Sep. 26, 2006
Tokyo, September 26, 2006/ Sumitomo Corporation today announced the formation of a strategic alliance with Apex Silver Mines Ltd., a mining development and exploration company. Under the agreement, approved by the respective Boards of Directors, Sumitomo has acquired a 35% participating interest in Apex Silver's San Cristobal open-pit silver-zinc-lead project located in the Department of Potosi in southwestern Bolivia and has been granted a two-year option to earn a 35% interest in certain of Apex Silver's exploration projects located in Peru, Mexico, Argentina and Bolivia. In exchange, Apex Silver will receive:
- Cash amounting to US$ 224 million
- Deferred silver payments consisting of 22.86% of Sumitomo's share of future payable silver production from San Cristobal.
zinc payments equal to the dollar value of 20% of Sumitomo's share of
payable zinc production from San Cristobal multiplied by the amount by
which the London Metal Exchange price of zinc exceeds US$ 1,800 per
Closing of the transaction requires completion of certain procedural steps expected before the end of September 2006. Cash payment of US$ 224 million will be covered by NEXI and JBIC Political Risk Insurance facility.
Construction and development of the San Cristobal project, which is practically one of the largest projects under development in silver and zinc, is expected to be completed and fully operated from the third quarter of 2007. Potosi Department is located in Andean mountains with agriculture as a main industry. The San Cristobal project contributes to the community including new job opportunities and upgrading of the infrastructure.
Mitsuhiko Yamada, Executive Officer of Sumitomo, commented "We are pleased to have a strategic alliance with an emerging mining company like Apex Silver. We are looking forward to working in Bolivia, traditionally mineral rich country with a long history of silver mining dating back to the 16th century. Japan has always enjoyed excellent relation with Bolivia through our immigrants and Japanese Government aid, and we expect the San Cristobal project to contribute to the development of the country's mineral wealth especially to the community of Potosi."
Jeff Clevenger, Chief Executive Officer of Apex Silver welcomes the participation of Sumitomo "Apex Silver is pleased to have this strategic alliance with Sumitomo with proven track record of partnership in major mining operations around the world, solidifying the successful development of San Cristobal."
- NEXI (Nippon Export and
Investment Insurance) is an Export Credit Agency of the Japanese
Government. They cover commercial and/or political risk involved in
trading and investment by Japanese companies.
- JBIC (Japan
Bank for International Cooperation) is a banking institution, belonging
to Japanese Government, engaged in ODA soft loan for developing
countries and finances for development of projects related to
infrastructure, energy and natural resources in overseas.
|Attachment: Summary of the San Cristobal Silver & Zinc Mine|
|1) ||Location: Southwestern part of the Republic of Bolivia, near the Salar of Uyuni. |
Located at a height of 3,800-4,500 meters above sea level.
|2) ||Reserve: 230 million tonnes grading 63.1 grams silver per tonne and 1.59% zinc and 0.58% lead.|
|3) ||Expected Annual Throughput (Average through whole mine life): |
550 tonnes of silver, 167,500 tonnes of Zinc and 63,500 tonnes of lead.
|4) ||Total Investment Amount: Over US$ 800 million since inception|
|5) ||Mine Life: 16 years expected|
|6)||Share in interest: ||Apex Silver Mines Ltd. 65%|
Sumitomo Corporation 35%
|7) ||Apex Silver Mines Ltd. Profile:|
| ||a) Established:||1993|
| ||b) Capital:||US$ 377 million(Total Shareholder's Equity as of June30, 2006)|
Market Cap: about US$ 1 billion
| ||c) CEO:||Jeffrey G. Clevenger|