First Silver Reserve Inc.
TSX : FSR

First Silver Reserve Inc.

August 15, 2005 18:49 ET

First Silver Reserve Inc. Reports 2005 Six Month Results

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Aug. 15, 2005) - First Silver Reserve Inc. (TSX:FSR) today announced its second quarter 2005 financial results. All amounts are expressed in United States dollars.

For the six months ending June 30, 2005, revenue was $6.44 million as compared to $7.73 million in the first 6 months of 2004. Revenue for the three month period ending June 30, 2005 was $3.16 million as compared to $3.50 million in the same period in 2004. In the first six months of 2005, the average London pm price for silver was $7.06 per ounce, as compared to $6.48 per ounce in 2004. The Company recorded earnings of $0.09 million or $0.00 per share for the six month period ending June 30, 2005, as compared to earnings of $1.22 million or $0.03 per share for same period in 2004. Net loss for the second quarter of 2005 was $0.13 million or $0.00 per share as compared to earnings of $0.22 million or $0.00 per share in the second quarter of 2004.

In the six month period ending June 30, 2005, First Silver produced 831,928 ounces of silver and 1,940 ounces of gold as compared to 1,077,023 ounces of silver and 2,466 ounces of gold for the six months ended June 30, 2004. Total mill throughput for the first six months of 2005 was 123,192 tonnes of ore at an average mill head grade of 241 g/tonne silver and a mill recovery rate of 87.2% as compared to 133,767 tonnes of ore at an average mill head grade of 290 g/tonne silver and a mill recovery rate of 86.4% in the first six months of 2004.

For the three months ending June 30, 2005, First Silver produced 410,730 ounces of silver and 1,039 ounces of gold as compared to 512,191 ounces of silver and 1,178 ounces of gold for the three months ended June 30, 2004. Total mill throughput in the three months ending June 30, 2005 was 60,402 tonnes of ore at an average mill head grade of 232 g/tonne silver and a mill recovery rate of 90.2% as compared to 65,899 tonnes of ore at an average mill head grade of 310 g/tonne silver and a recovery rate of 83.4% in the second quarter of 2004.

The lower silver production in the first six months of 2005 is attributable to lower mechanical availability of the underground mining equipment and restrictions on hiring contract workers imposed by the Miner's union. This lower mechanical availability of the underground mining equipment led to lower mine development and production resulting in the supply of lower silver grades in the mill feed as compared to the same period last year. The Company plans to purchase an additional scoop tram and underground haul truck and is continuing to source some selected additional mining equipment to improve the overall performance of the underground operation. The Company has also reached a two year agreement with the Miner's union that resolved the condition that applied to the employment of contract miners for development work. The Company has now engaged contract workers to increase stope development in the near term. These measures occurred late in Q2 and the Company anticipates an improvement in production during the remaining six months of 2005.

Cash costs, net of gold credits, were $5.85 per ounce of silver in the six months ending June 30, 2005, as compared to $4.04 per ounce of silver for the same period in 2004. Total costs, net of gold credits, were $6.53 per ounce of silver in the six months ending June 30, 2005, as compared to $4.45 per ounce of silver for the same period in 2004. Cash costs, net of gold credits, were $5.91 per ounce of silver in the three months ending June 30, 2005, as compared to $4.54 per ounce of silver in the year earlier period. Total costs, net of gold credits, were $6.68 per ounce of silver in the three months ending June 30, 2005, as compared to $4.97 per ounce of silver in the year earlier period.

Cost of sales were $5.04 million for the six month period, as compared to $4.74 million for the year earlier period. General and administrative expenses were $0.65 million for the period as compared to $0.67 million in the first six months of 2004. Depreciation was $0.56 million for the period, as compared to $0.44 million in the year earlier period. The Company incurred a foreign exchange loss of $0.02 million in the six months ending June 30, 2005 as compared to a small foreign exchange gain of $874 in the first six months of 2004.

Underground Exploration

Mine staff are currently evaluating several areas of the mine where additional exploration and development work is expected to increase mineral reserves. To provide access to a new prospective area and to improve mine safety, access and ventilation, the Company has completed work on a new haulage adit. The Rosario adit intersects the western-most workings of the San Martin mine and opens up several new identified targets for exploration. The adit is sized for production, 4 m wide and 3.5 m high, and has been routed alongside the Rosario-Condesa Fault, allowing systematic drill hole sampling of this fault zone and new access to a prospective area of the mine. The new tunnel has a total length of 1,514 m and will reduce mine haulage by some 1,200 m and allow for the transport of ore to the mill along surface roads rather than through the underground mine.

Minesite Exploration

On the San Martin minesite property, the Zuloaga vein, currently in production, is only one of several parallel and intersecting mineralized veins within the 18,000 acre area that First Silver controls. The mine property contains 15 known mineralized fault systems that offer the potential for expansion and development. The Company is currently evaluating these opportunities and plans on commencing exploration activities on these new areas later this year.

Other Exploration and Development Projects

On November 25, 2004, the Company entered into an option agreement with a private Mexican company for the purchase of a 100% interest in 7 mining claims covering 3,718 Ha. (9,187 acres) (the "Cuitaboca Claims") located in the State of Sinaloa, Mexico. The area has six discrete veins that have been mapped and sampled and the Company has recently applied for an additional exploration concession with an area of 1,416 Ha. The southern-most claims are accessed by a 27 km long road. An additional 7 km of road building is currently underway to reach the northern most vein structures. The Company has dispatched an excavator, front-end loader and dump truck to the site to expedite road construction, with plans of commencing an exploration drill program on the property later this year.

Behre Dolbear & Company Ltd. ("Behre Dolbear")have recently completed a NI-43-101 compliant technical report on the Cuitaboca Exploration Project. Behre Dolbear have recommended a program of road building to the main targets followed by an exploration program consisting of 10,210 meters of diamond drilling at an estimated cost of approximately $US870,000. The Qualified Person responsible for the Behre Dolbere Report is Baltazar Solano - Rico.,Geol. Eng., M.Sc who is an employee of Behre Dolbear and who is independent of the Company. The Behre Dolbear Technical report has been filed on Sedar and the Company's web site www.firstsilver.com.

A complete set of financial statements along with Management's Discussion and Analysis of Financial Condition and the Results of Operations for the six months ended June 30, 2005 is posted to the Company's web-site www.firstsilver.com and www.sedar.com .

First Silver Reserve is a company focused on silver production and exploration and owns and operates the San Martin Silver Mine in Jalisco State, Mexico. The common shares of First Silver Reserve trade on the Toronto Stock Exchange under the symbol FSR.



On behalf of the Board of Directors

"Len Brownlie"
Director
Toll Free 1-888-377-6676


First Silver Reserve Inc. Summarized Second Quarter Results
(expressed in US dollars)

June 30 December 31
2005 2004
$ $
ASSETS
Cash and short-term deposits 612,252 1,711,505
Other current assets 4,140,485 3,618,258
-----------------------------
4,752,737 5,329,763

RESOURCE ASSETS 4,479,014 3,920,735
-----------------------------
9,231,751 9,250,498
-----------------------------
-----------------------------

LIABILITIES
Current Liabilities 2,154,734 2,669,984
FUTURE INCOME TAXES 1,561,459 1,425,269
ASSET RETIREMENT OBLIGATIONS 162,232 150,000
OTHER LONG-TERM LIABILITIES 2,617,135 2,516,593
-----------------------------
6,495,560 6,761,846
-----------------------------
SHAREHOLDERS' EQUITY
CAPITAL STOCK 1,604,319 1,604,319
Contributed Surplus 128,682 128,682
Currency Translation Adjustment 193,025 38,237
RETAINED EARNINGS 810,165 717,414
-----------------------------
2,736,191 2,488,652
-----------------------------
9,231,751 9,250,498
-----------------------------
-----------------------------

Three Three Six Six
Months Months Months Months
Ended Ended Ended Ended
June 30 June 30 June 30 June 30
2005 2004 2005 2004
$ $ $ $
--------------------------------------------------
REVENUE
Revenue 3,161,461 3,500,938 6,442,688 7,730,622
--------------------------------------------------
Cost and expenses
Cost of sales 2,533,257 2,418,724 5,040,237 4,735,370
General and
Administration 336,035 399,563 645,692 665,633
Depreciation and
depletion 316,221 219,217 560,438 442,224
Other expense (income) 73,481 604 (21,770) 263
Foreign exchange
(gain) loss 33,530 56,845 21,888 (874)
--------------------------------------------------
3,292,524 3,094,953 6,246,485 5,842,616
--------------------------------------------------
NET EARNINGS (LOSS)
BEFORE INCOME TAXES (131,063) 405,985 196,203 1,888,006
--------------------------------------------------

Provision for
(recovery of) income
taxes: (3,096) 187,568 103,452 665,951
--------------------------------------------------

NET EARNINGS (LOSS)
FOR THE PERIOD (127,967) 218,417 92,751 1,222,055
--------------------------------------------------
RETAINED EARNINGS
- BEGINNING OF PERIOD 938,132 (281,659) 717,414 (1,285,297)
--------------------------------------------------
RETAINED EARNINGS
- END OF PERIOD 810,165 (63,242) 810,165 (63,242)
--------------------------------------------------
--------------------------------------------------
Net Earnings (Loss)
Per Common Share 0.00 0.00 0.00 $0.03
--------------------------------------------------
--------------------------------------------------
Weighted average
shares outstanding 38,191,921 38,046,921 38,191,921 38,046,921
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