Silver Mines : Bundarra Zone Expansion at the Bowdens Silver Project

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Level 11, 52 Phillip St

Sydney NSW 2000

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www.silvermines.com.au

18th January 2022

Company Announcement Officer

ASX Limited

Exchange Centre

20 Bridge Street

SYDNEY NSW 2000

Bundarra Zone Expansion at the Bowdens Silver Project

HIGHLIGHTS:

Continued success in drilling extends the Bundarra Zone mineralisation. Results include quartz sulphide vein style mineralisation at depth, with significant copper intersected for the first time at Bowdens.

• BD21042
  o 2.4 metres @ 1,520 g/t silver equivalent (269 g/t silver, 15.80% zinc, 10.33% lead,
  0.78% copper and 0.42 g/t gold) from 297.3 metres, including:

• 1 metre @ 2,282 g/t silver equivalent (398 g/t silver, 22.90% zinc, 16.80% lead, 1.06% copper and 0.82 g/t gold) from 298 metres.

• 1. 1.5 metres @ 869 g/t silver equivalent (98 g/t silver, 14.49% zinc, 0.20% lead, 0.30% copper & 0.14 g/t gold) from 327.1 metres.
• BD21039
• 1. 4.6 metres @ 338 g/t silver equivalent (24 g/t silver, 3.67% zinc, 1.47% lead and 0.98 g/t gold) from 406 metres.

• 1. 8.1 metres @ 193 g/t silver equivalent (18 g/t silver, 1.82% zinc, 1.45% lead and 0.41 g/t gold) from 416.9 metres.
• BD21038
• 1. 1 metres @ 740 g/t silver equivalent (343 g/t silver, 5.29% zinc and 3.74% lead) from 107metres.

1. 6 metres @ 244 g/t silver equivalent (26 g/t silver, 2.43% zinc, 2.50% lead and
   0.12 g/t gold) from 374 metres, including:

• 1 metre @ 478 g/t silver equivalent (59 g/t silver, 3.78% zinc, 6.0% lead and 0.38 g/t gold).

Underground Scoping Study

• Drilling continuing into the first half of 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 mineralised lenses, 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 BD21037, BD21038, BD21039, BD21040 and BD21042 drilled within the Bundarra Zone and Northwest High-Grade Zone (refer to Figure 1). The resource drilling has focused on the Aegean and Northwest Zones through 2021, with drilling now being focused on extending the Bundarra Zone and testing for lenses beneath the primary zone.

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

Bundarra Zone Results

The Bundarra Zone is a series of base metal (zinc and lead) dominant sulphide lenses below the current silver-zinc-lead resource. At Bundarra, gold occurs in veins throughout the deeper

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ABN: 45 107 452 942	Page 2

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parts of the system where mineralisation is related to, or controlled by, the emplacement of a dacite intrusion into the Rylstone Volcanic pile and underlying Ordovician basement. Drill holes testing the extent of mineralisation beneath the dacite intrusion the dacite have proven successful with drilling to date indicating mineralisation is both open within Ordovician Basement sediments and along major structures. Current modelling suggests 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.

Significantly, BD21042 has intercepted zones of mineralisation of higher emplacement temperature quartz sulphide veining including the highest concentration of copper intercepted to date in the Deposit and extending the Bundarra lenses some 75 metres to the south of BD21035 (refer release dated 3rd December 2021). These zones remain open to the south as well as up dip to the east and down dip to the west. The lower lenses are separated some 20 metres vertically with the upper lens rising into the Ordovician Rylstone contact. See figures 1 and 4. The upper zone comprises numerous lenses of banded/brecciated, semi massive sphalerite (zinc sulphide) - pyrite (iron sulphide) - galena (lead sulphide) with carbonate alteration, and the lower zones comprise a quartz-carbonate-sphalerite-pyrite-galena- chalcopyrite (copper sulphide) veins. See figures 2 and 3.

In BD21042, the upper Bundarra lens returned 4.3 metres @ 200 g/t silver equivalent from

216.7 metres while, the lower lenses returned assays of:

• 2.4 metres @ 1520 g/t silver equivalent (269 g/t silver, 15.8% zinc, 10.33% lead, 0.78% copper & 0.42 g/t gold) from 297.3 metres and
• 1.5 metres @ 869 g/t silver equivalent (98 g/t silver, 14.49% zinc, 0.20% lead 0.30% copper & 0.14 g/t Au) from 327.1 metres.

The lower 2.4 metre quartz-sulphide vein intercept appears to represent a conduit to the Bundarra style mineralisation, which forms a new component to the Bowdens Silver system. This style of mineralisation located deeper in an epithermal environment is prospective for gold.

BD21038 infills drilling of lenses between BD21017 and BD21007 and intercepted lower lenses with 14 metres @ 99 g/t silver equivalent. As well as 6 metres @ 244 silver equivalent, including 1 metre @ 478 silver equivalent from 378 metres.

Results from BD21039, some 90 metres north along strike of BD21035 also intersected multiple Bundarra style lenses with increasing gold and copper in zinc and lead dominated intercepts. Significant intercepts include:

• 5 metres @ 230 g/t silver equivalent from 396 metres;
• 4.6 metres @ 338 g/t silver equivalent from 406 metres including 0.4 metre at 90g/t silver, 23.7% zinc, 4.30% lead and 8.5 g/t gold and
• 8.1 metres @ 193 g/t silver equivalent from 416.9 metres including 1.1 metres @ 62 g/t silver, 6.68% zinc, 3.97% lead and 1.98 g/t gold.

The dacite intrusion, faults, the carbonate rich stratigraphy (layers) in the Ordovician basement are considered to be competing controls to this mineralisation. The Bundarra mineralisation while being laterally continuous, appears to have better grade when near to faults and

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ABN: 45 107 452 942	Page 3

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replacing carbonate rich units in the basement along faults. Drilling targeting continuations of the main semi-massive sulphide and new quartz-sulphide horizons to the south and west is ongoing.

Figure 2 & 3. Quartz - carbonate - sphalerite - galena - pyrite - chalcopyrite in BD21042 from 297.3 metres.

Figure 4. Bowdens Silver Project Long Section looking east.

Silver Mines Limited
ABN: 45 107 452 942	Page 4

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

only
		Hole			From			To			Interval			Silver			Zinc			Lead			Copper			Gold			Silver Eq
					(m)			(m)			(m)			(g/t)			(%)			(%)			(%)			(g/t)			(g/t)1
		BD21042	186		187		1		16		1.36		0.82		0.01		0.17		126
				191		192		1		22		1.32		1.32		0.03		0.14		146
				199		207.6		8.6		19		1.28		0.93		0.03		0.17		131
				216.7		221		4.3		31		1.89		1.35		0.02		0.34		200
use				234.5		235.9		1.4		42		2.63		1.77		0.03		0.13		246
			255.9		258.9		3		30		0.72		1.83		0.04		0.20		148
				276		277		1		25		1.8		0.65		0.05		0.01		142
				297.3		299.7		2.4		269		15.80		10.33		0.78		0.42		1520
					& incl.	from	0.7		292		17.35		8.66		1.02		0.03		1560
				297.3
					& incl. from 298	1		398		22.90		16.80		1.06		0.82		2282
personal				327.1		328.6		1.5		98		14.49		0.20		0.30		0.14		869
				& incl. from 328	0.6		164		24.7		16.8		0.54		0.22		1479
		BD21038	48		49		1		92		0.26		0.23		-		-		112*
				69		70		1		74		0.43		0.2		-		-		102*
				93		94		1		49		1.16		0.39		0.01		0.02		122*
				98		99		1		42		0.82		0.27		-		0.01		93*
				107		108		1		343		5.29		3.74		0.06		0.03		740*
				114.5		117		2.5		14		1.09		0.41		0.01		0.01		84*
				265		279		14		13		1.44		0.23		0.02		0.06		99
				300		301		1		19		2.22		0.06		0.03		0.06		140
				374		380		6		26		2.43		2.50		0.04		0.12		244
					& incl. from 378	1		59		3.78		6.04		0.04		0.318		479
				384		385		1		17		1.68		1.06		0.02		0.07		143
		BD21039	252		253		1		43		0.91		0.26		0.04		0.66		154
				258		259		1		125		2.57		1.56		0.25		0.48		371
For
			287		288		1		22		2.18		0.74		0.05		0.07		167
			293		294		1		18		0.96		0.77		0.02		0.44		129
				300		301		1		23		1.4		0.28		0.06		0.12		118
				306		309		3		57		1.4		0.42		0.10		0.27		173
				322		326		4		8		1.15		0.3		0.02		0.39		108
				333		342		9		11		1.56		0.12		0.02		0.12		104
				350		351		1		17		1.64		0.12		0.04		0.22		124
				363		364		1		17		1.56		0.45		0.04		1.00		193
				388		389		1		19		2.25		0.53		0.04		0.38		183
				396		401		5		16		2.91		0.56		0.02		0.61		230
				406		410.6		4.6		24		3.67		1.47		0.04		0.98		338
	Silver Mines Limited
	ABN: 45 107 452 942																				Page 5