VANCOUVER, BRITISH COLUMBIA -- (MARKET WIRE) -- 06/10/08 -- First Majestic Silver Corp. (TSX: FR)(PINK SHEETS: FRMSF)(FRANKFURT: FMV)(WKN: A0LHKJ) is pleased to announce that ground breaking and construction of a new 3,500 tpd cyanidation circuit at the La Encantada Silver Mine, located in Coahuila Mexico will commence next week. The final permit from the Mexican authorities was received last week allowing for this expansion to begin immediately.
Construction of the new cyanidation circuit is expected to be completed by February 2009. The total budget for this major plant expansion is US$21.6 million and has an undiscounted Internal Rate of Return (IRR) of 80% representing a payback period of 14 months based on the assumption of US$15.00 per oz silver.
Historically, the La Encantada mill has had a capacity of 800 tpd and has been processing oxide ores from the mine through a flotation circuit to produce a lead/silver concentrate. The construction of the new 3,500 tpd cyanidation circuit will allow the Company to increase its recoveries of silver and to produce Dore bars as a finished product instead of concentrates. Due to the historically low recoveries yielded from the past 30 years using flotation at La Encantada, a large Resource has been created in the form of tailings that was defined in the Company's NI 43-101 report dated March 19, 2008. That 43-101 report defines 4,916,085 tonnes of tailings with an average grade of 150 g/t. Commencing in the first quarter of 2009, silver production will come from combining ore from the mine with tailings from surface. This expansion, will allow production to be expanded to 3,500,000 ounces of silver in 2009 and 4,000,000 ounces of silver in 2010. Production will be in the form of Silver Dore rather than concentrates which will significantly reduce smelting, refining & transportation costs of the finished product and thereby increasing the profitability of the La Encantada operation.
The metallurgical testing for the cyanidation process was executed at the SGS Metallurgical Laboratory in Durango, Mexico which included the testing of the different ores present and the tailings to be processed. This metallurgical testing confirmed historical tests completed by Penoles in 1985.
The mixture of ore and tailings as defined by the Company's expansion plan will consist of 700 tpd of raw ore from the mine with an average grade of 350 g/t with a recovery of 78%, plus 2,800 tpd of old flotation tailings with an average grade of 150 g/t and a recovery of 50%, resulting in combined recoveries of 60%.
This expansion project illustrates First Majestic's commitment to maintaining its aggressive plans of continuing the growth at each of its operations, of which management believes will bring substantial benefits to the Company's shareholders. La Encantada will be doubling its silver output in the coming year and will produce 100% silver in the form of Dore bars, reducing smelting treatment and freight charges and increasing the Company's leverage to the value of this important metal.
The Company's ongoing aggressive development and exploration program at La Encantada is continuing with the purpose of increasing both the oxide and sulphide Resources within the mine. In addition to this mill expansion, a total of 8,160 metres of underground development is scheduled for 2008. Presently, three diamond drill rigs are working underground and are scheduled to complete 7,600 meters of drilling in 2008. Additionally, to compliment this development and exploration program, a Geophysics team is presently on site at La Encantada completing a 46 kilometre regional geophysics program.
The exploration potential within La Encantada's 2900 hectare property boundary is very high as all the operations of the mine and the present Reserve/Resource are located in a small portion of the property covering only approximately 100 hectares. The Company's current development and exploration program is focusing on the definition of known areas and testing of new targets and is expected to result in significantly improved Reserves/Resources. The Company anticipates the next updated NI 43-101 Report on the La Encantada Silver Mine will be completed by late 2008.
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.
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 Silver 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.