Exhibit 10.5

 

EXECUTION VERSION

 

 

 

COMPLETION AGREEMENT

 

among

 

APEX SILVER MINES LIMITED,

as Sponsor

 

BARCLAYS CAPITAL,
as Technical Agent

 

BNP PARIBAS,

as Administrative Agent

 

and

 

JPMORGAN CHASE BANK, N.A.,
as Collateral Agent

 

 

Dated as of December 1, 2005

 

 

 

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TABLE OF CONTENTS

 

 

Page

ARTICLE I DEFINITIONS

2

 

1.01 Definitions

2

 

1.02 Interpretation

2

 

 

 

ARTICLE II COMPLETION

2

 

2.01 Completion

2

 

2.02 Waiver of Completion Conditions

3

 

 

 

ARTICLE III GUARANTEE

3

 

3.01 Guarantee

3

 

3.02 Payments Free and Clear of Taxes, Etc.

4

 

3.03 Subrogation

6

 

 

 

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE SPONSOR

6

 

4.01 Representations and Warranties of the Sponsor

6

 

 

 

ARTICLE V COVENANTS OF THE SPONSOR

9

 

5.01 Completion Undertaking

9

 

5.02 Pari Passu Obligations

9

 

5.03 Contingent Support Deficiencies

9

 

5.04 Available Cash

10

 

 

 

ARTICLE VI COMPLETION DEFAULTS

10

 

6.01 Completion Defaults

10

 

 

 

ARTICLE VII MISCELLANEOUS

11

 

7.01 Termination of Agreement

11

 

7.02 Governing Law

12

 

7.03 Waiver of Jury Trial

12

 

7.04 Severability

12

 

7.05 Confidentiality

12

 

7.06 Notices

12

 

7.07 Benefits of Agreement

13

 

7.08 Remedies

13

 

7.09 Counterparts

13

 

7.10 Consent to Jurisdiction

14

 

7.11 Amendments

15

 

7.12 Effectiveness

15

 

7.13 Judgment Currency

15

 

7.14 No Waivers

15

 

7.15 Successors and Assigns

15

 

7.16 Expenses

15

 

7.17 Collateral Agent, Technical Agent and Administrative Agent Protections

15

 

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APPENDICES

 

 

 

 

A

DEFINITIONS

 

 

 

 

B

COMPLETION TEST

 

 

 

 

B-1

FORM OF PHYSICAL FACILITIES CERTIFICATE

 

 

 

 

B-2

FORM OF PRODUCTION CERTIFICATE

 

 

 

 

B-3

FORM OF ENVIRONMENTAL CERTIFICATE

 

 

 

 

B-4

FORM OF MARKETING CERTIFICATE

 

 

 

 

B-5

FORM OF LEGAL AND OTHER CONDITIONS CERTIFICATE

 

 

 

 

B-6

FORM OF FINANCIAL CERTIFICATE

 

 

 

 

C

SPONSOR BUDGET

 

 

ii

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COMPLETION AGREEMENT

 

This Agreement, dated as of December 1, 2005, is made among:

 

APEX SILVER MINES LIMITED, an exempted company incorporated with limited
liability under the laws of the Cayman Islands (the “Sponsor”),

 

BARCLAYS CAPITAL, a public limited company organized under the laws of England
and Wales, as Technical Agent for and on behalf of the Senior Lenders from time
to time party to the Common Security Agreement (the “Technical Agent”),

 

BNP PARIBAS, a banking institution organized under the laws of France, as
Administrative Agent for and on behalf of the Senior Lenders and the Hedge Banks
from time to time party to the Common Security Agreement (the “Administrative
Agent”), and

 

JPMORGAN CHASE BANK, N.A., a national banking corporation, as Collateral Agent
for and on behalf of the Senior Lenders and the Hedge Banks from time to time
party to the Common Security Agreement (the “Collateral Agent”).

 

WHEREAS:

 

A.            The Borrower, an indirect wholly-owned subsidiary of the Sponsor,
proposes to incur the Secured Debt Obligations and has entered into the Common
Security Agreement, the Senior Loan Agreements, the Hedge Guaranty and the
Security Documents;

 

B.            Apex Metals, an indirect wholly-owned subsidiary of the Sponsor,
proposes to incur the Apex Metals Obligations and has entered into the Mandatory
Metals Hedge Agreements and certain other Financing Documents;

 

C.            The Sponsor has authorized the execution and delivery of this
Agreement to undertake specified obligations to induce the Senior Lenders and
the Hedge Banks to extend credit to the Borrower and Apex Metals as the Sponsor
will receive significant benefits from such extensions of credit; and

 

D.            All things have been done which are necessary to constitute this
Agreement a valid contract.

 

NOW, THEREFORE, in consideration of the premises and of the execution of the
Common Security Agreement and Senior Loan Agreements by the Senior Lenders and
of the making of Senior Loans thereunder and the extensions of credit made by
the Hedge Banks as contemplated by the Mandatory Metals Hedge Agreements, the
Sponsor hereby agrees with the Technical Agent, the Administrative Agent and the
Collateral Agent, for and on behalf of the Senior Lenders and the Hedge Banks,
as follows:

 

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ARTICLE I

DEFINITIONS

 

1.01         Definitions.  Except for terms defined in this Agreement and the
Appendices to this Agreement, defined terms in this Agreement and the Appendices
hereto, which may be identified by the capitalization of the first letter of
each principal word thereof, have the meanings assigned to them in the Common
Security Agreement (including Appendix A thereto).

 

1.02         Interpretation.  The rules of interpretation set forth in
clauses (a) to (j) of Section 1.02 of the Common Security Agreement shall apply,
with necessary changes, to this Agreement as if set forth in full in this
Section.

 

ARTICLE II

COMPLETION

 

2.01         Completion.  “Completion” shall occur (subject to Section 7.01(c))
on the date upon which the Borrower has satisfied each of the requirements,
tests and conditions described and set forth in Appendix B and in the text of
the forms of certificates attached hereto as Appendix B-1 through Appendix B-6
(taken together, the “Completion Test”) and has delivered each of the following
certificates to the Administrative Agent (in the case of (e) below) or the
Technical Agent (for delivery to the Senior Lenders):

 

(a)           A Physical Facilities Certificate executed by a Senior Officer and
verified by the Independent Engineer, substantially in the form set forth in
Appendix B-1.

 

(b)           A Production Certificate executed by a Senior Officer and verified
by the Independent Engineer, substantially in the form set forth in
Appendix B-2.

 

(c)           An Environmental Certificate executed by a Senior Officer and
verified by the Independent Engineer, substantially in the form set forth in
Appendix B-3.

 

(d)           A Marketing Certificate executed by a Senior Officer and verified
by the Independent Engineer, substantially in the form set forth in
Appendix B-4.

 

(e)           A Legal and Other Conditions Certificate executed by a Senior
Officer, substantially in the form set forth in Appendix B-5.

 

(f)            A Financial Certificate executed by a Senior Officer,
substantially in the form set forth in Appendix B-6.

 

The Completion Certificates may be delivered together or separately in any order
and at any time and from time to time; provided that (i) the certificates
required by clauses (e) and (f) shall be dated as of a date not earlier than the
latest of the dates of the certificates required by clauses (a), (b), (c) and
(d), above.

 

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2.02         Waiver of Completion Conditions.  Completion shall occur, even if
the conditions set forth in Section 2.01 have not been satisfied, if the
Technical Agent (on behalf of and at the direction of each Secured Party)
delivers a notice to the Administrative Agent, the Collateral Agent, the
Borrower and the Sponsor stating that Completion has occurred.

 

ARTICLE III

GUARANTEE

 

3.01         Guarantee.

 

(a)           The Sponsor, as a primary obligor and not merely as a surety,
unconditionally and irrevocably guarantees to the Collateral Agent, the
Administrative Agent, the Technical Agent, each Senior Lender and each Hedge
Bank and their respective successors and assigns the full and punctual payment
by (i) the Borrower of all Secured Debt Obligations and (ii) Apex Metals of all
obligations of Apex Metals incurred under the Mandatory Metals Hedge Agreements
(including all Mandatory Metals Hedge Transactions executed thereunder)
including all obligations of payment and performance thereunder (such
obligations being herein collectively called the “Apex Metals Obligations”)
that, in any such case, are or become due and payable prior to Completion, when
and as the same shall become due and payable, whether at maturity, upon
acceleration, early termination or otherwise (subject to any exclusions or
applicable grace periods), according to their terms (such obligations being
herein collectively called the “Guaranteed Obligations”).  In case of the
failure of any Guaranteed Obligor to so pay any Guaranteed Obligation, the
Sponsor agrees to make such payment in full forthwith upon demand, in Dollars,
in cash, at such times and in the same manner as required of such Guaranteed
Obligor.

 

(b)           The Sponsor agrees that its Completion Guarantee shall be
unconditional and irrevocable, irrespective of the invalidity or
unenforceability of the Guaranteed Obligations, the absence of any action to
enforce the same, any waiver or consent by any Senior Lender or any Hedge Bank
with respect to any provision of this Agreement, the Common Security Agreement
or any of the other Financing Documents, the recovery of any judgment against
any Guaranteed Obligor or any action to enforce the same, the insolvency or
bankruptcy of any Guaranteed Obligor or any other circumstance which might
otherwise constitute a legal or equitable claim, right, discharge or defense of
a guarantor or surety (other than complete payment in full in Dollars of the
Guaranteed Obligations) or otherwise impair the right of the Collateral Agent,
the Administrative Agent, the Technical Agent, any Senior Lender or any Hedge
Bank to enforce the obligations of the Sponsor hereunder.  The Sponsor waives,
to the extent permitted under applicable law, diligence, presentment, demand of
payment, filing of claims with a court in the event of insolvency or bankruptcy
of any Guaranteed Obligor, any right to require a proceeding first against any
Guaranteed Obligor, any requirement that the Collateral Agent, the
Administrative Agent, the Technical Agent, any Hedge Bank or any Senior Lender
exhaust any right, power or remedy or proceed against any Guaranteed Obligor or
against any other Person under any guarantee of, or security for any Guaranteed
Obligation, protest, notice (including, without limitation, notice of acceptance
of this Completion Guarantee and notice of any liability to which it may apply)
and all demands whatsoever and agrees, that its

 

3

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Completion Guarantee shall remain in full force and effect and will not be
discharged except by complete payment in full, in cash and in Dollars of the
Guaranteed Obligations.  In the event that any payment to the Senior Lenders or
Hedge Banks in respect of any Guaranteed Obligation is rescinded or must
otherwise be returned for any reason whatsoever, the Sponsor shall remain liable
for such Guaranteed Obligation to the extent provided herein as if such payment
had not been made (and if the Sponsor’s obligations under the Completion
Guarantee have been terminated in accordance with this Agreement, such
obligations shall be reinstated to the extent necessary for the Sponsor to
comply with the foregoing provisions of this sentence).  The Sponsor agrees that
it will pay or reimburse the Collateral Agent, the Administrative Agent, the
Technical Agent, each Senior Lender and each Hedge Bank on demand for all
reasonable and documented costs and expenses (including, without limitation,
reasonable and documented fees and disbursements of counsel) incurred by the
Collateral Agent, the Administrative Agent, the Technical Agent, such Senior
Lender or such Hedge Bank, as the case may be, in connection with the rescission
or restoration of the Completion Guarantee, including any such costs and
expenses incurred in defending against any claim alleging that any payment
constituted a preference, fraudulent transfer or similar payment under any
bankruptcy, insolvency or similar law.

 

(c)           The Sponsor agrees that the Senior Lenders or the Hedge Banks may
at any time and from time to time, either before or after the maturity thereof,
without notice to or further consent of the Sponsor, extend the time of payment
of, exchange or surrender or fail to perfect collateral for, or renew, any of
the Guaranteed Obligations owed to it, and may also make any agreement with any
Guaranteed Obligor for the extension, renewal, payment, compromise, discharge or
release thereof, in whole or in part, or for any modification of the terms
thereof or of any agreement between Senior Lenders or the Hedge Banks and any
Guaranteed Obligor, without in any way impairing or affecting the Completion
Guarantee.

 

3.02         Payments Free and Clear of Taxes, Etc.

 

(a)           Except as required by law, any and all payments made by the
Sponsor under the Completion Guarantee to the Collateral Agent, the
Administrative Agent, the Technical Agent, any Senior Lender or any Hedge Bank
shall be made free and clear of and without deduction or withholding for any and
all present or future withholding, income, stamp and other taxes, levies,
imposts, deductions, duties or similar charges imposed by the government of the
Cayman Islands or any political subdivision or taxing authority thereof or
therein or by any other jurisdiction from or through which payments are made
(other than any of the foregoing imposed on the net income of the Collateral
Agent, the Administrative Agent, the Technical Agent, any of the Senior Lenders
or any Hedge Bank, or any franchise or other tax imposed on the Collateral
Agent, the Administrative Agent, the Technical Agent, any of the Senior Lenders
or any Hedge Bank, by a jurisdiction by virtue of the Collateral Agent’s, the
Administrative Agent’s, such Senior Lenders’ or such Hedge Banks’ connection
with such jurisdiction other than a connection arising solely under this
Agreement, the Common Security Agreement or any other Financing Document) (such
taxes herein referred to as “Taxes”).  If the Sponsor shall be required by law
to deduct any Taxes from or in respect of any payment under the Completion
Agreement to the Collateral Agent, the Administrative Agent, the Technical
Agent, any Senior Lender or any Hedge Bank, (i) such payment shall be increased
so that, after

 

4

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all required deductions for Taxes have been made, such payment shall not be less
than the amount that would have been paid by the Sponsor had no such deductions
for Taxes been required and made, (ii) the Sponsor shall make such deductions
and (iii) the Sponsor shall pay the full amount deducted to the relevant taxing
authority or other authority in accordance with applicable law.  If the
Collateral Agent, the Administrative Agent, the Technical Agent, any Senior
Lender or any Hedge Bank pays any such Taxes, the Sponsor shall, upon demand by
the Collateral Agent, the Administrative Agent, the Technical Agent, such Senior
Lender or such Hedge Bank and submission of reasonable documentary evidence of
such payment, reimburse the Collateral Agent, the Administrative Agent, the
Technical Agent, such Senior Lender or such Hedge Bank for such payments.  The
Collateral Agent, the Administrative Agent, the Technical Agent, each Senior
Lender and each Hedge Bank shall use its reasonable efforts to avoid or mitigate
the need for any additional payments by the Sponsor under this Section, provided
that the Collateral Agent, the Administrative Agent, the Technical Agent, such
Senior Lender or such Hedge Bank shall not be required hereunder to take any
action which is commercially disadvantageous to it or which it determines
violates or is otherwise impermissible under the regulatory requirements to
which it is subject.  If so requested, the Sponsor shall furnish to the
Collateral Agent and the Administrative Agent original or certified copies of
tax receipts in respect of any Taxes withheld as required under this
Section 3.02 as promptly as reasonably practicable.

 

(b)           Each Senior Lender, each Hedge Bank, the Administrative Agent and
the Collateral Agent shall notify the Sponsor if it shall have actual knowledge
of any event or circumstances occurring after the date of this Agreement which
will give rise to a payment obligation to it under clause (a) of this
Section 3.02 as promptly as practicable after it obtains actual knowledge
thereof and of its applicability to payments due under this Agreement.  Such
affected Secured Party will inform the Sponsor in writing of the basis and
amount of each payment obligation under clause (a) of this Section 3.02.  The
failure of such affected Secured Party to provide such notice will not affect
the obligation of the Sponsor under its Completion Guarantee or under this
Section 3.02 or give rise to a claim on, or liability of, such affected Secured
Party.

 

(c)           The obligations of the Sponsor under clause (a) and (d) of this
Section 3.02 shall survive the payment, prepayment or assignment of Guaranteed
Obligations and the termination of this Agreement.

 

(d)           The Sponsor agrees to pay upon demand any present or future stamp
or documentary taxes or any other excise or property taxes, charges or similar
levies which arise from any payment or purchase made under the Completion
Guarantee or from the execution, delivery or registration of, or otherwise with
respect to, the Completion Guarantee or this Agreement (other than taxes that
would be excluded from the definition of “Taxes” in clause (a) of this
Section 3.02 pursuant to the parenthetical phrase in the first sentence of such
clause (a)).

 

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3.03         Subrogation.  The Sponsor hereby agrees that until (a) the payment
and satisfaction in full of all the Guaranteed Obligations and (b) the
expiration and termination of the Senior Loan Commitments of the Senior Lenders
under the Senior Loan Agreements and the termination of all outstanding
Mandatory Metals Hedge Transactions, it shall not exercise any right or remedy
arising by reason of any performance by it of its guarantees in Section 3.01,
whether by subrogation or otherwise, against the Borrower or any other guarantor
of any of the Guaranteed Obligations or any security for any of the Guaranteed
Obligations.

 

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE SPONSOR

 

4.01         Representations and Warranties of the Sponsor.  The Sponsor
represents and warrants to the Collateral Agent and the Administrative Agent for
and on behalf of the Senior Lenders and the Hedge Banks that:

 

(a)           Organization.  The Sponsor (i) is incorporated and validly
existing and in good standing under the laws of the jurisdiction of its
incorporation; (ii) has all requisite corporate power and authority under the
laws of the jurisdiction of its incorporation to own its property and to carry
on its business as currently conducted; and (iii) is duly qualified to do
business in and is in good standing in all other jurisdictions where necessary
in light of the business it conducts and the Property it owns and intends to
conduct and own and in light of the transactions contemplated by this Agreement
and the other Financing Documents to which it is a party, except where the
failure to so qualify or be in good standing could not reasonably be expected to
have a Material Adverse Effect;

 

(b)           Ownership of the Borrower.  At the date hereof, (i) the Sponsor
owns 100% of the issued and outstanding share capital of Apex Luxembourg;
(ii) Apex Luxembourg owns 100% of the issued and outstanding share capital of
Apex Sweden, at least one quota of Apex Metals in the amount of 1,000 Swiss
Francs and one share of the Borrower; (iii) Apex Sweden owns all of the issued
and outstanding share capital of the Borrower except for two shares and at least
99.79% of the issued and outstanding quotas of Apex Metals; and (iv) Apex Metals
owns one share of the Borrower.

 

(c)           Authority.  The Sponsor has all requisite corporate power and
authority to enter into each Transaction Document to which it is a party and to
incur and perform its obligations provided for herein and therein;

 

(d)           Binding Agreements.  Each Transaction Document to which the
Sponsor is a party which has been executed and delivered by the Sponsor on or
prior to the date hereof, has been duly authorized, executed and delivered by it
and constitutes its legal, valid and binding obligation enforceable in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors’ rights and to general equity principles;

 

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(e)           Consents and Approvals.  All Authorizations and Government
Approvals which are necessary for (i) the execution and delivery by the Sponsor
of this Agreement and the other Financing Documents and (ii) the performance of
its obligations hereunder and thereunder have been obtained and are in full
force and effect (except for those specified in the legal opinions delivered in
satisfaction of the conditions precedent referred to in Section 11.02(h) of the
Common Security Agreement which are to be obtained following the Closing Date
but prior to the Initial Disbursement Date), and no other action by, and no
notice to or filing with, any Governmental Authority or other Person is required
for such execution, delivery or performance and all fees and taxes required for
the legality or enforceability of such documents have been paid (except for
(i) those specified in the legal opinions delivered in satisfaction of the
conditions precedent referred to in Section 11.02(h) of the Common Security
Agreement which are to be paid following the Closing Date but prior to the
Initial Disbursement Date, (ii) those which are immaterial and of a ministerial
nature and (iii) those payable in the Cayman Islands as specified in the legal
opinion of Cayman counsel as being payable in connection with enforcement in the
Cayman Islands);

 

(f)            No Conflicts.  The execution, delivery and performance by the
Sponsor of each of the Financing Documents to which it is or is intended to be a
party and the consummation of the transactions contemplated thereby do not and
will not (i) violate any provision of its Organizational Documents, any
Authorization, any Government Rule or any Government Approval applicable to the
Project or the Sponsor, (ii) conflict with, result in a breach of or constitute
a default under any Financing Document or any mortgage, indenture, loan, credit
agreement or other agreement to which the Sponsor is a party or by which it or
its property may be bound or affected in any material respect, or (iii) result
in, or create any Lien (other than a Sponsor Permitted Lien) upon or with
respect to any of the properties now owned or hereafter acquired by the Sponsor;

 

(g)           No Litigation.  There are no actions, suits or proceedings pending
against or, to the knowledge of the Sponsor, threatened against, or affecting
the Sponsor or any of its properties before or by any Governmental Authority or
before any arbitrator other than those which have been disclosed in writing to
the Senior Lenders on or prior to the date hereof or those which could not
reasonably be expected to result in a Material Adverse Effect.  There is no
existing default by the Sponsor under any applicable order, writ, injunction or
decree or other decision of any Governmental Authority or any arbitrator;

 

(h)           Project Information.  As of the date hereof and the Initial
Disbursement Date, the Project Information relevant to the Sponsor and other
information provided by or on behalf of the Sponsor in writing to the Senior
Lenders (as may have been superseded, modified or corrected by later information
provided in writing by or on behalf of the Sponsor in accordance with the
Financing Documents), considered as a whole, does not contain any material
misrepresentation or misstatement (or omit any material fact or circumstance
necessary in order to make the information contained therein not misleading);
provided that, the Sponsor’s sole representation with respect to projections,
estimates or other expressions of view as to future circumstances set out in the
Project Information shall be that such projections, estimates or other
expressions of

 

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view as to future circumstances (i) were prepared in good faith and with due
care and (ii) were based on reasonable assumptions as to all factual and legal
matters material to the estimates therein as of their respective date(s) of
delivery;

 

(i)            No Immunity.  The Sponsor is subject to civil and commercial law
with respect to its obligations under each of the Financing Documents to which
it is a party.  The execution, delivery and performance by the Sponsor of each
of the Financing Documents to which it is a party constitute private and
commercial acts rather than public or governmental acts.  Neither the Sponsor,
nor any of its assets, is entitled to any right of immunity in any jurisdiction
from suit, court jurisdiction, judgment, attachment (whether before or after
judgment), set-off or execution of a judgment or from any other legal process or
remedy relating to the obligations of the Sponsor under any of the Financing
Documents to which it is a party;

 

(j)            Taxes.  The Sponsor has filed or caused to be filed all tax
returns required to be filed by it, and has paid all taxes shown to be due and
payable on such returns, or on any assessments made against it or any of its
properties, and all other taxes, assessments, fees, liabilities or other charges
imposed on it or on its properties by any Governmental Authority, in each case
after giving effect to any applicable extensions, except for any such taxes,
assessments, fees, liabilities and other charges (i) the payment of which is
being contested in good faith and by appropriate proceedings and for which
adequate reserves are being maintained in accordance with U.S. GAAP and
Applicable Accounting Principles or (ii) the failure of which to file or pay
could not reasonably be expected to have a Material Adverse Effect.  As of the
date hereof, there are no material disputes pending or, to its knowledge,
threatened, between the Sponsor and any Governmental Authority relating to
taxes;

 

(k)           Ranking.  The obligations of the Sponsor under this Agreement will
at all times rank pari passu in right of payment with or senior in right of
payment to all other unsecured obligations of the Sponsor, other than those
which have priority under the law of the Cayman Islands;

 

(l)            Financial Condition.  The financial statements of the Sponsor
delivered in accordance with Section 4.02 of the Sponsor Pledge Agreement are
true, complete and correct and fairly present in all material respects the
financial condition and results of operations of the Sponsor as at the end of,
and for, such fiscal year or each fiscal quarter, as the case may be, in
accordance with U.S. GAAP consistently applied (subject, in the case of
quarterly financial statements, to normal year-end adjustments and the absence
of notes).  The Sponsor does not have as of the date of such financial
statements any material contingent liabilities, liabilities for taxes, unusual
forward or long-term commitments or unrealized or anticipated losses from any
unfavorable commitments required to be included or noted in financial statements
prepared in accordance with U.S. GAAP, except (i) as referred to or reflected or
provided for in such financial statements or, in the case of the financial
statements delivered pursuant to Section 11.01(h) of the Common Security
Agreement, as arising solely from the execution and delivery of the Financing
Documents or (ii) as notified in writing to the Administrative Agent

 

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concurrently with the delivery of such financial statements.  There has been no
material adverse change in the business, assets, operations or condition,
financial or otherwise, of the Sponsor from that set forth in such financial
statements (as supplemented by any information delivered therewith pursuant to
the preceding sentence, if any) as of the date thereof; and

 

(m)          Dedicated Cash.  As of the date hereof, the Sponsor (i) has
available to it Dedicated Cash in an amount of not less than $51,069,000 and
(ii) has deposited $10,893,780 of such amount in an identified securities
account maintained with The Bank of New York as collateral agent and securities
intermediary with respect to the Convertible Notes bearing interest at 4.0% (the
“Escrow Account”) for the purpose of paying interest on such Convertible Notes
when the same becomes due and payable.  As of the Initial Disbursement Date, the
Sponsor will have deposited $9,855,180 in an identified securities account
maintained with an institution and on terms reasonably acceptable to the Sponsor
and the Administrative Agent (the “Additional Escrow Account”) for the purpose
of paying interest on any of the Convertible Notes when the same becomes due and
payable.

 

(n)           Share Funding.  The Sponsor has authorized but not yet issued a
sufficient number of common shares of the Sponsor to permit the Sponsor to fund
the Share Funding Amount in accordance with Section 5.05 hereof.

 

ARTICLE V

COVENANTS OF THE SPONSOR

 

Until termination of this Agreement, the Sponsor shall perform the following
covenants:

 

5.01         Completion Undertaking.  The Sponsor undertakes to use commercially
reasonable efforts to cause the Borrower (a) to construct, complete and render
operational the physical facilities of the Project as contemplated by the
Project Description by the Limit Completion Date and (b) to achieve Completion
by the Limit Completion Date.

 

5.02         Pari Passu Obligations.  The Sponsor shall ensure that its
obligations under each of this Agreement, the Transfer Restrictions Agreement,
the Sponsor Pledge Agreement, the Project Document Guarantee and the Concentrate
Sales Guarantee rank at all times pari passu with or senior to all of its other
unsecured and unsubordinated indebtedness, except obligations under such
indebtedness that are preferred solely by bankruptcy, insolvency or other laws
of general application affecting creditors’ rights generally.

 

5.03         Contingent Support Deficiencies.  In the event that at any time a
Contingent Support Deficiency exists as identified in a Cost to Complete
Certificate, the Sponsor shall propose to the Administrative Agent an Acceptable
Funding Plan for funding such Contingent Support Deficiency within ten (10) days
of the date of such Cost to Complete Certificate.  The Administrative Agent
shall notify the Sponsor of its receipt of the Acceptable Funding Plan.  In the
event that the Administrative Agent (acting at the direction of the Majority
Secured Parties)

 

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accepts such Acceptable Funding Plan, the Sponsor shall diligently pursue such
plan and shall have ninety (90) days from the date on which the Administrative
Agent has notified the Sponsor of the acceptance of such Acceptable Funding Plan
to deposit, in immediately available funds, the total aggregate amount of the
Contingent Support Deficiency to be funded in connection with such Acceptable
Funding Plan.  In the event that the Administrative Agent (acting at the
direction of the Majority Secured Parties) rejects such Acceptable Funding Plan
or in the event that the Sponsor has failed to propose an Acceptable Funding
Plan within ten (10) days of the date of the Cost to Complete Certificate
identifying the Contingent Support Deficiency, the Sponsor shall immediately and
without demand, notice or presentment of any kind or nature whatsoever, deposit
in the Contingent Support Account, in immediately available funds, an amount
equal to the Contingent Support Deficiency on the date of the rejection of its
plan or, where it has not presented a plan, the date on which such plan was due
to be presented.  The Sponsor shall submit additional Acceptable Funding Plans
in the event that additional funds are required to cause the Contingent Support
Requirement to be satisfied without regard as to whether the Sponsor may be
currently implementing an Acceptable Funding Plan with respect to a previously
identified Contingent Support Deficiency.

 

5.04         Available Cash.  The Sponsor shall (a) expend its Available Cash in
material compliance with the Sponsor Budget and (b) following the Initial
Disbursement Date, upon the release of funds by the issuer of letters of credit
issued to support obligations of the Borrower under the Material Project
Documents, cause an additional $10,374,480 in cash to be deposited in the
Additional Escrow Account by no later than September 30, 2006.

 

5.05         Share Funding.  The Sponsor shall issue to the EPCM Contractor on
behalf of the Borrower a number of shares in the Sponsor having a value as
determined under the EPCM Contract of up to $4,000,000 on the date such amount
is due to the EPCM Contractor under the EPCM Contract.  The Sponsor shall, on
behalf of ASC Bolivia, issue into escrow in accordance with the Transmission
Line Loan Agreement and the Transmission Line Security Documents a number of
shares having a value as determined under the Transmission Line Loan
Agreement and the Transmission Line Security Documents sufficient to cause the
aggregate amount of funds to be made available under the Transmission Line Loan
Agreement to equal $22,280,148.

 

ARTICLE VI

COMPLETION DEFAULTS

 

6.01         Completion Defaults.  The occurrence and continuance of any of the
following events shall be a “Completion Default”:

 

(a)           Payment Default.  the Sponsor defaults in respect of any payment
obligation, when and as such payment is due and payable under this Agreement,
and such default continues unwaived or unremedied for the period specified for
the relevant underlying obligation of the Borrower set forth in
Section 10.01(a) of the Common Security Agreement after written notice thereof
is given to the Sponsor by the Collateral Agent or the Administrative Agent;

 

10

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(b)           Breach of Representation or Warranty Under this Agreement.  a
representation, warranty or statement confirmed or made by the Sponsor contained
in any written certificate, notice or other document provided to any Secured
Party under or pursuant to any Financing Document to which it is a party shall
have been incorrect in any material respect when made or deemed to be made or
repeated (except if stated to have been made solely as of an earlier date); or

 

(c)           Breach of Covenant.  the Sponsor fails to comply with any of its
obligations under:

 

(i)  Section 5.05 (Share Funding); or

 

(ii) any other provision of this Agreement not previously referenced in this
Article VI and such failure continues unremedied for 30 days after written
notice thereof is given to it by the Administrative Agent at the direction of
the Majority Secured Parties specifying such default and requiring that it be
remedied.

 

ARTICLE VII

MISCELLANEOUS

 

7.01         Termination of Agreement.

 

(a)           Subject to the reinstatement provisions of Sections 3.01(b),
7.01(b) and 7.01(c), this Agreement (and the associated representations and
warranties and Completion Obligations) shall terminate upon the earlier of
(i) Completion or (ii) payment of all outstanding Guaranteed Obligations and the
termination or cancellation of all Senior Loan Commitments and termination of
all outstanding Mandatory Metals Hedge Transactions.

 

(b)           Upon the termination of this Agreement, the obligations of the
Sponsor hereunder, other than such obligations as are provided under
clauses (a), (c) and (d) of Section 3.02 and Sections 7.13 and 7.16, shall
terminate and the Sponsor shall not have any further liability to the Senior
Lenders and the Hedge Banks hereunder.

 

(c)           Notwithstanding termination under clause (i) of Section 7.01(a),
this Agreement shall be automatically reinstated and shall continue in full
force and effect if (i) within 180 days following Completion, the Majority
Secured Parties notify the Sponsor that they intend to commence legal action to
establish that any certificate delivered under Section 2.01 was false in any
material respect as of its date, (ii) within 180 days following the Sponsor’s
receipt of such notice, such legal action is commenced and (iii) a court of
competent jurisdiction renders a judgment that such certificate was false in any
material respect as of its date.

 

11

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(d)           Notwithstanding termination under clause (i) of Section 7.01(a),
the Sponsor shall not be relieved of any obligations hereunder that arose prior
to the occurrence of Completion but which remain unpaid as of Completion.

 

7.02         Governing Law.  This Agreement shall be governed by and construed
in accordance with the law of the State of New York.

 

7.03         Waiver of Jury Trial.  Each party hereto hereby waives, to the
fullest extent permitted by applicable law, any and all right to trial by jury
in any legal proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby.

 

7.04         Severability.  If any provision of this Agreement shall be invalid,
illegal or unenforceable in any respect under any law, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.

 

7.05         Confidentiality.  Each of the Collateral Agent, the Administrative
Agent, the Technical Agent, the Hedge Banks and the Senior Lenders agrees to
maintain the confidentiality of the information disclosed to it concerning the
Sponsor, except that the information may be disclosed (a) to its Related Parties
including accountants, legal counsel and other advisers, (b) to a guarantor of
any Guaranteed Obligor’s obligations under the Financing Documents, (c) to any
insurer or guarantor of Senior Loan Obligations held by a Senior Lender, (d) to
the extent requested by any regulatory or Governmental Authority, (e) to the
extent required by applicable laws or regulations or by any subpoena or similar
legal process, (f) in the case of any Senior Lender that is a governmental
agency or entity, to other parts of its government in accordance with its usual
policies, (g) to any other party to this Agreement, (h) in connection with the
exercise of any duties or remedies hereunder or any suit, action or proceeding
relating to this Agreement or under the Loan PRI Policy (or in satisfaction of
the insureds’ obligations thereunder) or the enforcement of rights hereunder,
(i) subject to an agreement containing provisions substantially the same as
those of this Section 7.05 (which shall name the Sponsor as third party
beneficiary thereof), to any permitted assignee of or Participant in, or any
prospective permitted assignee or Participant in, any Secured Debt Obligations,
(j) with the consent of the Sponsor or (k) to the extent such information
(i) becomes publicly available other than as a result of a breach of the
obligations contained in this Section 7.05 or (ii) becomes available to the
Administrative Agent, the Collateral Agent, any Senior Lender or any Hedge Bank
on a nonconfidential basis from a source other than the Sponsor (it being
understood in the case of sections (a), (b) and (c) hereof that any such Persons
to whom such disclosure is made will be informed of the confidential nature of
such Information and instructed to keep such Information confidential).

 

7.06         Notices.

 

(a)           Any notice, request, demand, consent, designation, direction,
instruction, certificate, report or other communication to be given hereunder
shall be given in the English language and will be duly given when delivered in
writing or sent by facsimile transmission (with written confirmation of receipt,
which confirmation may be by facsimile transmission) or when delivered by any
other reasonable means to a party at its address and facsimile

 

12

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transmission numbers as indicated below or to such other address as may be
furnished for this purpose by such party at:

 

If to the Sponsor, at:

 

 

 

Apex Silver Mines Limited

 

Walker House, Mary Street

 

George Town, Grand Cayman, Caymans Islands

 

British West Indies

 

Tel:

(303) 839-5060

 

 

(888) 696-2739

 

Fax:

(303) 839-5907

 

Attn:

Senior Vice President

 

 

 

with a copy to:

 

 

 

Apex Silver Mines Corporation

 

1700 Lincoln Street, Suite 3050

 

Denver, CO 80203

 

Tel:

(303) 839-5060

 

 

(888) 696-2739

 

Fax:

(303)839-5907

 

Attn:

Chief Financial Officer

 

 

 

If to the Borrower, the Technical Agent, the Collateral Agent, or the
Administrative Agent, at the respective address indicated therefor in
Section 15.08 of the Common Security Agreement.

 

(b)           Any notice or certificate delivered by the Sponsor to the
Technical Agent, the Collateral Agent or the Administrative Agent shall be
deemed to have been given to each Senior Lender and each Hedge Bank for all
purposes hereunder.

 

7.07         Benefits of Agreement.  Nothing in this Agreement or any other
Financing Document, express or implied, shall give to any Person, other than the
parties hereto and their successors and permitted assigns under this Agreement,
the Senior Loan Agreements, the Common Security Agreement and the Mandatory
Metals Hedge Agreements, any benefit or any legal or equitable right or remedy
under this Agreement.

 

7.08         Remedies.  Except as and to the extent otherwise provided in this
Agreement, no remedy herein conferred upon the Collateral Agent or
Administrative Agent is intended to be exclusive of any other remedy and each
and every such remedy shall be cumulative and shall be in addition to every
other remedy given hereunder, under the Common Security Agreement, the Senior
Loan Agreements, the Transfer Restrictions Agreement or the Security Documents
or now or hereafter existing at law or in equity or by statute or otherwise.

 

7.09         Counterparts.  This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so

 

13

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executed and delivered shall be an original, but all the counterparts shall
together constitute one and the same instrument.

 

7.10         Consent to Jurisdiction.

 

(a)           The Sponsor hereby irrevocably consents and agrees, for the
benefit of each other party, that any legal action, suit or proceeding against
it with respect to its obligations, liabilities or any other matter under or
arising out of or in connection with this Agreement may be brought in any
Federal or State court located in the Borough of Manhattan, The City of New York
(a “New York court”), and hereby irrevocably accepts and submits to the
non-exclusive jurisdiction of each such New York court or New York Federal
court, as the case may be, with respect to any such action, suit or proceeding. 
The Sponsor waives any objection which it may now or hereafter have to the
laying of venue of any of the aforesaid actions, suits or proceedings brought in
any such New York Federal court and such New York court and hereby further
waives and agrees not to plead or claim in any such New York Federal court that
any such action, suit or proceeding brought therein has been brought in an
inconvenient forum.

 

(b)           The Sponsor agrees that a final judgment against it in any action,
suit or proceeding taken in a New York court or New York Federal court in
accordance with clause (a) shall be conclusive and may be enforced in any
jurisdiction by suit on the judgment, a certified copy of which judgment shall
be conclusive evidence thereof, or by any other means provided by applicable
law.

 

(c)           To the extent that the Sponsor has or hereafter may acquire any
immunity from jurisdiction of any court or from any legal process (whether
through service of notice, attachment prior to judgment, attachment in aid of
execution, execution, sovereign immunity or otherwise) with respect to itself or
its property, it hereby irrevocably waives such immunity to the fullest extent
permitted by law, in respect of its obligations under this Agreement.

 

(d)           The Sponsor hereby irrevocably appoints CT Corporation System,
with offices at the date of this Agreement at 111 8th Avenue, New York, New York
10011, as its authorized agent on which any and all legal process may be served
in any such action, suit or proceeding brought in any Federal or State court
located in the Borough of Manhattan, The City of New York.  The Sponsor agrees
that service of process in respect of it upon such agent, together with written
notice of such service given as provided in Section 7.06, shall be deemed to be
effective service of process upon it in any such action, suit or proceeding. 
The Sponsor agrees that the failure of such agent to give notice to it of any
such service shall not impair or affect the validity of such service or any
judgment rendered in any action, suit or proceeding based thereon.  If for any
reason such agent shall cease to be available to act as such, the Sponsor agrees
to designate a new agent in the Borough of Manhattan, The City of New York, on
the terms and for the purposes of this Section 7.10.  Nothing herein shall be
deemed to limit the ability of any party hereto to serve any such legal process
in any other manner permitted by applicable law or to obtain jurisdiction over
any such party or bring actions, suits or proceedings against it in such other
jurisdictions, and in such manner, as may be permitted or required by applicable
law.

 

14

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7.11         Amendments.  This Agreement may be amended only by an agreement in
writing signed by each party hereto.

 

7.12         Effectiveness.  This Agreement shall come into full force and
effect upon (a) its execution and delivery by each of the parties named on the
signature pages hereof and (b) the effectiveness of the Common Security
Agreement in accordance with Section 15.20 thereof.

 

7.13         Judgment Currency.  The obligations of the Sponsor to make payments
hereunder shall not be discharged by an amount paid in any currency other than
Dollars, whether pursuant to a court or arbitral judgment or otherwise, to the
extent that the amount so paid upon conversion to Dollars and transferred to New
York, New York under normal banking procedures does not yield the amount of
Dollars due, and the Sponsor hereby, as a separate obligation and
notwithstanding any such judgment, agrees to indemnify the Collateral Agent, the
Administrative Agent, the Technical Agent, each Hedge Bank and each Senior
Lender against, and to pay to the Collateral Agent on demand, in Dollars, any
difference between the sum originally due in Dollars and the amount of Dollars
received upon any such conversion and transfer.

 

7.14         No Waivers.  No failure on the part of the Collateral Agent, the
Administrative Agent, the Technical Agent, any Hedge Bank or any Senior Lender
to exercise and no delay in exercising, and no course of dealing with respect
to, any right, power or privilege under this Agreement or any other agreement or
instrument referred to herein or therein shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, power or privilege under any
such agreement or instrument preclude any other or further exercise thereof or
the exercise of any other right, power or privilege.  The remedies provided
herein are cumulative and not exclusive of any remedies provided by law.

 

7.15         Successors and Assigns.  This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and assigns.

 

7.16         Expenses.  The Sponsor shall pay all documented out-of-pocket
expenses of the Technical Agent, the Collateral Agent, the Administrative Agent,
the Technical Agent, the Hedge Banks and the Senior Lenders (including
reasonable fees and expenses of legal counsel) incurred in connection with the
enforcement of any provision of this Agreement and the collection of any amount
due hereunder.

 

7.17         Collateral Agent, Technical Agent and Administrative Agent
Protections.  The rights, benefits, privileges and protections conferred upon
the Collateral Agent, the Technical Agent and the Administrative Agent pursuant
to Article XII and Article XIII of the Common Security Agreement are expressly
incorporated herein by reference and shall extend to the Collateral Agent, the
Technical Agent and the Administrative Agent hereunder as if such rights,
benefits, privileges and protections were set forth in full herein.

 

15

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IN WITNESS WHEREOF the parties have caused this Agreement to be duly executed as
of the date first above written.

 

 

APEX SILVER MINES LIMITED

 

 

 

 

 

By:

/s/ Jeffrey G. Clevenger

 

 

 

Name: Jeffrey G. Clevenger

 

 

Title: President & CEO

 

S-1

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JPMORGAN CHASE BANK, N.A.,

 

 

as Collateral Agent

 

 

 

 

 

 

 

By:

/s/ Lucia Jaklitsch

 

 

 

Name: Lucia Jaklitsch

 

 

Title: Vice President

 

S-2

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BNP PARIBAS,

 

 

as Administrative Agent

 

 

 

 

 

 

 

By:

/s/ Jeffrey Stufsky

 

 

 

Name: Jeffrey Stufsky

 

 

Title: Managing Director

 

 

 

 

 

 

 

By:

/s/ Matthew Lewis

 

 

 

Name: Matthew Lewis

 

 

Title: Vice President

 

S-3

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BARCLAYS CAPITAL,

 

 

as Technical Agent

 

 

 

 

 

 

 

By:

/s/ John Hogarth

 

 

 

Name: John Hogarth

 

 

Title: Associate Director

 

S-4

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Appendix A

to Completion Agreement

 

DEFINITIONS

 

In this Appendix, the Completion Agreement and the other Appendices hereto and
in any other document that refers to this Appendix, the following terms shall
have the meanings assigned below and include the plural as well as the singular
(and unless otherwise specified, section references in this Appendix are to
sections of the Completion Agreement):

 

“Acceptable Funding Plan” means a funding plan delivered by the Sponsor to the
Administrative Agent in connection with the funding of any Contingent Support
Deficiency that satisfies the following conditions:

 

(a)           such plan is predicated on a commitment letter, underwriting
letter or other firm underwriting commitment by a commercial bank, investment
bank or financial institution of reputable international standing;

 

(b)           provides for funding in an amount at least equal to the identified
Completion Support Deficiency; and

 

(c)           does not provide for any recourse to any Affiliated Obligor or any
assets of any Affiliated Obligor other than the Sponsor.

 

“Additional Escrow Account” has the meaning given to that term in
Section 4.01(m).

 

“Agreement” means this Completion Agreement.

 

“Available Cash” means cash and Cash Equivalents (excluding any cash or Cash
Equivalents posted in the Equity Account and the Contingent Support Account)
available to the Sponsor for general corporate purposes and not pledged to any
Person or escrowed for any purpose.

 

“Borrower” means Minera San Cristóbal S.A., a sociedad anónima organized under
the laws of Bolivia.

 

“Cash Equivalent” means, at any time:

 

(a)           any evidence of Indebtedness for Borrowed Money, maturing not more
than one year after such time, issued or guaranteed by the United States
government or an agency thereof; or

 

(b)           investments in securities or bank instruments rated at least “A”
by S&P or “A2” by Moody’s or “A-1” by S&P or “P-1” by Moody’s and with
maturities of not more than one year; or

 

(c) money market funds that (i) comply with the criteria set forth in Securities
and Exchange Commission Rule 2a-7 under the investment Company Act of 1940, as
amended and (ii) have portfolio assets of at least $1,000,000,000.

 

A-1

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“Common Security Agreement” means the Common Security Agreement, dated as of the
date hereof, among the Borrower, Apex Sweden, Apex Luxembourg, Apex Metals, the
Administrative Agent, the Hedging Coordinators, the Lead Arrangers, the
Technical Agent, the Collateral Agent, the Securities Intermediary, and the
Senior Lenders and Hedge Banks from time to time party thereto.

 

“Completion” has the meaning set forth in Section 2.01.

 

“Completion Certificates” means each of the certificates referred to in
Section 2.01.

 

“Completion Default” has the meaning set forth in Section 6.01.

 

“Completion Guarantee” means all guarantee, payment and indemnity obligations of
the Sponsor under Section 3.01.

 

“Completion Obligations” means the Completion Guarantee and the Completion
Undertaking.

 

“Completion Test” has the meaning set forth in Section 2.01.

 

“Completion Undertaking” means the undertakings of the Sponsor under
Section 5.04.

 

“Convertible Notes” means the 2.875% convertible notes due 2024 issued by the
Sponsor under an Indenture of Trust dated March 16, 2004 between the Sponsor and
The Bank of New York as trustee and the 4.0% convertible notes due 2024 issued
by the Sponsor under an Indenture of Trust dated October 15, 2004 between the
Sponsor and The Bank of New York as trustee.

 

“Dedicated Cash” means the sum of (a) Available Cash plus (b) the sum of
(i) amounts deposited in the Escrow Account and the Additional Escrow Account
and (ii) cash posted to support the issuance of letters of credit required
pursuant to the terms of the Material Project Documents (excluding any cash
posted to meet the escrow requirements under the Ports Agreement).

 

“Environmental Certificate” means the certificate referred to in clause (c) of
Section 2.01.

 

“Escrow Account” has the meaning ascribed to such term in Section 4.01(m).

 

“Financial Certificate” means the certificate referred to in clause (f) of
Section 2.01.

 

“Guaranteed Obligations” has the meaning set forth in Section 3.01(a)

 

“Guaranteed Obligor” means each of the Borrower and Apex Metals.

 

A-2

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“Legal and Other Conditions Certificate” means the certificate referred to in
clause (e) of Section 2.01.

 

“Marketing Certificate” means the certificate referred to in clause (d) of
Section 2.01.

 

“Physical Facilities Certificate” means the certificate referred to in
clause (a) of Section 2.01.

 

“Production Certificate” means the certificate referred to in clause (b) of
Section 2.01.

 

“Senior Officer” means the President or Chief Executive Officer of the Borrower.

 

“Sponsor Budget” means a general budget attached as Appendix C hereto for the
activities of the Sponsor during the period from the Closing Date through the
Limit Completion Date referred to in Section 11.02(a)(iii) of the Common
Security Agreement.

 

“Sponsor Permitted Liens” has the meaning set forth in the Sponsor Pledge
Agreement.

 

 “Taxes” has the meaning set forth in clause (a) of Section 3.02.

 

A-3

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Appendix B

to Completion Agreement

 

COMPLETION TEST

 

The “Completion Test Period” is a period of 100 continuous days during which the
Borrower’s production facilities operate for 90 days or more, ending on or
before the Limit Completion Date, provided that downtime of up to 240 hours
during this period will not require the test to be restarted.  The Completion
Test shall be prospective in nature; the Borrower shall inform the Technical
Agent and Independent Engineer at least 15 days prior to start of the scheduled
test.  The Independent Engineer shall be on site for the commencement and
scheduled completion of the Completion Test, with further visit mid-way through
the Completion Test Period as deemed appropriate by the Independent Engineer and
the Technical Agent.  The Completion Test may be stopped at the discretion of
the Borrower and restarted at any point, with the approval of the Technical
Agent and the Independent Engineer which shall not be unreasonably withheld,
prior to the Limit Completion Date.  Should a stopped Completion Test be
restarted then a new prior notification to the Technical Agent and Independent
Engineer shall be required.

 

Satisfaction of the Completion Test shall require delivery of the completed
certifications in the forms attached as Appendix B-1 through Appendix B-6 to the
Completion Agreement.  The Technical Agent shall receive certificates B-1
through B-4 and B-6 in accordance herewith.  Certificate B-5 shall be delivered
directly to the Administrative Agent.  Upon receipt and review of certificates
B-1 through B-4 and B-6, the Technical Agent shall deliver the certificates to
the Administrative Agent together with a notification of its conclusions as to
whether the relevant documentary components of the Completion Test have been
satisfied.

 

In performing the Completion Test, the Borrower will conduct the required
sampling and assaying in accordance with standard international mining
practices.  All weight measures referred to in certificates submitted in
connection with the Completion Test will be on a dry basis.  Measurement of
moisture content will be made to adjust the weightometer and other records to a
dry basis.  The sampling locations and laboratory assay procedures will be
verified by the Independent Engineer.  In cases where a materiality assessment
is required, the Technical Agent, acting on behalf of the Secured Parties, may
determine in concert with the Independent Engineer and the Borrower appropriate
materiality thresholds.

 

During the Completion Test Period, the Borrower shall operate the Project in
accordance with the Operating Plan then in effect and accepted pursuant to
Section 8.14 of the Common Security Agreement.  References below and in the
annexed certificates to the accepted Operating Plan then in effect shall mean at
any time the Initial Operating Plan, or, if there have been any updates or
revisions thereto that have been accepted pursuant to Section 8.14 of the Common
Security Agreement, the latest such update or provision that has been so
accepted.

 

Summarized below are the requirements and components of the Completion Test:

 

(a)                                  Physical Facilities Test A certificate in
the form of Appendix B-1 signed by the President of the Borrower, verified by
the Independent Engineer, to the effect that:

 

(i)                                     physical facilities of the Project
substantially the same as those described in the Development Plan, attached as
Appendix H to the Common Security Agreement,

 

B-1

--------------------------------------------------------------------------------

 

have been installed and have become operational and the conditions of the
Mechanical Completion test in the EPCM Contract have been satisfied;

 

(ii)                                  as of the date of such certificate, the
Borrower has accepted all work and equipment performed and delivered under the
EPCM Contract in accordance therewith, except for any work the non-acceptance of
which will not materially and adversely affect the operability of the Project,
including safety and environmental performance;

 

(iii)                               as of the date of such certificate, the
items and quantities of capital spares inventory set out in Annex 3 to such
certificate are on hand at or near the Project facilities or arrangements have
been made to procure such items to restore the quantities of capital spares in
inventory to the levels specified in such Operating Plan and these reasonably
can be expected to be on hand at or near the Project facilities within 6 days or
such longer periods as may be dictated by the delivery schedule of ordered long
lead-time items which have been used prior to the date of such certificate;

 

(iv)                              as of the date of such certificate, no
material Project Costs have been incurred that remain unpaid (unless provided
for by satisfactory retentions by the Borrower and other than Project Costs that
are disputed); and

 

(v)                                 as of the date of such certificate, the
accepted Operating Plan then in effect demonstrates a Reserve Tail for the
Project in an amount at least 40% of the reserves as outlined in the Initial
Operating Plan remaining to be mined after the scheduled final maturity of the
Senior Loan Facilities.

 

(b)                                 Production Test A certificate in the form of
Appendix B-2 signed by the President of the Borrower, verified by the
Independent Engineer, to the effect that during the Completion Test Period:

 

(i)                                     the Project mined, crushed and milled
ore at an average rate of not less than ninety per cent (90%) of the forecast
production rate for the Completion Test Period, as described in the accepted
Operating Plan then in effect;

 

(ii)                                  the Project achieved an average grade for
the silver, zinc and lead contained in the ore mined of not less than ninety per
cent (90%) of the forecast grade for the Completion Test Period, as described in
the accepted Operating Plan then in effect; and the blast hole to model
reconciliation was within 10% of the forecasted mine block model (the blast hole
to model reconciliation calculation is defined in Annex 2 to Appendix B-2);

 

(iii)                               the Project has achieved an average zinc
equivalent recovery rate for the silver, zinc and lead contained in the ore
milled of not less than ninety per cent (90%) of the forecast average zinc
equivalent recovery rate for the Completion Test Period, as described in the
accepted Operating Plan then in effect (the recovery

 

B-2

--------------------------------------------------------------------------------

 

calculation and zinc equivalent calculation is defined in Annex 3 to Appendix
B-2);

 

(iv)                              the Project has produced zinc metal
equivalents contained in the concentrates produced at a rate not less than
ninety five per cent (95%) of the forecast zinc metal equivalent rate for the
production period in which the Completion Test Period occurs, as described in
the accepted Operating Plan then in effect (the zinc metal equivalent
calculation is defined in Annex 3 to Appendix B-2); and

 

(v)                                 there was a period of 30 continuous
Operating Days within the Completion Test Period during which the Project mined
an average of not less than 40,000 tonnes of ore per day, and a period of 30
continuous Operating Days within the Completion Test Period during which the
Project milled an average of not less than 40,000 tonnes of ore per day.  An
“Operating Day” means any day other than a day on which the operations of the
Project ceased for more than 12 continuous hours due to force majeure or on
which work of the facilities of the Project was prohibited by applicable law,
regulation, order or labor agreement.

 

(c)                                 Environmental Test A certificate in the form
of Appendix B-3 signed by the President of the Borrower, confirmed by the
Independent Engineer and by the Social Consultant, to the effect that as of the
date of such certificate:

 

(i)                                    construction and operation of the Project
conforms in all material respects with applicable World Bank Environment,
Health & Safety Guidelines and the Equator Principles (as identified in Annex 1
to Appendix B-3);

 

(ii)                                 construction and operation of the Project
conforms in all material respects with all applicable Bolivian environmental
laws, rules, regulations and orders of governmental authorities;

 

(iii)                              the Closure Plan (as identified in Annex 2 to
Appendix B-3) has been approved by all applicable Governmental Authorities and
is in all material respects in compliance with the Environmental Guidelines and
all applicable Environmental Laws in Bolivia; and

 

(iv)                             the activities of the Borrower during the
period of construction of the Project comply in all material respects with the
requirements and recommendations of the SDCR Report.

 

(d)                                Marketing Test A certificate in the form of
Appendix B-4 signed by the President of the Borrower, confirmed by the
Independent Engineer, to the effect that by the date of such certificate (i) at
least two shipments of Project concentrates have been shipped by Apex Metals
from the port of Mejillones aggregating a minimum of 6,000 tonnes of each of
Lead Concentrates and Zinc Concentrates, and (ii) at least one shipment each of
Lead Concentrates and Zinc Concentrates from the Project has been shipped to an
Acceptable Buyer under a Third Party Concentrate Sales Agreement and full and
final payment for each such shipment has been received without material
deduction or penalty for quality or

 

B-3

--------------------------------------------------------------------------------

 

impurity reasons.  Bulk Concentrate shall only be utilized for this test if
contemplated in the relevant production period in the Operating Plan then in
effect and if discussed and agreed in advance with the Independent Engineer.

 

(e)                                  Legal and Other Conditions Test A
certificate in the form of Appendix B-5 signed by the President of the Borrower,
and having annexed thereto an opinion of counsel in Bolivia acceptable to the
Administrative Agent supporting the certifications described in items (ii) and
(iii) below, to the effect that:

 

(i)                                     no Default or Event of Default has
occurred and is continuing;

 

(ii)                                  each of (A) the Mining Concessions is in
full force and effect, and (B) the Material Project Documents and Security
Documents is in full force and effect in all material respects or, in the case
of any Material Project Document no longer in effect, has been replaced in
accordance with the Common Security Agreement with an agreement that is in full
force and effect in all material respects;

 

(iii)                               all security interests required under the
Common Security Agreement to be created and perfected on or prior to Completion
have been created and perfected and are in full force and effect in all material
respects, subject only to the applicable qualifications and exceptions set forth
in the opinions of counsel to the Borrower delivered on the Initial Disbursement
Date;

 

(iv)                              all Government Approvals required for the
operation of the Project and the performance of the Financing Documents and the
Material Project Documents have been obtained and are in full force and effect;

 

(v)                                 all insurance coverage required to be in
full force and effect after the start-up of commercial production operations at
the Project pursuant to Article V of the Common Security Agreement is in full
force and effect and complies with the requirements of said Article V; and

 

(vi)                              the Project is operating in accordance with
prudent engineering and operating practices and standards.

 

(f)                                    Financial Test A certificate in the form
of Appendix B-6 signed by the President of the Borrower, confirmed (as to item
(ii) below) by the Independent Engineer, to the effect that:

 

(i)                                    the balance on deposit in the Debt
Service Reserve Account and Operating Reserve Account is not less than the
minimum balance specified for Completion in Sections 4.06 and 4.07 of the Common
Security Agreement; and

 

(ii)                                 based on

 

(a)                                  the actual number of recovered
zinc-equivalent pounds produced by the Borrower during the Completion Test
Period;

 

B-4

--------------------------------------------------------------------------------

 

(b)                                 the actual inputs (including all factors
identified in the Initial Financial Model, such as power, fuel, labor, etc)
utilized for such production during the Completion Test Period, and

 

(c)                                  fixed unit prices for such inputs as set
forth in the Initial Financial Model,

 

the nominal operating cost-per-pound of zinc equivalent produced by the Borrower
during the Completion Test Period (at such fixed unit input prices) did not
exceed 110% of the forecast operating cost-per-pound of zinc equivalent set
forth in the Initial Financial Model.  Annex 2 to Appendix B-6 describes the
methodology for updating the inputs into the Financial Model for the purpose of
calculating this efficiency test.

 

Submission of Certificates.  The Certificates may be delivered, together with
any supporting documentation which the Borrower and the Independent Engineer
have agreed is required, together or separately in any order and at any time and
from time to time, provided that the certificates referred to in (e) and
(f) above shall be dated as of a date not earlier than the date of the latest of
the certificates referred to in (a), (b), (c), and (d) above.

 

B-5

--------------------------------------------------------------------------------

 

Appendix B-1

to Completion Agreement

 

FORM OF PHYSICAL FACILITIES CERTIFICATE

 

I, [Name of President], President of Minera San Cristóbal S.A. (the “Borrower”),
hereby certify on behalf of the Borrower that, as of the date hereof:

 

(a)                                  a copy of the Project Description specified
in Appendix H to the Common Security Agreement that incorporates all amendments
and changes to such Appendix H that have been made on or prior to the date
hereof is attached hereto as Annex 1.  As of the date hereof, all amendments and
changes to such Appendix H have been made in accordance with Section 8.12(c) of
the Common Security Agreement;

 

(b)                                 (i)                                    
between the dates of [         ] and [        ], [names of employees or agents],
[titles], inspected the equipment and physical facilities of the Project.  We
have considered whether, in our reasonable judgment, the equipment and physical
facilities described in Annex 1 have been installed and have become operational,
in each case at the time of such inspection.  Our work involved inspection of
equipment and facilities and operation thereof, only to the extent necessary to
identify such equipment and facilities and the attributes thereof, if any,
referred to in Annex 1 and to conclude whether such equipment and facilities
have become operational.  Such inspections and observations were those we, in
our reasonable judgment, deemed necessary for the purposes of delivering this
certificate;

 

(ii)                                  we have noted in the analysis attached
hereto as Annex 2 a description of the equipment which we identified as meeting
the requirement of each item listed in Annex 1, together with a description
thereof reasonably sufficient for purposes of such identification.  The
equipment measures and amounts stated in Annex 2 represent approximate figures
and actual measures and amounts may vary depending upon various factors,
including actual characteristics of available equipment.  Where measures and
amounts relating to the actual equipment installed are approximately those set
forth in Annex 1, we have deemed the installed equipment to be substantially the
same as that described in Annex 1 and have stated the relevant amount or measure
in the description included in Annex 2;

 

(iii)                               based on and subject to the foregoing, as of
the date hereof, equipment and physical facilities of the Project substantially
the same as those described in Annex 2 have been installed and are operational;

 

(c)                                  the Borrower has delivered (with a copy to
the Technical Agent) a copy of the Certificate of Mechanical Completion (as
defined in Section 8.1 of the EPCM Contract) issued on [insert date] with
respect to [insert portion of the facility to which the certificate relates] in
accordance with Article 8 of the EPCM Contract.  [insert additional Certificates
of Mechanical Completion as necessary].  As of the date hereof, Certificates of
Mechanical Completion have been delivered by the Borrower with

 

B-1-1

--------------------------------------------------------------------------------

 

respect to all portions of the project facilities, which certify that all
conditions of achieving Mechanical Completion as set forth in the EPCM Contract
have been satisfied;

 

(d)                                 as of the date hereof, the Borrower has
delivered notification of its acceptance of delivery of each of the physical
facilities to, and all other work performed by and equipment delivered by, the
contractor under the EPCM Contract (subject to exception or conditions, if any,
none of which would be reasonably expected to have a material adverse effect on
the operation of the Project, including safety and environmental performance,
substantially as contemplated in the Common Security Agreement and subject to
such warranties and similar provisions as are set out in the EPCM Contract);

 

(e)                                  as of the date hereof, the items and
quantities of capital spares inventory, which are attached as Annex 3 hereto,
are either on hand on or near the facility of the Project in Bolivia or the
Borrower has entered into arrangements to procure such items to restore the
quantities of capital spares in inventory to the quantities set forth in such
Annex 3, and such arrangements have been made pursuant to an established
procurement system that will provide capital spares in a sound and efficient
manner such that such spares and consumables can be expected to be held in stock
at the Project’s facilities or (as the case may be) will be available from the
supplier(s) for dispatch within 6 days (or such longer periods as may be
dictated by the delivery schedule of ordered long lead-time items which have
been used prior to the date hereof) of the request by the Borrower.  As of the
date hereof, the items and quantities of consumables set forth in Annex 3 are
either on hand at a facility of the Project in Bolivia or have been purchased by
the Borrower;

 

(f)                                    as of the date hereof, (i) all Project
Costs have been paid for by the Borrower (other than Project Costs which are
being disputed by the Borrower in good faith) or (ii) as to those Project Costs
which have not been so paid for, the Borrower has sufficient funds available to
make such payments; and

 

(g)                                 as of the date hereof, the current Operating
Plan (which Operating Plan has been approved in accordance with Section 8.14 of
the Common Security Agreement) demonstrates a Reserve Tail equal to 80,000,000
tonnes of ore, which amount is at least 40% of the reserves as outlined in the
Initial Operating Plan, remaining to be mined after the Final Maturity Date.

 

This is the certificate referred to in Section 2.01(a) of the Completion
Agreement, dated as of December 1, 2005 among the Sponsor, the Technical Agent,
the Administrative Agent and the Collateral Agent.  Capitalized terms used
herein and in the annexes hereto, except as otherwise defined herein, shall have
the meanings assigned to them in the Completion Agreement or the Common Security
Agreement, dated as of December 1, 2005, among the Borrower and the other
parties thereto, as the same may be amended from time to time (the “Common
Security Agreement”).

 

B-1-2

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, I, [Name of President], on behalf of the Borrower have
caused this certificate to be duly executed.

 

Dated:

 

 

 

 

MINERA SAN CRISTÓBAL S.A.

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

Title: President

 

B-1-3

--------------------------------------------------------------------------------

 

[Name of Independent Engineer], a                                organized under
the laws of                           , has performed such inspections,
observations, analyses and other procedures which we have, in our reasonable
judgment, deemed necessary for purposes of this certificate.  Such procedures,
and the names of our employees or agents who performed them, are described in
Annex 4 to this Physical Facilities Certificate.

 

Based on such procedures, we hereby certify that we have no reason to believe
that each of the certifications of the Borrower set forth hereinabove is not
true and correct in all material respects as of the date hereof.

 

IN WITNESS WHEREOF, [Name of senior officer of Independent Engineer] has caused
this certificate to be duly executed.

 

Dated:

 

 

 

 

[Name of Independent Engineer]

 

 

 

 

 

By:

 

 

 

 

[Name]

 

 

 

[Position]

 

 

B-1-4

--------------------------------------------------------------------------------

 

Annex 1
to Physical Facilities Certificate

 

PHYSICAL FACILITIES

 

[When certificate is given, attach copy of Appendix H to the Common Security
Agreement, as amended pursuant to Section 8.12(c) of the Common Security
Agreement as of the time the certificate is delivered.]

 

B-1-5

--------------------------------------------------------------------------------

 

Annex 2
to Physical Facilities Certificate

 

EQUIPMENT

 

B-1-6

--------------------------------------------------------------------------------

 

Annex 3
to Physical Facilities Certificate

 

CAPITAL SPARES INVENTORY

 

Required Capital Spares Inventory

 

All spares are to be of equivalent quality to the items they replace.

 

Main Transformer

 

1                                          Spare transformer

3                                          HV bushing including gasket

6                                          LV bushing including gasket (3kV/450)

 

C.                                    Gyratory Crusher Spares

 

DESCRIPTION

 

Qty

 

Unit

 

 

 

 

 

 

 

Drive Motor

 

1

 

ea

 

 

 

 

 

 

 

Eccentric Assembly

 

1

 

ea

 

 

 

 

 

 

 

>for Counterbalance Add

 

1

 

ea

 

 

 

 

 

 

 

Main Shaft Assembly with Oversize Lower Mantle

 

1

 

ea

 

 

 

 

 

 

 

Countershaft Assembly

 

1

 

ea

 

 

 

 

 

 

 

Spider Bushing

 

1

 

ea

 

 

 

 

 

 

 

Outer Eccentric Bushing

 

1

 

ea

 

 

 

 

 

 

 

Eccentric Wearing Ring

 

1

 

ea

 

 

 

 

 

 

 

Inner Eccentric Bushing

 

1

 

ea

 

 

 

 

 

 

 

Upper Hydraulic Piston Bushing

 

1

 

ea

 

 

 

 

 

 

 

Lower Hydraulic Piston Bushing

 

1

 

ea

 

 

 

 

 

 

 

Bottom Piston Wearing Ring

 

1

 

ea

 

 

 

 

 

 

 

Shaft Wearing Ring

 

1

 

ea

 

 

 

 

 

 

 

Countershaft Bearings

 

2

 

ea

 

 

 

 

 

 

 

Mainshaft Sleeve

 

1

 

ea

 

 

 

 

 

 

 

Head Nut

 

1

 

ea

 

 

B-1-7

--------------------------------------------------------------------------------

 

D.                                    Coarse Ore Conveyor System Spares

 

Awaiting additional information

 

E.                                    SAG Mill & Ball Mill Spares

 

DESCRIPTION

 

Qty

 

Unit

 

 

 

 

 

 

 

Lift Pad Bronze Insert (set of 4)

 

1

 

set

 

 

 

 

 

 

 

Thrust Pad Bronze Insert (set of 4)

 

1

 

set

 

 

 

 

 

 

 

Lift Pad Installation Hardware (kit for 1 bearing)

 

1

 

set

 

 

 

 

 

 

 

Thrust Pad Installation Hardware & Shims (kit for 1 bearing)

 

1

 

set

 

 

 

 

 

 

 

Lift Pad Restrictor Hardware & Seals (kit for 1 bearing)

 

1

 

set

 

 

 

 

 

 

 

Hose Assemblies (set for 1 bearing)

 

1

 

set

 

 

 

 

 

 

 

Wiper Teflon Set w/ Hardware (2 thrust / 2 non-thrust)

 

1

 

set

 

 

 

 

 

 

 

Acoustic Sensor

 

1

 

ea

 

 

 

 

 

 

 

Lift Pad Bronze Insert (set of 4)

 

1

 

ea

 

 

 

 

 

 

 

Thrust Pad Bronze Insert (set of 4)

 

1

 

ea

 

 

 

 

 

 

 

Lift Pad Installation Hardware (kit for 1 bearing)

 

1

 

set

 

 

 

 

 

 

 

Thrust Pad Installation Hardware & Shims (kit for 1 bearing)

 

1

 

set

 

 

 

 

 

 

 

Lift Pad Restrictor Hardware & Seals (kit for 1 bearing)

 

1

 

set

 

 

 

 

 

 

 

Hose Assemblies (set for 1 bearing)

 

2

 

set

 

 

 

 

 

 

 

Wiper Teflon Set w/ Hardware (2 thrust / 2 non-thrust)

 

2

 

set

 

 

 

 

 

 

 

Lift Tip Sensitive RTD

 

12

 

ea

 

 

 

 

 

 

 

Thrust Tip Sensitive RTD

 

4

 

ea

 

 

 

 

 

 

 

Screw Pump (Conditioning Circuit)

 

2

 

ea

 

 

 

 

 

 

 

Electric Motor (Conditioning Circuit) 25 HP

 

2

 

ea

 

 

 

 

 

 

 

Screw Pump (HP Circuit)

 

2

 

ea

 

 

 

 

 

 

 

Electric Motor (HP Circuit) 150 HP

 

2

 

ea

 

 

 

 

 

 

 

Temperature Sensor (Power Pack)

 

1

 

ea

 

 

B-1-8

--------------------------------------------------------------------------------

 

Electrical for the ring motors

 

 

 

 

 

 

 

 

 

 

 

CCV transformer for SAG drive

 

1

 

ea

 

 

 

 

 

 

 

CCV transformer for BM drive

 

1

 

ea

 

 

 

 

 

 

 

Spare excitation trnsfmr for SAG & BM

 

1

 

ea

 

 

 

 

 

 

 

Stator coils for SAG mill

 

12

 

ea

 

 

 

 

 

 

 

Stator coils for BM mill

 

12

 

ea

 

 

 

 

 

 

 

Partial Rotor coils for SAG mill

 

4

 

ea

 

 

 

 

 

 

 

Partial Rotor coils for BM mill

 

4

 

ea

 

 

F.                                    Flotation Cells – Spares

 

Type

 

DESCRIPTION

 

Qty

 

Unit

 

 

 

 

 

 

 

 

 

130 SmartCell

 

Complete Mechanism Assy

 

1

 

ea

 

 

 

 

 

 

 

 

 

130 SmartCell

 

Complete Connection Box Assy

 

1

 

ea

 

 

 

 

 

 

 

 

 

No. 190

 

Complete Mechanism Assy

 

1

 

ea

 

 

 

 

 

 

 

 

 

No. 164

 

Complete Mechanism Assy

 

1

 

ea

 

 

 

 

 

 

 

 

 

No. 144

 

Complete Mechanism Assy

 

1

 

ea

 

 

 

 

 

 

 

 

 

No.120

 

Complete Mechanism Assy

 

1

 

ea

 

 

 

 

 

 

 

 

 

No. 66d

 

Complete Mechanism Assy

 

1

 

ea

 

 

 

 

 

 

 

 

 

No. 164

 

Complete Mechanism Assy

 

1

 

ea

 

 

 

 

 

 

 

 

 

No. 66d

 

Complete Mechanism Assy

 

1

 

ea

 

 

G.                                    Regrind – Vertimill Spares

 

DESCRIPTION

 

Qty

 

Unit

 

 

 

 

 

 

 

Spare motor

 

1

 

ea

 

 

 

 

 

 

 

Thrust roller bearing

 

1

 

ea

 

 

 

 

 

 

 

Spherical roller bearing

 

1

 

ea

 

 

B-1-9

--------------------------------------------------------------------------------

 

Shaft stabilizer bushing

 

1

 

ea

 

 

 

 

 

 

 

Screws (no liners)

 

1

 

ea

 

 

 

 

 

 

 

1 recycle inlet

 

1

 

ea

 

 

H.                                   Lime Vertimill Spares

 

DESCRIPTION

 

Qty

 

Unit

 

 

 

 

 

 

 

Spare motor

 

1

 

ea

 

 

 

 

 

 

 

Thrust roller bearing

 

1

 

ea

 

 

 

 

 

 

 

Spherical roller bearing

 

1

 

ea

 

 

 

 

 

 

 

Shaft stabilizer bushing

 

1

 

ea

 

 

 

 

 

 

 

Screws (no liners)

 

1

 

ea

 

 

 

 

 

 

 

1 recycle inlet

 

1

 

ea

 

 

I.                                        Filters – Spares

 

Spare drive motor

 

1

 

ea

 

 

 

 

 

 

 

End plate RPH

 

4

 

ea

 

 

 

 

 

 

 

filter plate

 

4

 

ea

 

 

 

 

 

 

 

membrane plate

 

4

 

ea

 

 

 

 

 

 

 

Axial piston pump PV 032-r1-KIS

 

1

 

ea

 

 

 

 

 

 

 

quadruple pump RIC6

 

1

 

ea

 

 

J.                                       Concentrate Thtks & Tailings Thtk -
Spares

 

Awaiting additional information

 

B-1-10

--------------------------------------------------------------------------------

 

Annex 4
to Physical Facilities Certificate

 

DESCRIPTION OF INDEPENDENT ENGINEER PROCEDURES

 

[To be completed at time of delivery]

 

B-1-9

--------------------------------------------------------------------------------

 

Appendix B-2

to Completion Agreement

 

FORM OF PRODUCTION CERTIFICATE

 

I, [Name of President], President of Minera San Cristóbal S.A. (the “Borrower”),
hereby certify on behalf of the Borrower that, as of the date hereof:

 

(a)                                  Attached to this certificate as Annex 1 are
copies of operating records, bills of lading and other data and documentation
relating to production by the San Cristobal Project during the periods referred
to in clause (e) below.  Such documentation accurately reflects, in all material
respects, the production of the San Cristobal Project during the period to which
it relates, and evidences compliance with the certifications set forth in
sections (i) through (v) of clause (f) below.

 

(b)                                 All sampling procedures relevant to the
matters covered by this certificate were conducted by the Borrower in accordance
with standard international mining practices; all assaying was conducted by the
Borrower in accordance with standard international mining practices.  The
sampling locations and laboratory assay procedures have been verified by the
Independent Engineer.

 

(c)                                  The Independent Engineer was provided with
(i) the Borrower’s most recently approved updated operating plan (accepted as
contemplated in Section 8.14 of the Common Security Agreement) that covers the
Completion Test Period, together with the current block model and mine plan
included in such operating plan (collectively, the “Operating Plan”), and
(ii) the past 12 months’ operating reports for the Borrower.  The Operating Plan
is in all material respects consistent with, and contemplates operating and
production results not materially divergent from those projected in, the Initial
Operating Plan and Initial Financial Model on which the October 12, 2005
Information Memorandum delivered to the Secured Parties was based (except for
such material changes thereto, if any, as have been previously furnished to the
Secured Parties, reported on by the Independent Engineer, and approved by the
Majority Secured Parties as provided in Section 8.14 of the Common Security
Agreement).

 

(d)                                 The Operating Plan was provided to the
Independent Engineer at least 30 days prior to the start of the Completion Test
Period.  Notice of the start of the Completion Test Period was given to the
Independent Engineer at least 15 days prior to the start of such period.  The
start date of the Completion Test Period occurred no earlier than October 2007,
unless prior to such start date the Borrower operated the San Cristobal Project
at or near full design capacity. The mine plan included in the Operating Plan
was adhered to during the Completion Test Period.

 

B-2-1

--------------------------------------------------------------------------------

 

(e)                                  For purposes of this certificate,

 

(i)                                     “Completion Test Period” is a period of
100 continuous days, ending on or before December 31, 2008 (the “Limit
Completion Date”), during which the Borrower’s production facilities operated
for 90 days or more, provided that downtime of up to 240 hours during this
period will not require the test to be restarted.

 

(ii)                                  “Operating Day” is any day other than a
day on which the operations of the Project ceased for more than 12 continuous
hours due to force majeure or on which work of the facilities of the Project was
prohibited by applicable law, regulation, order or labor agreement.

 

(iii)                               “force majeure” is defined as (a) an act of
God, labor dispute and industrial action of any kind (including, without
limitation, a strike, interruption, slowdown and other similar action on the
part of organized labor), a lockout, act of the public enemy, war (declared or
undeclared), civil war, sabotage, blockade, revolution, riot, insurrection,
civil disturbance, terrorism, epidemic, cyclone, tidal wave, landslide,
lightning, earthquake, flood, storm, fire, adverse weather conditions,
expropriation, nationalization, act of eminent domain, laws, rules, regulations
or orders of governmental authority, acts of other private and public companies,
explosion, breakage or accident to machinery or equipment or power or
transmission line or railroad tracks or equipment or ports or other facility,
embargo, inability to obtain or delay in obtaining equipment, materials,
transport, event of political force majeure or any other event whether similar
to the foregoing or not which is not within the reasonable control of the
Borrower, and which has a material adverse effect on the ability of the Borrower
to operate the Project in all material respects in accordance with the Operating
Plan and (b) in the case of any Project Document or any Material Project
Counterparty, an event of force majeure or uncontrollable force or other similar
term as such term is defined or used in such Project Document.

 

(f)                                    Production Test. During the Completion
Test Period, the Borrower achieved the following results of operations at the
San Cristobal Project:

 

(i)                                     the Project mined, crushed and milled
ore at an average rate of not less than ninety per cent (90%) of the forecast
production rate for the Completion Test Period, as described in the Operating
Plan;

 

(ii)                                  the Project achieved an average grade for
the silver, zinc and lead contained in the ore mined of not less than ninety
percent (90%) of the forecast grade for the Completion Test Period, as described
in the Operating Plan; and the blast hole to model reconciliation (utilizing the
method of calculation described in Annex 2 to this Certificate) was within ten
percent (10%) of the forecasted mine block model;

 

B-2-2

--------------------------------------------------------------------------------

 

(iii)                               the Project achieved an average zinc
equivalent recovery rate for the silver, zinc and lead contained in the ore
milled of not less than ninety percent (90%) of the forecast average zinc
equivalent recovery rate for the Completion Test Period, as described in the
Operating Plan (the recovery calculation and zinc equivalent calculation
methodology is described in Annex 3 to this Certificate);

 

(iv)                              the Project produced zinc metal equivalents
contained in the concentrates produced at a rate not less than ninety five
percent (95%) of the forecast zinc metal equivalent rate for the production
period in which the Completion Test Period occurs, as described in the Operating
Plan (the zinc metal equivalent calculation methodology is described in Annex 3
to this Certificate); and

 

(v)                                 there was a period of 30 continuous
Operating Days within the Completion Test Period during which the Project mined
an average of not less than 40,000 tonnes of ore per day and, a period of 30
continuous Operating Days within the Completion Test Period during which the
Project milled an average of not less than 40,000 tonnes of ore per day.

 

This is the certificate referred to in Section 2.01(b) of the Completion
Agreement, dated as of December 1, 2005 among the Sponsor, the Technical Agent,
the Administrative Agent and the Collateral Agent.  Capitalized terms used
herein and in the annexes hereto, except as otherwise defined herein, shall have
the meanings assigned to them in the Completion Agreement or the Common Security
Agreement, dated as of December 1, 2005, among the Borrower and the other
parties thereto, as the same may be amended from time to time (the “Common
Security Agreement”).

 

B-2-3

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, I, [Name of President], on behalf of the Borrower have
caused this certificate to be duly executed.

 

Dated:

 

 

 

 

MINERA SAN CRISTÓBAL S.A.

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title: President

 

 

B-2-4

--------------------------------------------------------------------------------

 

[Name of Independent Engineer], a                                organized under
the laws of                           , has performed such inspections,
observations, analyses and other procedures which we have, in our reasonable
judgment, deemed necessary for purposes of this certificate.  Such procedures,
and the names of our employees or agents who performed them, are described in
Annex 4 to this Production Certificate.

 

Based on such procedures, we hereby certify that (1) we have no reason to
believe that any of the certifications of the Borrower set forth hereinabove is
not true and correct in all material respects as of the date hereof, and (2) we
concur with the statement made in the second sentence of paragraph (c) of the
foregoing certificate.

 

IN WITNESS WHEREOF, [Name of senior officer of Independent Engineer] has caused
this certificate to be duly executed.

 

Dated:

 

 

 

 

[Name of Independent Engineer]

 

 

 

 

 

By:

 

 

 

 

[Name]

 

 

 

[Position]

 

 

B-2-5

--------------------------------------------------------------------------------

 

Annex 1
to Production Certificate

 

OPERATING RECORDS

 

[Attach copies of operating records, bills of lading and other data and
documentation relating to San Cristobal Project production and operations during
relevant period, including data demonstrating compliance with the certifications
set forth in the Production Certificate.]

 

B-2-6

--------------------------------------------------------------------------------

 

 Annex 2
to Production Certificate

 

BLAST HOLE TO MODEL RECONCILIATION

 

The following is an outline of the procedures that will be detailed by the
Borrower for use in the reconciliation of the blast hole grade and location data
base to geologic model.  The procedures will be fully detailed over the next 12
months (prior to the acceptance of the 2007 Operating Plan) and provided to the
Independent Engineer for inclusion, subject to the Independent Engineer’s
concurrence, in this Annex 2 to Appendix B-2 to the Completion Agreement.

 

Borrower personnel are developing a suite of procedures for optimizing blasthole
models (short range model) and checking the reconciliation of these models
against the exploration model (long-range model).  The required input for these
procedures are:

 

1.                                       The blast hole dataset (XYZ collar
location, sampled depth, assays.  Optional items include drilled depth and
geology.)

 

2.                                       The blast hole model (XYZ dump of block
centroids, estimated grades and other relevant geological items). Estimation
parameters used in preparing the blast hole model should also be provided.

 

3.                                       The exploration model covering the area
of the blast hole model (XYZ dump of block centroids, estimated grades and other
relevant geological items.) Estimation parameters used in preparing the
exploration model should also be provided.

 

4.                                       Exploration composites used in
preparation of the exploration model in the area provided (XYZ location of
composite centroid, composite length, composited grades and other relevant
geological items.)

 

5.                                       Diglines for determining the routing of
blast hole model blocks (e.g. waste,ROM, crushed leach and mill).  These can be
provided either as closed polygons or polylines with left and right codes.

 

6.                                       Monthly pit progress surveys. These can
be provided either as closed polygons or polylines with left and right codes or
tins.

 

7.                                       Client monthly reconciliation results
(through saleable product).

 

At least three months of full production data are required before blast hole
model performance can be reasonably assessed.  Data for any shorter period can
only be used for the purpose of this methodology with the Independent Engineer’s
concurrence.

 

B-2-7

--------------------------------------------------------------------------------

 

The Borrower will have automated procedures for performing the following
analyses:

 

1.                                       Check of the blast hole model against
the blast holes by backmarking.

 

2.                                       Check of blast hole model estimation
parameters by cross validation.  While the Borrower understands the use of cross
validation, at this stage the Borrower will complete further investigation into
whether this analysis will be used as part of the reconciliation analysis.  If
not, then a more up to date procedure that replaces this analysis will be
included.  If this analysis type is not included, a detailed explanation of the
change will be presented and will be subject (for purposes of this test) to the
Independent Engineer’s concurrence.

 

3.                                       Bias test of blast holes against the
composites using the estimation parameters found by cross validation.  While the
Borrower understands the use of cross validation, at this stage the Borrower
will complete further investigation into whether this analysis will be used as
part of the reconciliation analysis.  If not, then a more up to date procedure
that replaces this analysis will be included.  If this analysis type is not
included, a detailed explanation of the change will be presented and will be
subject (for purposes of this test) to the Independent Engineer’s concurrence.

 

4.                                       Check of the blast hole model against
long-range model by back marking.

 

5.                                       Check of monthly client reconciliation
by independently calculating long-range and short range production using the
models, dig lines in monthly progress.

 

B-2-8

--------------------------------------------------------------------------------

 

Annex 3
to Production Certificate

 

CALCULATION METHODOLOGY

 

Zinc equivalents in mined ore

 

Lbs zinc in ore +

 

lbs of lead in ore (0.30/0.50) +

 

ozs of silver in ore (5.75/0.50)

 

Based on blast hole samples

 

Zinc equivalent pounds produced

 

Lbs of zinc in zinc con +

 

lbs of lead in lead con * (0.30)/0.50) +

 

lbs of zinc in bulk con * (70/85) +

 

lbs of lead in bulk con * (92/95)*(0.30/0.50) +

 

ozs Ag in zinc con * (5.75/0.50) +

 

ozs Ag in lead con * (5.75/0.50) *[0.95/( ((ozs Ag in tonne of zinc con -
3.5)*(0.7))/(ozs Ag in tonne of zinc con))] +

 

ozs Ag in bulk con * (5.75/0.50) *[0.90/( ((ozs Ag in tonne of zinc con -
3.5)*(0.7))/(ozs Ag in tonne of zinc con))].

 

(“ozs in Ag in tonne of zinc con” will be the average Ag content per tonne of
zinc con achieved during the test period)

 

Zinc equivalent recovery

 

Zinc equivalent pounds produced/ zn pounds in mill feed +

 

lead pounds in mill feed *(0.3)/(0.5) +

 

silver ounces in mill feed * (5.75)/(0.50)

 

(where mill feed is calculated on metallurgical balance).

 

B-2-9

--------------------------------------------------------------------------------

 

Annex 4
to Production Certificate

 

DESCRIPTION OF INDEPENDENT ENGINEER PROCEDURES

 

[To be completed at time of delivery]

 

B-2-10

--------------------------------------------------------------------------------

 

Appendix B-3

to Completion Agreement

 

ENVIRONMENTAL CERTIFICATE

 

I, [Name of President], President of Minera San Cristóbal S.A. (the “Borrower”),
hereby certify on behalf of the Borrower that, as of the date hereof:

 

(a)           Construction of the Project complies in all material respects
with, and the Project is being operated in all material respects in compliance
with, the Environmental Guidelines specified in Annex 1.

 

(b)           Construction of the Project conforms in all material respects
with, and the Project is being operated in compliance in all material respects
with, all applicable Environmental Laws of Bolivia.

 

(c)           The Closure Plan (identified in Annex 2) has been approved by all
applicable Governmental Authorities and is in compliance in all material
respects with the Environmental Guidelines and all applicable Environmental Laws
of Bolivia.

 

(d)           The activities of the Borrower during the period of construction
of the Project comply in all material respects with the recommendations and
requirements of the SDCR Report.

 

This is the certificate referred to in Section 2.01(c) of the Completion
Agreement, dated as of December 1, 2005 among the Sponsor, the Technical Agent,
the Administrative Agent and the Collateral Agent.  Capitalized terms used
herein and in the annexes hereto, except as otherwise defined herein, shall have
the meanings assigned to them in the Completion Agreement or the Common Security
Agreement, dated as of December 1, 2005, among the Borrower and the other
parties thereto, as the same may be amended from time to time (the “Common
Security Agreement”).

 

B-3-1

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, I, [Name of President], on behalf of the Borrower have
caused this certificate to be duly executed.

 

Dated:

 

 

 

 

MINERA SAN CRISTÓBAL S.A.

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title: President

 

 

B-3-2

--------------------------------------------------------------------------------

 

[Name of Independent Engineer], a                            organized under the
laws of                             , have performed such inspections,
observations, analyses and other procedures which we have, in our reasonable
judgment, deemed necessary for purposes of this certificate.  Such procedures,
and the names of our employees or agents who performed them, are described in
Annex 3 to this Environmental Certificate.

 

Based on such procedures, we hereby certify that we have no reason to believe
that the certifications of the Borrower set forth in paragraphs (a), (b) and
(c) above are not true and correct in all material respects as of the date
hereof.

 

IN WITNESS WHEREOF, [Name of senior officer of Independent Engineer] has caused
this certificate to be duly executed.

 

Dated:

 

 

 

 

[Name of Independent Engineer]

 

 

 

 

 

By:

 

 

 

 

[Name]

 

 

 

[Position]

 

 

The undersigned have performed such inspections and observations which we have,
in our reasonable judgment, deemed necessary for purposes of this certificate. 
Based on such procedures, we hereby certify that we have no reason to believe
that the certification of the Borrower set forth in paragraph (d) above is not
true and correct in all material respects as of the date hereof.

 

IN WITNESS WHEREOF, the undersigned have caused this certificate to be duly
executed.

 

Dated:

[On Common Ground]

 

 

 

By:

 

 

 

 

[Name]

 

 

 

[Position]

 

 

B-3-3

--------------------------------------------------------------------------------

 

Annex 1
to Environmental Certificate

 

ENVIRONMENTAL GUIDELINES

 

“Environmental Guidelines” means the following guidelines as in effect on the
date of the Completion Agreement applicable to the Project (referred to in the
Equator Principles framework):  (a) World Bank Environmental, Health and Safety
Guidelines (i) Mining and Milling – Open Pit dated August 11, 1995,
(ii) Pollution Abatement and Prevention Handbook 1998: General Environmental
Guidelines, (iii) Operational Policy 4.01 (Environmental Assessment),
(iv) Operational Policy 4.04 (Natural Habitats), (v) Operational Policy 4.11
(Cultural Property), (vi) Pollution Abatement and Prevention Handbook 1998:
Part III Project Guidelines, Monitoring, and Base Metal and Iron Ore Mining and
(vii) the Reclamation and Closure Plan Section in the Knight-Piesold
Environmental Assessment of the Project (Closure Plan) and (b) IFC Safeguard
Policies dated September 1998.

 

B-3-4

--------------------------------------------------------------------------------

 

Annex 2

to Environmental Certificate

 

CLOSURE PLAN

 

B-3-5

--------------------------------------------------------------------------------

 

Annex 3
to Environmental Certificate

 

DESCRIPTION OF INDEPENDENT ENGINEER PROCEDURES

 

[To be completed at time of delivery]

 

B-3-6

--------------------------------------------------------------------------------

 

Appendix B-4

to Completion Agreement

 

FORM OF MARKETING CERTIFICATE

 

I, [Name of President], President of Minera San Cristóbal S.A. (the “Borrower”),
hereby certify on behalf of the Borrower that, as of the date hereof:

 

(a) the Borrower has produced from the Project, transported by rail to the port
of Mejillones, Chile, and caused to be shipped from the port of Mejillones,
Chile, in at least two shipments (as detailed on Annex 1 hereto), an aggregate
amount not less than 6,000 tonnes each of Lead Concentrates and Zinc
Concentrates; and

 

(b) at least one shipment of Lead Concentrates and one shipment of Zinc
Concentrates produced at the Project have been shipped to Acceptable Buyers
under Third Party Concentrate Sales Agreements, all as detailed on Annex 1
hereto, and Apex Metals has received full and final payment for each such
shipment from such Acceptable Buyers without material deduction or penalty for
quality or impurity reasons.

 

No Bulk Concentrate was included for purposes of any of the foregoing tests
(except (a) to the extent contemplated in the accepted Operating Plan in effect
for the relevant production period, (b) as detailed in Annex 1 hereto, and
(c) as accepted in advance for the purpose of this test by the Independent
Engineer).

 

This is the certificate referred to in Section 2.01(d) of the Completion
Agreement, dated as of December 1, 2005 among the Sponsor, the Technical Agent,
the Administrative Agent and the Collateral Agent.  Capitalized terms used
herein and in the annexes hereto, except as otherwise defined herein, shall have
the meanings assigned to them in the Completion Agreement or the Common Security
Agreement, dated as of December 1, 2005, among the Borrower and the other
parties thereto, as the same may be amended from time to time (the “Common
Security Agreement”).

 

B-4-1

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, I, [Name of President], on behalf of the Borrower have
caused this certificate to be duly executed.

 

Dated:

 

 

 

 

MINERA SAN CRISTOBAL S.A.

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title: President

 

 

B-4-2

--------------------------------------------------------------------------------

 

[Name of Independent Engineer], a                                    organized
under the laws of                              , has performed such inspections,
observations, analyses and other procedures which we have, in our reasonable
judgment, deemed necessary for purposes of this certificate.  Such procedures,
and the names of our employees or agents who performed them, are described in
Annex 2 to this Marketing Certificate.

 

Based on such procedures, we hereby certify that we have no reason to believe
that the certification of the Borrower set forth above is not true and correct
in all material respects as of the date hereof.

 

IN WITNESS WHEREOF, [Name of senior officer of Independent Engineer] has caused
this certificate to be duly executed.

 

Dated:

 

 

 

 

[Name of Independent Engineer]

 

 

 

 

 

By:

 

 

 

 

[Name]

 

 

 

[Position]

 

 

B-4-3

--------------------------------------------------------------------------------

 

Annex 1
to Marketing Certificate

 

DETAILS OF SHIPMENTS, BUYERS, PAYMENT

 

[To be completed at time of delivery]

 

B-4-4

--------------------------------------------------------------------------------

 

Annex 2
to Marketing Certificate

 

DESCRIPTION OF INDEPENDENT ENGINEER PROCEDURES

 

[To be completed at time of delivery]

 

B-4-5

--------------------------------------------------------------------------------

 

Appendix B-5

to Completion Agreement

 

FORM OF LEGAL AND OTHER CONDITIONS CERTIFICATE

 

I, [Name of President], President of Minera San Cristóbal S.A. (the “Borrower”),
hereby certify on behalf of the Borrower that, as of the date hereof:

 

(a)           No Default or Event of Default has occurred and is continuing.

 

(b)           Each of (i) the Mining Concessions is in full force and effect,
and (ii) the Material Project Documents and Security Documents is in full force
and effect in all material respects or, in the case of any Material Project
Document no longer in effect, has been replaced in accordance with the Common
Security Agreement with an agreement that is in full force and effect in all
material respects.

 

(c)           The security interests required under the Common Security
Agreement to be created after the Initial Disbursement Date and to be created
and perfected on or prior to the Completion Date have been created and are
perfected to the extent required under the Common Security Agreement and are in
full force and effect in all material respects, subject only to the applicable
qualifications and exceptions set forth in the opinions of counsel to the
Borrower delivered on the Initial Disbursement Date.

 

(d)           All Government Approvals that are required for operation of the
Project and the performance of the Financing Documents and the Material Project
Documents have been obtained and are in full force and effect.

 

(e)           All insurance coverage required to be in full force and effect
after the start-up of commercial production operations at the Project pursuant
to Article V of the Common Security Agreement is in full force and effect and
complies with the requirements of said Article V.

 

(f)            The Project is operating in accordance with prudent engineering
and operating practices and standards.

 

(g)           Attached is a true copy of the legal opinion of Quintanilla &
Soria Abogados, Bolivian counsel to the Borrower, dated the date hereof,
confirming the matters set forth in paragraphs b(i), (c) and (d) above.

 

This is the certificate referred to in Section 2.01(e) of the Completion
Agreement, dated as of December 1, 2005 among the Sponsor, the Technical Agent,
the Administrative Agent and the Collateral Agent.  Capitalized terms used
herein and in the annexes hereto, except as otherwise defined herein, shall have
the meanings assigned to them in the Completion Agreement or the Common Security
Agreement, dated as of December 1, 2005, among the Borrower and the other
parties thereto, as the same may be amended from time to time (the “Common
Security Agreement”).

 

--------------------------------------------------------------------------------

* The named firm may be replaced by the Borrower with other counsel acceptable
to the Administrative Agent.

 

B-5-1

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, I, [Name of President], on behalf of the Borrower have
caused this certificate to be duly executed.

 

Dated:

 

 

 

 

MINERA SAN CRISTÓBAL S.A.

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title: President

 

 

B-5-2

--------------------------------------------------------------------------------

 

Appendix B-6

to Completion Agreement

 

FORM OF FINANCIAL CERTIFICATE

 

I, [Name of President], President of Minera San Cristóbal S.A. (the “Borrower”),
hereby certify on behalf of the Borrower that, as of the date hereof:

 

(a)           Attached to this certificate as Annex 1 are copies of operating
records and other documentation relating to production by and operation of the
Project during the period referred to in paragraph (b). Such documentation
accurately reflects, in all material respects, the production and operation of
the Project during the period to which it relates.

 

(b)           For purposes of this certificate, the Completion Test Period
started on [start date] and ended on [end date], both inclusive. The downtime
hours during such period are identified in the Production Certificate delivered
pursuant to clause (b) of Section 2.01 of the Completion Agreement. The
Completion Test Period referred to below is the same as the Completion Test
Period defined in and utilized for the purposes of such Production Certificate.

 

(c)           Based on:

 

(i)            the actual number of recovered zinc-equivalent pounds in Lead
Concentrates, Zinc Concentrates and Bulk Concentrates produced by the Borrower
during the Completion Test Period,

 

(ii)           the actual inputs (including all factors identified in the
Initial Financial Model, such as power, fuel, labor, etc) utilized for such
production during the Completion Test Period, and

 

(iii)          fixed unit prices for such inputs as set forth in the Initial
Financial Model,

 

the nominal operating cost-per-pound of zinc equivalent produced by the Borrower
during the Completion Test Period (at such fixed unit prices) did not exceed
110% of the forecast operating cost-per-pound of zinc equivalent set forth in
the Initial Financial Model.  Annex 2 to this Certificate describes the
methodology for updating the inputs into the Financial Model for the purpose of
calculating this test; and “zinc equivalent” shall mean zinc metal contained in
Zinc Concentrates, value of lead contained in Lead Concentrates, the value of
lead and zinc contained in Bulk Concentrates and the value of silver contained
in all three concentrates, as computed in the manner described in Annex 3 to the
Production Certificate.

 

(d)  As of the date of this Certificate, (i) the credit balance of the Debt
Service Reserve Account is $                      , which is not less than the
minimum balance of $                       specified for Completion in
Section 4.06 of the Common Security Agreement, and (ii) the credit balance of
the Operating Reserve Account is $                        , which is not less
than the minimum balance of $                       specified for Completion in
Section 4.07 of the Common Security Agreement.

 

B-6-1

--------------------------------------------------------------------------------

 

This is the certificate referred to in Section 2.01(f) of the Completion
Agreement, dated as of December 1, 2005 among the Sponsor, the Technical Agent,
the Administrative Agent and the Collateral Agent.  Capitalized terms used
herein and in the annexes hereto, except as otherwise defined herein, shall have
the meanings assigned to them in the Completion Agreement or the Common Security
Agreement, dated as of December 1, 2005, among the Borrower and the other
parties thereto, as the same may be amended from time to time (the “Common
Security Agreement”).

 

B-6-2

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, I, [Name of President], on behalf of the Borrower have
caused this certificate to be duly executed.

 

Dated:

 

 

 

 

MINERA SAN CRISTÓBAL S.A.

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:  President

 

 

B-6-3

--------------------------------------------------------------------------------

 

[Name of Independent Engineer], a                                organized under
the laws of                           , has performed such inspections,
observations, analyses and other procedures which we have, in our reasonable
judgment, deemed necessary for purposes of this certificate.  Such procedures,
and the names of our employees or agents who performed them, are described in
Annex 3 to this Financial Certificate.

 

Based on such procedures, we hereby certify that we have no reason to believe
that each of the certifications of the Borrower set forth in paragraph (c) above
is not true and correct in all material respects as of the date hereof.

 

IN WITNESS WHEREOF, [Name of senior officer of Independent Engineer] has caused
this certificate to be duly executed.

 

Dated:

 

 

 

 

 

 

[Name of Independent Engineer]

 

 

 

 

 

By:

 

 

 

 

[Name]

 

 

 

[Position]

 

 

B-6-4

--------------------------------------------------------------------------------

 

Annex 1
to Financial Certificate

 

OPERATING RECORDS

 

[Attach copies of operating records and other data and documentation relating to
San Cristobal Project production and operations during relevant period,
including data demonstrating compliance with the certifications set forth in
paragraph (c) of the Financial Certificate.]

 

B-6-5

--------------------------------------------------------------------------------

 

Annex 2
to Financial Certificate

 

METHODOLOGY FOR CALCULATION OF THE UNIT COST TEST

 

The Unit Cost US$/lb Zn shall be calculated according to the following
procedure:

 

•                                          The values describing the Borrower’s
performance contained in the Initial Financial Model on sheet,
                   will be updated, with the participation and concurrence of
the Independent Engineer, based on annualized results obtained over the
Completion Test Period.

 

•                                          The performance values to be updated
will be based on an audit of mine and mill production records and G&A records,
including operating fixed and variable consumption items, for the Completion
Test Period.  The Independent Engineer will work with Borrower budgeting
personnel at the project site, and with the Sponsor and Borrower modelling
personnel to verify and concur with performance values and effects to be input.

 

•                                          Costs are to be obtained from the
regular reports submitted (or to be submitted) by the Borrower including all
onsite cash costs of the Borrower (mining through in-country concentrate
transportation and placing in storage at the port), any cash environmental
expenditures and the general administrative cash costs of the Borrower’s offices
at the minesite and in Bolivia but excluding any costs of loading concentrates
on-board ships, concentrate transportation and insurance costs from port to
customers and all treatment and refining charges.

 

•                                          Cash costs are also to be determined
net of (i) any VAT, except to the extent that such VAT (A) were not recoverable
by the Borrower in accordance with the rates and regulations in effect at the
time incurred and (B) would not have been recoverable by the Borrower under the
rules and regulations in effect at the Closing Date and (ii) any costs which
were capitalized by the Borrower in accordance with US GAAP. Annex 3

 

B-6-6

--------------------------------------------------------------------------------

 

Annex 3
to Financial Certificate

 

DESCRIPTION OF INDEPENDENT ENGINEER PROCEDURES

 

[To be completed at time of delivery]

 

B-6-7

--------------------------------------------------------------------------------

 

Appendix C

to Completion Agreement

 

 

SPONSOR BUDGET

 

C-1

--------------------------------------------------------------------------------