2007

San Martin Silver Mine Update and new NI 43-101 Resource


May 28, 2007

FIRST MAJESTIC SILVER CORP. (FR-V) (the “Company”) is pleased to announce an update regarding its activities in Mexico at the San Martin Silver Mine and the resource development presently underway.

The San Martin Silver Mine is located beside the town of San Martín de Bolaños in the Bolaños River valley, in the northern portion of the State of Jalisco, México. The San Martín operation is 150 kilometres by air or 250 kilometres by paved road north from Guadalajara. The property covers an area in excess of 7,840 hectares and includes several vein systems and structures that have not in the past received serious attention. The mine has been developed primarily on the main Zuloaga vein which has been identified over a strike length of three kilometres and consists of six main levels and an additional three partially developed levels (Pinolea, San Carlos, La Escondida) spanning a vertical interval of approximately 350 meters. The main access levels, San José, Santa María, Ballenas, Cangrejos, San Pablo, San Juan and San Carlos, are accessible from surface adits and various interconnecting underground ramps totalling over 70 kilometres. Production is also occurring from the La Blanca vein, a vertical split off from the Zuloaga vein.

First Majestic is presently developing and rehabilitating the upper parts of the Zuloaga vein and along crosscutting veins at the Rebaje 40 Oriente on the Cangrejos Level, and at the Rebaje 1100 on the Ballenas Level. In both cases north-south veins intersecting the Zuloaga vein show high grade mineralization in widths of up to 10 meters in the hanging wall of the previously mined structures. The La Blanca vein, which cuts upward through the Zuloaga hanging wall, is also being redeveloped which appears to contain higher silver grades.

The focus since January 1st has been on improving the mill and mine operations. Within the mill, a maintenance program was initiated on all key equipment, replacing components as required. At the mine, a program of underground development has been ongoing focusing on improving grades and reducing dilution. This program is designed to advance additional resource calculations for future NI 43-101 compliance and to provide higher grade ores for mining. Since January 1, 2007, the Company has completed 2,386 metres of development focusing on areas in the upper part of the Zuloaga vein, such as the La Escondido and Pinolea areas. The Company has also initiated exploration at the old Rosario mine and completed 1,762 metres of diamond drilling over 34 holes (28 underground and 6 from surface). None of this new work since January 1st,, 2007 is included in the new NI 43-101 resource calculation below.

Total Proven + Probable Mineral Reserves (Mineable Reserves) (2)
Category (1) Tonnes Silver Grade
g/tonne
Contained
Silver (oz)
Silver Grade
with Au/Pb
Credit (g/tonne)
Contained
Silver (oz)
including Au/Pb Credits

Proven Mineral Reserves

246,287

293

2,323,861

317

2,509,770

Probable Mineral Reserves

245,736

287

2,270,943

310

2,452,618

Total Proven + Probable Mineral Reserves (3)

492,023

290

4,594,804

314

4,962,389



Total Measured + Indicated Resources
Category (1) Tonnes Silver Grade
g/tonne
Contained
Silver (oz)
Silver Grade
with Au/Pb
Credit (g/tonne)
Contained
Silver (oz)
including Au/Pb Credits

Measured Resources

792,652

257

6,549,474

279

7,122,824

Indicated Resources

1,005,313

243

7,854,522

263

8,501,916

Total Measured + Indicated Resources (4)

1,797,965

250

14,451,468

270

15,624,740



Total Inferred Resources
Category (1) Tonnes Silver Grade
g/tonne
Contained
Silver (oz)
Silver Grade
with Au/Pb
Credit (g/tonne)
Contained
Silver (oz)
including Au/Pb Credits

Inferred Resources Silver only (5)

1,668,600

245

13,143,700

265

14,216,600

Inferred Resources Silver equivalent (6)

1,069,200

134

4,606,300

277

9,504,800

Total Inferred Resources (7)

2,737,800

202

17,750,000

257

23,721,400



(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. The complete NI 43-101 Technical Report prepared by Pincock Allen & Holt, Lakewood, Colorado (PAH) has been posted and can be viewed on SEDAR (www.sedar.com) and the Company’s web site at www.firstmajestic.com.
(2) Mineral Reserves are estimated as Mineable Reserves, including estimates of mine dilution and recovery in addition to 8 % credit for Au and Pb based on sales records for 2006. These reserves do not include metallurgical recovery. All silver grades are reported in grams or ounces per metric tonne, while Pb and Zn are reported in percentage (%).
(3) Silver equivalent ounces are 8 % of the silver content, based on the contribution of Pb and Au to revenue for 2006.
(4) The resources categories in the PAH Technical Report used an economic cut-off grade based solely on silver for the total operating costs and process recoveries of 5.84 oz Ag/tonne or 182g Ag/tonne. PAH’s economic breakeven cut-off grade including the gold & lead contribution for 2006 of 8 % of silver sales, converted to an equivalent silver grade was 5.38 oz Ag equivalent/tonne or 167g Ag Eqv/tonne. In order to report the equivalent silver values, 182g/tonne Ag was used in the report and the silver equivalent values are calculated according to the following formula: Ag Eqv. oz. = $52(($10.00x0.891)+$0.75), where $0.75 is equivalent to 8% of silver sales as contribution of Pb + Au for 2006; $52 is total operating cost per tonne and $10 is the price per Ag ounce. The calculation of Measured + Indicated Resources assumes 100 percent “in situ” resources and does not include mine dilution, nor mine and metallurgical recovery.
(5) Inferred resources are estimated as silver only for oxidized mineralization, including 8% contribution for Pb and Au, based on sales records.
(6) Inferred resources in sulfides mineralization are estimated as silver equivalent with contributions by Pb and Zn based on prices as follows: Ag-$10/oz; Pb-$0.50/lb and Zn-$1.50/lb, or the equivalent of Pb-1%=34 g Ag/tonne, and Zn-1%=103 g Ag/tonne. These resource estimates are “in situ” resources and do not include mine dilution, mine and metallurgical recoveries, nor freight, or smelter and refining charges.
(7) Inferred resources are presented in rounded figures. These may not be aggregated with Measured and Indicated resources. They are presented due to the significance for the mine’s potential for future development. San Martín has processed some sulphide mineralization in previous operating periods with economic recovery of Pb and Zn concentrates; however it is not operating with this type of mineralization at the present.

The prior re/_modules/bCMS/content/forms/source/reserve estimate completed for the San Martín Silver Mine was presented in a NI 43-101 Technical Report prepared for First Silver Reserve Inc. by Pincock, Allen & Holt, Inc. in June, 2005. First Majestic acquired the San Martin in two stages, in June 2006 and September 2006. In addition, the Company changed its year end to December 31st. It was necessary for accounting purposes to establish an accurate up to date baseline of reserves and resources as at the Company’s year end. For this reason, none of the development or exploration work completed at San Martin since January 1st was included in new re/_modules/bCMS/content/forms/source/reserve estimates.

Comparative Reserves / Resources 2005 to 2007 (1)

 

January 1, 2005

January 1, 2007

Tonnes

Ag eq g/tonne

Tonnes

Ag eq g/tonne

Reserves

 

(2)

 

(2)

Proven + Probable

675,955

273

492,022

314

 

Resources

       

Measured + Indicated

4,443,854

296

1,797,965

270

Contained Silver Ounces

42,290,470

 

15,607,596

 
         

Inferred (3)

0

0

2,737,823

257

Contained Silver Ounces

   

22,621,922

 
         

Production

2005

2006

Tonnes

Ag eq g/tonne

Tonnes

Ag eq g/tonne

249,239

243

261,834

209

         

Sales Doré

2005

2006

Silver Troy Ounces

 

1,742,675

 

1,566,400

Gold Troy Ounces

 

3,565

 

2,326



1) 2005 reserve statement for the San Martín Silver Mine was presented in a technical report prepared for First Silver Reserve Inc. by Pincock, Allen & Holt, Inc. June 23, 2005 which was published in SEDAR on July 5, 2005. Mineral reconciliation at the San Martín mine is difficult to control because the mining activity is carried out in numerous stopes along the drifts and at the different mine levels. First Majestic is working towards a better control of the production stopes with relation to reserve blocks.
2) Silver grade includes credit for Au/Pb based on actual metal sales during the production year. This credit was estimated as 13.5% for 2005 and 8% for 2006.
3) No inferred resources were reported in 2005. First Majestic has established more strict resource classification that includes the ‘Inferred’ category.

Presently, three drill rigs are operating on site from both surface and underground stations. The focus of the drilling program is to develop additional NI 43-101 compliant resources and to explore known mineralized structures. The Company intends to add an additional three drill rigs within the next two months to increase drilling activities from surface.

Immediate attention is being focused on the upper La Escondida and Pinolea levels and areas below the known ore shoots on the Zuloaga vein. This program will assess areas of resources with the objective to increase reserves and add additional resources to the project. The areas to be assessed cover an extension to the existing resources of approximately 500,000 m2 of known mineralized portions of the Zuloaga vein.

Once additional drill rigs arrive on site, other areas that will receive continued attention for exploration and development include the Condesa workings and the Rosario mine. Both are located to the southwest and have northwest trends. The Condesa workings show mineralization over 150 meters along strike, with mineralized zones ranging from 1.5 to 2.0 meters in width. The Rosario mine and old Condesa workings, which are located in close proximity, in addition to other areas in the region have had historic production activity. However, records of past mining activity are either unavailable or incomplete. In addition, these vein trends intersect the Zuloaga vein in an area below the mineralized surface outcrops, and thus represent very good targets for exploration and potential future mining activity.

In addition to the drilling program, a complete regional geologic survey is underway covering the different outcrops and structures with the purpose of defining future diamond drill objectives in other areas within this large property. All in all, the San Martin property has significant potential for the advancement of additional NI 43-101 compliant resources including a high likelihood of additional discoveries. The Company intends to issue another updated NI 43-101 technical report on the San Martin Silver Mine in November 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 info@firstmajestic.com, visit our website at www.firstmajestic.com or call our toll free number 1.866.529.2807.


FIRST MAJESTIC SILVER CORP.

“signed”

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.

The TSX Venture Exchange has in no way passed upon the merits of the proposed transaction and the TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.