10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(MARK ONE)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
	EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2006.
OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM            TO            .

COMMISSION FILE NUMBER 1-13627

APEX SILVER MINES LIMITED

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

CAYMAN ISLANDS, BRITISH WEST INDIES	NOT APPLICABLE
(STATE OR OTHER JURISDICTION OF	(I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION)	IDENTIFICATION NO.)
WALKER HOUSE MARY STREET GEORGE TOWN, GRAND CAYMAN CAYMAN ISLANDS, BRITISH WEST INDIES	NOT APPLICABLE
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)	(ZIP CODE)

(345) 949-0050

(REGISTRANT’S TELEPHONE NUMBER, INCLUDING AREA CODE)

INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS:  YES x  NO o

INDICATE BY CHECK MARK WHETHER THE REGISTRANT IS A LARGE ACCELERATED FILER, AN ACCELERATED FILER, OR A NON-ACCELERATED FILER:

LARGE ACCELERATED FILER o   ACCELERATED FILER x   NON-ACCELERATED FILER o

INDICATE BY CHECK MARK WHETHER THE REGISTRANT IS A SHELL COMPANY (AS DEFINED IN RULE 12B-2 OF THE EXCHANGE ACT):  YES o     NO x

AT NOVEMBER 3, 2006, 58,439,500 ORDINARY SHARES, $0.01 PAR VALUE PER SHARE, WERE ISSUED AND OUTSTANDING.

APEX SILVER MINES LIMITED
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 2006

INDEX

PART I – FINANCIAL INFORMATION
	ITEM 1.	FINANCIAL STATEMENTS
	ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
	ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK AND HEDGING ACTIVITIES
	ITEM 4.	CONTROLS AND PROCEDURES
PART II – OTHER INFORMATION
	ITEM 1.	LEGAL PROCEEDINGS
	ITEM 1A.	RISK FACTORS
	ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
	ITEM 3.	DEFAULTS UPON SENIOR SECURITIES
	ITEM 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
	ITEM 5.	OTHER INFORMATION
	ITEM 6.	EXHIBITS
SIGNATURES

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PART I. FINANCIAL INFORMATION

Item 1.    Financial Statements

APEX SILVER MINES LIMITED
An Exploration and Development Stage Company
CONSOLIDATED BALANCE SHEETS
(Expressed in United States dollars)
(Unaudited)

	September 30,			December 31,
	2006			2005
	(in thousands, except share data)
Assets
Current assets
Cash and cash equivalents	$	138,097		$	4,808
Restricted cash	15,172			135,182
Investments	290,743			132,000
Restricted investments	101,133			67,491
Ore inventories	444			—
Materials and supply inventory	4,124			—
Prepaid expenses and other assets	11,444			5,824
Total current assets	561,157			345,305
Property, plant and equipment, net	583,168			379,138
Ore inventories	16,498			—
Deferred financing costs	19,988			21,604
Value added tax recoverable	45,537			20,052
Investments	4,000			—
Restricted investments	—			12,392
Other	2,109			2,020
Total assets	$	1,232,457		$	780,511
Liabilities and Shareholders’ Equity
Current liabilities
Accounts payable and other accrued liabilities	$	66,048		$	74,487
Accrued interest payable	799			3,096
Derivatives	14,101			5,652
Current portion of long term debt	2,993			2,270
Total current liabilities	83,941			85,505
Long term debt	434,117			320,021
Derivatives	168,140			50,621
Deferred gain on sale of asset	1,400			—
Asset retirement obligation	5,394			2,003
Total liabilities	692,992			458,150
Minority interest in subsidiaries	88,403			34
Commitments and contingencies (Note 12)
Shareholders’ equity
Ordinary Shares, $.01 par value, 175,000,000 shares authorized; 58,435,200 and 50,444,890 shares issued and outstanding at respective dates	584			504
Accumulated other comprehensive income (loss)	160			(243		)
Additional paid in capital	666,291			486,762
Accumulated deficit during development stage	(215,973		)	(164,696		)
Total shareholders’ equity	451,062			322,327
Total liabilities and shareholders’ equity	$	1,232,457		$	780,511

The accompanying notes form an integral part of these consolidated financial statements.

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APEX SILVER MINES LIMITED
An Exploration and Development Stage Company
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Expressed in United States dollars)
(Unaudited)

	Three Months Ended						Nine Months Ended						For the Period from December 22, 1994 (inception)
	September 30,						September 30,						through
	2006			2005			2006			2005			Sept. 30, 2006
	(in thousands, except share data)
Operating income and expenses:
Exploration	$	(2,155	)	$	(1,097	)	$	(5,162	)	$	(3,858	)	$	(78,593	)
Administrative	(4,123		)	(4,814		)	(15,122		)	(13,660		)	(84,980		)
Gain (loss) on commodity derivatives	(45,432		)	(9,640		)	(165,487		)	(7,584		)	(220,937		)
Gain (loss) on foreign currency derivatives and transactions	203			474			439			(810		)	1,167
Other operating expense (1)	(134		)	—			(276		)	—			(276		)
Amortization and depreciation	(100		)	(81		)	(296		)	(114		)	(1,692		)
Total operating expenses	(51,741		)	(15,158		)	(185,904		)	(26,026		)	(385,311		)
Other income and expenses:
Interest and other income	4,469			5,700			12,637			12,743			47,309
Gain on sale of interest in subsidiary	119,800			—			119,800			—			119,800
Gain on extinguishment of debt	—			—			2,875			—			9,640
Interest expense and other borrowing costs (2)	—			(2,639		)	(774		)	(6,501		)	(11,696		)
Total other income and expense	124,269			3,061			134,538			6,242			165,053
Income (loss) before minority interest and income taxes	72,528			(12,097		)	(51,366		)	(19,784		)	(220,258		)
Income taxes	(54		)	—			(161		)	—			(540		)
Minority interest in (income) loss of consolidated subsidiaries	257			1			250			12			4,825
Net income (loss)	$	72,731		$	(12,096	)	$	(51,277	)	$	(19,772	)	$	(215,973	)
Other comprehensive income:
Unrealized gain (loss) on securities	$	(42	)	$	30		$	160		$	(127	)	$	(83	)
Reclassification for loss on securities included in net income	(518		)	—			243			—			243
Other comprehensive income (loss)	(560		)	30			403			(127		)	160
Comprehensive income (loss)	$	72,171		$	(12,066	)	$	(50,874	)	$	(19,899	)	$	(215,813	)
Net Income (loss) per Ordinary Share – basic	$	1.25		$	(0.25	)	$	(0.92	)	$	(0.41	)
Net Income (loss) per Ordinary Share – diluted	$	1.23		$	(0.25	)	$	(0.92	)	$	(0.41	)
Weighted average Ordinary Shares outstanding - basic	58,417,387			48,781,621			55,816,488			48,047,071
Weighted average Ordinary Shares outstanding - diluted	58,989,561			48,781,621			55,816,488			48,047,071

(1)Other operating expense is accretion expense associated with our asset retirement obligation at San Cristobal.

(2)Interest expense and other borrowing costs are net of $7.7 million and $18.7 million capitalized for the three and nine month periods ended September 30, 2006, respectively and $1.8 million and $4.3 million for the three and nine month periods ended September 30, 2005, respectively and $28.1 million for the inception to date period ended September 30, 2006.

The accompanying notes form an integral part of these consolidated financial statements.

4

APEX SILVER MINES LIMITED
An Exploration and Development Stage Company
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in United States dollars)
(Unaudited)

	Nine Months Ended						For the period from December 22, 1994 (inception)
	September 30,						through
	2006			2005			September 30, 2006
	(in thousands)
Cash flows from operating activities:
Net cash used in operating activities	$	(58,417	)	$	(16,491	)	$	(165,294	)
Cash flows from investing activities:
Purchase of available for sale investments	(385,104		)	(404,500		)	(1,578,296		)
Sale of available for sale investments	183,172			521,798			1,247,124
Purchase of held-to-maturity investments	(24,662		)	(17,524		)	(263,869		)
Sale of held-to-maturity investments	8,000			95,770			195,007
Purchase of available for sale restricted investments	(233,200		)	—			(248,150		)
Sale of available for sale restricted investments	246,400			—			246,400
Purchase of held-to-maturity restricted investments	(22,199		)	—			(49,542		)
Sale of held-to-maturity restricted investments	45,882			4,668			60,658
Payment of derivative premiums & settlements, net	(39,519		)	(1,889		)	(39,620		)
Advances for construction of port facility	—			—			(2,000		)
Advances to suppliers and contractors	(1,480		)	(1,296		)	(5,355		)
Released from (transfer to) restricted cash to collateralize credit facility, letters of credit and interest payments, net	120,010			(96,892		)	(18,134		)
Proceeds from the sale of interest in subsidiary	224,000			—			224,000
Capitalized costs and acquisitions of property, plant and equipment	(207,283		)	(101,301		)	(490,213		)
Net cash used in investing activities	(85,983		)	(1,166		)	(721,990		)
Cash flows from financing activities:
Proceeds from issuance of Ordinary Shares (net of offering costs of $4.8 million in 2006)	156,795			16,639			580,358
Proceeds from issuance of convertible notes	—			—			339,987
Payment of debt issuance costs	(671		)	(3,778		)	(24,992		)
Payments of notes payable and long term debt	(1,607		)	(2,142		)	(4,883		)
Proceeds from note to power line contractor	1,407			—			1,407
Borrowings under project finance facility	120,000			—			120,000
Proceeds from exercise of stock options and warrants	1,765			107			13,504
Net cash provided by financing activities	277,689			10,826			1,025,381
Net increase (decrease) in cash and cash equivalents	133,289			(6,831		)	138,097
Cash and cash equivalents - beginning of period	4,808			27,740			—
Cash and cash equivalents - end of period	$	138,097		$	20,909		$	138,097

See Note 14 for supplemental cash flow information.

The accompanying notes form an integral part of these consolidated financial statements.

5

APEX SILVER MINES LIMITED
An Exploration and Development Stage Company

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in United States dollars)

1.Basis of Preparation of Financial Statements and Nature of Operations

These unaudited interim consolidated financial statements of Apex Silver Mines Limited (the “Company”) and its subsidiaries have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”).  Such rules and regulations allow the omission of certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America, so long as such omissions do not render the financial statements misleading.  Certain prior period amounts have been reclassified to conform to the current period presentation.

In the opinion of management, these financial statements reflect all adjustments that are necessary for a fair statement of the results for the periods presented.  All adjustments were of a normal recurring nature.  These interim financial statements should be read in conjunction with the annual financial statements of the Company included in its 2005 Annual Report on Form 10-K as amended.

The Company is a mining exploration and development company that holds a portfolio of exploration and development properties primarily in South America and Central America. The Company currently focuses its resources primarily on the development of its San Cristobal Project in Bolivia. At present, none of the Company’s properties are in production and, consequently, the Company does not have current operating income.

2.Significant Accounting Policies

On September 25, 2006 the Company sold a 35% interest in the subsidiaries holding its San Cristobal Project to Sumitomo Corporation (“Sumitomo”) for $224 million in cash and the retention of certain interests in future silver and zinc production.  Pursuant to the Company’s principles of consolidation under which it consolidates more-than-50%-owned subsidiaries that it controls and entities over which control is achieved through means other than voting rights, the Company fully consolidates the results of operations of its San Cristobal Project and reports Sumitomo’s participation as a minority interest. (See Note 11 for further details of the transaction).

Effective January 1, 2006 the Company adopted Financial Accounting Standards No. 123R, “Share-Based Payment” (“FAS No. 123R”), using the modified prospective approach, which revised Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation” (“FAS No. 123”), and superseded Accounting Principles Board (“APB”) Opinion 25, “Accounting for Stock Issued to Employees” and its related implementation guidance. The Company is currently evaluating whether it will adopt the short-cut method for calculating the pool of windfall tax benefits as allowed by FAS No. 123R-3. The Company had previously adopted FAS No. 123 effective January 1, 2004. FAS No. 123R requires measurement and recording in the financial statements of the costs of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award, recognized over the period during which an employee is required to provide services in exchange for the award.  Additionally, FAS No. 123R requires companies that did not previously include the effects of estimated forfeitures in the FAS No. 123 expenses they reported, to record a cumulative adjustment to the income statements presented in the period of adoption of FAS No. 123R in order to reflect the effect of the estimated forfeitures.  The forfeiture rate used by the Company prior and subsequent to the adoption of FAS No. 123R has not changed and, therefore, the Company did not record a cumulative effect adjustment related to prior period estimated forfeitures. The adoption of FAS No. 123R did not have a material impact on the Company’s financial position or results of operations (see Note 10).

During March 2005, a committee of the Emerging Issues Task Force (“EITF”) reached a consensus (EITF Issue No. 04-6) that stripping costs incurred during the production phase of a mine are variable production costs that should be included in the costs of inventory produced during the period that the

6

stripping costs are incurred.  The Financial Accounting Standards Board (“FASB”) ratified the EITF consensus.  The EITF consensus is effective for the first reporting period in fiscal years beginning after December 15, 2005.  In January 2006, the EITF issued additional guidance defining the commencement of production as the period when saleable minerals are first extracted in greater than de minimis amounts.  During the first quarter 2006, the Company began mining significant amounts of oxide ore reserves at its San Cristobal project, and placed the ore in stockpiles for future processing.  The quantity and value of the minerals mined were sufficient to declare the start of ore production according to the EITF consensus.  The Company has commenced the mining and stockpiling of significant amounts of ore at its San Cristobal Project and has included the associated costs as ore inventories on its financial statements.

The Company records costs related to production activities as inventory held for sale in the ordinary course of business or work in process for such sale.  Work-in-process inventories include ore produced and stockpiled for which further processing is necessary before a product is ready for sale.  The Company uses the average cost method to assign costs to the units of ore stockpiled during the period.  Inventories are carried at the lower of cost or the current net realizable value.  If costs held in inventory exceed their net realizable value, the excess cost is recognized as a loss in the current period.  Net realizable value reflects the gross realizable value (“estimated selling price”) reduced by estimated costs of completion and disposal as of the balance sheet date.  Gross realizable value reflects the anticipated average realization that the inventory will generate when it is sold.

New Accounting Standards

In March 2006 the EITF reached a tentative consensus (EITF Issue No. 05-1) that the issuance of equity securities to settle an instrument that becomes convertible upon the issuer’s exercise of a call option should be accounted for as a conversion (as opposed to an extinguishment) if, at issuance, the debt instrument contains a substantive conversion feature other than the issuer’s call option.  The EITF concluded that if an instrument is deemed convertible at issuance, then a subsequent conversion of the instrument is in accordance with a “conversion privilege that existed at issuance” and is, therefore, outside the scope of APB Opinion No. 26, “Early Extinguishment of Debt.”  Therefore, the issuance of shares to settle debt pursuant to the original terms of the debt instrument should be afforded conversion treatment.  If the instrument does not contain a substantive conversion feature at issuance, the issuance of equity securities to settle the instrument should be recognized as a debt extinguishment.  EITF Issue No. 05-1 became effective for interim or annual reporting periods beginning after June 28, 2006, following its ratification during June 2006. The Company previously accounted for two transactions involving the buy-back of its convertible debt as an extinguishment under APB Opinion No. 26.  Ratification of EITF Issue No. 05-1 will require similar future transactions be accounted for as conversions.

Financial Accounting Standards No. 154, “Accounting Changes and Error Corrections – a replacement of APB Opinion No. 20 and FASB Statement No. 3” (“FAS No. 154”), is effective for years beginning after December 15, 2005.   FAS No. 154 changes the requirements for the accounting and reporting of a change in accounting principle.  The statement, which applies to voluntary changes as well as changes required by accounting pronouncements that do not otherwise provide specific transition provisions, requires retrospective application to prior period’s financial statements where practical.  FAS No. 154 did not have a material impact on the Company’s financial position or results of operations for the period and is not expected to have a material impact in the future.

In June 2006, the FASB issued Financial Accounting Standards Interpretation No. 48, “Accounting for Uncertainty in Income Taxes,” (“FIN 48”), an interpretation of Financial Accounting Standards Statement No. 109, “Accounting for Income Taxes.” FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Interpretation requires that the Company recognize in its financial statements the impact of a tax position, if that position is more likely than not of being sustained on audit, based on the technical merits of the position. FIN 48 also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods and disclosure. The provisions of FIN 48 are effective beginning January 1, 2007 with the cumulative effect of the change in accounting principle recorded as an adjustment to the opening balance of retained earnings. The Company is currently evaluating the impact of adopting FIN 48 but does not believe it will have a material impact on its financial position or results of operations.

7

During September 2006 the FASB issued Financial Accounting Standards No. 157 “Fair Value Measurements” (“FAS No. 157”). FAS No. 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. This Standard addresses how companies should measure fair value when they are required to use a fair value measure for recognition or disclosure purposes under U.S. GAAP. Accordingly, this Standard does not require any new fair value measurements. FAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The Company does not expect the adoption of FAS No. 157 to have a material impact on its financial position or results of operations.

During September 2006 the SEC issued Staff Accounting Bulletin No. 108 (“SAB 108”) which establishes an approach to the quantification of unadjusted financial statement errors based on the effects of the error on each of the company’s financial statements and the related financial statement disclosures. This model is commonly referred to as a “dual approach” because it essentially requires quantification of unadjusted errors under both the iron-curtain and the roll-over methods.  SAB 108 permits companies to record the cumulative effect of initially applying the “dual approach” in the first year ending after November 15, 2006 by recording the necessary “correcting” adjustments to the carrying values of assets and liabilities as of the beginning of that year with the offsetting adjustment recorded to the opening balance of retained earnings. The Company has no unadjusted errors and therefore does not expect the adoption of SAB 108 to have an impact on its financial position or results of operations.

3.Investments

The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.  The Company accounts for its investments in auction rate securities in accordance with Statement of Financial Accounting Standards No. 115, “Accounting for Certain Investments in Debt and Equity Securities” such that if the underlying security of an auction rate security has a stated or contractual maturity date in excess of 90 days, regardless of the frequency of the interest rate reset date, the security is classified as a current available-for-sale investment. Short-term investments include investments with maturities greater than three months, but not exceeding twelve months and available for sale auction rate securities.  Long-term investments include investments with maturities greater than twelve months.

The Company determines the appropriate classification of its investments in debt and equity securities at the time of purchase and re-evaluates classifications at each balance sheet date. Debt securities are classified as held to maturity when the Company has the intent and ability to hold the securities to maturity.  Held to maturity debt securities are stated at amortized cost and include government agency and corporate obligations.  Available for sale investments are marked to market at each reporting period with changes in value recorded as a component of other comprehensive income. If declines in value are deemed other than temporary, a charge is made to net loss for the period.

The Company invests only in government and corporate securities rated “investment grade” or better. The following tables, based on quoted market prices, summarize the Company’s investments at September 30, 2006 and December 31, 2005:

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September 30, 2006	Cost		Market		Balance
	(in Thousands)
Investments:
Short-term
Available for sale
Auction rate securities	$	246,080	$	246,094	$	246,094
Corporate notes	4,873		5,000		5,000
Government bonds	6,440		6,442		6,442
Common stock	761		842		842
Total available for sale	258,155		258,378		258,378
Held to maturity
Corporate notes	3,601		3,597		3,601
Government bonds	28,764		28,764		28,764
Total held to maturity	32,365		32,361		32,365
Total short term	$	290,520	$	290,739	$	290,743
Long-term
Available for sale
Corporate notes	2,000		2,000		2,000
Total available for sale	2,000		2,000		2,000
Held to maturity
Government bonds	2,000		2,000		2,000
Total held to maturity	2,000		2,000		2,000
Total long term	$	4,000	$	4,000	$	4,000
Restricted Investments:
Short-term
Available for sale
Auction rate securities	$	75,000	$	75,000	$	75,000
Total available for sale	75,000		75,000		75,000
Held to maturity
Government bonds	26,133		26,039		26,133
Total held to maturity	26,133		26,039		26,133
Total short term	$	101,133	$	101,039	$	101,133

December 31, 2005	Cost		Market		Balance
	(in Thousands)
Short-term investments
Available for sale
Common stock	$	434	$	686	$	686
Bond funds	3,381		2,885		2,885
Auction rate securities	127,426		127,426		127,426
Total available for sale	131,241		130,997		130,997
Held to maturity
Corporate notes	1,003		998		1,003
Total held to maturity	1,003		998		1,003
Total short term	$	132,244	$	131,995	$	132,000
Restricted Investments:
Short-term
Available for sale
Auction rate securities	$	14,950	$	14,950	$	14,950
Total available for sale	14,950		14,950		14,950
Held to maturity
Corporate notes	2,003		2,004		2,003
Government bonds	50,538		50,191		50,538
Total held to maturity	52,541		52,195		52,541
Total short term	$	67,491	$	67,145	$	67,491
Long-term
Held to maturity
Government bonds	$	12,392	$	12,173	$	12,392

9

To fulfill the requirements of the San Cristobal Project finance facility, the Company liquidated prior to their maturity dates approximately $34.0 million of investments in the fourth quarter of 2005 and $12.0 million of investments in the first quarter of 2006, which were previously recorded as held-to-maturity (“HTM”) securities.  The Company recognized a $0.2 million and $0.1 million loss on the liquidation for the fourth quarter of 2005 and first quarter of 2006, respectively.  The liquidation was necessitated by the terms of the project finance facility which required the Company to transfer substantially all of its cash and/or investments to collateral accounts to restrict funds necessary to complete the San Cristobal project. Certain covenants related to the project finance facility restricted the maturity dates of investments held in the collateral accounts to less than one year. A portion of the Company’s HTM portfolio had maturity dates slightly beyond the one year limitation. As a result, prior to transferring the securities to the project finance collateral accounts, those HTM securities with maturities greater than one year were liquidated and reinvested in instruments with maturities less than one year.  During the full year 2005 and for the nine month period ended September 30, 2006, the Company recorded as an investing cash inflow an additional $126.3 million and $41.5 million respectively related to HTM securities that matured on their maturity dates.  The Company believes the project financing requirements which caused the Company to liquidate a portion of its HTM investments prior to their maturity dates represent an isolated, unanticipated event that did not change the Company’s ability or intent to hold its remaining HTM investments until their maturity dates.

4.Prepaid expenses and other assets

Prepaid expenses and other assets consist of the following:

	September 30, 2006		December 31, 2005
	(in thousands)
Prepaid insurance	$	2,704	$	824
Prepaid bank fees	83		—
Accrued interest receivable	752		758
Prepaid consulting & contractor fees	5,345		3,874
Receivables, travel advances and other	715		118
Prepaid import taxes and duties receivable	1,333		—
Withholding taxes receivable	512		250
	$	11,444	$	5,824

The prepaid consulting and contractor fees consist primarily of advance payments made to contractors for work being performed for the San Cristobal Project.

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5.Value Added Tax Recoverable

The Company has recorded value added tax (“VAT”) paid in Bolivia as a recoverable asset.  Current Bolivian tax law states that VAT paid prior to production is recoverable as a credit against Bolivian taxes arising from production, including income tax. The VAT paid in Bolivia is expected to be recovered through production from the proven and probable reserves at the San Cristobal Project that the Company is developing.  Future changes to Bolivian tax law should they occur, could have an adverse effect on the Company’s ability to recover these taxes.  At September 30, 2006 and December 31, 2005 the recoverable VAT recorded for Bolivia is $45.5 million and $20.1 million, respectively.

In addition, the Company incurred VAT related to various exploration activities outside of the San Cristobal project in Bolivia and in other countries. Because of the uncertainty of the recoverability of these taxes they are charged to expense as incurred.

6.Property, Plant and Equipment

The components of property, plant and equipment were as follows:

	September 30, 2006			December 31, 2005
	(in thousands)
Mineral properties	$	117,319		$	117,103
Construction in progress	425,767			232,288
Buildings	11,493			8,423
Mining equipment and machinery	12,868			10,127
Equipment under capital lease	22,183			14,928
Other furniture and equipment	3,150			1,966
	592,780			384,835
Less: Accumulated depreciation	(9,612		)	(5,697		)
	$	583,168		$	379,138

For the nine month periods ended September 30, 2006 and 2005 the Company recorded depreciation expense of $296,000 and $114,000, respectively.  Also, for the nine month periods ended September 30, 2006 and 2005 the Company capitalized depreciation associated with the San Cristobal Project in the amounts of $3.6 million and $1.8 million respectively.

The September 30, 2006 and December 31, 2005 construction in progress balances include $28.1 and $9.4 million of capitalized interest respectively.

7.Debt

The Company’s debt consists of the following:

	September 30, 2006				December 31, 2005
	Current		Long term		Current		Long term
	(in thousands)
2.875% Convertible Senior Subordinated Notes due 2024	$	—	$	180,000	$	—	$	180,000
4.0% Convertible Senior Subordinated Notes due 2024	—		109,987		—		129,987
Project finance facility	—		120,000		—		—
Note payable to Ingelec	—		1,407		—		—
Note assigned to Sumitomo	—		7,798		—		—
Capital lease obligations	2,993		14,925		2,270		10,034
	$	2,993	$	434,117	$	2,270	$	320,021

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In December 2005 the Company closed on a $225 million project finance facility, arranged by BNP Paribas and Barclays Capital, and funded by a group of international financial institutions including banks, export credit agencies and the Andean Development Corporation, a multilateral financial agency that promotes sustainable development in South America.  Borrowings from the facility are being used to complete the development of the Company’s San Cristobal Project. During the nine months ended September 30, 2006 the Company borrowed $120.0 million under the facility. The Company is required to pay a 1.0% annual commitment fee on the undrawn amount of the facility.  Interest on the outstanding amounts drawn under the facility is based on LIBOR plus a credit spread.  Covenants related to the facility require the Company to maintain certain security interests, financial ratios, insurance coverage, minimum sales contracts and metals price protection contracts as well as other requirements.  The first principal payment under the facility is due in December 2008, and the facility must be fully repaid in December 2012.

In connection with the sale to Sumitomo of a 35% interest in the subsidiaries that own our San Cristobal Project, Sumitomo has guaranteed the repayment of 35% of the project finance facility debt. Also, in conjunction with the sale, the project finance facility agreements were amended to provide for the release of $70.0 million of overrun financing previously held in accounts controlled by the lenders and approximately $5.7 million previously escrowed to meet interest payments on our subordinated notes. This $75.7 million is now unrestricted and available for general corporate purposes (see Note 11 for detail of sale of 35% interest in San Cristobal).

During the nine months ended September 30, 2006 the Company placed in service $8.1 million of additional mining equipment to be used in stripping and mine production, and recorded the transaction as a capital lease, resulting in total capital lease obligations of $17.9 million. During the nine months ended September 30, 2006 the Company made payments of $1.7 million related to capital lease obligations and will be required to make additional payments of $0.8 million for the remainder of 2006, $3.0 million during each of 2007 and 2008, $2.4 million during 2009, $1.9 million during 2010 and $6.8 million thereafter.

The Company has loaned funds to the contractor that is building the power line for the San Cristobal Project and holds a note receivable from the contractor in the amount of $22.3 million. The Company expects to receive repayment of the note from the power company in the form of credits against charges for the delivery of power.  In connection with the sale of 35% of the San Cristobal Project to Sumitomo, the Company assigned 35% of the $22.3 million note to Sumitomo. As the Company receives payments from the power company it must pay Sumitomo its 35% share of such payments. As a result, the Company has recorded a note payable to Sumitomo in the amount of $7.8 million.

During the third quarter of 2006 the contractor that is building the power line for the San Cristobal Project borrowed approximately $1.4 million from its parent company to complete the construction of the power line.  Per the guidance of FASB Interpretation No. 46R “Variable Interest Entities” (“FIN 46R”) the Company consolidates the accounts of the contractor and recorded the note payable of $1.4 million on its consolidated books.

During 2006 the Company issued approximately 1.1 million Ordinary Shares valued at $17.1 million and $0.3 million of cash for unpaid interest to complete the purchase of $20.0 million principal amount of the Company’s 4.0% Convertible Senior Subordinated Notes due 2024 in a privately negotiated exchange transaction. The transaction resulted in the recognition of a $2.9 million gain on extinguishment of debt.  The Company canceled the notes purchased in the transaction.

Pursuant to the agreement related to the 4% Notes and certain provisions of the project finance facility, the Company is required to maintain restricted investments to cover the payment of interest on the Notes through 2007.  The amount invested will at maturity equal the interest payments due.  As of September 30, 2006, $5.5 million of restricted investments were designated for this purpose.

8.Sales Contracts and Derivative Instruments

Certain covenants related to the project finance facility require the Company to provide price protection for a portion of its planned production of metals from San Cristobal.  During the third quarter of 2005, the Company entered into contracts utilizing forward sales, puts and calls to comply with these covenants. In order to maintain leverage to silver market prices, the Company entered into proportionally

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more zinc and lead contracts than silver.  Non-cash mark-to-market gains and losses from these outstanding metal derivative positions may fluctuate substantially from period to period based on spot and forward prices and option volatilities.

In addition, the Company made limited investments in shorter duration put and call options and other metals derivatives not required by the project financing facility.  These discretionary derivative positions typically have settlement dates less than one year and management has the option to settle these positions in cash or roll them forward to a future date. During 2006, the Company made $36.9 million of net cash payments to settle the majority of these discretionary derivative contracts. The remaining liability for these discretionary derivative positions on a mark-to-market basis as of September 30, 2006 was approximately $5.0 million.

The Company recorded losses of $45.4 million and $165.5 million related to its total derivative position for the quarter and nine month periods ended September 30, 2006, respectively.  The losses are the result of continuing high spot and forward prices for silver, zinc and lead. The actual final financial impact of the required project financing facility derivative positions will not be known until the positions are closed on their future settlement dates.  The Company does not intend to use cash to settle the open derivatives position contracts relating to the project financing facility prior to their settlement dates beginning in 2007.  At the time of final settlement, the gain or loss recorded will exclude previously recognized non-cash mark-to-market gains or losses.

The following table sets forth the Company’s open contracts at September 30, 2006.  The contracts with open maturity dates of less than one year represent the discretionary derivatives while those with maturities greater than one year are all related to the requirements of the project financing.

	Current Maturity Date
	Year 1		Years 2 and 3		Years 4 and 5		Thereafter		Total
Forward Contracts
Silver (000 ounces)	—		230		185		200		615
Average price (per ounce)	$	—	$	7.27	$	7.21	$	7.13	$	7.21
Zinc (000 pounds)	9,177		411,431		335,348		19,841		775,797
Average price (per pound)	$	0.59	$	0.48	$	0.48	$	0.48	$	0.48
Lead (000 pounds)	17,085		241,511		64,374		—		322,970
Average price (per pound)	$	0.30	$	0.30	$	0.29	$	—	$	0.30
Put Option Contracts Owned
Silver (000 ounces)	100		1,325		3,102		4,573		9,100
Average price (per ounce)	$	5.25	$	5.49	$	5.71	$	5.91	$	5.78
Zinc (000 pounds)	24,251		—		—		—		24,251
Average price (per pound)	$	0.57	$	—	$	—	$	—	$	0.57
Call Option Contracts Written
Silver (000 ounces)	1,885		6,200		3,255		345		11,685
Average price (per ounce)	$	15.24	$	8.25	$	8.37	$	9.14	$	9.44
Zinc (000 pounds)	57,871		12,126		1,653		—		71,650
Average price (per pound)	$	1.06	$	0.57	$	0.57	$	—	$	0.97
Lead (000 pounds)	4,409		24,251		3,307		—		31,967
Average price (per pound)	$	0.70	$	0.39	$	0.39	$	—	$	0.43
Call Option Contracts Owned
Silver (000 ounces)	1,240		—		—		—		1,240
Average price (per ounce)	$	13.55	$	—	$	—	$	—	$	13.55
Zinc (000 pounds)	57,871		—		—		—		57,871
Average price (per pound)	$	1.23	$	—	$	—	$	—	$	1.23

The Company marks its open derivative positions to fair value at the end of each accounting period with the related change in fair value recorded to earnings in accordance with Statement of Financial Accounting Standards No. 133, “Accounting for Derivative Instruments and Hedging Activities” (“FAS No. 133”).  For the quarter and year to date periods ended September 30, 2006 the Company recorded

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derivative losses of $45.4 million and $165.5 million, respectively, compared to derivative losses of $9.6 million and $7.6 million recorded for the respective quarter and year to date periods ended September 30, 2005. As the result of the sale of a 35% interest in the San Cristobal Project to Sumitomo, Sumitomo has guaranteed the payment of 35% of the hedge positions required by the project finance facility (see Note 11).

In connection with the sale to Sumitomo of a 35% interest in the subsidiaries that own the San Cristobal Project, Sumitomo also purchased a 35% interest in the subsidiary that holds the metals hedge positions required by the project finance facility and assumed 35% of the derivative liability.  At September 30, 2006 the Company reported 100% of the derivative liability in its financial statements and included Sumitomo’s share of the liability in minority interest.

To arrive at fair value for its open derivative positions, the Company utilizes publicly available current and historical market data, including major commodities price indices such as the LME and COMEX, in combination with independently derived third party projections to derive future forward metal prices.  Many of the Company’s open derivative positions expire on dates that are beyond the periods covered by the LME or COMEX indices, or expire in the future periods covered by those indices with respect to which little or no trading activity has occurred.  In these instances, where an active market does not exist, the Company uses price projections provided by an independent third party employing statistical analysis as the best indication of fair value.  The Company obtains advice from outside consultants knowledgeable in the valuation of commodities to establish the major assumptions used in the fair value calculation, including discount rates, historical price trends and forward price projections.

Longer dated forward and option positions are valued using the Black option pricing model which is a recognized mean-reversion commodities pricing model that uses a single volatility factor.  Mean-reversion models assume that prices eventually revert to a longer-term historical price trend.  Forward prices derived from the mean-reversion model are lower than current spot market prices due to the recent sharp increase in prices during the past year.  If current spot prices continue into future periods that include the settlement dates of the Company’s open derivative positions, the Company will report further mark-to-market losses in subsequent periods.  As of September 30, 2006, the fair value of the Company’s open commodities derivatives position was recorded as a $182.2 million liability.  Of that amount, $14.1 million was recorded as a current liability with $9.1 million being related to the hedge positions required by the project finance facility.

During the nine months ended September 30, 2005 the Company incurred a mark-to-market loss of $0.9 million with respect to certain foreign currency derivative positions related to certain equipment being purchased for San Cristobal that was denominated in Euros. At September 30, 2006 the Company did not hold any foreign currency derivative positions.

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The following table sets forth the realizable fair value of the Company’s open derivative positions at December 31, 2005 and the change for the nine months ended September 30, 2006.

		Amount To Be Realized In
Valuation Technique	Period Ended	Year 1			Years 2 & 3			Years 4 & 5			Thereafter			Total
		(in thousands)
Based on quoted prices in active markets:	12/31/2005	$	(5,652	)	$	—		$	—		$	—		$	(5,652	)
	9/30/2006	$	(5,018	)	$	—		$	—		$	—		$	(5,018	)
	2006 Change	$	634		$	—		$	—		$	—		$	634
Based on Black option pricing model and other valuation methods:	12/31/2005	$	—		$	(25,785	)	$	(25,580	)	$	744		$	(50,621	)
	9/30/2006	$	(9,083	)	$	(132,452	)	$	(35,407	)	$	(282	)	$	(177,224	)
	2006 Change	$	(9,083	)	$	(106,667	)	$	(9,827	)	$	(1,026	)	$	(126,603	)
Totals:	12/31/2005	$	(5,652	)	$	(25,785	)	$	(25,580	)	$	744		$	(56,273	)
	9/30/2006	$	(14,101	)	$	(132,452	)	$	(35,407	)	$	(282	)	$	(182,242	)
	2006 Change	$	(8,449	)	$	(106,667	)	$	(9,827	)	$	(1,026	)	$	(125,969	)

9.Asset Retirement Obligations

The Company has developed an asset retirement plan for its San Cristobal Project which is currently under construction and is expected to begin producing in the third quarter of 2007. The plan includes estimated reclamation, remediation and closure requirements based on Bolivian government requirements, World Bank financing requirements and the Company’s policies.  Beginning in the third quarter of 2005 the Company has been conducting activities at its San Cristobal Project including earthworks, plant construction and mining activities that fall within the scope of the asset retirement plan and as such will require future reclamation and closure expenditures.

Per the guidance of Statement of Financial Accounting Standards No. 143, “Accounting for Asset Retirement Obligations” (“FAS No. 143”), the fair value of the asset retirement obligation (“ARO”) associated with the San Cristobal Project is calculated by first estimating the cash flows required to settle an estimated $28.5 million ARO obligation in future periods using an inflation rate of 1.6 percent and then discounting the future cash flows using the Company’s credit-adjusted risk-free rate of 9.8 percent.

The following table reconciles the beginning and ending balance for the Company’s asset retirement obligations (in thousands):

Balance at December 31, 2005	$	2,003
Additions	3,115
Changes in estimates, and other	—
Liabilities settled	—
Accretion expense	276
Balance at September 30, 2006	$	5,394

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10.Shareholders’ Equity

The following table sets forth the changes in shareholders’ equity during the first nine months of 2006:

									Accumulated
				Additional					Other			Total
	Common Stock			Paid-in		Accumulated			Comprehensive			Shareholders’
	Shares	Amount		Capital		Deficit			income			Equity
	(in thousands except share data)
Balance, December 31, 2005	50,444,890	$	504.4	$	486,762	$	(164,696	)	$	(243	)	$	322,327
Stock to finance construction of the power line ($15.09 per share)	369,033	3.7		5,724		—			—			5,728
Shares issued to retire debt, ($15.77 per share)	1,086,653	10.9		17,114		—			—			17,125
Stock to consultants ($15.90 per share)	1,699	—		27		—			—			27
Stock compensation accrued	—	—		3,897		—			—			3,897
Stock options exercised ($12.52 per share)	140,925	1.4		1,764		—			—			1,765
Stock granted as compensation ($19.30 per share)	17,000	0.2		—		—			—			—
Sale of Ordinary Shares, net ($23.70 per share)	6,375,000	63.8		151,003		—			—			151,067
Unrealized gain on marketable equity securities	—	—		—		—			403			403
Net loss	—	—		—		(51,277		)	—			(51,277		)
Balance, September 30, 2006	58,435,200	$	584.4	$	666,291	$	(215,973	)	$	160		$	451,062

Ordinary Share Issuances – During January 2006, the Company issued 369,033 of its Ordinary Shares, valued at $5.7 million, as the last of four agreed upon advances to SC TESA for the construction of the power line to the San Cristobal project. The Company had previously issued 1,134,799 of its Ordinary Shares, valued at $16.6 million, during 2005, as the first three advances to SC TESA. Proceeds in excess of construction costs of approximately $0.1 million received by SC TESA from the sale of the shares will be added to the advances to be repaid to the Company with interest through credits against charges for future delivery of power.

In January and February 2006 the Company issued approximately 1.1 million Ordinary Shares valued at $17.1 million and paid $0.3 million for interest to complete the purchase of $20.0 million principal amount of the Company’s 4.0% Convertible Senior Subordinated Notes due 2024 in a privately negotiated exchange transaction. The Company canceled the notes purchased in the transaction.

During the second quarter of 2006, the Company completed the public offering of 6,375,000 of its Ordinary Shares at $24.45 per share ($23.70 per share net of commissions) registered under its shelf registration statement.  The Company intends to use the net proceeds of approximately $151.1 million to continue further evaluation, exploration, advancement and expansion of its portfolio of exploration properties and for other general corporate purposes.

Stock Option Plans – The Company established a plan to issue share options and other share awards for officers, employees, consultants and agents of the Company and its subsidiaries (the “Plan”). Option awards are granted with an exercise price equal to the market price of the Company’s stock at the date of grant. Options typically vest ratably over periods of up to four years with the first tranche vesting on the date of grant or the first anniversary of the date of grant. Unexercised options expire typically ten years after the date of grant.  The options and other awards provide for accelerated vesting if there is a change in control as defined in the Plan.

The Company also established a share option plan for its non-employee directors (the “Director Plan”).  Options granted under the Director Plan vest on the date of the grant and expire ten years after the date of the grant or three years after the date that a non-employee director ceases to be a director of the Company.  Options granted under the Director Plan are transferable only in limited circumstances.

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The fair value of each option award is estimated on the date of grant using the Black-Scholes option-pricing model that uses the assumptions noted in the following table.  Expected volatilities are based on historical volatility of the entity’s stock.  The Company uses historical data to estimate option exercise and employee termination within the Black-Scholes model.  The expected term of options granted represents the period of time that options granted are expected to be outstanding, based on past experience and future estimates and includes data from both the Plan and the Directors Plan.  The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant.

For purposes of calculating the fair value of options, volatility for the periods presented is based on the historical volatility of the Company’s Ordinary Shares.  The Company currently does not foresee the payment of dividends in the near term. The fair value for these options was estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions:

	Nine Months Ended September 30,
	2006		2005
Expected volatility	43.8% - 45.4%		42.6% - 43.8%
Weighted average volatility	44.9	%	43.3	%
Expected dividend yield	—		—
Expected term (in years)	3.06		3.78
Risk-free rate	4.89	%	3.72	%

A summary of the Company’s stock options at September 30, 2006 and changes during the nine months then ended is presented in the following table:

Options	Number of Shares		Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Life	Aggregate Intrinsic Value
Outstanding at beginning of period	2,859,781		$	14.42	6.4 Years	$	6,664,178
Granted during period	123,888		$	15.97	9.6 Years	$	—
Forfeited or expired during period	(47,901	)	$	16.64		$	289,983
Exercised during period	(140,925	)	$	12.53		$	1,145,515
Outstanding at end of period	2,794,843		$	14.54	5.8 Years	$	7,460,540
Exercisable at end of period	1,938,293		$	13.33	4.7 Years	$	7,027,492
Expected to vest at the end of the period	856,550		$	17.28	8.3 Years	$	433,047

During the nine months ended September 30, 2006 and September 30, 2005, the Company granted equity awards with weighted average grant date fair values of $0.7 million and $0.8 million, respectively; options were exercised with total intrinsic values of $1.1 million and $0.1 million, respectively; and the total fair value of shares vested during the nine months was $1.7 million and $0.4 million, respectively.

As of September 30, 2006, total unrecognized compensation cost related to the non-vested stock options granted pursuant to the Plan was $1.8 million which the Company expects will be recognized over a weighted average period of 1.0 year.

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A summary of the status of the Company’s non-vested restricted stock grants at September 30, 2006 and changes during the nine months then ended is presented in the following table:

Non-vested Shares	Number of Shares		Weighted Average Grant Date Fair Value Per Share
Non-vested at beginning of period	170,700		$	18.41
Granted during period	25,000		$	13.75
Vested during period	(14,500	)	$	17.70
Forfeited during period	(3,000	)	$	16.03
Nonvested at end of period	178,200		$	17.85

As of September 30, 2006, total unrecognized compensation cost related to the non-vested restricted shares granted pursuant to the Plan was $1.9 million.  The Company expects that the total unrecognized cost will be recognized over a weighted average period of 1.5 years.

During 2005 the Company granted stock-based performance bonuses under the Plan, related to certain cost and completion date targets for the San Cristobal Project.  The following table summarizes the stock-based performance bonus plan at September 30, 2006 and changes during the first nine months of 2006:

Non-vested Shares	Number of Shares		Weighted Average Grant Date Fair Value Per Share
Non-vested at beginning of period	32,000		$	15.41
Granted during period	—		$	—
Vested during period	—		$	—
Forfeited during period	(6,000	)	$	16.25
Nonvested at end of period	26,000		$	15.21

As of September 30, 2006, total unrecognized compensation cost related to the non-vested performance bonuses granted pursuant to the Plan was $0.1 million.  The Company expects that the total unrecognized cost will be recognized over a weighted average period of 0.7 years.

Total compensation costs recognized for all stock-based employee compensation awards, including amounts capitalized, were $3.6 million and $2.0 million for the nine months ended September 30, 2006 and 2005, respectively.

11.Minority Interest

On September 25, 2006, pursuant to a Purchase and Sale Agreement among the Company, certain of its wholly owned subsidiaries and Sumitomo Corporation (“Sumitomo”), the Company sold to Sumitomo a 35% interest in three subsidiaries that own its San Cristobal Project, market Project concentrates and hold the metals hedge positions required by the Project lenders, in exchange for $224 million in cash and certain deferred payments based on silver and zinc production from the Project.  The Company continues to own 65% of these three subsidiaries.  The Company also agreed to assign Sumitomo a 35% interest in the $22.3 million note receivable the Company holds from the Project power line construction and transmission contractor.

Pursuant to the Purchase and Sale Agreement, the Company agreed to indemnify Sumitomo generally for breaches of representations and warranties discovered within one year of closing resulting in damages to Sumitomo exceeding $3 million, up to a cap of $40 million, provided that for breaches related to title to shares of the acquired companies, subordinated debt, certain transferred agreements and real and personal property required for the San Cristobal Project discovered within six years of closing, the cap is $224 million.

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Sumitomo agreed to indemnify the Company generally for breaches of representations and warranties that are discovered within one year of closing, resulting in damages to the Company exceeding $3 million, up to a cap of $40 million.

Pursuant to a Deferred Payments Agreement dated September 25, 2006 Sumitomo will make the following deferred payments to the Company in respect of production from the San Cristobal Project and future expansions:  (i) quarterly payments equal to 22.86% of Sumitomo’s share of payable silver production from the San Cristobal Project, or approximately 8% of total payable silver production, payable in cash or silver at Sumitomo’s option, and (ii) quarterly cash payments equal to 20% of Sumitomo’s share of payable zinc production from the San Cristobal Project, or approximately 7% of total payable zinc production, multiplied by the zinc price in excess of $1,800 per tonne.

The Minera San Cristobal (“MSC”) Shareholders Agreement dated September 25, 2006 provides that the majority shareholder will control the MSC Board and appoint the Board Chairman.  MSC is the subsidiary that owns and operates the San Cristobal Project.  As long as the minority shareholder holds more than 25% of MSC, certain significant matters require the approval of the minority shareholder director including approval of annual programs and budgets, increases of 15% or more over budgeted capital expenditures or operating expenses (with customary exceptions for emergencies and compliance), merger or liquidation, permanent cessation or suspension for more than 180 days of mining at or abandonment of the San Cristobal Project.  If a deadlock with respect to adoption or amendment in excess of 15% of a program and budget continues for 180 days, the majority shareholder’s directors are then entitled to approve the program and budget.

Under the MSC Shareholder Agreement, the Company and Sumitomo are required to provide their respective proportionate shares of shareholder debt or equity funding required for MSC to achieve commercial operations, or be diluted on a two for one basis.  Following commercial operations, the Company and Sumitomo may choose to provide their proportionate share of required external funding or dilute on a one for one basis.  Dilution by the Company or Sumitomo of its ownership interest in MSC will result in transfers of shares in the other two subsidiaries, so that the parties’ ownership interests in the three companies remain identical.  If Sumitomo were to dilute below 25% solely as a result of its failure to provide future funding, and were to refuse to approve a program and budget proposed by the Company for more than 180 days, Sumitomo would have the right to sell to the Company all (but not less than all) of its remaining interest in MSC for $224 million, reduced pro rata by the percentage of year-end 2005 reserves produced from the San Cristobal Project.

Each of the Company and Sumitomo has a right of first refusal to acquire any interests in MSC that the other wishes to sell or, if the party wishing to sell has less than a 25% interest in MSC, a right of first offer.  In the event of a change of control of the Company, Sumitomo would be relieved of its right of first refusal and first offer obligations for two years.  Any party that acquires an interest in MSC must acquire a pro rata interest in the other two subsidiaries.

The MSC Shareholders Agreement provides that available cash will be distributed quarterly, first to pay the $5.4 million annual management fee due from MSC to the Company, then to shareholders that have advanced loans on behalf of a non-funding shareholder, then to shareholders who have advanced shareholder loans pro rata to their ownership interests, and then as cash dividends. An additional aggregate $0.3 million annual management fee is jointly payable to the Company by the other two jointly owned subsidiaries.

The Company and Sumitomo have also entered into a two year Option Agreement dated September 25, 2006, pursuant to which Sumitomo may acquire a 20 percent to 35 percent interest in each of certain active exploration properties at historical cost, and in each of certain of the Company’s inactive exploration properties at historical cost once the Company has spent $200,000 in exploration costs on the property.  Sumitomo must exercise its option on each active property within 60 days of receiving complete information regarding the property and on each inactive property within 60 days of the Company spending $200,000 on the property.  At September 30, 2006 Sumitomo had not exercised its options to acquire any exploration properties.

The Company also amended the San Cristobal project finance facility in connection with the sale to Sumitomo, as follows:  (i) the Company and Sumitomo provide severally pro rata to their respective 65%

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and 35% ownership interests in MSC, and not jointly, San Cristobal Project completion and cost overrun support; (ii) the Company and Sumitomo guarantee severally pro rata to their MSC ownership interests, and not jointly, the performance of the metals hedge positions; (iii) the Company is permitted to withdraw from accounts controlled by the lenders $70 million of contingent overrun financing previously required by the Project lenders; (iv) Sumitomo guarantees up to $45.5 million of overrun funding by the Company; (v) the Company was permitted to remove from escrow approximately $5.7 million previously deposited to meet interest payments on its subordinated notes, and is no longer required to escrow an additional $10.4 million; and (vi) additional cure periods for certain representation and covenant defaults and certain defaults related to completion of the Project are permitted, as is the substitution of a replacement sponsor in the event of certain defaults, bankruptcy or expropriation events.

The Company recorded a minority interest in the assets and liabilities sold of $88.6 million and recognized a gain of $119.8 million related to the transaction.  The gain is net of approximately $6.4 million of selling costs incurred by the Company related to the transaction.  The $119.8 million gain is calculated as the difference between the cash proceeds (net of selling costs) and the book value of the interests sold. The book value includes the mark-to-market liability on the open metals hedge positions required by the project finance facility, excludes pre-feasibility exploration and other costs previously expensed, and was reduced by the book value allocated to the retained interests in future silver and zinc production. The payments related to the retained interests in future production will be recorded as a reduction of minority interest as they become receivable by the Company.

The Company may be required to pay up to an estimated $4.0 million bonus to the Project construction management contractor contingent upon certain project completion parameters. Sumitomo is deemed to have already paid its 35% share of the bonus as part of the initial cash payment. Therefore, Apex Silver has agreed to reimburse Sumitomo its $1.4 million share of the bonus if it is paid. Apex Silver will defer $1.4 million of the gain until such time as the payment is made or determined not to be payable.

The Company recognized a $0.3 million minority interest benefit related to Sumitomo’s share of certain losses incurred subsequent to the close of the transaction. The losses were primarily related to the mark-to-market losses on the open hedge positions required by the project finance facility that were incurred from the date of the Sumitomo transaction through the end of the period.

12.Commitments and Contingencies

Letters of Credit – At September 30, 2006, the Company had outstanding irrevocable standby letters of credit related to the San Cristobal Project in the aggregate amount of $7.6 million. The letters of credit include $4.5 million associated with the rail contract to transport metal concentrates to the port facilities, $2.0 million associated with the construction management contract and $1.1 million associated with the power line construction contract.  At September 30, 2006 the Company had deposited $7.6 million to collateralize the letters of credit and has recorded $0.5 million to restricted cash and $7.1 million to restricted investments.  Per the terms of the letters of credit the required amounts may be reduced from time to time under certain circumstances.

Escrow and Other Restricted Amounts – At September 30, 2006, $4.1 million remained in an escrow account to provide for certain requirements related to the development of the port facility for the San Cristobal Project. At September 30, 2006 the amount was recorded to restricted cash.

Project Financing – Per the terms and conditions of the San Cristobal Project finance facility the Company was required to deposit cash and investments in an account the use of which is restricted to the development of the San Cristobal Project. At September 30, 2006 the remaining balance in the account was $99.1 million of which $10.6 million was recorded to restricted cash and $88.5 million recorded to restricted investments.

Capital Commitments – The Company entered into agreements with certain service providers and placed orders for certain long-lead equipment and construction materials for its San Cristobal project resulting in open commitments totaling approximately $77.6 million at September 30, 2006.  If the Company had cancelled all of these agreements or orders at September 30, 2006, it would have incurred cancellation fees totaling approximately $18.6 million.

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Taxes – The Company is receiving certain tax and duty benefits on a portion of the equipment it is importing for its San Cristobal Project. The benefits are contingent upon fulfilling certain expenditure commitments within a specified period of time and returning certain equipment off shore within a specified period of time. Failing to comply with these commitments would obligate the Company to refund all or a portion of the benefits received.

Performance Bonus – The Company may be required to pay up to an estimated $4.0 million bonus to the San Cristobal Project construction management contractor contingent upon certain project completion parameters.  Based on the current project status the company does not consider the payment probable and at September 30, 2006 no amounts have been accrued.

Other Contingencies – The Company reported in its 10-K filing for the period ended December 31, 2005 that it had concluded an internal investigation regarding impermissible payments made to government officials by several senior employees of one of its South American subsidiaries during 2003 and 2004.  The Company reported at that time that the SEC had commenced an investigation with respect to these matters including possible violations of the Foreign Corrupt Practices Act. The Company is cooperating fully with the SEC investigation and will cooperate with any investigation by the U. S. Department of Justice.  The Company cannot predict with any certainty at this time the final outcome of any investigations that may take place including any fines or penalties that may be imposed.

The Company continues to monitor the political uncertainties in Bolivia resulting from the Bolivian government's renegotiation of agreements with oil and gas producers and statements regarding possible changes in current policies affecting the mining industry.  If the San Cristobal Project were nationalized, or if taxes were substantially increased or significant royalty payments imposed, the Company might be unable to recover its investment in the Project and could have substantial liabilities for the derivative positions required by the Project lenders. In addition, changes in Bolivian law may have an adverse effect on the Company’s ability to recover VAT receivable (See Note 5).

13.Foreign Currency

Gains and losses on foreign currency derivatives and translation consist of the following:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2006		2005		2006		2005
	(in thousands)				(in thousands)
Loss on Euro derivatives	$	—	$	—	$	—	$	(872	)
Gain (loss) on re-measurement of monetary assets denominated in other than US dollars	$	203	$	474	$	439	$	62
Total	$	203	$	474	$	439	$	(810	)

The re-measurement of monetary assets is related to certain taxes receivable and other accounts denominated in Bolivia’s local currency.

The loss on the Euro derivatives during 2005 is related to the marking to market of open Euro derivative positions held by the Company related to certain capital equipment purchased for San Cristobal for which the price was denominated in Euros.  The Company held no such derivative positions during 2006.

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14.Supplemental cash flow information

The following table sets forth supplemental cash flow information and non-cash transactions:

	Nine Months Ended
	September 30,
	2006			2005
	(in thousands)
Supplemental disclosure:
Interest paid, net of amounts capitalized	$	774		$	6,387
Supplemental disclosure of non-cash transactions:
Depreciation expense capitalized	$	3,618		$	1,776
Accrued interest capitalized	$	799		$	228
Stock issued as compensation to consultants	$	27		$	126
Mark-to-market gain (loss) on derivatives	$	(125,969	)	$	(7,116	)
Accrued property plant & equipment	$	(13,008	)	$	55,807
Capitalized leases	$	8,123		$	15,222
Stock issued as compensation including amounts capitalized	$	3,608		$	2,016
Stock issued to purchase debt	$	17,125		$	6,103

15.Subsequent Events

During October 2006 the Company borrowed an additional $20 million against the $225 million San Cristobal project finance facility, bringing to $140 million the total borrowings against the facility. The funds are restricted to the development of the San Cristobal Project.

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Item 2:   Management’s Discussion and Analysis of Financial Condition and Results of Operations

General

The following discussion and analysis summarizes the results of operations of Apex Silver Mines Limited (“Apex Silver” or “we”) for the three month and nine month periods ended September 30, 2006 and changes in our financial condition from December 31, 2005.  This discussion should be read in conjunction with the Management’s Discussion and Analysis included in our Annual Report on Form 10-K as amended for the period ended December 31, 2005.

Apex Silver is a mining exploration and development company that holds a portfolio of exploration and development properties primarily in South America and Central America. We currently focus our resources primarily on the development of our San Cristobal Project in Bolivia. At present, none of our properties are in production and, consequently, we have no current operating income.

Overview

Development of San Cristobal

During the first nine months of 2006 we continued to make significant progress on the construction of our San Cristobal Project in Bolivia with expenditures of approximately $71 million in the third quarter and $207 million in the first nine months on equipment procurement, plant construction, infrastructure development, engineering and other costs. The concrete work, steel erection and power line construction was essentially completed at September 30, 2006.  During the first nine months of 2006 significant progress was made on the installation of the mills and construction of the primary crusher and the associated conveyor system with construction beginning on the rail spur during the third quarter. We expect to have access to the power grid by the end of 2006 and construction of the rail and port facilities are expected to be completed in the second quarter of 2007. At September 30, 2006 the project was estimated to be approximately 80% completed. We anticipate commencement of production at the project in the third quarter of 2007.

During the year we began mining ore at the San Cristobal Project and at September 30, 2006 we had stockpiled approximately 3.5 million tonnes of work-in-process ore inventories recorded at a cost of approximately $16.9 million. Work-in-process inventories include ore produced and stockpiled for which further processing is necessary before a product is ready for sale.  During September 2006 we began mining and stockpiling sulfide ore and at September 30, 2006 approximately 0.1 million tonnes of the total stockpiled ore was sulfide ore.  The sulfide ores will be processed through the San Cristobal mill first with the oxide ores scheduled for processing later in the mine life.  Final processing of work-in-process ore inventories to a saleable product is scheduled to begin during the third quarter of 2007.

Sale of 35% of San Cristobal to Sumitomo

On September 25, 2006, we sold to Sumitomo Corporation (“Sumitomo”), a 35% interest in three subsidiaries that own and operate our San Cristobal Project, market Project concentrates and hold the metals hedge positions required by the Project lenders, and certain other Project-related assets. We continue to own 65% of these three subsidiaries. The purchase price paid by Sumitomo was $224 million in cash and certain deferred payments based on silver and zinc production from the Project and future expansions as follows:  (i) quarterly payments equal to 22.86% of Sumitomo’s share of payable silver production from the San Cristobal Project, or approximately 8% of total payable silver production, payable in cash or silver at Sumitomo’s option, and (ii) quarterly cash payments equal to 20% of Sumitomo’s share of payable zinc production from the San Cristobal Project, or approximately 7% of total payable zinc production, multiplied by the zinc price in excess of $1,800 per tonne.

The Minera San Cristobal (“MSC”) Shareholders Agreement entered into in connection with the sale to Sumitomo provides that the majority shareholder will control the MSC Board and appoint the Board Chairman.  MSC is the subsidiary that owns and operates the San Cristobal Project.  As long as the

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minority shareholder holds more than 25% of the outstanding stock of MSC, certain significant matters require the approval of the minority shareholder director including approval of annual programs and budgets, increases of 15% or more over budgeted capital expenditures or operating expenses (with customary exceptions for emergencies and compliance), merger or liquidation, permanent cessation or suspension for more than 180 days of mining at or abandonment of the San Cristobal Project.  If a deadlock with respect to adoption or amendment in excess of 15% of a program and budget continues for 180 days, the majority shareholder’s directors are then entitled to approve the program and budget.

Under the MSC Shareholder Agreement, we and Sumitomo are required to provide our respective proportionate shares of shareholder debt or equity funding required for MSC to achieve commercial operations, or be diluted on a two for one basis.   Following commercial operations, we and Sumitomo may choose to provide our proportionate share of required external funding or dilute on a one for one basis.  Dilution by us or Sumitomo of ownership interest in MSC would result in transfers of shares in the other two subsidiaries, so that the parties’ ownership interests in the three companies would remain identical.  If Sumitomo were to dilute below 25% ownership of MSC solely as a result of its failure to provide future funding, and were to refuse to approve a program and budget proposed by us for more than 180 days, Sumitomo could elect to sell to us all (but not less than all) of its remaining interest in MSC for $224 million, reduced pro rata by the percentage of year-end 2005 reserves produced from the San Cristobal Project.

We and Sumitomo have also entered into a two year Option Agreement pursuant to which Sumitomo may acquire a 20 percent to 35 percent interest in each of certain of our active exploration properties at historical cost, and in each of certain inactive exploration properties at historical cost once we have spent $200,000 in exploration costs. Sumitomo must exercise its option on each active property within 60 days of receiving complete information regarding the property and on each inactive property within 60 days of the Company spending $200,000 on the property.  At September 30, 2006 Sumitomo had not exercised its options to acquire any exploration properties.

In connection with the sale to Sumitomo, we also amended the San Cristobal project finance facility, as follows:  (i) we and Sumitomo provide severally pro rata to our respective 65% and 35% ownership interests in MSC, and not jointly, San Cristobal Project completion and cost overrun support; (ii) we and Sumitomo guarantee severally pro rata to our MSC ownership interests, and not jointly, the performance of the metals hedge positions; (iii) we were permitted to withdraw from accounts controlled by the Project lenders $70 million of contingent overrun financing previously required by the lenders; (iv) Sumitomo guarantees up to $45.5 million of overrun funding by the Company; (v) we were permitted to remove from escrow approximately $5.7 million previously deposited to meet interest payments on its subordinated notes, and are no longer required to escrow an additional $10.4 million; and (vi) additional cure periods for certain representation and covenant defaults and certain defaults related to completion of the Project are permitted, as is the substitution of a replacement sponsor in the event of certain defaults, bankruptcy or expropriation events.

We recorded a minority interest in the assets and liabilities sold of $88.6 million and recognized a gain of $119.8 million related to the transaction. The gain is net of approximately $6.4 million of selling costs we incurred related to the transaction.

Updated San Cristobal Funding Requirements, Production and Operating Costs

During October 2006, we completed our review of the San Cristobal development plan commenced during the third quarter 2006, based on the advancement of construction and mining activities.  As a result, we have increased our estimate for the total amount of project funding, increased our estimates of zinc production and reduced our estimates of silver production for the first five years of operation, and increased our estimates of average cash operating costs for the first five years of operation.  These changes result primarily from record high commodity prices and the required stockpiling of increased amounts of oxide ore for future processing.  Record high commodities prices have had a direct impact on the cost of supplies such as fuel, tires, and reagents, contributing to increased funding requirements for the project and higher estimated operating costs once production begins.  Recent pre-stripping activity has provided additional information regarding the ore body, which indicates that the boundary between the surface silver-rich oxide ore that will be stockpiled for future processing and the sulfide ore that will be the first to be processed through the San Cristobal mill is lower than previously believed.   This has increased the amount of oxide ore stockpiled for future processing and has required that increased amounts of material be moved to access the sulfide ore. Based on the increased amounts of silver-rich oxide ore, we have begun to analyze

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the feasibility of various alternative methods to process the oxide ore earlier in the mine life than originally planned.

With more than 80% of the construction complete, our estimate for the total amount of project funding required from January 1, 2004 through the beginning of production in 2007 has increased from approximately $600 million to approximately $650 million or an 8% increase over the original estimate developed in 2004. This amount includes all estimated costs required to commence production at San Cristobal, including all engineering, procurement and construction costs, as well as estimates for constant dollar escalation and contingencies. The increase includes approximately $23 million of additional mining costs related to the stockpiling of additional oxide ore, $15 million in additional capital, and $9 million of additional contingency.  As previously indicated, this estimate excludes $22 million advanced to the company constructing the power line, $6 million advanced to the company constructing the port facilities, and $43 million of working capital.  The working capital estimate has been increased by approximately $16 million to $43 million due to higher operating costs incurred prior to the commencement of receipt of revenues from production.

Based on additional information developed during pre-stripping and a 40,000-tonne-per-day ore throughput, in the first five years of operation San Cristobal is now expected to produce annually approximately 16.9 million ounces of payable silver (at an average cash operating cost of approximately $1.97 per ounce), 225,000 tonnes of payable zinc (at an average cash operating cost of approximately $0.51 per pound) and 82,000 tonnes of payable lead (lead is credited as a by-product to silver production costs).  The higher operating costs result primarily from the increases in the cost of supplies due to higher commodity prices described above, and also from increases in estimated man power requirements over those anticipated in the original development plan. The term “average cash operating cost” is a non-GAAP financial measure (see “Non-GAAP Financial Measures”). During its projected 16-year life, San Cristobal is expected to produce annually approximately 15.7 million ounces of payable silver, 166,000 tonnes of payable zinc and 59,000 tonnes of payable lead.

We are updating our San Cristobal reserve estimates to reflect the new information about the boundary between oxide and sulfide ore and updated operating costs and metals prices.  We expect to complete this updated estimate prior to filing our report on Form 10-K for the year ended December 31, 2006.

Financing and Commodity Derivatives Matters

During the first quarter of 2006 we issued approximately 1.1 million Ordinary Shares valued at $17.1 million and paid $0.3 million for interest to complete the purchase of $20.0 million principal amount of our 4.0% Convertible Senior Subordinated Notes due 2024 in a privately negotiated exchange transaction. The transaction resulted in the recognition of a $2.9 million gain on extinguishment of debt.  We cancelled the notes purchased in the transaction.

During the first quarter of 2006 we initiated borrowing under the $225 million San Cristobal project finance facility that we closed during December 2005.  At September 30, 2006 we had borrowed $120 million under the facility.  During October 2006 we borrowed an additional $20 million bringing the total borrowings against the facility to $140 million.

During the second quarter of 2006 we completed the sale of 6,375,000 of our Ordinary Shares at $24.45 per share ($23.70 per share net of commissions). We intend to use the net proceeds of approximately $151.1 million to continue further evaluation, exploration, advancement and expansion of our portfolio of exploration properties and for other general corporate purposes.  With this additional available funding we have accelerated the evaluation of our current exploration portfolio and the expansion of new exploration opportunities.

Certain covenants related to the project finance facility required us to provide price protection for a portion of our planned production of metals from San Cristobal.  During the third quarter 2005, we entered into contracts utilizing forward sales, puts and calls to comply with the project finance facility covenants.  In order to maintain leverage to silver market prices, we entered into proportionally more zinc and lead contracts than silver.

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In addition, we have made limited investments in shorter duration put and call options and other metals derivatives not required by the project financing. These discretionary derivative positions typically have settlement dates less than one year and we have the option to settle these positions in cash or roll them forward to a future date. During 2006 we made $36.9 million of net cash payments to settle the majority of these discretionary derivative contracts not required by the project financing.  The remaining liability for these discretionary derivative positions on a mark-to-market basis as of September 30, 2006 was $5.0 million.

We continue to recognize losses on our total derivative position as a result of continuing high spot and forward prices for silver, zinc and lead. During the first nine months of 2006 we recorded losses of $165.5 million. During the same period we made net cash payments of $36.9 million to settle the majority of our discretionary positions not required by the project financing facility.   While the final financial impact of the required price protection program related to the project financing will not be known until the positions are closed on their future settlement dates, we do not intend to settle those open positions with cash prior to the settlement dates beginning in 2007.  At the time of final settlement, the gain or loss recorded will exclude previously recognized mark-to-market gains or losses.  In addition, if the increased silver, zinc and lead prices were to continue into the production phase of the San Cristobal Project, the increased revenue from metals sales for which price protection was not required would generate a significant benefit to future earnings and cash flows.  During the periods that the metal derivative positions are outstanding, gains and losses may fluctuate substantially from period to period in accordance with Statement of Financial Accounting Standards No. 133, “Accounting for Derivative Instruments and Hedging Activities” (“FAS 133”), based on spot prices, forward prices and quoted option volatilities. If current spot prices continue into future periods that include the settlement dates of our open derivative positions, we will report further mark-to-market losses in subsequent periods.

Political Matters in Bolivia

We continue to monitor the political uncertainties in Bolivia that may affect our San Cristobal Project.  To date, there have been no formal proposals by the Bolivian government to nationalize the mining industry but it is possible that the government may alter its current policies with respect to the mining industry in the future.

Results of Operations

Three Months Ended September 30, 2006

Exploration.  Exploration expense was $2.2 million for the third quarter 2006 compared to $1.1 million for the third quarter 2005.  Exploration expense was incurred primarily in Bolivia, Peru, Argentina and Mexico during the third quarter 2006 with the increased expense resulting primarily from a drilling program in Argentina.

Administrative.  Administrative expense of $4.1 million for the third quarter 2006 is comparable to $4.8 million for the third quarter 2005.  The additional administrative expense incurred during the third quarter of 2005 as compared to the same period of 2006 is primarily related to indirect legal and consulting fees associated with the project finance facility that we closed in December 2005.

Gains and Losses - Commodity Derivatives.  For the third quarter of 2006 we recorded losses related to our metals derivative positions in the amount of $45.4 million compared to a loss of $9.6 million on our derivative positions for the third quarter of 2005. During the same period of 2006 we made net cash payments of $8.8 million to settle the majority of our discretionary derivative positions not required by the project financing facility.  Continuing high spot and forward prices for silver, zinc and lead resulted in the losses for the 2006 period, which are primarily related to the hedge positions required by the project finance facility. Our open metals derivative position for the second quarter 2005 was substantially smaller, prior to the project financing facility requirements, as reflected in the smaller non-cash mark-to-market loss. (See “Overview” for additional discussion of the third quarter 2006 derivative loss).

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Gain on sale of interest in subsidiary. During the third quarter 2006 we sold a 35% equity interest in the subsidiaries that own and operate our San Cristobal Project to Sumitomo for $224 million in cash and the retention of certain interests in future silver and zinc production. We recognized a gain of $119.8 million on the transaction. There was no similar activity during the third quarter of 2005.

Interest and other income. We recorded interest and other income of $4.5 million for the third quarter 2006 as compared to $5.7 million recorded during the third quarter 2005.  The decrease in interest and other income during 2006 is primarily related to lower average cash and investment balances during the third quarter 2006 as compared to the same period of 2005, resulting in lower interest earned. Amounts spent on our San Cristobal Project resulted in the lower average cash and investment balances during 2006.

Interest expense and other borrowing costs.  We recognized no interest expense and other borrowing costs during the third quarter 2006 as the total related costs of $7.1 million were capitalized. During the third quarter 2005 we recognized $2.6 million of interest expense and other borrowing costs net of approximately $1.8 million capitalized. Interest costs for 2006 are primarily related to the Convertible Senior Subordinated Notes Due 2024 and the project finance facility while the 2005 interest costs are primarily related to the Convertible Senior Subordinated Notes Due 2024.

Income Taxes.   For the third quarter 2006 we recorded approximately $0.1 million of income tax expense related to withholding taxes on certain services we provided to one of our Bolivian subsidiaries.  No such taxes were incurred during the third quarter 2005.

Nine Months Ended September 30, 2006

Exploration.  Exploration expense was $5.2 million for the first nine months of 2006 compared to $3.9 million for the first nine months of 2005.  Exploration expense was incurred primarily in Bolivia, Peru, Argentina and Mexico during the first half of 2006 with the increased expense resulting primarily from a drilling program in Argentina.

Administrative.  Administrative expense was $15.1 million for the first nine months of 2006, compared to $13.7 million for the first nine months of 2005.  The increase in administrative expense during 2006 is primarily the result of additional personnel and related indirect support costs associated with the advancement of our San Cristobal Project and certain legal fees and other costs associated with the investigation of a possible violation of the Foreign Corrupt Practices Act as previously reported.

Gains and Losses - Commodity Derivatives.  For the first nine months of 2006 we recorded losses related to our metals derivative positions in the amount of $165.5 million compared to a loss of $7.6 million on our derivative positions for the first nine months of 2005. During the same period of 2006 we made net cash payments of $36.9 million to settle the majority of our discretionary derivative positions not required by the project financing facility. Continuing high spot and forward prices for silver, zinc and lead resulted in the losses for the 2006 period, which are primarily related to the hedge positions required by the project finance facility. Our open metals derivative position for the first nine months of 2005 was substantially smaller prior to the project financing requirements, as reflected in the smaller non-cash mark-to-market gain. (See “Overview” for additional discussion of the 2006 derivative loss)

Interest and other income. Interest and other income of $12.6 million for the first nine months of 2006 comparable to $12.7 million recorded during the first nine months of 2005.

Interest expense and other borrowing costs.  Interest and other borrowing costs were $0.8 and $6.5 million, net of approximately $16.9 million and $4.3 million capitalized, for the first nine months of 2006 and 2005, respectively. The 2006 interest expense includes a $0.5 million write-off of deferred issuance costs related to the extinguishment of debt. The interest expense for 2006 is primarily related to the Convertible Senior Subordinated Notes Due 2024 and the project finance facility while the 2005 interest expense is primarily related to the Convertible Senior Subordinated Notes Due 2024.

Income Taxes.   For the first nine months of 2006 we recorded approximately $0.2 million of income tax expense related to withholding taxes on certain services we provided to one of our Bolivian subsidiaries.  No such taxes were incurred during the first nine months of 2005.

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Liquidity and Capital Resources

At September 30, 2006 our aggregate cash, restricted cash, short and long term investments and restricted investments totaled $549.1 million compared to an aggregate of $351.9 million in cash, restricted cash, short and long term investments and restricted investments at December 31, 2005.  The amounts held at September 30, 2006 include $138.1 million in cash and cash equivalents, $294.7 million in investments,  $15.2 million of cash that has been restricted to cover outstanding letters of credit and other purposes, $95.6 million of investments that are restricted to fund development at our San Cristobal Project and $5.5 million of investments that are restricted and at maturity will provide the amounts necessary to pay interest through September 2007 on the 4.0% Convertible Senior Subordinated Notes Due 2024.

As of September 30, 2006, we had cash and cash equivalents of $138.1 million, compared to $4.8 million at December 31, 2005.  The increase in our cash balance at September 30, 2006 is primarily the result of $151.1 million of net proceeds from an equity offering, $120.0 million of borrowings against the project finance facility, and $224.0 million of proceeds from the sale of a 35% interest in our San Cristobal Project.  In addition, cash and cash equivalents increased as a result of $5.7 million of net proceeds from the sale of Ordinary Shares to fund the power line construction, $1.8 million of proceeds from employee stock options exercised, $1.4 million of proceeds received from a loan from the power line contractor’s parent, and a net decrease in restricted cash of $120.0 million.  The increases in our cash balances were all partially offset by $207.3 million invested in property, plant and equipment related to the development of the San Cristobal Project, $58.4 million used to fund operations, property holding costs and administrative costs, net of interest and other income, the net purchase of $181.7 million of investments, $39.5 million of net premiums and liquidation payments made related to our discretionary derivative positions, $1.5 million paid to suppliers and contractors related to our San Cristobal Project, $0.7 million paid to the banks related to the credit facility and payments on long term debt (capital lease payments) of $1.6 million.

In conjunction with the sale of the 35% equity interest in the subsidiaries that own our San Cristobal Project to Sumitomo, the project finance facility agreements were amended to provide for the release to us of $70.0 million of overrun financing previously held in accounts controlled by the lenders and approximately $5.7 million previously escrowed to meet interest payments on our subordinated notes.  This $75.7 million (which was included in the $120.0 million of net decrease in restricted cash described above) is now unrestricted and available to us for general corporate purposes. At September 30, 2006 the amounts were recorded as investments as discussed above.

During the third quarter 2006 we revised our estimate for the total amount of project funding required for the San Cristobal Project from January 1, 2004 through the beginning of production scheduled for the third quarter of 2007 to approximately $650 million or an 8% increase over the original estimate developed in December 2004.  This amount includes all estimated costs required to commence production at San Cristobal, including all engineering, procurement and construction costs, as well as estimates for constant-dollar escalation and contingencies.  The estimate excludes $22 million advanced through the issuance of Ordinary Shares to the company constructing the power line, $6 million advanced to or escrowed for the company constructing the port facilities and approximately $43 million of working capital.  Advances to the power line and port facility providers are expected to be recouped through credits applied against payments for the contracted services. Excluding the power line and port advances, we have spent approximately $420 million on the Project through September 30, 2006 including $226 million spent during the first nine months of 2006.  In addition to the amounts above, we expect to incur interest and other financing costs related to the project finance facility of approximately $30 million prior to the start up of operations.

During the next twelve months we expect to spend about $230 million on the San Cristobal Project,  representing the remainder of the approximately $650 million total project cost estimate, plus an additional $43 million of working capital and $16 million of project financing interest costs prior to start up of operations.  The preceding amounts include $50 million in total project costs and $16 million in working capital in excess of the original estimates. We expect to fund these cash requirements by liquidating the restricted investments already set aside for this purpose, drawing the remaining funds available from the project financing facility, and using existing cash and investments to fund our 65% of the requirements in excess of the original estimates. In addition, during the next twelve months we expect to spend approximately $14

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million on general corporate costs and approximately $10 million on interest payments related to the outstanding convertible debt.  Our current plans call for expenditures of approximately $12 million on exploration efforts during the next twelve months. We plan to fund these expenditures from our existing cash and investment balances and from interest and other income.  At September 30, 2006 our aggregate cash, restricted cash, short and long term investments and restricted investments totaled $549 million. In addition we expect operating cash flows to begin during the third quarter of 2007.

Significant Accounting Policies

Effective January 1, 2006 we adopted Financial Accounting Standards No. 123R, “Share-Based Payment” (“FAS No. 123R”), using the modified prospective approach, which revised Statement of Financial Accounting Standards No. 123,  “Accounting for Stock-Based Compensation” (“FAS No. 123”), and superseded Accounting Principles Board (“APB”) Opinion 25, “Accounting for Stock Issued to Employees” and its related implementation guidance. We had previously adopted FAS No. 123 effective January 1, 2004 and consequently the adoption of FAS No. 123R did not have a significant impact on the comparability of stock compensation costs recognized in 2006 as compared to 2005. We recognized $3.6 million of stock based compensation costs for the nine months ended September 30, 2006 including amounts capitalized compared to $2.0 million of stock based compensation for the same period of 2005 including amounts capitalized. The increased cost is primarily related to stock option grants made in December of 2005 and vesting over a four year period.  (See Item 1 Note 10 for further detail of stock based compensation.)

Effective January 1, 2006 we adopted Emerging Issues Task Force Issue No. 04-06 (“EITF 04-06”), “Accounting for Stripping Costs Incurred during Production in the Mining Industry.” In January 2006, the EITF issued additional guidance defining the commencement of production as the period when saleable minerals are first extracted in greater than de minimis amounts. During the first quarter of 2006, we began mining significant amounts of oxide ore reserves at our San Cristobal Project, which have been placed in stockpiles for future processing.  The quantity and value of the minerals mined were sufficient to declare the start of ore production according to the EITF consensus. At September 30, 2006 we had recorded ore inventories valued at $16.9 million.

See Item 1, Note 2 for additional discussion of significant accounting policies and new accounting standards.

Contractual Obligations

We have entered into agreements with certain service providers and placed orders for certain equipment and construction materials for our San Cristobal Project resulting in commitments totaling approximately $77.6 million at September 30, 2006.  If we had cancelled all of these agreements or orders at September 30, 2006, we would have incurred cancellation fees totaling approximately $18.6 million.

During the nine months ended September 30, 2006 we had a net increase in long term debt of $114.8 million consisting of $120.0 million of borrowings against the project finance facility, $14.8 million of other long term borrowings and a $20.0 reduction of long term debt resulting from the buy back of a portion of the 4.0% Convertible Senior Subordinated Notes due 2024. In addition during the nine months ended September 30, 2006 we placed in service $8.1 million of equipment recorded as capital leases resulting in total capital lease obligations of $17.9 million at September 30, 2006.

In conjunction with the sale of a 35% interest in our San Cristobal Project to Sumitomo the Company recorded a note payable of $7.8 million as the result of assigning Sumitomo a 35% interest in a $22.3 million note receivable the Company holds from the power line contractor at the San Cristobal Project. The Company also recorded a $1.4 million deferred gain that is contingent upon the payment of a performance bonus to the construction contractor at the San Cristobal Project and the reimbursement to Sumitomo of its $1.4 million share of the bonus by the Company should the bonus be paid.  In addition, as a result of the sale the project finance facility agreements were amended to provide for the release of $70.0 million of overrun financing previously held in accounts controlled by the lenders and approximately $5.7 million previously escrowed to meet interest payments on our subordinated notes. This $75.7 million is now unrestricted and available for general corporate purposes.

29

Non-GAAP Financial Measures

The non-GAAP financial measure term “cash operating costs” is used on a per-ounce of payable silver and per-pound of payable zinc basis. Our estimated cash operating costs include estimated mining, milling and other mine related overhead costs. The per-ounce of silver cost also includes off-site costs related to projected silver refining charges. The per-pound of zinc cost also includes charges related to transportation of zinc concentrates and their projected treatment and smelting charges. All cash operating costs exclude taxes, depreciation, amortization and provisions for reclamation. The average cash operating cost per ounce of silver is equal to the pro-rata share of estimated average operating costs for the period reduced by the estimated value of lead by-product credits for the period and divided by the number of “payable ounces”. The lead by-product credits are net of charges related to transportation of lead concentrates and their projected treatment and smelting charges. The “payable ounces” are the estimated number of ounces of silver to be produced during the period reduced by the ounces required to cover estimated refining, treatment and transportation charges for the period. Average cash operating cost per pound of zinc is equal to the pro-rata share of estimated average operating costs for the period divided by the number of “payable pounds”. The “payable pounds” are the estimated number of pounds of zinc to be produced during the period reduced by the number of pounds required to cover estimated refining, treatment and transportation charges for the period. We have included estimated average cash operating cost information to provide investors with information about the cash generating capabilities of the San Cristobal Project. This information will differ from measures of performance determined in accordance with generally accepted accounting principles (GAAP) and should not be considered in isolation or as a substitute for measures of performance that will be prepared in accordance with GAAP. These measures are not necessarily indicative of operating profit or cash flow from operations to be determined under GAAP and may not be comparable to similarly titled measures of other companies.

Forward-Looking Statements

Some information contained in or incorporated by reference into this report may contain forward-looking statements. These statements include comments regarding San Cristobal development and construction plans, capital and other costs, funding and timing; the timing of completion of San Cristobal construction, start-up and commencement of operations; anticipated spending during 2006 and 2007; increased funding requirements, capital costs and working capital requirements for the San Cristobal Project; Contractual arrangements with Sumitomo, including Sumitomo’s obligations with respect to deferred payments and funding commitments; the likely increased volatility in future earnings due to forward sales, derivative positions and metals trading activity; anticipated San Cristobal production and operating costs and the timing and amounts of spending on the evaluation and expansion of our exploration portfolio. The use of any of the words “anticipate,” “continues,” “estimate,” “expect,” “may,” “will,” “project,” “should,” “believe” and similar expressions are intended to identify uncertainties.  We believe the expectations reflected in those forward-looking statements are reasonable.  However, we cannot assure that these expectations will prove to be correct.  Actual results could differ materially from those anticipated in these forward-looking statements as a result of the factors set forth below and other factors set forth in, or incorporated by reference into this report:

·worldwide economic and political events affecting the supply of and demand for silver, zinc and lead;

·political unrest and economic instability in Bolivia including the communities located near the San Cristobal Project and other countries in which we conduct business;

·future actions of the Bolivian government with respect to nationalization of gas and other natural resources;

·changes in the mining policies of the Bolivian government;

·volatility in market prices for silver, zinc and lead;

·financial market conditions;

·uncertainties associated with developing a new mine, including potential cost overruns and the unreliability of production and cost estimates in early stages of mine development;

30

·variations in ore grade and other characteristics affecting mining, crushing, milling and smelting operations and mineral recoveries;

·geological, technical, permitting, mining and processing problems;

·the availability, terms, conditions and timing of required government permits and approvals;

·failure to comply obligations under the San Cristobal project finance facility;

·disagreements with Sumitomo Corporation regarding future development or operation of San Cristobal, or failure to comply with agreements with Sumitomo related to the San Cristobal Project;

·uncertainties regarding future changes in applicable law or implementation of existing law, including Bolivian laws related to tax, mining, environmental matters and exploration; and

·the factors discussed under “Risk Factors” in our Form 10-K for the period ended December 31, 2005.

Many of those factors are beyond our ability to control or predict.  You should not unduly rely on these forward-looking statements. These statements speak only as of the date of this report on Form 10-Q.  Except as required by law, we are not obligated to publicly release any revisions to these forward-looking statements to reflect future events or developments.

Item 3.Quantitative and Qualitative Disclosures About Market Risk and Hedging Activities

Interest Rate Risk

Our outstanding debt consists primarily of our 4.0% and 2.875% Convertible Senior Subordinated Notes due 2024 and amounts borrowed under our San Cristobal project finance facility.  The Convertible Senior Subordinated Notes bear interest at a fixed rate and thus do not have exposure to interest rate changes.  The project finance facility bears interest at the LIBOR rate plus a credit spread.  As of September 30, 2006, we had borrowed $120 million under the facility and expect to borrow the full amount of the $225 million facility before the completion of the San Cristobal project in 2007.  Assuming the full $225 million was borrowed under the facility, a 1% increase in the LIBOR rate would result in an annual increase in interest expense of $2.25 million.  We have not entered into any agreements to hedge against unfavorable changes in interest rates, but may in the future manage our exposure to interest rate risk.

We invest excess cash in U.S. government and debt securities rated “investment grade” or better.  The rates received on such investments may fluctuate with changes in economic conditions. As a result, our investment income may fall short of expectations during periods of lower interest rates.  Based on the average cash balances outstanding during the first nine months of 2006, a 1% decrease in interest rates would have resulted in a reduction in interest income for the period of approximately $3 million.

Foreign Currency Exchange Risk

Although most of our expenditures are in U.S. dollars, certain purchases of labor, operating supplies and capital assets are denominated in Bolivianos, Euros or other currencies.  As a result, currency exchange fluctuations may impact the costs of our operations.  Specifically, the appreciation of Bolivianos against the U.S. dollar may result in an increase in operating expenses and capital costs at the San Cristobal project in U.S. dollar terms.  To reduce this risk, we maintain minimum cash balances in all foreign currencies, including Bolivianos, and complete most of our purchases, including purchases relating to the San Cristobal project, in U.S. dollars.

We have previously engaged in a limited amount of currency hedging activities primarily related to an equipment order for the San Cristobal project that was denominated in Euros.  At September 30, 2006 we did not hold any foreign currency derivative positions.

Commodity Price Risk

None of our properties are in production and, consequently, we do not have any current revenue from sales.  When the San Cristobal project begins production, our primary source of income will be from sales

31

of concentrates containing silver, zinc and lead.  As a result, changes in the price of any of these commodities could significantly affect our results of operations and cash flows.

To complete the San Cristobal project finance facility, we were required to hedge a portion of our planned silver, zinc and lead production from San Cristobal.  We have entered into contracts utilizing forward sales, puts and calls.  Non-cash mark-to-market gains and losses from these and other outstanding metals derivative positions may fluctuate substantially from period to period based on spot and forward prices and option volatilities.  The actual final financial impact of the required project financing facility derivative positions will not be known until the positions are closed on their future settlement dates.  Our outstanding derivative positions represent 4%, 14% and 17% of planned life-of-mine payable production of silver, zinc and lead at San Cristobal.

As a result of rising commodity prices, we recorded losses of $165.5 million on our derivative positions for the nine months ended September 30, 2006.  During the same period, we made net cash payments of $36.9 million to settle the majority of certain discretionary hedge positions that were not required by the project financing facility.  As of September 30, 2006, the fair value of our open commodities derivatives position was recorded as a $182.2 million liability.  If current spot prices continue into future periods that include the settlement dates of our open derivative positions, we will report further mark-to-market losses in subsequent periods.  See “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Results of Operations.”

Item 4. Controls and Procedures

(a)Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports we file or submit under the Securities and Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to Apex Silver’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our Disclosure Committee and management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness and design and operation of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(e) under the Securities Exchange Act of 1934.  Based upon this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.

(b)Change in Internal Control over Financial Reporting

Apex Silver’s management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934.  Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles (GAAP).  Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies and procedures may deteriorate.

There has been no change in the Company’s internal control over financial reporting during the most recent fiscal quarter that has materially affected, or that is reasonably likely to materially affect, the Company’s internal control over financial reporting.

32

PART II: OTHER INFORMATION

Item 1. Legal Proceedings

We reported in our 10-K filing for the period ended December 31, 2005 that the SEC has commenced an investigation into possible violations of the Foreign Corrupt Practices Act by one of our South American subsidiaries following our voluntary report to the SEC and Department of Justice of the results of our internal investigation. We are cooperating fully with the SEC investigation and will cooperate with any investigation by the U. S. Department of Justice.  We cannot predict with any certainty at this time the final outcome of any investigations that may take place including any fines or penalties that may be imposed.

Item 1A. Risk Factors

Other than as set forth below, there were no material changes from the risk factors as previously discussed in our Form 10-K as amended for the year ended December 31, 2005.

We depend on a single mining project which is not 100% owned by us.

We anticipate that the majority, if not all, of any revenues for the next few years and beyond will be derived from the sale of metals mined at the San Cristobal Project.  Therefore, if we are unable to complete and successfully mine the San Cristobal Project, our ability to generate revenue and profits would be materially adversely affected.

In September 2006 we sold 35% of the San Cristobal Project to Sumitomo Corporation. As a result of this transaction, Sumitomo obtained certain rights with respect to the management and operation of the project. For example, certain significant matters for the project require the approval of Sumitomo, including approval of annual programs and budgets, and increases of 15% or more in capital expenditures or operating expenses and mergers or liquidations. If Sumitomo does not approve our proposals with respect to these matters, we may face significant delays in completing the project or improving its operations and may be unable to operate the project in the manner we believe to be in the best interests of our shareholders.

We and Sumitomo are required to provide our proportionate shares of funding for the project if necessary in order to complete construction and begin commercial operations. If additional funding is necessary and Sumitomo does not pay its 35% share of such additional amounts, there can be no assurance that we would have sufficient capital to fund the amounts required.

Sumitomo is also required to comply with certain provisions of the San Cristobal project financing agreements.  If Sumitomo fails to comply with its obligations, the failure could result in a default under those agreements, and in the subsequent acceleration of the San Cristobal project loans and settlement obligations under the commodity derivative obligations required by the project lenders, and enforcement of the lender’s liens against the San Cristobal Project. See --- “We may be unable to comply with the terms and covenants of the debt financing for our San Cristobal Project.”

Our San Cristobal Project may be adversely affected by changes in government policies toward the mining industry.

On May 1, 2006, President Evo Morales of Bolivia, who took office in January 2006, signed a decree to nationalize Bolivia’s hydrocarbon industry, in order to take control of companies involved in the production, transport, refining or distribution of oil and gas.  Although the oil and gas companies were permitted to continue operating, the nationalization decree provides that a larger share of the revenues derived from the production and sale of hydrocarbons in Bolivia will go to the government.  The government is negotiating new arrangements separately with each of the oil and gas producers operating in Bolivia. President Morales and others in his administration have made public statements regarding their desire to recover natural resource production in Bolivia, including mining.

33

To date, there have been no formal proposals to nationalize the mining industry.   The government may, however, alter its current policies with respect to the mining industry.  If the San Cristobal project were nationalized, we might be unable to recover any significant portion of our investment in the project.  The government could also substantially increase mining taxes or require significant royalty payments, which could have a material adverse effect on the profitability of the San Cristobal project.   If as a result of changes in government policy, we did not complete construction of the San Cristobal project, we could have substantial liabilities in connection with our hedge positions.  We do not maintain political risk insurance to cover losses that we may incur as a result of nationalization, expropriation or similar events in Bolivia.  The lenders, other than Corporacion Andina de Fomento, do, however maintain political risk insurance to cover their loan and hedge position exposures.  Amounts payable with respect to such insurance would be payable directly to the lenders or hedge counterparties and would not cover any portion of our investment in the project.

In addition, in May 2006, the Constitutional Court of Bolivia issued a ruling declaring certain articles of the Mining Code unconstitutional. The Court’s ruling is not effective until May 2008 and the ruling urges the Bolivian Congress to enact legislation during that time which may supersede the ruling.  Among other things, the ruling may limit the transferability of mining concessions and restrict our ability to transfer or mortgage our mining concessions including the San Cristobal concessions that we have mortgaged as collateral to the lenders providing financing for the San Cristobal Project.  There can be no assurance that the Bolivian Congress will enact legislation to permit the transfer or mortgage of concessions prior to the May 2008 implementation and if implemented, what the impact of the Court’s ruling will be.  If the Court’s ruling is implemented and causes a negative effect on the validity of our existing San Cristobal mortgages that situation could result in a default under the San Cristobal Project finance facility, which could result in acceleration of the loan and hedge liabilities.

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3.Defaults Upon Senior Securities

None.

Item 4.Submission of Matters to a Vote of Security Holders

None.

Item 5.Other Information

None.

Item 6.Exhibits

10.1Purchase and Sale Agreement, dated September 25, 2006 among the Company, Apex Luxembourg S.A.R.L., Apex Silver Mines Sweden AB and Sumitomo Corporation.

10.2Deferred Payments Agreement, dated September 25, 2006 between Apex Silver Mines Sweden AB and Sumitomo Corporation.

10.3MSC Shareholders Agreement, dated September 25, 2006 among Apex Luxembourg S.A.R.L., Apex Silver Mines Sweden AB, Gotlex Lageraktiebolag nr. 451 AB and Minera San Cristobal, S.A.

10.4Option Agreement, dated September 25, 2006 between the Company and Sumitomo Corporation.

10.5Omnibus Amendment Agreement, dated September 25, 2006 among Minera San Cristobal S.A., the Company, Apex Silver Mines Sweden AB, Apex Luxembourg S.A.R.L., Apex Metals GmbH, Apex Silver Finance LTD., Apex Metals Marketing GmbH, Gotlex Lageraktiebolag nr. 451 AB, Comercial Metales Blancos AB, BNP Paribas, Barclays Capital, JP

34

Morgan Chase Bank, N.A., Corporacion Andina de Fomento and the senior lenders and hedge banks party thereto.

10.6Form of Change of Control Agreement

31.1Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act

31.2Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act

32Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C., 1350 (Section 906 of the Sarbanes-Oxley Act)

35

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on behalf of the undersigned thereunto duly authorized.

		APEX SILVER MINES LIMITED
Date:	November 6, 2006	By:	\s\ Jeffrey G. Clevenger
			Jeffrey G. Clevenger
			President and Chief Executive Officer
Date:	November 6, 2006	By:	\s\ Gerald J. Malys
			Gerald J. Malys
			Senior Vice President and Chief Financial Officer

36

EX-10.1

Exhibit 10.1

Execution Version

PURCHASE AND SALE AGREEMENT

Entered into as of September 25, 2006

among

APEX SILVER MINES LIMITED,

APEX LUXEMBOURG S.À R.L.,

APEX SILVER MINES SWEDEN AB,

and

SUMITOMO CORPORATION

TABLE OF CONTENTS

			Page
ARTICLE I DEFINITIONS		3
ARTICLE II PURCHASE AND SALE; CLOSING		19
Section 2.1	Purchase and Sale		19
Section 2.2	Purchase Price		19
Section 2.3	Allocation of Purchase Price		19
Section 2.4	Closing		20
Section 2.5	Closing Deliveries		20
Section 2.6	MOU		23
ARTICLE III TRANSACTION REPRESENTATIONS AND WARRANTIES		23
Section 3.1	Apex’s Representations and Warranties		23
Section 3.2	Sumitomo’s Representations and Warranties		29
ARTICLE IV REPRESENTATIONS AND WARRANTIES REGARDING ACQUIRED ENTITIES, MSC, OLD METALS, NEW METALS, AND NEW CAYMAN		31
Section 4.1	Organization, Good Standing, Authority, Governing Documents, Books and Records		31
Section 4.2	Consents; No Conflicts		32
Section 4.3	Consents and Approvals for the Project		33
Section 4.4	Subsidiaries		33
Section 4.5	Financial Statements; No Undisclosed Liabilities; No Material Adverse Effect		34
Section 4.6	Title to Properties		35
Section 4.7	Material Contracts		35
Section 4.8	Employees; Employee Benefits		36
Section 4.9	Legal Compliance		37
Section 4.10	Taxes		37
Section 4.11	Legal Proceedings		37
Section 4.12	Environmental Matters		38
Section 4.13	Interested Party Transactions		38
Section 4.14	Insurance		38
Section 4.15	Financing Documents		38
Section 4.16	No Default		38
Section 4.17	Performance Security		39
Section 4.18	Acquired Entities		39
Section 4.19	No Liquidation; Intent		39
Section 4.20	Notices		39
Section 4.21	Project Information and Other Information Furnished		39
ARTICLE V OTHER COVENANTS			40
Section 5.1	Confidentiality		40
Section 5.2	Expenses; Transfer Taxes; Tax Cooperation		40

i

Section 5.3	Further Assurances	41
ARTICLE VI CONDITIONS TO CLOSING		42
Section 6.1	Authorizations and Government Approvals	42
Section 6.2	Closing Deliveries to Sumitomo	42
Section 6.3	Closing Deliveries to Apex, Apex Sweden, and Apex Luxembourg	46
Section 6.4	Board Approvals	46
Section 6.5	Restructuring	46
ARTICLE VII INDEMNIFICATION		47
Section 7.1	Survival of Representations and Warranties	47
Section 7.2	Indemnification	47
Section 7.3	Procedures	48
Section 7.4	Insurance Proceeds	49
ARTICLE VIII MISCELLANEOUS		50
Section 8.1	Entire Agreement	50
Section 8.2	Governing Law; Language	50
Section 8.3	Dispute Resolution	50
Section 8.4	Headings	50
Section 8.5	Notices	50
Section 8.6	Severability	51
Section 8.7	Amendment; Waiver	52
Section 8.8	Assignment and Binding Effect	52
Section 8.9	No Benefit to Others	52
Section 8.10	Counterparts	52
Section 8.11	Interpretation	52
Section 8.12	Rules of Construction	54
Section 8.13	No Partnership	54

ii

TABLE OF SCHEDULES AND EXHIBITS

Schedule A-1	Ownership of Shares of New Sweden 1, New Sweden 2, and New Cayman
Schedule A-2	Ownership of Shares of MSC and Quotas of New Metals
Schedule B	Material Project Documents
Schedule C	Apex Disclosure Schedule
Schedule D	Sumitomo Disclosure Schedule
Schedule E	Purchase Price Allocation
Schedule F	New and Amended Financing Documents
Exhibit A	Form of MSC Shareholders Agreement
Exhibit B	Form of Metals Quotaholders Agreement
Exhibit C	Form of New Cayman Shareholders Agreement
Exhibit D	Form of Apex Guaranty
Exhibit E	Form of Sumitomo Guaranty
Exhibit F	Form of Deferred Payments Agreement
Exhibit G	Form of Dispute Resolution Agreement
Exhibit H	Form of Option Agreement
Exhibit I	Form of Reimbursement Agreement

iii

PURCHASE AND SALE AGREEMENT

This Purchase and Sale Agreement is entered into as of September 25, 2006, by and among:

APEX SILVER MINES LIMITED, an exempted company limited by shares duly organized and validly existing under the Laws of the Cayman Islands, British West Indies (“Apex”), with its registered office at Walker House, Mary Street, George Town, Grand Cayman, Cayman Islands, British West Indies;

APEX LUXEMBOURG S.À R.L., a société à responsabilité limitée duly organized and validly existing under the Laws of the Grand Duchy of Luxembourg (“Apex Luxembourg”), with its registered office at 73, Côte d’Eich, L-1450 Luxembourg, registered with the Luxembourg Register of Commerce (Registre de Commerce et des Sociétés du Grand-Duché de Luxembourg) under number B 110 956;

APEX SILVER MINES SWEDEN AB, a privat aktiebolag duly organized and validly existing under the Laws of the Kingdom of Sweden (“Apex Sweden”), with its registered office at c/o Accurate Accounting AB, Drakegatan 7, SE-412 50 Göteborg, Sweden; and

SUMITOMO CORPORATION, a corporation duly organized and validly existing under the Laws of Japan (“Sumitomo”), with its headquarters at 8-11, Harumi, Chuo-ku, Tokyo 104-8610, Japan.

Apex, Apex Luxembourg, Apex Sweden, and Sumitomo are sometimes referred to herein individually as a “Party” and collectively as the “Parties.”  Capitalized terms used and not otherwise defined in this Agreement have the respective meanings ascribed thereto in ARTICLE I.

RECITALS

A.            Apex Sweden owns, beneficially and of record, (1) shares representing 100% of the issued and outstanding share capital of means Gotlex Lageraktiebolag nr 451, organization number 556702-1083, a privat aktiebolag duly organized and validly existing under the Laws of the Kingdom of Sweden (“New Sweden 1”), with its registered office at c/o Wistrand Advokatbyrå, Lilla Bommen 1, 411 04 Göteborg, Sweden; and (2) shares representing 100% of the issued and outstanding share capital of Comercial Metales Blancos AB, a privat aktiebolag duly organized and validly existing under the Laws of the Kingdom of Sweden (“New Sweden 2”), with its registered office at c/o Anders Sköldberg, Ernst & Young AB, 401 82 Göteborg, Sweden.

B.            Each of Apex Sweden and Apex Luxembourg own, beneficially and of record, shares, which together represent 65% of the issued and outstanding share capital of Minera San Cristóbal S.A., a sociedad anónima organized under the Laws of Bolivia (“MSC”), with domicile at the city of Potosi, Bolivia, with register of commerce number 13681.  New Sweden 1 owns, beneficially and of record, shares representing 35% of the issued and outstanding share capital of MSC.

C.            Apex Sweden owns, beneficially and of record, a quota representing 65% of the issued and outstanding capital of Apex Metals Marketing GmbH, a Gesellschaft mit beschränkter Haftung organized under the Laws of Switzerland (“New Metals”), with its seat in Zug, Canton of Zug, Switzerland and with a registered address of c/o Juris Treuhand AG, Industriestrasse 47, 6304 Zug, Switzerland.  New Sweden 2 owns, beneficially and of record, a quota representing 35% of the issued and outstanding capital of New Metals.

D.            Apex Sweden is the holder of that certain Subordinated Promissory Note, dated as of the date hereof, made by MSC in favor of Apex Sweden in the original principal amount of US$27,495,378.00 of which US$27,495,378.00 is outstanding on the date hereof (the “Apex Sweden MSC Subordinated Debt”).  New Sweden 1 is the holder of that certain Subordinated Promissory Note, dated as of the date hereof, made by MSC in favor of New Sweden 1 in the original principal amount of US$14,805,204.00 of which US$14,805,204.00 is outstanding on the date hereof (the “New Sweden 1 MSC Subordinated Debt”).

E.             Apex Luxembourg owns, beneficially and of record, shares, which represent 100% of the issued and outstanding share capital of Apex Silver Finance Ltd., an exempted company limited by shares organized under the Laws of the Cayman Islands, British West Indies (“New Cayman”), with its registered office at Walker House, Mary Street, George Town, Grand Cayman, Cayman Islands, British West Indies.

F.             MSC owns and is developing the San Cristóbal silver, zinc, and lead mine in Bolivia.

G.            Concurrently with the execution and delivery of this Agreement, New Metals and MSC are entering into the New Concentrate Sales Agreement and the Concentrate Sales Agreement, dated as of December 1, 2005, between MSC and Old Metals is being terminated.  Under the New Concentrate Sales Agreement, New Metals has the exclusive right to acquire and market the lead, zinc, and bulk concentrates produced by the Project.

H.            The New and Amended Financing Documents are being executed and delivered by the parties thereto concurrently with the execution and delivery of this Agreement.

I.              Apex Sweden desires to sell to Sumitomo, and Sumitomo desires to purchase from Apex Sweden, all of the shares of New Sweden 1 and New Sweden 2, in consideration for, among other things, a portion of the Purchase Price.

J.             Apex Luxembourg desires to sell to Sumitomo, and Sumitomo desires to purchase from Apex Luxembourg, the New Cayman Acquired Shares, in consideration for a portion of the Purchase Price.

AGREEMENT

In consideration of the mutual promises, covenants, and agreements set forth herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

2

ARTICLE I
DEFINITIONS

For purposes of this Agreement, the following terms have the following meanings:

“Acquired Entity” means New Sweden 1 or New Sweden 2, as the context requires.

“Acquired Entities” means New Sweden 1 and New Sweden 2.

“Action” has the meaning specified in Section 7.3(b).

“Affiliate” means, with respect to any Person, any other Person that directly, or indirectly through one or more intermediaries, Controls, is Controlled by, or is under common Control with, the Person in question.

“Agreement” means this Purchase and Sale Agreement (including the Exhibits, Disclosure Schedules (but not the Apex Disclosure Bundle), and other Schedules attached hereto).

“Apex” has the meaning specified in the preamble.

“Apex Disclosure Bundle” means the collection of documents listed so named, dated the date hereof, delivered by Apex to Sumitomo.

“Apex Disclosure Schedule” means the schedule so named attached hereto as Schedule C.

“Apex Guaranty” means the Guaranty in the form attached hereto as Exhibit D, being entered into by Apex in favor of New Sweden 1, New Sweden 2, and Sumitomo.

“Apex Luxembourg” has the meaning specified in the preamble.

“Apex Management Agreements Guarantee” means that certain Guarantee Agreement, dated as of December 1, 2005, by Apex in favor of MSC and Old Metals, as amended by the Omnibus Amendment Agreement, concerning, among other things, the MSC Management Agreement and the New Metals Management Agreement, and rights and obligations in respect of which were assigned to New Metals pursuant to the Assignment and Assumption of Contract.

“Apex Parent Guarantees” means the Apex Management Agreements Guarantee and the Apex Guaranty.

“Apex Sweden” has the meaning specified in the preamble.

“Apex Sweden MSC Subordinated Debt” has the meaning specified in the recitals.

“ASC Bolivia” means ASC Bolivia LDC (Sucursal Bolivia), the branch, existing under the Laws of Bolivia, with domicile at Calle Campos N° 265, La Paz, Bolivia and with register of

3

commerce number 13961, of ASC Bolivia LDC, an exempted limited duration company organized under the Laws of the Cayman Islands, British West Indies, with its registered office at Walker House, Mary Street, George Town, Grand Cayman, Cayman Islands, British West Indies.

“ASC Bolivia Acquired Assets” has the meaning specified in Section 5.3(b).

“Assignment and Assumption of Contract” means that certain Assignment and Assumption of Contract, dated on or about the date hereof, between Old Metals and New Metals.

“Audited Balance Sheets” has the meaning specified in Section 4.5(a).

“Authorizations” means resolutions, approvals, or consents of third parties, creditors, shareholders, partners, and members, excluding any resolution, approval, or consent of any Governmental Authority.

“Basket Amount” has the meaning specified in Section 7.2(b).

“Bolivia” means the Republic of Bolivia.

“Bolivian Corporations Law” means the Bolivian Code of Commerce enacted by Decree Law No. 14379 of February 25, 1997.

“Bolivianos” or “Bs.” means Bolivianos, the lawful currency of Bolivia.

“Business Day” means any day other than Saturday, Sunday, and a day on which banks in New York, New York, U.S.A. or Tokyo, Japan are required or permitted to close.

“CHF” means Swiss francs, the lawful currency of Switzerland.

“Closing” has the meaning specified in Section 2.4.

“Closing Date” has the meaning specified in Section 2.4.

“Common Security Agreement” means that certain Common Security Agreement, dated as of December 1, 2005, among MSC, Apex Sweden, Apex Luxembourg, Old Metals, BNP Paribas, Barclays Capital, Corporación Andina de Fomento, JPMorgan Chase Bank, N.A., the senior lenders party thereto, and the hedge banks party thereto, as amended by the Omnibus Amendment Agreement.

“Confidential Information” has the meaning specified in Section 5.1.

“Confidentiality Agreement” means that certain Confidentiality Agreement, dated as of September 8, 2005, between Apex and Sumitomo.

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“Contract” means any note, bond, indenture, debenture, security agreement, trust agreement, mortgage, lease, contract, license, franchise, permit, guaranty, joint venture agreement, or other agreement, instrument, commitment, or obligation, whether oral or written.

“Control” means the ability to direct or cause the direction (whether through the ownership of voting securities, by contract, or otherwise) of the management and policies of a Person or to control (whether affirmatively or negatively and whether through the ownership of voting securities, by contract, or otherwise) the decision of such Person to engage in the particular conduct at issue.  A Person shall be rebuttably presumed to control an Entity if such Person owns, directly or indirectly through one or more intermediaries, (a) sufficient shares of stock or other equity interests of such Entity to allow such Person, under ordinary circumstances, to elect or direct the election of a majority of the members of the board of directors or other governing body of such Entity or (b) shares of stock or other equity interests of such Entity representing, in the aggregate, more than 50% of the aggregate outstanding economic interests in such Entity.  The term “Controlled” has a meaning correlative to that of Control.

“Default” has the meaning specified in the Common Security Agreement.

“Deferred Payments” has the meaning specified in Section 2.2.

“Deferred Payments Agreement” means the Deferred Payments Agreement in the form attached hereto as Exhibit F, being entered into by Apex Sweden and Sumitomo.

“Development Plan” means that certain San Cristóbal Development Plan, dated November 2004, prepared by MSC and concerning the construction and operation of the Project, as amended or otherwise modified by (a) those certain San Cristóbal Project Monthly Project Reports prepared by Aver Kvaerner through the date hereof, (b) that certain First Amendment to EPCM Services Supply Agreement, effective as of April 11, 2005, together with that certain First Change Order to EPCM Services Supply Agreement, dated as of June 8, 2005, that certain Second Change Order to EPCM Services Supply Agreement, dated as of July 21, 2005, that certain Third Change Order to EPCM Services Supply Agreement, dated as of December 2, 2005, that certain Fourth Change Order to EPCM Services Supply Agreement, and that certain Fifth Change Order to EPCM Services Supply Agreement, dated as of June 14, 2006, (c) the “Definitive Estimate” set forth in that certain Banks Reconciliation Template, dated August 2006, and (d) the memorandum and Table 1-Comparison of the Development Plan Production Plan and the July 2006 Revised Production Plan thereto, sent by email to Sumitomo on August 9, 2006.

“Disclosure Schedules” means either the Apex Disclosure Schedule or the Sumitomo Disclosure Schedule, as applicable.

“Dispute Resolution Agreement” has the meaning specified in Section 2.5(a)(vii).

“Dollars” means the lawful currency of the U.S.

“Employee Benefit Plan” means any “employee benefit plans” (within the meaning of Section 3(1) of ERISA), and any other material employee benefit plan, program, or arrangement

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for any current or former employee, director, consultant or independent contractor, or any dependent, survivor or beneficiary (in each case, whether or not resident in the United States), with respect to any of the foregoing, which is maintained, administered or contributed to (directly or indirectly) of MSC, Old Metals, New Metals, or any ERISA Affiliate.

“Entity” means any sociedad anónima, sociedad de responsabilidad limitada, Aktiengesellshchaft, Gesellschaft mit beschränkter Haftung, privat aktiebolag, société à responsabilité limitée, corporation, exempted company limited by shares, general or limited partnership, limited liability company, joint venture, trust, association, unincorporated entity of any kind, or Governmental Authority.

“Environmental Guidelines” means the following guidelines as in effect on the date hereof applicable to the Project (referred to in the Equator Principles framework): (a) World Bank Environmental, Health and Safety Guidelines (i) Mining and Milling - Open Pit dated August 11, 1995, (ii) Pollution Abatement and Prevention Handbook 1998:  General Environmental Guidelines, (iii) Operational Policy 4.01 (Environmental Assessment), (iv) Operation Policy 4.04 (Natural Habitats), (v) Operational Policy 4.11 (Cultural Property), (vi) Pollution Abatement and Prevention Handbook 1998: Part III Project Guidelines, Monitoring and Base Metal and Iron Ore Mining, and (vii) the Reclamation and Closure Plan Section in the Knight-Piesold Environmental Assessment of the Project (Closure Plan) and (b) IFC Safeguard Policies dated September 1998.

“Environmental Laws” means any and all Bolivian Laws relating to the regulation or protection of the environment or human health or to emissions, discharges, releases or threatened releases of pollutants, contaminants, chemicals or toxic or hazardous substances or wastes into the indoor or outdoor environment, including ambient air, soil, surface water, ground water, wetlands, land or subsurface strata, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport, or handling of pollutants, contaminants, chemicals, or toxic or hazardous substances or wastes.

“ERISA” means the U.S. Employee Retirement Income Security Act of 1974, as amended.

“ERISA Affiliate” means any Entity that would be considered a single employer with MSC, Old Metals, or New Metals pursuant to Section 414(b), (c), (m) or (o) of the U.S. Internal Revenue Code of 1986, as amended, and the regulations promulgated under those sections or pursuant to Section 4001(b) of ERISA and the regulations promulgated thereunder.

“Event of Default” has the meaning specified in the Common Security Agreement.

“Filing” means any written registration, declaration, application, or filing.

“Financial Statements” has the meaning specified in Section 4.5(a).

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“Financing Documents” means:

(a)           that certain Loan Agreement, dated December 1, 2005, among MSC, certain lenders named therein, and BNP Paribas, as administrative agent;

(b)           that certain Loan Agreement, dated December 1, 2005, between MSC and Corporación Andina de Fomento;

(c)           the Common Security Agreement;

(d)           that certain Sponsor Pledge and Agreement, dated as of December 1, 2005, between Apex and JPMorgan Chase Bank, N.A., as collateral agent (as amended by the Omnibus Amendment Agreement);

(e)           that certain Transfer Restrictions Agreement, dated as of December 1, 2005, among Apex, Apex Luxembourg, Apex Sweden, Old Metals, BNP Paribas, as administrative agent, and JPMorgan Chase Bank, N.A., as collateral agent (as amended by Amendment No. 1 to the Transfer Restrictions Agreement, dated as of May 2, 2006 and as further amended by the Omnibus Amendment Agreement);

(f)            that certain Completion Agreement, dated as of December 1, 2005, among Apex, Barclays Capital, BNP Paribas, and JPMorgan Chase Bank, N.A. (as amended by the Omnibus Amendment Agreement);

(g)           that certain ISDA Master Agreement (together with the Amended and Restated Schedule to the ISDA Master Agreement and the Credit Support Annex thereto), dated as of March 16, 2005 (as amended by that certain Amendment No. 1 to Master Agreement, dated as of June 16, 2005, and as further amended by that certain Amendment and Restatement of the Schedule to Master Agreement, dated as of December 1, 2005), between BNP Paribas and Old Metals, as novated by the Metals Hedge Novation Agreements related thereto and as further amended by that certain Schedule to Master Agreement, dated on or about the date hereof, between BNP Paribas and New Cayman;

(h)           that certain ISDA Master Agreement (together with the Amended and Restated Schedule to the ISDA Master Agreement and the Credit Support Annex thereto), dated as of September 4,1998 (as amended by that certain Amendment, dated February 18, 2005, as further amended by that certain Amendment No. 2, dated as of June 16, 2005, and as further amended by that certain Amendment and Restatement of the Schedule to Master Agreement, dated as of December 1, 2005), between Barclays Bank PLC and Old Metals, as novated by the Metals Hedge Novation Agreements related thereto and as further amended by that certain Schedule to Master Agreement, dated on or about the date hereof, between Barclays Bank PLC and New Cayman;

(i)            the Security Documents, including the Bolivian Security Documents (in each case, as defined in the Common Security Agreement);

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(j)            the Omnibus Amendment Agreement;

(k)           that certain Pledge Agreement, dated on or about the date hereof, by Apex Luxembourg in favor of JPMorgan Chase Bank, N.A. (regarding shares of New Cayman);

(l)            that certain Pledge Agreement, dated on or about the date hereof, by Apex Sweden in favor of JPMorgan Chase Bank, N.A. (New York law pledge regarding quotas of New Metals);

(m)          that certain Pledge Agreement, dated on or about the date hereof, by Apex Sweden in favor of JPMorgan Chase Bank, N.A. (Swiss law pledge regarding quotas of New Metals);

(n)           that certain Pledge Agreement, dated on or about the date hereof, by New Sweden 2 in favor of JPMorgan Chase Bank, N.A. (Swiss law pledge regarding quotas of New Metals);

(o)           that certain Pledge Agreement, dated on or about the date hereof, by New Sweden 2 in favor of JPMorgan Chase Bank, N.A. (New York law pledge regarding quotas of New Metals);

(p)           that certain Pledge Agreement, dated on or about the date hereof, by Apex Sweden in favor of JPMorgan Chase Bank, N.A. (New York law pledge regarding shares of New Sweden 2);

(q)           that certain Pledge Agreement, dated on or about the date hereof, by Apex Sweden in favor of JPMorgan Chase Bank, N.A. (New York law pledge regarding quotas of New Sweden 1);

(r)            that certain Apex Silver Finance Cross-Guarantee and Security Agreement, dated on or about the date hereof, between New Cayman and JPMorgan Chase Bank, N.A.; and

(s)           any related notes, guarantees, collateral documents, instruments, and agreements executed in connection therewith (other than any such notes, guarantees, collateral documents, instruments, and agreements to which Sumitomo is a party);

in each case of clauses (a) through (s) of this definition, as such may be amended, novated, or otherwise modified through the date hereof.

“GAAP” means, in respect of MSC, generally accepted accounting principles as used in Bolivia and, in respect of Old Metals, New Metals, and New Cayman, generally accepted accounting principles as used in the U.S., in each case as in effect on the date hereof.

“Governing Documents” means the estatutos sociales, escritura de constitución social, articles or certificate of incorporation or formation or association, general or limited partnership

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agreement, limited liability company or operating agreement, bylaws, or other incorporation or governing documents of any Entity.

“Government Approvals” means any authorization, consent, approval, License, lease, ruling, permit, tariff, rate, certification, exemption, Filing, variance, claim, Judgment, decree, sanction, or publication of, by or with, any notice to, any declaration of or with, or any registration by or with, or any other action or deemed action by or on behalf of, any Governmental Authority.

“Governmental Authority” means any domestic or foreign national, regional, or local, court, governmental department, commission, authority, central bank, board, bureau, agency, official, or other instrumentality exercising executive, legislative, judicial, taxing, regulatory, or administrative powers or functions of or pertaining to government.

“Hedge Instrument” means (a) any currency swap agreement, option contract, future contract, option on futures contract, spot or forward contract, or other agreements to purchase or sell currency or any other arrangement entered into by a Person to hedge such Person’s exposure or to speculate on movements in rates of exchange of currencies; (b) any interest rate swap, option contract, futures contract, options on futures contract, cap, floor, collar, or any other similar hedging arrangements entered into by a Person to hedge such Person’s exposure to or to speculate on movements in interest rates; (c) any forward purchase, forward sale, put option, synthetic put option, call option, collar, or any other arrangement relating to commodities entered into by a Person to hedge such Person’s exposure to or to speculate on commodity prices; and (d) any other derivative transaction or hedging arrangement of any type or nature whatsoever that is the subject at any time of trading in the over-the-counter derivatives market.

“Indebtedness” means, without duplication, (a) all obligations created, issued, or incurred for borrowed money (whether by loan, the issuance and sale of debt securities, or the sale of property to another Person subject to an understanding or agreement, contingent or otherwise, to repurchase such property from such other Person); (b) all obligations to pay the deferred purchase price or acquisition price of property or services (other than accrued expenses and trade accounts payable incurred in the ordinary course of business that are not more than 90 days past due); (c) all obligations to pay money evidenced by a note, bond, debenture, or similar instrument; (d) the principal amount of all obligations under or in respect of leases capitalized in accordance with generally accepted accounting principles as used in the U.S.; (e) all reimbursement obligations in respect of letters of credit or similar instruments issued or accepted by banks and other financial institutions; (f) all payment obligations under any Hedge Instrument to the extent constituting a liability under generally accepted accounting principles as used in the U.S.; and (g) all obligations of another Person of the type listed in clauses (a) through (f) of this definition, payment of which is guaranteed by or secured by Liens on the property of such Person (with respect to Liens, to the extent of the value of property pledged pursuant to such Liens if less than the amount of such obligations).

“Indemnified Party” has the meaning specified in Section 7.2(a).

“Indemnifying Party” has the meaning specified in Section 7.2(a).

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“Intellectual Property Rights” means all permits, licenses, trademarks, patents, or agreements with respect to the usage of technology or other intellectual property (other than those constituting Government Approvals and off-the-shelf, commercially available software).

“Judgment” means any judgment, writ, order, decree, injunction, award, restraining order, or ruling of or by any court, judge, justice, arbitrator, or magistrate, including any bankruptcy court or judge, and any writ, order, decree, or ruling of or by any Governmental Authority.

“KYD” means Cayman Islands dollars, the lawful currency of the Cayman Islands, British West Indies.

“Law” or “Laws” means any national, regional, or local, or any foreign, statute, law, code, ordinance, rule, regulation, resolution, Judgment, regulatory agreement with a Governmental Authority, or general principle of common or civil law or equity.

“Legal Proceeding” means any private or governmental action, suit, complaint, arbitration, legal, or judicial or administrative proceeding or investigation, whether civil, criminal, or of any other nature.

“Licenses” means all franchises, concessions, licenses, permits, authorizations, certificates, variances, exemptions, consents, leases, rights of way, easements, instruments, orders, and approvals issued by any Governmental Authority.

“Lien” means any (a) security agreement, conditional sale agreement, or other title retention agreement; (b) lease, consignment, or bailment given for security purposes; and (c) lien, charge, restrictive agreement, prohibition against transfer, mortgage, pledge, legal privilege, option, encumbrance, adverse interest, security interest, claim, attachment, exception to or defect in title, or other ownership interest (including reservations, rights of entry, possibilities of reverter, encroachments, easements, rights of way, restrictive covenants, leases, and Licenses granted to other Persons) of any kind, but excluding any of the foregoing created or imposed by or pursuant to this Agreement or any other Transaction Document.

“Losses” means losses, liabilities, damages, dues, deficiencies, assessments, Liens, fines, interest, penalties, including with respect to Taxes, costs, expenses, and obligations, including amounts reasonably paid in settlement, prosecuting, defending, or otherwise, and reasonable legal, accounting, experts, and other fees, costs, and expenses, in connection with claims, actions, suits, proceedings, hearings, investigations, charges, complaints, demands, injunctions, and Judgments.

“Mandatory Metals Hedge Agreements” has the meaning specified in the Common Security Agreement.

“Material Adverse Effect” means

(a)           with respect to MSC, Old Metals, New Cayman, and/or New Metals, (i) a material adverse effect on or change to the condition (financial or otherwise), business,

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performance, operations, or properties of MSC, Old Metals, New Cayman, and New Metals, and the Project, taken together, except to the extent that such effect or change is attributable to or results from (A) changes affecting generally the securities or capital markets or economic conditions in the country or countries in which any such Entity conducts its businesses or the Project is conducted, (B) changes affecting generally the industries in which any such Entity operates (as opposed to changes affecting any such Entity or group of Entities specifically, predominantly or disproportionately), (C) changes in the country or countries in which the Project is being conducted or any such Entity conducts its businesses affecting generally the industries in which any such Entity operates (as opposed to changes affecting any such Entity or group of Entities specifically, predominantly or disproportionately), (D) the effect of the public announcement of this Agreement or the pendency of the transactions contemplated hereby and by the other Transaction Documents, (E) changes in generally accepted accounting principles in the U.S. or elsewhere, or (F) the Mandatory Metals Hedge Agreements, or (ii) any event, change, or circumstance that has a material adverse effect on the ability of such Entity to perform its obligations under, and to consummate the transactions contemplated by, the Transaction Documents to which it is a party;

(b)           with respect to New Sweden 1 and/or New Sweden 2, (i) a material adverse effect on or change to the condition (financial or otherwise), business, performance, operations, or properties of New Sweden 1 and New Sweden 2, taken together, except to the extent that such effect or change is attributable to or results from (A) changes affecting generally the securities or capital markets or economic conditions in the country or countries in which any such Entity conducts its businesses or the Project is conducted, (B) changes affecting generally the industries in which any such Entity operates (as opposed to changes affecting any such Entity or group of Entities specifically, predominantly or disproportionately), (C) changes in the country or countries in which the Project is being conducted or any such Entity conducts its businesses affecting generally the industries in which any such Entity operates (as opposed to changes affecting any such Entity or group of Entities specifically, predominantly or disproportionately), (D) the effect of the public announcement of this Agreement or the pendency of the transactions contemplated hereby and by the other Transaction Documents, or (E) changes in generally accepted accounting principles in the U.S. or elsewhere, or (ii) any event, change, or circumstance that has a material adverse effect on the ability of such Entity to perform its obligations under, and to consummate the transactions contemplated by, the Transaction Documents to which it is a party; or

(c)           with respect to Apex, Apex Sweden, Apex Luxembourg, and/or Service Company (i) a material adverse effect on or change to the condition (financial or otherwise), business, performance, operations, or properties of Apex and its Subsidiaries, taken as a whole, except to the extent that such effect or change is attributable to or results from (A) changes affecting generally the securities or capital markets or economic conditions in the country or countries in which any such Entity conducts its businesses or the Project is conducted, (B) changes affecting generally the industries in which any such Entity operates (as opposed to changes affecting any such Entity or group of Entities specifically, predominantly or disproportionately), (C) changes in the country or

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countries in which the Project is being conducted or any such Entity conducts its businesses affecting generally the industries in which any such Entity operates (as opposed to changes affecting any such Entity or group of Entities specifically, predominantly or disproportionately), (D) the effect of the public announcement of this Agreement or the pendency of the transactions contemplated hereby and by the other Transaction Documents, or (E) changes in generally accepted accounting principles in the U.S. or elsewhere, or (ii) any event, change, or circumstance that has a material adverse effect on the ability of such Entity to perform its obligations under, and to consummate the transactions contemplated by, the Transaction Documents to which it is a party.

“Material Project Documents” means the Contracts listed on Schedule B and each other Contract to which MSC is a party or by which MSC’s assets are bound, which is in effect on the date hereof, and has payments due to or from MSC thereunder in excess of US$10,000,000.00.

“Metals Hedge Novation Agreements” means

(a)           that certain Novation Agreement, dated on or about the date hereof, among BNP Paribas, Old Metals, as transferor, and Apex Luxembourg, as transferee, concerning that certain ISDA Master Agreement (together with the Schedule and the Credit Support Annex thereto), dated as of March 16, 2005 (as amended by that certain Amendment No. 1 to Master Agreement, dated as of June 16, 2005, and as further amended by that certain Amendment and Restatement of the Schedule to the Master Agreement, dated as of December 1, 2005), between BNP Paribas and Old Metals;

(b)           that certain Novation Agreement, dated on or about the date hereof, among BNP Paribas, Apex Luxembourg, as transferor, and New Cayman, as transferee, concerning that certain ISDA Master Agreement (together with the Schedule and the Credit Support Annex thereto), dated as of March 16, 2005 (as amended by that certain Amendment No. 1 to Master Agreement, dated as of June 16, 2005, and as further amended by that certain Amendment and Restatement of the Schedule to Master Agreement, dated as of December 1, 2005), between BNP Paribas and Old Metals, as novated by the Novation Agreement specified in clause (a) of this definition and as further amended by that certain Schedule to Master Agreement, dated on or about the date hereof, between BNP Paribas and New Cayman;

(c)           that certain Novation Agreement, dated on or about the date hereof, among Barclays Bank PLC, Old Metals, as transferor, and Apex Luxembourg, as transferee, concerning that certain ISDA Master Agreement (together with the Schedule and the Credit Support Annex thereto), dated as of September 4, 1998 (as amended by that certain Amendment, dated February 18, 2005, as further amended by that certain Amendment No. 2, dated as of June 16, 2005, and as further amended by that certain Amendment and Restatement of the Schedule to Master Agreement, dated as of December 1, 2005), between Barclays Bank PLC and Old Metals; and

(d)           that certain Novation Agreement, dated on or about the date hereof, among Barclays Bank PLC, Apex Luxembourg, as transferor, and New Cayman, as

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transferee, concerning that certain ISDA Master Agreement (together with the Schedule and the Credit Support Annex thereto), dated as of September 4, 1998 (as amended by that certain Amendment, dated February 18, 2005, as further amended by that certain Amendment No. 2, dated as of June 16, 2005, and as further amended by that certain Amendment and Restatement of the Schedule to Master Agreement, dated as of December 1, 2005), between Barclays Bank PLC and Old Metals, as novated by the Novation Agreement specified in clause (c) of this definition and as further amended by that certain Schedule to Master Agreement, dated on or about the date hereof, between Barclays Bank PLC and New Cayman.

“Metals Quotaholders Agreement” has the meaning specified in Section 2.5(a)(v).

“Mining Concessions” means, collectively, the mining concessions listed on Section 4.3(a) of the Apex Disclosure Schedule.

“Minute Books” has the meaning specified in Section 4.1(d).

“MOU” means that certain Non-Binding Memorandum of Understanding, dated June 29, 2006, between Apex and Sumitomo.

“MSC” has the meaning specified in the recitals.

“MSC Management Agreement” means that certain Amended and Restated Management and Services Agreement, dated on or about the date hereof, between MSC and Service Company.

“MSC Shareholders Agreement” has the meaning specified in Section 2.5(a)(iv).

“MSC Subordinated Debt” means the Apex Sweden MSC Subordinated Debt, the New Sweden 1 MSC Subordinated Debt, and the New Cayman MSC Subordinated Debt.

“New and Amended Financing Documents” means the agreements, documents, and instruments listed on Schedule F.

“New Cayman” has the meaning specified in the recitals.

“New Cayman Acquired Shares” means shares of New Cayman representing 35% of the issued and outstanding shares of New Cayman as of the Closing.

“New Cayman Shareholders Agreement” has the meaning specified in Section 2.5(a)(vi).

“New Concentrate Sales Agreement” means that certain Concentrate Sales Agreement, dated on or about the date hereof, between MSC and New Metals.

“New Metals” has the meaning specified in the recitals.

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“New Metals Management Agreement” means that certain Management and Services Agreement, dated on or about the date hereof, among New Metals, New Cayman, and Service Company.

“New Sweden 1” has the meaning specified in the recitals.

“New Sweden 1 Acquired Shares” means shares of New Sweden 1 representing 100% of the issued and outstanding shares of New Sweden 1 as of the Closing.

“New Sweden 1 MSC Subordinated Debt” has the meaning specified in the recitals.

“New Sweden 2” has the meaning specified in the recitals.

“New Sweden 2 Acquired Shares” means shares of New Sweden 2 representing 100% of the issued and outstanding shares of New Sweden 2 as of the Closing.

“Old Metals” means Apex Metals GmbH, a Gesellschaft mit beschränkter Haftung organized under the Laws of Switzerland, with its seat in Zug, Canton of Zug, Switzerland and with a registered address of c/o Juris Treuhand AG, Industriestrasse 47, 6304 Zug, Switzerland.

“Old Metals Concentrate Sales Agreement Termination” means that certain Termination Agreement, dated as of the date hereof, between MSC and Old Metals, concerning that certain Concentrate Sales Agreement, dated as of December 1, 2005, between MSC and Old Metals.

“Omnibus Amendment Agreement” means that certain Omnibus Amendment Agreement, dated as of September 20, 2006, among MSC, Apex, Apex Sweden, Apex Luxembourg, Old Metals, New Cayman, New Metals, New Sweden 1, New Sweden 2, BNP Paribas, Barclays Capital, Corporación Andina de Fomento, JPMorgan Chase Bank, N.A., the senior lenders party thereto, and the hedge banks party thereto.

“Operational Agreements” means all Contracts to which Old Metals is a party or by which its assets are bound requiring payments in excess of US$25,000.00 on an annual basis or that are otherwise material to Old Metals.

“Option Agreement” means the Option Agreement in the form attached hereto as Exhibit H, being entered into by Apex and Sumitomo.

“Other Property Rights” means, collectively, easements, leases, mining and civil usufructs, rights of way, surface rights, real estate other than mining concessions, and other property rights.

“Party” or “Parties” has the meaning specified in the preamble.

“Performance Security” has the meaning specified in Section 4.17.

“Permitted Liens” means, with respect to any Person, the following: (a) Liens for Taxes, assessments, or other governmental charges or levies not yet due and payable or that are being

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contested in good faith through appropriate proceedings diligently conducted and for which adequate reserves (as determined on the basis of generally accepted accounting principles as used in the U.S.) have been established; (b) Liens of carriers, warehousemen, mechanics, materialmen, and landlords incurred in the ordinary course of business for sums not yet due or that are being contested in good faith through appropriate proceedings diligently conducted and for which adequate reserves (as determined on the basis of generally accepted accounting principles as used in the U.S.) have been established; (c) Liens incurred in the ordinary course of business in connection with workmen’s compensation, unemployment insurance, or other forms of governmental insurance or benefits, or to secure performance of tenders, statutory obligations, legal privileges, leases, bank guarantees, letters of credit, and Contracts (other than for borrowed money) entered into in the ordinary course of business or to secure obligations on surety or appeal bonds; (d) purchase money security interests or Liens on property acquired or held by the applicable Person in the ordinary course of business to secure the purchase price of such property or to secure indebtedness incurred solely for the purpose of financing the acquisition of such property; (e) easements, restrictions, and other minor defects of title that are not, in the aggregate, material or which do not, individually or in the aggregate, materially and adversely affect the value of the property affected thereby or the use thereof for its intended purpose; and (f) Liens incurred under the Financing Documents.

“Person” means any natural person or Entity.

“Port Agreement” means that certain Construction and Port Services Agreement, dated as of September 1, 2003 (as amended by First Amendment to the Construction and Port Services Agreement, dated as of March 31, 2005, and as further amended by Second Amendment to Construction and Port Services Agreement, dated as of December 16, 2005) by and between MSC and Puerto de Mejillones S.A.

“Preemptive Rights” means (a) the preferred rights that the shareholders of a sociedad anónima have, pursuant to Article 255 of the Bolivian Corporations Law, entitling them to purchase newly issued shares of such sociedad anónima in accordance with their pro rata shareholding; (b) the preferred rights that the quotaholders of a Gesellschaft mit beschränkter Haftung have, pursuant to Article 787 of the Swiss Code of Obligations, entitling them to acquire a proportional increase of their quotas; and (c) the preferred rights that the shareholders of a Swedish privat aktiebolag have entitling them to purchase newly issued shares of such privat aktiebolag in accordance with their pro rata shareholding.

“Project” means the development, establishment, construction, and operation by MSC of the San Cristóbal open pit silver, zinc, and lead mine and processing facilities located in the Potosi Department, Bolivia, the processing of silver, zinc, and lead ores to recover silver bearing zinc, and lead concentrates, and related infrastructure (including rail transportation, power transmission, and port facilities), and the marketing and sale of the products thereof and other activities reasonably ancillary thereto.

“Project Information” means all the information related to the Project contained in the Apex Disclosure Bundle taken as a whole.

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“Purchase Price” has the meaning specified in Section 2.2.

“Rail Transportation Agreement” means that certain Transportation Agreement, dated as of March 15, 2005, between MSC and Antofagasta Railway Company PLC.

“Reimbursement Agreement” means a reimbursement agreement in the form attached hereto as Exhibit I, being entered into by Sumitomo in favor of Apex.

“Reference Exchange Rate” has the meaning specified in Section 8.11(d).

“Restriction” means, with respect to any share capital, partnership interest, membership right or membership interest in a limited liability company, or other equity interest or security, any voting or other trust or agreement, option, warrant, preemptive right (other than Preemptive Rights), right of first offer, right of first refusal, escrow arrangement, proxy, buy-sell agreement, power of attorney, or other Contract (but excluding this Agreement and the other Transaction Documents), or any License that, conditionally or unconditionally, (a) grants to any Person the right to purchase or otherwise acquire, or obligates any Person to sell or otherwise dispose of or issue, or otherwise gives or, whether upon the occurrence of any event or with notice or lapse of time or both or otherwise, may give any Person the right to acquire (i) any such share capital, partnership interest, membership right or membership interest in a limited liability company, or other equity interest or security; (ii) any proceeds of, or any distributions paid or that are or may become payable with respect to, any such share capital, partnership interest, membership right or membership interest in a limited liability company, or other equity interest or security; or (iii) any interest in such share capital, partnership interest, membership right or membership interest in a limited liability company, or other equity interest or security or any such proceeds or distributions; (b) restricts or, whether upon the occurrence of any event or with notice or lapse of time or both or otherwise, is reasonably likely to restrict the transfer or voting of, or the exercise of any rights or the enjoyment of any benefits arising by reason of ownership of, any such share capital, partnership interest, membership right or membership interest in a limited liability company, or other equity interest or security or any such proceeds or distributions; or (c) creates or, whether upon the occurrence of any event or with notice or lapse of time or both or otherwise, is reasonably likely to create a Lien or purported Lien affecting such share capital, partnership interest, membership right or membership interest in a limited liability company, or other equity interest or security, proceeds or distributions.

“Scheduled Contracts” has the meaning specified in Section 4.7(a).

“SEK” means Swedish kronas, the lawful currency of Sweden.

“Service Company” means Apex Silver Mines Corporation, a corporation organized under the Laws of Delaware, U.S.A.

“Subsidiary” means, with respect to any Person:

(a)           a corporation a majority in voting power of whose share capital with voting power, under ordinary circumstances, to elect directors is, at the date of determination thereof, directly or indirectly, owned by such Person, by a Subsidiary of

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such Person, or by such Person and one or more Subsidiaries of such Person, without regard to whether the voting of such share capital is subject to a voting agreement or similar Restriction,

(b)           a partnership or limited liability company in which such Person or a Subsidiary of such Person is, at the date of determination thereof, (i) in the case of a partnership, a general partner of such partnership with the power affirmatively to direct the policies and management of such partnership or (ii) in the case of a limited liability company, the managing member or, in the absence of a managing member, a member with the power affirmatively to direct the policies and management of such limited liability company, or

(c)           any Entity (other than a corporation, partnership, or limited liability company) in which such Person, a Subsidiary of such Person, or such Person and one or more Subsidiaries of such Person, directly or indirectly, at the date of determination thereof, has (i) the power to elect or direct the election of a majority of the members of the governing body of such Person (whether or not such power is subject to a voting agreement or similar Restriction) or (ii) in the absence of such a governing body, at least a majority ownership interest.

“Sumitomo” has the meaning specified in the preamble.

“Sumitomo Completion Agreement” means that certain Sumitomo Completion Agreement, dated on or about the date hereof, among Sumitomo, Barclays Capital, BNP Paribas, and JPMorgan Chase Bank, N.A.

“Sumitomo Disclosure Schedule” means the schedule so named attached hereto as Schedule D.

“Sumitomo Guaranty” means the Guaranty in the form attached hereto as Exhibit E, being entered into by Sumitomo in favor of Apex Sweden, Apex Luxembourg, and Apex.

“Sweden” means the Kingdom of Sweden.

“Swiss Company Law” means Articles 620 to 926 of the Swiss Code of Obligations.

“Switzerland” means the Swiss Confederation.

“Tax Authority” means any Governmental Authority of any kind with the power to impose any Tax.

“Tax” or “Taxes” means all taxes, however denominated, foreign or domestic, including any monetary adjustments, interest, penalties or other additions to tax that may become payable in respect thereof, imposed by any Tax Authority, which taxes include all income or profits taxes, payroll and employee withholding taxes, unemployment insurance, social security taxes, income withholding taxes, sales and use taxes, value added taxes, ad valorem taxes, excise taxes, franchise taxes, gross receipts taxes, business or municipal license (patente municipal) taxes,

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occupation taxes, real and personal property taxes, stamp taxes, environmental taxes, severance taxes, production taxes, transfer taxes, workers’ compensation, governmental charges, and other obligations of the same or of a similar nature to any of the foregoing.

“Tax Returns” means all returns, declarations, reports, forms, claims for refund, estimates, information returns, and statements and other documentation, including amendments, required to be maintained or filed with or supplied to any Tax Authority in connection with any Taxes.

“Third Party Concentrate Sales Agreement” has the meaning specified in the Common Security Agreement.

“Transaction Documents” means this Agreement, the MSC Shareholders Agreement, the Metal Quotaholders Agreement, the New Cayman Shareholders Agreement, the Deferred Payments Agreement, the Dispute Resolution Agreement, the MSC Management Agreement, the New Metals Management Agreement, the Option Agreement, the New and Amended Financing Documents, the Metals Hedge Novation Agreements, the Old Metals Concentrate Sales Agreement Termination, the New Concentrate Sales Agreement, the Apex Parent Guarantees, the Sumitomo Guaranty, the Reimbursement Agreement, and any and all other documents, instruments, and agreements being or to be executed and delivered in connection with the transactions contemplated hereby (including in connection with the satisfaction of each Party’s conditions hereunder) or thereby.

“Transmission Line Loan Documents” means (a) that certain Power Line Construction and Transmission Agreement, dated as of January 14, 2005 (as amended by the First Amendment to Power Line Construction and Transmission Agreement, dated as of March 14, 2005, and as further amended by the Second Amendment to Power Line Construction and Transmission Agreement, dated as of August 29, 2005), among MSC, Ingelec S.A., Ingelec Transportadora de Electricidad S.A., Ingelec Electricity Transportation Investments, Corp., and San Cristóbal Transportadora de Electricidad, S.A.; (b) that certain Loan Agreement, dated as of April 15, 2005, between ASC Bolivia and San Cristóbal Transportadora de Electricidad, S.A.; (c) that certain Promissory Note, dated as of April 15, 2005, made by San Cristóbal Transportadora de Electricidad, S.A. in favor of ASC Bolivia; (d) that certain Escrow Agreement and Account Pledge and Security Agreement, dated as of April 15, 2005, among San Cristóbal Transportadora de Electricidad, S.A., ASC Bolivia, and Atlantic Security Bank, Cayman Islands; (e) that certain Pledge Agreement, dated as of April 15, 2005, made by Ingelec Electricity Transportation Investments, Corp., Raúl Quiroga, and Rene Fernández in favor of ASC Bolivia; (f) that certain Pledge Agreement, dated as of April 15, 2005, made by Ingelec Transportadora de Electricidad S.A. in favor of ASC Bolivia; (g) that certain Guaranty, dated as of April 15, 2005, made by Ingelec S.A., Ingelec Transportadora de Electricidad S.A., and Ingelec Electricity Transportation Investments, Corp. in favor of ASC Bolivia; and (h) a moveables pledge agreement to be entered into pursuant to the agreement referred to in clause (b) of this definition.

“Unaudited Balance Sheet Date” has the meaning specified in Section 4.5(a).

“Unaudited Separate Balance Sheet Date” has the meaning specified in Section 4.5(a).

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“U.S.” or “U.S.A.” means the United States of America.

“US$” means Dollars.

ARTICLE II
PURCHASE AND SALE; CLOSING

Section 2.1             Purchase and Sale.  On and subject to the terms and conditions of this Agreement, simultaneously with the execution and delivery of this Agreement by the Parties and for the consideration specified in Section 2.2:

(a)           Sumitomo is purchasing from Apex Sweden, and Apex Sweden is selling, transferring, assigning, conveying, and delivering to Sumitomo, all the right, title, and interest of Apex Sweden in and to the New Sweden 1 Acquired Shares, free and clear of all Liens and Restrictions, other than Liens or Restrictions (i) created by this Agreement or any of the other Transaction Documents, (ii) imposed by applicable Law or the Governing Documents of New Sweden 1 generally on all shares of New Sweden 1, or (iii) existing under the Financing Documents;

(b)           Sumitomo is purchasing from Apex Sweden, and Apex Sweden is selling, transferring, assigning, conveying, and delivering to Sumitomo, all the right, title, and interest of Apex Sweden in and to the New Sweden 2 Acquired Shares, free and clear of all Liens and Restrictions, other than Liens or Restrictions (i) created by this Agreement or any of the other Transaction Documents, (ii) imposed by applicable Law or the Governing Documents of New Sweden 2 generally on all shares of New Sweden 2, or (iii) existing under the Financing Documents; and

(c)           Sumitomo is purchasing from Apex Luxembourg, and Apex Luxembourg is selling, transferring, assigning, conveying, and delivering to Sumitomo, all the right, title, and interest of Apex Luxembourg in and to the New Cayman Acquired Shares, free and clear of all Liens and Restrictions, other than Liens or Restrictions (i) created by this Agreement or any of the other Transaction Documents, (ii) imposed by applicable Law or the Governing Documents of New Cayman generally on all shares of New Cayman, or (iii) existing under the Financing Documents.

Section 2.2             Purchase Price  Simultaneously with execution and delivery of this Agreement, Sumitomo is (a) paying or causing to be paid to Apex Sweden and Apex Luxembourg US$224,000,000.00 (the “Purchase Price”) by wire transfer of immediately available Dollar funds to such account or accounts of Apex , as Apex Sweden and/or Apex Luxembourg has specified to Sumitomo prior to the date hereof and (b) agreeing to make payments to Apex Sweden at the times, in the amounts, and otherwise in accordance with and on the terms set forth in the Deferred Payments Agreement (the “Deferred Payments”).

Section 2.3             Allocation of Purchase Price.  The Parties shall allocate the Purchase Price among the New Sweden 1 Acquired Shares, the New Sweden 2 Acquired Shares, the New Cayman Acquired Shares, and the ASC Bolivia Acquired Assets as specified on Schedule E for

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all purposes; provided that such allocations are consistent with Law (including financial reporting and Tax Law).  The Parties covenant and agree that (a) such allocation was determined in an arm’s length negotiation and none of the Parties shall take a position on any Tax Return before any Tax Authority or in any judicial proceeding that is in any way inconsistent with such allocation without the prior written consent of the other Parties or unless specifically required pursuant to a determination by an applicable Tax Authority; (b) they shall cooperate with each other in connection with the preparation, execution, and filing of all Tax Returns related to such allocation; and (c) they shall promptly advise each other regarding the existence of any tax audit, controversy, or litigation related to such allocation.  The parties agree to treat any amounts payable pursuant ARTICLE VII, as an adjustment to the Purchase Price for Tax purposes, unless the Law, pursuant to a determination by an applicable Tax Authority, causes such a payment not to be treated as an adjustment to the Purchase Price for Tax purposes.

Section 2.4             Closing.  The closing of the transactions contemplated by this Agreement (the “Closing”) commenced at 9:00 a.m., George Town, Grand Cayman, Cayman Islands, British West Indies time in George Town, Grand Cayman, Cayman Islands, British West Indies, on date hereof (the “Closing Date”).

Section 2.5             Closing Deliveries.

(a)           Apex Closing Deliveries.  At the Closing, Apex, Apex Sweden, and Apex Luxembourg are delivering or causing to be delivered to Sumitomo:

(i)one or more certificates evidencing the New Sweden 1 Acquired Shares, duly endorsed by Apex Sweden to Sumitomo, together with a copy of the shareholders’ register of New Sweden 1 evidencing that Sumitomo has been entered therein as holder of the New Sweden 1 Acquired Shares;

(ii)one or more certificates evidencing the New Sweden 2 Acquired Shares, duly endorsed by Apex Sweden to Sumitomo, together with a copy of the shareholders’ register of New Sweden 2 evidencing that Sumitomo has been entered therein as holder of the New Sweden 2 Acquired Shares;

(iii)one or more certificates evidencing the New Cayman Acquired Shares, duly endorsed by Apex Luxembourg to Sumitomo, together with a copy of the shareholders’ register of New Cayman evidencing that Sumitomo has been entered therein as holder of the New Cayman Acquired Shares;

(iv)counterparts of the MSC Shareholders Agreement in the form attached hereto as Exhibit A (the “MSC Shareholders Agreement”), duly executed by Apex Luxembourg, Apex Sweden, Old Metals, New Sweden 1, and MSC;

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(v)counterparts of the Metals Quotaholders Agreement in the form attached hereto as Exhibit B (the “Metals Quotaholders Agreement”), duly executed by Apex Sweden, New Sweden 2, and New Metals;

(vi)counterparts of the Apex Silver Finance Shareholders Agreement in the form attached hereto as Exhibit C (the “New Cayman Shareholders Agreement”), duly executed by Apex Luxembourg and New Cayman;

(vii)counterparts of the Dispute Resolution Agreement in the form attached hereto as Exhibit G (the “Dispute Resolution Agreement”), duly executed by Apex, Apex Luxembourg, Apex Sweden, New Metals, Service Company, New Sweden 1, New Sweden 2, MSC, New Metals, and New Cayman;

(viii)counterparts of the MSC Management Agreement, duly executed by MSC and Service Company;

(ix)counterparts of the New Metals Management Agreement, duly executed by New Metals, New Cayman, and Service Company;

(x)counterparts of the Deferred Payments Agreement, duly executed by Apex Sweden;

(xi)counterparts of the Option Agreement, duly executed by Apex;

(xii)a copy of the Apex Disclosure Bundle, which copy has been reviewed and initialed by representatives of Apex in order to ensure that it is identical to the copies being retained by Apex and Sumitomo;

(xiii)the various certificates, instruments, and documents referred to in Section 6.2;

(xiv)counterparts of the New and Amended Financing Documents, duly executed by Apex and its Subsidiaries that are parties thereto;

(xv)written letters of resignation from each of the current officers, if any, and members of the boards of directors of New Sweden 1 and New Sweden 2 to be effective immediately following the Closing;

(xvi)counterparts of the Metals Hedge Novation Agreements, duly executed by Old Metals and New Cayman;

(xvii)counterparts of the Old Metals Concentrate Sales Agreement Termination, duly executed by Old Metals and MSC;

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(xviii)counterparts of the New Concentrate Sales Agreement, duly executed by New Metals and MSC;

(xix)a written letter of resignation from one director of MSC;

(xx)a copy of Articles of Association of New Metals in the form of the German language version attached as Exhibit A to the Metals Quotaholders Agreement;

(xxi)a copy of Articles of Association of New Cayman in the form attached as Exhibit A to the New Cayman Shareholders Agreement;

(xxii)counterparts of the Reimbursement Agreement, duly executed by Apex;

(xxiii)US$50,000.00 to Sumitomo by wire transfer of immediately available Dollar funds to such account of Sumitomo as Sumitomo has specified to Apex prior to the date hereof in respect of a fee being paid by Apex to Sumitomo in connection with Sumitomo’s execution and delivery of the Sumitomo Completion Agreement;

(xxiv)the Apex Parent Guarantees, duly executed by Apex; and

(xxv)such other documents and instruments as Sumitomo has reasonably requested.

(b)           Sumitomo Closing Deliveries.  At the Closing, Sumitomo is delivering or causing to be delivered to Apex, Apex Sweden, and Apex Luxembourg:

(i)the Purchase Price;

(ii)counterparts of the New Cayman Shareholders Agreement, duly executed by Sumitomo;

(iii)the Sumitomo Guaranty, duly executed by Sumitomo;

(iv)counterparts of the Dispute Resolution Agreement, duly executed by Sumitomo;

(v)counterparts of the Deferred Payments Agreement, duly executed by Sumitomo;

(vi)counterparts of the Option Agreement, duly executed by Sumitomo;

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(vii)counterparts of the Reimbursement Agreement, duly executed by Sumitomo;

(viii)a copy of the Apex Disclosure Bundle, which copy has been reviewed and initialed by representatives of Sumitomo in order to ensure that it is identical to the copies being retained by Apex and Sumitomo;

(ix)the various certificates, instruments, and documents referred to in Section 6.3;

(x)counterparts of the New and Amended Financing Documents, duly executed by Sumitomo; and

(xi)such other documents and instruments as Apex has reasonably requested.

Section 2.6             MOU.  Sumitomo and Apex hereby agree that upon the execution and delivery of this Agreement by the Parties, the MOU is hereby terminated, and this Agreement and the other Transaction Documents contain, and are intended as, a complete statement of all of the terms of the agreements between the Parties and the other parties thereto with respect to the matters provided for in the MOU, and supersede and discharge the MOU.

ARTICLE III
TRANSACTION REPRESENTATIONS AND WARRANTIES

Section 3.1             Apex’s Representations and Warranties.  Apex represents and warrants with respect to itself, Apex Sweden, Apex Luxembourg, Old Metals, and Service Company to Sumitomo that the statements contained in this Section 3.1 are true, correct, and complete as of the date of this Agreement (except to the extent such representation and warranty specifically speaks as of a different date).

(a)           Organization.  It is duly organized, validly existing, and, to the extent applicable in its jurisdiction of organization, in good standing, under the Laws of its jurisdiction of organization.

(b)           Power and Authority.  (i) It has all requisite corporate or other Entity power and authority to enter into, and to perform its obligations under, this Agreement and each Transaction Document being or to be executed and delivered by it pursuant to this Agreement; and (ii) the execution and delivery by it of this Agreement and each Transaction Document to which it is or shall be a party, and the performance by it of its obligations under this Agreement and each Transaction Document to which it is or shall be a party, have been duly authorized by all requisite corporate or other Entity action.

(c)           Validity.  Each of this Agreement and the other Transaction Documents being or to be executed and delivered by it has been duly executed and delivered by it, and assuming the due execution and delivery by each other party hereto and thereto, this

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Agreement constitutes, and when executed and delivered by it pursuant to this Agreement, each Transaction Document being or to be executed and delivered by it shall constitute, its legal, valid, and binding obligation, enforceable against it in accordance with its terms, except as such enforceability may be affected by applicable bankruptcy, reorganization, insolvency, moratorium, or similar Laws affecting creditors’ rights generally.

(d)           Consents.  Except for any required Authorizations and Government Approvals set forth in Section 3.1(d) of the Apex Disclosure Schedule or that have been obtained or made, no Authorization or Government Approval is required, on behalf of it in connection with the execution, delivery, or performance by it of this Agreement or any of the other Transaction Documents being or to be executed and delivered by it, or the consummation of the transactions contemplated hereby and thereby.

(e)           No Conflicts.  Assuming the Authorizations and Government Approvals set forth in Section 3.1(d) of the Apex Disclosure Schedule will be obtained or made, the execution and delivery by it of this Agreement and the other Transaction Documents being or to be executed and delivered by it do not, and the performance by it of its obligations under this Agreement and the other Transaction Documents being or to be executed and delivered by it and the consummation of the transactions contemplated hereby and thereby do not and shall not, (i) violate or conflict with any provision of its Governing Documents; (ii) violate any of the terms, conditions, or provisions of any Law or Government Approval to which it is subject or by which it or any of its assets is bound; (iii) result in a violation or breach of, or (with or without the giving of notice or lapse of time or both) constitute a default (or give rise to any right of termination or cancellation) under, or give rise to or accelerate any material obligation under, or pursuant to, any material Contract to which it is a party or by which it or any of its assets is bound; or (iv) result in a Lien or Restriction (other than any Lien or Restriction of the type referred to in the first sentences of Section 3.1(l)  and Section 3.1(o)) on any of the New Sweden 1 Acquired Shares, the New Sweden 2 Acquired Shares, or the New Cayman Acquired Shares.

(f)            Brokers’ and Finders’ Fees.  There is no broker, finder, investment banker, or similar intermediary that has been retained by, or is authorized to act on behalf of, it or any of its Affiliates or any of their respective officers or directors who shall be entitled to any fee or commission in connection with this Agreement or any other Transaction Document or upon consummation of the transactions contemplated hereby or thereby and which fee or commission could be or become a liability of Sumitomo, any of Sumitomo’s Affiliates, MSC, Old Metals, New Metals, New Cayman, or either Acquired Entity.

(g)           Capitalization of New Sweden 1.  (i) New Sweden 1 has an issued and registered share capital of SEK 100,000 divided into 1,000 issued and outstanding shares, all in a single series, with no preference; (ii) the issued and outstanding shares of New Sweden 1 are as set forth on Schedule A-1, and the information set forth therein is true, correct, and complete; (iii) all of such issued and outstanding shares are duly authorized, validly issued, fully paid, and nonassessable and not issued in violation of any

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Preemptive Rights; (iv) there are no other issued or outstanding capital, subscriptions, options, warrants, puts, calls, trusts (voting or otherwise), rights, exchangeable or convertible securities, or other commitments or agreements of any nature relating to the capital or other securities of or ownership interests in New Sweden 1 or obligating New Sweden 1, at any time or upon the happening of any event, to issue, transfer, deliver, sell, repurchase, redeem, or otherwise acquire, or cause to be issued, transferred, delivered, sold, repurchased, redeemed, or otherwise acquired, any of its share capital, other securities, or ownership interests or any phantom shares, phantom equity interests, or stock or equity appreciation rights, or other ownership interests in New Sweden 1 or obligating New Sweden 1 to grant, extend, or enter into any such subscription, option, warrant, put, call, trust, right, exchangeable or convertible security, commitment, or agreement.

(h)           Capitalization of New Sweden 2.  (i) New Sweden 2 has an issued and registered share capital of SEK 100,000 divided into 1,000 issued and outstanding shares, all in a single series, with no preference; (ii) the issued and outstanding shares of New Sweden 2 are as set forth on Schedule A-1, and the information set forth therein is true, correct, and complete; (iii) all of such issued and outstanding shares are duly authorized, validly issued, fully paid, and nonassessable and not issued in violation of any Preemptive Rights; (iv) there are no other issued or outstanding capital, subscriptions, options, warrants, puts, calls, trusts (voting or otherwise), rights, exchangeable or convertible securities, or other commitments or agreements of any nature relating to the capital or other securities of or ownership interests in New Sweden 2 or obligating New Sweden 2, at any time or upon the happening of any event, to issue, transfer, deliver, sell, repurchase, redeem, or otherwise acquire, or cause to be issued, transferred, delivered, sold, repurchased, redeemed, or otherwise acquired, any of its share capital, other securities, or ownership interests or any phantom shares, phantom equity interests, or stock or equity appreciation rights, or other ownership interests in New Sweden 2 or obligating New Sweden 2 to grant, extend, or enter into any such subscription, option, warrant, put, call, trust, right, exchangeable or convertible security, commitment, or agreement.

(i)            Capitalization of MSC.  The share capital of MSC is Bs.2,151,361,000.00, divided into 21,513,610 registered shares, all in a single series, with no preference, all of which are issued and outstanding.  The issued and outstanding shares of MSC are set forth on Schedule A-2, and the information set forth therein is true, correct, and complete.  All of such issued and outstanding shares are duly authorized, validly issued, fully paid, and nonassessable, and not issued in violation of any Preemptive Rights.  Except as provided in the Financing Documents and the New and Amended Financing Documents, there are no other issued or outstanding share capital, subscriptions, options, warrants, puts, calls, trusts (voting or otherwise), rights, exchangeable or convertible securities, or other commitments or agreements of any nature relating to the share capital or other securities of or ownership interests in MSC or obligating MSC, at any time or upon the happening of any event, to issue, transfer, deliver, sell, repurchase, redeem, or otherwise acquire, or cause to be issued, transferred, delivered, sold, repurchased, redeemed, or otherwise acquired, any of its share capital, other securities, or ownership interests or any

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phantom shares, phantom equity interests, or stock or equity appreciation rights, or other ownership interests in MSC or obligating MSC to grant, extend, or enter into any such subscription, option, warrant, put, call, trust, right, exchangeable or convertible security, commitment, or agreement.

(j)            Capitalization of New Metals.  (i) The capital of New Metals is CHF 20,000, divided into two issued and outstanding quotas of a single series and with no preference; (ii) the issued and outstanding quotas of New Metals are as set forth on Schedule A-2, and the information set forth therein is true, correct, and complete; (iii) such issued and outstanding quotas are duly authorized, validly issued, fully paid, and nonassessable, and not issued in violation of any Preemptive Rights; and (iv) except as provided in the Financing Documents and the New and Amended Financing Documents, there are no other issued or outstanding capital, subscriptions, options, warrants, puts, calls, trusts (voting or otherwise), rights, exchangeable or convertible securities, or other commitments or agreements of any nature relating to the capital or other securities of or ownership interests in New Metals or obligating New Metals, at any time or upon the happening of any event, to issue, transfer, deliver, sell, repurchase, redeem, or otherwise acquire, or cause to be issued, transferred, delivered, sold, repurchased, redeemed, or otherwise acquired, any of its share capital, other securities, or ownership interests or any phantom shares, phantom equity interests, or stock or equity appreciation rights, or other ownership interests in New Metals or obligating New Metals to grant, extend, or enter into any such subscription, option, warrant, put, call, trust, right, exchangeable or convertible security, commitment, or agreement.

(k)           Capitalization of New Cayman.  (i) New Cayman has an issued and registered share capital of US$100 divided into 100 issued and outstanding shares, all in a single series, with no preference; (ii) the issued and outstanding shares of New Cayman are as set forth on Schedule A-1, and the information set forth therein is true, correct, and complete; (iii) all of such issued and outstanding shares are duly authorized, validly issued, fully paid, and nonassessable; (iv) there are no other issued or outstanding capital, subscriptions, options, warrants, puts, calls, trusts (voting or otherwise), rights, exchangeable or convertible securities, or other commitments or agreements of any nature relating to the capital or other securities of or ownership interests in New Cayman or obligating New Cayman, at any time or upon the happening of any event, to issue, transfer, deliver, sell, repurchase, redeem, or otherwise acquire, or cause to be issued, transferred, delivered, sold, repurchased, redeemed, or otherwise acquired, any of its share capital, other securities, or ownership interests or any phantom shares, phantom equity interests, or stock or equity appreciation rights, or other ownership interests in New Cayman or obligating New Cayman to grant, extend, or enter into any such subscription, option, warrant, put, call, trust, right, exchangeable or convertible security, commitment, or agreement.

(l)            Ownership of Shares of New Sweden 1 and New Sweden 2.  Immediately prior to the Closing, Apex Sweden was the sole owner, beneficially and of record, of, and had good and valid title to, all of the issued and outstanding shares of New Sweden 1 and New Sweden 2 as set forth on Schedule A-1, free and clear of all Liens and Restrictions,

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other than Liens or Restrictions (i) created by this Agreement or any of the other Transaction Documents, (ii) imposed by applicable Law or by the Governing Documents of New Sweden 1 or New Sweden 2 generally on all shares of New Sweden 1 and New Sweden 2, or (iii) existing under the Financing Documents.  Such shares of New Sweden 1 and New Sweden 2 include all voting and dividend rights and interests in respect of capital, and corporate funds of any kind, purpose, or denomination, such as reserve, revaluation, credit, profit, and dividend funds, whether accumulated or not, that have not been distributed, even if agreements are pending with regard to their distribution or to which Apex Sweden is otherwise entitled as the owner thereof as of the Closing Date, whether originating in the current fiscal year or any previous fiscal year.  There are no voting trusts, proxies, powers of attorney, or other agreements or understandings with respect to the voting of such shares of New Sweden 1 or New Sweden 2, other than the Contracts listed in Section 3.1(1) Section 3.1(l)of the Apex Disclosure Schedule, true, correct, and complete copies of which have been provided to Sumitomo, the Financing Documents, and the Transaction Documents.

(m)          Ownership of Shares of MSC.  Apex Sweden is the owner, beneficially and of record, of, and has good and valid title to, 13,983,846 registered shares of the issued and outstanding shares of MSC, Apex Luxembourg is the owner, beneficially and of record, of and has good and valid title to, one registered share of the issued and outstanding shares of MSC, and New Sweden 1 is the owner, beneficially and of record, of, and has good and valid title to, 7,529,763 registered shares of the issued and outstanding shares of MSC as set forth on Schedule A-2, in each case free and clear of all Liens and Restrictions, other than Liens or Restrictions (i) created by this Agreement or any of the other Transaction Documents, (ii) imposed by applicable Law or by the Governing Documents of MSC generally on all shares of MSC, or (iii) existing under the Financing Documents.  Such shares of MSC include all voting and dividend rights and interests in respect of capital, and corporate funds and patrimonial rights and account of any kind, purpose, or denomination, such as special or legal reserve, revaluation, patrimonial adjustment, credit, profit, and dividend funds, whether accumulated or not, that have not been distributed, even if agreements are pending with regard to their distribution or to which Apex Sweden, Apex Luxembourg, or New Sweden 1, as applicable, is otherwise entitled as the owner thereof as of the Closing Date, whether originating in the current business year or any previous business year.  There are no voting trusts, proxies, powers of attorney, or other agreements or understandings with respect to the voting of such shares of MSC, other than the Contracts listed in Section 3.1(m) of the Apex Disclosure Schedule, true, correct, and complete copies of which have been provided to Sumitomo, the Financing Documents, and the Transaction Documents.

(n)           Ownership of Quotas of New Metals.  Apex Sweden is the owner, beneficially and of record, of, and has good and valid title to, one quota representing 65% of the issued and outstanding capital of New Metals and New Sweden 2 is the owner, beneficially and of record, of, and has good and valid title to, one quota representing 35% of the issued and outstanding capital of New Metals as set forth on Schedule A-2, in each case free and clear of all Liens and Restrictions, other than Liens or Restrictions

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(i) created by this Agreement or any of the other Transaction Documents, (ii) imposed by applicable Law or by the Governing Documents of New Metals generally on all quotas of New Metals, or (iii) existing under the Financing Documents.  No other quotas of New Metals are outstanding.  Such quotas of New Metals include all voting and dividend rights and interests in respect of capital, and corporate funds of any kind, purpose, or denomination, such as reserve, revaluation, credit, profit, and dividend funds, whether accumulated or not, that have not been distributed, even if agreements are pending with regard to their distribution or to which Apex Sweden or New Sweden 2, as applicable, is otherwise entitled as the owner thereof as of the Closing Date, whether originating in the current fiscal year or any previous fiscal year.  There are no voting trusts, proxies, powers of attorney, or other agreements or understandings with respect to the voting of such quotas of New Metals, other than the Contracts listed in Section 3.1(n) of the Apex Disclosure Schedule, true, correct, and complete copies of which have been provided to Sumitomo, the Financing Documents, and the Transaction Documents.

(o)           Ownership of Shares of New Cayman.  Immediately prior to the Closing, Apex Luxembourg was the sole owner, beneficially and of record, of, and had good and valid title to, all of the issued and outstanding shares of New Cayman as set forth on Schedule A-1, free and clear of all Liens and Restrictions, other than Liens or Restrictions (i) created by this Agreement or any of the other Transaction Documents, (ii) imposed by applicable Law or by the Governing Documents of New Cayman generally on all shares of New Cayman, or (iii) existing under the Financing Documents.  Such shares of New Cayman include all voting and dividend rights and interests in respect of capital, and corporate funds of any kind, purpose, or denomination, such as reserve, revaluation, credit, profit, and dividend funds, whether accumulated or not, that have not been distributed, even if agreements are pending with regard to their distribution or to which Apex Luxembourg is otherwise entitled as the owner thereof as of the Closing Date, whether originating in the current fiscal year or any previous fiscal year.  There are no voting trusts, proxies, powers of attorney, or other agreements or understandings with respect to the voting of such shares of New Cayman, other than the Contracts listed in Section 3.1(o) of the Apex Disclosure Schedule, true, correct, and complete copies of which have been provided to Sumitomo, the Financing Documents, and the Transaction Documents.

(p)           Ownership of MSC Subordinated Debt and ASC Bolivia Acquired Assets.  Apex Sweden is the holder of, and has good and valid title to, the Apex Sweden MSC Subordinated Debt representing 65% of the aggregate outstanding principal amount of, and accrued and unpaid interest, if any, on, the Apex Sweden MSC Subordinated Debt and New Sweden 1 MSC Subordinated Debt, free and clear of all Liens and Restrictions, other than Liens or Restrictions (i) created by this Agreement or any of the other Transaction Documents, (ii) imposed by applicable Law generally on all the MSC Subordinated Debt, or (iii) existing under the Financing Documents.  New Sweden 1 is the holder of, and has good and valid title to, the New Sweden 1 MSC Subordinated Debt representing 35% of the aggregate outstanding principal amount of, and accrued and unpaid interest, if any, on, the Apex Sweden MSC Subordinated Debt and the New Sweden 1 MSC Subordinated Debt, free and clear of all Liens and Restrictions, other

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than Liens or Restrictions (i) created by this Agreement or any of the other Transaction Documents, (ii) imposed by applicable Law generally on all the MSC Subordinated Debt, or (iii) existing under the Financing Documents.  ASC Bolivia is the owner of, and has good and valid title to, the ASC Bolivia Acquired Assets, free and clear of all Liens and Restrictions, other than (i) Liens and Restrictions created by this Agreement or any of the other Transaction Documents, (ii) imposed by applicable Law generally on the type of assets constituting the Transmission Line Loan Documents and (iii) existing under the Financing Documents.

(q)           Legal Proceedings.  There is no Legal Proceeding pending, or to Apex’s, knowledge, threatened against Apex, Apex Sweden, Apex Luxembourg, Old Metals, or Service Company that (i) questions the validity of the Transaction Documents or the right of Apex, Apex Sweden, Apex Luxembourg, Old Metals, or Service Company to enter into them or to consummate the transactions contemplated thereby or, (ii) except as disclosed in the periodic reports and filings by Apex with the U.S. Securities and Exchange Commission made on or before the date of this Agreement, if adversely determined, would reasonably be expected to have a Material Adverse Effect on Apex, Apex Sweden, Apex Luxembourg, Old Metals, or Service Company.

Section 3.2             Sumitomo’s Representations and Warranties.  Sumitomo represents and warrants with respect to itself to Apex, Apex Sweden, and Apex Luxembourg that the statements contained in this Section 3.2 are true, correct, and complete as of the date of this Agreement (except to the extent such representation and warranty specifically speaks as of a different date).

(a)           Organization.  It is duly organized, validly existing, and, to the extent applicable in its jurisdiction of organization, in good standing, under the Laws of its jurisdiction of organization.

(b)           Power and Authority.  (i) It has all requisite corporate or other Entity power and authority to enter into, and to perform its obligations under, this Agreement and each Transaction Document being or to be executed and delivered by it pursuant to this Agreement; and (ii) the execution and delivery by it of this Agreement and each Transaction Document to which it is or shall be a party, and the performance by it of its obligations under this Agreement and each Transaction Document to which it is or shall be a party, have been duly authorized by all requisite corporate or other Entity action.

(c)           Validity.  Each of this Agreement and the other Transaction Documents being or to be executed and delivered by it has been, or shall be, duly executed and delivered by it, and assuming the due execution and delivery by each other party hereto and thereto, this Agreement constitutes, and when executed and delivered by it pursuant to this Agreement, each Transaction Document being or to be executed and delivered by it shall constitute, its legal, valid, and binding obligation, enforceable against it in accordance with its terms, except as such enforceability may be affected by applicable bankruptcy, reorganization, insolvency, moratorium, or similar Laws affecting creditors’ rights generally.

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(d)           Consents.  Except for any required Authorizations and Government Approvals set forth in Section 3.2(d) of the Sumitomo Disclosure Schedule or that have been obtained or made, no Authorization or Government Approval is required, on behalf of it in connection with the execution, delivery, or performance by it of this Agreement or the other Transaction Documents being or to be executed and delivered by it, or the consummation of the transactions contemplated hereby and thereby.

(e)           No Conflicts.  Assuming the Authorizations and Government Approvals set forth in Section 3.2(d) of the Sumitomo Disclosure Schedule will be obtained or made, the execution and delivery by it of this Agreement and the other Transaction Documents being or to be executed and delivered by it do not, and the performance by it of its obligations under this Agreement and the other Transaction Documents being or to be executed and delivered by it and the consummation of the transactions contemplated hereby and thereby do not and shall not, (i) violate or conflict with any provision of its Governing Documents; (ii) violate any of the terms, conditions, or provisions of any Law or Government Approval to which it is subject or by which it or any of its assets is bound; or (iii) result in a violation or breach of, or (with or without the giving of notice or lapse of time or both) constitute a default (or give rise to any right of termination or cancellation) under, or give rise to or accelerate any material obligation under, or pursuant to, any material Contract to which it is a party or by which it or any of its assets is bound.

(f)            Brokers’ and Finders’ Fees.  There is no broker, finder, investment banker, or similar intermediary that has been retained by, or is authorized to act on behalf of, it or any of its Affiliates or any of their respective officers or directors who shall be entitled to any fee or commission in connection with this Agreement or any other Transaction Document or upon consummation of the transactions contemplated hereby or thereby and which fee or commission could be or become a liability of Apex or any of its Affiliates, including MSC, New Metals, and New Cayman.

(g)           No External Financing.  Sumitomo does not require any third-party financing to complete the transactions contemplated by this Agreement, including the payment of the Purchase Price to Apex, or perform its obligations under the other Transaction Documents, including the funding of additional share capital or loans to MSC, New Metals, or New Cayman in connection with the Project or otherwise under the MSC Shareholders Agreement, Metals Quotaholders Agreement, or the New Cayman Shareholders Agreement, as applicable.

(h)           Investment Intent.  Sumitomo is not acquiring the New Sweden 1 Acquired Shares, the New Sweden 2 Acquired Shares, or the New Cayman Acquired Shares with a view to or for sale in connection with any distributions thereof within the meaning of the U.S. Securities Act of 1933, as amended.

(i)            Legal Proceedings.  There is no Legal Proceeding pending, or to Sumitomo’s knowledge, threatened against it that (i) questions the validity of the Transaction Documents or the right of it to enter into them or to consummate the

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transactions contemplated thereby or (ii) if adversely determined, would reasonably be expected to (A) have a material adverse effect on or change to the condition (financial or otherwise), business, performance, operations, or properties of Sumitomo and its Subsidiaries, taken as a whole, except to the extent that such effect or change is attributable to or results from (1) changes affecting generally the securities or capital markets or economic conditions in the country or countries in which it conducts its business, (2) changes affecting generally the industries in which it operates (as opposed to changes affecting any such Entity or group of Entities specifically, predominantly, or disproportionately), (3) changes in the country or countries in which it conducts its business affecting generally the industries in which it operates (as opposed to changes affecting any such Entity or group of Entities specifically, predominantly, or disproportionately), (4) the effect of the public announcement of this Agreement or the pendency of the transactions contemplated hereby and by the other Transaction Documents, or (5) changes in generally accepted accounting principles in the U.S. or elsewhere or (B) have a material adverse effect on its ability to perform its obligations under, and to consummate the transactions contemplated by, the Transaction Documents.

ARTICLE IV
REPRESENTATIONS AND WARRANTIES
REGARDING ACQUIRED ENTITIES, MSC, OLD METALS, NEW METALS, AND
NEW CAYMAN

Apex represents and warrants to Sumitomo that the statements contained in this ARTICLE IV are true, correct, and complete as of the date of this Agreement (except to the extent such representation and warranty specifically speaks as of a different date).

Section 4.1             Organization, Good Standing, Authority, Governing Documents, Books and Records. 

(a)           Each Acquired Entity is a privat aktiebolag.  MSC is a sociedad anónima.  New Metals is a Gesellschaft mit beschränkter Haftung.  New Cayman is an exempted company limited by shares.

(b)           MSC (i) is duly organized, validly existing, and, to the extent applicable under the Laws of its jurisdiction of organization, in good standing under the Laws of its jurisdiction of organization, (ii) has all requisite corporate or other Entity power and authority to own its properties and to carry on its business as now being conducted, including to construct, develop, and operate the Project as contemplated in the Development Plan, and (iii) is duly qualified and in good standing to do business in each jurisdiction where necessary in light of the business it conducts and the property it owns, except where the failure to be so qualified and in good standing would not reasonably be expected to have a Material Adverse Effect on it.

(c)           Each of New Metals, New Cayman, and the Acquired Entities (i) is duly organized, validly existing, and, to the extent applicable under the Laws of its jurisdiction of organization, in good standing under the Laws of its jurisdiction of organization,

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(ii) has all requisite corporate or other Entity power and authority to own its properties and to carry on its business as then being conducted, and (iii) is duly qualified and in good standing to do business in each jurisdiction where necessary in light of the business it conducts and the property it owns, except where the failure to be so qualified and in good standing would not reasonably be expected to have a Material Adverse Effect on it.

(d)           Apex has made available to Sumitomo true, correct, and complete copies of (i) the Governing Documents of each of MSC, Old Metals, New Metals, New Cayman, and the Acquired Entities, including all amendments thereto, as presently in effect; (ii) all share or equity interest records of each of MSC, Old Metals, New Metals, New Cayman, and the Acquired Entities, including MSC’s share ledger and copies of any share certificates (front and back) issued by MSC, Old Metals’ quota ledger, New Metals’ quota ledger, New Cayman’s share ledger and copies of any share certificates issued by New Cayman, and each Acquired Entity’s share ledger and copies of any share certificates issued by each Acquired Entity; and (iii) all minutes and other records of all meetings or actions taken by written consent or otherwise without a meeting of (A) the shareholders of each of MSC, New Cayman, and the Acquired Entities, (B) the quotaholders of each of Old Metals and New Metals, (C) the boards of directors of each of MSC, New Cayman, and the Acquired Entities, (D) the management board of each of Old Metals and New Metals, and (E) all committees of each such board of directors or management board (collectively, the “Minute Books”).  The Minute Books contain a true, correct, and complete record, in all material respects, of all material actions taken at all meetings and by all written consent or otherwise without a meeting of such Entity’s shareholders or quotaholders, as applicable, such Entity’s board of directors or management board, as applicable, and any committees of such Entity’s board of directors or management board, as applicable and such actions were taken in accordance with such Entity’s Governing Documents in effect at the time of such action.

Section 4.2             Consents; No Conflicts.

(a)           Except for any required Authorizations and Government Approvals set forth in Section 4.2(a) of the Apex Disclosure Schedule or that have been obtained or made, no Authorization or Government Approval is required on behalf of MSC, New Metals, or New Cayman in connection with any of the Transaction Documents being or to be executed and delivered by MSC, New Metals, or New Cayman, or the consummation of the transactions contemplated hereby and thereby.

(b)           The execution and delivery of the Transaction Documents being or to be executed and delivered by MSC, New Metals, or New Cayman do not, and the consummation of the transactions contemplated thereby do not and shall not, (i) violate or conflict with any provision of the Governing Documents of MSC, New Metals, or New Cayman; (ii) violate any of the terms, conditions, or provisions of any Law or Government Approval to which MSC, New Metals, or New Cayman is subject or by which MSC, New Metals, or New Cayman, or any of their respective assets, is bound; (iii) result in a violation or breach of, or (with or without the giving of notice or lapse of time or both) constitute a default (or give rise to any right of termination or cancellation)

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under, or give rise to or accelerate any material obligation under, or pursuant to, any Scheduled Contract to which MSC, New Metals, or New Cayman is a party or by which MSC, New Metals, or New Cayman, or any of their respective assets, is bound; or (iv) result in any Lien or Restrictions (other than any Lien or Restriction created by this Agreement or any of the other Transaction Documents) on any capital stock of any of MSC, New Metals, New Cayman, and the Acquired Entities, or on any of their respective assets.

Section 4.3             Consents and Approvals for the Project.

(a)           To the knowledge of Apex, all material (i) Government Approvals, (ii) Authorizations, (iii) Mining Concessions, (iv) Other Property Rights, and (v) Intellectual Property Rights, necessary in each case for the development, construction, and operation of the Project in accordance with the Development Plan are set forth in Section 4.3(a) of the Apex Disclosure Schedule.

(b)           To the knowledge of Apex, each of the (i) Government Approvals, (ii) Authorizations, (iii) Mining Concessions, (iv) Other Property Rights, and (v) Intellectual Property Rights set forth in Part A of Section 4.3(a) of the Apex Disclosure Schedule has been obtained and is in full force and effect.  Collectively, to the knowledge of Apex, such Government Approvals, Authorizations, Mining Concessions, Other Property Rights, and Intellectual Property Rights are sufficient to permit (A) the development, construction, and operation of the Project in all material respects as contemplated by the Development Plan and (B) the performance by each of MSC, New Metals, and New Cayman of its obligations under the Material Project Documents, in each case, with respect to such Government Approvals, Authorizations, Mining Concessions, Other Property Rights, and Intellectual Property Rights, other than those that (1) are not now necessary and which are expected to be obtained in the ordinary course of business by the time they are necessary (and that are listed in Part B of Section 4.3(a) of the Apex Disclosure Schedule) or (2) the failure to have or obtain would not reasonably be expected to have a Material Adverse Effect on MSC, New Metals, or New Cayman.

(c)           To the knowledge of Apex, MSC is in compliance (i) in all material respects with all terms and conditions of all of the Mining Concessions and (ii) in all material respects, with all terms and conditions of all of such Government Approvals, Authorizations, Other Property Rights, and Intellectual Property Rights, in each case under clauses (i) and (ii), listed in Part A of Section 4.3(a) of the Apex Disclosure Schedule.

Section 4.4             Subsidiaries.  None of MSC, New Metals, New Cayman, or the Acquired Entities has any Subsidiary or owns, otherwise Controls, or, to the knowledge of Apex, has any right to acquire, directly or indirectly, any capital stock of, or other equity interests in, any Entity (except that New Sweden 1 owns shares of, and has Preemptive Rights in respect of, MSC, and New Sweden 2 owns a quota of, and has Preemptive Rights in respect of, New Metals).  Except as set forth in Section 4.4 of the Apex Disclosure Schedule, none of MSC, New Metals, New

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Cayman, or the Acquired Entities owns or, to the knowledge of Apex, has any right to acquire, directly or indirectly, any debt securities, or any other Indebtedness, of any Entity (except in respect of the net obligations, if any, of the Entities that are counterparties of New Cayman under the Mandatory Metals Hedge Agreements, and Indebtedness between or among any of MSC, New Metals, and New Cayman).

Section 4.5             Financial Statements; No Undisclosed Liabilities; No Material Adverse Effect.

(a)           Apex has delivered to Sumitomo (i) the audited separate balance sheets (the “Audited Balance Sheets”) of MSC as of September 30, 2004 and 2005, and of Old Metals as of December 31, 2005, (ii) the audited separate statements of income and cash flows of MSC for the fiscal years ended on September 30, 2004 and 2005, and of Old Metals for the fiscal year ended on December 31, 2005, (iii) the unaudited separate balance sheets of MSC and Old Metals as of June 30, 2006 (the “Unaudited Balance Sheet Date”) and the unaudited separate balance sheets of New Metals and New Cayman as of August 31, 2006 (the “Unaudited Separate Balance Sheet Date”), and (iv) the unaudited separate statements of income and cash flows of MSC for the nine months ended on June 30, 2006, and of Old Metals for the six months ended on June 30, 2006 (the foregoing financial statements, collectively, the “Financial Statements,” true, correct, and complete copies of all of which are included as Section 4.5(a) of the Apex Disclosure Bundle).

(b)           Except (i) as set forth in Section 4.5(b) of the Apex Disclosure Schedule, (ii) as described in the notes to the Financial Statements that are audited, (iii) to the extent that the unaudited interim statements do not include footnotes and other presentation items as required by GAAP, and (iv) in the case of the unaudited statements, for normal, year-end adjustments (which shall not be material individually or in the aggregate), the Financial Statements have been prepared in accordance with GAAP applied on a consistent basis and fairly present the separate financial condition and results of operations and cash flows of MSC, Old Metals, New Metals, and New Cayman as of the respective dates thereof and for the respective periods indicated therein.

(c)           Except for (i) any liabilities set forth in Section 4.5(c) of the Apex Disclosure Schedule, (ii) liabilities set forth or provided for on the Financial Statements (including liabilities the amounts of which are set forth numerically in the notes thereto), (iii) liabilities that have arisen after the Unaudited Balance Sheet Date in the ordinary course of business consistent with past practice, (iv) liabilities under the Financing Documents to which MSC, Old Metals, New Metals, or New Cayman is a party or the Scheduled Contracts, to the extent that the existence of such liabilities is reasonably ascertainable solely by reference to such Financing Documents or Scheduled Contracts, (v) Indebtedness set forth in Section 4.5(c) of the Apex Disclosure Schedule of the type defined in clauses (a) and (c), and clause (g) as it applies to clause (a) and (c), of the definition of Indebtedness, and (vi) liabilities that have not had, individually or together with other liabilities, a Material Adverse Effect on MSC, Old Metals, New Metals, or New Cayman, neither MSC, Old Metals, New Metals, nor New Cayman has any material

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liability (whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, and whether due or to become due, including any liability for Taxes).

(d)           Since the Unaudited Balance Sheet Date, no event has occurred and no condition exists that, individually or together with other events and conditions, has had a Material Adverse Effect on MSC and Old Metals.

(e)           Since the Unaudited Separate Balance Sheet Date, no event has occurred and no condition exists that, individually or together with other events and conditions, has had a Material Adverse Effect on New Metals and New Cayman.

(f)            Since June 30, 2006, no event has occurred and no condition exists that, individually or together with other events and conditions, has had a Material Adverse Effect on Apex.

Section 4.6             Title to Properties.  To the knowledge of Apex, (a) MSC has good, legal, and valid title to (or, in the case of any leased premises, easement properties or licensed property, valid leasehold, easement, or license interests in) all real and personal property (including the Mining Concessions) and all rights, tangible or intangible (including Intellectual Property Rights and Other Property Rights), now required for the construction and operation of the Project substantially as contemplated by the Development Plan; and (b) there are no Liens of any nature against such properties or rights (other than (i) Permitted Liens and (ii) such Liens as are set forth in Section 4.6 of the Apex Disclosure Schedule), in each case, except where such failure of title or the existence of such Liens would not have a Material Adverse Effect on MSC or the Project.

Section 4.7             Material Contracts.

(a)           All Material Project Documents to which MSC is a party as of the date hereof, all Operational Agreements to which New Metals is a party as of the date hereof, all Mandatory Metals Hedge Agreements, and all Third Party Concentrate Sales Agreements are listed on Section 4.7(a) of the Apex Disclosure Schedule (the “Scheduled Contracts”).

(b)           To the knowledge of Apex, there are no material services, materials, or rights (other than Government Approvals and Authorizations) required for the current stage of the development, financing, construction, operation, and ownership of the Project, other than those granted by, or to be provided to MSC pursuant to the Scheduled Contracts.

(c)           Except for the amendments, modification, or supplements of the Scheduled Contracts being entered into on the date hereof, none of the Scheduled Contracts have been amended, modified, or supplemented, and, to the knowledge of Apex, all of the Scheduled Contracts are in full force and effect, except as such enforceability may be affected by applicable bankruptcy, reorganization, insolvency,

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moratorium, or similar Laws affecting creditors’ rights generally (and Apex and its Subsidiaries have no knowledge of any fact or circumstance that has occurred that would make any such Laws applicable), and have not been terminated, suspended, or rescinded by any party thereto.

(d)           To the knowledge of Apex, all conditions precedent to the obligations of the respective parties under the Scheduled Contracts have been satisfied or waived except for such conditions precedent that need not or cannot be satisfied until a later stage of development, financing, construction, operation, and ownership of the Project, and Apex and its Subsidiaries have no reason to believe that any such condition precedent cannot be satisfied on or prior to the commencement of the appropriate state of development, financing, construction, operation, and ownership of the Project, except as otherwise set forth on Section 4.7(d) of the Apex Disclosure Schedule.

(e)           No Subsidiary of Apex is in default in the performance of any covenant or obligation set forth in, or otherwise in default under, any of the Scheduled Contracts to which it is a party, which default would reasonably be expected to result in a Material Adverse Effect on MSC, Old Metals, New Metals, or New Cayman.  There exists no default under the MSC Subordinated Debt by MSC, nor any event which, with notice or lapse of time or both, would constitute a default thereunder by MSC.  The outstanding principal amount of the MSC Subordinated Debt is US$208,387,865.00.  To the knowledge of Apex, there has been no default by any counterparty under, and no Event of Force Majeure (as defined in the Common Security Agreement) has occurred under, any Scheduled Contract, which in either case would reasonably be expected to have a Material Adverse Effect on MSC, Old Metals, New Metals, or New Cayman.

(f)            The Apex Disclosure Bundle includes true, correct, and complete copies of the Scheduled Contracts and of any amendments to any of the foregoing except for copies of confirmations under the Mandatory Metals Hedge Agreements.

Section 4.8             Employees; Employee Benefits.

(a)           Section 4.8(a) of the Apex Disclosure Schedule contains a true, correct, and complete list of all employment or employment-related or consulting Contracts to which MSC, Old Metals, New Metals, or New Cayman is a party with any current executive officer or director of MSC, Old Metals, New Metals, or New Cayman that are currently in effect.  To the knowledge of Apex, no executive officer, key employee, or significant group of employees plans to terminate employment with MSC, New Metals, or New Cayman during the next 12 months.

(b)           Section 4.8(b) of the Apex Disclosure Bundle includes a true, correct, and complete copy of each collective bargaining agreement relating to or affecting MSC, Old Metals, New Metals, or New Cayman or any employee of MSC, Old Metals, New Metals, or New Cayman.  Except as set forth in Section 4.8(b) of the Apex Disclosure Schedule and except for such exceptions as have not had, and would not reasonably be expected to have, a Material Adverse Effect on MSC, Old Metals, New Metals, or New

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Cayman, (i) there is not occurring, and there has not occurred during the previous five years, or, to the knowledge of Apex, there has not been threatened, any strike, slow-down, picket, work stoppage, or other concerted action by any union or other group of employees or other Persons against either MSC, Old Metals, New Metals, or New Cayman or their respective premises or products; (ii) there are, and during the previous five years have been, no complaints or grievances known to Apex, by any union, other group, or class of employees or other Persons which are unsettled or unresolved; and (iii) to the knowledge of Apex, no other union or labor organization has attempted to organize any of the employees of MSC, Old Metals, New Metals, or New Cayman.

(c)           Except as set forth in Section 4.8(c)  of the Apex Disclosure Schedule and subject to the exceptions set forth in Section 4.5(c), none of MSC, Old Metals, New Metals, New Cayman, or any ERISA Affiliate has incurred or reasonably expects to incur any material liability (whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, and whether due or to become due) with respect to any Employee Benefit Plan that would reasonably be expected have a Material Adverse Effect on MSC, Old Metals, New Metals, New Cayman, or the Project.

Section 4.9             Legal Compliance.  Except as set forth in Section 4.9 of the Apex Disclosure Schedule, (a) to the knowledge of Apex, each of Apex and its Subsidiaries is in compliance with, and has conducted its business, including in the case of MSC and the Project, so as to comply with, the terms of all Government Approvals and Laws applicable to it, including applicable anti-corruption Laws in force in Bolivia, the Republic of Chile, U.S., Sweden, Switzerland, Peru, Argentina, and Mexico; (b) to the knowledge of Apex, each of MSC, Old Metals, New Metals, New Cayman, and the Acquired Entities has all Government Approvals that are required to operate its business, and (c) none of MSC, Old Metals, New Metals, New Cayman, and the Acquired Entities has any Legal Proceeding, claim, demand, or notice filed or commenced against it alleging any failure to so comply, in each case except where the failure to so comply or to have such Government Approvals has not had, or would not reasonably be expected to have, a Material Adverse Effect on MSC, Old Metals, New Metals, New Cayman, or either Acquired Entity.

Section 4.10           Taxes.  Each of MSC, Old Metals, New Metals, New Cayman, and the Acquired Entities has timely filed or caused to be filed all Tax Returns required to have been filed and has paid or caused to be paid all Taxes shown as due and payable on such Tax Returns, except (a) Taxes that are being contested in good faith by appropriate proceedings diligently conducted and for which such Entity has set aside on its books adequate reserves (as determined by generally accepted accounting principles as used in the U.S.), (b) as set forth in Section 4.10 of the Apex Disclosure Schedule, or (c) to the extent that the failure to do so has not had, and would not reasonably be expected to have, a Material Adverse Effect on it.  There are no material disputes pending or, to the knowledge of Apex, threatened, between any of MSC, Old Metals, New Metals, New Cayman, and the Acquired Entities, and any Tax Authority relating to Taxes.  With respect to the corporate and tax restructuring that has occurred prior to the Closing, Section 4.10 of the Apex Disclosure Schedule sets forth a complete and accurate description of all the material steps and actions taken in connection with such restructuring.  In connection with

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such restructuring, Apex has, and has caused its Subsidiaries to, take only the steps set forth in such section of the Apex Disclosure Schedule.

Section 4.11           Legal Proceedings.  Except as set forth in Section 4.11  of the Apex Disclosure Schedule, there is no Legal Proceeding pending, or to the knowledge of Apex, threatened in writing relating to MSC, Old Metals, New Metals, or New Cayman, which has had, and would reasonably be expected to have, a Material Adverse Effect on MSC, Old Metals, New Metals, or New Cayman.  None of MSC, Old Metals, New Metals, or New Cayman is subject to any Judgment, which has had, and would reasonably be expected to have, a Material Adverse Effect on MSC, Old Metals, New Metals, or New Cayman.

Section 4.12           Environmental Matters.

(a)           To the knowledge of Apex, the development, construction, and operation of the Project and the activities and properties of MSC are in compliance in all material respects with (i) the Environmental Guidelines, (ii) all applicable Environmental Laws, and (iii) all environmental Government Approvals.  To the knowledge of Apex, MSC has designed the Project in compliance in all material respects with the Environmental Guidelines.

(b)           No notice, notification, demand, citation, summons, or order has been issued and delivered to MSC, no written complaints have been filed and notice thereof served on MSC, no penalty has been assessed, and, to the knowledge of Apex, no investigation or review is pending or threatened by any Governmental Authority or other Person with respect to any alleged failure by MSC to have any material environmental Government Approval or to comply with any applicable Environmental Law.

Section 4.13           Interested Party Transactions.  Other than transactions required or permitted by this Agreement or the other Transaction Documents, Section 4.13 of the Apex Disclosure Schedule lists all transactions and Contracts between Apex or any of its Subsidiaries (other than MSC, New Metals, or New Cayman), on the one hand, and MSC, New Metals, or New Cayman, on the other hand, in each case that involves consideration of US$500,000 or more and has not yet been fully performed.

Section 4.14           Insurance.  Each of MSC, New Metals, and New Cayman maintain with financially sound and reputable insurers, insurance with respect to its properties and business against such casualties and contingencies and in such amounts as are usually carried by businesses engaged in similar activities as MSC, New Metals, and New Cayman and located in similar geographic areas in which MSC, New Metals, and New Cayman operate.

Section 4.15           Financing Documents.  Section 4.15 of the Apex Disclosure Schedule sets forth a correct and complete list of all Financing Documents to which Apex or any of its Subsidiaries is a party and of all other Contracts (except Scheduled Contracts and the New and Amended Financing Documents) pursuant to which Apex or any of its Subsidiaries is required to provide credit support in respect of the Project or any of MSC, Old Metals, New Metals, or New Cayman.  True, correct, and complete copies of all such Financing Documents and other

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Contracts, including all amendments, supplements, modifications, and waivers thereof, are included as Section 4.15 of the Apex Disclosure Bundle.

Section 4.16           No Default.  Except as disclosed in Section 4.16 of the Apex Disclosure Schedule, to the knowledge of Apex, no Default or Event of Default has occurred and is continuing.

Section 4.17           Performance Security.  There are no letters of credit, performance bonds, or other types of performance security currently required to be posted and in full force and effect under the Financing Documents or the Scheduled Contracts, other than those listed on Section 4.17 of the Apex Disclosure Schedule (the “Performance Security”).  No drawing has been made under any of the Performance Security and, to the knowledge of Apex, no event has occurred and currently exists that gives or reasonably could be expected to give any beneficiary of a Performance Security the right to draw thereunder.

Section 4.18           Acquired Entities.  Immediately prior to the Closing, each of New Sweden 1 and New Sweden 2: (a) had no outstanding Indebtedness; (b) had no liabilities (whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, and whether due or to become due, including any liability for Taxes), except for any liabilities under the Transaction Documents and the Financing Documents to which such Entity is a party; (c) owns no real or personal property except, with respect to New Sweden 1, an SEK 100,000 cash deposit with Skandinaviska Enskilda Banken (publ), shares of MSC, and the New Sweden 1 MSC Subordinated Debt, and, with respect to New Sweden 2, an SEK 100,000 cash deposit with Skandinaviska Enskilda Banken (publ) and a quota of New Metals; and (d) has no operations other than holding such properties and being a party to such Contracts.

Section 4.19           No Liquidation; Intent.  None of MSC, New Metals, New Cayman, and the Acquired Entities has commenced any voluntary proceeding or filed any petition, and Apex is not aware of the commencement of any involuntary proceeding or the filing of any involuntary petition, seeking (a) liquidation, reorganization, or other relief in respect of any of MSC, New Metals, New Cayman, or the Acquired Entities for its debts, or any substantial part of its assets, under any applicable Law or (b) appointment of a receiver, trustee, custodian, sequestrator, conservator, or similar official for any such Entity or for a substantial part of its assets.  Apex and its Subsidiaries are not entering into the transactions contemplated hereby or by any of the Transaction Documents with the intent to hinder, delay, or defraud any Person to which any such Entity is, or may become, indebted.

Section 4.20           Notices.  Apex has made available to Sumitomo true, correct, and complete copies of all material notices and other documents delivered under ARTICLE VI of the Common Security Agreement.

Section 4.21           Project Information and Other Information Furnished.  To the knowledge of Apex, the Project Information and other information, financial statements, exhibits, and schedules furnished in writing by or on behalf of Apex to Sumitomo in connection with the negotiation, preparation, or delivery of this Agreement and the other Transaction Documents or

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included herein or therein or delivered pursuant hereto or thereto (including the documents included in the Apex Disclosure Bundle), considered together, do not contain any material misrepresentation or misstatement (or omit any material fact or circumstance necessary in order to make the information contained therein not misleading); provided, that the only representations and warranties made by Apex to Sumitomo under this Section 4.21 in respect of projections, estimates, or other expressions of view as to future circumstances included in the Apex Disclosure Bundle or such other information, financial statements, exhibits, and schedules is that such projections, estimates, or other expression of view were prepared in good faith and were based on reasonable assumptions as to all factual and legal matters materially related thereto as of their respective preparation dates.

ARTICLE V
OTHER COVENANTS

Section 5.1             Confidentiality.  Each Party shall keep confidential, shall cause its Affiliates to keep confidential, and shall instruct its officers, directors, employees, and advisors to keep confidential, all information received from the other Party as a result of any due diligence investigation conducted relating to the execution and delivery of this Agreement and the consummation of the transactions contemplated by this Agreement or otherwise, except (i) as required by applicable securities or other Laws or stock exchange rules or administrative process, and (ii) for information that is or becomes generally available to the public other than as a result of a breach of this Section 5.1 (such information, subject to clauses (i) and (ii), “Confidential Information”).  Except to the extent deemed necessary or advisable by counsel to maintain compliance with, or to prevent violation of, applicable securities or other Laws or stock exchange rules, each Party shall keep the existence of and the provisions of this Agreement and the other Transaction Documents confidential and shall disclose their contents only (1) to those lenders, investors, partners, shareholders, directors, officers, employees, and agents who need to know such information for purposes of its businesses and the transactions contemplated hereby, and (2) to Governmental Authorities and other Persons for purposes of obtaining approvals in connection with the transactions contemplated hereby.  All Confidential Information shall be treated as information covered by the Confidentiality Agreement, which shall remain in full force and effect and shall not be modified or superseded in any way by this Agreement.

Section 5.2             Expenses; Transfer Taxes; Tax Cooperation.  Except as otherwise specifically provided herein, all costs and expenses incurred in connection with this Agreement, the other Transaction Documents, and the transactions contemplated hereby and thereby shall be paid by the Party incurring such expense.  Sumitomo shall pay all costs and expenses incurred in connection with the formation of New Sweden 1 and New Sweden 2.  For the avoidance of doubt, the Parties agree that such costs and expenses shall exclude any Taxes.  Sumitomo shall pay all transfer, documentary, sales, use, stamp, registration and other similar Taxes and fees (including any monetary adjustments, penalties and interest), but excluding any other Taxes such as income, profits, excise, franchise or withholding taxes, incurred on the transfer by Apex Sweden to Sumitomo of the New Sweden 1 Acquired Shares and the New Sweden 2 Acquired Shares.

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Section 5.3             Further Assurances.

(a)           From time to time, as and when requested by any Party, the other Parties shall execute and deliver, or cause to be executed and delivered, all such documents and instruments, and shall take, or cause to be taken, all such further or other actions, as the requesting Party may reasonably deem necessary or desirable to consummate the transactions contemplated by this Agreement, including executing and delivering such assignments, consents, and other instruments the requesting Party may reasonably request as necessary or desirable for such purpose.

(b)           (i) The Parties shall use their commercially reasonable efforts to obtain the consent and approval of those Persons under the Transmission Line Loan Documents, the Financing Documents, and the New and Amended Financing Documents whose consent and approval is required to consummate as promptly as practicable following the Closing, without any additional consideration hereunder therefor, (A) the assignment by ASC Bolivia to Sumitomo or its designated wholly-owned Subsidiary of 35% of all the right, title, and interest of ASC Bolivia in and to the Transmission Line Loan Documents (the “ASC Bolivia Acquired Assets”), free and clear of all Liens and Restrictions, other than Liens or Restrictions (1) created by this Agreement or any of the other Transaction Documents, (2) imposed by applicable Law generally on the type of assets constituting the Transmission Line Loan Documents, or (3) existing under the Financing Documents or the Transaction Documents, and (B) the assumption by Sumitomo of 35% of all the liabilities and obligations of ASC Bolivia under the Transmission Line Loan Documents; provided, that, except as otherwise specifically required by this Agreement, no loan agreement or Contract for borrowed money shall be repaid except as currently required by its terms, in whole or in part, and no Contract shall be amended to increase the amount payable thereunder or otherwise to be more burdensome to the Project, MSC, New Metals, New Cayman, or ASC Bolivia in order to obtain any such consent or approval without first obtaining the approval of Apex and Sumitomo and no Party shall be required to make any cash payment or relinquish any property or contractual rights or change in any manner its operations or the operations of its Subsidiaries to obtain any such consent or approval except for Filing fees and fees and expenses of attorneys, accountants, and other professional advisors and payments in accordance with the terms of Contracts existing on the date hereof; and (ii) each Party shall, and shall cause its respective Subsidiaries and Affiliates to, cooperate and use its respective commercially reasonable efforts to take, or cause to be taken, all appropriate action to cause to be made any necessary amendments to the Transmission Line Loan Documents, the Financing Documents, and the New and Amended Financing Documents to effect the same.  At the Closing, the transactions referred to in clauses (A) and (B) of the immediately preceding sentence shall be deemed, as between ASC Bolivia and Sumitomo, to have occurred at the Closing, 35% of all gains, income, losses, and liabilities related to the Transmission Line Loan Documents on or after the Closing to be for the account of Sumitomo, and ASC Bolivia shall accede to the Dispute Resolution Agreement and become a party thereto; provided,  however, if the assignment of 35% of the interest in ASC Bolivia to Sumitomo, as set forth in this Section 5.3(b), is not consummated for any reason, Apex expressly agrees to promptly pay to Sumitomo any and all proceeds that would otherwise have been paid to Sumitomo if the assignment had in fact occurred as of the date hereof.

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(c)           In accordance with Section 2.2(c)(ii) of the MSC Shareholders Agreement, promptly following the execution and delivery of this Agreement, an extraordinary General Shareholders Meeting (as defined in the MSC Shareholders Agreement) shall be held for the purpose of, among other things, amending and restating the estatutos sociales of MSC in the form of the Spanish language version attached as Exhibit A to the MSC Shareholder Agreement.

ARTICLE VI
CONDITIONS TO CLOSING

On or prior to the date hereof, each of the following is occurring or has occurred:

Section 6.1             Authorizations and Government Approvals.  One or more of the Parties, MSC, Old Metals, New Metals, New Cayman, and the Acquired Entities has made, or caused to be made, all notices and Filings with all Persons that are required to have been made to consummate the transactions contemplated by this Agreement and the other Transaction Documents, and has received all Authorizations and Government Approvals that are required to have been received to consummate the transactions contemplated by this Agreement and the other Transaction Documents, except for such Authorizations and Government Approvals the failure to make or obtain would not have a Material Adverse Effect on New Metals, MSC, New Cayman, Apex, or Sumitomo, and all such Authorizations and Government Approvals are in full force and effect.

Section 6.2             Closing Deliveries to Sumitomo.

(a)           Each of the items described as being executed and delivered by Apex and its Subsidiaries (including the Acquired Entities) pursuant to Section 2.5(a), including the MSC Shareholders Agreement, the Metals Quotaholders Agreement, the New Cayman Shareholders Agreement, the Apex Parent Guarantees, the Dispute Resolution Agreement, the MSC Management Agreement, the New Metals Management Agreement, the Deferred Payments Agreement, the Option Agreement, the Reimbursement Agreement, the Apex Parent Guarantees, the Metals Hedge Novation Agreements, the Old Metals Concentrate Sales Agreement Termination, the New Concentrate Sales Agreement, and the New and Amended Financing Documents, has been executed by Apex and its Subsidiaries (including the Acquired Entities), as applicable, that are parties thereto and delivered to Sumitomo;

(b)           The New and Amended Financing Documents have been executed by the lenders, the hedge banks, the administrative agent, the technical agent, and the collateral agent, as applicable, that are parties thereto and delivered to Sumitomo;

(c)           Sumitomo has received (i) the opinion of Holme Roberts & Owen LLP, special New York counsel to Apex regarding, among other things, Service Company, (ii) the opinion of Quintanilla e Soria Abogados, special Bolivian counsel to Apex regarding MSC, (iii) the opinion of Wistrand Advokatbyra, special Swedish counsel to Apex regarding Apex Sweden, (iv) the opinions of SuterHowald Rechstanwalte, special

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Swiss counsel to Apex regarding (A) New Metals and (B) Old Metals, (v) the opinions of Walkers & Co., special Cayman Islands counsel to Apex regarding (A) New Cayman and (B) Apex, and (vi) the opinion of Bonn Schmitt Steichen, counsel to Apex regarding Apex Luxembourg, in each case dated as of the Closing Date, addressed to Sumitomo, New Sweden 1, and New Sweden 2, and in form and substance satisfactory to Sumitomo in its reasonable discretion;

(d)           Apex has delivered to Sumitomo copies of each of the public deeds evidencing the Governing Documents of MSC, duly certified by a notary public under Bolivian Law, together with certified copies of the registration of all such public deeds in the Registry of Commerce of Bolivia under the care of Fundempresa, on or soon before the date hereof;

(e)           Apex has delivered to Sumitomo a copy of the articles of association (statuten) of New Metals, duly certified by the commercial register of the Canton of Zug (Handels registeramt des Kanton Zug) as of September 25, 2006;

(f)            Apex has delivered to Sumitomo a copy of the registration of MSC in the Registry of Commerce of Bolivia under the care of Fundempresa with an updated certificate of commercial registration for year 2005 (certificado de actualización de matricula) issued on September 21, 2006 by the Registry of Commerce of Bolivia under the care of Fundempresa;

(g)           Apex has delivered to Sumitomo copy of the articles of association (statuts coordonnes) of Apex Luxembourg, duly certified by Paul Frieders, notary public of Luxembourg, as of December 14, 2005;

(h)           Apex has delivered to Sumitomo a copy of the articles of association (bolagsordning) of Apex Sweden, duly certified by the Swedish Companies Registration Office (Bolagsverket) as of September 22, 2006;

(i)            Apex has delivered to Sumitomo a copy of the articles of association (bolagsordning) of New Sweden 1, duly certified by the Swedish Companies Registration Office (Bolagsverket) as of September 21, 2006;

(j)            Apex has delivered to Sumitomo a copy of the articles of association (bolagsordning) of New Sweden 2, duly certified by the Swedish Companies Registration Office (Bolagsverket) as of September 21, 2006;

(k)           Apex has delivered to Sumitomo copies of each of the public deeds evidencing the Governing Documents of New Cayman, duly certified by G. Wayne Panton, notary public in and for the Cayman Islands, as of September 22, 2006;

(l)            Apex has delivered to Sumitomo a certified copy of the extract from the commercial register of the Canton of Zug (Handelsregisteramt des Kanton Zug — Hauptregister) regarding New Metals as of September 4, 2006;

(m)          [Intentionally Omitted];

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(n)           Apex has delivered to Sumitomo a certificate of the secretary of MSC, dated as of the Closing Date, in form and substance reasonably satisfactory to Sumitomo, as to (i) no amendments to the Governing Documents of MSC since the date specified in Section 6.2(d); (ii) the resolutions of the board of directors (or a duly authorized committee thereof) of MSC authorizing the execution, delivery, and performance of the Transaction Documents to which it is a party and the transactions contemplated thereby; and (iii) incumbency and signatures of the officers of MSC executing such Transaction Documents and any other agreements contemplated by this Agreement to which it is a party;

(o)           Apex has delivered to Sumitomo a certificate signed by a managing officer of New Metals, dated as of the Closing Date, in form and substance reasonably satisfactory to Sumitomo, as to (i) no amendments to the Governing Documents of New Metals since the date specified in Section 6.2(e); (ii) the resolutions of all the managing officers of New Metals authorizing the execution, delivery, and performance of the Transaction Documents to which it is a party and the transactions contemplated thereby; and (iii) incumbency and signatures of the managing officers of New Metals executing such Transaction Documents and any other agreements contemplated by this Agreement to which it is a party;

(p)           Apex has delivered to Sumitomo a certificate of the assistant secretary of Apex, dated as of the Closing Date, in form and substance reasonably satisfactory to Sumitomo, as to (i) the resolutions of the board of directors (or a duly authorized committee thereof) of Apex authorizing the execution, delivery, and performance of this Agreement and the other Transaction Documents to which it is a party and the transactions contemplated thereby; and (ii) incumbency and signatures of the officers of Apex executing this Agreement, such other Transaction Documents, and any other agreements contemplated by this Agreement to which it is a party;

(q)           Apex has delivered to Sumitomo a certificate of a manager of Apex Luxembourg, dated as of the Closing Date, in form and substance reasonably satisfactory to Sumitomo, as to (i) the resolutions of the managers of Apex Luxembourg authorizing the execution, delivery, and performance of the Transaction Documents to which it is a party and the transactions contemplated thereby; and (ii) incumbency and signatures of the managers of Apex Luxembourg executing such Transaction Documents and any other agreements contemplated by this Agreement to which it is a party;

(r)            Apex has delivered to Sumitomo a certificate of a director of Apex Sweden, dated as of the Closing Date, in form and substance reasonably satisfactory to Sumitomo, as to (i) the resolutions of the board of directors of Apex Sweden authorizing the execution, delivery, and performance of the Transaction Documents to which it is a party and the transactions contemplated thereby; and (ii) incumbency and signatures of the directors (or deputy directors) of Apex Sweden executing such Transaction Documents and any other agreements contemplated by this Agreement to which it is a party;

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(s)           [Intentionally Omitted];

(t)            Apex has delivered to Sumitomo a certificate of a director of New Sweden 1, dated as of the Closing Date, in form and substance reasonably satisfactory to Sumitomo, as to (i) no amendments to the Governing Documents of New Sweden 1 since the date specified in Section 6.2(i); (ii) the resolutions of the board of directors (or a duly authorized committee thereof) of New Sweden 1 authorizing the execution, delivery, and performance of the Transaction Documents to which it is a party and the transactions contemplated thereby; and (iii) incumbency and signatures of the directors (or deputy directors) of New Sweden 1 executing such Transaction Documents and any other agreements contemplated by this Agreement to which it is a party;

(u)           Apex has delivered to Sumitomo a certificate of a director of New Sweden 2, dated as of the Closing Date, in form and substance reasonably satisfactory to Sumitomo, as to (i) no amendments to the Governing Documents of New Sweden 2 since the date specified in Section 6.2(j), (ii) the resolutions of the board of directors (or a duly authorized committee thereof) of New Sweden 2 authorizing the execution, delivery, and performance of the Transaction Documents to which it is a party and the transactions contemplated thereby; and (iii) incumbency and signatures of the directors (or deputy directors) of New Sweden 2 executing such Transaction Documents and any other agreements contemplated by this Agreement to which it is a party;

(v)           Apex has delivered to Sumitomo a certificate of the secretary or assistant secretary of New Cayman, dated as of the Closing Date, in form and substance reasonably satisfactory to Sumitomo, as to (i) no amendments to the Governing Documents of New Cayman since the date specified in Section 6.2(k), (ii) the resolutions of the board of directors (or a duly authorized committee thereof) of New Cayman authorizing the execution, delivery, and performance of the Transaction Documents to which it is a party and the transactions contemplated thereby; and (iii) incumbency and signatures of the officers of New Cayman executing such Transaction Documents and any other agreements contemplated by this Agreement to which it is a party;

(w)          Apex has delivered to Sumitomo a copy of the certificate of incorporation of Service Company, duly certified by the Secretary of State of the State of Delaware, U.S.A. dated as of a recent date;

(x)            Apex has delivered to Sumitomo a copy of the certificate issued by the Secretary of State of the State of Delaware, U.S.A. dated as of a recent date, relating to the good standing of Service Company in the State of Delaware, U.S.A.; and

(y)           Apex has delivered to Sumitomo a certificate of the secretary or assistant secretary of Service Company, dated as of the Closing Date, in form and substance reasonably satisfactory to Sumitomo, as to (i) the resolutions of the board of directors of Service Company authorizing the execution, delivery, and performance of the Transaction Documents to which it is a party and the transactions contemplated thereby; and (ii) incumbency and signatures of the officers of Service Company executing such

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Transaction Documents and any other agreements contemplated by this Agreement to which it is a party.

Section 6.3             Closing Deliveries to Apex, Apex Sweden, and Apex Luxembourg.

(a)           Each of the items described as being executed and delivered by Sumitomo or its Subsidiaries (other than the Acquired Entities) pursuant to Section 2.5(b), including the New Cayman Shareholders Agreement, the Sumitomo Guaranty, the Dispute Resolution Agreement, the Deferred Payments Agreement, the Option Agreement, the Reimbursement Agreement, and the New and Amended Financing Documents, has been executed by Sumitomo and its Subsidiaries (other than the Acquired Entities), as applicable, that are parties thereto and delivered to Apex;

(b)           The New and Amended Financing Documents have been executed by the lenders, the hedge banks, the administrative agent, the technical agent, and the collateral agent, as applicable, that are parties thereto and delivered to Apex;

(c)           Apex has received (i) the opinion of Morrison & Foerster LLP, special New York counsel to Sumitomo, and (ii) the opinion of Ito & Mitomi, special Japanese counsel to Sumitomo, in each case dated as of the Closing Date, addressed to Apex, and in form and substance satisfactory to Apex in its reasonable discretion; and

(d)           Sumitomo has delivered to Apex a certificate of the General Manager, Corporate Legal & General Affairs Department of Sumitomo, dated as of the Closing Date, in form and substance reasonably satisfactory to Apex, as to (i) the resolutions of the board of directors (or a duly authorized committee thereof) of Sumitomo authorizing the execution, delivery, and performance of this Agreement and the other Transaction Documents to which it is a party and the transactions contemplated thereby; and (ii) incumbency and signatures of the officers of Sumitomo executing this Agreement, such other Transaction Documents, and any other agreements contemplated by this Agreement to which it is a party.

Section 6.4             Board Approvals.  This Agreement, the other Transaction Documents, their execution and delivery, and the transactions contemplated hereby and thereby, have been approved by Sumitomo’s board of directors and Apex’s board of directors, and to the extent any of such approvals are subject to the satisfaction or waiver of any conditions, such conditions have been satisfied or waived.

Section 6.5             Restructuring.  All the material steps and actions with respect to the corporate and tax restructuring set forth in Section 4.10 of the Apex Disclosure Schedule to be taken prior to Closing have been taken.

ARTICLE VII
INDEMNIFICATION

Section 7.1             Survival of Representations and Warranties.  The respective representations and warranties of the Parties contained in this Agreement or any certificate

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delivered pursuant to this Agreement shall survive the Closing until the first anniversary of the Closing Date; provided, however, that the representation and warranties set forth in Section 3.1(l) through Section 3.1(p), Section 4.6, and Section 4.10 shall survive the Closing until the expiration of any applicable statutes of limitations; provided, further, that the obligations to indemnify specified in Section 7.2 shall not terminate at the time provided above if, prior to such time, a notice of claim relating to Losses specifying in detail the nature of such Losses (although the amount of Losses, if not yet determinable, need not be specified) has been given to Apex or Sumitomo, as applicable; and provided, further, that notwithstanding anything to the contrary in this Agreement, a claim for indemnity that is related to a Loss that results from fraud or intentional malfeasance of Apex shall not have the benefit of any of the limitations set forth in this ARTICLE VII.  The covenants of the Parties in this Agreement shall survive the Closing without limitation (except pursuant to their terms).

Section 7.2             Indemnification.

(a)           Subject to a Party (an “Indemnified Party”) making a written claim for indemnification against the other Party (the “Indemnifying Party”) pursuant to Section 7.3 within the survival period set forth in Section 7.1, the Indemnifying Party shall indemnify and hold the Indemnified Party harmless from and against any and all Losses the Indemnified Party may suffer (including Losses suffered or paid, directly or indirectly, through the application of the Indemnified Party’s assets or otherwise), arising out of, in the nature of, incident or relating to, resulting from, or caused by (i) the failure of any representation or warranty set forth in ARTICLE III or ARTICLE IV made by the Indemnifying Party to be true and correct in all material respects at and as of the Closing Date or (ii) the breach in any material respect by the Indemnifying Party of any of its covenants under this Agreement.

(b)           No indemnification by either Party pursuant to Section 7.2(a) shall be due and payable unless the aggregate amount of all such claims asserted by the Indemnified Party against the Indemnifying Party exceeds US$3,000,000.00 (the “Basket Amount”), whereupon the applicable Indemnifying Party shall be obligated to pay only the excess of the aggregate amount of such claims for indemnification over the Basket Amount.

(c)           A Party’s maximum aggregate indemnification obligations pursuant to Section 7.2(a) are limited to US$40,000,000.00; provided, however, that the maximum aggregate indemnification obligations pursuant to Section 7.2(a) are limited to $224,000,000 to the extent arising out of, in the nature of, incident or relating to, resulting from, or caused by the failure of any representation or warranty set forth in Section 3.1(l) through Section 3.1(p), or Section 4.6 to be true and correct at and as of the Closing Date.

(d)           Each Party hereby acknowledges and agrees that its sole and exclusive monetary remedy with respect to this Agreement, regardless of whether the relief demanded or sought is found in contract or tort, shall be pursuant to the indemnification provisions set forth in this ARTICLE VII.  Notwithstanding anything in the immediately preceding sentence to the contrary, nothing in this Section 7.2(d) shall limit in any way the availability of specific performance, injunctive relief, rescission, or other

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non-monetary remedies to which a Party may otherwise be entitled.  In no event shall either Party be liable to any other Person for such other Person’s (i) lost profits, loss of use, or lost revenues, (ii) punitive, multiple, or other exemplary damages, or (iii) any other indirect, incidental, special, or consequential Losses.  Each Party waives and relinquishes claims for such lost profits, loss of use, lost revenues, or other indirect, incidental, special, or consequential Losses.

Section 7.3             Procedures.

(a)           In order for an Indemnified Party under this ARTICLE VII to be entitled to any indemnification provided for under this Agreement, such Indemnified Party shall, promptly following the discovery of the matters giving rise to any Loss, notify the Indemnifying Party under this ARTICLE VII in writing of its claim for indemnification for such Loss, specifying in reasonable detail the nature of such Loss and the amount of the liability estimated to accrue therefrom; provided, however, that the Indemnified Party’s failure to so notify the Indemnifying Party shall not release the Indemnifying Party, in whole or in part, from its obligations under this ARTICLE VII, except to the extent (and solely to the extent) that the Indemnifying Party will have been actually prejudiced as a result of such failure.  Thereafter, the Indemnified Party shall deliver to the Indemnifying Party, within five Business Days after the Indemnified Party’s receipt of such request, all information and documentation reasonably requested by the Indemnifying Party with respect to such Loss.

(b)           If any third party notifies any Indemnified Party seeking indemnification under Section 7.2, with respect to any matter, claim, investigation, action, suit, charge, complaint, demand, or other Legal Proceeding, whether pending or threatened (an “Action”), that may give rise to a claim for indemnification under this ARTICLE VII, then the Indemnified Party shall promptly give notice of the Action to the Indemnifying Party pursuant to Section 8.5; provided, however, that the Indemnified Party’s failure to so notify the Indemnifying Party of any Action shall not release the Indemnifying Party, in whole or in part, from its obligations under this ARTICLE VII, except to the extent (and solely to the extent) that the Indemnified Party’s failure to so notify actually prejudices the Indemnifying Party’s ability to defend against such Action.

(c)           The Indemnified Party may, at the sole expense and liability of the Indemnifying Party, exercise full control of the defense, compromise, or settlement of any such Action, unless, at any time within 30 days after the Indemnified Party has given notice to the Indemnifying Party of the Action, the Indemnifying Party (i) delivers a written confirmation to such Indemnified Party that the indemnification provisions of Section 7.2 are applicable to such Action and that, subject to the other provisions of this ARTICLE VII, the Indemnifying Party shall indemnify such Indemnified Party in respect of such Action pursuant to the terms of Section 7.2, (ii) notifies such Indemnified Party in writing of the Indemnifying Party’s intention to assume the defense thereof and thereafter conducts the defense actively and diligently, and (iii) retains legal counsel reasonably satisfactory to such Indemnified Party to conduct the defense of such Action.  Notwithstanding anything to the contrary in the immediately preceding sentence, the

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Indemnifying Party shall not have any right to assume the defense of such Action, if (1) such Action seeks an injunction or other equitable relief and not money damages only, or (2) the settlement or compromise of, or an adverse judgment with respect to, such Action is, in the good faith judgment of the Indemnified Party, likely to establish a precedent, custom or practice materially adverse to the continuing business interests or the reputation of the Indemnified Party.

(d)           The Indemnified Party and the Indemnifying Party shall use their commercially reasonable efforts to cooperate with the Party assuming the defense, compromise, or settlement of any such Action in accordance herewith in any manner that such Party reasonably may request.  If the Indemnifying Party assumes the defense of any such Action, the Indemnified Party shall have the right to employ separate counsel and to participate in (but not control) the defense, compromise, or settlement thereof, but the fees and expenses of such counsel shall be the expense of such Indemnified Party unless (i) the Indemnifying Party has specifically agreed to pay such fees and expenses or (ii) the Indemnified Party has been advised by its counsel that there may be one or more legal defenses from claims available to it that are different from or additional to those available to the Indemnifying Party or that there may be a conflict of interest between the Indemnifying Party and the Indemnified Party in the conduct of the defense of such Action (in either of which cases the Indemnifying Party shall not have the right to direct the defense, compromise, or settlement of such Action on behalf of the Indemnified Party), and in any such case the reasonable fees and expenses of such separate counsel shall be borne by the Indemnifying Party, it being understood and agreed, however, that the Indemnifying Party shall not be liable for the fees and expenses of more than one separate firm of attorneys at any time for the Indemnified Party.  No Indemnified Party shall settle or compromise or consent to entry of any judgment with respect to any such Action for which it is entitled to indemnification hereunder without the prior written consent of the Indemnifying Party, unless the Indemnifying Party fails to assume control of such Action in the manner provided in Section 7.3(c).  The Indemnifying Party shall not, without the written consent of the Indemnified Party, settle or compromise or consent to entry of any judgment with respect to any such Action (1) in which any relief other than the payment of money damages is or may be sought against any Indemnified Party, or (2) that does not include as an unconditional term thereof the giving by the claimant, party conducting such investigation, plaintiff or petitioner to such Indemnified Party of a release from all liability with respect to such Action.

Section 7.4             Insurance Proceeds.  Notwithstanding anything to the contrary in the other provisions of this ARTICLE VII, the amount that any Indemnifying Party may be required to pay to an Indemnified Party pursuant to this ARTICLE VII shall be reduced (retroactively, if necessary) by any insurance proceeds or refunds actually recovered by or on behalf of the applicable Indemnified Party in reduction of the related Losses (on an after-Tax basis).  If an Indemnified Party receives the payment required by this ARTICLE VII from the Indemnifying Party in respect of Losses and subsequently receives insurance proceeds in respect of such Losses, then the Indemnified Party shall promptly repay to the Indemnifying Party a sum equal to the amount of such insurance proceeds or refunds actually received, net of costs and expenses and on an after-Tax basis, but not exceeding the amount paid by the Indemnifying Party to such

49

Indemnified Party in respect of such Losses.  No representation, warranty, covenant, or agreement contained in this Agreement is for the benefit of any insurer.

ARTICLE VIII
MISCELLANEOUS

Section 8.1             Entire Agreement.  This Agreement (together with the Disclosure Schedules, other Schedules and Exhibits annexed hereto) and the other Transaction Documents contain, and are intended as, a complete statement of all of the terms of the agreements among the Parties with respect to the matters provided for herein and therein, and supersede and discharge any previous agreements and understandings between the Parties with respect to those matters; provided, however, that the Confidentiality Agreement shall survive the execution and delivery hereof and the Closing hereunder and continue in full force and effect in accordance with its terms.

Section 8.2             Governing Law; Language.  This Agreement shall be governed by and construed in accordance with the Laws of the State of New York, including Section 5-1401 of the New York General Obligations Law, as applied to contracts made and performed within the State of New York, without regard to any choice or conflicts of law provision or rule that would cause the application of the Laws of any jurisdiction other than the State of New York.  This Agreement has been negotiated and executed by the Parties in English.  In the event any translation of this Agreement is prepared for convenience or any other purpose, the provisions of the English version shall govern.  Certain Schedules and/or Exhibits to this Agreement are being executed in both English and Spanish or German.  If any doubt, misunderstanding or dispute arises in their interpretation, the English version shall govern.

Section 8.3             Dispute Resolution.  Any controversy, claim, or dispute between the Parties that arises out of or relates to this Agreement, including any claim or controversy relating to the interpretation, breach, termination, or invalidity of any provision hereof, shall be exclusively and finally settled pursuant to and in accordance with the Dispute Resolution Agreement.

Section 8.4             Headings.  The article and section headings of this Agreement are for reference purposes only and are to be given no effect in the construction or interpretation of this Agreement.

Section 8.5             Notices.  All notices and other communications hereunder shall be in writing and shall be delivered personally, telecopied (if receipt of which is confirmed by the Person to whom sent), or sent by internationally recognized overnight delivery service to the Parties at the following addresses (or to such other Person or address for a Party as specified by such Party by like notice) (notice shall be deemed given and received upon receipt, if delivered personally, by overnight delivery service or by telecopy, or on the third Business Day following mailing, if mailed, except that notice of a change of address shall not be deemed given and received until actually received):

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(a)          If to Apex, Apex Sweden, or Apex Luxembourg, to it at:

c/o Apex Silver Mines Corporation
1700 Lincoln Street, Suite 3050
Denver, Colorado  80203  U.S.A.
Attention:  President
Telecopier: +1 (303) 839-5907

with a copy to:

Holme Roberts & Owen LLP
1700 Lincoln Street, Suite 4100
Denver, Colorado 80203 U.S.A.
Attention:  Paul G. Thompson, Esq.
Telecopier:  +1 (303) 866-0200

with a further copy to:

Davis Graham & Stubbs LLP
1550 17th Street, Suite 500
Denver, Colorado 80202 U.S.A.
Attention:  Deborah J. Friedman, Esq.
Telecopier:  +1 (303) 893-1379

(b)          If to Sumitomo, to it at:

Sumitomo Corporation
8-11, Harumi, 1-chome,
Chuo-ku, Tokyo, 104-8610 Japan
Attention:  General Manager of the Non Ferrous Metals & Raw Materials Department
Telecopier: +81-3-5166-6423

with a copy to:

Morrison & Foerster LLP
1290 Avenue of the Americas
New York, New York 10104 U.S.A.
Attention:  Michael C. Graffagna, Esq.
Telecopier:  +1 (212) 468-7900

Section 8.6             Severability.  If at any time any covenant or provision contained herein is deemed in a final ruling of a court or other body of competent jurisdiction (including an arbitral tribunal convened in accordance with the Dispute Resolution Agreement) to be invalid or unenforceable, such covenant or provision shall be considered divisible and such covenant or provision shall be deemed immediately amended and reformed to include only such portion of such covenant or provision as such court or other body has held to be valid and enforceable; and the Parties agree that such covenant or provision, as so amended and reformed, shall be valid and binding as though the invalid or unenforceable portion had not been included herein.

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Section 8.7             Amendment; Waiver.  No provision of this Agreement may be amended or modified except by an instrument or instruments in writing signed by the Parties and designated as an amendment or modification.  No waiver by any Party of any provision of this Agreement shall be valid unless in writing and signed by the Party making such waiver and designated as a waiver.  No failure or delay by any Party in exercising any right, power, or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise thereof or the exercise of any other right, power, or remedy preclude any further exercise thereof or the exercise of any other right, power, or remedy.  No waiver of any provision hereof shall be construed as a waiver of any other provision.

Section 8.8             Assignment and Binding Effect.  No Party may assign any of its rights or delegate any of its obligations under this Agreement without (a) the prior written consent of the other Parties, and (b) the complete written assumption by the assignee of all of the obligations of the assignor under this Agreement.  All of the terms and provisions of this Agreement shall be binding on, and shall inure to the benefit of, the respective successors and permitted assigns of the Parties.

Section 8.9             No Benefit to Others.  Except as expressly set forth herein, the representations, warranties, covenants, and agreements contained in this Agreement are for the sole benefit of the Parties and their respective successors and permitted assigns, and they shall not be construed as conferring and are not intended to confer any rights, remedies, obligations, or liabilities on any other Person, unless such Person is expressly stated herein to be entitled to any such right, remedy, obligation, or liability.

Section 8.10           Counterparts.  This Agreement may be executed by the Parties in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute one and the same instrument.

Section 8.11           Interpretation.

(a)           As used herein, except as otherwise indicated herein or as the context may otherwise require: (i) the words “include,” “includes,” and “including” are deemed to be followed by “without limitation” whether or not they are in fact followed by such words or words of like import; (ii) the words “hereof,” “herein,” “hereunder,” and comparable terms refer to the entirety of this Agreement, including the Exhibits, Disclosure Schedules, and other Schedules hereto, and not to any particular article, section, or other subdivision hereof or Exhibit, Disclosure Schedule, or Schedule hereto; (iii) any pronoun shall include the corresponding masculine, feminine, and neuter forms; (iv) the singular includes the plural and vice versa; (v) references to any agreement or other document are to such agreement or document as amended, modified, supplemented, and restated now or hereafter from time to time; (vi) references to any statute or regulation are to it as amended, modified, supplemented, and restated now or hereafter from time to time, and to any corresponding provisions of successor statutes or regulations; (vii) except as otherwise expressly provided in this Agreement, references to “Article,” “Section,” “preamble,” “recital,” or another subdivision or to an “Exhibit,” “Disclosure Schedule,” or “Schedule” are to an article, section, preamble, recital or subdivision hereof or an

52

“Exhibit,” “Disclosure Schedule,” or “ Schedule” hereto; and (viii) references to any Person or Entity include such Person’s or Entity’s respective successors and permitted assigns.

(b)           In this Agreement,

(i)any reference to Sumitomo’s “knowledge,” and comparable terms including “know,” “known,” “aware,” or “awareness,” of a particular fact or other matter means the knowledge of one or more of the executive officers or directors of Sumitomo or the knowledge such individuals should be expected to know after conducting a due, appropriate, and reasonable investigation; and

(ii)any reference to Apex’s “knowledge,” and comparable terms including “know,” “known,” “aware,” or “awareness,” of a particular fact or other matter means the knowledge of any of the following individuals or the knowledge such individuals should be expected to know after conducting a due, appropriate, and reasonable investigation:

(A)Keith R. Hulley, chairman and director of Apex;

(B)Jeffrey G. Clevenger, president, chief executive officer, and director of Apex;

(C)Harry M. Conger, director of Apex;

(D)Ove Hoegh, director of Apex;

(E)Kevin R. Morano, director of Apex;

(F)Terry M. Palmer, director of Apex;

(G)Charles B. Smith, director of Apex;

(H)Paul Soros, director of Apex;

(I)Alan Edwards, executive vice president and chief operating officer of Apex;

(J)Gerald J. Malys, senior vice president and chief financial officer of Apex;

(K)Marcel F. DeGuire, senior vice president of marketing and projects of Apex;

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(L)Terry L. Owen, senior vice president of project development of Apex;

(M)Jerry W. Danni, senior vice president of corporate affairs of Apex;

(N)Robert P. Vogels, vice president and controller of Apex;

(O)Robert B. Blakestad, vice president exploration of Apex;

(P)Igor Levental, vice president, investor relations and corporate development of Apex;

(Q)Graham Buttenshaw, vice president and general manager of MSC; and

(R)Gerardo Garrett, vice president corporate of MSC.

(c)           Any reference herein to a “day” or number of “days” (without the explicit qualification of “Business”) shall be deemed to refer to a calendar day or number of calendar days.  If any action or notice is to be taken or given on or by a particular calendar day, and such calendar day is not a Business Day, then such action or notice may be taken or given on the next succeeding Business Day.

(d)           Any financial or accounting terms that are not otherwise defined herein shall have the meanings given thereto under generally accepted accounting principles as used in the U.S.  For purposes of each reference herein to an amount in Dollars in circumstances where the actual item is expressed in any other currency shall be considered a reference to the Dollar equivalent of such other currency on the relevant date of determination of such amount at the relevant noon buying rate in the City of New York for cable transfers in foreign currencies, as announced by the Federal Reserve Bank of New York for customs purposes (the “Reference Exchange Rate”).

Section 8.12           Rules of Construction.  The Parties agree that they have been represented by counsel during the negotiation, preparation, and execution of this Agreement and, therefore, waive the application of any Law or rule of construction providing that ambiguities in an agreement or other document shall be construed against the Party drafting such agreement or document.

Section 8.13           No Partnership.  No provision of this Agreement creates a partnership or joint venture between or among the Parties or makes any Party the agent of any other Party for any purpose.  No Party has the authority or power to bind, to contract in the name of, or to create any liability for any other Party in any way or for any purpose.

[Remainder of page intentionally left blank]

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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first written above.

APEX SILVER MINES LIMITED
By:	/s/ Jeffrey Clevenger
	Jeffrey Clevenger
Its:	President & CEO
APEX LUXEMBOURG S.À R.L.
By:	/s/ Gerald Malys
	Gerald Malys
Its:	Manager
APEX SILVER MINES SWEDEN AB
By:	/s/ Marcel DeGuire
	Marcel DeGuire
Its:	Director

SUMITOMO CORPORATION
By:	/s/ Mitsuhiko Yamada
	Mitsuhiko Yamada
Its:	Executive Officer and General Manager, Mineral Resources Division 1

EX-10.2

Execution Version

Exhibit 10.2

DEFERRED PAYMENTS AGREEMENT

Entered into as of September 25, 2006

between

APEX SILVER MINES SWEDEN AB

and

SUMITOMO CORPORATION

TABLE OF CONTENTS

		Page
ARTICLE I DEFINITIONS
Section 1.1	Defined Terms
Section 1.2	Definitions from Purchase and Sale Agreement
ARTICLE II SILVER PAYMENTS
Section 2.1	Silver Payment Obligation
Section 2.2	Calculation of Payment
Section 2.3	Payment in Silver Bullion
Section 2.4	Payment in Dollars
Section 2.5	Payment Adjustments
ARTICLE III ZINC PAYMENTS
Section 3.1	Zinc Payment Obligation
Section 3.2	Calculation of Payment; Payment
Section 3.3	Payment Adjustments
ARTICLE IV FAILURE TO MAKE PAYMENT
ARTICLE V TERM
Section 5.1	Term
Section 5.2	Adjustment of Sumitomo Percentage; Survival of Payment Obligations
ARTICLE VI ADDITIONAL PROVISIONS
Section 6.1	Access to Records
Section 6.2	No Right of Off-Set
Section 6.3	Entire Agreement
Section 6.4	Governing Law; Language
Section 6.5	Dispute Resolution
Section 6.6	Headings
Section 6.7	Notices
Section 6.8	Severability
Section 6.9	Amendment; Waiver
Section 6.10	Assignment and Binding Effect
Section 6.11	No Benefit to Others
Section 6.12	No Consequential Damages
Section 6.13	Counterparts
Section 6.14	Interpretation
Section 6.15	Rules of Construction
Attachment A – Mine Map

1

DEFERRED PAYMENTS AGREEMENT

This Deferred Payments Agreement is entered into as of September 25, 2006 (the “Closing Date”), by and between:

APEX SILVER MINES SWEDEN AB, a privat aktiebolag duly organized and validly existing under the Laws of the Kingdom of Sweden (“Apex Sweden”), with its registered office at Accurate Accounting AB, Draketan 7, SE-412 50, Göteborg, Sweden; and

SUMITOMO CORPORATION, a corporation duly organized and validly existing under the Laws of Japan (“Sumitomo”), with its headquarters at 1-8-11, Harumi, Chuo-ku Tokyo 104-8610, Japan.

Apex Sweden and Sumitomo are sometimes referred to herein individually as a “Party” and collectively as the “Parties.”  Capitalized terms used and not otherwise defined in this Agreement have the respective meanings ascribed thereto in ARTICLE I.

RECITALS

A.            Pursuant to the Purchase and Sale Agreement, dated as of September 25, 2006 (the “Purchase and Sale Agreement”), Sumitomo, among other things, acquired (1) 100% of the issued and outstanding share capital of New Sweden 1, which on the Closing Date owned 35% of the issued and outstanding share capital of Minera San Cristóbal S.A., a sociedad anónima organized under the Laws of Bolivia (“MSC”), (2) 100% of the issued and outstanding share capital of New Sweden 2, which on the Closing Date owned 35% of the issued and outstanding quotas of Apex Metals Marketing GmbH, a Gesellschaft mit beschränkter Haftung organized under the Laws of Switzerland (“New Metals”), and (3) 35% of the issued and outstanding share capital of Apex Silver Finance Ltd., an exempted company limited by shares incorporated under the Laws of the Cayman Islands, British West Indies (“New Cayman”) (collectively, the “Acquisition”).

B.            MSC owns and is developing a silver, zinc, and lead mine known as the San Cristóbal Mine, located in the Republic of Bolivia.  MSC shall produce zinc, lead, and bulk concentrates from certain Production at the Mine (the “Concentrates”) and New Metals has the exclusive right to acquire and market the Concentrates.  New Metals has entered, and from time to time shall enter into agreements for the sale of Concentrates purchased from MSC with smelters, refineries and traders (any such agreement entered into by New Metals with a Person who is not an Affiliate of Apex or which is otherwise on an arm’s length basis, a “Sales Agreement” and collectively, the “Sales Agreements”).

C.            Pursuant to Section 2.2 of the Purchase and Sale Agreement, the Purchase Price to be paid by Sumitomo in connection with the Acquisition is payable, in part, by payment of Deferred Payments to Apex Sweden.  This is the Deferred Payments Agreement referred to in the Purchase and Sale Agreement.  This Agreement sets forth the terms and conditions with respect to the Deferred Payments.

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AGREEMENT

In consideration of the mutual promises, covenants, and agreements set forth herein, the Purchase and Sale Agreement and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

ARTICLE I
DEFINITIONS

Section 1.1             Defined Terms For purposes of this Agreement, the following terms have the following meanings:

“Acquisition” has the meaning specified in the recitals.

“Agreement” means this Deferred Payments Agreement.

“Apex” means Apex Silver Mines Limited, an exempted company limited by shares incorporated under the laws of the Cayman Islands, British West Indies.

“Apex Interestholders” means the “Apex Interestholders” as defined in the MSC Shareholders Agreement, the “Apex Interestholders” as defined in the New Metals Quotaholders Agreement, the “Apex Interestholders” as defined in the New Cayman Shareholders Agreement, and their Affiliates which own any right, tile, and interest in the Transmission Line Loan.

“Apex Interests” has the meaning specified in the MSC Shareholders Agreement.

“Apex Luxembourg” means Apex Luxembourg S.à r.l., a société à responsabilité limitée organized under the Laws of the Grand Duchy of Luxembourg, with its registered office at 73, Côte d’Eich, L-1450 Luxembourg, registered with the Luxembourg Register of Commerce (Registre de Commerce et des Sociétés du Grand-Duché de Luxembourg) under number B 110 956.

“Apex Metals Account” means (a) the unallocated metals account of Apex Sweden maintained in London, England, by Prudential as Account No. 080020911 in the name of Apex Silver Mines Limited, or (b) such other account or accounts as Apex Sweden may designate from time to time by notice to Sumitomo delivered in accordance with Section 6.7 not less than five days prior to the date of any Silver Payment to be made by delivery of Silver Bullion.

“Apex Sweden” has the meaning specified in the preamble.

“Business Day” means any day other than Saturday, Sunday, and a day on which banks in New York, New York, U.S.A. or Tokyo, Japan are required or permitted to close.

“Closing Date” has the meaning specified in the preamble.

“Concentrates” has the meaning specified in the recitals.

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“Default Rate” means a rate per annum equal to the lesser of: (a) LIBOR plus four percent or (b) the Maximum Legal Rate.

“Delivered Silver” has the meaning specified in Section 2.3(a).

“Delivery Business Day” means any Business Day other than a day on which banks in the relevant Delivery Location are required or permitted to close.

“Delivery Location” means the vault of JP Morgan Chase located in London, England, or such other location in London, England, as may be designated by Apex Sweden in the Delivery Notice.

“Delivery Notice” has the meaning specified in Section 2.3(a).

“Dispute Resolution Agreement” means that certain Dispute Resolution Agreement, dated as of the date hereof, by and among Apex, Apex Sweden, Apex Luxembourg, Service Company, Sumitomo, New Sweden 1, New Sweden 2, MSC, New Metals, and New Cayman.

“Dollar” or “Dollars” means the lawful currency of the United States of America.

“Election Notice” has the meaning specified in Section 2.2(a).

“GAAP” means generally accepted accounting principles as used in the United States of America.

“Governmental Equity Ownership” has the meaning specified in Section 5.2(c).

“Governmental Mine Ownership” has the meaning specified in Section 5.2(d).

“Indirect Interests” has the meaning specified in the MSC Shareholders Agreement.

“Interests” has the meaning specified in the MSC Shareholders Agreement.

“LBMA” means the London Bullion Market Association.

“LIBOR” means the London interbank offered rate of major banks for six-month Dollar deposits that appears on page 3750 of the Dow Jones Telerate Service (or on any successor or substitute page of such service or any successor to or substitute for such service or similar service, if such service is no longer available) at approximately 11:00 a.m., London, England time on any date of determination therefor.

“LME” means the London Metal Exchange or, if the LME ceases to exist, the industry’s generally accepted successor exchange thereto.

“LME Difference” means the amount by which the LME Price of zinc exceeds US$1,800.00 per tonne.

“LME Price” means the average of the daily official LME cash settlement quotations for Special High Grade zinc, quoted in Dollars, for the quotational period as set forth in the

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applicable Sales Agreement (as published in Metal Bulletin during such quotational period, but corrected to the official quotations of the LME in the event of printing errors).

“LOCO” has the meaning set forth in LBMA Glossary of Terms.

“Maximum Legal Rate” means on any day, the highest non-usurious rate of interest permitted by applicable law on such day, computed on the basis of the actual number of days elapsed over a year of 360 days.

“Metal Bulletin” means the Metal Bulletin publication published by Metal Bulletin Plc.

“Mine” solely, for the purposes of this Agreement, means the area inside the boundary delineated as the “Buffer Zone” set forth on the map attached hereto as Attachment A.

“Moody’s” means Moody’s Investors Service, Inc. and any successor thereto, so long as such successor is a “nationally recognized statistical rating organization” registered with the Securities and Exchange Commission of the United States of America.

“MSC” has the meaning specified in the recitals.

“MSC Shareholders Agreement” means that certain MSC Shareholders Agreement, dated as of the Closing Date, among Apex Sweden, Apex Luxembourg, New Sweden 1, and MSC.

“New Cayman” has the meaning specified in the recitals.

“New Cayman Shareholders Agreement” means that certain Apex Silver Finance Shareholders Agreement, dated as of the Closing Date, among Apex Luxembourg, Sumitomo, and New Cayman.

“New Metals” has the meaning specified in the recitals.

“New Metals Quotaholders Agreement” means that certain New Metals Quotaholders Agreement, dated as of the Closing Date, among Apex Sweden, New Sweden 2, and New Metals.

“New Sweden 1” means Gotlex Lageraktiebolag nr 451, organization number 556702-1083, a privat aktiebolag duly organized and validly existing under the Laws of the Kingdom of Sweden, with its registered office at c/o Wistrand Advokatbyra, Lilla Bommen 1, 411 04 Göteborg, Sweden.

“New Sweden 2” means Comercial Metales Blancos AB, a privat aktiebolag duly organized and validly existing under the Laws of the Kingdom of Sweden, with its registered office at c/o Anders Sköldberg, Ernst & Young AB, 401 82 Göteborg, Sweden.

“Ownership Adjustment” has the meaning specified in Section 5.2(a).

“Party” or “Parties” has the meaning specified in the preamble.

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“Payable Silver” means the amount of silver (in troy ounces) equal to the amount of silver contained in the Concentrates for which payment is to be made to a seller in accordance with the terms of the applicable Sales Agreement.

“Payable Silver Payment” means, in respect of a shipment of Concentrates made by seller pursuant to a Sales Agreement, a sum in Dollars equal to the product of (a) the Payable Silver in such shipment and (b) the per troy ounce silver price payable for the silver content of such shipment as set forth in such Sales Agreement.

“Payable Zinc” means the amount of zinc (in tonnes) equal to the amount of zinc contained in the Concentrates for which payment is to be made to a seller in accordance with the terms of the applicable Sales Agreement.

“Payment Date” has the meaning specified in ARTICLE IV.

“Payment Quarter” means each calendar quarter, or portion thereof, during the term of this Agreement.

“Production” means (a) ore from the Mine that is processed by MSC through the mill located at the Mine that is under construction on the Closing Date (including any expansions or extensions thereto over time) (the “Mill”), and (b) ore from the Mine that is processed by MSC through a facility located at the Mine other than the Mill, which may include a heap leach or oxide treatment facility.

“Purchase and Sale Agreement” has the meaning specified in the recitals.

“Qualified Third Party” means an Entity the non-credit-enhanced long-term senior unsecured debt of which is rated at least the lesser of (a) BBB- by S&P or Baa3 by Moody’s, and (b) the credit rating of the non-credit-enhanced long-term senior unsecured debt of Sumitomo as provided by S&P or Moody’s as of the date of the Sale by the Sumitomo Interestholders of their Sumitomo Interests to such Entity.

“Quarterly Silver Payment” has the meaning specified in Section 2.2(a).

“Quarterly Zinc Payment” has the meaning specified in Section 3.2(a).

“S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc and any successor thereto so long as such successor is a nationally recognized statistical rating organization registered with the Securities and Exchange Commission of the United States of America.

“Sale” has the meaning specified in the MSC Shareholders Agreement.

“Sales Agreement” or “Sales Agreements” has the meaning specified in the recitals.

“Silver Adjustment Amount” has the meaning specified in Section 2.5.

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“Silver Bullion” means (a) silver bullion bars produced by a refiner on the LBMA “Good Delivery List of Acceptable Refiners,” complying with the standards of the LBMA relating to good delivery and fineness from time to time in effect or (b) silver bullion which is suitable for a metal transfer in metal accounts at LOCO London.

“Silver Payment” has the meaning specified in Section 2.1.

“Silver Payment Adjustment Event” has the meaning specified in Section 2.5.

“Silver Payment Adjustment Notice” has the meaning specified in Section 2.5.

“Silver Payment Notice” has the meaning specified in Section 2.2(a).

“Silver Share” means 22.86% of the Payable Silver attributed to New Sweden 1’s 35% ownership interest in MSC as of the Closing Date.

“Sumitomo” has the meaning specified in the preamble.

“Sumitomo Interestholders” means the “Sumitomo Interestholders” as defined in the MSC Shareholders Agreement, the “Sumitomo Interestholders” as defined in the New Metals Quotaholders Agreement, the “Sumitomo Interestholders” as defined in the New Cayman Shareholders Agreement, and their Affiliates which own any right, tile, and interest in the Transmission Line Loan.

“Sumitomo Interests” has the meaning specified in the MSC Shareholders Agreement.

“Sumitomo Payable Silver” means, in respect of a shipment of Concentrates delivered by a seller pursuant to a Sales Agreement, an amount of Payable Silver equal to the product of (a) Silver Share and (b) the Payable Silver in such shipment.

“Sumitomo Payable Silver Payment” means, in respect of a shipment of Concentrates made by a seller pursuant to a Sales Agreement, an amount in Dollars equal to the product of (a) the Silver Share and (b) the Payable Silver Payment for such shipment.

“Sumitomo Payable Zinc” means, in respect of a shipment of Concentrates delivered by a seller pursuant to a Sales Agreement, an amount of Payable Zinc equal to the product of (a) the Zinc Share and (b) the Payable Zinc in such shipment.

“Transmission Line Loan” has the meaning specified in the MSC Shareholders Agreement.

“Unpaid Amount” has the meaning specified in ARTICLE IV.

“US$” means Dollars.

“Zinc Adjustment Amount” has the meaning specified in Section 3.3.

“Zinc Payment Adjustment Event” has the meaning specified in Section 3.3.

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“Zinc Payment Adjustment Notice” has the meaning specified in Section 3.3.

“Zinc Payment Notice” has the meaning specified in Section 3.2(a).

“Zinc Share” means 20% of the Payable Zinc attributed to New Sweden 1’s 35% ownership in MSC as of the Closing Date.

“Zinc Shipment Payment” has the meaning specified in Section 3.2(a).

Section 1.2             Definitions from Purchase and Sale Agreement.  Undefined capitalized terms used herein have the respective meanings set forth in the Purchase and Sale Agreement.

ARTICLE II
SILVER PAYMENTS

Section 2.1             Silver Payment Obligation.  For each Payment Quarter, Sumitomo shall pay to Apex Sweden (the “Silver Payment”), at Sumitomo’s election in its sole discretion, either (a) an amount of Silver Bullion equal to the Sumitomo Payable Silver for all shipments of Concentrates delivered during such Payment Quarter, or (b) cash equal to the Quarterly Silver Payment.  The foregoing shall be calculated in accordance with Section 2.2 for each shipment of Concentrates delivered during such Payment Quarter to counterparties under the Sales Agreements.

Section 2.2             Calculation of Payment.

(a)           No later than five Business Days after the end of each Payment Quarter, Apex Sweden shall deliver to Sumitomo notice (the “Silver Payment Notice”) in accordance with Section 6.7 setting forth (i) the shipments of Concentrates delivered to counterparties under the Sales Agreements during such Payment Quarter (for the avoidance of doubt and for the purposes of this Agreement, a shipment shall be deemed delivered to a counterparty as of the date the provisional payment under the applicable Sales Agreement is received by New Metals), (ii) the Payable Silver and the Sumitomo Payable Silver for each such shipment, (iii) the Payable Silver Payment and the Sumitomo Payable Silver Payment for each such shipment, (iv) the Dollar amount equal to the sum of the Sumitomo Payable Silver Payments for all such shipments (the “Quarterly Silver Payment”), and (v) the details of the bank account of Apex Sweden (which shall be in London, England, New York, N.Y., or Tokyo, Japan) to which Sumitomo would be required to pay the Quarterly Silver Payment should it elect to make the Silver Payment in cash. Each Silver Payment Notice shall be accompanied by such supporting evidence as is reasonably necessary for Sumitomo to confirm the information set forth therein.  No later than three Business Days after receipt of the Silver Payment Notice, Sumitomo shall provide Apex Sweden written notice of its election either (A) to make the Silver Payment in Silver Bullion pursuant to Section 2.1 and in accordance with Section 2.3, or (B) to make the Silver Payment in Dollars pursuant Section 2.1 and in accordance with Section 2.4 (the “Election Notice”).

(b)           For the avoidance of doubt, the Parties acknowledge and agree that the Payable Silver and the Payable Silver Payment shall be calculated in the manner provided

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in the applicable Sales Agreement without giving effect to costs or amounts associated with the processing, refining, smelting, or treating of the Concentrates including treatment charges, refining charges, or penalties for impurities.

Section 2.3             Payment in Silver Bullion.

(a)           If Sumitomo elects to make the Silver Payment in Silver Bullion (the “Delivered Silver”), then, no later than five Business Days after receipt of the Election Notice, Apex Sweden shall provide Sumitomo notification in accordance with Section 6.7 confirming the information for the Delivery Location (the “Delivery Notice”).  No later than five Delivery Business Days after receipt of the Delivery Notice, Sumitomo shall cause the Delivered Silver to be delivered to the Delivery Location.  The amount of the Delivered Silver shall be equal to the amount of Sumitomo Payable Silver correctly set forth in the Silver Payment Notice.

(b)           Apex Sweden shall not be responsible for insurance, storage, transportation, transfer, or other costs prior to the time title to the Delivered Silver delivered hereunder has passed to Apex Sweden in accordance with Section 2.3(c).  Sumitomo shall bear all costs and expenses associated with the delivery of the Delivered Silver.

(c)           Possession of and title to Delivered Silver delivered pursuant hereto shall pass from Sumitomo to Apex Sweden when such Delivered Silver is credited to the Apex Metals Account and is recorded through appropriate book entry on the books and records of the institution maintaining the Apex Metals Account.  Until such time, Sumitomo shall be deemed to be in control and possession of, have title to, risk of loss of, and be responsible for such Delivered Silver and, after such time, Apex Sweden shall be deemed to be in control and possession of, have title to, risk of loss of, and be responsible for such Delivered Silver.

(d)           Sumitomo shall be liable for and shall pay, cause to be paid or reimburse Apex Sweden if Apex Sweden has paid, all Taxes applicable to the Delivered Silver delivered hereunder prior to the time title to the Delivered Silver has passed to Apex Sweden in accordance with Section 2.3(c).  Apex Sweden shall be liable for and shall pay, cause to be paid or reimburse Sumitomo if Sumitomo has paid, all Taxes applicable to the Delivered Silver delivered hereunder at or after the time title to the Delivered Silver has passed to Apex Sweden in accordance with Section 2.3(c).

(e)           Sumitomo hereby represents, warrants, and covenants that (i) Sumitomo has good, valid, and marketable title to the Delivered Silver, free and clear of all liens, upon delivery to Apex Sweden, and (ii) the Delivered Silver shall be Silver Bullion.

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Section 2.4             Payment in Dollars.  If Sumitomo elects to make the Silver Payment in Dollars, then, no later than five Business Days after the date of receipt of the Silver Payment Notice, Sumitomo shall pay to Apex Sweden an amount equal to the Quarterly Silver Payment by wire transfer of immediately available Dollar funds to the account or accounts of Apex Sweden designated by it in such Silver Payment Notice.

Section 2.5             Payment Adjustments.  The Parties acknowledge and agree that the determination of the Silver Payment for any Payment Quarter may, in part, be based upon “provisional payments” made in accordance with the applicable Sales Agreements for which “final payment” has not been determined prior to the end of such Payment Quarter.  The foregoing may result in a necessary adjustment of the actual Payable Silver applicable to a shipment used in the calculation of the Payable Silver for a Payment Quarter and as such, an adjustment in the Silver Payment for such Payment Quarter may be necessary (a “Silver Payment Adjustment Event”).  In accordance with the foregoing, if a Silver Payment Adjustment Event occurs, then Apex Sweden shall promptly provide Sumitomo written notice of same (a “Silver Payment Adjustment Notice”).  The Silver Payment Adjustment Notice shall set forth (a) the amount by which the Sumitomo Payable Silver for such Payment Quarter was either reduced or increased and (b) the Dollar value of such adjusted amount (the “Silver Adjustment Amount”).  If the Silver Payment for a Payment Quarter is reduced, then Apex Sweden shall deliver payment of the Silver Adjustment Amount concurrently with delivery of the Silver Payment Adjustment Notice.  If the Silver Payment for a Payment Quarter is increased, then Sumitomo shall make payment of the Silver Adjustment Amount concurrently with the Silver Payment for the following Payment Quarter.

ARTICLE III
ZINC PAYMENTS

Section 3.1             Zinc Payment Obligation.  For each Payment Quarter, Sumitomo shall pay to Apex Sweden in cash an amount equal to the Quarterly Zinc Payment.  The foregoing shall be calculated in accordance with Section 3.2 for each shipment of Concentrates delivered during such Payment Quarter to counterparties under the Sales Agreements.

Section 3.2             Calculation of Payment; Payment.

(a)           No later than five Business Days after the end of each Payment Quarter, Apex Sweden shall deliver to Sumitomo notice (the “Zinc Payment Notice”) in accordance with Section 6.7 that sets forth (i) the shipments of Concentrates delivered to counterparties under the Sales Agreements during such Payment Quarter (for the avoidance of doubt and for the purposes of this Agreement, a shipment shall be deemed delivered to a counterparty as of the date the provisional payment under the applicable Sales Agreement is received by New Metals), (ii) the amount of the Payable Zinc and the Sumitomo Payable Zinc for each such shipment, (iii) the LME Price for each such shipment as calculated pursuant to the applicable Sales Agreement, (iv) the LME Difference for each such shipment, (v) the Dollar amount equal to the amount of Sumitomo Payable Zinc for each such shipment multiplied by the LME Difference for that shipment (each a “Zinc Shipment Payment”), (vi) the Dollar amount equal to the sum of the Zinc Shipment Payments (the “Quarterly Zinc Payment”) and (vii) the details for

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the bank account of Apex Sweden (which shall be in London, England, New York, N.Y., or Tokyo, Japan) to which Sumitomo is required to pay the Quarterly Zinc Payment.  Each Zinc Payment Notice shall be accompanied by such supporting evidence as is reasonably necessary for Sumitomo to confirm the information set forth therein.

(b)           Each Quarterly Zinc Payment shall be payable no later than five Business Days after the date of receipt of the Zinc Payment Notice by wire transfer in immediately available funds to the account designated by Apex Sweden in the Zinc Payment Notice.

(c)           For the avoidance of doubt, the Parties acknowledge and agree that the Payable Zinc shall be calculated in the manner provided in the applicable Sales Agreement without giving effect to costs or amounts associated with the processing, refining, smelting or treating of the Concentrates including treatment charges, refining charges or penalties for impurities.

Section 3.3             Payment Adjustments.  The Parties acknowledge and agree that the determination of a Quarterly Zinc Payment may, in part, be based upon “provisional payments” made in accordance with the applicable Sales Agreements for which “final payment” has not been determined prior to the end of the relevant Payment Quarter.  The foregoing may result in a necessary adjustment of the actual Payable Zinc applicable to a shipment used in the calculation of the Payable Zinc for a Payment Quarter and as such, an adjustment in the Quarterly Zinc Payment for such Payment Quarter may be necessary (a “Zinc Payment Adjustment Event”).  In accordance with the foregoing, if a Zinc Payment Adjustment Event occurs, then Apex Sweden shall promptly provide Sumitomo written notice of same (a “Zinc Payment Adjustment Notice”).  The Zinc Payment Adjustment Notice shall set forth (i) the amount by which the Sumitomo Payable Zinc for such Payment Quarter was either reduced or increased and (ii) the Dollar value of such adjusted amount (the “Zinc Adjustment Amount”).  If the Quarterly Zinc Payment for a Payment Quarter is reduced, then Apex Sweden shall deliver payment of the Zinc Adjustment Amount concurrently with delivery of the Zinc Payment Adjustment Notice.  If the Quarterly Zinc Payment for a Payment Quarter is increased, then Sumitomo shall make payment of the Zinc Adjustment Amount concurrently with the Quarterly Zinc Payment for the following Payment Quarter.

ARTICLE IV
FAILURE TO MAKE PAYMENT

If Sumitomo fails to make a Silver Payment or Quarterly Zinc Payment (the unpaid portion thereof, an “Unpaid Amount”) on the date such payment is due and payable (the “Payment Date”), then, commencing on the Payment Date and continuing until such Unpaid Amount (together with accrued interest thereon) is paid in full, the unpaid portion of the Unpaid Amount shall bear interest, calculated daily (computed on the actual days elapsed over a year of 360 days), at the Default Rate.  To the extent the Unpaid Amount is a Silver Payment made in Silver Bullion pursuant to Section 2.3, interest shall accrue based upon the amount of the Quarterly Silver Payment that would otherwise have been due on the Payment Date.

ARTICLE V
TERM

Section 5.1             Term.  Unless otherwise agreed in writing by the Parties, the Parties’ obligations under this Agreement shall commence on the Closing and shall terminate, along with this Agreement, upon the earlier of:

(a)           the permanent cessation of Production;

(b)           the completion of the Sale by the Sumitomo Interestholders of all, but not less than all, of their Sumitomo Interests to Apex and/or its Subsidiaries whether such Sale is pursuant to the MSC Shareholders Agreement, the New Metals Quotaholders Agreement, the New Cayman Shareholders Agreement, as applicable, or otherwise; or

(c)           the completion of the Sale by the Apex Interestholders of all, but not less than all, of their Interests to Sumitomo and/or its Subsidiaries whether such Sale is pursuant to the MSC Shareholders Agreement, the New Metals Quotaholders Agreement, the New Cayman Shareholders Agreement, as applicable or otherwise; provided, however, that the purchase price for such Sale shall include an amount equal to the price for which the right, title, and interest of Apex Sweden in and to this Agreement could be sold, as of the date of such Sale, in an arm’s-length transaction to an unaffiliated, bona fide, third-party purchaser in an orderly sale.

Section 5.2             Adjustment of Sumitomo Percentage; Survival of Payment Obligations.

(a)           The Parties understand that, during the term of this Agreement, Sumitomo’s direct or indirect ownership interests in MSC, New Metals, and New Cayman, and related “share” of Production may be adjusted upward or downward from time to time as a result of adjustment events (including by Sale to Apex) pursuant to the MSC Shareholders Agreement, the New Metals Quotaholders Agreement, the New Cayman Shareholders Agreement, as applicable, or otherwise (an “Ownership Adjustment”).  Notwithstanding the foregoing, the Parties acknowledge and agree that, except as provided in Section 5.1 and this Section 5.2, if an Ownership Adjustment occurs, the Silver Share and the Zinc Share, as set forth in ARTICLE II and ARTICLE III, respectively, shall not be adjusted to conform to such Ownership Adjustment and shall remain as defined herein on the Closing Date.

(b)           Subject to Section 5.1, Sumitomo and Apex Sweden hereby acknowledge and agree that if the Sumitomo Interestholders complete the Sale of all, but not less than all, of their Sumitomo Interests to a Proposed Third-Party Buyer pursuant to Article V of the MSC Shareholders Agreement, Sumitomo shall continue to be obligated to satisfy the payment obligations set forth herein and Sumitomo shall not be relieved or discharged of its obligations with respect thereto.  Notwithstanding the foregoing, if the Sumitomo Interestholders Sell all, but not less than all, of their Sumitomo Interests to a Qualified Third Party, and if such Qualified Third Party expressly assumes all of Sumitomo Interestholders’ obligations with respect to such Sumitomo Interests under this Agreement in a writing delivered to Apex Sweden, then Sumitomo shall be relieved and

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discharged of its obligations hereunder to the extent they have been assumed by the Qualified Third Party.

(c)           Notwithstanding the foregoing, if Bolivia or any action taken by any Governmental Authority of Bolivia requires the issuance or Sale to any Governmental Authority of Bolivia, citizens of Bolivia, or any other Person of an any Interests or Indirect Interests (a “Governmental Equity Ownership”), then the Silver Share and Zinc Share shall be adjusted downward, on a pro rata basis, to reflect the then current direct or indirect ownership of Sumitomo in MSC following such event.  The Parties acknowledge and agree that to the extent the Government Equity Ownership adjusts upward or downward at any time thereafter, the Silver Share and the Zinc Share shall adjust, on a pro rata basis, accordingly, provided that neither the Silver Share nor the Zinc Share shall be adjusted to a percentage interest in excess of that set forth in the definitions of such terms in the Agreement as of the Closing Date.

(d)           Notwithstanding the foregoing, (i) if Bolivia or any action taken by any Governmental Authority of Bolivia requires the issuance or sale to any Governmental Authority of Bolivia, citizens of Bolivia, or any other Person of an equity or other participation interest in the Mine (a “Governmental Mine Ownership”) and (ii) such Governmental Mine Ownership results in such Governmental Authority or Bolivia or citizens of Bolivia or other Persons, as applicable, owning, directly or indirectly, a percentage of any shipment of Concentrates, then the Silver Share and Zinc Share, as applicable, shall be adjusted downward, on a pro rata basis on a per shipment basis, to reflect the then current direct or indirect ownership of Sumitomo in such shipment as a result of Sumitomo’s then current direct or indirect ownership in MSC; provided that neither the Silver Share nor the Zinc Share, as applicable, with respect to any such shipment shall be adjusted to a percentage interest in excess of that set forth in the definitions of such terms in the Agreement as of the Closing Date.

ARTICLE VI
ADDITIONAL PROVISIONS

Section 6.1             Access to Records.

(a)           The Parties shall, and shall cause New Metals, any other seller of Concentrates under a Sales Agreement and MSC to, keep and maintain complete and accurate books, records and accounts relating to the sales of Concentrates pursuant to the Sales Agreements.  Such books, records and accounts shall be maintained for at least seven years after the calendar year to which they relate.  During the term of this Agreement and for a period of seven years thereafter, the Parties shall, and shall cause New Metals, any other seller of Concentrates under a Sales Agreement and MSC to, afford to Sumitomo and its accounting, legal, and other representatives, as well as their respective officers and employees, reasonable access, upon reasonable notice, to all such books, records and accounts and any other documents, agreements, accounting records, and financial statements utilized in calculating the Quarterly Zinc Payment and the Silver Payment.

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(b)           Sumitomo shall have the right, from time to time (but in no event more than once per fiscal quarter), to have either Sumitomo or an independent auditor audit the such books, records, accounts and other documents, agreements and financial statements to verify the accuracy of the information provided by Apex Sweden pursuant to ARTICLE II and ARTICLE III.  Any such audit shall be at Sumitomo’s expense and shall be limited to the Quarterly Zinc Payments and Silver Payments adjusted pursuant to Section 2.5 and Section 3.3, respectively (i.e. only the “final payments” are to be audited and not the “provisional payments”).  Sumitomo shall promptly provide Apex Sweden a copy of all such audits.

(c)           If the audit reveals an overpayment by Sumitomo for a Quarterly Zinc Payment or Silver Payment, then Apex Sweden shall promptly pay to Sumitomo the amount of any overpayment revealed by any such audit, plus interest thereon, calculated daily (computed on the actual days elapsed over a year of 360 days), at the Default Rate, for the period commencing on payment of the original amount by Sumitomo to Apex Sweden and ending on the date such overpayment amount (together with the accrued interest thereon) is paid in full.  Such amount shall be paid in Dollars by wire transfer in immediately available funds to the bank account of Sumitomo designated by it in writing to Apex Sweden.

(d)           If the audit reveals an underpayment by Sumitomo for a Quarterly Zinc Payment or Silver Payment, then Sumitomo shall make payment of any underpayment concurrently with the next applicable quarterly payment, plus interest thereon, calculated daily (computed on the actual days elapsed over a year of 360 days), at the Default Rate, for the period commencing on payment of the original amount by Sumitomo to Apex Sweden and ending on the date such underpayment amount (together with the accrued interest thereon) is paid in full.

(e)           Any dispute regarding an audit and the accuracy thereof shall be addressed in accordance with Section 6.5.

Section 6.2                No Right of Off-Set.  All amounts required to be paid to Apex Sweden under this Agreement shall be paid to Apex Sweden in full and in a timely manner without assertion of any right of offset, counterclaim, withholding, deduction, right of cross-collateralization, or right of reduction on account of any obligations.

Section 6.3                Entire Agreement.  This Agreement (together with the Purchase and Sale Agreement and the other Transaction Documents) contain, and are intended as, a complete statement of all of the terms of the agreements among the Parties with respect to the matters provided for herein and therein, and supersede and discharge any previous agreements and understandings between the Parties with respect to those matters; provided, however, that the Confidentiality Agreement shall survive the execution and termination of this Agreement and continue in full force and effect in accordance with its terms.

Section 6.4                Governing Law; Language.  This Agreement shall be governed by and construed in accordance with the Laws of the State of New York, including Section 5-1401 of the New York General Obligations Law, as applied to contracts made and performed within the

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State of New York, without regard to any choice or conflicts of law provision or rule that would cause the application of the Laws of any jurisdiction other than the State of New York.  This Agreement has been negotiated and executed by the Parties in English.  In the event any translation of this Agreement is prepared for convenience or any other purpose, the provisions of the English version shall govern.  If any doubt, misunderstanding, or dispute arises in their interpretation, the English version shall govern.

Section 6.5                Dispute Resolution.  Any controversy, claim, or dispute between the Parties that arises out of or relates to this Agreement, including any claim or controversy relating to the interpretation, breach, termination, or invalidity of any provision hereof, shall be exclusively and finally settled pursuant to and in accordance with the Dispute Resolution Agreement.

Section 6.6                Headings.  The article and section headings of this Agreement are for reference purposes only and are to be given no effect in the construction or interpretation of this Agreement.

Section 6.7                Notices.  All notices and other communications hereunder shall be in writing and shall be delivered personally, telecopied (if receipt of which is confirmed by the Person to whom sent), or sent by internationally recognized overnight delivery service to the Parties at the following addresses (or to such other Person or address for a Party as specified by such Party by like notice) (notice shall be deemed given and received upon receipt, if delivered personally, by overnight delivery service or by telecopy, except that notice of a change of address shall not be deemed given and received until actually received):

(a)           If to Apex Sweden, to it at:

Apex Silver Mines Sweden AB
c/o Apex Silver Mines Corporation
1700 Lincoln Street, Suite 3050
Denver, Colorado  80203  U.S.A.
Attention:  Senior Vice President, Marketing and Strategic Planning
Telecopier: +1 (303) 839-5907

(b)           If to Sumitomo, to it at:

Sumitomo Corporation
8-11, Harumi, 1-chome,
Chuo-ku, Tokyo, 104-8610 Japan
Attention:General Manager, Non-Ferrous Metals
& Raw Materials Dept.
Telecopier: +81-3-5166-6423

Section 6.8                Severability.  If at any time any covenant or provision contained herein is deemed in a final ruling of a court or other body of competent jurisdiction (including an arbitral tribunal convened in accordance with the Dispute Resolution Agreement) to be invalid or unenforceable, such covenant or

14

provision shall be considered divisible and such covenant or provision shall be deemed immediately amended and reformed to include only such portion of such covenant or provision as such court or other body has held to be valid and enforceable (provided such amended and reformed provision shall be amended, reformed and construed in a manner that reflects and carries out the provisions and the intent of the Parties); and the Parties agree that such covenant or provision, as so amended and reformed, shall be valid and binding as though the invalid or unenforceable portion had not been included herein.

Section 6.9                Amendment; Waiver.  No provision of this Agreement may be amended or modified except by an instrument or instruments in writing signed by the Parties and designated as an amendment or modification.  No waiver by any Party of any provision of this Agreement shall be valid unless in writing and signed by the Party making such waiver and designated as a waiver.  No failure or delay by any Party in exercising any right, power, or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise thereof or the exercise of any other right, power, or remedy preclude any further exercise thereof or the exercise of any other right, power, or remedy.  No waiver of any provision hereof shall be construed as a waiver of any other provision.

Section 6.10              Assignment and Binding Effect.

(a)           Subject to Section 6.10(b), no Party may assign any of its rights or delegate any of its obligations under this Agreement without (i) the prior written consent of the other Party and (ii) the complete written assumption by the assignee of all of the obligations of the assignor under this Agreement.  All of the terms and provisions of this Agreement shall be binding on, and shall inure to the benefit of, the respective successors and permitted assigns of the Parties.

(b)           Notwithstanding anything to the contrary herein, the Parties acknowledge and agree that (i) Apex Sweden may assign its rights and obligations hereunder to Apex Luxembourg, and (ii) Apex Luxembourg may then assign its rights and obligations hereunder to Apex.

Section 6.11              No Benefit to Others.  Except as expressly set forth herein, the representations, warranties, covenants, and agreements contained in this Agreement are for the sole benefit of the Parties and their respective successors and permitted assigns, and they shall not be construed as conferring and are not intended to confer any rights, remedies, obligations, or liabilities on any other Person, unless such Person is expressly stated herein to be entitled to any such right, remedy, obligation, or liability.

Section 6.12              No Consequential Damages.  No Party shall be liable for any punitive, multiple, or other exemplary damage or loss, or any indirect, special, incidental, or consequential loss or damage, lost profits, loss of use, or lost revenues suffered by any other Party arising from or relating to a Party’s performance, non-performance, breach of, or default under a covenant, warranty, representation, term, or condition of this Agreement.  Each Party waives and relinquishes claims for such punitive, multiple, exemplary, indirect, special, incidental, or consequential losses or damages, lost profits, loss of use, or lost revenues.  The limitations on liability and damages set forth in this Section 6.12 apply to all causes of action that may be

15

asserted hereunder, whether sounding in breach of contract, breach of warranty, tort, product liability, negligence, or otherwise.

Section 6.13              Counterparts.  This Agreement may be executed by the Parties in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute one and the same instrument.

Section 6.14              Interpretation.

(a)           As used herein, except as otherwise indicated herein or as the context may otherwise require: (i) the words “include,” “includes,” and “including” are deemed to be followed by “without limitation” whether or not they are in fact followed by such words or words of like import; (ii) the words “hereof,” “herein,” “hereunder,” and comparable terms refer to the entirety of this Agreement, and not to any particular article, section, or other subdivision hereof; (iii) any pronoun shall include the corresponding masculine, feminine, and neuter forms; (iv) the singular includes the plural and vice versa; (v) references to any agreement or other document are to such agreement or document as amended, modified, supplemented, and restated now or hereafter from time to time; (vi) references to any statute or regulation are to it as amended, modified, supplemented, and restated now or hereafter from time to time, and to any corresponding provisions of successor statutes or regulations; (vii) except as otherwise expressly provided in this Agreement, references to “Article,” “Section,” “preamble,” “recital,” or another subdivision are to an article, section, preamble, recital or subdivision hereof; and (viii) references to any Person include such Person’s respective successors and permitted assigns.

(b)           Any reference herein to a “day” or number of “days” (without the explicit qualification of “Business”) shall be deemed to refer to a calendar day or number of calendar days.  If any action or notice is to be taken or given on or by a particular calendar day, and such calendar day is not a Business Day, then such action or notice may be taken or given on the next succeeding Business Day.

(c)           Any financial or accounting terms that are not otherwise defined herein shall have the meanings given thereto under GAAP.

Section 6.15              Rules of Construction.  The Parties agree that they have been represented by counsel during the negotiation, preparation, and execution of this Agreement and, therefore, waive the application of any Law or rule of construction providing that ambiguities in an agreement or other document shall be construed against the Party drafting such agreement or document.

[Remainder of page intentionally left blank]

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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first written above.

APEX SILVER MINES SWEDEN AB
By:	/s/ Marcel DeGuire
	Marcel DeGuire
Its:	Marcel DeGuire Director

17

SUMITOMO CORPORATION
By:	/s/ Mitsuhiko Yamada
	Mitsuhiko Yamada
Its:	Executive Officer and General Manager, Mineral Resources Division 1

18

EX-10.3

Exhibit 10.3

Execution Version

MSC SHAREHOLDERS AGREEMENT

Entered into as of September 25, 2006

among

APEX SILVER MINES SWEDEN AB,

APEX LUXEMBOURG S.À R.L.,

GOTLEX LAGERAKTIEBOLAG nr 451 (organization number 556702-1083),

and

MINERA SAN CRISTÓBAL, S.A.

TABLE OF CONTENTS

		Page
ARTICLE I DEFINITIONS		2
ARTICLE II MANAGEMENT OF MSC		22
Section 2.1	Shareholders Meetings.	22
Section 2.2	Board; Sindicos.	25
Section 2.3	Significant Matters.	34
Section 2.4	Deadlock on Significant Matters	38
Section 2.5	Management	38
Section 2.6	Indemnification of Directors, Officers, and Sindicos	39
Section 2.7	Finance and Operating Committee.	40
ARTICLE III PROGRAM AND BUDGETS		42
Section 3.1	Initial Program and Budget	42
Section 3.2	Annual Program and Budget	42
Section 3.3	Deadlock on Proposed Program and Budgets	43
Section 3.4	Put Right	43
Section 3.5	Overruns; Emergencies	45
Section 3.6	Termination of Certain ARTICLE III Rights	45
ARTICLE IV FINANCING OF MSC		46
Section 4.1	No Obligation	46
Section 4.2	Funding for the Project through the Commercial Operations Date	46
Section 4.3	Post-Commercial Operations Funding	47
Section 4.4	Additional Funding Mechanics	48
ARTICLE V TRANSFERS		57
Section 5.1	General Restrictions on Sales and Pledges; Legend; Effect of Sales and Pledges Not in Accordance with This Article	57
Section 5.2	Certain Restrictions on Sales and Pledges	58
Section 5.3	Sales to Third Parties; Right of First Refusal	62
Section 5.4	Sales to Third Parties; Right of First Offer	64
ARTICLE VI DEFAULTS		67
Section 6.1	Default Notice	67
Section 6.2	Procedure	67
Section 6.3	Bankruptcy of a Sponsor	69
ARTICLE VII ADDITIONAL COVENANTS AND AGREEMENTS		67
Section 7.1	Amendment of Estatutos; Further Assurances	72
Section 7.2	Notice to MSC	72
Section 7.3	Business of MSC	73
Section 7.4	Offices	73
Section 7.5	Access to Information	73

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Section 7.6	Confidentiality	74
Section 7.7	Distribution of Available Cash	75
Section 7.8	Compliance with Law.	76
Section 7.9	Sumitomo Exploration	76
ARTICLE VIII TERM AND TERMINATION		79
Section 8.1	Term	79
Section 8.2	Termination	79
Section 8.3	Survival	79
ARTICLE IX MISCELLANEOUS		79
Section 9.1	Entire Agreement	79
Section 9.2	Governing Law	79
Section 9.3	Dispute Resolution	79
Section 9.4	Limitation on Damages	79
Section 9.5	Headings	80
Section 9.6	Notices	80
Section 9.7	Severability	81
Section 9.8	Amendment; Waiver	81
Section 9.9	Assignment and Binding Effect	81
Section 9.10	No Benefit to Others	81
Section 9.11	Counterparts	81
Section 9.12	Interpretation.	82
Section 9.13	Rules of Construction	82
Section 9.14	No Partnership	83

Schedule A	Total Project Investment
Schedule B	Open Properties Map
Exhibit A	Form of Estatutos
Exhibit B	Form of Defaulting Shareholder Loan Note
Exhibit C	Form of Defaulting MSC Loan Note

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MSC SHAREHOLDERS AGREEMENT

This MSC Shareholders Agreement is entered into as of September 25, 2006, by and among

APEX SILVER MINES SWEDEN AB, a privat aktiebolag duly organized and validly existing under the Laws of the Kingdom of Sweden (“Apex Sweden”), with its registered office at c/o Accurate Accounting AB, Drakegatan 7, SE-412 50 Göteborg, Sweden;

APEX LUXEMBOURG S.À R.L., a société à responsabilité limitée duly organized and validly existing under the Laws of the Grand Duchy of Luxembourg (“Apex Luxembourg”), with its registered office at 73, Côte d’Eich, L-1450 Luxembourg, registered with the Luxembourg Register of Commerce (Registre de Commerce et des Sociétés du Grand-Duché de Luxembourg) under number B 110 956;

GOTLEX LAGERAKTIEBOLAG nr. 451, organization number 556702-1083, a privat aktiebolag duly organized and validly existing under the Laws of the Kingdom of Sweden (“New Sweden 1”), with its registered office at c/o Wistrand Advokatbyra, Lilla Bommen 1, 411 04 Göteborg, Sweden; and

MINERA SAN CRISTÓBAL, S.A., a sociedad anónima organized under the Laws of Bolivia (“MSC”), with domicile at the city of Potosi, Bolivia, with register of commerce number 13681.

Apex Sweden, Apex Luxembourg, New Sweden 1, and MSC (together with their respective successors and permitted assigns, as well as any Person that otherwise becomes a party hereto in accordance with the provisions hereof) are sometimes referred to herein individually as a “Party” and collectively as the “Parties.”  Capitalized terms used and not otherwise defined in this Agreement have the respective meanings ascribed thereto in ARTICLE I.

RECITALS

A.            Apex Sweden owns, beneficially and of record, 13,983,846 Shares representing approximately 65% of the issued and outstanding share capital of MSC.  Apex Luxembourg owns, beneficially and of record, one Share of the issued and outstanding share capital of MSC.  Apex Sweden is the holder of the Apex Sweden MSC Subordinated Note.

B.            New Sweden 1 owns, beneficially and of record, 7,529,763 Shares representing 35% of the issued and outstanding share capital of MSC.  New Sweden 1 is the holder of the New Sweden 1 MSC Subordinated Note.

C.            MSC owns and is developing the San Cristóbal silver, zinc, and lead mine in Bolivia.

D.            The Shareholders desire to enter into this Agreement for the purpose of recording their mutual agreement on the financing, operation, and management of MSC, and their mutual rights and obligations relative to MSC and, through MSC, to the Project.

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E.             The Shareholders and MSC desire to enter into this Agreement to establish certain rights, responsibilities, and obligations by and among themselves.

AGREEMENT

In consideration of the mutual promises, covenants, and agreements set forth herein, the Parent Guarantees, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

ARTICLE I
DEFINITIONS

For purposes of this Agreement, the following terms shall have the following meanings:

“Additional Funds” has the meaning specified in Section 4.4(a)(i).

“Additional Post-Commercial Operations Funds” has the meaning specified in Section 4.3(a).

“Additional Pre-Commercial Operations Funds” has the meaning specified in Section 4.2(b).

“Affiliate” means, with respect to any Person, any other Person that directly, or indirectly through one or more intermediaries, Controls, is Controlled by, or is under common Control with, the Person in question.

“Affiliated New Cayman Shareholders” has the meaning specified in Section 5.2(d)(ii).

“Affiliated Quotaholders” has the meaning specified in Section 5.2(d)(i).

“Agreement” means this MSC Shareholders Agreement (including the Exhibits and Schedules attached hereto).

“Alternative Shareholder Loan Notice” has the meaning specified in Section 4.4(a)(iii).

“Alternative Shareholder Capital Contribution Notice” has the meaning specified in Section 4.4(b)(iii).

“Apex” means Apex Silver Mines Limited, an exempted company limited by shares organized under the laws of the Cayman Islands.

“Apex Change of Control” means (a) any merger or consolidation of Apex with or into any person, or any sale, transfer, or other conveyance of all or substantially all of Apex’s assets, on a consolidated basis, in one transaction or a series of related transactions shall have occurred after the date hereof, if either (i) immediately after giving effect to such transaction or transactions, any person or group is or becomes the beneficial owner of more than 50% of the aggregate voting power of all outstanding classes of voting securities of the resulting, surviving,

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or transferee Entity, or Apex, as applicable, in elections for directors of the resulting, surviving, or transferee Entity, or Apex, as applicable, or (ii) the voting power of all outstanding classes of voting securities of Apex in elections for directors of Apex immediately prior to such transaction or transactions ceases to represent more than 50% of the aggregate voting power of all outstanding classes of voting securities of the resulting, surviving, or transferee Entity, or Apex, as applicable, in elections of directors of the resulting, surviving, or transferee Entity, or Apex, as applicable, immediately after giving effect to such transaction or transactions; (b) any Person or group is or becomes the beneficial owner of more than 50% of the aggregate voting power of all outstanding classes of voting securities of Apex in elections for directors of Apex; or (c) the adoption of a plan relating to the liquidation or dissolution of Apex in a Bankruptcy of Apex; if as a result of or at any time following the occurrence of an event described in clause (a) or (b) of this definition, a majority of the members of the board of directors of the resulting, surviving, or transferee Entity, or Apex, as applicable, are not Continuing Directors.  For purposes of this “Apex Change of Control” definition, (i) ”beneficial owner” shall be determined in accordance with Rule 13d-3 and Rule 13d-5 of the Commission under the Exchange Act; (ii) ”person” or “group” have the meanings given to them for purposes of Sections 13(d) and 14(d) of the Exchange Act, and the term “group” includes any group acting for the purpose of acquiring, holding, or disposing of securities within the meaning of Rule 13d-5(b)(1) of the Commission under the Exchange Act; (iii) ”Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended; and (iv) ”Continuing Director” means any member of the board of directors of the resulting, surviving, or transferee Entity, or Apex, as applicable, who (A) was a member of the board of directors of Apex on the date hereof or (B) was nominated for election or elected to the board of directors of Apex with the approval of a majority of the members of the board of directors of Apex, who were members of the board of directors of Apex on the date hereof or who were nominated for election or elected to the board of directors of Apex in accordance with this clause (B).

“Apex Control Group” means Apex and its wholly-owned Subsidiaries.

“Apex Director” means any member of the Board nominated by one or more of the Apex Shareholders in accordance with Section 2.2(c) (including any alternate director therefor).

“Apex Election Notice” has the meaning specified in Section 7.9(e).

“Apex Election Period” has the meaning specified in Section 7.9(e).

“Apex Guaranty” means that certain Apex Guaranty, dated as of the date hereof, made by Apex in favor of New Sweden 1, New Sweden 2, and Sumitomo in the form of Exhibit C to the Purchase and Sale Agreement.

“Apex Indirect Interests” means any equity interests in or Indebtedness of any of the Subsidiaries of Apex that are Interestholders or that own, directly or indirectly, equity interests in or Indebtedness of any of the Subsidiaries of Apex that are Interestholders.

“Apex Interestholders” means (a) the Apex Shareholders and (b) each member of the Apex Control Group that (i) is or becomes the owner of Interests and (ii) is or has become a Party pursuant to the terms of this Agreement.

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“Apex Interests” has the meaning specified in Section 6.3(c).

“Apex Luxembourg” has the meaning specified in the preamble.

“Apex Member” has the meaning specified in Section 2.7(a).

“Apex Shareholders” means (a) Apex Sweden and Apex Luxembourg, and (b) each member of the Apex Control Group that (i) is or becomes the owner of Shares and (ii) is or has become a Party pursuant to the terms of this Agreement.

“Apex Sindico” means any Sindico of MSC nominated by one or more of the Apex Shareholders in accordance with Section 2.2(c).

“Apex Sponsor Default Cure Notice” has the meaning specified in Section 6.3(b).

“Apex Sweden” has the meaning specified in the preamble.

“Apex Sweden MSC Subordinated Debt” means Indebtedness of MSC to Apex Sweden evidenced by that certain Subordinated Promissory Note, dated as of September 25, 2006, made by MSC in favor of Apex Sweden in the original principal amount of US$27,495,378 (the “Apex Sweden MSC Subordinated Note”).

“ASC Bolivia” means ASC Bolivia LDC (Sucursal Bolivia), the branch, existing under the Laws of Bolivia, with domicile at Calle Campos N° 265, La Paz, Bolivia and with register of commerce number 13961, of ASC Bolivia LDC, an exempted limited duration company organized under the Laws of the Cayman Islands, British West Indies, with its registered office at Walker House, Mary Street, George Town, Grand Cayman, Cayman Islands, British West Indies.

“Available Cash” means, for each fiscal year, as determined quarterly by the unaudited financial statements of MSC and its Subsidiaries, the Revenues received during such period, minus (a) the operating costs and expenses (which shall not include the Subordinated Management Fee) and capital expenditures of MSC and its Subsidiaries paid during such period, including all costs and expenses for the operation, maintenance, and protection of their respective assets and properties, but excluding all costs and expenses such as depreciation or depletion that do not represent cash outlays; (b) payments of principal and interest on any Indebtedness owed to any Person other than any Shareholder or any Affiliate of any Shareholder (excluding New Metals and New Cayman, if applicable) paid by MSC and its Subsidiaries during such period; (c) Taxes assessed against or imposed on MSC or any of its Subsidiaries or any of their respective assets or properties and paid by MSC or any of its Subsidiaries during such period, but excluding any such Taxes to the extent that reserves therefor were set aside pursuant to clause (d) of this definition during any prior period; and (d) any amounts that the Board reasonably determines are prudent to set aside as cash reserves to assure that MSC and its Subsidiaries have adequate funds on hand to timely pay the items described in clauses (a), (b), and (c) of this definition and any other items provided for by the applicable Program and Budget with respect to future periods.

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“Bankruptcy” means, with respect to any Person, (a) (i) the commencement or institution by such Person of any proceeding under any reorganization, arrangement, adjustment of debt, relief of debts, insolvency, bankruptcy, discontinuance, winding up, dissolution, liquidation or similar Law; (ii) the seeking by such Person of any order for the appointment of a receiver, trustee, or other such official for it or all or a substantial part of its property; or (iii) the making by such Person of a general assignment for the benefit of its creditors; or (b) the commencement or institution against such Person without its application or consent, in any court of competent jurisdiction, (i) seeking any order for relief under any reorganization, arrangement, adjustment of debt, relief of debts, insolvency, bankruptcy, discontinuance, winding up, dissolution, liquidation or similar Law; or (ii) seeking any order for the appointment of a receiver, trustee, or other such official for it or all or a substantial part of its property, in each case of clause (b)(i) and (b)(ii), where such proceeding shall continue undismissed, or an order, Judgment, or decree approving or ordering any of the foregoing shall be entered and continue unstayed and in effect, for a period of 60 days or more.

“Big Four Auditing Firms” means PricewaterhouseCoopers, Deloitte Touche Tohmatsu, Ernst & Young, and KPMG including any of their respective affiliated or associated auditing firms.

“Board” means the Board of Directors of MSC.

“Bolivia” means the Republic of Bolivia.

“Bolivian Corporations Law” means the Bolivian Code of Commerce enacted by Law Decree No. 14379 dated February 25, 1977.

“Bolivianos” or “Bs.” means Bolivianos, the lawful currency of Bolivia.

“Business Day” means any day other than Saturday, Sunday, and a day on which banks in New York, New York, U.S.A. or Tokyo, Japan are required or permitted to close.

“Chairman” has the meaning specified in Section 2.2(d).

“Commercial Operations” means the Project’s normal commercial operations in accordance with the then-current approved Program and Budget, including the mining, crushing, and milling of ore and the shipment of concentrates, as confirmed by the occurrence of the latest of (i) the successful completion of the Fourteen Day Throughput Test (as defined in the EPCM Contract), (ii) Commercial Operation (as defined in the Rail Transportation Agreement), (iii) the Commercial Operation Date (as defined in the Port Agreement), (iv) Power Operation (as defined in the Transmission Line Agreement), and (v) the date 90 days after MSC shall have received provisional payment in respect of shipped concentrates aggregating at least 10,000 tonnes each of lead concentrates and zinc concentrates.

“Commercial Operations Date” means the date on which Commercial Operations commence.

“Commission” means the U.S. Securities and Exchange Commission.

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“Commodity Hedge Instrument” means any forward purchase, forward sale, put option, synthetic put option, call option, collar, or any other arrangement relating to commodities entered into by a Person to hedge such Person’s exposure to or to speculate on commodity prices.

“Common Security Agreement” means that certain Common Security Agreement, dated as of December 1, 2005, among MSC, Apex Sweden, Apex Luxembourg, Old Metals, BNP Paribas, Barclays Capital, Corporación Andina de Fomento, JPMorgan Chase Bank, N.A., the senior lenders party thereto, and the hedge banks party thereto, as amended by the Omnibus Amendment Agreement.

“Consolidated Loan” has the meaning specified in Section 4.4(a)(iii).

“Consolidated Loan Contribution Notice” has the meaning specified in Section 4.4(a)(iv).

“Contract” means any note, bond, indenture, debenture, security agreement, trust agreement, mortgage, lease, contract, license, franchise, permit, guaranty, joint venture agreement, or other agreement, instrument, commitment, or obligation, whether oral or written.

“Contribution Alternative Funding” has the meaning specified in Section 4.4(b)(iii)(C).

“Control” means the ability to direct or cause the direction (whether through the ownership of voting securities, by contract, or otherwise) of the management and policies of a Person or to control (whether affirmatively or negatively and whether through the ownership of voting securities, by contract, or otherwise) the decision of such Person to engage in the particular conduct at issue.  A Person shall be rebuttably presumed to control an Entity if such Person owns, directly or indirectly through one or more intermediaries, (a) sufficient shares of stock or other equity interests of such Entity to allow such Person, under ordinary circumstances, to elect or direct the election of a majority of the members of the board of directors or other governing body of such Entity, or (b) shares of stock or other equity interests of such Entity representing, in the aggregate, more than 50% of the aggregate outstanding economic interests in such Entity.  The term “Controlled” has a meaning correlative to that of Control.

“Control Group” means either the Apex Control Group or the Sumitomo Control Group, as applicable.

“Conversion Date” has the meaning specified in Section 4.4(a)(iv).

“Conversion Price” has the meaning specified in Section 4.4(a)(v).

“CSA Penalty Subscription Price” has the meaning specified in Section 4.2(d).

“Cure Period” has the meaning specified in Section 6.2(a).

“deadlock” has the meaning specified in Section 2.4(a).

“Deadlock Meeting” has the meaning specified in Section 2.4(a).

“Deadlock Notice” has the meaning specified in Section 3.3(b).

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“December 31, 2005 Reserves” has the meaning specified in Section 3.4(b).

“Default Notice” has the meaning specified in Section 6.1.

“Defaulting Capital Contribution” has the meaning specified in Section 6.1.

“Defaulting MSC Loan” has the meaning specified in Section 6.1.

“Defaulting MSC Loan Contribution Notice” has the meaning specified in Section 6.2(d).

“Defaulting MSC Loan Conversion Date” has the meaning specified in Section 6.2(d).

“Defaulting Shareholder” has the meaning specified in Section 6.2(b).

“Defaulting Shareholder Loan” has the meaning specified in Section 6.1.

“Deferred Payments Agreement” means that certain Deferred Payments Agreement, dated as of the date hereof, between Apex Sweden and Sumitomo.

“Designated Apex Member” has the meaning specified in Section 7.9(g).

“Designated SCG Member” has the meaning specified in Section 7.9(b).

“Development Plan” means that certain San Cristóbal Development Plan, dated November 2004, prepared by MSC and concerning the construction and operation of the Project, as amended or otherwise modified by (a) those certain San Cristóbal Project Monthly Project Reports prepared by Aver Kvaerner through the date hereof, (b) that certain First Amendment to EPCM Services Supply Agreement, effective as of April 11, 2005, together with that certain First Change Order to EPCM Services Supply Agreement, dated as of June 8, 2005, that certain Second Change Order to EPCM Services Supply Agreement, dated as of July 21, 2005, that certain Third Change Order to EPCM Services Supply Agreement, dated as of December 2, 2005, that certain Fourth Change Order to EPCM Services Supply Agreement, dated as of June 13, 2006, and that certain Fifth Change Order to EPCM Services Supply Agreement, dated as of June 14, 2006, (c) the “Definitive Estimate” set forth in that certain Banks Reconciliation Template, dated August 2006, and (d) the memorandum and Table 1-Comparison of the Development Plan Production Plan and the July 2006 Revised Production Plan thereto, sent by email to Sumitomo on August 9, 2006, in each case as may be amended, restated, supplemented, replaced, or otherwise modified from time to time in accordance with ARTICLE II, ARTICLE III, and the Financing Documents, as applicable.

“Director” means a member of the Board.

“Dispute Resolution Agreement” means that certain Dispute Resolution Agreement, dated as of the date hereof, by and among Apex, Apex Sweden, Apex Luxembourg, Service Company, Sumitomo, New Sweden 1, New Sweden 2, MSC, New Metals, and New Cayman.

“Disqualified Person” means any Person (a) whose ownership of Interests is reasonably likely to cause MSC or any of its Subsidiaries to have any material License suspended, revoked,

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or otherwise terminated, in each case considering any waivers, approvals and consents that have been obtained and (b) in the case of any Sumitomo Interestholder, who or whose parent guarantor does not have a credit rating from Standard and Poor’s Corporation, Moody’s Investors Services, or Fitch Ratings Limited of either “investment grade” or at least equivalent to that of Sumitomo.

“Dollars” means the lawful currency of the U.S.

“Entity” means any sociedad anónima,  sociedad de responsabilidad limitada, Aktiengesellshchaft, Gesellschaft mit beschränkter Haftung,  privat aktiebolag, société à responsabilité limitée, corporation, general or limited partnership, limited liability company, joint venture, trust, association, unincorporated entity of any kind, or Governmental Authority.

“EPCM Contract” means that certain EPCM Services Supply Agreement, dated as of November 8, 2004, between MSC and Aker Kvaerner Metals, Inc., together with that certain First Amendment to EPCM Services Supply Agreement, effective as of April 11, 2005, that certain First Change Order to EPCM Services Supply Agreement, dated as of June 8, 2005, that certain Second Change Order to EPCM Services Supply Agreement, dated as of July 21, 2005, that certain Third Change Order to EPCM Services Supply Agreement, dated as of December 2, 2005, that certain Fourth Change Order to EPCM Services Supply Agreement, and that certain Fifth Change Order to EPCM Services Supply Agreement, dated as of June 14, 2006.

“Equity Interests” means Shares of any Shareholder in MSC or any of its Subsidiaries, and interests in such Shares, including voting and dividend rights, Preemptive Rights, and interests in respect of capital, and corporate funds of any kind, purpose, or denomination, such as reserve, revaluation, credit, profit, and dividend funds, whether accumulated or not.

“Estatutos” means the estatutos sociales of MSC, as hereafter amended, modified, supplemented, and restated in accordance with this Agreement and applicable Law.

“Exercise Period” has the meaning specified in Section 3.4(a).

“FCPA” has the meaning specified in Section 7.8.

“Fair Market Value of the Apex Interests” has the meaning specified in Section 6.3(d).

“Fair Market Value of the Sumitomo Interests” has the meaning specified in Section 6.3(d).

“Fifty-Fifty Control” has the meaning specified in Section 2.2(c)(i).

“Fifty-Fifty Date” has the meaning specified in Section 2.2(c)(i).

“Filing” means any written registration, declaration, application, or filing.

“Final Feasibility Study” has the meaning specified in Section 7.9(d).

“Finance and Operating Committee” has the meaning specified in Section 2.7(a).

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“Finance and Operating Committee Chairman” has the meaning specified in Section 2.7(a).

“Financial Resources” means, from time to time, all cash and cash equivalent balances standing on MSC’s accounts and the proceeds of any third-party financing (available for drawing by MSC).

“Financing Documents” means:

(a)           that certain Loan Agreement, dated December 1, 2005, among MSC, certain lenders named therein, and BNP Paribas, as administrative agent;

(b)           that certain Loan Agreement, dated December 1, 2005, between MSC and Corporación Andina de Fomento;

(c)           the Common Security Agreement;

(d)           that certain Sponsor Pledge and Agreement, dated as of December 1, 2005, between Apex and JPMorgan Chase Bank, N.A., as collateral agent (as amended by the Omnibus Amendment Agreement);

(e)           that certain Transfer Restrictions Agreement, dated as of December 1, 2005, among Apex, Apex Luxembourg, Apex Sweden, Old Metals, BNP Paribas, as administrative agent, and JPMorgan Chase Bank, N.A., as collateral agent (as amended by Amendment No. 1 to the Transfer Restrictions Agreement, dated as of May 2, 2006 and as further amended by the Omnibus Amendment Agreement);

(f)            that certain Completion Agreement, dated as of December 1, 2005, among Apex, Barclays Capital, BNP Paribas, and JPMorgan Chase Bank, N.A. (as amended by the Omnibus Amendment Agreement);

(g)           that certain ISDA Master Agreement (together with the Schedule and the Credit Support Annex thereto), dated as of March 16, 2005 (as amended by that certain Amendment No. 1 to Master Agreement, dated as of June 16, 2005, and as further amended by that certain Amendment and Restatement of the Schedule to Master Agreement, dated as of December 1, 2005), between BNP Paribas and Old Metals, as novated by the Metals Hedge Novation Agreements related thereto and as further amended by that certain Schedule to Master Agreement, dated on or about the date hereof, between BNP Paribas and New Cayman;

(h)           that certain ISDA Master Agreement (together with the Schedule and the Credit Support Annex thereto), dated as of September 4,1998 (as amended by that certain Amendment, dated February 18, 2005, as further amended by that certain Amendment No. 2, dated as of June 16, 2005, and as further amended by that certain Amendment and Restatement of the Schedule to Master Agreement, dated as of December 1, 2005), between Barclays Bank PLC and Old Metals, as novated by the Metals Hedge Novation Agreements related thereto and as further amended by that certain Schedule to Master

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Agreement, dated on or about the date hereof, between Barclays Bank PLC and New Cayman;

(i)            the Security Documents, including the Bolivian Security Documents (in each case, as defined in the Common Security Agreement);

(j)            the Omnibus Amendment Agreement;

(k)           that certain Pledge Agreement, dated on or about the date hereof, by Apex Luxembourg in favor of JPMorgan Chase Bank, N.A. (regarding shares of New Cayman);

(l)            that certain Pledge Agreement, dated on or about the date hereof, by Apex Sweden in favor of JPMorgan Chase Bank, N.A. (New York law pledge regarding quotas of New Metals);

(m)          that certain Pledge Agreement, dated on or about the date hereof, by Apex Sweden in favor of JPMorgan Chase Bank, N.A. (Swiss law pledge regarding quotas of New Metals);

(n)           that certain Pledge Agreement, dated on or about the date hereof, by New Sweden 2 in favor of JPMorgan Chase Bank, N.A. (Swiss law pledge regarding quotas of New Metals);

(o)           that certain Pledge Agreement, dated on or about the date hereof, by New Sweden 2 in favor of JPMorgan Chase Bank, N.A. (New York law pledge regarding quotas of New Metals);

(p)           that certain Apex Silver Finance Cross-Guarantee and Security Agreement, dated on or about the date hereof, between New Cayman and JPMorgan Chase Bank, N.A.;

(q)           that certain Sumitomo Pledge and Guarantee Agreement, dated on or about the date hereof, between Sumitomo and JPMorgan Chase Bank, N.A.;

(r)            that certain Sumitomo Transfer Restrictions Agreement, dated on or about the date hereof, among Sumitomo, New Sweden 1, New Sweden 2, BNP Paribas, and JPMorgan Chase Bank, N.A.;

(s)           the Sumitomo Completion Agreement; and

(t)            any related notes, guarantees, collateral documents, instruments, and agreements executed in connection with the foregoing;

in each case of clauses (a) through (v) of this definition with respect to any such agreement, schedule, note, guarantee, document, or instrument to which MSC, New Metals, or New Cayman is not a party, as such agreement, schedule, note, guarantee, document, or instrument is last in effect on the date hereof.

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“GAAP” means generally accepted accounting principles as used in the United States of America.

“General Shareholders Meeting” means a meeting of the shareholders of MSC, held in accordance with the Estatutos and Bolivian Law, which may be a regular meeting or an extraordinary meeting.

“Governing Documents” means the estatutos sociales, escritura de constitución social, articles or certificate of incorporation or formation or association, general or limited partnership agreement, limited liability company or operating agreement, bylaws, or other incorporation or governing documents of any Entity.

“Government Approvals” means any authorization, consent, approval, License, lease, ruling, permit, tariff, rate, certification, exemption, Filing, variance, claim, Judgment, decree, sanction, or publication of, by or with, any notice to, any declaration of or with, or any registration by or with, or any other action or deemed action by or on behalf of, any Governmental Authority.

“Governmental Authority” means any domestic or foreign national, regional, or local, court, governmental department, commission, authority, central bank, board, bureau, agency, official, or other instrumentality exercising executive, legislative, judicial, taxing, regulatory, or administrative powers or functions of or pertaining to government.

“Hedge Instrument” means (a) any currency swap agreement, option contract, future contract, option on futures contract, spot or forward contract, or other agreements to purchase or sell currency or any other arrangement entered into by a Person to hedge such Person’s exposure or to speculate on movements in rates of exchange of currencies; (b) any interest rate swap, option contract, futures contract, options on futures contract, cap, floor, collar, or any other similar hedging arrangements entered into by a Person to hedge such Person’s exposure to or to speculate on movements in interest rates; (c) Commodity Hedge Instrument; and (d) any other derivative transaction or hedging arrangement of any type or nature whatsoever that is the subject at any time of trading in the over-the-counter derivatives market.

“Implied Equity of MSC” has the meaning specified in Section 4.4(a)(v).

“Indebtedness” means, without duplication, (a) all obligations created, issued, or incurred for borrowed money (whether by loan, the issuance and sale of debt securities, or the sale of property to another Person subject to an understanding or agreement, contingent or otherwise, to repurchase such property from such other Person); (b) all obligations to pay the deferred purchase price or acquisition price of property or services (other than accrued expenses and trade accounts payable incurred in the ordinary course of business that are not more than 90 days past due); (c) all obligations to pay money evidenced by a note, bond, debenture, or similar instrument; (d) the principal amount of all obligations under or in respect of leases capitalized in accordance with generally accepted accounting principles as used in the U.S.; (e) all reimbursement obligations in respect of letters of credit or similar instruments issued or accepted by banks and other financial institutions; (f) all payment obligations under any Hedge Instrument to the extent constituting a liability under generally accepted accounting principles as used in the

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U.S.; and (g) all obligations of another Person of the type listed in clauses (a) through (f) of this definition, payment of which is guaranteed by or secured by Liens on the property of such Person (with respect to Liens, to the extent of the value of property pledged pursuant to such Liens if less than the amount of such obligations).

“Independent Investment Banker” has the meaning specified in Section 6.3(d).

“Indirect Interests” means the Apex Indirect Interests or the Sumitomo Indirect Interests, as applicable.

“Initial Offered Terms” has the meaning specified in Section 5.4(a).

“Interestholder” means each of the Apex Interestholders and the Sumitomo Interestholders.

“Interestholder Group” means either the Apex Interestholders or the Sumitomo Interestholders.

“Interest Ratio” means, with respect to any Interestholder, the number of Shares held by such Interestholder, from time to time, expressed as a percentage of the total number of Shares issued and outstanding at that time; provided, however, that the total of all Interest Ratios shall always equal 100%.  As of the date hereof, the Interest Ratio of the Apex Shareholders is 65% and the Interest Ratio of New Sweden 1 is 35%.

“Interests” means (i) all Equity Interests, (ii) the MSC Subordinated Debt, and (iii) all Indebtedness of MSC or any of its Subsidiaries in the form of Consolidated Loans, Shareholder Loans, Supplemental Loans, or Defaulting MSC Loans.

“Judgment” means any judgment, writ, order, decree, injunction, award, restraining order, or ruling of or by any court, judge, justice, arbitrator, or magistrate, including any bankruptcy court or judge, and any writ, order, decree, or ruling of or by any Governmental Authority.

“Law” means any national, regional, or local, or any foreign, statute, law, code, ordinance, rule, regulation, resolution, Judgment, regulatory agreement with a Governmental Authority, or general principle of common or civil law or equity.

“Lease Agreement” has the meaning specified in Section 7.9(d).

“LIBOR” means the London interbank offered rate of major banks for six-month Dollar deposits that appears on page 3750 of the Dow Jones Telerate Service (or on any successor or substitute page of such service or any successor to or substitute for such service or similar service, if such service is no longer available) at approximately 11:00 a.m., London, England time on any date of determination therefor.

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“Licenses” means all franchises, concessions, licenses, permits, authorizations, certificates, variances, exemptions, consents, leases, rights of way, easements, instruments, orders, and approvals issued by or pending with any Governmental Authority.

“Lien” means any (a) security agreement, conditional sale agreement, or other title retention agreement; (b) lease, consignment, or bailment given for security purposes; and (c) lien, charge, restrictive agreement, prohibition against transfer, mortgage, pledge, legal privilege, option, encumbrance, adverse interest, security interest, claim, attachment, exception to or defect in title, or other ownership interest (including reservations, rights of entry, possibilities of reverter, encroachments, easements, rights of way, restrictive covenants, leases, and Licenses granted to other Persons) of any kind, but excluding any of the foregoing created or imposed by or pursuant to this Agreement or any other Transaction Document.

“Loan” has the meaning specified in Section 2.3(a)(viii).

“Loan Alternative Funding” has the meaning specified in Section 4.4(a)(iii)(C).

“Majority Shareholder Group” means, as of any date of determination, the Shareholder Group that is entitled to nominate a majority of the Directors.

“Mandatory Metals Hedge Agreements” means any Hedge Instrument required under the Financing Documents.

“Material Project Document” means the Contracts listed on Schedule B to the Purchase and Sale Agreement and each other Contract to which MSC is or becomes a party or by which MSC’s assets are or are to be bound, which has a term of more than one year and has payments due to or from MSC thereunder in excess of US$10,000,000.00.

“MSC” has the meaning specified in the preamble.

“MSC Confidential Information” has the meaning specified in Section 7.6.

“MSC Management Agreement” means that certain Amended and Restated Management and Services Agreement, dated as of the date hereof, between MSC and Service Company.

“MSC Subordinated Debt” means the Apex Sweden MSC Subordinated Debt and the New Sweden 1 MSC Subordinated Debt.

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“Metals Hedge Novation Agreements” means

(a)           that certain Novation Agreement, dated on or about the date hereof, among BNP Paribas, Old Metals, as transferor, and Apex Luxembourg, as transferee, concerning that certain ISDA Master Agreement (together with the Schedule and the Credit Support Annex thereto), dated as of March 16, 2005 (as amended by that certain Amendment No. 1 to Master Agreement, dated as of June 16, 2005, and as further amended by that certain Amendment and Restatement of the Schedule to Master Agreement, dated as of December 1, 2005), between BNP Paribas and Old Metals;

(b)           that certain Novation Agreement, dated on or about the date hereof, among BNP Paribas, Apex Luxembourg, as transferor, and New Cayman, as transferee, concerning that certain ISDA Master Agreement (together with the Schedule and the Credit Support Annex thereto), dated as of March 16, 2005 (as amended by that certain Amendment No. 1 to Master Agreement, dated as of June 16, 2005, and as further amended by that certain Amendment and Restatement of the Schedule to Master Agreement, dated as of December 1, 2005), between BNP Paribas and Old Metals, as novated by that certain Novation Agreement specified in clause (a) of this definition and as further amended by that certain Schedule to Master Agreement, dated on or about the date hereof, between BNP Paribas and New Cayman;

(c)           that certain Novation Agreement, dated on or about the date hereof, among Barclays Bank PLC, Old Metals, as transferor, and Apex Luxembourg, as transferee, concerning that certain ISDA Master Agreement (together with the Schedule and the Credit Support Annex thereto), dated as of September 4, 1998 (as amended by that certain Amendment, dated February 18, 2005, as further amended by that certain Amendment No. 2, dated as of June 16, 2005, and as further amended by that certain Amendment and Restatement of the Schedule to Master Agreement, dated as of December 1, 2005), between Barclays Bank PLC and Old Metals; and

(d)           that certain Novation Agreement, dated on or about the date hereof, among among Barclays Bank PLC, Apex Luxembourg, as transferor, and New Cayman, as transferee, concerning that certain ISDA Master Agreement (together with the Schedule and the Credit Support Annex thereto), dated as of September 4, 1998 (as amended by that certain Amendment, dated February 18, 2005, as further amended by that certain Amendment No. 2, dated as of June 16, 2005, and as further amended by that certain Amendment and Restatement of the Schedule to Master Agreement, dated as of December 1, 2005), between Barclays Bank PLC and Old Metals, as novated by that certain Novation Agreement specified in clause (c) of this definition and as further amended by that certain Schedule to Master Agreement, dated on or about the date hereof, between Barclays Bank PLC and New Cayman.

“New Cayman” means Apex Silver Finance Ltd., an exempted company limited by shares incorporated under the Laws of the Cayman Islands, British West Indies, with its registered office at the offices of Walkers SPV Limited, Walker House, PO Box 908GT, Mary Street, George Town, Grand Cayman, Cayman Islands, British West Indies.

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“New Cayman Interests” means “Interests” as defined in the New Cayman Shareholders Agreement.

“New Cayman Interest Ratio” means “Interest Ratio” as defined in the New Cayman Shareholders Agreement.

“New Cayman Shareholders Agreement” means that certain Apex Silver Finance Shareholders Agreement, dated the date hereof, by and among Apex Luxembourg, Sumitomo, and New Cayman.

“New Cayman Shareholder” means “Shareholder” as defined in the New Cayman Shareholders Agreement.

“New Cayman Shares” means “Shares” as defined in the New Cayman Shareholders Agreement.

“New Concentrate Sales Agreement” means that certain Concentrate Sales Agreement, dated on or about the date hereof, between New Metals and MSC.

“New Metals” means Apex Metals Marketing GmbH, a Gesellschaft mit beschränkter Haftung organized under the Laws of Swiss Confederation, with its seat in Zug, canton of Zug, Switzerland and with a registered address of c/o Juris Treuhand AG, Industriestrasse 47, 6304 Zug, Switzerland.

“New Metals Interests” means “Interests” as defined in the New Metals Quotaholders Agreement.

“New Metals Interest Ratio” means “Interest Ratio” as defined in the New Metals Quotaholders Agreement.

“New Metals Quotaholders Agreement” means that certain Metals Quotaholders Agreement, dated the date hereof, by and among Apex Sweden, New Sweden 2, and New Metals.

“New Metals Quotaholder” means “Quotaholder” as defined in the New Metals Quotaholders Agreement.

“New Metals Quotas” means “Quotas” as defined in the New Metals Quotaholders Agreement.

“New Shares” has the meaning specified in Section 4.4(a)(iv).

“New Sweden 1” has the meaning specified in the preamble.

“New Sweden 1 MSC Subordinated Debt” means Indebtedness of MSC to New Sweden 1 evidenced by that certain Subordinated  Promissory Note, dated as of September 25, 2006, made by MSC in favor of New Sweden 1 in the original principal amount of US$14,805,204 (the “New Sweden 1 MSC Subordinated Note”).

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“New Sweden 2” means Comercial Metales Blancos AB, a privat aktiebolag organized under the Laws of the Kingdom of Sweden, with its registered office at c/o Anders Sköldberg, Ernst & Young AB, 401 82 Göteborg, Sweden.

“Non-Contributing Shareholder Group” has the meaning specified in Section 4.4(b)(iii).

“Non-Contributing Shareholder Notice” has the meaning specified in Section 4.4(b)(iii).

“Non-Defaulting Shareholder Group” has the meaning specified in Section 6.1.

“Non-Lending Shareholder Group” has the meaning specified in Section 4.4(a)(iii).

“Non-Lending Shareholder Notice” has the meaning specified in Section 4.4(a)(iii).

“Non-Offering Interestholders” has the meaning specified in Section 5.4(a).

“Non-Selling Interestholders” has the meaning specified in Section 5.3(a).

“Offer Notice” has the meaning specified in Section 5.4(a).

“Offered Terms” has the meaning specified in Section 5.3(a).

“Offering Interestholder” has the meaning specified in Section 5.4(a).

“Old Metals” means Apex Metals GmbH, a Gesellschaft mit beschränkter Haftung existing under the Laws of Switzerland, with its seat in Zug, canton of Zug, Switzerland and with a registered address of c/o Juris Treuhand AG, Industriestrasse 47, 6304 Zug, Switzerland.

“Omnibus Amendment Agreement” means that certain Omnibus Amendment Agreement, dated as of September 20, 2006, among MSC, Apex, Apex Sweden, Apex Luxembourg, Old Metals, New Cayman, New Metals, New Sweden 1, New Sweden 2, BNP Paribas, Barclays Capital, Corporación Andina de Fomento, JPMorgan Chase Bank, N.A., the senior lenders party thereto, and the hedge banks party thereto.

“Open Properties” has the meaning specified in Section 7.9(a).

“Option Agreement” means that certain Option Agreement, dated as of the date hereof, between Apex and Sumitomo.

“Parent Guarantees” means the Apex Guaranty and the Sumitomo Guaranty.

“Party” or “Parties” has the meaning specified in the preamble.

“Payment Default” has the meaning specified in Section 6.1.

“Penalty Subscription Price” has the meaning specified in Section 4.4(b)(iv)(B).

“Periodic Exploration Report” has the meaning specified in Section 7.9(d).

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“Permitted Transferee” has the meaning specified in Section 5.3(d).

“Person” means any natural person or Entity.

“Pledge” means any pledge of, or any creation, incurrence, assumption, or grant of any Lien on, any Interest, whether direct or indirect.  The terms “Pledges,” “Pledging,” and “Pledged” have meanings correlative to that of Pledge.

“Port Agreement” means that certain Construction and Port Services Agreement, dated as of September 1, 2003, as amended by that certain First Amendment to the Construction and Port Services Agreement, dated as of March 31, 2005, and as further amended by that certain Second Amendment to the Construction Port Services Agreement, dated as of December 16, 2005, between MSC and Puerto de Mejillones, S.A.

“Post-Commercial Operations Contribution Notice” has the meaning specified in Section 4.3(a).

“Pre-Commercial Operations Contribution Notice” has the meaning specified in Section 4.2(b).

“Preemptive Rights” means the preferred rights that the shareholders of a sociedad anónima have, pursuant to Article 255 of the Bolivian Corporations Law, entitling them to purchase newly issued shares of such sociedad anónima in accordance with their pro rata shareholding.

“Program and Budget” means the Development Plan and the cost estimates for construction and operation of the Project included in the Development Plan, or either of them as the context requires, in each case as may be amended, restated, supplemented, replaced, or otherwise modified from time to time in accordance with ARTICLE II, ARTICLE III, and the Financing Documents, as applicable.

“Project” means the development, establishment, construction, and operation by MSC of the San Cristóbal open pit silver, zinc, and lead mine and processing facilities located in the Potosi Department, Bolivia (including any expansions or extensions thereto over time), the processing of silver, zinc, and lead ores to recover silver, zinc, and lead concentrates and related infrastructure (including rail transportation, power transmission, and port facilities), and the transportation, marketing, and sale of the products thereof and other activities reasonably ancillary thereto.

“Proposed Third-Party Buyer” has the meaning specified in Section 5.3(a).

“Prospective Transferee” has the meaning specified in Section 5.2(c).

“Purchase and Sale Agreement” means that certain Purchase and Sale Agreement, dated as of the date hereof, by and among Apex, Sumitomo and the other parties thereto.

“Put Closing” has the meaning specified in Section 3.4(c).

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“Put Closing Date” means the date of the Put Closing, if any.

“Put Interests” has the meaning specified in Section 3.4(a).

“Put Notice” has the meaning specified in Section 3.4(a).

“Put Price” has the meaning specified in Section 3.4(b).

“Put Right” has the meaning specified in Section 3.4(a).

“Qualified Contributor Group” has the meaning specified in Section 4.4(b)(iii).

“Qualified Shareholder Group” has the meaning specified in Section 4.4(a)(iii).

“Rail Transportation Agreement” means that certain Transportation Agreement, dated as of March 15, 2005, between MSC and Antofagasta Railway Company PLC.

“Reference Exchange Rate” has the meaning specified in Section 9.12(c).

“Refinancing Document” has the meaning specified in Section 6.1.

“Restatement Document” has the meaning specified in Section 6.1.

“Revenues” mean all revenues received by or on behalf of MSC and its Subsidiaries on a consolidated basis, from any source, excluding (a) capital contributions and (b) Indebtedness owed to any Person.

“Sale” means any sale, assignment, gift, exchange, or other transfer or disposition of any Interest, whether direct or indirect (including by operation of Law through a merger or consolidation, as well as any repossession, foreclosure or similar action by a creditor, but not including any Pledge).  The terms “Sell,” “Sells,” “Selling,” and “Sold” have meanings correlative to that of Sale.

“Sale Notice” has the meaning specified in Section 5.3(a).

“SCG Historical Costs” means the documented or supported aggregate costs incurred by a Designated SCG Member with respect to a Selected Open Property until (i) in the case of Section 7.9(f), the date of the acquisition referred to therein, and (ii) in the case of Section 7.9(g), the date on which a joint venture relating to such Selected Open Property has been entered into by the Designated SCG Member and a Designated Apex Member.  Such costs shall include a reasonable allocation of overhead expenses.

“Section 5.3 Offered Interests” has the meaning specified in Section 5.3(d).

“Section 5.3 Offer Period” has the meaning specified in Section 5.3(b).

“Section 5.4 Offered Interests” has the meaning specified in Section 5.4(a).

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“Section 5.4 Offer Period” has the meaning specified in Section 5.4(b).

“Selected Open Property” has the meaning specified in Section 7.9(b).

“Selling Interestholder” has the meaning specified in Section 5.3(d).

“Service Company” means Apex Silver Mines Corporation, a corporation organized under the Laws of Delaware, U.S.A.

“Share” means a registered share of MSC.

“Shareholder” means each of the Apex Shareholders and the Sumitomo Shareholders.

“Shareholder Capital Contributions” has the meaning specified in Section 4.4(b)(i).

“Shareholder Capital Contribution Notice” has the meaning specified in Section 4.4(b)(i).

“Shareholder Capital Contribution Response Notice” has the meaning specified in Section 4.4(b)(ii)(B).

“Shareholder Group” means either the Apex Shareholders or the Sumitomo Shareholders.

“Shareholder Loan Notice” has the meaning specified in Section 4.4(a)(i).

“Shareholder Loan Response Notice” has the meaning specified in Section 4.4(a)(ii)(B).

“Shareholder Loans” has the meaning specified in Section 4.4(a)(i).

“Significant Matter” has the meaning specified in Section 2.3(a).

“Significant Operational Matter” has the meaning specified in Section 2.7(b).

“Sindico” means an individual appointed as a sindico by the General Shareholders Meeting of MSC pursuant to the Estatutos and the Bolivian Corporations Law to perform the administrative supervisory functions therein provided for.

“Special Purpose Interestholder” means any Entity (other than Sumitomo or Apex) (a) formed for the sole purpose of, and which conducts no other business than, holding Interests or (b) all or substantially all of the assets of which, on a consolidated basis, consist of any or all of the Interests, Indirect Interests, New Cayman Interests, New Metals Interests, or indirect interests in any thereof.

“Subordinated Management Fee” has the meaning specified in the MSC Management Agreement.

“Subscription Price” has the meaning specified in Section 4.4(b)(iv)(A).

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“Subsidiary” means with respect to any Person:

(a)           a corporation a majority in voting power of whose share capital with voting power, under ordinary circumstances, to elect directors is, at the date of determination thereof, directly or indirectly, owned by such Person, by a Subsidiary of such Person, or by such Person and one or more Subsidiaries of such Person,

(b)           a partnership or limited liability company in which such Person or a Subsidiary of such Person is, at the date of determination thereof, (i) in the case of a partnership, a general partner of such partnership with the power affirmatively to direct the policies and management of such partnership or (ii) in the case of a limited liability company, the managing member or, in the absence of a managing member, a member with the power affirmatively to direct the policies and management of such limited liability company, or

(c)           any Entity (other than a corporation, partnership, or limited liability company) in which such Person, a Subsidiary of such Person, or such Person and one or more Subsidiaries of such Person, directly or indirectly, at the date of determination, has (i) the power to elect or direct the election of a majority of the members of the governing body of such Person or (ii) in the absence of such a governing body, at least a majority ownership interest.

“Sumitomo” means Sumitomo Corporation, a corporation organized under the Laws of Japan.

“Sumitomo Completion Agreement” means that certain Sumitomo Completion Agreement, dated on or about the date hereof, among Sumitomo, Barclays Capital, BNP Paribas, and JPMorgan Chase Bank, N.A.

“Sumitomo Control Group” means Sumitomo and its wholly-owned Subsidiaries.

“Sumitomo Director” means any member of the Board nominated by the Sumitomo Shareholders in accordance with Section 2.2(c) (including any alternate director therefor).

“Sumitomo Guaranty” means that certain Sumitomo Guaranty, dated as of the date hereof, made by Sumitomo in favor of Apex and the Apex Shareholders.

“Sumitomo Indirect Interests” means any equity interests in or Indebtedness of any of the Subsidiaries of Sumitomo that are Interestholders or that own, directly or indirectly, equity interests in or Indebtedness of any of the Subsidiaries of Sumitomo that are Interestholders.

“Sumitomo Interestholders” means (a) the Sumitomo Shareholders and (b) each member of the Sumitomo Control Group that (i) is or becomes the owner of Interests and (ii) is or has become a Party pursuant to the terms of this Agreement.

“Sumitomo Interests” has the meaning specified in Section 6.3(c).

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“Sumitomo Member” has the meaning specified in Section 2.7(a).

“Sumitomo Shareholders” means (a) New Sweden 1 and (b) each member of the Sumitomo Control Group that (i) is or becomes the owner of Shares and (ii) is or has become a Party pursuant to the terms of this Agreement.

“Sumitomo Sindico” means any Sindico of MSC nominated by the Sumitomo Shareholders in accordance with Section 2.2(c).

“Sumitomo Sponsor Default Cure Notice” has the meaning specified in Section 6.3(a).

“Supplemental Loan” has the meaning specified in Section 4.4(a)(iii).

“Tax Authority” means any Governmental Authority with the power to impose any Tax.

“Tax” or “Taxes” means all taxes, however denominated, including any monetary adjustments, interest, penalties or other additions to tax that may become payable in respect thereof, imposed by any Tax Authority, which taxes include, without limiting the generality of the foregoing, all income or profits taxes, payroll and employee withholding taxes, unemployment insurance, social security taxes, income withholding taxes, sales and use taxes, value added taxes, ad valorem taxes, excise taxes, franchise taxes, gross receipts taxes, business or municipal license (patente municipal) taxes, occupation taxes, real and personal property taxes, stamp taxes, environmental taxes, severance taxes, production taxes, transfer taxes, workers’ compensation, governmental charges, and other obligations of the same or of a similar nature to any of the foregoing.

“Tonnes Processed” has the meaning specified in Section 3.4(b).

“Total Project Investment” has the meaning specified in Section 4.2(a).

“Transaction Documents” has the meaning specified in the Purchase and Sale Agreement.

“Transferee” means any Person that receives any Interest as a result of any Sale or Pledge.

“Transmission Line Agreement” means that certain Power Line Construction and Transmission Agreement, dated as of January 14, 2005, as amended by that certain First Amendment to Power Line Construction and Transmission Agreement, dated as of March 14, 2005, and as further amended by that certain Second Amendment to Power Line Construction and Transmission Agreement, dated as of August 29, 2005, among MSC, Ingelec S.A., Ingelec Transportadora de Electricidad S.A., Ingelec Electricity Transportation Investments, Corp., and San Cristóbal Transportadora de Electricidad, S.A.

“Transmission Line Loan Documents” means (a) the Transmission Line Agreement; (b) that certain Loan Agreement, dated as of April 15, 2005, between ASC Bolivia and San Cristóbal Transportadora de Electricidad, S.A.; (c) that certain Promissory Note, dated as of April 15, 2005, made by San Cristóbal Transportadora de Electricidad, S.A. in favor of ASC

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Bolivia; (d) that certain Escrow Agreement and Account Pledge and Security Agreement, dated as of April 15, 2005, among San Cristóbal Transportadora de Electricidad, S.A., ASC Bolivia, and Atlantic Security Bank, Cayman Islands; (e) that certain Pledge Agreement, dated as of April 15, 2005, made by Ingelec Electricity Transportation Investments, Corp., Raúl Quiroga, and Rene Fernández in favor of ASC Bolivia; (f) that certain Pledge Agreement, dated as of April 15, 2005, made by Ingelec Transportadora de Electricidad S.A. in favor of ASC Bolivia; (g) that certain Guaranty, dated as of April 15, 2005, made by Ingelec S.A., Ingelec Transportadora de Electricidad S.A., and Ingelec Electricity Transportation Investments, Corp. in favor of ASC Bolivia; (h) a moveables pledge agreement to be entered into pursuant to the agreement referred to in clause (b) of this definition; and (i) any related notes, guarantees, collateral documents, instruments, and agreements executed in connection therewith, in each case of (a) through (h), as such agreements, note, guaranty, and related notes, guarantees, collateral documents, instruments, and agreements may be amended, restated, supplemented, novated,  renewed, extended, refunded, refinanced, replaced, or otherwise modified from time to time.

“U.S.” or “U.S.A.” means the United States of America.

“US$” means Dollars.

“Vice Chairman” has the meaning specified in Section 2.2(d).

ARTICLE II
MANAGEMENT OF MSC

Section 2.1             Shareholders Meetings.

(a)           Authority.  The General Shareholders Meeting of MSC is the supreme governing body of MSC.  General Shareholders Meetings can be regular (ordinaria) or extraordinary (extraordinaria).  An annual regular General Shareholders Meeting shall be held at least once each year within three months after the end of each fiscal year, in accordance with the Estatutos, and regular and extraordinary General Shareholders Meetings may be held at any time in accordance with the provisions of this Section 2.1, in order to decide any matter that according to Bolivian Law or the Estatutos may be decided by the General Shareholders Meeting.

(b)           Convocation.  General Shareholders Meetings shall be called by the Board.  The Board shall call (i) regular General Shareholders Meetings, on the dates determined by the Board; (ii) extraordinary General Shareholders Meetings, if the Board determines that the interests of MSC so require, on the dates determined by the Board; and (iii) regular or extraordinary General Shareholders Meetings, as applicable, upon the written request (which request shall indicate the items that such holders desire to have discussed and voted on at such General Shareholders Meeting) of one or more holders of record of at least 20% of the Shares issued, outstanding, and entitled to vote, on the date determined by the Board.

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(c)Notice.  Once a General Shareholders Meeting has been called, notice of the nature of the General Shareholders Meeting, the place, date, and time thereof, and an agenda (and for an extraordinary General Shareholders Meeting, a brief description of the items to be discussed and voted on thereat) shall be delivered to each Shareholder in accordance with Section 9.6 at least 30 days and no more than 90 days prior to such meeting, and such notice, agenda, and the requirements for participation shall be published in a nationwide newspaper in Bolivia on three discontinuous days with the last publication being made at least five and no more than 30 days before such meeting as required by applicable Law; provided, however, that the Shareholders may waive any such notice if all Shareholders are present or duly represented at such meeting as provided by the Bolivian Corporations Law, and any Shareholder’s presence or due representation at such General Shareholders Meeting shall be deemed a waiver thereof.

(d)Quorum.

(i)Regular (Ordinaria) General Shareholders Meetings.  Holders of at least a majority of Shares issued, outstanding, and entitled to vote, whether present in person or represented by a letter (carta poder) or a notarized power of attorney, shall constitute a quorum to hold a meeting for all purposes of any regular General Shareholders Meeting; provided, however, that, except as set forth in Section 2.3(a), with respect to any matter that cannot be approved without the affirmative vote of the holder or holders of Shares representing a higher voting percentage, such holder or holders of Shares issued, outstanding, and entitled to vote representing at least such higher voting percentage, whether present in person or represented by a letter (carta poder) or a notarized power of attorney, shall be required to constitute a quorum for purposes of voting on such matter.  If the absence of one or more such holders at such General Shareholders Meeting prevents the establishment of a quorum (including with respect to any particular matter), then (A) the individual (which individual shall be the Chairman) presiding at such General Shareholders Meeting shall adjourn such General Shareholders Meeting (unless such lack of quorum relates only to a particular matter, in which case the General Shareholders Meeting may proceed as to the other matters and thereafter shall be adjourned only with respect to such matter), and (B) the Board shall call for such General Shareholders Meeting to be reconvened on a date of its choosing, which date shall be no earlier than 10 days nor later than 30 days following the date for which such General Shareholders Meeting was originally called.  Notice of such reconvened General Shareholders Meeting shall be published in a nationwide newspaper in Bolivia on two days with the last publication being made at least three and no more than 30 days before such meeting as required by applicable Law, and may be waived in accordance with Section 2.1(c).  Subject to the proviso

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at the end of the first sentence of this Section 2.1(d)(i), at such reconvened General Shareholders Meeting, holders of one-third or more of Shares issued, outstanding, and entitled to vote, whether present in person or represented by a letter (carta poder) or a notarized power of attorney, shall constitute a quorum to hold such reconvened General Shareholders Meeting and the individual presiding at such General Shareholders Meeting shall be appointed by the affirmative vote required to approve any action of any reconvened General Shareholders Meeting set forth in Section 2.1(e).

(ii)Extraordinary (Extraordinaria) General Shareholders Meetings.  Holders of two-thirds or more of Shares issued, outstanding, and entitled to vote, whether present in person or represented by a letter (carta poder) or a notarized power of attorney, shall constitute a quorum to hold a meeting for all purposes of any extraordinary General Shareholders Meeting; provided, however, that, except as set forth in Section 2.3(a), with respect to any matter that cannot be approved without the affirmative vote of the holder or holders of Shares representing a higher voting percentage, such holder or holders of Shares issued, outstanding, and entitled to vote representing at least such higher voting percentage, whether present in person or represented by a letter (carta poder) or a notarized power of attorney, shall be required to constitute a quorum for purposes of voting on such matter.  If the absence of one or more such holders at such General Shareholders Meeting prevents the establishment of a quorum (including with respect to any particular matter), then (A) the individual (which individual shall be the Chairman) presiding at such General Shareholders Meeting shall adjourn such General Shareholders Meeting (unless such lack of quorum relates only to a particular matter, in which case the General Shareholders Meeting may proceed as to the other matters and thereafter shall be adjourned only with respect to such matter), and (B) the Board shall call for such General Shareholders Meeting to be reconvened on a date of its choosing, which date shall be no earlier than 10 days nor later than 30 days following the date for which such General Shareholders Meeting was originally called.  Notice of such reconvened General Shareholders Meeting shall be published in a nationwide newspaper in Bolivia on two days with the last publication being made at least three and no more than 30 days before such meeting as required by applicable Law, and can be waived in accordance with Section 2.1(c).  Subject to the proviso at the end of the first sentence of this Section 2.1(d)(ii), at such reconvened General Shareholders Meeting, holders of one-third or more of Shares issued, outstanding, and entitled to vote, whether present in person or

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represented by a letter (carta poder) or a notarized power of attorney, shall constitute a quorum to hold such reconvened General Shareholders Meeting and the individual presiding at such General Shareholders Meeting shall be appointed by the affirmative vote required to approve any action of any reconvened General Shareholders Meeting set forth in Section 2.1(e).

(e)Voting.  Subject to Section 2.3, and except when a higher voting percentage is required under Bolivian Law, the affirmative vote by the holders of a majority of Shares issued, outstanding, and entitled to vote, whether present in person or represented by a letter (carta poder) or a notarized power of attorney, at a General Shareholders Meeting where a quorum is present and acting throughout the time such vote is taken shall be required to approve any action of the General Shareholders Meeting; provided, however, that at any reconvened General Shareholders Meeting described in Section 2.1(d), the affirmative vote by the holders of a majority of Shares in attendance thereat, whether present in person or represented by a letter (carta poder) or a notarized power of attorney, shall be required to approve any action of the General Shareholders Meeting, subject to Section 2.3, and except when a higher voting percentage is required under Bolivian Law.

(f)Conflict of Interest.  No Shareholder shall be disqualified from voting on or signing a written resolution with respect to any matter, including the approval of any proposed Contract, solely because that Shareholder or an Affiliate of that Shareholder or any officer or director of that Shareholder or of any Affiliate of that Shareholder is interested or has a material interest in that matter.

Section 2.2Board; Sindicos.

(a)Authority; Composition of the Board.  Subject to Section 2.3, and except for those powers granted by Bolivian Law or the Estatutos to the holders of Shares, acting through a General Shareholders Meeting, the direction and management of MSC is vested in the Board.  The Board shall initially consist of three Directors but not more than twelve, with one or more alternate directors for each Director, which Directors and alternate directors shall be nominated and elected in accordance with Section 2.2(c).  As approved by the General Shareholders Meeting (or as otherwise required pursuant to Section 2.2(c) in the event each Shareholder Group’s Interest Ratio equals 50%), the Board may consist of more than three Directors, with one or more alternate directors for each Director, which Directors and alternate directors shall be nominated and elected in accordance with Section 2.2(c).  Each Director (and any alternate director therefor) shall hold office until the annual regular General Shareholders Meeting following his or her election and until his or her successor is elected or until his or her earlier removal, resignation, death, or disability.  Each alternate director shall be entitled to participate in all meetings of the Board with a right to speak, but shall be entitled to vote in such meetings only in case of the applicable Director’s absence or temporary impediment, in which case such alternate director may replace such Director and vote in such Director’s stead.

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(b)Sindicos.  MSC shall have two Sindicos.  Each Sindico shall have the powers and authority granted by Bolivian Law or the Estatutos to Sindico and shall hold office until the annual regular General Shareholders Meeting following his or her election and until his or her successor is elected or until his or her earlier removal, resignation, death, or disability.  In accordance with article 62 of the Estatutos, the Sindicos shall exercise permanent and full controlling functions regarding MSC’s operations and books, without interfering with the administrative affairs of MSC. At each annual regular General Shareholders Meeting, the Sindicos shall present a detailed report on the annual memory (memoria) of the Board including the balance sheet, accounts, and results of MSC for the previous fiscal year and such other information as the Sindicos deem appropriate for review by the Shareholders.  At each regular and extraordinary General Shareholders Meeting, the Sindicos shall present a report addressing each of the points contemplated in the notice of such meeting.  The Sindicos shall also attend Board meetings and shall have the right to speak but may not vote.  The two Sindicos shall become a controlling committee and shall hold mandatory meetings at least once each year and at any time one of its members so requests.  The Sindicos shall verify compliance with the requirements under applicable Law and provisions of the Governing Documents of MSC for calling meetings and recording agreements.  If the Board shall fail to call any regular or extraordinary General Shareholders Meeting that it is required to call, the Sindicos may call such General Shareholders Meeting.  The Sindicos, as they deem advisable, may also call any extraordinary General Shareholders Meeting.  The Sindicos also shall supervise MSC’s liquidation when and if that has been resolved by the General Shareholders Meeting.

(c)Nomination, Election, and Removal of Directors and Sindicos; Vacancies.  Except as provided in Section 2.2(a), Section 2.2(c)(v), and Section 2.2(c)(vi), the Directors, alternate directors, and Sindicos shall be nominated, elected, and removed and vacancies in the office of Director, alternate director, and Sindico shall be filled as follows:

(i)Nomination.  In the event, and for so long as, the Board consists of three Directors (and one or more alternate directors for each such Director), the Apex Shareholders shall be entitled to nominate two Directors (and one or more alternate directors for each such Director), and the Sumitomo Shareholders shall be entitled to nominate one Director (and one or more alternate directors for such Director); provided, however, that, in the event, and for so long as, the aggregate Interest Ratio of the Sumitomo Shareholders exceeds 50%, (A) the Sumitomo Shareholders shall be entitled to nominate two Directors (and one or more alternate directors for each such Director), (B) the Apex Shareholders shall be entitled to nominate one Director (and one or more alternate directors for such Director), (C) notwithstanding Section 2.2(d), each of the then-elected Chairman and Vice Chairman shall be replaced by one of the Sumitomo Directors, one of the Sumitomo

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Directors shall thereafter be elected as Chairman and one of the Sumitomo Directors shall thereafter be elected as Vice Chairman, and (D) the Shareholders shall take such actions as are necessary to remove, nominate, and elect any Director (and any alternate director therefor), as applicable to implement the provisions of clauses (A), (B), and (C) of this proviso.

In the event, and for so long as, the aggregate Interest Ratio of the Sumitomo Shareholders equals 50% and the aggregate Interest Ratio of the Apex Shareholders equals 50% (“Fifty-Fifty Control,” and the date of such occurrence, the “Fifty-Fifty Date”), (A) the Board shall consist of at least four, or a greater even number of, Directors, (B) the Sumitomo Shareholders shall be entitled to nominate 50% of the total number of the Directors (and one or more alternate directors for each such Director), (C) the Apex Shareholders shall be entitled to nominate 50% of the total number of the Directors (and one or more alternate directors for each such Director), (D) notwithstanding Section 2.2(d), each of the then-elected Chairman and Vice Chairman shall be replaced by one of the Sumitomo Directors who shall serve until the first anniversary of the Fifty-Fifty Date (thereafter, Chairmen and Vice Chairmen shall serve one-year terms with the right to appoint the Chairman and Vice Chairman alternating between the Sumitomo Shareholders and the Apex Shareholders; provided, that the Apex Shareholders shall appoint the Chairman and Vice Chairman for the year following the first anniversary of the Fifty-Fifty Date), and (E) the Shareholders shall take such actions as are necessary to remove, nominate, and elect any Director (and any alternate director therefor), as applicable to implement the foregoing provisions.

Except in the circumstance described in the immediately preceding paragraphs, in the event, and for so long as, the Board consists of more than three directors as approved by a General Shareholders Meeting in accordance with Section 2.2(a), (A) the Sumitomo Shareholders shall be entitled to nominate (1) a number of Directors equal to the product of (I) the total number of Directors multiplied by (II) the aggregate Interest Ratio of the Sumitomo Shareholders, with such product being rounded down to the nearest whole number; provided, however, that such number of Directors nominated by the Sumitomo Shareholders shall not be less than one except pursuant to Section 2.2(c)(v); and (2) one or more alternate directors for each such Director, and (B) the Apex Shareholders shall be entitled to nominate (1) a number of Directors equal to the product of (I) the total number of Directors multiplied by (II) the aggregate Interest Ratio of the Apex Shareholders, with such product being rounded down to the nearest

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whole number; provided, however, that such number of Directors nominated by the Apex Shareholders shall not be less than one except pursuant to Section 2.2(c)(vi); provided, further, that if, solely as a result of the rounding down described in the preceding clauses (A) and (B), one of the Directors to be nominated to the Board (as approved by a General Shareholders Meeting in accordance with Section 2.2(a)) is not nominated, then such Director shall be nominated by the Shareholder Group that has an aggregate Interest Ratio in excess of 50%.

At each regular General Shareholders Meeting called to elect Directors, alternate directors, or Sindicos, the Directors, alternate directors, and Sindicos, as applicable, shall be nominated in accordance with this Section 2.2(c)(i), the Estatutos, and the Bolivian Corporations Law.

The Apex Shareholders’ initial nominees to serve as the Apex Directors and their respective alternate directors are as follows:

Director	Alternate Directors
Jeffrey Clevenger	Alan Edwards Jerry Danni
Gerald J. Malys	Robert Vogels Marcel F. DeGuire

The Sumitomo Shareholders’ initial nominees to serve as the Sumitomo Director and his alternate directors are as follows:

Director	Alternate Directors
Mitsuhiko Yamada	Akira Takeuchi Koji Nakamura

The Apex Shareholders shall be entitled to nominate one Sindico and the Sumitomo Shareholders shall be entitled to nominate one Sindico.  The Apex Shareholders’ initial nominee to serve as the Apex Sindico is Eduardo R. Quintanilla B.  The Sumitomo Shareholders’ initial nominee to serve as the Sumitomo Sindico is Fernando Aguirre B.

(ii)Election.  Promptly following the execution and delivery of this Agreement, an extraordinary General Shareholders Meeting shall be held for the purpose of, among other things, amending and restating the Estatutos in the form attached hereto as Exhibit A.  On the same date, a regular General Shareholders Meeting shall be held for the purpose of, among other things, (A) electing the Directors and their alternate directors and (B) electing the

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Sindicos.  At such extraordinary General Shareholders Meeting, and at each regular General Shareholders Meeting thereafter called to elect Directors, alternate directors, or Sindicos, the Directors, alternate directors, and Sindicos, as applicable, shall be elected in accordance with the Estatutos and the Bolivian Corporations Law, and all Shareholders shall vote their respective Shares in favor of all of the Directors, their alternate directors, and Sindicos nominated in accordance with Section 2.2(c)(i).

(iii)Removal.  The Apex Shareholders shall have the right to remove any or all of the Apex Directors, any alternate director therefor, and the Apex Sindico at any time with or without cause and no Apex Director, alternate director therefor, or Apex Sindico may be removed without the consent of the Apex Shareholders.  If the Apex Shareholders notify the Sumitomo Shareholders of their desire to remove any Apex Director, any alternate director therefor, or the Apex Sindico, the Shareholders promptly shall do all things necessary pursuant to Bolivian Law and the Estatutos to remove such Apex Director, alternate director, or Apex Sindico, as applicable, and vote their respective Shares in favor of such removal.  The Sumitomo Shareholders shall have the right to remove any or all of the Sumitomo Directors, any alternate director therefor, and the Sumitomo Sindico at any time with or without cause and no Sumitomo Director, any alternate director therefor, or Sumitomo Sindico may be removed without the consent of the Sumitomo Shareholders.  If the Sumitomo Shareholders notify the Apex Shareholders of their desire to remove any Sumitomo Director, any alternate director therefor, or the Sumitomo Sindico, the Shareholders promptly shall do all things necessary pursuant to Bolivian Law and the Estatutos to remove such Sumitomo Director, alternative director, or Sumitomo Sindico, as applicable, and vote their respective Shares in favor of such removal.  The term of any Director, alternate director, or Sindico so removed shall immediately terminate and there shall be a vacancy or vacancies on the Board or in the office of Sindico, as applicable, to be filled as provided in Section 2.2(c)(iv).

(iv)Vacancies.  Whenever any vacancy has occurred on the Board or in the office of Sindico due to the removal, resignation (other than resignations pursuant to Section 2.2(c)(v) or Section 2.2(c)(vi)), death, or disability of a Director, alternate director, or Sindico, it shall be filled by a Person nominated by the Shareholder Group that nominated such Director, alternate director, or Sindico.  Such Person shall be elected by resolution of the General Shareholders Meeting at the next regular General Shareholders Meeting (which meeting may be called solely for such purpose) following the

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Chairman’s receipt of the nomination from such Shareholder Group (or, if the Chairman receives the nomination during a General Shareholders Meeting, then at the meeting in which the Chairman received the nomination).  The Person so nominated and elected shall hold office until the next annual regular General Shareholders Meeting and until his or her successor is elected or until his or her earlier removal, resignation, death, or disability.

(v)Changes in the Ownership of the Sumitomo Control Group.  Notwithstanding anything to the contrary in Section 2.2(c)(i), Section 2.2(c)(ii), Section 2.2(c)(iii), Section 2.2(c)(iv), and Section 2.7, if the aggregate Interest Ratio of the Sumitomo Shareholders ceases to be at least 20%, then immediately and thereafter until this Agreement is terminated:

(A)the Sumitomo Shareholders’ rights under this Agreement to nominate and remove any Director (and any alternate director therefor) and fill a vacancy on the Board and its rights under this Agreement to nominate and remove any Sindico and fill a vacancy in the office of Sindico shall cease;

(B)the Sumitomo Director(s) (and the alternate director(s) therefor) shall, and the Sumitomo Shareholders shall cause the Sumitomo Director(s) (and the alternate director(s) therefor) to, immediately resign from the Board;

(C)the Apex Shareholders thereupon shall be entitled to remove and appoint replacements for such resigning Director(s) (and the alternate director(s) therefor) and shall be entitled to nominate, elect, and remove any or all Directors (and an alternate director for each such Director) and fill every vacancy on the Board, without regard to this Agreement;

(D)the Sumitomo Sindico shall, and the Sumitomo Shareholders shall cause the Sumitomo Sindico to, immediately resign from the office of Sindico;

(E)the Apex Shareholders thereupon shall be entitled to remove and appoint replacements for such resigning Sindico and shall be entitled to nominate, elect, and remove any or all Sindicos and fill every vacancy in the office of Sindico, without regard to this Agreement;

(F)the Sumitomo Shareholders’ rights under this Agreement to nominate and remove any member of the Finance and

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Operating Committee shall cease and any such member shall be deemed removed from the Finance and Operating Committee without any further action of the Sumitomo Shareholders; and

(G)the Apex Shareholders thereupon shall be entitled to remove and appoint replacements for such removed member of the Finance and Operating Committee, without regard to this Agreement.

(vi)Changes in the Ownership of the Apex Control Group.  Notwithstanding anything to the contrary in Section 2.2(c)(i), Section 2.2(c)(ii), Section 2.2(c)(iii), Section 2.2(c)(iv), and Section 2.7, if the aggregate Interest Ratio of the Apex Shareholders ceases to be at least 20%, then immediately and thereafter until this Agreement is terminated:

(A)the Apex Shareholders’ rights under this Agreement to nominate and remove any Director (and any alternate director therefor) and fill a vacancy on the Board and its rights under this Agreement to nominate and remove any Sindico and fill a vacancy in the office of Sindico shall cease;

(B)the Apex Director(s) (and the alternate director(s) therefor) shall, and the Apex Shareholders (as applicable) shall cause the Apex Director(s) (and the alternate director(s) therefor) to, immediately resign from the Board;

(C)the Sumitomo Shareholders thereupon shall be entitled to remove and appoint replacements for such resigning Director(s) (and the alternate director(s) therefor) and shall be entitled to nominate, elect, and remove any or all Directors (and an alternate director for each such Director) and fill every vacancy on the Board, without regard to this Agreement;

(D)the Apex Sindico shall, and the Apex Shareholders shall cause the Apex Sindico to, immediately resign from the office of Sindico;

(E)the Sumitomo Shareholders thereupon shall be entitled to remove and appoint replacements for such resigning Sindico and shall be entitled to nominate, elect, and remove any or all Sindicos and fill every vacancy in the office of Sindico, without regard to this Agreement;

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(F)the Apex Shareholders’ rights under this Agreement to nominate and remove any member of the Finance and Operating Committee shall cease and any such member shall be deemed removed from the Finance and Operating Committee without any further action of the Apex Shareholders; and

(G)the Sumitomo Shareholders thereupon shall be entitled to remove and appoint replacements for such removed member of the Finance and Operating Committee, without regard to this Agreement.

(d)Chairman.  Subject to Section 2.2(c)(i), the Directors shall elect annually one of the Apex Directors to serve as Chairman (presidente) of the Board (the “Chairman”), whose term and duties shall be as determined by the Board.  In addition, subject to Section 2.2(c)(i), the Directors shall elect annually (i) one of the Apex Directors to serve as Vice Chairman (vicepresidente) of the Board (the “Vice Chairman”), to substitute for the Chairman in the event of absence, impediment or death of the Chairman; and (ii) a Secretary of the Board, who shall be responsible for preparing all resolutions of the General Shareholders Meeting and the Board, sending and delivering all notices, managing the correspondence with respect to all matters delegated thereto, issuing evidentiary documents (constancias) and certifications, verifying the resolutions and maintaining the books of MSC, and exercising all other powers and obligations provided by this Agreement and the Estatutos or required by the Board.

(e)Board Meetings; Notice.  Regular meetings of the Board shall be held at least once every six months, at such times and places as the Board determines; provided, however, that no Board meeting shall be held in a place other than a location reasonably convenient to all Directors in any of Denver, Colorado, U.S.A., New York, New York, U.S.A. and La Paz, Bolivia, unless all the Directors shall have agreed in advance to the holding of such meeting in such other place.  As promptly as practicable following the execution and delivery of this Agreement, a regular meeting of the Board shall be held for the purpose of, among other things, determining the times and places for the remaining regular meetings of the Board during the current calendar year.  Special meetings of the Board (i) may be called by the Chairman on his or her own initiative, (ii) shall be called by the Chairman with reasonable promptness after he or she receives a written request therefor from any Director, and (iii) may be called by any Director if (A) due to death, disability, resignation, removal, or any other reason, there is no Chairman then acting, or (B) the Chairman fails to call a meeting as required by the preceding clause (ii).  In connection with all regular meetings of the Board and all special meetings of the Board properly called in accordance with the preceding sentence, notice of the place and time thereof and a brief description of the items to be discussed and voted on thereat (which description shall, in the case of regular meetings, include any item that any Director requests in writing as long as (1) such written request is delivered to all other Directors within a reasonable time before such notice is sent and (2) such request relates to an issue customarily addressed by boards of directors of sociedades

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anónimas in Bolivia) shall be delivered to all Directors and alternate directors by certified letter, and by facsimile or email, at least seven Business Days prior to the date such meeting is to be held; provided, however, that the Directors may, by attendance at such meeting of all the Directors then in office (including alternate directors for any absent Directors), forego or waive such notice, and any Director’s attendance (or, if any Director is absent, the respective alternate director’s attendance) at such meeting shall be deemed a waiver thereof; and provided, further, however, that the validity of any action taken by the Board shall not be affected by whether the notice of meeting or the description of the items to be discussed and voted on thereat is correct or complete.  If, in the future, the Bolivian Corporations Law permits Directors and alternate directors to participate in Board meetings through telephone conference calls, videoconferences, or any other technological means, nothing in this Agreement shall be deemed to prohibit such participation through any such means.

(f)Quorum.  A majority of the Directors then in office (or an alternate director for any absent Director) shall constitute a quorum to hold a meeting for all purposes at any regular or special meeting of the Board; provided, however, that with respect to any matter that cannot be approved without the affirmative vote of at least one Sumitomo Director and at least one Apex Director, a majority of the Directors then in office (or an alternate director for any absent Director), including at least one Sumitomo Director (or, if absent, his or her respective alternate director) and at least one Apex Director (or, if absent, his or her respective alternate director), shall constitute a quorum for purposes of voting on such matter.  If any Director is absent from any regular or special meeting of the Board, one of his or her alternate directors shall be entitled to attend such meeting, to act in his or her stead, and to exercise all rights and powers such Director would have been entitled to exercise had he been present thereat, and for purposes of this Agreement any such alternate director shall be considered a Director for purposes of such meeting.  If the absence of one or more Directors and their alternate directors from any regular or special meeting of the Board prevents the establishment of a quorum thereat (including with respect to any particular matter), then (i) the Chairman presiding at such meeting, or, in his absence, the Vice Chairman, or, in his absence, another Director designated by a majority of the Directors in attendance to preside at such meeting, shall adjourn such meeting (unless such lack of quorum relates only to a particular matter, in which case the meeting may proceed as to the other matters and thereafter shall be adjourned only with respect to such matter), and (ii) the Chairman shall call for such meeting to be reconvened on a date chosen by a majority of the Directors then present, which date shall be no earlier than three Business Days nor later than 10 Business Days following the date for which such meeting was originally called.  Notice of such reconvened meeting shall be delivered or waived in accordance with Section 2.2(e).  At such reconvened meeting, the presence or absence of a quorum shall be determined in accordance with this Section 2.2(f) and, if the absence of one or more Directors and their alternate directors therefrom prevents the establishment of a quorum, then the procedures set forth in this Section 2.2(f) shall be repeated until such time as a meeting is reconvened and a quorum is present thereat.  If any Director and his or her alternate director fails, without cause, to attend two successive meetings of the Board, and such failures prevent the establishment of a quorum (either with respect to such

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meetings in general or with respect to any particular matter), then, promptly following the Party or Parties that nominated such Director and his or her alternate director receiving a written request from any other Party to remove and replace such Director and alternate director, the Shareholders promptly shall do all things necessary pursuant to Bolivian Law and the Estatutos to remove such Director and alternate director, as applicable, and vote their respective Shares in favor of such removal.  The term of any Director or alternate director so removed shall immediately terminate and there shall be a vacancy or vacancies in the Board to be filled as provided in Section 2.2(c)(iv).

(g)Voting.  Each Director (including the alternate director for any absent Director) present at a Board meeting shall be entitled to one vote on each matter presented to the Board for a vote.  Subject to Section 2.3, and except as otherwise provided under Bolivian Law, the affirmative vote of a majority of Directors (or an alternate director for any absent Director) present at a meeting where a quorum is present and acting throughout the time such vote is taken shall be required to approve any action of the Board.

(h)Compensation.  All Directors and alternate directors shall serve without remuneration by MSC, but shall be reimbursed by MSC for all reasonable out-of-pocket, travel, lodging, food, and incidental expenses incurred thereby in connection with their attendance at Board meetings and their other duties performed as Directors of MSC.  All Sindico shall receive compensation from MSC customary with local practice in Bolivia and shall be reimbursed by MSC for all reasonable out-of-pocket, travel, lodging, food, and incidental expenses incurred thereby in connection with their attendance at Board meetings and General Shareholder Meetings.

(i)Conflict of Interest.  An officer of MSC or a Director who is a party to, or is a director or officer of or has a material interest in a party to a material Contract or proposed material Contract with MSC shall disclose in writing to MSC or request to have entered into the minutes of the meeting of the Board, the nature and extent of that interest.  To the extent not restricted by the Bolivian Corporations Law following that disclosure, the officer of MSC or Director may vote on the approval of any proposed material Contract or on any matter or issue arising in respect of any material Contract or proposed material Contract notwithstanding the interest of such officer or Director.

Section 2.3Significant Matters.

(a)To the fullest extent permitted by applicable Law and notwithstanding anything to the contrary in the Estatutos or any other Governing Document of MSC or any of its Subsidiaries, except as provided in Section 2.3(c), Section 2.4, Section 3.3, and Section 3.5, the following acts, expenditures, decisions, and obligations made or incurred by or on behalf of MSC or any of its Subsidiaries (each, a “Significant Matter”) shall require the prior approval of either (1) the Board pursuant to the affirmative vote of a majority of Directors (including alternate directors for any absent Directors) present at a meeting of the Board where a quorum is present and acting throughout the time such vote is taken, which majority shall include at least one Apex Director and one Sumitomo Director, or (2) subject to Section 2.3(b), the General Shareholders Meeting pursuant to

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the affirmative vote of the holder or holders of more than 75% of Shares issued, outstanding, and entitled to vote thereon in attendance thereat, whether present in person or represented by a letter (carta poder) or a notarized power of attorney, where a quorum is present and acting throughout the time such vote is taken:

(i)unless pursuant to Section 3.5(b), any operating expenditure or series of related operating expenditures by MSC or any of its Subsidiaries in any calendar year, not otherwise included in the Program and Budget for that year (without giving effect to any amendment or modification of such Program and Budget made in accordance with Section 2.3(a)(iv)), that results in an increase in operating expenditures under such Program and Budget by more than 15% for that year;

(ii)unless pursuant to Section 3.5(b), any capital expenditure or series of related capital expenditures by MSC or any of its Subsidiaries in any calendar year, not otherwise included in the Program and Budget for that year (without giving effect to any amendment or modification of such Program and Budget made in accordance with Section 2.3(a)(iv)), that results in an increase in capital expenditures under such Program and Budget by more than 15% for that year;

(iii)any expenditure or series of expenditures relating to exploration by MSC or any of its Subsidiaries in any calendar year, not otherwise included in the Program and Budget for that year, in excess of US$1,000,000.00 in the aggregate;

(iv)from and after the Commercial Operations Date, the approval of (A) any Program and Budget proposed by MSC’s officers in accordance with Section 3.2 and (B) unless pursuant to Section 3.5(b), any amendment or modification to, or deviation (including a deviation otherwise permitted under any clause of this Section 2.3(a)) from, any Program and Budget for any calendar year that results in an increase in the aggregate operating and capital expenditures under the Program and Budget for that year by more than 15%;

(v)any incurrence by MSC or any of its Subsidiaries of Indebtedness in any calendar year in excess of 15% of the aggregate operating and capital expenditures under the Program and Budget for that year, other than Indebtedness incurred (A) pursuant to the Financing Documents, (B) to New Metals or Service Company in respect of amounts payable by MSC under the MSC Management Agreement or the New Concentrate Sales Agreement, (C) to any member of the Apex Control Group or Sumitomo Control Group pursuant to ARTICLE IV, (D) pursuant to the then applicable

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Program and Budget, (E) pursuant to the Apex Sweden MSC Subordinated Note and the New Sweden 1 MSC Subordinated Note, and (F) pursuant to the Mandatory Metals Hedge Agreements;

(vi)any request for, modification of the terms of, or prepayment (other than in accordance with dividend and distribution policies set forth in Section 7.7) of, Additional Funds from the Shareholders in the form of Shareholder Loans or Shareholder Capital Contributions, other than any request for Additional Funds (A) required to fund any expenditure under the then applicable Program and Budget, (B) in respect of any expenditure for which approval is not required or, if required, has been given under Section 2.3(a)(i), Section 2.3(a)(ii), Section 2.3(a)(iii), or Section 2.3(a)(iv), or (C) required to fund any expenditure permitted by Section 3.5;

(vii)any Sale or Pledge of all or part of MSC’s equity interests in any of its Subsidiaries, or any formation of any Subsidiary or the acquisition of any Person, which following such acquisition shall be a Subsidiary of MSC;

(viii)any lending of money, extending credit, or making advances to any Person by MSC or any of its Subsidiaries (each, a “Loan”), in each case other than (A) Loans for prepaid expenses, negotiable instruments held for collection, and lease, utility, workers compensation, performance, and other similar deposits and bonds made in the ordinary course of business, (B) Loans to employees, officers, and Directors made in the ordinary course of business, (C) Loans made to contractors or subcontractors in the ordinary course of business in connection with the construction of the Project, (D) accounts receivable and commercially reasonable advances to customers in the ordinary course of business and extensions of trade credit, (E) deposits at banks and other financial institutions and investments in cash equivalents, (F) one or more other Loans, all made in the ordinary course of business in connection with the operation of the Project and having an aggregate principal amount of less than US$10,000,000.00 at any time outstanding, and (G) Loans made pursuant to the then applicable Program and Budget;

(ix)any acquisition of any equity interest in any Entity, any acquisition of all or substantially all the assets of any Entity, or any entering into any partnership, or profit sharing agreement, or joint venture with any other Person, by MSC or any of its Subsidiaries;

(x)any Sale or Pledge, in one transaction or a series of related transactions, of an asset or assets of MSC or any of its Subsidiaries

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(except for equity interests in any Subsidiary of MSC) with a value in excess of US$10,000,000.00 in the aggregate in any calendar year, other than any Sale or Pledge required pursuant to the Financing Documents or in the ordinary course of business;

(xi)(A) any merger or consolidation of MSC or any of its Subsidiaries with or into any other Person or any merger or consolidation of any other Person with or into MSC or any of its Subsidiaries, or (B) any Sale, in one transaction or a series of related transactions, of all or substantially all of the business or assets of MSC or any of its Subsidiaries;

(xii)any Bankruptcy of MSC or any of its Subsidiaries;

(xiii)permanent cessation or suspension for more than 180 consecutive days of mining at, or the abandonment of, the Project;

(xiv)any modification of the dividend and other distribution policies set forth in Section 7.7 or any declaration or authorization of the payment by MSC of dividends and other distributions other than in accordance with Section 7.7;

(xv)any execution, delivery, or performance by MSC or any of its Subsidiaries of any Hedge Instrument (other than any Hedge Instrument that is a Mandatory Metals Hedge Agreement);

(xvi)except as may be required by applicable Law, any amendment of the Estatutos or any other Governing Documents of MSC or any of its Subsidiaries (including any amendment to increase or decrease the number of Directors);

(xvii)any making of any guaranty by, or any granting of any security interest on the property of, MSC or any of its Subsidiaries, other than (A) any guaranty or security interest in respect of any Indebtedness permitted by Section 2.3(a)(v), (B) any Pledge permitted by Section 2.3(a)(x), and (C) any guaranty or security interest required by any Material Project Document or any Contract entered into in accordance with Section 2.7(b)(iv);

(xviii)unless made pursuant to ARTICLE IV or ARTICLE VI and except as may be required by applicable Law, any change in the capital structure, or any increase or reduction of the authorized capital stock (or other Equity Interests), of MSC or any of its Subsidiaries, or reclassification of such stock (or other Equity Interests) including by changing the number, par value, preferences, or rights thereof, or creation of new classes of capital stock (or other Equity Interests) of MSC or any of its Subsidiaries, or any public offering

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of capital stock (or other Equity Interests) of MSC or any of its Subsidiaries;

(xix)any appointment or removal of the auditors of MSC or any of its Subsidiaries, unless such appointment is of one of the Big Four Auditing Firms or upon such removal one of the Big Four Auditing Firms will be appointed for the auditors so removed; and

(xx)any material change in the accounting policies or principles of MSC or any of its Subsidiaries, other than any change permitted under or required by GAAP.

(b)Notwithstanding anything to the contrary in Section 2.3(a), if a Significant Matter has been approved by the Board in accordance with Section 2.3(a), and the Estatutos or applicable Law requires that such Significant Matter also be approved by the General Shareholders Meeting, then as long as such General Shareholders Meeting is called for that purpose within 90 days from the date on which the Board approved the Significant Matter, (i) such Board approval shall be sufficient to satisfy the requirements of Section 2.3(a), (ii) holders of at least the number of Shares issued, outstanding, and entitled to vote, whether present in person or represented by a letter (carta poder) or a notarized power of attorney, set forth in Section 2.1(d)(i) or Section 2.1(d)(ii), as applicable, shall constitute a quorum for purposes of voting on such Significant Matter, (iii) in accordance with Section 2.1(e) and unless a higher voting percentage is required under Bolivian Law, such General Shareholders Meeting may approve such Significant Matter by the affirmative vote of the holder or holders of a majority of Shares issued, outstanding, and entitled to vote thereon, and (iv) at such General Shareholders Meeting, each Shareholder shall vote its Shares in favor of such Significant Matter.

(c)Notwithstanding anything to the contrary in Section 2.3(a), Section 2.3(b), Section 2.4, Section 2.5, or Section 2.7(b), if the aggregate Interest Ratio of either Shareholder Group ceases to constitute at least 25%, then immediately and thereafter until this Agreement is terminated:

(i)Section 2.3(a), Section 2.3(b), Section 2.4, Section 2.5, and Section 2.7(b), shall terminate and cease to have any force or effect; and

(ii)the Shareholders shall take all necessary action to amend the Estatutos accordingly.

Section 2.4Deadlock on Significant Matters.

(a)If, at each of two consecutive meetings of the Board (each, a “Deadlock Meeting”), the Apex Directors and the Sumitomo Director have opposing positions with respect to any Significant Matter, the Directors shall confer in good faith over the course of a period of 30 days following the date of the second Deadlock Meeting to resolve the matter and if, after such period, the matter on which there is disagreement has not been

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resolved by Board action pursuant to Section 2.3(a), a “deadlock” shall be deemed to exist.

(b)If at any time a deadlock is deemed to exist under Section 2.4(a) with respect to a Significant Matter (other than with respect to a Significant Matter enumerated in Section 2.3(a)(iv)), MSC shall not make or incur any act, expenditure, decision, or obligation in respect of such Significant Matter and the status quo as it existed prior to such deadlock shall be preserved until such time as the Directors or the Shareholders resolve such deadlock.

(c)If at any time a deadlock is deemed to exist with respect to a Significant Matter enumerated in Section 2.3(a)(iv), the provisions of Section 3.3 shall apply.

Section 2.5Management.  Any officers of MSC (including the president, vice president, general manager, chief financial officer, and secretary of MSC) appointed after the date hereof shall be appointed by the Board from one or more candidates nominated by Apex, subject to the approval of the Sumitomo Director, such approval not to be unreasonably withheld.  For the avoidance of doubt, no officer of MSC on the date hereof shall have to be reappointed under this Section 2.5 to continue as an officer of MSC.  Subject to any agreements between MSC and its officers, and subject to applicable provisions of Bolivian labor Laws, the Board shall be entitled to terminate any of MSC’s officers, at any time with or without cause.  The officers shall be responsible for implementing the decisions of the Shareholders and the Board and for conducting the business and affairs of MSC, subject to the terms of this Agreement and the policies and limitations established by, and the supervision of, the Shareholders and the Board.

Section 2.6Indemnification of Directors, Officers, and Sindicos.

(a)MSC shall indemnify and hold harmless, to the maximum extent permitted by applicable Law, any Person who was or is a party or is threatened to be made a party to, from and against, any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative (other than an action by or in the right of MSC) by reason of the fact that the Person is or was a Director or officer of MSC, or is or was serving at the request of MSC as a director or officer of another Person, against expenses (including reasonable attorneys’ fees), judgments, fines, and amounts paid in settlement actually and reasonably incurred by the individual in connection with such action, suit, or proceeding if the individual acted lawfully and in good faith and in a manner the individual reasonably believed to be in or not opposed to the best interests of MSC, and, with respect to any criminal action or proceeding, had no reasonable cause to believe the individual’s conduct was unlawful.

(b)MSC shall indemnify each Sindico and hold each Sindico harmless, to the maximum extent permitted by applicable Law, from and against all claims, causes of action, liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses, fees, Taxes, and other liabilities, including reasonable attorneys’ fees (whether incurred at trial, at an appellate level, or without litigation) by whomsoever brought or caused, including any and all of the shareholders, past, present, or future, of MSC, or any

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Person related to MSC, which may at any time or times be imposed upon, incurred by or asserted against such Sindico, in any way arising under or relating to such Sindico’s appointment as Sindico (including any claim, action, and the like based on an allegation of improper domicile at the time of such Sindico’s appointment or during the exercise of such Sindico’s functions) or any resolutions, actions, lack of actions, or any other performance or non performance by such Sindico as a result of such Sindico’s said condition, except to the extent of such Sindico’s gross negligence or willful misconduct.  MSC, in its own name and that of any of its parent companies, branches, Subsidiaries, Affiliates, Controlled or related Entities of any kind, hereby expressly waives and releases each Sindico from any and all claims and causes of action whatsoever that MSC may at any time or times have against such Sindico.

Section 2.7Finance and Operating Committee.

(a)Establishment; Appointment and Removal of Members; Finance and Operating Committee Chairman.  The Shareholders hereby establish a Finance and Operating Committee (the “Finance and Operating Committee”).  The Finance and Operating Committee shall consist of one or more members (and one or more alternate members therefor) appointed and removed by the Apex Shareholders (each, an “Apex Member”) and one or more members (and one or more alternate members therefor) appointed and removed by the Sumitomo Shareholders (each, a “Sumitomo Member”).  The chairman of the Finance and Operating Committee (the “Finance and Operating Committee Chairman”) shall be appointed and removed by the Shareholder Group that has an aggregate Interest Ratio in excess of 50% (or by the Shareholder Group having the largest aggregate Interest Ratio, if no Shareholder Group has an aggregate Interest Ratio in excess of 50%) from among the members of the Finance and Operating Committee.  Subject to the limitations contained in Section 2.7(e), the term and duties of the Finance and Operating Committee Chairman shall be as determined by the Finance and Operating Committee.

(b)Significant Operational Matters.  To the fullest extent permitted by applicable Law and notwithstanding anything to the contrary in the Estatutos or any other Governing Document of MSC or any of its Subsidiaries, except as provided in Section 2.3(a), Section 2.3(b), Section 2.3(c), Section 2.4, Section 3.3, and Section 3.5, the following acts, expenditures, decisions, and obligations made or incurred by or on behalf of MSC or any of its Subsidiaries (each, a “Significant Operational Matter”) shall require the prior approval of at least one Apex Member and one Sumitomo Member in a writing or other instrument designated as such:

(i)(A) any termination of any Material Project Document to which it is a party, any amendments thereto, or any waiver of any of its rights thereunder, except in the ordinary course of business; (B) any termination of any Financing Document to which it is a party, any material amendments thereto, or any waiver of any of its material rights thereunder; and (C) any voluntary prepayment of any Indebtedness incurred by MSC or its Subsidiaries pursuant to

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the Financing Documents or otherwise in an amount exceeding US$10,000,000.00, the refinancing of any such Indebtedness, or any replacement or restatement of any such document, agreement, or instrument evidencing such Indebtedness;

(ii)any exercise or waiver of any “Buy-Out Rights” under the Transmission Line Agreement;

(iii)(A) any determination to commence legal action with respect to any litigation or arbitration matter or claim (collectively, a “Claim”) that exceeds or is reasonably likely to exceed US$10,000,000.00, or (B) any settlement of a Claim, which settlement (1) exceeds or is reasonably likely to exceed US$10,000,000.00, (2) involves any acknowledgement by MSC or any of its Subsidiaries of criminal misconduct or criminal negligence, or (3) involves any injunctive relief, in each case of clause (A) and (B) of this Section 2.7(b)(iii), except for any legal action or settlement required to comply with Law or any legal action or any settlement of any Claim in response to or as a result of an emergency;

(iv)any entering into any material Contract or any amendment, termination, or waiver of any of its material rights under any such Contract, (A) which Contract involves expenditures that are not contemplated by the then applicable Program and Budget or permitted by Section 2.3(a)(i), Section 2.3(a)(ii), Section 2.3(a)(iii), Section 2.3(a)(iv), Section 2.3(a)(v), or Section 3.5(b); (B) which Contract effects an amendment, termination, or waiver that is not permitted under Section 2.7(b)(i); (C) which amendment, termination, or waiver is not permitted under Section 2.7(b)(i); or (D) which Contract, amendment, or waiver is not permitted under Section 2.7(b)(v);

(v)any entering into, amendment of, or waiver of any of its rights under, any Contract between MSC or any of its Subsidiaries, on the one hand, and any Shareholder or any Affiliate or Subsidiary of any Shareholder (other than MSC, New Metals, New Cayman, and their respective Subsidiaries), on the other hand, (A) involving an expenditure or the incurrence of a liability by MSC or any of its Subsidiaries exceeding US$1,000,000.00 in any one year or that are not contemplated by the then applicable Program and Budget or (B) not on arm’s length terms; and

(vi)any change, replacement, or termination of Service Company pursuant to, or any amendment, termination, or waiver of, the MSC Management Agreement.

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(c)Meetings.  Regular meetings of the Finance and Operating Committee shall be held at least once every calendar quarter, at such times and places as all the members of the Finance and Operating Committee determine or the Finance and Operating Committee Chairman determines if such members cannot agree; provided, however, that no meeting of the Finance and Operating Committee that is held in person shall be held in a place other than a location reasonably convenient to all the members of such committee in any of Denver, Colorado, U.S.A., New York, New York, U.S.A., and La Paz, Bolivia, unless at least one of each of the Apex Member(s) and the Sumitomo Member(s) shall have agreed in advance to the holding of such meeting in such other place.  Special meetings of the Finance and Operating Committee may be called by the Finance and Operating Committee Chairman on his or her own initiative or by any two members of the Finance and Operating Committee.  Reasonable notice shall be given by facsimile or email or telephone prior to the date such meeting is to be held.  Members of the Finance and Operating Committee and alternate members may participate in the Finance and Operating Committee’s meetings through telephone conference calls, videoconferences, or any other technological means available.  The Finance and Operating Committee Chairman shall cause minutes of such meetings to be recorded and entered into the records of MSC.

(d)Compensation.  All members of the Finance and Operating Committee and alternate members shall serve without remuneration by MSC, but shall be reimbursed by MSC for all reasonable out-of-pocket, travel, lodging, food, and incidental expenses incurred thereby in connection with their attendance at any Finance and Operating Committee meetings.

(e)Scope and Function.  The Finance and Operating Committee shall serve an informational and advisory function, and as such, shall have no power or authority to bind MSC or act on its behalf insofar as third parties are concerned.  Notwithstanding anything to the contrary in this ARTICLE II, if a Significant Operational Matter has been approved in writing by at least two members of the Finance and Operating Committee in accordance with Section 2.7(b), and the Estatutos or applicable Law requires that such Significant Operational Matter also be approved by the General Shareholders Meeting or the Board, then each Shareholder shall vote its Shares or, as applicable, cause any Director it nominated to vote, in favor of such Significant Operational Matter.

ARTICLE III
PROGRAM AND BUDGETS

Section 3.1Initial Program and Budget.  The Development Plan is the initial Program and Budget and has been approved by the Board (as constituted prior to the date hereof).  The initial Program and Budget may be amended, modified, and revised from time to time subject to approval by the Board, including, if then required, approval by the Board in accordance with Section 2.3(a)(iv).

Section 3.2Annual Program and Budget.  For each calendar year beginning from and after the calendar year in which the Commercial Operations Date falls, at least 60 days prior to the end of that year, a Program and Budget shall be prepared by MSC’s management, as directed

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by the Board.  Unless directed otherwise by the Board, each such proposed Program and Budget shall cover a five-year period, with the part of the Program and Budget related to the first year being substantially in the form and having substantially the same degree of detail as the Development Plan, with such changes as MSC’s management determines are then appropriate considering the stage of operation and development of the Project.  Once prepared, such proposed Program and Budget shall be delivered to each of the Directors, and the Chairman shall call a regular or special meeting of the Board in accordance with Section 2.2(e) to review, discuss, and vote on such proposed Program and Budget, which meeting shall in no event be held earlier than 15 days after the delivery of such proposed Program and Budget to the Sumitomo Director(s), if any.  During the time between the delivery of such proposed Program and Budget to the Sumitomo Director(s), if any, and the meeting of the Board referred to in the preceding sentence, (a) at the request of any Director, the Board shall hold an informal meeting (either in person or by conference telephone) to discuss such proposed Program and Budget, and (b) MSC’s management shall seek to develop revisions or clarifications to such proposed Program and Budget reflecting all reasonable requests, if any, of any Director with respect to such proposed Program and Budget.  For the avoidance of doubt, unless the Parties agree otherwise, the approval of such Program and Budget required under Section 2.3(a)(iv) shall be in respect of the first calendar year of the five-year period covered by the proposed Program and Budget.

Section 3.3Deadlock on Proposed Program and Budgets.

(a)If the Board fails to approve a proposed Program and Budget, including a Program and Budget required to be approved by the Board in accordance with Section 2.3(a)(iv), by the beginning of the period to which such proposed Program and Budget applies or if a deadlock is deemed to exist under Section 2.4(a) with respect to a Significant Matter enumerated in Section 2.3(a)(iv), subject to the contrary direction of the Board, including, if then required, such direction approved by the Board in accordance with Section 2.3(a)(iv), and to the receipt of necessary funds, MSC shall continue operations at levels comparable with the last adopted Program and Budget.  For purposes of determining the required contributions of the Shareholders, the last adopted Program and Budget shall be deemed extended.

(b)If at any time a deadlock is deemed to exist under Section 2.4(a) with respect to a Significant Matter enumerated in Section 2.3(a)(iv) (but only to the extent that such Section 2.3(a)(iv) deadlock has continued with respect to the approval of any proposed Program and Budget for at least 180 days after the beginning of the period to which such proposed Program and Budget applies), then either the Apex Shareholders or the Sumitomo Shareholders, which ever constitutes the Majority Shareholder Group, as determined on the date the Deadlock Notice is delivered hereunder, shall have the right to declare such matter deadlocked by delivering a written notice declaring such matter deadlocked (a “Deadlock Notice”) to either the Sumitomo Shareholders or the Apex Shareholders, whichever does not constitute the Majority Shareholder Group as of such date of determination, and, thereafter and notwithstanding anything to the contrary in this Agreement, the approval of such proposed Program and Budget shall require the affirmative vote of a majority of Directors (or an alternate director for any absent

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Director) present at a meeting of the Board where a quorum of a majority of Directors (or alternate director for any absent Director) is present and acting throughout the time such vote is taken.  If after a Deadlock Notice is delivered, such proposed Program and Budget or any subsequent Program and Budget is approved in accordance with Section 2.3(a)(iv), the deadlock under Section 2.4(a) with respect to a Significant Matter enumerated in Section 2.3(a)(iv) shall no longer be deemed to exist.

Section 3.4Put Right.

(a)Conditions to Exercise; Exercise Period.  If (i) the Apex Shareholders shall have delivered a Deadlock Notice to the Sumitomo Shareholders pursuant to Section 3.3(b) with respect to a proposed Program and Budget for any calendar year, (ii) such proposed Program and Budget shall have been approved by the affirmative vote of a majority of Directors (or an alternate director for any absent Director), which majority shall not have included a Sumitomo Director (or an alternate director therefor), and (iii) the aggregate Interest Ratio of the members of Sumitomo Control Group that are Sumitomo Interestholders shall be less than 25% solely as a result of the members of the Sumitomo Control Group that are Sumitomo Interestholders not contributing their proportionate share of Additional Post-Commercial Operations Funds under ARTICLE IV pursuant to such proposed Program and Budget or any other Program and Budget in respect of which a Deadlock Notice has been delivered by the Apex Shareholders to the Sumitomo Shareholders (and not as a result of any Sale of Interests or Sumitomo Indirect Interests), then beginning on the date on which all the conditions specified in clauses (i) through (iii) of this Section 3.4(a) shall have been satisfied and ending on the date 180 days thereafter (the “Exercise Period”), the members of the Sumitomo Control Group that are Sumitomo Interestholders shall have the right (the “Put Right”) on no more than one occasion to Sell all, but not less than all, of their Interests, their or their Affiliates’, New Metals Interests and New Cayman Interests and their or their Affiliates’ right, title, and interest in the Transmission Line Loan Documents and in all Defaulting Shareholder Loans made to any Apex Shareholder (collectively, the “Put Interests”) to the Apex Shareholders for a purchase price equal to the Put Price on the terms and conditions of this Section 3.4.  The members of the Sumitomo Control Group that are Sumitomo Interestholders may exercise the Put Right by delivering a notice (the “Put Notice”) to the Apex Shareholders during the Exercise Period stating the desire of the members of the Sumitomo Control Group that are Sumitomo Interestholders to Sell all, but not less than all, of the Put Interests to the Apex Shareholders for a purchase price equal to the Put Price on the terms and conditions of this Section 3.4.

(b)Put Price.  For purposes of this Agreement, “Put Price” means the product of (i) US$224,000,000.00 times (ii) a fraction, the numerator of which is December 31, 2005 Reserves minus Tonnes Processed, and the denominator of which is December 31, 2005 Reserves.  For purposes of this Agreement, “December 31, 2005 Reserves” means 231,000,000 tonnes of ore, and “Tonnes Processed” means the aggregate tonnes of ore mined, crushed, and milled or otherwise processed by MSC from after the date hereof to and including the date immediately prior to the Put Closing Date.

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(c)           Put Closing.  The closing (the “Put Closing”) of the purchase and sale of the Put Interests pursuant to this Section 3.4 shall occur at such time and place as the Apex Shareholders and the members of the Sumitomo Control Group that are Sumitomo Interestholders agree or, if such time and place have not otherwise been agreed by them, at the offices of Service Company at 10:00 a.m., local time, on the date that is 180 days after the Put Notice shall have been delivered to the Apex Shareholders (subject to delays reasonably beyond the control of the members of the Sumitomo Control Group that are Sumitomo Interestholders and the Apex Shareholders in obtaining necessary approvals and consents of Governmental Authorities and any other Person).  The Parties shall cooperate in good faith with respect to all actions necessary to effect the Put Closing, including the execution of all reasonably requested documentation and the making, delivery, and obtaining of all necessary approvals and consents of Governmental Authorities and any other Person.  At the Put Closing, the Apex Shareholders shall pay to the members of the Sumitomo Control Group that are Sumitomo Interestholders the Put Price by wire transfer of immediately available Dollar funds to such account or accounts designated by the members of the Sumitomo Control Group that are Sumitomo Interestholders prior to the Put Closing against the Sale to the Apex Shareholders of all the right, title, and interest of the members of the Sumitomo Control Group that are Sumitomo Interestholders or their Affiliates, as applicable, in and to the Put Interests, free and clear of all Liens and Restrictions (as defined in the Purchase and Sale Agreement), other than (i) Liens imposed by applicable Law or created by this Agreement or the documentation executed and delivered in connection with the Put Closing, (ii) Liens arising pursuant to the Governing Documents of MSC and New Metals, and (iii) Liens arising pursuant to any secured financing consummated by MSC or any of its Subsidiaries.

(d)           Termination of Put Right.  Notwithstanding anything to the contrary under this Agreement, if a Sale of Interests to which Section 5.2(e) applies has occurred and such Sale would result in references to “Sumitomo” in this Agreement being deemed to be to another Person pursuant to Section 5.2(e)(i)(B), then immediately upon the consummation of such Sale this Section 3.4 shall terminate and cease to have any force or effect.

Section 3.5             Overruns; Emergencies.

(a)           The appropriate officers of MSC shall notify the Directors promptly of any proposed material departure from the Program and Budget and of any emergency of the type set forth in Section 3.5(b).

(b)           Notwithstanding anything to the contrary under this Agreement including Section 2.3(a), in case of emergency or to comply with applicable Law,  MSC and any of its Subsidiaries may take any reasonable action and make expenditures its or their respective officers reasonably deem necessary to protect life, limb, or property, or to protect and maintain the business and assets of MSC and any of its Subsidiaries from imminent material economic loss.

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Section 3.6             Termination of Certain ARTICLE III Rights.  Notwithstanding anything to the contrary in Section 3.2 or Section 3.3, if the aggregate Interest Ratio of the Sumitomo Shareholders ceases to be at least 25%, then immediately and thereafter until the termination of this Agreement:

(a)           except with respect to the exercise of the Put Right, Section 3.2 and Section 3.3 shall terminate and cease to have any force or effect;

(b)           the Shareholders shall take all necessary action to amend the Estatutos accordingly.

ARTICLE IV
FINANCING OF MSC

Section 4.1             No Obligation.  No Shareholder shall have any obligation to make any capital contribution, loan, or provide credit support to MSC or any of its Subsidiaries except as provided in this Agreement and the Financing Documents.

Section 4.2             Funding for the Project through the Commercial Operations Date.

(a)           Deemed Funding.  The total Project investment through the Commercial Operations Date is estimated as of the date hereof to be US$640,000,000.00 (“Total Project Investment”) as set forth on Schedule A.  As of the date hereof, the Apex Shareholders have funded and are deemed to have funded 65% of Total Project Investment and the Sumitomo Shareholders are deemed to have funded 35% of Total Project Investment.

(b)           Third-Party Debt Financing; Additional Pre-Commercial Operations Funds.  If, prior to the Commercial Operations Date, the Board determines that additional funds in excess of the Financial Resources are required for MSC to meet its operating expenses or its capital expenditure requirements or to carry out any other activities or implement any decision approved by the Board to achieve Commercial Operations (in the aggregate, the “Additional Pre-Commercial Operations Funds”), MSC first shall use commercially reasonable efforts to attempt to obtain such Additional Pre-Commercial Operations Funds through debt financing from third parties without recourse to the Shareholders.  If the Board determines that such third-party debt financing is not available on commercially reasonable terms or not in the best interests of MSC and its Subsidiaries or such financing shall not fully provide such Additional Pre-Commercial Operations Funds, then the Board may request Additional Pre-Commercial Operations Funds from each Shareholder Group in the form of loans pursuant to Section 4.4(a).  If the Board determines that such third-party debt financing and such loans are not available on commercially reasonable terms or not in the best interests of MSC and its Subsidiaries or such financing and loans shall not fully provide such Additional Pre-Commercial Operations Funds, then the Board may request Additional Pre-Commercial Operations Funds from each Shareholder Group in the form of contributions to the capital of MSC pursuant to Section 4.4(b).  In connection with any such request, and as directed by the

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Board, MSC shall deliver a notice (the “Pre-Commercial Operations Contribution Notice”) to the Apex Shareholders and the Sumitomo Shareholders.

(c)           Required Additional Pre-Commercial Operations Contributions.  The Apex Shareholders and the Sumitomo Shareholders agree among themselves and not for the benefit of any other Person, including MSC, any creditor of MSC, or any other shareholder of MSC, that if the Board requests Additional Pre-Commercial Operations Funds from each Shareholder Group pursuant to Section 4.2(b), each Shareholder Group shall contribute its respective share of such funds, which shall be in proportion to its respective Interest Ratio, in each case determined as of the date immediately prior to the date MSC delivers the Pre-Commercial Operations Contribution Notice.  Such contributions, if any, shall be made in accordance with Section 4.4.

(d)           Draws on Sumitomo Completion Agreement.  If Sumitomo makes any payment under Section 2.02(a) of the Sumitomo Completion Agreement, notwithstanding anything in this Agreement to contrary, the Sumitomo Shareholders shall have the right to have such amount treated as a capital contribution to MSC upon notice from the Sumitomo Shareholders to the Apex Shareholders and MSC.  Upon such notice, (i) the amount so paid by Sumitomo shall be deemed a contribution by the Sumitomo Shareholders to the capital of MSC, (ii) the “CSA Penalty Subscription Price” per Share shall be an amount equal to the Implied Equity of MSC determined in accordance with Section 4.4(a)(v) divided by the product of two times the number of issued and outstanding Shares immediately prior to the making of such payment by Sumitomo, (iii) MSC shall issue to the Sumitomo Shareholders a number of fully paid and nonassessable Shares equal to the amount so paid by Sumitomo divided by the CSA Penalty Subscription Price per Share, and (iv) the Shareholders (A) shall vote their Shares to approve any capital increase necessary to permit the issuance of such newly issued Shares; (B) take all necessary and appropriate actions to cause MSC to adopt any decisions and take any actions that may be necessary to permit such issuance, including an amendment of the Estatutos; and (C) waive any Preemptive Rights they may have in connection therewith.  MSC shall not issue fractional interests in Shares under this Section 4.2(d).  If the Sumitomo Shareholders would otherwise be entitled to a fractional share interest, MSC shall pay cash in lieu of such fractional share interest.  The amount of cash in lieu to be paid shall be determined by multiplying (A) the CSA Penalty Subscription Price applied in making such conversion by (B) such fractional share interest, and rounding the product to the nearest whole cent (centavo), with one-half cent (centavo) being rounded upward.

Section 4.3             Post-Commercial Operations Funding.

(a)           Third-Party Debt Financing; Additional Post-Commercial Operations Funds.  If, after the Commercial Operations Date, the Board determines that additional funds are necessary for MSC to meet its operating expenses or its capital requirements, or to carry out any other activities or implement any decision approved by the Board (in the aggregate, the “Additional Post-Commercial Operations Funds”), MSC first shall use commercially reasonable efforts to attempt to obtain such Additional Funds through debt

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financing from third parties without recourse to the Shareholders.  If the Board determines that such third-party debt financing is not available on commercially reasonable terms or not in the best interests of MSC and its Subsidiaries or such financing shall not fully provide such Additional Post-Commercial Operations Funds, then the Board may request Additional Post-Commercial Operations Funds from each Shareholder Group in the form of loans pursuant to Section 4.4(a).  If the Board determines that such third-party debt financing and such loans are not available on commercially reasonable terms or not in the best interests of MSC and its Subsidiaries or such financing and loans shall not fully provide such Additional Post-Commercial Operations Funds, then the Board may request Additional Post-Commercial Operations Funds from each Shareholder Group in the form of contributions to capital of MSC pursuant to Section 4.4(b).  In connection with any such request, and as directed by the Board, MSC shall deliver a notice (the “Post-Commercial Operations Contribution Notice”) to the Apex Shareholders and the Sumitomo Shareholders.

(b)           Optional Post-Commercial Operations Contributions.  If the Board requests Additional Post-Commercial Operations Funds from each Shareholder Group pursuant to Section 4.3(a), each Shareholder Group may (but shall not be obligated to) contribute its respective share of such funds, which shall be in proportion to its respective Interest Ratio, in each case determined as of the date immediately prior to the date MSC delivers the Post-Commercial Operations Contribution Notice.  Such contributions, if any, shall be made in accordance with Section 4.4.

Section 4.4             Additional Funding Mechanics.  Additional Pre-Commercial Operations Funds and Additional Post-Commercial Operations Funds, if any, to be contributed by each Shareholder Group shall be made in conformance with the following general principles.

(a)           Shareholder Loans.

(i)Notices; Terms.  In respect of any Pre-Commercial Operations Contribution Notice delivered by MSC pursuant to Section 4.2(b) or any Post-Commercial Operations Contribution Notice delivered by MSC pursuant to Section 4.3(a), as applicable (a “Shareholder Loan Notice”), pursuant to which MSC is requesting Additional Pre-Commercial Operations Funds or Additional Post-Commercial Operations Funds, as applicable (the “Additional Funds”) from each Shareholder Group in the form of loans (the “Shareholder Loans”), such Shareholder Loan Notice shall include all relevant terms relating to such Shareholder Loans, including (A) the date or dates on which MSC wishes the Shareholder Loans to be advanced, (B) the aggregate principal amount of the Shareholder Loans requested, (C) the principal amount of the Shareholder Loans requested from each Shareholder Group, which shall be in proportion to its respective Interest Ratio, in each case determined as of the date immediately prior to the date MSC delivers the Shareholder Loan Notice, (D) the obligor or obligors in respect of

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such Shareholder Loans, and (E) the terms and conditions of such Shareholder Loans, which terms and conditions shall be identical for each Shareholder Group (varying only to reflect the varying principal amounts requested from each Shareholder Group). Such Shareholder Loans shall: (1) bear interest at a fixed or variable market rate of interest determined by the Board in good faith based on the tenor and currency of the Shareholder Loans and other factors the Board determines relevant; (2) be unsecured and subordinated to all senior secured third-party debt, if and in the manner (including by way of pledge) required by the lenders of such third-party debt; (3) be subject to prepayment at any time at MSC’s option without premium or penalty; (4) be subject to the restrictions on Sale or Pledge and other applicable terms and conditions of this Agreement, which fact shall be reflected in all instruments or other documents representing such Shareholder Loans, if any; (5) so long as the Financing Documents (or any replacement therefor) shall be in effect, no event of default shall occur under the Shareholder Loans in the event MSC fails to pay principal or interest thereunder, and the only events of default under the Shareholder Loans shall be those of the type set forth in Section 6 of the Defaulting MSC Loan (or any replacement therefor); (6) have a term of 10 years unless otherwise agreed by all Shareholders; and (7) include such other terms and conditions as the Board may approve, taking into consideration the requirements of any third-party debt of MSC and its Subsidiaries, cash flow requirements, and other factors the Board determines relevant.

(ii)Responses to Shareholder Loan Notices.

(A)With respect to a Shareholder Loan Notice delivered pursuant to Section 4.2(b), each Shareholder Group shall deliver the Additional Funds required thereby in the manner and in accordance with the time period set forth in such Shareholder Loan Notice.

(B)With respect to a Shareholder Loan Notice delivered pursuant to Section 4.3(a), in accordance with the time period for responding set forth in such Shareholder Loan Notices, each Shareholder Group shall deliver to MSC a written response notice (a “Shareholder Loan Response Notice”) indicating whether such Shareholder Group is willing to loan such Additional Funds to MSC on the terms and conditions described in such Shareholder Loan Notice.

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(iii)Supplemental Loans.  If (A) MSC requests Shareholder Loans pursuant to Section 4.3(a) and the Apex Shareholders or the Sumitomo Shareholders either fail to deliver a Shareholder Loan Response Notice or deliver a Shareholder Loan Response Notice indicating that they shall not loan the entire amount requested of them in the applicable Shareholder Loan Notice, or, (B) if MSC requests Shareholder Loans pursuant to Section 4.2(b) or MSC requests Shareholder Loans pursuant to Section 4.3(a) and the Apex Shareholders or the Sumitomo Shareholders fail to advance the entire amount required or requested of them on the date set by MSC for such advance (in any such case, the “Non-Lending Shareholder Group”), then MSC shall promptly notify (a “Non-Lending Shareholder Notice”) the Apex Shareholders and the Sumitomo Shareholders of same.  The “Qualified Shareholder Group” shall be, (A) in the case of a Shareholder Loan Notice delivered pursuant to Section 4.3(a), if the date set forth by MSC for such advance has not occurred, the Shareholder Group that delivered a Shareholder Loan Response Notice indicating that it would loan the entire amount requested of it in the applicable Shareholder Loan Notice and, (B) in the case of a Shareholder Loan Notice delivered pursuant to either Section 4.2(b) or Section 4.3(a), if the date set forth by MSC for such advance has occurred, the Shareholder Group that has advanced the entire amount required or requested of it.  Upon receipt of a Non-Lending Shareholder Notice, the Qualified Shareholder Group shall notify MSC (within 10 days of receipt thereof) of its election of one of the following options:

(A)such Qualified Shareholder Group intends to loan to MSC an amount equal to the amount of the advance required or requested of it plus all, but not less than all, of the amount of the advance required or requested of the Non-Lending Shareholder Group; or

(B)such Qualified Shareholder Group has elected not to advance the amount required or requested of it under the applicable Shareholder Loan Notice; or

(C)such Qualified Shareholder Group has elected to propose an alternative funding requirement to the program or budget item underlying the applicable Shareholder Loan Notice (a “Loan Alternative Funding”).

In the event the Qualified Shareholder Group elects to propose a Loan Alternative Funding, the Qualified Shareholder Group shall deliver a written description of such alternative to MSC and the

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Shareholders and MSC shall deliver an alternative Shareholder Loan Notice to the Shareholders with respect thereto (the “Alternative Shareholder Loan Notice”); provided, that, any Alternative Shareholder Loan Notice shall include all relevant terms relating to the Loan Alternative Funding and shall otherwise be consistent with clauses (A) through (E) and clauses (1) through (7) of Section 4.4(a)(i), mutatis mutandis.  The Non-Lending Shareholder Group shall have five Business Days from receipt of the Alternative Shareholder Loan Notice to notify MSC and the Qualified Shareholder Group whether such Non-Lending Shareholder Group intends to either loan to MSC the entire amount requested of it pursuant to the Alternative Shareholder Loan Notice or elects not to fund such requested loan amount.  If the Non-Lending Shareholder Group elects to make such loan, then the Non-Lending Shareholder Group and the Qualified Shareholder Group shall deliver the Additional Funds in the manner and in accordance with the time period set forth in such Alternative Shareholder Loan Notice.  If the Non-Lending Shareholder Group elects not to fund the requested amount under the Alternative Shareholder Loan Notice or otherwise fails to deliver the Additional Funds in the manner and in accordance with the time period set forth in the Alternative Shareholder Loan Notice, then the Qualified Shareholder Group may elect to either (A) loan to MSC an amount equal to the amount of the advance requested of it under either (1) the original Shareholder Loan Notice plus all, but not less than all, of the amount of the advance requested of the Non-Lending Shareholder Group thereunder or (2) the Alternative Shareholder Loan Notice plus all, but not less than all, of the amount of the advance requested of the Non-Lending Shareholder Group thereunder, or (B) not to advance any amount requested of it under either shareholder notice.  Any amount loaned by the Qualified Shareholder Group in the stead of the Non-Lending Shareholder Group in accordance with this Section 4.4(a)(iii) shall be a “Supplemental Loan.”  The Supplemental Loan together with the Shareholder Loan that such Supplemental Loan supplements shall be a “Consolidated Loan.”

(iv)Contribution of Consolidated Loans.  The Qualified Shareholder Group that makes Supplemental Loans pursuant to and in accordance with Section 4.4(a)(iii) in connection with a Shareholder Loan Notice delivered pursuant to Section 4.3(a) may, at its option and at any time, in the name and on behalf of the members of such Qualified Shareholder Group, contribute to MSC’s capital all or part of the outstanding principal amount of, and accrued and unpaid interest on, the applicable Consolidated Loan against the issuance to members of such Qualified

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Shareholder Group of a number of fully paid and nonassessable Shares determined by dividing the sum of the principal amount and the amount of accrued and unpaid interest being contributed by a price per Share equal to the Conversion Price determined pursuant to Section 4.4(a)(v).  The Qualified Shareholder Group that makes Supplemental Loans pursuant to and in accordance with Section 4.4(a)(iii) in connection with a Shareholder Loan Notice delivered pursuant to Section 4.2(b) may, at its option and at any time, in the name and on behalf of the members of such Qualified Shareholder Group, contribute to MSC’s capital all or part of the outstanding principal amount of, and accrued and unpaid interest on, the applicable Consolidated Loan against the issuance to the members of such Qualified Shareholder Group of, a number of fully paid and nonassessable Shares determined by dividing (w) the product of two times the sum of the principal amount and the amount of accrued and unpaid interest being contributed by (x) a price per Share equal to the Conversion Price determined pursuant to Section 4.4(a)(v).  The Qualified Shareholder Group desiring to exercise its contribution right (y) shall deliver to MSC a written notice (a “Consolidated Loan Contribution Notice”) indicating the Consolidated Loan to be contributed and (z) shall follow the requirements for doing so set forth in the terms and conditions of such Supplemental Loan.  The date on which the Qualified Shareholder Group has delivered a Consolidated Loan Contribution Notice and satisfied all such requirements for contribution is referred to as the “Conversion Date” for that contribution.  The Shareholders (A) shall vote their Shares to (1) approve any capital increase necessary to permit the contribution in full of such Consolidated Loan, (2) set the maximum term permitted by Law for the subscription of the Shares (“New Shares”) to be issued upon such contribution, (3) authorize any New Shares to be paid through the contribution to capital of such Consolidated Loan, and (4) consent to the payment for New Shares in kind with such Consolidated Loan, valued in each case at the amount of the outstanding principal amount of, and accrued and unpaid interest on, such Consolidated Loan, without an expert appraisal thereof; (B) take all necessary and appropriate actions to cause MSC to adopt any decisions and take any actions that may be necessary to permit such contribution, including an amendment of the Estatutos; and (C) waive any Preemptive Rights they may have in connection therewith.

(v)Conversion Price.  For purposes of the contribution of Consolidated Loans on the Conversion Date therefor, the “Conversion Price” shall equal the Implied Equity of MSC divided by the total number of issued and outstanding Shares immediately

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prior to such contribution.  “Implied Equity of MSC” means the sum of (A) Total Project Investment plus (B) the total of all actual capital contributions made to MSC by all Shareholders and other members of either Control Group from and after the date hereof to and including the time immediately prior to such contribution.

(vi)No Fractional Shares.  MSC shall not issue fractional interests in Shares upon contribution of any Consolidated Loan or in respect of any Shareholder Capital Contribution.  To the extent the Qualified Shareholder Group, or, in the case of Section 4.4(b), the Qualified Contributor Group, would otherwise be entitled to a fractional share interest, MSC shall pay cash in lieu of such fractional share interest.  The amount of cash in lieu to be paid shall be determined by multiplying (A) the Conversion Price applied in making such conversion by (B) such fractional share interest, and rounding the product to the nearest whole cent (centavo), with one-half cent (centavo) being rounded upward.

(b)           Capital Contributions.

(i)Board Determination; Notices; Terms.  In respect of any Pre-Commercial Operations Contribution Notice delivered by MSC pursuant to Section 4.2(b) or any Post-Commercial Operations Contribution Notice delivered by MSC pursuant to Section 4.3(a), as applicable (a “Shareholder Capital Contribution Notice”), pursuant to which MSC is requesting the Additional Funds from each Shareholder Group in the form of contributions to the capital of MSC (“Shareholder Capital Contributions”), such Shareholder Capital Contribution Notice shall include all relevant terms relating to such Shareholder Capital Contributions, including (A) the date or dates on which MSC wishes the Shareholder Capital Contributions to be made, (B) the aggregate amount of the Shareholder Capital Contributions requested, (C) the amount of the Shareholder Capital Contributions requested from each Shareholder Group, which shall be in proportion to its respective Interest Ratio, in each case determined as of the date immediately prior to the date MSC delivers the Shareholder Capital Contribution Notice, and (D) the terms and conditions of such Shareholder Capital Contributions, which terms and conditions shall be identical for each of the Shareholder Groups (varying only to reflect the varying amounts requested from each Shareholder Group).

(ii)Responses to Shareholder Capital Contribution Notices.

(A)With respect to a Shareholder Capital Contribution Notice delivered pursuant to Section 4.2(b), each Shareholder

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Group shall deliver the Shareholder Capital Contribution required thereby in the manner and in accordance with the time period set forth in such Shareholder Capital Contribution Notice.

(B)With respect to a Shareholder Capital Contribution Notice delivered pursuant to Section 4.3(a), in accordance with the time period for responding set forth in such Shareholder Capital Contribution Notices, each Shareholder Group shall deliver to MSC a written response notice (a “Shareholder Capital Contribution Response Notice”) indicating whether such Shareholder Group is willing to contribute such Additional Funds to MSC on the terms and conditions described in such Shareholder Capital Contribution Notice.

(iii)Supplemental Capital Contributions.  If (A) MSC requests Shareholder Capital Contributions pursuant to Section 4.3(a) and the Apex Shareholders or the Sumitomo Shareholders either fail to deliver a Shareholder Capital Contribution Response Notice or deliver a Shareholder Capital Contribution Response Notice indicating that they shall not make the entire capital contribution requested of them in the applicable Shareholder Capital Contribution Notice, or, (B) if MSC requests Shareholder Capital Contributions pursuant to Section 4.2(b) or MSC requests Shareholder Capital Contributions pursuant to Section 4.3(a) and the Apex Shareholders or the Sumitomo Shareholders fail to make the entire capital contribution required or requested of them on the date set by MSC for such contribution (in any such case, the “Non-Contributing Shareholder Group”), then MSC shall promptly notify (a “Non-Contributing Shareholder Notice”) the Apex Shareholders and the Sumitomo Shareholders of same.  The “Qualified Contributor Group” shall be, (A) in the case of a Shareholder Capital Contribution Notice delivered pursuant to Section 4.3(a), if the date set forth by MSC for such contribution has not occurred, the Shareholder Group that delivered a Shareholder Capital Contribution Response Notice indicating that it would contribute  the amount requested of it in the applicable Shareholder Capital Contribution Notice and, (B) in the case of a Shareholder Capital Contribution Notice delivered pursuant to either Section 4.2(b) or Section 4.3(a), if the date set forth by MSC for such contribution has occurred, the Shareholder Group that has contributed the entire capital contribution required or requested of it.  Upon receipt of a Non-Contributing Shareholder Notice, the Qualified Contributor Group shall notify MSC (within 10 days of receipt thereof) of its election of one of the following options:

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(A)such Qualified Contributor Group intends to make a capital contribution to MSC in an amount equal to the amount of capital required or requested of it plus all, but not less than all, of the amount of the capital required or requested of the Non-Contributing Shareholder Group; or

(B)such Qualified Contributor Group has elected not to contribute the amount required or requested of it under the applicable Shareholder Capital Contribution Notice; or

(C)such Qualified Shareholder Group has elected to propose an alternative funding requirement to the program or budget item underlying the applicable Shareholder Capital Contribution Notice (a “Contribution Alternative Funding”).

In the event the Qualified Contributor Group elects to propose a Contribution Alternative Funding, the Qualified Contributor Group shall deliver a written description of such alternative to MSC and the Shareholders and MSC shall deliver an alternative Shareholder Capital Contribution Notice to the Shareholders with respect thereto (the “Alternative Shareholder Capital Contribution Notice”); provided, that, any Alternative Shareholder Capital Contribution Notice shall include all relevant terms relating to the Contribution Alternative Funding and shall otherwise be consistent with clauses (A) through (D) of Section 4.4(b)(i), mutatis mutandis.  The Non-Contributing Shareholder Group shall have five Business Days from receipt of the Alternative Shareholder Capital Contribution Notice to notify MSC and the Qualified Contributor Group whether such Non-Contributing Shareholder Group intends to either contribute to MSC the entire amount requested of it pursuant to the Alternative Shareholder Capital Contribution Notice or elects not to contribute such requested amount.  If the Non-Contributing Shareholder Group elects to make such contribution, then the Non-Contributing Shareholder Group and the Qualified Contributor Group shall deliver the Shareholder Capital Contributions in the manner and in accordance with the time period set forth in such Alternative Shareholder Capital Contribution Notice.  If the Non-Contributing Shareholder Group elects not to fund the requested amount under the Alternative Shareholder Capital Contribution Notice or otherwise fails to deliver the Shareholder Capital Contributions in the manner and in accordance with the time period set forth in the Alternative Shareholder Capital Contribution Notice, then the Qualified Contributor Group may elect to either (A) contribute to MSC an amount equal to the amount of the capital contribution requested

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of it under either (1) the original Shareholder Capital Contribution Notice plus all, but not less than all, of the amount of the capital contribution requested of the Non-Contributing Shareholder Group thereunder or (2) the Alternative Shareholder Capital Contribution Notice plus all, but not less than all, of the amount of the capital contribution requested of the Non-Contributing Shareholder Group thereunder, or (B) not to contribute any amount requested of it under either shareholder notice.

(iv)Subscription Price; Subscription.

(A)In the case of a Shareholder Capital Contribution Notice delivered pursuant to Section 4.2(b), where each Shareholder Group has delivered the Shareholder Capital Contribution required thereby in the manner and in accordance with the time period set forth in such Shareholder Capital Contribution Notice, and in the case of a Shareholder Capital Contribution Notice delivered pursuant to Section 4.3(a), the “Subscription Price” per Share shall be an amount equal to the Implied Equity of MSC determined in accordance with Section 4.4(a)(v) divided by the number of issued and outstanding Shares immediately prior to the making of such Shareholder Capital Contributions, and subject to Section 4.4(a)(vi), against payment to MSC of the aggregate Subscription Price per Share equal to the amount of the Shareholder Capital Contributions to be made by the Apex Shareholders or the Sumitomo Shareholders, as applicable, MSC shall issue to such Shareholders a number of fully paid and nonassessable Shares equal to such aggregate amount divided by the Subscription Price per Share.

(B)In the case of a Shareholder Capital Contribution Notice delivered pursuant to Section 4.2(b), where either the Apex Shareholders or the Sumitomo Shareholders have not delivered the Shareholder Capital Contribution required thereby in the manner and in accordance with the time period set forth in such Shareholder Capital Contribution Notice, the “Penalty Subscription Price” per Share shall be an amount equal to the Implied Equity of MSC determined in accordance with Section 4.4(a)(v) divided by the product of two times the number of issued and outstanding Shares immediately prior to the making of such Shareholder Capital Contributions, and subject to Section 4.4(a)(vi), against payment to MSC of the aggregate Penalty Subscription Price per Share equal to the amount of the

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Shareholder Capital Contributions made by the Apex Shareholders or the Sumitomo Shareholders, as applicable, MSC shall issue to such Shareholders a number of fully paid and nonassessable Shares equal to such aggregate amount divided by the Penalty Subscription Price per Share.

(C)For purposes this Section 4.4(b)(iv), the Shareholders (1) shall vote their Shares to approve any capital increase necessary to permit the issuance of such newly issued Shares; (2) take all necessary and appropriate actions to cause MSC to adopt any decisions and take any actions that may be necessary to permit such issuance, including an amendment of the Estatutos; and (3) waive any Preemptive Rights they may have in connection therewith.

ARTICLE V
TRANSFERS

Section 5.1             General Restrictions on Sales and Pledges; Legend; Effect of Sales and Pledges Not in Accordance with This Article.

(a)           Except as permitted under Section 5.2, the Interestholders agree that no Interestholder may Sell or Pledge any of its Interests, without first complying with the provisions of this ARTICLE V.  The Interestholders intend for the provisions of this ARTICLE V to govern Sales and Pledges of Interests and Indirect Interests, and, to the extent, but only to the extent, necessary to effectuate the provisions of this ARTICLE V, the Interestholders hereby waive any rights that they may have under the Estatutos, Bolivian Law, and any other applicable Law that are inconsistent with the terms of this ARTICLE V.

(b)           MSC shall include upon each certificate, instrument, or other document, if any, representing the Interests owned by the Interestholders a legend in substantially the form set forth below:

THE [NAME OF INTERESTS] REPRESENTED BY THIS [NAME OF DOCUMENT] ARE SUBJECT TO THE TERMS AND CONDITIONS OF THE MSC SHAREHOLDERS AGREEMENT, DATED AS OF SEPTEMBER 25, 2006, AMONG MINERA SAN CRISTÓBAL, S.A. AND ITS SHAREHOLDERS, AND MAY NOT BE SOLD, PLEDGED, OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE THEREWITH.

This Agreement also has been deposited with MSC and MSC shall make a notation on the shareholder registry (or equivalent record of holders of other Interests) that the

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Interests owned by the Interestholders may not be Sold or Pledged except in accordance with the terms and conditions of this Agreement.

(c)           The Special Purpose Interestholders shall include upon each certificate, instrument, or other document, if any, representing interests owned in such Entities a legend in substantially the form set forth below:

THE [NAME OF INTERESTS] REPRESENTED BY THIS [NAME OF DOCUMENT] ARE SUBJECT TO THE TERMS AND CONDITIONS OF THE MSC SHAREHOLDERS AGREEMENT, DATED AS OF SEPTEMBER 25, 2006, AMONG MINERA SAN CRISTÓBAL, S.A. AND ITS SHAREHOLDERS, AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE THEREWITH.

This Agreement also has been deposited with each Special Purpose Interestholder and each Special Purpose Interestholder shall make a notation on its shareholder registry (or equivalent record of holders of other Interests) that the interests owned in such Entity may not be Sold or Pledged except in accordance with the terms and conditions of this Agreement.

(d)           The Interestholders agree that any Sale or Pledge of Interests in violation of the provisions of this ARTICLE V shall be null and void.  MSC shall not record any such purported Sale or Pledge on its books or treat any purported Transferee of such Interests as the owner thereof for any purpose.

Section 5.2             Certain Restrictions on Sales and Pledges.  The Interestholders agree that:

(a)           No Sumitomo Interestholder may Sell or Pledge any of its Interests, and no Sumitomo Interestholder may permit any of its Affiliates to Sell or Pledge any Sumitomo Indirect Interests in a Special Purpose Interestholder, other than pursuant to:

(i)any Sale of any of its Interests or any Sumitomo Indirect Interests in a Special Purpose Interestholder to any member of the Sumitomo Control Group; provided, that, in the case of a wholly-owned Subsidiary of Sumitomo, such wholly-owned Subsidiary is not a Disqualified Person under clause (a) of the definition thereof;

(ii)any Sale of any of its Interests or any Sumitomo Indirect Interests in a Special Purpose Interestholder in accordance with the procedures, and subject to the limitations, set forth in Section 5.3 or Section 5.4, as applicable;

(iii)any Sale or Pledge of any of its Interests or any Sumitomo Indirect Interests in a Special Purpose Interestholder to any member of the Apex Control Group, including pursuant to Section 3.4;

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(iv)any Sale or Pledge of any of its Interests or any Sumitomo Indirect Interests in a Special Purpose Interestholder to any secured party in respect of any Indebtedness of any of MSC and its Subsidiaries;

(v)any Sale or Pledge of any of its Interests or any Sumitomo Indirect Interests in a Special Purpose Interestholder to any secured party in respect of any Indebtedness of Sumitomo or any of its Subsidiaries under the Financing Documents;

(vi)any Sale of any of its Interests or any Sumitomo Indirect Interests in a Special Purpose Interestholder without regard to the procedures or the limitations set forth in Section 5.3 or Section 5.4 to any Person that is not a Disqualified Person, so long as the definitive agreement with respect to such Sale is entered into during the two-year period immediately following the occurrence of an Apex Change of Control; or

(vii)any Sale of its Interests pursuant to Section 6.3.

(b)           No Apex Interestholder may Sell or Pledge any of its Interests, and no Apex Interestholder may permit any of its Affiliates to Sell or Pledge any Apex Indirect Interests in a Special Purpose Interestholder, other than pursuant to:

(i)any Sale any of its Interests or any Apex Indirect Interests in a Special Purpose Interestholder to any member of the Apex Control Group; provided, that, in the case of a wholly-owned Subsidiary of Apex, such wholly-owned Subsidiary is not a Disqualified Person under clause (a) of the definition thereof;

(ii)any Sale of any of its Interests or any Apex Indirect Interests in a Special Purpose Interestholder in accordance with the procedures, and subject to the limitations, set forth in Section 5.3 or Section 5.4, as applicable;

(iii)any Sale or Pledge of any of its Interests or any Apex Indirect Interests in a Special Purpose Interestholder to any member of the Sumitomo Control Group;

(iv)any Sale or Pledge of any of its Interests or any Apex Indirect Interests in a Special Purpose Interestholder to any secured party in respect of any Indebtedness of any of MSC and its Subsidiaries;

(v)any Sale or Pledge of any of its Interests or any Apex Indirect Interests in a Special Purpose Interestholder to any secured party in respect of any Indebtedness of Apex or any of its Subsidiaries under the Financing Documents;

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(vi)any Sale by the members of the Apex Control Group that are Apex Interestholders of any of their respective Interests to any Person that is not a Disqualified Person under clause (a) of the definition thereof, if (A) immediately prior to such Sale, the members of the Apex Control Group that are Apex Interestholders have an aggregate Interest Ratio of more than 50%, and (B) immediately following such Sale the members of the Apex Control Group that are Apex Interestholders have an aggregate Interest Ratio of at least 50%; or

(vii)any Sale of its Interests pursuant to Section 6.3.

(c)           In the case of any Sale of Interests permitted under this Section 5.2, prior to the completion of any such Sale, the Person to whom such Sale is proposed to be made (the “Prospective Transferee”) shall execute and deliver to the Parties an instrument under which the Prospective Transferee agrees to become a Party, to assume, perform, and discharge all of the obligations of the Interestholder Selling its Interests in respect of the Interests being Sold, and to receive, subject to Section 5.2(e), the benefits and rights under, and otherwise be bound by all of the terms of this Agreement and the other Transaction Documents, to the extent applicable with respect to the Interestholder Selling its Interests.  Upon any Sale of Interests in accordance with this Section 5.2, the Interestholder Selling any of its Interests hereunder shall be released from its obligations under this Agreement in respect of the Interests Sold arising from and after the completion of such Sale, except for such obligations arising out of events or circumstances that occurred prior to the completion of such Sale, whether accruing before, at, or after the completion of such Sale.

(d)           In the case of any Sale of Interests pursuant to this Section 5.2 (other than any Sale pursuant to Section 5.2(a)(i) or Section 5.2(b)(i)) or Section 6.3, simultaneously with the completion of any such Sale, the Interestholder Selling its Interests:

(i)shall, or shall cause one or more of the New Metals Quotaholders that is its Affiliate (collectively with the Interestholder Selling its Interests, the “Affiliated Quotaholders”) to, Sell to the Transferee (or any designated Affiliate thereof) such part of such New Metals Quotaholders’ New Metals Quota as is necessary such that the aggregate Interest Ratio of the Interestholder Selling its Interests and its Control Group and the aggregate New Metals Interest Ratio of the Affiliated Quotaholders are the same percentage;

(ii)shall, or shall cause one or more of the New Cayman Shareholders that is its Affiliate (collectively with the Interestholder Selling its Interests, the “Affiliated New Cayman Shareholders”) to, Sell to the Transferee (or any designated Affiliate thereof) such part of such New Cayman Shareholders’ New Cayman Shares as is necessary such that the aggregate Interest Ratio of the Interestholder Selling its Interests and its Control Group and the

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aggregate New Cayman Interest Ratio of the Affiliated New Cayman Shareholders are the same percentage; and

(iii)shall, or shall cause one or more of its Affiliates to, Sell to the Transferee (or any designated Affiliate thereof) such part of its right, title, and interest in the Transmission Line Loan Documents as is necessary such that the aggregate Interest Ratio of the Interestholder Selling its Interests and its Control Group and the aggregate outstanding principal amount payable pursuant to the Transmission Line Loan Documents to the Interestholder Selling its Interests and its Control Group, expressed as a percentage of the aggregate outstanding principal amount payable pursuant to the Transmission Line Loan Documents to all the holders thereof are the same percentage.

The Sale of all or part of any New Metals Quota pursuant to this Section 5.2(d) shall be subject to and in accordance with the terms, conditions, procedures, and limitations set forth in the New Metals Quotaholders Agreement.  The Sale of all or part of any New Cayman Shares pursuant to this Section 5.2(d) shall be subject to and in accordance with the terms, conditions, procedures, and limitations set forth in the New Cayman Shareholders Agreement.  The Sale of all or part of the right, title, and interest in the Transmission Line Loan Documents shall be subject to and in accordance with the terms, conditions, procedures, and limitations set forth in the Transmission Line Loan Documents.

(e)(i)            If the proposed Sale of such Interests or Indirect Interests to which Section 5.2(a)(vi), Section 5.3, or Section 5.4 applies involves the Sale, directly or indirectly, of all, but not less than all, of the Interests of the Interestholder Group to which the Interestholder Selling its Interests belongs, then, unless the Parties agree otherwise:

(A)if the Interestholder Selling its Interests is an Apex Interestholder,  references to “Apex” in this Agreement shall be deemed to refer to the Transferee or, if the Transferee is a wholly-owned Subsidiary, directly or indirectly, of one or more Persons, each Person of which the Transferee is its wholly-owned Subsidiary;

(B)if the Interestholder Selling its Interests is a Sumitomo Interestholder, references to “Sumitomo” in this Agreement shall be deemed to refer to the Transferee or, if the Transferee is a wholly-owned Subsidiary, directly or indirectly, of one or more Persons, each Person of which the Transferee is its wholly-owned Subsidiary; and

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(C)the Transferee shall have the same rights and benefits and the same obligations under this Agreement as the Interestholder Selling its Interests in respect of the Interests being Sold.

(ii)If any proposed Sale of such Interests or Indirect Interests to which Section 5.2(a)(vi), Section 5.2(b)(vi), Section 5.3, or Section 5.4 applies involves the Sale, directly or indirectly, of less than all of the Interests of the Interestholder Group to which the Interestholder Selling its Interests belongs, then, the Parties shall negotiate in good faith such amendments to this Agreement, the New Metals Quotaholders Agreement, the New Cayman Shareholders Agreement, the Transmission Line Loan Documents, the Governing Documents of MSC, New Metals, and New Caymans, and such other documents, agreements, and instruments related thereto to modify them as appropriate (A) so as to effect the intent of the parties hereto and thereto as closely as possible in a mutually acceptable manner, (B) so that such proposed Sale can be effected in accordance with the terms of this Agreement, and (C) so that the Transferee has such rights and obligations hereunder and thereunder as the parties hereto and thereto mutually agree are appropriate given the Interests or Indirect Interests to be acquired in such proposed Sale.

Section 5.3             Sales to Third Parties; Right of First Refusal.  The Interestholders agree that:

(a)           If a Selling Interestholder desires to Sell its Section 5.3 Offered Interests, or an Affiliate of a Selling Interestholder desires to Sell its Indirect Interests in a Special Purpose Interestholder, to one or more Persons other than a Permitted Transferee (a “Proposed Third-Party Buyer”), the Selling Interestholder shall, or shall cause its Affiliate to, first make a written offer to Sell the Section 5.3 Offered Interests or the Indirect Interests, as applicable, to either (i) the Apex Interestholders, if the Selling Interestholder is a Sumitomo Interestholder or if such selling Affiliate is an Affiliate of a Sumitomo Interestholder or (ii) the Sumitomo Interestholders, if the Selling Interestholder is an Apex Interestholder or if such selling Affiliate is an Affiliate of an Apex Interestholder (as applicable, the “Non-Selling Interestholders”), by delivering to the Non-Selling Interestholders a written notice of its intention to Sell the Section 5.3 Offered Interests or the Indirect Interests, as applicable (the “Sale Notice”), which Sale Notice shall describe in reasonable detail the price and other terms and conditions upon which the Selling Interestholder desires to Sell the Section 5.3 Offered Interests or an Affiliate of the Selling Interestholder desires to Sell its Indirect Interests, as applicable, to the Proposed Third-Party Buyer and shall be accompanied by a copy of the bona fide offer or contract for sale with the Proposed Third-Party Buyer (the “Offered Terms”).

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(b)           The Non-Selling Interestholders shall have the right for a 60-day period (the “Section 5.3 Offer Period”) after receipt of the Sale Notice to agree to purchase the Section 5.3 Offered Interests or the Indirect Interests, as applicable, by delivering to the Selling Interestholder a written notice accepting the Offered Terms.

(c)           If the Non-Selling Interestholders agree to purchase the Section 5.3 Offered Interests or the Indirect Interests, as applicable, in accordance with Section 5.3(b), the Section 5.3 Offered Interests or the Indirect Interests, as applicable, shall be sold to such Non-Selling Interestholders (on a pro rata basis, based on their respective Interest Ratios, unless the Non-Selling Interestholders agree otherwise) on the Offered Terms.  If the Non-Selling Interestholders do not agree to purchase the Section 5.3 Offered Interests or the Indirect Interests, as applicable, within the Section 5.3 Offer Period, the Selling Interestholder may Sell all, but not less than all, of the Section 5.3 Offered Interests or the Affiliate of the Selling Interestholder may Sell all, but not less than all, of the Indirect Interests, as applicable, to the Proposed Third-Party Buyer on the conditions that:

(i)such Sale to the Proposed Third-Party Buyer is on terms and conditions no less favorable to the Selling Interestholder than the Offered Terms;

(ii)such Sale to the Proposed Third-Party Buyer is completed within 60 days after the end of the Section 5.3 Offer Period (subject to delays reasonably beyond the control of the Selling Interestholder (or its Affiliates) in obtaining required approvals and consents of Governmental Authorities and any other Person, which delays would not result in such Sale being completed more than 120 days after the end of the Section 5.3 Offer Period);

(iii)in connection with the Sale of Section 5.3 Offered Interests, the Proposed Third-Party Buyer executes and delivers to the Parties an instrument under which the Proposed Third-Party Buyer agrees to become a Party, to assume, perform, and discharge all of the obligations of the Selling Interestholder in respect of the Interests to be Sold to such Proposed Third-Party Buyer, and to receive, subject to Section 5.2(e), the benefits and rights under, and otherwise be bound by all of the terms of, this Agreement and the other Transaction Documents, to the extent applicable with respect to the Interestholder Selling its Interests (it being understood that upon such Sale to such Proposed Third-Party Buyer pursuant to this Section 5.3, the Selling Interestholder shall be released of its obligations under this Agreement in respect of the Section 5.3 Offered Interests Sold arising from and after the completion of such Sale, except for such obligations arising out of events or circumstances that occurred prior to the completion of such Sale,

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whether accruing before, at, or after the completion of such Sale); and

(iv)the Proposed Third-Party Buyer shall not be a Disqualified Person.

If the Selling Interestholder fails to complete the Sale of such Section 5.3 Offered Interests or the Affiliate of the Selling Interestholder fails to complete the Sale of the Indirect Interests, as applicable, within such 60-day period (as extended for up to an additional 60 days for delays as provided above), the provisions of this Section 5.3 shall apply again to any proposed Sale of such interests to which this Section 5.3 applies.

(d)           For purposes of this Agreement, “Selling Interestholder” means (i) any Interestholder that is part of an Interestholder Group that has an aggregate Interest Ratio of at least 25% and not more than 50%, as determined on the date the Sale Notice is delivered pursuant to Section 5.3(a), that desires to Sell all or any of its Interests and (ii) any Interestholder that is part of an Interestholder Group that has aggregate Interest Ratio of more than 50%, as determined on the date the Sale Notice is delivered pursuant to Section 5.3(a), that desires to Sell all of its Interests or so much of its Interests as would cause the Interestholder Group to which it belongs to have an aggregate Interest Ratio of less than 50%, as determined immediately after the completion of such Sale; “Section 5.3 Offered Interests” means all or any part of the Interests a Selling Interestholder desires to Sell; and “Permitted Transferee” means any one or more of the members of the Sumitomo Control Group or one or more of the members of the Apex Control Group.

(e)           Except as otherwise permitted by this ARTICLE V, the Sumitomo Shareholders shall ensure that any Interests that at one time were issued or owned by any such Sumitomo Shareholder shall at all times be owned directly by Sumitomo or a wholly-owned Subsidiary of Sumitomo that is not a Disqualified Person under clause (a) of the definition thereof.

(f)            Except as otherwise permitted by this ARTICLE V, the Apex Shareholders shall ensure that any Interests that at one time were issued or owned by any such Apex Shareholder (other than any Interests held by New Sweden 1 on the date hereof) shall at all times be owned directly by Apex or a wholly-owned Subsidiary of Apex that is not a Disqualified Person under clause (a) of the definition thereof.

(g)           Notwithstanding anything to the contrary in this Section 5.3, the Sale by any Sumitomo Interestholder of its Interests or by any of its Affiliates of their Sumitomo Indirect Interests may be consummated without regard to the procedures or the limitations set forth in this Section 5.3 to any Person that is not a Disqualified Person, so long as the definitive agreement with respect to such Sale is entered into during the two-year period immediately following the occurrence of an Apex Change of Control.

(h)           Any Sale or Pledge in violation of the provisions of Section 5.3(e) or Section 5.3(f) shall be null and void ab initio and shall constitute a material breach of this Agreement, and, in accordance with the Dispute Resolution Agreement, the Parties shall

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be entitled to specific performance, injunctive relief, or any other remedy at Law to enforce the terms of such Section 5.3(e) or Section 5.3(f), as applicable.  In the event of any Sale or Pledge in violation of the provisions of Section 5.3(e) or Section 5.3(f), without limiting any other rights or remedies of the Parties, the Transferee or the party then holding any Indirect Interest shall have no right to participate in the management of the business and affairs of MSC or to become an Interestholder, or to receive any distributions of any kind or other payment in respect of any Interest or any other item an Interestholder would otherwise be entitled.

Section 5.4             Sales to Third Parties; Right of First Offer.  The Interestholders agree that:

(a)           If any Interestholder that is part of an Interestholder Group that has an aggregate Interest Ratio of less than 25% (an “Offering Interestholder”) desires to Sell all or any part of its Interests (the “Section 5.4 Offered Interests”), or an Affiliate of an Offering Interestholder desires to Sell all or any part of its Indirect Interests in a Special Purpose Interestholder to a Proposed Third-Party Buyer, the Offering Interestholder shall, or shall cause its Affiliate to, first make a written offer to Sell the Section 5.4 Offered Interests or the Indirect Interests, as applicable, to either (i) the Apex Interestholders, if the Offering Interestholder is a Sumitomo Interestholder or if such offering Affiliate is an Affiliate of a Sumitomo Interestholder or (ii) the Sumitomo Interestholders, if the Offering Interestholder is an Apex Interestholder or if such offering Affiliate is an Affiliate of an Apex Interestholder (as applicable, the “Non-Offering Interestholders”), by delivering to the Non-Offering Interestholders a written notice of its intention to Sell the Section 5.4 Offered Interests or the Indirect Interests, as applicable (the “Offer Notice”), which Offer Notice shall describe in reasonable detail the price and other terms and conditions upon which the Offering Interestholder would be willing to Sell the Section 5.4 Offered Interests or the Affiliate of the Offering Interestholder would be willing to Sell its Indirect Interests, as applicable, to the Non-Offering Interestholders (the “Initial Offered Terms”).

(b)           The Non-Offering Interestholders shall have the right for a 60-day period (the “Section 5.4 Offer Period”) after receipt of the Offer Notice to either (i) agree to purchase the Section 5.4 Offered Interests or the Indirect Interests, as applicable, by delivering to the Offering Interestholder a written notice accepting the Initial Offered Terms or (ii) make one or more written counter-offers for the Section 5.4 Offered Interests or the Indirect Interests, as applicable, by delivering to the Offering Interestholder a written notice describing in reasonable detail the price and other terms and conditions upon which the Non-Offering Interestholders would be willing to purchase the Section 5.4 Offered Interests from the Offering Interestholder or the Indirect Interests from the Affiliate of the Offering Interestholder (the “Counter-Offer Terms”).

(c)           If the Non-Offering Interestholders agree to purchase the Section 5.4 Offered Interests or the Indirect Interests, as applicable, in accordance with Section 5.4(b)(i), the Section 5.4 Offered Interests or the Indirect Interests, as applicable, shall be sold to such Non-Offering Interestholders (on a pro rata basis, based on their respective Interest Ratios, unless the Non-Offering Interestholders agree otherwise) on the Initial

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Offered Terms.  If the Non-Offering Interestholders do not agree to purchase the Section 5.4 Offered Interests or the Indirect Interests, as applicable, in accordance with Section 5.4(b)(i) and the Offering Interestholder does not accept the Counter-Offer Terms within the Section 5.4 Offer Period, the Offering Interestholder may Sell all, but not less than all, of the Section 5.4 Offered Interests or the Affiliate of the Offering Interestholder may Sell all, but not less than all, of the Indirect Interests, as applicable, to a Proposed Third-Party Buyer on the conditions that:

(i)such Sale to the Proposed Third-Party Buyer is at a price at least equal to 105% of the highest price specified in the Counter-Offer Terms in respect of the Offered Interests or the Indirect Interests, as applicable, it being understood that if no Non-Offering Interestholder (or its Affiliates) has made a written counter-offer for the Section 5.4 Offered Interests or the Indirect Interests, as applicable, in accordance with Section 5.4(b)(ii), then such Sale to the Proposed Third-Party Buyer shall be at a price at least equal to the price in the Initial Offered Terms;

(ii)such Sale to the Proposed Third-Party Buyer is on terms and conditions (other than price) no less favorable to the Offering Interestholder or the Affiliate of the Offering Interestholder, as applicable, than the Counter-Offer Terms, it being understood that if no Non-Offering Interestholder has made a written counter-offer for the Section 5.4 Offered Interests or the Indirect Interests, as applicable, in accordance with Section 5.4(b)(ii), then such Sale to the Proposed Third-Party Buyer shall be on terms and conditions (other than price) no less favorable to the Offering Interestholder than the Initial Offered Terms;

(iii)such Sale to the Proposed Third-Party Buyer is completed within 60 days after the end of the Section 5.4 Offer Period (subject to delays reasonably beyond the control of the Offering Interestholder in obtaining required approvals and consents of Governmental Authorities and any other Person, which delays would not result in such Sale being completed more than 120 days after the end of the Section 5.4 Offer Period);

(iv)in connection with the Sale of Section 5.4 Offered Interests, the Proposed Third-Party Buyer executes and delivers to the Parties an instrument under which the Proposed Third-Party Buyer agrees to become a Party, to assume, perform, and discharge all of the obligations of the Offering Interestholder in respect of the Interests to be Sold to such Proposed Third-Party Buyer, and to receive, subject to Section 5.2(e), the benefits and rights under, and otherwise be bound by all of the terms of, this Agreement and the other Transaction Documents, to the extent applicable with respect

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to the Interestholder Selling its Interests (it being understood that upon such Sale to such Proposed Third-Party Buyer pursuant to this Section 5.4, the Offering Interestholder shall be released of its obligations under this Agreement in respect of the Section 5.4 Offered Interests Sold arising from and after the completion of such Sale, except for such obligations arising out of events or circumstances that occurred prior to the completion of such Sale, whether accruing before, at, or after the completion of such Sale); and

(v)the Proposed Third-Party Buyer shall not be a Disqualified Person.

If the Offering Interestholder fails to complete the Sale of such Section 5.4 Offered Interests or the Affiliate of the Offering Interestholder fails to complete the Sale of the Indirect Interests, as applicable, within such 60-day period (as extended for up to an additional 60 days for delays as provided above), the provisions of this Section 5.4 shall apply again to any proposed Sale of such interests to which this Section 5.4 applies.

(d)           Notwithstanding anything to the contrary in this Section 5.4, the Sale by any Sumitomo Interestholder of its Interests or by any of its Affiliates of their Sumitomo Indirect Interests may be consummated without regard to the procedures or the limitations set forth in this Section 5.4 to any Person is not a Disqualified Person, so long as the definitive agreement with respect to such Sale is entered into during the two-year period immediately following the occurrence of an Apex Change of Control.

ARTICLE VI
DEFAULTS

Section 6.1             Default Notice.  If any Shareholder or Affiliate thereof shall have received notice of the default in the performance of any payment obligation of any other Shareholder or Affiliate thereof under any Financing Document, any document pursuant to which the Indebtedness incurred by MSC, New Metals, or New Cayman under the Financing Documents is refinanced or relating to such refinancing (each, a “Refinancing Document”), or any replacement or restatement of any Financing Document or the transactions contemplated thereby, with the same counterparties or otherwise (each, a “Restatement Document”) (each, a “Payment Default”) from any collateral agent, administrative agent, or other Person authorized to give notice of a Payment Default under any Financing Document, Refinancing Document, or Restatement Document, as applicable, and such Financing Document, Refinancing Document, or Restatement Document provides a time period following the giving or the receiving of such notice to cure such Payment Default, the Shareholder Group whose Shareholder or Affiliate is not alleged to have made a Payment Default (the “Non-Defaulting Shareholder Group”), may give to the Shareholder Group whose Shareholder or Affiliate is alleged to have made a Payment Default, a notice (“Default Notice”), which shall specify (a) that the Non-Defaulting Shareholder Group intends to cure the Payment Default and (b) the form in which the Non-Defaulting Shareholder Group requires the amount it pays to cure the Payment Default be evidenced, being one of the following:  (i) a loan to the Defaulting Shareholder to be repaid by the Defaulting Shareholder on demand, which shall bear interest at a rate per annum equal to LIBOR plus four percent, and

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otherwise be due and payable on the terms of such note as set forth in Exhibit B (a “Defaulting Shareholder Loan”), (ii) a loan to MSC to be repaid by MSC within 10 years after the date the Payment Default is cured, which shall bear interest at a rate per annum equal to LIBOR plus four percent, and otherwise be due and payable, and convertible into or exchangeable for Shares of MSC, on the terms of such note as set forth in Exhibit C (a “Defaulting MSC Loan”), or (iii) a capital contribution to MSC (a “Defaulting Capital Contribution”).  For purposes of this ARTICLE VI, none of MSC, New Metals, New Cayman, and any Subsidiary thereof shall be an Affiliate of any Shareholder.

Section 6.2             Procedure.

(a)           The Shareholder Group that receives a Default Notice shall have a period of 10 Business Days from the date it received the Default Notice (the “Cure Period”) to either (i) cure the alleged Payment Default or (ii) provide the Non-Defaulting Shareholder Group evidence showing to the reasonable satisfaction of the Non-Defaulting Shareholder Group that the alleged Payment Default was cured or that there was in fact no Payment Default.  Notwithstanding the foregoing, if a Payment Default would cause MSC, New Metals, New Cayman, or any Subsidiary thereof to be in default under the terms of any Financing Document, Refinancing Document, or Restatement Document, then the Cure Period shall be modified to be a number of days equal to three Business Days less than the applicable cure period (or if there is more than one applicable cure period, the shortest applicable cure period) under the applicable Financing Document, Refinancing Document, or Restatement Document.

(b)           The Shareholder Group that receives a Default Notice shall be deemed to have cured the Payment Default when, prior to the end of the Cure Period, it has fulfilled its obligations to make all payments under the Financing Document, Refinancing Document, or Restatement Document, as applicable, then due.  A Shareholder shall be considered a “Defaulting Shareholder” if it fails to (i) cure the alleged Payment Default within the Cure Period or (ii) provide the Non-Defaulting Shareholder Group evidence that the alleged Payment Default was cured or that there was in fact no Payment Default.

(c)           If there is a Defaulting Shareholder, the Payment Default is cured by the Non-Defaulting Shareholder Group, and the Non-Defaulting Shareholder Group elected in its Default Notice to make a Defaulting Shareholder Loan, the Defaulting Shareholder forthwith shall execute and deliver to the Non-Defaulting Shareholder Group a promissory note in the form of Exhibit B; provided, however, that the failure to execute and deliver such note shall not affect the validity and enforceability of the obligations owing by the Defaulting Shareholder to the Non-Defaulting Shareholder Group pursuant to such Defaulting Shareholder Loan, the terms of which in the absence of such note shall be deemed to be such terms as would have been included in such note if such note had in fact been executed and delivered as required hereby.

(d)           If there is a Defaulting Shareholder, the Payment Default is cured by the Non-Defaulting Shareholder Group, and the Non-Defaulting Shareholder Group elected in its Default Notice to make a Defaulting MSC Loan, MSC forthwith shall execute and deliver to the Non-Defaulting Shareholder Group a promissory note in the form of

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Exhibit C; provided, however, that the failure to execute and deliver such note shall not affect the validity and enforceability of the obligations owing by MSC to the Non-Defaulting Shareholder Group pursuant to such Defaulting MSC Loan, the terms of which in the absence of such note shall be deemed to be such terms as would have been included in such note if such note had in fact been executed and delivered as required hereby.  The Non-Defaulting Shareholder Group may, at its option and at any time, contribute to MSC’s capital all or part of the outstanding principal amount of, and accrued and unpaid interest on, the Defaulting MSC Loan against the issuance to such Non-Defaulting Shareholder Group of a number of fully paid and nonassessable Shares determined by dividing (i) the sum of the principal amount and the amount of accrued and unpaid interest being contributed by (ii) a subscription price per Share equal to (A) the Implied Equity of MSC determined in accordance with Section 4.4(a)(v) divided by (B) the product of two times the number of issued and outstanding Shares immediately prior to the Defaulting MSC Loan Conversion Date.  The Non-Defaulting Shareholder Group desiring to exercise its contribution right (1) shall deliver to MSC a written notice (a “Defaulting MSC Loan Contribution Notice”) indicating the Defaulting MSC Loan to be contributed and (2) shall follow the requirements for doing so set forth in the terms and conditions of such Defaulting MSC Loan.  The date on which the Non-Defaulting Shareholder Group has delivered a Defaulting MSC Loan Contribution Notice and satisfied all such requirements for contribution is referred to as the “Defaulting MSC Loan Conversion Date” for that contribution.  The Shareholders (A) shall vote their Shares to (1) approve any capital increase necessary to permit the contribution in full of such Defaulting MSC Loan, (2) set the maximum term permitted by Law for the subscription of the New Shares to be issued upon such contribution, (3) authorize any New Shares to be paid through the contribution to capital of such Defaulting MSC Loan, and (4) consent to the payment for New Shares in kind with such Defaulting MSC Loan, valued in each case at the amount of the outstanding principal amount of, and accrued and unpaid interest on, such Defaulting MSC Loan, without an expert appraisal thereof; (B) take all necessary and appropriate actions to cause MSC to adopt any decisions and take any actions that may be necessary to permit such contribution, including an amendment of the Estatutos; and (C) waive any Preemptive Rights they may have in connection therewith.

(e)           If there is a Defaulting Shareholder, the Payment Default is cured by the Non-Defaulting Shareholder Group, and the Non-Defaulting Shareholder Group elected in its Default Notice to make a Defaulting Capital Contribution, MSC promptly shall issue to the Non-Defaulting Shareholder a number of fully paid and nonassessable Shares equal to the amount of the payment made by the Non-Defaulting Shareholder Group to cure the Payment Default divided by a subscription price per Share equal to the Implied Equity of MSC determined in accordance with Section 4.4(a)(v) divided by the product of two times the number of issued and outstanding Shares immediately prior to the making of such Defaulting Capital Contribution.  For purposes this Section 6.2(e), the Shareholders (i) shall vote their Shares to approve any capital increase necessary to permit the issuance of such newly issued Shares; (ii) take all necessary and appropriate actions to cause MSC to adopt any decisions and take any actions that may be necessary

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to permit such issuance, including an amendment of the Estatutos; and (iii) waive any Preemptive Rights they may have in connection therewith.

(f)            MSC shall not issue fractional interests in Shares under this Section 6.2.  If the Non-Defaulting Shareholder Group would otherwise be entitled to a fractional share interest, MSC shall pay cash in lieu of such fractional share interest.  The amount of cash in lieu to be paid shall be determined by multiplying (A) the subscription price applied in making such conversion or contribution, as applicable, by (B) such fractional share interest, and rounding the product to the nearest whole cent (centavo), with one-half cent (centavo) being rounded upward.

Section 6.3             Bankruptcy of a Sponsor.

(a)           If a Bankruptcy of Apex shall have occurred and is continuing and such Bankruptcy results in a default that is curable under the terms of the applicable Financing Document, Refinancing Document, or Restatement Document, then the Sumitomo Shareholders may elect, by notice (a “Sumitomo Sponsor Default Cure Notice”) given to the Apex Interestholders while such default exists and is curable, to cure such default in accordance with the terms of the applicable Financing Document, Refinancing Document, or Restatement Document and to purchase all, but not less than all, of the Interests, the New Metals Interests, the New Cayman Interests, and the right, title, and interest in the Transmission Line Loan Documents of the members of the Apex Control Group that are Apex Interestholders or their Affiliates in accordance with Section 6.3(c).

(b)           If a Bankruptcy of Sumitomo shall have occurred and is continuing and such Bankruptcy results in a default that is curable under the terms of the applicable Financing Document, Refinancing Document, or Restatement Document, then the Apex Shareholders may elect, by notice (an “Apex Sponsor Default Cure Notice”) given to the Sumitomo Interestholders while such default exists and is curable, to cure such default in accordance with the terms of the applicable Financing Document, Refinancing Document, or Restatement Document and to purchase all, but not less than all, of the Interests, the New Metals Interests, the New Cayman Interests, and the right, title, and interest in the Transmission Line Loan Documents of the members of the Sumitomo Control Group that are Sumitomo Interestholders or their Affiliates in accordance with Section 6.3(c).

(c)           If a Sumitomo Sponsor Default Cure Notice shall have been given pursuant to Section 6.3(a), the members of the Apex Control Group that are Apex Interestholders shall sell, or cause to be sold, all, but not less than all, of their Interests, their or their Affiliate’s New Metals Interests and New Cayman Interests, and their or their Affiliate’s right, title, and interest in the Transmission Line Loan Documents (collectively, the “Apex Interests”) to the Sumitomo Shareholders for a purchase price equal to the Fair Market Value of the Apex Interests, and one or more of the Sumitomo Shareholders shall purchase the Apex Interests for such purchase price.  If an Apex Sponsor Default Cure Notice shall have been given pursuant to Section 6.3(b), the members of the Sumitomo Control Group that are Sumitomo Interestholders shall sell, or cause to be sold, all, but not less than all, of their Interests, their or their Affiliate’s New

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Metals Interests and New Cayman Interests, and their or their Affiliate’s right, title, and interest in the Transmission Line Loan Documents (collectively, the “Sumitomo Interests”) to the Apex Shareholders for a purchase price equal to the Fair Market Value of the Sumitomo Interests, and the Apex Shareholders shall purchase the Sumitomo Interests for such purchase price.  The purchase and sale of the Apex Interests or the Sumitomo Interests, as applicable, shall be consummated as soon as reasonably practicable, and in any event no later than 60 days, following the determination of the Fair Market Value of the Apex Interests or the Fair Market Value of the Sumitomo Interests, as applicable, in accordance with Section 6.3(d).  The Parties shall cooperate in good faith with respect to all actions necessary and appropriate to effect such consummation, including the execution of all reasonably requested documentation and the making, delivering, and obtaining of all Government Approvals and consents from, to, or with Governmental Authorities and other Persons necessary or appropriate to such consummation.  Upon the purchase and sale of the Apex Interests hereunder, the Deferred Payments Agreement shall terminate and, if and to the extent required by the terms of the Financing Documents, Refinancing Documents, or Restatement Documents, all of the rights and obligations of Apex and its Affiliates (other than MSC, New Metals, and New Cayman, if applicable) under such documents shall have been assigned to and assumed by one or more of Sumitomo and its Affiliates.  Upon the purchase and sale of the Sumitomo Interests hereunder, the Deferred Payments Agreement shall terminate and, if and to the extent required by the terms of the Financing Documents, Refinancing Documents, or Restatement Documents, all of the rights and obligations of Sumitomo and its Affiliates (other than MSC, New Metals, and New Cayman, if applicable) under such documents shall have been assigned to and assumed by one or more of Apex and its Affiliates.  The purchase price for the Apex Interests or the Sumitomo Interests, as applicable, shall be paid in immediately available Dollar funds on the closing date of the relevant purchase and sale.

(d)           For purposes of this Agreement, the “Fair Market Value of the Apex Interests” means the price at which the Apex Interests and the right, title, and interest to the Deferred Payments Agreement of one or more of Apex and its Affiliates (calculated based on the assumption that such agreement would not terminate as a result of the purchase and sale hereunder) could be sold in an arm’s-length transaction to an unaffiliated, bona fide, third-party purchaser in an orderly sale without regard to the existence of the default specified in Section 6.3(a), and the “Fair Market Value of the Sumitomo Interests” means the difference of (i) the price at which the Sumitomo Interests could be sold in an arm’s-length transaction to an unaffiliated, bona fide, third-party purchaser in an orderly sale without regard to the existence of the default specified in Section 6.3(b) minus (ii) the price at which the right, title, and interest to the Deferred Payments Agreement of one or more of Apex and its Affiliates (assuming such agreement would not terminate as a result of the purchase and sale hereunder) could be sold in an arm’s-length transaction to an unaffiliated, bona fide, third-party purchaser in an orderly sale without regard to the existence of the default specified in Section 6.3(a).  The Fair Market Value of the Apex Interests or the Fair Market Value of the Sumitomo Interests, as applicable, shall be determined by a panel of two internationally recognized investment banking firms (each, an “Independent Investment Banker”) retained by the

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Shareholder Groups, one of which shall be designated by the Sumitomo Shareholders and the other of which shall be designated by the Apex Shareholders.  Such designations shall be made as promptly as possible after delivery of the Sumitomo Sponsor Default Cure Notice or the Apex Sponsor Default Cure Notice, as applicable, but in no event later than 15 days thereafter.  Each Shareholder Group shall, and shall cause MSC and New Metals to, upon reasonable notice, afford each Independent Investment Banker and its representatives full access during normal business hours to the properties, books and records of MSC, New Metals, New Cayman, and their respective Subsidiaries and such other information about MSC, New Metals, New Cayman, and their respective Subsidiaries, and about the relevant interests, the Transmission Line Loan Documents, and the Deferred Payments Agreement as the Independent Investment Bankers and their representatives shall from time to time reasonably request.  Each Independent Investment Banker shall submit its written determination of the Fair Market Value of the Apex Interests or the Fair Market Value of the Sumitomo Interests, as applicable, to such Interestholders within 30 days after the date of its retention.  If the higher determination of the two Independent Investment Bankers is not greater than 110% of the lower determination, the Fair Market Value of the Apex Interests or the Fair Market Value of the Sumitomo Interests, as applicable, shall be the average of such two determinations.  If the higher determination is greater than 110% of the lower determination, then such two Independent Investment Bankers shall jointly select, within 15 days after the date on which they are informed of the difference, a third Independent Investment Banker to be retained by such Shareholder Groups.  Such third Independent Investment Banker shall deliver its written opinion of the Fair Market Value of the Apex Interests or the Fair Market Value of the Sumitomo Interests, as applicable, within 30 days after its retention, and the Fair Market Value of the Apex Interests or the Fair Market Value of the Sumitomo Interests, as applicable, shall be the average of the two closest determinations or, if there are not two closest determinations, the average of all three determinations.  One half of the fees and expenses of such Independent Investment Bankers shall be paid by the Apex Shareholders and one half of all the fees and expenses shall be paid by the Sumitomo Shareholders.

ARTICLE VII
ADDITIONAL COVENANTS AND AGREEMENTS

Section 7.1             Amendment of Estatutos; Further Assurances.

(a)           Each of the Parties agrees that, to the extent that any provision of this Agreement conflicts with or is at a variance with the Estatutos or the Governing Documents of MSC or any of its Subsidiaries, this Agreement shall prevail and be the binding document among the Parties to the extent allowed by applicable Law.  Each of the Shareholders also covenants and agrees that (i) it shall vote or cause to be voted the Shares owned by it to accomplish and give effect to the terms and conditions of this Agreement and (ii) in the event of any conflict between the provisions of this Agreement on the one hand and the Estatutos or any Governing Document on the other hand, it shall vote or cause to be voted the Shares owned by it as provided in this Agreement and cause the Estatutos and/or other Governing Documents, as applicable, to be amended to resolve

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any such conflict in favor of the provisions of this Agreement, to the extent permitted by applicable Law.  Furthermore, the Shareholders agree that if any Bolivian Law would require any Article, Section, or clause of this Agreement to be included in the Estatutos in order to be enforceable against them or MSC, they shall take all necessary action to amend the Estatutos accordingly.

(b)           Each Party hereby agrees to furnish upon request to each of the other Parties such further information, to execute and deliver to such other Parties such other documents, and to do such other acts and things, all as such other Parties may reasonably request for the purpose of carrying out the intent and accomplish the purposes of this Agreement, including voting or causing to be voted its Shares to accomplish and give effect to the terms and conditions of this Agreement.

(c)           Each of the Shareholders, to the fullest extent permitted by Bolivian Law, waives any rights that it may have under Bolivian Law that is inconsistent with any provision of this Agreement and, to the extent such rights cannot validly be waived, each such Shareholder shall exercise such rights only to the extent consistent with this Agreement.

Section 7.2             Notice to MSC.  MSC hereby acknowledges that it has actual notice of the terms of this Agreement, consents hereto and hereby covenants that it will at all times during the term of this Agreement be governed by the terms and provisions hereof in carrying out its business and affairs and, accordingly, shall give or cause to be given such notices, execute or cause to be executed such documents and do or cause to be done all such acts, matters and things as may from time to time be necessary or required to carry out the terms and intent hereof, subject to the requirements of applicable Law.

Section 7.3             Business of MSC.  The business of MSC is limited to financing, owning and operating the Project, marketing and selling mineral concentrates, and engaging in the activities set forth in this Agreement, the Material Project Documents, or the Financing Documents and in any other act or activity in furtherance of or related to such object and purpose that is not prohibited by Law.

Section 7.4             Offices.  The registered office of MSC shall be Minera San Cristόbal, S.A., Calle Campos 265, La Paz, Bolivia, or such place or places as the Board may from time to time determine.  The registered and principal offices of each of MSC’s Subsidiaries shall be at such place or places as their respective boards may from time to time determine.  Written notice of any change in such offices shall be given to each Shareholder by the applicable Board.

Section 7.5             Access to Information.

(a)           MSC shall promptly furnish the following to each Shareholder Group:

(i)As soon as available and in any event within 60 days after the end of each of the first three quarterly fiscal periods of each fiscal year of MSC, an unaudited consolidated balance sheet of MSC and its Subsidiaries as of the end of such quarter and the related unaudited

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consolidated statement of MSC’s income and of cash flows for such quarter and for the portion of MSC’s fiscal year ended at the end of such quarter, setting forth in each case in comparative form the figures for the corresponding quarter and the corresponding portion of MSC’s previous fiscal year; and

(ii)As soon as available and in any event within 90 days after the end of each fiscal year of MSC, an audited consolidated balance sheet of MSC and its Subsidiaries as of the end of such fiscal year and the related consolidated statement of MSC’s income and of cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all reported on by MSC’s auditors.

(b)           MSC shall promptly furnish to the Apex Shareholders so long as one or more of the Apex Shareholders are entitled to nominate one or more Directors pursuant to Section 2.2(c) and to the Sumitomo Shareholders so long as one or more of the Sumitomo Shareholders are entitled to nominate one or more Directors pursuant to Section 2.2(c), copies of:

(i)all management reports and all agenda and other associated documents relating to any meeting of the Board as are made available to any Director;

(ii)all agenda and other associated documents relating to any meeting of the Shareholders as are made available to all of the Shareholders for purposes of such meeting; and

(iii)such other financial statements or other financial or operating data relating to MSC, any of its Subsidiaries, or the Project as are made available to any Director, and any such information as the Shareholder may reasonably request.

Section 7.6             Confidentiality.  Each Party shall keep confidential, shall cause its Affiliates to keep confidential, and shall instruct its officers, directors, employees, and advisors to keep confidential, all information and documents received from MSC and its Subsidiaries and shall not use such information and documents for any purpose other than those connected with the activities of MSC and its Subsidiaries, except (i) as required by applicable securities or other Laws or stock exchange rules or administrative process, (ii) as necessary to obtain the necessary Government Approvals for the Project or to obtain financing for the Project from potential lenders and providers of credit support; (iii) as necessary to comply with a court or administrative order (provided, that

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such Party shall furnish only the portion of such MSC Confidential Information (as defined below) which is legally required to be provided and shall exercise all reasonable efforts to obtain assurances that confidential treatment will be accorded such information and shall give notice to MSC and the Shareholders as promptly as practicable of its obligation to disclose any such information); (iv) as necessary in connection with any litigation or arbitration arising out of or related to the Project or this Agreement (provided, that such Party shall furnish only the portion of such MSC Confidential Information that is directly relevant to the litigation or arbitration and shall exercise all reasonable efforts to obtain assurances that confidential treatment will be accorded such information); (v) as necessary to respond to an environmental emergency or other emergency that may materially and adversely affect MSC, its Subsidiaries or the Project (provided, that such Party shall disclose only the portion of such MSC Confidential Information that is necessary in response to the environmental emergency or other emergency and that it shall notify each other Party as promptly as possible after any such disclosure of MSC Confidential Information); (vi) for information (A) that was in the possession of a Party or its Affiliates prior to receipt thereof from any member of the Apex Control Group, MSC or its Subsidiaries or (B) that has become known to such Party or its Affiliates independently of any disclosure by any member of the Apex Control Group, MSC or its Subsidiaries and which has not been wrongfully disclosed to or obtained by such Party or its Affiliates; (vii) for information that is or becomes generally available to the public other than as a result of a breach of this Section 9.6; and (viii) in connection with the Sale of all or a part of its Interests to a third party in accordance with the terms of this Agreement; provided that such third party has provided a written undertaking to keep all MSC Confidential Information  confidential in accordance with the terms of this Agreement and for the benefit of the Parties or otherwise in form and substance reasonably acceptable to the other Parties (such information, subject to clauses (i) through (viii), “MSC Confidential Information”).  The obligations of the Parties under this Section 7.6 shall remain in full force and effect for three years following the termination of this Agreement.

Section 7.7             Distribution of Available Cash.

(a)           The Shareholders hereby agree that each fiscal year, promptly following MSC’s annual audit for the previous fiscal year (starting with the annual audit for the year in which the Commercial Operations Date falls), subject to any limitations imposed by the Financing Documents, required accounting practice, and applicable Law, Available Cash shall be distributed quarterly to the following Persons, in the following order of priority, and in the following amounts:

(i)First, 100% of any such Available Cash to Service Company in an amount equal to and for the payment of the Subordinated Management Fee;

(ii)Second, 100% of any such Available Cash remaining after making the payment pursuant to Section 7.7(a)(i) to the holder or holders of Defaulting MSC Loans, on a pro rata basis in accordance with the then-outstanding principal amounts thereof, in payment or prepayment thereof, as applicable, until such time as all Defaulting MSC Loans have been paid in full;

(iii)Third, 100% of any such Available Cash remaining after making all the payments pursuant to Section 7.7(a)(i) and Section 7.7(a)(ii) to the holder or holders of Consolidated Loans, on a pro rata basis in accordance with the then-outstanding principal amounts thereof,

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in payment or prepayment thereof, as applicable, until such time as all Consolidated Loans have been paid in full;

(iv)Fourth, 100% of any such Available Cash remaining after making all the payments pursuant to Section 7.7(a)(i), Section 7.7(a)(ii), and Section 7.7(a)(iii) to the holder or holders of MSC Subordinated Debt, on a pro rata basis in accordance with the then-outstanding principal amounts thereof, in payment or prepayment thereof, as applicable and without duplication, until such time as all MSC Subordinated Debt has been paid in full;

(v)Fifth, 100% of any such Available Cash remaining after making all the payments pursuant to Section 7.7(a)(i), Section 7.7(a)(ii), Section 7.7(a)(iii), and Section 7.7(a)(iv) to the holder or holders of Shareholder Loans, on a pro rata basis in accordance with the then-outstanding principal amounts thereof, in payment or prepayment thereof, as applicable and without duplication, until such time as all Shareholder Loans have been paid in full; and

(vi)Sixth, 100% of any such Available Cash remaining after making all the payments pursuant to Section 7.7(a)(i), Section 7.7(a)(ii), Section 7.7(a)(iii),  Section 7.7(a)(iv), and Section 7.7(a)(v) to the Shareholders, on a pro rata basis in accordance with their then-outstanding Shares, as cash dividends in an aggregate amount equal to, but not greater than, the maximum amount permitted to be distributed as a dividend pursuant to applicable Law.

(b)           Subject to any contrary determination made in accordance with Section 2.3(a)(xiv), if applicable, the Shareholders hereby agree to vote their Shares in favor of, and to instruct any Directors or alternate directors appointed by them to vote in favor of, any and all actions that are necessary or appropriate actions in order to cause MSC and its Subsidiaries to adopt any decisions and take any actions that may be necessary to permit the foregoing actions pursuant to this Section 7.7.

Section 7.8             Compliance with Law.  MSC shall comply in all material respects with applicable Laws in the conduct of its business, including compliance with (and taking reasonable precautions to assure compliance by its Subsidiaries, if any, with) the U.S. Foreign Corrupt Practices Act (Section 30-A of the U.S. Securities Exchange Act of 1934) and any similar applicable Laws of Japan, Sweden, Luxembourg, Bolivia, Cayman Islands and Switzerland (such Laws, collectively, the “FCPA”).

Section 7.9             Sumitomo Exploration.

(a)           The Parties acknowledge and agree that, so long as the Sumitomo Shareholders have an aggregate Interest Ratio of at least a 35%, the members of the Sumitomo Control Group shall have the right, during the term of this Agreement and in accordance with the terms of this Section 7.9, to explore MSC properties located outside

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the zone designated as the “Buffer Zone” (“Open Properties”), as such “Buffer Zone” is described on the map attached hereto as Schedule B.

(b)           If one or more of the members of the Sumitomo Control Group elects to explore an Open Property, then the Sumitomo Shareholders shall deliver a written notice to MSC and the Apex Shareholders, which notice shall specify the Open Property (the “Selected Open Property”) the Sumitomo Control Group desires to explore and the member of the Sumitomo Control Group that will conduct the exploration (the “Designated SCG Member”).  Upon receipt thereof, MSC shall as promptly as practicable make a determination as to whether the Selected Open Property is subject to any restrictions under applicable Law, the Financing Documents, or any Governmental Authority that would prohibit the Designated SCG Member’s exploration of the Selected Open Property.  All costs and expenses incurred by MSC in connection with making such determination shall be paid or reimbursed by the Sumitomo Interestholders within 30 days after the receipt of an invoice therefor accompanied by appropriate supporting documentation.  If such a restriction exists, MSC shall provide the Sumitomo Shareholders and the Apex Shareholders written notice, including a reasonably detailed explanation, of such restriction and the Designated SCG Member shall be prohibited from exploring such Selected Open Property under the terms of this Section 7.9.  If no such restrictions exist, MSC shall deliver a written notice to the Sumitomo Shareholders that indicates whether MSC elects either (i) to participate in the exploration of the Selected Open Property or (ii) not to participate in the exploration of the Selected Open Property at that time.  Notwithstanding anything to the contrary in ARTICLE II, no election shall be made by MSC without the prior written approval of at least one Apex Member.

(c)           If MSC elects to participate in the exploration of a Selected Open Property, then, subject to applicable Financing Documents, the Estatutos, and applicable Law, the Shareholders shall cause their respective Directors to amend, or otherwise vote their respective Shares in favor of amending, the then applicable Program and Budget, as necessary to provide for such exploration.  MSC shall then, in accordance with the terms of this Agreement, develop the exploration program and budgets and manage the exploration of the Selected Open Property.

(d)           If MSC elects not to participate in the exploration of a Selected Open Property, then MSC shall enter into a lease (or such other appropriate agreement) (the “Lease Agreement”) with the Designated SCG Member whereby MSC shall grant appropriate rights to the Selected Open Property to the Designated SCG Member for exploration.  The Lease Agreement shall be on arm’s-length terms and have terms and conditions mutually satisfactory to the parties thereto (including an appropriate royalty payment to MSC with respect thereto).  Upon execution and delivery of the Lease Agreement, the Designated SCG Member shall have the right to explore the Selected Open Property on the terms and conditions set forth therein and in this Agreement and shall deliver to the Apex Shareholders and MSC in writing information regarding its exploration activities and expenditures (a “Periodic Exploration Report”) on a current basis, but in any event no less frequently than once each calendar quarter.  In addition to

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Periodic Exploration Reports, the Sumitomo Shareholders shall, or shall cause the Designated SCG Member to, promptly deliver to MSC and the Apex Shareholders a copy of the final feasibility study for a mining operation on the Selected Open Property (a “Final Feasibility Study”).

(e)           At any time until 60 days after the date MSC and the Apex Shareholders receive a Final Feasibility Study in respect of the Selected Open Property (the “Apex Election Period”), the Apex Shareholders shall have the right to elect to acquire up to a 65% interest in the Selected Open Property by delivering a written notice (an “Apex Election Notice”) to MSC and the Sumitomo Shareholders on or prior to the end of the Apex Election Period.  If the Apex Shareholders do not elect to acquire a 65% interest in the Selected Open Property by delivering the Apex Election Notice on or prior to the end of the Apex Election Period, then the Lease Agreement shall remain in full and effect in accordance with its terms and the right of the Apex Shareholders to acquire such interest shall terminate.

(f)            If the Apex Shareholders elect to acquire a 65% interest in the Selected Open Property, subject to the Financing Documents and applicable Law, the Shareholders shall vote their respective Shares to cause the Estatutos to be amended and take such other action, including causing their respective Directors to amend the then applicable Program and Budget, in each case as necessary to provide for the acquisition of all the Designated SCG Member’s right, title, and interest in the Selected Open Property and the Lease Agreement by MSC.  The purchase price payable by MSC in connection with such acquisition shall be the total SCG Historical Costs incurred by the Designated SCG Member with respect to the Selected Open Property until the date of such acquisition.  In connection with the completion of such acquisition, each Shareholder Group shall contribute its respective share of the funds required to enable MSC to pay such purchase price, which shall be in proportion to its respective Interest Ratio, in each case determined as of the date immediately prior to the date of such acquisition.  MSC shall then, in accordance with the terms of this Agreement, develop the exploration program and budgets and manage the exploration of the Selected Open Property.

(g)           If the Apex Shareholders elect to acquire a 65% interest in the Selected Open Property and MSC for any reason is not able to acquire all the Designated SCG Member’s right, title, and interest in the Selected Open Property and the Lease Agreement, then (i) the Designated SCG Member shall contribute the Lease Agreement, Final Feasibility Study and its other assets and liabilities relating to the Selected Open Property to a joint venture with a member of the Apex Control Group (the “Designated Apex Member”) in exchange for a 35% interest in such joint venture, and (ii) the Designated Apex Member shall acquire a 65% interest in such joint venture in exchange for making contributions thereto in cash equal to 100% of all costs incurred by the joint venture after its establishment until such time as the Designated Apex Member’s contributions equal an amount which, when divided by a number equal to the sum of (i) the Designated Apex Member’s said contributions plus (ii) the SCG Historical Costs incurred by the Designated SCG Member in respect of the Selected Open Property,

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equals 65%.  The Designated Apex Member and the Designated SCG Member shall further (i) jointly determine a mutually acceptable structure for the joint venture and (ii) enter into documentation relating thereto providing for (A) rights of first refusal with respect to each party’s transfer of all or part of its interest therein, (B) the contribution by each party of its pro rata share of future operating and capital costs of the Selected Open Property after the contributions of the Designated Apex Member described in the preceding sentence, (C) dilution, so that if either party fails to contribute its proportionate share of capital contributions, the other party shall have the right to contribute the non-contributing party’s share of such capital contributions against the issuance of additional beneficial interests (in shares, quotas, membership, or partnership interest or other comparable designation) to the contributing party to reflect the adjusted proportionate holdings resulting from such contribution(s) (and non-contribution, as applicable), (D) loss of rights so that at such time a party’s beneficial interest in the joint venture falls below 25% as a result of clause (C), such party shall have no further rights with respect to the management of the joint venture or the Selected Open Property except the right to have a director on the joint venture until the party’s beneficial interest falls below 20% and such other rights afforded by applicable Law, and (E) provisions, on such terms as the parties may mutually agree, similar to ARTICLE II, Section 3.2, Section 3.3, Section 5.1 and Section 7.7 of this Agreement.

ARTICLE VIII
TERM AND TERMINATION

Section 8.1             Term.  The term of this Agreement shall commence upon the date this Agreement is executed and delivered by all of the Parties.

Section 8.2             Termination.  Except as provided in Section 8.3, this Agreement shall terminate automatically as to all Parties upon the earlier of (a) the mutual agreement of all Interestholders, and (b) the conclusion of the liquidation or dissolution of MSC, as determined in accordance with the Estatutos and Bolivian Law.  Except as otherwise provided herein, this Agreement shall terminate automatically as to any individual Party upon such Party ceasing to be an Interestholder in accordance with the terms hereof.

Section 8.3             Survival.  The provisions of ARTICLE I, ARTICLE IX, and Section 2.6, Section 7.6, and this Section 8.3 shall survive the termination of this Agreement to the full extent necessary for their enforcement and the protection of the Parties in whose favor they run, and each Party shall remain liable for any breach of this Agreement by such Party prior to such termination.  No termination of this Agreement with respect to all or any of the Parties shall affect any obligation or liability of any Party arising before or as a result of circumstances in existence before such termination.

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ARTICLE IX
MISCELLANEOUS

Section 9.1             Entire Agreement.  This Agreement contains, and is intended as, a complete statement of all of the terms of the agreements among the Parties with respect to the matters provided for herein, and supersedes and discharges any previous agreements and understandings between the Parties with respect to those matters.

Section 9.2             Governing Law.  This Agreement shall be governed by and construed in accordance with the Laws of the State of New York, including Section 5-1401 of the New York General Obligations Law, as applied to contracts made and performed within the State of New York, without regard to any choice or conflicts of law provision or rule that would cause the application of the Laws of any jurisdiction other than the State of New York.  This Agreement has been negotiated and executed by the Parties in English.  In the event any translation of this Agreement is prepared for convenience or any other purpose, the provisions of the English version shall govern.  Certain Schedules and/or Exhibits to this Agreement are being executed in both English and Spanish.  If any doubt, misunderstanding or dispute arises in their interpretation, the English version shall govern.

Section 9.3             Dispute Resolution.  Any controversy, claim, or dispute among the Parties that arises out of or relates to this Agreement, including any claim or controversy relating to the interpretation, breach, termination, or invalidity of any provision hereof, shall be exclusively and finally settled pursuant to and in accordance with the Dispute Resolution Agreement.

Section 9.4             Limitation on Damages.  No Party shall be liable for any punitive, multiple, or other exemplary damage, or any indirect, special, incidental, or consequential loss or damage, lost profits, loss of use, or lost revenues suffered by any other Party arising from or relating to a Party’s performance, non-performance, breach of, or default under a covenant, warranty, representation, term, or condition of this Agreement.  Each Party waives and relinquishes claims for such punitive, multiple, exemplary, indirect, special, incidental, or consequential losses or damages, lost profits, loss of use, or lost revenues.  The limitations on liability and damages set forth in this Section 9.4 apply to all causes of action that may be asserted hereunder, whether sounding in breach of contract, breach of warranty, tort, product liability, negligence, or otherwise.

Section 9.5             Headings.  The article and section headings of this Agreement are for reference purposes only and are to be given no effect in the construction or interpretation of this Agreement.

Section 9.6             Notices.  All notices and other communications hereunder shall be in writing and shall be delivered personally, telecopied (if receipt of which is confirmed by the Person to whom sent), or sent by internationally recognized delivery service to the Parties at the following addresses (or to such other Person or address for a Party as specified by such Party by like notice) (notice shall be deemed given and received upon receipt, if delivered personally, by delivery service or by telecopy, or on the third Business Day following mailing, if mailed, except that notice of a change of address shall not be deemed given until actually received):

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(a)           If to any Sumitomo Interestholder, to Sumitomo at:

Sumitomo Corporation
8-11, Harumi, 1-chome,
Chuo-ku, Tokyo, 104-8610 Japan
Attention:  General Manager, Non-Ferrous Metals
                                & Raw Materials Dept.
Telecopier:  +81-3-5166-6423

(b)           If to any Apex Interestholder, to Apex at:

c/o Apex Silver Mines Corporation
1700 Lincoln Street, Suite 3050
Denver, Colorado 80237  U.S.A.
Attention:  President
Telecopier:  +1 (303) 839-5907

(c)           If to MSC, to it at:

Minera San Cristόbal, S.A.
Calle Campos 265
La Paz, Bolivia
Attention:  President
Telecopier:  +591-2-243-3737

with a copy to Apex at:

c/o Apex Silver Mines Corporation
1700 Lincoln Street, Suite 3050
Denver, Colorado 80237  U.S.A.
Attention:  President
Telecopier:  +1 (303) 839-5907

Section 9.7             Severability.  If at any time any covenant or provision contained herein is deemed by a court or other body of competent jurisdiction (including an arbitral tribunal convened in accordance with the Dispute Resolution Agreement) to be invalid or unenforceable, such covenant or provision shall be considered divisible and such covenant or provision shall be deemed immediately amended and reformed to include only such part of such covenant or provision as such court or other body has held to be valid and enforceable; and the Parties agree that such covenant or provision, as so amended and reformed, shall be valid and binding as though the invalid or unenforceable portion had not been included herein.

Section 9.8             Amendment; Waiver.  No provision of this Agreement may be amended or modified except by an instrument or instruments in writing signed by all of the Parties and designated as an amendment or modification, as applicable.  No waiver by any Party of any provision of this Agreement shall be valid unless in writing and signed by the Party making such waiver and designated as a waiver.  No failure or delay by any Party in exercising any right,

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power, or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise thereof or the exercise of any other right, power, or remedy preclude any further exercise thereof or the exercise of any other right, power, or remedy.  No waiver of any provision hereof shall be construed as a waiver of any other provision.

Section 9.9             Assignment and Binding Effect.  All of the terms and provisions of this Agreement shall be binding on, and are for the sole benefit of, the Parties and their respective successors and permitted assigns, but neither this Agreement nor any of the rights, benefits, or obligations hereunder shall be assigned or delegated by any of the Parties hereto without the prior written consent of all of the Parties, except in accordance with Section 5.2, Section 5.3, or Section 5.4, and they shall not be construed as conferring and are not intended to confer any rights, benefits, or obligations on any other Person.

Section 9.10           No Benefit to Others.  Except as expressly set forth herein, the representations, warranties, covenants, and agreements contained in this Agreement are for the sole benefit of the Parties and their respective successors and permitted assigns, and they shall not be construed as conferring and are not intended to confer any rights, remedies, obligations, or liabilities on any other Person, unless such Person is expressly stated herein to be entitled to any such right, remedy, obligation, or liability.

Section 9.11           Counterparts.  This Agreement may be executed by the Parties in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute one and the same instrument.

Section 9.12           Interpretation.

(a)           As used herein, except as otherwise indicated herein or as the context may otherwise require: (i) the words “include,” “includes,” and “including” are deemed to be followed by “without limitation” whether or not they are in fact followed by such words or words of like import; (ii) the words “hereof,” “herein,” “hereunder,” and comparable terms refer to the entirety of this Agreement, including the Exhibits and Schedules hereto, and not to any particular article, section, or other subdivision hereof or Exhibit or Schedule hereto; (iii) any pronoun shall include the corresponding masculine, feminine, and neuter forms; (iv) the singular includes the plural and vice versa; (v) references to any agreement or other document are to such agreement or document as amended, modified, supplemented, and restated now or hereafter from time to time; (vi) references to any statute or regulation are to it as amended, modified, supplemented, and restated now or hereafter from time to time, and to any corresponding provisions of successor statutes or regulations; (vii) references to “Article,” “Section,” or another subdivision or to a “Schedule” or “Exhibit” are to an article, section, or subdivision hereof or a “Schedule” or “Exhibit” hereto; and (viii) except as otherwise expressly provided in this Agreement, references to any Person or Entity include such Person’s or Entity’s successors and permitted assigns.

(b)           Any reference herein to a “day” or number of “days” (without the explicit qualification of “Business”) shall be deemed to refer to a calendar day or number of calendar days.  If any action or notice is to be taken or given on or by a particular

82

calendar day, and such calendar day is not a Business Day, then such action or notice may be taken or given on the next succeeding Business Day.

(c)           Any financial or accounting terms that are not otherwise defined herein shall have the meanings given thereto under GAAP.  For purposes of each reference herein to an amount in Dollars in circumstances where the actual item is expressed in any other currency shall be considered a reference to the Dollar equivalent of such other currency on the relevant date of determination of such amount at the relevant noon buying rate in the City of New York for cable transfers in foreign currencies, as announced by the Federal Reserve Bank of New York for customs purposes (the “Reference Exchange Rate”).

Section 9.13           Rules of Construction.  The Parties agree that they have been represented by counsel during the negotiation, preparation, and execution of this Agreement and, therefore, waive the application of any Law or rule of construction providing that ambiguities in an agreement or other document shall be construed against the Party drafting such agreement or document.

Section 9.14           No Partnership.  No provision of this Agreement creates a partnership or joint venture between or among the Parties or makes any Party the agent of any other Party for any purpose.  No Party has the authority or power to bind, to contract in the name of, or to create any liability for any other Party in any way or for any purpose.

[Remainder of page intentionally left blank]

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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first written above.

APEX SILVER MINES SWEDEN AB
By:	/s/ Marcel DeGuire
	Marcel DeGuire
Its:	Director
APEX LUXEMBOURG S.À R.L
By:	/s/ Gerald Malys
	Gerald Malys
Its:	Manager
GOTLEX LAGERAKTIEBOLAG nr. 451, organization number 556702-1083
By:	/s/ Gerald Malys
	Gerald Malys
Its:	Director
MINERA SAN CRISTÓBAL, S.A.
By:	/s/ Jeffrey Clevenger
	Jeffrey Clevenger
Its:	Director

EX-10.4

Exhibit 10.4

Execution Version

OPTION AGREEMENT

Entered into as of September 25, 2006

between

APEX SILVER MINES LIMITED

and

SUMITOMO CORPORATION

TABLE OF CONTENTS

		Page
ARTICLE I DEFINITIONS		2
Section 1.1	Defined Terms	2
Section 1.2	Definitions from Purchase and Sale Agreement	6
ARTICLE II GENERAL		6
Section 2.1	Active and Reserve Assets	6
ARTICLE III ACTIVE ASSET OPTION		7
Section 3.1	Grant of Active Asset Option	7
Section 3.2	Active Asset Option Term	7
Section 3.3	Exercise of Active Asset Option	7
Section 3.4	Payment with respect to each Optioned Active Asset	8
Section 3.5	Failure to Exercise Active Asset Option	9
Section 3.6	Cessation of an Active Asset; Third-Party Sale	9
Section 3.7	Access to Records	10
ARTICLE IV RESERVE ASSET OPTION		11
Section 4.1	Grant of Reserve Asset Option	11
Section 4.2	Reserve Asset Option Term	11
Section 4.3	Exercise of Option	11
Section 4.4	Payment for Optioned Reserve Assets	12
Section 4.5	Failure to Exercise Reserve Asset Option	13
Section 4.6	Cessation of a Reserve Asset; Third-Party Sale	13
Section 4.7	Access to Records	14
ARTICLE V TERM AND TERMINATION		14
Section 5.1	Term	14
Section 5.2	Effect of Termination	15
ARTICLE VI FAILURE TO MAKE PAYMENT		15
Section 6.1	Failure to Make Holding Cost Payment	15
ARTICLE VII ADDITIONAL PROVISIONS		15
Section 7.1	Entire Agreement	15
Section 7.2	Confidentiality	15
Section 7.3	Governing Law; Language	16
Section 7.4	Dispute Resolution	16
Section 7.5	Headings	16
Section 7.6	Notices	16
Section 7.7	Severability	17

i

		Page
Section 7.8	Amendment; Waiver	17
Section 7.9	Assignment and Binding Effect	17
Section 7.10	No Benefit to Others	18
Section 7.11	No Consequential Damages	18
Section 7.12	Counterparts	18
Section 7.13	Interpretation	18
Section 7.14	Rules of Construction	19

Appendix A          Active Assets

Appendix B           Reserve Assets

ii

OPTION AGREEMENT

This Option Agreement is entered into as of September 25, 2006 (the “Effective Date”), by and between:

APEX SILVER MINES LIMITED, an exempted company limited by shares duly incorporated and validly existing under the Laws of the Cayman Islands, British West Indies (“Apex”), with its registered office at the offices of Walkers SPV Limited, P.O. Box 908GT, Walker House, Mary Street, George Town, Grand Cayman, Cayman Islands, British West Indies; and

SUMITOMO CORPORATION, a corporation duly organized and validly existing under the Laws of Japan (“Sumitomo”), with its headquarters at 1-8-11, Harumi, Chuo-ku, Tokyo 104-8610, Japan.

Apex and Sumitomo are sometimes referred to herein individually as a “Party” and collectively as the “Parties.”  Capitalized terms used and not otherwise defined in this Agreement have the respective meanings ascribed thereto in ARTICLE I.

RECITALS

A.            Pursuant to the Purchase and Sale Agreement, dated as of the date hereof (the “Purchase and Sale Agreement”), Sumitomo, among other things, acquired (1) 100% of the issued and outstanding share capital of New Sweden 1, which on the Closing Date owned 35% of the issued and outstanding share capital of Minera San Cristóbal S.A., a sociedad anónima organized under the Laws of Bolivia (“MSC”), (2) 100% of the issued and outstanding share capital of New Sweden 2, which on the Closing Date owned 35% of the issued and outstanding quotas of Apex Metals Marketing GmbH, a Gesellschaft mit beschränkter Haftung organized under the Laws of Switzerland (“New Metals”), and (3) 35% of the issued and outstanding share capital of Apex Silver Finance Ltd., an exempted company limited by shares incorporated under the Laws of the Cayman Islands, British West Indies (“New Cayman”) (collectively, the “Acquisition”).

B.            In connection with the Acquisition, Sumitomo desires to obtain, and Apex is willing to grant to Sumitomo, an option to acquire up to a 35% interest (but not less than 20%) in certain mineral exploration assets of Apex (or its Subsidiaries) pursuant to the terms and conditions set forth below.

agreement

In consideration of the mutual promises, covenants, and agreements set forth herein, the Purchase and Sale Agreement and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

1

ARTICLE I
DEFINITIONS

Section 1.1                Defined Terms.  For purposes of this Agreement, the following terms have the following meanings:

“Acquisition” has the meaning specified in the recitals.

“Active Asset” means Apex’s (or its Subsidiary’s) Rights with respect to an Exploration Property set forth in Appendix A attached hereto.

“Active Asset Cessation/Sale Notice” has the meaning specified in Section 3.6(a).

“Active Asset Option” has the meaning specified in Section 3.1.

“Active Asset Option Notice” has the meaning specified in Section 3.3(a).

“Active Asset Option Term” has the meaning specified in Section 3.2.

“Active Asset Payment” has the meaning specified in Section 3.4(a).

“Active Offered Terms” has the meaning specified in Section 3.6(c).

“Active Retained Interest” has the meaning specified in Section 3.6(b).

“Active Third-Party Sale” has the meaning specified in Section 3.6(a).

“Affiliate” means, with respect to any Person, any other Person that directly, or indirectly through one or more intermediaries, Controls, is Controlled by, or is under common Control with, the Person in question.

“Agreement” means this Option Agreement (including the Appendices attached hereto).

“Apex” has the meaning specified in the preamble.

“Asset Development Documents” means all material documents, agreements, accounting records, and financial statements in Apex’s possession related to an Exploration Property.

“Business Day” means any day other than Saturday, Sunday, and a day on which banks in New York, New York, U.S.A. or Tokyo, Japan are required or permitted to close.

“Confidential Information” has the meaning specified in Section 7.2.

“Definitive Exploration Property Agreements” has the meaning specified in Section 3.3(b).

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“Development Costs” means costs paid to third parties incurred after the acquisition of an Exploration Property to evaluate the feasibility of developing and conducting mining operations on such property, provided that Development Costs shall not include any Holdings Costs.

“Dispute Resolution Agreement” means that certain Dispute Resolution Agreement, dated as of the date hereof, by and among Apex, Apex Sweden, Apex Luxembourg, Service Company, Sumitomo, New Sweden 1, New Sweden 2, MSC, New Metals, and New Cayman.

“Dollar” or “Dollars” means the lawful currency of the United States of America.

“Effective Date” has the meaning specified in the preamble.

“Exploration Costs” means all costs and expenses incurred in conducting exploration and prospecting activities on or in connection with an asset including the preparation of feasibility studies, the active pursuit of required Government Approvals and the performance of required environmental protection or reclamation obligations, the building, maintenance, and repair of roads, drill site preparation, drilling, tracking, sampling, trenching, digging test pits, shaft sinking, acquiring, diverting, and/or transporting water necessary for exploration, logging of drill holes and drill core, completion and evaluation of geological, geophysical, geochemical, or other exploration data, and preparation of interpretive reports, and surveying and laboratory costs and charges (including assays or metallurgical analyses and tests).

“Exploration Entity” means an Entity as may be permitted to be formed in any given jurisdiction, formed to pursue the development of a given Exploration Property.

“Exploration Property” has the meaning specified in Section 2.1(a).

“GAAP” means generally accepted accounting principles as used in the United States of America.

“Holding Costs” means the periodic and other ordinary and necessary costs of owning, leasing, licensing, maintaining, or otherwise holding an Exploration Property or the Rights associated therewith including property taxes, annual minimum lease, license, or royalty payments, insurance, costs for providing security for persons and equipment on such property, the costs of routine land, buildings, and equipment maintenance, and interest on debt incurred to acquire such Exploration Property or Rights.

“Holding Costs Payment” has the meaning specified in Section 3.6(b).

“Interest” has the meaning specified in Section 3.1.

“Interest Ratio” has the meaning specified in the MSC Shareholder Agreement.

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“Moody’s” means Moody’s Investors Service, Inc. and any successor thereto, so long as such successor is a “nationally recognized statistical rating organization” registered with the Securities and Exchange Commission of the United States of America.

“MSC” has the meaning specified in the recitals.

“MSC Shareholders Agreement” means that certain MSC Shareholders Agreement, dated as of the Closing Date, among Apex Sweden, Apex Luxembourg, New Sweden 1 and MSC.

“Optioned Active Asset” has the meaning specified in Section 3.3(a).

“Optioned Asset Historical Cost” means the documented or supported aggregate historical costs incurred by Apex with respect to the Optioned Active Asset(s) or the Optioned Reserve Asset(s), as applicable.  Such historical costs shall include Exploration Costs, Holding Costs, and all other related costs, including reasonably allocated overhead costs related to such asset.

“Optioned Reserve Asset” has the meaning specified in Section 4.3(b).

“Party” or “Parties” has the meaning specified in the preamble.

“Payment Date” has the meaning specified in Section 6.1.

“Purchase and Sale Agreement” has the meaning specified in the recitals.

“Qualified Third Party” means an Entity the non-credit-enhanced long-term senior unsecured debt of which is rated at least the lesser of (i) BBB- by S&P or Baa3 by Moody’s, and (ii) the credit rating of the non-credit-enhanced long-term senior unsecured debt of Sumitomo as provided by S&P or Moody’s as of the date of the transfer, sale, or other disposition by Sumitomo (or its Subsidiary) of its direct or indirect equity interests in an Exploration Entity to such Entity.

“Reserve Asset” means Apex’s (or its Subsidiary’s) Rights with respect to an Exploration Property set forth in Appendix B attached hereto or deemed to be a Reserve Asset in accordance with the terms hereof.

“Reserve Asset Cessation/Sale Notice” has the meaning specified in Section 4.6(a).

“Reserve Asset Option” has the meaning specified in Section 4.1.

“Reserve Asset Option Notice” has the meaning specified in Section 4.3(b).

“Reserve Asset Option Term” has the meaning specified in Section 4.2.

“Reserve Asset Trigger Notice” has the meaning specified in Section 4.3(a).

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“Reserve Definitive Exploration Property Agreements” has the meaning specified in Section 4.3(c).

“Reserve Offered Terms” has the meaning specified in Section 4.6(c).

“Reserve Retained Interest” has the meaning specified in Section 4.6(b).

“Reserve Third-Party Sale” has the meaning specified in Section 4.6(a).

“Review Documents” has the meaning specified in Section 3.2.

“Rights” has the meaning specified in Section 2.1(a).

“S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc and any successor thereto so long as such successor is a nationally recognized statistical rating organization registered with the Securities and Exchange Commission of the United States of America.

“Subsidiary” means with respect to any Person (other than MSC, New Metals and New Cayman as same apply to Apex):

(a)           a corporation a majority in voting power of whose share capital with voting power, under ordinary circumstances, to elect directors is, at the date of determination thereof, directly or indirectly, owned by such Person, by a Subsidiary of such Person, or by such Person and one or more Subsidiaries of such Person,

(b)           a partnership or limited liability company in which such Person or a Subsidiary of such Person is, at the date of determination thereof, (i) in the case of a partnership, a general partner of such partnership with the power affirmatively to direct the policies and management of such partnership or (ii) in the case of a limited liability company, the managing member or, in the absence of a managing member, a member with the power affirmatively to direct the policies and management of such limited liability company, or

(c)           any Entity (other than a corporation, partnership, or limited liability company) in which such Person, a Subsidiary of such Person, or such Person and one or more Subsidiaries of such Person, directly or indirectly, at the date of determination, has (i) the power to elect or direct the election of a majority of the members of the governing body of such Person or (ii) in the absence of such a governing body, at least a majority ownership interest.

“Sumitomo” has the meaning specified in the preamble.

“Sumitomo Interestholders” has the meaning specified in the MSC Shareholder Agreement.

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“Term” has the meaning specified in Section 5.1(a).

“US$” means Dollars.

Section 1.2                Definitions from Purchase and Sale Agreement.  Undefined capitalized terms used herein have the respective meanings set forth in the Purchase and Sale Agreement.

ARTICLE II
GENERAL

Section 2.1                Active and Reserve Assets.

(a)           Appendices A and B attached hereto set forth the ownership rights (the “Rights”) of Apex (or its Subsidiaries) with respect to each Active Asset or Reserve Asset set forth therein (each an “Exploration Property”).  Apex represents and warrants that it, or its Subsidiary, own such Rights.  Sumitomo acknowledges that the Rights may be subject to transfer restrictions or other limitations (i.e. rights of first refusal) and in connection therewith, Sumitomo’s rights under this Agreement are subject thereto.  Subject to Section 3.6 and Section 4.6, Apex further covenants, represents and warrants that, to the extent within the control of Apex, neither Apex nor any applicable Affiliate of Apex shall grant any acquisition rights to third-parties with respect to the Rights or the Exploration Properties other than Sumitomo during the Term.  Notwithstanding anything herein to the contrary, in no event shall the option rights granted hereunder apply to any property right or Contract to which Apex (or any of its Subsidiaries) is a party or any of its rights or interests thereunder if, and for so long as, the grant of such rights shall constitute or result in (i) the abandonment, invalidation, or enforceability of any right or interest of Apex (or its Subsidiaries) therein or (ii) a breach or termination pursuant to the terms of, or a default under, any such property right or Contract; provided, however, that such grant shall apply immediately at such time as the condition causing such abandonment, invalidation, or unenforceability shall be remedied, and to the extent severable, shall apply immediately to any portion of such property right or Contract that does not result in the consequences specified in clause (i) or (ii) of this Section 2.1(a).

(b)           Apex shall have the right at any time, and from time to time prior to the commencement of an Active Asset Option Term relating to a specified Active Asset, to reclassify such Active Asset as a Reserve Asset and vice versa and Appendices A and B shall be amended accordingly by Apex without further action of the Parties under Section 7.8; provided, however, that no such reclassification shall be made on or after 18 months after the Effective Date or with respect to an asset if an Active Asset Option Notice or a Reserve Asset Option Notice, as applicable, has been delivered with respect to such asset in accordance with the terms of this Agreement.

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ARTICLE III
ACTIVE ASSET OPTION

Section 3.1                Grant of Active Asset Option.  Apex hereby grants to Sumitomo the option (the “Active Asset Option”) to acquire from time to time during the Term and on the terms and conditions set forth in this ARTICLE III, an undivided interest of not less than 20% but not more than 35% (an “Interest”) in one or more of the Active Assets.

Section 3.2                Active Asset Option Term.  The “Active Asset Option Term” for any Active Asset shall commence on the date that Sumitomo receives the Asset Development Documents for such Active Asset and shall terminate at 11:59 P.M. (Denver, Colorado, U.S.A. time) on the date that is 60 days after the date Sumitomo receives the Asset Development Documents for such Active Asset.  Apex shall deliver the Asset Development Documents relating to all of the Active Assets to Sumitomo no later than 22 months after the Effective Date.  In the event that Apex (or its Subsidiaries) comes in possession of an Asset Development Document not previously in its possession after the commencement of the Active Asset Option Term, or in the event Apex (or its Subsidiaries) creates an Asset Development Document after the commencement of the Active Asset Option Term, Apex shall promptly deliver such document to Sumitomo, but the existence of such document shall not extend the Active Asset Option Term.  In addition, Sumitomo acknowledges and agrees that some Asset Development Documents may be made available to Sumitomo for review but not physically delivered (“Review Documents”).  Apex shall provide Sumitomo prompt written notice of the existence of Review Documents and the location thereof, but the receipt of such notice and the existence of such Review Documents shall not extend the Active Asset Option Term.

Section 3.3                Exercise of Active Asset Option.

(a)           If Sumitomo elects to exercise any Active Asset Option, Sumitomo shall deliver a written notice (the “Active Asset Option Notice”) to Apex prior to the expiration of such Active Asset Option Term relating to such Active Asset.  The Active Asset Option Notice shall set forth the Active Asset in which Sumitomo elects to acquire an Interest (the “Optioned Active Asset”) and the amount of the Interest Sumitomo wishes to acquire, which in no case shall be less than 20% nor more than 35%, in each such case an Optioned Active Asset.

(b)           Commencing upon receipt by Apex of the Active Asset Option Notice, Apex and Sumitomo shall (i) jointly determine a mutually acceptable structure for the acquisition of Interests in the Optioned Active Assets, and (ii) enter into acquisition documents with respect thereto that are on terms and conditions reasonably acceptable to the Parties (including, among other documents, a shareholders or joint venture agreement providing for the contribution by each party of its pro rata share of future operating and capital costs of the Optioned Active Assets) (the “Definitive Exploration Property Agreements”).  The Definitive Exploration Property Agreements shall include provisions for (A) rights of first refusal with respect to a Party’s transfer of all or part of its interest therein, (B) the contribution by each party of its pro rata share of future operating and capital costs of the Optioned Active Assets, (C) dilution, so that if either Party fails to contribute its proportionate share, the other Party shall have the right to contribute the

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non-contributing party’s share against the issuance of additional beneficial interests (in shares, quotas, membership, or partnership interest or other comparable designation) to the contributing Party to reflect the adjusted proportionate holdings resulting from such contribution(s) (and non-contribution, as applicable), (D) loss of rights so that at such time a Party’s beneficial interest in an Exploration Entity falls below 25% as a result of clause (C) of this Section 3.3(b), such Party shall have no further rights with respect to the management of such Exploration Entity or the Optioned Active Asset it is developing except the right to have a director on the Board of Exploration Entity until the Party's beneficial interest falls below 20%, and (E) provisions, on such terms as the Parties may mutually agree, similar to ARTICLE II, Section 3.2, Section 3.3, Section 5.1 and Section 7.7 of the MSC Shareholders Agreement.  Apex shall cause any of its Subsidiaries which have rights in the applicable Optioned Active Asset to enter into the Definitive Exploration Property Agreements to the extent reasonably required for Sumitomo to effectively acquire its Interest in the Optioned Active Asset.  Notwithstanding the foregoing, Sumitomo may at any time prior to the execution of the Definitive Exploration Property Agreements elect, by written notice to Apex, not to acquire an interest in one or more Optioned Active Assets to which the Definitive Exploration Property Agreements relate, in which event (X) such Optioned Active Assets shall cease to be subject to this Agreement, and (Y) Sumitomo shall reimburse Apex for reasonable out-of-pocket expenses incurred by Apex in connection with the negotiation of the Definitive Exploration Property Agreement including attorney’s and other consultant fees.

Section 3.4                Payment with respect to each Optioned Active Asset.

(a)           In consideration for each Optioned Active Asset, Sumitomo shall, in each applicable Definitive Exploration Property Agreement, agree to contribute to each Exploration Entity operating the respective Optioned Active Asset the Dollar amount, in cash, equal to 100% of all costs incurred by the Exploration Entity since its establishment until such time Sumitomo’s contributions to such entity shall equal an amount which, when divided by a number equal to the sum of (i) Sumitomo’s said contributions plus (ii) the Optioned Asset Historical Cost incurred up to the effective date of such Definitive Exploration Property Agreement, equals the same percentage as the Interest in such Optioned Active Asset that Sumitomo is acquiring (the “Active Asset Payment”).

(b)           Sumitomo and Apex hereby acknowledge and agree that if Sumitomo (or its Subsidiary) transfers, sells, or otherwise disposes of its direct or indirect equity interests in an Exploration Entity prior to payment in full of the Active Asset Payment as set forth in Section 3.4(a), then Sumitomo (or its Subsidiary) shall, within five Business Days of the date on which Sumitomo or its Subsidiaries ceases to own such equity interest, pay Apex (or its Subsidiary) an amount, in cash, equal to the outstanding unpaid amount of the Active Asset Payment which payment shall satisfy the obligation under Section 3.4(a).  Notwithstanding the foregoing and subject to any applicable rights of first refusal, if Sumitomo or its Subsidiary transfers, sells or otherwise disposes of all, but not less than all, of its direct or indirect equity interests in such Exploration Entity to a

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Qualified Third Party, and if such Qualified Third Party expressly assumes all of Sumitomo’s obligations under this Agreement in a writing delivered to Apex (or its Subsidiary), then Sumitomo shall be released of its obligations with respect to the applicable Active Asset arising from and after the completion of such transfer, except for such obligations arising out of events or circumstances that occurred prior to the completion of such transfer, whether occurring before, at, or after the completion of such transfer, and only to the extent such obligations have been assumed by the Qualified Third Party. 

Section 3.5                Failure to Exercise Active Asset Option

. In the event that Sumitomo does not elect to exercise an Active Asset Option with respect to a specific Active Asset during the Active Asset Option Period relating to such Active Asset in accordance with the terms and conditions of this ARTICLE III, then Sumitomo’s rights with respect to such Active Asset as set forth in this ARTICLE III shall terminate and have no further force or effect, and, notwithstanding anything to the contrary in this Agreement, the Parties hereto shall have no liability, responsibility, or obligation, whatsoever, to the each other in respect of this ARTICLE III with respect to such Active Asset.

Section 3.6                Cessation of an Active Asset; Third-Party Sale.

(a)           If, prior to the end of the Term and prior to Sumitomo’s submission of an Active Asset Option Notice with respect to any Active Asset, Apex either (i) elects to cease the exploration or development of an Active Asset still subject to the Active Asset Option or (ii) agrees (subject to this Agreement) to sell an interest in an Active Asset still subject to the Active Asset Option to an unaffiliated third party (an “Active Third-Party Sale”), then, promptly after such decision or agreement, Apex shall provide Sumitomo written notice of same (the “Active Asset Cessation/Sale Notice”) together with the Asset Development Documents relating to such Active Asset, to the extent not already delivered.  Sumitomo shall have the right to acquire all or part of the subject Active Asset on the terms and conditions set forth in Section 3.6(b) and Section 3.6(c). 

(b)           If the Active Asset Cessation/Sale Notice states that Apex intends to cease the exploration or development of an Active Asset still subject to the Active Asset Option, then Apex shall indicate in the Active Asset Cessation/Sale Notice the percentage interest of the interest in such Active Asset that Apex shall have the right to retain (the “Active Retained Interest”); provided, however, that such Active Retained Interest shall not exceed 35% of the interest in such Active Asset.  Sumitomo shall have 60 days from the date of receipt of the Active Asset Cessation/Sale Notice and the related Asset Development Documents to elect to either (i) acquire the Active Asset, other than the Active Retained Interest therein, on the terms, conditions, and procedures set forth in Section 3.3(b), or (ii) request that such Active Asset be deemed a Reserve Asset.  Any such election shall be made by written notice to Apex specifying whether Sumitomo is electing to acquire such Acquired Asset or to deem it a Reserve Asset.  In addition:

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(I)            If Sumitomo elects to acquire the applicable percentage interest of such Active Asset, then the purchase price for such interest shall be the Dollar amount, in cash, equal to the product of (i) the percentage interest of such Active Asset to be acquired by Sumitomo and (ii) Optioned Asset Historical Costs incurred by Apex for such Active Asset up to the date of Sumitomo’s payment of such purchase price. 

(II)           If Sumitomo elects to deem any such Active Asset a Reserve Asset, such Active Asset shall thereafter be treated as a Reserve Asset subject to the provisions of ARTICLE IV.  Sumitomo shall be responsible for all Holding Costs with respect to such asset from the date such asset is designated a Reserve Asset until the earlier of (A) the termination of this Agreement or (B) the date on which Sumitomo acquires an Interest in such asset in accordance with the terms hereof (the “Holding Costs Payment”).  In connection therewith, Apex, on a monthly basis, shall provide Sumitomo an invoice that sets forth the amount payable by Sumitomo with respect such Holding Costs along with reasonable supporting documentation thereof.  All amounts invoiced shall be payable by Sumitomo no later than five Business Days after invoice receipt.  Payment of any such Holding Costs that are outstanding (including any interest accrued thereon and whether invoiced or not) shall be a condition to the closing of Sumitomo’s acquisition of an Interest in such asset, to the extent Sumitomo elects to acquire an Interest in accordance with ARTICLE IV.

(c)           If the Active Asset Cessation/Sale Notice states that Apex intends to enter into an Active Third-Party Sale, then Apex shall indicate in the Active Asset Cessation/Sale Notice the terms and conditions on which such Active Asset is proposed to be sold to a third party (the “Active Offered Terms”) (including the percentage interest to be sold, sale price, and applicable time period in which the transaction shall close).  Sumitomo shall have 30 Business Days from the date of receipt of the Active Asset Cessation/Sale Notice and the related Asset Development Documents to elect to acquire such interest in the applicable Active Asset on the Active Offered Terms.  Apex may sell such Active Asset to a third-party on the Active Offered Terms within 120 days of the end of such 30 Business Day period or within 120 days of Sumitomo’s failure to consummate the transaction on the Active Offered Terms (including applicable required time periods with respect thereto) after having made an election to do so.  In the event Apex does not complete such a sale to a third party on the Active Offered Terms, the Active Asset shall, at the election of Apex, be deemed either an Active Asset or a Reserve Asset.

Section 3.7                Access to Records.  Commencing on the Effective Date until the end of the Term (except with respect to those Active Assets with respect to which the Active Asset Option has terminated), Apex shall afford to Sumitomo and its business, accounting, legal, engineering and other representatives, as well as their respective officers and employees, reasonable access, upon reasonable notice, to its documents, agreements, accounting records, and

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financial statements applicable to, and to the physical properties comprising, the Active Assets and shall permit Sumitomo and such representatives to make such tests, including soil and other field tests, of such Active Assets as Sumitomo may reasonably request. 

ARTICLE IV
RESERVE ASSET OPTION

Section 4.1                Grant of Reserve Asset Option.  Apex hereby grants to Sumitomo the option (the “Reserve Asset Option”) to acquire, from time-to-time during the Term and on the terms and conditions set forth in this ARTICLE IV, an Interest in one or more of the Reserve Assets. 

Section 4.2                Reserve Asset Option Term.  The “Reserve Asset Option Term” with respect to any Reserve Asset shall commence on the date (after delivery of the applicable Reserve Asset Trigger Notice) Sumitomo receives the Asset Development Documents (taking into account any Asset Development Documents provided or reviewed by Sumitomo in accordance with Section 4.3 prior to such date) with respect to such Reserve Asset and shall terminate at 11:59 p.m. (Denver, Colorado time) on the date that is 60 days after Sumitomo receives such documents.  In the event that Apex (or its Subsidiaries) comes in possession of an Asset Development Document not previously in its possession after the commencement of the Reserve Asset Option Term, or in the event Apex (or its Subsidiaries) creates an Asset Development Document after the commencement of the Reserve Asset Option Term, Apex shall promptly deliver such document to Sumitomo, but the existence of such document shall not extend the Reserve Asset Option Term.  In addition, Sumitomo acknowledges and agrees that Apex may provide Sumitomo with Review Documents.  Apex shall provide Sumitomo prompt written notice of the existence of Review Documents and the location thereof, but the receipt of such notice and the existence of such Review Documents shall not extend the Reserve Asset Option Term.

Section 4.3                Exercise of Option.

(a)           Apex shall provide Sumitomo written notice promptly after Apex has expended in excess of US$200,000 (as determined from the Effective Date) in Development and/or Exploration Costs with respect to a Reserve Asset, and Sumitomo may at any time during the Term provide a written notice to Apex requesting that Apex deliver to Sumitomo all Asset Development Documents relating to a specified Reserve Asset (either such notice being a “Reserve Asset Trigger Notice”).  Apex shall provide Sumitomo with all Asset Development Documents relating to such Reserve Asset as soon as practicable after delivery of the Reserve Asset Trigger Notice. For clarity, Sumitomo may request to review documents related to any of the Reserve Assets at any time during the Term of this agreement, whether or not a Reserve Asset Trigger Notice has been delivered by Apex, for the purpose of determining Sumitomo’s desire to present a Reserve Asset Option Notice under the terms of this Section 4.3(a).

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(b)           At any time prior to the end of any Reserve Asset Option Term, Sumitomo may elect to exercise the Reserve Asset Option with respect to the Reserve Asset that is the subject of a Reserve Asset Trigger Notice by delivering a written notice (the “Reserve Asset Option Notice”) stating Sumitomo’s intent to acquire an Interest in the applicable Reserve Asset (an “Optioned Reserve Asset”).  The Reserve Asset Option Notice shall set forth the Reserve Asset in which Sumitomo elects to acquire an Interest and the amount of the Interest Sumitomo wishes to acquire, which in no case shall be less than 20% nor more than 35%, in each such case an Optioned Reserve Asset.

(c)           Commencing upon receipt by Apex of the Reserve Asset Option Notice, Apex and Sumitomo shall (i) jointly determine a mutually acceptable structure for the acquisition of the Interest in the Optioned Reserve Asset, and (ii) enter into acquisition documents with respect thereto that are on terms and conditions reasonably acceptable to the Parties (including, among other documents, a shareholders or joint venture agreement providing for the contribution by each party of its pro rata share of the future operating and capital costs of the Optional Reserve Asset) (the “Reserve Definitive Exploration Property Agreements”).  The Reserve Definitive Exploration Property Agreements shall include provisions for (A) rights of first refusal with respect to a Parties transfer of all or part of their interest therein, (B) the contribution by each party of its pro rata share of future operating and capital costs of the Optioned Reserve Assets, (C) if either Party fails to contribute its proportionate share, the other Party shall have the right to contribute the non-contributing party’s share against the issuance of additional beneficial interests (in shares, quotas, membership or partnership interest, or other comparable designation) to the contributing Party to reflect the adjusted proportionate holdings resulting from such contribution(s) (and non-contribution, as applicable), (D) at such time a Party’s beneficial interest in an Exploration Entity falls below 25% as a result of clause (C) of this Section 4.3(c), such Party shall have no further rights with respect to the management of such Exploration Entity or the Exploration Property it is developing except the right to have a director on the Board of the Exploration Entity until the Party's beneficial interest in the Exploration Entity falls below 20%, and (E) provisions, on such terms as the Parties may mutually agree, similar to ARTICLE II, Section 3.2, Section 3.3, Section 5.1 and Section 7.7 of the MSC Shareholders Agreement.  Apex shall cause any of its Subsidiaries having rights in the applicable Optioned Reserve Asset to enter into the Reserve Definitive Exploration Property Agreements to the extent reasonably required for Sumitomo to effectively acquire its Interest in the Optioned Reserve Asset.  Notwithstanding the foregoing, Sumitomo may at any time prior to the execution of the Reserve Definitive Exploration Property Agreement elect, by written notice to Apex, not to acquire an interest in one or more of the Optioned Reserve Assets to which the Reserve Definitive Exploration Property Agreement relates in which event such Reserve Asset shall cease to be the subject to this Agreement.

Section 4.4                Payment for Optioned Reserve Assets.  In consideration for each Optioned Reserve Asset, Sumitomo shall pay to Apex, at the closing of the acquisition of the Interest in such Optioned Reserve Asset, the Dollar amount in cash, equal to the percentage

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Interest of such Optioned Reserve Asset that Sumitomo is acquiring times the Optioned Asset Historical Costs with respect to such Optioned Reserve Asset that have been incurred up to the date of Sumitomo’s said payment.

Section 4.5                Failure to Exercise Reserve Asset Option. In the event that Sumitomo elects not to exercise any Reserve Asset Option, or fails to timely deliver a Reserve Asset Option Notice, with respect to a Reserve Asset for which a Reserve Asset Option Notice has been delivered, then Sumitomo’s rights as set forth in this ARTICLE IV with respect to such Reserve Asset shall terminate and have no further force or effect, and, notwithstanding anything to the contrary in this Agreement, the Parties hereto shall have no liability, responsibility, or obligation, whatsoever, to each other in respect of this ARTICLE IV with respect to such Reserve Asset.

Section 4.6                Cessation of a Reserve Asset; Third-Party Sale. 

(a)           Except with respect to an Optioned Reserve Asset or a Reserve Asset for which a Reserve Asset Trigger Notice has been delivered, if, during the Term, Apex either (i) makes a permanent election not to pursue development of a Reserve Asset or (ii) agrees (subject to this Agreement) to sell an interest in a Reserve Asset to an unaffiliated third party (a “Reserve Third-Party Sale”), then, promptly after such decision or agreement, Apex shall provide Sumitomo written notice of same (the “Reserve Asset Cessation/Sale Notice”) together with the Asset Development Documents relating to such Reserve Asset, to the extent not already delivered.  Sumitomo shall have the right to acquire all or part of the subject Reserve Asset on the terms and conditions set forth in Section 4.6(b) and Section 4.6(c). 

(b)           If the Reserve Asset Cessation/Sale Notice states that Apex has permanently elected not to pursue development of a Reserve Asset, then Apex shall indicate in the Reserve Asset Cessation/Sale Notice the percentage interest of such Reserve Asset that Apex shall have the right to retain (the “Reserve Retained Interest”); provided, however, that such Reserve Retained Interest shall not exceed 35% of the interest in such Reserve Asset.  Sumitomo shall have 60 days from the date of receipt of the Reserve Asset Cessation/Sale Notice and the related Asset Development Documents to elect to acquire the applicable Reserve Asset other than the Reserve Retained Interest therein on the terms, conditions, and procedures set forth in Section 4.3(c).  The purchase price for such interest shall be the Dollar amount, in cash, equal to (i) the percentage interest of such Reserve Asset to be acquired by Sumitomo multiplied by (ii) the total amount of all Optioned Asset Historical Costs incurred by Apex for such Reserve Asset up to the date of payment of such purchase price.

(c)           If the Reserve Asset Cessation/Sale Notice states that Apex intends to enter into a Reserve Third-Party Sale, then Apex shall indicate in the Reserve Asset Cessation/Sale Notice the terms and conditions on which such Reserve Asset is proposed to be sold to a third party (the “Reserve Offered Terms”) (including the percentage interest to be sold, sale price, and applicable time period in which the transaction shall

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close).  Sumitomo shall have 60 days from the date of receipt of the Reserve Asset Cessation/Sale Notice and the related Asset Development Documents to elect to acquire such interest in the applicable Reserve Asset on the Reserve Offered Terms.  Apex may sell such Reserve Asset to a third party on the Reserve Offered Terms within 120 days of the end of such 60-day period or within 120 days of Sumitomo’s failure to consummate the transaction on the Reserve Offered Terms (including applicable required time periods with respect thereto) after having made an election to do so.  In the event Apex does not complete such a sale to a third party on the Reserve Offered Terms, the Reserve Asset shall thereafter continue to be treated as a Reserve Asset subject to the provisions of ARTICLE IV.

Section 4.7                Access to Records.  During the Term of this Agreement, Apex shall afford to Sumitomo and its business, accounting, legal, engineering and other representatives, as well as their respective officers and employees, reasonable access, upon reasonable notice, to its documents, agreements, accounting records, and financial statements related to, and to the physical properties comprising, the Reserve Assets and shall permit Sumitomo and such representatives to make such tests, including soil and other field tests, of such Active Assets as Sumitomo may reasonably request.

ARTICLE V
TERM AND TERMINATION

Section 5.1                Term. 

(a)           Unless otherwise agreed in writing by the Parties, the Parties obligations under this Agreement shall commence on the Effective Date and shall terminate, along with this Agreement, upon the date that is the earlier of (i) two years after the Effective Date, or (ii) the date on which the aggregate Interest Ratios of the Sumitomo Interestholders in MSC is less than 20% (the “Term”).

(b)           Subject to Section 5.2(a) and notwithstanding the foregoing, the Term shall be tolled solely under the following circumstances:  (i) if the Asset Development Documents related to any Active Asset have not been delivered to (or reviewed by) Sumitomo on or before the date that is 60 days prior to the end of the Term, or the Section 3.3 negotiation period with respect to such Active Asset has not expired by the end of the Term, the Term shall be tolled with respect to such Active Asset for the duration of the applicable Active Asset Option Term pursuant to Section 3.2 and any negotiation period with respect thereto pursuant to Section 3.3(a); and (ii) if a Reserve Asset Trigger Notice has been delivered to or by Sumitomo with respect to a Reserve Asset, and the Asset Development Documents related to such Reserve Asset have not been delivered to (or reviewed by) Sumitomo on or before the date that is 60 days prior to the end of the Term, or the Section 4.3 negotiation period with respect to such Reserve Asset has not expired by the end of the Term, the Term shall be tolled with respect to such Reserve Asset for the duration of the applicable Reserve Asset Option Term

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pursuant to Section 4.2 and any negotiation period with respect thereto pursuant to Section 4.3.

Section 5.2                Effect of Termination.

(a)           If (i) this Agreement is terminated pursuant to  Section 5.1(a)(i) and (ii) at such time of termination, an Active Asset Option Notice or an Reserve Asset Option Notice, as applicable, has been delivered to Apex, but the acquisition process set forth in ARTICLE III or ARTICLE IV, as applicable, has not been completed in accordance with the terms hereof, then, solely with respect to such optioned asset, this Agreement shall continue until consummation of the acquisition of such asset.

(b)           If (i) this Agreement is terminated pursuant to Section 5.1(a)(ii) and (ii) at such time of termination,  an Active Asset Option Notice or an Reserve Asset Option Notice, as applicable, has been delivered to Apex, but the acquisition process set forth in ARTICLE III or ARTICLE IV, as applicable, has not been completed in accordance with the terms hereof, then this Agreement shall terminate and Sumitomo shall have no further rights with respect to such asset.

ARTICLE VI
FAILURE TO MAKE PAYMENT

Section 6.1                Failure to Make Holding Cost Payment.  If Sumitomo fails to make  a Holding Costs Payment within 30 days of the date (the “Payment Date”) such payment is due and payable, Sumitomo shall forfeit its interest and its rights to the Active Asset or Reserve Asset to which the Holding Costs Payment applies without further notice from Apex.

ARTICLE VII
ADDITIONAL PROVISIONS

Section 7.1                Entire Agreement.  This Agreement (together with the Purchase and Sale Agreement and the other Transaction Documents) contain, and are intended as, a complete statement of all of the terms of the agreements among the Parties with respect to the matters provided for herein and therein, and supersede and discharge any previous agreements and understandings between the Parties with respect to those matters.

Section 7.2                Confidentiality.  Each Party shall keep confidential, shall cause its Affiliates to keep confidential, and shall instruct its officers, directors, employees, and advisors to keep confidential, all information received from the other Party with respect to any Asset Development Document or Review Document along with any due diligence investigation conducted relating to an Active Asset or Reserve Asset and the consummation of the transactions contemplated by this Agreement or otherwise, except (i) as required by applicable securities or other Laws or stock exchange rules or administrative process, and (ii) for information that is or becomes generally available to the public other than as a result of a breach of this Section 7.2 (such information, subject to clauses (i) and (ii), “Confidential Information”).  Except to the

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extent deemed necessary or advisable by counsel to maintain compliance with, or to prevent violation of, applicable securities or other Laws or stock exchange rules, each Party shall keep the existence of and the provisions of this Agreement and the other Transaction Documents confidential and shall disclose their contents only (1) to those lenders, investors, partners, shareholders, directors, officers, employees, and agents who need to know such information for purposes of its businesses and the transactions contemplated hereby, and (2) to Governmental Authorities and third parties for purposes of obtaining approvals for the transactions contemplated hereby.  All Confidential Information shall be treated as information covered by the Confidentiality Agreement, which shall remain in full force and effect and shall not be modified or superseded in any way by this Agreement.  With respect to an Active Asset or Reserve Asset for which Sumitomo (or its Affiliates) receives Asset Development Documents or Review Documents but does not acquire an Interest in such asset, Sumitomo (or its Affiliates) (i) shall promptly return to Apex all copies of such Asset Development Documents or Review Documents in the possession or Sumitomo (or its Affiliates), and, unless specifically prohibited by court order, Sumitomo (or its Affiliates) will destroy all copies of any analyses, compilations, studies or other documents prepared by it or for its use containing or reflecting any such Asset Development Document or Review Document, and (ii) shall be prohibited from using any information in such Asset Development Document or Review Document for its (or its Affiliates) future benefit without the prior written consent of Apex.

Section 7.3                Governing Law; Language.  This Agreement shall be governed by and construed in accordance with the Laws of the State of New York, including Section 5-1401 of the New York General Obligations Law, as applied to contracts made and performed within the State of New York, without regard to any choice or conflicts of law provision or rule that would cause the application of the Laws of any jurisdiction other than the State of New York.  This Agreement has been negotiated and executed by the Parties in English.  In the event any translation of this Agreement is prepared for convenience or any other purpose, the provisions of the English version shall govern.  If any doubt, misunderstanding, or dispute arises in their interpretation, the English version shall govern.

Section 7.4                Dispute Resolution.  Any controversy, claim, or dispute between the Parties that arises out of or relates to this Agreement, including any claim or controversy relating to payment obligations hereunder or the interpretation, breach, termination, or invalidity of any provision hereof, shall be exclusively and finally settled pursuant to and in accordance with the Dispute Resolution Agreement.

Section 7.5                Headings.  The article and section headings of this Agreement are for reference purposes only and are to be given no effect in the construction or interpretation of this Agreement.

Section 7.6                Notices.  All notices and other communications hereunder shall be in writing and shall be delivered personally, telecopied (if receipt of which is confirmed by the Person to whom sent), sent by internationally recognized overnight delivery service to the Parties at the following addresses (or to such other Person or address for a Party as specified by such

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Party by like notice) (notice shall be deemed given and received upon receipt, if delivered personally, by overnight delivery service or by telecopy, except that notice of a change of address shall not be deemed given and received until actually received):

(a)           If to Apex, to it at:

Apex Silver Mines Limited
c/o Apex Silver Mines Corporation
1700 Lincoln Street, Suite 3050
Denver, Colorado  80203 U.S.A.
Attention:  Vice President of Exploration
Telecopier: +1 (303) 839-5907

(b)           If to Sumitomo, to it at:

Sumitomo Corporation
8-11, Harumi, 1-chome,
Chuo-ku, Tokyo, 104-8610 Japan
Attention:  General Manager, Non-Ferrous Metals
                                & Raw Materials Dept.
Telecopier:  +81-3-5166-6423

Section 7.7                Severability.  If at any time any covenant or provision contained herein is deemed in a final ruling of a court or other body of competent jurisdiction (including an arbitral tribunal convened in accordance with the Dispute Resolution Agreement) to be invalid or unenforceable, such covenant or provision shall be considered divisible and such covenant or provision shall be deemed immediately amended and reformed to include only such portion of such covenant or provision as such court or other body has held to be valid and enforceable (provided such amended and reformed provision shall be amended, reformed and construed in a manner that reflects and carries out the provisions and the intent of the Parties); and the Parties agree that such covenant or provision, as so amended and reformed, shall be valid and binding as though the invalid or unenforceable portion had not been included herein.

Section 7.8                Amendment; Waiver.  Except as provided in Section 2.1(b), no provision of this Agreement may be amended or modified except by an instrument or instruments in writing signed by the Parties and designated as an amendment or modification.  No waiver by any Party of any provision of this Agreement shall be valid unless in writing and signed by the Party making such waiver and designated as a waiver.  No failure or delay by any Party in exercising any right, power, or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise thereof or the exercise of any other right, power, or remedy preclude any further exercise thereof or the exercise of any other right, power, or remedy.  No waiver of any provision hereof shall be construed as a waiver of any other provision.

Section 7.9                Assignment and Binding Effect.  No Party may assign any of its rights or delegate any of its obligations under this Agreement without (a) the prior written consent of the

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other Party, and (b) the complete written assumption by the assignee of all of the obligations of the assignor under this Agreement.  All of the terms and provisions of this Agreement shall be binding on, and shall inure to the benefit of, the respective successors and permitted assigns of the Parties.

Section 7.10              No Benefit to Others.  Except as expressly set forth herein, the representations, warranties, covenants, and agreements contained in this Agreement are for the sole benefit of the Parties and their respective successors and permitted assigns, and they shall not be construed as conferring and are not intended to confer any rights, remedies, obligations, or liabilities on any other Person, unless such Person is expressly stated herein to be entitled to any such right, remedy, obligation, or liability.

Section 7.11              No Consequential Damages.  No Party shall be liable for any punitive, multiple, or other exemplary damage or loss, or any indirect, special, incidental, or consequential loss or damage, lost profits, loss of use, or lost revenues suffered by any other Party arising from or relating to a Party’s performance, non-performance, breach of, or default under a covenant, warranty, representation, term, or condition of this Agreement.  Each Party waives and relinquishes claims for such punitive, multiple, exemplary, indirect, special, incidental, or consequential losses or damages, lost profits, loss of use, or lost revenues.  The limitations on liability and damages set forth in this Section 7.11 apply to all causes of action that may be asserted hereunder, whether sounding in breach of contract, breach of warranty, tort, product liability, negligence, or otherwise.

Section 7.12              Counterparts.  This Agreement may be executed by the Parties in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute one and the same instrument.

Section 7.13              Interpretation.

(a)           As used herein, except as otherwise indicated herein or as the context may otherwise require: (i) the words “include,” “includes,” and “including” are deemed to be followed by “without limitation” whether or not they are in fact followed by such words or words of like import; (ii) the words “hereof,” “herein,” “hereunder,” and comparable terms refer to the entirety of this Agreement, including the Appendices hereto, and not to any particular article, section, or other subdivision hereof or Appendix hereto; (iii) any pronoun shall include the corresponding masculine, feminine, and neuter forms; (iv) the singular includes the plural and vice versa; (v) references to any agreement or other document are to such agreement or document as amended, modified, supplemented, and restated now or hereafter from time to time; (vi) references to any statute or regulation are to it as amended, modified, supplemented, and restated now or hereafter from time to time, and to any corresponding provisions of successor statutes or regulations; (vii) except as otherwise expressly provided in this Agreement, references to “Article,” “Section,” “preamble,” “recital,” or another subdivision or to an “Appendix” are to an article, section, preamble, recital or subdivision hereof or an “Appendix” hereto; and

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(viii) references to any Person or Entity include such Person’s or Entity’s respective successors and permitted assigns.

(b)           Any reference herein to a “day” or number of “days” (without the explicit qualification of “Business”) shall be deemed to refer to a calendar day or number of calendar days.  If any action or notice is to be taken or given on or by a particular calendar day, and such calendar day is not a Business Day, then such action or notice may be taken or given on the next succeeding Business Day.

(c)           Any financial or accounting terms that are not otherwise defined herein shall have the meanings given thereto under GAAP.

Section 7.14              Rules of Construction.  The Parties agree that they have been represented by counsel during the negotiation, preparation, and execution of this Agreement and, therefore, waive the application of any Law or rule of construction providing that ambiguities in an agreement or other document shall be construed against the Party drafting such agreement or document.

[Remainder of page intentionally left blank]

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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first written above.

APEX SILVER MINES LIMITED
By:	/s/ Jeffrey Clevenger
	Jeffrey Clevenger
Its:		President & CEO

SUMITOMO CORPORATION
By:	/s/ Mitsuhiko Yamada
	Mitsuhiko Yamada
Its:		Executive Officer and General Manager,
		Mineral Resources Division 1

EX-10.5

Exhibit 10.5

EXECUTION VERSION

OMNIBUS AMENDMENT AGREEMENT

among

MINERA SAN CRISTÓBAL, S.A.,
as Borrower

APEX SILVER MINES LIMITED,

APEX SILVER MINES SWEDEN AB,

APEX LUXEMBOURG S.A. R.L.,

APEX METALS GmbH,

APEX SILVER FINANCE LTD.,

APEX METALS MARKETING GmbH,

GOTLEX LAGERAKTIEBOLAG nr. 451,
organizational number 556702-1083,

COMERCIAL METALES BLANCOS AB,

BNP PARIBAS,
as Administrative Agent

BARCLAYS CAPITAL,
as Technical Agent

CORPORACIÓN ANDINA DE FOMENTO,
as a Senior Lender

JPMORGAN CHASE BANK, N.A.,
as Collateral Agent and Securities Intermediary,

THE SENIOR LENDERS PARTY HERETO
and

THE HEDGE BANKS PARTY HERETO

Dated as of September 20, 2006

TABLE OF CONTENTS

		Page
ARTICLE I DEFINITIONS		2
Section 1.01.	Defined Terms	2
Section 1.02.	Interpretation	3
ARTICLE II REPRESENTATIONS AND WARRANTIES		3
Section 2.01.	Organization	3
Section 2.02.	Authority	4
Section 2.03.	Binding Agreements; Proper Legal Form	4
Section 2.04.	Consents and Approvals	4
Section 2.05.	No Conflicts	4
Section 2.06.	Ownership	5
ARTICLE III REORGANIZATION AMENDMENTS		6
Section 3.01.	Common Security Agreement	6
Section 3.02.	Transfer Restrictions Agreement	20
Section 3.03.	Sponsor Pledge Agreement	23
Section 3.04.	Cross-Guarantee and Security Agreement	24
Section 3.05.	Hedge Guaranty	26
Section 3.06.	Completion Agreement	27
Section 3.07.	Project Document Guarantee (a)	27
Section 3.08.	Project Document Guarantee (b)	28
ARTICLE IV ACQUISITION AMENDMENTS		29
Section 4.01.	Consent to Acquisition	29
Section 4.02.	Consent to Disbursement of Contingent Support Account	30
Section 4.03.	Common Security Agreement	31
Section 4.04.	Transfer Restrictions Agreement	41
Section 4.05.	Sponsor Pledge Agreement	42
Section 4.06.	Completion Agreement	43
Section 4.07.	Project Document Guarantee (a)	46
Section 4.08.	Consent to Increase in Service Fee	47
Section 4.09.	AMM Cross-Guarantee and Security Agreement	47
ARTICLE V CONDITIONS PRECEDENT		48
Section 5.01.	Conditions Precedent to Reorganization	48
Section 5.02.	Conditions Precedent to Acquisition	51
ARTICLE VI MISCELLANEOUS		53
Section 6.01.	Notices	53
Section 6.02.	Expenses	53
Section 6.03.	Counterparts; Integration	53
Section 6.04.	Severability	54
Section 6.05.	Governing Law; Jurisdiction; Service of Process; Etc.	54

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Section 6.06.	WAIVER OF JURY TRIAL	54
Section 6.07.	Headings	54
Section 6.08.	Waivers; Amendment	54
Section 6.09.	Successors and Assigns	55
Section 6.10.	Limited Agreement	55
Section 6.11.	Authorizations	55

APPENDIX A	-	Form of Apex Luxembourg Pledge of Silver Finance Shares
APPENDIX B		Form of Apex Sweden Pledge of Apex Metals Marketing Quotas
APPENDIX C	-	Form of Apex Sweden Swiss Quota Pledge
APPENDIX D	-	Form of Comercial Metales Blancos Swiss Quota Pledge
APPENDIX E	-	Form of Comercial Metales Blancos Pledge of Apex Metals Marketing Quotas
APPENDIX F	-	Form of Apex Sweden Pledge of Comercial Metales Blancos Shares
APPENDIX G	-	Form of Apex Sweden Pledge of SC Minerals Sweden Shares
APPENDIX H	-	Form of Apex Silver Finance Cross-Guarantee and Security Agreement
APPENDIX I	-	Form of Assignment and Assumption Agreement
APPENDIX J	-	Form of Sumitomo Completion Agreement
APPENDIX K	-	Form of Sumitomo Transfer Restrictions Agreement
APPENDIX L	-	Form of Sumitomo Pledge and Guarantee Agreement
APPENDIX M-1	-	Form of Bolivian Opinion
APPENDIX M-2-A, M-2-B -		Forms of Cayman Islands Opinions
APPENDIX M-3	-	Form of Swedish Opinion
APPENDIX M-4	-	Form of Swiss Opinion
APPENDIX M-5	-	Form of Borrower New York Opinion
APPENDIX M-6	-	Form of Japanese Opinion
APPENDIX M-7	-	Form of Sumitomo New York Opinion
APPENDIX M-8	-	Form of Luxembourg Opinion
APPENDIX N-1, N-2	-	Form of Apex Luxembourg Novations
APPENDIX O-1, O-2	-	Form of ISDA Master Agreement Schedules
APPENDIX P-1, P-2	-	Form of Apex Silver Finance Novations
APPENDIX Q	-	Form of Apex Metals Marketing Management and Services Agreement
APPENDIX R	-	Form of Borrower Concentrate Sales Agreement
APPENDIX S	-	Form of Amended and Restated Borrower Management Services Agreement

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This OMNIBUS AMENDMENT AGREEMENT (this “Agreement”), dated as of September 20, 2006, is entered into among MINERA SAN CRISTÓBAL, S.A., a sociedad anónima organized under the laws of Bolivia (the “Borrower”), APEX SILVER MINES LIMITED, an exempted company duly incorporated with limited liability and validly existing under the laws of the Cayman Islands (“ASM”),  APEX SILVER MINES SWEDEN AB, a privat aktiebolag organized under the laws of Sweden (“Apex Sweden”), APEX LUXEMBOURG S.A. R.L., a société à responsabilité limitée organized under the laws of Luxembourg (“Apex Luxembourg”), APEX METALS GmbH, a company with limited liability organized under the laws of Switzerland (“Apex Metals”), APEX SILVER FINANCE LTD., an exempted company duly incorporated with limited liability and validly existing under the laws of the Cayman Islands organized under the laws of the Cayman Islands (“Apex Silver Finance”), APEX METALS MARKETING GmbH, a company with limited liability organized under the laws of Switzerland (“Apex Metals Marketing”), GOTLEX LAGERAKTIEBOLAG nr. 451, organizational number 556702-1083, a privat aktiebolag organized under the laws of Sweden (“SC Minerals Sweden”), COMERCIAL METALES BLANCOS AB, a privat aktiebolag organized under the laws of Sweden (“Comercial Metales Blancos”), BNP PARIBAS, a banking institution organized under the laws of France as Administrative Agent for the Secured Parties (the “Administrative Agent”), BARCLAYS CAPITAL, a public limited company organized under the laws of England and Wales as Technical Agent (the “Technical Agent”), CORPORACIÓN ANDINA DE FOMENTO, a multilateral institution organized and existing pursuant to its Constitutive Agreement signed in Bogotá, Colombia on February 7, 1968, as a Senior Lender, JPMORGAN CHASE BANK, N.A., a national banking corporation as Collateral Agent (the “Collateral Agent”) as Securities Intermediary (the “Securities Intermediary”), the SENIOR LENDERS party hereto and the HEDGE BANKS party hereto.

RECITALS

WHEREAS, the Borrower, Apex Sweden, Apex Luxembourg, Apex Metals, the Administrative Agent, the Technical Agent,  Corporación Andina de Fomento, the Collateral Agent, the Securities Intermediary, the Senior Lenders party thereto and the Hedge Banks party thereto are parties to the Common Security Agreement, dated as of December 1, 2005 (as amended and supplemented from time to time, the “Common Security Agreement”);

WHEREAS, pursuant to the Common Security Agreement and the other Transaction Documents, the Borrower and the other parties thereto agreed, among other things, to the terms and conditions for the financing of the Project;

WHEREAS, pursuant to the letter dated August 21, 2006 from ASM to the Administrative Agent, ASM has requested from the Secured Parties approval to (a) reorganize the group of ASM Affiliates involved in the Project and (b) allow Sumitomo to acquire (i) indirectly, 35% of the outstanding shares of the Borrower, (ii) indirectly, 35% of the outstanding quotas of Apex Metals Marketing (as successor to Apex Metals’ rights and obligations with respect to the Concentrate Sales Agreements under the Transaction Documents) and (iii) directly,  35% of the outstanding shares of Apex Silver Finance (as successor to Apex Metals’ rights and obligations with respect to the Mandatory Metals Hedge Agreements under the Transaction Documents);

WHEREAS, the Secured Parties are willing to approve such transactions upon the terms and conditions set forth herein;

NOW, THEREFORE, in consideration of the mutual agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

ARTICLE I

DEFINITIONS

Section 1.01.Defined Terms. Except as otherwise defined herein, capitalized terms used in this Agreement shall have the meanings given thereto in the Common Security Agreement (including Appendix A thereto). As used in this Agreement, the following terms have the meanings specified below:

“Acquisition Documents” means each of the Sumitomo Completion Agreement, the Sumitomo Transfer Restrictions Agreement, the Sumitomo Pledge and Guarantee Agreement.

“Acquisition Effective Date” has the meaning given to that term in Section 5.02.

“Assignment and Assumption Agreement” means the Assignment and Assumption Agreement between Apex Metals and Apex Metals Marketing of Apex Metals’ rights and obligations under the Third Party Concentrate Sales Agreements, the Cross-Guarantee and Security Agreement and the Project Document Guarantee described in clause (b) of the definition of “Project Document Guarantee” in the Common Security Agreement; substantially in the form of Appendix I hereto.

“Pledge Agreements” means (a) the Pledge Agreement of Apex Luxembourg in favor of the Collateral Agent in the form of Appendix A hereto of Apex Luxembourg’s right, title and interest in the Apex Silver Finance Shares; (b) the Pledge Agreement of Apex Sweden in favor of the Collateral Agent in the form of Appendix B hereto of all of its right, title and interest in the Apex Metals Marketing Quotas; (c) the Swiss Quota Pledge of Apex Sweden in favor of the Collateral Agent in the form of Appendix C of its right, title and interest in the Apex Metals Marketing Quotas; (d) the Swiss Quota Pledge of Comercial Metales Blancos in favor of the Collateral Agent in the form of Appendix D hereto of its right, title and interest in the Apex Metals Marketing Quotas; (e) the Pledge Agreement of Comercial Metales Blancos in favor of the Collateral Agent in the form of Appendix E hereto of all of its right, title and interest in the Apex Metals Marketing Quotas; (f) the Pledge Agreement of Apex Sweden in favor of the Collateral Agent in the form of Appendix F hereto of its right, title and interest in the Comercial Metales Blancos Shares; and (g) the Pledge Agreement of Apex Sweden in favor of the Collateral Agent in the form of Appendix G hereto of its right, title and interest in the SC Minerals Sweden Shares.

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“Reorganization Documents” means this Agreement, the Apex Silver Finance Cross-Guarantee and Security Agreement, each Pledge Agreement, the Assignment and Assumption Agreement, and the novation agreements entered into by each of Apex Luxembourg and Apex Silver Finance and the amended Mandatory Metals Hedge Agreements and Schedules entered into by Apex Silver Finance as contemplated by Section 5.01(e) of this Agreement.

“Reorganization Effective Date” has the meaning given to that term in Section 5.01.

“Sumitomo” means Sumitomo Corporation, a corporation incorporated under the laws of Japan.

“Sumitomo Completion Agreement” means a Sumitomo Completion Agreement among Sumitomo, the Technical Agent, the Administrative Agent and the Collateral Agent substantially in the form of Appendix J hereto.

“Sumitomo Pledge and Guarantee Agreement” means a Sumitomo Pledge and Guarantee Agreement between Sumitomo and the Collateral Agent substantially in the form of Appendix L hereto.

“Sumitomo Transfer Restrictions Agreement” means a Sumitomo Transfer Restrictions Agreement among Sumitomo, SC Minerals Sweden, Comercial Metales Blancos, the Administrative Agent and the Collateral Agent substantially in the form of Appendix K hereto.

Section 1.02.Interpretation. The rules of interpretation set forth in clauses (a) to (j) of Section 1.02 of the Common Security Agreement shall apply, with necessary changes, to this Agreement as if set forth in full in this Section 1.02.

ARTICLE II

REPRESENTATIONS AND WARRANTIES

Each of the Borrower, ASM, Apex Sweden, Apex Luxembourg, Apex Metals, Apex Silver Finance, Apex Metals Marketing, SC Minerals Sweden and Comercial Metales Blancos represents and warrants to the Administrative Agent and the Collateral Agent for the benefit of the Secured Parties that:

Section 2.01.Organization. It (a) is organized and validly existing and in good standing under the laws of the jurisdiction of its incorporation; (b) has all requisite organizational power and authority under the laws of the jurisdiction of its formation to own its property and to carry on its business; and (c) is duly qualified to do business in and is in good standing in all other jurisdictions where necessary in light of the business it conducts and the property it owns and intends to conduct and own and in light of the transactions contemplated by this Agreement and the other Acquisition Documents, Reorganization Documents, and Transaction Documents to which it is a party, except where the failure to qualify could not reasonably be expected to have a Material Adverse Effect.

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Section 2.02.Authority. It has all requisite organizational power and authority to enter into each Reorganization Document to which it is a party and to incur and perform its obligations provided for herein and therein and to grant the Secured Parties the security interests and Liens described in the Security Documents to which it is a party.

Section 2.03.Binding Agreements; Proper Legal Form.

(a)Each Reorganization Document to which it is a party which has been executed and delivered by it on or prior to the date hereof, has been duly authorized, executed and delivered by it and constitutes its legal, valid and binding obligation enforceable in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles.

(b)Each Reorganization Document to which it is a party is in proper legal form under the laws of Sweden, Switzerland, Luxembourg or the Cayman Islands, as applicable, for the enforcement thereof against it under the laws of Sweden, Switzerland, Luxembourg and the Cayman Islands, as applicable, and if this Agreement were stated to be governed by such law, it would constitute the legal, valid and binding obligation of it under such law, enforceable in accordance with its terms subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles; and to ensure the legality, validity, enforceability or admissibility in evidence of this Agreement in Sweden, Switzerland, Luxembourg and the Cayman Islands, as applicable, it is not necessary that this Agreement or any other document be filed or recorded with any court or other authority in Sweden, Switzerland, Luxembourg or the Cayman Islands, as applicable, or that any stamp or similar tax be paid in Sweden, Switzerland, Luxembourg or the Cayman Islands, as applicable, on or in respect of this Agreement, except as specifically provided in the legal opinions delivered in satisfaction of the conditions precedent referred to in clause (e) of Section 5.02. The laws of Sweden, Switzerland, Luxembourg or the Cayman Islands do not provide for or require any filing, recording or registration of a security interest in any of the Pledged Collateral as a condition of obtaining priority over a creditor that has acquired a Lien thereon or over a receiver in bankruptcy.

Section 2.04.Consents and Approvals. All Authorizations and Government Approvals which are necessary for (i) the execution and delivery by it of this Agreement and the other Reorganization Documents to which it is a party and (ii) the performance of its obligations hereunder and thereunder have been obtained and are in full force and effect, and no other action by, and no notice to or filing with, any Governmental Authority or other Person is required for such execution, delivery or performance or enforceability, except as specifically provided in the legal opinions delivered in satisfaction of the conditions precedent referred to in clause (e) of Section 5.02; and all fees and taxes required for the legality or enforceability of such documents have been paid.

Section 2.05.No Conflicts. The execution, delivery and performance by it of each of the Reorganization Documents to which it is a party and the consummation of the

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transactions contemplated thereby do not and will not (i) violate any provision of its Organizational Documents, any Authorization, any Government Rule or any Government Approval applicable to it; (ii) conflict with, result in a breach of or constitute a default under any Reorganization Document or any indenture or loan or credit agreement to which it is a party or by which it or its property may be bound or affected in any material respect; or (iii) result in, or create any Lien (other than Liens specifically permitted under the Financing Documents or the Reorganization Documents) upon or with respect to any of the properties now owned or hereafter acquired by it.

Section 2.06.Ownership.

(a)Prior to execution of this Agreement, (i) ASM directly owns 100% of the issued and outstanding share capital of Apex Luxembourg;(ii) Apex Luxembourg directly owns (A) 100% of the issued and outstanding share capital of Apex Sweden, (B) 1 share of the Borrower and (C) 0.20% of the issued and outstanding equity interests of Apex Metals; (iii) Apex Sweden directly owns 88.19% of the issued and outstanding share capital of the Borrower and 99.80% of the issued and outstanding equity interests of Apex Metals; and (iv) Apex Metals directly owns 11.8% of the issued and outstanding share capital of the Borrower and 100% of the issued and outstanding share capital of the Service Company.

(b)As of the Reorganization Effective Date, (i) ASM directly owns 100% of the issued and outstanding share capital of Apex Luxembourg; (ii) Apex Luxembourg directly owns (A) 100% of the issued and outstanding share capital of Apex Sweden, (B) 100% of the issued and outstanding share capital of Apex Silver Finance and (C) 1 share of the Borrower; (iii) Apex Sweden directly owns (A) 64.99% of the issued and outstanding share capital of the Borrower, (B) 65% of the issued and outstanding share capital of Apex Metals Marketing, (C) 100% of the issued and outstanding share capital of SC Minerals Sweden and (D) 100% of the issued and outstanding share capital of Comercial Metales Blancos; (iv) SC Minerals Sweden directly owns 35% of the issued and outstanding share capital of the Borrower; and (v)  Comercial Metales Blancos directly owns 35% of the issued and outstanding share capital of Apex Metals Marketing.

(c)As of the Acquisition Effective Date, (i) ASM directly owns 100% of the issued and outstanding share capital of Apex Luxembourg; (ii) Apex Luxembourg directly owns (A) 100% of the issued and outstanding share capital of Apex Sweden, (B) 65% of the issued and outstanding share capital of Apex Silver Finance and (C) 1 share in the Borrower; (iii) Apex Sweden directly owns 64.99% of the issued and outstanding share capital of the Borrower and 65% of the issued and outstanding share capital of Apex Metals Marketing; (iv) SC Minerals Sweden directly owns 35% of the issued and outstanding share capital of the Borrower; (v) Comercial Metales Blancos directly owns 35% of the issued and outstanding share capital of Apex Metals Marketing; and (vi) Sumitomo owns (A) 35% of the issued and outstanding share capital of Apex Silver Finance, (B) 100% of the issued and outstanding share capital of SC Minerals Sweden and (C) 100% of the issued and outstanding share capital of Comercial Metales Blancos.

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ARTICLE III

REORGANIZATION AMENDMENTS

Subject to the satisfaction of each of the conditions precedent specified in Section 5.01 below, but effective as of Reorganization Effective Date:

Section 3.01.Common Security Agreement. The provisions of the Common Security Agreement shall be amended as follows:

(a)Apex Metals shall be removed as a party to the Common Security Agreement and replaced with Apex Metals Marketing and Apex Silver Finance as detailed below;

(b)Each of Apex Silver Finance, Apex Metals Marketing, SC Minerals Sweden and Comercial Metales Blancos shall be added as parties to the Common Security Agreement;

(c)Section 3.06 shall be amended by deleting in each place where they appear in that section the words “Apex Metals” and inserting in their place the words “SC Minerals Sweden”;

(d)Section 3.07 shall be amended by deleting in each place where they appear in that section the words “Apex Metals” and inserting in their place the words “SC Minerals Sweden”;

(e)Section 3.08(b) shall be amended by inserting after the words “Apex Metals” in the first line thereof the word “Marketing”;

(f)Section 3.08(c) shall be amended by deleting in the first line of that section the words “Apex Metals” and inserting in their place the words “SC Minerals Sweden”;

(g)Section 3.12(e) shall be amended by deleting the words “Apex Metals” in the fifth line thereof and inserting in their place the word “AMM”;

(h)the Senior Lenders and the Hedge Banks consent to the liquidation of Apex Metals, the termination of the security interests in the Apex Metals Quotas provided for in Section 3.13, and to the deletion of Section 3.13 in its entirety;

(i)Section 3.13 shall be deleted in its entirety and replaced with the word “[Reserved.]”;

(j)Section 3.14(a)(i) shall be amended by (i) deleting the word “and” in the first line thereof and (ii) inserting after the words “Apex Metals” in the first line thereof the words “Marketing, Apex Silver Finance, SC Minerals Sweden and Comercial Metales Blancos”;

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(k)Section 3.14(b) shall be amended by deleting the words “or Apex Sweden” in the ninth line thereof and inserting the words “, Apex Sweden or SC Minerals Sweden” in their place;

(l)Section 3.14(c) shall be amended by (i) deleting the word “Neither” and replacing it with the words “None of” and (ii) deleting the words “or Apex Metals” in the first line thereof and inserting the words “, Apex Metals Marketing, Apex Silver Finance, SC Minerals Sweden and Comercial Metales Blancos” in their place;

(m)Section 3.14(f) shall be amended by (i) deleting the word “and” in the second line thereof and (ii) inserting after the words “Apex Sweden,” in the second line thereof the words “Apex Metals Marketing, SC Minerals Sweden and Comercial Metales Blancos”;

(n)Section 3.15 shall be amended by (i) deleting all references to the term “Apex Metals” in the fifth line of clause (a) and in clause (a)(v) and replacing it with the words “Apex Metals Marketing, SC Minerals Sweden and Comercial Metales Blancos”; (ii) deleting each reference to the term “Apex Metals Quotas” in clauses (a)(iv) and (a)(v) and replacing it with the words “Apex Metals Marketing Quotas or Apex Silver Finance Shares”; (iii) deleting each reference to the term “Service Company Shares” in clauses (a)(iv) and (a)(v); (iv) deleting the term “Apex Metals Subordinated Debt” in clause (a)(vi)(B) and inserting in its place the terms “AMM Subordinated Debt and Apex Silver Finance Subordinated Debt”, in each case together with appropriate conforming changes; (v) deleting the references to “Apex Metals” in clause (a)(vi)(C) and inserting in their place the words “Apex Metals Marketing”; (vi) deleting the word “or” in the third line of clause (b); and (vii) inserting the words “Apex Silver Finance, Apex Metals Marketing, SC Minerals Sweden or Comercial Metales Blancos” in the third and fifth lines of clause (b) after the words “Apex Sweden”;

(o)Section 3.17 shall be amended by deleting the term “Apex Metals” in the fourth line thereof and inserting in its place the words “Apex Metals Marketing and Apex Silver Finance”;

(p)Section 3.18 shall be amended by deleting the words “Apex Metals” each time they appear in such section and inserting in its place the words “Apex Silver Finance, Apex Metals Marketing, SC Minerals Sweden, Comercial Metales Blancos”;

(q)Section 3.19 shall be amended by (i) deleting the term “Apex Metals” each time it appears in such section and inserting in its place the words “Apex Silver Finance, Apex Metals Marketing, SC Minerals Sweden, Comercial Metales Blancos” and (ii) inserting after the term “Apex Luxembourg” in clause (f) therein the words “Apex Silver Finance, Apex Metals Marketing, SC Minerals Sweden, Comercial Metales Blancos”, in each case with appropriate conforming changes;

(r)Section 3.20 shall be amended in its entirety to read as follows:

“3.20 Subrogation. Apex Luxembourg, Apex Sweden, SC Minerals Sweden and Comercial Metales Blancos shall not exercise, and

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each of Apex Luxembourg, Apex Sweden, SC Minerals Sweden and Comercial Metales Blancos hereby irrevocably defers the exercise of, any claim, right or remedy that it may now have or may hereafter acquire against the Borrower, Apex Metals Marketing or Apex Silver Finance arising under or in connection with this Agreement or any other Security Document, including, without limitation, any claim, right or remedy of subrogation, contribution, reimbursement, exoneration, indemnification or participation arising under contract, by applicable law or otherwise in any claim, right or remedy of the Collateral Agent or the other Secured Parties against the Borrower, Apex Metals Marketing, Apex Silver Finance or any other Person or any Collateral which the Collateral Agent or any other Secured Party may now have or may hereafter acquire, until the indefeasible payment and satisfaction in full of all Secured Debt Obligations. If, notwithstanding the preceding sentence, any amount shall be paid to Apex Luxembourg, Apex Sweden, SC Minerals Sweden or Comercial Metales Blancos on account of such subrogation rights at any time when any of the Secured Debt Obligations shall not have been paid in full, such amount shall be held by such Person in trust for the Collateral Agent and the other Secured Parties, segregated from other funds of such Person and be turned over to the Collateral Agent in the exact form received by such Person (duly endorsed by such Person to the Collateral Agent, if required), to be applied against the Secured Debt Obligations, whether matured or unmatured, in accordance with the Financing Documents.”

(s)Section 4.01(a) shall be amended by deleting the words “and in the case of the Apex Metals Account, Apex Metals” in the first parenthetical of such section and inserting in its place the words “and in the case of the AMM Account, Apex Metals Marketing”;

(t)Section 4.01(b)(ii) shall be amended by deleting the term “Apex Metals Account” and inserting in its place the term “AMM Account”;

(u)all other references in the Common Security Agreement (including in Sections 3.12(c), 4.02(c), 4.02(d), 4.02(f), 4.02(h), 4.03, 4.04, 4.05, 4.07, 4.09(b), 4.14, 5.05, 5.08 and 9.01) to the defined term “Apex Metals Account” shall be replaced with the defined term “AMM Account”;

(v)each of Sections 4.01(c), 4.01(d), 4.01(e), 4.01(f), 4.01(g), 4.01(h), 4.01(i), 4.02(c), 4.03, 4.04, 4.05, 4.12 and 4.14 shall be amended by deleting the defined term “Apex Metals” each time it appears in such sections and inserting in its place the words “Apex Metals Marketing”;

(w)Section 4.02(d) shall be amended by deleting the term “Apex Metals” and inserting in its place the term “Apex Silver Finance”;

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(x)Section 4.02(h) shall be amended by (A) deleting the words “ or Apex Metals” in the fifth line thereof and inserting in its place the words “, Apex Metals Marketing or Apex Silver Finance” and (B) deleting the words “and Apex Metals” in the penultimate clause thereof and inserting in their place the words “, Apex Metals Marketing and Apex Silver Finance”;

(y)Section 5.08 shall be amended by deleting the defined term “Apex Metals” and inserting in its place the term “Apex Metals Marketing, SC Minerals Sweden, Comercial Metales Blancos”;

(z)Section 5.08(d) shall be amended by inserting the words “, SC Minerals Sweden” after the term “Apex Sweden” in the second line thereof;

(aa)Section 6.03(b) shall be amended by deleting the defined term “Apex Metals Document” and inserting in its place the term “AMM Document or Apex Silver Finance Document”;

(bb)Section 7.01(a)(ii) shall be amended by deleting the defined term “Apex Metals” in the second line thereof and inserting in its place the words “SC Minerals Sweden”;

(cc)Section 8.16 shall be amended by (i) deleting the defined term “Apex Metals” in the second line thereof and inserting in its place the term “Apex Metals Marketing”; and (ii) inserting the word “Borrower” before the term “Concentrate Sales Agreement”;

(dd)Section 8.19(b) shall be amended by deleting the words “Each of the Borrower, Apex Luxembourg and Apex Sweden” each time they appear in the section and in each case inserting in their place the words “The Borrower and each Subordinated Lender”;

(ee)Section 8.22 shall be revised by inserting after the words “Apex Sweden” in the fourth line thereof the words “and SC Minerals Sweden”;

(ff)Section 8.30 shall be amended by deleting the defined term “Apex Metals” in the first line thereof and inserting in its place the words “Apex Metals Marketing, Apex Silver Finance, SC Minerals Sweden, Comercial Metales Blancos”;

(gg)Section 9.01(d) shall be amended by inserting after the word “Metals” in the second line thereof the word “Marketing”;

(hh)Section 10.01(h) shall be amended in its entirety to read as follows:

“(h)Default under or Termination of a Cross-Guarantee and Security Agreements. (i) A CGSA Default shall have occurred and be continuing; (ii) a Cross-Guarantee and Security Agreement shall be terminated; (iii) a Cross-Guarantee and Security Agreement shall have been declared in a final order of a court to be unenforceable against Apex

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Metals Marketing or Apex Silver Finance; (iv) either Apex Metals Marketing or Apex Silver Finance shall have repudiated its obligations under the Cross-Guarantee and Security Agreement to which it is a party; or (v) a default shall have occurred under the Assignment and Assumption Agreement or any Pledge Agreement;”

(ii)Section 10.01(o)(iii) shall be deleted in its entirety;

(jj)Section 10.01(u) shall be amended by (i) inserting after the word “Borrower” in clause (ii) the words “Apex Metals Marketing” and (ii) deleting the defined term “Apex Metals” and inserting in its place the term “Apex Silver Finance”;

(kk)Sections 10.01(y) shall be amended by deleting the defined term “Apex Metals” and inserting in its place the words “Apex Silver Finance, Apex Metals Marketing”;

(ll)Section 10.01(aa) shall be amended by deleting the defined term “Apex Metals” each time it appears in such section and inserting in its place the words “SC Minerals Sweden”, with appropriate conforming changes;

(mm)Section 10.01(bb) shall be amended by deleting the defined term “Apex Metals” and inserting in its place the words “Apex Metals Marketing”;

(nn)Section 10.01(cc) shall be amended by deleting the defined term “Cross-Guarantee and Security Agreement” and inserting in its place the defined term “Apex Silver Finance Cross-Guarantee and Security Agreement”;

(oo)Section 10.01(ee) shall be amended in its entirety to read as follows:

“(ee)Change in Control. Subject to the provisions of the Transfer Restrictions Agreement:

(i)(A) Prior to Completion, the Sponsor shall cease to own directly 100% of the issued and outstanding Apex Luxembourg Shares, (B) at any time after Completion, the Sponsor shall cease to own directly at least 51% of the issued and outstanding Apex Luxembourg Shares or (C) at any time, the Sponsor shall cease to Control the Borrower, Apex Metals Marketing or Apex Silver Finance directly or indirectly;

(ii)(A) Apex Luxembourg shall cease to own directly 100% of the issued and outstanding Apex Sweden Shares, 100% of the Apex Silver Finance Shares and at least one share in the Borrower or (B) Apex Luxembourg shall cease to Control Apex Sweden or Apex Silver Finance directly or indirectly at any time;

(iii)(A) Apex Sweden shall cease to own directly 64.99% of the issued and outstanding Borrower Shares, 65% of the issued and outstanding Apex Metals Marketing Quotas, 100% of the SC Minerals

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Sweden Shares and 100% of the Comercial Metales Blancos Shares, or (B) Apex Sweden shall cease to Control the Borrower directly or indirectly at any time; or

(iv)(A) SC Minerals Sweden shall cease to own directly 35% of the issued and outstanding Borrower Shares or (B) Comercial Metales Blancos shall cease to own directly 35% of the issued and outstanding Apex Metals Marketing Quotas.

(pp)Section 13.05 shall be amended by inserting after the words “Apex Metals” in the last line thereof the words “Marketing or Apex Silver Finance”;

(qq)Section 13.14 shall be amended by inserting after the words “Apex Metals” each time they appear in such section the words “Marketing or Apex Silver Finance”;

(rr)Section 14.10 shall be amended by inserting after the words “Apex Metals” each time they appear in such section the words “Marketing, Apex Silver Finance, SC Minerals Sweden, Comercial Metales Blancos,”;

(ss)Section 15.01 shall be amended by deleting the words “Apex Metals Shares” in clause (d) thereof and replacing them with the words “Apex Silver Finance Shares”);

(tt)Section 15.08 shall be amended by (i) deleting lines three and four or clause (ii) thereof and replacing them with the words “c/o Anders Skoldberg, Ernst & Young AB, 401 82 Göteborg”; (ii) deleting clause (iv) thereof and (iii) inserting the following clauses:

(iv)If to Apex Metals Marketing, to it at:

Apex Metals Marketing GmbH

c/o Juris Treuhand AG

Industriestrasse AG

CH-6304, Zug

Switzerland

Tel:(303) 839-5060

(888) 696-2739

Fax:(303) 839-5097

with a copy to:

Apex Silver Mines Corporation

1700 Lincoln Street, Suite 3050

Denver, CO 80203

Tel:(303) 839-5060

(888) 696-2739

Fax:(303) 839-5097

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(v)If to Apex Silver Finance, to it at:

Apex Silver Finance Ltd.

c/o Walkers SPV Limited

Walker House

Mary Street, P.O. Box 908GT

George Town, Grand Cayman

B.W.I.

Tel:(303) 839-5060

(888) 696-2739

Fax:(303) 839-5097

with a copy to:

Apex Silver Mines Corporation

1700 Lincoln Street, Suite 3050

Denver, CO 80203

Tel:(303) 839-5060

(888) 696-2739

Fax:(303) 839-5097;

(vi)If to SC Minerals Sweden, to it at:

Gotlex Lageraktiebolag nr. 451, organizational number 556702-1083
c/o Wistrand Advokatbyra

Lilla Bommen 1
S-411 04 Göteborg

Sweden

Tel:(303) 839-5060
Fax:(303) 839-5907

Attn:Director

with a copy to:

Apex Silver Mines Corporation

1700 Lincoln Street, Suite 3050

Denver, CO 80203

Tel:(303) 839-5060

(888) 696-2739

Fax:(303) 839-5097;

(vii)If to Comercial Metales Blancos, to it at:

Comercial Metales Blancos AB
c/o Anders Skoldberg, Ernst & Young AB
401 82 Göteborg
Sweden
Tel:(303) 839-5060
Fax:(303) 839-5907
Attn:Director

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with a copy to:

Apex Silver Mines Corporation
1700 Lincoln Street, Suite 3050
Denver, CO 80203

Tel:(303) 839-5060

(888) 696-2739

Fax:(303) 839-5097;

(uu)Section 15.18 shall be amended by deleting the defined term “Apex Metals” each time it appears in such section and inserting in its place the words “Apex Metals Marketing, Apex Silver Finance, SC Minerals Sweden and Comercial Metales Blancos”, with appropriate conforming changes;

(vv)the definition of “Affiliated Obligors” in Appendix A thereto shall be amended in its entirety to read as follows: ““Affiliated Obligors” means, collectively, the Borrower, the Sponsor, Apex Luxembourg, Apex Sweden, Apex Silver Finance, Apex Metals Marketing, Comercial Metales Blancos and SC Minerals Sweden.”

(ww)the definitions of each of “Apex Metals”, “Apex Metals Account”, “Apex Metals Documents”, “Apex Metals Quotas”, “Apex Metals Subordinated Debt”, “Apex Metals Subordinated Lender”, “Apex Metals Subordinated Notes” and “Apex Metals Subordination Agreement” shall be deleted in its entirety;

(xx)the definition of “Apex Metals Management and Services Agreement” in Appendix A thereto shall be amended by (i) deleting the words “dated December 1, 2005” and inserting in their place the words “in the form of Appendix Q to the Omnibus Amendment Agreement” and (ii) replacing the words “between Apex Metals” with “among Apex Metals Marketing, Apex Silver Finance”;

(yy)the definition of “Apex Metals Net Payment Amount” in Appendix A thereto shall be amended by deleting the term “Apex Metals” each time it appears in such definition and inserting in its place the term “Apex Silver Finance”;

(zz)the definition of “Apex Metals Obligations” in Appendix A thereto shall be amended by deleting the defined term “Apex Metals” in the first line thereof and inserting in its place the term “Apex Silver Finance”.

(aaa)the definition of “Borrower Concentrate Sales Agreement” in Appendix A thereto shall be amended by (i) deleting the words “dated December 1, 2005” and inserting in their place the words “in the form of Appendix R to the Omnibus Amendment Agreement”; and (ii) inserting after the words “Apex Metals” in the second line thereof the word “Marketing”;

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(bbb)the definition of “CGSA Default” in Appendix A thereto shall be amended by deleting the word “the” immediately before the words “Cross-Guarantee and Security Agreement” and inserting in its place the word “either”;

(ccc)the definition of “CGSA Secured Obligations” in Appendix A thereto shall be amended by deleting the word “the” immediately before the words “Cross-Guarantee and Security Agreement” and inserting in its place the word “either”;

(ddd)the definition of “Concentrate Sales Guarantee” in Appendix A thereto shall be amended by deleting the words “Apex Metals’” and inserting the words “Apex Metals Marketing’s”;

(eee)the definition of “Contingent Support Contribution” in Appendix A thereto shall be amended by deleting the term “Apex Metals Account” in the second line thereof and inserting in its place the term “AMM Account”;

(fff)the definition of “Cross-Guarantee and Security Agreement” in Appendix A thereto shall be amended in its entirety to read “each of (a) the AMM Cross-Guarantee and Security Agreement; and (b) the Apex Silver Finance Cross-Guarantee and Security Agreement”;

(ggg)the definition of “Financing Documents” in Appendix A thereto shall be amended in its entirety to read as follows: ““Financing Documents” means the Security Documents, the Completion Agreement, the Transfer Restrictions Agreement, the Hedge Guaranty, each Senior Loan Agreement, each Note, each PRI Policy, the Fee Letters and each Reorganization Document.”

(hhh)the definition of “Guaranteed Apex Metals Early Termination Amount” in Appendix A thereto shall be amended by deleting the term “Apex Metals” each time it appears in such definition and inserting in its place the term “Apex Silver Finance”;

(iii)the definition of “Historical Debt Service Coverage Ratio” in Appendix A thereto shall be amended by deleting the term “Apex Metals” in the third line thereof and inserting in its place the words “Apex Metals Marketing and Apex Silver Finance”;

(jjj)the definition of “Intercompany Debt” in Appendix A thereto shall be amended by (i) deleting the words “and Apex Metals Subordinated Debt” and inserting in their place the words “, AMM Subordinated Debt, Apex Silver Finance Subordinated Debt, SC Minerals Sweden Debt and Comercial Metales Blancos Debt” and (ii) deleting the words “Service Company Debt”;

(kkk)the definition of “Intercompany Lender” in Appendix A thereto shall be amended by deleting the words “Apex Metals Subordinated Lender and Service Company Lender” and inserting in their place the words “AMM Subordinated Lender, Apex Silver Finance Subordinated Lender, SC Minerals Sweden Subordinated Lender, Comercial Metales Blancos Subordinated Lender”;

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(lll)the definition of “Intercompany Note” in Appendix A thereto shall be amended by deleting the words “Apex Metals Subordinated Note and Service Company Note” and inserting in their place the words “AMM Note, Apex Silver Finance Note, SC Minerals Sweden Note, Comercial Metales Blancos Note”;

(mmm)the definition of “Liquidity Accounts” in Appendix A thereto shall be amended by deleting the term “Apex Metals Account” and inserting in its place the words “AMM Account”;

(nnn)the definition of “Mandatory Metals Hedge Agreements” in Appendix A thereto shall be amended by replacing “Apex Metals” with “Apex Silver Finance”;

(ooo)the definition of “Metals Hedge Transactions” in Appendix A thereto shall be amended by deleting the words “Apex Metals” in the parenthetical and inserting in their place the words “Apex Silver Finance”;

(ppp)the definition of “Operating Costs” in Appendix A thereto shall be amended by deleting the words “or Apex Metals” in the third line thereof and inserting in its place the words “, Apex Metals Marketing or Apex Silver Finance”;

(qqq)the definition of “Project Document Guarantees” in Appendix A thereto shall be amended by (i) deleting the words “and the Collateral Agent” in clause (a) thereof, (ii) deleting the words “and the Service Company’s obligations under the Borrower Management and Services Agreement” in clause (a) thereof, (iii) inserting after the words “Services Agreement” in the last line of clause (b) thereof the words “ and the Service Company’s obligations under the Borrower Management and Services Agreement” and (iv) inserting after the words “Apex Metals” in each of clauses (a) and (b) thereof the word “Marketing”;

(rrr)the definition of “Project Funds” in Appendix A thereto shall be amended by:

(i)deleting the term “Apex Metals” in clauses (a) and (j) thereof and inserting in its place the words “Apex Metals Marketing and Apex Silver Finance”; and

(ii)deleting the term “Apex Metals” in clause (i) thereof and inserting in its place the words “Apex Silver Finance”;

(sss)the definition of “Replacement Mandatory Metals Hedge Transactions” in Appendix A thereto shall be amended by deleting the words “Apex Metals” in the second line thereof and inserting in its place the words “Apex Silver Finance”;

(ttt)the definition of “Security Documents” in Appendix A thereto shall be amended by inserting after the words “Apex Metals” in the seventh line the word “Marketing” and by inserting after the word “Agreement” in the last line the words “or the Omnibus Amendment Agreement”;

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(uuu)the definitions of each of “Service Company Debt”, “Service Company Lender”, “Service Company Note” and “Service Company Shares” shall be deleted in its entirety;

(vvv)the definition of “Service Fee” shall be deleted by deleting the words “Apex Metals” in clause (b) thereof and inserting in their place the words “Apex Metals Marketing”;

(www)the definition of “Shareholder Debt” shall be amended by adding after the term “Apex Sweden” the words “, SC Minerals Sweden or Comercial Metales Blancos”;

(xxx)the definition of “Spot Sales Agreement” in Appendix A thereto shall be amended by deleting the term “Apex Metals” in the third line thereof and inserting in its place the words “Apex Metals Marketing”;

(yyy)the definition of “Subordinated Lender” in Appendix A thereto shall be amended by inserting after the words “Apex Metals” the word “Marketing” and by inserting after the words “Apex Luxembourg” the words “Apex Silver Finance, SC Minerals Sweden, Comercial Metales Blancos”;

(zzz)the definition of “Third Party Concentrate Sales Agreement” in Appendix A thereto shall be amended by deleting the term “Apex Metals” each time it appears in such definition and inserting in its place the term “Apex Metals Marketing”;

(aaaa)the following additional defined terms shall be inserted in Appendix A thereto:

“AMM Account” has the meaning assigned to such term in Section 4.01(b)(ii).

“AMM Collateral” has the meaning assigned to such term in the initial paragraph of Section 4 of the AMM Cross-Guarantee and Security Agreement.

“AMM Cross-Guarantee and Security Agreement” means the Cross-Guarantee and Security Agreement executed by Apex Metals Marketing in favor of the Collateral Agent for the benefit of the Secured Parties;

“AMM Documents” means this Agreement, the Transfer Restrictions Agreement, the Apex Metals Management and Services Agreement, each Third Party Concentrate Sales Agreement, the Borrower Concentrate Sales Agreement, the AMM Cross-Guarantee and Security Agreement and the Project Document Guarantee described in clause (b) of the definitions thereof.

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“AMM Subordinated Debt” means unsecured Indebtedness (including capitalized interest) of Apex Metals Marketing, whether currently outstanding or hereinafter created, ranking in payment and upon liquidation junior to the Secured Debt in accordance with the subordination terms attached as Appendix A-2 to the Transfer Restrictions Agreement, which is assigned and pledged as security for the Secured Debt Obligations pursuant to a Security Document. No such indebtedness of Apex Metals Marketing shall constitute AMM Subordinated Debt until such time as a the holder thereof assumes in writing, either pursuant to the terms of a Financing Document or otherwise, all of the obligations applicable to an AMM Subordinated Lender under and in accordance with this Agreement and the AMM Subordination Agreement.

“AMM Note” means any promissory notes or other instruments of Apex Metals Marketing evidencing AMM Subordinated Debt.

“AMM Subordinated Lender” means any holder of AMM Subordinated Debt so long as it continues to hold such AMM Subordinated Debt.

“AMM Subordination Agreement” has the meaning set forth in Section 5.06(b) of the AMM Cross-Guarantee and Security Agreement.

“Apex Metals Marketing” means Apex Metals Marketing GmbH, a company with limited liability organized under the laws of Switzerland.

“Apex Metals Marketing Quotas” means the quotas of Apex Metals Marketing.

“Apex Silver Finance” means Apex Silver Finance Ltd., an exempted company with limited liability organized under the laws of the Cayman Islands.

“Apex Silver Finance Cross-Guarantee and Security Agreement” means the Cross-Guarantee and Security Agreement executed by Apex Silver Finance in favor of the Collateral Agent for the benefit of the Secured Parties.

“Apex Silver Finance Documents” means this Agreement, the Transfer Restrictions Agreement, the Apex Silver Finance Cross-Guarantee and Security Agreement, each Mandatory Metals Hedge Agreement and the Apex Metals Management and Services Agreement.

“Apex Silver Finance Note” means any promissory notes or other instruments of Apex Silver Finance evidencing Apex Silver Finance Subordinated Debt.

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“Apex Silver Finance Shares” means the shares of Apex Silver Finance.

“Apex Silver Finance Subordinated Debt” means unsecured Indebtedness (including capitalized interest) of Apex Silver Finance, whether currently outstanding or hereinafter created, ranking in payment and upon liquidation junior to the Secured Debt in accordance with the subordination terms attached as Appendix A-2 to the Transfer Restrictions Agreement, which is assigned and pledged as security for the Secured Debt Obligations pursuant to a Security Document. No such indebtedness of Apex Silver Finance shall constitute Apex Silver Finance Subordinated Debt until such time as the holder thereof assumes in writing, either pursuant to the terms of a Financing Document or otherwise, all of the obligations applicable to a Apex Silver Finance Subordinated Lender under and in accordance with this Agreement and the Apex Silver Finance Subordination Agreement.

“Apex Silver Finance Subordinated Lender” means any holder of Apex Silver Finance Subordinated Debt so long as it continues to hold such Apex Silver Finance Subordinated Debt.

“Apex Silver Finance Subordination Agreement” has the meaning set forth in Section 5.06(b) of the Cross-Guarantee and Security Agreement.

“Assignment and Assumption Agreement” has the meaning assigned thereto in the Omnibus Amendment Agreement.

“Comercial Metales Blancos” means Comercial Metales Blancos AB, a privat aktiebolag organized under the laws of Sweden.

“Comercial Metales Blancos Debt” means unsecured Indebtedness (including capitalized interest) of Comercial Metales Blancos, whether currently outstanding or hereinafter created, which is assigned and pledged as security for the Secured Debt Obligations pursuant to a Security Document.

“Comercial Metales Blancos Note” means any promissory notes or other instruments of Comercial Metales Blancos evidencing Comercial Metales Blancos Debt.

“Comercial Metales Blancos Shares” means the shares of Comercial Metales Blancos.

“Comercial Metales Blancos Subordinated Lender” means any holder of Comercial Metales Blancos Debt so long as it continues to hold such Comercial Metales Blancos Debt.

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“Omnibus Amendment Agreement” means the Omnibus Amendment Agreement dated as of September 20, 2006 among the parties hereto.

“Pledge Agreements” has the meaning assigned thereto in the Omnibus Amendment Agreement.

“SC Minerals Sweden” means Gotlex Lageraktiebolag nr. 451, organizational number 556702-1083, a privat aktiebolag organized under the laws of Sweden.

“SC Minerals Sweden Debt” means unsecured Indebtedness (including capitalized interest) of SC Minerals Sweden, whether currently outstanding or hereinafter created, which is assigned and pledged as security for the Secured Debt Obligations pursuant to a Security Document.

“SC Minerals Sweden Note” means any promissory notes or other instruments of SC Minerals Sweden evidencing SC Minerals Sweden Debt.

“SC Minerals Sweden Shares” means the shares of SC Minerals Sweden.

“SC Minerals Sweden Subordinated Lender” means any holder of SC Minerals Sweden Debt so long as it continues to hold such SC Minerals Sweden Debt.

(bbbb)The following defined terms shall be replaced as indicated wherever they appear in the Common Security Agreement:

“Apex Metals Management and Services Agreement” shall be replaced with “Apex Metals Marketing Management and Services Agreement”;

“Apex Metals Net Payment Amount” shall be replaced with “Apex Silver Finance Net Payment Amount”;

“Apex Metals Obligations” shall be replaced with “Apex Silver Finance Obligations”;

“Cash Flow Prepayments” shall be replaced with “Cash Sweep Prepayments”;

“Eligible Guaranteed Apex Metals Amount” shall be replaced with “Eligible Guaranteed Apex Silver Finance Amount”;

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“Guaranteed Apex Metals Early Termination Amounts” shall be replaced with “Guaranteed Apex Silver Finance Early Termination Amounts”;

“Guaranteed Apex Metals Net Payment Amounts” shall be replaced with “Guaranteed Apex Silver Finance Net Payment Amounts”;

“Guaranteed Apex Metals Obligations” shall be replaced with “Guaranteed Apex Silver Finance Obligations”;

Section 3.02.Transfer Restrictions Agreement. The provisions of the Transfer Restrictions Agreement shall be amended as follows:

(a)Apex Metals shall be removed as a party to the Transfer Restrictions Agreement;

(b)recital “C” shall be amended by deleting the words “one quota of Apex Metals in the amount of 1,000 Swiss Francs” in the second line thereof and inserting in their place the words “100% of the outstanding share capital of Apex Silver Finance”;

(c)recital “D” shall be amended by deleting the text in its entirety and inserting in its place the words “Apex Sweden directly owns 64.99% of the outstanding share capital of the Borrower, 65% of the outstanding share capital of Apex Metals Marketing, 100% of the outstanding share capital of SC Minerals Sweden and 100% of the outstanding share capital of Comercial Metales Blancos.”;

(d)recital “E” shall be deleted in its entirety and replaced with the word “[Reserved.]”;

(e)recital “F” shall be amended by (i) replacing the comma after the words “Apex Sweden” in the first lien thereof with the word “and”, (ii) deleting the words “and Apex Metals” from the first line thereof and (iii) replacing the word “Metals” in the last line thereof with the words “Silver Finance”;

(f)the definition of “Apex Metals Subordination Conditions” shall be deleted in its entirety.

(g)the definition of “Shareholder Party” shall be amended by deleting the words “and Apex Metals”, with appropriate conforming changes;

(h)the following additional definitions shall be inserted in Section 1.01:

“AMM Subordination Conditions” shall mean subordination conditions of Apex Metals Marketing substantially in the form of Appendix A-2 hereto.

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“Apex Silver Finance Subordination Conditions” shall mean subordination conditions of Apex Silver Finance substantially in the form of Appendix A-2 hereto.”;

(i)Section 2.01(a)(ii) shall be amended by deleting the words “Apex Metals” in clause (B) thereof and inserting in its place the words “Apex Silver Finance”;

(j)Section 2.01(a)(iii) shall be amended by deleting the words “Apex Metals, or (C)” in clause (B) thereof and inserting in its place the words “Apex Metals Marketing, (C) any Interest in SC Minerals Sweden, (D) any Interest in Comercial Metales Blancos, or (E)”;

(k)Section 2.01(a)(iv) shall be amended in its entirety to read “the Sponsor shall not permit (A) SC Minerals Sweden to transfer any Interest in the Borrower or (B) Comercial Metales Blancos to transfer any Interest in Apex Metals Marketing”;

(l)Section 2.01(b) shall be amended in its entirety to read as follows:

“(b)Prior to Completion, except for the grant of security interests to the Collateral Agent for the benefit of the Secured Parties pursuant to the Security Documents (or the exercise by the Collateral Agent of remedies thereunder), no Transfer to any Permitted Affiliated Assignee referred to in clause (a) above shall be made without the prior written consent of the Majority Secured Parties.”

(m)the last paragraph of Section 2.01 shall be amended by deleting the words “Apex Metals” in the third line thereof and inserting in its place the words “Apex Metals Marketing, Apex Silver Finance, SC Minerals Sweden and Comercial Metales Blancos”;

(n)Section 2.02 shall be amended by:

(i)deleting the words “Apex Metals” each time they appear in each of clauses (b), (e)(ii), (A)(2), A(3) and (A)(8)  thereof and inserting in its place the words “Apex Metals Marketing”;

(ii)deleting in each of clauses (c) and (e)(iii) the words “the Service Company” and inserting in its place the words “Apex Silver Finance”;

(iii)deleting the term “Apex Metals Subordinated Debt” each time its appears in section (A)(5) and inserting in its place “AMM Subordinated Debt”;

(iv)deleting immediately before clause (A)(8) the word “and” inserting after the end of clause (A)(8) the following additional clause: “(9) Interests in Apex Silver Finance representing greater than 50% of the total outstanding Interest in Apex Silver Finance; and (10) Apex Silver Finance Subordinated Debt representing greater than 50% of the total outstanding Apex Silver Finance Subordinated Debt”;

(v)deleting clause (C) in its entirety;

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(o)Section 2.04(a) shall be amended by deleting the words “Apex Metals, the Service Company” in the second line thereof and inserting in their place the words “Apex Metals Marketing and Apex Silver Finance”;

(p)Section 2.04(b) shall be amended by (A) deleting the words “Apex Metals Subordinated Debt” each time they appear in the section and inserting in their place the words “AMM Subordinated Debt, Apex Silver Finance Subordinated Debt”, including appropriate conforming changes and (B) deleting the term “Apex Metals Subordination Conditions in the penultimate line thereof and inserting in its place the words “AMM Subordination Conditions or Apex Silver Finance Subordination Conditions”;

(q)Section 3.02(b) shall be amended in its entirety to read “each of its representations and warranties set forth in Section 2.06(b) of the Omnibus Amendment Agreement is true and correct on and as of the date hereof.”;

(r)Section 3.02(k) shall be amended by inserting before the words “fully perfected” in the sixth line thereof the words “upon making all of the appropriate registrations and filings,”;

(s)Section 3.03 shall be deleted in its entirety;

(t)Section 3.04(c) shall be amended in its entirety to read “The Sponsor agrees to be bound by the terms of each of the AMM Subordination Conditions and the Apex Silver Finance Subordination Conditions with respect to all amounts owing to it from Apex Metals Marketing or Apex Silver Finance.”;

(u)Section 3.05 shall be amended by (i) deleting the references to “Apex Metals” each time it appears in clauses (c), (f), (g) and (h) thereof and inserting in its place the words “Apex Silver Finance”, (ii) deleting all other references to the terms “Apex Metals” each time it appears in such section and deleting all references to “Apex Metals Organizational Documents” each time it appears in such section, with appropriate conforming changes and (iii) deleting the reference to “the Service Company” in clause (h) thereof;

(v)Section 3.06 shall be amended by (i) deleting all references to the terms “Apex Metals” each time it appears in such section and inserting in its place the term “Apex Metals Marketing” and (ii) deleting all references to the term “Apex Metals Organizational Documents” each time it appears in such section, with appropriate conforming changes;

(w)Section 3.07 of the Transfer Restrictions Agreement is deleted in its entirety.

(x)Section 4.01(iii) shall be amended by inserting after the parenthetical therein the words “or under Section 4.01 of the Pledge Agreement of Apex Luxembourg of its right, title and interest in the Apex Silver Finance Shares;

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(y)Section 4.01(v) shall be amended by inserting after the parenthetical therein the words “or under or under Section 4.01 of (A) the Pledge Agreement of Apex Sweden of its right, title and interest in the Apex Metals Marketing Quotas, (B) the Pledge Agreement of Apex Sweden of its right, title and interest in Comercial Metales Blancos Shares or (C) the Pledge Agreement of Apex Sweden of its right, title and interest in SC Minerals Sweden Shares”;

(z)Section 4.01(b)(vii) shall be amended by deleting the words “or Section 7.07 hereof”;

(aa)the last paragraph of Section 5.05 shall be amended by deleting the words “or Apex Metals” in the second line thereof;

(bb)Exhibit A-1 thereto shall be amended by (i) inserting the word “Marketing” after the words “Apex Metals” in the definitions of “Affiliate Permitted Obligations” and “Subordinated Obligations” and (ii) inserting after the words “Apex Sweden” in the definition of “Subordinated Obligations” the words “, Apex Silver Finance, SC Minerals Sweden”; and

(cc)Exhibit A-2 thereto shall be amended by deleting the term “Apex Metals” each time it appears in such exhibit and inserting in its place the words “[Apex Metals Marketing/Apex Silver Finance]”, with appropriate conforming changes.

Section 3.03.Sponsor Pledge Agreement. The provisions of the Sponsor Pledge Agreement shall be amended as follows:

(a)recital “B” shall be amended by deleting the words “Apex Metals GmbH (“Apex Metals”) in the first line thereof and inserting in its place the words “Apex Silver Finance Ltd. (“Apex Silver Finance”) and deleting the words “Apex Metals” in the third line thereof and inserting in its place the words “Apex Silver Finance”;

(b)recital “C” shall be amended by deleting the words “quotas of Apex Metals” in the fourth line thereof and inserting in their place the words “shares of Apex Silver Finance”;

(c)the definition of “Restricted Subsidiary” in the Sponsor Pledge Agreement shall be amended by adding after the words “the Borrower” in the second line thereof the words “, Apex Metals Marketing and Apex Silver Finance”;

(d)Section 3.02(a) shall be amended by deleting the words “or the Service Company, as the case may be”;

(e)Section 3.02(c) shall be amended by deleting the term “Apex Metals Account” in the sixth line thereof and inserting in its place the words “AMM Account”; and

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(f)Section 4.12 shall be amended by deleting the words “Apex Metals” in the fifth line thereof and inserting in its place the words “Apex Silver Finance”.

Section 3.04.Cross-Guarantee and Security Agreement. The provisions of the Cross-Guarantee and Security Agreement shall be amended as follows:

(a)Apex Metals shall be removed as a party to the Cross-Guarantee and Security Agreement;

(b)Apex Metals Marketing shall be the guarantor under the Cross-Guarantee and Security Agreement, with appropriate conforming changes to the introductory paragraph thereof, including the definition of “Guarantor”;

(c)the defined term “Apex Metals Collateral” shall be deleted each time it appears in the agreement (including Section 3.06 and the introductory paragraph of Section 4) and replaced in each instance with the term “AMM Collateral”.

(d)the defined term “Apex Metals Documents” shall be deleted each time it appears in the agreement (including Sections 3.01, 3.02, 3.03, 3.04 and 3.05) and replaced in each case with the term “AMM Documents”, with appropriate conforming changes;

(e)the defined term “Apex Metals Management and Services Agreement” shall be deleted each time it appears in the agreement and replaced in each case with the term “Apex Metals Marketing Management and Services Agreement”;

(f)the defined term “Apex Metals Subordinated Debt” shall be deleted each time it appears in the agreement (including Section 3.14) and replaced in each instance with the term “AMM Subordinated Debt”;

(g)the defined term “Apex Metals Subordinated Lender” shall be deleted each time it appears in the agreement and replaced in each instance with the term “AMM Subordinated Lender”;

(h)the defined term “Apex Metals Subordinated Note” shall be deleted each time it appears in the agreement and replaced in each instance with the term “AMM Subordinated Note”;

(i)the defined term “Apex Metals Subordination Agreement” shall be deleted each time it appears in the agreement and replaced in each instance with the term “AMM Subordination Agreement;

(j)the defined term “CGSA Secured Obligations” shall be amended by deleting clause (b) thereof;

(k)the following additional definition shall be inserted in Section 1.03:

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“Comercial Metales Blancos” means Comercial Metales Blancos AB, a privat aktiebolag organized under the laws of Sweden;

(l)the definition of “Quarterly Hedge Report” in Section 1.03 shall be deleted in its entirety;

(m)the introductory paragraph of Section 4 shall be amended by deleting the term “Apex Metals Collateral” and inserting in its place the words “AMM Collateral”;

(n)Section 4.01 shall be deleted in its entirety;

(o)the Senior Lenders and the Hedge Banks consent to the removal of the Service Company from the security package, the termination of the security interests in the Service Company Shares provided for in Section 4.03 and to the deletion of Section 4.03 in its entirety;

(p)the Senior Lenders and the Hedge Banks consent to the liquidation of Apex Metals pursuant to Section 5.01;

(q)Section 5.03 shall be amended in its entirety to read as follows:

“Section 5.03  Business. The Guarantor shall not conduct any business other than its activities and obligations pursuant and related to the Borrower Concentrate Sales Agreement, the Spot Sales Agreements and the Third Party Concentrate Sales Agreements.”;

(r)Section 5.04 shall be deleted in its entirety.

(s)Section 5.05 shall be amended shall be amended by (i) deleting all references to the terms “Mandatory Metals Hedge Transactions” and “Mandatory Metals Hedge Agreements” in such section, (ii) replacing clause (b)(iii) in its entirety with the following: “(iii) waive any default under, or breach of, any of the Subject Documents” and (iii)  deleting clause (d) of such Section in its entirety;

(t)Section 5.06(a)(ii) shall be deleted in its entirety;

(u)Section 5.08(b) shall be amended by (i) deleting the parenthetical that reads “(other than the Service Company)” and (ii) deleting the last sentence of the section in its entirety;

(v)Section 5.13 shall be amended by deleting the words “executed and delivered in connection with the Closing Date”;

(w)Section 5.14 shall be amended by inserting after the words “Apex Luxembourg” in the fourth line thereof the words “or Comercial Metales Blancos or any other Person permitted under the Transfer Restrictions Agreement”;

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(x)Sections 5.15, 5.18 and 7.01(c)(i)(A) shall be amended by deleting the term “Apex Metals Account” and inserting in its place the term “AMM Account”;

(y)Section 7.01(a)(i) shall be deleted in its entirety;

(z)Section 8.04(i) shall be amended in its entirety to read as follows;

(i)If to the Guarantor, to it at:

Apex Metals Marketing GmbH

c/o Juris Treuhand AG

Industriestrasse AG

CH-6304, Zug

Switzerland

Tel:(303) 839-5060

(888) 696-2739

Fax:(303) 839-5097

with a copy to:

Apex Silver Mines Corporation

1700 Lincoln Street, Suite 3050

Denver, CO 80203

Tel:(303) 839-5060

(888) 696-2739

Fax:(303) 839-5097

(aa)Annex I shall be amended by (i) inserting in (1) after the words “APEX METALS” the word “MARKETING”; (ii) deleting the information set forth in (4) and inserting the following in its place:  “CH-170.4.006.587-8 (Registry Number for the Commercial Register of the Canton of Zug”; (iii) inserting in (5) after the words “APEX METALS” the word “MARKETING” and (iv) deleting the paragraph set forth under the heading “CHANGE IN CIRCUMSTANCES” and the heading itself; and

(bb)Appendix B thereto shall be deleted in its entirety.

Section 3.05.Hedge Guaranty. The provisions of the Hedge Guaranty shall be amended as follows:

(a)Recital (A) shall be amended by deleting the text in its entirety and inserting in its place the words “Apex Silver Finance Ltd., an exempted company with limited liability organized under the laws of the Cayman Islands (“Apex Silver Finance”) and the Hedge Banks have executed and will continue to execute certain Mandatory Metals Hedge Transactions under the Mandatory Metals Hedge Agreements to which Apex Silver Finance and the Hedge Banks are parties; and”;

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(b)each other reference to “Apex Metals” in the Hedge Guaranty shall be replaced with the words “Apex Silver Finance”; and

(c)each reference to the term “Apex Metals Document” in the Hedge Guaranty shall be replaced with the words “Apex Silver Finance Document”.

Section 3.06.Completion Agreement. The provisions of the Completion Agreement shall be amended as follows:

(a)the defined term “Apex Metals” shall be deleted each time it appears in recital “B”, recital “C” and Section 3.01(a) of the Completion Agreement and replaced in each instance with the term “Apex Silver Finance”;

(b)Section (d) of Appendix B shall be amended by deleting the term “Apex Metals” in the third line thereof and inserting in its place the term “Apex Silver Finance”;

(c)the definition of “Guaranteed Obligor” in Appendix A thereto shall be amended by deleting the term “Apex Metals” and inserting in its place the term “Apex Silver Finance”;

(d)Appendix B-4 (Form of Marketing Certificate) shall be amended by deleting the term “Apex Metals” in clause (b) and inserting in its place the term “Apex Silver Finance”.

Section 3.07.Project Document Guarantee (a). The Project Document Guarantee described in clause (a) of the definition of “Project Document Guarantee” in Appendix A to the Common Security Agreement (which guarantee is issued by the Sponsor in favor of the Borrower in respect of Apex Metals’ obligations under the Borrower Concentrate Sales Agreement) shall be amended as follows:

(a)Recital “B” thereto shall be amended in its entirety to read as follows: “Apex Metals Marketing GmbH (“Apex Metals Marketing”), a subsidiary of the Guarantor, has entered into the Borrower Concentrate Sales Agreement with the Borrower;”;

(b)the defined term “Apex Metals” shall be deleted each time it appears in the guarantee and replaced in each instance with the term “Apex Metals Marketing”; and

(c)the second paragraph of Section 2.01 shall be amended by replacing the term “Apex Metals Account” with the term “AMM Account”.

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Section 3.08.Project Document Guarantee (b). The Project Document Guarantee described in clause (b) of the definition of “Project Document Guarantee” in Appendix A to the Common Security Agreement (which guarantee is issued by the Sponsor in favor of the Borrower and Apex Metals in respect of the Service Company’s obligations under the Borrower Management and Services Agreement and the Apex Metals Management and Services Agreement) shall be amended as follows:

(a)Apex Metals shall be removed as a party to this Project Document Guarantee;

(b)Apex Metals Marketing shall be added as a party to this Project Document Guarantee, with appropriate conforming changes to the introductory paragraph thereof;

(c)Apex Silver Finance shall be added to a party to this Project Document Guarantee with appropriate conforming changes to the introductory paragraph thereof;

(d)each reference to the term “Apex Metals” in this Project Document Guarantee shall be deleted and in each case shall be replaced with the term “Apex Metals Marketing”;

(e)recital “E” to this Project Document Guarantee shall be amended by deleting the words “Apex Metals” in the penultimate line thereof and inserting the words “Apex Silver Finance” to replace them;

(f)the first paragraph of Section 2.01 shall be amended by deleting the words “the Borrower and Apex Metals” in the second line thereof and inserting the words “the Borrower, Apex Metals Marketing and Apex Silver Finance” to replace them;

(g)the second paragraph of Section 2.01 shall be amended by replacing the term “Apex Metals Account” with the term “AMM Account”;

(h)Section 2.02(d) shall be amended by deleting the words “either the Borrower or Apex Metals” and inserting the words “the Borrower, Apex Metals Marketing or Apex Silver Finance” to replace them;

(i)the last paragraph of Section 2.02 shall be amended by deleting the words “the Borrower or Apex Metals” in the second line thereof and inserting the words “the Borrower, Apex Metals Marketing or Apex Silver Finance” to replace them;

(j)Section 2.03 shall be amended by (i) deleting the words “the Borrower and Apex Metals” from the sixth line thereof and inserting the words “the Borrower, Apex Metals Marketing and Apex Silver Finance” to replace them and (ii) deleting the words “the Borrower or Apex Metals” from the seventh line thereof and inserting the words “the Borrower, Apex Metals Marketing or Apex Silver Finance” to replace them;

(k)the introductory sentence of Article III shall be amended by deleting the words “the Borrower or Apex Metals” and inserting the words “the Borrower, Apex Metals Marketing and Apex Silver Finance” to replace them;

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(l)Section 4.01 shall be amended by deleting the words “the Borrower or Apex Metals” from the second line thereof and inserting the words “the Borrower, Apex Metals Marketing and Apex Silver Finance” to replace them;

(m)Section 5.04(b) shall be amended by deleting the words “the Borrower or Apex Metals” from the sixth line thereof and inserting the words “the Borrower, Apex Metals Marketing and Apex Silver Finance” to replace them;

(n)Section 5.07(a) shall be amended by inserting before the words “and the Collateral Agent” in the second sentence thereof the words “, Apex Silver Finance”;

(o)Section 5.09 shall be amended by deleting the words “the Borrower or Apex Metals” from the second line thereof and inserting the words “the Borrower, Apex Metals Marketing and Apex Silver Finance” to replace them; and

(p)Section 5.10 shall be amended by (i) deleting the words “the Borrower and Apex Metals” from the second line thereof and inserting the words “the Borrower, Apex Metals Marketing and Apex Silver Finance” to replace them and (ii) inserting before the words “and the Collateral Agent” in the penultimate line thereof the words “, Apex Silver Finance”.

ARTICLE IV

ACQUISITION AMENDMENTS

Subject to the satisfaction of each of the conditions precedent specified in Section 5.02 below, but effective as of the Acquisition Effective Date:

Section 4.01.Consent to Acquisition. The Secured Parties consent to the following:

(a)the transfer by ASM and its Affiliates, and the direct or indirect acquisition by Sumitomo, of (i) 35% of the outstanding shares of the Borrower,  indirectly, through the acquisition by Sumitomo of 100% of the shares of SC Minerals Sweden, (ii) 35% of the outstanding quotas of Apex Metals Marketing (as successor to Apex Metals’ rights and obligations with respect to the Concentrate Sales Agreements under the Transaction Documents), indirectly, through the acquisition by Sumitomo of 100% of the shares of Comercial Metales Blancos, and (iii) 35% of the outstanding shares of Apex Silver Finance (as successor to Apex Metal’s rights and obligations with respect to the Mandatory Metals Hedge Agreements under the Transaction Documents), directly;

(b)notwithstanding any contrary provision of the Financing Documents (including Sections 3.06(b) and 8.02 of the Common Security Agreement), each of the Borrower, Apex Metals Marketing and Apex Silver Finance shall be permitted to amend

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or modify its Organizational Documents as contemplated by the applicable Shareholder Agreement as in effect on the Acquisition Effective Date;

(c)notwithstanding any contrary provision of the Financing Documents, Apex Sweden shall be permitted to repay the Shareholder Note payable to ASM in the principal amount of $95 million promptly following the Acquisition Effective Date, provided that in no event shall the amount of such Shareholder Note repaid pursuant to this clause (c) exceed the amount Apex Sweden actually receives in cash from the sale of each of the outstanding SC Minerals Sweden Shares and the Comercial Metales Blancos Shares;

(d)notwithstanding any contrary provision of the Financing Documents, the Borrower shall be permitted to repay Subordinated Debt payable to Apex Silver Finance from time to time provided that Apex Silver Finance shall use such repayments to satisfy obligations pursuant to the Mandatory Metals Hedge Transactions;

(e)notwithstanding any contrary provision of the Financing Documents, Apex Luxembourg shall be permitted to (i) repay up to $121 million of the Shareholder Parent Notes payable to ASM promptly following the Acquisition Effective Date, provided that in no event shall the amount of such Shareholder Parent Note repaid pursuant to this clause (e)(i) exceed the amount of the dividend Apex Luxembourg actually receives in cash pursuant to Section 4.01(f)(i), and (ii) transfer to ASM all of its rights (including the right to receive any and all payments) and obligations under the Deferred Payments Agreement in exchange for the reduction of the Shareholder Parent Note Payable to ASM in an amount up to $125 million;

(f)notwithstanding any contrary provision of the Financing Documents, Apex Sweden shall be permitted to (i) make a dividend to Apex Luxembourg in an amount up to $121 million promptly following the Acquisition Effective Date, provided that in no event shall the amount of such dividend under this clause (i) exceed the difference of (A) the amount Apex Sweden actually receives in cash from the sale of each of the outstanding SC Minerals Sweden Shares and the Comercial Metales Blancos Shares less (B) the principal amount of the Shareholder Note repaid pursuant to Section 4.01(c) and (ii) transfer as a dividend to Apex Luxembourg all of its rights (including the right to receive any and all payments) and obligations under the Deferred Payments Agreement; and

(g)notwithstanding any contrary provision of the Financing Documents, Sumitomo and SC Minerals Sweden shall be permitted to amend the Organizational Documents of SC Minerals Sweden after the Acquisition Effective Date solely for the purpose of changing the legal name of SC Minerals Sweden.

Section 4.02.Consent to Disbursement of Contingent Support Account. The Secured Parties consent to the distribution of all amounts on deposit in the Contingent Support Account to MSC and to the simultaneous repayment by MSC of Subordinated Debt payable to

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ASM in an aggregate amount equal to the amount distributed from the Contingent Support Account.

Section 4.03.Common Security Agreement. The provisions of the Common Security Agreement shall be amended as follows:

(a)Section 2.07(a)(A)(1) shall be amended by inserting after the words “Contingent Support Account” in the parenthetical therein the words “or otherwise committed to be paid by a Sponsor under Sections 5.03 or 5.04 of the ASM Completion Agreement or Section 4.03 of the Sumitomo Completion Agreement, as applicable”;

(b)Section 2.08(d)(i) shall be amended by inserting after the words “Contingent Support Account” in the parenthetical therein the words “or otherwise committed to be paid by a Sponsor under Sections 5.03 or 5.04 of the ASM Completion Agreement or Section 4.03 of the Sumitomo Completion Agreement, as applicable.”;

(c)Section 3.12(e) shall be amended by adding the following sentence at the end thereof: “Appendices A-1 and A-2 to the Transfer Restrictions Agreement shall not be amended without the consent of Sumitomo.”

(d)Section 3.15(a)(v) shall be amended by adding the words “or the Sumitomo Transfer Restrictions Agreement” after the term “Transfer Restrictions Agreement”;

(e)Section 3.15(a)(vii) shall be amended by adding the words “or the Sumitomo Transfer Restrictions Agreement” after the second occurrence of the term “Transfer Restrictions Agreement”;

(f)Section 4.02(e) shall be amended by replacing the words “Section 5.03 of the Completion Agreement” at the end thereof with the words “Section 5.03 and 5.04 of the ASM Completion Agreement and Section 4.03 of the Sumitomo Completion Agreement”;

(g)Section 7.01(a)(ii) shall be amended by inserting in the fourth sentence thereof, after the words “Apex Sweden” the words “or SC Minerals Sweden”;

(h)Section 8.02 shall be amended by adding the words “or the Sumitomo Transfer Restrictions Agreement” after the term “Transfer Restrictions Agreement”;

(i)Section 8.18 shall be amended by replacing each reference to “the Sponsor” with the words “a Sponsor”;

(j)Section 8.19(a)(ii) shall be amended by inserting after the words “Transfer Restrictions Agreement” the words “or Sumitomo Transfer Restrictions Agreement”;

(k)Section 10.01(b) shall be amended in its entirety to read as follows:

“(b)Breach of Representation and Warranty.

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(i) Any representation, warranty or statement confirmed or made by the Borrower under Sections 7.01(a) (Organization and Ownership), 7.01(b) (Authority), 7.01(c)(ii) (Proper Legal Form), 7.01(d) (Consents and Approvals for Financing Documents), Section 7.01(e) (Consents and Approvals for Project), 7.01(f) (No Conflicts), 7.01(j) (Title to Properties; Security Interests), 7.01(k) (Taxes), 7.01(o) (Transaction Documents) or 7.01(q) (Environmental Matters) or contained in any certificate, statement, notice or other document provided to any Secured Party under or pursuant to any such sections shall have been incorrect in any material respect when made or deemed to be made or (except if stated to have been made solely as of an earlier date) repeated, and such representation or warranty is not cured or otherwise corrected to the satisfaction of the Administrative Agent within 30 days from the earlier of (A) receipt by the Borrower of written notice from the Administrative Agent of such breach or (B) the date upon which the Borrower becomes aware of such breach; or

(ii) any other representation, warranty or statement confirmed or made by the Borrower in any Financing Document or contained in any certificate, statement, notice or other document provided to any Secured Party under or pursuant to any Financing Document shall have been incorrect in any material respect when made or deemed to be made or (except if stated to have been made solely as of an earlier date) repeated;

(l)Section 10.01(f) shall be amended in its entirety to read as follows:

“(f) Default Under or Termination of the Completion Agreement.

(i) (A) a Completion Default under any of the following sections of the ASM Completion Agreement or the Sumitomo Completion Agreement shall have occurred and be continuing:

(1) Section 6.01(a) (Payment Default) of the ASM Completion Agreement or Section 5.01(a) (Payment Default) of the Sumitomo Completion Agreement, unless within 10 Business Days from the receipt of written notice by the Borrower from the Administrative Agent of such default, the Borrower (with funds from the Sponsors) or the non-defaulting Sponsor shall have cured such default;

(2) Section 6.01(b) (Breach of Representation or Warranty) of the ASM Completion Agreement or Section 5.01(b) (Breach of Representation or Warranty) of the Sumitomo Completion Agreement, unless within 30 days from the earlier of (x) receipt of written notice from the Administrative Agent of such breach or (y) the date upon which the non-defaulting Sponsor becomes aware of such breach, the non-defaulting Sponsor shall have cured such default; or

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(3) Section 6.01(c) (Breach of Covenant) of the ASM Completion Agreement or Section 5.01(c) (Breach of Covenant) of the Sumitomo Completion Agreement, with respect to any of the covenants (other than to pay money) in Sections 5.03 or 5.04 of the ASM Completion Agreement or Section 4.03 of the Sumitomo Completion Agreement, unless within 30 days from the earlier of (x) receipt of written notice from the Administrative Agent of such breach or (y) the date upon which the non-defaulting Sponsor becomes aware of such breach, the non-defaulting Sponsor shall have cured such default; or

(B) any other Completion Default under either the ASM Completion Agreement or the Sumitomo Completion Agreement shall have occurred and be continuing; or

(ii) either Completion Agreement shall have been terminated prior to Completion;

(iii) either Completion Agreement shall have been declared in a final order of a court to be unenforceable against the applicable Sponsor; or

(iv) either Sponsor shall have repudiated its obligations under the applicable Completion Agreement prior to Completion;

provided that any Completion Default listed in clauses (ii) through (iv) above or any uncurable Completion Default shall not be an Event of Default if, promptly but in no case later than five Business Days after receiving such notice from the Administrative Agent, the non-defaulting Sponsor shall assume all obligations of the defaulting Sponsor under each Financing Document to which it is a party (until such time as the defaulting Sponsor shall have been replaced in accordance with this paragraph) and within 90 days after the Administrative Agent notifies the Borrower and Sponsors of such occurrence, (I) the terminated, repudiated or unenforceable Completion Agreement shall have been replaced with an alternative completion agreement acceptable to the Secured Parties or (II) the defaulting Sponsor shall have been replaced (x) if the defaulting Sponsor is Sumitomo, with an alternate sponsor having a credit rating at least as strong as that held by Sumitomo on and as of June 30, 2006 or (y) if the defaulting Sponsor is ASM, with (1) an alternate sponsor that is acceptable to the Majority Secured Parties (such acceptance not to be unreasonably withheld) and (2) an operator (which, for the avoidance of doubt, may be the alternate sponsor referred to in the preceding clause (1)) that is acceptable to the Majority Secured Parties (such acceptance not to be unreasonably withheld) to operate the Project on terms reasonably acceptable to the Majority Secured Parties; provided further that if the defaulting Sponsor is Sumitomo, ASM shall have deposited into the

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Contingent Support Account an amount equal to the difference of $70,000,000 minus the aggregate amount of all Contingent Support Contributions of ASM and Sumitomo made from and after the Acquisition Effective Date immediately upon receiving notice of such occurrence from the Administrative Agent;”;

(m)Section 10.01(g) shall be amended in its entirety to read as follows:

“(g)Default Under or Termination of a Transfer Restrictions Agreement. (i) A TRA Default under either the Transfer Restrictions Agreement or the Sumitomo Transfer Restrictions Agreement shall have occurred and be continuing; (ii) either the Transfer Restrictions Agreement or the Sumitomo Transfer Restrictions Agreement shall be terminated other than in accordance with its terms; (iii) either the Transfer Restrictions Agreement or the Sumitomo Transfer Restrictions Agreement shall have been declared in a final order of a court to be unenforceable against a party thereto (other than the Administrative Agent or the Collateral Agent) or any Permitted Assignee of any thereof; or (iv) any party thereto (other than the Administrative Agent or the Collateral Agent) or any Permitted Assignee of any thereof shall have repudiated its obligations under the Transfer Restrictions Agreement or the Sumitomo Transfer Restrictions Agreement;”;

(n)Section 10.01(i) shall be amended in its entirety to read as follows:

“(i)Sponsor Default.

(i) (A) a Sponsor Default under any of the following sections of the Sponsor Pledge Agreement or the Sumitomo Pledge and Guarantee Agreement shall have occurred and be continuing:

(1) Section 6.01(a) (Payment Default), unless within 10 Business Days from the receipt of written notice from the Administrative Agent of such default, the non-defaulting Sponsor shall have cured such default; or

(2) Section 6.01(b) (Breach of Representation and Warranty), unless within 30 days from the earlier of (x) receipt of written notice from the Administrative Agent of such breach or (y) the date upon which the non-defaulting Sponsor becomes aware of such breach, the non-defaulting Sponsor shall have cured such default; or

(3) Section 6.01(c)(ii) (Breach of Covenant), unless within 30 days from the earlier of (x) receipt of written notice from the Administrative Agent of such breach or (y) the date upon which the non-defaulting Sponsor becomes aware of such breach, the non-defaulting Sponsor shall have cured such default; or

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(B) any other Sponsor Default under the Sponsor Pledge Agreement or the Sumitomo Pledge and Guarantee Agreement shall have occurred and be continuing; or

(ii) the Sponsor Pledge Agreement or the Sumitomo Sponsor Pledge and Guarantee Agreement shall be terminated;

(iii) the Sponsor Pledge Agreement or the Sumitomo Sponsor Pledge and Guarantee Agreement shall have been declared in a final order of a court to be unenforceable against the applicable Sponsor; or

(iv) either Sponsor shall have repudiated its obligations under the applicable Sponsor Pledge Agreement;

provided that any Sponsor Default listed in clauses (ii) through (iv) above or any uncurable Sponsor Default shall not be an Event of Default if, promptly but in no case later than five Business Days after receiving such notice from the Administrative Agent, within the non-defaulting Sponsor shall assume all obligations of the defaulting Sponsor under each Financing Document to which it is a party (until such time as the defaulting Sponsor shall have been replaced in accordance with this paragraph) and within 90 days after the Administrative Agent notifies the Borrower and Sponsors of such occurrence, (I) the terminated, repudiated or unenforceable agreement shall have been replaced with an alternative sponsor pledge agreement acceptable to the Secured Parties or (II) the defaulting Sponsor shall have been replaced (x) if the defaulting Sponsor is Sumitomo, with an alternate sponsor having a credit rating at least as strong as that held by Sumitomo on and as of June 30, 2006 or (y) if the defaulting Sponsor is ASM, with (1) an alternate sponsor that is acceptable to the Majority Secured Parties (such acceptance not to be unreasonably withheld) and (2) an operator (which, for the avoidance of doubt, may be the alternate sponsor referred to in the preceding clause (1)) that is acceptable to the Majority Secured Parties (such acceptance not to be unreasonably withheld) to operate the Project on terms reasonably acceptable to the Majority Secured Parties; provided further that if the defaulting Sponsor is Sumitomo, ASM shall have deposited into the Contingent Support Account an amount equal to the difference of $70,000,000 minus the aggregate amount of all Contingent Support Contributions of ASM and Sumitomo made from and after the Acquisition Effective Date immediately upon receiving notice of such occurrence from the Administrative Agent;”;

(o)Section 10.01(u) shall be amended by deleting the word “Sponsor” in clause (ii) thereof and replacing it with the word “Sponsors”;

(p)Section 10.01(aa) shall be amended in its entirety to read as follows:

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“(aa)Forced Divestiture. A law, order, decree, regulation, directive or restriction is issued by any Governmental Authority of the principal place of business of either Sponsor, any Senior Lender or any of Apex Luxembourg, Apex Sweden or SC Minerals Sweden that (i) requires any of SC Minerals Sweden, Apex Luxembourg or Apex Sweden to divest itself of all or part of its equity interest in the Borrower or (ii) prevents either Sponsor or any of Apex Luxembourg, Apex Sweden or SC Minerals Sweden from participating in all or any part of the benefit of its equity interests in the Project, and in each such case such law, order, decree, regulation, directive or restriction remains in effect for a period of 180 days; provided however that any such occurrence shall not be an Event of Default if, within 10 Business Days after such 180-day period (or such divestiture if earlier), the unaffected Sponsor or an Affiliate of the unaffected Sponsor acquires all rights and interests of the affected entity in the Borrower and Project pursuant to an assignment agreement acceptable to the Majority Secured Parties, so long as such acquisition would avoid the effect of the relevant law, order, decree, regulation, directive or restriction;”

(q)Section 10.01(ee) shall be amended in its entirety to read as follows:

“(ee)Change in Control. Subject to the provisions of the Transfer Restrictions Agreements:

(i)Prior to Completion (A) ASM shall cease to own directly 100% of the issued and outstanding Apex Luxembourg Shares or (B) ASM shall cease to Control the Borrower, Apex Metals Marketing or Apex Silver Finance directly or indirectly;

(ii)prior to Completion, (A) Apex Luxembourg shall cease to own directly 100% of the issued and outstanding Apex Sweden Shares, or at least 65% of the Apex Silver Finance Shares, or at least one share in the Borrower or (B) Apex Luxembourg shall cease to Control Apex Sweden or Apex Silver Finance directly or indirectly;

(iii)prior to Completion, (A) Apex Sweden and SC Minerals Sweden shall collectively cease to own, directly, 100% of the issued and outstanding Borrower Shares (less one share held by Apex Luxembourg), or (B)  Apex Sweden and Comercial Metales Blancos shall collectively cease to own, directly, 100% of the issued and outstanding Apex Metals Marketing Quotas, or (C) Apex Sweden shall cease to Control the Borrower or Apex Metals Marketing directly or indirectly; or

(iv)at any time after Completion, ASM shall cease to Control the Borrower, Apex Metals Marketing or Apex Silver Finance directly or indirectly;

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provided that, the failure of ASM to comply with the conditions described in clauses (i) and (iv) above shall not constitute Events of Default if concurrently therewith ASM is replaced with (1) an alternate sponsor that is acceptable to the Majority Secured Parties (such acceptance not to be unreasonably withheld) and (2) an operator (which, for the avoidance of doubt, may be the alternate sponsor referred to in the preceding clause (1)) that is acceptable to the Majority Secured Parties (such acceptance not to be unreasonably withheld) to operate the Project on terms reasonably acceptable to the Majority Secured Parties; or

(v)prior to Completion, (A) Sumitomo shall cease to own 100% of the outstanding shares of either SC Minerals Sweden or Comercial Metales Blancos, (B) SC Minerals Sweden shall cease to own directly 35% of the issued and outstanding Borrower Shares, or (C) Comercial Metales Blancos shall cease to own directly 35% of the issued and outstanding Apex Metals Marketing Quotas (except, in cases (B) and (C) above, for any such Shares or Quotas transferred to ASM or its Affiliates).”

(r)Section 10.02(d) shall be amended by deleting the words “the Sponsor” each time they appear in the section and inserting in their place the word “ASM”;

(s)Section 11.04(g)(i) and (ii) shall be amended to read as follows:

“(i)(A) a percentage of the identified Planned Project Costs equal to the quotient (expressed as a percentage) of (1) the aggregate amount of undrawn Senior Loan Commitments divided by (2) the total amount of Planned Project Costs set forth on the most recently accepted Cost to Complete Certificate (not including the $4 million of Planned Project Costs paid by ASM with ordinary shares pursuant to the EPCM Contract), shall be funded by Senior Loans, and (B) the remaining identified Planned Project Costs shall be funded by Base Equity Contributions; provided that at no time shall the TPCFR exceed 33:67; and

(ii)Excess Project Costs shall be funded: (A) from amounts otherwise available in the AMM Account (and not previously marked for any other purpose) and (B) by Contingent Support Contributions from the Sponsors deposited into the Contingent Support Account on or before the requested Disbursement Date”;

(t)Section 14.10 shall be amended by inserting after the words “Apex Group” in the last line thereof the words “or the Sumitomo Group”;

(u)Section 15.08 shall be amended by (i) deleting clauses (vi) and (vii) thereof and (ii) inserting the following clauses:

(vi)If to SC Minerals Sweden, to it at :

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Gotlex Lageraktiebolag nr. 451, organizational number 556702-1083

c/o Wistrand Advokatbyra

Lilla Bommen 1
S-411 04 Göteborg

Sweden

Tel:  +81-3-5166-4300

Fax:  +81-3-5166-6423

Attn: Director

with a copy to:

Sumitomo Corporation

8-11, Harumi, 1-chome,

Chuo-ku, Tokyo, 104-8610 Japan

Attention: General Manager, Non-Ferrous Metals &

Raw Materials Department

Telecopier: +81-3-5166-6423

(vii)If to Comercial Metales Blancos, to it at:

Comercial Metales Blancos AB

c/o Anders Skoldberg, Ernst & Young AB

401 82 Göteborg

Sweden

Tel:  +81-3-5166-4300

Fax:  +81-3-5166-6423

Attn: Director

with a copy to:

Sumitomo Corporation

8-11, Harumi, 1-chome,

Chuo-ku, Tokyo, 104-8610 Japan

Attention: General Manager, Non-Ferrous Metals &

Raw Materials Department

Telecopier: +81-3-5166-6423

(v)the definition of “Affiliated Obligors” in Appendix A thereto shall be further amended by (i) replacing the words “the Sponsor” with “ASM” and (ii) inserting after the term “Apex Sweden” the word “, Sumitomo”;

(w)the definition of “Completion” in Appendix A thereto shall be amended by inserting before the words “Completion Agreement” the word “ASM”;

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(x)the definition of “Completion Agreement” in Appendix A thereto shall be amended in its entirety to read “means either of the ASM Completion Agreement or the Sumitomo Completion Agreement.”;

(y)the definition of “Completion Certificates” in Appendix A thereto shall be amended by inserting before the words “Completion Agreement” the word “ASM”;

(z)the definition of “Completion Default” in Appendix A thereto shall be amended in its entirety to read “means a “Completion Default” as such term is defined in either of the ASM Completion Agreement or the Sumitomo Completion Agreement.”;

(aa)the definition of “Completion Test” in Appendix A thereto shall be amended by inserting before the words “Completion Agreement” the word “ASM”; ;

(bb)the definition of “Completion Test Period” in Appendix A thereto shall be amended by inserting before the words “Completion Agreement” the word “ASM”;

(cc)the definition of “Contingent Support Contribution” in Appendix A thereto shall be amended in its entirety to read “means one or more deposits by either ASM or Sumitomo into the Contingent Support Account for transfer to the Loan Proceeds Account for the purpose of paying Excess Project Costs in accordance with Section 11.04(g)(ii).”;

(dd)the definition of “Contingent Support Requirement” in Appendix A thereto shall be amended in its entirety to read “means, at any date of determination, (i) the Total Cost to Complete as indicated on the most recently approved Cost to Complete Certificate less (ii) the sum of (A) the total amount of Senior Loan Commitments then available to be drawn plus (B) the sum of (1) amounts available to be drawn under Equity Support Letters of Credit plus (2) the balance of the Equity Account”;

(ee)the definition of “Financing Documents” in Appendix A thereto shall be further amended by inserting after the words “Fee Letters” the words “, each of the Sumitomo Documents”;

(ff)the definition of “Information” shall be amended by inserting the words “or the Sumitomo Group” after each occurrence of the term “Apex Group”;

(gg)the definition of “Project Document Guarantees” in Appendix A thereto shall be amended by deleting in clause (a) the words “the Sponsor” and inserting in their place the word “ASM”;

(hh)the definition of “Restricted Payment” in Appendix A thereto shall be amended by (i) deleting the word “and” at the end of clause (a) thereof, (ii) deleting the period at the end of clause (b) thereof and inserting in its place the word “, and” and (iii) inserting the following clause at the end of such definition: “(c) all payments of the Service Fee in excess of $125,000 per month.”;

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(ii)the definition of “Sponsor” in Appendix A thereto shall be amended in its entirety to read “means either ASM or Sumitomo, and “Sponsors” means both ASM and Sumitomo.”;

(jj)the definition of “Sponsor Default” in Appendix A thereto shall be amended in its entirety to read “means a “Sponsor Default” as such term is defined in either of the Sponsor Pledge Agreement or the Sumitomo Pledge and Guarantee Agreement.”;

(kk)the definition of “Sponsor Funding” in Appendix A thereto shall be amended in its entirety to read “means funding provided to the Borrower by or on behalf of either Sponsor, Apex Luxembourg, Apex Sweden or SC Minerals Sweden”;

(ll)the definition of “Sponsor Pledge Agreement” in Appendix A thereto shall be further amended by deleting the words “the Sponsor” and inserting the word “ASM” to replace them;

(mm)the definition of “TRA Default” in Appendix A thereto shall be amended in its entirety to read “has the meaning specified in Section 4.01 of either the Transfer Restrictions Agreement or the Sumitomo Transfer Restrictions Agreement.”;

(nn)the following additional defined terms shall be inserted in Appendix A thereto:

“Apex Metals Marketing Quotaholders Agreement” means the Metals Quotaholders Agreement to be entered into on or about September 26, 2006, among Apex Sweden, Comercial Metales Blancos and Apex Metals Marketing.

“Apex Silver Finance Shareholders Agreement” means the Apex Silver Finance Shareholders Agreement to be entered into on or about September 26, 2006, among Apex Luxembourg, Sumitomo and Apex Silver Finance.

“ASM Completion Agreement” means the Completion Agreement dated December 1, 2005, among ASM, the Technical Agent, the Administrative Agent and the Collateral Agent.

“Borrower Shareholders Agreement” means the MSC Shareholders Agreement to be entered into on or about September 26, 2006, among Apex Luxembourg, Apex Sweden, SC Minerals Sweden and the Borrower.

“Deferred Payments Agreement” means the Deferred Payments Agreement to be entered into on or about September 26, 2006, between Apex Sweden and Sumitomo.

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“Shareholders Agreements” means the Borrower Shareholders Agreement, the Apex Metals Marketing Quotaholders Agreement and the Apex Silver Finance Shareholders Agreement.

“Sumitomo Completion Agreement” means the Sumitomo Completion Agreement executed and delivered in satisfaction of Section 5.02(c) of the Omnibus Amendment Agreement, among Sumitomo, the Technical Agent, the Administrative Agent and the Collateral Agent.

“Sumitomo Documents” means the Sumitomo Completion Agreement, the Sumitomo Pledge and Guarantee Agreement and the Sumitomo Transfer Restrictions Agreement.

“Sumitomo Group” means Sumitomo and each of its Subsidiaries (as such term is defined in the Sumitomo Pledge and Guarantee Agreement).

“Sumitomo Pledge and Guarantee Agreement” means the Sumitomo Pledge and Guarantee Agreement executed and delivered in satisfaction of Section 5.02(c) of the Omnibus Amendment Agreement, between Sumitomo and the Collateral Agent.

“Sumitomo Transfer Restrictions Agreement” means the Sumitomo Transfer Restrictions Agreement executed and delivered in satisfaction of Section 5.02(c) of the Omnibus Amendment Agreement, among Sumitomo, SC Minerals Sweden, Comercial Metales Blancos, the Administrative Agent and the Collateral Agent.”

Section 4.04.Transfer Restrictions Agreement. The provisions of the Transfer Restrictions Agreement shall be amended as follows:

(a)recital “C” shall be amended in its entirety to read as follows:  “C. Apex Luxembourg directly owns 100% of the outstanding share capital of Apex Sweden, 65% of the outstanding share capital of Apex Silver Finance and one share in the Borrower”;

(b)recital “D” shall be amended in its entirety to read as follows: “D. Apex Sweden directly owns 64.99% of the outstanding share capital of the Borrower and 65% of the outstanding share capital of Apex Metals Marketing.”;

(c)Section 2.01(a) shall be amended by deleting clauses 2.01(a)(iii)(C) and (D) in their entirety and deleting clause 2.01(a)(iv) in its entirety;

(d)the last paragraph of Section 2.01 shall be revised by inserting after the words “the Sponsor” in the second line thereof the words “and Sumitomo collectively”,

(e)Section 2.04(a) shall be amended to insert “ASM” immediately prior to “Completion Agreement” in the penultimate line;

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(f)an additional Section 2.06 shall be added at the end of Article II, which shall read as follows:

“2.06  Successor Sponsor. Transfers otherwise prohibited under Sections 2.01 and 2.02 hereof shall not constitute TRA Defaults hereunder if such transfers are made to an alternate sponsor in connection with the cure of a Sponsor Default or Completion Default of ASM, so long as ASM is replaced with (a) an alternate sponsor that is acceptable to the Majority Secured Parties (such acceptance not to be unreasonably withheld) and (b) an operator (which, for the avoidance of doubt, may be the alternate sponsor referred to in the preceding clause (a)) that is acceptable to the Majority Secured Parties (such acceptance not to be unreasonably withheld) to operate the Project on terms reasonably acceptable to the Majority Secured Parties.”;

(g)Section 3.01(a) shall be amended to insert “ASM” immediately prior to “Completion Agreement” in the penultimate line; and

(h)Section 4.01(a) shall be amended to insert the following at the end of the clause:

“provided that it shall not be a TRA Default under this Section 4.01(a) if the facts that resulted in an incorrect representation, warranty or statement are (i) corrected so that the incorrect representation, warranty or statement becomes correct or (ii) otherwise addressed to the satisfaction of the Administrative Agent acting on behalf of the Secured Parties, in each case within 30 days from the earlier of (x) receipt of written notice from the Administrative Agent notifying such Shareholder Party of the incorrect representation, warranty or statement or (y) the date on which any Shareholder Party becomes aware of such incorrect representation, warranty or statement”.

Section 4.05.Sponsor Pledge Agreement. The provisions of the Sponsor Pledge Agreement shall be amended as follows:

(a)recital “C” of the Sponsor Pledge Agreement shall be further amended by deleting the words “indirectly owns 100%” in the third line thereof and inserting in their place the words “directly and indirectly owns 65%”;

(b)Section 4.05(a) of the Sponsor Pledge Agreement shall be amended by adding at the end of the clause the words “(other than any of the foregoing relating solely to a member of the Sumitomo Group)”;

(c)Section 5.04 of the Sponsor Pledge Agreement shall be amended by adding after the words “realization and” in the third line thereof the words “and, to the

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extent the Sponsor is liable thereon pursuant to this Agreement or the ASM Completion Agreement,”;

(d)Section 6.01(b) of the Sponsor Pledge Agreement shall be amended in its entirety to read as follows:

 “(b) Breach of Representation and Warranty.

(i) any representation, warranty or statement confirmed or made by the Sponsor under Sections 2.01 (Representations), to the extent that the applicable representation in the ASM Completion Agreement is identified in Section 6.01(b) of the ASM Completion Agreement, or under 2.02 (Good Title; Valid Security Interests), 2.03 (Names, Etc.) or 2.04 (Proper Legal Form) or contained in any certificate, statement, notice or other document provided by the Sponsors to any Secured Party under or pursuant to any such sections shall have been incorrect in any material respect when made or deemed to be made or (except if stated to have been made solely as of an earlier date) repeated, and such representation or warranty is not cured or otherwise corrected to the satisfaction of the Administrative Agent within 30 days from the earlier of (A) receipt of written notice from the Administrative Agent of such breach or (B) the date upon which the Sponsor becomes aware of such breach; or

(ii) any other representation, warranty or statement confirmed or made by the Sponsor hereunder or contained in any certificate, statement, notice or other document provided by the Sponsors to any Secured Party hereunder shall have been incorrect in any material respect when made or deemed to be made or (except if stated to have been made solely as of an earlier date) repeated;”;

(e)Section 7.11 of the Sponsor Pledge Agreement shall be amended by (i) deleting the words “or Event of Default” in the fourth line thereof and (ii) deleting the words “resulting therefrom” in the fifth line thereof, and inserting in their place the words “hereof or hereon resulting from any Sponsor Default or Event of Default”; and

(f)each reference to the term “Completion Agreement” in the Sponsor Pledge Agreement shall be amended to read “ASM Completion Agreement”.

Section 4.06.Completion Agreement. The provisions of the Completion Agreement shall be amended as follows:

(a)Section 3.01(a) shall be revised in its entirety to read as follows:

“(a)The Sponsor, as a primary obligor and not merely as a surety, unconditionally and irrevocably guarantees to the Collateral Agent, the Administrative Agent, the Technical Agent, each Senior Lender and

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each Hedge Bank and their respective successors and assigns the full and punctual payment of its Pro Rata Share of (i) all Secured Debt Obligations and (ii)  all Apex Silver Finance Obligations that, in any such case, are or become due and payable prior to Completion, when and as the same shall become due and payable, whether at maturity, upon acceleration, early termination or otherwise (subject to any exclusions or applicable grace periods), according to their terms (such obligations being herein collectively called the “Guaranteed Obligations”). In case of the failure of any Guaranteed Obligor to so pay any Guaranteed Obligation, the Sponsor agrees to make payment of its Pro Rata Share thereof forthwith upon demand, in Dollars, in cash, at such times and in the same manner as required of such Guaranteed Obligor.”

(b)the following new Section 3.04 shall be added to Article III of the Completion Agreement:

“3.04  Several Obligations. The obligations of ASM under its Completion Guarantee and the obligations of Sumitomo under the Sumitomo Completion Agreement are several, and not joint or joint and several. The obligations of ASM under its Completion Guarantee and Article V shall be limited to its Pro Rata Share of the Guaranteed Obligations or required Contingent Support Contributions. Neither a Completion Default nor the failure of ASM or Sumitomo to meet any of its other obligations under a Completion Agreement or under a Transfer Restriction Agreement, and no transfer of Interests in the Borrower or any other Person, shall change ASM’s Pro Rata Share.”;

(c)each of Sections 4.01(m) and 4.01(n) shall be deleted in its entirety;

(d)Section 5.01 shall be amended by inserting as the final sentence the following: “The Sponsor’s liability for any financial obligations implied in or arising from such efforts shall be limited to the Sponsor’s Pro Rata Share thereof.”;

(e)a new Section 5.03 shall be inserted in Article V, which shall read as follows:

“5.03 Contingent Support Contribution Commitment. The Sponsor agrees to deposit into the Contingent Support Account for transfer to the Loan Proceeds Account, when and as required to meet Excess Project Costs payable by the Borrower, its Pro Rata Share of up to an aggregate amount of $70,000,000 in Contingent Support Contributions from and after the Acquisition Effective Date for the purpose of paying Excess Project Costs in accordance with Section 11.04(g)(ii) of the Common Security Agreement.”;

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(f)the former Section 5.03 shall be renumbered and amended in its entirety to read as follows:

“5.04 Contingent Support Deficiencies. Without limiting Section 5.03, in the event that at any time a Contingent Support Deficiency exists as identified in a Cost to Complete Certificate that is not funded under Section 5.03 above or Section 4.03 of the Sumitomo Completion Agreement, the Sponsor shall either (a) demonstrate to the satisfaction of the Administrative Agent that the Sponsor holds Available Cash in an amount sufficient to fund its Pro Rata Share of such Contingent Support Deficiency or (b) propose to the Administrative Agent an Acceptable Funding Plan for funding its Pro Rata Share of such Contingent Support Deficiency within ten (10) days of the date of such Cost to Complete Certificate. The Administrative Agent shall notify the Sponsor of its receipt of the Acceptable Funding Plan. In the event that the Administrative Agent (acting at the direction of the Majority Secured Parties) accepts such Acceptable Funding Plan, the Sponsor shall diligently pursue such plan and shall have ninety (90) days from the date on which the Administrative Agent has notified the Sponsor of the acceptance of such Acceptable Funding Plan to deposit, in immediately available funds, its Pro Rata Share of the Contingent Support Deficiency to be funded in connection with such Acceptable Funding Plan. In the event that the Administrative Agent (acting at the direction of the Majority Secured Parties) rejects such Acceptable Funding Plan or in the event that the Sponsor is required and has failed to propose an Acceptable Funding Plan within ten (10) days of the date of the Cost to Complete Certificate identifying the Contingent Support Deficiency that is not funded under Section 5.03 above or Section 4.03 of the Sumitomo Completion Agreement, the Sponsor shall immediately and without demand, notice or presentment of any kind or nature whatsoever, deposit in the Contingent Support Account, in immediately available funds, an amount equal to its Pro Rata Share of the Contingent Support Deficiency on the date of the rejection of its plan or, where it has not presented a plan, the date on which such plan was due to be presented. The Sponsor shall submit additional Acceptable Funding Plans in the event that additional funds are required to cause the Contingent Support Requirement to be satisfied without regard as to whether the Sponsor may be currently implementing an Acceptable Funding Plan with respect to a previously identified Contingent Support Deficiency.”;

(g)each of the former Sections 5.04 and 5.05 shall be deleted in its entirety;

(h)Section 6.01(b) shall be amended in its entirety to read as follows:

“(b)Breach of Representation or Warranty Under this Agreement. (i) a representation, warranty or statement confirmed or made

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by the Sponsor under Sections 4.01(a) (Organization), 4.01(b) (Ownership of the Borrower), 4.01(c) (Authority), 4.01(e) (Consents and Approvals), 4.01(f) (No Conflicts), or 4.01(j) (Taxes) or contained in any written certificate, notice or other document provided to any Secured Party under or pursuant to such sections shall have been incorrect in any material respect when made or deemed to be made or repeated (except if stated to have been made solely as of an earlier date), and such representation or warranty is not cured or otherwise corrected to the satisfaction of the Administrative Agent within 30 days from the earlier of (A) receipt of written notice from the Administrative Agent of such breach or (B) the date upon which the Sponsor becomes aware of such breach; or (ii) any other representation, warranty or statement confirmed or made by the Sponsor hereunder contained in any certificate, notice or other document provided to any Secured Party hereunder or pursuant to any Financing Document to which it is a party shall have been incorrect in any material respect when made or deemed to be made or (except if stated to have been made solely as of an earlier date) repeated; or”;

(i)Section 6.01(c)(i) shall be deleted;

(j)the definitions of each of “Additional Escrow Account”,  “Convertible Notes”, “Dedicated Cash”, “Escrow Account” and “Sponsor Budget” shall be deleted in its entirety;

(k)the following additional definitions shall be added to Appendix A thereto:

 “Acquisition Effective Date” has the meaning assigned to such term in the Omnibus Amendment Agreement.

“MSC Shareholders Agreement” means the MSC Shareholders Agreement to be entered into on or about September 26, 2006, among Apex Sweden, Apex Luxembourg, SC Minerals Sweden and the Borrower.

“Pro Rata Share” shall mean 65%.

Section 4.07.Project Document Guarantee (a). The Project Document Guarantee described in clause (a) of the definition of “Project Document Guarantee” in Appendix A to the Common Security Agreement (which guarantee is issued by ASM in favor of the Borrower in respect of Apex Metals Marketing’s obligations under the Borrower Concentrate Sales Agreement) shall be amended as follows:

(a)Section 1.02 shall include the following additional definition: “Pro Rata Share” means (a) prior to Completion, 65% and (b) after Completion, 100% minus (i) the “Pro Rata Share” of Sumitomo at such time under the Sumitomo Pledge and Guarantee Agreement and (ii) the percentage of the total number of shares of the Borrower issued and outstanding then owned directly or indirectly by a third party acceptable to the

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Secured Parties that has assumed such percentage share of the obligations guaranteed under this agreement and the Sumitomo Pledge and Guarantee Agreement.”

(b)the first paragraph of Section 2.01 shall be amended in its entirety to read as follows:

“2.01  The Guarantee. The Guarantor hereby unconditionally guarantees to the Borrower and its respective successors and assigns (for the benefit of the Secured Parties) the full, prompt and proper payment of its Pro Rata Share of all payment obligations of Apex Metals Marketing to the Borrower under the Borrower Concentrate Sales Agreement and the observance, compliance and performance by Apex Metals Marketing of all of the other terms, covenants, obligations and conditions that are to be performed by Apex Metals Marketing under the Borrower Concentrate Sales Agreement, and agrees that upon any breach by Apex Metals Marketing of any terms, covenants, obligations and conditions of the Borrower Concentrate Sales Agreement, the Guarantor will, subject to Section 2.06 below, forthwith perform, or cause to be performed to the extent of its Pro Rata Share thereof, each of said terms, covenants, obligations and conditions (including its Pro Rata Share of payment obligations) (such obligations being herein collectively called the “Concentrate Sales Guaranteed Obligations”). This is a present and continuing guarantee of performance and, to the extent that this instrument guarantees payment by Apex Metals Marketing, this is a guarantee of payment and not of collection.”

(e)the following additional Section 2.06 shall be inserted at the end of Article II:

“2.06  Several Obligation. The obligations of ASM hereunder and the obligations of Sumitomo under its guarantee of Apex Metals Marketing’s obligations under the Borrower Concentrate Sales Agreement are several, and not joint or joint and several.”

Section 4.08.Consent to Increase in Service Fee. The Secured Parties consent to the amendment of the Borrower Management and Services Agreement to increase in the management fee payable by the Borrower to the Service Company under such agreement from $125,000 per month to $450,000 per month, provided that the Borrower shall not pay the Service Company any amount above $125,000 for any given month unless each of the conditions specified in Section 9.01(a) of the Common Security Agreement have been satisfied with respect to the payment of such excess.

Section 4.09.AMM Cross-Guarantee and Security Agreement. The provisions of the AMM Cross-Guarantee and Security Agreement shall be amended as follows:

47

(a)Section 5.06(a)(iii) shall be amended by inserting after the words “Transfer Restrictions Agreement” in the second line thereof the words “or the Sumitomo Transfer Restrictions Agreement”;

(b)Section 5.14 shall be further amended by inserting after the words “or any other Person permitted under the Transfer Restrictions Agreement” the words “or the Sumitomo Transfer Restrictions Agreement, as applicable”; and

(c)Section 7.01(b) shall be amended in its entirety to read as follows:

“Any representation, warranty or statement confirmed or made by the Guarantor under any AMM Document or contained in any certificate, statement, notice or other document provided to any Secured Party under or pursuant to any Financing Document to which it is a party shall have been incorrect in any material respect when made or deemed to be made or (except if stated to have been made solely as of an earlier date) repeated, provided that it shall not be a CGSA Default under this Section 7.01(b) if the facts that resulted in an incorrect representation, warranty or statement are (i) corrected so that the incorrect representation, warranty or statement becomes correct or (ii) otherwise addressed to the satisfaction of the Administrative Agent acting on behalf of the Secured Parties, in each case with in 30 days from the earlier of (x) receipt of written notice from the Administrative Agent notifying the Guarantor of the incorrect representation, warranty or statement or (y) the date on which the Guarantor becomes aware of such incorrect representation, warranty or statement;”.

ARTICLE V

CONDITIONS PRECEDENT

Section 5.01.Conditions Precedent to Reorganization. The provisions of Article III of this Agreement shall become effective on the date on which all of the following conditions precedent have been satisfied in form and substance acceptable to (or shall have been waived by) each Secured Party (the “Reorganization Effective Date”), provided that such date occurs not later than December 31, 2006:

(a)Authorizations. The Administrative Agent and the Collateral Agent shall have received certified copies of (i) the Organizational Documents of each of Apex Metals Marketing, Apex Silver Finance, SC Minerals Sweden and Comercial Metales Blancos and (ii) Authorizations with respect to ASM, Apex Luxembourg, Apex Sweden, Apex Metals, Apex Metals Marketing, Apex Silver Finance, SC Minerals Sweden, Comercial Metales Blancos and the Borrower given to authorize the execution, delivery and performance by it of each Reorganization Document to which it is a party, and the performance by it of its obligations hereunder and thereunder, as applicable.

48

(b)Incumbency and Signatures. The Administrative Agent and the Collateral Agent shall have received certificates of each of Apex Metals Marketing, Apex Silver Finance, SC Minerals Sweden and Comercial Metales Blancos in respect of the authority and incumbency, and containing a specimen signature, of each Person who has signed or will sign each of this Agreement and the other Reorganization Documents to which it is a party, on its behalf, or who will, until replaced by another Person or Persons duly authorized for that purpose, otherwise act as its representative for the purposes of signing documents in connection with such documents and the transactions contemplated hereby and thereby.

(c)Pledges.

(i)Apex Luxembourg shall have executed and delivered to the Collateral Agent and the Administrative Agent a pledge agreement under New York law in the form of Appendix A hereto of all of its right, title and interest in the Apex Silver Finance Shares as security in favor of the Secured Parties and shall have delivered such shares to the Collateral Agent;

(ii)Apex Sweden shall have executed and delivered to the Collateral Agent and the Administrative Agent a pledge agreement under New York law in the form of Appendix B hereto of all of its right, title and interest in the Apex Metals Marketing Quotas as security in favor of the Secured Parties;

(iii)Each of Apex Sweden and Comercial Metales Blancos shall have (A) executed and delivered to the Collateral Agent and the Administrative Agent a quota pledge under Swiss law in the form of Appendix C and D hereto respectively of its respective Apex Metals Marketing quotas as security in favor of the Secured Parties and (B) made or caused to be made such filings, registrations or recordations and any other actions as may be necessary to perfect such security interest in Switzerland;

(iv)Comercial Metales Blancos shall have executed and delivered to the Collateral Agent and the Administrative Agent a pledge agreement under New York law in the form of Appendix E hereto of all of its right, title and interest in the Apex Metals Marketing Quotas as security in favor of the Secured Parties;

(v)Apex Sweden shall have executed and delivered to the Collateral Agent and the Administrative Agent a pledge agreement under New York law in the form of Appendix F hereto of all of its right, title and interest in the Comercial Metales Blancos shares as security in favor of the Secured Parties; and

(vi)Apex Sweden shall have executed and delivered to the Collateral Agent and the Administrative Agent a pledge agreement under New York law in the form of Appendix G hereto of all of its right, title and interest in the SC Minerals Sweden shares as security in favor of the Secured Parties.

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(d)Cross-Guarantee and Security Agreement. Apex Silver Finance shall have executed and delivered to the Administrative Agent and the Collateral Agent a Cross-Guarantee and Security Agreement in the form of Appendix H hereto.

(e)Mandatory Metals Hedge Agreements.

(i)Apex Luxembourg shall have executed and delivered to the Collateral Agent and the Administrative Agent novation agreements in the form of Appendix N-1 and Appendix N-2 hereto with respect to the transfer of all Mandatory Metals Hedge Agreements from Apex Metals to Apex Luxembourg;

(ii)Apex Silver Finance shall have (A) executed and delivered to the Collateral Agent and the Administrative Agent amended ISDA Master Agreement schedules in the form of Appendices O-1 and O-2 hereto, (B) delivered to the Collateral Agent and the Administrative Agent the confirmations under such agreements, and (C) executed novation agreements in the form of Appendices P-1 and P-2 hereto with respect to the transfer of the Mandatory Metals Hedge Agreements from Apex Luxembourg to Apex Silver Finance;

(f)Assignment and Assumption Agreement. The Collateral Agent and the Administrative Agent shall have received the Assignment and Assumption Agreement substantially in the form of Appendix I hereto;

(g)Notices of Assignment of Third Party Concentrate Sales Agreements. The Administrative Agent and the Collateral Agent shall have received evidence of the notice of the transfer of each Third Party Concentrate Sales Agreement and revised payment instructions.

(h)Financing Statements. The Collateral Agent shall have received evidence of the filing of all financing statements under the Uniform Commercial Code with respect to each of Apex Luxembourg, Apex Sweden, Apex Metals Marketing, Apex Silver Finance, SC Minerals Sweden and Comercial Metales Blancos in each jurisdiction in which such financing statements are necessary or desirable to perfect the Liens created by the Reorganization Documents to which it is a party.

(i)Acceptance of Appointment of Agent for Service. The Collateral Agent and the Administrative Agent shall have received acceptances from CT Corporation System, located at 111 Eighth Avenue, New York, New York 10011, agreeing to serve as the authorized agent for service of process appointed in New York for each of Apex Metals Marketing and Apex Silver Finance.

(j)Consent of PRI Insurers. The Administrative Agent shall have received from each PRI Provider a consent to this Omnibus Amendment Agreement and the consummation of the transactions contemplated hereby, in form and substance acceptable to the Administrative Agent.

(k)Bolivian Documents. The Administrative Agent shall have received (i) a copy of the Amendment to the

50

Bolivian Conditional Assignment with respect to the Borrower Concentrate Sales Agreement and (ii) evidence of registration in the Borrower’s Shareholder Registry Book and corresponding share title certificates of the endorsement and transfer of shares of the Borrower to SC Minerals Sweden subject to the existing registered pledge thereof.

(l)Payment of Fees. The Borrower shall have paid (i) to the Administrative Agent for the benefit of the Senior Lenders, the amendment fee agreed in the fee letter dated as of the date hereof from the Administrative Agent to the Borrower (ii) to Barclays Bank PLC as Hedge Bank and BNP Paribas as Administrative Agent and Hedge Bank, the restructuring fees agreed in the respective fee letters dated as of the date hereof from Barclays Bank PLC and BNP Paribas, as applicable, to the Borrower, and (iii) to the Administrative Agent and the Collateral Agent, all invoiced fees and expenses (including reasonable fees and disbursements of counsel to the Administrative Agent and the Collateral Agent) in respect of the transactions contemplated by this Agreement.

(m)Legal Opinions. Unless the Acquisition Effective Date is occurring concurrently with the Reorganization Effective Date, the Administrative Agent and the Collateral Agent shall have received the legal opinions (dated as of the Restructuring Effective Date and addressed to the Administrative Agent, the Collateral Agent, each Senior Lender and each Hedge Bank) listed in clauses (i) through (vi) of Section 5.02(e) hereof.

(n)Management Services Agreement. Apex Metals Marketing, Apex Silver Finance and Apex Silver Mines Corporation, a Delaware corporation, shall have executed and delivered to the Administrative Agent and the Collateral Agent the Apex Metals Marketing Management and Services Agreement in the form of Appendix Q attached hereto.

(o)Concentrate Sale Agreement. Apex Metals Marketing and the Borrower shall have executed and delivered to the Administrative Agent and the Collateral Agent the Borrower Concentrate Sales Agreement in the form of Appendix R attached hereto.

(p)Amended and Restated Management Services Agreement. The Borrower and Apex Silver Mines Corporation shall have executed and delivered to the Administrative Agent and the Collateral Agent the Amended and Restated Borrower Management Services Agreement in the form of Appendix S hereto.

(q)Tax Report. The Administrative Agent shall have received a report of PriceWaterhouseCoopers with respect to certain tax implications of the transactions contemplated herein, in form and substance satisfactory to the Administrative Agent.

Section 5.02.Conditions Precedent to Acquisition. The provisions of Article IV of this Agreement shall become effective on the date on which all of the following conditions precedent have been satisfied in form and substance acceptable to (or shall have been waived by) each Secured Party (the “Acquisition Effective Date”), provided that such date occurs not later than December 31, 2006:

51

(a)Authorizations. The Administrative Agent and the Collateral Agent shall have received (i) certified copies of the Organizational Documents of Sumitomo and (ii) a certificate of an Authorized Officer of Sumitomo certifying Sumitomo has duly approved and ratified pursuant to its internal regulations the execution, delivery and performance by it of each Acquisition Document to which it is a party, and the performance by it of its obligations thereunder;

(b)Incumbency and Signatures. The Administrative Agent and the Collateral Agent shall have received certificates of Sumitomo in respect of the authority and incumbency, and containing a specimen signature, of each Person who has signed or will sign each Acquisition Document to which it is a party, on its behalf, or who will, until replaced by another Person or Persons duly authorized for that purpose, otherwise act as its representative for the purposes of signing documents in connection with such documents and the transactions contemplated thereby.

(c)Acquisition Documents.

(i)Sumitomo shall have executed and delivered to the Collateral Agent and the Administrative Agent (A) the Sumitomo Completion Agreement, in substantially the form attached as Appendix J hereto and (B) the Sumitomo Pledge and Guarantee Agreement, in substantially the form attached as Appendix L hereto.

(ii)Each of Sumitomo, SC Minerals Sweden and Comercial Metales Blancos shall have executed and delivered to the Collateral Agent and the Administrative Agent the Sumitomo Transfer Restrictions Agreement, in substantially the form attached as Appendix K hereto.

(d)Acceptance of Appointment of Agent for Service. The Collateral Agent and the Administrative Agent shall have received acceptances from CT Corporation System, located at 111 Eighth Avenue, New York, New York 10011, agreeing to serve as the authorized agent for service of process appointed in New York for Sumitomo, SC Minerals Sweden and Comercial Metales Blancos.

(e)Legal Opinions. The Administrative Agent and the Collateral Agent shall have received the following legal opinions dated as of the Acquisition Effective Date and addressed to the Administrative Agent, the Collateral Agent, each Senior Lender and each Hedge Bank (provided that if the Reorganization Effective Date occurred prior to the Acquisition Effective Date, the opinions listed below that were delivered on the Reorganization Effective Date need not be reissued or redelivered on the Acquisition Effective Date):

(i)The opinion of Quintanilla & Soria Abogados, special Bolivian Counsel to the Borrower, in the form attached hereto as Appendix M-1;

(ii)The opinions of Walkers & Co., special Cayman Islands counsel to the Borrower, in the forms attached hereto as Appendix M-2-A and M-2-B;

52

(iii)The opinion of Wistrand Advokatbyra, special Swedish counsel to the Borrower, in the form attached hereto as Appendix M-3;

(iv)The opinion of SuterHowald, special Swiss counsel to the Borrower, in the form attached hereto as Appendix M-4; and

(v)The opinion of Davis Graham & Stubbs LLP, special counsel to the Borrower, in the form attached hereto as Appendix M-5;

(vi)The opinion of Bonn Schmitt Steichen Avocate, special Luxembourg counsel to the Borrower, in the form attached hereto as Appendix M-8:

(vii)The opinion of Ito & Mitomi, special Japanese counsel to Sumitomo, in the form attached hereto as Appendix M-6; and

(viii)The opinion of Morrison & Foerster LLP, special New York counsel to Sumitomo, in the form attached hereto as Appendix M-7.

(f)Financing Statements. The Collateral Agent shall have received evidence of the filing of all financing statements under the Uniform Commercial Code with respect to Sumitomo in each jurisdiction in which such financing statements are necessary or desirable to perfect the Liens created by the Acquisition Documents to which it is a party.

ARTICLE VI

MISCELLANEOUS

Section 6.01.Notices. All notices and other communications provided for herein shall be in writing and shall be delivered by hand, mail or overnight courier service, or sent by fax, to the address specified for such party in the Financing Documents to which it is a party.

Section 6.02.Expenses. The Borrower shall be solely responsible for any and all out-of-pocket expenses, fees, charges, disbursements and any other costs incurred by the each Agent, each Senior Lender, each Hedge Bank (including the reasonable fees of counsel to the Administrative Agent and to the Collateral Agent) in connection with the negotiation, execution and delivery of this Agreement and the transactions contemplated hereby, which costs shall be paid in full in cash in accordance with Section 15.14 of the Common Security Agreement.

Section 6.03.Counterparts; Integration. This Agreement may be executed in any number of counterparts and by different parties hereto on separate counterparts, each of which shall constitute an original, but all of which when taken together shall constitute one and the same instrument. This Agreement, together with the Financing Documents, constitute the entire agreement between and among the parties relating to the subject matter thereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject

53

matter thereof. Delivery of an executed counterpart of a signature page to this Agreement by fax shall be effective as delivery of a manually executed counterpart of this Agreement.

Section 6.04.Severability. Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.

Section 6.05.Governing Law; Jurisdiction; Service of Process; Etc.

(a)Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York.

(b)Submission to Jurisdiction. Each party to this Agreement hereby irrevocably agrees, for the benefit of each other party hereto, that any legal action, suit or proceeding against it with respect to its obligations, liabilities or any other matter under or arising out of or in connection with this Agreement or any judgment entered by any court in respect thereof may be brought in any Federal or State court located in the Borough of Manhattan, the City of New York (including the Supreme Court of the State of New York sitting in New York County and the United States District Court for the Southern District of New York), and any appellate court from any thereof; and each party hereby irrevocably accepts and submits to the non-exclusive jurisdiction of each such court with respect to any such suit, action, proceeding or judgment and hereby further waives and agrees not to plead or claim in any such court that any such suit, action or proceeding brought therein has been brought in an inconvenient forum. Each party to this Agreement further submits, for the purpose of any such suit, action, proceeding or judgment brought or rendered against it, to the appropriate courts of the jurisdiction of its domicile.

(c)Other Service. Nothing herein shall in any way be deemed to limit the ability of the any party hereto to serve any such writs, process or summonses in any other manner permitted by applicable law or to obtain jurisdiction over any other party in such other jurisdictions, and in such manner, as may be permitted by applicable law.

Section 6.06.WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).

Section 6.07.Headings. Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.

Section 6.08.Waivers; Amendment. None of the terms or provisions of this Agreement may be waived, amended, supplemented or otherwise modified without the consent of each of the parties hereto.

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Section 6.09.Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby and by the Financing Document or the Mandatory Metals Hedge Agreements. Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person, other than the parties hereto and their respective successors and assigns permitted hereby, any legal or equitable right, remedy or claim under or by reason of this Agreement.

Section 6.10.Limited Agreement. The amendments, waivers and consents set forth in this Agreement are limited in effect, shall apply only as expressly set forth herein and shall not constitute or be deemed to be an amendment or waiver of any other provision of, or a consent to any action limited by, any Financing Document, each of which shall remain in full force and effect and are hereby ratified and confirmed in all respects.

Section 6.11.Authorizations.

(a)Each of the Senior Lenders and Hedge Banks hereby authorizes the Administrative Agent, the Collateral Agent and the Technical Agent to execute and deliver this Agreement and each of the agreements in the forms attached hereto to which they are required to be a party, and authorizes and directs the Collateral Agent (a) on the Reorganization Effective Date, to release to ASM the Service Company Shares and the Apex Metals Quotas held by the Collateral Agent and (b) on the Acquisition Effective Date, to release to ASM the balance of the Contingent Support Account on such date as contemplated in Section 4.02 hereof.

(b)Each of Apex Luxembourg, Apex Sweden and each of the Secured Parties hereby consents to the termination and release of (i) the pledge of 35% of the Apex Silver Finance Shares executed and delivered in accordance with Section 5.01(c)(i) hereof, (ii) the pledge of 100% of the SC Minerals Sweden Shares executed and delivered in accordance with 5.01(c)(vi) hereof and (iii) the pledge of 100% of the Comercial Metales Blancos Shares executed and delivered in accordance with Section 5.01(c)(v) hereof, concurrently with the pledge of such shares by Sumitomo under the Sumitomo Pledge and Guarantee Agreement.

[The remainder of this page intentionally left blank]

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IN WITNESS WHEREOF, the parties hereto have caused this Omnibus Amendment Agreement to be duly executed by their respective authorized officers as of the day and year first above written.

MINERA SAN CRISTÓBAL, S.A.
By:	/s/ Jeffrey Clevenger
	Name: Jeffrey Clevenger
	Title: Director
APEX SILVER MINES LIMITED
By:	/s/ Gerald Malys
	Name: Gerald Malys
	Title: Chief Financial Officer
APEX SILVER MINES SWEDEN AB
By:	/s/ Marcel DeGuire
	Name: Marcel DeGuire
	Title: Director

APEX LUXEMBOURG S.A. R.L.
By:	/s/ Gerald Malys
	Name: Gerald Malys
	Title: Manager
APEX METALS GMBH
By:	/s/ Marcel DeGuire
	Name: Marcel DeGuire
	Title: Managing Officer
APEX SILVER FINANCE LTD.
By:	/s/ Robert Vogels
	Name: Robert Vogels
	Title: Vice President

S-2

APEX METALS MARKETING GmbH
By:	/s/ Marcel DeGuire
	Name: Marcel DeGuire
	Title: Managing Officer
GOTLEX LAGERAKTIEBOLAG nr. 451, organizational number 556702-1083
By:	/s/ Gerald Malys
	Name: Gerald Malys
	Title: Director
COMERCIAL METALES BLANCOS AB
By:	/s/ Gerald Malys
	Name: Gerald Malys
	Title: Director

S-3

BNP PARIBAS
as Administrative Agent
By:	/s/ Jeffrey Stufsky
	Name: Jeffrey Stufsky
	Title: Managing Director
By:	/s/ Greg Caione
	Name: Greg Caione
	Title: Director
BARCLAYS CAPITAL
as Technical Agent
By:	/s/ Colin Hall
	Name: Colin Hall
	Title: Manager
JPMORGAN CHASE BANK, N.A.,
as Collateral Agent
By:	/s/ Lucia Jaklitsch
	Name: Lucia Jaklitsch
	Title: Vice President

S-4

JPMORGAN CHASE BANK, N.A.,
as Securities Intermediary
By:	/s/ Lucia Jaklitsch
	Name: Lucia Jaklitsch
	Title: Vice President
CORPORACIÓN ANDINA DE FOMENTO,
as a Senior Lender
By:	/s/ Luis Enrique Berribeitia
	Name: Luis Enrique Berribeitia
	Title: Acting Executive President
BARCLAYS BANK PLC,
as a Senior Lender
By:	/s/ Colin Hall
	Name: Colin Hall
	Title: Manager

S-5

BNP PARIBAS,
as a Senior Lender
By:	/s/ Jeffrey Stufsky
	Name: Jeffrey Stufsky
	Title: Managing Director
By:	/s/ Greg Caione
	Name: Greg Caione
	Title: Director
AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED, as a Senior Lender
By:	/s/ John W. Wade
	Name: John W. Wade
	Title: Director
KFW,
as a Senior Lender
By:	/s/ Wolfgang Behler
	Name: Wolfgang Behler
	Title: First Vice President
By:	/s/ Dirk Sindermann
	Name: Dirk Sindermann
	Title: Vice President

S-6

NATEXIS BANQUES POPULAIRES,
as a Senior Lender
By:	/s/ Amit Roy
	Name: Amit Roy
	Title: Vice President
By:	/s/ Robert Park
	Name: Robert Park
	Title: Associate
CATERPILLAR FINANCIAL SERVICES (UK) LTD., as a Senior Lender
By:	/s/ Robert Prandota
	Name: Robert Prandota
	Title: Credit & Operations Manager
N M ROTHSCHILD & SONS LIMITED,
as a Senior Lender
By:	/s/ George Pyper
	Name: George Pyper
	Title: Assistant Director
By:	/s/ Christopher Coleman
	Name: Christopher Coleman
	Title: Managing Director

S-7

EXPORT DEVELOPMENT CANADA,
as a Senior Lender
By:	/s/ Isha Aggarwal
	Name: Isha Aggarwal
	Title: Asset Management
By:	/s/ Howard Clysdale
	Name: Howard Clysdale
	Title: Portfolio Manager
FORTIS CAPITAL CORP.,
as a Senior Lender
By:	/s/ Trond Rokholt
	Name: Trond Rokholt
	Title: Managing Director
By:	/s/ Darrel Ho
	Name: Darrel Ho
	Title: Vice President

S-8

NORDKAP BANK AG,
as a Senior Lender
By:	/s/ Stefan Peria
	Name: Stefan Peria
	Title: CIO
By:	/s/ Kershin Rotter
	Name: Kershin Rotter
	Title
RMB INTERNATIONAL (DUBLIN) LIMITED,
as a Senior Lender
By:	/s/ Stephen Peters
	Name: Stephen Peters
	Title: Authorised Signatory
	RMB International (Dublin) Ltd.
By:	/s/ Derek Coetzee
	Name: Derek Coetzee
	Title: Authorised Signatory
	RMB International (Dublin) Ltd.

S-9

BARCLAYS BANK PLC,
as a Hedge Bank
By:	/s/ Colin Hall
	Name: Colin Hall
	Title: Manager
BNP PARIBAS,
as a Hedge Bank
By:	/s/ Christopher Taylor
	Name: Christopher Taylor
	Title: Vice President/Derivatives Credit
By:	/s/ Dora Sung
	Name: Dora Sung
	Title: Managing Director
	BNP Paribas/CIT Group

S-10

EX-10.6

Exhibit 10.6

FORM OF CHANGE OF CONTROL AGREEMENT

[Name]

[Title]

Dear [Name]:

Apex Silver Mines Limited (the “Company”) considers it essential to the best interests of its stockholders to foster the continuous employment of key management personnel.  In this connection, the Board of Directors of the Company (the “Board”) recognizes that, as is the case with many publicly held corporations, the possibility of a Change of Control (as defined in Section 2 hereof) may exist and that such possibility, and the uncertainty and questions which it may raise among management, may result in the departure or distraction of management personnel to the detriment of the Company and its stockholders.

The Board has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of members of the Company’s management, including yourself, to their assigned duties without distraction in the face of potentially disturbing circumstances arising from the possibility of a Change of Control, although no such change is now contemplated.

In order to induce you to remain in the employ of the Company, the Company agrees that you shall receive the severance benefits set forth in this letter agreement (the “Agreement”) in the event your employment with the Company is terminated subsequent to a Change of Control under the circumstances described below.

1.  TERM OF AGREEMENT.  This Agreement shall commence on the date hereof and shall continue from year to year at the discretion of the Board of Directors.  Provided no Change of Control shall have occurred, the Company may terminate this Agreement at any time upon 12 months prior written notice to you; provided, however, that after a Change of Control during the term of this Agreement, this Agreement shall remain in effect until all of the obligations of the parties under the Agreement are satisfied and the two year period referred to in the definition of “Good Reason” has expired.  Notwithstanding the foregoing, and provided no Change of Control shall have occurred, this Agreement shall automatically terminate upon the earlier to occur of (i) your termination of employment with the Company, or (ii) the Company’s furnishing you with notice of termination of employment, irrespective of the effective date of such termination.

2.  CHANGE OF CONTROL.  No benefits shall be payable hereunder unless there shall have been a Change of Control, as set forth below.  For purposes of this Agreement, a “Change of Control” shall mean the first to occur of the following events specified in (A), (B), (C), (D) or (E) (but no event other than the specified events):  (A) any person becomes the beneficial owner, directly or indirectly, of securities of the Company representing thirty-five percent (35%) or more of the combined voting power of the Company’s then outstanding voting securities (other than

(i) the Company, (ii) any subsidiary of the Company, or (iii) one or more employee benefit plans maintained by the Company); (B) three or more Directors of the Company, whose election or nomination for election is not approved by a majority of the applicable Incumbent Board, are elected within any single twelve month period to serve on the Board; (C) members of the applicable Incumbent Board cease to constitute a majority of the Board; (D) the consummation of a merger or consolidation of the Company with or into any other corporation or entity or person, or any other corporate reorganization, in which the stockholders of the Company immediately prior to such consolidation, merger or reorganization own less than 50% of the outstanding voting securities of the surviving entity (or its parent) following the consolidation, merger or reorganization or (E) the consummation of a sale, lease or other disposition of all or substantially all of the assets of the Company.  For purposes of Section 2(A) hereof, the terms “person” and “beneficial owner” shall have the meanings set forth in Section 13(d) and Rule 13d-3, respectively, of the Securities Exchange Act of 1934, as amended, and in the regulations promulgated thereunder.  For purposes of this Section 2, “Incumbent Board” means (i) members of the Board of Directors of the Company as of the date hereof, to the extent that they continue to serve as members of the Board, and (ii) any individual who becomes a member of the Board after the date hereof, if such individual’s election or nomination for election as a Director was approved by a vote of at least seventy-five percent (75%) of the then applicable Incumbent Board.

3.  TERMINATION FOLLOWING CHANGE OF CONTROL.  If the events described in Section 2 hereof constituting a Change of Control shall have occurred during the term of this Agreement, you shall be entitled to the benefits provided in Subsection 4(iii) hereof upon the subsequent termination of your employment within 2 years after the occurrence of such Change of Control unless such termination is (A) because of your death or Disability, (B) by the Company for Cause, or (C) by you other than for Good Reason.

(i)Disability.  If, as a result of your incapacity due to physical or mental illness, you shall have been absent from the full-time performance of your duties with the Company for six consecutive months, and within 30 days after written notice of termination is given you shall not have returned to the full-time performance of your duties, your employment may be terminated for “Disability.”

(ii)Cause.  Termination by the Company of your employment for “Cause” shall mean termination for (A) the commission of a felony or a crime involving moral turpitude or the commission of any other act involving dishonesty, disloyalty, or fraud with respect to the Company, (B) conduct tending to bring the Company into substantial public disgrace or disrepute, (C) substantial and repeated failure to perform duties as reasonably directed by the Board, (D) gross negligence or willful misconduct with respect to the Company or any of its affiliated entities, or (E) any other material breach of any other agreement between you and the Company or its affiliated entities which is not cured within 15 days after written notice thereof to you.

(iii)Good Reason.  You shall be entitled to terminate your employment for Good Reason.  For purposes of this Agreement, “Good Reason” shall mean, without your express written consent, the occurrence within 2 years after a Change of Control of any of the following circumstances unless, in the case of paragraphs (A), (B), (E), (F), (G) or (H), such circumstances are fully corrected prior to the Date of Termination specified in the Notice of Termination, as such terms are defined in Subsections 3(v) and 3(iv) hereof, respectively, given in respect thereof:

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(A)the assignment to you of any duties inconsistent with your current status as an executive of the Company or a substantial adverse alteration in the nature or status of your responsibilities from those in effect immediately prior to the Change of Control;

(B)a reduction by the Company in your annual base salary as in effect on the date hereof or as the same may be increased from time to time, except for across-the-board salary reductions similarly affecting all senior executives of the Company and all senior executives of any person in control of the Company;

(C)your relocation to a location not within 25 miles of your present office or job location, except for required travel on the Company’s business to an extent substantially consistent with your present business travel obligations;

(D)the failure by the Company to pay to you any portion of your current compensation, or to pay to you any portion of an installment of deferred compensation under any deferred compensation program of the Company, within seven days of the date such compensation is due;

(E)the failure by the Company to continue in effect any bonus to which you were entitled, or any compensation plan in which you participated immediately prior to the Change of Control which is material to your total compensation, including but not limited to the Company’s Incentive Bonus Plan, Stock Option Plan, 401(k) Profit Sharing Plan, or any substitute plan or plans adopted prior to the Change of Control, unless an equitable arrangement (embodied in an ongoing substitute or alternative plan) has been made with respect to such plan and such equitable arrangement provides substantially equivalent benefits not materially less favorable to you (both in terms of the amount of benefits provided and the level of your participation relative to other participants), or the failure by the Company to continue your participation therein (or in such substitute or alternative plan) on a basis not materially less favorable (both in terms of the amount of benefits provided and the level of your participation relative to other participants) as existed at the time of the Change of Control of the Company.

(F)the failure by the Company to continue to provide you with benefits substantially similar or superior to those enjoyed by you under any of the Company’s life insurance, medical, dental, and accident, or disability plans in which you were participating at the time of the Change of Control, the taking of any action by the Company which would directly or indirectly materially reduce any of such benefits or deprive you of any material fringe benefit enjoyed by you at the time of the Change of Control, or the failure by the Company to provide you with the number of paid vacation days to which you are entitled in accordance with the Company’s normal vacation policy in effect at the time of the Change of Control;

(G)the failure of the Company to obtain a satisfactory agreement from any successor to assume and agree to perform this Agreement, as contemplated in Section 5 hereof; or

(H)any purported termination of your employment which is not effected pursuant to a Notice of Termination satisfying the requirements of Subsection 3(iv) hereof (and,

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if applicable, the requirements of Subsection 3(ii) hereof); for purposes of this Agreement, no such purported termination shall be effective.

Your rights to terminate your employment pursuant to this Subsection 3(iii) shall not be affected by your incapacity due to physical or mental illness.  Your continued employment shall not constitute consent to, or a waiver of rights with respect to, any circumstance constituting Good Reason hereunder.

(iv)NOTICE OF TERMINATION.  Any purported termination of your employment by the Company or by you shall be communicated by written Notice of Termination to the other party hereto in accordance with Section 6 hereof.  For purposes of this agreement, a “Notice of Termination” shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of your employment under the provision so indicated.

(v)DATE OF TERMINATION, ETC.  “Date of Termination” shall mean (A) if your employment is terminated for Disability, 30 days after Notice of Termination is given (provided that you shall not have returned to the full-time performance of your duties during such 30-day period), (B) if your employment is terminated pursuant to Subsection 3(ii) hereof or for any other reason (other than Disability), the date specified in the Notice of Termination (which shall not be less than 30 nor more than 60 days from the date such Notice of Termination is given) or (C) if your employment is terminated pursuant to Subsection 3(iii) hereof, the date specified in the Notice of Termination (which shall not be less than 15 nor more than 60 days from the date such Notice of Termination is given).

4.  COMPENSATION UPON TERMINATION OR DURING DISABILITY.  Following a Change of Control, as defined by Section 2 hereof, upon termination of your employment within 2 years after the occurrence of such Change of Control or during a period of Disability you shall be entitled to the following benefits:

(i)During any period that you fail to perform your full-time duties with the Company as a result of incapacity due to physical or mental illness, you shall continue to receive your base salary at the rate in effect at the commencement of any such period, together with all amounts payable to you under any compensation plan of the Company during such period, until this Agreement is terminated pursuant to Subsection 3(i) hereof.  Thereafter, or in the event your employment shall be terminated by you other than for Good Reason or by reason of your death, your benefits shall be determined under the Company’s insurance or other compensation programs then in effect in accordance with the terms of such programs.

(ii)If your employment shall be terminated by the Company for Cause, Disability or death, or by you other than for Good Reason, the Company shall, to the extent not theretofore paid, pay you in a lump sum your full base salary through the Date of Termination at the rate in effect at the time Notice of Termination is given within 10 business days of the Date of Termination, plus all other amounts to which you are entitled under any insurance and other compensation programs of the Company at the time such payments are due, and the Company shall have no further obligations to you under this Agreement.

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(iii)If your employment by the Company shall be terminated (a) by the Company other than for Cause, Disability or death or (b) by you for Good Reason, then you shall be entitled to the benefits provided below:

(A)The Company shall, to the extent not theretofore paid, pay you in a lump sum your full base salary through the Date of Termination at the rate in effect at the time Notice of Termination is given within 10 business days of the Date of Termination, plus all other amounts to which you are entitled under any compensation plan of the Company, at the time such payments are due, except as otherwise provided below.

(B)In lieu of any further salary payments to you for periods subsequent to the Date of Termination, the Company shall pay as severance pay to you a lump sum severance payment (together with the payments provided in paragraph (C) of this Subsection 4(iii), the “Severance Payments”) equal to          times the sum of (a) your annual base salary in effect immediately prior to the occurrence of the circumstance giving rise to the Notice of Termination given in respect thereof, and (b) 100% of your target bonus amount established pursuant to the compensation or bonus plan in effect immediately prior to the occurrence of the circumstance giving rise to the Notice of Termination.  The Severance Payments shall be made within 10 business days of the Date of Termination.

(C)The Company shall pay to you any deferred compensation, including but not limited to deferred bonuses, allocated or credited to you as of the Date of Termination.

(D)The Company shall also pay to you all legal fees and expenses incurred by you prior to December 31 of the second calendar year following the calendar year that includes the Date of Termination as a result of such termination including all such fees and expenses, if any, incurred in contesting or disputing any such termination or in seeking to obtain or enforce any right or benefit provided by this Agreement.

(E)Taxes - All payments shall be subject to the withholding of such amounts as the Company is required to be withheld pursuant to any applicable federal, state, or local law or regulation, and you are responsible for any tax liability on such payments.

(F)All payments under this Agreement will be contingent upon the execution of a Release of Claims by you and the Company, and this Release of Claims shall govern the timing of all payments made.  A copy of the terms and conditions of such Release of Claims is attached as an appendix to this Agreement.

(G)Gross-Up of Benefits.  Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that any payment or distribution by the Company to or for your benefit (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, but determined without regard to any additional payments required under this Section 4.(iii)(G) (a “Payment”) would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended, including any regulations adopted thereunder (the “Code”), or any interest or penalties are

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incurred by you with respect to such excise tax that are not due to your actions or inactions (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then you shall be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount such that after payment by you of all taxes imposed upon the Gross-Up Payment (including any federal, state, and local income taxes, employment taxes under Section 3101(b) of the Code, and Excise Taxes, assuming the highest marginal income tax rates apply to the Gross-Up Payment), you retain an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments.  In the event you are entitled to a Gross-Up Payment, the following shall apply:

(1)All determinations required to be made, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment, shall be made by a nationally recognized certified public accounting firm selected by the Company (the “Accounting Firm”).  The Accounting Firm shall be requested to provide detailed supporting calculations both to the Company and you within 15 business days of the receipt of notice that there has been a Payment.  All fees and expenses of the Accounting Firm shall be borne solely by the Company.  Any Gross-Up Payment shall be paid by the Company to you within 5 days of the receipt of the Accounting Firm’s determination.  Any determination by the Accounting Firm shall be binding upon the Company and you.  As a result of uncertainty in the application of Sections  280G and 4999 of the Code, it is possible that Gross-Up Payments that will not have been made by the Company should have been made (an “Underpayment”).  In the event the Company exhausts its remedies pursuant to the following paragraph and you are thereafter required to make a payment of any Excise Tax, the Accounting Firm shall be requested to determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to you.

(2)You shall notify the Company in writing of any assertion by the Internal Revenue Service that, if successful, would require the payment by the Company of an Underpayment.  Such notification shall be given as soon as practicable, but no later than 10 business days after you are informed of such assertion.  You shall apprise the Company of the nature of such assertion and provide copies of all letters, notices, etc. regarding the assertion, and written summaries of any statements made to you or by you in connection with the assertion.  You shall not pay any amount asserted to be due prior to the expiration of the 30-day period following the date on which you give such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such assertion is due).  If the Company notifies you in writing prior to the expiration of such period that the Company desires to contest such assertion, you shall:

(a)give the Company any information reasonably requested by the Company relating to such assertion,

(b)take such action in connection with contesting such assertion as the Company shall reasonably request in writing from time to time,

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including, without limitation, accepting legal representation with respect to such assertion by an attorney reasonably selected by the Company,

(c)cooperate with the Company in good faith in order effectively to contest such assertion, and

(d)permit the Company to participate in any proceedings relating to such assertion;

provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest, and shall indemnify and hold you harmless, on an after-tax basis, for any Excise Tax and income and employment tax (including interest and penalties) imposed as a result of such representation and payment of costs and expenses.  The Company shall control all proceedings taken in connection with such contest, and, at its sole discretion, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the applicable taxing authority in respect of such assertion and may, at its sole discretion, either direct you to pay the tax asserted and sue for a refund or contest the claim in any permissible manner, and you agree to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that, if the Company directs you to pay such claim and sue for a refund, the Company shall advance the amount of such payment to you, on an interest-free basis, and shall indemnify and hold you harmless, on an after-tax basis, from any Excise Tax and income and employment tax (including interest or penalties) imposed with respect to such advance or with respect to any imputed income in connection with such advance; and provided, further, that any extension of the statute of limitations relating to payment of taxes for the taxable year with respect to which such contested amount is claimed to be due is limited solely to such contested amount.  Furthermore, the Company’s control of the contest shall be limited to issues with respect to which the Gross-Up Payment would be payable hereunder, and you shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.

(3)If, after the receipt by you of a Gross-Up Payment or an amount advanced by the Company, you become entitled to receive any refund with respect to the Excise Tax to which such Gross-Up Payment relates or with respect to such claim, you shall (subject to the Company’s complying with the requirements of this Section, if applicable) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto).  If, after the receipt by you of an amount advanced by the Company pursuant to this Section, a determination is made that you shall not be entitled to any refund with respect to such claim and the Company does not notify you in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven

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and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.

(iv)If your employment shall be terminated (A) by the Company other than for Cause, Disability or death or (B) by you for Good Reason, then, provided you timely elect continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), the Company shall pay, on your behalf, the portion of premiums of your group health insurance, including coverage for your eligible dependents, that the Company paid immediately prior to the Date of Termination (“COBRA Payments”) for the period that you are entitled to coverage under COBRA, but not to exceed        months (“COBRA Period”).  The Company will pay such COBRA Payments for your eligible dependents only for coverage for which those dependents were enrolled immediately prior to the Date of Termination.  You will continue to be required to pay that portion of the premium of your health coverage, including coverage for your eligible dependents, that you were required to pay as an active employee immediately prior to the Date of Termination.  Within 30 days following the end of the COBRA Period, the Company shall pay to you in a lump sum an amount equal to the product of (x) the amount of the COBRA payment paid on your behalf for the final month of the COBRA Period and (y) the number of months by which the Cobra Period was less than       .

(v)If your employment shall be terminated (A) by the Company other than for Cause, Disability or death or (B) by you for Good Reason then for a       -month period after such termination, the Company shall arrange to provide you, at a cost not to exceed $5,000 in the aggregate, with life, disability, and accident insurance benefits substantially similar to those that you are receiving immediately prior to the Notice of Termination.  Benefits otherwise receivable by you pursuant to this Subsection 4(v) shall be reduced to the extent comparable benefits are actually received by you from another employer during the       -month period following your termination, and any such benefits actually received by you shall be reported to the Company.

(vi)You shall not be required to mitigate the amount of any payment provided for in this Section 4 by seeking other employment or otherwise, nor shall the amount of any payment or benefit provided for in this Section 4 be reduced by any compensation earned by you as the result of employment by another employer, by retirement benefits, by offset against any amount claimed to be owed by you to the Company (other than by any cash payments which may be available to you under the Company’s Severance Policy), or otherwise except as specifically provided in this Section 4.

(vii)In addition to all other amounts payable to you under this Section 4, you shall be entitled to receive all benefits available to you under the Company’s Employees’ Share Option Plan, 401(k) profit sharing plan, and to Outplacement benefits as defined in Section 5.5 of the Company’s Severance Policy.

(viii)Anything in this Agreement to the contrary notwithstanding, if on the Date of Termination of your employment with the Company, as a result of such termination, you would receive any payment that, absent the application of this Section 4(viii), would be subject to interest and additional tax imposed pursuant to Section 409A(a) of the Code as a result of the application of Section 409A(2)(B)(i) of the Code, then such payment shall be payable on the date that is the earliest of (i) six (6) months after the Date of Termination,

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(ii) your death or (iii) such other date as will not result in such payment being subject to such interest and additional tax.  It is the intention of the parties that payments or benefits payable under this Agreement not be subject to the additional tax imposed pursuant to Section 409A of the Code.  To the extent such potential payments or benefits could become subject to such Section, the parties shall cooperate to amend this Agreement with the goal of giving you the economic benefits described herein in a manner that does not result in such tax being imposed (it being understood that if such amendments do not avoid the application of Section 409A of the Code, the Company will make such payments nonetheless).

5.  SUCCESSORS; BINDING AGREEMENT.

(i)The Company will require any successor (whether direct or indirect, by purchase, merger, share exchange, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place.  Failure of the Company to obtain such assumption and agreement prior to the effectiveness of any such succession shall be a breach of this Agreement and shall entitle you to compensation from the Company in the same amount and on the same terms as you would be entitled to hereunder if you terminate your employment for Good Reason following a Change of Control, except that for purposes of implementing the foregoing, the date on which any such succession becomes effective shall be deemed the Date of Termination.  As used in this Agreement, “Company” shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this agreement by operation of law, or otherwise.

(ii)This Agreement shall inure to the benefit of and be enforceable by your personal or legal representatives, executors, administrators, heirs, distributees and legatees.  If you should die while any amount would still be payable to you hereunder if you had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this agreement to your legatee or other designee or, if there is no such designee, to your estate.

(iii)In the event that you are employed by a subsidiary of the Company, wherever in this Agreement reference is made to the “Company,” unless the context otherwise requires, such reference shall also include such subsidiary.  The Company shall cause such subsidiary to carry out the terms of this Agreement insofar as they relate to the employment relationship between you and such subsidiary, and the Company shall indemnify you and save you harmless from and against all liability and damage you may suffer as a consequence of such subsidiary’s failure to perform and carry out such terms.  Wherever reference is made to any benefit program of the Company, such reference shall include, where appropriate, the corresponding benefit program of such subsidiary if you were a participant in such benefit program on the date a Change of Control has occurred.

6.  NOTICE.  For the purpose of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth on the first page of this Agreement, provided that all notices to the Company shall be directed to the attention of the Board with a copy to the

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Secretary of the Company, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt.

7.  MISCELLANEOUS.  No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by you and such officer as may be specifically designated by the Board.  No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.  No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement.  To the extent that United States federal laws do not otherwise apply, this Agreement shall be construed in accordance with and governed by the laws of the Cayman Islands.

8.  VALIDITY.  The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.

9.  COUNTERPARTS.  This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

10.  ARBITRATION.  Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration in the State of Colorado, in accordance with the rules of the American Arbitration Association then in effect.  Judgment may be entered on the arbitrator’s award in any court having jurisdiction; provided, however, that you shall be entitled to seek specific performance of your right to be paid until the Date of Termination during the pendency of any dispute or controversy arising under or in connection with this Agreement.

[remainder of page intentionally left blank]

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If this letter sets forth our agreement on the subject matter hereof, kindly sign and return to the Company the enclosed copy of this letter which will then constitute our agreement on this subject.

Sincerely,

Apex Silver Mines Limited

By
Agreed to as of the        day of                               .
Signature:
	[Name]

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APPENDIX

FORM OF

GENERAL RELEASE

I,                                       , for good and valuable consideration, including the performance by Apex Silver Mines Limited, a Cayman Islands company (the “Company”), of certain obligations under that certain Change of Control Agreement dated as of                          between myself and the Company (the “Change of Control Agreement”), do hereby release and forever discharge as of the date hereof, the Company and all present, future and former subsidiaries, affiliates, directors, officers, agents, attorneys, insurers, shareholders, representatives and employees of the Company (including all subsidiaries, affiliates, directors, officers, agents, attorneys, insurers, shareholders, partners, representatives and employees thereof), and the successors and assigns of each of them (collectively, the “Released Parties”) to the extent provided below.

1.  Except as provided in Section 2 below, I knowingly and voluntarily release and forever discharge the Company and the other Released Parties from any and all claims, controversies, actions, causes of action, cross-claims, counter-claims, demands, debts, damages (however styled, including compensatory, liquidated, punitive or exemplary damages), claims for costs and attorneys’ fees, or liabilities of any nature whatsoever in law and in equity, both past and present (from the beginning of the world through the date of this General Release) and whether known or unknown, suspected, or claimed against the Company or any of the Released Parties which I, my spouse, or any of my heirs, executors, administrators, representatives or assigns, have or may have, which arise out of or are connected with my employment or association with, or my separation or termination from, the Company (including, but not limited to, any allegation, claim or violation, arising under:  Title VII of the Civil Rights Act of 1964, as amended; the Civil Rights Act of 1991, as amended; the Equal Pay Act of 1963, as amended; the Americans with Disabilities Act of 1990, as amended; the Family and Medical Leave Act of 1993, as amended; the Civil Rights Act of 1866, as amended; the Age Discrimination in Employment Act (29 U.S.C. § 621 et seq.), as amended (“ADEA”), subject to Section 15 below; the Worker Adjustment Retraining and Notification Act, as amended; the Employee Retirement Income Security Act of 1974, as amended; any applicable Executive Order Programs; the Fair Labor Standards Act, as amended; or their state or local counterparts; or under any other federal, state or local civil or human rights law, or under any other local, state, or federal law, regulation or ordinance; or under any public policy, contract or tort, or under common law; or arising under any policies, practices or procedures of the Company; or any claim for wrongful discharge, breach of contract, infliction of emotional distress, defamation; or any claim for costs, fees, or other expenses, including attorneys’ fees incurred in these matters) (all of the foregoing collectively referred to herein as the “Claims”).  As part of the release set forth in this Section 1, I fully and forever covenant not to sue or cause to be sued the Company or any other Released Party with respect to any Claims.

2.  This General Release shall not relinquish, diminish, or in any way affect (i) any accrued benefits under the terms of the Change of Control Agreement or any other plans or programs of the Company which are due to me, or (ii) rights for indemnification as a director of the Company

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under the Company’s certificate of incorporation or bylaws for duly approved acts taken prior to the date of this General Release, subject to the provisions thereof.

3.  I represent that I have made no assignment or transfer of any Claims, or any other matter covered by Section 1 above.  I agree that I will indemnify, defend and hold harmless the Company from any and all Claims so assigned and transferred.  I have not been involved in any personal bankruptcy or other insolvency proceedings at any time since I began my employment with the Company.  No child support orders, garnishment orders, or other orders requiring that money owed to me by the Company be paid to any other person are now in effect.

4.  In signing this General Release, I acknowledge and intend that it shall be effective as a bar to each and every one of the Claims hereinabove mentioned or implied that are released by me.  I further acknowledge and agree that my separation from employment with the Company shall not serve as the basis for any claim or action.  I agree that this General Release shall be given full force and effect according to each and all of its express terms and provisions, including those relating to unknown and unsuspected Claims (notwithstanding any state statute that expressly limits the effectiveness of a general release of unknown, unsuspected and unanticipated Claims), if any, as well as those relating to any other Claims hereinabove mentioned or implied.  I acknowledge and agree that this waiver is an essential and material term of this General Release.  I therefore agree that in the event a Claim is brought seeking damages against me in violation of the terms of this General Release, or in the event a party should seek to recover against the other in any Claim brought by a governmental agency on such party’s behalf, this General Release shall serve as a complete defense to such Claims.  I further agree that I am not aware of any pending or threatened charge or complaint of the type described above as of the execution of this General Release.

5.  I agree that, by my signature below, I hereby resign from all positions, including any board memberships, related to the Company and its subsidiaries contemporaneously with the execution of this General Release.

6.  I understand that this General Release embodies the complete agreement and understanding among the parties with respect to the subject matter hereof and supersedes and preempts any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way.

7.  Whenever possible, each provision of this General Release shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this General Release is held by any court of competent jurisdiction to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or any other jurisdiction, but this General Release shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

8.  This General Release shall be binding in all respects upon, and shall inure to the benefit of, the heirs, successors and assigns of the parties hereto; provided that I acknowledge that I may not assign my rights under the this General Release without the prior written consent of the Company.  I agree, upon reasonable request of the Company, to execute, acknowledge and deliver

any additional instrument or documents that may be reasonably required to carry out the intentions of this General Release.  This General Release may be executed in counterparts and facsimile signatures shall be originals for all purposes.

9.  I agree that this General Release shall be interpreted and construed in accordance with the laws of the State of Colorado and that any disputes arising under this General Release or by any asserted breach of it, or from the employment relationship between the Company and Executive, shall be litigated in the state or federal courts in Colorado and I consent to such jurisdiction.

10.  I represent that I am over the age of forty (40).  As part of the release set forth in Section 1, I knowingly and voluntarily agree to waive any rights or claims arising out of or relating to the ADEA (the “ADEA Waiver”) and acknowledge that I have been informed of the following:

a.I represent and acknowledge that I am waiving any and all rights or claims that I may have arising under the ADEA;

b.I represent and acknowledge that I have been informed of my right to consult with an attorney regarding these ADEA rights, before executing this General Release;

c.I know and understand that I am not waiving any rights or claims that may arise after the date this waiver of ADEA rights is executed;

d.I know and understand that in exchange for the waiver of my rights under the ADEA, I am receiving consideration in addition to any consideration to which I am already entitled;

e.BY SIGNING THIS GENERAL RELEASE, I REPRESENT AND ACKNOWLEDGE THAT I HAVE BEEN INVITED AND ADVISED TO CONSULT AN ATTORNEY BEFORE SIGNING THIS DOCUMENT.  I acknowledge and understand that I have been given a period of at least twenty-one (21) days in which to consider the terms of the ADEA Waiver provided to me; and

f.I understand that I have the right to revoke this ADEA Waiver contained in this General Release at any time within seven (7) days after signing this General Release, by providing written notice to the following address:  Apex Silver Mines Limited,                                                             , and that, upon such revocation, this General Release will not have any further legal force and effect.  I further understand and agree that this General Release shall not become effective or enforceable until this seven day revocation period has expired.

By signing this General Release, I further represent and agree that:

(i)I have read it carefully;

(ii)I understand all of its terms and know that I am giving up important rights, including but not limited to, rights under Title VII of the Civil Rights Act of 1964, as amended; the Equal Pay Act of 1963, as amended; the Americans with Disabilities Act of 1990, as amended; and the Employee Retirement Income Security Act of 1974, as amended;

(iii)I voluntarily consent to everything in this General Release;

(iv)I have been advised to consult with an attorney before executing this General Release and I have done so or, after careful reading and consideration I have chosen not to do so of my own volition;

(v)I have signed this General Release knowingly and voluntarily and with the advice of any counsel retained to advise me with respect to this General Release;

(vi)I agree that the provisions of this General Release may not be amended, waived, changed or modified except by an instrument in writing signed by an authorized representative of the Company and by me.

DATE:                                 , 20
	[Executive]

Acknowledged and agreed to this            day of                               , 20      

Apex Silver Mines Limited,

a Cayman Islands company

By:

Name:

Title:

SCHEDULE TO FORM OF

CHANGE OF CONTROL AGREEMENT

The following table contains a list of our officers who are party to the Change of Control Agreement.  This agreement supersedes and replaces the previous change of control agreement, if any, between the Company and the officer.  As shown below, the only terms of the agreement which differ are (1) the multiple of salary and bonus to be paid by the Company as provided in Section 4(iii)(B), and (2) the period of time for which benefits will be payable as provided in Sections 4(iv) and (v).

Name	Execution Date	Salary/Bonus Multiple (Section 4(iii)(B))	Benefit Period (Section 4(iv) and (v))
Jeffrey Clevenger	September 25, 2006	Three	Thirty-Six Months
Alan Edwards	September 25, 2006	Three	Thirty-Six Months
Robert Blakestad	September 25, 2006	Two	Twenty-Four Months
Jerry Danni	September 25, 2006	Two	Twenty-Four Months
Marcel DeGuire	September 25, 2006	Two	Twenty-Four Months
Igor Levental	September 25, 2006	Two	Twenty-Four Months
Gerald Malys	September 25, 2006	Two	Twenty-Four Months
Terry Owen	September 25, 2006	Two	Twenty-Four Months
Donald Ratcliff	November 1, 2006	Two	Twenty-Four Months
Robert Vogels	September 25, 2006	Two	Twenty-Four Months

EX-31.1

EXHIBIT 31.1

CERTIFICATIONS

I, Jeffrey G. Clevenger, certify that:

1.   I have reviewed this quarterly report on Form 10-Q of Apex Silver Mines Limited;

2.   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.   The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.  Designed such internal controls over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.   Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.  Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.   The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors:

a.   All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.  Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 6, 2006
	\s\ Jeffrey G. Clevenger
	Jeffrey G. Clevenger
	President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

I, Gerald J. Malys, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Apex Silver Mines Limited;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.      Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.      Designed such internal controls over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.      Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.      Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors:

a.      All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.      Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 6, 2006
	\s\ Gerald J. Malys
	Gerald J. Malys
	Senior Vice President and Chief Financial Officer

EX-32

EXHIBIT 32

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Apex Silver Mines Limited (the “Company”) on Form 10-Q for the quarter ended September 30, 2006 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned hereby certifies, pursuant to 18 U.S.C. §1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

\s\ Jeffrey G. Clevenger

Jeffrey G. Clevenger

President and Chief Executive Officer

November 6, 2006

\s\ Gerald J. Malys

Gerald J. Malys

Senior Vice President and Chief Financial Officer

November 6, 2006