**ExecutionVersion**

**Exhibit10.2**

**DEFERRED PAYMENTS AGREEMENT**

**Entered into as of September 25,2006betweenAPEX SILVER MINES SWEDEN ABandSUMITOMO CORPORATION**

 

----

 

**TABLE OF CONTENTS**
| ** **                          | ** ** | ** **                                                          | ** ** | **Page** |
|-------------------------------------|------------|---------------------------------------------------------------------|------------|----------|
| ARTICLE I DEFINITIONS               |       | 2                                                                   |
| Section 1.1                         |       | Defined  Terms                                                      |       | 2        |
| Section 1.2                         |       | Definitions  from Purchase and Sale Agreement                       |       | 7        |
|                                |       |                                                                |
| ARTICLE II  SILVER PAYMENTS         |       | 7                                                                   |
| Section 2.1                         |       | Silver  Payment Obligation                                          |       | 7        |
| Section 2.2                         |       | Calculation  of Payment                                             |       | 7        |
| Section 2.3                         |       | Payment in  Silver Bullion                                          |       | 8        |
| Section 2.4                         |       | Payment in  Dollars                                                 |       | 9        |
| Section 2.5                         |       | Payment  Adjustments                                                |       | 9        |
|                                |       |                                                                |       |     |
| ARTICLE III  ZINC PAYMENTS          |       | 9                                                                   |
| Section 3.1                         |       | Zinc Payment  Obligation                                            |       | 9        |
| Section 3.2                         |       | Calculation  of Payment; Payment                                    |       | 9        |
| Section 3.3                         |       | Payment  Adjustments                                                |       | 10       |
|                                |       |                                                                |       |     |
| ARTICLE IV  FAILURE TO MAKE PAYMENT |       | 10                                                                  |
|                                |       |                                                                |       |     |
| ARTICLE V  TERM                     |       | 11                                                                  |
| Section 5.1                         |       | Term                                                                |       | 11       |
| Section 5.2                         |       | Adjustment  of Sumitomo Percentage; Survival of Payment Obligations |       | 11       |
|                                |       |                                                                |       |     |
| ARTICLE VI  ADDITIONAL PROVISIONS   |       | 12                                                                  |
| Section 6.1                         |       | Access to  Records                                                  |       | 12       |
| Section 6.2                         |       | No Right of  Off-Set                                                |       | 13       |
| Section 6.3                         |       | Entire  Agreement                                                   |       | 13       |
| Section 6.4                         |       | Governing  Law; Language                                            |       | 13       |
| Section 6.5                         |       | Dispute  Resolution                                                 |       | 14       |
| Section 6.6                         |       | Headings                                                            |       | 14       |
| Section 6.7                         |       | Notices                                                             |       | 14       |
| Section 6.8                         |       | Severability                                                        |       | 14       |
| Section 6.9                         |       | Amendment;  Waiver                                                  |       | 15       |
| Section 6.10                        |       | Assignment  and Binding Effect                                      |       | 15       |
| Section 6.11                        |       | No Benefit  to Others                                               |       | 15       |
| Section 6.12                        |       | No  Consequential Damages                                           |       | 15       |
| Section 6.13                        |       | Counterparts                                                        |       | 16       |
| Section 6.14                        |       | Interpretation                                                      |       | 16       |
| Section 6.15                        |       | Rules of  Construction                                              |       | 16       |
|                                |       |                                                                |       |     |
| Attachment A – Mine Map        |       |                                                                |

 

1

----

 

**DEFERREDPAYMENTS AGREEMENT**

This Deferred Payments Agreement is entered into as ofSeptember 25, 2006 (the “Closing Date”), by and between:

**APEX SILVER MINES SWEDEN AB**,a *privat aktiebolag*dulyorganized and validly existing under the Laws of the Kingdom of Sweden (“ApexSweden”), with its registered office at Accurate Accounting AB, Draketan 7,SE-412 50, Göteborg, Sweden; and

**SUMITOMO CORPORATION**,a corporation duly organized and validly existing under the Laws of Japan (“Sumitomo”),with its headquarters at 1-8-11, Harumi, Chuo-ku Tokyo 104-8610,Japan.

Apex Sweden and Sumitomo are sometimes referred toherein individually as a “Party” and collectively as the “Parties.”  Capitalized terms used and not otherwisedefined in this Agreement have the respective meanings ascribed thereto inARTICLE I.

**RECITALS**

A.            Pursuant to the Purchase and Sale Agreement, datedas of September 25, 2006 (the “Purchase and Sale Agreement”),Sumitomo, among other things, acquired (1) 100% of the issued andoutstanding share capital of New Sweden 1, which on the Closing Date owned35% of the issued and outstanding share capital of Minera San Cristóbal S.A., a*sociedad anónima* organized underthe Laws of Bolivia (“MSC”), (2) 100% of the issued and outstandingshare capital of New Sweden 2, which on the Closing Date owned 35% of theissued and outstanding quotas of Apex Metals Marketing GmbH, a *Gesellschaft mit beschränkter Haftung*organized under the Laws of Switzerland (“New Metals”), and (3) 35%of the issued and outstanding share capital of Apex Silver Finance Ltd., an exempted company limited by sharesincorporated under the Laws of the Cayman Islands, British West Indies (“NewCayman”) (collectively, the “Acquisition”).

B.            MSCowns and is developing a silver, zinc, and lead mine known as the San CristóbalMine, located in the Republic of Bolivia. MSC shall produce zinc, lead, and bulk concentrates from certainProduction at the Mine (the “Concentrates”) and New Metals has theexclusive right to acquire and market the Concentrates.  New Metals has entered, and from time to timeshall enter into agreements for the sale of Concentrates purchased from MSCwith smelters, refineries and traders (any such agreement entered into by New Metalswith a Person who is not an Affiliate of Apex or which is otherwise on an arm’slength basis, a “Sales Agreement” and collectively, the “SalesAgreements”).

C.            Pursuantto Section 2.2 of the Purchase and Sale Agreement, the Purchase Price tobe paid by Sumitomo in connection with the Acquisition is payable, in part, bypayment of Deferred Payments to Apex Sweden. This is the Deferred Payments Agreement referred to in the Purchase andSale Agreement.  This Agreement setsforth the terms and conditions with respect to the Deferred Payments.

2

----

 

**AGREEMENT**

In consideration of themutual promises, covenants, and agreements set forth herein, the Purchase andSale Agreement and other good and valuable consideration, the receipt andsufficiency of which are hereby acknowledged, the Parties hereby agree asfollows:

**ARTICLE I**DEFINITIONS**

## Section 1.1             Defined Terms For purposesof this Agreement, the following terms have the following meanings:

“Acquisition” has the meaning specified in therecitals.

“Agreement” means this Deferred PaymentsAgreement.

“Apex” means Apex Silver Mines Limited, anexempted company limited by shares incorporated under the laws of the CaymanIslands, British West Indies.

“Apex Interestholders” means the “ApexInterestholders” as defined in the MSC Shareholders Agreement, the “ApexInterestholders” as defined in the New Metals Quotaholders Agreement, the “ApexInterestholders” as defined in the New Cayman Shareholders Agreement, and theirAffiliates which own any right, tile, and interest in the Transmission LineLoan.

“Apex Interests” has the meaning specified inthe MSC Shareholders Agreement.

“Apex Luxembourg” means Apex Luxembourg S.àr.l., a *société à responsabilité limitée*organizedunder the Laws of the Grand Duchy of Luxembourg, with its registered office at73, Côte d’Eich, L-1450 Luxembourg, registered with the LuxembourgRegister of Commerce (*Registre de Commerceet des Sociétés du Grand-Duché de Luxembourg*) under numberB 110 956.

“Apex Metals Account” means (a) theunallocated metals account of Apex Sweden maintained in London, England, byPrudential as Account No. 080020911 in the name of Apex Silver Mines Limited,or (b) such other account or accounts as Apex Sweden may designate fromtime to time by notice to Sumitomo delivered in accordance with Section 6.7 notless than five days prior to the date of any Silver Payment to be made bydelivery of Silver Bullion.

“Apex Sweden” has the meaning specified in thepreamble.

“Business Day” means any day other thanSaturday, Sunday, and a day on which banks in New York, New York, U.S.A. orTokyo, Japan are required or permitted to close.

“Closing Date” has the meaning specified in thepreamble.

“Concentrates” has the meaning specified in therecitals.

3

----

 

“Default Rate” means a rate per annum equal tothe lesser of: (a) LIBOR plus four percent or (b) the Maximum LegalRate.

“Delivered Silver” has the meaning specified inSection 2.3(a).

“Delivery Business Day” means any Business Dayother than a day on which banks in the relevant Delivery Location are requiredor permitted to close.

“Delivery Location” means the vault of JPMorgan Chase located in London, England, or such other location in London,England, as may be designated by Apex Sweden in the Delivery Notice.

“Delivery Notice” has the meaning specified inSection 2.3(a).

“Dispute Resolution Agreement” means thatcertain Dispute Resolution Agreement, dated as of the date hereof, by and amongApex, Apex Sweden, Apex Luxembourg, Service Company, Sumitomo, NewSweden 1, New Sweden 2, MSC, New Metals, and New Cayman.

“Dollar” or “Dollars” means the lawfulcurrency of the United States of America.

“Election Notice” has the meaning specified inSection 2.2(a).

“GAAP” means generally accepted accountingprinciples as used in the United States of America.

“Governmental Equity Ownership” has the meaningspecified in Section 5.2(c).

“Governmental Mine Ownership” has the meaningspecified in Section 5.2(d).

“Indirect Interests” has the meaning specifiedin the MSC Shareholders Agreement.

“Interests” has the meaning specified in theMSC Shareholders Agreement.

“LBMA” means the London Bullion MarketAssociation.

“LIBOR” means the London interbank offered rateof major banks for six-month Dollar deposits that appears on page 3750 ofthe Dow Jones Telerate Service (or on any successor or substitute page of suchservice or any successor to or substitute for such service or similar service,if such service is no longer available) at approximately 11:00 a.m., London,England time on any date of determination therefor.

“LME” means the London Metal Exchange or, ifthe LME ceases to exist, the industry’s generally accepted successor exchangethereto.

“LME Difference” means the amount by which theLME Price of zinc exceeds US$1,800.00 per tonne.

“LME Price” means the average of the dailyofficial LME cash settlement quotations for Special High Grade zinc, quoted inDollars, for the quotational period as set forth in the 

4

----

 

applicable SalesAgreement (as published in Metal Bulletin during such quotational period, butcorrected to the official quotations of the LME in the event of printingerrors).

“LOCO” has the meaning set forth in LBMAGlossary of Terms.

“Maximum Legal Rate” means on any day, thehighest non-usurious rate of interest permitted by applicable law on suchday, computed on the basis of the actual number of days elapsed over a year of360 days.

“Metal Bulletin” means the Metal Bulletinpublication published by Metal Bulletin Plc.

“Mine” solely, for the purposes of thisAgreement, means the area inside the boundary delineated as the “Buffer Zone”set forth on the map attached hereto as Attachment A.

“Moody’s” means Moody’s Investors Service, Inc.and any successor thereto, so long as such successor is a “nationallyrecognized statistical rating organization” registered with the Securities andExchange Commission of the United States of America.

“MSC” has the meaning specified in therecitals.

“MSC Shareholders Agreement” means that certainMSC Shareholders Agreement, dated as of the Closing Date, among Apex Sweden,Apex Luxembourg, New Sweden 1, and MSC.

“New Cayman” has the meaning specified in therecitals.

“New Cayman Shareholders Agreement” means thatcertain Apex Silver Finance Shareholders Agreement, dated as of the ClosingDate, among Apex Luxembourg, Sumitomo, and New Cayman.

“New Metals” has the meaning specified in therecitals.

“New Metals Quotaholders Agreement” means thatcertain New Metals Quotaholders Agreement, dated as of the Closing Date, amongApex Sweden, New Sweden 2, and New Metals.

“New Sweden 1” means GotlexLageraktiebolag nr 451, organization number 556702-1083, a *privataktiebolag* duly organized and validly existing under the Laws of theKingdom of Sweden, with its registered office at c/o Wistrand Advokatbyra,Lilla Bommen 1, 411 04 Göteborg, Sweden.

“New Sweden 2” means Comercial Metales BlancosAB, a *privat aktiebolag* duly organized andvalidly existing under the Laws of the Kingdom of Sweden, with its registeredoffice at c/o Anders Sköldberg, Ernst & Young AB, 401 82 Göteborg, Sweden.

“Ownership Adjustment” has the meaningspecified in Section 5.2(a).

“Party” or “Parties” has the meaningspecified in the preamble.

5

----

 

“Payable Silver” means the amount of silver (introy ounces) equal to the amount of silver contained in the Concentrates forwhich payment is to be made to a seller in accordance with the terms of theapplicable Sales Agreement.

“Payable Silver Payment” means, in respect of ashipment of Concentrates made by seller pursuant to a Sales Agreement, a sum inDollars equal to the product of (a) the Payable Silver in such shipmentand (b) the per troy ounce silver price payable for the silver content ofsuch shipment as set forth in such Sales Agreement.

“Payable Zinc” means the amount of zinc (intonnes) equal to the amount of zinc contained in the Concentrates for whichpayment is to be made to a seller in accordance with the terms of theapplicable Sales Agreement.

“Payment Date” has the meaning specified inARTICLE IV.

“Payment Quarter” means each calendar quarter,or portion thereof, during the term of this Agreement.

“Production” means (a) ore from the Minethat is processed by MSC through the mill located at the Mine that is underconstruction on the Closing Date (including any expansions or extensionsthereto over time) (the “Mill”), and (b) ore from the Mine that isprocessed by MSC through a facility located at the Mine other than the Mill,which may include a heap leach or oxide treatment facility.

“Purchase and Sale Agreement” has the meaningspecified in the recitals.

“Qualified Third Party” means an Entity the non-credit-enhancedlong-term senior unsecured debt of which is rated at least the lesser of(a) BBB- by S&P or Baa3 by Moody’s, and (b) the creditrating of the non-credit-enhanced long-term senior unsecureddebt of Sumitomo as provided by S&P or Moody’s as of the date of the Saleby the Sumitomo Interestholders of their Sumitomo Interests to such Entity.

“Quarterly Silver Payment” has the meaningspecified in Section 2.2(a).

“Quarterly Zinc Payment” has the meaningspecified in Section 3.2(a).

“S&P” means Standard & Poor’s RatingsServices, a division of The McGraw-Hill Companies, Inc and any successorthereto so long as such successor is a nationally recognized statistical ratingorganization registered with the Securities and Exchange Commission of theUnited States of America.

“Sale” has the meaning specified in the MSCShareholders Agreement.

“Sales Agreement” or “Sales Agreements”has the meaning specified in the recitals.

“Silver Adjustment Amount” has the meaningspecified in Section 2.5.

6

----

 

“Silver Bullion” means (a) silver bullionbars produced by a refiner on the LBMA “Good Delivery List of AcceptableRefiners,” complying with the standards of the LBMA relating to good deliveryand fineness from time to time in effect or (b) silver bullion which issuitable for a metal transfer in metal accounts at LOCO London.

“Silver Payment” has the meaning specified inSection 2.1.

“Silver Payment Adjustment Event” has themeaning specified in Section 2.5.

“Silver Payment Adjustment Notice” has themeaning specified in Section 2.5.

“Silver Payment Notice” has the meaningspecified in Section 2.2(a).

“Silver Share” means 22.86% of the PayableSilver attributed to New Sweden 1’s 35% ownership interest in MSC as ofthe Closing Date.

“Sumitomo” has the meaning specified in thepreamble.

“Sumitomo Interestholders” means the “SumitomoInterestholders” as defined in the MSC Shareholders Agreement, the “SumitomoInterestholders” as defined in the New Metals Quotaholders Agreement, the “SumitomoInterestholders” as defined in the New Cayman Shareholders Agreement, and theirAffiliates which own any right, tile, and interest in the Transmission LineLoan.

“Sumitomo Interests” has the meaning specifiedin the MSC Shareholders Agreement.

“Sumitomo Payable Silver” means, in respect ofa shipment of Concentrates delivered by a seller pursuant to a Sales Agreement,an amount of Payable Silver equal to the product of (a) Silver Share and(b) the Payable Silver in such shipment.

“Sumitomo Payable Silver Payment” means, inrespect of a shipment of Concentrates made by a seller pursuant to a SalesAgreement, an amount in Dollars equal to the product of (a) the SilverShare and (b) the Payable Silver Payment for such shipment.

“Sumitomo Payable Zinc” means, in respect of ashipment of Concentrates delivered by a seller pursuant to a Sales Agreement,an amount of Payable Zinc equal to the product of (a) the Zinc Share and(b) the Payable Zinc in such shipment.

“Transmission Line Loan” has the meaningspecified in the MSC Shareholders Agreement.

“Unpaid Amount” has the meaning specified inARTICLE IV.

“US$” means Dollars.

“Zinc Adjustment Amount” has the meaningspecified in Section 3.3.

“Zinc Payment Adjustment Event” has the meaningspecified in Section 3.3.

7

----

 

“Zinc Payment Adjustment Notice” has themeaning specified in Section 3.3.

“Zinc Payment Notice” has the meaning specifiedin Section 3.2(a).

“Zinc Share” means 20% of the Payable Zincattributed to New Sweden 1’s 35% ownership in MSC as of the Closing Date.

“Zinc Shipment Payment” has the meaningspecified in Section 3.2(a).

## Section 1.2             Definitions from Purchase andSale Agreement.  Undefinedcapitalized terms used herein have the respective meanings set forth in thePurchase and Sale Agreement.

**ARTICLE IISILVER PAYMENTS**

## Section 2.1             Silver Payment Obligation.  For each Payment Quarter, Sumitomo shall payto Apex Sweden (the “Silver Payment”), at Sumitomo’s election in itssole discretion, either (a) an amount of Silver Bullion equal to theSumitomo Payable Silver for all shipments of Concentrates delivered during suchPayment Quarter, or (b) cash equal to the Quarterly Silver Payment.  The foregoing shall be calculated inaccordance with Section 2.2 for each shipment of Concentrates delivered duringsuch Payment Quarter to counterparties under the Sales Agreements.

## Section 2.2             Calculation of Payment.

### (a)           No later than five Business Daysafter the end of each Payment Quarter, Apex Sweden shall deliver to Sumitomonotice (the “Silver Payment Notice”) in accordance with Section 6.7 settingforth (i) the shipments of Concentrates delivered to counterparties underthe Sales Agreements during such Payment Quarter (for the avoidance of doubtand for the purposes of this Agreement, a shipment shall be deemed delivered toa counterparty as of the date the provisional payment under the applicableSales Agreement is received by New Metals), (ii) the Payable Silver andthe Sumitomo Payable Silver for each such shipment, (iii) the PayableSilver Payment and the Sumitomo Payable Silver Payment for each such shipment,(iv) the Dollar amount equal to the sum of the Sumitomo Payable SilverPayments for all such shipments (the “Quarterly Silver Payment”), and(v) the details of the bank account of Apex Sweden (which shall be inLondon, England, New York, N.Y., or Tokyo, Japan) to which Sumitomo would berequired to pay the Quarterly Silver Payment should it elect to make the SilverPayment in cash. Each Silver Payment Notice shall be accompanied by suchsupporting evidence as is reasonably necessary for Sumitomo to confirm theinformation set forth therein.  No laterthan three Business Days after receipt of the Silver Payment Notice, Sumitomoshall provide Apex Sweden written notice of its election either (A) tomake the Silver Payment in Silver Bullion pursuant to Section 2.1 and inaccordance with Section 2.3, or (B) to make the Silver Payment in Dollarspursuant Section 2.1 and in accordance with Section 2.4 (the “ElectionNotice”).

### (b)           For the avoidance of doubt, theParties acknowledge and agree that the Payable Silver and the Payable SilverPayment shall be calculated in the manner provided 

8

----

 

### in the applicable Sales Agreement withoutgiving effect to costs or amounts associated with the processing, refining,smelting, or treating of the Concentrates including treatment charges, refiningcharges, or penalties for impurities.

## Section 2.3             Payment in Silver Bullion.

### (a)           If Sumitomo elects to make the SilverPayment in Silver Bullion (the “Delivered Silver”), then, no later thanfive Business Days after receipt of the Election Notice, Apex Sweden shallprovide Sumitomo notification in accordance with Section 6.7 confirming theinformation for the Delivery Location (the “Delivery Notice”).  No later than five Delivery Business Daysafter receipt of the Delivery Notice, Sumitomo shall cause the Delivered Silverto be delivered to the Delivery Location. The amount of the Delivered Silver shall be equal to the amount ofSumitomo Payable Silver correctly set forth in the Silver Payment Notice.

### (b)           Apex Sweden shall not be responsiblefor insurance, storage, transportation, transfer, or other costs prior to thetime title to the Delivered Silver delivered hereunder has passed to ApexSweden in accordance with Section 2.3(c). Sumitomo shall bear all costs and expenses associated with the deliveryof the Delivered Silver.

### (c)           Possession of and title to DeliveredSilver delivered pursuant hereto shall pass from Sumitomo to Apex Sweden whensuch Delivered Silver is credited to the Apex Metals Account and is recordedthrough appropriate book entry on the books and records of the institutionmaintaining the Apex Metals Account. Until such time, Sumitomo shall be deemed to be in control andpossession of, have title to, risk of loss of, and be responsible for such DeliveredSilver and, after such time, Apex Sweden shall be deemed to be in control andpossession of, have title to, risk of loss of, and be responsible for suchDelivered Silver.

### (d)           Sumitomo shall be liable for andshall pay, cause to be paid or reimburse Apex Sweden if Apex Sweden has paid,all Taxes applicable to the Delivered Silver delivered hereunder prior to thetime title to the Delivered Silver has passed to Apex Sweden in accordance withSection 2.3(c).  Apex Sweden shall beliable for and shall pay, cause to be paid or reimburse Sumitomo if Sumitomohas paid, all Taxes applicable to the Delivered Silver delivered hereunder ator after the time title to the Delivered Silver has passed to Apex Sweden inaccordance with Section 2.3(c).

### (e)           Sumitomo hereby represents, warrants,and covenants that (i) Sumitomo has good, valid, and marketable title tothe Delivered Silver, free and clear of all liens, upon delivery to ApexSweden, and (ii) the Delivered Silver shall be Silver Bullion.

9

----

 

## Section 2.4             Payment in Dollars.  If Sumitomo elects to make the Silver Paymentin Dollars, then, no later than five Business Days****after the date of receipt of the Silver Payment Notice,Sumitomo shall pay to Apex Sweden an amount equal to the Quarterly SilverPayment by wire transfer of immediately available Dollar funds to the accountor accounts of Apex Sweden designated by it in such Silver Payment Notice.

## Section 2.5             PaymentAdjustments.  The Parties acknowledgeand agree that the determination of the Silver Payment for any Payment Quartermay, in part, be based upon “provisional payments” made in accordance with theapplicable Sales Agreements for which “final payment” has not been determinedprior to the end of such Payment Quarter. The foregoing may result in a necessary adjustment of the actual PayableSilver applicable to a shipment used in the calculation of the Payable Silverfor a Payment Quarter and as such, an adjustment in the Silver Payment for suchPayment Quarter may be necessary (a “Silver Payment Adjustment Event”).  In accordance with the foregoing, if a SilverPayment Adjustment Event occurs, then Apex Sweden shall promptly provideSumitomo written notice of same (a “Silver Payment Adjustment Notice”).  The Silver Payment Adjustment Notice shallset forth (a) the amount by which the Sumitomo Payable Silver for suchPayment Quarter was either reduced or increased and (b) the Dollar valueof such adjusted amount (the “Silver Adjustment Amount”).  If the Silver Payment for a Payment Quarteris reduced, then Apex Sweden shall deliver payment of the Silver AdjustmentAmount concurrently with delivery of the Silver Payment Adjustment Notice.  If the Silver Payment for a Payment Quarteris increased, then Sumitomo shall make payment of the Silver Adjustment Amountconcurrently with the Silver Payment for the following Payment Quarter.

**ARTICLE IIIZINC PAYMENTS**

## Section 3.1             Zinc Payment Obligation.  For each Payment Quarter, Sumitomo shall payto Apex Sweden in cash an amount equal to the Quarterly Zinc Payment.  The foregoing shall be calculated inaccordance with Section 3.2 for each shipment of Concentrates delivered duringsuch Payment Quarter to counterparties under the Sales Agreements.

## Section 3.2             Calculationof Payment; Payment.

### (a)           No later than five Business Daysafter the end of each Payment Quarter, Apex Sweden shall deliver to Sumitomonotice (the “Zinc Payment Notice”) in accordance with Section 6.7 thatsets forth (i) the shipments of Concentrates delivered to counterpartiesunder the Sales Agreements during such Payment Quarter (for the avoidance ofdoubt and for the purposes of this Agreement, a shipment shall be deemeddelivered to a counterparty as of the date the provisional payment under theapplicable Sales Agreement is received by New Metals), (ii) the amount ofthe Payable Zinc and the Sumitomo Payable Zinc for each such shipment,(iii) the LME Price for each such shipment as calculated pursuant to theapplicable Sales Agreement, (iv) the LME Difference for each suchshipment, (v) the Dollar amount equal to the amount of Sumitomo PayableZinc for each such shipment multiplied by the LME Difference for that shipment(each a “Zinc Shipment Payment”), (vi) the Dollar amount equal tothe sum of the Zinc Shipment Payments (the “Quarterly Zinc Payment”) and(vii) the details for 

10

----

 

### the bank account of Apex Sweden (which shallbe in London, England, New York, N.Y., or Tokyo, Japan) to which Sumitomo isrequired to pay the Quarterly Zinc Payment. Each Zinc Payment Notice shall be accompanied by such supportingevidence as is reasonably necessary for Sumitomo to confirm the information setforth therein.

### (b)           Each Quarterly Zinc Payment shall bepayable no later than five Business Days after the date of receipt of the ZincPayment Notice by wire transfer in immediately available funds to the accountdesignated by Apex Sweden in the Zinc Payment Notice.

### (c)           For the avoidance of doubt, theParties acknowledge and agree that the Payable Zinc shall be calculated in themanner provided in the applicable Sales Agreement without giving effect tocosts or amounts associated with the processing, refining, smelting or treatingof the Concentrates including treatment charges, refining charges or penaltiesfor impurities.

## Section 3.3             Payment Adjustments.  The Parties acknowledge and agree that thedetermination of a Quarterly Zinc Payment may, in part, be based upon “provisionalpayments” made in accordance with the applicable Sales Agreements for which “finalpayment” has not been determined prior to the end of the relevant PaymentQuarter.  The foregoing may result in anecessary adjustment of the actual Payable Zinc applicable to a shipment usedin the calculation of the Payable Zinc for a Payment Quarter and as such, anadjustment in the Quarterly Zinc Payment for such Payment Quarter may benecessary (a “Zinc Payment Adjustment Event”).  In accordance with the foregoing, if a ZincPayment Adjustment Event occurs, then Apex Sweden shall promptly provideSumitomo written notice of same (a “Zinc Payment Adjustment Notice”).  The Zinc Payment Adjustment Notice shall setforth (i) the amount by which the Sumitomo Payable Zinc for such PaymentQuarter was either reduced or increased and (ii) the Dollar value of suchadjusted amount (the “Zinc Adjustment Amount”).  If the Quarterly Zinc Payment for a PaymentQuarter is reduced, then Apex Sweden shall deliver payment of the ZincAdjustment Amount concurrently with delivery of the Zinc Payment AdjustmentNotice.  If the Quarterly Zinc Paymentfor a Payment Quarter is increased, then Sumitomo shall make payment of theZinc Adjustment Amount concurrently with the Quarterly Zinc Payment for thefollowing Payment Quarter.

**ARTICLE IVFAILURE TO MAKE PAYMENT**

If Sumitomo fails to make a Silver Payment orQuarterly Zinc Payment (the unpaid portion thereof, an “Unpaid Amount”)on the date such payment is due and payable (the “Payment Date”), then,commencing on the Payment Date and continuing until such Unpaid Amount(together with accrued interest thereon) is paid in full, the unpaid portion ofthe Unpaid Amount shall bear interest, calculated daily (computed on the actualdays elapsed over a year of 360 days), at the Default Rate.  To the extent the Unpaid Amount is a SilverPayment made in Silver Bullion pursuant to Section 2.3, interest shall accruebased upon the amount of the Quarterly Silver Payment that would otherwise havebeen due on the Payment Date.

**ARTICLE VTERM**

## Section 5.1             Term.  Unless otherwise agreed in writing by theParties, the Parties’ obligations under this Agreement shall commence on theClosing and shall terminate, along with this Agreement, upon the earlier of:

### (a)           the permanent cessation ofProduction;

### (b)           the completion of the Sale by theSumitomo Interestholders of all, but not less than all, of their SumitomoInterests to Apex and/or its Subsidiaries whether such Sale is pursuant to theMSC Shareholders Agreement, the New Metals Quotaholders Agreement, the NewCayman Shareholders Agreement, as applicable, or otherwise; or

### (c)           the completion of the Sale by theApex Interestholders of all, but not less than all, of their Interests toSumitomo and/or its Subsidiaries whether such Sale is pursuant to the MSCShareholders Agreement, the New Metals Quotaholders Agreement, the New CaymanShareholders Agreement, as applicable or otherwise; provided, however, that thepurchase price for such Sale shall include an amount equal to the price forwhich the right, title, and interest of ApexSweden in and to this Agreement could be sold, as of the date of such Sale, inan arm’s-length transaction to an unaffiliated, *bona fide*, third-party purchaser inan orderly sale.

## Section 5.2             Adjustment of SumitomoPercentage; Survival of Payment Obligations.

### (a)           The Parties understand that, duringthe term of this Agreement, Sumitomo’s direct or indirect ownership interestsin MSC, New Metals, and New Cayman, and related “share” of Production may beadjusted upward or downward from time to time as a result of adjustment events(including by Sale to Apex) pursuant to the MSC Shareholders Agreement, the NewMetals Quotaholders Agreement, the New Cayman Shareholders Agreement, asapplicable, or otherwise (an “Ownership Adjustment”).  Notwithstanding the foregoing, the Partiesacknowledge and agree that, except as provided in Section 5.1 and this Section5.2, if an Ownership Adjustment occurs, the Silver Share and the Zinc Share, asset forth in ARTICLE II and ARTICLE III, respectively, shall not be adjusted toconform to such Ownership Adjustment and shall remain as defined herein on theClosing Date.

### (b)           Subject to Section 5.1, Sumitomo andApex Sweden hereby acknowledge and agree that if the Sumitomo Interestholderscomplete the Sale of all, but not less than all, of their Sumitomo Interests toa Proposed Third-Party Buyer pursuant to Article V of the MSCShareholders Agreement, Sumitomo shall continue to be obligated to satisfy thepayment obligations set forth herein and Sumitomo shall not be relieved ordischarged of its obligations with respect thereto.  Notwithstanding the foregoing, if the SumitomoInterestholders Sell all, but not less than all, of their Sumitomo Interests toa Qualified Third Party, and if such Qualified Third Party expressly assumesall of Sumitomo Interestholders’ obligations with respect to such SumitomoInterests under this Agreement in a writing delivered to Apex Sweden, thenSumitomo shall be relieved and 

11

----

 

### discharged ofits obligations hereunder to the extent they have been assumed by the QualifiedThird Party.

### (c)           Notwithstanding the foregoing, ifBolivia or any action taken by any Governmental Authority of Bolivia requiresthe issuance or Sale to any Governmental Authority of Bolivia, citizens ofBolivia, or any other Person of an any Interests or Indirect Interests (a “GovernmentalEquity Ownership”), then the Silver Share and Zinc Share shall be adjusteddownward, on a pro rata basis, to reflect the then current direct or indirectownership of Sumitomo in MSC following such event.  The Parties acknowledge and agree that to theextent the Government Equity Ownership adjusts upward or downward at any timethereafter, the Silver Share and the Zinc Share shall adjust, on a pro ratabasis, accordingly, provided that neither the Silver Share nor the Zinc Shareshall be adjusted to a percentage interest in excess of that set forth in thedefinitions of such terms in the Agreement as of the Closing Date.

### (d)           Notwithstanding the foregoing,(i) if Bolivia or any action taken by any Governmental Authority ofBolivia requires the issuance or sale to any Governmental Authority of Bolivia,citizens of Bolivia, or any other Person of an equity or other participationinterest in the Mine (a “Governmental Mine Ownership”) and(ii) such Governmental Mine Ownership results in such GovernmentalAuthority or Bolivia or citizens of Bolivia or other Persons, as applicable,owning, directly or indirectly, a percentage of any shipment of Concentrates,then the Silver Share and Zinc Share, as applicable, shall be adjusteddownward, on a pro rata basis on a per shipment basis, to reflect the then currentdirect or indirect ownership of Sumitomo in such shipment as a result ofSumitomo’s then current direct or indirect ownership in MSC; provided thatneither the Silver Share nor the Zinc Share, as applicable, with respect to anysuch shipment shall be adjusted to a percentage interest in excess of that setforth in the definitions of such terms in the Agreement as of the Closing Date.

**ARTICLE VIADDITIONAL PROVISIONS**

## Section 6.1             Access to Records.

### (a)           The Parties shall, and shall causeNew Metals, any other seller of Concentrates under a Sales Agreement and MSCto, keep and maintain complete and accurate books, records and accountsrelating to the sales of Concentrates pursuant to the Sales Agreements.  Such books, records and accounts shall bemaintained for at least seven years after the calendar year to which theyrelate.  During the term of thisAgreement and for a period of seven years thereafter, the Parties shall, andshall cause New Metals, any other seller of Concentrates under a SalesAgreement and MSC to, afford to Sumitomo and its accounting, legal, and otherrepresentatives, as well as their respective officers and employees, reasonableaccess, upon reasonable notice, to all such books, records and accounts and anyother documents, agreements, accounting records, and financial statementsutilized in calculating the Quarterly Zinc Payment and the Silver Payment.

12

----

 

### (b)           Sumitomo shall have the right, fromtime to time (but in no event more than once per fiscal quarter), to haveeither Sumitomo or an independent auditor audit the such books, records,accounts and other documents, agreements and financial statements to verify theaccuracy of the information provided by Apex Sweden pursuant to ARTICLE II andARTICLE III.  Any such audit shall be atSumitomo’s expense and shall be limited to the Quarterly Zinc Payments andSilver Payments adjusted pursuant to Section 2.5 and Section 3.3, respectively(i.e. only the “final payments” are to be audited and not the “provisionalpayments”).  Sumitomo shall promptlyprovide Apex Sweden a copy of all such audits.

### (c)           If the audit reveals an overpaymentby Sumitomo for a Quarterly Zinc Payment or Silver Payment, then Apex Swedenshall promptly pay to Sumitomo the amount of any overpayment revealed by anysuch audit, plus interest thereon, calculated daily (computed on the actualdays elapsed over a year of 360 days), at the Default Rate, for the periodcommencing on payment of the original amount by Sumitomo to Apex Sweden andending on the date such overpayment amount (together with the accrued interestthereon) is paid in full.  Such amountshall be paid in Dollars by wire transfer in immediately available funds to thebank account of Sumitomo designated by it in writing to Apex Sweden.

### (d)           If the audit reveals an underpaymentby Sumitomo for a Quarterly Zinc Payment or Silver Payment, then Sumitomo shallmake payment of any underpayment concurrently with the next applicablequarterly payment, plus interest thereon, calculated daily (computed on theactual days elapsed over a year of 360 days), at the Default Rate, for theperiod commencing on payment of the original amount by Sumitomo to Apex Swedenand ending on the date such underpayment amount (together with the accruedinterest thereon) is paid in full.

### (e)           Any dispute regarding an audit andthe accuracy thereof shall be addressed in accordance with Section 6.5.

## Section 6.2                NoRight of Off-Set.  All amountsrequired to be paid to Apex Sweden under this Agreement shall be paid to ApexSweden in full and in a timely manner without assertion of any right of offset,counterclaim, withholding, deduction, right of cross-collateralization,or right of reduction on account of any obligations.

## Section 6.3                EntireAgreement.  This Agreement (togetherwith the Purchase and Sale Agreement and the other Transaction Documents)contain, and are intended as, a complete statement of all of the terms of theagreements among the Parties with respect to the matters provided for hereinand therein, and supersede and discharge any previous agreements andunderstandings between the Parties with respect to those matters; provided,however, that the Confidentiality Agreement shall survive the executionand termination of this Agreement and continue in full force and effect inaccordance with its terms.

## Section 6.4                GoverningLaw; Language.  This Agreement shallbe governed by and construed in accordance with the Laws of the State of NewYork, including Section 5-1401 of the New York General Obligations Law,as applied to contracts made and performed within the 

13

----

 

## State of New York, without regard to any choice or conflicts of lawprovision or rule that would cause the application of the Laws of anyjurisdiction other than the State of New York. This Agreement has been negotiated and executed by the Parties inEnglish.  In the event any translation ofthis Agreement is prepared for convenience or any other purpose, the provisionsof the English version shall govern.  Ifany doubt, misunderstanding, or dispute arises in their interpretation, theEnglish version shall govern.

## Section 6.5                DisputeResolution.  Any controversy, claim,or dispute between the Parties that arises out of or relates to this Agreement,including any claim or controversy relating to the interpretation, breach,termination, or invalidity of any provision hereof, shall be exclusively andfinally settled pursuant to and in accordance with the Dispute ResolutionAgreement.

## Section 6.6                Headings.  The article and section headings of thisAgreement are for reference purposes only and are to be given no effect in theconstruction or interpretation of this Agreement.

## Section 6.7                Notices.  All notices and other communicationshereunder shall be in writing and shall be delivered personally, telecopied (ifreceipt of which is confirmed by the Person to whom sent), or sent byinternationally recognized overnight delivery service to the Parties at thefollowing addresses (or to such other Person or address for a Party asspecified by such Party by like notice) (notice shall be deemed given andreceived upon receipt, if delivered personally, by overnight delivery serviceor by telecopy, except that notice of a change of address shall not be deemedgiven and received until actually received):

### (a)           If to Apex Sweden, to it at:

Apex Silver Mines Sweden ABc/o Apex Silver Mines Corporation1700 Lincoln Street, Suite 3050Denver, Colorado  80203  U.S.A.Attention:  Senior Vice President,Marketing and Strategic PlanningTelecopier: +1 (303) 839-5907

### (b)           If to Sumitomo, toit at:

Sumitomo Corporation8-11, Harumi, 1-chome,Chuo-ku, Tokyo, 104-8610 JapanAttention:General Manager, Non-Ferrous Metals& Raw Materials Dept.Telecopier: +81-3-5166-6423

## Section 6.8                Severability.  If at any time any covenant or provisioncontained herein is deemed in a final ruling of a court or other body ofcompetent jurisdiction (including an arbitral tribunal convened in accordancewith the Dispute Resolution Agreement) to be invalid or unenforceable, suchcovenant or 

14

----

 

## provision shall be considered divisible and such covenant or provisionshall be deemed immediately amended and reformed to include only such portionof such covenant or provision as such court or other body has held to be validand enforceable (provided such amended and reformed provision shall be amended,reformed and construed in a manner that reflects and carries out the provisionsand the intent of the Parties); and the Parties agree that such covenant orprovision, as so amended and reformed, shall be valid and binding as though theinvalid or unenforceable portion had not been included herein.

## Section 6.9                Amendment;Waiver.  No provision of thisAgreement may be amended or modified except by an instrument or instruments inwriting signed by the Parties and designated as an amendment or modification.  No waiver by any Party of any provision ofthis Agreement shall be valid unless in writing and signed by the Party makingsuch waiver and designated as a waiver. No failure or delay by any Party in exercising any right, power, orremedy hereunder shall operate as a waiver thereof, nor shall any single orpartial exercise thereof or the exercise of any other right, power, or remedypreclude any further exercise thereof or the exercise of any other right,power, or remedy.  No waiver of anyprovision hereof shall be construed as a waiver of any other provision.

## Section 6.10              Assignmentand Binding Effect.

### (a)           Subject to Section 6.10(b), no Partymay assign any of its rights or delegate any of its obligations under thisAgreement without (i) the prior written consent of the other Party and(ii) the complete written assumption by the assignee of all of theobligations of the assignor under this Agreement.  All of the terms and provisions of thisAgreement shall be binding on, and shall inure to the benefit of, therespective successors and permitted assigns of the Parties.

### (b)           Notwithstanding anything to thecontrary herein, the Parties acknowledge and agree that (i) Apex Sweden mayassign its rights and obligations hereunder to Apex Luxembourg, and (ii) ApexLuxembourg may then assign its rights and obligations hereunder to Apex.

## Section 6.11              NoBenefit to Others.  Except asexpressly set forth herein, the representations, warranties, covenants, andagreements contained in this Agreement are for the sole benefit of the Partiesand their respective successors and permitted assigns, and they shall not beconstrued as conferring and are not intended to confer any rights, remedies,obligations, or liabilities on any other Person, unless such Person isexpressly stated herein to be entitled to any such right, remedy, obligation,or liability.

## Section 6.12              NoConsequential Damages.  No Partyshall be liable for any punitive, multiple, or other exemplary damage or loss,or any indirect, special, incidental, or consequential loss or damage, lostprofits, loss of use, or lost revenues suffered by any other Party arising fromor relating to a Party’s performance, non-performance, breach of, ordefault under a covenant, warranty, representation, term, or condition of thisAgreement.  Each Party waives andrelinquishes claims for such punitive, multiple, exemplary, indirect, special,incidental, or consequential losses or damages, lost profits, loss of use, orlost revenues.  The limitations onliability and damages set forth in this Section 6.12 apply to all causes ofaction that may be 

15

----

 

## asserted hereunder, whether sounding in breach of contract, breach ofwarranty, tort, product liability, negligence, or otherwise.

## Section 6.13              Counterparts.  This Agreement may be executed by the Partiesin separate counterparts, each of which when so executed and delivered shall bean original, but all such counterparts shall together constitute one and thesame instrument.

## Section 6.14              Interpretation.

### (a)           As used herein, except as otherwiseindicated herein or as the context may otherwise require: (i) the words “include,”“includes,” and “including” are deemed to be followed by “without limitation”whether or not they are in fact followed by such words or words of like import;(ii) the words “hereof,” “herein,” “hereunder,” and comparable terms referto the entirety of this Agreement, and not to any particular article, section,or other subdivision hereof; (iii) any pronoun shall include thecorresponding masculine, feminine, and neuter forms; (iv) the singularincludes the plural and vice versa; (v) references to any agreement orother document are to such agreement or document as amended, modified,supplemented, and restated now or hereafter from time to time;(vi) references to any statute or regulation are to it as amended,modified, supplemented, and restated now or hereafter from time to time, and toany corresponding provisions of successor statutes or regulations;(vii) except as otherwise expressly provided in this Agreement, referencesto “Article,” “Section,” “preamble,” “recital,” or another subdivision are toan article, section, preamble, recital or subdivision hereof; and(viii) references to any Person include such Person’s respectivesuccessors and permitted assigns.

### (b)           Any reference herein to a “day” ornumber of “days” (without the explicit qualification of “Business”) shall bedeemed to refer to a calendar day or number of calendar days.  If any action or notice is to be taken orgiven on or by a particular calendar day, and such calendar day is not aBusiness Day, then such action or notice may be taken or given on the nextsucceeding Business Day.

### (c)           Any financial or accounting termsthat are not otherwise defined herein shall have the meanings given theretounder GAAP.

## Section 6.15              Rulesof Construction.  The Parties agreethat they have been represented by counsel during the negotiation, preparation,and execution of this Agreement and, therefore, waive the application of anyLaw or rule of construction providing that ambiguities in an agreement or otherdocument shall be construed against the Party drafting such agreement ordocument.

*[Remainderof page intentionally left blank]*

16

----

 

IN WITNESSWHEREOF, the Parties have executed this Agreement as of the date first writtenabove.

 
|        | APEX SILVER MINES SWEDEN AB |
|--------|-----------------------------|
|   |                        |   |
|   |                        |   |
|   | By:                         | /s/ Marcel DeGuire |
|   |                        | Marcel DeGuire |
|   | Its:                        | Marcel DeGuire Director |

 

17

----

 
|        | SUMITOMO CORPORATION |
|--------|----------------------|
|   |                 |   |
|   |                 |   |
|   | By:                  | /s/ Mitsuhiko Yamada |
|   |                 | Mitsuhiko Yamada |
|   | Its:                 | Executive Officer and General Manager,  Mineral Resources Division 1 |

 

18

----