#5 fastest growing B.C. company:
First Majestic Silver Corp.

By Joanne Lee-Young, Vancouver Sun | November 10, 2009

CEO Keith neumeyer of First Majestic Silver.

Keith Neumeyer, president and CEO of Vancouver-based First Majestic Silver Corp., is getting ready to unveil a major expansion at the company's La Encantada silver mine in Coahuila, Mexico. The price of silver has improved dramatically to about $17 and he is looking forward to a "major growth spurt, thanks to this new mill getting turned on in the next couple of weeks."

A year ago, it was a completely different story and Neumeyer was forced to order a screeching halt on almost everything at First Majestic.

"We're going back to the anniversary of one of the most important crises we have experienced since the late 1980s," Neumeyer said.

In April 2008, silver was at a high-flying $21 per ounce and the company had one of the largest drilling programs of any Canadian mining company active in Mexico, according to Neumeyer.

"We had 23 drillings going on at the time," he said. There was a plan for 60,000 metres of underground development over the company's three mines, plus some 80,000 metres of drilling. Three construction projects were running simultaneously and the company's two other Mexico-based mines, La Parrilla and San Martin, were slated to expand, each by hundreds of tons.

In short, "our burn was very, very high and we were on full cylinders."

But by the summer, "we started recognizing that there was a major problem and we started cutting everything as fast as we could."

Indeed, by November, silver had crashed from its April price of $21 per ounce to $9 per ounce. Copper and gold dived too, from $4 per ounce to $1.25 per ounce and from $1,000 per ounce to $700 per ounce, respectively.

In response, "we brought drills down to zero by January (2009)," said Neumeyer. "When I mean cut, we cut aggressively. We completely suspended construction at La Parrilla and San Martin."

The company continued to seek new sources of funding. In August 2009, it began trading on what it describes as the OTC Market's "prestigious" OTCQX International tier.

Neumeyer said the listing, in theory, gives First Majestic greater access to U.S. investors, but emphasized, "Whether this is true or not, it's hard to say. We don't know what it is going to do yet."

The New York-based QX market is made up of non-U.S. companies that do not follow U.S. financial rules. "The problem with the U.S. system is that it doesn't follow the international financial system and Canada, along with many other markets around the planet, is moving that way," said Neumeyer. "The U.S. is the only industrial country not going down the path (of following international financial standards) and you see a lot of companies bypassing New York and listing in other jurisdictions, primarily London.

"It's still very early. The QX needs to do a lot of marketing and tell the world who they are before we really see an impact for us,"Neumeyer said. "We decided to do it for the same reason we are listed in London and Frankfurt. As a public company, we have a responsibility to our shareholders, and that is liquidity."

Looking ahead, Neumeyer is encouraged by improving metal prices. "We're not at $21 per ounce, but it's still $17 per ounce, so we have a good cash-flow business. Our costs are around the $7 to $8 range, with all costs added in. We are making around $10 per ounce, so it's a pretty good business."

He said that results for the next quarter would reflect it being an "interesting" one, but added that "the quarters are going to get better and better from here on out. We are going to be in a situation where our treasury is actually increasing as a result of cash flow, as opposed to equity financing."

Once La Encantada ramps up - the opening ceremonies are slated for Nov. 19 - First Majestic's production will expand from 4.2 million ounces of silver last year to 6.3 million ounces next year, Neumeyer predicts.

"We have been very lucky. Our top executives have a lot of experience in the environment that we are active in," said Neumeyer. "Even though (the last several quarters) have been difficult, (the financial crisis) was also fairly shortlived and the market for our product improved greatly in the first six months of this year, and has continued to do so."

jlee-young@vancouversun.com

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First Majestic Silver Corp.
Toll Free: 1.866.529.2807 | Phone: 1.604.688.3033 | Fax: 1.604.639.8873
Email: info@firstmajestic.com | Web: www.firstmajestic.com