Airplay icon not appearing on Macbook Air (mid 2011). Everything is updated, can someone please help me out??

Hey, so I just bought an Apple TV specifically to mirror my Macbook Air screen to my TV.
My Mac is mid 2011 so it whould be working, I'm wondering if there is a setting I have missed or something?
All other functions are working except the Airplay icon is not showing on my toolbar??
Anybody know how I can fix this??

According to other discussion threads I need Mountain Lion? I'm on 10.7.5 is that Lion? My Mac says I have no new software updates though? So confused!

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