First Silver Reserve Inc.

First Silver Reserve Inc.

July 05, 2005 09:01 ET

First Silver Reports Increased Reserves at San Martin Silver Mine

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - July 5, 2005) - First Silver Reserve Inc. (the "Company") (TSX:FSR) is pleased to announce that Pincock Allen & Holt ("PAH") has completed a National Instrument 43-101 compliant technical review of First Silver's 100% owned San Martin de Bolanos Silver Mine. PAH have reported that the total mineral reserves and resources have increased to 5.2 million and 37.5 million ounces of silver respectively. This is an increase of 24% on previously reported mineable reserves and 88% on previously reported resources. In addition, PAH state in their report: "Exploration potential for finding and developing new resources/reserves in the San Martin district appears to be very promising".

PAH reported that the 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 NI 43-101 and the definitions of the Canadian Institute of Mining, Metallurgy and Petroleum. PAH notes that there are no significant technical, legal, environmental, political or other kind of restrictions which would materially affect the extraction and processing of these reserves and resources. PAH also note that the estimated reserves indicate 2.5 years of mine life from January, 2005, which, with the resources, if proven to reserve certainty, would add many years of life to the mine. The San Martin Mine reserve and resources estimates as at December 31, 2004 are as follows:

Silver (ounces)
Contained Grade with Including
Silver Silver gold/lead Au/Pb
Grade (ounces) credit Credits
Category Tonnes (g/tonne) (i) (g/tonne) (ii)
Proven Mineral
Reserves 296,611 239 2,278,085 270 2,574,235
Probable Mineral
Reserves 379,343 243 2,963,669 275 3,348,946
Total Mineral
Reserves 675,954 241 5,241,753 273 5,923,181
Measured Resources 2,804,000 264 23,782,600 298 26,875,000
Indicated Resources 1,604,000 262 13,802,000 296 15,596,000
Resources 4,444,000 263 37,584,600 297 42,471,000

(i) PAH's economic breakeven cutoff grade, based solely on silver for the total operating costs and process recoveries was 6.91 Ozs Ag per tonne or 215g Ag per tonne. PAH used a price of $7.00 per ounce of silver for this calculation.

(ii) PAH's economic breakeven cutoff grade, considering the gold /lead contribution, converted to an equivalent silver grade was 6.04 Ozs Ag Equivalent per tonne or 188g Ag Equivalent per tonne. PAH used a price of $7.00 per ounce of silver, $400 per ounce for gold and $0.38 per pound for lead for this calculation.

PAH reviewed the reserve and resource estimates prepared as at December 31, 2004 by First Silver's subsidiary, Minera El Pilon S.A. de C.V.("Pilon") San Martin unit geologists. Details of the reserve and resource calculations, including key economic parameters, sampling methodology, and analytical procedures may be found in the PAH report.

The Qualified Persons responsible for the PAH Report are Mark G. Stevens, C.P.G. and Leonel Lopez, C.P.G., P.G., who are employees of PAH and who are independent of the Company. The PAH Technical report will be filed on Sedar and the Company's web site within five business days.

First Silvers holds, through its wholly owned subsidiary Minera El Pilon ("Pilon") 31 contiguous mining concessions, located in the State of Jalisco Mexico in the San Martin mining district that cover mineral rights for 7,841 hectares. To date, Pilon has recorded a production of 28.1 million ounces of silver from 3.4 million tones of ore. The underground mine has been developed to a depth of 400 meters and it remains open to depth and along strike. The Company is in the process of developing an extensive exploration program with the goal of expanding reserves that may allow for increased production beyond the 2.3 million ounces per year average annualized silver production.

On behalf of the Board of Directors

"Len Brownlie"


Forward Looking Statements

Certain information regarding the Company set forth in this document, including management's assessment of the Company's future plans and operations contains "Forward-Looking Statements" within the meaning of section 21E of the United States Securities Exchange Act of 1934, as amended. These forward looking statements are subject to numerous risks and uncertainties, some of which are beyond the Company's and management's control, including but not limited to, the impact of general economic conditions, industry conditions, fluctuation of commodity prices, fluctuation of foreign exchange rates, imperfection of reserve estimates, environmental risks, industry competition, availability of qualified personnel and management, stock market volatility, timely and cost effective access to sufficient capital from internal and external sources. The Company's actual results, performance or achievement could differ materially from those expressed in or implied by these forward looking statements and accordingly, no assurance can be given that any of the events anticipated to occur or transpire from the forward looking statements will provide any benefits to the Company.

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