SILVER MINES LIMITED — Capital/Financing Update 2021

May 17, 2021

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

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18[th] May 2021

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

Major Expansion of Drilling Program at Bowdens Silver

• The recent highly successful drilling, which has resulted in the identification of new silver feeder veins, has led to the decision to substantially expand drilling activity at Bowdens Silver.

• A 30,000 metre program has commenced with four rigs operational on site.

• Analysis of recent drilling has identified individual steep feeder veins considered to be source structures to the main Bowdens Silver mineralisation.

• Drilling has shown that steep veins and breccias at Bowdens contain the highest-grade mineralisation and extend to depth.

• A recently identified individual structure, now called the Northern Feeder Vein, is interpreted over a strike of at least 120 metres and to a depth of 260 metres (150 metres below the proposed Bowdens open pit) with silver grade consistently over 1,000 grams per tonne (or over 30 ounces silver per tonne).

• Potential for substantially wider zones of ‘blowout’ mineralisation is being targeted where the feeder vein intersects the Eastern and Gully Faults.

• Targeting of further steep feeder vein zones in the central and southern parts of the Bowdens Deposit.

• Drilling to also continue at the recently defined high-grade Aegean Zone, along with the Northwest High-Grade Zone, to expand the potential for underground mining scenarios.

• The expanded drilling program is to continue to at least the end of 2021.

Silver Mines Limited ABN: 45 107 452 942

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Introduction

Silver Mines Limited (ASX:SVL) (“Silver Mines” or “the Company”) is pleased to announce a substantial update to exploration activities and an expanded 2021 drilling program at the Bowdens Silver Project located near Mudgee in New South Wales.

Diamond drilling has continued to test the potential for underground mining scenarios with a focus on the Northwest High-Grade Zone, and more recently on the Aegean Zone. The Aegean Zone is a high-grade vein system located beneath the bulk-tonnage Ore Reserve in the Main Zone area of Bowdens (refer also to release dated 14 May 2021).

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Figure 1. Reported drillhole locations and High-Grade silver targets at the Bowdens Silver Project.

Feeder Vein in the Main Zone

The Main Zone defines the highest-grade component of the Bowdens Silver Ore Reserve. A review of recent drilling and characterisation of specific vein textures has led to the identification of a distinctive steep high-grade vein believed to represent one of many feeder structures to the Bowdens Silver System. This vein has been named the ‘Northern Feeder Vein’ and is currently defined with 120 metre strike east to west and to a depth of 260 metres (150 metres below the current open pit design), within the wide Main Zone.

Drilling of the Northern Feeder Vein to date indicates a continuous high-grade, silver dominant mineralising event with distinct pathfinder geochemistry and metal ratios. The Northern Feeder Vein is 0.1 to 0.5 metres wide and feeds into wider zones of high-grade sulphide breccias and

Silver Mines Limited ABN: 45 107 452 942

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stringer zones of several metres in width such as the Northwest High-Grade Zone and Main Zone. The vein is approximately east-west striking and sub-vertical to steeply dipping.

The orientation of the Northern Feeder Vein is at right-angles to the bulk tonnage fracture fill and disseminated style mineralised zones (flat lying and gently north dipping). The Company has determined that the most optimal drilling orientation, for feeder veins, is to the northnortheast to intersect the steep veins and broader mineralisation in the north of the Deposit.

Figures 2 and 3 show the Northern Feeder Vein in two holes, with a total separation of 185 metres. Multi-phase sulphide mineralisation is clear with brecciated vein walls and similar vein thicknesses. Assays from the vein in Figure 2 include 1 metre @ 1,490 g/t silver, 4.36% lead and 2.2% zinc while results from the vein in Figure 3 include 1 metre @ 1,290 g/t silver, 4.10% lead and 2.06% zinc (refer to release of 19[th] February 2021).

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Figure 2. 128.1 metres in BD21002 (Main Zone) - Northern Feeder vein, with 1 metre @ 1,490 g/t silver, 4.36% lead and 2.2% zinc. Includes massive sulphide of sphalerite, galena and silver sulphides.

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Figure 3. 279.4 metres in BD21001 - Northern Feeder vein, with 1 metre @ 1,290 g/t silver, 4.10% lead and 2.06% zinc. Includes massive sulphide of sphalerite, galena and silver sulphides.

Drillholes which have enabled the modelling of the Northern Feeder Vein include recent holes BD21001, BD21002 and BD21003 and previously drilled holes including BD12012, BD17006,

Silver Mines Limited ABN: 45 107 452 942

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BGR162, BRC12090, BGD040 BGR304, BGR215 and BD16002. The corresponding results are shown in Table 1 below.

Table 1. Intercepts determined to be the Northern Feeder Vein and proximal breccias from recent and historic drilling (all intercepts previously released).

Hole	From	To	Interval	Silver	Zinc	Lead	Gold	Silver Eq
	(m)	(m)	(m)	(g/t)	(%)	(%)	(g/t)	(g/t)1
BD21001	279	280	1	1290	2.06	4.1	0.01	1529
BD21002	125	126	1	829	0.28	0.96	0.01	875
	126	127	1	850	0.27	1.21	-	903
	127	128.1	1.1	1490	2.20	4.36	0.01	1745
BD21003	128	129	1	1300	0.93	2.1	-	1416
BD12012	156	157	1	274	0.17	0.28	-	292
	157	158	1	1240	1.39	1.0	-	1342
BRC12090	96	97	1	587	2.20	2.0	0.02	763
BD16002	291.5	292	0.5	933	0.78	2.51	0.08	1056
BGR162	160	161	1	996	2.03	5.20	-	1271
BGR215	87	88	1	1550	0.65	3.43	-	1697
	88	89	1	580	0.42	1.40	-	648
BGR304	239	240	1	1170	0.04	0.10	-	1175
	240	241	1	316	0.02	0.55	-	335
BGD040	243	244	1	328	0.02	0.12	-	333
	244	245	1	972	0.02	0.82	-	1000
	245	246	1	838	0.02	0.08	-	841

1.Bowdens’ reported silver equivalent is consistent with previous reports and current resource modelling based on assumptions: Ag Eq (g/t) = Ag (g/t) + 33.48Pb (%) + 49.61Zn (%) calculated from prices of US$20/oz silver, US$1.50/lb zinc, US$1.00/lb lead, and metallurgical recoveries of 85% silver + gold, 82% zinc and 83% lead estimated from test work commissioned by Silver Mines Limited.

Silver Mines Limited ABN: 45 107 452 942

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Figure 4. East West Section view south, showing the plane of the Northern Feeder Vein, and the oblique view of the shallowly plunging Northwest High-Grade Zone and the Aegean Zone

Expanded Program

The Company currently has four drilling rigs on site undertaking an expanded program of 30,000 metres of diamond drilling. The program is to test targets and to define high-grade silver veins and feeder zones outside of the current Ore Reserve in the north, central and southern parts of the Bowdens Silver deposit. In the south of the deposit for example, limited previous diamond drilling is available to inform an interpretation of vein orientations and textures and, as such, this area will be tested to target higher-grade veins in the near surface.

With renewed insight from textural analysis, detailed gravity surveying and VTEM reprocessing, the ongoing drilling at the Northwest High-Grade and Aegean Zones will continue in tandem with targeted diamond drilling of steep feeder veins. This work includes testing eastern extensions to the Northwest Zone that would link to the Aegean Zone. In particular, the Northwest High-Grade Zone is still considered to represent a feeder conduit for the Bowdens Silver system (refer to release dated 8[th] October 2020 and Figure 4 below) with a close association between silver and gold in assays and vein textures (colloform banding and pebble breccia).

The results of this program are expected to provide the basis for a resource estimation of potential underground mineable resources.

Silver Mines Limited ABN: 45 107 452 942

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Figure 5: BD20012 from 230 to 234 metres, colloform sulphide and pebble breccia in the Northwest High-grade Zone.

Silver Mines Limited ABN: 45 107 452 942

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About the Bowdens Silver Project

The Bowdens Silver Project is located in central New South Wales, approximately 26 kilometres east of Mudgee (refer to Figure 6 ) . The consolidated project area comprises 2,007 km[2] (496,000 acres) of titles covering approximately 80 kilometres of strike of the highly mineralised Rylstone Volcanics. Multiple target styles and mineral occurrences have potential throughout the district including analogues to Bowdens Silver, high-grade silver-lead-zinc epithermal and volcanogenic massive sulphide (VMS) systems and copper-gold targets.

Bowdens Silver is the largest undeveloped silver deposit in Australia with substantial resources and a considerable body of high-quality technical work already completed. The projects boast outstanding logistics for future mine development.

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Figure 6: Silver Mines Limited tenement holdings in the Mudgee district.

This document has been authorised for release to the ASX by the Company’s Managing Director, Mr Anthony McClure.

Further information:

Anthony McClure Luke Forrestal Managing Director Associate Director Silver Mines Limited M+C Partners +61 2 8316 3997 +61 411 479 144

Silver Mines Limited ABN: 45 107 452 942

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Competent Persons Statement

The information in this report that relates to mineral exploration from the Bowdens Silver Project is based on information compiled by the Bowdens Silver team and reviewed by Darren Holden who is an advisor to the Company. Dr Holden is a member of the Australasian Institute of Mining and Metallurgy and has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration, and to the activity being undertaken, to qualify as a Competent Person as defined in the 2012 edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’ (JORC code). Dr Holden consents to the inclusion in this report of the matters based on the information in the form and context in which it appears.

Silver Mines Limited ABN: 45 107 452 942

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

Section 1 Sampling Techniques and Data

(Criteria in this section apply to all succeeding sections.)

Criteria	JORC Code explanation	Commentary
Sampling	• Nature and quality of sampling (e.g. cut channels, random chips, or	•Sampling taken continuously downhole from PQ and HQ diameter
techniques	specific specialised industry standard measurement tools appropriate to the minerals under investigation, such as down hole	diamond core. •PQ size core – all samples taken as nominal 1 or 2 metre intervals, or
	gamma sondes, or handheld XRF instruments, etc). These	as otherwise defined by logged geology intervals, from quarter cut
	examples should not be taken as limiting the broad meaning of	core.
	sampling.	•HQ size core – all samples taken as nominal 1 metre intervals where
	• Include reference to measures taken to ensure sample	mineralisation observed from half cut core, or as composite 2 metre
	representivity and the appropriate calibration of any measurement	samples of quarter core, or as otherwise defined by logged geology
	tools or systems used.	intervals and from the same side of the core where downhole
	• Aspects of the determination of mineralisation that are Material to	orientations permit.
	the Public Report.	•Samples vary in weight but are generally between 2 and 4 kilograms
	• In cases where ‘industry standard’ work has been done this would	of material.
	be relatively simple (e.g. ‘reverse circulation drilling was used to	•Each sample was sent for multi-element assay using ICP technique
	obtain 1m samples from which 3kg was pulverised to produce a	(ME-ICP61) with the entire sample pulverized and homogenized with
	30g charge for fire assay.’) In other cases, more explanation may	a 25g extract taken for assay.
	be required such as where there is coarse gold that has inherent	•Select samples were also sent for gold using fire assay technique
	sampling problems. Unusual commodities or mineralisation types	(Au-AA25 or Au-AA23) with a 30g sample taken for assay.
	(e.g. submarine nodules) may warrant disclosure of detailed information.	•Assays are considered representative of the sample collected.
Drilling	• Drill type (e.g. core, reverse circulation, open-hole hammer, rotary	•Diamond drilling undertaken using PQ and HQ diamond core rig with
techniques	air blast, auger, Bangka, sonic, etc) and details (e.g. core diameter, triple or standard tube, depth of diamond tails, face-sampling bit or	triple tube used. •All core, excluding PQ size, where unbroken ground allows, is
	other type, whether core is oriented and if so, by what method, etc).	oriented by drilling team and an orientation line drawn along the base
		of the hole.
Drill sample	• Method of recording and assessing core and chip sample	•Core recovery is estimated at greater than 98%.
recovery	recoveries and results assessed. • Measures taken to maximise sample recovery and ensure	•Some zones, (less than 5%) were broken core with occasional clay zones where sample loss may have occurred. However, this is not
	_representative nature of the samples. _	considered tohavematerially affected theresults.

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Criteria	JORC Code explanation	Commentary
	• Whether a relationship exists between sample recovery and grade	•No significant relationship between sample recovery and grade
	and whether sample bias may have occurred due to preferential	exists.
	loss/gainof fine/coarse material.
Logging	• Whether core and chip samples have been geologically and	•All diamond core is logged using lithology, alteration, veining,
	geotechnically logged to a level of detail to support appropriate	mineralisation and structure, including geotechnical structure.
	Mineral Resource estimation, mining studies and metallurgical	•All core is photographed using both a wet and dry image.
	studies.	•In all cases the entire hole is logged by a geologist.
	• Whether logging is qualitative or quantitative in nature. Core (or
	costean, channel, etc) photography.
	• The total length and percentage of the relevant intersections
	_logged. _
Sub-sampling	• If core, whether cut or sawn and whether quarter, half or all core	•Selective sub-sampling based on geology to a maximum size of 2
techniques and sample preparation	were taken. • If non-core, whether riffled, tube sampled, rotary split, etc and whether sampled wet or dry. • For all sample types, the nature, quality and appropriateness of the	metres and a minimum of 0.3 metres. •All core is cut using a Corewise core saw with core rotated 10 degrees to the orientation line to preserve the orientation for future reference.
	sample preparation technique.	•For HQ core the half of the core without the orientation line is
	• Quality control procedures adopted for all sub-sampling stages to	removed, bagged and sent to the laboratory for assay.
	maximise representivity of samples.	•Sample sizes are considered appropriate for the rock type, style of
	• Measures taken to ensure that the sampling is representative of the	mineralisation, the thickness and consistency of the intersections and
	in situ material collected, including for instance, results for field	assay ranges expected at Bowdens.
	duplicate/second-half sampling.
	• Whether sample sizes are appropriate to the grain size of the
	_material being sampled. _
Quality of	• The nature, quality and appropriateness of the assaying and	•Samples dispatched to ALS Global in Orange NSW for sample
assay data and laboratory tests	laboratory procedures used and whether the technique is considered partial or total. • For geophysical tools, spectrometers, handheld XRF instruments, etc, the parameters used in determining the analysis including instrument make and model, reading times, calibration factors	preparation and analysis. Some sample batches were then on shipped to ALS Global in Adelaide, Brisbane and Townsville due to the high volume within the Orange Lab. •Site standards and blanks are inserted at a rate of 8 per 100 samples, and duplicates are inserted at a rate of 5 per 100 samples to check
	applied and their derivation, etc.	quality control. Laboratory standards and blanks are inserted every
	• Nature of quality control procedures adopted (e.g. standards,	25 samples.
	blanks, duplicates, external laboratory checks) and whether
	acceptable levels of accuracy (i.e. lack of bias) and precision have
	been established.

Silver Mines Limited

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Criteria	JORC Code explanation	Commentary
Verification of	• The verification of significant intersections by either independent or	•Significant intersections calculated by Bowdens Silver geologists.
sampling and assaying	alternative company personnel. • The use of twinned holes. • Documentation of primary data, data entry procedures, data	•All geological logging is entered digitally before inputting into a Maxwell Geoservices database schema. •Primary assay data is sent electronically from the laboratory to the
	verification, data storage (physical and electronic) protocols.	SVL database administrator and then entered into the geological
	• Discuss any adjustment to assay data.	database for validation.
		•All assays matched with the logging sheets and loaded directly from
		the output provided by the laboratory with no manual entry of assays
		undertaken.
		•No adjustments were made or required to be made to the assay data.
Location of	• Accuracy and quality of surveys used to locate drill holes (collar	•The collar position is initially surveyed using hand-held GPS with
data points	and down-hole surveys), trenches, mine workings and other locations used in Mineral Resource estimation.	accuracy of +- 3 metres. •Down hole surveys collected every 30 metres using an electronic
	• Specification of the grid system used.	downhole reflex survey camera.
	• Quality and adequacy of topographic control.	•The terrain includes steep hills and ridges with a digital elevation
		model derived from a combination of locally flown LIDAR and
		publically available point cloud data.
		•All collars recorded in MGA94 zone 55.
Data spacing	• Data spacing for reporting of Exploration Results.	•The drilling results relate to exploration drilling of the Aegean Zone.
and	• Whether the data spacing and distribution is sufficient to establish	Drilling is not defined to a set spacing.
distribution	the degree of geological and grade continuity appropriate for the Mineral Resource and Ore Reserve estimation procedure(s) and
	classifications applied.
	• _Whether sample compositing has been applied. _
Orientation of	• Whether the orientation of sampling achieves unbiased sampling of	•Drill orientation was designed to intersect the projection of the major
data in	possible structures and the extent to which this is known,	structural controls to the Deposit.
relation to geological structure	considering the deposit type. • If the relationship between the drilling orientation and the orientation of key mineralised structures is considered to have introduced a sampling bias, this should be assessed and reported if	•An interpretation of the mineralisation has indicated that no sampling bias has been introduced.
	material.
Sample	• The measures taken to ensure sample security.	•All samples bagged on site under the supervision the senior geologist
security		with sample bags tied with cable ties before being driven by site personnelto thelaboratoryinOrange,NSW(~200kilometresfrom

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Criteria	JORC Code explanation	Commentary
		the site)
Audits or	• The results of any audits or reviews of sampling techniques and	•The drilling campaign and drill work includes on-going internal
reviews	data.	auditing with advice taken on process from external advisors.

Section 2 Reporting of Exploration Results

(Criteria listed in the preceding section also apply to this section.)

Criteria	JORC Code explanation	Commentary
Mineral	• Type, reference name/number, location and ownership including	•The Bowdens Resource is located wholly within Exploration Licence
tenement and	agreements or material issues with third parties such as joint	No 5920, held wholly by Silver Mines Limited and is located
land tenure status	ventures, partnerships, overriding royalties, native title interests, historical sites, wilderness or national park and environmental settings.	approximately 26 kilometres east of Mudgee, New South Wales. •The tenement is in good standing. •The project has a 2.0% Net Smelter Royalty which reduces to 1.0%
	• The security of the tenure held at the time of reporting along with	after the payment of US$5 million over 100% of EL5920
	any known impediments to obtaining a licence to operate in the	•The project has a 0.85% Gross Royalty over 100% of EL5920.
	_area. _
Exploration	• Acknowledgment and appraisal of exploration by other parties.	•The Bowdens project was previously managed by Kingsgate
done by other parties		Consolidated and Silver Standard Ltd, however the new results under this table are based on work conducted solely by Silver Mines/Bowdens Silver.
Geology	• Deposit type, geological setting and style of mineralisation.	•The Bowdens Deposit is a low sulphidation epithermal base-metal
		and silver system hosted in Permian aged Volcanic rocks.
		•Mineralisation includes veins, shear veins and breccia zones within
		tuff and ignimbrite rocks.
		•Mineralisation is overall shallowly dipping (~15 degrees to the north)
		with high-grade zones preferentially following a volcanic dome. There
		are several vein orientations within the broader mineralised zones
		including some areas of stock-work veins.
		•The mineralisation reported in this release is hosted in the main
		Rylstone Volcanics which unconformably overlie the Ordovician
		Coomber Formation(sediments). Themineralization reportedinthis

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Criteria	JORC Code explanation	Commentary
		report is related to Bowdens and represents a higher-temperature
		zone.
Drill hole	• A summary of all information material to the understanding of the	•All information is included in Table 1 and Table 2 of this report above.
Information	exploration results including a tabulation of the following
	information for all Material drill holes:
	o easting and northing of the drill hole collar;
	o elevation or RL (Reduced Level elevation above sea level in
	metres) of the drill hole collar;
	o dip and azimuth of the hole;
	o down hole length and interception depth; and
	o hole length.
	• If the exclusion of this information is justified on the basis that the
	information is not Material and this exclusion does not detract from
	the understanding of the report, the Competent Person should
	_clearly explain why this is the case. _
Data	• In reporting Exploration Results, weighting averaging techniques,	•Intersection calculation are weighted to sample length. The average
aggregation methods	maximum and/or minimum grade truncations (e.g. cutting of high grades) and cut-off grades are usually Material and should be stated.	sample represents 1 metre of drill core. •Reported intersections are based on a cut off of 90g/t silver with a 3 metres internal dilution factor.
	• Where aggregate intercepts incorporate short lengths of high-grade	•No top cutting of data or grades was undertaken in the reporting of
	results and longer lengths of low-grade results, the procedure used	these results.
	for such aggregation should be stated and some typical examples
	of such aggregations should be shown in detail.
	• The assumptions used for any reporting of metal equivalent values
	_should be clearly stated. _
Relationship	• These relationships are particularly important in the reporting of	•Mineralisation is both stratabound and vein hosted. The stratigraphy
between	Exploration Results.	dips moderately to the north within the volcanics and moderately to
mineralisatio n widths and intercept lengths	• If the geometry of the mineralisation with respect to the drill hole angle is known, its nature should be reported. • If it is not known and only the down hole lengths are reported, there should be a clear statement to this effect (e.g. ‘down hole length, true width not known’).	the west in the basement units, while the majority of mineralised veins dip west. Some individual veins intersected were sub-parallel (~10 to 20 degrees to core axes). However, given the stratigraphic controls on the zone, the drilling width is estimated to be 100 to 140% of true- width for stratabound mineralized zone.
Diagrams	• Appropriate maps and sections (with scales) and tabulations of	•Maps and cross sections provided in the body of this report.
	intercepts should be included for any significant discovery being
	_reported These should include, but not be limited to, a plan view of _

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Criteria	JORC Code explanation	Commentary
	_drill hole collar locations and appropriate sectional views. _
Balanced	• Where comprehensive reporting of all Exploration Results is not	•All results received and compiled to date are reported in this release.
reporting	practicable, representative reporting of both low and high grades and/or widths should be practiced to avoid misleading reporting of	Drilling is on-going with further results expected.
	_Exploration Results. _
Other	• Other exploration data, if meaningful and material, should be	•This report relates to drill data reported from this program.
substantive	reported including but not limited to: geological observations;
exploration data	geophysical survey results; geochemical survey results; bulk samples – size and method of treatment; metallurgical test results; bulk density, groundwater, geotechnical and rock characteristics
	_and potential deleterious or contaminating substances. _
Further work	• The nature and scale of planned further work (e.g. tests for lateral	•This report relates to a drill program that is designed to test the
	extensions or depth extensions or large-scale step-out drilling).	extension and explore for further zones of high-grade silver situated
	• Diagrams clearly highlighting the areas of possible extensions,	beneath the Bowdens Silver Deposit. Drilling is on-going with further
	including the main geological interpretations and future drilling	results pending.
	_areas, provided this information is not commercially sensitive. _

Silver Mines Limited

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