Silver Mines : Bundarra Zone Drilling Results - Increasing Grade and Width

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Level 11, 52 Phillip St

Sydney NSW 2000

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www.silvermines.com.au

3rd December 2021

Company Announcement Officer

ASX Limited

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20 Bridge Street

SYDNEY NSW 2000

Bundarra Zone Drilling Results - Increasing Grade and Width

HIGHLIGHTS

• Drilling of the 30,000m resource program at Bowdens Silver continues with wide and high-grade results returned from the Bundarra Zone.
• BD21035;
  o 14.2 metres @ 374g/t silver equivalent (36g/t silver, 4.86% zinc, 2.35% lead and 0.23g/t gold) from 238 metres, including;
• • 4.6 metres @ 694g/t silver equivalent (72g/t silver, 8.76% zinc, 4.40% lead and 0.49g/t gold) from 245.4 metres.
• New quartz - sulphide vein style of high-grade mineralisation intersected
  o 3.0 metres @ 437g/t silver equivalent (52g/t silver, 5.57% zinc, 0.50% lead and 1.14g/t gold) from 294.4 metres, including;
• • 1.4 metres @ 749g/t silver equivalent (78g/t silver, 9.14% zinc, 0.87% lead and 2.36g/t gold) from 296 metres.
• BD21036;
  o 9.0 metres @ 296g/t silver equivalent (29g/t silver, 3.23% zinc, 1.86% lead and 0.55g/t gold) from 300.7 metres, including;
• • 1.5 metres @ 470g/t silver equivalent (48g/t silver, 5.55% zinc, 3.69% lead and 0.30g/t gold) from 301.5 metres, and
  • 1.0 metre @ 615g/t silver equivalent (67g/t silver, 4.65% zinc, 3.32% lead and 2.58g/t gold) from 308 metres.

Underground Scoping Study

• Drilling continuing into 2022 with four rigs operational to deliver maiden underground Mineral Resource estimation as part of the initial Scoping Study of underground mining scenarios.

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Introduction

Silver Mines Limited (ASX:SVL) ("Silver Mines" or "the Company") is pleased to announce recent assay results from the underground resource drilling program at the Bowdens Silver Project located near Mudgee in New South Wales.

Diamond drilling has continued to test mineralised zones for potential underground mining scenarios at the Bowdens Silver Deposit, with a focus on the Northwest Zone, Aegean Zone and Bundarra Zone. The Aegean to Northwest Zone is dominated by high-grade silver vein systems of substantial widths, while the Bundarra Zone is dominated by wide zones of high- grade zinc and lead mineralisation, associated with gold and silver. All three zones are located beneath the bulk-tonnageopen-pit Ore Reserve of the Bowdens Deposit with the Aegean Zone situated directly beneath Main Zone.

Results have been received for holes BD21026 through to BD21036 with BD21035 and BD21036 drilled within the Bundarra Zone (refer to Figure 1). The resource drilling has focused on the Aegean and Northwest Zones through 2021, with drilling now being focused on the Bundarra Zone in aid of Mineral Resource estimation.

Figure 1. Reported drillhole locations and underground mining targets at the Bowdens Silver Project.

Bundarra Zone Results

The Bundarra Zone is a base metal (zinc and lead) dominant sulphide zone below the current silver-zinc-lead resource, which represents a hotter part of the Bowdens Silver system. Gold is common in veins throughout the deeper parts of the system where mineralisation is related

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to, or controlled by, the emplacement of a dacite intrusion into the Rylstone Volcanic pile and underlying Ordovician Basement. A large area below the known extent of the dacite intrusion has not been tested, with this area presenting a significant target. Current modelling supports the idea that the dacite has acted to trap migrating hydrothermal fluids, as well as fracturing surrounding rocks (Rylstone Volcanics and Ordovician Basement) during its emplacement, thus increasing the permeability and potential for mineral deposition immediately surrounding the intrusion.

Drill holes BD21035 and BD21036 were drilled to extend the Bundarra Zone directly south of the semi-massive sulphide intersection in BD17011 (refer releases dated 15th March 2017, 11th April 2017, 12th May 2017 and 7th June 2017 and recent releases 27th July 2021 and 26th October 2021) and west of more recent BD21017 and BD21015. Two zones of significant mineralisation have been intersected in BD21035 which define the Bundarra Zone, with an upper zone being the typical banded/brecciated, semi massive sphalerite (zinc sulphide) - pyrite (iron sulphide) - galena (lead sulphide) with carbonate alteration, and the lower zone being a quartz-carbonate-sphalerite-pyrite-galena-chalcopyrite (copper sulphide) vein system. The two styles of mineralisation have a vertical separation of approximately 50 metres with the separation increasing with distance to the south (refer Figures 2 and 3).

Significant intercepts from BD21035 include 14.2 metres @ 374 g/t silver equivalent from 238 metres, and 3.0 metres @ 437 g/t silver equivalent from 294.4 metres. The high-grade core of 4.6 metres @ 694 g/t silver equivalent from 245.4 metres represents the highest- grade intercept to date in the Bundarra Zone. The quartz-sulphide vein (3.0 metre intercept) appears to represent a conduit to the Bundarra style mineralisation, and which forms a new component to the Bowdens Silver System. This style of mineralisation, deeper in an epithermal environment, is prospective for gold.

The significant intercept from BD21036 from within the upper semi massive sulphide zone includes 9.0 metres @ 296 g/t silver equivalent from 300.7 metres. Results from BD21035 and BD21036 give the Bundarra zone a thickness of 3 to 20 metres, 200 metres of strike (north to south) and a width of 150 metres (east to west). Drilling is continuing for continuations of the main semi massive sulphide and new quartz - sulphide horizons to the south and west.

Hole BD21042 (awaiting assays), has been drilled in the Bundarra Zone to the south (50 to

80 metres) of BD21035 and has intersected a 2.5 metre wide quartz-carbonate-sphalerite-galena-pyrite-chalcopyrite vein (refer Figure 3) and another 1.5 metre wide vein. These veins, in addition to the 3.0 metres @ 437 g/t silver equivalent intercept from BD21035, represent a substantial new high grade target including gold to the Bowdens Silver system.

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Figure 2 & 3. Bundarra Zone mineralisation styles (left) massive to semi massive sphalerite - galena - pyrite in BD17011 and (right) 2.5 metre wide quartz - carbonate - sphalerite - galena - pyrite - chalcopyrite in BD21042 (results pending).

Figure 4. Bowdens Silver Project Long Section looking east.

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Table 1. Significant intercept calculations from recent results from the Bundarra Zone.

	Hole			From			To			Interval			Silver			Zinc			Lead			Gold			Silver Eq
			(m)			(m)			(m)			(g/t)			(%)			(%)			(g/t)			(g/t)1
	BD21035	238		252.2		14.2		36		4.86		2.35		0.23		374
	incl.	245.4		250		4.6		72		8.76		4.40		0.49		694
			294.4		297.4		3.0		52		5.57		0.50		1.14		437
	incl.	294.4		295.8		1.4		78		9.14		0.87		2.36		749
	BD21036	300.7		309.7		9.0		29		3.23		1.86		0.55		296
	incl.	301.5		303		1.5		48		5.55		3.69		0.30		470
	& incl.	308		309		1.0		67		4.65		3.32		2.58		615

1.Bowdens' reported silver equivalent is consistent with previous reports and current resource modelling based on assumptions: Ag Eq (g/t) = Ag (g/t) + 33.48*Pb (%) + 49.61*Zn (%) calculated from prices of US$20/oz silver, US$1.50/lb zinc, US$1.00/lb lead, and metallurgical recoveries of 85% silver + gold, 82% zinc and 83% lead estimated from test work commissioned by Silver Mines Limited. Silver equivalent updated to also include significant gold credit assuming the same recovery as silver, with gold:silver price ratio of 80:1 based on the approximate price ratio: Ag Eq (g/t) = Ag (g/t) + 33.48*Pb (%) + 49.61*Zn (%) + 80*Au(g/t). Intercepts calculated using a 90g/t AgE cut-off and 3 metre internal dilution factor, with highest individual assay results highlighted as included within overall intercept.

Northwest Zone and Aegean Zones Results

The Northwest Zone starts approximately 30 metres below the base of the proposed Bowdens Silver open pit. This mineralised zone is a high-grade silver target at depth with continuation and connectivity to the Aegean Zone (refer Figure 1 and Figure 5). Both zones are defined as shallowly dipping zones 1 metre to 20 metres thick, extending over 520 metres (east to west) and continuing down plunge/dip to the northwest for at least 300 metres.

Mineralisation is developed in two clear horizons with the Aegean Zone being dominated by silver sulphides (acanthite), while the Northwest Zone has a silver and base metal association (zinc, lead and minor copper). Gold is associated with silver in high concentrations in the centre of the Northwest Zone.

Drilling in the Northwest Zone has previously intersected breccia and veined sulphides dominated by silver sulphides, sphalerite (zinc) and galena (lead) within the welded tuff of the Rylstone Volcanics (refer releases dated 26th October 2021, 4th August 2021, 27th July 2021, 14th May 2021, and 28th January 2021). Results received for BD21031 thicken the Northwest Zone continuation towards the Aegean. BD21031 is situated 40 metres east of BD21013 and 65 metres southeast of BD21025. Significant intersections in BD21031 include 17.0 metres

• 129 g/t silver equivalent from 230 metres and 1.0 metre @ 519 g/t silver equivalent from 276 metres.

BD21030, BD21032 and BD21033 define extensions east and southeast of the Aegean Zone, while BD21028 defines an extension north. BD21032 intersected the eastern fault prior to target depth. BD21033 intersected 4.0 metres @ 138 g/t silver equivalent from 271 metres at the position of the Eastern Fault, while BD21030 intersected 3.5 metres @ 359 g/t silver equivalent from 316.3 metres. The Aegean and Northwest Zones both remain open each in a north to northwest strike with drilling in 2022 to target extensions to these two zones.

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