-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GPOC3mJcEBs21hlcjJjLi37pjci9s8hAUYbS+AdSVYIA9fJpgCBDfkqrPvAAgIYy iQZKJbg8EpG4+XIRrcXfdQ== 0000932384-00-000085.txt : 20000322 0000932384-00-000085.hdr.sgml : 20000322 ACCESSION NUMBER: 0000932384-00-000085 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000321 FILER: COMPANY DATA: COMPANY CONFORMED NAME: APEX SILVER MINES LTD CENTRAL INDEX KEY: 0001011509 STANDARD INDUSTRIAL CLASSIFICATION: GOLD & SILVER ORES [1040] IRS NUMBER: 000000000 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: SEC FILE NUMBER: 001-13627 FILM NUMBER: 574820 BUSINESS ADDRESS: STREET 1: CALEDONIAN HOUSE GROUND FL GEORGETOWN CITY: GRAND CAYMAN CAYMAN STATE: E9 BUSINESS PHONE: 3499490050 MAIL ADDRESS: STREET 1: CALEDONIAN HOUSE MARY STREET STREET 2: GEORGE TOWN GRAND CAYMAN ISLAND BWI 10-K/A 1 FORM 10-K/A (12/31/99) ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K/A (MARK ONE) |X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999 |_| 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 of Incorporation or Organization) (I.R.S. Employer Identification No.) CALEDONIAN HOUSE JENNETT STREET GEORGE TOWN, GRAND CAYMAN CAYMAN ISLANDS, BRITISH WEST INDIES NOT APPLICABLE (Address of principal executive office) (Zip Code) (345) 949-0050 (Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered ORDINARY SHARES, $0.01 PAR VALUE AMERICAN STOCK EXCHANGE ORDINARY SHARES SUBSCRIPTION WARRANTS AMERICAN STOCK EXCHANGE Securities registered pursuant to Section 12(g) of the Act: NONE 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 |_| Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. |_| The aggregate market value of the voting stock held by non-affiliates of the registrant was approximately $145,500,000 as of March 3, 2000. The number of Ordinary Shares outstanding as of March 3, 2000 was 34,471,268. DOCUMENTS INCORPORATED BY REFERENCE Portions of the Registrant's Definitive Proxy Statement to be filed with the Securities and Exchange Commission pursuant to Regulation 14A in connection with the 2000 Annual Meeting of Shareholders are incorporated by reference in Part III of this Report on Form 10-K. ================================================================================ EXPLANATORY NOTE This Annual Report on Form 10-K/A for the fiscal year ended December 31, 1999 (the "Report") is being filed solely to make the following amendments to Items 6 and 7: ITEM 6: Amounts shown in line items "Net cash used in operating activities" and "Net cash used in investing activities" for the years ended December 31, 1999, 1998 and 1997 and for December 22, 1994 (inception) through December 31, 1999, have been amended to conform to the Consolidated Statement of Cash Flows in the Company's financial statements. ITEM 7: Amounts shown in the second sentence of the first paragraph under the heading "Liquidity and Capital Resources" have been amended to conform to the Consolidated Statement of Cash Flows in the Company's financial statements. This Form 10-K/A constitutes Amendment No. 1 to the Report. -2- ITEM 6 : SELECTED CONSOLIDATED FINANCIAL DATA The selected consolidated financial data for the Company for the years ended December 31, 1999, 1998, 1997, 1996 and 1995, and the period from December 22, 1994 (inception) through December 31, 1999, are derived from the audited consolidated financial statements of the Company. The selected financial data that has not been presented herein is immaterial. This table should be read in conjunction with the Consolidated Financial Statements and Management's Discussion and Analysis of Financial Condition and Results of Operations.
December 22, 1994 (inception) Year ended December 31, through ----------------------------------------------------------- December 31, 1999 1998 1997 1996 1995 1999 --------- ---------- ---------- --------- --------- -------------- (dollars in thousands, except per share amounts) STATEMENT OF OPERATIONS: Interest and other income................... $ 1,114 $ 2,444 $ 962 $ 575 $ 462 $ 5,572 --------- ---------- ---------- --------- --------- --------- Total income................................ 1,114 2,444 962 575 462 5,572 --------- ---------- ---------- --------- --------- --------- Expenses Exploration............................. 6,014 9,966 13,358 14,852 3,559 48,167 Administrative.......................... 2,846 3,339 2,440 265 200 9,090 Amortization and depreciation........... 233 169 149 57 57 666 --------- ---------- ---------- --------- --------- --------- Total expenses.............................. 9,093 13,474 15,947 15,174 3,816 57,922 --------- ---------- ---------- --------- --------- --------- Loss before minority interest............... (7,979) (11,030) (14,985) (14,599) (3,354) (52,350) Minority interest........................... -- -- -- 2,876 1,493 4,559 --------- ---------- ---------- --------- --------- ---------- Net loss for the period..................... $ (7,979) $ (11,030) $ (14,985) $(11,723) $ (1,861) $ (47,791) ========= ========== ========== ========= ========= ========== Net loss per Ordinary Share................. $ (0.29) $ (0.42) $ (0.72) $ (0.66) $ (0.12) $ (2.19) ========= ========== ========== ========= ========= ========== Weighted average number of Ordinary Shares outstanding ..................... 27,601 26,212 20,930 17,672 15,900 21,791 CASH FLOW DATA: Net cash provided by (used in) financing activities ............................. $ 94,073 $ (267) $ 55,008 $ 35,269 $ 6,430 $ 191,199 Net cash used in operating activities....... (8,289) (11,463) (17,990) (12,092) (3,491) (53,653) Net cash used in investing activities....... (15,705) (19,086) (5,934) (524) -- (41,249) --------- ---------- ---------- --------- --------- ---------- Net increase (decrease) in cash............. $ 70,079 $ (30,816) $ 31,084 $ 22,653 $ 2,939 $ 96,297 ========= ========== ========== ========= ========= ==========
December 31, ------------------------------------------------------------- 1999 1998 1997 1996 1995 --------- ---------- ---------- --------- --------- (dollars in thousands) BALANCE SHEET DATA: Total assets................................ $ 151,077 $ 62,347 $ 73,329 $ 26,797 $ 6,820 Total liabilities........................... 6,249 3,950 4,100 2,486 359 Minority interest........................... -- -- -- -- 2,876 Shareholders' equity........................ 144,828 58,397 69,229 24,311 3,585
-3- ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL You should read the following discussion and analysis together with the consolidated financial statements of Apex Silver Mines Limited and the selected financial data and related notes thereto included elsewhere in this report on form 10-K. Apex Limited is a mining exploration and development company that holds a portfolio of silver exploration and development properties primarily in South America and Central America. None of these properties are in production and, consequently, we have no current operating income or cash flow. We currently focus our resources on the development of our San Cristobal Project in Bolivia as well as continued evaluation of our Cobrizos property in Bolivia and Platosa property in Mexico. Our company completed an initial public offering of Ordinary Shares on December 1, 1997. We completed a subsequent offering of Ordinary Shares and warrants during November 1999. As used herein, Apex Limited, our company, we and our refer collectively to Apex Silver Mines Limited, its predecessors, subsidiaries and affiliates or to one or more of them as the context may require. RESULTS OF OPERATIONS Interest Income. Our company does not yet produce silver or any other mineral products and has no revenues from product sales. Our primary source of revenue is interest income. Our policy is to invest all excess cash in liquid, high credit quality, short-term financial instruments. Our interest income for the year ended December 31, 1999 was $1.1 million compared to $2.4 million and $1.0 million for the years ended December 31, 1998 and 1997, respectively. The 1999 decrease in interest income compared to 1998 is the result of declining average cash balances during 1999 prior to receipt of the net proceeds of our November 1999 offering of Ordinary Shares and warrants. The increase in our interest income for 1998 compared to 1997 was due to the additional cash raised in our initial public offering of Ordinary Shares in 1997. Exploration. Our company expenses mineral exploration expenditures as incurred on each property until we determine that mining operations on that property are feasible. Once we have determined that a mineral property has proven and probable ore reserves, we capitalize all development costs. Through December 31, 1999, we have expensed all acquisition and exploration costs as incurred, except those pertaining to the San Cristobal Project. Since September 1, 1997, we have capitalized development costs associated with the San Cristobal Project and will continue to do so in the future. Our exploration expenses were $6.0 million for the year ended December 31, 1999 compared to $10.0 million and $13.4 million for the years ended December 31, 1998 and 1997, respectively. The decreases in our exploration expenses for these periods is due primarily to the reduced emphasis on exploration as we concentrate our resources on the development of the San Cristobal Project. Administrative. Our administrative expenses were $2.8 million for the year ended December 31, 1999, compared to $3.3 million and $2.4 million for the years ended December 31, 1998 and 1997, respectively. The decrease in our administrative expenses in 1999 as compared to 1998 is primarily due to the refocusing of our efforts on development activities at the San Cristobal Project. The increase in our administrative expenses for 1998 compared to 1997 is primarily the result of our increased activity and our hiring of additional personnel associated with the anticipated development and financing of the San Cristobal Project. Income Taxes. Apex Silver Mines Corporation, our U.S. management services company, is subject to U.S. income taxes. Otherwise our company pays no income tax in the U.S. since we are incorporated in the Cayman Islands and conduct no business that currently generates U.S. taxable income. The Cayman Islands currently impose -4- no corporate taxation. Our company has been granted exemption until January 16, 2015 from any form of corporate taxation which may subsequently be adopted in the Cayman Islands. LIQUIDITY AND CAPITAL RESOURCES As of December 31, 1999, our company had cash and cash equivalents of approximately $96.3 million compared to $26.2 million at December 31, 1998. The increase in our cash and cash equivalents during 1999 is due to the $94.1 million in net proceeds we received from our November 1999 offering of Ordinary Shares and warrants, partially offset by our investments of approximately $15.0 million in the development of the San Cristobal Mine and $0.7 million in plant, buildings and equipment, together with $8.3 million in other expenditures related primarily to exploration and administration. During November 1999, pursuant to a shelf registration statement filed with the Securities and Exchange Commission, we sold 8,090,132 Ordinary Share units, resulting in proceeds before commissions and fees of approximately $97.1 million and net proceeds of approximately $94.1 million. The Ordinary Share units, each priced at $12.00 per unit, were comprised of one Ordinary Share and one warrant with each warrant exercisable into one-half of an Ordinary Share at any time on or before November 4, 2002 at a price of $18.00 per Ordinary Share. The warrants, if exercised, would raise an additional $73.6 million for the Company and would result in the issuance of 4,045,066 Ordinary Shares. Based on the September 1999 feasibility study for the San Cristobal Project, we expect capital costs for construction to total approximately $413 million. In addition, we expect that the Project will require $15 million of working capital and $20 million to pay Bolivian value-added tax during construction. We should recover the value-added tax against our future Bolivian income taxes. Based on our current development schedule for San Cristobal, we anticipate capital expenditures of approximately $127 million over the next twelve months, with the remaining $321 million to be spent in the following two years. We expect to fund these expenditures from a combination of our existing cash balances and financing raised from outside sources. Under the current schedule, we expect our existing cash balances to be sufficient to fund ongoing development of San Cristobal through the third quarter of 2000. We will need significant additional financing from outside sources to complete San Cristobal development. We expect that outside sources of financing for San Cristobal will include bank borrowings and future additional debt or equity financing. Our company does not currently have a line of credit with any financial institution. We have appointed Barclays and Deutsche Bank as co-lead arrangers for the project financing of the San Cristobal Project and have begun negotiations regarding the terms of a potential financing. There can be no assurance that we will be able to obtain the required financing on terms that we find attractive, or at all. In order to maintain our mineral properties, we must make certain payments including government mineral patent fees and commissions, work commitments, lease and option payments and advance royalties. In order to maintain our current portfolio of mineral properties, we will be required to make payments during the next twelve months of approximately $0.5 million for San Cristobal, $0.2 million for Cobrizos, $0.7 million for Platosa and $0.6 million for our other exploration properties. In addition, we expect to make expenditures for other continuing exploration, property acquisition, property evaluation and general corporate expenses. Such expenditures are not anticipated to increase significantly during the next twelve months. We expect to fund these obligations from existing cash balances. ENVIRONMENTAL COMPLIANCE Our current and future exploration and development activities, as well as our future mining and processing operations, are subject to various federal, state and local laws and regulations in the countries in which we conduct our activities. These laws and regulations govern the protection of the environment, prospecting, development, production, taxes, labor standards, occupational health, mine safety, toxic substances and other matters. Our management expects to be able to comply with those laws and does not believe that compliance will have a material adverse effect on our competitive position. We intend to obtain all licenses and permits required by all applicable regulatory agencies in connection with our mining operations and exploration activities. We intend to maintain standards of environmental compliance consistent with best contemporary industry practice. -5- FORWARD-LOOKING STATEMENTS Some information contained in or incorporated by reference into this report on Form 10-K may contain forward-looking statements. These statements include comments regarding mine development and construction plans, costs, grade, production and recovery rates, permitting, financing needs, the availability of financing on acceptable terms, the timing of engineering studies and environmental permitting, and the markets for silver, zinc and lead. The use of any of the words "anticipate", "continue," "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 you that these expectations will prove to be correct. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of the risk factors set forth below and other factors set forth in, or incorporated by reference into, this report: o worldwide economic and political events affecting the supply of and demand for silver, zinc and lead; o volatility in market prices for silver, zinc and lead; o financial market conditions, and the availability of financing on terms acceptable to our company; o uncertainties associated with developing a new mine, including potential cost overruns and the unreliability of estimates in early stages of mine development; o variations in ore grade and other characteristics affecting mining, crushing, milling and smelting operations and mineral recoveries; o geological, technical, permitting, mining and processing problems; o the availability and timing of acceptable arrangements for power, transportation, water and smelting; o uncertainties regarding future changes in tax legislation or implementation of existing tax legislation; o variations in smelting operations and capacity; o the availability of experienced employees; and o the factors discussed under "Risk Factors." 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-K. 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. All subsequent written and oral forward-looking statements attributable to our company and persons acting on our behalf are qualified in their entirety by the cautionary statements contained in this section and elsewhere in this report on Form 10-K. -6- SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed March 22, 2000 on its behalf by the undersigned, thereunto duly authorized. Apex Silver Mines Limited Registrant By: /s/ KEITH R. HULLEY --------------------------------------- Keith R. Hulley Director and Chief Operating Officer -----END PRIVACY-ENHANCED MESSAGE-----