SILVER MINES LIMITED — Capital/Financing Update 2018

Sep 11, 2018

Level 11, 52 Phillip St Sydney NSW 2000 T: +61 2 8316 3997 F: +61 2 8316 3999 Info@silvermines.com.au www.silverminesltd.com.au

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11 September 2018

Company Announcement Officer ASX Limited Exchange Centre 20 Bridge Street SYDNEY NSW 2000

APPENDIX 3B

Silver Mines Limited (ASX:SVL) (“Silver Mines” or “the Company”) is pleased to attach its final Appendix 3B noting the total number of shares and options issued under the Company’s recent entitlements issue offer (see Prospectus dated 3 August 2018) (“Offer”).

The Company received subscriptions from eligible shareholders totalling $2,600,053.29, with Patersons Securities Limited, the Underwriter and Lead Manager to the Offer placing an additional $1,245,953.13, bringing the total raised under the Offer to $3,846,006.42.

Directors of the Company applied for $237,500 of securities under the Shortfall Placement, with such issue of securities (“Director Securities”) to be made subject to shareholder approval. Accordingly, the enclosed Appendix 3B does not take into account the 7,916,667 shares and 3,958,334 options which will be issued to directors following approval being obtained.

Yours faithfully Silver Mines Limited

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Trent Franklin Company Secretary

Silver Mines Limited ABN: 45 107 452 942

Page 1

Appendix 3B New issue announcement

Rule 2.7, 3.10.3, 3.10.4, 3.10.5

Appendix 3B

New issue announcement, application for quotation of additional securities and agreement

Information or documents not available now must be given to ASX as soon as available. Information and documents given to ASX become ASX’s property and may be made public.

Introduced 01/07/96 Origin: Appendix 5 Amended 01/07/98, 01/09/99, 01/07/00, 30/09/01, 11/03/02, 01/01/03, 24/10/05, 01/08/12, 04/03/13

Name of entity

Silver Mines Limited

ABN

45 107 452 942

We (the entity) give ASX the following information.

Part 1 - All issues

You must complete the relevant sections (attach sheets if there is not enough space).

1 +Class of +securities issued or to (a) Ordinary shares be issued (b) Options 2 Number of[+] securities issued or (a) 120,283,547 shares to be issued (if known) or (b) 60,141,774 options maximum number which may be issued 3 Principal terms of the (a) Fully paid ordinary shares +securities (e.g. if options, (b) Quoted options, exercise price of exercise price and expiry date; if partly paid +securities, the $0.06 and an expiry date of 6 September 2021. amount outstanding and due dates for payment; if +convertible securities, the conversion price and dates for conversion)

• See chapter 19 for defined terms.

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4 Do the+securities rank equally in all respects from the+issue date with an existing+class of quoted+securities? If the additional+securities do not rank equally, please state:  the date from which they do  the extent to which they participate for the next dividend, (in the case of a trust, distribution) or interest payment  the extent to which they do not rank equally, other than in relation to the next dividend, distribution or interest payment 5 Issue price or consideration 6 Purpose of the issue (If issued as consideration for the acquisition of assets, clearly identify those assets) 6a Is the entity an+eligible entity that has obtained security holder approval under rule 7.1A? If Yes, complete sections 6b – 6h in relation to the+securities the subject of this Appendix 3B, and comply with section 6i 6b The date the security holder resolution under rule 7.1A was passed 6c Number of+securities issued without security holder approval under rule 7.1	(a) Yes. (b) No. These are a new class of securities for which the Company is seeking quotation from the date of issue.
	(a) $0.03 per share. (b) Nil, as the Options are being issued as attachingto the Shares.
	Entitlements Issue to existing shareholders, as announced on 3 August 2018.
	Yes.
	28 November 2017
	N/A

• See chapter 19 for defined terms.

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6d Number of+securities issued with security holder approval under rule 7.1A 6e Number of+securities issued with security holder approval under rule 7.3, or another specific security holder approval (specify date of meeting) 6f Number of+securities issued under an exception in rule 7.2 6g If+securities issued under rule 7.1A, was issue price at least 75% of 15 day VWAP as calculated under rule 7.1A.3? Include the +issue date and both values. Include the source of the VWAP calculation. 6h If+securities were issued under rule 7.1A for non-cash consideration, state date on which valuation of consideration was released to ASX Market Announcements 6i Calculate the entity’s remaining issue capacity under rule 7.1 and rule 7.1A – complete Annexure 1 and release to ASX Market Announcements 7 +Issue dates Note: The issue date may be prescribed by ASX (refer to the definition of issue date in rule 19.12). For example, the issue date for a pro rata entitlement issue must comply with the applicable timetable in Appendix 7A. Cross reference: item 33 of Appendix 3B. 8 Number and +class of all +securities quoted on ASX (_including_the +securities in section 2 if applicable)	N/A	N/A
	N/A
	(a) 120,283,547 shares (b) 60,141,774options
	N/A
	N/A
	7.1: 18,042,532 7.1A: 54,291,068
	6 September 2018
	Number	+Class
	633,084,403 60,141,774	Ordinary shares Options, exercise price of $0.06, expiry date 6 September 2021.

• See chapter 19 for defined terms.

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9 Number and +class of all +securities not quoted on ASX (_including_the +securities in section 2 if applicable) 10 Dividend policy (in the case of a trust, distribution policy) on the increased capital (interests)	Number	+Class
	9,000,000 5,000,000	Options, exercise price of $0.30 and expiry date of 20/06/2019 Options, exercise price of $0.20 and expiry date which is three years from the date on which the milestones are achieved.
	N/A

Part 2 - Pro rata issue

11 Is security holder approval required? 12 Is the issue renounceable or non- renounceable? 13 Ratio in which the+securities will be offered 14 +Class of+securities to which the offer relates 15 +Record date to determine entitlements 16 Will holdings on different registers (or subregisters) be aggregated for calculating entitlements? 17 Policy for deciding entitlements in relation to fractions	No.
	Renounceable
	One Share for every four Shares held at the Record Date and one Option for every two shares received under the offer
	Shares and options
	10 August 2018.
	No.
	Fractions will be round up.

• See chapter 19 for defined terms.

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18 Names of countries in which the entity has security holders who will not be sent new offer documents Note: Security holders must be told how their entitlements are to be dealt with. Cross reference: rule 7.7. 19 Closing date for receipt of acceptances or renunciations 20 Names of any underwriters 21 Amount of any underwriting fee or commission 22 Names of any brokers to the issue 23 Fee or commission payable to the broker to the issue 24 Amount of any handling fee payable to brokers who lodge acceptances or renunciations on behalf of security holders 25 If the issue is contingent on security holders’ approval, the date of the meeting 26 Date entitlement and acceptance form and offer documents will be sent to persons entitled 27 If the entity has issued options, and the terms entitle option holders to participate on exercise, the date on which notices will be sent to option holders 28 Date rights trading will begin (if applicable)	All countries other than Australia and New Zealand.
	31 August 2018
	Patersons Securities Limited.
	6% of the amount raised under the offer $60,000 Issue of 4,000,000 options on the same terms as the options to be issued under the offer. 1.5% broking fee on sale of ineligible shareholder rights.
	Patersons Securities Limited (PSL)
	See item 21 for fees payable to PSL.
	See item 21 for fees payable to PSL.
	N/A
	15 August 2018
	6 August 2018
	9 August 2018

• See chapter 19 for defined terms.

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29 Date rights trading will end (if applicable) 30 How do security holders sell their entitlements_in full_through a broker? 31 How do security holders sell_part_ of their entitlements through a broker and accept for the balance? 32 How do security holders dispose of their entitlements (except by sale through a broker)? 33 +Issue date	24 August 2018
	By providing instructions to that broker.
	Complete and submit the entitlement and acceptance form provided with the prospectus and subsequently providing instructions to the broker for the remainder.
	If shareholders wish to transfer their entitlement to another person other than on ASX they must forward to the share registry a standard renunciation and transfer form, along with the transferee’s required application monies. If they wish to transfer their entitlement to a person on the CHESS subregister, they should engage their CHESS controlling participant.
	6 September 2018

Part 3 - Quotation of securities

You need only complete this section if you are applying for quotation of securities

• 34 Type of[+] securities ( tick one )

• (a) +Securities described in Part 1

(b)[All other ][+][securities ]

Example: restricted securities at the end of the escrowed period, partly paid securities that become fully paid, employee incentive share securities when restriction ends, securities issued on expiry or conversion of convertible securities

Entities that have ticked box 34(a)

Additional securities forming a new class of securities

• See chapter 19 for defined terms.

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Tick to indicate you are providing the information or documents

• 35 If the[+] securities are[+] equity securities, the names of the 20 largest holders of the additional[+] securities, and the number and percentage of additional[+] securities held by those holders

36 If the[+] securities are[+] equity securities, a distribution schedule of the additional +securities setting out the number of holders in the categories 1 - 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001 and over

37 A copy of any trust deed for the additional[+] securities

Entities that have ticked box 34(b)

38 Number of[+] securities for which +quotation is sought 39 +Class of +securities for which quotation is sought

40 Do the[+] securities rank equally in all respects from the[+] issue date with an existing[+] class of quoted +securities? If the additional[+] securities do not rank equally, please state:

• the date from which they do

• the extent to which they participate for the next dividend, (in the case of a trust, distribution) or interest payment

• the extent to which they do not rank equally, other than in relation to the next dividend, distribution or interest payment

• See chapter 19 for defined terms.

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41 Reason for request for quotation now Example: In the case of restricted securities, end of restriction period (if issued upon conversion of another[+] security, clearly identify that other[+] security)

Number +Class 42 Number and +class of all +securities quoted on ASX ( including the[+] securities in clause 38)

• See chapter 19 for defined terms.

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Quotation agreement

1 +Quotation of our additional +securities is in ASX’s absolute discretion. ASX may quote the[+] securities on any conditions it decides.

• 2 We warrant the following to ASX.

• The issue of the[+] securities to be quoted complies with the law and is not for an illegal purpose.

• There is no reason why those[+] securities should not be granted +quotation.

• An offer of the[+] securities for sale within 12 months after their issue will not require disclosure under section 707(3) or section 1012C(6) of the Corporations Act.

Note: An entity may need to obtain appropriate warranties from subscribers for the securities in order to be able to give this warranty

• Section 724 or section 1016E of the Corporations Act does not apply to any applications received by us in relation to any[+] securities to be quoted and that no-one has any right to return any[+] securities to be quoted under sections 737, 738 or 1016F of the Corporations Act at the time that we request that the[+] securities be quoted.

• If we are a trust, we warrant that no person has the right to return the +securities to be quoted under section 1019B of the Corporations Act at the time that we request that the[+] securities be quoted.

• 3 We will indemnify ASX to the fullest extent permitted by law in respect of any claim, action or expense arising from or connected with any breach of the warranties in this agreement.

• 4 We give ASX the information and documents required by this form. If any information or document is not available now, we will give it to ASX before +quotation of the +securities begins. We acknowledge that ASX is relying on the information and documents. We warrant that they are (will be) true and complete.

Sign here: SIGNATURE ON FILE Date: 12 September 2018 (Company secretary)

Print name: TRENT FRANKLIN

== == == == ==

• See chapter 19 for defined terms.

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Appendix 3B New issue announcement

Appendix 3B – Annexure 1

Calculation of placement capacity under rule 7.1 and rule 7.1A for eligible entities

Introduced 01/08/12 Amended 04/03/13

Part 1

Rule 7.1 – Issues exceeding 15% of capital

Step 1: Calculate “A”, the base figure from which the placement capacity is calculated

• Insert number of fully paid[+] ordinary 390,298,856 securities on issue 12 months before the + issue date or date of agreement to issue Add the following: 53,750,000 (Placement, October 2017) • Number of fully paid[+] ordinary securities 2,000 (Exercise of Options, October 2017) issued in that 12 month period under an exception in rule 7.2 120,283,547 (Entitlements Issue, August 2018)

• • Number of fully paid[+] ordinary securities issued in that 12 month period with shareholder approval

• • Number of partly paid[+] ordinary securities that became fully paid in that 12 month period

• Note: • Include only ordinary securities here – other classes of equity securities cannot be added

• • Include here (if applicable) the securities the subject of the Appendix 3B to which this form is annexed

• • It may be useful to set out issues of securities on different dates as separate line items

• Subtract the number of fully paid[+] ordinary - securities cancelled during that 12 month period “A” 564,334,403

• See chapter 19 for defined terms.

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Step 2: Calculate 15% of “A”

“B” 0.15 [Note: this value cannot be changed] Multiply “A” by 0.15 84,650,160 Step 3: Calculate “C”, the amount of placement capacity under rule 7.1 that has already been used

• Insert number of[+] equity securities issued 66,607,628 (Placement, April 2018) or agreed to be issued in that 12 month period not counting those issued: • Under an exception in rule 7.2 • Under rule 7.1A • With security holder approval under rule 7.1 or rule 7.4

• Note: • This applies to equity securities, unless specifically excluded – not just ordinary securities

• • Include here (if applicable) the securities the subject of the Appendix 3B to which this form is annexed

• • It may be useful to set out issues of securities on different dates as separate line items

• “C” 66,607,628

Step 4: Subtract “C” from [“A” x “B”] to calculate remaining placement capacity under rule 7.1 “A” x 0.15 85,837,660 Note: number must be same as shown in Step 2 Subtract “C” 66,607,628 Note: number must be same as shown in Step 3 Total [“A” x 0.15] – “C” 18,042,532 [Note: this is the remaining placement capacity under rule 7.1]

• See chapter 19 for defined terms.

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Part 2

Rule 7.1A – Additional placement capacity for eligible entities

Step 1: Calculate “A”, the base figure from which the placement capacity is calculated

“A” 564,334,403 Note: number must be same as shown in Step 1 of Part 1

Step 2: Calculate 10% of “A”

“D” 0.10 Note: this value cannot be changed Multiply “A” by 0.10 56,433,440

Step 3: Calculate “E”, the amount of placement capacity under rule 7.1A that has already been used

Insert number of[+] equity securities issued 2,142,372 shares (Placement, April 2018) or agreed to be issued in that 12 month period under rule 7.1A

Notes:

• This applies to equity securities – not just ordinary securities

• • Include here – if applicable – the securities the subject of the Appendix 3B to which this form is annexed

• • Do not include equity securities issued under rule 7.1 (they must be dealt with in Part 1), or for which specific security holder approval has been obtained

• • It may be useful to set out issues of securities on different dates as separate line items

• “E” 2,142,372

• See chapter 19 for defined terms.

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Step 4: Subtract “E” from [“A” x “D”] to calculate remaining placement capacity under rule 7.1A

Step 4: Subtract “E” from [“A” x “D”] to calculate remaining placement capacity under rule 7.1A	Step 4: Subtract “E” from [“A” x “D”] to calculate remaining placement capacity under rule 7.1A
“A” x 0.10 Note: number must be same as shown in Step 2	56,433,440
Subtract“E” Note: number must be same as shown in Step 3	2,142,372
Total[“A” x 0.10] – “E”	54,291,068 Note: this is the remaining placement capacity under rule 7.1A

• See chapter 19 for defined terms.

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