Silver Mines
LSE : SVLP

March 22, 2010 03:00 ET

Half year report

                                                        
                                                       
                                             Silver Mines Limited
                                                ACN 107 452 942
                                                       
                                          HALF YEAR FINANCIAL REPORT
                                                       
                                               31 DECEMBER 2009
     
     
     
                                                       
                                             SILVER MINES LIMITED
                                               DIRECTORS' REPORT

The  Directors present their report together with the financial statements of Silver Mines Limited for the  six
months ended 31 December 2009

Directors
The Directors of Silver Mines Limited during the financial period and up to the date of this report are:

David Sutton (Non -Executive Chairman)
David Straw (Non-Executive Director)
Malcolm Bird (Non-Executive Director)
Kim Slater (Non-Executive Director) Resigned 9th December, 2009.

Principal Activities
The principal activity of the Company during the financial period was exploration of the Company's New England
mineral tenements.

Review of Operations
During the period under review, the Company continued exploration on the New England mineral tenements. The
Company recorded a loss from ordinary activities of $213,160 (2008: $389,372).

Webbs Silver Project - (EL5674, NSW - 100% SVL)

Metallurgy.

Work in the first half of the financial period focused on metallurgy. A combined ore sample was sent for
Quantitative Mineralogical Analysis (QMA) in order to assist with flowsheet development and refining of
metallurgical testwork parameters. The QMA was conducted by Ammtec using QEM*Scan and XRD technologies. The QMA
enabled quantitative mineralogy and liberation of the economic sulphides and gangue minerals to be established.

This analysis established that the major economic minerals for silver, copper, lead and zinc were silver-
bearing tetrahedrite, non-silver bearing tetrahedrite, galena and sphalerite. Liberation sizes were such that
production of a silver / copper / lead concentrate and a separate zinc concentrate is technically feasible
using the froth flotation process.

Testwork planned for the current quarter includes flotation testwork on a combined sample of historical surface
dump material at Webbs Silver. This testwork will focus on establishing metal recoveries, likely concentrate
grades and a flowsheet to concept study level.

In conjunction with the flotation testwork, gravity testwork will also be conducted using a Kelsey Jig. This
process offers the advantage that it does not require reagents and it is cost effective at relatively coarse
grind sizes.

Drilling

In October 2009, the Company undertook a 1,634 m reverse circulation (RC) drilling program. 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. 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.

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 March 2010.

A drilling program planned to begin in March-April 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.

EL 6269 - (Australia Oriental Minerals NL Joint Venture)

Under a Joint Venture Agreement, Silver Mines Ltd will earn 50% of EL 6269, owned by Australia Oriental
Minerals NL (AOM) by expending $95,000 on exploration (current expenditure is approximately $60,000). This work
has concentrated on the old Walla Walla Pb-Ag-Zn mine. In 2006, AOM undertook an extensive stream sediment and
rock chip study of this area revealing a zone of prospective ground extending from north of the Walla Walla
mine southward past the old Colandel mine. Silver Mines have followed this up with rock chip and most recently
an IP (Induced Polarisation) survey over the Walla Walla workings and along strike from them.

The existing workings reached a recorded depth of 30 metres and extend north and south of the main shaft. It is
understood that the workings were following a vertical vein type structure present within a fine grained
sedimentary unit.

Induced Polarisation Survey

Between the period of 08/07/09 and 16/07/09, Fender Geophysics on behalf of Silver Mines carried out an IP
survey over the historic Walla Walla silver. Map 3 shows a satellite image of the survey area with a chargeable
zone identified. Four lines of IP survey were completed on a 200 metre line spacing with 50 metre spaced survey
stations using a dipole-dipole configuration. All four lines show a chargeable zone starting at approximately
100 metres below surface consistent with disseminated mineralisation. The overall strike length to the IP
anomaly is 600 metres. As the anomaly exists across all lines, it would indicate that the anomaly has not been
closed off and could feasibly continue both north and south of the area surveyed.

The results recorded were quite conclusive in that there exists a clear IP anomaly around and below the
historical workings with values reaching 40 millivolts/volt against background values of < 10 millivolts/volt.
The IP response would appear to be caused by a feature that doesn't reach the surface and has a strike length
of over 600 metres. The resistivity data has also been effective in identifying changes in the geology across
the profile indicated by the presence of the resistive zone particularly to the west of the profile which
coincides withthe fine grained mafic outcrop observed on site. (Modified from Fender
Geophysics - IP Report Walla Walla September 09).
Silver Mines plan to extend the survey both to the north and south to close off the anomaly. It is expected
that drilling will follow this work.

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.

Silver Mines 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.

Significant Changes in the State of Affairs

There were no significant changes in the state of affairs in the Company during the half year.



Lead Auditor's Independence Declaration under Section 307C of the Corporations Act 2001

The lead auditor's independence declaration is set out on page 4 and forms part of the directors' report for
the half-year ended 31 December 2009.

This report is made in accordance with a resolution of the directors.



David Sutton
Chairman
Sydney 15th March 2010
                                                                         


Auditor's Independence Declaration under Section 307C of the Corporations Act 2001 to the directors of Silver
Mines Limited

I declare that, to the best of my knowledge and belief, in relation to our review of Silver Mines Limited for
the half-year ended 31 December 2009 there have been:

(i)   no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in
      relation to the review; and

(ii)  no contraventions of any applicable code of professional conduct in relation to the review.

                                                                  


Moyes Yong & Co                                         William M Moyes - Principal

Chartered Accountants                                   15th  March, 2010

Level 7, Norwich House.
6 O'Connell St.
Sydney. NSW.
                                                                  






                                             SILVER MINES LIMITED
                                                       
Statement of Comprehensive Income
for the Half-Year Ended 31 December 2009


                                                                                     
                                                                                2009             2008
                                                        Notes                      $                $
Revenue from continuing operations                                                    
Other Income                                                                   4,569           32,410
                                                                                      
Operating costs:                                                                      
                                                                                                      
- Accounting/ company secretarial                                            (24,000)         (18,000)
- Wages                                                                       (3,750)         (11,663)
- Share registry                                                              (6,547)         (16,812)
- Stock exchange fees                                                        (16,061)         (11,774)
- Bank fees                                                                     (910)            3,115
- Auditors                                                                   (13,442)         (10,950)
- Directors emoluments                                                       (57,500)         (59,955)
- Office expenses                                                            (12,472)          (9,057)
- IT & communications                                                           (273)         (12,511)
- Rent                                                                       (18,627)         (20,772)
- Depreciation                                                               (22,385)         (32,467)
- Insurance                                                                   (1,671)               -
- Professional advisors                                                            -          (12,590)
- Plus Market Listing fees                                                   (13,075)        (149,806)
- Other expenses from ordinary activities                                    (27,016)         (58,540)
                                                                          ----------------------------
Loss from continuing operations before income tax                           (213,160)        (389,372)

                                                                          ----------------------------

Income tax expense                                                                 -                -

                                                                          ---------------------------- 
Loss from continuing operations after income tax                            (213,160)        (389,372)
expense
                                                                          ----------------------------
                                                                                      
                                                                                      
                                                                               Cents            Cents
                                                                                              
Basic earnings per share                                                       (0.01)           (0.01)
Diluted earnings per share                                                     (0.01)           (0.01)








The above Statement of Comprehensive Income should be read in conjunction with the accompanying notes.


                                        STATEMENT OF CHANGES IN EQUITY
                                   FOR THE HALF YEAR ENDED 31 DECEMBER 2009
                                                       
                                                       
                                                       
                                                       

                                                                   $               $                 $

Balance at 1 July 2008                                     5,571,400        (854,222)        4,717,178
                                                                                                      
Total comprehensive loss                                                                              
Loss for period                                                    -        (389,372)         (389,372)
                                                          ---------------------------------------------
Total comprehensive loss for the period                            -        (389,372)         (389,372)
Equity Issued                                                                                         
Dividends paid or provided for                                     -               -                 -

                                                          ---------------------------------------------
Balance at 31 December 2008                                5,571,400      (1,243,594)        4,327,806
                                                          ---------------------------------------------
                                                                                      

Balance at 1 January 2009                                  5,571,400      (1,243,594)        4,327,806
                                                                                                      
Total comprehensive loss                                                                              
Loss for period                                                             (283,719)         (283,719)
                                                          ---------------------------------------------
Total comprehensive loss for the period                                     (283,719)         (283,719)
Equity Issued                                                176,392                           176,392
Dividends paid or provided for                                   
                                                          ---------------------------------------------
                                                          
                                                          ---------------------------------------------
Balance at 30 June 2009                                    5,747,792      (1,527,313)        4,220,479
                                                          ---------------------------------------------
                                                                       


Balance at 1 July 2009                                     5,747,792      (1,527,313)        4,220,479
                                                                                                      
Total comprehensive loss                                                                              
Loss for period                                                             (213,160)         (213,160)
                                                          ---------------------------------------------
Total comprehensive loss for the period                                     (213,160)         (213,160)
Equity Issued                                              1,016,918                         1,016,918
Dividends paid or provided for                                                                        
                                                          --------------------------------------------- 
Balance at 31 December 2009                                6,764,710      (1,740,473)        5,024,237
                                                          --------------------------------------------- 





The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.


                                                       
                                             SILVER MINES LIMITED
                                                       
Consolidated Statement of Financial Position
for the Half-Year Ended 31 December 2009


                                                                                     
                                                                 31 Dec 2009     30 June 2009
                                                                           $                $
                                                                                      
                                                                                      
Current Assets                                                                        
Cash and cash equivalents                                            663,111          373,395
Trade and other receivables                                          206,269           50,516
                                                                 -------------   -------------
                                                                                      
Total Current Assets                                                 869,381          423,911
                                                                 -------------   ------------- 
                                                                  
Non-Current Assets                                                                    
Property plant & equipment                                            85,671          124,422
Other Financial Assets                                                60,550           75,550
Capitalised exploration and tenement expenditure                   4,320,598        3,965,310
                                                                 -------------   ------------- 
Total Non-Current Assets                                           4,466,819        4,165,282
                                                                 -------------   -------------
                                                                  
Total Assets                                                       5,336,200        4,589,193
                                                                 -------------   -------------
                                                                                      
Current Liabilities                                                                   
Trade and other payables                                             223,969          228,841
Employee provisions                                                    1,108            7,934
                                                                 -------------   -------------
                                                                                      
Total Current Liabilities                                            225,077          236,775
                                                                 -------------   -------------
                                                                                      
Non Current Liabilities                                                               
Payables                                                              86,885          131,939
                                                                 -------------   -------------
                                                                      86,885          131,939
                                                                 -------------   -------------
                                                                      
Total Liabilities                                                    311,962          368,714
                                                                 -------------   -------------

                                                                                      
Net Assets                                                         5,024,237        4,220,479
                                                                 -------------   -------------
                                                                 -------------   -------------
                                                                                      
Equity                                                                                
Issued capital                                                     6,764,710        5,747,792
Accumulated losses                                                (1,740,473)      (1,527,313)
                                                                 -------------   ------------- 
                                                                                      
                                                                                      
Total Equity                                                       5,024,237        4,220,479
                                                                 -------------   ------------- 
                                                                 -------------   ------------- 





The above Statement of Cash Flows should be read in conjunction with the accompanying notes.



                                              SILVER MINES LIMITED
                                                       
Statements of Cash Flows
For the half-year ended 31 December 2009


                                                                    Half Year         Half Year 
                                                                        Ended             Ended
                                                                  31 Dec 2009       31 Dec 2008
                                                                            $                 $
                                                                                       
Cash Flows From Operating Activities                                                   
Interest received                                                       4,569            32,410
Interest Paid                                                          (2,410)                -
Payments to suppliers and employees                                  (381,850)         (310,022)
                                                                 -------------     ------------- 
                                                                                       
Net cash inflows (outflows) from operating                         
activities                                                           (379,691)         (277,612)
                                                                 -------------     ------------- 
                                                                                       
Cash Flows From Investing Activities                                                   
Deferred Exploration                                                 (355,288)         (764,375)
Exploration Bonds                                                      15,000            50,000
Proceed on Sale of property plant & equipment                           2,437                 -
                                                                 -------------     ------------- 
                                                                                       
Net cash inflows (outflows) from investing                           
activities                                                           (337,851)         (714,375)
                                                                 -------------     ------------- 
                                                                                       
Cash Flows From Financing Activities                                                   
Lease Liability                                                        (9,660)           18,654
Equity Issued                                                       1,016,918         
Share fund raising costs                                                    -                 -
                                                                 -------------     ------------- 
                                                                                       
Net cash inflows from financing activities                          1,007,258            18,654
                                                                 -------------     ------------- 
                                                                                       
Net Increase (Decrease) in Cash Held                                  289,716          (973,333)
Cash at the Beginning of the Financial Year                           373,395         1,491,991
                                                                 -------------     ------------- 
                                                                                       
Cash at the end of the Half-Year                                      663,111           518,658
                                                                 -------------     ------------- 
                                                                 -------------     ------------- 



The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.









                                             SILVER MINES LIMITED
                                                       
                                       NOTES TO THE FINANCIAL STATEMENTS
                                   FOR THE HALF YEAR ENDED 31 DECEMBER 2008
                                                       
1.    BASIS OF PREPARATION OF THE HALF-YEAR FINANCIAL REPORT

      
      These general purpose financial statements for the interim half-year reporting period ended 31 December
      2009 have been prepared in accordance with requirements of the Corporations Act 2001 and Australian
      Accounting Standards including AASB 134: Interim Financial Reporting. Compliance with Australian
      Accounting Standards ensures that the financial statements and notes also comply with International
      Financial Reporting Standards.
      
      This interim financial report is intended to provide users with an update on the latest annual financial
      statements of Silver Mines Limited. As such, it does not contain information that represents relatively
      insignificant changes occurring during the half-year within the Company. It is therefore recommended
      that this financial report be read in conjunction with the annual financial statements of the Company
      for the year ended 30 June 2009, together with any public announcements made during the half-year.
      
      The same accounting policies and methods of computation have been followed in this interim financial
      report as were applied in the most recent annual financial statements except for the adoption of the
      following new and revised Accounting Standards.
      
      Accounting Standards not Previously Applied
      
      The Company has adopted the following new and revised Australian Accounting Standards issued by the AASB
      which are mandatory to apply to the current interim period. Disclosures required by these Standards that
      are deemed material have been included in this financial report on the basis that they represent a
      significant change in information from that previously made available.
      
      Presentation of Financial Statements
      
      AASB 101 prescribes the contents and structure of the financial statements. Changes reflected in this
      financial report include:
      
      *     the replacement of Income Statement with Statement of Comprehensive Income. Items of income and expense
            not recognised in profit or loss are now disclosed as components of 'other comprehensive income'. In this
            regard, such items are no longer reflected as equity movements in the Statement of Changes in Equity;
            
      *     the adoption of the separate income statement/single statement approach to the presentation of the
            Statement of Comprehensive Income;
            
      *     other financial statements are renamed in accordance with the Standard; and
      
      *     presentation of a third Statement of Financial Position as at the beginning of a comparative financial
            year where relevant amounts have been affected by a retrospective change in accounting policy or material
            reclassification of items.
           
      Operating Segments
      
      From 1 January 2009, operating segments are identified and segment information disclosed on the basis of
      internal reports that are regularly provided to, or reviewed by, the Company's chief operating decision
      maker which, for the Company, is the board of directors. In this regard, such information is provided
      using different measures to those used in preparing the Statement of Comprehensive Income and Statement
      of Financial Position. Reconciliations of such management information to the statutory information
      contained in the interim financial report have been included.
      
      As a result of the adoption of the revised AASB 8, certain cash generating units have been redefined
      having regard to the requirements in AASB 136: Impairment of Assets.     
       
      These half-year financial statements do not include all the notes of the type normally included in an
      annual financial report and therefore cannot be expected to provide as full an understanding of the
      financial performance, financial position and financing and investing activities of the consolidated
      entity as the full financial Report.  Accordingly, these half-year financial statements are to be read
      in conjunction with the annual report for the year ended 30 June 2009 and any public announcements made
      by Silver Mines Limited during the interim reporting period in accordance with the continuous
      disclosure requirements of the Corporations Act 2001.
       
      The same accounting policies and methods of computation have generally been followed in these half-year
      financial statements as compared with the most recent Annual Financial Report.
      
      Significant Accounting Policies
      
      The accounting policies applied by the company in this interim financial report are the same as those
      applied by the company in its financial report for the previous financial year and the corresponding
      interim reporting period.
      
      Estimates
      
      The preparation of these half-year financial statements requires management to make judgements,
      estimates and assumptions that affect the application of accounting policies and the reported amounts
      of assets and liabilities, income and expense.  Actual results may differ from these estimates.
       
      In preparing these half-year financial statements, the significant judgements made by the management in
      applying the Company's accounting policies and the key sources of estimation uncertainty were the same
      as those that applied to the Companys' financial report as at and for the year ended 30 June 2009.
      
      Going Concern
      
      The directors believe that the going concern basis is appropriate for the preparation and presentation
      of the financial statements as the Company has sufficient cash to continue to operate for the
      foreseeable future. Further, the Company is confident of being able to raise additional funds through
      share placement which would enhance cash flow and allow a reduced exploration programme on the
      Company's New England leases.
       
      The directors have prepared a forecast for the foreseeable future reflecting the abovementioned
      expectations and their effect on the Company. The achievement of the forecast is largely dependent upon
      the following matters, the outcomes of which are uncertain:
       
      *     The ability of the Company to raise additional equity capital, and or
      *     Farm-out some of the Company's interest in the New England leases.
       
      The directors believe that they have sufficient cash for the Company to meet its debts as and when they
      become due and payable.

      Contingent Liabilities
      
      The Company has no contingent liabilities.


      Events occurring after balance sheet date
      
      There were no significant events after the reporting date.
      
      Dividends
      
      No dividends have No dividends been paid during the period.
      
      
      
                                             SILVER MINES LIMITED
                                       NOTES TO THE FINANCIAL STATEMENTS
                                   FOR THE HALF YEAR ENDED 31 DECEMBER 2009

                                                       
                                                       
                                                                                     
                                                                31 Dec 2009      31 Dec 2008
                                                                          $                $
                                                                                      
2.    REVENUE                                                                         
                                                                                      
                                                                                      
Revenue from outside the operating activities                                         
Interest received                                                    32,410           32,410
                                                               -------------     ------------- 
                                                               -------------     ------------- 

                                                                                      
3.    CASH AND CASH EQUIVALENTS'                                                      
                                                                                      
Cash at bank - operating account                                    363,506          503,437
Deposit                                                             298,594           15,000
Cash on hand                                                          1,011              221
                                                               -------------------------------
                                                                
Cash at bank and on hand                                            663,111          518,658
                                                               ------------------------------- 
                                                               -------------------------------
                                                               -------------------------------
                                                                
      
4.    SEGMENT INFORMATION
      
      Business Segments
      
      The Company operates in the mining industry in Australia only. Operations comprise the exploration,
      development and mining of precious minerals.
      
      
      
                                             SILVER MINES LIMITED
                                       NOTES TO THE FINANCIAL STATEMENTS
                                   FOR THE HALF YEAR ENDED 31 DECEMBER 2009
      
5.    CAPITAL AND RESERVES
      
                                                                                               
                                            Half Year                                         Half Year
                             Dec 2009        Dec 2009        Dec 2009         Dec 2008         Dec 2008       Dec 2008
                                          Issue Price               $        Number of      Issue Price              $
                                                    $                           shares                $
                                                                                                               
 Opening balance           43,447,505               -                       43,497,505                -      5,571,400
 
 Issues of Ordinary                                                                  -                               -
 Shares During the                                                                                    -
 Half-Year
 
 C Straw Bonus                695,000           0.035          24,325                                                        
 
 Placement                  3,200,000           0.035         112,000                                                       
 
 Placement                  7,900,000           0.040         316,000                                                       
 
 Directors                  1,957,687           0.046          90,000                                                        
 
 Placement                  6,250,000           0.080         500,000                                                       
 
 Cost of Issue                                                (25,607)                                                      
                          -------------------------------------------------------------------------------------------- 
                          -------------------------------------------------------------------------------------------- 
 Closing balance           68,805,192                       6,764,509       43,497,505                -      5,571,400
                          --------------------------------------------------------------------------------------------     
                          -------------------------------------------------------------------------------------------- 
                          
      
6.    CONTINGENT LIABILITIES
      
      There has been no change in contingent liabilities since the last annual reporting date.



7.    SUBSEQUENT EVENTS
      
      There has not arisen in the interval between the end of the financial year and the date of this report
      any item, transaction or event of a material and unusual nature likely, in the opinion of the directors
      of the company, to affect significantly the operations of the company, the results of those operations,
      or the state of affairs of the company in future financial years.
       
       
       
                                             SILVER MINES LIMITED
                                                       
                                             DIRECTORS DECLARATION


Declaration by Directors
 
The directors of the company declare that:
 
(a) The financial statements and notes set out on pages 5 to 12  are in accordance with the Corporations Act 2001
    and:
 
     (i)  comply with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations
          2001; and

     (ii) give a true and fair view of the consolidated entity's financial position as at 30 June 2009 and of its
          performance for the half-year ended on that date.

 
(b) In the directors' opinion, there are reasonable grounds to believe that the company will be able
    to pay its debts as and when they become due and payable.
 
 
This declaration is made in accordance with a resolution of the Board of Directors and is signed for and
behalf of the directors by:




Dated at Sydney this 15th day of March 2009



..........................
David Sutton
Chairman

                                             SILVER MINES LIMITED
                                                       






INDEPENDENT AUDITOR'S REVIEW REPORT - SILVER MINES LIMITED

To the members of Silver Mines Limited
We have reviewed the accompanying half-year financial report of Silver Mines Limited ("the Company"), which
comprises the Consolidated Statement of Financial Position as at 31st December, 2009 and the Statement of
Comprehensive Income, Statement of Changes in Equity, Statements of Cash Flows for the half-year ended on that
date, a summary of significant accounting policies, other selected explanatory Notes and the Directors'
Declaration.

Directors' Responsibility for the Half-Year Financial Report
The directors of the Company are responsible for the preparation and fair presentation of the half-year
financial report in accordance with Australian Accounting Standards (including the Australian Accounting
Interpretations) and the Corporations Act 2001. This responsibility includes designing, implementing and
maintaining internal controls relevant to the preparation and fair presentation of the half-year financial
report that is free from material misstatement, whether due to fraud or error; selecting and applying
appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditor's Responsibility
Our responsibility is to express a conclusion on the half-year financial report based on our review. We
conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of an Interim
Financial Report Performed by the Independent Auditor of the Entity, in order to state whether, on the basis of
the procedures described, we have become aware of any matter that makes us believe that the financial report is
not in accordance with the Corporations Act 2001 including: giving a true and fair view of the Company's
financial position as at 31 December 2009 and its performance for the half-year ended on that date; and
complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001.
As the auditor of Silver Mines Limited, ASRE 2410 requires that we comply with the ethical requirements
relevant to the audit of the annual financial report.

A review of a half-year financial report consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review procedures. A review is
substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and
consequently does not enable us to obtain assurance that we would become aware of all significant matters that
might be identified in an audit. Accordingly, we do not express an audit opinion.

Independence
In conducting our review, we have complied with the independence requirements of the Corporations Act 2001.

Conclusion
Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that
the half-year financial report of Silver Mines Limited is not in accordance with the Corporations Act 2001
including:

(a)     giving a true and fair view of the Company's financial position as at 31 December 2008 and of its
        performance for the half-year ended on that date; and
        
(b)     complying with Accounting Standard AASB 134 Interim Financial Reporting and Corporations Regulations
        2001.


Moyes Yong & Co                                         William M Moyes - Principal

Chartered Accountants                                   15th March, 2010

Level 7, Norwich House.
6 O'Connell St.
Sydney. NSW.


                                             SILVER MINES LIMITED
                                              CORPORATE DIRECTORY
                                                         
                                                         
Directors                                                Auditors
                                                         
David Sutton (Non -Executive Chairman)                   Moyes Yong & Co
David Straw (Non-Executive Director)                     Level 7, Norwich House.
Malcolm Bird (Non-Executive Director)                    6 O'Connell St,
                                                         Sydney, NSW 2011
                                                         
Company Secretary                                        Company's Solicitor
                                                         
Kevin Martin Lynn                                        Peter Kemp Solicitors
                                                         Level 7, 60 Castlereagh Street
                                                         Sydney, NSW 2000
Australian Company Number                                

107 452 942

Registered Office

11 Rodborough Avenue
Crows Nest, NSW, 2065
Phone: +61 2 9455 0280
Fax: +61 2 9455 0879
E-mail: info@silverminesltd.com.au
Website:"http://www.silverminesltd.com.au";

Bank

National Australia Bank Limited
345 George St
Sydney NSW 2000

Share Registry

Registries Limited
Level 7, 207 Kent Street,
Sydney, NSW, 2000

Contact Information

  • Silver Mines