Updated San Martin NI 43‐101 Technical Report and Economic Assessment

FIRST MAJESTIC SILVER CORP.

Suite 1805 – 925 West Georgia Street Vancouver, B.C., Canada V6C 3L2 Telephone: (604) 688-3033 Fax: (604) 639-8873 Toll Free: 1-866-529-2807 Web site: www.firstmajestic.com; E-mail: [email protected]

NEWS RELEASE

NYSE – AG  May 28, 2013 TSX – FR Frankfurt – FMV

Updated San Martin NI 43‐101 Technical Report and Economic Assessment 

FIRST MAJESTIC SILVER CORP. (AG: NYSE; FR: TSX) (the "Company" or “First Majestic”) is pleased to announce an updated NI  43‐101  Technical  Report  (TR),  Reserve  and  Resource  estimate  at  the  San  Martin  Silver  Mine  and  an  economic assessment of the current expansion program to 1,300 tpd.  All figures are reported in US dollars unless otherwise noted.

REPORTED HIGHLIGHTS 

• Proven and Probable Reserves increase by 224% to 22.0 million silver ounces
• Life of Mine (LOM) increases to 9 ½ years  at higher throughput rates of 1,300 tonnes per day (tpd)
• After‐tax net present value (NPV 5%) of $52.0 million and 130% internal rate of return (IRR) both calculated using a 10% reduction to the three‐year average silver price
• LOM average cash cost (co‐product) is estimated at $11.45 per ounce, excluding any by‐product credits
• LOM average operating cash flow is estimated at $22.8 million per year starting in 2014
• Operating  costs  per  tonne  estimated  at  $43.44  per  tonne  excluding  third  party  smelting/refining  charges, transportation and insurance costs over LOM
• At the increased rate of 1,300 tpd, the Company expects silver production to increase by approximately 50% to between 1.4 to 1.6 million ounces of silver doré per year

Keith Neumeyer, CEO and President of First Majestic Silver, states: “Our geological team deserves recognition for a job well done.  After three years of drilling, not only have they replaced all the mined production ore, they have also upgraded and discovered many more ounces with a higher degree of confidence which substantially improved the mine life of the operation.  They make exploration look easy, while in‐fact replacing reserves is a very time consuming process.  This very successful  exploration  program  has  allowed  us  to  expand  the  mill  from  900  tpd  to  1,300  tpd  which  is  expected  to substantially improve the economics of the San Martin operation.”

The San Martin Silver Mine, located in the state of Jalisco, Mexico near the town of San Martín de Bolaños located in the Bolaños  Mining  District  consists  of  33  contiguous  mining  concessions  totalling  37,518  hectares  (73,331  acres).  The Company acquired through staking, 29,676 hectares of mineral rights in June 2012, adding to its previous holdings of 7,842 hectares. These new mining concessions cover prospective land identified previously by the Company’s geological team.

Since  October  2008,  the  cut‐off  date  of  the  previous  NI  43‐101  Technical  Report,  to  the  current  cut‐off  date  of December 31,  2012,  an  aggressive  exploration  program  has  been  underway  which  has  included  332  drill  holes  from underground sites totalling 35,901 meters plus an additional 140 drill holes from surface totalling 31,674 meters for a total exploration  program  over  this  period  amounting  to  67,575  meters.  In  addition  to  this  drilling  program,  an  extensive underground development program has been underway amounting to 6,839 meters of underground accesses, drifts and crosscuts for production and exploration.

The updated Reserve/Resource estimate consists of 22.0 million ounces of silver in Proven and Probable Reserves, which represents a significant increase of 224% over the previously reported estimates; 4.0 million ounces of silver in Measured and Indicated Resources, representing a decrease of 46% from the previous estimates; plus 58.6 million silver ounces in Inferred  Resources  representing  a  20%  increase  from  the  previous  estimate.    It  should  be  noted  that  this  significant increase  in  Reserves  comes after  continuous  mining  and  production  since  the  previous  NI  43‐101  released  over  three years  ago  and  demonstrates  not  only  the  Company’s  ability  to  identify  and  process  undefined  Reserves  but  the exploration potential of this prolific region of Jalisco.  Furthermore, due to the increase in silver prices since 2009, an updated break‐even cut‐off silver grade of 64 g/t was defined compared to the previous break‐even cut‐off grade of 146 g/t resulting in the expected decrease in the average silver Reserve grade to 160 g/t, in‐line with the three‐year average mill head grade of 150 g/t.

Total  tonnage  consists  of  4.3  million  tonnes  of  Reserves,  representing  a  455%  increase  from  the  prior  estimates,  777 thousand  tonnes  of  Measured  and  Indicated  Resources,  representing  a  48%  decrease  from  prior  estimates  plus  an additional 11.2 million tonnes of Inferred Resources, representing a 36% increase from prior estimates.  It should be noted that  3.5  million  tonnes,  or  78%  of  the  total  Inferred  Sulphide  Resources  were  removed  and  replaced  with  6.5  million tonnes of Inferred Oxide Resources, representing an increase of 179% from prior Inferred Oxide Resource estimate. This substantial improvement further demonstrates the success of the exploration program over the past few years.  There is further upside potential for total ounces assuming the Inferred Mineral Resource is converted to Measured and Indicated Resources or Reserves through additional drilling and development which is ongoing.

The following table was taken from the complete San Martin Silver Mine updated NI 43‐101 TR prepared by Runge Pincock Minarco (RPM), Lakewood, Colorado. Shareholders and interested parties are encouraged to read this positive report in its entirety which can be viewed on SEDAR (www.sedar.com) and the Company's web site at www.firstmajestic.com.

Mineral Reserves and Resources as of December 31, 2012  

(1) A minimum width of vein of 2 meters was considered for the blockage estimation.

(2) 15 cm at both sides of the vein are considered as dilution for over‐breaking when mining, the walls of the vein has been sampled along open drifts, assaying from zero to below the cut‐off grade.

(3) The density considered based on laboratory measurements is 2.7.

(4) The resource estimate was prepared by internal QP, Carlos Wong who is a full time employee of the Company and reviewed by Leonel Lopez, who is the QP for RPM.

(5) Mineral resources are reported at a cut‐off grade for the oxide mineral of 64 g/t Ag, and for the sulphide mineral of 37 g/t of eq Ag based on consideration of operating costs (mining, processing, and G&A) and includes metallurgical recovery at 78% and payable values at 99.5% in accordance to contracted terms.  The silver price base is $28.82/troy ounce, the lead is $1.00/lb and the zinc is $0.95/lb.

(6) Totals may not add due to rounding.

(7) Mineral Resources are reported exclusive of Mineral Reserves.

(8)  Proven  and  Probable  Mineral  Reserves  and  Measured  and  Indicated  Mineral  Resources  are  both  inclusive  of  the  total  Mineral  Resources.  The reclassification of Proven and Probable Mineral Reserves is in compliance with current CIM best practices guidance. Measured and Indicated Mineral Resources consists of the remaining of the total Mineral Resources after the reclassification of the Proven and Probable Mineral Reserves.

For  the  purposes  of  the  economic  evaluation  only  oxide  Measured  and  Indicated  Resources  were  considered  for  the Resource to Reserve conversion.  This conversion procedure follows industry best practices and is backed up with many years of operating history.  The converted Reserve estimates were calculated after applying assumptions for breakeven cutoff grades, mining dilution and recovery, as well as metallurgical recoveries and payable values.

Based on the updated NI 43‐101 Reserve estimate at San Martin, a LOM production plan was completed. This updated Technical Report defines an Economic Assessment for the planned operation being extended to the year 2022, based on the 1,300 tpd production rate. The economic evaluation assumes flat long‐term silver prices equal to the industry rolling three‐year average of $28.82 per silver ounce resulting in an after‐tax NPV (5%) of $90.0 million and 255% IRR.  Assuming a 10% reduction in the silver price to $25.94 per ounce, the after‐tax NPV (5%) reduces to $52.0 million and a still robust 130% IRR.

The capital cost for the plant expansion is estimated at $14.0 million.  As of May 20, 2013, a total of $7.5 million has been spent or committed towards the plant expansion with the remaining capital planned to be spent over the next couple of months.  Total sustaining capital over the LOM of 9 ½ years, to 2022, amounts to approximately $12.8 million and includes new mine and plant equipment costs, tailings pond lift and mine closing reclamation.

For  the  purposes  of  this  Technical  Report,  by‐product  credits  for  gold  were  omitted  due  to  the  absence  of  historic sampling of gold assays.  The LOM average cash costs are estimated at $11.45 per payable silver ounce which excludes any by‐products.  This co‐product estimate compares to the average cash cost of $13.81 per payable silver ounce in 2012 (excluding a $2.09 by‐product credit as a result of gold recovery in doré bars).  The following table shows a breakdown of actual costs in 2012 compared to the estimated costs over the LOM.

Operating Costs for LOM Plan at 1,300 tpd 

(1) Cash cost per ounce excluding any by‐product credits.

MILL CONSTRUCTION UPDATE 

As previously disclosed, the Company stated it had decided to expand the San Martin operation from 900 tpd to 1,300 tpd. This construction project commenced in the summer of 2012 and is on schedule for completion by the end of June 2013. Capacity upgrades to the crushing circuit is in progress alongside the additional upgrade of a third ball mill.  Other mill expansion  improvements  to  the  cyanidation  plant  include  new  leaching  tanks,  new  clarification  filters  and  a  new thickening tank.  In addition, major improvements to the solution management system include the installation of six new storage tanks and two new tailings filters which will allow over 80% of the water used in the milling process to be recycled.

The initial throughput ramp up period is expected in July 2013 with commercial production expected by September 2013. Once  fully  operational  at  1,300  tpd,  San  Martin’s  annual  silver  production  is  expected  to  increase  by  over  50%  to approximately 1.4 to 1.6 million ounces of silver plus potential upside resulting from higher silver grades and gold credits over LOM.

The Company's independent Qualified Person under the policies of the Canadian National Instrument 43‐101 who have reviewed the contents of this news release and who authored the most recent qualifying report is Leonel López, C.P.G., P.G., of Runge Pincock Minarco (RPM), who is employed by RPM and independent of the Company.

First  Majestic  is  a  producing  silver  company  focused  on  silver  production  in  México  and  is  aggressively  pursuing  its business plan of becoming a senior silver producer through the development of its existing mineral property assets and the  pursuit  through acquisition  of  additional  mineral  assets  which contribute to  the  Company  achieving  its  aggressive corporate growth objectives.

FOR FURTHER INFORMATION contact [email protected], visit our website at www.firstmajestic.com or call our toll free number 1.866.529.2807.

FIRST MAJESTIC SILVER CORP.

“signed” 

Keith Neumeyer, President & CEO

SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION

This news release includes certain "Forward-Looking Statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 and applicable Canadian securities laws. When used in this news release, the words “anticipate”, “believe”, “estimate”, “expect”, “target”, “plan”, “forecast”, “may”, “schedule” and similar words or expressions, identify forward-looking statements or information. These forward-looking statements or information relate to, among other things: the price of silver and other metals; the accuracy of mineral reserve and resource estimates and estimates of future production and costs of production at our properties; estimated production rates for silver and other payable metals produced by us, the estimated cost of development of our development projects; the effects of laws, regulations and government policies on our operations, including, without limitation, the laws in Mexico which currently have significant restrictions related to mining; obtaining or maintaining necessary permits, licences and approvals from government authorities; and continued access to necessary infrastructure, including, without limitation, access to power, land, water and roads to carry on activities as planned.

These statements reflect the Company’s current views with respect to future events and are necessarily based upon a number of assumptions and estimates that, while considered reasonable by the Company, are inherently subject to significant business, economic, competitive, political and social uncertainties and contingencies. Many factors, both known and unknown, could cause actual results, performance or achievements to be materially different from the results, performance or achievements that are or may be expressed or implied by such forward-looking statements or information and the Company has made assumptions and estimates based on or related to many of these factors. Such factors include, without limitation: fluctuations in the spot and forward price of silver, gold, base metals or certain other commodities (such as natural gas, fuel oil and electricity); fluctuations in the currency markets (such as the Canadian dollar and Mexican peso versus the U.S. dollar); changes in national and local government, legislation, taxation, controls, regulations and political or economic developments in Canada, Mexico; operating or technical difficulties in connection with mining or development activities; risks and hazards associated with the business of mineral exploration, development and mining (including environmental hazards, industrial accidents, unusual or unexpected formations, pressures, cave-ins and flooding); risks relating to the credit worthiness or financial condition of suppliers, refiners and other parties with whom the Company does business; inability to obtain adequate insurance to cover risks and hazards; and the presence of laws and regulations that may impose restrictions on mining, including those currently enacted in Mexico; employee relations; relationships with and claims by local communities and indigenous populations; availability and increasing costs associated with mining inputs and labour; the speculative nature of mineral exploration and development, including the risks of obtaining necessary licenses, permits and approvals from government authorities; diminishing quantities or grades of mineral reserves as properties are mined; the Company’s title to properties; and the factors identified under the caption “Risk Factors” in the Company’s Annual Information Form, under the caption “Risks Relating to First Majestic's Business”.

Investors are cautioned against attributing undue certainty to forward-looking statements or information. Although the Company has attempted to identify important factors that could cause actual results to differ materially, there may be other factors that cause results not to be anticipated, estimated or intended. The Company does not intend, and does not assume any obligation, to update these forward-looking statements or information to reflect changes in assumptions or changes in circumstances or any other events affecting such statements or information, other than as required by applicable law.