La Encantada Silver Mine Update and new NI 43-101 Resource
June 18, 2007FIRST MAJESTIC SILVER CORP. (FR-V) (“First Majestic” or the “Company”) is pleased to announce an update regarding its activities in Mexico at the La Encantada Silver Mine and the resource development presently underway.
The La Encantada Silver Mine is located in northern Mexico approximately a 2.5 hour drive from the city of Múzquiz in the Coahuila State. Access to the mine by charter airplane from Durango City is about 2:15 hrs flying time or from Torreón city, about 1:15 hrs flying time. The La Encantada property consist of 2,826 hectares (6,982 acres) of mining rights and surface land ownership of 2,271 hectares ( 5,614 acres) where the mine, plant and facilities are installed. The facilities at La Encantada include; a flotation plant with an installed capacity of 800 tonnes per day (“tpd”), including laboratory, maintenance buildings, water wells and pipeline, airfield, 180 houses, mine office, warehouses, club house, kitchen and restaurant facilities and guest houses. The mill is presently running at 600 tpd or approximately 75% capacity which compares to only 35% capacity when the La Encantada was taken over by First Majestic in November 2006.
Underground mine development presently includes drifts, ramps and raises along an extension of about 4 km by about 700m vertically. Numerous production areas are under operation and several other exploration areas have been delineated for further development. Ore is being mined primarily from the Milagros, San Javier, San Francisco, Azul y Oro, Cedritos and Bonanza areas from the underground mine levels 1780, 1790, 1840, 1870, 1910 and 1940 along the NE trending mineralized zone. Exploration is on-going on these breccia zones, mantos and vein structures along the system.
The La Encantada acquisition has exceeded management’s expectations at this early stage of developing this mine into a much larger operation. Reserve/Resource development has advanced more quickly than originally anticipated due to the enormous sampling effort carried out by the Company’s geological staff and production levels continue to improve.
The mine’s geologic potential is enclosed by a calcareous rock formation (Aurora Formation) that presents favourable chemical characteristics (interbedded limestones and dolomites); structural conditions associated with regional features (anticline); local intrusive stocks (granodiorite) that have created domic structures; and numerous dikes and sills that have created high permeability throughout the formation. These geologic characteristics have hosted mineralized breccia pipes (chimneys), breccia zones, bedded deposits, veins and irregular shaped deposits and fault systems. All mineral occurrences throughout the calcareous Aurora Formation consist of oxidized minerals. Partial exploration at La Encantada’s deepest mine drifts including a few drill holes have indicated metasomatic deposits in proximity to the intrusive stocks. These occur as skarn rocks with hornfels, garnets and an assemblage of primary sulphide mineralization. This area will be a focus for future exploration programs.
Exploration targets that are getting immediate attention and appear to represent significant potential are; Breccia La Escalera, Geophysical Anomalies A, B, C and D, and the downthrown block of Aurora Formation to the west of La Prieta deposit and María Isabel regional fault. The additional sulphides deposits are at; Cuerpo 660, Ojuela and La Morena.
The following summary tables were taken from the complete La Encantada Silver Mine NI 43-101 Technical Report prepared by Pincock Allan & Holt, Lakewood, Colorado (PAH). Shareholders and interested parties are encouraged to read this positive report which can be viewed on SEDAR (www.sedar.com) and the Company’s web site at www.firstmajestic.com.
Total Proven + Probable Mineral Reserves (Mineable Reserves) (1) Grade Metal Contained (3) Category (2) Tonnes Silver Lead Zinc(5) Silver Silver (oz.) g/tonne % % only including Lead oz. Credit Proven Mineral 357,379 412 2.03 0.61 4,738,995 4,842,405 Reserves Probable Mineral 276,127 391 1.81 0.86 3,467,341 3,547,240 Reserves Total Proven + 633,506 403 1.93 0.72 8,206,336 8,389,646 Probable Mineral Reserves (4) Total Measured + Indicated Resources (1) Grade Metal Contained (3) Category (2) Tonnes Silver Lead Zinc(5) Silver Silver (oz.) g/tonne % % only including Lead oz. Credit Measured 1,229,425 255 1.55 1.11 10,063,170 10,418,913 Resources Indicated 185,315 417 2.85 0.22 2,484,988 2,538,620 Resources Total Measured 1,414,470 276 1.72 0.99 12,548,168 12,957,533 + Indicated Resources (4,6,7) Total Inferred Resources (1) Grade Metal Contained (3) Category (2) Tonnes Silver Lead Zinc(5) Silver Silver (oz.) g/tonne % % only including Lead oz. Credit Total Inferred 1,479,023 200 0.50 0.70 9,587,585 10,015,550 Resources (4,8)
(1) The Total Proven + Probable Mineral Reserves and Total Measured + Indicated Resources and Total Inferred Resources in the tables above are exclusive of each other and are not combined.
(2) 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).
(3) 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)
(4) 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.
(8) Rounded figures.
The Company is in the process of fully recognizing the mine, identifying reserve and resource blocks and exploring additional areas. The estimated mineral resources are considered conservative, since only adjacent blocks are projected from the reserve blocks. Mineralization within the Aurora Formation has shown high probability of occurrence at faults and fracture zone intersections, as well as in association with intrusive rocks, such as dikes, sills and stocks. Additionally, several other areas of geologic potential exist within the property boundaries.
First Majestic is in the process of an aggressive development and exploration program at La Encantada that includes underground drifting and development which has amounted to 2,555 metres so far this year. In addition, an underground drilling program will commence shortly that is considered to have a high probability of success given the geological conditions of the mineralization at the mine. This present program is directed to access projected known areas of mineralization as well as to investigate other adjacent and new promising areas that may result in an increased increment to the resource base and a higher level of reserves for the mine. In addition to these known areas, geologic potential exists to discover additional mineralized zones along the development workings.
In addition to the development and exploration programs underway and planned in and around the mine, the Company is evaluating old waste dumps and tailings. The dumps are presently being screened by a new screening plant installed in April and screened ore is being sent to the mill for processing. A pressure drill program with a BQ (2.5 inches) diameter core designed to test the size and grade of the tailings dams commenced several weeks ago. A 50 metre grid consisting of 700 metres of drilling over 55 holes is underway. To date, 45 holes have been completed for a total of 600 metres. Metallurgical testing is underway at SGS’s lab in Durango. It is anticipated that a bulk test will be carried out at the Company’s La Parrilla mill near Durango in the coming months.
The prior NI 43-101 Technical Report published for the La Encantada Silver Mine was reported in December 2006. This report did not include any Resource/Reserve estimates as it was written primarily for the purpose of due-diligence and identifying areas of focus for development and exploration. This newly updated NI 43-101 Technical Report prepared by PAH represents the Company’s first NI 43-101 Resource/Reserve estimate and will act as a basis for further development and exploration which management is confident will lead to substantially more resources being defined and increases in silver production levels going forward.
The Company intends to issue another updated NI 43-101 Technical Report on the La Encantada Silver Mine in October 2007.
The Company’s independent Qualified Persons under the policies of National Instrument 43-101 who have reviewed the contents of this news release and who authored the most recent qualifying report are Leonel López, C.P.G., P.G., and Richard Addison P.E., Principal Process Engineer, of Pincock Allen & Holt, who are employees of PAH and are independent of the Company.
First Majestic is a producing silver company focused in Mexico 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 firstname.lastname@example.org, visit our website at www.firstmajestic.com or call our toll free number 1.866.529.2807.
FIRST MAJESTIC SILVER CORP.
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 Resource 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.
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