In all likelihood Apex Silver Mines (SIL-X) will soon be off the big board and its ability to carry on as a going-concern is also in serious doubt.
NYSE Alternext told the Denver-based company that it is not in compliance with the Exchange’s continued listing standards.
The exchange noted that the losses the company has sustained are so substantial relative to its operations or financial resources that it appears “questionable” as to whether it can carry-on and or meet its obligations as they mature.
Apex shares had begun the year trading in the US$15 range, but as of Dec. 30, they were trading for just 67¢ in New York.
The companies problems stem from a combination of the heavy amounts of leverage it used to build the San Cristobal mine in Bolivia, a terrible hedge book that was connected to such borrowing, and collapsing metal prices.
San Cristobal is a world class silver and zinc mine, but when prices of the metals fell, the company found itself having to take massive write-downs on its balance sheet.
In an attempt to right the ship, it sold the mine to its minority partner, Sumitomo, for just US$22.5 million, with Sumitomo taking over the hedge book and some of its debt.
The deal allowed for Apex to stay on as manager of the mine for at least one year.
Compounding the company’s woes is the fact that it had issued convertible debt totaling US$290 million. Apex’s ability to pay out that debt is now in doubt.
The direness of the situation left Apex to say that it doesn’t expect to regain compliance with the NYSE and says delisting of the company’s ordinary shares will likely begin early in January of 2009.
Once de-listed its ordinary shares will likely begin to trade on the over-the-counter market.
Apex also clarified that delisting will not effect the company’s reporting obligations under the rules of the Securities and Exchange Commission.
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