SILVER MINES LIMITED — Capital/Financing Update 2012

Dec 13, 2012

To: Company Announcements Officer Australian Securities Exchange

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14[th] December, 2012

WEBBS SILVER PROJECT UPDATE

HIGHLIGHTS

• Approval has been received for drilling to recommence at the Webbs Silver Project.

• Drilling scheduled to commence in first week of January 2012 with shallow near surface holes.

• Drilling of deeper extensional holes is scheduled to commence in mid to late January 2013.

• Option to purchase property encompassing Webbs and surrounds concluded.

Silver Mines Limited (ASX:SVL) is pleased to announce that approval has now been received from the NSW Department of Trade and Investment, Regional Infrastructure and Services (Resources and Energy Division) to re-commence drilling activities on the Company’s 100% owned Webbs Silver Project in northern NSW (EL5674). This approval has been a long time coming and has unfortunately precluded any drilling at the Webbs Silver Project for most of 2012. The approvals process has been protracted due to NSW State Government delays and has caused significant frustration for the Company during the year, however the outcome is very positive and SVL is confident that the planned drilling programs can now be implemented as designed so that the potential of Webbs can be realised.

CEO Charles Straw commented. “The delays experienced in approving our next, major drilling program, at Webbs has been a very frustrating experience, however we are clearly pleased with the outcome and excited about this next crucial stage in our assessment of Webbs. The Company would like to take this opportunity to thank all shareholders for their patience during the extended period whilst we awaited government approval to continue drilling at Webbs and we anticipate that it will now be rewarded. We look forward to providing results as drilling recommences at Webbs”.

PLANNED DRILLING

A small low impact RC rig is due to mobilise to Webbs next week and begin drilling in early 2013. This rig will be used to drill some shallow targets along the Webbs trend where relatively large gaps exist in the existing drill coverage and where access has been precluded in the past. Specific areas to be targeted include: north and south of Webbs Main, north of Webbs North and also at the southern end of the Webbs South lode (see Figure 1). In all these target areas there is capacity to delineate potentially open pittable mineralisation. It is anticipated this program will total around 1000m.

A larger deeper drilling program is planned to commence in January 2013. The main purpose of this second phase program is to target extensions to the Webbs deposit and substantially grow the resource.

Silver Mines Limited ACN 107 452 942 L5, 17-19 Bridge St Sydney, NSW Australia 2000 P: +61 2 0253 0900 W: www.silverminesltd.com.au

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The potential for extensions is considered excellent as many high grade intersections remain open at relatively shallow depths (see Figure 1). This program will total about 7000m of RC and 1000m of diamond core drilling. Importantly 5000m of the RC component has already been pre-paid.

The Company anticipates this initial drill program will be completed by around May 2013. Depending upon results, Silver Mines may elect to expand the program with further extensional drilling and possibly additional infill drilling where appropriate. Following the completion of drilling a new resource estimate will be prepared and released later in 2013.

OPTION TO PURCHASE FREEHOLD

Silver Mines is also very pleased to announce it has secured an option to purchase the approximately 2000ha ‘Wellcamp’ property which encompasses the Webbs prospects and surrounds (Figure 2). The option period is for three years at a cost of $30,000 per year. The option payment is inclusive of all compensation payments for ongoing drilling activities. Should Silver Mines elect to exercise the option the purchase price for the property will be $1.1million, less the option fees paid. The Company believes this is an important step in the evolution of the Webbs project. Silver Mines would like to acknowledge the owners of the Wellcamp property for their ongoing support over the last 5 years and the successful outcome with regard to the ‘option to purchase’ agreement.

Please direct any queries regarding the content of this report to Charles Straw (CEO) on +61 2 9253 0900 or cstraw@silverminesltd.com.au.

Competent Person Declaration

The information in this Document that relates to Exploration Results, Mineral Resources or Ore Reserves is based on information compiled by Mr David Hobby, consulting geologist to SVL, who is a Member of The Australasian Institute of Mining and Metallurgy. Mr Hobby 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’ for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Hobby consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

Silver Mines Limited ACN 107 452 942 L5, 17-19 Bridge St Sydney, NSW Australia 2000 P: +61 2 0253 0900 W: www.silverminesltd.com.au

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Figure 2 : ‘Wellcamp’ property boundary

Silver Mines Limited ACN 107 452 942 L5, 17-19 Bridge St Sydney, NSW Australia 2000 P: +61 2 0253 0900 W: www.silverminesltd.com.au

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