ACTIVITIES REPORT

FOR THE QUARTER ENDED 30 SEPTEMBER 2009

To: Company Announcement officer

SUMMARY
During the September Quarter this year Silver Mines Limited (SVL) completed raising just over $400,000 which provides additional working capital and the necessary financial resources to continue with detailed metallurgical studies of the historical dump material surrounding the historical Webbs Silver Mine and drilling of high priority targets (Map 1) on the Webbs Silver Project (EL5674).

METALLURGY
During the September Quarter, a combined ore sample was sent for Quantitative Mineralogical Analysis (QMA) in order to assist with flowsheet development and refining of metallurgical testwork parameters. The QMA was conducted by Ammtec using QEM*Scan and XRD technologies. The QMA enabled quantitative mineralogy and liberation of the economic sulphides and gangue minerals to be established. This analysis established that the major economic minerals for silver, copper, lead and zinc were silver-bearing tetrahedrite, non-silver bearing tetrahedrite, galena and sphalerite. Liberation sizes were such that production of a silver / copper / lead concentrate and a separate zinc concentrate is technically feasible using the froth flotation process. Testwork planned for the current quarter includes flotation testwork on a combined sample of historical surface dump material at Webbs Silver. This testwork will focus on establishing metal recoveries, likely concentrate grades and a flowsheet to concept study level. In conjunction with the flotation testwork, gravity testwork will also be conducted using a Kelsey Jig. This process offers the advantage that it does not require reagents and it is cost effective at relatively coarse grind sizes. The historical dumps will be surveyed in late October so that an accurate volume can be determined. The dumps consist of coarse (small boulder size, approximately 150mm diameter) and fine (<15mm). Map 2 shows the outline of the dumps and the results of a sampling program in 2008.

Webbs Silver Historical Dumps Outline and 2008 Sampling Results

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ACTIVITIES REPORT
FOR THE QUARTER ENDED 30 SEPTEMBER 2009

Webbs Silver South and Adit

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ACTIVITIES REPORT
FOR THE QUARTER ENDED 30 SEPTEMBER 2009

Walla Walla Prospect Chargeability Anomaly at 100m Depth below surface

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ACTIVITIES REPORT
FOR THE QUARTER ENDED 30 SEPTEMBER 2009

EL 6269 (Australia Oriental Minerals NL Joint Venture)

Under a Joint Venture Agreement, Silver Mines Ltd (SVL) will earn 50% of EL 6269, owned by Australia Oriental Minerals NL (AOM) by expending $95,000 on exploration (current expenditure is approximately $60,000). This work has concentrated on the old Walla Walla Pb-Ag-Zn mine. In 2006, AOM undertook an extensive stream sediment and rock chip study of this area revealing a zone of prospective ground extending from north of the Walla Walla mine southward past the old Colandel mine. SVL have followed this up with rock chip and most recently an IP (Induced Polarisation) survey over the Walla Walla workings and along strike from them. The existing workings reached a recorded depth of 30 metres and extend north and south of the main shaft. It is understood that the workings were following a vertical vein type structure present within a fine grained sedimentary unit. Induced Polarisation Survey Between the period of 08/07/09 and 16/07/09, Fender Geophysics on behalf of SVL carried out an IP survey over the historic Walla Walla silver. Map 3 shows a satellite image of the survey area with a chargeable zone identified. Four lines of IP survey were completed on a 200 metre line spacing with 50 metre spaced survey stations using a dipole-dipole configuration. All four lines show a chargeable zone starting at approximately 100 metres below surface consistent with disseminated mineralisation. The overall strike length to the IP anomaly is 600 metres. As the anomaly exists across all lines, it would indicate that the anomaly has not been closed off and could feasibly continue both north and south of the area surveyed (Map 3). The results recorded were quite conclusive in that there exists a clear IP anomaly around and below the historical workings with values reaching 40 millivolts/volt against background values of < 10 millivolts/volt. The IP response would appear to be caused by a feature that doesnt reach the surface and has a strike length of over 600 metres. The resistivity data has also been effective in identifying changes in the geology across the profile indicated by the presence of the resistive zone particularly to the west of the profile which coincides with the fine grained mafic outcrop observed on site. (Modified from Fender Geophysics IP Report Walla Walla September 09). SVL plan to extend the survey both to the north and south to close off the anomaly. It is expected that drilling will follow this work.

Please direct any queries regarding the content of this report to Charles Straw (CEO) on +61 2 9436 0533 or cstraw@silverminesltd.com.au.

The information in this report that relates to Exploration Results is based on information compiled by Charles Straw, consulting geologist and General Manager, who is a Member of The Australasian Institute of Mining and Metallurgy. Charles Straw 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. Charles Straw consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

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