TOKYO--Sumitomo Corporation today announced the formation of a strategic alliance with Apex Silver Mines Ltd., a mining development and exploration company. Under the agreement, approved by the respective Boards of Directors, Sumitomo has acquired a 35% participating interest in Apex Silver's San Cristobal open-pit silver-zinc-lead project located in the Department of Potosi in southwestern Bolivia and has been granted a two-year option to earn a 35% interest in certain of Apex Silver's exploration projects located in Peru, Mexico, Argentina and Bolivia. In exchange, Apex Silver will receive:
Cash amounting to US$ 224 million
Deferred silver payments consisting of 22.86% of Sumitomo's share of future payable silver production from San Cristobal.
Deferred zinc payments equal to the dollar value of 20% of Sumitomo's share of payable zinc production from San Cristobal multiplied by the amount by which the London Metal Exchange price of zinc exceeds US$ 1,800 per tonne.

Closing of the transaction requires completion of certain procedural steps expected before the end of September 2006. Cash payment of US$ 224 million will be covered by NEXI and JBIC Political Risk Insurance facility.

Construction and development of the San Cristobal project, which is practically one of the largest projects under development in silver and zinc, is expected to be completed and fully operated from the third quarter of 2007. Potosi Department is located in Andean mountains with agriculture as a main industry. The San Cristobal project contributes to the community including new job opportunities and upgrading of the infrastructure.

Mitsuhiko Yamada, executive officer of Sumitomo, commented "We are pleased to have a strategic alliance with an emerging mining company like Apex Silver. We are looking forward to working in Bolivia, traditionally mineral rich country with a long history of silver mining dating back to the 16th century. Japan has always enjoyed excellent relation with Bolivia through our immigrants and Japanese Government aid, and we expect the San Cristobal project to contribute to the development of the country's mineral wealth especially to the community of Potosi."

Jeff Clevenger, Chief Executive Officer of Apex Silver welcomes the participation of Sumitomo "Apex Silver is pleased to have this strategic alliance with Sumitomo with proven track record of partnership in major mining operations around the world, solidifying the successful development of San Cristobal."