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The agreement consolidates 14.6 sq. km held by Western and 48 sq. km controlled by Apex. During the first year, the partners will jointly spend US$200,000 on data evaluation, geophysics and drilling. Western will act as project operator.
The most prospective target, El Pirul, is 10 km southeast of the Francisco I Madero sediment-hosted massive sulphide deposit. Dump material around the historic El Pirul shaft returned up to 5.7 grams gold and 2,392 grams silver per tonne, plus 9.53% lead and 17.2% zinc. The area has never been drill-tested.
Another priority, 10 km north of the city of Zacatecas, is Veta Grande, which hosts fragments of massive sulphide breccia on historical mine dumps.
To fund its share of exploration expenses, Apex has issued 11,126 shares to Western. The latter, in turn, will sell these shares to meet its own funding requirements.
In the first quarter of 2002, Apex incurred a loss of US$1 million (or US3 per share), compared with a loss of US$1.9 million (US5 per share) in the corresponding period last year.
Meanwhile, at its San Cristobal silver-zinc project in southwestern Bolivia, Apex spent US$1.5 million on engineering and development costs during the quarter. Total expenditures now stand at US$91.2 million.
The wholly owned project hosts 240 million tonnes grading 62.2 grams silver, 1.67% zinc and 0.58% lead. The main deposit remains open in several directions, as well as at depth, and several other targets have yet to be drilled.
Apex envisions a large-scale, open-pit mine capable of processing 40,000 tonnes per day. During its first five years, the mine is expected to produce 27 million oz. silver and 260,000 tonnes zinc in concentrate annually, as well as lead credits. The average cash operating cost per ounce of silver, net of lead byproduct credits, is projected to be US$1.23; the average cost per pound of zinc, US23. Life-of-mine cash costs are pegged at US$1.83 per oz. silver and US27 per lb. zinc.
At the end of the first quarter, Apex had US$39 million in working capital plus US$40.7 million in cash and cash equivalents.
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