Apex Silver Reports 2006 Year-End Results

    DENVER, April 3 /CNW/ - Apex Silver Mines Limited (AMEX:   SIL) today
reported a net loss of $326.4 million or $5.58 per share for the fourth
quarter 2006 and a restated net loss of $72.3 million or $1.44 per share for
the same 2005 period. The loss in the fourth quarter 2006 was mainly due to
the company's share of a $340.5 million unrealized mark-to-market charge
related to the commodity hedge position required by the company's lenders in
connection with the $225-million project financing for its 65%-owned San
Cristobal open-pit silver-zinc-lead project located in southwestern Bolivia.
The charge stems from the application of Statement of Financial Accounting
Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities" (FAS No. 133), whereby the company records all derivative
instruments on the balance sheet at fair value with changes in fair value
recorded each period in current earnings. As of December 31, 2006, the company
had closed out all of its discretionary hedges unrelated to the project
financing. The company's remaining hedge positions are solely related to the
San Cristobal project finance facility. The settlement dates for the hedge
positions begin in the third quarter 2007, coinciding with the anticipated
first sale of production at the company's San Cristobal mine, and are
substantially settled by the fourth quarter of 2011. The company's fourth
quarter 2006 loss was partly offset by $7.0 million in primarily interest
income earned on higher cash and investment balances. In addition, the company
recorded $1.6 million of royalty income received from a joint venture property
in Mexico during the quarter.

    For the year ended December 31, 2006, the company recorded a net loss of
$513.5 million or $9.09 per share, primarily due to a realized loss of $42.6
million on its discretionary derivative program and the company's share of the
unrealized mark-to-market derivative charge of $672.5 million related to the
San Cristobal project financing offset by the third quarter $199.6 million
gain on the sale of the 35% interest in San Cristobal to Sumitomo Corporation.

    The company's loss for the year ended December 31, 2006 was partly offset
by $19.7 million in interest and other income consisting primarily of interest
earned on higher cash and investment balances and a $2.9 million gain related
to the extinguishment of convertible notes during the year. In addition, the
company recorded $1.6 million of royalty income received from a joint venture
property in Mexico during the year.

    At December 31, 2006, the company's aggregate cash and short and
long-term investments, both restricted and unrestricted, amounted to $514.9
million. This amount included $97.2 million of cash and investments restricted
to fund development of San Cristobal and outstanding corporate financial
commitments. At December 31, 2006, the company had spent approximately $494
million of the projected $650 million total project cost including
approximately $300 million spent in 2006.

    Restatement of Prior Period Financial Statements

    The company's project finance facility required the company to provide
price protection (effectively selling forward) a portion of its planned
production from San Cristobal. In 2005, the company entered into silver, zinc
and lead derivatives positions including primarily forward sales, but also
puts and calls to comply with this requirement. Many of the derivatives mature
or expire beyond the periods covered by the major commodities price indices
such as LME or COMEX, or expire in future periods covered by those indices
with respect to which only limited trading activity has occurred. In instances
where only limited market activity exists, the company has historically used
price projections to estimate a forward price curve provided by an independent
third party employing statistical analysis and models to calculate the fair
value of its open derivative positions. As silver, zinc and lead prices have
continued to increase since the derivatives were entered into, the disparity
has increased between the fair values used by the company for its long-dated
derivatives and other market information reflected in commodities prices
indices and quoted prices from other trading institutions related to
long-dated metals derivatives. Inclusion of this available market information
to estimate the forward price curve would have resulted in substantially
higher fair market values than those used by the company to determine the
estimated fair value of its open derivative positions. The change in the
derivative valuation method will likely result in increased volatility in the
Company's non-cash earnings during the next three years, the period over which
most of the derivatives mature or expire.

    The Company has filed its annual report on Form 10-K for the year ended
December 31, 2006, and is preparing a restatement of its financial statements
for the quarter ended September 30, 2005, the year ended December 31, 2005,
and the first three quarters of 2006 which it expects to file shortly. The
restatements, which were announced in the company's March 2, 2007 press
release, are necessary in order to correct the previously reported valuation
of the company's metal derivative positions. The cumulative understatement of
the derivative liability is approximately $300.5 million as of September 30,
2006. Additionally, correcting the valuation of the derivatives impacted the
gain and minority interest the company recognized on the sale of a 35%
interest in its subsidiary that owns the San Cristobal project. The gain on
the sale increased from $119.8 million to $199.6 million and the minority
interest decreased from $88.4 million to $18.9 million at September 30, 2006.

    Apex Silver is a mining exploration and development company. The Ordinary
shares of Apex Silver trade on the American Stock Exchange under the symbol

    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 San Cristobal
project including the commencement of production in the third quarter of 2007,
settlement of commodity hedges and capital expenditures. 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, problems or delays in
construction and startup, problems in emerging financial markets and changes
in government policies with respect to taxes or other political unrest and
uncertainty in Bolivia. 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, 2006.

                          APEX SILVER MINES LIMITED
                        Summary Financial Information
      (In thousands of United States dollars, except for shares and per
                                  share data)

                             Three Months Ended      Twelve Months Ended
                                        December                December
                            December       31,      December       31,
                               31,        2005-        31,        2005-
                              2006       Restated     2006       Restated
    Income and expenses
     Interest and other
      income                   $7,041      $1,552     $19,678     $14,295
     Royalty income             1,619           -       1,619           -
     Gain on sale of
      interest in
      subsidiary                    -           -     199,600           -
     Gain on
      extinguishment of
      debt                          -       6,765       2,875       6,765
     Trading gains
      (losses) -
      commodities            (344,225)    (73,882)   (715,120)   (151,515)
     Trading gains
      (losses) - foreign
      currency                    446         132         885        (678)
    Exploration expense        (3,154)     (1,377)     (8,316)     (5,235)
     Other operating
      expense                    (130)          -        (406)          -
      expense                  (6,125)     (4,200)    (21,247)    (17,860)
     Interest expense &
      other borrowing
      costs                         -        (834)       (774)     (7,335)
    Amortization and
     depreciation                (107)        (96)       (403)       (210)
                           ----------- ----------- ----------- -----------
       Loss before
        minority interest    (344,635)    (71,940)   (521,609)   (161,773)
     Income tax expense          (588)       (379)       (749)       (379)
    Minority interest          18,836           4       8,813          16
                           ----------- ----------- ----------- -----------
       Net loss             $(326,387)   $(72,315)  $(513,545)  $(162,136)
       Other comprehensive
        income (loss)            (184)       (184)        219        (311)
                           ----------- ----------- ----------- -----------
           loss             $(326,571)   $(72,499)  $(513,326)  $(162,447)
                           ----------- ----------- ----------- -----------

    Net loss per Ordinary
     Share-basic and
     diluted                   $(5.58)     $(1.44)     $(9.09)     $(3.34)
                           ----------- ----------- ----------- -----------
    Weighted average
     Ordinary Shares
     outstanding           58,478,529  50,313,340  56,498,416  48,615,586
                           ----------- ----------- ----------- -----------


    SUMMARY BALANCE SHEET DATA                  December 31, December 31,
    in thousands of U.S. dollars                    2006     2005-Restated
                                                ------------ -------------

    Cash & cash equivalents                         $49,840        $4,808
    Restricted cash                                  31,942       135,182
    Short-term investments                          325,536       132,000
    Restricted investments                           65,343        67,491
    Ore inventories                                   3,183             -
    Other current assets                             13,133         5,824
                                                ------------ -------------
    Total current assets                            488,977       345,305

    Property, plant and equipment (net)             641,758       379,138
    Ore inventories                                  21,341             -
    Deferred financing costs                         19,485        21,604
    Value added tax recoverable                      54,158        20,052
    Restricted investments                                -        12,392
    Long-term investments                            42,255             -
    Other assets                                      2,122         2,020
                                                ------------ -------------
    Total assets                                 $1,270,096      $780,511
                                                ------------ -------------

    Accounts payable and accrued current
     liabilities                                     47,979        74,487
    Accrued interest payable                          3,405         3,096
    Derivatives                                      39,080         5,652
    Current portion of long-term debt                 4,408         2,270
                                                ------------ -------------
    Total current liabilities                        94,872        85,505

    Long-term debt                                  492,195       320,021
    Derivatives                                     779,118       145,719
    Asset retirement obligation                       5,761         2,003
    Other long-term liabilities                       1,400             -
                                                ------------ -------------
    Total liabilities                             1,373,346       553,248

    Minority interest in subsidiaries                    40            34
    Shareholders' equity (Deficit)                 (103,290)      227,229
                                                ------------ -------------
    Total liabilities & shareholders' equity     $1,270,096      $780,511
                                                ------------ -------------

For further information:

For further information: Apex Silver Mines Corporation Gerald Malys,
303-764-9167 Sr. Vice President and Chief Financial Officer

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