Highlights from 2nd Quarter Financial Statements
August 30, 2007
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Overall Operating Performance and Highlights
• Sales revenue for the quarter ended June 30, 2007 increased to $10,846,344, reflecting sales of 801,324 equivalent ounces of silver in the quarter, and representing a 7% increase from the prior quarter’s revenues of $10,158,621 and a 298% increase over revenues of $2,725,624 for the same quarter in the prior calendar year ended June 30, 2006.
• Mine earnings (excluding amortization and depreciation) continued positively in the quarter. Mine earnings (excluding amortization and depreciation) were $2,699,669, and $6,075,400 for the six months ended June 30, 2007.
• Direct cash costs per ounce of silver (see Non-GAAP measures below) decreased to US$6.59 per ounce for the quarter ended June 30, 2007, from US$6.90 per ounce from the prior quarter. This cash costs disclosure reflects the Company’s revised calculation of cash costs to align this measure with industry standards (see Non-GAAP Measure, below).
• Silver production in the second quarter ending June 30, 2007 has increased to 852,721 equivalent ounces of silver, an increase of 13% over the prior quarter production of 753,442 equivalent ounces of silver, which is also an increase of 298% over the same quarter ending June 2006. The equivalent silver production for the quarter consisted of 782,674 ounces of silver an increase of 9% over the previous quarter, 604 ounces of gold and 534,324 pounds of lead, showing an increase respectively of 16% and 63% on the previous quarter.
• Net loss for the quarter ended June 30, 2007 decreased to $1,227,422 representing a 60% decrease from the prior quarter’s net loss of $3,061,899, and a decrease of 61% from the prior year’s net loss of $3,151,859 for the same quarter.
• The Company completed three new NI 43-101 technical reports, one for each of its primary producing mines. As a result, at June 30, 2007, these reports indicated combined Proven and Probable Reserves of 17,012,762 ounces of silver equivalent; combined Measured and Indicated Resources of 41,751,766 ounces of silver equivalent, and combined Inferred Resources of 68,465,698 ounces of silver equivalent. The different categories of Reserves and Resources are non-inclusive of one another and thus are shown separately and not combined.
• During the period, the Company completed a private placement of special warrants for gross proceeds of $34,415,000. A total of 6,883,000 special warrants were sold at a price of $5.00 per special warrant through Cormark Securities Inc. (formerly Sprott Securities Inc.) and CIBC World Markets Inc. (as co-lead underwriters) and Blackmont Capital Inc. The Company filed a short form prospectus dated July 25, 2007 qualifying the distribution of 6,883,000 common shares and 3,441,500 share purchase warrants issued upon the exercise of 6,883,000 special warrants.
• Year to date silver production at June 30, 2007 is 1,618,689 equivalent ounces of silver, compared to 273,651 equivalent ounces of silver for the two quarters ended June 30, 2006. The Company’s increase in production is due to a 259% increase in production at the Company’s flagship La Parrilla Silver Mine compared with the same period in 2006, or by 37% compared to the previous quarter. Production has also increased significantly due the acquisitions of the San Martin Silver Mine and the La Encantada Silver Mine, completed in the quarters ending September 2006 and December 2006, respectively.
• A combined total of 9,716 metres of drilling was completed during the quarter. This ongoing drill program which includes 11 rigs presently operating is focusing on upgrading and defining resources for the upcoming NI 43-101 reports to be published prior to year end.
• Significant underground development consisted of a combined total of 4,985 meters in the quarter for all three mines. In addition there have been significant improvements and upgrades carried out at each mill. This ongoing program of enhancements will continue for the balance of the year and is focused on increasing the Company’s silver production in each of the following quarters.
It should be noted that certain financial results regarding operations, cash costs and average realized revenues were reclassified to conform to peer company presentation standards which required historical comparatives to be adjusted.
Management is very encouraged by the continued positive results coming from the mining operations. Keith Neumeyer, President & CEO states, “Over the past year, the ongoing work at our mines is beginning to yield positive financial results. We anticipate that these improvements will progress in the coming quarters and that increases in silver production and optimization of our operations will continue.”
First Majestic is a producing silver company focused in Mexico and is aggressively pursuing its business plan to become a senior silver producer through the development of its existing assets and the pursuit through acquisition of additional assets that contribute to achieving its corporate growth objectives.
FOR FURTHER INFORMATION contact info@firstmajestic.com, visit our website at www.firstmajestic.com or call our toll free number 1.866.529.2807.
FIRST MAJESTIC SILVER CORP.
“signed”
Keith Neumeyer,
President & CEO
This press release includes certain “Forward-Looking Statements” within the meaning of section 21E of the United States Securities Exchange Act of 1934, as amended. All statements, other than statements of historical fact, included herein, including without limitation, statements regarding potential mineralization and reserves, exploration results and future plans and objectives of First Majestic Resource Corp. are forward-looking statements that involve various risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements.
Cautionary Notes to U.S. Investors Concerning Reserve and Resource Estimates
The definitions of proven and probable reserves used in National Instrument 43-101 — Standards of Disclosure for Mineral Projects (“NI 43-101”) differ from the definitions in the United States Securities and Exchange Commission (“SEC”) Industry Guide 7. Under SEC Guide 7 standards, a “Final” or “Bankable” feasibility study is required to report reserves, the three year history average price is used in any reserve or cash flow analysis to designate reserves and the primary environmental analysis or report must be filed with the appropriate governmental authority.
In addition, the terms “mineral resource”, “measured mineral resource”, “indicated mineral resource” and “inferred mineral resource” are defined in and required to be disclosed by NI 43-101; however, these terms are not defined terms under SEC Industry Guide 7 and normally are not permitted to be used in reports and registration statements filed with the SEC. Investors are cautioned not to assume that any part or all of mineral deposits in these categories will ever be converted into reserves. “Inferred mineral resources” have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of feasibility or pre-feasibility studies, except in rare cases.
The TSX Venture Exchange has in no way passed upon the merits of the proposed transaction and the TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.