AUSTIN METALS LIMITED — Share Issue/Capital Change 2011

May 17, 2011

SILVER CITY MINERALS LIMITED

ABN 68 130 933 309

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For the offer of 50,000,000 ordinary fully paid shares
in Silver City Minerals Limited at an offer price
of 20 cents each to raise $10,000,000 with a
minimum subscription of $6,000,000, with the
right to accept over-subscriptions of up to $2,000,000
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IMPORTANT INFORMATION:
This is a replacement prospectus dated 17 May 2011. It replaces a prospectus dated 20 April 2011
relating to the Offer of Shares in Silver City Minerals Limited. This is an important document that should
be read in its entirety. If you do not understand it, you should consult your professional advisors. The
securities the subject of this Prospectus should be considered speculative.
Proposed ASX Code: SCI
Lead Manager to the Issue
Locantro Capital Pty Ltd
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Application for Quotation Silver City will apply to the ASX for listing and Quotation of its Shares within seven days after the date of this Prospectus. Electronic Prospectus This Prospectus will be issued in paper form and as an electronic Prospectus. A copy of the electronic Prospectus can be downloaded from the Silver City website at www.silvercityminerals.com.au. The Offer pursuant to the electronic Prospectus is only available to persons receiving an electronic version of this Prospectus in Australia and New Zealand. The Corporations Act prohibits any person passing onto another person the Application Form unless it is attached to, or accompanied by, the complete and unaltered version of the Prospectus. During the Offer Period, any person may obtain a hardcopy of this Prospectus by contacting the Company by email at info@silvercityminerals.com.au. Foreign Jurisdictions This Prospectus does not constitute an offer in any place in which, or to persons to whom, it would not be lawful to make an offer. Distribution of this Prospectus in jurisdictions outside Australia (and New Zealand) may be restricted by law, and persons who come into possession of this Prospectus should seek advice and observe any such restrictions. Any failure to comply with such restrictions may constitute a violation of applicable securities laws. Important Information Offer Opening Date 17 May 2011 Offer Closing Date (5.00pm EST) 14 June 2011 Allotment of Shares and despatch of statements of shareholding 21 June 2011 Expected Trading Date on ASX 28 June 2011 Indicative Timetable This is a replacement prospectus dated 17 May 2011. It replaces the prospectus dated 20 April 2011 relating to the Offer of Shares in Silver City Minerals Limited. The original prospectus was lodged with ASIC on 20 April 2011. Neither ASIC nor the ASX or any of their officers, take any responsi- bility for the contents of the Prospectus. No applications for Shares will be accepted nor will any Shares be issued on the basis of this Prospectus later than 13 months from the date of the original Prospectus (20 April 2011).

Details of the Offer

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Disclaimer Privacy
No person is authorised to give any information or to make When you apply to invest in the Company, you will need to
any representation regarding the Offer. Any information or provide the Company and the Share Registrar with certain
representation in relation to the Offer which is not personal information to: (i) facilitate the assessment of the
contained in this Prospectus may not be relied upon as Application; (ii) enable the Company to assess the needs of
having been authorised by Silver City or its Directors. applicants and provide appropriate facilities and services
for applicants; and (iii) carry out appropriate adminis-
tration. The Company and the Share Registrar may be
Exposure Period
required to disclose this information to: (i) third parties who
The Corporations Act prohibits the Company from carry out functions on behalf of the Company; and (ii) other
processing Applications received until after the Exposure third parties to whom disclosure is required by law.
Period. The Exposure Period is a seven day period that Applicants may request access to their personal information
commences on the date of this Prospectus. This period held by (or on behalf of) the Company by telephoning or
may be extended by ASIC for a further period of up to writing to the Company Secretary.
seven days. The purpose of this Exposure Period is to
enable this Prospectus to be examined by market partic- Photographs and Diagrams
ipants prior to the offering of Shares. If this Prospectus is
found to be deficient, Applications received during the The assets depicted in photographs and diagrams in this
Exposure Period will be dealt with in accordance with Prospectus are not assets of the Company, unless otherwise
section 724 of the Corporations Act. Applications received stated. Diagrams appearing in this Prospectus are
prior to the expiration of the Exposure Period will not be illustrative only and may not be drawn to scale.
processed until after the Exposure Period. No preference
will be conferred on Applications received during the
Conditions Precedent
Exposure Period and all Applications received during the
Exposure Period will be treated as if they were simulta- The Offer made under this Prospectus and the issue of
neously received on the Opening Date. Shares pursuant to this Prospectus are subject to and
conditional upon the Company raising the minimum
Speculative sub scription and meeting the requirements for listing
on the ASX.
The Shares offered by this Prospectus are of a speculative
nature. Applicants should read this document in its entirety
Definitions
and, if in any doubt, consult with their professional
advisers before deciding whether to apply for Shares. The Throughout this Prospectus abbreviations and defined
Shares offered under this Prospectus carry no guarantee in terms are used. Those relevant to mineral exploration are
respect of return of capital, return on investment, payment contained in the Glossary of Technical Terms in Section 13
of dividends or the future value of the Shares. of this Prospectus, and other abbreviations and legal terms
are contained in the Definitions in Section 12.19 of this
Prospectus. Defined terms are generally identified by the
uppercase first letter.
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Silver City Prospectus 1

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Contents

		Contents
		1. Investment Highlights and Risks 4 2. Details of the Offer 8 3. Capital Structure 13 4. Board and Management 14 5. Directors’ Review of Projects 17 6. Exploration Programs and Budgets 40 7. Independent Geologist’s Report 42 8. Independent Review of Tenements 56 9. Independent Accountant’s Report 64
		10. Corporate Governance 72 11. Risk Factors 74 12. Additional Information 79 13. Glossary of Technical Terms 92 14. Corporate Directory 101

2 Contents

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Chairman’s Letter

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Dear Investor

On behalf of the Board of Directors, it is a pleasure to present this Prospectus to you and invite you to become a Shareholder in Silver City Minerals Limited, whose investment focus is on exploration discovery in the world class Broken Hill silver, zinc and lead mineral province.

Silver City has been building its asset base in the Broken Hill region for almost three years and has spent more than $2,000,000 on exploration and acquisition activities. This has been undertaken by a team of geologists with over 50 years combined experience in the Broken Hill District and has resulted in the Company having one of the largest exploration positions at Broken Hill, covering almost 1,700 km[2] across 20 Tenements. Within the Tenements, the Company has identified 19 exploration targets, including six drill ready prospects. The Tenements contain more than 1200 recorded old workings and 168 Broken Hill-type silver, lead and zinc occurrences. These represent prime target zones for the discovery of Broken Hill style silver-lead-zinc deposits.

The Broken Hill ore body has been mined continuously since 1883. It is contained within a 20 km long trend of characteristic lode rocks and silver-lead-zinc mineralisation. A deposit just a small fraction of the size of the Broken Hill deposit represents a major target for Silver City.

Broken Hill is one of the world’s great silver districts, having produced over one billion ounces of silver. Within the Silver City Tenements there are over 200 recorded silver occurrences and in particular the Apollyon Valley shear zone contains a coincident, 23 km long, multi-element geochemical anomaly with more than 30 old silver mines, most of which have never been drilled. This zone will be targeted for both oxide and sulphide silver deposits.

To the north east of the Broken Hill Block, the Euriowie Block of similar age hosts a number of historic copper and coppergold workings. Silver City has exploration rights over approximately 50 km of strike trend of this block with 25 recorded copper and copper-gold occurrences with little or no detailed exploration. The Company plans to drill test the Golden King workings, an 800 m long copper and gold mineralised zone with no previous drilling.

The Directors believe that the Broken Hill District is an important underexplored mineral province. Silver City has been able to consolidate a unique exploration position capable of hosting a range of important mineral deposits. There have been other large deposit discoveries in similar ore deposit districts such as Mt Isa following extensive exploration. Silver City is dedicated to seeking such discoveries at Broken Hill.

This Prospectus invites subscriptions for 50,000,000 Shares at an issue price of $0.20 per Share to raise $10,000,000 with a minimum subscription of $6,000,000 and the right to accept over subscriptions of up to $2,000,000. All Shares issued pursuant to this Prospectus will be issued as fully paid ordinary shares.

The funds raised will be used to undertake an aggressive exploration programme at Broken Hill to test the high quality targets already identified, to continue the search for a world class mineral deposit and for corporate costs.

I recommend that you carefully read this Prospectus in its entirety and seek professional assistance as appropriate. There are important risks associated with exploration investment and these are set out in Section 11. Silver City’s Board has substantial experience in the resources sector and demonstrated skills in successful exploration and mining company development.

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Robert (Bob) Besley Chairman

Silver City Prospectus 3

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1
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Investment Highlights and Risks

Important Notice

Prospective investors should read this Prospectus in its entirety, including the Independent Geologist’s Report in Section 7, the Independent Review of Tenements in Section 8 and the Independent Accountant’s Report in Section 9.

Investors should be aware that while the Directors consider that the exploration Tenements are prospective and host well-documented mineralisation as mineral occurrences, none of the exploration projects contain JORC-compliant resources or reserves. Further, there is no guarantee that exploration of the exploration Tenements will identify an economic resource, or if an economic resource if identified, that it will be able to be commercially exploited.

Investment Highlights

Focus on Broken Hill

• 3 A sharp focus on a world-class mining district hosting the world’s largest, high grade silver-lead-zinc deposit as well as one of Australia’s best known silver provinces.

• 3 Consolidation of diverse tenure hosting extensive, prospective lode rock horizons.

• 3 All projects are easily accessible from the city of Broken Hill where existing infrastructure is well developed.

• 3 Potential for discovery of high grade silver and silverbase metal deposits.

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Drill-Ready Projects

• 3 Razorback West is a large coincident geochemical and geophysical anomaly that has potential to represent a major mineralised body. Importantly it has the potential to be the northern extension of the Broken Hill Line of Lode which is offset by a fault. It is hidden beneath a thin veneer of soil and alluvium.

• 3 Maybell returned a high grade drill intersection of 4 m at 608 g/t silver and requires follow-up drilling.

• 3 The old Golden King mine has returned elevated copper-gold grades in a structure with over 800 m strike length.

• 3 High grade Broken Hill type (lead-zinc) mineralisation occurs at Allendale where an extensive zone of lode rocks has returned anomalous values over 6 km of strike length and where historic drill holes are recorded to host high grade intersections.

• 3 Stephens Trig has returned near-surface drill hole intersections including 12 m at 6.75% zinc, 2.3% lead and 10 g/t silver.

• 3 The Yellowstone project is hosted in a banded quartzgossan rock where anomalous results in gold and copper have been recorded in oxidised rocks overlying an induced polarisation chargeability anomaly. To date this anomaly has not been tested at sufficient depth to assess the source of the chargeable response.

• 3 A pipeline of projects ranging from those which are currently being mapped and sampled in detail with a view to imminent drilling, to those which are conceptual in nature and undergoing reconnaissance sampling.

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4 Investment Highlights and Risk

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Management and Team

• 3 Experienced and successful management team.

• 3 Strong technical team with local expertise in the Broken Hill District.

• 3 Over $10,000,000 already spent by the Company and its joint venture partners and associates to identify drill targets.

Investment Risks

The Company’s operations are subject to a number of risks which may have an impact upon its future performance. Before subscribing for Shares offered by this Prospectus, prospective investors should carefully evaluate the Company’s business.

Prospective investors in the Company should consider the risk factors described in this Section, together with the information contained elsewhere in the Prospectus, including the risk factors outlined in Section 11, before deciding whether to apply for Shares.

The following summary is a non-exhaustive list of the major risk factors which potential investors need to be aware of.

• 3 None of the projects contain a JORC-compliant resource and there is no guarantee that exploration of the projects will identify an economic resource, or if an economic resource is identified, that it will be able to be commercially exploited.

• 3 Exploration work on the Company’s Tenements is at an early stage and there is no certainty that the Company can develop profitable mining operations on its Tenements. Despite the presence of geological indications and encouragement, there may not be any economic metal deposits in the tenure.

• 3 Exploration Licences are subject to periodic renewal in Australia. In particular, the Company has interests in a number of Exploration Licences in respect of which renewal applications are pending. The Company also has a number of Exploration Licences which will expire (if not renewed) in the next 12 months. These Exploration Licences include EL 7203 (Razorback West), EL 6132 (Maybell) and EL 5764 (Allendale), refer to Section 5.3 for further details. There is a risk that the Company's Exploration Licences will not be renewed, including those specifically listed above, or that the conditions of any such renewal may include increased expenditure and work commitments. The Company may also be required to relinquish up to 50% of an Exploration Licence as a condition of its renewal. During the period that a renewal application is being considered by the Department, an Exploration Licence continues to have effect until the application is disposed of, but only in respect of the area of land the subject of the renewal application.

The Company has made an application for a number of Exploration Licences which have not yet been granted including ELA 4125, ELA 4199 and ELA 4104. There is no guarantee that these Exploration Licence Applications will be granted.

The Company could lose title to, or its interest in, its Tenements if licence conditions are not met or if insufficient funds are available to meet expenditure commitments.

• 3 Mining Leases

• In the event that the Company discovers an economically viable resource, the Company will be required to apply for a Mining Lease to permit the Company to mine that resource. The grant of a Mining Lease is subject to ministerial discretion and accordingly, there is no guarantee that a Mining Lease will be granted.

• 3 The current and future operations of the Company, including exploration, appraisal and possible production activities may be affected by a range of factors, including:

• 3 geological conditions;

• 3 alterations to programs and budgets;

• 3 unanticipated operational and technical difficulties encountered in geophysical surveys, drilling and production activities;

• 3 mechanical failure of operating plant and equipment, adverse weather conditions, industrial and environmental accidents, industrial disputes and force majeure;

• 3 unavailability of aircraft or drilling equipment to undertake airborne surveys and other geological and geophysical investigations;

• 3 poor weather conditions over a prolonged period which might adversely affect mining and exploration activities and the timing of earning revenues;

• 3 unexpected shortages or increases in the costs of consumables, spare parts, plant and equipment;

• 3 prevention or restriction of access by reason of inability to obtain consents or approvals (including clearance of work programs pursuant to access agreements entered into with native title claimants); and

• 3 un-insured losses and liabilities.

• 3 Market conditions might dictate that sufficient funds to conduct the exploration planned cannot be raised. Further, commodity prices may vary over time and may substantially impact upon exploration and development programmes and consequently, the Company’s Share price.

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Silver City Prospectus 5

• 3 The Silverton Windfarm may adversely impact on some of the Company’s projects by potentially impeding access to some Tenements and in an extreme case may have the effect of rendering any discovery on those Tenements as uneconomic. Further information is contained within Section 11.3.

• 3 The Company’s success depends to a significant extent upon key management personnel, as well as other management and technical personnel including those employed on a contractual basis. The loss of the services of certain personnel could have an adverse effect upon the Company and its activities. Further, the Company may have difficulty in finding and securing additional technical experts with Broken Hill familiarity. The availability of additional employees and contractors could impact on the rate at which the Company's large number of prospects are developed or prioritised and bought into drilling stage.

• 3 The Company will be relying on its respective joint venture partners to comply with their respective obligations. In the event of failure of, or breach of agreement by, a joint venture partner, the Company’s business activities and operating results may be adversely affected. In particular, the Directors are unable to predict the risk of financial failure or default by a participant in any joint venture to which the Company is or may become a party. Financial failure of a joint venture party may result in an inability to meet expenditure requirements in respect of the Tenements which could result in their eventual loss or forfeiture.

• 3 Further funds will be required once the Company completes its proposed exploration and development activities as disclosed in this Prospectus. There are no guarantees that the Company will be able to obtain future equity or debt funding on terms suitable to the Company, or at all. Further, any additional equity financing, or the exercise of existing Options, may be dilutive to Shareholders and debt financing, if available, may involve restrictions on financing and operating activities.

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6

Investment Highlights and Risk

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Silver City Prospectus 7

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2
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Details of the Offer

2.1 Description of the Offer

This Prospectus invites subscriptions for 50,000,000 Shares at an issue price of $0.20 per Share to raise $10,000,000 with a minimum subscription of $6,000,000 and the right to accept oversubscriptions of up to $2,000,000 through the issue of up to 60,000,000 Shares at an issue price of $0.20 per Share. The maximum amount that may be raised under this Prospectus is therefore $12,000,000 by the issue of a maximum of 60,000,000 Shares.

All Shares issued pursuant to this Prospectus will be issued as fully paid ordinary shares and will rank equally in all respects with the Shares already on issue. The rights attaching to the Shares are summarised in Section 12.6.

No Shares will be allotted or issued until the Offer has reached the minimum subscription. If the minimum subscription has not been raised within four months of the date of this Prospectus, all Applications will be dealt with in accordance with the Corporations Act .

The Offer made pursuant to this Prospectus is not underwritten. The Company has agreed that Locantro Capital Pty Ltd (Locantro) will act as Lead Manager for the Company and in return be entitled to, among other things, a capital raising and management fee of 6% + GST of the total amount introduced by Locantro from subscriptions for Shares under the Prospectus (see section 12.5(h)). Locantro will then be responsible to pay any stockbroker, licensed securities dealer or other person legally entitled to receive commission (Dealer) a negotiable rate between 2% + GST and 5% + GST at the discretion of Locantro.

2.2 Opening and Closing Dates

Subscription lists will open on the Opening Date and will remain open until 5.00 pm EST on the Closing Date subject to the right of the Company to either close the Issue at an earlier time and date or to extend the closing time and date without prior notice. Applicants are encouraged to submit their Applications as early as possible.

2.3 Indicative Timetable – dates are indicative only

	Offer Opening Date 17 May 2011 Offer Closing Date (5.00pm EST) 14 June 2011 Allotment of Shares and despatch of statements of shareholding 21 June 2011 Expected Trading Date on ASX 28 June 2011

2.4 Purpose of the Issue

The purpose of the Issue is to raise adequate funds to allow the continued exploration of the projects described in this Prospectus, in particular:

• 3 to immediately drill test six advanced prospects and complete detailed exploration on another thirteen targets identified as potential drill targets; and

• 3 to convert identified gold, silver and base metal prospects within the Tenements into advanced mineralised projects with defined mineral resources; and

• 3 to identify new targets and acquire more tenements for evaluation.

The funds raised from the Issue will be applied as follows, on the assumption that $500,000 is available from preIPO funds.

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8 Details of the Offer

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			Over-allotment
	Minimum	Fully	option fully
	Raising#	Subscribed*	exercised*
Total Raised at Offer	$6,000,000	$10,000,000	$12,000,000
Pre-IPO funds available	$500,000	$500,000	$500,000
Exploration Expenditure	4,306,000	6,852,000	8,737,000
Expenses of Offer	602,000	842,000	962,000
Administration	1,200,000	1,800,000	1,800,000
Working Capital	392,000	1,006,000	1,001,000
Total Funds Applied	$6,500,000	$10,500,000	$12,500,000

Notes: # – Expenditure over two years. * – Expenditure over three years.

2.5 Applications for Shares

Applications must be for a minimum of 10,000 Shares ($2,000) and thereafter in multiples of 1,000 Shares and can only be made by completing the Application Form attached to this Prospectus. The Company reserves the right to reject any Application or to allocate any investor fewer Shares than the number applied for.

2.6 How to Apply

Applications under the Offer may be made, and will only be accepted, in one of the following forms:

• 3 on the relevant Application Form accompanying this Prospectus; or

• 3 on a paper copy of the relevant electronic Application Form which accompanies the electronic version of this Prospectus, both of which can be downloaded from www.silvercityminerals.com.au.

• 3 BPay. Application can be made on-line at http://www.registries.com.au/ipo/silvercityipo2011/

Paper Application Forms, whether accompanying a paper copy of this Prospectus or which have been downloaded from www.silvercityminerals.com.au, must be accompanied by a personal cheque or a bank draft payable in Australian dollars, drawn on an Australian branch of an Australian registered bank for an amount equal to the number of Shares for which you wish to apply multiplied by the application price of $0.20 per Share. Cheques or bank drafts should be made payable to “Silver City Minerals Limited Share Offer Account” and crossed “Not Negotiable”.

Applicants should ensure that cleared funds are available at the time the Application is lodged, as dishonoured cheques will result in the Application being rejected.

Applicants should return their completed Application Forms to Registries Limited at GPO Box 3993, Sydney, NSW 2001 by no later than 5.00pm on the Closing Date.

Detailed instructions on how to complete paper Application Forms are set out on the reverse of those forms. You are not required to sign the Application Form. The Company reserves the right to reject any Application (including where an Application Form has not been correctly completed) or allocate any person fewer Shares than that person applied for, or vary the dates and times of the Offer without prior notice and independently of other parts of the Offer. Where Applications are rejected or fewer Shares are allotted than applied for, surplus Application Monies will be refunded. No interest will be paid on any Application Monies refunded.

2.7 Proforma Capital Structure

The proforma capital structure of the Company is set out below to reflect the issued and paid up capital structure of the Company under three possible scenarios of the Offer:

• 3 Minimum subscription of $6,000,000.

• 3 Fully subscribed Offer of $10,000,000.

• 3 Over allotment fully exercised of $12,000,000

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Silver City Prospectus 9

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	Minimum	Minimum	Full	Full	Over-	Over-
	Subscription		Subscription		allotment
Shares	Number	% Holding	Number	% Holding	Number	% Holding
Exisiting Shares	48,962,728	62.00	48,962,728	49.47	48,962,728	44.93
Shares issued pursuant
to this Prospectus	30,000,000	38.00	50,000,000	50.53	60,000,000	55.07
Total	78,962,728	100.00	98,962,728	100.00	108,962,728	100.00

	Minimum	Exercise	Full	Exercise	Over-	Exercise
	Subscription	Price	Subscription	Price	Allotment	Price
Unlisted Options	Number	$	Number	$	Number	$
Issued to Directors	2,900,000	$0.25	2,900,000	$0.25	2,900,000	$0.25
Issued to employees
and contractors	3,025,000	$0.25	3,025,000	$0.25	3,025,000	$0.25
Issued to Sales
Agreement Parties	4,100,000	$0.35	4,100,000	$0.35	4,100,000	$0.35
Total	10,025,000		10,025,000		10,025,000

In addition, the Company will issue to Locantro Capital Pty Ltd (the Lead Manager) (or their nominee(s)), at the same time as the ‘Entitlements Issue of Options After Listing’ (Entitlements Issue) outlined in Section 2.9, 3,000,000 Options for $0.01 each with an expiry date three years after the issue date at an exercise price of $0.25 per Option. For the sake of clarity these Options will be on identical terms to the Options under the Entitlements Issue.

2.8 Allotment and Allocation of Shares

Subject to the ASX granting approval for the Company to be admitted to the Official List, the allotment of Shares to Applicants will occur as soon as possible after the Offer is closed, following which statements of Shareholdings will be despatched. It is the responsibility of Applicants to determine their allocation prior to trading in Shares. Applicants who sell their Shares before they receive their holding statements will do so at their own risk. Pending the issue of the Shares or return of the Application Monies, the Application Monies will be held in trust for the Applicants.

The Company has the right to allocate the Shares under the Offer. The Company may reject any Application or allocate any investor fewer Shares than applied for under the Offer. There is no priority offer associated with this Offer and the Board will exercise its discretion in allotting Shares pursuant to its obligations under the Corporations Act , the ASX Listing Rules and the Constitution with reference to the Company’s requirements in ensuring there is a sufficient number of Shareholders to meet the ASX’s listing requirements and liquidity in the Company’s Shares. If an

Application is not accepted, or is accepted in part only, the relevant part of the Application Monies will be refunded. Interest will not be paid on Application Monies refunded.

2.9 Entitlements Issue of Options After Listing

All Shareholders registered on the share register of Silver City as at a date approximately four months after the Shares commence trading on ASX (the final date will be as announced by the Company to ASX) will be entitled to participate in a non-renounceable entitlements issue of Options on the basis of one Option for every three Shares held. The Options will be issued at a price of $0.01 each with an exercise price of $0.25 and an expiry date three years after the issue date.

A disclosure document for the Entitlements Issue will be issued when the securities are offered. Anyone who wishes to acquire the Options will need to complete the application form that will accompany the disclosure document.

2.10 Australian Securities Exchange Listing

Within seven days after the date of this Prospectus, the Company will apply to the ASX for admission to the Official List, and for the Shares offered by this Prospectus to be granted Quotation. If approval for Quotation is not granted within three months after the date of this Prospectus, the Company will not allot or issue any Shares pursuant to the Offer and will repay all Application Monies without any

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10 Details of the Offer

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interest as soon as practicable. The fact that the ASX may admit the Company to its Official List is not to be taken in any way as an indication of the merits of the Company or the Shares offered pursuant to this Prospectus.

2.11 CHESS

The Company proposes participating in the Clearing House Electronic Subregister System (CHESS), operated by ASX Settlement Pty Ltd, a wholly owned subsidiary of ASX, in accordance with the Listing Rules and ASX Settlement Operating Rules.

Under this system, the Company will not issue certificates to investors. Instead, Shareholders will receive a statement of their holdings in the Company. If an investor is Participant sponsored, the ASTC will send them a CHESS statement.

The CHESS statement will set out the number of Shares allotted to each holder under the Prospectus, give details of the Shareholder’s holder identification number and give the Participant identification number of the sponsor.

If you are registered on the issuer sponsored sub register, your statement will be despatched by the Share Registrar and will contain the number of Shares allotted under the Prospectus and the Shareholder’s security holder reference number.

A CHESS statement or issuer sponsored statement will be sent to Shareholders at the end of any calendar month during which the balance of their holding changes. A Shareholder may request a statement at any other time however a charge may be made for additional statements.

2.12 Overseas Investors

This Prospectus does not constitute an offer or invitation in any place in which, or to any person to whom, it would not be lawful to make such an offer or invitation. The distribution of this Prospectus in jurisdictions outside Australia and New Zealand may be restricted by law and persons who come into possession of this Prospectus should seek advice on and observe any such restrictions. Any failure to comply with such restrictions may constitute a violation of applicable securities laws. Lodgement of a duly completed Application Form will be taken by the Company to constitute a representation that there has been no breach of such laws.

The Offer pursuant to an electronic Prospectus is only available to persons receiving an electronic version of this Prospectus within Australia and New Zealand.

2.13 New Zealand Investors

This Offer to New Zealand investors is regulated by Australian and New Zealand law. In Australia, by Chapter 8 of the Corporations Act and Corporations Regulations and in New Zealand, by Part 5 of the Securities Act and the Mutual Recognition Regulations.

Offer and the content of the Offer document are principally governed by Australian rather than New Zealand law. In the main, the Corporations Act and Corporations Regulations set out how the Offer must be made.

There are differences in how securities are regulated under Australian law. For example, the disclosure of fees for collective investment schemes is different under the Australian regime.

The rights, remedies, and compensation arrangements available to New Zealand investors in Australian securities may differ from the rights, remedies, and compensation arrangements for New Zealand securities.

Both the Australian and New Zealand securities regulators have enforcement responsibilities in relation to this Offer. If you need to make a complaint about this Offer, please contact the Securities Commission, Wellington, New Zealand. The Australian and New Zealand regulators will work together to settle your complaint.

The taxation treatment of Australian securities is not the same as for New Zealand securities.

If you are uncertain about whether this investment is appropriate for you, you should seek the advice of an appropriately qualified financial adviser.

The Offer may involve a currency exchange risk. The currency for the securities is not New Zealand dollars. The value of the securities will go up or down according to changes in the exchange rate between that currency and New Zealand dollars. These changes may be significant.

If you expect the securities to pay any amounts in a currency that is not New Zealand dollars, you may incur significant fees in having the funds credited to a bank account in New Zealand in New Zealand dollars.

If the securities are able to be traded on a securities market and you wish to trade the securities through that market, you will have to make arrangements for a participant in that market to sell the securities on your behalf. If the securities market does not operate in New Zealand, the way in which the market operates, the regulation of participants in that market, and the information available to you about the securities and trading may differ from securities markets that operate in New Zealand.

Privacy Act

The Company collects information about each Applicant from the Application Form for the purposes of processing the Application and, if the Application is successful, administering the Applicant’s Shares.

By submitting an Application Form, each Applicant agrees that the Company may use the information in the Application Form for the purposes set out in this privacy disclosure statement and may disclose it for those purposes to the Share Registrar, the Company’s related bodies

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11

Silver City Prospectus

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corporate, agents, contractors and third party service providers (including mailing houses), ASX, ASIC and other regulatory authorities.

If an Applicant becomes a Shareholder, the Corporations Act requires the Company to include information about the Shareholder (name, address and details of the Shares held) in its public register. This information must remain in the register even if that person ceases to be a Shareholder. Information contained in the Company’s registers is also used to facilitate distribution payments and corporate communications (including the Company’s financial results, annual reports and other information that the Company may wish to communicate to its Shareholders) and compliance by the Company with legal and regulatory requirements.

If you do not provide the information required on the Application Form, the Company may not be able to accept or process your Application.

2.14 Taxation

2.15 Restricted Securities

As a condition of admitting the Company to the Official List, the ASX may classify certain Shares held prior to the date of this Prospectus as Escrowed Securities. Prior to Quotation it will be necessary for these holders of Escrowed Securities to enter into restriction agreements with the Company. The effect of the restriction agreements will be that the restricted securities cannot be dealt with for a period as determined by the ASX. The determination of which Shares will be escrowed is at the discretion of the ASX however, at a minimum, the Shares and Options held by the Directors, as detailed in the table in Section 12.8 (b), will be escrowed for a period of 2 years from the date of Quotation. In addition, it is also expected that the ASX will escrow for a period of up to 2 years the Shares and Options held by the parties who have vended in Tenements to the Company. While the exact position regarding escrow is not known at the date of this Prospectus it is estimated that approximately 18% of all Shares on issue under the minimum subscription will be escrowed and 13% under the maximum subscription.

The Australian taxation consequences of any investment in Shares will depend upon the investor’s particular circumstances. It is an obligation of investors to make their own enquiries concerning the taxation consequences of an investment in the Company. If you are in doubt as to the course of action you should take, you should consult your professional advisers.

12

Details of the Offer

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Capital Structure

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3
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Summary Capital Structure – after issue

	Number of	Number of
	Ordinary Shares	Unlisted Options
Securities on issue – Minimum Subscription of $6,000,000	78,962,728	10,025,000
Securities on issue – Maximum Subscription of $10,000,000	98,962,728	10,025,000
Securities on issue – Oversubscription of $2,000,000	108,962,728	10,025,000

PlatSearch NL and its wholly owned subsidiary, Bluestone 23 Limited, together own 14,325,182 Shares representing 29.25% of all Shares on offer prior to the allotment of any Shares under this Prospectus. It is not known whether PlatSearch NL or Bluestone 23 propose to participate in the Offer however, on the assumption that they do not participate then that holding will dilute to approximately 18.14% under the minimum subscription and approximately 13.14% under the maximum subscription. PlatSearch NL and Silver City have a common director in Mr Greg Jones. It is not known whether any of the other top 20 Shareholders (as shown in the table set out in Section 12.12) will be participating in the Offer.

Silver City Prospectus 13

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4
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Board and Management

Silver City will be led by a Board and management team with strong technical and commercial skills, and significant experience in the Australian resources industry.

Bob Besley BSc (Hons), MAusIMM, MAIG

Chairman

Bob Besley is a geologist with more than 40 years of experience in the minerals industry in Asia, the Middle East, North and South America, Australia and the Pacific Rim. He spent 13 years with Unocal, seven of those as Manager of Minerals for Australia and the Pacific and was General Manager of Australmin Holdings Limited when that company developed a minerals sands project in eastern Australia and a gold mine in Western Australia. Bob founded and was Managing Director of CBH Resources Limited, taking that company from an exploration junior to an important producer of zinc, lead and silver. He is a NonExecutive Director of Kimberley Metals Ltd. Until recently he was the Deputy Chairman of the NSW Minerals Council.

Christopher Torrey

BSc, MSc, RPGeo., MAIG, FSEG

Managing Director

Chris Torrey is a geologist with 30 years experience in global mineral exploration and has held senior and management positions in Australia, New Zealand, the United States of America, Indonesia and Central America. Since 2006 he has been the Principal Geologist for a Sydney-based consultancy providing geological and exploration services to exploration and mining companies in the Pacific region and Latin America. Prior to joining Silver City in April 2010 he was the Chief Consulting Geologist to Golden Minerals Company, a North Americanbased silver explorer.

Before joining ASX-listed Golden Cross Resources (GCR) as Exploration Manager in 1996 Chris worked for large mining companies Noranda and Cyprus-Amax. He was an integral part of the GCR exploration team and played important roles in corporate financing and governance. He is currently the Chairman of GCR. He also Chairs the Audit and Remuneration Committees of GCR.

Gregory F. P. Jones

BSc (Hons), MAusIMM

Non-Executive Director

Greg Jones is a geologist with 30 years of exploration and operational experience gained in a broad range of metalliferous commodities both within Australia and overseas. Greg has held senior positions in a number of resource companies including Western Mining Corporation and Sino Gold. His experience spans the spectrum of exploration activity from grass-roots exploration through to resource definition and new project generation, as well as mine geology, ore resource/reserve generation and new mine development.

Greg was awarded the Institute Medal for academic excellence whilst at university and is credited with several economic discoveries including the Blair nickel and the Orion gold deposits in Western Australia. He is a Director of Eastern Iron Limited and PlatSearch NL and its associated company Thomson Resources Ltd.

Professor Ian Plimer

BSc (Hons), PhD, FGS, FTSE, FAIMM

Non-Executive Director

Ian Plimer is Professor of Mining Geology at the University of Adelaide and Emeritus Professor of Earth Sciences at the University of Melbourne. Ian has previously been on the staff of North Broken Hill Ltd, and is a prominent Australian geologist who has spent most of his industry, consulting and scientific life working on base metal deposits, particularly in Broken Hill, where he is considered to be an expert on the geology of the Broken Hill deposit.

Ian is a respected scientist who has published seven books and 130 scientific papers. He edited the Academic Press Encyclopaedia of Geology and is a member and fellow of a number of learned institutions. Ian sits on the boards of Ivanhoe Australia Ltd, Kefi Minerals plc, Ormil Energy Ltd and TNT Mines Ltd.

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14 Board and Management

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Justin B. Clyne

LLM (UNSW), GradDipACG

Company Secretary

Justin Clyne was admitted as a solicitor in 1996 before gaining admission as a barrister in 1998. He has 15 years of experience in the legal profession acting for a number of the country's largest corporations, initially in the areas of corporate and construction law before developing an interest in mining investment and research. Since 2006 Justin has dedicated himself full-time to the mining and resources sector.

Justin is a director and/or secretary of a number of public listed and unlisted companies. He has significant experience and knowledge of the Corporations Act , the Listing Rules and corporate regulatory requirements generally. Justin holds a Master of Laws in International Law from the University of New South Wales and is a qualified Chartered Company Secretary.

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Silver City Prospectus 15

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16 Directors Review of Projects

Directors’ Review of Projects

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5
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5.1 Company Profile

5.2 Exploration Rationale and Strategy

Silver City, incorporated 5 May 2008, is a base and precious metals explorer with a focus on the Broken Hill District of New South Wales, Australia. It has an interest in approximately 1,700 km[2] of tenure within granted Exploration Licences and Mining Leases, through a variety of joint venture, sales and option agreements (Figure 1).

Silver City takes its name from the famous Silver City of Broken Hill in western New South Wales, Australia. Broken Hill is considered to be one of Australia’s most important silver provinces. With the increase in metal prices over the past year, Silver City is particularly interested in the potential for discovery of new silver deposits.

The Company’s objective is to increase Shareholder wealth by advancing projects from exploration discovery, through development into profitable operating mines that can provide both capital growth and dividends.

Two styles of silver mineralisation occur in the Broken Hill district. The first is in silver-rich galena-carbonate veins (known as Thackaringa-type veins), which when weathered near the surface, produce high grade concentrations of silver. It was these veins that originally brought miners to the district. There are 234 vein occurences of this type recorded within Silver City Tenements. In the opinion of the Directors, these have undergone little systematic exploration using modern methods and offer significant potential as near-surface open pit resources.

Prior to this Prospectus the Company raised $3,340,000 through Australian and Singaporean investors. These funds have been applied to mineral exploration, tenement acquisitions and preparation for the proposed IPO.

Silver City currently conducts business as an experienced base and precious metal explorer, using its own resources and the services of geological consultants with extensive Broken Hill experience.

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Silver City Prospectus 17

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The second style is the classic Broken Hill massive sulphide-type deposit which also contains highly elevated grades of silver. In 1883 the large, world class Broken Hill orebody was found. It was one of the largest and highest grade accumulations of lead, zinc and silver in the world. The pre-mining size of this orebody has been estimated to have been in the order of 280[1] million tonnes, much of it over 20% combined lead and zinc with appreciable silver (40-300 g/t). The deposit has been mined continuously for over 125 years and the wealth created by it helped underpin the industrial and mining development of Australia and spawned the world’s largest mining company, BHP-Billiton. There are over 150 known occurrences of Broken Hill-type (BHT) mineralisation within the Tenements.

The rocks which host the Broken Hill deposit are known collectively as the ‘Willyama Supergroup’. These underlie much of the Broken Hill district and host numerous mineral occurrences. To date, none of these have been mined or explored to the same extent as the Broken Hill deposit. Within the Willyama Supergroup, a number of rock sequences are recognised as hosts to BHT mineralisation (Table 1). One of these in particular, known as the ‘Broken Hill Group’ which hosts the Broken Hill deposit, occurs extensively throughout the Tenements.

It is the opinion of the Directors that these rock sequences have been under-explored and offer significant discovery potential. Significant areas of the district lie under a thin veneer of soil or alluvial cover and have been similarly underexplored. An analysis of the Silver City tenure indicates that within the central Broken Hill cluster of Tenements, only 57% of the area is occupied by outcropping rocks.

Exploration of the district in the past has been dominated by large mining companies which have tended to focus on the discovery of other large, Broken Hill-sized deposits. As a consequence, the density of surface geochemical samples (soils and rocks) and of drill holes in exploration prospects has tended to be low. In contrast Silver City recognises the potential for discovery of much smaller but also profitable orebodies due to the high grade nature of BHT deposits and their proximity to an established mining centre. Discovery will require more attention to detailed geological and geochemical exploration than has been undertaken in the past, including more detailed drilling. Regional, high quality geological, geochemical and geophysical datasets acquired by State and Federal governments over the last 15 years help provide the framework for discovery, but in the opinion of the Directors similarly lack the detail to enable discovery.

Silver City has sought and acquired extensive exploration tenure in this metallogenic province at a time when a large amount of new information about the geology of the district

1 NSW Geological Survey Report 1990/322

has become available. In the last fifteen years comprehensive packages of high quality data including geophysics, geology and geochemistry have become available from government and private sources. Much of this data is the product of new technologies (airborne gravity and portable XRF geochemistry, for example) which can be easily processed, interpreted and integrated with Geographic

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18 Directors Review of Projects

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Information Systems (GIS). This enables rapid prioritisation and assessment of mineral targets for future drilling.

The opportunity for new discovery is built around the application of new information, new technologies and new geological concepts to an old, world-class mining district. Silver City has also enlisted the services of geologists with

extensive experience in the Broken Hill district to assist the team.

It is the intention of the Directors to utilise this new information, integrate it with the Company’s own high quality geological and geochemical surveys and system - atically drill targets to assess mineral potential.

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Silver City Prospectus 19

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Figure 1: Silver City Tenements shown in relation to the Broken Hill Line of Lode Mining Leases which are owned and operated by other parties.

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20 Directors Review of Projects

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5.3 Silver City Tenements

Silver City has an interest in a total of 20 Exploration Licences and has an option to acquire three Mining Leases. In addition it has three Exploration Licence Applications currently registered with the Department.

Name Title SCI Grant Expiry Area Annual $ Number Interest Date Date sq km Commitment

Apollyon Valley EL 6475 30% can earn 75% 17/11/2005 16/11/2011 26 39,000 Aragon EL 7300 76.5% 23/02/2009 renewal sought 292 70,000 Big Aller EL 6147 30% can earn 75% 10/11/2003 9/11/2011 6 8,000 Bitterkeep ELA 4125 100% application 78 Chloe EL 6542 100% 22/03/2006 21/03/2012 15 17,000 Copper King EL 5919 30% can earn 75% 24/01/2002 23/01/2012 12 14,000 Eldee Ck EL 6002 30% can earn 75% 30/09/2002 29/09/2011 38 43,000 Euriowie EL 7319 92% 27/02/2009 renewal sought 254 117,000 Humungus EL 6864 100% 5/9/2007 5/9/2011 118 71,000 Golbin ELA4199 100% application 133 43,000 Interceptor EL 6863 100% 5/9/2007 4/9/2011 102 65,000 Iron Bar EL 7203 100% 9/09/2008 renewal sought 105 66,000 Mt Robe EL 5646 30% can earn 75% 23/11/2003 renewal sought 32 41,000 Mulyungarie SA EL 4705 100% 24/3/2011 23/3/2012 29 250,000 Mundi Mundi EL 4657 100% 21/04/1994 20/04/2012 6 8,000 Nightrider EL 7228 100% 27/10/2008 27/10/2012 121 72,000 Stephens-Centennial EL 6132 30% can earn 75% 1/10/2003 30/09/2011 124 73,000 StrawCastle EL 7705 100% 17/2/2011 17/2/2013 124 41,500 Windy Hill ELA 4104 100% application 38 Woowoolahra EL 6468 100% 19/10/2005 18/10/2011 69 54,000 Yanco Glen EL 5764 30% can earn 75% 22/08/2000 renewal sought 18 20,000 Yellowstone EL 7390 earning 80% 20/08/2009 6/3/2012 199 50,000 Ziggys EL 6036 90% 6/01/2003 renewal sought 12 14,000 Golden King MCL 13 & 14 17/02/1988 30/06/2012 0.5 ha 4,000 Golden King MCL 293 28/09/2013 2 ha 2,000

Table 1: Silver City Tenements List

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Silver City Prospectus 21

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5.4 Geology

The Broken Hill district is one of the world’s major metallogenic provinces. The Broken Hill Block and the neighbouring Euriowie Block form part of the Curnamona Craton, which straddles the border between New South Wales and South Australia (Figure 2). The important rock package in the Curnamona is the Willyama Supergroup of Palaeoproterozoic age (Table 2). Most lead, zinc and silver deposits present within the Willyama Supergroup, including the Broken Hill deposit, occur within the Broken Hill Group, which is a folded and metamorphosed package of quartzo-feldspathic sedimentary and volcanic rocks.

5.5 The Broken Hill Deposit and Future Exploration

The main Broken Hill ore deposit is not a single body, but rather a stacked series of eight ore lenses with the total ore zone varying from 50 m to 150 m in thickness. The vertical extent of the base metal sulphide mass varies from 500 m to 300 m or less along the spine of the deposit. The length of this boomerang shaped deposit is 8 km (Figure 3). In total, with its many lenses and mine openings, it is known as the ‘Broken Hill Line of Lode’. It lies within a mineralised corridor of rock approximately 20 km in length.

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Figure 2: Regional geological setting

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22 Directors Review of Projects

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YOUNGEST
OLDEST
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	Willyama
	Supergroup
	Age Subdivision Neoproterozoic Mesoproterozoic Palaeoproterozoic Paragon Group	Stratigraphic Unit Adelaidean Sequence Hiltaba age Granites	Known Mineralisation MVT IOCG	YOUNGEST
	Sundown Group
	Broken Hill Group	Upper Hores Gneiss	Broken Hill Mine Pb-Zn-Ag
		Middle Freyers Metasediments	Zn, Pb, Ag
		Parnell Gneiss	Zn, Pb, Ag, Cu, W
		Lower Allendale Metasediments	Zn, Pb, Ag, Cu, W
	Thackaringa Group	Ettlewood Calc-Silicate Himalaya Formation Cues Formation Lady Brassey Formation	Zn, Pb, Ag, Cu, W Cu, Au, Co, Ag Pb, Zn, Ag Cu, Au, Co	OLDEST
	Rantyga Group
Table 2:Relationship between geological age, stratigraphy and mineralisation at Broken Hill
*	MTV refers to Mississippi Valley Type mineralisation and IOCG refers to Iron Oxide Copper Gold mineralisation
	described in Section 5.7.
Figure 3:Longitudinal section of the Broken Hill deposit
The geometry of individual ore lenses within the deposit 3 Stacked lenses; and
gives some insight as to the appropriate methods of exploration. Features Silver City considers important are: 3 Plunging lenses in fold			hinge zones; and
3	Rapid lens thickness variations over short distances from less than 10 m in attenuated fold limbs to 80 to 100 m in fold hinge zones (Figure 4); 3 Considerable tonnages be contained in a very high bulk density.		of high grade sulphide ore can small volume of rock due to its

Silver City Prospectus 23

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Figure 4: Cross-section No. 30 of the Broken Hill deposit. (First published in Journal of Economic Geology, Volume 82, 1987)

These observations suggest that past exploration in the Tenements, with broad spaced sampling and drilling, was too cursory in nature. In the Directors’ opinion, future exploration should pay attention to the geology and structural controls on ore lenses, with a focus on detailed geological mapping and systematic sampling of potential ore zones and similarly detailed follow-up drilling. The surface expression of a significant plunging ore lens might be very small and easily overlooked without attention to detail.

5.6 Broken Hill Exploration Model

The most prospective Tenements are located within the Broken Hill and Euriowie Blocks of the Willyama Supergroup. Silver City considers BHT mineralisation to be the most important style of mineralisation in these blocks due to its potentially high intrisic in-ground value (plus 20% combined lead and zinc and three to ten ounces per tonne of silver). Host rocks comprise a suite of quartz and feldspar-rich metamorphosed sedimentary sequences and intercalated felsic volcanic rocks, which were originally deposited in a shallow marine setting. The originally sandy sediments are referred to as psammites, and the originally finer silty and muddy sediments, pelites. The rocks were laid down in extensional rift basins between 1,710 and 1,640 million years ago and intruded by thick sills of granite and sills and dykes of dolerite.

Hydrothermal fluids enriched in metals and sulphur, either derived from the basins or from a magmatic source, ascended within large rift-bounding faults. Sulphide minerals, galena (PbS) and sphalerite (ZnS) precipitated from these fluids either onto the seafloor as chemical sediments (exhalites) or within permeable layers of semiconsolidated sandy sediment just below the seafloor (inhalites). Geochronological studies suggest these minerals were formed at the same time as, or slightly after a specific unit known as the Hores Gneiss which is thought to be a metamorphosed felsic volcanic rock about 1,685 million years old.

Since the deposition of the sulphide-bearing sedimentary package, the rocks have undergone at least three periods of tectonic deformation which have included deep crustal burial, heating, folding and faulting. This has resulted in the rocks being highly metamorphosed, intensely folded and dismembered by faults. Most of the rocks present today are described as metamorphic rocks such as gneisses, granite-gneisses or amphibolites.

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Figure 5: Rift basin model for the formation of Broken Hill type ore

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24 Directors Review of Projects

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Under high pressures and temperatures sulphide minerals are ductile and move to areas of less strain. These areas can include new open fractures/faults which have a veinlike character, or the hinge zones of folds where they concentrate and form thicker accumulations of sulphiderich ore minerals compared to the attenuated limbs of folds. This accumulation and thickening process is considered to be an important mechanism in the formation of economic widths of sulphide ores at Broken Hill. This is an important feature in exploration, as very narrow sulphide zones can transition to very thick ore zones over short distances (Figure 4).

5.6.1 The Importance of Lode Rocks

The Broken Hill ore lenses are hosted within an envelope of companion lithologies called lode rocks. These include rocks known as garnet quartzite, garnet sandstone, blue quartz-garnet-gahnite rock, spotted psammopelite, banded iron formation and lode pegmatite. The garnet is commonly manganese rich and weathers at surface to black mangan - ese oxide minerals. Feldspars within pegmatites are locally greenish in colour due to their high lead content.

Lode rocks occur in a number of places in the Broken Hill Block and are considered to provide one of the best indicators to potential proximity of sulphide-bearing ore. In this regard their accurate location on maps and their morphology is an important element in successful exploration. Not all lode rocks are mineralised but in places they host high grade mineralisation in small isolated or discontinuous areas of outcrop. These can signal the beginning of an ore shoot.

Regionally, there are at least three main corridors of mapped lode rocks which coincide with and host known occurrences of BHT mineralisation. One to the south encompasses the Little Broken Hill-Native Dog trend, the central corridor covers the Broken Hill Line of Lode itself, and the third, a much larger and folded corridor, extends north-eastward through the Purnamoota prospect to the Allendale prospect where it swings southward to encompass Maybell, Stephens Trig, Nine Mile and Corruga in the south. This latter corridor follows a complex fold in the Broken Hill Group rocks and lies almost entirely within the Tenements. It is about 65 km long; some three times the length of the Broken Hill Line of Lode corridor and Silver City estimates it hosts well over 100 km of complexly folded and faulted lode rock. It provides a target zone for high grade metal sulphide deposits (Figure 6).

5.7 Other Styles of Mineralisation 5.7.1 High Grade Veins

Silver

Thackaringa-type high grade silver veins first attracted miners to the district in the late 19th century. They appear to be independent of stratigraphy, some occurring in rock units overlying and post-dating the Broken Hill deposit host rocks. Many are hosted in schistose rocks in shear zones and are thought to have formed during a late deformation event 520 million years ago. These veins are characterised by narrow (commonly less than 2 m) discontinuous veins of iron carbonate (siderite), galena (PbS), minor quartz, and very minor barite. Silver was contained within galena and where the galena oxidized in the weathered zone, residual concentrations of high grade silver have been deposited. Clusters of small, shallow historic silver workings occur throughout the district within the Tenements. In particular, the Apollyon Valley fault zone hosts numerous occurrences of this type and these appear, in part, to be responsible for a strong multi-element geochemical anomaly which extends for over 23 km within the valley itself (Figures 7 and 8).

The richest known deposit of this style occurred at the old ABS Consols Mine located 400 m east of the Broken Hill Line of Lode (outside Silver City tenure). It was mined to vertical depths of 131 m and produced 25.4 tonnes (0.82 million ounces) of silver and 20 tonnes of lead. Typical grades were 10 to 40% silver and 30 to 60% lead.[2]

In the opinion of the Directors of Silver City these silver veins represent an excellent exploration target for Silver City especially if they form in clusters or stockworks of coales - cing veins that are amenable to open pit mining. The mineralogy historically recorded included native silver and chlorargyrite (silver chloride) which are eminently suited to extraction by low-cost leach technologies. The Directors note the style of mineralisation indicated here is conceptual, based on historic data, mapped geology and modern XRF soil surveys. At this time there has been insufficient exploration to verify the quality or quantity of the mineralisation style and there has been no drilling to assess it. Accordingly there are no mineral resources recorded.

Copper-Gold

Within the Euriowie Block there are a number of historic vein-style deposits where copper and gold mineralisation is hosted in shears and mylonite zones. At least one of these, the old Golden King Mine, has a significant strike length (800 m) and thickness (up to 10 m). The origin of this style of vein is unclear, however, structurally persistent veins with these elevated grades represent a clear exploration target for Silver City (Figure 7).

2 NSW Geological Survey Bulletin No. 32(3)

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Silver City Prospectus 25

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Figure 6: BHT occurrences and lode rock corridors

5.7.2 Sediment-hosted Stratabound Copper

A number of sediment-hosted copper occurrences, locally associated with magnetite-rich rocks, are located in the Euriowie Tenement. These are thought to have formed during regional tectonic and thermal events including deformation, metamorphism and intrusion of hot magmas. The formation of these is thought to have occurred after the deposition of the sedimentary rock sequences.

5.7.3 Iron Oxide Copper-Gold Deposits (IOCGs)

IOCG’s have been found in the Proterozoic rocks to the west in South Australia (Olympic Dam and Prominant Hill deposits) and in the Mt Isa district in Queensland (Ernest Henry and the Selwyn deposits). These are often large accumulations of copper, gold and uranium intimately associated with magnetite and hematite-rich bodies derived from magmatic/volcanic processes. A number of prospects occur within the Tenements which are thought to be potential IOCG occurrences. These include the Iron Duke (Mt Robe), K2 (Mulyungerie) and possibly Yellowstone (Yellowstone).

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26 Directors Review of Projects

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Figure 7: Silver veins, copper-gold veins and sediment-hosted copper occurrences

5.7.4 Mt Isa Sediment-hosted Stratiform Lead-Zinc-Silver

The Paragon Group rocks, near Broken Hill, include carbonaceous pelitic rocks of a similar age to the Urquhart Shale in the Mt Isa area. The Urquhart Shale is host to the world class Mt Isa silver-lead-zinc deposit. This chronological correlation suggests potential for Mt Isa style mineralisation in the Broken Hill district. The Tenements which host the Paragon Group include Eldee Creek, Apollyon Valley, Aragon and Mt Robe Tenements.

5.7.5 Mississippi Valley Type Lead-Zinc (MVTs)

Recently published data on drilling programs by other explorers at the Dome Five prospect approximately 35 km northwest of Broken Hill has shown that lead and zinc mineralisation occurs as replacements of dolomitic rocks within the Neoproterozoic rocks of the Adelaidean Group. These unconformably overlie the Willyama Supergroup. This is the first time this style (MVT) of mineralisation had been described in the district and opens up large tracts of land where Adelaidean rocks outcrop for future exploration. The Tenements prospective for this style of mineralisation are Nightrider, Humungus, Woolwoolahra and Interceptor Tenements.

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Silver City Prospectus 27

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Figure 8: Apollyon Valley Silver Project. Historic silver workings (green triangles) commonly return very high grade silver. These show a close spatial relationship to anomalous lead in soil samples.

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28 Directors Review of Projects

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Figure 9: Example of presentation of XRF geochemical data. Hot colours represent anomalies.

5.8 Note on Portable X-Ray Fluorescence (XRF) Geochemistry

One of the key advances in exploration over the last ten years has been the introduction of field-portable XRF devices to assess the geochemical characteristics of rocks. The Broken Hill district is amenable to widespread coverage using these instruments because approximately 50% of the district hosts outcropping rocks. Recent Company surveys, now available to Silver City, have focussed on measuring geochemical signals from residual soils which overlie these rocks. The method is low cost, fast and efficient, with results being available within 60 seconds compared to conventional surveys where a significant lag time and expense is incurred.

This has allowed large areas of the Tenements to be covered by relatively detailed regional geochemistry. Elements that are most useful to Silver City such as lead, zinc, arsenic and manganese are readily measurable using this technique. Silver City has a total of approximately 120,000 XRF analyses within its Tenements. Not only are known prospects and outcrops of lode rocks outlined as anomalies in this data, but previously unknown anomalies or extensions to known zones have also been highlighted for future follow-up. This data is a key element in project generation by Silver City. An example of this type of data is shown in Figure 9.

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Silver City Prospectus 29

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Figure 10: Project locality plan

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30

Directors Review of Projects

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5.9 Exploration Projects 5.9.1 Introduction

The Tenements host more than 1,200 historic workings and numerous exploration prospects. Over 400 diamond and reverse circulation drill holes are recorded in the government database and the history of modern exploration within the Tenements goes back at least 50 years. Despite the long exploration history the large amount of data generated has rarely been adequately compiled. To date detailed compilation and interpretation of this data has provided Silver City with nineteen prospective targets (Figure 10). Of these, six advanced projects are ready to be drilled and others are close to drill planning stage. The six advanced projects are: Razorback West, Allendale, Golden King, Stephens Trig, Yellowstone and Maybell.

5.9.2 Advanced Projects

Razorback West

(EL 7203 – Iron Bar, BHT)

The Iron Bar Tenement is located immediately to the northeast of the Broken Hill Line of Lode. The Razorback West project is characterised by a large lead and zinc anomaly which has been detected in historic auger and RAB sampling programs including one undertaken by Silver City in 2010. Geochemically anomalous rocks occur mostly beneath a cover of soil and transported alluvium 5 to 30 m

thick. Within this anomalous zone samples range in value from less than 10 ppm to 1,000 ppm lead and less than 10 ppm to 2,560 ppm zinc. Elevated manganese, an important constituent of prospective lode rocks in BHT deposits, coincides with both lead and zinc anomalies with values in peak anomalies at 1.2% manganese. The most coherent anomaly appears to be zinc. It extends in a southwest-northeast orientation and is 4.7 km long and locally 200 to 400 m wide.

The geology in the zone is poorly understood due to poor outcrop, but interpretive government survey maps indicate that the rocks belong to the favourable Broken Hill Group. The geochemical anomaly at Razorback West is partly underlain by magnetic rock which has been detected in airborne geophysical surveys. The zinc anomaly in particular overlies a strong, regionally significant gravity anomaly which extends for 6 km along strike (Figure 11).

Silver City believes that this prospect has the potential to represent the northern extension of the Line of Lode corridor which has been offset westward by the Stephens Creek Shear Zone. This interpretation is also supported by a westward offset in mapped geology and gravity anomalies. As such this represents an attractive exploration target for Silver City. To date, no drilling has been undertaken to assess the gravity, magnetic or geochemical anomalies despite their size, continuity and favourable location with respect to the Broken Hill deposit. This is a significant

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Figure 11: Left-hand diagram shows the Razorback West zinc (in RAB) geochemical anomaly in relation to the Broken Hill and Potosi Deposits. The right-hand diagram shows a more detailed view of the anomaly and its relationship to a large gravity anomaly.

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geochemical anomaly located just to the north of one of the world’s largest geochemical anomalies; the Broken Hill deposit. Silver City intends to continue evaluation of the project through more detailed RAB drilling, geological interpretation and RC and diamond drilling.

Allendale

(EL 5764 – Yanco Glen, BHT)

The Allendale project encompasses an area of approximately 13 km[2] centred on the Yanco Glen Exploration Licence. A number of old mines and prospecting pits occur within the area. These include the Allendale mine, Sinclair’s, Steakhouse, Easter Gift and Waukaroo prospects.

NSW Geological Survey records show that the Allendale mine produced base metal sulphides a grades similar to

those at the Broken Hill deposit. Similarly, historic diamond drilling between 1969 and 1972 indicated that base metal sulphides occur within a persistent central lode horizon over a strike length of 150 m and to depths of approximately 200 m. It is the Directors opinion that due to the wide spaced nature of the drilling (approx. 100m) and the uncertainties with respect to drill hole locations and hole surveys, drilling in this zone has been insufficient to fully assess the mineralised lode horizon.

Detailed mapping by Silver City in an area around the Allendale mine has located at least 6.1 km of outcropping, commonly tightly folded lode rocks. Sampling of these rocks by various companies, including Silver City, show widespread and anomalous lead and zinc grades (Figure 12).

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Figure 12: Allendale Project XRF soil lead geochemistry (contours) and lead-zinc in rock chip samples (yellow or blue triangles).

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32 Directors Review of Projects

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In addition, new soil geochemical data from portable XRF surveys show that not only is the Allendale mine area anomalous, but zones which have never been drill tested, such as Steakhouse, Easter Gift, Waukaroo and areas north of Sinclair’s show marked anomalism. In total the Steakhouse-Allendale-Sinclairs anomalous trend represents a mineralised corridor some 3.5 km long and 1 km wide where multiple, untested lode horizons occur.

A first pass drill program of approximately 3,500 m of RC drilling is planned for this project.

Golden King

(option to purchase MLs 13, 14 and 293 – located in western part of EL 7319, Euriowie, copper-gold vein style) Silver City has entered into an option agreement to acquire three Mining Leases over a portion (300 m of strike) of the historic Golden King Mine. The remainder of the old workings and outcropping lode rocks (500 m of strike) are located within Silver City’s Euriowie Exploration Licence. Gossanous and quartz vein material occur discontinuously along the length of the structure in a mylonitic shear zone oriented east-northeast. Vein and siliceous stockwork on the vein margins are reported from old workings to range from less than 1 m to 10 m in thickness.

Small tonnages (less than 15 tonne packages) of ore have been mined intermittently from the structure since discovery in 1884. Historic work reports the presence of pyrite, chalcopyrite and pyrrhotite in ore zones.

Recent mapping by Silver City shows that there are multiple lodes hosted in a chlorite-altered corridor 20 to 50 m wide and 800 m long. Silver City has collected rock chip samples (grab and continuous rock chip samples) from outcrops and bulk samples of vein material extracted from the No.3 Shaft (not in-situ but on ore dumps at surface). Siliceous material located at No.3 Shaft returned high gold with three samples returning 7.7 g/t, 12.8 g/t and 9.15 g/t and less than 0.1% copper. Limonitic and goethitic gossans were sampled in the western part of the structure and returned appreciable copper ranging in grade from less than 0.5% to 2.67% (Figure 13).

Silver City considers this project has potential for high grade copper and gold veins in a laterally continuous structure. The Company intends to drill test this project with approximately eight shallow RC holes as soon as possible.

Maybell

(EL 6132 – Stephens Centennial, Thackaringa type)

The Maybell project comprises an area of approximately 6 km[2] which hosts numerous historic mines in pegmatite, metasediments and amphibolites of the Broken Hill Group. Detailed geological mapping by Silver City shows that it contains lode rocks with thicknesses from less than 0.5 to 15 m (Figure 14). Detailed portable XRF geochemistry over the same area maps out these lode rocks as being anomalous in lead, zinc, copper, arsenic and manganese; important indicators for BHT style mineralisation. In

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Figure 13: Golden King gold-copper project

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addition selective grab samples of lode rock were collected; these also indicate strong anomalism. In particular a number of rock samples returned anomalous silver.

As an initial test, Silver City drilled eight shallow reverse circulation percussion holes. Four of these returned anomalous results (Table 4). In particular, hole RCM5 returned a high grade silver intersection over 4 m from 17 m.

This intersection was hosted in a halo of anomalous silver between 0.5 g/t and 10.1 g/t from 10 to 29 m (Figure 14).

The high grade silver results from this hole RCM5 are hosted in gossanous oxidised rocks, interpreted to be part of the nearby lode which dips to the northwest. Silver City considers these results to be very encouraging and intends to follow this intersection up with more detailed step-out drilling.

	Hole MGA MGA From To Interval Silver Lead Zinc Cutoff No. East North (m) (g/t) (%) (%) (Ag)
	RCM1 548358 6484613 33 35 2 17 0.40 1.50 10g/t RCM3 548330 6484635 31 34 3 22 0.04 0.06 10g/t RCM4 548317 6484644 17 18 1 21 0.20 0.30 10g/t RCM5 548324 6484750 17 21 4 608 0.26 0.02 30g/t

Table 4: Selected drill hole intersections Maybell. Silver City drilling.

Note: Weighted average of 1 m samples collected by riffle splitter with nominal sample size 2 kg. Hole RCM5 intersected high grade silver above the water table. Analytical method ALS-Chemex Lab Code ME-ICP 61, Ag OG62 and Ag OG62h, Zn OG62. All holes were drilled at azimuth of 128.5 degrees at an declination of -60 degrees.

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Figure 14: Maybell silver project. Inset shows the cross-section and downhole assays for hole RCM-5.

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34 Directors Review of Projects

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Stephens Trig

(EL 6132 – Stephens-Centennial, BHT)

The Stephens Trig project lies within a mineralised corridor which hosts numerous BHT style occurrences from Limestone and Corruga in the southwest to Peppertree and Maybell in the northeast. It is located in the upper, prospective units of the Broken Hill Group in an area of poor outcrop. The project is located approximately 15 km

north of Broken Hill and to date previous explorers have completed 24 drill holes to test the lode horizons. The project has been reviewed in some detail by Silver City and shows that Stephens Trig lies in the northern end of a well defined and strong lead-zinc RAB anomaly which extends southwestward to the Trig South prospect; a total distance of 4.5 km.

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Figure 15: Stephens Trig project showing drill hole plan with significant drill intersections (upper diagram) and longitudinal section (lower diagram) with drill hole piercement points shown in the main lode horizon.

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Hole MGA MGA From Interval Zinc Lead Silver No. East North (m) (m) (%) (%) (g/t)

SGC1 545590 6478934 51 6 9.53 0.71 14 SGC2 545574 6478829 54 3 5.86 1.38 16 and 134 3 8.48 1.69 53 SGC4 545329 6478744 196 1 4.07 1.11 13 SGC5 545310 6478643 66 1 1.55 0.05 5 SGC6 544988 6478474 48 2 5.87 0.01 2 SG001 545797 6478964 66 2 12.00 4.27 62 SG003 545542 6478904 110 12 6.75 2.28 10 Including 112 6 11.80 3.80 13 SG005 545276 6478541 76 4 5.31 0.32 13 SG006 545377 6478850 56 2 2.30 2.71 20 SG012 545527 6478829 126 16 1.29 0.30 2 SG016 545451 6479135 335 1 9.00 5.08 43 SG017 545226 6478895 342 4 1.10 0.33 8 and 390 2 1.54 2.38 117

Table 5: Selected historic drillhole intersection – Stephens Trig project

Note: Lower cut of 1% zinc with minimum 1 m width. Holes were drilled between 1990 and 2003 and results above were extracted from a PlatSearch NL Quarterly Report dated 31 March 2004. No sampling or analytical method was reported.

The focus of previous drilling has been within the strongest part of the RAB anomaly at Stephens Trig itself which is 1.1 km long and 50 to 100 m wide. Drill programs have recorded high grade, near-surface intersections (Table 5). The work has shown that there are several lode horizons between 0.2 and 3.0 m in true thickness; one in particular persists for over 300 m and dips steeply to the northwest. Drill data for this lode indicates that it plunges gently to the southwest (Figure 15). The Silver City assessment suggests that there is potential to outline a base metal mineralised zone in this prospect with further, more detailed drilling.

Yellowstone

(EL 7390 – Yellowstone, copper-gold vein)

The Yellowstone project consists of an easterly oriented elongate zone of ironstone between 1 and 11 m wide which outcrops over a strike length of 660 m. It ranges in composition from a quartz-hematite-limonite rock at its eastern end to a banded, quartz-goethite-limonite gossan at its eastern end. It is hosted in sheared metamorphosed sedimentary rocks and amphibolite. It sits within a large fault zone known as the Yellowstone Shear. Systematic rock chip geochemical sampling undertaken by joint venture partner Golden Cross Resources (GCR) shows that the ironstone is variably anomalous in copper and gold. In particular an area in the eastern part of the ironstone (over a strike length of approximately 75 m) returned a number of samples above 0.5 g/t gold (Table 6).

Historical dipole-dipole induced polarisation geophysical data indicates that a chargeability anomaly, suggestive of sulphide at depth, is coincident with the anomalous zone of rock chip samples (Figure 16). GCR tested this anomalous zone drilling eight shallow RC percussion holes to vertical depths in the order of 50 m below the surface. Significant drill results are summarised below (Table 7). Like the rock results at surface, the drill results are anomalous in gold. In addition the holes returned anomalous copper.

A detailed review of the data indicates that none of these holes passed beyond the weathered oxidised zone into fresh rock. Silver City believes the source of both the geophysical and geochemical anomalies lies within fresh rock at depth and remains untested due to the shallow nature of the drilling.

In the opinion if the Directors there is potential for copper-gold resources at depth and Silver City plans to drill six RC holes in this project to assess this.

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36 Directors Review of Projects

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Sample	MGA	MGA	Au	Sample	MGA	MGA	Au
ID	East	North	(g/t)	ID	East	North	(g/t)
YR011	562595	6471068	0.14	YR061	562604	6471072	0.01
YR013	562604	6471073	16.20	YR062	562605	6471071	10.30
YR015	562613	6471078	1.67	YR065	562613	6471078	0.16
YR018	562622	6471082	0.07	YR066	562613	6471077	0.07
YR021	562631	6471087	0.03	YR067	562614	6471076	4.90
YR023	562647	6471100	0.74	YR076	562630	6471090	5.30
YR055	562586	6471067	1.65	YR077	562630	6471089	1.96
YR056	562587	6471066	5.10	YR137	562598	6471066	0.30
YR057	562587	6471066	16.90	YR160	562639	6471095	0.02
YR059	562604	6471074	0.01	YR161	562641	6471091	0.04
YR060	562604	6471073	0.01

Table 6: All rock chip results Yellowstone from 75 m long section of outcropping gossan shown on Figure 16.

Note: Samples collected as continuous chip/channel samples with nominal sample lengths of 4 m collected in channels perpendicular to strike. Gold analyses were by fire assay with atomic absorption spectrometry finish.

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Figure 16: Yellowstone project showing an induced polarisation chargeability anomaly (modelled at a depth of approximately 100 m below surface) in relation to a banded quartz gossan and anomalous gold and copper geochemistry in rock chips and in shallow drill holes.

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Hole	MGA	MGA	From	Interval	Gold	Copper
No.	East	North	(m)	(m)	(g/t)	(%)
YRC-01	562582	6471052	14	2	0.49	0.09
YRC-01	562582	6471052	14	8	-	0.59
YRC-02	562610	6471033	42	4	-	0.25
YRC-03	562623	6471073	12	4	0.31	0.12
YRC-04	562659	6471058	44	4	0.94	0.33
YRC-05	562667	6471096	14	8	0.75	0.15
YRC-05	562667	6471096	22	7	-	1.50
YRC-06	562569	6471012	46	8	-	0.31
YRC-07	562703	6471080	48	1	8.61	0.53

Table 7: Selected drill intersections from Yellowstone

Note: Analytical method fire assay with atomic absorption spectrometry finish. Weighted average of 1 m samples collected by riffle splitter with nominal sample size 2 kg. All holes were drilled at an azimuth of 334.5 degrees and at declinations of -55 degrees. Cutoffs for calculations are 0.1 g/t gold or 0.1% copper.

5.9.3 Other Projects

Silver City has 20 Exploration Licences which host many hundreds of documented mineral occurrences. In addition to those projects outlined above another thirteen have been identified as prospective targets which require geological assessment with the view to drill assessment in the future (Figure 10). These are summarised in the Independent Geologist’s Report in Section 7 of this Prospectus and briefly discussed below.

Native Dog (EL 5919)

This project lies to the southeast of Broken Hill within a lode rock corridor immediately to the northeast of a group of BHT occurrences collectively known as Little Broken Hill (Figure 7). To date Silver City has completed geological mapping, XRF soil surveys and rock chip sampling. A geochemically anomalous zone of lode rock some 4 km long and 500 m wide, oriented in a northeast direction has been identified and within this a number of zones have been earmarked for more detailed mapping and sampling.

Mulyungarie (EL 4705)

This Licence, located in South Australia, hosts the K1 project. PlatSearch NL drill-tested a magnetic anomaly located beneath approximately 100 m of cover. Two diamond holes intersected weakly gold-anomalous quartzmagnetite-hematite rocks which have the potential to be deformed banded iron formations. The paucity of drilling to date makes interpretation of the data equivocal. Silver City plans to review the data in detail with the view to drilling over a broader area. The target has potential to host IOCGstyle mineralisation.

Hidden Treasure (EL 6132)

Historic drilling has located a tightly folded lode rock sequence with anomalous intersections of lead, zinc and silver at shallow depths. Detailed data compilation and 3D geological modelling are planned with the view to targeting downplunge shoot extensions with further drilling.

Ziggys (EL 6036)

This Licence hosts a weak, previously identified lead and zinc RAB geochemical anomaly under cover, adjacent to outcrop of highly silicified Broken Hill Group rocks. The anomaly extends in a northerly direction for 4000 m and is 400 m wide. The area requires further assessment as it extends into areas too deep for effective RAB drill testing. Silver City intends to use a combination of RAB and aircore drilling to constrain the anomaly for deeper drill evaluation.

Yalcowinna Creek (EL7319)

Located in the Euriowie Block this project is hosted in the Thackaringa Group rocks in the lower part of the Willyama Supergroup. Tightly folded ironstones hosting anomalous copper at surface have been drilled in the past and have returned broad zone of weak copper mineralisation in RC holes. Much of the area lies beneath a veneer of soil and alluvial cover. Silver City plans to extend a number of historic RAB geochemical sampling programs in order to constrain anomalies for future drill assessment.

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38

Directors Review of Projects

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Iron Duke (EL 5646)

Magnetite breccias hosted in goethitic and limonitic ironstones outcrop above a descrete magnetic anomaly 900 m long and 500 m wide. It is hosted in the upper part of the Willyama Supergroup in the Sundown Group rocks and is underlain by younger granites. Silver City plans to undertake detailed rock chip sampling and ground magnetic surveys over the area to define drill targets. This has the potential to host IOCG-type mineralisation.

Champion/Hidden Secret South, Brunhill (EL 7300)

These have been grouped into one project as they lie in close proximity to one another. All host lode rocks and all have returned anomalous XRF soil geochemistry, especially with respect to zinc. To date Silver City has completed geological mapping of these areas and proposes to undertake more detailed rock chip and RAB sampling.

Apollyon Valley (EL 6475)

This project covers the entire anomalous zone of the Apollyon Valley. The anomaly is 23 km long and hosts elevated arsenic, lead and zinc in XRF soil surveys. In the southern part of the tenure a zone approximately 10 km long hosts strong lead anomalies which are spatially related to numerous old silver mines and occurrences. These are hosted in highly sheared rocks of the Sundown Group within a major fault zone. The historic extent of modern exploration in this zone comprises rock chip sampling, XRF soil surveys and 1:25,000 scale geological mapping. There has been no RAB or other drilling in this southern 10 km zone (Figure 8). Silver City considers that this zone holds potential for open pit resources of oxidised silver and/or high grade silver-rich veins at depth. Detailed geological mapping and rock chip sampling is scheduled as a prelude to more extensive RAB drilling.

Purnamoota Conductor (EL 7300)

This project hosts an elongate electromagnetic conductor 4 km long and 20-30 m wide. It is coincident with a tightly folded lode rock sequence and an XRF soil lead and zinc geochemical anomaly which extends for 6 km in the same orientation. The conductor lies within a fault. Sparce drilling of the conductor to date has shown that it hosts pyrrhotite; a magnetic and conductive iron sulphide mineral. Silver City considers that the paucity of drilling leaves open the opportunity for discovery of other mineralisation in other parts of the fault. Silver City intends to undertake detailed geological mapping and rock chip sampling to determine locations of anomalous base or precious metals along the structure.

Mt Brown (EL 7319)

Located in the Euriowie Block this project comprises a line of old mines hosted in lode rock outcrops. These extend for 1.5 km and gossan samples have returned elevated grades in silver, lead and copper. No drilling has been conducted at this locality. Silver City will conduct detailed geological mapping and sampling with the view to drilling testing anomalous targets.

Anomaly Hill (EL 6468)

This project hosts Willyama Supergroup rock underlain and intruded by a granite. It was first identified as an airborne radiometric feature being anomalous in uranium. Preliminary investigation has located a sequence of sedimentary rocks which are clay altered and locally iron rich. First pass sampling has indicated weak anomalism in a variety of elements including copper, lead, bismuth, molybdenum and telerium. These suggest an intrusion related style of mineralisation. Silver City intends to conduct rock chip and RAB sampling over this zone to evaluate further potential.

Wolseley (EL 5646)

This project comprises a well mapped zone 2 km long of lode rocks with coincident anomalous lead and zinc XRF geochemistry. Drilling by previous explorers and Silver City has been undertaken in parts of the zone. Silver City plans to review all previous data to assess the future potential in areas not yet drilled.

Parnell (EL 6132)

This is an historic base metal mine where mineralisation occurs in the hinge of a synform. Historic drilling has returned intersections with lead and zinc mineralisation over down hole widths of between 1 and 3 m. Compilation of the data and re-evaluation of the geological potential will be undertaken.

Competent Person

The information in Section 5 of this Prospectus that relates to Exploration Results, Mineral Resources or Ore Reserves is based on information compiled by Christopher Torrey (BSc, MSc, RPGeo.) who is a member of the Australian Institute of Geoscientists. Mr Torrey is the Managing Director of Silver City and a full time employee of CTEX. Mr Torrey has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a “Competent Person” as defined in the 2004 edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves 2004”. Mr Torrey consents to the inclusion in this Prospectus of the matters based on this information in the form and context in which it appears.

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Exploration Programs and Budgets

The primary objective of the Offer is to raise funds for ongoing exploration, new project acquisitions and corporate costs totalling $10,000,000 over a three year period. Budgets are designed on the current state of knowledge of each project. The budgets presented below are the best estimate at this time. As a project moves forward, the actual allocation of future funds will depend entirely on results. Positive results from a project will attract continued or accelerated expenditure. Conversely poor results will result in re-allocation of funds to other projects. Budgets below are presented on the basis of three scenarios. Each assumes the availability of $500,000 in pre-IPO funding and each scenario will also allow the Company to meet its minimum expenditure obligations under the exploration licences.

Scenario 1

$10,000,000 raising

During the first 12 months after Quotation, Silver City will apply funds to an aggressive drilling program which aims to drill a total of approximately 23,000 m.

The first year program will comprise two parts:

1. Focussed drilling on the six advanced projects outlined in this Prospectus; and

2. Further geological, geochemical and geophysical evaluation on next priority projects.

It is anticipated that the following two years will focus on follow-up drilling and evaluation the best of the projects, initial deep drilling of conceptual targets and acquisition of new projects. Currently Silver City has an additional 13 identified on its current Tenements.

In Scenario 1, total expenditure is forecast at $3,786,000 in Year One, $3,386,000 in Year Two and $3,328,000 in Year Three. This budget is inclusive of all administrative and management costs including the cost of the IPO in Year One. Included within this estimate is an allocation to assess, help secure and explore other quality projects that may become available.

Scenario 1: Indicative expenditures based on the capital raising of $10,000,000

	Year One	Year Two	Year Three
Item	($)	($)	($)
Drilling	1,577,000	2,243,000	1,860,000
Geophysics	100,000	130,000	315,000
Other Exploration
(geochemistry, geology etc)	317,000	85,000	225,000
IPO	842,000	0
Administration	600,000	600,000	600,000
Working Capital	350,000	328,000	328,000
TOTAL	3,786,000	3,386,000	3,328,000

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40

Exploration Programs and Budgets

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Scenario 2

$6,000,000 raising

Should the minimum capital raising of $6,000,000 only be achieved the total drilling would be similarly ambitious in Year One (approximately 23,000 m). In Year Two the focus would be on follow-up drilling, and geological, geochemical and geophysical assessment of those most promising projects and the strike extensions to these. Silver City would be less ambitious in evaluating all known projects and acquiring others.

Scenario 3

$12,000,000 raising

Scenario 3 would involve a $2,000,000 oversubscription. This would allow for a comprehensive drill assessment extending beyond the first six high priority projects. Silver City anticipates that a total of almost 20 targets could be drill tested with these funds over a three year period. In addition, it would also allow for the an airborne geophysical survey of a portion the tenure with follow-up ground surveys, and allow for assessment of new opportunities that might arise in the district.

Scenario 2: Indicative expenditures based on the capital raising of $6,000,000

	Year One	Year Two
Item	($)	($)
Drilling	1,577,000	1,618,000
Geophysics	100,000	380,000
Other Exploration
(geochemistry, geology etc)	317,000	314,000
IPO	602,000	0
Administration	600,000	600,000
Working Capital	182,000	210,000
TOTAL	3,378,000	3,122,000

Scenario 3: Indicative expenditures based on the capital raising of $12,000,000

	Year One	Year Two	Year Three
Item	($)	($)	($)
Drilling	1,577,000	2,243,000	2,500,000
Geophysics	820,000	350,000	250,000
Other Exploration
(geochemistry, geology etc)	297,000	300,000	400,000
IPO	962,000	0	0
Administration	600,000	600,000	600,000
Working Capital	322,000	400,000	279,000
TOTAL	4,578,000	3,893,000	4,029,000

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Silver City Prospectus 41

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Independent Geologist’s Report

John B Seeley Geol ical Consultant og

37 Alfred Road Sutton, NSW 2620 Australia ABN 71 989 662 065

12 May 2011

The Directors Silver City Minerals Limited PO Box 956 Crows Nest, NSW 1585

Dear Sirs

Silver City Minerals Limited – Independent Geologist's Report

Introduction

This independent Geologist’s Report has been commissioned by the directors for inclusion in the Prospectus of Silver City Minerals Limited (Silver City or Company), to be dated on or about 30 April 2011. The Prospectus is to be lodged with the Australian Securities and Investment Commission and is intended for distribution to interested parties for the purpose of raising $10,000,000 through an Initial Public Offering of 50 million Ordinary Shares at an issue price of $0.20 each. The Company intends to list the shares on the Australian Stock Exchange.

This report has been prepared in accordance with Australian Securities and Investments Commission Regulatory Guide 111 relating to the content of the report and Regulatory Guide 112 which relates to the independence of expert reports. Standards are observed as set out in the Valmin Code relating to Guidelines for Assessment of Mineral Assets and/or Valuation for Independent Expert Reports by The Australasian Institute of Mining and Metallurgy.

Within the Silver City Tenements there is insufficient exploration data to define a JORC-compliant resource or make any valuation of prospects described in this document. Furthermore it is uncertain whether additional exploration will result in a JORC-compliant resource in the future.

Purpose and Scope

The purpose and scope of this report is to assess the technical information contained in the Prospectus, to verify independently the sources of contained information and to make relevant comments on the integrity of that information and the work proposals contained herein.

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42 Independent Geologist’s Report

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Summary of Conclusions

I have satisfied myself of the overall integrity of information contained in this Prospectus. It is a pertinent summary of the geological, technical and commercial information relevant to the prospectivity of a variety of mineral occurrences contained within 20 Exploration Licences and 3 Mining Leases. The tenements contain over forty identified prospects that range from mature projects requiring more detailed drilling programs to defined geochemical and or geophysical anomalies in grass roots environments.

Directors of Silver City have achieved a major consolidation of prospective ground in the Broken Hill area by acquisition of tenements covering open ground, joint venture agreements with existing tenement holders and sale agreements. Geological, geochemical and geophysical information relating to the many prospective areas within Silver City controlled tenements is available in published literature, ASX reports and numerous past and present exploration and mining company reports.

Considerable background research has been carried out by directors of the Company to evaluate substantial amounts of public information, compile geological, geochemical and geophysical data sets and reinterpret earlier work. Silver City uses the latest published geological, geophysical and spectral imagery in conjunction with rigorous geological and structural mapping to understand ore depositional environments and structural complexities imposed on the mineral deposits by multiple tectonic events. Rapid field based XRF analyses are used to complement outcrop mapping and highlight geochemical continuities or discontinuities in areas of subcrop and poor exposure. Results of detailed structural and geological field mapping together with recent grid extensions and infill XRF analyses are the basis for exploration proposals on projects outlined in this Prospectus. Geophysical surveys are appropriate in the case of iron oxide, copper, gold type deposits such as at Iron Duke. Broken Hill-type stratabound deposits are zinc dominated and unresponsive to electrical geophysical methods. Gravity surveys are useful in the detection of dense rocks within lighter host material beneath cover.

Cost effective exploration proposals contained in this Prospectus cover 19 prospects within a variety of geological settings (Table 1). Exploration methodologies, particularly in geology, structural mapping and in-field geochemistry are exacting and economically carried out enabling rapid prospect prioritisation.

Comments on the Project Geology

Geological Setting of the Silver City Tenements

Tenements under exploration by Silver City are contained in a 90 km E-W and 120 km N-S area within the geologically significant Willyama Supergroup portion of the Curnamona Cratonic Province. The city of Broken Hill is located in the south central portion of the area. The Willyama Supergroup comprises three structural and geologically complex ‘blocks’ named the Broken Hill Block, Euriowie Block and Olary Block. The three ‘blocks’ are made up of a number of geological terrains of which the older, Thackaringa Group and overlying Broken Hill Group contain the major known mineralised lithologies. These two principle Groups are either exposed or known to lie beneath variable thickness younger cover. In general terms each of the three blocks is associated with different, but economically significant types of mineralisation.

Structurally complex, high grade metamorphic Broken Hill Group and Thackaringa Group rocks were derived from arenaceous and pelitic sediments interbedded with lava flows and volcano-sedimentary material. These rocks host the world’s largest Pb, Zn, Ag deposits of the type; the mineral sources, depositional mechanisms and subsequent metamorphism remain somewhat contentious. Mineralisation within the Group is confined mostly to two well defined geological areas namely the Broken Hill Block and the Euriowie Block. The two blocks are separated by younger Adelaidean geosynclinal sediments deposited in a developing rift during a period of extensional tectonics. The major economic minerals of silver, zinc and lead may be accompanied by one or more accessory economic minerals such as gold, copper, cobalt, uranium or tungsten. Prospective mineral deposits in the Broken Hill and Euriowie Blocks are dominated by Broken Hilltype (BHT) stratiform and stratabound mineralisation. Underlying Thackaringa type rocks contain stockwork, stringer, shear zone-hosted and stratabound mineralisation and mainly occur within the Euriowie Block. It is noteworthy that previous exploration on prospects within the Euriowie Block received lesser attention than Broken Hill Block prospects. This may have been due to the economics of smaller, less attractive, Thackaringa type deposits or the perceived difficulties of exploration under young cover sequences.

Rocks within the Thackaringa Group are not only prospective for oxide-facies iron formation associated with BHT stratabound deposits but are host to stringer and shear zone mineralisation. Thackaringa Group rocks stratigraphically underlie the Broken Hill Group and the presence of copper in these rocks may reflect proximity to sources of mineralisation rather than more distal facies Zn-Pb-Ag BHT deposits.

Paragon Group rocks occur in the north western part of the area and are mostly overlain by Adelaidean Group sediments or young cover. The Paragon Group together with Thackaringa and Broken Hill groups are Paleoproterozoic in age. To date few Silver City prospects crop out within Paragon Group rocks although several prospects occur within shear zones and

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Silver City Prospectus 43

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carbonate members in overlying Adelaidean rocks. The possibility for McArthur River/Mt Isa sediment hosted lead-zinc deposits in Paragon Group rocks was established recently by the NSW Geological Survey. It is possible therefore that poorly exposed Paragon Group rocks are both a source of mineralising fluids to overlying Adelaidean sediments and a host to potentially larger sediment hosted lead-zinc deposits.

Late Proterozoic-Cambrian Adelaidean geosynclinal and shelf sediments overlie Willyama Supergroup rocks in the north west of the region and infill the rift between the Broken Hill and Euriowie Blocks. Mineralisation within the Adelaidean Group is restricted to Mississippi Valley Type mineralisation in carbonate bearing sediments and shear zone hosted mineralisation.

The characteristics of the differing types of ore deposition and mineralisation referred to in the text are summarised in Appendix 1.

Selected Project Geology

To date Silver City has identified 19 projects within exploration tenements specified in this Prospectus. The projects are prioritised by the Company according to prospectivity. Using current field data together with interpretations based on new concepts for ore deposition the prospects are prioritised into high, intermediate and early stage projects. Prospect prioritisation is based on an evaluation and re-interpretation of all available exploration data and the ‘need to drill’ in order to technically advance the project. Project priorities will change as prospects are upgraded or downgraded following interpretation of data from infill XRF surveys, geological/structural mapping and initial drilling.

I have verified that Silver City has made extensive studies of prior work in the area and that the Company continues with an ongoing program of detailed geological and geochemical field work. Significant geochemical information has been obtained using a field portable XRF instrument (Niton). This instrument allows rapid, low cost and detailed ground coverage over areas of good outcrop and thin cover. Some 120,000 analytical readings from earlier work, recent grid extensions and infill sampling have been compiled into a series of comprehensive, prospect-specific geochemical maps. These maps, together with ongoing program of mapping and structural interpretation are instrumental in planning and budgeting a series of prioritised drilling programs. A limited program of RAB and RC drilling has been carried out on four prospects in the past year. Encouraging assay results from Maybell and Razorback prospects has defined substantial target areas requiring additional detailed drilling to further progress these prospects.

Field inspections were made to projects designated by Silver City as high and intermediate priority drill targets in January 2010 and to new priority project areas in July 2010. Project selection for this report was based on the presence of reasonable outcrop geology and accessibility together with available background information, maps and reports and assay results from recent drilling on the project areas. One exception to the criteria for a field visit was the Mulyungarie/Mundi Mundi project. This prospect lies beneath thick cover on the NSW and SA border and is given intermediate priority by Silver City based on drill core studies from a previous drilling program. The writer inspected core from the two deep drill holes and reviewed relevant drill logs and a petrographic report on 35 thin sections from both drill holes.

Priority Prospects

Prospects are discussed in broad order of priority at the time of writing (Table 1) together with the Exploration Licence in which they occur (Figure 1).

EL 5764 Yanco Glen

Allendale (five prospects)

This EL contains five prospects occurring in BHT lode rocks over a strike length of six kilometres; three prospects were reviewed in the field. The principle prospect surrounds the Allendale mines where a series of shallow shafts had been developed in high grade Pb-Zn ore. The area is structurally complex and prior drilling at Allendale was widely spaced, not systematic, nor did it address the possibility of down dip extensions to ore zones or the strong geochemical anomalous zones along strike from the central mine area. Assay values >10% Zn+Pb and >50 g/t Ag were encountered in two historic drillholes. At Allendale the ore is contained within an amphibolite envelope accompanied by unusual amounts of tourmaline. The significance of this mineral association is a basis for additional detailed structural mapping and sampling. Structural interpretation of this area will assist in target definition for further drilling of lateral and down dip extensions to ore contained in fold hinges. The stratigraphic sequence at Allendale has undergone complex folding in which beds may be overturned, isoclinally folded or form recumbent folds; all with variable axial plunges. In mineralised horizons there is good evidence of an increased thickness within fold hinges. In any future drilling program a number of diamond drill holes are needed to improve structural interpretation prior to systematic RC drilling. Oriented drill core will greatly assist clarification of folding complexity and axial plunge directions enabling implementation of a more focused RC program.

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44 Independent Geologist’s Report

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EL 6132 Stephens Centennial

Maybell Prospect

Stephens Centennial EL contains a number of prospects from which Silver City selected Maybell and Nine Mile for pre-IPO drilling. Prior work at Maybell recorded a number of old pits and shafts developed on high grade silver lodes with variable zinc values; mineralisation in the area is both BHT and Thackaringa type. The area has partial cover, which restricts mapping and sampling. Little prior drilling was undertaken due to this young cover and subsurface interpretation difficulties. Geophysics is not responsive to high zinc mineralisation and structural interpretation of the Maybell prospect will rely on very detailed lithological and structural mapping, Niton geochemistry and interpretation of results from eight recent RC holes. The RC hole locations were based on the magnitude of Niton geochemical anomalies, chip sample assays and interpretation of recent mapping. Encouraging high grade silver intersections in four of the eight RC drill holes (including 4 m @ 608 g/t Ag in RCM-5) has warranted elevation of Maybell prospect to high priority. There is good potential for along strike and down dip extensions to the indicated high grade silver zone. Two or three strategic oriented diamond drill holes would greatly assist in the sructural interpretation of the lode zone prior to systematic RC infill drilling.

EL 6132 Stephens Centenial

Stephens Trig. Prospect

This prospect has a strike length in excess of 5 km of which the major part lies beneath cover. The southern portion has intermitent outcrop of isoclinally folded amphibolite and garnet quarzite lode rocks which regionally are recognised as host to BHT mineralisation. The proximity and parallelism in strike, scale and host rocks to the Broken Hill Line of Lode make this an intruiging priority prospect. Historical work records from several previous companies indicate twenty four holes were drilled in the area with a majority of holes located in the southern part of the prospect. Six drill holes have assay values with greater than nine percent combined Zn + Pb together with >14 g/t silver. Compilation and interpretation of all the prior work is being carried out by Silver City to determine the best approach for the next phase of exploration at Stephens Trig. Niton geochemistry is not appropriate in areas of cover and some geophysical methods are not responsive to zinc rich lithologies. Based on known results and indicated strike length of 5 km, this prospect appears to have significant potential despite the issues surrounding an appropriate choice of exploration method other than drilling.

EL 7203 Iron Bar

Razorback West Prospect

The prospect is marked by a large, well defined gravity anomaly and coincident Zn+Pb anomaly with a strike length of over 6 km Although the prospect is immediately north east of the Broken Hill Line of Lode it is offset by the east-west trending Stephens Creek Shear Zone and probably further affected by northeast and northwesterly trending faults in the region. Two RAB assisted geochemical surveys were carried out by past workers in the prospect area and Silver City recently concluded an extensive program of 462 RAB drill holes. Most of the prospect lies beneath variable cover up to thirty five metres thick. Rock types mapped in areas of outcrop and from RAB drill chips show the rocks are Broken Hill Type metasediments with minor amphibolite and quartz-magnetite rock. This sedimentary package sits between the large Stephens Creek granitegneiss in the west and a smaller granite-gneiss in the east. Magnetic anomalies in the area relate to disseminated magnetite in a thick sequence of metasediments. A second, strong and parallel magnetic anomaly is related to a one metre thick quartz magnetite bed separated from the broader magnetic anomaly by 30 m of non magnetic sediments. Magnetite destruction is important with respect to the location of geochemical anomalies as it probably relates to the passage of oxidised hydrothermal fluids. It is therefore significant that the strongest zinc and lead geochemical anomalies appear laterally disposed to or straddle the magnetic anomalies in this prospect.

Silver City has compiled results from all previous and current geochemical sampling surveys over the prospect and produced credible geological and geochemical maps of the Razorback Prospect. To date only RAB drilling has been done with good agreement on results between different surveys where grid lines intersect. It is probably timely to select two or three diamond drill locations for a limited number of diamond drill holes to test the best geochemical anomalies in the southern part of the prospect before more closely spaced RAB drilling is undertaken in the northern part of the grid. Understanding the source of the gravity anomaly, the attidude of the stratigraphy and extent of mineralisation are important issues to resolve prior to further infill RAB drilling in the north of the prospect.

EL 7319 Euriowie

Euriowie EL covers a large area (>250 km[2] ) in the south western portion of the Euriowie Block. Thackaringa Group rocks are not only prospective for oxide-facies iron formation associated with BHT stratabound deposits but are host to stringer and shear zone mineralisation. They stratigraphically underlie the Broken Hill Group and the presence of copper in these rocks may reflect proximity to sources of mineralisation rather than more distal facies Zn-Pb-Ag BHT deposits.

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Silver City Prospectus 45

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Mining Leases 13, 14 and 293 Golden King (located within EL 7319)

The recent option agreement over three Mining Leases covering the Golden King deposit has introduced copper, gold, cobalt, silver and bismuth into the Silver City mineral portfolio. Prospects in the Broken Hill Block are heavily weighted toward BHT zinc, lead and silver projects. The Golden King deposit is a shear zone hosted copper-gold deposit with variable high grades of copper and gold along the strike. Mineralisation is contained within an open ended 800 m east-west trending zone of mylonite. Host rocks are metamorphosed derivatives of both acid and basic volcanism and now are recognised as feldspathic metasediments/albitic gneiss and chloritised amphibolite. Periods of dynamic metamorphism resulted in extreme brecciation and mylonitisation of rocks within a broad shear zone. The mylonite zone now comprises multiple parallel to sub-parallel shears in which the pulverised host rocks were healed by pulses of hydrothermal mineralisation and silicification.

Variability in the mineral composition of successive pulses is indicated by the predominance of copper in western parts of the shear zone while gold values increase markedly at the expense of copper in the central parts of the deposit. There has been significant sampling of the ore zone over time which more recently has shown there to be strongly anomalous silver, cobalt, tellurium and bismuth in addition to gold and copper. Assay figures supplied by the NSW Mines Department of 4% Cu, 88 g/t Au and 1054 g/t Ag for five to ten ton ore parcels submitted in the period 1880 to 1930 possibly indicate reasonable bulk samples values for the deposit.

EL 7390 Yellowstone

Yellowstone Prospect

This copper-gold prospect is located some 24 km northeast of Broken Hill. The prospect lies within the Yellowstone Shear Zone; an east northeast trending, laterally extensive zone of retrograde schist. Copper–gold mineralisation appears to have some association with partially exposed (700 m) quartz-pyrite iron formation hosted within the Yellowstone Shear but the relationship remains unclear. Previous, disparate exploration programs carried out soil and rock chip sampling, an IP geophysical survey, eight short (55–79 m) RC drill holes and two diamond drill holes. Results from these surveys indicate coincidence of both the geochemical and geophysical anomalies with the iron formation. Drilling results show the iron formation dips at 68˚ to the southeast with a strike parallel to the shear zone. Amphibolite forming the footwall of the shear zone appears to have a variable plunge between 35˚ and 50˚ to the southeast which indicates shearing occurred post ironstone deposition. Copper values increase immediately above the base of oxidation as a result of supergene enrichment while gold mineralisation maintains a 50˚ plunge along the northeast trending iron formation.

Interpretation of the above observations raises issues related to the possible source(s) of mineralisation. The following questions require definitive answers:

• 3 Is the low-level copper mineralisation stratiform/stratabound in origin?

• 3 Does weak copper mineralisation laterally and vertically persist throughout the iron formation and only increase in grade near the base of oxidation as a result of supergene enrichment?

• 3 Gold mineralisation appears to differ from copper in its mode of distribution. Anomalous gold values are parellel in strike to the iron formation but at depth have a lesser plunge. Does this 50˚ plunge in gold distribution persist below the base of oxidation?

• 3 Is mineralisation syngenetic or epigenetic?

Since the ironstone package of rocks under investigation sits within the Yellowstone Shear which presents an ideal environment for both generation and migration of deep seated mineralised fluids. The Yellowstone Shear is a major structural feature with clear potential to have tapped deep seated mineralised fluid sources. Drilling to depths below the base of oxidation is the only means to answer the queries posed and determine the nature and extent of both copper and gold mineralisation.

Intermediate Priority Prospects

EL 5919 Copper King

Native Dog Prospect

The Copper King EL is 15 km southeast of Broken Hill and along strike of the well mineralised Little Broken Hill line of workings. The metasedimentary package of rocks in prospects within the EL is remarkably similar to that hosting the ore bodies at Broken Hill. The Native Dog prospect is the principal focus of detailed work by Silver City in this EL. Work has been carried out on this prospect by a number of previous companies but with only limited diamond drilling, despite encouraging assay results over a broad area. The 3 km long, geochemical zinc anomaly is well defined by close spaced Niton XRF. Planned detailed structural mapping will enable Silver City to define additional drill targets within the anomalous

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46 Independent Geologist’s Report

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geochemical zone prior to release of the IPO. Native Dog is a large anomalous zone with significant possibilities within the fold structures for economic mineral concentrations. The proposed exploration program is cost effective and expected to be definitive with respect to discovering the presence or not of economic ore.

EL 3478 Mulyungarie (SA) and EL4657 Mundi Mundi (NSW)

Two Exploration Licences cover contiguous ground in South Australia and New South Wales. The area is underlain by Proterozoic rocks of the Willyama Supergroup comprising equivalent sedimentary units to the Broken Hill and Thackaringa Groups. The project is focused on two strong northeast-southwest trending magnetic anomalies beneath variable thickness young cover. Three previous diamond drill holes in the area intersected metamorphosed banded iron formation (BIF); core from the two more recent drill holes was reviewed for purposes of this report. The clastic sedimentary sequence in DDWPG-2 also contains basic volcano-sedimentary derived sediment (now amphibolite). BIF units in DDWPG-1 were upgraded to massive, coarse-grained magnetite/hematite beds and magnetite/hematite/quartz beds. Coarse and fine grained banding within the massive magnetite/hematite units reflects relic bedding. BIF units in DDHWPG-2 show considerable soft sediment slumping and brecciation prior to diagenesis and regional tectonic events. Although the BIF is highly contorted as a result of soft sediment deformation there was insufficient metamorphic upgrading to remove silica and oxidize magnetite to hematite. Rock sequences overlying and underlying the BIF are amphibolite facies, metamorphic equivalents of a parent ferruginous sedimentary rock. Arkoses form the most abundant sedimentary units which are altered to granoblastic textured albitites.

Significant features observed in drill core are brecciation, veining, alteration and mineralisation in both BIF and coarser grained albitic rocks. It is probable that hydrothermal fluids accompanied saline fluids exsolved from the sedimentary package during metamorphism. Alteration assemblages of chlorite, pyrite, magnetite, hematite, quartz and mica are evident in small veins and aggregates within the metasedimentary sequence. Fine gold grains extracted from pyritic albitite indicate that gold accompanied alteration fluids and the presence of pyrite suggests a degree of sulphidation. Low gold and REE values also were recorded from core samples in DDWPG-1. Analysis of pyrite grains indicate that the gold is contained in the pyrite lattice but that cobalt and nickel are present in pyrite cores and rims.

To draw conclusions on deposit type or potential for gold, REEs + copper is difficult based on the results of two widely spaced diamond drill holes. Indications suggest higher temperature oxygenated fluids were introduced at some stage during diagenesis or early metamorphism. These fluids may either add gold and REEs to the BIF and/or scavenge these elements from the BIF and deposit them in veins or disseminations within the surrounding sedimentary package. A granitic source for the hydrothermal fluids is yet to be established. Mineralisation in this prospect fits within a general category of iron oxidecopper-gold (IOCG) deposits. Additional deep drilling is necessary to develop an understanding of the geological setting, ore distribution, possible mineral source and to locate additional mineralisation.

Lower Order Prospects

Silver City has identified a large number of prospects within tenements currently designated as lower priority. The ranking does not imply that further work is not required but rather that insufficient information is available from prior exploration and/or that follow up work is yet to be carried out.

EL 5646 Mt Robe

Iron Duke Project

Mt Robe Exploration Licence contains the Iron Duke and Wolseley Prospects which are located west and east of the Apollyon Valley Shear Zone respectively. Only the Iron Duke Project is discussed here as it has possible affinities with IOCG type mineralisation.

The Iron Duke prospect is contained within a prominent rounded hill rising from the plain adjacent to Lakes Grave Creek. It comprises bedded metasedimentary rocks in which ironstone forms prominent podiform masses aligned in a ‘Y’-shaped configuration across the hill and its spurs. Most ironstone pods were mined out in the past for smelter flux; only the more siliceous ironstone pods remain intact. The Iron Duke ironstones appear to have been rootless blobs of massive magnetite/hematite and silica emplaced in shear zones. A large and complex aerial magnetic anomaly underlies the prospect, however the elongation trends of the magnetic anomaly in no way reflect the distribution of ironstone pods or westerly dipping metasedimentary sequence. Examination of most mined pits at Iron Duke indicates that ironstone emplacement is related to the presence of shear zones. The ironstone bodies are massive cross-cutting epigenetic bodies located in structural or stratigraphic traps. Iron Duke ironstones are akin to the stratiform, silica-rich ironstones proximal to porphyritic granite intrusives near Tennant Creek and in parts of Nevada where they form part of the spectrum of IOCG deposits. Ironestones are common in Proterozoic environments due to the abundant formation of oxidised sedimentary basins and fluid inputs from magnetite dominated granites. This geological setting produced high temperature saline fluids

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Silver City Prospectus 47

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capable of transporting copper and gold as chloride complexes together with trace elements such as U, REEs, Mo, Se, and W. It is noteworthy that some of these elements appear weakly anomalous in samples taken by Silver City from the Iron Duke prospect.

Current geophysical interpretation does not appear to agree with mapped geology and further geophysical work such as ground magnetics is suggested to better detect and define the attitude of any deep magnetic bodies. A gravity survey may be useful to confirm or exclude the presence of any underlying granite. Exploration results to date show unusual geological, geochemical and geophysical characteristics perhaps sufficient to warrant additional geochemical and geophysical work in order identify drill targets.

EL 7300 Aragon

Champion, Hidden Secret South and Brunihill

The Aragon EL contains six or more prospects of which Champion and Hidden Secret were visited by the writer. The prospects comprise quartz-gahnite-garnet rocks that are the significant host rocks associated with the Broken Hill Lode. In the past five shafts were sunk into the Champion lode which suggests there was sufficient ore grade material to warrant the cost of extraction.

Silver City plan a compilation of all prior exploration and drilling data followed by extensive Niton surveys and detailed structural mapping. RAB drilling is anticipated to be carried out on two prospects. This drilling will assist in tracing known trends of BHT mineralisation under thick soil cover and perhaps better define deeper targets for additional drilling.

EL 6188 Euriowie

Yalcowinna Creek Prospect

A prospect of lesser priority within the Euriowie EL is Yalcowinna Creek [Cu Co (Au Zn Bi)].

Yalcowinna Creek is a large but low order copper anomaly with a strike length of more than one kilometre. The anomaly is open along strike and down dip and a program of RAB holes is planned in the near future to see if copper grades increase along strike or down dip.

Conceptual Projects

Interceptor EL6863, Humungus EL 6864 are located in the north and far west of the Silver City tenement block. Paragon Group and Adelaidean rock sequences underlie the two ELs and are reported to have potential for Mt Isa type MVT mineralisation. The area is mostly under cover and was not visited. A gravity survey was carried out which together with aerial geophysics is hoped to assist in regional interpretation of the geology.

Nightrider EL 7228 surrounds the Dome 5 EL prospect which is subject to a joint venture by other companies. Apart from the potential for BHT mineralisation at depth, MVT Pb-Zn mineralisation occurs in Adelaidean rocks on the flanks of Dome 5. This mineralisation extends into the Nightrider EL but at depth away from the up doming of Adelaidean rocks at Dome 5 prospect. Gravity surveys are expected to assist in the interpretation of possible carbonate sediment hosted mineralisation in the non outcropping Nightrider area. The MVT prospects are designated as conceptual at this stage due to lack of outcrop and cost of necessary deep drilling.

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48 Independent Geologist’s Report

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Conclusions

Directors of Silver City have secured a large area of exploration tenements that contain some of the most prospective ground in the Broken Hill region. Since discovery of the main Broken Hill lode in 1883 the area has been one of the most explored in Australia. A few small mines have emerged in the region since the initial Broken Hill discovery but none compare to the Broken Hill mine itself. Was the bulk of the mineralisation concentrated in a single large basin or did mineralised fluids also accumulate in a number of sub basins? Based on the number of widely dispersed prospects the latter would appear to be the case. Were the obvious, widely spread, mineralised fluids sufficient or insufficient to form economic deposits? If emanating mineralised fluids were insufficient to form additional ore deposits then economic accumulations do not exist. Conversely if there was sufficient mineral bearing fluid to form additional discrete pockets of mineralisation then they are simply hard to find. Why are they hard to find?

It took over 100 years to recognise that the Broken Hill orebody is upside down and that the sedimentary sequence enclosing the ore forms the underside of a recumbent nappe. The process of ore formation at Broken Hill was the subject of an equally lengthy debate. High grade metamorphism masked the original textures and compositions of sediments in which zinc and lead precipitated and crystallized. Ore genesis is not discussed here except to state that ore formation was tied to the origin of the rocks which clearly was not always the same throughout the region. Variable sediment inputs and compositionally differing metal sulphate fluids contributed material to a number of sub-basins, rather than to a single very large basin. Compressional tectonic activity probably commenced during lithification and mineral diagenesis within the basin sediments. Multidirectional periods of folding and faulting piled fold upon fold and imposed high-grade and retrograde regional metamorphic effects on the rocks. In much the same way as one rucks up a large table cloth, with numerous wine stains, into one small corner of the table. Some spots will be visible but most are probably hidden in the folds.

At Broken Hill ‘spots of wine’ are ore deposits; some spots are large and some are small, some are visible at or near the surface while others lie buried within a mass of complex folds and shears. Crustal shortening in the region is estimated to be greater than 20:1 and during this type of severe folding the dense ore is squeezed like paste within tight fold hinges; a process often aided by the presence of amphibolite which behaves like grease. Gravity subsequently may cause downward migration of the heavy mineral fraction into shear zones or within plunging folds of lighter sedimentary material. At Broken Hill lead-zinc ore pods (droppers) continue to move downward as drops off the end of the coat hanger shaped ore body. In this way ore within steeply dipping anticlines and synclines may move downward to accumulate as thickened ore deposits in the noses of fold structures at depth with no surficial evidence of mineralisation.

Silver City is faced with unraveling this very complex structural picture and is using the latest information and analytical techniques to assist in the quest for economic ore deposits. Rigorous structural mapping and interpretation, together with an ability to recognise lithologies and compositions associated with BHT ore deposition, are key factors in the exploration process. While Silver City arguably has the best expertise for this exacting work, the Company may have difficulty finding additional technical expertise with Broken Hill familiarity, beyond what is already contracted. The Company has a substantial program of work planned to advance a number of high priority prospects as well as comply with Exploration Licence time constraints and expenditure commitments. The availability of additional staff could impact on the rate at which the large number of prospects described in this document are developed or prioritised and brought to the drilling stage.

With respect to the budget proposals outlined in this Prospectus, the Exploration Licence expenditure commitments should fall within the minimum budgets proposed for the active tenements. The degree to which proposed drilling can be carried out on high priority prospects is clearly dependent on the amount of working capital raised on completion of this offer. The budget scenarios outlined in the Prospectus accommodate additional drilling on high priority projects beyond the first year. Overall Silver City has carried out technically sound and cost effective exploration and is well positioned to face the large task of achieving its stated future goals.

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Silver City Prospectus 49

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Table 1: Project Summary and Ranking

Project	Tenement	Geological Characteristics	Model	Next Stage of Exploration
Advanced Projects
Allendale	EL 5764	Broken Hill Group. Abundant folded lode rocks	BHT	Drill targets defined, extensions also require further mapping and sampling.
Maybell	EL 6132	Broken Hill Group. Multiple lode rocks and small veins	BHT, Thackaringa Ag Veins	Follow-up drilling.
Razorback West	EL 7203	Broken Hill and Thackaringa Group rocks. Lode rocks identified	BHT	Follow-up RAB, RC drilling.
Stephens Trig	EL 6132	Broken Hill Group. Lode horizons mostly under cover.	BHT	Compilation and evaluation of all historic data with view to under- standing geology and drill testing new targets.
Golden King	EL 7319	Thackaringa Group rocks, mylonitic and retrograde shear zones as host.	Copper-gold veins	Mapping, sampling, RC drilling.
Yellowstone	EL 7390	Thackaringa Group rocks hosted in retrograde schist shear zone.	IOCG, copper-gold vein	Drilling both core/RC needed to test Cu-Au beneathe base of oxidation.
Intermediate Projects
Native Dog	El 5919	Broken Hill Group rocks, abundant lode horizons. NE extension of the Little Broken Hill mineralised trend.	BHT	Detailed geological mapping and rock-chip sampling
Mulyungarie Mundi Mundi	EL s 4657 and 4705	Broken Hill and Thackaringa Groups	IOCG	Sequence under 100m of cover. Rotary mud drilling with diamond tails planned to test broader zone than existing two holes.
Hidden Treasure	EL 6132	Broken Hill Group, tightly folded lode horizons. Plunging shoots defined	BHT	Data compilation and geological interpretation. Drill test down-plunge extension.
Ziggys	EL 6036	Broken Hill Group; poor outcrop on margin of strong magnetic anomaly	BHT	Continued RAB drilling to define extent of anomaly

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50 Independent Geologist’s Report

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Table 1: Project Summary and Ranking continued

Project	Tenement	Geological Characteristics	Model	Next Stage of Exploration
Early Stage Projects
Yalcowinna Creek	EL 7319	Thackaringa Group, lower part of Willyama Supergroup.	Cu-Co-rich BHT equivalent	Data compilation. Reconnaissance RAB drilling.
Iron Duke	EL 5646	Ironstone outcrops, magnetite breccias and strong magnetic anomaly with weak but anomalous geochemical response in Mo and REE. Hosted in Sundown Group and underlain by 1600 Ma granites (Hiltaba age)	IOCG	Ground magnetic surveys
Champion, Hidden Secret South, Brunihill	EL 7300	All hosted in Broken Hill Group. Lode horizons identified.	BHT and Thack- ainga Ag veins	Detailed mapping and rock chip sampling required.
Apollyon Valley	EL 6475	Numerous Thackaringa-type workings hosted in large retrograde shear zone. Shear interpreted to extend to mid-crustal levels.	High grade Thackaringa Ag veins and BHT	Mapping, reconnaissance sampling
Wolseley	EL 5646	2 km long zone of lode rocks	BHT	Data compilation, geological interpretation, detailed mapping and rock chip sampling
Parnell	EL 6132	Broken Hill Group, tightly folded lode horizons.	BHT	Data compilation and geological interpretation
Purnamoota conductor	EL 7300	Broken Hill Group, tightly folded lode horizons. 4 km long EM conductor, thought to be predominantly pyrrhotite.	BHT	Data compilation and geological interpretation. Rock chip sampling and detailed mapping
Mt Brown	EL 7319	Himalaya Formation	BHT	Geological mapping and geochemical sampling.
Anomaly Hill	EL 6468	Upper Willyama Supergroup	IOGC/BHT	Detailed historic data review.
Conceptual Projects
Nightrider Humungus Interceptor	EL 7228 EL 6864 EL 6863	Adelaidean rocks	MVT	Conceptual target, assessment of existing geophysical data.

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51

Silver City Prospectus

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Sources of Information

In respect to the sources of technical information I am satisfied that Silver City has made available all copies of relevant Company reports or directed me to sources within the NSW Department of Mineral Resources to review open file reports by previous workers. Reports on work carried out in areas that are now within and surrounding tenements under the control Silver City are in the public domain and available in digital format. Some of that information has been used as background information in preparation of the Prospectus and this Independent Geologist’s Report.

Statement of Capability and Independence

The directors of Silver City commissioned me to prepare this report. I am a qualified geologist with over 43 years experience in mineral exploration. I have worked for several major mining companies based overseas and in Australia. For the past ten years I have been a geological consultant working both within Australia and some twenty countries in Asia, South East Asia, Eastern Europe, South West Pacific, North and South America. I have a wide range of commodity experience in diverse geological environments, with greater emphasis on gold and copper-gold deposits in Proterozoic and younger volcanic arc terrains.

I am independent of Silver City and all of its associated companies and I have no interest in any of the exploration tenements or any entitlement to any of the assets or securities of the Company. Payment for service is based entirely on standard rate professional fees plus reimbursement for out of pocket expenses relating to the examination of properties and preparation of this report. Payment of my professional fee is not contingent on the outcome of the proposed equity raising, pursuant to the issuance of the Prospectus for which this report is written.

Limitations and Consent

Assessment of geological concepts and prospect descriptions contained in the Prospectus is based on reports, CD ROMs, maps and figures supplied by Silver City, from my own geological records and public domain reports. Field visits were made to selected higher priority project areas where outcrops were accessible in reasonable time and geological, geochemical and geophysical work continues to be carried out. Drill core inspection took place in Broken Hill. The statements contained in this report are based on that information and represent my independent assessment of the mineral assets of Silver City Mining Limited.

Yours sincerely

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John B Seeley

MSc(Hons), Grad.Dip.App.Econ., MAusIMM, FSEG, FAIME

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52 Independent Geologist’s Report

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APPENDIX: 1

Summary of characteristics of relevant mineralisation styles

1. Iron Oxide Copper-Gold Deposits (IOCGs)

This style is typified by the giant Olympic Dam Deposit in the Gawler Craton to the west of the Curnamona Craton. Others of this type include Prominent Hill and Carapateena in South Australia, Ernest Henry and Selwyn in the Mount Isa District and the deposits of the Tennant Creek district in Central Australia. A number of smaller prospects have been recognised to the west of Broken Hill within the Curnamona Craton, probably the most significant being Kalkaroo. They are characterised by abundant iron oxides, magnetite and hematite, and contain accumulations of copper, gold, uranium, silver, molybdenum and often rare earth elements. They are associated with magmatic/volcanic activity. The Iron Duke prospect within the Silver City Mt Robe Tenement and the K1 Prospect in Mulyungarie and Mundi Mundi Tenements may be of this style.

2. Mt Isa Sediment-hosted Stratiform Lead-Zinc-Silver

Geochronology of the Paragon Group in the Broken Hill district, a sequence of carbonaceous pelitic rocks suggests that it is at least in part the same age as the Urquhart Shale in the Mt Isa district. The Urquhart Shale is the host to the large Mt Isa Pb-Zn-Ag deposit. The prospectivity of the Paragon Group is derived from this chronological correlation and the presence of weakly mineralised rocks at this stratigraphic position in the Paragon Group. As yet no significant mineralisation has been recognised. Silver City Tenements which host the Paragon Group include Eldee Creek, Apollyon Valley, Aragon and Mt Robe.

3. Mississippi Valley Type Lead-Zinc (MVTs)

Recently published data on drilling program by other explorers at the Dome Five prospect some 35km northwest of Broken Hill has shown that MVT styles of mineralisation occur in dolomitic rocks within the Neoproterozoic rocks of the Adelaidean Group which unconformably overlie the Willyama Supergroup. This is the first time this style of mineralisation had been described in the district and opens up large tracts of land where Adelaidean rocks outcrop for future exploration. Silver City Tenements prospective for this style of mineralisation are Nightrider, Humungus, Woolwoolahra and Interceptor.

Thackaringa Type Veins	Copper-Gold Veins
Host Rocks Willyama Supergroup, wide range of ages, preferentially hosted in schist zones, shallow-moderate east to southeast dips	Host Rocks Willyama, wide range of ages.
Igneous Association None	Igneous Association None
Structural Setting In retrograde shears. Implication is these are younger than BHTs	Structural Setting Mylonitic or retrograde shear zones
Deposit Morphology Discontinuous, generally short strike length, narrow viens (<2m wide)	Deposit Morphology Discontinuous but with persistent strike to 800, narrow veins (<1 to 10m wide)
Mineralogy Non-laminated, crustiform siderite-(barite)-quartz gangue with silver-rich galena,pyrite, arsenopyrite, chalcopyrite, tetrahedrite pyrargyrite. High grade silver minerals especially chlorargyrite in oxidised weathered zone.	Mineralogy Quartz gangue. Veins, vein stockwork, stringers, locally chalcedonic and laminated. Pyrite, chalcopyrite, pyrrhotite, gold.
Alteration None	Alteration Narrow silicification halos. Chlorite. Possibly tourmaline.
Metals Ag, Pb, Zn, Cu, As	Metals Cu, Au and Ag
Geophysical Signature None known to date	Geophysical Signature IP reported to be effective at Golden King

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Silver City Prospectus 53

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Broken Hill Type (BHT) Mineralisation	Iron Oxide Copper Gold (IOCG) Mineralisation
Host Rocks Variably metamorphosed chemical sediments incl. garnetites, siliceous gahnite rocks, reduced iron formation facies and / or altered calcsil- icates. Occur within meta-sedimentary and / or meta-volcanic to volcaniclastic sequences.	Host Rocks Hosted in variable rock types including felsic to intermediate/basic metavolcanics, metasediments, banded iron formations and intrusives.
Igneous Association Altered basic (basaltic) to intermediate (rhyodacitic) extrusives and intrusives or bimodal volcanics.	Igneous Association Association with igneous activity and usually spatially and temporally related to significant magmatic events.
Structural Setting Structurally modified, remobilised when massive due to later folding and shearing. Occur in rift situations.	Structural Setting Usually localised along high and low-angle faults which are often splays off major crustal scale faults.
Deposit Morphology Stratiform to stratabound. Progressively remobilised with increased metamorphic grades and later shear events. Folded and brecciated via cataclastic remobilisation. Complex ore shapes.	Deposit Morphology Deposits occur in a variety of morphologies ranging from stratabound sheets, to irregular stockwork breccia zones. Virtually all deposits formed by the replacement of the host rock.
Mineralogy Galena, sphalerite, chalcopyrite +/- pyrrhotite, pyrite. Silver mainly in tetrahedrite included in galena. Characteristic gangue minerals are Mn, Fe, Si, Ca, F, Mg and P enriched. Indicator minerals in host rocks include gahnite, Mn garnet and blue quartz.	Mineralogy Characterised by the presence of iron oxide minerals, usually magnetite + hematite and there is a comparative lack of iron sulphides. Almost all the deposits contain rare earth elements and may contain significant carbonate, Ba, P or F.
Alteration Increased Mn, Fe, Si, Ti, P, Ca, Bi, B, Al, Mg, K, Rb and S, and Na depletion. Expressed in host rocks as increased garnet, quartz, biotite, chlorite, K-feldspar, sillimanite, sericite, barite, tourmaline, or as other silicates, Ti-oxides, or disseminated sulphides.	Alteration Host rocks are typically intensely altered. Generally associated with sodic, potassic or hydrolytic (sericite-carbonate) alteration; pre-minerali- sation sodic and sodic-calcic alteration systems tend to be spatially extensive.
Metals Mainly Pb, Zn, Ag and Cu. By-products may include Au, Sb, Cd, As, Co and Bi.	Metals Deposits are generally mined for Cu with Au (or other metals as a credit). Au grades are generally less that 1g/t Au. Chalcopyrite is the dominant sulphide. Minor metals can include U, Ag, Mo, Co, As and Zn.
Geophysical Signature 3 Magnetic surveys useful in locating associated magnetite bearing chemical sediments and some ore types. Useful in tracking broader host stratigraphy and associated iron formations. Usually insufficient pyrrhotite to produce meaningful anomalies. 3 Electrical methods have limited application from surface. IP may be useful in outlining disseminated pyritic haloes and galena rich stringer types. EM limited to galena rich ores. Pyrrhotite enrichments generally non-diagnostic. Zinc rich sulphides poorly to non-responsive to EM and IP. 3 Down hole MMR, EM and IP possibly useful in tracking sulphide rich zones intersected by drill holes.	Geophysical Signature The geophysical signatures are variable but often include: 3 Anomalously high magnetic responses but the deposits are not always coincident with the anomalies. 3 Gravity highs are often coincident with the mineralisation. 3 Some deposits have a high radiometric response although radiometrics are not frequently used as an exploration tool. 3 Conductivity anomalies as the sulphides as well as magnetite and hematite are all conductive. IP and resistivity methods have been successfully used in exploration.

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54 Independent Geologist’s Report

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Mississippi Valley Type (MVT) Mineralisation	Mount Isa-Style Mineralisation
Host Rocks Hosted by marine carbonate rocks.	Host Rocks Hosted in pyritic and carbonaceous dolomitic siltstone.
Igneous Association No obvious igneous activity associated with the deposits. Mineralising fluids were basinal brines.	Igneous Association No obvious igneous activity associated with the deposits. Mineralising fluids were basinal brines.
Structural Setting Typically associated with growth faults, especially basin margin faults.	Structural Setting Typically associated with major growth faults.
Deposit Morphology Replacement and karst-fill deposits, massive to irregular.	Deposit Morphology Stratiform to slightly cross-cutting mineralisation, with stacked tabular bodies.
Mineralogy Sphalerite with or without galena, fluorite and barite.	Mineralogy Mostly pyrite, galena and sphalerite.
Alteration Deposits are commonly associated with a “dolomite front” alteration in which dolomite (Ca Mg carbonate) partly replaces original Ca carbonate	Alteration Haloes of Zn, Pb, Cu, Ag, Tl, Hg, and Mn enrichment extending for km laterally, and anomalous Tl above and below.
Metals Predominantly Zn, Pb	Metals Predominantly Pb, Zn with some Ag.
Geophysical Signature 3 Geophysical methods are generally ineffective in direct detection although gravity may be able to distinguish higher density metal accumulations. 3 Aeromagnetics and gravity methods may help delineate basin morphology and growth faults.	Geophysical Signature 3 The deposits are non-magnetic but are highly conductive. Graphitic host rock would tend to mask both EM and IP responses. 3 Down-hole electromagnetics (“DHEM”) is an effective tool.

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55

Silver City Prospectus

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Independent Review of Tenements

Tel/Fax: (02) 9420 3591 ining itle ervices Pty Ltd Email : bob@amts.com.au ABN 55 133 183 436 Mining Agents & Title Consultants 9 Kinsellas Drive LANE COVE NORTH NSW 2066

24th March 2011

The Directors Silver City Minerals Limited P.O. Box 956 CROWS NEST NSW 1585

Dear Sir

REPORT ON TITLES & NATIVE TITLE

This report is prepared for inclusion in a prospectus to be dated on or about 15th April 2011 to be issued by Silver City Minerals Limited [ACN 130 933 309] (the Company) for the issue of 50,000,000 fully paid ordinary shares in the capital of the Company (Shares) at an issue price of 20 cents per share, to raise $10,000,000 (Offer). The minimum subscription under the Offer is for 30,000,000 Shares to raise $6,000,000, with the right to accept over-subscriptions of up to a further 10,000,000 Shares to raise a further $2,000,000.

The report relates to Titles held in New South Wales (NSW Titles) and South Australia (SA Titles) (collectively the Titles), which are detailed in this report in which the Company holds an interest. The notes to the Titles as set out in the Schedule form part of this report.

Mr Robert Harrison is a Director and Consultant with Mining Title Services Pty Limited (MTS). He has in excess of 40 years experience as a mining and exploration titles consultant in Australasia.

This report has been prepared in accordance with the Valmin Code.

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56 Independent Review of Tenements

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1 Searches and Source Information

We have conducted the following searches and enquiries:

• (a) searches of the NSW Titles as recorded in the Computer Register maintained by the Department of Industry & Investments (DII) pursuant to the Mining Act 1992 of New South Wales (NSW Mining Act), as amended as at 24th March 2011;

• (b) searches of the SA Titles as recorded in the Computer Register maintained by the Department of Primary Industries and Resources (PIRSA) pursuant to the Mining Act 1971 of South Australia (SA Mining Act) as amended as at 24th March 2011; and

• (c) searches of the native title application summaries maintained by the National Native Title Tribunal (NNTT) in the online Computer Register as at 24th March 2011, in relation to those native title claims which affect the Titles.

On the basis of the searches of the Titles, we consider that this report provides an accurate statement as to:

• (a) the status of the Titles as at 24th March 2011; and

• (b) the Company’s interests therein and we note that the annual rental and expenditure commitments for the granted Titles have either been complied with or varied as required, subject to the notations and additional comments to the report.

In addition the Aboriginal and Torres Strait Islander Heritage Act 1984 (Cth.) (Commonwealth Heritage Act) also applies to the Titles and is aimed at the preservation and protection from desecration of significant Aboriginal areas and significant Aboriginal objects. An area or object is found to be desecrated if it is used or treated in a manner inconsistent with Aboriginal tradition.

We have not undertaken searches to ascertain if any Aboriginal sites have been registered in the vicinity of the Titles under any of these Acts listed in Section 2 as there is no obligation, in any of those Acts, to register sites, objects or relics. In any event, their exact location is not ascertain - able from such searches. Further, these enquiries are generally done by the exploration company after the tenure applied for is granted and once a particular work programme has been determined. In those cases it may be necessary to enter into separate arrangements with the traditional owners of the sites.

To ensure that it does not contravene any of these Acts listed in Section 2 while carrying out operations on the Titles, the Company would need to conduct heritage surveys and also request the relevant authority to provide a certificate to determine if any Aboriginal sites exist within the area of the Titles. If so, the Company would need to ensure that any interference with such Aboriginal sites is in strict conformity with the provisions of the above, NPWA, Aboriginal Heritage Act 1988 and the Commonwealth Heritage Act as applicable in each State.

2 Aboriginal Heritage

There may be sites of Aboriginal heritage or significance located on the land on which the Titles are situated.

• a) New South Wales – In New South Wales the National Parks & Wildlife Act 1974 of New South Wales (NPWA) covers the major requirements for protection of Aboriginal objects, Aboriginal places and Aboriginal remains under Part 6 of the NPWA Sections 86 to 91 inclusive. It is an offence to knowingly destroy, deface or damage an Aboriginal object, place or remains without the consent of the Director-General of the Department of Environment Climate Change and Water (DECCW) in accordance with the provisions of Section 90 of the NPWA.

• b) South Australia – the Aboriginal Heritage Act 1988 provides for the protection and preservation of Aboriginal Heritage and extends this protection to Aboriginal sites, Aboriginal objects and Aboriginal remains. It is an offence to damage, disturb or interfere with an Aboriginal site, object or remains. A Register of Aboriginal sites and objects is established and maintained. The register does not purport to be a comprehensive record of all Aboriginal sites, objects and remains in South Australia. Nevertheless, the Aboriginal Heritage Act protects all Aboriginal sites, objects arid remains, whether entered on the register or not.

3 Native Title – Generally

On 3 June 1992 the High Court of Australia held in Mabo -v- Queensland that the common law of Australia recognises a form of native title. In order to maintain a native title claim, the persons making such claim must show that they enjoyed certain customary rights and privileges in respect of a particular area of land and that they have maintained their traditional connection with that land. Such a claim will not be recognised if the native title has been extinguished, either by voluntary surrender to the Crown, death of the last survivor of a community entitled to native title, abandonment of the land in question by that community or the granting of an “inconsistent interest” in the land by the Crown. An example of an inconsistent interest would be the granting of a freehold or some types of leasehold interest in the land. The granting of a lesser form of interest will not extinguish native title unless it is wholly inconsistent with native title.

The Commonwealth Parliament responded to the Mabo decision by passing the Native Title Act 1993 (Commonwealth Act). Amongst other things, the Commonwealth Act :

• (a) regulates the recognition and protection of native title;

• (b) confirms the validity of titles granted by the Federal Government prior to the commencement of that Act on 1 January 1994;

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Silver City Prospectus 57

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• (c) specifies the procedures to be complied with for certain future acts which affect native title; and

• (d) specifies the procedures by which Aboriginal peoples can claim native title and by which people determined to hold native title holders can claim compensation.

The Commonwealth Act was extensively amended in 1998 by the Native Title Amendment Act 1998 (Cth.). These amendments include the validation of any titles that may have been invalidly granted over pastoral leases and certain other leasehold interests during the period 1 January 1994 to 23 December 1996. Other significant amendments include a revised threshold test for the acceptance of native title claims, confirmation of extinguishment of native title by the grant of “exclusive possession” pastoral leases and certain other leasehold interests and provisions intended to deal with overlapping claims.

New South Wales has implemented the Native Title (New South Wales) Act 1994 which adopts the Commonwealth Act in New South Wales.

We have not researched the underlying land tenure in respect of the Titles in order to determine the extent of extinguishment for the purposes of this report.

4 Native Title – Native Title Claims

Persons claiming to hold native title may lodge an application for determination of native title (being a native title claim) with the Federal Court. Applications which are lodged with the Federal Court will be referred to the NNTT for the purposes of registration of the claim.

If the Native Title Registrar is satisfied that a claim meets the registration requirements set out in the Commonwealth Act (Registration Test) it will be entered on the Register of Native Title Claims maintained by the NNTT (Register). Claimants of registered claims are afforded certain procedural rights under the Commonwealth Act including the “right to negotiate” discussed further below.

Claims which fail to meet the Registration Test are recorded on the Schedule of Applications Received maintained by the NNTT. Such claims may be entered on the Register at a later date if additional information is provided by the claimant that satisfies the Registration Test. Claims which are deregistered will lose the right to negotiate from the date of deregistration but will still remain on foot in the Federal Court until such time as they are determined by the Court.

Certain of the Titles relate to land which is currently the subject of at least one or more registered native title claims. These claims are identified in the Notes to the Schedule of Titles attached to this report. The fact that a claim has been lodged does not necessarily mean that native title exists over the area claimed, nor does the absence of a claim necessarily indicate that no native title exists over that area. The existence of native title will be established in due course as the claims are determined by the Federal Court.

All of the NSW titles are within NC97/32 by Barkandji Traditional Owners 8, the claim was lodged on 8 October 1997 and has been accepted under the registration test the application embraces an area of some 128,481.654 sq kilometres. The claim however has little effect due to the following Court determination.

The areas embraced by the NSW titles fall within the Western Division of NSW the vast majority of tenure is held under Western Lands Leases in Perpetuity with small areas of freehold title. Under the High Court Decision in Wilson vs Anderson [2002] HCA 29 (8 August 2002) lands in the Western Lands Division subject to Western Lands Leases in Perpetuity were deemed to have extinguished Native Title.

Accordingly the provisions of the Commonwealth Act would only be addressed as required by condition of the licences if exploration work were to be undertaken on some small area/s of unoccupied Crown Land or land which was held under some alternative form of Western Lands Lease within the licence.

Such lands are normally identified by searching of the areas through the records of the Land Titles Office, prior to implementing exploration activity and as a prerequisite to negotiating access and compensation agreements with the relevant owners/occupiers.

5 Native Title – Validity of Titles

(a) Granted Authorities – New South Wales

(i) Authorities granted prior to 1 January 1994

Under the Native Title (New South Wales) Act 1994 (NSW Native Title Act) Authorities granted in New South Wales prior to 1 January 1994 have been validated to the extent that the grant of the Authority may have been invalid as a result of the existence of native title.

(ii) Authorities granted between 1 January 1994 and 23 December 1996

Under the NSW Native Title Act , certain acts which took place between 1 January 1994 and 23 December 1996, known as “intermediate period acts” were validated.

(iii) Authorities granted since 23 December 1996

Authorities affected by native title rights and interests will be valid provided the applicable processes prescribed by the Commonwealth Act were complied with. The Exploration Licences were all granted after 23 December 1996. We understand that it has been the practice of the New South Wales Government to comply with these processes but we have not undertaken any independent enquiries to confirm that this is the case.

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58 Independent Review of Tenements

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(b) Granted Titles – South Australia

In South Australia under the Native Title (South Australia) (Validation and Confirmation) Amendment Act 2000, freehold and most current perpetual leases have been confirmed as extinguishing native title. Other leasehold land may also fall within this category. The types of tenures covered by this legislation are set out in Part 6, Division 5 of the Native Title (South Australia) Act 1994 and in the Commonwealth's Native Title Act , 1993, in particular Schedule 1, Part 5, Sections 37, 38 and 39.

(i) Titles granted prior to 1 January 1994

Under the Native Title (South Australia) Act 1994 Titles granted in the South Australia prior to 1 January 1994 have been validated to the extent that the grant of Titles may have been invalid as a result of the existence of native title.

• (ii) Titles granted between 1 January 1994 and 23 December 1996

Under the Native Title (South Australia) Act 1994, certain acts which took place between 1 January 1994 and 23 December 1996, known as “intermediate period acts” were validated. In accordance with this Act, native title has been extinguished in South Australia over land which on or before 23 December 1996 was the subject of certain types of Perpetual Lease.

• (iii) Titles granted since 23 December 1996

Titles granted since 23 December 1996 which are affected by native title rights and interests will be valid provided the applicable processes prescribed by the Commonwealth Act were complied with.

(c) Future Titles Grants

As stated above, the valid grant of any of the Titles which may affect native title requires full compliance with the provisions of the Commonwealth Native Title Act in addition to compliance with the usual procedures under the relevant State’s mining legislation. The primary procedure prescribed under the Commonwealth Native Title Act is the “right to negotiate” process. Other procedures generally apply to low-impact titles (such as prospecting and exploration licences) or infrastructure titles.

The right to negotiate process involves the publishing of a notice of the proposed grant of a Titles or permit followed by a minimum 6 month period of negotiation between the relevant State Government, the Titles applicant and the relevant registered native title claimant. If agreement is not reached to enable the grant to occur, the matter may be referred to arbitration before the NNTT, which has a further 6 months to reach a decision. The decision of the NNTT may be reviewed by the relevant Federal Minister.

The Commonwealth Act provides that, in relation to the grant of Titles in certain areas, a State law can operate in lieu of the right to negotiate process of the Commonwealth Act . These areas are principally areas covered by pastoral leases.

The right to negotiate process does not necessarily have to be pursued in cases where either the explorer has previously entered into an agreement with the native title claimants which facilitates the grant of future Titles, or where an indigenous land use agreement (ILUA) is negotiated with the relevant Aboriginal people and registered with the NNTT. In such cases, the procedures prescribed by the ILUA must be followed to obtain the valid grant of the Titles. These procedures will vary depending on the terms of the relevant ILUA.

(d) Renewals

As with the grant of Titles, renewals of Titles granted prior to 1 January 1994, to the extent the renewals were invalid due to native title, have been validated by legislation. Renewals granted between 1 January 1994 and 23 December 1996 have been similarly validated provided certain statutory criteria have been met.

Renewals made after 23 December 1996 of Titles validly granted before that date will not be subject to the right to negotiate process provided:

• (i) the area to which the earlier right is made is not extended;

• (ii) the term of the new right is not longer than the term of the earlier right; and

• (iii) the rights to be created are not greater than the rights conferred by the earlier grant.

There is doubt as to whether the right to negotiate process applies to second and subsequent renewals but this matter is yet to be determined by the courts. Other than as stated above, renewals of Titles are subject to the same right to negotiate (or, pending legislation, alternative State) process as is described above.

6 Risk Factors

The existence of native title and/or native title claims in relation to the land the subject of the Titles may have an adverse impact on the Company’s activities and its ability to fund those activities. It is impossible at this stage to quantify the impact that these matters may have on the Company’s operations but the main risks include:

• (a) delays or difficulties in obtaining the grant of the applications for Titles, renewals or conversions of the Titles, or further applications, as a result of the right to negotiate (or alternative State) process as this process can take as long as 2 years;

• (b) compensation may be payable by the Company as a result of agreements made pursuant to the right to negotiate or alternative process or as a result of a compensation order made by the Federal Court in the event native title has been determined to exist. The amount of such compensation is not quantifiable at this stage;

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Silver City Prospectus 59

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• (c) if native title is found to exist the nature of the native title may be such that consent to mining is required from the native title holders and such consent is withheld or only granted on conditions unacceptable to the Company; and

• (d) the risk that Aboriginal sites and objects exist on the land the subject of the Titles, the existence of which sites and objects may preclude or limit mining activities in certain areas of the Titles. Further, the disturbance of such sites and objects is likely to be an offence under the applicable legislation, exposing the Company to fines and other penalties.

Other risk factors include:

• (e) renewals of exploration licences are matters determined in NSW by the Exploration Title Committee of the Department of Industry & Investment, the Committee determines whether or not a licence should be renewed, the area to be renewed and as and if required whether or not “special circumstances are deemed to exist”, which allow a licence to be renewed for an area greater than 50% of the land held in the previous term, based on information supplied by the licence holder at the time of renewal, in regard to work conducted, expenditure requirements for the previous term and work proposals for the renewal term and proposed expenditure.

7 Qualifications

While the status of the Titles is dealt with in detail in the Schedule hereunder, we point out, that:

• (a) we have assumed the results of the searches which we have made or caused to be made of the Registers established and maintained pursuant to the NSW Mining Act and the SA Mining Act are accurate;

• (b) we have relied on the accuracy of the Registers maintained by DII and PIRSA, and

• (c) the holding of the Titles is subject to compliance with their terms and conditions and the provisions of the NSW Mining Act and the SA Mining Act .

8 Consent

This report is given solely for the benefit of the Company and the directors of the Company in connection with the issue of the Prospectus and is not to be relied on or disclosed to any other person or used for any other purpose or quoted or referred to in any public document or filed with any government body or other person without our prior consent.

Mining Title Services Pty Limited has consented to the inclusion of this report in the Prospectus in the form and context in which it is included and has not withdrawn that consent before the lodgement of the Prospectus with the Australian Securities and Investments Commission.

Titles Schedule

South Australia

			Current to	Renewel	Area	Expenditure	Dealings and
Name	Licence No	Holder	(Appln Date)	Pending	(sq km)	Requirements	Agreements
Mulyungarie	EL 4705*	Platsearch NL (80%)	23-03-2012		29 sq km	$250,000	C & E
		& Eaglehawk Geological			(same area	p.a.
		Consulting Pty Ltd (20%)			as former
					EL 3478)

Notes:

• formerly ELA 2010/00328 See Location Plan “A”

The Mulyungarie – ELA 2010/00328 is a subsequent Exploration Licence Application lodged pursuant to the provisions of Section 30AB of the SA Mining Act.

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60 Independent Review of Tenements

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Titles Schedule

New South Wales

					Area	Expenditure	Dealings and
					(1 unit	Requirements	Agreements
	Licence No	Holder/	Current to	Renewel	= 2.9 sq km	(On renewal	(see notes
Name	(Appln Date)	Applicant	(Appln Date)	Pending	approx)	or grant) $P.A.	below)
Mundi Mundi EL 4657		Platsearch NL	20-04-2012		2 units	$8,000	C & H
Mt Robe	EL 5646*	Broken Hill	22-11-2010	Pending	11 units	$41,000	A, B, F & K
		Operations Pty Ltd				($41,000)
Yanco Glen	EL 5764*	Platsearch NL &	21-08-2010	Pending	6 units	$20,000	A, F & K
		Eaglehawk Geological				($20,000)
		Consulting Pty Ltd
Copper King	EL 5919	Platsearch NL &	23-01-2012		4 units	$14,000	A, F & K
		Eaglehawk Geological
		Consulting Pty Ltd
Eldee Creek	EL 6002	Broken Hill	29-09-2011		13 units	$43,000	F & K
		Operations Pty Ltd
Ziggys	EL 6036*	Silver City Minerals	05-01-2011	Pending	4 units	$34,000	J
		Limited				($14,000)
Stephens-	EL 6132	Platsearch NL,	30-09-2011		43 units	$73,000	F & K
Centennial		Eaglehawk Geological
		Consulting Pty Ltd &
		Triako Resources Limited
Big Aller	EL 6147	Broken Hill	09-11-2011		2 units	$8,000	A, B, F & K
		Operations Pty Ltd
Eurowie	EL 7319*	Silver City	27-02-2011	Pending	87 units	$63,500	H & J
		Minerals Limited				($117,000)
Woolwoolahra EL 6468		Silver City	18-10-2011		24 units	$54,000	D
		Minerals Limited
Apollyon	EL 6475	Platsearch NL	16-11-2011		9 units	$39,000	A, F & K
Valley
Chloe	EL 6542	Silver City	21-03-2012		5 units	$17,000	D
		Minerals Limited
Interceptor	EL 6863	Platsearch NL	04-09-2011		35 units	$65,000	C & H
Humungus	EL 6864	Platsearch NL	05-09-2011		41 units	$71,000	C & H
Ironbar	EL 7203*	Platsearch NL	09-09-2010	Pending	36 units	$38,000	E & G
						($66,000)
Nightrider	EL 7228*	Platsearch NL	27-10-2012		42 units	$72,000	C & H
Aragon	EL 7300*	Silver City	23-02-2011	Pending	100 units	$70,000	F, J & K
		Minerals Limited				($130,000)
Yellowstone	EL 7390	Golden Cross	06-03-2012		69 units	$99,000	L
		Operations Pty Ltd

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61

Silver City Prospectus

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Titles Schedule

New South Wales continued

					Area	Expenditure	Dealings and
					(1 unit	Requirements	Agreements
	Licence No	Holder/	Current to	Renewel	= 2.9 sq km	(On renewal	(see notes
Name	(Appln Date)	Applicant	(Appln Date)	Pending	approx)	or grant) $P.A.	below)
Strawcastle	EL 7705	Silver City	17-02-2013		43 units	$41,500
		Minerals Limited
Windy Hill	[ELA 4104]	Silver City	(27-10-2010)		13 units	($26,500)
		Minerals Limited
Bitterkeep	[ELA 4125]	Silver City	(18-11-2010)		27 units	($33,500)
		Minerals Limited
Goblin	[ELA 4199]	Silver City	(15-03-2011)		46 units	($43,000)
		Minerals Limited
Golden	M(C)L 293	Riley Ward	28-09-2013		2 hectares	$2,000	I
King Lease
Golden	M(C)L 13	Stephen Roy Hoare	30-06-2012		0.25 hectares	$2,000	I
King Lease
Golden	M(C)L 14	Stephen Roy Hoare	30-06-2012		0.25 hectares	$2,000	I
King Lease

All of the NSW Exploration Licences and applications are for Group 1 Minerals (Metallics) which includes the minerals set out hereunder:

*** Renewal Applications:**

Section 117 of the Mining Act 1992, as amended, provides

• “117 Authority to have effect until application dealt with

• (1) If an application for the renewal of an authority is not finally dealt with before the date on which the authority would otherwise cease to have effect, the authority continues to have effect, in relation only to the land to which the application relates, until the application is finally disposed of.”

The consideration of renewal applications is made by the Department of Industry & Investment after review and consideration of the renewal proposals and the work undertaken to date and planned for the renewal term. Renewals are usually processed within 6 months of application being lodged.

Group 1 (Metallic Minerals)

(Includes: antimony, arsenic, bismuth, cadmium, caesium, chromite, cobalt, columbium, copper, galena, germanium, gold, indium, iron minerals, lead, lithium, manganese, mercury, molybdenite, nickel, niobium, platinum group minerals, platinum, rare earth minerals, rubidium, scandium and its ores, selenium, silver, sulphur, tantalum, thorium, tin, tungsten and its ores, vanadium, zinc and zirconia

Exploration Licences 6132, 7300 & 7203 (Act 1992) embrace a number of small areas excluded from the licences by condition being subject to prior titles under the NSW Mining Act , the areas are indicated on the attached Location Plan “B” being within:

• 3 Exploration Licence 6132 (Act 1992) – Mining Lease 6136 (Act 1906) and Mining Lease 6393 (Act 1906).

• 3 Exploration Licence 7300 (Act 1992) – Mining Lease 6271 (Act 1906) & Minerals Claims 7, 9 & 11 (Act 1973).

• 3 Exploration Licence 7203 (Act 1992) – a small part of CML 6 (Act 1973)

ELA 4199 (Act 1992) was lodged with the consent under Section 19(1)(a) of the NSW Mining Act of the holders of EL 5765 (Act 1992) Platsearch NL and Eaglehawk Geological Consulting Pty Ltd. Accordingly under the provisions of the NSW Mining Act , EL 5765 (Act 1992) will on grant of this new application cease to have affect over the area within the said application.

Within Exploration Licence 7319 (Act 1992) the company has entered into an “Option Agreement – Golden King Leases” which includes Mineral (Claim) Lease 293 (Act 1973) (granted for Gold, Silver and Lead) and Mineral (Claim) Leases 13 & 14 (Act 1992) (granted for “All Minerals” see list below) with Stephen Roy Hoare & Riley Ward these titles were originally granted as Mineral Claims however following the introduction of the Mining Amendment Act 2008 on 15 November 2010 these

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62 Independent Review of Tenements

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claims are now held to be Mining Leases under the provisions of the Mining Act 1992, as amended – See Location Plan “B” attached.

NL & Silver City Minerals Limited – Registered 25 February 2009 – NSW-DII – EL 7203 (Act 1992) and Registered 16 October 2009 – SA-PIRSA – EL 3478 & EL 4705

All Act 1992 as amended includes:

Agate, agricultural lime, antimony, apatite, arsenic, asbestos, barite, bauxite, bentonite (including fuller's earth), beryllium minerals, bismuth, borates, cadmium, caesium, calcite, chalcedony, chert, chlorite, chromite, clay/shale, coal, cobalt, columbium, copper, corundum, cryolite, diamond, diatomite, dimension stone, dolomite, emerald, emery, feldspathic materials, fluorite, galena, garnet, geothermal substances, germanium, gold, graphite, gypsum, halite (including solar salt), ilmenite, indium, iron minerals, jade, kaolin, lead, leucoxene, limestone, lithium, magnesite, magnesium salts, manganese, marble, marine aggregate, mercury, mica, mineral pigments, molybdenite, monazite, nephrite, nickel, niobium, oil shale, olivine, opal, ores of silicon, peat, perlite, phosphates, platinum group minerals, platinum, potassium minerals, potassium salts, pyrophyllite, quartz crystal, quartzite, rare earth minerals, reef quartz, rhodonite, rubidium, ruby, rutile, sapphire, scandium and its ores, selenium, serpentine, sillimanite-group minerals, silver, sodium salts, staurolite, strontium minerals, structural clay, sulphur, talc, tantalum, thorium, tin, topaz, tourmaline, tungsten and its ores, turquoise, vanadium, vermiculite, wollastonite, zeolites, zinc, zircon, zirconia.

Notes – Dealings and Agreements

• A) Platsearch NL / Consolidated Broken Hill Joint Venture Agreement dated 19 September 2005 between Broken Hill Operations Pty Ltd, Eaglehawk Geological Consulting Pty Ltd, Platsearch NL – Registered 1 March, 2006 – ELs 5646, 5764, 5919, 6147, 6475 & 5704 – (now Historic) (Act 1992)

• B) Legal and equitable Interest in ELs 5646 & 6147 Agreement dated 28 September 2005 between Broken Hill Operations Pty Ltd, Eaglehawk Geological Consulting Pty Ltd, Platsearch NL created 50% to Platsearch NL in the two licences – Registered 31 January, 2006 – ELs 5646 & 6147 (Act 1992)

• C) Silver City Broken Hill Project, Sale Agreement – Platsearch dated 20 October 2008 between Eaglehawk Geological Consulting Pty Ltd, Platsearch NL and Silver City Mining Limited (now known as Silver City Minerals Limited) - Registered 25 February 2009 – NSW-DII – ELS 4657, 6863, 6864, 7203 & 7228 (Act 1992) and Registered 16 October 2009 – SA-PIRSA.- EL 3478 & EL 4705

• D) Silver City Broken Hill Project, Sale Agreement – Mining Exploration dated 20 October 2008 between Silver City Mining Limited (now known as Silver City Minerals Limited) and Mining Exploration Pty Ltd – Registered 25 February 2009. ELs 6468 & 6542 (Act 1992)

• E) Silver City Broken Hill Project, Sale Agreement – Eaglehawk dated 20 October 2008 between Eaglehawk Geological Consulting Pty Ltd, Platsearch

• F) Silver City Farm In & Joint Venture Agreement dated 30 March 2009 between Broken Hill Operations Pty Ltd, Eaglehawk Geological Consulting Pty Ltd, Platsearch NL, Silver City Mining Limited (now known as Silver City Minerals Limited) and Triako Resources Limited – Registered against ELs 5646, 5764, 5919, 6132, 6147, 6475 & 7300 (Act 1992) on 23 February, 2010 and Registered against EL 6002 (Act 1992) on 18 March 2010.

• G) Silver City Broken Hill Project Sale Agreement – Eaglehawk Extension dated 8 April 2010 between Eaglehawk Geological Consulting Pty Ltd, Platsearch NL and Silver City Minerals Limited) – Registered 7 July 2010 – NSW-DII – EL 7203 (Act 1992).

• H) Silver City Broken Hill Project Sale Agreement Extension – Platsearch NL dated 23 April 2010 between Eaglehawk Geological Consulting Pty Ltd, Platsearch NL and Silver City Minerals Limited) – Registered 7 July 2010 – NSW-DII – ELS 4657, 6863, 6864, 7203, 7228 & 7319 (Act 1992).

• I) Option Agreement – Golden King Leases dated 2 June 2010 between Silver City Minerals Limited, Stephen Roy Hoare & Riley Ward – Registered 30 July 2010 – NSW-DII – M(C)Ls 13, 14 & 293 (Act 1992).

• J) Agreement Silver City Minerals Limited and Eaglehawk Geological Consulting Pty Ltd dated 28 June 2010 between Eaglehawk Geological Consulting Pty Ltd, Platsearch NL and Silver City Minerals Limited) (outlining respective interests in licences – Registered 5 August 2010 – NSW-DII – EL 7300, 6036 & 7319 (Act 1992).

• K) Deed of Variation Silver City Farm In and Joint Venture Agreement ( See “F” – above) dated 4 February 2011 between Broken Hill Operations Pty Ltd, Eaglehawk Geological Consulting Pty Ltd, Platsearch NL, Silver City Minerals Limited and Triako Resources Pty Ltd – Registered 17 February 2011 – NSW-DII – against ELs 5646, 5764, 5919, 6002, 6132, 6147, 6475 & 7300 (Act 1992)

• L) Joint Venture Agreement dated 8 October 2010 between Golden Cross Operations Pty. Ltd and Silver City Minerals Limited – Registered 19 November 2010 – EL 7390 (Act 1992)

For additional information on the various agreements detailed above see “Section 12 Additional Information” in this prospectus.

Yours faithfully

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Bob Harrison

Mining Title Services Pty Ltd

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Silver City Prospectus 63

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9
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Independent Accountant’s Report

BARNES DOWELL JAMES

CHARTERED ACCOUNTANTS

Partners North Sydney C H Barnes FCA Level 13, 122 Arthur St A J Dowell CA North Sydney NSW 2060 B Kolevski (Affiliate ICAA) Manly M Galouzis CA Level 5, 22 Central Ave 15 April 2011 Associate Manly National Building M A Nakkan CA Manly NSW 2095

Correspondence The Directors PO Box 1664 North Sydney NSW 2059 Silver City Minerals Limited PO Box 956 Telephone Crows Nest, NSW 1585 (02) 9956 8500 Facsimile (02) 9929 7428 email: bdj@bdj.com.au Dear Sirs

INDEPENDENT ACCOUNTANT’S REPORT

This report has been prepared, at your request, for inclusion in a Prospectus to be issued by Silver City Minerals Limited (“Silver City”) dated on or about 20 April 2011 in relation to the issue of up to 50,000,000 Shares in Silver City at an issue price of 20 cents each, with the right to accept over-subscriptions of up to $2,000,000.

Scope of our Report

You have requested that Barnes Dowell James report on whether anything has come to our attention that would indicate that the financial information disclosed in Section 9 Appendix A of the Prospectus does not present fairly:

• 3 Silver City’s results for the period from 1 July 2010 (being the date from the last audited financial statements of Silver City) to 31 December 2010; and

• 3 Silver City’s assets and liabilities as at 31 December 2010, both historical and assuming that the Offer and all of the transactions outlined in Section 2 of the Prospectus had taken place on that date.

This financial information has been reproduced at Appendix A to this report, including the financial reporting framework and details of adjustments to the historical financial position.

The Directors of Silver City are responsible for the preparation and presentation of the financial information as set out in the Prospectus, including the assumptions detailed on which they are based.

In our role as Independent Accountant in relation to the Prospectus, we have reviewed this financial information in accordance with Australian auditing standards applicable to review engagements, in particular Auditing Standard AUS 902 – Review of Financial Reports. Such a review is limited primarily to inquiries of Silver City’s Directors and analytical procedures applied to the financial information. These procedures do not provide all of the evidence that would be required in an audit and, accordingly, we do not express an audit opinion.

Expressions used in this report that are defined in the Prospectus have the same meaning as in the Prospectus.

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64 Independent Accountants Report

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Financial Information

The historical financial information has been derived from Silver City’s unaudited financial statements for the period from 1 July 2010 to 31 December 2010.

Silver City’s proforma Statement of Financial Position as at 31 December 2010 reflects the completion of the Offer as though it had taken place on 31 December 2010, and;

• (a) To reflect the completion of the Minimum Subscription under the Offer, includes the following transactions:

• 3 The issue of 30,000,000 shares for $0.20 each, being the Minimum Subscription under the Offer: and

• 3 Costs of $602,000 associated with the issue; and

• (b) To reflect the acceptance of the Maximum Subscription under the Offer, includes the following transactions:

• 3 The issue of a further 20,000,000 Shares for $0.20 each, being the Maximum Subscription under the Offer; and

• 3 Further costs of $240,000 associated with the issue.

Subsequent Events

To the best of our knowledge and belief, there have been no material items, transactions or events, outside the ordinary course of Silver City’s business, that have occurred subsequent to 31 December 2010 which are not otherwise disclosed in the Prospectus that require comment upon or adjustment to the information referred to in this report or which would cause such information to be misleading or deceptive.

Independence

Barnes Dowell James does not have any interest in the outcome of the Offer other than in connection with the preparation of this report and participation in the due diligence procedures for which normal professional fees will be received.

Yours faithfully,

BARNES DOWELL JAMES

A. J. DOWELL Partner

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65

Silver City Prospectus

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APPENDIX A

Statement of Financial Position as at 31 December 2010

Set out below is Silver City’s unaudited Statement of Financial Position as at 31 December 2010 and its proforma Statement of Financial Positions as at 31 December 2010, incorporating the transactions in Note 3.

The proforma Statement of Financial Positions show Silver City’s financial position on the assumption that the Subscription is taken up under the Offer.

is taken up under the Offer.
			Proforma	Proforma
		Historical	Minimum	Maximum
		Consolidated	Subscription	Subscription
		31 December 2010	31 December 2010	31 December 2010
	Note	$	$	$
ASSETS
Current Assets
Cash		806,087	6,204,087	9,964,087
Receivables		26,056	26,056	26,056
Total Current Assets		832,143	6,230,143	9,990,143
Non Current Assets
Deferred Exploration and Evaluation	Expenditure	1,645,132	1,645,132	1,645,132
Property, Plant and Equipment		20,988	20,988	20,988
Tenement Security Deposits		50,000	50,000	50,000
Total Non Current Assets		1,716,120	1,716,120	1,716,120
Total Assets		2,548,263	7,946,263	11,706,263
LIABILITIES
Current Liabilities
Trade and Other Payables		101,862	101,862	101,862
Total Current Liabilities		101,862	101,862	101,862
Total Liabilities		101,862	101,862	101,862
Net Assets		2,446,401	7,844,401	11,604,401
Shareholders’ Equity
Ordinary share capital	4 (a)(b)	3,565,500	9,565,500	13,565,500
Share issue costs	4 (a)(b)	(134,860)	(736,860)	(976,860)
Converting performance shares	4 (c)	4,500	4,500	4,500
Options on issue	4 (d)	4,100	4,100	4,100
Reserves	5	203,384	203,384	203,384
Accumulated losses		(1,196,223)	(1,196,223)	(1,196,223)
TOTAL EQUITY		2,446,401	7,844,401	11,604,401

The historical and proforma statements of financial position should be read in conjunction with the accompanying notes.

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66 Independent Accountants Report

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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS

1. Financial Reporting Framework

The financial information included in this report has been prepared in accordance with applicable accounting standards and other mandatory professional reporting requirements.

The financial information has been prepared on the basis of historical costs and does not take into account changing money values or current valuations of non current assets. Cost is based on fair values of the consideration given in exchange for assets.

The following significant accounting policies have been adopted in the preparation and presentation of the financial information and will be used in the preparation of subsequent financial reports.

• a) Share issue costs

Costs incurred and directly attributable to the issue of Shares are deducted from the proceeds of the issue.

• b) Exploration and Evaluation Expenditure

Exploration and evaluation expenditure is considered separately for each area of interest.

Exploration and evaluation expenditure related to an area of interest will be written off as incurred, except that it may be carried forward providing that rights to tenure of the area of interest are current and provided further that at least one of the following conditions is met:

• (i) Such expenditure is expected to be recouped through successful development and exploitation of the area of interest or, alternatively, by its sale; and

• (ii) Exploration and evaluation activities in the area of interest have not, at balance date, reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant operations in, or in relation to, the area of interest, are continuing.

Capitalised Exploration and Evaluation Expenditure

Exploration and evaluation expenditure incurred by or on behalf of the Company is accumulated separately for each area of interest. Such expenditure comprises net direct costs and an appropriate portion of related overhead expenditure, but does not include general overheads or administrative expenditure not having a specific connection with a particular area of interest. This policy is in line with the requirements of AASB 6.

Exploration and evaluation costs in relation to separate areas of interest for which rights of tenure are current are brought to account in the year in which they are incurred and carried forward provided that:

• (a) such costs are expected to be recouped through successful development and exploitation of the area, or alternatively through its sale; or

• (b) exploration and/or evaluation activities in the area have not yet reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves.

Accumulated costs in respect of areas of interest are written off in the Statement of Comprehensive Income when the above criteria do not apply or when the Directors assess that the carrying value may exceed the recoverable amount. The costs of productive areas are amortised over the life of the area of interest to which such costs relate on the production output basis.

Once a development decision has been taken, all past and future exploration and evaluation expenditure in respect of the area of interest is aggregated within costs of development.

Imp airment Testing

Under Australian equivalents to International Financial Reporting Standards (A-IFRS) all current and non-current assets are subject to impairment testing. The Company has tested the values attributed to assets when impairment is indicated. Such testing will require the Company to identify the smallest group of assets generating independent cash inflows, called cash generating units (“CGUs”), and determine the recoverable amount for each CGU. Recoverable amounts are determined using the higher of either value in use calculated using reliable estimates of future discounted cash flows, or fair values. Where the carrying amount of CGU exceeds the recoverable amount, an impairment loss exists which will be recognised in the statement of income. The Company has determined that there will be no impact from impairment required. It is not practicable to determine the impact of the change in accounting policy for future financial reports, as any impairment or reversal thereof will be affected by future conditions.

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Silver City Prospectus 67

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2. Consolidated Statement of Comprehensive Income

The statements of comprehensive income shown below have been summarised from the Company's unaudited financial statements for the half year ended 31 December 2010.

statements for the half year ended 31 December 2010.
		Proforma Minimum
	Historical	and Maximum
	Consolidated	Subscription
	31 December 2010	31 December 2010
	$	$
Income	25,797	25,797
Less: Expenses
Administration Costs
- Contract administration services	127,084	127,084
- Exploration expenditure expensed	5,186	5,186
- Insurance	6,479	6,479
- Rent	12,540	12,540
- Share-based payments	81,087	81,087
- Travel and accomodation expenses	10,400	10,400
- Other costs	26,694	26,694
Total Expenses	269,470	269,470
Loss for the Period	243,673	243,673
Accumulated Losses brought forward	952,550	952,550
Accumulated Losses carried forward	1,196,223	1,196,223

3. Proforma Statement of Financial Position

The proforma statement of financial position as at 31 December 2010 that reflects the completion of the Minimum and Maximum Subscriptions under the Offer as though it had taken place on 31 December 2010 (Proforma Minimum and Proforma Maximum Subscription) includes the following transactions:

• (a) The issue of 30,000,000 Shares for $0.20 each (Minimum Subscription);

• (b) The issue of 50,000,000 Shares for $0.20 each (Maximum Subscription); and

• (c) Costs of $602,000 (Minimum Subscription) and $842,000 (Maximum Subscription) associated with the Issue.

The Company will accept a maximum oversubscription of $2 million, raising a total of $12 million. In the advent of an oversubscription additional costs of issue are Brokers’ fees which are calculated at 6% of capital raised.

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68 Independent Accountants Report

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4. Issued Capital

4.	Issued Capital
		Number of Shares	$
(a)	Ordinary shares
	On the assumption that theMINIMUM Subscription
	is taken up under the Offer
	Shares on issue at 30 June 2010 (audited)	38,902,728	3,565,500
	Less: Share issue costs	–	(134,860)
	Shares issued pursuant to the Prospectus	30,000,000	6,000,000
	Less: Costs associated with the issue	–	(602,000)
	Total ordinary shares	68,902,728	8,828,640
(b)	Ordinary shares
	On the assumption that theMAXIMUM Subscription
	is taken up under the Offer
	Shares on issue at 30 June 2010 (audited)	38,902,728	3,565,500
	Less: Share issue costs	–	(134,860)
	Shares issued pursuant to the Prospectus	50,000,000	10,000,000
	Less: Costs associated with the issue	–	(842,000)
	Total ordinary shares	88,902,728	12,588,640
		Number of
		Performance Shares	$
(c)	Converting performance shares
	On the assumption that theMinimum/Maximum
	Subscriptionis taken up under the Offer
	On issue at 30 June 2010 (audited) and at
	31 December 2010 (unaudited)	30,000,000	4,500
	Total converting performance shares	30,000,000	4,500

(i) The Company issued 15,000,000 converting performance shares (CPS) to various parties. The CPS will be converted to the parties as ordinary shares upon the share price of Silver City exceeding $0.50 per share for a continuous period of 30 days within a two year period of listing on the ASX.

(ii) There is a second pool of 15,000,000 JORC converting performance shares (CPS) which are presently held by a trustee, AET Limited, and will be issued and allotted to the first party whose tenement(s) yields a discovery of greater than $150,000,000 (being the perceived value determined by multiplying a JORC indicated mineral resource by relevant market metal prices) as ordinary shares.

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Silver City Prospectus 69

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		Number of Options	$
(d)	Options on issue
	On the assumption that theMinimum/Maximum
	Subscriptionis taken up under the Offer
	On issue at 30 June 2010 (audited) and at
	31 December 2010 (unaudited)	(i) 4,100,000	4,100
	Options issued to Directors and consultants	(ii) 5,925,000	–
	Total options on issue	10,025,000	4,100

(i) The Company issued 3,100,000 options at $0.001 as consideration for the purchase of tenements in December 2008. The options were issued with an exercise price of $0.35 and expiry date of 1 July 2013. The Company issued 1,000,000 options at $0.001 as consideration for the acquisition of Mining Exploration Pty Ltd in December 2008. The options were issued with an exercise price of $0.35 and an expiry date of 1 July 2013.

• (ii) 5,925,000 options issued to Directors and consultants (refer Note 5).

5. Reserves

5.	Reserves
		Number of Options	$
(a)	Share-based compensation reserve
	As at 30 June 2010 (audited)	4,800,000	122,297
	Options issued to Directors and consultants	1,850,000	95,755
	Options expired during the period	(725,000)	(14,668)
	Total share-based compensation reserve at
	31 December 2010	5,925,000	203,384

The share-based compensation reserve represents a valuation of options issued during the period ended 31 December 2010. The cost of these equity-settled transactions is measured by reference to the fair value at the date at which they are granted determined by using the Binomial option valuation methodology model with the below assumptions.

	Number of
Issue	Options	Exercise	Expiry	Expected	Risk-free	Expected	Estimated	Total $
Date	Issued	Price	Date	Volatility	Rate	Life	Fair Value	vested
Dec 08	1,325,000	0.25	30 Jun 11	103.76%	5.65%	2.5 years	$0.0212	28,090	(a)
Nov 09	550,000	0.25	30 Jun 12	123.78%	5.12%	2.6 years	$0.0452	22,529	(b)
Nov 09	200,000	0.25	30 Jun 13	118.71%	5.12%	3.6 years	$0.0454	5,797	(c)
Apr 10	1,000,000	0.25	6 Apr 12	130.23%	4.67%	1.9 years	$0.0481	48,100	(d)
Apr 10	1,000,000	0.25	6 Apr 13	130.23%	4.94%	2.9 years	$0.0418	31,350	(d)
Nov 10	1,100,000	0.25	30 Nov 12	130.56%	4.87%	2.0 years	$0.0503	29,793	(e)
Nov 10	750,000	0.25	30 Nov 12	130.56%	4.87%	2.0 years	$0.0503	37,725	(f)
	5,925,000							203,384

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70 Independent Accountants Report

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• (a) An amount of 250,000 options were issued to Bob Richardson in lieu of Directors’ fees (125,000 of options expired on 30 November 2009). There were 1,000,000 options issued to Michael Leggo and 200,000 options issued to Justin Clyne as performance incentives, with the value being expensed in the Statement of Comprehensive Income. 50% of the options vested on 31 March 2009 and the remaining 50% vested on 31 March 2010.

• (b) An amount of 250,000 options were issued to Robert Waring and 300,000 to Gregory Jones as payment for Directors’ fees and as performance incentives with the value being expensed in the Statement of Comprehensive Income. 50% of the options vested on 31 March 2010 and the remaining 50% will vest on 31 March 2011.

• (c) An amount of 200,000 options were issued to Justin Clyne as a performance incentive with the value to be expensed in the Statement of Comprehensive Income. 50% of the options will vest on 31 March 2011 and the remaining 50% will vest on 31 March 2012.

• (d) An amount of 2,000,000 options were issued to Chris Torrey as a performance incentive with the value being expensed in the Statement of Comprehensive Income. 50% of the options vested on 6 April 2010 and the remaining 50% will vest on 6 April 2011.

• (e) An amount of 1,100,000 options were issued to employee/consultants of the Company as a peformance incentive with the value being expensed in the Statement of Comprehensive Income. 50 % of the options vest immediately and the remaining 50% will vest 30 November 2011.

• (f) An amount of 750,000 options were issued to Directors in lieu of Directors fees. The options were approved by shareholders at the Company’s AGM held on 30 November 2010. The value of the options is expensed in the Statement of Comprehensive Income. The options vested immediately.

No options have been exercised during the half-year ended 31 December 2010.

6. Financial Reporting by Segments

The Company currently operates solely in the resources industry in Australia.

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Silver City Prospectus 71

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10
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Corporate Governance

The Board is responsible for the corporate governance of Silver City and strives for high standards in this regard. The Board draws on relevant best practice principles, particularly those issued by the ASX Corporate Governance Council, to monitor the business and affairs of Silver City on behalf of the Shareholders by whom they are elected and to whom they are accountable. While the Board attempts to adhere to the principles proposed by ASX, it is mindful that there may be some instances where compliance is not practicable for a company of Silver City’s size.

The ASX Corporate Governance Council’s “Principles of Good Corporate Governance and Best Practice Recommendations” (Recommendations) are referred to for guidance purposes, however all listed companies are required to disclose the extent to which they have followed the Recommendations, to identify any Recommendations that have not been followed and reasons for not doing so. The Board has reviewed the Recommendations and developed the Silver City Minerals Limited Corporate Governance Policy (Corporate Governance Policy) with which the Board will comply.

The following paragraphs set out a summary of the Corporate Governance Policy as it applies to each of the eight principles contained in the ASX Recommendations.

Principle 1:

Lay solid foundations for management and oversight

The Company’s Corporate Governance Policy sets out the requirements for the Board’s composition, the Board’s responsiblities and the specific roles of the Board and the Chairman.

Principle 2:

Structure the Board to add value

The Company complies with most of the recommendations relevant to this Principle, as a majority of Directors are independent. Further, the Board considers that the current Board structure, presently consisting of three Non-Executive Directors and one Managing Director, is adequate for the Company’s current size and operations and includes an appropriate mix of skills and expertise, relevant to the Company’s business.

Principle 3:

Promote ethical and responsible decision making

The Corporate Governance Policy incorporates a Code of Conduct to promote ethical and responsible decision making by the Board. The Code of Conduct provides for standards relating to business and personal conduct, conflicts of interest, ethical standards, confidentiality, health and safety and internal controls.

The Corporate Governance Policy also includes a policy concerning trading in its securities by Directors and employees which is summarised below.

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72 Corporate Governance

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Principle 4:

Safeguard integrity in financial reporting

The Board has implemented an Audit and Risk Committee which shall oversee the Company’s internal accounting controls, financial reporting, the integrity and quality of the Company’s financial information, the independence, objectivity, scope and quality of the external audit and the frequency, significance and propriety of all transactions with related parties. The Audit and Risk Committee consists of the Non-Executive Chairman of Directors, Mr Besley, Non-Executive Director, Professor Plimer (the Committee Chairman) and Mr Jones, who are suitably experienced. This structure meets the ASX’s Recommendations regarding independence, in that it should have a majority of independent Directors and have at least three members.

Principle 7:

Recognise and manage risk

The Audit and Risk Committee shall also oversee the Company’s risk management controls and adequacy of the Company’s system for compliance with relevant laws, regulations, standards and codes. The Corporate Governance Policy includes the Audit and Risk Committee Charter which sets out the Audit and Risk Committee’s responsibilities which include overseeing the adequacy of the Company’s internal control environment and assessing and implementing controls to monitor the financial and business risks relating to the Company. A Health and Safety Committee has also been appointed to ensure the Company’s compliance with all relevant environmental and occupational health and safety laws.

Principle 5:

Make timely and balanced disclosure

The Company, its Directors and staff are very aware of the ASX’s continuous disclosure requirements and operate in an environment where strong emphasis is placed on full and appropriate disclosure to the market. The Corporate Governance Policy includes a Continuous Disclosure Policy and Shareholder Relations Policy which provide procedures for the Company’s compliance with the Corporations Act and Listing Rules and aims to ensure Shareholders are informed of all information necessary to assess the performance of the Company. Under the Continuous Disclosure Policy, the Company Secretary is responsible for communications with the ASX. The Company Secretary is also responsible for ensuring compliance with the continuous disclosure requirements in the Listing Rules and overseeing information disclosure to analysts, borkers, Shareholders, the media and the general public.

Principle 6:

Respect the rights of Shareholders

Under the Shareholder relations policy, all significant information is posted on the Company’s website and, pursuant to the Company’s obligations under the Listing Rules, the Company’s ASX online platform. The Shareholder relations policy promotes effective communication with Shareholders by setting out the various means in which major develoments affecting the Company are communicated to Shareholders. These means include the annual report, quarterly and half-yearly reports. Annual General Meeting and other general meetings and other reports commissioned and released as necessary. The Company will also request its external auditor to attend Annual General Meetings to answer any questions of Shareholders.

Principle 8:

Remunerate fairly and responsibly

Given the size and scope of the Company at this time, the Board considers the establishment of a Nomination and Remuneration Committee to be impractical. However, the Board consisders those matters which would normally be the responsibility of the Nomination and Remuneration Committee, such as the appointment and remuneration of the non-executive Directors, Managing Director, Company Secretary, CFO and other senior executives and employees of the Company. In accordance with Corporations Act requirements, the Company discloses the fees or salaries paid to all Directors, plus the five highest paid officers. The Company has an Employee Share Option Plan that was introduced in April 2011.

Securities Trading and Trading Windows

Directors and employees are encouraged to be long-term holders of the Company’s securities however the sale and purchase of any securities in the Company by Directors and employees is governed by the Share Trading Policy contained in the Corporate Governance Policy. The Share Trading Policy aims to ensure the Directors and employees avoid ‘insider trading’ and in some cases extends beyond the strict requirements of the Corporations Act .

Purchases or sales in the Company's Shares by Directors or employees may not be carried out other than in the 15 day period commencing after the Company’s annual general meeting, release of the quarterly results announcement to the ASX, release of the half-yearly results announcement to the ASX, release of the preliminary final results announcement to the ASX or release of a disclosure document offering securities in the Company. Directors and employees are prohibited from buying or selling the Company’s securities at any time if they are aware of price-sensitive information that has not been made public.

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Silver City Prospectus 73

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11
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Risk Factors

11.1 Introduction

The Shares offered under this Prospectus should be considered speculative because of the nature of the business activities of the Company. Whilst the Directors commend the Offer, potential investors should be aware that an investment in the Company involves risks, which may be higher than the risks associated with an investment in other companies.

There are numerous widespread risks associated with investing in any form of business and with investing in the share market generally. There is also a range of specific risks associated with the Company’s business and its involvement in the exploration industry. These risk factors are largely beyond the control of the Company and its Directors because of the nature of the proposed business of the Company.

Persons considering whether or not to invest in the Company should read the whole of this Prospectus in order to fully appreciate such matters and the manner in which the Company intends to operate, before any decision is made to apply for Shares. Prospective investors should consider whether the Shares offered are a suitable investment for them having regard to their own personal investment objectives and financial circumstances and the risk factors set out below. If in any doubt, they should consult with their professional advisers before deciding whether to apply for Shares.

The Directors have identified some of the major risks associated with an investment in the Company, of which potential investors need to be aware before making a decision on whether or not to invest in the Company’s Shares. The risks identified by the Directors are not exhaustive.

11.2 General Risks

The activities of the Company are subject to usual commercial risks and factors such as industry competition and general economic conditions which may affect the Company’s ability to explore and develop income generating projects.

(a) Exploration and Development

A significant risk for the Company is that the proposed exploration programs will not result in exploration success. Mineral exploration by its nature is a high risk endeavour and consequently there can be no assurance that exploration of the project areas described in this Prospectus, or any other projects that may be acquired in the future, will result in discovery of an economic mineral deposit. Should a discovery be made, there is no guarantee that it will be commercially viable. While the Directors will make every effort to reduce these risks, the fact remains that a commercially viable mineral discovery is very much the exception rather than the rule and success can never be guaranteed.

(b) Development and Acquisition Opportunities

The success of the Company partially depends upon the Company’s ability to identify, secure and develop a portfolio of high quality project interests and strategic industry partnerships. There is a risk that the Company will be unable to secure additional gold, base metals and rare metal project interests on appropriate terms, thereby potentially limiting the growth of the Company.

If the Company acquires only a limited number of gold, base metals and rare metal project interests, poor performance by one or a few of these could severely affect the performance of the Company and thereby severely impact the returns to investors. The integration of new gold, base metals and rare metals project interests by the Company may also be more difficult, and involve greater costs, than anticipated.

(c) Valuation of Tenements

No valuation has been completed of the exploration projects or the Shares of the Company. The Company makes no representation in this Prospectus as to the value of the exploration assets. It is recommended that intending investors and their advisors make their own assessment as to the value of the exploration projects.

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Risk Factors

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(d) Exploration Licences

Mining and Exploration Licences are subject to periodic renewal and Ministerial discretion. In particular, there is no guarantee that applications for future Exploration Licences or production licences will be approved or that renewals will be granted in respect of existing Tenements. Renewal and transfer conditions may include increased expenditure and work commitments or compulsory relinquishment of areas of the Exploration Licences comprising the Company’s projects. Interests in tenements in Australia are governed by legislation and are evidenced by the granting of licences or leases over tenements. Each licence or lease is for a specific term and carries with it annual expenditure and reporting commitments, as well as other conditions requiring compliance. Consequently, the Company could lose title to, or its interest in, the Tenements if licence conditions are not met or if insufficient funds are available to meet expenditure conditions.

(h) Environmental Risks

The minerals and mining industries have become subject to increasing environmental responsibility and liability. The potential for liability is an ever-present risk. The use and disposal of chemicals in the mining industry is under constant legislative scrutiny and regulation.

Exploration work will be carried out in a way that causes minimum impact on the environment. Consistent with this, it may be necessary in some cases to undertake baseline environmental studies prior to certain exploration or mining activities, so that environmental impact can be monitored, and as far as possible, minimised. While the Company is not aware of any endangered species of fauna and flora within any of its project areas, no baseline environmental studies have been undertaken to date, and discovery of such could prevent further work in certain areas.

(i) Health and Safety

(e) Native Title and Land Access

The Company’s activities in Australia are subject to the Native Title Act and associated legislation relating to native title, which are discussed in Section 8, Independent Review of Tenements. Uncertainty associated with native title issues may impact on the Company’s future plans. Such issues include the Company’s ability to gain access to prospective exploration areas, to obtain production titles and meet compensatory obligations.

(f) Aboriginal Sites of Significance

Commonwealth and State legislation obliges the Company to identify and protect sites of significance to Aboriginal custom and tradition. Further details of this legislation are set out in Section 8, Independent Review of Tenements. Some sites of significance may be identified within the Tenements. It is therefore possible that one or more sites of significance will exist in an area which the Company considers to be prospective.

(g) Dependence on Key Personnel

The Company’s success depends to a significant extent upon key management personnel, as well as other management and technical personnel including those employed on a contractual basis. The loss of the services of certain personnel could have an adverse effect upon the Company and its activities. Further, the Company may have difficulty in finding and securing additional technical experts with Broken Hill familiarity. The availability of additional employees and contractors could impact on the rate at which the Company's large number of prospects are developed or prioritised and bought into drilling stage. See Section 12.5 for further information in relation to Material Contracts.

The Company’s activities are and will continue to be subject to health and safety regulations and standards. Failure to comply with such requirements may result in fines and/or penalties being assessed against the Company.

(j) Share Market Conditions

Share market conditions may affect listed securities regardless of operating performance. Share market conditions are affected by many factors such as:

• 3 general economic outlook;

• 3 movements in, or outlook on, interest rates and inflation rates;

• 3 currency fluctuations;

• 3 commodity prices;

• 3 changes in investor sentiment towards particular market sectors; and

• 3 the demand for, and supply of, capital.

Investors should recognise that once the Shares are listed on ASX, the price of the Shares may rise or fall. Many factors will affect the price of the Shares including local and international stock markets, movements in commodity prices, interest rates, economic conditions and investor sentiment generally.

(k) General Economic Factors

Factors such as inflation, currency fluctuation, interest rates, supply and demand and industrial disruption may have an impact on operating costs, commodity prices and stock market processes. The Company’s future possible revenues and Share price can be affected by these factors which are beyond the control of the Company and its Directors.

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Silver City Prospectus 75

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(l) Commodity Prices

Commodity prices are influenced by physical and investment demand for those commodities. Fluctuations in commodity prices may substantially impact upon exploration and development programs and consequently the Company’s Share price. Specifically, changes in the price of gold, base metals and rare metals may have an effect on the Company.

(m) Sovereign Risk

Sovereign risk may arise from the application of restrictive practices implemented by NSW Government agencies that inhibit viable exploration activity.

(n) Litigation

Legal proceedings may arise from time to time in the course of the Company’s business. Furthermore, litigation may be brought against third parties which has an adverse effect on the Company. The Directors are not aware of any legal proceedings pending or threatened against the Company.

(o) Production

If production eventuates, specific risks include:

• 3 adverse geological, seismic and geotechnical conditions;

• 3 failure and/or breakdown of equipment;

• 3 labour disputes;

• 3 industrial accidents; and

• 3 other environmental hazards and risks.

(p) Counterparty Risk

The Company will enter into a number of commercial agreements with third parties. There is a risk that the counterparties may not meet their obligations under those agreements. Commercial consequences are likely to flow from any non-observance of commercial obligations.

(q) Insurance

The Company may, where economically practicable and available, endeavour to mitigate some project and business risks by procuring relevant insurance cover. However, such insurance cover may not always be available or economically justifiable and the policy provisions and exclusions may render a particular claim by the Company outside the scope of the insurance cover.

While the Company will undertake all reasonable due diligence in assessing the creditworthiness of its insurance providers there will remain the risk that an insurer defaults in the legitimate claim by the Company under the insurance policy.

(r) Industrial Disputes

The Company’s projects and businesses may be adversely impacted by industrial disputes by employees of the Company, its contractors, its contract counterparties and/or other third parties. The Company will endeavour to provide working conditions, including salaries, which are consistent with best industry practice in Australia. The Company will also endeavour to ensure its contractors and contract counterparties also adopt such practices. However, the risk of industrial disputes and the potential negative impact on a project or the business of the Company cannot be fully mitigated.

(s) Government Policy

Changes in government, monetary policies, taxation and other laws can have a significant influence on the outlook for companies and the returns to investors.

The Company’s activities will require compliance with various laws, both State and Commonwealth, relating to the protection of the environment, Aboriginal culture and heritage and native title, and occupational health and safety. Changes in government, government policies and legislation could have a material adverse effect on the Company.

11.3 Specific Risks

(a) Silverton Wind Farm

Silverton Wind Farm Developments Pty Ltd (Silverton) is a joint venture established in 2007 for the purpose of developing, constructing and operating the Silverton Wind Farm for electricity generation in NSW. Silverton received planning approval on 24 May 2009 from the NSW Minister for Planning for the installation of 282 wind turbines and associated infrastructure in the Barrier Ranges and concept approval for the installation of a further 316 turbines.

There is a risk that the location of the Silverton Wind Farm may affect the following Silver City Tenements:

• 3 Mt Robe EL 5646;

• 3 Eldee Creek EL 6002;

• 3 Big Aller EL 6147;

• 3 Apollyon Valley EL 6475; and

• 3 Aragon EL 7300.

According to the planning approval conditions, Silverton must consult with Silver City as a holder of an Exploration Licence or Mining Lease to negotiate measures for minimising impact, sterilisation of resources, maximising access and determining appropriate buffer zones.

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Risk Factors

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Silver City is entitled to be part of the consultation process prior to commencement of construction for the wind farm project to be located in the relevant areas. In the future, Silver City may be required to consult with Silverton in respect of the Company’s planned operations, including mine development and related construction.

The full effect of the proposed Silverton Wind Farm on the Company’s activities cannot be presently ascertained. However, potential risks for the Company and its operations may include:

• 3 delays or impeded access to the land;

• 3 delays or limits to exploration activities on the land; and

• 3 in the event of a discovery of a resource, the economic value may be reduced or diminished entirely such as to render any mining activity uneconomic.

(b) Mineral Reserves and Resources are Estimates Only

There is no certainty that any mineral resources, or any mineral reserve, discovered by the Company will be realised. Until a deposit is actually mined and processed, the quantity of mineral resources and reserves, and grades, must be considered as estimates only. In addition, the value of mineral resources and any mineral reserve will depend upon, among other things, metal prices and currency exchange rates. Any material change in quantity of mineral resources or any mineral reserve, or grade, may affect the economic viability of any future mines. Any material reductions in the estimates of mineral resources, or mineral reserves, or the Company's ability to extract any ore, could have a material adverse effect on the Company’s future results of operation and financial condition.

Resource estimates are expressions of judgment based on knowledge, experience and industry practice. Often these estimates are appropriate when made but may change significantly when new information becomes available. Further, there are risks associated with such estimates. Resource estimates are necessarily imprecise and depend to some extent upon interpretations, which may ultimately prove to be inaccurate and require adjustment. Adjustments to any resources descovered by the Company could affect the Company’s development and mining plans.

(c) Limited operating history

The Company was established in 2008 and accordingly has a limited operating history. The prospects of the Company must be considered in light of the risks, expenses and difficulties frequently encountered by companies in their early stage of development, particularly in the mineral exploration and production sectors, which have a high level of inherent uncertainty.

(d) Additional Requirements for Capital

Further funds will be required once the Company completes its proposed exploration and development activities as disclosed in this Prospectus.

Unless and until the Company develops or acquires income producing assets, it will be dependent upon the funds raised by the Offer and its ability to obtain future equity or debt funding to support exploration, evaluation and development of the properties in which it has an interest.

The Company’s ability to raise further equity or debt, or to divest part of its interest in a Tenement, and the terms of such transactions will vary according to a number of factors, including the success of exploration results and the future development of the Tenements, stock market conditions and prices for commodities.

Should it subsequently be established that a mining production operation is technically, environmentally and economically viable, substantial additional financing will be required by the Company to permit and establish mining operations and production facilities. No assurances can be given that the Company will be able to raise the additional finances that may be required for such future activities. Commodity prices, environmental regulations, environmental rehabilitation or restitution obligations, revenues, taxes, transportation costs, capital expenditures and operating expenses and technical aspects are all factors which will impact on the amount of additional capital that may be required.

Any additional equity financing, or the exercise of existing Options, may be dilutive to Shareholders and debt financing, if available, may involve restrictions on financing and operating activities. There are no assurances that additional financing will be available on terms acceptable to the Company, or at all. If the Company is unable to obtain additional financing as needed, it may be required to reduce the scope of its operations or anticipated expansion, forfeit its interest in some or all of its Tenements, incur financial penalties and reduce or terminate its operations.

(e) Reliance on Joint Venture Partners

The Company will be relying on its respective joint venture partners to comply with their respective obligations. In the event of failure of, or breach of agreement by, a joint venture partner, the Company’s business activities and operating results may be adversely affected. In particular, the Directors are unable to predict the risk of financial failure or default by a participant in any joint venture to which the Company is or may become a party. Financial failure of a joint venture party may result in an inability to meet expenditure requirements in respect of the Tenements which could result in their eventual loss or forfeiture.

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(f) Other Risks Specific to the Company

The current and future operations of the Company, including exploration, appraisal and possible production activities may be affected by a range of factors, including:

• 3 geological conditions;

• 3 alterations to programs and budgets;

• 3 unanticipated operational and technical difficulties encountered in geophysical survey, drilling and production activities;

• 3 mechanical failure of operating plant and equipment, adverse weather conditions, industrial and environmental accidents, industrial disputes and force majeure;

• 3 unavailability of aircraft or drilling equipment to undertake airborne surveys and other geological and geophysical investigations;

• 3 poor weather conditions over a prolonged period which might adversely affect mining and exploration activities and the timing of earning revenues;

• 3 unexpected shortages or increases in the costs of consumables, spare parts, plant and equipment;

• 3 prevention or restriction of access by reason of inability to obtain consents or approvals (including clearance of work programs pursuant to access agreements entered into with native title claimants); and

• 3 un-insured losses and liabilities.

• 3 Exploration Licences are subject to periodic renewal in Australia. In particular, the Company has interests in a number of Exploration Licences in respect of which renewal applications are pending. The Company also has a number of Exploration Licences which will expire (if not renewed) in the next 12 months. These Exploration Licences include EL 7203 (Razorback West), EL 6132 (Maybell) and EL 5764 (Allendale), refer to Section 5.3 for further details. There is a risk that the Company's Exploration Licences will not be renewed, including those specifically listed above, or that the conditions of any such renewal may include increased expenditure and work commitments. The Company may also be required to relinquish up to 50% of an Exploration Licence as a condition of its renewal. During the period that a renewal application is being considered by the Department, an Exploration Licence continues to have effect until the application is disposed of, but only in respect of the area of land the subject of the renewal application.

The Company has made an application for a number of Exploration Licences which have not yet been granted including ELA 4125, ELA 4199 and ELA 4104. There is no guarantee that these Exploration Licence Applications will be granted.

The Company could lose title to, or its interest in, its Tenements if licence conditions are not met or if insufficient funds are available to meet expenditure commitments.

• 3 Mining Leases In the event that the Company discovers an economically viable resource, the Company will be required to apply for a Mining Lease to permit the Company to mine that resource. The grant of a Mining Lease is subject to ministerial discretion and accordingly, there is no guarantee that a Mining Lease will be granted.

11.5 Speculative Nature of Investment

The above list of risk factors ought not to be taken as exhaustive of the risks faced by the Company or by investors in the Company. The above factors, and others not specifically referred to above, may in the future materially affect the financial performance of the Company and the value of the Shares offered under this Prospectus. Therefore, the Shares to be issued pursuant to this Prospectus carry no guarantee with respect to the payment of dividends, returns of capital or the market value of those Shares. Potential investors should consider that the investment in the Company is speculative and should consult their professional advisers before deciding whether to apply for Shares in the Company.

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Additional Information

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12
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12.1 Registration

The Company was incorporated as Silver City Mining Limited, a public company, on 5 May 2008 and its name was changed by a special resolution at a Shareholders’ meeting to Silver City Minerals Limited on 30 November 2009. Mining Exploration Pty Ltd ACN 113 513 321 is a wholly owned and largely dormant subsidiary of the Company.

12.2 Share Capital

(a) History of Shares

At the date of this Prospectus, the Company has 48,962,728 Shares on issue.

Since incorporation, the Company has issued Shares as follows:

• 3 Upon incorporation on 5 May 2008 the Company issued 90,000 new Shares at $0.10 per Share cash;

• 3 On or around 29 July 2008 the Company issued 750,000 new Shares at $0.10 per Share cash;

• 3 On or around 16 September 2008 the Company issued 10,100,000 new Shares at $0.10 per Share cash;

• 3 On or around 5 November 2008 the Company issued 2,500,000 new Shares at $0.10 per Share cash;

• 3 On or around 23 January 2009 the Company issued 7,250,000 new Shares at $0.10 per Share cash;

• 3 On 13 November 2009 the Company issued 18,272,728 new Shares at $0.11 per Share cash; and

• 3 On 22 March 2011 the Company issued 10,000,000 Shares to various parties pursuant to the five sale agreements in consideration for the cancellation of the CPS.

(b) History of Options

Since incorporation, the Company has issued Options as follows:

At the date of this Prospectus, the Company has granted for nil cash consideration the following Options:

• 3 On 2 December 2008 at the Company’s first Annual General Meeting 1,450,000 Options at an exercise price of $0.25 per Option expiring on or before 30 June 2011. 50% of these vested on 31 March 2009 and the remaining 50% vested on 31 March 2010 (125,000 have since been cancelled);

• 3 Pursuant to the five sales agreements detailed in Section 12.5(c) of the Prospectus 4,100,000 Options exercisable at $0.35 per Options for a deemed consideration of $0.001 per Option expiring on or before 1 July 2013.

• 3 On 30 November 2009 at the Company’s second Annual General Meeting 2,350,000 Options exercisable at $0.25 per Option expiring on or before 30 June 2013 with 50% of these vesting 31 March 2011 and the remaining 50% vesting on 31 March 2012 (1,600,000 have since been cancelled);

• 3 On 6 April 2010 the Company issued 2,000,000 Options exercisable at $0.25 to the then CEO, Mr Chris Torrey, with 50% vesting immediately and expiring 6 April 2012 and the remaining 50% vesting 6 April 2011 and expiring 6 April 2013;

• 3 On 8 November 2010 the Company issued 1,100,000 Options exercisable at $0.25 per Option with 50% vesting immediately and the remaining 50% vesting 30 November 2011 all expiring on 30 November 2012; and

• 3 On 30 November 2010 at the Company’s third Annual General Meeting 750,000 Options exercisable at $0.25 per Option expiring on or before 30 November 2012.

12.3 Tax Status and Financial Year

The Company will be taxed in Australia as a public company at the prevailing corporate tax rate which is 30%. The financial year of the Company will end on 30 June annually.

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Silver City Prospectus 79

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12.4 Litigation

The Directors are not aware of any legal proceedings which have been threatened or commenced against the Company.

12.5 Material Contracts

Set out below are summaries of the more important provisions of contracts to which the Company is a party and which are or may be material in terms of the Offer or the operations of the Company or otherwise are or may be relevant to an investor who is contemplating the Offer.

The information about the material contracts set out below is brief and indicative only and should be read on that basis.

(a) Directors Deed of Indemnity and Access

As permitted by the Constitution, the Company has entered into a Deed of Indemnity, Access and Insurance (Deed) with each Director. The Deed is subject to restrictions prescribed in the Corporations Act .

In summary, the Deed:

• 3 indemnifies a director, while he is a director and for seven years thereafter, against liabilities incurred as a result of acting as a director subject to certain exclusions and provides for related legal costs to be paid by the Company;

• 3 requires the Company to maintain an insurance policy against any liability incurred by a director in his capacity as a director during that person’s term of office and seven years thereafter; and

• 3 provides a director with a right of access to board papers and other documents while in office and for seven years thereafter.

(b) Joint Venture Agreement between CBH Resources Limited (CBH), Silver City and Various Parties

Parties to the agreement are Silver City, BHO, Triako, PTS and EGC. Pursuant to the SCFJVA CBH subsidiaries, Triako and BHO’s hold 100% interest in the Tenements except for EL 7300 Aragon (the Scheduled Tenement).

Thereafter, Silver City had the opportunity to increase its interest in any particular Tenement in the joint venture from 30% to 65% by undertaking additional expenditure of not less than $500,000 on that Tenement within three years from the formation of the joint venture (Stage 2 expenditure).

Following creation of the joint venture the parties entered into a Deed of Variation with the key amendments as follows:

• 3 Silver City will incur additional exploration expenditure of $3,000,000 over three years commencing 27 August 2010, including $750,000 in the first year and $1,000,000 in the second year, to earn a 75% interest in the Tenements;

• 3 BHO will hold a free carried interest of 30% (15% in respect of the Scheduled Tenement) until commencement of the Definitive Feasibility Study stage;

• 3 Silver City will be the Manager of the joint venture;

• 3 BHO (or its nominee) will have the rights to purchase all lead and zinc concentrates produced from the Tenements;

• 3 The Scheduled Tenement is now held by Silver City (76.5%), BHO (15%) and EGH (8.5%); and

• 3 The Scheduled Tenement is included for the purposes of the expenditure commitments and metal offtake rights.

Silver City has the option of withdrawing from the SCFJVA, or the Deed of Variation at the earlier of either expenditure of $3,000,000 on the Exploration Program or 27 August 2013.

On or about 30 March 2009 Silver City entered into an agreement known as the Silver City Farm In and Joint Venture agreement (SCFJVA) in relation to eight Tenements near Broken Hill, namely, EL 6475 (Apollyon Valley), EL 5919 (Copper King), EL 6147 (Big Aller), EL 6002 (Eldee Creek), EL 5646 (Mt Robe), EL 5764 (Yanco Glen), EL 6132 (Stephens-Centennial) and (EL 7300 Aragon).

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Additional Information

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(c) Sale Agreements

To assemble the initial Tenement collection, Silver City entered into a series of negotiations with five parties, with the object of those parties vending some or all of their assets into Silver City. The result was the successful negotiation of five sale agreements resulting in 12 Tenements being the basis for Silver City’s initial portfolio. The respective vendors and the Tenements which were the subject of these five agreements are listed below.

Vendor and Date
of Agreement	Tenement
Eaglehawk Geological	Zetta*, Ironbar
Consulting Pty Ltd (EGH)	and Mulyungarie
– 12 December 2008
Graynic Metals Ltd (now	Corona*
known as Corazon Mining
Limited (ASX Code: CZN)
– 22 October 2008
Mining Exploration Pty Ltd	Woowoolahra
(MEPL) – 24 November 2008	and Chloe
PlatSearch Ltd	Mundi Mundi,
(ASX Code: PTS)	Mulyungarie,
– 20 October 2008	Interceptor, Gyro*,
	Zetta*, Humungus,
	Euriowie, Ironbar
	and Nightrider
WPG Resources Ltd	Euriowie
(ASX Code: WPG)
– 14 November 2008

• Silver City no longer retains an interest in tenement

Under each agreement Silver City retains the right to hand back any Tenement to a vendor provided Silver City meets certain preconditions relating to expenditure and sufficient notice to that party. This clause benefits Silver City by enabling it to retain only those Tenements which are of the highest prospectivity and value to Silver City. To date, Silver City has returned three Tenements to their vendors being the Corona Tenement acquired under the agreement with Graynic Minerals Ltd, the Gyro Tenement acquired under the agreement with PTS and the Zetta Tenement acquired under the agreements with both PTS and EGC.

The consideration paid by Silver City to the five vendors was through a combination of Shares, converting performance shares (CPS) and Options. Silver City issued 7,250,000 Shares, 4,100,000 Options exercisable at $0.35 each on or before 1 July 2013 and 30,000,000 CPS. The CPS were divided into two pools under the agreements as follows:

1. The first pool of 15,000,000 CPS was issued and allotted to the parties following execution of the sale agreements. The first tranche of CPS were to convert to Shares upon the Silver City Share price exceeding $0.50 for a continuous period of 30 days within two years of listing on the ASX; and

2. The second pool of 15,000,000 CPS were held on trust by Australian Executor Trustees Limited and were to be divided up between the parties according to a formula upon the discovery of a JORC compliant resource with a perceived in ground value of greater than $150,000,000 within five years of listing on the ASX.

In January 2011 the Board made a strategic decision given the change in market conditions and the underlying potential value of the Company, that it was in the best interests of Shareholders to reduce the classes of securities on issue to just Shares and Options and cancel the CPS. Accordingly, on 3 March 2011 an Extraordinary General Meeting of the Shareholders of the Company was held and the 30,000,000 CPS were cancelled and 10,000,000 Shares issued to the CPS holders in lieu thereof.

As a result of cancelling the CPS, no further consideration is payable to the various parties under the sale agreements, however all other rights remain.

The agreements carry with them the onus upon Silver City to meet the statutory expenditure obligations set by the Department and to maintain the Tenements in good standing. In the event that a successful listing on the ASX is not achieved by Silver City before 30 June 2012 then Silver City will be deemed to have withdrawn from the agreements unless extensions are negotiated.

(d) Agreement with Eaglehawk Geological Consulting Pty Ltd (EGC)

By agreement dated 28 June 2010 between Silver City and EGH, the parties agreed to confirm their holdings in three Tenements, namely, Ziggy’s (EL 6036), Aragon (EL 7300) and Euriowie (EL 7319). Pursuant to the agreement Silver City’s holding in Aragon and Ziggy’s is 90% and EGH 10% and with respect to Euriowie Silver City’s interest is 92% and EGH 8%. Clause 10 of the agreement provides that where Silver City and EGH agree on the introduction of additional parties by way of a joint venture arrangement then their interests will reduce proportionally to the extent necessary to accommodate the interest of the additional party. By Deed of Variation between Silver City and other parties as outlined in Section 12.5(c) above, the parties agreed to vary their interest in Aragon to the extent that Silver City now holds 76.5%, EGH 8.5% and BHO (a subsidiary of CBH Resources Limited) 15%.

(e) Agreement with CTEX Pty Limited (CTEX)

Pursuant to an agreement dated on or about 6 April 2010 between CTEX and Silver City, CTEX agrees to provide consultancy services to the Company including:

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Silver City Prospectus 81

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• 3 The services of Mr Chris Torrey as CEO;

• 3 Geological services; and

• 3 Other services required for fulfilment of the role of CEO.

CTEX will charge a daily rate of $1,050 for an annual aggregate of 210 days per year. Work over and above this requires mutual agreement in advance.

Pursuant to the agreement the Company has also issued to Mr Torrey 2,000,000 Options on the following terms and conditions:

• 3 Tranche 1 – 1,000,000 Options to vest immediately at an exercise price of $0.25 and which expire on 6 April 2012; and

• 3 Tranche 2 – 1,000,000 Options vesting 6 April 2011, at an exercise price of $0.25 and which expire on 6 April 2013.

The Tranche 1 Options will be forfeited if Mr Torrey does not hold the position of either consultant, Chief Executive Officer or Managing Director with the Company as at 6 April 2011 and the Tranche 2 Options will be forfeited if any of these positions is not held with the Company as at 6 April 2012.

(f) Golden King Option Agreement

Pursuant to an agreement dated 2 June 2010 between the Company and Stephen Hoare (Option Agreement), as holder of ML No’s 13 and 14, and as having a Power of Attorney to act with respect to ML 293 (all within EL 7319 known as Euriowie), the Company has acquired a three year option to undertake exploration on the three MLs and test them for their mineral and mining potential.

At anytime during the three year period the Company can exercise the option and acquire the three MLs or withdraw from the Option Agreement.

Silver City is required to make the following payments pursuant to the Option Agreement:

• 3 $35,000 which was paid upon execution of Option Agreement;

• 3 $30,000 to be paid within 12 months from the date of the Option Agreement being payable on or before 2 June 2011; and

• 3 $25,000 to be paid within 24 months from the date of the Option Agreement being payable on or before 2 June 2012.

If the Option Agreement is terminated prior to exercising the option then only the payments due prior to the date of withdrawal are payable.

If Silver City elects to exercise the option then the Exercise Price is $500,000 less any of the payments made above. In addition, on exercise the Company will also issue to the holders of the MLs a total of 500,000 Shares collectively in Silver City.

Under the Option Agreement Silver City shall give Mr Hoare the first right of refusal to provide his services as a field assistant to the Company in respect of the approved exploration activities at current market rates on terms and conditions to be agreed.

The holders of the MLs retain the obligation prior to exercising the option to keep the MLs in good standing by attending to payments such as rent, royalty returns and rate payments and also in ensuring continuing compliance with applicable statutory and other requirements. During the option period, MLs 13 and 14 may come up for renewal and the parties have agreed to use their best endeavours to ensure they are renewed or replaced with such title as will protect the holders’ mineral rights.

(g) Golden Cross Resources (GCR) Farm-in and Joint Venture Agreement

Silver City entered into a farm-in and joint venture Heads of Agreement with GCR dated 8 October 2010 in relation to EL 7390 at Broken Hill (Farm-in Agreement). Pursuant to the Farm-in Agreement Silver City has the right to explore for base metals and silver-gold minerals but not nickelplatinum group element minerals and minerals in ultramafic complexes on EL 7390.

To earn a 51% interest in the base metals, silver and gold Silver City will be required to spend on exploration and development activities a total of $600,000 within five years from the date of the Farm-in Agreement. If Silver City earns a 51% interest it may then an additional $400,000 within a further two years to earn an 80% interest and may then apply for an ML to develop and mine the base metals, gold and silver. Silver City must spend at least $50,000 in the first year of the Farm-in Agreement before it may withdraw from the Farm-in Agreement. During the term of the Farm-in Agreement Silver City will be responsible for meeting the minimum annual expenditure required and lodging Annual Reports under EL 7390.

(h) Agreement with Locantro Capital Pty Ltd, Lead Manager

On 31 January 2011, the Company entered into an agreement (Lead manager Agreement) with Locantro Capital Pty Ltd (Locantro). Locantro, will act as Lead Manager for the Company for the issue of the Shares under the Prospectus and will provide the following services:

• 3 raising and introducing a targeted amount of $1.5 million under the IPO;

• 3 assistance with the promotion and support of Silver City;

• 3 liaison with other client advisers;

• 3 the provision of a marketing document and promotion of the IPO to various media services;

• 3 giving written consent to being named in the Prospectus; and

• 3 providing such other services as may be agreed.

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82 Additional Information

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The fee for acting as lead manager is $50,000 +GST. The lead manager fee includes all corporate advice provided for the successful completion of the IPO.

The capital raising and management fee is 6% + GST of the total amount introduced by Locantro from subscriptions for Shares under the Prospectus.

The Company will reimburse Locantro for all reasonable expenses including travel costs associated with the promotion of the IPO.

(i) Services Contract between the Company and PlatSearch NL (PTS)

Pursuant to a services contract dated 28 March 2011 between the Company and PTS, PTS has agreed to provide the following services to the Company:

• 3 technical input in exploration programmes on Silver City Tenements;

• 3 assistance in preparation of technical material for presentations;

• 3 assistance in tenement management; including statutory reporting to the Mines Departments;

• 3 assistance in project management, marketing, geology and interpretation, map making and joint venture negotiation;

• 3 accounting functions including accounts payable;

• 3 reception and office administration; and

• 3 provision of office accommodation and facilities, computing, telephone/communications, hardware, software and expertise, library facilities, map and data files at cost.

Technical personnel will be charged out at industrystandard rates and office facilities and administrations services will be supplied at the cost of $1,945 per month.

The term of the agreement is for one year commencing 1 April 2011. The Company and PTS will renegotiate in respect of any proposed extension of the term prior to the end of the term.

(j) Related Party Agreements

There are two agreements which the Board consider to be related party agreements but for which Shareholder approval was not required under Chapter 2E of the Corporations Act . The first is the Consultancy Services Agreement with Mr Torrey detailed in Section 12.5 (e). The fees paid to Mr Torrey thereunder relate to the performance of his duties as Managing Director and it is the Board’s opinion that such fees constitute reasonable remuneration for his services as Managing Director. The second is the Services Contract with PlatSearch NL detailed in Section 12.5 (i). The Board considers the amounts charged by PlatSearch NL for the services provided thereunder to be in accordance generally with reasonable market rates and the deal was concluded on an arm’s length basis as though PlatSearch NL was an independent third party.

12.6 Rights Attaching To Shares

The Shares to be issued under this Prospectus will rank equally with the issued fully paid ordinary shares in the Company. The rights attaching to Shares are set out in the Company’s Constitution and, in certain circumstances, are regulated by the Corporations Act , the Listing Rules and general law. Where the Constitution omits any provision required under the Listing Rules, the Constitution is deemed to contain such a provision and the Constitution is deemed not to contain any provision inconsistent with the Listing Rules. The Constitution of the Company may be inspected during normal business hours at the registered office of the Company.

The following is a summary of the more significant rights of Shareholders. This summary is not exhaustive, nor does it constitute a definitive statement of the rights and liabilities of the Company’s members. The summary assumes that the Company is admitted to the Official List of ASX.

(a) General Meeting

Each member is entitled to receive notice of, and to attend and vote at, general meetings of the Company and to receive all notices, accounts and other documents required to be sent to members under the Constitution, the Corporations Act or the Listing Rules.

The Directors may convene a general meeting whenever they think fit. General meetings may also be called as requested by the Shareholders or as ordered by a court under section 249D, E, F and G of the Corporations Act .

A Notice of General Meeting must be given in accordance with the Corporations Act and must specify the place, date and time of the meeting, the general nature of the business to be transacted at the meeting, information regarding a Shareholder's right to appoint a proxy, and if a special resolution is to be proposed at the meeting, the text of the special resolution.

A quorum is met with three Shareholders present at the time when the meeting proceeds to business.

(b) Voting

Subject to any rights or restrictions for the time being attached to any class or classes of shares whether by the terms of their issue, the Constitution, the Corporations Act or the Listing Rules, at a general meeting of the Company every holder of Shares present in person or by a representative has one vote on a show of hands and every such holder present in person or by a representative, proxy or attorney has one vote per Share on a poll.

A person who holds an ordinary share which is not fully paid is entitled, on a poll, to a fraction of a vote equal to the proportion which the amount paid bears to the total issue price of the share. A member is not entitled to vote unless all calls and other sums presently payable by the member in respect of shares in the Company have been paid.

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Where there are two or more joint holders of the Share and more than one of them is present at a meeting and tenders a vote in respect of the Share (whether in person or by proxy or attorney), the Company will count only the vote cast by the member whose name appears before the other(s) in the Company’s register of members. No Shares may be issued with voting rights more advantageous than those available to any previously issued Shares. In the case of an equality of votes, the Chairman of the meeting, in additional to their deliberative vote, has a casting vote.

(c) Issues of Further Shares

The Directors may, on behalf of the Company, issue, grant Options over or otherwise dispose of un-issued Shares to any person on the terms, with the rights, and at the times that the Directors decide. However, the Directors must act in accordance with the restrictions imposed by the Constitution, the Listing Rules, the Corporations Act and any rights for the time being attached to the shares in special classes of shares.

(d) Variation of Rights

At present, the Company has on issue one class of shares only, namely ordinary shares. The rights attached to the shares in any class may be altered only by special resolution passed at a separate meeting of the holders of the issued shares of the affected class, or with the written consent of the holders of at least 75% of the issued shares of the affected class.

(e) Transfer of Shares

Subject to the Company’s Constitution, the Corporations Act and the Listing Rules, Shares are freely transferable.

The Shares may be transferred by a proper transfer effected in accordance with ASTC Settlement Rules, by any other method of transferring or dealing introduced by ASX and as otherwise permitted by the Corporations Act or by a written instrument of transfer in any usual form or in any other form approved by the Directors that is permitted by the Corporations Act . The Company may decline to register a transfer of Shares in the circumstances described in the Company’s Constitution and where permitted to do so under the Listing Rules. If the Company declines to register a transfer, the Company must, within five business days after the transfer is lodged with the Company, give the lodging party written notice of the refusal and the reasons for refusal. The Directors must decline to register a transfer of Shares when required by law, by the Listing Rules or by the ASTC Settlement Rules.

(f) Partly Paid Shares

The Directors may, subject to compliance with the Constitution, the Corporations Act and the Listing Rules, issue partly paid shares upon which amounts are or may become payable at a future time(s) in satisfaction of all or part of the unpaid issue price.

(g) Dividends

The Company in general meeting may declare a dividend if the Directors have recommended a dividend and a dividend shall not exceed the amount recommended by the Directors. The Directors may authorise the payment to the members of such interim dividends as appear to the Directors to be justified by the Company’s profits and for that purpose may declare such interim dividends.

Subject to the rights of members entitled to shares with special rights as to dividend (if any), all dividends in respect of shares (including ordinary shares) are to be declared and paid to those persons entitled to those dividends in proportions to the shares held by them respectively irrespective of the amount paid up or credited as paid up on the shares.

(h) Winding Up

Subject to the rights of holders of shares with special rights in a winding up, if the Company is wound up, members (including holders of ordinary shares) will be entitled to participate in any surplus assets of the Company in proportion to the shares held by them respectively irrespective of the amount paid up or credited as paid up on the shares.

(i) Dividend Plans

The members of the Company, in general meeting, may authorise the Directors to establish and maintain dividend plans under which (among other things) a member may elect that dividends payable by the Company be reinvested by way of subscription for Shares in the Company or a member may elect to forego any dividends that may be payable on all or some of the Shares held by that member and to receive instead some other entitlement, including the issue of Shares.

(j) Directors

The Company’s Constitution states that the minimum number of directors is three.

The Shareholders may appoint and remove a Director by ordinary resolution. The Board may appoint any person to be a Director to either fill a casual vacancy or as an addition to the existing Directors and any Director may appoint an alternate director by notice to the Company.

The Listing Rules require that the Company holds an election of Directors by ordinary resolution each year. The Directors, other than a managing director, must not hold office (without re-election) past the third annual general meeting following the Director's appointment or three years, whichever is longer. However, a Director appointed by the Board to fill a casual vacancy or as an addition to the board must not hold office (without re-election) past the next annual general meeting.

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Additional Information

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Under the Constitution, a Director ceases to hold office if the Director becomes bankrupt, becomes of unsound mind, becomes disqualified from being a Director, resigns, is removed, or has been absent from meetings of the Directors without permission from the other Directors, for three consecutive months.

Directors who have a direct or indirect material personal interest in a matter that is being considered at a Directors' meeting must not vote in respect of the matter or be present at the meeting while the matter is being considered, except as permitted by the Corporations Act .

(k) Powers of the Board

The Directors have power to manage the business of the Company and may exercise that power to the exclusion of the members, except as otherwise required by the Corporations Act , any other law, the Listing Rules or the Constitution.

12.7 Compliance with the Listing Rules

If the Company is admitted to the Official List, then despite anything in the Constitution, if the Listing Rules prohibit an act being done, the act must not be done. Nothing in the Constitution prevents an act being done that the Listing Rules require to be done. If the Listing Rules require an act to be done or not to be done, authority is given for that act to be done or not to be done (as the case may be). If the Listing Rules require the Constitution to contain a provision or not to contain a provision the Constitution is deemed to contain that provision or not to contain that provision (as the case may be). If a provision of the Constitution is or becomes inconsistent with the Listing Rules, the Constitution is deemed not to contain that provision to the extent of the inconsistency.

12.8 Directors’ interests

Except as disclosed in this Prospectus, no Director (whether individually or in consequence of a Director’s association with any company or firm or in any material contract entered into by the Company) has now, or has had, in the two year period ending on the date of this Prospectus, any interest in:

• 3 the formation or promotion of the Company; or

• 3 property acquired or proposed to be acquired by the Company in connection with its formation or promotion or the Offer of the Shares; or

• 3 the Offer of the Shares.

Except as disclosed in this Prospectus, no amounts of any kind (whether in cash, Shares, Options or otherwise) have been paid or given or agreed to be paid or given to any Director, or to any company or firm with which a Director is associated to induce him or her to become, or to qualify as, a Director, or otherwise for services rendered by him or her or any company or firm with which the Director is associated in connection with the formation or promotion of the Company or the Offer of the Shares.

a) Remuneration of Directors

Directors are entitled to remuneration out of the funds of the Company but the remuneration of the non-executive Directors may not exceed in any year the amount fixed by the Company in general meeting for that purpose. The aggregate remuneration of the non-executive Directors has been fixed at a maximum of $200,000 per annum (allowing for the appointment of future Directors) to be apportioned among the non-executive Directors in such manner as they determine. The Directors are also entitled to be paid reasonable travelling, accommodation and other expenses incurred in consequence of their attendance at the Board meetings and otherwise in the execution of their duties as Directors.

b) Directors’ interests in Company’s securities

The direct and indirect interests of the Directors in the securities of the Company as at the date of this Prospectus are as follows:

	Shares	Shares	Options	Options
Director	Direct	Indirect	Direct	Indirect
R Besley	–	400,000	–	500,000
C Torrey		130,000	2,000,000	–
G F P Jones	–	–	–	400,000
I Plimer	–	1,000,000	–	–

• Some of the Directors’ Shares and Options are not held in their own names. Those shown in the above table which are not held in the Director’s own name are as follows. Mr Besley’s Shares and Options are held in the name of Jane Besley & Robert Besley <R & J Besley Superannuation Fund. Mr Torrey’s Shares are held in the name of Christopher Torrey and Glenys Torrey and Mr Plimer’s Shares are held in the name of Regine Maja Sainisch-Plimer . The maximum shareholding of any Director on the basis of the minimum subscription being achieved is 1.25%.

Dr M D Leggo was a Director of the Company from 11 September 2008 until 6 April 2010 and holds 200,000 Shares and 1,000,000 Options in the Company. Mr R L Richardson was a Director of the Company from the date of incorporation until 30 November 2009 and holds 250,000 Shares and 125,000 Options in the Company. Mr J B Clyne was a Director of the Company from the date of incorporation until 11 September 2008 and holds 400,000 Options in the Company. Further details on the expected capital structure of the Company are set out in Section 2.7 of this Prospectus.

c) Indemnity and access

The Company has entered into Deeds of Indemnity, Access and Insurance with each of the Directors. Details of the Deeds of Indemnity and Access are set out in Section 12.5(a) of this Prospectus.

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Silver City Prospectus 85

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d) Insurance

The Company intends to effect, and intends to maintain, Directors’ and Officers’ Liability and Company Reimbursement insurance.

services up to the date of this Prospectus. Gadens Lawyers has or may receive professional fees at their normal rates for other legal work for the Company.

John B Seeley has received professional fees of $39,000 for the provision of the Independent Geologist’s Report.

e) Other

Ian Plimer holds mineral rights (other than gold) to an area of 24.3 hectares located within EL 7300 west of the town of Silverton.

12.9 Interests of named persons

Except as disclosed in this Prospectus, no expert, promoter or any other person named in this Prospectus as performing a function in a professional advisory or other capacity in connection with the preparation or distribution of the Prospectus, nor any firm in which any of those persons is or was a partner nor any company in which any of those persons is or was associated with, has now, or has had, in the two year period ending on the date of this Prospectus, any interest in:

• 3 the formation or promotion of the Company; or

• 3 property acquired or proposed to be acquired by the Company in connection with its formation or promotion or the Offer of the Shares; or

• 3 the Offer of the Shares.

Except as disclosed in this Prospectus, no amounts of any kind (whether in cash, Shares, Options or otherwise) have been paid or given or agreed to be paid or given to any expert, promoter or any other person named in this Prospectus as performing a function in a professional advisory or other capacity in connection with the preparation or distribution of the Prospectus, or to any firm in which any of those persons is or was a partner or to any company in which any of those persons is or was associated with, for services rendered by that person in connection with the formation or promotion of the Company or the Offer under this Prospectus.

Barnes Dowell James has acted as independent accountant in relation to the Offer. As independent accountant, Barnes Dowell James has been involved in undertaking due diligence in relation to financial and taxation matters and preparing pro-forma financial accounts, and has prepared the Independent Accountant’s Report which has been included in this Prospectus. In respect of this work the Company has agreed to pay Barnes Dowell James a total of $5,000 for these services.

Gadens Lawyers has acted as the solicitors to the Company in relation to the Offer and in that capacity and otherwise assisting the Company with the preparation of this Prospectus. Gadens Lawyers has been involved in undertaking certain due diligence enquiries in relation to legal matters and providing legal advice to the Company in relation to the Offer. In respect of this work, the Company has agreed to pay Gadens Lawyers $58,000 for these

Mining Title Services Pty Ltd will receive professional fees of $12,000 for the provision of the Independent Tenement Report.

12.10 Expenses of the Offer based on a raising of $10,000,000

The estimated expenses connected with the Offer which are payable by the Company; are as follows:

Independent Accountant’s Report	$5,000
Legal Expenses	$58,000
Independent Geologist’s Report	$39,000
Tenement Report	$12,000
Printing, posting, Share Registry
and other miscellaneous Offer costs	$45,000
ASX listing fees	$33,000
Broker or Dealers’ commission	$650,000
Total	$842,000

12.11 Consents

Each of the parties referred to in this Section 12.11:

• a) does not make, or purport to make, any statement in this Prospectus or on which a statement made in the Prospectus is based, other than as specified in this Section 12.11; and

• b) to the maximum extent permitted by law, expressly disclaims and takes no responsibility for any part of this Prospectus other than a reference to its name and a statement included in this Prospectus with the consent of that party as specified in this Section 12.11.

Barnes Dowell James has given its written consent to the inclusion in Section 9 of this Prospectus of their Investigating Accountant’s Report and to all statements referring to that report in the form and context in which they appear and has not withdrawn such consent before lodgement of this Prospectus with ASIC.

Gadens Lawyers has given its written consent to all statements referring to its role as Solicitors to the Company in the form and context in which they appear and has not withdrawn such consent before lodgement of this Prospectus with ASIC.

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Additional Information

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Locantro has given their written consent before lodgement of this Prospectus with ASIC, to be named in as the Lead Manager to the Offer.

John B Seeley has given its written consent to the inclusion in Section 7 of this Prospectus of its Independent Geologist’s Report and to all statements referring to that report in the form and context in which they appear and has not withdrawn such consent before lodgement of this Prospectus with ASIC.

Mining Title Services Pty Ltd has given its written consent to the inclusion in Section 8 of its Independent Tenement Report and to all statements referring to that report in the form and context in which they appear and has not withdrawn such consent before lodgement of this Prospectus with ASIC.

Christopher Torrey has given consent to the inclusion of the information in Section 5, and has given his written consent to be named as a “Competent Person” as defined in the JORC Code.

Registries Limited has given and, as at the date hereof, has not withdrawn its written consent to be named as Share Registrar in the form and context in which it is named. Registries Limited has had no involvement in the preparation of any part of this Prospectus other than being named as Share Registrar to the Company. Registries

Limited has not authorised or caused the issue of any part of this Prospectus.

Furthermore, each of the following has consented in writing to being named in the Prospectus in the capacity as noted below and has not withdrawn such consent prior to the lodgement of this Prospectus with ASIC:

• 3 Barnes Dowell James as Independent Accountants;

• 3 Gadens Lawyers as the Solicitors to the Company;

• 3 Locantro Capital Pty Ltd as Sponsoring Broker;

• 3 John B Seeley as the Independent Geologist;

• 3 Mining Title Services Pty Ltd as mining title service providers; and

• 3 Registries Limited as the Share Registrar.

Copies of the consents to the issue of this Prospectus are available for inspection, without charge, at the registered office of the Company.

There are a number of other persons referred to in this Prospectus who are not experts and who have not made statements included in this Prospectus nor are there any statements made in this Prospectus on the basis of any statements made by those persons. These persons did not consent to being named in the Prospectus and did not authorise or cause the issue of the Prospectus.

12.12 Details of the Existing Shareholders and Optionholders

The Top 20 holders of Shares and Options in the Company prior to this Offer are as follows:

Shareholder	Number of Shares	% Issued Capital
PlatSearch NL	11,007,000	22.48%
Van Der Horst Energy Ltd	4,318,182	8.82%
Bluestone 23 Limited	3,318,182	6.78%
LAM Speculative Limited	3,070,000	6.27%
Panstyn Investments Pty Ltd	2,625,000	5.36%
Cedar Top Investments Ltd	2,500,000	5.11%
DMG & Partners Securities	2,500,000	5.11%
Germaine Investments	2,000,000	4.08%
Mr Lew Foon Keong Charles	1,818,182	3.71%
Budberth Pty Ltd	1,587,640	3.24%
Yeronda Nominees Pty Ltd	1,587,640	3.24%
Graynic Metals Limited	1,089,000	2.22%
Warman Investments Pty Ltd	1,000,000	2.04%
Ms Regine Maja Sainisch Plimer	1,000,000	2.04%
Milstern Enterprises Pty Ltd	900,000	1.84%
Bohuon Resources Pty Ltd	793,820	1.62%
Eaglehawk Geological	503,000	1.03%
Western Plains Resources	503,000	1.03%
Huntley Group Investments	500,000	1.02%
Mr Richard Graham Warren	500,000	1.02%
Mrs Jane Besley & Mr Robert Besley	400,000	0.82%
Shareholders (Top 20)	43,520,646	88.89%

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Shareholder	Number of Options
PlatSearch NL	3,000,000
Christopher Torrey	2,000,000
Michael Leggo	1,000,000
R & J Besley Super Fund A/C	500,000
Justin Clyne	400,000
Greg Jones	400,000
Rob Waring	400,000
Budberth	380,000
Yeronda Nominees Pty Ltd	380,000
Brian Stevens	200,000
Wolf Leyh	200,000
Bohuon Resources Pty Ltd	190,000
Wendy Corbett	150,000
Michelle Lilley	150,000
Robert Richardson	125,000
Graynic Metals Ltd	100,000
Farokh Billimoria	100,000
Greg Macrae	100,000
Jyrki Pienmunne	100,000
Heath Porteous	100,000
Sarah Franks & BJ Retail Pty Ltd	50,000
TOTAL (Option holders)	10,025,000

12.13 Employee Share Option Plan

The Company has established the Silver City Minerals Employee Share Option Plan (Plan) to assist in the attraction, retention and motivation of employees of the Company and its related bodies corporate (Group). No Options have been granted under the Plan as at the date of this Prospectus. The Plan will be administered by the Board in accordance with the rules of the Plan, and the rules are subject to the Listing Rules.

A summary of the Rules of the Plan is set out below.

(a) Eligibility

All employees (full and part-time) will be eligible to participate in the Plan after a qualifying period of 12 months’ employment by a member of the Group. The Board can also authorise a Contractor of the Group to be an eligible employee for the purposes of the Plan.

The allocation of Options to each employee is at the discretion of the Board. In determining when and which eligible employees will receive offers, the Board will look at the employee's length of service with the Company, their contribution and potential contribution to the Company, any misconduct or willful default, whether the employee will continue to be an employee soon after the time of issue, and tax and other legal implications.

(b) Offers

At the time of making the Offer, the Board will specify the exercise price of the options, the expiry date, the acceptance period and any applicable vesting conditions. Each Option is to subscribe for one Share in the Company.

The exercise price of Options will be determined by the Board with reference to, but not limited to factors including the market value of the Company’s Shares on the date the offer is made, on the date the Options are granted or on a specified date which is after the date the Options are granted.

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88 Additional Information

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(c) Exercise of Options

Subject to an Option becoming vested and not having lapsed, an Option holder may exercise all or any of the Options during the period the Options are exercisable. Shares issued as a result of the exercise of Options will rank equally with the Company’s previously issued Shares.

Option holders may only participate in new issues of securities by first exercising their Options. The Options or exercise price of the Options will be adjusted if there is a pro-rata issue, bonus issues or any reconstruction in accordance with the Listing Rules.

(d) Lapse and Transfer of Options

The Options will be issued for nil consideration and may not be sold, transferred, mortgaged, charged or otherwise dealt with or encumbered without the prior written approval of the Board. The Options will automatically lapse and be forfeited where an employee voluntarily resigns from employment, is dismissed or their contract terminated on grounds including willful misconduct, incompetence, fraud and breach of contract. In the event of death, redundancy, or retirement of an eligible employee, or in the case of a Contractor, termination of the relevant contract for services as a result of the passage of time or completion of the contracted services, the eligible employee or their legal representative will have a period of six months in which to exercise the Option.

The Board may amend the Plan rules by written instrument subject to the requirements of the Listing Rules. The Plan may be terminated or suspended at any time at the discretion of the Board.

12.17 Governing Law

This Prospectus and the contracts that arise from the acceptance of the Applications are governed by the laws applicable in New South Wales and each applicant submits to the exclusive jurisdiction of the courts of New South Wales.

12.18 Electronic Prospectus

Pursuant to Class Order 00/44, ASIC has exempted compliance with certain provisions of the Corporations Act to allow distribution of an electronic prospectus on the basis of a paper prospectus lodged with ASIC and the issue of securities in response to an electronic application form subject to compliance with certain provisions.

If you have received this Prospectus as an electronic Prospectus please ensure that you have received the entire Prospectus accompanied by the Application Form. If you have not, please email the Company at info@silvercityminerals.com.au and the Company will send to you, for free, either a hard copy or a further electronic copy of the Prospectus or both.

The Company reserves the right not to accept an Application Form from a person if it has reason to believe that when that person was given access to the electronic Application Form, it was not provided together with the Prospectus and any relevant supplementary or replacement prospectus or any of those documents were incomplete or altered. In such case, the Application Monies received will be dealt with in accordance with section 722 of the Corporations Act .

12.14 Documents Available for Inspection

Copies of the following documents may be inspected free of charge at the registered office of the Company during normal business hours:

• (a) the Constitution; and

• (b) the consents referred to in Section 12.11 of this Prospectus.

12.15 Working Capital Statement

The Directors believe that, on completion of the Offer, the Company will have sufficient working capital to carry out its objectives as stated in this Prospectus.

12.16 Dividend Policy

The Company does not expect to be in a position to pay dividends in the foreseeable future and as such has not adopted a dividend policy.

12.19 Definitions

In this Prospectus, unless the context otherwise requires:

“A$” and “$” means Australian dollars, unless otherwise stated.

“Applicant” means a person who submits an Application.

“Application” means a valid application to subscribe for Shares.

“Application Form” means the application form contained in this Prospectus or a copy of the application form contained in this Prospectus or a direct derivative of the application form which is contained in this Prospectus.

“Application Monies” means $0.20, being the amount payable in respect of each Share under the Offer.

“ASIC” or “Commission” means Australian Securities and Investments Commission.

“ASTC” means ASX Settlement and Transfer Corporation Pty Ltd (ACN 008 624 691).

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Silver City Prospectus 89

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“ASX Settlement Operating Rules” means the operating rules of the ASTC and, to the extent that they are applicable, the operating rules of ASX and the operating rules of Australian Clearing House Pty Ltd.

“ASX” means the Australian Securities Exchange or ASX Limited (ACN 008 624 691) (as the context requires).

“BHO” means Broken Hill Operations Pty Ltd a wholly owned subsidiary of CBH Resources.

“Board of Directors” and “Board” means the Board of Directors of the Company unless the context indicates otherwise.

“Business Day” means a day on which the trading banks are open in Sydney, NSW.

“Chairman” means the chairperson of the Company unless the context indicates otherwise.

“Entitlements Issue” has the meaning given in Section 2.9.

“Escrowed Securities” has the meaning given in Section 2.15.

“EST” means Eastern Standard Time as applicable in Sydney, NSW and references to time in this Prospectus are references to EST.

“Exposure Period” means the period of seven days (or longer as ASIC may direct) from the date of lodgement of the Prospectus with ASIC.

“Farm-in Agreement” means the agreement between the Company and GCR dated 8 October 2010 in relation to EL 7390 at Broken Hill.

“GCR” means Golden Cross Resources Limited (ACN 063 075 178).

“HIN” means holder identification number.

“CBH” means CBH Resources Ltd.

“CHESS” means ASX Clearing House Electronic Subregistry System.

“Closing Date” means the date on which the Offer closes.

“Company” means Silver City Minerals Limited (ACN 130 933 309).

“Competent Person” has the meaning given to that term in the JORC code.

“Completion of the Offer” means the allotment of all the Shares offered under this Prospectus.

“Constitution” means the constitution of the Company.

“Converting Performance Shares” or “CPS” means the Converting Performance Shares issued pursuant to the Company’s Sale Agreements outlined in Section 12.5 of this Prospectus.

“Corporations Act” means the Corporations Act 2001 (Cth).

“Department” means the New South Wales government body for Industry and Investment.

“Directors” means directors of the Company unless the context indicates otherwise.

“IPO” means the Initial Public offering pursuant to this Prospectus.

“Issue” means the issue of Shares pursuant to this Prospectus.

“Issuer Sponsored” means securities issued by an issuer that are held in uncertificated form without the holder entering into a sponsorship agreement with a broker or without the holder being admitted as an institutional participant in CHESS.

“JORC Code” means the 2004 edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves.

“Lead manager Agreement” means the agreement between the Company and Locantro dated 31 January 2011.

“Listing Date” means the date the Company is admitted to the Official List.

“Listing Rules” means listing rules of the ASX.

“Locantro” means Locantro Capital Pty Ltd (ACN 146 828 846).

“MEPL” means Mining Exploration Pty Ltd (ACN 113 513 321).

“Mining Act” means the Mining Act 1992 (NSW).

“EGC” means Eaglehawk Geological Consulting Pty Ltd (ACN 061 324 454).

“EL” and “Exploration Licence” means an area granted under the Mining Act in respect to mineral exploration.

“ELA” and “Application for Exploration Licence” means an Exploration Licence application.

“Email” means an electronic mail service that allows users to send and receive messages via the Internet.

“MLA” and “Application for Mining Lease” means a Mining Lease application.

“Native Title Act” means Native Title Act 1993 (Cth).

“Mutual Recognition Regulations” means the Securities (Mutual Recognition of Securities Offerings – Australia) Regulations 2008 (NZ).

“Offer” means the invitation to apply for Shares pursuant to this Prospectus.

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90 Additional Information

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“Offer Period” means period commencing on the Opening Date and ending on the Closing Date.

“Official List” means the Official List of the ASX.

“Opening Date” means the date immediately following the expiry of the Exposure Period.

“Optionholder” means a holder of any Options.

“Options” means an option to acquire Shares.

“Option Agreement” means the agreement dated 2 June 2010 between the Company and Stephen Hoare, as holder of MCs 13 and 14, and having a Power of Attorney to act with respect to MC 293.

“Participant” means a participant for the purpose of CHESS.

“Principle” refers to the principles prescribed by the ASX Corporate Governance Council in the August 2007 publication entitled ‘Corporate Governance Principles and Recommendations – Second edition’.

“Proper ASTC transfer” as the same meaning given in the Corporations Act .

“Prospectus” means this replacement prospectus dated 17 May 2011. It replaces a prospectus dated 20 April 2011 related to the Offer of Shares in the Company.

“PTS” means PlatSearch NL (ACN 003 254 395).

“Quotation” means quotation of the Shares on the Official List.

context requires.

“Triako” means Traiko Resources (ACN 103 323 173) a wholly owned subsidiary of CBH Resources Limited (ACN 009 423 858).

“WPG” means WPG Resources Ltd (ACN 109 426 502).

12.20 Directors’ Consent

The Directors state that they have made all reasonable enquiries and on that basis have reasonable grounds to believe that any statements by the Directors in this Prospectus are not misleading or deceptive and that with respect to any other statements made in this Prospectus by persons other than Directors, the Directors have made reasonable enquiries and on that basis have reasonable grounds to believe that persons making those other statements were competent to make such statements, those persons having given their consent to the issue of this Prospectus and not withdrawn that consent before lodgement of this Prospectus with ASIC, or to the Directors’ knowledge, before any issue of Shares pursuant to this Prospectus. The Prospectus is prepared on the basis that certain matters may be reasonably expected to be known to likely investors or their professional advisers.

Each of the Directors, Robert Besley, Christopher Torrey, Greg Jones and Ian Plimer, has consented in writing to the lodgement of this Prospectus with ASIC and has not withdrawn that consent.

Dated: 17 May 2011

Signed for and on behalf of the Company

“Scheduled Tenement” has the meaning given that phrase in Section 12.5(b).

“SCFJVA” means Silver City Farm In and Joint Venture Agreement.

“Section” means a Section of this Prospectus.

“Securities Act” means the Securities Act 1978 (NZ).

“Share” means a fully paid ordinary share in the capital of the Company.

Christopher Torrey Managing Director

“Shareholder” means a holder of Shares in the Company.

“Silver City” or ”Company” means Silver City Minerals Limited (ACN 130 933 309 or ABN 68 130 933 309) issuer and formerly known as Silver City Mining Limited.

“Silverton” has the meaning given that term in Section 11.3(a).

“Subsidiary” means the same as that term is defined under section 9 of the Corporations Act .

“Tenement” means an Exploration Licence or any other form of mineral licence or title held or applied for by the Company or in which the Company has an interest, as the

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Silver City Prospectus 91

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13
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Glossary of Technical Terms

Terms not included in the glossary are used in accordance with their definition in the Concise Oxford Dictionary.

acid/acidic	A descriptive term applied to igneous rocks that contain more than 60% silica (SiO2)
Ag	The chemical symbol for silver
air core	A rotary drilling technique that uses compressed air to cut a core sample and return the
	fragments to the surface inside the drill rods
alluvial (alluvium)	Sediment deposited by a stream or river
alteration	Change in the mineralogical and chemical composition of a rock, generally produced by
	hydrothermal fluids, oxidation or weathering
amphibolite	A crystalline rock consisting mainly of amphibole and feldspar with little or no quartz
anomaly(ies)	Value higher or lower than the norm
arsenopyrite	A sulphide mineral of iron and arsenic (FeAsS)
As	The chemical symbol for arsenic
Au	The chemical symbol for gold
B	The chemical symbol for boron
banded iron formation (BIF)	Finely banded, stratiform, siliceous, hematite, magnetite deposits of significant thickness
	and extent
basalt/basaltic	A fine grained dark coloured extrusive volcanic rock with a low silica content
base metal	Generally a non-ferrous metal inferior in value to the precious metals; usually and
	especially copper, lead, zinc, nickel
basin	A low area in the earth’s crust, of tectonic origin, in which sediments have accumulated
BHT	Broken Hill-type – a particular style of lead-zinc-silver mineralisation
Bi	The chemical symbol for bismuth
biotite	A common rock forming silicate mineral of the mica group, containing varying proportions
	of potassium, iron magnesium and aluminium
Ca	The chemical symbol for calcium
calcic	Containing calcium (chemical symbol Ca)
carbonaceous	Carbon bearing, usually referring to sedimentary rock
carbonate mineral	A mineral formed by the combination of the complex ion (CO3)2- with positive ions, e.g.
(carbonates)	calcite (CaCO3).
chalcopyrite	A sulphide mineral of iron and copper (CuFeS2)
chlorargyrite	Silver chloride mineral (AgCl)
chlorite	A green plate-like iron-magnesium rich silicate mineral
Co	The chemical symbol for cobalt
core	Cylindrical sample of rock produced by diamond drilling
core drilling	Drilling to produce cylindrical rock sample; usually diamond drilling
craton	Area of the Earth’s crust no longer affected by mountain building activity

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92

Glossary of Technical Terms

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cross section	A diagram that that shows features transacted by a vertical plane drawn at right angles to
	the longer axis of a geological feature
cryptocrystalline	A rock texture where the crystals are too small to recognise under an ordinary microscope
Cu	The chemical symbol for copper
diamond drilling (DDH)	Rotary drilling with diamond-impregnated bits to produce a solid continuous core sample
	of rock
dip	The angle that a stratum or planar feature such as a fault makes with the horizontal,
	measured perpendicular to the strike and in the vertical plane
diorite	A coarse grained igneous rock of intermediate composition between acidic and basic (i.e.
	between granite and gabbro)
dolerite	A medium grained plutonic rock with the composition of basalt
Dolomite/dolomitic/	Dolomite is a carbonate mineral with calcium and magnesium cations [CaMg (CO3)2] ;
dolomitisation	rock containing dolomite; carbonate minerals in a rock converted to dolomite
drill core	The cylindrical cutting recovered by means of diamond drilling
drill hole	In mineral exploration, a hole bored into prospective ground to recover cuttings and cores
	indicative of rock types and grades of mineralisation encountered in the hole
drilling	In mineral exploration, boring a hole into prospective ground to recover cuttings indicative
	of rock types and grades of mineralisation
electromagnetic (EM)	A geophysical method employing the generation of electromagnetic waves at the earths
	surface. When the waves impinge on a conducting formation or sulphide rich body at
	depth they induce an electrical response that can be detected by instruments
exhalite	A chemical sedimentary rock formed by the issuing of volcanically derived fluids onto the
	sea floor or into the sea
Exploration Licence (EL)	A tenement on which mineral exploration may take place
F	The chemical symbol for fluorine
fault	A break or discontinuity in the subsurface strata across which there has been vertical
	and/or lateral displacement
Fe	The chemical symbol for iron
feasibility study	A technical and financial study of a project at sufficient level of accuracy and detail to
	allow a decision as to whether or not the project should proceed
feldspar	A group of silicate minerals containing varying amounts of aluminium, sodium, potassium
	and other elements
feldspathic	Rock or mineral aggregate containing feldspar
felsic	Applied to an igneous rock containing an abundance of light coloured minerals such as
	quartz and feldspar
ferruginous	Said of a rock having a rusty colour due to the presence of iron oxide
fold	A flexure or arch in rock strata induced by tectonic deformation processes
footwall	Wall rock beneath an inclined vein, fault or mineral deposit
Formation	A body of rock strata that consists dominantly of a certain lithologic type or combination of
	types; a subdivision of a Group
g	Gram
g/t	Gram/tonne
galena	Lead sulphide mineral (PbS)
gahnite	A zinc rich member of the spinel group of minerals (non silicate oxides)
garnet/garnetiferous	A group of silicate minerals that contain variable amounts of calcium, magnesium, iron
	and manganese; commonly found in metamorphic rocks
GIS	Geographic Information System – a method of recording data and the relative position of
	the data points

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93

Silver City Prospectus

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geochemical sampling	Systematic collection of rock or soil samples in order to study their chemistry
geochemical survey	A systematic study of the variation of chemical elements in rocks or soils
geochemically anomalous	An area having elevated levels of specified elements in rocks or soils
gossan(ous)	An iron rich, often spongy rock found at or near the surface, produced by the weathering
	and/or oxidation of sulphide minerals and the leaching out of the sulphur and often some
	of the metals
grade	Average quantity of ore or metal in a specified quantity of rock
granite/granitic	Coarse acid igneous rock containing quartz and feldspar
ground magnetic survey	Surface geophysical survey measuring variations in the earth's magnetic field intensity
Group	The formal stratigraphic unit next in rank above Formation. A Group includes two or more
	associated Formations with significant features in common
hanging wall	The wall rock above an inclined vein, fault or mineral deposit
hematite	A red iron oxide mineral [Fe2O3]
Hiltaba age	Approximately 1600 million year old rocks synchronous with a magmatic sequence of
	rocks in South Australia known to be related to IOCG deposits
Hg	The chemical symbol for mercury
hornblende	A common mineral of the amphibole group especially in igneous and metamorphic rocks
hydrothermal alteration	Alteration of rocks or minerals due to reaction with hot aqueous solutions usually
	associated with magmatic activity
igneous	A term applied to rocks formed from solidification of molten material either at surface
	(volcanic) or at depth (intrusive)
induced polarisation (“IP”)	A surface electrical geophysical surveying method
inhalite	A chemical rock formed by the incorporation of volcanically derived fluids in the
	sedimentary sequence below the sea floor
inlier	Group of rocks surrounded by rocks of a younger age
IOCG	Iron oxide copper gold – a style of mineralisation where copper and/or gold is hosted in an
	iron oxide rich rock
ironstone	Rock containing a large proportion of iron oxides
JORC	“Joint Ore Reserve Committee” – Australasian Code for Reporting Exploration Results,
	Mineral Resources and Ore Reserves 2004 Edition
K	The chemical symbol for potassium
km	Kilometre: 1kilometre = 1000 metres
km2	Square kilometre: 1 square kilometre = an area of 1000 metres by 1000 metres
limonite/limonitic	A field term for a group of brown amorphous hydrous iron oxide minerals
lithology (-ies)	Rock type
lode/lodey rocks	Colloquial term for a rock formation in which there are indications that metalliferous
	concentrations may occur
m	Metre: 1 metre = 100 centimetres
M	Million
Ma	A measure of time, one million years
magnetite	A magnetic black iron oxide mineral [Fe3O4]
malachite	A bright green copper carbonate mineral [Cu2CO3(OH)2]
Mesoproterozoic	The middle part of the Proterozoic, lasting from about 1600-1000 Ma
metabasalt	A metamorphosed basalt
metamorphic	Rocks formed in response to pronounced changes in temperature, pressure or chemical
	environment
metasediment	Sedimentary rock that has been metamorphosed

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94 Glossary of Technical Terms

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metavolcanic	A metamorphosed volcanic rock
Mg	The chemical symbol for magnesium
Mining Claim (MC);	A tenement on which mining may take place
Mineral Lease (ML)
mineralisation	The process of concentration of metals and their compounds in rock mass; also a term
	used to refer to a body of rock containing an assemblage of valuable minerals
Mn	The chemical symbol for manganese
Mo	The chemical symbol for molybdenum
Mt	Million tonnes
MVT	Mississippi Valley Type – a particular style of lead–zinc mineralisation
Neoproterozoic	The most recent part of the Proterozoic, from about 1000–542 Ma
Niton XRF	A portable, hand held analyser that uses X-ray fluorescence to analyse for a suite of
	elements in soils, rocks and other types of samples
outcrop	Rock exposed to view at the surface and physically connected to solid rock at depth
ounce (oz)	troy ounce: 12 troy ounces = 1 Avoirdupois pound (lb), 1 oz = 31.103477 g
P	The chemical symbol for phosphorus
Palaeoproterozoic	The earliest part of the Proterozoic, lasting from about 2500–1600 Ma
Pb	The chemical symbol for lead
percussion drilling	A method of drilling involving a down hole hammer breaking the rock and the rock
	fragments are brought to surface by compressed air and can be collected for analysis
pelite	A metamorphic rock formed by the metamorphism of clay-rich sedimentary rocks
phyllite	Metamorphosed and cleaved fine grained sediments intermediate between slate and schist
polymetallic	A number of different metallic mineral species, applied to a vein or other type of deposit
potassic	Containing potassium (chemical symbol K); often referring to a style of hydrothermal
	alteration which has generated secondary potassium rich minerals such as biotite and
	potassium feldspar
ppm	parts per million, 1 ppm = 1 g/th
precious metals	Includes gold, silver and the six platinum group metals
Proterozoic	The upper division of the Precambrian era, extending from 2500–542 Ma
Province	Region or area of large extent with similar features throughout and capable of being
	considered as a unit
psammite	A metamorphosed sandstone, arkose or quartzite, extremely rich in the mineral quartz
psammopelite	A metamorphic rock formed by the metamorphism of sediments intermediate in
	composition between clay-rich and quartz-rich
pyrite	Common iron sulphide mineral (FeS2)
pyrrhotite	A magnetic iron sulphide [Fe1-xS]
pyrargyrite	Silver antimony sulphide mineral (Ag3SbS3)
quartz	A mineral composed of silicon and oxygen (SiO2)
RAB	Rotary air blast – a rotary drilling method where compressed air is used to raise the drill
	cuttings
Rb	The chemical symbol for rubidium
RC/RCP	Reverse Circulation Percussion - a percussion drilling technique in which the cuttings are
	recovered up the inside of the drill rods to minimise contamination from the wall of the hole
rock chip sampling	Obtaining a sample, generally for assay, by breaking chips off a rock face
S	The chemical symbol for sulphur
saline	Fluid with a very high salt content

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95

Silver City Prospectus

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sandstone	A clastic sedimentary rock composed of sand sized grains
schist	A strongly foliated crystalline rock formed by a dynamic metamorphism, that can be readily
	split into thin flakes or slabs due to the well developed parallelism of more than 50% of
	the minerals
secondary	Minerals formed from the breakdown of earlier minerals
sediment	Rock or unconsolidated material formed from particles deposited from suspension in water,
	ice or air
shale	A fine grained laminated sedimentary rock
shear	A deformation resulting from stresses that cause contiguous parts of a body to slide relative
	to each other in a direction parallel to their plane of contact
siliceous	Rock with a very high silica content
silicified	The introduction of, or replacement by, silica, which may replace existing minerals
siltstone	A sedimentary rock composed of silt-sized particles
Sn	The chemical symbol for tin
sodic	Containing sodium (chemical symbol Na)
soil geochemistry	A systematic sampling and chemical analysis of soils
sphalerite	A sulphide mineral of zinc and iron [(Zn, Fe)S], the main ore mineral of zinc
sq. km.	Square kilometre
stratabound	Confined to a particular strata
stratiform	A body (e.g. a mineral deposit) that is concordant with bedding, usually in sheets but may
	be ribbon-like
stratigraphic/stratigraphy	The arrangement of strata as to its geographic position and chronological order of sequence
strike	Trend or direction of rock strata in a horizontal plane; to extend in that direction
sulphide	A mineral compound characterised by the linkage of sulphur with metal
syncline	A fold in rock strata that is concave upwards with a core of younger rocks
synform	A basin or trough-shaped fold whose younger strata may be above or below older ones
synsedimentary	Formed at the same time as a sedimentary bed (usually refers to mineralisation
Tort	Tonne: a metric tonne, 1 tonne = 1000 kilograms
tectonic	Pertaining to the forces involved in or the resulting structures of tectonics
tenement	A land use instrument issued by state governments for regulation of mineral exploration
	and mining
Th	The chemical symbol for thorium
Ti	The chemical symbol for titanium
tuff (-aceous)	Volcanic ash strata (derived from weathering of, or containing, tuff strata)
U (U3O8)	The chemical symbol for uranium; (an oxide compound of uranium)
ultramafic	Igneous rocks consisting chiefly of dark ferromagnesium minerals, low silica
vein	Generally tabular mineral deposit, usually relatively narrow and occurring between well
	defined walls
volcanic	Rock erupted from a volcano on to the earth’s surface
W	The chemical symbol for tungsten
wolframite (wolfram)	A tungsten oxide mineral [(Fe,Mn)WO4]
Zn	The chemical symbol for zinc

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96 Glossary of Technical Terms

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ABN: 68 130 933 309

Application form

Broker Reference – Stamp Only Broker Code Advisor Code

Fill out this Application form if you wish to apply for Shares in Silver City Minerals Limited

• Please read the Replacement Prospectus dated 17 May 2011 which replaces a prospectus dated 20 April 2011 relating to the Offer of Shares in Silver City Minerals Limited

• Follow the instructions to complete this Application form (see reverse).

• Print clearly in capital letters using black or blue pen.

A B Number of shares you are applying for Total amount payable

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x $0.20 per share =

Minimum of 10,000 Shares to be applied for, and thereafter in multiples of 1,000 Shares.

C Write the name(s) you wish to register the Shares in (see reverse for instructions)

Applicant 1

Name of Applicant 2 or < Account Designation >

Name of Applicant 3 or < Account Designation >

D Write your postal address here

Number / Street

Suburb/Town State Postcode E CHESS participant – Holder Identification Number (HIN) Important please note if the name & address details above in ~~s~~ ections C & D do not match exactly with your registration details X held at CHESS, any Securities issued as a result of your application will be held on the Issuer Sponsored subregister.

FEnter your Tax File Number(s), ABN, or exemption category	FEnter your Tax File Number(s), ABN, or exemption category	FEnter your Tax File Number(s), ABN, or exemption category	FEnter your Tax File Number(s), ABN, or exemption category	FEnter your Tax File Number(s), ABN, or exemption category	FEnter your Tax File Number(s), ABN, or exemption category	FEnter your Tax File Number(s), ABN, or exemption category	FEnter your Tax File Number(s), ABN, or exemption category	FEnter your Tax File Number(s), ABN, or exemption category	FEnter your Tax File Number(s), ABN, or exemption category	FEnter your Tax File Number(s), ABN, or exemption category	FEnter your Tax File Number(s), ABN, or exemption category	FEnter your Tax File Number(s), ABN, or exemption category	FEnter your Tax File Number(s), ABN, or exemption category	FEnter your Tax File Number(s), ABN, or exemption category	FEnter your Tax File Number(s), ABN, or exemption category	FEnter your Tax File Number(s), ABN, or exemption category	FEnter your Tax File Number(s), ABN, or exemption category	FEnter your Tax File Number(s), ABN, or exemption category	FEnter your Tax File Number(s), ABN, or exemption category	FEnter your Tax File Number(s), ABN, or exemption category	FEnter your Tax File Number(s), ABN, or exemption category	FEnter your Tax File Number(s), ABN, or exemption category	FEnter your Tax File Number(s), ABN, or exemption category	FEnter your Tax File Number(s), ABN, or exemption category
Applicant #1 Applicant #2
Applicant #3

• G Cheque payment details – �PIN CHEQUE(S) HERE Please enter details of the cheque(s) that accompany this application. Alternatively you can apply online at http://www.registries.com.au/ipo/silvercityipo2011/ and pay by BPAY.

	Name of drawer of cheque	Name of drawer of cheque	Name of drawer of cheque	Name of drawer of cheque	Name of drawer of cheque	Name of drawer of cheque	Cheque No.	Cheque No.		BSB No.	BSB No.	BSB No.	Account No.	Cheque Amount A$	Cheque Amount A$
										I Email address

By submitting this Application form, I/We declare that this Application is completed and lodged according to the Prospectus and the instructions on the reverse of the Application form and declare that all details and statements made by me/us are compete and accurate. I/We agree to be bound by the constitution of Silver City Minerals Limited (the Company). I/We was/were given access to the Prospectus together with the application form. I/We represent, warrant and undertake to the Company that our subscription for the above Shares will not cause the Company or me/us to violate the laws of Australia or any other jurisdiction which may be applicable to this subscription for Shares in the Company.

Guide to the Application Form

YOU SHOULD READ THE PROSPECTUS CAREFULLY BEFORE COMPLETING THIS APPLICATION FORM.

Please complete all relevant sections of the appropriate Application Form using BLOCK LETTERS. These instructions are cross-referenced to each section of the Application Form.

Instructions

• A. If applying for Shares insert the number of Shares for which you wish to subscribe at Item A (not less than 10,000 and then in multiples of 1,000. Multiply by $ 0.20 AUD to calculate the total for Shares and enter the $amount at B.

• C. Write your full name . Initials are not acceptable for first names.

• D. Enter your postal address for all correspondence. All communications to you from the Company will be mailed to the person(s) and address as shown. For joint Applicants, only one address can be entered.

• E. If you are sponsored in CHESS by a stockbroker or other CHESS participant, you may enter your CHESS HIN if you would like the allocation to be directed to your HIN.

• NB: your registration details provided must match your CHESS account exactly.

• F. Enter your Australian tax file number ("TFN") or ABN or exemption category, if you are an Australian

• resident. Where applicable, please enter the TFN /ABN of each joint Applicant. Collection of TFN's is authorised by taxation laws. Quotation of your TFN is not compulsory and will not affect your Application Form.

• G. Complete cheque details as requested. Make your cheque payable to Silver City Minerals Limited Share Offer Account , cross it and mark it "Not negotiable" . Cheques must be made in Australian currency, and cheques must be drawn on an Australian Bank. Alternatively you can apply online at http://www.registries.com.au/ipo/silvercityipo2011/ and pay by BPAY.

• H. Enter your contact details so we may contact you regarding your Application Form or Application Monies.

• I. Enter your email address so we may contact you regarding your Application Form or Application Monies or other correspondence.

Correct Forms of Registrable Title

Note that ONLY legal entities can hold the Shares. The Application must be in the name of a natural person(s), companies or other legal entities acceptable to the Company. At least one full given name and surname is required for each natural person.

Examples of the correct form of registrable title are set out below.

Type of Investor	Correct Form of Registrable Title	Incorrect Form of Registrable Title
Individual	Mr John David Smith	J D Smith
Company	ABC Pty Ltd	ABC P/L or ABC Co
Joint Holdings	Mr John David Smith & Mrs Mary Jane Smith	John David & Mary Jane Smith
Trusts	Mr John David Smith	John Smith Family Trust
Deceased Estates	Mr Michael Peter Smith	John Smith (deceased)
Partnerships	Mr John David Smith & Mr Ian Lee Smith	John Smith & Son
Clubs/Unincorporated Bodies	Mr John David Smith	Smith Investment Club
Superannuation Funds	John Smith Pty Limited	John Smith Superannuation Fund

Lodgement

Mail your completed Application Form with cheque(s) attached to the following address:

Mailing address: Delivery address:

Silver City Minerals Limited Silver City Minerals Limited C/- Registries Limited C/- Registries Limited GPO Box 3993 Level 7 SYDNEY NSW 2001 207 Kent Street SYDNEY NSW 2000

It is not necessary to sign or otherwise execute the Application Form.

If you have any questions as to how to complete the Application Form, please contact Registries Limited on 02 9290 9600.

Privacy Statement:

Registries Limited advises that Chapter 2C of the Corporations Act 2001 (Cth) requires information about you as a shareholder (including your name, address and details of the shares you hold) to be included in the public register of the entity in which you hold shares. Information is collected to administer your share holding and if some or all of the information is not collected then it might not be possible to administer your share holding. Your personal information may be disclosed to the entity in which you hold shares. You can obtain access to your personal information by contacting us at the address or telephone number shown on the Application Form.

Our privacy policy is available on our website (http://www.registriesltd.com.au/help/share_privacy.html).

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ABN: 68 130 933 309

Application form

Broker Reference – Stamp Only Broker Code Advisor Code

Fill out this Application form if you wish to apply for Shares in Silver City Minerals Limited

• Please read the Replacement Prospectus dated 17 May 2011 which replaces a prospectus dated 20 April 2011 relating to the Offer of Shares in Silver City Minerals Limited

• Follow the instructions to complete this Application form (see reverse).

• Print clearly in capital letters using black or blue pen.

A

B Number of shares you are applying for Total amount payable

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x $0.20 per share =

Minimum of 10,000 Shares to be applied for, and thereafter in multiples of 1,000 Shares.

C Write the name(s) you wish to register the Shares in (see reverse for instructions)

Applicant 1

Name of Applicant 2 or < Account Designation >

Name of Applicant 3 or < Account Designation >

D Write your postal address here

Number / Street

Suburb/Town State Postcode CHESS participant – Holder Identification Number (HIN)participant – Holder Identification Number (HIN)articipant – Holder Identification Number (HIN)pant – Holder Identification Number (HIN)ant – Holder Identification Number (HIN)(HIN)HIN)) Important please note if the name & address details above in ~~s~~ ections C & D do not match exactly with your registration details X held at CHESS, any Securities issued as a result of your application will be held on the Issuer Sponsored subregister.

E CHESS participant – Holder Identification Number (HIN)participant – Holder Identification Number (HIN)articipant – Holder Identification Number (HIN)pant – Holder Identification Number (HIN)ant – Holder Identification Number (HIN)(HIN)HIN)) X

F Enter your Tax File Number(s), ABN, or exemption category Applicant #1 Applicant #2

Applicant #3

G Cheque payment details – �PIN CHEQUE(S) HERE

Please enter details of the cheque(s) that accompany this application. Alternatively you can apply online at http://www.registries.com.au/ipo/silvercityipo2011/ and pay by BPAY.

	Name of drawer of cheque	Name of drawer of cheque	Name of drawer of cheque	Name of drawer of cheque	Name of drawer of cheque	Name of drawer of cheque	Cheque No.	Cheque No.		BSB No.	BSB No.	BSB No.	Account No.	Cheque Amount A$	Cheque Amount A$
										I Email address

By submitting this Application form, I/We declare that this Application is completed and lodged according to the Prospectus and the instructions on the reverse of the Application form and declare that all details and statements made by me/us are compete and accurate. I/We agree to be bound by the constitution of Silver City Minerals Limited (the Company). I/We was/were given access to the Prospectus together with the application form. I/We represent, warrant and undertake to the Company that our subscription for the above Shares will not cause the Company or me/us to violate the laws of Australia or any other jurisdiction which may be applicable to this subscription for Shares in the Company.

Guide to the Application Form

YOU SHOULD READ THE PROSPECTUS CAREFULLY BEFORE COMPLETING THIS APPLICATION FORM.

Please complete all relevant sections of the appropriate Application Form using BLOCK LETTERS. These instructions are cross-referenced to each section of the Application Form.

Instructions

• A. If applying for Shares insert the number of Shares for which you wish to subscribe at Item A (not less than 10,000 and then in multiples of 1,000. Multiply by $ 0.20 AUD to calculate the total for Shares and enter the $amount at B.

• C. Write your full name . Initials are not acceptable for first names.

• D. Enter your postal address for all correspondence. All communications to you from the Company will be mailed to the person(s) and address as shown. For joint Applicants, only one address can be entered.

• E. If you are sponsored in CHESS by a stockbroker or other CHESS participant, you may enter your CHESS HIN if you would like the allocation to be directed to your HIN.

• NB: your registration details provided must match your CHESS account exactly.

• F. Enter your Australian tax file number ("TFN") or ABN or exemption category, if you are an Australian

• resident. Where applicable, please enter the TFN /ABN of each joint Applicant. Collection of TFN's is authorised by taxation laws. Quotation of your TFN is not compulsory and will not affect your Application Form.

• G. Complete cheque details as requested. Make your cheque payable to Silver City Minerals Limited Share Offer Account , cross it and mark it "Not negotiable" . Cheques must be made in Australian currency, and cheques must be drawn on an Australian Bank. Alternatively you can apply online at http://www.registries.com.au/ipo/silvercityipo2011/ and pay by BPAY.

• H. Enter your contact details so we may contact you regarding your Application Form or Application Monies.

• I. Enter your email address so we may contact you regarding your Application Form or Application Monies or other correspondence.

Correct Forms of Registrable Title

Note that ONLY legal entities can hold the Shares. The Application must be in the name of a natural person(s), companies or other legal entities acceptable to the Company. At least one full given name and surname is required for each natural person.

Examples of the correct form of registrable title are set out below.

Type of Investor	Correct Form of Registrable Title	Incorrect Form of Registrable Title
Individual	Mr John David Smith	J D Smith
Company	ABC Pty Ltd	ABC P/L or ABC Co
Joint Holdings	Mr John David Smith & Mrs Mary Jane Smith	John David & Mary Jane Smith
Trusts	Mr John David Smith	John Smith Family Trust
Deceased Estates	Mr Michael Peter Smith	John Smith (deceased)
Partnerships	Mr John David Smith & Mr Ian Lee Smith	John Smith & Son
Clubs/Unincorporated Bodies	Mr John David Smith	Smith Investment Club
Superannuation Funds	John Smith Pty Limited	John Smith Superannuation Fund

Lodgement

Mail your completed Application Form with cheque(s) attached to the following address:

Mailing address: Delivery address:

Silver City Minerals Limited Silver City Minerals Limited C/- Registries Limited C/- Registries Limited GPO Box 3993 Level 7 SYDNEY NSW 2001 207 Kent Street SYDNEY NSW 2000

It is not necessary to sign or otherwise execute the Application Form.

If you have any questions as to how to complete the Application Form, please contact Registries Limited on 02 9290 9600.

Privacy Statement:

Registries Limited advises that Chapter 2C of the Corporations Act 2001 (Cth) requires information about you as a shareholder (including your name, address and details of the shares you hold) to be included in the public register of the entity in which you hold shares. Information is collected to administer your share holding and if some or all of the information is not collected then it might not be possible to administer your share holding. Your personal information may be disclosed to the entity in which you hold shares. You can obtain access to your personal information by contacting us at the address or telephone number shown on the Application Form.

Our privacy policy is available on our website (http://www.registriesltd.com.au/help/share_privacy.html).

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Corporate Directory

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14
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Board of Directors

Robert Besley Non-Executive Chairman Christopher Torrey Managing Director Greg Jones Non-Executive Director Ian Plimer Non-Executive Director

Auditors and Independent Accountants

Barnes Dowell James

Level 13, 122 Arthur Street, North Sydney PO Box 1664, North Sydney, NSW 2059

Solicitors

Company Secretary

Justin B Clyne

Gadens Lawyers

Skygarden Building 77 Castlereagh Street, Sydney, NSW 2000

Registered Office

Suite 3, Level 1 80 Chandos Street, St Leonards Sydney, NSW 2065

Telephone: 02 9437 1737 Facsimile: 02 9906 5233 Website: www.silvercityminerals.com.au Email: info@silvercityminerals.com.au

Independent Geologist

John B Seeley

Consulting Geologist 37 Alfred Road Sutton, NSW 2620

Share Registrar

Registries Limited

GPO Box 3993 Sydney, NSW 2001

Lead Manager

Locantro Capital Pty Ltd

PO Box 332 Leederville WA 6903

Proposed ASX Code

SCI

Credits

Colour Photographs kindly provided by Eaglehawk Geological Consulting Pty Ltd Historical Photographs courtesy of The Broken Hill Historical Society

Design and Production by APM Graphics Management p 1800 806 930 p www.apmgraphics.com.au

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Silver City Prospectus 101

SILVER CITY MINERALS LIMITED

ABN 68 130 933 309 w w w . s i l v e r c i t y m i n e r a l s . c o m . a u