Silver Mines
LSE : SVLP

October 25, 2010 03:49 ET

10.2 M Oz of Silver at Webbs Silver

To: Company Announcements Officer
Australian Securities Exchange

25th October, 2010

                  10.2 million oz's of Silver at Webb's Silver Project with Significant Grade Increase.

Silver Mines Limited (ASX:SVL, PLUS:SVLP) is pleased to announce that independent consultants GeoRes have completed an
updated resource estimate for the Webb's Silver Project located on the Company's 100% owned tenement (EL5674) in north-
eastern NSW. The new estimate has incorporated over 13,000m of drilling completed by SVL since 2007, as well as surface
sampling and some historical sampling from underground workings. The new model is an important advance for the project
and will assist in guiding the next drilling program scheduled to begin in two weeks plus allow Scoping studies to re-
commence .


                                                       HIGHLIGHTS.
                                                            

    - Resource estimate of;
        * 1.23 million tonnes at 256g/t silver (8.2 oz/t Ag), for 10.19 million ounces of silver plus
        * 1.84% zinc, 0.79% lead and 0.28% Cu,
    - New contained silver resource is more than double the previous estimate which was 4.6 million ounces of silver
      in the inferred category.
    - Average grade increased by 30% from 200g/t to 256 g/t Ag. Base metal grades also increased.
    - Cut off grade maintained at 70 g/t Ag.
    - A portion of the resource is now classified as Indicated.
    - Resource remains open to the south and at depth.
    - Near surface potential exists in undrilled areas along the trend and above deeper mineralised intersections.
    - Additional drilling to commence shortly to further extend the mineralised area as well as upgrade the existing
      resource to a higher JORC level.
    - Open pit optimizations will now be done as part of the Scoping study.
    - Metallurgical test-work to be conducted on drill core from upcoming program.

        
 The resource is reported in Table 1.

---------------------------------------------------------------------------
---------------------------------------------------------------------------
JORC Category      Tonnes  Ag g/t   Cu %   Pb %   Zn %   Contained Ag (M Oz)
---------------------------------------------------------------------------
Indicated         167,000     360   0.32   0.55   1.96                 1.93
---------------------------------------------------------------------------
Inferred        1,066,000     240   0.27   0.83   1.83                 8.20
---------------------------------------------------------------------------
---------------------------------------------------------------------------
TOTAL           1,233,000     256   0.28   0.79   1.84                10.19
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Table 1: Resource estimate for Webb's Silver Project at 70ppm Ag lower cut-off.


The updated resource estimate continues to demonstrate that the Webb's project is one of the highest grade
undeveloped silver deposits in Australia. Mineralisation extends from surface and is potentially amenable to open
cut mining with possible underground mining targeting higher grade, deeper mineralisation.

The Company has been exploring the Webb's area since 2007, and in late 2008 released an Inferred Resource estimate
for  the  project of 720 000 tonnes at 200g/t silver, for 4.6 million ounces of contained silver.  Since  then  an
additional  6,700m of drilling in 57 holes has been conducted. The results of this drilling as well as  additional
data generated by Silver Mines and previous explorers have been incorporated into the updated resource estimate.

The  Resource is contained in four centres of mineralisation occurring along a 1.2km long trend as shown in Figure
1.  The most significant of these zones are Webb's South and Webb's Main, Figure 2. Mineralisation at Webb's South
remains  open  to  the  south  and  at depth. Additional potential also exists near  surface  above  deeper  drill
intersections. Mineralisation at Webb's Main remains open to the North and at relatively shallow depths.
                                                            

Future Plans.

The updated Resource estimate is another important milestone in the development of the Webb's Silver Project. Ongoing
drilling is likely to upgrade the resource in terms of both tonnage and JORC classification, and supports the Company's
view that there is real potential for a mining operation to be developed at Webbs.

Silver Mines is recommencing Scoping to Pre-feasibility level studies to investigate the potential economics of a mining
operation at Webbs. A major component of this study will be detailed metallurgical test-work. Diamond drilling, which is
due to commence shortly will provide samples for this work. This drilling program will also provide geotechnical data to
assist with mine design proposals as well as additional assay data to increase confidence levels of the current
resource.

Please direct any queries regarding the content of this report to Charles Straw (CEO) on +61 2 9455 0280 or
cstraw@silverminesltd.com.au.

Figure 1 ( Please see website)
Figure 2 (please see website)


Notes on the Resource Estimate

RESOURCE ESTIMATION METHODOLOGY

The resource estimates has been reported for Silver Mines by the Company's consultants, GeoRes Pty Ltd ("GeoRes") and
their results are shown in Table 1.

The resource estimate has been produced from information derived from 111 drill holes, 95 of which were drilled by
Silver Mines, all being Reverse circulation (RC). The other 18 holes are all diamond core drilled by previous explorers.
Drill hole sampling for the RC holes is based on 1m splits through the mineralised zones. Diamond drillhole sampling
methods by previous explorers is unknown. Sample intervals are typically from 1-3m.

Surface trench and outcrop traverse sampling have also been used in the resource estimate. This includes 13 such zones
derived from work by Silver Mines as well as the results from 10 surface trenches excavated and sampled by previous
explorers, some of which Silver Mines have sampled.

The resource estimate also contains 130 samples that were collected by previous explorers at various locations from the
Webbs Main underground workings extending to 200m below surface.

All Silver Mines samples are analysed by appropriate techniques at a commercial laboratory. Appropriate QA/QC procedures
are undertaken by Silver Mines, the results of which support the integrity of the assay database. Assay methods by
previous explorers are unknown.

All Silver Mines drill holes have been located by a Registered Surveyor and all have been down hole surveyed. The
location of trench and outcrop samples is derived from DGPS. Drill holes drilled by previous explorers have been
surveyed by DGPS. Where the drill collar has been destroyed the location was derived from plans generated by previous
explorers. Downhole survey data has not been found.

The location of the underground samples is derived from underground maps and plans generated by previous explorers and
transformed into the Silver Mines grid.

All drillhole, trench, outcrop and underground sampling data have been compiled into an Access database. Silver Mines
assume responsibility for the data.

Density data are based on the modelling of 95 individual specific gravity determinations from 1m assay pulps of waste
and representative mineralised material. This data was supported by a small number of density measurements on 20cm
lengths of drill core. Density has been modelled using polynomial formulas derived from specific gravity measurements
and applied to Cu, Pb, Zn and Ag assays.

A series of 3D geological shapes have been interpreted by GeoRes and Silver Mines from geological and assay data. These
shapes are constrained into domains or 'lodes'. Three dimensional grade modelling within each domain utilised the
Inverse distance squared method with a series of different search ellipses reflecting dip, strike and plunge controls of
the mineralisation and information derived from geostatistics and variography applied to the major domains of
mineralisation. Previous production has not been subtracted - for the reason that the quantum is believed to be small,
largely outside the interpreted lodes.

The classification of the resources pursuant to the JORC Code as shown in Table 1 is derived from a combination of data
spacing, the perceived continuity of the geology and grade and confidence in the various data inputs which constitute
the resource database. Accordingly GeoRes has elected to report much of the resource as Inferred with some in the
Indicated Category.

The reporting is based on a 70g/t Ag lower cut off. The cut-off grade is intended to reflect mineralisation potentially
mineable by open pit methods, given that approximately 75% of the resource lies above 100m below surface.


Competent Person Declaration.

The information in this Document that relates to Exploration Results, Mineral Resources or Ore Reserves is based on
information compiled by Robin Rankin, who is a Member of the Australasian Institute of Mining and Metallurgy (MAusIMM)
and registered as a Chartered Professional Geologist (CPGeo).  Robin Rankin is Principal Consulting Geologist and
operator of the independent geological consultancy GeoRes.  He has sufficient experience which is relevant to the style
of mineralization and type of deposit under consideration, and to the activity which he is undertaking, to qualify as a
Competent Person as defined in the 2004 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves' (the JORC Code).  He consents to the inclusion in the report of the matters based on his
information in the form and context in which it appears.

Contact Information

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