First Majestic goes on Mexican shopping spree (August 28, 2006)

Vancouver – Junior silver producer First Majestic Resource (FR-V, FMJRF-O) will bolster its Mexican property portfolio with a few new acquisitions in the vicinity of its La Parrilla mine in Durango State.

It is purchasing the Quebradillas and Viboras silver mines plus a 3,126-hectare package of mining concessions in the La Parrilla mining district from Grupo Mexico (GMBXF-O) for US$3 million payable over two years plus a 1.5% net smelter royalty capped at US$2.5 million and purchasable by First Majestic for US$2 million.

Several old operations are included in the acquisition including the Quebradillas, El Recuerdo, La Luz and Las Vacas mines, which were developed by Grupo Mexico in the 1970s. Exploration consisted of 77 drill holes totaling over 16,800 metres in addition to development of the 1,034-metre Viboras ramp to access an orebody.

The properties host both manto-style silver-lead-zinc replacement and silver vein mineralization.

An historic resource of 551,860 tonnes of oxide mineralization grading 175 grams silver per tonne was calculated in 1981 in the El Recuerdo and Viboras zones. A further combined sulphide resource estimate of 602,595 tonnes at 235 grams silver was later tabled in 1990 on all the projects. Additionally, a tailings resource of 194,545 tonnes averaging 163 grams silver was estimated on the Vacas site. The global historic resource estimate for the project package is 1.35 million tonnes grading 200 grams silver, 0.16 gram gold per tonne, 2.75% lead and 2.6% zinc.

First Majestic is eager to advance on the mineralized zone in the fully developed mining ramp, anticipating it could contribute significantly to its milling operation at La Parrilla.

The company is nearing completion of its new 800-tonne-per-day mill facility at La Parrilla, replacing the old 180-tonne-per-day mill. The new mill will be brought on-stream in two 400-tonne-per-day lines to allow for continual operation.

First Majestic’s recommenced production at La Parrilla silver mine in mid-2004 and the company anticipates annualized production of about 1.3 million oz. La Parrilla had operated from 1956 to 1999, when it was shut down due to low silver prices. Estimated production over the 43 years period is about 700,000 tonnes of ore averaging 300 grams silver per tonne, 1.5% lead and 1.5% zinc.

Earlier this year, the company closed a $28 million financing consisting of 7 million special warrants at $4 apiece. The bulk of the funds were earmarked for its acquisition of a 63% interest in First Silver Reserve (FSR-T, FSLVF-O) that operates the San Martin silver mine in Mexico’s Jalisco State. The companies have subsequently entered into an agreement whereby First Silver Reserve will merge into First Majestic.

With its 42 million shares outstanding, First Majestic posts a market capitalization of $168 million based on its recent $4.00 trading price. The stock has 52-week range of $1.84-to-$7.05.