SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): September 7, 1999
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Apex Silver Mines Limited
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(Exact name of registrant as specified in its charter)
Incorporated under the Laws
of The Cayman Islands 1-13627 Not Applicable
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(State or other jurisdiction (Commission (IRS Employee
of incorporation) File Number) Identification No.)
Caledonian House, Jennett Street,
George Town, Grand Cayman,
Cayman Islands, British West Indies
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (345) 949-0050
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ITEM 5. OTHER EVENTS
Apex Silver Mines Limited (the "Company") has completed a detailed
feasibility study on its wholly owned San Cristobal silver-zinc mining project
in southern Bolivia. The feasibility study was prepared by Kvaerner, E&C Metals
Division, an independent engineering firm. As part of the feasibility study,
proven and probable reserves for San Cristobal have been calculated by Mine
Reserves Associates, Inc., using updated mine planning, metallurgical and
economic information from the feasibility study. Proven and probable reserves
now total 240 million tonnes of ore grading 2.0 ounces per tonne of silver, 1.67
percent zinc and 0.58 percent lead, containing approximately 470 million ounces
of silver, 8.8 billion pounds of zinc and 3.1 billion pounds of lead.
Mineralized material totals 46 million tonnes grading an average of 2.9 ounces
of silver per tonne, 1.04 percent zinc and 0.58 percent lead. The deposit
remains open laterally in several directions and at depth.
Based on the feasibility study, the Company anticipates developing a
low cost, open pit silver-zinc mine with a low strip ratio of approximately
1.8:1 (tonnes of waste per tonne of ore) including pre-stripping. Under the
study's mine plan, the deposit would be mined at a rate of approximately 40,000
tonnes per day and processed by conventional means. Mined ore would be
transported to the primary crusher by truck and then conveyed to a mill and
flotation complex. The ore would be ground in semi-autogenous (SAG) and ball
mill circuits, and then processed by selective flotation to produce separate
silver-lead and silver-zinc concentrates. Filtered concentrates are expected to
be transported by road to the port of Punta Patache, Chile, and then by ocean
vessel to smelters and refineries in Asia, the Americas and Europe.
Based on existing reserves and production rates from the feasibility
study, the Company believes the operation should produce, once commercial
production is attained, an annual average of approximately 19 million contained
ounces of silver, 473 million contained pounds of zinc and 133 million contained
pounds of lead over a mine life of approximately 17 years, with higher
production anticipated in the first five years. The Company believes that San
Cristobal will produce silver and zinc as co-products, and cash operating costs
would be attributed to silver and zinc on a basis proportional to their value.
Since lead would be a by-product of silver production, its value would be
credited against silver costs.
Future capital costs for San Cristobal construction as projected in the
feasibility study total approximately $413 million, and assume contract mining
for the first five years. These capital figures do not include an additional $15
million of assumed working capital. The capital figures also exclude value-added
taxes and duties which the feasibility study assumes to be recovered by the
Company following commencement of production. Thus, the feasibility study
assumes that up to approximately $20 million in Bolivian value-added tax to be
paid during construction will be recovered as credits against future income
taxes. Under a Supreme Decree recently enacted by the government of Bolivia, in
exchange for costs incurred in constructing a road from the San Cristobal site
to the Chilean border connecting with the Chilean road to Punta Patache, the
Bolivian government has agreed to provide tax credits which the Company believes
will total approximately $40 million to offset an equivalent amount of
additional value-added taxes and duties. The Company believes this can reduce
initial funding requirements during pre-production project development by
approximately $40 million, and the capital costs estimate in the feasibility
study assumes that this reduction is achieved.
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The Company plans to proceed with detailed engineering and selection of
a construction contractor in the fourth quarter 1999. Commencement of the
construction of the San Cristobal Project could begin in early 2000, if
necessary financing is obtained. Based on this schedule, the Company anticipates
that start-up could begin in 2002.
FORWARD LOOKING STATEMENTS
This filing contains forward looking statements within the meaning of
Section 27A of the Securities Act of 1933 and the Securities Exchange Act of
1934. All statements, other than statements of historical facts, included in
this filing which address activities, events or developments that the Company
expects, believes, intends or anticipates will or may occur in the future,
including matters such as future investments in the San Cristobal Project, San
Cristobal mine development and construction plans, anticipated capital and
operating costs, grade, production and recovery rates, environmental permitting,
financing needs from external sources and the availability of financing on
acceptable terms, the timing of construction and start-up are forward looking
statements. The use of any of the words "anticipate", "continue", "estimate",
"expect", "may", "will", "project", "should", "would", "believe" and similar
expressions are intended to identify uncertainties. The Company believes the
expectations reflected in those forward looking statements are reasonable.
However, the implementation of mine construction as contemplated by a
feasibility study is complex and involves a number of factors, many of which are
beyond the Company's ability to control or predict. Thus, the Company cannot
assure that such expectations will prove to be correct. Future events and actual
results, financial and otherwise, could differ materially from those set forth
in or contemplated by the forward-looking statements herein.
Factors that could cause actual results to differ materially include,
among others, worldwide economic and political events affecting the supply of
and demand for silver, zinc and lead; volatility in market prices of silver,
zinc and lead; financial market conditions, whether external financing for San
Cristobal construction and development is available on terms acceptable to the
Company or at all, and the timing of such financing; uncertainties associated
with the development of the new San Cristobal mine, including potential cost
overruns and the unreliability of estimates of construction costs and of
operating costs and production in the current early stages of San Cristobal mine
development; mistaken assumptions or other errors in the feasibility study, or
changes in development or construction which develop during the course of
detailed engineering; variations in ore grade and other characteristics
affecting development, mining, crushing, milling and smelting operations and
mineral recoveries; geological, technical, permitting, construction, mining and
processing problems; the availability of and timing of acceptable arrangements
for power, transportation and smelting; the availability of smelting operations
and capacity; the availability of experienced employees; start-up problems; and
uncertainties regarding future changes in Bolivian tax legislation or
implementation of existing Bolivian tax legislation, including legislation
regarding credits for value-added tax and duties associated with the
construction of San Cristobal. Many such factors are beyond the Company's
ability to control or predict. The reader is cautioned not to put undue reliance
on forward looking statements. Except as required by law, the Company is not
obligated to publicly release any revisions to forward-looking statements to
reflect future events or developments.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
APEX SILVER MINES LIMITED
(Registrant)
Date: September 8, 1999 By: /S/ THOMAS S. KAPLAN
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Name: Thomas S. Kaplan
Title: Chairman, Board of Directors
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