EX-99.1 2 v417785_ex99-1.htm EXHIBIT 99.1

Exhibit 99.1

CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2015 AND 2014

(UNAUDITED)

925 West Georgia Street, Suite 1805, Vancouver, B.C. Canada V6C 3L2

Phone: 604.688.3033 | Fax: 604.639.8873 | Toll Free: 1.866.529.2807 | Email: info@firstmajestic.com

www.firstmajestic.com

MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL REPORTING

The condensed interim consolidated financial statements of First Majestic Silver Corp. (the “Company”) are the responsibility of the Company’s management. The condensed interim consolidated financial statements are prepared in accordance with International Accounting Standard 34, “Interim Financial Reporting”, as issued by the International Accounting Standards Board and reflect management’s best estimates and judgment based on information currently available.

Management has developed and maintains a system of internal controls to ensure that the Company’s assets are safeguarded, transactions are authorized and properly recorded, and financial information is reliable.

The Board of Directors is responsible for ensuring management fulfills its responsibilities. The Audit Committee reviews the results of the condensed interim consolidated financial statements prior to their submission to the Board of Directors for approval.

The condensed interim consolidated financial statements have not been audited.


Keith Neumeyer	Raymond Polman, CA
President & CEO	Chief Financial Officer
August 10, 2015	August 10, 2015

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF (LOSS) EARNINGS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2015 and 2014

Condensed Interim Consolidated Financial Statements - Unaudited

(In thousands of US dollars, except share and per share amounts)

The Condensed Interim Consolidated Statements of (Loss) Earnings provide a summary of the Company’s financial performance and net earnings or loss over the reporting periods.

		Three Months Ended June 30,						Six Months Ended June 30,
	Note	2015			2014			2015			2014

Revenues	5	$	54,190		$	66,927		$	108,759		$	132,223

Cost of sales (excludes depletion, depreciation and amortization)	6		33,314			42,727			65,650			77,997
Gross margin			20,876			24,200			43,109			54,226

Depletion, depreciation and amortization			17,435			14,699			34,672			28,104
Mine operating earnings			3,441			9,501			8,437			26,122

General and administrative expenses	7		4,229			4,938			8,568			9,913
Share-based payments			1,544			2,678			3,153			5,326
Accretion of decommissioning liabilities			192			205			389			407
Foreign exchange (gain) loss			(662	)		640			(2,174	)		694

Operating (loss) earnings			(1,862	)		1,040			(1,499	)		9,782

Investment and other (loss) income	8		(1,345	)		10,625			447			13,522
Finance costs	9		(1,242	)		(1,990	)		(2,665	)		(3,233	)

(Loss) earnings before income taxes			(4,449	)		9,675			(3,717	)		20,071

Income taxes
Current income tax expense			1,269			2,398			1,412			6,369
Deferred income tax (recovery) expense			(3,140	)		(313	)		(1,446	)		132

			(1,871	)		2,085			(34	)		6,501

Net (loss) earnings for the period		$	(2,578	)	$	7,590		$	(3,683	)	$	13,570

(Loss) earnings per common share
Basic	10	$	(0.02	)	$	0.06		$	(0.03	)	$	0.12
Diluted	10	$	(0.02	)	$	0.06		$	(0.03	)	$	0.12

Weighted average shares outstanding
Basic	10		121,097,717			117,490,053			119,355,855			117,359,468
Diluted	10		121,097,717			117,622,304			119,355,855			117,545,365

Approved by the Board of Directors


Keith Neumeyer, Director		Douglas Penrose, Director

The accompanying notes are an integral part of the condensed interim consolidated financial statements.
First Majestic Silver Corp. 2015 Second Quarter Report	Page 1

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2015 and 2014

Condensed Interim Consolidated Financial Statements - Unaudited

(In thousands of US dollars)

The Condensed Interim Consolidated Statements of Comprehensive (Loss) Income provide a summary of total comprehensive earnings or loss and summarizes items recorded in other comprehensive income that may or may not be subsequently reclassified to profit or loss depending on future events.

	Three Months Ended June 30,						Six Months Ended June 30,
	2015			2014			2015			2014

Net (loss) earnings for the period	$	(2,578	)	$	7,590		$	(3,683	)	$	13,570

Other comprehensive income
Items that may be subsequently reclassified to profit or loss:
Unrealized loss on fair value of available for sale investments		-			(330	)		-			(312	)
Reclassification of impairment on available for sale investments		-			275			-			275

Other comprehensive loss		-			(55	)		-			(37	)

Total comprehensive (loss) income for the period	$	(2,578	)	$	7,535		$	(3,683	)	$	13,533

The accompanying notes are an integral part of the condensed interim consolidated financial statements.
First Majestic Silver Corp. 2015 Second Quarter Report	Page 2

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2015 and 2014

Condensed Interim Consolidated Financial Statements - Unaudited

(In thousands of US dollars)

The Condensed Interim Consolidated Statements of Cash Flows provide a summary of movements in cash and cash equivalents during the reporting periods by classifying them as operating, investing or financing activities.

		Three Months Ended June 30,						Six Months Ended June 30,
	Note	2015			2014			2015			2014

Operating Activities
Net (loss) earnings for the period		$	(2,578	)	$	7,590		$	(3,683	)	$	13,570
Adjustments for:
Depletion, depreciation and amortization			17,623			14,875			35,042			28,449
Share-based payments			1,544			2,678			3,153			5,326
Income tax (recovery) expense			(1,871	)		2,085			(34	)		6,501
Finance costs	9		1,242			1,990			2,665			3,233
Other	22		488			(10,238	)		(3,381	)		(12,746	)
Operating cash flows before movements in working capital and taxes			16,448			18,980			33,762			44,333
Net change in non-cash working capital items	22		6,551			16,083			(1,782	)		12,251
Income taxes paid			(1,749	)		(7,558	)		(4,380	)		(9,784	)
Cash generated by operating activities			21,250			27,505			27,600			46,800

Investing Activities
Expenditures on mining interests			(11,902	)		(15,631	)		(23,268	)		(36,968	)
Acquisition of property, plant and equipment			(6,957	)		(10,947	)		(7,743	)		(15,277	)
Deposits applied (paid) for the acquisition of non-current assets			613			(1,758	)		(646	)		(1,837	)
Proceeds from settlement of derivatives			396			-			396			942
Cash used in investing activities			(17,850	)		(28,336	)		(31,261	)		(53,140	)

Financing Activities
Proceeds from private placement, net of share issue costs	20(a)		22,968			-			22,968			-
Proceeds from exercise of stock options			-			375			-			938
Proceeds from prepayment facility	18		-			30,000			-			30,000
Repayment of prepayment facilities			(6,264	)		(2,063	)		(11,953	)		(4,938	)
Proceeds from sale-and-leasebacks			-			3,705			-			3,705
Repayment of lease obligations			(3,184	)		(4,101	)		(6,725	)		(8,369	)
Finance costs paid			(988	)		(1,929	)		(2,120	)		(2,664	)
Shares repurchased and cancelled	20(c)		-			(369	)		-			(369	)
Cash provided by financing activities			12,532			25,618			2,170			18,303

Effect of exchange rate on cash and cash equivalents held in foreign currencies			(574	)		359			(1,112	)		(34	)
Increase (decrease) in cash and cash equivalents			15,932			24,787			(1,491	)		11,963
Cash and cash equivalents, beginning of period			22,384			41,548			40,345			54,765
Cash and cash equivalents, end of period		$	37,742		$	66,694		$	37,742		$	66,694

Cash		$	20,855		$	64,511		$	20,855		$	64,511
Short-term investments			16,887			2,183			16,887			2,183
Cash and cash equivalents, end of period		$	37,742		$	66,694		$	37,742		$	66,694

Supplemental cash flow information	22

The accompanying notes are an integral part of the condensed interim consolidated financial statements.
First Majestic Silver Corp. 2015 Second Quarter Report	Page 3

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

AS AT JUNE 30, 2015 AND DECEMBER 31, 2014

Condensed Interim Consolidated Financial Statements - Unaudited

(In thousands of US dollars)

The Condensed Interim Consolidated Statements of Financial Position provides a summary of assets, liabilities and equity, as well as their current versus non-current nature, as at the reporting date.

	Note	June 30, 2015		December 31, 2014
Assets

Current assets
Cash and cash equivalents		$	37,742	$	40,345
Trade and other receivables	11		14,178		13,561
Inventories	12		16,144		17,649
Other financial assets	13		2,468		2,460
Prepaid expenses and other			1,798		1,337
Total current assets			72,330		75,352

Non-current assets
Mining interests	14		428,704		422,663
Property, plant and equipment	15		258,728		267,038
Deposits on non-current assets			3,474		2,917
Other investments	16		3,003		3,372

Total assets		$	766,239	$	771,342

Liabilities and Equity

Current liabilities
Trade and other payables	17	$	34,681	$	40,360
Current portion of prepayment facilities	18		25,710		26,329
Current portion of lease obligations	19		10,190		11,428
Income taxes payable			2,674		105
Total current liabilities			73,255		78,222

Non-current liabilities
Prepayment facilities	18		17,546		29,647
Lease obligations	19		11,558		15,455
Decommissioning liabilities			15,051		15,484
Other liabilities			1,933		1,740
Deferred tax liabilities			103,925		110,261
Total liabilities			223,268		250,809

Equity
Share capital			453,556		430,588
Equity reserves			56,493		53,340
Retained earnings			32,922		36,605
Total equity			542,971		520,533

Total liabilities and equity		$	766,239	$	771,342

Commitments (Note 14, Note 21(c); Contingencies (Note 23); Subsequent events (Note 24))

The accompanying notes are an integral part of the condensed interim consolidated financial statements.
First Majestic Silver Corp. 2015 Second Quarter Report	Page 4

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

FOR THE SIX MONTHS ENDED JUNE 30, 2015 and 2014

Condensed Interim Consolidated Financial Statements - Unaudited

(In thousands of US dollars, except share and per share amounts)

The Condensed Interim Consolidated Statements of Changes in Equity summarizes movements in equity, including common shares, share capital, equity reserves and retained earnings.

	Share Capital						Equity Reserves
	Shares			Amount			Share-based payments^(a)			Available for sale revaluation^(b)			Foreign currency translation			Total equity reserves			Retained earnings			Total equity
Balance at December 31, 2013		117,024,840		$	425,707		$	47,069		$	(218	)	$	(308	)	$	46,543		$	98,495		$	570,745
Net earnings		-			-			-			-			-			-			13,570			13,570
Other comprehensive loss		-			-			-			(37	)		-			(37	)		-			(37	)
Total comprehensive income		-			-			-			(37	)		-			(37	)		13,570			13,533
Share-based payments		-			-			5,326			-			-			5,326			-			5,326
Shares issued for:
Exercise of options		220,000			938			-			-			-			-			-			938
Acquisition of mining interests (Note 14(c))		293,784			2,820			-			-			-			-			-			2,820
Shares repurchased and cancelled (Note 20(c))		(40,000	)		(146	)		-			-			-			-			(223	)		(369	)
Transfer of equity reserve upon exercise of options		-			469			(469	)		-			-			(469	)		-			-
Balance at June 30, 2014		117,498,624		$	429,788		$	51,926		$	(255	)	$	(308	)	$	51,363		$	111,842		$	592,993

Balance at December 31, 2014		117,594,640		$	430,588		$	53,648		$	-		$	(308	)	$	53,340		$	36,605		$	520,533
Net loss and total comprehensive loss		-			-			-			-			-			-			(3,683	)		(3,683	)
Share-based payments		-			-			3,153			-			-			3,153			-			3,153
Shares issued for private placement (Note 20(a))		4,620,000			22,968			-			-			-			-			-			22,968
Balance at June 30, 2015		122,214,640		$	453,556		$	56,801		$	-		$	(308	)	$	56,493		$	32,922		$	542,971

	(a)	Share-based payments reserve records the cumulative amount recognized under IFRS 2 in respect of options granted and shares purchase warrants issued but not exercised to acquire shares of the Company.
	(b)	The available for sale revaluation reserve principally records the fair value gains or losses related to available-for-sale financial instruments, net of amount reclassed as impairment.

The accompanying notes are an integral part of the condensed interim consolidated financial statements.
First Majestic Silver Corp. 2015 Second Quarter Report	Page 5

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Condensed Interim Consolidated Financial Statements - Unaudited

(Tabular amounts are expressed in thousands of US dollars)

NATURE OF OPERATIONS

First Majestic Silver Corp. (the “Company” or “First Majestic”) is in the business of silver production, development, exploration, and acquisition of mineral properties with a focus on silver production in Mexico. The Company presently owns and operates five producing silver mines: the La Encantada Silver Mine, La Parrilla Silver Mine, Del Toro Silver Mine, San Martin Silver Mine and the La Guitarra Silver Mine.

First Majestic is incorporated in Canada with limited liability under the legislation of the Province of British Columbia and is publicly listed on the New York Stock Exchange under the symbol “AG”, on the Toronto Stock Exchange under the symbol “FR”, on the Mexican Stock Exchange under the symbol “AG” and on the Frankfurt Stock Exchange under the symbol “FMV”. The Company’s head office and principal address is located at 925 West Georgia Street, Suite 1805, Vancouver, British Columbia, Canada, V6C 3L2.

BASIS OF PRESENTATION

These condensed interim consolidated financial statements have been prepared in accordance with International Accounting Standard (“IAS”) 34, “Interim Financial Reporting”, and International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”).

These condensed interim consolidated financial statements were prepared using accounting policies consistent with those in the audited consolidated financial statements as at and for the year ended December 31, 2014. These condensed interim consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements as at and for the year ended December 31, 2014, as some disclosures from the annual consolidated financial statements have been condensed or omitted.

These condensed interim consolidated financial statements have been prepared on an historical cost basis except for certain items that are measured at fair value including derivative financial instruments (Note 21(a)), marketable securities (Note 13) and the prepayment facilities (Note 18). All dollar amounts presented are in United States dollars unless otherwise specified.

These condensed interim consolidated financial statements incorporate the financial statements of the Company and its controlled subsidiaries. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Intercompany balances, transactions, income and expenses are eliminated on consolidation.

ACCOUNTING POLICIES, JUDGMENTS AND ESTIMATES

Significant Accounting Estimates and Judgments

The preparation of condensed interim consolidated financial statements in conformity with IAS 34 requires management to make judgments, estimates and assumptions about future events that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Although these estimates are based on management’s best knowledge of the amounts, events or actions, actual results may differ from these estimates.

In preparing the Company’s unaudited condensed interim consolidated financial statements for the three and six months ended June 30, 2015, the Company applied the critical judgements and estimates disclosed in note 3 of its audited consolidated financial statements for the year ended December 31, 2014.

The accompanying notes are an integral part of the condensed interim consolidated financial statements.
First Majestic Silver Corp. 2015 Second Quarter Report	Page 6

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Interim Consolidated Financial Statements - Unaudited

(Tabular amounts are expressed in thousands of US dollars)

ACCOUNTING POLICIES, JUDGMENTS AND ESTIMATES (continued)

Future Changes in Accounting Policies Not Yet Effective as at June 30, 2015

Revenue Recognition

In May 2014, the IASB issued IFRS 15 – Revenue from Contracts with Customers ("IFRS 15") which supersedes IAS 11 – Construction Contracts, IAS 18 – Revenue, IFRIC 13 – Customer Loyalty Programmes, IFRIC 15 – Agreements for the Construction of Real Estate, IFRIC 18 – Transfers of Assets from Customers, and SIC 31 – Revenue – Barter Transactions Involving Advertising Services. IFRS 15 establishes a single five-step model framework for determining the nature, amount, timing and uncertainty of revenue and cash flows arising from a contract with a customer. The standard is currently mandatory for annual periods beginning on or after January 1, 2018, with early adoption permitted. The Company is currently evaluating the impact of the adoption of this standard on its consolidated financial statements.

Financial instruments

In July 2014, the IASB issued the final version of IFRS 9 – Financial Instruments ("IFRS 9") to replace IAS 39 – Financial Instruments: Recognition and Measurement. IFRS 9 provides a revised model for recognition and measurement of financial instruments and a single, forward-looking “expected loss” impairment model. IFRS 9 also includes a substantially reformed approach to hedge accounting. The standard is effective for annual periods beginning on or after January 1, 2018, with early adoption permitted. The Company is currently evaluating the impact of the adoption of this standard on its consolidated financial statements.

SEGMENTED INFORMATION

The Company has seven reporting segments, including five operating segments located in Mexico, one retail market segment in Canada and one silver trading segment in Europe. Others consists primarily of the Company’s other development and exploration properties (Note 14) not considered segments, other investments (Note 16), prepayment facilities (Note 18), corporate and intercompany eliminations.

All of the Company’s operations are within the mining industry and its major products are silver doré, silver-lead and silver-zinc concentrates. Transfer prices between reporting segments are set on an arms-length basis in a manner similar to transactions with third parties. Coins and bullion cost of sales are based on transfer prices.

A reporting segment is defined as a component of the Company that:

engages in business activities from which it may earn revenues and incur expenses;

whose operating results are reviewed regularly by the entity’s chief operating decision maker; and

for which discrete financial information is available.

Management evaluates segment performance based on mine operating earnings as other expenses are not allocated to the segments.

The accompanying notes are an integral part of the condensed interim consolidated financial statements.
First Majestic Silver Corp. 2015 Second Quarter Report	Page 7

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Interim Consolidated Financial Statements - Unaudited

(Tabular amounts are expressed in thousands of US dollars)

SEGMENTED INFORMATION (continued)

	Three Months Ended June 30, 2015													At June 30, 2015
	Revenue			Cost of sales⁽¹⁾			Depletion, depreciation and amortization		Mine operating earnings (loss)			Capital expenditures		Total assets		Total liabilities
Mexico
La Encantada	$	9,871		$	8,686		$	5,997	$	(4,812	)	$	4,208	$	138,986	$	44,122
La Parrilla		12,502			8,877			4,244		(619	)		4,026		196,237		32,820
Del Toro		14,251			7,623			3,406		3,222			3,825		191,895		28,917
San Martin		12,413			5,794			1,980		4,639			2,751		88,041		26,669
La Guitarra		4,436			2,361			1,702		373			2,106		80,760		10,565
Canada
Coins and Bullion Sales		76			108			-		(32	)		-		333		1
Europe
Silver Sales		25,267			25,258			-		9			-		7,479		793
Others		(24,626	)		(25,393	)		106		661			449		62,508		79,381
Consolidated	$	54,190		$	33,314		$	17,435	$	3,441		$	17,365	$	766,239	$	223,268

	Six Months Ended June 30, 2015													At June 30, 2015
	Revenue			Cost of sales⁽¹⁾			Depletion, depreciation and amortization		Mine operating earnings (loss)			Capital expenditures		Total assets		Total liabilities
Mexico
La Encantada	$	19,751		$	16,639		$	11,617	$	(8,505	)	$	7,964	$	138,986	$	44,122
La Parrilla		24,881			17,099			8,770		(988	)		8,349		196,237		32,820
Del Toro		32,320			15,990			6,547		9,783			7,120		191,895		28,917
San Martin		23,844			10,951			4,169		8,724			4,928		88,041		26,669
La Guitarra		7,842			4,870			3,360		(388	)		3,739		80,760		10,565
Canada
Coins and Bullion Sales		167			231			-		(64	)		-		333		1
Europe
Silver Sales		48,540			48,523			-		17			-		7,479		793
Others		(48,586	)		(48,653	)		209		(142	)		1,024		62,508		79,381
Consolidated	$	108,759		$	65,650		$	34,672	$	8,437		$	33,124	$	766,239	$	223,268

	Three Months Ended June 30, 2014														At December 31, 2014
	Revenue			Cost of sales⁽¹⁾			Depletion, depreciation and amortization			Mine operating earnings (loss)			Capital expenditures		Total assets		Total liabilities
Mexico
La Encantada	$	24,458		$	12,786		$	3,447		$	8,225		$	6,805	$	141,145	$	63,730
La Parrilla		18,404			9,009			4,170			5,225			4,073		198,295		28,172
Del Toro		14,255			12,623			3,931			(2,299	)		6,924		205,863		35,297
San Martin		11,121			5,749			1,583			3,789			3,203		94,188		31,516
La Guitarra		3,320			2,302			1,817			(799	)		2,467		108,641		31,845
Canada
Coins and Bullion Sales		164			197			-			(33	)		-		259		15
Europe
Silver Sales		34,023			38,948			-			(4,925	)		-		6,283		935
Others		(38,818	)		(38,887	)		(249	)		318			746		16,668		59,299
Consolidated	$	66,927		$	42,727		$	14,699		$	9,501		$	24,218	$	771,342	$	250,809

The accompanying notes are an integral part of the condensed interim consolidated financial statements.
First Majestic Silver Corp. 2015 Second Quarter Report	Page 8

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Interim Consolidated Financial Statements - Unaudited

(Tabular amounts are expressed in thousands of US dollars)

SEGMENTED INFORMATION (continued)

	Six Months Ended June 30, 2014													At December 31, 2014
	Revenue			Cost of sales⁽¹⁾			Depletion, depreciation and amortization		Mine operating earnings (loss)			Capital expenditures		Total assets		Total liabilities
Mexico
La Encantada	$	46,438		$	22,526		$	6,322	$	17,590		$	12,620	$	141,145	$	63,730
La Parrilla		38,241			17,332			8,796		12,113			10,099		198,295		28,172
Del Toro		28,351			22,640			6,397		(686	)		14,778		205,863		35,297
San Martin		17,967			10,329			3,023		4,615			10,330		94,188		31,516
La Guitarra		7,854			4,779			3,511		(436	)		9,737		108,641		31,845
Canada
Coins and Bullion Sales		540			600			-		(60	)		1		259		15
Europe
Silver Sales		63,719			70,932			-		(7,213	)		-		6,283		935
Others		(70,887	)		(71,141	)		55		199			1,641		16,668		59,299
Consolidated	$	132,223		$	77,997		$	28,104	$	26,122		$	59,206	$	771,342	$	250,809

(1)

Cost of sales excludes depletion, depreciation and amortization

During the six months ended June 30, 2015, the Company had four (2014 – seven) major customers that account for 100% of its doré and concentrate sales revenue. The Company had three customers that accounted for 57%, 18%, and 17% of total revenue in the six months ended June 30, 2015, and four customers that accounted for 45%, 21%, 17%, and 14% of total revenue in the six months ended June 30, 2014.

REVENUES

Revenues from sale of metal, including by-products, are recorded net of smelting and refining costs. Metals in doré sold are priced on delivery. Final weights and assays are adjusted on final settlement typically one month after delivery. Metals in concentrate sold are provisionally priced on delivery and settled based on market price at a predetermined future date, typically one to four months after delivery.

Revenues for the period are summarized as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2015			2014			2015			2014
Gross revenue from payable metals:
Silver	$	44,544		$	59,471		$	89,469		$	116,867
Gold		3,812			3,124			7,004			7,382
Lead		9,415			8,212			19,147			15,546
Zinc		3,446			2,119			8,408			4,202
Other		-			78			-			106
Gross revenue	$	61,217		$	73,004		$	124,028		$	144,103
Less: smelting and refining costs		(7,027	)		(6,077	)		(15,269	)		(11,880	)
Revenues	$	54,190		$	66,927		$	108,759		$	132,223
Silver as % of gross revenue		73	%		81	%		72	%		81	%

The accompanying notes are an integral part of the condensed interim consolidated financial statements.
First Majestic Silver Corp. 2015 Second Quarter Report	Page 9

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Interim Consolidated Financial Statements - Unaudited

(Tabular amounts are expressed in thousands of US dollars)

COST OF SALES

Cost of sales excludes depletion, depreciation and amortization and are costs that are directly related to production and generation of revenues at the operating segments. Significant components of cost of sales are comprised of the following:

	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
Production costs	$	31,008	$	34,774	$	60,632	$	68,695
Inventory changes		333		4,498		1,044		2,775
Cost of goods sold	$	31,341	$	39,272	$	61,676	$	71,470
Transportation and other selling costs		1,241		1,614		2,717		3,261
Workers participation costs		338		1,086		342		1,865
Environmental duties and royalties		308		417		638		854
Other costs		86		338		277		547
Cost of sales	$	33,314	$	42,727	$	65,650	$	77,997

GENERAL AND ADMINISTRATIVE EXPENSES

General and administrative expenses are incurred to support the administration of the business that are not directly related to production. Significant components of general and administrative expenses are comprised of the following:

	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
Corporate administration	$	931	$	1,348	$	1,894	$	2,770
Salaries and benefits		2,191		2,097		4,293		4,352
Audit, legal and professional fees		644		1,008		1,420		1,839
Filing and listing fees		83		121		212		236
Directors fees and expenses		192		188		379		371
Depreciation		188		176		370		345
	$	4,229	$	4,938	$	8,568	$	9,913

INVESTMENT AND OTHER (LOSS) INCOME

The Company’s investment and other (loss) income are comprised of the following:

	Three Months Ended June 30,						Six Months Ended June 30,
	2015			2014			2015			2014
(Loss) gain from fair value adjustment of prepayment facilities (Note 18)	$	(245	)	$	(3,781	)	$	223		$	(2,356	)
(Loss) gain from investment in derivatives (a)		(871	)		-			396			1,102
(Loss) gain from investment in marketable securities		(120	)		251			8			359
Equity loss on investment in associates (Note 16)		(296	)		-			(369	)		-
Interest income and other		187			303			189			428
Gain from First Silver litigation (b)		-			14,127			-			14,127
Write-down of marketable securities		-			(275	)		-			(275	)
Gain from value-added tax settlement		-			-			-			137
	$	(1,345	)	$	10,625		$	447		$	13,522

The accompanying notes are an integral part of the condensed interim consolidated financial statements.
First Majestic Silver Corp. 2015 Second Quarter Report	Page 10

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Interim Consolidated Financial Statements - Unaudited

(Tabular amounts are expressed in thousands of US dollars)

INVESTMENT AND OTHER (LOSS) INCOME (continued)

(a)

(Loss) Gain from Investment in Derivatives

From time to time, the Company purchases long positions on silver futures or sells call options on silver futures for investment purposes. During the six months ended June 30, 2015, the Company recorded a gain of $0.4 million (2014 - $1.1 million) in relation to its investment in silver futures.

During the three months ended June 30, 2015, the Company has recorded a loss on investment in derivatives after closing all of its silver forward positions, which had a fair value of $1.3 million as at March 31, 2015.

(b)

Gain from First Silver Litigation

In June 2014, the Company recognized a $14.1 million deferred litigation gain as other income, after the defendant’s appeal was dismissed by the Court of Appeal. Please see Note 23 for further details related to the First Silver Litigation.

FINANCE COSTS

Finance costs are primarily related to interest and accretion expense on the Company’s prepayment facilities and finance leases. The Company’s finance costs in the period are summarized as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
Prepayment facilities	$	816	$	1,075	$	1,729	$	1,807
Finance leases		372		824		787		1,261
Silver sales and other		54		91		149		165
	$	1,242	$	1,990	$	2,665	$	3,233

10.

EARNINGS PER SHARE

Basic net income per share is the net income available to common shareholders divided by the weighted average number of common shares outstanding during the period. Diluted net income per share adjusts basic net income per share for the effects of dilutive potential common shares.

The calculations of basic and diluted earnings per share for the three and six months ended June 30, 2015 and 2014 are based on the following:

	Three Months Ended June 30,					Six Months Ended June 30,
	2015			2014		2015			2014
Net (loss) earnings for the period	$	(2,578	)	$	7,590	$	(3,683	)	$	13,570

Weighted average number of shares on issue - basic		121,097,717			117,490,053		119,355,855			117,359,468
Adjustment for stock options		-			132,251		-			185,897
Weighted average number of shares on issue - diluted⁽¹⁾		121,097,717			117,622,304		119,355,855			117,545,365

(Loss) earnings per share - basic	$	(0.02	)	$	0.06	$	(0.03	)	$	0.12
(Loss) earnings per share - diluted	$	(0.02	)	$	0.06	$	(0.03	)	$	0.12

(1)

Diluted weighted average number of shares excludes 8,458,013 (2014 – 6,710,958) options that were anti-dilutive for the three and six months ended June 30, 2015.

The accompanying notes are an integral part of the condensed interim consolidated financial statements.
First Majestic Silver Corp. 2015 Second Quarter Report	Page 11

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Interim Consolidated Financial Statements - Unaudited

(Tabular amounts are expressed in thousands of US dollars)

11.

TRADE AND OTHER RECEIVABLES

Trade and other receivables of the Company are comprised of:

	June 30, 2015		December 31, 2014
Trade receivables	$	6,881	$	5,399
Value added taxes and other taxes receivable		5,696		7,263
Other		1,601		899
	$	14,178	$	13,561

During the six months ended June 30, 2015, the Company advanced $0.5 million to First Mining Finance Corp. (“First Mining”), a related party. As at June 30, 2015, other receivables include a total amount of $1.1 million (2014 - $0.5 million) receivable from First Mining, which is repayable on demand and bears an interest rate of 9% per annum.

12.

INVENTORIES

Inventories consist primarily of materials and supplies and products of the Company’s operations, in varying stages of the production process, and are presented at the lower of cost and net realizable value. Inventories of the Company are comprised of:

	June 30, 2015		December 31, 2014
Finished product - doré and concentrates	$	533	$	990
Work-in-process		725		949
Stockpile		223		487
Silver coins and bullion		212		218
Materials and supplies		14,451		15,005
	$	16,144	$	17,649

The amount of inventories recognized as an expense during the period is equivalent to the total of cost of sales plus depletion, depreciation and amortization for the period. As at June 30, 2015, mineral inventories, which consists of stockpile, work-in-progress and finished goods, include a $0.5 million (2014 - $2.5 million) write-down which was recognized in cost of sales during the period.

13.

OTHER FINANCIAL ASSETS

Other financial assets are entirely attributed to the Company’s investment in marketable securities. As at June 30, 2015, the Company held 400,000 units of Sprott Physical Silver Trust (PSLV) with a fair value of $2.5 million (December 31, 2014 - $2.5 million), which were acquired at a cost of $5.3 million. These trust units are classified as fair value through profit or loss (“FVTPL”) marketable securities, with changes in fair value recorded through profit or loss. During the three and six months ended June 30, 2015, the Company recognized an unrealized loss of $0.1 million (2014 - gain of $0.3 million) and $nil (2014 - gain of $0.4 million), respectively, related to its FVTPL marketable securities.

14.

MINING INTERESTS

Mining interests primarily consist of acquisition, exploration, development and field support costs directly related to the Company’s operations and projects. Upon commencement of commercial production, mining interests for producing properties are depleted on a units-of-production basis over the estimated economic life of the mine. In applying the units of production method, depletion is determined using quantity of material extracted from the mine in the period as a portion of total quantity of material, based on reserves and resources, considered to be highly probable to be economically extracted over the life of mine plan. If no published reserves and resources are available, the Company may rely on internal estimates of economically recoverable mineralized material, prepared on a basis consistent with that used for determining reserves and resources, for purpose of determining depletion.

The accompanying notes are an integral part of the condensed interim consolidated financial statements.
First Majestic Silver Corp. 2015 Second Quarter Report	Page 12

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Interim Consolidated Financial Statements - Unaudited	(Tabular amounts are expressed in thousands of US dollars)

14.

MINING INTERESTS (continued)

The Company’s mining interests are comprised of the following:

	June 30, 2015		December 31, 2014
Producing properties	$	333,139	$	276,399
Exploration properties (non-depletable)		95,565		146,264
	$	428,704	$	422,663

Producing properties are allocated as follows:

Producing properties	La Encantada			La Parrilla			Del Toro			San Martin			La Guitarra			Total
Cost
At December 31, 2013	$	59,185		$	110,655		$	31,167		$	58,228		$	58,774		$	318,009
Additions		12,602			13,901			17,659			7,770			7,367			59,299
Change in decommissioning liabilities		1,292			1,003			398			1,083			118			3,894
Transfer (to) from exploration properties		(588	)		-			12,689			246			-			12,347
At December 31, 2014	$	72,491		$	125,559		$	61,913		$	67,327		$	66,259		$	393,549
Additions		3,660			5,278			4,902			2,909			3,055			19,804
Transfer from exploration properties		4,177			7,656			17,606			7,588			17,397			54,424
At June 30, 2015	$	80,328		$	138,493		$	84,421		$	77,824		$	86,711		$	467,777

Accumulated depletion and impairment
At December 31, 2013	$	(10,285	)	$	(15,227	)	$	(1,224	)	$	(17,704	)	$	(5,892	)	$	(50,332	)
Depletion and amortization		(4,264	)		(9,589	)		(5,036	)		(2,772	)		(4,172	)		(25,833	)
Impairment		-			-			(6,142	)		(10,211	)		(24,632	)		(40,985	)
At December 31, 2014	$	(14,549	)	$	(24,816	)	$	(12,402	)	$	(30,687	)	$	(34,696	)	$	(117,150	)
Depletion and amortization		(6,208	)		(3,809	)		(3,304	)		(1,465	)		(2,702	)		(17,488	)
At June 30, 2015	$	(20,757	)	$	(28,625	)	$	(15,706	)	$	(32,152	)	$	(37,398	)	$	(134,638	)

Carrying values
At December 31, 2014	$	57,942		$	100,743		$	49,511		$	36,640		$	31,563		$	276,399
At June 30, 2015	$	59,571		$	109,868		$	68,715		$	45,672		$	49,313		$	333,139

Exploration properties are allocated as follows:

Exploration properties	La Encantada			La Parrilla			Del Toro			San Martin			La Guitarra			Other			Total
Cost
At December 31, 2013	$	4,793		$	12,325		$	50,146		$	18,660		$	55,559		$	39,280		$	180,763
Additions		2,964			2,936			2,242			1,002			6,467			1,791			17,402
Change in decommissioning liabilities		-			-			-			-			-			54			54
Impairment		-			-			(4,389	)		(4,241	)		(27,232	)		-			(35,862	)
Disposition (d)		-			-			-			-			-			(3,746	)		(3,746	)
Transfer from (to) producing properties		588			-			(12,689	)		(246	)		-			-			(12,347	)
At December 31, 2014	$	8,345		$	15,261		$	35,310		$	15,175		$	34,794		$	37,379		$	146,264
Exploration and evaluation expenditures		874			726			1,094			145			397			489			3,725
Transfer to producing properties		(4,177	)		(7,656	)		(17,606	)		(7,588	)		(17,397	)		-			(54,424	)
At June 30, 2015	$	5,042		$	8,331		$	18,798		$	7,732		$	17,794		$	37,868		$	95,565

The accompanying notes are an integral part of the condensed interim consolidated financial statements.
First Majestic Silver Corp. 2015 Second Quarter Report	Page 13

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Interim Consolidated Financial Statements - Unaudited	(Tabular amounts are expressed in thousands of US dollars)

14.

MINING INTERESTS (continued)

(a)

La Parrilla Silver Mine, Durango State

The La Parrilla Silver Mine has a net smelter royalty (“NSR”) agreement of 1.5% of sales revenue associated with the Quebradillas Mine, a mine within the La Parrilla mining complex, with a maximum cumulative payable of $2.5 million. During the three and six months ended June 30, 2015, the Company paid royalties of $0.1 million (2014 - $0.1 million) and $0.2 million (2014 - $0.2 million), respectively. As at June 30, 2015, total royalties paid to date for the Quebradillas NSR is $2.3 million (December 31, 2014 - $2.2 million).

(b)

Del Toro Silver Mine, Zacatecas State

In 2013, the Company entered into several option agreements to acquire six mineral properties adjacent to the Del Toro Silver Mine, consisting of 492 hectares of mineral rights. If fully exercised, total option payments will amount to $3.3 million, of which $1.7 million have been paid, $1.2 million is due in 2015, $0.2 million is due in 2016 and $0.2 million is due in 2017.

(c)

La Guitarra Silver Mine, State of Mexico

In 2014, the Company entered into two agreements to acquire 757 hectares of adjacent mineral rights at the La Guitarra Silver Mine. The total purchase price amounted to $5.4 million, of which $5.2 million is settled in common shares of First Majestic and $0.2 million in cash. As at June 30, 2015, the Company has paid the $0.2 million and issued $3.2 million in common shares. The remaining balance of $2.0 million in common shares will be issued in four equal annual payments based on the Company’s volume weighted average market price at the time of the payments.

(d)

Other Properties

On July 1, 2014, First Majestic divested its subsidiary, Minera Terra Plata, S.A. de C.V., and its group of exploration properties, which had a carrying value of $3.7 million, to Sundance Minerals Ltd. (“Sundance”) (see Note 16).

15.

PROPERTY, PLANT AND EQUIPMENT

The majority of the Company’s property, plant and equipment are used in the Company’s five operating mine segments. Property, plant and equipment are depreciated using either the straight-line or units-of-production method over the shorter of the estimated useful life of the asset or the expected life of mine. Where an item of property, plant and equipment comprises of major components with different useful lives, the components are accounted for as separate items of property, plant and equipment. Assets under construction are recorded at cost and re-allocated to machinery and equipment when they become available for use.

The accompanying notes are an integral part of the condensed interim consolidated financial statements.
First Majestic Silver Corp. 2015 Second Quarter Report	Page 14

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Interim Consolidated Financial Statements - Unaudited	(Tabular amounts are expressed in thousands of US dollars)

15.

PROPERTY, PLANT AND EQUIPMENT (continued)

Property, plant and equipment are comprised of the following:

	Land and Buildings⁽¹⁾			Machinery and Equipment⁽²⁾			Assets under Construction			Other			Total
Cost
At December 31, 2013	$	83,767		$	215,296		$	52,212		$	9,965		$	361,240
Additions		13,190			17,129			4,452			2,043			36,814
Transfers and disposals⁽³⁾		23,678			5,892			(35,458	)		(372	)		(6,260	)
At December 31, 2014	$	120,635		$	238,317		$	21,206		$	11,636		$	391,794
Additions		187			2,118			7,049			241			9,595
Transfers and disposals		3,033			2,849			(6,482	)		218			(382	)
At June 30, 2015	$	123,855		$	243,284		$	21,773		$	12,095		$	401,007

Accumulated depreciation, amortization and impairment
At December 31, 2013	$	(13,918	)	$	(50,879	)	$	-		$	(5,117	)	$	(69,914	)
Depreciation and amortization		(5,878	)		(28,188	)		-			(1,748	)		(35,814	)
Transfers and disposals		37			5,587			-			451			6,075
Impairment		(9,815	)		(15,152	)		-			(136	)		(25,103	)
At December 31, 2014	$	(29,574	)	$	(88,632	)	$	-		$	(6,550	)	$	(124,756	)
Depreciation and amortization		(2,503	)		(14,406	)		-			(741	)		(17,650	)
Transfers and disposals		-			119			-			8			127
At June 30, 2015	$	(32,077	)	$	(102,919	)	$	-		$	(7,283	)	$	(142,279	)

Carrying values
At December 31, 2014	$	91,061		$	149,685		$	21,206		$	5,086		$	267,038
At June 30, 2015	$	91,778		$	140,365		$	21,773		$	4,812		$	258,728

	(1)	Included in land and buildings is $8.2 million (December 31, 2014 - $6.7 million) of land properties which are not subject to depreciation.
	(2)	Included in property, plant and equipment is $30.7 million (December 31, 2014 - $47.4 million) of equipment under finance lease (Note 19).
	(3)	On January 1, 2014, the commissioning of the 1,000 tpd cyanidation plant at the Del Toro mine was completed as operating levels intended by management have been reached. Accordingly, costs associated with the plant were transferred from assets under construction to buildings, machinery and equipment, with depreciation commencing effective January 1, 2014.

The accompanying notes are an integral part of the condensed interim consolidated financial statements.
First Majestic Silver Corp. 2015 Second Quarter Report	Page 15

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Interim Consolidated Financial Statements - Unaudited	(Tabular amounts are expressed in thousands of US dollars)

15.

PROPERTY, PLANT AND EQUIPMENT (continued)

Property, plant and equipment, including land and buildings, machinery and equipment, assets under construction and other assets above are allocated by mine as follow:

	La Encantada			La Parrilla			Del Toro			San Martin			La Guitarra			Other			Total
Cost
At December 31, 2013	$	90,087		$	92,013		$	101,876		$	41,131		$	17,973		$	18,160		$	361,240
Additions		12,069			5,019			10,167			5,787			1,977			1,795			36,814
Transfers and disposals		(1,797	)		(4,160	)		1,286			(2,433	)		782			62			(6,260	)
At December 31, 2014	$	100,359		$	92,872		$	113,329		$	44,485		$	20,732		$	20,017		$	391,794
Additions		3,430			2,345			1,124			1,874			287			535			9,595
Transfers and disposals		1,998			(1,231	)		(853	)		(480	)		160			24			(382	)
At June 30, 2015	$	105,787		$	93,986		$	113,600		$	45,879		$	21,179		$	20,576		$	401,007

Accumulated depreciation and amortization and impairment
At December 31, 2013	$	(27,842	)	$	(23,571	)	$	(3,858	)	$	(9,549	)	$	(2,372	)	$	(2,722	)	$	(69,914	)
Depreciation and amortization		(10,119	)		(8,107	)		(8,947	)		(4,722	)		(2,512	)		(1,407	)		(35,814	)
Transfers and disposals		1,022			3,136			(860	)		3,173			(380	)		(16	)		6,075
Impairment		-			-			(11,019	)		(7,292	)		(6,792	)		-			(25,103	)
At December 31, 2014	$	(36,939	)	$	(28,542	)	$	(24,684	)	$	(18,390	)	$	(12,056	)	$	(4,145	)	$	(124,756	)
Depreciation and amortization		(5,409	)		(4,979	)		(3,244	)		(2,702	)		(658	)		(658	)		(17,650	)
Transfers and disposals		(475	)		445			133			178			(140	)		(14	)		127
At June 30, 2015	$	(42,823	)	$	(33,076	)	$	(27,795	)	$	(20,914	)	$	(12,854	)	$	(4,817	)	$	(142,279	)

Carrying values
At December 31, 2014	$	63,420		$	64,330		$	88,645		$	26,095		$	8,676		$	15,872		$	267,038
At June 30, 2015	$	62,964		$	60,910		$	85,805		$	24,965		$	8,325		$	15,759		$	258,728

16.

OTHER INVESTMENTS

As at December 31, 2014, the Company held a 31.7% interest in Sundance, a privately held exploration company. During the three and six months ended June 30, 2015, as part of a plan of arrangement, Sundance closed a private placement of CAD$5.0 million in March 2015 and completed the reverse takeover (“RTO”) of Albion Petroleum Ltd. Concurrent with the RTO, subscription receipts of CAD$2.7 million were converted into shares of Sundance. Following the RTO, Sundance changed its name to First Mining Finance Corp. and is listed on the TSX Venture Exchange under the symbol “FF”.

As a result of the aforementioned transactions, First Majestic’s holding in Sundance was converted on a 1:1 basis into common shares of First Mining, equivalent to 19.7% of the issued and outstanding shares of First Mining. During the six months ended June 30, 2015, the Company recognized a gain of $0.1 million in relation to dilution of its investment in First Mining from 31.7% to 19.7%.

Due to certain common directors and a common officer, the Company’s investment in First Mining is accounted for as an investment in associate. During the three and six months ended June 30, 2015, the Company’s share of First Mining’s net loss was $0.3 million (2014 - $nil) and $0.4 million (2014 - $nil), respectively.

As at June 30, 2015, the Company’s investment in First Mining has a carrying value of $3.0 million and a market value of $7.1 million based on Level 1 fair value measurement.

The accompanying notes are an integral part of the condensed interim consolidated financial statements.
First Majestic Silver Corp. 2015 Second Quarter Report	Page 16

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Interim Consolidated Financial Statements - Unaudited	(Tabular amounts are expressed in thousands of US dollars)

17.

TRADE AND OTHER PAYABLES

The Company’s trade and other payables are primarily comprised of amounts outstanding for purchases relating to mining operations, exploration and evaluation activities and corporate office expenses. The normal credit period for these purchases is between 30 to 90 days.

Trade and other payables are comprised of the following items:

	June 30, 2015		December 31, 2014
Trade payables	$	21,459	$	25,948
Accrued liabilities		13,222		14,412
	$	34,681	$	40,360

18.

PREPAYMENT FACILITIES

The Company occasionally enters into prepayment facilities to fund its cash requirements. Under the prepayment facility agreements, the Company receives advance payment by forward selling a pre-determined amounts of its lead and zinc concentrate production.

The prepayment facilities are classified as FVTPL financial liabilities and are recorded at fair market value, based on the forward market price of lead and zinc and discounted at effective interest rates between 6.0% to 6.7%. Fair value adjustment gains or losses are recorded as other income.

To mitigate potential exposure to future price increases in lead and zinc, the Company has entered into an agreement with the same lender to purchase call options on lead and zinc futures equivalent to a portion of its production to be delivered under the terms of the prepayment facility agreements. The call options are classified as FVTPL financial assets and recorded at fair market value based on quoted market prices, presented on the statements of financial position on an offsetting basis with the prepayment facilities.

The Company’s prepayment facilities are comprised of:

Metal	Agreement Date	Advance Amount		Interest Rate			Maturity Date	Contract Quantity (MT)		Remaining Quantity (MT)		June 30, 2015			December 31, 2014
Lead	Dec 2012	$	24,684		4.34	%	Jun 2016		12,158		5,086	$	8,808		$	13,189
Lead	Apr 2014	$	30,000		4.05	%	Sept 2017		15,911		14,435		23,582			26,356
Zinc	Dec 2012	$	25,316		4.34	%	Jun 2016		13,176		5,567		10,866			16,431
												$	43,256		$	55,976
Remaining repayments
Less than one year												$	31,742		$	29,389
One to three years													21,385			37,230
Gross value of remaining repayments													53,127			66,619
Cumulative mark-to-market adjustment of remaining repayments, including call options													(6,789	)		(5,834	)
Adjusted value of remaining repayments													46,338			60,785
Less: future finance charges													(3,082	)		(4,809	)
												$	43,256		$	55,976
Statements of Financial Position Presentation
Current portion of prepayment facilities												$	25,710		$	26,329
Non-current portion of prepayment facilities													17,546			29,647
												$	43,256		$	55,976

The accompanying notes are an integral part of the condensed interim consolidated financial statements.
First Majestic Silver Corp. 2015 Second Quarter Report	Page 17

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Interim Consolidated Financial Statements - Unaudited	(Tabular amounts are expressed in thousands of US dollars)

18.

PREPAYMENT FACILITIES (continued)

During the three and six months ended June 30, 2015, the Company has realized a loss of $0.2 million (2014 - $3.8 million) and a gain of $0.2 million (2014 – loss of $2.4 million), respectively, on fair value adjustments of the prepayment facilities and associated call options.

19.

LEASE OBLIGATIONS

The Company has finance leases for various mine and plant equipment. These leases have terms of 36 to 60 months with interest rates ranging from 4.8% to 8.0%. Assets under finance leases are pledged as security against lease obligations.

The following is a schedule of future minimum lease payments due under the Company’s finance lease contracts:

	June 30, 2015			December 31, 2014
Less than one year	$	11,358		$	12,883
More than one year but not more than five years		12,243			16,547
Gross payments		23,601			29,430
Less: future finance charges		(1,853	)		(2,547	)
Present value of minimum lease payments	$	21,748		$	26,883
Statement of Financial Position Presentation
Current portion of lease obligations	$	10,190		$	11,428
Non-current portion of lease obligations		11,558			15,455
Present value of minimum lease payments	$	21,748		$	26,883

20.

SHARE CAPITAL

(a)

Authorized and issued capital

The Company has unlimited authorized common shares with no par value. The movement in the Company’s issued and outstanding capital during the period is summarized in the Condensed Interim Consolidated Statements of Changes in Equity.

In April 2015, the Company closed a private placement by issuing an aggregate of 4,620,000 common shares at a price of CAD$6.50 per common share for gross proceeds of $24.5 million (CAD$30.0 million), or net proceeds of $23.0 million (CAD$28.1 million) after share issuance costs.

(b)

Stock options

Under the terms of the Company’s Stock Option Plan, the maximum number of shares reserved for issuance under the Plan is 10% of the issued shares on a rolling basis. Options may be exercisable over periods of up to five years as determined by the Board of Directors of the Company and the exercise price shall not be less than the closing price of the shares on the day preceding the award date, subject to regulatory approval. All stock options granted prior to May 19, 2011 are subject to vesting with 25% vesting upon issuance and 25% vesting each six months thereafter. All stock options granted thereafter are subject to vesting with 25% vesting on first anniversary from the date of grant, and 25% vesting each six months thereafter.

The accompanying notes are an integral part of the condensed interim consolidated financial statements.
First Majestic Silver Corp. 2015 Second Quarter Report	Page 18

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Interim Consolidated Financial Statements - Unaudited	(Tabular amounts are expressed in thousands of US dollars)

20.

SHARE CAPITAL (continued)

(b)

Stock options (continued)

The following table summarizes information about stock options outstanding as at June 30, 2015:

	Options Outstanding						Options Exercisable
Exercise prices (CAD$)	Number of Options		Weighted Average Exercise Price (CAD$/Share)		Weighted Average Remaining Life (Years)		Number of Options		Weighted Average Exercise Price (CAD$/Share)		Weighted Average Remaining Life (Years)
5.01 - 10.00		2,506,055		6.24		4.54		-		-		-
10.01 - 15.00		2,904,842		11.00		3.13		1,109,316		11.47		2.32
15.01 - 20.00		1,355,900		16.71		1.47		1,355,900		16.71		1.47
20.01 - 22.45		1,691,216		21.60		2.47		1,460,591		21.71		2.46
		8,458,013		12.63		3.15		3,925,807		17.09		2.08

The movements in stock options issued during the six months ended June 30, 2015 and the year ended December 31, 2014 are summarized as follows:

	Six Months Ended June 30, 2015					Year Ended December 31, 2014
	Number of Options			Weighted Average Exercise Price (CAD$/Share)		Number of Options			Weighted Average Exercise Price (CAD$/Share)
Balance, beginning of the period		6,084,458			15.24		5,208,520			16.85
Granted		2,499,555			6.25		2,549,142			10.57
Exercised		-			-		(372,500	)		4.29
Cancelled or expired		(126,000	)		12.35		(1,300,704	)		15.67
Balance, end of the period		8,458,013			12.63		6,084,458			15.24

During the six months ended June 30, 2015, the aggregate fair value of stock options granted was CAD$5.1 million (December 31, 2014 – CAD$8.4 million), or a weighted average fair value of CAD$2.04 per stock option granted (December 31, 2014 – CAD$3.30).

The following weighted average assumptions were used in estimating the fair value of stock options granted using the Black-Scholes Option Pricing Model:

Assumption	Based on	Six Months Ended June 30, 2015		Year Ended December 31, 2014
Risk-free interest rate (%)	Yield curves on Canadian government zero-coupon bonds with a remaining term equal to the stock options’ expected life		1.10		1.44
Expected life (years)	Average of the expected vesting term and expiry term of the option		3.38		3.38
Expected volatility (%)	Historical and implied volatility of the precious metals mining sector		44.00		41.20
Expected dividend yield (%)	Annualized dividend rate as of the date of grant		0.00		0.00

The weighted average closing share price at date of exercise for the year ended December 31, 2014 was CAD$8.85. No options were exercised in the six months ended June 30, 2015.

The accompanying notes are an integral part of the condensed interim consolidated financial statements.
First Majestic Silver Corp. 2015 Second Quarter Report	Page 19

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Interim Consolidated Financial Statements - Unaudited	(Tabular amounts are expressed in thousands of US dollars)

20.

SHARE CAPITAL (continued)

(c)

Share repurchase program

The Company has an ongoing share repurchase program to repurchase up to 5,879,732 of its common shares, which represents approximately 5% of the Company’s issued and outstanding shares. The normal course issuer bids will be carried through the facilities of the Toronto Stock Exchange. No shares were repurchased during the three and six months ended June 30, 2015. During the three and six months ended June 30, 2014, the Company repurchased and cancelled 40,000 shares for a total consideration of $0.4 million.

21.

FINANCIAL INSTRUMENTS AND RELATED RISK MANAGEMENT

The Company’s financial instruments and related risk management objectives, policies, exposures and sensitivity related to financial risks are summarized below.

(a)

Fair value and categories of financial instruments

Financial instruments included in the condensed interim consolidated statements of financial position are measured either at fair value or amortized cost. Estimated fair values for financial instruments are designed to approximate amounts for which the instruments could be exchanged in an arm’s-length transaction between knowledgeable and willing parties.

The Company uses various valuation techniques in determining the fair value of financial assets and liabilities based on the extent to which the fair value is observable. The following fair value hierarchy is used to categorize and disclose the Company’s financial assets and liabilities held at fair value for which a valuation technique is used:

Level 1:

Unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities.

Level 2:

All inputs which have a significant effect on the fair value are observable, either directly or indirectly, for substantially the full contractual term.

Level 3:

Inputs which have a significant effect on the fair value are not based on observable market data.

The table below summarizes the valuation methods used to determine the fair value of each financial instrument:

Financial Instruments Measured at Fair Value		Valuation Method
Cash equivalents (short-term investments)		Assumed to approximate carrying value
Trade receivables (related to concentrate sales)		Receivables that are subject to provisional pricing and final price adjustment at the end of the quotational period are estimated based on observable forward price of metal per London Metal Exchange (Level 2)
Marketable securities Silver futures derivatives Foreign exchange derivatives		Based on quoted market prices for identical assets in an active market (Level 1) as at the date of statements of financial position
Prepayment facilities		Based on observable forward price curve of lead and zinc per London Metal Exchange (Level 2). Related call options are valued based on unadjusted quoted prices for identical assets in an active market (Level 1) as at the date of statements of financial position

Financial Instruments Measured at Amortized Costs		Valuation Method
Cash and cash equivalents Trade and other receivables Trade and other payables		Approximated carrying value due to their short-term nature
Finance leases		Assumed to approximate carrying value

The accompanying notes are an integral part of the condensed interim consolidated financial statements.
First Majestic Silver Corp. 2015 Second Quarter Report	Page 20

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Interim Consolidated Financial Statements - Unaudited	(Tabular amounts are expressed in thousands of US dollars)

21.

FINANCIAL INSTRUMENTS AND RELATED RISK MANAGEMENT (continued)

(a)

Fair value and categories of financial instruments (continued)

The following table presents the Company’s fair value hierarchy for financial assets and financial liabilities that are measured at fair value:

	June 30, 2015							December 31, 2014
			Fair value measurement							Fair value measurement
	Carrying value		Level 1			Level 2		Carrying value		Level 1			Level 2
Financial assets
Trade receivables	$	6,463	$	-		$	6,463	$	4,741	$	-		$	4,741
Marketable securities		2,468		2,468			-		2,460		2,460			-
Financial liabilities
Prepayment facilities	$	43,256	$	(435	)	$	43,691	$	55,976	$	(1,132	)	$	57,108

There were no transfers between levels 1, 2 and 3 during the six months ended June 30, 2015 and year ended December 31, 2014.

(b)

Capital risk management

The Company’s objectives when managing capital are to maintain financial flexibility to continue as a going concern while optimizing growth and maximizing returns of investments from shareholders. The Company’s overall strategy with respect to capital risk management remains unchanged from the year ended December 31, 2014.

The Company monitors its capital structure and, based on changes in operations and economic conditions, may adjust the structure by repurchasing shares, issuing new shares, issuing new debt or retiring existing debt. The Company prepares annual budget and quarterly forecasts to facilitate the management of its capital requirements. The annual budget is approved by the Company’s Board of Directors.

The capital of the Company consists of equity (comprising of issued capital, equity reserves and retained earnings), prepayment facilities, lease obligations, net of cash and cash equivalents as follows:

	June 30, 2015			December 31, 2014
Equity	$	542,971		$	520,533
Prepayment facilities		43,256			55,976
Lease obligations		21,748			26,883
Less: cash and cash equivalents		(37,742	)		(40,345	)
	$	570,233		$	563,047

The Company’s investment policy is to invest its cash in highly liquid short-term investments with maturities of 90 days or less, selected with regards to the expected timing of expenditures from continuing operations. The Company expects that its available capital resources will be sufficient to carry out its development plans and operations for at least the next 12 months.

The Company is not subject to any externally imposed capital requirements with the exception of complying with covenants under the prepayment facility agreements. As at June 30, 2015 and December 31, 2014, the Company was in compliance with these covenants.

The accompanying notes are an integral part of the condensed interim consolidated financial statements.
First Majestic Silver Corp. 2015 Second Quarter Report	Page 21

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Interim Consolidated Financial Statements - Unaudited	(Tabular amounts are expressed in thousands of US dollars)

21.

FINANCIAL INSTRUMENTS AND RELATED RISK MANAGEMENT (continued)

(c)

Financial risk management

There are no significant changes in financial risk management compared to the Company’s consolidated financial statements for the year ended December 31, 2014, except for the following:

Liquidity Risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they arise. The Company has in place a planning and budgeting process to help determine the funds required to support the Company’s normal operating requirements and contractual obligations. The Company believes it has sufficient cash on hand, combined with cash flows from operations, to meet operating requirements as they arise for at least the next 12 months.

The following table summarizes the maturities of the Company’s financial liabilities and commitments based on the undiscounted contractual cash flows:

	Carrying Amount as at		Contractual		Less than		1 to 3		4 to 5		After 5
	June 30, 2015		Cash Flows		1 year		years		years		years
Trade and other payables	$	34,681	$	34,681	$	34,681	$	-	$	-	$	-
Prepayment facilities		43,256		53,127		31,742		21,385		-		-
Finance lease obligations		21,748		23,601		11,358		12,103		140		-
Decommissioning liabilities		15,051		15,897		-		-		-		15,897
	$	114,736	$	127,306	$	77,781	$	33,488	$	140	$	15,897

Currency Risk

The Company is exposed to foreign exchange risk primarily relating to financial instruments that are denominated in Canadian dollars or Mexican pesos, which would impact the Company’s net earnings and other comprehensive income. To manage foreign exchange risk, the Company may occasionally enter into short-term foreign currency derivatives. The foreign currency derivatives are not designated as hedging instruments for accounting purposes.

The sensitivity of the Company’s net earnings and comprehensive income due to changes in the exchange rate between the Canadian dollar and the Mexican peso against the U.S. dollar is included in the table below:

	June 30, 2015													December 31, 2014
	Cash and cash equivalents		Trade and other receivables		Trade and other payables			Foreign exchange derivative		Net assets (liabilities) exposure		Effect of +/- 10% change in currency		Net assets (liabilities) exposure			Effect of +/- 10% change in currency
Canadian dollar	$	21,974	$	1,158	$	(769	)	$	-	$	22,363	$	2,236	$	6,791		$	679
Mexican peso		762		6,173		(17,596	)		29,239		18,578		1,858		(12,430	)		(1,243	)
	$	22,736	$	7,331	$	(18,365	)	$	29,239	$	40,941	$	4,094	$	(5,639	)	$	(564	)

Commodity Price Risk

The Company is exposed to commodity price risk on silver, gold, lead and zinc, which have a direct and immediate impact on the value of its related financial instruments and net earnings. The Company’s revenues are directly dependent on commodity prices that have shown volatility and are beyond the Company’s control. The Company does not use derivative instruments to hedge its commodity price risk to silver but has forward sales agreements to sell a portion of its lead and zinc production at a fixed price (see Note 18). The Company purchased call options on lead and zinc futures to mitigate potential exposure to future price increases in lead and zinc for its lead and zinc forward sales agreements.

The accompanying notes are an integral part of the condensed interim consolidated financial statements.
First Majestic Silver Corp. 2015 Second Quarter Report	Page 22

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Interim Consolidated Financial Statements - Unaudited	(Tabular amounts are expressed in thousands of US dollars)

21.

FINANCIAL INSTRUMENTS AND RELATED RISK MANAGEMENT (continued)

(c)

Financial risk management (continued)

The following table summarizes the Company’s exposure to commodity price risk and their impact on net earnings:

	June 30, 2015
	Silver		Gold		Lead			Zinc			Effect of +/- 10% change in metal prices
Metals subject to provisional price adjustments	$	638	$	63	$	819		$	275		$	1,795
Metals in doré and concentrates inventory		31		8		10			5			54
Prepayment facilities (Note 18)		-		-		(3,313	)		(1,025	)		(4,338	)
	$	669	$	71	$	(2,484	)	$	(745	)	$	(2,489	)

	December 31, 2014
	Silver		Gold		Lead			Zinc			Effect of +/- 10% change in metal prices
Metals subject to provisional price adjustments	$	969	$	48	$	938		$	109		$	2,064
Metals in doré and concentrates inventory		86		13		6			-			105
Prepayment facilities		-		-		(4,204	)		(1,670	)		(5,874	)
	$	1,055	$	61	$	(3,260	)	$	(1,561	)	$	(3,705	)

22.

SUPPLEMENTAL CASH FLOW INFORMATION

		Three Months Ended June 30,						Six Months Ended June 30,
	Note	2015			2014			2015			2014
Adjustments to reconcile net earnings to operating cash flows before movements in working capital:
Accretion of decommissioning liabilities		$	192		$	205		$	389		$	407
Loss (gain) from silver derivatives and marketable securities	13		991			(251	)		(404	)		(1,461	)
(Gain) loss on fair value adjustment on prepayment facilities	18		(94	)		3,652			(1,312	)		2,074
Dilution gain on investment in associates	16		-			-			(64	)		-
Equity loss on investment in associates	16		296			-			433			-
Impairment of marketable securities			-			275			-			275
Reversal of deferred litigation gain			-			(14,127	)		-			(14,127	)
Unrealized foreign exchange (gain) loss and other			(897	)		8			(2,423	)		86
		$	488		$	(10,238	)	$	(3,381	)	$	(12,746	)
Net change in non-cash working capital items:
Decrease (increase) in trade and other receivables		$	1,348		$	6,531		$	(617	)	$	4,058
Decrease in inventories			546			5,202			1,504			2,550
Decrease (increase) in prepaid expenses and other			286			583			(461	)		732
Increase in income taxes payable			2,974			6,116			3,561			5,593
Increase (decrease) in trade and other payables			1,397			(2,349	)		(5,769	)		(682	)
		$	6,551		$	16,083		$	(1,782	)	$	12,251

The accompanying notes are an integral part of the condensed interim consolidated financial statements.
First Majestic Silver Corp. 2015 Second Quarter Report	Page 23

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Interim Consolidated Financial Statements - Unaudited	(Tabular amounts are expressed in thousands of US dollars)

22.

SUPPLEMENTAL CASH FLOW INFORMATION (continued)

		Three Months Ended June 30,					Six Months Ended June 30,
	Note	2015			2014		2015			2014
Non-cash investing and financing activities:
Assets acquired by finance lease		$	(633	)	$	-	$	(1,590	)	$	-
Acquisition of mining interests with common shares	14(c)		-			-		-			(2,820	)
Transfer of share-based payments reserve upon exercise of options			-			195		-			469
		$	(633	)	$	195	$	(1,590	)	$	(2,351	)

23.

CONTINGENCIES AND OTHER MATTERS

Due to the size, complexity and nature of the Company’s operations, various legal and tax matters arise in the ordinary course of business. The Company accrues for such items when a liability is probable and the amount can be reasonably estimated. In the opinion of management, these matters will not have a material effect on the consolidated financial statements of the Company.

Mexican Federal Labour Law

In 2012, the Mexican government introduced changes to the federal labour law which made certain amendments to the law relating to the use of service companies and subcontractors and the obligations with respect to workers’ participation benefits. These amendments may have an effect on the distribution of profits to workers and result in additional financial obligations to the Company. The Company continues to be in compliance with the federal labour law and believes that these amendments will not result in any new material obligations. Based on this assessment, the Company has not accrued any provisions as at June 30, 2015. The Company will continue to monitor developments in Mexico and to assess the potential impact of these amendments.

First Silver Litigation

In April 2013, the Company received a positive judgment on the First Silver litigation from the Supreme Court of British Columbia (the “Court”), which awarded the sum of $93.8 million in favour of First Majestic against Hector Davila Santos (the “Defendant”). The Company received a sum of $14.1 million in June 2013 as partial payment of the judgment, leaving an unpaid amount of approximately $65.3 million (CAD$81.5 million). As part of the ruling, the Court granted orders restricting any transfer or encumbrance of the Bolaños Mine by the defendant and limiting mining at the Bolaños Mine. The orders also require that the defendant to preserve net cash flow from the Bolaños Mine in a holding account and periodically provide to the Company certain information regarding the Bolaños Mine. However, there can be no guarantee that the remainder of the judgment amount will be collected and it is likely that it will be necessary to take additional action in Mexico and/or elsewhere to recover the balance. Therefore, as at June 30, 2015, the Company has not accrued any of the remaining $65.3 million (CAD$81.5 million) unpaid judgment in favour of the Company.

24.

SUBSEQUENT EVENTS

The following significant events occurred subsequent to June 30, 2015:

On July 27, 2015, the Company entered into a definitive agreement to acquire all of the issued and outstanding shares of SilverCrest for consideration of 0.2769 common shares of First Majestic plus CAD$0.0001 in cash per SilverCrest common share. With this acquisition, SilverCrest’s Santa Elena Mine will be First Majestic’s sixth producing silver mine, adding further growth potential to the Company’s portfolio of Mexican projects. It will also add approximately CAD$30 million in cash and further enhances the Company’s working capital position.

3,844 common shares were cancelled; and

68,750 options were cancelled.

The accompanying notes are an integral part of the condensed interim consolidated financial statements.
First Majestic Silver Corp. 2015 Second Quarter Report	Page 24

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Interim Consolidated Financial Statements - Unaudited	(Tabular amounts are expressed in thousands of US dollars)

24.

SUBSEQUENT EVENTS (continued)

Pursuant to the above subsequent events, the Company has 122,210,796 common shares outstanding as at the date on which these consolidated financial statements were approved and authorized for issue by the Board of Directors (see Note 25).

25.

APPROVAL OF FINANCIAL STATEMENTS

The condensed interim consolidated financial statements of First Majestic Silver Corp. for the three and six months ended June 30, 2015 were approved and authorized for issue by the Board of Directors on August 10, 2015.

The accompanying notes are an integral part of the condensed interim consolidated financial statements.
First Majestic Silver Corp. 2015 Second Quarter Report	Page 25