First Majestic rises on Del Toro intercept (October 29, 2008)

Vancouver – After disappointing silver production numbers for the third quarter pushed First Majestic Silver‘s (FR-T) share price below $1, a whopper hole proving a new massive sulphide body at the Del Toro mine in Mexico seems to be turning the tide.

In mid-July First Majestic announced that hole SSJ-04 hit a new massive sulphide body at depth under the old San Juan mine. The discovery hole returned 74.2 metres grading 359 grams silver per tonne, 7.07% lead, and 7.6% zinc.

To get a handle on the size of this new body the company drilled hole SSJ-08 perpendicular to SSJ-04. The new hole first passed through the two massive sulphide bodies that sit above the new discovery and showed that they join at depth, returning 29.4 metres grading 312 grams silver, 4.222 % lead, and 2.2% zinc from 358 metres depth.

Then, starting 420 metres downhole, the drill hit the new sulphide body and pulled out 62.1 metres averaging 422 grams silver, 6.29% lead, 6.78% zinc, and 0.74 gram gold per tonne. The intercept included 1,191 grams silver, 9.96% lead, and 12.42% zinc over 6.2 metres as well as 8.2 metres grading 1,238 grams silver, 13.78% lead, and 31.4% zinc.

The newly-discovered orebody consists of replacements and veins of massive galena and sphalerite with high silver content and disseminated mineralization in the contact between the skarn and the intrusive rock, which carries the low gold values.

The Del Toro silver mine, known until recently as the Chalchihuites group of properties, is in the Chalchihuites mining district in Zacatecas state. The 400-hectare property covers two historic mines: Perseverancia and San Juan. Importantly for First Majestic, Del Toro is 60 km southeast of the company’s flagship La Parrilla silver mine.

Mineralization at Del Toro consists of veins, mantos, and brecciated pipes, chimneys, and stockwork zones, with oxidized upper zones and sulphide mineralization at depth. First Majestic has spent three years on an aggressive development and exploration program at the property, completing 56 drill holes totalling almost 12,000 metres and clearing or developing over 1,200 metres of declines, drifts, ramps, and raises.

First Majestic recently calculated a resource estimate for Del Toro, which pegged measured and indicated resources at 1.4 million tonnes grading 269 grams silver, 4.69% lead, and 4.8% zinc and added 1.8 million tonnes grading 306 grams silver, 5.77% lead, and 5.94% zinc in the inferred category. The estimate does not include results from hole SSJ-08, which are expected to add significantly to the count.

Underground drilling is ongoing in the San Juan area, aimed at defining the deep and western extensions of these three orebodies, which all remain open. Underground development is also continuing at both Perseverancia and San Juan.

In mid-October First Majestic announced its silver production numbers for the third quarter. A nasty wet season in Mexico disrupted production significantly: silver equivalent production was down 34%. However the company says it is en route to record production in 2009 with mill capacity upgrades at its three mines.

The San Martin mine, 250 km north of Guadalajara, and the La Parrilla operation will be expanded slightly, from 800 to 1,000 tonnes per day. Daily capacity at La Encantada, in Coahuila State, is being increased from 800 to 3,500 tonnes.

First Majestic gained 30 in the two days following its news from Del Toro to close at $1.22. The company has a 52-week trading range of 87 to $5.75 and has 73.8 million shares issued.