Technical Report for the
La Parrilla Silver Mine,
State of Durango, México

Prepared for

First Majestic Silver Corp.

February 16, 2009

90534

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 Reports Amended for the La Parrilla Silver Mine, Durango State, México; which was prepared by Pincock, Allen & Holt, Inc. for First Majestic Silver Corp. dated March 18, 2008 and published in SEDAR in March 19, 2008 and January 25, 2008 and published in SEDAR in January 26, 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) to prepare a Technical Report covering updated results of operations at La Parrilla Silver Mine (La Parrilla) located in the Municipality of Nombre de Dios, Durango State, México. The objective of this Technical Report is to provide FMS with a report that will comply with existing regulations in Canada. This report meets the requirements for NI 43-101 and conforms to form 43-101F1 for technical reports.

La Parrilla mine is owned and operated by First Majestic Plata, S.A. de C.V. (FMPlata) a wholly-owned subsidiary of FMS through its newly created Mexican holding company, Corporación First Majestic, S.A. de C.V. (CFM) which went into effect on August 14, 2007. La Parrilla Silver Mine was previously operated by First Majestic Resources México, S.A. de C.V.

La Parrilla Silver Mine consists of underground silver/lead/zinc mining operations, and cyanidation and flotation ore processing plants. La Parrilla represents a typical Mexican mining district which was discovered in Colonial times (XVI – XVII centuries) and only developed from outcroppings by following mineralization on the structures, until high grade ore shoots were discovered and depleted at times of high prices of the metals.

FMPlata owns mining rights that cover 53,249.22 hectares (131,581.20 acres). The duration of the mineral rights concessions is 50 years, renewable over similar time periods.

La Parrilla mine consists of underground mine development that includes drifts, ramps, raises, stopes and other old workings along the S-SE-trending Los Rosarios system. This system consists of a 2-km-long mineralized structure that encloses numerous veins that branch out into veinlets and stockwork zones. The Los Rosarios system comprises La Rosa, Rosarios, La Blanca and San José mines and it intersects the NS-trending San Marcos vein. Other mineralized zones are located within the surrounding skarn zone of a regional diorite intrusive stock. These include Quebradillas, Protectora, San Nicolas, San José, Las Vacas, Santa Paula, etc.

Historical production records, plus surveys of old stopes within the La Parrilla district, suggest that approximately 1.37 million tonnes of silver ores were extracted from these mines at an estimated average grade of 310 g/tonne Ag, 1.9 percent Pb and 1.5 percent Zn. This estimate includes production by Mina Los Rosarios between 1978 and 1991 and FMS’s production from 2004 to September 30, 2008. The production amounts to 13.7 million ounces silver, 58.4 million pounds lead and 44.4 million pounds zinc.

FMPlata has developed an on-going aggressive exploration program that includes ramps, drifting and crosscutting into the old working areas of the Los Rosarios system. The exploration budget proposed for the period of 2009 is $5.18M. It includes 97 drill holes totaling 17,200m, geophysical and geochemical surveying, and approximately 5,800m of drifting, crosscutting and ramps development. This program is based on the following premises:

• Prepare the La Parrilla operation with sufficient mineral reserves to sustain economic production throughout periods of low metals prices.

• Plan and develop systematic production and increase operating capacity.

• Recover oxides and sulfides mineralization, consolidating mining blocks, and increasing Reserves to support a reasonable production schedule.

• Support exploration activities for development, channel sampling and underground drilling.

• Carry out an aggressive exploration program including deep drilling from underground and surface sites.

• Focus exploration efforts on regional exploration targets.

PAH has reviewed the La Parrilla mine 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.

The La Parrilla mine has estimated mineable Reserves for the following deposits:

• La Rosa
• Rosarios
• La Blanca
• San Marcos
• Quebradillas

The Proven ore category has been projected up to 20 meters from the drift sample data, while the Probable ore category is projected another 20 meters beyond the Proven ore. The total “in situ” diluted Proven and Probable Reserves at a minimum mining width of 2.00m, as reviewed by PAH, is 0.50 million tonnes of oxides and sulfides averaging 295 grams per tonne silver, 1.40 percent lead and 1.01 percent zinc, for a total of 4.8 million contained ounces of silver only; or 5.2 million ounces of silver equivalent with gold and lead credits.

Resource calculations by FMPlata at La Parrilla are based on projections of the mineralized zones in the underground mine workings, 20m beyond the areas of Reserves for the Measured Resources, and another 20m 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 20m beyond the blocks’ width. La Parrilla mineral resource estimates were applied mostly to diamond drilling intercepts, as well as to some adjacent blocks from the estimated reserves. The grade for these blocks is determined from the grade estimated for the

drill hole intercepted grade and from the adjacent Reserve blocks, and sampling in mine workings and drill holes located within the block area.

The Measured and Indicated silver Resources, including oxides and sulfides mineralization, consist of 3.1 million tonnes averaging 255 grams per tonne silver, for a total content of 30.7 million ounces of silver equivalent inclusive of gold credit for oxides and lead and zinc credit for sulfides. The resources grade has been estimated “in situ” above cutoff grade, and the silver equivalent content is inclusive of gold credit in oxides, at 6 g/tonne Ag, and inclusive of lead and zinc credit for sulfides, at 47 g/tonne Ag and 30 g/tonne respectively, for sulfides. This estimate is based on sales and on the following prices: Ag - $12.00/oz, Au - $708/oz, Pb - $0.75/lb and Zn – $0.75/lb.

Table 3-1 presents a summary of the La Parrilla Proven and Probable Reserves and Measured and Indicated Resources, in addition to Inferred Resources at the bottom of the table. These Reserves and Resources are exclusive of each other category. Figure 3-1 shows the Los Rosarios system Reserve/Resource Blocks.

PAH has excluded the zinc mineralization from the Reserve Base. However, zinc may represent a significant value for the La Parrilla operation at better market conditions with higher prices and possibly lower smelter charges. In the current resource grade estimates, the zinc has been considered as part of the block’s grade, and estimated at a 70 percent metallurgical recovery included in the value for silver equivalent calculation.

PAH notes that these Resources are in addition to the previously reported Reserves.

Additional geologic potential exists within the area of La Parrilla to investigate targets that may result in significant resource development for the mining operation. Direct exploration of geophysical anomalies may result in significant target zones for further exploration. FMS has determined anomalous areas of interest for further exploration investigations, which may represent concentrations of sulfides or other conductive minerals.

Other areas representing interesting geologic potential within the FMPlata holdings are the following:

• Quebradillas stockwork zone in outcroppings
• San José mine
• Sacramento
• Cerro Santiago
• Las Víboras
• San Marqueña
• Mina Santa Paula
• Cerro Santiago
• Santa Cruz
• La Protectora, etc.

TABLE 3-1
First Majestic Silver Corp.
First Majestic Plata, S.A. de C.V.
La Parrilla Silver Mine
Mineral Reserves and Resources Prepared by FMPlata, Reviewed by PAH as of September 30, 2008

(1) Estimates by First Majestic Plata, reviewed by PAH. Estimates based on Minimum Mining Width >2.00m. No mine recovery included.
(2) Silver equivalent based on sales. Prices used for evaluation: Ag - $12/oz; Au - $708/oz; Pb - $0.75/lb; Zn - $0.75/lb.
(3) Oxides Ag equivalent includes gold credit based on FMPlata sales. Au Credit = 6 g/tonne Ag.
(4) Sulfides Ag equivalent includes Pb credit = 47 g/tonne Ag. Zinc is considered at 70% met. recovery = 30 g/tonne Ag.
(5) Cut Off Grade estimated as 184 g/tonne Ag net of Au credit in oxide ores; and 246 g/tonne Ag net of Pb credit in sulfide ores. Zinc not considered in COG estimates.
(6) Preliminary Quebradillas Block Model estimate at COG>50 g/tonne Ag.
(7) Reserves and resources in this report are exclusive of each other.
(8) Rounded figures.

Additional Inferred Resources have been projected in Rosarios, Quebradillas, and San Marcos zones.

FMS operates three mines in La Parrilla area. The Rosa/Rosario and La Blanca, the San Marcos, and Quebradillas operations, all are separate mines within an area of about 10 km². The production from the mines during 2008 has been about 143,838 tonnes at an average grade of 213 g/tonne Ag. This production includes about 24,000 tonnes of ore extracted from development workings. Oxide ore mined was about 82,419 tonnes, while sulfide ore mined was about 61,419 tonnes.

The La Parrilla processing plant has both an oxide recovery circuit and sulfide recovery circuit; therefore both doré metal bars and flotation concentrates are produced. Products are marketed to Met-Mex Peñoles’ smelter and refineries, located in Torreón, Coahuila. The tonnes milled during the first 9 months of 2008 totaled 143,838 tonnes. Silver production for the first 9 months was about 731,259 equivalent ounces of silver. The company’s 5-Year Plans requires improvements in production rates, ore head grades and mill recoveries to achieve about 1.94 million ounces of silver equivalent production per year by the end of 2009.

Mining is semi mechanized with trackless loading and hauling. Some drilling is done with a 2-boom and 1-boom electro-hydraulic drill jumbo, but most development and production drilling is accomplished with hand-held jackleg drills. The principal stoping method for the near-vertical veins of La Parrilla is overhand cut and fill, with backfill mainly obtained from development waste. However, the operators are currently experimenting with long-hole open stoping. Drifting and ramping is all trackless, and at times old drifts and other workings that are used in the modern La Parrilla operations are slashed out to accommodate the trackless equipment. Raising is mainly done conventionally as “bald-headed raises,” but some major raises, ventilation, orepasses, etc, are done with contracted raise boring equipment.

The mines are dry and very little water handling is required. Ventilation is primarily by natural flow, and the operators are in the process of boring exhaust ventilation raises for the mines. Compressed air is provided from surface compressor stations in all three operations.

The ore processing plant at La Parrilla processes both oxide and sulfide silver ore in two separate parallel circuits. The oxide circuit has a process capacity of 420 tonnes per day of which during 2008, an average of 300 tonnes per day of ore from La Parrilla containing 211 grams per tonne of silver and recovers about 65 percent of the contained silver as silver bars. The sulfide circuit has a 420 tonnes per day capacity of which during 2008 an of average of 230 tonnes per day of ore were from La Parrilla containing about 218 grams per tonne silver and 2.0 percent lead and recovers about 65 percent of the silver and about 55 percent of the lead into a concentrate containing about 4.0 kilograms per tonne silver and 28 percent lead.

The plant was extensively expanded and modified in 2006 to allow processing of both oxide and sulfide ore at a rate of 420 tonnes per day each. Metal recoveries are expected to gradually rise to 70 percent, and may, perhaps, improve further as the mineral processed is extracted from other areas of the mine outside of the transition zone. In addition to the plant, the tailing containment area with 10 years of life has been built. Figure 3-2 shows the Ore Processing Plant Layout.

Infrastructure for the operation is well established with adequate roads, buildings and utility systems. Power and water supply systems were expanded in 2006 to mine and process ore at a higher rate than in the past.

PAH is not aware of any environmental liabilities within the La Parrilla mining district. FMS applied for modifications to the previous operating permits (“Permiso Unico Ambiental”) to accommodate the expansion for the processing plant installations. This was granted on March 23, 2006.

The mine operations are contracted to outside contractors, and surface ore and waste haulage is also contracted. The administration, beneficiation plant and ancillary functions are all accomplished with company personnel. The total personnel on site at the end of September 2008 totaled 509 people of which 458 were outside contractors. The overall efficiencies achieved to date (September 30) in 2008 were about 1.1 tonnes per man-shift, while that for the mine operation only, were about 2.3 tonnes per man-shift.

Site operating costs have averaged about $47 per tonne mined and milled for the nine-month period of 2008. The all-in costs including mining, milling and downstream processing have averaged about $50 per tonne for oxides and $67 per tonne for sulfides. The mining costs were an average of about $18 per tonne, milling costs were about $24 for oxide ores and $21 for sulfide ores per tonne and site G&A costs averaged about $6.30 per tonne. A summary of the 2008 operating costs is shown in Table 3-2.

TABLE 3-2
First Majestic Silver Corp.
First Majestic Plata, S.A. de C.V.
La Parrilla Silver Mine
Summary of Operating Costs

Capital expenditures are estimated at about $6.8 million in 2008, including $3.2 million for exploration and mine development. Projected capital expenditures budgets decrease to $3.9 million in 2009 and are at about $2.9 million per year for the remaining three years of the 5-Year Plan. The detail of the capital costs is found in Table 3-3.

An economic analysis of the project, at a discount rate of 10 percent, resulted in a net present value of $13.65M with an Internal Rate of Return of 205 percent. These values show La Parrilla’s current conditions, which are based on mining lower tonnage at lower grades due to mine preparation developments, and lower metallurgical recoveries due to processing ores from the oxides/sulfides transition zone.

TABLE 3-3
First Majestic Silver Corp
First Majestic Plata, S.A de C.V.
La Parrilla Silver Mine
Projected Capital Expenditures, 2009 through 2013 ($U.S)

These conditions are also affected by high capital and operating costs generated by equipment acquisitions, an aggressive exploration program and mine preparation investments. In PAH’s opinion the La Parrilla mill and process plant will likely reach planned throughput rates in 2009 as shown in Table 3-4.

TABLE 3-4
First Majestic Silver Corp.
First Majestic Plata, S.A de C.V.
La Parrilla Silver Mine
Economic Analysis Results for 5-year Plan

PAH believes that the La Parrilla 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 FMPlata for the La Parrilla Silver Mine were reviewed by PAH and constitute part of an operation by 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.

An economic analysis of the La Parrilla operation shows positive economics as measured by a cash flow exercise, and thus the postulated Reserve position is accepted.

4.0           INTRODUCTION

First Majestic Silver Corp. (FMS) retained Pincock, Allen and Holt (PAH) to prepare a Technical Report covering the La Parrilla Silver Mine (La Parrilla) located in the Municipality of Nombre de Dios, Durango State, México. This report is an update of Technical Reports for the La Parrilla Silver Mine, Durango State, México, prepared for First Majestic Silver Corp. dated July 24, 2007, Amended by Pincock, Allen & Holt, Inc., and was published in SEDAR on July 25, 2007, and Technical Report for the La Parrilla Silver Mine, Durango State, México, dated January 25, 2008, and published in SEDAR in January 29, 2008, and Technical Report Amended dated March 18, 2008 and published in SEDAR in March 19, 2008, and they are referred to as Technical Reports herein.

The objective of this Technical Report is to provide FMS with an updated report that will follow existing regulations in Canada. This report meets the requirements for 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-C.P.G.-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 15–18 and November 13-18, 2007 to review current status of the property. Another team of PAH professionals visited La Parrilla Silver Mine to review environmental, mine, plant and safety issues during the period of April 13–15, 2007. Mr. López’s prior visit to La Parrilla Silver Mine was in June 21, 2006 as part of a PAH team of professionals to review the operations. Mr. López and Mr. Richard Addison visited the property during the period of October 30 to November 1, 2008 to review available information on La Parrilla Silver Mine and has assembled the location, tenure, history, environmental considerations, and all aspects of the geology, and reviewed the sampling, data verification, drilling and project resources. Other PAH members collaborated in the review of reserve estimates, mine and processing, operations and operating and capital costs for La Parrilla Silver Mine and operation.

4.2           Terms and Definitions

La Parrilla consists of silver/lead/zinc oxidized and sulfides mineral deposits located in the State of Durango, México. La Parrilla comprises numerous mineralized structures, vein, breccia zones and metasomatic mineral concentrations within the area, including additional geologic potential to discover other projected concentrations along regional and local structures and their projected intersections. Some of the known deposits within the La Parrilla area are the following:

• Los Rosarios, La Rosa and La Blanca/San José vein system (Los Rosarios System)
• San Marcos
• Quebradillas

• Las Vacas
• San Nicolas
• Las Animas, and
• Numerous other targets for exploration along known structures and projected intersections, such as Milagros, La Víbora, Sacramento
• Geophysical anomalies recently confirmed by detailed IP and Resistivity investigations

In this report:

• FMS refers to First Majestic Silver Corp.

• CFM refers to Corporación First Majestic, S.A. de C.V. a Mexican holding company wholly owned subsidiary of FMS, which was incorporated on July 31, 2007 and effected corporate restructuring on August 14, 2007 by which CFM now holds all ownership, including all shares of La Encantada, El Pilon and FMPlata. FMS Press Release of November 29, 2007 published on SEDAR site.

• FMPlata refers to First Majestic Plata, S.A. de C.V. a wholly owned subsidiary of Corporación First Majestic, S.A. de C.V. It was incorporated on July 31, 2007 to hold the La Parrilla Silver Mine mineral rights, ownership and obligations held through First Majestic Resources México, S.A. de C.V. including all FMRM shares and acquisitions from Industrial Minera México, S.A. de C.V., its subsidiaries and other third parties. All changes were effected on August 14, 2007.

• FMRM refers to First Majestic Resources México, S.A. de C.V., a wholly-owned Mexican subsidiary of FMS held under the Mexican holding company CFM, and operator of La Parrilla Silver Mine. FMRM ownership and rights were transferred to FMPlata on August 14, 2007.

• 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 Parrilla Silver Mine, La Parrilla mine, La Parrilla district or La Parrilla refers to the operating underground mines, processing plants and infrastructure facilities that form this industrial complex and all the surrounding ground owned by FMPlata.

• Mina Los Rosarios, S.A. de C.V. is a Mexican mining company owned by Mr. José Antonio Gámiz Quiñones and Family, former operator of the La Parrilla mine and plant. FMRM acquired the rights to La Parrilla from this company.

• Grupo México refers to the corporation that holds ownership of ASARCO, former ASARCO Mexicana, and a group of Mexican Companies, subsidiaries of Industrial Minera México, S.A. de C.V., including Minera Montana, S. de R.L. de C.V., Mexicana del Arco, S.A. de C.V. and Minerales Metálicos del Norte, S.A. de C.V., from which FMRM has purchased mining concessions and properties within La Parrilla area.

• 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.”

• CFM refers to Comisión de Fomento Minero, a Mexican Federal Entity responsible for support and promoting mining activities, including financing and exploration, mining and processing through contracting by small-scale miners (gambusinos). It was shut down by the Mexican Federal Government. All former CFM activities were transferred to other Federal Institutions as Fideicomiso de Fomento Minero (FIFOMI) and Servicio Geológico Mexicano (SGM).

4.3           Units

All units are carried in metric units, also unless otherwise noted. Grades are described in terms of percent (%) or grams per metric tonne (gptonne or 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 22.

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. (“Consultant”) 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. Environmental review of documents, permits and studies for the La Parrilla Silver Mine were provided to PAH by the FMS Corporate Manager of Environmental and Permitting, Mr. José Hernández Santibañez in document dated October 31, 2008.

This information was also reviewed by FMPlata legal advisers and a legal opinion was provided to PAH by the Durango City-based Lawyers Firm of Mr. Carlos Galván Pastoriza, dated September 30, 2008. Therefore, PAH believes all above described documents and information regarding the property current status, legal title and environmental compliance for the La Parrilla Silver Mine mining – metallurgical operation to be accurate and current in legal standing.

6.0           PROPERTY DESCRIPTION AND LOCATION

La Parrilla Silver Mine is owned and operated by First Majestic Plata, S.A. de C.V. (FMPlata) a wholly-owned subsidiary of Corporación First Majestic, S.A. de C.V., a Mexican holding company wholly owned by First Majestic Silver Corp. of Vancouver, Canada (FMS).

Additional details of property description and location are presented in Technical Report Amended for La Parrilla Silver Mine of March 18, 2008 and published in SEDAR on March 19, 2008 and in Technical Report Amended of July 24, 2007 and published in SEDAR on July 25, 2007. Figure 6-1 presents a general site map and Figure 6-2 is a general location map.

Location coordinates to approximate center of La Parrilla Silver Mine are as follows:

6.1           Property Description

This Technical Report presents an update of La Parrilla’s current operating conditions and projections as planned by FMS. La Parrilla property modifications for the period of January to September, 2008 include the following:

The La Parrilla mining rights covered by First Majestic Resources México, S.A. de C.V. a wholly owned subsidiary of FMS have been transferred to the newly founded First Majestic Plata, S.A. de C.V. a corporation owned by the newly created Mexican holding company Corporación First Majestic, S.A. de C.V. which consolidates all shares and ownership of the Mexican operations by First Majestic Silver Corp. of Vancouver, BC.

All the Mining Concessions legal status was provided by legal opinion, dated September 30, 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 FMPlata 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. Figure 6-3 is a mining concessions map.

La Parrilla consists of 38 contiguous mining concessions in the La Parrilla mining district that cover mineral rights for 53,249.21 hectares (131,581.20 acres). All these mining concessions hold exploitation rights for 50 years from the date of registration.

Table 6-1 presents a list of La Parrilla Silver Mine concessions.

TABLE 6-1
First Majest Silver Corp.
First Majestic Plata, S.A. de C.V.
La Parrilla Silver Mine
Mining Concessions

(1) All concessions have been transferred to FMPlata
(2) Concessions with provisions to pay royalties

6.2           Mineral Tenure

FMS acquisition rights of La Parrilla claims purchased from Grupo México include a Net Smelter Return (NSR) of 1.5 percent royalty payments that may be acquired by FMPlata for a total of US$2,000,000. There are no other encumbrances on La Parrilla mining concessions. FMPlata has recently negotiated a lease on the land where the second tailings dam has being built and is now operating; this includes a yearly payment to the Ejido San José de La Parrilla.

6.3           Environmental

All mining and environmental activities in México are regulated by the Dirección General de Minas and by the SEMARNAP from México City, under the corresponding Laws and Regulations. All minerals below surface rights lie with the State; while surface rights are owned by “ejidos” (communities) or private individuals, allowing them the right of access and use of their land.

La Parrilla area is located, within the Ejido San José de la Parrilla and also within private property. La Parrilla has made an Agreement for the surface rights from Ejido San José de La Parrilla under the provisions included in the Mexican Mining Law to permit the use of surface rights for development of projects that are of general economic interest, including mining operations.

PAH is not aware of any pending environmental liabilities within the La Parrilla area of operations. A list and statement of all operating permits and their current status was provided to PAH by FMS Corporate Manager of Environmental and Permitting regarding the La Parrilla, dated October 31, 2008. Environmental Permits and Requirements are current.

La Parrilla Silver Mine is located in the south-eastern part of the state of Durango, at about 60km to the southeast from the capital city of Durango. It is located in the municipality of Nombre de Dios, at about 1km to the SE of the village of San José de la Parrilla.

Geographic coordinates for the central part of the La Parrilla area are as follows:

N – 2,625,000; E – 591,500

La Parrilla district consists of numerous silver/gold/lead/zinc underground mines, Los Rosarios, La Rosa, San José, La Blanca, San Marcos, Las Vacas, Quebradillas, Las Víboras, San Marqueña, Sacramento, Cerro Santiago, Santa Paula and other small workings. FMS has consolidated the district into the La Parrilla Silver Mine operation.

Additional details on Accessibility, Infrastructure, Climate, Vegetation, Physiography, Hydrology and Local Resources are presented in Technical Reports. A project access map is shown in Figure 7-1.

8.0           HISTORY

La Parrilla mining district was discovered during the Spanish Colonial Times of the XVI century, when mining activity began in the region. Mining districts that are still in operation within this region include mines at Fresnillo, San Martín, Sombrerete, La Colorada, Cerro del Mercado, and others.

La Parrilla consists of underground silver-gold-lead mines with a processing facility that was originally constructed in 1956. The mine and plant were operated until 1999, when operations were shut down due to low silver prices. In 1960, the mining claims were acquired by Minera Los Rosarios, S.A. de C.V. who operated the mine until 1999. The Comisión de Fomento Minero (CFM), a Mexican Federal Entity responsible for promoting and supporting mining, constructed a 180 tpd flotation plant at La Parrilla, which operated as a custom mill, processing ores from nearby areas, such as Chalchihuites, Sombrerete, Zacatecas, etc. This plant was purchased in 1990 by Minera Los Rosarios from CFM. Subsequently, in 2004, FMS acquired the mining rights and the plant from Minera Los Rosarios and in 2006 successfully negotiated the acquisition of the mineral rights held by Grupo México which surrounded the original La Parrilla mine. Today FMS has consolidated ownership of the plant and all the land surrounding La Parrilla, where numerous mineral occurrences and mineral deposits are being investigated.

Production records by ASARCO and Consejo de Recursos Minerales, plus surveying volumes of old stopes within La Parrilla district, suggest that approximately 1.37 million tonnes of silver ores have been extracted from the various mines that make up this industrial complex at an estimated grade of 310 g/tonne Ag, 1.9 percent Pb and 1.5 percent Zn.

FMS’s production from the La Parrilla area (June 2004 to September 2008) amounts to 443,340 tonnes with recovered average grade of 215 g/tonne Ag and 1.05 percent Pb. These are included in total production within the mining district. Table 8-1 summarizes the La Parrilla district’s historical production.

TABLE 8-1
First Majestic Silver Corp.
First Majestic Plata, S.A. de C.V.
La Parrilla Silver Mine
Historical Mineral Production (*)

(*) Data provided by FMS from ASARCO, Consejo de Recursos Minerales and FMPlata.
(1) reported production by Mina Los Rosarios, S.A. de C.V. (1978 - 1991). Rounded figures.
(2) FMS production from Jun 2004 to Sep 2008, including 16,589 tonnes of reprocessed dumps.

Pincock, Allen & Holt	8.1
90534 February 16, 2009

FMS has consolidated ownership of the La Parrilla concessions and property under First Majestic Resources, SA de CV and newly renamed (July 31, 2007) the operating company First Majestic Plata, S.A. de C.V. (FMPlata). This operating company is held under FMS's newly created wholly owned Mexican Holding Company, Corporación First Majestic, S.A. de C.V. (CFM). These changes have been incorporated as of August 14, 2007.

FMS resumed operations at La Parrilla in June, 2004, with plans to improve and expand operations. In 2006 FMS initiated construction of a flotation plant within the cyanidation plant facilities, for total production capacity of 800 tonnes per day, including 400 tpd of oxide ore and 400 tpd of sulfide ore. This flexibility allows for a more efficient processing of the ores extracted from the various mines within the La Parrilla land holdings.

FMPlata has been developing an aggressive exploration program in the area to increase the La Parrilla Resources and Reserves. This program included drilling with six surface drilling rigs operating in the area. During the third quarter of 2008 the drilling activity was reduced to four drill rigs and by September 2008 only one drilling machine was left in operation for underground investigations. The recommended drilling program for 2009 includes 97 drill holes with a total depth of 17,200 meters.

9.0           GEOLOGICAL SETTING

Please refer to La Parrilla Silver Mine Technical Reports dated July 24, 2007 and March 18, 2008, which were published on July 25, 2007 and March 19, 2008 respectively in SEDAR.

La Parrilla Silver Mine district is located in the border zone between the physiographic provinces of the Sierra Madre Occidental and the Mesa Central, within the sub-province of Sierras y Llanuras de Durango. La Parrilla Silver Mine is located in the northern side of a contact zone between a dioritic intrusive stock and a sequence of Cretaceous sedimentary rocks. Figure 9-1 shows La Parrilla Silver Mine Regional Geologic Map.

To this date, there are no changes to report regarding the La Parrilla geology.

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

10.0         DEPOSIT TYPES

La Parrilla Silver Mine mineral deposits consist of structurally-controlled mineral concentrations of silver/gold/lead/zinc and other secondary minerals. These occur associated and partly enclosed by the metasomatic zone created by a stock of dioritic composition intruding a sequence of calcareous rocks of Cretaceous age.

The plutonic cycle originated uplifting and intense faulting and fracturing of the pre-existing sedimentary rocks. A broad zone of metasomatic alteration was developed around the outer zone of the intrusive and into the sedimentary rocks, which may reach up to about 2km in the southern part of the outcropping contact zone at the La Parrilla Silver Mine area. Figure 10-1 shows a sketch of a typical skarn deposit.

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

For additional details on the deposit types at La Parrilla Silver Mine, please refer to La Parrilla Silver Mine Technical Report Amended dated July 24, 2007, which was prepared by Pincock, Allen & Holt, Inc. for First Majestic Silver Corp. and published on July 25, 2007 in SEDAR.

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

11.0         MINERALIZATION

Mineralization at La Parrilla Silver Mine is a typical assemblage of metasomatic deposit and hydrothermal vein deposits with a high content of silver. These mineral assemblages have been affected by processes of oxidation and secondary enrichment. They mainly consist of pyrite, sphalerite, galena, some chalcopyrite, argentite and other silver sulfosalts associated with calcite and quartz as gangue minerals. Oxidation and secondary enrichment of these sulfides makes up the mineral concentrations in the upper parts of the deposits, which consists of sulfosalts (ceragyrite, pyrargyrite, stephanite) carbonates (cerussite, hydrozincite, hemimorphite), sulfates (anglesite, willemite), and iron oxides, hematite, limonite, etc. Figure 11-1 Quebradillas mine High Grade oxides mineralization.

Silver mineralization occurs as argentite and native silver. Lead mineralization is present as carbonates (cerussite) and sulfates (anglesite) and other oxides. Figure 11-2 shows High Grade oxides at Quebradillas vein, Stope 538. Figure 11-3 shows exploration drilling at Stope 7564 of La Rosa vein.

The La Parrilla Silver Mine mineralization occurs along a vertical range of about 600m in vertical extension (2,300m to 1,700m above sea level). This extension is known through underground development and drill holes and it is still open to depth. Known longitudinal extensions vary from about 1,200 meters at the Los Rosarios system, 500 meters at the San Marcos vein system, and about 400 meters at the Quebradillas area; however some of these systems may be continuous, such as Los Rosarios System and San Marcos.

FMS has delineated an area of approximately 200m by 200m for possible open pit mining. Preliminary estimates based on 33 drill holes with a total depth of 2,905m has indicated 3.3m tones at an average grade of 100 g/tonne Ag in oxides mineralization. Figure 11-4 shows the Quebradillas outcropping 3D Block Model representation.

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

For additional details on the deposit types at La Parrilla Silver Mine, please refer to La Parrilla Silver Mine Technical Report Amended dated July 24, 2007, which was prepared by Pincock, Allen & Holt, Inc. for First Majestic Silver Corp. and published on July 25, 2007 in SEDAR.

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

12.0         EXPLORATION

12.1         Introduction

La Parrilla Silver Mine represents a typical Mexican mining district which was discovered in Colonial times (XVI – XVII centuries) and only developed from outcroppings by following mineralization along the structures, until high grade ore shoots were discovered and depleted at times of high metals prices. Common practice in these districts’ development was to mine out high grade ores, for the most part, by direct exploration development.

For additional details on the deposit types at La Parrilla Silver Mine, please refer to La Parrilla Silver Mine Technical Report Amended dated July 24, 2007, which was prepared by Pincock, Allen & Holt, Inc. for First Majestic Silver Corp. and published on July 25, 2007 in SEDAR.

FMS through its wholly-owned Mexican subsidiary FMPlata continues development of an aggressive exploration program that includes underground workings, such as ramps of access, drifting and crosscutting into the old working areas of the Los Rosarios System including La Blanca, San Marcos, Quebradillas and Vacas areas. It also includes, for 2009 the completion of investigations for the potential development of the Quebradillas outcroppings area by open pit methods. This program is based on the following premises:

• Prepare the La Parrilla Silver Mine operation with sufficient mineral Reserves to sustain economic production throughout periods of low metals prices.

• Plan and develop systematic production and increasing operating capacity.

• Recover oxides and sulphides mineralization consolidating mining blocks and increasing Reserves to support reasonable production schedule.

• Support exploration activities for development, channel sampling and underground drilling.

• Carry out an aggressive exploration program including deep drilling from underground and surface sites, and

• Focus exploration efforts into regional exploration targets.

FMPlata is focusing exploration efforts on large volume targets while mining small to medium size volume mineral concentrations that were left within blocks and accessible areas along the workings. Part of the efforts during 2008 focused on the probable development of the Quebradillas outcroppings area by open pit methods. Table 12-1 shows the exploration programs at La Parrilla Silver Mine for 2009.

TABLE 12-1
First Majestic Silver Corp.
First Majestic Plata, S.A. de C.V.
La Parrilla Silver Mine
Exploration Program 2009

12.2         Exploration Programs

FMPlata exploration programs for the La Parrilla district during 2009 are designed to investigate principally two types of targets:

• To increase La Parrilla Reserve/Resource base within currently producing areas. These targets include mine workings and drilling for confirmation of blocks and areas in the Los Rosarios System, La Blanca, San Marcos, Quebradillas, Las Vacas, etc.

• To investigate geophysical, geochemical and structural targets that may indicate significant concentrations of minerals. These target areas may represent large-volume exploration targets. These areas are generally associated with the contact zone between the regional intrusive stock and sedimentary formations, or with dykes and sills that may indicate favorable zones for mineral concentrations. Geophysical investigations are programmed for the Cerro Santiago and La Cruz areas. Geochemical sampling is scheduled for Cerro Santiago, Providencia, La Cruz, Michis and additional assays of drill core.

• Access, prepare and develop old mine workings such as Quebradillas, Las Vacas, San Marcos, etc.

FMPlata has considered a significant budget for investment in exploration at La Parrilla. This budget includes programs of exploration that have already shown positive results by indicating an important Reserve/Resource base for the mine. It appears that, at no other time during the life of the mine, La Parrilla has shown the Reserves and Resources currently estimated by FMPlata. Estimated budget for exploration during 2009 is shown in Table 12-1. Due to current market conditions, at the time of writing this report, this program is presently on hold.

12.2.1      Geophysical Exploration

FMPlata carried out geophysical investigations during the period of April to June, 2007 to confirm previous studies within the areas of Quebradillas, Sacramento, Las Vacas, and Santa Paula (formerly Los Perros). These investigations have confirmed the presence of Induced Polarization and Resistivity anomalies which will be further investigated by direct methods, such as drilling and underground access where possible. Figure 12-1 shows Resistivity Profile of Line Y-900 at Las Vacas area.

The geophysical survey was developed by Geolinsa, a Monterrey city based geophysical company. Methodology and results were described in Report dated August 30, 2007, Informe Técnico Exploración Geofísica en La Parrilla, Durango. This Surrey consisted in measuring electric resistivity and induced polarization (IP). The data was processed by EarthImager 3D Software including topographic information.

The resulting interpretation was presented in plan view to show anomalous zones and projected cross sections indicating electrical resistivity and induced polarization (chargeability) in 2D vertical representation. The survey was completed for the following Areas:

• Sacramento A, including 9 lines at 2,000m each. Recommendation 5 dh.
• Sacramento B, including 5 lines at 1,000m each. Recommendation 7 dh.
• San Nicolás, including 7 lines at 1,000m each. Recommendation 3 dh.
• Las Vacas, including 10 lines at 1,200m each. Recommendation 11 dh, and
• Santa Paula (Los Perros), including 4 lines at 1,000m each. Recommendation 5 dh.

The IP survey was developed by the Dipole – Dipole method with readings at 100m along the lines. The topographic survey included location of control points at 50m spacing along the lines.

The geophysical survey resulted in prospective anomalous zones showing high resistivity and high chargeability. Drill sites were recommended to investigate the most outstanding anomalies as indicated above. Figure 12-2 shows Induced Polarization response at Profile Y-900 at the Las Vacas area.

FMPlata has included in 2009 additional exploration programs for IP and Resistivity surveying at the Cerro Santiago and La Cruz areas. Total estimated length of IP surveying is 30km.

12.2.2      Geochemical Exploration

FMPlata exploration program for 2009 includes geochemical investigations to complement exploration investigations by geophysical methods at the Cerro Santiago, Providencia, La Cruz and Michis areas. This program includes about 800 samples to detail, confirm or evaluate some of the geophysically anomalous areas. Additional geochemical sampling has been scheduled to assay about 1,000 representative samples of drill core to investigate probable geochemical signatures. This core sampling is intended to establish a database that may help to make future interpretations of other target zones within the mining district. FMPlata exploration program for La Parrilla during 2009 include geologic mapping and geochemical sampling of the Quebradillas and Víboras areas.

12.3         Drilling

Drilling programs at La Parrilla Silver Mine have been limited by past operations, since the best exploration results may have been obtained through underground development. However, FMPlata has obtained positive results by increasing drilling to define and evaluate new mineralized zones as well as to investigate continuity of ore shoots for development.

FMPlata initiated an aggressive drilling program to explore the various areas of interest within La Parrilla holdings in 2005. The entire program through to September 30, 2008, has consisted of 310 diamond drill holes completed by FMPlata for a total drilled depth of 72,084m at an average depth of 233m per drill

hole. FMPlata completed drilling program was developed to investigate 13 areas within the mining district. Table 12-2 shows completed drilling at La Parrilla Silver Mine by FMS through September 2008.

TABLE 12-2
First Majestic Silver Corp.
First Majestic Plata, S.A. de C.V.
La Parrilla Silver Mine
FMPlata Drilling Programs through September 2008

FMPlata contracted and operated six drill rigs to carry out the 2008 program that included 24,700m of drilling in the Quebradillas, Vacas, San Marcos, Santa Paula, Cerro Santiago, Sacramento and Michis areas. At the time of PAH’s visit, four drill rigs were operating, including one underground. Currently, the La Parrilla Silver Mine drilling program comprises one underground drill rig.

Table 12-3 shows exploration programs completed by FMS at La Parrilla through 2007. In addition to these investigation FMS has completed diamond drilling during 2008 as shown in Table 12-2. Figure 12-3 shows the Vacas area surface expression. Figure 12-4 Underground Drilling at Quebradillas vein.

TABLE 12-3
First Majestic Silver Corp.
First Majestic Plata, S.A. de C.V.
La Parrilla Silver Mine
Exploration Programs Through 2007

12.4         Opinion

In PAH’s opinion the exploration programs developed by FMPlata within the La Parrilla Silver Mine district have been successful in testing exploration targets, increasing the mine’s Reserve/Resource base and indicating new targets of exploration within the mining district. FMPlata has assembled an experienced and enthusiastic team of exploration professionals to cover all facets of the exploration requirements. In PAH’s opinion FMPlata exploration programs have established a significant Resource/Reserve base for La Parrilla Silver Mine to sustain continued operation during a significant period of time. Table 12-4 presents FMS all drilling at La Parrilla Silver Mine from 2006 to 2008.

13.0         DRILLING

FMPlata has been drilling at La Parrilla Silver Mine since June 2005, shortly after acquisition of the Project took place. FMPlata is currently drilling with one drill rig from underground sites, and has contracted four drill rigs with Cau S.A. de C.V. (“Causa”). Causa is a Gómez Palacio, Durango, México based drilling company. This program includes drilling from surface and underground sites.

FMPlata’s 2009 exploration drilling program, even though it is presently on hold due to market conditions, includes a total of 97 holes planned for a total depth of 17,200m distributed for exploration within the following areas: Quebradillas, Vacas, San Marcos, La Blanca, Cerro Santiago, and Sacramento. This program has been outlined in Table 12-1.

Figure 13-1 shows the La Parrilla general map showing all the areas under exploration within the mining district. Figure 13-2 shows channel sampling at San Marcos Drift 042-N. Figure 13-3 shows channel sampling at La Rosa vein, L-8450.

FMPlata’s drill hole database is compiled in electronic format, which contains collar, assay intervals, lithology, and assay information with gold/silver/lead/zinc values. Most of the holes are drilled at an angle to intersect vein or mineralized structures that generally dip at near vertical angles. According to FMPlata, based on geologic interpretations, no apparent deviation has been detected in drill holes. FMPlata has established a surveying procedure which is performed during the drilling due to the fact that most of the holes are now longer than 150 meters. Deviation is defined with one survey reading at the bottom for holes of 150 meters in depth and 2 survey readings for holes longer than 150 meters; one reading at the middle and one reading at the bottom of the hole.

Logging is performed by the project geologist in each of the areas being investigated. The project geologist also determines the sample intervals. Trained assistants are in charge of core splitting and sampling as per the project’s geologist indications.

PAH believes that FMPlata’s drilling program from surface and underground sites, in combination with underground development, is appropriate and well designed to explore promising targets and ore deposits continuity. Table 13-1 Drilling and mine development for exploration, 2007 – 2008.

Geologic potential exists to discover additional mineralized zones along the development workings.

In PAH’s opinion FMPlata’s exploration drilling program is well designed and is justified as an investment as it has consistently developed additional Reserves/Resources for La Parrilla Silver Mine. The estimated budget for the next program anticipated for 2009 is included in Section 22 of this Report - Recommendations.

TABLE 13-1
First Majestic Silver Corp.
First Majestic Plata, S.A. de C.V.
La Parrilla Silver Mine
Drilling and Mine Development Programs, 2007 and 2008

14.0         SAMPLING METHOD AND APPROACH

PAH reviewed La Parrilla Silver Mine’s sampling program for the preparation of this Technical Report. La Parrilla Silver Mine’s current sampling team consists of three sampling crews with three employees each for underground sampling, one sampler for drill core, and one sampling supervisor. This process is managed by the mine geologists.

14.1         Channel Sampling

Exploration sampling for Reserve delineation at La Parrilla Silver Mine is conducted by drifting along the mineralized zones so that channel samples can be taken. Channel samples are the primary means of sampling in the mine and are taken perpendicular to the vein structures, across the back of the drift and across the drifts and workings, generally from the footwall towards the hanging wall of the mineralized structure. Sampling crews take channel samples at regular intervals of 2m to 3m, typically with several samples along every sampling channel on new openings (drifts, crosscuts, ramps, stopes, etc.) and every day from stope development muck piles. Channel samples are taken in consecutive lengths of less than 1.50m along the channel, depending on geologic features. Channel samples are taken with chisel and hammer, collected in a canvas tarp and deposited in numbered bags for transportation to the laboratory.

A channel “line” typically consists of two or more individual samples taken to reflect changes in geology and/or mineralogy across the structural zone. Each sample weighs approximately 4kg. All channels for sampling are painted by the geologist and numbered on the drift’s walls for proper orientation and identification.

The La Parrilla sampling quality control program consists of checking the assays of one duplicate sample for every 20 regular samples from pulp samples. La Parrilla also includes duplicate drill core samples, at a rate of about 1 duplicate for every 40 samples, to confirm the sample preparation and assaying methods.

La Parrilla Silver Mine’s duplicate samples for this period included 44 samples from drill core samples of exploration areas. Additionally the program included assays of 31 duplicate pulp samples.

All samples are assayed at La Parrilla Silver Mine’s lab, while duplicate samples are sent to BSI-Inspectorate laboratory a US lab located in Reno, Nevada with representation and sampling preparation facilities in Durango City, México.

14.2         Drill Core Samples

FMPlata exploration drilling is performed by the contractor firm of Causa. This company is based in the city of Gómez Palacio, Durango State, Mexico and at the time of the PAH visit, presently is operating four drilling rigs within the La Parrilla Silver Mine area.

Sampling of the drill core is made after the core has been logged by the mine geologists. The geologist marks the core on the basis of geologic and mineralization features. Then the sampling crew splits the core with diamond saw, as indicated by the geologist and one half of the core is placed in a numbered bag and sent to Inspectorate lab in Durango City. Generally the samples represent core lengths of less than 1.50m. All the core samples are sent for assaying by Inspectorate. The core samples are crushed and pulverized at Inspectorate in Durango City and 250g pulp samples are sent to Reno, Nevada for assaying.

Duplicate core samples are taken by FMPlata crew from the remaining half of the core, by again splitting the core to a one quarter size. Therefore, one quarter of the core still remains in the box for future reference. Duplicate samples are taken at a rate of approximately one duplicate sample from every twenty regular samples. Figure 14-1 shows core samples of the La Blanca Vein, LB-13.

Drill hole data are included in the Resource/Reserve calculations, and are generally applied by La Parrilla Silver Mine in the resource projections. Drilling results are applied in the grade calculations giving more weight to the larger-size channel sample data.

PAH's opinion regarding the channel sampling applied by FMPlata's exploration and mining crews, is that it is done carefully and responsibly by well trained samplers. The sampling appears to reconcile with silver production and sales by FMPlata. The channel samples appear to properly represent the mineralization of the various La Parrilla Silver Mine deposits; therefore, they are acceptable for Resource and Reserve estimates.

15.0         SAMPLE PREPARATION, ANALYSIS AND SECURITY

15.1         Sample Preparation

La Parrilla FMPlata’s sample preparation descriptions were presented in previous PAH’s Technical Reports as follows: “Exploration, mine development, production, and plant samples are sent to FMPlata’s on-site laboratory for chemical analysis of silver/gold/lead/zinc and copper. Silver and gold assays are carried out by fire assaying methods, while the rest of the elements are assayed by atomic absorption (AA)”.

A typical channel sample received by the laboratory, weighing approximately 4 kilograms, is passed through a jaw crusher to reduce it to a 1.3 - -centimeter (1/2”) size. A 500-gram split is taken and passed through gyratory or disk crushers to reduce it to a 10-mesh (1/8”) size. A 200 to 300 gram split is taken and placed in a drying oven at 120 degrees Centigrade. After drying, the material is put into two pulverizers, one disk pulverizer and one ring pulverizer, to grind the rock to minus 100 mesh. The resulting pulp is homogenized and 10 grams taken for fire assay analysis of silver and gold for geology samples and for concentrates; 20 grams are taken for head samples; and 1 gram is required for precipitate samples.

The 10-gram pulps are placed in fusion crucibles and placed into an electric furnace for fusion into lead buttons. The lead buttons are placed in cupellation cupels and placed into an electric furnace for cupellation into a silver-gold bead. The bead is weighed and then put into nitric acid to dissolve away the silver and then the remaining gold bead is weighed again. The microbalance used has a sensitivity of + 1 per 10,000 (equivalent to an actual grade of +0.1 gram per tonne), while the gold beads commonly range in weight from 100 milligrams down to less than 1 milligram. As a result, the determination of the smaller bead weight is at or below the detection limits of the microbalance.” Figure 15-1 shows AA unit at La Parrilla Lab. Figure 15-2 shows La Parrilla sample preparation flow chart.

15.2         Laboratory Facilities

PAH notes that the La Parrilla FMPlata laboratories generally appear to be adequate, with reasonable cleaning and organization. The laboratory currently processes about 250 samples by fire assay and by AA per day, including exploration samples, development samples, and mill samples. Laboratory personnel include five sample preparation operators, one Chief Chemist/AA and one Assistant Operator in fire assay and AA, and one person who weigh samples and reports results. La Parrilla Silver Mine supports students under scholarship programs for practicing at the laboratory during the summer months.

The on-site laboratories consist of two separate buildings for sample preparation and for assaying. The assaying facility includes electric equipment, two crushers, one ball mill and electric and LPG fueled furnaces. Solution samples are analyzed with a Perkin Elmer Analyst 400 Atomic Absorption unit.

The La Parrilla lab includes facilities for metallurgical test work. Test work for flotation, cyanidation and gravimetric concentration is done in the lab.

FMPlata’s QC procedure consists in sending mine samples and/or pulps to an outside laboratory, usually BSI-Inspectorate Labs in Reno, Nevada. Samples of concentrates are regularly sent to Peñoles for check assays. The laboratory duplicates pulp assays at 1 sample for every 20. FMPlata has established a QC procedure by checking assays. Drill samples are duplicated as one sample for every twenty regular samples. PAH recommends that standard samples and blank samples also be included in the duplicate sampling.

15.3         Check Assaying

To evaluate sample quality control, FMPlata performs periodic check analyses on samples. For the period to September 30, 2008, FMPlata has sent 119 samples to Inspectorate Laboratories, an independent commercial laboratory in Reno, Nevada for duplicate analysis. All core samples are sent to the BSI-Inspectorate lab for assaying; therefore, the assay check was also performed by the same lab. Statistics and correlation were applied to 44 duplicate samples and 31 pulp duplicate samples. Table 15-1 is a list of duplicate core samples for assays check.

Figure 15-3 is a graph that shows the assay check results for silver, lead and zinc from the core samples and comparison of Inspectorate Laboratories assays of regular and duplicate samples, for 44 samples from the period of November, 2007 to September, 2008.

Table 15-2 presents the database for 31 duplicate pulp samples corresponding to V-29 drill hole. These were assayed by the La Parrilla Silver Mine lab and checked by Inspectorate Lab for silver, lead and zinc.

Figure 15-4 shows three graphs representing the assay check results for silver, lead and zinc from the 31 pulp samples and comparison between the Inspectorate Laboratories assays and the La Parrilla Silver Mine lab assays.

No gold assays are performed at the La Parrilla FMPlata’s lab. The correlation for silver assays of core samples is excellent at 99 percent while the pulp duplicates correlation is acceptable at 91 percent. The correlation for assays of lead is 97 percent and 81 percent respectively. The correlation for zinc assays is 97 percent for duplicate samples and 40 percent for pulp sample duplicates. The poor correlation for zinc samples is probably due to presence of oxidizes within the mineralization. The range of silver values is from 0 to 1,137 g/tonne, with an average grade of 119 g/tonne, while the range for lead is 0 to 22 percent with an average of 2.44 percent and for zinc is 0 to 19 percent with an average grade of 4.12 percent.

Channel sample checks are performed by analyzing random sample pulps at the La Parrilla lab with assay checking by the SGS de México lab at Durango. The assays include silver, lead and zinc.

TABLE 15-1
First Majestic Silver Corp.
First Majestic Plata, S.A. de C.V.
La Parrilla Silver Mine
Duplicate Samples Assays Check to September 30, 2008

TABLE 15-2
First Majestic Silver Corp.
First Majestic Plata, S.A. de C.V.
La Parrilla Silver Mine
Duplicate Pulp Samples Assays Check to September 30, 2008

PAH recommends that a more strict and systematic program of assay checks of the mine samples, including field samples and pulps, be implemented, to correlate assays between the mine and the plant.

PAH suggests the implementation of a strict program of Quality Control of the mined out and processed ores by introduction of blank and standard samples, as well as the insertion of field duplicate samples to keep a close control of the assay results. PAH recommends that a similar program as that for core samples be established, to compare assay results between La Parrilla Silver Mine’s lab and Inspectorate for channel and production samples.

15.4         Conclusion

Overall, PAH found that the results from the check assaying are reasonable. PAH recommends the inclusion of standard samples to assess analytical precision. In addition, field duplicate samples and blank samples would allow for an assessment of sample preparation procedures.

It is PAH’s opinion that the sample methods and analyses are representative of the deposits at La Parrilla Silver Mine, and that most of FMPlata’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 the La Parrilla Silver Mine operation is being conducted by FMPlata in a reasonable manner, consistent with standard industry practices. PAH would expect the sampling results to be reasonably representative of the mineralization of the deposits, 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 Parrilla Silver 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.

FMPlata has established a systematic procedure to verify data and quality control which has proven 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.

FMPlata initiated an effective control of the La Parrilla Silver Mine operations since January 2004 when it took control of the mining operation.

La Parrilla Silver Mine maintains an active program of assay checks for the production of concentrates at the mine’s lab, in addition to a 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 Concentrates and Doré shipments for the month of August, 2008. It includes 9 shipments of concentrates for a total tonnage of 327 tonnes and 4 shipments of La Parrilla Silver Mine Doré with assays reported by FMPlata and by Peñoles laboratories.

Statistical correlation for weight and assays of shipments between the La Parrilla Silver Mine and Peñoles labs is 100 percent for weight and silver assays and 96 percent for lead assays.

Statistical analysis of these results indicates a coefficient of correlation of about 83 percent for the gold in concentrates and 100 percent for the gold in Doré shipments between measurements and assays at La Parrilla FMPlata and Peñoles laboratories.

Table 16-1 shows a list of 9 shipments of concentrates embarked to Met-Mex Peñoles during the month of August, 2008. These concentrates were assayed for gold, silver and lead. Correlation of assay results between the La Parrilla Silver Mine and Peñoles labs is represented at the bottom of the Table 16-1. The coefficient of correlation for silver assays is 100 percent, while for lead is 96 percent. La Parrilla Silver Mine also shipped, during the month of August 2008, 4 loads of Doré to Peñoles resulting in a total weight of 1.218 tonnes containing 3.724 kilograms of silver (39,169 oz) and 1,355 grams of gold (43.5 oz) and assays correlation of about 100 percent.

PAH believes that an adequate amount of checking has been conducted and that the results are representative of the Doré and concentrates produced at La Parrilla Silver Mine and shipped for sales.

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 various deposit

TABLE 16-1
First Majestic Silver Corp.
First Majestic Plata S.A. de C.V.
La Parrilla Silver Mine
Dore and Concentrate Checks for August, 2008 Shipments

mineralization and concentrates, and should be usable with acceptable confidence in the estimation of the mineable Reserves, and that the sales of Doré and concentrates are a clear representation of FMPlata production sales.

During PAH's site visit, drilling from underground sites was in progress at Quebradillas and at the La Rosa vein. PAH reviewed cores of the La Rosa, La Blanca and San Marcos veins in previous visits. PAH notes that the core is kept in boxes with clear markings of samples and depth. The core has been split in half and occasionally in one quarter for assaying. The mineralization intercepts are sampled and FMPlata provided copies of the assay certificates. PAH reviewed the original certificates, which are kept at FMPlata's office in the city of Durango. PAH believes that an adequate amount of checking has been performed at La Parrilla Silver Mine and that the results are representative of the mineralization in the various deposits.

17.0         ADJACENT PROPERTIES

No adjacent properties exist within the surrounding areas of La Parrilla Silver Mine. Several mines, including: Quebradillas, La Blanca, Las Vacas, San Nicolás and other mines, are covered by mining concessions owned by FMPlata. Therefore, as reported in previous PAH’s Technical Reports, FMPlata has consolidated ownership of the area surrounding the La Parrilla Silver Mine.

FMPlata owns 38 contiguous mining claims within the La Parrilla Silver Mine and surrounding area. The claims provide coverage of 53,249.21 hectares. These claims have been registered at the Dirección General de Minas under FMS Mexican subsidiary FMPlata. According to Legal Opinion by the Durango-based Legal Firm of Carlos Galván Pastoriza issued on September 30, 2008, all of these mining claims are current in legal standing.

No other mines exist nearby the La Parrilla Silver Mine area. Other mining districts located within the La Parrilla Silver Mine region are the following:

• The Chalchihuites mining district, partially owned by FMS, is located approximately S50ºE and 50km from the La Parrilla Silver Mine’s district. The areas within this district owned by FMS include the Perseverancia silver mine and the San Juan silver mine which are part of a project FMS calls the Del Toro Silver Mine.

• La Colorada mine, owned and operated by Pan American Silver is located about 70 km S40ºE from La Parrilla Silver Mine, and

• The San Martín/Sabinas/Los Tocayos mining district, with mines operated by Grupo México, Peñoles and others near the city of Sombrerete, Zacatecas, is about 60km to the S75ºE from the La Parrilla Silver Mine area.

La Parrilla Silver Mine district and other regional mining districts as shown in Figure 17-1.

Surface rights for installations, waste dumps, tailings, and some of the mines within the La Parrilla Silver Mine area, have been obtained by FMPlata in an Agreement for the use of surface rights with the Ejido of San José de La Parrilla, for 15 years, covering 69 hectares, and also FMPlata purchased an additional 30.5 hectares of surface rights from Grupo México.

18.0         MINERAL PROCESSING AND METALLURGICAL TESTING

The ore processed from the La Parrilla mining district consists of two essential types: oxides and sulfides. Oxides are the in-situ oxidation product of the sulfide ore. For both ore types the principal economic component is silver. The ores also contain minor amounts of gold, lead, and zinc. Oxide ores are processed by cyanide leaching to produce Doré metal; sulfide ores are processed by differential flotation to produce a silver-rich lead concentrate.

Metal recoveries are currently low by general industry standards, about 60 percent of the silver in both the cyanide leaching and flotation circuits, and about 55 percent for lead in the flotation circuit. Expectations of higher recoveries of silver in both the leaching and flotation circuits and of lead in the flotation circuit have not been met. The valuable mineral in the sulfide ore is essentially argentiferous galena. It is suspected that part of the gold is present in slightly-auriferous pyrite. The mineralogy of the oxide ore is essentially the oxidation product of the sulfides. It is probable that most of the silver occurs as argentite, but it is likely that some of the silver is present as naumannite (silver selenide) since selenium is found as an impurity in the Doré bars.

Ore processed in the plant up to now has been mostly from the Rosa/Rosario and La Blanca veins with smaller amounts from the San Marcos and Quebradillas veins.

Results of recent metallurgical test work are summarized in Table 18-1. As shown on the table, flotation of Quebradillas ore shows slightly better results than those of the plant operation, but upgrading of the concentrate will result in lowering of the recoveries. Flotation of Vacas ore, which is of high lead and zinc grade, gave good results, indicating the ore does not exhibit intense mineral intergrowth, a problem that sometimes occurs in such ores.

TABLE 18-1
First Majestic Silver Corp.
First Majestic Plata, S.A. de C.V.
La Parrilla Silver Mine
Metallurgical Testwork Summary

19.0         MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES

La Parrilla Silver Mine uses conventional, manual methods, supported by computer applications and software, to calculate the tonnage and average grades of the mineral Resources and Reserves. FMPlata 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 FMS. Preliminary modeling in SURPAC was applied to the Quebradillas outcropping area for projected open pit mining. Currently FMPlata maintains geologic interpretations and mine plans in AutoCAD and databases in Excel spreadsheets. PAH has reviewed FMPlata calculated Resources and Reserves for La Parrilla Silver Mine to assess the current status of the property and to use it as a basis for future updated estimates and reconciliation. This estimate is also the basis for design and evaluation of exploration programs for the mine. This Resource/Reserve calculation has been estimated as of September 30, 2008.

19.1         Introduction

FMPlata initiated exploration activities at the La Parrilla Silver Mine area in July 2005. Diamond drilling and underground development works were focused in exploring the Los Rosarios System. Other than exploration by Grupo México at Quebradillas and Vacas mines, no other significant exploration studies had been carried out at La Parrilla until FMS initiated these investigations. Currently FMPlata is exploring by underground development and drilling at La Blanca, La Rosa, Rosarios, San Marcos, Quebradillas, Las Vacas, San Onofre, and Santa Paula areas. As a result of these exploration efforts, other areas have been located that will be included in future FMPlata programs, such as the probable open pitable area to the East of Quebradillas and geophysical anomalies at Cerro Santiago and La Cruz.

FMPlata initiated exploration programs based on drifting and channel sampling. Old workings and accessible areas within the Los Rosarios system of mines are a primary target for confirmation and further exploration by FMPlata, as well as other promising areas of resources.

Exploration studies by FMS at La Parrilla Silver Mine to September, 2008, adds up to 310 drill holes with a total drilled depth of 72,084m; 274.2km of geophysical surveying (IP/RA), including 46 km carried out by FMPlata during 2007; 36sq km of aeromagnetic investigations; and about 4,100 samples for geochemical research, in addition to 17,540m to September of 2008, of underground development.

Quebradillas mine was acquired by FMPlata from Grupo México and initiated aggressive mine development and drilling to validate those Reserves and Resources. During this period, FMPlata has estimated at Quebradillas about 67,000 tonnes in Reserves in addition to about 489,000 tonnes of ore in Resources. These Reserves and Resources were estimated with drill hole sample assays and underground development, with assays at La Parrilla lab and at Inspectorate lab. Geologic projections of the Quebradillas deposit appear to indicate a significant deposit to be further developed. Current estimates indicate silver content of about 4.2 million ounces of silver within the Quebradillas Reserves and Resources.

19.2         Methodology

La Parrilla Silver Mine’s actual Reserve and Resource blocks are primarily located in the Los Rosarios system, in the San Marcos and Quebradillas mines. Mineralization at La Parrilla Silver Mine is controlled by regional and local mineralized structures, intrusive stocks, dikes, sills and the metasomatic zone that surrounds the main granodiorite stock.

Regional and local geologic features appear to indicate that the main mineral concentrations are emplaced in the surrounding area to deep granodiorite stocks. These stocks are well defined by magnetic anomalies. Geologic structures are located and oriented around the boundaries of the deep igneous bodies, which probably have originated them during the tectonic events. Breccia zones and intense fracturing of some areas were also originated by the igneous events. Chemically and structurally favorable enclosing rocks allow deposition and replacement of the economic mineralization in the area.

Under this propitious geologic environment, the Resource and Reserve blocks have been defined at the various mineralized structures, veins, veinlets, intersections and stockwork zones at the drift levels along the Los Rosarios system and others mines within the area, where sampling has found economically mineable mineralization.

The Reserve tonnage and grade are based largely on channel samples, while the Resources are largely determined by diamond drilling. Reserve blocks range in length according to variable extensions of the ore shoots along the veins and breccia or mineralized zones; they may reach lengths of up to 200 meters, and are dependant on the ore shoot extensions. The vertical extension of the Reserve and Resource blocks is projected between contiguous drift levels. Vertical extension if generally projected to 30m, but in some cases it may reach 50m. The Los Rosarios system has been developed and partially drilled, in its central portion, along an extension of approximately 1.50km. Within this distance FMPlata has defined four ore shoots. This system includes, from the SE, the La Blanca, Rosarios and La Rosa mines. This central portion of the system comprises the main mining development within La Parrilla Silver Mine, and it also holds the most significant Reserves and Resources known to date.

The San Marcos vein occurs in a general NS strike at the eastern part of the area, and it tends to intercept the Los Rosarios system. The San Marcos mine was developed near the area where this projection may take place. FMPlata is reopening and developing the old mine in a systematic manner with ramps and regular drifting to prepare mine blocks for production, as well as for exploration. An ore shoot of approximately 200m long has been delineated and some Reserves are already accessible for production. An intense drilling program indicates continuity of the mineralization to depth as well as along strike.

Other significant Resources within the area are now under investigation by FMPlata, in the Quebradillas, where an interesting breccia pipe is under investigation and development, San José, Vacas, Las Víboras, Sacramento, Santa Paula, etc.

Geophysical anomalies within the area represent a significant target for exploration since these may indicate geological features that appear appropriate for finding other mineral concentrations. Geochemical sampling may be a useful tool to qualify these anomalies. FMPlata is utilizing all these techniques to investigate the La Parrilla district for satellite mineral deposits within the area.

For Reserve estimation, the cross sectional area of mineralization is drawn on each of the blocks using Auto CAD software and the assayed sample lengths. The volume of mineralization on each section is calculated for the mineralized zone. The Reserve Blocks are projected up and down by a maximum length of 20m in vertical extension, although they may be limited by mine drifts or other workings. Mine dilution is adjusted to a minimum mining width of 2.00m. Proven Reserves are based on channel sampling of contiguous drift levels and accessible raises and other mine works. Probable Reserves are projected at 20m beyond the proven blocks. Measured and Indicated Resources are projected beyond the Probable Reserves, considering geologic features and evidences of mineralization continuity. Resource estimates are projected at 25m from the drill intercepts.

In PAH's opinion the La Parrilla Silver Mine Reserve/Resource Blocks estimation is in accordance to acceptable engineering practices and appropriate for the geologic characteristics of the mineral deposits within the La Parrilla Silver Mine district.

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 s.g. = tonnes of material.

The density factor used (2.70) 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 Mr. Manuel Yañez Escareño, Manager of the La Parrilla lab and by Inspectorate.

PAH believes that on average the density for mineralization is conservative since the results indicate a general average of 2.79. PAH recommends that samples be periodically taken as checks for bulk density determination to ensure the application of an appropriate density factor.

To estimate the average grade and thickness for each Reserve/Resource Block at La Parrilla Silver Mine, composites of all channels and sample grades that occur on either side within the block’s drifts are taken in consideration. 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 section that crosses the block. The Resource Block tonnes and grade are tabulated by FMPlata on a series of spreadsheet summaries.

PAH notes that the sampling conducted across the mineralized zones for use in the Reserve estimate 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 some non economic mineralization below the cutoff grade, in which case FMPlata 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 cross cuts 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 drill holes, be used as much as possible in the blocks of Reserve and Resource estimation.

The Reserve Blocks estimated by FMPlata are not included within the Resource Blocks.

In PAH’s opinion the Reserve and Resource Block estimates carried out by FMPlata at La Parrilla Silver Mine have been reasonably prepared and conform to acceptable engineering standards for reporting of Reserves.

19.3         Cutoff Grade Calculations

For the current reserve, PAH has calculated breakeven cutoff grades for both the extraction and processing of oxide ore as well as extraction and processing of sulfide ore in La Parrilla underground mine operations. PAH calculated reasonable long-term metal prices based on the 3-year rolling averages and recent 2008 price trends. The metal price comparisons are shown in Table 19-1.

TABLE 19-1
First Majestic Silver Corp.
FM Plata, S.A. de C.V.
La Parrilla Silver Mine
Comparison of Metal Prices for 43-101 (USD)

The basic parameters applicable to the cutoff grade calculations for the underground mine are shown in Table 19-2.

19.4         Oxide Ore

Equating the parameters from Table 19-2 (oxide ore only), the breakeven cutoff grade for silver (C_Ag),based solely on silver for total operating costs and process recoveries is as follows:

CM_Ag =Total operating costs/ (Silver price X mill recovery X refinery payable metal)

CM_Ag= $49.87 per tonne/($12.00 X 0.684 X 0.995) =6.10 oz Ag per tonne or 190 g Ag/t.

TABLE 19-2
First Majestic Silver Corp.
First Majestic Plata, S.A. de C.V.
La Parrilla Silver Mine
Cutoff Grade Parameters for Oxide Ore

82,369 tonnes of oxides processed in first 9 months of 2008.

However, there is a small gold contribution for La Parrilla oxide ores. Production of gold in the Doré from the mine only for the first 9 months of 2008 was 19.15 kilograms. The calculation for gold contribution is as follows:

Revenues from gold (R_m) = Ounces of gold in Doré X payable from refinery X gold price.

R_m = 286 oz Au X 0.995 X $708 Rm = $201,475

R_m/ tonne mined = $201,475 / 82,369 = $2.45

The silver equivalent of gold contribution = $2.45 / $12.00 = 0.20 oz Ag/t or 6 g Ag/t.

The adjusted mine cutoff grade (CM_Ag) is then: 190 g Ag/t Ag - 6 g Ag/t = Ag = 184 g Ag/t.

The basic parameters used for the cutoff grade calculations for the mining and processing of sulfide ore from La Parrilla are shown in Table 19-3.

9.5         Sulfide Ore

Equating the parameters from Table 19-3, the breakeven cutoff grade for mining and processing of the sulfide ore, based solely on silver, for the total operating costs and process recoveries anticipated, is as follows:

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

CD_Ag = $66.94/ $12.00 X 0.624 X 0.95) = 9.41 oz Ag/t or 293 g Ag/t.

TABLE 19-3
First Majestic Silver Corp.
First Majestic Plata, S.A. de C.V.
La Parrilla Silver Mine
Cutoff Grade Parameters for Sulfide Ore

61,419 tonnes of sulfides processed in first 9 months of 2008.

A lead contribution is obtained from mining and processing sulfide ore at La Parrilla. About 1,767 tonnes of lead in concentrates were produced the first nine months of 2008. The calculation for the lead contribution is as follows:

Revenues for lead (R_Pb)= Lbs in concentrates X payable from smelter X lead price.

R_Pb= 740.5 tonnes X 2204.6 lbs / t X 0.90 X $0.75

R_Pb = $1,101,942

R_Pb per tonne of sulfide ore processed = $1,101,942 / 61,419 = $17.94 / t

Ag Equivalent per tonne = R_Pb / Ag price = $17.94 / $12.00 = 1.50 oz Ag/t or 47 g Ag/t.

Adjusted Cut-off Grade (CD_Ag) for sulfides = 293 g Ag/t – 47 g Ag/t =246 g Ag/t.

19.6         Reserve Estimates

PAH has reviewed the La Parrilla Silver Mine Reserve update of September 30, 2008, along with factors for mining dilution to a minimum mining width of 2.00m 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.

FMPlata has estimated mineable Reserves for La Parrilla Silver Mine’s following deposits:

• La Rosa – Rosarios vein system
• San Marcos, and
• Quebradillas

The total “in-situ” diluted Proven and Probable Reserves at a minimum mining width of 2.00m, as reviewed by PAH, is 0.50 million tonnes averaging 295 grams per tonne silver, 1.40 percent lead and 1.00 percent zinc, for a total of 4.8 million contained ounces of silver only or 5.2 million ounces of silver equivalent contained with gold and lead credits. As discussed previously in the calculation methodology section, the Proven ore category has been projected up to 20 meters from the drift sample data, while the Probable ore category is projected another 20 meters beyond the proven ore. Table 19-4 presents a summary of La Parrilla Silver Mine Proven and Probable Reserves.

Figures 19-1, 19-2, 19-3, and 19-4 show cross sections of the San Marcos, Las Vacas, Section 4-4’ of Las Vacas and Stopes of the San Marcos vein showing Reserve and Resource Blocks.

PAH notes that the Reserve and Resource blocks are exclusive of each other.

La Parrilla Silver Mine deposits occur in vein deposits and breccia zones and faults or fracturing intersections that make wide and irregular deposits. Generally ore shoots occur at La Parrilla Silver Mine in alternating zones of wide and narrow areas along the mineralized structures. 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.

19.7         Resource Estimation

Resource calculations by FMPlata at La Parrilla Silver Mine are based on projections of the mineralized zones in the underground mine workings, 20m beyond the areas of Reserves for the Measured Resources, and another 20m 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 20m 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 on the ore shoots projections and they may reach 200m in length as in the Rosarios system.

La Parrilla Silver Mine mineral Resource estimates were applied mostly to diamond drilling intercepts, as well as to some adjacent blocks from the estimated reserves.

TABLE 19-4
First Majestic Silver Corp.
First Majestic Plata, S.A. de C.V.
La Parrilla Silver Mine
Mineral Reserves Prepared by FMPlata, Reviewed by PAH as of September 30, 2008

(1) Estimates by First Majestic Plata, reviewed by PAH. Estimates based on Minimum Mining Width >2.00m. No mine recovery included.
(2) Silver equivalente based on sales. Prices used for evaluation: Ag - $12/oz; Au - $708/oz; Pb - $0.75/lb; Zn - $0.75/lb.
(3) Oxides Ag equivalent includes gold credit based on FMPlata sales. Au Credit = 6 g/tonne Ag.
(4) Sulfides Ag equivalent includes Pb credit = 47 g/tonne Ag. Zinc is not considered in reserves due to low prices and high smelter charges.
(5) Cut Off Grade estimated as 184 g/tonne Ag net of Au credit in oxide ores; and 246 g/tonne Ag net of Pb credit in sulfide ores. Zinc not considered.
(6) Reserves and resources in this report are exclusive of each other.

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

FMPlata continues to identify Reserve and Resource blocks, and exploring additional areas. The estimated mineral Resources are considered conservative, since only adjacent blocks are projected from the Reserve Blocks. Mineralization within the metasomatic zone in the contact between the intrusive stock and the carbonaceous Cuesta del Cura Formation has shown high probability of occurrence as Skarn deposits.

Additional geologic potential exists within the La Parrilla area to investigate targets that may result in significant resource development for the operation such as the outcropping Quebradillas and the Las Vacas areas. Direct exploration of the geophysical anomaly areas may be confirmed as significant target zones for further exploration. Geophysical investigations by FMPlata during 2007 have indicated anomalous areas of interest for further exploration, which confirm previous investigations by Grupo México with magnetic and IP methods and may represent concentrations of sulfides or other conductive minerals.

Other areas representing interesting geologic potential within the FMPlata holdings are the following:

• San José mine
• Sacramento
• Cerro Santiago
• Stockwork zone to the East of Quebradillas
• Las Víboras
• San Marqueña
• Mina Santa Paula
• Las Vacas
• Quebradillas, and
• Color anomaly to the West of San José de la Parrilla
• La Protectora, etc.

Additional Inferred Resources have been projected in the La Rosa/Rosarios/La Blanca system, San Marcos, Quebradillas and Las Vacas zones.

PAH has included the zinc mineralization in the La Parrilla Resources due to the current low prices and high smelter charges for concentrates made by Met-Mex Peñoles; as a result FMS has suspended the activation of the zinc flotation circuit until the market prices improve.

FMPlata estimate of Measured and Indicated Resource Blocks as reviewed by PAH is shown in Table 19-5. Most of the Resources are defined by diamond drilling. The Measured and Indicated silver Resources, including oxides and sulfides mineralization, consist of 3.1 million tonnes averaging 255 grams per tonne silver, for a total content of 25.4 million ounces of silver only contained or 30.7 million ounces of silver

equivalent net of gold credit for oxides and lead for sulfides. The Resources grade has been estimated “in situ” above cutoff grade, and the silver equivalent content is net of gold credit in oxides, at 6 g/tonne Ag, and net of lead credit for sulfides, at 47 g/tonne Ag respectively. This estimate is based on the following prices: Ag - $12.00/oz, Au - $708/oz, Pb - $0.75/lb and Zn-$0.75/lb.

Table 19-5 shows the Measured and Indicated Resources and the Inferred Resource estimate for La Parrilla Silver Mine. PAH notes that these Resources are in addition to the previously reported Reserves.

FMPlata has estimated additional silver Resources at a distance beyond the Proven and Probable Reserves. These Inferred Resources are estimated at 8.0 million tonnes at an average grade of 169 g/tonne Ag, representing a content of 43.9 million ounces of silver only, or 52.8 million ounces of silver equivalent including Au, Pb and zinc, within the Resource. These Inferred Resources include a preliminary estimate of Resources at the Quebradillas area for projected open pit mining. 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 the 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 widely-spaced drill holes, surface sampling or old surface workings. These Resources are presented by FMPlata as Inferred Resources.

The Inferred Resources need considerable grade and tonnage information before they can be “proved up” to “mineable Reserves.” To date, Los Rosarios system at La Parrilla has demonstrated a continuity along about 2.0 kilometers of strike length and down dip to about 400 meters; so it is reasonable to assume that in the future, Resources will continue to be converted to Reserves (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 Parrilla are presented in the lower portion of Table 19-5.

19.8         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 FMPlata were reviewed by PAH and constitute part of an operation by FMPlata, 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, which are exclusive of each other category, may not be materially affected by issues that could prevent their extraction and processing.

TABLE 19-5
First Majestic Silver Corp.
First Majestic Plata, S.A. de C.V.
La Parrilla Silver Mine
Mineral Resources Prepared by FMPlata, Reviewed by PAH as of September 30, 2008

(1) Estimates by First Majestic Plata, reviewed by PAH. Estimates based on Minimum Mining Width >2.00m. No mine recovery included.
(2) Silver equivalente based on sales. Prices used for evaluation: Ag - $12/oz; Au - $708/oz; Pb - $0.75/lb; Zn - $0.75/lb.
(3) Oxides Ag equivalent includes gold credit based on FMPlata sales. Au Credit = 6 g/tonne Ag.
(4) Sulfides Ag equivalent includes Pb credit = 47 g/tonne Ag. Zinc is considered at 70% met. recovery = 30 g/tonne Ag.
(5) Cut Off Grade estimated as 184 g/tonne Ag net of Au credit in oxide ores; and 246 g/tonne Ag net of Pb credit in sulfide ores. Zinc not considered in COG estimates.
(6) Preliminary Block Model estimate at COG>50 g/tonne Ag.
(7) Reserves and resources in this report are exclusive of each other.
(8) Rounded figures.

20.0         OTHER RELEVANT DATA AND INFORMATION

La Parrilla consists of several mines within FMPlata’s large land holding which make up the operations of the La Parrilla Silver Mine. Many of these mines have been in operation intermittently since the sixteenth century, when many of the mining districts in the region were discovered, such as Zacatecas, Fresnillo, San Martín/Sabinas/Tocayos near Sombrerete, Cerro del Mercado, etc. Silver production from the La Parrilla district until 2007, based in unpublished reports by ASARCO, the Comisión de Fomento Minero, production records from Mina Los Rosarios, S.A. de C.V. and production records from FMS from June 2004 to September 30, 2008, is estimated at a total production of about 1.374 million tonnes of ore at an average grade of 310 g/tonne Ag, 1.93 percent Pb, about 1.47 percent Zn and some Au. This represents about 13.7 million ounces of silver, 58.4 million pounds of lead and about 44 million pounds of zinc.

Mineralization at the Los Rosarios system, which includes the mines of Rosarios, La Rosa, La Blanca and San José, consists of a vein system that has been partially developed to depths of less than 250m at Ore Shoot 1 of the Rosarios area, while at other mines of similar geologic environments within the region, such as the San Martín/Sabinas and La Colorada mines, the ore deposits have been developed to depths greater than 600m to 800m.

FMPlata underground development has identified numerous exploration targets. One immediate target for exploration is the intersection zone between the Los Rosarios system and the San Marcos vein and follow up exploration investigations at Las Vacas and Quebradillas areas.

FMPlata’s acquisition of mining concessions owned by Grupo México surrounding the La Parrilla includes highly promising prospecting areas that may increase FMPlata’s Resource/Reserve base. FMPlata is developing exploration programs through drilling and underground workings to validate Grupo México’s reported historical Resources and Reserves for Quebradillas and other areas within the concessions. Drilling and underground development in the Quebradillas area have resulted in about 65,000 tonnes in Proven and Probable Reserves plus about 0.50 million tonnes in Measured and Indicated Resources. These Quebradillas Reserves and Resources contain an estimated 4.2 million ounces of silver in addition to Pb and Zn metals. The Quebradillas outcropping zone may be mined by open pit methods. Preliminary block model estimates resulted in estimated Inferred Resources of 3.3 million tones at an average grade of 100 g/tonne Ag in oxides mineralization.

In PAH’s opinion numerous outcropping mineralized structures and alteration zones within the La Parrilla district still remain to be explored. No other mines are operating within adjacent areas to the FMPlata’s holdings.

21.0         INTERPRETATION AND CONCLUSIONS

La Parrilla Silver Mine represents a typical Mexican mining district developed by prospectors (gambusinos) into a small to medium scale mining operation. Typically, no exploration investigations were carried out in these mining districts, other than following the mineralized structures. Development of these mines was based in accordance with metal’s prices or other geopolitical issues.

Modern exploration investigations within these old mining districts often result in discovery of significant mineral deposits, as was the case in Guanajuato, Fresnillo, Cananea, Parral, etc.

FMPlata’s exploration programs are based on investigating old mining districts; therefore, its rate of success for discovering new mineral deposits has resulted in a higher-than-average rate of success.

La Parrilla district consists of a mineralized region where a plutonic intrusive in contact with carbonaceous sedimentary rocks, in addition to subsequent hydrothermal mineralizing events, have originated adequate geologic conditions and mineral deposition creating numerous mineral deposits within the district. These mineral deposits occur, associated or enclosed by, the regional intrusive stock, stockwork zones, breccia zones and vein structures. Similar geologic conditions exist at San Martín/Sabinas, near Sombrerete; at Fresnillo; at Zacatecas; at Chalchihuites; at Concepción del Oro, and at Peñasquito mining districts, all within the State of Zacatecas, México.

Partial records of historic production at La Parrilla indicate a total of approximately 1.37 million tonnes containing about 13.7 million ounces of silver, about 58.4 million pounds of lead, and about 44.4 million pounds of zinc. These estimated metals include FMS production to September 30, 2008. This recorded production was primarily extracted from the Los Rosarios system, including the Rosarios, La Rosa, La Blanca and San José mines, and from the San Marcos vein.

Current exploration studies by FMPlata and previous operators in the area have indicated significant geologic potential within the La Parrilla district, along and to depth of the Los Rosarios system (La Blanca, La Rosa, Rosarios, San José); along and to depth of the San Marcos vein system; at the Quebradillas–Las Víboras zone; at Vacas mine; as well as at numerous geophysical magnetic and IP anomalies. FMPlata is planning to carry out an aggressive exploration program for the following several years to investigate the district’s numerous exploration targets.

FMPlata is integrating the old mining workings into new underground mines that include ramps of access to the production zones, crosscuts and drifts that incorporate development into accessible and more productive blocks of mineralization for mining by the cut-and-fill method. Mine preparation requires a lengthy program of workings based on sound planning. This mine preparation eventually leads to a more efficient operation, at lower operating costs, and a predictable production schedule.

During 2008 FMPlata has completed programs to upgrade processing facilities and increase recoveries by replacing a significant numbers of parts or pieces of equipment from the cyanidation plant, such as one

of the filters, two new leaching tanks, one thickener tank and parts of mthe crushing system. These upgrades should result in operating at scheduled capacity with a more effective operation that should result in consistent processing and recoveries. Adjacent to the cyanidation plant a new flotation circuit was built to process primary sulfides mineralization, since some of the mines are reaching the transition zone where oxidized and sulfides minerals are extracted. La Parrilla's two processing circuits are capable of processing the ores produced from the different mines within the FMPlata land holdings.

FMPlata's exploration and development efforts and investments at La Parrilla have resulted in estimated Reserves and Resources for the operation as of September 30, 2008 containing 5.2 million ounces of silver equivalent in Proven and Probable Reserves, which represent a decrement of 14 percent over previously reported estimates; 30.7 million ounces in Measured and Indicated Resources, an increment of 5 percent; and 52.8 million ounces in Inferred Resources, or 37 percent above those from the previous estimate. This resource increment is due to the continued exploration efforts by FMPlata's programs. These estimates include about 10.6 million ounces of silver contained in the Quebradillas Resources projected for open pit mining.

FMPlata has initiated training and support for educational programs to attract experienced personnel and in preparing for the future. These programs include coordination and support to nearby communities as part of social responsibilities.

La Parrilla estimated Resource/Reserve base for this period represents an important step towards consolidating the mining operation under a solid scenario of mineable Reserves for the following fiscal operating periods. This step also represents a base for further Reserves increment through exploration and development.

In PAH's opinion FMPlata's operation at La Parrilla is being conducted with sound engineering practices and acceptable methods of general application within the World mining industry; therefore, PAH believes that the exploration, mining and processing methods applied by FMPlata at La Parrilla are acceptable and justified, in accordance with good engineering practices.

22.0         RECOMMENDATIONS

La Parrilla Silver Mine represents a typical Mexican mining district which was discovered in Colonial times (XVI – XVII centuries) and only developed from outcroppings by following mineralization along the structures, until high grade ore shoots were discovered and depleted at times of high metals prices. No significant exploration programs were generally carried out in these districts. Historical records and estimates by surveying of old stopes show production from the numerous mines within the La Parrilla district of 13.7 million ounces silver, 58.4 million pounds lead and 44.4 million pounds zinc, including FMPlata operations to September 2008.

FMPlata has considered significant budgets for investment in exploration at La Parrilla. These programs of exploration appear to have already shown positive results by indicating an important Resource/Reserve base for the mine. PAH highly recommends to continue with these programs in the Los Rosarios system, San Marcos, Vacas and Quebradillas areas. FMPlata has estimated an expenditure of $3.79 Million for the period of 2009 presented in Tables 12-1 and 22-1. In PAH’s opinion, this investment represents a reasonable budget for exploration of targets that show geologic potential and highly promising evidences of mineral concentrations within accessible areas of the mining district.

The FMPlata exploration program includes geophysical investigations by magnetic and IP surveying (30km) at an estimated budget of $90,000. It also includes geochemical investigations (1,900 samples) at an estimated cost of $80,000. Diamond drilling from surface and underground sites (total 97 drill holes) is estimated at $1.82M. The program also includes underground drifting and crosscuts and preparation and access for drill sites, for a total development of about 2,800m at an estimated cost of $1.8 million. PAH agrees with implementation of this exploration program and the cited estimated expenditures, since positive results may develop additional Resources and extend the life of the mine.

PAH recommends completing Pre Feasibility investigations for the projected Quebradillas open pit mining prior to initiate development. These should include particularly detailed metallurgical testwork for recoveries and operating costs.

PAH recommends continuation of the geochemical investigations from drilling samples. This includes core sampling of the different rock formations, other than mineralized zones. The intention is to apply geochemical investigations by rock formations, and to establish a signature and database that may aid in interpretations in other target zones within the mining district. This requires taking selected core intervals within each geologic unit. An estimated budget for these investigations includes about 1,900 samples at an estimated cost of $80,000, which has been included in the 2009 budget.

In PAH’s opinion the La Parrilla programmed capital expenditures for the period of 2009, for a total of $3.79 Million are scheduled to improve the operation and through a successful exploration program, increase the mine’s Reserves and Resources and therefore extend the mine life. PAH notes that as of the writing of this report, FMS has temporarily suspended this budget due to current market conditions.

Other recommendations by PAH related to operating practices, for which no budget can be estimated, are the following:

• La Parrilla’s operators must address discrepancies between the milled grades of both oxide and sulfide ore versus the average Reserve and Resource grades. The head grade problems are mainly due to the contract miners extracting more dilution than necessary. PAH recommends that mine geologists and mining engineers develop and execute stricter grade control procedures in all the operations. These measures should result in tonnage and grade reconciliation between production, Reserves and sales.

• Metallurgical accounting must be more accurate. The operators must closely control the ore flow and stockpiles for both La Parrilla and the ore from outside operations, such as Del Toro.

• Ground control in the mines still requires attention, especially in the loose oxide zones of the orebodies. PAH recommends that rock bolting with mesh and straps, and possibly shotcrete be employed consistently in areas of poor ground.

• A system of long-range planning should be adopted by the mine engineering group at La Parrilla. Current long-range plans are general and lack detail.

Table 22-1 shows recommended exploration budget for 2009 at La Parrilla Silver Mine.

TABLE 22-1
First Majestic Silver Corp.
First Majestic Plata, S.A. de C.V.
La Parrilla Mine
Recommended Exploration Budget for 2009

23.0         REFERENCES