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First Majestic is Producing “Green” Silver

In the mining industry, going green is generally a phrase reserved for companies whose share price has reached a new 52 week high. However, Vancouver based First Majestic Silver Corp. is leading the charge to bring metals producers up to the same standards the rest of the world has been striving for since we first started separating paper from plastic.

First Majestic, founded in 2003 operates three producing silver mines in Mexico and trades under the symbol FR on the Toronto Stock Exchange. The La Parrilla Silver Mine, operated by their wholly owned subsidiary First Majestic Plata, SA de CV. was awarded a Clean Industry Certificate by the Mexican Environmental Authority PROFEPA (Procuradoria Federal Proteccion al Ambiente) on February 25th, 2009. This Certificate is a significant milestone for the Company and was achieved after twenty nine months of Voluntary Environmental Audit work, which demonstrates the Company's sustained focus in complying with international and Mexican mining standards. Relevant activities undertaken in order to achieve this Certificate included:

- Control of all machinery exhaust and dust emissions
- Control of on-site water use to the highest environmental standards
- Remediation of soil where necessary
- Effective handling and disposal of bi-product residues
- Construction of containment walls and rain water drainage systems at the mill site
- Reclamation of the old tailings dam and construction of a new tailings dam

In addition on March 12th, 2009 the Centro Mexicano para la Filantropia (CEMEFI) awarded First Majestic the Socially Responsible Business Distinction for 2008  (Distintivo Empressa Socialmente Responsable 2008). Relevant activities that the Company excelled in to accomplish this distinction included:

- Corporate Ethics and Governance practices
- Quality of work within the Company
- Relationships with the communities in which the Company operates
- Care and preservation of the environment

This was the first time First Majestic had been recognized with such an honour, normally reserved for manufacturers of solar panels or companies with self sufficient energy policies. However, before you start to think it is all granola and hacky sack for the First Majestic team, let us not forget that they have grown into one of the most successful mid-tier silver producers in Mexico, with no plans to stop there.

First Majestic President and CEO Keith Neumeyer is not your average mining executive and he appreciates the distinction. Whether he is raising money, acquiring projects or ramping up production, Keith does it more aggressively than the rest. Keith was Founding President of First Quantum Minerals Ltd. (FM:TSX) and integral in the evolution of the successful base metals Company. The lessons learned with First Quantum are clearly evident in the development of First Majestic. Foremost is Keith’s ability and desire to raise money. The credo if you can raise money, do is a literal practise at First Majestic, evident by the $150 million plus raised to date. The proceeds of which have gone into assembling a burgeoning suite of Mexican silver projects. Keith and his man on the ground, Ramon Davila, have worked diligently to upgrade and expand the infrastructure and improve recoveries. The result of their perpetual efforts is a consistent, year-by-year improvement in production.

The first property to be acquired was the La Parrilla Silver Mine located 65km SE of the city of Durango. Drilling commenced in 2004 on the 53,000 hectare property and the Company has recently completed an 840 tonne per day (tpd) mill, expanded from 340 tpd initially. The facility consists of two 420tpd circuits, one to handle oxide ore, and the other to handle sulphide ore. The mine produced approximately 1.15 million ounces of equivalent silver last year.

In 2006, First Majestic acquired the 7840 hectare San Martin Silver Mine, located 250km north of Guadalajara by purchasing a majority stake in First Silver Reserve Inc. The Company owns 1482 hectares of the surface rights. The mine has been in continuous production since 1983 and includes a cyanide mill recently expanded to 950 tpd, which produced approximately 1.6 million ounces of equivalent silver in 2008.

In 2007, the Company acquired the La Encantada Silver Mine in the state of Coahuila. La Encantada produced approximately 1.45 million ounces of equivalent silver in 2008 but that number is going to increase substantially with the construction of a new 3,500 tpd cyanidation circuit to be completed by the end of the first quarter of this year. The new mill will allow the company to properly process the oxide ores and produce doré bars as a finished product instead of concentrates, thereby reducing smelting and refining charges that have escalated this year in Mexico.

In addition to their production improvements, First Majestic has undergone an expansive drilling campaign to establish mineralization continuity and expand their reserves and resources on their three producing mines as well as their most advanced exploration project, the  Del Toro Silver Mine ("Del Toro", formerly referred to as the Chalchihuites Group of Properties), located in the Municipality of Chalchihuites. A feasibility study and permitting is planned for Del Toro, scheduled to be completed by the second quarter of this year.

The tables below demonstrate First Majestic’s 43-101 compliant Reserves and Resources estimates as of September 30, 2008. All combined, First Majestic demonstrates a total of 288 million ounces of silver in the ground.

Total annual production for First Majestic in 2008 increased by 18% over the previous year to 4,229,998 ounces of silver equivalents, which translates into $56 million in gross revenues for the year. The company also has an additional $30 million in the treasury. However, during 2008, the Company invested $30.1 million in capital expenditures on its mineral properties, and a further $18.0 million on additions to their various plants and equipment. That combined with consolidated production costs averaging $6.40 an ounce; the Company reported a net loss after taxes of $5.1 million for the year, or .16 per share.

In comparison, Pan American Silver (PAA:TSX) produced 18.7 million ounces of silver in 2008, coupled with their gold and base metal sales that equates to $338 million in gross revenues or, after costs, a profit of .31 per share. While Pan American Silver earned 6x gross revenues compared to First Majestic, they trade at over a 10x ratio to their share price.  However, this ratio could be significantly smaller by the end of 2009.

First Majestic is looking to drastically improve operations this year. The main catalyst will be the ramp-up of the mill at La Encantada. Construction began in June 2008 on the new $27.3 million cyanidation plant which will have a capacity of 3,500 tpd up from 1,000 tpd in 2008. This expansion will see production increase from 1.45 million ounces in 2008 to 3.3 million ounces in 2009 and 4 million ounces annually starting in 2010. Operations on the new plant are set to commence in July of this year.

Total production in 2009 is expected to top 6,000,000 ounces. In addition, the Company intends to reduce costs, improve recoveries, expand their ounces in the ground and make a substantial shift from shipping concentrates to producing their own silver Dore bars.

2009 is likely to be a record year for the Company and the fact that they are set to achieve this while looking out for the health of their workers and preserving the environment of the communities in which they operate distinguishes First Majestic as a truly “green” mining company.