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   GALENA- Source of Lead   

Apex Silver's wholly owned San Cristobal property is considered to be the world's largest primary silver mine development project. It is also one of the largest zinc mining projects in development today.

Apex Silver’s 65%-owned (Sumitomo Corporation - 35%) San Cristobal property is considered to be one of the world’s largest silver-zinc-lead development projects.

San Cristobal is located in the Potosi district of southwestern Bolivia and hosts approximately 470 million ounces of silver and 8 billion pounds of zinc and 3 billion pounds of lead contained in 231 million tonnes of open-pittable proven and probable reserves. As the orebody is open both at depth and laterally, reserve expansion potential is considered excellent.

The San Cristobal deposit occupies the central portion of a depression associated with volcanism. The four-kilometer diameter depression is filled with fine to coarse-grained volcanoclastic sedimentary rocks. Disseminated and stockwork silver-lead-zinc mineralization formed locally both within the volcanoclastic sediments and in the intrusions themselves.

Initially, the two largest areas of mineralization, the Jayula and Tesorera deposits, were drilled separately. Subsequent drilling resulted in a nearly two-fold increase in reserves as it was discovered that the Jayula and Tesotera deposits were one large and continuous deposit, now called the San Cristobal orebody.

The company commenced development and construction of San Cristobal following Board approval received in December 2004. Construction of a power line from the town of Punutuma to San Cristobal has been completed and began drawing power from the national power grid during November 2006. During 2006 began mining ore began at the San Cristobal project and as of December 31, 2006 approximately stockpiled 6.5 million tonnes of work-in-process ore.

Approximately 1.3 million tonnes of the total stockpiled ore are sulfide ore and the remainder is oxide ore. The sulfide ores will be processed through the San Cristobal mill first with the oxide ores scheduled for processing later in the mine life.

A long-term agreement is in place for the transportation of the concentrates by rail to the port in Mejillones, Chile. Construction of the rail spur from the mine site to the main rail line began during the third quarter of 2006. It is expected to be completed during the second quarter of 2007. Concentrates will be unloaded from the rail cars at a facility at the port in Mejillones and then loaded into ships for export. Once the concentrates have arrived in Mejillones, they will be shipped by bulk carriers to smelters around the world.

The ore’s primary lead material is silver-rich galena (lead sulfide) and the primary zinc material is sphalerite (zinc sulfide). San Cristóbal will mainly produce two products: a zinc/silver concentrate and a lead/silver concentrate. Silver’s end uses are in photographic paper and film, electronics and jewelry/tableware, batteries, brazing alloys, solder, mirrors, medicines, dental fillings, ammunition, medals, and coins. Zinc is used in steel galvanizing and lead in acid batteries.

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