SILVER MINES LIMITED — AGM Information 2007

Oct 28, 2007

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SILVER MINES LIMITED

NOTICE OF ANNUAL GENERAL MEETING AND EXPLANATORY STATEMENT

Annual General Meeting to be held at:

Christie Corporate , Zulu Room Level 4, 100 Walker Street North Sydney, NSW on

Thursday, 29 November 2007 at 3.00 p.m.

This Notice of Annual General Meeting and Explanatory Statement should be read in its entirety. If Shareholders are in doubt as to how they should vote, they should seek advice from their accountant, solicitor or other professional adviser without delay.

Silver Mines Limited ACN 107 452 042

NOTICE OF ANNUAL GENERAL MEETING

Notice is hereby given that an Annual General Meeting of the Shareholders of Silver Mines Limited (The Company) will be convened held at Christie Corporate, Zulu Room, Level 4, 100 Walker Street, North Sydney, NSW, on Thursday, 29 November 2007 at 3.00 p.m. to consider, and if thought fit, to pass the following resolutions.

If you are unable to attend the meeting, we encourage you to complete and return the enclosed Proxy Form. The completed Proxy Form must be received by the Company at least 48 hours before the commencement of the meeting.

An Explanatory Statement is attached. Shareholder should read this in full.

ORDINARY BUSINESS

Annual Accounts

“To receive and consider the Annual Company Financial Statements and reports of the Directors and the Auditor for the period ended 30 June 2007.”

~~Resolution 1 – Remuneration Report.~~

To consider and, if thought fit, to pass the following resolution as an ordinary resolution:

“To adopt the remuneration report for the year ended 30 June 2007”

Note: the vote on this resolution is advisory only and does not bind the directors.

~~Resolution 2 – Re-election of Mr. David Sutton as a Direct.~~

To consider and, if thought fit, to pass the following resolution as an ordinary resolution:

“That Mr David Sutton, a Director of the Company retiring in accordance with the Company’s Constitution, be re-elected as a Director.”

~~Resolution 3 – Re-election of Mr. Malcolm Bird as a Director.~~

To consider and, if thought fit, to pass the following resolution as an ordinary resolution:

“That Mr Malcolm Bird, a Director of the Company retiring in accordance with the Company’s Constitution, be re-elected as a Director.”

~~Resolution 4 – Approval of an Issue of Shares by Directors~~

To consider and, if thought fit, to pass the following resolution as an ordinary resolution:

“That, pursuant to and in accordance with Listing Rule 7.1 of the Listing Rules of the Australian Stock Exchange Limited and for all other purposes, the Company be authorised to allot and issue up to 20 million fully paid ordinary Shares of the capital of the Company at an issue price no less than 80% of the weighted average price for 5 trading days prior to the announcement of a placement on the terms and conditions set in the Explanatory Statement accompanying this Notice.”

Voting Exclusion Statement

The Company will disregard any votes cast on Resolution 4 by a person who may participate in the proposed issue and a person who might obtain a benefit, except a benefit solely in the capacity of a holder of ordinary securities and an associate related to that person, if the resolution is passed. However, the Company need not disregard a vote if:

(i) the vote is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form; or

• (ii) the vote is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

~~Resolution 5 – Approval of an Issue of Securities by Directors~~

To consider and, if thought fit, to pass the following resolution as an ordinary resolution:

“That, pursuant to and in accordance with Listing Rule 7.1 of the Listing Rules of the Australian Stock Exchange Limited and for all other purposes, the Company be authorised to allot and issue up to 12 million fully paid ordinary Shares and 12 million attached options of the Company to Clients of Loeb Aron & Company Ltd and Martin Place Securities Pty Ltd at an issue price no less than 80% of the weighted average price for 5 trading days prior to the announcement of a placement as part of an application by the Company to list of the PLUS market in the United Kingdom and on the terms and conditions set out in the Explanatory Statement accompanying this Notice.”

Voting Exclusion Statement

The Company will disregard any votes cast on Resolution 5 by a person who may participate in the proposed issue and a person who might obtain a benefit, except a benefit solely in the capacity of a holder of ordinary securities and an associate related to that person, if the resolution is passed. However, the Company need not disregard a vote if:

• (i) the vote is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form; or

• (ii) the vote is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

~~Resolution 6 – Section 195 Approval~~

To consider, and if thought fit pass as an ordinary resolution, the following:

“That for the purposes of section 195(4) of the Corporations Act and for all other purposes, Shareholders approve and authorise the Directors to complete the transactions as contemplated in this Notice.”

Dated this 26 October 2007

By Order of The Board

Kevin Lynn

Company Secretary

NOTES

1. A shareholder of the Company entitled to attend and vote is entitled to appoint not more than two proxies. Where more than one proxy is appointed, each proxy must be appointed to represent a specified proportion of the shareholder’s voting rights. If the shareholder appoints two proxies and the appointment does not specify this proportion, each proxy may exercise half of the votes. A proxy need not be a shareholder of the Company.

2. In accordance with Regulation 7.11.37 of the Corporations Regulations, the Directors have set a snapshot date to determine the identity of those entitled to attend and vote at the Meeting. The snapshot date is 3.00 p.m. on 27 November 2007.

3. A proxy form is attached. If required it should be completed, signed and returned to the Company’s registered office in accordance with the proxy instructions on that form.

4. Where a voting exclusion applies, the Company need not disregard a role if it is cast by a person as a proxy for a person who is entitled to vote in accordance with the directions on the proxy form or it is cast by the person chairing the Meeting as proxy for a person who is entitled.

NOTICE OF ANNUAL GENERAL MEETING

EXPLANATORY STATEMENT

This Explanatory Statement accompanies and forms part of the Notice of General Meeting dated 26 October 2007 (Notice) and has been prepared to provide Shareholder with material information to enable them to make an informed decision on the business to be conducted at the General Meeting of the Company. Amongst other things, this Explanatory Statement provides Shareholder with the information required to be provided to Shareholders by the Corporations Act 2001 and the Official Listing Rules of the Australian Stock Exchange Limited (ASX Listing Rules) .

The Explanatory Statement sets out an explanation of each of the resolutions to be put to Shareholders. Shareholders should read this Explanatory Statement carefully before determining how to vote in respect of the resolutions.

ANNUAL FINANCIAL REPORTS AND ACCOUNTS FOR THE YEAR ENDED 30 JUNE 2007

The first item of the Notice is to receive and consider the annual financial reports and accounts of the Company for the year ended 30 June 2007, comprising the Financial Statements together with the Statement of the Directors, the Directors’ Report and the Auditor’s Report. No resolution is required in respect of this agenda item. However, it provides Shareholders with the opportunity to ask questions of the Company’s management and auditors in relation to the Company’s results and operations for that financial year.

~~Resolutions 2 and 3 – Election of Directors~~

Election of directors Items 2 and 3 of the notice of meeting deal with the election of directors. Under the Company’s constitution and the listing rules, a 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. The director will be eligible for re-election. The directors required to retire under the above framework are the Chairman Mr David Sutton and Mr Malcolm Bird. They have both indicated that they will offer themselves for re-election. The Company selects Board members for their knowledge of and familiarity with financial markets, their experience with relevant stakeholder groups and their individual contribution to the Board’s ability to function efficiently and with integrity.

The Board’s focus is achieving progressive renewal whilst maintaining stability and retaining experience and guidance which has been invaluable throughout the early stages of the Company’s development. In the next years the Board will focus further upon renewal of its membership and ensuring that the Company’s Board possesses the appropriate pool of skills and experience to take the Company into its next phase of growth as a listed company.

In accordance with the Clause 20.2 of the Company’s Constitution, Messrs Sutton and Bird retire and being eligible, have offered themselves for re-election. The remaining Director recommends to Shareholders that Messrs Sutton and Bird be reelected as directors.

GENERAL – LISTING RULE 7.4

Refreshing the Company’s ability to issue securities within the 15% limit.

Listing Rule 7.4 provides that an issue made within the 15% limit will be treated as having been made with the prior approval of Shareholder for the purpose of Listing Rule 7.1, thereby “refreshing” the Company’s ability to issue securities within the 15% limit, and restoring the Company’s ability to make placements (if that is thought desirable) without the need for Shareholder approval. The Company is requesting Shareholder to approve / ratify the issue of the Shares the subject of Resolution 4 and 5 for the purpose of Listing Rule 7.4, so that the Company will have flexibility to issue further securities under Listing Rule 7.1 without seeking Shareholder approval, if the need or opportunity arises.

~~Resolution 4 – Approval of an Issue of Securities by Directors~~

Resolution 4 of the Notice of Meeting proposes the issue and allotment of up to 20 million fully paid ordinary Shares in the capital of the Company per the ASX Listing Rules.

In compliance with the information requirements of ASX Listing Rule 7.3, members are advised of the following particulars in relation to the proposed issue:

1. Maximum number of Shares to issued – up to 20 million shares.

2. Date by which the Company will issue and allot Shares – No later than 3 months after the date of the meeting.

3. Price at which Shares to be issued – Minimum being no less than 80% of the average market price calculated in accordance with ASX Listing Rule 7.3.3.

4. Basis upon which allottees will be determined – The allottees will be determined by the Board having regard to a number of issues, including:

5. (i) the level of demand for placement Shares;

6. (ii) the identification of Shareholder with a long term commitment to the Company; and,

7. (iii) other issues which the board may consider appropriate from time to time.

8. Terms of issue – The Shares will rank equally in all respects with the existing ordinary Shares on issue.

9. Intended use of funds raised – The issue of Shares will provide additional funding required by the Company for the following purposes:

10. (i) exploration programmes on tenements, primarily within the New England region;

11. (ii) assessment of capital acquisitions and joint venture opportunities; and

12. (iii) general working capital.

13. Dates of allotment – Allotment will occur progressively.

Pursuant to the placement proposed under resolution 4, no single Shareholder/placee will be permitted to exceed 20% of the issued capital of the Company and therefore no change in control of the Company is anticipated. This prohibition will be included in the placement Information Statement.

It is proposed that the placement be made to selected allottees pursuant to a placement Information Statement.

~~Resolution 5 – Approval of an Issue of Securities by Directors~~

Resolution 5 of the Notice of Meeting proposes the issue and allotment of up to 12 million fully paid ordinary Shares with 12 million attached options in the capital of the Company raising up to raise £1 million (pounds) with the assistance of Loeb Aron & Company Ltd (‘Loeb Aron’). On raising the funds, Loeb Aron will sponsor and coordinate an application by SVL for admission on the PLUS market in the United Kingdom in accordance with the PLUS market rules.

In compliance with the information requirements of ASX Listing Rule 7.3, members are advised of the following particulars in relation to the proposed issue:

1. Maximum number of Securities to be issued – up to 12 million Shares with 12 million attached options of the Company;

2. Date by which SVL will issue and allot Shares – no later than 3 months after the date of the meeting;

3. Price at which Shares to be issued – Minimum being no less than 80% of the average market price calculated in accordance with ASX Listing Rule 7.3.3.

4. The Shares and Options will be issued to clients of Loeb Aron & Company Ltd and Martin Place Securities Pty Ltd.

5. Terms of issue of Shares – The Shares will rank equally in all respects with the existing ordinary Shares on issue.

6. Terms of issue of Options – The Options will entitle the holders to subscribe for Shares in the Company on the following terms:

7. (a) each Option entitles the holder, when exercised, to one (1) Share in the Company;

8. (b) the Options are exercisable at any time on or prior to 5.00pm (AEDT) on the Expiry Date being two years after admission to the UK Plus market, by completing an Option exercise form and delivering it together with the payment for the number of Shares in respect of which the Options are exercised to the registered office of the Company;

9. (c) each option may be exercised by notice in writing to the Company during the period referred to in condition (a and b), accompanied by payment of 50 cents per share;

10. (d) an Option does not confer the right to a change in exercise price or a change in the number of underlying shares over which the Option can be exercised;

11. (e) the Options will be listed;

12. (f) the Options are transferable;

13. (g) all Shares issued upon exercise of the Options will rank pari passu in all respects with the Company’s then issued Shares. The Company will apply for the quotation on ASX of the Options and all Shares issued upon exercise of the Options;

NOTICE OF ANNUAL GENERAL MEETING

• (h) there are no participating rights or entitlements inherent in the Options and holders will not be entitled to participate in new issues of capital offered to Shareholders during the currency of the Options. However, the Company will ensure that for the purposes of determining entitlements to and such issue, the record date will be at least 7 Business Days after the issue is announced. This will give Option holders the opportunity to exercise their Options prior to the date for determining entitlements to participate in any such issue; and

• (i) if at any time the issued capital of the Company is reorganised, the rights of an Option holder are to be changed to the extent necessary to comply with the Listing Rules applying to the reorganisation of capital at the time of the reorganisation.

• Intended use of funds raised – The issue of Securities will provide additional funding required by SVL for:

• (a) exploration programmes on SVL’s in New England;

• (b) assessment of capital acquisitions and joint venture opportunities; and

• (c) general working capital.

• Dates of allotment of Shares – Allotment of shares will occur progressively.

OTHER INFORMATION

There is no other information known to the Company that is material to a Shareholder’s decision on how to vote on the resolutions set out in the Notice. However, should any Shareholder be in doubt as to how they should vote on any resolution and/or as to how a resolution may affect them, they should seek advice from their accountant, solicitor or other professional adviser as soon as possible.

Queries as to the lodgement of proxies and other formalities in relation to the Meeting should be directed to the General Manager (Telephone: (02) 9455 0280).

ACTION TO BE TAKEN BY SHAREHOLDERS

Attached to the Notice of Meeting accompanying this Explanatory Statement is a proxy form for use by Shareholders. All Shareholders are invited and encouraged to attend the Meeting or, if they are unable to attend in person and are eligible to vote, to complete, sign and return the proxy form to the Company in accordance with the instructions contained on the proxy form and the Notice of Meeting. Lodgement of a proxy form will not preclude a Shareholder from attending and voting at the Meeting in person.

PROXY FORM

SILVER MINES LIMITED

ACN 107 452 942

The Secretary

Silver Mines Limited 56 Berry Street North Sydney, NSW, 2060

SHAREHOLDER DETAILS

Name of Shareholder:

(Surname) (Given Names)

Address of Shareholder:

I/We being a member(s) of Silver Mines Limited, hereby appoint the following person or failing him/her the Chairman of the Meeting as my/our Proxy to vote for me/us and on my/our behalf at the General Meeting of the Company to be held at Christie Corporate, Zulu Room, Level 4, 100 Walker Street, North Sydney, NSW, on Thursday, 29 November 2007 at 3.00 p.m. (and at any adjournment thereof) in the manner indicated below or as he/she thinks fit.

PROXY’S DETAILS

Name of Shareholder:

(Surname) (Given Names)

Address of Shareholder:

INSTRUCTIONS AS TO VOTING – Refer attached Notes to the Proxy Form

If you wish to direct your proxy how to vote with respect to the proposed resolutions, please indicate the manner in which your proxy is to vote by placing a “X” in the appropriate box below, otherwise your proxy will vote or abstain from voting as he/she thinks fit.

If the Chairman of the meeting is appointed as your proxy, or may be appointed by default and you do not wish to direct your proxy, how to vote as your proxy in respect of a resolution, please place a mark in the box.

By marking this box, you acknowledge that the Chairman of the meeting may exercise your proxy even if he has an interest in the outcome of the resolution and votes cast by the Chairman of the meeting for those resolutions other than as proxy holder will be disregarded because of that interest.

If you do not mark this box, and you have not directed your proxy how to vote, The Chairman will not cast your votes on the resolution and your votes will not be counted in calculating the required majority if a poll is called on the resolution.

PROXY’S VOTING INSTRUCTIONS (OPTIONAL)

Ordinary Resolutions	For	For	Against Abstain	Against Abstain	Against Abstain	Against Abstain	Against Abstain
1) Remuneration Report 2) Re-election of David Sutton 3) Re-election of Malcolm Bird 4) Approval of an Issue of Shares by Directors 5) Approval of an Issue of Shares by Directors 6) Section 195 Approval

PROXY FORM

It is the Chairman’s intention to vote in favour of all resolutions in relation to undirected proxies. FOR INDIVIDUALS OR JOINT HOLDERS

Signature of Shareholder	Name(Please Print)	Date
Signature of Shareholder	Name(Please Print)	Date
(Joint Shareholder)

IF THE MEMBER IS A COMPANY

The COMMON SEAL of the company was herewith affixed in accordance with the Constitution in the presence of:

Director Director / Sectary Date

IF THE MEMBER IS A COMPANY HAVING ONE PERSON AS ITS SOLE DIRECTOR AND SOLE COMPANY SECRETARY.

The COMMON SEAL of the company was herewith affixed in accordance with the Constitution in the presence of:

Sole Director / Company Secretary Date

NOTES TO THE PROXY FORM

Pursuant to the Company’s Constitution and the Corporations Act 2001, any person registered in the Register of Shareholder as a holder of one or more Shares 48 hours prior to the time of commencement of the Meeting is entitled to attend and vote at the Meeting.

Shareholders are entitled to appoint up to two individuals to act as proxies to attend and vote on their behalf. Where more than one proxy is appointed, each proxy must be appointed to represent a specified proportion of the Shareholder’s voting rights.

The Proxy Form and the Power of Attorney (if any) or the instrument appointing the proxy and power of attorney (if any) under which it is signed (or an office copy or notarially certified copy thereof) must be deposited at the Registered Office of the Company ( 11 Rodborough Avenue, Crows Nest, NSW, 2065 ) at least 48 hours prior to the time of holding of the Meeting (and at any adjournment thereof), at which the individual named in the Proxy Form proposes to vote.

A proxy must be signed by the Shareholder or his/her attorney duly authorised in writing or, if the Shareholder is a corporation, under its common seal or under the hand of an authorised officer or attorney.

A legible facsimile transmission copy of the instrument and the power of attorney or other authority is acceptable. The facsimile number to which a Proxy Form may be sent is +61 2 9455 0879. The proxy may, but need not be, a Shareholder of the Company.

Corporate Representation

A company may only vote by proxy, power of attorney or by appointment of a corporate representative. The instrument appointing a proxy is not valid unless the original instrument and the power of attorney or other authority (if any) under which the instrument is signed (duly stamped where necessary) or a copy or facsimile which appears on its face to be an authentic copy of that proxy, or power of attorney is submitted to the Registered Office within the time set out herein. A company must sign a proxy under common seal in accordance with its Constitution or under power of attorney, which must be produced, with the Proxy Form.

If the Shares are registered in the name of more than one person, all such holders must sign the Proxy Form.

To be valid a Proxy Form and the Power of Attorney under which it is signed or proof thereof must be to the satisfaction of the Directors.

A person authorised (pursuant to the provisions of the Corporations Act 2001) by a corporation which is a Shareholder of the Company to act as its representative at the Meeting is entitled to exercise the same powers on behalf of the corporation as the corporation could exercise if it were an individual Shareholder of the Company.