Silver Mines

October 31, 2012 06:23 ET

Quarterly Activity Report and App 5B

31st October, 2012
Silver Mines Ltd.


 - SPP completed with approximately 50% take-up by shareholders raising over $833,000;
 - Soil and rock chip sampling completed on high priority targets on Mole River prospects,
   north of Webbs;
 - Drilling began in mid October on Mole River Prospects to test previously un-drilled

 - Final statutory report lodged with NSW Department Trade and Investment - Resources and
   Energy for drilling approval at Webbs as per new requirement introduced in September;

 - Drilling at Webbs is expected to commence by December, pending environmental approval; and

 - Metallurgical testwork is now complete. Scoping level study to be completed by year end.

EL6771-EL6114 (Mole River)

The Mole River projects are highly prospective for silver rich polymetallic mineralisation as
demonstrated by the vast number of documented mineral occurrences combined with exploration
results achieved by Silver Mines and previous explorers. The mineral occurrences form a zone over
11km long and 2km wide. Only a small part of one prospect was ever drill tested by previous
explorers. Silver Mines anticipates that reconnaissance drilling will be undertaken at the Burra,
Ecquador, Torny, Hazeledean and Mt Morgan prospects by the end of 2012.

EL5674 (Webbs)


The testwork program is now complete. Recently completed work focussed on establishing cyanide
consumption. Results are yet to be reported. The testwork program has demonstrated that
mineralisation at both Webbs Main and Webbs South is highly amenable to the Albion Process with
overall silver to dore of over 90%. It is anticipated that Scoping level study investigating a
500,000tpa flotation/Albion plant producing around 4Moz of silver in dore per annum will be
completed by year end. Silver Mines will use the results of this study to assist with project


Silver Mines has been awaiting environmental approval for drilling at Webbs since it lodged a
'Review of Environmental Factors' in February 2012. Since this time the government on several
separate occasions has requested additional information, which Silver Mines has provided
expeditiously. The latest request was for an Agricultural Impact Statement as per new requirements
only introduced in September 2012.

Drilling at Webbs is planned to commence by December, pending approvals. Initial drilling will
focus on shallow targets. Deeper drilling is planned to commence as soon as possible but will
depend on drill rig availability. Silver Mines still has 5,000m of RC drilling pre-paid with our
preferred drill contractor.

Results of Security Purchase Plan

The Company announced on 31 August 2012 that Shareholders were invited to participate in the
Company's Security Purchase Plan (SPP). Shareholders eligible to participate were entitled to
receive up to $10,000 worth of Shares at $0.06 per Share and one option per every two shares
applied for. The Options had an exercise price of $0.10 and expire on 13 November 2013.

The SPP raised $833,150 for the Company and was completed 26 September 2012.


The September Quarter will continue to be an exciting time for Silver Mines with the following key
programs underway or planned to commence;
- Extensional drilling at the Webbs Silver project aimed at growing the Webbs resource.

- Exploration drilling on regional targets aimed at demonstrating potential for high grade
  silver rich polymetallic mineralisation similar to Webbs.

- Completion of Scoping level study on processing plant.

Please direct any queries regarding the content of this report to Charles Straw (CEO) on +61 2
9253 0900 or

The information in this Document that relates to Exploration Results, Mineral Resources or Ore
Reserves is based on information compiled by Mr David Hobby, consulting geologist to SVL, who is a
Member of The Australasian Institute of Mining and Metallurgy. Mr Hobby has sufficient experience
which is relevant to the style of mineralisation and type of deposit under consideration and to
the activity which he is undertaking to qualify as a Competent Person as defined in the 2004
Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore
Reserves'. Mr Hobby consents to the inclusion in the report of the matters based on his
information in the form and context in which it appears.

                                                                                          Rule 5.3
                                            Appendix 5B

                            Mining exploration entity quarterly report
Introduced 1/7/96.  Origin:  Appendix 8.  Amended 1/7/97, 1/7/98, 30/9/2001, 01/06/10.

Name of entity

ABN                                                             Quarter ended ("current quarter")
45 107 452 942                                                  30 September 2012

Consolidated statement of cash flows
                                                                Current quarter    Year to date (3months)
Cash flows related to operating activities                               $A'000                   $A'000

1.1     Receipts from product sales and related                                                         
1.2     Payments for   (a)  exploration & evaluation                      (391)                    (391)
                       (b)  development                                                                 
                       (c)  production                                                                  
                       (d)  administration                                (310)                    (310)
1.3     Dividends received                                                                              
1.4     Interest and other items of a similar nature                          3                        3
1.5     Interest and other costs of finance paid                            (1)                      (1)
1.6     Income taxes paid                                                                               
1.7     Other (provide details if material) Pre paid                                                    
                                                                          (699)                    (699)
        Net Operating Cash Flows
        Cash flows related to investing activities
1.8     Payment for purchases of: (a)  prospects                                                        
                      (b)  equity investments                                 -                        -
                      (c)  other fixed assets                               (3)                      (3)
1.9     Proceeds from sale of:    (a)  prospects                              -                        -
                      (b)  equity investments                                 -                        -
                      (c)  other fixed assets                                 -                        -
1.10    Loans to other entities                                                                         
1.11    Loans repaid by other entities                                                                  
1.12    Other (provide details if material)                                                             
                                                                            (3)                      (3)
        Net investing cash flows                                                                        
1.13    Total operating and investing cash flows                          (702)                    (702)
        (carried forward)

        Cash flows related to financing activities
1.14    Proceeds from issues of shares, options, etc.                       830                      830
1.15    Proceeds from sale of forfeited shares                                                          
1.16    Proceeds from borrowings                                                                        
1.17    Repayment of borrowings                                                                         
1.18    Dividends paid                                                                                  
1.19    Other (provide details if material)                                                             
        Net financing cash flows                                            830                      830
        Net increase (decrease) in cash held                                128                      128
1.20    Cash at beginning of quarter/year to date                           800                      800
1.21    Exchange rate adjustments to item 1.20                                                          
1.22    Cash at end of quarter                                              928                      928
Payments to directors of the entity and associates of the directors
Payments to related entities of the entity and associates of the related entities

                                                                                 Current quarter
1.23     Aggregate amount of payments to the parties included in item 1.2        21
1.24     Aggregate amount of loans to the parties included in item 1.10
1.25     Explanation necessary for an understanding of the transactions
         Director Fees
Non-cash financing and investing activities
2.1    Details of financing and investing transactions which have had a material effect on consolidated
       assets and liabilities but did not involve cash flows

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

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

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

Estimated cash outflows for next quarter
4.1    Exploration and evaluation                                     300
4.2    Development                                                    
4.3    Production                                                     
4.4    Administration                                                 300
       Total                                                          600

Reconciliation of cash
Reconciliation of cash at the end of the quarter (as   Current quarter         Previous quarter
shown in the consolidated statement of cash flows) to  $A'000                  $A'000
the related items in the accounts is as follows.
5.1   Cash on hand and at bank                         16                      26

5.2   Deposits at call                                 912                     774

5.3   Bank overdraft                                   -                       -

5.4   Other (provide details)                          -                       -

      Total: cash at end of quarter (item 1.22)        928                     800

Changes in interests in mining tenements

                                  Tenement      Nature of interest             Interest     Interest
                                  reference     (note (2))                     at           at end of
                                                                               beginning    quarter
                                                                               of quarter
6.1   Interests in mining                                                                   
      tenements relinquished,
      reduced or lapsed
6.2   Interests in mining                                                                  
      tenements acquired or
Issued and quoted securities at end of current quarter
Description includes rate of interest and any redemption or conversion rights together with prices
and dates.

                           Total number        Number quoted      Issue price per     Amount paid up per
                                                                  security (see       security (see note
                                                                  note 3) (cents)     3) (cents)
7.1     Preference                                                                    
7.2     Changes during                                                                
        (a)  Increases
        through issues
        (b)  Decreases
        through returns
        of capital, buy-
7.3     +Ordinary          163,997,091         163,997,091                            
7.4     Changes during                                                                
        (a)  Increases     15,385,890          15,385,890         6 cents per share   6 cents per share
        through issues                                                                
        (b)  Decreases
        through returns
        of capital, buy-
7.5     +Convertible                                                                  
        debt securities
7.6     Changes during                                                                
        (a)  Increases
        through issues
        (b)  Decreases
7.7     Options                                                   Exercise price      Expiry date
        (description and                                                              
        conversion         13,609,882          13,609,882         Listed Options      Expiring 31 October
        factor)                                                   exercisable at      2012
                                                                  35 cents per        

                           13,195,339          -                  Unlisted Options    Expiring 13 Nov
                                                                  exercisable at      2013
                                                                  10 cents per        
                           2,000,000           -                  Unlisted Options,   Expiry 27 August
                                                                  exercise price 40   2013. Vest - 27
                                                                  cents, Expiry 27    August 2011
                                                                  August 2013.        
                                                                  Vest - 27 August    
                           8,500,000           -                  Unlisted Employee   Expiry Date 23
                                                                  Options, exercise   December  2015
                                                                  price  50 cents,    
7.8     Issued during      6,942,972           -                  Unlisted Options    Expiring 13 Nov
        quarter                                                   exercisable at      2013
                                                                  10 cents per        
7.9     Exercised during   1,500,000           -                  Performance         -
        quarter                                                   Rights
7.10    Expired during     3,500,000           -                  Employee Options,   Expiry Date 6 July
        quarter                                                   exercise price      2012
                                                                  20 cents            
                           2,000,000           -                  Unlisted Options,   Expiry 27 August
                                                                  exercise price 24   2012.Vest 27
                                                                  cents               February 2011
                           1,500,000           -                  Performance         -
7.11    Debentures                                                                    
        (totals only)
7.12    Unsecured notes                                                               
        (totals only)

Compliance statement

1 This statement has been prepared under accounting policies which comply with accounting
  standards as defined in the Corporations Act or other standards acceptable to ASX (see note 4).
2 This statement does give a true and fair view of the matters disclosed.

Sign here:       ...........................................        Date: ..October 2012..............
                              (Company secretary)

Print name:      ...Kevin Lynn......................................................


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

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

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

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

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

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Contact Information

  • Silver Mines