Exhibit 99.1
Apex Silver Reports 2007 Year-End Results
DENVER—(BUSINESS WIRE)—February 29, 2008— Apex Silver Mines Limited (AMEX: SIL) today reported net income of $11.6 million or $0.20 per share for the year ended December 31, 2007, compared to a net loss of $513.5 million or $9.09 per share for the same 2006 period. The company also reported a loss from operations of $37.9 million for the year ended December 31, 2007, compared to a loss of $744.6 million for the same 2006 period.
For the year ended December 31, 2007, the company recorded a gain related to its metals derivative positions in the amount of $19.3 million, compared to a loss of $715.1 million on its derivative positions for 2006. The gains and losses are primarily the result of marking-to-market its open derivative positions as spot and forward prices for silver, zinc and lead fluctuate and maturity dates draw closer. Also during 2007, the company began to settle the derivative positions required by the San Cristobal project finance facility by making cash payments of $48.3 million. The actual financial impact of the remaining derivative positions will not be known until the positions are closed on their future settlement dates. At December 31, 2007, the net liability associated with the derivative positions was $741 million.
During the fourth quarter 2007 the company liquidated auction rate securities (ARS) investments with a cost basis of $19.5 million for $15.7 million for a loss of $3.8 million, and for the year the company recorded a $30.7 million impairment charge to earnings on the remaining ARS investments it held with an original cost of $52.2 million resulting in a carrying value of $21.5 million at December 31, 2007. The company does not anticipate liquidating the remaining ARS investments during the next twelve months and has classified them as long-term investments at December 31, 2007.
At December 31, 2007 the company’s aggregate cash, restricted cash, short and long-term investments and restricted investments totaled $220.7 million compared to an aggregate of $514.9 million in cash, restricted cash, short- and long-term investments and restricted investments at December 31, 2006. At December 31, 2007, the company’s aggregate unrestricted cash and investments (excluding ARS investments) totaled $95.9 million. The decrease in our aggregate balance of cash, restricted cash, short and long-term investments and restricted investments at December 31, 2007, compared to the prior year, is primarily the result of $148.9 million invested in property, plant and equipment related to the development of the San Cristobal mine; $166.0 million used to fund operations, property holding costs and administrative costs, net of interest and other income; and $57.9 million to settle maturing derivative positions and to purchase additional derivative positions. In addition, the value of the company’s investments was reduced by a $34.5 million impairment to the carrying value of its ARS investments. The decrease in cash and investment balances was partially offset by $80.4 million advanced by Sumitomo as its share of San Cristobal funding and $45.0 million of borrowings against the San Cristobal project finance facility.
Earnings Calls Commencing with First Quarter Earnings
The company will be scheduling a conference call following the first quarter earning release. An announcement and call in instructions will be provided in advance of the call.
Apex Silver is a mining, exploration and development company. The Ordinary shares of Apex Silver trade on the American Stock Exchange under the symbol “SIL.”
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This press release contains forward-looking statements regarding the company, within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act, including statements regarding the net liability associated with the company’s metals derivatives positions and the anticipation that its remaining auction rate security investments will not be liquidated during the next twelve months. Actual results relating to any and all of these subjects may differ materially from those presented. Factors that could cause results to differ materially include fluctuations in silver, zinc and lead prices and resulting changes in net liabilities associated with and settlements of metals derivative positions and changes in its plan regarding the liquidation of auction rate security investments. The company assumes no obligation to update this information. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements can be found in the company’s Form 10-K filed with the SEC for the year ended December 31, 2007.
CONTACT: Apex Silver Mines Corporation
Jerry W. Danni, 303-228-0336
Sr. Vice President Corporate Affairs
SOURCE: Apex Silver Mines Corporation
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APEX SILVER MINES LIMITED
Summary Financial Information
| | The years ended December 31, | |
| | 2007 | | 2006 | | 2005 | |
| | (in thousands except per share data) | |
Revenues: | | | | | | | |
Sales of concentrates, net | | $ | 45,932 | | $ | — | | $ | — | |
Costs and expenses: | | | | | | | |
Costs applicable to sales | | (42,941 | ) | — | | — | |
Production startup income/(expense), net | | (13,483 | ) | — | | — | |
Exploration | | (15,357 | ) | (8,316 | ) | (5,235 | ) |
Administrative | | (21,857 | ) | (21,247 | ) | (17,860 | ) |
Gain (loss) - commodity derivatives | | 19,290 | | (715,120 | ) | (151,515 | ) |
Gain (loss) - foreign exchange and currency derivatives | | 7,724 | | 885 | | (678 | ) |
Asset retirement accretion expense | | (600 | ) | (406 | ) | — | |
Other expense | | (2,435 | ) | — | | — | |
Amortization and depreciation. | | (14,179 | ) | (403 | ) | (210 | ) |
Total operating expenses | | (83,838 | ) | (744,607 | ) | (175,498 | ) |
Loss from operations | | (37,906 | ) | (744,607 | ) | (175,498 | ) |
| | | | | | | |
Other income and expenses: | | | | | | | |
Interest and other income | | 21,990 | | 19,678 | | 14,295 | |
Royalty income | | 1,319 | | 1,619 | | — | |
Gain on sale of interest in subsidiaries | | — | | 199,600 | | — | |
Gain on extinguishment of debt | | — | | 2,875 | | 6,765 | |
Loss on auction rate securities | | (34,537 | ) | — | | — | |
Interest expense and other borrowing costs (net of $30.6, $26.1 and $6.9 million capitalized during 2007, 2006 and 2005, respectively) | | (23,845 | ) | (774 | ) | (7,335 | ) |
Total other income and expenses | | (35,073 | ) | 222,998 | | 13,725 | |
Loss before minority interest and income taxes | | (72,979 | ) | (521,609 | ) | (161,773 | ) |
Income tax expense | | (2,864 | ) | (749 | ) | (379 | ) |
Minority interest in loss of consolidated subsidiary | | 87,399 | | 8,813 | | 16 | |
Net income (loss) | | $ | 11,556 | | $ | (513,545 | ) | $ | (162,136 | ) |
Other comprehensive income (loss): | | | | | | | |
Unrealized loss on securities | | (86 | ) | (24 | ) | (311 | ) |
Reclassification for loss on securities included in net income | | — | | 243 | | — | |
Comprehensive income (loss) | | $ | 11,470 | | $ | (513,326 | ) | $ | (162,447 | ) |
Net income (loss) per Ordinary Share - basic | | $ | 0.20 | | $ | (9.09 | ) | $ | (3.34 | ) |
Net income (loss) per Ordinary Share - diluted | | $ | 0.20 | | $ | (9.09 | ) | $ | (3.34 | ) |
Weighted average Ordinary Shares outstanding - basic | | 58,714,935 | | 56,498,416 | | 48,615,586 | |
Weighted average Ordinary Shares outstanding - diluted | | 59,070,546 | | 56,498,416 | | 48,615,586 | |
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SUMMARY BALANCE SHEET DATA
| | December 31, | | December 31, | |
| | 2007 | | 2006 | |
| | (in thousands except share data) | |
Assets | | | | | |
Current assets | | | | | |
Cash and cash equivalents | | $ | 40,736 | | $ | 49,840 | |
Restricted cash | | 12,313 | | 31,942 | |
Investments | | 52,243 | | 325,536 | |
Restricted investments | | — | | 65,343 | |
Inventories | | 44,211 | | 6,332 | |
Prepaid expenses and other assets | | 19,305 | | 9,984 | |
Current assets | | 168,808 | | 488,977 | |
Property, plant and equipment (net) | | 841,981 | | 641,758 | |
Ore stockpile inventories | | 76,914 | | 21,341 | |
Deferred financing costs | | 15,990 | | 19,485 | |
Value added tax recoverable | | 95,327 | | 54,158 | |
Restricted Cash | | 91,000 | | — | |
Investments | | 24,407 | | 42,255 | |
Derivatives at fair value | | 8,475 | | — | |
Other | | 2,009 | | 2,122 | |
Total assets | | $ | 1,324,911 | | $ | 1,270,096 | |
| | | | | |
Liabilities and Shareholders’ Equity (Deficit) | | | | | |
| | | | | |
Current liabilities | | | | | |
Accounts payable and accrued liabilities | | $ | 55,957 | | $ | 47,979 | |
Accrued interest payable | | 4,982 | | 3,405 | |
Derivatives at fair value | | 266,820 | | 39,080 | |
Current portion of long term debt | | 41,155 | | 4,408 | |
Current liabilities | | 368,914 | | 94,872 | |
Long term debt | | 546,981 | | 492,195 | |
Derivatives at fair value | | 482,683 | | 779,118 | |
Deferred gain on sale of asset | | 945 | | 1,400 | |
Other long term liabilities | | 2,508 | | — | |
Asset retirement obligation | | 6,981 | | 5,761 | |
Total liabilities | | 1,409,012 | | 1,373,346 | |
Minority interest in subsidiaries | | — | | 40 | |
Commitments and contingencies | | | | | |
Shareholders’ equity (deficit) | | | | | |
Ordinary Shares, $.01 par value, 175,000,000 shares authorized; 58,909,625 and 58,577,700 shares issued and outstanding, respectively | | 589 | | 586 | |
Additional paid in capital | | 677,203 | | 669,487 | |
Accumulated deficit during development stage | | (761,783 | ) | (773,339 | ) |
Accumulated other comprehensive loss | | (110 | ) | (24 | ) |
Total shareholders’ equity (deficit) | | (84,101 | ) | (103,290 | ) |
Total liabilities and shareholders’ equity (deficit) | | $ | 1,324,911 | | $ | 1,270,096 | |
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