SILVER MINES LIMITED — Capital/Financing Update 2012

Aug 29, 2012

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30 August 2012

Letter to Shareholders

Share Purchase Plan

(ASX: SVL)

Dear Shareholder,

Silver Mines Limited ( SVL or the Company ) is pleased to announce that it has resolved to raise up to A$1.781 million via a Share Purchase Plan to existing shareholders ( Plan ).

A total of approximately 29.7 million shares at A$0.06 per share and 14.8 million free attaching Options will be offered at A$0.06 per Share under the Plan to eligible shareholders registered at 29 August 2012 with Plan documentation to be sent to eligible shareholders shortly. The Options will have an exercise price of 10 cents and expire 13 November 2012.

Funds raised pursuant to the Plan will be used primarily for further exploration and drilling of the Webbs Silver Project in New England, regional exploration, and for working capital purposes.

Details of the Share Purchase Plan ( Plan ) are as follows:

Eligible shareholders registered as at 5:00pm, Wednesday, 29 August 2012 will be entitled to subscribe for shares in the Company at A$0.06 per share, which is a 20% discount to the average price, based on the 5 days trading prior to the date of this announcement.

The material terms of the Plan are:

• The Plan will be available to all SVL shareholders resident in Australia or New Zealand and who are registered as at Wednesday, 29 August 2012;

• Each Shareholder can apply for shares up to a value of A$10,000;

• The Plan will be limited to less than 30% of the outstanding capital of the Company. The Company reserves its right to scale back applications, in any manner it deems appropriate;

• The Plan is not underwritten;

• The issue price is A$0.06 per share, which is an 20% discount to the average price over the 5 days before this announcement;

• Each share will come with free attaching Options, on the basis of 1 Option for every two (2) shares applied for. The Options will have an exercise price of 10 cents and expire Tuesday, 13 November 2013.

• Applications and payment must be received by close of business on Wednesday, 26 September 2012;

• The Plan is non‐renounceable.

Silver Mines Limited looks forward to your continued support.

Charles Straw Managing Director SILVER MINES LIMITED

Silver Mines Limited (ACN 107 452 942) FKP House, 5[th] Floor 17-19 Bridge St Sydney, NSW Australia 2001 P: +61 2 9253 0900 F: +61 2 9253 0901 E: info@silverminesltd.com.au W: www.silverminesltd.com.au

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