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 69 Jennette Street George Town, Grand Cayman Cayman Islands, British West Indies		Not Applicable
(Address of principal executive office)		(Zip Code)

Title of each class		Name of each exchange on which registered
Ordinary Shares, $0.01 par value Ordinary Shares Subscription Warrants		American Stock Exchange American Stock Exchange

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 ý No o

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. ý

The aggregate market value of the voting stock held by non-affiliates of the registrant was approximately $247,000,000 as of March 20, 2002.

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 2002 Annual Meeting of Shareholders are incorporated by reference in Part III of this Report on Form 10-K.

Apex Silver Mines Limited, organized under the laws of the Cayman Islands in 1996, is engaged in the exploration and development of silver properties in South America, Mexico and Central America. Our company has a large diversified portfolio of privately owned and controlled silver exploration properties. We have rights to or control over 100 silver and other mineral exploration holdings, divided into 17 property groups, located in or near the traditional silver producing regions of Bolivia, Mexico, Peru and El Salvador. Our exploration efforts have produced our first development property, our 100% owned San Cristobal Project located in southern Bolivia. San Cristobal's proven and probable reserves total 240 million tonnes of ore grading 2.0 ounces per tonne of silver, 1.67% zinc and 0.58% lead, containing 470 million ounces of silver, 8.8 billion pounds of zinc and 3.1 billion pounds of lead. None of our properties are in production, and consequently we have no operating income or cash flow.

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.

All currency references are to United States dollars, unless otherwise indicated.

Our company is one of a limited number of mining companies which focus on silver exploration, development and production. Our strategy is to capitalize on our sizeable portfolio of silver exploration properties in order to achieve long-term profits and growth and to enhance shareholder value.

Although our primary focus is on mining silver, we intend to produce other metals associated with our silver deposits if economically practicable, including zinc, lead, copper and gold. We are managed by a team of seasoned mining professionals with significant experience in the identification and exploration of mineral properties, as well as the construction, development and operation of large scale, open pit and underground, precious and base metals mining operations.

Our 100% owned San Cristobal Project is located in the San Cristobal mining district of the Potosi Department in southern Bolivia, a region that has historically produced a significant portion of the world's silver supply. San Cristobal is located in the Bolivian Altiplano in the Andes mountains, approximately 500 kilometers south of the capital city of La Paz. The project is accessible by a gravel road from the international railroad at Rio Grande, approximately 50 kilometers to the north, and from the town of Uyuni, a former railroad maintenance town, approximately 80 kilometers to the northeast. The railroad begins at the Chilean port of Antofagasta, approximately 460 kilometers southwest of San Cristobal, and continues approximately 500 kilometers north to La Paz.

The San Cristobal property is comprised of certain mining concessions which are part of a large block of concessions covering approximately 460,000 acres which we own or control. Under these

mining concessions, our company has the right to carry out exploration, mining, processing and marketing of all mineral substances located within the concessions, and to use the water found on the concessions. In order to maintain our rights to these concessions, we must make annual mining patent payments to the Bolivian government.

Our San Cristobal property is largely unexploited. The relatively small, shut down Toldos mine, located approximately 1.5 kilometers from the proposed San Cristobal open pit mine, was mined by underground block caving and open pit mining between 1985 and 1995. At present, there is no significant plant or equipment on the San Cristobal property.

We believe that our San Cristobal property contains one of the largest known open pit silver, zinc and lead deposits in the world. Additional drilling in 1998 doubled proven and probable reserves at San Cristobal, which total 240 million tonnes of ore grading 2.0 ounces per tonne of silver, 1.67% zinc and 0.58% lead. These reserves contain 470 million ounces of silver, 8.8 billion pounds of zinc and 3.1 billion pounds of lead. The full dimensions of the San Cristobal deposit have not yet been determined; mineralized material extends outward from the identified ore body in most directions as well as to depths below 260 meters.

In September 1999, we completed a detailed feasibility study on San Cristobal. The feasibility study was prepared by Kvaerner, E&C Metals Division, an independent engineering firm. Based on the feasibility study, we anticipate developing a low cost, open pit silver-zinc mine at San Cristobal with a low strip ratio of approximately 1.8:1 (tonnes of waste per tonne of ore), including pre-stripping. Under the study's mine plan, we would mine the deposit at a rate of approximately 40,000 tonnes of ore per day and process the ore by conventional means. We would transport mined ore to the primary crusher by truck and then convey the crushed ore to a mill and flotation plant. The ore would be ground in semi-autogenous (SAG) and ball mill circuits, and then processed by selective flotation to produce separate silver-lead and silver-zinc concentrates. We expect to transport the filtered concentrates by road or railroad to a port in Chile, and then by ocean vessel to smelters and refineries in Asia, the Americas and Europe.

In September 2000, our company announced that positive metallurgical and operational improvements occurring subsequent to completion of the San Cristobal feasibility study have further enhanced the project economics. Once commercial production is attained, we believe the operation should produce an annual average of approximately 21 million contained ounces of silver, 478 million contained pounds of zinc and 155 million contained pounds of lead over a mine life of approximately 17 years, with higher production anticipated in the first five years. Based on the geology of San Cristobal, and the drilling, analysis and proven and probable reserves identified to date, we believe that the San Cristobal Project could be extended in life or increased in scale.

Based on estimated revisions made during 2000 to the September 1999 feasibility study for the San Cristobal project, which assumes contract mining, we forecast capital costs for construction to total approximately $435 million, net of approximately $60 million in expected tax credits, including approximately $25 million which will be recovered against our company's future Bolivian income taxes after commencement of production. We have expended over $81 million in San Cristobal, including approximately $31 million in construction costs, through December 31, 2001. Unless there is an improvement in the metals and capital markets in 2002, we expect to limit project spending during 2002 to approximately $2 million for completion of our transportation, port and power arrangements and payment of holding and permitting costs. When metals markets improve, we expect to complete detailed engineering and incorporate into our feasibility study any changes deriving from our ultimate infrastructure arrangements, which may result in an increase to our forecast construction capital and working capital requirements.

Since completion of the feasibility study, we have continued negotiations related to key infrastructure items including power for the project and the port facilities. In September 2001, we

signed a letter of intent with Nor Oeste Pacifico Generacion de Energia Limitada ("NOPEL") to provide power for San Cristobal, at a price consistent with the feasibility study assumptions. NOPEL is the power generating and transmission subsidiary for the $750 million GasAtacama project, consisting of a natural gas pipeline and a 740-megawatt generating station at Mejillones, Chile. The acquisition of power from NOPEL is our preferred alternative. We are conferring with the various Bolivian government agencies responsible for executing power arrangements involving the import and export of energy. With large natural gas discoveries having taken place in Bolivia since completion of the feasibility study, energy is becoming a fast growing part of the Bolivian economy, and we continue to receive alternative proposals for the usage of domestic electricity. We are also working with the governments of Bolivia and Chile on issues related to transportation of concentrates from the project by road or railroad to the Chilean ports of Tocapilla or Meijillones, respectively. In addition, we continue to advance project permitting and project financing.

The San Cristobal Project occupies the central portion of a depression associated with volcanism of Miocene age. The 4 kilometer diameter depression is filled with fine to coarse grained volcanoclastic sedimentary rocks (including shale, conglomerate, sandstone, landslide debris and talus). During the late Miocene Period, after sedimentation had nearly filled the depression, a series of dacite and andesite porphyry sills and domes intruded the volcanoclastic rocks. Disseminated and stockwork silver-lead-zinc mineralization formed locally both within the volcanoclastic sediments and in the intrusions themselves. The disseminated mineralization was not mined in the past except at the nearby Toldos mine. Historic production on the San Cristobal property was from veins.

The two largest areas of mineralization, the Jayula and Tesorera deposits, initially were drilled separately. Our additional drilling in 1998, which more than doubled proven and probable reserves, merged the Jayula and Tesorera deposits into one large deposit, now called the San Cristobal orebody.

Mineralization at the Jayula portion of the San Cristobal orebody is dominated by stockwork consisting of iron oxides, clays, galena, barite, sphalerite, pyrite, tetrahedrite and acanthite. The veins of the stockwork are most abundant in the dacite sill, near its contact with the volcanoclastic sedimentary rocks. At the Tesorera portion of the orebody, mineralization is characterized by galena, sphalerite and acanthite, disseminated in the volcanoclastic sedimentary rocks. This mineralization is most prevalent in the coarser grained beds, usually conglomerates and coarse sandstones. To the extent that ore grade mineralization is confined to the sedimentary beds, the mineral zones are both stratiform and strata-bound, forming tabular bodies.

Oxidation of the mineralized zone at San Cristobal has occurred to depths averaging 40 to 75 meters and affects approximately 4% of the reserves. In this oxide zone, zinc has been almost completely leached out by groundwater; silver values, however, are locally enhanced due to secondary enrichment processes. In the oxide zone, the dominant minerals are iron oxides, galena, clays, native silver and secondary acanthite.

We have completed approximately 169,400 meters of reverse circulation and approximately 20,100 meters of diamond drilling at San Cristobal. This drilling indicates that the mineralization is present over an area of 1,500 meters by 1,500 meters. The ore deposit defined by this drilling is open at depth and in several lateral directions.

Proven and probable reserves were calculated in August 1999 using a $4.65 net smelter return per tonne cutoff value and market price assumptions of $5.00 per ounce of silver, $0.50 per pound of zinc and $0.28 per pound of lead. The following tables show our company's proven and probable reserves of

silver, zinc and lead for sulfide ore and oxide ore at the San Cristobal Project, which were calculated by Mine Reserve Associates, Inc.

In addition to proven and probable reserves, Mine Reserves Associates has estimated 46 million tonnes of mineralized material at an average grade of 2.90 ounces of silver per tonne, 1.04% zinc, and 0.58% lead.

Other than San Cristobal and nearby exploration projects in the San Cristobal district, we have a portfolio of silver properties in Bolivia, Mexico, Peru, El Salvador and Central Asia totaling approximately 538,000 acres which contain potential for silver mineralization or other significant exploration potential. These mineral properties consist of:

We generally seek to structure our acquisitions of mineral rights so that individual properties can be optioned for exploration and subsequently acquired at reasonable cost if justified by exploration results. Properties which we determine do not warrant further exploration or development expenditures are divested, typically without further financial obligation to our company. Although we believe that our exploration properties may contain significant silver or other mineralization, our analysis of most of these properties is at a preliminary stage. The activities performed to date at these properties often have involved the analysis of data from previous exploration efforts by others, supplemented by our own exploration programs.

Our exploration holdings consist primarily of ownership interests, leases, options and joint ventures, all in varying percentages. The distribution of these holdings is summarized in the table below.

Country			Number of Exploration Property Groups	Acreage
Mexico and Central America
	Mexico		4	50,000
	El Salvador		1	10,000

		Subtotal	5	60,000

South America
	Bolivia		5	77,000
	Peru		6	18,000

		Subtotal	11	95,000

Central Asia			1	383,000

		Total	17	538,000

We are continuing to develop the structure of SilEx, which is planned as an independently funded exploration subsidiary focused on silver, gold and precious metal deposits, and polymetallic deposits containing precious metals. We would consolidate in SilEx most of our exploration properties outside the San Cristobal District.

In July 2000, we announced completion of a core drilling program on the approximately 48,000-acre Platosa-Saltillera property, located about 5 kilometers northwest of the town of Bermejillo in Durango State in northern Mexico. The property contains water and is located within approximately 1.5 kilometers of a paved highway, railroad and natural gas and powerlines. We have the right to acquire a 49% interest in the Platosa-Saltillera claim group, consisting of the Platosa claim group of approximately 11,000 acres and the Saltillera claim group of approximately 24,000 acres that adjoins Platosa on the west. We have the right to acquire an additional 2% interest in the Platosa-Saltillera claim group and become the joint venture operator upon completion of a prefeasibility study.

Twenty-seven diamond drill holes totaling 3,645 meters at Platosa and six diamond drill holes totaling 1,007 meters at Saltillera were drilled through year-end 2000. Drilling at Saltillera has found geologic indications that massive sulfides may exist at depths greater than those drilled; however, because mineralization is shallower at Platosa our exploration efforts have been concentrated there. Three massive sulfide mantos have been identified by drilling at Platosa. Nine holes encountered an average of 4.5 meters of massive and sanded sulfides averaging 49.7 ounces per tonne silver, 28.5% zinc and 16.5% lead in the mineralized zone we refer to as Manto No. 4. Six holes in the mineralized zone referred to as Manto No. 5 averaged 30.1 ounces of silver and 5.1% lead and 3.1% zinc. Manto No. 5 is 1.8 meters thick on average and is located from 10 to 20 meters below Manto No. 4. Two holes intersected Manto No. 6 at a location 100 meters east of Mantos Nos. 4 and 5. Manto No. 6 averages 3.2 meters thick, and our average assay results were 33.1 ounces of silver per tonne, 7.4% lead and 5.7% zinc. Our geologists have used mercury soil gas geochemistry and electro-magnetic geophysical methods to help guide the drilling through thin post-mineral cover. Additional drilling in 2001 by our joint venture partner confirmed the grades and thickness of mineralized deposits.

We acquired 40% of the 10,200 acre El Zapote mining concession in El Salvador from Intrepid Minerals Corporation in 2001 in exchange for 35,000 of our ordinary shares. We have the right to acquire an additional 20% from Intrepid for an additional 30,000 of our ordinary shares. If we acquire the initial 60% interest in El Zapote, we would have the right to acquire an additional 15% interest by completing a bankable feasibility study for development of a mine on the property. We have identified two primary target areas for limestone replacement deposits, Cerro Colorado III and San Carolina. At Cerro Colorado III, results from 14 core and reverse circulation holes drilled in 1999 and 2000 indicate the potential for an open pittable silver-zinc-lead deposit. Additional drilling at Cerro Colorado III by Intrepid in 2001 was encouraging. At San Carolina, surface sampling and geophysical surveys indicate that a manto type deposit may be present. We plan to continue exploring the area through a combination of mapping, sampling and drilling.

Mexico is the largest producer of silver in the world. In addition to the core properties described above, we have holdings in the historic Zacatecas mining district as well as a silver property in Guerrero State.

The Cobrizos property is located on level terrain 12 kilometers north of the San Cristobal Project in southern Bolivia. Our company is party to a joint venture agreement with Corporacion Minera de Bolivia S.A., or Comibol, a Bolivian government mining company, on its approximately 2,600 acres of mining rights at the Cobrizos property. Under the agreement, we must make certain payments to Comibol and complete certain work commitments on the property in order to acquire an 85% interest in the joint venture. Under the joint venture, Comibol would receive five percent of the operating cash flow (as defined in the agreement) from production at the Cobrizos property until we have recovered our entire capital investment; thereafter, Comibol would receive 15% of operating cash flow. Our company would be the operator of the joint venture.

Cobrizos is a partially oxidized copper-silver deposit of possible roll front or red bed type in shale and sandstone of the Jurassic Potoco Formation. Further field work would be required to determine the limits of the Cobrizos mineralization, and whether there are proven and probable reserves.

We are evaluating the 11,500 acre Pulacayo/Paca property located in the Potasi Department of Southern Bolivia approximately 140 kilometers northeast of the San Cristobal Project. We own the Paca concessions and have leased the Pulacayo concessions from the Pulacayo Cooperative. We have identified two promising target areas for breccia deposits. We have completed five drill holes and are currently engaged in metallurgical testing of the core.

Our holdings, joint ventures and options in Bolivia, other than the Cobrizos property and San Cristobal Project, total approximately 77,000 acres, including the Pulacayo/Paca property in the historic Pulacayo silver mining district. We aggressively seek silver exploration opportunities in Bolivia.

We have an exploration office in Lima and are actively exploring for silver in Peru, the world's second largest silver producing country. We have acquired the mineral rights to several historic silver districts in the northeastern and southeastern parts of the country. We have also entered into a joint venture on a silver-lead-zinc vein, manto and diatreme prospect located near Cerro de Pasco.

We are in the process of relinquishing mineral rights to 383,000 acres of exploration properties in Kyrghyzstan.

Investors in our company should consider carefully, in addition to the other information contained in, or incorporated by reference into, this report, the following risk factors:

Our company has no history of producing silver or other metals. The development of our economically feasible properties will require the construction or rehabilitation and operation of mines, processing plants and related infrastructure. As a result, we are subject to all of the risks associated with establishing new mining operations and business enterprises. There can be no assurance that we will successfully establish mining operations or profitably produce silver or other metals at any of our properties.

History of Losses—we expect losses to continue for at least the next three years.

As an exploration and development company that has no production history, we have incurred losses since our inception, and we expect to continue to incur additional losses for at least the next three years. As of December 31, 2001, we had an accumulated deficit of $63.3 million. There can be no assurance that we will achieve or sustain profitability in the future.

Unless otherwise indicated, reserves and other mineralization figures presented in our filings with the Securities and Exchange Commission, press releases and other public statements that may be made from time to time are based on estimates of contained silver and other metals made by independent geologists or our own personnel. These estimates are imprecise and depend on geological interpretation and statistical inferences drawn from drilling and sampling which may prove to be unreliable. There can be no assurance that:

Since we have not commenced production on any of our properties, reserves and other mineralization estimates for these properties may require adjustments or downward revisions based on actual production experience. Extended declines in market prices for silver, zinc and lead may render portions of our reserves uneconomic and result in reduced reported reserves. Any material reductions in estimates of our reserves and other mineralization, or of our ability to extract these reserves or mineralization, could have a material adverse effect on our results of operations and financial condition.

We have not established the presence of any proven or probable reserves at any of our mineral properties other than the San Cristobal Project. There can be no assurance that subsequent testing or future feasibility studies will establish additional reserves at our properties. The failure to establish additional reserves could restrict our ability to successfully implement our strategies for long term growth beyond the San Cristobal Project.

San Cristobal Project Risks—the San Cristobal Project is subject to delays in commencement and completion and we may be unable to achieve anticipated production volume or manage cost increases.

Completion of the development of the San Cristobal Project is subject to various factors, including the availability and timing of acceptable arrangements for financing, power, transportation, construction, contract mining and smelting, or the availability, terms, conditions and timing of required

government approvals, including approvals required for the importation of power from a Chilean provider, our preferred alternative. The lack of availability on acceptable terms or the delay in any one or more of these items could delay or prevent the development of San Cristobal. There can be no assurance that:

If the actual cost to complete the development of the San Cristobal Project is significantly higher than expected, there can be no assurance that we will have enough funds to cover these costs or that we would be able to obtain alternative sources of financing to cover these costs. Unexpected cost increases or the failure to obtain necessary project financing on acceptable terms to commence or complete the development of the San Cristobal Project on a timely basis, or to achieve anticipated production capacity, could have a material adverse effect on our future results of operations and financial condition.

The successful development of the San Cristobal Project is subject to the other risk factors described herein.

Dependence on a Single Mining Project—our principal asset is the San Cristobal Project.

We anticipate that the majority, if not all, of our 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 in a timely manner, our ability to generate revenue and profits would be materially adversely affected.

Management of Growth—our success will depend on our ability to manage our growth.

We anticipate that as we bring our mineral properties into production and as we acquire additional mineral rights, we will experience significant growth in our operations. We expect this growth to create new positions and responsibilities for management personnel and increase demands on our operating and financial systems. There can be no assurance that we will successfully meet these demands and manage our anticipated growth.

Volatility of Metals Prices—our profitability will be affected by changes in the prices of metals.

Our profitability and long-term viability depend, in large part, on the market price of silver, zinc, lead and other metals. The market prices for these metals are volatile and are affected by numerous factors beyond our control, including:

The aggregate effect of these factors on metals prices is impossible for our company to predict. Decreases in metals prices have adversely affected, and could in the future adversely affect, our ability to finance the development of the San Cristobal Project and the exploration and development of our

other properties, which would have a material adverse effect on our financial condition and results of operations. There can be no assurance that metals prices will improve.

The following table sets forth (1) the London Silver Market's high and low spot price of silver in U.S. dollars per troy ounce and (2) the London Metals Exchange's high and low settlement prices of zinc and lead in U.S. dollars per pound, for the periods indicated.

	Silver		Zinc		Lead
Year	Silver		Zinc		Lead
Year	High	Low	High	Low	High	Low
1994	5.75	4.64	0.54	0.41	0.31	0.15
1995	6.04	4.41	0.55	0.43	0.35	0.24
1996	5.83	4.71	0.50	0.44	0.42	0.30
1997	6.27	4.22	0.60	0.47	0.33	0.23
1998	6.83	4.88	0.52	0.42	0.27	0.22
1999	5.75	4.88	0.56	0.41	0.25	0.21
2000	5.45	4.57	0.58	0.46	0.26	0.18
2001	4.82	4.07	0.48	0.33	0.24	0.20

Hedging and Currency Risks—we may not be successful in hedging against price, currency and interest rate fluctuations and may incur mark to market losses and lose money through our hedging programs.

We have engaged in limited metals trading activities to hedge against commodity and base metals price risks, using puts and calls. We anticipate that as we bring our mineral properties into production and we begin to generate revenue, we may utilize various price hedging techniques to mitigate some of the risks associated with fluctuations in the prices of the metals we produce. We may also engage in activities to hedge the risk of exposure to currency and interest rate fluctuations related to the development of San Cristobal in Bolivia or in other countries in which we incur substantial expenditures for exploration or development. Further, terms of our financing arrangements may require us to hedge against these risks.

There can be no assurance that we will be able to successfully hedge against price, currency and interest rate fluctuations. In addition, our ability to hedge against zinc and lead price risk in a timely manner may be adversely affected by the smaller volume of transactions in both the zinc and lead markets. Further, there can be no assurance that the use of hedging techniques will always be to our benefit. Hedging instruments which protect against market price volatility may prevent us from realizing the benefit from subsequent increases in market prices with respect to covered production. This limitation would limit our revenues and profits. Hedging contracts are also subject to the risk that the other party may be unable or unwilling to perform its obligations under these contracts. Any significant nonperformance could have a material adverse effect on our financial condition and results of operations.

Uncertainty and Cost of Mineral Exploration and Acquisition—the exploration of mineral properties is highly speculative in nature, involves substantial expenditures and is frequently non-productive.

Our future growth and profitability will depend, in part, on our ability to identify and acquire additional mineral rights, and on the costs and results of our continued exploration and development programs. Competition for attractive mineral exploration properties is intense. See "—Competition." Our strategy is to expand our reserves through a broad program of exploration. Mineral exploration is highly speculative in nature and is frequently non- productive. Substantial expenditures are required to:

If we discover ore, it usually takes several years from the initial phases of exploration until production is possible. During this time, the economic feasibility of production may change. As a result of these uncertainties, there can be no assurance that we will successfully acquire additional mineral rights, or that our exploration programs will result in new proven and probable reserves in sufficient quantities to justify commercial operations in any of our company's properties, other than the San Cristobal Project.

We consider from time to time the acquisition of operating or formerly operating mines. Our decisions to acquire these properties are based on a variety of factors including historical operating results, estimates of and assumptions about future reserves, cash and other operating costs, metals prices and projected economic returns, and evaluations of existing or potential liabilities associated with the property and its operation. Other than historical operating results, all of these may differ significantly from our estimates and assumptions. In addition, there is intense competition for attractive properties. Accordingly, there is no assurance that our acquisition efforts will result in profitable mining operations.

Development Risks—our profitability depends, in part, on actual economic returns and actual costs of developing mines, which may differ significantly from our estimates and involve unexpected problems and delays.

None of our mineral properties, including the San Cristobal Project, has an operating history upon which we can base estimates of future cash operating costs. Our decision to develop the San Cristobal Project is based on feasibility studies. Decisions about the development of other projects in the future may also be based on feasibility studies. Feasibility studies derive estimates of reserves and operating costs and project economic returns. Estimates of economic returns are based, in part, on assumptions about future metals prices. See "—Volatility of Metals Prices." Feasibility studies derive estimates of cash operating costs based upon, among other things:

Actual cash operating costs, production and economic returns may differ significantly from those anticipated by our studies and estimates.

There are a number of uncertainties inherent in the development and construction of any new mine, including the San Cristobal Project. See "—San Cristobal Project Risks." These uncertainties include:

The costs, timing and complexities of mine construction and development are increased by the remote location of many mining properties, like the San Cristobal Project. It is common in new mining operations to experience unexpected problems and delays during development, construction and mine start-up. In addition, delays in the commencement of mineral production often occur. Accordingly, there is no assurance that our future development activities will result in profitable mining operations.

Our policy is to seek to confirm the validity of our rights to title to, or contract rights with respect to, each mineral property in which we have a material interest. However, we cannot guarantee that title to our properties will not be challenged. Title insurance generally is not available, and our ability to ensure that we have obtained secure claim to individual mineral properties or mining concessions may be severely constrained. We have not conducted surveys of all of the claims in which we hold direct or indirect interests and, therefore, the precise area and location of these claims may be in doubt. Accordingly, our mineral properties may be subject to prior unregistered agreements, transfers or claims, and title may be affected by, among other things, undetected defects. In addition, we may be unable to operate our properties as permitted or to enforce our rights with respect to our properties.

Property Rights—we may lose rights to properties if we fail to meet payment requirements or development or production schedules.

We derive the rights to some of our mineral properties, including some of our principal properties at the San Cristobal Project, from leaseholds or purchase option agreements which require the payment of rent or other installment fees. If we fail to make these payments when they are due, our rights to the property may lapse. There can be no assurance that we will always make payments by the requisite payment dates. In addition, some contracts with respect to our mineral properties require development or production schedules. There can be no assurance that we will be able to meet any or all of the development or production schedules. In addition, our ability to transfer or sell our rights to some of our mineral properties requires governmental approvals or third party consents, which may not be granted.

Mining Risks and Limits of Insurance Coverage—we cannot insure against all of the risks associated with mining.

Although we maintain, and intend to continue to maintain, insurance with respect to our operations and mineral properties within ranges of coverage consistent with industry practice, there can be no assurance that insurance will be available at economically feasible premiums. Insurance against environmental risks is not generally available. These environmental risks include potential liability for pollution or other disturbances resulting from mining exploration and production. In addition, not all risks associated with developing and producing silver, zinc, lead and other metals are included in coverage and some covered risks may result in liabilities which exceed policy limits. Further, we may elect to not seek coverage for all risks. The occurrence of an event that is not fully covered, or covered at all, by insurance, could have a material adverse effect on our financial condition and results of operations.

Foreign Operations—we conduct all of our exploration activities in countries with developing economies and are subject to the risks of political and economic instability associated with these countries.

We currently conduct exploration activities in countries with developing economies including Bolivia, Mexico and Peru in Latin America. These countries and other emerging markets in which we may conduct operations have from time to time experienced economic or political instability. We may be materially adversely affected by risks associated with conducting operations in countries with developing economies, including:

Changes in mining or investment policies or shifts in the prevailing political climate in any of the countries in which we conduct exploration and development activities could adversely affect our business. Our operations may be affected in varying degrees by government regulations with respect to, among other things:

We cannot accurately predict the effect of these factors. In addition, legislation in the United States regulating foreign trade, investment and taxation could have a material adverse effect on our financial condition and results of operations.

Government Regulation of Environmental Matters—our activities are subject to foreign environmental laws and regulations which may materially adversely affect our future operations.

We conduct mineral exploration and development activities primarily in Central America and South America, and are most active in Bolivia, where the San Cristobal Project is located, and Mexico. With the development of San Cristobal, we also expect to conduct mining operations in Bolivia. These countries have laws and regulations which control the exploration and mining of mineral properties and their effects on the environment, including air and water quality, mine reclamation, waste handling and disposal, the protection of different species of flora and fauna and the preservation of lands. These laws and regulations will require our company to acquire permits and other authorizations for certain activities. In many countries, including Bolivia, there is relatively new comprehensive environmental legislation, and the permitting and authorization processes may be less established and less predictable than they are in the United States. There can be no assurance that we will be able to acquire necessary permits or authorizations on a timely basis, if at all. Delays in acquiring any permit or authorization could increase the development cost of San Cristobal or other projects and could delay the commencement of production.

Environmental legislation in many countries is evolving in a manner which will likely require stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental assessments of proposed projects and a heightened degree of responsibility for companies and their officers, directors and employees. In Bolivia, where there is relatively new environmental legislation, enforcement activities and strategies may be under development, and thus may be less predictable than in the United States. We cannot predict what environmental legislation or regulations will be enacted or adopted in the future or how future laws and regulations will be administered or interpreted. Compliance with more stringent laws and regulations, as well as potentially more vigorous enforcement policies or regulatory agencies or stricter interpretation of existing laws, may (1) necessitate significant capital outlays, (2) cause us to delay, terminate or otherwise change our intended activities with respect to one or more projects and (3) materially adversely affect our future operations.

Many of our exploration and development properties are located in historic mining districts where prior owners may have caused environmental damage which may not be known to us or to the regulators. In most cases, we have not sought complete environmental analyses of our mineral properties and have not conducted comprehensive reviews of the environmental laws and regulations in every jurisdiction in which we own or control mineral properties. To the extent we are subject to environmental requirements or liabilities, the cost of compliance with these requirements and satisfaction of these liabilities would reduce our net cash flow and could have a material adverse effect on our financial condition and results of operations. If we are unable to fund fully the cost of

remediation of any environmental condition, we may be required to suspend operations or enter into interim compliance measures pending completion of the required remediation.

The mining industry is intensely competitive. Many of the largest mining companies are primarily producers of base metals, and may become interested in the types of silver deposits on which we are focused because these deposits typically are polymetallic, containing significant quantities of base metals including zinc, lead and copper. Many of these companies have greater financial resources, operational experience and technical capabilities than we have. We may encounter increasing competition from other mining companies in our efforts to acquire mineral properties and hire experienced mining professionals. Increased competition in our business could adversely affect our ability to attract necessary capital funding or acquire suitable producing properties or prospects for mineral exploration in the future.

Holding Company Structure Risks—our ability to obtain dividends or other distributions from our subsidiaries may be subject to restrictions imposed by law and foreign currency exchange regulations.

We conduct, and will continue to conduct, all of our operations through subsidiaries. Our ability to obtain dividends or other distributions from our subsidiaries may be subject to restrictions on dividends or repatriation of earnings under applicable local law, monetary transfer restrictions and foreign currency exchange regulations in the jurisdictions in which the subsidiaries operate. Our subsidiaries' ability to pay dividends or make other distributions to our company is also subject to their having sufficient funds to do so. If our subsidiaries are unable to pay dividends or make other distributions, our growth may be inhibited unless we are able to obtain additional debt or equity financing on acceptable terms. In the event of a subsidiary's liquidation, we may lose all or a portion of our investment in that subsidiary.

Requirement of External Financing—we may not be able to raise the funds necessary to explore and develop our mineral properties.

We will need external financing to develop and construct the San Cristobal Project and to fund the exploration and development of our other mineral properties. Sources of external financing may include bank borrowings and future debt and equity offerings. There can be no assurance that financing will be available on acceptable terms, or at all. The failure to obtain financing could have a material adverse effect on our growth strategy and our results of operations and financial condition. The mineral properties that we are likely to develop are expected to require significant capital expenditures. There can be no assurance that we will be able to secure the financing necessary to retain our rights to, or to begin or sustain production at, our mineral properties.

We are dependent on the services of key executives including our chairman and our chief operating officer and a small number of highly skilled and experienced executives and personnel focused on the development of the San Cristobal Project. Due to the relatively small size of our company, the loss of these persons or our inability to attract and retain additional highly skilled employees required for the development of the San Cristobal Project may delay or otherwise adversely affect the development of the San Cristobal Project, which could have a material adverse effect on our business or future operations.

Substantial Control By Directors, Officers and 5% Shareholders—the substantial control of our company by our directors, officers and 5% shareholders may have a significant effect in delaying, deferring or preventing a change in control of our company or other events which could be of benefit to our other shareholders.

As of February 28, 2002, Thomas S. Kaplan and the other directors of our company and officers of Apex Silver Mines Corporation, together with members of their families and entities that may be deemed to be affiliates of or related to these persons or entities, and 5% shareholders beneficially owned approximately 19 million shares, or 55%, of the outstanding shares of our company, assuming the conversion of currently exercisable options and warrants. This level of ownership by these persons may have a significant effect in delaying, deferring or preventing a change in control of our company or other events which could be of benefit to our other shareholders.

Potential investors that are U.S. taxpayers should consider that our company may be considered to be "passive foreign investment company" (a "PFIC") for federal income tax purposes. If our company were deemed to be a PFIC, then a U.S. taxpayer who disposes or is deemed to dispose of shares of our company at a gain, or who received a so-called "excess distribution" on the shares, generally would be required to treat such gain or excess distribution as ordinary income and pay an interest charge on a portion of the gain or distribution unless the taxpayer makes a timely qualified electing fund election (a "QEF" election). A U.S. taxpayer who makes a QEF election generally must report on a current basis his or her share of any of our company's ordinary earnings and net capital gain for any taxable year in which our company is a PFIC, whether or not we distribute those earnings. Special estate tax rules could be applicable to the shares of our company if we are classified as a PFIC for income tax purposes.

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:

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.

Silver has traditionally served as a medium of exchange, much like gold. While silver continues to be used as a form of investment and a financial asset, the principal uses of silver are for industrial uses, primarily for electrical and electronic components, photography, jewelry and silverware. The CPM Group estimates, in publications generally available in the industry, that in 2001 approximately 804.5 million ounces of silver were used in these and other industrial applications, a decrease of 4.9% from 845.6 million ounces in 2000. CPM has projected that the consumption of silver will increase 3.7% in 2002, to a projected 834.3 million ounces. Silver used in photography is estimated to have totaled 277.3 million ounces in 2001, and is projected to rise to 286.1 million ounces in 2002.

Silver's strength, malleability, ductility, thermal and electrical conductivity, sensitivity to light and ability to endure extreme changes in temperature combine to make silver a widely used industrial metal. Specifically, it is used in photography, batteries, computer chips, electrical contacts, and high technology printing. Silver's anti-bacterial properties also make it valuable for use in medicine and in water purification. Additionally, new uses of silver are being developed in connection with the use of superconductive wire.

Most silver production is obtained from mining operations in which silver is not the principal or primary product. Approximately 80% of mined silver is produced as a by-product of mining lead, zinc, gold, nickel or copper deposits. CPM estimates that total silver supply from mine production, recycling, estimated dishoarding and government stockpile sales has been insufficient to meet industrial demand since 1990, and that stockpiles are continuing to diminish. CPM studies indicate that approximately 730 million ounces of silver were supplied from all sources in 2001, an increase of 0.8% from 2000. Mine production of silver rose 2.8% to 502.0 million ounces.

The following table sets forth the London Silver Market's annual average, high and low spot price of silver in U.S. dollars per troy ounce since 1978.

Year	Average	High	Low
	(U.S. dollars per troy ounce)
1978	5.42	6.26	4.82
1979	11.06	32.20	5.94
1980	20.98	49.45	10.89
1981	10.49	16.30	8.03
1982	7.92	11.11	4.90
1983	11.43	14.67	8.37
1984	8.14	10.11	6.22
1985	6.13	6.75	5.45
1986	5.46	6.31	4.85
1987	7.01	10.93	5.36
1988	6.53	7.82	6.05
1989	5.50	6.21	5.04
1990	4.83	5.36	3.95
1991	4.06	4.57	3.55
1992	3.95	4.34	3.65
1993	4.31	5.42	3.56
1994	5.28	5.75	4.64
1995	5.19	6.04	4.41
1996	5.19	5.83	4.71
1997	5.17	6.27	4.22
1998	5.54	6.83	4.88
1999	5.22	5.75	4.88
2000	4.95	5.45	4.57
2001	4.39	4.82	4.07

We anticipate that our San Cristobal Project will, and that our future projects may, involve the production of economically significant quantities of metals other than silver. We expect production from San Cristobal to include the extraction, processing and sale of significant quantities of zinc and lead contained in sulfide concentrates.

Due to the corrosion resisting property of zinc, zinc is used primarily as the coating in galvanized steel. Galvanized steel is widely used in construction of infrastructure, housing and office buildings. In the automotive industry, zinc is used for galvanizing and die-casting, and in the vulcanization of tires. Smaller quantities of various forms of zinc are used in the chemical and pharmaceutical industries, including fertilizers, food supplements and cosmetics, and in specialty electronic applications such as satellite receivers. The western world industrial consumption of zinc in 2001 was estimated in generally available industry publications of the International Lead Zinc Study Group ("ILZSG") at approximately 8.8 million tonnes compared to an estimated available supply of 9.1 million tonnes. The majority of the implied surplus originated from an increase in refined metal production in China. Warehouse stocks (predominantly LME stocks) increased significantly and the zinc refined metals market ended 2001 in a surplus position.

The primary use of lead is in motor vehicle batteries, but it is also used in cable sheathing, shot for ammunition and alloying. Lead in chemical form is used in alloys, glass and plastics. Western world

industrial consumption of lead in 2001 is estimated by ILZSG at 6.4 million tonnes. Lead is widely recycled, with secondary production accounting in recent years for approximately 55% to 60% of total supply. According to ILZSG, 6.5 million tonnes of lead were produced in 2001. The refined lead metal market was approximately balanced at the end of 2001.

The following table sets forth the annual average spot prices for zinc and lead on the London Metals Exchange since 1978.

Year	Zinc	Lead
	(U.S. cents per pound)
1978	31.0	33.7
1979	33.5	52.6
1980	34.4	41.4
1981	38.3	33.5
1982	33.7	24.7
1983	34.6	19.3
1984	41.7	20.1
1985	35.5	17.7
1986	34.1	18.4
1987	36.2	27.0
1988	56.3	29.7
1989	77.6	30.5
1990	68.9	36.7
1991	50.7	25.3
1992	56.2	24.6
1993	43.6	18.4
1994	45.3	24.9
1995	46.8	28.6
1996	46.5	35.1
1997	59.7	28.3
1998	46.4	24.0
1999	48.9	22.8
2000	51.2	20.3
2001	40.2	21.6

Apex Limited has no executive officers. Under the Companies Law (1995 Revision) of the Cayman Islands, directors are authorized to bind the corporation that they represent. Apex Limited has entered into a Management Services Agreement pursuant to which it has engaged Apex Silver Mines Corporation, our wholly owned subsidiary, referred to as Apex Corporation, to provide a broad range of corporate management and advisory services. Set forth below are certain personnel of Apex Limited and its subsidiaries.

Name	Age	Position
Thomas S. Kaplan	39	Chairman of Apex Limited, and Chief Executive Officer of Apex Corporation
Keith R. Hulley	62	President and Chief Operating Officer, Apex Corporation
Marcel F. DeGuire	52	Vice President of Project Development, Apex Corporation
Mark A. Lettes	52	Vice President, Finance and Chief Financial Officer, Apex Corporation
Larry J. Buchanan	57	Chief Geologist, Apex Corporation
Edmond R. LeBlanc	43	Vice President, Marketing, Apex Corporation
Michael F. Shaw	55	Vice President, Project Manager, San Cristobal, Apex Corporation
Linda Good Wilson	44	Vice President, Corporate Development, Apex Corporation
Carlos H. Fernandez Mazzi	43	President and Chief Executive Officer, Andean Silver Corporation LDC

Thomas S. Kaplan. Mr. Kaplan has been the Chairman of the board of directors of our company since its inception in March 1996 and is a director and was the founder of companies we acquired in 1996 through 1998. Mr. Kaplan is a principal shareholder in Consolidated Commodities Ltd., a shareholder of Apex Limited. For the past ten years, Mr. Kaplan has served as an advisor to private clients, trusts and fund managers in the field of strategic forecasting, an analytical method which seeks to identify and assess global trends in politics and economics and the way in which such trends relate to international financial markets, particularly in the developing markets of Asia, Latin America, the Middle East and Africa. Mr. Kaplan was educated in Switzerland and England and holds B.A., M.A., and D. Phil. degrees in history from the University of Oxford.

Keith R. Hulley. Mr. Hulley has been a director of our company since April 1997. A mining engineer with more than 30 years experience, Mr. Hulley serves as the President and Chief Operating Officer of Apex Corporation and has served as an executive officer of Apex Corporation since its formation in October 1996. From early 1991 until he joined the Company, he served as a member of the board of directors and the Director of Operations at Western Mining Holdings Limited Corporation, a publicly traded international nickel, gold and copper producer. At Western Mining, Mr. Hulley's responsibilities included supervising on a global basis strategic planning, mine production, concentrating, smelting, refining and sales. During this period, Western Mining produced on an annual basis approximately 90,000 tonnes of nickel, 700,000 ounces of gold, 80,000 tonnes of refined copper and 1,500 tonnes of uranium oxide. Mr. Hulley also supervised the development and operation of Western Mining's Mount Keith open-pit nickel mine, an A$450 million mining project. Prior to joining Western Mining, Mr. Hulley was the President, Chief Executive Officer and Chairman of the board of directors of USMX Inc., a publicly traded precious-metals exploration company. Mr. Hulley has also

served as the President of the minerals division and Senior Vice President for Operations of Atlas Corporation, where he was in charge of mining exploration, development and production. Previously he was Vice President of Mining and Development of the U.S. division of BP Minerals, Inc. Over the course of his career, Mr. Hulley has worked as a miner and shift supervisor in the gold mines of South Africa, as Mine Operation Superintendent of Kennecott Corporation's Bingham Canyon mine which processed 100,000 tonnes of ore per day, and as project manager of the early phase of the Ok Tedi exploration and development projects in Papua New Guinea. A member of the American Institute of Mining and Metallurgical Engineers and a Fellow of the Australian Institute of Mining and Metallurgy, Mr. Hulley holds a B.S. in mining engineering from the University of Witwatersrand and an M.S. in mineral economics from Stanford University.

Marcel F. DeGuire. Mr. DeGuire serves as Vice President of Project Development of Apex Corporation. Prior to joining Apex Corporation in August 1996, he served as Vice President of Project Development and Country Manager for those jurisdictions which were formerly part of the Soviet Union for Newmont Gold Company, a subsidiary of Newmont Mining Corporation. During this period, Mr. DeGuire acted as Project Leader of Newmont's Muruntau large scale open pit heap leach gold project in Uzbekistan. This facility processes 37,800 tonnes of ore per day and was built at a cost of $225 million. Mr. DeGuire was directly involved in the joint venture negotiations leading up to the project, the subsequent feasibility studies, completion of construction and the commencement of mining operations. In addition to his work in Central Asia, Mr. DeGuire has been responsible for various feasibility analyses, including Newmont's Yanacocha gold project in Peru. During his almost 20 years with Newmont, Mr. DeGuire worked as resident manager of a uranium mine and rose to President of several of Newmont's subsidiaries and became a leading expert in environmental management and mine reclamation, serving as Newmont's Vice President of Environmental Affairs and Research and Development as well as in other senior executive positions. Mr. DeGuire is a member of the American Institute of Mining, Metallurgical and Petroleum Engineers, the Canadian Institute of Metallurgy, the Mining and Metallurgical Society of America and has published various articles on mineral processing and environmental matters. Mr. DeGuire holds a B.S. in metallurgical engineering from Michigan Technological University and an M.S. in metallurgical engineering from the University of Nevada, Reno.

Mark A. Lettes. Mr. Lettes has served as Vice President, Finance and Chief Financial Officer of Apex Corporation since June 1998. Prior to joining Apex Corporation, Mr. Lettes served from late 1996 to 1998 as Vice President Trading for Amax Gold Inc. and Director of Treasury for Cyprus Amax Minerals Company, where he was responsible for all Amax Gold hedging activities. A financial professional with over 25 years experience, Mr. Lettes served as Vice President and Chief Financial Officer for Amax Gold from 1994 until 1996 where he was responsible for numerous financings including project financings for the Fort Knox mine in Alaska and the Refugio mine in Chile, parent-subsidiary financing arrangements with Cyprus Amax and a convertible preferred issue. Mr. Lettes started the gold hedging program at Amax Gold and was responsible for all hedging activities of Amax Gold from 1987 through June 1998, when Amax Gold merged with Kinross Gold Corporation. From 1979 through 1986, Mr. Lettes held several positions at AMAX Inc. including Manager of Corporate Development, Manager Futures Analysis and Group Planning Administration. In those positions, Mr. Lettes was responsible for planning and economic analysis activities for AMAX and for business development and acquisition functions. Transactions on which Mr. Lettes worked at AMAX included the acquisition of the remaining 50% of Alumax, AMAX's aluminum subsidiary. Prior to his service at AMAX and Amax Gold, Mr. Lettes held professional positions in the financial departments of United Technologies and Rockwell International from 1974 until 1979. Mr. Lettes holds a B.S. in marketing from the University of Connecticut and an M.B.A. from Ohio State University.

Dr. Larry J. Buchanan. Dr. Buchanan has served as Chief Geologist and a principal advisor to the Company's international operations since he joined Apex Corporation in 1995. Dr. Buchanan was an

independent consultant from 1990 through 1994. Dr. Buchanan is a noted exploration geologist with a reputation as one of the industry's leading experts on epithermal deposits, on which he has written several definitive texts. His analysis of such deposits has given rise to the industry paradigm known as "The Buchanan Model". Dr. Buchanan has published eight geological texts, played a key role in identifying several multi-million ounce gold deposits, and developed implementation programs for numerous currently producing mines. His consulting clients included Cyprus Minerals Company, FMC Corporation, Total Resources, Inc. and Fischer-Watt Gold Co. Inc. Dr. Buchanan is a shareholder and director of Begeyge Minera Ltda. Dr. Buchanan holds a B.Sc. and an M.Sc. in geological engineering and a Ph.D in economic geology from the Colorado School of Mines.

Edmond R. LeBlanc. Mr. LeBlanc has served as Vice President, Marketing of Apex Corporation since April 1998. Prior to joining us, Mr. LeBlanc served as Director of Marketing for Westmin Resources Limited from 1995 through March 1998, where he was responsible for sales, transportation and hedging for all of the company's mineral production. Westmin sold a wide variety of products including copper, zinc, precious metals and molybdenum concentrates, as well as precious metal dore and copper cathodes. As a member of Westmin's senior management, Mr. LeBlanc was instrumental in assessing marketing issues for the company's five-year strategic plans. From 1990 to 1995, he served as Manager of Special Projects and Manager of Marketing for Westmin. Mr. LeBlanc commenced his career in the mining industry as an exploration geologist before specializing in the marketing of nonferrous concentrates and precious metals. He earned a B.S. in geology from Saint Xavier University.

Michael F. Shaw. Mr. Shaw has served as Vice President of Apex Corporation since May 2000 and as Project Manager for the San Cristobal Project since January 1999. Prior to joining Apex Corporation, Mr. Shaw served from 1996 through 1998 as a Vice President of Tiomin Resources and as Vice President, General Manager and a director of Panama Cobre, S.A., a subsidiary of Tiomin. At Tiomin, he was responsible for development activity at the Cerro Colorado copper deposit in Panama. Mr. Shaw previously served from 1994 to 1996 as Project Director for Cyprus Amax Minerals Company on its solvent extraction- electrowinning expansion of the Cerro Verde copper mine in Peru. Under Mr. Shaw's management, Cerro Verde's expansion was completed on schedule and under budget. In addition, Mr. Shaw has held numerous project management positions for Bechtel Corporation and Kvaerner Metals (Davy McKee). Over the course of his career, he helped build the Andacollo gold mine in Chile, the El Abra copper mine in Chile, the Jerritt Canyon gold mine in Nevada and Magma Copper Company's flash copper smelter in Arizona. A metallurgical engineer with nearly 30 years experience, Mr. Shaw began his career as a metallurgist for Phelps Dodge Corporation before specializing in project management. He earned a B.S. in chemistry and an M.S. in metallurgical engineering from the University of Texas at El Paso.

Linda Good Wilson. Ms. Wilson has served as Vice President, Corporate Development since June 2001, having joined our company in October 1997 as Vice President, Investor Relations. Prior to joining Apex Corporation, Ms. Wilson served from March through October 1997 as Director of Investor Relations for Addwest Minerals, a newly listed Canadian junior gold producer. With over 16 years of mining experience, Ms. Wilson spent 10 years at Cyprus Amax Minerals Company in various financial analysis and planning positions, including Director in the Investor Relations and Treasury Department. Ms. Wilson began her career as a Geologist at AMAX Inc.'s Mount Tolman Project, a large copper-molybdenum deposit in eastern Washington. Ms. Wilson holds a B.A. in geology from Colby College and a M.S. in mineral economics from the Colorado School of Mines.

Carlos H. Fernandez Mazzi. Mr. Fernandez has served as President and Chief Executive Officer of Andean Silver Corporation LDC, a wholly owned subsidiary of our company, since January 2002. From January 1999 through year-end 2001, he served as Executive Vice President and Chief Operating Officer of Andean Silver Corporation, and since July 1998 he has been a director of the San Cristobal

Foundation. Andean Silver Corporation indirectly owns the San Cristobal Project. The San Cristobal Foundation implements community related investments near the San Cristobal Project. Prior to joining our company, Mr. Fernandez worked in the financial sector for over 12 years, specializing in investment banking and trade finance. From September 1996 through July 1998, Mr. Fernandez was a founding partner and director of Sudamer Valores S.A., a licensed brokerage firm, and a founding partner and chief executive officer of Innova Capital, a financial advisory and asset management firm, both located in La Paz, Bolivia. From 1985 through 1996, he held various positions at BHN Multibanco S.A., including director responsible for new business development, Executive Vice President and Vice President, Operations and Finance. Mr. Fernandez earned a B.S. in industrial and systems engineering from the University of Arkansas and an M.B.A. from the University of Notre Dame.

We have recently amended our insider trading policy to permit our officers, directors and other insiders to enter into trading plans or arrangements for systematic trading in our securities under Rule 10b5-1 of the Securities Exchange Act of 1934. Certain of our officers have established such plans, and we anticipate that some or all of our other officers, directors or insiders may establish trading plans at some date in the future.

Our subsidiary, Apex Corporation, provides management, advisory and administrative services for our company under a Management Services Agreement dated October 22, 1996. The services provided by Apex Corporation include:

We pay Apex Corporation a service fee in an amount equal to the direct and indirect costs incurred by Apex Corporation in providing its services, plus 5% of those costs.

In this report, figures are presented in both United States standard and metric measurements. Conversion rates from United States standard to metric and metric to United States standard measurement systems are provided in the table below.

U.S. Measure	Metric Unit	Metric Measure	U.S. Unit
2.47 acres	1 hectare	0.4047 hectares	1 acre
3.28 feet	1 meter	0.3048 meters	1 foot
0.62 miles	1 kilometer	1.609 kilometer	1 mile
0.032 ounces (troy)	1 gram	31.103 grams	1 ounce (troy)
1.102 tons	1 tonne	0.907 tonne	1 ton

No matters were submitted to a vote of security holders in the fourth quarter of 2001.

ITEM 5: MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

Our company's Ordinary Shares are listed on the American Stock Exchange under the symbol "SIL." Our warrants are listed on the American Stock Exchange under the symbol "SIL.WS", and began trading on February 25, 2000. As of March 20, 2002, we had approximately 139 shareholders of record and an estimated 4,100 additional beneficial holders whose Ordinary Shares were held in street name by brokerage houses.

Our company has never paid any dividends on its Ordinary Shares and expects for the foreseeable future to retain all of its earnings from operations for use in expanding and developing its business. Any future decision as to the payment of dividends will be at the discretion of our board of directors and will depend upon our earnings, receipt of dividends from our subsidiaries, financial position, capital requirements, plans for expansion and such other factors as our board of directors deems relevant.

The following table sets forth the high and the low sale prices per share of our Ordinary Shares for the periods indicated. The closing price of the Ordinary Shares on March 20, 2002 was $12.48.

	Ordinary Shares
	2001				2000
Period	2001				2000
Period	High		Low		High		Low
1st Quarter	$	10.60	$	7.35	$	12.13	$	8.75
2nd Quarter	$	11.49	$	7.20	$	12.94	$	8.30
3rd Quarter	$	11.38	$	8.65	$	11.25	$	8.75
4th Quarter	$	10.10	$	8.42	$	10.63	$	8.06

The selected consolidated financial data of our company for the years ended December 31, 2001, 2000, 1999, 1998 and 1997, and the period from December 22, 1994 (inception) through December 31, 2001, are derived from our audited consolidated financial statements. 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.

ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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, Mexico and Central America. We currently focus our resources primarily on the development and financing of our San Cristobal project in Bolivia. At present, none of our properties are in production and, consequently, we have no current operating income or cash flow.

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.

Interest and Other Income. Our company does not yet produce silver or any other mineral products and has no revenues from product sales. Our primary source of income is interest income. Our policy is to invest all excess cash in liquid, high credit quality, short-term financial instruments. Our interest and other income for the year ended December 31, 2001 was $2.2 million compared to $5.2 million and $1.0 million for the years ended December 31, 2000 and 1999, respectively. The 2001 decrease in interest and other income compared to 2000 is primarily the result of lower average cash balances and lower interest rates during 2001. The increase in our interest and other income for 2000 compared to 1999 was due to higher average cash balances during 2000 as the result of the net proceeds of our November 1999 offering of ordinary shares and warrants.

Trading Gains and Losses. Our company currently engages in limited metals trading activities utilizing puts and calls and other trading instruments in anticipation of potential lender requirements for the San Cristobal project financing. We measured the fair value of open positions at each reporting date during 2001, recording the difference in the carrying value to current earnings, in accordance with Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities ("FAS 133"), which we adopted January 1, 2001. Adoption of FAS 133 had no effect on our results of operations or financial position as previously we had marked open positions to market and included gains or losses in earnings. We recorded a trading loss for the year ended 2001 of approximately $1.0 million compared to trading gains of approximately $0.4 million and $0.1 million for 2000 and 1999, respectively. The 2001 $1.0 million loss as compared to the $0.4 million gain in 2000 is primarily the result of marking our long position in zinc, and to a lesser extent, silver to market. The 2000 trading gain increase to $0.4 million from $0.1 million in 1999 is primarily the result of the increased size of the program in 2000. Inception to date, we have recorded a loss of approximately $0.4 million related to the trading program. Of that amount, approximately $0.1 million represents cash losses and the remaining $0.3 million represents unrealized losses at December 31, 2001. Under FAS 133, fair value measurements may vary substantially from period to period based on spot prices, forward prices and quoted option volatilities.

Exploration. Our company expenses mineral exploration expenditures on each property as incurred 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, 2001, we have expensed all acquisition and exploration costs as incurred. 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, including property holding costs and allocated administrative expenses, were $3.7 million, including the $0.9 million value of shares issued to acquire mineral rights, for the year ended December 31, 2001, compared to $4.4 million and $6.0 million for the years ended December 31, 2000 and 1999, respectively. The decreases in our exploration expenses for these periods are due primarily to the reduced emphasis on exploration as we concentrated our resources on the development of the San Cristobal Project.

Administrative. Our administrative expenses were $5.4 million for the year ended December 31, 2001 compared to $8.4 million and $2.8 million for the years ended December 31, 2000 and 1999, respectively. The decrease in our administrative expenses for 2001 compared to 2000 is primarily the result of cost savings associated with the reduction of personnel and office facilities as part of our cash conserving policy. In addition, the 2001 expenses include the $0.5 million value of stock and options issued to consultants in lieu of cash. The increase in our administrative expenses in 2000 as compared to 1999 is primarily due to costs and fees directly related to our project financing activities.

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 do not conduct or expect to conduct business that generates U.S. taxable income. The Cayman Islands currently impose no corporate taxation. Our company has been granted exemption until January 16, 2015 from any form of corporate taxation that may subsequently be adopted in the Cayman Islands. Deferred tax assets of approximately $34 million at December 31, 2001, resulting from operating loss carryforwards of our company's subsidiaries, have been entirely offset by valuation allowances.

As of December 31, 2001, our company had cash and cash equivalents of $41.5 million compared to $61.1 million at December 31, 2000. The decrease in our cash and cash equivalents during 2001 is due to the investment of $12.7 million in property, plant and equipment related to the development of San Cristobal. We also used cash of $6.7 million for operations, which is net of interest and other income and is primarily related to administration and exploration, and we made payments of $0.5 million on outstanding notes. These cash uses were partially offset by $0.3 million in proceeds from the exercise of stock options.

Our company has a universal shelf registration statement filed with the Securities and Exchange Commission that became effective September 8, 2000. The universal shelf registration statement allows us to raise up to $200 million by selling any combination of equity or debt securities listed in the statement. Proceeds from offerings under the shelf registration, if any, may be used to construct and develop San Cristobal, continue exploring our other properties, maintain control or ownership of our properties and acquire additional mining related properties or businesses, and for general corporate purposes. At December 31, 2001 a total of 203,011 ordinary shares valued at $2.1 million had been issued under the shelf registration statement to pay $0.8 million under a note, to purchase mineral rights for $0.9 million and to pay $0.4 million in consulting fees.

The major pre-financing expenditures related to San Cristobal were completed during 2001. Unless there is an improvement in the metals and capital markets in 2002, we expect to limit project spending during the year to approximately $2 million for completion of our transportation, port and power arrangements and payment of holding and permitting costs. In addition, in order to maintain our current portfolio of mineral properties, we expect to make lease, patent and option payments during the next twelve months of about $1 million. There also may be some discretionary spending on attractive new exploration opportunities should they arise. Total administrative expenses are not expected to exceed $6 million during 2002, net of interest and other income. Our company could maintain its current properties and retain key personnel while significantly reducing its expenditures

should we deem it strategically desirable to do so. We plan to fund our project and operating expenditures from our existing cash balances or, as in 2001, we may issue limited amounts of stock.

We will be required to raise significant additional debt and equity financing from outside sources to complete development of the San Cristobal Project. Based on estimated revisions made during 2000 to the September 1999 feasibility study for the San Cristobal Project, which assumes contract mining, we forecast capital costs for construction to total approximately $435 million net of approximately $60 million in expected tax credits, including approximately $25 million which will be recovered against our company's future Bolivian income taxes after commencement of production. We have spent approximately $31 million on construction costs through December 31, 2001 and have expended over $81 million in total project capital to date. When and if metals markets improve, our company expects to complete detailed engineering and incorporate into our feasibility study any changes deriving from our ultimate infrastructure arrangements, which may result in increases to our forecasted construction capital and working capital requirements. We continue to work with our co-lead arrangers for project financing, Barclays Capital and Deutsche Bank Securities Inc., as well as several multilateral funding agencies, to develop multilateral financing options for San Cristobal as part of a total financing package that may incorporate support from other official agencies as well as debt financing from banks and the use of capital markets. There can be no assurance that metals or capital markets will improve or that we will be able to obtain the required financing on terms that we find attractive, or at all.

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.

Currently, our major principal cash balances are held in U.S. dollars. We maintain minimum cash balances in foreign currencies and therefore have a relative low exposure to currency fluctuations. Because we conduct our activities in several foreign countries, we may in the future engage in hedging activities to minimize the risk of exposure to currency and interest rate fluctuations.

To complete the project financing for San Cristobal, our company expects to be required to hedge a portion of its planned production. In addition, when San Cristobal enters production, we may sell forward a portion of our production and use price hedging techniques to mitigate some of the risks associated with fluctuating metals prices. Our company currently engages in limited metals trading activities, utilizing puts and calls and other market instruments in anticipation of potential lender requirements for the San Cristobal project financing. See "Results of Operations."

The consolidated financial statements and supplementary information filed as part of this Item 8 are listed under Part IV, Item 14, "Exhibits, Financial Statement Schedules and Reports on Form 8-K" and contained in this Form 10-K at page F-1.

ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

ITEM 10: DIRECTORS OF THE REGISTRANT AND CERTAIN EXECUTIVE OFFICERS OF APEX CORPORATION

Information regarding directors of Apex Limited and certain executive officers of Apex Corporation is incorporated by reference to the section entitled "Election of Directors" in our definitive proxy statement to be filed with the Securities and Exchange Commission pursuant to Regulation 14A in connection with the 2002 annual meeting of shareholders (the "Proxy Statement").

Reference is made to the information set forth under the caption "Executive Compensation and Other Information" in our proxy statement, which information (except for the report of the board of directors on executive compensation and the performance graph) is incorporated by reference in this report on Form 10- K.

Reference is made to the information set forth under the caption "Security Ownership of Principal Shareholders and Management" in our proxy statement, which information is incorporated by reference in this report on Form 10-K.

Reference is made to the information contained under the caption "Certain Transactions" contained in our proxy statement, which information is incorporated by reference in this report on Form 10-K.

Exhibit Number		Description of Exhibits
3.1		Amended and restated Memorandum of Association of the Company.(1)
3.2		Amended and restated Articles of Association of the Company.(1)
4.1		Specimen of certificates representing the Company's Ordinary Shares, par value U.S. $0.01 each.(2)
4.2		Form of Warrant Certificate.(3)
4.3		Form of Warrant Agreement dated November 5, 1999.(4)
10.1		Summary of the Company's 401(k) Plan.(2)
10.2		Management Services Agreement among the Company and its subsidiaries.(2)
10.3		Non-Employee Directors' Share Plan, as amended.(1)
10.4		Employees' Share Option Plan.(1)
10.5		Form of Option Grant to Non-Employee Directors dated April 10, 1997.(5)
10.6		Employment contract between the Company and Marcel F. DeGuire, dated July 23, 1996.(2)
10.7		Employment contract between the Company and Mark A. Lettes, dated May 19, 1998.(1)
10.8		Employment contract between the Company and Keith R. Hulley, dated August 4, 1996.(2)
10.9		English translation of Deed of Lease and Purchase Option Contract between Monica de Prudencio and Mineria Tecnia Consultores Asociados, S.A. ("Mintec"), dated November 7, 1994, regarding the Tesorera concession, with an attached note from Keith Hulley, a director of the Company, as required by Rule 306 of Regulation S-T.(2)
10.10		English translation of Assignment Agreement between ASC Bolivia LDC and Mintec regarding the rights to the above agreement, with an attached note from Keith Hulley, a director of the Company, as required by Rule 306 of Regulation S-T.(2)
10.11		English translation of the Lease and Purchase Option Contract between Empresa Minera Yana Mallcu S.A. and Mintec, dated February 7, 1996, regarding the Toldos concession, with an attached note from Keith Hulley, a director of the Company, as required by Rule 306 of Regulation S-T.(2)
10.12		English translation of the Assignment of Lease and Purchase Option Agreement among Banco Industrial S.A., Mintec and ASC Bolivia LDC, with an attached note from Keith Hulley, a director of the Company, as required by Rule 306 of Regulation S-T.(2)

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 27, 2002 on its behalf by the undersigned, thereunto duly authorized.

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed by the following persons on behalf of the Registrant, in the capacities and on the dates indicated.

		Page
Report of Management		F-2
Report of Independent Accountants		F-2
Consolidated Balance Sheets at December 31, 2001 and 2000		F-3
Consolidated Statements of Operations for the years ended December 31, 2001, 2000 and 1999 and for the period from December 22, 1994 (inception) through December 31, 2001		F-4
Consolidated Statements of Changes in Shareholders' Equity for the years ended December 31, 2001, 2000 and 1999 and for the period from December 22, 1994 (inception) through December 31, 2001		F-5
Consolidated Statements of Cash Flows for the years ended December 31, 2001, 2000 and 1999 and for the period from December 22, 1994 (inception) through December 31, 2001		F-6
Notes to the Consolidated Financial Statements		F-7

Management is responsible for the preparation of the accompanying consolidated financial statements and for other financial and operating information appearing in the annual report. It believes that its accounting systems and internal accounting controls, together with other controls, provide assurance that all accounts and records are maintained by qualified personnel in requisite detail, and accurately and fairly reflect transactions of Apex Silver Mines Limited and its subsidiaries in accordance with established policies and procedures.

The Board of Directors has an Audit Committee, all of whose members are neither officers nor employees of the Company or its affiliates. The Audit Committee recommends independent public accountants to act as auditors for the Company for consideration by the Board of Directors; reviews the Company's financial statements; confers with the independent accountants with respect to the scope and results of their audit of the Company's financial statements and their reports thereon; reviews the Company's accounting policies, tax matters and internal controls; and oversees compliance by the Company with the requirements of federal regulatory agencies. Access to the Audit Committee is given to the Company's financial and accounting officers and independent accountants.

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, of changes in shareholders' equity and of cash flows present fairly, in all material respects, the financial position of Apex Silver Mines Limited (successor to Apex Silver Mines LDC) and its subsidiaries at December 31, 2001 and 2000, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2001 and the period from December 22, 1994 (inception) through December 31, 2001, in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

APEX SILVER MINES LIMITED

An Exploration and Development Stage Company

CONSOLIDATED BALANCE SHEETS

(Expressed in United States dollars)

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

APEX SILVER MINES LIMITED

An Exploration and Development Stage Company

CONSOLIDATED STATEMENTS OF OPERATIONS

(Expressed in United States dollars)

APEX SILVER MINES LIMITED

An Exploration and Development Stage Company

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

(Expressed in United States dollars)

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

APEX SILVER MINES LIMITED

An Exploration and Development Stage Company

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Expressed in United States dollars)

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

APEX SILVER MINES LIMITED

An Exploration and Development Stage Company

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in United States dollars)

1. Incorporation, Recapitalization, Initial Public Offering, Subsequent Offerings, Ownership and Operations

a. Apex Silver Mines Limited ("Apex Limited" or the "Company") was formed under the laws of the Cayman Islands in March 1996 for the sole purpose of serving as a holding company for certain ownership interests in Apex Silver Mines LDC ("Apex LDC"). On April 15, 1996, holders of approximately 55% of the then outstanding shares of Apex LDC elected to participate, effective as of the completion of a proposed private placement of shares of Apex Limited which was completed as of August 6, 1996, in a recapitalization effected by an exchange, on a one-for-one basis, of their shares in Apex LDC for identical equity instruments of Apex Limited (the "Recapitalization"). The balance of shareholders retained a direct ownership interest in Apex LDC. As a result of this recapitalization, Apex LDC became a majority-owned subsidiary of Apex Limited. The accompanying financial statements reflect the historical accounts of the Company's predecessor, Apex LDC. For purposes of the accompanying consolidated financial statements of Apex Limited, the recapitalization has been given retroactive effect to the date of incorporation of Apex LDC, with the results of operations and equity attributable to the other ownership interests in Apex LDC being reflected in "minority interest in consolidated subsidiary". Consequently, for purposes of these financial statements, Apex Limited is considered the successor to Apex LDC.

b. In August 1996, Apex Limited issued 4,256,700 Ordinary Shares at $8 per share in a private placement transaction (the "Private Placement") for net proceeds of approximately $32.4 million. These proceeds were contributed to Apex LDC in exchange for the issuance by Apex LDC of 4,256,700 shares of its share capital. As a result of this Private Placement, the Company's ownership interest in Apex LDC was increased from approximately 55% to 65%.

c. On December 1, 1997, the Company closed its initial public offering (the "Offering") of Ordinary Shares. The Company sold 5,000,000 Ordinary Shares at a price of $11 per share on the American Stock Exchange under the symbol "SIL". In addition, on December 23, 1997, the underwriters exercised an option to purchase an additional 523,372 Ordinary Shares at the initial price of $11 per share. Net proceeds raised in the Offering were approximately $54.8 million. These proceeds were contributed to Apex LDC in exchange for the issuance by Apex LDC of 5,523,372 shares of its capital.

d. In conjunction with the Recapitalization and the Private Placement, Apex Limited and the shareholders of Apex LDC entered into a Buy-Sell Agreement which was intended to maintain the same beneficial interest in Apex LDC attributable to all shareholders of Apex LDC prior to the Recapitalization and Private Placement. During 1998, Pursuant to the terms of the Buy-Sell Agreement, Apex Limited exchanged 7,079,006 of its Ordinary Shares for an equal number of Apex LDC shares. Such shares are included in the 34,802,397 Apex Limited Ordinary Shares outstanding at December 31, 2001. At December 31, 2001, Apex Limited owned 100 percent of Apex LDC. Per the provisions of the Buy-Sell Agreement, all of the outstanding shares of Apex LDC are considered Ordinary Shares outstanding for the purposes of computing net loss per Ordinary Share for the periods presented.

e. In November 1999, pursuant to a shelf registration statement filed with the Securities and Exchange Commission, the Company 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, priced at $12.00 per unit, were comprised of one Ordinary Share and a warrant which is exercisable for 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.

f. The Company's principal activities are the exploration and development of mineral properties. The Company participates in the acquisition and exploration of mineral properties for possible future development directly and indirectly through its subsidiaries.

g. The Company, through indirect subsidiaries, is active in Mexico, Central America and South America and currently holds interests in, or is the beneficial owner of, non-producing silver resource properties in Bolivia, Mexico, Peru and El Salvador. The Company is in the process of developing its San Cristobal property and evaluating certain of its other properties to determine the economic feasibility of bringing one or more of the properties into production.

These consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates. The policies adopted, considered by management to be significant, are summarized as follows:

These consolidated financial statements include the accounts of the Company and its majority-owned subsidiaries. Investments in unincorporated joint ventures are proportionately consolidated.

Substantially all expenditures are made in United States dollars. Accordingly, the Company uses the United States dollar as its functional currency.

The Company considers all highly-liquid investments with a maturity of three months or less when purchased to be cash equivalents. Short-term investments include certificates of deposit with maturities greater than three months, but not exceeding twelve months. Short-term investments are recorded at cost which approximates fair value.

The Company expenses general prospecting costs and the costs of acquiring and exploring unevaluated mining properties. When a property is determined to have proven and probable reserves, development costs are capitalized. When proven and probable ore reserves are developed and operations commence, capitalized costs will be amortized using the units-of-production method. Upon abandonment or sale of projects, all capital costs relating to the specific project are written off in the period abandoned or sold and a gain or loss is recognized. Beginning September 1, 1997, all costs associated with the Company's San Cristobal Project have been capitalized. As of December 31, 2001,

capitalized property and development costs related to the San Cristobal Project amounted to $85,676,630. No other amounts related to mineral properties have been capitalized.

Mineral properties include costs to acquire development properties and property development costs. Mineral properties brought into production will be charged to operations using the units-of-production method based on estimated recoverable proven and probable reserves. Buildings are stated at cost and are depreciated using the straight—line method, over useful lives of thirty to forty years. Mining equipment and machinery are stated at cost and are depreciated using the straight-line method over useful lives of three to eight years. Other furniture and equipment are stated at cost and are depreciated using the straight-line method over estimated useful lives of three to five years.

The Company evaluates its long-lived assets for impairment when events or changes in circumstances indicate that the related carrying amount may not be recoverable. If the sum of estimated future net cash flows on an undiscounted basis is less than the carrying amount of the related asset, an asset impairment is considered to exist. The related impairment loss is measured by comparing estimated future net cash flows on a discounted basis to the carrying amount of the asset. Changes in significant assumptions underlying future cash flow estimates may have a material effect on the Company's financial position and results of operations. To date no such impairments have been identified.

As permitted under Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation ("FAS 123"), the Company has elected to measure compensation expense as prescribed by Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees. Under that method, the difference between the exercise price and the estimated fair value of the shares at the date of grant is charged to compensation expense ratably over the vesting period.

Basic earnings per share excludes dilution and is computed by dividing net earnings available to ordinary shareholders by the weighted average number of shares outstanding for the period. Diluted earnings per share reflect the potential dilution that would occur if securities or other contracts to issue Ordinary Shares were exercised or converted into Ordinary Shares.

Outstanding options to purchase 1,895,150, 1,498,128 and 915,817 Ordinary Shares were not included in the computation of diluted earnings per share at December 31, 2001, 2000, and 1999, respectively, because to do so would have been antidilutive.

In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities ("FAS 133"). FAS 133, as amended by Statement of Financial Accounting Standards No. 137, Deferral of the Effective Date of FAS Statement No. 133, became effective for the Company January 1, 2001. FAS 133 requires that all

derivative instruments be recorded on the balance sheet at their fair value. Changes in the fair value of derivatives are recorded each period in current earnings or other comprehensive income, depending on whether a derivative is designated as part of a hedge transaction and, if it is, the type of hedge transaction. For fair-value hedge transactions in which the Company is hedging changes in the fair value of an asset, liability, or firm commitment, changes in the fair value of the derivative instrument will generally be offset by changes in the hedged item's fair value. For cash flow hedge transactions, in which the Company is hedging the variability of cash flows related to a variable-rate asset, liability or forecasted transaction, changes in the fair value of the derivative instrument will be reported in other comprehensive income. The gains and losses on the derivative instrument that are reported in other comprehensive income will be reclassified as earnings in the periods in which earnings are impacted by the variability of cash flows of the hedged item. The ineffective portion of all hedges will be recognized in current-period earnings.

To complete the project financing of San Cristobal, the Company may be required to hedge a portion of its planned production. In addition, when San Cristobal enters production, the Company may sell forward a portion of its production and use price-hedging techniques to mitigate some of the risks associated with fluctuating metals prices. The Company currently engages in limited metals trading activities utilizing puts and calls and other market instruments in anticipation of potential lender requirements for the San Cristobal project financing. The Company measured the fair value of open positions at each reporting date during 2001, recording the difference in the carrying value to current earnings, in accordance with FAS 133. Adoption of FAS 133 had no effect on the Company's results of operations or financial position as previously the Company had marked its open positions to market and included gains or losses in earnings. During 2001, 2000 and 1999, the Company recorded mark to market gains (losses) of approximately ($972,000), $457,000 and $86,000, respectively. Inception to date the Company has recorded a loss of approximately $441,000 related to the trading program. Of that amount, approximately $105,000 represents a cash loss and the remaining $336,000 represents unrealized losses in value at December 31, 2001. Under FAS 133, fair value measurements may vary substantially from period to period based on spot prices, forward prices and quoted option volatilities.

Certain prior year balances have been reclassified to conform to the classifications being presented at December 31, 2001.

The provision for income taxes includes United States federal, state and foreign income taxes currently payable and deferred based on currently enacted tax laws. Deferred income taxes are provided for the tax consequences of differences between the financial statement and tax bases of assets and liabilities. A valuation allowance is recognized if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax asset may not be realized.

There is currently no taxation imposed by the Cayman Islands. If any form of taxation were to be enacted, the Company has been granted exemption therefrom to January 16, 2015. The Company's subsidiaries which do business in other countries have not generated income and therefore are not liable for local income taxes.

As of December 31, 2001 and 2000, operating loss carryforwards generated by ASC Bolivia amounted to approximately $17.3 and $16.6 million, respectively. Operating losses (as adjusted for inflation) may be carried forward and deducted from taxable income indefinitely. The deferred tax asset resulting from the operating loss carryforwards has been entirely offset by a valuation allowance.

As of December 31, 2001 and 2000, operating loss carryforwards generated by the Company's subsidiaries other than ASC Bolivia amounted to approximately $17.0 and $15.2 million, respectively. The deferred tax assets resulting from these operating loss carryforwards have been entirely offset by valuation allowances.

The Company has recorded value added tax ("VAT") paid in Bolivia and Mexico as recoverable assets. Bolivian 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 intends to develop. The VAT paid in Mexico is related to exploration activities and according to Mexican law is recoverable upon application to the tax authorities. Although the Company has filed applications to recover all VAT paid through the third quarter of 2001, the Mexican tax authorities have not refunded any VAT to the Company since early 2000. The Company has been informed that the Mexican tax authorities, for their own fiscal reasons, have made no VAT refunds to any companies since early 2000. Based on these circumstances, the Company recorded a 50% impairment of the recoverable VAT in Mexico, although it remains the Company's intent to recover the full amount. At December 31, 2001, the recoverable VAT recorded for Bolivia and Mexico is $4,881,137 and $190,000, respectively, after the impairment.

Because of the uncertainty of the recoverability of VAT paid in Peru, VAT costs incurred in Peru are charged to expense as incurred.

	December 31, 2001			December 31, 2000
Mineral properties (San Cristobal)	$	85,676,630		$	72,819,859
Buildings		1,408,242			1,166,868
Mining equipment and machinery		3,049,941			3,317,827
Other furniture and equipment		845,268			805,289

		90,980,081			78,109,843
Less: Accumulated depreciation		(1,269,851	)		(758,338	)

	$	89,710,230		$	77,351,505

Depreciation expense for the periods ended December 31, 2001, 2000 and 1999 totaled $126,661, $235,749 and $232,987, respectively. For the periods ended December 31, 2001, 2000 and 1999, depreciation associated with the San Cristobal Project was capitalized in the amounts of $384,852, $195,505 and $168,461, respectively.

		December 31, 2001			December 31, 2000
San Cristobal Area Properties		$	643,657		$	1,847,369
San Cristobal Foundation			1,499,458			1,752,739

	Sub-total		2,143,115			3,600,108
Less: Current Portion			(512,915	)		(1,703,712	)

		$	1,630,200		$	1,896,396

In 1996, 1997 and 1998, the Company exercised options to purchase the Toldos and other properties in the San Cristobal area. The following outstanding notes payable were recorded on the Company's books:

The Company has established a plan to issue share options and other awards to be valued by reference to the Company's shares for officers, employees, consultants and agents of the Company and its subsidiaries (the "Plan"). Under the Plan, the total number of options and other awards outstanding at any time cannot exceed ten percent of the Company's share capital. Options granted and other awards under the Plan are non-assignable. Options exist for a term, not to exceed ten years, as fixed by the Compensation Committee of the Board of Directors of the Company. Options typically vest ratably over periods of up to four years with the first tranche vesting on the date of grant or the anniversary of the date of grant. Unexercised options expire ten years after the date of grant.

The Company has established a share option plan for its non-employee directors (the "Director Plan"). Under the Director Plan, the total number of options outstanding at any one time cannot exceed five percent of the Company's share capital. Pursuant to the Director Plan non-employee directors receive (i) at the effective date of their initial election to the Company's Board of Directors, an option to purchase the number of Ordinary Shares equal to $50,000 divided by the closing price of the Ordinary Shares on the American Stock Exchange (the "AMEX") on such date, (ii) at the close of business of each annual meeting of the Company's shareholders, an option to purchase the number of Ordinary Shares equal to $50,000 divided by the closing price of the Ordinary Shares on the AMEX on such date, and (iii) at the close of business of each meeting of the Company's Board of Directors, an option valued at $3,000 calculated using the Black-Scholes option-pricing model to purchase Ordinary Shares with an exercise price equal to that of the closing price of the Ordinary Shares on the AMEX on such date. Options granted to a non-employee director vest on the date of the grant and expire 10 years after the date of the grant or one year after the date that such non-employee director ceases to be a director of the Company. Options granted under the Director Plan are transferable only in limited circumstances.

A summary of the Company's stock options at December 31, 2001, 2000 and 1999 and changes during those years is presented in the following table:

Options granted during 2001, 2000 and 1999 ranged in exercise price from $7.44 to $10.32, $9.13 to $11.63 and $7.94 to $14.88, respectively.

Pro forma information regarding net income is required by FAS 123, and has been determined as if the Company has accounted for its stock options under the fair value method of FAS 123. For purposes of calculating the fair value of options, volatility for the three years presented is based on the historical volatility of the Company's stock over its public trading life. 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:

	Year ended December 31, 2001	Year ended December 31, 2000	Year ended December 31, 1999
Weighted average risk-free interest rate	4.08%	6.21%	5.64%
Volatility	40.60%	40.50%	42.10%
Expected dividend yield	—	—	—
Weighted average expected life (in years)	2.88	2.83	2.73

For the purposes of pro forma disclosures, the estimated fair value of the options is amortized to expense over the options' vesting period. The Company's pro forma information follows:

			Year ended December 31, 2000		Year ended December 31, 1999
As reported
	Net loss	$	(8,085,932	)	$	(7,400,529	)	$	(7,979,032	)
	Net loss per Ordinary Share		(.23	)		(.21	)		(.29	)
Pro forma
	Net loss	$	(8,974,413	)	$	(8,837,116	)	$	(8,509,350	)
	Net loss per Ordinary Share		(.26	)		(.26	)		(.31	)

In addition, on December 13, 2001, December 13, 2000 and December 14, 1999, the Company issued, net of forfeitures, 73,638, 15,361 and 15,542, respectively, of its Ordinary Shares to employees as performance bonuses. For 2001, 100% of the bonus was paid in shares while 25% of the bonus was paid in shares for 2000 and 1999.

Apex LDC engaged Tigris Financial Group Ltd. to provide management advisory services to Apex LDC and its subsidiaries. Tigris is wholly owned by Mr. Thomas S. Kaplan, a director and officer of Apex LDC and a director and shareholder of the Company. The consulting arrangement with Tigris was terminated at the end of 1999. During the year ended December 31, 1999, fees and reimbursed expenses paid to Tigris for such services amounted to $20,495.

The Company has lease commitments associated with the corporate headquarters office space as follows:

		2002		2003		2004		2005		2006
Corporate headquarters office lease		$	156,011		$	207,694		$	211,205		$	214,715		$	181,367

Payments associated with this lease were recorded to rent expense by the Company in the amounts of $145,666, $203,759 and $146,714 for the years ended December 31, 2001, 2000 and 1999, respectively.

The Company had outstanding letters of credit totaling $610,000 and $369,000 at December 31, 2001 and 2000, respectively. The letters of credit are associated with the port and power facilities for

the San Cristobal Project and assure the contractors of the reimbursement of their out-of-pocket costs should the Company terminate the letter of intent and not utilize their services.

The Company's financial instruments consist of cash and cash equivalents, receivables, value added tax recoverable, accounts payable, other current liabilities and long-term debt. Except for the value added tax and long-term debt, the carrying amounts of these financial instruments approximate fair value due to their short maturities. The estimated fair values of the Company's long-term financial instruments, as measured on December 31, 2001 and 2000, are as follows:

	2001		2000
	Carrying Amount		Fair Value		Fair Value	Carrying Amount
Value added tax recoverable	$	5,071,137		$	3,685,728	$	5,024,021	$	4,283,122
Notes payable		1,630,200			1,276,100		1,896,396		1,532,900

The fair values of the value added tax recoverable and the long-term debt are estimated based on the expected timing of future cash flows.

In 1998, the Company adopted Statement of Financial Accounting Standards No. 131, Disclosure about Segments of an Enterprise and Related Information. The Company's sole activity is exploration for and development of silver properties and, consequently, the Company has only one operating segment—mining.

The following table summarizes the Company's quarterly results of operations for the years ended December 31, 2001 and 2000:

	Proven and Probable Reserves—San Cristobal Project
		Average Grade			Contained Metals (1)
	Tonnes of ore (000s)	Silver Grade (oz./tonne)	Zinc Grade (%)	Lead Grade (%)	Silver Ounces (000s)	Zinc Tonnes (000s)	Lead Tonnes (000s)
Sulfide Ore	230,700	1.90	1.73	0.58	430,300	3,990	1,338
Oxide Ore	9,600	4.20	0.10	0.61	39,700	10	58

																	For the period December 22, 1994 Inception Through December 31, 2001
		Year ended December 31,
		2001			2000			1999			1998			1997
		(amounts in thousands, except per share amounts)
Statement of Operations:
Income and expenses
	Interest and other income	$	2,158		$	5,206		$	1,028		$	2,456		$	962		$	12,850
	Trading gains (losses)		(972	)		457			86			(12	)		—			(441	)
	Exploration		(3,742	)		(4,441	)		(6,014	)		(9,966	)		(13,358	)		(56,350	)
	Administrative		(5,403	)		(8,387	)		(2,846	)		(3,339	)		(2,440	)		(22,868	)
	Amortization and depreciation		(127	)		(236	)		(233	)		(169	)		(149	)		(1,028	)

Loss before minority interest			(8,086	)		(7,401	)		(7,979	)		(11,030	)		(14,985	)		(67,837	)
Minority interest in loss of consolidated subsidiary			—			—			—			—			—			4,559

Net loss for the period		$	(8,086	)	$	(7,401	)	$	(7,979	)	$	(11,030	)	$	(14,985	)	$	(63,278	)

Net loss per Ordinary Share — Basic and diluted		$	(0.23	)	$	(0.21	)	$	(0.29	)	$	(0.42	)	$	(0.72	)	$	(2.49	)

Weighted average Ordinary Shares outstanding			34,634			34,473			27,601			26,212			20,930			25,423

Cash Flow Data:
Net cash provided by (used in) financing activities		$	(148	)	$	(439	)	$	94,073		$	(267	)	$	55,008		$	190,612
Net cash used in operating activities			(6,677	)		(7,243	)		(8,289	)		(11,463	)		(17,990	)		(67,574	)
Net cash used in investing activities			(12,742	)		(27,511	)		(15,705	)		(19,086	)		(5,934	)		(81,502	)

		$	(19,567	)	$	(35,193	)	$	70,079		$	(30,816	)	$	31,084		$	41,536

Balance Sheet Data:
Total assets		$	136,735		$	144,054		$	151,077		$	62,347		$	73,329
Long term liabilities			1,630			1,896			3,137			1,967			3,094
Shareholders' equity			133,103			137,896			144,828			58,397			69,229

10.13		English translation of the Purchase Option Agreement between Mintec and Litoral Mining Cooperative Ltd., dated August 17, 1995, regarding the Animas concession, with an attached note from Keith Hulley, a director of the Company, as required by Rule 306 of Regulation S-T.(2)
10.14		English translation of the Assignment and Assumption Agreement between Mintec and ASC Bolivia LDC, dated May 22, 1996, regarding the Animas concession, with an attached note from Keith Hulley, a director of the Company, as required by Rule 306 of Regulation S-T.(2)
10.15		English translation of the Purchase Agreement between ASC Bolivia LDC and Litoral Mining Cooperative Ltd., regarding the Animas concessions with an attached note from Keith Hulley, a director of the Company, as required by Rule 306 of Regulation S-T.(2)
10.16		English translation of the Joint Venture Agreement between Corporacion Minera Boliviano S.A. ("Comibol") and ASC Bolivia LDC, regarding the Cobrizos Concession, with an attached note from Keith Hulley, a director of the Company, as required by Rule 306 of Regulation S-T.(2)
10.17		English translation of the Joint Venture Agreement between Comibol and ASC Bolivia LDC regarding the Choroma Concession, with an attached note from Keith Hulley, a director of the Company, as required by Rule 306 of Regulation S-T.(2)
10.18		Board Designation Agreement, dated October 28, 1997, by and between the Company and Silver Holdings.(2)
10.19		Registration Rights and Voting Agreement, dated October 28, 1997, by and among the Company, Silver Holdings, Consolidated, Argentum, Aurum LLC and Thomas S. Kaplan.(2)
10.20		Amended and Restated Voting Trust Agreement, dated October 29, 1997, between Thomas Kaplan and Consolidated.(2)
10.21		Amended and Restated Voting Trust Agreement, dated October 29, 1997, between Thomas Kaplan and Argentum LLC.(2)
10.22		English translation of the Purchase Agreement between Monica de Prundencio and ASC Bolivia, regarding the Tesorera and Jayula concessions, dated September 3, 1997, with an attached note from Keith Hulley as required by Rule 306 of Regulation S-T.(2)
10.23		Form of Change of Control Agreement dated June 26, 2000.(6)
21		List of Subsidiaries.
23		Consent of Independent Accountants.

			December 31, 2001			December 31, 2000
Assets
Current assets
	Cash and cash equivalents		$	41,536,181		$	61,103,263
	Accrued interest receivable			79,045			214,259
	Prepaid expenses and other assets			167,463			227,764

		Current assets		41,782,689			61,545,286
	Property, plant and equipment (net)			89,710,230			77,351,505
	Value added tax recoverable (net)			5,071,137			5,024,021
	Other			170,709			132,739

		Total assets	$	136,734,765		$	144,053,551

Liabilities and Shareholders' Equity
Current liabilities
	Accrued salaries, wages and benefits		$	23,968		$	159,465
	Accounts payable			1,464,906			2,398,064
	Current portion of notes payable			512,915			1,703,712

		Current liabilities		2,001,789			4,261,241
Notes payable				1,630,200			1,896,396
Commitments and contingencies (Note 10)				—			—
Shareholders' equity
	Ordinary Shares, $.01 par value, 75,000,000 shares authorized; 34,802,397 and 34,486,629, shares issued and outstanding, respectively (Note 1e)			348,024			344,866
	Contributed surplus			196,032,436			192,742,800
	Accumulated deficit			(63,277,684	)		(55,191,752	)

		Total shareholders' equity		133,102,776			137,895,914

		Total liabilities and shareholders' equity	$	136,734,765		$	144,053,551

			Year ended December 31, 2001			Year ended December 31, 2000			Year ended December 31, 1999			For the period December 22, 1994 (inception) through December 31, 2001
Income and expenses
	Interest and other income		$	2,157,442		$	5,206,229		$	1,027,419		$	12,850,391
	Trading gains (losses)			(971,669	)		457,279			86,128			(440,921	)
	Exploration			(3,741,927	)		(4,440,931	)		(6,013,535	)		(56,349,567	)
	Administrative			(5,403,117	)		(8,387,357	)		(2,846,057	)		(22,868,548	)
	Amortization and depreciation			(126,661	)		(235,749	)		(232,987	)		(1,027,925	)

Loss before minority interest				(8,085,932	)		(7,400,529	)		(7,979,032	)		(67,836,570	)
Minority interest in loss of consolidated subsidiary				—			—			—			4,558,886

		Net loss for the period	$	(8,085,932	)	$	(7,400,529	)	$	(7,979,032	)	$	(63,277,684	)

Net loss per Ordinary Share—basic and diluted(1)			$	(0.23	)	$	(0.21	)	$	(0.29	)	$	(2.49	)

Weighted average Ordinary Shares outstanding (Notes 1e and 2h)				34,634,026			34,472,548			27,601,362			25,423,092

		APEX SILVER MINES LIMITED Registrant
		By:		/s/ THOMAS S. KAPLAN Thomas S. Kaplan Chairman, Board of Directors

Signature	Title	Date

/s/ THOMAS S. KAPLAN Thomas S. Kaplan	Director	March 27, 2002
/s/ HARRY M. CONGER Harry M. Conger	Director	March 27, 2002
/s/ DAVID SEAN HANNA David Sean Hanna	Director	March 27, 2002
/s/ CHARLES L. HANSARD Charles L. Hansard	Director	March 27, 2002
/s/ OVE HOEGH Ove Hoegh	Director	March 27, 2002
/s/ KEITH R. HULLEY Keith R. Hulley	Director	March 27, 2002
/s/ KEVIN R. MORANO Kevin R. Morano	Director	March 27, 2002

/s/ PAUL SOROS Paul Soros		Director		March 27, 2002
/s/ CHARLES B. SMITH Charles B. Smith		Director		March 27, 2002

Thomas S. Kaplan		Mark A. Lettes
Chairman		Vice President and Chief Financial Officer
Apex Silver Mines Limited		Apex Silver Mines Corporation

	Shares Outstanding	Amount		Contributed Surplus			Accumulated Deficit and Comprehensive Deficit			Total Shareholders' Equity
Issuance of shares upon incorporation, December 22, 1994 ($0.85 per share)	8,822,546	$	88,225	$	5,571,398		$	—		$	5,659,623
Net loss	—		—		—			(213,165	)		(213,165	)

Balance, December 31, 1994	8,822,546		88,225		5,571,398			(213,165	)		5,446,458
Net loss and comprehensive loss	—		—		—			(1,861,185	)		(1,861,185	)

Balance, December 31, 1995	8,822,546		88,225		5,571,398			(2,074,350	)		3,585,273
Issuance of shares in private placement ($8.00 per share)	4,256,700		42,567		32,406,783			—			32,449,350
Net loss and comprehensive loss	—		—		—			(11,723,313	)		(11,723,313	)

Balance, December 31, 1996	13,079,246		130,792		37,978,181			(13,797,663	)		24,311,310
Purchase of minority interest in ASC Bolivia ($11.00 per share)	268,496		2,685		2,950,771			—			2,953,456
Issuance of shares to associates ($11.00 per share)	138,595		1,386		1,523,159			—			1,524,545
Issuance of shares for services ($1.49 per share)	115,207		1,152		231,566			—			232,718
Stock option compensation expense	—		—		416,562			—			416,562
Issuance of shares upon initial public offering ($11.00 per share)	5,523,372		55,234		54,719,730			—			54,774,964
Net loss and comprehensive loss	—		—		—			(14,984,958	)		(14,984,958	)

Balance, December 31, 1997	19,124,916		191,249		97,819,969			(28,782,621	)		69,228,597
Exchange of Apex LDC shares	7,079,006		70,790		(70,790	)		—			—
Stock options exercised ($7.91 per share)	25,001		250		197,473			—			197,723
Stock awards ($8.50 per share)	21,838		218		185,407			—			185,625
Unearned compensation	—		—		(185,625	)		—			(185,625	)
Net loss and comprehensive loss	—		—		—			(11,029,570	)		(11,029,570	)

Balance, December 31, 1998	26,250,761		262,507		97,946,434			(39,812,191	)		58,396,750
Stock options exercised ($8.77 per share)	25,549		256		223,900			—			224,156
Sale of Ordinary Share units ($12.00 per unit)	8,090,132		80,901		94,004,628			—			94,085,529
Commissions paid in stock ($12.00 per share)	84,184		842		(842	)		—			—
Stock awards ($12.06 per share)	15,542		156		187,475			—			187,631
Unearned compensation (net)	—		—		(87,042	)		—			(87,042	)
Net loss and comprehensive loss	—		—		—			(7,979,032	)		(7,979,032	)

Balance, December 31, 1999	34,466,168		344,662		192,274,553			(47,791,223	)		144,827,992
Stock compensation ($10.88 per share)	5,100		51		55,412			—			55,463
Stock awards ($9.13 per share)	15,361		153		140,168			—			140,321
Unearned compensation	—		—		272,667			—			272,667
Net loss and comprehensive loss	—		—		—			(7,400,529	)		(7,400,529	)

Balance, December 31, 2000	34,486,629		344,866		192,742,800			(55,191,752	)		137,895,914
Stock to acquire mineral rights ($9.43 per share)	96,136		961		905,790			—			906,751
Stock options exercised ($10.36 per share)	39,119		391		404,939			—			405,330
Stock issued as note payment ($10.95 per share)	70,875		709		775,373			—			776,082
Stock ($11.04 per share) and options to consultants	36,000		360		525,080			—			525,440
Stock awards (net) ($9.27 per share)	73,638		737		678,454			—			679,191
Net loss and comprehensive loss	—		—		—			(8,085,932	)		(8,085,932	)

Balance, December 31, 2001	34,802,397	$	348,024	$	196,032,436		$	(63,277,684	)	$	133,102,776

			Year ended December 31, 2001			Year ended December 31, 2000			Year ended December 31, 1999			For the period December 22, 1994 (inception) through December 31, 2001
Cash flows from operating activities:
Net cash used in operating activities (Note 9)			$	(6,677,028	)	$	(7,243,649	)	$	(8,288,609	)	$	(67,573,515	)

Cash flows from investing activities:
	Purchase of property, plant and equipment			(12,742,049	)		(27,510,946	)		(15,705,206	)		(81,502,400	)

		Net cash used in investing activities		(12,742,049	)		(27,510,946	)		(15,705,206	)		(81,502,400	)

Cash flows from financing activities:
	Net proceeds from issuance of Ordinary Shares			—			—			94,085,529			191,761,070
	Payment of notes			(474,001	)		(438,719	)		(236,534	)		(1,613,893	)
	Proceeds from exercise of stock options			325,996			—			224,156			747,875
	Deferred organizational and financing costs			—			—			—			(282,956	)

		Net cash provided by (used in) financing activities		(148,005	)		(438,719	)		94,073,151			190,612,096

Net increase (decrease) in cash and cash equivalents				(19,567,082	)		(35,193,314	)		70,079,336			41,536,181
Cash and cash equivalents beginning of period				61,103,263			96,296,577			26,217,241			—

Cash and cash equivalents end of period			$	41,536,181		$	61,103,263		$	96,296,577		$	41,536,181

Supplemental non-cash transactions:
	Acquisition of mining properties for assumption of debt		$	—		$	—		$	260,000
	Capitalized development costs at San Cristobal for which a note payable was issued		$	—		$	—		$	2,000,000
	Acquisition of mineral rights for Ordinary Shares at average of $9.43 per share		$	906,751		$	—		$	—
	Payment of debt with Ordinary Shares at $10.95 per share		$	776,082		$	—		$	—
	Payment of consulting services with Ordinary Shares at $11.04 per share and options		$	525,440		$	—		$	—
	Assets transferred as partial payment of debt		$	206,911		$	—		$	—

	2001				2000			1999
Options	Number of Shares		Average Price Per Share		Number of Shares	Average Price Per Share		Number of Shares		Average Price Per Share
Outstanding at beginning of period	1,498,128		$	9.91	915,817	$	9.98	626,571		$	8.84
Granted during period	571,548		$	9.24	582,311	$	9.79	358,847		$	11.76
Forfeited or expired during period	(135,407	)	$	10.53	—	$	—	(44,052	)	$	8.97
Exercised during period	(39,119	)	$	8.33	—	$	—	(25,549	)	$	8.77

Outstanding at end of period	1,895,150		$	9.69	1,498,128	$	9.91	915,817		$	9.98

Exercisable at end of period	922,720				713,602			563,898
Weighted average of fair value of options granted during period			$	2.27		$	1.76			$	1.36
Weighted average remaining contractual life	7.9 years				8.0 years			8.3 years

			Year ended December 31, 2001			Year ended December 31, 2000			Year ended December 31, 1999			For the period December 22, 1994 (inception) through December 31, 2001
Cash flows from operating activities:
	Net loss		$	(8,085,932	)	$	(7,400,529	)	$	(7,979,032	)	$	(63,277,684	)
	Adjustments to reconcile net loss to net cash used in operating activities:
		Amortization and depreciation		126,661			235,749			232,987			1,027,925
		Minority interest in loss of consolidated subsidiary		—			—			—			(4,558,886	)
		Stock compensation expense		758,524			468,451			100,589			1,744,126
		Shares issued in consideration for services		525,440			—			—			2,049,985
		Shares issued to purchase mineral rights		906,754			—			—			906,754
	Changes in operating assets and liabilities:
		(Increase) decrease in accrued interest receivable		135,214			(153,140	)		65,213			(79,045	)
		(Increase) decrease in prepaid expenses and other assets		60,301			(13,021	)		896,137			(254,205	)
		Increase in value added tax recoverable		(47,116	)		(1,213,561	)		(1,084,657	)		(5,071,137	)
		Increase (decrease) in accrued salaries, wages and benefits		(135,497	)		41,357			(36,692	)		23,968
		Increase (decrease) in accounts payable		(933,158	)		305,587			(520,182	)		(603,083	)
		Other increase (decrease)		11,781			485,458			37,028			517,767

Net cash used in operating activities			$	(6,677,028	)	$	(7,243,649	)	$	(8,288,609	)	$	(67,573,515	)

	First Quarter		Second Quarter		Third Quarter		Fourth Quarter
2001
Net loss for the period	$	1,871,591	$	2,531,516	$	1,780,283	$	1,902,542
Net loss per Ordinary Share—basic and diluted	$	0.05	$	0.07	$	0.05	$	0.05
2000
Net loss for the period	$	723,296	$	1,888,071	$	2,148,069	$	2,641,093
Net loss per Ordinary Share—basic and diluted	$	0.02	$	0.05	$	0.06	$	0.08