SILVER MINES LIMITED — Capital/Financing Update 2015

Jun 16, 2015

Silver Mines Limited ABN: 45 107 452 942 10[th] Floor, 2 Bligh Street, Sydney, NSW 2000 +61 2 8188 2557 F: +61 2 9235 2203

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To: Australian Securities Exchange (ASX) From: Silver Mines Limited Date: 17 June, 2015 Subject: Conrad Acquisition & Financing Update

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Conrad Acquisition

Silver Mines Ltd (SVL or the Company) is pleased to advise that further to the announcement made on 11 May, 2015, it has now exercised its option to acquire the Conrad Silver Project (“Conrad”) from Malachite resources Ltd (ASX:MAR) in accordance with the terms of a Memorandum of Understanding (MoU) between the parties.

Silver Mines paid an initial option fee of $50,000 in May 2015 when the original MoU was executed with Malachite. The parties have subsequently agreed to revised terms as follows:

• SVL shall pay $50,000 to MAR on or before 30 June 2015 (the Second Payment);

• The Parties shall use their best endeavours to resolve formal documentation within 30 days of the Second Payment;

• Subject to formal documentation, Completion shall occur 10 business days following completion of a Rights Issue by SVL but in any event not later than 31 August 2015.

• On Completion:

• SVL will pay $350,000 to MAR;

• SVL will issue shares in SVL to MAR (subject to necessary approvals) (to be escrowed for 12 months) to the value of $125,000 based on the 5 day volume weighted SVL share price prior to the date of Completion; and

• MAR will transfer 100% ownership of the Conrad Project to SVL.

Malachite will retain an ongoing interest in the Conrad project via a 1% net smelter return on all metals produced from the Conrad Project.

Funding Update - Renounceable Rights Issue

The Board of Silver Mines (SVL or the Company) is also pleased to advise that it proposes to undertake a 4 for 1 Renounceable Rights Issue at a price of A$0.001 to raise up to A$2.8m before costs.

Rights Issue subscribers and shortfall participants will also receive an attaching option with every two shares subscribed for, exercisable at $0.003 and two year expiry.

The Company will allow current shareholders to apply for oversubscriptions, but reserves the right to scale back such requests at its sole discretion.

Fern Street Partners Pty Ltd has committed to subscribing for the first A$750,000 of shortfall from the offer, with DJ Carmichael in Perth appointed as the Lead Book-runner to the offer.

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Silver Mines Limited ABN: 45 107 452 942 10[th] Floor, 2 Bligh Street, Sydney, NSW 2000 +61 2 8188 2557 F: +61 2 9235 2203

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The offer will be made via full prospectus, and is expected to be lodged with ASIC and released to the ASX early next week and dispatched to shareholders on or before Monday 6, July, subject to there being no objection by ASIC. The timetable and Record Date will be advised upon release of the Prospectus.

The funds will be used to close the recent Conrad acquisition from Malachite Resources, for working capital and provide balance sheet strength for further accretive acquisitions within the Australian Silver Sector.

The Company also intends to release a Notice of Meeting (NOM) for a General Meeting of shareholders in the next few days, to approve certain material transactions.

The company intends to continue its aggressive pursuit of accretive “in the ground” Silver Ounces, as it positions itself to become the leading exposure to Silver available to investors on the ASX.

By Order of the Board Silver Mines Limited

For any queries please contact: Davide Bosio DJ Carmichael Level 14, 191 St George's Terrace Perth WA 6000 Tel: 08 9263 5200

Vaz Hovanessian Fern Street Partners

Level 10, 2 Bligh St Sydney NSW 2000 Tel: 02 8188 2555

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