Apex Silver Mines wraps up selection process for San Cristobal power supplier

DENVER, Jan. 11, 2001 (PRNewswire) à‚– Apex Silver Mines Limited (Amex: SIL) has entered the final stage of its selection process to determine the power supplier for its wholly owned San Cristobal Project in southwestern Bolivia.

The company has been working closely with both the Lead Arrangers for the project financing, Barclays Capital and Deutsche Bank Securities Inc., and the Bolivian government to establish a comprehensive and transparent process for determining the optimum power alternative for San Cristobal.

Due to the high level of interest expressed by both Bolivian and foreign suppliers, on December 19, 2000, Apex called for definitive power proposals from a highly qualified group of power providers as a final step in the competitive bidding process. This tender is now underway with final bids due early in the first quarter.

San Cristobal is unusually fortunate to be located at the nexus of two energy-rich regions, Bolivia itself and northern Chile. Bolivia has a vast surplus of hydrocarbon reserves and Northern Chile is currently experiencing a systemic over-capacity of low-cost electric energy, thereby creating a situation with the potential for competitive and attractive long-term power alternatives. The company anticipates that a timely, thorough review of these proposals will result in a selection being made early in 2001.

Once the power supplier has been selected and infrastructure arrangements are completed, the company and its Lead Arrangers will move rapidly to advance the project financing. Completion of these arrangements is advancing in parallel to Kaverner’s detailed engineering for the Project, which will allow the Lead Arrangers, working closely with two of the world’s key multilateral funding agencies, the International Finance Corporation (IFC) and the Corporacion Andina de Fomento (CAF), to move expeditiously to develop and implement a total financing package for San Cristobal.

Keith Hulley, Apex Silver Mines Corporation President and Chief Operating Officer, commented that, “We are pleased to announce that the international tender for the power provision is now well underway, with the support and assistance of both the relevant governmental authorities and our banking advisors. We look forward to the conclusion of a competitive bidding process that will not only result in the best available power solution for the Project, but which will also enable us to finalize the project financing arrangements.”

In terms of size and cost profile, the San Cristobal Project is anticipated to be among the largest and lowest cost producers of silver and zinc in the world. At the designed production rate of 40,000 tonnes of ore per day, San Cristobal’s first five full years of production is projected to average 27 million ounces of contained silver annually, while zinc production during this period is projected to average 570 million pounds contained in concentrates. At these levels, San Cristobal will be one of the three largest producers of both silver and zinc. As a large-scale, open pit operation, San Cristobal should enjoy an inherently low cost structure and is projected to be one of the lowest cost producers of silver and zinc worldwide.

As San Cristobal will produce silver and zinc as co-products, cash operating costs will be attributed to silver and zinc proportional to their value. Since lead is a by-product of silver production, its value will be credited back to silver costs. For the first five years of production, the average cash operating cost per ounce of silver net of lead by-product credits is projected to be $1.23 and the average cash operating cost per pound of zinc is projected to be $0.23. Life-of-mine cash costs are now forecast to average approximately $1.83 per ounce of silver and $0.27 per pound of zinc.

Current proven and probable reserves 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), making San Cristobal one of the world’s largest open pit silver reserves as well as one of the world’s largest zinc reserves. San Cristobal’s orebody remains open in several directions, as well as to depth, while numerous satellite targets for silver and zinc mineralization remain to be explored within the company’s extensive landholdings throughout the wholly owned San Cristobal district.

Apex Silver Mines Limited, a Cayman Islands corporation, is a mining exploration and development company with a primary focus on silver. In addition to holdings at San Cristobal, Apex controls one of the world’s largest portfolios of silver properties, with 16 major property groups comprising over 1 million acres of concessions which are primarily located in the traditional silver-producing regions of Central and South America.

SOURCE: Apex Silver Mines Limited

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