Silver Mines

November 26, 2008 05:42 ET

AGM Statement

26th November, 2008

Chairman's Address,
Annual General Meeting,
November 26 2008.

This has been a very eventful year for companies in the business of mineral exploration generally
and for Silver Mines Ltd (SVL), in particular.

However, in this address there are 2 aspects of the year in particular I would like to focus on.

Firstly, metal prices and financial markets have experienced one of their worst years ever and
shareholders may be interested in how the board sees the global picture as it relates to SVL.

Base metal prices, particularly lead and zinc, are at such a low level that many mines are being
forced to reduce production and this is setting the scene for a price rebound as excess stocks are
worked out of the system. Obviously the timing of any recovery is uncertain, but inevitably the
lack of profitable mineable reserves and cessation of exploration will limit the current downturn
once the economies of the major consuming nations resume their upward path.

In the case of precious metals in which SVL has a particular interest, the next upward move may
already be underway. The current deluge of currency created by the US Treasury and other similar
institutions to prop up the international financial system, inevitably will work its way into
precious metal prices as investors seek protection from the erosion of currency purchasing power
which will result. In recent days gold and silver prices have moved up strongly and we expect this
trend to continue despite the pessimism shown in the general economic outlook.

The downward spiral in stock prices this year has made capital raising very difficult,
particularly for junior resource companies. As a result SVL has not issued any new shares this
year and returned the small amount of funds raised in the SPP to investors as our stock priced had
fallen. In 2009, we expect at least a  modest  improvement in silver prices as the year progresses
providing a more favourable outlook for raising the additional funds required by the company to
continue its exploration program at Emmaville. The board considers SVL to be fortunate in its
concentration on silver rich ore. We already seeing the difficulties experienced by other silver
lead zinc producers and explorers who are dealing with lower grade ore bodies. We continue to
believe that our strategy of pursuing higher grade silver projects will see the company well
placed as markets recover.

Secondly, SVL had a very satisfactory year in its exploration programs at Emmaville. Since the
company commenced active exploration last year at the Webbs Silver Project, the results of
drilling have been very positive, culminating in the release of the resource estimate in September
2008. We were fortunate to have the benefit of results from previous explorers to aid the locating
of the drilling sites and coupled with our own field programs and new interpretations, I am
pleased to report that our exploration team have had success at four targets, Webbs Silver North,
Webbs Silver Main, Webbs Silver Adit and most importantly, Webbs Silver South.

The Resource Estimate, as completed by Hellman and Schofield, indicated a Global Inferred Resource
for the Webbs Silver Project of 670,000 tonnes averaging  210 g/tonne of silver with associated
base metals, which includes 510,000 tonnes averaging 230 g/tonne silver at Webbs South. At current
metal prices we feel it is necessary to increase this tonnage to approximately double the current
size to be economically viable and this goal will be the subject of our future exploration
programs. Our technical team is confident that the project is capable of delivering this size
resource with another 6 targets identified by geophysics, geochemistry and mapping that are ready
to be drilled.

At present, exploratory drilling and other field work has been suspended as the company is
focusing on conserving existing funds until a more favourable investment climate returns. However,
we are continuing interpretation work using the large and very detailed datasets we have collected
over the past 12 months to enhance our understanding of the Webbs Silver project in particular so
we can continue with our goal of developing a mining operation there as rapidly as possible.

The board wishes to express its appreciating of the contribution from our exploration team ably
lead by our General Manager, Charles Straw.

David Sutton


The information in this report that relates to Exploration Results is based on information
compiled by Charles Straw, consulting geologist and General Manager, 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.

The Directors of Silver Mines accept responsibility for the content of this announcement, full details can be found on the Company?s website
For further information please contact:

Silver Mines Limited
Charles Straw
+61 2 9436 0533

PLUS Corporate Adviser
Loeb Aron & Co Ltd.
Peter Freeman
+44 207 620 1128

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