In a statement on the rights issue, the company said: "In light of recent changes to the board composition that have occurred it has become apparent there are differing views, and some discord, amongst the reconstituted board about the broader direction of the company, which prompted the application for a trading halt."
The board met yesterday "for a lengthy discussion on these and other matters and reached the conclusion that the reconstituted board are no longer confident that the strategy outlined in the rights offer document can be fulfilled in a timely manner, as was anticipated by the previous board".
The company had therefore decided to withdraw the rights offer "until such time as a clear and united path forward can be found at which point it can revisit its capital requirements and any capital raising plans".
Funds received under the offer would be returned.
Shareholders last month voted outsider and company critic John Upperton onto the board and sought the removal of current chairman Nader and chief executive Matthew Hill as directors.
Upperton, who has in the past criticised the company's path, won by a comfortable majority.
He had the backing of the New Zealand Shareholders Association, who voted proxies in his favour.
A non-binding resolution from the floor to remove chief executive Matthew Hill from the board received 58.75 per cent of votes in favour.
Another non-binding resolution to remove Nader was passed with 60.09 per cent support.
As "non-binding" resolutions, the board was not compelled to act on them.
Earlier this week, New Talisman director Murray Stevens retired from the board after five years of service.
The two-for-one rights offer, aimed at raising $3.13 million, was to have closed on October 19.
In a letter to shareholders accompanying the offer, Nader said proceeds from previous rights issues had been used to develop the company's main asset - the Talisman mine near Waihi.
Since the last capital raise, the company had made significant progress.
"The company however is, and has been, undercapitalised and not had the resources required to realise the full expected potential of the Talisman mine and the other opportunities the company has before it in a timely and efficient fashion," he said.
New Talisman shares last traded at $0.003 each.
In August, the Financial Markets Authority (FMA) filed civil High Court proceedings against Hill for alleged information-based market manipulation and making false and misleading representations.
The case relates to anonymous posts Hill allegedly made about the company on the Sharetrader website's online investor forum.
