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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 10-Q
(MARK ONE)

x  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED
        SEPTEMBER 30, 2004.

OR
 
o                     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM________TO________.

 

COMMISSION FILE NUMBER 1-13627

APEX SILVER MINES LIMITED
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
 

CAYMAN ISLANDS, BRITISH WEST INDIES
 NOT APPLICABLE
(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION)
  (I.R.S. EMPLOYER IDENTIFICATION NO.)
 
  
   
WALKER HOUSE
MARY STREET
GEORGE TOWN, GRAND CAYMAN
CAYMAN ISLANDS, BRITISH WEST INDIES
 NOT APPLICABLE
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
  (ZIP CODE)
   
  (345) 949-0050
(REGISTRANT’S TELEPHONE NUMBER, INCLUDING AREA CODE)


INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS:   YES x NO o

INDICATE BY CHECK MARK WHETHER THE REGISTRANT IS AN ACCELERATED FILER (AS DEFINED IN RULE 12B-2 OF THE EXCHANGE ACT): YES x   NO o

AT NOVEMBER 3, 2004, 47,500,547 ORDINARY SHARES, $0.01 PAR VALUE PER SHARE, WERE ISSUED AND OUTSTANDING.


 
  1   
 

APEX SILVER MINES LIMITED
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 2004
 
INDEX

PART I - FINANCIAL INFORMATION

 
 
PAGE
     
ITEM 1.
FINANCIAL STATEMENTS
3
     
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
 
 
CONDITION AND RESULTS OF OPERATIONS
14
     
ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
  
 
MARKET RISK AND HEDGING ACTIVITIES
18
     
ITEM 4.
CONTROLS AND PROCEDURES
18
     
PART II - OTHER INFORMATION
  
     
ITEM 1.
LEGAL PROCEEDINGS
19
     
ITEM 2.
CHANGES IN SECURITIES AND USE OF PROCEEDS
19
     
ITEM 3.
DEFAULTS UPON SENIOR SECURITIES
19
     
ITEM 4.
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
19
     
ITEM 5.
OTHER INFORMATION
19
     
ITEM 6.
EXHIBITS AND REPORTS ON FORM 8-K
19
     
SIGNATURES
 
20


  2   
 

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

APEX SILVER MINES LIMITED
An Exploration and Development Stage Company

CONSOLIDATED BALANCE SHEET
(Expressed in United States dollars)
(Unaudited)



 
September 30,
  
December 31,
  
 
2004
  
2003
  
Assets
            
Current assets
            
Cash and cash equivalents 
$
261,354,175
  
$
40,098,745
  
Restricted cash 
  
800,143
   
800,000
 
Short term investments 
  
100,702,114
   
-
 
Prepaid expenses and other assets 
  
3,341,452
   
2,194,741
 
 Total current assets
  
366,197,884
   
43,093,486
 
             
Property, plant and equipment (net)
  
110,397,765
   
97,979,316
 
Long term investments
  
61,533,642
   
-
 
Value added tax recoverable
  
5,373,061
   
5,238,648
 
Deferred financing costs
  
6,619,960
   
-
 
Other non-current assets
  
187,815
   
199,542
 
 Total assets
$
550,310,127
  
$
146,510,992
  
             
Liabilities and Shareholders' Equity
            
             
Current liabilities
            
Accounts payable and other accrued liabilities 
$
4,056,839
  
$
1,834,848
  
Accrued interest payable 
  
260,150
   
-
 
Current portion of notes payable 
  
689,958
   
90,500
 
 Total current liabilities
  
5,006,947
   
1,925,348
 
             
Notes payable
  
200,000,000
   
599,458
 
Commitments and contingencies (Note 5)
  
-
   
-
 
 Total liabilities
  
205,006,947
   
2,524,806
 
Shareholders' equity
            
Ordinary Shares, $.01 par value, 75,000,000 shares  
            
 authorized; 47,460,547 and 36,874,640 shares issued and outstanding for respective periods
  
474,605
   
368,746
 
Accumulated other comprehensive income 
  
205,520
   
-
 
Deferred stock based compensation 
  
(461,145
)
  
-
 
Additional paid in capital 
  
439,816,731
   
222,430,086
 
Accumulated deficit during development stage 
  
(94,732,531
)
  
(78,812,646
)
 Total shareholders' equity
  
345,303,180
   
143,986,186
 
 Total liabilities and shareholders' equity
$
550,310,127
  
$
146,510,992
  
             

The accompanying notes form an integral part of these consolidated financial statements.

  3   
 

APEX SILVER MINES LIMITED
An Exploration and Development Stage Company

CONSOLIDATED STATEMENT OF OPERATIONS
(Expressed in United States dollars)
(Unaudited)
 

                   
For the Period
  
                   
December 22, 1994
 
   
Three Months Ended
  
Nine Months Ended
  
(inception)
  
   
September 30,
  
September 30,
  
through
  
     
2004
    
2003
    
2004
    
2003
  
 September 30, 2004
  
Income and expenses
                                
Interest and other income 
  
$
1,596,780
  
$
104,141
  
$
3,115,246
  
$
432,007
  
$
17,384,773
  
Trading gains - comodities 
    
118,838
   
505,420
   
422,799
   
705,465
   
639,130
 
Trading losss - foreign currency 
    
(186,913
)
  
-
   
(186,913
)
  
-
   
(186,913
)
Exploration 
    
(1,049,969
)
  
(637,855
)
  
(3,640,318
)
  
(2,192,092
)
  
(66,530,435
)
Administrative 
    
(6,193,120
)
  
(916,947
)
  
(12,239,553
)
  
(3,627,670
)
  
(46,075,651
)
Interest expense and other 
                                
 borrowing costs (net of
                               
 $86,700 capitalized for the three
                                
 and nine month periods of 2004
                                
 and none capitalized in 2003)
    
(1,539,295
)
  
-
   
(3,353,441
)
  
-
   
(3,353,441
)
Amortization and depreciation 
    
(20,166
)
  
(9,596
)
  
(37,705
)
  
(26,544
)
  
(1,168,880
)
 Loss before minority interest
    
(7,273,845
)
  
(954,837
)
  
(15,919,885
)
  
(4,708,834
)
  
(99,291,417
)
Minority interest in loss of 
                                
 consolidated subsidiary
    
-
   
-
   
-
   
-
   
4,558,886
 
 Net loss for the period
  
$
(7,273,845
)
$
(954,837
)
$
(15,919,885
)
$
(4,708,834
)
$
(94,732,531
)
Net loss per Ordinary Share – basic and diluted (1)
  
$
(0.15
)
$
(0.03
)
$
(0.34
)
$
(0.13
)
$
(3.25
)
Weighted average Ordinary Shares outstanding
    
47,422,586
   
36,658,117
   
46,169,444
   
36,502,367
   
29,182,404
 
 
(1)   Diluted earnings per share were antidilutive for all periods presented.



The accompanying notes form an integral part of these consolidated financial statements.

  4   
 

APEX SILVER MINES LIMITED
An Exploration and Development Stage Company

CONSOLIDATED STATEMENT OF CASH FLOWS
(Expressed in United States dollars)
(Unaudited)


         
For the Period
  
         
December 22,
  
 
Nine Months Ended
  
1994 (inception)
  
 
September 30,
  
through
  
   
2004
    
2003
    Sept. 30, 2004  
Cash flows from operating activities:
                  
 Net cash used in operating activities
$
(8,867,073
)
$
(2,249,713
)
$
(84,168,640
)
Cash flows from investing activities: