From Locomotives of the Silverton Tramway by Steve McNicol:
In 1876 silver was discovered just over the border in New South Wales, and in no time at all the township of Silverton emerged. Provisions for this new settlement were first supplied by bullock teams from South Australia, but even then a rail link was envisaged. The SA government passed a bill in November 1884, known as 'The Silverton Railway Bill' authorising the construction of a 3 foot 6 inch gauge railway line from Petersburg (now Peterborough) to Silverton. Work commenced in April 1885 and it was completed to the border in June 1887, but the NSW government would not permit the SA Railways to construct a railway within its boundary.
To overcome this problem a private company known as 'The Silverton Tramway Company' was formed on May 30th 1885, with a capital of £250,000 made up of 50,000 shares at £5 each. During this time ore was discovered at Broken Hill and another township arose. The NSW government gave the Silverton Tramway Company permission to construct a line from Cockburn, on the SA/NSW border, via Silverton to Broken Hill in October 1886. The contract for this 35 mile 48 chain railway was given to C. & E. Millar, the company which had also constructed the line from Peterborough.