**EXHIBIT10.1**

SEPARATION AGREEMENT AND RELEASE

ThisSeparation Agreement and Release (“Agreement”) is made between (i) Mark A.Lettes (“Employee”) and (ii)  Apex Silver Mines Corporation (the “Company”).  Employee and the Company are referred tocollectively as the “Parties” and individually as a “Party.”  The Effective Date of this Agreement will beas set forth in Section 1.

RECITALS

WHEREAS,Employee’s employment with the Company ended effective June 10, 2006.

WHEREAS,the Parties wish to resolve fully and finally any potential disputes regardingEmployee’s employment with the Company and any other potential disputes betweenthe Parties; and

WHEREAS,in order to accomplish this end, the Parties are willing to enter into thisAgreement.

NOWTHEREFORE, in consideration of the mutual promises and undertakings containedherein, the Parties to this Agreement agree as follows:

TERMS

1.             Separation and Effective Date. Employee’s employment with the Company ended effective June 10,2006.  This Agreement will becomeeffective (the “Effective Date”) on the eighth day after Employee’s executionof this Agreement, provided that Employee has not revoked his acceptancepursuant to Paragraph 7(g) below.

2.             Payments.

a.             The Company will continue to pay Employee’ssalary until June 30, 2006.

b.             On the Effective Date, the Company willpay to Employee the gross sum of $307,995, comprised of (i) $247,695,representing all amounts to which Employee is entitled pursuant to theSeverance Compensation Plan of Apex Silver Mines Corporation and (ii) $60,300,representing all amounts to which Employee would have been entitled pursuant tothe Apex Silver Mines Limited Incentive Bonus Plan**,** prorated through June 30, 2006.

c.             On the date hereof, the Company andEmployee will enter into an agreement (the “Restricted Shares AmendmentAgreement”) in the form attached hereto as Exhibit A.  The Restricted Shares Amendment Agreementwill become effective on the Effective Date and will amend certain agreementsregarding the grant of 7,800 ordinary shares of Apex Silver Mines Limited (“Apex”)pursuant to the 2004 Equity Incentive Plan (the “Incentive Plan”) to providethat (i) the restrictions will lapse with respect to those shares on theEffective Date

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and (ii) the Company willdeliver to Employee on or before the third business day following the EffectiveDate (the “Delivery Date”) a certificate representing 7,800 ordinary shares ofApex.

d.             On the date hereof, the Company andEmployee will enter into an agreement (the “Stock Option Amendment Agreement”)in the form attached hereto as Exhibit B, effective on the Effective Date, thatamends certain agreements regarding the grant of options under the Apex SilverMines Limited Employees’ Share Option Plan (the “Employees’ Plan”)  and the Incentive Plan to provide that theoptions set forth below will vest on the Effective Date and remain exercisableuntil June 30, 2009.
| **Date of Grant** | ** ** | **Number of  Options** | ** ** | **Exercise Price** | ** ** | **Vesting Dates*** | ** ** | **Expiration Date*** | ** ** |
|-----------------------------|------------|-----------------------------|------------|-------------------------|------------|-------------------------|------------|---------------------------|------------|
| 12/4/2002                   |       | 6,250                       | (1)        | $                       | 14.12      |                    | 12/4/2006  |                      | 12/4/2012  |   |
|                        |       |                        |       |                    |       |                    |       |                      |       |
| 12/10/2003                  |       | 12,500                      | (2)        | $                       | 16.95      |                    | 12/10/2006 |                      | 12/10/2013 |   |
|                        |       |                        |       |                    |       | 12/10/2007              |       |                      |       |
|                        |       |                        |       |                    |       |                    |       |                      |       |
| 12/9/2004                   |       | 7,500                       | (3)        | $                       | 16.68      |                    | 12/9/2006  |                      | 12/9/2014  |   |
|                        |       |                        |       |                    |       | 12/9/2007               |       |                      |       |
|                        |       |                        |       |                    |       | 12/9/2008               |       |                      |       |
|                        |       |                        |       |                    |       |                    |       |                      |       |
| 12/8/2005                   |       | 21,000                      |       | $                       | 18.01      |                    | 12/8/2006  |                      | 12/8/2015  |   |
|                        |       |                        |       |                    |       | 12/8/2007               |       |                      |       |
|                        |       |                        |       |                    |       | 12/8/2008               |       |                      |       |
|                        |       |                        |       |                    |       | 12/8/2009               |       |                      |       |

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*      Prior to execution of the Stock OptionAmendment Agreement.

(1)   18,750 options have already vested andalso will remain exercisable until June 30, 2009.

(2)   12,500 options have already vested andalso will remain exercisable until June 30, 2009.

(3)   2,500 options have already vested andalso will remain exercisable until June 30, 2009.

e.             After the Effective Date, the Companywill pay, on Employee’s behalf, twelve (12) months (commencing June 30, 2006)of COBRA medical and dental insurance benefits, equivalent to such benefits asof Employee’s separation date, at the rate of 100% for Employee and at the rateof 100% for Employee’s spouse, to be paid by the Company to the applicableinsurance company(s).  Employee is solelyresponsible for all payments in respect of any COBRA benefits for periodsfollowing June 30, 2007.

f.              Reporting of and withholding anyconsideration provided under this paragraph 2, including the Restricted SharesAmendment Agreement and the Stock Option Amendment Agreement, for tax purposeswill be at the discretion of the Company in conformance with applicable taxlaws.  If a claim is made against theCompany for any additional tax or withholding in connection with or arising outof the payment pursuant to this Agreement, the Restricted Shares AmendmentAgreement or the Stock Option Amendment Agreement, Employee will pay any suchclaim within thirty (30) days of being notified by the Company and agrees toindemnify the Company and hold it harmless against such claims, including butnot limited to any taxes, attorneys’ fees, penalties and/or interest, which areor become due from the Company.

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3.             General Release.

a.             Employee, for himself and for hisaffiliates, successors, heirs, subrogees, assigns, principals, agents,partners, employees, associates, attorneys and representatives, voluntarily,knowingly and intentionally releases and discharges the Company and itspredecessors, successors, parents, subsidiaries, affiliates and assigns andeach of their respective officers, directors, principals, shareholders, agents,attorneys, board members, and employees from any and all claims, actions,liabilities, demands, rights, damages, costs, expenses, and attorneys’ fees(including but not limited to any claim of entitlement for attorneys’ feesunder any contract, statute, or rule of law allowing a prevailing party orplaintiff to recover attorneys’ fees), of every kind and description from thedate Company hired Employee through the Effective Date (the “Released Claims”).

b.             The Released Claims include but are notlimited to those which arise out of, relate to, or are based upon: (i) Employee’semployment with the Company or the termination thereof; (ii) statements, actsor omissions by the Parties whether in their individual or representativecapacities, (iii) express or implied agreements between the Parties, (except asprovided herein) and claims under any severance plan, (iv) any stock or stockoption grant, agreement, or plan, (v) all federal, state, and municipalstatutes, ordinances, and regulations, including but not limited to claims ofdiscrimination based on race, age, sex, disability, whistleblower status,public policy, or any other characteristic of Employee under the AgeDiscrimination in Employment Act, the Older Workers Benefit Protection Act, theAmericans with Disabilities Act, the Equal Pay Act, Title VII of the CivilRights Act of 1964 (as amended), the Employee Retirement Income Security Act of1974, the Rehabilitation Act of 1973, the Worker Adjustment and RetrainingNotification Act, or any other federal, state, or municipal law prohibitingdiscrimination or termination for any reason, (vi) state and federal commonlaw, and (vii) any claim which was or could have been raised by Employee.

4.             Unknown Facts. This Agreement includes claims of every nature and kind, known orunknown, suspected or unsuspected. Employee hereby acknowledges that he may hereafter discover factsdifferent from, or in addition to, those which he now knows or believes to betrue with respect to this Agreement, and he agrees that this Agreement and thereleases contained herein shall be and remain effective in all respects,notwithstanding such different or additional facts or the discovery thereof.

5.             No Application. Employee agrees that he will not apply for any job or position as anemployee, consultant, independent contractor, or otherwise, with theCompany.  Employee warrants that no suchapplications are pending at the time this Agreement is executed.

6.             No Admission of Liability. The Parties agree that nothing contained herein, and no action taken byany Party hereto with regard to this Agreement, shall be construed as anadmission by any Party of liability or of any fact that might give rise toliability for any purpose whatsoever.

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7.             Warranties.  Employeewarrants and represents as follows:

a.             He has read this Agreement, and he agreesto the conditions and obligations set forth in it.

b.             He voluntarily executes this Agreementafter having been advised to consult with legal counsel and after having hadopportunity to consult with legal counsel and without being pressured orinfluenced by any statement or representation or omission of any person actingon behalf of the Company including, without limitation, the officers,directors, board members, committee members, employees, agents and attorneysfor the Company.

c.             He has no knowledge of the existence ofany lawsuit, charge, or proceeding against the Company or any of its officers,directors, board members, committee members, employees, or agents arising outof or otherwise connected with any of the matters herein released.

d.             He has not previously disclosed anyinformation which would be a violation of the confidentiality provisions setforth in Paragraph 8 below if such disclosure were to be made after theexecution of this Agreement.

e.             He has full and complete legal capacityto enter into this Agreement.

f.              He has had at least 21 days to considerthis Agreement.  In the event that Employeeexecutes this Agreement prior to the 21st day after receipt of it, he expressly intendssuch execution as a waiver of any rights he has to review the Agreement for thefull 21 days.  In such event, Employeerepresents that such waiver is voluntary and made without any pressure,representations, or incentives from the Company for such early execution.

g.             He may revoke this Agreement for 7 daysfollowing its execution, and this Agreement shall not become enforceable andeffective until 7 days after such execution. If Employee chooses to revoke this Agreement, he must provide writtennotice to Jerry Danni, Apex Silver Mines Corporation, 1700 Lincoln Street,Suite 3050, Denver, Colorado 80203, by hand delivery and by facsimile to (303)839-5907 within 7 calendar days of Employee’s execution of this Agreement.  If Employee does not revoke within the 7 dayperiod, the right to revoke is lost.

h.             He admits, acknowledges, and agrees thathe is not otherwise entitled to the consideration set forth in Paragraph 2, andthat consideration is good and sufficient consideration for thisAgreement.  He admits, acknowledges, andagrees that the consideration set forth in Paragraph 2 above represents fulland final payment of all wages, compensation, bonuses, stock, stock options, orother benefits from the Company which are or could be due to him under theterms of his employment with the Company or otherwise.

8.             Confidential Information. Except as herein provided, all discussions regarding this Agreement,including, but not limited to, the amount of consideration, offers,counteroffers or other terms or conditions of the negotiations or the agreementreached, will be kept confidential by Employee from all persons and entitiesother than the Parties to this

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Agreement.  Employee may disclose the amount received inconsideration of the Agreement only if necessary (i) to discuss with his legaland accounting advisors, (ii) for the limited purpose of makingdisclosures required by law to agents of the local, state or federalgovernments, (iii) for the purpose of enforcing any term of thisAgreement, or (iv) in response to compulsory process, and only then aftergiving the Company ten days advance notice, or immediately in the event that hedoes not have 10 days to provide notice, of the compulsory process andaffording the Company the opportunity to obtain any necessary or appropriateprotective orders.  Employee will notuse, nor disclose to any third party, any of the Company’s business, personnel,or financial information that Employee learned during his employment with theCompany that is not in the public domain. Employee hereby expressly acknowledges that any breach of this Paragraph8 shall result in a claim for injunctive relief and/or damages against Employeeby the Company, and possibly by others.

9.             Non-Disparagement.

a.             Employee agrees not to make to any personany statement that disparages the Company or reflects negatively on theCompany, including, but not limited to statements regarding the Company’sfinancial condition, employment practices, or its officers, directors, boardmembers, employees, or affiliates.

b.             Employee expressly acknowledges that anybreach of this Paragraph 9 by Employee may result in a claim for injunctiverelief and or damages against the other Party.

10.           Return of Company Property andInformation.  Employee represents and warrants that, priorto his execution of this Agreement, he has returned to the Company any and allproperty, documents and files, including any documents (in any recorded media,such as papers, computer disks, copies, photographs, maps, transparencies, andmicrofiche) that relate in any way to the Company or the Company’s businessthat is not in the public domain.  Exceptas otherwise provided herein, Employee agrees that, to the extent that hepossesses any files, data, or information relating in any way to the Company orthe Company’s business on any personal computer, he will delete those files,data, or information (and will retain no copies in any form).  Employee also has returned any Company tools,equipment, calling cards, credit cards, access cards or keys, any keys to anyfiling cabinets, vehicles, vehicle keys, and all other Company property in anyform prior to the date he executes this Agreement.

11.           No Solicitation. Employee agrees not to interfere with the relationship between theCompany and its affiliates and any current or future employee of the Companyand its affiliates, including soliciting, inducing, enticing, hiring,employing, or attempting to solicit, induce, hire or employ any current orformer employee of the Company and its affiliates for two years following theEffective Date.

12.           Severability. If any provision of this Agreement is held illegal, invalid, orunenforceable, such holding shall not affect any other provisions hereof.  In the event any provision is held illegal,invalid or unenforceable, such provision shall be limited so as to effect theintent of the Parties to the fullest extent permitted by applicable law.  Any claim by Employee against the Companyshall not constitute a defense to enforcement by the Company.

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13.           Assignment.  The Companymay assign its rights under Paragraphs 8, 9 and 11 of this Agreement.  No other assignment is permitted except bywritten permission of the Parties.

14.           Enforcement. The releases contained herein do not release any claims for enforcementof the terms, conditions or warranties contained in this Agreement.  The Parties will be free to pursue anyremedies available to them to enforce this Agreement.

15.           Entire Agreement. This Agreement, the Restricted Shares Amendment Agreement, and the StockOption Amendment Agreement are the entire agreement between the Parties.  These four agreements supersede any and allprior oral or written promises or agreements between the Parties, and Employeeacknowledges that he has not relied on any promise, representation, orstatement other than those set forth in those agreements.  This Agreement cannot be modified except inwriting signed by all Parties.

16.           Venue and Applicable Law. This Agreement shall be interpreted and construed in accordance with thelaws of the State of Colorado, without regard to its conflicts of lawprovisions.  Venue shall be in thefederal or state courts in Colorado.

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IN WITNESSWHEREOF, the Parties have executed this Separation Agreement and Release on thedates written below.
| EMPLOYEE                       |                  |         |
|--------------------------------|-----------------------|--------------|
|                           |                  |         |
|                           |                  |         |
| /s/ Mark A.  Lettes            |                  | June 9, 2006 |   |
| Mark A. Lettes                 |                  | Date         |
|                           |                  |         |
|                           |                  |         |
| THE COMPANY                    |                  |         |
|                           |                  |         |
|                           |                  |         |
| /s/ Jeffrey G.  Clevenger      |                  | June 9, 2006 |   |
| Apex Silver  Mines Corporation |                  |         | Date |
| By:                            | Jeffrey G.  Clevenger |         |   |
| Title:                         | President             |         |   |
|                                |                       |              |  |  |  |

 

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