SILVER MINES LIMITED — Capital/Financing Update 2007

Oct 4, 2007

ASX Release 4[th] October, 2007

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High Grade Silver in Drilling at Webb’s Silver Southern Prospect

Silver Mines Limited (ASX:SVL) is pleased to announce that current drilling completed at the Webb’s Silver Southern prospect has identified several high grade zones of anomalous silver – one zone assaying up to and exceeding 50 ounces/tonne - silver (1500 ppm) over 0.5m and base metal mineralisation along a strike length of approximately 150m. The Webb’s Silver Southern prospect is located within EL5674 in northern NSW (Figure 1).

This drilling programme has targeted the Webb’s Silver Southern prospect as identified by Planet Management during the late 1960s. Previous explorers estimated an inferred resource of 1.7 million ounces of silver from the previous Planet drill-hole information available.

SVL has completed a 13 hole - 1,225m reverse circulation (RC) programme along the Webb’s Silver Southern prospect (Figure 2). Assays are still pending for some holes. The programme was designed to confirm reported intercepts by Planet Management’s 1960s drilling (as no assay certificates are available) and to test for lateral and vertical continuations of the lode. Not all holes reached their target depths due to drilling problems (see Figure 2), however all holes will be extended to their target depths in the next phase of drilling currently underway.

Significant silver and base metal results include:

Hole ID / Downhole Intersection	True Width m (estimate) 1	Ag (g/t)	Cu %	Pb %	Zn %
RC01267-87m	3.5m	309	0.18	0.44	1.08
Incl. 70-73m	0.54m	> 1,5002	1.01	1.48	3.80
RC01752-57m	1.1	43.02	0.05	0.46	0.43
RC01960-66m	1.08	270	0.20	2.02	2.21
RC01974-81m	1.26	89.9	0.06	0.36	0.62
RC020127-129m	0.36	65.6	0.10	0.35	1.25
RC022132-140m	1.44	225.4	0.14	0.16	0.82
Incl. 132-134m	0.3	710	-	-	1.16
RC022143-148m	0.9	48.6	0.03	0.26	0.69

1 True lode widths are estimates only at this stage. Downhole surveys are expected to be completed in the next 2 weeks. Estimates are based on surface mapping and its correlation with drilling intercepts.

2 Final assays are pending for samples exceeding 1500ppm silver as a different assay method is required.

Page 1 of 4 ASX _04OCT07_EL5674 Drilling Update.doc

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The current drilling has identified a significant lode structure currently open at both ends of the drill pattern, totalling a length of approximately 150m, as well as being open at a depth of 140m vertically. Drilling has also identified a parallel lode system with two lenses delineated.

Planned future drilling within EL5674 aims to:

• 1) Close off the southern extent of the Webb’s Silver Southern prospect; and

• 2) Test for continuity between the Webb’s Silver Southern prospect and known mineralisation associated with the Webb’s Silver mine lode located approximately 500m to the north.

EL6239 Preliminary Drilling

Concurrent drilling at the Webb’s Consols prospect, EL6239, has initially failed to identify any extensions to known mineralisation immediately beneath the existing main workings. Five RC bores totalling 547m targeted the main Webb’s Consols shaft and the Mt Galena workings. These holes did not intersect massive sulphides directly beneath the lower levels of the old mines and further interpretation is required before further drilling is completed to ensure the geometry of the ore shoot is understood. There are still a number of other targets within this lode system that will be tested in coming work however the immediate focus will be the drilling on EL5674 in light of the recent positive results.

For further information please do not hesitate to contact Charles Straw, General Manager on 02 9455 0280.

The information in this report that relates to Exploration Results has been compiled by Charles Straw (BSc Appl Geo, Hons) consulting geologist and General Manager, who is a Member of The Australasian Institute of Mining and Metallurgy. Charles 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 Persons as defined in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Charles consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

Page 2 of 4 ASX _04OCT07_EL5674 Drilling Update.doc

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6800000 mN6800000 mN6800000 mN6800000 mN6800000 mN6800000 mN6800000 mN6800000 mN6800000 mN 6800000 mN6800000 mN6800000 mN6800000 mN6800000 mN6800000 mN6800000 mN6800000 mN6800000 mN
6775000 mN6775000 mN6775000 mN6775000 mN6775000 mN6775000 mN6775000 mN6775000 mN6775000 mN 6775000 mN6775000 mN6775000 mN6775000 mN6775000 mN6775000 mN6775000 mN6775000 mN6775000 mN
BrisbaneBrisbaneBrisbaneBrisbane
QUEENSLAND
6750000 mN6750000 mN6750000 mN6750000 mN6750000 mN6750000 mN6750000 mN6750000 mN6750000 mN 6750000 mN6750000 mN6750000 mN6750000 mN6750000 mN6750000 mN6750000 mN6750000 mN6750000 mN
NEW
SOUTH
WALES
6725000 mN6725000 mN6725000 mN6725000 mN6725000 mN6725000 mN6725000 mN6725000 mN6725000 mN SydneySydneySydneySydney 6725000 mN6725000 mN6725000 mN6725000 mN6725000 mN6725000 mN6725000 mN6725000 mN6725000 mN 0 50 100
kilometers
MAP016_EL5674_2007_AnnRpt_Fig01.WOR Basemap: 250 000 Topo Raster, Geoscience Australia 2007
FIGURE 1
0 5 10 Scale 1:500,000 EL5674 Boundary
kilometres EL5674 LOCATION PLAN
325000 mE325000 mE325000 mE325000 mE325000 mE325000 mE325000 mE325000 mE325000 mE 350000 mE350000 mE350000 mE350000 mE350000 mE350000 mE350000 mE350000 mE350000 mE 375000 mE375000 mE375000 mE375000 mE375000 mE375000 mE375000 mE375000 mE375000 mE 400000 mE400000 mE400000 mE400000 mE400000 mE400000 mE400000 mE400000 mE400000 mE 425000 mE425000 mE425000 mE425000 mE425000 mE425000 mE425000 mE425000 mE425000 mE
0 mE0 mE0 mE 000 0 mE0 mE0 mE 000 0 mE0 mE0 mE 000
Datum: GDA94, Projection: MGA Z56
325000 mE325000 mE325000 mE325000 mE325000 mE325000 mE325000 mE325000 mE325000 mE 350000 mE350000 mE350000 mE350000 mE350000 mE350000 mE350000 mE350000 mE350000 mE 375000 mE375000 mE375000 mE375000 mE375000 mE375000 mE375000 mE375000 mE375000 mE 400000 mE400000 mE400000 mE400000 mE400000 mE400000 mE400000 mE400000 mE400000 mE 425042504250425042504250425042504250
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FIGURE 1 EL5674 LOCATION PLAN

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( RC021RC021RC021RC021
6751900mN
( RC022RC022RC022RC022
RC019RC019RC019RC019 (
( RC020RC020RC020RC020
RC017RC017RC017RC017 (
( RC018RC018RC018RC018
6751800mN
RC015RC015RC015RC015 RC016RC016RC016RC016
(
(
RC013RC013RC013RC013 (
( RC014RC014RC014RC014
RC012RC012RC012RC012 (
6751700mN
6751600mN
FIGURE 2
Interpreted Main Lode
EL5674 - WEBBS SILVER SOUTH
SVL Drillhole - DID NOT REACH TARGET DRILLING COLLARS
(
359000mE
358800mE 358900mE
Datum: GDA94, Projection: Lat/Long
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FIGURE 2

EL5674 - WEBBS SILVER SOUTH DRILLING COLLARS

SVL Drillhole - DID NOT REACH TARGET ( TO BE EXTENDED ( SVL Drillhole

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0

50

100

MAP032_EL5674_2007_ASX Fig1.WOR

metres