Half Year Report and Accounts

The first six months of the 2019 financial year have been extremely productive for the Company with strong progress being made in all aspects of the Talisman project. Refurbishment works to the Mystery and Dubbo areas of the mine are complete and blasting of the face of the Mystery vein to extend the drive into the vein has commenced. The Mine has never in its recent history been in such a solid state of repair and has been refurbished to modern standards allowing deployment of mining vehicles and equipment in those areas. Power cables have been installed throughout level 8, the auxiliary fan installed and airflow now reaches all the way through to Dubbo. Approximately 110 tonnes of ore, at an average grade of 4.5 g/t Au and 68g/t Ag, has been transported to the Run of Mine stockpile. The stockpile is now ready for transporting and processing at the pilot plant which is being installed at an off site location with commissioning expected before year end. The main purpose of the pilot plant is to replicate the metallurgical testwork completed by Peacock and Simpson in which the majority of the gold and silver is recovered through a purely gravity based system which negates the use of cyanide and other potentially hazardous chemicals. The remaining gold and any other metals will be concentrated into a secondary saleable by-product leaving an inert sand which can be applied to industrial and commercial uses. Once the pilot process has been established a commercial plant, which will allow processing of up to 1,000 tonnes per month, is planned to be commissioned to meet the future needs of the mine. Mine Refurbishment Following on from the previous activities, a significant number of key milestones were achieved which resulted in the commencement of the mining activities at the Talisman Mine. A major milestone was achieved in September when, following installation and commissioning of the 250kva generator and main fan, the company undertook the first blast on the Mystery Vein. True to the company's commitment to environmentally sustainable mining, sound emissions from the heavily silenced fan are virtually imperceptible beyond the immediate mine site. Highlights for the period are: o The Traffic Management Plan "TMP" was approved by HDC and the company has commenced activities under the resource consent granted by HDC in 2013. This allows transporting of ore from the mine offsite with one blast event per day which following completion of refurbishments of level 8 will continue for approximately 2 years as the definitive feasibility study is completed. o Commissioning of the silenced 250KVA generator and control room is complete and the operation now has reliable power supply to the main ventilation fan and other site equipment. o Installation and commissioning of the primary ventilation fan is complete. This fan, mounted above the airlock and connected to the mine via a reinforced concrete tunnel, is fitted with world leading silencing equipment to reduce noise emissions to conversational level. The fan is capable of delivering sufficient air to maintain a healthy respirable atmosphere underground while up to three diesel powered loaders are deployed in the workings, which has significantly increased the productivity of the mining team. o Following the final metres of rehabilitation into the Mystery zone the company was able to commence the blasting at Mystery during the quarter. Approximately 8 tonnes of vein material 4 | NEW TALISMAN GOLD HALF YEARLY REPORT 2018 have been extracted which has provided promising results. A resue mining method - blasting the vein material and surrounding waste in separate stages - is being tested with encouraging results from the first blast. This system will enable the vein material to be trammed separately from waste material which will maximise the grade of ore delivered to the plant and reduce transport costs. The blasts which have been undertaken to date have provided no measurable vibration or noise at surface. Samples taken from ore generated by the first blast were independently analysed for gold and silver content at the SGS laboratory in Waihi and yielded an average grade of 7.1g/t Au as announced on 20/09/2018 (Please see https://www.asx.com.au/asxpdf/20180920/pdf/43yhcd15zcxsp5.pdf) These results are in line with expectations and consistent with the range of grades in this section of the Mystery Vein. This is in the same area where recent check sampling of ore exposed at the drive face yielded grades of up to 40 g/t Au as announced to the market on 31 March 2018 (please see https://www.asx.com.au/asxpdf/20180508/pdf/43tvlpmv420f4f.pdf ) While considerably more work is required to understand the full extent of this highly prospective vein system these results are encouraging and represent a very positive first step in this process. Rehabilitation of old workings through to the start of the BM37 zone at Dubbo was completed in the half year and, once vehicle access is attained, loading of rock from the base of the BM37 rise can begin. Clearing of this rock will provide access to the high-grade Dubbo Zone of the Maria Vein. This is the site of the last mining by previous owners in the late 1980's and was identified by borehole BM37 which assayed 656 g/t Au over 1.8m including 1154 g/t Au over 1.0m. Sampling in this area has previously yielded results exceeding 1% gold (over 10,000g/t), please see https:// www.asx.com.au/asxpdf/20130705/pdf/42gx44jq96lzrs.pdf o Maintenance of the mine road was completed in September and has significantly improved the drainage capability and trafficability of the road. Post Balance Date Mine Refurbishments o Final cleanup of the 8 Level drive, including securing vehicular access through the "Bandaid" and "Viaduct" was completed. There was considerable uncertainty regarding the quantity and quality of ore present in the area and thus timing was uncertain. Loading operations were carried out for two weeks with no sign of slow down before the decision was made to barricade the area and build a stopping to retain remaining ore in the stope. A reinforced retaining wall was constructed incrementally from the hanging wall of the drive and is fitted with drain pipes to ensure no build up of water behind the seal. HALF YEARLY REPORT 2018 NEW TALISMAN GOLD | 5 o The viaduct, the area where the historic fall of ground occurred, has been cleared of waste rock left over during construction. o Stockpiling of ore underground has continued successfully. In total approximately 110 tonnes of ore have been loaded and transferred to the Run of Mine stockpile. Regular interval in stream sampling was carried out with 44 samples yielding grades that are characteristically variable and range from trace to 66.0g/t Au for an average of 4.5g/t Au, silver grades assayed in a range of 7.1g/t to 633g/t for an average of 68g/t Ag. This ore will, in part, be used as the initial feed material to test the pilot plant, the final components of which have arrived in Auckland. Other feedstock totalling 90+ Tonnes removed for old workings is also currently stockpiled underground. o Installation of the underground power cable and auxiliary fan is underway. This second fan is on site and will be transported to position at the Keillors crosscut junction to pump air into the Dubbo Drive. Upon completion there will be accessibility for vehicles from the Portal all the way through to Dubbo which will allow for accelerated clearing into the BM37 area. o All components of the pilot processing plant, have arrived and are currently being installed offsite. It is expected the plant will be fully installed and operational with the crushing and grinding circuit by end of December with first production of gold from stockpiled ore by year end. While the capacity of the pilot plant is relatively low the aim is to replicate the recovery rates which were achieved using a similar flowsheet in the testwork carried out in South Africa in February 2018 (please see https://www.asx.com.au/asxpdf/20180322/pdf/43sn63s00fjnz6.pdf). Once recovery rates are confirmed a larger plant, suitable for the longer-term needs will be acquired. 6 | NEW TALISMAN GOLD HALF YEARLY REPORT 2018 2018 Prefeasibility study In July the Company announced the completion of a revised Prefeasibility study on the Talisman Project. This study, based on the updated Mineral Resource Estimate, has demonstrated an increase in the Net Present Value of the project, (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: o 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. o 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; o Grade - Run of Mine grade, on a gold equivalent basis, has increased from 11.2g/t to more than 27 g/t. o The USD gold price, based on independent forecasts, is expected to continue trading in a narrow range of between USD1300/Oz and USD1400/Oz; o Continued USD strength is expected to result in a falling NZD:USD exchange rate over the project life o Extended mine life has seen an increase in operating costs of approximately $8m; o Capital expenditure is reduced by $1m because of the work already completed towards the Bulk Sampling Project; Other key project metrics, in comparison with the previous PFS results, are tabulated below Table 1 - Results of PFS Unit 2013 2018 Variance Production Life of Mine Years 5 6 1 Tonnes Milled ktpa 107 64 -43 Gold Recovered Oz Total 32,200 51,000 18,800 Cost Total Revenue NZD(m) 68 109 41 Total Opex (C3) NZD(m) 34 42 8 Total Capex NZD(m) 11 12 1 Financial Cash Surplus NZD(m) 23 55 32 NPV @9% (Pre-Tax) NZD(m) 15 36 21 IRR % 83% 118% 35% Payback period Yrs 3 2 -1 Unit Costs C1 cash Cost NZD/Oz 692 583 -109 C2 Cost NZD/Oz 904 710 -194 C3 Cost NZD/Oz 1,041 985 -56 Breakeven Gold Price NZD/Oz 1,075 820 -255 Full details of the Pre-Feasibility Study were released to the market on 26/06/2018. The release can be viewed here https://www.asx.com.au/asxpdf/20180626/pdf/43w27wyn66hkx8.pdf . HALF YEARLY REPORT 2018 NEW TALISMAN GOLD | 7 8 | NEW TALISMAN GOLD HALF YEARLY REPORT 2018 Ore Reserve Update The outcome of the PFS supports a 50% increase in the Ore Reserve attributable to the Talisman Mine. Ore Reserves, based on an average in-situ cut-off grade of 2.6 g/t, are 45,000 tonnes at 30.6 grams per tonne gold equivalent. Reserves are quoted at the point of delivery to the gold processing plant and are derived from and contained within, not additional to, the Measured and Indicated portions of the Mineral Resource. The study was reviewed by independent experts who found that the proposed mining plan is appropriate for the style of deposit at Talisman, and that determination of Ore Reserves has been attained through reasonable evaluation of mining costs and process recoveries. Mineral Resource and Ore Reserve categories Mineral Resources Total NTL Gold Equivalent Category Tonnes Grade Ounces Measured 19,600 17.4 57,480 Indicated 62,900 7.4 23,100 Inferred 82,500 15.9 389,200 Total Resources 165000 15.1 469,800 Ore Reserves Total NTL Gold Equivalent Category Tonnes Grade Ounces Proved 30,294 35.7 34,791 Probable 14,632 20.1 9,470 Total Reserves 44,926 30.6 44,260 Full details of the Ore Reserve were released to the market on 26/06/2018. The release can be viewed here https://www.asx.com.au/asxpdf/20180626/pdf/43w27wyn66hkx8.pdf HALF YEARLY REPORT 2018 NEW TALISMAN GOLD | 9 A detailed Independent review of the Mineral resources estimate was completed which confirmed the 2012 JORC compliant resource of 469K oz AuEq at an average grade of 15.1g/t. This makes the Talisman Mine the highest grade underground active mine in NZ for which grades and resources have doubled in just over a year. The report concluded: In reviewing NTGM's MREs Geos Mining has found that the estimations, the data and the resource models they are based on, meet the guidelines set out in the 2004 and 2012 JORC Codes and have no serious errors or issues associated with them. Further work is being carried out on the remaining data for the fourth module relating to Talisman Deeps which will be included in the growing database as works are carried out. With significant development into Mystery and Dubbo, the substantial amount of data and knowledge of the orebody acquired from these activities will support a review of the MRE and upgrade of remaining areas to JORC 2012 compliance standards in H1 2019. Rahu Applications for access and consent to initiate fieldwork at the Rahu Project have been lodged with the relevant authorities The Year Ahead Over the next year the company intends accelerating rehabilitation and extraction activities in the existing Mystery and BM37 areas while commencing the development of the decline system required to open up the first significant ore reserve block in the Dubbo zone immediately below No 8 Level. Mineral resources in this area form part of the high confidence Measured Resources where grades are estimated to exceed 80g/t AuEq (please see https://www.asx.com.au/asxpdf/20170712/pdf/43kl6294htcscp. pdf ). Limited amounts of ore will be processed through the pilot plant with the balance being stockpiled for later processing through the final plant. Opening up and rehabilitation of the BM37 rise will provide the company with access to the area where 1980's sampling indicates grades of up to 656 g/t Au over 1.8m including 1154 g/t Au over 1.0m. Sampling in this area has previously yielded results exceeding 1% gold (over 10,000g/t), please see https://www.asx.com.au/asxpdf/20130705/pdf/42gx44jq96lzrs.pdf . Ore extracted from this area will be prioritised for treatment through the pilot plant although other opportunities will be investigated. Several locations for siting of the final plant have been identified and securing a suitable site, in parallel with procurement of the plant, will be a high priority over the coming months. The above works will set the company up for full execution of the mining plan proposed in the 2018 Pre-feasibility Study which indicates average production volumes, once steady state has been achieved of some 850 tonnes per month at an average Run of Mine grade of 27.3 g/t AuEq. End CA:00328381 For:NTL Type:INTERIM Time:2018-12-14 11:33:04