Apex revises San Cristobal reserves

Prompted by new regulatory guidelines, Apex Silver Mines (SIL-X) has updated its reserve estimate for the advanced San Cristobal silver-zinc project in southwestern Bolivia.

Proven and probable reserves now stand at 218.72 million tonnes grading 64.63 grams silver per tonne, compared with 240.27 million tonnes at 60.83 grams as outlined in a 1999 feasibility study. Zinc and lead grades remain unchanged at 1.67% and 0.59%, respectively.

The revision is based on a silver price of US$4.64 per oz., a zinc price of US42 per lb., and a lead price of US21 per lb., thus making it more reflective of current conditions. The feasibility study was based on US$5 per oz. silver, US50 per lb. zinc, and US28 per lb. lead.

The update also comes with new operating-cost projections. Cash costs are now expected to average US$1.34 per oz. silver, net of byproduct lead credits, and US22 per lb. zinc over the first five years of commercial operations, and US$1.95 per oz. silver and US26 per lb. zinc over the life of the mine.

Similarly, the stripping ratio has been changed to 1.53-to-1 from 1.8-to-1.

Apex still envisages building a conventional, 40,000-tonne-per-day, grinding-and-flotation operation at a capital cost of US$435 million. The cost projection is equivalent to one provided with a 2000 project update, but it is 5% higher than the feasibility estimate.

San Cristobal’s annual production forecast for the first five years of commercial operations remains unchanged at 27 million oz. silver in concentrate and 258,780 tonnes zinc in concentrate.

Construction still awaits signs of a recovery in silver and zinc markets. Meanwhile, the company continues to explore elsewhere on the property and on other land holdings in Bolivia, Peru and Mexico.

In the first three months of the year, Apex lost US$1.7 million (or 5 per diluted share), compared with a loss of US$1.1 million (3 per share) in the similar period of 2001. The company spent US$734,000 on exploration, or US$147,000 more than a year earlier.

On March 31, Apex had US$41.9 million in working capital and US$770,000 in long-term debt. Its current assets include US$43.3 million in cash or equivalents.