FIRST MAJESTIC RESOURCE CORP. (TSX VENTURE: FR)(PINK SHEETS: FMJRF)(FWB: 905910) (the "Company") is pleased to announce that it has signed a Letter Agreement to acquire 100% of the issued and outstanding shares of Desmin S.A. de C. V. ("Desmin"), a privately held Mexican mining company.
Desmin's primary asset is an exploitation contract with Penoles which covers the operation of La Encantada Silver Mine located at the Coahuila State in Mexico. The exploitation contract between Desmin and Penoles gives Desmin the right to all properties within the 700 hectare land package, including the operations of the mine and mill and all the auxiliary installations and associated equipment. It has been agreed that the Company will pay US$1.5million for all the issued and outstanding shares of Desmin resulting in Desmin becoming a wholly owned subsidiary of the Company. The form of payment will be defined and a schedule of cash payments will be agreed upon prior to closing.
In addition, Desmin has an agreement with Penoles to purchase the La Encantada Silver Mine, including the mill and surrounding mining claims. The purchase price agreed between Desmin and Penoles is US$3,250,000.
The La Encantada Silver Mine is presently producing 800,000 ounces of silver per year. The mill, which has a total capacity of 800 tpd, is processing 250 tpd of oxide ore grading 500 gpt Ag, which represents less then 40% capacity of the operation. The Company anticipates that these production numbers can be improved significantly over the coming months. In addition, the surrounding ground of 700 hectares represents excellent exploration potential with several areas of interest already defined.
In addition to the acquisition of another producing silver mine in Mexico the Company, through Desmin will inherit an experienced workforce of mining professionals and geologists including all the equipment needed for mining, milling and trucking.
The agreement to purchase Desmin is subject to a due diligence period ending Oct 3, 2006. The due diligence is presently underway and will cover; financial, legal, geological, engineering and any other areas required.
First Majestic is a producing silver company focused in Mexico and is aggressively pursuing its business plan to become a mid-tier silver producer through development of its existing assets and the pursuit through acquisition of additional assets that make sense to achieving our corporate objective.
FIRST MAJESTIC RESOURCE CORP.
Keith Neumeyer, President
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.
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.