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SILVER MINES LIMITED Proxy Solicitation & Information Statement 2016

May 8, 2016

65881_rns_2016-05-08_9ae7057c-0da3-472b-810d-02489383d39b.pdf

Proxy Solicitation & Information Statement

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SILVER MINES LIMITED ACN 107 452 942 NOTICE OF GENERAL MEETING

TIME:	10.30am (AEST)
DATE:	6 June 2016
PLACE:	Level 11, 52 Phillip Street Sydney NSW 2000 Australia

This Notice should be read in its entirety. If Shareholders are in doubt as to how they should vote, they should seek advice from their professional advisers prior to voting. Should you wish to discuss the matters in this Notice please do not hesitate to contact the Company Secretary on +61 2 8316 3997.

CONTENTS

Notice of General Meeting (setting out the proposed resolutions)

Explanatory Statement (explaining the proposed resolutions)

Proxy Form

TIME AND PLACE OF GENERAL MEETING AND HOW TO VOTE

VENUE

The General Meeting of the Shareholders to which this Notice relates will be held at 10.30 am (AEST) on 6 June 2016 at Level 11, 52 Phillip Street Sydney NSW 2000 Australia.

VOTING IN PERSON

To vote in person, attend the General Meeting on the date and at the place set out above.

VOTING BY PROXY

To vote by proxy, please complete and sign the enclosed Proxy Form and return by:

(a) post, to Level 11, 52 Phillip Street, Sydney NSW 2000 Australia; or (b) facsimile, to the Company on facsimile number +61 2 8316 3999,

so that it is received not later than 10.30 am (AEST) on Saturday, 4 June 2016 .

Proxy Forms received later than this time will be invalid.

NOTICE OF GENERAL MEETING

Notice is given that the General Meeting of Shareholders will be held at 10.30 am (AEST) on 6 June 2016 at Level 11, 52 Phillip Street Sydney NSW 2000 Australia.

The Explanatory Statement to this Notice provides additional information on matters to be considered at the General Meeting.

The Explanatory Statement and the Proxy Form are part of this Notice.

The Directors have determined pursuant to Regulation 7.11.37 of the Corporations Regulations that the

persons eligible to vote at the General Meeting are those who are registered Shareholders of the Company at 10.30 am (AEST) on 4 June 2016.

AGENDA

RESOLUTION 1 - RATIFICATION OF ISSUE OF SHARES – TRANCHE 2 PLACEMENT

To consider and, if thought fit, pass the following resolution as an ordinary resolution :

“ That, for the purposes of ASX Listing Rule 7.4 and for all other purposes, the Shareholders ratify the issue of 877,454,916 Shares (at an issue price of $0.0015) on 6 April 2016 on the terms and conditions set out in the Explanatory Statement.”

Voting Exclusion Statement: The Company will disregard any votes cast on Resolution 1 by any person who participated in the issue the subject of Resolution 1 and any person who is an Associate of those persons. However, the Company need not disregard a vote if it is cast by:

a) a person as a proxy for a person who is entitled to vote, in accordance with the directions on the Proxy Form; or

b) the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

RESOLUTION 2 - APPROVAL TO ISSUE NEW OPTIONS

To consider and, if thought fit, pass the following resolution as an ordinary resolution :

“ That, for the purposes of ASX Listing Rule 7.1 and for all other purposes, shareholder approval is given for the issue of 750,000,000 New Options (on a pre-consolidated basis), each New Option having an exercise price of $0.003 and expiring on the date that is 2 years after the date that the options are issued and otherwise on the terms and conditions set out in the Explanatory Statement. ”

Voting Exclusion Statement: The Company will disregard any votes cast on this Resolution 2 by any person who may participate in the proposed issue and any person who may obtain a benefit, except a benefit solely in the capacity of a holder of ordinary securities if the Resolution is passed, and any person who is an Associate of those persons. However, the Company need not disregard a vote if it is cast by:

a) a person as a proxy for a person who is entitled to vote, in accordance with the directions on the Proxy Form; or

b) it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

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RESOLUTION 3 – APPROVAL TO ISSUE TRANCHE 3 SHARES

To consider and, if thought fit, pass the following resolution as an ordinary resolution :

“ That, for the purposes of ASX Listing Rule 7.1 and for all other purposes, shareholder approval is given for the issue of 666,667 Shares (on a pre-consolidated basis) at an issue price of $0.0015 per share on the terms and conditions set out in the Explanatory Statement. ”

Voting Exclusion Statement: The Company will disregard any votes cast on this Resolution 3 by any person who may participate in the proposed issue and any person who may obtain a benefit, except a benefit solely in the capacity of a holder of ordinary securities if the Resolution is passed, and any person who is an Associate of those persons. However, the Company need not disregard a vote if it is cast by:

a) a person as a proxy for a person who is entitled to vote, in accordance with the directions on the Proxy Form; or

b) it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

RESOLUTION 4 – APPROVAL OF THE PROPOSED SHARE CONSOLIDATION OF THE COMPANY’S SHARES

To consider and, if thought fit, pass the following resolution as an ordinary resolution :

“That, for the purposes of section 254H of the Act, and for all other purposes, approval is given for the share capital of the Company to be consolidated through the conversion of every one hundred (100) shares held by a Shareholder into one (1) share, with any resulting fractions of a Share rounded up to the next whole number of shares with consolidation to take effect in accordance with the timetable set out in the Explanatory Statement accompanying this Notice of Meeting.”

Note: In accordance with section 254(4) of the Corporations Act, a copy of this Resolution 4, if passed, shall be lodged with the Australian Securities & Investments Commission within one month of the meeting.

Voting Exclusion: There is no voting exclusion for this resolution.

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RESOLUTION 5 – APPROVAL TO ISSUE SHARES – POST EGM PLACEMENT

To consider and, if thought fit, pass the following resolution as an ordinary resolution :

“That, for the purposes of ASX Listing Rule 7.1 and for all other purposes, shareholder approval is given for the issue of up to a maximum of 300,000,000 fully paid ordinary shares at an issue price of $0.15 per share (on a post-consolidated basis) on the terms and conditions set out in the Explanatory Statement.”

Voting Exclusion Statement: The Company will disregard any votes cast on this Resolution 5 by any person who may participate in the proposed issue and any person who may obtain a benefit, except a benefit solely in the capacity of a holder of ordinary securities if the Resolution is passed, and any person who is an Associate of those persons. However, the Company need not disregard a vote if it is cast by:

a) a person as a proxy for a person who is entitled to vote, in accordance with the directions on the Proxy Form; or

b) it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

RESOLUTION 6 – PARTICIPATION BY NATHAN FEATHERBY IN POST EGM PLACEMENT

To consider and, if thought fit, pass the following resolution as an ordinary resolution :

“ That, subject to the passage of Resolution 5, for the purposes of ASX Listing Rule 10.1 and for all other purposes, shareholder approval is given for the issue of up to 1,666,666 Tranche 4 Shares (on a post-consolidated basis) to Nathan Featherby, a Director of the Company, or his nominee or as directed by him, on the terms and conditions set out in the Explanatory Statement.”

Voting Exclusion Statement: The Company will disregard any votes cast on this Resolution 6 by Mr Featherby and his nominee and any of his associates. However, the Company need not disregard a vote if it is cast by:

a) Mr Featherby or an associate of Mr Featherby as a proxy for a person who is entitled to vote, in accordance with the directions on the Proxy Form; or

b) it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

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RESOLUTION 7 - APPROVAL TO ISSUE OPTIONS TO ADVISORS

To consider and, if thought fit, pass the following resolution as an ordinary resolution :

“ That, for the purposes of ASX Listing Rule 7.1 and for all other purposes, shareholder approval is given for the issue of up to 8,000,000 Advisor Options (on a post-consolidated basis) on the terms and conditions set out in the Explanatory Statement. ”

Voting Exclusion Statement: The Company will disregard any votes cast on this Resolution 7 by any person who may participate in the proposed issue and any person who may obtain a benefit, except a benefit solely in the capacity of a holder of ordinary securities if the Resolution is passed, and any person who is an Associate of those persons. However, the Company need not disregard a vote if it is cast by:

a) a person as a proxy for a person who is entitled to vote, in accordance with the directions on the Proxy Form; or
b) it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

RESOLUTION 8 – APPROVAL FOR ISSUE OF SHARES FOR SIHA ACQUISITION

To consider and, if thought fit, pass the following resolution as an ordinary resolution :

“ That, for the purposes of ASX Listing Rule 7.1 and for all other purposes, approval is given for the issue of 40,000,000 Shares (on a post-consolidated basis) pursuant to the terms of the Share sale and purchase deed, and otherwise on the terms and conditions set out in the Explanatory Statement. ”

Voting Exclusion Statement: The Company will disregard any votes cast on this Resolution 8 by any person who may participate in the proposed issue and any person who may obtain a benefit, except a benefit solely in the capacity of a holder of ordinary securities if the Resolution is passed, and any person who is an Associate of those persons. However, the Company need not disregard a vote if it is cast by:

a) a person as a proxy for a person who is entitled to vote, in accordance with the directions on the Proxy Form; or

b) it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

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OTHER BUSINESS

To consider any other business that can lawfully be brought before the General Meeting.

DATED: 4 May 2016

BY ORDER OF THE BOARD

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TRENT FRANKLIN COMPANY SECRETARY SILVER MINES LIMITED

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ENTITLEMENT TO VOTE

Who may vote?

Pursuant to Regulation 7.11.37 of the Corporations Regulations, the Company has determined that for the purpose of the General Meeting, all Shares in the Company shall be taken to be held by the persons who held them as registered Shareholders at 10.30 am (AEST) on 4 June 2016 ( Entitlement Time ).

All holders of ordinary Shares in the Company as at the Entitlement Time are entitled to attend and vote at the General Meeting.

Transactions registered after that time will be disregarded in determining a Shareholder's entitlement to attend and vote at the General Meeting.

PROXIES

Please note that:

a Shareholder of the Company who is entitled to attend and cast a vote at the General Meeting has a right to appoint a proxy;
the appointment may specify the proportion or number of votes that the proxy may exercise;
a Shareholder who is entitled to cast two or more votes at the General Meeting may appoint two proxies and must specify the proportional number of votes each proxy is appointed to exercise;
if the Shareholder appoints two proxies and the appointment does not specify the proportion or number of the Shareholder's votes, each proxy may exercise half the votes;
a proxy need not be a Shareholder of the Company; and
if you wish to appoint two proxies, contact Company for another Proxy Form.

Unless the Shareholder specifically directs the proxy how to vote, the proxy may vote as he or she thinks fit or abstain from voting.

If you wish to appoint a proxy, you should complete the attached 'Appointment of Proxy' form and comply with details set out in that form for lodgement of the form with the Company.

The Proxy Form must be signed by the Shareholder or his or her attorney duly authorised in writing or,

if the Shareholder is a corporation, either under the seal of the corporation (in accordance with its Constitution) or under the hand of an attorney duly authorised in writing or otherwise signed in accordance with the Act.

If any attorney or authorised officer signs the Proxy Form on behalf of a Shareholder, the relevant power of attorney or other authority under which it is signed or a certified copy of that power or authority must be deposited with the Proxy Form.

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The proxy form must be received not less than 48 hours before the time for holding the General Meeting (i.e. by no later than 10.30am on Saturday, 4 June 2016) by delivering the proxy form to one of the addresses as follows:

Registered Office: Level 11, 52 Phillip Street, Sydney NSW 2000 NSW 2000 Australia Mailing Address: Facsimile transmission to: GPO Box 225 Within Australia : 02 8316 3999 Sydney International: + 61 2 8316 3999 NSW, Australia 2001

A corporation may appoint a representative who may attend the meeting and vote on behalf of the corporation. Such a representative will have to produce a corporate representative appointment letter from the corporation signed either under the common seal of the corporation (in accordance with its Constitution), or by a duly authorised officer or otherwise signed in accordance with the Act before he or she will be permitted to vote.

EXPLANATORY STATEMENT

This Explanatory Statement has been prepared for the information of the Shareholders in connection with the business to be conducted at the General Meeting to be held at 10.30 am (AEST) on 6 June 2016 at Level 11, 52 Phillip Street Sydney NSW 2000 Australia.

The purpose of this Explanatory Statement is to provide Shareholders with all information known to the Company that is relevant to a decision on how to vote on the resolution in the accompanying Notice.

1. BACKGROUND

Silver Investment Holdings Australia Limited ( SIHA ) Transaction

On 3 March 2016, the Company announced that it had entered into a heads of agreement ( HOA ) to acquire SIHA.

Background of SIHA

SIHA is a public unlisted company incorporated as a New South Wales specific resources group, with particular emphasis on silver and related minerals. The group delivers considerable expertise across all aspects of exploration, development and financing of resource projects.

SIHA recently entered into an agreement with Kingsgate Consolidated Limited (ticker: KCN) to purchase an effective 85% interest in the Bowdens Silver Project ( Bowdens Agreement ). Pursuant to the Bowdens Agreement SIHA is buying all the share capital in Kingsgate Bowdens Pty Limited ACN 009 250 051 ( Kingsgate Bowdens ). The Bowdens Silver Project is one of the largest undeveloped silver deposits in Australia. It is anticipated that on completion of the acquisition of SIHA by the Company, the total assets of the Company will increase from approximately $7 million to approximately $27 million.

The Bowdens Silver Project

The largest undeveloped silver deposit in Australia
Bowdens is a large, well advanced silver project with outstanding logistics and with a substantial body of high quality technical work already completed

Bowdens is located in central New South Wales, approximately 26 kilometres east of Mudgee. It is a bulk tonnage low sulphidation epithermal silver deposit. The deposit remains open in several directions and at depth with potential resource increases highly likely.

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Figure 1 Tenement map of SVL holdings in the Bowdens district along with the holdings subject to the transaction with SIHA.

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A substantial amount of technical work has already been completed by previous owners of the project, and SIHA has conducted a significant review of many aspects of previous work.

Ochre Group Holdings Limited ( Ochre ) has been engaged by the Company to provide advisory services in respect to the acquisition of the Bowdens Silver Project and associated regional tenement portfolio ( Services ). Nathan Featherby (a director of the Company), is also a director of Ochre Group Holdings Limited and a substantial shareholder having a Relevant Interest in approximately 25.5% of the shares in Ochre Group Holdings Limited.

The Board has resolved (with Nathan Featherby abstaining from such discussions) as follows:

as part of an advisory services agreement between the Company and Ochre Capital Management Pty Ltd (a wholly owned subsidiary of Ochre) ( Ochre Capital ), the Company will grant to Ochre Capital or Ochre (as nominee) a 1% Gross Revenue Royalty over the Company’s interest (via its acquisition of SIHA) in the Bowdens Silver Project. The royalty is subject to completion of each of the Bowdens Agreement and the SIHA Share Sale and Purchase Deed (described below); and
the Company will grant to Ochre Capital a 1% Gross Revenue Royalty interest over all other current tenements that are 100% owned by the Company in consideration of the provision of the Services by Ochre.

Key terms of HOA

As announced on 3 March 2016, the key proposed terms of the acquisition of SIHA include:

(a) the Company to:
(i) pay $200,000 ( Deposit ) to SIHA before the next payment by SIHA falls due under the Bowdens Agreement ( Bowdens Payment Date );
(ii) advance $1,800,000 to SIHA (or as the SIHA shareholders otherwise direct) before the Bowdens Payment Date, by way of an interest-free loan ( Tranche 1 Loan );
(iii) advance a further $18,000,000 to SIHA (or as the SIHA shareholders otherwise direct) before the final payment by SIHA falls due under the Bowdens Agreement (expected to be towards the end of June 2016), by way of an interest-free loan ( Tranche 2 Loan ); and
(iv) issue 4,000,000,000 Shares having a paid up value of $0.001 each to SIHA shareholders (or as they otherwise direct), to complete the acquisition of SIHA;
(b) SIHA to use the proceeds from the Tranche 1 Loan and Tranche 2 Loan to meet its payment obligations under the Bowdens Agreement;
(c) the initial term of the Tranche 1 Loan and the Tranche 2 Loan will be 6 months each; and
(d) the Company to set up an equity incentive plan from completion of the acquisition (with the details to be finalised following consultation with the Board and management of the Company).

Formalised terms as per SIHA Share Sale and Purchase Deed

The Company has formalised the acquisition based on the terms of the HOA and had entered into the Share Sale and Purchase Deed ( Deed ) with Enable Underwriting Pty Ltd ACN 610 250 425 ( Seller )

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and SIHA dated 3 May 2016. The Deed rescinds the HOA. The principle terms of the Deed are as follows:

(a) The Company will acquire all the shares in the capital of SIHA, being 1,000,000 ordinary shares (fully paid up to $1,099.90). The Shares will transfer to the Company 5 Business Days after the date of the Deed ( Completion Date ).
(b) The Purchase Price will be satisfied by:
(i) payment of the Deposit (this amount has already been paid by the Company to SIHA);
(ii) payment of $1.00 on the Completion Date;
(iii) subject to the conditions in paragraph (d) below, the issue of 4,000,000,000 ordinary shares in the capital of the Company (fully paid up to $0.001 each) ( Initial Consideration Shares ) (on a pre-consolidation basis) and 1% Gross Revenue Royalty over the Company’s interest (via SIHA) in the Bowdens Silver Project and all other current tenements that are 100% owned by the Company ( SIHA Royalty );
(iv) the issue of the Tranche 1 Deferred Consideration Shares (see paragraph (k) below); and
(v) the issue of the Tranche 2 Deferred Consideration Shares (see paragraph (l) below).
(c) On the Completion Date the shareholders of SIHA are required to provide certain acknowledgements to the Company by way of deed poll in favour of the Company.
(d) Subject to each of the following conditions having occurred by 30 June 2016 (or such later date as agreed between the Company and the Seller), the Company will issue parties nominated by the Seller the Initial Consideration Shares and SIHA Royalty:
(i) SIHA having completed its purchase under the Bowdens Sale Agreement and becomes the registered holder of all shares in Kingsgate Bowdens, free from all encumbrances;
(ii) the Company has completed a capital raising (or series of capital raisings) conducted by the Company pursuant to which at least $20,000,000 is raised (after expenses associated with the raising);
(iii) the Company has received Shareholder approval in relation to the issue of the Initial Consideration Shares; and
(iv) the Company has completed due diligence enquiries in respect of SIHA, the assets of SIHA and the shareholders of SIHA to its reasonable satisfaction,
(e) The Company also agrees to pay SIHA:
(i) the Tranche 1 Loan (this amount has already been paid by the Company to SIHA); and
(ii) the Tranche 2 Loan pursuant to (i) below.
(f) If one or more of the conditions under paragraph (d) above fails or is not fulfilled by 30 June 2016 then a party who has complied with their obligations under paragraph (d) will be able to

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terminate the Deed. If the Deed is terminated then, in addition to any other rights, powers or remedies provided by law each party must do all acts and things at its own cost, including the execution of all such documents necessary, to procure SIHA’s repayment to the Buyer of any Tranche 1 Loan Amount or Tranche 2 Loan Amount paid by the Buyer to SIHA.

(g) SIHA will not have to repay any Tranche 1 Loan Amount if the Deed is terminated due to the condition under clause (d)(i) not being fulfilled by 5.00pm on the End Date, which is directly and solely due to the Buyer’s conduct. In this case, the Buyer’s liability under any claim arising in connection with its conduct will be limited to the amounts paid by it under the Deed before the date of termination.
(h) The Seller grants the Company an option to require the Seller or its nominee to purchase all the Sale Shares on certain terms ( Put Option ). The Put Option granted to the Company is only exercisable if the Deed is terminated.
(i) Tranche 2 Loan

On the Tranche 2 Payment Date (being 29 June 2016), the Company must pay the Tranche 2 Loan Amount to Kingsgate Consolidated Limited ACN 000 837 472 in accordance with the direction to pay from the Seller to the Company under the Deed.

(j) Terms of the Tranche 1 Loan and Tranche 2 Loan

The payment of the Tranche 1 Loan and the Tranche 2 Loan each comprise a loan by the Company to SIHA that:

(i) is interest-free;
(ii) has an initial term of 6 months, which may be extended by the Company in its sole discretion ( Expiry Date );
(iii) is:
- (A) before Completion of the Deed, repayable immediately on termination of the Deed; or
- (B) from Completion until the Expiry Date, an intercompany loan between the Company and SIHA payable on demand.
(k) Tranche 1 Deferred Consideration

The Company will issue to the Seller (or their nominee) 2,000,000,000 ordinary shares in the capital of the Company (fully paid up to $0.001 each) (on a pre-consolidation basis) ( Tranche 1 Deferred Consideration Shares ) 5 Business Days after the date of submission of the environmental impact statement for the Bowdens Silver Project to the New South Wales Government Department of Planning & Environment.

(l) Tranche 2 Deferred Consideration

The Company will issue to the Seller (or their nominee) 2,000,000,000 ordinary shares in the capital of the Company (fully paid up to $0.001 each) (on a pre-consolidation basis) ( Tranche 2 Deferred Consideration Shares ) 5 Business Days after a mining lease has been granted under the Mining Act by the NSW Government Department of Industry, Resources and Energy in relation to a Tenement (which has the meaning given to that term in the Bowdens Sale Agreement).

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(m) Acceleration of Deferred Consideration

The Seller’s entitlement to the Tranche 1 Deferred Consideration Shares and the Tranche 2 Deferred Consideration Shares will be accelerated upon an unconditional takeover offer being made or court approval of a scheme of arrangement in respect of the Company’s share capital.

The issue of the Initial Consideration Shares without Shareholder approval will result in the Company breaching the 15% limit referred to in ASX Listing Rule 7.1. Accordingly, the issue of the Initial Consideration Shares are conditional on the Company obtaining Shareholder approval to issue, for the purposes of Listing Rule 7.1.

Given that the Tranche 1 Deferred Consideration Shares and Tranche 2 Deferred Consideration Shares (collectively the Deferred Shares ) are likely to be issued outside of the period of 3 months after the date of the Meeting, the Company is not seeking approval for their issue at the Meeting. Instead, SVL will issue the Deferred Shares under its existing capacity under Listing Rule 7.1 (if any). If the issue of the Deferred Shares will result in the Company breaching the 15% limit referred to in ASX Listing Rule 7.1, the Company will seek shareholder approval.

Placement

On 23 March 2016, the Company announced that it has received acceptances from sophisticated and professional investors under a placement to raise $2,250,000 ( Placement ). The total shares issued under the Placement equals 1,500,000,000 Shares ( Placement Shares ).

622,545,084 of the Placement Shares ( Tranche 1 Placement ) were issued pursuant to the shareholder approval as per resolution 5 approved by shareholders at the 2015 AGM on 30 November 2015. The Tranche 1 Placement Shares were issued partly on 5 February 2016 and partly on 29 February 2016.

On 6 April 2016, 877,454,916 fully paid ordinary shares in the Company were issued at an issue price of $0.0015 per Share to unrelated sophisticated and professional investors ( Subscribers ) under the Company’s 15% placement capacity ( Tranche 2 Placement ).

The Subscribers under the Placement were also offered the opportunity to subscribe for 1 free Option for every 2 Placement Shares subscribed for under the Placement. This offer was made under the prospectus for the Placement Offer referred to below. The issue of the options to the Subscribers under the Placement is subject to Shareholder approval.

Placement Offer

On 24 March 2016, the Company announced that it is offering the Subscribers the opportunity to subscribe for:

(a) 750,000,000 Options (exercisable for 1 Share at $0.003 each at or before 5pm (AEST) on the date that is 2 years after the date that the options are issued) ( New Options ), on the basis of 1 free New Option for every 2 Placement Shares subscribed for under the Placement ( Placement Offer ); and
(b) 666,667 Shares to Subscribers of at an issue price of $0.0015 each ( Tranche 3 Shares ), to raise up to $1,000 (before expenses) ( Share Offer ).

The Placement Offer and the Share Offer ( Offers ) are conditional on the Company obtaining Shareholder approval to issue the New Options and Tranche 3 Shares (respectively), for the purposes of Listing Rule 7.1. A prospectus for the Share Offer and Placement Offer was lodged with ASIC and ASX on 24 March 2016 ( Prospectus ).

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Use of funds under the Placement and the Placement Offer

The funds raised under the Placement and the Placement Offer will be used to fund part of the Tranche 1 Loan, working capital and expenses of the Offers.

Post EGM Placement (on a post-consolidated basis)

The Company intends to make the following offers to sophisticated or professional investors for a placement to issue approximately 300,000,000 fully paid ordinary shares (on a post-consolidated basis) ( Tranche 4 Shares ) at a price of $0.15 each to raise approximately $45,000,000 ( Post EGM Placement ). The Tranche 4 Shares to be issued as part of the Post EGM Placement will be issued subject to shareholder approval being obtained.

The proceeds from the Post EGM Placement will be used to fund the Tranche 2 Loan under the Deed, exploration development, transaction costs and general working capital.

Share Consolidation

As outlined below the Company is seeking shareholder approval to consolidate its share capital through the conversion of every hundred (100) fully paid ordinary shares into one (1) fully paid ordinary share. If approved, the share consolidation will occur in accordance with the timetable outlined under the explanation of Resolution 4. The intention is that the share consolidation will occur before any issues are made under the Post EGM Placement (outlined below) and as such the share issues described for the Post EGM Placement are described on a post-consolidated basis.

The Post EGM Placement will be offered under a transaction specific prospectus to be lodged with ASIC shortly after this Meeting. Due to the proposed Share Consolidation the shares offered under those documents will be described on a post-consolidation basis. All other resolutions (concerning issues of shares and options already announced to market (i.e. Resolutions 2 and 3) are described on a pre-consolidation basis. The following table has been prepared so that shareholders can see each Share issue and options issue under a pre-consolidation scenario and post-consolidation scenario.

Share Issues under Resolutions 3, 5, 6 and 8

	If no Share Consolidation	If no Share Consolidation	If Share Consolidation Approved (subject to rounding)	If Share Consolidation Approved (subject to rounding)
	Number of Shares	Issue Price per Share	Number of Shares	Issue Price per Share
Number of Shares on issue on the date of the Notice of Meeting	6,714,172,861	N/A	67,141,728	N/A
Resolution 3issue of Tranche 3 Shares	666,667	$0.0015	6,667	$0.15
Resolution 5issue of Post EGM Placement	30,000,000,000	$0.0015	300,000,000	$0.15
Resolution 6participation by Nathan Featherbyin Post EGM	166,666,666	$0.0015	1,666,666	$0.15

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Placement
Resolution 8issue of shares as consideration to sellers in SIHA acquisition	4,000,000,000	$0.001	40,000,000	$0.10
TOTAL SHARES IF RESOLUTIONS 3, 5, 6 and 8 APPROVED	40,881,506,194	N/A	408,815,061	N/A

Options under Resolutions 2 and 7

	If no Share Consolidation		If Share Consolidation Approved (subject to rounding)	If Share Consolidation Approved (subject to rounding)
	Number of Options	Exercise Price per Option	Number of Options	Exercise Price per Option
Number of Options on issue on the date of the Notice of Meeting	5,800,000 (unquoted)	$0.043	58,000	$4.30
	2,339,354,178 (quoted)	$0.003	23,393,542	$0.30
Resolution 2issue of New Options	750,000,000	$0.003	7,500,000	$0.30
Resolution 7issue of Advisor Options	800,000,000	$0.003	8,000,000	$0.30
TOTAL OPTIONS IF RESOLUTION 2 AND 8 APPROVED	3,895,154,178	N/A	38,951,542	N/A

2. RESOLUTION 1 – RATIFICATION OF ISSUE OF SHARES - TRANCHE 2 PLACEMENT

On 7 April 2016, the Company announced that it had issued 877,454,916 fully paid ordinary Shares to unrelated sophisticated and professional investors, being the Subscribers, under the Company’s 15% placement capacity to raise $1,316,182.37 under the Tranche 2 Placement.

Listing Rule 7.1 requires Shareholder approval for the proposed issue of securities in the Company. Listing Rule 7.1 broadly provides, subject to certain exceptions, that Shareholder approval is required for any issue of securities by a listed company, where the securities proposed to be issued represent more than 15% of the Company’s securities then on issue.

Listing Rule 7.4 permits the ratification of previous issues of securities made without prior Shareholder approval, provided the issue did not breach the 15% threshold set by Listing Rule 7.1. The effect of the ratification is to restore the Company’s maximum discretion power to issue further Shares up to 15% of the issued capital of the Company without requiring Shareholder approval.

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Resolution 1 seeks ratification under Listing Rule 7.4 of the issue of 877,454,916 Shares that were issued on 6 April 2016 pursuant to the Tranche 2 Placement in order to restore the ability of the Company to issue further shares within the 15% limit during the next 12 months.

The following information in relation to the Shares is provided to the Shareholders for the purposes of Listing Rule 7.5:

(a) 877,454,916 Shares were issued and the issue did not breach the 15% threshold set by Listing Rule 7.1;
(b) the Shares were issued at an issue price of $0.0015 each;
(c) the Shares issued were fully paid ordinary shares in the capital of the Company and rank equally in all respects with the existing fully paid ordinary shares on issue;
(d) the Shares were issued to the Subscribers under the Placement, who are professional and sophisticated investors under section 708 of the Act, none of whom are related parties to the Company;
(e) the funds raised under the Placement were used to fund the Tranche 1 Loan as it relates to the SIHA acquisition, general working capital and the expenses of the Placement.

The Directors recommend that shareholders vote in favour of Resolution 1.

3. RESOLUTION 2 – APPROVAL TO ISSUE NEW OPTIONS

Resolution 2 seeks Shareholder approval for the purpose of Listing Rule 7.1 and for all other purposes for the issue of up to 750,000,000 New Options to the Subscribers (on a pre-consolidated basis).

As noted in section 1 of the Explanatory Statement, the Company will offer the Subscribers the opportunity to subscribe for free New Options on the basis of one Option for every two Placement Shares subscribed for under the Placement ( Option Offer ). This Option Offer is made under the Prospectus.

Listing Rule 7.1 requires Shareholder approval for the proposed issue of securities in the Company. Listing Rule 7.1 broadly provides, subject to certain exceptions, that Shareholder approval is required for any issue of securities by a listed company, where the securities proposed to be issued represent more than 15% of the Company’s securities then on issue.

The Company is seeking Shareholder approval for the issue of up to 750,000,000 New Options to the Subscribers pursuant to Resolution 2.

The following information in relation to the New Options is provided to the Shareholders for the purposes of Listing Rule 7.3:

(a) the maximum number of New Options to be issued is 750,000,000;
(b) the Company will issue the New Options no later than three months after the date of the Meeting, unless otherwise extended by way of ASX granting a waiver to the Listing Rules and it is anticipated that allotment will occur on the same date;

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(c) the issue price of the New Options is nil. The New Options are free Options issued on the basis of one Option for every two Placement Shares subscribed for under the Placement, for which no additional consideration is payable;
(d) the persons to whom the New Options may be issued are the Subscribers under the Placement, none of whom are related parties to the Company;
(e) the New Options are unquoted options, each to acquire one Share, exercisable at $0.003 on or before the date that is 2 years after the date that the options are issued and otherwise on the terms set out in Annexure A;
(f) no funds will be raised from the issue of the New Options.

The Directors recommend that shareholders vote in favour of Resolution 2.

4. RESOLUTION 3 – APPROVAL TO ISSUE TRANCHE 3 SHARES

Resolution 3 seeks Shareholder approval for the purpose of Listing Rule 7.1 and for all other purposes for the issue of up to a maximum of 666,667 Shares at an issue price of $0.0015 per share (on a preconsolidated basis).

As noted in section 1 of the Explanatory Statement, the Company will offer the Subscribers the opportunity to subscribe for 666,667 Shares to Subscribers. The Share Offer is made under the Prospectus.

Listing Rule 7.1 requires Shareholder approval for the proposed issue of securities in the Company. Listing Rule 7.1 broadly provides, subject to certain exceptions, that Shareholder approval is required for any issue of securities by a listed company, where the securities proposed to be issued represent more than 15% of the Company’s securities then on issue.

The Company is seeking Shareholder approval for the issue of up to 666,667 Shares to the Subscribers pursuant to Resolution 3.

The following information in relation to the Options is provided to the Shareholders for the purposes of Listing Rule 7.3:

(a) the maximum number of Tranche 3 Shares the Company can issue is 666,667;
(b) the Company will issue the Tranche 3 Shares no later than three months after the date of the Meeting, unless otherwise extended by way of ASX granting a waiver to the Listing Rules and it is anticipated that allotment will occur on the same date;
(c) the issue price of the Tranche 3 Shares is $0.0015 per share;
(d) the persons to whom the Tranche 3 Shares may be issued are the Subscribers, none of whom are related parties to the Company;
(e) the Tranche 3 Shares will be fully paid ordinary shares in the capital of the Company and rank equally in all respects with the existing fully paid ordinary shares on issue;
(f) the funds raised under the Share Offer will be used to fund the expenses of the Offers.

The Directors recommend that shareholders vote in favour of Resolution 3.

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5. RESOLUTION 4 - APPROVAL OF THE PROPOSED SHARE CONSOLIDATION OF THE COMPANY’S SHARES

Regulatory Requirements

The Company proposes to consolidate its share capital through the conversion of every hundred (100) Shares in the Company into one (1) Share in the Company ( Share Consolidation ). Under section 254H of the Corporations Act, a company may consolidate its shares if the consolidation is approved by an ordinary resolution of shareholders at a general meeting. Listing Rule 7.20 provides that if an entity proposes to reorganize its capital, it must advise shareholders of certain matters, which are set out below.

Reasons for the consolidation

The Directors propose the Share Consolidation for the following reasons:

(a) the Company currently has approximately 6,714,172,861 Shares on issue which represents a relatively large number when compared to its peer group listed on the ASX; and
(b) the Share Consolidation will result in a more appropriate and effective capital structure for the Company and a share price more appealing to a wider range of investors, particularly institutional investors, globally.

Effect of the consolidation

(a) Shares

If Resolution 4 is approved, every hundred (100) Shares on issue will be consolidated into one (1) Share (subject to rounding). Overall, this will result in the current number on Shares on issue reducing from 6,714,172,861 to approximately 67,141,728 (subject to rounding)

As the consolidation applies equally to all of the Company’s shareholders, individual shareholdings will be reduced in the same ratio as the total number of the Company’s shares (subject only to the rounding of fractions). It follows that the consolidation will have no material effect on the percentage interest of each individual shareholder in the Company.

For example, if a shareholder currently has one million (1,000,0000) shares representing approximately 1% of the issued capital, then if the share consolidation is approved and implemented, the shareholder will have 10,000 shares following the consolidation, still representing the same 1% of the Company’s issued capital.

Similarly, the aggregate value of each shareholder’s holding (and the Company’s market capitalisation) should not materially change – other than minor changes as a result of rounding – as a result of the share consolidation alone (that is assuming no other market movements or impacts occur).

Shareholders should note that the reduction of share capital, if approved, will also have an effect on the Company’s share price.

The Directors expect that the price per share will increase to reflect the reduced number of shares on issue.

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(b) Options

As at the date of this Notice of Meeting, the Company has Options (both quoted and not quoted) on issue ( Options ). If the Share Consolidation is approved, the Options will also be reorganised in accordance with the terms and conditions of the Options and Listing Rule 7.22.1 (as applicable) on the basis that the number of Options will be consolidated in the same ratio as the Share Consolidation and the exercise price is amended in inverse proportion to that ratio.

For example, a holding of one thousand (1000) Options with an exercise price of $0.0325 each prior to the Share Consolidation would result in a holding of approximately ten (10) Options with an exercise price of $3.25 each after the Share Consolidation.

After the Share Consolidation, there will be approximately:

A. 23,393,542 Options (quoted) exercisable at $0.3 on or before 13 October 2017.
B. 58,000 Options (not quoted) exercisable at $4.30 on or before 31 May 2017.

The Share Consolidation will not result in any change to the substantive rights and obligations of existing holders of Options.

(c) Treatment of fractions

Where the share consolidation results in a shareholder having a fractional entitlement to a share, the Company will round up the entitlement to the next whole number of shares.

If the Company reasonably believes that a shareholder has been a party to the division of a shareholding in an attempt to obtain an advantage from this treatment of fractions, the Company will take appropriate action, having regard as necessary to the terms of the Company’s Constitution and the ASX Listing Rules. In particular, the Company reserves the right to disregard the division of the shareholding for the purpose of dealing with the fractions so as to round up any fraction to the nearest whole number of shares that would have been received but for the division.

(d) Holding statements

Taking effect from the date of the Share Consolidation, all existing holding statements will cease to have any effect, except as evidence of entitlement to a certain number of securities on a post-Share Consolidation basis. New holding statements will be issued to security holders, who are encouraged to check their holdings after the Share Consolidation.

Tax implications for shareholders

The summary in this section is general in nature. In addition, particular taxation implications will depend upon the circumstances of each shareholder. Accordingly, shareholders are encouraged to seek and rely only on their own professional advice in relation to their tax position. Neither the Company nor any of its officers, employees or advisors assumes any liability or responsibility for advising shareholders about the tax consequences for them from the proposed share consolidation.

The share consolidation will be undertaken in accordance with section 254H of the Corporations Act. Subject only to rounding, there will be no change to the proportionate interests held by each shareholder in the Company as a result of the consolidation.

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The share consolidation will occur through the conversion of every hundred (100) ordinary shares in the Company into one (1) ordinary share in the Company. No capital gains tax (CGT) event will occur as a result of the Company’s share consolidation and therefore there will be no taxation implications arising for the Company’s shareholders.

Indicative Timetable for Share Consolidation

If approved by Shareholders, the proposed Share Consolidation will take effect on 22 June 2016. The following is an indicative timetable (subject to change) of the key events:

	Indicative Date (2016)	Business Days
 EGM approval of share consolidation  ASX informed that the consolidation has been approved	6 June 2016	Day 0
 Last dayfor tradinginpre-consolidation shares	7 June 2016	Day 1
 Post-consolidation trading starts on a deferred settlement basis  The Company ASX ticker becomes SVLDA for the ordinary shares (SVL) and SVLDB for thequoted options (SVLO)	8 June 2016	Day 2
 Last dayfor registration of transfers on apre-consolidation basis	9 June 2016	Day 3
 Deferred settlement trading ends  Post-consolidation holdings entered into holder’s security holdings  Despatch of new holdingstatements completed	17 June 2016	Day 8
 Normal trading commences following share consolidation  The Company ASX ticker returns to SVL for the ordinary shares and SVLO for thequoted options	20 June 2016	Day 9
 Settlement of all trades conducted on a deferred settlement basis and first settlement of trades conducted on a normal (T+2) basis	22 June 2016	Day 11

Interdependency with the other resolutions

The Board has determined that resolution 4 is dependent on all other resolutions that are being submitted to shareholders at the Meeting. In particular, if the other resolutions are not approved by shareholders, the share consolidation will not be undertaken.

Directors’ recommendation

The Company’s Directors unanimously recommend that shareholders vote in favour of the share consolidation.

No other material information

Other than as set out in this document, and other than information previously disclosed to the shareholders of the Company, there is no other information that is known to the Company’s Directors which may reasonably be expected to be material to the making of a decision by the Company’s shareholders regarding whether or not to vote in favour of the share consolidation.

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6. RESOLUTION 5 – APPROVAL TO ISSUE SHARES – POST EGM PLACEMENT

Resolution 5 seeks Shareholder approval for the purposes of Listing Rule 7.1 and for all other purposes for the issue of up to a maximum of 300,000,000 fully paid ordinary shares at an issue price of $0.15 per share (on a post-consolidated basis).

If approved, the Shares the subject of Resolution 5 will be issued under the Post EGM Placement. The Post EGM Placement will be issued under a “cleansing prospectus”, which will be lodged with ASX after the EGM.

As noted above, Listing Rule 7.1 requires Shareholder approval for the proposed issue of securities in the Company. Listing Rule 7.1 broadly provides, subject to certain exceptions, that Shareholder approval is required for any issue of securities by a listed company, where the securities proposed to be issued represent more than 15% of the Company’s securities then on issue.

The following information in relation to the Shares proposed to be issued pursuant to Resolution 5 is provided to the Shareholders for the purposes of Listing Rule 7.3:

(a) the maximum number of Shares the Company can issue is 300,000,000 (this is on a postconsolidated basis);
(b) the Company will issue the Shares no later than three months after the date of the Meeting, unless otherwise extended by way of ASX granting a waiver to the Listing Rules. The Shares will not be issued until Normal trading commences following share consolidation and it is anticipated that allotment will occur on the same date;
(c) the issue price of the Shares is $0.15 per share;
(d) the persons to whom the Shares may be issued are to the professional and sophisticated investors under section 708 of the Act, none of whom will be related parties to the Company, unless shareholder approval is sought as required;
(e) the Shares will be fully paid ordinary shares in the capital of the Company and rank equally in all respects with the existing fully paid ordinary shares on issue;
(f) the funds raised under the Post EGM Placement will be used to fund the Tranche 2 Loan as it relates to the SIHA acquisition, exploration development, transaction costs, general working capital and the expenses of the Post EGM Placement.

The Directors recommend that shareholders vote in favour of Resolution 5.

7. RESOLUTION 6 – PARTICIPATION BY NATHAN FEATHERBY IN POST EGM PLACEMENT

Listing Rule 10.11 requires a listed company to obtain Shareholder approval by ordinary resolution prior to the issue of securities to a related party except if an exception to Listing Rule 10.11 is applicable.

The issue of Tranche 4 Shares to related parties under the Post EGM Placement does not fall within any exception Listing Rule 10.11. As such, Shareholder approval is sought by Resolution 6 for the purposes of Listing Rule 10.11 for the proposed issue of the Tranche 4 Shares to Nathan Featherby (a Director) under the Post EGM Placement.

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Listing Rule 7.1 approval is not required for the issue of the Tranche 4 Shares to Nathan Featherby as approval is being obtained under Listing Rule 10.11 by Resolution 7. Accordingly, and pursuant to Exception 14 to Listing Rule 7.1, the issue of Tranche 4 Shares to Nathan Featherby under the Post EGM Placement will not reduce the Company’s available placement capacity under Listing Rule 7.1 if shareholder approval is obtained for Resolution 6.

The following information in relation to the Tranche 4 Shares proposed to be issued pursuant to Resolution 6 is provided to the Shareholders for the purposes of Listing Rule 10.13:

(a) the Tranche 4 Shares the subject of Resolution 6 will be issued to Mr Nathan Featherby (a Director), or an entity controlled by him;
(b) the maximum number of Tranche 4 Shares to be issued to Mr Nathan Featherby (or an entity controlled by him) is 1,666,666 (on a post-consolidated basis);
(c) the Tranche 4 Shares the subject of Resolution 6 will be issued for $0.15 each on the same terms as the Post EGM Placement;
(d) the Tranche 4 Shares the subject of Resolution 6 will be issued on the Tranche 4 Issue Date (as that term will be defined in the Post EGM Placement Prospectus), and in any event, no later than 1 month after the date of the Meeting (or such other later date as permitted by any ASX waiver or modification of the Listing Rules). The Shares will not be issued until Normal trading commences following share consolidation and it is anticipated that allotment will occur on the same date;
(e) the funds raised (up to $250,000) will be used for the same purpose as under the Post EGM Placement.

The Directors (Nathan Featherby abstaining) recommend that shareholders vote in favour of Resolution 6.

8. RESOLUTION 7 - APPROVAL TO ISSUE OPTIONS TO ADVISORS

Resolution 7 seeks Shareholder approval for the purpose of Listing Rule 7.1 and for all other purposes for the issue of up to 8,000,000 Options to the advisors (on a post-consolidated basis) who assisted with the Post EGM Placement ( Advisor Options ). The Company seeks to undertake to pay the advisors in this manner to preserve its cash for ongoing working capital.

The Advisor Options are unquoted options, each to acquire one Share, exercisable at $0.30 on or before the date that is 3 years after the date that the options are issued and otherwise on the terms set out in Annexure B.

Listing Rule 7.1 requires Shareholder approval for the proposed issue of securities in the Company. Listing Rule 7.1 broadly provides, subject to certain exceptions, that Shareholder approval is required for any issue of securities by a listed company, where the securities proposed to be issued represent more than 15% of the Company’s securities then on issue.

The Company is seeking Shareholder approval for the issue of up to 8,000,000 Advisor Options pursuant to Resolution 7.

The following information in relation to the Advisor Options is provided to the Shareholders for the purposes of Listing Rule 7.3:

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(a) the maximum number of Advisor Options the Company can issue is 8,000,000 (on a postconsolidated basis);
(a) the Company will issue the Advisor Options no later than three months after the date of the Meeting, unless otherwise extended by way of ASX granting a waiver to the Listing Rules;
(b) the Advisor Options will be issued for nil cash consideration;
(c) the Advisor Options will be issued to advisors that assisted with the recent financing of the Company, in consideration of the services that they provided to the Company; none of whom are related parties to the Company;
(d) the Advisor Options are unquoted options, each to acquire one Share, exercisable at $0.30 on or before the date that is 3 years after the date that the options are issued and otherwise on the terms set out in Annexure B; and
(e) no funds will be raised from the issue of the Advisor Options.

The Directors recommend that shareholders vote in favour of Resolution 7.

9. RESOLUTION 8 – APPROVAL OF ISSUE OF SHARES AS CONSIDERATION TO SELLERS IN SIHA ACQUISITION

Resolution 8 seeks Shareholder approval under ASX Listing Rule 7.1 for the issue of shares to the Sellers as part of the consideration under the Share Sale and Purchase Deed ( Deed ) for the purchase by the Company of all the shares in the capital of SIHA, being 1,000,000 ordinary shares (fully paid up to $1,099.90).

A detailed description of the proposed acquisition of SIHA is outlined in Section 1 above. As explained above part of the purchase price under the Deed is the issue of:

(a) 40,000,000 ordinary shares in the capital of the Buyer (fully paid up to $0.10 each) ( Initial Consideration Shares ) (on a post-consolidation basis);
(b) 20,000,000 ordinary shares in the capital of the Company (fully paid up to $0.10 each) ( Tranche 1 Deferred Consideration Shares ) (on a post-consolidation basis); and
(c) 20,000,000 ordinary shares in the capital of the Company (fully paid up to $0.10 each) ( Tranche 2 Deferred Consideration Shares ) (on a post-consolidation basis);

ASX Listing Rule 7.1 provides that a company must not, subject to specified exceptions, issue or agree to issue more equity securities during any 12 month period than that amount which represents 15% of the number of fully paid ordinary securities on issue at the commencement of that 12 month period.

ASX Listing Rule 7.3.2 provides that a company will have a period of 3 months after its general meeting where Shareholder approval is obtained (or a longer period, if allowed by ASX), to issue the shares under ASX Listing Rule 7.1.

Given that the Tranche 1 Deferred Consideration Shares and Tranche 2 Deferred Consideration Shares are likely to be issued outside of the period of 3 months after the date of the Meeting, the Company is not seeking approval for their issue. Instead SVL will make these issues under its existing capacity under Listing Rule 7.1 before issuing those shares or will seek shareholder approval before issuing the Deferred Shares (if required).

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The issue of the Initial Consideration Shares without Shareholder approval will result in the Company breaching the 15% limit referred to in ASX Listing Rule 7.1. The issue of those securities therefore depends on Shareholders passing Resolution 8.

The following information in relation to the Initial Consideration Shares proposed to be issued pursuant to Resolution 8 is provided to the Shareholders for the purposes of Listing Rule 7.3:

(a) the maximum number of Shares the Company can issue is 40,000,000 (this is on a postconsolidated basis);
(b) the 40,000,000 Initial Consideration Shares (on a post-consolidation basis) will be issued no later than three months after the date of the Meeting, unless otherwise extended by way of ASX granting a waiver to the Listing Rules and it is anticipated that allotment will occur on the same date;
(c) the Initial Consideration Shares will be issued for nil cash consideration for the acquisition of SIHA. Accordingly, no funds will be raised from their issue;
(d) the persons to whom the Shares may be issued are the Seller (or its nominees) under the Deed, none of whom will be related parties to the Company;
(e) the Initial Consideration Shares will be fully paid ordinary shares in the capital of the Company and rank equally in all respects with the existing fully paid ordinary shares on issue.

The Directors recommend that shareholders vote in favour of Resolution 8.

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ENQUIRIES

Shareholders are advised to contact Trent Franklin, the Company Secretary, on +61 02 8316 3997 if they have any queries in respect of the matters set out in these documents.

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ANNEXURE A – TERMS AND CONDITIONS OF NEW OPTIONS

The New Options entitle the holder to subscribe for Shares on the following terms and conditions:

(a) Each New Option gives the New Option holder the right to subscribe for one Share. To obtain the right given by each New Option, the New Option holder must exercise the New Options in accordance with the term and conditions of the New Options.
(b) The commencement date ( Commencement Date ) for the exercise of the New Options is the date of issue.
(c) The New Options will, except to the extent earlier exercised, expire at 5:00pm (AEST) on the date that is two (2) years after the Commencement Date ( New Option Expiry Date ). Any New Option not exercised before the New Option Expiry Date will automatically lapse on the New Option Expiry Date.
(d) The exercise price for each New Option will be $0.003 (on a pre-consolidation basis) ( Exercise Price ).
(e) The New Option exercise period will be the period commencing on the Commencement Date of the relevant New Options and expiring on the New Option Expiry Date of the relevant New Options ( Exercise Period ).
(f) The New Options will be freely transferable.
(g) The New Options may be exercised at any time wholly or in part by delivering a duly completed form of notice of exercise specifying the number of New Options being exercised together with a cheque for the exercise price to the Company ( Exercise Notice ) at any time during the Exercise Period.
(h) An Exercise Notice is only effective when the Company has received the full amount of the Exercise Price in cleared funds.
(i) Within 10 Business Days of receipt of the Exercise Notice accompanied by the Exercise Price, the Company will allot the number of Shares required under these terms and conditions in respect of the number of New Options specified in the Exercise Price.
(j) All Shares allotted upon exercise of New Options will upon allotment rank pari passu in all respects with the then issued ordinary shares of the Company.
(k) If at any time the issued capital of the Company is reconstructed, all rights of a New Option holder are to be changed in a manner consistent with the Corporations Act and the Listing Rules at the time of the reconstruction.
(l) A New Option does not confer the right to a change in exercise price or a change in the number of underlying securities over which the New Option can be exercised.
(m) There are no participating rights or entitlements inherent in the New Options and New Option holders will not be entitled to participate in new issues of securities of the Company offered to Shareholders during the currency of the New Options. However, the Company will ensure that for the purposes of determining entitlements to any such issue, the record date will be at least 4

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Business Days after the issue is announced. This will give New Option holders the opportunity to exercise their New Options prior to the date for determining entitlements to participate in any such issue.

(n) If there is a bonus issue to the holders of shares in the Company, the number of shares over which the New Option is exercisable may be increased by the number of shares which the New Option holder would have received if the New Option had been exercised before the record date for the bonus issue.
(o) The terms of the New Options may only be changed if holders of ordinary shares in the Company who are not excluded from voting approve of such a change. However, the terms of the New Options cannot be changed to reduce the exercise price, increase the number of New Options or change any period for exercise of the New Options.
(p) If at any time a meeting of holders of New Options is required or proposed, the rules applicable to the convening and holding of, and voting at, a general meeting of the Company will apply so far as they are capable of application (and with all necessary changes) to that meeting on the basis that on a poll a holder is entitled to 1 vote for each New Option held.

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ANNEXURE B – TERMS AND CONDITIONS OF ADVISOR OPTIONS

The Advisor Options entitle the holder to subscribe for Shares on the following terms and conditions:

(a) Each Advisor Option gives the Advisor Option holder the right to subscribe for one Share. To obtain the right given by each Advisor Option, the Advisor Option holder must exercise the Advisor Options in accordance with the term and conditions of the Advisor Options.
(b) The commencement date ( Commencement Date ) for the exercise of the Advisor Options is the date of issue.
(c) The Advisor Options will, except to the extent earlier exercised, expire at 5:00pm (AEST) on the date that is three (3) years after the Commencement Date ( Advisor Option Expiry Date ). Any Advisor Option not exercised before the Advisor Option Expiry Date will automatically lapse on the Advisor Option Expiry Date.
(d) The exercise price for each Advisor Option will be $0.30 ( Exercise Price ) (calculated on a post-consolidation basis).
(e) The Advisor Option exercise period will be the period commencing on the Commencement Date of the relevant Advisor Options and expiring on the Advisor Option Expiry Date of the relevant Advisor Options ( Exercise Period ).
(f) The Advisor Options will be freely transferable.
(g) The Advisor Options may be exercised at any time wholly or in part by delivering a duly completed form of notice of exercise specifying the number of Advisor Options being exercised together with a cheque for the exercise price to the Company ( Exercise Notice ) at any time during the Exercise Period.
(h) An Exercise Notice is only effective when the Company has received the full amount of the Exercise Price in cleared funds.
(i) Within 10 Business Days of receipt of the Exercise Notice accompanied by the Exercise Price, the Company will allot the number of Shares required under these terms and conditions in respect of the number of Advisor Options specified in the Exercise Price.
(j) All Shares allotted upon exercise of Advisor Options will upon allotment rank pari passu in all respects with the then issued ordinary shares of the Company.
(k) If at any time the issued capital of the Company is reconstructed, all rights of an Advisor Option holder are to be changed in a manner consistent with the Corporations Act and the Listing Rules at the time of the reconstruction.
(l) An Advisor Option does not confer the right to a change in exercise price or a change in the number of underlying securities over which the Advisor Option can be exercised.
(m) There are no participating rights or entitlements inherent in the Advisor Options and Advisor Option holders will not be entitled to participate in new issues of securities of the Company offered to Shareholders during the currency of the Advisor Options. However, the Company will ensure that for the purposes of determining entitlements to any such issue, the record date

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will be at least 4 Business Days after the issue is announced. This will give Advisor Option holders the opportunity to exercise their Advisor Options prior to the date for determining entitlements to participate in any such issue.

(n) If there is a bonus issue to the holders of shares in the Company, the number of shares over which the Advisor Option is exercisable may be increased by the number of shares which the Advisor Option holder would have received if the Advisor Option had been exercised before the record date for the bonus issue.
(o) The terms of the Advisor Options may only be changed if holders of ordinary shares in the Company who are not excluded from voting approve of such a change. However, the terms of the Advisor Options cannot be changed to reduce the exercise price, increase the number of Advisor Options or change any period for exercise of the Advisor Options.
(p) If at any time a meeting of holders of Advisor Options is required or proposed, the rules applicable to the convening and holding of, and voting at, a general meeting of the Company will apply so far as they are capable of application (and with all necessary changes) to that meeting on the basis that on a poll a holder is entitled to 1 vote for each Advisor Option held.

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PROXY FORM – SILVER MINES LIMITED

GENERAL MEETING

I/We of being a member of Silver Mines Limited entitled to attend and vote at the General Meeting, hereby Appoint Name of proxy OR the Chair of the General Meeting as your proxy

or failing the person so named or, if no person is named, the Chair of the General Meeting, or the Chair’s nominee, to vote in accordance with the following directions, or, if no directions have been given, as the proxy sees fit, at the General Meeting to be held at 10.30 am AEST) on 6 June 2016 at Level 11, 52 Phillip Street Sydney NSW 2000 Australia, and at any adjournment thereof.

If no directions are given, the Chair will vote in favour of all the Resolutions.

If the Chair of the General Meeting is appointed as your proxy, or may be appointed by default, and you do not wish to direct your proxy how to vote as your proxy in respect of Resolutions 1 to 8 please place a mark in this box.

By marking this box, you acknowledge that the Chair of the General Meeting may exercise your proxy even if he has an interest in the outcome of Resolutions 1-8 and that votes cast by the Chair of the General Meeting for Resolutions 1-8, other than as proxy holder, will be disregarded because of that interest. If you do not mark this box, and you have not directed your proxy how to vote, the Chair will not cast your votes on Resolutions 1-8 and your votes will not be counted in calculating the required majority if a poll is called on Resolutions 1-8.

OR

Voting on Business of the General Meeting Resolution 1 – Ratification of issue of Shares – Tranche 2 Placement Resolution 2 – Approval to issue New Options Resolution 3 – Approval to issue Tranche 3 Shares Resolution 4– Approval of the proposed Share Consolidation of the Company’s Shares Resolution 5 – Approval to issue Shares – Post EGM Placement Resolution 6 – Participation by Nathan Featherby in Post EGM Placement Resolution 7 – Approval to issue Advisor Options Resolution 8 – Approval to issue Shares to SIHA Shareholders

FOR AGAINST ABSTAIN Resolution 1 – Ratification of issue of Shares – Tranche 2 Placement Resolution 2 – Approval to issue New Options Resolution 3 – Approval to issue Tranche 3 Shares Resolution 4– Approval of the proposed Share Consolidation of the Company’s Shares Resolution 5 – Approval to issue Shares – Post EGM Placement Resolution 6 – Participation by Nathan Featherby in Post EGM Placement Resolution 7 – Approval to issue Advisor Options Resolution 8 – Approval to issue Shares to SIHA Shareholders Please note : If you mark the abstain box for a particular Resolution, you are directing your proxy not to vote on that Resolution on a show of hands or on a poll and your votes will not to be counted in computing the required majority on a poll. Signature of Member(s): Date: ____ Individual or Member 1 Member 2 Member 3 Sole Director/Company Secretary Director Director/Company Secretary Contact Name: _____ Contact Ph (daytime): _____

SILVER MINES LIMITED

ACN 107 452 942

Instructions for Completing ‘Appointment of Proxy’ Form

( Appointing a Proxy ): A member entitled to attend and vote at the General Meeting is entitled to appoint not more than two proxies to attend and vote on a poll on their behalf. The appointment of a second proxy must be done on a separate copy of the Proxy Form. Where more than one proxy is appointed, such proxy must be allocated a proportion of the member’s voting rights. If a member appoints two proxies and the appointment does not specify this proportion, each proxy may exercise half the votes. A duly appointed proxy need not be a member of the Company.
( Direction to Vote ): A member may direct a proxy how to vote by marking one of the boxes opposite each item of business. Where a box is not marked the proxy may vote as they choose. Where more than one box is marked on an item the vote will be invalid on that item.

( Signing Instructions ):

( Individual ): Where the holding is in one name, the member must sign.
( Joint Holding ): Where the holding is in more than one name, all of the members should sign.
( Power of Attorney ): If you have not already provided the Power of Attorney with the registry, please attach a certified photocopy of the Power of Attorney to this form when you return it.
( Companies ): Where the company has a sole director who is also the sole company secretary, that person must sign. Where the company (pursuant to Section 204A of the Act) does not have a company secretary, a sole director can also sign alone. Otherwise, a director jointly with either another director or a company secretary must sign. Please sign in the appropriate place to indicate the office held.
( Attending the Meeting ): Completion of a Proxy Form will not prevent individual members from attending the General Meeting in person if they wish. Where a member completes and lodges a valid Proxy Form and attends the General Meeting in person, then the proxy’s authority to speak and vote for that member is suspended while the member is present at the General Meeting.
( Return of Proxy Form ): To vote by proxy, please complete and sign the enclosed Proxy Form and return by:
(a) post to Level 11, 52 Phillip Street, Sydney NSW 2000 Australia; or
(b) facsimile to the Company on facsimile number (+61 2) 8316 3999,

so that it is received not later than 10.30am (AEST) on Saturday, 4 June 2016.

Proxy Forms received later than this time will be invalid.