Genco Resources Ltd.
TSX : GGC

Genco Resources Ltd.

May 16, 2008 17:51 ET

Genco Reports Results for First Quarter Ended March 31, 2008 & Provides Update on Mining Activities

VANCOUVER, BRITISH COLUMBIA--(Marketwire - May 16, 2008) - Genco Resources Ltd. (TSX:GGC) announces the results for its first financial quarter ended March 31, 2008 and provides an update on mining activities during the same period. For the quarter, Genco had revenues from metal sales of $2,073,329, an operating loss of $244,703 and a net loss of $1,285,407.

The following table contains selected highlights from the Genco's consolidated income statement and consolidated balance sheet for the three month periods ended March 31, 2008 and March 31, 2007.



------------------------------------------------------------------------
March 31,
2008 2007
---------- ----------
C$ C$
Total revenue 2,073,329 1,547,026
Operating profit (loss) (244,703) 311,201
General & administrative costs (1,135,625) (1,125,105)
Income (loss) before other items (1,380,328) (813,904)
Other income (expense) 94,921 (24,673)
Net income (loss) (1,285,407) (838,577)
Net income (loss) per-share (0.03) (0.03)
Total assets 49,398,428 24,045,081
------------------------------------------------------------------------


Improved metal recoveries at Genco's La Guitarra mining operations combined with higher metal prices led to higher revenues when compared to the same three month period in 2007. Operating profits were lower as a result of increased activities relating to an ongoing mine expansion feasibility study, district exploration and infrastructure expansion at La Guitarra.

The following table highlights the production at La Guitarra Mine.



---------------------------------------------------------------------------
3 Months Ended 3 Months Ended 12 Months Ended
March 31, 2008 March 31, 2007 December 31, 2007
Tonnes milled 18,955 18,161 59,342
Equivalent silver ounces 148,700 120,740 572,788
Silver ounces 97,719 76,479 304,368
Gold ounces 975 907 5,177
Silver equivalent grade
(g/t) 274 301 358
Average silver price US$ 17.64 13.31 13.39
Average gold price US$ 922.49 649.72 694.39
Gold$/silver$ equivalency
factor 52.30 48.80 51.84
---------------------------------------------------------------------------


During the period ended March 31, 2008 La Guitarra recorded higher operating costs than during the same period of 2007. On-site operating costs were actually lower in 2008, but increased third party refining and smelting charges led to an overall increase in costs.

The table below summarizes Genco's mining costs in US dollars on a cost per silver equivalent ounce basis.



---------------------------------------------------------------------------
3 Months Ended 3 Months Ended 12 Months Ended
March 31, 2008 March 31, 2007 December 31, 2007
US$ US$ US$
Cash operating cost 5.49 5.03 6.12
Total cash cost 5.99 5.61 6.62
Total production cost 7.59 7.43 8.36
---------------------------------------------------------------------------


See attached balance sheet and income statement for details. Full financial statements are available on SEDAR at http://www.sedar.com and on Genco's website at www.gencoresources.com.



GENCO RESOURCES LTD.
Consolidated Balance Sheets
As at March 31, 2008 and December 31, 2007
(Expressed in Canadian dollars)

March 31 December 31
2008 2007
$ $
---------- -----------
Assets
Current assets
Cash 2,304,873 12,556,146
Accounts receivable 1,117,969 567,372
Taxes receivable 2,863,784 1,918,349
Inventory 899,382 708,447
Prepaid expenses and deposits 861,838 419,093
---------- -----------
8,047,846 16,169,407

Mineral property interests 6,525,818 45,975
Property, plant, and equipment 34,322,840 29,807,280
Other long term assets 501,924 -
---------- -----------

49,398,428 46,022,662
---------- -----------
---------- -----------

Liabilities
Current liabilities
Accounts payable and accrued liabilities 6,187,100 4,130,633
Current portion of long term debt 747,108 664,325
---------- -----------
6,934,208 4,794,958

Long term debt 1,466,094 1,411,800
Asset retirement obligation 765,284 214,109
EPA settlement obligation 1,104,993 -
Future income tax 1,482,775 1,482,775
---------- -----------

11,753,354 7,903,642
---------- -----------
Shareholders' Equity
Share capital 43,842,119 43,352,639
Contributed surplus 7,960,010 7,638,029
Deficit (14,157,055) (12,871,648)
---------- -----------
37,645,074 38,119,020
---------- -----------

49,398,428 46,022,662
---------- -----------
---------- -----------


GENCO RESOURCES LTD.
Consolidated Statements of Operations and Deficit
For the Three Months Ended March 31, 2008 and 2007
(Expressed in Canadian dollars)

March 31 March 31
2008 2007
$ $
---------- ----------

Sales 2,073,329 1,547,026
Cost of sales 2,318,032 1,235,825
---------- ----------
Gross profit (loss) (244,703) 311,201
---------- ----------

Operating expenses
Administration expenses 781,644 636,768
Stock-based compensation 353,981 488,337
---------- ----------
1,135,625 1,125,105
---------- ----------

Operating income (loss) (1,380,328) (813,904)
---------- ----------

Other income (expense)
Accretion on long term debt (22,143) (31,282)
Interest and other income 126,528 6,609
---------- ----------
104,385 (24,673)
---------- ----------

Net income (loss) before tax (1,275,943) (838,577)
---------- ----------

Current income tax expense 9,464 -
---------- ----------

Net income (loss) (1,285,407) (838,577)
Deficit, beginning (12,871,648) (7,133,281)
---------- ----------

Deficit, ending (14,157,055) (7,971,858)
---------- ----------
---------- ----------

Earnings (loss) per share
Basic (0.03) (0.03)
---------- ----------
---------- ----------

Weighted average number of common shares
outstanding
Basic 40,851,312 31,927,955
---------- ----------
---------- ----------


GENCO RESOURCES LTD.
Consolidated Statements of Cash Flows
For the Three Months Ended March 31, 2008 and 2007
(Expressed in Canadian dollars)

March 31 March 31
2008 2007
$ $
---------- ----------
Cash Provided By (Used In) Operating
Activities
Net loss for the period (1,285,407) (838,577)
Items not affecting cash
Accretion on long term debt 22,143 31,282
Amortization 252,605 258,490
Stock-based compensation 353,981 488,337
---------- ----------
(656,678) (60,468)
Change in non-cash working capital items (849,760) 12,703
---------- ----------

(1,506,438) (47,765)
---------- ----------

Cash Provided By (Used In) Investing
Activities
Deferred exploration and development (3,500,459) (2,173,202)
Investment in Chief Consolidated Mining
Company (4,779,378) -
Mine development changes in accounts
payable - (48,486)
Mineral properties (296) -
Purchase of property, plant, and
equipment (617,811) (411,646)
---------- ----------

(8,897,944) (2,633,334)
---------- ----------

Cash Provided By (Used In) Financing
Activities
Long term debt principal repayments (52,811) (27,915)
Shares issued for cash (less costs) 60,000 1,823,730
---------- ----------

Net cash provided by financing activities 7,189 1,795,815
---------- ----------

Net Increase (Decrease) In Cash During
The Period (10,397,193) (885,284)
Effect of Changes in Foreign Exchange Rates 145,920 -
Cash, Beginning 12,556,146 2,184,209
---------- ----------

Cash, Ending 2,304,873 1,298,925
---------- ----------
---------- ----------


This news release contains certain forward-looking statements that involve risks and uncertainties such as statements of the Company's plans, objectives, strategies, expectations, and intentions. The words "may", "would", "could", "will", "intend", "plan", "believe", "estimate", "expect" and similar expressions, as they relate to the Company, or its management, are intended to identify such forward-looking statements. Many factors could cause the Company's actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements, including those factors discussed below and in filings made with the Canadian securities regulatory authorities. Should one or more of these risk factors or uncertainties materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected. The Company does not intend, and does not assume any obligation to update these forward-looking statements.

The Toronto Stock Exchange has not reviewed the contents of this release and does not accept responsibility for the accuracy of the contents of this release.

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