Silver Mines : Annual Report to Shareholders

About this update from Silver Mines Limited

Silver Mines Limited ABN 45 107 452 942 For personal use only 2024 ANNUAL REPORT For personal use only CONTENTS Chairman's Letter 1 Review of Operations 3 Information on Board 30 Remuneration Report 32 Auditors Independence Declaration 44 Consolidated Statement of Profit or Loss and Other Comprehensive Income 45 Consolidated Statement of Financial Position 46 Consolidated Statement of Changes In Equity 47 Consolidated Statement of Cash Flows 48 Notes to the Financial Statements 49 Consolidated Entity Disclosure Statement 84 Directors' Declaration 85 Independent Auditor's Report 86 Additional Securities Exchange Information 91 Corporate Governance Statement 95 Corporate Directory 105 CHAIRMAN'S LETTER For personal use only Dear Shareholders, I am pleased to present the Annual Report for Silver Mines Limited and its wholly owned subsidiaries for the year ended 30 June 2024. This year we have made significant progress across our flagship Bowdens Silver Project. Our focus remains on transitioning this project into full development, marking a critical step towards becoming a leading producer of silver and polymetallic resources. Who We Are and Our Purpose Silver Mines is an Australian-based exploration and development company headlined by the Bowdens Silver Project, the largest known undeveloped silver resource in Australia and one of the largest in the world. The Bowdens Silver Project is located near Mudgee in the Central Tablelands Region of New South Wales, Australia. The Project comprises 2,115 km2 (521,000 acres) of titles covering approximately 80 kilometres of strike of the highly prospective Carboniferous Rylstone Volcanics overlying Ordovician and Silurian formations. Our strategy is to responsibly discover and develop our projects to generate value for our shareholders, local communities, and all stakeholders while adhering to leading practices in sustainability and environmental stewardship. Advancing the Bowdens Silver Project The Bowdens Silver Project is our highest priority, and 2024 has been a year of substantial progress. We have advanced pre-development works and have progressed optimisation of our feasibility study. This optimisation program, currently underway, is focused on refining all aspects of the Bowdens Silver Project, including ore reserves, mine design, metallurgy, and process design. This work aims to enhance the project's economic viability and reduce its environmental footprint, consistent with our objective of ensuring responsible mining. The Company is also on track for release of an update to its Mineral Resource and Ore Reserves. Despite the unfortunate decision of the New South Wales Court of Appeal in August, the Company continues to work through the ramifications of this ruling and remains fully committed to the progression of the Bowdens Silver Project through to production. We look forward to updating the market on this progress. Our Values Our values guide everything we do at Silver Mines. We are dedicated to: Integrity: Acting with honesty, transparency, and respect. Sustainability: Prioritising responsible resource management and responsible mining. Community Engagement: Building strong relationships and ensuring our operations align with community needs. Safety First: Upholding the highest standards of safety for our team and stakeholders. Silver Mines Limited Annual Report 2024 1 CHAIRMAN'S LETTER For personal use only Commitment to Our People and Communities Our people are our most valuable asset, and their commitment drives our success. We have strengthened our team with key appointments, including Jonathan Battershill as Managing Director at the beginning of this year, who brings decades of experience in the mineral resources sector. We are building a culture of excellence, safety, and innovation as we prepare to move into the next phase of the Bowdens Silver Project. Community and stakeholder engagement remains a cornerstone of our approach. We continue to work closely with local communities, providing employment opportunities, supporting local businesses, and engaging transparently about our operations. Our recent Native Title Agreement with the Warrabinga-Wiradjuri people reflects our respect for Indigenous rights and our dedication to inclusive development. Looking Ahead As we move forward, our focus is firmly on bringing the Bowdens Silver Project into development and positioning it as a world-class mining operation. We are committed to meeting our milestones, advancing our other promising exploration projects, and maintaining financial discipline to maximise shareholder value. The next year promises to be transformative as we transition from planning to action, bringing us closer to realising our vision of becoming a major player in the Australian mining industry. Thank you for your continued support and belief in our journey. Yours sincerely, Keith Perrett Non-Executive Chairman Silver Mines Limited 2 Silver Mines Limited Annual Report 2024 REVIEW OF OPERATIONS For personal use only During the 2024 Financial Year, Silver Mines Limited (' Silver Mines ', the ' Company ' or the ' Group ') continued pre-development works and ongoing mineral exploration at the Bowdens Silver Project (' Project ') located near Mudgee in New South Wales. In March 2023, the Company updated its Mineral Resource Estimate reporting a substantial increase across all categories adding significant value and demonstrating confidence for further Project longevity. The Company also continued to undertake substantial exploration works across its tenement holdings. PROJECTS During the 2024 Financial Year, the Group controlled the following projects, all of which are located in New South Wales, Australia: Bowdens Silver Project (silver/polymetallic) Barabolar Project (copper/gold/silver) Tuena Project (gold/silver) Figure 1. Group Project Locations. Silver Mines Limited Annual Report 2024 3 REVIEW OF OPERATIONS For personal use only 4 Silver Mines Limited Annual Report 2024 REVIEW OF OPERATIONS Bowdens Silver Project Introduction The Bowdens Silver Project is located near Mudgee in the Central Tablelands Region of New South Wales, Australia. For personal use only The Project comprises 2,115 km 2 (521,000 acres) of titles covering approximately 80 kilometres of strike of the highly prospective Carboniferous Rylstone Volcanics overlying Ordovician and Silurian formations. This area also hosts the Company's exploration prospects at Bara Creek, Coomber and Barabolar. The Company is advanced in an optimisation program for the updating of the Bowdens Silver Feasibility Study completed in 2018. The optimisation program is examining all aspects of the development including Ore Reserves, mine design, metallurgy, process design and economic and market considerations. The Optimisation study is demonstrating that the Project can potentially be developed and operated with even less environmental impact than the 2018 Feasibility Study design, with current plans considering a reduced development footprint across the open pit mine, waste rock emplacement and the tailings storage facility. The Group holds 100% of Exploration Licence EL5920 which contains the Bowdens Silver Deposit. In addition, the Group holds exploration licences EL6354, EL8159, EL8160, EL8168, EL8268, EL8403, EL8405, EL8480 and EL8682. During the 2024 Financial Year, EL9580 was granted (Refer to Figure 2) . Description The Bowdens Silver Project is the largest known undeveloped silver Mineral Resource in Australia. The tenement portfolio is situated on the eastern margin of the Lachlan Orocline/Macquarie Arc. The Project comprises the highly-mineralised Rylstone Volcanics and the on-lapping later Permian, sedimentary units of the Shoalhaven Group within the Sydney Basin. The Rylstone Volcanics unconformably overlie the Ordovician Coomber Formation and Silurian Dungeree Volcanics ( Refer to Figure 3 ). Several intrusions cross-cut Ordovician, Silurian and Carboniferous units. Figure 2. Silver Mines Limited Tenement and Project locations in the Mudgee district. Silver Mines Limited Annual Report 2024 5 REVIEW OF OPERATIONS For personal use only Figure 3. Silver Mines Limited prospect locations in the Mudgee district. 6 Silver Mines Limited Annual Report 2024 REVIEW OF OPERATIONS For personal use only Mineral Resource and Ore Reserve Statement Mineral Resources During the 2023 Financial Year, the Company provided an updated Mineral Resource for the Bowdens Silver Project (" 2023 MRE "). The Bowdens Mineral Resource Estimate has been updated by H&S Consultants using both Multiple Indicator Kriging, Ordinary Kriging and the reporting is compliant with the 2012 JORC Code and Guidelines. Please refer to Tables 1, 2 and 3, for further details. With the updated Mineral Resource as of March 2023, the Mineral Resource and Ore Reserve is expected to be updated during the 2025 Financial Year. Table 1 - Bowdens Silver Deposit Mineral Resource Estimate as at March 2023 (at a 30 g/t Ag Eq cut-off) Tonnes Silver Eq. Silver Zinc Lead Gold Million Million Category Ounces Ounces (Mt) (g/t) (g/t) (%) (%) (g/t) Silver Silver Eq. Measured 107 68 40 0.36 0.25 0.03 137 235 Indicated 50 55 20 0.38 0.26 0.09 33 88 M & I 157 64 33 0.36 0.25 0.05 169 323 Inferred 43 54 14 0.39 0.29 0.13 19 73 Total 200 62 29 0.37 0.26 0.07 189 396 Table 2 - Bowdens Silver Deposit Mineral Resource Estimate for Gold as at March 2023 (at a 0.2 g/t Au cut-off) Tonnes Silver Eq. Silver Zinc Lead Gold Thousand Million Category Ounces Ounces (Mt) (g/t) (g/t) (%) (%) (g/t) Gold Silver Eq. Measured 3.5 76 18 0.46 0.30 0.31 35 9 Indicated 6.0 71 12 0.46 0.31 0.31 61 14 Inferred 9.5 75 11 0.50 0.41 0.31 96 23 Total 19.0 74 13 0.48 0.36 0.31 190 45 Notes: Refer to Appendix 1 for full details. Bowdens silver equivalent: Ag Eq (g/t) = Ag (g/t) + 33.48*Pb (%) + 49.61*Zn (%) + 80*Au (g/t) calculated from prices of US$20/oz silver, US$1.50/lb zinc, US$1.00/lb lead, US$1600/oz gold and metallurgical recoveries of 85% silver, 82% zinc and 83% lead, 85% gold estimated from test work commissioned by Silver Mines Limited. Bowdens Silver Mineral Resource Estimate reported to a 30g/t Ag Eq cut off extends from surface and is trimmed to above 300 metres RL, approximately 320 metres below surface, representing a potential target volume for future open-pit mining and expansion. In the Company's opinion, the silver, zinc, gold and lead included in the metal equivalent calculations have a reasonable potential to be recovered and sold. Stated Mineral Resources are partially inclusive of areas of the total Underground Mineral Resource Estimate at 150 g/t Silver Equivalent (Ag Eq) Cut-off Grade above 300mRL. See ASX announcement dated 5th September 2022. Variability of summation may occur due to rounding. Silver Mines Limited Annual Report 2024 7 REVIEW OF OPERATIONS For personal use only Table 3 - Bowdens Silver Deposit Grade-Tonnage Data for Estimation Results as at March 2023 Cut off Tonnes Silver Eq. Silver Zinc Lead Gold Million Million Ounces Ounces g/t Ag Eq. (Mt) (g/t) (g/t) (%) (%) (g/t) Silver Silver Eq. 0 663 26 12 0.16 0.11 0.03 258 555 10 403 40 19 0.24 0.17 0.05 243 521 20 287 50 24 0.30 0.22 0.06 218 466 30 200 62 29 0.37 0.26 0.07 189 396 35 167 68 32 0.40 0.29 0.07 174 362 40 140 73 36 0.43 0.31 0.07 161 330 50 100 85 43 0.49 0.35 0.08 137 272 60 71 97 51 0.53 0.38 0.08 117 222 70 51 110 61 0.57 0.42 0.08 100 180 80 37 123 72 0.59 0.45 0.08 85 146 90 27 136 84 0.61 0.47 0.08 74 120 100 21 150 96 0.63 0.49 0.08 64 100 120 13 175 119 0.66 0.52 0.06 49 72 150 7 210 153 0.70 0.57 0.05 34 47 200 3 265 200 0.80 0.66 0.04 19 25 The 2023 MRE is the result of additional drilling conducted by Silver Mines (132 drill holes for 53,190 metres) over the past five and a half years. This additional information comprises 123 diamond core holes for 49,150 metres, 8 reverse circulation drill holes with diamond tails for 3,867 metres and one reverse circulation drill hole for 173 metres. Ore Reserve The Bowdens Silver Ore Reserve is estimated at 29.9 million tonnes at 69.0 g/t silver, 0.44% zinc and 0.32% lead containing 66.32 million ounces of silver, 130.8 kilotonnes of zinc and 95.3 kilotonnes of lead. The Ore Reserve Estimate was prepared by mining engineering consultancy firm AMC Consultants Pty Ltd ("AMC Consultants") and is based on the September 2017 Mineral Resource Estimate generated for Silver Mines by H & S Consultants Pty Ltd ("H & S Consultants") (see ASX announcement 19 September 2017) . Measured and Indicated Mineral Resources were converted to Proved and Probable Ore Reserves respectively and are subject to mine designs, modifying factors and economic evaluation. The Ore Reserve Estimate for the Bowdens Silver Project as of May 2018 is outlined in Table 1 below. 8 Silver Mines Limited Annual Report 2024

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