NI 43-101 Technical Report on Resources

Apex Silver Mines Corporation El

Quevar Project Argentina

Prepared for:
Apex Silver Mines Corporation
1700 Lincoln Street, Suite 3050
Denver, Colorado 80203

SRK Project Number: 182801

Prepared by:

7175 W. Jefferson Ave.

Suite 3000 Lakewood,
CO 80235
Effective Date: January 31, 2009
Report Date: February 27, 2009
Contributors:
Endorsed by QP:
Leah Mach, CPG, MScPatrick Hollenbeck, B.A.
Geology Dorinda Bair, BSc Geology Alva
Kuestermeyer, MS Mineral Economics, CP, SME

Leah Mach, CPG, MSc

Table of Content

1 INTRODUCTION (ITEM 4) ................................................................................................. 1-1

1.1 Terms of Reference and Purpose of the Report ......................................................... 1-1
1.2 Reliance on Other Experts (Item 5) ........................................................................... 1-2
1.2.1 Sources of Information ................................................................................ 1-2
1.3 Qualifications of Consultants (SRK) ......................................................................... 1-2
1.3.1 Site Visit ...................................................................................................... 1-3
1.4 Units of Measure ........................................................................................................ 1-3
1.5 Effective Date ............................................................................................................ 1-3 2 PROPERTY
DESCRIPTION AND LOCATION (ITEM 6) ................................................. 2-1
2.1 Property Location....................................................................................................... 2-1
2.2 Mineral Titles ............................................................................................................. 2-1
2.3 Location of Mineralization ........................................................................................ 2-4
2.4 Royalties, Agreements and Encumbrances................................................................ 2-4
2.5 Environmental Liabilities and Permitting.................................................................. 2-7 3
ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY
(ITEM 7) ............................................................................................................ 3-1
3.1 Topography, Elevation and Vegetation ..................................................................... 3-1
3.2 Climate and Length of Operating Season .................................................................. 3-1
3.3 Physiography.............................................................................................................. 3-1
3.4 Access to Property ..................................................................................................... 3-1
3.5 Surface Rights ............................................................................................................ 3-2
3.6 Local Resources and Infrastructure ........................................................................... 3-2
3.6.1 Access Road and Transportation ................................................................. 3-2
3.6.2 Power Supply ............................................................................................... 3-2
3.6.3 Water Supply ............................................................................................... 3-2
3.6.4 Camp Site .................................................................................................... 3-2
3.6.5 Waste Disposal Area ................................................................................... 3-3
3.6.6 Manpower .................................................................................................... 3-3 4 HISTORY (ITEM
8) .............................................................................................................. 4-1
4.1 Ownership .................................................................................................................. 4-1
4.2 Past Exploration and Development ............................................................................ 4-2
4.3 Historic Mineral Resource and Reserve Estimates .................................................... 4-2
4.4 Historic Production .................................................................................................... 4-2 5
GEOLOGIC SETTING (ITEM 9) ......................................................................................... 5-1
5.1 Regional Geology ...................................................................................................... 5-1
5.2 Local Geology ............................................................................................................ 5-1
5.2.1 Alteration ..................................................................................................... 5-2
5.2.2 Structure ...................................................................................................... 5-3
5.3 Project Geology ......................................................................................................... 5-3 6 DEPOSIT
TYPE (ITEM 10) .................................................................................................. 6-1 7
MINERALIZATION (ITEM 11) ........................................................................................... 7-1
7.1 Mineralized Zones ..................................................................................................... 7-1
7.2 Surrounding Rock Types ........................................................................................... 7-1

7.3 Relevant Geological Controls .................................................................................... 7-

7.4 Type, Character and Distribution of Mineralization .................................................. 7-2 8

EXPLORATION (ITEM 12) ................................................................................................. 8-1
8.1 Interpretation .............................................................................................................. 8-2 9 DRILLING
(ITEM 13) .......................................................................................................... 9-1
9.1 Type and Extent of Drilling ....................................................................................... 9-1
9.2 Logging ...................................................................................................................... 9-2
9.3 Results ........................................................................................................................ 9-2
10
SAMPLING METHOD AND APPROACH (ITEM 14) ..................................................... 10-1
10.1 Sample Methods....................................................................................................... 10-1
10.2 Factors Impacting Accuracy of Results ................................................................... 10-1
10.3 Sample Quality and Parameters ............................................................................... 10-1
10.4 Relevant Samples ..................................................................................................... 10-1 11
SAMPLE PREPARATION, ANALYSES AND SECURITY (ITEM 15) .......................... 11-1
11.1 Sample Preparation and Assaying Methods Alex Stewart ................................... 11-1
11.2 Sample Preparation and Assaying Methods ALS Chemex ................................... 11-1
11.3 Testing Laboratories Certification ........................................................................... 11-2
11.4 Quality Controls and Quality Assurance ................................................................. 11-2
11.4.1 Blanks ........................................................................................................ 11-3
11.4.2 Duplicates .................................................................................................. 11-3
11.4.3 Standard Samples ...................................................................................... 11-5
11.5 Sample Security ....................................................................................................... 11-6
11.6 Interpretation ............................................................................................................ 11-6 12 DATA
VERIFICATION (ITEM 16) ................................................................................... 12-1
12.1 Quality Control Measures and Procedures .............................................................. 12-1
12.2 SRK Verification ..................................................................................................... 12-1
12.3 Limitations ............................................................................................................... 12-1 13
ADJACENT PROPERTIES (ITEM 17) .............................................................................. 13-1 14
MINERAL PROCESSING AND METALLURGICAL TESTING (ITEM 18) ................. 14-1
14.1 Metallurgical Testing ............................................................................................... 14-1
14.1.1 Procedures ................................................................................................. 14-1
14.1.2 Results ....................................................................................................... 14-2 15 MINERAL
RESOURCES AND MINERAL RESERVE ESTIMATES (ITEM 19) .......... 15-1
15.1 Drillhole Database ................................................................................................... 15-1
15.2 Topography .............................................................................................................. 15-1
15.3 Geology .................................................................................................................... 15-1
15.4 Oxidation State......................................................................................................... 15-2
15.5 Specific Gravity ....................................................................................................... 15-2
15.6 Grade Capping ......................................................................................................... 15-3
15.7 Compositing ............................................................................................................. 15-4
15.8 Variogram Analysis ................................................................................................. 15-4
15.9 Grade Estimation ..................................................................................................... 15-5
15.9.1 Model Validation ....................................................................................... 15-5
15.10 Resource Classification ............................................................................................ 15-6
15.11 Cut-off Grade ........................................................................................................... 15-6

15.12 Resource Statement .................................................................................................. 15-

15.13 Mineral Resource Sensitivity ................................................................................... 15-7 16 OTHER

RELEVANT DATA AND INFORMATION (ITEM 20) ..................................... 16-1 17
INTERPRETATION AND CONCLUSIONS (ITEM 21) .................................................. 17-1
17.1 Field Surveys ........................................................................................................... 17-1
17.2 Analytical and Testing Data..................................................................................... 17-1
17.3 Exploration Conclusions .......................................................................................... 17-1
17.4 Resource Estimation ................................................................................................ 17-1 18
RECOMMENDATIONS (ITEM 22) .................................................................................. 18-1
18.1 Recommended Work Programs and Costs .............................................................. 18-1 19
REFERENCES (ITEM 23) .................................................................................................. 19-1 20
GLOSSARY ........................................................................................................................ 20-1
20.1 Mineral Resources and Reserves ............................................................................. 20-1
20.1.1 Mineral Resources ..................................................................................... 20-1
20.1.2 Mineral Reserves ....................................................................................... 20-1
20.2 Glossary ................................................................................................................... 20-2

List of Tables
Table 1: Resource Statement, Yaxtch Deposit, as of December 31, 2008....................................... IV
Table 1.3.1: Key Project Personnel................................................................................................... 1-3
Table 2.2.1: Exploration and Exploitation Concessions at El Quevar .............................................. 2-3
Table 2.3.1: Exploration Projects with Mineralized Zones .............................................................. 2-4
Table 2.4.1: Details of the Purchase Option and JV Agreements ..................................................... 2-6
Table 5.2.1.1: Simplified Paragenetic Sequence for the Hydrothermal Phases ................................ 5-3
Table 5.2.1.2: Hydrothermal Phases Related to Geological Evolution of the Project Area ............. 5-3
Table 9.1.1: El Quevar Drilling by Program and Contractor ............................................................ 9-1
Table 10.4.1: Summary of Relevant Samples, Excluding Yaxtch* .............................................. 10-2
Table 11.4.1: Standards Used in the El Quevar QA/QC Program .................................................. 11-3
Table 11.4.2.1: Summary of Quarter Core Duplicates ................................................................... 11-4
Table 11.4.2.2: Percentage of Quarter Core Duplicate Assays* ..................................................... 11-4
Table 11.4.2.3: Summary of Coarse Duplicates ............................................................................. 11-4
Table 11.4.2.4: Percentage Coarse Duplicate Assays * .................................................................. 11-5
Table 11.4.2.5: Summary of Pulp Duplicates ................................................................................. 11-5
Table 11.4.2.6: Percentage Pulp Duplicate Assays* ....................................................................... 11-5
Table 11.4.3.1: Results of Standard Sample Analysis .................................................................... 11-6
Table 14.1.1.1: Composite Head Analysis ...................................................................................... 14-1

Table 14.1.2.1: Test Results from Whole Ore Leaching ................................................................ 14-

Table 14.1.2.2: Test Results from Selective Silver Flotation ......................................................... 14-

Table 14.1.2.3: Test Results from Silver and Bulk Sulfide Flotation ............................................. 14-

Table 14.1.2.4: Test Results from Flotation Tailings Cyanidation ................................................. 14-

Table 14.1.2.5: Combined Silver Recovery from Flotation and Tailings Cyanidation .................. 14-

Table 14.1.2.6: Summary of Test Results on El Quevar Sample Composites ................................ 14-

Table 15.3.1: Statistics of Raw Silver Assay Intervals within the Yaxtch

Grade Shell ............... 15-

Table 15.4.1: Raw Silver Assay Statistics by Oxidation Type ....................................................... 15-

Table 15.5.1: Specific Gravity Statistics ......................................................................................... 15-

Table 15.6.1: Statistics of Capped Silver Assay Intervals within the Yaxtch

Grade Shell ........... 15-

Table 15.7.1: Statistics of Silver Composite Intervals within the Yaxtch

Grade Shell ................ 15-

Table 15.8.1: Silver Variogram Parameters .................................................................................... 15-

Table 15.9.1: El Quevar Block Model Limits ................................................................................. 15-

Table 15.9.2: El Quevar Grade Estimation Parameters .................................................................. 15-

Table 15.9.1.1: Comparison of Kriged and Nearest Neighbor Estimations ................................... 15-

Table 15.12.1: Resource Statement, Yaxtch

Deposit, as of December 31, 2008 .......................... 15-

Table 15.13.1: Tonnage and Grade of Indicated Resource by Cut-off ........................................... 15-

Table 15.13.2: Tonnage and Grade of Inferred Resource by Cut-off ............................................. 15-

Table 20.2.1: Glossary .................................................................................................................... 20-

Table 20.2.2: Abbreviations ............................................................................................................ 20-

List of Figures
Figure 2-1: Location Map of El Quevar Project ............................................................................... 2-8
Figure 2-2: Exploration and Exploitation Concessions of El Quevar Project .................................. 2-9
Figure 2-3: Three Areas of Exploration Focus at El Quevar Project .............................................. 2-10
Figure 5-1: Regional Geology of the El Quevar Project ................................................................... 5-5
Figure 5-2: Local Geology of the El Quevar Project ........................................................................ 5-6
Figure 5-3: Representative Section through the Yaxtch Structural Trend ...................................... 5-7
Figure 9-1: Drillhole Location Map.................................................................................................. 9-3
Figure 11-1: Duplicate QA/QC Samples ........................................................................................ 11-8
Figure 11-2: Standard Samples GBM ............................................................................................. 11-9
Figure 11-3: Standard Samples STD 1-6 ...................................................................................... 11-10

Figure 14-1: Whole Ore Leach Kinetics ......................................................................................... 14-

Figure 14-2: Leach Kinetics for Flotation Tailings Cyanide .......................................................... 14-

Figure 15-1: Yaxtch

Drillhole Location Map ............................................................................... 15-

Figure 15-2: Grade Shell Plan View............................................................................................. 15-1

Figure 15-3: Grade Shell Oblique View, Looking West .............................................................. 15-1

Figure 15-4: Grade Shell Cross-section Looking West ................................................................ 15-1

Figure 15-5: Location Map Specific Gravity samples .................................................................. 15-1

Figure 15-6: Specific Gravity Plot for Breccia Samples .............................................................. 15-1

Figure 15-7: Specific Gravity by Oxidation State ........................................................................ 15-1

Figure 15-8: Probability Plot of Silver Assays ............................................................................. 15-1

Figure 15-9: Block Model Cross Section, Looking West ............................................................. 15-1

Figure 15-10: Block Model Elevation 4795 ................................................................................. 15-1

Figure 15-11: Swath Plots Block Model vs. Composites ............................................................. 15-1

Figure 15-12: Grade Tonnage Curve Indicated and Inferred Resources ...................................... 15-2

List of Appendices
Appendix A
Certificate of Author

Summary

(Item 3)

Apex Silver Mines Corporation (Apex Silver or the Company), a subsidiary of Apex Silver Mines
Limited, has engaged SRK Consulting (US), Inc. (SRK) to prepare a Technical Report for the El
Quevar Project (El Quevar or the Project) to meet the requirements of Canadian National
Instrument 43-101 (NI 43-101). This report reflects the most recent resource based on drill data
produced between 2006 and 2008. Apex Silver has been exploring the Project since acquiring
exploration rights to El Quevar in 2004.
Property Description and Location
El Quevar is located in the Argentine Republic (Argentina), in the Northwest geographic region of
the Puna/Altiplano. The Project is approximately 300km west-northwest of the provincial capital city
of Salta in the western part of Salta province.
The Project is accessed from Salta by following National Road 51 (NR51) to the turn off to
Provincial Road 27 (PR27) for approximately 226km (Figure 2-1). From Salta to San Antonio de
los Cobres NR51 is 166km of paved road and beyond San Antonio de los Cobres to Provincial Road
27 (PR27), NR51 is a well-maintained gravel road. At the intersection between NR51 and PR27, El
Quevar is accessed by traveling south for approximately 30km and then east on the access road for
15km.
Ownership
El Quevar includes 10 exploitation concessions totaling 14,622.32ha and six exploration concessions
totaling 50,365.28ha. A total canon payment of US$37,750 was assessed for the exploitation
concessions in 2008, and all annual payment canons for the exploitation concessions are current. Apex
Silver through its subsidiary Silex Argentina S.A. (Silex) controls all exploration concessions at El
Quevar.
Surface rights are owned and administered by Salta province, and as a result there are no required
agreements for access and in this area, no existing infrastructure limiting exploration activities. Apex
Silver, through its subsidiary Silex, acquired the first two exploitation concession at El Quevar
(Quirincolo I and Quirincolo II) in 2004 and began exploration on these two concessions at that time.
In 2006, Apex Silver formed a joint venture (JV) agreement with Hochschild Mining PLC
(Hochschild) and its subsidiary Minera Hochschild Argentina (Minera Hochschild) expanding the
Project to include five additional exploitation concessions. Since then, nine more concessions have
been added to the Project through property purchase from Mansfield Minerals, Inc. and purchase
option agreements with Saravia Carlos Alberto and Salta Exploraciones S.A. (SESA). Apex Silver
and Hochschild have recently formed the company Minera El Quevar, S.A. (Minera El Quevar) to
manage the exploitation concessions with the exception of Viejo Campo. Apex Silver is the operator
and holds 65% of Minera El Quevar.
Viejo Campo, while still part of El Quevar, is currently not included in the JV agreement and is
managed separately by Apex Silver. Apex Silver has recently entered into an agreement with SESA
regarding Viejo Campo and can earn a 60% interest in the property after a US$600,000 payment to
SESA and a US$1,000,000 investment in Veijo Campo.

Geology and Mineralization

El Quevar is interpreted as an intermediate sulfidation (IS) to high sulfidation (HS) epithermal

deposit associated with caldera collapse, stratovolcano formation and development of dacitic domes.
These types of deposits form under acidic, oxidizing conditions within 1km of the surface and between
150 and 250C. They are often associated with silicic to intermediate volcanic rocks and hot spring
deposits, and share similar ages as their host rocks. Host rocks include andesite, rhyodacite and locally
rhyolite. IS and HS epithermal deposits are both characterized by wallrock replacement, breccias,
sulfide disseminations and siliceous vein filling. Quartz may also have a crustiform texture. Typical
alteration assemblages include advanced argillic, alunite and kaolinite with pyrophyllite deeper in the
system. These may be accompanied by sericite, adularia and chlorite. Gangue minerals include vuggy
quartz and silica as well as barite. Carbonate and selenides are usually absent and manganese minerals
are rare in HS types. However, manganese minerals are more abundant in IS deposits and selenide
minerals may be present locally. Barite is often present in association with gold. Ore mineralogy
include native gold, electrum, gold and silver telluride minerals, bornite, enargite, tennantite, covelite,
chalcopyrite, sphalerite and galena, and epithermal deposits normally show vertical zoning. Zoning in
IS deposits are often characterized by antimony, bismuth and gold anomalies with some silver values.
The boiling zone is marked by high-grade silver and the lower parts of these systems are richer in lead
and zinc. There is typically more copper in these systems than zinc and lead. This contrasts with HS
deposits, which generally are base-metal poor (Guilbert, et al, 1986; Camprub, et al, 2006; Taylor,
2007; Sillitoe, 2008).
At El Quevar, mineralization is related to the formation of El Quevar Volcanic Complex (CVQ).
Silver and base metal mineralization is found in brecciated structural zones, spatially related to dacitic
flows and domes. Within the Project area, exploration models are based on mapping, drilling and
geophysical data collected within the Yaxtch and Copn structural trends in Quevar Sur. The
resource for the Project is within the Yaxtch structural trend.
Mineralization at El Quevar has been deposited in association with vuggy silica in individual zones
averaging 1 to 15cm wide but may reach 1m wide in some areas. Mineralized breccia occurs as both
fault breccia (FBV) and hydrothermal Breccia (BXH) and as open space filling, disseminations and
massive zones and includes the following mineral species:

Sulfosalts: Enargite, tethraedrite, tennantite, bismutite and pyrargirite;

Sulfide minerals: Pyrite, galena and sphalerite;
Sulfate minerals: Plumbojarosite; and
Native silver (Silex Argentina S.A., 2008b).

The Yaxtch structural trend is a structural corridor 750m long and 40 to 150m wide, characterized
by strong to moderate silica and quartz-alunite alteration and bounded by two faults. At surface, the
mineralization branches into three separate structures. The strike is variable between 090 in the
eastern area to 300 in the western area. The structure dips from 70 to 65N at surface and flattens to
45 to 55N at depth (Silex Argentina S.A., 2008b).
Evidence from kinematic indicators suggest that the Yaxtch structural trend could be offset on both
the east and west by 035 faults identified during trench mapping and geophysical surveys.

In addition, argillic alteration mapped at surface in these areas point to potential drilling targets that
could extend the Yaxtch

structural trend (Silex Argentina S.A., 2008b).

Exploration
Prior to Apex Silver, five companies engaged in limited exploration at El Quevar between 1970 and
1999. Exploration was conducted at the Project between 1970 and 1995 by Fabricaciones Militares,
BHP-Utah Minerals International and Industrias Peoles, S.A.B. de C.V. Additional exploration prior
to 1995 included excavation of several small pits at Yaxtch and Mani. It is not known which
company or parties completed this work. In 1997 Minera Hochschild, completed a six hole, reverse
circulation (RC) and diamond drilling program in the Mani structural trend and in 1999, Mansfield
Minerals, Inc. collected samples from surface (Silex Argentina S.A., 2008a).
Apex Silver acquired exploration rights to El Quevar in October 2004. Between October 2004 and
August 2006, Apex Silver mapped in the Quevar Sur area at 1:5,000 and 1:10,000 scales. At this time,
various outcrops were sampled. Apex Silver began drilling at the Project in June of 2006 and between
2006 and 2008 has completed 15,506.3m of diamond drilling in 81 drillholes. In addition a ground
based geophysical program was completed between December 2007 and February 2008 by Quantec
Geoscience Argentina S.A. and in late 2007, 24 samples from six drillholes in the Yaxtch structural
zone were submitted to Brockway and Franquesa Consultores (BFC) for petrographic and reflected
light microscopy work. As a follow up to the petrographic work, 14 of the 24 samples had electron
microprobe work to confirmation mineral species (Silex Argentina S.A., 2006; 2007; 2008a; 2008b).
Resource Estimation and Resource Statement
SRK conducted a resource estimation for the Yaxtch deposit at El Quevar using the data provided by
Apex Silver. Forty-five core holes were drilled in the resource area. The mineralized breccia trends
090 to 120 and dips 50 to the north. Silver exhibits a zonation within the breccia with higher grades
at the margins and a sharp contact with the host rock. Within the mineralized breccias, the central core
tends to have low silver values. SRK constructed a grade shell at 10g/t silver to constrain the resource
estimation. Assays were composited into 2m intervals from the top of the hole with a break at the
grade shell boundaries. Silver grades were estimated with ordinary kriging using only composites
within the grade shell. To further define waste blocks within the grade shell, indicator kriging with a
25g/t silver discriminator was conducted. Blocks with an indicator value less than 0.5 were considered
waste and not included in the resource statement.
The resources for the Yaxtch deposit as of December 31, 2008 are shown in Table 1.

Table 1: Resource Statement, Yaxtch

Deposit, as of December 31, 2008


Conduct additional specific gravity tests on the half core archived at the Quevar site to obtain more
data for Yaxtch especially on material within the grade shell. This work can be performed during the
ongoing exploration program at an estimated cost of US$5,000;
Indicate 85 85304 94168 1,64
Oxi

dInferre
259 4
d
784
Indicate 120 156 5 237 1,19
Mix
d
120
322 2 50
ed
Inferred
Indicate 120 939 7 197 5,95
Sulf
d
120
202 4 46
ide
Inferred
Indicat
Tot ed
8,79
Conclusions
Recommendations
al Inferre and 1,399
195 0
de

Conclusions
Apex has undertaken exploration at El Quevar using a systematic approach and according to industry
best practices. Several target areas have been identified based on the presence of outcropping
mineralized breccia. Typically, target exploration was initiated with mapping and sampling, followed
by trenching and sampling to define drill targets. All drilling is HQ and NQ sized core. Apex Silver
has established procedures to ensure that data is collected in a systematic manner, and have ensured
that appropriate QA/QC protocols have been implemented.
Samples have been analyzed by Alex Stewart in Mendoza and ALS Chemex in Mendoza and La
Serena, Chile. Both of these laboratories are local facilities of international laboratories. Apex Silver is
using appropriate sample preparation and analytic procedures for this type of mineralization and has a
proper laboratory QA/QC program in place.
The Quevar project covers an area of about 20km x 30km with excellent exploration potential. Apex
Silver has been conducting exploration for the past four years in a systematic and thorough manner
and identified several targets in Quevar Sur on which they have conducted drilling. The exploration
practices adopted by Apex Silver meet or exceed industry best practices.
Recommendations
Apex Silver has been conducting exploration at Quevar over the last four years in a systematic
manner. The Yaxtch trend has received the most drilling to date and a resource has been estimated
for that area. It appears that the western extension has been offset by faulting and the eastern
extension has not yet been limited by drilling. In addition, several other targets have been defined in
surface mapping and sampling programs and in a recent reinterpretation of geophysical data.
SRK recommends that following work programs at El Quevar:

Perform check analyses at ALS Chemex on the pulps originally analyzed by Alex
Stewart prior to initiation of the QA/QC program. These samples should also include
blank and standard reference samples. It is also recommended that pulps originally

analyzed at ALS Chemex should be checked at Alex Stewart. Approximately 10% of the
pulps should have check analyses performed, or about 200 samples. It is estimated that the
cost would be approximately US$10,000;

 Continue exploration at Quevar, specifically to;

1.
o Explore the west and east
extensions of Yaxtch,
2.
o Test geophysical targets generated
from the new interpretation in 2008, and
3.
o Define further drill targets through
continued surface mapping and sampling.

1 Introduction (Item 4)
Apex Silver Mines Corporation (Apex Silver or the Company), a subsidiary of Apex Silver Mines
Limited, has engaged SRK Consulting (US), Inc. (SRK) to prepare a Technical Report for the El
Quevar Project (El Quevar or the Project) to meet the requirements of Canadian National
Instrument 43-101 (NI 43-101). El Quevar is located approximately 300km by paved and unpaved
roads west-northwest of the city of Salta in the western part of Salta province, Argentine Republic
(Argentina). This report reflects the most recent resource based on drill data produced between
2006 and 2008. Apex Silver has been exploring the Project since acquiring exploration rights in 2004.
It is recommended that the drilling program start with approximately 1,500m of drilling at Yaxtch
followed
by anwas
evaluation
the results
and a exploration
follow up program.
The cost
of this focusing
program on
is
The Company
founded of
in 1993
as a mining,
and development
company
US$600,000.
traditional silver producing regions in Latin America. The main objective of Apex Silver is to become
a significant producer of silver, lead and zinc. To this end, the Company acquires properties that have
exploration and development potential and divests those properties that are not of continuing interest.
Apex Silver, through its subsidiary Silex Argentina S.A. (Silex), acquired the first two exploitation
concession at El Quevar (Quirincolo I and Quirincolo II) in 2004 and began exploration on these two
concessions at that time. In 2006, Apex Silver formed a joint venture (JV) agreement with
Hochschild Mining PLC (Hochschild) and its subsidiary Minera Hochschild Argentina (Minera
Hochschild) expanding the Project to include five additional exploitation concessions. Since then,
nine more concessions have been added to the Project through property purchase from Mansfield
Minerals, Inc. and purchase option agreements with Saravia Carlos Alberto and Salta Exploraciones
S.A. (SESA). Apex Silver and Hochschild have recently formed the company Minera El Quevar,
S.A. (Minera El Quevar) to manage the exploitation concessions with the exception of Viejo Campo.
Apex Silver is the operator and holds 65% of Minera El Quevar. To maintain this position, Apex
Silver must complete a feasibility study by 2010 and begin production within another 2 years (2012).
Viejo Campo, while still part of El Quevar, is currently not included in the JV agreement and is
managed separately by Apex Silver. Apex Silver has recently entered into an agreement with SESA
regarding Viejo Campo and can earn a 60% interest in the property after a US$600,000 payment and a
US$1,000,000 investment.
All exploration concessions will continue to be managed by Apex Silver. Property agreements are
discussed in detail in Section 2.

1.1 Terms of Reference and Purpose of the Report

This report is intended to provide Apex Silver with an independent resource review and technical
report that follows existing regulations in Canada. The report meets the requirements for NI 43 101
and conforms to Form 43-101F1 for technical reports.
Resource and Reserve definitions are as set forth in the Appendix to Companion Policy 43-101 CP,
Canadian Institute of Mining, Metallurgy and Petroleum Definitions Adopted by CIM Council,
August 20, 2000 (CIM).

1.2

Reliance on Other Experts

(Item 5)

1.2.1 Sources of Information

SRKs opinion contained herein is based on information provided to SRK by Apex Silver throughout
the course of SRKs investigations. The sources of information include data and reports supplied by
Apex Silver and Silex personnel as well as documents cited in Section 19.
Much of the information is drawn from four reports:

El Quevar, Argentina-Property Description, Internal Report by Silex Argentina S.A., 2008;

El Quevar Project, Drilling Campaign Report January-July 2008, Internal Report by Silex
Argentina S.A.;

Proyecto El Quevar, Internal Report 2006, by Silex Argentina S.A.; and

El Quevar Project, Drilling Campaign Report, February-June 2007, Internal Report, by

Silex Argentina S.A.

SRK has relied on information from Apex Silver regarding the validity of its exploration and mining
concessions and has not independently verified their validity. SRK has also relied on Apex Silver
regarding surface ownership of the exploration and mining concessions.

1.3 Qualifications of Consultants (SRK)

The SRK Group is comprised of over 850 staff, offering expertise in a wide range of resource
engineering disciplines. The SRK Groups independence is ensured by the fact that it holds no equity
in any project and that its ownership rests solely with its staff. This permits SRK to provide its clients
with conflict-free and objective recommendations on crucial judgment issues. SRK has a
demonstrated record of accomplishment in undertaking independent assessments of Mineral
Resources and Mineral Reserves, project evaluations and audits, technical reports and independent
feasibility evaluations to bankable standards on behalf of exploration and mining companies and
financial institutions worldwide. The SRK Group has also worked with a large number of major
international mining companies and their projects, providing mining industry consultancy service
inputs.
This report has been prepared based on a technical and economic review by a team of consultants
sourced principally from the SRK Groups Denver, US office. These consultants are specialists in the
fields of geology exploration, mineral resource and mineral reserve estimation and classification, open
pit and underground mining, mineral processing and mineral economics.
Neither SRK nor any of its employees and associates employed in the preparation of this report has
any beneficial interest in Apex Silver or in the assets of Apex Silver. SRK will be paid a fee for this
work in accordance with normal professional consulting practice.
The individuals who have provided input to this technical report, who are listed below, have extensive
experience in the mining industry and are members in good standing of appropriate professional
institutions. Ms. Mach is a Qualified Person for this report and is responsible for all Sections of this
report.
The key project personnel contributing to this report are listed in Table 1.3.1. The Certificate of
Author for Leah Mach is provided in Appendix A.

Table 1.3.1: Key Project Personnel

2 Property Description and Location (Item 6)

LeahProperty
Mach Principal Resource
Geologist Resources
2.1
Location

P.J. Hollenbeck Senior Resource Geologist Resources Dorinda Bair Senior Geologist Geology Alva

ElKuestermeyer
Quevar is
located
in Salta
Province,
Argentina in the Northwest geographic region on the
Associate
Metallurgist
Metallurgy
and Processing
Puna/Altiplano. The Project is northwest of Salta, the provincial capital, and accessed by
approximately 300km of paved and unpaved roads. El Quevar is 90km by road from San Antonio de
los Cobres and 15km east of the village of Salar de Pocitos. Salar de Pocitos is the nearest inhabited
1.3.1
Site
Visit
location
with
a population of 150 people. Both the Project and Salar de Pocitos are within the San
Antonio
Cobres
municipality.
TheforProject
is during
locatedthebetween
El Quevarde
waslosvisited
by Leah
Mach, the QP
this report
week ofgeographic
November 9,coordinates
2008, for
241100S,
670100S
andSRK
242825S,
664120S
at an average
elevation
of 4,700m
above sea
four days. During
this visit
verified drill
logs andand
reviewed
core handling,
splitting,
logging
practices
and core
Mach also
visited
the exploration
sitesAndes.
duringThis
the site
visit.is multi-use
level
(masl).
El facilities.
Quevar liesMs
entirely
within
La Reserva
Natural Los
reserve
and classed as Categora de Manejo de Uso Mltiple VIII, which allows production/extraction
activities including mining and exploration. The reserves main purpose is for the preservation of
1.4
Units
oflocation
Measure
vicua.
Project
is shown in Figure 2-1.
Metric units are used throughout this report, except where otherwise stated.

2.2 Mineral Titles

1.5
Effective
Date
Argentina
is a federal
republic, composed of 23 provinces and one autonomous city, the capital Buenos
Aires.
Argentina
Provincial
andisMunicipal
with inputdate
intoofmining
regulation.
The effective
datehas
of Federal,
this Technical
Report
January 31,governments
2009. The effective
the resource
The
National
Mining Code
regulates
mining
in Argentina
and was
is administered
by the 2004
Federal
estimate
is December
31, 2008;
the data
used activities
in the resource
estimation
produced between
government.
However, natural resources are owned by individual provinces, which regulate the
and 2008.
mining law within their boundaries. This includes granting concessions and enforcing compliance
through regular investigations by inspectors (Silex Argentina S.A., 2008).
There are four types of properties that include three different exploration concessions and mines or
exploitation concessions.

Cateo or claim (exploration concession);

An air survey permit (exploration concession);
An underground survey (exploration concession); and
Minas or mines, which is an exploitation concession (Godoy, 2007).

All concessions are granted by the regulating province either by a judicial or administrative decision.
Exploration concessions are essentially paper locations while exploitation concessions must be
surveyed with monuments placed at the corners (Silex Argentina S.A., 2008).
In Salta province, all concessions are granted by a judge in the Mining Court. Each property is
recorded by number in the Mining Court registry, and each property has its own judicial file. In
addition, the Mining Secretariat records the property in the Registro Grfico (Land Register Office)
and adds the property to a digital map of the area. Should an exploration concession be submitted for
change to an exploitation concession, it must be surveyed prior to granting the exploitation concession.
The survey must be conducted according to specific procedures and requirements as defined by law,
and must include the participation of the mining office authorities (Godoy, 2007; Silex Argentina S.A.,
2008).
In exploration concessions, the air and underground surveys are seldom used in favor of cateos. In all
cases, exploration concessions are granted for a limited surface area and period of time.

These concessions are divided into

surface units

of 500ha and each concession can have a maximum of 20 units or 10,000ha. A 500ha exploration
concession can be held for 150 days and for every additional unit of 500ha the time increases by 50
days. The maximum is a 1,100 day term for a 10,000ha concession. During this time, total hectares
must be reduced incrementally at 300 days and 700 days after the exploration concession is granted
unless the concessionaire declares the property to be a mine and applies for an exploitation concession
(Godoy, 2007; Silex Argentina S.A., 2008).

Only 20 exploration concessions or 200,000ha can be held by a single legal entity or individual per
province. Exploration concessions have a one-time canon payment, which is variable from year to year
and fixed for a given year by the National Ministry of Economy. Landowners within the concession
must be notified and cannot oppose the concession but can request a bond from the concessionaire.
Exploration activities cannot be conducted near crops and gardens, buildings and facilities and requires
acceptance by the property owner. An exploration plan must be filed and followed for the associated
concession, and failure to do so may result in termination of the concession. Prior to any activities, an
environmental report must be filed with, and approved by, the provincial mining authority. Additional
environmental reports are required on a bi-annual basis while the exploration concession is valid. On
expiration of the exploration concession, all data and documentation from the activities must be filed
with the provincial mining authority. In addition to this, exploration cannot be conducted near
cemeteries, infrastructure including roads, pipelines and railroads, public water or any public facilities
(Godoy, 2007; Silex Argentina S.A., 2008).
Exploitation concessions are granted if any mineral discovery is made either by the concessionaire or
third parties within the area and term of the concession. Exploitation concessions have payments that
are fixed annually by the National Ministry of Economy. There are no fixed time limits associated with
exploitation concessions but duration can be affected by the following three conditions:

Timely payment of annual fees;

An appropriate and reasonable capital investment; and
Continuous workflow.

Table 2.2.1: Exploration and Exploitation Concessions at El Quevar

Paid and in
good standing
Paid and in
3,500.
Silex Silex
Quirinco
22-Decgood standing
00
SESA
lo I
04 22Paid and in
3,500. Exploitation 50%/Minera
03-Jun-05
18036
Quirinco
Dec-05
good standing
Date Granted
Annual
00
Exploitation Hochschild
03-Jun-05
8,750
18037 lo II
21-AugPaid and in
203.5 Exploitation 50% SESA
19-Dec-05
8,750
3902
61 01- by The Concess Expira Paym good standing
Expe Castor No.
Type
of
8 of
Exploitation
Minera Presentatio Title
071,000
17114
Sep-04 Mining ions------tion-----ent
Paid and in
dient El
Hectares
n Date
329.0 Concession
Exploitation Hochschild
Aug-96
1,000
1578
Quevar
22-May- Court of (days)
good standing
No. Proper
Date-- Cano
8
Exploitation Minera
26-Jul-04
125 Sta
1542 ty
II Vince
8908- Salta
n 50 75Paid
tus and in
44.72 Exploitation Owner
Hochschild
02-Feb-04
12222 Armonia
Feb-86
good standing
17.90 Application for Minera
In
1,250
18332 Quespej
01-FebPaid and in
18.00 Exploitation Hochschild
Progress
ahuar
85 13good standing
436.6
Minera
Toro I
Feb-06
No canon
0
Hochschild
payment until
2 semester
of 2009
18359 Nevado I2,161. Application for Saravia
27-Mar- 19-Oct-06 5,500No canon
39
Exploitation Carlos
06
payment until
Alberto
2 semester
of 2009
18745 Quevar I 7,975. Exploration Silex Silex 25-Apr- 07-Mar-08 850 07Paid and in
18784 Quevar 45
Exploration Silex Silex 07 16- 12-Mar-08 1100 Aug-10
good standing
18786 III
9,991. Exploration Silex Silex May-07 12-Mar-08 1100 20-AprPaid and in
18785 Quevar 26
Exploration SESA
16-May-12-May750 11 30good standing
19136 IV
9,968. Exploration
07 16- 08 05800 Apr-11
Paid and in
19195 Quevar 46
Exploration
May-07 Dec-08 In
-- 03-Julgood standing
18079 V
6,500. Application for
28-Feb- Progress
10 20Paid and in
Quevar 30
Exploitation
08 29- In
Mar-11
good standing
VI
6,987.
Apr-08 Progress
-Paid and in
Quevar 05
good standing
VII
8,942.
Paid and in
Viejo
76
good standing
Campo 4,411.
No canon
05
------ payment until
11,25 1 semester
0
of 2011
Subtotal El 64,987.
Subtotal Annual
37,75
Quevar (ha) 60
Canon
0

*Source: Silex
Argentina S.A. 2009

El Quevar falls within the jurisdiction of the Salta Province. The Project includes 10 exploitation
concessions totaling 14,622.32ha and six exploration concessions totaling 50,365.28ha. A total canon
payment US$37,750 was assessed for the exploitation concessions in 2008, and all annual payment
canons for the exploitation concessions are current. All exploration and exploitation concessions are
listed in Table 2.2.1 and shown in Figure 2-2. SRK did not review the validity of the claims.

SRK
Cons
ulting
(US),
Inc.
Febru
ary
27,
2009
El
Quev
ar.NI
43101
Techn
ical
Repor
t on
Reso
urces.
1828
01.K
G.02
0.doc
x

2.3

Location of Mineralization

Apex Silver controls a large concession area in a highly prospective part of Salta province.
Mineralization has been identified on most of its concessions, and exploration by other companies is
ongoing on adjacent properties. El Quevar covers 64,987.60ha of exploration and exploitation
concessions with many promising areas of mineralization. Of these, there are three focused areas of
exploration (Figure 2-3):

Quevar Sur;
Quevar Norte; and
Viejo Campo.

Quevar Sur is the area of most intense exploration and contains the Quevar resource. The
mineralization associated with the resource is located at the center of the concession block and this
resource lies entirely within the Armonia exploitation concession number 1542 on land controlled by
Apex through a JV agreement with Hochschild. This agreement is discussed in Section 2.4. The
resource is located in the Yaxtch structural trend, which extends onto adjacent concessions controlled
by the JV or under purchase agreement with the JV or Apex Silver and other companies. All
exploration concessions are 100% owned and controlled by Apex Silver through its subsidiary Silex.
Two exploitation concessions are 100% owned by Apex through Silex, with the remaining eight
exploitation concessions part of JV agreements and royalties as discussed in Section 2.4. Mineralized
zones at El Quevar are listed in Table 2.3.1.
Table 2.3.1: Exploration Projects with Mineralized Zones
Quevar Sur Yaxtch Quevar Norte
North Breccia
structural trend
(Resource area)
Yaxtch Northeast Tetera Breccia
Yaxtch East
Black structure
Mani structural trend Oriental Breccia
Copn structural
Ailapuna Breccia
trend
Argentina
Breccia

Viejo Campo
Main structure
QZ Veins
Breccias
Brecciated Veins

2.4 Royalties, Agreements and Encumbrances

Surface rights are owned and administered by Salta province, and as a result there are no required
agreements for access and in this area there is no existing infrastructure limiting exploration activities.
Apex Silver, through its subsidiary Silex, acquired the first two exploitation concession at El Quevar
(Quirincolo I and Quirincolo II) in 2004 and began exploration on these two concessions at that time.
In 2006, Apex Silver formed a JV agreement with Hochschild and its subsidiary Minera Hochschild
expanding the Project to include five additional exploitation concessions. Since then, nine more
concessions have been added to the Project through property purchase from Mansfield, and purchase
option agreements with Saravia Carlos SESA.
As part of the JV agreement Apex Silver holds a 65% interest and manages El Quevar. To maintain
this position, Apex Silver must expend US$1 million by May 22, 2009, complete a feasibility study by
2010 and begin production within an additional 2 years (2012). Apex Silver has fulfilled the
expenditure of US$1,000,000 as part of this agreement.

Apex Silver and Hochschild have recently formed the company Minera El Quevar to manage the
exploitation concessions with the exception of Viejo Campo. Minera El Quevar is 65% held by Apex
Silver and 35% held by Hochschild. Viejo Campo and the exploration concession will continue to be
managed by Apex Silver.

Viejo Campo, while still part of El Quevar, is currently not included in the JV agreement with
Hochschild. This concession is under an agreement between SESA and is managed separately by
Apex Silver. Under the terms of the agreement, Apex Silver can earn a 60% interest in the property
after a US$600,000 payment and a US$1,000,000 investment. After the initial payment and
investment, Apex Silver can do one of the following:

Elect to form a JV with Apex Silver as the Operator of Viejo Campo holding a 60%
interest and SESA holding the remaining 40% interest; or

Elect to acquire an additional 20% interest in Viejo Campo for a total of an 80% interest
by initiating a feasibility study at Viejo Campo within three years from the exercise of the call
option.
Should Apex Silver choose to form a JV with SESA, Apex Silver must make a one-time cash payment
of US$250,000 within 30 days of this decision to the SESA. In addition, with the formation of any JV,
SESA has 90 days to agree to enter into the JV or to convert its 40% interest into either:

3% NSR (the First NSR) on precious metal from Viejo Campo; or,
1% NSR (the Second NSR) on the remaining metals from Viejo Campo.

Should SESA elect to exchange its 40% interest for the NSR's discussed above, Apex Silver have the
right to purchase 50% of the First NSR for US$2,000,000 and 50% of the Second NSR for
US$1,000,000 within the first 3 years of commercial production.
To maintain these call options for the foreseen term of three years after the beginning of the
production, Apex Silver must make an annual payment of US$100,000 to SESA. This will be
allocated to the final price of the call option if Apex Silver exercises it within three years.
Table 2.4.1 shows the details of the purchase option and JV agreements.

2009

Should El Quevar go into production a 3% NSR royalty will be paid to Salta province, a 1% NSR
royalty will be paid to SESA for any production from the Quevar II concession and 50% of the Castor
concession under purchase option with SESA. The Viejo Campo NSR is discussed above. Should
there be any production from Nevado I, a 1% NSR royalty will also be paid to Saravia Carlos Alberto.

Within the concession block are 22 perlite quarries. Ownership of these quarries is listed in Section
13. Access across land controlled by Apex is granted by the province and can only be contested if
access impinges on exploration or mining activities. Currently there are no agreements or objections
to activities being conducted either by the perlite quarry operators or Apex Silver in the concession
area concerning surface access.

2.5 Environmental Liabilities and Permitting

There are no environmental liabilities associated with the Project. El Quevar lies entirely within La
Reserva Natural Los Andes a multi-use area classed as Categora de Manejo de Uso Mltiple VIII,
which allows production/extraction activities including mining and exploration. The reserves main
purpose is for the preservation of vicua. As a requirement of exploration activities on province land,
the concessionaire must complete an Environmental Information Report (EIR) for the concession
prior to any activities and must submit a new report every two years. There are three levels of
permitting:

Prospecting requiring an EIR Stage 1;

Drilling and Exploration requiring an EIR Stage 2; and
Production requiring an EIR Final Stage.

At this time, all 17 concessions are permitted for exploration. SRK has not reviewed the exploration
permits.

El Quevar,

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21

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3 Accessibility, Climate, Local Resources,

Infrastructure and Physiography (Item 7)
3.1

Topography, Elevation and Vegetation

El Quevar is located in an east-west oriented valley immediately west of Nevado de Pastos Grandes, a
6,130m peak, and east of the salt flat, Salar de Pocitos. Relief within the concession block ranges from
low in the resource area to moderate and high near Viejo Campo on the flanks of Nevado de Pastos
Grande. Elevations range from 4,300m to 5,200m in the mineralized zones. The Project camp facilities
are located 10km west of the resource area where the valley opens onto a large alluvial fan. Elevation
at the camp is 3,700m.
The Project is within the Domino Andino-Patagnico (Andean-Patagonian Domain) biogeographical
province of Argentina. In Argentina, this province parallels and includes the Andes Mountains from
north to south and extends from the mountains across Chile to the Atlantic Ocean at approximately
45S latitude. The Andean-Patagonian Domain is dominated by mineral soils consistent with arid, lowmoisture environments showing no diagnostic horizon development. Classified as aridisols and
entisols, these soils support limited vegetation characteristic of steppe climates adapted to harsh
conditions and include grasses and low growing woody plants. In the driest, rocky areas vegetation
disappear completely (Vector Argentina S.A., 2008).

3.2

Climate and Length of Operating Season

The climate is characteristic of high mountain environments. The weather is extremely dry and
ranges from polar conditions on the higher mountain peaks to arid steppe environments at the valley
floors. Most precipitation falls between November and March as heavy rains, hail and snow. Total
precipitation is variable and can range from 50mm in dry years to 200mm during wetter years.
Temperatures during the winter months vary from 10C day during the day to 25C at night. During
the summer months, temperatures in the daytime can reach 25C falling to -5 C night at night. The
operating season is year round at the Project (Vector Argentina S.A., 2008).

3.3

Physiography

El Quevar lies in the physiographic region of the Puna Block and extension of the Bolivian Altiplano
which is marked by high plateaus and broad valleys flanked by even higher mountains. The median
elevation of the Puna in this area is 3,800m. There is 2,470m of vertical relief from the Salar de
Positos to the peak of Nevado de Pastos (Vector Argentina S.A., 2008).

3.4

Access to Property

The Project is accessed from Salta by following National Road 51 (NR51) to the turn off to
Provincial Road 27 (PR27) for approximately 226km (Figure 2-1). From Salta to San Antonio de
los Cobres NR51 is 166km of paved road and beyond San Antonio de los Cobres to Provincial Road
27 (PR27), NR51 is a well-maintained gravel road. At the intersection between NR51 and PR27, El
Quevar is accessed by traveling south for approximately 30km and then east on the access road for
15km.

3.5

Surface Rights

Surface rights at El Quevar are controlled and administered by Salta Province. There are no required
agreements for access and no existing infrastructure limiting exploration activities.

3.6 Local Resources and Infrastructure

Salar de Pocitos, a village of 80 people, is approximately 18km west of El Quevar and the nearest
permanent habitation to the Project area. San Antonio de los Cobres supports a population of
approximately 4,200 people and is located 100km from the Project. Salar de Pocitos has a first aid
facility and San Antonio de los Cobres has a hospital with a Level II rating. Salta, located just under
300km to the east, is a large city with approximately 465,000 people. Salta has a major airport and
provides the primary support for the Project (Vector Argentina S.A., 2008a).
The area is a remote, rural setting with the chief economy related to animal husbandry and exploration
and mining support. The local population follows a traditional subsistence lifestyle of growing limited
crops, raising camelids, sheep and cattle and producing woolen articles for sale (Vector Argentina
S.A., 2008a).
3.6.1 Access Road and Transportation
El Quevar is connected to Salta by approximately 300km of well-maintained gravel and paved roads.
A railway connecting Salta, Argentina and Antofagasta, Chile is within 5km of the Project area. This
railway is currently undergoing maintenance and restoration. It is a government owned railway and
the government estimates that service along the line will be restored in 1 to 2 years (Vector Argentina
S.A., 2008a).
3.6.2 Power Supply
There is currently no external electric power to El Quevar. The camp is powered by two 275kVA
diesel, Caterpillar generators. A 354kVA, high-tension power line passes approximately 30km north of
El Quevar resource area and within 10km of the concession block. This power line runs between
Argentina and Chile, approximately 409km. and is owned by Termo Andes (Silex Argentina, S.A.,
2008a; Mercado, 2009).
In addition, a high-pressure gas pipeline has been constructed by Salta Province to support mining
operations on the Puna. This pipeline is located 5km from the resource area and passes through the
concession block controlled by Apex. This pipeline is 185km long and extends from Burras River,
through San Antonio de los Cobres and ending in Salar de Pocitos Station. This is a six inch line with
3
a capacity of 210,000m /day (Silex Argentina, S.A., 2008a; Mercardo, 2009).
3.6.3 Water Supply
Water for camp use is pumped from a well located at the camp. This well is approximately 100m
3
deep. The maximum capacity of this well is 29m /day (Vector Argentina S.A., 2008a). Water for
future mining activities would be supplied from additional wells.
3.6.4 Camp Site
Apex Silvers camp is located approximately 10km west of the resource area on a large
alluvial fan at 3,700m elevation. This camp is modular and can house 96 people. The four
main buildings include a full kitchen and dining area, offices, supervisors and workers rooms.
In

addition, there is a covered core shed, two generator sheds and a small shed over the well
(Vector Argentina S.A., 2008a).

4 History (Item 8)
El
Quevar
located
in an important
mining
region
of Argentina.
Between
1930 and
1950,
there
Should
the isproject
become
an operating
mine,
it would
be necessary
to construct
a man
camp
for was
the
small-scale
mining
of
lead
and
silver
from
limited
workings
but
no
recorded
production.
Limited
majority of the mine workers because of the distance from population centers.
mining was from the Yaxtch area at the Quespe Jaguar Mine. Most of the mining activity was at
3.6.5
Mani. Waste Disposal Area
Wastewater
frompermit
the camp
passedfor
through
system
that includes
aerobic digestion,
sedimentation
An exploitation
was is
granted
Castora3902
in 1961.
This exploitation
concession
has been
and
chlorination.
After
this
process,
the
liquids
are
sent
to
an
infiltration
well
for
introduction
into the
split in half and SESA controls one-half while Hochschild controls the other.
ground. Remaining solids will be stored in sealed containers and transported to Salar de Pocitos for
The
organized
exploration
completed
finalfirst
disposal
(Vector
Argentinawas
S.A.,
2008a). in the 1970s when Fabricaciones Militares drilled three
or four drillholes on the property. The exact number of drillholes is unknown and no data remains.
Currently,
domestic
waste
is disposed
de in
Pocitos
andNorte.
industrial
waste
temporarily
However, the
drillholes
were
thought of
to at
beSalar
drilled
Quevar
Later
thatissame
decade, stored
BHPon site.
Future plans
include construction
of a landfillofwith
anBilliton,
impermeable
membrane
for solid,
Utah
Minerals
International
(BHP), a subsidiary
BHP
drilled
three holes;
one innonthe
industrial
disposal
and
a
transfer
station
for
temporary
storage
for
hazardous
wastes.
These
two
areas
Mani structural trend and two in the breccia between Mani and Copn structural trends. There is no
will
constructed
close
to the present
camp on property controlled by Silex. Routine maintenance of
data be
available
for this
exploration
program.
vehicles is currently conducted in Salta (Vector Argentina S.A., 2008a).
Additional exploration prior to 1995 included excavation of several small pits at Yaxtch and Mani. It
The
exploration
concessions
contain this
sufficient
is notmining
known and
which
company or
parties completed
work. area for process facilities, tailings and
waste rock disposal should the project become an operating mine.
During the 1990s, the exploration division of Industrias Peoles, S.A.B. de C.V. (Peoles) explored
3.6.6
Manpower
the Quevar
Sur of the Project area. This was a limited program collecting surface samples only and no
mapping
wasexploration
completed.are Analytical
results
for the
sample and
exact de
sample
locations
are not
Laborers for
available from
the local
communities
of Salar
Pocitos,
San Antonio
de
available
Apex
Silver.
los Cobrestoand
Salta.
Geologists are available throughout Argentina. There is a history of mining in
the
region and
are available should
the Project
becomeNo.
an operating
In 1985,
1986skilled
and miners
1989, Quespejahuar
No. 12222,
Armonia
1542 andmine.
Vince No. 1578
respectively were converted to exploitation permits. These are currently held by Minera Hochschild
and explored by Apex Silver as part of the JV agreement.
Minera Hochschild completed a six hole, reverse circulation (RC) and diamond drilling program in
the Mani and west structural trend in 1997. In addition to this work, Minera Hochschild took surface
samples and constructed eight trenches across the Mani structural trend. Apex Silver has access to this
data.
In 1999, Mansfield collected samples from surface and a number of small exploration pits in the
Yaxtch structural trend at Quevar Sur. This data has been provided to Apex Silver.
Quirincolo I 18036 and El Quevar II were converted to exploitation permits in 2004. Quirincolo I is
controlled by Silex while El Quevar II is held by SESA. These are currently explored under the
agreements discussed in Section 2.
Apex Silver started exploration at El Quevar through its subsidiary Silex in 2004. Since then, four
exploration programs have been completed which include 3,000 surface samples and 15,506.3m of
core drilling in 81 drillholes.
Quirincolo II 18037 was converted to an exploitation permit in 2005. This exploitation permit is held
by Silex,

4.1 Ownership
Minerals and surface rights belong to the Salta Province, Argentina, and
through canon payments and royalty agreements with the province,
companies explore and extract minerals. Past

exploration activities and mining activities have included the following

individuals and companies through agreement with Salta Province:


1930-1950: Artisanal miners extracted silver and lead ore from Mani and Yaxtch
structural trends;

1970s: Fabricaciones Milatares explored Quevar Norte and later that decade, BHP
explored Quevar Sur including the Mani and Copn structural trends;

1990s: Peoles explored Quevar Sur;

1997: Hochschild explored the Mani structural trend; and

1999: Mansfield conducted surface exploration work in the Yaxtch structural trend at
Quevar Sur.

5 Geologic Setting (Item 9)

5.1 Regional Geology
El Quevar is located in the eastern Puna Block, which is the southern extension of the Bolivian
Altiplano physiographic province. The regional geology is dominated by the Tertiary age El Quevar
Volcanic Complex (CVQ), which hosts the Project mineralization. This volcanic complex covers
2
approximately 1,150km and is thought to have formed in a rift basin that developed between the
Cretaceous and Paleocene (Petrinovic, 1999; Silex Argentina, S.A., 2008b).
The CVQ formed between the Tertiary and Quarternary periods in a series of volcanic eruptions,
culminating in caldera collapse with subsequent doming and formation of a stratovolcano. Most of the
volcanic complex formed between 19.0 and 0.5Ma in five main pulses dated at 19 to 17Ma, 13 to
4.2
Past
Exploration
Development
12Ma,
10Ma,
7 to 6Ma and and
1 to 0.5Ma.
Lithology includes extensive pyroclastic flows near the
extrusive center including ignimbrite sheets of lithic and crystal-lithic tuffs. Above this are rhyolite
The Project has been periodically explored since 1930. Some limited small-scale production occurred
flows equivalent to the Quirn rhyolite indicating that for a period subsequent pulses were increasingly
between 1930 and 1950 in the Mani and Yaxtch structural trends. Exploration has included surface
silicic. This was followed by an intermediate volcanic event that included andesitic flows and
sampling, trenching, pitting and approximately seven drillholes prior to 1980. There is no data
resurgent domes of dacitic composition. Doming is associated with multiple intrusions of different
available for this exploration work. Exploration work was focused in small areas in El Quevar Sur
phases and mineralizing events. The CVQ is spatially related to the 305 trending Calama-Olacapatoand El Quevar Norte where silicified silver-bearing quartz veins outcrop. More recent exploration has
Toro regional lineament. A smaller, secondary set of regional lineaments, bearing 025, are interpreted
included detailed surface mapping, and 15,506.3m of core drilling in 81 drillholes.
as older and related to folding in the Paleozoic basement rocks (Petrinovic, 1999; Silex Argentina,
S.A., 2008a; Silex Argentina, S.A., 2008b).

4.3 Historic Mineral Resource and Reserve Estimates

The
underlain
by Ordovician
greenschist
metapelites and, in some places, by
ThereCVQ
are nois historic
resource
and reserveage,
estimates
for El facies
Quevar.
Miocene to Pliocene age, red sandstone that is correlative to the Pastos Grandes Group. Late
4.4
Historic
Production
Pleistocene
glaciation
and fluvial processes have eroded the complex, creating erosional windows and
depositing
alluvial production
fans. Erosional
in the project
area have
exposed
intrusive
There is noextensive
recorded historic
for El windows
Quevar. Previous
production
from small
workings
at
the Project
have been
limited
artisanal-style
mining,
focused atalteration.
Yaxtch atThese
the Quespe
Jaguar
Mine,
domes,
structural
controls
andto areas
of extensive
hydrothermal
erosional
windows
and
in the Mani
structural
Most production
is thought
have
beenCampo
in the in
Mani
Mining
correspond
to Quevar
Sur trend.
(the resource
area), Quevar
Norte toand
Viejo
the area.
Project
Area
was focused
on the
extraction
silver
and baseS.A.,
metals.
(Silex
Argentina,
S.A.,
2008a; of
Silex
Argentina,
2008b). Regional geology is shown in Figure 5-1.

5.2 Local Geology

El Quevar lies within the Calama-Olacapato-Toro regional lineament. Local geology at El Quevar is
dominated by Tertiary volcanic flows and intrusive rocks overlain in places by Pleistocene moraine
and Quaternary rockslide, alluvium and colluviums deposits. There has been no radiometric age
dating of rocks within the project area, but dates for the CVQ vary between 192Ma to 0.5 Ma. The
volcanic sequence begins with volcanic glass and perlites, overlain by dacitic domes, fault related
breccia zones including El Quevar Breccia, lithic tuffs and finally capped by dacitic flows. The
lithologic sequence from oldest to youngest is listed below:
Perlites and volcanic glass (PE);
Dacitic domes (DD);
El Quevar Breccia (BXQ);

Lithic tuffs (TDL);

 Dacitic flows (LD); and

Quaternary (QC)-(QA)-(QM).
Perlite occurs at the base of the exposed volcanic sequence and is massive, green colored and shows
no alteration. Porphyritic dacitic domes composed of plagioclase feldspar, quartz and biotite have the
greatest exposure in the project area. In places, porphyritic dacite hosts the mineralization. This
relationship has been identified at surface. El Quevar Breccia (BXQ) is primarily a monomictic
breccia of dacitic composition and confined to fault zones between dacitic domes. This breccia is
matrix supported with sub-rounded to angular clasts ranging from
0.5 to 30cm in size. El Quevar Breccia is the primary host rock for mineralization. Both the
porphyritic dacite and El Quevar Breccia show hydrothermal alteration. These rocks and the breccia
zones are overlain by lithic tuffs that are primarily monomictic, matrix supported tuff with, subrounded to angular clasts, 4 to 70cm in size. Lithic tuffs show weak argillic and propyllitic alteration
in some places. Capping the sequence is a series of dacitic flows that show porphyritic and flow
banding textures. These rocks are composed of plagioclase, quartz and biotite. Feldspars in the dacitic
flows are up to 5cm in size. The dacitic flows show no hydrothermal alteration. Quaternary cover
consists of alluvium, colluvium and morainal deposits found along creeks and hillsides. According to
drilling information, moraine deposits are locally up to 40m deep (Silex Argentina S.A., 2008b). Local
geology is shown in Figure 5-2.
5.2.1 Alteration
Hydrothermal alteration found throughout CVQ is associated with structural controls. These controls
are identified structural trends and related breccia zones. This hydrothermal alteration is identified as
silicic, advanced argillic, argillic and propylitic. El Quevar Sur and Norte are the most explored areas
of the Project and are used as models for exploration elsewhere in the Project area. In Quevar Sur and
Norte, the most abundant and easily identifiable alteration is argillic composed of kaolinite, illite and
smectite. Argillic alteration, silicification and vuggy quartz are often associated with significant Ag
and Pb/Zn content. The next most abundant alteration is advanced argillic composed of kaolinite,
alunite and dickite. Alunite occurs as both crystalline and porcelaneous material. Silicification with
vuggy quartz and both types of alunite is restricted to the mineralized structures. Propyllitic alteration
consisting mainly of chlorite and pyrite is also found distal to the mineralization. At El Quevar Sur
propylitic alteration is only observed in the deeper drillholes (Silex Argentina S.A., 2008b).
Within the structural trends and associated breccias, the hydrothermal alteration displays lateral
zoning. The zoning pattern is identified by pervasive silicification at the center extending outward into
advanced argillic and argillic alteration. The advanced argillic to argillic transition is as follows:

Quartz-alunite
Quartz-kaolinite; and
Chlorite-smecitite.

Higher-grade areas are associated with hydrothermal breccia zones showing strong and pervasive
silicification and vuggy silica. The vuggy silica is interpreted to be the result of acid leaching and
preceded the deposition of galena and sphalerite. These silica zones may be up to 10m thick.

Table 5.2.1.1 summarizes a simplified paragenetic sequence for the hydrothermal phases and Table
5.2.1.2 places the hydrothermal phases in the context of the geological evolution of the Project area
(Silex Argentina S.A., 2008b).

Table 5.2.1.1: Simplified Paragenetic Sequence for the Hydrothermal Phases

Alteration Intensity
n/a

Hydrothermal Phases*
Fresh

Fresh rock

PHASE I
Clay, fine pyrite
PHASE II Gray and white silica, intense
+ III refer to table 5.2.1.2.
pyrite
*Simplified,
Acid leaching followed by
PHASE Ag-sulfosalts +/- Barite +/-

STRONG

MEDIUM

Table 5.2.1.2: Hydrothermal Phases Related to Geological Evolution of the Project Area
Time Sequence Geologic Event/Hydrothermal Phase Dacite dome
1
intrusion / extrusion
2
Fault induced brecciation of Dacite
3
Hydrothermal Brecciation
4
PHASE I Pervasive alteration clay + pyrite
Gray + white silica alteration and infill,
5
PHASE II
FBV*
6
PHASE III Pyrite alteration and infill, FBV
Acid leaching, leading to secondary
7
PHASE IV
porosity generation, FBV
8
PHASE VaBarite +/- alunite +/- clay infill, FBV
8
PHASE VbAg-sulfosalts +/- galena +/- sphalerite
9
Uplift and erosion of Quevar complex
*FBV= Fault Breccia Vein
10
Extrusion of Dacitic flows

5.2.2 Structure
The two main structural trends identified at El Quevar Sur and Norte have an azimuth of 090 to 095
and 035. Alteration and mineralization identified in the Project area occurs along the 090 to 095
striking structural trend. Domes have been emplaced where these structures and at the 035 striking
structures intersect.
Recent trench mapping at El Quevar Sur has identified a dextral, normal fault striking 280 and
dipping 70NW, which is interpreted as related to the Yaxtch structural zone. The second structure
shows normal, sinistral movement and strikes 010, dipping 75SE. This crosscuts and offsets the 280
structure. These intersections and offsets are of exploration interest, and are being used as a guide for
other targets at El Quevar (Silex Argentina S.A., 2008b).
Apex Silver is also drilling and has intercepts in the Mani and Copan structural trends. These
intercepts are not included in the current resource estimate.

5.3 Project Geology

Within the Project area, exploration models are based on mapping, drilling and geophysical data
collected within the Yaxtch and Copn structural trends in Quevar Sur. The resource for the Project
is within the Yaxtch structural trend.

At Quevar Sur, mineralization is confined to the structural trends and related breccias zones including
Yaxtch

, Cop

n, Mani and Argentina. The Argentina zone can reach 10m in width in places. Exploration has not
identified a correlation between lithology and mineralization, but the primary host rocks in Project
area are porphyritic dacitic domes. Within the structural trends, individual mineralized zones average
1 to 15cm but can reach 1m in width. These zones can aggregate mineralized intervals up to 25m in
width. The mineralization is deposited in association with vuggy silica zones that can reach 10m in
width. Mineralized breccia occurs as both fault breccia (FBV), which is matrix supported with angular
clasts and fine silica matrix and as hydrothermal breccia (BXH) also a matrix supported breccia with
angular to subangular clasts. Hydrothermal breccia commonly contains oxides and boxworks and is
found in many areas of the Project. Andrea Breccia is an example of hydrothermal breccia.
Mineralization at El Quevar includes:

Sulfosalts: Enargite, tethraedrite, tennantite, bismutite and pyrargirite;

Sulfide minerals: Pyrite, galena and sphalerite;
Sulfate minerals: Plumbojarosite; and
Native silver.

These minerals occur as open space filling, disseminations and in massive zones (Silex Argentina S.A.,
2008b).
The Yaxtch structural trend is a structural corridor 750m long and 40 to 150m wide, characterized
by strong to moderate silica and quartz-alunite alteration. The Yaxtch mineralized zone is bounded by
a hangingwall and a footwall fault. At surface, the mineralization branches into three separate
structures. The strike is variable between 090 in the eastern area to 300 in the western area. The
structure dips from 70 to 65N at surface and flattens to 45 to 55N at depth (Silex Argentina S.A.,
2008b). Figure 5-3 shows a representative cross section through the Yaxtch structural trend.
Yaxtch is strongly silicified. Vuggy silica is found both at surface and at depth. Near surface, the
vugs are partially filled with alunite and minor barite. At depth, the vugs are filled with barite, white
and pink alunite, sulfides and silver sulfosalts. Massive sulfide minerals are also found in places at
depth (Silex Argentina S.A., 2008b).

Ex
pl
an
ati
on

Apex has interpreted the central part of the Yaxtch zone as a horst block that has been rotated up to
the north where most of the drilling has been focused. Apex has observed a transition to a more goldrich regime at shallower depths in this area, and based on zoning in epithermal systems is of the
opinion that part of the mineralization has been eroded. Drilling and structural mapping in trenches
have identified 035 striking faults at the east and west ends of the main zone and local geological and
geophysical features including argillic alteration mapped at surface strongly suggest that the zone
continues both east and west and has been down dropped relative to the central part of Yaxtch. This
also suggests that the upper parts of the mineralized zone may be preserved in these down-dropped
extensions, providing for the possibility of more silver mineralization in these areas. These areas are
the principle targets of the current drilling program, which is due to begin in February 2009. (Alvarez,
et al., 2009; Silex Argentina S.A., 2008b).

3 Eolian Sand Dune Deposits

1
3
Colluvium Deposits
0
2
Lacustrian Deposits
9
2
New Alluvium Deposits
8
2
Detrital Flows
7
2
Alluvial Fans
6
2
Salars
5
2 Cerro Blanco Pyroclastic
4 Flows

Domes 19
23b Peinnado
Basalt 23a Cerro Stratovolcano
Condor Andesite Andesits Flows
and Breccias 18
22c Porphyritic
Dacitic Domes 22b Rosada
Ignimbrite Flow
Basalt 22a
17 Los
Stratovolcano
related Porphyritic Colorados
Andesite 21 Dacite Ignimbrite Flow
and Andesite Flows 16 Volcanic
Complex
and Domes 20
Andesite and
Laguna Amarga
Ignimbrite Flows Dacite Flows 15
and Dacitic
Sues Formation

La Hoyada
Volcanic 14
Complex
Basalt
14a
5 Falda
Tebenquincho
Andesite
Cienaga
and
Formation
9
13
Dacite Formation
4
Agua
Pantanoso
Dulce
Volcanic
SedimentaryAndesite
Formation
and8
BrecciaVolcanic
14b
Dacite
Patquia
Bodies
de la
Andesite
Cortaderas
and
12Cuesta
Vizcachera
Dacite Chicas
Complex7
FormationFormation
Volcanic
3 Las
Upper
Las Yeguas
BrecciaPlanchadas
and
Member
Formation
11 6
Flows 14c
Formation
Vizcachera
Basic-2
Domes Fambalasto
andFormationUltrabasic
Intrusives
Formation
14d
1
Lower
Tramontana
Dacitic Antofalla
Member
Complex
10
Ignimbrite
Metamorphic
Geste
Gabbro and
Flows Group
Formation
Gabbro-

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Deposit Type (Item 10)

El Quevar is interpreted as an intermediate sulfidation (IS) epithermal deposit with some high
sulfidation (HS) characteristics. El Quevar is associated with caldera collapse, stratovolcano
formation and development of dacitic domes. These types of deposits form under acidic, oxidizing
conditions within 1km of the surface and between temperatures of 150 and 250C. They are often
associated with silicic to intermediate volcanic rocks and hot spring deposits, and share similar ages as
their host rocks. Host rocks include andesite, rhyodacite and locally rhyolite. IS and HS epithermal
deposits are both characterized by wallrock replacement, breccias, sulfide disseminations and siliceous
vein filling. Quartz may also have a crustiform texture. Typical alteration assemblages include
advanced argillic, alunite and kaolinite with pyrophyllite deeper in the system. These may be
accompanied by sericite, adularia and chlorite. Gangue minerals include vuggy quartz and silica as
well as barite. Carbonate and selenides are usually absent and manganese minerals are rare in HS
types. However, manganese minerals are more abundant in IS deposits and selenide minerals may be
present locally. Barite is often present in association with gold. Ore mineralogy includes native gold,
electrum, gold and silver telluride minerals, bornite, enargite, tennantite, covelite, chalcopyrite,
sphalerite and galena, and epithermal deposits normally show vertical zoning. Zoning in IS deposits
are often characterized by antimony, bismuth and gold anomalies with some silver values. The boiling
zone is marked by high-grade silver and the lower parts of these systems are richer in lead and zinc.
There is typically more copper in these systems than zinc and lead. This contrasts with HS deposits,
which generally are base-metal poor (Guilbert, et al, 1986; Camprub, et al, 2006; Charchafli, 2007;
Taylor, 2007; Sillitoe, 2008).
El Quevar lies within the extension of the Bolivian metallogenic province that extends from Bolivia
north into Peru and south into northern Argentina and Chile. El Quevar is specifically located in the
Altiplano and Cordillera Occidental Polymetallic Belt, which is the western most region of this
metallogenic province. This belt includes many types of epithermal deposits including IS and HS
epithermal deposits. El Quevar is more characteristic of IS type epithermal deposits and is similar to
San Antonio de Lipez, Mulatos Todos Los Santos and San Cristobal in Bolivia (Arce, 2008). Other
large IS deposits found worldwide include the Fresnillo deposit in Zacatecas State, Mxico. Fresnillo
is a silver producer and has been in production since Colonial times (Camprub, et al, 2006). Apex
Silver is currently using Bolivian-type IS and to a lesser extent HS epithermal deposits as a model for
exploration in this region.

7 Mineralization

(Item 11)

Within the Project area, exploration models are based on mapping, drilling and geophysics data
collected within the Yaxtch and Copn structural trends in Quevar Sur. The resource for the Project
is within the Yaxtch structural trend (Silex Argentina S.A., 2008b).

7.1 Mineralized Zones

At Quevar Sur, mineralization is confined to the structural trends and associated breccia zones
including Yaxtch, Copn, Mani and Argentina. Within the structural trends, mineralization is
associated with vuggy silica in zones averaging 1 to 15cm wide but may reach 1m in width in some
areas. Mineralized breccia occurs as both fault breccia (FBV), which is matrix supported having
angular clasts with a fine silica matrix and as hydrothermal Breccia (BXH) also a matrix supported
breccia with angular to subangular clasts. Hydrothermal breccia commonly contains oxide minerals
and boxwork textures and are also associated with faulting (Silex Argentina S.A., 2008b).
Mineralized zones are associated with the following three hydrothermal alteration zones:

Silicification;
Advanced argillic; and

Argillic. Argillic and advanced argillic are transitional and show the following three
assemblages:

Quartz-alunite

Quartz-kaolinite; and

Chlorite-smecitite.
The higher-grade areas of mineralization are associated with hydrothermal breccias showing strong
and pervasive silicification with vuggy silica (Silex Argentina S.A., 2008b).

7.2 Surrounding Rock Types

The lithologic sequence from oldest to youngest at El Quevar is

Perlites and volcanic glass (PE);

Dacitic domes (DD);
El Quevar Breccia (BXQ);
Lithic tuffs (TDL);
Dacitic flows (LD); and
Quaternary (QC)-(QA)-(QM).

Exploration has not identified a correlation between lithology and mineralization, but the primary host
rock in Project area are porphyritic, dacitic domes composed of plagioclase, feldspar, quartz and
biotite. Dacitic domes have the greatest areal extent in the Project area. El Quevar Breccia (BXQ) is
primarily a monomictic breccia of dacitic composition. This breccia is matrix supported with subrounded to angular clasts ranging from 0.5 to 30cm in size.

Mineralization is found in the El Quevar Breccia found within and extending between the dacitic
domes. Both the porphyritic dacite and El Quevar Breccia show extensive hydrothermal alteration
(Silex Argentina S.A., 2008b).

7.3 Relevant Geological Controls

Alteration and mineralization identified in the Project area are controlled by a 090 to 095 structural
trend. Domes have been emplaced at the intersection of the structures oriented 090 to 095 and 035.
Structures that may offset the mineralization are normal, sinistral faults that strikes 010, dipping
75SE and occurs at each end of the Yaxtch zone. The intersections of the 090 to 095 and 035
trending structures and possible offsets relating to the 010 fault are of exploration interest, and are
being used as a guide in other areas of El Quevar (Silex Argentina S.A., 2008b). It appears that
mineralization at Yaxtch has been terminated by these faults and Apex Silver reports that it has
identified the probable continuation of mineralization to the west and east.

7.4 Type, Character and Distribution of Mineralization

Mineralization occurs as open space filling, disseminations and in massive zones. Ore mineralization
includes:

Sulfosalts: enargite, tethraedrite, tennantite, bismuthinite and pyrargirite;

Sulfide minerals: pyrite, galena and sphalerite;
Sulfate minerals: Plumbojarosite; and
Native silver.

Mineralization is found in strongly silicified, advanced argillic and agillic alteration zones. Vuggy
silica associated with silicification alteration is found both at surface and at depth within the El Quevar
Breccia. Near surface, the vugs are partially filled with alunite and minor barite. At depth, the vugs
are filled with barite, white and pink alunite, sulfides and silver sulfosalts. Massive sulfide minerals
are also found in places at depth (Silex Argentina S.A., 2008b).
In Yaxtch structural trend the mineralized zone is 750m long and 40 to 150m wide. It is characterized
by strong to moderate silica alteration and quartz-alunite bounded by two faults; one in the
hangingwall and one in the footwall of the mineralized zone. At surface, the mineralization branches
into three separate structures. The strike is variable between 090 at the eastern end to 300 in the
western end. The structure dips from 70 to 65N at surface and flattens to 45 to 55N at depth (Silex
Argentina S.A., 2008b).
Silver mineralization tends to be concentrated at the upper and lower contacts zones of the breccia with
the host rock and may locally occur in a central zone as well. Copper mineralization is located in the
central core of the breccias and has better grades higher in the system. Lead mineralization tends to
track silver mineralization, while zinc mineralization is exterior to the silver mineralization. Higher
gold grades tend to be located below elevations of 4,700m

Exploration

(Item 12)

Exploration was conducted at the Project between 1970 and 1980 by Fabricaciones Militares, BHPUtah Minerals International and Peoles. The first organized exploration was completed in the 1970s
when Fabricaciones Militares drilled three or four drillholes in Quevar Norte. Later that same decade,
BHP drilled three holes in breccia found along the Mani structural trend in Quevar Sur. BHPs
exploration model was thought to be a porphyry copper system. During the 1990s, the exploration
division of Peoles explored Quevar Sur. This was a limited program collecting surface samples only
and no mapping was completed. These exploration projects predated requirements for reporting data
to the Salta Province and Apex Silver has been unable to obtain any data on these exploration
programs.
Minera Hochschild completed a six hole, RC and diamond drilling program in the Mani structural
trend in 1997. In addition to this work, Minera Hochschild took surface samples and constructed eight
trenches across the Mani structural trend. Apex Silver has this data.
In 1999, Mansfield collected samples from surface and a number of small exploration pits in the
Yaxtch structural trend and Quevar Sur. This data has been provided to Apex Silver.
Apex Silver acquired exploration rights to El Quevar in October 2004. Between October 2004 and
August 2006, Apex Silver mapped in the Quevar Sur area at 1:5,000 and 1:10,000 scales. At this
time, various outcrops were sampled. Outcrop sampling included channel, panel and select chip
samples. This information was used to design a diamond drilling program. This 17-hole core drilling
program was completed between June and August of 2006 and totaled 2,373.8m. The drilling
company used for this drilling phase was Major Perforaciones S.A., a subsidiary of Major Drilling
based in Mendoza, Argentina. These holes were drilled in Quevar Sur targeting the Mani, Copn and
Yaxtch structural trends (Silex Argentina S.A., 2006).
Between March and June 2007, Apex Silver drilled 19 additional core holes totaling 2,481.75m using
Bolland Minera S.A. based in Buenos Aires, Argentina as the drilling contractor. Seventeen of these
holes were drilled in Quevar Sur and two were exploration holes in Quevar Norte. Those drilled at
Quevar Sur include nine drilled in the Yaxtch structural trend to infill and test the extension of the
mineralized zone, seven holes were drilled in the Mani structural trend and one was drilled exclusively
for exploration. The two holes drilled in Quevar Norte were exploration holes drilled approximately
3km northeast of the Yaxtch structural trend. In addition to drilling, 16 trenches totaling 3,300m were
excavated and sampled. Of these four trenches were constructed in Quevar Norte and twelve in
Quevar Sur (Silex Argentina S.A., 2007).
A ground based geophysical program was completed between December 2007 and February 2008,
using an IP/Resistivity with 3-D Pole/Dipole survey over El Quevar Sur. This work was contracted to
Quantec Geoscience Argentina S.A. based in Mendoza, Argentina. Line separation was at 200 and
400m with markers at 50m intervals along lines. The instruments used were an Iris Elrec-6 receiver
and an Iris VIP 3000 transmitter. The offset dipole array provides information to approximately 600m
depth at the center of the survey. The purpose of this survey was to identify sulfide mineralization that
may be associated with the high sulfidation epithermal system and it was expected that these areas
would have high chargeability and wide conductive zones (Quantec Geoscience Argentina, S.A.,
2008).

In late 2007, Apex Silver submitted 24 samples from six drillholes in the Yaxtch

structural zone to Brockway and Franquesa Consultores (

BFC

), based in Santiago, Chile, for petrographic and reflected light microscopy work. In January of 2008,
BFC provided a report identifying the host rocks as lithic tuff, volcanic breccia and altered volcanic
breccia. Minerals identified in reflected light included pyrite, sphalerite, enargite, tennantitetetrahedrite, covellite, pryargyrite, chalcopyrite, galena, native silver and argentite. Argentojarosite and
plumbojarosite were identified using an electron microprobe. As a follow up to this work, 14 of the 24
samples had additional electron microprobe work for confirmation purposes. The results of the
additional analysis were reported by BFC in June of 2008 (Brockway, 2008; Brockway, 2008a).

A third drilling program was completed between January and June 2008. This program included 43
diamond drillholes totaling 10,650.75m. The two drilling companies used for this program were
Patagonia Drill, a subsidiary of Boart Longyear, based in Mendoza, Argentina and the Argentine
division of Falcon Drilling Ltd., based in Salta. Falcon Drilling Ltd. is a Canadian company. The
third drilling program focused on definition drilling and infill drilling at Yaxtch and exploration
around the Copn structural trend. Apex Silver completed and sampled 21 additional trenches in this
area and remapped much of Quevar Sur and Norte.

8.1 Interpretation
None of the exploration data prior to 1997 is available for review and exploration methods used by
Fabricaciones Militares, BHP and Peoles are unknown. Apex Silver has access to the more recent
data from its JV partner Minera Hochschild and from Mansfield. Apex Silver has used this data and
through additional exploration has generated multiple targets and focused infill and definition drilling
on its resource area at Yaxtch. Drilling and sampling procedures used by Apex Silver are discussed
in the following sections. SRK considers the exploration methods used by Apex Silver to be
appropriate for this type of deposit. The work carried out by Apex Silver has been conducted
according to industry best practices.

9 Drilling

(Item 13)

9.1 Type and Extent of Drilling

Apex Silver has completed 15,506.3m of diamond drilling in 81 drillholes between 2006 and 2008. Two
holes were drilled at Quevar Norte and the remainder were drilled at Quevar Sur. The total area drilled is
approximately 4.8km x 2.3km, with the majority of holes drilled at Yaxtch over an 850m strike length.
The drillholes are oriented perpendicular to the mineralized structures.
Drilling was conducted by four separate drilling companies and completed during three drilling
programs. All core drilled was HQ size (6.35cm). It was necessary to reduce to NQ (4.76cm) in only
one drillhole (QVD63) due to bad ground. Table 9.1.1 summarizes the drilling by program and
drilling contractor and Figure 9-1 shows drillhole locations.
Table 9.1.1: El Quevar Drilling by Program and Contractor
Progra Contractor Major
m 2006 Perforaciones S.A.
2007
2008
2008

Bolland Minera S.A.

Patagonia Drill/Boart
Longyear
Falcon Drilling Ltd.
Total

Meters No. of
2,373.80 Holes
19
2,481.75
19
8,415.75

35

2,235.00
15,506.3

8
81

Drilling activities are monitored by two operations chiefs, one per shift, who divide their time between
drilling and camp responsibilities. Drill sites are located using a handheld Global Positioning System
receiver (GPS) by a Silex technician. A bulldozer is used to prepare the site and the site is then
verified by a geologist who marks the hole orientation on the ground with either paint or three wooden
stakes. A collar stake is set out with the hole number, planned drilling depth, azimuth and inclination
for the drillers. Once the drill rig is on site and ready to drill, the azimuth and inclination of the set-up
is checked by a geologist. Azimuth must be within 2 and inclination within 1 of the planned
drillhole.
Contractors tricone through the overburden to solid rock and casing is set in the upper part of the hole
prior to coring. Drilling is performed in two, 12 hour shifts and core is picked up twice daily during
shift change. A shift report on drilling activities is provided at that time by the drilling contractor.
During drilling, active drills are visited two to three times per day by a geologist or the operations
chief. Water for drilling is controlled by Silex who employs a dedicated helper for this purpose. Water
trucks for drilling are provided by the drilling contractor. It is the drilling contractors responsibility to
keep the drill site clean. All drilling fluids are collected in a sump and clear water is allowed to drain
off. In addition, sheets of PVC material are placed under drilling equipment in case of spills.
After completion of a drillhole, the drilling contractor performs a downhole survey. During the 2008
drilling program, Falcon Drilling Ltd., provided a Sperry Sun and Patagonia Drill provided a Reflex
Photobor. Downhole surveys are made at 25m intervals and are checked by an operations chief. When
the downhole survey is completed, the drilling contractor places polyvinyl chloride (PVC) pipe in
the hole and cements the drillhole collar. The drillhole is then marked with drillhole number, total
depth, azimuth and inclination. After the drill is moved

off the drill site, the operations chief verifies that the site has been left in acceptable condition and
takes the collar coordinates with a GPS.

9.2 Logging
Core is placed in wooden boxes holding 3m of core at the drill and moved to the core shed by an
operations chief or a technician, twice daily. The core is either in the custody of the drilling contractor
or Silex at all times. In the core shed, a technician cleans the core with water and a brush and marks
the box at meter intervals and verifies depths. The technician also marks the start and end of the
interval and writes the drillhole number on the top and side of the core box. Next the technician
measures and records geotechnical information including recovery, rock quality designation (RQD)
>10cm and both mechanical and physical fracture frequency. Core recovery is 90% or better.
Geologists describe the core on paper logs, and then enter the data into a computer. The paper log has
sections for comments and a graphic log with a separate area for drawing fractures. Mineralization,
alteration and alteration intensity are also recorded on the log sheet and there is an area for sample
interval, sample number and analytical results. The geologist marks the core for any additional
observations including passive infrared mineral analyzer (PIMA) measurements. The geologist then
selects sample intervals and samples for density measurements. Once this is completed, the core is
photographed and split for analysis. Sample length within the mineralized zone is a nominal 1m, but
may vary due to changes in lithology. The entire mineralized zone is sampled and 2 to 3m on either
side of the zone.
Drill core is stored onsite in a locked facility and each hole is color coded for ease of identification. A
paper file is maintained for each stored drillhole with a checklist for each item that must be completed
for every hole and included in the file. This includes a hole summary, geological log, geotechnical log,
analytical results, drill reports, certificate from the surveyor, photographs, downhole survey
information and density measurements.

9.3 Results
At the time, all drill programs had been completed and SRK did not observe active drilling. SRK
found the completed drill pads to be clean and marked as described. The core logging and storage
facilities at El Quevar are clean and well organized enabling Apex Silver to easily locate reference
core and supporting data. SRK is of the opinion that Apex Silver is using industry best practice for its
drilling and core logging procedures.

El Quevar, Salta Province, Argentina

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10 Sampling Method and Approach

(Item 14)

10.1 Sample Methods

Sample intervals are marked on the core by a geologist. Sample intervals are a nominal 1m length in
the mineralized zone, but may be longer or shorter at changes in lithology. Outside the mineralized
zone, samples are 2m in length. In general, only the mineralized zone and a few meters above and
below are sampled. If necessary, the geologist may also draw a cut line longitudinally on the core to
guide the sample technician in splitting the core. The beginning and end of each sample interval is
marked on the core box. Drill core is split using a core saw in competent zones and a trowel in broken
zones. Each sample is placed in a plastic bag with two labels, one inside with the sample and one
placed on the outside of the bag. The bag is then folded over and stapled. Sample numbers are
randomly generated and recorded on color-coded sheets for later correlation.

10.2 Factors Impacting Accuracy of Results

El Quevar mineralization is a competent breccia with areas of open space. Mineralization occurs as
open space filling, disseminations and zones of massive sulfide minerals. More rarely, native silver
has been observed in core and identified during ore microscopy studies. Because of void space and
the possibility of localized concentrations of mineralization as well as rare nugget silver, it is
important that Apex Silver provide a large, representative sample for analysis. It is SRKs opinion that
Apex Silver is taking appropriate measures to ensure that sampling is unbiased.
QA/QC discussed in Section 12 did not detect any deficiencies in analytical results. SRK is of the
opinion that Apex Silver is collecting adequate sample to compensate for mineral distribution and size
of sulfide minerals and the rare occurrence of native silver.

10.3 Sample Quality and Parameters

Drill core recoveries are reported at 90% or better. The majority of samples in the mineralized zone
are 1.0m. Outside the mineralized zone samples are 2.0m in length. The maximum sample interval is
4.0m and the minimum interval was 0.3m. Samples intervals were determined with consideration to
lithologic controls. Internal waste was sampled and samples were taken several meters on either side
of the mineralized zone in wallrock. Should the wallrock sample have elevated analytical results,
Apex Silver takes additional samples into the wallrock. It is SRKs opinion that the sampling method
and sample length are appropriate for the deposit.

10.4 Relevant Samples

A summary of relevant samples for the drilling outside the Yaxtch zone is presented in Table
10.4.1. A resource estimation has been conducted for Yaxtch and is presented in Section 15.

Table 10.4.1: Summary of Relevant Samples, Excluding Yaxtch

QVD-02 Mani East <30g/t -55.0 QVD-32 Yaxtch 21.6 27.5 5.9 -55.0 62 QVD-15 Andrea <30g/t -58.0 QVD-16 Andrea 180.0 180.0 1.0 -53.0 171
QVD-14 Copan <30g/t -59.0 QVD-51 Copan 104.0 113.0 9.0 -58.0 236 QVD-55 Copan 29.0 32.0 3.0 -45.0 213 QVD-56 Copan 117.0 236.0 9.0
-54.0 75 QVD-57 Copan 158.0 163.0 5.0 -55.0 83 QVD-59 Copan 189.0 190.0 1.0 -60.0 43 QVD-62 Copan <30g/t -46.0 QVD-63 Copan 220.0
227.0 7.0 -69.0 91 QVD-67 Copan <30g/t -65.0 QVD-01 Mani <30g/t -50.0 QVD-08A Mani 45.0 49.0 4.0 -68.0 131 QVD-09 Mani <30g/t -55.0
QVD-10 Mani <30g/t -50.0 QVD-11 Mani 15.0 24.0 9.0 -50.0 111 QVD-12 Mani 36.0 39.0 3.0 -60.0 37 QVD-13 Mani 12.0 20.0 8.0 -63.0 76
QVD-17 Mani 21.0 26.0 5.0 -58.0 35 QVD-26A Mani 48.0 56.0 8.0 -85.0 90 QVD-27 Mani <30g/t -55.0 QVD-28 Mani <30g/t -88.0 QVD-29 Mani
<30g/t -60.0 QVD-31 Mani <30g/t -65.0 QVD-33 Mani 52.0 54.0 2.0 -90.0 45 QVD-34 Quevar Norte 47.0 48.0 1.0 -69.0 42 QVD-35 Quevar Norte
<30g/t -60.0 QVD-05 Yaxtch Ne 71.0 77.0 6.0 -55.0 57 QVD-25 Yaxtch NE <30g/t -47.0

* Intervals are near true width because holes were drilled near perpendicular to mineralization.

11 Sample Preparation, Analyses and Security

(Item 15)

El Quevar samples have been prepared and analyzed at two laboratories, Alex Stewart (QVD-01
through QVD-42) and ALS Chemex (QVD-43 through QVD-78). ALS Chemex has a prep lab in
Mendoza, Argentina and samples are sent to La Serena, Chile for analysis.

11.1 Sample Preparation and Assaying Methods Alex Stewart

Samples were shipped to the Alex Stewart laboratory in Mendoza, Argentina by Silex, where they
were prepped and analyzed. The sample preparation procedure (P-5) consists of the following steps:

Receiving and checking sample identification numbers against submittal form;

Weighing;
Primary and secondary crushing to 80% passing 10 mesh;
Splitting in a riffle splitter to 800g +100g;
Grinding to 85% passing 200 mesh; and
200g sample is placed in a sample envelope.

The samples were analyzed for 39 elements by ICP (ICP-MA-390) with four acid digestion of a 0.2g
sample. The lower and upper detection limits for silver in this package are 5 and 2,000ppm,
respectively. All samples were analyzed for silver and gold by fire assay of a 50g sample with
gravimetric finish for silver (AG4A-50) and Atomic Absorption (AA) finish for gold (Au450). The
lower detection limit is 2ppm for silver and 0.01ppm for gold.

11.2 Sample Preparation and Assaying Methods ALS Chemex

Samples were shipped to the ALS Chemex laboratory in Mendoza, Argentina by Silex, where the
samples were prepped. The pulps were returned to the Silex office in Mendoza where new sample
identification numbers were assigned to the samples and QA/QC samples were inserted. The sample
prep procedures (Prep-31) consist of the following:

Receiving and checking sample identification numbers against the submittal form;
Weighing;
Crushing to 70% passing 10 mesh;
Splitting to 250g;
Pulverizing to 85% passing 200 mesh; and
Placing sample in sample envelope.

Samples are analyzed for 33 elements by ICP (ME-ICP61) using four acid digestion, with lower and
upper detection limits for silver of 0.5 and 100ppm, respectively. The silver overlimits were analyzed
by fire assay with AA finish (Ag-AA62) with lower and upper detection limits of 1 and 1,500ppm,
respectively, and those resultant overlimits were analyzed by fire assay with gravimetric finish (AGGRA22) with lower and upper detection limits of 5 and 10,000ppm, respectively. Gold is analyzed by
fire assay with AA finish (Au-AA24) with lower and upper

detection limits of 0.005ppm and 10ppm, respectively; gold overlimits are analyzed by fire assay with
gravimetric finish (Au-GRA22), with lower and upper detection limits of 0.05 and 1,000ppm
respectively. Overlimits of lead, zinc, and copper are analyzed by AA with a multi acid digestion.

11.3 Testing Laboratories Certification

ALS Chemex in La Serena has the following certifications:

ISO 9001:2000 number 8989 issued July 2005; and

Instituto Nacional de Normalizacion Chile ISO 17025.Of2005 issued November 2003

effective to November 2009.
Alex Stewart in Mendoza has ISO 9001:2000 certification but does not have laboratory certification.
Alex Stewart and ALS Chemex are international companies with local facilities in many countries.
The laboratories and provide services to many mining and exploration companies worldwide.

11.4 Quality Controls and Quality Assurance

Apex Silver commenced its QA/QC program with drillhole QVD-043, at the time that it started
sending samples to ALS Chemex. There is no QA/QC data for the earlier samples sent to Alex
Stewart other than the internal laboratory QA/QC program.
Apex Silver has an extensive and thorough Quality Assurance/Quality Control (QA/QC) program
that includes two types of blanks, three types of duplicates, six precious metal standard reference
samples (standards) and four base metal standards. For surface sample submissions including
channel, panel and select outcrop samples, Apex Silver inserts a standard, coarse blank and pulp blank
at a frequency of one per 50 samples or approximately 2%. For drilling programs, Apex Silver inserts
the following QA/QC samples into the sample stream:

Standard-one per 20 samples (5%);

Coarse Duplicate-one per 20 samples (5%);
Pulp Duplicate- one per 20 samples (5%);
Core Duplicate- one per 50 samples (2%); and
Pulp Blank and Coarse Blank-one per 20 samples (5%).

Table 11.4.1: Standards Used in the El Quevar QA/QC Program

Standard Au ppm Ag ppm Pb % Zn % Source
STD-1
0.34
18
ASA
STD-2
1.47 53.91
ASA
STD-3
4.22
129
ASA
STD-4
1.16
34
ASA
STD-5
4.33
103
ASA
STD-6
10.36
491
ASA
GBM396Geostat
*0.24
11.6 0.102 10.601
10
s
GBM398Geostat
*0.173
5.1 26.741 20.376
1
s
GBM900Geostat
*1.3
7.4 0.087 0.072
3
s
GBM996-The QA/QC samples are inserted
Geostat
into the sample stream in two steps. At the El Quevar camp, coarse
*0.1
44.2 0.289 32.333
3 blanks and core duplicates are inserted
s
into the sample shipment. The samples are taken to Salta by

Apex Silver, and then shipped to either ALS Chemex (ALS) or ASA, both located in Mendoza for
sample preparation. Each lab prepares the sample for analysis, after which all sample materials are
returned to Silexs Mendoza office. Silex stores the reject materials, renumbers the samples, inserts
the remaining QA/QC samples and submits the pulps for analysis to the respective labs. Pulps
prepared by ALS are returned to ALS for analysis and likewise pulps prepared by ASA are returned to
ASA for analysis. The QA/QC samples submitted into the sample stream at this time include
standards, pulp duplicates and pulp (fine) blanks.
11.4.1 Blanks
Blank samples help to identify contamination during the sample preparation and analytical process.
About 5% of the samples submitted to the lab are coarse blanks and about 5% are fine blanks.
SRK has examined the results of the analyses of the coarse blanks and finds that 299 analyses were
conducted with no failures as defined as 5 times the lower detection limit. Only three analyses had
results greater than detection limit and those were 0.8ppm Ag or less. There were 220 fine blank
samples and no failures were identified. Thirty samples were greater than detection limit and all were
less than 2.5ppm, which is five times the lower detection limit.
The results from the blank sample analysis indicate that there has been no contamination during the
sample preparation stage.
11.4.2 Duplicates
The coarse blank and precious metal standards are site specific. The coarse blank was collected from a
Duplicate samples are used to monitor sample batches for potential sample mix-ups and to monitor the
fresh dacite flow, younger than the rocks in the mineralized zone and located approximately 3.5km
data variability as a function of laboratory error and sample homogeneity. Apex silver used core
southeast of the camp. The precious metal standards were generated from material collected at the site
duplicates, coarse duplicates and pulp duplicates in its QA/QC program. Each is discussed separately
and prepared by Alex Stewart. Apex Silver purchased a fine blank from ASA. Base metal standards
in
sectionsreference
below; Figure
11-1purchased
presents the
results
in graphical
format.
arethe
certified
material
from
Geostats
Pty Ltd.,
(Geostats) in Australia. Table
11.4.1Duplicates
lists the standards, expected analytical result and source of standard material.
Core
The second half of a drill core sample is assayed to determine the reproducibility of assays for
different halves of the core to detect any sampling bias, as well as to assess the natural grade
variability of the deposit. The halved core remaining after the original split was cut lengthwise again
to produce a quarter core sample. The quarter core does not represent a true duplicate, as

the duplicate sample size is one-half the original sample size. Apex Silver submits core samples at a
rate of 1 in 50 samples. Table 11.4.2.1 presents a summary of the core duplicates and the results are
shown in Table 11.4.2.2.

Table 11.4.2.1: Summary of Quarter Core Duplicates

All Samples

108

>5 times LDL

32

2323
21%
21%
1615
47%
50%

62
57%
1
3%

Table 11.4.2.2: Percentage of Quarter Core Duplicate Assays*

The results show that of the samples more than five limes the lower detection limit (>2.5g/t Ag), 56%
were within 20% of the original assay and that the original assay was greater than or equal to the
duplicate 50% of the time which indicates that there is no bias in the cutting of the core. The graph of
the core duplicates (Figure 11-1) shows that there are two samples where the original assay was
significantly greater than the duplicate. The high values in these two samples indicates that there may
have been some coarse silver present in the core that produced the variation between the duplicates.
Coarse Duplicates
A sample preparation (coarse) duplicate sample was taken after the crushing stage to test the adequacy
of the crushing size. Apex Silver requested that coarse duplicates be made at a frequency of 1 in 20
samples. A summary of the coarse duplicates is presented in Table 11.4.2.3 and the results are shown
in Table 11.4.2.4.
Table 11.4.2.3: Summary of Coarse Duplicates

Table 11.4.2.4: Percentage Coarse Duplicate Assays *

The results show that the original assay was greater than or equal to the duplicate 61% of the time.
Although the original sample was greater than the duplicate more than half the time, the results show
that the difference between the assays was quite small with 80% being within 10% of the original and
94% being within 20% of the original. Figure 11-1 also shows that the variation between the samples
is quite small.
Pulp Duplicates
Pulp duplicates were made after the pulverization stage to test the accuracy of the laboratory. Apex
Silver requests that pulp duplicates be made at a frequency of 1 in 20 samples. Table
11.4.2.5 presents a summary of the pulp duplicates and Table 11.4.2.6 presents the percentage of the
duplicates reporting within specific percentage ranges.
Table 11.4.2.5: Summary of Pulp Duplicates

Table 11.4.2.6: Percentage Pulp Duplicate Assays*

About half of the original assays (55%) were greater than the duplicates, but the precision is quite
good with 93% within 10% of the original and 100% within 20% of the original.
11.4.3 Standard Samples
Apex Silver requested that Alex Stewart prepare and certify six standard samples from Quevar
material to test the silver assays and purchased standard samples from Geostats Pty primarily to test
the base metal assays. Table 11.4.3.1 presents the results of the analysis of the standard samples and
Figures 11-2 and 11-3 illustrate the results in graphical format. A failure is defined as outside two
standard deviations of the mean.

Table 11.4.3.1: Results of Standard Sample Analysis

STD-1 33
STD-2 16
STD-3 27
STD-4 33
STD-5 27
STD-6 29
GBM39
13
6-10
GBM39
17
8-1
GBM90
17
0-3
GBM99
15
6-3
Total 227

18.0 4.9 16.5

53.9 8.1 50.3
129.5 11.5 128.1
34.4 7.0 31.7
102.7 11.4 101.5
491.4 86.3 495.1

2.3
2.0
2.9
2.4
3.7
33.0

92%
93%
99%
92%
99%
101%

0
0
0
0
0
0

0
0
0
0
0
1

11.6 0.7 12.0 0.6 104%

5.1 0.8

4.9

0.7

97%

7.4 1.0

7.7

0.6 103%

44.2 4.0 42.0 2.7

95%

The results indicate that the laboratory has produced reliable results with the results within 7% of the
expected value for all samples.

11.5 Sample Security

Drill core and samples are kept in a locked facility at the El Quevar campsite. Prior to the
establishment of the camp, the samples were stored in a secure location at the companys facility in
Salar de Pocitos. Samples are shipped to Silex headquarters in Salta by company personnel and then
are shipped to the laboratory in Mendoza by a commercial carrier. Once the samples were received by
Alex Stewart, Silex had no further contact with the samples. As mentioned in previous sections, Silex
personnel received the prepared pulps from ALS Chemex to insert QA/QC samples before shipment to
the analytical laboratory in La Serena. Only the sample identification numbers were changed, and the
sample envelopes were not opened.
Silex personnel were responsible for logging, sampling, splitting, and shipping core to the laboratory
facilities, as is standard practice in exploration. No officer, director, or employee of the company was
involved in sample preparation once samples were received by the laboratory.

11.6 Interpretation
The sample preparation and analytic procedures used by Apex Silver are appropriate for the metals
that are tested and meet industry standards.
The QA/QC program meets or exceeds industry standards for blanks, standard and duplicate samples.
Analysis of the blanks, standard samples and duplicate samples indicate that ALS Chemex is
performing at an acceptable level. The blanks show that there is no contamination during the sample
preparation stage. The duplicate samples show increasing precision from core duplicates to coarse
duplicates to pulp duplicates, which is the expected outcome. The standard sample analysis indicates
that the lab has good precision in its analysis.
SRK recommends that Apex Silver also submit about 5% of its samples to a second laboratory as a
cross check on the primary lab.

The QA/QC program was not started until the 2008 drilling campaign during which ALS Chemex was
the primary lab. SRK suggests that Apex Silver submit pulps originally assayed by Alex Stewart
during the earlier campaigns to ALS Chemex for cross checks

0 500 5001000 1500 2000 2500 3000 3500 4000 4500

1000
50
Original Ag g/t
1500 100
100 150 200 250 300 350 Original Ag g/t
2000
2500
200 300 400 500
3000
600 700 Original Ag g/t
3500
4000
4500
0
0
50
100
150
200
250
300
350 0
0
100
200
300
400
500
600
700 0

Core Duplicates

Pulp Duplicates
Coarse
Duplicates

Duplicate Agg/t

Duplicate Agg/t

Duplicate A gg/t

El Quevar, Salta
Duplicate QA/QC
Province,
Samples
Argentina
SRK Job
No.:
182801
File Name: Figure
11-1.docx

Date:
Approved:
01/30/09 LM

Figure:
11-1

St
an
da
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ple
s
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Fi
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re:
11
-2
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d:
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e:
01
/3
0/
09

El
Quev
ar,
Salta
Provi
nce,
Arge
ntina

SRK
Job
No.:
182801
File
Name:
Figure
112.docx

St
an
da
rd
Sa
m
pl
es
ST
D
16

Fi
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re:
11
-3
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01
/3
0//
09

El
Quev
ar,
Salta
Provi
nce,
Arge
ntina

SRK
Job
No.:
182801
File
Name:
Figure
113.docx

12 Data Verification

(Item 16)

12.1 Quality Control Measures and Procedures

Apex Silver has instituted several measures to ensure that the data produced by its exploration
programs meets industry standards. A field handbook has been developed that discusses rock types,
alteration, mineralization, procedures for drilling and mapping, and laboratory QA/QC protocols to
standardize all procedures in the field.
The assay data is received from the laboratory as electronic files and as hard copies of the assay
certificates. The electronic data is transferred directly to Microsoft Excel workbooks with six separate
sheets for collar coordinates, assays, downhole surveys, lithologic, alteration, and oxidation
information. The laboratory certificates are received as hard copies and are maintained in the Silex
office in Salta.
Silex personnel also visit the assay laboratories on a routine basis for inspection of preparation and
analytic procedures.

12.2 SRK Verification

SRK conducted a site visit to the property and the Silex office at which time the following verification
checks were conducted:

pads;

Visits to each of the exploration targets with examination of trenches, outcrops, and drill
Examination of drill core and logging and sampling procedures;
Comparison of lithologic logs to database;
Comparison of assay certificates to 10% of the database, with no errors detected;
Review of cross-sections and geologic model; and
Review and analysis of laboratory QA/QC procedures and results.

SRK did not identify any errors in the database and found the drilling and logging procedures to meet
industry standards.

12.3 Limitations
SRK did not independently collect and analyze samples from the Quevar property.

13 Adjacent Properties

(Item 17)

Silex has provided the following information on adjacent properties. El Quevar is located within an
active exploration area. The Project lies within the La Reserva Natural Los Andes and the
municipality of San Antonio De Los Cobres. Adjacent properties include exploration permits and
exploitation concessions held by various mining companies and individuals. None of these
concessions have published resources and the mineralization at the Project does not extend onto
adjacent properties. To the north, the Project shares boundaries with SESA, Argentina Diamonds, Ltd.
and ADY Resources. On the east the concession boundaries are shares with Desarrollo de Proyectos
Mineros S.A., Arieu Sergio Roberto, Carlos Saravia and Arieu Pedro Eugenio. BHP Billiton
Exploration, Inc. SUC Argentina holds concessions adjacent to the south and west of the Project. Also
on the south is an adjacent concession held by La Milagros S.R.L. and on the west a concession held
by FMC Minera del Altiplano a subsidiary of FMC Corporation.
In addition to this, there are 20 perlite quarries located within the El Quevar Project concession block.
This includes provisionary as well as active quarries. Companies and individuals holding concessions
for perlite quarries within the El Quevar concession block include the following:

Dalborgo Sergio Antonio (one quarry);

Casamiro Cresencio (one quarry);
Cruz Hipolito Gumercindo (one provisional quarry);
Fernandez Tomas Alberto (one provisional quarry);
Jose German Verimonte (two quarries);
Juan Morales Onix (one quarry);
Margehtti Ricardo Javier (three quarries);
Mariana Perlita Salta S.R.L. (one quarry);
Minaclar SCA (two quarries);
Patrico Martinez (one quarry);
Perfiltra S.A. (four quarries);
Roberto Lopez (one provisional quarry); and
Sola Juan Esteban (one quarry).

Access across land controlled by Apex is granted by the province and can only be contested if access
impinges on exploration or mining activities. Currently there are no agreements or objections to
activities being conducted either by the perlite quarry operators or Apex Silver in the concession area
concerning surface access.

14 Mineral Processing and Metallurgical Testing

(Item 18)

14.1 Metallurgical Testing

In 2008, Apex Silver commissioned Dawson Metallurgical Laboratories, Inc. of Salt Lake City, Utah
to complete test work on six sample composites from the El Quevar project. The metallurgical
program was designed to investigate the following:

Whole ore cyanidation;

Selective silver flotation followed by bulk sulfide pyrite flotation of the silver flotation
tailings;

Sequential sulfide silver-lead, zinc and pyrite flotation on a high-grade sulfide sample;

Cyanidation of the pyrite flotation tailings; and

Combined flotation and tailings cyanidation.

14.1.1 Procedures
Forty-five individual samples from drillholes were composited into six composites for the
metallurgical test program. The composites were designated as:

Oxide low grade;

Mixed medium grade;
Mixed high grade;
Sulfide low grade;
Sulfide medium grade; and
Sulfide high grade.

The composites were crushed through a 10 Tyler mesh and split into 1 kg charges. One charge from
each composite was then split into four 250g samples with two of the splits pulverized and submitted
for head analysis. Table 14.1.1.1 shows the results from the head analysis.
Table 14.1.1.1: Composite Head Analysis

The whole ore leach tests were conducted at a pH of ~11 for 95h and 50% solids at a cyanide
concentration of 5/L and P80 grinds of 69 to 78 microns.

Selective sulfide flotation was conducted using hydrated lime and sodium metabisulfite in the

primary followed by conditioning with Cytec 3418A and 3477 at a target grind of P

80

74 microns. A bulk flotation of the silver tailings was performed on the silver flotation tailings for
recovery of the pyrite by the addition of copper sulfate and potassium amyl xanthate.

Cyanidation tests of the flotation tailings were conducted for 72h using a 5g/L cyanide concentration at
pH11 and 50% solids.
14.1.2 Results
Whole Ore Leaching
Silver recovery from the whole ore leaching tests indicated recoveries between 57% and 83% with the
higher recoveries being obtained on composites with lower sulfur values. The cyanide consumption
rate was reasonable, varying between 1.4 to 3.4kg/t, except for the high-grade sulfide sample at
10.4kg/t. In general, the leach kinetics indicate a 48h leach time as shown in Figure 14-1. Table
14.1.2.1 summarizes the test results from the whole ore leaching.
Table 14.1.2.1: Test Results from Whole Ore Leaching

1 Oxide - Low-grade 71
2 Mixed - Medium Grade 71
3 Mixed - High-grade 69
4 Sulfide - Low-grade 78
5 Sulfide - Medium Grade 75
6 Sulfide - High-grade 72

5862 26
251 263 45
2,020 2,060 343
7272 40
193 196 85
832 884 335

36 58
218 83
1,718 83.4
32 44.2
112 56.9
552 62.4

2.7
3.1
2.2
3.4
10.4

* P80 of leach residue.

Sulfide Flotation
The results from selective silver flotation tests indicate a wide range of recoveries, ranging from 36%
to 96%, with the higher recoveries observed in the sulfide composites. Table 14.1.2.2 summarizes the
test results from selective silver flotation.
Table 14.1.2.2: Test Results from Selective Silver Flotation

1.4

8 68 Mixed Medium Grade

9 68 Mixed High-grade
10 80 Sulfide Low-grade
11 76 Sulfide Medium Grade
12 73 Sulfide High-grade

74.5
78.1
79.1
88.1
95.7

21.5
<1.0
74.2
63.7
88.4

314
1,785
80
189
839

3.48
2.3
6.58
6.15
16.56

* Ag + pyrite ro's for all comps except sulfide high-grade which included Zn ro also.

The silver and bulk flotation tests showed good metal recoveries for silver, copper, lead and zinc
recoveries into the pyrite concentrate for the sulfide composites as shown in Table 14.1.2.3.

Table 14.1.2.3: Test Results from Silver and Bulk Sulfide Flotation

TestGrind
AgRecovered into
Bi
No. 7P80-
32.Product (%) Pb
13.
8 963 68
9Cu Zn Fe As 2.2
5
(2)
P80 of1011
whole
ore leach residue.
68 80
3.319.6 3.3 3.3 1.6
2.3
121376 73
Product
63.2.8 4.8 3 3.5 2.6
84.
73
Ag Ro
895 75.6 93.6 93.2
2
Con Pyrite
50.95.82.9 69 26.2
Sb 34.
Ro Con
323.8 6.1 22 4.3
2.4 8
Flotation
24.18.2 9.2 13.3 75.2 2.1 3.3
Tails Ag Wg 126.7 55.6 67
95. 61.
Ro Con
t 25.80.62.4 21.7 20.2
5 9
Pyrite Ro 1.62 54.5 1.9 0.5 21.4
13. 8.5
Con
2.25 77.1.3 5.4 0.9 97.1
5 8 5.6
Flotation 96.1 256.9 78.5 90.1
78. 85.
Tails Ag 22.0 0.997.26.2 16.4 13.1
6 9
Ro Con
8 21.10.4 12.726 63.8 5.9 10.
Pyrite Ro 2.54 970.4 77.4 7467.9 1.4 8
Con
95.3 16.19.8 16.6 12.3
92. 62.
Flotation 81.7 413.322 23 24.4
7 3
Tails Ag
5 62.16.1 17.3 41.7
13. 26.
Ro Con 1.99 767.9 71.5 70.4
2 9
Composite Pyrite Ro 96.2 20.54.236.4 9 4.1
57. 17.
Low-grade Con
52.1 913.5 28.543.2 27.9 4 2
Oxide MixedFlotation 914. 26.26 2.7 16 44.4
29. 66.
Medium
Tails Ag 268 964.9 70.5 59.7
5 5
Grade MixedRo Con 3.55 61.68.85.3 4.3 2 32 21. 16.
High-grade Pyrite Ro 2.69 210.2 7 2.8 1.5 5.6
4 3
Sulfide Low-Con
11.0 11.5 52.2 45.1 13.2 54. 20.
grade
Flotation 186. 91.0 24.2 39.6 47.2 5 2
Sulfide
Tails Ag 313. 36.82.7 4.6 41 8.2 7.7 24. 54.
Medium
Ro + Scav 47 44 94.4 34.8
1 1
Grade
Con Zn Ro 21.6 51
28 13
Sulfide
Con Pyrite 12.1 8.3
58. 12.
High-grade Ro Con
6 4.3
55 7
ZnSO4/MBS Flotation 62.7 51.
8.6 34.
depressant Tails Ag 73.2 7
41. 6
Sulfide
Ro + Scav
4 31.
5 45.
* Selective Ag/Pb
FollowedCon
by Zn
on Sulfide High-grade
Composite.
High-grade
ZnFlotation
Ro 6.98 Conducted
7
44 6
ZnSO4/NaC Con Zn Ro 89.7 16.
14. 19.
N depressant Tails
8 5
5 8

Flotation Tailings Cyanidation

Cyanidation test results of the flotation tailings indicate a wide range of silver recovery, between 43%
and 85%, with the higher recoveries observed in the sulfide composites. Table 14.1.2.4 summarizes
the test results from the flotation tailings cyanidation.
Table 14.1.2.4: Test Results from Flotation Tailings Cyanidation
14Oxide - Low43
42
27.2 Ag 1.4 NaCN
71 Grind
24 Leach
42.6
Testgrade
Assay Calc
18 g/t
Extr. Consump
(2) P80-
Residue
%
No. Composite
Head Head
Overall
(kg/t)
Mixed 15 Medium
71
84
82
33 49
59.7
15.2
1.6
Grade
Mixed - High16
69
406
383
181 203
53
11.6
1.5
grade
Sulfide 17
78
20
14
6 8
56.5
11.8
1.3
Low-grade
Sulfide 18 Medium
75
26
24
7 17
70.3
8.4
1.4
Grade
Sulfide High-grade (1)
19

72h, 5g/L

72

58

54

46

85.2

3.7

2.7

TheNaCN,
leach kinetics for the flotation tailings cyanidation show a 48h leach time (see Figure 14-2).

Combination of Flotation and Tailings Cyanidation

A combination of test results using flotation and tailings cyanidation indicates silver recoveries
between 63% and 99% as summarized in Table 14.1.2.5.
Table 14.1.2.5: Combined Silver Recovery from Flotation and Tailings Cyanidation

** Head assay back-calculated from flotation tests.

Summary of Test Results

The results from the various test procedures indicate that viable silver recoveries was obtained on the
six El Quevar sample composites as summarized in Table 14.1.2.6.
Table 14.1.2.6: Summary of Test Results on El Quevar Sample Composites

** Head assay back-calculated from flotation tests.

The best test results yielded silver recoveries of about 90% using a combination of flotation and
tailings cyanidation on all six samples, except for the low-grade oxide, which exhibited a recovery of
63.4%.
Based on the metallurgical test results, the envisioned flow sheet for the process plant would comprise
the following unit processes:

Primary
crushing;

SAG and ball mill grinding with a vibrating screen and cyclones for size classification;

Rougher and cleaner flotation with regrind for the production of a final sulfide
silver concentrate;

Thickening, filtering, and packaging for shipment of final sulfide silver concentrate;

Leaching
tailings;

(cyanide)

of

the

flotation

Counter-current decantation circuit with thickeners producing a silver-bearing PLS;


Merrill-Crowe circuit for processing the PLS solution producing a dor for
shipment to off-site refinery;

Cyanide destruction circuit;

and

Disposal of final plant

Due to the tailings.
complexity of the deposit and the identified rock types to date, future metallurgical test
work should investigate various flow sheet designs for the process plant so that individual processing
circuit(s) can be bypassed to optimize the plant operation and metal recoveries.

El Quevar,

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Mineral Resources and Mineral Reserve

Estimates

(Item 19)

SRK has conducted a resource estimation on the Yaxtch zone of El Quevar using Mapteks Vulcan
software.

15.1 Drillhole Database

The drillhole database was compiled and maintained by Silex personnel in Argentina. The database
was given to SRK as a Microsoft Excel workbook including six worksheets, containing collar
coordinates, downhole surveys, assays, lithology, alteration, and oxidation state.
The database contains 81 core holes drilled by Silex over the entire Quevar property. Three of these
holes were drilled adjacent to holes that did not reach the required depth. Forty-five drillholes are
contained within the Yaxtch resource area (Figure 15-1).
The drill samples were analyzed at Alex Stewart Assayers and ALS Chemex. All samples were
analyzed using a multi-element ICP package that includes silver by both labs. All samples from
drillholes QVD-001 through QVD-042 were also analyzed at Alex Stewart for silver by fire assay with
gravimetric finish. Samples from QVD-043 through QVD-078 were analyzed at ALS Chemex with
only the silver overlimits analyzed by fire assay with gravimetric finish. SRK used a priority of fire
assay first, then ICP, in the resource database.
The database has been verified by SRK and is considered to be of sufficient quality for resource
estimation.

15.2 Topography
The topographic survey for Quevar Sur was done by PDOP Servicios Topogrphicos (PDOP), based in
Mendoza. The survey was conducted in May and June of 2008 and covers the exploration targets in
the Quevar Sur area. PDOP used GPS Trimble R3 and Trimble ME Base Station for the survey. The
contour interval is 2m and the data is in the Grauss-Kruger Projection, Datum WGS-84. The
topographic data was provided to SRK as point file in Excel and as an AutoCAD drawing file.
PDOP also surveyed drillholes, trenches, and other exploration points requested by Silex at the end of
the annual field seasons.

15.3 Geology
The silver mineralization is contained within the breccia zone that trends about 290 and dips
approximately 50 to the north. The higher grade silver mineralization is concentrated along the upper
and lower margins of the breccia zone. There is a clear grade boundary between unmineralized rock
and the mineralized breccia. SRK created a grade shell by constructing cross-sections perpendicular to
the trend of the mineralization and drawing polygons around the mineralized intercepts at a 10g/t Ag
cut-off. Fifteen cross-sections were constructed about 50m apart. The polygons were snapped to the
drillholes to ensure that all relevant assays were included within the grade shell. Figures 15-2, 15-3,
15-4 show the grade shell in plan view, oblique view and in cross-section, respectively. Table 15.3.1
presents statistics of assay intervals within the grade shell.

Table 15.3.1: Statistics of Raw Silver Assay Intervals within the Yaxtch

Grade Shell

Median
Standard
Deviation
Minimum
Maximum
CV
Count

16
287
0
7,304
4.0
1,600

15.4
Oxidation
The
database contains information on oxidation state for each drillhole. Intervals were coded as
oxidized,
State mixed, or sulfide. SRK constructed triangulated surfaces with Vulcan software to code the
cells in the block model with the appropriate code.
Statistics were run for the assay data by oxidation type (Table 15.4.1) to determine the need to model
silver grades by oxidation type. The assays were also visually reviewed by drillhole to see if there was
a difference in grade at the change in oxidation state. Based on the visual examination and the
statistics, SRK decided that there is no clear differentiation in silver grades by oxidation state and did
not use oxidation type in the estimation.
Table 15.4.1: Raw Silver Assay Statistics by Oxidation Type
Statistic
Mean 61
Median 25
Standard Deviation
Minimum
Maximum 1,445
CV 2.4
Count 140

Oxide
148
0

All samples
Mixed Sulfide
150
65
26
15
697
230
1
0
7,304
4,470
4.6
3.5
118
1342

Samples < 1,500g/t

Mixed
Sulfide
76
54
24
15
157
136
1
0
1,020
1,372
2.1
2.5
116
1337

15.5 Specific Gravity

Apex has performed 260 density measurements on core samples from 17 drillholes using the water
displacement methodology. The methodology is as follows:

Core samples 10cm in length were selected at a frequency of about 10 to 15m downhole;

Samples were dried and if necessary, coated with varnish to make the sample
impermeable;

The rock type and oxidation state were noted on the data sheet as well as the
length of the sample and whether it was whole or half core;

The scale was set to 0 and the core sample was weighed;

A graduated test tube was filled 1,000mL of water, and the level was noted on the
data sheet;

The sample was placed in the water and the water level was noted;

 The density was calculated according to the following equation;

Weight of Rock (g)/(Volume of water (ml) Volume of sample(mL))

Twenty-one samples are within the Yaxtch mineralized envelope including sixteen breccias samples.
Within the mineralized envelope, one sample is oxide, three are mixed and the remainder are sulfide.
The locations of the density samples are shown in Figure 15.5.
SRK determined outlier values based on observation of plots of SG values for the breccia only (Figure
15.6) and for all material by oxidation state (Figure 15-7). Table 15.5.1 presents statistics of the SG
measurements of the breccia and non-breccia material, inside and outside the grade shell.
Table 15.5.1: Specific Gravity Statistics
Statistic
Mean
Median
Standard
Deviation
Minimum
Maximum
CV
Count

Breccia
All* Grade
Shell*
2.36 2.35
2.36 2.33

Oxide
**
2.11
2.11

Non-Breccia
Sulfide***
Unclassified
2.24 2.41
2.23 2.44

0.14 0.14

0.10

0.13 0.18

1.95
2.08 2.17
1.85 2.01
2.26
2.58 2.58
2.62 2.64
0.06 0.06
0.05
0.06 0.08
* Excludes outlier value of 3.89 ** Oxide excludes outlier
40
15
20
165 18
values of 1.69, 2.52, 2.53, and 2.58 *** Sulfide excludes
outlier values of 1.23 and 5.83

The majority of the samples from the brecciated material are sulfide, with only one oxide and two
mixed samples. The majority of the material inside the mineralized envelope is breccia. SRK has
assigned the following SG values to the block model based on the SG data that has been obtained thus
far:
Outside the Grade shell;
a o Oxide 2.11,
b o Mixed 2.16, and
c o Sulfide 2.24.
d
Inside Grade Shell;
e o Oxide 2.11,
f o Mixed
2.16, and
g o Sulfide
2.35.

15.6 Grade Capping

The assays within the grade shell were plotted on log normal probability
plots to determine the presence of outliers, which could materially impact
grade estimation (Figure 15-8). Four silver

grades at 2,000g/t (99.8 percentile) occur as outliers to the assay values

and those grades were capped prior to compositing. Table 15.6.1 presents
statistics of the capped assays.

Table 15.6.1: Statistics of Capped Silver Assay Intervals within the Yaxtch Grade Shell
Mean
Median
Standard
Deviation
Minimum
Maximum
CV
Count

65
16
185
0
2,000
2.9
1,600

15.7
Composi
tingassays were composited on 2m downhole intervals starting at the top of the drillhole, with breaks
The
at the grade shell boundary. Thus, the composite intervals within the grade shell are 2m in length
except where the drillhole exits the grade shell. The 2m interval was chosen to regularize the assay
intervals which are predominately 1m or 2m in length. The average length of composites is 1.97m.
Table 15.7.1 presents statistics of the composite data.
Table 15.7.1: Statistics of Silver Composite Intervals within the Yaxtch Grade Shell
Mean
Median
Standard
Deviation
Minimum
Maximum
CV
Count

64
19.7
155
0
1866
2.4
853

15.8 Variogram Analysis

SRK developed variograms for Ag using the corellogram function and the 2m composites within the
grade shell. Spherical modeling was used to fit the experimental variograms. Table 15.81 presents the
fitted variogram parameters.
Table 15.8.1: Silver Variogram Parameters
Nugget 0.5 Sill differential 0.499 Orientation of Ellipsoid
Bearing 020
Plunge -50
Dip 00 Range
Major 75m
Semi-major 50m
Minor 10m

15.9

Grade Estimation

A block model for the Yaxtch area was created in Vulcan with coordinates and block size as shown in
Table 15.9.1. The coordinates are in the Argentina System, Grauss-Kruger Projection, WGS-84
Datum.
Table 15.9.1: El Quevar Block Model Limits
East 3,418 3,419,4 1,00 1
,400 00
0 0
Nort 7,306 7,307,4 1,20 1
h
,200 00
0 0
Elev 4,500 5,502 1,00 3
ation
2
The
block model contains
variables for silver, oxidation state, density, percentage of the cell within the

grade shell, and class.

Silver grades were estimated within the grade shell using only composites within the grade shell in
two passes as shown in Table 15.92.
Table 15.9.2: El Quevar Grade Estimation Parameters
Search Ellipsoid
Bearing 020 020
Plunge -50 -50
Dip 00 00
Search distance
Major 75m 150m
Semi-major 75m 150m
Minor 20m 40m
Composites
Minimum 4 4
Maximum 10 10
Maximum/drillhole 3 3
Minimum Drillholes 2 2

The block grades were visually compared to the composite grades by section and by elevation. It
appeared that there had been some smearing of higher grade into areas where the composite grades
were relatively low. SRK therefore did an estimation to define waste blocks within the grade shell
with indicator kriging at 25g/t silver threshold. Composites with silver grades less than 25g/t silver
were assigned an indicator value of 0 and composites greater than 25g/t silver were assigned a value
of 1. The search parameters were the same as in Pass 2 in Table 15.8.2, but with a minimum
requirement of 1 composite and a maximum of 5 composites per block estimation. Blocks with
indicator values less than 0.50 were considered waste and not used in the resource statement. Figures
15-9 and 15-10 present a typical cross-section and plan view of the block model.
15.9.1 Model Validation
The block model was validated by the following procedures:
Visual inspection of block and composite grades by section and elevation;

Comparison of kriged grades and composite grades in swath plots; and

 Comparison of kriged grades and nearest neighbor estimates.

SRK examined block and composite silver grades by cross-sections oriented perpendicular to the
grade shell (azimuth 020) and parallel to the strike of the grade shell (azimuth 290), as well as by
elevation. The block grades compared well to the composite grades once the waste blocks had been
defined as described in the section above.
SRK generated swath plots at 75m intervals west to east and at 30m elevation ranges (Figure 1511).
The swath plots show some smoothing as would be expected in a kriging estimation.
SRK also did a nearest neighbor estimation and compared the two estimates visually and tested for
global bias and conservation of metal by comparing statistics at a 0.0g/t silver cut-off. Table
15.9.1.1 presents the tonnage and grade of both estimations.
Table 15.9.1.1: Comparison of Kriged and Nearest Neighbor Estimations
Kriged Model 14,234,725 0.97 647 54.1 Nearest Neighbor
Percent Difference 0.1% 2.9% (Kriged-NN)/Kriged)

14,222,564 0.25 1,867 52.5

15.10 Resource Classification

Resources were classified according to CIM guidelines as indicated and inferred based on the
following criteria:

Study of variogram ranges; and

Study of geologic model and grade distribution.

Blocks that were estimated in the first pass, within 1 variogram range and with a minimum of two
drillholes, were classified as indicated. Blocks estimated in the second pass, within 2 variogram
ranges, and also with a minimum of two drillholes were classified as inferred.

15.11 Cut-off Grade

The resource cut-off grades were determined for oxide and mixed/sulfide based on silver price,
metallurgical recoveries and open pit or underground mining methods. The following parameters were
used to calculate the cut-off grades:

Silver price: $12.00/oz - $0.39/g

Recovery: Oxide 65% Mixed 90%

Sulfide 95%

Process:
$20/t

Mining: Open Pit - $1.75/t

Underground - $25/t

The cut-off grade was calculated for open pit and underground separately by the following equation:

(Process cost + Mining cost) / (Silver price / recovery)

SRK ran a pit optimization on the Yaxtch resource with the above parameters and the resulting pit
contained all the oxide material. Apex Silver plans to mine the mixed and sulfide material by
underground methods should future studies indicate that the deposit is economically viable. Therefore
the cut-off grade for the oxide resource is 85g/t silver and the cut-off grade for the mixed/sulfide
resource is 120g/t silver.

15.12 Resource Statement

The resources for the Yaxtch deposit at El Quevar are contained in Table 15.12.1
Table 15.12.1: Resource Statement, Yaxtch Deposit, as of December 31, 2008
Cutoff
Indica 85 85
Oxide tedInf
erred
Indica 120
ted 120
Mixed
Inferr
ed
Indica 120
ted 120
Sulfide
Inferr
15.13 edMineral
SourceClass

Ag
g/t
168
259

Ag
koz
1,644
784

156 5 237
322

1,192
50

939 7 197
202

5,954
46

kt
304
94

Resource Sensitivity

Tables 15.13.1 and 15.13.2 contain tonnage and grade of the Yaxtch Indicated and Inferred resources,
respectively, at various silver cutoffs. The grade tonnage curves are shown in Figure
15.12.
Table 15.13.1: Tonnage and Grade of Indicated Resource by Cut-off
25 98 5,075 50 123 3,611 75 152 2,439
100 181 1,687 125 208 1,216 150 237
865 175 269 611 200 301 438 225 327
338 250 351 267

Table 15.13.2: Tonnage and Grade of Inferred Resource by Cut-off

50 198 154 75 244 115 100 271 99

125 292 87 150 299 83 175 311 76
200 334 65 225 340 61 250 353 54

El Quevar,

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Name:
Figure
151.docx

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153.docx

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155.docx

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No.:
182801
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Name:
Figure
156.docx

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SRK
Job
No.:
182801
File
Name:
Figure
157.docx

El Quevar, Salta Province, Argentina

Block
Mode
l
Cross
sectio
n,
Looki
ng
West

S
R
K
Jo
b
No
.:
18
28
01

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El Quevar, Salta Province, Argentina

Bl
oc
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47
95

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10
A
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L
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01
/3
0/
09

SRK
Job
No.:
182801
File
Name:
Figure
1510.docx

El Quevar, Salta
Province,
Argentina
SRK Job No.:
182801
File Name:
Figure 15-

Swath Plots
Block Model vs.
Composites
Date:
Approved:
02/02/09 LM

Figure:

El Quevar, Salta Province,

Argentina
SRK Job No.: 182801
File Name: Figure 1512.docx

Grade Tonnage
Curve Indicated
and Inferred
Resources
Date: Approved:
02/02/09 LM

Figure:
15-12

16 Other Relevant Data and Information

(Item 20)

There is no other relevant data or information for El Quevar.

17 Interpretation and Conclusions

(Item 21)

The El Quevar property is a volcanic hosted silver deposit occurring within a regional fault zone. The
host rock has been brecciated and mineralized along a structure that trends about 290 and dips about
50 to the north. The Yaxtch deposit has been drilled along a strike length of 650m and is open to the
east and west. The structure appears to have been faulted at both east and west ends and a possible
extension have been identified, but not yet drilled. Gold, copper, lead, and zinc minerals are also
present in the structure. The metals show a zonation with silver and lead present at the margins of the
breccia zone, gold in the core of the zone and zinc at the lower elevations.
Several additional target areas have been defined at Quevar Sur, including Yaxtch, Mani, Copan,
Andrea, and Argentina. Quevar Norte and Viejo Campo also have promising exploration targets that
have not yet been drilled, with the exception of two holes in Quevar Norte.

17.1 Field Surveys

Apex has undertaken exploration at El Quevar using a systematic approach and according to industry
best practices. Several target areas have been identified based on the presence of outcropping breccia.
Typically, target exploration was initiated with mapping and sampling, followed by trenching and
sampling to define drill targets. All drilling is HQ and NQ sized core. Apex Silver has established
procedures to ensure that data is collected in a systematic manner, and have ensured that appropriate
QA/QC protocols have been implemented.

17.2 Analytical and Testing Data

Samples have been analyzed by Alex Stewart in Mendoza and ALS Chemex in Mendoza and La
Serena, Chile. Both of these laboratories are local facilities of international laboratories. Apex Silver is
using appropriate sample preparation and analytic procedures for this type of mineralization and has a
proper laboratory QA/QC program in place.

17.3 Exploration Conclusions

The Quevar project covers an area of about 20km x 30km with excellent exploration potential. Apex
Silver has been conducting exploration for the past 4 years in a systematic and thorough manner and
has identified several targets in Quevar Sur on which they have conducted drilling. The exploration
practices adopted by Apex Silver meet or exceed industry best practices.

17.4 Resource Estimation

SRK has conducted a resource estimation on the Yaxtch target using ordinary kriging within a grade
shell constructed at a 10g/t silver cutoff. Waste blocks within the grade shell were further delimited
with indicator kriging at 25g/t silver cut-off to minimize smearing of grade. Oxide, mixed and
sulfide zones were defined, and separate cutoff grades were determined for oxide as potentially
mineable by open pit and for mixed/sulfide as potentially mineable by underground methods.
Apex Silver has conducted specific gravity measurements on core samples, but only 15 are within the
Yaxtch grade shell, and of those, only one is oxide and two are mixed. SRK has assigned a specific
gravity value to oxide and mixed blocks based on the average of all oxide and mixed blocks,
respectively and separate values to sulfide within and outside the grade shell based

on the average values inside and outside the shell. SRK recommends that additional tests be
conducted on the half core that is archived at site.

18 Recommendations

(Item 22)

Apex Silver has been conducting exploration at Quevar over the last four years in a systematic
manner. The Yaxtch trend has received the most drilling to date and a resource has been estimated
for that area. It appears that the western extension has been offset by faulting and the eastern
extension has not yet been limited by drilling. In addition, several other targets have been defined in
surface mapping and sampling programs and in a recent reinterpretation of geophysical data.

18.1 Recommended Work Programs and Costs

SRK recommends that following work programs at El Quevar:

Conduct additional specific gravity tests on the half core archived at the Quevar site to
obtain more data for Yaxtch especially on material within the grade shell. This work can be
performed during the ongoing exploration program at an estimated cost of US$5,000;

Perform check analyses at ALS Chemex on the pulps originally analyzed by Alex Stewart
prior to initiation of the QA/QC program. These samples should also include blank and standard
reference samples. It is also recommended that pulps originally analyzed at ALS Chemex should
be checked at Alex Stewart. Approximately 10% of the pulps should have check analyses
performed, or about 200 samples. It is estimated that the cost would be approximately US$10,000;

to;

Continue exploration at Quevar, specifically

a o
Explore the west and east extensions
of Yaxtch,
b o
Test geophysical targets generated
from the new interpretation in 2008, and
It is recommended
that thefurther
drilling
program
with approximately 1,500m of drilling at Yaxtch
c o
Define
drill
targets start
through
followedcontinued
by an evaluation
of
the
results
and
a
follow
up program. The cost of this program is
surface mapping and sampling.
US$600,000

19 References

(Item 23)

Alvarez, N. and Blakestad, B., 2009, Personal Communication.

Arce, O.R., 2008, Metalogenia y Yacimientos Metalferos de Bolivia, Presentated at: XXVII Curso
Latinoamericano de Metalogenia UNESCO-SEG-SGA, La Paz, Bolivia, Agosto de 2008.
Brockway, M., 2008, Petrografas and Calcografas de 24 Muestras de Sondajes de Exploraciones El
Quevar, Unpublished Report for Silex Argentina, S.A., 9p.
Brockway, M., 2008a, Electronic Microscopy Study of El Quevar Drillholes Samples, Unpublished
Report for Silex Argentina, S.A., 32p.
Cambrub, A., and Albinson, T., 2006, Depsitos eptermales en Mxico: actualizacin de su
conocimiento y reclasificacin emprica, in: Boletn de la Sociedad Geolgica Mexicana Volumen
Conmemorativo del Centenario, Revisin de Algunas Tiplogas de Depsitos Minerales de Mxico,
Tomo LVIII, Nm. 1, pp. 27-81.
Charchafli, D., Tosdal, R.M., and Mortensen, J.K., 2007, Geologic Framework of the Veladero HighSulfidation Epithermal Deposit Area, Cordillera Frontal, Argentina, Economic Geology, vol. 102, pp.
171-192.
Sillitoe, R.H., 2008, Major Gold Deposits and Belts of the North and South American Cordillera:
Distribution, Tectonomagmatic Settings, and Metallogenic Considerations, Economic Geology, v. 103,
pp. 663-687.
Dawson Metallurgical Laboratories, Inc. (July 2, 2008), Report Describing Preliminary Cyanidation
and Flotation Testing of Several Composite Samples from the El Quevar Project, prepared for Apex
Silver Mines Corp.
Taylor, B.E, 2007, Epithermal Gold Deposits, Natural Resources of Canada Website, 27p.
http://gsc.nrcan.gc.ca/mindep/, accessed January, 2009.
Godoy, B., 2007, Argentina: Mining Prospecting and Exploration Legal Framework-Guidelines for
Foreign Investors, 02 January 2007, Environmental & Energy website accessed January 8, 2009,
http://www.mondaq.com/article.asp?articleid=45028.
Guilbert, J.M. and Park, C.F.Jr., 1986, The Geology of Ore Deposits, W.H. Freeman Company, New
York, New York, p532-537.
Mercardo, Norberto, 2009, Personal Communication.
PDOP Servicios Topogrphicos, 2007, Informe Tcnico de los Levantimientos Topogrficos en las
Zonas del Proyecto Quevar, Memo to Silex Argentina.
PDOP Servicios Topogrphicos, 2008, Informe Tcnico de los Levantimientos Topogrficos en las
Zonas del Proyecto Quevar, Memo to Silex Argentina.
Quantec Geoscience Argentina, S.A., 2008, Geophysicla Report on: 3D Off-Set Pole Dipole Survey at
El Quevar Project, Salta, Argentina, Unpublished Report for Silex Argentina, S.A., 41p.
Silex Argentina S.A., 2006, Proyecto El Quevar, Unpublished Internal Report, 17p.

Silex Argentina S.A., 2007,

El Quevar Project, Drilling Campaign Report, February-June 2007

, Unpublished Internal Report, 21p.

Silex Argentina S.A., 2008, System for Granting Mining Property in the Argentine Republic,
Unpublished Internal Report.
Silex Argentina S.A., 2008a, El Quevar, Argentina-Property Description, Unpublished Internal
Report.
Silex Argentina S.A., 2008b, El Quevar Project, Drilling Campaign Report January-July 2008,
Unpublished Internal Report, 35p.
Petrinovic, I.A., 1999, La Caldera de colapso del Cerr o Aquas Caliente, Salta, Argentina: evolucin
y equema structural, Acta Geologica Hispanica, v.34, no2-3, p 243-253.
Vector Argentina S.A., 2008, Informe de Impacto Ambiental Para la Etapa De Prospeccin,
Prospecto Quevar VI, Proyecto el Quevar Departamento Los Andes, Provincia de Salta,
Environmental Report prepared for Silex Argentina, S.A.
Vector Argentina S.A., 2008a, Informe de Impacto Ambiental Campamento Habitacional e
Instalaciones Auxiliares, Proyecto El Quevar Salar de Pocitos Departamento Los Andes, Provincia de
Salta, Environmental Report prepared for Silex Argentina, S.A.

20 Glossary

20.1 Mineral Resources and Reserves

20.1.1 Mineral Resources
The mineral resources and mineral reserves have been classified according to the CIM Standards on
Mineral Resources and Reserves: Definitions and Guidelines (December 2005). Accordingly, the
Resources have been classified as Measured, Indicated or Inferred, the Reserves have been classified
as Proven, and Probable based on the Measured and Indicated Resources as defined below.
A Mineral Resource is a concentration or occurrence of natural, solid, inorganic or fossilized organic
material in or on the Earths crust in such form and quantity and of such a grade or quality that it has
reasonable prospects for economic extraction. The location, quantity, grade, geological characteristics
and continuity of a Mineral Resource are known, estimated or interpreted from specific geological
evidence and knowledge.
An Inferred Mineral Resource is that part of a Mineral Resource for which quantity and grade or
quality can be estimated on the basis of geological evidence and limited sampling and reasonably
assumed, but not verified, geological and grade continuity. The estimate is based on limited
information and sampling gathered through appropriate techniques from locations such as outcrops,
trenches, pits, workings and drillholes.
An Indicated Mineral Resource is that part of a Mineral Resource for which quantity, grade or
quality, densities, shape and physical characteristics can be estimated with a level of confidence
sufficient to allow the appropriate application of technical and economic parameters, to support mine
planning and evaluation of the economic viability of the deposit. The estimate is based on detailed
and reliable exploration and testing information gathered through appropriate techniques from
locations such as outcrops, trenches, pits, workings and drillholes that are spaced closely enough for
geological and grade continuity to be reasonably assumed.
A Measured Mineral Resource is that part of a Mineral Resource for which quantity, grade or quality,
densities, shape, physical characteristics are so well established that they can be estimated with
confidence sufficient to allow the appropriate application of technical and economic parameters, to
support production planning and evaluation of the economic viability of the deposit. The estimate is
based on detailed and reliable exploration, sampling and testing information gathered through
appropriate techniques from locations such as outcrops, trenches, pits, workings and drillholes that are
spaced closely enough to confirm both geological and grade continuity.
20.1.2 Mineral Reserves
A Mineral Reserve is the economically mineable part of a Measured or Indicated Mineral Resource
demonstrated by at least a Preliminary Feasibility Study. This Study must include adequate
information on mining, processing, metallurgical, economic and other relevant factors that
demonstrate, at the time of reporting, that economic extraction can be justified. A Mineral Reserve
includes diluting materials and allowances for losses that may occur when the material is mined.

Probable Mineral Reserve

is the economically mineable part of an Indicated, and in some circumstances a Measured Mineral
Resource demonstrated by at least a Preliminary Feasibility Study. This Study must include adequate
information on mining, processing, metallurgical, economic, and other relevant factors that
demonstrate, at the time of reporting, that economic extraction can be justified.

A Proven Mineral Reserve is the economically mineable part of a Measured Mineral Resource
demonstrated by at least a Preliminary Feasibility Study. This Study must include adequate
information on mining, processing, metallurgical, economic, and other relevant factors that
demonstrate, at the time of reporting, that economic extraction is justified.

20.2 Glossary
Table 20.2.1: Glossary
Assay: Capital
Expenditure:
Composite:
Concentrate:
Crushing: Cut-off
Grade (CoG):
Dilution: Dip:
Fault:
Footwall:
Gangue:
Grade:
Hangingwall:
Igneous:
Kriging:
Lithological:
Milling:
Mining Assets:
Stratigraphy:
Strike:
Sulfide:
Variogram:

The chemical analysis of mineral samples to determine the metal content. All other expenditures not
classified as operating costs. Combining more than one sample result to give an average result over a
larger distance. A metal-rich product resulting from a mineral enrichment process such as gravity
concentration or flotation, in which most of the desired mineral has been separated from the waste
material in the ore. Initial process of reducing ore particle size to render it more amenable for further
processing. The grade of mineralized rock, which determines as to whether or not it is economic to
recover its gold content by further concentration. Waste, which is unavoidably mined with ore. Angle
of inclination of a geological feature/rock from the horizontal. The surface of a fracture along which
movement has occurred. The underlying side of an orebody or stope. Non-valuable components of the
ore. The measure of concentration of gold within mineralized rock. The overlying side of an orebody
or slope. Primary crystalline rock formed by the solidification of magma. An interpolation method of
assigning values from samples to blocks that minimizes the estimation error. Geological description
pertaining to different rock types. A general term used to describe the process in which the ore is
crushed and ground and subjected to physical or chemical treatment to extract the valuable metals to a
concentrate or finished product. The Material Properties and Significant Exploration Properties. The
study of stratified rocks in terms of time and space. Direction of line formed by the intersection of
strata surfaces with the horizontal plane, always perpendicular to the dip direction. A sulfur bearing
mineral. A statistical representation of the characteristics (usually grade).

Abbreviations

The metric system has been used throughout this report unless otherwise stated. All currency is in
U.S. dollars. Market prices are reported in US$ per troy oz of gold and silver. Tonnes are metric of
1,000kg, or 2,204.6lbs. The following abbreviations are used in this report.
Table 20.2.2: Abbreviations
Abbreviation

Unit or Term

amp

AA

atomic absorption

Ag

silver

Au

gold

degrees Centigrade

cm
cm2

centimeter

cm3

square centimeter
cubic centimeter

degree (degrees)

dia.

diameter

EIR

Environmental Impact Report

FA

fire assay

gram

g/L

gram per liter

g/t

grams per tonne

hour

ha

hectares

kg

kilograms

km
km2

kilometer

koz

thousand troy ounce

kt

thousand tonnes

kV

kilovolt

kVA

kilovolt amperes

Ma

mega years

m
m2

meter

square kilometer

m3

square meter
cubic meter

masl

meters above sea level

mg/L

milligrams/liter

mL

milliliter

mm
mm2

millimeter

mm3

square millimeter
cubic millimeter

Mt

million tonnes

NI 43-101

Canadian National Instrument 43-101

oz

troy ounce

percent

ppb

parts per billion

Appendix

Certificate of Autho

SRK Consulting (U.S.), Inc. 7175 West

Jefferson Avenue, Suite 3000 Lakewood,
Colorado USA 80235 e-mail:
denver@srk.com web: www.srk.com Tel:
303.985.1333 Fax: 303.985.9947

CERTIFICATE of AUTHOR
I, Leah Mach, CPG, MSc do hereby certify that:
1.
I am a Principal Resource
Geologist of:
SRK Consulting (US), Inc. 7175
W. Jefferson Ave, Suite 3000
Denver, CO, USA, 80235
2.
I graduated with a Master of Science degree in Geology from the University of Idaho in
1986.
3.
I am a member of the American Institute of Professional
Geologists.
4.
I have worked as a Geologist for a total of 22 years since my graduation in
minerals exploration, mine geology, project development and resource estimation.
5.
I have read the definition of qualified person set out in National Instrument 43-101
(NI 43-101) and certify that by reason of my education, affiliation with a professional
association (as defined in NI 43-101) and past relevant work experience, I fulfill the
requirements to be a qualified person for the purposes of NI 43-101.
6.
I am responsible for all Sections of the technical report titled NI 43-101 Technical
Report on Resources, Apex Silver Mines Corporation, El Quevar Project, and dated February 27,
2009 (the Technical Report) relating to the Lucky Jack property. I visited El Quevar Project
property during the week of November 9, 2008 for four days.
7.
I have not had prior involvement with the property that is the subject of the Technical
Report.
8.
I am independent of the issuer applying all of the tests in section 1.4 of National
Instrument 43-101.
9.
I have read National Instrument 43-101 and Form 43-101F1, and the Technical Report
has been prepared in compliance with that instrument and form.
10. I consent to the filing of the Technical Report with any stock exchange and other regulatory
authority and any publication by them for regulatory purposes, including electronic publication
in the public company files on their websites accessible by the public, of the Technical Report.

Group Offices in: North American Offices: Australia Denver

303.985.1333 North America Elko 775.753.4151 Southern Africa
Reno 775.828.6800 South America Tucson 520-544-3688 United
Kingdom Toronto 416.601.1445
Vancouver 604.681.4196 Yellowknife 867-699-2430

SRK Consulting (US), Inc. Page 2 of 2

11. As of the date of this certificate, to the best of my knowledge, information and belief, the
Technical Report contains all scientific and technical information that is required to be
disclosed to make the Technical Report not misleading.
th

Dated this 27 Day of February, 2009.

Leah Mach, CPG, MSc CPG 10940 (Signed) (Sealed)

Certificate of Author.LM.doc

Apex Silver Mines Corporation, NI 43-101 Technical Report on Resources, El Quevar Project,
Argentina, January 31, 2009

th

Dated this 27 Day of February, 2009.

Leah Mach, CPG MSc CPG 10940 (Signed) (Sealed)