To: Company Announcements Officer Australian Securities Exchange 14th March 2013 DRILLING UNDERWAY AT WEBBS HIGHLIGHTS - 7 RC holes completed to date for 1 269m. - 5 Holes are pre-collars with diamond 'tails' planned for each. - Diamond drilling to commence on Monday March 18th as planned. Silver Mines Limited is pleased to announce that Reverse circulation (RC) drilling is underway at the Webbs Silver Project (EL5674). Drilling progress has been affected by persistent wet weather which has impacted much of north- eastern NSW over the last month, however the program is well advanced with seven RC holes for a total of 1 269m completed. Two of these holes had to be abandoned at relatively shallow depth due to difficult RC drilling conditions, however the target zone for these holes will still be tested with a new hole. The five remaining holes will be cased and 'tailed' with diamond core as planned. The 'tails' will vary from approximately 60m to 120m long in order to test the interpreted target zone for depth extensions to the high grade silver rich mineralisation (see Figures 1 and 2). The diamond drill rig is on site (see Photo 1) with diamond drilling due to begin on Monday 18th of March as scheduled. A further two RC holes are planned as part of this first phased RC program. RC drilling will then be suspended and is planned to recommence in 2-3 weeks after the diamond drilling is nearing completion. Again, the next phase of RC drilling will target depth extensions to the mineralisation. To view "Figure 1. Track mounted diamond drill rig and rod/support vehicle on site," please visit the following link: [ http://media3.marketwire.com/docs/slvfig1314.jpg ]. The RC rig is currently at the Webbs South Deposit with holes designed to test the steeper down-dip/plunge extensions to high grade mineralisation intersected by previous drilling. One of these holes will test for mineralisation which remains open at depth on Cross Section 6,751,690mN where one of the deepest holes drilled to date by SVL intersected 25.9m downhole at 337 g/t Ag, 0.29% Cu and 3.20% combined Pb+Zn in DDH017. This equates to approximately 8m true width. The planned hole is designed to test the lode structure approximately 50-60m vertically below the DDH017 intersection shown in Figure 1. The Company looks forward to providing further updates and results as they become available. Please direct any queries regarding the content of this report to Charles Straw (CEO) on +61 2 9253 0900 or [ cstraw@silverminesltd.com.au ]. Competent Person Declaration 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 Chief 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' 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. To view "Figure 2. Webbs Long section - looking west," please visit the following link: [ http://media3.marketwire.com/docs/slvfig2314.jpg ]. Silver Mines Limited ACN 107 452 942 L5, 17-19 Bridge St, Sydney, NSW 2000 Australia P: +61 2 9253 0900 E: [ info@silverminesltd.com.au ] W: [ www.silverminesltd.com.au ]