Silver Mines
LSE : SVLP

February 01, 2010 02:00 ET

2nd Quarter Results

                                                                                                 Appendix 5B
                                                                  Mining exploration entity quarterly report


                                                                                                  +Rule 5.3
                                                Appendix 5B

                                Mining exploration entity quarterly report


Introduced 1/7/96.  Origin:  Appendix 8.  Amended 1/7/97, 1/7/98, 30/9/2001.


Name of entity
   SILVER MINES LIMITED

ABN                                                             Quarter ended ("current quarter")
  45 107 452 942                                                                    Dec 2009

Consolidated statement of cash flows
                                                            Current quarter            Year to date
Cash flows related to operating activities                       $A'000             (6 Mths to Dec 09)
                                                                                          $A'000
1.1     Receipts   from  product  sales  and   related                                       
        debtors                                                    -                        -
        
1.2     Payments for                                                                         
        (a)  exploration and evaluation                          (248)                    (372)
        (b)  development                                           -                        -
        (c)  production                                            -                        -
        (d)  administration                                       (64)                     (123)
1.3     Dividends received                                         -                        -
1.4     Interest  and other items of a similar  nature                                       
        received                                                   4                        5
1.5     Interest and other costs of finance paid                   -                        -
1.6     Income taxes paid                                          -                        -
1.7     Other (Exploration Bonds refund)                           -                        -
                                                                 (308)                    (490)
        Net Operating Cash Flows
                                                                                             
Cash flows related to investing activities

1.8     Payment for purchases of:                                                            
        (a)prospects                                               -                        -
        (b)equity investments                                      -                        -
        (c) other fixed assets                                     -                        -
1.9     Proceeds from sale of:                                                               
        (a)prospects                                               -                        -
        (b)equity investments                                      -                        -
        (c)other fixed assets                                      -                        3
1.10    Loans to other entities                                    -                        -
1.11    Loans repaid by other entities                             -                        -
1.12    Other (provide details if material)                        -                        -
                                                                                             
        Net investing cash flows                                   -                        3
1.13    Total   operating  and  investing  cash  flows           (308)                    (487)
        (carried forward)

1.13    Total   operating  and  investing  cash  flows           (308)                    (487)
        (brought  forward)
                                                                                             

Cash flows related to financing activities
1.14    Proceeds from issues of shares, options, etc.             371                      777
1.15    Proceeds from sale of forfeited shares                     -                        -
1.16    Proceeds from borrowings                                   -                        -
1.17    Repayment of borrowings                                    -                        -
1.18    Dividends paid                                             -                        -
1.19    Other (provide details if material)                        -                        -
        
        Net financing cash flows                                  371                      777
                                                                   63                      290
        Net increase (decrease) in cash held
        
1.20    Cash at beginning of quarter/year to date                 600                      373
1.21    Exchange rate adjustments to item 1.20                     -                        -

1.22    Cash at end of quarter                                    663                      663

Payments to directors of the entity and associates of the directors
Payments to related entities of the entity and associates of the related entities

                                                                                           Current quarter
                                                                                           $A'000
                                                                                                                
1.23               Aggregate amount of payments to the parties included in item 1.2                  17
                                                                                                                
1.24               Aggregate amount of loans to the parties included in item 1.10                    -
                   
1.25               Explanation necessary for an understanding of the transactions
                   N/A.
                   

Non-cash financing and investing activities

2.1    Details of financing and investing transactions which have had a material effect on consolidated
       assets and liabilities but did not involve cash flows
       
       N/A
       
       

2.2    Details  of  outlays made by other entities to establish or increase their share in projects  in
       which the reporting entity has an interest
       
       
       N/A
       

Financing facilities available
Add notes as necessary for an understanding of the position.

                                                                  Amount available          Amount used
                                                                  $A'000                    $A'000
3.1    Loan facilities                                             -                         -
       
3.2    Credit standby arrangements                                 -                         -
       

Estimated cash outflows for next quarter
                                                                                    $A'000
4.1    Exploration and evaluation                                                      -
       
4.2    Development                                                                     -
       
                                                                                       -
       Total                                                          

Reconciliation of cash

Reconciliation of cash at the end of the quarter  (as      Current quarter         Previous quarter
shown in the consolidated statement of cash flows) to      $A'000                  $A'000
the related items in the accounts is as follows.

5.1   Cash on hand and at bank                                   18                      290

5.2   Deposits at call                                          645                      310

5.3   Bank overdraft                                             -                        -

5.4   Other                                                      -                        -
      
      Total: cash at end of quarter (item 1.22)                 663                      600

Changes in interests in mining tenements

                                  Tenement            Nature of interest            Interest     Interest
                                  reference           (note (2))                    at           at end of
                                                                                    beginning    quarter
                                                                                    of quarter
6.1   Interests in mining                N/A                       -                     -            -
      tenements relinquished,
      reduced or lapsed
      
      
6.2   Interests in mining                N/A                       -                     -            -
      tenements acquired or
      increased
      
      
Issued and quoted securities at end of current quarter
Description  includes  rate of interest and any redemption or conversion rights together  with  prices  and
dates.
                           Total number           Number quoted          Issue price per    Amount paid up per
                                                                         security (see      security (see note
                                                                         note 3) (cents)    3) (cents)
7.1     Preference                   -                     -                     -                    -
        +securities
        (description)
7.2     Changes during               -                     -                     -                    -
        quarter                                                                                       
        (a)  Increases                                                                                
        through issues                                                                                
        (b)  Decreases                                                                                
        through returns              -                     -                     -                    -
        of capital, buy-                                                         
        backs,
        redemptions
7.3     +Ordinary          68,805,192 OFP         68,805,192 OFP                 -                    -
        securities                                          
7.4     Changes during                                                                                
        quarter                                                                                       
        (a)  Increases         1,957,687(1)            1,957,687              5 cents              5 cents
        through issues        (1) in lieu of                                                          
        IPO                 Directors Fees (per                                                       
        Tenements              AGM approval)                                                          
        Placement                                      6,250,000              8 cents              8 cents
        (b)  Decreases           6,250,000                                                            
        through returns              
        of capital, buy-             
        backs                        
7.5     +Convertible                 -                     -                     -                    -
        debt securities
        (description)
7.6     Changes during                                                                                
        quarter                                                                                       
        (a)  Increases               -                     -                     -                    -
        through issues                                                                                
        (b)  Decreases               -                     -                     -                    -
        through
        securities
        matured,
        converted
7.7     Options                                        Escrowed           Exercise price         Expiry date
        (description and          300,000                                                           Nov 2011
        conversion                                         -
        factor)
7.8     Issued during                -                     -                     -                    -
        quarter
7.9     Exercised during             -                     -                     -                    -
        quarter                                                                                       
7.10    Expired during               -                     -                     -                    -
        quarter
7.11    Debentures                   -                     -                                
        (totals only)
7.12    Unsecured notes              -                     -                                
        (totals only)


Compliance statement

1         This  statement  has  been  prepared  under accounting policies,  which  comply  with  accounting
          standards as defined in the Corporations Act or other standards acceptable to ASX (see note 4).

2         This statement does /does not* (delete one) give a true and fair view of the matters disclosed.



Sign here:          ...........................................Date:..December 2009..............
                    (Company Secretary)



Print name:         .KEVIN LYNN.........................................

Notes

1         The  quarterly report provides a basis for informing the market how the entity's activities  have
          been  financed  for the past quarter and the effect on its cash position.  An entity  wanting  to
          disclose  additional  information is encouraged to do so, in a note or  notes  attached  to  this
          report.

2         The  "Nature of interest" (items 6.1 and 6.2) includes options in respect of interests in  mining
          tenements  acquired, exercised or lapsed during the reporting period.  If the entity is  involved
          in  a joint venture agreement and there are conditions precedent which will change its percentage
          interest  in  a  mining  tenement,  it  should disclose the change  of  percentage  interest  and
          conditions precedent in the list required for items 6.1 and 6.2.

3         Issued and quoted securities. The issue price and amount paid up is not required in items 7.1 and
          7.3 for fully paid securities.

4         The  definitions in, and provisions of, AASB 1022: Accounting for Extractive Industries and  AASB
          1026: Statement of Cash Flows apply to this report.

5         Accounting Standards ASX will accept, for example, the use of International Accounting  Standards
          for  foreign entities.  If the standards used do not address a topic, the Australian standard  on
          that topic (if any) must be complied with.


                                              == == == == ==
29th January, 2010
To: Company Announcement officer
ACTIVITIES REPORT -
FOR THE QUARTER ENDED 31st  DECEMBER 2009.

*         HIGHLY SUCCESSFUL 1,600M DRILLING PROGRAM COMPLETED AT WEBBS SILVER PROJECT.
*         HIGH SILVER GRADE MULTI-LODE SYSTEM EXTENDED ALONG STRIKE FOR A TOTAL LENGTH OF OVER 600M
*         UPDATED RESOURCE MODEL CURRENTLY UNDERWAY WITH SIGNIFICANT UPGRADE ON EXISTING MODEL EXPECTED
*         NEW 3-DIMENSIONAL MODEL UNDER CONSTRUCTION FOR ENTIRE MINERALISED SYSTEM TO ASSIST WITH PLANNING
          AND MARKETING
*         POSITIVE METALLURGICAL RESULTS SHOWING ARSENIC BEING SUPPRESSED WHILST RETAINING HIGH SILVER IN
          CONCENTRATES.
*         GEOPHYSICS EXTENDS AND STRENGTHENS BROAD CHARGEABILITY ANOMALY AT WALLA WALLA SILVER PROJECT
          (FARM-IN WITH AOM)WHICH IS NOW READY TO DRILL



WEBBS SILVER PROJECT (EL5674, NSW - 100% SVL)


Silver Mines Limited completed a 1,634m reverse circulation drilling program during the quarter at the 100%
          owned  Webbs  Silver  Project.  The  drilling has extended high  grade  silver-rich  polymetallic
          mineralisation at the Webbs Silver South and Adit Prospects to a total combined strike length  of
          over  600m,  and  still  remains open in all directions (Map 1).The results  show  that  the  two
          previously  identified high grade zones are part of a larger continuously mineralised  multi-lode
          system  rather  than  discrete pipes which should provide a significant tonnage  upgrade  on  the
          previous resource estimate. The most significant intersections are shown in Table 1.


An updated  3-dimensional model of the mineralised system is currently under construction and will  provide
          the  Company  and investors with insights into the shape, size and geometry of the mineralisation
          and  resource. The model will also be an important tool for both future planning of drilling  and
          mining studies as well as marketing for future financing of the Company. The model is expected to
          be completed by the end of February.


A drilling  program  planned  to  begin  in  March  2010  will target  strike  extensions  of  the  current
          mineralisation  as  well as provide geotechnical and metallurgical samples  for  the  mining  and
          processing programs currently underway.






Hole ID     From# (m)   To# (m)    Ag g/t    Ag Oz/t     Zn %    Cu %     Pb %    Sb %          comment
 RC058         116        124        33        1.1       0.3     0.03     0.6     0.01    RC pre-collar for diamond
                                                                                               tail in 2010
 RC059          9          11       142        4.6       0.2      0.1     1.1     0.05              
 RC059         15          16       178        5.7       0.4      0.2     1.9     0.1               
 RC060         54          60       213        6.8       0.9      0.3     0.7     0.2               
 RC061        NSI*                                                                                  
 RC062         NSI                                                                                  
 RC063         99         100       143        4.6       0.9     NSA**    0.5     NSA               
 RC064         NSI                                                                                  
 RC065         22          24       614       19.7       0.3      0.2     0.4     0.1               
 RC066         NSI                                                                                  
 RC067         143        152       312       10.0       2.2      0.3     0.5     0.1               
 RC068         63          69        76        2.4       1.6      NSA      3      NSA     RC pre-collar for diamond
                                                                                               tail in 2010
 RC069         32          37       283        9.1       1.7      0.3     1.7     0.2               
 RC070         36          39       347       11.2       0.4      0.3     0.9     0.2               
 RC071         105        118       223        7.2       1.9      0.2     0.2     0.1               
Table 1 - most significant assays from October-November 2009 drilling program, EL5674.

# - depths  are  downhole intersections and NOT true widths of lode. Due to the geometry of the lode versus
          the angle of each drillhole the true width of the mineralised interval is approximately one third
          of  the  downhole intersection. These true widths will be clarified once all the  new  drillholes
          have been incorporated into the existing 3D model and interpreted.
* NSI - no significant intersection. ** NSA - no significant assay.

Metallurgy


During the  quarter  samples  of  the  fine  crushed ore from the historical  Webbs  dumps  were  sent  for
          metallurgical testing. Results are expected next week and will be released as soon as they are at
          hand.


EL 6269 - (Australia Oriental Minerals NL Joint Venture)

Between the  period  of 04/12/09 and 10/12/09 Silver Mines Limited carried out an IP (Induced Polarisation)
          survey  over  the  historic Walla Walla silver mine just outside Boorowa, NSW.  This  survey  was
          carried out as a follow-up to the previous survey conducted in July 2009 and is considered  phase
          2.

Three extra  lines  of  dipole  dipole  were run, this time at 100m electrode spacing,  i.e.  100m  between
          electrodes as opposed to 50m spacing in the previous survey. This increase was in order  to  gain
          greater  depth  penetration. Lines 400N and 600N were run as infill  lines  either  side  of  the
          historical main shaft and between already surveyed lines. Line 1000N was placed 100m to the north
          of the previously finished grid to test the extent of the chargeable zone and attempt to close it
          off to the north.

The results  infer  that the chargeability anomaly extends to a depth greater than was seen using  the  50m
          spacing  which suggests that the source of the anomaly has significant depth potential. It  would
          also appear that chargeability is not closed off to the north as the anomaly still exists on line
          1000N.  Data  inversions are expected to be completed in the coming weeks which  will  enable  an
          accurate  interpretation  of the data collected and provide insights into  the  geometry  of  the
          anomaly and assist with defining drill targets.

SVL considers  the  results of this Phase 2 work to be very promising given the size, depth continuity  and
          strength of the chargeability. Drilling is now considered a priority and planning is underway for
          a program to begin as soon as possible.



Please direct any queries regarding the content of this report to Charles Straw (CEO) on +61 2 9436 0533 or
          cstraw@silverminesltd.com.au.

The information in this report that relates to Exploration Results is based on information compiled by
Charles Straw, consulting geologist and CEO, who is a Member of The Australasian Institute of Mining and
Metallurgy. Charles Straw has sufficient experience which is relevant to the style of mineralisation 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'. Charles Straw 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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