined further in this report. Late last year at the AGM the board outlined its aims to complete metallurgical test work to examine potential for the establishment of an environmentally benign method in which to concentrate gold underground. The company engaged an independent expert who tested representative ore inside Talisman. This demonstrated that by using a variety of methods which resulted in a preferred method using both gravity and flotation to produce gold at a recovery rate usually found in cyanide-based treatment of 94%. Your company is currently working closely with stakeholders for the installation of a pilot plant for the treatment of ore and production of bullion as part of the bulk sampling phase. The company is engaging with specialists to provide the required data that will allow the company to install a small-scale pilot plant once the ventilation fan is installed. With underground rehabilitation to the Mystery vein now complete, and resupporting works to the high grade Dubbo target zone being well ahead of timelines, your company is awaiting delivery of its customised ventilation fan which has been ordered and currently being built. The ventilation fan is a key step to allowing blasting and frequent underground traffic movements and is expected to be installed in the next 60 days. FINANCIAL From a financial perspective the company applied most of its funds to the development at Talisman with a total expenditure directly attributable to mine upgrades of over $1.79m. Whilst expenses on development are shown in the accounts as a loss in the Statement of Financial Performance, such expenses capitalised in the balance sheet increased the Talisman mine asset from $7.8m in 2017 to $9.6m in 2018. In June 2018 the company engaged Geos Mining Minerals Consultants Pty Ltd "Geos Mining" to complete a 2015 Valmin Code compliant independent valuation of the Talisman mine project. The Valuation reviewed the JORC compliant 2017 Mineral Resource Estimate, the updated 2018 Pre-feasibility study and Ore Reserve Statement and the Scoping Study on Talisman Deeps. Geos Mining reviewed in detail the resource model and all technical data available as well as completing a field visit to site and confirmed that the resource and project was compliant with the 2012 JORC reporting standards. As set out in the notes to the accounts the directors will review valuation policy with respect to the Talisman project in the coming year. The Rahu Project had been previously written down to a nominal amount on the Statement of Financial Position. However, following the acquisition of the remaining 80% of Exploration Permit 60144 through the purchase of Rahu Resources Pty Ltd (formerly Newcrest NZ Pty Ltd) from Newcrest Mining this has now been written back to $2.7m based on capitalised costs to date. At the end of the financial year your company's balance sheet remains in a very healthy position with cash of $4.8m and the book value of the company's net assets of $14.5m. The company has no debt and sufficient funds to meet its budgets which the board approves on a quarterly basis. THIS YEAR HAS SEEN THE ACHIEVEMENT OF SEVERAL OTHER KEY MILESTONES IN THE DEVELOPMENT OF YOUR COMPANY AND ONE IN WHICH CONSIDERABLE VALUE HAS BEEN ADDED FOR SHAREHOLDERS. NEW TALISMAN GOLD ANNUAL REPORT 20184 Community, sustainability and social responsibility New Talisman is committed to strong sustainable health, safety and environmental performance. We are proud of our record of operating without incident for over 30 years. During the year the company cleared invasive species and runoff material from the 0.25Ha surface footprint, and, in consultation with regulators, has put stormwater management facilities in place to direct runoff water into a series of silt dams and settling ponds. This ensures that water flowing across the site during rainy periods is of good quality on leaving the site. Bulk sampling underground under the company's existing resource consent will have environmental effects which independent experts have deemed to be no more than minor. Innovative technology and solutions such as the closed loop water system all contribute to the company's aim of minimizing or mitigating any environmental impacts wherever possible and are driven by a commitment to environmental stewardship and compliance with all applicable environmental laws and regulations. We recognise that the natural environs and forest areas adjacent to our area of operations are used for recreational activities and tourism and we wish to continue to enhance these areas. We have supported over the last 30 years the growth in tourism which is driven to significant degree by the area's significant mining heritage. The walking track which was outlined in last year's annual report has progressed substantially with the completion of a number of surveys and it is expected the company will be in a position to commence these works in the near future. This will provide a substantial opportunity for the public's extended enjoyment of the park by connecting the tracks at the bottom of the mine road with those leading to other parts of the park. We have been, and continue to be, well supported by the people we meet near site and the community at large and direct as much of our procurement as possible towards local businesses. We continue to be committed to working in a spirit of cooperation and respect with the community in a sustainable and ethical way. Mine Refurbishment Portal pad area as at June 2017 - Installation of site works commences In June 2017 the Company mobilised to the Talisman mine site and began preparing the site for installation of equipment to support underground works under a certificate of compliance issued by Hauraki District Council. The 0.25 hectare site, which has a smaller footprint at surface than the size of a quarter of an international rugby field, has been closed to the general public by the Department of Conservation, and has now been completely cleaned of gorse and other invasive species. o A site office consisting of a management office and control room, a storage container, first aid room, change house, security office and ablutions are in place; Figure 1 - Photos showing the evolution of the mine site from a muddy bog to what is now a fully functioning operation ANNUAL REPORT 2018 NEW TALISMAN GOLD 5 o Stormwater management facilities have been constructed in consultation with Waikato Regional Council and include silt dams and settling ponds as part of the company's environmental management system; o Perimeter fencing has been erected and a secondary gate established Figure 2 - photos showing reconstruction of portal support and the ventilation lock The old portal structure has been dismantled and a new ventilation lock installed with the area now prepared for installation of the ventilation fan which will sit atop the portal entrance; o An underground communication system is in place which allows constant communication with underground workers from the control room; o Support of workings from the portal to the Mystery drive, some 700m, is complete and water and compressed air reticulation systems have been installed throughout the length of the upgraded workings; NEW TALISMAN GOLD ANNUAL REPORT 20186 ANNUAL REPORT 2018 NEW TALISMAN GOLD 7 o Power generation facilities are in place providing sufficient power for the underground equipment compressed air systems and to fully run the office systems and charging of batteries. o Work on powerlines and clearing a pathway for re-establishment of mains power is underway in discussion with Powerco which will provide 3 phase power from the existing substation. o A high tech security system that includes night vision, motion detection, wireless modem and 16 cameras has been setup allowing 24/7 remote video coverage at site. Refurbishment of the underground workings through to Mystery was completed during the period. Remedial works have now progressed more than 700m into the mine with clear access to Mystery Vein and now stand at the last section toward Dubbo. The team have faced many geotechnical challenges along the way and have completed the works to date without any notifiable incidents. As set out at this time last year the company, having successfully raised sufficient capital to progress at full steam, began to shift focus from rehabilitation to prospecting and extraction, a recent inspection of the workings by a leading geotechnical expert concluded that the remediation works on No 8 Level have been conducted to a high standard and address the localised strata control hazards present about the drives. Work continues on gaining access through to the highly prospective areas of the high-grade Dubbo Zone. The intersection of the Maria vein in that area in 1989 borehole BM37 assayed at 656g/t gold over 1.8m which included 1154g/t gold over 1.0M. This with channel sampling and drilling by NTL confirmed the presence of a high-grade shoot that has been further supported by modelling work of historic grade data in the recent mineral resource upgrade. The company is currently at the entrance to this area approximately 40 metres from the high grade area. A series of rehabilitation works will be required to this area prior to commencement of blasting and extraction. The completion of re-establishing the trafficable entry into the Dubbo Zone requires the use of machinery and as such will commence following installation of the vent fan which is expected late July. Extraction and stockpiling of ore underground which commenced in December 2017 at the Talisman mine site continues. Small volumes of ore are currently being stockpiled Underground while treatment options as outlined further in this report are being reviewed. 2017 JORC compliant Mineral Resource Estimate In late 2017 the Company undertook a programme to upgrade the Mineral Resource estimate to be compliant with JORC 2012 reporting standards. The net result was to revise the estimate of mineral resources available to the Talisman Project from 917,000 tonnes at 6.9g/t Au for 204,000 Oz Au to 950,000 tonnes at 15.1g/t AuEq for 469,800 Oz AuEq. Tabulations and details of the methods adopted in compiling the Mineral Resource estimate for the Dubbo, Woodstock and Bonanza blocks, reported in compliance with the 2012 JORC Code, are set out in in the individual company releases of 12 July 2017, 25 July 2017 and 05 September 2017. Dubbo Zone Resource modelling of the Dubbo Zone has resulted in Measured, Indicated, and Inferred resources increasing to 312,800 oz gold equivalent (Au Eq) at a grade of 21.98g/t Au Eq in compliance with the 2012 JORC Code. This is an increase of 102% over the 2004 resource estimate of 140,600 oz gold and 445,800 oz Ag for this zone (154,690 oz Au Eq). The Mineral Resources Estimate was reviewed by Geos Mining under their Valmin compliant report which confirmed compliance with the reporting standards of JORC 2012. The increase in measured, indicated, and inferred gold equivalent resources in the Dubbo Zone is a significant milestone and has supported the considerable increase in project economics and further potential for mine life as set out in the summary of the revised PFS. Figure 3 - Long Section of the Maria vein showing the Woodstock Zone on the left, Dubbo on the right and Talisman/Bonanza in the middle. NEW TALISMAN GOLD ANNUAL REPORT 20188 Woodstock Zone As there has been little drilling in this zone, a significant proportion of the Woodstock data was unable to meet 2012 JORC Code requirements. Once the orebody is prospected further this may allow targeted drilling to expand the mineral resources which are set out below. Resource modelling of the Woodstock Zone has resulted in Measured, Indicated, and Inferred resources increasing from 41,000 oz gold equivalent (Au Eq) at a grade of 6.30g/t Au Eq. This is an increase of 25% over the 2004 resource estimate of 32,686 oz AuEq for this zone. Resource modelling of the Talisman and Bonanza Zones has resulted in quantifying of an Inferred resource of 73,601 oz gold equivalent (Au Eq) at a grade of 23.64g/t Au Eq. and brings the total JORC 2012 compliant resource estimate for the Maria vein to 427,600 Oz AuEq. The combined total of all resource blocks to has increased to 469,800 Oz AuEq. Table 1 - Mineral resource estimate of Maria Vein, Dubbo Zone Small differences in tonnage, grade and ounces are due to rounding. Gold equivalents have been used as the historic data is expressed in bullion values. The gold price remained constant during the period that recorded production data is available at ?4-6s-0d, (?4.25)/Oz or USD20.47/oz. Silver values ranged from USD0.49 to USD1.03. An average of USD 0.65 was chosen for silver and a ratio of 0.031609 was factored to give gold equivalence based on the formula [Au g/ t+(Ag g/t*0.031609). All more recent exploration data has been converted to gold equivalents at the same metal prices for consistency of resource estimation and reporting. Over and above the Mineral Resource Estimate set out above, the exercise also identified some 387,000m2 within the vein wireframe, measured on the plane of the resource model, that can be classified as an exploration target. The mineralised zone is expected to range between 1.2 and 1.8 metres in thickness with a grade range of between 7.4 and 12.9 g/t AuEq for between 277,000 Oz AuEq and 726,000 Oz AuEq. This target constitutes an Exploration Target as defined in the 2012 JORC Code. The potential quantity and grade is conceptual in nature and there has been insufficient exploration to estimate a Mineral Resource. It is uncertain if further exploration will result in the estimation of a Mineral Resource. The company has developed an exploration programme which will both upgrade the confidence in the estimate of inferred mineral resources and investigate the exploration potential. NEW TALISMAN GOLD ANNUAL REPORT 20188 Woodstock Zone As there has been little drilling in this zone, a significant proportion of the Woodstock data was unable to meet 2012 JORC Code requirements. Once the orebody is prospected further this may allow targeted drilling to expand the mineral resources which are set out below. Resource modelling of the Woodstock Zone has resulted in Measured, Indicated, and Inferred resources increasing from 41,000 oz gold equivalent (Au Eq) at a grade of 6.30g/t Au Eq. This is an increase of 25% over the 2004 resource estimate of 32,686 oz AuEq for this zone. Resource modelling of the Talisman and Bonanza Zones has resulted in quantifying of an Inferred resource of 73,601 oz gold equivalent (Au Eq) at a grade of 23.64g/t Au Eq. and brings the total JORC 2012 compliant resource estimate for the Maria vein to 427,600 Oz AuEq. The combined total of all resource blocks to has increased to 469,800 Oz AuEq. Table 1 - Mineral resource estimate of Maria Vein, Dubbo Zone Small differences in tonnage, grade and ounces are due to rounding. Gold equivalents have been used as the historic data is expressed in bullion values. The gold price remained constant during the period that recorded production data is available at ?4-6s-0d, (?4.25)/Oz or USD20.47/oz. Silver values ranged from USD0.49 to USD1.03. An average of USD 0.65 was chosen for silver and a ratio of 0.031609 was factored to give gold equivalence based on the formula [Au g/ t+(Ag g/t*0.031609). All more recent exploration data has been converted to gold equivalents at the same metal prices for consistency of resource estimation and reporting. Over and above the Mineral Resource Estimate set out above, the exercise also identified some 387,000m2 within the vein wireframe, measured on the plane of the resource model, that can be classified as an exploration target. The mineralised zone is expected to range between 1.2 and 1.8 metres in thickness with a grade range of between 7.4 and 12.9 g/t AuEq for between 277,000 Oz AuEq and 726,000 Oz AuEq. This target constitutes an Exploration Target as defined in the 2012 JORC Code. The potential quantity and grade is conceptual in nature and there has been insufficient exploration to estimate a Mineral Resource. It is uncertain if further exploration will result in the estimation of a Mineral Resource. The company has developed an exploration programme which will both upgrade the confidence in the estimate of inferred mineral resources and investigate the exploration potential. Woodstock Mystery Category Tonnes Aueq g/t Ounces Category Tonnes Aueq g/t Ounces Measured 50,500 5.2 8,500 Measured 9,200 6.4 1,900 indicated 46,600 3.6 5,300 indicated 12,100 6.5 2,530 inferred 106,000 8.0 27,330 inferred 30,900 6.4 6,420 Total resources 203,100 6.3 41,170 Total resources 52,200 6.5 10,840 Dubbo Crown Category Tonnes Aueq g/t Ounces Category Tonnes Aueq g/t Ounces Measured 13,000 96.9 40,700 Measured 30,100 6.7 6,380 Indicated 3,100 74.9 7,500 indicated 35,900 6.7 7,770 Inferred 436,000 18.9 264,600 inferred 80,100 6.6 17,230 Total Resources 452,100 22.0 312,829 Total resources 146,100 6.7 31,380 Bonanza 2004 Compliant Total Category Tonnes Aueq g/t Ounces Category Tonnes Aueq g/t Ounces Measured - Measured 39,300 6.5 8,270 indicated - indicated 48,000 6.7 10,290 inferred 97,000 23.6 73,600 inferred 111,000 6.6 23,650 Total resources 97,000 23.6 73,601 Total resources 198,300 6.6 42,220 Total 2012 Compliant Mineral Resources Total NTL Category Tonnes Aueq g/t Ounces Category Tonnes Aueq g/t Ounces Measured 63,500 24.1 49,200 Measured 102,800 17.4 57,480 Indicated 49,700 8.0 12,800 Indicated 97,700 7.4 23,100 Inferred 639,000 17.8 365,580 Inferred 750,000 15.9 389,200 Total Resources 752,200 17.6 427,600 Total Resources 950,500 15.1 469,800 JORC 2012 Compliant JORC 2004 Compliant ANNUAL REPORT 2018 NEW TALISMAN GOLD 9 Prospecting Prospecting and check samples at the Mystery vein provided confidence the potential for high grade intersections in the area with a 1.45m wide vein sample and a 0.35 wide footwall sample yielding grades ranging from 0.78g/t Au, 3g/t Ag to 47.3g/t Au, 40g/t Ag. The main vein assayed 47.3g/t Au, 40g/t Ag over 1.45m. Significantly the 0.35m footwall sample gave 6.44g/t Au, 13g/t Ag and is attributed to gold bearing quartz stringers marginal to the main vein. Including this foot wall sample gives a weighted average grade over 1.8m of 39.35 g/t Au, 34.75g/t Ag. These results were released to the market in the Quarterly Activities Report of 8 May 2018. The company is investigating ways of achieving access to other areas of the mine to further prospect and increase resource confidence during the developments being undertaken through the Bulk Sampling Programme. Prefeasibility In 2013 the company completed a Pre-Feasibility Study on development of the Talisman Mine. This study proposed a mine plan, focussed on the high confidence areas adjacent to No 8 level, to produce some 32,000 ounces of gold from 106,000 tonnes of ore over a five-year period with an average Run of Mine grade of 9.9g/t Au. At a then gold price of USD 1,700/Oz and a USD: NZD exchange rate of 1:0.8 the project yielded an indicative NPV10% of NZD 15.5 million at an on mine cash cost of below NZD700/Oz with an IRR of 83%. The Company as per the announcement dated 26th June 2018 has completed a revised 2018 Pre-Feasibility study which has demonstrated an increase in the Net Present Value, (NPV) from NZD15.4m to NZD35.9m at a 9% Discount Rate. The updated study proposes a mine plan, focussed on high confidence areas adjacent to No 8 level, based on the production of 45,000 tonnes at 30.6 g/t AuEq with a significant drop in on mine costs to NZD583 per ounce and C2 cash costs of NZD710 per ounce. The IRR increased significantly to 118%. The key drivers for this increase in value are discussed below: 1. Increased ounces available for extraction - this is a result of the Mineral Resource Upgrade which saw gold equivalent ounces in the Measured and Indicated categories increase by some 18,000 ounces. These are included in the mining plan which has seen an increase in gold production of some 18,800 Oz AuEq. 2. Increased mine life - on the back of the increased ounces life of mine is extended by a year giving a current expectation of 6 years. 3. Grade - Run of Mine grade, on a gold equivalent basis, has increased from 11.2g/t to more than 27 g/t. 4. The USD gold price, based on independent forecasts, is expected to continue trading in a narrow range of between USD1300/ Oz and USD1400/Oz. 5. Continued USD strength is expected to result in a falling NZD:USD exchange rate over the project life. 6. Extended mine life has seen an increase in operating costs of approximately $8m. 7. Capital expenditure is reduced by $1m because of the work already completed towards the Bulk Sampling Project. It is important to note that by its nature a PFS is a technical study as defined in the 2012 JORC Code and can be used for the purposes of defining an Ore Reserve. Because of this a PFS is confined to examining only the higher confidence Measured and Indicated Resources and cannot take account of the extensive information available pertaining to the deeper extents of the mine where the Mineral Resources are classified in the Inferred Resource category. While indicative of the short to medium term potential of the project covering the reserves as outlined above the PFS is not reflective of the considerable upside value increase posed by the depth extensions of the vein system. In order to assess the value of the remaining resource the company completed a separate scoping study over the Talisman Deeps area. Figure 4 - installation of rock bolts in Keillors Crosscut NEW TALISMAN GOLD ANNUAL REPORT 201810 Talisman Deeps Scoping Study As outlined earlier the Talisman Deeps scoping study was completed in June 2018. This study reviewed the broad economic potential for the development of the much larger Talisman Deeps operation based on the significantly expanded 469,800 AuEq Oz Mineral resource, and significantly increased grades as discussed earlier in this report. Preliminary mine design and production scheduling covering the much larger, 469,800 Oz AuEq mineral resource has been undertaken a reiview of the 100% inferred resource which has not previously been considered. The JORC 2012 Compliant Study is currently being independently reviewed in conjunction with our technical team and independent experts in line with requirements set out by the ASX. We are currently identifying opportunities for exploration activities to be undertaken to gain the information required to increase confidence in the estimate of inferred mineral resources and portions of the Exploration Target highlighted during the recent mineral resource upgrade. Concentrator Plant Mystery is the first target for extraction and is expected to have the highest recovery using gravity processing alone. Following the final consultation with stakeholders as outlined earlier in this report the pilot plant will initially be used with the Mystery Ore. The Company continues to investigate opportunities to deploy environmentally sound gold recovery methods within and external to the workings of the mine and has carried out an initial testwork programme to examine these opportunities. This metallurgical test work, which was carried out and announced during the year, was designed to deliver reliable and repeatable results to support design of a pilot processing plant to ensure maximization of recoveries can be attained by scaling up prior to a full scale plant. Testwork examined the potential of two processing paths, post mining, using gravity and flotation as illustrated below: There are four stages to the metalurgical process once ore has been mined and crushed to a suitable feed size: 1. Grinding of ore to a suitable size to liberate gold- The results of the testwork announced during the year showed that the ore at a lower grind size of 106 micron is optimal. 2. Recovery of free milling gold in a gravity concentrator - Tests using a gravity concentrator for the recovery of gold from Mystery ore delivered high recovery rates of 81.9% with Dubbo ore showing rates of above 61.3% 3. Flotation of the concentrator tails to recover additional gold - By taking the remaining solids through a flotation system, testing indicates both gold and sulphides could be concentrated and extracted to gain a further 32.7% for Dubbo and 11.7% for Mystery ore. 4. Final gold recovery- If using both Gravity and subsequent flotation testing indicates the resulting recovery of gold could reach 94% for Dubbo and 93.6% for Mystery ore. Three samples of 25kg each were collected and sent for testing 25kg from Mystery face, 25kg of Maria Vein ore and 25kg of control rock from inside the mine. As previously announced the results from metallurgical testwork and using a lab scale plant provided recoveries which were comparable with recoveries of gold from material processed at nearby operations where 100 Tonnes was processed at the Waihi plant in 2014 with ore feed from stockpiles in excess of 1.5 oz/tonne and which provided recovery rates of 95%. The metallurgical route for the high grade Talisman ore has already been tested utilising the existing toll treatment facilities. The significant gold recovery results recently attained using an alternative metallurgical route via gravity and flotation on the ore samples have key benefits both with the potential for a reduction in material leaving site and the potential for at/near vein processing of bullion for sale. ANNUAL REPORT 2018 NEW TALISMAN GOLD 11 Pilot Plant Design Results from the testwork set out above have assisted in modifications and design of a pilot plant layout which is expected to be that set out in the process flow diagram alongside. It is expected that the plant will be modular and scalable allowing components to be added as production volumes increase. Talisman Mine Tenure The Talisman Mine is held under a mining permit, MMP51326, which was granted in 2009 for a period of 25 years, NZPAM have confirmed we are compliant with the conditions of that permit and a change of conditions is currently being finalised. The operation is an existing mine on conservation land and the Company holds all the necessary permits and consents to execute the work programme. Low sovereign risk is one of the factors that makes New Zealand an attractive destination for both foreign and domestic investors. It is considered unlikely that the New Zealand government would take any drastic steps to upset the status quo, particularly for those operators holding existing mineral permits. Rahu Project (wholly owned subsidiary 100% Rahu Resources Pty Ltd) NTL has a long association with the Rahu project, and completing during its tenure, comprehensive exploration and evaluation work that identified what the Company has interpreted as a 1.5 km plus long northern extension to the mineralisation hosting the gold deposits at Talisman. During the time of its involvement with the project the Newcrest team carried out a significant programme of work on the permit, this included: o Extensive field investigations. o Spectral analysis of drill core to identify hydrothermal clay alteration patterns that indicate proximity to gold mineralisation. o Relogged drill core and reinterpreted the rock type, structure and geochemistry; o Updated the geological model and determined drill targets. Figure 5 - The figure above shows the projected mineralised structure (red dashed line) to be targeted with the planned first deep drill hole. Title: Flowsheet - Crush/Gravity Plant with Mill & Float Circuit Date: August 2017 Drawn: HP Client: Sheet: 1 of 1 GoldKacha concentrate GOLDKACHA CONCENTRATOR Water CLASSIFICATION CYCLONES SHAKING TABLE BALL MILL Smeltable Gold Tailings JAW CRUSHER Feed Material VIBRATING GRIZZLY FEEDER Rougher concentrate Cleaner Tails Scavenger concentrate ROUGHER CELLS SCAVENGER CELLS Flotation concentrate Rougher Tails CLEANER CELLS CONDITIONING TANK GoldKacha GoldKacha Water GoldKacha tailings NEW TALISMAN GOLD ANNUAL REPORT 201812 All data gathered during the period was transferred to NTL who have continued with further analysis since the acquisition of Newcrest NZ Pty Ltd and which on 31st May NZPAM granted the change of beneficial ownership. The figure below shows the results of a CSAMT geophysical survey that shows the top of the host andesite host rock is nearest surface at the southern end of prospect. Based on the Newcrest's and NTL's interpretive work, the area selected for the first drill hole has distinctive clay hydrothermal alteration patterns plus the mineral adularia, indicative of proximity to gold mineralisation in Waihi Gold District epithermal vein systems. NTL has previously delineated a small resource at Rahu, however the main target for a high-grade extension of Talisman is believed to lie at depth. Newcrest were supportive of NTL's belief that geological evidence points towards to the area being the upper extent of what could be a significant epithermal gold deposit. Following the delays created by processing times taken, which resulted in the change of ownership of the permit only recently being confirmed by NZPAM, NTL is now in the process of finalising applications for resource consents for water take and discharge and is applying resources to validate the deep drilling target and plan for drilling once the administrative work required is complete. Tenement Holdings Project Permit Number Ownership Talisman MMP 51326 100% New Talisman Gold Mines Ltd Rahu MEP 60144 100% Rahu Resources Pty Ltd a 100% owned subsidiary of NTL Photo of high grade ore from 13 Level of Maria Vein. Bonanza Section. Grade 701.05 g/t Gold and 3,426.6 g/t Silver ANNUAL REPORT 2018 NEW TALISMAN GOLD 13 About New Talisman Gold Mines Ltd New Talisman Gold is a dual listed (NZSX & ASX: NTL) with over 2250 shareholders who are mainly from Australia and New Zealand and has been listed since 1986. It is a leading New Zealand minerals development and exploration company with a mining permit encompassing the Talisman mine, one of New Zealand's historically most productive and highest grade gold mines. The company has commenced prospecting and upgrading activities at the mine, and advance the exploration project and increase its considerable global exploration target into JORC 2012 resources. Its gold properties near Paeroa in the Hauraki District of New Zealand are a granted mining permit, a JORC compliant mineral of 469,800 ounces AuEq at an average above 15 g/t AuEq and a JORC compliant reserve statement. The company owns 100% of exploration permit Rahu, which lies along strike from the Talisman mine of which 80% was recently acquired from Newcrest Mining. The company will shortly commence exploration activities at Rahu. Cautionary Statement for Public Release Certain information contained in this public release may be deemed "forward-looking" within the meaning of applicable securities laws. Forward-looking statements and information relate to future performance and reflect the Company's expectations regarding execution of business strategy, business prospects and opportunities of New Talisman Gold Mines and its related subsidiaries. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance are not statements of historical fact and may be forward-looking statements. Forward-looking statements are subject to a variety of risks and uncertainties which could cause actual events or results to differ materially from those expressed in the forward-looking statements and information. They include, among others, the accuracy of mineral reserve and resource estimates and related assumptions and inherent operating risks. There are no assurances the Company can fulfil forward-looking statements and information. Such forward-looking statements and information are only predictions based on current information available to management as of the date that such predictions are made; actual events or results may differ materially because of risks facing the Company, some of which are beyond the Company's control. Although the Company believes that any forward-looking statements and information contained in this press release is based on reasonable assumptions, readers cannot be assured that actual outcomes or results will be consistent with such statements. Accordingly, readers should not place undue reliance on forward-looking statements and information. The Company expressly disclaims any intention or obligation to update or revise any forward-looking statements and information, whether because of new information, events or otherwise, except as required by applicable securities laws. The information contained in this release is not investment or financial product advice. Competent Person Statements The information in this report that relates to exploration results, exploration targets and mineral resources is based on information compiled by or supervised by Mr Murray Stevens and Mr Wayne Chowles. Mr Stevens is a consulting geologist and director of New Talisman Gold Mines Ltd, who is a corporate member of the AusIMM. Mr Stevens has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves". Mr Chowles is a Mining Engineer and member of the AusIMM. Mr Chowles is a full-time employee of New Talisman Gold Mines Limited, he has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves". Both Mr Chowles and Mr Stevens consent to the inclusion in this report of the matters based on his information in the form and context in which it appears. The company confirms that it is not aware of any new information or data that materially affects the information included in the original market announcement and that all material assumptions and technical parameters underpinning the estimates in the relevant market announcement continue to apply and have not materially changed. The company confirms that the form and context in which the Competent Persons findings are presented have not been materially modified from the original market announcement End CA:00320158 For:NTL Type:ANNREP Time:2018-06-29 14:28:36