James R. Anderson

June 12, 2008 12:41 ET

Genco Resources' Largest Shareholder Files Complaint With TSX and BCSC Regarding Contract Backdating and Disclosure

VANCOUVER, BRITISH COLUMBIA--(Marketwire - June 12, 2008) - James R. Anderson, a former Board member and, together with his spouse, the largest shareholder of Genco Resources Ltd. of Vancouver, announced today that he has filed complaints with both the Toronto Stock Exchange and the British Columbia Securities Commission regarding contract backdating and disclosure matters involving Genco. A copy of each complaint is available online at www.savegenco.com.

As previously disclosed, Mr. Anderson has filed a Shareholder Information Circular with Canadian securities regulators on June 10, 2008 and has initiated a proxy solicitation process with the objective of replacing Robert Gardner (Chairman), Gordon Blankstein and Brian Smith as members of Genco's seven-person Board of Directors.

"Genco's backdating of material consulting agreements, failure to publicly file those agreements, and failure to disclose my resignation from the Board with a timely news release raise more troubling questions about the company's governance practices and underscores the need for shareholders to vote for change at the annual meeting on June 26," said Mr. Anderson.

Additional information on Mr. Anderson's concerns and his plans for Genco, including the Shareholder Information Circular, is available at www.savegenco.com.

Contract Backdating

The contract backdating involves consulting agreements for the services of Gardner and Blankstein. The TSX has been asked to confirm whether Genco's backdating of these agreements, which involve the potential issuance of Genco shares to insiders, is in compliance with TSX rules. The BCSC has been separately asked to confirm whether Genco violated British Columbia law and regulatory policy in failing to file these consulting agreements as material contracts on SEDAR.

The consulting agreements, dated October 1, 2006, were first disclosed in Genco's Management Information Circular dated May 11, 2007. In that circular each of these agreements was said to provide, among other things, annual performance bonuses of up to US$100,000. The amount was to be payable in cash or, subject to stock exchange approval, in common shares.

Genco's more recent Management Information Circular, dated May 22, 2008, has different disclosure regarding this bonus. According to the more recent Genco circular, the ceiling for the annual performance bonuses is US$250,000, rather than US$100,000. The bonus is still payable in cash or, subject to stock exchange and shareholder approval, in common shares. The date of the agreements remains October 1, 2006.

Excessive Compensation

Mr. Anderson resigned from Genco's Board of Directors on May 21, 2007 due to his strong disapproval of these Gardner and Blankstein bonuses, which now total US $1 million (US$500,000 for each over two years). Mr. Anderson points out that these agreements were negotiated while Gardner and Blankstein controlled the Genco Board's compensation committee.

According to the Genco's 2008 Management Information Circular, Gardner and Blankstein each now have the following compensation:

- Base pay of US$144,000;

- A bonus of up to US$250,000 (including US$500,000 to be paid retroactively for 2006 and 2007 when Genco missed production targets);

- A further bonus of 2% of Genco's pre-tax income;

- A "merger" bonus of 1.5% of increased market capitalization from October 1, 2006 to the date of a merger (which would equate to an combined bonus for both of $1,040,000 if Genco were sold at today's depressed stock price); and

- Stock options which included grants of options in 2006 and 2007 to purchase an aggregate of 487,850 shares, in the case of Blankstein, and 360,082 shares, in the case of Gardner.

Mr. Anderson, as disclosed in his dissident shareholder information circular, considers this compensation is particularly exorbitant given that Gardner and Blankstein each have other principal occupations, that Blankstein is not even an executive officer of Genco, and that Genco's financial and operating performance has deteriorated over this period. Mr. Anderson commits that Genco will align Board compensation with industry practice if shareholders vote to remove Gardner, Blankstein and Smith from the board and replace them with the shareholder nominees.

Failure to Disclose Anderson's Resignation from Genco Board

On a related disclosure matter, the TSX and the BCSC have been asked to confirm whether Genco complied with timely disclosure requirements in its failure to issue a news release on the resignation of Mr. Anderson, Genco's largest shareholder, from Genco's Board of Directors.

The first public disclosure by Genco of Mr. Anderson's May 21, 2008 resignation was in Genco's 2008 Management Information Circular. This circular was not filed on SEDAR until June 2, 2008, 12 days after the resignation. Mr. Anderson's resignation was briefly mentioned on page 23 of the 30-page circular, and no reason was given for the resignation. As of June 11, 2008, Mr. Anderson was still listed as a director on Genco's website.

About James Anderson

A resident of Sioux Falls, South Dakota, James R. Anderson is a former Board member and, together with his spouse, is the largest shareholder of Genco Resources Ltd. Mr. Anderson and his spouse own 5 million Genco shares, equivalent to 12.2% of the shares outstanding. He has been a purchaser of shares since 2005 and has never sold a Genco share.

Mr. Anderson is the founder, sole shareholder and Chief Executive Officer of Tennessee Eastern Gas and Oil Company and Southwestern Mineral Leasing Company. Anderson's two companies conduct business in eight states across the United States and are involved in oil and gas exploration and production, and the purchase and leasing of mineral land. Mr. Anderson earned a Bachelor of Science Business degree in 1971 and a Juris Doctor degree in Law in 1974, both from the University of Minnesota, after which he practised as a general commercial litigator up until 2004. Mr. Anderson served on Genco's Board from July 3, 2007 until May 21, 2008, when he resigned following his strong disapproval of $1 million in retroactive bonuses that Robert Gardner and Gordon Blankstein had proposed to award to themselves ($500,000 for each) while they controlled the Board's Compensation Committee.

Mr. Anderson is one of three shareholder nominees for the Genco Board. The other two shareholder nominees are two long-time colleagues of Anderson: Lyle Weismantel and Charles Schroeder. Weismantel is a banker with more than 40 years of experience, including ten years as President and CEO of a Bremer Bank in Minnesota. Schroeder, a geologist and entrepreneur, has more than two decades of experience in resource development and owns two oil and gas companies. These successful businessmen will strengthen Genco's Board and bring a much-needed drive to improve shareholder value.

You can learn more about all three shareholder nominees and the reasons for the proxy contest by reading the Shareholders' Information Circular or by visiting www.savegenco.com.

Voting your YELLOW proxy

Genco shareholders are asked to complete and return the YELLOW proxy so that much needed change can take place at Genco Resources Ltd. Your vote is important - please vote your YELLOW proxy today. Proxies should be completed in accordance with the instructions on the YELLOW proxy.

Your YELLOW proxy should be returned prior to 11:00 a.m. (Vancouver time) (being 2:00 p.m. (Toronto time)) on Monday, June 23, 2008, in order to be deposited with the Company in time to be used at the Meeting.

For assistance in voting your proxy, please contact Laurel Hill Advisory Group at 1-888-268-4498.

About Forward Looking Statements

Certain statements contained in this news release constitute forward-looking statements. The words "may", "would", "could", "will", "intend", "plan", "anticipate", "believe", "estimate", "expect" and similar expressions are intended to identify forward-looking statements, however forward-looking statements may not include such terms. This news release may contain forward-looking statements relating to Anderson, the Shareholder Nominees, Genco, future management or Genco's future financial or operational performance. Such statements reflect Anderson's current views with respect to future events and are based on the information reasonably available to Anderson today. These statements are subject to certain risks, uncertainties and assumptions. Many factors could cause Genco's actual results, performance or achievements that may be expressed or implied by such forward-looking statements to vary from those described herein should one or more of these risks or uncertainties materialize. Such factors include, but are not limited to, economic, business, competitive, political and regulatory factors, including changes in the price of precious metals. Except to the extent required by law, Anderson undertakes no obligation to update any forward-looking statements contained herein. Readers are cautioned not to place undue reliance on forward-looking statements contained herein.

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