DENVER--(BUSINESS WIRE)--
Apex Silver Mines Limited (AMEX:SIL) announced today that it had reached
an agreement in principle with Sumitomo Corporation in which Sumitomo
will purchase from Apex for $70 million Apex’s
rights pursuant to a Deferred Payment Agreement dated September 25,
2006. The Deferred Payment Agreement requires Sumitomo to make deferred
purchase price payments to Apex in respect to the 2006 acquisition of
35% of the San Crist�bal mine, consisting of:
(i) quarterly payments equal to 22.86% of Sumitomo’s
share of payable silver production from the San Crist�bal
mine, or approximately 8% of total payable silver production, payable in
cash or silver at Sumitomo’s option, and (ii)
quarterly cash payments equal to 20% of Sumitomo’s
share of payable zinc production from the San Crist�bal
mine, or approximately 7% of total payable zinc production, multiplied
by the zinc price in excess of $1,800 per tonne. The transaction is
subject to the approval of the company and Sumitomo Boards of Directors
and is expected to close in June 2008.
At March 31, 2008 Apex’s aggregate cash,
restricted cash, short and long-term investments totaled $198.9 million.
The company’s aggregate unrestricted cash and
investments totaled $40.2 million. Following closing of the transaction
with Sumitomo, the company’s unrestricted cash
position would increase by $70 million.
During the first week of June, the company and Sumitomo plan to
contribute an additional $10 million to San Crist�bal.
The company will fund $6.5 million of this amount and the remaining $3.5
million will be funded by Sumitomo. As previously noted, the amount of
funding, if any, that San Crist�bal requires
depends on the relative amounts and timing of concentrate production,
revenues and expenditures, which are difficult to predict while the mine
continues to ramp up.
In addition, the company is continuing to explore with Sumitomo other
opportunities to further improve the financial position of Minera San
Crist�bal. Apex and Sumitomo are also
continuing to work with the lenders to increase flexibility under the
San Crist�bal finance agreements..
San Crist�bal Operations Update
The ramp up to full production at San Crist�bal
continues to proceed favorably, with design throughput rates expected to
be consistently achieved by mid-year. The water well field is now
producing sufficient water to allow the plant to operate at design
capacity. Failed wells and pumps caused by excess salinity in the water
are being systematically replaced as necessary. Installation in the
third quarter 2008 of larger stainless steel casings and pumps should
provide a long-term solution. Improvements have been made in the
tailings density and the reclamation of water from the tailings
impoundment should result in additional water availability.
During May, San Crist�bal completed the 14
day throughput test provided for in the Engineering, Procurement and
Construction Management Contract. During the test the plant achieved an
average throughput of 43,000 tonnes per day over 14 consecutive days,
with several days achieving rates of 50,000 tonnes per day, while
confirming the functionality of plant components.
Jeffrey Clevenger, Apex’s President and Chief
Executive Officer commented, “We are pleased
with the support shown by our partner Sumitomo with this initial action
to improve the company’s financial condition,
and for their willingness to discuss additional liquidity support if
necessary. We are proud to stand with our partner as we strengthen our
alliance and commitment to San Crist�bal.”
Forward-Looking Statements
This press release contains forward-looking statements regarding the
company, within the meaning of Section 27A of the Securities Act and
Section 21E of the Exchange Act, including statements regarding the
transaction pursuant to which Apex will receive $70 million from
Sumitomo in exchange for its rights to receive deferred purchase price
payments and the timing of the same, the resulting increase in the
company’s unrestricted cash, the planned
funding by the company of $6.5 million and Sumitomo of $3.5 million to
San Cristobal, potential future funding requirements of San Cristobal,
San Crist�bal ramp-up and the timing of
achieving consistent throughput at designed capacity, production of
sufficient water for plant operation at design capacity, the
functionality of plant components and exploration of opportunities to
improve the financial position of Minera San Cristobal and increase
flexibility under the San Cristobal finance agreements. Actual results
relating to any and all of these subjects may differ materially from
those presented. Factors that could cause results to differ materially
include refusal of the board of directors of the company or Sumitomo to
approve the deferred payments transaction or the failure to satisfy
other customary conditions to closing of the transaction, delay in
closing of the deferred payments transaction, additional funding
requirements of San Cristobal, problems or delays in achieving full mill
throughput rates and anticipated metals production and recovery rates at
San Crist�bal, including shortages and other
problems with reliability of process water, material handling problems
in the stockpile reclaim system, difficulties in blending ore types and
variations in ore grade, inability to improve recoveries without
affecting throughput, plant availability and delivery of operating
supplies to the site, operating or maintenance problems or delays,
continued training needs of the plant workforce, labor disputes or
strikes; higher than anticipated mine or concentrator costs; inability,
without reducing unrestricted cash and investments to unacceptable
levels, to contribute funds to San Crist�bal
if required; lack of success in increasing flexibility under the San
Cristobal financing agreements or improving the financial position of
Minera San Cristobal, problems in emerging financial markets; inability
to obtain debt or equity financing on acceptable terms or at all, and
political unrest and uncertainty in Bolivia. The company assumes no
obligation to update this information. Additional information concerning
factors that could cause actual results to differ materially from those
in the forward-looking statements can be found in the company’s
Form 10-K filed with the SEC for the year ended December 31, 2007..