Denver-based Apex Silver Mines (AMEX: SIL) is mulling the sale of its 65% interest in the San Cristóbal mine in Bolivia to current JV partner and the 35%-owner of the mine, Japan's Sumitomo, both companies reported in separate statements.
"We are positioning this project as a core business and have concluded that this is a good opportunity to increase value of this project," Sumitomo said.
With the decline in metals prices, among other factors, Apex has lost liquidity and has borrowed increasingly under a line of credit provided by Sumitomo to fund its cash needs at San Cristóbal, Apex said.
For the third quarter Apex posted a loss from operations of US$488mn, which includes a US$163mn gain on metal derivative positions and US$615mn impairment of property, plant and equipment, resulting from "rapidly declining metals prices and continued high operating costs during the third quarter," according to Apex.
Apex said it is mulling strategic and financial alternatives, including a sale of the company, a sale of its interest in San Cristóbal and a filing under chapter 11 of the US bankruptcy code.
QUARTERLY FINANCIAL RESULTS
Apex reported a net loss in Q3 of US$332mn, including the gain on metal derivative positions, the impairment and a write down of inventories of US$34mn due to declining metals prices, compared to a US$178mn profit during the second quarter.
Apex posted Q3 revenues of US$149mn through concentrate sales of 4.69Moz of payable silver, 60,000t payable zinc and 18,000t payable lead. Revenues totaled US$59.7mn on concentrate sales of about 1.6Moz payable silver, 26,500t payable zinc and 5,400t payable lead during the second quarter.
Cash costs in Q3 totaled US$4.26/oz silver and US$0.37/lb zinc. San Cristóbal kicked off commercial production in August 2007.
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