First Majestic Silver Corp.
TSX VENTURE : FR
PINK SHEETS : FRMSF
FRANKFURT : FMV

First Majestic Silver Corp.

December 21, 2006 09:56 ET

First Majestic Silver Corp.: Acquisition of La Encantada Silver Mine

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Dec. 21, 2006) - FIRST MAJESTIC SILVER CORP. (TSX VENTURE:FR)(PINK SHEETS:FRMSF)(FWB:FMV) (WKN:A0LHKJ) (the "Company") is pleased to announce that further to its news release dated October 4, 2006 the Company has now signed a Letter Agreement to acquire 100% of the issued and outstanding shares of Minera La Encantada S.A. de C. V. ("La Encantada"), a Mexican mining company owned by Minas Penoles SA de CV and Industrias Penoles SA de CV (collectively "Penoles").

La Encantada's primary asset is the La Encantada Silver Mine located in northern part of Mexico in the Coahuila State. This mine has at least 50 years of mining history and has been operated by Penoles from the early 1970's to 2003 when Desmin S.A. de C. V. ("Desmin") took over operations.

The La Encantada Silver Mine is presently producing 800,000 ounces of silver per year. The mill, which has a total capacity of 800 tpd, is processing 250 tpd of oxide ore grading 500 gpt Ag, which represents less then 40% capacity of the mill. The Company anticipates that these production numbers can be improved significantly over the coming months. In addition, the surrounding ground of 700 hectares represents excellent exploration and development potential with several areas of immediate interest already defined. The company has recently acquired through staking additional mining claims of 3,100 hectares surrounding the property and covering areas of geological interest.

The Letter Agreement dated December 18, 2006 allows the Company the right to purchase 100% of the issued and outstanding shares of Minera La Encantada S.A. de C.V. for total purchase price of US$3,250,000 and a NSR royalty of 4%. An initial payment of US$1,000,000.00 was paid on signing of the Letter Agreement. The balance of US$2,250,000 will be paid on closing which is anticipated on or before March 15, 2007.

As part of the Letter Agreement, the Company has also agreed to buy-out the 4% royalty to zero at an additional cost of US$1,500,000 in common shares and warrants. The shares and warrants were priced on the date of signing, thus, the agreement calls for the issuance of 382,582 shares and 191,291 warrants. Each warrant entitles Penoles to purchase one additional share at a price of $6.81 for a period of two years. The agreement remains subject to regulatory approval.

The Company's wholly owned subsidiary, ("Desmin") which was acquired on November 1, 2006, has an exploitation contract with La Encantada paying an ongoing scaling royalty to operate the mine. As a result of this purchase all royalties will be cancelled at closing on or before March 15th, 2007.

In the event that the Company is unable to obtain regulatory approval to the payment of shares and warrants, the Company will pay a 4% NSR royalty on all metals produced at the La Encantada.

With the acquisition of Desmin previously announced on October 4th, 2006 and with the signing of this Letter Agreement, the Company now has full control of the La Encantada Silver Mine, which is the Company's third producing silver mine.

First Majestic is a producing silver company focused in Mexico and is aggressively pursuing its business plan to become a senior silver producer through development of its existing assets and the pursuit through acquisition of additional assets that make sense to achieving its corporate objective.

FIRST MAJESTIC SILVER CORP.

Keith Neumeyer, President

This press release includes certain "Forward-Looking Statements" within the meaning of section 21E of the United States Securities Exchange Act of 1934, as amended. All statements, other than statements of historical fact, included herein, including without limitation, statements regarding potential mineralization and reserves, exploration results and future plans and objectives of First Majestic Resource Corp. are forward-looking statements that involve various risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements.

The TSX Venture Exchange has in no way passed upon the merits of the proposed transaction and the TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

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