First Majestic lines up $20M financing

Vancouver — Junior silver producer First Majestic Resource (FR-V, FMJRF-O) has arranged a $20-million bought-deal financing aimed at expanding its operations in Mexico.

Sprott Securities, the underwriter on the deal, will purchase 5 million special warrants at $4.00 apiece. Each special warrant will consist of a common share and half a warrant, with each full warrant exercisable at $5.00 for 18 months. Sprott holds a “greenshoe” over-subscription option for an additional 2 million special warrants at the same price until the closing date of the financing, scheduled for mid-April.

First Majestic’s La Parrilla silver mine, located near Durango, Mexico, restarted production in mid-2004 at 180 tonnes per day and is undergoing upgrades to boost underground operations to the 600-tonne-per-day level. The company anticipates annual production of about 1.3 million oz. silver by mid-2006.

La Parrilla had operated from 1956 to 1999, when it was shut down due to low silver prices. Estimated production over the 43-year period is about 700,000 tonnes of ore averaging 300 grams silver per tonne, 1.5% lead and 1.5% zinc.

The company also holds the Dios Padre silver mine in eastern Sonora state, which has seen historic production from underground workings dating back to the 1700s. An underground evaluation program, mapping and sampling will be followed by drilling to determine whether the project holds enough resources to restart production. A 2002 study on Dios Padre estimated an unqualified (non-Instrument 43-101-compliant) resource of about 3.5 million tonnes grading 465 grams silver.

Other First Majestic silver project acquisitions in Mexico include the Candamena property in Chihuahua state and the Chalchihuites group of properties located about 60 km southeast of the La Parrilla mine. The Chalchihuites group includes four past-producing silver mines (Perseverancia, San Juan, La Esmeralda and Magistral).

First Majestic posts a market capitalization of $132 million based on its 31.1 million shares outstanding and recent $4.25 trading price.