SILVER MINES LIMITED — Capital/Financing Update 2016

Jan 21, 2016

==> picture [122 x 34] intentionally omitted <==

Silver Mines Limited

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

To: Australian Securities Exchange Ltd (ASX) From: Silver Mines Limited (ASX: SVL) Date: 22 January, 2016 Subject: Update on Heads of Agreement with White Rock Minerals

Silver Mines ("SVL" or "The Company") advises that it remains in ongoing discussions with White Rock Minerals (ASX:WRM) with respect to a possible corporate transaction.

On 23 July 2015 SVL and WRM entered into a Heads of Agreement (HOA). This Heads of Agreement contemplated an exclusivity period of 6 months expiring 23 January, 2016.

On 18 December 2015 WRM signed a Heads of Agreement with E2 Metals which provided for a placement of A$350,000 and consideration of a “proposed transaction”.

Silver Mines will continue to pursue the opportunity to assist WRM with its financing requirements going forward, whether by means of equity/debt or potential asset purchase.

By Order of the Board Silver Mines Limited

1