SILVER MINES LIMITED — Interim / Quarterly Report 2020

Jan 28, 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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29 January 2021

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

ACTIVITIES REPORT FOR THE QUARTER ENDED

31 December 2020

HIGHLIGHTS

Bowdens Silver Project, New South Wales

• As previously announced, completion of the public submission period for the Development Application and associated Environmental Impact Statement.

• The Company received no objections to the Project from any of the Government agency regulators and received resounding public support for the Project.

Bowdens Silver Exploration

• Northwest High-Grade Zone consists of several stacked mineralised horizons 1 to 20 metres thick, with a width of approximately 200 metres, down-plunge extents confirmed over 300 metres and remains open down-plunge. Results include:

• 26.1 metres @ 252 g/t silver equivalent (202 g/t silver, 0.31% zinc, 1.01% lead) from 229 metres in BD20017; including:

• 10.1 metres @ 460g/t silver equivalent (357g/t silver, 0.47% zinc, 1.86% lead, 0.22g/t gold) from 245 metres in an epithermal breccia pipe:

• 4.6 metres @ 430 g/t silver equivalent (215 g/t silver, 3.1% zinc, 1.9% lead) from 230 metres in BD20012; and

• 2.8 metres @ 706 g/t silver equivalent (169 g/t silver, 3.2 g/t gold, 1.3% zinc, 6.5% lead) from 274 metres.

Tuena Project, New South Wales

• 4,000 metre drilling program commenced. Initial results include:

• 4.0 metres @ 6.88 g/t gold from 98 metres in TRC20010.

Webbs and Conrad Projects, New South Wales

• Agreements entered for the sale of the Webbs and Conrad polymetallic projects.

Silver Mines Limited

ABN: 45 107 452 942

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Silver Mines Limited COVID-19 Response

During the December 2020 quarter, Silver Mines Limited (ASX:SVL) (“Silver Mines” or “the Company”) continued to carry out measures in response to the impact of the COVID-19 pandemic. The Company’s priorities are to protect the health and safety of our staff, contractors and local communities, while maintaining the integrity of our business.

The Company adheres to the directives from Federal and State Government and has put in place comprehensive COVID-19 Policies and Procedures. This has allowed our current operations to continue safely and with minimal interruption.

Bowdens Silver Project

The Bowdens Silver Project is the largest undeveloped silver deposit in Australia and lies within Exploration Licence 5920, which is 100% held by the Company. The Project is located in central New South Wales, approximately 26 kilometres east of Mudgee.

In May 2020, the Company completed and submitted the Bowdens Silver Development Application and associated Environmental Impact Statement (EIS) to the New South Wales Department of Planning, Industry and Environment. The proposed development comprises an open-cut mine feeding a new processing plant with a conventional milling circuit and differential flotation to produce two concentrates that will be sold for smelting off site.

Plant capacity is designed for 2.0 million tonnes per annum with a mine life of 16.5 years. Life of mine production is planned to be approximately 66 million ounces of silver, 130,000 tonnes of zinc and 95,000 tonnes of lead.

Summary points of the EIS include:

• Considerable local economic benefits with substantial local job creation;

• Minimal impacts on surface water and groundwater during and after operations;

• An arrangement to source surplus water from nearby coalfields via a dedicated water pipeline limiting the requirement to source water locally;

• No physical human health risk issues of concern have been identified;

• A progressive rehabilitation plan has been committed to with rehabilitation occurring throughout the life of the mine;

• No significant impacts upon migratory or threatened species. The Project’s biodiversity offset program will see a significant area of land conserved in perpetuity;

• Relocation of a local road around the mine site with the result that the majority of traffic would avoid the local township of Lue;

• Aboriginal Cultural Heritage assessment has been concluded in conjunction with the local Aboriginal communities, with agreement on ongoing management; and

Silver Mines Limited

ABN: 45 107 452 942

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• More broadly, the potential for amenity-related impacts would be managed over the life of the mine through a range of management commitments, monitoring and reporting.

The EIS was placed on an eight week public exhibition which concluded during the September 2020 quarter. Results from the public exhibition may be viewed at the New South Wales Department of Planning, Industry and Environment Major Projects website (https://www.planningportal.nsw.gov.au/major-projects).

From the exhibition process, the Company received no objections to the Project from any of the Government agencies and received resounding public support. The Company will be shortly responding to received submissions.

Silver Mines continues an extensive program of consultation with relevant Government departments, local communities, and other interested stakeholders. The program examines the potential impacts and benefits of exploration and development across the substantial Bowdens Silver tenement portfolio. Consultation processes focus on the current potential mine development area and the wider area where the Company is commencing or undertaking exploration programs.

Silver Mines Limited ABN: 45 107 452 942

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Bowdens Project Exploration

Introduction

During and subsequent to the December 2020 quarter, the Company provided updates on exploration activities at the Bowdens Silver Project.

The Company reported that drilling activities at Bowdens Silver will be expanded with up to 10,000 metres of drilling targeting high-grade infill and extension silver mineralisation. Drilling is likely to continue to at least the end of the March 2021 quarter.

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Figure 1. High-Grade silver targets at the Bowdens Silver Project.

Diamond drilling continues to test extensions of potential source/feeder structures within and around the Northwest High-Grade Zone. The Northwest Zone has previously returned spectacular high-grade silver results. The zone starts approximately 30 metres below the base of the proposed Bowdens Silver open pit and is a mineralised zone being targeted for potential high-grade silver underground mining scenarios (Refer to Figures 6 and 7).

Drilling in this zone has shown the mineralisation consists of breccia and veined sulphides dominated by silver sulphides, galena (lead sulphide) and sphalerite (zinc sulphide) within the welded tuff of the Rylstone Volcanics. Mineralisation intersected in BD20017 from 248 to 256 metres show breccia and vein textures indicative of boiling and episodic hydrothermal events. These intercepts are approximately 30 metres down and to the south of the high-grade intercept of 2.4 metres @ 701 g/t silver equivalent from BD20012 (Refer to release dated 8[th] October 2020) and the interpreted fluid conduit.

Silver Mines Limited

ABN: 45 107 452 942

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Figures 2, 3 and 4 show a variety of hydrothermal breccia textures of the high-grade mineralisation observed in BD20017. Gold and copper are also anomalous within this structure, with peak assays of 5.41 g/t gold and 0.44% copper. Refer to Figure 5.

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Hydrothermal breccia –
Silver & lead
Sulphide matrix
sulphides
Figure 2. BD20017 from 254.1-255.1m: Epithermal textures in high grade breccia.
Brecciated sulphide vein
Hydrothermal breccia
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Figure 3. BD20017 from 248.8-249.9m: Epithermal textures in high grade breccia.

Silver Mines Limited ABN: 45 107 452 942

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Hydrothermal Breccia
Silver & lead sulphides
Brecciated sulphide veins
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Figure 4. BD20017 from 249 metres: Epithermal textures in high grade breccia.

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Copper sulphide
Zinc sulphide
Silver sulphide
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Figure 5. BD20017 from 282.9 to 283.9 metres: Epithermal textures with gold and copper.

Hole BD20016 tested a western and southern extension of BRC12037 (4 metres @ 1007 g/t silver equivalent) and intersected several narrow high-grade zones (refer to Table 1). BD20014 was drilled to extend the Northwest Zone to the north of current known limits, with significant results also shown in Table 1. Two more holes, BD20018 and BD20019, are drilled and pending completion of assay results.

Silver Mines Limited

ABN: 45 107 452 942

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Drilling is on-going with a priority to target and define the location and orientation of the feeder structures to the Bowdens Silver Deposit. This includes testing the Northwest Zone and the potential for high-grade zones linking the Northwest Zone to the Main Zone. With the latest results, the Northwest High-Grade Zone is now defined as 1 metre to 20 metres thick, 200 metres width (east to west) and continues down plunge/dip to the northwest for at least 300 metres. This zone is not yet closed off and drilling presents further potential for expansion.

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Figure 6. Cross-section 10655mN through the Northwest High-Grade silver zone with drilling.

Silver Mines Limited ABN: 45 107 452 942

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Figure 7. Long section 15000mE through the deposit showing Northwest High-Grade silver zone

Silver Mines Limited ABN: 45 107 452 942

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Table 1. Intercept calculations from recent results from the Northwest High-Grade Zone.

Hole	From	To	Interval	Silver	Zinc	Lead	Gold	Silver Eq
	(m)	(m)	(m)	(g/t)	(%)	(%)	(g/t)	(g/t)1
BD20011	292	293	1	131	0.16	0.19	-	145
	317	318	1	378	0.08	0.22	-	389
BD20012	230	234	4.6	215	3.06	1.87	-	430
Incl.	233.2	233.6	0.4	832	0.58	0.66	-	883
	274	276.8	2.8	169	1.26	6.50	3.21	7062
BD20014	258	259	1	139	0.04	0.04	-	143
	275.5	277	1.5	220	0.01	0.02	-	221
	279.7	281	1.3	129	0.02	0.04	-	131
BD20015	240	245.1	5.1	168	0.24	0.25	0.01	188
Incl.	241	242	1	517	0.32	0.28	0.02	542
	249	254	5	114	0.62	0.72	0.02	168
Incl.	253	254	1	225	0.62	1.64	0.04	311
	264.25	265.5	1.25	109	0.23	5.2	0.18	3092
	269	270	1	111	0.03	0.94	0.49	1832
	282	283	1	402	0.02	3.35	0.33	5422
BD20016	292	293	1	297	0.12	1.48	0.01	353
	298.4	300	1.6	315	0.47	1.13	0.16	3892
	317	318	1	92	0.03	0.24	-	102
BD20017	178	184	6	73	0.64	0.52	-	122
	208	210	2	169	0.17	1.39	0.01	224
	216	218	2	382	0.37	1.11	0.01	438
	229	255.1	26.1	202	0.31	1.01	0.08	252
Incl.+	245	255.1	10.1	357	0.47	1.86	0.22	4602
Incl.	248.8	249.9	1.1	921	0.96	1.84	0.07	1030
Incl.	254.1	255.1	1	471	0.48	7.61	1.52	8712
	266	272	6	162	0.24	2.13	0.1	2532
	277	279	2	222	0.66	4.14	0.27	4152
	282.9	283.9	1	356	1.22	2.19	5.41	9232

1.Bowdens’ silver equivalent reported 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. 2. Silver equivalent updated to also include significant gold credit assuming the same recovery as silver, with gold:silver price ratio of 80:1 based on the approximate price ratio : Ag Eq (g/t) = Ag (g/t) + 33.48Pb (%) + 49.61Zn (%) + 80*Au(g/t). Intercepts calculated using a 90g/t Ag cut-off and 3 metre internal dilution factor, with highest individual assay results highlighted as included within overall intercept; except where indicated with [+], which is the high-grade breccia zone intersected in BD20017.

For further information refer to ASX releases of 8[th] October 2020 and 25[th] January 2021.

Silver Mines Limited

ABN: 45 107 452 942

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Further Exploration

Drilling continues to test other high-grade silver targets around the current resource and extensions at depth. The base-metal and gold bearing Bundarra zone remains open to the south and down-dip to the west of previous drilling, with BD20001 drilled in early 2020 (Refer to release dated 8[th] April 2020) proving the Bowdens system is developed extensively at depth to the west.

Regional exploration activities, around the Bowdens Silver Deposit, have continued through the latter half of 2020 in accordance with the Company’s COVID-19 policies. A detailed gravity survey was completed over the Deposit area and surrounds. The increased survey resolution will assist with the interpretation of the controlling structures and possible source intrusives in the area. This data and updated models, once received from the Company’s geophysical consultant, will aid in targeting new silver deposits in proximity to the Bowdens Silver Deposit.

Barabolar Project

During the December 2020 quarter, the Company continued desktop activities on the Barabolar Project, which is located approximately 26 kilometres east of Mudgee in central New South Wales and 10 kilometres northwest of the Company’s Bowdens Silver Project (refer Figure 8 and 9).

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Figure 8. Barabolar Project geology with prospects.

Due to the COVID-19 pandemic the planned drilling at Barabolar has been put on-hold. However, the Barabolar Project remains a compelling target area with a considerable hydrothermal footprint, and the Company is continuing with desktop studies and application of R&D technologies in this area.

Silver Mines Limited ABN: 45 107 452 942

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About the Bowdens Silver and Barabolar Projects

The Bowdens Silver Project and Barabolar Projects are located in central New South Wales, approximately 26 kilometres east of Mudgee (see Figure 9). 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 and underlying sediments, intrusions and volcanics of the Macquarie Arc. Multiple target styles and mineral occurrences have potential throughout the district including analogues to Bowdens Silver, high-grade silver-lead-zinc epithermal, volcanogenic massive sulphide (VMS) systems and copper-gold targets.

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

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Figure 9. Silver Mines Limited tenement holdings in the Mudgee district.

Silver Mines Limited ABN: 45 107 452 942

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Tuena Gold Project

The Tuena Gold Project is located 80 kilometres south of the city of Orange in New South Wales (Refer to Figure 10).

The Tuena area was the scene of a historic gold rush, with gold extracted from narrow highgrade gold reefs over greater than 5 kilometres of strike length. The Company has completed reconnaissance mapping, rock sampling and soil geochemistry; as well as flown a detailed magnetic survey. The Company has defined >15 individual zones with anomalous gold in soil sampling associated with historic workings. Rock samples have also returned highly anomalous gold results at Peeks Reef (up to 76.4 g/t Au in rock sampling), Cooper & McKenzie and the Eastern Prospects (Refer to release dated 23[th] October 2019).

During the December quarter, the Company commenced a 20 hole 4,000 metre drill program designed to test beneath several of the historic hard-rock gold workings and associated geochemistry anomalies along an extensive 5.4 kilometre by 1.5-kilometre shear complex within EL8526 (refer to Figure 10). In addition, two targets, at Lucky Hit South and Markham’s Prospects, have been identified with both gold and base-metal pathfinder signatures. Both prospects adjoin historic workings at Lucky Hit and Markham’s Hill respectively and are clearly defined by soil chemistry with anomalism of silver, bismuth, lead, tellurium and gold (refer release dated 19 May 2020). These targets are being tested for bulk-tonnage gold mineral systems and have a comparable signature and scale to the McPhillamy’s Gold Project (Regis Resources) located north of the Tuena Gold Project.

Drilling has encountered multiple potentially mineralised structures beneath historic workings comprising quartz and carbonate veining with or without pyrite (iron sulphide). A substantial intercept of 4 metres @ 6.88 g/t gold (from 98 metres) , with a peak assay of 25g/t gold over 1 metre was intersected in TRC20010 beneath the Garnet Mine Prospect (refer to Figure 11) with multiple intercepts < 0.5 g/t gold returned in TRC20009 and TRC20010 suggesting that other gold bearing structures are proximal.

Alteration throughout the project area is moderate to strong (chlorite, epidote and carbonate) suggesting that a substantial hydrothermal system has affected the area. Results from this initial program will guide potential follow-up drilling to test the extents of gold encountered. A number of drill holes are awaiting assay results and will be reported in due course.

This program represents the first modern drilling to be completed in the Tuena project area. However, in recent years there have been substantial gold discoveries made along the strike of the Copperhannia Fault including the McPhillamy’s deposit to the north of Tuena (Regis Resources) and the Cullarin discovery to the south (Sky Metals) (refer Figure 10).

Silver Mines Limited ABN: 45 107 452 942

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Figure 10: Tuena Gold Project regional setting.

Silver Mines Limited ABN: 45 107 452 942

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Figure 11. Tuena Gold Project planned drilling with regional insert.

Silver Mines Limited ABN: 45 107 452 942

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About the Tuena Gold Project

The Tuena Gold Project is a regional exploration project that consists of a four exploration licenses covering 747 square kilometres. The project is 100% owned by Silver Mines Limited and is located in the Southern Tablelands of New South Wales, 180 kilometres west of Sydney, 80 kilometres south of Orange and 150 kilometres southwest of the Company’s primary assets the Bowdens Silver Project and the Barabolar Project. Tuena was the site of a mid-1800s alluvial and hard-rock gold rush. A cluster of historic workings closely associated with the major Copperhania Thrust Fault extend over an area approximately six kilometres by four kilometres. The Company is targeting the region for large structurally controlled gold deposits analogous to the nearby McPhillamys Gold Deposit.

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Figure 12. Silver Mines Limited project in the Lachlan Orogen.

Silver Mines Limited ABN: 45 107 452 942

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Table 2. Table of drill collars for the Tuena RC drill program.

Target	Hole ID	GDA94 East	GDA94 North	RL (m)	Dip	Azimuth (grid)	Depth (m)	Drill Type	Comment
Lucky Hit South	TRC20001	716376	6228001	675	-60	90	198	RC	Assays received – no significant results
Lucky Hit	TRC20002	716367	6228271	646	-60	90	201	RC	Assays received
Lucky Hit	TRC20003	716297	6228268	639	-65	90	200	RC	Assays received
Lucky Hit	TRC20004	716357	6228636	634	-60	250	200	RC	Assays received– no significant results
Lucky Hit	TRC20005	716217	6228804	630	-70	70	216	RC	Assays received– no significant results
Lucky Hit South	TRC20006	716293	6227472	640	-75	270	200	RC	Awaiting Assays
Lucky Hit South	TRC20007	716279	6227523	644	-75	90	200	RC	Assays received– no significant results
Golden Dyke South	TRC20008	716065	6229459	606	-75	86	200	RC	Assays received
Garnet Mine	TRC20009	715426	6231355	574	-75	65	200	RC	Assays received
Garnet Mine	TRC20010	715421	6231447	564	-70	150	200	RC	Assays received
Peeks Reef	TRC20011	715190	6232644	501	-75	60	222	RC	Awaiting Assays
Peeks Reef	TRC20012	715307	6232713	509	-75	60	222	RC	Awaiting Assays
Markhams	TRC20013	716969	6232093	544	-80	67	174	RC	Awaiting Assays
Markhams	TRC20014	717033	6232142	553	-70	247	198	RC	Awaiting Assays
Markhams	TRC20015	716720	6232360	535	-80	270	180	RC	Awaiting Assays
Eastern Prospects	TRC20016	716676	6231055	603	-75	265	198	RC	Awaiting Assays
Eastern Prospects	TRC20017	716121	6230599	615	-75	83	198	RC	Awaiting Assays
Eastern Prospects	TRC20018	716012	6230505	625	-75	83	198	RC	Awaiting Assays
Peeks Reef	TRC20019	715384	6232326	540	-75	75	198	RC	Awaiting Assays
Peeks Reef	TRC20020	715370	6232257	544	-70	75	15	RC	Hole abandoned (redrilled as TRC20021)
Peeks Reef	TRC20021	715372	6232257	544	-70	75	198	RC	Awaiting Assays

Silver Mines Limited

ABN: 45 107 452 942

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Table 3. Intercept calculations of recent results from Tuena RC Drilling.

Hole	From	To	Interval	Gold	Silver
	(m)	(m)	(m)	(g/t)	(g/t)
TRC20002	128	129	1	0.13	<0.5
TRC20003	88	89	1	0.19	<0.5
TRC20008	97	98	1	0.20	<0.5
TRC20009	10	11	1	0.12	<0.5
	12	13	1	0.12	<0.5
	34	36	2	0.17	<0.5
	49	51	2	0.40	<0.5
TRC20010	98	102	4	6.88	<0.5
Incl.	98	99	1	25.0	5.2
and	99	100	1	1.72	<0.5
	107	108	1	0.16	<0.5
	111	113	2	0.26	<0.5
	153	154	1	0.20	<0.5

Intercepts calculated using a 0.10g/t Au cut-off with no internal dilution factor, with highest individual assay results highlighted as included within overall intercept.

Silver Mines Limited ABN: 45 107 452 942

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Webbs and Conrad Projects

During the December 2020 quarter the Company announced that it had entered into a binding Term Sheet with Thomson Resources Limited (ASX:TMZ) (“Thomson Resources”) for the sale of its 100% interests in the Webbs Silver/Polymetallic Project (“Webbs”) and the Conrad Silver/Polymetallic Project (“Conrad”), both located in the New England region of New South Wales. The Term Sheet was superseded by definitive agreements as reported on 27[th] January 2021.

Transaction

Thomson Resources will acquire 100% of the interests in the Webbs and Conrad projects along with associated information, cash security bonds and agreements by acquiring all the issued share capital in Webbs Resources Pty Ltd and Conrad Resources Pty Ltd (“Sale Interest”).

The Consideration for the Sale Interest will comprise:

(a) a non-refundable payment of A$50,000 to be paid to Silver Mines within five Business Days of signing the binding Term Sheet (paid);

(b) a payment equivalent to the cash rehabilitation bonds in place at Completion and the replacement of any non-cash rehabilitation bonds (currently, the aggregate of both types of rehabilitation bonds is approximately $269,000);

(c) Share Consideration of 75,000,000 fully-paid ordinary shares (with a current market value of approximately A$9.4 million) in Thomson Resources escrowed for 12 months from the date of issue;

(b) Option Consideration of 50,000,000 Options with: an exercise price of $0.124 per option; an expiry date of 3 years from the date of issue; vesting 12 months after the date of issue; and which shall be issued on Completion;

Both parties have completed due diligence and have elected to proceed with the transaction.

Completion is subject to a number of conditions precedent including:

• (a) Approval from shareholders of Thomson Resources to the issue of the equity part of the Consideration including for the purposes of Listing Rule 7.1;

• (b) stand-still obligations; and

• (c) any Ministerial approvals required.

On an undiluted basis Silver Mines will hold an interest in Thomson Resources equating to approximately 19%. On Completion, Thomson Resources will appoint Silver Mines Managing Director Anthony McClure to the Board of Thomson Resources as a non-executive director.

Completion of the transaction is expected during March 2021.

Silver Mines Limited ABN: 45 107 452 942

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Research and Development and NSW New Frontiers Cooperative Drilling Grants

The Company has an active research and development (“R&D”) program to better map and understand the Permian volcanics and basement Palaeozoic (Ordovician and Silurian) rocks of the Company’s exploration licenses. The R&D programs are on-going and have, over the past three years, involved collaboration between Silver Mines’ researchers and researchers from the University of Technology Sydney, the University of New South Wales and Macquarie University. Several industry consultants and data collection contractors have also assisted in analysing and providing base datasets for the R&D program.

The R&D project involves developing innovative new technology and processes, which have been applied to geological studies on the Bowdens Silver Deposit and particularly the basement rocks and the search for a porphyry source or feeder structure. In addition, research has been applied to the Barabolar Project area and elsewhere in the Company’s portfolio including Tuena. The Company has developed and continues to develop new technologies for multivariate geochemical analysis; automated mapping of geology from geochemistry data; and predictive geochemistry modelling using machine learning techniques. These R&D programs have developed further hypotheses for mineralisation in areas such as basement rocks beneath the main volcanic host at the Bowdens Silver Deposit; Bowdens northern and north-westerly extensions; and several targets in the Barabolar Corridor including the Cringle prospect area. Much of the Company’s exploration drilling is considered as a test of hypotheses and targets developed under these R&D programs.

During the December 2020 quarter, the development and testing of the machine learning predictive geochemistry technology and integration with recently acquired gravity data continued. The current drill programs at Bowdens are on targets generated under this work and based on the integration of technologies and data. The Company is now establishing programs to test its machine learning technologies on targeting outside of the BowdensBarabolar district to establish if such technologies have transferable applications to other geological domains. In particular, the Tuena Gold Project, with a multi-element association of gold mineralisation along with complex structure, is being used as a further test site with drill targets associated with multi-element anomalism being generated, in part, by these technologies.

Corporate

Issue of fully paid ordinary shares

During the December 2020 quarter, new fully paid ordinary shares were issued after the below SVLOB options, with an exercise price of $0.06 per share, were exercised:

• 64,848 shares issued on 2 November 2020;

• 753,640 shares issued on 8 December 2020; and

• 487,000 shares issued on 18 December 2020.

Further shares were issued to related parties of the Company on 8 December 2020 as follows:

Silver Mines Limited

ABN: 45 107 452 942

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• 500,000 shares to be issued to related parties of the Company in connection with the placement conducted by the Company and announced to the market on 27 May 2020. Shareholders approved the issue to the related parties of the Company at the Annual General Meeting on 27 November 2020; and

• 10,000,000 shares were issued to a Director of the Company, as deferred consideration in accordance with the share sale and purchase deed dated 3 May 2016 which effected the purchase of Bowdens Silver. Shareholders approved this issue at the Annual General Meeting of the Company on 27 November 2020.

Waiver

On 27 November 2020, shareholders approved at the Annual General Meeting of the Company ( Approval ) a waiver granted by ASX Listing Compliance on 28 October 2020 ( Waiver ). The Waiver relates to the issue of 10,000,000 fully paid ordinary shares ( Deferred Consideration Shares ) in the Company to be issued to a Director of the Company in accordance with the provisions of the share sale and purchase deed dated 3 May 2016 ( Deed ), which effectuated the purchase of the Bowdens Silver Project. In accordance with the Deed the Deferred Consideration Shares are to be issued upon:

• achievement of the mining lease granted by the NSW Department of Planning, Industry and Environment pursuant to the Mining Act 1992 (NSW) in connection with Bowden Silver Project; or

• a change of control milestone such as a takeover bid pursuant to section 9 of the Corporations Act 2001 (Cth),

• (collectively, Milestones )

The Company confirms the Deferred Consideration Shares have not been issued in the December Quarter. The Deferred Consideration Shares may only be issued if either of the Milestones are achieved and occur in the period that is 24 months from the date that Approval is obtained.

Appendix 5B

As set out in the attached Appendix 5B, exploration expenditure during the quarter totalled A$1,569,000. Payments to related parties totalling A$193,000 consisted of remuneration paid to executive and non-executive directors and an associate of a director under respective service agreements.

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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About Silver Mines Limited

The Silver Mines strategy has been to consolidate quality silver deposits in New South Wales and to form Australia’s pre-eminent silver company.

The Company’s goal is to provide exceptional returns to shareholders through the acquisition, exploration and development of quality silver projects and by maximising leverage to an accretive silver price.

Competent Persons Statement

The information in this report that relates to mineral exploration from the Bowdens, Barabolar and Tuena projects is based on information compiled by the Bowdens Silver team and reviewed by Dr 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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Tenement Information as at 31 December 2020

			Silver Mines	Change in
Tenement	Project Name	Location	Ownership	Quarter
EL 5920	Bowdens Silver	NSW	100%	-
EL 6354	Bowdens Silver	NSW	100%	-
EL 8159	Bowdens Silver	NSW	100%	-
EL 8160	Bowdens Silver	NSW	100%	-
EL 8168	Bowdens Silver	NSW	100%	-
EL 8268	Bowdens Silver	NSW	100%	-
EL 73911	Bowdens Silver	NSW	0%	-
EL 8403	Bowdens Silver	NSW	100%	-
EL 8405	Bowdens Silver	NSW	100%	-
EL 8480	Bowdens Silver	NSW	100%	-
EL 8682	Bowdens Silver	NSW	100%	-
EL 8526	Tuena	NSW	100%	-
EL 8973	Tuena	NSW	100%	-
EL 8974	Tuena	NSW	100%	-
EL 8975	Tuena	NSW	100%	-
EL 5674	Webbs	NSW	100%	-
EPL1050	Conrad	NSW	100%	-
EL 5977	Conrad	NSW	100%	-
ML 6040	Conrad	NSW	100%	-
ML 6041	Conrad	NSW	100%	-
ML 5992	Conrad	NSW	100%	-

1. Under joint venture with Thomson Resources Limited (TMZ). Silver Mines Limited (SVL) earning 80%.

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 techniques

• Nature and quality of sampling (e.g. cut channels, random chips, or specific specialised industry standard measurement tools appropriate to the minerals under investigation, such as down hole gamma sondes, or handheld XRF instruments, etc). These examples should not be taken as limiting the broad meaning of sampling. • Include reference to measures taken to ensure sample representivity and the appropriate calibration of any measurement tools or systems used. • Aspects of the determination of mineralisation that are Material to the Public Report. • In cases where ‘industry standard’ work has been done this would be relatively simple (e.g. ‘reverse circulation drilling was used to obtain 1m samples from which 3kg was pulverised to produce a 30g charge for fire assay.’) In other cases, more explanation may be required such as where there is coarse gold that has inherent sampling problems. Unusual commodities or mineralisation types (e.g. submarine nodules) may warrant disclosure of detailed information. Diamond Drilling – Bowdens: •Sampling taken continuously downhole from PQ and HQ diameter diamond core. •PQ size core – all samples taken as nominal 2 metre intervals, or as otherwise defined by logged geology intervals, from quarter cut core. •HQ size core – all samples taken as nominal 1 metre intervals where mineralisation observed from half cut core, or as composite 2 metre samples of quarter core, or as otherwise defined by logged geology intervals and from the same side of the core where downhole orientations permit. •Samples vary in weight but are generally between 2 and 4 kilograms of material. •Each sample was sent for multi-element assay using ICP technique (ME-ICP61) with the entire sample pulverized and homogenized with a 25g extract taken for assay. •Select samples were also sent for gold using fire assay technique (Au-AA25) with a 30g sample taken for assay. •Assays are considered representative of the sample collected. RC Drilling – Tuena: •Samples collected on a 1 metre interval from a rotary cone splitter. •Samples vary in weight but are generally between 1 and 3 kilograms of material. •Each sample was sent for multi-element assay using ICP technique (ME-ICP61) with the entire sample pulverized and homogenized with a 25g extract taken for assay. •Each sample was also sent for gold using fire assay technique (Au- AA25)with a 30gsample taken for assay.

• Criteria JORC Code explanation Sampling • Nature and quality of sampling (e.g. cut channels, random chips, or techniques specific specialised industry standard measurement tools appropriate to the minerals under investigation, such as down hole gamma sondes, or handheld XRF instruments, etc). These examples should not be taken as limiting the broad meaning of sampling.

Criteria

JORC Code explanation Commentary

Sampling techniques

• Nature and quality of sampling (e.g. cut channels, random chips, or specific specialised industry standard measurement tools appropriate to the minerals under investigation, such as down hole gamma sondes, or handheld XRF instruments, etc). These examples should not be taken as limiting the broad meaning of sampling. • Include reference to measures taken to ensure sample representivity and the appropriate calibration of any measurement tools or systems used. • Aspects of the determination of mineralisation that are Material to the Public Report. • In cases where ‘industry standard’ work has been done this would be relatively simple (e.g. ‘reverse circulation drilling was used to obtain 1m samples from which 3kg was pulverised to produce a 30g charge for fire assay.’) In other cases, more explanation may be required such as where there is coarse gold that has inherent sampling problems. Unusual commodities or mineralisation types (e.g. submarine nodules) may warrant disclosure of detailed information. Diamond Drilling – Bowdens: •Sampling taken continuously downhole from PQ and HQ diameter diamond core. •PQ size core – all samples taken as nominal 2 metre intervals, or as otherwise defined by logged geology intervals, from quarter cut core. •HQ size core – all samples taken as nominal 1 metre intervals where mineralisation observed from half cut core, or as composite 2 metre samples of quarter core, or as otherwise defined by logged geology intervals and from the same side of the core where downhole orientations permit. •Samples vary in weight but are generally between 2 and 4 kilograms of material. •Each sample was sent for multi-element assay using ICP technique (ME-ICP61) with the entire sample pulverized and homogenized with a 25g extract taken for assay. •Select samples were also sent for gold using fire assay technique (Au-AA25) with a 30g sample taken for assay. •Assays are considered representative of the sample collected. RC Drilling – Tuena: •Samples collected on a 1 metre interval from a rotary cone splitter. •Samples vary in weight but are generally between 1 and 3 kilograms of material. •Each sample was sent for multi-element assay using ICP technique (ME-ICP61) with the entire sample pulverized and homogenized with a 25g extract taken for assay. •Each sample was also sent for gold using fire assay technique (Au- AA25)with a 30gsample taken for assay.

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Criteria	JORC Code explanation	Commentary
		•Assays are considered representative of the sample collected.
Drilling	• Drill type (e.g. core, reverse circulation, open-hole hammer, rotary	Diamond Drilling – Bowdens:
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 other type, whether core is oriented and if so, by what method, etc).	•Diamond drilling undertaken using PQ and HQ diamond core rig with triple tube used. •All core, excluding PQ size, where unbroken ground allows, is
		oriented by drilling team and an orientation line drawn along the base
		of the hole.
		RC Drilling – Tuena:
		•RC drilling utilised a 4.5 inch (112.5mm) sampling bit with a 4 inch
		(100mm) hammer.
Drill sample	• Method of recording and assessing core and chip sample	Diamond Drilling – Bowdens:
recovery	recoveries and results assessed. • Measures taken to maximise sample recovery and ensure representative nature of the samples. • Whether a relationship exists between sample recovery and grade and whether sample bias may have occurred due to preferential loss/gain of fine/coarse material.	•Core recovery is estimated at greater than 98%. •Some zones, (less than 5%) were broken core with occasional clay zones where sample loss may have occurred. However, this is not considered to have materially affected the results. •No significant relationship between sample recovery and grade exists.
		RC Drilling – Tuena:
		•Samples are weighed by the laboratory on receipt and in the field for
		the effect of water.
		•No significant relationship between sample recovery and grade
		exists.
Logging	• Whether core and chip samples have been geologically and	Diamond Drilling – Bowdens:
	geotechnically logged to a level of detail to support appropriate Mineral Resource estimation, mining studies and metallurgical studies. • Whether logging is qualitative or quantitative in nature. Core (or costean, channel, etc) photography.	•All diamond core is logged using lithology, alteration, veining, mineralisation and structure, including geotechnical structure. •All core is photographed using both a wet and dry image. •In all cases the entire hole is logged by a geologist.
	• The total length and percentage of the relevant intersections	RC Drilling – Tuena:
	logged.	•RC chip samples arelogged usinglithology, alteration,veining and

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Criteria	JORC Code explanation	Commentary
		mineralisation.
		•All chip trays are photographed.
		•In all cases entire hole is logged by a geologist.
Sub-sampling	• If core, whether cut or sawn and whether quarter, half or all core	Diamond Drilling – Bowdens:
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 sample preparation technique. • Quality control procedures adopted for all sub-sampling stages to maximise representivity of samples. • Measures taken to ensure that the sampling is representative of the in situ material collected, including for instance, results for field duplicate/second-half sampling. • Whether sample sizes are appropriate to the grain size of the	•Selective sub-sampling based on geology to a maximum size of 2 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. •For HQ core the half of the core without the orientation line is removed, bagged and sent to the laboratory for assay. •Sample sizes are considered appropriate for the rock type, style of mineralisation, the thickness and consistency of the intersections and assay ranges expected at Bowdens.
	material being sampled.	RC Drilling – Tuena:
		•RC samples are collected from a rotary cone splitter at a 12% split.
		Both a primary and a secondary sample are collected from the splitter
		(total of 24% split) with the primary sample being sent for laboratory
		assay and the secondary sample being kept as a library record.
		•The cyclone/splitter system is checked periodically throughout each
		hole and cleaned when necessary. To assess the representation of
		material sampled a duplicate 12% split sample is collected from a
		secondary - sample chute on the opposite side of the rotary cone
		splitter at the rate of 1/20.
Quality of	• The nature, quality and appropriateness of the assaying and	Diamond Drilling – Bowdens:
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 applied and their derivation, etc. • Nature of quality control procedures adopted (e.g. standards,	•Samples dispatched to ALS Global in Orange NSW for sample 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

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Criteria	JORC Code explanation	JORC Code explanation	Commentary
		blanks, duplicates, external laboratory checks) and whether	quality control. Laboratory standards and blanks are inserted every
		acceptable levels of accuracy (i.e. lack of bias) and precision have	25 samples.
		been established.	RC Drilling – Tuena:
			•Samples dispatched to ALS Global in Orange NSW for sample
			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 2 per 100 samples,
			and duplicates are inserted at a rate of 5 per 100 samples to check
			quality control. Laboratory standards and blanks are inserted every
			25 samples.
Verification of	•	The verification of significant intersections by either independent or	Diamond Drilling – Bowdens:
sampling and assaying	• • •	alternative company personnel. The use of twinned holes. Documentation of primary data, data entry procedures, data verification, data storage (physical and electronic) protocols. Discuss any adjustment to assay data.	•Significant intersections calculated by Bowdens Silver geologists. •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 SVL database administrator and then entered into the geological
			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.
			RC Drilling – Tuena:
			•Significant intersections calculated by Bowdens Silver geologists.
			•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
			SVL database administrator and then entered into the geological
			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.

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Criteria	JORC Code explanation	Commentary
		•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	Diamond Drilling – Bowdens:
data points	and down-hole surveys), trenches, mine workings and other locations used in Mineral Resource estimation. • Specification of the grid system used. • Quality and adequacy of topographic control.	•The collar position is initially surveyed using hand-held GPS with accuracy of +- 3 metres. •Locations were later collected by Real Time Kinetic by VRS to an accuracy of +- 1 centimetre.
		•Down hole surveys collected every 30 metres using an electronic
		downhole reflex survey camera.
		•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.
		RC Drilling – Tuena:
		•The collar position is surveyed using hand-held GPS with accuracy of
		+- 3 metres.
		•Down hole surveys collected every 30 metres using an electronic
		downhole reflex survey camera.
		•The terrain includes steep hills and ridges with a digital elevation
		model derived from publically available point cloud data.
		•All collars recorded in MGA94 zone 55.
Data spacing	• Data spacing for reporting of Exploration Results.	Diamond Drilling – Bowdens:
and distribution	• Whether the data spacing and distribution is sufficient to establish the degree of geological and grade continuity appropriate for the Mineral Resource and Ore Reserve estimation procedure(s) and classifications applied.	•This drilling relates to exploration drilling of the Northwest High-Grade Silver Zone as defined by previous drilling at the Bowdens Deposit. Drilling is not defined to a set spacing.
	• Whether sample compositing has been applied.	RC Drilling – Tuena:
		•This drilling relates to exploration drilling of the Tuena Gold Project
		and is not defined to a set spacing.
Orientation of	• Whether the orientation of sampling achieves unbiased sampling of	Diamond Drilling – Bowdens:
data in	possible structures and the extent to which this is known, _considering the deposit type. _	•Drill orientation was designed to intersect the projection of the major

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ABN: 45 107 452 942

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Criteria	JORC Code explanation	Commentary
relation to	• If the relationship between the drilling orientation and the	structural controls to the Deposit.
geological structure	orientation of key mineralised structures is considered to have introduced a sampling bias, this should be assessed and reported if material.	•An interpretation of the mineralisation has indicated that no sampling bias has been introduced. RC Drilling – Tuena:
		•Drill orientation was designed to intersect the main structures
		identified from the trend of historic workings.
		•An interpretation of the mineralisation has indicated that no sampling
		bias has been introduced.
Sample	• The measures taken to ensure sample security.	Diamond Drilling – Bowdens:
security		•All samples bagged on site under the supervision of the senior
		geologist with sample bags tied with cable ties before being driven by
		site personnel to the laboratory in Orange, NSW (~200 kilometres
		from the site).
		RC Drilling – Tuena:
		•All samples bagged on site under the supervision of Rangott Mineral
		Explorations geologists with sample bags tied with cable ties before
		being driven by a site contractor to the laboratory in Orange, NSW
		(~80 kilometres from the site).
Audits or	• The results of any audits or reviews of sampling techniques and	Diamond Drilling – Bowdens:
reviews	data.	•The drilling campaign and drill work includes on-going internal
		auditing with advice taken on process from external advisors.
		RC Drilling – Tuena:
		•The drilling campaign and drill work includes on-going internal
		auditing with advice taken on process from external advisors.

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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	Diamond Drilling – Bowdens:
tenement and land tenure status	agreements or material issues with third parties such as joint ventures, partnerships, overriding royalties, native title interests, historical sites, wilderness or national park and environmental settings. • The security of the tenure held at the time of reporting along with any known impediments to obtaining a licence to operate in the area.	•The Bowdens Resource is located wholly within Exploration Licence No 5920, held wholly by Silver Mines Limited and is located 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% after the payment of US$5 million over 100% of EL5920 •The project has a 0.85% Gross Royalty over 100% of EL5920.
		RC Drilling – Tuena:
		•The Tuena Project is located entirely within Exploration Licence No
		EL8526, held wholly by Silver Mines Limited, through its subsidiary
		Tuena Resources Limited, and is located approximately 80km south
		of Bathurst, New South Wales.
		•The tenement is in good standing.
		•The project has a 1.00% Gross Royalty over 100% of EL8526.
Exploration	• Acknowledgment and appraisal of exploration by other parties.	Diamond Drilling – Bowdens:
done by other parties		•The Bowdens project was previously managed by Kingsgate Consolidated and Silver Standard Ltd, however the new results under
		this table are based on work conducted solely by Silver
		Mines/Bowdens Silver.
		RC Drilling – Tuena:
		•Drilling results from Tuena reported under this table is based on work
		conducted solely by Silver Mines/Tuena Resources.
Geology	• Deposit type, geological setting and style of mineralisation.	Diamond Drilling – Bowdens:
		•The Bowdens Deposit is a low sulphidation epithermal base-metal
		and silver system hosted in Permian aged Volcanic rocks.
		•Mineralisation includesveins, shear veins and brecciazoneswithin

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Criteria	JORC Code explanation	Commentary
		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). The mineralization reported in this
		report is related to Bowdens and represents a higher-temperature
		zone.
		RC Drilling – Tuena:
		•The Tuena Project consists of Devonian and Silurian age volcanics
		and sedimentary rocks which have been regionally and locally
		deformed during the Tabberabberan orogeny. This has resulted in
		regional folding and multiple generations of faulting associated with
		the major Copperhannia Thrust on the western side of the tenement.
		•Mineralisation is defined by the existence of historic shafts and audits,
		and can be observed at surface as structurally controlled shear or
		vein systems hosted within deformed sediments and volcanics.
Drill hole	• A summary of all information material to the understanding of the	Diamond Drilling – Bowdens:
Information	exploration results including a tabulation of the following information for all Material drill holes:	•All information is included in Table 1 of this report above.
	o easting and northing of the drill hole collar;	RC Drilling – Tuena:
	o elevation or RL (Reduced Level elevation above sea level in metres) of the drill hole collar;	•All information is included in Table 2 and Table 3 of this report above.
	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.

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Criteria	JORC Code explanation	Commentary
Data	• In reporting Exploration Results, weighting averaging techniques,	Diamond Drilling – Bowdens:
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. • Where aggregate intercepts incorporate short lengths of high grade results and longer lengths of low grade results, the procedure used for such aggregation should be stated and some typical examples of such aggregations should be shown in detail.	•Intersection calculation are weighted to sample length. The average sample represents 1 metre of drill core. •Reported intersections are based on a cut off of 90g/t silver with no internal dilution factors •No top cutting of data or grades was undertaken in the reporting of these results.
	• The assumptions used for any reporting of metal equivalent values	RC Drilling – Tuena:
	should be clearly stated.	•Intersection calculation are weighted to sample length. All samples
		represent 1 metre lengths.
		•Reported intersections are based on a cut off of 0.1g/t gold with no
		internal dilution factors
		•No top cutting of data or grades was undertaken in the reporting of
		these results.
Relationship	• These relationships are particularly important in the reporting of	Diamond Drilling – Bowdens:
between mineralisatio n widths and intercept lengths	Exploration Results. • 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’).	•Mineralisation is both stratabound and vein hosted. The stratigraphy dips moderately to the north within the volcanics and moderately to 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.
		RC Drilling – Tuena:
		•The principal mineralized structures appear to strike NW to SE and as
		such the soil sampling grids are conducted perpendicular to
		geological orientation.
Diagrams	• Appropriate maps and sections (with scales) and tabulations of	Diamond Drilling – Bowdens:
	intercepts should be included for any significant discovery being reported These should include, but not be limited to, a plan view of	•Maps and cross sections provided in the body of this report.
	drill hole collar locations and appropriate sectional views.	RC Drilling – Tuena:
		•Maps provided in the body of this report.

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Criteria	JORC Code explanation	Commentary
Balanced	• Where comprehensive reporting of all Exploration Results is not	Diamond Drilling – Bowdens:
reporting	practicable, representative reporting of both low and high grades and/or widths should be practiced to avoid misleading reporting of Exploration Results.	•All results received and compiled to date are reported in this release. Drilling is on-going with further results expected.
		RC Drilling – Tuena:
		•All results received and compiled to date are reported in this release.
		Drilling is on-going with further results expected.
Other	• Other exploration data, if meaningful and material, should be	Diamond Drilling – Bowdens:
substantive exploration data	reported including but not limited to: geological observations; 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.	•This report relates to drill data reported from this program. RC Drilling – Tuena: •This report relates to drill data reported from this program.
Further work	• The nature and scale of planned further work (e.g. tests for lateral	Diamond Drilling – Bowdens:
	extensions or depth extensions or large-scale step-out drilling). • Diagrams clearly highlighting the areas of possible extensions, including the main geological interpretations and future drilling areas, provided this information is not commercially sensitive.	•This report relates to a drill program that is designed to test the extension and explore for further zones to the Northwest High-Grade Silver Zone situated beneath the Bowdens Silver Deposit. Drilling is on-going with further results pending.
		RC Drilling – Tuena:
		•This report relates to a drill program that is reconnaissance in nature
		and designed to test the presence of gold at depth below historic
		workings. Further results are pending.

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ABN: 45 107 452 942

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Rule 5.5

Appendix 5B

Mining exploration entity or oil and gas exploration entity quarterly cash flow report

Name of entity Silver Mines Limited ABN Quarter ended (“current quarter”) 45 107 452 942 31 December 2020

Consolidated statement of cash flows	Current quarter $A’000	Year to date (6-months) $A’000
1. Cash flows from operating activities 1.1 Receipts from customers 1.2 Payments for (a) exploration & evaluation (if expensed) (b) development (c) production (d) staff costs (e) administration and corporate costs 1.3 Dividends received (see note 3) 1.4 Interest received 1.5 Interest and other costs of finance paid 1.6 Income taxes paid 1.7 Government grants and tax incentives 1.8 Other (provide details if material) 1.9 Net cash from / (used in) operating activities*	87 (462) (356) 32 (10) 25	130 (898) (606) 64 (20) 276
	(684)	(1,055)
2. Cash flows from investing activities 2.1 Payments to acquire: (a) entities (b) tenements (c) property, plant and equipment (d) exploration & evaluation (if capitalised) (e) intangible (f) land and buildings	(59) (1,569) (36) (11)	(59) (2,659) (687) (1,792)

ASX Listing Rules Appendix 5B (01/12/19) + See chapter 19 of the ASX Listing Rules for defined terms.

Page 1

Appendix 5B

Mining exploration entity or oil and gas exploration entity quarterly cash flow report

Consolidated statement of cash flows	Current quarter $A’000	Year to date (6-months) $A’000
2.2 Proceeds from the disposal of: (a) entities (b) tenements (c) property, plant and equipment (d) investments (e) other non-current assets 2.3 Cash flows from loans to other entities 2.4 Dividends received (see note 3) 2.5 Other (provide details if material) 2.6 Net cash from / (used in) investing activities	50	50
	(1,625)	(5,147)
3. Cash flows from financing activities 3.1 Proceeds from issues of equity securities (excluding convertible debt securities) 3.2 Proceeds from issue of convertible debt securities 3.3 Proceeds from exercise of options 3.4 Transaction costs related to issues of equity securities or convertible debt securities 3.5 Proceeds from borrowings 3.6 Repayment of borrowings 3.7 Transaction costs related to loans and borrowings 3.8 Dividends paid 3.9 Other (provide details if material) 3.10 Net cash from / (used in) financing activities	412 (10)	1,239 (13)
	402	1,226
4. Net increase / (decrease) in cash and cash equivalents for the period
4.1 Cash and cash equivalents at beginning of period 4.2 Net cash from / (used in) operating activities (item 1.9 above) 4.3 Net cash from / (used in) investing activities (item 2.6 above) 4.4 Net cash from / (used in) financing activities (item 3.10 above)	9,055 (684) (1,625) 402	12,124 (1,055) (5,147) 1,226

ASX Listing Rules Appendix 5B (01/12/19) + See chapter 19 of the ASX Listing Rules for defined terms.

Page 2

Appendix 5B

Mining exploration entity or oil and gas exploration entity quarterly cash flow report

Consolidated statement of cash flows	Consolidated statement of cash flows	Current quarter $A’000	Year to date (6-months) $A’000
4.5 Effect of movement in exchange rates on cash held 4.6 Cash and cash equivalents at end of period
		7,148	7,148
5. Reconciliation of cash and cash equivalents at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts		Current quarter $A’000	Previous quarter $A’000
5.1 Bank balances 5.2 Call deposits 5.3 Bank overdrafts 5.4 Other (provide details) 5.5 Cash and cash equivalents at end of quarter (should equal item 4.6 above)		7,148	9,055
		7,148	9,055
6.	Payments to related parties of the entity and their associates		Current quarter $A'000
6.1	Aggregate amount of payments to related parties and their associates included in item 1		193
6.2	Aggregate amount of payments to related parties and their associates included in item 2		-
Note: if any amounts are shown in items 6.1 or 6.2, your quarterly activity report must include a description of, and an explanation for, such payments
Remuneration paid to executive and non-executive directors and an associate of a director under respective service agreements.

ASX Listing Rules Appendix 5B (01/12/19) + See chapter 19 of the ASX Listing Rules for defined terms.

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Appendix 5B

Mining exploration entity or oil and gas exploration entity quarterly cash flow report

7. Financing facilities Note: the term “facility’ includes all forms of financing arrangements available to the entity. Add notes as necessary for an understanding of the sources of finance available to the entity. Total facility amount at quarter end $A’000 Amount drawn at quarter end $A’000 7.1 Loan facilities 1,009 1,009 7.2 Credit standby arrangements 7.3 Other (please specify) 7.4 Total financing facilities 1,009 1,009 7.5 Unused financing facilities available at quarter end - 7.6 Include in the box below a description of each facility above, including the lender, interest rate, maturity date and whether it is secured or unsecured. If any additional financing facilities have been entered into or are proposed to be entered into after quarter end, include a note providing details of those facilities as well.	Total facility amount at quarter end $A’000	Amount drawn at quarter end $A’000
	1,009	1,009
	1,009	1,009
Westpac Bank, secured facility with variable interest rate at 3.66%

8. Estimated cash available for future operating activities	8. Estimated cash available for future operating activities	$A’000
8.1 Net cash from / (used in) operating activities (Item 1.9) 8.2 Capitalised exploration & evaluation (Item 2.1(d)) 8.3 Total relevant outgoings (Item 8.1 + Item 8.2) 8.4 Cash and cash equivalents at quarter end (Item 4.6) 8.5 Unused finance facilities available at quarter end (Item 7.5) 8.6 Total available funding (Item 8.4 + Item 8.5) 8.7 Estimated quarters of funding available (Item 8.6 divided by Item 8.3)		(684) (1,569) (2,253) 7,148 - 7,148
		3.17
8.8 If Item 8.7 is less than 2 quarters, please provide answers to the following questions: 1. Does the entity expect that it will continue to have the current level of net operating cash flows for the time being and, if not, why not?
	Answer: Not applicable

Answer: Not applicable

1. Has the entity taken any steps, or does it propose to take any steps, to raise further cash to fund its operations and, if so, what are those steps and how likely does it believe that they will be successful?

Answer: Not applicable

1. Does the entity expect to be able to continue its operations and to meet its business objectives and, if so, on what basis?

Answer: Not applicable

ASX Listing Rules Appendix 5B (01/12/19) + See chapter 19 of the ASX Listing Rules for defined terms.

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Appendix 5B

Mining exploration entity or oil and gas exploration entity quarterly cash flow report

Compliance statement

• 1 This statement has been prepared in accordance with accounting standards and policies which comply with Listing Rule 19.11A.

• 2 This statement gives a true and fair view of the matters disclosed.

Date: 29 January 2021........................................................

Authorised by: ................................................................................... Trent Franklin – Company Secretary

Notes

1. This quarterly cash flow report and the accompanying activity report provide a basis for informing the market about the entity’s activities for the past quarter, how they have been financed and the effect this has had on its cash position. An entity that wishes to disclose additional information over and above the minimum required under the Listing Rules is encouraged to do so.

2. If this quarterly cash flow report has been prepared in accordance with Australian Accounting Standards, the definitions in, and provisions of, AASB 6: Exploration for and Evaluation of Mineral Resources and AASB 107: Statement of Cash Flows apply to this report. If this quarterly cash flow report has been prepared in accordance with other accounting standards agreed by ASX pursuant to Listing Rule 19.11A, the corresponding equivalent standards apply to this report.

3. Dividends received may be classified either as cash flows from operating activities or cash flows from investing activities, depending on the accounting policy of the entity.

4. If this report has been authorised for release to the market by your board of directors, you can insert here: “By the board”. If it has been authorised for release to the market by a committee of your board of directors, you can insert here: “By the [ name of board committee – eg Audit and Risk Committee ]”. If it has been authorised for release to the market by a disclosure committee, you can insert here: “By the Disclosure Committee”.

5. If this report has been authorised for release to the market by your board of directors and you wish to hold yourself out as complying with recommendation 4.2 of the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations , the board should have received a declaration from its CEO and CFO that, in their opinion, the financial records of the entity have been properly maintained, that this report complies with the appropriate accounting standards and gives a true and fair view of the cash flows of the entity, and that their opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively.

ASX Listing Rules Appendix 5B (01/12/19) + See chapter 19 of the ASX Listing Rules for defined terms.

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