Apex Silver Reports Delay in 2006 Year-End Results.

DENVER -- Apex Silver Mines Limited (AMEX: SIL) today reported a delay in the release of its 2006 year-end results. The company also reported that it has filed for a fifteen-day extension to file its annual report on Form 10-K with the Securities and Exchange Commission. The company has concluded that certain available market information that it did not use in calculating the fair value of its open derivative positions which the company holds as a requirement of its project financing facility, would have been a more reliable indicator of the fair value of those positions. The company will require additional time to finalize the calculation of the fair value of its metals derivative positions utilizing that additional market information. The company has determined that it will be required to restate the quarter ended September 30, 2005, the year ended December 31, 2005, and the first three quarters of 2006 to reflect the corrected fair value of its metals derivative positions and has filed a Form 8-K with the Securities and Exchange Commission reporting its intent to restate these periods.

In addition, the company is currently assessing whether it will be required to reflect as a current liability on its December 31, 2006 balance sheet the outstanding principal and interest under the company's $225 million San Cristobal project finance facility, of which the company has drawn $200 million, and the estimated cost of settlement of the derivative positions required by the project finance facility, due to potential noncompliance with certain covenants of the project finance facility.

The company expects to report a loss for the year ended December 31, 2006 that is significantly greater than the loss reported for the year ended December 31, 2005. The increase in its net loss for the year ended December 31, 2006 is due primarily to the company's share of the non-cash mark-to-market loss, preliminarily estimated at $670 million, related to the open metals derivative positions required by the company's project finance facility as discussed below and an approximate $43 million realized loss on the cash settlement of its discretionary metals derivative positions during the year.

The company also reports significant progress on the development of its San Cristobal project which is now approximately 90% complete. The first sale of concentrates from San Cristobal is expected in the third quarter of 2007. In addition, the company has accelerated the evaluation of many of its more promising exploration properties and the company's board of directors has approved an increase in the exploration budget from $8.5 million in 2006 to $14.5 million for 2007 in the hopes of advancing one or more of its properties toward the development stage.

Fair Value of Derivative Liability

The project finance facility required the company to provide price protection (effectively selling forward) a portion of its planned production from San Cristobal. In 2005, the company entered into silver, zinc and lead derivatives positions including primarily forward sales, but also puts and calls to comply with this requirement. Pursuant to Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("FAS No. 133"), the company records the open derivative positions at their fair value on its balance sheet and records the change in fair value to current earnings at the end of each reporting period.

The company's derivatives mature or expire on various dates over an approximate six-year period commencing in July 2007. Many of the derivatives mature or expire beyond the periods covered by the major commodities price indices such as LME or COMEX, or expire in future periods covered by those indices with respect to which only limited trading activity has occurred. In instances where only limited market activity exists, the company has historically used price projections to estimate a forward price curve provided by an independent third party employing statistical analysis an models to calculate the fair value of its open derivative positions. As silver, zinc and lead prices have continued to increase since the derivatives were entered into, the disparity has increased between the fair values used by the company for its long-dated derivatives and other market information reflected in commodities prices indices and quoted prices from other trading institutions related to long-dated metals derivatives. Inclusion of this available market information to estimate the forward price curve would have resulted in substantially higher fair market values than those used by the company to determine the estimated fair value of its open derivative positions.

After reviewing this information in detail, the company has concluded that the additional market information is a more reliable indicator of fair value than the independent third party price projections previously used, and that the company has understated its derivative liability commencing with the quarter ended September 30, 2005. The company estimates that the cumulative understatement of the derivative liability is approximately $300 million as of September 30, 2006. Additionally, correcting the valuation of the derivatives will impact the gain recognized on the sale of a 35% in the mining subsidiary in the quarter ended September 30, 2006. As a result, the company has concluded that the financial statements for the following periods should no longer be relied on and plans to file amended financial statements for these periods: the quarter ended September 30, 2005, the year ended December 31, 2005 and the first three quarters of 2006. The company has discussed these matters with its independent registered public accountants. The Company is in the process of evaluating the impact this restatement will have on these prior periods' financial statements and while the amounts are not yet known the Company expects that the adjustments to these financial statements will be material. The Company has discussed these matters with its independent registered public accountants. The Company is also evaluating the effect this restatement will have on management's assessment of internal control over financial reporting as of December 31, 2006 which may result in a conclusion that a material weakness existed and that internal control over financial reporting was ineffective as of December 31, 2006. The change in the derivative valuation method will likely result in increased volatility in the company's non-cash earnings during the next three years, the period over which most of the Derivatives mature or expire.

The Company intends that these derivatives will be settled with revenues from San Cristobal mine production over the six year period commencing in July 2007. Therefore, the cash effect of settling these hedges would be realized as lower revenue over that six year period and the ultimate losses or gains from these derivatives would be determined based upon market prices at the time of settlement.

Debt Covenant Compliance

Covenants related to the project finance facility require that the company and certain of its subsidiaries maintain certain security interests, financial ratios after completion, insurance coverage, minimum sales contracts and metals price protection contracts as well as other requirements. At December 31, 2006, the company may have been in violation of certain covenants related to the method and timeliness of the delivery of certain reports, and the additions of certain provisions to the company's local insurance policies. The company believes that these possible covenant violations have been cured, and is in the process of requesting confirmation from its lenders, which the company believes it will obtain, that any covenant violations that may have resulted from these events have been cured and that any possible covenant violations or related defaults resulting from these events have been waived. In addition, the company is analyzing whether the restatement referenced above may require covenant waivers from its lenders. Failure to comply with, to cure failures to comply with, or to obtain waivers of project finance facility covenants within specified time frames could result in a default that would permit acceleration of all obligations pursuant to the project finance facility, including repayment of the outstanding principal amount and settlement of the derivatives. If such a demand were to be successful, the company currently has insufficient cash and investments to pay in full its share of the loan and hedge liability. Additionally, although the company believes it would be able to secure additional financing to satisfy these liabilities or defer payment of these obligations, there can be no assurance that it would be able to do so on acceptable terms or at all. The inability to obtain waivers of potential covenant violations could cause the company to receive an opinion from its independent auditors that would include an explanatory going concern paragraph.

San Cristobal Nearing Start-up

Significant advancement has been made in the development of San Cristobal and the project is now approximately 90% complete with the first sale of concentrates expected in the third quarter of 2007. All of the major mechanical equipment including the flotation circuit, filtration plant and the 10-kilometer tailings line, including piping and booster pumping stations for the 15-kilometer water supply system has been installed. Major components, including the Semi-Autogenous Grinding (SAG) and two ball mill motors have been installed and are undergoing testing procedures. Concentrator construction has shifted to systems completion and is centered on final installation of process piping and electrical instrumentation equipment. Commissioning activities began in the fourth quarter of 2006 with the electrical substation, utilities and the primary crusher and overland conveyor. We have completed construction of a power line from the town of Punutuma to San Cristobal, and we began drawing power from the national power grid during November 2006. The construction of the railroad spur is proceeding on schedule with 95% of the 65 kilometers of roadbed completed and 14 kilometers or 20% of the total spur laid. Construction of the Mejillones port facility is also proceeding on schedule. The railroad spur and port facilities are expected to be completed during the second quarter of 2007.

Mining activities are advancing and as of December 31, 2006, approximately 19 million tonnes of material had been moved including 1 million tonnes of sulfide ore which will be processed through the mill when operations commence, still on schedule for the third quarter of 2007. Two new CAT 789 200-tonne trucks were placed in service late in 2006 and eight more trucks arrived during January and February 2007, with an additional 3 trucks arriving in May. The new haulage equipment will be complemented by two PC 4000 Komatsu shovels and a CAT 994 front-end loader all to arrive over the first 4 months of 2007.

The company recently updated its San Cristobal reserve estimates to reflect the new information about the boundary between oxide and sulfide ore and updated operating costs and metals prices. The updated metals prices represent the three-year average prices for each of the metals through December 2006 as per guidelines established by the SEC. The higher average metals prices used in the revised reserve estimates have contributed to an increase in reserve tonnes and payable metal with a resulting decrease in ore grade. Details of the revised reserves will be published in the company's Form 10-K for December 31, 2006.

Exploration

The company has a portfolio of over 50 property groups in Mexico, Peru, Argentina and Bolivia that it believes contain potential for silver, base metals and gold mineralization or have other significant exploration potential. During 2006 the company increased the rate of evaluation of many of its properties and the company's Board of Directors has approved an increase in the exploration budget from $8.5 million in 2006 to $14.5 million for 2007. The company's focus for 2007 is to drill test its more promising projects to identify which of them may be advanced to a development stage as soon as possible. At year end, five prospects were being drilled and several more are currently undergoing preparatory work so that they may be drilled in early 2007. The company's more promising projects are in Argentina, Mexico and Peru and early results indicate that at least one project in each country will move on to a more advanced stage of exploration. This will involve more drilling and preliminary metallurgical, engineering and environmental work.

Apex Silver is a mining exploration and development company. The Ordinary shares of Apex Silver trade on the American Stock Exchange under the symbol "SIL."

This press release contains forward-looking statements regarding the company, within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act, including statements regarding the San Cristobal project including the commencement of production in the third quarter of 2007, projected timing for equipment delivery, settlement of commodity hedges and capital expenditures. Actual results relating to any and all of these subjects may differ materially from those presented. Factors that could cause results to differ materially include fluctuations in silver, zinc and lead prices, problems or delays in construction and startup, problems in emerging financial markets and changes in government policies with respect to taxes or other political unrest and uncertainty in Bolivia. The company assumes no obligation to update this information. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements can be found in the company's Form 10-K filed with the SEC for the year ended December 31, 2005.