Silver Mines
LSE : SVLP

March 14, 2012 08:12 ET

Half year financial report

                                                       
                                             Silver Mines Limited
                                                ACN 107 452 942
                                                       
                                          HALF YEAR FINANCIAL REPORT
                                                       
                                               31 DECEMBER 2011
     
     
     
                                                      
                                            SILVER MINES LIMITED

DIRECTORS' REPORT

The  Directors present their report together with the financial statements of Silver Mines Limited  for  the
half year ended 31 December 2011.

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)
Malcolm Bird (Non-Executive Director)
Charles Straw (Managing Director)

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

At  the  end  of  the  reporting period, Silver Mines Limited recorded a loss from  ordinary  activities  of
$403,332 (31 December 2010: $1,080,284).

During  the  reporting period, the Company continued to explore its projects in the New  England  region  of
north-eastern  NSW  and, in particular, the Company has completed additional reverse  circulation  (RC)  and
diamond  drilling at the 100% owned Webbs silver project.  Details of operational activities are  summarised
below.

Drilling

A  total of 10,813m of RC drilling in 144 holes, and 1,825.2m of diamond core in 19 holes were completed  at
Webbs.  The aim of this program was:

     * to improve the confidence in the current resource by upgrading much of the current inferred resource
       into the indicated and/or measured JORC categories;
     * to infill gaps in the existing drilling pattern, particularly in the upper 120m of the deposit; and
     * as well as test for mineralised strike extensions to the current resource, in particular within and
       adjacent to the existing optimised open pit shells derived from the Scoping Study.

Some drilling was also undertaken at exploration targets to the north and south in untested portions of  the
Webbs trend.

Results  from the drilling will be incorporated into the resource database and an updated resource  will  be
estimated.  The inclusion of more diamond drilling is a crucial part of the resource upgrade and will enable
more  detailed  geological interpretation to be undertaken thus improving confidence  in  the  modelling  in
association with infill RC drilling. Diamond core will also be utilised for metallurgical test- work and  to
derive geotechnical data.

Silver Mines has released results for all drilling completed during the reporting period, and readers should
refer to ASX announcements made during this period.  Results to date have again been highly encouraging  and
strongly  support  previous interpretations.  The deposit remains open, in particular at depth  and  further
drilling should continue to grow the deposit.

Resource Update

Independent  resource consultants, GeoRes have been engaged to complete a new resource  estimate  for  Webbs
that  will  incorporate  most of the new drilling.  Silver Mines is confident  that  much  of  the  inferred
resources  will be upgraded to the indicated category under JORC and that total silver ounces will increase,
particularly  within and adjacent to the current optimized pit shells derived from the Scoping  Study  which
should have a positive impact on the project.

SILVER MINES LIMITED

DIRECTORS' REPORT (continued)

Other Projects

Silver Mines has numerous other projects in the New England and southern NSW.  Exploration on these projects
generally included exploration planning for future drilling and other programs.
Earlier  in  the  reporting  period,  Silver Mines released results from  rock  chip  sampling  and  induced
polarization surveys on its 100% owned Exploration Licenses 6771 and 6114.  Results were highly  encouraging
and  revealed  numerous  new  targets  associated with silver rich  polymetallic  mineralisation  and  semi-
coincident  IP  anomalies.  Some IP anomalies are proximal to elevated geochemistry and  old  workings.   IP
anomalies not associated with old workings remain to be mapped and sampled.
Mineralisation  is  associated with sulphide veining and disseminations in altered  sediments  and  granitic
rocks,  proximal to the Triassic Mole Granite - which is a major source of local silver base metal  and  tin
mineralisation.   Silver Mines considers the style of mineralisation identified during this  program  to  be
similar to that which occurs at the Webbs Silver deposit defined as narrow zones of 'higher grade' enveloped
in lower grade altered and mineralized country rock.

Webbs Metallurgy

A  key aspect to the on-going evaluation of Webbs is the metallurgical characteristics of the deposit.   The
production of metal concentrate(s) for sale and the possibility of doré production as a value-add option  is
being  considered. Previous test-work on concentrate production and more recent test-work investigating  the
potential for doré production have yielded favourable results.  Silver Mines has engaged Mineralurgy Pty Ltd
to  instigate  and supervise a pre-feasibility level metallurgical test-work program and develop  a  process
flow sheet based on the afore-mentioned products.

Future Activities

Additional  drilling is planned at Webbs, in Q2 2012.  This will be largely directed by the results  of  the
new  resource estimate and the additional geological information gained from a 'tighter' drill pattern  used
in  the last program, including additional diamond core.  This data will enable optimal targeting and  drill
spacing  to improve efficiency and reduce costs in 'chasing' the mineralisation deeper.  The aim  of  future
drilling  will  be  to extend the resource at depth and infill some near surface gaps in the  current  drill
pattern. Additional exploration targets around Webbs may also be tested.
Metallurgical test-work on Webbs' mineralisation will continue and a process flow sheet will be selected and
optimised  in  order  to  maximise any future project revenue flow.  The drill core from  the  2011  diamond
program  will  provide  metallurgical samples for pre-feasibility level  metallurgical  test-work  which  is
scheduled for completion during 2012.

Exploration  programs including drilling are planned for some New England projects and  other  Silver  Mines
properties.

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 3 and forms part of the directors' report for
the half year ended 31 December 2011.

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




David Sutton
Chairman
Sydney, 14th March 2012

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 2011 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.






William M Moyes - Partner

Moyes Yong   & Co Partnership
Chartered Accountants
Level 7, Norwich House
6 O'Connell Street
Sydney NSW 2000



Sydney, 14th March 2012



                                            SILVER MINES LIMITED
                                                      
Statement of Comprehensive Income
for the Half Year Ended 31 December 2011


                                                                           --------------------------
                                                         Note              Dec 2011          Dec 2010
                                                                              $                 $
                                                                           --------------------------
Revenue from continuing operations                                                                    
Other Income                                               2                  57,587           21,075
                                                                                                      
Operating costs:                                                                                      
                                                                                                      
- Accounting/company secretarial                                             (28,439)        (154,278)
- Wages                                                                             -         (31,814)
- Share registry                                                             (43,926)         (32,105)
- Stock exchange fees                                                        (47,777)         (28,897)
- Bank fees                                                                   (2,751)          (3,277)
- Auditors                                                                   (13,700)         (11,850)
- Directors emoluments                                                       (39,000)        (645,223)
- Office expenses                                                             (6,781)         (25,698)
- IT & communications                                                        (13,324)         (17,975)
- Rent                                                                      (120,000)         (20,000)
- Depreciation                                                               (12,152)         (19,369)
- Insurance                                                                  (14,409)          (2,688)
- Professional advisors                                                       (4,290)          (9,649)
- Plus Market Listing fees                                                    (5,579)           2,715
- Other expenses from ordinary activities                                   (108,789)        (101,251)
                                                                          -----------        ---------
Loss from continuing operations before                                                      
income tax                                                                  (403,332)      (1,080,284)
                                                                                                      
Income tax expense                                                                 -                -
                                                                                                      
                                                                          -----------        ---------
Loss from continuing operations after income tax                                                      
expense                                                                     (403,332)      (1,080,284)
                                                                          -----------        ---------
                                                                          -----------        ---------
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
Basic earnings per share                                                      (0.003)          (0.010)
Diluted earnings per share                                                    (0.003)          (0.010)




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

                                       
                                          SILVER MINES LIMITED

Statement of Financial Position
for the Half Year Ended 31 December 2011
                                                                   ---------------------------- 
                                                                   31 Dec 2011      30 Jun 2011
                                                       Note              $                $
                                                                   ---------------------------- 
                                                                                      
Current Assets                                                                        
Cash and cash equivalents                               3            1,454,058        3,371,757
Receivables                                                            658,398        1,201,356
                                                                   -------------     -----------
                                                                                      
Total Current Assets                                                 2,112,456        4,573,113
                                                                   -------------     -----------
                                                                                      
Non-Current Assets                                                                    
Other Financial Assets                                                 110,000          120,550
Intangible assets - Deferred exploration and                                          
development                                                          9,995,318        7,675,327
Property, plant & equipment                                             35,727           47,880
Investments                                                            100,000          100,000
                                                                   -------------     -----------
                   
Total Non-Current Assets                                            10,241,045        7,943,757
                                                                   -------------     -----------
                   
Total Assets                                                        12,353,501       12,516,870
                                                                   -------------     -----------
                   
Current Liabilities                                                                   
Payables                                                                92,928          142,120
Provisions                                                              27,146           32,598
                                                                   -------------     -----------
                   
Total Current Liabilities                                              120,074          174,718
                                                                   -------------     -----------
                   
Non Current Liabilities                                                               
Payables                                                                48,242           57,903
                                                                   -------------     -----------

                                                                        48,242           57,903
                                                                   -------------     -----------

Total Liabilities                                                      168,316          232,621
                                                                   -------------     -----------
                                                                                      
Net Assets                                                          12,185,185       12,284,249
                                                                   -------------     -----------
                                                                   -------------     -----------

                                                                                      
Equity                                                                                
Contributed equity                                                  15,166,097       14,861,829
Reserves                                                             1,522,857        1,522,857
Accumulated losses                                                  (4,503,769)      (4,100,437)
                                                                   -------------     -----------
                   
Total Equity                                                        12,185,185       12,284,249
                                                                   -------------     -----------
                                                                   -------------     -----------




The above Statement of Financial Position should be read in conjunction with the accompanying notes.
                                          
                                          
                                          SILVER MINES LIMITED
                                                      
                                                      
Statement of Changes in Equity
for the Half Year Ended 31 December 2011

                                                   --------------------------------------------------------------------
                                                    Ordinary Shares    Share Option     Accumulated              Total
                                                                         Reserve           Losses
                                                           $                                 $                     $
                                                   --------------------------------------------------------------------
Balance at 1 January 2010                                 6,764,710               -      (1,740,473)         5,024,237
                                                                                                                       
Total comprehensive loss                                                                                               
Loss for period                                                   -               -        (278,340)          (278,340)
                                                   --------------------------------------------------------------------
Total comprehensive loss for the period                           -               -        (278,340)          (278,340)
Equity Issued                                               409,816               -               -            409,816
Dividends paid or provided for                                    -               -               -                  -
                                                   --------------------------------------------------------------------
Balance at 30 June 2010                                   7,174,526               -      (2,018,813)         5,155,713
                                                   --------------------------------------------------------------------
                                                   --------------------------------------------------------------------
Balance at 1 July 2010                                    7,174,526               -      (2,018,813)         5,155,713
                                                                                                                       
Total comprehensive loss                                                                                               
Loss for period                                                   -               -      (1,080,284)        (1,080,284)
                                                   --------------------------------------------------------------------
Total comprehensive loss for the period                           -               -      (1,080,284)        (1,080,284)
Equity Issued                                             4,320,426               -               -          4,320,426
Share option reserve                                              -         785,712               -            785,712
Dividends paid or provided for                                    -               -               -                  -
                                                   --------------------------------------------------------------------
Balance at 31 December 2010                              11,494,952         785,712      (3,099,097)         9,181,567
                                                   --------------------------------------------------------------------
                                                   --------------------------------------------------------------------
Balance at 1 January 2011                                11,494,952         785,712      (3,099,097)         9,181,567
                                                                                                                       
Total comprehensive loss                                                                                               
Loss for period                                                   -               -      (1,001,340)        (1,001,340)
                                                   --------------------------------------------------------------------
Total comprehensive loss for the period                           -               -      (1,001,340)        (1,001,340)
Equity Issued                                             3,366,877               -               -          3,366,877
Share option reserve                                              -         737,145               -            737,145
Dividends paid or provided for                                    -               -               -                  -
                                                   --------------------------------------------------------------------
Balance at 30 June 2011                                  14,861,829       1,522,857      (4,100,437)        12,284,249
                                                   --------------------------------------------------------------------
                                                   --------------------------------------------------------------------
Balance at 1 July 2011                                   14,861,829       1,522,857      (4,100,437)        12,284,249
                                                                                                                       
Total comprehensive loss                                                                                               
Loss for period                                                   -               -        (403,332)          (403,332)
                                                   --------------------------------------------------------------------
Total comprehensive loss for the period                           -               -        (403,332)          (403,332)
Equity Issued                                               304,268               -               -            304,268
Share option reserve                                              -               -               -                  -
Dividends paid or provided for                                    -               -               -                  -
                                                   --------------------------------------------------------------------
Balance at 31 December 2011                              15,166,097       1,522,857      (4,503,769)        12,185,185
                                                   --------------------------------------------------------------------
                                                   --------------------------------------------------------------------


The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.
                                                      
                                            
                                            SILVER MINES LIMITED
                                                      
Statement of Cash Flows
For the Half Year ended 31 December 2011

                                                                 -----------------------------------
                                                                  Half Year Ended  Half Year Ended
                                                                    31 Dec 2011      31 Dec 2010
                                                                         $                $
                                                                 -----------------------------------
Cash Flows From Operating Activities                                                   
Interest received                                                       57,587            21,075
Interest Paid                                                           (2,412)           (2,414)
Payments to suppliers and employees                                   (469,607)         (463,108)
                                                                 ----------------- -----------------
Net cash outflows from operating activities                           (414,432)         (444,447)
                                                                 ----------------- -----------------
Cash Flows From Investing Activities                                                   
Deferred Exploration                                                (1,808,424)       (2,176,796)
Investments                                                                             (100,000)
Exploration Bonds                                                       10,550           (50,000)
Proceed on Sale of property plant & equipment                                -                 -
                                                                 ----------------- -----------------
Net cash outflows from investing activities                         (1,797,874)       (2,326,796)
                                                                 ----------------- -----------------
Cash Flows From Financing Activities                                                   
Lease Liability                                                         (9,661)           (9,661)
Equity Issued                                                          304,268         4,320,426
Share fund raising costs                                                                       -
                                                                 ----------------- -----------------
Net cash inflows from financing activities                             294,607         4,310,765
                                                                 ----------------- -----------------
Net (Decrease)/Increase in Cash Held                                (1,917,699)        1,539,522
Cash at the Beginning of the Financial Year                          3,371,757           388,302
                                                                 ----------------- -----------------
Cash at the end of the Half Year                                     1,454,058         1,927,824
                                                                 ----------------- -----------------
                                                                 ----------------- -----------------


The above Statement of Cash Flows should be read in conjunction with the accompanying notes.
                                           
                                           
                                           SILVER MINES LIMITED
                                                      
                                      NOTES TO THE FINANCIAL STATEMENTS
                                  FOR THE HALF YEAR ENDED 31 DECEMBER 2011
                                                      
1.     BASIS OF PREPARATION OF THE HALF YEAR FINANCIAL REPORT

       Statement of Compliance
      
       This  general purpose financial report for the interim financial half year reporting period ended  31
       December  2011  has  been prepared in accordance with Accounting Standard AASB 134 Interim  Financial
       Reporting and the Corporations Act 2001.
       
       The historical cost basis has been used.
       
       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 2011 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 Company's financial report as at and for the year ended  30  June
       2011.
      
       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 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.
                                                                     -------------------------------
                                                                       31 Dec 2011      31 Dec 2010
                                                                            $                $
                                                                     -------------------------------
2.    REVENUE                                                                         
                                                                                      
      Revenue from outside the operating activities                                         
      Interest received                                                     57,587           21,075
                                                                     ---------------- --------------
                                                                     ---------------- --------------
                 
                                                                     -------------------------------
                                                                       31 Dec 2011      30 Jun 2011
                                                                            $                $
                                                                     -------------------------------
3.    CASH AND CASH EQUIVALENTS                                                       
                                                                                      
      Cash at bank and on hand                                           1,454,058        3,371,757
                                                                     -------------------------------
                                                                     -------------------------------
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.
      
5.    CAPITAL AND RESERVES
                         ------------------------------------------------------------------------------------------
                                          Half Year                                       Half Year
                         ------------------------------------------------------------------------------------------

                          Dec 2011         Dec 2011       Dec 2011         Dec 2010        Dec 2010       Dec 2010
                         ------------------------------------------------------------------------------------------
                                         Issue Price                                     Issue Price          
                           Shares             $               $             Shares            $              $
                         ------------------------------------------------------------------------------------------
                                                                                     
 Opening balance          135,105,618                      14,861,829       74,181,662           -       74,181,662
 Issues of Ordinary                                                                                                
 Shares during the
 Half Year
 Placement                          -           -                   -      20,000,000         0.09        1,800,000
 Options exercised          1,000,000        0.17             170,000       2,386,808         0.12          286,417
 Options exercised                850        0.35                 298               -            -                -
 Placement                          -           -                   -      10,000,000         0.24        2,400,000
                         ------------------------------------------------------------------------------------------

 Subtotal                 136,106,468                      15,032,127     106,568,470                    11,660,943
                                                                                                                   
 Options issued            13,609,882        0.01             136,107                                              
 Option placement                                                                             0.01          150,511
 Cost of issue                                                 (2,137)                                     (316,502)
                         ------------------------------------------------------------------------------------------

 Closing Balance          149,716,350                      15,166,097     106,568,470                    11,494,952
                         ------------------------------------------------------------------------------------------
                         ------------------------------------------------------------------------------------------



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.
      
8.    RELATED PARTIES
      
      Related parties of the Company fall into the following categories:
      
      8.1   Trading transactions
      
      During  the  half  year,  the  Company entered into the following trading  transactions  with  related
      parties:
      
       (i)  Centric  Minerals Management Pty Ltd (CMM) was paid $334,550 (Dec 2010: $44,000)  to  provide
            management, administrative services (including provision of office space and facilities) and geological
            consulting services to the Company.  As at balance date the company owed $nil (Dec 2010: $nil) to CMM.
            Messrs Sutton and Straw are directors of CMM.
            
       (ii) Dayton Way Financial Pty Ltd, an entity controlled by Mr Sutton, received $nil (Dec 2010: $117,991)
            from the Company in relation to fees associated with raising equity for the Company.
            
       (iii)Davcha Resources Pty Ltd, an entity controlled by Mr Straw, received $nil (Dec 2010: $30,055) from
            the Company in relation to geological consulting services for the Company.
            
       (iv) Strategy-Matters International Pty Ltd, an entity controlled by Mr Lynn, received $30,800 (Dec 2010;
            $32,450) from the Company in relation to accounting and secretarial services for the Company.
            
       (v)  During the previous financial year the Company paid $1,191,594 for drilling services  to  New
            Competitive Drilling Pty Ltd (NCD), an entity involved in drilling services to the exploration sector, 
            which represented a prepayment for the drilling of 17,023 metres at $70 per metre. The Company 
            utilised 3,358 metres at $70 per metre of this prepayment during the financial year ended 30 June 
            2011 and as at 30 June 2011 the Company had 13,665 metres at $70 per metre representing $956,534 
            available for future drilling
            
            During  the half year the Company utilised a further 6,839 metres at $70 per metre.  As  at  31
            December  2011 the Company has a remaining balance of prepaid drilling of 6,826 metres  at  $70
            per  metre  representing $477,820 available for future drilling.  Also, during the  half  year,
            the  Company  paid NCD $170,536 (Dec 2010: $nil) for drill rig mobilisation, slow drilling  and
            field consumables.  Mr Straw is a director and Mr Lynn is company secretary of NCD.
            
      8.2   Other related party transactions
      
      8.2.1 Equity interests in related parties
      
       (i)  The Company holds 250,000 fully paid ordinary shares escrowed at 40 cents each in Precious Metals
            Investments Ltd (PMI), an entity involved in exploration for precious metals.
            The  shares  are  held in escrow for a period of 2 years from 17 February 2012 being  the  date
            that  PMI  was  listed  on  the National Stock Exchange.  Messrs Sutton,  Straw  and  Lynn  are
            directors of PMI.
             
       
                                            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 4 to 10  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 31 December 2011 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 14th day of March 2012




---------------
David Sutton
Chairman

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 statement of financial position as at 31 December 2011, the comprehensive statement of income,
statement of changes in equity and cash flow statement 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 2011 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 2011 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.




William M Moyes - Partner

Moyes Yong   & Co Partnership
Chartered Accountants
Level 7, Norwich House
6 O'Connell Street
Sydney NSW 2000

Sydney, 14th March 2012

                                             SILVER MINES LIMITED
                                              CORPORATE DIRECTORY
                                                         
                                                         
Directors                                                Auditors
                                                         
David Sutton (Non -Executive Chairman)                   Moyes Yong & Co
Malcolm Bird (Non-Executive Director)                    Chartered Accountants
Charles Straw (Managing Director)                        Level 7, Norwich House
                                                         6 O'Connell Street
Company Secretary                                        Sydney, NSW 2000
                                                         
Kevin Martin Lynn                                        Company's Solicitor
                                                         
Australian Company Number                                Macpherson + Kelly
                                                         Level 11,
107 452 942                                              56 Pitt Street
                                                         Sydney, NSW 2000
Registered Office                                        

Level 5, FKP House
17-19 Bridge Street
Sydney, NSW, 2000
Phone: +61 2 9253 0900
Fax: +61 2 9253 0901
E-mail: info@silverminesltd.com.au
Website: www.silverminesltd.com.au

Bank

National Australia Bank Limited
255 George St
Sydney NSW 2000

Share Registry

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

Contact Information

  • Silver Mines