Silver Price: $20.67
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Second Quarter Silver Production Increases

July 26, 2007

FIRST MAJESTIC SILVER CORP. (First Majestic or the “Company”) is pleased to announce that silver production in the second quarter ending June 30th, 2007 has increased by 13% over the prior quarter to 852,721 equivalent ounces of silver which is also an increase of 298% over the same quarter ending June 2006.

The increase is primarily due to a 259% increase in production, compared with the same quarter in 2006, at the Company’s flagship La Parrilla Silver Mine. La Parrilla’s production of silver equivalent is also up 37% from the first quarter ending March 31, 2007. Also, at the La Encantada Silver Mine, production increased 12% over the prior quarter and 85% over the quarter ended December 31, 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% from the previous quarter. Management is confident that increases in silver production will continue into the third and fourth quarters and that production levels will meet targets for these periods.

Production for this quarter was under target due to equipment replacements that were required at the La Parrilla and La Encantada mills. In April, the primary and secondary crushers at La Parrilla were replaced to accommodate the increased production being fed through the mill. The new La Parrilla crushers have a daily capacity of 1400tpd which exceeds the overall mill capacity of 800tpd. At La Encantada, one of the power plants was repaired in April and May, again as a result of running the operation at higher capacities. The older equipment was required to be replaced and thus a new power plant was purchase in June and is being installed to accommodate the increased production levels. The La Encantada mill is now running at 80% capacity, an improvement from 30% in November 2006 when First Majestic took over operations of La Encantada.

Complementing the seven pieces of underground Trucks, Scoop Trams and Jumbo purchased in 2006, a new agreement was signed with Sandvik AB to acquire an additional eleven underground machines. Two pieces have already arrived and all equipment will arrive prior to December. This underground mining equipment will be spread throughout the Company’s three mines. These new machines are larger and more efficient then what is presently being used and will assist in further optimizing the operations. As part of the agreement, First Majestic and Sandvik agreed on a financing facility which spreads the payments out over the next two years.

Reserve and Resource development remains to be a high priority of the Company. Presently nine drill rigs are operating; six at La Parrilla and three at San Martin Silver Mine. Two additional rigs are on the way to San Martin and should be mobilized within two weeks. In addition, two drill rigs are being added at La Encantada; one this month and the second in August. During the quarter, all three mines received newly updated NI 43-101 Resource estimates. Management was pleased to see the Reserve and Resource development and estimates at both the La Parrilla and La Encantada were well ahead of expectations. Also, a total of 8,379 meters of diamond drilling was completed over 28 holes at La Parrilla and 693 metres of diamond drilling over 12 holes was completed at San Martin during the quarter. Significant underground development is also continuing at all three operations with a total of 4,985 meters being completed during the quarter. This activity is ongoing and is for the purpose of mining activity, grade control, development of additional resources and exploration. In addition, during the quarter an IP and AR Geophysics program of approximately 50 km commenced on the newly acquired land package surrounding the La Parrilla mine.

The following summary tables were taken from the completed La Parrilla Silver Mine, San Martin Silver Mine and La Encantada Silver Mine NI 43-101 Technical Reports prepared by QPs Leonel López, CPG-Principal Geologist and Richard Addison, PE, C.Eng., Principal Process Engineer, both of Pincock Allen & Holt, Lakewood, Colorado (PAH). These three properties are wholly-owned by First Majestic. It should be noted that Proven and Probable Mineral Reserves and Total Measured + Indicated Resources and Total Inferred Resources in the tables below are exclusive of each other and are not combined. The calculation of Measured + Indicated Resources assumes 100 percent “in situ” resources and does not include mine dilution, nor mine and metallurgical recovery. All estimates based on Minimum Mining Width > 2.00m. No mine recovery included. Inferred resources are presented in rounded figures. All silver grades are reported in grams per metric tonne, while Pb and Zn are reported in percentage (%). All Reserve / Resource estimates have been prepared in accordance with Best Practice Guidelines adopted by CIM on November 14, 2004, as amended.

Reserves (Proven and Probable)



Silver Grade (g/t)

Silver Only (oz)

Silver Including Credits (oz)

La Parrilla Silver Mine (A)





San Martín Silver Mine (B)





La Encantada Silver Mine (C)







Resources (Measured + Indicated)



Silver Grade (g/t)

Silver Only (oz)

Silver Including Credits (oz)

La Parrilla Silver Mine (A)





San Martín Silver Mine (B)





La Encantada Silver Mine (C)







Resources (Inferred)



Silver Grade (g/t)

Silver Only (oz)

Silver Including Credits (oz)

La Parrilla Silver Mine (A)





San Martín Silver Mine (B)





La Encantada Silver Mine (C)







(A) La Parrilla Silver Mine
(1) Silver equivalent based on sales. Prices used for evaluation: Ag — US$10/oz; Au — US$570/oz; Pb — US$0.50/lb.
(2) Oxides Ag equivalent includes Gold Credit based on FMRM sales. Au Credit = 0.15 g/tonne Au X Met. Rec X Payable Au X Au price = $1.61 = 5 g/tonne Ag.
(3) Sulphides Ag equivalent includes Pb credit = 20.6 g/tonne Ag. Pb Credit = (1.00 X 2204/100) X 0.70 X 0.85 X US$0.50 = US$6.61/tonne.
(4) Cut Off Grade estimated as 225 g/tonne Ag net of Au credit in oxide ores; and 235 g/tonne Ag net of Pb credit in sulphide ores. Zinc not considered.
(B) San Martín Silver Mine
(1) Mineral Reserves are estimated as Mineable Reserves, including estimates of mine dilution and recovery in addition to 8 % credit for Au and Pb based on sales records for 2006. These reserves do not include metallurgical recovery.
(2) Silver equivalent ounces are 8 % of the silver content, based on the contribution of Pb and Au to revenue for 2006.
(3) The resources categories in the PAH Technical Report used an economic cut-off grade based solely on silver for the total operating costs and process recoveries of 5.84 oz Ag/tonne or 182g Ag/tonne. PAH’s economic breakeven cut-off grade including the gold & lead contribution for 2006 of 8 % of silver sales, converted to an equivalent silver grade was 5.38 oz Ag equivalent/tonne or 167g Ag Eqv/tonne. In order to report the equivalent silver values, 182 g/tonne Ag was used in the report and the silver equivalent values are calculated according to the following formula: Ag Eqv. oz. = $52(($10.00x0.891)+$0.75), where $0.75 is equivalent to 8% of silver sales as contribution of Pb + Au for 2006; $52 is total operating cost per tonne and $10 is the price per Ag ounce.
(4) Inferred resources are estimated as silver only for oxidized mineralization, including 8% contribution for Pb and Au, based on sales records.
(5) Inferred resources in sulfides mineralization are estimated as silver equivalent with contributions by Pb and Zn based on prices as follows: Ag-$10/oz; Pb-$0.50/lb and Zn-$1.50/lb, or the equivalent of Pb-1%=34 g Ag/tonne, and Zn-1%=103 g Ag/tonne. These resource estimates are “in situ” resources and do not include mine dilution, mine and metallurgical recoveries, nor freight, or smelter and refining charges.
(C) La Encantada Silver Mine
(1) Cut Off Grade estimated as 271 g/tonne Ag only; and 262 g/tonne Ag eq net of Pb credit. (COG=Operating Costs / Ag $10/oz X Mill Recovery X Smelter Payment).
(2) Silver equivalent includes Pb credit, at prices US$10/oz-Ag, $0.50/lb-Pb. Pb credit=9 g/tonne-Ag. (Pb revenue) = (Pb in concentrates X 63% X 0.50/lb). Pb credit = 9 g/tonne Ag.
(3) Mining dilution is included at a minimum mining width of 2.00m. Estimates do not include mining recovery.
(5) Zinc is not recovered at this time.
(6) Dump stockpile included in Measured Resource.
(7) La Morena sulphides deposit requires additional test work.

Presently, all drilling activity at the San Martin is taking place from underground areas. This drill program is focusing on developing oxide resources in the upper parts of the mine. During the quarter, surface geological mapping was taking place to define diamond drill targets in the North-South structural system where some intersections of high grade silver ore are indicating new areas of interest. Also, a new exploration target in the Rosario-Condesa system was defined (Cinco Senores) where some old workings were discovered. The two drill rigs arriving shortly will be focusing on these areas from surface.

At La Encantada, a total of 744 metres of pressure drilling was completed in the tailing ponds. A 50 meter grid consisting of 49 holes was drilled into Tailings Pond 1 & 2. The purpose of this program was to define additional resources which were not included in the last NI 43-101 report. Initial metallurgical tests completed by SGS de Mexico, SA de CV., lab in Durango City confirmed the possibility of economically recovering the silver contained in these tailings ponds. An economic evaluation is currently underway to evaluate the feasibility of adding a cyanidation circuit to the mill and what level of expansion would be most optimal.

At the Company’s recently acquired San Juan and Perseverancia silver mines located in Chalchihuites about 60 kilometres away from the La Parrilla, mine development and exploration is continuing. A 600 metre ramp is under construction at San Juan, with 300 metres completed to date. 50 tonnes of high grade ore is being removed from the mine daily and being shipped to the La Parrilla mill. The final payment for the Perseverancia was made in the quarter ending June 30, resulting in the Company now owning 100% of this high grade silver mine. This past-producing mine is presently being upgraded and rehabilitated to start production on its high grade chimney areas. Ore production is expected to start at the Perseverancia in the latter half of the third quarter at a rate of 50 tonnes per day. This ore will be shipped to the La Parrilla mill for processing.

Also in the quarter the Company was pleased to receive the permit for the construction of a new tailings dam for the La Parrilla mine. Construction of this new dam began in the second week of May and is expected to be completed within 6 months.

First Majestic is a producing silver company focused in México 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, visit our website at or call our toll free number 1.866.529.2807.



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 Silver 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 does not accept responsibility for the adequacy or accuracy of this release.