Technical Report for the
La Encantada Silver Mine
Coahuila State, México

Prepared for

First Majestic Silver Corp.

January 12, 2009

90533

AMENDED AND RESTATED

February 26, 2009

Prepared by

Pincock, Allen & Holt

Richard Addison, P.E.
Leonel López, C.P.G.

1.0           TITLE PAGE

This technical report has been prepared in accordance with the National Instrument 43-101 standards of disclosure for mineral projects (“NI 43-101”) and the contents herein are organized and in compliance with form 43-101F1 contents of the technical report (“43-101F1”). This technical report is an update of Technical Report Amended for the La Encantada Silver Mine, Coahuila State, México; which was prepared for First Majestic Silver Corp. dated March 19, 2008 and published in SEDAR in March 28, 2008. The first two items are the title page and table of contents that are presented previously in this report and are simply mentioned herein to maintain the specific report outline numbering contained in form 43-101F1 contents of the technical report.

2.0           TABLE OF CONTENTS

See discussion in Section 1.

TABLES

FIGURES

3.0           EXECUTIVE SUMMARY

First Majestic Silver Corp. (FMS) retained Pincock, Allen and Holt (PAH), a division of Australia-based Runge, Inc. to prepare a Technical Report for the silver/lead/zinc deposit of La Encantada Silver Mine located in the Municipality of Ocampo, Coahuila State, and México. This report is an update of Technical Report Amended of March 19, 2008, which was prepared by PAH and published in SEDAR in March 28, 2008. This report is presented to document material change in La Encantada Silver Mine due to an increment of reserves (+183 percent) and resources (measured and indicated -17 percent and inferred +51 percent). This report meets the requirements and is compliant with NI 43-101 and conforms to Form 43-101F1 for technical reports.

La Encantada Silver Mine is owned and operated by Minera La Encantada, S.A. de C.V., wholly-owned Mexican subsidiary of FMS. La Encantada Silver Mine consists of an industrial complex that includes underground silver/lead/zinc mining, a flotation ore processing plant, water wells and pipeline, airport, housing, camp facilities and a new cyanidation plant under construction to process silver tailings. The La Encantada mine was operated by Peñoles for a period of about 25 years, until June 2002. Desmín leased the property from Peñoles and operated the mine and processing plant from July 1, 2004 until November 1, 2006 when Desmín was acquired by FMS. During January to September, 2008 FMS has mined out 178,480 tonnes at an average grade of 297 g/tonne Ag and 2.29 percent Pb.

FMS owns mining rights that cover 2,237 hectares (5,227 acres) within 18 titled concessions and 3 approved claim applications, in addition to 2 other applications under review by the Mines Department. Minera La Encantada has acquired, from the Ejido Tenochtitlán, Municipality of Ocampo, under expropriation regulations, surface land ownership of 1,343 hectares (3,319 acres) where mine, plant, housing, camp and associated facilities are installed. It also owns the surface rights, installations and water rights for two water wells at El Granizo, which supply La Encantada water needs.

Estimated proven and probable reserves and measured and indicated resources for La Encantada, as of September 30, 2008, are presented in Table 3-1. These include proven and probable reserves of 5.2 million tonnes at 208 g/tonne (6.7 oz) Ag, and 2.42 percent (53 lb/tonne) Pb, for a total contained silver equivalent, inclusive of Pb credit, of 35.5 million ounces. These reserves include 4 million tonnes of tailings at an average grade of 168 g/tonne silver, estimated at a Cut-off Grade of 111 g/tonne silver.

La Encantada reserves have been estimated at a Cutoff Grade of 250 g/tonne Ag only and 228 g/tonne Ag equivalent net of Pb credit. The La Encantada proven and probable reserves in hard rock include 1.2 million tones at an average grade of 343 g/tonne silver and 2.39 percent lead.

During the period of January through September, 2008 FMS mined 178,480 tonnes of ore, which included 70,000 tonnes from reserves, in addition of other minerals extracted from different areas of the mine for a total of 108,480 tonnes. To September 30, 2008, the La Encantada exploration programs and underground development increased reserves by approximately 183 percent over the 2007 estimates.

TABLE 3-1
First Majestic Silver Corp.
Minera La Encantada, S.A. de C.V.
La Encantada Mine
Mineral Reserves Prepared by FMS, Reviewed by PAH as of September 30, 2008 (1)

(1) Cut Off Grade estimated as250 g/tonne Ag only; and 228 g/tonne Ag eq net of Pb credit. Estimated Reserves are exclusive of Resources.
(2) Silver equivalent includes Pb credit, at prices US$12.00/oz -Ag, $0.75/lb -Pb. Pb credit=22 g/tonne -Ag.
(3) Mining dilution is included at over 2.00m width. Estimates do not include mining recovery.
(4) Zinc is not recovered.
(5) Dump stockpile is considered as measured resource because the average grade is below COG - 203 g/tonne Ag only and 186 g/tonne Ageq, however with pre-screening may be processed. It requires of additional testing.
(6) La Morena sulfide deposit requires additional metallurgical testwork to prove its economic recovery. La Encantada mill does not have an operating zinc circuit at this time.
(7) Tailings are included within Indicated Resources due to required additional testwork and grade below Cutt Off Grade - 111 g/tonne Ag.
(8) Rounded figures.

(1) Cut Off Grade estimated as250 g/tonne Ag only; and 228 g/tonne Ag eq net of Pb credit. Estimated Reserves are exclusive of Resources.
(2) Silver equivalent includes Pb credit, at prices US$12.00/oz -Ag, $0.75/lb -Pb. Pb credit=22 g/tonne -Ag.
(3) Mining dilution is included at over 2.00m width. Estimates do not include mining recovery.
(4) Zinc is not recovered.
(5) Rounded figures.

These were estimated from the following areas: Breccia Milagros, Azul y Oro, Breccia Keylor, Cuerpo 660 E, Cola de Gallo, Bonanza, La Piedra, Breccia San Javier, Dique San Francisco, San Francisco, Jorobada, Rebaje 141, Rebaje and Ojuela Ampliación zones in addition to the Tailings Dam No. 1. Most of these deposit areas remain opened for exploration and development; for instance, Breccia Milagros appears to represent a significant deposit, the full extent of which is still unknown to FMS.

Measured and indicated resources to September 30, 2008 at La Encantada amount to 5.4 million tonnes at 176 g/tonne (5.7 oz) Ag and 1.40 percent (31 lb/tonne) Pb, for a total contained silver equivalent, inclusive of Pb credit, of about 33.1 million ounces. These resources include 1.6 million tonnes of tailings at an average grade of 76 g/tonne (2.4 oz/tonne). Preliminary testwork appears to indicate amenability and probable economic recovery of silver values from the tailings by cyanide leaching processing. Additional bulk testing is recommended to validate and confirm the resource. These resources represent a decrease of about 17 percent over the resources estimated for 2007 in silver equivalent ounces to 33.1 million, due to upgrade of tailings dam No. 2 to probable reserves.

Additional inferred resources have been estimated by FMS at La Encantada. The inferred resources require additional grade and tonnage information before they may be upgraded to indicated or measured resources. They represent geologic potential to be further investigated. La Encantada has estimated inferred resources that amount to about 2.6 million tonnes at an average grade of 220 g/tonne (7.0 oz/tonne) Ag and 1.0 percent (22 lb/tonne) Pb, for a total estimated content of silver equivalent, inclusive of Pb credit, of about 20.0 million ounces. This estimate represents an increment of 51 percent over the reported resources for 2007.

During the La Encantada 2008 exploration drilling program a new mineralized zone was discovered at the 1790 mine level. This zone has been denominated the Buenos Aires zone and delineated with 15 drill holes resulting in about 536,000 tonnes of Indicated Resources at an average grade of 395 g/tonne Ag (7.2 million ounces of silver equivalent) and 560,000 tonnes of Inferred Resources at an average grade of 339 g/tonne Ag (6.5 million ounces of silver equivalent). Silver equivalent includes Pb credits.

Processing flotation plant facilities have an installed capacity of 800 tonnes per day. It includes all supporting facilities, including laboratory, maintenance, etc. The metallurgical current plant average operating rate is about 800 tonnes per day. About three quarters of the ore comes from the mine and the other quarter from upgraded waste dump rock that has been screened to reject the coarser lower-grade fraction.

FMS is presently building, on a site about 1-1/2 kilometers from the existing flotation plant, a cyandiation plant with a capacity of 3,500 tonnes per day. The plant will process the ore and waste dump rock that is currently processed through the flotation plant in conjunction with reclaimed tailings. The plant is scheduled to commence operation in April 2009. PAH considers the FMS production and cost projections for this operation optimistic, but these parameters will only be clearly established when it has been in operation for six month or more.

The surface rights to La Encantada Silver Mine are mostly owned by Minera La Encantada (a wholly owned subsidiary of FMS). According to La Encantada, there is a good working relationship with people of the Ejido Tenochtitlán from which the surface rights were purchased by La Encantada, and with the town of Múzquiz, since many of the inhabitants are employed in the exploration or mining operations. No labor or access problems have been reported by La Encantada within the area.

La Encantada was declared in suspension of activities by Peñoles in 2003. In April 24, 2007 La Encantada presented a notification of reactivation of operations at the mine to the National Water Commission (C.N.A.), to SEMARNAT, to Secretaría del Trabajo y Previsión Social, and to PROFEPA. In accordance with legal opinion of October 31, 2008 by Mr. Carlos Galván Pastoriza, La Encantada mining operations are currently and have always been conducted in compliance with all applicable laws and regulations.”

PAH is not aware of any environmental liabilities in La Encantada mining district; most of the area covered by La Encantada concessions is mining and prospective land for mineral exploration and mine development. Mr. José Luis Hernández Santibañez, Corporate Manager of Environmental and Permitting for FMS provided PAH with a document dated October 31, 2008 showing the list of Environmental and Operating Permits for La Encantada in current good standing.

PAH believes that La Encantada reserve and resource estimates have been reasonably prepared and conform to acceptable engineering standards for reporting of reserves and resources. PAH believes that the classification of the reserves and resources meets the standards of Canadian National Instrument NI 43-101 and the definitions of the Canadian Institute of Mining, Metallurgy and Petroleum (CIM).

The reserves and resources herein reported by La Encantada were reviewed by PAH and constitute part of an operation by Minera La Encantada, a Mexican subsidiary of FMS. There is no significant technical, legal, environmental, political or other kind of restrictions; therefore, in PAH’s opinion, these reserves and resources are exclusive of each category and may not be materially affected by issues that could prevent their extraction and processing.

An economic analysis of La Encantada operation shows positive economics as measured by a cash flow model, and thus the postulated reserve position is accepted. La Encantada Silver Mine shows a net present value of $67 million at a 10 percent discounted rate of return. Table 3-2 presents a summary of

TABLE 3-2
First Majestic Silver Corp.
Minera La Encantada, S.A. de C.V.
La Encantada Silver Mine
Economic Analysis Results as of September 30, 2008

La Encantada cash flow based on current reserves/resources estimates. Figure 3-1 shows the installations general layout, Figure 3-2 shows the underground mine, and Figure 3-3 shows the mines airstrip.

4.0           INTRODUCTION

First Majestic Silver Corp. (FMS) retained Pincock, Allen and Holt (PAH) to prepare a Technical Report of exploration activities and results obtained to this date, which represent a material change in the resources and reserves for the silver/lead/zinc deposit of La Encantada Silver Mine located in the Municipality of Ocampo, Coahuila State, México. This report is an update of Technical Report for the La Encantada Silver Mine, Coahuila State, México, prepared for First Majestic Silver Corp. dated March 19, 2008, Amended by Pincock, Allen & Holt, Inc., and was published in SEDAR on March 28, 2008, and it is referred to as Technical Report Amended herein.

The objective of this Technical Report is to provide FMS with a report that will follow existing regulations in Canada. This report presents a material change of the property due a significant increment of reserves including some tailings (+183 percent) and resources (M+I=-17 percent and Inferred=+51 percent) over the estimates reported for 2007. This report meets the requirements and is compliant with NI 43-101 and conforms to Form 43-101F1 for technical reports.

4.1           Qualified Person and Participating Personnel

The principal author of this report is Leonel López, a Certified Professional Geologist (AIPG-CPG-08359), Registered Professional Geologist in the State of Wyoming (PG-2407), a Registered Professional Member of The Society of Mining Engineers (No.1943910) and a PAH Principal Geologist. Mr. López has visited the site during the periods of May 18–23, November 13–18, 2007 and October 28-31, 2008, to review current status of the property. Mr. López also carried out exploration activities for the La Encantada mine as Peñoles Exploration North Division Manager in the 1980s. Mr. López reviewed available information on the La Encantada mine to update the reported areas where material changes have occurred during the period from July 2007 to September 30, 2008 regarding the mining rights, land tenure, history, environmental concerns, and all aspects of the geology, and reviewed drilling core and results, sampling, data verification and projected resources. Mr. López also reviewed drilling, sampling, volume estimates and location of the two tailings deposits that FMS is preparing for re-processing by cyanidation. Dick Addison reviewed methods and processing plant for La Encantada silver/lead/zinc deposit including research results for cyanidation of the silver tailings and plans for on going construction of a cyanidation plant. Other PAH members collaborated in the review of FMS’s tailings deposits modeling to confirm volumes and grade estimates, as well as the reserve estimates, mine planning and safety aspects of the operation.

4.2           Term and Definitions

La Encantada Silver Mine consists of silver/lead/zinc oxidized mineral deposits located in the State of Coahuila, México. La Encantada mine comprises numerous mineral concentrations within the underground development area, including some exhausted deposits and additional geologic potential in other areas. Some of the known deposits within the La Encantada area are the following:

• La Prieta, mostly exhausted breccia pipe deposit
• La Escondida, exhausted breccia pipe deposit
• Buenos Aires, a recently drill-discovered mineralizad zone
• El Plomo
• Bonanza
• Breccia Milagros
• Estructuras Irregulares Bonanza
• Estructuras Irregulares San Javier
• Brecha San Javier
• Ojuelas
• San Francisco
• Azul y Oro
• 660 W
• 660
• 660 E
• La Morena, and
• Numerous other bedded and vein deposits.

In this report:

• FMS refers to First Majestic Silver Corp.

• Desmín refers to Desmín, S.A. de C.V., a wholly-owned subsidiary of FMS.

• PAH refers to Pincock, Allen & Holt, Inc., a Division of Runge, Inc., and its representatives.

• Peñoles refers to Industrias Peñoles, S.A. de C.V., MET-MEX Peñoles and Grupo Peñoles.

• La Encantada Silver Mine refers to the operating underground mine, processing plant and infrastructure facilities that constitute this industrial complex (also referred to as La Encantada mine or La Encantada).

• Technical Report for the La Encantada Silver Mine, Coahuila State, México, prepared for First Majestic Silver Corp. dated March 19, 2008, Amended by Pincock, Allen & Holt, Inc., and was published in SEDAR on March 28, 2008, is referred to as “Technical Report Amended” herein.

• Minera La Encantada refers to the operating company and wholly owned subsidiary of First Majestic Silver Corp.

• Resource and Reserve definitions are as set forth in the CIM Definitions Standards dated December 15, 2005.

• Resource definitions are as set forth in an appendix to Companion Policy 43-101CP, “Canadian Institute of Mining, Metallurgy and Petroleum – Definitions Adopted by CIM Council, August 20, 2000.”

4.3           Units

All units are carried in metric units, unless otherwise noted. Grades are described in terms of percent (%) or grams per metric tonne (gptonne, g/tonne), with tonnages stated in metric tonnes. Salable metals are described in terms of tonnes, or troy ounces (precious metals) and percent weight.

Unless otherwise stated, Dollars are US Dollars. The following abbreviations are used in this report:

4.4           Source Documents

The source documents for this report are summarized in Section 23.

5.0           RELIANCE ON OTHER EXPERTS

This report was prepared for First Majestic Silver Corp. (FMS) by the independent consulting firm Pincock, Allen & Holt, Inc. (“PAH”) and is based in part on information prepared by other parties. PAH has relied primarily on information provided as part of the following reports, investigations and operating results:

PAH believes that this information is reliable for use in this report. PAH has reviewed ownership documents for the purchase of Minera La Encantada shares from Peñoles; acquisition of Desmín shares; purchase land rights under expropriation procedure where La Encantada mine, plant, camp and ancillary installations are located; and documents for sampling and applications for renewal of the Permiso Ambiental Unico (environmental permit for operating); as well as copies of the titled concessions for La Encantada mining rights.

This information was also reviewed by FMS legal advisers and a legal opinion was provided to PAH by the Durango City-based legal firm of Mr. Carlos Galván Pastoriza in a document issued on October 31, 2008. Therefore, PAH believes all above described documents and information regarding the property current status, legal title and environmental compliance for La Encantada mining–metallurgical operation to be accurate and current in legal standing.

6.0           PROPERTY DESCRIPTION AND LOCATION

Additional details are presented in Technical Report Amended for La Encantada Silver Mine of March 18, and published in SEDAR on March 28, 2008. Figure 6-1 is a General Location Map and Figure 6-2 is a Mining Concessions Map.

6.1           Property Description

This Technical Report presents an update of La Encantada’s current operating conditions and projections as planned by FMS.

La Encantada Silver Mine property modifications for the period of October, 2007 to September, 30 2008 include the following:

Successful exploration programs have delineated a significant increment of reserves, including some tailings (+183 percent) and resources (M+I - -17 percent and Inf. +51 percent) for 2008 over 2007, at the La Encantada Silver Mine.

The La Encantada mining rights cover 2,237 hectares (5,227 acres) within 21 Mining Concessions including 3 approved Applications which have been accepted by the Dirección General de Minas and are now under the process of registration at the Mines Department (1,250 hectares or 3,089 acres). Two other Concession Applications have presented at the Mines Department and are under review for approval. These Concession Applications cover additional lands within the surrounding area of La Encantada for further protection and exploration potential. No other changes have occurred in total land coverage at La Encantada Silver Mine.

All the Mining Concessions legal status was provided by legal opinion, dated October 31, 2008 from the Durango City-based firm of Mr. Carlos Galván Pastoriza, legal advisers for FMS in México. PAH also requested and received an updated review by legal advisers of the mining concessions current status showing that all mining claims owned by Minera La Encantada, S.A. de C.V. are current in meeting the legal obligations and requirements by Mexican Mining and Environmental Laws and Regulations including assessment works, property taxes and operating permits for the period that covers to December 31, 2008. Table 6-1 shows the List of Mining Concessions at La Encantada.

TABLE 6-1
First Majestic Silver Corp.
Minera La Encantada, S.A. de C.V.
La Encantada Silver Mine
List of Mining Concessions

(*) Application approved in process of registration.
(1) Mining Application in process. Final coverage will be defined when the Title is issued. Area NOT INCLUDED.
(2) Fraction of Platón is included in the Paltón claim. It will be Titled with different No.

La Encantada Silver Mine is located within an isolated mining district in northern México. It is located in the northern part of the physiographic province of the Sierra Madre Oriental in the NW portion of the State of Coahuila. It is located in the municipality of Ocampo, at about 120km to the N60ºW from the city of Múzquiz, and 120km to the N7ºW from the city of Ocampo, Coahuila.

UTM coordinates for La Encantada area are as follows: N–3,139,550; E–739,660.

La Encantada mining district consists of two main silver/lead underground mines, the La Encantada and the El Plomo mines. Both of these mine areas have been consolidated into one operation, which is now owned and operated by FMS. Figure 7-1 shows the El Plomo inactive camp.

Additional details on Accessibility, Infrastructure, Climate, Vegetation, Physiography, Hydrology and Local Resources are presented in Technical Report Amended.

8.0           HISTORY

In 2003 Peñoles reported proven and probable reserves at the closing of La Encantada mine including 485,000 tonnes at an average grade of 570 g/t Ag and 3.98 percent Pb. FMS’s exploration efforts are directed to explore other areas of interest within the extensive underground workings, validate these historical figures and advance development of additional exploration targets. By June 2007, FMS reported NI 43-101 proven and probable reserves of 633,000 tonnes at an average grade of 315 g/tonne Ag, in addition to measured and indicated resources of 1.4 million tonnes at an average grade of 276 g/tonne Ag, and about 1.5 Million tonnes of inferred resources at an average grade of 200 g/tonne Ag, in Technical Report Amended of July 24, 2007 published in SEDAR.

The La Encantada aggressive exploration and development investments during 2007 resulted in additional proven and probable reserves estimated at 1.2 million tonnes for 2008 at an average grade of 343 g/tonne (11.03 oz/t) and measured and indicated resources estimated at 9.4 million tonnes at an average grade of 173 g/tonne (5.6 oz/t), in addition to inferred resources estimated at 2.6 million tonnes at a grade of about 220 g/tonne (7.0 oz/t). The 2008 reserves and resources represent a significant increment over the 2007 reported reserves (+183 percent) and resources of (M+I -17 and inferred +51 percent). Proven and probable reserves plus measured and indicated resources contain approximately 68.7 million ounces of silver equivalent, while inferred resources may contain about 20.0 million ounces of silver equivalent.

From the period of October, 2007 to September, 2008, FMS has mined and processed 178,480 tonnes of ore from La Encantada Silver mine at an average recovered grade of 297 g/tonne (9.5 oz/tonne) Ag, for a total of 1,704,300 contained ounces. FMS’s 2008 production consisted of about 70,000 tonnes of ore from the proven and probable reserves, in addition to ore extracted from different newly discovered areas during mine preparation and development activities, for a total of 108,480 tonnes. Currently the plant is operating at an average rate of about 800 tonnes per day, while the mine continues to access, prepare new working phases and develop additional reserves and resources.

9.0           GEOLOGICAL SETTING

Please refer to Technical Reports Amended dated July 24, 2007 and March 19, 2008 which were published respectively on July 25, 2007 and in March 28, 2008 in SEDAR.

To this date, there are no changes to report regarding the La Encantada Silver Mine geology.

National Instrument 43-101 Standards of Disclosure for Mineral Projects. Form 43-101F1 Technical Report–Instructions (5), December 23, 2005.

Figure 9-1 shows the La Encantada Regional Geologic Map.

Figure 9-2 shows La Encantada Silver Mine Geologic Cross Section.

10.0         DEPOSIT TYPES

There are no changes to report regarding geologic and mineral deposit concepts for the La Encantada Silver Mine.

Please refer to Technical Report Amended dated July 24, and published in SEDAR on July 25, 2007.

Figure 10-1 shows Types of Mineral Deposits at La Encantada.

11.0         MINERALIZATION

For details on mineralization at La Encantada Silver Mine please refer to Technical Report Amended of July 24 and published in SEDAR on July 25, 2007.

No changes regarding mineralization characteristics of the La Encantada Silver Mine have occurred since last publication in Technical Report Amended. However, the mineralized zones of the La Encantada mine have been further increased by discovery of a new mineralized zone denominated Buenos Aires.

FMS exploration drilling program to investigate the Azul y Oro deposit resulted in interception of an unknown mineralized zone which comprises a series of NW-SE oriented veins and mineralized breccia zones containing high grade silver mineralization with lead and zinc. These structures show variable widths of up to eight meters. The Buenos Aires zone is located between the Azul y Oro and La Escalera breccia zones within the northeastern portion of the mine.

Currently known projections of the Buenos Aires zone have been drilled from the mine levels 1870, 1790 and 1635. Preliminary drilling has determined some blocks of indicated and inferred resources which enclose approximately 850,000 tonnes containing some estimated 13 million ounces of silver equivalent in oxides.

FMS is preparing underground access to the zone and additional drilling to upgrade the Buenos Aires resource base.

Figure 11-1 shows Duplicate Channel Sample at Breccia San Javier.

Figure 11-2 shows stope 274 High Grade Silver at Breccia San Javier.

Figure 11-3 shows the Stope 141 – El Chamaco High Grade zone at the Bonanza Dike.

Figure 11-4 shows Breccia Milagros mineralization.

12.0         EXPLORATION

12.1         Introduction

La Encantada Silver Mine has been subjected to exploration programs from its discovery in the 1950s, by prospectors in the early stages and by Peñoles since the late 1960s to 2003. FMS has developed an aggressive program of explorations including mine development and preparations for drilling from underground sites. Additional diamond drilling is planned from surface locations, as well as geophysical surveying to investigate areas of interest and confirm other previously identified exploration areas.

Exploration efforts carried out during the second half of 2007 through 2008 were primarily focused in proving and developing additional reserves and resources for La Encantada mine. These resulted in a significant increment of both resources and reserves. Major efforts were developed in the areas of Breccia Milagros, Bonanza, San Francisco, Intrusivo Milagros, Azul y Oro, and Cuerpo de Zinc at mine level N-1535 and in the sampling of the old dumps. A long term exploration program was initiated to investigate the promising target at the La Escalera breccia zone. A new exploration target was identified during the course of explorations to define the Azul y Oro mineralized zone. The newly discovered zone, denominated Buenos Aires, is located between the Azul y Oro and the La Escalera breccia zones. FMS exploration efforts have resulted in a material change of the La Encantada reserve/resource base. These results, in addition to some tailings, show an increment of about 183 percent in proven and probable Reserves and a decrement of about 17 percent in measured and indicated resources over previously reported reserves and resources of October 31, 2007. Additional inferred resources have resulted in an increment of about 51 percent. These results have increased the ounces of silver equivalent contained for the La Encantada mine to about 69 million in proven and probable reserves plus measured and indicated resources. Additional exploration may upgrade the inferred resources, currently estimated at about 20 million ounces of silver equivalent.

Sampling of old dumps was also advanced and about 150,000 tonnes of screened material was measured, sampled and indicated during the period, in addition to screening and processing about 42,000 tonnes. Screening recovery of the dumps is about 40 percent in tonnage and grade enrichment from about 120 g/tonne Ag to about 160 g/tonne Ag. Figure 12-1 shows the La Encantada Exploration Program.

12.2         Exploration Programs

FMS’s program of underground exploration was designed to investigate the Milagros and San Javier breccia zones, as well as the San Francisco bedded deposits and the Bonanza area where numerous veins occur associated with the Bonanza dike. The La Escalera breccia zone appears to be a significant target for exploration.

During the period of September 2007, to September 30, 2008, a total of about 6,660 meters of core drilling was completed. During the period of January to June, 2008 underground workings for exploration purposes were developed at the La Encantada mine, including about 1,490 meters of access ramps, drifts, and crosscuts, and about 850 meters of exploration tunneling for drill sites access. This development resulted in a significant increment of resources and reserves at the various mine levels of the La Encantada Silver Mine, within the Stope 141, Stope 325, Breccia Milagros, Bonanza, Dique San Francisco, San Francisco, Jorobada, San Javier Extensión and Alto del Dique La Escondida areas.

12.2.1      Geophysical Exploration

FMS has designed an extensive 2008 program of exploration based on geophysical surveying to investigate the various identified anomaly areas, and to confirm other indicated potential zones. This program was completed during the period of January to October, 2008, and includes about 50 km of lines to be measured by Natural Source Audio-frequency Magnetotelluric methods (NSAMT). Readings were carried out along lines at 100m and 50m spacing according to geologic conditions, at 25m and 50m stations along the lines. This geophysical method takes reading of resistivity and conductivity parameters. The survey was conducted by Zonge Engineering and Research Organization from Tucson, Arizona. The Report is in progress. Some exploration targets have been identified and confirmed from previous research, including the most outstanding targets for investigation, such as the El Plomo, La Escalera Breccia zone and the Anomalous areas “A”, “B”, “C” and “D”. Figure 12-2 shows Geophysical Anomaly A – Line 3. Figure 12-3 shows Geophysical Anomaly El Plomo – Line 4.

12.2.2      Geochemical Exploration

No geochemical sampling has taken place at La Encantada during 2008; however, FMS has designed a 2009 exploration program that includes sampling for geochemical investigations in the areas of the geophysical anomalies. This program is estimated to include about 500 samples.

12.3         Drilling

Drilling programs at La Encantada have been limited since the best exploration results may have been obtained through underground development. Additionally, topographic conditions at the mine and irregular morphology of mineral concentrations make it difficult to plan for drilling. Therefore, drilling from underground sites and mine workings has proven to be the most effective combination for exploration at La Encantada.

During the period from September, 2007 to September 30, 2008, the La Encantada exploration team completed drilling from underground sites totaling 6,660 meters to investigate continuity and depth of the Azul y Oro, Breccia San Javier, and La Escalera mineralized structures. These drill holes resulted in discovery of the Buenos Aires mineralized zone, extension and confirmation of some of San Francisco and Azul y Oro mineralized zones.

Additional drilling was developed at the old Peñoles tailings dams to determine volume and grade of the two tailings dams. Metallurgical testwork was carried out in some of the drilled tailings. Grade, tonnage and metallurgical recovery estimates have resulted in additional resources for the La Encantada Silver Mine, since some of the silver contained by the tailings appears to be amenable for economic recovery by Cyanide Leaching processing methods. The tailings drilling program included 15 drill holes totaling 168 meters at the Tailings Dam No. 1, and 34 drill holes for a total drilled depth of 576 meters in Tailings Dam No. 2. Trenches and surveying delimited additional tailings volume at the Presa No. 3. Figure 12-4 shows tailing samples.

12.3.1     Exploration Drilling

FMS exploration activities for La Encantada mine include three drill rigs for drilling from underground sites. The program completed during 2008, consisted of a total underground development of 2,340m including drifts, crosscuts, raises, ramps and stopes development in addition to 5,000m of development carried out during the second semester of 2007. Numerous drill sites have been prepared during 2008.

Details of the exploration program developed and completed during 2008 are included in Table 12-1. This program resulted in a material change with significant additional Resources for the La Encantada mine. Table 12-1 shows the exploration program completed during 2008.

TABLE 12-1
First Majestic Silver Corp.
Minera La Encantada, S.A. de C.V.
La Encantada Silver Mine
Completed Exploration Program for the Period November, 2007 to September, 2008

The FMS exploration program for La Encantada includes an aggressive underground and drilling plan that has a high probability of success given the geological conditions of the mineralization at the mine. In PAH’s opinion the combination of direct exploration methods, drilling and underground development represents a good balance for exploration at La Encantada. The program is directed to access projected known areas of mineralization as well as to investigate other adjacent and new promising areas that may result in an increment of the resource base and a higher level of reserves for the mine. This has been proven positive during the period of 2008 since the new Buenos Aires zone was discovered and resulted in additional resources containing approximately 13 million ounces of silver equivalent.

The exploration program suggested by FMS for the La Encantada Silver Mine for implementation during the period of calendar year 2009 is presented in Table 22-1 including estimated costs. This program consists of 7,195 meters of drilling, including 23 drill holes from underground sites, and 10,807 meters of underground drifting. Table 12-2 shows the La Encantada exploration program for 2009.

TABLE 12-2
First Majestic Silver Corp.
Minera La Encantada, S.A. de C.V.
La Encantada Silver Mine
Exploration Program for the Period October-December, 2008, January-September, 2009

In PAH’s opinion, FMS’s exploration program at La Encantada represents an aggressive exploration program with a high probability of success to upgrade the mine’s reserve and resource base, and with high probability for discovery of additional mineralized zones, which would lengthen the mine’s life. PAH recommends implementation of the suggested program at an estimated cost of about $2.5 million.

13.0         DRILLING

FMS continued with an aggressive drilling program at La Encantada during the period from September, 2007 to September, 2008. FMS has three drilling rigs to carry out the exploration drilling from underground sites. FMS’s program for 2009 includes 7,195 meters of core drilling from underground sites to investigate the La Escalera breccia, Buenos Aires and Azul y Oro targets from the 1870, 1970 and 1535 mine levels. Exploration drilling requires access and drill site preparation, which for the underground exploration is estimated to be approximately 10,800 meters of ramps, drifts, crosscuts and drill site construction.

During the period of January through September 2008, drilling at La Encantada completed 29 drill holes for a total depth of 6,660 meters from underground locations. This program resulted in additional total estimated tonnage of 850,000 tonnes of indicated and inferred resources at an average grade of about 340 g/tonne (about 11 oz/tonne) Ag in oxides mineralization with lead and zinc.

Fifteen drill holes were completed from underground access to investigate the Azul y Oro mineralized structure. These drill holes also intercepted a new mineralized zone denominated Buenos Aires. Some of these drill holes intersected some of the mineralized structures of the Azul y Oro zone confirming geologic continuity of the mineralization. Additional resource and some reserve blocks were confirmed by the program. Figure 13-1 shows the Buenos Aires Drilling and Figure 13-2 shows Underground Drilling for Azul y Oro and Buenos Aires zones.

Details of FMS’s 2008 and 2009 drilling program are presented in Tables 12-1 and Table 12-2. Estimated costs for the 2009 program are presented in Table 22-1.

FMS has defined future targets of exploration for drilling from surface. These include confirmation of geophysical and structural anomalies, such as:

• Breccia La Escalera
• Anomaly A
• Anomaly B
• El Camello, etc.

Exploration drilling from underground drill sites includes:

• Buenos Aires
• Azul y Oro
• Bonanza Dike
• San Javier
• Breccia Milagros
• La Escalera, etc.

PAH believes that this drilling program from surface and underground workings, in combination with underground development, is appropriate and well designed to explore promising targets. Geologic potential exists to discover additional mineralized zones along the development workings. Estimated budget for this program is included in Section 22 of this Report - Recommendations. PAH recommends implementation of this program. Figure 13-3 shows Buenos Aires Drill Core Intercept. Figure 13-4 shows Buenos Aires High Grade Core.

14.0         SAMPLING METHOD AND APPROACH

PAH reviewed La Encantada’s sampling program for the preparation of the Technical Report Amended dated July 24, 2007. Full description of sampling method and approach by La Encantada’s geologic crews is presented in the Technical Report Amended July 24, 2007. Additionally, PAH also reviewed the La Encantada sampling procedures for this Technical Report and did not notice changes in protocols that may affect the results, other than improving in some areas, such as QA/QC with increasing number of filed duplicates for drilling and reserve blocks samples.

The samples are brought into the La Encantada laboratory for preparation and assaying. Duplicate samples are sent to Inspectorate Lab for assay checks. Additional representative samples are sent to the La Encantada laboratory for density determinations. For the period of 2008 FMS has assayed 38 duplicate samples and 26 pulp samples at Inspectorate Lab in Reno, Nevada for comparison with assay results from the La Encantada lab. A total of 28 representative samples for density were sent to the La Encantada Lab from the El Plomo, Bonanza, Breccia Milagros, San Javier and San Francisco zones.

In PAH’s opinion, the channel and core sampling and methods applied by La Encantada exploration and mining crews is done carefully and responsibility by well trained samplers. The sampling appears to reconcile with silver/lead head assays for the processing plant, as well as with production and sales by Minera La Encantada. The channel and core samples appear to properly represent the mineralization of La Encantada various deposits; therefore, they are acceptable for resource and reserve estimates. Figure 14-1 shows channel sampling. Figure 14-2 shows a channel sample of Azul y Oro Veinlet. Figure 14-3 shows a channel Sample of Azul y Oro at Level 1790.

15.0         SAMPLE PREPARATION, ANALYSIS AND SECURITY

15.1         Sample Preparation

PAH reviewed the La Encantada sample preparation for the Technical Report Amended dated March 18, 2008. FMS has not modified the sample preparation methods and procedures. Details are presented in the Technical Report Amended.

15.2         Laboratory Facilities

PAH notes that the La Encantada laboratories generally appear to be adequate, with reasonable cleaning and organization. The laboratory currently conducts about 800 samples by fire assay and AA per month, including exploration samples, development samples, and mill samples.

More details on laboratory facilities are presented in Technical Report Amended of July 24, 2007.

FMS’s procedure for quality controls is by sending drill core, mine samples and/or pulps to an outside laboratory, usually Inspectorate Labs in Reno, Nevada. Samples of concentrates are regularly sent to Peñoles for check assays. The laboratory duplicates pulp assays at about 1 sample for every 20 and it includes field duplicates, standard samples and introduction of blank samples.

15.3         Check Assaying

To evaluate sample quality control, the La Encantada personnel perform periodic check analyses on samples. For the period from November, 2007 to September, 2008, La Encantada has sent 64 samples to Inspectorate Laboratories, an independent commercial laboratory in Reno, Nevada for duplicate analysis. These include 38 channel samples from reserve blocks in addition to 26 core duplicates of pulps from the reserve blocks. Results of the assays and graphs are presented in the following tables and graphs. La Encantada Silver Mine is mining and processing mineralization contained in oxides, which presents highly variable metal concentrations due to its inherent genetic characteristics. In this type of mineral occurrence, the comparison of assays may present high variations, depending on the mineral content of each sample. High grade silver assays may present differences of up to 80 percent due probably to some nugget effect, while the middle range grade samples usually result in close assays. In overall comparison, however, within a range of assays that represent very low to very high grades, the correlation is acceptable at an average of 74 percent for silver, and 100 percent for lead. While the duplicates of pulp samples show a better correlation of 99 percent for silver and 98 percent for lead.

Tables 15-1, 15-2 and Figures 15-1 and 15-2 show the assay results and graphs for samples of the La Encantada reserve blocks as duplicate samples and as duplicate pulp samples. The comparison is between assays by the La Encantada mine’s lab and Inspectorate Laboratories. Figure 15-3 shows the Buenos Aires drill core.

TABLE 15-1
First Majestic Silver Corp.
Minera La Encantada, S.A. de C.V.
La Encantada Silver Mine
Sample Assay Checks
Reserve Duplicate Samples (1)

(1) Data by FMS, formatted by PAH

TABLE 15-2
First Majestic Silver Corp.
Minera La Encantada, S.A. de C.V.
La Encantada Silver Mine
Sample Assay Checks
Reserve Duplicate of Pulp Samples (1)

(1) Data by FMS, formatted by PAH.

The reserve duplicate samples mineral content range includes assays that vary from 0.2 to 1,409 g/tonne Ag. The average correlation coefficient of the silver grades is acceptable for the set of samples, at 74 percent, with slightly lower assays by the La Encantada lab. The reserve pulp duplicate samples, for the set of duplicate samples, range in silver values from 0.7 to 781 g/tonne Ag with an average correlation of 99 percent and slightly lower silver assays for the La Encantada Lab and average correlation of 98 and 99 percent respectively for lead and zinc. Therefore, pulp duplicate samples assays show good sample preparation procedures at La Encantada. PAH believes that the reproducibility of silver grades is acceptable, and it represents acceptable procedures and practices in the sampling preparation processes.

La Encantada Silver Mine has implemented a strict program of Quality Control by introduction of blank and standard samples, as well as the insertion of field duplicate samples and pulp duplicates to keep a close control of the assay results. PAH recommends continuing with current sample preparation and shipping processes, which show acceptable differences in assay checks.

15.4         Conclusion

Overall, PAH found that the results from the check assaying are excellent and acceptable for pulp duplicates, the mineralization in oxides may cause larger differences in assays due to its nature. It is PAH’s opinion that the sample methods and analyses are representative of the deposits at La Encantada mine, and that most of La Encantada’s data was generated by procedures that were carried out according to accepted industry standards using accepted practices.

PAH finds that the exploration, sampling, and laboratory analysis for La Encantada operation is being conducted by FMS in a reasonable manner consistent with standard industry practices. In PAH’s opinion the sampling results appear to be reasonably representative of the deposits mineralization and believes that they may be used with acceptable confidence in the estimation of the mineable reserves.

16.0         DATA VERIFICATION

PAH has not taken independent samples from the surface or underground exposures of the mineral concentrations at La Encantada mine, as other Qualified Persons have previously sampled the mineralization as discussed in this report, and the production records are the most reliable data of mineralization contained in the ore deposits under development at the mine. Peñoles developed and operated La Encantada mine for over 25 years producing over 80 million ounces of silver. Peñoles is one of the leading Mexican mining companies and the world’s largest silver producer.

FMS has established in a short operating period a systematic procedure to verify data and quality control which is proving effective and accurate. Assay data and information generated by the operation is transmitted manually; however, the entire paper trail is accessible and available for inspection.

FMS initiated effective control of La Encantada operations since November 2006 when it took control of the mining operation. La Encantada has established an active program of assay checks for samples and pulps of exploration, production and concentrates at the mine’s lab in comparison to assays performed by Inspectorate Laboratories of Durango city and Reno, Nevada, and concentrate sampling and assaying program by a sales representative in the city of Torreón, Coahuila to check the assays reported by the MET-MEX Peñoles smelter.

Table 16-1 presents a summary of concentrate assays for July, 2008 of shipments to MET-MEX Peñoles. This summary presents a comparison of assays by La Encantada lab and MetMex Peñoles.

TABLE 16-1
First Majestic Silver Corp.
Minera la Encantada, S.A. de C.V.
La Encantada Silver Mine
Concentrate Checks for July, 2008 Shipments

The coefficient of correlation is excellent for all determinations, including weight (99 percent), silver (100 percent) and lead (95 percent).

Figure 16-1 shows correlation between silver assays of both laboratories.

PAH believes that an adequate amount of checking has been conducted and that the results are representative of the mineralization and concentrates produced at La Encantada and shipped to the smelter.

PAH’s conclusion is that the results from check assaying are reasonable, including appropriate preparation procedures that the sampling results appear to be reasonably representative of the deposit mineralization and concentrates, and should be usable with acceptable confidence in the estimation of the mineable reserves.

17.0         ADJACENT PROPERTIES

No adjacent properties exist within the surrounding area of La Encantada. The El Plomo mine was operated as an independent mine for a period of time during the early stages of La Encantada development; however, in 1983 it was purchased by Minera La Encantada and it has been part of La Encantada mine since then. Underground developments of La Encantada and El Plomo were connected and established as one underground system. No other mine exists nearby the La Encantada area.

La Encantada mine is located at about 100km from the cities of Ocampo and Muzquiz, in Coahuila, México.

La Encantada mine housing facilities include 180 single family houses, events center, hotel and three restaurants, elementary school facilities, secondary school by teleconferences, sport facilities for soccer, squash and bowling, apart from the administration offices and warehouses, etc. Refurbishing of required facilities is in progress.

FMS has consolidated ownership of the La Encantada mine area by acquiring all mining claims and additional concessions around the property. Surface rights have also been acquired by La Encantada from the local “Ejido” (land community) under expropriation proceedings in accordance with the Mining Laws.

18.0         METALLURGICAL TESTING AND MINERAL PROCESSING

The ore processed at La Encantada is a complex mixture of oxide and sulfide minerals and is consequently difficult to process efficiently. The principal economic minerals are as follows:

• Argentite (Ag₂S)
• Acanthite (Ag₂S)
• Cerussite (PbCO₃)

The gangue is principally limestone and hematite with minor amounts of quartz, manganese, and zinc.

The ore is relatively soft and friable making for easy crushing and grinding. The ore processing method consists of crushing and grinding followed by two sequential flotation steps, the first consists of sulfide mineral flotation and the second is oxide mineral flotation. The reason for floating the ore in two stages is because the reagents used for oxide flotation are detrimental to sulfide flotation. Recoveries are poor, a reflection of the difficult mineralogy of the rock.

A cyanide leach plant is currently under construction at La Encantada and plans are to place it in operation in April 2009. The plant will process ore from the mine and waste dumps and from the three existing tailings containments: No. 1, No. 2 and No. 3.

Metallurgical testwork has been conducted on cyanide leaching of old tailings and of flotation concentrate. Results of the testwork are presented in Table 18-1 and 18-2, respectively.

Table 18-1 shows that cyanide leaching achieves relatively good recovery, averaging 59 percent, from the lower-grade, lower-tonnage No. 1 Tailings, and relatively poor recovery, averaging 40 percent, from the higher-grade, higher-tonnage No. 2 Tailings. Recovery from the composite sample, a mixture of fresh ore and Tailings No. 1 and No. 2, was good at 67 percent, though the sample is not particularly representative of what will be fed to the plant.

Table 18-2 shows that cyanide leaching of one sample of flotation concentrate gave very good recovery, at 98 percent. When the cyanide leach plant becomes operational, one option for the future plans is to eliminate flotation and instead, cyanide leach the ore and waste dump rock in the new plant following crushing and grinding in the existing mill. Direct cyanide leaching the ore and waste dump rock is projected to be 78 percent in the FMS Cash Flow Model, which appears reasonable based on the results of leaching concentrate and old tailings; however, the testwork is limited but the results were comfirmed with historic testworks made by Penoles.

One area of concern in the cyanide leaching plant is that the process water used at La Encantada is slightly saline and testwork conducted thus far has been with standard potable water. It may well be that the use of plant process water will be of no consequence but, until this is tested, this uncertainty remains.

TABLE 18-1
First Majestic Silver Corp.
Minera La Encantada, S.A. de C.V.
La Encantada Silver Mine
Cyanide Leach Testwork, Tailings and Ore/Tailings Composite

* Made up of 37.5% mine ore, 31.25% Tailings No. 1, and 31.25% Tailings No. 2

TABLE 18-2
First Majestic Silver Corp.
Minera La Encantada, S.A. de C.V.
La Encantada Silver Mine
Cyanide Leach Testwork, Flotation Concentrate

*Note: Residual concentrations of cyanide and lime
could not be determined because of the strong yellow
color of the leach solution.

19.0         MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES

La Encantada uses conventional, manual methods, assisted by computer databases, to calculate the tonnage and average grades of the mineral resources and reserves. FMS has initiated the compilation of all data to incorporate it into a database and create a geologic model in SURPAC software which has been acquired by the company. FMS has reviewed and calculated resources and reserves for La Encantada to assess the current status of the property and to use it as a basis for future updated estimates. FMS assumed control of La Encantada Silver Mine operation from November 2006. FMS estimated the first resource/reserve base for the La Encantada mine as of May 31, 2007. This estimate is an update of October 31, 2007, resource/reserve base and it incorporates exploration and underground development results for the mine. During the current period, November, 2007 to September 2008, La Encantada mined a total of about 205,000 tonnes of ore, from which only 90,000 tonnes were mined out of the previously reported reserves and also increased the reserves during the period to about 5.2 million tones, including 4.0 million tones of tailings to be processed by cyanidation. This resource/reserve update calculation has been estimated as of September 30, 2008.

19.1         Introduction

FMS estimated proven and probable reserves, as of October 31, 2007, amounted to 1.2 million tonnes at an average grade of 312 g/tonne Ag and 1.77 percent Pb. Cutoff grade was estimated as 256 g/tonne Ag only, and 241 g/tonne Ag equivalent net of Pb credit. The estimated reserves were included in the deposits of: Breccia Milagros, Azul y Oro, Breccia Keylor, Cuerpo 660, Mantos 314, Chicotón Stope, San Francisco, La Piedra, Cola Gallo deposits and some dumps.

FMS has implemented exploration programs based on drifting, drilling and channel sampling. During this reported period, October, 2007 through September 2008, FMS has increased the silver contained in the resource/reserve base for the La Encantada mine by about 31 percent including proven and probable reserves and measured and indicated resources. Additional inferred resources have been delineated and other exploration targets are under further investigations. Additional resources and reserves were developed within the La Encantada mine in the Breccia Milagros, Bonanza, San Francisco, Azul y Oro and Jorobada deposits. A new discovery was made during the drilling program of the Azul y Oro deposit, the Buenos Aires deposit, which has been currently estimated in additional resources for La Encantada in excess of 536,000 tonnes of Indicated Resources at an average grade of 395 g/tonne Ag (7.2 million ounces of silver equivalent) and 560,000 tonnes of Inferred Resources at an average grade of 339 g/tonne Ag (6.5 million ounces of silver equivalent). Silver equivalent includes Pb credits. Dump materials and tailings dams have been sampled and measured resulting in additional reserves and resources for the La Encantada mine.

19.2         Methodology

Under the La Encantada mine’s diverse geologic environment, the resource and reserve blocks have been defined at the various drift levels where sampling has found mineable ore within the mineralized zones.

The reserve tonnage and grade are based largely on channel samples along drifts, crosscuts and other mine workings. Drilling from underground sites was initiated to explore the San Francisco, Breccia Milagros, San Javier and Azul y Oro mineralized structures to depth. This program was completed with 29 drill holes and a total depth of 6,660 meters. FMS’s surface drilling program has been on hold due to delay in delivery of geophysical exploration program report.

Reserve and resource blocks range in length according to variable extensions of breccia or mineralized zones, and are from 50 to 150 meters in length along the mineralized structures. The resource and reserve blocks are developed by drifting across breccia zones and structures. Proven reserve blocks are projected up to 15 meters from the drift in which the channel samples were taken, and Probable blocks extending another 25 meters beyond the proven blocks where the geology and mine developments may allow.

All adits, drifts ramps and access development headings are regularly surveyed by La Encantada staff. The mineralized zones are subdivided into vertical sections through the multiple horizontal levels, such that each vertical section has 10 meter horizontal separation from the immediately adjacent sections. For reserve estimation, the cross sectional area of mineralization is drawn on each of these 10 meter spaced sections using Auto CAD software and the assayed sample lengths. The volume of mineralization on each section is calculated for the mineralized zone extending 5 meters on either side of the section. The density factor (specific gravity) is then input into the calculation, and tonnage is calculated based on the formula; Length (in meters) X Width (in meters) X Height (in meters) X Specific Gravity = tonnes of material.

The density factor used to convert reserve block volumes into tonnes has been determined as a weighted average from ore samples representative of the various deposit areas. The density tests were performed by Peñoles and by FMS. Numerous samples have been sent to an external lab (Inspectorate Lab) for determination. Currently FMS has carried out density tests of representative samples of the different deposits within the mine. Breccia Milagros samples density determinations have reported an average of 2.98, El Plomo area (3.07), Bonanza (3.14), San Javier (2.75) and Dique San Francisco (2.96) . La Encantada continues to follow a conservative approach by taking an average density of 2.70.

PAH believes that, on average, the density for mineralization is reasonable. PAH recommends that additional representative samples be taken periodically, as checks for bulk density determination, to ensure and properly adjust the application of an appropriate density factor as required.

To estimate the average grade and thickness for each 10 meter section that crosses a reserve block, La Encantada composites all the sample grades in the drift that occur within 5 meters on either side of the section. La Encantada has determined that the most appropriate filter for grade outliers is to assign a top grade of 1,000 g/tonne Ag to those samples. The total length of samples in the composite is then divided by the total number of composites, giving the average width of the mineralization in the drift at that section. Similarly, the average silver grade of the samples, weighted by length, gives the average silver grade for the drift at that section.

The tonnes and grade for each reserve block are then determined by combining the tonnes and grade results obtained for each 10 meter section that crosses the block. The resource block tonnes and grade are tabulated by La Encantada personnel on a series of spreadsheet summaries.

PAH notes that the sampling conducted across the mineralized zones for use in the reserve estimates is done with cutoff grade and width considerations, at a minimum mining width of 2.00m. This minimum width typically includes zones within the structures that are above the cutoff grade, as well as sub-ore grade mineralization below the cutoff grade, in which case La Encantada eliminates these areas when possible.

PAH also notes that in a few local areas, the drift is wholly enclosed by the mineralized structures and, unless there are some additional crosscuts or drilling, the vein width is taken as that measured across the confines of the drift opening. PAH recommends that the true structure widths, measured by cross cuts and/or the drill holes, be used as much as possible in the blocks of reserve and resource estimation.

The reserve blocks estimated by La Encantada are exclusive of the resource blocks.

In PAH’s opinion the reserve and resource block estimates carried out by La Encantada have been reasonably prepared and conform to acceptable engineering standards for reporting of reserves.

19.3         Cutoff Grade Calculations

PAH has used more conservative metal prices than those used by First Majestic, mainly because most pricing used by the company is much higher than current international pricing levels, and PAH has chosen more conservative pricing in view of the current international economic trends. PAH’s prices are about 13.4 percent lower than First Majestic’s prices. A comparison of metals prices is shown in Table 19-1.

TABLE 19-1
First Majestic Silver Corp.
Minera La Encantada, S.A. de C.V.
La Encantada Silver Mine
Comparison of Metal Prices for 43-101 (U.S. Dlls)

*PAH lead and zinc prices in line with current pricing and predicted trends

19.3.1     Underground Mine Cut-Off Grade

For the current reserve, PAH has calculated breakeven cutoff grades for both the underground mine operations and also the dump recovery program. The basic parameters applicable to the cutoff grade calculations for the underground mine are shown in the following Table 19-2 and Tables 25-13 and 25-14 in Section 25.8.2 of this report.

TABLE 19-2
First Majestic Silver Corp.
Minera La Encantada, S.A. de C.V.
La Encantada Silver Mine
*Cutoff Grade Parameters (U/G Mine Only)

*Based on January-September, 2008 Operating Data

Equating the parameters in the above table (U/G mine only), the breakeven cutoff grade for silver (C_Ag), based solely on silver for total operating costs (Table 25-13) and process recoveries anticipated is as follows:

CM_Ag =Total operating costs/ (silver price X mill recovery X smelter payable metal)

CM_Ag= $55.01/( $12.00 X 0.60 X 0.95) = 8.04 oz Ag per tonne or 250 g Ag/t.

However, there is a lead contribution for La Encantada ores. Production of lead in the concentrates from the mine only throughSeptember 2008 is about 777.5 tonnes. The calculation for lead contribution is as follows:

Revenues for Mine from lead (R_m) = Lbs lead in concentrates X payable from smelter X lead price:

R^m =777.5 t X 2204.6 lbs/t X 0.90 X $0.75

R_m = $1,157,002

R_m/ tonnes mined & milled = $1,157,002/ 136,326 t = $8.49/t

The silver equivalent of lead contribution = $8.49 /$12.00 = 0.71 oz Ag/t or 22 g Ag/t.

The adjusted mine cutoff grade (CM_Ag) is then: 250 g Ag/t -22 g Ag/t = Ag = 228 g Ag/t.

19.3.2     Mine Dump Recovery Cutoff Grade

The basic parameters used for the cutoff grade calculations for the recovery of dump material are shown in Table 19-3 as follows:

TABLE 19-3
First Majestic Silver Corp.
Minera La Encantada, S.A. de C.V.
La Encantada Silver Mine
*Cutoff Grade Parameters (Mine Dump Recovery)

*Based on January-September 2008 Operating Data

Equating these parameters (dumps only), the breakeven cutoff grade for mining and processing of the in-situ dumps, based solely on silver for the total operating costs (Table 25-14) and process recoveries anticipated, is as follows:

CD_Ag = Total Operating Costs/ (silver price X mill recovery X smelter payable metal).

CD_Ag= $40.98/ ($12.00 X 0.55 X 0.95) = 6.54 oz Ag/t or 203 g Ag/t.

A lead contribution is also applicable for recovery of dump material. About

183 tonnes of lead in concentrates have been produced through September2008. The calculation for the lead contribution is as follows:

Revenues for lead from Dumps (R_d)= Lbs in concentrates X payable from smelter X lead price:

R_d = 183 tonnes X 2204.6 lbs/t X 0.90 X $0.75

R_d= $272,323

R_d per tonne of dumps processed = $272,323/42,155 = $6.46/t.

Ag Equivalent per tonne = R_d/ Ag price = $6.46/ $12.00 = 0.54 oz Ag/t or 17 g Ag/t.

Adjusted Cut-off Grade (CD_Ag) for dumps = 203 g Ag/t – 17Ag/t = 186 g Ag/t.

19.3.3     Tailings Recovery Cutoff Grade

First Majestic is constructing a new 3,500-tpd processing plant, principally for the recovery of silver values from the flotation tailings. This plant will employ a grinding circuit with thickeners, counter-current decantation and a Merrill-Crowe metals recovery system. PAH has calculated a breakeven cutoff grade for the recovery of silver from the tailings, based on the parameters such as plant recoveries and operating costs set forth in First Majestic’s metallurgical test-work reports, and that First Majestic will send silver-gold precipitates to La Parrilla unit, where bullion bars will be produced. The basic parameters used for the Tailings Recovery cutoff grade estimation are shown in Table 19-4.

TABLE 19-4
First Majestic Silver Corp.
Minera La Encantada, S.A. de C.V.
La Encantada Silver Mine
*Cutoff Grade Parameters (Tailings Recovery)

*Based on FM Metallurgical Data & Cost Estimates
**Plant throughput design is 3,500 tpd

The cutoff grade for the tailings is calculated with the formula:

CT_Agt= Total Operating Costs/(Plant recovery X silver price X payable metal)

CT_Ag = $17.00/(0.40 X $12.00 X 0.995)

Ct_Ag= 3.56 oz Ag/t or 111 g Ag/t

19.4         Reserve Estimates

PAH has reviewed La Encantada reserve update of September 30, 2008 along with factors for mining dilution and recovery. In addition, the sampling methods, assaying procedures, compositing methods, data handling, cutoff grade application and grade calculations were reviewed. Several reserve blocks were cross-checked to track data handling from the initial assays to the final tonnage and grade calculation to ensure that the stated methods and practices were observed.

La Encantada has estimated mineable Reserves for the following deposits:

• Breccia Milagros
• Azul y Oro
• Breccia Keylor
• Cuerpo 660
• Mantos 314
• Breccia Chicotón
• Cedritos
• Cola Gallo
• Bonanza
• San Francisco
• La Piedra, and
• Stockpiles at the mine and at the plant patios.

The total “in-situ” diluted hard rock Reserve at a minimum mining width of 2.00m, as reviewed by PAH, is 1.209 million tonnes averaging 343 grams (11 oz) per tonne silver and 2.39 percent (53 lb/tonne) lead, for a total of 13.9 million contained ounces of silver net of lead credit. Additional reserves were estimated from Tailings Dam No. 1, which contains about 4.0 million tones at an average grade of 168 g/tonne (5.4 oz/tonne) silver at estimated at a Cutoff Grade of 111 g/tonne silver, to be reprocessed by cyanidation. As discussed previously in the calculation methodology section, the proven ore category has been projected up to 15 meters from the drift sample data, while the probable ore category is projected another 15 meters beyond the proven ore.

La Encantada has been processing pre-screened dump materials. Results for the month of September 2008 indicate that screened dumps yield about 40 percent of tonnage with increased silver grade from about 67 g/tonne to about 131 g/tonne; therefore, the dump materials have been included as an indicated resource due to silver content of an average grade below the cutoff grade. Estimated recovered screened tonnage from the measured dumps is about 225,000 tonnes. Table 19-5 presents a summary of La Encantada proven and probable reserves. Figure 19-1 shows Buenos Aires resource blocks. Figure 19-2 shows Breccia Milagros reserves. Figure 19-3 shows Azul y Oro resource blocks. Figure 19-4 shows San Francisco Dike reserve blocks.

TABLE 19-5
First Majestic Silver Corp.
Minera La Encantada, S.A. de C.V.
La Encantada Mine
Mineral Reserves Prepared by FMS, Reviewd by PAH as of September 30, 2008 (1)

(1) Cut Off Grade estimated as 250 g/tonne Ag only; and 228 g/tonne Ag eq net of Pb credit. Estimated Reserves are exclusive of Resources. 7
(2) Silver equivalent includes Pb credit, at prices US$12.00/oz -Ag, $0.75/lb -Pb. Pb credit=22 g/tonne - -Ag.
(3) Mining dilution is included at a minimum mining width of 2.00m. Estimates do not include mining recovery.
(4) Zinc is not recovered

(1) Cut Off Grade estimated as 250 g/tonne Ag only; and 228 g/tonne Ag eq net of Pb credit. Estimated Reserves are exclusive of Resources
(2) Silver equivalent includes Pb credit, at prices US$12.00/oz -Ag, $0.75/lb -Pb. Pb credit=22 g/tonne -Ag.
(3) Mining dilution is included at a minimum mining width of 2.00m. Estimates do not include mining recovery.
(4) Zinc is not recovered
(5) Tailings COG estimated at 111 g/tonne.

(1) Cut Off Grade estimated as 299 g/tonne Ag only; and 274 g/tonne Ag eq net of Pb credit. Estimated Reserves are exclusive of Resources.
(2) Silver equivalent includes Pb credit, at prices US$12.00/oz -Ag, $0.75/lb -Pb. Pb credit=22 g/tonne -Ag.
(3) Mining dilution is included at a minimum mining width of 2.00m. Estimates do not include mining recovery.
^{(4) Zinc is not recovered}

Pincock, Allen & Holt	REVISED	19.12
90533 February 26, 2009

La Encantada deposits occur in breccia zones and faults or fracturing intersections that make wide and irregular deposits. These generally present widths greater than 2.00m which is estimated to be the minimum mining width due to the mining equipment in use at the mine. Therefore, mining dilution is only significant when the mining is developed along narrow structures. Provisions have been taken to include the mining dilution for those areas.

19.5         Resource Estimation

Resource calculations by FMS at La Encantada are based on projections of the mineralized zones in the underground mine workings; 10m to 15m beyond the areas of reserves for the measured resources; and another 15m beyond the boundaries of the measured resources for the blocks of indicated resources. inferred resources are estimated by projecting up to 50m beyond the indicated resource block boundaries along mineralized structures, and another 15m beyond the blocks’ width. The estimated resource blocks may be limited by underground levels and previous mining extraction. Longitudinal projections depend on the drift development along the mineralized zones and it may vary from about 50m up to 150m in length.

La Encantada mineral resource estimates were applied only to adjacent blocks from the estimated reserves. Resource estimates were made for blocks that include only oxidized mineralization, such as the Breccia Keylor, Azul y Oro, Breccia Milagros, Cuerpo 660, Cuerpo 660 W and San Francisco deposits. Sulfides mineralization is only estimated in the La Morena deposit. Sulfides are only considered as resources because the processing facilities for the zinc circuit at the plant are not currently operating.

The grade for these blocks is determined from the grade estimated for the adjacent reserve blocks, and sampling in mine workings and drill holes located within the block area.

Geologic potential still exists within the mine’s area to investigate targets that may result in additional resource development for La Encantada. Exploration and full development of breccia zones, such as: Milagros, San Javier, Keylor, San Francisco and Azul y Oro may result in high-tonnage resource development. The Breccia Milagros appears to be a significant deposit. Other areas that appear to represent important targets for exploration are breccia La Escalera and the area west of the La Prieta deposit beyond the María Isabel fault. This area appears to be downthrown to the west of La Prieta deposit, which represents the largest known deposit within La Encantada area.

In addition to the reserves, La Encantada has estimated resources in blocks within the following areas:

• Buenos Aires
• Breccia Milagros
• Azul y Oro area
• Breccia Keylor
• Cuerpo 660 E and W
• Bonanza
• Ojuelas Ampliación

• Intrusivo Milagros
• San Francisco
• Dique San Francisco
• La Piedra
• Mine dumps
• Jorobada

Additional inferred resources have been projected in the Azul y Oro, Buenos Aires, Breccia San Javier, Bonanza, Intrusivo Milagros and San Francisco zones.

La Encantada’s estimate of measured and indicated resource blocks as reviewed by PAH, is shown in Table 19-6. The measured and indicated silver resources consist of 5.4 million tonnes averaging 176 grams (5.6 oz) per tonne silver, for a total content of 33.4 million ounces of silver equivalent. This resources grade has been estimated “in situ”, and the silver equivalent content is net of lead credit, at 22 g/tonne Ag. The tailings dams No.1 and No.2 and dumps material have been included as indicated resources. This estimate is based on the following prices: Ag - $12.00/oz and Pb - $0.75 / lb.

Table 19-6 is the measured and indicated resource estimate for La Encantada. PAH notes that these resources are in addition to the previously reported reserves.

La Encantada has estimated additional silver resources at a distance beyond the proven and probable reserves. These additional resources lack sufficient drifting, raising, sampling, drill holes or old workings with production data, and are estimated at a lower degree of confidence than other reserve or resource categories. PAH considers these additional resources to be of an inferred category and they are based on projections of presumed vein continuity ahead, above, and below current mining; and are based on very widely-spaced drill holes, surface sampling or old surface workings. These resources are presented by La Encantada as inferred resources.

Each reserve and resource category presented in this Report are exclusive of each other.

The inferred resources need considerable grade and tonnage information before they can be “proved up” to “Mineable Reserves.” To date, La Encantada has demonstrated a continuity along about 4.0 kilometers of strike length and down dip to about 700 meters; so it is reasonable to assume that in the future resources will continue to be converted to ore as additional drifting, crosscutting and raising define vein configurations, sampling and assaying determine the grade, and diamond drilling confirms vein extensions and fills in data gaps. Inferred resources for La Encantada are presented in the lower portion of Table 19-6. Inferred resources are exclusive of reserves and measured and indicated resources.

TABLE 19-6
First Majestic Silver Corp.
Minera La Encantada, S.A. de C.V.
La Encantada Mine
Mineral Resources Prepared by FMS, Reviewd by PAH as of September 30, 2008 (1)

(1) Cut Off Grade estimated as 250 g/tonne Ag only; and 228 g/tonne Ag eq net of Pb credit. Estimated Resources are exclusive of Reserves.
(2) Silver equivalent includes Pb credit, at prices US$12.00/oz -Ag, $0.75/lb -Pb. Pb credit=22 g/tonne-Ag.
(3) Mining dilution is included at a minimum mining width of 2.00m. Estimates do not include mining recovery.
(4) Zinc is not recovered.

(1) Cut Off Grade estimated as 250 g/tonne Ag only; and 228 g/tonne Ag eq net of Pb credit. Estimated Resources are exclusive of Reserves. 24,774,263
(2) Silver equivalent includes Pb credit, at prices US$12.00/oz -Ag, $0.75/lb -Pb. Pb credit=22 g/tonne-Ag.
(3) Mining dilution is included at a minimum mining width of 2.00m. Estimates do not include mining recovery.
(4) Zinc is not recovered.
(5) Tailings are considered as indicated resources because require of bulk testing. Cut Off Grade at Ag-111 g/tonne.
(6) Dump stockpile is considered as indicated resource because the average grade is below COG.It represents 40.19% of measured tonnes.
(7) Dump stockpile Cut Off Grade is estimated at 203 g/tonne Ag, including Pb credit is 186g/tonne Ag. Pb credit = 17 g/tonne Ag.
(8) La Morena sulfides deposit requires of additional metallurgical testwork to prove its economic recovery. La Encantada mill does not have an operating zinc circuit at this time.

(1) Cut Off Grade estimated as 250 g/tonne Ag only; and 228 g/tonne Ag eq net of Pb credit. Estimated Resources are exclusive of Reserves.
(2) Silver equivalent includes Pb credit, at prices US$12.00/oz -Ag, $0.75/lb -Pb. Pb credit=22 g/tonne-Ag.
(3) Mining dilution is included at a minimum mining width of 2.00m. Estimates do not include mining recovery.
(4) Zinc is not recovered.
(5) Tailings are considered as indicated resources because require of bulk testing. Cut Off Grade at Ag-111 g/tonne.
(6) Dump stockpile is considered as indicated resource because the average grade is below COG.It represents 40.19% of measured tonnes.
(7) Dump stockpile Cut Off Grade is estimated at 203 g/tonne Ag, including Pb credit is 186g/tonne Ag. Pb credit = 17 g/tonne Ag.
(8) La Morena sulfides deposit requires of additional metallurgical testwork to prove its economic recovery. La Encantada mill does not have an operating zinc circuit at this time.

(1) Cut Off Grade estimated as 250 g/tonne Ag only; and 228 g/tonne Ag eq net of Pb credit. Estimated Resources are exclusive of Reserves.
(2) Silver equivalent includes Pb credit, at prices US$12.00/oz -Ag, $0.75/lb -Pb. Pb credit=22 g/tonne-Ag.
(3) Mining dilution is included at over 2.00m width. Estimates do not include mining recovery.
(4) Zinc is not recovered.

19.6         Conclusion

PAH believes that these reserve and resource estimates have been reasonably prepared and conform to acceptable engineering standards for reporting of resources. PAH believes that the classification of the reserves and resources meets the standards of Canadian National Instrument NI 43-101 and the definitions of the Canadian Institute of Mining, Metallurgy and Petroleum (CIM).

The reserves and resources herein reported by La Encantada Silver Mine were reviewed by PAH and constitute part of an operation by Minera La Encantada, a Mexican subsidiary of FMS. There are no significant technical, legal, environmental, political or other kind of restrictions; therefore, in PAH’s opinion these reserves and resources may not be materially affected by issues that could prevent their extraction and processing.

20.0         OTHER RELEVANT DATA AND INFORMATION

La Encantada mine has been in operation for over 25 years. Reported silver production for that period by Peñoles is about 80 million ounces of silver, in addition to significant lead content and minor gold. This production was extracted from about 6 Million tonnes of ore.

Historical mineral concentrations at La Encantada consist of mineralized breccia pipes (chimneys) and metasomatic zones, which typically contain up to 2.0 million tonnes; breccia zones that range up to 1.0 million tonnes; vein deposits that may contain up to 0.5 million tonnes, and mantos or bedded deposits that may hold up to 50,000 tonnes of usually high grade concentrations.

Major underground workings were developed by Peñoles at La Encantada, to connect the various parts of the mine, as well as to explore and mine mineralized zones within the Aurora limestone/dolomite formation. These workings extend along a 4km-long mineralized structural zone, with access to mine levels at elevations of 1,535m to about 2,300m. These connections are accessible by shafts and ramps.

Through the underground development, numerous exploration targets have been projected, identified or discovered.

At the closure of La Encantada mine by Peñoles in June 2002, several exploration targets remained to be investigated. Some of these areas require significant development as well as drilling from underground locations, such as Breccia Milagros, Breccia San Javier, Bonanza zone, Mantos San Francisco, etc. Other longer-term exploration targets may result in discoveries which may be as significant as those previously mined such as La Prieta and La Escondida, these areas are La Escalera, Ojuela and Cuerpo 660.

Other important areas for future development by FMS are represented by primary sulfide mineralization located at depth, in proximity to the granodiorite intrusive stocks, such as Cuerpo La Morena, Cuerpos 660 E and W, and Ojuela, which may enhance and extend La Encantada mine life.

La Encantada exploration investigations have resulted in validation and a significant increment of previous reserve and resource estimates. Proven and probable reserve estimates as of September 30, 2007 are about 70 percent higher than the reserves estimated for May 31, 2007, while measured and indicated resources were augmented nearly 500 percent, including tailings from previous Peñoles operations, which have been tested for processing by cyanidation. Inferred resources are also increased by about 30 percent. Numerous additional exploration targets have been identified by La Encantada staff.

During the exploration program for 2008, La Encantada exploration team discovered additional resources while drilling another target. The new area has been denominated Buenos Aires and partially investigated with about 15 drill holes resulting in indicated and inferred resources containing about 536,000 tonnes of Indicated Resources at an average grade of 395 g/tonne Ag (7.2 million ounces of silver equivalent) and 560,000 tonnes of Inferred Resources at an average grade of 339 g/tonne Ag (6.5 million ounces of silver equivalent). Silver equivalent includes Pb credits. Additional drilling and underground development are in progress to further define the mineral deposit and upgrade the resources.

In PAH’s opinion, La Encantada has developed a highly successful exploration program based on underground development and drilling which has resulted in increasing resources and reserves and identifying other exploration targets; therefore, La Encantada investments in exploration and development have been well justified.

21.0         INTERPRETATION AND CONCLUSIONS

Recorded production in about 25 years by Minera La Encantada, S.A. de C.V. is approximately 6.0 million tonnes of ore at an average grade of Ag-418 g/t (13.44 oz/t) and Pb-9.83 percent (over 80 million ounces of silver and about 1.3 billion lbs of lead) until June 2002 when Peñoles shut the operation down. Mining and processing by FMS through its wholly-owned subsidiaries, Desmín and Minera La Encantada, was approximately 175,000 tonnes of ore to October 31, 2007.

Mineralization at La Encantada is a typical assemblage of metasomatic deposits with a high content of silver and lead. This mineral assemblage has been affected by a long process of oxidation and secondary enrichment. The most important mineralization consists of unconsolidated massive concentrations of oxides including hematite, limonite and other iron oxides as well as carbonates and sulphates, including the minor presence of zinc oxides. Silver and lead represent the main economic minerals within the oxidized deposits at La Encantada. Silver mineralization occurs as argentite and native silver. Lead mineralization is present as carbonates (cerussite) and sulfates (anglesite) and other oxides.

La Encantada mineral assemblage occurs within a range of about 435m in vertical extension (2035m to 1600m asl). Below the 1600m elevation, at the La Morena deposit in the SW portion of La Encantada area, primary sulfide mineralization has been identified. This mineralization includes primarily sphalerite, galena and pyrite. FMS has identified other regional areas of geologic interest. These areas appear to represent potential exploration targets that may extend the mineralized system.

FMS initiated preliminary drilling, during the period of June through October, 2007 while expecting new drill rigs to carry out a more comprehensive drilling program to investigate several targets. Exploration investigations during this period by La Encantada staff have resulted in about 6.2 million tonnes of additional reserve and resource blocks within the mining areas. These include dumps materials and tailings being investigated by FMS as resources. A new mineralized zone located within the Azul y Oro and La Escalera breccia zones was recently discovered by diamond drilling. Currently it is estimated to contain about 850,000 tonnes of silver mineralization containing about 13 million ounces of silver equivalent. This area requires of additional drilling for upgrading the currently delineated resources.

The mine was initially developed from the shafts as a conventional operation with rail haulage levels, and utilizing standard rail-bound loading and hauling equipment. Subsequently, La Encantada mine has been converted to a mainly trackless operation, although rail haulage is still used on a few of the deeper levels of the mine.

The main access to the current mine operations is a trackless adit at the 1,870 elevation. This working has been enlarged to accommodate 20-t capacity highway-type dump trucks for ore and waste haulage from the mine. Drifts and ramps are driven with cross-sectional area of about 3- X 3- meters, and the enlarged drifts and ramps to accommodate the larger dump trucks are about 4.5 - X 5.0 - meters in cross-section. Most areas of the mine are unsupported, but in a few places, rock bolts and wire mesh has been installed, and in other heavy ground areas, it has been necessary to install steel arches with timber lagging.

A ramp system in the interior of the mine provides access for low-profile diesel mobile equipment up to the 2035 level and down to the 1710 level. The portion of the ramp above the 1870 level is being enlarged to accommodate the highway-type dump trucks. Mining operations at La Encantada mine are partially mechanized. Drilling of headings for both development and stoping is accomplished using pneumatic hand-held jackleg machines. Loading and tramming is done with diesel-powered, low profile front-end loaders (load-haul-dumps, or LHD’s), and haulage is usually with highway-type diesel rear-dump trucks, or battery powered rail haulage trains.

The ore processed at La Encantada is a complex mixture of oxide and sulfide minerals and is consequently difficult to process efficiently. The principal economic minerals are as follows:

• Argentite (Ag₂S)
• Acanthite (Ag₂S)
• Cerussite (PbCO₃)

The ore is relatively soft and friable, which is easily crushed and milled. The ore processing method consists of crushing and grinding followed by two sequential flotation steps. The first consists of sulfide mineral flotation and the second is oxide mineral flotation. Installed capacity at La Encantada is 800 tpd; however, it is currently operated at about 800 tpd. Recoveries are modest, a reflection of the difficult mineralogy of the rock; operating costs are modest, a consequence of the softness of the rock.

FMS are currently building a 3,500 tpd cyanide leach plant and plans are to switch from flotation processing to cyanidation of the mined ore and to process it in conjunction with reclaimed tailings that have accumulated on the site over the prior decades of operation. There is some uncertainty as to the outcome of this plan since it is based on limited testwork. The plant will go into operation in the second quarter of 2009 and actual results established by yearend.

Peñoles estimated proven and probable reserves as of December 2002 amounted to 484,857 tonnes at an average grade of 570 g/t Ag and 3.98 percent Pb. No cutoff grade was reported. The estimated reserves were included in the deposits of: Bonanza, El Milagro, Estructuras Irregulares Bonanza, Estructuras Irregulares San Javier, Breccia San Javier, Ojuelas, San Francisco, and Azul y Oro deposits.

FMS has initiated exploration programs based on drifting, channel sampling, drilling, geophysical investigations and some geochemical studies. Peñoles reported (2002) reserve or resource blocks are a primary target for confirmation, validation and further exploration by FMS, as well as other promising areas of reserves.

PAH has reviewed La Encantada Reserve update of October 31, 2007, along with factors for mining dilution and recovery. In addition, the sampling methods, assaying procedures, compositing methods, data handling, cutoff grade application and grade calculations were reviewed. Several reserve blocks were cross-checked to track data handling from the initial assays to the final tonnage and grade calculation to ensure that the stated methods and practices were observed.

La Encantada has estimated mineable reserves for the following deposits:

• Breccia Milagros
• Azul y Oro
• Breccia Keylor
• Cuerpo 660
• Mantos 314
• Breccia Chicotón
• Cedritos
• Cola Gallo
• Ojuelas
• San Javier
• La Morena, and
• San Francisco

The total “in-situ” diluted Reserve as of September 30, 2008, at a minimum mining width of 2.00m, as reviewed by PAH, is 5.2 million tonnes including 4.0 million tones of tailings, averaging 208 grams (6.7 oz) per tonne silver and 2.42 percent (53 lb/tonne) lead, for a total of 35.5 million contained ounces of silver net of lead credit. The tailings appear to be amenable for reprocessing by cyanidation; therefore, they have been included as probable reserves.

In addition to reserves, the La Encantada holds measured and indicated mineral resources that include estimates for the following areas: Azul y Oro, Buenos Aires, Breccia Milagros, Cuerpo 660, Cuerpo 660 W and Breccia Keylor deposits. Sulfide mineralization is only estimated in the La Morena deposit. Sulfides are only considered as Resources because the processing facilities for the zinc circuit at the plant are currently out of order. Dump materials have been screened, concentrated, and processed in the flotation plant to fill operating capacity, and have been included as resources after screening. Estimated resources for La Encantada Silver Mine total 5.4 million tonnes at an average grade of 176 g/tonne (5.7 oz/tonne) Ag and 1.40 percent (31 lb/tonne) Pb. Measured and indicated resources to September 30, 2008, are estimated to contain about 33.1 million ounces of silver equivalent net of lead credit.

In addition to measured and indicated resources, La Encantada has estimated about 2.6 million tonnes of inferred resources at an average grade of 220 g/tonne (7 oz/tonne) Ag and 1.0 percent (22 lb/tonne) Pb, for a total silver equivalent of 20.0 million ounces.

To date, La Encantada has demonstrated a continuity along approximately 4.0 kilometers of strike length and down dip for about 700 meters; so it is reasonable to assume that in the future resources will continue to be converted to ore as additional drifting, crosscutting and raising define vein configurations, sampling and assaying determine the grade, and diamond drilling confirms vein extensions and fills in data gaps. Geophysical investigations carried out during the period have confirmed previously delineated anomalous zones which require of a drilling program from surface sites.

During the period of January to September 2008 the La Encantada mine operation totaled 178,480 tonnes of silver mineralization which was extracted from previously estimated reserves (70,000 tonnes) and from other areas (108,480 tonnes) that were discovered during the development for extraction of the reserves.

All reserve and resource blocks at La Encantada are exclusive of each category.

PAH believes that these reserve and resource estimates have been reasonably prepared and conform to acceptable engineering standards for reporting of reserves and resources. PAH believes that La Encantada Silver Mine classification of reserves and resources meets the standards of Canadian National Instrument NI 43-101 and the definitions of the Canadian Institute of Mining, Metallurgy and Petroleum (CIM).

An economic analysis of FMS’s La Encantada Silver Mine indicates that the mine’s reserve/resources may be extracted at a profit, and PAH did not identify any significant technical, legal, environmental, political or other kind of restrictions; therefore, in PAH’s opinion these reserves and resources may not be materially affected by issues that could prevent their extraction and processing.

22.0         RECOMMENDATIONS

La Encantada Silver Mine has been in operation since the 1950s, with intense extraction and processing operations from the early 1970s. Its production, by Peñoles records, amounts to over 80 million ounces of silver and over 1.3 billion pounds of lead. La Encantada is by no means exhausted; its geologic potential remains to be fully explored. Several zones within the mine area have been identified that may contain significant mineralization, such as Breccia La Escalera, Breccia Milagros, Breccia San Javier and others that enable the operators to increase La Encantada’s production. Aside from the oxidized mineralization, there are sulfide deposits identified within the skarn areas at Cuerpo 660, La Morena and deeper areas under the La Prieta and La Escondida chimneys. These areas require intense exploration direct methods, such as diamond drilling and drifting.

FMS has initiated an aggressive program of exploration based on drifting and diamond drilling. Preliminary results of this program have resulted in a significant increment of resources and reserves for the La Encantada Silver Mine for the period between June and October, 2007. For instance, the Breccia Milagros and the San Francisco areas have produced high grade ores through exploration development and appear to be developing into significant ore deposits. Exploration drilling for the Azul y Oro zone has intersected other mineralized zone located between the Azul y Oro and the La Escalera breccia zones denominated as Buenos Aires. This zone consists of a series of mineralized structures containing high grade silver mineralization which full extension is being investigated.

PAH agrees with the continued implementation of the exploration program and recommends additional support for exploration activities at La Encantada. Positive results would develop resources into reserves and extend the mine’s life.

Care must be taken to prioritize the exploration targets since the area holds a broad potential for development and possible discovery of new ore bodies. Potential high volume areas should have priority in the exploration program, since these large volume deposits could potentially help to lower mine operating costs.

FMS has suggested an exploration budget of US$2.50 Million for 2009 at La Encantada. If successful, this program may result in a significant increment of resources and additional reserves. The program includes approximately 7,850 meters of drilling from underground sites and 5,000 meters from surface locations. Underground exploration development in drifting, access ramps, crosscutting and drill sites preparation amounts to about 850 meters for the year. The budget for this program also includes geochemical sampling of about 500 samples to validate geophysical exploration targets. PAH believes that this exploration program, budget and exploration targets are reasonable for continued investigation the La Encantada geologic potential. Table 22-1 shows the La Encantada exploration budget for 2009.

PAH recommends that La Encantada follow budgeted capital-expenditure plans for the ore processing facilities. With the exception of the funds budgeted to complete the cyanidation plant, the plan is generic with a fixed annual amount for ongoing capital expenditures. The estimated 2009 cost for completing the cyanidation plant is $8.2 million of the 21.5 million original budget and the ongoing annual ore-processing-related capital expenditure estimate is $135,000.

TABLE 22-1
First Majestic Silver Corp.
Minera La Encantada, S.A. de C.V.
La Encantada Silver Mine
PAH Recommendations Estimated Budget

Much of the mines mobile equipment at La Encantada is very old and requires replacement. FMS has a plan in place to replace some of the older mine equipment in the near future and has purchased some new units in 2008 and plans additional purchases in 2009.

PAH has noted the possibility of significant ground movements that may affect the integrity of either or both the San Francisco and Maria Isabel Shafts, which are the major ore hoisting and service facilities for the mine. In addition, the geotechnical studies should also include ground control methods at the mine and recommendations for improvement. The estimated cost of the initial geotechnical study will range from $150,000 to $250,000.

PAH also notes that the ventilation system in the mine is inadequate and much improvement is needed. A comprehensive survey and study of the ventilation system and corresponding recommendations by an outside expert is recommended. The estimated cost of the initial survey will be in the range of $100,000 to $250,000.

The Capital expenditures suggested for the plant and mine are scheduled to improve the operation and, through a successful exploration program, increase the mine’s reserves and resources and therefore the mine life. A summary of the PAH recommendation is found in Table 22-1.

23.0         REFERENCES

24.0         DATE AND SIGNATURE PAGE

Leonel López, C.P.G.
165 S. Union Blvd. Suite 950
Lakewood, Colorado 80228
Phone (303)986-6950
Fax (303)987-8907
leonel.lopez@pincock.com

I, Leonel López, C.P.G., am a professional geologist and Principal Geologist for Pincock, Allen & Holt, Inc. of 165 S. Union Boulevard, Suite 950, Lakewood, Colorado, USA. This certificate applies to the Technical Report for the La Encantada Silver Mine, Coahuila State, Mexico dated February 26, 2009 (the “Technical Report”).

Dated in Lakewood, Colorado, this 26^th day of February 2009

“Leonel López”

______________________________
Leonel López, C.P.G.

Richard Addison
165 So. Union Blvd., Suite 950
Lakewood, CO 80228
Phone (303) 986-6950
Fax (303) 987-8907
dick.addison@pincock.com

I, Richard Addison, P.E., C. Eng., Eur. Ing., for Pincock, Allen & Holt, Inc. of 165 S. Union Boulevard, Suite 950, Lakewood, Colorado, USA. This certificate applies to the Technical Report for the La Encantada Silver Mine, Coahuila State, Mexico dated February 26, 2009 (the “Technical Report”).

Dated in Lakewood, Colorado, this 26^th day of February 2009

“Richard Addison”
_______________________________________
Richard Addison, P.E., C. Eng., Eur. Ing.

25.1         Introduction

La Encantada Silver Mine is located in the municipality of Ocampo in the northwestern part of the state of Coahuila, Mexico. The mining district in which La Encantada is located is the David Contreras (La Encantada) district. Mining has been carried out in La Encantada area since the early 1940s with some limited extraction of high-grade lead-silver oxides from the skarn deposits of the area. Historically ore extraction in the district was done by underground methods, and this has been continued at La Encantada.

In the early 1970s a 60/40 joint venture was formed between Lacana Mining of Canada and Industrias Peñoles to develop and exploit the silver-lead orebodies discovered at La Encantada. The joint venture, operating under the name of Compañia Minera La Encantada, S.A. de C.V., sank two main production shafts for La Encantada project, the San Francisco and the Maria Isabel, and started exploitation of La Prieta high-grade silver chimney. The operator constructed a magnetic separation plant to process the ore at project inception, but two years later, replaced the plant with a 1,000 tonnes per day differential flotation plant. All products from this plant are concentrates, which were, and continue to be, marketed to the Peñoles Met-Mex smelter, located in the city of Torreón, Coahuila. Peñoles, as the operator, worked the mine steadily from 1974 until 1986, when it was stopped due to poor profitability. Peñoles restarted operations in 1990 after discovery of significant high-grade reserves.

During the 35 years Peñoles operated the property, about 6.0 million tonnes of mainly oxidized silver-lead ores, which averaged about 418 grams Ag and 9.9 percent Pb per tonne, were mined and processed. In 2003, Peñoles leased the mine to a small company, Desmín, S.A. de C.V., who operated it from 2003 until November 2006, when Desmín was acquired by First Majestic Silver Corporation (FMS) giving FMS control over the mine. FMS then acquired Minera La Encantada S.A. de C.V. (a wholly owned subsidiary of Peñoles) in March 2007 giving FMS complete ownership of the mine. There was no hiatus in the mine production program through the acquisition period, and Desmín continued the operations until First Majestic took over in late November 2006. First Majestic continued with Desmín’s development and production programs after the acquisition. FMS made several changes in early 2007, and current production is about 20,000 tonnes per month of oxidized silver-lead ores. Mill feed is not only derived from the underground mine, but also from old dump material left by both Peñoles and Desmín; the split for the first nine months of FMS operations in 2008 is about 15,000 tonnes per month from the mine and 6,000 tonnes per month from dump material. Ore is campaign-milled at the site in the differential flotation plant, which was originally constructed by Peñoles in the 1970s. The mine produces a silver-lead concentrate, and paid metal production is currently in average for the period of January to September about 112,800 ounces of silver and 235,300 pounds of lead per month.

The historic production from La Encantada has resulted in storage of about 5.0 million tonnes of mainly flotation tailings, which still contain significant silver values. The company is currently constructing a 3,500-tpd process plant in which the tailings will be reprocessed together with mine and dump ore, and silver and small amounts of gold will be recovered in a cyanide circuit with a Merrill-Crowe precious metals’ recovery system. FMS projects that 3.6 million ounces of silver will be produced per annum, of which 1.8 million ounces will be obtained from the old tailings and 1.8 million ounces will be obtained from processing mine ore and dump recovery ore. The new plant is scheduled for startup in the second quarter of 2009.

25.2         Mine Design and Production

La Encantada mine has largely been developed below ore zones indicated from surface exploration work within a block about four kilometers long, 700 meters wide and 500 meters in height. The mine was initially developed from shafts as a conventional operation with rail haulage levels, and utilizing standard rail-bound loading and hauling equipment. Subsequently, La Encantada was converted to a mainly trackless operation, although rail haulage is still used on a few levels of the mine. The mine has been developed to the northeast of the shafts over a vertical range of about 400 meters from the surface (2,035 meters asl) to about the 1525 level (1,525 meters asl), where the water table has been encountered. The mine has not been developed into the large prospective area to the southwest of the shafts, which is situated at the southwest boundary of the developed mine area.

The San Francisco and María Isabel shafts were sunk by the Peñoles-Lacana joint venture, mainly for the development and extraction of the Escondida and La Prieta chimneys and these shafts continue to be used by the current operators. The collar elevations of both shafts, which are situated only about 100 meters apart, is 1,800 meters asl for the María Isabel, and 1805 meters asl for the San Francisco, and the depths of both are about 300 meters. Both the San Francisco and María Isabel Shafts provide access to the deeper levels of La Prieta and Escondida areas of the mine.

The southern-most María Isabel Shaft is L-shaped with a manway cut-out and it is equipped with two in-balance 3.7 -t capacity skips, and a man cage. The man cage capacity is about 15 people. The furnishings in the shaft are all constructed of steel, including dividers. The guides for the ore skips are cables, and the guides for the man cage are steel H-beams. The main air lines and electric power cables into the mine are installed in the manway compartment of the María Isabel Shaft. The María Isabel ore hoist is a 500-hp Canadian Ingersoll-Rand 2-drum hoist, and the man-hoist is a Vulcan 125-hp 1-drum hoist.

The rectangular San Francisco Shaft is set up for ore hoisting only, with only a small emergency manway located in a corner of the shaft. The Shaft is fitted with two in-balance 4.8 -t capacity skips, but has no man cage. The main pumping station for the mine is located on the San Francisco Shaft, and the mine pump lines are located in the shaft near the emergency manway. The San Francisco ore hoist is a 2-drum 400-hp Canadian Ingersoll-Rand unit.

The main access to the current mine operations the trackless Los Angeles adit at the 1,870 elevation. This working has been enlarged to accommodate 20-t capacity highway-type dump trucks for ore and waste haulage from the mine. Drifts and ramps are driven at a cross-section of about 3 X 3 meters, and then enlarged to accommodate the larger dump trucks to about 4.5 X 5.0 meters in section. Most ramps are driven at a maximum gradient of 15 percent. Many areas of the mine are unsupported, but in a few places, shotcrete and/or rock bolts and wire mesh or combinations of the same have been installed. In heavy ground areas, it has been necessary to install steel arches with timber lagging. FMS develops most of its short raises (<60 meters) by conventional methods, and most raises are driven at a cross-section area of about 1.5 X 1.5 meters. Historically long ore and waste pass raises, ventilation raises, etc. have been developed by raise boring contractors, and FMS will continue this policy as the need arises.

A ramp system in the interior of the mine provides access for low-profile diesel mobile equipment up to the 2035 level and down to the 1635 level. The portion of the main ramp above the 1870 level is being enlarged to accommodate the highway-type dump trucks. Peñoles established the 1790 main rail haulage level (from the María Isabel Shaft) to the stoping and exploration areas northeast of the shaft. In addition a rail level was also developed at the 1635 level. Both the rail levels are still in use. A longitudinal section of the mine with major shafts, and levels are included in Figure 9-2 of this report.

Mining operations at La Encantada mine are partially mechanized. Drilling of headings for both development and stoping is accomplished using pneumatic hand-held jackleg machines. Loading and tramming is done with diesel-powered, low profile front-end loaders (load-haul-dumps, or LHD’s), and haulage is usually with highway-type diesel rear-dump trucks, or battery powered rail haulage trains.

Before FMS acquired La Encantada from the previous operator, Desmín, little exploration and development work had been done in the mine. Since taking over the operation in November 2006, FMS has undertaken an intensive exploration and development effort. As stated above, some mine workings are being slashed out to accommodate highway-type dump trucks, but the advance for these is not included in the development totals.

A diagram of typical drilling patterns for the different sizes of drifts and ramps driven in La Encantada Mine are shown in Figure 25-1.

During the first 9 months of 2008, the average development advance is about 570 meters per month. About 146 meters per month are classified as exploration, and the remaining 424 meters per month are for stope preparation and other development. The development totals for 2008 are shown in Table 25-1.

The principal mining method employed at La Encantada is overhand mechanized cut-and-fill (Figure 25-2), utilizing development waste for fill. Ramps are driven in the orebodies and stopes are developed from sill drifts driven in the ore zones and slashed out the full width of the ore. Stopes are drilled with jacklegs, and the main blasting agent is a commercial ammonium nitrate product, which is initiated with sausages of water-gel explosive primed with cap and fuse. Rounds are fired with Ignitacord (B-cord) as the fuse initiator. Stopes are mucked with rubber-tired 1.0 - to 3.5 yd³ Load-Haul-Dump (LHD’s) machines, which also tram the broken ore to ore passes or remuck stations. Completed stope cuts are backfilled with development waste, which is passed through raises into the stope or trammed into the stope with the LHD units.

TABLE 25-1
First Majestic Silver Corp.
Minera La Encantada, S.A. de C.V.
La Encantada Silver Mine
2008 Exploration and Mine Preparation Advances (Lineal Meters)

A modification of overhand cut and fill stoping that has been adopted for extraction of some breccia pipes and chimney orebodies is post pillar stoping, which is essentially a room and pillar method, but on multiple horizons. Post-pillar stopes in La Encantada mine are backfilled with waste, and are mined overhand progressing from the sill level to the next level above. Most development ramps for post pillar stoping are developed in waste outside the orebody. All other parameters for stoping the post pillar areas are the same as for a standard mechanized overhand cut and fill stope. A diagram of a typical La Encantada post pillar stope is shown in Figure 25-3.

Stope production is about 11,200 tonnes per month, and there are currently about 15 stopes in production. The monthly mine production for 2008 is shown in Table 25-2.

TABLE 25-2
First Majestic Silver Corp.
Minera La Encantada, S.A. de C.V.
La Encantada Silver Mine
Mine Production for 2008 (wet metric tonnes)

*Totals will not coincide with totals for process due to moisture content of mine ore, which is normally < 6 percent.

Much of La Encantada mine development and stoping work is done by outside contractors, using company equipment. Mucking and haulage operations are done with company crews, and maintenance and other mine services are also done with company personnel. If the company does not have sufficient personnel to operate the mobile mucking and haulage equipment, the contractors will operate the equipment for extra fees. Ore haulage to the mine patios is done with contractor dump trucks, and ore transfers from the patios to the mill crusher bins are also done with outside contractors using their own trucks.

FMS plans to eventually reinitiate extraction of La Prieta and La Escondida abandoned chimneys, which were first mined by caving methods by Peñoles in the early years of the mine operation. The workings for the extraction of both chimneys caved in and were lost, with much waste rock material dumped into the glory-holes which had holed through to the surface. The purpose of the waste rock was to stabilize the areas proximal to the chimneys. Some ground movements have occurred in the form of concentric cracks around the ore boundaries of the chimneys, and since the chimneys are situated very near to both the main production shafts, ground movements could affect the stability of these installations. In fact some cracks in the walls of hoist room of the San Francisco shaft have been noted, apparently as a result of caving of the chimneys. Extraction of remnants left in these chimneys is technically possible, but should be delayed until the two shafts are no longer required for production or service. PAH recommends that FMS commission an updated geotechnical study and evaluation of the old mining areas near the shafts, so that any potential problem will be revealed and mitigation steps taken.

Mine ventilation is through natural air flows into and out of the mine. The maximum intake airflow is about 40,000 ft³/min. (25 m³/sec.), which is actually air flowing into the upper part of the mine through old mine workings. The maximum exhaust air flow is about 88,000 ft³/min. (54 m³/sec.) through the Los Angeles Adit level (1865 level), which is above most of the current active mining levels. From Figure 25-4 it can be appreciated that the air flows in most of the mine are very small. Although aided by using auxiliary axial fans, there is much heat buildup and stagnant air in many of the active mine workings. This problem is compounded by the use of diesel mobile equipment in the mine. The ventilation system requires a substantial up grade, and First Majestic should commission a ventilation study with independent experts, and then proceed to install major fan(s), booster fans and air-flow regulators to conduct much greater volumes of fresh air into the mine. PAH recommends that FMS commission an in-depth study of the ventilation system as a first step toward upgrading it.

A separate mine dump recovery effort continues at the mine site. This operation consists of the excavation and screening of old dump material from the previous operations, and transporting the screened product to the mill ore bins as supplemental mill feed material. The company uses a portable screening plant for the operation and the recovery operation is conducted by a combination of company operators and contractors. This material has been viable if screened to remove coarse waste material, and screened material recovered and processed totaled 42,154 tonnes at an average grade of about 119 gpt Ag during the first nine months of 2008. A summary of the month by month screened dump material recovered and processed during the first nine months of the year is shown in Table 25-3.

The mine currently operates on two 12-hour shifts per day, 7 days per week. Crews currently work two weeks at site with one week off. Both contractor crews and company personnel work the same shift schedule. Most company and contractor personnel live in the town of Muzquiz, Coahuila, which is situated about 210 km on paved highways to the northwest of the La Encantada Mine.

TABLE 25-3
First Majestic Silver Corp.
Minera La Encantada, S.A. de C.V.
La Encantada Silver Mine
Mine Dump Production for 2008 (dry metric tonnes)

The company is currently transporting many personnel to and from Muzquiz to the mine site in a company bus. Peñoles constructed and maintained about 180 houses, as well as a primary school, stores and recreational facilities in the proximity of the mine site, and FMS has refurbished some of the housing and ancillary facilities to accommodate the workforce in company-controlled living quarters: presently much of the housing is occupied by contractor personnel, who are working on construction of the new 3,500-tpd cyanide plant.

The current mine workforce as of September 30, 2008 totals 490 people including contractors. There are currently 123 contractors on site, who are engaged in the new cyanide plant construction. A summary of personnel at La Encantada as of the end of September is shown in Table 25-4.

The operations budget for the first 9 months of 2008 is for milling of 136,816 tonnes from the mine and 53,734 tonnes from the old mine dumps. The average grades to the mill are budgeted at 345 gpt Ag for the mine and 104 gpt Ag for the dumps. The actual mine tonnes milled through the nine-month period total 136,327 tonnes and actual grades through the first 9 months of 2008 have averaged 352 gpt Ag. The actual mine dump tonnes removed and processed for the first 9 months of 2008 total 42,154 tonnes at an average grade of 119 gpt Ag. A summary of the 2008 mining and milling budgets for both the underground mine and the surface mine dump recovery is found in Table 25-5.

25.3         Mine Equipment

Most of the mine equipment used at La Encantada was inherited from the previous operator; Desmín and Desmín acquired most it from Peñoles. As can be appreciated from the table below, much of the mine mobile equipment fleet is very old, and FMS management has started a program of replacing much of the older equipment in the fleet.

TABLE 25-4
First Majestic Silver Corp.
Minera La Encantada, S.A. de C.V.
La Encantada Silver Mine
La Encantada Mine Manpower, Including Contractors (September 30, 2008)