APEX SILVER MINES LTD
S-1/A, 1997-10-24
SILVER ORES
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<PAGE>
 
    
 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 24, 1997     
 
                                                    REGISTRATION NO.: 333-34685
================================================================================
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549
                                --------------
                                
                             AMENDMENT NO. 2     
                                      TO
                                   FORM S-1
                            REGISTRATION STATEMENT
                                     UNDER
                          THE SECURITIES ACT OF 1933
                                --------------
                           APEX SILVER MINES LIMITED
            (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
 
    CAYMAN ISLANDS                   1044                    NOT APPLICABLE
   (STATE OR OTHER            (PRIMARY STANDARD             (I.R.S. EMPLOYER
     JURISDICTION                 INDUSTRIAL              IDENTIFICATION NO.)
  OF INCORPORATION)          CLASSIFICATION CODE
                                   NUMBER)
 
                        CALEDONIAN HOUSES, GROUND FLOOR
                                  MARY STREET
                           GEORGE TOWN, GRAND CAYMAN
                      CAYMAN ISLANDS, BRITISH WEST INDIES
                                (345) 949-0050
      (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA
               CODE OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
                                --------------
                               THOMAS S. KAPLAN
                      PRESIDENT & CHIEF EXECUTIVE OFFICER
                         APEX SILVER MINES CORPORATION
                        1700 LINCOLN STREET, SUITE 3050
                            DENVER, COLORADO 80203
                                (303) 839-5060
           (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
                  INCLUDING AREA CODE, OF AGENT FOR SERVICE)
                                --------------
                                  COPIES TO:
      PATRICK J. DOOLEY, ESQ.                      ROBERT F. WALL, ESQ.
 AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P.           WINSTON & STRAWN
         590 MADISON AVENUE                  35 WEST WACKER DRIVE, SUITE 4200
      NEW YORK, NEW YORK 10022                    CHICAGO, ILLINOIS 60601
           (212) 872-1000                             (312) 558-5600
                                --------------
 
  APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
 
  If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]
 
  If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
 
  If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the
same offering. [_]
 
  If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
 
                        CALCULATION OF REGISTRATION FEE
<TABLE>   
<CAPTION>
==========================================================================================
                                               PROPOSED       PROPOSED
                                 AMOUNT        MAXIMUM        MAXIMUM
  TITLE OF EACH CLASS OF         TO BE      OFFERING PRICE   AGGREGATE       AMOUNT OF
SECURITIES TO BE REGISTERED  REGISTERED(1)    PER SHARE    OFFERING PRICE REGISTRATION FEE
- ------------------------------------------------------------------------------------------
<S>                          <C>            <C>            <C>            <C>
 Ordinary Shares, par
  value $0.01 per
  share.................       10,350,000        $15        $155,250,000     $47,046(2)
==========================================================================================
</TABLE>    
   
(1)  Includes up to 1,350,000 Ordinary Shares which the U.S. Underwriters and
     Managers have the option to purchase solely to cover over-allotments, if
     any. The number of Ordinary Shares to be registered also includes any
     Ordinary Shares initially offered or sold outside the United States that
     are thereafter reoffered or resold in the United States. See
     "Underwriting".     
   
(2) Includes a filing fee of $30,304 which was paid by the Registrant at the
    time of filing the Registration Statement, and an additional filing fee of
    $16,742 which is being paid concurrently with the filing of this
    amendment.     
                                --------------
 
  THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION
8(A), MAY DETERMINE.
 
================================================================================
<PAGE>
 
                               EXPLANATORY NOTE
 
  This registration statement contains two forms of prospectus; one to be used
in connection with an offering in the United States and Canada (the "U.S.
Prospectus") and one to be used in connection with a concurrent international
offering outside the United States and Canada (the "International
Prospectus"). The two prospectuses are identical except for the front and back
cover pages. The form of U.S. Prospectus is included herein and is followed by
the front and back cover pages for the International Prospectus. The alternate
front cover page and alternate back cover page for the International
Prospectus included herein are labeled "Alternate Front Cover Page for
International Prospectus" and "Alternate Back Cover Page for International
Prospectus", respectively.
<PAGE>
 
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION AND AMENDMENT. A        +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE   +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY  +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THIS REGISTRATION STATEMENT       +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR   +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE      +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE    +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF  +
+ANY SUCH STATE.                                                               +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
                             SUBJECT TO COMPLETION
                                
                             OCTOBER 24, 1997     
 
PROSPECTUS
   
9,000,000 SHARES     
   
LOGO     
ORDINARY SHARES
 
(PAR VALUE $0.01 PER SHARE)
   
Of the 9,000,000 shares (the "Shares") of ordinary shares, par value $0.01 per
share, (the "Ordinary Shares") of Apex Silver Mines Limited (the "Company")
offered hereby (the "Offering"), 7,200,000 Shares are being offered initially
in the United States and Canada by the U.S. Underwriters and 1,800,000 Shares
are being offered initially outside the United States by the Managers. See
"Underwriting". Upon completion of the Offering (assuming the over-allotment
options granted to the U.S. Underwriters and the Managers are not exercised),
the Company will own 76.2 percent of the outstanding share capital of Apex
Silver Mines LDC ("Apex LDC"), the Company's principal operating subsidiary.
See "Corporate Structure". The minority shareholders of Apex LDC (the "Minority
Shareholders") are entitled to sell their shares of Apex LDC to the Company
for, at the Company's sole option, Ordinary Shares on a one-for-one basis,
cash, or a combination of cash and Ordinary Shares. The Company currently
expects that any future purchases by the Company of shares of Apex LDC from the
Minority Shareholders will involve only Ordinary Shares of Apex Silver Mines
Limited. Any such transactions will not affect the beneficial or economic
interest in Apex LDC attributable to shareholders of Apex Silver Mines Limited.
Currently, the Company has approximately 13,601,544 Ordinary Shares outstanding
and approximately 7,077,007 Ordinary Shares reserved for issuance for
approximately 7,077,007 shares of Apex LDC owned by the Minority Shareholders.
If all such shares of Apex LDC were issued, the Company would have 20,678,551
Ordinary Shares outstanding, excluding the Shares to be sold in the Offering.
See "Certain Transactions". An application has been made to list the Shares for
quotation on the American Stock Exchange under the trading symbol "SIL",
subject to notice of issuance.     
   
Prior to the Offering, there has been no public market for the Shares. It is
anticipated that the initial offering price will be between $13.00 and $15.00
per share. See "Underwriting" for information relating to the factors
considered in determining the initial public offering price.     
 
FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE
INVESTORS IN PURCHASING THE SHARES OFFERED HEREBY, SEE "RISK FACTORS" ON PAGE
8.
 
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
 
- --------------------------------------------------------------------------------
<TABLE>   
<CAPTION>
                                                 PRICE TO UNDERWRITING PROCEEDS TO
                                                 PUBLIC   DISCOUNT(1)  COMPANY(2)
<S>                                              <C>      <C>          <C>
Per Ordinary Share..............................  $          $            $
Total(3)........................................  $          $            $
</TABLE>    
- --------------------------------------------------------------------------------
(1) The Company has agreed to indemnify the U.S. Underwriters against certain
    liabilities, including liabilities under the Securities Act of 1933, as
    amended. See "Underwriting".
   
(2) Before deducting certain expenses of the Offering, payable by the Company,
    estimated to be $   .     
   
(3) The Company has granted the U.S. Underwriters and the Managers 30-day
    options to purchase up to an aggregate 1,350,000 additional Ordinary
    Shares, at the Price to Public, less Underwriting Discount, solely to cover
    over-allotments, if any. If the U.S. Underwriters and the Managers exercise
    such options in full, the total Price to Public, Underwriting Discount and
    Proceeds to Company will be $    , $     and $    , respectively. See
    "Underwriting".     
   
These Shares are offered subject to receipt and acceptance by the U.S.
Underwriters, to prior sale, and to the U.S. Underwriters' right to reject any
order in whole or in part and to withdraw, cancel or modify the offer without
notice. It is expected that delivery of the Shares will be made at the office
of Salomon Brothers Inc, Seven World Trade Center, New York, New York, or
through the facilities of the Depository Trust Company, on or about    , 1997.
    
SALOMON BROTHERS INC
                            PAINEWEBBER INCORPORATED
                                                          SCOTIA CAPITAL MARKETS
 
The date of this Prospectus is October  , 1997.
<PAGE>

[MAP OF THE WORLD SHOWING COUNTRIES IN WHICH THE COMPANY'S MINERAL PROPERTIES 
ARE SITUATED]
 
       
  CERTAIN PERSONS PARTICIPATING IN THE OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE SHARES,
INCLUDING STABILIZING BIDS, SYNDICATE COVERING TRANSACTIONS AND THE IMPOSITION
OF PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING".
 
                                      (i)
<PAGE>
 
         ENFORCEABILITY OF CIVIL LIABILITIES UNDER UNITED STATES LAWS
 
  Apex Silver Mines Limited is a Cayman Islands corporation, and certain of
its officers and directors are residents of various jurisdictions outside the
U.S. All or a substantial portion of the assets of the Company and of such
officers and directors, at any one time, are or may be located in
jurisdictions outside the U.S. In particular, Apex Silver Mines LDC, the
Company's majority-owned subsidiary, through which the Company conducts all of
its operations, is a Cayman Islands exempted limited duration company.
Therefore, it ordinarily could be difficult for investors to effect within the
U.S. service of process on the Company or any of those officers and directors
who reside outside the U.S. or to recover against the Company or such
individuals on judgments of courts in the U.S., including judgments predicated
upon civil liability under the U.S. federal securities laws and similar state
laws. Notwithstanding the foregoing, the Company has irrevocably agreed that
it may be served with process with respect to actions based on offers of
Shares made hereby in the U.S. by serving Apex Silver Mines Corporation, 1700
Lincoln Street, Suite 3050, Denver, Colorado 80203, its United States agent
appointed for that purpose.
 
  The Company has been advised by its Cayman Islands counsel, W. S. Walker &
Company, that there may be circumstances where the courts of the Cayman
Islands would not enforce (i) judgments of U.S. courts obtained in actions
against the Company or officers or directors of the Company not resident
within the U.S. predicated upon the civil liability provisions of the U.S.
federal securities laws and similar state laws or (ii) original actions
brought in the Cayman Islands against the Company or such persons predicated
solely upon U.S. federal securities laws. There is no treaty in effect between
the U.S. and the Cayman Islands providing for such enforcement, and there are
grounds upon which Cayman Islands courts may not enforce judgments of U.S.
courts. Certain remedies available under the laws of U.S. jurisdictions,
including certain remedies under U.S. federal securities laws, may not be
allowed in Cayman Islands courts as contrary to public policy.
 
                                 *  *  *  *  *
 
  Except as expressly provided in the Underwriting Agreement, no Shares may be
offered or sold in the Cayman Islands.
 
                                     (ii)
<PAGE>
 
                               PROSPECTUS SUMMARY
   
  The following summary is qualified in its entirety by, and should be read in
conjunction with, the more detailed information and financial statements,
including the notes thereto, appearing elsewhere in this Prospectus. Unless
otherwise indicated, (i) all references to the "Company" include Apex Silver
Mines Limited, its predecessor entities, and each of its direct and indirect
subsidiaries or other entities in which Apex Silver Mines Limited has a direct
or indirect equity or voting interest, (ii) all references to "Apex Limited"
refer exclusively to Apex Silver Mines Limited, and (iii) all references to
"dollars" or "$" refer to dollars of the United States of America. Except where
otherwise specified, all information in this Prospectus assumes that the over-
allotment options granted to the U.S. Underwriters and the Managers are not
exercised. Capitalized terms used herein without definition are defined
elsewhere in this Prospectus. See "Glossary" for definitions of certain
technical terms.     
 
                                  THE COMPANY
 
  Apex Silver Mines Limited is engaged in the exploration and development of
silver properties in South America, Central America and Central Asia. The
Company has accumulated one of the largest, privately controlled portfolios of
silver exploration properties in the world. Since 1993, the Company has
acquired the rights to or gained control of 27 non-producing silver properties
located in or near the traditional silver producing regions of Bolivia, Peru,
Chile, Honduras, Mexico, Kyrghyzstan, Mongolia and Tajikistan. Exploration
efforts since 1993 have successfully produced the Company's first development
project, the San Cristobal project (the "San Cristobal Project") located in
southern Bolivia, where regular and close spaced drilling and analysis have
delineated substantial proven and probable reserves of silver, zinc and lead.
In addition, exploration activities at the Company's other properties in
Bolivia, Peru and Honduras indicate the presence of significant quantities of
mineralized material containing silver and other metals.
 
                              SAN CRISTOBAL STUDY
 
  A first phase feasibility study (the "San Cristobal Study") was completed in
August of 1997 with respect to the San Cristobal Project, which is located in
the San Cristobal district of the Potosi department in southern Bolivia, a
region that has historically produced a significant portion of the world's
silver supply. The San Cristobal Study indicates that the San Cristobal Project
contains in excess of 219 million ounces of silver in the proven and probable
reserves of 122.9 million tonnes of ore based on an average grade of
approximately 1.8 ounces of silver per tonne and contains in excess of 1.8
million tons of zinc and 0.6 million tonnes of lead in these proven and
probable reserves, based on average grades of 1.49 and 0.51 percent,
respectively. At and near the San Cristobal Project, several deposits contain
an additional 57.1 million tonnes of mineralized material, comprised of 43.3
million tonnes of mineralized material with average grades of 1.28 ounces of
silver per tonne and 1.1 percent of zinc and 0.34 percent of lead and 13.8
million tonnes of mineralized material at an average grade of 4.21 ounces of
silver per tonne. The full dimensions of the mineral deposits at the San
Cristobal Project have not yet been determined; mineralized material extends
outward from the identified ore body in most directions as well as to depths
below 200 meters. The reserve estimates are limited by the current extent of
the Company's program of closely spaced drilling analysis. The Company will be
conducting an ongoing exploration program in order to fully delineate the
mineralized zones.
 
  The San Cristobal Study was prepared for the Company by Kvaerner Metals, Davy
Nonferrous Division ("Davy"), an international engineering procurement,
construction and management firm. Davy was also retained by the Company to
confirm independently the reliability of the Company's drilling and sampling
procedures at the San Cristobal Project. A more detailed summary of key
conclusions from the San Cristobal Study is provided elsewhere in this
Prospectus. See "Development Project--San Cristobal Project--First Phase
Feasibility Study Results".
 
                                       1
<PAGE>
 
 
  All aspects of this confirmatory process were controlled by Davy, including
(i) the number of test holes required (four), site selection and drilling of
the four reverse circulation drill holes parallel to holes previously drilled
by the Company; (ii) sample collection, preparation and transportation; and
(iii) assay analysis. Davy's work confirmed results reported by the Company.
Behre Dolbear & Company Inc. ("Behre Dolbear"), a geological and mining
consulting firm, conducted a technical audit of and confirmed, within the
accuracy of plus or minus 25 to 30 percent, the work undertaken by Davy and the
other independent technical specialists who contributed to the San Cristobal
Study. The San Cristobal Study concluded with an economic assessment of the
identified mineral deposits.
 
  Based on the San Cristobal Study, the San Cristobal Project, as currently
delineated, is forecast to produce an average of 14 million ounces of silver,
132,700 tonnes of zinc and 39,500 tonnes of lead per year over the anticipated
11.5 year life of the project. The San Cristobal Project is expected to consist
of two large scale, open pit mining operations using conventional mining and
processing technologies capable of producing and processing an aggregate 30,000
tonnes per day ("tpd") of ore. The stripping ratio for open pit operations is
1.66 tonnes of waste for each tonne of ore. The average cash production cost
over the life of the San Cristobal Project is forecast to be $2.66 per silver
equivalent ounce. Capital expenditures are estimated to total $327 million for
pre-production development and construction to complete the San Cristobal
Project. Based on the favorable results of the San Cristobal Study, the Company
is targeting the completion of a second phase feasibility study of the San
Cristobal Project by the third quarter of 1998 with a goal of securing
committed financing by late 1998. Subject to the completion of a second phase
feasibility study and securing committed financing, the Company anticipates
beginning construction at the San Cristobal Project in early 1999, with silver,
zinc and lead production commencing in early 2001.
 
  In addition, the Company's recent drilling at its Cobrizos property, located
approximately 12 kilometers north of the San Cristobal Project within the San
Cristobal district, has identified approximately 10.8 million tonnes of
mineralized material with an average grade of 4.3 ounces of silver per tonne.
The Company plans to conduct further drilling and engineering studies to
establish proven and probable reserves.
 
  The Company estimates that its San Cristobal district properties may contain
some of the largest known open pit silver, zinc and lead deposits in the world.
Based on the general geology of the San Cristobal district, the drilling and
analysis performed for the San Cristobal Study, and the amount of mineralized
material identified to date, the Company expects that the San Cristobal Project
could be extended in life and/or increased in scale.
 
  There are certain specific risks associated with the San Cristobal Project,
and thus there can be no assurance that the Company will successfully develop
the San Cristobal Project. See "Risk Factors--San Cristobal Project Risks."
 
                                OTHER PROPERTIES
 
  The Company is currently evaluating three other advanced-stage exploration
properties: the El Ocote silver property in southwestern Honduras; the San Juan
de Lucanas silver and gold property in southern Peru; and the Choroma silver
prospect in southern Bolivia. At the El Ocote property, the Company has
completed a conceptual engineering study in order to determine the feasibility
of bringing the property into production. Based on the results of this study,
the Company is planning a comprehensive metallurgical sampling and test
program. Upon completion of the registration of its ownership of the San Juan
de Lucanas property, the Company will conduct a focused exploration and
evaluation program to establish and develop reserves by, among other things,
drilling targets identified
 
                                       2
<PAGE>
 
by previous exploration activities. Sampling of outcrops at the Choroma silver
prospect has defined several anomalies which the Company plans to drill to test
for bulk mineable mineralization and access existing underground workings for
further sampling.
 
  The Company controls a portfolio of silver properties covering more than two
million acres of mineral rights in eight countries. The Company has conducted
limited drilling and sampling at some of these other exploration properties and
anticipates that certain of these properties may contain significant silver
mineralization.
 
                               BUSINESS STRATEGY
   
  The Company is one of a limited number of mining companies with a primary
focus on silver exploration, development and production. The Company's business
strategy is to capitalize on its sizeable reserve and mineralized material base
in order to achieve long-term profitable growth and enhance shareholder value.
The principal elements of the Company's business strategy are as follows: (i)
to complete a second phase feasibility study of a large scale open pit mining
operation at the San Cristobal Project; (ii) to secure the financing required
to develop the San Cristobal Project; (iii) to proceed to develop the San
Cristobal Project into a large scale open pit mining operation; (iv) to
continue exploration and evaluation activities at the Cobrizos property in
southern Bolivia, the El Ocote property in southwestern Honduras, the San Juan
de Lucanas property in southern Peru, and to commence drilling and underground
sampling at the Choroma property in southern Bolivia; (v) to evaluate other
properties in the Company's portfolio of silver exploration properties,
focusing the Company's exploration and development efforts on those properties
which are most likely to contain significant silver mineralization and
divesting itself of those properties that are not of continuing interest to the
Company; and (vi) to identify and acquire additional mining and mineral
properties that the Company believes contain significant amounts of silver or
have exploration potential.     
 
  The Company believes that its expanding international portfolio of
development and exploration properties position it to take advantage of future
increases in demand for silver and certain co-occurring minerals, such as zinc,
lead, copper and gold.
 
                               BUSINESS STRENGTHS
 
  The Company's substantial proven and probable reserves of silver, zinc and
lead, its additional significant silver, zinc, lead, copper and gold
mineralized material, its large exploration property portfolio and its
experienced management team position the Company to become a major precious and
base metals producer and to benefit from favorable developments in these
markets.
 
MAJOR SILVER DEVELOPMENT PROJECT
 
  The San Cristobal Study indicates that the San Cristobal Project may
constitute one of the largest known mineable silver deposits in the world.
Based on the San Cristobal Study, two of the 15 mineralized deposits identified
at the San Cristobal Project are estimated to contain total proven and probable
reserves of 219 million ounces of contained silver as well as significant
amounts of zinc and lead. The San Cristobal Study indicates that production at
the San Cristobal Project could commence as early as 2001 at a rate of 30,000
tpd of ore producing on average 14 million ounces of silver, 132,700 tonnes of
zinc metal and 39,500 tonnes of lead metal, subject to the results of a second
phase feasibility study and securing the required financing. The San Cristobal
Study indicates that the nature and extent of the deposits at the San Cristobal
Project will enable the development of a large scale, open pit mining operation
with low stripping ratios that utilizes conventional mining and processing
technology, enabling the Company to benefit from economies of scale in
production.
 
                                       3
<PAGE>
 
 
DIVERSIFIED PORTFOLIO OF SILVER PROPERTIES
 
  The Company's current property portfolio is diversified not only in terms of
property location, but also in terms of stages of evaluation. The Company's
development, advanced exploration and other exploration stage mineral
properties are located primarily in or near traditional silver producing
regions in South America, Central America and Central Asia. These properties
include substantial holdings throughout southern Bolivia, northern Chile,
southwestern Honduras, southern Peru, and the Zacatecas district of Mexico, as
well as significant mineral concessions in Kyrghyzstan, Mongolia and
Tajikistan. Initial analyses of several of the Company's early-stage
exploration properties indicate the presence of sufficient silver
mineralization to warrant additional exploration and evaluation in order to
determine the potential for future development. Notwithstanding its primary
focus on silver, the Company intends to exploit, where economically feasible,
co-occurring minerals, such as zinc, lead, copper and gold, at its mineral
properties.
 
EXPERIENCED MANAGEMENT TEAM
 
  The management of the Company is comprised of an experienced team of mining
experts, whose experience in managing, identifying, developing, building and
bringing into production major mining enterprises averages approximately 30
years. In addition, many of the members of the Company's management team have
extensive experience in operating large scale mining projects for major
international mining companies throughout the world. Certain of the Company's
senior executives and the members of its Development Committee have had overall
responsibility for the development and operation of major mining operations,
including, among others, one major expansion of an existing iron ore mine
costing $170 million, two new mine developments each costing $165 million, the
operation and administration of major open pit iron and zinc/silver mines
located in Peru, the development, construction and start up of the $230 million
Muruntau gold project in Zarafshan, Uzbekistan, the $450 million (Australian)
Mount Keith open pit nickel mine, and participation in the identification of
several multi-million ounce gold deposits.
 
                                COMPANY HISTORY
 
  The Company was founded in 1993 to acquire and develop attractive silver
properties throughout the world. Since 1993, the Company has accumulated a
portfolio of silver exploration properties covering more than two million acres
in eight countries. These acquisitions were premised on several factors,
including (i) the low price of silver relative to the price of other precious
metals, (ii) a perception that silver supply and demand fundamentals were
stronger than the then-prevailing price of silver suggested, (iii) the general
scarcity of attractive publicly-traded silver companies and (iv) the perception
of negative sentiment within the traditional silver mining community.
 
  In December of 1994, in connection with an investment by Silver Holdings LDC
("Silver Holdings"), the Company reorganized as a Cayman Islands holding
company with regionally targeted subsidiaries. See "Corporate Structure",
"Certain Transactions" and "Principal Shareholders". Following this
reorganization and new investment, Apex Silver Mines LDC, an exempted limited
duration company organized under the laws of the Cayman Islands ("Apex LDC"),
accelerated its program of acquiring silver exploration properties. In March of
1996, in connection with a private placement of common stock (the "1996 Private
Placement"), Apex Limited was organized. The 1996 Private Placement, which was
completed as of August 6, 1996, raised gross proceeds of $34.1 million. See
"Certain Transactions".
 
  Apex Limited conducts all of its operations through Apex LDC and the
subsidiaries of Apex LDC; Apex Limited's assets consist exclusively of its
shares in Apex LDC. Prior to the Offering, Apex Limited owned approximately 66
percent of the issued and outstanding shares of Apex LDC; upon completion
 
                                       4
<PAGE>
 
   
of the Offering (assuming the over-allotment options granted to the U.S.
Underwriters and Managers are not exercised), Apex Limited will own
approximately 76.2 percent of the issued and outstanding share capital of Apex
LDC. Currently, Apex Limited has approximately 13,601,544 Ordinary Shares
outstanding and approximately 7,077,007 Ordinary Shares reserved for issuance
for approximately 7,077,007 shares of Apex LDC owned by the Minority
Shareholders. If all such shares of Apex LDC were issued, Apex Limited would
have 20,678,551 Ordinary Shares outstanding. See "Corporate Structure" and
"Certain Transactions".     
 
                           ADDRESS, PRINCIPAL OFFICE
 
  The Company was formed under the laws of the Cayman Islands and maintains its
registered office at Caledonian House, Ground Floor, Mary Street, George Town,
Grand Cayman, Cayman Islands, British West Indies.
 
  The Company has contracted with Apex Silver Mines Corporation ("Apex
Corporation"), a wholly-owned subsidiary of Apex LDC, for certain management
services. Apex Corporation maintains its principal office at 1700 Lincoln
Street, Suite 3050, Denver, Colorado 80203.
 
                                       5
<PAGE>
 
 
                                  THE OFFERING
 
<TABLE>   
<S>                             <C>
Ordinary Shares offered by the
 Company:
  U.S. Offering...............  7,200,000 shares
  International Offering......  1,800,000 shares
    Total(1)..................  9,000,000 shares
Ordinary Shares to be
 outstanding after the
 Offerings(1)(2)..............  22,601,554
Use of Proceeds...............  The Company intends to use the net proceeds
                                for one or more of the following purposes: (i)
                                feasibility studies, financing and
                                construction and development of its San
                                Cristobal district properties in Bolivia, (ii)
                                exploration and development activities at any
                                of the other properties within the Company's
                                existing portfolio, (iii) maintenance of
                                control or ownership of the Company's existing
                                mineral properties including ongoing lease
                                payments, and paying royalties and other
                                maintenance and registration fees, and (iv)
                                acquisition of additional properties or
                                businesses that are complementary to those of
                                the Company. In addition, the Company may use
                                the net proceeds as working capital and to
                                finance other general corporate purposes. Apex
                                Limited will contribute the gross proceeds
                                from the Offering, and all associated
                                expenses, to Apex LDC.
American Stock Exchange
 Symbol.......................  SIL
</TABLE>    
- --------
   
(1) Does not include up to an aggregate 1,350,000 additional Ordinary Shares
    subject to over-allotment options granted to the U.S Underwriters and the
    Managers. See "Underwriting".     
(2) Excludes (i) Ordinary Shares reserved for issuance pursuant to options that
    were or may be granted pursuant to the Company's Employee Share Option Plan
    and Non-employee Director Share Option Plan, and (ii) approximately
    7,077,007 Ordinary Shares reserved for issuance to the Minority
    Shareholders. See "Executive Compensation--Share Option Plans" and "Certain
    Transactions".
       
       
       
                                  RISK FACTORS
 
  PROSPECTIVE INVESTORS SHOULD CONSIDER CAREFULLY CERTAIN RISK FACTORS RELATING
TO AN INVESTMENT IN THE SHARES. SEE "RISK FACTORS".
 
                                       6
<PAGE>
 
 
                     RESERVES AND MINERALIZED MATERIAL DATA
 
  The following table sets forth the Company's proven and probable reserves of
silver, zinc and lead as of August 29, 1997 at the San Cristobal Project. The
reserves reflected below are based on an equivalent cut-off grade of 1.0 ounce
of silver per tonne and prices of $5.00 per ounce for silver and $0.55 and
$0.30 per pound for zinc and lead, respectively. Proven and probable reserves
include an average recovery of 75.5 percent for silver, 78.0 percent for zinc
and 73.3 percent for lead. The proven and probable reserves and mineralized
material have been determined by Mine Reserves Associates Inc. ("MRA"),
independent consultants working as members of the first phase feasibility
consultants' team. Confirmation of the reserves and mineralized material was
also conducted by another independent consulting firm, Pincock, Allen & Holt
("PAH") which developed an independent resource grade model using a common data
set that checked closely with the reserve estimates. Davy and, separately,
Behre Dolbear acting as technical auditor, reviewed the reserve estimates and
confirmed the results reported below within the accuracy of the study. See
"Properties--Development Project--San Cristobal Project--Reserves and
Mineralized Material."
 
              PROVEN AND PROBABLE RESERVES--SAN CRISTOBAL PROJECT
 
<TABLE>
<CAPTION>
                                                    CONTAINED METALS
                          AVERAGE GRADE                  (000'S)
                 -------------------------------- ---------------------
      TONNES         SILVER                       SILVER   ZINC   LEAD
       (000'S)   (OUNCES/TONNE) ZINC (%) LEAD (%) OUNCES  TONNES TONNES
      --------   -------------- -------- -------- ------- ------ ------
      <S>        <C>            <C>      <C>      <C>     <C>    <C>
      122,891         1.79        1.49     0.51   219,472 1,836   629
</TABLE>
 
  Stripping ratio for the open pit operations is 1.66 tonnes of waste for each
                                 tonne of ore.
   
  The following table sets forth the Company's estimates of the silver, zinc
and lead mineralized material contained in its property portfolio. Mineralized
material is that part of mineral deposits (i) for which tonnage and grade are
computed (a) partly from specific measurements, samples or production data
compiled from appropriately spaced assays of outcrops, trenches, underground
workings or drill holes and (b) partly from projections based on geological
evidence, and (ii) that have not been measured and sampled with sufficient
confidence to determine that the identified deposit can be economically and
legally extracted at the time of such determination. The mineralized material
estimates were determined by MRA for the Tesorera and Jayula deposits, and by
the Company with respect to the other deposits. In the case of the Cobrizos
deposit, the mineralized material estimates were verified by MRA. In the case
of the El Ocote deposit, the mineralized material estimates were developed by
the Company and reviewed by Behre Dolbear.     
 
                              MINERALIZED MATERIAL
 
<TABLE>
<CAPTION>
                                                         AVERAGE GRADE
                                                --------------------------------
                                                    SILVER
                                 TONNES (000'S) (OUNCES/TONNE) ZINC (%) LEAD (%)
                                 -------------- -------------- -------- --------
<S>                              <C>            <C>            <C>      <C>
San Cristobal District
  Tesorera deposit..............      2,611          0.77        1.37     0.37
  Jayula deposit................     32,122          1.22        0.91     0.22
  Animas deposit................      8,600          1.67        1.71     0.76
  Toldos deposit................      3,000          3.86         --       --
  Cobrizos deposit..............     10,800          4.31         --       --
El Ocote deposit................      2,100          9.90         --       --
</TABLE>
 
                                       7
<PAGE>
 
                                 RISK FACTORS
 
  Prospective purchasers of the Shares offered hereby should consider
carefully, in addition to the other information contained in this Prospectus,
the following risk factors:
 
LIMITED OPERATING HISTORY; HISTORY OF LOSSES
   
  The Company, incorporated in the Cayman Islands in March of 1996, is the
successor to the mineral property acquisition, exploration and development
activities conducted by its affiliates since 1993. The Company has incurred
losses since its inception, and expects to incur additional losses for at
least the next four years. As of June 30, 1997, the Company had an accumulated
deficit of $25,575,509. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations".     
 
RESERVE AND OTHER MINERALIZATION ESTIMATES
 
  The reserves and other mineralization figures presented herein, unless
otherwise indicated, are based on estimates of contained silver and other
metals made by independent geologists and/or the Company's personnel. These
estimates are imprecise and depend on geological interpretation and
statistical inferences drawn from drilling and sampling which may prove
unreliable. There can be no assurance that such estimates will be accurate, or
that indicated reserves or mineralization can be profitably exploited. Since
production has not yet commenced on any of the Company's properties, reserves
and other mineralization estimates for these properties may require
adjustments or downward revisions based on actual production experience. Any
material reductions in estimates of the Company's reserves and other
mineralization, or of the Company's ability to extract such reserves or
mineralization, could have a material adverse effect on the results of
operations and financial condition of the Company.
 
  The Company has completed a first phase feasibility study with respect to a
portion of only one of its properties, the San Cristobal Project. Accordingly,
the Company has not established the presence of any proven or probable
reserves at any of its other mineral properties. Although conceptual studies
have been prepared with respect to the Company's El Ocote and San Juan de
Lucanas exploration properties by independent parties using data and
assumptions provided by the Company, these studies involve assumptions and
projections based on a level of data insufficient to establish the presence of
proven or probable reserves. There can be no assurance that subsequent testing
or future feasibility studies will establish additional reserves at the
Company's properties. The failure to so establish additional reserves could
restrict the Company's ability to successfully implement its strategies for
long term growth.
 
  In addition, there can be no assurance that the proven or probable reserves
set forth in the San Cristobal Study will actually be able to be mined and
processed profitably, if at all. The San Cristobal Study is based on many
assumptions, any, some, or all of which may prove to be inaccurate. The
failure of any such assumptions to prove accurate may alter the conclusions of
the San Cristobal Study and may have a material adverse effect on the Company.
In addition, the economics of mining at San Cristobal are based on (i) bench
scale metallurgical testing of drill samples from the property to estimate
extraction yields of silver and other metals, (ii) estimates of the cost of
creating and operating the necessary mine process infrastructure and transport
facilities to profitably extract the minerals at the property and (iii)
estimates of the market price of silver, zinc and lead. Such estimates can be
highly inaccurate. There can be no assurance that the Company will achieve the
anticipated extraction rates or operating costs, or create the necessary
facilities within the budgets, proposed by the San Cristobal Study.
 
 
                                       8
<PAGE>
 
SAN CRISTOBAL PROJECT RISKS
 
  In addition to the other risk factors, the San Cristobal Project involves
the following risks:
 
  The proximity of the town of San Cristobal may adversely affect the
Company's ability to efficiently mine the San Cristobal Project. The Company
expects to seek to relocate the local population of approximately 350. There
can be no assurance that the Company will be able to develop an amicable and
economically feasible relocation program within the time period anticipated by
the Company's development plans. See "Properties--Development Project--San
Cristobal Project".
 
  Although the Company anticipates that the development of the San Cristobal
Project will be successfully completed and that the resulting operations will
be in full production by early 2001, no assurance can be given that the
development of the San Cristobal Project will be completed on a timely basis,
that the operations will achieve the anticipated production capacity or that
the construction costs or ongoing operating costs associated with the
development of the San Cristobal Project will not be higher than anticipated.
The construction of expanded mining operations involves a number of
uncertainties, including factors beyond the Company's control. Failure to
complete the development of the San Cristobal Project on a timely basis or
unexpected cost increases could have a material adverse effect on future
results of operations and financial condition of the Company. If the capital
expenditures required to complete the development of the San Cristobal Project
are significantly higher than expected, there is no assurance that the
Company's capital resources would be sufficient to cover such costs or that
the Company would be able to obtain alternative sources of financing to cover
such costs. See "Use of Proceeds" and "Properties--Development Project--San
Cristobal Project".
 
NO PRODUCTION HISTORY
 
  The Company has no history of silver production. The Company's strategy to
develop its economically feasible properties will require the construction or
rehabilitation and operation of mines, processing plants and related
infrastructure. As a result, the Company is subject to all of the risks
inherent in the establishment of new mining operations and business
enterprises. There can be no assurance that the Company will successfully
establish mining operations or profitably produce silver or other metals at
any of its properties.
 
MANAGEMENT OF GROWTH
 
  The Company anticipates that as its mineral properties are brought into
production and as it acquires additional mineral rights, it will experience
significant growth in its operations. This growth is expected to create new
responsibilities for management personnel, as well as added demands on the
Company's operating and financial systems. There can be no assurance that the
Company will be successful in meeting such demands and managing its
anticipated growth. The Company's growth is dependent, in part, on the
continued identification and acquisition of additional mineral rights. There
can be no assurance that the Company will be successful in acquiring
additional mineral rights.
 
VOLATILITY OF METALS PRICES; HEDGING ACTIVITIES
 
  The profitability of the Company and its long-term viability are dependent
in large part on the market price of silver and other metals, including zinc
and lead. The market prices for such metals are volatile and are affected by
numerous factors beyond the Company's control, including expectations for
inflation, speculative activities, currency exchange fluctuations, global or
regional consumption patterns, supply of and demand for silver and the other
metals, political and economic conditions and production and transportation
costs. The aggregate effect of these factors is impossible for the Company to
predict and could have a material adverse effect on the Company and the
results of its operations.
 
                                       9
<PAGE>
 
  Certain mining operations, including the San Cristobal Project, may be
dependent upon anticipated proceeds from the production of secondary metals
and a decline in the price of any metals extracted by the Company could
materially adversely affect the profitability of the Company. If the market
price for these metals falls below the Company's production costs and remains
at such level for any sustained period, the Company will experience additional
losses and may determine to discontinue the development of a project or mining
at one or more of its properties. See "Metals Market Overview".
 
  The Company currently does not hedge against commodity and base metals price
risks. However, the Company anticipates that as its mineral properties are
brought into production and it begins to derive revenue from the production,
sale and exchange of commodity and base metals, the Company may utilize
various price hedging techniques to lock in forward delivery prices on a
portion of its production, and thereby mitigate some of the risks associated
with fluctuations in the prices of the metals it produces. The Company may
also engage in hedging activities to hedge the risk of exposure to currency
fluctuations as a result of its operations in several foreign countries. There
can be no assurance that the use of hedging techniques will always benefit the
Company. For example, there is the possibility that the Company will lock in
forward deliveries at prices lower than the market price at the time of
delivery. Such an event would negatively affect the Company's revenues and
profits. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations".
 
EXPLORATION AND DEVELOPMENT RISKS
 
  The degree of profitability of the Company's operations will be affected by
the costs and results of its continued exploration and development programs.
The Company is seeking to expand its reserves through a broad program of
exploration and development, including ongoing development activities at the
San Cristobal Project. Mineral exploration is highly speculative in nature,
involves many risks, and frequently is nonproductive. There can be no
assurance that the Company's mineral exploration efforts will be successful.
Once mineralization is discovered, it usually takes a number of years from the
initial phases of exploration until production is possible, during which time
the economic feasibility of production may change. Substantial expenditures
are required to establish ore reserves through drilling, to determine metal
content and metallurgical processes to extract such metal from the ore and, in
the case of new properties, to construct mining and processing facilities. As
a result of these uncertainties, no assurance can be given that the Company's
exploration programs will result in the establishment of new ore reserves.
 
  None of the Company's mineral properties have an operating history upon
which estimates of future cash operating costs may be based. Estimates of
reserves and cash operating costs, particularly for development projects, to a
large extent, are based upon the interpretation of geologic data obtained from
drill holes and other sampling techniques, and feasibility studies which
derive estimates of cash operating costs based upon anticipated tonnage and
grades of ore to be mined and processed, the configuration of the ore body,
expected recovery rates of silver and other metals from the ore, comparable
facility and equipment operating costs, anticipated climatic conditions, and
other factors. As a result, it is possible that actual cash operating costs
and economic returns may differ significantly from those currently estimated
by the Company. It is not unusual in new mining operations to experience
unexpected problems during the start-up phase.
 
  There are a number of uncertainties inherent in any development program,
including the location and dimensions of a deposit, metal content, development
of appropriate metallurgical processes, receipt of necessary governmental
permits and the construction of mining and processing facilities.
 
  The costs involved in building or upgrading all necessary power, water or
transportation facilities at any given property may be considerable,
particularly in light of the frequently remote locations of the Company's
properties. The development of many of the Company's properties will require
the
 
                                      10
<PAGE>
 
creation of extensive infrastructure in order to commence production at such
sites. No assurance can be given that minerals will be discovered in
sufficient quantities to justify commercial operations or that the funds
required for development can be obtained at all, or on a timely basis.
Accordingly, there can be no assurance that the Company's future development
activities or exploration efforts will result in profitable mineral
production.
 
TITLE TO MINERAL PROPERTIES
 
  Although it is the Company's policy to seek to confirm the validity of its
rights to title to, or contract rights with respect to, each mineral property
in which it has a material interest, there is no guarantee that title to its
properties will not be challenged or impugned. Title insurance generally is
not available, and the Company's ability to ensure that it has obtained secure
claim to individual mineral properties or mining concessions may be severely
constrained. The Company has not conducted surveys of all of the claims in
which it holds direct or indirect interests and, therefore, the precise area
and location of such claims may be in doubt. Accordingly, the Company's
mineral properties may be subject to prior unregistered agreements, transfers
or claims, and title may be affected by, among other things, undetected
defects. In addition, the Company may not be able to operate its properties as
permitted, or to enforce its rights with respect to such properties.
 
  The Company's rights to certain of its mineral properties, including certain
of its principal properties at the San Cristobal Project, derive from
leaseholds or purchase option agreements which require the payment of rent or
other installment fees. In the event the Company fails to make such payments
with respect to any of its mineral properties on the relevant due date, the
Company's rights to any such property may lapse. There can be no assurance
that the Company will, or will be able to, effect all such payments by the
requisite payment dates. In addition, certain of the Company's contracts with
respect to its mineral properties mandate development or production schedules.
There can be no assurance that the Company will be able to meet any or all of
such development or production schedules. In addition, the Company's ability
to transfer or sell its rights to certain mineral properties may require
governmental approvals or third party consents, which may not be granted.
 
  The Company's title to, and control over its San Juan de Lucanas property in
Peru has been contested by certain employee creditors of the prior operator of
the property. During the last three years, parts of the property have been
physically controlled by individuals challenging the Company's ownership.
There can be no assurance that the Company will prevail in its attempt to
register title to the property. See "Properties--Advanced Exploration
Properties--San Juan de Lucanas".
 
MINING RISKS AND INSURANCE
 
  The business of mining is generally subject to a number of risks and
hazards, including adverse environmental effects, industrial accidents, labor
disputes, technical difficulties posed by unusual or unexpected geologic
formations, cave-ins, flooding and periodic interruptions due to inclement or
hazardous weather conditions. Such risks can result in damage to and
destruction of, mineral properties or producing facilities, as well as
personal injury, environmental damage, delays in mining, monetary losses and
possible legal liability. Although the Company maintains, and intends to
continue to maintain, insurance with respect to its operations and mineral
properties within ranges of coverage consistent with industry practice, no
assurance can be given that such insurance will be available at economically
feasible premiums. Insurance against environmental risks (including potential
liability for pollution or other disturbances resulting from mining
exploration and production) is not generally available to the Company.
 
FOREIGN OPERATIONS
 
  The Company currently conducts exploration activities in countries with
developing economies, including Bolivia, Chile, Honduras, Mexico and Peru in
Latin America, and Kyrghyzstan, Mongolia and
 
                                      11
<PAGE>
 
Tajikistan in Central Asia. Each of these countries has experienced recently,
or is experiencing currently, economic or political instability.
Hyperinflation, volatile exchange rates and rapid political and legal change,
often accompanied by military insurrection, have been common in these and
certain other emerging markets in which the Company may conduct operations.
The Company may be materially adversely affected by possible political or
economic instability in any one or more of those countries. The risks include,
but are not limited to, terrorism, military repression, expropriation,
changing fiscal regimes, extreme fluctuations in currency exchange rates, high
rates of inflation and the absence of industrial and economic infrastructure.
Changes in mining or investment policies or shifts in the prevailing political
climate in any of the countries in which the Company conducts exploration and
development activities could adversely affect the Company's business.
Operations may be affected in varying degrees by government regulations with
respect to production restrictions, price controls, export controls, income
and other taxes, expropriation of property, maintenance of claims,
environmental legislation, labor, welfare benefit policies, land use, land
claims of local residents, water use and mine safety. The effect of these
factors cannot be accurately predicted.
 
GOVERNMENT REGULATION AND ENVIRONMENTAL MATTERS
 
  All commercial production and mineral exploration and development by the
Company will be subject to foreign laws and regulations controlling not only
the mining of and exploration for mineral properties, but also the possible
effects of such activities upon the environment. These laws and regulations
are comprehensive and deal with matters such as air and water quality, mine
reclamation, waste handling and disposal, the protection of certain species
and the preservation of certain lands. These environmental laws and
regulations may require the acquisition of permits or other authorizations for
certain activities. Environmental legislation is evolving in a manner which
will require stricter standards and enforcement, increased fines and penalties
for non-compliance, more stringent environmental assessments of proposed
projects and a heightened degree of responsibility for companies and their
officers, directors and employees. Permits from a variety of regulatory
authorities are required for many aspects of mine operation and reclamation.
The Company cannot predict what environmental legislation or regulations will
be enacted or adopted in the future or how future laws and regulations will be
administered or interpreted. Compliance with more stringent laws and
regulations, as well as potentially more vigorous enforcement policies or
regulatory agencies or stricter interpretation of existing laws, may
necessitate significant capital outlays, may materially adversely affect the
Company's future operations or may cause material changes or delays in the
Company's intended activities.
 
  The Company's preliminary analysis of the existing mining activities
conducted by the current owner and operator of the Toldos mine at the San
Cristobal Project indicates that low-level effluents from the site may be
draining into a seasonal stream which flows into the Rio Grande and,
ultimately, into the Salar de Uyuni, a salt lake to the north of the San
Cristobal Project. See "Properties--Development Project--San Cristobal
Project". Pursuant to the recently enacted Bolivian mining code, mining
companies are not liable for identified pre-existing conditions. Nonetheless,
if the Company acquires the Toldos property from its current owner, the
Company expects to improve the environmental situation which may currently
exist at the site. The Company does not expect any such remediation program to
have a material adverse effect on the Company's proposed operations at the San
Cristobal Project.
 
  Environmental conditions may exist on other mineral properties currently
owned or controlled by the Company which are unknown to the Company at present
and which have been caused by previous or existing owners or operators of the
properties. The Company has not sought an environmental analysis at any of its
mineral properties, nor has it conducted a comprehensive review of the
environmental laws and regulations applicable to it in each of the various
jurisdictions in which it owns or controls mineral properties. To the extent
the Company is subject to environmental liabilities, the satisfaction of such
liabilities would reduce the Company's net cash flow and could have a material
 
                                      12
<PAGE>
 
adverse effect on the Company's financial position and results of operations.
Should the Company be unable to fund fully the cost of remediation of any
environmental condition, the Company might be required to suspend operations
or enter into interim compliance measures pending completion of the required
remediation.
 
COMPETITION
 
  The mining industry is intensely competitive. The Company competes with many
companies possessing greater financial resources, operational experience and
technical facilities than itself. Competition in the mining business could
adversely affect the Company's ability to attract requisite capital funding or
acquire suitable producing properties or prospects for mineral exploration in
the future. The Company recently has encountered increasing competition from
other mining groups in its efforts to acquire mineral properties.
 
HOLDING COMPANY STRUCTURE RISKS
 
  The Company currently conducts, and will continue to conduct, all of its
operations through subsidiaries. The Company's ability to obtain dividends or
other distributions from its subsidiaries may be subject to, among other
things, restrictions on dividends under applicable local law and foreign
currency exchange regulations in the jurisdictions in which the subsidiaries
operate. The subsidiaries' ability to pay dividends or make other
distributions to the Company may also be subject to their having sufficient
funds from their operations legally available for the payment thereof which
are not needed to fund their operations, obligations or other business plans.
If the Company's subsidiaries are unable to pay dividends or make other
distributions to the Company, the Company's growth may be inhibited after the
proceeds of the Offering are exhausted, unless the Company is able to obtain
additional debt or equity financing on terms which are acceptable to the
Company. In the event of a subsidiary's liquidation, there may not be assets
sufficient for the Company to recoup its investment therein.
 
DISCRETION AS TO USE OF PROCEEDS
 
  Apex Limited will contribute the gross proceeds of the Offering, and all
associated expenses, to Apex LDC. While the Company has identified certain
anticipated uses for the net proceeds, it will have broad discretion as to the
expenditure of such proceeds.
 
REQUIREMENT OF ADDITIONAL FINANCING
 
  The net proceeds of the Offering will not be sufficient to complete the
Company's planned development of the San Cristobal Project. The Company
intends to seek additional financing to complete development of the San
Cristobal Project and to fund the development of other of its mineral
properties, including the Cobrizos, El Ocote, San Juan de Lucanas, and Choroma
properties. Sources of such external financing include bank borrowings and
future debt and equity offerings. There can be no assurance that additional
financing will be available on terms acceptable to the Company and its
shareholders, or at all. The failure to obtain such additional financing could
have a material adverse effect on the results of operations and the financial
condition of the Company.
 
  The operations contemplated by the Company are expected to be highly capital
intensive. There can be no assurance that the Company will be able to secure
the financing necessary to retain its rights to, or to begin, or, if begun, to
sustain production at the Company's mineral properties.
 
DEPENDENCE ON KEY PERSONNEL
 
  The Company is dependent on the services of certain key executives including
its Chairman and the Chief Operating Officer. The loss of these persons, other
key executives or personnel, or the
 
                                      13
<PAGE>
 
inability to attract and retain the additional highly skilled employees
required for the expansion of the Company's activities, may have a material
adverse effect on the Company's business or future operations. Although the
Chairman does not have a written contract certain key executives have entered
into written agreements. See "Executive Compensation--Employment Agreements".
The Company does not intend to maintain "key-man" life insurance on any of its
executive officers or other personnel.
 
SUBSTANTIAL CONTROL BY DIRECTORS AND SIGNIFICANT SHAREHOLDERS
   
  Upon the completion of this Offering, Thomas S. Kaplan and the Company's
directors and principal shareholders, together with members of their families
and entities that may be deemed affiliates of or related to such persons or
entities, will beneficially own approximately 76.2 percent of the Ordinary
Shares outstanding after the Offering, including approximately 7,077,007
Ordinary Shares which would be issued in the event the Company elected to
satisfy all of its obligations to the Minority Shareholders of Apex LDC
arising under the Buy-Sell Agreement through the issuance of Ordinary Shares.
See "Certain Transactions". Mr. Kaplan and others, together with certain of
the shareholders of Apex LDC, including Silver Holdings, have entered into an
agreement with respect to the appointment of two designees of Silver Holdings
to the Company's board of directors for so long as Silver Holdings owns one
percent of the outstanding Ordinary Shares, including Ordinary Shares it may
receive pursuant to the Buy-Sell Agreement. Silver Holdings' investors include
entities affiliated with Mr. Paul Soros, Mr. Richard Katz and Mr. Eduardo
Elsztain, who are directors of the Company. In addition, Quantum Industrial
Partners LDC and Geosor Corporation, collectively own more than 50 percent of
Silver Holdings. By virtue of his ownership of Geosor Corporation and his
position with Soros Fund Management LLC, an investment advisor to Quantum
Industrial Partners LDC, Mr. George Soros may have the power to direct the
election of the directors of Silver Holdings, who in turn, will elect the two
designees. See "Certain Transactions". Such a high level of ownership by such
persons may have a significant effect in delaying, deferring or preventing a
change in control of the Company or other events which could be of benefit to
the Company's other shareholders. See "Principal Shareholders".     
 
CONFLICTS OF INTEREST
 
  Certain officers and directors of the Company are officers and/or directors
of, or are associated with, other natural resource companies that acquire
interests in mineral properties. Such associations may give rise to conflicts
of interest from time to time. See "Certain Transactions."
 
SUBSTANTIAL DILUTION
   
  As a result of the Offering, persons purchasing Shares in the Offering will
experience immediate and substantial dilution in the net tangible book value
per share of $9.59. See "Dilution".     
 
ABSENCE OF DIVIDENDS
 
  The Company does not anticipate paying dividends to existing or future
shareholders for the foreseeable future. It is the present intention of the
Company to retain all earnings, if any, in order to support the future growth
of its business. Any determination in the future to pay dividends will be
dependent upon the Company's consolidated results of operations, financial
condition, cash requirements, future prospects and such other factors as the
Company deems appropriate at the time.
 
NO PRIOR PUBLIC MARKET
 
  Prior to the Offering, there has been no public market for the Shares. An
application will be made to have the Shares listed for quotation on the
American Stock Exchange. There can be no assurance that an active public
market for the Shares will develop, or if such market does develop, be
sustained. The initial public offering price for the Shares will be determined
by negotiations among the Company and the underwriters. There can be no
assurance that the market price of the Shares after
 
                                      14
<PAGE>
 
the Offering will equal or exceed the initial public offering price. The
market price of the Shares could be subject to significant fluctuations in
response to variations in quarterly operating results, developments relating
to the Company and general trends affecting the metals industry. In addition,
broad market fluctuations and general economic and political conditions may
adversely affect the market price of the Shares regardless of the Company's
performance. See "Underwriting" for a description of the factors to be
considered in determining the initial public offering price.
 
ORDINARY SHARES ELIGIBLE FOR FUTURE SALE
 
  Sales of substantial amounts of Ordinary Shares in the public market
following the Offering could adversely affect the market price of the Shares.
The Company and certain of its directors and executive officers, and all
current shareholders (including the shareholders of Apex LDC) have agreed,
during the 180 days following the date of the Prospectus, not to sell any
Ordinary Shares without the prior written consent of Salomon Brothers Inc
("Salomon"). See "Certain Transactions", "Ordinary Shares Eligible for Future
Sale" and "Underwriting".
 
TAX RISKS
 
  Potential investors should inform themselves as to the tax consequences of
acquiring, holding and disposing of Shares in their particular circumstances.
In particular, potential investors that are U.S. taxpayers should consider
that the Shares may be considered interests in a "passive foreign investment
company" ("PFIC") for U.S. tax purposes, and should consult their own tax
advisers as to the taxation of U.S. shareholders of PFICs in light of their
particular circumstances. If the Company were deemed to be a PFIC, then a U.S.
taxpayer who disposes or is deemed to dispose of Shares at a gain generally
would be required to treat such gain as ordinary income and pay an interest
charge on a portion of the gain unless the U.S. taxpayer makes a timely
election (a "QEF election") to have the Company treated as a "qualified
electing fund".
 
  A U.S. taxpayer who makes a QEF election generally must report on a current
basis his share of any ordinary earnings and net capital gain of the Company
for any taxable year in which the Company is a PFIC. A QEF election generally
must be made for the first taxable year of the U.S. taxpayer's ownership of
Shares during which the Company is a PFIC, provided that the Company complies
with certain reporting requirements. The Company intends to comply with all
reporting requirements necessary for U.S. investors to make QEF elections with
respect to the Company and will upon request provide to U.S. investors such
information as may be required to make such QEF elections effective. For
taxable years beginning after December 31, 1997, a U.S. investor who owns
marketable stock in a PFIC may elect to recognize gain or loss on a mark-to-
market basis in lieu of making a QEF election. For a further discussion, see
"Taxation--United States Federal Income Taxation--Passive Foreign Investment
Company Considerations".
 
FORWARD-LOOKING STATEMENTS
 
  This Prospectus contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended (the "Securities Act"),
and Section 21E of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). All statements, other than statements of historical facts,
included in this Prospectus that address activities, events or developments
that the Company expects, believes, intends or anticipates will or may occur
in the future, including such matters as future investments in existing
development projects and the acquisition of new mineral properties (including
the amount and nature thereof), the use of proceeds of this Offering, business
strategies and the future need for additional funds from outside sources, are
forward-looking statements. Forward-looking statements are inherently subject
to risks and uncertainties, many of which cannot be predicted with accuracy
and some of which might not even be anticipated. Future events and actual
results, financial and otherwise, could differ materially from those set forth
in or contemplated by the forward-looking statements herein.
 
                                      15
<PAGE>
 
                                USE OF PROCEEDS
   
  The aggregate net proceeds to the Company from the sale of Shares offered
hereby are estimated to be approximately $   (or approximately $   if the U.S.
Underwriters' and the Managers' over-allotment options are exercised in full)
after deducting the underwriting discount and estimated fees and expenses
payable by the Company in connection with the Offering. The Company intends to
use the net proceeds for one or more of the following purposes: (i)
feasibility studies, financing, and construction and development of the San
Cristobal Project, (ii) exploration and development activities at any of the
other properties within the Company's existing portfolio, (iii) maintenance of
control or ownership of the Company's existing mineral properties by making
ongoing lease payments, and paying royalties and other maintenance and
registration fees, and (iv) acquisition of additional properties or businesses
that are complementary to those of the Company. In addition, the Company may
use the net proceeds for working capital and other general corporate purposes.
Apex Limited will contribute the gross proceeds from the Offering, and all
associated expenses, to Apex LDC in exchange for an equal number of Apex LDC
shares.     
   
  Although the Company has not determined a specific allocation of proceeds
among the various uses described above, the Company currently estimates that
it will spend $10 million in 1998 in connection with the second phase
feasibility study, and an additional $10 million and $15 million,
respectively, for exploration activities at the San Cristobal Project and the
Company's other mineral properties over the next three years performing
reconnaissance, field mapping and sampling, including drilling. The Company
expects to incur approximately $5 million per annum in general and
administrative expenses. The amounts actually expended on each of the uses
described above will vary depending upon, among other factors, the results of
the second phase feasibility study and the success of the Company's
exploration and development activities. Additional financing will be required
to fund future development activities and there can be no assurance that such
financing will be available at all, or on terms acceptable or favorable to the
Company and its shareholders. See "Risk Factors--Discretion as to Use of
Proceeds" and "--Requirement of Additional Financing".     
 
                                DIVIDEND POLICY
 
  The Company has never paid any dividends on its Ordinary Shares and expects
for the foreseeable future to retain all of its earnings from operations for
use in expanding and developing its business. Any future decision as to the
payment of dividends will be at the discretion of the Company's board of
directors and will depend upon the Company's earnings, receipt of dividends
from its subsidiaries, financial position, capital requirements, plans for
expansion and such other factors as the board of directors deems relevant. See
"Risk Factors--Absence of Dividends".
 
                                      16
<PAGE>
 
                                CAPITALIZATION
   
  The following table sets forth the capitalization of the Company as of June
30, 1997, and such capitalization as adjusted to reflect (i) the sale of
9,000,000 Shares offered hereby at an assumed initial public offering price of
$14.00 per share, after deduction of the underwriting discount and estimated
expenses of the Offering payable by the Company and (ii) the application of
the estimated net proceeds. See "Certain Transactions" and "Underwriting".
This table should be read in conjunction with the Consolidated Financial
Statements of the Company and the notes thereto included elsewhere in the
Prospectus. See "Use of Proceeds".     
 
<TABLE>   
<CAPTION>
                                                              JUNE 30, 1997
                                                           --------------------
                                                           ACTUAL   AS ADJUSTED
                                                           -------  -----------
                                                             (IN THOUSANDS)
<S>                                                        <C>      <C>
SHAREHOLDERS' EQUITY:
  Ordinary Shares, $0.01 par value, 50,000,000 Ordinary
   Shares authorized, 13,194,453 Ordinary Shares issued
   and outstanding prior to the Offering, 22,194,453
   Ordinary Shares issued and outstanding upon
   consummation of the Offering........................... $   132   $    222
  Contributed Surplus.....................................  38,749    154,489
  Accumulated Deficit..................................... (25,575)   (25,575)
                                                           -------   --------
  Total Shareholders' Equity..............................  13,306    129,136
                                                           -------   --------
    Total Capitalization.................................. $13,306   $129,136
                                                           =======   ========
</TABLE>    
 
                                      17
<PAGE>
 
                                   DILUTION
   
  As of June 30, 1997, the net tangible book value of the Company was
$13,163,995 or $1.00 per share outstanding. After giving effect to the sale of
the 9,000,000 Shares offered hereby at an assumed initial public offering
price of $14.00 per Share, the issuance of approximately 7,077,007 Ordinary
Shares in exchange for approximately 7,077,007 shares of Apex LDC pursuant to
the Buy-Sell Agreement, deduction of the underwriting discount and estimated
expenses of the Offering payable by the Company and the application of the net
proceeds therefrom as set forth under "Use of Proceeds", the pro forma net
tangible book value of the Company as of June 30, 1997 would have been
$128,993,995 or $4.41 per share. This change represents an immediate increase
in net tangible book value of $3.41 per share to existing shareholders and an
immediate dilution of $9.59 per share to purchasers of the shares of the
Company's share capital at the initial public offering price. The following
table illustrates this per share dilution:     
 
<TABLE>   
     <S>                                                          <C>   <C>
     Initial public offering price...............................       $14.00
      Net tangible book value per share at June 30, 1997(1)...... $1.00
      Increase attributable to the sale by the Company of
       9,000,000 Ordinary Shares(2)..............................  3.41
                                                                  -----
     Pro forma net tangible book value per share after the
          Offering(2)(3).........................................         4.41
                                                                        ------
     Dilution to new investors...................................       $ 9.59
                                                                        ======
</TABLE>    
 
  The following table sets forth as of June 30, 1997, the difference between
the number of Shares purchased, the total consideration paid and the average
price per share paid by the existing shareholders and to be paid by new
investors in the Offering:
 
<TABLE>   
<CAPTION>
                            SHARES PURCHASED  TOTAL CONSIDERATION
                           ------------------ -------------------- AVERAGE PRICE
                             NUMBER   PERCENT    AMOUNT    PERCENT   PER SHARE
                           ---------- ------- ------------ ------- -------------
<S>                        <C>        <C>     <C>          <C>     <C>
Existing shareholders..... 13,194,453   59.4% $ 38,280,632   24.8%    $ 2.90
New investors.............  9,000,000   40.6%  115,830,000   75.2%     12.87
                           ----------  -----  ------------  -----
  Total................... 22,194,453  100.0% $154,110,632  100.0%
                           ==========  =====  ============  =====
</TABLE>    
- --------
(1) Net tangible book value per share is determined by dividing total net
    tangible assets (assets less deferred organizational costs less
    liabilities) by the number of Ordinary Shares outstanding prior to the
    Offering.
   
(2) Excludes (i) up to an aggregate 1,350,000 additional Ordinary Shares
    subject to over-allotment options granted to the U.S. Underwriters and the
    Managers, and (ii) 453,125 Ordinary Shares subject to options granted
    under the Employee Share Option Plan and the Non-employee Director Share
    Option Plan, and includes the issuance of approximately 7,077,007 Ordinary
    Shares in exchange for approximately 7,077,007 shares of Apex LDC,
    pursuant to the Buy-Sell Agreement. See "Incentive Compensation", "Certain
    Transactions" and "Underwriting".     
(3) Pro forma net tangible book value per share is determined by dividing the
    number of Ordinary Shares outstanding after giving effect to the Offering
    into the net tangible book value of the Company after application of the
    net proceeds of the Offering. Dilution is determined by substituting pro
    forma net tangible value per share after the Offering from the initial
    public offering price per Share to be paid by new investors for each
    Share.
 
                                      18
<PAGE>
 
                     SELECTED CONSOLIDATED FINANCIAL DATA
 
  The selected consolidated financial data for the Company for the years ended
December 31, 1996 and 1995, and the period from December 22, 1994 (inception)
through December 31, 1994 are derived from the audited consolidated financial
statements of the Company. The selected consolidated financial data as of and
for the six month periods ended June 30, 1997 and 1996 have been derived from
the Company's unaudited financial statements which, in the opinion of
management, include all significant normal and recurring adjustments necessary
for a fair presentation of the financial position and results of operations
for such unaudited period. The selected financial data not been presented
herein as it was immaterial. The following table should be read in conjunction
with the Consolidated Financial Statements and Management's Discussion and
Analysis of Financial Condition and Results of Operations.
 
<TABLE>   
<CAPTION>
                                                                        FOR THE PERIOD
                                                                         DECEMBER 22,
                             SIX MONTHS                                      1994
                                ENDED                                    (INCEPTION)
                              JUNE 30,       YEAR ENDED DECEMBER 31,       THROUGH
                          -----------------  -------------------------   DECEMBER 31,
                            1997     1996        1996         1995           1994
                          --------  -------  ------------  -----------  -------------- 
                            (UNAUDITED)
                                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S>                       <C>       <C>      <C>           <C>          <C>           
STATEMENT OF OPERATIONS:
Interest income.........  $    475  $    72  $        575  $       462      $   15
                          --------  -------  ------------  -----------      ------
Total income............       475       72           575          462          15
                          --------  -------  ------------  -----------      ------
Expenses
 Exploration............     7,961    4,323         9,591        1,560         105
 Administrative.........     2,415      498         1,924          982         148
 Consulting.............     1,060      792         2,506          560         145
 Professional fees......       776      421         1,096          657          20
 Amortization and depre-
  ciation...............        41       28            57           57         --
                          --------  -------  ------------  -----------      ------
Total expenses..........    12,253    6,062        15,174        3,816         418
                          --------  -------  ------------  -----------      ------
Loss before minority
 interest...............   (11,778)  (5,990)      (14,599)      (3,354)       (403)
Minority interest.......       --     2,666         2,876        1,493         190
                          --------  -------  ------------  -----------      ------
Net loss for the
 period.................  $(11,778) $(3,324) $    (11,723) $    (1,861)     $ (213)
                          ========  =======  ============  ===========      ======
Net loss per Ordinary
 Share..................  $  (0.89) $ (0.38) $      (1.11) $     (0.21)     $(0.02)
                          ========  =======  ============  ===========      ======
Weighted average number
 of Ordinary Shares
 outstanding ...........    13,195    8,823        10,596        8,823       8,823
CASH FLOW DATA:
Net cash provided by
 financing activities ..  $    172  $ 2,820  $     35,269  $     6,430      $  686
Net cash used in
 operating activities...   (12,982)  (4,939)      (12,092)      (3,491)       (329)
Net cash used in
 investing activities...    (9,051)     --           (524)         --          --
                          --------  -------  ------------  -----------      ------
Net increase (decrease)
 in cash................  $(21,861) $(2,119) $     22,653  $     2,939      $  357
                          ========  =======  ============  ===========      ======
<CAPTION>
                              JUNE 30,                    DECEMBER 31,
                          -----------------  -----------------------------------------
                            1997     1996        1996         1995           1994
                          --------  -------  ------------  -----------  --------------
                            (UNAUDITED)
                                           (DOLLARS IN THOUSANDS)
<S>                       <C>       <C>      <C>           <C>          <C>            
BALANCE SHEET DATA:
Total assets............  $ 14,291  $ 1,476  $     26,797  $     6,820      $9,929
Total liabilities.......       985    1,005         2,486          359         114
Minority interest.......       --       210           --         2,876       4,369
Shareholders' equity....    13,306      261        24,311        3,585       5,446
</TABLE>    
 
                                      19
<PAGE>
 
                              CORPORATE STRUCTURE
 
HISTORY OF THE COMPANY
 
  Beginning in 1993, the Company and its founders embarked on a program of
acquiring silver exploration properties throughout the world. In December of
1994, in connection with an investment by Silver Holdings, the Company
reorganized as a Cayman Islands holding company with subsidiaries based on
regional operations. See "Certain Transactions". Following this reorganization
and new investment, Apex LDC accelerated its program of acquiring silver
exploration properties. In March of 1996, in connection with the 1996 Private
Placement, Apex Silver Mines Limited was organized. The 1996 Private
Placement, which was completed as of August 6, 1996, raised gross proceeds of
$34.1 million for an approximately 21 percent interest (on a fully diluted
basis) in the Company. See "Certain Transactions".
   
  As an "exempted" company under the laws of the Cayman Islands, the Company
may not carry on business in the Cayman Islands, except in furtherance of the
business of the Company carried on outside the Cayman Islands. Substantially
all of Apex Limited's assets consist of shares of Apex LDC. Currently, Apex
Limited owns approximately 66 percent of Apex LDC. Upon completion of the
Offering (assuming the over-allotment options granted to the U.S. Underwriters
and the Managers are not exercised), Apex Limited will own 76.2 percent of the
outstanding share capital of Apex LDC. The Minority Shareholders are entitled
to sell their shares of Apex LDC to Apex Limited for, at Apex Limited's sole
option, Ordinary Shares on a one-for-one basis, cash, or a combination of cash
and Ordinary Shares. The Company currently expects that any future purchases
by Apex Limited of shares of Apex LDC from the Minority Shareholders will
involve only Ordinary Shares of Apex Limited. Any such transactions will not
affect the beneficial and economic interest in Apex LDC attributable to
shareholders of Apex Limited. Currently, Apex Limited has approximately
13,601,544 Ordinary Shares outstanding and approximately 7,077,007 Ordinary
Shares reserved for issuance for approximately 7,077,007 shares of Apex LDC
owned by the Minority Shareholders. If all such shares of Apex LDC were
issued, Apex Limited would have 20,678,551 Ordinary Shares outstanding,
excluding the Shares to be sold in the Offering. See "Principal Shareholders"
and "Certain Transactions". Apex LDC conducts its business primarily through a
series of directly and indirectly owned subsidiaries. The Company has
approximately 33 full-time employees.     
 
  Apex LDC's, and hence the Company's, principal operating subsidiaries are
(i) Andean Silver Corporation LDC ("Andean"), which is indirectly engaged in
exploration and development activities in South America; (ii) Apex Asia LDC
("Apex Asia"), which is engaged, directly and indirectly, in exploration
activities in Asia; (iii) Apex Corporation, which serves as the principal
management services provider to the Company pursuant to the terms of a
Management Services Agreement executed in connection with Apex Corporation's
formation in the fall of 1996; (iv) Minera de Cordilleras (Honduras), S. de
R.L. ("Cordilleras Honduras"), which is engaged in exploration and development
activities in Honduras; (v) Cordilleras Silver Mines Ltd. ("Cordilleras
Bahamas"), which is indirectly engaged in exploration and development
activities in Honduras; and (vi) Compania Minerales de Zacatecas, S. de R.L.
de C.V. ("CMZ"), which is indirectly engaged in exploration activities in
Mexico. See "Certain Transactions".
 
  Apex LDC is the sole beneficial owner of Andean, with a 99 percent interest;
the remaining one percent interest is held by Apex Partners LDC ("Apex
Partners"), which is wholly beneficially owned by Apex LDC. Apex LDC is the
sole beneficial owner of ASC Bolivia LDC ("ASC Bolivia"), with a 2.5 percent
interest; the remaining 97.5 percent is held by Andean. Apex LDC is the sole
beneficial owner of ASC Peru LDC ("ASC Peru"); Andean holds a 99 percent
interest in ASC Peru, and ASC Partners LDC ("ASC Partners"), which is wholly
and beneficially owned by Apex LDC, holds the remaining one percent interest.
The Company anticipates that individual properties will be contributed to new
special purpose holding companies prior to the commencement of production at
such properties. The formation of such additional subsidiaries will not
involve any dilution to the Company's beneficial ownership of the underlying
properties.
 
                                      20
<PAGE>
 
  Apex Asia, which is wholly beneficially owned by Apex LDC, has formed joint
venture entities to own or otherwise hold interests in silver resource
properties in Kyrghyzstan and Mongolia, and is in the process of doing so in
Tajikistan. In Kyrghyzstan, Apex Asia holds a 50 percent interest in " "JSC'
Kumushtak" ("Kumushtak Mining"). The remaining 50 percent interest in
Kumushtak Mining is held by the North Kyrghyz Geological Expedition, a
government mining enterprise which operates in the Kumushtak region in
northwestern Kyrghyzstan. Apex Asia owns 99 percent of Kumushtak Management
Company; Apex Partners holds the remaining one percent. In Mongolia, Apex Asia
has organized "Asgatmongu' Company, Ltd. ("Asgat Mining"). Apex Asia holds
approximately one half of the total interests in Asgat Mining and has
appointed two individuals, including the chairman, of Asgat Mining's four
member board of managers. Mongolrostvetmet, a joint association owned by the
government of Mongolia and Zarubeshvetmet, a recently privatized company
organized under the laws of the Russian Federation, holds the remaining
interest in Asgat Mining. In Tajikistan, Apex Asia has entered into an
agreement with the Adrasman Mining Venture ("Adrasman Mining"), an agency of
the government of Tajikistan, to form "Kanimansur Ltd." Joint Mining Venture
("Kanimansur Mining"). Kanimansur Mining will be 49 percent owned by Apex
Asia.
 
  In Mexico, CMZ serves as the holding company for Compania Metalurgica Largo,
S. de R.L. de C.V. ("Largo"), Compania Metalurgica Barones, S. de R.L. de C.V.
("Barones") and Minera de Cordilleras, S. de R.L. de C.V. ("Cordilleras
Mexico"). Apex LDC is the sole beneficial owner of CMZ, with a 99 percent
interest; Apex Partners holds the remaining one percent interest. Apex LDC is
the sole beneficial owner of Cordilleras Mexico; CMZ holds a 99 percent
interest and Apex Partners holds the remaining one percent interest. Barones
and Largo are each owned 75 percent by CMZ and 25 percent by Minera Dolore
Anguatias y Anexas, S.A. de C.V., an unaffiliated Mexican company.
 
  Apex LDC is the sole owner of each of Cordilleras Bahamas and Apex
Corporation. Apex LDC is the sole beneficial owner of Cordilleras Caymans with
a 20 percent interest; the remaining 80 percent interest is held by
Cordilleras Bahamas. Apex LDC is the sole beneficial owner of Cordilleras
Honduras, with a 99 percent interest; the remaining one percent interest is
held by Apex Partners.
 
                                      21
<PAGE>
 
   MANAGEMENT'S DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF
                                  OPERATIONS
 
GENERAL
 
  The following discussion and analysis should be read in conjunction with the
Consolidated Financial Statements and related notes thereto which appear
elsewhere in this Prospectus.
 
  The Company is a mining exploration and development company that holds a
portfolio of silver exploration and development properties in South America,
Central America and Central Asia. None of these properties are in production
and, consequently, the Company has no current operating income or cash flow.
 
BACKGROUND
 
  In mid-1993, Apex Silver Mines Ltd. ("Apex Bermuda") was established to
acquire and develop silver exploration properties throughout the world.
 
  On December 22, 1994, Apex Bermuda contributed substantially all of its
assets to Apex LDC, a limited duration company formed under the laws of the
Cayman Islands.
   
  In March of 1996, Apex Limited, a limited liability company formed under the
laws of the Cayman Islands, was incorporated in order to facilitate the 1996
Private Placement. In connection with the 1996 Private Placement, Apex Limited
issued Ordinary Shares to certain of the non-U.S. investors in Apex LDC in
exchange for their interests in Apex LDC. These transactions, and the 1996
Private Placement were completed effective as of August 6, 1996. Currently,
Apex Limited owns approximately 66 percent of Apex LDC. Upon the completion of
the Offering (assuming the over-allotment options granted to U.S. Underwriters
and the Managers are not exercised) Apex Limited will own 76.2 percent of the
outstanding share capital of Apex LDC. The Minority Shareholders are entitled
to sell their shares of Apex LDC to the Company for, at Apex Limited's sole
option, Ordinary Shares of Apex Limited on a one for one basis, cash, or a
combination of cash and Ordinary Shares. The Company currently expects that
any future purchases by Apex Limited of shares of Apex LDC from the Minority
Shareholders will involve only Ordinary Shares. Any such transactions will not
affect the beneficial and economic interest in Apex LDC attributable to
shareholders of Apex Limited. See "Certain Transactions". Currently, Apex
Limited has approximately 13,601,544 Ordinary Shares outstanding and
approximately 7,077,007 Ordinary Shares reserved for issuance for
approximately 7,077,007 shares of Apex LDC owned by the Minority Shareholders.
If all such shares of Apex LDC were issued, Apex Limited would have 20,678,551
Ordinary Shares outstanding, excluding the Shares to be sold in the Offering.
    
  For United States investors, ownership of the Shares may have certain tax
consequences. See "Tax Considerations".
 
THE SAN CRISTOBAL PROJECT
 
  From 1994 to 1996, the properties comprising the San Cristobal Project were
acquired in a series of transactions. See "Properties--Development Project--
San Cristobal Project." In 1996, the Company began exploring these properties,
and discovered the presence of a significant silver zinc and lead deposit with
the potential to be developed as a large scale open-pit mining project. In the
fall of 1996, an in-fill drilling program using reverse circulation ("RC") and
diamond core drilling was continued in order to delineate the deposit and the
amount of reserves. In addition, an expanded exploration effort at the San
Cristobal Project resulted in the discovery of additional silver and base
metal anomalies.
 
  Based on the San Cristobal Study, the San Cristobal Project is forecast to
produce annually an average of 14 million ounces of silver, 132,700 tonnes of
zinc and 39,500 tonnes of lead during an expected minimum life of 11.5 years.
The San Cristobal Project is expected to consist of two large
 
                                      22
<PAGE>
 
scale, open pit mining operations using conventional mining and processing
technologies capable of producing and processing an aggregate 30,000 tonnes
per day ("tpd") of ore. The average cash production cost over the life of the
San Cristobal Project is forecast to be $2.66 per silver equivalent ounce. See
"Glossary". Capital expenditures are estimated to total $327 million for pre-
production development and construction to complete the San Cristobal Project.
Based on the favorable results of the San Cristobal Study, the Company is
targeting the completion of a second phase feasibility study of the San
Cristobal Project by the third quarter of 1998 with a goal of securing
committed financing by late 1998. Subject to the completion of a second phase
feasibility study and committed financing, the Company anticipates beginning
construction at the San Cristobal Project in early 1999, with silver, zinc and
lead production commencing in early 2001.
 
  The Company plans to commission this second phase feasibility study in the
fall of 1997, immediately after the completion of the Offering. The Company
also intends to continue an extensive drilling program in order to (i) further
define the existing ore bodies, (ii) increase the San Cristobal Project's
proven and probable reserves and (iii) evaluate other areas of potential
mineralization. At the same time, contracts for power supply, transportation,
and smelting and refining of metal concentrates will be negotiated.
 
  If the results of this second phase feasibility study confirm the economic
feasibility of the San Cristobal Project, and if no new properties emerge in
the interim that are considered to be more attractive development
opportunities, the Company expects to devote the majority of the proceeds from
the Offering to financing its equity portion of the construction and
development costs of the San Cristobal Project. See "Use of Proceeds".
   
  The Company has retained Rothschild Natural Resources LLC and Barclays Bank
PLC as the Company's financial advisor and arranger, respectively, in
connection with the anticipated project financing of the San Cristobal
Project. The Company anticipates that project financing activities will
commence on a preliminary basis in late 1997 and then accelerate with the
delivery of the a second phase feasibility study in mid-1998 with financing to
be secured by late 1998. If this timetable is achieved, project construction
could commence in early 1999 and, after an approximate two-year construction
and development program, production could commence in early 2001.     
       
OTHER PROJECTS
 
  The Company is also assessing the economic viability of (i) the Cobrizos
property in Bolivia, which may be developed in conjunction with the San
Cristobal Project; (ii) the El Ocote project in Honduras; (iii) the San Juan
de Lucanas project in Peru; and (iv) the Choroma property in Bolivia.
 
  The Cobrizos property is located approximately 12 kilometers north of the
San Cristobal Project. Recent drilling by the Company suggests the presence of
approximately 10.8 million tonnes of mineralized material containing 4.3
ounces of silver per tonne and 0.2 percent copper. This mineralized material
estimate has been reviewed and verified by MRA, an independent mine geology
consulting firm. The mineralized body is amenable to open pit mining and is
being considered as a satellite mining operation that could provide additional
feed to the proposed mill to be constructed at the San Cristobal Project,
thereby enhancing the silver grade of the ore processed by the mill after the
early years of operation at the San Cristobal Project.
 
  The El Ocote property is located in southeast Honduras. Behre Dolbear
reviewed the Company's estimate that the property contains approximately 2.1
million tonnes of mineralized material averaging 9.9 ounces of silver per
tonne and prepared a conceptual study of this property for the Company in
1996. On the basis of this initial study, the Company conducted further field
work and a second conceptual study. This latest study, which was performed by
Davy, utilized the earlier resource estimates, and estimated new capital and
operating costs and production schedules based on underground mining and heap
leach processing. The Company expects to conduct an additional round
 
                                      23
<PAGE>
 
of field work and to undertake metallurgical sampling and heap leach tests. If
warranted, these analyses will be followed by additional drilling to establish
proven and probable reserves.
 
  In June of 1995, PAH prepared a conceptual study for the rehabilitation of
an idled mine at the San Juan de Lucanas property. The results indicated that
approximately $10 million in capital expenditures would be required to
rehabilitate the mine to a 500 tpd capacity operation. The Company believes
that the identification of additional reserves at the site would be required
to justify such an investment. In addition, the Company has experienced
lengthy delays in its effort to register its title to the properties
comprising the San Juan de Lucanas property. While the Company believes its
legal position is secure, it is not currently possible to estimate when this
registration process will be completed. The Company expects to begin
exploration and commission a first phase feasibility study of the property
after its title thereto has been perfected.
 
  The Choroma property is located in the Bolivian silver-lead belt, 600
kilometers south of La Paz and 80 kilometers north of the Argentine border
near the town of Tupiza at an elevation of approximately 3,300 meters. During
early 1996, the Company channel-sampled many of the rock outcrops and
identified several anomalies 44 to 86 meters long with average grades between
1.8 and 4.0 ounces of silver per tonne. These anomalies will be drilled and
sampled to test for bulk mineable mineralization. In addition, the Company
will gain access to existing underground workings to sample these structures,
and to test further for bulk mineralization.
 
RESULTS OF OPERATIONS
   
  Loss Before Minority Interest. The Company does not produce silver or any
other mineral products and has no revenues from product sales. The only source
of revenue is interest income. The loss before minority interest for the six
month period ended June 30, 1997 was $11,777,846 compared to a loss before
minority interest of $5,990,521 for the six month period ended June 30, 1996,
and the loss before minority interest for the year ended December 31, 1996 was
$14,599,240 compared to a loss before minority interest of $3,354,160 in 1995
and a net loss before minority interest of $403,149 in 1994. The Company's
expenses for the year ended December 31, 1996 were substantially higher than
1995 and 1994 due to increased exploration activity and higher general and
administrative expenses.     
 
  Exploration. Mineral exploration expenditures are expensed as incurred prior
to the determination of the feasibility of mining operations. Once it has been
determined that a mineral property has proven and probable ore reserves,
subsequent development and exploration expenses are capitalized. Through June
30, 1997, all acquisition and exploration costs have been expensed as
incurred. The Company will capitalize future exploration and development costs
associated with the San Cristobal Project commencing with the start-up of the
second phase feasibility study.
   
  Exploration expenses were $7,961,583 for the six month period ended June 30,
1997 compared to $4,322,867 for the six month period ended June 30, 1996, and
were $9,590,632 for the year ended December 31, 1996, compared to $1,559,874
in 1995 and $105,185 in 1994. The increased exploration expenses from 1995 to
1996 were due to an increase in exploration activity at the San Cristobal
Project. Total cumulative exploration expense at the San Cristobal Project was
$10,648,173 through June 30, 1997.     
   
  Administrative. Administrative expenses were $2,414,831 for the six month
period ended June 30, 1997, compared to $497,874 for the six month period
ended June 30, 1996, and totaled $1,923,165 for the year ended December 31,
1996, compared to $982,261 in 1995 and $147,780 in 1994. The increased
expenditures were primarily due to the hiring of key management personnel
during the second half of 1996 and the opening of Apex Corporation's Denver
office in 1996, and stock option compensation expenses associated with the
granting of stock options to directors and officers in the six month period
ended June 30, 1997.     
 
                                      24
<PAGE>
 
  Consulting. Consulting fees were $1,059,669 for the six month period ended
June 30, 1997 compared to $792,417 for the six month period ended June 30,
1996, and were $2,506,250 for the year ended December 31, 1996, compared to
$560,060 in 1995 and $144,840 in 1994. The increase in 1996 over 1995 is
primarily due to expenses associated with retaining third party consultants to
prepare technical studies on various properties and executive recruiters to
identify and hire key personnel.
 
  Professional Fees. Professional fees were $775,863 for the six month period
ended June 30, 1997, compared to $421,055 for the six month period ended June
30, 1996, and totaled $1,096,271 for the year ended December 31, 1996,
compared to $657,621 in 1995 and $20,600 in 1994. The increase in 1996 over
1995 was primarily due to higher legal and accounting fees.
 
  Amortization and Depreciation. Amortization and depreciation expense was
$41,198 for the six month period ended June 30, 1997, compared to $28,295 for
the six month period ended June 30, 1996, and totaled $57,392 for the year
ended December 31, 1996, compared to $56,591 in 1995 and $-0- in 1994. Costs
incurred in the organization of the Company and its subsidiaries were
capitalized and are being amortized on a straight-line basis over five years.
 
  Interest Income. The primary source of income for the Company since
inception is interest income. Interest income for the six month period ended
June 30, 1997 was $475,298 compared to $71,987 for the six month period ended
June 30, 1996, and totaled $574,470 for the year ended December 31, 1996,
compared to $462,247 in 1995 and $15,256 in 1994. The Company's policy is to
invest all excess cash in liquid, high credit quality, short term financial
instruments. The increase in interest income for the comparative periods was
due to the additional cash raised in the 1996 Private Placement.
 
  Income Taxes. Apex Corporation, the Company's U.S. management services
company, is subject to U.S. income taxes. Otherwise the Company pays no income
tax in the U.S. since the Company is incorporated in the Cayman Islands and
conducts no business that currently generates U.S. taxable income. There is
currently no corporate taxation imposed by the Cayman Islands. If any form of
taxation were to be enacted in the Cayman Islands, the Company has been
granted exemption until January 16, 2015. See "Tax Considerations".
 
EMPLOYEE BENEFITS
 
  The Company does not provide any post-retirement or post-employment benefits
to its employees and therefore does not accrue for such expenses. In 1997,
Apex Corporation instituted a 401(k) Plan for its U.S. employees. Apex
Corporation makes monthly contributions to this 401(k) Plan, and currently
matches 50 percent of each employee's contribution up to an employee
contribution of six percent of base salary. Employees vest in the Company's
contribution at 50 percent after one year of service and 100 percent after two
years of service. Although the Company does not currently have a formal bonus
or incentive plan for any of its employees, it anticipates instituting a bonus
plan in the future. See "Executive Compensation--Other Plans".
 
LIQUIDITY AND CAPITAL RESOURCES
 
  As of June 30, 1997, the Company had cash and short-term investments of
$13,088,342 compared to $25,949,771 at December 31, 1996 compared with
$3,296,618 at December 31, 1995 and $356,942 at December 31, 1994. The
increase in 1996 relative to 1995 was due primarily to the receipt of net
proceeds from the 1996 Private Placement and the payment of the Silver
Holdings demand note discussed below.
 
  On December 22, 1994, the Company received, in consideration for the
issuance of shares of Apex LDC to Silver Holdings, a $10,000,000 non-
negotiable demand note, with interest accrued thereon at an interest rate
equal to the one month London Interbank Offered Rate for U.S. dollar
 
                                      25
<PAGE>
 
deposits. The principal outstanding under this demand note was $2,819,718 on
December 31, 1995 and $9,250,000 on December 31, 1994. On February 5, 1996,
the remaining balance was fully paid. See "Certain Transactions".
 
  In connection with the 1996 Private Placement, which closed effective August
6, 1996, the Company issued 4,256,700 Ordinary Shares at a price of $8.00 per
share and received net proceeds of $32,449,350.
 
  The net cash used in operating activities for the six month period ended
June 30, 1997 was $12,981,766 compared with $4,938,517 for the six month
period ended June 30, 1996, and was $12,091,580 for the year ended December
31, 1996, compared with $3,490,631 in 1995 and $328,586 in 1994. The variance
in the net cash used in operating activities between the comparative periods
was due to the increased exploration activity and the San Cristobal Study. The
net cash provided by financing activities was $171,659 for the six month
period ended June 30, 1997, compared with $2,819,718 for the six month period
ended June 30, 1996, and $35,269,068 for the year ended December 31, 1996,
compared with $6,430,307 in 1995 and $685,528 in 1994.
 
  The Company is subject to a series of obligations with respect to its
mineral properties; the failure to meet any of these commitments could result
in the loss or forfeiture of one or more of the Company's properties. These
obligations consist of government mineral patent fees and commissions, work
commitments, lease payments and advance royalties. In addition, a number of
the Company's property interests derive from contractual purchase options. In
order to acquire such properties, the Company will be obliged to make certain
payments to the registered concession holders and others who have interests in
the properties. See "Notes to the Consolidated Financial Statements".
 
  The Company does not currently have a line of credit with any financial
institution.
 
  The Company's future revenues and earnings will be influenced by currency
exchange rates and by world market prices for silver, zinc, lead, copper and
gold, which fluctuate and over which the Company has no control. See "Metals
Market Overview". Depending upon market conditions for currency exchange and
metal prices, the Company may from time to time hedge its metal or currency
exposure in order to decrease fluctuations in revenues and earnings. The
Company does not currently have a set of policies or guidelines for hedging
foreign currency, interest rate or metals price exposure. See "Risk Factors--
Volatility of Metals Prices".
 
  The Company does not know of any trends, demands, commitments, events or
incidents that may result in the Company's liquidity either materially
increasing or decreasing at present or in the foreseeable future other than
the Offering.
 
  It is anticipated that the Company will devote the majority of the net
proceeds from the Offering to financing its equity portion of the San
Cristobal Project's construction and development. In addition, it is
anticipated that significant expenditures will be made for other continuing
exploration, property acquisition, property evaluation and general corporate
expenses.
   
  The development program at the San Cristobal Project will require
significant additional financing. Sources of financing may include bank
borrowings and future additional debt or equity financings. There can be no
assurance that any such financing will be obtainable on terms that are
attractive to the Company, or at all. The Company has retained Rothschild
Natural Resources LLC and Barclays Bank PLC to act as the Company's financial
advisor and arranger, respectively, in connection with the anticipated project
financing for the San Cristobal Project.     
       
  As of the date hereof, the Company does not plan to declare or pay a
dividend.
 
ENVIRONMENTAL COMPLIANCE
 
  The Company's current and future mining and processing operations and
exploration activities will be subject to various federal, state and local
laws in the countries in which it conducts its activities,
 
                                      26
<PAGE>
 
which govern the protection of the environment, prospecting, development,
production, taxes, labor standards, occupational health, mine safety, toxic
substances and other matters. Management does not believe that compliance with
such regulations will have a material adverse effect on its competitive
position. The Company intends to obtain all licenses and permits required by
all applicable regulatory agencies in connection with its mining operations
and exploration activities. The Company's preliminary analysis of the previous
and temporarily continuing leaching operations at the Toldos mine operated by
the current owner and operator indicates that some effluents from the site may
be draining into a seasonal stream which flows into the Rio Grande and,
ultimately, into the Salar de Uyuni, a salt lake to the north of the San
Cristobal Project. Under Bolivian law the Company is not obliged to remediate
known pre-existing environmental conditions. Nonetheless, if the Company
acquires the Toldos property from its current owner, the Company expects to
improve the environmental situation which may currently exist at the Toldos
property. The Company does not expect any such program to have a material
adverse effect on the Company's proposed operations at the San Cristobal
Project. The Company intends to maintain standards of environmental compliance
consistent with World Bank environmental guidelines. See "Properties--
Development Property--San Cristobal Project".
 
METALS PRICE AND CURRENCY HEDGING ACTIVITIES
 
  Currently, the Company's major principal cash balances are held in U.S.
dollars. Subsidiary cash balances in foreign currencies are held to minimum
balances and therefore have a minimum risk to currency fluctuations. There are
currently no hedge positions against foreign currencies. The Company currently
does not hedge commodity and base metals price risks. However, the Company
anticipates that as its mineral properties are brought into production and it
begins to derive revenue from the production, sale and exchange of commodity
and base metals, the Company may utilize various price hedging techniques to
lock in forward delivery prices on a portion of its production, and thereby
mitigate some of the risks associated with fluctuations in the prices of the
metals it produces. The Company may also engage in hedging activities to hedge
the risk of exposure to currency fluctuations as a result of its operations in
several foreign countries. There can be no assurance that the use of hedging
techniques will always benefit the Company.
 
                                      27
<PAGE>
 
                                  THE COMPANY
 
  The Company is engaged in the exploration and development of silver
properties in South America, Central America and Central Asia. The Company
believes it has accumulated one of the largest privately controlled portfolios
of silver exploration properties in the world. Since 1993, the Company has
acquired the rights to or gained control of 27 non-producing silver properties
located in or near the traditional silver producing regions of Bolivia, Peru,
Chile, Honduras, Mexico, Kyrghyzstan, Mongolia and Tajikistan. Exploration
efforts since 1993 have successfully produced the Company's first development
project, the San Cristobal Project located in southern Bolivia, where regular
and close spaced drilling and analysis has delineated substantial proven and
probable reserves of silver, zinc and lead. In addition, exploration
activities at the Company's other properties in Bolivia, Peru and Honduras
indicate the presence of significant quantities of mineralized material
containing silver and other metals.
 
  The San Cristobal Study was completed in August of 1997 with respect to the
San Cristobal Project, which is located in the Potosi department in southern
Bolivia, a region that has historically produced a significant portion of the
world's silver supply.
 
BUSINESS STRATEGY
 
  The Company was founded in 1993 to acquire and develop attractive silver
properties throughout the world. Since 1993, the Company has acquired a
portfolio of silver properties covering approximately two million acres in
eight countries. These acquisitions were premised on several factors,
including (i) the low price of silver relative to the price of other precious
metals, (ii) a perception that silver supply and demand fundamentals were
stronger than the then-prevailing price of silver suggested, (iii) the general
scarcity of attractive publicly-traded silver companies, and (iv) the
perception of negative sentiment within the traditional silver mining
community. As a consequence of a prolonged depressed price for silver, which
culminated in a low of $3.51 per ounce in 1993, many marginal silver producers
around the world were forced to scale back, and in some cases shut down, their
silver mining operations. The resultant mine closures, bankruptcies and low
prices contributed to a generally depressed market for silver mining
properties around the world. Competition for the purchase of silver properties
was further dampened by the fact that many of the silver mining companies that
maintained operations became less aggressive in their search for new silver
properties and/or attempted to diversify into other metals in order to
mitigate their exposure to low silver prices. Negative sentiment among silver
producers was reflected in reduced exploration expenditures. The Company's
founders believed that these market conditions provided the Company with
compelling opportunities to purchase silver exploration properties at
attractive prices.
 
  While this "bear market" psychology resulted in a soft market for silver
properties, the Company believed that the fundamental outlook for silver was
improving. The trend of large annual surpluses in silver supply relative to
demand, which had peaked in the early 1980s, began to reverse by the early
1990s, when rising industrial demand for silver, combined with declining
production profiles, caused substantial supply deficits. The Company believed
that the disequilibrium in supply and demand suggested that the "bear market"
in silver was nearing an end. Encouraged by what it considered a discrepancy
between market perceptions and improving fundamentals, the Company embarked on
a program of acquiring silver exploration properties globally and recruiting a
professional management team with a proven track record of developing and
operating mining properties worldwide.
 
  The Company believes that it has successfully achieved the objectives of its
initial acquisition program by assembling a portfolio comprised of
approximately 27 non-producing silver properties covering more than two
million acres of land located in or near traditional silver mining regions of
South America, Central America and Central Asia. Moreover, the Company has
recruited an experienced management team with significant experience in the
identification, exploration and development of mineral properties, as well as
the construction and operation of large-scale mining projects. Finally, the
 
                                      28
<PAGE>
 
Company has successfully enlisted the support of major financial institutions
and investors through two private placements: a $10 million offering in
December of 1994, and a $34.1 million offering in August of 1996.
   
  Upon completion of the Offering, the Company will focus on achieving the
following five objectives: (i) to complete a second phase feasibility study of
a large scale open pit mining operation at the San Cristobal Project; (ii) to
secure the financing required to develop the San Cristobal Project; (iii) to
proceed to develop the San Cristobal Project into a large scale open pit
mining operation; (iv) to continue exploration and evaluation activities at
the Cobrizos property in southern Bolivia, the El Ocote property in
southwestern Honduras, the San Juan de Lucanas property in southern Peru, and
to commence drilling and underground sampling of the Choroma property in
southern Bolivia; (v) to evaluate other properties in the Company's portfolio
of silver exploration properties, focusing the Company's exploration and
development efforts on those properties which are most likely to contain
significant silver mineralization and divesting itself of those properties
that are not of continuing interest to the Company; and (vi) to identify and
acquire additional mining and mineral properties that the Company believes
contain significant amounts of silver or have exploration potential.     
 
                                      29
<PAGE>
 
                                  PROPERTIES
 
  The Company's portfolio of silver properties in Bolivia, Peru, Chile,
Honduras, Mexico, Kyrghyzstan, Mongolia and Tajikistan, which cover an area in
excess of two million acres, contain identified silver mineralization or offer
significant exploration potential. These mineral properties consist of (i)
mining concessions which the Company has acquired, or is in the process of
acquiring, directly; (ii) concessions which the Company has leased, generally
with an option to purchase; (iii) concessions which the Company has agreed to
explore and develop and, if feasible, bring into production, in concert with
local joint venture partners; and (iv) new claims, principally to mineral
properties which the Company believes offer significant exploration
opportunities and which the Company has staked on its own behalf.
 
  The Company's exploration and development activities are currently focused
on five properties: the San Cristobal Project and the Cobrizos property in
southern Bolivia, the El Ocote property in southwestern Honduras, the San Juan
de Lucanas property in southern Peru, and the Choroma property in southern
Bolivia. All five of these properties remain subject to various stages of
exploration, analysis and development. The Company has completed a first phase
feasibility study with respect to the San Cristobal Project. Based on the
favorable results of the San Cristobal Study, the Company is targeting the
completion of a second phase feasibility study of the San Cristobal Project by
late 1998. The Company expects to commission a conceptual study with respect
to the Cobrizos property in the second half of 1997, and expects to commission
a drilling and underground sampling program of the Choroma property. The
Company has completed conceptual studies with respect to the El Ocote and San
Juan de Lucanas properties. Although the San Cristobal Project remains the
Company's top development priority, the initial analysis from the Cobrizos, El
Ocote, San Juan de Lucanas and Choroma properties have been promising and the
Company believes that these properties may be economic development and
production candidates.
 
  In addition to the aforementioned properties, the Company controls a
portfolio of silver exploration properties located in eight countries in South
America, Central America and Central Asia. The Company generally seeks to
structure its acquisitions of mineral rights so that individual properties can
be explored without significant expense and acquired if significant
development opportunities are identified. Properties which the Company
determines do not warrant further exploration or development expenditures will
be sold or otherwise relinquished, typically without further financial
obligation to the Company. Although the Company believes that its exploration
properties may contain significant silver mineralization, the Company's
analysis of such properties is at a preliminary stage. The activities
performed to date at these properties often have involved the analysis of data
from previous exploration undertaken with respect to a property, as
supplemented by the Company's own field work and sampling programs. See "Risk
Factors -- Reserve and Other Mineralization Estimates".
 
                                      30
<PAGE>
 
                              DEVELOPMENT PROJECT
 
SAN CRISTOBAL PROJECT
 
 Location and Access
   
  The San Cristobal Project is located in the San Cristobal district of Nor
Lipez province in the Potosi department in southern Bolivia, approximately 500
kilometers south of La Paz and 90 kilometers south of the town of Uyuni. The
San Cristobal Project is named after the town of San Cristobal which is
situated in the midst of the project area. The San Cristobal Project is
comprised of 12 separate identified mineralized anomalies, including the
Toldos deposit, which has been recently mined.     
 
  The town of San Cristobal is accessible by a gravel road which runs
approximately 50 kilometers north to the railroad at Rio Grande and a further
60 kilometers northeast to Uyuni. A small unpaved airstrip is also located
approximately six kilometers from the Toldos deposit. The Company has
constructed unpaved roads to access the individual deposits at the site. The
Company anticipates that prior to the commencement of operations at the San
Cristobal Project it will be necessary to construct an approximately 53
kilometer rail spur and road linking the site to the existing main rail line
siding located 40 kilometers north of the property. The Company also expects
(i) to construct a 110 kilometer electric line to supply power to the San
Cristobal Project, and (ii) to pump water approximately ten kilometers to the
site from wells which will be drilled near the Rio Grande river.
 
  The property is largely undisturbed, except for the Toldos deposit, which
has been mined by underground block caving and open pit mining. At present,
there is no significant plant or equipment on site. There is an active mining
camp at the Toldos deposit. A small river, the Rio Grande, passes
approximately 11 kilometers south of the site. Due to the remote location and
small size of the town of San Cristobal, the Company expects that it will have
to recruit skilled and unskilled labor from neighboring areas.
 
 Operating History
 
  Silver was discovered in what is now the San Cristobal district in the early
seventeenth century, and mining has occurred intermittently in the area ever
since. Although no records from the Spanish colonial era mines have survived,
and few records exist with respect to production in the district during the
nineteenth and twentieth centuries, the Company estimates that the district
has produced in excess of 60 million ounces of silver. The Toldos mine was
operated as a block caving underground operation between 1985 and 1988, and
was operated as an open pit mine between 1989 and 1995. Empresa Minera Yana
Mallcu, S.A. ("Yana Mallcu"), a Bolivian mining corporation, continues to
operate a remnant heap leaching operation at Toldos, reprocessing the tailings
from the former mining operation.
 
 Title and Ownership Rights
 
   Since commencing its acquisition program in the San Cristobal district, the
Company has secured contract rights over, outright ownership of or the first
claim of all of the mineral properties that it has identified to be of
interest within a radius of approximately 50 kilometers from the San Cristobal
Project.
 
  In October of 1994, the Company, acting through its agent Mineria Tecnica
Consultores Asociados ("Mintec"), entered into lease and option agreements
with the owner of ten mining concessions pertaining to approximately 1,134
acres of mineral rights including the mineralized areas known as Jayula and
Tesorera. In September of 1997, the Company exercised its option to purchase
these mining rights. The exercise price was $600,000, plus $12,000 per month
for the first 81 months, and $8,000 for the 82nd month, following exercise.
 
 
                                      31
<PAGE>
 
  In August of 1995, the Company, again acting through its agent Mintec,
acquired a two-year purchase option for the mining concessions containing the
Animas deposit from Cooperativa Minera Litoral Ltda. ("Litoral"), a Bolivian
mining cooperative. In July of 1997, the Company exercised its option to
purchase these mining concessions. The acquisition price was $150,000, less 50
percent of the aggregate prior monthly payments to Litoral.
 
  In February of 1996, the Company, again acting through its agent Mintec,
acquired from Yana Mallcu an option to acquire mining concessions controlling
approximately 4,692 acres of mineral rights in the San Cristobal district,
including the entire Toldos mineralized dome. Under the terms of this option
agreement, which expires in February of 1998, the Company has agreed to pay
$6,000 per month to Yana Mallcu for the duration of the contract or until such
time as the Company exercises its option to purchase the concessions. The
Company is entitled to purchase the concessions for the sum of $500,000 and
the assumption of up to $5,750,000 of Yana Mallcu's indebtedness.
       
 Geology and Mineralization
 
  The San Cristobal Project occupies the central portion of a volcanic
depression probably resulting from the collapse of a Miocene age volcanic
peak. The collapse resulted in the formation of a four kilometer diameter
depression, which was subsequently filled with fine to coarse-grained
volcaniclastic sedimentary rocks (shale, conglomerate, sandstone, landslide
debris, talus, etc.).
   
  In the late Miocene age, after sedimentation had nearly filled the
depression, a series of dacite and andesite porphyry sills and domes intruded
into the volcaniclastics, with disseminated and stockwork silver-lead-zinc
mineralization forming both within the volcaniclastics and in the intrusions
themselves. As a result, mineralization occurs in the San Cristobal district
in shallow intrusive dacite sills and domes, intrusive breccia bodies and
volcaniclastics. The disseminated mineralization has not been mined in the
past except for some areas of the Toldos mine. Previous workings were only on
mineralized veins. Company studies indicate the presence of at least 12
mineralized intrusive bodies, all located in close proximity to one another.
Most of the identified mineralized intrusive bodies are hydrothermally altered
and all have been found to be strongly mineralized. Eight of these intrusive
bodies have been drilled by the Company. To date, drilling has been conducted
in sufficient detail to allow estimates of proven and probable reserves at the
Tesorera and Jayula domes and additional mineralized material at Tesorera,
Jayula, Animas and Toldos domes. As previously noted, the Company currently
controls the mineral rights to all of these intrusive bodies.     
 
  The following paragraphs describe the geology and mineralization of the more
intensely drilled areas of the San Cristobal district. The two largest
identified areas of mineralization, the Jayula and Tesorera deposits, appear
to be portions of one single mineralized body, and even though they will be
identified separately below, recent drilling results suggest that the two
bodies may be connected with ore grade mineralization. The Company intends to
analyze these and other areas in conjunction with the overall exploration and
development plans for the San Cristobal Project.
 
  Jayula. The Jayula deposit consists of a dacite porphyry sill intruded into
volcaniclastics that filled the depression. Both the dacite intrusion and the
adjacent sediments have been cut by numerous narrow veins and veinlets,
forming a mineralized stockwork over large areas. Mineralization in the
stockwork consists of iron oxides, clays, galena, barite, sphalerite, pyrite,
tetrahedrite, and acanthite. Veins and veinlets are most common in the dacite
sill, near its contact with the sedimentary rocks. Within the volcaniclastics
rocks themselves, and locally within the intrusive sill, is a second form of
mineralization, characterized by disseminated galena, sphalerite and
acanthite. This disseminated mineralization is predominately confined to
coarser-grained sedimentary beds, usually conglomerates and coarse sandstones.
As the extent of ore grade mineralization is confined to the limits of the
planar beds of coarse-grained units, the mineral zones within the sediments
are both stratiform and
 
                                      32
<PAGE>
 
stratibound, forming gently-dipping planar bodies of mineralization which
parallel the bedding of the sediments.
 
  Oxidation of the mineralized zone in the Jayula deposit has occurred to a
depth averaging 40 meters. In this oxide zone, zinc has been nearly completely
leached out; silver values, however, are greatly enhanced due to secondary
enrichment processes. In the oxide zone, the dominant minerals are iron
oxides, clays, native silver, and secondary acanthite.
 
  Based on the assay results of samples taken from old small scale underground
workings, surface exposures, and seven diamond core and 50 RC holes drilled by
the Company, the Company believes that the dacite porphyry intrusion hosts
approximately 75 percent of the mineralization identified at Jayula, with the
volcaniclastics hosting the remainder. The mineralized zone at Jayula covers
an area no less than 500 meters by 600 meters on the surface, and ore grade
mineralization extends to at least 200 meters below the surface. Of the 57
holes drilled at Jayula, approximately one-half had ore-grade mineralization
at their lowest depth. The mineralized zone has not been fully delineated by
the drilling, with ore grade mineralization over significant widths being
found at the southeast, west and northwest perimeters of the drilled area and
at depth. The exploration program has delineated the boundaries of the deposit
only at the northeast corner of the deposit.
 
  Tesorera. The Tesorera deposit is 1,300 meters southwest of the Jayula
deposit, and both appear to be part of the same large mineralized system. The
geology and mineralization at Tesorera are nearly identical to Jayula. At
Tesorera, the west side of the deposit consists of a dacite porphyry sill
intruded into the caldera-fill sediments, and, as at Jayula, disseminated
mineralization occurs within certain coarse-grained sedimentary beds and in
the intrusion itself. This mineralization is similarly stratabound and
stratiform, forming several subparallel, gently-dipping horizons parallel to
the bedding of the volcaniclastics. The mineralogy is identical to that at
Jayula, consisting of pyrite, iron oxides, barite, clays, galena, sphalerite,
tetrahedrite, and acanthite.
 
  Oxidation has affected the Tesorera deposit to a greater depth than at the
nearby Jayula deposit, typically extending to a depth of 75 meters. The oxide
zone mineralogy of Tesorera, like that at Jayula, is dominated by iron oxides,
clays, native silver, and secondary acanthite.
 
  The Tesorera deposit has been drilled by 139 RC and ten diamond core holes
have been drilled at the Tesorera deposit. The assays indicate that the
mineralization is present over an area of 950 meters by 450 meters. As at
Jayula, the deposit is open to depth and in three directions but it is closed
to the west, as the dacite intrusion appears to have received minimal
mineralization. Approximately 40 percent of the holes had ore-grade
mineralization at their lowest depth, which was usually in excess of 200
meters below the surface.
 
  Animas. The Animas deposit, located two kilometers west of Tesorera, is
hosted by a subvertical breccia pipe adjacent to a stockwork-veined rhyolite
porphyry dike. The volcaniclastic rocks are not present at Animas, and thus
stratibound mineralization is absent.
 
  The breccia pipe occurs along the eastern margin of a north-trending
rhyolite dike. The pipe follows the margin for a distance of 400 meters, and
varies from 20 meters to 200 meters wide. It has been drilled to a depth of
200 meters, and is found to be shaped in cross section like an inverted cone
that is narrower at depth. Mineralization is primarily sulfide and consists of
massive galena and sphalerite as a matrix around the breccia fragments. Silver
is present as acanthite and minor tetrahedrite. The Company has drilled 33
reverse circulation holes at Animas.
 
  Toldos. The Toldos deposit consists of a series of a parallel, high-angle
veins. These veins were mined to a depth of approximately 100 meters below the
surface. These veins averaged approximately 15 ounces of silver per tonne. The
wall rock adjacent to the veins also contained disseminated
 
                                      33
<PAGE>
 
and veinlet mineralization. The Company believes that the wall rock and lower
grade ore has not been systematically mined.
 
  Yana Mallcu converted its operations at the Toldos dome from underground
narrow vein mining to bulk mining methods, principally block caving in 1985
and open pit mining in 1989. Beginning in 1985, ore was processed through a
conventional heap leaching circuit at a rate of 3,000 tonnes per day. With the
exception of some minor leaching of the mine tailings undertaken by the former
owner of the Toldos mine, mining activities at the Toldos deposit were
discontinued in 1995.
 
 Drilling Program
 
  The Company has been engaged in a comprehensive delineation and in-fill
drilling program at the San Cristobal Project since October of 1996. This
program was designed to substantiate initial positive drill results at several
of the numerous intrusive dacite or breccia domes located in the district and
has concentrated on the Tesorera, Jayula, and Animas mineralized dome
complexes. The Company has drilled 278 reverse circulation drill holes and 17
diamond core drill holes for a total of 64,554 meters of reverse circulation
RC drilling and 4,752 meters of diamond core drilling at the San Cristobal
Project. These drill holes were generally spaced at intervals from 25 up to
150 meters. Although this drilling is sufficient to establish the presence of
proven and probable ore reserves at the Tesorera and Jayula deposits, drilling
has been too widely spaced to establish proven and probable reserves at the
Animas deposit. The following table summarizes the Company's drilling
activities at San Cristobal.
 
<TABLE>
<CAPTION>
                                        DIAMOND DRILL HOLES    RC DRILL HOLES
                                        -------------------- -------------------
                                        # OF  AVG.           # OF  AVG.
                                        HOLES DEPTH SPACING  HOLES DEPTH SPACING
                                        ----- ----- -------- ----- ----- -------
<S>                                     <C>   <C>   <C>      <C>   <C>   <C>
Dome Complex
  Jayula...............................    7  250m  100-150m   50  225m  60-150m
  Tesorera.............................   10  250m   50-150m  139  225m   25-70m
  Animas...............................    0   --        --    33  200m  40-120m
                                         ---                  ---
    Subtotal...........................   17   --        --   222   --       --
Surrounding Anomalies..................    0    NA        NA   56  250m   random
                                         ---                  ---
    Total Drilling.....................   17                  278
                                         ===                  ===
</TABLE>
 
 First Phase Feasibility Study
   
  In early 1997, the Company commissioned Kvaerner Metals, Davy Nonferrous
Division ("Davy") to conduct the San Cristobal Study. This first phase
feasibility study was completed in August of 1997 and has estimated accuracies
ranging from plus or minus 25 to 30 percent. Davy is a leading mining and
processing engineering firm. Davy has completed more than 50 precious metal
projects during the past 10 years. Davy's expertise covers all aspects of
mining projects from feasibility studies and audits to construction of mines,
processing plants and smelters and refineries. Davy served as lead engineers,
and reviewed the efforts and contributions of the other independent San
Cristobal Study consultants. MRA performed ore reserve estimates using kriging
estimating methods and prepared mine production schedules, and estimated
capital and operating costs. PAH developed an independent resource grade model
using the same database used by MRA which checked closely with the MRA reserve
estimates. Mineral Resource Development Inc. ("MRDI") conducted the
metallurgical test work and developed the process flow sheet. Knight Piesold
LLC was contracted to perform the preliminary environmental assessment and
geotechnical estimates, including mill tailings pond design. The firm of Behre
Dolbear was hired by the Company to conduct and oversee a technical audit of
Davy's procedures and analyses as well as the work of the technical
subcontractors. CPM Group ("CPM") was retained by the Company to provide an
independent analysis of the silver, lead and zinc markets. The Company
purchased published studies from Brook Hunt & Associates and the International
Lead Zinc Study Group regarding the lead and zinc markets.     
 
  Proven and probable reserve estimates are based on regularly spaced drilling
at the Tesorera and Jayula mineralized domes. Proven and probable reserves
were calculated using (i) the cost
 
                                      34
<PAGE>
 
   
assumptions delineated in the San Cristobal Study (see below) and (ii) the
market price assumptions of $5.00 per ounce of silver, $0.55 per pound of zinc
and $0.30 per pound of lead. The equivalent cut-off grade was 1.0 ounce of
silver per tonne. The ore reserve estimation method used was kriging, a method
which automatically moderates exceptionally high grades consistent with the
geostatistical character of its mineralization. The following table summarizes
the estimated proven and probable reserves and mineralized material at the San
Cristobal Project, as indicated by the drilling completed to date. The reserve
estimates for the Tesorera and Jayula deposits were prepared by the San
Cristobal Study consultants, and check closely with an independent resource
grade model developed by PAH. The additional mineralized material which occurs
proximate to the San Cristobal Project was estimated by MRA for the Tesorera
and Jayula deposits and the others were estimated by the Company. The
Company's Mineralized Material estimates with respect to the Cobrizos deposit
were confirmed by MRA.     
 
<TABLE>
<CAPTION>
                                      AVERAGE GRADE        CONTAINED METALS
                                 ----------------------- ---------------------
                         TONNAGE   SILVER    ZINC  LEAD  SILVER   ZINC   LEAD
                          (000S     GRADE    GRADE GRADE OUNCES  TONNES TONNES
                         TONNES) (OZ./TONNE)  (%)   (%)  (000S)  (000S) (000S)
                         ------- ----------- ----- ----- ------- ------ ------
<S>                      <C>     <C>         <C>   <C>   <C>     <C>    <C>
PROVEN AND PROBABLE
 RESERVES
  Tesorera..............  42,113    1.88     2.00  0.67   79,384   842   282
  Jayula................  80,778    1.73     1.23  0.43  140,088   994   347
                         -------    ----     ----  ----  ------- -----   ---
    Total Proven and
     Probable Reserves.. 122,891    1.79     1.49  0.51  219,472 1,836   629
                         =======    ====     ====  ====  ======= =====   ===
 
 Stripping ratio for the combined open pit operations is 1.66 tonnes of waste
                            for each tonne of ore.
 
ADDITIONAL MINERALIZED
 MATERIAL
  Tesorera..............   2,611    0.77     1.37  0.37
  Jayula................  32,122    1.22     0.91  0.22
  Animas................   8,600    1.67     1.71  0.76
                         -------    ----     ----  ----
    Subtotal............  43,333    1.28     1.10  0.34
                         -------    ----     ----  ----
  Toldos................   3,000    3.86      --    --
  Cobrizos..............  10,800    4.31      --    --
                         -------    ----     ----  ----
    Total Additional
     Mineralized Materi-
     al.................  57,133    1.99      --    --
                         =======    ====     ====  ====
</TABLE>
 
Sampling Procedures
 
  The approximate 30 kilograms of RC drill cuttings from every two meters of
drill depth were sampled at the drill site by splitting the drill chips
ejected from the drill in a Vezin Sampler. This splitting process and the
moisture content of the ejected material results in approximately one-half of
the sample being collected in plastic buckets placed in series. The pulp is
allowed to settle and the excess water decanted off the sample. The sample is
then reslurried and split in half using a Jones type riffle sample splitter.
Each half is then placed in a sample bag and most of the remaining water is
allowed to drain for one to two days. One sample is sent to an assay
laboratory for sample preparation and analysis; the second sample is stored
for later reference and possible confirmatory testing. Drill core samples are
prepared by first sawing the core in half with a rock saw. Half of the core is
bagged for assay and the other half is used for geological logging and then
saved. These samples are also taken at intervals of approximately every two
meters of the drill core, depending upon rock type changes.
 
  The six-kilogram RC drilling samples and the half core samples received at
the lab are first dried in an oven at a temperature not to exceed 85 degrees
centigrade. After drying, the samples are first crushed to minus ten (-10)
mesh (1.68 millimeters) and split in half. One of these samples is pulverized
to minus 65 mesh and again this is mixed and split down to 250 to 500 grams
using Jones type riffles. The remaining sample is bagged as a reserve. The
sample is then pulverized in a ring and puck pulverizer to minus 200 mesh
(0.074 millimeters).
 
                                      35
<PAGE>
 
  The minus 200 mesh sample is analyzed for silver using standard fire assay
procedures using a one assay tonne sample size. Samples with low silver values
are finished by atomic adsorption while samples with high silver values are
finished gravimetrically. Assay results are reported in parts per million
(grams per tonne). The sample is also analyzed for lead and zinc using
standard total wet analytical methods using a four acid digestion and atomic
adsorption. Results are reported in parts per million or percent, depending
upon the values encountered.
   
  Davy conducted its own independent drilling sampling and assay analysis of a
representative sample of four drill holes using the services of a registered
professional geologist and an independent commercial analytical laboratory.
Davy independently determined how many holes and their positioning and managed
the drilling of these four "twin" holes, the collection of the resultant drill
samples, and maintained custody of the samples from the drill site to the
independent commercial analytical laboratory in the United States. This
independent test program confirmed the Company's drilling results.     
 
 First Phase Feasibility Study Results
 
  The San Cristobal Study was based on field work involving extensive drilling
with typically evenly spaced drill holes designed to establish the presence
and dimensions of measurable mineralization. The Company's field work was
conducted in accordance with generally accepted mining industry procedures. In
addition, bench scale metallurgical test work was conducted. A fair and
accurate summary of key conclusions from the San Cristobal Study is provided
below.
 
  Production Rates
 
  The first phase feasibility study utilized a base case incorporating an ore
production rate of 30,000 tonnes per day (10.8 million tonnes per year)
resulting in a minimum mine life of 11.5 years based on current reserves. An
average waste to ore strip ratio of 1:66:1 is indicated with the ratio varying
from approximately 2.0:1 in the early years to 0.5:1 in the later years of the
mine life. The ore is near the surface and outcrops in some areas and the
study estimates 30 million tonnes of pre-production waste stripping will be
required. Production will utilize conventional large scale open pit mining
methods and equipment.
 
  Processing
 
  The bench scale metallurgical tests and analysis indicate successful use of
conventional flotation separation of waste rock from minerals and separate
collection of silver rich zinc and lead concentrates for both oxide and
sulfide ores. Test results indicate average metallurgical recovery rates of 77
percent for silver, 85 percent for zinc and 75 percent for lead in the
sulphide ores, and 60 percent for silver and 55 percent for lead in the oxide
ores. These concentrates are expected to have metal content well within the
norms of downstream smelting and refining processes. Consequently, the process
selected by the study includes conventional primary crushing, followed by
semi-autogenous-grinding (SAG) milling, followed by differential flotation
which will produce separate zinc and lead concentrates each containing
approximately half of the silver produced.
 
  Metal in Concentrate Production
 
  The profile of the production of metals contained in concentrate is
estimated below.
 
<TABLE>
<CAPTION>
                                            YEARS 1 TO                AVERAGE
   METAL                                        5      YEARS 6 TO 12  PER YEAR
   -----                                    ---------- ------------- ----------
<S>                                         <C>        <C>           <C>
Silver (ounces)............................ 15,400,000  13,000,000   14,000,000
Zinc (tonnes)..............................    114,600     146,500      132,700
Lead (tonnes)..............................     44,209      35,890       39,507
</TABLE>
 
                                      36

<PAGE>
 
  Cost Estimates
 
  Mine site cash production costs for mining, including stripping waste,
processing, overhead, reclamation, and general and administration costs are
estimated to be $6.33 per tonne of ore mined. These estimates assume the use
of a large scale mining contractor who will drill, blast, and transport the
ore and waste rock from the mine to the process plant and waste rock piles.
Average transport costs for concentrate produced to the market is estimated to
be $70 per tonne of concentrate from the mine gate. Treatment charges for
smelting and refining are estimated to be $175 per tonne of lead and zinc
concentrates.
 
  Stripping ratio for the combined open pit operation is 1.66 tonnes of waste
for each tonne of ore. The cash production cost is estimated to be $2.66 per
equivalent ounce of silver.
 
  Capital cost estimates for the completion of the second phase feasibility
study and financing, which the Company anticipates will be completed in late
1998, as well as the development and construction of mining, processing and
infrastructure and the inclusion of working capital, which the Company
anticipates will be completed in late 2000, total $327 million. This amount
includes $15 million of working capital, $24 million of pre-construction
capital, $26 million pre-production waste stripping, $262 million for the
construction of the process plant and necessary infrastructure. The process
plant and infrastructure estimates include a 20 percent contingency. These
estimates include the construction of transportation facilities and other
requisite infrastructure, but exclude the cost of mobile mining equipment
which will be provided by a mining contractor.
 
  Proposed Development Program
 
  In the event no new properties emerge in the interim which represent more
attractive development opportunities, it is anticipated that the Company will
devote the majority of the proceeds from the Offering to develop the San
Cristobal Project.
 
  Part of the continuing development of the San Cristobal Project will be the
completion of a second-phase feasibility study. This study, and the field work
required in connection with it will involve:
 
  . Additional in-fill and extension drilling intended to delineate
    significant additional proven and probable reserves;
 
  . Sterilization drilling to confirm surface plant and infrastructure
    siting;
 
  . Collection of bulk and composite samples for additional bench scale and
    pilot plant scale metallurgical test work;
 
  . Comprehensive environmental sampling and monitoring including the
    preparation of an environmental impact study;
 
  . Discussions and negotiations with national and international service
    providers with respect to power supply and transportation, and
    negotiations with smelters and refiners of metal concentrates;
 
  . Collection of detailed and extensive cost information from national and
    international sources;
 
  . Preliminary engineering for mine, plant, and infrastructure to be
    advanced to approximately ten percent of final engineering so as to
    provide capital and operating cost estimates within an accuracy range of
    plus or minus ten percent; and
 
  . Continuing updates of metal markets dynamics and forecasts.
   
  The Company has retained Rothschild Natural Resources LLC and Barclays Bank
PLC as the Company's financial advisor and arranger, respectively, in
connection with the anticipated project     
 
                                      37
<PAGE>
 
financing of the San Cristobal Project. The Company anticipates that project
financing activities will commence on a preliminary basis in late 1997 and
then accelerate with the delivery of the second phase feasibility study in
mid-1998 with financing to be secured by late 1998. If this timetable is
achieved, project construction could commence in early 1999 and, after an
approximate two-year construction and development program, production could
commence in early 2001.
 
 Exploration and Development
 
  Jayula. The Company plans to continue drilling the Jayula deposit in order
to determine the limits of economic mineralization. As the deposit is open in
most directions, and at depth, such drilling is required to determine the full
size of the deposit for pit design and mine planning. Preliminary drilling
west of the Jayula deposit indicates that the deposit may converge with the
Tesorera deposit, thus this probability will be tested by numerous closely
spaced drill holes.
 
  Tesorera. The Company intends to continue drilling the Tesorera deposit in
order to determine the full extent of the mineralization. A primary goal is to
determine the extent of mineralization, particularly toward the Jayula
deposit, to test the probability that the ore-grade mineralization at the
Tesorera deposit is indeed connected to that at the Jayula deposit, 1,300
meters to the northeast. Additional deep drilling will be conducted to
determine the depth of the mineralization at Tesorera, as many of the holes
have bottomed in ore grade mineralization.
 
  Animas. The Animas deposit is relatively small in comparison to the Tesorera
and Jayula deposits. Therefore, although much additional drilling is necessary
to put the mineralized material into a proven and probable category, drilling
at the site will likely take a lower priority than drilling at the other,
larger deposits. There is good exploration potential at the Animas deposit,
especially to the west of the rhyodocite dike, and to the north on strike of
the known breccia pipe. During routine district-wide exploration, these
potential areas will be tested.
   
  Cobrizos. Cobrizos is a joint venture between the Company and the
Corporacion Minera de Bolivia S.A. ("Comibol"), a government mining company,
and is described in more detail below. Nevertheless, it is included under this
heading as its proximity to the San Cristobal Project makes it likely that it
will be developed in conjunction with the San Cristobal Project. Therefore,
future work will include drilling along strike beyond the currently defined
zone of mineralization, and diamond drilling to confirm the results of
reserve-circulation drilling as well as gather samples for metallurgical
testing. See "Advanced Exploration Properties--Cobrizos".     
 
  Toldos. The Company has started drilling reconnaissance holes in the area at
the Toldos deposit. Several of these holes show favorable results, and
additional drilling will be conducted to test the mineralized material for
proven and probable reserves.
   
  Satellite Deposits, including Inca, Colon, Cerillos and Delgado. In addition
to the above, the Company has additional anomalous zones in this area that it
will explore during the second phase feasibility study.     
 
 Environmental and Other Issues
 
  The Company's preliminary analysis of the existing tailings operations at
the Toldos deposit at the San Cristobal Project indicates that some effluents
from the Toldos deposit may be draining into a seasonal stream which drains
into the Rio Grande and, ultimately, flows into the Salar de Uyuni, a salt
lake to the north of the San Cristobal Project. If the Company exercises its
option to acquire the Toldos property from its current owner, the Company
expects to improve the environmental situation which may currently exist at
the mine. The Company does not expect any such program to have a material
adverse effect on the Company's proposed operations at the San Cristobal
Project. See "Risk Factors--Government Regulation and Environmental Matters".
 
                                      38
<PAGE>
 
  The Company has determined that the town of San Cristobal, its church, and
its cemetery are located in close proximity to the planned Jayula and Tesorera
pits. The Company's efficiency when mining the deposits may be limited without
the resettlement of the residents of the town and the possible replacement of
its church. The Company is currently working with the residents of the town,
which it estimates has approximately 350 inhabitants, to develop an
economically feasible relocation plan sensitive to the interests of the
residents and the traditions of the town. See "Risk Factors--San Cristobal
Project Risks".
 
                                      39
<PAGE>
 
                        ADVANCED EXPLORATION PROPERTIES
 
COBRIZOS
 
 Location and Access
 
  The Cobrizos property is located on level terrain 12 kilometers north of the
San Cristobal Project in southern Bolivia. The proximity to the San Cristobal
Project affords significant potential operating efficiencies. The former
railroad maintenance town of Uyuni lies 70 kilometers to the northeast and the
railroad to the Chilean port of Antofagasta, 460 kilometers distant, passes 20
kilometers to the north. The Bolivian commercial centers of Oruro and La Paz,
respectively, are located 350 kilometers and 500 kilometers to the north.
 
 Operating History
 
  Green and blue colored copper carbonate minerals were produced from the
deposit for use as pigment during pre-Columbian times and Spanish miners
subsequently engaged in small scale native copper and copper sulfate mining.
Between 1892 and 1906 Compania Arenal sank shafts as deep as 60 meters and
produced copper from approximately 100,000 tonnes of material extracted from
shallow underground and open cast workings. A combination of flooding and
carbon dioxide build-up in the workings ultimately forced a cessation of
operations.
 
 Title and Ownership Rights
 
  The Company acquired the right to enter into a joint venture with Comibol on
its approximately 4,178 acres of mining rights at the Cobrizos property
through public tender in August of 1996. An agreement defining the joint
venture was signed on September 11, 1996. Pursuant to this agreement, the
Company must complete certain payments and work commitments in order for its
rights to vest in this joint venture at the Cobrizos property, to which
Comibol contributes only the mining rights. These obligations are summarized
below.
 
<TABLE>
<CAPTION>
                                                            PAYMENT
                                                              PER   MINIMUM WORK
       PERIOD                                                ACRE    COMMITMENT
       ------                                               ------- ------------
      <S>                                                   <C>     <C>
      0-24 months.......................................... $  1.44    $625,000
      25-48 months......................................... $ 48.28  No minimum
      49-60 months......................................... $240.89  No minimum
</TABLE>
 
  Comibol will receive five percent of the operating cash flow, as defined
below, from production at the Cobrizos property until the Company has
recovered its entire capital investment; thereafter, Comibol will receive 15
percent of operating cash flow. The Company has the right, in its discretion,
to reduce the acreage subject to the joint venture agreement prior to
commencement of the third year thereof and again prior to the commencement of
the fifth year thereof. Operating cash flow is defined in the agreement as the
gross revenues less the cost of transportation, smelting and refining,
marketing commissions, production costs and administrative expenses. Financing
costs and depreciation are not deductible from gross revenues.
 
 Geology
 
  The Cobrizos property hosts an oxidized copper-silver deposit of the red
bed-type composed of narrow (less than ten centimeters thick) veins in a
stockwork cutting shale and sandstone of the Jurassic Potoco Formation, which
dips steeply to the east.
 
 Mineralized Material
 
  In November and December of 1995, prior to entering into the aforementioned
joint venture agreement with Comibol, the Company conducted initial field
studies including geologic mapping and
 
                                      40
<PAGE>
 
the collection of 108 samples for geochemical analysis of gold, silver, and
copper. After successfully bidding for and acquiring the Cobrizos property,
the Company conducted a mercury vapor survey over the greater mineralized area
in August of 1996. In October of 1996, the Company drilled 11 inclined (-60
degrees) RC holes. Four of the holes drilled in a row 700 meters long and
spaced no less than 150 meters apart tested a single stratigraphic horizon and
intersected silver and copper mineralization.
 
  These drill results precipitated a follow-up drilling phase focused on this
single stratographic horizon during which eight additional holes were drilled
over a strike length of 850 meters which, together with the four earlier
holes, resulted in all the drill holes being spaced approximately 75 meters
apart. The results indicate a steeply dipping mineralized zone with an average
width of 55 meters over the 855 meters of strike length. The indicated depth
from surface or near surface is at least 100 meters. The Cobrizos property
contains mineralized material of 10.8 million tonnes at an average grade of
4.3 ounces of silver per tonne and approximately 0.22 percent of copper. These
estimates were confirmed by MRA.
 
 Exploration and Development
 
  The Company intends to commission a conceptual study of the property in the
fall of 1997. Further drilling will be conducted in order to increase the
reliability of current data, to determine the limits of the mineralization at
the site, and to establish proven and probable reserves. The Company believes
that the proximity of the Cobrizos property to the San Cristobal Project may
result in significant operating efficiencies. Open pit mining with processing
either at the deposit site or at the proposed milling and processing facility
at the San Cristobal Project will be evaluated, and metallurgical test work
will be conducted.
 
EL OCOTE
 
 Location and Access
 
  The El Ocote property in southwestern Honduras is located near the town of
Santa Lucia in the municipality of La Labor, department of Ocotepeque,
approximately 150 kilometers south of the major city of San Pedro Sula and
approximately 30 kilometers east of the Guatemalan border. The property is
accessible by means of the paved Pan-American Highway which passes within one
kilometer of the deposit. Power, water and labor are available within two
kilometers of the property. The site is largely unimproved with no equipment
on site; some underground development has occurred, and it is possible to
inspect the mineral body from four adits.
 
 Operating History
 
  A portion of the El Ocote property was first explored and put into
production in the late nineteenth century. Rosario Resources ("Rosario"), a
New York-based company, subsequently acquired the property and in 1963 drilled
four diamond drill holes. According to Rosario's geologists responsible for
the project, Rosario decided against further development due to difficult
logistics and what was perceived to be unfavorable metallurgy. Rosario's
metallurgical studies at the time indicated that the mineralized material at
the site was best processed by flotation.
 
 Title and Ownership Rights
 
  In 1983, a Honduran entity, Compania Minera Ocote, S. de R.L. ("Minera
Ocote") acquired the property. In June of 1994, the Company, acting through an
agent, acquired an exclusive five-year exploitation concession and purchase
option for the El Ocote property from Minera Ocote totaling 986 acres. Minera
Ocote's rights to the property derive from a 40-year mining concession granted
by the government of Honduras in March of 1983, which may be extended for an
additional 20-year term.
 
                                      41
<PAGE>
 
  Pursuant to the contract with Minera Ocote, the Company has committed to
undertake a five-year, $1,000,000 exploration and development program on the
property, and to advance production royalties of $50,000 and $75,000 to Minera
Ocote on the fourth and fifth anniversaries, respectively, of the agreement.
The Company is also responsible for maintaining Minera Ocote's concession
until such time as title has been formally transferred to the Company. Minera
Ocote has agreed to transfer the title to the property on the fifth
anniversary of the aforementioned contract, assuming the property is in
production, or at such earlier time as the Company may request. Upon the
commencement of commercial production at the property, the Company will pay
Minera Ocote a five percent NSR royalty.
 
  In addition to the aforementioned concession at the El Ocote property, the
Company has also contracted with Minera Ocote to acquire an exploration
permit, the Ocote Exploration Zone, covering approximately 17,414 acres of
adjacent territory. Minera Ocote's title to this exploration permit was
formally granted in March of 1996. This exploration permit will have a life of
four years, extendable for an additional two years before converting into an
exploitation concession. The Company expects that if it elects to acquire this
permit outright from Minera Ocote, title to the property will be assigned to
Cordilleras Honduras. The Company also holds a right of first refusal with
respect to another property contiguous to the El Ocote property.
 
 Geology
 
  The major geological feature of the El Ocote property is a zone of
mineralized breccia rock contained in a near vertical pipe-shaped structure.
This pipe is located at an altitude of approximately 1,600 meters on the side
of the very steep eastern slopes of Cordillera Del Merendo. The deposit is
hosted by a thin package of Tertiary andesitic volcanics, which overlie
Tertiary sediments and volcaniclastics, as well as Cretaceous Yojoa Group
limestones. Although faults are believed to be present immediately east and
northeast of the structure, it does not appear to have been subjected to any
significant post-mineral faulting.
 
  The deposit consists of a near vertical column of brecciated diorite,
roughly oval in plan section, in which silver and copper minerals, plus
fluorite, and quartz form the cement around the breccia fragments. This
structure in plan has dimensions of 150 meters (north-south) by 90 meters
(east-west). Within the mineralized structure, the fragments comprise angular
to rounded diorite and diorite porphyry. The degree of brecciation decreases
with depth, such that at a depth of less than approximately 50 meters below
the 1,200 level, there is no longer significant brecciation and the rock is
merely weakly jointed.
 
  The bulk of the silver mineralization is in one massive block of breccia
near the surface, with the grade diminishing rapidly below the 1,200 meter
level. Below that level, most of the higher grade material takes the form of
several arcuate bands, concave upward, which extend downward from the west
side of the structure and which terminate with depth toward the east.
 
 Mineralized Material
 
  In 1995, the Company began a process of evaluating the exploration and
development potential of the identified mineralized zone at the El Ocote
property. Specifically, the Company resampled four preexisting mine levels,
mapped the geology of the area, prepared topographic maps of the site, and
drilled 16 RC drill holes into the pipe-like structure and two RC holes into
the surrounding host rock. A total of 3,422 meters of drilling was completed
during this program and a total of 2,258 samples from these holes were sent
for assay. Using this drill assay data and the data from 313 samples from the
underground mine workings, the Company estimated that the deposit contains
approximately 2.1 million tonnes of mineralized material containing 9.9 ounces
of silver per tonne at a cut-off grade of 2.0 ounces of silver per tonne.
 
 
                                      42
<PAGE>
 
 Conceptual Study
 
  The Company commissioned Davy to prepare a conceptual study in order to
estimate the potential and timing of undertaking rapid exploitation of the
property via rapid bulk underground mining and heap leach extraction methods.
This study utilized the Company's estimate of mineralized material mentioned
above.
 
  This study was completed in July of 1997 and concluded as follows:
 
  . The project's economics are sensitive to metallurgical recovery and metal
    prices. Assuming a 50 percent heap leach recovery, the project's internal
    rate of return is positive with silver prices of approximately $6.00 per
    ounce, or at a 75 percent recovery, a positive rate of return begins at
    prices above $4.00 per ounce of silver.
 
  . Metallurgical test work should be undertaken to determine cyanide
    consumption and silver recovery rates.
 
  . Upside potential lies in lower cyanide consumption rates and the
    discovery of ore reserves to improve the return on capital invested in
    the mining and processing facilities.
 
 Exploration and Development
 
  The Company plans to commission an extensive metallurgical sampling and
testing program as the next step in its continuing evaluation of this
property. The Company believes that there is little likelihood of discovering
additional resources within the pipe structure itself. Nonetheless, as part of
the appraisal of the mineral potential of the El Ocote property, a regional
stream sediment survey was conducted over an area of 80 square kilometers. The
stream draining the mineralized area at the El Ocote property assayed 0.6
parts per million ("ppm") silver. Most other streams in the immediate area
assayed under 0.5 ppm silver. However, a large number of streams draining an
area 4.5 kilometers southwest of the mineralized structure assayed from 0.6 to
2.6 ppm silver. As numerous streams draining this area are strongly anomalous
in silver, the Company believes it is likely that additional silver
mineralization may occur in the headwaters of those sampled streams. The
Company plans to conduct further reconnaissance field work in this anomalous
area until the source of the silver is discovered.
 
SAN JUAN DE LUCANAS
 
 Location and Access
 
  The San Juan de Lucanas property is located 147 kilometers east of the town
of Nazca in the San Juan district of the Lucanas province in the department of
Ayacucho in southern Peru, approximately 500 kilometers south of Lima. The
property is accessible by means of a partly-paved, well-maintained highway
from Nazca which extends to within ten kilometers of the property and is
connected to the mine and mill site by well-established gravel roads. Water
and labor are available on site while power must be generated at the site.
 
 Operating History
 
  Mineralization was discovered in the San Juan district in colonial times.
Documented mining has occurred intermittently in the area since 1938. Empresa
Minera San Juan de Lucanas S.A. ("EMSJ") operated the San Juan de Lucanas mine
from 1966 until 1990, at which time operations were discontinued due to
operating losses. Between 1990 and early 1996, a small mining cooperative
 
                                      43
<PAGE>
 
intermittently ran the San Juan de Lucanas mine at a low production level.
Since 1951, the three mined veins at San Juan de Lucanas property have
produced approximately 3,000,000 tonnes of ore grading an average of 13.8
ounces of silver per tonne and 0.061 ounces of gold per tonne. Mill recoveries
of 84 percent silver and 91 percent gold resulted in district production of
approximately 35,830,000 ounces of silver and 170,400 ounces of gold.
 
 Title and Ownership Rights
 
  Through its new claims and the acquisition of mining concessions and certain
contract rights entitling it to explore and develop mining concessions in the
district, the Company has acquired title to, or otherwise controls, mineral
rights to more than 52,000 acres of properties dispersed over an area of
approximately 150 square miles in the San Juan district of the Lucanas
province of Peru. The Company has contracted to acquire 38 existing mining
concessions relating to 42,071 acres of land, including the aforementioned
pre-existing mining complex, and has staked new claims covering more than
10,131 acres. The Company believes that it controls all known mineralized
structures in the San Juan district.
 
  The registered holders of title to the 38 mining concessions include EMSJ
and Banco Minero del Peru, S.A. ("Banco Minero"), a Peruvian state bank which
is in liquidation. Among EMSJ's creditors were Banco Minero, which became
EMSJ's sole shareholder, and EMSJ's former employees, who where the
beneficiaries of certain statutory labor liens on EMSJ's assets. As a result,
these mining assets, although primarily registered in the name of EMSJ, also
included certain properties registered in the name of Banco Minero which are
now registered in the name of ASC Peru, a subsidiary of the Company. In June
of 1993, Banco Minero agreed to transfer ownership of the San Juan de Lucanas
mining complex to EMSJ's former workers in exchange for a release of all
claims by such workers against EMSJ and its successor in interest, Banco
Minero. The Banco Minero settlement agreement was subject to (i) a two-step
court approval process and (ii) subsequent registration with the Peruvian
Registry of Mines. The approval process has been completed and the
registration of the settlement agreement has been ordered by the Labor Court
in Lima. The registration of the settlement agreement, transfer of title to
the Company and the raising to public deed of the Company's rights to acquire
the concessions, however, remain pending.
 
  The Company has contracted with more than 90 percent in interest of the
beneficiaries of the Banco Minero settlement agreement to acquire all of their
rights in the San Juan de Lucanas mining complex (such contracts, the "San
Juan Contracts"). The Company has obtained the opinion of local counsel
attesting to the validity and enforceability of the San Juan Contracts. In
order for the Company to perfect its title to the San Juan de Lucanas mining
complex, the Banco Minero settlement agreement must be duly registered with
the Peruvian Registry of Mines. Since Peruvian law does not provide for
fractional interests in mining properties as an administrative procedure, a
special purpose mining entity, to be named SMRL Dorita I de Ica ("SMRL"),
which will be beneficially owned by the workers party to the settlement
agreement, will become the holder of the title to the San Juan de Lucanas
property. The SMRL is broadly analogous to a Peruvian limited liability
corporation. Pursuant to the San Juan Contracts, the Company will become the
holder of at least 90 percent of the participating interests in SMRL. The
Company expects that pursuant to the San Juan Contracts, SMRL will be
compelled to sell the San Juan de Lucanas property to the Company or its
designee upon the registration of the settlement agreement.
 
  As several of the former workers party to the Banco Minero settlement either
are not party to the San Juan Contracts, or have sought or may be expected to
seek to opt out of the San Juan Contracts, the Company's interest in
particular properties comprising the San Juan de Lucanas mining complex may be
subject to a small amount of dilution. Management does not believe that any
such dilution will have a material adverse effect on its interests or
activities in the San Juan district. The Company is
 
                                      44
<PAGE>
 
pursuing the rapid resolution of all title disputes and is committed to an
amicable settlement with all parties involved.
 
  Concurrent with the resolution of outstanding administrative legal issues,
the Company has taken steps to maintain an orderly physical presence in the
San Juan district. Of the 337 surviving ex-workers, approximately 60 continue
to live at the mining camp while the others no longer live in the district.
Those at the camp are living at a subsistence level. The Company provides
periodic truckloads of food and other supplies and has provided some
assistance to the local school and sports teams. The Company has two
representatives at the camp who periodically report to management, and the
Company's engineering personnel have made numerous uneventful visits to the
camp. However, the situation is unstable and is likely to remain so until such
time as the Company is able to make purchase payments on the SMRL properties.
The Company expects to make such payments as soon as the registration of the
settlement agreements have been completed and the San Juan Contracts have been
raised to public deed.
 
 Geology
 
  The mineral deposits at the San Juan de Lucanas property are epithermal,
with mineralization occurring in a number of steeply dipping veins, running
along two well defined orientations. The north-south veins include the veins
known as Santa Rosa, Saramarca, Yanarumi, Ventanilla and Rosaura; the
northeast-southwest vein is known as Concepcion-Raquel. The outcrops of the
Ventanilla and Concepcion-Raquel structures can be followed on the surface for
over one kilometer. The rocks hosting the veins consist of lava flows and tuff
flows with conglomerate.
 
  There are several systems of veins on the property. The Concepcion-Raquel
vein forms the most important structure in the district and is comprised of
two sets of three parallel structures each. The width of the veins varies
between two and four meters, although in some sections of the mine, widths
over 20 meters can be found. The Santa Rosa vein and another associated vein,
Alfa Romeo, form the second most important vein system; with vein widths
varying from one to seven meters. The third most important vein system is the
Saramarca system which is comprised of a series of veins and mineralization
occurring in lenses.
 
  All three vein systems are mineralized with gold, chalcopyrite, sphalerite,
galena, argentite and ruby silvers. Successive processes of leaching and
oxidation led to the formation of an enriched zone which constitutes the most
readily mineable portion of the deposit. The main minerals at the surface are
oxides extending to a depth of approximately 100 meters. The oxides contain
significant grades of silver and gold in some areas. Below this level, an
enriched zone with a vertical interval of 200 to 250 meters is present in most
of the known veins.
 
 Mineralized Material
 
  Underground mineralized material is estimated at 139,000 tonnes with an
average silver grade of 9.27 ounces per tonne and gold grade of 0.086 ounces
per tonne.
 
  During January and February of 1995, the Company engaged independent
contractors to survey and drill, under the supervision of Company geologists,
the two tailings dumps using impact casing methods. Twenty holes were drilled,
and 149 samples obtained. Approximately 85 percent of the tailings area was
sampled, and there is no reason to believe that the remaining 15 percent would
yield significantly different results.
 
  Based on the work described above, the Company estimates that the two
tailings dumps contain at least 1.75 million tonnes of mineralized material
with an average silver grade of 1.74 ounces per tonne and gold grade of 0.006
ounces per tonne. The Company sent a 60 pound (30 kilogram) sample to the
University of Cardiff, Wales, for metallurgical testing to estimate
recoveries, material balances
 
                                      45
<PAGE>
 
for various throughputs for processing the tailings, reagent consumption and
preliminary equipment and capital specifications. PAH found that these test
results support the concept of reprocessing the tailings profitably, assuming
a tailings reclaim agglomerate and heap leach process for a new or refurbished
underground mine combined operation. The tailings component would contribute a
net cash margin (before tax) of $1.99 per ounce of silver at an assumed price
of $5.15 per ounce of silver.
 
 Conceptual Study
 
  In June of 1995, PAH performed a conceptual study evaluating the
rehabilitation of the idled San Juan de Lucanas mine complex. PAH concluded
that rehabilitation would be feasible, and require approximately $10 million
to return the mine to a 500 tpd underground mining operation. Operating cash
costs of a rehabilitated and developed mine were estimated by PAH to be
approximately $2.40 per ounce of silver when fully operational. PAH outlined a
mine and power rehabilitation program and also defined requirements for
replacement of the crushing and grinding sections, a new flotation plant,
thickening section and cyanidation section, and repairs to the Merrill-Crowe
precipitation section. All ancillary structures would have to be rebuilt. The
Company believes additional reserves, which could result from such proposed
exploration, would be required to justify such investment.
 
 Exploration and Development
 
  The Company has defined a two stage, 5,500 meter core drilling program with
the goal of delineating an additional two million tonnes of reserves within
the known vein system. The first stage would consist of 12 core holes drilled
into eight veins to depths averaging 250 meters, for a total of 2,875 meters.
The second stage would consist of another 10 holes in the same veins, for a
total of 2,625 meters. If successful, a third phase consisting of additional
drilling and underground drifting will be conducted, the results of which will
be used to justify the rehabilitation and development of the mine, as well as
further exploration on other parts of the property.
 
CHOROMA
 
 Location and Access
 
  The Choroma property is located in the Bolivian silver-tin belt, 600
kilometers south of La Paz and 80 kilometers north of the border with
Argentina. It is 15 kilometers northeast of the small regional commercial
center of Tupiza, which is served by the railroad connecting Salta, Argentina
with Antofagasta, Chile and La Paz. Elevations in the prospect area range from
3,100 to 3,500 meters above mean sea level.
 
 Title and Ownership Rights
 
  The property is covered by approximately 310 acres of mining rights owned by
Comibol. The right to joint venture with Comibol was acquired through public
tender and contracted in July of 1996. The terms of the 40-year renewable
agreement provide for an initial five-year exploration period during which the
Company must make the following payments and investments in the property in
order to maintain the joint venture:
 
<TABLE>
<CAPTION>
                                                           PAYMENT  MINIMUM WORK
     PERIOD                                                PER ACRE  COMMITMENT
     ------                                               --------- ------------
   <S>                                                    <C>       <C>
    0-24 months..........................................  $  1.44     $213,000
   25-48 months..........................................  $ 48.18   No minimum
   49-60 months..........................................  $240.89   No minimum
</TABLE>
 
                                      46
<PAGE>
 
  Comibol will receive five percent of the operating cash flow, as defined
below, from production at the Choroma property until the Company has recovered
its entire capital investment; thereafter, Comibol will receive 15 percent of
operating cash flow. The Company has the right, in its discretion, to reduce
the acreage subject to the joint venture agreement prior to commencement of
the third year thereof and again prior to the commencement of the fifth year
thereof. Operating cash flow is defined in the agreement as the gross revenues
less the cost of transportation, smelting and refining, marketing commissions,
production costs and administrative expenses. Financing costs and depreciation
are not deductible from gross revenues.
 
 Operating History
 
  Production records are not available for the Choroma property. Pods of high-
grade lead-silver oxide ores were mined from veins during the Spanish Colonial
era. During the first half of the twentieth century, the deposit belonged to
Simon I. Patino until it was nationalized in 1952, when the property became
part of Comibol. Comibol leased the property to Messrs. H. Berinduague and A.
Levy, and finally to a miners' cooperative. Between 1976 and 1985, Comibol
rehabilitated several mine workings, carried out 526 meters of development on
several veins, and drilled 3,336 meters of core in 15 holes. The results of
this work are not in the Company's possession and reportedly have been lost by
Comibol. The mine was inactive when the United Nations Development Program
(UNDP) issued its report in December of 1990, following a 15-day field study.
UNDP concluded that the deposit had potential for the discovery of bulk
mineable material in fractured or brecciated rock as well as for traditional
vein ore bodies.
 
  During the first quarter of 1996, geologists for the Company channel sampled
many of the outcrops at the Choroma property. This work defined several lines
44 to 86 meters long which each averaged between 1.8 ounces of silver per
tonne and 4.0 ounces of silver per tonne. The Company acquired the property on
the basis of this work and the earlier reports.
 
 Geology
 
  The deposit is located near the southern end of the Bolivian silver-tin belt
in a sequence of dark colored shales of Ordovician age that have been intruded
by one or more porphyry domes of quartz dacitic to rhyolitic composition.
Veins and associated hydrothermal breccias occupy steep fractures trending
northwest. Hydrothermal alteration in rocks flanking the mineralized
structures consists of locally intense silification overprinted on more
broadly distributed propyllitic dominated by chlorite. Vein filling consists
of quartz, siderite, pyrite, chalcopyrite, arsenopyrite, galena, sphalerite,
tetrahedrite, tenantite and argentite with local concentrations of canfieldite
and agyrodite. Gold grades of up to 0.064 ounces per tonne are present in at
least one vein.
 
 Exploration
 
  Sampling of outcrops has defined several anomalies, which the Company
intends to drill in order to test for bulk mineable mineralization. In
addition, access will be gained to underground workings for sampling of
structures and wallrocks to further test for bulk mineable mineralization as
well as ore hosted by veins.
 
                                      47
<PAGE>
 
                           OTHER MINERAL PROPERTIES
 
  In addition to the aforementioned development project and advanced
exploration properties, the Company has a portfolio of more than two million
acres of exploration properties located in the traditional silver producing
regions of the world or otherwise identified by the Company as areas which
warrant exploration. The Company generally seeks to structure its acquisitions
of mineral properties in order to allow the Company to engage in phased
exploration of individual properties at a relatively low cost and to acquire
those properties that it regards as presenting significant development
opportunities. Properties which the Company determines do not warrant further
exploration or development will be sold or otherwise relinquished, typically
without further cost obligations to the Company. The Company currently holds,
controls or has options to acquire 22 major groups of exploration properties
located in eight countries. The distribution of these holdings is summarized
in the table below.
 
              LOCATION AND DISTRIBUTION OF EXPLORATION PROPERTIES
 
<TABLE>
<CAPTION>
                                          NUMBER OF              PERCENTAGE OF
 COUNTRY                                  PROPERTIES ACREAGE(1) TOTAL ACREAGE(1)
 -------                                  ---------- ---------- ----------------
<S>                                       <C>        <C>        <C>
SOUTH AMERICA
  Bolivia................................      4       949,607        47.1%
  Chile..................................      3        53,127         2.6
  Peru...................................      3        87,908         4.4
                                             ---     ---------       -----
    Subtotal.............................     10     1,090,642        54.1
                                             ---     ---------       -----
CENTRAL AMERICA
  Honduras...............................      5       344,556        17.1
  Mexico.................................      3        26,275         1.3
                                             ---     ---------       -----
    Subtotal.............................      8       370,831        18.4
                                             ---     ---------       -----
CENTRAL ASIA
  Kyrghyzstan............................      1       534,477        26.5
  Mongolia...............................      1         4,201         0.2
  Tajikistan.............................      2        14,332         0.7
                                             ---     ---------       -----
    Subtotal.............................      4       553,010        27.5
                                             ---     ---------       -----
    Total................................     22     2,014,483       100.0%
                                             ===     =========       =====
</TABLE>
- --------
(/1/) Acreage and percent of total acreage figures do not include land
      considered part of the San Cristobal Project, El Ocote, San Juan de
      Lucanas, Cobrizos and Choroma properties. These five properties consist of
      claims and concessions comprising approximately 6,518 acres, 988 acres,
      52,200 acres, 4,178 acres and 309 acres, respectively.
 
  While the Company in the near term expects to focus primarily on the
development of the San Cristobal Project, the acquisition, exploration and
evaluation of properties will be vigorously pursued in order to unlock the
potential value of the Company's existing exploration property portfolio as
well as to sustain continuing corporate growth objectives.
 
  Drilling and geophysical engineering services are frequently subcontracted
to regional and/or international firms. Chemical analysis generally is
performed in laboratories located in the same regions as the specific
property, with metallurgical testing and analysis conducted in the U.S. When
using core drilling, the Company uses conventional split core sampling in its
testing, retaining one half of all drill cores for reference and confirmatory
testing processes. Similarly, representative portions of chip samples from
rotary percussion, reverse circulation drilling are processed leaving
substantial quantities of the chip sample material for reexamination and other
future test work.
 
  The Company's international exploration activities are described on a
country-by-country basis below. Due to the limited nature of the available
information regarding these properties, the general exploration portfolio is
addressed below in a summary manner only.
 
                                      48
<PAGE>
 
BOLIVIA
 
  The Company has continued its aggressive land acquisition program throughout
Bolivia, making the Company one of this country's largest private owners of
mineral rights. The Company's holdings and joint ventures, excluding the
Cobrizos property, the Choroma property and the San Cristobal Project, now
total almost 950,000 acres, including its existing joint venture interests for
the historic Pulacayo mine and options on several properties being explored
presently. The Company expects to pursue aggressively its exploration program
in Bolivia.
 
CHILE
 
  The Company has been systematically staking concessions in northern Chile.
This program, which is based on efforts to identify promising silver
exploration zones, has resulted in the staking of 22 claims over an area of
more than 53,000 acres. The Company's exploration of its Chilean property
holdings are at an early stage.
 
PERU
 
  In addition to its San Juan de Lucanas property, the Company has undertaken
numerous activities in Peru, including: (i) the acquisition and preliminary
evaluation of the Otuzco property located in northern Peru which has been
leased and is subject to a purchase option held by the Company; and (ii)
technical evaluation of a number of the mining properties being sold by
Centromin, the Peruvian state-owned mining company. The Company is presently
engaged in land acquisition programs in several districts.
 
MEXICO
 
  Exploratory work in Mexico has successfully secured a significant land
position in the vicinity of Zacatecas, historically Mexico's largest silver
producing district. An initial exploration program was completed in March of
1997. The Company's continuing program is evaluating the potential for several
underground silver operations. Additional exploration targets throughout
Mexico are being analyzed by the Company's Zacatecas office.
 
HONDURAS
 
  In addition to its El Ocote property, the Company has acquired an extensive
land position in Honduras, encompassing more than 396,000 acres of exploration
and exploitation concessions. The Company's analysis of these properties
remains preliminary. Over the course of the next 12 to 18 months, the Company
expects to conduct additional field reconnaissance in order to determine
further drill targets at these properties.
 
KYRGHYZSTAN
 
  On March 26, 1996, the Company established Kumushtak Mining, a 50/50 joint
venture with North-Kyrghyz Geological Expedition, a state enterprise organized
under the laws of the Kyrghyz Republic. Kumushtak Mining holds concessions
located in a belt of silver occurrences which extends for several hundred
kilometers in the Kumushtak river valley in western Kyrghyzstan. The area
encompasses several historic mining districts.
 
  The Company recently completed its first round of drilling at one
significant silver anomaly situated in Kumushtak. The results of such drilling
indicate insufficient grades to sustain economic production at prevailing
silver prices. However, due to Kumushtak Mining's large property holdings and
exploration potential, the Company intends to preserve a strategic position in
this region and continue with its interest in Kumushtak Mining. The Company
believes that Kumushtak Mining's extraordinarily large concession offers the
possibility of numerous occurrences of silver and gold.
 
                                      49
<PAGE>
 
MONGOLIA
 
  On March 26, 1996, the Company established Asgat Mining, a 50/50 joint
venture with Mongolrostvetmet, a joint association owned by the Mongolian
government and Zarubeshvetmet, a privatized company formed under the laws of
the Russian Federation. Asgat Mining is involved in the evaluation of the
Asgat silver deposits in northwestern Mongolia (the "Asgat Silver Property").
 
  Work on the Asgat Silver Property, which already contains some underground
development, has principally involved data preparation for a feasibility
study. Recently, metallurgical bench scale test work has been conducted with
mixed results. While recoveries of silver and copper were high, the results
indicated large amounts of arsenic and antimony. The Company regards the Asgat
Silver Property as a strategic property position with potential long term
development prospects. Asgat Mining is presently assessing other precious
metal prospects based on its detailed knowledge of information and conditions
in Mongolia.
 
TAJIKISTAN
 
  The Company is in the process of obtaining an exclusive, irrevocable license
to exploit the Bolshoi Kanimansur and the Western Kanimansur silver deposits
in northern Tajikistan, through the formation of Kanimansur Mining, which will
be 49 percent owned by Apex Asia and 51 percent by Adrasman Mining. The
Company is considering entering into a joint venture with respect to the
property with Zarabeshtsvetmet, a Russian mining company.
 
                                      50
<PAGE>
 
                            METALS MARKET OVERVIEW
 
SILVER MARKET
 
  Silver has traditionally served as a medium of exchange, much like gold.
While silver continues to be used for currency, the principal uses of silver
can be divided into three main categories: (i) industrial uses, primarily
electrical and electronic components; (ii) photography; and (iii) jewelry and
silverware. According to the Silver Institute, in 1996, approximately 720
million ounces of silver were consumed for these and other industrial
purposes.
 
  Silver's strength, malleability, ductility, thermal and electrical
conductivity, sensitivity to light and ability to endure extreme changes in
temperature combine to make silver a widely-used industrial metal.
Specifically, it is used in batteries, computer chips, electrical contacts,
and high-technology printing. Silver's anti-bacterial properties also make it
valuable for use in medicine and in water purification.
 
  Most silver production is obtained from mining operations for which silver
is not the principal or primary product. Approximately 83 percent of mined
silver is produced as a by-product of mining of lead, zinc, gold or copper
deposits. According to the Silver Institute, approximately 400 million ounces
of silver were mined in 1996. CPM estimates that recycled or secondary
production accounts for a decreasing proportion of total silver supply,
approximately 29 percent of total silver production in 1996, compared to an
average of 36 percent of aggregate silver production between 1980 and 1990.
CPM further estimates that total silver supply (from mine production,
recycling and estimated dishoarding and government stockpile sales) has been
insufficient to meet industrial demand since 1989, and stockpiles have been
diminishing. CPM studies indicate that approximately 576 million ounces of
silver were supplied from all sources in 1996.
 
  The following table sets forth the London Silver Market's annual average
(except for 1997), high and low spot price of silver in U.S. dollars per troy
ounce since 1977.
 
<TABLE>
<CAPTION>
      YEAR                                          AVERAGE  HIGH   LOW
      ----                                          ------- ------ -----
                                                     (DOLLARS PER TROY
                                                           OUNCE)
      <S>                                           <C>     <C>    <C>   
      1977......................................... $ 4.63  $ 4.97 $4.31
      1978.........................................   5.42    6.26  4.82
      1979.........................................  11.06   32.20  5.94
      1980.........................................  20.98   49.45 10.89
      1981.........................................  10.49   16.30  8.03
      1982.........................................   7.92   11.11  4.90
      1983.........................................  11.43   14.67  8.37
      1984.........................................   8.14   10.11  6.22
      1985.........................................   6.13    6.75  5.45
      1986.........................................   5.46    6.31  4.85
      1987.........................................   7.01   10.93  5.36
      1988.........................................   6.53    7.82  6.05
      1989.........................................   5.50    6.21  5.04
      1990.........................................   4.83    5.36  3.95
      1991.........................................   4.06    4.57  3.55
      1992.........................................   3.95    4.34  3.65
      1993.........................................   4.31    5.42  3.56
      1994.........................................   5.28    5.75  4.64
      1995.........................................   5.19    6.04  4.41
      1996.........................................   5.19    5.83  4.71
      1997 (to June 30)............................   4.89    5.31  4.64
</TABLE>
- --------
   
Source: Silver Institute     
 
                                      51
<PAGE>
 
ZINC AND LEAD MARKETS
 
  The Company anticipates that the San Cristobal Project will, and that other
future projects may, involve the production of economically significant
quantities of metals other than silver. The Company expects that production
from the San Cristobal Project will include the extraction, processing and
sale of significant quantities of zinc and lead.
 
  Zinc is utilized for its resistance to corrosion, and, in the form of steel
coating, is widely used in construction of infrastructure, housing and office
buildings. In the automotive industry, zinc is used for steel coating, and die
casting, and is an important component of tires and motor oil. Smaller
quantities of various forms of zinc are used in fertilizers, food supplements
and cosmetics, and in specialty electronic applications such as satellite
receivers. Industrial consumption of zinc in 1996 was estimated by the
International Lead Zinc Study Group (the "ILZSG") at 6.28 million tonnes.
Recycled zinc accounts for about 30 percent of the zinc consumed on an annual
basis. According to the ILZSG, 5.94 million tonnes of zinc were produced in
1996.
 
  The primary use of lead is in motor vehicle batteries, but it is also used
in cable sheathing, shot for ammunition and alloying, and in chemical form for
use in alloys, glass and plastics. Industrial consumption of lead in 1996 is
estimated by the ILZSG at 5.08 million tonnes. Lead is widely recycled with
secondary production accounting for a steady 54 percent of total supply.
According to the ILZSG, 5 million tonnes of lead were produced in 1996.
 
  The following table sets forth the annual average (except for 1997) spot
prices for zinc and lead on the London Metals Exchange since 1977.
 
<TABLE>
<CAPTION>
      YEAR                                                       ZINC  LEAD
      ----                                                       ----  ----
                                                                   (U.S.
                                                                 CENTS PER
                                                                  POUND)
      <S>                                                        <C>   <C>  
      1977...................................................... 34.4c 30.7c
      1978...................................................... 31.0  33.7
      1979...................................................... 33.5  52.6
      1980...................................................... 34.4  41.4
      1981...................................................... 38.3  33.5
      1982...................................................... 33.7  24.7
      1983...................................................... 34.6  19.3
      1984...................................................... 41.7  20.1
      1985...................................................... 35.5  17.7
      1986...................................................... 34.1  18.4
      1987...................................................... 36.2  27.0
      1988...................................................... 56.3  29.7
      1989...................................................... 77.6  30.5
      1990...................................................... 68.9  36.7
      1991...................................................... 50.7  25.3
      1992...................................................... 56.2  24.6
      1993...................................................... 43.6  18.4
      1994...................................................... 45.3  24.9
      1995...................................................... 46.8  28.6
      1996...................................................... 46.5  35.1
      1997 (to June 30)......................................... 58.3  30.9
</TABLE>
- --------
   
Source: Flemings Global Mining Group     
 
                                      52
<PAGE>
 
                              REPUBLIC OF BOLIVIA
 
  The following information has been compiled by the Company from governmental
and private publications.
 
GENERAL INFORMATION
 
  Bolivia is situated in central South America and is bordered by Peru,
Brazil, Paraguay, Argentina and Chile. It has an area of 1,098,581 square
kilometers and a population of approximately 7.7 million people. Bolivia's
official and most widely spoken language is Spanish, but over 70 percent of
the population is either native Aymara or Quechua Indian. Sucre is the capital
city of Bolivia. La Paz is the seat of government and, with a population of
over one million people, the largest city in Bolivia. La Paz is situated on
the Altiplano, the high plateau which separates the eastern and western ranges
of the Andes. The land in this part of the country is largely semi-desert
plains bordered by steep, rugged mountains. The eastern portion of the country
consists of sparsely populated low-lands bordering the Brazilian Amazon basin
where temperate and tropical forest dominate. Santa Cruz is the principal city
of the low country with a population of approximately 700,000.
 
  The government of Bolivia consists of a directly elected president and a
bicameral congress. Since the military government stepped down in 1982,
Bolivia has maintained a stable democratic system with elections every four
years. The current president, Hugo Banzer, was elected by the Congress on
August 5, 1997, after no presidential candidate succeeded in winning a
majority of the votes in the general election held in June of 1997.
 
ECONOMY
 
  The Bolivian economy has experienced continuous growth and relatively low,
stable inflation in recent years. This economic performance is generally
ascribed to the deregulation of key sectors of the economy, including oil and
gas, communications, transport and finance, and to foreign direct investment
which has occurred as part of the recent privatization of formerly government-
owned electricity, telecommunications, railways, aviation and oil and gas
companies. The country's privatization program has involved (i) the sale of
shares in government-owned entities in exchange for capital contributions to
the privatized entities, and (ii) the contribution of government-owned shares
in such privatized entities to trust funds established on behalf of all
Bolivians over the age of 21 at the end of 1995. In connection with this
program, the Company has entered into joint venture agreements with the
government mining company, Comibol, with respect to two properties. Summary
information on the Bolivian economy is set forth in the table below.
 
<TABLE>
<CAPTION>
                                        1992    1993    1994    1995    1996
                                       ------  ------  ------  ------  ------
<S>                                    <C>     <C>     <C>     <C>     <C>
GDP Growth............................    1.6%    4.7%    5.0%    3.7%    4.0%
GDP per Capita........................ $  764  $  791  $  756  $  812  $  860
Inflation.............................   10.5%    9.3%    8.5%   12.6%    7.9%
Public Sector Deficit (non-financial)
 as % of GDP..........................    4.6%    6.5%    3.2%    2.3%    2.1%
Exports FOB (in millions)............. $  774  $  809  $1,124  $1,181  $1,326
Imports CIF (in millions)............. $1,131  $1,177  $1,196  $1,433  $1,635
Current Account Balance (% GDP).......    7.8%    8.4%    3.6%    5.0%    5.2%
Total Investment (in millions)........ $  794  $  760  $  794  $  898  $1,173
Share of GDP (%)......................   14.1%   13.3%   13.3%   13.7%   16.5%
Public Investment (in millions)....... $  532  $  481  $  505  $  524  $  540
Share of GDP (%)......................    9.4%    8.4%    8.5%    8.0%    7.6%
Private Investment (in millions)...... $  262  $  279  $  288  $  373  $  632
Share of GDP (%)......................    4.6%    4.9%    4.8%    5.7%    8.9%
</TABLE>
- --------
Source: Latin Finance
 
                                      53
<PAGE>
 
  The official monetary unit of Bolivia is the boliviano, which was introduced
in January of 1987 following the adoption in 1985 of a broad based reform
program known as the "New Economic Policy". In the mid-1980s, prior to the New
Economic Policy, Bolivia suffered from hyperinflation, declining foreign
investment, growing balance of payments deficits and a foreign exchange
shortage fueled in part by an increasing disparity between the official and
unofficial exchange rates. The New Economic Policy removed restrictions on
exports and imports, ended most price controls and subsidies, instituted a
freeze on public sector wages and subjected the public sector to rigorous cost
cutting. By 1986, inflation was under control and the International Monetary
Fund resumed stand-by assistance. During the period of the New Economic
Policy, the gap between the official exchange rate and the parallel unofficial
rate was bridged. On December 31, 1996, the exchange rate was 5.19 bolivianos
to one U.S. dollar compared to the exchange rate on December 31, 1995 of 4.94
bolivianos to one U.S. dollar. On June 30, 1997, the exchange rate was 5.23
bolivianos to one U.S. dollar; over the past year the boliviano has shown a
tendency to depreciate approximately US$0.01 every 15 days.
 
  The boliviano is freely convertible in Bolivia at a single, public exchange
rate established by twice-weekly auctions held by the Bolivian Central Bank.
 
FOREIGN INVESTMENT AND TAX
 
  Since the New Economic Policy, most restrictions on trade have been removed
or are in the process of being phased out. Currently, import levies stand at
ten percent for all items except capital goods, which are subject to a five
percent levy. In March of 1991, a new export code introduced further measures
to liberalize trade. In order to prevent transfer pricing and other tax
avoidance mechanisms, almost all foreign trade transactions require the filing
of an aviso de conformidad describing the terms of the underlying
transactions.
 
  The 1990 Investment Law provides for unrestricted repatriation of capital,
freedom to import goods and services, equality under the law between foreign
and domestic companies, and the creation of "free trade zones".
 
  Mining companies in Bolivia are subject to a 25 percent income tax. Taxable
income is determined in accordance with Bolivian generally accepted accounting
principles. However, earnings reinvested (for specified purposes) in Bolivia
are deductible in computing taxable profits. If the reinvested capital exceeds
retained profits, the excess may not be carried forward. Income from the
export of derivative products from precious metals which include Bolivian
added value is exempt from taxes under the Bolivian Mining Code.
 
  Under the new Bolivian Mining Code, which came into effect on March 17,
1997, there is Complementary Mining Tax applicable to whomever carries out
mining activities, which would be payable if greater than the Bolivian income
tax. Mining activities are defined to include: prospecting and exploration;
mining or extracting minerals or metals; concentrating mine products; smelting
and refining; marketing of minerals and metals. The Complementary Mining Tax
is calculated by applying an aliquot to the taxable base. The aliquot of the
Complementary Mining Tax is a variable percentage (which fluctuates between
three percent and seven percent for precious stones and metals and between one
percent and five percent for other metallic minerals) indexed to the official
U.S. dollar market price for the relevant metal or mineral. The taxable base
is construed as the amount that results from multiplying the weight of the
fine content of the mineral or metal by its official U.S. dollar market price.
This tax is creditable against corporate income and is, in effect, a minimum
tax on mining companies. Manufacturing or processing involving minerals is not
subject to the Complementary Mining Tax.
 
  Bolivian source income, including dividends, interest, management fees and
expenses charged to a Bolivian company by foreign affiliates is subject to a
withholding tax of 12.5 percent.
 
                                      54
<PAGE>
 
  Operating losses (as adjusted for inflation) may be carried forward and
deducted from taxable income indefinitely. However, if accrued losses exceed
50 percent of capital (including that of a branch) the capital must be
increased.
 
  Bolivia assesses a 12.5 percent tax on profits of a branch of a foreign
corporation operating in Bolivia. The branch tax is calculated on the book
profits of the branch regardless of remittances or reinvestment of profits in
the branch. Book profits are deemed remitted 120 days after the end of the
fiscal year.
 
  There is a 13 percent value added tax ("VAT") on all sales, including
mineral commodities, a five percent import duty on machinery and equipment and
a ten percent duty on imported raw materials and components. The VAT paid on
purchases is recoverable against VAT collected on Bolivian sales. Exports are
not subject to VAT. The exporter can offset the VAT credit arising from
purchases with domestic sales or can apply for a refund of import duties and
VAT paid on inputs and raw materials included in the cost of exported goods.
However, the refund of credits arising from imports is limited to 13 percent
of the total value of the exports and therefore is not recoverable during the
exploration phase.
 
MINING INDUSTRY
 
  Bolivia produces a number of mineral commodities including tin, gold,
silver, lead, zinc, antimony, tungsten, copper and bismuth. The country has
long been a leading mineral and precious metals producer. Bolivia was
colonized in the early sixteenth century by Spaniards who arrived in search of
silver and gold. The extensive silver mining operations in Potosi which
developed under Spanish rule led to the region being described as the
"treasury of the Spanish empire". In the early Twentieth Century, tin became
the country's leading mineral export although in recent years the focus has
returned to gold, silver, lead and zinc. The country's principal mining
regions are the eastern part of Bolivia along the Brazilian border, and the
traditional mining areas of the Altiplano and Cordillera.
 
  Recent regulatory reforms have resulted in increased exploration activities,
particularly with respect to precious metals. In the early 1990s, the
government reformed the land tenure system, reduced taxes on mining
operations, established equal treatment under the law between Comibol and
foreign companies in obtaining mineral concessions, and created a national
Mining Inventory Service which will maintain up-to-date information, including
maps, for exploration and mining exploration concessions.
 
MINING CONCESSIONS
 
  Pursuant to the Bolivian constitution, all mineral deposits are the property
of the State. Mining concessions, which may be awarded by the government,
grant the holder, subject to the payment of patents, the real and exclusive
right to carry out prospecting, exploration, exploitation, concentration,
smelting, refining and marketing activities with respect to all mineral
substances located within a given concession. Individual mineral claims
consist of indivisible squares shaped like an inverted pyramid, whose lower
vertex is the center of the earth and whose surface area covers a total area
of 25 hectares. Mining concessions are comprised of no fewer than one and no
more than 2,500 adjacent squares. Mining concessions are distinct from the
surface rights which comprise traditional land ownership; holders of mining
concessions are entitled to explore and exploit a property and to use the
water found at the property. Expropriation or the establishment of easements
may not be legally carried out if the water supplies for a population are
interrupted or negatively affected.
 
  Holders of mining concessions are obliged to pay an annual mining patent.
Co-owners are jointly and severally responsible for the patent payment. The
patent is progressive and fees are based on the number of years of existence
of the concession. Concessions established before the enactment of the new
Mining Code, which comprise an area of up to 1,000 mining claims, pay the
equivalent of
 
                                      55
<PAGE>
 
$1.00 per claim per year. Concessions established before the enactment of the
new Mining Code which comprise an area of more than 6,000 mining claims pay
the equivalent of $1.00 per claim per year for the first five years of the
existence of the concession; thereafter, the patent increases to the
equivalent of $2.00 per claim per year. Concessions established under the new
Mining Code pay the following: for the first five years of the existence of a
concession, the owner is required to pay the equivalent of $25.00 per square
per year; thereafter the patent increases to the equivalent of $50.00 per
square per year. All of the Company's Bolivian concessions were established
prior to enactment of the new Mining Code.
 
  Mining concessions are liable to forfeiture when the corresponding annual
patent fails to be paid. Forfeiture is governed by law and does not require
any administrative or judicial declaration. When a concession has been
forfeited, the mining concession reverts to the State.
 
  The Mining Code requires concession holders to minimize damage to surface
rights, to neighboring concessions and to the environment. Concession holders
are liable for damage or injury caused by their operations. Concession holders
are not obliged to remediate environmental damage caused prior to the
effectiveness of the Environmental Law or the date on which the mining
concession was obtained, if the concession was granted at a later date. On
becoming the owner of a concession, the concession holder must carry out an
environmental audit to determine the extent of any environmental damage. If an
environmental audit is not performed, the concession holder assumes the
responsibility to mitigate all environmental damage. Environmental liabilities
incurred under this new regime survive the existence or ownership of the
relevant concession.
 
  In 1992, the Bolivian government passed environmental legislation that
establishes a comprehensive scheme for the initiation of a national
environmental policy to protect the environment, promote sustainable
development, promote the preservation of biological diversity and promote
environmental education. Few environmental regulations specifically applicable
to mineral exploration companies in Bolivia have been proclaimed to date. At
present, concession holders must maintain waterways running through their
concessions in their unspoiled state and concession holders must employ
exploration and development techniques that will minimize environmental
damage. Under Bolivia's environmental regulations, environmental impact
assessments are required. In practice, foreign mining companies operating in
Bolivia generally adhere to U.S. and European environmental standards for
mining and exploration.
 
LABOR MARKET
 
  Bolivia has a large pool of unskilled and, in the mining sector, semi-
skilled labor, but a relative shortage of skilled labor and managerial
expertise overall. One percent of the payroll tax is used for worker training.
A large portion of the labor force that is engaged in wage employment is also
unionized, although union participation is not mandatory. Strikes, which have
decreased greatly since the early 1980s, are not forbidden. However, before a
strike may be called, all legally-mandated alternatives, such as negotiation,
mediation and conciliation, must have been exhausted. Collective agreements
are very rare, as negotiations are generally carried out between an individual
company's union and management.
 
                                      56
<PAGE>
 
                                  MANAGEMENT
 
DIRECTORS
 
  Set forth below are the names, ages, positions with the Company, business
experience and directorships in other companies of the directors of the
Company. Apex Limited has no executive officers. Under the Companies Law (1995
Revision) of the Cayman Islands, directors are authorized to bind the
corporation that they represent.
 
<TABLE>   
<CAPTION>
   NAME                                                   AGE      POSITION
   ----                                                   ---      --------
<S>                                                       <C> <C>
Michael Comninos.........................................  66 Director
Harry M. Conger..........................................  67 Director
Eduardo S. Elsztain......................................  37 Director
David Sean Hanna.........................................  37 Director
Ove Hoegh................................................  58 Director
Keith R. Hulley..........................................  57 Director
Thomas S. Kaplan.........................................  35 Chairman, Director
Richard Katz.............................................  55 Director
Paul Soros...............................................  70 Director
</TABLE>    
 
  Michael Comninos. Mr. Comninos has been a director of the Company since
April of 1997. An international financier, Mr. Comninos joined N.M. Rothschild
& Sons in 1954, becoming a Partner in its corporate finance group in 1965,
and, later, upon the firm's incorporation as N.M. Rothschild & Sons Limited in
1970, a director. Prior to his retirement in 1991, Mr. Comninos served as the
head of the firm's investment management division, its credit division and for
ten years served as the chairman of N.M. Rothschild & Sons (C.I.) Ltd., the
firm's merchant banking affiliate in Guernsey. Mr. Comninos has served as a
director of numerous listed real estate and investment funds and is currently
a member of the investment committee of the East European Food Fund, a
Luxembourg investment fund managed by Jupiter Asset Management Bermuda
Limited. Mr. Comninos is a member of the Institute of Investment Management
and Research, The Institute of Bankers, The Institute of Chartered Secretaries
and Administrators and the Association of Corporate Treasurers.
   
  Harry M. Conger. Mr. Conger has been a director of the Company since April
of 1997. A leading figure in the international mining community, Mr. Conger
has 42 years of industry experience, rising from a position as shift boss to
Chairman and Chief Executive Officer of Homestake Mining Company
("Homestake"), a New York Stock Exchange listed-company. He served as Chairman
of Homestake from 1982 and retired from the Chief Executive Officer position
in May 1986, remaining as Chairman. Over the course of his career, Mr. Conger
has been involved in gold, silver, lead, zinc, uranium, sulfur, coal, iron ore
and copper mining. He has been extensively involved in numerous major project
developments, with both on-site and broader supervisory responsibility,
including the expansion, at a cost of $170 million, of an iron ore mine to 25
million tons of material mined per year, greenfield development of a large
surface coal mine moving 20 million tonnes per year at a cost of $165 million,
and development of a new gold mine with new technology at a cost of $165
million. Mr. Conger is a former Chairman of the American Mining Congress, the
World Gold Council and is a member of the National Academy of Engineering. He
currently serves on the boards of directors of ASA Limited, a closed-end
portfolio of gold stocks listed on the New York Stock Exchange, and Pacific
Gas and Electric Company (PG&E), a San Francisco based utility company. He
recently retired from Baker Hughes Inc., an oil and mining services company
based in Houston, Texas under their ten year tenure rule; and Cal Mat Company
of Los Angeles, an integrated producer of cement, construction aggregates,
pre-mixed concrete and asphalt mixes, and real estate developer. Mr. Conger
retired as Chairman of Homestake in February of 1997.     
 
 
                                      57
<PAGE>
 
   
  Eduardo S. Elsztain. Mr. Elsztain has been a director of the Company since
its inception in March of 1996 and until the Offering was a director of Apex
LDC. He is also a director of, and an indirect shareholder in, Silver
Holdings. See "Principal Shareholders". Mr. Elsztain is the founder of
Consultores Asset Management S.A. ("Consultores"), a leading securities
portfolio management firm in Buenos Aires, Argentina formerly known as
Consultores de Inversiones Bursatiles y Financiera S.A. He has served as the
President of Consultores since 1989. Mr. Elsztain is currently the Chairman of
the board of directors of IRSA Inversiones y Representaciones S.A., an
Argentine real estate company listed on the Buenos Aires stock exchange, the
New York Stock Exchange and the Mexico Stock Exchange. He is also the Chairman
of the board of directors of Cresud S.A.C.I.F. y A. and of SAMAP Sociedad
Anonima Mercado de Abasto Proveedor, companies listed on the Buenos Aires
Stock Exchange. Mr. Elsztain studied Economics at the University of Buenos
Aires.     
 
  David Sean Hanna. Mr. Hanna has been a director of the Company since its
inception in March of 1996 and until the Offering was a director of Apex LDC.
See "Principal Shareholders" and "Certain Transactions". Mr. Hanna is a
specialist in corporate law with the Bahamas law firm of Arthur D. Hanna &
Co., of which he is a Partner. Mr. Hanna is also a director of each of (i)
Andean, (ii) ASC Peru, (iii) ASC Partners, (iv) Cordilleras Bahamas, (v)
Cordilleras Cayman. He is also a director of two shareholders of the Company,
Litani Capital Management LDC ("Litani") and Consolidated Commodities, Ltd.
("Consolidated"). See "Corporate Structure". Mr. Hanna was called to the Bar
of England and Wales in 1983. He holds an LLB (Honours) from the University of
Buckingham, England.
 
  Ove Hoegh. Mr. Hoegh has been a director of the Company since April of 1997.
A member of the board of directors until July of 1997 of Leif Hoegh & Co. A/S,
a family owned shipping business with more than $1 billion in assets, Mr.
Hoegh has more than 30 years of experience in the international shipping
industry. Mr. Hoegh began his career in commercial fishing, and joined the
board of directors of Leif Hoegh & Co. in 1966. From 1970 to 1982, he served
as Chief Operating Officer and Chief Executive Officer of Leif Hoegh & Co.
Since 1982, he has served as the senior partner of Hoegh Invest, a family
investment company with a diversified portfolio of technology, oil and gas and
real estate holdings. In addition, Mr. Hoegh served for eight years as a
member of the board of directors and executive committee of Brown Boveri
(Norway), and also has served on the shareholders' councils of Esso Norway,
Den Norske Creditbank, and Det Norske Veritas. A member of the board of the
Energy Policy Foundation of Norway, Mr. Hoegh is a former member of the
steering committee of the International Maritime Industry Forum, a former Vice
Chairman of the executive committee of the Independent Tanker Owners'
Association, and served for five years as a member of the Harvard Business
School Visiting Committee. Mr. Hoegh is a graduate of the Royal Norwegian
Naval Academy and holds an M.B.A. from Harvard University.
 
  Keith R. Hulley. Mr. Hulley has been a director of the Company since April
of 1997 and, upon consummation of the Offering, will become a director of Apex
LDC. A mining engineer with more than 30 years experience, Mr. Hulley has
served as the Executive Vice President and Chief Operating Officer of Apex
Corporation since its formation in October of 1996. From early 1991 until he
joined the Company, he served as a member of the board of directors and the
Director of Operations at Western Mining Holdings Limited Corporation
("Western Mining"), a publicly-traded international nickel, gold and copper
producer. At Western Mining, Mr. Hulley's responsibilities included
supervising on a global basis strategic planning, mine production,
concentrating, smelting, refining and sales. During this period, Western
Mining produced on an annual basis approximately 90,000 tonnes of nickel,
700,000 ounces of gold, 80,000 tonnes of refined copper and 1,500 tonnes of
uranium oxide. Mr. Hulley also supervised the development and operation of
Western Mining's Mount Keith open-pit nickel mine, a $450 million mining
project. Prior to joining Western Mining, Mr. Hulley was the President, Chief
Executive Officer and Chairman of the board of directors of USMX Inc., a
publicly-traded precious-metals exploration company. Mr. Hulley has also
served as the President of the minerals division and Senior Vice President for
Operations of Atlas Corporation, where he was in charge of mining
 
                                      58
<PAGE>
 
exploration, development and production. Previously he was Vice President of
Mining and Development of the U.S. division of BP Minerals, Inc. Over the
course of his career, Mr. Hulley has worked as a miner and shift supervisor in
the gold mines of South Africa, Mine Operation Superintendent of Kennecott
Corporation's Bingham Canyon mine which processed 100,000 tonnes of ore per
day, and project manager of the early phase of the Ok Tedi exploration and
development projects in Papua New Guinea. A member of the American Institute
of Mining and Metallurgical Engineers and a Fellow of the Australian Institute
of Mining and Metallurgy, Mr. Hulley holds a B.S. in Mining Engineering from
the University of Witwatersrand and an M.S. in Mineral Economics from Stanford
University.
 
  Thomas S. Kaplan. Mr. Kaplan has been the Chairman of the board of directors
of the Company since its inception in March of 1996 and is a director and was
the founder of Apex LDC and its predecessor, Apex Bermuda, which contributed
substantially all of its assets to Apex LDC in December of 1994. Mr. Kaplan is
a director of Litani LDC and a principal shareholder in Consolidated.
Consolidated is a shareholder of Apex Limited, and Litani LDC is a shareholder
of both Apex Limited and Apex LDC. See "Principal Shareholders". Mr. Kaplan
also serves as a director of each of the Company's subsidiary entities, except
for Cordilleras Bahamas, Asgat Mining, Kumushtak Mining and Kumushtak
Management Company. For the past ten years, Mr. Kaplan has served as an
advisor to private clients, trusts and fund managers in the field of strategic
forecasting, an analytical method which seeks to identify and assess global
trends in politics and economics and the way in which such trends relate to
international financial markets, particularly in the developing markets of
Asia, Latin America, the Middle East and Africa. Mr. Kaplan has managed
numerous venture capital investments and portfolio investment accounts, and is
a principal of several entities specializing in direct and portfolio
investments, including Feder Information Services Corporation, Tigris
Financial Group Ltd., FMS Partners L.P. and Bridge Capital Group L.P. Mr.
Kaplan also serves as a director of African Plantations Corporation LDC, a
Cayman Islands limited duration company which owns and operates coffee and tea
plantations in eastern and southern Africa. Mr. Kaplan was educated in
Switzerland and England and holds B.A., M.A., and D. Phil. degrees in History
from the University of Oxford.
 
  Richard Katz. Mr. Katz has been a director of the Company since April of
1997. An investment banker specializing in international finance, Mr. Katz was
a director of N.M. Rothschild & Sons Limited, London, England from 1977 until
March 1993, having joined them in 1969; he was also a managing director of
Rothschild Italia S.p.A., Milan, Italy from its inception in 1989 until
December 1993. Mr. Katz has been a supervisory director of Quantum Fund N.V.,
a Netherlands Antilles investment fund, or one of its subsidiaries, since
1986. He is also a member of the board of supervisory directors of a number of
other investment funds affiliated with Mr. George Soros, including Quasar
International Fund N.V. and Quantum Emerging Growth Fund N.V., and is the
Chairman of the board of supervisory directors of Quota Fund N.V., and the
Chairman of the boards of advisors of Quantum Realty Fund Limited, Asian
Infrastructure Development Fund Ltd., and Quantum Industrial Holdings Ltd., an
indirect shareholder of the Company. See "Principal Shareholders".
 
  Paul Soros. Mr. Soros has been a director of the Company since its inception
in March of 1996 and, until the Offering, was a director of Apex LDC.
Principally involved in private investment activities during the past five
years, Mr. Soros is a director of, and an indirect shareholder in Silver
Holdings through his 100% ownership of VDM, Inc. (a shareholder of Silver
Holdings). Mr. Soros is a member of the Investment Advisory Committee of
Quantum Industrial. Quantum Industrial is the largest shareholder in Silver
Holdings. See "Principal Shareholders" and "Certain Transactions". Mr. Soros
is involved in the monitoring of the Quantum Group of Fund's shareholding in
Companhia Vale do Rio Doce S.A. ("CVRD") of Brazil, its participation in
Global Power Investments, L.P., a joint venture with the International Finance
Corporation and GE Capital Corporation to develop power projects in emerging
economies, serves on the Board of Directors of TVX Gold Inc., and is an active
advisor to the Company. Mr. Soros is the founder and former president of Soros
Associates, an international
 
                                      59
<PAGE>
 
   
engineering firm specializing in port development, offshore terminal and
material handling projects for the mining industry and other basic industries.
Soros Associates was involved in projects in more than 80 countries, acting on
behalf of consortia including USX Corporation, The Broken Hill Proprietary
Company Limited, Alcan Aluminium Limited and Aluminum Company of America, and
was involved in projects in a majority of the largest mineral ports in the
world. Mr. Soros has served on the Review Panel of the President's Office of
Science and Technology and the U.S.-Japan Natural Resources Commission. He
received the Outstanding Engineering Achievement Award of the National Society
of Professional Engineers in 1989. Mr. Soros holds a Masters of Mechanical
Engineering degree from the Polytechnic Institute of Brooklyn and is a
licensed professional engineer in New York and numerous other states. In
addition, he holds several patents in material handling and offshore
technology, and is the author of over 100 technical articles.     
 
COMMITTEES OF THE BOARD OF DIRECTORS
 
  The Company has established an Audit Committee of its board of directors.
The Audit Committee will review the accounting and auditing principles and
procedures of the Company with a view to providing for the safeguard of the
Company's assets and the reliability of its financial records, recommending to
the board of directors the engagement of the Company's independent
accountants, reviewing with the independent accountants the plans and results
of the auditing engagement, and considering the independence of the Company's
accountants. Messrs. Comninos, Katz and Hoegh currently serve on the Audit
Committee.
 
  A Compensation Committee has also been established to review the Company's
compensation policies and supervise the Company's Share Option Plans. See
"Executive Compensation--Share Option Plans". Messrs. Conger and Soros
currently serve on the Compensation Committee.
 
  The Company's board of directors is divided into three classes designated
Class I, Class II and Class III. Each class of directors consists of one-third
of the total number of directors constituting the entire board and
approximately one-third of the members of the board are elected at each annual
meeting of stockholders. The Class I directors are Messrs. Conger, Katz and
Comninos; the Class II directors are Messrs. Hulley, Soros and Hoegh; and the
Class III directors are Messrs. Kaplan, Elsztain and Hanna. The term of the
Class I directors will end on the date of the 1998 annual meeting of
stockholders. The term of the Class II directors will end on the date of the
1999 annual meeting of stockholders. The term of the Class III directors will
end on the date of the 2000 annual meeting of stockholders. If the number of
directors is changed, any increase or decrease in the number of directors will
be apportioned among the classes so as to maintain the number of directors in
each class as nearly equal as possible, and any additional directors of any
class elected to fill a vacancy resulting from an increase in such class will
hold office for a term that coincides with the remaining term of that class.
Each director will hold office until the annual meeting for the year in which
his term expires and until his successor shall be elected, subject, however,
to his prior death, resignation, retirement or removal from office. Any
vacancy occurring in the board for any reason will be filled by a vote of the
majority of the directors then in office, even if less than a quorum, or by a
sole remaining director. Any director elected to fill a vacancy will hold
office for a term that coincides with the term of the class to which such
director was elected.
 
EXECUTIVES AND KEY PERSONNEL
 
 Apex Corporation
 
  As discussed above, the Company has no executive officers. The Company has
entered into a Management Services Agreement dated as of October 22, 1996,
pursuant to which the Company has
 
                                      60
<PAGE>
 
engaged Apex Corporation to provide a broad range of corporate management and
advisory services. See "Certain Transactions".
 
  Thomas S. Kaplan. Mr. Kaplan serves as the Chairman of the board of
directors of the Company and President and Chief Executive Officer of Apex
Corporation. See "Management--Directors".
 
  Keith R. Hulley. Mr. Hulley serves as the Executive Vice President and Chief
Operating Officer of Apex Corporation and as a director of Andean Silver
Corporation LDC. See "Management--Directors".
 
  Marcel F. DeGuire. Mr. DeGuire serves as Vice President of Development of
Apex Corporation and as a director of Apex Asia. Prior to joining Apex in
August of 1996, he served as Vice President of Project Development and
Regional Director for the jurisdictions formerly part of the Soviet Union of
Newmont Gold Company. During this period, Mr. DeGuire acted as Project Leader
of Newmont Gold's Muruntau large scale open pit heap leach gold project in
Uzbekistan. This facility processes 37,800 tonnes of ore per day and was built
at a cost of $225 million. Mr. DeGuire was directly involved in the joint
venture negotiations leading up to the project, the subsequent feasibility
studies, completion of construction and the commencement of mining operations.
In addition to his work in Central Asia, Mr. DeGuire has been responsible for
numerous feasibility analyses, including the Yanacocha gold project in Peru,
on behalf of Newmont Mining Corp. During his almost 20 years with Newmont
Mining, Mr. DeGuire worked as resident manager of a uranium mine and rose to
President of several of Newmont Mining's subsidiaries and became a leading
expert in environmental management and mine reclamation, serving as Newmont
Mining's Vice President of Environmental Affairs and Research and Development
as well as other senior executive positions. Mr. DeGuire is a member of the
American Institute of Mining, Metallurgical and Petroleum Engineers, the
Canadian Institute of Metallurgy, the Mining and Metallurgical Society of
America and has published numerous articles on mineral processing and
environmental matters. Mr. DeGuire holds a B.S. in Metallurgical Engineering
from Michigan Technological University and M.S. in Metallurgical Engineering
from the University of Nevada, Reno.
 
  Gregory G. Marlier. Mr. Marlier serves as the Vice President of Finance and
Chief Financial Officer of Apex Corporation. From August of 1991 until
November of 1996, when he joined Apex Corporation, Mr. Marlier was the
Treasurer and Chief Financial Officer of Cambior USA, Inc., the mineral
resources exploration and development subsidiary of Cambior, Inc., an
international mining company based in Montreal, Canada. Mr. Marlier has almost
25 years of mining industry finance experience, serving as Chief Financial
Officer and Corporate Secretary of Westmont Mining, Inc. (a predecessor of
Cambior USA), Controller and Corporate Secretary of New Castle Energy
Corporation and director of administrative services of Dorchester Coal
Company. Mr. Marlier has also worked with Northern Coal Company and
Consolidation Coal Company (Consol). A member of the Association of Mining
Financial Professionals and National Mining Association, Mr. Marlier holds a
B.S. in Business Administration and Accounting from John Carroll University,
Cleveland, Ohio.
 
  Dr. Larry J. Buchanan. Dr. Buchanan serves as Chief Geologist to the Company
and is a principal advisor to its international operations. Dr. Buchanan is a
noted exploration geologist with a reputation as one of the industry's leading
experts on epithermal deposits, on which he has written several definitive
texts. His analysis of such deposits has given rise to the industry paradigm
known as "The Buchanan Model". Dr. Buchanan has published eight geological
texts, played a key role in identifying several multi-million ounce gold
deposits, and developed implementation programs for numerous currently
producing mines. His consulting clients have included Cyprus Minerals Company,
FMC Corporation, Total Resources, Inc. and Fischer-Watt Gold Co. Inc.
("Fischer-Watt"). Dr. Buchanan is a shareholder and director of Begeyge Minera
Ltda. Dr. Buchanan holds a B.Sc. and an M.Sc. in Geological Engineering and
Ph.D in Economic Geology from the Colorado School of Mines.
 
                                      61
<PAGE>
 
  Douglas M. Smith, Jr. Mr. Smith serves as Vice President of Exploration for
Apex Corporation. Mr. Smith began his career with Minas de San Luis, S.A.,
where he was District Geologist at the Taylotita mine, one of the largest
epithermal silver-gold deposits in the world, and became Chief Geologist at
the Company. Prior to joining Apex, Mr. Smith was employed for almost 20 years
by ASARCO Incorporated ("ASARCO"), which he joined in 1977. During his tenure
at ASARCO, he held numerous positions including Manager of the Rocky Mountain
Exploration Division and, most recently, Chief Geologist of the Latin American
Exploration Division, where he was responsible for overseeing all aspects of
exploration and project evaluation in Spanish-speaking countries of the
Americas, including Bolivia, Peru, Chile and Mexico. Mr. Smith left ASARCO in
1997 to join Apex Corporation. Mr. Smith holds a B.S. in Geology from the
University of New Mexico.
 
  Leni S. Berliner. Ms. Berliner serves as Commercial Development Manager for
Apex Corporation. Prior to joining the Company in the fall of 1996, Ms.
Berliner was the Chief Administrator-South America for Andean, a position she
had held since Andean's inception in 1994; prior to the formation of Andean,
she represented Andean Bahamas in a similar capacity starting in mid-1993.
Before joining the Company, Ms. Berliner was a private sector development
analyst and management consultant for ten years devising country investment
strategies for, among others, the Inter-American Investment Corporation, the
investment arm of the Inter-American Development Bank. Ms. Berliner is a
specialist in Latin American business and banking, and has worked extensively
throughout the region and in other emerging markets. She holds a B.A. with
honors from the University of Massachusetts, Amherst, and an MPIA in Economic
and Social Development from, and was a Public Service Fellow at, the
University of Pittsburgh.
 
 Latin America
 
  Johnny Delgado Achaval. Mr. Delgado serves as the Chief Executive Officer of
Andean. Mr. Delgado has over 30 years experience in the South American mining
industry, including 15 years as President, and principal shareholder, of
Mintec, one of Bolivia's leading mining consulting firms, and the agent for
Andean Silver Corporation LDC since the formation of its Bolivian branch in
1994. Mr. Delgado founded Mintec in 1981. Prior to the formation of Mintec,
Mr. Delgado worked with International Mining Company from 1966 to 1981, where
he served initially as Chief of Exploration and Project Manager and then as
Technical Vice President of its tungsten mining holding company, Estalsa
Boliviana S.A. Both before and during his tenure at Mintec, Mr. Delgado was
involved in all aspects of international mining, including the direction of
major exploration efforts in Bolivia, Peru, Brazil, Ecuador, Argentina and
Chile, as well as management of mining operations in Bolivia. Mr. Delgado has
taught mining engineering, mining finance and mine geology. He is a member of
the Geological Society of Bolivia, the Society of Bolivian Engineers and the
Mining Club.
 
  Felipe de Lucio Pezet. Mr. De Lucio serves as the General Manager of ASC
Peru. Mr. de Lucio is a mining engineer with over 30 years experience in the
Peruvian mining industry. Over the course of his career, Mr. de Lucio has been
the Head of Mining Engineering for Cerro De Pasco Corporation, the Deputy
Manager of Operations for the Compania Minera Caylloma S.A., the General
Manager of Compania Minera Colquirrumi S.A., the Manager of Operations for
Sociedad Minera Austria Duvaz S.A., and the Chief Executive Officer of Hierro
Peru, S.A. In addition, he has served on the Board of Directors of Sociedad
Minera Austria Duvaz S.A., the Corporacion Financiera de Desarrollo, S.A.,
Hierro Peru S.A., Banco Minero del Peru, S.A., Compania Mercantil de
Industrial Inga and Empresa Minera del Centro del Peru. In 1990, Mr. de Lucio
served on the Advisory Committee to the Minister of Energy and Mines and acted
as the head of the council responsible for the design and implementation of
the Government of Peru's Mining Development Plan. Mr. de Lucio is a former
President of the Mining Engineers' Association. He holds mining and
engineering degrees from National University of Engineering in Lima, as well
as the University of Arizona and the Michigan Technological University.
 
                                      62
<PAGE>
 
  Jon Gelvin. Mr. Gelvin serves as Chief Geologist for Cordilleras Mexico,
Cordilleras Bahamas and Cordilleras Honduras and is the Company's chief
representative in Central America. Mr. Gelvin has 30 years experience as a
professional geologist/engineer and mining exploration consultant in South
America and Central America. From 1976 to 1989, Mr. Gelvin served as a mining
exploration consultant in all of Central America and South America, with the
exception of Uruguay and Paraguay. In 1990, Mr. Gelvin joined Fischer-Watt to
supervise a Honduran mining exploration project; he left Fischer-Watt in 1993.
He joined Cordilleras Mexico in 1994 as an explorer, and became Chief
Geologist for CMZ in January of 1997. Mr. Gelvin is a shareholder and director
of Begeyge Minera Ltda. Mr. Gelvin holds a B.Sc. in petroleum engineering from
the Colorado School of Mines.
 
 Asia
 
  Dekel Golan. Mr. Golan serves as the President and a director of Apex Asia.
Mr. Golan is the founder and manager of MADA Holdings and Management Ltd., a
limited liability company organized and existing under the laws of Israel,
engaged in business development operations, including the promotion of
chemicals, mining and agricultural ventures. Mr. Golan served as head of
Competitive Intelligence and Business Development for Dead Sea Bromine Group,
the world's largest bromine producer and a subsidiary of Israel Chemicals
Ltd., Israel's leading mineral exploitation company. Mr. Golan holds a B.Sc.
in General Science from the Tel Aviv University.
 
  Alexander Becker. Mr. Becker serves as Apex Asia's principal advisor with
respect to mining exploration, development and production in Kyrghyzstan. Mr.
Becker is an experienced geologist with extensive mining experience. Prior to
emigrating from Russia to Israel in 1991, where he became a senior scientific
researcher for the Ramon Science Center at Ben Gurion University, Mr. Becker
served as Geologist in Chief of the Northern Kyrghyzstan Geological Expedition
at the Kyrghyzstan Ministry of Geology in Frunze. Mr. Becker has authored
numerous papers and reports on Kyrgyzstani geology, with particular regard to
the Northern Tien Shan region. He holds an M.Sc. in Geology from the Tomsk
State University and a Ph.D. in Geology, specializing in the Northern Tien
Shan region, from the Academy of Science in Frunze, Kyrghyzstan.
 
  Boris Miletsky. Mr. Miletsky serves as Vice President of Apex Asia, and is
Apex Asia's principal advisor with respect to mining exploration, development
and production in Mongolia. Prior to emigrating from Russia to Israel in 1993,
Mr. Miletsky served as the Managing Director of the Russian concern
Geologodzevska, the largest geological entity active in Mongolia, and as the
Soviet Ministry of Geology's representative to Mongolia. At Geologodzevska,
Mr. Miletsky supervised more than 3,000 workers, and served as the company's
chief negotiator with the governments of Mongolia and the Russian Federation.
Mr. Miletsky played a key role in negotiating Apex Asia's joint venture with
Mongolrostvetmet. Mr. Miletsky holds an M.Sc. in Geological and Mineral
Sciences from the Academy for the Geological Sciences in Kazakhstan.
 
                                      63
<PAGE>
 
                            EXECUTIVE COMPENSATION
 
COMPENSATION OF DIRECTORS
   
  Directors do not receive any cash compensation from the Company for serving
on the board of directors, although each non-employee director (other than Mr.
Conger) received, in April of 1997 options to purchase 6,250 Ordinary Shares
at a price of $8.00 per share and each non-employee director (including Mr.
Conger) is eligible to receive grants of Options under the Non-employee
Director Share Option Plan. See "Share Option Plans--Non-employee Directors
Share Option Plan". The Company has agreed to reimburse the directors for all
reasonable out-of-pocket costs incurred by them in connection with their
services to the Company. Mr. Conger received options to purchase 25,000
Ordinary Shares for certain consulting services performed for the Company and
options to purchase 3,125 Ordinary Shares for being a member of the Company's
Development Committee, all of which options are exercisable at a price of
$8.00 per share. The options for the 25,000 Ordinary Shares vest ratably over
four years with the first tranche vesting in October 1996.     
 
COMPENSATION OF OFFICERS
 
  The following table sets forth certain information with respect to the
annual compensation paid by the Company during the fiscal year ended December
31, 1996 to the Chief Executive Officer of Apex Corporation and the four other
most highly compensated executive officers and certain other officers of the
Company:
<TABLE>
<CAPTION>
                                       ANNUAL       LONG-TERM
                                    COMPENSATION   COMPENSATION
                                  ---------------- ------------
                                                    SECURITIES
                                                    UNDERLYING   ALL OTHER
  NAME AND PRINCIPAL POSITION      SALARY   BONUS    OPTIONS    COMPENSATION
  ---------------------------     -------- ------- ------------ ------------
<S>                               <C>      <C>     <C>          <C>          
Thomas S. Kaplan................  $120,625     --        --           --
 Chairman and Chief Executive
 Officer, Apex Corporation (1)
Keith R. Hulley.................    56,250     --    125,000      $93,167
 Executive Vice President and
 Chief Operating Officer, Apex
 Corporation(2)
Marcel F. DeGuire...............    67,500     --     62,500          --
 Vice President of Development,
 Apex Corporation(3)
Gregory G. Marlier..............    20,833     --     31,250          --
 Vice President of Finance and
 Chief Financial Officer, Apex
 Corporation(4)
Douglas M. Smith Jr. ...........       --      --        --           --
 Vice President of Exploration,
 Apex Corporation(5)
Johnny Delgado Achaval..........    25,000     --        --           --
 Chief Executive Officer, Andean
 ASC (6)
Dekel Golan.....................   120,000     --        --           --
 President, Apex Asia(7)
Larry J. Buchanan...............    70,700 $10,000    37,500          --
 Chief Geologist, Apex
 Corporation
Leni S. Berliner................    80,000   5,000       --           --
 Manager Commercial Development,
 Apex Corporation(8)
Felipe de Lucio Pezet
 Manager ASC Peru(9)............    66,000   7,500       --           --
Kerry A. McDonald...............    76,000     --        --           --
 Manager, Cordilleras Mexico(10)
</TABLE>
- --------
(1) Effective April 1, 1997, Mr. Kaplan's annual base salary is $240,000.
(2) Mr. Hulley joined the Apex group of companies on October 1, 1996. His
    annual base salary is $225,000. The $93,167 of other compensation was for
    taxable moving expenses and tax reimbursement.
(3) Mr. DeGuire joined the Apex group of companies on August 19, 1996. His
    annual base salary is $180,000.
(4) Mr. Marlier joined Apex Corporation on November 1, 1996. His annual base
    salary is $125,000.
 
                                      64
<PAGE>
 
(5) Mr. Smith joined Apex Corporation on March 7, 1997. His annual base salary
    is $120,000.
(6) Mr. Delgado Achaval joined Andean on November 1, 1996. His annual base
    salary is $125,000. He also receives an additional $25,000 in annual
    compensation in lieu of Company benefits.
(7) Mr. Golan has served as the President of Apex Asia since December 21,
    1994. His annual base salary is $120,000. Mr. Golan is also compensated
    for his services to the Company through payments to two companies that he
    owns or otherwise controls (i) Mada Limited, and (ii) MADA Holdings &
    Management Ltd.
(8) On January 1, 1997, Ms. Berliner became Manager of Commercial Development
    for Apex Corporation. Her annual base salary is $80,000.
(9) Mr. de Lucio Pezet joined ASC Peru on March 6, 1995. His annual base
    salary is $72,000.
(10) Mr. McDonald resigned from his position as Manager of Cordilleras
     Honduras in April of 1997. Currently, Mr. McDonald serves as a consultant
     to the Company's subsidiaries in Mexico.
 
  The following table contains further information concerning the share
options grants made to each of the officers of Apex Corporation during the
fiscal year ended December 31, 1996.
 
                       OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>   
<CAPTION>
                                                                      POTENTIAL REALIZABLE
                                                                        VALUE AT ASSUMED
                                                                         ANNUAL RATES OF
                                                                           SHARE PRICE
                                                                        APPRECIATION FOR
                                      INDIVIDUAL GRANTS                  OPTION TERM(4)
                         -------------------------------------------- ---------------------
                                    % OF TOTAL
                         NUMBER OF   OPTIONS
                         SECURITIES GRANTED TO
                         UNDERLYING EMPLOYEES  EXERCISE OR
                          OPTIONS   IN FISCAL  BASE PRICE  EXPIRATION
                         GRANTED(1)  YEAR(2)    ($/SH)(3)     DATE       5%         10%
                         ---------- ---------- ----------- ---------- --------- -----------
<S>                      <C>        <C>        <C>         <C>        <C>       <C>
Keith R. Hulley......... $125,000    $44.44       $8.00      9/2/06   $ 628,895 $ 1,593,742
Marcel F. DeGuire.......   62,500     22.22        8.00      8/5/06     314,447     796,871
Gregory G. Marlier......   31,250     11.11        8.00     10/2/06     157,224     398,436
Larry J. Buchanan.......   37,500     13.33        8.00      9/1/06     188,668     478,123
</TABLE>    
- --------
(1) All options granted in 1996, except for those granted to Dr. Buchanan,
    vest ratably over four years, with the first tranche vesting on the date
    of grant. The options granted to Dr. Buchanan vest ratably over three
    years, with the first tranche vesting on the date of grant.
(2) Based on 281,250 options granted to employees in fiscal 1996.
(3) All share options were granted with exercise prices of $8.00 per share.
(4) These amounts are based on compounded annual rates of share price
    appreciation of five and ten percent over the 10-year term of the options,
    as mandated by rules of the Securities and Exchange Commission, and are
    not indicative of expected share price performance. Actual gains, if any,
    on share option exercises are dependent on future performance of the
    overall market conditions, as well as the option holders' continued
    employment throughout the vesting period. The amounts reflected in this
    table may not necessarily be achieved or may be exceeded. The indicated
    amounts are net of the option exercise price but before taxes that may be
    payable upon exercise.
 
                                      65
<PAGE>
 
                AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
                       AND FISCAL YEAR-END OPTION VALUES
 
<TABLE>
<CAPTION>

                          SHARES
                         ACQUIRED                  NUMBER OF                 VALUE OF
                            ON     VALUE     SECURITIES UNDERLYING          UNEXERCISED
                         EXERCISE REALIZED  UNEXERCISED OPTIONS AT     IN-THE-MONEY OPTIONS
NAME                       (#)      ($)        FISCAL YEAR-END         AT FISCAL YEAR-END *
- ----                     -------- -------- ------------------------- -------------------------
                                           EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
<S>                      <C>      <C>      <C>         <C>           <C>         <C>
Keith R. Hulley.........   --       --       31,250       93,750          --           --
Marcel F. DeGuire.......   --       --       15,625       46,875          --           --
Gregory G. Marlier......   --       --        7,813       23,437          --           --
Larry J. Buchanan.......   --       --       12,500       25,000          --           --
</TABLE>
- --------
* Computed based upon a fair market value of $8.00 per share on December 31,
 1996 as determined by the Company.
 
EMPLOYMENT AGREEMENTS
 
  The Company and Keith Hulley, a director of the Company, entered into an
agreement on September 2, 1996 with respect to Mr. Hulley's employment as
Executive Vice President and Chief Operating Officer of Apex Corporation.
Pursuant to such employment agreement, the Company, through Apex Corporation,
will pay Mr. Hulley an annual salary of $225,000, plus a performance-based
bonus starting in 1998. In addition, the employment agreement provides that
Mr. Hulley is eligible to participate in the Company's and Apex Corporation's
employee benefit plans, including the Employee Share Option Plan pursuant to
which Mr. Hulley received options to purchase 125,000 Ordinary Shares. Twenty-
five percent of the options vested on appointment, the remaining 75 percent
vest over the three-year period ending September 2, 1999 at a rate of 25
percent per annum. The employment agreement, which may be terminated for cause
by the Company at any time, contains a severance arrangement that entitles Mr.
Hulley to receive his existing salary and all benefits for one year from the
date of termination if he is terminated, other than for cause, at any time
within three years from the date of the employment agreement. The employment
agreement also contains a non-compete covenant with a term of two years after
the termination of Mr. Hulley's employment.
 
  Marcel DeGuire, Vice President of Project Development of Apex Corporation,
and the Company entered into an employment agreement on August 1, 1996.
Pursuant to such employment agreement the Company, through Apex Corporation,
will pay Mr. DeGuire an annual salary of $180,000. In addition, the employment
agreement provides that Mr. DeGuire is eligible to participate in the
Company's employee benefit plans, including the Employee Share Option Plan
pursuant to which Mr. DeGuire received options to purchase 62,500 Ordinary
Shares. Twenty-five percent of the options vested on appointment, the
remaining 75 percent vest over the three-year period ending August 1, 1999 at
a rate of 25 percent per annum. The employment agreement, which may be
terminated for cause by the Company at any time, contains a severance
arrangement that entitles Mr. DeGuire to receive his existing salary and all
benefits for one year from the date of termination if he is terminated, other
than for cause, at any time within three years from the date of the employment
agreement. The employment agreement also contains a non-compete covenant with
a term of two years after the termination of Mr. DeGuire's employment.
 
 
                                      66
<PAGE>
 
  Gregory Marlier, Vice President of Finance and Chief Financial Officer of
Apex Corporation, and the Company entered into an employment agreement on
October 2, 1996. Pursuant to such employment agreement the Company, through
Apex Corporation, will pay Mr. Marlier an annual salary of $125,000, plus a
performance-based bonus starting in 1998. In addition, the employment
agreement provides that Mr. Marlier is eligible to participate in the
Company's employee benefit plans, including the Employee Share Option Plan
pursuant to which Mr. Marlier received options to purchase 31,250 Ordinary
Shares. Twenty-five percent of the options vested on appointment, the
remaining 75 percent vest over the three-year period ending July 24, 1999 at a
rate of 25 percent per annum. The employment agreement, which may be
terminated for cause by the Company at any time, contains a severance
arrangement which entitles Mr. Marlier to receive his existing salary and all
benefits for one year from the date of termination if he is terminated, other
than for cause, at any time within three years from the date of the employment
agreement. The employment agreement also contains a non-compete covenant with
a term of two years after the termination of Mr. Marlier's employment.
 
  Douglas Smith, Vice President of Exploration of Apex Corporation, and the
Company entered into an employment agreement on January 23, 1997. Pursuant to
such employment agreement the Company, through Apex Corporation, will pay Mr.
Smith an annual salary of $120,000. In addition, the employment agreement
provides that Mr. Smith is eligible to participate in the Company's employee
benefit plans, including the Employee Share Option Plan pursuant to which Mr.
Smith received options to purchase 31,250 Ordinary Shares. Twenty-five percent
of the options vested on appointment, the remaining 75 percent vest over the
three-year period ending January 23, 2000 at a rate of 25 percent per annum.
The employment agreement also contains a confidentiality covenant with a term
of two years after the termination of Mr. Smith's employment.
 
SHARE OPTION PLANS
 
  The Company has established two Share option plans; one for officers,
employees, consultants and agents of the Company and its subsidiaries, the
other for non-employee directors of the Company.
 
 Employee Share Option Plan
 
  The Company has established a share option plan for officers, employees,
consultants and agents of the Company and its subsidiaries (the "Employee
Share Option Plan"). The Employee Share Option Plan provides for the grant of
Ordinary Share options (including incentive Ordinary Share options as defined
in Section 422 of the U.S. Internal Revenue Code of 1986, as amended, (the
"Code")), Ordinary Share appreciation rights and other Share awards (including
restricted Ordinary Share awards, contingent Ordinary Share awards and
dividend or equivalent Ordinary Share awards) (collectively "Awards"). The
total number of options outstanding at any time cannot exceed ten percent of
the number of Ordinary Shares outstanding from time to time. Options granted
under the Employee Share Option Plan are non-assignable and exist for a term,
not to exceed ten years, fixed by the Compensation Committee of the board of
directors of the Company (the "Committee"). The exercise price of options
granted on or before the date of the Offering is $8.00 per share. The exercise
price of options granted after the date of the Offering is determined by the
Committee at the time the option is granted; provided that the exercise price
shall not be less than 100 percent of the fair market value of the share on
the date of the grant. In the case of an incentive share option granted to an
employee owning (actually or constructively under Section 422(d) of the Code),
more than ten percent of the total combined voting power of all classes of
Ordinary Shares of the Company, the price of any such option shall not be less
than 110 percent of the fair market value of the Ordinary Shares on the date
of grant. The aggregate fair market value (determined at the time the
incentive share options are granted) of the Ordinary Shares with respect to
which incentive share options are exercisable for the first time by any
optionee during any calendar year under all plans of the Company shall not
exceed $100,000. Awards may be granted by the Committee on such terms,
including vesting schedules, price, restriction
 
                                      67
<PAGE>
 
or option period, dividend rights, post-retirement and termination rights, and
payment forms as they deem appropriate. Unless terminated by the board of
directors, the Employee Share Option Plan continues until August 1, 2006.
 
  Options grants made under the Employee Share Option Plan provide that in the
event of a Change in Control (as defined in the Employee Share Option Plan),
the options whether or not currently vested and exercisable, shall become
immediately vested and exercisable as of the effective date of the Change of
Control.
 
  Under the Employee Share Option Plan, as of the date hereof, options to
purchase an aggregate of 415,000 Ordinary Shares are outstanding. All such
options are exercisable at a price of $8.00 per share. See "Principal
Shareholders".
 
 Non-Employee Director Share Option Plan
 
  The Company has established, a share option plan for non-employee directors
of the Company (the "Non-employee Director Share Option Plan"). The total
number of options outstanding at any time cannot exceed five percent of the
number of Ordinary Shares outstanding from time to time. Options granted under
the Non-employee Director Share Option Plan are non-assignable (except for
approved assignments to immediate family members) and expire at the earlier of
(i) ten years after the date of the grant of the option or (ii) one year after
the director ceases to be a director of the Company. Options shall have an
exercise price of 100 percent of the Fair Market Value (as defined in the Non-
employee Director Share Option Plan) of the Ordinary Shares on the date of the
grant. The Non-employee Director Share Option Plan provides for the automatic
grant of (i) an option to purchase the number of Ordinary Shares equal to
$50,000 divided by the Fair Market Value of the Ordinary Shares on the date of
the grant to each non-employee director at the effective date of their initial
election to the board of directors and, (ii) an option to purchase the number
of Ordinary Shares equal to $50,000 divided by the Fair Market Value of the
Ordinary Shares on the date of the grant at the close of business of each
annual meeting of the shareholders of the Company.
 
  No options have been granted under the Non-employee Director Share Option
Plan. However, non-employee directors have received options pursuant to
individual grants. See "Principal Shareholders".
 
OTHER PLANS
 
  In 1997, Apex Corporation instituted a 401(k) Plan for its U.S. employees.
Apex Corporation makes monthly contributions to this 401(k) Plan, and
currently matches 50 percent of each employee's contribution up to an employee
contribution of six percent of base salary. Employees vest in the company's
contribution at 50 percent after one year of service and 100 percent after two
years of service. Although the Company does not currently have a formal bonus
or incentive plan for any of its employees, it anticipates instituting a bonus
plan in the future.
 
                                      68
<PAGE>
 
                            PRINCIPAL SHAREHOLDERS
 
  The following table sets forth certain information with respect to the
beneficial ownership of the Ordinary Shares by (i) each person known by the
Company to beneficially hold five percent or more of the outstanding Ordinary
Shares, (ii) each director of Apex Limited, (iii) each executive officer of
the Company named in the table on page 64, and (iv) all executive officers and
directors as a group. All Ordinary Share numbers set forth in the table have
been rounded up to the nearest whole number. Except as otherwise noted, the
Company believes that all of the persons and groups shown below, based on
information furnished by such owners, have sole voting and investment power
with respect to the shares indicated. See "Certain Transactions".
 
<TABLE>   
<CAPTION>
                                                                          BENEFICIAL OWNERSHIP
                           BENEFICIAL OWNERSHIP                                  AFTER               PRO FORMA
                          PRIOR TO THE OFFERING        AS ADJUSTED(1)       THE OFFERING(2)       AS ADJUSTED(3)
                          ------------------------- --------------------- -------------------- ---------------------
                            NUMBER     PERCENTAGE     NUMBER   PERCENTAGE  NUMBER   PERCENTAGE   NUMBER   PERCENTAGE
                          ------------ ------------ ---------- ---------- --------- ---------- ---------- ----------
<S>                       <C>          <C>          <C>        <C>        <C>       <C>        <C>        <C>
DIRECTORS, OFFICERS AND
 5% SHAREHOLDERS(4)
Silver Holdings(5)......             1          *    6,297,321   30.45%           1       *     6,297,321   21.22%
Moore Global Investments
 Ltd./Remington
 Investment Strategies,
 L.P.(6)................       937,500       6.89%     937,500    4.53%     937,500    4.15%      937,500    3.16%
C.A. Delaney Capital
 Management Limited(7)..       750,000       5.51%     750,000    3.63%     750,000    3.32%      750,000    2.53%
Leni S. Berliner(8).....        27,346          *       27,346       *       27,346       *        27,346       *
Larry J. Buchanan(9)....        50,000          *       50,000       *       50,000       *        50,000       *
Michael Comninos(10)....         6,250          *        6,250                6,250       *         6,250       *
Harry S. Conger(11).....        15,625          *       15,625       *       15,625       *        15,625       *
Marcel F. DeGuire(12)...        31,250          *       31,250       *       31,250       *        31,250       *
Johnny Delgado
 Achaval(13)............       394,591       2.90%     394,591    1.91%     394,591    1.75%      394,591    1.33%
Felipe de Lucio
 Pezet(14)..............        27,346          *       27,346       *       27,346       *        27,346       *
Eduardo S.
 Elsztain(15)...........        31,250          *    6,328,571   30.60%      31,250       *     6,328,571   21.32%
Dekel Golan(16).........        52,346          *       52,346       *       52,346       *        52,346       *
David Sean Hanna(17)....         6,250          *        6,250       *        6,250       *         6,250       *
Ove Hoegh(18)...........         6,250          *        6,250       *        6,250       *         6,250       *
Keith R. Hulley(19).....        62,500          *       62,500       *       62,500       *        62,500       *
Thomas S. Kaplan(20)....     6,674,979      49.08%   6,674,979   32.28%   6,674,979   29.53%    6,674,979   22.49%
Richard Katz(21)........         6,250          *        6,250       *        6,250       *         6,250       *
Gregory G. Marlier(22)..        15,626          *       15,626       *       15,626       *        15,626       *
Kerry A. McDonald(23)...        31,250          *       31,250       *       31,250       *        31,250       *
Douglas M. Smith(24)....         7,813          *        7,813       *        7,813       *         7,813       *
Paul Soros(25)..........         6,250          *    6,303,571   30.48%       6,250       *     6,303,571   21.24%
DIRECTORS AND OFFICERS
 AS A GROUP.............     7,453,172      54.80%  13,750,493   66.50%   7,453,172   32.98%   13,750,493   46.33%
</TABLE>    
- -------
   *The percentage of Ordinary Shares beneficially owned is less than 1%.
 (1) Adjusted as if Ordinary Shares were issued in exchange for all shares of
     Apex LDC owned by the Minority Shareholders, on a one-for-one basis,
     pursuant to the terms of the Buy-Sell Agreement. See "Certain
     Transactions".
   
 (2) Reflects the sale of Shares in the Offering (assuming no exercise of the
     U.S. Underwriters and Managers over-allotment options and no purchase of
     Shares).     
 (3) Adjusted as if Ordinary Shares were issued in exchange for all of the
     shares of Apex LDC owned by the Minority Shareholders, pursuant to the
     terms of the Buy-Sell Agreement.
 (4) Unless otherwise specified, the address for directors and officers of the
     Company is 1700 Lincoln Street, Suite 3050, Denver, Colorado 80203,
     U.S.A.
 (5) The address for Silver Holdings is Kaya Flamboyan 9, Willemstad, Curacao,
     Netherlands Antilles. Quantum Industrial Partners LDC ("Quantum
     Industrial"), an exempted limited duration company formed under the laws
     of the Cayman Islands is a 50 percent shareholder in Silver Holdings LDC
     ("Silver Holdings"), an exempted limited duration company formed under
     the laws of the Cayman
 
                                      69
<PAGE>
 
     Islands, the registered owner of 6,297,320 shares of Apex LDC. QIH
     Management Investor, L.P. ("QIHMI"), an investment advisory firm organized
     as a Delaware limited partnership, is a minority shareholder of, and is
     vested with investment discretion with respect to portfolio assets held
     for the account of Quantum Industrial. The sole general partner of QIHMI
     is QIH Management, Inc. ("QIH Management"), a corporation formed under the
     laws of the State of Delaware. Mr. George Soros, the sole shareholder of
     QIH Management, has entered into an agreement with Soros Fund Management
     LLC ("SFM LLC"), a limited liability company formed under the laws of the
     State of Delaware, pursuant to which Mr. George Soros has, among other
     things, agreed to use his best efforts to cause QIH Management to act at
     the direction of SFM LLC (the "QIP Contract"). Mr. George Soros is
     Chairman of SFM LLC, and as a result of such position and the QIP
     Contract, may be deemed the beneficial owner of shares held for the
     account of Quantum Industrial. Mr. Stanley F. Druckenmiller, the Lead
     Portfolio Manager of SFM LLC, by virtue of such position and the QIP
     Contract, also may be deemed the beneficial owner of shares held for the
     account of Quantum Industrial. Emerging Dolphin Limited is a private, open-
     end investment fund formed under the laws of the Isle of Man. It is
     managed by Consultores Management Company (Isle of Man) Limited, a wholly-
     owned subsidiary of Consultores Asset Management, S.A., and holds a 26.5
     percent interest in Silver Holdings LDC. Geosor Corporation ("Geosor"), a
     corporation formed under the laws of the State of New York which is wholly-
     owned by Mr. George Soros, is a 15 percent shareholder of Silver Holdings
     LDC. Mr. Eduardo Elsztain is the Chairman and Majority Shareholder of
     Consultores Asset Management. See "Certain Transactions".
 (6) The address is 1251 Avenue of the Americas, 53rd Floor, New York, New
     York 10020. Moore Capital Management, Inc., a Connecticut corporation, is
     vested with investment discretion with respect to portfolio assets held
     for the account of Moore Global Investments, Ltd. ("MGI"). Moore Capital
     Advisors, L.L.C., a New York limited liability company, is the sole
     general partner of Remington Investment Strategies, L.P. ("Remington").
     Mr. Louis M. Bacon is the majority shareholder of Moore Capital
     Management, Inc. and is the majority equity holder of Moore Capital
     Advisors, L.L.C. As a result, Mr. Bacon may be deemed to be the indirect
     beneficial owner of the aggregate 937,500 shares held by MGI and
     Remington.
 (7) The address of C.A. Delaney Capital Management Limited ("C.A. Delaney")
     is 161 Bay Street, Suite 5100, Toronto, Ontario M5J251. C.A. Delaney
     serves as an agent on behalf of Spectrum United Canadian Growth Fund, the
     beneficial owners of 750,000 Ordinary Shares.
 (8) Ms. Berliner is the registered owner of 25,000 Ordinary Shares and has
     vested options to purchase 2,346 Ordinary Shares pursuant to the Employee
     Share Option Plan.
 (9) Dr. Buchanan is the registered owner of 25,000 Ordinary Shares of the
     Company. Pursuant to the Employee Plan, Dr. Buchanan has vested options
     to purchase 12,500 Ordinary Shares and options to purchase 12,500
     Ordinary Shares which vest on September 1, 1997.
(10) Mr. Comninos is a director of the Company and has received, pursuant to a
     grant as of April 10, 1997, vested options to purchase 6,250 Ordinary
     Shares as compensation for becoming a director of the Company.
(11) Pursuant to a grant as of October 8, 1996 and a grant as of April 10,
     1997, Mr. Conger has been granted vested options to purchase 15,625
     Ordinary Shares.
(12) Mr. DeGuire has been granted vested options to purchase 31,250 Ordinary
     Shares pursuant to the Employee Share Option Plan.
(13) Mr. Delgado Achaval is the registered owner of 113,595 Ordinary Shares
     and has vested options to purchase 12,500 Ordinary Shares pursuant to the
     Employee Plan. In addition, Mr. Delgado Achaval has voting and
     dispositive control with respect to 268,496 Ordinary Shares of the
     Company owned by Mineria Tecnica Consultores, S.A.
(14) Mr. de Lucio Pezet is the registered owner of 25,000 Ordinary Shares of
     the Company and has vested options to purchase 2,346 Ordinary Shares
     pursuant to the Employee Share Option Plan.
 
                                      70

<PAGE>
 
   
(15) Mr. Elsztain, a director of the Company, is the registered owner of
     25,000 Ordinary Shares. Pursuant to a grant as of April 10, 1997, Mr.
     Elsztain has vested options to purchase 6,250 Ordinary Shares of the
     Company. Mr. Elsztain also serves as a director of Silver Holdings, the
     registered owner of 6,297,320 shares of Apex LDC which Ordinary Shares
     are included in the table. The inclusion of such Ordinary Shares shall
     not be deemed an admission that such individual is the beneficial owner
     of such Ordinary Shares. He is the Chairman and Majority Shareholder of
     Consultores Asset Management, S. A. ("Consultores") which is a 2.5
     percent shareholder of Silver Holdings and the sole owner of Consultores
     Management Company (Isle of Man) Limited ("Consultores Management").
     Consultores Management is the manager of Emerging Dolphin Limited, a
     private open-end investment fund formed under the laws of the Isle of Man
     which owns 26.5 percent of Silver Holdings.     
(16) Mr. Golan has voting and dispositive control of Mada Limited which is the
     registered owner of 50,000 Ordinary Shares. Mr. Golan has vested options
     to purchase 2,346 Ordinary Shares pursuant to the Employee Share Option
     Plan.
(17) Mr. Hanna is a director of the Company and has received, pursuant to a
     grant as of April 10, 1997, vested options to purchase 6,250 Ordinary
     Shares of the Company.
(18) Mr. Hoegh is a director of the Company and has received, pursuant to a
     grant as of April 10, 1997, options to purchase 6,250 Ordinary Shares of
     the Company.
(19) Mr. Hulley has been granted vested options to purchase 62,500 Ordinary
     Shares pursuant to the Employee Share Option Plan.
(20) Pursuant to Voting Trust Agreements, Mr. Kaplan has voting and
     dispositive control with respect to 2,739,154 shares of the Company owned
     by Argentum LLC and 3,935,825 shares of the Company owned by Consolidated
     Commodities, Ltd.
(21) Mr. Katz is a director of the Company and has received, pursuant to a
     grant as of April 10, 1997, vested options to purchase 6,250 shares of
     the Company.
(22) Mr. Marlier has vested options to acquire 15,626 Ordinary Shares pursuant
     to the Employee Share Option Plan.
(23) Mr. McDonald is the indirect owner of 31,250 shares of the Company
     through Celtic Group Ltd., an international business corporation
     organized under the laws of the British Virgin Islands.
(24) Mr. Smith has vested options to acquire 7,812.50 Ordinary Shares pursuant
     to the Employee Share Option Plan.
   
(25) Mr. Soros is a director of the Company and has received, pursuant to a
     grant as of April 10, 1997, options to purchase 6,250 shares of the
     Company. Mr. Soros is also a director and indirect five percent
     shareholder of Silver Holdings (through this 100% ownership of VDM, Inc.,
     a shareholder of Silver Holdings), which is the registered owner of
     6,297,320 shares of Apex LDC which Ordinary Shares included in the table.
     The inclusion of such Ordinary Shares shall not be deemed an admission
     that such individual is the beneficial owner of such Ordinary Shares. He
     also serves on the Investment Advisory Committee of Quantum Industrial, a
     50 percent shareholder of Silver Holdings.     
 
                                      71
<PAGE>
 
                             CERTAIN TRANSACTIONS
 
  In December of 1994, Silver Holdings formed by (i) Quantum Industrial
Partners LDC, (ii) Geosor Corporation, (iii) VDM, Inc. (iv) entities
affiliated with Mr. Elsztain, and (v) Jack Nash, purchased a 75 percent
interest in Apex LDC in exchange for a $10 million demand note (the "Note")
payable to Apex LDC. Upon Silver Holdings' investment, Mr. Paul Soros and Mr.
Elsztain were appointed to Apex LDC's board of directors. As part of this
investment, and in consideration of introducing the principals of the Company
and Silver Holdings to each other. Litani Capital Management Ltd. ("Litani
Ltd."), an international business company formed under the laws of the
Bahamas, was granted an option to purchase 35 percent of the issued and
outstanding shares of Apex LDC from Silver Holdings for an amount equal to
Silver Holdings' initial purchase price for such shares, plus interest thereon
calculated at an annual rate of 20 percent.
 
  In connection with the investment by Silver Holdings, Apex LDC agreed to pay
Tigris Financial Group Ltd. ("Tigris"), a corporation formed under the laws of
the State of Delaware, an annual advisory fee of $75,000, plus expenses, in
consideration for Mr. Kaplan's services to Apex LDC and its subsidiaries. Mr.
Kaplan is the sole shareholder of Tigris. This consulting arrangement was
terminated at the end of the first quarter of 1997, following the formation of
Apex Corporation. In addition, Apex LDC agreed to pay Litani Ltd. an annual
advisory fee of $45,000, plus expenses, in consideration for Litani Ltd.'s
services to Apex LDC and its subsidiaries. The right to this fee was
subsequently assigned to LCM Holdings LDC, a limited duration company formed
under the laws of the Bahamas ("LCM Holdings LDC"). This consulting
arrangement was terminated at the end of the first quarter of 1997.
 
  In the first half of 1995, Litani LDC succeeded to Litani Ltd.'s contract
rights with respect to Apex LDC, including the option, but excluding LCM
Holdings LDC's advisory fee. In July of 1995, Litani LDC completed the sale,
in a Private Placement, of 30 percent of its shares to accredited investors
(representing an approximately 10.5 percent beneficial economic interest in
Apex LDC) for approximately $6 million. In early August of 1995, Litani LDC
exercised its option to acquire from Silver Holdings 35 percent of the issued
and outstanding shares of Apex LDC for a price equal to approximately
$5,250,000. Substantially all of Litani LDC's assets consisted of its shares
of Apex LDC.
 
  In January of 1996, the Company delivered to Silver Holdings a capital call
for the amount of the outstanding balance due on the Note. Silver Holdings
made its final payment under the Note, in the amount of just over $2.9
million, effective as of January 31, 1996.
 
  In the first four months of 1996, Apex LDC was restructured in order to
facilitate the 1996 Private Placement which was completed effective August 6,
1996. As part of this restructuring, Apex Limited was formed to serve as the
majority shareholder of Apex LDC. Apex LDC also formed ASM Holdings Limited
("ASM Holdings"), an exempted limited liability company organized and existing
under the laws of the Cayman Islands, and Apex Partners in order to facilitate
the purchase of minority interests in certain of Apex LDC's subsidiaries from
five officers of Apex Corporation. Apex Partners subsequently acquired a one
percent interest in each of Apex Asia, Cordillera Minera de Zacatecas,
Cordilleras Honduras, Andean and ASC Partners. The Company also purchased
certain minority profit interests in Honduran and Mexican properties from the
individual who had represented the Company in connection with the initial
acquisition of such properties.
 
  As part of the 1996 Private Placement, 4,256,700 shares of the Company were
sold at a price of US $8.00 per Ordinary Shares to accredited investors. The
gross proceeds from the 1996 Private Placement were $34,053,600. The Private
Placement agents for the sale included Salomon Brothers Inc and S.G. Warburg &
Co. Inc. In connection with the 1996 Private Placement, Consolidated
contributed its 25 percent interest in Apex LDC to the Company in exchange for
3,935,825 Ordinary Shares (approximately 30% of the Ordinary Shares
outstanding at such time, or 20%, assuming the issuance of the 7,077,007
Ordinary Shares reserved for issuance pursuant to the Buy-Sell Agreement),
 
                                      72
<PAGE>
 
and approximately 84 percent of the shareholders of Litani LDC exchanged their
interests in Apex LDC in exchange for 4,730,468 Ordinary Shares (approximately
36% of the Ordinary Shares outstanding at such time, or 23% assuming the
issuance of the 7,077,007 Ordinary Shares reserved for issuance pursuant to
the Buy-Sell Agreement).
 
  Further in connection with the 1996 Private Placement, Apex LDC, the Company
and the other beneficial owners of Apex LDC entered into a Buy-Sell Agreement
dated as of August 6, 1996 (the Buy-Sell Agreement"). Pursuant to the terms of
the Buy-Sell Agreement, upon a request by a Minority Shareholder, the Company
is required to purchase, at its sole option, for cash, for Ordinary Shares or
for a combination of cash and Ordinary Shares, the shares of Apex LDC owned by
such shareholder. The Company currently expects that any future purchases by
Apex Limited of shares of Apex LDC from the Minority Shareholders will involve
only Ordinary Shares of Apex Limited. Any such transaction will not effect the
beneficial and economic interest in Apex LDC attributable to shareholders of
Apex Limited.
   
  Pursuant to a Shareholders' Agreement dated as of August 6, 1996 (the
"Shareholders' Agreement") by and among Apex LDC, the Company, the other
shareholders of Apex LDC, and each purchaser of Ordinary Shares in the 1996
Private Placement, such shareholders have agreed not to affect any public sale
or distribution (including any sale pursuant to Rule 144 of the Securities
Act) of any securities convertible into, or exchangeable or exercisable for
Shares, for seven days prior to and 180 days after the date of this
Prospectus, without the prior written consent of Salomon.     
 
  Dr. Larry J. Buchanan and Jon Gelvin, officers of the Company, are
shareholders and directors of Begeyge Minera Ltda. ("Begeyge"), from which the
Company purchased options for three properties in Honduras for a total of
$20,000. The Company declined to exercise its option to purchase two of the
three properties. From the time of entering into the option contracts until
December 31, 1996, the Company spent a total of $182,324 in connection with
the returned properties. During the period January 1, 1997 through June 30,
1997 the Company paid Begeyge $5,000 in lease payments for one of the returned
properties. The Company spent a further $9,619 in connection with this
property during the period. The Company still has an option to purchase the
remaining property for $3,000,000. Begeyge also serves as an associate of the
Company and during the period ended December 31, 1996, total expenditures
charged to the Company by Begeyge amounted to $106,691. During the period
January 1, 1997 through June 30, 1997, Begeyge did not receive any payment
from the Company other than the $5,000 in lease payments.
 
  In 1996, Mr. Harry Conger, a director of the Company, received options to
purchase 25,000 Ordinary Shares at $8 per share. The option, were granted in
consideration of his consulting services for the Company and vest ratably over
four years, with the first tranche vesting on the date of grant.
 
  In August 1997, the Company issued Mada Limited 25,000 shares in
consideration of its services to the Company.
 
  In August of 1997, the Company exchanged 268,496 Ordinary Shares for
Mintec's 2.5 percent interest in ASC Bolivia.
 
  In August of 1997, the Company issued Johnny Delgado Achaval, an officer of
the Company 113,595 Ordinary Shares of the Company in consideration of his
services to the Company.
   
  The Company is negotiating an agreement with Mintec in which the Company
would purchase from Mintec (i) its non-land assets for approximately $757,000
and (ii) concessions with respect to approximately 126,000 acres of land for
approximately $550,000. The closing of such transaction will not occur until
after the Offering.     
 
                                      73
<PAGE>
 
  Silver Holdings, the Company, Mr. Kaplan, Argentum LLC, Aurum LLC, and
Consolidated intend to enter into a Board Designation Agreement pursuant to
which the Company, Mr. Kaplan, Argentum LLC, Aurum LLC, and Consolidated will
agree to nominate and support for nomination two individuals designated by
Silver Holdings, for so long as Silver Holdings owns one percent of the
outstanding Ordinary Shares, including Ordinary Shares it may receive pursuant
to the Buy-Sell Agreement.
   
  Silver Holdings, Argentum LLC, Consolidated, Litani LDC, Thomas Kaplan,
Aurum LLC, and the Company will enter into a registration rights agreement,
pursuant to which each of Silver Holdings and Argentum LLC are entitled to
demand registration of any Ordinary Shares owned by either of them. Silver
Holdings and Argentum LLC may make such demand up to three times each on Form
S-1 of the Securities Act and up to an additional three times each on Forms S-
2 and S-3, when such form is available for use by the Company. The Company is
not required to effect any demand registration within 120 days after the
effective date of a previous demand registration and may postpone, on one
occasion in any 365-day period, the filing or effectiveness of a registration
statement for a demand registration for up to 120 days under certain
circumstances, including pending material transactions. Silver Holdings,
Argentum LLC, Aurum LLC, Thomas Kaplan, Consolidated and Litani LDC are also
entitled to unlimited piggyback registrations. All such registrations would be
at the Company's expense, exclusive of underwriting discounts and commissions.
The Company and such shareholders have entered into customary indemnification
and contribution provisions.     
 
  Apex Corporation provides management, advisory and administrative services
for the Company pursuant to a Management Services Agreement dated October 22,
1996. The services provided by Apex Corporation include identifying and
evaluating investment opportunities, making recommendations to the board of
directors with respect to the Company's exploration and development
activities, staffing employees and providing the necessary expertise to manage
the Company's affairs and monitor its exploration and development activities,
advising the Company with respect to investments, contractual and financing
activities and providing financial services. The Company pays Apex Corporation
a service fee in an amount equal to the direct and indirect costs incurred by
Apex Corporation in providing its services, plus 10 percent of such costs.
 
                                      74
<PAGE>
 
                        DESCRIPTION OF ORDINARY SHARES
 
  The following summarizes certain provisions of the Memorandum of Association
(the "Memorandum") and the Articles of Association, as amended (the
"Articles") of the Company. Such summaries do not purport to be complete and
are subject to, and are qualified in their entirety by reference to, all of
the provisions of the Memorandum and the Articles, including the definitions
thereof to certain terms. Copies of the Memorandum and Articles are filed as
exhibits to the Registration Statement of which this Prospectus is part.
 
GENERAL
 
  The authorized share capital of the Company consists of one class of
50,000,000 ordinary shares, par value $0.01 per share, of which 13,601,544
shares were outstanding as of the date of this Prospectus. Approximately
7,077,007 shares may be issued on a one-for-one basis in exchange for the
Shares of Apex LDC subject to the terms of the Buy-Sell Agreement. See
"Certain Transactions".
 
SHARES
 
  The Shares offered hereby are validly issued, fully paid and nonassessable.
There are no provisions of Cayman Islands law or the Company's Articles of
Association which impose any limitation on the rights of shareholders to hold
or vote Ordinary Shares by reason of their not being resident of the Cayman
Islands.
 
  Dividend Rights. Holders of Ordinary Shares are entitled to receive
dividends ratably when and as declared by the board of directors out of funds
legally available therefor.
 
  Liquidation. In the event of any dissolution, liquidation or winding up of
the Company, whether voluntary or involuntary, after there shall have been
paid or set aside for payment to the holders of any outstanding shares ranking
senior to the Shares as to distribution on liquidation, distribution or
winding up, the full amount to which they shall be entitled, the holders of
the then outstanding Ordinary Shares shall be entitled to receive, pro rata
according to the number of Ordinary Shares registered in the names of such
shareholders, any remaining assets of the Company available for distribution
to its shareholders; provided, if, at such time, the holder of Ordinary Shares
has any outstanding debts, liabilities or engagements to or with the Company
(whether presently payable or not, either alone or jointly with any other
person, whether a shareholder or not (including, without limitation, any
liability associated with the unpaid purchase price of such Ordinary Shares),
the liquidator appointed to oversee the liquidation of the Company shall
deduct from the amount payable in respect of such Ordinary Shares the
aggregate amount of such debts, liabilities and engagements and apply such
amount to any of such holder's debts, liabilities or engagements to or with
the Company (whether presently payable or not). The liquidator may distribute,
in kind, to the holders of the Ordinary Shares remaining assets of the Company
or may sell, transfer or otherwise dispose of all or any part of such
remaining assets to any other corporation, trust or entity and receive payment
therefor in cash, shares or obligations of such other corporation, trust or
entity or any combination thereof, and may sell all or any part of the
consideration so received, and may distribute the consideration received or
any balance or proceeds thereof to holders of the Ordinary Shares.
 
  Voting Rights. The Articles provide that the quorum required for a general
meeting of the shareholders is not less than one shareholder present in person
or by proxy holding at least 50 percent of the issued and outstanding shares
entitled to vote at such meeting. Subject to applicable law and any provision
of the Articles requiring a greater majority, the Company may from time to
time by special resolution alter or amend the Memorandum or Articles;
voluntarily liquidate, dissolve or wind-up the affairs of the Company; reduce
its share capital or any capital, redemption or reserve funds, or any share
premium account; or change its name or alter its objects.
 
                                      75
<PAGE>
 
  Each shareholder is entitled to one vote per share on all matters submitted
to a vote of shareholders at any such meeting. All matters, including the
election of directors, voted upon at any duly held shareholders' meeting shall
be carried by ordinary resolution, except (i) approval of a merger,
consolidation or amalgamation which requires (in addition to any regulatory or
court approvals) the approval of at least seventy-five percent of the
outstanding voting shares, voting together as a single class, (ii) any matter
that must be approved by special resolution, including any amendment of the
Memorandum and Articles, and (iii) as otherwise provided in the Articles. A
special resolution requires the approval of at least two-thirds of the votes
cast by holders of the outstanding voting shares voting together as a single
class represented in person or by proxy at a duly convened meeting. An
ordinary resolution requires the approval of a simple majority of votes cast
at a meeting of shareholders represented in person or by proxy.
 
  The Articles provide that, except as otherwise required by law and subject
to the rights of the holders of any class or series of shares issued by the
Company having a preference over the Ordinary Shares as to dividends or upon
liquidation to elect directors in specified circumstances, extraordinary
general meetings of the shareholders may be called only by (i) the directors
or (ii) at the request in writing of shareholders owning at least 25 percent
of the outstanding shares generally entitled to vote.
 
  The Ordinary Shares have noncumulative voting rights, which means that the
holders of a majority of the Ordinary Shares may elect all of the directors of
the Company and, in such event, the holders of the remaining Ordinary Shares
will not be able to elect any directors. The board of directors of the Company
is presently divided into three classes, of three directors each. At present,
each class is elected for a term of three years, with the result that
shareholders will not vote for the election of a majority of directors in any
single year. See "Management". Pursuant to the Articles, Directors may be
removed by the shareholders only with the vote of 80 percent of the
outstanding shares generally entitled to vote. The classified board provision
and the removal of directors by shareholder provision can only be amended with
the vote of 80 percent of the outstanding shares generally entitled to vote.
 
  This classified board provision could prevent a party who acquires control
of a majority of the outstanding voting power from obtaining control of the
board of directors until the second annual shareholders meeting following the
date the acquirer obtains the controlling share interest. The classified board
provision could have the effect of discouraging a potential acquirer from
making a tender offer or otherwise attempting to obtain control of the Company
and could thus increase the likelihood that incumbent directors will retain
their positions.
 
  Preemption Rights. No holder of shares of the Company shall, by reason of
such holding, have any preemptive right to subscribe to any additional issue
of shares of any class or series nor to any security convertible into such
shares.
 
  Transfer of Shares. The Articles also provide that the board of directors
may suspend the registration of transfers of Ordinary Shares for such periods
as the board of directors may determine, but shall not suspend the
registration of transfers for more than 40 days.
 
  The existing holders of Ordinary Shares have agreed not to offer, sell,
contract to sell or otherwise dispose of, directly or indirectly, or announce
the offering of any Ordinary Shares, including any such Ordinary Shares
beneficially or indirectly owned or controlled by the Company, or any
securities convertible into, or exchangeable or exercisable for Ordinary
Shares, for 180 days from the date of this Prospectus, without the prior
written consent of Salomon.
 
OTHER CLASS OR SERIES OF SHARES
 
  The Articles authorize the directors to create and issue one or more classes
or series of shares and determine the rights and preferences of each such
class or series, to the extent permitted by the
 
                                      76
<PAGE>
 
Articles and applicable law. Among other rights, the directors may determine:
(i) the number of shares of that class or series and the distinctive
designation thereof; (ii) the voting powers, full or limited, if any, of the
shares of that class or series; (iii) the right in respect of dividends on the
shares of that class or series, whether dividends shall be cumulative and, if
so, from which date or dates and the relative rights or priority, if any, of
payment of dividends on shares of that class or series and any limitations,
restrictions or conditions on the payment of dividends; (iv) the relative
amounts, and the relative rights or priority, if any, of payment in respect of
shares of that class or series, which the holders of the shares of that class
or series shall be entitled to receive upon any liquidation, dissolution or
winding up of the Company; (v) the terms and conditions (including the price
or prices, which may vary under different conditions and at different
redemption dates), if any, upon which all or any part of the shares of that
class or series may be redeemed, and any limitations, restrictions or
conditions on such redemption; (vi) the terms, if any, of any purchase,
retirement or sinking fund to be provided for the shares of that class or
series; (vii) the terms, if any, upon which the shares of that class or series
shall be convertible into or exchangeable for shares of any other class,
classes or series, or other securities, whether or not issued by the Company;
(viii) the restrictions, limitations and conditions, if any, upon issuance of
indebtedness of the Company so long as any shares of that class or series are
outstanding; and (ix) any other preferences and relative, participating,
optional or other rights and limitations not inconsistent with applicable law
or the Articles.
 
REGISTRATION RIGHTS
   
  Silver Holdings, Argentum LLC, Consolidated, Litani LDC, Aurum LLC, Thomas
Kaplan and the Company will enter into a registration rights and voting
agreement, 1997, pursuant to which each of Silver Holdings and Argentum LLC
are entitled to demand registration of any Ordinary Shares owned by either of
them. Silver Holdings and Argentum LLC may make such demand up to three times
each on Form S-1 of the Securities Act and up to an additional three times
each on Forms S-2 and S-3, when such form is available for use by the Company.
The Company is not required to effect any demand registration within 120 days
after the effective date of a previous demand registration and may postpone,
on one occasion in any 365-day period, the filing or effectiveness of a
registration statement for a demand registration for up to 120 days under
certain circumstances, including pending material transactions. Silver
Holdings, Argentum LLC, Aurum LLC, Consolidated and Litani LDC are also
entitled to unlimited piggyback registrations. All such registrations would be
at the Company's expense, exclusive of underwriting discounts and commissions.
The Company and such shareholders have entered into customary indemnification
and contribution provisions.     
 
TRANSFER AGENT
 
  The Company's registrar and transfer agent for all Ordinary Shares is
American Stock Transfer & Trust Company.
 
DIFFERENCES IN CORPORATE LAW
 
  The Companies Law (1995 Revision) (the "Companies Law") of the Cayman
Islands is modeled after that of England, and differs in certain respects from
such laws generally applicable to United States corporations and their
shareholders. Set forth below is a summary of certain significant provisions
of the Companies Law (including such modifications thereto adopted pursuant to
the Articles) applicable to the Company which differ from provisions generally
applicable to United States corporations and their shareholders. These
statements are a brief summary of certain significant provisions of the
Companies Law and, as such, do not deal with all aspects of every law that may
be relevant to corporations and their shareholders.
 
  Interested Directors. The Company's Articles provide that any transaction
entered into by the Company in which a director has an interest is not
voidable by the Company nor can such director be liable to the Company for any
profit realized pursuant to such transaction. A director having an interest
 
                                      77
<PAGE>
 
in a transaction is entitled to vote in respect of such transaction provided
the nature of the interest is disclosed at or prior to the vote on such
transaction.
 
  Mergers and Similar Arrangements. The Company may acquire the business of
another company and carry on such business when it is within the objects of
the Memorandum. The approval of the holders of at least 75 percent of the
outstanding shares entitled to vote, voting together as a single class, at a
meeting called for such purpose is required for the Company to (i) merge,
consolidate or amalgamate with another company, (ii) reorganize or reconstruct
itself pursuant to a plan sanctioned by the Cayman Islands courts or (iii)
sell, lease or exchange all or substantially all of its assets, except in the
case of a transaction between the Company and any entity which the Company,
directly or indirectly, controls. In order to merge or amalgamate with another
company or to reorganize and reconstruct itself, as a general rule, the
relevant plan would need to be approved in accordance with the provisions of
the Companies Law by the holders of not less than 75 percent of the votes cast
at a general meeting called for such purpose and thereafter sanctioned by the
Cayman Islands court. In respect of such a court sanctioned reorganization,
while a dissenting shareholder may have the right to express to a Cayman
Islands court his view that the transaction sought to be approved would not
provide the shareholders with the fair value of their shares, (i) the court
ordinarily would not disapprove the transaction on that ground absent other
evidence of fraud or bad faith, and (ii) if the transaction were approved and
consummated, the dissenting shareholder would have no rights comparable to the
appraisal rights (as here defined, rights to receive payment in cash for the
judicially determined value of their shares) ordinarily available to
dissenting shareholders of United States corporations.
 
  Shareholders' Suits. There does not appear to be any history of either a
class action or a derivative action ever having been brought by shareholders
in the Cayman Islands courts. There has, however, until recently been no
official law reporting in the Cayman Islands and actions subject to the
Confidential Relationships (Preservation) Law of 1976, as amended, are held in
closed court. However, in this regard, the Cayman Islands courts ordinarily
would be expected to follow English precedent, which would permit a minority
shareholder to commence an action against or a derivative action in the name
of the corporation only (i) where the act complained of is alleged to be
beyond the corporate power of the corporation or illegal, (ii) where the act
complained of is alleged to constitute a fraud against the minority
perpetrated by those in control of the corporation, (iii) where the act
requires approval by a greater percentage of the corporation's shareholders
than actually approved it, or (iv) where there is an absolute necessity to
waive the general rule that a shareholder may not bring such an action in
order that there not be a denial of justice or a violation of the
corporation's memorandum of association.
 
  Indemnification; Exculpation. Cayman Islands law does not limit the extent
to which a company's Articles of Association may provide for the
indemnification of officers and directors, except to the extent that such
provision may be held by the Cayman Islands courts to be contrary to public
policy (for instance, for purporting to provide indemnification against the
consequences of committing a crime). In addition, an officer or director may
not be indemnified for fraud or wilful default.
 
  The Company's Articles contain provisions providing for the indemnity by the
Company of an officer, director, consultant, employee or agent of the Company
for threatened, pending or contemplated actions, suits or proceedings, whether
civil, criminal, administrative or investigative (including, without
limitation, an action by or the right of the company), brought against such
indemnified person by reason of the fact that such person was an officer,
director, consultant, employee or agent of the Company. In addition, the board
of directors may authorize the Company to purchase and maintain insurance on
behalf of any such person against any liability asserted against him and
incurred by him in any such capacity, or arising out of his status as such,
whether or not the company would have the power to indemnify him against such
liability under the provisions of the Articles.
 
 
                                      78
<PAGE>
 
  The Company also purchases directors and officers liability insurance from
third parties for its directors and officers. The Company's Article's provide
that directors and officers of the Company shall have no liability (i) for the
acts, receipts, neglects, defaults or omissions of any other such director or
officer or agent of the Company or (ii) by reason of his having joined in any
receipt for money not received by him personally or (iii) for any loss on
account of defect of title to any property of the Company or (iv) on account
of the insufficiency of any security in or upon which any money of the Company
shall be invested or (v) for any loss incurred through any bank, broker or
other agent or (vi) for any loss occasioned by any negligence, default, breach
of duty, breach of trust, error of judgement or oversight on his part of (vii)
for any loss, damage or misfortune whatsoever which may happen in or arise
from the execution or discharge of the duties, powers, authorities, or
discretions of his office or in relation thereto, unless the same shall happen
through his own dishonesty.
 
  Inspection of Books and Records. Shareholders of a Cayman Islands company
have no general rights to inspect or obtain copies of the list of shareholders
or corporate records of a corporation.
 
ANTI-TAKEOVER EFFECTS OF ARTICLES OF ASSOCIATION
 
  The Articles contain certain provisions that make more difficult the
acquisition of control of the Company by means of a tender offer, open market
purchase, a proxy fight or otherwise. These provisions are designed to
encourage persons seeking to acquire control of the Company to negotiate with
the directors. The directors believe that, as a general rule, the interests of
the Company's shareholders would be best served if any change in control
results from negotiations with the directors. The directors would negotiate
based upon careful consideration of the proposed terms, such as the price to
be paid to shareholders, the form of consideration to be paid and the
anticipated tax effects of the transaction. However, these provisions could
have the effect of discouraging a prospective acquirer from making a tender
offer or otherwise attempting to obtain control of the Company. To the extent
these provisions discourage takeover attempts, they could deprive shareholders
of opportunities to realize takeover premiums for their shares or could
depress the market price of the shares.
 
  In addition to those provisions of the Articles discussed above, set forth
below is a description of other relevant provisions of the Articles. The
descriptions are intended as a summary only and are qualified in their
entirety by reference to the Articles, which are filed as an exhibit to the
Registration Statement of which this Prospectus is a part.
 
  Shareholder Action by Written Consent. Cayman law permits shareholders to
act by unanimous written consent.
 
  Availability of Ordinary Shares of the Company for Future Issuances. The
availability for issue of shares by the directors of the Company without
further action by shareholders (except as may be required by applicable stock
exchange requirements) could be viewed as enabling the directors to make more
difficult a change in control of the Company, including by issuing warrants or
rights to acquire shares to discourage or defeat unsolicited share
accumulation programs and acquisition proposals and by issuing shares in a
Private Placement or public offering to dilute or deter share ownership of
persons seeking to obtain control of the Company. The Company has no present
plan to issue any shares other than possibly pursuant to employee benefit
plans.
 
  Shareholder Proposals. The Articles provide that if a shareholder desires to
submit a proposal for consideration at an annual general meeting or
extraordinary general meeting, or to nominate persons for election as
directors, written notice of such shareholder's intent to make such a proposal
or nomination must be given and received by the secretary of the Company at
the principal executive offices of the Company not later than (i) with respect
to an annual general meeting, 60 days prior to the anniversary date of the
immediately preceding annual general meeting, and (ii) with respect to an
extraordinary general meeting, the close of business on the tenth day
following the date on which notice of such meeting is first sent or given to
shareholders. The notice must describe the proposal or
 
                                      79
<PAGE>
 
nomination in sufficient detail for a proposal or nomination to be summarized
on the agenda for the meeting and must set forth (i) the name and address of
the shareholder, (ii) a representation that the shareholder is a holder of
record of shares of the Company entitled to vote at such meeting and intends
to appear in person or by proxy at the meeting to present such proposal or
nomination, and (iii) the class and number of shares of the Company which are
beneficially owned by the shareholder. In addition, the notice must set forth
the reasons for conducting such proposed business at the meeting and any
material interest of the shareholder in such business. In the case of a
nomination of any person for election as a director, the notice shall set
forth: (i) the name and address of any person to be nominated; (ii) a
description of all arrangements or understandings between the shareholder and
each nominee and any other person or persons; (iii) such other information
regarding such nominee proposed by such shareholder as would be required to be
included in a proxy statement filed pursuant to Regulation 14A under the
Exchange Act, whether or not the Company is then subject to such Regulation;
and (iv) the consent of each nominee to serve as a director of the Company, if
so elected. The presiding officer of the annual general meeting or
extraordinary general meeting shall, if the facts warrant, refuse to
acknowledge a proposal or nomination not made in compliance with the foregoing
procedure.
 
  The advance notice requirements regulating shareholder nominations and
proposals may have the effect of precluding a contest for the election of
directors or the introduction of a shareholder proposal if the procedures
summarized above are not followed and may discourage or deter a third party
from conducting a solicitation of proxies to elect its own slate of directors
or to introduce a proposal.
 
                                      80
<PAGE>
 
                        SHARES ELIGIBLE FOR FUTURE SALE
   
  After consummation of the Offering, there will be approximately 22,194,453
Ordinary Shares still owned by the current shareholders of the Company
(assuming no purchase of Shares by such current shareholder). Approximately
7,077,007 Ordinary Shares may be issued to the Minority Shareholders on a one-
for-one basis for the shares of Apex LDC subject to the terms of the Buy-Sell
Agreement. See "Certain Transactions". Shareholders will only be able to sell
such Ordinary Shares pursuant to a registration statement under the Securities
Act or an exemption therefrom.     
 
  Rule 144 under the Securities Act provides such an exemption for resales of
securities under certain circumstances. Under Rule 144, as currently in
effect, a person (or persons whose shares are aggregated) who beneficially
owns "restricted" shares that have been issued and not held by an affiliate of
the Company for at least one year from the time the shares were fully paid for
will be entitled to sell in "brokers' transactions" or to market makers,
within any three-month period, a number of shares that does not exceed the
greater of (i) one percent of the shares then outstanding or (ii) the average
weekly trading volume of the shares on all national securities exchanges
and/or reported through the automated quotation system of a registered
securities association during the four calendar weeks preceding such sale.
Sales under Rule 144 are also subject to certain notice requirements, and the
availability of current public information about the Company. Restricted
shares held for two years by a person who is not, at the time of sale and has
not been at any time within three months prior thereto, an affiliate of the
Company may be sold without regard to the volume limitations or manner of sale
restrictions under Rule 144. The foregoing summary of Rule 144 is not intended
to be a complete description thereof.
 
  The existing holders of Ordinary Shares have agreed with the representatives
of the U.S. Underwriters subject to certain exceptions, not to register any
transfer of such shares, without the consent of Salomon until at least the
date 180 days from the date of this Prospectus. See "Underwriting".
   
  In addition, after the Offering approximately 14,352,056 Ordinary Shares
(including all Ordinary Shares issuable pursuant to the Buy-Sell Agreement and
assuming no purchase of Shares by the current shareholder of the Company) will
be entitled to certain rights with respect to registration of such shares
under the Securities Act. See "Description of Ordinary Shares--Registration
Rights".     
 
  There has been no public market in the shares prior to the Offering and no
predictions can be made as to the effect, if any, that additional sales of
Ordinary Shares in the future by any Shareholders or the availability of such
Ordinary Shares for sale will have on the market price prevailing from time to
time. Sales of substantial amounts of additional Ordinary Shares in the public
market, or the perception that such sales could occur, could adversely affect
prevailing market prices and the Company's ability to raise additional equity
capital (although the Company has no current plans to do so).
 
                                      81
<PAGE>
 
                                 UNDERWRITING
   
  Subject to the terms and conditions set forth in an underwriting agreement
among the Company and the U.S. Underwriters (the "U.S. Underwriting
Agreement"), the Company has agreed to sell to each of the U.S. Underwriters
named below (the "U.S. Underwriters"), and each of the U.S. Underwriters for
whom Salomon Brothers Inc, PaineWebber Incorporated and Scotia Capital Markets
(USA) Inc., are acting as the representatives (the "U.S. Representatives"),
has severally agreed to purchase the number of Ordinary Shares set forth
opposite its name below:     
 
<TABLE>   
<CAPTION>
                                                                    UNDERWRITING
U.S. UNDERWRITERS                                                    COMMITMENT
- -----------------                                                   ------------
<S>                                                                 <C>
Salomon Brothers Inc...............................................
PaineWebber Incorporated...........................................
Scotia Capital Markets (USA) Inc. .................................
                                                                     ---------
  Total............................................................  9,000,000
                                                                     =========
</TABLE>    
   
  The Company has been advised by the U.S. Representatives that the several
U.S. Underwriters initially propose to offer such Ordinary Shares to the
public at the Price to Public set forth on the cover page of this Prospectus
and to certain dealers at such price less a concession not in excess of $
per Share. The U.S. Underwriters may allow, and such dealers may re-allow, a
concession not in excess of $    per Share to other dealers. After the
Offerings, the Price to Public and such concessions may be changed.     
   
  The Company has granted to the U.S. Underwriters and the Managers
(collectively, the "Underwriters") options, exercisable during the 30-day
period after the date of this Prospectus, to purchase up to     additional
Ordinary Shares from the Company at the Price to Public less the Underwriting
Discount, solely to cover over-allotments. To the extent that the U.S.
Underwriters and the Managers exercise such options, each of the U.S.
Underwriters and the Managers, as the case may be, will be committed, subject
to certain conditions, to purchase a number of option Ordinary Shares
proportionate to such U.S. Underwriter's or Manager's initial commitment.     
   
  The Company has entered into an International Underwriting Agreement with
the Managers named therein, for whom Salomon Brothers International Limited,
PaineWebber International (U.K.) Limited and ABN AMRO Rothschild are acting as
the representatives (the "International Representatives" and, together with
the U.S. Representatives, the "Representatives"), providing for the concurrent
offer and sale of 1,800,000 Ordinary Shares (in addition to the shares covered
by the over-allotment options described above) outside the U.S. and Canada.
Both the U.S. Underwriting Agreement and the International Underwriting
Agreement provide that the obligations of the U.S. Underwriters and the
Managers are such that if any of the Ordinary Shares are purchased by the U.S.
Underwriters pursuant to the U.S. Underwriting Agreement, or by the Managers
pursuant to the     
 
                                      82
<PAGE>
 
   
International Underwriting Agreement, all the Shares agreed to be purchased by
either the U.S. Underwriters or the Managers, as the case may be, pursuant to
their respective agreements must be so purchased. The Price to Public and
Underwriting Discount per Ordinary Share for the U.S. Offering and
International Offering will be identical. The closing of the International
Offering is a condition to the closing of the U.S. Offering and the closing of
the U.S. Offering is a condition to the closing of the International Offering.
       
  Each U.S. Underwriter has severally agreed that, as part of the distribution
of the 7,200,000 Ordinary Shares offered by the U.S. Underwriters: (i) it is
not purchasing any Ordinary Shares for the account of anyone other than a U.S.
or Canadian Person; (ii) it has not offered or sold, and will not offer or
sell, directly or indirectly, any Ordinary Shares or distribute this Prospectus
to any person outside of the U.S. or Canada, or to anyone other than a U.S. or
Canadian Person; and (iii) any dealer to whom it may sell any Ordinary Shares
will represent that it is not purchasing for the account of anyone other than a
U.S. or Canadian Person and agree that it will not offer or resell, directly or
indirectly, any Ordinary Shares outside of the U.S. or Canada, or to anyone
other than a U.S. or Canadian Person or to any other dealer who does not so
represent and agree. Each Manager has severally agreed that, as part of the
distribution of the 1,800,000 Ordinary Shares offered by the Managers: (i) it
is not purchasing any Ordinary Shares for the account of any U.S. or Canadian
Person; (ii) it has not offered or sold, and will not offer or sell, directly
or indirectly, any Ordinary Shares or distribute any Prospectus relating to the
International Offering to any person in the U.S. or Canada, or to any U.S. or
Canadian Person; and (iii) any dealer to whom it may sell any Ordinary Shares
will represent that it is not purchasing for the account of any U.S. or
Canadian Person and agree that it will not offer or resell, directly or
indirectly, any Ordinary Shares in the U.S. or Canada, or to any U.S. or
Canadian Person or to any other dealer who does not so represent and agree.
    
  The foregoing limitations do not apply to stabilization transactions or to
certain other transactions specified in the Agreement Between U.S. Underwriters
and the Managers. "U.S. or Canadian Person" means any person who is a national
or resident of the U.S. or Canada, any corporation, partnership or other entity
created or organized in or under the laws of the U.S. or Canada or of any
political subdivision thereof, and any estate or trust the income of which is
subject to U.S. or Canadian federal income taxation, regardless of its source
(other than any non-U.S. or non-Canadian branch of any U.S. or Canadian
Person), and includes any U.S. or Canadian branch of a person other than a U.S.
or Canadian Person.
   
  Pursuant to the Agreement Between U.S. Underwriters and the Managers, sales
may be made between the U.S. Underwriters and the Managers of such number of
Ordinary Shares as may be mutually agreed. The price of any Ordinary Shares so
sold shall be the Price to Public, less an amount not greater than the
concession to securities dealers. To the extent that there are sales between
the U.S. Underwriters and the Managers pursuant to the Agreement Between U.S.
Underwriters and the Managers, the number of Ordinary Shares initially
available for sale by the U.S. Underwriters or by the Managers may be more or
less than the amount specified on the cover page of this Prospectus.     
 
  Any offer of the Shares in Canada will be made only pursuant to an exemption
from the prospectus filing requirement and an exemption from the dealer
registration requirement (where such an exemption is not available, offers
shall be made only by a registered dealer) in the relevant Canadian
jurisdiction where such offer is made.
 
  The U.S. Underwriting Agreement provides that the Company will indemnify the
U.S. Underwriters against certain liabilities and expenses, including
liabilities under the Securities Act, or contribute to payments the U.S.
Underwriters may be required to make in respect thereof.
 
  The International Underwriting Agreement provides that the Company will
indemnify the Managers against certain liabilities and expenses.
 
                                       83
<PAGE>
 
   
  The existing holders of Ordinary Shares have agreed not to affect any public
sale or distribution (including any sale pursuant to Rule 144 of the
Securities Act) of any securities convertible into, or exchangeable or
exercisable for Shares, for 180 days from the date of this Prospectus, without
the prior written consent of Salomon.     
   
  During and after the Offerings, the Underwriters may purchase and sell the
Ordinary Shares in the open market. These transactions may include
overallotment and stabilizing transactions and purchases to cover syndicate
short positions created in connection with the Offerings. The Underwriters
also may impose a penalty bid, whereby selling concessions allowed to
syndicate members of other broker-dealers, in respect of the Ordinary Shares
sold in the Offerings for their account may be reclaimed by the syndicate if
such Ordinary Shares are repurchased by the syndicate in stabilizing or
covering transactions. These activities may stabilize, maintain or otherwise
affect the market price of the Ordinary Shares which may be higher than the
price that might otherwise prevail in the open market.     
   
  Prior to the Offerings, there has been no public market for the Ordinary
Shares. The Price to Public was determined by negotiations between the Company
and the Representatives. Among the factors considered in determining the Price
to Public were prevailing market conditions, the market values of publicly
traded companies that the Underwriters believed to be somewhat comparable to
the Company, the demand for the Ordinary Shares and for similar securities of
publicly traded companies that the Underwriters believed to be somewhat
comparable to the Company, the future prospects of the Company and its
industry in general, sales, earnings and certain other financial and operating
information of the Company in recent periods, and other factors deemed
relevant. There can be no assurance that the prices at which the Ordinary
Shares will sell in the public market after the Offerings will not be lower
than the Price to Public.     
   
  Certain existing shareholders (including 5% or greater shareholders),
directors and officers of the Company may purchase Ordinary Shares either from
the Underwriters in the Offering or directly from the Company in a concurrent
offering. The Company may reserve some of the Ordinary Shares offered hereby
for sale to certain individuals, including employees of the Company and other
entities with whom the directors of the Company are affiliated, and members of
their families. The price of such Ordinary Shares to such persons will be the
initial public offering price set forth on the cover of this Prospectus. The
number of Ordinary Shares available to the general public will be reduced to
the extent those persons purchase the reserved Ordinary Shares. Any Ordinary
Shares not so purchased will be offered in the Offering at the public offering
price set forth on the cover of this Prospectus.     
   
  Certain of the U.S. Underwriters and Managers provide financial advisory
services to or are engaged in other financial transactions with the Company
for which they have received and will receive customary compensation. The
Company has retained Rothschild Natural Resources LLC, an affiliate of ABN
AMRO Rothschild, to act as the Company's financial advisor in connection with
the anticipated project financing with respect to the San Cristobal Project.
    
                                      84
<PAGE>
 
                                   TAXATION
   
  The following discussion is a summary of the material Cayman Islands and
U.S. federal income tax consequences of the acquisition, ownership and
disposition of Ordinary Shares. The discussion is based on the Code and the
tax laws of the Cayman Islands as in effect on the date hereof, which are
subject to change. The discussion does not consider any specific facts or
circumstances that may apply to a particular investor, some of which (for
example, tax-exempt entities, insurance companies, banks, broker-dealers,
investors liable for alternative minimum tax, investors who hold Ordinary
Shares as part of straddles or hedging or conversion transactions or
constructive sales, and investors whose functional currency is not the U.S.
dollar) may be subject to special rules. In addition, the discussion does not
address special rules that could in certain circumstances apply to a U.S.
Holder (as defined below) of Ordinary Shares that owns directly or by
attribution 10 percent or more of the Ordinary Shares. Because the discussion
is not exhaustive of all possible tax considerations relevant to the ownership
of Shares and is not based upon an opinion of counsel, prospective investors
are urged to consult their tax advisors regarding the U.S. federal, state,
local and foreign tax consequences, including the Cayman Islands tax
consequences, of the acquisition, ownership and disposition of Ordinary Shares
in their particular circumstances.     
 
CAYMAN ISLANDS TAXATION
   
  There is, at present, no direct income taxation in the Cayman Islands.
Accordingly, income and gains received by the Company, and distributions by
the Company to its shareholders and gains realized upon the disposition of
Ordinary Shares, will be received free of all Cayman Islands income and
withholding taxes. The Company is registered as an exempted Company under
Cayman Islands law, and the Company has received an undertaking from the
Governor-in-Council of the Cayman Islands to the effect that, for a period of
20 years from the date of the undertaking, no law that is enacted in the
Cayman Islands imposing any tax to be levied on profits or income or gains or
appreciations will apply to the Company nor shall any tax in the nature of
estate duty or inheritance tax be payable on the shares, debentures or other
obligations of the Company.     
 
UNITED STATES FEDERAL INCOME TAXATION
   
  For purposes of this discussion, a "U.S. Holder" is any beneficial owner
that owns Ordinary Shares as a capital asset and is (i) a citizen or resident
of the U.S., (ii) a corporation or partnership that is created or organized in
the U.S. or under the law of the U.S. or any state thereof, (iii) an estate
that is subject to U.S. federal income tax on its income regardless of source,
or (iv) a trust if a court within the U.S. is able to exercise primary
supervision over the administration of the trust and one or more U.S.
fiduciaries have authority to control all substantial decisions of the trust.
    
TAXATION OF DIVIDENDS
 
  Subject to the discussion under "Passive Foreign Investment Company
Considerations" and "Foreign Personal Holding Company Considerations", under
U.S. federal income tax law, U.S. Holders will include in gross income as a
dividend the gross amount of any distribution paid by the Company to the
extent of its current or accumulated earnings and profits (as determined for
U.S. federal income tax purposes) as ordinary income when the dividend is
received by the U.S. Holder. The dividend will not be eligible for the
dividends-received deduction generally allowed to U.S. corporations. In
general, the dividend will be income from sources outside the U.S., and
generally will be treated together with other items of "passive income" (or,
in the case of certain holders, "financial services income") for U.S. foreign
tax credit purposes.
 
TAXATION OF CAPITAL GAINS
   
  Subject to the discussion under "Passive Foreign Investment Company
Considerations", upon a sale or other disposition of Ordinary Shares, a U.S.
Holder will recognize gain or loss for U.S. federal income tax purposes in an
amount equal to the difference between the U.S. dollar value of the amount
    
                                      85
<PAGE>
 
   
realized and the U.S. Holder's tax basis (determined in U.S. dollars) in such
Ordinary Shares. Such gain or loss will be capital gain or loss and, if the
U.S. Holder's holding period for such Ordinary Shares exceeds 18 months, will
be long-term capital gain or loss.     
 
PASSIVE FOREIGN INVESTMENT COMPANY CONSIDERATIONS
   
  Classification as a PFIC. The Company will be a PFIC for any taxable year if
75 percent or more of its gross income for the taxable year is "passive"
income or 50 percent or more of its assets produce or are held for the
production of "passive" income. For purposes of applying these income and
asset tests, the Company is deemed to receive its pro rata share of the
income, and to own its pro rata share of the assets, of any corporation in
which the Company directly or indirectly owns 25 percent or more of the stock
(measured by value). In addition, although not free from doubt, it is expected
that the Company will be deemed to receive its pro rata share of the income,
and to own its pro rata share of the assets, of any partnership in which the
Company is a partner (either directly or through one or more intervening
partnerships). U.S. Holders should be aware that the Ordinary Shares may be
treated as stock of a passive foreign investment company ("PFIC") for U.S.
federal income tax purposes because the Company will earn significant passive
income from investments relative to any non-passive income of the Company
prior to the commencement by the Company of substantial mining operations.
Further, the Code treats gains from transactions in commodities, such as
silver, as passive income for PFIC purposes unless "substantially all" of a
company's business is as an active producer of the commodity. Applicable U.S.
Treasury Regulations interpret "substantially all" to mean that 85 percent or
more of a producer's taxable income must be gross receipts from sales in the
active conduct of a commodities business or certain related activities. Under
these rules, there can be no assurance that the Company would not be treated
as a PFIC in future taxable years even after it has begun to earn income from
mining operations. In this regard, prospective investors should note that the
Company would likely constitute a PFIC even after it begins to generate
significant income from mining operations in the event the Company conducts
its mining operations predominantly through the use of independent contractors
rather than directly through the use of its own employees.     
 
  Prospective investors should note that the PFIC classification rules are
complex and may apply in numerous unexpected circumstances. Under these rules,
the Company could be classified as a PFIC in various circumstances in addition
to those described in the preceding paragraphs. For example, the Company could
constitute a PFIC for any taxable year as a consequence of owning substantial
"passive assets" such as cash and marketable securities (including any cash
derived from the issuance of Company securities or the sale of assets of the
Company), even in a year in which the Company generates significant income
from direct mining operations.
   
  Consequences of PFIC Status. If the Company were treated as a PFIC, unless a
U.S. Holder makes a "QEF election" or "mark to market election" in respect of
the Company, as described below, such U.S. Holder will be subject to a special
tax regime (i) in respect of gains realized on the sale or other disposition
of Ordinary Shares, and (ii) in respect of distributions on Ordinary Shares
held for more than one taxable year to the extent those distributions
constitute "excess distributions". Although not entirely free from doubt, the
PFIC rules should not apply to gain realized in respect of any Ordinary Shares
disposed of during the same taxable year in which the Ordinary Shares are
acquired. An excess distribution generally includes dividends or other
distributions received from a PFIC in any taxable year to the extent the
amount of such distributions exceeds 125 percent of the average distributions
for the three preceding years (or, if shorter, the investor's holding period).
In general, under the PFIC rules, a U.S. Holder will be required to allocate
such excess distributions and any gain realized on sale of the Ordinary Shares
to each day during the Holder's holding period for the Ordinary Shares, and
will be taxable at the highest rate of taxation applicable to ordinary income
for the year to which the excess distribution or gain is allocable (without
regard to the U.S. Holder's other items of income and loss for such taxable
year) (the "deferred tax"). The deferred tax (other than the tax on     
 
                                      86
<PAGE>
 
amounts allocable to the year of disposition or receipt of the distribution)
will then be increased by an interest charge computed by reference to the rate
generally applicable to underpayments of tax (which interest charge generally
will be non-deductible interest expense for individual taxpayers).
   
  QEF Election. The special PFIC tax rules described above will not apply to a
U.S. Holder if the U.S. Holder elects to have the Company treated as a
"qualified electing fund" ("QEF election") in the first taxable year of the
holder's ownership of the Ordinary Shares during which the Company is a PFIC
and the Company complies with certain reporting requirements. The Company
intends to comply with all reporting requirements necessary for U.S. Holders
to make a QEF election with respect to the Company and will upon request
provide to U.S. Holders such information as may be required to make such QEF
election effective.     
   
  A U.S. Holder that makes a QEF election with respect to the Company will be
currently taxable on its pro rata share of ordinary earnings and net capital
gain of the Company for each taxable year of the Company in which the Company
qualifies as a PFIC, regardless of whether the holder receives any
distribution from the Company. The U.S. Holder's basis in the Ordinary Shares
of the Company will be increased to reflect taxed but undistributed income of
the Company. Distributions of income that previously had been taxed will
result in a corresponding reduction of basis in the Ordinary Shares and will
not be taxed again as a distribution to the U.S. Holder.     
 
  During the period in which the Company may be a PFIC, the Company may be
entitled to deductions under U.S. federal income tax principles that may
substantially offset earnings of the Company. As a result, the pro rata share
of the ordinary earnings and net capital gain of the Company that would be
includable by a U.S. Holder making a QEF election may not be material. If this
were the case, U.S. Holders generally could obtain the benefits of making a
QEF election in respect of the Company (i.e., the elimination of deferred tax
and interest charges on excess distributions and realized gains) without
having to bear current inclusions of income substantially in excess of
distributions received. U.S. Holders should consult their own tax advisors
concerning the most appropriate manner in which to make a QEF election.
 
  Lower-Tier PFICs. At the present time, none of the Company's non-U.S.
subsidiaries is classified as a corporation for U.S. federal income tax
purposes. Accordingly, U.S. Holders are not subject to the PFIC rules with
respect to their indirect ownership interests in these subsidiaries.
   
  If, in the future, the Company acquires a non-U.S. subsidiary that is
classified as a corporation for U.S. federal income tax purposes, the Company
will notify its shareholders so that U.S. Holders may determine whether to
make a QEF election with respect to the subsidiary. If the Company were a
PFIC, U.S. Holders generally would be deemed to own, and also would be subject
to the PFIC rules with respect to, their indirect ownership interests in any
corporate subsidiaries of the Company which themselves constitute PFICs
("lower-tier PFICs"). If the Company were a PFIC and a U.S. Holder does not
make a QEF election in respect of any lower-tier PFIC, the U.S. Holder could
incur liability for the deferred tax and interest charge described above if
either (i) the Company receives a distribution from, or disposes of all or
part of its interest in, a lower-tier PFIC or (ii) the U.S. Holder disposes of
all or part of its Ordinary Shares. The Company intends to cause any lower-
tier PFIC to comply with all reporting requirements necessary for a U.S.
Holder to make a QEF election with respect to the lower-tier PFIC.     
   
  Mark to Market Election. For taxable years beginning after December 31,
1997, a U.S. Holder who owns marketable stock of a PFIC may elect to recognize
any gain or loss on the stock on a mark-to-market basis at the end of the U.S.
Holder's taxable year. If an election is made, any mark-to-market gains, and
any gains realized on disposition of the stock, will be treated as ordinary
income. Mark-to-market losses, and any losses recognized on disposition of the
stock to the extent of the holder's net mark-to-market gains, will be treated
as ordinary losses. U.S. Holders should consult their tax advisors regarding
the effect of making a mark-to-market election with respect to the Ordinary
Shares, including the effect of such an election on any lower-tier PFICs that
the holder is deemed to own.     
 
                                      87
<PAGE>
 
   
  A U.S. Holder who owns Ordinary Shares during any year that the Company is a
PFIC must file an Internal Revenue Service Form 8621 in respect of such
Ordinary Shares and, under proposed U.S. Treasury Regulations, in respect of
interests in any lower-tier PFICs.     
 
  Prospective investors are urged to consult their own tax advisors regarding
the possible classification of the Company as a PFIC as well as the potential
tax consequences arising from the ownership and disposition (directly or
indirectly) of interests in a PFIC.
 
FOREIGN PERSONAL HOLDING COMPANY CONSIDERATIONS
 
  Prospective investors should also be aware that special U.S. tax laws would
apply to U.S. Holders if the Company (or any corporate subsidiary of the
Company) is characterized as a foreign personal holding company ("FPHC"). In
particular, if the Company (or any corporate subsidiary) is an FPHC in respect
of any taxable year of the Company, U.S. Holders may be subject to current tax
on their (direct or indirect) pro rata share of the income of the FPHC (as
determined for purposes of the FPHC rules), even if no cash dividend is
actually paid by the FPHC. In general, the Company (or any corporate
subsidiary of the Company) will constitute a FPHC during a taxable year if (i)
a specified percentage of its income is passive for purposes of the FPHC
rules, and (ii) at any time during the taxable year five or fewer individuals
who are U.S. citizens or residents own (directly, indirectly or
constructively) more than 50 percent of the voting power or value of such
company's stock. The Company does not anticipate that it or any of its
subsidiaries will be an FPHC immediately following the Offering or in the
future. The Company, however, can provide no assurance as to such conclusion.
 
TAXATION OF NON-U.S. HOLDERS
   
  An investor who is not a U.S. Holder will not be subject to U.S. federal
income tax on any dividends received on the Ordinary Shares unless (i) the
investor has an office or other fixed place of business in the U.S. to which
the dividends are attributable and either the dividends are derived in the
active conduct of a banking, finance or similar business in the U.S. or the
investor is a non-U.S. corporation the principal business of which consists of
trading in stocks or securities for its own account and certain other
conditions are met or (ii) the investor is a foreign insurance company that
conducts business in the U.S. and the dividends are attributable to such
business.     
   
  An investor who is not a U.S. Holder will not be subject to U.S. federal
income tax on any gain realized on the sale or other disposition of Ordinary
Shares unless (i) the investor is engaged in the conduct of a trade or
business in the U.S. and the gain is effectively connected with such trade or
business or (ii) the investor is an individual who is present in the U.S. for
183 days or more during the taxable year in which the gain is realized and
certain other conditions are met.     
 
UNITED STATES INFORMATION REPORTING AND BACKUP WITHHOLDING
 
  Under current U.S. federal income tax law, payments of dividends to certain
U.S. Holders are subject to information reporting, and a "back up" withholding
tax at a rate of 31 percent if such persons fail to supply correct taxpayer
identification numbers and certain other information in the required manner.
Payments of dividends to a U.S. Holder (a) made by mail or wire transfer to an
address in the U.S. , (b) made by a paying agent, broker or other intermediary
in the U.S. or (c) made by a U.S. broker or by a custodian, nominee or agent
that is (i) a U.S. person, (ii) a controlled foreign corporation for U.S. tax
purposes, or (iii) a foreign person 50% or more of whose gross income is from
a U.S. trade or business (hereinafter, any of the persons described in (i),
(ii) and (iii) shall be referred to as a "U.S. Controlled Person") to such
holder outside the U.S. may be subject to U.S. information reporting
requirements. Payments of dividends received by investors who are not U.S.
Holders generally would be exempt from these reporting requirements, but such
persons may be required to comply with
 
                                      88
<PAGE>
 
certification and identification procedures in order to prove their exemption
from the reporting requirements. Treasury regulations currently in effect do
not require backup withholding with respect to dividends paid by a foreign
corporation such as the Company.
   
  The payment of proceeds of the disposition of Ordinary Shares by a holder to
or through the U.S. office of a broker generally will be subject to
information reporting and backup withholding at a rate of 31 percent, unless
the holder either certifies its status as a non-U.S. Holder under penalties of
perjury or otherwise establishes an exemption. The payment of proceeds of the
disposition by a holder of Ordinary Shares to or through a non-U.S. office of
a broker will generally not be subject to backup withholding and information
reporting. However, information reporting (but not backup withholding) may
apply to such a holder who sells a beneficial interest in Ordinary Shares
through a non U.S. branch of a U.S. broker, or through a non-U.S. office of a
U.S. Controlled Person, in either case unless the holder establishes an
exemption or the broker has documentary evidence in its files of the holder's
status as a non-U.S. person.     
 
  Any amounts withheld under the backup withholding rules from payment to a
holder will be refunded (or credited against the holder's United States
federal income tax liability, if any) provided that the required information
is furnished to the United States Internal Revenue Service.
 
                                    EXPERTS
 
  The consolidated financial statements as of December 31, 1996 and 1995 and
for each of the years in the two year period ended December 31, 1996 and for
the periods from December 22, 1994 (inception) through December 31, 1994 and
from inception through December 31, 1996 included in this Prospectus have been
so included in reliance on the report of Price Waterhouse LLP, independent
accountants, given on the authority of said firm as experts in auditing and
accounting.
 
  The estimates of the Company's development and operating costs for the San
Cristobal property appearing herein were based upon the first phase
feasibility report prepared by the independent engineering firm Kvaerner
Metals, Davy Nonferrous Division; reserves for the San Cristobal Project were
based upon estimates prepared by Mine Reserves Associates Inc. and were
corroborated by an independent grade model prepared by Pincock, Allen & Holt.
Mineral Resources Development Inc. conducted the metallurgical test work and
developed the process flow sheet. Knight Piesold LLC was contracted to perform
the preliminary environmental assessment and geotechnical estimates, including
mill tailings design. The independent engineering firm of Behre Dolbear was
hired by the Company to conduct and oversee a technical audit of Davy's
procedures and analyses as well as the work of the technical subcontractors.
All such figures are included herein in reliance upon the authority of said
firms as experts in such matters.
 
  The estimates of the Company's development and operating costs for the El
Ocote property appearing herein were based upon the conceptual study prepared
by Davy, and are included herein in reliance upon the authority of said firm
as an expert in such matters.
 
                                 LEGAL MATTERS
 
  Certain United States legal matters will be passed upon for the Company by
Akin, Gump, Strauss, Hauer & Feld, L.L.P., New York, New York, and certain
Cayman Islands legal matters, including the validity of the Shares offered
hereby will be passed upon for the Company by W.S. Walker & Company, Grand
Cayman, Cayman Islands. Certain United States legal matters will be passed
upon for the U.S. Underwriters by Winston & Strawn, Chicago, Illinois.
 
                                      89
<PAGE>
 
                            ADDITIONAL INFORMATION
 
  The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-1 under the Securities Act
with respect to the Shares offered hereby. The Prospectus does not contain all
of the information set forth in the Registration Statement and the exhibits
thereto. For further information with respect to the Company and the Shares,
reference is made to such Registration Statement and Exhibits. Statements made
in the Prospectus as to the contents of any contract, agreement or other
documents referred to are not necessarily complete. With respect to each such
contract, agreement or other document filed as an exhibit to the Registration
Statement, reference is made to the exhibit for a more complete description of
the matter involved. The Registration Statement and exhibits may be inspected
without charge and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
Commission's regional offices at Northwestern Atrium Center, 500 West Madison,
Suite 1400, Chicago, Illinois 60661 and Seven World Trade Center, Suite 1300,
New York, New York 10048. Copies of such material may be obtained at
prescribed rates from the Commission's Public Reference Section at 450 Fifth
Street, N.W., Washington, D.C. 20549. Such material may also be accessed
electronically by means of the Commission's home page on the Internet at
http://www.sec.gov. Material filed by the Company may also be inspected at the
offices of the American Stock Exchange.
 
  The Company will be subject to the periodic reporting and other
informational requirements of the Exchange Act, and in accordance therewith
will file reports and other information with the Commission. Such reports and
other information concerning the Company can be inspected and copied at the
public reference facilities and regional offices referred to above, or can be
accessed electronically as referred to above.
 
                                      90
<PAGE>
 
                                   GLOSSARY
 
  ADIT--a horizontal or nearly horizontal passage driven from the surface for
the working of a mine.
 
  ANDESITE--a porphyritic igneous rock with low quartz content.
 
  ASSAY TONNE--a weight of 32.151 grams used in assaying to represent
proportionally the assay value of an ore.
 
  BACK--a mining term indicating the rock volume which is above a level in a
mine; the term may also refer to the roof of a mine working.
 
  BLOCK CAVING--a mass mining system where the extraction of ore depends
largely on the action of gravity. By removing a thin horizontal layer at a
lower mining level of the ore column, using standard mining methods, the
vertical support of the ore column above is removed and the ore then caves by
gravity. As broken ore is removed from the mining level the ore above
continues to break and cave by gravity to the mining level for extraction.
 
  BRECCIATION or BRECCIA--fracturing of preexisting rocks by natural forces; a
rock type formed in this manner.
 
  BULK MINING--surface or underground mining methods applied to large bodies
of ore which involve large-scale, automated excavation techniques.
   
  CALDERA--a large basin shaped depression caused by volcanic activity.     
 
  CASH PRODUCTION COST PER EQUIVALENT OUNCE--the total equivalent ounces
divided by the sum of the mine site cash production costs plus the transport
costs of the concentrates to the market.
 
  CONCENTRATE--a mineral processing product that generally describes the
material that is produced after crushing and grinding ore and then effecting
significant separation of gangue (waste) minerals from the metal and/or metal
minerals, discarding the waste and minor amounts of metal and/or metal
minerals leaving a "concentrate" of metal and/or metal minerals with a
consequent order of magnitude higher content of metal and/or metal minerals
than the beginning ore material.
 
  CONCEPTUAL STUDY--an initial technical financial study of a project at a
sufficient level of accuracy and detail to allow a decision as to whether to
undertake a feasibility study with respect to a given property.
 
  CONGLOMERATE--a course-grained clastic sedimentary rock, composed of rounded
to subangular fragments larger than 2 millimeters in diameter set in a fine-
grained matrix of sand or silt.
 
  CORE--a sample of rock produced by diamond drilling.
 
  CUT-OFF GRADE--the minimum grade of mineralization or ore used to establish
quantitative estimates of total mineralized ore.
 
  DACITE--a rock similar to andesite with less plagioclase and more quartz.
 
  DEVELOPMENT--work carried out for the purpose of opening up a mineral
deposit and making the actual ore extraction possible.
 
  DIAMOND DRILL--a type of rotary drill in which the cutting is done by
abrasion rather than by percussion. The hollow bit of the drill cuts a core of
rock which is recovered in long cylindrical sections.
 
                                      91
<PAGE>
 
  DISSEMINATED--a mineral deposit in which the desired minerals occur as
scattered particles in the adjacent rocks to the primary passage of
penetrating solutions that originally carried these minerals.
 
  DORE--unrefined gold and silver in bullion form.
 
  DRIFT--a horizontal passage underground that follows along the length of a
vein or mineralized rock formation.
 
  EPITHERMAL--said of a Hydrothermal mineral deposit formed within about 1
kilometer of the earth's surface and in the temperature range of 100 to 250
degrees Celsius, occurring mainly as veins; a term applied to deposits formed
at shallow depths from ascending solutions of moderate temperatures.
 
  EQUIVALENT SILVER OUNCES--is calculated by dividing the gross net smelter
return of silver, zinc and lead by the market price of silver per ounce. For
purposes of this Prospectus, the market price of silver is assumed to be $5.00
per ounce of silver, and the market prices of zinc and lead are assumed to be
$0.55 and $0.30 per pound, respectively.
 
  EXPLORATION--work involved in searching for ore, by geological mapping,
geochemistry, geophysics, drilling and other methods.
 
  FAULT--a fracture in a rock where there has been displacement of the two
sides.
 
  FEASIBILITY STUDY--a technical financial study of a project at sufficient
level of accuracy and detail to allow a decision as to whether a given project
should proceed.
 
  FIRE ASSAY--the assaying of metallic ores, usually gold and silver by
methods requiring a furnace, heat sufficient to melt the entire sample;
commonly involves the process of scorification, cupellation, etc.
 
  FRACTURE--breaks in a rock, usually due to intensive folding or faulting.
 
  GRADE--the average assay of a ton of ore, reflecting metal content.
 
  GRAVIMETRIC ANALYSIS--quantitative chemical analysis in which the different
substances of a compound are measure by weight.
 
  HEAP LEACHING--a process involving the percolation of a cyanide solution
through crushed ore heaped on an impervious pad or base to dissolve minerals
or metals out of the ore.
 
  HYDROTHERMAL ALTERATION--alteration of rocks or minerals by the reaction of
hydrothermal water (hot water) with preexisting solid phases.
 
  IMMEDIATELY ACCESSIBLE--blocks of ore immediately accessible from current
mine workings.
 
  INTRUSION--in geology, a mass of igneous rock that while molten, was forced
into or between other rocks.
 
  INVERSE DISTANCE ESTIMATING METHOD--a method of establishing the importance
accorded to specific data points of a three dimensional block model in order
to determine the economic value of the minerals located in such block. This
determination is a weighted average with the individual weights of each data
point computed as an inverse power of distance as follows:
 
<TABLE>
               <C>   <C> <S>
               wi =  di  -poweri = 1. . .number of samples
                     ---
                     Sdi
</TABLE>
 
where w is the weight computed for each sample; i, each distance; d, the
distance between the location being estimated and sample i; and -power is the
inverse distance weighting power.
 
                                      92
<PAGE>
 
  KRIGING--a geostatistical estimation method for calculating a geological
three dimensional model for the estimation of mineralized material and proven
and probable reserves. This method was developed to provide the "best linear,
unbiased estimate" for grade based on a least squares minimization of the
error estimation, or Kriging errors.
 
  LEACHED--the separation, selective removal or dissolving out of soluble
constituents from a rock or orebody by the natural action of percolating
water.
 
  LENS--a geological deposit bounded by converging surfaces, at least one of
which is curved, thick in the middle and thinning out to the edges, resembling
a convex lens.
 
  LEVEL--a subhorizontal working in a mine, like a drift or a tunnel, often
given a number which relates its depth below an arbitrarily chosen reference
point, e.g., the -300 Level usually means the working is 300 meters below some
chosen reference point.
 
  MASSIVE--said of mineral deposits characterized by a great concentration of
ore in one place, as opposed to disseminated or vein deposits.
 
  MATRIX--the finer-grained material between the larger particles of a rock or
the material surrounding mineral particles.
 
  MILL--a processing plant that produces a concentrate of the valuable
minerals or metals contained in an ore. The concentrate must then be treated
in some other type of plant, such as a smelter, to effect recovery of the pure
metal.
 
  MINEABLE--the portion of a resource for which extraction is technically and
economically feasible.
 
  MINERALIZATION--the concentration of metals and their compounds in rocks,
and the processes involved therein.
   
  MINERALIZED MATERIAL--that part of mineral deposits (i) for which tonnage
and grade are computed (a) partly from specific measurements, samples or
production data compiled from appropriately spaced assays of outcrops,
trenches, underground workings or drill holes and (b) partly from projections
based on geological evidence, and (ii) that have not been measured and sampled
with sufficient confidence to determine that the identified deposit can be
economically and legally extracted at the time of such determination.     
 
  NET SMELTER RETURN OR NSR--a return based on the actual proceeds from sale
of metal or mineral products received less the cost of refining or smelting at
an off-site refinery.
 
  OPEN PIT--a surface working open to daylight, such as a quarry.
 
  ORE--material that can be economically mined and processed.
 
  OUNCE--a unit of measurement of weight. In the precious metals industry, and
at Apex one troy ounce, the equivalent of 31.103 grams.
 
  OUTCROP--the part of a rock formation that appears at the earth's surfaces,
often protruding above the surrounding ground.
 
  PLANAR--Lying or arranged as a plane or in parallel planes, usually implying
more or less parallelism as in bedding or cleavage. It is a two-dimensional
arrangement, in contrast to the one-dimensional linear arrangements.
 
  PORPHYRY--an igneous rock of any composition that contains conspicuous
phenocrysts (large crystals) in a fine-grained rock mass.
 
 
                                      93
<PAGE>
 
   
  PROBABLE RESERVES--that part of a mineral deposit which may be economically
and legally extracted or produced at the time of the reserve determination for
which quantity and grade and/or quality are computed from information similar
to that used for proven reserves (see below), but the sites for inspection,
sampling and measurement are farther apart or are otherwise less adequately
spaced. The degree of assurance, although lower than that for proven reserves,
is high enough to assume continuity between points of observation.     
 
  PROPYLITIC ALTERATION--a hydrothermally altered rock containing chlorite,
pyrite, and carbonate.
   
  PROVEN RESERVES--that part of a mineral deposit which may be economically
and legally extracted or produced at the time of the reserve determination for
which (a) quantity is computed from dimensions revealed in outcrops, trenches,
workings and drill holes and grade and/or quality are computed from the
results of detailed sampling; and (b) the sites for inspection, sampling and
grade measurement are spaced so closely and the geological character is so
well defined that size, shape, depth and mineral content of reserves are well
established.     
 
  RECOVERY--the percentage of contained of metal extracted from ore in the
course of processing such ore.
 
  REFINING--the final stage of metal production in which residual impurities
are removed from the metal.
   
  RESERVES--that part of a mineral deposit which may be economically and
legally extracted or produced at the time of the reserve determination.     
 
  REVERSE CIRCULATION DRILL--a rotary drill or rotary percussion drill in
which the drilling fluid and cuttings return to the surface through the drill
pipe, minimizing contamination.
 
  RHYOLITE--A group of extrusive igneous rocks, typically porphyritic and
commonly exhibiting flow texture; the extrusive equivalent of granite.
 
  SECONDARY ENRICHMENT/SUPERGENE ENRICHMENT--a mineral deposition process in
which near surface oxidation produces acidic solutions that leach (dissolve)
minerals or metals, carry them downward, and precipitate them, thus enriching
sulfide minerals already present.
 
  SEDIMENTARY ROCKS/SEDIMENTS--rocks resulting from the consolidation of loose
sediments that have accumulated in layers consisting of mechanically formed
fragments of older rock transported from its source and deposited in water, or
from air or ice.
 
  SEMI-AUTOGENOUS-GRINDING OR SAG--a grinding method that uses a rotating mill
drum of large diameter, versus its axial length, to tumble ores that have
characteristics of hardness and particle size requiring only small amounts of
grinding steel balls added to the mill to aid the grinding process.
 
  SHAFT--a vertical or steeply inclined excavation for the purposes of opening
and servicing an underground mine. It is usually equipped with a hoist at the
top which lowers and raises a conveyance for handling personnel and materials.
 
  SILL--a near horizontal flat-bedded strata of intrusive rock.
 
  SKARN--a rock composed of calc-silicate minerals formed by the action of
igneous bodies intruding into a calcium-rich rock such as limestone. Precious
metals and sulfides of copper, lead and zinc may be introduced as part of the
process.
 
  SMELTING--heating ore or concentrate material with suitable flux materials
at high temperatures creating a fusion of these materials to produce a melt
consisting of two layers on top, a slag of the flux
 
                                      94
<PAGE>
 
and gangue (waste) minerals, and below molten impure metals. This generally
produces an unfinished product requiring refining.
 
  STERILIZATION DRILLING--refers to drilling conducted in areas proposed for
surface facilities or waste material dumps, to test for unexpected existence
of economic mineralization.
 
  STOCKWORK--a mineral deposit in the form of a three dimensional network of
anastomosing veinlets diffused in the host rock.
 
  STRATA-BOUND--a mineral deposit confined to a single stratigraphic unit.
 
  STRATIFIED--formed, arranged, or laid down in layers of strata.
 
  STOPE--an excavation in a mine from which ore is being or has been
extracted.
 
  STRIKE--the course or bearing of a vein or a layer of rock.
 
  TAILINGS--the finely-ground waste product from ore processing.
 
  TON--a dry short ton (2,000 pounds).
 
  TONNE--a metric ton (1,000 kilograms, or 2,205 pounds).
 
  TUFF--a general term for all pyroclastic (volcanic ash) rock.
 
  TWIN HOLE--refers to a drill hole drilled parallel to and as practically
close to a preexisting drill hole in order to obtain samples to test the
continuity or similarity of the results from both drill holes.
 
  VEIN--a mineralized zone having a more or less regular development in
length, width and depth which clearly separates it from neighboring rock.
 
  VEZIN SAMPLER--A mechanical device that automatically extracts a regular
portion (a sample) from a stream of pulverized material passing through it.
 
  WALL ROCK--the rock adjacent to, enclosing, or including a vein, layer, or
dissemination of ore minerals.
 
  WASTE--barren rock in a mine, or mineralization that is too low in grade to
be mined and milled at a profit.
 
                                      95
<PAGE>
 
                                CONVERSION TABLE
 
  In this Prospectus, figures are presented in both United States standard and
metric measurements. Conversion rates from United States standard to metric and
metric to United States standard measurement systems are provided in the table
below.
 
<TABLE>
<CAPTION>

U.S. MEASURE             METRIC UNIT
- ------------             -----------
<S>                      <C>
2.47 acres.............. 1 hectare
3.28 feet............... 1 meter
0.62 miles.............. 1 kilometer
0.032 ounces (troy)..... 1 gram
1.102 tons.............. 1 tonne
</TABLE>
<TABLE>
<CAPTION>
METRIC MEASURE           U.S. UNIT
- --------------           ---------
<S>                      <C>
0.4047 hectares......... 1 acre
0.3048 meters........... 1 foot
1.609 kilometer......... 1 mile
31.103 grams............ 1 ounce (troy)
0.907 tonnes............ 1 ton
</TABLE>
 
                                       96
<PAGE>
 
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 
<TABLE>
<CAPTION>
                                                                           PAGE
                                                                           ----
<S>                                                                        <C>
Report of Independent Accountants......................................... F-2
Consolidated Balance Sheet at June 30, 1997 (unaudited) and at December
 31, 1996 and 1995........................................................ F-3
Consolidated Statement of Operations for the six month periods ended June
 30, 1997 and 1996 (unaudited), the years ended December 31, 1996 and
 1995, the period from December 22, 1994 (inception) through December 31,
 1994, and the period from inception through December 31, 1996............ F-4
Consolidated Statement of Changes in Shareholders' Equity for the six
 month period ended June 30, 1997 (unaudited), for the years ended
 December 31, 1996 and 1995, and for the period ended December 31, 1994
 ......................................................................... F-5
Consolidated Statement of Cash Flows for the six month periods ended June
 30, 1997 and 1996 (unaudited), the years ended December 31, 1996 and
 1995, the period from December 22, 1994 (inception) through December 31,
 1994, and the period from inception through December 31, 1996............ F-6
Notes to the Consolidated Financial Statements............................ F-7
</TABLE>
 
 
 
                                      F-1
<PAGE>
 

                       REPORT OF INDEPENDENT ACCOUNTANTS
 
 
To the Board of Directors and Shareholders of Apex Silver Mines Limited
 (Successor to Apex Silver Mines LDC), an Exploration Stage Company
 
  In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of operations, of changes in shareholders' equity and
of cash flows present fairly, in all material respects, the financial position
of Apex Silver Mines Limited (successor to Apex Silver Mines LDC) and its
subsidiaries at December 31, 1996 and 1995 and the results of their operations
and their cash flows for the years ended December 31, 1996 and 1995, the
period from December 22, 1994 (inception) through December 31, 1994 and the
period from inception through December 31, 1996 in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express
an opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for the opinion expressed above.
 
PRICE WATERHOUSE LLP
 
Denver, Colorado
August 29, 1997
 
                                      F-2
<PAGE>
 
                           APEX SILVER MINES LIMITED
                      (SUCCESSOR TO APEX SILVER MINES LDC)
                          AN EXPLORATION STAGE COMPANY
 
                           CONSOLIDATED BALANCE SHEET
                      (EXPRESSED IN UNITED STATES DOLLARS)
 
<TABLE>   
<CAPTION>

                                          JUNE 30,    DECEMBER 31,  DECEMBER 31,
                                            1997          1996          1995
                                        ------------  ------------  ------------
                                        (UNAUDITED)
<S>                                     <C>           <C>           <C>
ASSETS
Current assets
 Cash and cash equivalents............. $  4,088,342  $25,949,771   $ 3,296,618
 Short-term investments................    9,000,000          --            --
 Note and accrued interest receivable..          --           --      2,885,830
 Prepaid expenses and other assets.....      499,180      154,225           --
 Cash advances to associates...........          --           --        311,246
                                        ------------  -----------   -----------
  Current assets.......................   13,587,522   26,103,996     6,493,694
Plant, buildings and equipment (net)...      561,953      523,534           --
Deferred organizational costs (net)....      141,479      169,774       226,365
Loan receivable from associates........          --           --        100,000
                                        ------------  -----------   -----------
  Total assets......................... $ 14,290,954  $26,797,304   $ 6,820,059
                                        ============  ===========   ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
 Amounts due to related parties........ $      1,703  $   533,275   $   110,933
 Accrued salaries, wages and benefits..       33,135      310,669           --
 Accounts payable and other accrued
  liabilities..........................      950,642    1,642,050       247,926
                                        ------------  -----------   -----------
  Current liabilities..................      985,480    2,485,994       358,859
Commitments and contingencies
 (Note 10).............................          --           --            --
Minority interest in consolidated
 subsidiary............................          --           --      2,875,927
Shareholders' equity
 Ordinary shares, $.01 par value,
  50,000,000 shares authorized;
  13,194,453, 13,079,246 and 8,822,546,
  shares issued and outstanding,
  respectively
  (See Note 1d)........................      131,944      130,792        88,225
 Contributed surplus...................   38,749,039   37,978,181     5,571,398
 Accumulated deficit...................  (25,575,509) (13,797,663)   (2,074,350)
                                        ------------  -----------   -----------
  Total shareholders' equity...........   13,305,474   24,311,310     3,585,273
                                        ------------  -----------   -----------
  Total liabilities and shareholders'
   equity.............................. $ 14,290,954  $26,797,304   $ 6,820,059
                                        ============  ===========   ===========
</TABLE>    
 
  The accompanying notes form an integral part of these consolidated financial
                                  statements.
 
                                      F-3
<PAGE>
 
                           APEX SILVER MINES LIMITED
                      (SUCCESSOR TO APEX SILVER MINES LDC)
                          AN EXPLORATION STAGE COMPANY
 
                      CONSOLIDATED STATEMENT OF OPERATIONS
                      (EXPRESSED IN UNITED STATES DOLLARS)
 
<TABLE>   
<CAPTION>
                                                                                 FOR THE PERIOD
                                                                                  DECEMBER 22,     PERIOD
                                                                                      1994          FROM
                           SIX MONTHS   SIX MONTHS                                (INCEPTION)    INCEPTION
                             ENDED         ENDED      YEAR ENDED    YEAR ENDED      THROUGH       THROUGH
                            JUNE 30,     JUNE 30,    DECEMBER 31,  DECEMBER 31,   DECEMBER 31,  DECEMBER 31,
                              1997         1996          1996          1995           1994          1996
                          ------------  -----------  ------------  ------------  -------------- ------------
                                (UNAUDITED)
<S>                       <C>           <C>          <C>           <C>           <C>            <C>           
Income
 Interest income........  $    475,298  $    71,987  $    574,470  $   462,247     $  15,256    $  1,051,973
                          ------------  -----------  ------------  -----------     ---------    ------------
 Total income...........       475,298       71,987       574,470      462,247        15,256       1,051,973
                          ------------  -----------  ------------  -----------     ---------    ------------
Expenses
 Exploration............     7,961,583    4,322,867     9,590,632    1,559,874       105,185      11,255,691
 Administrative.........     2,414,831      497,874     1,923,165      982,261       147,780       3,053,206
 Consulting.............     1,059,669      792,417     2,506,250      560,060       144,840       3,211,150
 Professional fees......       775,863      421,055     1,096,271      657,621        20,600       1,774,492
 Amortization and
  depreciation..........        41,198       28,295        57,392       56,591           --          113,983
                          ------------  -----------  ------------  -----------     ---------    ------------
 Total expenses.........    12,253,144    6,062,508    15,173,710    3,816,407       418,405      19,408,522
                          ------------  -----------  ------------  -----------     ---------    ------------
Loss before minority
 interests..............   (11,777,846)  (5,990,521)  (14,599,240)  (3,354,160)     (403,149)    (18,356,549)
Minority interest in
 loss of consolidated
 subsidiary.............           --     2,666,424     2,875,927    1,492,975       189,984       4,558,886
                          ------------  -----------  ------------  -----------     ---------    ------------
 Net loss for the
  period................  $(11,777,846) ($3,324,097) $(11,723,313) $(1,861,185)    $(213,165)   $(13,797,663)
                          ============  ===========  ============  ===========     =========    ============
Net loss per ordinary
 share..................  $      (0.89) $     (0.38) $      (1.11) $     (0.21)    $   (0.02)
                          ============  ===========  ============  ===========     =========
Weighted average
 ordinary shares
 outstanding
 (See Note 1d)..........    13,194,453    8,822,546    10,596,171    8,822,546     8,822,546
                          ============  ===========  ============  ===========     =========
</TABLE>    
 
  The accompanying notes form an integral part of these consolidated financial
                                  statements.
 
                                      F-4
<PAGE>
 
                           APEX SILVER MINES LIMITED
                      (SUCCESSOR TO APEX SILVER MINES LDC)
                          AN EXPLORATION STAGE COMPANY
 
           CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
                      (EXPRESSED IN UNITED STATES DOLLARS)
 
<TABLE>   
<CAPTION>
                            ORDINARY SHARES
                          --------------------                               TOTAL
                            SHARES             CONTRIBUTED ACCUMULATED   SHAREHOLDERS'
                          OUTSTANDING  AMOUNT    SURPLUS     DEFICIT        EQUITY
                          ----------- -------- ----------- ------------  -------------
<S>                       <C>         <C>      <C>         <C>           <C>
Issuance of shares upon
 incorporation--December
 22, 1994...............   8,822,546  $ 88,225 $ 5,571,398 $        --    $ 5,659,623
Net loss................         --        --          --      (213,165)     (213,165)
                          ----------  -------- ----------- ------------   -----------
Balance, December 31,
 1994...................   8,822,546    88,225   5,571,398     (213,165)    5,446,458
Net loss................         --        --          --    (1,861,185)   (1,861,185)
                          ----------  -------- ----------- ------------   -----------
Balance, December 31,
 1995...................   8,822,546    88,225   5,571,398   (2,074,350)    3,585,273
Issuance of shares in
 private placement......   4,256,700    42,567  32,406,783          --     32,449,350
Net loss................         --        --          --   (11,723,313)  (11,723,313)
                          ----------  -------- ----------- ------------   -----------
Balance, December 31,
 1996...................  13,079,246   130,792  37,978,181  (13,797,663)   24,311,310
Issuance of shares
 (unaudited)............     115,207     1,152     170,507          --        171,659
Stock option
 compensation expense
 (unaudited)............         --        --      600,351          --        600,351
Net loss (unaudited)....         --        --          --   (11,777,846)  (11,777,846)
                          ----------  -------- ----------- ------------   -----------
Balance, June 30, 1997
 (unaudited)............  13,194,453  $131,944 $38,749,039 $(25,575,509)  $13,305,474
                          ==========  ======== =========== ============   ===========
</TABLE>    
 
 
 
  The accompanying notes form an integral part of these consolidated financial
                                  statements.
 
                                      F-5
<PAGE>
 
                           APEX SILVER MINES LIMITED
                      (SUCCESSOR TO APEX SILVER MINES LDC)
                          AN EXPLORATION STAGE COMPANY
 
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                      (EXPRESSED IN UNITED STATES DOLLARS)
 
<TABLE>   
<CAPTION>
                                                                                FOR THE PERIOD
                                                                                 DECEMBER 22,
                                                                                     1994      PERIOD FROM
                          SIX MONTHS   SIX MONTHS                                 (INCEPTION)   INCEPTION
                            ENDED         ENDED      YEAR ENDED    YEAR ENDED      THROUGH       THROUGH
                           JUNE 30,     JUNE 30,    DECEMBER 31,  DECEMBER 31,   DECEMBER 31,  DECEMBER 31,
                             1997         1996          1996          1995           1994          1996
                         ------------  -----------  ------------  ------------  -------------- ------------
                               (UNAUDITED)
<S>                      <C>           <C>          <C>           <C>           <C>            <C>          
Cash flows from
 operating activities:
 Net loss..............  $(11,777,846) $(3,324,097) $(11,723,313) $(1,861,185)    $(213,165)   $(13,797,663)
 Adjustments to
  reconcile net loss to
  net cash used in
  operating activities:
 Amortization and
  depreciation.........        41,198       28,295        57,392       56,591           --          113,983
 Minority interest in
  loss of consolidated
  subsidiary...........           --    (2,666,424)   (2,875,927)  (1,492,975)     (189,984)     (4,558,886)
 Stock option
  compensation
  expense..............       600,351          --            --           --            --              --
 Changes in operating
  assets and
  liabilities:
  (Increase) decrease
   in accrued interest
   receivable..........           --        66,112        66,112      (50,856)      (15,256)            --
  (Increase) decrease
   in prepaid expenses
   and other assets....      (344,955)         --       (154,225)      24,167       (24,167)       (154,225)
  (Increase) decrease
   in cash advances to
   and loan receivable
   from associates.....           --       311,246       411,246     (411,246)          --              --
  Increase (decrease)
   in current
   liabilities.........    (1,500,514)     646,351     2,127,135      244,873       113,986       2,485,994
                         ------------  -----------  ------------  -----------     ---------    ------------
   Net cash used in
    operating
    activities.........   (12,981,766)  (4,938,517)  (12,091,580)  (3,490,631)     (328,586)    (15,910,797)
                         ------------  -----------  ------------  -----------     ---------    ------------
Cash flows from
 investing activities:
 Purchases of short-
  term investments.....    (9,000,000)         --            --           --            --              --
 Purchases of property
  and equipment........       (51,322)         --       (524,335)         --            --         (524,335)
                         ------------  -----------  ------------  -----------     ---------    ------------
   Net cash used in
    investing
    activities.........    (9,051,322)         --       (524,335)         --            --         (524,335)
                         ------------  -----------  ------------  -----------     ---------    ------------
Cash flows from
 financing activities:
 Proceeds from issuance
  of ordinary shares...       171,659    2,819,718    35,269,068    6,430,307       968,484      42,667,859
 Deferred
  organizational
  costs................           --           --            --           --       (282,956)       (282,956)
                         ------------  -----------  ------------  -----------     ---------    ------------
   Net cash provided by
    financing
    activities.........       171,659    2,819,718    35,269,068    6,430,307       685,528      42,384,903
                         ------------  -----------  ------------  -----------     ---------    ------------
Net increase (decrease)
 in cash and cash
 equivalents...........   (21,861,429)  (2,118,799)   22,653,153    2,939,676       356,942      25,949,771
Cash and cash
 equivalents:
 Beginning of period...    25,949,771    3,296,618     3,296,618      356,942           --              --
                         ------------  -----------  ------------  -----------     ---------    ------------
 End of period.........  $  4,088,342  $ 1,177,819  $ 25,949,771  $ 3,296,618     $ 356,942    $ 25,949,771
                         ============  ===========  ============  ===========     =========    ============
</TABLE>    
 
  The accompanying notes form an integral part of these consolidated financial
                                  statements.
 
                                      F-6
<PAGE>
 
                           APEX SILVER MINES LIMITED
                     (SUCCESSOR TO APEX SILVER MINES LDC)
                         AN EXPLORATION STAGE COMPANY
 
                NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                     (EXPRESSED IN UNITED STATES DOLLARS)
 
1.INCORPORATION, RECAPITALIZATION, OWNERSHIP AND OPERATIONS
 
 a. Apex Silver Mines Limited ("Apex Limited" or the "Company") was formed
under the laws of the Cayman Islands in March of 1996 for the sole purpose of
serving as a holding company for certain ownership interests in Apex Silver
Mines LDC ("Apex LDC"). On April 15, 1996, holders of approximately 55% of the
then-outstanding shares of Apex LDC elected to participate, effective as of
the completion of a proposed private placement of shares of Apex Limited which
was completed as of August 6, 1996, in a recapitalization effected by an
exchange, on a one-for-one basis, of their shares in Apex LDC for identical
equity instruments of Apex Limited (the "Recapitalization"). The balance of
shareholders retained a direct ownership interest in Apex LDC. As a result of
this recapitalization, Apex LDC became a majority-owned subsidiary of Apex
Limited. The accompanying financial statements reflect the historical accounts
of the Company's predecessor, Apex LDC. For purposes of the accompanying
consolidated financial statements of Apex Limited, the recapitalization has
been given retroactive effect to the date of incorporation of Apex LDC, with
the results of operations and equity attributable to the other ownership
interests in Apex LDC being reflected in "minority interest in consolidated
subsidiary". Consequently, for purposes of these financial statements, Apex
Limited is considered the successor to Apex LDC.
 
 b. In August of 1996, Apex Limited issued 4,256,700 ordinary shares in a
private placement transaction (the "Private Placement") for net proceeds of
$32.4 million. These proceeds were contributed to Apex LDC in exchange for the
issuance by Apex LDC of 4,256,700 shares of its share capital. As a result of
this private placement, the Company's ownership interest in Apex LDC was
increased from approximately 55% to 65%.
 
 c. Apex LDC was incorporated under the laws of the Cayman Islands on November
23, 1994 as a 30-year limited duration company on the contribution of all the
assets of its predecessor entity, Apex Silver Mines Ltd., a Bermuda
corporation. (Actual contribution occurred on December 22, 1994.) The activity
of the predecessor has not been presented herein as it was immaterial.
However, all expenses incurred by the predecessor have been presented. The
Company's principal activity is the exploration of mineral properties. The
Company participates in the acquisition and exploration of mineral properties
for possible future development directly and indirectly through Apex LDC's
principal subsidiaries, Andean Silver Corporation LDC ("Andean"), ASC Bolivia
LDC ("ASC Bolivia"), Apex Asia LDC ("Apex Asia"), Minera de Cordilleras
(Honduras), S. de R.L. ("Cordilleras Honduras"), Cordilleras Silver Mines Ltd.
("Cordilleras Bahamas"), Cordilleras Silver Mines (Cayman) LDC ("Cordilleras
Cayman"), Compania Minerales de Zacatecas, S. de R.L. de C.V. ("CMZ"), Apex
Silver Mines Corporation, ("Apex Corporation") and ASC Peru LDC ("ASC Peru").
 
 
 d. In conjunction with the Recapitalization and the Private Placement, Apex
Limited and the shareholders of Apex LDC entered into a Buy-Sell Agreement
(the "Buy-Sell Agreement") which is intended to maintain the same beneficial
interest in Apex LDC attributable to all shareholders of Apex LDC prior to the
Recapitalization and Private Placement. Pursuant to the terms of the Buy-Sell
Agreement, upon a request by a shareholder of Apex LDC, Apex Limited is
required to purchase, at its sole option, for cash, for ordinary shares or for
a combination thereof, the shares of Apex LDC owned by such shareholder. Apex
Limited currently expects that any purchase of shares of Apex LDC will involve
only an equal number of ordinary shares. As of August 29, 1997, Apex Limited
has approximately 13,601,544 shares outstanding and approximately 7,077,007
ordinary shares reserved
 
                                      F-7
<PAGE>
 
                           APEX SILVER MINES LIMITED
                     (SUCCESSOR TO APEX SILVER MINES LDC)
                         AN EXPLORATION STAGE COMPANY
 
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
                     (EXPRESSED IN UNITED STATES DOLLARS)
   
for issuance for the approximately 7,077,007 shares of Apex LDC owned by such
shareholders. If all such ordinary shares were issued, the Company would have
approximately 20,678,551 ordinary shares outstanding. Because of the
provisions of the Buy-Sell Agreement, all of the outstanding shares of Apex
LDC are considered ordinary share equivalents for purposes of computing net
loss per ordinary share but are not included in the computation for any of the
periods presented because they are antidilutive. If all of the Apex LDC shares
were assumed to be purchased in all periods, the outstanding ordinary shares
and the net loss per ordinary share as of and for the periods ended June 30,
1997 and 1996 and December 31, 1996, 1995 and 1994, on a pro forma basis,
would have been (all unaudited) 20,271,460, 15,899,553, 17,673,178, 15,899,553
and 15,899,553 ordinary shares and $(0.58), $(0.21), $(0.66), $(0.12) and
$(0.01) net loss per ordinary share.     
 
 e. The Company, through its direct and indirect subsidiaries, is active in
Central America, South America and Central Asia and currently holds interests
in, or is the beneficial owner of, non-producing silver resource properties in
Chile, Bolivia, Honduras, Kyrghyzstan, Mexico, Mongolia, Peru and Tajikistan.
The Company is in the process of evaluating its properties to determine
economic feasibility of bringing one or more of the properties into
production.
 
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
  These consolidated financial statements have been prepared in accordance
with accounting principles generally accepted in the United States of America
("GAAP"). The preparation of financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect the reported
amounts and disclosures in the financial statements. Actual results could
differ from those estimates. The policies adopted, considered by management to
be significant, are summarized as follows:
 
 a. Basis of consolidation
 
  These consolidated financial statements include the accounts of the Company
and its majority owned subsidiaries. Investment in 50% joint ventures are
proportionately consolidated.
 
 b. Interim financial data
 
  The interim financial data as of June 30, 1997 and for the six-month periods
ended June 30, 1997 and 1996 are unaudited; however, in the opinion of
management, such interim data includes all adjustments (consisting only of
normal recurring adjustments) considered necessary for a fair presentation of
financial position and results of operations for the interim periods. All data
included herein as of such date and for such periods are unaudited.
 
 c. Translation of foreign currencies
 
  All expenditures are made in United States dollars. Accordingly, the Company
uses the United States dollar as its functional currency.
 
                                      F-8

<PAGE>
 
                           APEX SILVER MINES LIMITED
                     (SUCCESSOR TO APEX SILVER MINES LDC)
                         AN EXPLORATION STAGE COMPANY
 
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
                     (EXPRESSED IN UNITED STATES DOLLARS)
 
 d. Cash, cash equivalents and short-term investments
 
  The Company considers all highly liquid investments with a maturity of three
months or less when purchased to be cash equivalents. Short-term investments
include certificates of deposit with maturities greater than three months, but
not exceeding six months. Short-term investments are recorded at cost which
approximates fair value.
 
 e. Exploration and development costs
 
  The Company expenses general prospecting costs and the costs of acquiring
and exploring unevaluated mining properties. When a property is determined to
have proven and probable reserves, further exploration costs and development
costs are capitalized. When commercially profitable ore reserves are developed
and operations commence, capitalized costs will be amortized using the units-
of-production method. Upon abandonment or sale of projects, all capitalized
costs relating to the specific project are written off in the year abandoned
or sold and a gain or loss is recognized.
 
  As of December 31, 1996, no exploration and development costs have been
capitalized.
 
 f. Fixed assets
 
  Buildings and equipment are carried at cost and are depreciated on a
straight-line basis over estimated useful lives of three to thirty years.
 
 g. Deferred organizational costs
 
  Costs incurred in the organization of the Company have been capitalized and
are being amortized on a straight-line basis over five years.
 
 h. Asset impairment
 
  The Company evaluates its long-lived assets for impairment when events or
changes in circumstances indicate that the related carrying amount may not be
recoverable. If the sum of estimated future net cash flows on an undiscounted
basis is less than the carrying amount of the related asset, an asset
impairment is considered to exist. The related impairment loss is measured by
comparing estimated future net cash flows on a discounted basis to the
carrying amount of the asset. Changes in significant assumptions underlying
future cash flow estimates may have a material effect on the Company's
financial position and results of operations. To date no such impairments have
been identified.
 
 i. Fair value of financial instruments
 
  The Company's financial instruments consist of cash, receivables, accounts
payable and other current liabilities. The carrying amounts of these financial
instruments approximate fair value due to their short maturities.
 
 
                                      F-9
<PAGE>
 
                           APEX SILVER MINES LIMITED
                     (SUCCESSOR TO APEX SILVER MINES LDC)
                         AN EXPLORATION STAGE COMPANY
 
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
                     (EXPRESSED IN UNITED STATES DOLLARS)
 
 j. Stock compensation
 
  As permitted under Statement of Financial Accounting Standards ("SFAS") No.
123, "Accounting for Stock-Based Compensation," the Company has elected to
measure compensation expense as prescribed by Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees." Under that method,
the difference between the exercise price and the estimated fair value of the
shares at the date of grant is charged to compensation expense ratably over
the vesting period.
 
 k. Net loss per ordinary share
 
  Net loss per ordinary share is computed using the weighted average number of
ordinary and equivalent shares outstanding during the period. Equivalent
shares are excluded from the computation if their effect is antidilutive
except that, pursuant to the requirements of the Securities and Exchange
Commission, equivalent shares relating to options issued and ordinary shares
sold at less than the initial public offering price during the twelve-month
period prior to the initial public offering contemplated hereby are included
in the computations for all periods presented.
 
 l. New accounting pronouncements
 
  During February of 1997, the Financial Accounting Standards Board released
SFAS No. 128, Earnings per Share, which requires the disclosure of both basic
earnings per share and diluted earnings per share. The Company will be
required to adopt SFAS No. 128 effective December 31, 1997, and believes it
will not have a material impact on previously reported losses per share.
 
  Other pronouncements issued by authoritative bodies with future effective
dates are either not applicable or not material to the consolidated financial
statements of the Company.
 
3. INCOME TAXES
 
  The provision for income taxes includes United States federal, state and
foreign income taxes currently payable and deferred based on currently enacted
tax laws. Deferred income taxes are provided for the tax consequences of
differences between the financial statement and tax bases of assets and
liabilities. A valuation allowance is recognized if, based on the weight of
available evidence, it is more likely than not that some portion or all of the
deferred tax asset will not be realized.
 
  There is currently no taxation imposed by the Cayman Islands. If any form of
taxation were to be enacted, the Company has been granted exemption therefrom
to January 16, 2015. The Company's subsidiaries which do business in other
countries have not generated income and therefore are not liable for local
income taxes.
 
  Apex Corporation, a Delaware corporation, is the only entity within the
Company which is currently subject to United States federal and state income
taxes. As of June 30, 1997 and December 31, 1996, Apex Corporation had a
United States net operating loss carryforward of approximately $1,300,000
(unaudited) and $500,000, respectively. As such, no United States tax
provision is included in the accompanying financial statements. Additionally,
as of June 30, 1997 and December 31, 1996, Apex Corporation had net deferred
tax assets of approximately $500,000 (unaudited) and $200,000, respectively,
primarily as a result of operating loss carryforwards which are entirely
offset by a valuation allowance.
 
 
                                     F-10
<PAGE>
 
                           APEX SILVER MINES LIMITED
                     (SUCCESSOR TO APEX SILVER MINES LDC)
                         AN EXPLORATION STAGE COMPANY
 
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
                     (EXPRESSED IN UNITED STATES DOLLARS)
  As of June 30, 1997 and December 31, 1996, operating loss carryforwards
generated by ASC Bolivia amounted to approximately $9.7 million (unaudited)
and $3.4 million, respectively. Operating losses (as adjusted for inflation)
may be carried forward and deducted from taxable income indefinitely. The
deferred tax asset resulting from the operating loss carryforwards has been
entirely offset by a valuation allowance.
 
  No net deferred tax assets related to operating losses generated through
June 30, 1997 by the Company's other foreign subsidiaries have been included
in the accompanying financial statements, as all such assets have been
entirely offset by a valuation allowance.
 
4. NOTE RECEIVABLE
 
  At December 31, 1995, the note receivable represents the outstanding balance
of a $10,000,000 non-negotiable secured demand note, dated December 22, 1994,
on demand at any time, accruing interest at LIBOR, issued by Silver Holdings
LDC in consideration for 7,500 shares of the share capital (75% of the then
issued and outstanding shares) of Apex LDC. The balance at December 31, 1995
is comprised of the note receivable in the amount of $2,819,718 and accrued
interest of $66,112. The note was paid in full during 1996.
 
5. PLANT, BUILDINGS AND EQUIPMENT
 
  The components of plant, buildings and equipment were as follows:
 
<TABLE>
<CAPTION>
                                                         JUNE 30,   DECEMBER 31,
                                                           1997         1996
                                                        ----------- ------------
                                                        (UNAUDITED)
   <S>                                                  <C>         <C>
   Buildings..........................................   $274,054     $274,054
   Mining equipment...................................    228,168      183,356
   Other furniture and equipment......................     73,435       66,925
                                                         --------     --------
                                                          575,657      524,335
   Less: Accumulated depreciation.....................    (13,704)        (801)
                                                         --------     --------
                                                         $561,953     $523,534
                                                         ========     ========
</TABLE>
 
  Depreciation expense for the six months ended June 30, 1997 and the year
ended December 31, 1996 totaled $12,903 and $801, respectively.
 
6. DEFERRED ORGANIZATIONAL COSTS
 
<TABLE>
<CAPTION>
                             JUNE 30, 1997 DECEMBER 31, 1996 DECEMBER 31, 1995
                             ------------- ----------------- -----------------
                              (UNAUDITED)
   <S>                       <C>           <C>               <C>
   Organizational costs.....   $282,956        $282,956          $282,956
   Less: Accumulated
    amortization............   (141,477)       (113,182)          (56,591)
                               --------        --------          --------
                               $141,479        $169,774          $226,365
                               ========        ========          ========
</TABLE>
 
  Amortization expense for the six-month period ended June 30, 1997 was
$28,295 and for each of the years ended December 31, 1996 and 1995 was
$56,591.
 
                                     F-11

<PAGE>
 
                           APEX SILVER MINES LIMITED
                     (SUCCESSOR TO APEX SILVER MINES LDC)
                         AN EXPLORATION STAGE COMPANY
 
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
                     (EXPRESSED IN UNITED STATES DOLLARS)
 
7. STOCK OPTION PLANS
 
  During 1996, options to purchase 281,250 shares of the Company's ordinary
shares were granted, exercisable at a price of $8.00 per share. Of these
options, 73,438 vested immediately. The remainder of the options vest ratably
over periods of up to four years with the first tranche vesting on the date of
grant. Unexercised options expire ten years after the date of grant.
 
The following table summarizes stock option information:
 
<TABLE>
<CAPTION>
                                                                  YEAR ENDED
                                                               DECEMBER 31, 1996
                                                               -----------------
   <S>                                                         <C>
   Options granted at $8 during period........................      281,250
   Options outstanding at end of period.......................      281,250
   Options exercisable at end of period.......................       73,438
</TABLE>
 
  The weighted average grant-date fair value of options granted for the year
ended December 31, 1996 is $1.30. The weighted average remaining contractual
life of the options at December 31, 1996 is 11.1 years. To date, none of these
options have been exercised.
 
  Pro forma information regarding net income is required by SFAS No. 123, and
has been determined as if the Company has accounted for its employees' stock
options under the fair value method of SFAS No. 123. For purposes of
calculating the fair value of options, volatility was not considered for the
options granted in 1996 since the Company was non-public at the date of grant.
The Company currently does not foresee the payment of dividends in the near
term. The fair value for these options was estimated at the date of grant
using the Black-Scholes option pricing model with the following assumptions:
 
<TABLE>
<CAPTION>
                                                                  YEAR ENDED
                                                               DECEMBER 31, 1996
                                                               -----------------
   <S>                                                         <C>
   Weighted average risk-free interest rate...................       6.45%
   Expected dividend yield....................................        --
   Weighted average expected life (in years)..................       2.78
</TABLE>
 
  For the purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting period. The
Company's pro forma information follows:
 
<TABLE>
<CAPTION>
                                                                   YEAR ENDED
                                                                  DECEMBER 31,
                                                                      1996
                                                                  -------------
<S>                                                               <C>
As reported
 Net loss........................................................ $(11,723,313)
 Net loss per ordinary share.....................................        (1.11)
Pro forma
 Net loss........................................................  (11,852,522)
 Net loss per ordinary share.....................................        (1.12)
</TABLE>
 
                                     F-12
<PAGE>
 
                           APEX SILVER MINES LIMITED
                     (SUCCESSOR TO APEX SILVER MINES LDC)
                         AN EXPLORATION STAGE COMPANY
 
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
                     (EXPRESSED IN UNITED STATES DOLLARS)
 
8. EVENTS SUBSEQUENT TO DECEMBER 31, 1996
 
  In January 1997, the Company received payment for 115,207 shares issued
effective September 30, 1996 at the then book value of $1.49 per share in
consideration for services received in conjunction with the Private Placement.
 
  Effective as of August 15, 1997, the minority shareholder of ASC Bolivia
exchanged its 2.5% interest for 268,496 shares of Apex Limited and the Company
granted two associates a total of 138,595 shares of the Company in
consideration for services.
 
9. RELATED PARTY TRANSACTIONS
 
  Apex LDC engaged Tigris Financial Group Ltd. ("Tigris") and LCM Holdings LDC
("LCM") to provide management advisory services to Apex LDC and its
subsidiaries. Tigris is wholly owned by Mr. Thomas S. Kaplan, a director and
officer of Apex LDC and its subsidiaries, and an indirect shareholder. LCM is
wholly owned by an indirect shareholder of Apex LDC. This consulting
arrangement was terminated at the end of the first quarter of 1997, following
the formation of Apex Corporation. Apex Corporation provides management,
advisory and administrative services for the Company pursuant to a Management
Services Agreement dated October 22, 1996. The Company pays Apex Corporation
in providing its services, plus 10 percent of such costs. During the periods
ended December 31, 1996, 1995 and 1994 fees paid to Tigris and LCM for such
services amounted to $423,684, $143,368 and $21,250, respectively. As of
December 31, 1996, the amount payable for such services was $11,119.
 
  Apex LDC hires both individuals and companies ("associates") to perform
services on its behalf in countries in which it has mineral interests. These
services include administrative expenses, obtaining interests in properties on
Apex LDC's behalf, and consulting services. In certain cases persons
affiliated with such associates serve as officers or directors of Apex LDC's
subsidiaries. During the periods ended December 31, 1996, 1995 and 1994, the
total amounts charged to Apex LDC by such related associates were $5,695,193,
$1,965,276 and $275,653, respectively, and are included in the statement of
operations under the applicable captions. As of December 31, 1996, the amount
payable for such services was $386,639.
 
  During the periods ended December 31, 1996, 1995 and 1994, Apex LDC paid an
associate who, until August 6, 1996, was a shareholder of certain subsidiaries
of Apex LDC $485,179, $239,647 and $14,104, respectively, in consideration for
geology services provided and disbursements made on Apex LDC's behalf. As of
December 31, 1996, the amount payable for such services was $135,517.
 
  During the year ended December 31, 1995, Apex LDC made an interest-free loan
to an indirect shareholder in the amount of $100,000. The loan was forgiven by
Apex LDC as of August 6, 1996, as partial payment for that shareholder's
remaining interest in one subsidiary and his profits interests in certain
properties owned or controlled by Apex LDC or its subsidiaries.
 
  Apex LDC received interest income on the note receivable issued by Silver
Holdings LDC, a shareholder of Apex LDC. During the periods ended December 31,
1995 and 1994, such interest income amounted to $360,937 and $15,256,
respectively.
 
  Two individuals, one of whom is an officer and indirect shareholder of Apex
LDC, the second of whom is an officer of certain of Apex LDC's subsidiaries,
are also shareholders and directors of Begeyge Minera Ltda. ("Begeyge"), with
whom the Company has a non-binding commitment to purchase the Suyatal Project
for an aggregate purchase price of $3,000,000 (see Note 10). Begeyge also
served as an associate and during the year ended December 31, 1996, total
amounts charged to Apex LDC by Begeyge were $106,691.
 
                                     F-13
<PAGE>
 
                           APEX SILVER MINES LIMITED
                     (SUCCESSOR TO APEX SILVER MINES LDC)
                         AN EXPLORATION STAGE COMPANY
 
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
                     (EXPRESSED IN UNITED STATES DOLLARS)
 
10. COMMITMENTS AND CONTINGENCIES
 
  The Company had outstanding nonbinding commitments relating to certain
mineral properties at December 31, 1996 (as adjusted for contract terminations
and modifications through August 15, 1997) as follows:
 
<TABLE>
<CAPTION>
                            1997       1998      1999     2000      2001    THEREAFTER
                         ---------- ---------- -------- -------- ---------- ----------
<S>                      <C>        <C>        <C>      <C>      <C>        <C>
HONDURAS
  El Ocote(/1/)......... $  250,000 $   93,866 $ 75,000 $    --  $      --  $      --
  Suyatal(/2/)..........     15,000     25,000   40,000   40,000     40,000  2,825,000
  Tatumbla(/3/).........     66,667     66,667   66,666      --         --         --
BOLIVIA
  San Cristobal(/4/)....    297,000    120,000      --       --         --         --
  Choroma(/5/)..........    227,000    349,250      --       --         --         --
  Cobrizos(/6/).........    318,841    214,675  201,314  201,314  1,006,551        --
  General...............    170,000    170,000  170,000  170,000    170,000        --
PERU
  Otuzco(/7/)...........     36,000     18,000   18,000   18,000     18,000    450,000
    Total............... $1,380,508 $1,057,458 $570,980 $429,314 $1,234,551 $3,275,000
</TABLE>
- --------
(/1/)  Upon production, the Company will also pay a 5% net smelter return
       ("NSR") royalty.
(/2/)  Annual installments are not to exceed the greater of $40,000, or a 2%
       NSR.
(/3/)  In addition, beginning in January of 1999, the Company will pay the
       greater of a $20,000 per year advance against future NSR royalties, or a
       2% NSR. Upon the earlier of the fifth anniversary of commercial
       production or recovery of the Company's entire capital investment, the
       Company will pay the higher of the $20,000 per year advance, or a 3%
       NSR, plus an additional 2% NSR on production from the project.
(/4/)  The Company, through a wholly-owned subsidiary has an option to purchase
       these properties prior to October of 1998 for $2,000,000, less the sum
       of all prior lease payments ($12,000 per month). In addition, the
       Company has an option to acquire mining concessions for $6,000 per month
       until February 1, 1998. Upon exercise of the option, a payment of
       $250,000 is due, to be followed by another $250,000 due on February 1,
       1999 plus the assumption of certain indebtedness of the seller.
(/5/)  Upon production, the Company will pay a royalty of 5% of operating cash
       flow until the investment has been recovered, and a 15% royalty
       thereafter.
(/6/)  The commitments relating to the years 1999 to 2001 are for land taxes.
       The amounts disclosed represent the maximum possible payment. Upon
       production, the Company will pay a royalty of 5% of operating cash flow
       until the investment has been recovered, and a 15% royalty thereafter.
(/7/)  The lease agreement related to this property also includes payment of a
       production royalty of 4.5% NSR. Concurrent with the lease is a four-year
       option to purchase the property for $350,000. In addition, the Company
       has a $40,400 per year payment due for land taxes on staked claims.
 
       In addition to those summarized above, the Company has the following
nonbinding commitments:
       
      Bolivia--Pulacayo: ASC Bolivia is obligated to pay $1,500 per month during
exploration until completion of a feasibility study. If the property is
developed, ASC Bolivia will be required to pay a 5% NSR.
 
                                     F-14
<PAGE>
 
                           APEX SILVER MINES LIMITED
                     (SUCCESSOR TO APEX SILVER MINES LDC)
                         AN EXPLORATION STAGE COMPANY
 
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
                     (EXPRESSED IN UNITED STATES DOLLARS)
 
  Peru--San Juan de Lucanas: Andean has contracted to purchase mining
concessions for total payment of $2,100,000 over a fourteen month period.
 
  Tajikistan--Kanimansur Ore Field: The joint venture agreement related to
this proposed acquisition is still awaiting approval by the government. An
initial capital contribution of $49,000 must be effected within one year of
the formal registration of Kanimansur Mining.
 
                                     F-15
<PAGE>
 
[MAP SHOWING THE LOCATION OF THE SAN CRISTOBAL PROJECT IN RELATION TO BOLIVIA 
 AND SURROUNDING COUNTRIES]

[MAP SHOWING THE LOCATION OF THE VARIOUS MINERAL ZONES WITHIN THE SAN CRISTOBAL
 PROJECT]
<PAGE>
 
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY IN-
FORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THE PRO-
SPECTUS IN CONNECTION WITH THE OFFER MADE BY THE PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY OR ANY OF THE U.S. UNDERWRITERS. NEITHER THE DE-
LIVERY OF THE PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUM-
STANCES CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF
THE COMPANY SINCE THE DATE HEREOF. THE PROSPECTUS DOES NOT CONSTITUTE AN OFFER
OR SOLICITATION BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITA-
TION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITA-
TION.
 
                               ----------------
 
                               TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                          PAGE
                                                                          ----
<S>                                                                       <C>
Prospectus Summary.......................................................   1
Risk Factors.............................................................   8
Use of Proceeds..........................................................  16
Dividend Policy..........................................................  16
Capitalization...........................................................  17
Dilution.................................................................  18
Selected Consolidated Financial Data.....................................  19
Corporate Structure......................................................  20
Management's Discussion and Analysis of Financial Condition and Results
 of Operations...........................................................  22
The Company..............................................................  28
Properties...............................................................  30
Development Project......................................................  31
Advanced Exploration Properties..........................................  40
Other Mineral Properties.................................................  48
Metals Market Overview...................................................  51
Republic of Bolivia......................................................  53
Management...............................................................  57
Executive Compensation...................................................  64
Principal Shareholders...................................................  69
Certain Transactions.....................................................  72
Description of Ordinary Shares...........................................  75
Shares Eligible for Future Sale..........................................  81
Underwriting.............................................................  82
Taxation.................................................................  85
Experts..................................................................  89
Legal Matters............................................................  89
Additional Information...................................................  90
Glossary.................................................................  91
Conversion Table.........................................................  94
Index to Consolidated Financial Statements............................... F-1
</TABLE>
   
UNTIL    , 1997 ALL DEALERS EFFECTING TRANSACTIONS IN THE SHARES, WHETHER OR
NOT PARTICIPATING IN THE DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS DELIVERY REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DE-
LIVER A PROSPECTUS WHEN ACTING AS U.S. UNDERWRITERS AND WITH RESPECT TO THEIR
UNSOLD ALLOTMENTS.     
   
9,000,000 SHARES     
 
APEX SILVER
MINES LIMITED
 
ORDINARY SHARES
(PAR VALUE $0.01 PER SHARE)
   
                           [LOGO APPEARS HERE]     
 
 
SALOMON BROTHERS INC
 
PAINEWEBBER INCORPORATED
 
SCOTIA CAPITAL MARKETS
 
PROSPECTUS
   
     1997     
<PAGE>
 
           [ALTERNATE FRONT COVER PAGE FOR INTERNATIONAL PROSPECTUS]
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A         +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE   +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY  +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THIS REGISTRATION STATEMENT       +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR   +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE      +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE    +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF  +
+ANY STATE.                                                                    +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
                             SUBJECT TO COMPLETION
                                
                             OCTOBER 24, 1997     
 
PROSPECTUS
   
9,000,000 SHARES     
   
[LOGO OF APEX SILVER MINES LIMITED APPEARS HERE]     
ORDINARY SHARES
 
(PAR VALUE $0.01 PER SHARE)
   
Of the 9,000,000 shares (the "Shares") of ordinary shares, par value $0.01 per
share, (the "Ordinary Shares") of Apex Silver Mines Limited (the "Company")
offered hereby (the "Offering"), 7,200,000 Shares are being offered initially
in the United States and Canada by the U.S. Underwriters and 1,800,000 Shares
are being offered initially outside the United States by the Managers. See
"Underwriting". Upon completion of the Offering (assuming the over-allotment
options granted to the U.S. Underwriters and the Managers are not exercised),
the Company will own 76.2 percent of the outstanding share capital of Apex
Silver Mines LDC ("Apex LDC"), the Company's principal operating subsidiary.
See "Corporate Structure". The minority shareholders of Apex LDC (the "Minority
Shareholders") are entitled to sell their shares of Apex LDC to the Company
for, at the Company's sole option, shares of the Company on a one-for-one
basis, cash, or a combination of cash and Ordinary Shares. The Company
currently expects that any future purchases by the Company of shares of Apex
LDC from the Minority Shareholders will involve only Ordinary Shares of Apex
Silver Mines Limited. Any such transactions will not affect the beneficial or
economic interest in Apex LDC attributable to shareholders of Apex Silver Mines
Limited. Currently, the Company has approximately 13,601,544 Ordinary Shares
outstanding and approximately 7,077,007 Ordinary Shares reserved for issuance
for 7,077,007 shares of Apex LDC owned by the Minority Shareholders. If all
such shares of Apex LDC were issued, the Company would have 20,678,551 Ordinary
Shares outstanding, excluding the Shares to be sold in the Offering. See
"Certain Transactions". An application has been made to list the Shares for
quotation on the American Stock Exchange under the trading symbol "SIL",
subject to notice of issuance.     
   
Prior to the Offering, there has been no public market for the Shares. It is
anticipated that the initial offering price will be between $13.00 and $15.00
per share. See "Underwriting" for information relating to the factors
considered in determining the initial public offering price.     
 
FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE
INVESTORS IN PURCHASING THE SHARES OFFERED HEREBY, SEE "RISK FACTORS" ON PAGE
8.
 
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
 
- --------------------------------------------------------------------------------
<TABLE>   
<CAPTION>
                                       PRICE TO     UNDERWRITING     PROCEEDS TO
                                       PUBLIC       DISCOUNT(1)      COMPANY(2)
<S>                                    <C>          <C>              <C>
Per Ordinary Share..................    $              $                $
Total(3)............................    $              $                $
</TABLE>    
- --------------------------------------------------------------------------------
(1) The Company has agreed to indemnify the Managers against certain
    liabilities, including liabilities under the Securities Act of 1933, as
    amended. See "Underwriting".
   
(2) Before deducting certain expenses of the Offering, payable by the Company,
    estimated to be $   .     
   
(3) The Company has granted the U.S. Underwriters and the Managers 30-day
    options to purchase up to as aggregate 1,350,000 additional Ordinary
    Shares, at the Price to Public, less Underwriting Discount, solely to cover
    over-allotments, if any. If the U.S. Underwriters and the Managers exercise
    such options in full, the total Price to Public, Underwriting Discount and
    Proceeds to Company will be $    , $     and $    , respectively. See
    "Underwriting".     
   
These Shares are offered subject to receipt and acceptance by the Managers, to
prior sale, and to the Managers' right to reject any order in whole or in part
and to withdraw, cancel or modify the offer without notice. It is expected that
delivery of the Shares will be made at the office of Salomon Brothers Inc,
Seven World Trade Center, New York, New York, or through the facilities of the
Depository Trust Company, on or about    , 1997.     
 
SALOMON BROTHERS INTERNATIONAL LIMITED
                             PAINEWEBBER INTERNATIONAL
                                                           
                                                        ABN AMRO ROTHSCHILD     
   
The date of this Prospectus is October   , 1997.     
<PAGE>
 
            [ALTERNATE BACK COVER PAGE FOR INTERNATIONAL PROSPECTUS]
 
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY IN-
FORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THE PRO-
SPECTUS IN CONNECTION WITH THE OFFER MADE BY THE PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY OR ANY OF THE MANAGERS. NEITHER THE DELIVERY OF
THE PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE
ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY
SINCE THE DATE HEREOF. THE PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR SOLICITA-
TION BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION.
 
                                ---------------
 
                               TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                          PAGE
                                                                          ----
<S>                                                                       <C>
Prospectus Summary.......................................................   1
Risk Factors.............................................................   8
Use of Proceeds..........................................................  16
Dividend Policy..........................................................  16
Capitalization...........................................................  17
Dilution.................................................................  18
Selected Consolidated Financial Data.....................................  19
Corporate Structure......................................................  20
Management's Discussion and Analysis of Financial Condition and Results
 of Operations...........................................................  22
The Company..............................................................  28
Properties...............................................................  30
Development Project......................................................  31
Advanced Exploration Properties..........................................  40
Other Mineral Properties.................................................  48
Metals Market Overview...................................................  51
Republic of Bolivia......................................................  53
Management...............................................................  57
Executive Compensation...................................................  64
Principal Shareholders...................................................  69
Certain Transactions.....................................................  72
Description of Ordinary Shares...........................................  75
Shares Eligible for Future Sale..........................................  81
Underwriting.............................................................  82
Taxation.................................................................  85
Experts..................................................................  89
Legal Matters............................................................  89
Additional Information...................................................  90
Glossary.................................................................  91
Conversion Table.........................................................  94
Index to Consolidated Financial Statements............................... F-1
</TABLE>
   
UNTIL    , 1997 ALL DEALERS EFFECTING TRANSACTIONS IN THE SHARES, WHETHER OR
NOT PARTICIPATING IN THE DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS DELIVERY REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DE-
LIVER A PROSPECTUS WHEN ACTING AS MANAGERS AND WITH RESPECT TO THEIR UNSOLD AL-
LOTMENTS.     
   
9,000,000 SHARES     
 
APEX SILVER
MINES LIMITED
 
ORDINARY SHARES
(PAR VALUE $0.01 PER SHARE)
   
                           [LOGO APPEARS HERE]     
 
 
SALOMON BROTHERS INTERNATIONAL LIMITED
 
PAINEWEBBER INTERNATIONAL
   
ABN AMRO ROTHSCHILD     
 
PROSPECTUS
   
     , 1997     
<PAGE>
 
                                    PART II
 
                  INFORMATION NOT REQUIRED IN THE PROSPECTUS
 
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
 
  The following are the estimated expenses, other than the underwriting
discounts and commissions, expected to be incurred in connections with the
issuance and distribution of the securities registered under this Registration
Statement:
 
<TABLE>   
   <S>                                                                <C>
   Securities and Exchange Commission Registration Fee............... $47,046
   AMEX Listing Fee.................................................. $50,000
   NASD Filing Fee................................................... $10,500
   Blue Sky Fees and Expenses*....................................... $10,000
   Printing and Engraving Expenses*.................................. $      **
   Legal Fees and Expenses*.......................................... $      **
   Accounting Fees and Expenses*..................................... $      **
   Transfer Agent's Fees and Expenses*............................... $      **
   Miscellaneous..................................................... $      **
                                                                      -------
     Total........................................................... $      **
                                                                      =======
</TABLE>    
- --------
 * Estimated
** To be filed by Amendment.
 
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
 
  The Companies Act (1995 Revision) of the Cayman Islands provides in Section
77 that:
 
  The liability of the directors, manager or the managing director of a
company may, if so provided by the memorandum of association, be unlimited.
 
  The Articles of Association of the Company provide as follows:
 
    85. (a)    Every Director (including for the purposes of this Article any
               Alternate Director appointed pursuant to the provisions of
               these Articles), Managing Director, Secretary, Assistant
               Secretary, and, at the discretion of the Board of Directors,
               other officer, consultant, employee or agent, for the time
               being and from time to time of the Company and the personal
               representatives of the same shall be indemnified and secured
               harmless out of the assets and funds of the Company against all
               actions, proceedings, costs, charges, expenses, losses, damages
               or liabilities incurred or sustained by him in or about the
               conduct of the Company's business or affairs or in the
               execution or discharge of his duties, powers, authorities or
               discretions, including without prejudice to the generality of
               the foregoing, any costs, expenses, losses or liabilities
               incurred by him in defending (whether successfully or
               otherwise) any civil proceedings concerning the Company or its
               affairs in any court whether in the Cayman Islands or elsewhere
               provided, that no indemnification shall be available in the
               case of wilful default or fraud.
 
        (b)    No such Director, Alternate Director, Managing Director, agent,
               Secretary, Assistant Secretary or other officer of the Company
               shall be liable (i) for the acts, receipts, neglects, defaults
               or omissions of any other such director or officer or agent of
               the Company or (ii) by reason of his having joined in any
               receipt for money not received by him personally or (iii) for
               any loss on account of defect of title to any property of the
               Company or (iv) on account of the insufficiency of any security
               in or upon which any money of the Company shall be invested or
               (v) for any loss incurred through any bank, broker or other
               agent or (vi) for any loss occasioned by any negligence,
               default, breach of duty, breach of trust, error of
 
                                     II-1
<PAGE>
 
               judgment or oversight on his part or (vii) for any loss, damage
               or misfortune whatsoever which may happen in or arise from the
               execution or discharge of the duties, powers authorities, or
               discretions of his office or in relation thereto, unless the
               same shall happen through his own dishonesty.
 
        (c)    The Board of Directors may authorize the Company to purchase
               and maintain insurance on behalf of any person described in
               Section 83(a), against any liability asserted against him and
               incurred by him in any such capacity, or arising out of his
               status as such, whether or not the Company would have the power
               to indemnify him against such liability under the provisions of
               this Section 83.
 
  To the extent that it is permitted to do so by these provisions, the Company
intends to give an indemnity to each of its directors and to arrange for the
liabilities under these indemnities to be covered.
 
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
 
  Since its formation in March of 1996, Ordinary Shares have been issued in
the following transactions:
 
    1. Effective as of August 6, 1996, the Company issued 4,256,700 Ordinary
  Shares at a price of $8.00 per share to subscribers in a Private Placement.
  Salomon Brothers Inc, S.G. Warburg & Co. Inc. and Matrix U.S.A., LLC acted
  as Private Placement agents for the Offering. The Company paid $1,243,050
  to the Private Placement agents as a fee for their services. All of the
  shares issued were issued to "accredited investors" as defined within
  Regulation D under the Securities Act of 1933, as amended.
 
    2. Effective as of August 6, 1996, the Company issued (i) 25,000 Ordinary
  Shares to each of Ms. Berliner and Messrs. Buchanan, Mohamed Kashoggi and
  de Lucio in exchange for their respective two and one-half percent (2.5%)
  interests in Andean; (ii) 25,000 Ordinary Shares to Mr. McDonald in
  exchange for his profits interests in certain Mexican and Honduran
  properties and his one share of Cordillera Mexico; and (iii) 25,000
  Ordinary Shares to Mr. Golan in exchange for his two and one-half percent
  (2.5%) interest in Apex Asia.
 
    3. Effective as of September 30, 1996, the Company issued 115,207
  Ordinary Shares to Mr. William Natbony at the then per share book value of
  the Company in exchange for consulting services.
 
    4. Effective as of August 15, 1997, the Company issued (i) 268,496
  Ordinary Shares to Mintec in exchange for Mintec's two and one-half percent
  (2.5%) interest in ASC Bolivia, (ii) 113,595 Ordinary Shares to Johnny
  Delgado Achaval in consideration of his consulting and other work for the
  Company, and (iii) 25,000 Ordinary Shares to Mada Limited in consideration
  for its and Mr. Golan's work for the Company.
 
  The Company believes that the foregoing described issuances of securities,
if they constitute sales, are exempt from registration under the Securities
Act of 1933, as amended, by virtue of the exemption provided by Section 4(2)
thereof for transactions not involving a public offering.
 
                                     II-2
<PAGE>
 
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
 
  (a) Exhibits. Attached hereto are the following exhibits:
 
<TABLE>   
<CAPTION>
 EXHIBIT
 NUMBER                          DESCRIPTION OF EXHIBIT
 -------                         ----------------------
 <C>     <S>
  1.1    Form of Underwriting Agreement between the Registrant and the U.S.
         Underwriters.**
  1.2    Form of Underwriting Agreement between the Registrant and the
         Managers.**
  3.1    Form of Amended and Restated Memorandum of Association of the
         Registrant.*
  3.2    Form of Amended and Restated Articles of Association of the
         Registrant.*
  4.1    Specimen of certificates representing the Registrant's Ordinary
         Shares, par value $0.01 each. **
  5.1    Opinion of W.S. Walker & Company as to the validity of the Ordinary
         Shares (Cayman Islands law).**
 10.1    Shareholders' Agreement, dated as of August 6, 1996, among the
         Shareholders of the Registrant.*
 10.2    Form of consent to amendment of above Shareholders' Agreement, dated
         March 21, 1995.*
 10.3    Buy-Sell Agreement, dated as of August 6, 1996, by and among the
         Registrant, Apex LDC, Litani and Silver Holdings.*
 10.4    Summary of the Registrant's 401(K) Plan.*
 10.5    Management Services Agreement among the Registrant and its
         subsidiaries.*
 10.6    Form of Registrant's Non-Employee Director's Plan.*
 10.7    Form of Registrant's Employees' Share Option Plan.*
 10.8    Form of Registrant's Share Option Agreement.*
 10.9    Employment contract between the Registrant and Marcel F. DeGuire,
         dated July 23, 1996.*
 10.10   Employment contract between the Registrant and Gregory Marlier, dated
         September 26, 1996.*
 10.11   Employment contract between the Registrant and Keith R. Hulley, dated
         August 14, 1996.*
 10.12   Employment contract between the Registrant and Douglas M. Smith, Jr.,
         dated January 21, 1997.*
 10.13   English translation of Deed of Lease and Purchase Option Contract
         between Monica de Prudencio and Mineria Tecnia Consultores Asociados
         S.A. ("Mintec"), dated November 7, 1994, regarding the Tesorera and
         Jayula concessions, with an attached note from Keith Hulley, a
         director of the Registrant, as required by Rule 306 of Regulation S-
         T.*
 10.14   English translation of Assignment Agreement, between ASC Bolivia LDC
         and Mintec regarding the rights to the above agreement, with an
         attached note from Keith Hulley, a director of the Registrant, as
         required by Rule 306 of Regulation S-T.*
 10.15   English translation of the Lease and Purchase Option Contract between
         Empresa Minera Yana Mallcu S.A. and Mintec, dated February 7, 1996,
         regarding the Toldos concession, with an attached note from Keith
         Hulley, a director of the Registrant, as required by Rule 306 of
         Regulation S-T.*
 10.16   English translation of the Assignment of Lease and Purchase Option
         Agreement among Banco Industrial S.A., Mintec and ASC Bolivia LDC,
         with an attached note from Keith Hulley, a director of the Registrant,
         as required by Rule 306 of Regulation S-T.*
 10.17   English translation of the Purchase Option Agreement between Mintec
         and Litoral Mining Cooperative Ltd., dated August 17, 1995, regarding
         the Animas concession, with an attached note from Keith Hulley, a
         director of the Registrant, as required by Rule 306 of Regulation S-
         T.*
</TABLE>    
 
                                      II-3
<PAGE>
 
<TABLE>   
<CAPTION>
 EXHIBIT
 NUMBER                          DESCRIPTION OF EXHIBIT
 -------                         ----------------------
 <C>     <S>
 10.18   English translation of the Assignment and Assumption Agreement between
         Mintec and ASC Bolivia LDC, dated May 22, 1996, regarding the Animas
         concession, with an attached note from Keith Hulley, a director of the
         Registrant, as required by Rule 306 of Regulation S-T.*
 10.19   English translation of the Purchase Agreement between ASC Bolivia LDC
         and Litoral Mining Cooperative Ltd., regarding the Animas concessions
         with an attached note from Keith Hulley, a director of the Registrant,
         as required by Rule 306 of Regulation S-T.*
 10.20   English translation of the Joint Venture Agreement between Corporacion
         Minera Boliviano S.A. ("Comibol") and ASC Bolivia LDC, regarding the
         Cobrizos Concession, with an attached note from Keith Hulley, a
         director of the Registrant, as required by Rule 306 of Regulation S-
         T.*
 10.21   English translation of the Joint Venture Agreement between Comibol and
         ASC Bolivia LDC, regarding the Choroma Concession, with an attached
         note from Keith Hulley, a director of the Registrant, as required by
         Rule 306 of Regulation S-T.*
 10.22   Mining Agreement between Compania Minera Ocote and Kerry A. McDonald,
         dated June 24, 1994, regarding the El Ocote concession.*
 10.23   Assignment and Assumption Agreement between Kerry A. McDonald and
         Cordilleras Silver Mines Ltd., dated September 27, 1994, regarding the
         assignment of the above Mining Agreement.*
 10.24   Acknowledgment from Bruce Wallis in his capacity as President of
         Compania Minera Ocote S. de R.L. that Cordilleras Silver Mines
         (Cayman) LDC has been assigned Kerry A. McDonald's rights under the
         above Mining Agreement, dated July 10, 1995.*
 10.25   English translation of the agreement between Andean Silver Corporation
         LDC and 190 of the co-owners of the assets which previously belonged
         to Empressa Minera San Juan de Lucanas, S.A. ("EMSJ"), regarding the
         San Juan de Lucanas concession, dated January 12, 1995, with an
         attached note from Keith Hulley, a director of the Registrant, as
         required by Rule 306 of Regulation S-T.*
 10.26   English translation of the agreement between Andean Silver Corporation
         LDC and 133 of the co-owners of the assets which previously belonged
         to EMSJ, regarding the San Juan de Lucanas concession, dated January
         12, 1995, with an attached note from Keith Hulley, a director of the
         Registrant, as required by Rule 306 of Regulation S-T.*
 10.27   English translation of the form of agreement between 16 individuals
         who are some of the co-owners of the assets which previously belonged
         to EMSJ, regarding the San Juan de Lucanas concession, with an
         attached note from Keith Hulley, a director of the Registrant, as
         required by Rule 306 of Regulation S-T.*
 10.28   Board Designation Agreement, dated    , 1997, by and between the
         Registrant and Silver Holdings.**
 10.29   Registration Rights and Voting Agreement, dated    , 1997 by and among
         the Registrant, Silver Holdings, Consolidated, Argentum, Aurum LLC and
         Thomas S. Kaplan.**
 10.30   Voting Trust Agreement, dated August 1, 1997, between Thomas Kaplan
         and Consolidated.*
 10.31   Voting Trust Agreement, dated August 27, 1997, between Thomas Kaplan
         and Argentum LLC.*
 10.32   English translation of the Purchase Agreement between Monica de
         Prudencio and ASC Bolivia, regarding the Tesorera and Jayula
         concessions, dated September 3, 1997, with an attached note from Keith
         Hulley as required by Rule 306 of Regulation S-T.*
 11      Statement regarding computation of per share earnings.
</TABLE>    
 
 
                                      II-4
<PAGE>
 
<TABLE>   
<CAPTION>
 EXHIBIT
 NUMBER                          DESCRIPTION OF EXHIBIT
 -------                         ----------------------
 <C>     <S>
 21      List of Subsidiaries.*
 23.1    Consent of W.S. Walker & Company (included as part of Exhibit 5.1).**
 23.3    Consent of Price Waterhouse LLP.
 23.4    Consent of CPM Group.*
 23.5    Consent of Mineral Resource Development Inc.*
 23.6    Consent of Knight Piesold LLC.*
 23.7    Consent of Pincock, Allen & Holt.*
 23.8    Consent of Mine Reserves Associates, Inc.*
 23.9    Consent of Kvaerner Metals.*
 23.10   Consent of Behre Dolbear.*
 24.1    Powers of attorney of the Registrant (included on page II-6 hereof).
</TABLE>    
 
- --------
* Previously filed.
**To be filed by Amendment.
 
ITEM 17. UNDERTAKINGS.
 
  Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described in Item 14 of this
registration statement or otherwise may be permitted, the registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
 
 
  The undersigned registrant hereby undertakes that:
 
    (1) For purposes of determining any liability under the Securities Act of
  1933, the information omitted from the form of prospectus filed as part of
  this registration statement in reliance upon Rule 430A and contained in a
  form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
  (4) or 497(h) under the Securities Act shall be deemed to be part of this
  registration statement as of the time it was declared effective.
 
    (2) For the purpose of determining any liability under the Securities Act
  of 1933, each post-effective amendment that contains a form of prospectus
  shall be deemed to be a new registration statement relating to the
  securities offered therein, and the offering of such securities at that
  time shall be deemed to be the initial bona fide offering thereof.
 
    (3) The undersigned registrant hereby undertakes to provide the
  underwriters at the closing specified in the underwriting agreements
  certificates in such denominations and registered in such names as required
  by the underwriters to permit prompt delivery to each purchaser.
 
                                     II-5
<PAGE>
 
                                  SIGNATURES
   
  Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-1 and has duly caused this
amendment to be signed on its behalf by the undersigned, thereunto duly
authorized in, New York, New York on October 24, 1997.     
 
                                          Apex Silver Mines Limited
 
                                                   /s/ Thomas S. Kaplan
                                          By: _________________________________
                                             THOMAS S. KAPLAN CHAIRMAN, BOARD
                                                       OF DIRECTORS
   
  Pursuant to the requirements of the Securities Act of 1933, as amended, this
amendment has been signed by the following persons in the capacities as set
forth below on October 24, 1997.     
 
              SIGNATURE                  TITLE                    DATE
 
        /s/ Thomas S. Kaplan           Director
- -------------------------------------  (Registrant's
          THOMAS S. KAPLAN             authorized
                                       representative in
                                       the United States)
 
                  *                    Director
- -------------------------------------
 
           HARRY M. CONGER
 
                  *                    Director
- -------------------------------------
          MICHAEL COMNINOS
 
                  *                    Director
- -------------------------------------
         EDUARDO S. ELSZTAIN
 
                  *                    Director                     
- -------------------------------------                            October 24,
          DAVID SEAN HANNA                                        1997     
 
                  *                    Director
- -------------------------------------
              OVE HOEGH
 
                  *                    Director
- -------------------------------------
           KEITH R. HULLEY
 
                  *                    Director
- -------------------------------------
            RICHARD KATZ
 
                  *                    Director
- -------------------------------------
             PAUL SOROS
   
*______/s/ Thomas S. Kaplan_____     
_____________________________________
          THOMAS S. KAPLAN
          ATTORNEY-IN-FACT
 

                                     II-6
<PAGE>
 
                                    EXHIBIT INDEX
 
<TABLE>   
<CAPTION>
 EXHIBIT
 NUMBER                          DESCRIPTION OF EXHIBIT
 -------                         ----------------------
 <C>     <S>
  1.1    Form of Underwriting Agreement between the Registrant and the U.S.
         Underwriters.**
  1.2    Form of Underwriting Agreement between the Registrant and the
         Managers.**
  3.1    Form of Amended and Restated Memorandum of Association of the
         Registrant.*
  3.2    Form of Amended and Restated Articles of Association of the
         Registrant.*
  4.1    Specimen of certificates representing the Registrant's Ordinary
         Shares, par value U.S. $0.01 each.**
  5.1    Opinion of W.S. Walker & Company as to the validity of the Ordinary
         Shares (Cayman Islands law).**
 10.1    Shareholders' Agreement, dated as of August 6, 1996, among the
         Shareholders of the Registrant.*
 10.2    Form of consent to amendment of above Shareholders' Agreement, dated
         March 21, 1995.*
 10.3    Buy-Sell Agreement, dated as of August 6, 1996, by and among the
         Registrant, Apex LDC, Litani and Silver Holdings.*
 10.4    Summary of the Registrant's 401(K) Plan.*
 10.5    Management Services Agreement among the Registrant and its
         subsidiaries.*
 10.6    Form of Registrant's Non-Employee Director's Plan.*
 10.7    Form of Registrant's Employees' Share Option Plan.*
 10.8    Form of Registrant's Share Option Agreement.*
 10.9    Employment contract between the Registrant and Marcel F. DeGuire,
         dated July 23, 1996.*
 10.10   Employment contract between the Registrant and Gregory Marlier, dated
         September 26, 1996.*
 10.11   Employment contract between the Registrant and Keith R. Hulley, dated
         August 14, 1996.*
 10.12   Employment contract between the Registrant and Douglas M. Smith, Jr.,
         dated January 21, 1997.*
 10.13   English translation of Deed of Lease and Purchase Option Contract
         between Monica de Prudencio and Mineria Tecnia Consultores Asociados
         S.A. ("Mintec"), dated November 7, 1994, regarding the Tesorera and
         Jayula concessions, with an attached note from Keith Hulley, a
         director of the Registrant, as required by Rule 306 of Regulation S-
         T.*
 10.14   English translation of Assignment Agreement, between ASC Bolivia LDC
         and Mintec, regarding the rights to the above agreement, with an
         attached note from Keith Hulley, a director of the Registrant, as
         required by Rule 306 of Regulation S-T.*
 10.15   English translation of the Lease and Purchase Option Contract between
         Empresa Minera Yana Mallcu S.A. and Mintec, dated February 7, 1996,
         regarding the Toldos concession, with an attached note from Keith
         Hulley, a director of the Registrant, as required by Rule 306 of
         Regulation S-T.*
 10.16   English translation of the Assignment of Lease and Purchase Option
         Agreement among Banco Industrial S.A., Mintec and ASC Bolivia LDC,
         with an attached note from Keith Hulley, a director of the Registrant,
         as required by Rule 306 of Regulation S-T.*
 10.17   English translation of the Purchase Option Agreement between Mintec
         and Litoral Mining Cooperative Ltd. dated, August 17, 1995, regarding
         the Animas concession, with an attached note from Keith Hulley, a
         director of the Registrant, as required by Rule 306 of Regulation S-
         T.*
</TABLE>    
<PAGE>
 
<TABLE>   
<CAPTION>
 EXHIBIT
 NUMBER                          DESCRIPTION OF EXHIBIT
 -------                         ----------------------
 <C>     <S>
 10.18   English translation of the Assignment and Assumption Agreement between
         Mintec and ASC Bolivia LDC, dated May 22, 1996, regarding the Animas
         concession, with an attached note from Keith Hulley, a director of the
         Registrant, as required by Rule 306 of Regulation S-T.*
 10.19   English translation of the Purchase Agreement between ASC Bolivia LDC
         and Litoral Mining Cooperative Ltd., regarding the Animas Concession
         with an attached note from Keith Hulley, a director of the Registrant,
         as required by Rule 306 of Regulation S-T.*
 10.20   English translation of the Joint Venture Agreement between Corporacion
         Minera Boliviano S.A. ("Comibol") and ASC Bolivia LDC, regarding the
         Cobrizos Concession, with an attached note from Keith Hulley, a
         director of the Registrant, as required by Rule 306 of Regulation S-
         T.*
 10.21   English translation of the Joint Venture Agreement between Comibol and
         ASC Bolivia LDC, regarding the Choroma Concession, with an attached
         note from Keith Hulley, a director of the Registrant, as required by
         Rule 306 of Regulation S-T.*
 10.22   Mining Agreement between Compania Minera Ocote and Kerry A. McDonald,
         dated June 24, 1994, regarding the El Ocote concession.*
 10.23   Assignment and Assumption Agreement between Kerry A. McDonald and
         Cordilleras Silver Mines Ltd., dated September 27, 1994, regarding the
         assignment of the above Mining Agreement.*
 10.24   Acknowledgment from Bruce Wallis in his capacity as President of
         Compania Minera Ocote S. de R.L. that Cordilleras Silver Mines
         (Cayman) LDC has been assigned Kerry A. McDonald's rights under the
         above Mining Agreement, dated July 10, 1995.*
 10.25   English translation of the agreement between Andean Silver Corporation
         LDC and 190 of the co-owners of the assets which previously belonged
         to Empressa Minera San Juan de Lucanas, S.A. ("EMSJ"), regarding the
         San Juan de Lucanas concession, dated January 12, 1995, with an
         attached note from Keith Hulley, a director of the Registrant, as
         required by Rule 306 of Regulation S-T.*
 10.26   English translation of the agreement between Andean Silver Corporation
         LDC and 133 of the co-owners of the assets which previously belonged
         to EMSJ, regarding the San Juan de Lucanas concession, dated January
         12, 1995, with an attached note from Keith Hulley, a director of the
         Registrant, as required by Rule 306 of Regulation S-T.*
 10.27   English translation of the form of agreement between 16 individuals
         who are some of the co-owners of the assets which previously belonged
         to EMSJ, regarding the San Juan de Lucanas concession, with an
         attached note from Keith Hulley, a director of the Registrant, as
         required by Rule 306 of Regulation S-T.*
 10.28   Board Designation Agreement, dated    , 1997, by and between the
         Registrant and Silver Holdings.**
 10.29   Registration Rights and Voting Agreement, dated    , 1997 by and among
         the Registrant, Silver Holdings, Consolidated, Argentum, Aurum LLC and
         Thomas S. Kaplan.**
 10.30   Voting Trust Agreement, dated August 1, 1997, between Thomas Kaplan
         and Consolidated.*
 10.31   Voting Trust Agreement, dated August 27, 1997, between Thomas Kaplan
         and Argentum LLC.*
 10.32   English translation of the Purchase Agreement between Monica de
         Prudencio and ASC Bolivia, regarding the Tesorera and Jayula
         concessions, dated September 3, 1997, with an attached note from Keith
         Hulley as required by Rule 306 of Regulation S-T.*
 11      Statement regarding computation of per share earnings.
</TABLE>    
 
<PAGE>
 
<TABLE>   
<CAPTION>
 EXHIBIT
 NUMBER                          DESCRIPTION OF EXHIBIT
 -------                         ----------------------
 <C>     <S>
 21      List of Subsidiaries.*
 23.1    Consent of W.S. Walker & Company (included as part of Exhibit 5.1).**
 23.3    Consent of Price Waterhouse LLP.
 23.4    Consent of CPM Group.*
 23.5    Consent of Mineral Resource Development Inc.*
 23.6    Consent of Knight Piesold LLC.*
 23.7    Consent of Pincock, Allen & Holt.*
 23.8    Consent of Mine Reserves Associates, Inc.*
 23.9    Consent of Kvaerner Metals.*
 23.10   Consent of Behre Dolbear.*
 24.1    Powers of attorney of the Registrant (included on page II-6 hereof).
</TABLE>    
- --------
 * Previously Filed
** To Be Filed By Amendment

<PAGE>
 

                                                                      EXHIBIT 11




                           APEX SILVER MINES LIMITED
                           -------------------------

<TABLE> 
<CAPTION> 
                  COMPUTATION OF NET LOSS PER ORDINARY SHARE
                                                                                                 For the period    
                                                                                                   December 22,             
                                                                                                      1994          
                               Six months      Six months                                          (Inception)      
                                 ended           ended        Year ended       Year ended            through        
                                June 30,         June 30,     December 31,     December 31,        December 31,    
                                  1997            1996            1996             1995               1994          
                               -----------   -------------    ------------     ------------      ---------------  
<S>                            <C>           <C>              <C>              <C>               <C> 
Net loss for the 
  period...................... $(11,777,846)  $(3,324,097)    $(11,723,313)     $(1,861,185)        $(213,165)
                               =============  ============    =============     ============        ==========
Weighted average
  ordinary shares
  outstanding (1).............   13,194,453     8,822,546       10,596,171        8,822,546         8,822,546
                               ============   ============    =============     ============        ==========

Net loss per ordinary
  shares...................... $     (0.89)   $     (0.38)    $      (1.11)     $     (0.21)        $   (0.02)
                               ============   ============    =============     ============        ==========
</TABLE> 

(1) Ordinary share equivalents are not included because they are antidilutive,
    except that ordinary share equivalents relating to options issued and
    ordinary shares sold at less than the initial public offering price during
    the twelve-month period prior to the initial public offering contemplated
    hereby are included for all periods presented.

<PAGE>
 
 
                                                                   EXHIBIT 23.3
 
                      CONSENT OF INDEPENDENT ACCOUNTANTS
   
We hereby consent to the use in the Prospectus constituting part of this
Amendment No. 2 to the Registration Statement on Form S-1 of our report dated
August 29, 1997, relating to the financial statements of Apex Silver Mines
Limited, which appears in such Prospectus. We also consent to the reference to
us under the heading "Experts" in such Prospectus.     
 
PRICE WATERHOUSE LLP
 
Denver, Colorado
   
October 24, 1997     

<TABLE> <S> <C>

<PAGE>
 
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Balance Sheet at June 30, 1997 (unaudited) and Consolidated
Statement of Operations for the year ended December 31, 1996 of Apex Silver
Mines Limited.
</LEGEND>
       
<S>                             <C>                     <C>
<PERIOD-TYPE>                   6-MOS                   YEAR
<FISCAL-YEAR-END>                          DEC-31-1997         DEC-31-1996
<PERIOD-START>                             JAN-01-1997         JAN-01-1996
<PERIOD-END>                               JUN-30-1997         DEC-31-1996
<CASH>                                      13,088,342          25,949,771
<SECURITIES>                                         0                   0
<RECEIVABLES>                                        0                   0
<ALLOWANCES>                                         0                   0
<INVENTORY>                                          0                   0
<CURRENT-ASSETS>                            13,587,522<F1>      26,103,996<F1>
<PP&E>                                         575,657             524,335
<DEPRECIATION>                                (13,704)               (801)
<TOTAL-ASSETS>                              14,290,954<F2>      26,797,304<F2>
<CURRENT-LIABILITIES>                          985,480           2,485,994
<BONDS>                                              0                   0
                                0                   0
                                          0                   0
<COMMON>                                       131,944             130,792
<OTHER-SE>                                           0                   0
<TOTAL-LIABILITY-AND-EQUITY>                14,290,954          26,797,304
<SALES>                                              0                   0
<TOTAL-REVENUES>                               475,298             574,470
<CGS>                                                0                   0
<TOTAL-COSTS>                               12,253,144          15,173,710
<OTHER-EXPENSES>                                     0                   0
<LOSS-PROVISION>                                     0                   0
<INTEREST-EXPENSE>                                   0                   0
<INCOME-PRETAX>                           (11,777,846)        (14,599,240)
<INCOME-TAX>                                         0                   0
<INCOME-CONTINUING>                                  0                   0
<DISCONTINUED>                                       0                   0
<EXTRAORDINARY>                                      0                   0
<CHANGES>                                            0           2,875,927<F3>
<NET-INCOME>                              (11,777,846)        (11,723,313)
<EPS-PRIMARY>                                    (.89)              (1.11)
<EPS-DILUTED>                                    (.89)              (1.11)
<FN> 
<F1> Total Current Assets include "prepaid expenses" of $499,180 in 1997 and 
     $154,225 in 1996.
<F2> Total Assets include "deferred organizational costs" (net) of $141,479 for 
     1997 and $169,774 for 1996.
<F3> Changes equals a "minority interest" of 2,875,927
</FN> 
         

</TABLE>



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