First Majestic To Raise $25M

VANCOUVER–With its share price on the rebound and solid silver production in 2008, First Majestic Silver (FR-T, FRMSF-O) is raising $25 million through a private placement led by CIBC World Markets.

Each of the as-yet-undetermined number of units will consist of one share and half a share purchase warrant. Each warrant will entitle holders to buy one share for two years following the financing’s closing date, which is expected to be around March 5.

First Majestic is also extending a 15% overallotment to the underwriters.

The company says it will use $15.5 million of the proceeds to finish construction of a mill and mine expansion at its La Encantada silver mine in the state of Coahuila, Mexico.

The expansion to 3,500 tonnes per day from 1,000 tonnes is now more than ever at the heart of First Majestic’s plans to boost production.

It had previously intended to expand its two other silver mines in Mexico, La Parilla and San Martin, but in the fall put those plans on hold citing difficult market conditions.

When the mill and mine expansions at La Encantada are complete, it will roughly double the company’s silver production.

In 2008, First Majestic churned out 4.2 million oz. of silver equivalent, an 18% increase over 2007. Silver proper accounted for more than 90% of that.

Year-to-date ending Sept. 30, First Majestic had a net income of $394,120 and not including smelting costs, produced silver at a cash cost of US$5.70 per oz. at its three mines.

During that year-long period, it milled 542,690 tonnes grading 282 grams silver per tonne.

Recoveries in the third and fourth quarters were 67% and 65% silver, respectively.

Since November, First Majestic’s share price has significantly improved. It has gone from trading either side of $1.50 to its most recent closing price of $2.20.

First Majestic has 73.4 million shares outstanding.