Silver Mines

September 07, 2011 06:09 ET

Letter to Shareholders


                                                                               Silver Mines Limited ACN 107 452 942
                                                                                                 FKP House, Level 5
                                                                                                17-19 Bridge Street
                                                                                                  Sydney, NSW, 2065
                                                                                                 P: +61 2 9253 0900

                                                                                              7 September 2011
                                              Non-renounceable Issue

Dear Shareholder,

The  Directors  of  Silver  Mines Limited (the Company) are pleased to offer Eligible  Shareholders  the  right  to
participate in a pro-rata non-renounceable offer to be issued with New Options on the basis of one (1)  New  Option
for every ten (10) existing Shares held by the Eligible Shareholder at the record date of 14 September 2011 (Record
Date) at an issue price of $0.01 each.

The  funds raised by the issue will be applied to continue a drilling program at the Webbs Silver Project,  in  the
New England Area, NSW and to provide working capital for the Company.

The  Company remains focused on Webbs which continues to deliver excellent drilling results. Our recent 11,000m  RC
drilling  program, completed in late August, shows that the silver-rich polymetallic mineralisation  still  remains
open in all directions and so further infill as well as extensional drilling is warranted. High grades along strike
from  the  historic  Webbs underground mine as well as at Webbs South show the deposit is  still  growing  and  our
expected resource upgrade in November is expected to not only grow in size but also in confidence. Diamond drilling
and  further RC drilling into the deposit over the coming months will target both untested near surface  and  depth
extensions  as  well as provide more detailed data to feed into our assessment of the potential of the  deposit  to
become a mining operation in the future.

The  Board  remains optimistic about Webbs as well as the other excellent potential which exists  in  our  regional

The  Board  was very pleased with the success of our last Rights Issue for Options which provided all  Shareholders
with  an  opportunity  to  continue to support the growth of the Company by participating  in  a  capital  raising.
Feedback from Shareholders was very positive and as such this Rights Issue for Options is being made so once  again
all Shareholders can participate.

We  appreciate the continued support of our loyal Shareholders and believe that the offer contained in  this  Short
Form  Prospectus gives the Company's Shareholders the ability to participate further, on favourable terms,  in  our
2011 exploration drilling programme.

The Board recommends this Offer to you.

Details of the Offer

The  Offer is on the basis of one (1) New Option for every ten (10) shares held at the record date of Wednesday  14
September  2011  (Record Date). The Options have an exercise price of 35 cents and expire on Wednesday  31  October

The Company is inviting Existing Shareholders to subscribe for New Options at an issue price of $0.01 each.

The  Offer  is  non-renounceable and is available to all Eligible Shareholders registered on  the  Record  Date  as
detailed  in  the timetable which follows ("Timetable"). Please note that shareholders at the Record  Date  with  a
registered address outside of Australia or New Zealand will not be eligible to participate in the Offer.

The  approximate  number  of New Options which may be issued under the Offer is 13,610,561 to  raise  approximately
$136,106 (before costs of issue) based on the current capital structure of the Company.

The  record  date  for entitlements under the Offer is Wednesday 14 September 2011 and  the  due  date  for
receipt of applications for shares pursuant to the Offer is 29 September 2011.

An  offer document (Letter of Offer) and relevant entitlement form will be sent to you on the date referred  to  in
the Timetable.

Where  the  determination of the entitlement of any Eligible Shareholder results in a fraction of an  option,  such
fraction will be rounded up to the nearest whole option.

Application will be made to the ASX within seven days after the date of the Letter of Offer for official  quotation
of  New  Options  issued under that Letter of Offer. If permission for quotation is not granted  by  ASX,  the  New
Options will remain unlisted.

Any shares issued upon the exercise of any New Option will rank equally with shares currently on issue. Shareholder
approval is not required in relation to the Offer.

The Offer is not underwritten. However, the Directors, at their discretion, may offer any shortfall to Shareholders
to  whom offers are made under the Offer, or to other investors who fall within section 708 of the Act, for  up  to
three months after the close of the Offer.

The  Company  intends to apply the proceeds raised from the Offer, in conjunction with its existing  funds,
towards  funding the Company's continued drilling program at the Webbs Silver Project, in the  New  England
Area, NSW and provide working capital for the Company.


Activity                                                              Date
Announcement of Offer                          Tuesday                06-September-2011
Notices of Offer sent to all Shareholders      Wednesday              07-September-2011
Ex  date                                       Thursday               08-September-2011
Record Date for determining entitlement to     Wednesday              14-September-2011
participate in the Offer
Offer Opens                                    Wednesday              14-September-2011
Notices of Offer sent to all Shareholders      Thursday               15-September-2011
and announcement of despatch
Closing Date (5.00pm AEST) for receipt of      Thursday               29-September-2011
Entitlement and Acceptance Form
Expected date for quotation of New Options     Friday                 30-September-2011
on ASX - Deferred settlement basis
ASX notified of under-subscriptions            Tuesday                04-October-2011
Anticipated date for the issue of New          Thursday               06-October-2011
Options and dispatch of holdings statements
Normal ASX trading for New Options commences   Friday                 07-October-2011

These dates are indicative only and Silver Mines  reserves the right (subject to the Corporations Act and the Listing
Rules) to vary the dates and times outlined above without notifying you.

Evidencing  their  strong  belief  in  the Company's prospects, all  Directors  will  take  up  their  full
entitlements under the Offer.

Yours sincerely

David Sutton 

Contact Information

  • Silver Mines