First Majestic finding promise in old Mexican mines (December 17, 2007)

Vancouver — Initial drill results from First Majestic Silver’s (FR-V, FRMSF-O) Chalchihuites group of properties in Zacatecas state show there’s still significant silver and zinc in the historic Mexican mining district.

The Chalchihuites properties are located 60 km south of First Majestic’s flagship La Parrilla silver mine. The 2.9 sq. km of contiguous claims cover the historic Perseverancia and San Juan silver mines.

San Juan was mined to a depth of 150 metres on nine levels, but has not been in operation since the 1950s. First Majestic completed a 6-hole diamond-drill program from surface. The longest mineralized intersection came from hole 4, which returned 49 metres grading 46 grams silver per tonne, 1.94% lead and 5.05% zinc. Hole 6 returned 7.2 metres grading 248 grams silver, 4.03% lead and 4.66% zinc from 257 metres depth.

Other holes cut shorter, higher-grade intersections, including hole 1, which returned 3.5 metres grading 234 grams silver, 3.6% lead and 16.8% zinc from 178 metres down-hole, followed by 3.8 metres grading 616 grams silver, 2.48% lead and 2.12% zinc from 188 metres.

First Majestic used the initial results from the drill program to develop 670 metres of ramps and underground drilling stations. In addition, the company bored over 300 metres in four crosscuts into the orebody to outline mineralization.

The San Juan deposit has now been delineated over 105 metres of strike and 20 metres width, and is still open at depth and along strike. Additional assay results from seven recent underground drill holes totalling 1,556 metres are pending.

In the La Perseverancia silver mine, workings have proved the occurrence of two adjacent high-grade silver-mineralized chimneys. While limited records exist detailing the mine’s activities, smelter receipts confirm monthly shipments of 150 to 300 tonnes grading 1.5-3 kg silver per tonne and 20-40% lead from 1975 to 1994.

The two chimneys are hosted by skarn at the contact with intrusive igneous rock. Both are 15 to 30 metres long by 6 to 10 metres wide, and are known to extend to 195 metres depth. A geophysical survey in 2005 appeared to show the main chimney extending to depth; in mid-2006, First Majestic launched a drill program from surface and underground to investigate.

Due to topographical limitations, the company only attempted one drill hole to reach the projection of the mineralized chimney at depth from surface. Its results — three short intersections showing low-grade gold, high-grade silver, and significant lead and zinc — appear to indicate that the drill intersected a vein or manto offshoot from the main chimney.

An underground drill program was needed to intersect the chimney at depth, hence First Majestic developed a 50-metre adit from one of the lowest levels of the old mine and drilled three holes towards the chimneys. Hole 1 returned 11.4 metres grading 0.15 gram gold per tonne, 384 grams silver, 8.27% lead and 5.06% zinc.

The company also developed a 100-metre adit from surface into the side of a hill and drilled one long hole towards the chimney extension. The drill hit 1.4 metres grading 349 grams silver, 17.4% lead and 5.49% zinc.

Together, the underground results indicate that at least one of the two known chimneys extends to depth.

First Majestic signed option agreements in 2004 covering some 4.9 sq. km of land in the Chalchihuites mining district. After conducting surface geology, geochemical and geophysical surveying, drilling, underground rehabilitation, and channel sampling, the company exercised its options to acquire the San Juan mine in January and the Perserverancia mine in June. The company now owns both mines outright.

Results from Chalchihuites pushed First Majestic’s share price up 26 over two days of trading to close at $4.44. The junior has a 52-week trading range of $2.81-6.33 with 61.3 million shares issued.