Form 6-K FIRST MAJESTIC SILVER For: Apr 18

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April 19, 2017 6:04 AM EDT

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of April 18, 2017

Commission File Number 001-34984

FIRST MAJESTIC SILVER CORP.

(Translation of registrant's name into English)

925 West Georgia Street, Suite 1800, Vancouver BC V6C 3L2

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

¨ Form 20-F x Form 40-F

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ¨

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ¨

SUBMITTED HEREWITH

Exhibits



99.1		Notice of Meeting
99.2		Management Information Circular
99.3		Notice and Access Notification
99.4		Proxy
99.5		Financial Statement Request Form
99.6		Annual Report

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



FIRST MAJESTIC SILVER CORP.

By:

/s/ Connie Lillico
Connie Lillico
Corporate Secretary

April 18, 2017

Exhibit 99.1

NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS

NOTICE is hereby given that the Annual General Meeting (the “Meeting”) of the shareholders of First Majestic Silver Corp. (the "Company") will be held at The Sutton Place Hotel, 845 Burrard Street, Vancouver, British Columbia, V6Z 2K6, on Thursday, May 25, 2017 at 10:00 a.m. (Vancouver time). At the Meeting, the shareholders will receive the financial statements for the year ended December 31, 2016, together with the auditor’s report thereon, receive and consider the report of the directors, and consider resolutions:


1.	To set the number of directors of the Company at five.


2.	To elect the directors of the Company to serve until the next annual general meeting of shareholders.


3.	To appoint Deloitte LLP, Independent Registered Public Accounting Firm, as auditors for the Company to hold office until the next annual general meeting of shareholders of the Company and to authorize the directors to fix the remuneration to be paid to the auditors.


4.	To approve the Amended and Restated Stock Option Plan of the Company, as more particularly described in the accompanying Information Circular.


5.	To vote on an advisory resolution with respect to the Company’s approach to executive compensation.


6.	To transact such other business as may properly come before the Meeting or any adjournment or adjournments thereof.

The record date for notice and for voting at the Meeting is April 3, 2017. Only registered shareholders at the close of business on April 3, 2017 will be entitled to vote at the Meeting.

If you are a registered shareholder of the Company and are unable to attend the Meeting in person, please read, sign and date the form of proxy for the Meeting (the “Proxy”) and deposit it with Computershare Investor Services Inc. (“Computershare”) by courier or mail at 100 University Avenue, 9th Floor, Toronto, Ontario, M5J 2Y1, Attention: Proxy Department, or by facsimile at 1-866-249-7775 (toll free in North America) or 1-416-263-9524 (international) by 10:00 a.m. (Vancouver, British Columbia time) on Tuesday, May 23, 2017 or at least 48 hours (excluding Saturdays, Sundays and holidays) before any postponement or adjournment of the Meeting). Alternatively, registered shareholders may vote by telephone (1-866-732-8683) or online (www.investorvote.com) using the control number listed on the Proxy.

Meeting, information circular, financial statements and management’s discussion and analysis for the year ended December 31, 2016 (collectively, the “Meeting Materials”) to shareholders for the Meeting. Under Notice and Access, instead of receiving printed copies of the Meeting Materials, shareholders receive a Notice and Access notification containing details of the Meeting date, location and purpose, as well as information on how they can access the Meeting Materials electronically. Shareholders with existing instructions on their account to receive printed materials will receive a printed copy of the Meeting Materials. Other shareholders wishing to receive a printed copy of the Meeting Materials should follow the instructions set out in the Notice and Access notification.

DATED at Vancouver, British Columbia, this 17^th day of April, 2017.

ON BEHALF OF THE BOARD OF DIRECTORS
OF FIRST MAJESTIC SILVER CORP.

“Keith Neumeyer”

Keith Neumeyer
President and Chief Executive Officer

Exhibit 99.2

NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS
MAY 25, 2017

MANAGEMENT INFORMATION CIRCULAR

(Containing information as at April 3, 2017, unless otherwise specified)

TO OUR SHAREHOLDERS:

From the Chairman

You are invited to attend the annual general meeting of shareholders of First Majestic Silver Corp. to be held at 10:00 a.m. (Vancouver time) on Thursday, May 25, 2017 at the Sutton Place Hotel, 845 Burrard Street, Vancouver, British Columbia.

The business to be considered at the annual general meeting is described in the accompanying Notice of Meeting and Management Information Circular which contains important information about the meeting, voting, the nominees for election as directors, our governance practices and how we compensate our executives and directors.

Your vote is important. We encourage you to participate in this process by voting your shares, and, if possible, by attending the annual general meeting where you can consider and vote on a number of important matters.

Thank you for your support as shareholders and I look forward to seeing you at the Meeting.

Douglas Penrose, CPA, CA

Chairman

From the President and CEO

TO OUR SHAREHOLDERS:

Reinvesting for Growth

Performance, efficiency and a better long-term outlook provide good reasons why “optimization” was the right, if not perfect, theme for this year’s annual report. Following five years of very challenging market environments, along with cutbacks at just about every level, we are enjoying much improved cash flows. As a result, we are now reinvesting for growth while continuing to optimize operations throughout the company.

With revenues climbing and a return to profitability, we have increased exploration by 100 percent in just the last two quarters. Our mine development budget is up 50 percent over last year, with capital expenditures forecast to reach $124 million in 2017—an increase of more than 88 percent over 2016. We are bringing in new, industry-leading talent to manage new initiatives, and we continue to invest heavily in technology to modernize and streamline our operations.

Silver production, at 11.85 million ounces, increased by six percent over 2015. The higher numbers reflect a full year of output from our newly-acquired Santa Elena mine.

All of this reflects important decisions made as far back as 2012, when the market environment began to deteriorate. It was then apparent to management that crucial action was necessary to maintain a healthy balance sheet, or perhaps even to survive, if conditions prevailed—which they did for the next four years.

One of our primary mandates was to use the downturn to our advantage. This meant substantially transforming First Majestic from a growth-oriented company to a much more efficient, manufacturing-based model. We dramatically cut costs, and we invested whatever spare capital we had to develop better tracking systems and technology that would empower staff to spend wisely and make better decisions.

Today we see the results of our transformative efforts. All-in-Sustaining Costs (AISC) have dropped from $17.71 per ounce in 2014 (the first year we employed this metric) to $10.79 per ounce in 2016—an improvement of 39%

and one of the industry’s lowest. The low costs, combined with higher production and improved metals markets, allowed us to generate net income of $8.6 million in 2016, compared with losses in the three previous years.

Optimization also means that, with First Majestic once again in a position of strength, we are focused on efforts that will make us even more productive and efficient. We have more cash now than at any time in the history of the company. These funds will enable us to improve our mines and plants, streamline our decision-making processes and management systems, rebuild reserves and resources and essentially take First Majestic to our next major goals. With expanded production from existing mines, plus expected new production from projects in the pipeline, I believe we are at the beginning of several years of further growth.

It’s very refreshing for me to report on such a positive year and to do so with such optimism looking ahead to 2017 and beyond. None of this would be possible without the team we have built at First Majestic. I extend my thanks and congratulations to everyone in the First Majestic Family. I look forward to celebrating the many accomplishments to come.

Keith Neumeyer

President and CEO

TABLE OF CONTENTS



NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS	iii

PROXY SUMMARY	1
Annual General Meeting Details	1
Shareholder Voting Matters	1
Director Nominees	1

PART ONE VOTING INFORMATION	3
Solicitation of Proxies	3
Notice and Access Process	3
Voting Instructions	4
Registered Shareholders	4
Non-Registered Holders	5
Distribution to Non-Registered Shareholders	5
Voting Shares and Principal Holders Thereof	6

PART TWO BUSINESS OF THE MEETING	6
Receiving the Consolidated Financial Statements	6
Election of Directors	7
Majority Voting Policy	7
Director Tenure Policy	7
Nominees for Election as Directors	8
Director Qualifications	15
Appointment of Auditors	16
Approval of the Amended and Restated Stock Option Plan	16
Advisory Vote on Executive Compensation	20

PART THREE STATEMENT OF CORPORATE GOVERNANCE PRACTICES	20
Board of Directors	21
Independence of the Board	21
Directorships and Interlocks	21
Independent Directors’ Meetings	22



Chairman	22
Meetings of the Board and Committees of the Board	22
Board Mandate	23
Position Descriptions	23
Ethical Business Conduct	25
Diversity Policy	26
Whistleblower Policy	26
Nomination of Directors	27
Compensation	27
Corporate Governance Committee	28
Other Board Committees	28
Assessments	28
Shareholder Engagement	28

PART FOUR DIRECTOR COMPENSATION	29
Compensation of Directors	29
Compensation of Directors - Outstanding Share-Based Awards and Option-Based Awards	30
Compensation of Directors - Incentive Plan Awards – Value Vested or Earned During the Year	31
Director Share Ownership Requirement	31

PART FIVE EXECUTIVE COMPENSATION	31
Introduction	31
Compensation Discussion & Analysis	33
Base Salary	36
Services Agreement – Keith Neumeyer	37
Employment Agreement – Salvador Garcia	37
Employment Agreement – Raymond Polman	38
Employment Agreement – Martin Palacios	38
Employment Agreement – Connie Lillico	38
Discretionary Bonus Payments	38
Option Based Awards	39
Benefits and Perquisites	39
Incentive Compensation Clawback Policy	39
Retirement Policy	39
Review / Modifications	40
Executive Compensation-Related Fees	40
Performance Graph	40
Incentive Plan Awards	43
Outstanding share-based awards and option-based awards	43
Value Vested or Earned During the Year	43
Option-Based Awards – Outstanding at Year End	44



Termination and Change of Control Benefits	45

PART SIX OTHER INFORMATION	45
Normal Course Issuer Bid	45
Securities Authorized for Issuance Under Equity Compensation Plans	46
Indebtedness of Directors and Senior Officers to the Company	46
Interest of Informed Persons in Material Transactions	46
Management Contracts	46
Audit Committee	47
Additional Information	47
Approval of the Board of Directors	47
Certificate	47

APPENDIX “A” BOARD OF DIRECTORS MANDATE	A-1

NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS


1.	To set the number of directors of the Company at five.


2.	To elect the directors of the Company to serve until the next annual general meeting of shareholders.


3.	To appoint Deloitte LLP, Independent Registered Public Accounting Firm, as auditors for the Company to hold office until the next annual general meeting of shareholders of the Company and to authorize the directors to fix the remuneration to be paid to the auditors.


4.	To approve the Amended and Restated Stock Option Plan of the Company, as more particularly described in the accompanying Information Circular.


5.	To vote on an advisory resolution with respect to the Company’s approach to executive compensation.


6.	To transact such other business as may properly come before the Meeting or any adjournment or adjournments thereof.

The record date for notice and for voting at the Meeting is April 3, 2017. Only registered shareholders at the close of business on April 3, 2017 will be entitled to vote at the Meeting.

The Company has adopted the notice and access model (“Notice and Access”) provided for under National Instrument 54-101 - Communication with Beneficial Owners of Securities of a Reporting Issuer for the delivery of the Notice of Meeting, information circular, financial statements and management’s discussion and analysis for the year ended December 31, 2016 (collectively, the “Meeting Materials”) to shareholders for the Meeting. Under Notice and Access, instead of receiving printed copies of the Meeting Materials, shareholders receive a Notice and

-iv-

Access notification containing details of the Meeting date, location and purpose, as well as information on how they can access the Meeting Materials electronically. Shareholders with existing instructions on their account to receive printed materials will receive a printed copy of the Meeting Materials. Other shareholders wishing to receive a printed copy of the Meeting Materials should follow the instructions set out in the Notice and Access notification.

DATED at Vancouver, British Columbia, this 17^th day of April, 2017.

ON BEHALF OF THE BOARD OF DIRECTORS
OF FIRST MAJESTIC SILVER CORP.

“Keith Neumeyer”

Keith Neumeyer
President and Chief Executive Officer

PROXY SUMMARY

This summary highlights information contained in this Management Information Circular (the “Information Circular”). The summary does not contain all of the information that you should consider. Shareholders are encouraged to read the entire Information Circular carefully prior to voting.

Annual General Meeting Details



Date	Location	Time

Thursday, May 25, 2017	The Sutton Place Hotel 845 Burrard Street Vancouver, BC V6Z 2K6	10:00 a.m. (Vancouver time)

Shareholder Voting Matters



Matter to be Voted on	Management’s Recommendation	Reference Page

Election of Directors	For each nominee	Page 7
Appointment and Remuneration of Auditors	For	Page 16
Approval of the Amended and Restated Stock Option Plan of the Company	For	Page 16
Advisory Vote on Executive Compensation	For	Page 20

Director Nominees

Shareholders will be asked to elect five directors to act as members of the Board until the next annual general meeting of shareholders unless an office is earlier vacated. The following chart provides summary information about each director nominee. Additional information regarding the nominees may be found beginning at page 6 of this Information Circular.

FIRST MAJESTIC SILVER CORP. - 2017 MANAGEMENT INFORMATION CIRCULAR

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Name	Principal Occupation	Year First Appointed	Independent	Committee Participation
Name	Principal Occupation	Year First Appointed	Independent	Audit	Corporate Governance	Compensation and Nominating
Keith Neumeyer	President and Chief Executive Officer of the Company	1998	No
Douglas Penrose	Retired	2006	Yes	Chair	●	●⁽¹⁾
Marjorie Co	Business Development Professional/Lawyer	2017	Yes	●⁽¹⁾
Robert A. McCallum	Retired	2005	Yes	●	●	Chair
David Shaw	Mining Investment Consultant	2005	Yes		Chair	●

(1) Not presently a member of the applicable committee. In order to comply with the Company’s Director Tenure Policy, Mr. Tony Pezzotti will not be standing for re-election as a director at the Meeting and will cease to be a director of the Company as of the closing of the Meeting. Management anticipates that Ms. Co will be appointed to the Audit Committee in place of Mr. Pezzotti and that Mr. Penrose will be appointed to the Compensation and Nominating Committee in place of Mr. Pezzotti following closing of the Meeting.

FIRST MAJESTIC SILVER CORP. - 2017 MANAGEMENT INFORMATION CIRCULAR

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PART 1

VOTING INFORMATION

Solicitation of Proxies

This Information Circular is furnished in connection with the solicitation of proxies by the management of First Majestic Silver Corp. (“First Majestic” or the "Company"). The accompanying form of proxy (the “Proxy”) is for use at the Annual General Meeting of shareholders of the Company (the "Meeting") to be held on May 25, 2017 at the time and place and for the purposes set forth in the accompanying Notice of Meeting and at any adjournment thereof. While it is expected that the solicitation will be primarily by mail, proxies may be solicited personally or by telephone by the directors and employees of the Company (for no additional compensation). The Company may retain other persons or companies to solicit proxies on behalf of management, in which event customary fees for such services will be paid. All costs of solicitation will be borne by the Company.

Unless otherwise indicated, all references in this Information Circular to “$” refer to United States dollars, unless Canadian dollars (C$) are indicated. Unless otherwise indicated, any United States dollar amounts which have been converted from Canadian dollars have been converted at an exchange rate of C$1.00 = US$0.7448, being the noon exchange rate quoted by the Bank of Canada on December 31, 2016.

This Information Circular is dated April 17, 2017. Unless otherwise stated, information in this Information Circular is as of April 3, 2017.

Notice and Access Process

The Company has adopted the notice and access model (“Notice and Access”) provided for under National Instrument 54-101 - Communication with Beneficial Owners of Securities of a Reporting Issuer (“NI 54-101”) for the delivery of the Notice of Meeting, this Information Circular, financial statements and management’s discussion and analysis for the year ended December 31, 2016 (collectively, the “Meeting Materials”) to shareholders for the Meeting. The Company has adopted this alternative means of delivery in order to further its commitment to environmental sustainability and to reduce its printing and mailing costs.

Under Notice and Access, instead of receiving printed copies of the Meeting Materials, shareholders receive a Notice and Access notification containing the Meeting date, location and purpose, as well as information on how they can access the Meeting Materials electronically. Shareholders with existing instructions on their account to receive printed materials will receive a printed copy of the Meeting Materials.

Shareholders who receive a Notice and Access notification can request that printed copies of the Meeting Materials be sent to them by postal delivery at no cost to them up to one year from the date of the filing of this Information Circular on SEDAR. Shareholders with questions about the Notice and Access system, or who would like to request printed copies of the Meeting Materials, should contact the Company’s Corporate Secretary, toll-free, at 1-866-529-2807. A request for printed copies which are required in advance of the Meeting should be made no later than May 12, 2017 in order to allow sufficient time for mailing.

FIRST MAJESTIC SILVER CORP. - 2017 MANAGEMENT INFORMATION CIRCULAR

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Voting Instructions

Registered Shareholders

Registered shareholders are persons who hold common shares that are registered directly in their names. Registered shareholders may vote by attending the Meeting, by appointing proxyholders, by telephone or by voting online.

Registered shareholders that wish to vote in person at the Meeting do not need to complete and deposit the form of proxy (the “Proxy”) and should register with the scrutineer at the Meeting.

Registered shareholders that wish to appoint a proxyholder to vote at the Meeting may complete the Proxy. The Proxy names a director and/or officer of the Company as a proxyholder/alternate proxyholder (the “Management Designees”). Registered shareholders that wish to appoint another person (who need not be a shareholder) to serve as proxyholder/alternate proxyholder at the Meeting may do so by striking out the names of the Management Designees and inserting the name(s) of the desired proxyholder/alternate proxyholder in the blank space provided in the Proxy. Registered shareholders may direct the manner in which their common shares are to be voted or withheld from voting at the Meeting by marking their instructions on the Proxy. Any common shares represented by the Proxy will be voted or withheld from voting by the Management Designees in accordance with the instructions of registered shareholders contained in the Proxy. If there are no instructions, those common shares will be voted “for” each matter set out in the Notice of Meeting. The Proxy grants the proxyholder discretion to vote as such person sees fit on any amendments or variations to matters identified in the Notice of Meeting, or any other matters which may properly come before the Meeting.

At the time of printing of this Information Circular, management knows of no other matters which may come before the Meeting other than those referred to in the Notice of Meeting. No person who is a director of the Company has informed Management that he intends to oppose any action to be taken by Management at the Meeting.

Alternatively, registered shareholders may vote by telephone (1-866-732-8683) or online (www.investorvote.com) using the control number listed on the Proxy.

To be valid, a completed Proxy must be deposited with or telephonic/online votes must be received by Computershare Investor Services Inc. (“Computershare”) by 10:00 a.m. (local time in Vancouver, British Columbia) on May 23, 2017 or at least 48 hours (excluding Saturdays, Sundays and holidays) before any postponement or adjournment of the Meeting.

A Proxy may be revoked by:

(a) completing a Proxy with a later date and depositing it by the time and at the place noted above;

(b) signing and dating a written notice of revocation and delivering it to Computershare, or by transmitting a revocation by telephonic or electronic means, to Computershare, at any time up to and including the last business day preceding the day of the Meeting, or any postponement or adjournment, at which the Proxy is to be used, or delivering a written notice of revocation and delivering it to the Chairman of the Meeting on the day of the Meeting or any postponement or adjournment; or

(c) attending the Meeting or any postponement or adjournment and registering with the scrutineer as a shareholder present in person.

FIRST MAJESTIC SILVER CORP. - 2017 MANAGEMENT INFORMATION CIRCULAR

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Non-Registered Holders

Non-registered shareholders are persons who hold common shares that are registered in the name of an intermediary (such as a broker, bank, trust company, securities dealer, trustees or administrators of RRSP’s, RRIF’s, RESP’s or similar plans) or clearing agency (such as CDS Clearing and Depository Services Inc. or The Depository Trust Company). Non-registered shareholders may vote in person or through a proxyholder at the Meeting or through intermediaries using the voting instruction form (or other form). Alternatively, some non-registered shareholders may be able to vote by telephone or online and should refer to the voting instruction form (or other form) for further details and instructions.

If a non-registered shareholder wishes to vote in person or through a proxyholder at the Meeting, it is critical to follow the required procedures for appointing proxyholders given that the Company does not have unrestricted access to the names of the Company’s non-registered shareholders and accordingly would not otherwise have any record of a non-registered shareholder’s entitlement to vote at the Meeting.

Non-registered shareholders may appoint themselves or nominees as proxyholders using one of the following procedures:

(a) carefully following the instructions for appointing a proxyholder contained in the voting instruction form (or other form) and ensuring that such request is communicated to the appropriate person well in advance of the Meeting and in accordance with such instructions; or

(b) unless prohibited by applicable corporate law, submitting any other document in writing to the Company requesting the non-registered shareholder or its nominee be given authority to attend, vote and otherwise act for and on behalf of the registered shareholder in respect of all matters that may come before the Meeting or any postponement or adjournment by 10:00 a.m. (Vancouver, British Columbia time) on May 23, 2017 (or before 72 hours, excluding Saturdays, Sundays and holidays before any postponement or adjournment of the Meeting).

Non-registered shareholders that wish to vote through their intermediaries using the voting instruction form (or other form) accompanying the Notice and Access notification should carefully follow the instructions contained in the voting instruction form (or other form) accompanying the Notice and Access notification and should ensure that such instructions are communicated to the appropriate person well in advance of the Meeting.

Non-registered shareholders should refer to the voting instruction form (or other form) accompanying the Notice and Access notification to determine if telephonic or online voting is available.

Non-registered shareholders that wish to change their voting instructions or to appoint a proxyholder after delivering voting instructions in accordance with the instructions on a voting instruction form (or other form) accompanying the Notice and Access notification should contact the Company’s Corporate Secretary to discuss whether this is possible and what procedures must be followed.

Distribution to Non-Registered Shareholders

Pursuant to the provisions of NI 54-101, the Company is sending the Notice and Access notification to both registered and non-registered shareholders. Non-registered shareholders fall into two categories: those who object to their identity being known to the Company (“OBOs”) and those who do not object to their identity being made known to the Company (“NOBOs”).

The Company is sending the Notice and Access notification directly to NOBOs pursuant to NI 54-101. If you are a non-registered shareholder, and the Company or its agent has sent the Notice and Access notification directly to you, your name and address and information about your holdings of securities have been obtained in accordance with applicable securities regulatory requirements from the intermediary holding on your behalf. By choosing to send the Notice and Access notification to you directly, the Company (and not the intermediary holding common shares on your behalf) has assumed responsibility for (i) delivering the Notice and Access notification to you, and (ii) executing your proper voting instructions.

FIRST MAJESTIC SILVER CORP. - 2017 MANAGEMENT INFORMATION CIRCULAR

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The Company will assume the costs of delivery of proxy-related materials for the Meeting to OBOs.

Voting Shares and Principal Holders Thereof

The authorized capital of the Company consists of an unlimited number of common shares without par value. As at April 3, 2017 there were 165,065,914 common shares without par value issued and outstanding.

Only registered shareholders of record at the close of business on April 3, 2017 (the “Record Date”) who either personally attend the Meeting or who have completed and delivered a Proxy or, non-registered shareholders who have delivered, a voting instruction form, in the manner and subject to the provisions described above shall be entitled to vote or to have their shares voted at the Meeting.

Each shareholder is entitled to one vote for each common share held as of the Record Date. The failure of any shareholder to receive the Notice of Meeting does not deprive such shareholder of his or her entitlement to vote at the Meeting.

To the knowledge of the directors and senior officers of the Company, there are no persons or companies who beneficially own or exercise control or direction, directly or indirectly, over shares carrying more than 10% of the voting rights attached to all outstanding shares of the Company.

PART 2
BUSINESS OF THE MEETING

The Meeting will address the following matters:


1.	Receiving the Company’s audited consolidated financial statements for the year ended December 31, 2016, together with the auditor’s report thereon.


2.	Setting the number of directors at five.


3.	Electing the directors who will serve until the next annual general meeting of shareholders.


4.	Appointing the auditors that will serve until the next annual general meeting of shareholders and authorizing the board of directors to set their remuneration.


5.	Approving the Amended and Restated Stock Option Plan of the Company.


6.	Voting on an advisory resolution with respect to the Company’s approach to executive compensation.


7.	Any such other business as may properly be brought before the Meeting.

Receiving the Consolidated Financial Statements

The audited financial statements of the Company for the year ended December 31, 2016, together with the auditor’s report on those statements (the “Financial Statements”), will be presented to the shareholders at the Meeting. The Financial Statements are included within the Company’s 2016 Annual Report and are available at www.firstmajestic.com/s/AGM.asp or under the Company’s profile at www.sedar.com. A paper copy may be requested, at no charge to the shareholder, by calling the Corporate Secretary of the Company toll-free at 1-866-529-2807.

FIRST MAJESTIC SILVER CORP. - 2017 MANAGEMENT INFORMATION CIRCULAR

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Election of Directors

The number of directors on the board of directors (the “Board of Directors” or “Board”) of the Company is currently set at six. Tony Pezzottti has advised the Company that he will not be standing for re-election at the Meeting. Accordingly, Shareholders will be asked at the Meeting to pass an ordinary resolution to fix the number of directors at five.

The term of office of each of the present directors expires at the close of the Meeting. Management proposes to nominate the persons listed below in “Nominees for Election of Directors” for election as directors at the Meeting and the Management Designees named in the Proxy intend to vote for the election of these nominees. In the absence of instructions to the contrary, all Proxies will be voted “For” the nominees herein listed. Each director elected at the Meeting will hold office until the Company’s next annual general meeting, unless his or her office is earlier vacated. Management does not contemplate that any of the nominees will be unable to serve as a director. In the event that prior to the Meeting any of the listed nominees withdraws or for any other reason will not stand for election at the Meeting, it is intended that discretionary authority shall be exercised by the Management Designees or other proxyholder/alternate proxyholder, as the case may be, named in the Proxy as nominee to vote the shares represented by the Proxy for the election of any other person or persons nominated by the Company to stand for election as directors, unless the shareholder has specified in his, her or its Proxy that the shareholder’s shares are to be withheld from voting on the election of directors.

Majority Voting Policy

On April 11, 2013, the Board adopted a policy (the “Majority Voting Policy”) which requires that any nominee for director for which there are a greater number of votes “withheld” than votes “for” his or her election will be required to tender his or her resignation as a director of the Company. The Majority Voting Policy was amended on May 20, 2016 and applies only to uncontested elections, which are elections in which the number of nominees for election as director is equal to the number of positions available on the Board. If a nominee for director is required under the Majority Voting Policy to tender his or her resignation, the Board will refer the resignation to the Compensation and Nominating Committee (except in certain circumstances, in which case the Board will review the resignation without reference to the Compensation and Nominating Committee) which will consider the director’s resignation and will recommend to the Board whether or not to accept it. The Compensation and Nominating Committee will generally be expected to recommend accepting the resignation, except in situations where extraordinary circumstances would warrant the applicable director to continue to serve on the Board. The Board will act on the Compensation and Nominating Committee’s recommendation within 90 days following the certification by the scrutineer of the voting results of the applicable annual meeting and will promptly disclose by press release its decision whether to accept the director’s resignation, including the reasons for rejecting the resignation, if applicable. A director who tenders his or her resignation pursuant to the Majority Voting Policy will not participate in any meeting of the Board or the Compensation and Nominating Committee at which the resignation is considered.

Pursuant to the advance notice policy (the “Advanced Notice Policy”) adopted by the Board of Directors on April 11, 2013, as amended, on March 14, 2017 any additional director nominations for the Meeting must be received by the Company in compliance with the Advance Notice Policy no later than the close of business on April 20, 2017. No such nominations have been received by the Company prior to the date hereof.

Director Tenure Policy

On March 6, 2015, the Board adopted a policy to ensure appropriate and ongoing renewal of the Board of Directors in order to sustain Board performance and maintain Board expertise (the “Director Tenure Policy”). The Director Tenure Policy was amended on December 3, 2015. Pursuant to the Director Tenure Policy, subject to receiving strong annual performance assessments and being annually re-elected by shareholders, non-management members of the Board may serve on the Board for the following terms:


•	For a maximum of 15 years if such member joined the Board prior to January 1, 2015; or


•	For a maximum of 10 years if such member joined the Board on or after January 1, 2015.

FIRST MAJESTIC SILVER CORP. - 2017 MANAGEMENT INFORMATION CIRCULAR

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The Board may, on recommendation from the Compensation and Nominating Committee extend the term of a non-management director who joined the Board on or after January 1, 2015 for a subsequent five year period.

Tony Pezzotti has been a director of the Company since his initial appointment in 2001. In accordance with the Director Tenure Policy, Mr. Pezzotti will not be standing for re-election at the Meeting and will cease to be a director of the Company as of the closing of the Meeting.

As of the date of this Circular, the average tenure of the non-management directors of the Company (excluding Mr. Pezzotti) was eight years.

Nominees for Election as Directors

The tables below set out the names of each of management’s nominees for election as directors, the municipality and province or state and country in which each is ordinarily resident, all offices of the Company now held by each of them, each nominee’s principal occupation, business or employment, the period of time for which each nominee has served as a director of the Company and the number of shares of the Company beneficially owned by each nominee, directly or indirectly, or over which each nominee exercised control or direction as at April 3, 2017, and as at December 31, 2016 and 2015. All of the proposed nominees, except Marjorie Co, were duly elected as directors at the last Annual General Meeting of shareholders held on May 26, 2016.

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KEITH NEUMEYER

Zug, Switzerland Age: 56 Director since December 1998 Not Independent Principal Occupation: President and Chief Executive Officer of the Company since November 2001	Mr. Neumeyer has worked in the investment community for over 32 years. Mr. Neumeyer began his career at a number of Canadian national brokerage firms and moved on to work with several publicly traded companies in the resource and high technology sectors. His roles have included senior management positions and directorships in the areas of finance, business development, strategic planning and corporate restructuring. Mr. Neumeyer was the original and founding President of First Quantum Minerals Ltd. (T-FM). Mr. Neumeyer founded First Majestic in 2002. Mr. Neumeyer has also listed a number of companies on the Toronto Stock Exchange (“TSX”) and as such has extensive experience dealing with the financial, regulatory, legal and accounting issues that are relevant in the investment community.
	Voting Results of 2016 Annual General Meeting					2016 Continuing Education
	For	Withheld				TD Securities Mining Conference BMO Capital Markets Global Metals & Mining Conference Prospectors & Developers Association of Canada (PDAC) Conference Mines & Money Asia Investment U Conference European Gold Forum BAML Global Metals, Mining and Steel Conference Scotiabank Summer Solstice Silver Sessions Sprott Natural Resources Symposium Rodman and Renshaw Conference Denver Gold Forum Mine Expo International London Metals Exchange Week International Precious Metals & Commodities Show The Silver Summit and Resource Expo Multiple site visits to the Company’s mines
	99.60%	0.40%

	Board and Committee Membership			Attendance			Other Reporting Issuer Directorships
	Board			9 / 9	100%		First Mining Finance Corp. (Chairman)
	Primary Skills and Expertise
	Strategic Leadership, International Business, Mergers and Acquisitions, Corporate Finance, Industry Expertise
	Options and Common Shares (Held as at April 3, 2017)
	Year	Options	Common Shares				Total Value of Common Shares and in-the-money Options⁽¹⁾	Meets Ownership Guidelines
	2017	1,390,000	3,322,000				$30,548,808	Yes
	Options and Common Shares (Held as at December 31)
	Year	Options	Common Shares				Total Value of Common Shares and in-the-money Options⁽²⁾⁽³⁾	Meets Ownership Guidelines
	2016	1,090,000	3,322,000				$27,430,775	Yes
	2015	840,000	3,322,000				$10,824,654	Yes


(1)	The value of the common shares at April 3, 2017 is based on the closing price on the TSX as of April 3, 2017 of C$11.25 converted to $8.40 using the April 3, 2017 exchange rate of $0.7469.


(2)	The value at December 31, 2016 is based on the closing price on the TSX as of December 31, 2016 of C$10.26 converted to $7.64 at year end exchange rate of $0.7448.


(3)	The value at December 31, 2015 is based on the closing price on the TSX as of December 31, 2015 of C$4.51 converted to $3.26 at year end exchange rate of $0.7225.

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DOUGLAS PENROSE, B. Comm., CPA, CA

Summerland, British Columbia, Canada Age: 69 Director since September 2006 Chairman of the Board since January 1, 2012 Independent Principal Occupation: Retired	Mr. Penrose received his Bachelor of Commerce degree from the University of Toronto. He has been a member of the Institute of Chartered Accountants of Ontario from 1974 to 2008 and the Institute of Chartered Accountants of British Columbia since 1978. Mr. Penrose brings over 20 years of experience in leadership positions in accounting and corporate finance. Mr. Penrose was formerly the Vice President of Finance and Corporate Services for the British Columbia Lottery Corporation.
	Voting Results of 2016 Annual General Meeting					2016 Continuing Education
	For	Withheld				Site visits to Company’s mines
	99.57%	0.43%
	Board and Committee Membership			Attendance		Other Reporting Issuer Directorships
	Board Audit Committee (Chair) Corporate Governance Committee			9 / 9 8 / 8 0 / 0	100% 100% N/A	None
	Primary Skills and Expertise
	Strategic Leadership, International Business, Mergers and Acquisitions, Corporate Finance, Industry Expertise, Accounting, Risk Management, Human Resources, Information Technology
	Options and Common Shares (Held as at April 3, 2017)
	Year	Options	Common Shares			Total Value of Common Shares and in-the-money Options⁽¹⁾	Meets Ownership Guidelines
	2017	187,089	60,000			$1,059,601	Yes
	Options and Common Shares (Held as at December 31)
	Year	Options	Common Shares			Total Value of Common Shares and in-the-money Options⁽²⁾⁽³⁾	Meets Ownership Guidelines
	2016	162,554	60,000			$897,088	Yes
	2015	104,538	60,000			$195,509	Yes


(1)	The value of the common shares at April 3, 2017 is based on the closing price on the TSX as of April 3, 2017 of C$11.25 converted to $8.40 using the April 3, 2017 exchange rate of $0.7469.


(2)	The value at December 31, 2016 is based on the closing price on the TSX as of December 31, 2016 of C$10.26 converted to $7.64 at year end exchange rate of $0.7448.


(3)	The value at December 31, 2015 is based on the closing price on the TSX as of December 31, 2015 of C$4.51 converted to $3.26 at year end exchange rate of $0.7225.

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MARJORIE CO, BSc, LLB, MBA

Vancouver, BC Age: 48 Director since March 2017 Independent Principal Occupation: Business Development Professional/Lawyer	Ms. Co brings over 20 years of legal, business and corporate development experience. She currently provides business development and legal advice for technology-focused organizations and start-up companies. Her previous roles have included being the Director of Strategic Relations at Westport Innovations and Chief Development Officer at The Proof Centre of Excellence. Ms. Co was called to the British Columbia Bar in 1996 and is a Member of the Law Society of British Columbia. Ms. Co obtained her Master of Business Administration and Bachelor of Laws degrees from the University of British Columbia, and her Bachelor of Science degree from Simon Fraser University.
	Voting Results of 2016 Annual General Meeting				2016 Continuing Education
	For	Withheld			Licensing Executives Society Annual Meeting Wearables: Data Driven Improvements to Our Lives Protecting Confidential Business Information
	N/A	N/A
	Board and Committee Membership			Attendance	Other Reporting Issuer Directorships
	Board			N/A	None
	Primary Skills and Expertise
	Strategic Leadership, International Business, Mergers and Acquisitions, Corporate Finance, Accounting, Risk Management
	Options and Common Shares (Held as at April 3, 2017)
	Year	Options	Common Shares		Total Value of Common Shares and in-the-money Options⁽¹⁾	Meets Ownership Guidelines
	2017	21,997	0		$Nil	No
	Options and Common Shares (Held as at December 31)
	Year	Options	Common Shares		Total Value of Common Shares and in-the-money Options	Meets Ownership Guidelines
	2016	N/A	N/A		$N/A	No
	2015	N/A	N/A		$N/A	No


(1)	The value of the common shares at April 3, 2017 is based on the closing price on the TSX as of April 3, 2017 of C$11.25 converted to $8.40 using the April 3, 2017 exchange rate of $0.7469.

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ROBERT A. McCALLUM, B.Sc., P.Eng

North Vancouver, British Columbia, Canada Age: 80 Director since December 2005 Independent Principal Occupation: Retired	Mr. McCallum, now retired, was most recently the president of Kensington Resources Ltd. (“Kensington”), a Canadian public mining company, prior to its merger with Shore Gold Inc. (SGF:TSX) (“Shore Gold”). During Mr. McCallum's tenure at Kensington, he advanced Kensington from a junior exploration company to an advanced-stage development company, increasing the company's profile and eventually orchestrating a merger with Shore Gold. Mr. McCallum graduated in 1959 from the University of Witwatersrand, South Africa, with a Bachelor of Engineering (Mining) followed in 1971 by a PMD (Program for Management Development) at Harvard Graduate School of Business, Boston, Massachusetts. He has a wealth of experience in mining having worked with DeBeers Consolidated Mines and Anglo American Corp Ltd. in South Africa followed by Denison Mines Limited, Cyprus Anvil Mining Corp. and Potash Corporation of Saskatchewan in Canada and Philex Mining in the Philippines.
	Voting Results of 2016 Annual General Meeting					2016 Continuing Education
	For	Withheld				Deloitte Director Series - Focus on the Audit Committee Deloitte Director Series – Long Termism and shareholder engagement Deloitte Director Series – Shifting enterprise risks: New action steps for the audit committee’s year end Site visits to Company’s mines
	99.39%	0.61%

	Board and Committee Membership			Attendance		Other Reporting Issuer Directorships
	Board Audit Committee Corporate Governance Committee			9 / 9 8 / 8 0 / 0	100% 100% N/A	None
	Primary Skills and Expertise
	Strategic Leadership, International Business, Mergers and Acquisitions, Corporate Finance, Operations, Industry Expertise, Risk Management, Human Resources, Government and Community Relations
	Options and Common Shares (Held as at April 3, 2017)
	Year	Options	Common Shares			Total Value of Common Shares and in-the-money Options⁽¹⁾	Meets Ownership Guidelines
	2017	126,089	65,000			$926,802	Yes
	Options and Common Shares (Held as at December 31)
	Year	Options	Common Shares			Total Value of Common Shares and in-the-money Options⁽²⁾⁽³⁾	Meets Ownership Guidelines
	2016	126,554	67,000			$912,529	Yes
	2015	104,538	67,000			$218,318	Yes


(1)	The value of the common shares at April 3, 2017 is based on the closing price on the TSX as of April 3, 2017 of C$11.25 converted to $8.40 using the April 3, 2017 exchange rate of $0.7469.


(2)	The value at December 31, 2016 is based on the closing price on the TSX as of December 31, 2016 of C$10.26 converted to $7.64 at year end exchange rate of $0.7448.


(3)	The value at December 31, 2015 is based on the closing price on the TSX as of December 31, 2015 of C$4.51 converted to $3.26 at year end exchange rate of $0.7225.

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DAVID SHAW, Ph.D.

Vancouver, British Columbia Canada Age: 65 Director since January 2005 Independent Principal Occupation: Mining Investment Consultant	Since completing his doctorate over 35 years ago, Mr. Shaw has worked both in the technical and financial communities within the resource industry. Seven years were spent with Chevron Resources (“Chevron”) in Calgary and Vancouver, employed initially as an in-house structural consultant on both metal and hydrocarbon exploration programs and then as a member of a hydrocarbon project financial evaluation team. Upon leaving Chevron, he initiated and developed the Resource Research Group at Charlton Securities Ltd., Calgary before assuming the position of Senior Mining Analyst, Corporate Finance, at Yorkton Securities Inc. in Vancouver. Throughout Mr. Shaw's career, he has built strong relationships with European financial institutions and the global mining community.
	Voting Results of 2016 Annual General Meeting					2016 Continuing Education
	For	Withheld				Prospectors & Developers Association of Canada (PDAC) Conference Property visit in Nevada Fieldwork in Morocco
	99.59%	0.41%
	Board and Committee Membership			Attendance		Other Reporting Issuer Directorships
	Board Corporate Governance Committee (Chair) Compensation and Nominating Committee			9 / 9 0 /0 2 / 2	100% N/A 100%	First Mining Finance Corp. Great Quest Fertilizer Ltd. Medallion Resources Ltd.
	Primary Skills and Expertise
	Strategic Leadership, International Business, Mergers and Acquisitions, Corporate Finance, Operations, Industry Expertise, Accounting, Risk Management, Human Resources
	Options and Common Shares (Held as at April 3, 2017)
	Year	Options	Common Shares			Total Value of Common Shares and in-the-money Options⁽¹⁾	Meets Ownership Guidelines
	2017	187,089	80,000			$1,227,653	Yes
	Options and Common Shares (Held as at December 31)
	Year	Options	Common Shares			Total Value of Common Shares and in-the-money Options⁽²⁾⁽³⁾	Meets Ownership Guidelines
	2016	162,554	80,000			$1,049,921	Yes
	2015	104,538	80,000			$260,678	Yes


(1)	The value of the common shares at April 3, 2017 is based on the closing price on the TSX as of April 3, 2017 of C$11.25 converted to $8.40 using the April 3, 2017 exchange rate of $0.7469.


(2)	The value at December 31, 2016 is based on the closing price on the TSX as of December 31, 2016 of C$10.26 converted to $7.64 at year end exchange rate of $0.7448.


(3)	The value at December 31, 2015 is based on the closing price on the TSX as of December 31, 2015 of C$4.51 converted to $3.26 at year end exchange rate of $0.7225.

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The information as to the municipality and province, state or country of residence, principal occupation, or business or employment and the number of shares beneficially owned by each nominee or over which each nominee exercises control or direction set out above has been furnished by the individual nominees as at April 3, 2017.

No director or proposed director of the Company is, or within the ten years prior to the date of this Information Circular has been, a director, chief executive officer or chief financial officer of any company, including the Company, that while that person was acting in that capacity:


(a)	was the subject of a cease trade order, similar order or an order that denied the company access to any exemption under securities legislation for a period of more than 30 consecutive days;


(b)	was subject to an order issued after the proposed director ceased to be a director, chief executive officer or chief financial officer and which resulted from an event that occurred while the proposed director was acting in the capacity as director, chief executive officer or chief financial officer; or


(c)	within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets.

No director or proposed director of the Company has, within the ten years prior to the date of this Information Circular, become bankrupt or made a proposal under any legislation relating to bankruptcy or insolvency, or been subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of that individual.

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Director Qualifications

As discussed below under “Statement of Corporate Governance Practices - Assessments”, the Board of Directors has adopted an annual formal assessment process. As a part of this process the Board of Directors assesses the skills and expertise necessary to provide effective oversight of the business of the Company. Following is a summary of the skills and expertise possessed by each of the director nominees named in this Information Circular. The lack of a specifically identified area of expertise does not mean that the person in question does not possess the applicable skill or expertise. Rather, a specifically identified area of expertise indicates that the Board of Directors currently relies upon that person for the skill or expertise.



	Keith Neumeyer	Marjorie Co	Robert McCallum	Douglas Penrose	David Shaw
Strategic Leadership - Experience guiding strategic direction and growth of an organization, preferably including the management of multiple significant projects and experience with corporate governance.	●	●	●	●	●
International Business - Experience working in a major organization that carries on business in one or more international jurisdictions, preferably in countries or regions where the Company has or expects to be developing operations.	●	●	●	●	●
Mergers and Acquisitions - Experience with significant mergers and acquisitions and/or investment banking.	●	●	●	●	●
Corporate Finance - Experience in the field of finance, specifically in corporate lending/borrowing transactions and public market transactions.	●	●	●	●	●
Operations - Senior level experience with a major resource company with mineral reserves, exploration and operations expertise, and particular experience developing and implementing strong safety, environmental and operational standards.			●		●
Industry Expertise - Experience in the mining industry, market and international regulatory environment.	●		●	●	●
Accounting - Experience as a professional accountant, a chief financial officer or a chief executive officer or member of the Audit Committee of a reporting issuer; strong understanding of the financial side of an organization, including familiarity with financial reports, internal financial controls and other financial requirements.		●		●	●
Risk Management - Experience implementing best practices for risk management, including assessing and addressing potential risks of a major organization.		●	●	●	●
Human Resources - Experience as a board compensation committee member or senior officer responsible for the oversight of compensation and benefit programs, having particular experience with executive compensation programs.			●	●	●
Information Technology - Experience developing and implementing leading information technology practices at a major organization.				●
Government and Community Relations - Experience with and fulsome understanding of governmental and public policy and experience developing strong community relations and working relationships with communities and mining regulators in the jurisdictions where the Company operates.			●

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Appointment of Auditors

The auditors for the Company are Deloitte LLP, Independent Registered Public Accounting Firm, of Four Bentall Centre, 2800 – 1055 Dunsmuir Street, Vancouver, British Columbia V7X 1P4. At the Meeting, shareholders will be asked to approve (a) the re-appointment of Deloitte LLP as auditors for the Company to hold office as such until the next Annual General Meeting of the Company and (b) a resolution authorizing the Board of Directors to fix the remuneration to be paid to the auditors for the upcoming year. Deloitte LLP was first appointed as auditors for the Company on December 14, 2004.

Approval of the Amended and Restated Stock Option Plan

The Board of Directors is seeking shareholder approval for adoption of its amended and restated stock option plan (the “Amended and Restated Stock Option Plan”), subject to regulatory approval, and as more particularly described below.

The Amended and Restated Stock Option Plan is an amendment and restatement of the Company’s current 2014 Stock Option Plan, which was approved by shareholders on May 27, 2014. Pursuant to the requirements of the TSX, the Company must obtain shareholder approval of its stock option plan at least every three years. The Board of Directors has deemed it appropriate to update the 2014 Stock Option Plan to reflect TSX current policies and best practices and accordingly its submitting the Amended and Restated Stock Option Plan to the shareholders. There are currently 11,181,935 stock options outstanding under the 2014 Stock Option Plan representing approximately 7% of the current outstanding common shares of the Company, which will become subject to the Amended and Restated Stock Option Plan. If the Amended and Restated Stock Option Plan is approved, options to purchase up to 5,324,656 common shares will be available to be granted, which, when combined with outstanding options, represents 10% of the current outstanding common shares of the Company. If the Amended and Restated Stock Option Plan is not approved by the shareholders, the Company will be unable to grant any further options and any outstanding options would remain subject to the terms of the 2014 Stock Option Plan.

The Amended and Restated Stock Option Plan is attached as Appendix “B” to this Information Circular.

The Board of Directors is of the view that the Amended and Restated Stock Option Plan is required in order to provide incentive to the directors, officers, employees, management and others who provide service to the Company to act in the best interests of the Company.

The material terms of the Amended and Restated Stock Option Plan, as well as any material differences between the Amended and Restated Stock Option Plan, and the 2014 Stock Option Plan are set out below.


•	Maximum Number of Shares Issuable - The maximum number of shares issuable under the Amended and Restated Stock Option Plan, together with the number of shares issuable under outstanding options granted otherwise than under the 2014 Stock Option Plan, shall not in the aggregate exceed 10% of the issued and outstanding shares (calculated as at the grant date of such options).

•

Expiration Date - Options granted before May 25, 2017 shall expire on be the fifth anniversary of the award date of such option and options granted after May 25, 2017 shall expire 10 years from the date of grant, unless terminated earlier in accordance with the Amended and Restated Stock Option Plan, subject to expirations that occur during a trading blackout. The 2014 Stock Option Plan provides that all options would expire on the fifth anniversary of the award date of such options.


•	Exercise Price - The exercise price is determined by the Board, but is not to be less than the closing price of the shares on the TSX on the last day immediately preceding the grant date.

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•

Vesting Schedule - Options vest in 25% increments on each of the 12 month, 18 month, 24 month and 30 month anniversaries from the grant date. Options granted to the Chief Executive Officer of the Corporate which have an initial expiry date which is more than five years after the Award Date shall instead vest in equal portions on each of the first, second, third, fourth and fifth anniversaries of the Award Date (the “Chief Executive Officer Vesting Provisions”). The 2014 Stock Option Plan did not contain the Chief Executive Officer Vesting Provisions.

•

Prohibitions on Granting - The Company is prohibited from granting options to (a) any one person where the grant would result in such person holding options to acquire shares in excess of 5% of the issued and outstanding shares of the Company, (b) insiders where such grant would result in the number of shares (i) issued to insiders within any one year period, or (ii) issuable to insiders, at any time, under the Amended and Restated Stock Option Plan, when combined with all of the Company’s other security-based compensation arrangements, exceeding 10% of the issued and outstanding shares as at the award date (c) a non-employee director where such grant would result in the non-employee directors, as a group, holding options to acquire shares in excess of 1% of the issued and outstanding shares, and (d) any non-employee director where such grant would result in such person having received options during the 12 month period ending on the award date which have a combined value in excess of C$100,000.

•

Death or Disability - In the event of the death or disability of an option holder while he or she is a director or an employee or the deemed death or disability in the case of a consultant of the Company, the expiry date shall be one year from the date of death or disability. Any options held by an option holder who was a director on the date of death or disability and which are unvested as of such date will automatically vest in full as of such date and become immediately exercisable (the “Director Vesting Provisions”). Any options held by an option holder who was not a director on the date of death or disability and which are unvested as of such date will not vest. Notwithstanding, the Board has the discretion to determine that any unvested options will immediately vest and become exercisable. The 2014 Stock Option Plan did not contain the Director Vesting Provisions.

•

Termination of Employment - In the event that an option holder is an employee and ceases to be employed by the Company (other than by reason of death, disability, mandatory retirement, a change of control, termination for cause or as a result of an order of a regulatory body), the expiry date of the option shall be the 60th day following the date the employee ceased to be employed. If the option holder ceases to be an employee as a result of (i) termination for cause; or (ii) by order of the British Columbia Securities Commission, the Ontario Securities Commission, the TSX or any other regulatory body having jurisdiction to so order, the expiry date shall be the date the option holder ceased to be an employee. All options which are not vested as of the date the employee ceases to be employed shall not vest unless the option holder continues to be a director or consultant of the Company, in which case the expiry date and the vesting of the options shall be unchanged. Notwithstanding, the Board has the discretion to determine that any unvested options will immediately vest and become exercisable.


•	Mandatory Retirement - If an employee ceases to be an employee by reason of mandatory retirement, all unvested options will immediately vest and become exercisable and the expiry date will be one year from the date of retirement.

•

Ceasing to be a Director - In the event that an option holder is a director of the Company and ceases to be a director other than by reason of death or disability, all unvested options shall immediately vest and become exercisable and the expiry date of the option shall be the 180th day following the date the option holder ceased to be a director of the Company. The 2014 Stock Option Plan provided that options held by directors of the Company would, upon such director ceasing to be a director other than by reason of death or disability, would immediately vest and remain exercisable for 90 days. If the option holder ceases to be

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a director but continues to be an employee or consultant, the options will not so vest and the expiry date will remain unchanged. If the option holder ceases to be a director as the result of certain prescribed circumstances in the Amended and Restated Stock Option Plan, the expiry date of the options will be the cessation date and any unvested options will not vest.

•

Termination/Expiration of Consultant Agreement - In the event that an option holder is a consultant of the Company and the option holder ceases to be a consultant by reason of the completion or termination of the contract under which the consultant provides services to the Company, the expiry date of the option shall be the 60th day following such cessation date and any options which are unvested as of the date the option holder ceases to be a consultant will not vest, unless the option holder ceases to be a consultant but continues to be engaged as a director or employee of the Company, in which case the expiry date and vesting shall remain unchanged. Notwithstanding, the Board has the discretion to determine that any unvested options will immediately vest and become exercisable.


•	Clawback Policy - Options granted under the Amended and Restated Stock Option Plan may be subject to forfeiture in certain instances under the Company’s Code of Ethical Conduct. See “Executive Compensation - Incentive Compensation Clawback Policy”.


•	Assignment - Options are non-assignable and non-transferable otherwise than by will or the laws of descent and distribution or to a holding entity, RRSP, RRIF or TFSA of the option holder.


•	Amendments Not Requiring Shareholder Approval - The Board may, without shareholder approval, amend, suspend or terminate the Amended and Restated Stock Option Plan or any option granted under the Amended and Restated Stock Option Plan, including, without limiting the generality of the foregoing:


(a)	altering, extending or accelerating the terms and conditions of vesting of any options;


(b)	a change to the termination provisions of the Amended and Restated Stock Option Plan or any option which does not entail an extension beyond the original expiry date;


(c)	amending or modifying the mechanics of exercise of options;


(d)	effecting amendments of a “housekeeping” or ministerial nature (i.e. any amendment necessary to comply with the provisions of applicable laws or rules, regulations and policies of the TSX);


(e)	effecting amendments respecting the administration of the Amended and Restated Stock Option Plan;


(f)	effecting amendments necessary to suspend or terminate the Amended and Restated Stock Option Plan;


(g)	amending the change of control provisions of the Amended and Restated Stock Option Plan, provided that any amendment does not allow option holders to be treated any more favourably than other holders of shares with respect to the consideration holders would be entitled to receive upon a change of control; and


(h)	any other amendment, whether fundamental or otherwise, not requiring shareholder approval under applicable law or pursuant to the rules, regulations and policies of the TSX,

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provided that any such amendment does not, without the consent of the option holder, alter the terms or conditions of any option or impair any right of any option holder pursuant to any option awarded prior to such amendment in a manner materially prejudicial to such option holder.


•	Amendments Requiring Shareholder Approval - Shareholder approval (or disinterested shareholder approval, if required by the policies of the TSX) will be required for the following types of amendments:


(a)	any increase in the number of shares issuable under the Amended and Restated Stock Option Plan except such adjustments as are necessary in respect of a change in or substitution or exchange of outstanding shares;


(b)	any reduction in the exercise price of an option or the cancellation and reissue of an option within three months of the date of such cancellation;


(c)	any extension of the term of an option beyond its original expiry date, except as may be effected in connection with a blackout period;


(d)	any amendment to permit the transfer or assignment of an option other than for normal estate settlement purposes;


(e)	any amendment to the maximum number of shares issuable under the Amended and Restated Stock Option Plan or any amendment to the amendment sections of the Amended and Restated Stock Option Plan; and


(f)	any amendment required to be approved by shareholders under applicable law or pursuant to the rules, regulations and policies of the TSX.


•	Financial Assistance - The Company does not offer financial assistance in respect of the exercise of options.

At the Meeting, shareholders will be asked to pass an ordinary resolution approving the adoption of the Amended and Restated Stock Option Plan in the following form:

“BE IT RESOLVED as an ordinary resolution that:


1.	the Company’s proposed amended and restated stock option plan (the “Amended and Restated Stock Option Plan”), as described in the Information Circular dated April 17, 2017, including reserving for issuance under the Amended and Restated Stock Option Plan at any time a maximum of 10% of the then issued and outstanding common shares of the Company, be and is hereby authorized and approved;


2.	the Company be and is hereby authorized to grant stock options under the Amended and Restated Stock Option Plan until May 25, 2020, being the date that is three years from the date hereof; and


3.	the Company be and is hereby authorized to prepare such documents and make such submissions as the Company may be required to make to give effect to this resolution.”

Shareholders may vote FOR or AGAINST the above resolution. An ordinary resolution is a resolution passed by the shareholders of the Company at a general meeting by a simple majority of the votes cast in person or by proxy. If the Amended and Restated Stock Option Plan is not approved, previously granted options will be unaffected however no further options will be able to be issued under the Amended and Restated Stock Option Plan or the 2014 Stock Option Plan.

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The Board of Directors recommends that shareholders vote FOR this resolution.

Management of the Company is not aware of any other matters which are to come before the Meeting other than the matters referred to in the Notice of Meeting. However, if any matters other than those referred to herein should be presented at the Meeting, the persons named in the enclosed Proxy are authorized to vote the shares represented by the Proxy in accordance with their best judgment.

Advisory Vote on Executive Compensation

On March 6, 2014, the Board adopted a policy relating to shareholder engagement and an advisory vote on executive compensation, known as “Say-on-Pay” (the “Say-on-Pay Policy”). The purpose of the Say-on-Pay Policy is to provide appropriate accountability to the shareholders of the Company for the Board’s compensation decisions by giving shareholders a formal opportunity to provide their views on the disclosed objectives of the Company’s compensation plans for executives, as well as the plans themselves.

In accordance with the Say-on-Pay Policy, at the Meeting, shareholders will be asked to consider a non-binding advisory resolution on executive compensation as follows:

“BE IT RESOLVED, on an advisory basis and not to diminish the role and responsibilities of the board of directors, that: the shareholders accept the approach to executive compensation disclosed in the Company’s management information circular for this meeting”

As this is an advisory vote, the results are not binding on the Company. However, the Board will take the results of the vote into account, as appropriate, when considering future compensation policies, procedures and decisions, and in determining whether there is a need to significantly increase engagement with shareholders on this matter. In particular, in the event that a significant number of shareholders oppose the advisory resolution, the Board will consult with its shareholders, specifically those that are known to have opposed the resolution, to understand shareholder concerns and evaluate appropriate actions in the context of those concerns. A summary of the significant comments relating to compensation from shareholders will be included in the Company’s management information circular for the subsequent year and an explanation as to any changes to be made to compensation plans or why no changes are contemplated will be disclosed.

PART 3

STATEMENT OF CORPORATE
GOVERNANCE PRACTICES

The Board of Directors is responsible for developing, reviewing and implementing a set of corporate governance guidelines specifically applicable to the Company, as described in this Part of the Information Circular. The corporate governance practices ensure the process and structure used to direct and manage the business and affairs of the Company with the objectives of enhancing shareholder value and ensuring the financial viability of the business.

The Board of Directors has adopted the board mandate (the “Board Mandate”) provided in Appendix “A” hereto clarifying responsibilities and ensuring effective communication between the Board of Directors and management.

The following description of the governance practices of the Company is provided in accordance with the guidelines of National Instrument 58-101 - Disclosure of Corporate Governance Practices, as set out in Form 58-101F1 - Corporate Governance Disclosure (the “Form 58-101F1 Guidelines”). The Form 58-101F1 Guidelines address matters relating to constitution and independence of directors, the functions to be performed by the directors of a company and their committees and the effectiveness and evaluation of proposed corporate governance guidelines

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and best practices specified by the Canadian securities regulators. The directors of the Company will continue to monitor the developments and the various changes to the Form 58-101F1 Guidelines and best practices and where applicable, will amend its corporate governance guidelines accordingly.

Board of Directors

Independence of the Board

The Board nominees consists of five directors, of whom four (a majority) are independent. None of the four independent directors has any direct or indirect material relationship with the Company (other than as a holder of shares or options of the Company) which could, in the view of the Board, reasonably interfere with the exercise of that director’s independent judgment. Marjorie Co, Robert McCallum, Douglas Penrose and David Shaw are independent directors. Keith Neumeyer is the Chief Executive Officer of the Company. As an officer of the Company, Mr. Neumeyer is not an independent director.



Director Nominees	Independent	Non-Independent	Reason for Non-Independence
Keith Neumeyer		●	Chief Executive Officer
Marjorie Co	●
Robert A. McCallum	●
Douglas Penrose	●
David Shaw	●

Directorships and Interlocks

The following table discloses the directors of the Company that are also directors of other reporting issuers, as well as any executive positions or committee memberships held by the director with that reporting issuer:



Director	Company	Executive Position	Committee Memberships
Keith Neumeyer	First Mining Finance Corp.	Chairman	Audit Committee Corporate Governance Committee Compensation Committee
David Shaw	First Mining Finance Corp.	----	Audit Committee Corporate Governance Committee Compensation Committee
	Great Quest Fertilizer Ltd.	----	Audit Committee Corporate Governance Committee
	Medallion Resources Ltd.	----	----

Each of Keith Neumeyer and David Shaw is also a member of the board of directors of First Mining Finance Corp. (“FMF”), a mineral exploration holding company listed on the TSX Venture Exchange. This constitutes a “Board

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Interlock” for purposes of the Board Mandate. In addition, Messrs. Neumeyer and Shaw are both members of FMF’s Audit Committee, Corporate Governance Committee and Compensation Committee. This constitutes a “Committee Interlock” for the purposes of the Board Mandate. The Board has determined that, in its judgment, this Board Interlock and this Committee Interlock do not adversely impact the independence of these directors or the ability of these directors to act in the best interests of the Company because, among other things, the Company owns a significant number of shares of FMF and FMF is focused on exploration properties while the Company is focused on development properties. In the event of a conflict, each of the directors will be required to act in accordance with his obligations under the Code (as defined under the heading “Ethical Business Conduct”) and applicable corporate law as described under “Ethical Business Conduct”.

Independent Directors’ Meetings

The independent directors hold regularly scheduled meetings which non-independent directors and members of management do not attend. The Board holds in-camera meetings regularly following certain board meetings and Audit Committee meetings. During the financial year ended December 31, 2016, the independent directors held four in-camera meetings (one at the end of each quarterly board meeting) and eight in-camera meetings at the end of Audit Committee meetings.

Chairman

The Chairman of the Board, Douglas Penrose, is an independent director. The Chairman of the Board leads the Board in its management and supervision of the business and affairs of the Company and its oversight of management. The Chairman of the Board is responsible for the following duties and responsibilities, among other things: act as liaison between the Board and key management of the Company and shareholders, chair Board and shareholder meetings, coordinate the agenda for Board meetings, and assist the Corporate Governance Committee with its annual review of the performance of directors and the Board as a whole.

Meetings of the Board and Committees of the Board

The Board meets a minimum of four times per year, usually every quarter and following the annual general meeting of the Company’s shareholders. Each committee of the Board generally meets once a year or more frequently as deemed necessary by the applicable committee. The frequency of the meetings and the nature of the meeting agendas are dependent upon the nature of the business and affairs which the Company faces from time to time. During the financial year ended December 31, 2016, the Board held nine meetings, the Audit Committee held eight meetings, the Compensation and Nominating Committee held two meetings and the Corporate Governance Committee held no meetings. The following table provides details regarding attendance of each director standing for re-election at the Meeting at the Board and committee meetings during the financial year ended December 31, 2016.



Director	Board of Directors	Audit Committee	Corporate Governance Committee	Compensation and Nominating Committee	Committees (Total)	Overall Attendance
Keith Neumeyer	9 / 9 (100%)				___	9 / 9 (100%)
Marjorie Co⁽²⁾	N/A				___	N/A
Robert McCallum	9 / 9 (100%)	8 / 8		2 / 2⁽¹⁾	10 / 10 (100%)	19 / 19 (100%)
Douglas Penrose	9 / 9 (100%)	8 / 8 ⁽¹⁾	0 / 0⁽³⁾		8 / 8 (100%)	17 / 17 (100%)
David Shaw	9 / 9 (100%)		0 / 0⁽¹⁾⁽³⁾	2 / 2	6 / 6 (100%)	17 / 17 (100%)

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(1)	Indicates such director as the Chair of the committee.


(2)	Appointed to the Board in March 2017.


(3)	The Corporate Governance Committee did not meet in 2016.

Board Mandate

The Board Mandate was implemented by the Board effective November 28, 2013, and is attached as Appendix “A” to this Information Circular.

Position Descriptions

Written position descriptions have been developed by the Board for the Chief Executive Officer, the Chairman of the Board and the Chairman of each committee of the Board. See “Board of Directors - Chairman” for a description of the Chairman of the Board’s role and responsibilities.

The Chief Executive Officer, Keith Neumeyer, provides leadership and vision to manage the Company in the best interests of its stakeholders. The Chief Executive Officer develops strategic direction and initiatives to maximize shareholder value, ensures the implementation of strategic, business and operational plans and manages the business and affairs of the Company within the guidelines established by the Board.

The Chairman of the Audit Committee, Douglas Penrose is an independent director. The Chairman of the Audit Committee provides leadership to enhance the effectiveness of the Audit Committee and takes all reasonable steps to ensure that the responsibility and duties of the Audit Committee, as outlined in the Audit Committee Mandate, are well understood by the members of the Audit Committee and executed as effectively as possible. The Chairman of the Audit Committee is responsible for the following duties and responsibilities, among other things: coordinate the agenda for Audit Committee meetings, chair Audit Committee meetings, report to the Board on the activities, findings and recommendations of the Audit Committee and ensure annual performance evaluation of the Audit Committee and Audit Committee members.

The Chairman of the Corporate Governance Committee, David Shaw, is an independent director. The Chairman of the Corporate Governance Committee provides leadership to enhance the effectiveness of the Corporate Governance Committee and takes all reasonable steps to ensure that the responsibility and duties of the Corporate Governance Committee, as outlined in the Corporate Governance Committee Mandate, are well understood by the members of the Corporate Governance Committee and executed as effectively as possible. The Chairman of the Corporate Governance Committee is responsible for the following duties and responsibilities, among other things: coordinate the agenda for Corporate Governance Committee meetings, chair Corporate Governance Committee meetings, report to the Board on the activities, findings and recommendations of the Corporate Governance Committee, ensure annual performance evaluation of the Corporate Governance Committee and investigate complaints received under the Company’s Whistleblower Policy (see “Whistleblower Policy” below).

The Chairman of the Compensation and Nominating Committee, Robert McCallum, is an independent director. The Chairman of the Compensation and Nominating Committee provides leadership to enhance the effectiveness of the Compensation and Nominating Committee and takes all reasonable steps to ensure that the responsibility and duties of the Compensation and Nominating Committee, as outlined in the Compensation and Nominating Committee Mandate, are well understood by the members of the Compensation and Nominating Committee and executed as effectively as possible. The Chairman of the Compensation and Nominating Committee is responsible for the following duties and responsibilities, among other things: coordinate the agenda for Compensation and Nominating Committee meetings, chair Compensation and Nominating Committee meetings, report to the Board on the activities, findings and recommendations of the Compensation and Nominating Committee and ensure annual performance evaluation of the Compensation and Nominating Committee.

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The Board of Directors has adopted a formal process for the orientation of new members of the Board. New directors are provided with comprehensive materials providing background information on the Company’s history, performance and strategic plans as well as the role of the Board, its committees and members. The orientation program also provides new members with the opportunity to meet with the executive team. As each director has a different set of skills and professional background, the Board of Directors seeks to tailor orientation and training of new members according to the particular needs and experience of each new director.

Continuing education for all members of the Board is conducted primarily on an informal basis. As a part of the continuing education of directors, presentations are made at Board meetings by management on new developments which may impact upon the Company and its business. In addition, directors receive periodic one on one presentations from management and are provided with the opportunity to meet with corporate officers outside of formal Board meetings to discuss and better understand the business. Directors also visit, from time to time, the underground mine and above ground operations at each of the Company’s producing assets. In December 2016, the directors visited each of the La Guitarra Silver Mine, the La Encantada Silver Mine, the La Parrilla Silver Mine and the Del Toro Silver Mine.

Board members are encouraged to communicate with management and the Company’s auditors, to keep themselves current with industry trends and developments, and to attend related industry seminars at no/minimal cost to the directors. Board members have full access to the Company’s records.

The following table provides details regarding various continuing education events held for, or attended by, the directors during the year ended December 31, 2016:

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Date and Place	Event	Directors Attending
January 2016 Vancouver	Deloitte Director Series – Focus on the Audit Committee	McCallum
January 2016 Toronto	TD Securities Mining Conference	Neumeyer
February 2016	Visits to Santa Elena and Del Toro Silver Mines	Neumeyer
February 2016 Florida	BMO Capital Markets Global Metals & Mining Conference	Neumeyer
March 2016 Toronto	Prospectors & Developers Association of Canada (PDAC) Conference	Neumeyer, Shaw
April 2016 Hong Kong	Mines & Money Conference	Neumeyer
April 2016 Carlsbad	Investment U Conference	Neumeyer
April 2016 Vancouver	Deloitte Director Series – Long Termism and shareholder engagement	McCallum
April 2016 Zurich	European Gold Forum	Neumeyer
May 2016 Miami	BAML Global Metals, Mining & Steel Conference	Neumeyer
May 2016 Mexico	Visits to Santa Elena and San Martin Silver Mines	Neumeyer
May 2016 Nevada	Property visit	Shaw
June 2016 Toronto	Scotiabank Summer Solstice Silver Sessions	Neumeyer
July 2016 Vancouver	Sprott Natural Resource Symposium	Neumeyer
September 2016 New York	Rodman & Renshaw Conference	Neumeyer
September 2016 Denver	Denver Gold Show	Neumeyer
September 2016 Las Vegas	Mine Expo International	Neumeyer
October 2016 London, UK	London Metals Exchange Week	Neumeyer
October 2016 Vancouver	Deloitte Director Series – Shifting enterprise risks: new action steps for the audit committee’s year end	McCallum
November 2016 Munich	International Precious Metals & Commodities Show	Neumeyer
December 2016 Mexico	Visits to La Guitarra, La Encantada, Del Toro and La Parrilla Silver Mines	Neumeyer, Penrose, Pezzotti, McCallum and Shaw

Ethical Business Conduct

The Board has adopted a formal written code of ethical conduct (the “Code”) for its directors, officers and employees. The Corporate Governance Committee is responsible for setting the standards of business conduct contained in the Code, as well as overseeing and monitoring compliance with the Code by ensuring all directors, officers and employees receive and become familiar with the Code and acknowledge their support and understanding of the Code on an annual basis. Any non-compliance with the Code is required to be reported to the Corporate Governance Committee. A copy of the Code may be accessed on the Company’s website at www.firstmajestic.com.

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Where a director has a material interest in a transaction or agreement concerning the Company, the Board will take such steps as may be prudent to isolate and eliminate or reduce the potential for such a conflict of interest to interfere with the Board’s exercise of independent judgment.

Corporate law and the Code require that any director or officer who is directly or indirectly interested in a proposed activity or transaction which involves the Company, or otherwise is in a position which creates a potential for a conflict of interest, must disclose the circumstances and these interests to the Company’s Chief Executive Officer and the Corporate Governance Committee, who will assess whether there is a conflict of interest. If it is determined there is a conflict of interest, the conflict must be disclosed to the Board. Further, in accordance with applicable corporate law, any director who is in a position of conflict must refrain from voting on any resolution of the Board with respect to the conflict. The Board may also require the director to excuse himself or herself from deliberations of the Board or may alternatively refer the matter for consideration by a committee of independent directors of the Board.

Diversity Policy

As an extension of the Code, in 2016 the Board adopted a policy to reflect its commitment to diversity and inclusion in all levels in the workplace and on the Board (the “Diversity Policy”). The Diversity Policy sets out the guidelines by which the Company and the Board will endeavour to achieve diversity throughout the Company. To this end, the Board is dedicated to cultivating an environment where individual differences are respected, the ability to contribute and access employment opportunities is based on performance, skill and merit, and appropriate attitudes, behaviours and stereotypes are confronted and eliminated. While the Company does not support the adoption of quotas, management and the Board will consider diversity as an element of the overall selection criteria of candidates. In addition, the Company will attempt to interview at least one female and/or minority candidate for each opening on the Board.

The Diversity Policy requires that each year the Company report on the proportion of female and minority personnel in senior executive positions and on the Board in the Company’s management information circular. As at December 31, 2016, (a) 20% of the Company’s personnel at the executive management level was female and 60% of such personnel identified themselves as part of a minority group and (b) the Company’s Board did not include any female members and none of Board members identified themselves as belonging to a minority group, however as a result of the appointment of Ms. Co to the Board in March 2017, 16.67% of the Company’s Board is now female and identify themselves as belonging to a minority group.

Whistleblower Policy

In 2007, the Company adopted a whistleblower policy (the “Whistleblower Policy”) which allows its directors, officers and employees who feel that a violation of the Code has occurred, or who have concerns regarding financial statement disclosure issues, accounting, internal accounting controls, auditing matters or violations of the Code to report such violation or concerns on a confidential and anonymous basis. The policy also states clearly and unequivocally that the Company prohibits discrimination, harassment and/or retaliation against any employee, officer or director who (i) reports complaints regarding financial statement disclosure issues, accounting, internal accounting controls, auditing matters or violations of the Code or (ii) provides information or otherwise assists in an investigation or proceeding regarding any conduct which he or she reasonably believes to be a violation of employment or labour laws, securities laws, laws regarding fraud or the commission or possible commission of a criminal offence. Everyone at the Company is responsible for ensuring that the workplace is free from all forms of discrimination, harassment and retaliation prohibited by this policy. No employee, officer or director of the Company has the authority to engage in any conduct prohibited by this policy. Reporting can be made by web-based reporting or telephone through EthicsPoint, Inc., an independent reporting agency used by the Company for this purpose. Once received, complaints are forwarded to the Chairman of the Corporate Governance Committee the Chief

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Executive Officer and the Corporate Secretary who then investigates each matter so reported and takes corrective and / or disciplinary action, if appropriate.

Nomination of Directors

The Compensation and Nominating Committee currently consists of Robert McCallum, David Shaw and Tony Pezzotti, all of whom are independent. In order to comply with the Company’s Director Tenure Policy, Mr. Pezzotti will not be standing for re-election at the Meeting and will cease to be a director of the Company as of the closing of the Meeting. Management anticipates that Mr. Penrose will be appointed to the Compensation and Nominating Committee in place of Mr. Pezzotti following closing of the Meeting. The Compensation and Nominating Committee is responsible for identifying individuals qualified to become new board members and for recommending to the Board the new director nominees for the next annual meeting of shareholders. In selecting appropriate candidates for the Board, the Compensation and Nominating Committee is tasked with determining appropriate Board size, composition and profile of the Board with a view to ensuring a diversity of skills, backgrounds, experiences and expertise. The use and maintenance of an “evergreen” list of potential directors, and a skills/experience matrix as a tool to identify any gaps in the competencies most relevant to the Board, assist the Compensation and Nominating Committee in assessing and interviewing potential Board members and reviewing candidates for vacancies on the Board. The Committee may also engage a third party service firm to assist with recruitment of candidates for the Board. In accordance with the Diversity Policy, while the Company does not support the adoption of quotas, management and the Board will consider diversity as an element of the overall selection criteria of candidates. In addition, the Company will attempt to interview at least one female and/or minority candidate for each opening on the Board.

Compensation

The Compensation and Nominating Committee has overall responsibility for recommending levels of executive compensation that are competitive and motivating in order to attract, retain and inspire senior officers. All members of the Compensation and Nominating Committee have experience acting on board compensation committees and overseeing compensation and benefit programs. The Company’s Compensation and Nominating Committee reviews management’s recommendations for and, in accordance with Board guidelines, recommends the granting of stock options to management, directors, officers and other employees and consultants of the Company and its subsidiaries. Independent members of the Board are compensated for acting as directors and may be granted incentive stock options pursuant to the policies of the TSX and the Company’s Stock Option Plan. The Board as a whole determines the stock option grants for each director.

The Company engaged Korn Ferry Hay Group in October 2016 to provide specific advice to it on executive, director and employee compensation matters. This advice consisted of:


(i)	the provision of general market observations with respect to market trends and issues, and

(ii)

the provision of benchmark market data for the Company’s peer group, consisting of publicly traded companies having international mining operations and similar size market capitalization, revenues and total assets, including Alacer Gold Corp, Alamos Gold Inc., Capstone Mining Corp., Coeur Mining Inc., Endeavour Silver Corp., Hecla Mining Co., Hochschild Mining PLC, Pan American Silver Corp., Primero Mining Corp., Silver Standard Resources Inc., Silver Wheaton Corp., Tahoe Resources Inc., Fortuna Silver Mines Inc., B2Gold Corp., and OceanaGold Corporation.

Decisions made by the Company with respect to the compensation of its officers, directors and employees, however, are its own responsibility and may reflect factors and considerations other than the information provided to the Company by Korn Ferry Hay Group. The Company implemented changes to the compensation arrangements for its officers, directors and employees effective January 1, 2017.

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Corporate Governance Committee

The Corporate Governance Committee which consists of David Shaw, Douglas Penrose and Robert McCallum, under the supervision of the Board, has overall responsibility to monitor the governance of the Board of Directors (including the size of the Board and the profiles of the Board members) and Board committees. The Corporate Governance Committee’s responsibilities include, but are not limited to, the following:


•	Review at least annually the size, composition and profile of the Board.


•	Review at least annually the performance of the Board as a whole.


•	Review annually the performance of individual directors, including with respect to minimum attendance guidelines, diligence, avoidance or handling of conflicts of interest and compliance with respect to their statutory and common law duties.


•	Evaluate the performance of the Chairman of the Board.


•	On an annual basis, recommend and bring forward to the Board, a list of corporate governance issues for review, discussion or action by the Board or a committee.


•	On an annual basis, review the indemnification polices of the Company, general liability insurance policy and directors’ and officers’ insurance policy.

Other Board Committees

The Board is satisfied that in view of the size and composition of the Board, it is more efficient and cost effective for the full Board to perform the duties that would be required by standing committees, other than the Audit Committee, Compensation and Nominating Committee and Corporate Governance Committee.

Assessments

The Board of Directors has adopted an annual formal assessment process with respect to performance of the Board, its committees and its individual directors. The Board as a whole considers the contributions and performance of each of the directors and the performance of the Board and each of its committees by conducting a performance review questionnaire. The Board uses an assessment tool to determine whether additional expertise is required to ensure that the Board is able to properly discharge its responsibilities and individuals with specific skill sets are identified. As discussed above under “Corporate Governance Committee”, the Corporate Governance Committee undertakes this assessment on behalf of the Board.

Shareholder Engagement

The Company conducts an active shareholder engagement program through a variety of means. The Company communicates regularly with shareholders through annual and quarterly reports and news releases, as well as through other disclosure and regulatory documents filed on SEDAR at www.sedar.com. The Company’s management team regularly meets with large institutional shareholders and investment advisors. In addition, the Company periodically hosts conference calls and webcasts to allow individual shareholders the opportunity to participate in a discussion regarding the Company’s financial and operational highlights and results. Investors may also contact the Company’s investor relations department by letter, e-mail or phone on a continuing basis.

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The Board also recognizes that it is important for the Board to communicate with shareholders, including organizations that represent or advise shareholders on matters of governance, such as the Canadian Coalition for Good Governance and Institutional Shareholder Services. Shareholders, employees and other interested parties may communicate directly with the Board on questions or concerns related to the Board and executive succession, compensation and corporate governance through the Chairman of the Board or the Company’s Corporate Secretary.

PART 4

DIRECTOR COMPENSATION

Compensation of Directors

Other than compensation paid to the Named Executive Officers who are also directors, and except as noted below, no compensation was paid to directors in their capacity as directors of the Company or its subsidiaries, or of a committee of the Board of Directors or of its subsidiaries, or as consultants or experts, during the Company’s most recently completed financial year.

The following table sets forth the details of compensation provided to the directors, other than the Named Executive Officers (as defined in Part Six of this Information Circular) who are also directors, during the Company’s most recently completed financial year:



Name	Fees Earned⁽¹⁾ ($)	Share- based Awards ($)	Option based Awards⁽²⁾ ($)	Non-Equity Incentive Plan Compensation ($)	Pension Value ($)	All Other Compensation⁽³⁾ ($)	Total ($)
Marjorie Co	N/A	N/A	N/A	N/A	N/A	N/A	N/A
Ramon Davila⁽⁴⁾	$103,348	Nil	$75,540	Nil	Nil	$1,509		$180,397
Robert McCallum	$128,695	Nil	$75,540	Nil	Nil	$1,509		$205,744
Douglas Penrose	$196,588	Nil	$75,540	Nil	Nil	$1,509		$273,637
Tony Pezzotti	$113,608	Nil	$75,540	Nil	Nil	$1,509		$190,656
David Shaw	$113,909	Nil	$75,540	Nil	Nil	$1,509		$190,958


(1)	All director compensation is paid in Canadian dollars and converted to U.S. dollars for reporting purposes using the average exchange rate of C$1.00 equalling $0.7554.

(2)

The value of the option based awards was calculated using the Black-Scholes Option Pricing Model with the following assumptions: weighted average fair value at grant date: $1.60, expected dividend yield: nil, average risk-free interest rate: 0.59%, expected life: 3.38 years and expected volatility: 46.0%. This was the calculation under IFRS 2 as the Black-Scholes Option Pricing Model is an industry accepted model for valuing option-based payments.


(3)	Represents an allowance in respect of miscellaneous out-of-pocket expenses incurred in acting as a director of the Company.


(4)	Mr. Davila ceased to be a director of the Company as of September 15, 2016.

Independent members of the Board of Directors are compensated for acting as directors and may be granted incentive stock options pursuant to the policies of the TSX and the Stock Option Plan (as defined under the heading “Compensation Discussion & Analysis”). The Board of Directors as a whole determines the stock option grants for each director, after recommendation by the Compensation Committee.

The following table shows a breakdown of the fees payable to non-management directors in each of 2015, 2016 and 2017 as set by the Board for service on the Board and/or a committee of the Board, as applicable:

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Nature of Board Duty	2015⁽¹⁾		2016⁽²⁾		2017⁽³⁾
Annual Retainer Fee for each Independent Member of the Board:
• for all Independent Directors		$112,060		$93,925		$111,720
• additional retainer for Chairman of the Board		$77,580		$65,025		$93,100
Additional Annual Retainer Fee for Chairman of the Audit Committee		$17,240		$14,450		$22,344
Additional Annual Retainer Fee for Chairman of the Compensation and Nominating Committee		$17,240		$14,450		$14,896
Additional Annual Retainer Fee for Chairman of the Corporate Governance Committee		$8,620		$7,225		$11,172
Fee for each Board meeting attended by an Independent Director		$862		$723		$894
Fee for each Audit Committee meeting attended by an Independent Director		$1,034		$867		$1,117
Fee for each Compensation and Nominating Committee meeting attended by an Independent Director		$862		$723		$894
Fee for each Corporate Governance Committee meeting attended by an Independent Director		$862		$723		$894
Credit for expenses incurred		$1,724		$1,445		$1,490
Credit for education expenses		$1,724		$1,445		$1,490


(1)	All director fees are paid in Canadian dollars and converted to U.S. dollars for reporting purposes using the exchange rate of C$1.00 equalling $0.8620, being the noon exchange rate quoted by the Bank of Canada on December 31, 2014.


(2)	All director fees are paid in Canadian dollars and converted to U.S. dollars for reporting purposes using the exchange rate of C$1.00 equalling $0.7225, being the noon exchange rate quoted by the Bank of Canada on December 31, 2015.


(3)	All director fees are paid in Canadian dollars and converted to U.S. dollars for reporting purposes using the exchange rate of C$1.00 equalling $0.7448, being the noon exchange rate quoted by the Bank of Canada on December 31, 2016.

Compensation of Directors - Outstanding Share-Based Awards and Option-Based Awards

The following table sets forth the incentive plan awards granted to the independent directors of the Company during the most recently completed financial year:



	Option-based Awards				Share-based Awards
Name	Number of securities underlying unexercised options (#)	Option exercise price⁽¹⁾ ($)	Option expiration date	Value of unexercised in-the- money options⁽²⁾ ($)	Number of shares or units of shares that have not vested (#)	Market or payout value of share-based awards that have not vested ($)	Market or payout of value vested share- based awards not paid out or distributed ($)
Marjorie Co	N/A	Nil	N/A	Nil	Nil	Nil	Nil
Ramon Davila⁽³⁾	70,416	$3.58	4-Jan-21	$286,354	Nil	Nil	Nil
Robert McCallum	70,416	$3.58	4-Jan-21	$286,354	Nil	Nil	Nil
Douglas Penrose	70,416	$3.58	4-Jan-21	$286,354	Nil	Nil	Nil
Tony Pezzotti	70,416	$3.58	4-Jan-21	$286,354	Nil	Nil	Nil
David Shaw	70,416	$3.58	4-Jan-21	$286,354	Nil	Nil	Nil


(1)	The option exercise prices were converted to U.S. dollars at the exchange rate of C$1.00 = $0.7448, being the noon exchange rate quoted by the Bank of Canada on December 31, 2016.

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(2)	This amount is the aggregate dollar amount of in-the-money unexercised options held at December 31, 2016 using the year-end share price as reported by the TSX of C$10.26 or $7.64.


(3)	Mr. Davila ceased to be a director of the Company as of September 15, 2016.

Compensation of Directors - Incentive Plan Awards – Value Vested or Earned During the Year

The following table sets forth details of the value vested or earned for all incentive plan awards during the most recently completed financial year by each independent director:



Name	Option-based awards – Value vested during the year⁽¹⁾⁽²⁾ ($)	Share-based awards – Value vested during the year ($)	Non-equity incentive plan compensation – Value earned during the year ($)
Marjorie Co	Nil	Nil	Nil
Ramon Davila⁽³⁾	$983,493⁽⁴⁾	Nil	Nil
Robert McCallum	$164,848	Nil	Nil
Douglas Penrose	$164,848	Nil	Nil
Tony Pezzotti	$164,848	Nil	Nil
David Shaw	$164,848	Nil	Nil

(1)

This amount is based on the aggregate dollar value that would have been realized if the options under the option-based award had been exercised on the vesting date. Amounts were computed using the dollar value that would have been realized by determining the difference between the market price of the underlying securities at exercise and the exercise or base price of the options under the option-based award on the vesting date. A total of 334,947 options vested to the directors during the most recent financial year and 53,011 options were exercised during the most recent financial year. The amount set out in the column is based on the vested options at December 31, 2016.


(2)	The option exercise prices were converted to U.S. dollars at the exchange rate of C$1.00 = $0.7448, being the noon exchange rate quoted by the Bank of Canada on December 31, 2016.


(3)	Mr. Davila ceased to be a director of the Company as of September 15, 2016.


(4)	Mr. Davila’s vesting on his options were accelerated on his resignation as a director of the Company.

Director Share Ownership Requirement

The Company has a minimum share ownership requirement for directors, under which directors are required to own a minimum of 30,000 common shares of the Company. Directors have three years to comply with the requirement from their initial election or appointment, as the case may be. As of the date of this Information Circular, all directors of the Company, except Marjorie Co who became a director on March 1, 2017, comply with the share ownership requirement.

PART 5

EXECUTIVE COMPENSATION

Introduction

The Company’s compensation structure is designed to be competitive with the compensation arrangements of other Canadian mining companies with international operations of similar size and scope. The Company’s

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compensation is intended to meet the Company’s compensation objectives, which are to allow the Company to attract and retain qualified and experienced senior management who are motivated to achieve the Company’s business plans, strategies and goals on an annual and long-term basis, in order to increase shareholder value. Shareholder value in the Company is primarily driven by results, both in terms of its financial strength and operating measures such as production. These objectives are tied directly to the Company’s annual budget and long‐term plan, which are approved by the Board each year. Compensation is linked to key performance metrics such as production levels, cash costs, cash flows and cash targets. Key target metrics relate only to metrics that executive officers and employees can influence and impact. Operational targets such as production levels, cash costs and safety are set for operations staff at the mine sites, and corporate goals such as cash flows or cash in treasury are established for the executive officers and corporate office personnel in Vancouver, Canada and Durango, México. As described in more detail below, executive compensation is in many respects dependent on achieving these individual and Company performance results and is, therefore, linked to the creation of shareholder value.

For the purposes of this Information Circular:


(a)	“CEO” of the Company means each individual who served as Chief Executive Officer of the Company or acted in a similar capacity for any part of the most recently completed financial year;


(b)	“CFO” of the Company means each individual who served as Chief Financial Officer of the Company or acted in similar capacity for any part of the most recently completed financial year; and

(c)

“Named Executive Officers” means (i) each CEO, (ii) each CFO, (iii) each of the three most highly compensated executive officers of the Company, including any subsidiary of the Company, or the three most highly compensated individuals acting in a similar capacity, other than the CEO and CFO, at the end of the most recently completed financial year whose total compensation was, individually, more than C$150,000; and (iv) each individual who would be a Named Executive Officer under paragraph (iii) but for the fact that the individual was neither an executive officer of the Company or a subsidiary of the Company, nor acting in a similar capacity, at the end of that financial year.

During the financial year ended December 31, 2016, the Company had five Named Executive Officers: Keith Neumeyer, the President and CEO of the Company; Salvador Garcia, the Chief Operating Officer of the Company; Raymond Polman, the CFO of the Company; Martin Palacios, the Chief Transformation Officer of the Company; and Connie Lillico, Corporate Secretary of the Company.

The following is a brief biography for each of the Named Executive Officers:



KEITH NEUMEYER
President Chief Executive Officer	Mr. Neumeyer has worked in the investment community for over 32 years, beginning his career at a number of Canadian national brokerage firms. Mr. Neumeyer moved on to work with several publicly traded companies in the resource and high technology sectors. His roles have included senior management positions and directorships responsible in areas of finance, business development, strategic planning and corporate restructuring. Mr. Neumeyer was the founding President of First Quantum Minerals Ltd. (T-FM). Mr. Neumeyer founded First Majestic in 2002. Mr. Neumeyer has also listed a number of companies on the Toronto Stock Exchange and as such has extensive experience dealing with the financial, regulatory, legal and accounting issues that are relevant in the investment community.

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SALVADOR GARCIA
Chief Operating Officer	Prior to joining First Majestic in January 2013, Mr. García held several positions in the mining industry, most recently as Vice President Mexico for Goldcorp Inc., a senior gold producer. Mr. García was employed by Luismin prior to its acquisition by Goldcorp for a period of 25 years. He worked in positions ranging from Mine Superintendent, General Manager and Operations Director and was later promoted to the senior management team of Goldcorp as Vice President Mexico. While in those positions, he was responsible for the operations at the Tayoltita and San Antonio mines and was involved in the development, construction and operation of the Los Filos, El Sauzal and Peñasquito mines. Mr. Garcia graduated with a bachelor's degree in mine engineering from the School of Mines at the University of Guanajuato, Mexico. Mr. Garcia was the Vice President Operations of the Company from January 2013 to June 2014 and has been the Chief Operating Officer of the Company since July 2014. Effective March 1, 2017, Mr. Garcia was appointed Country Manager, Mexico and Dustin VanDoorselaere was appointed as the Company’s new Chief Operating Officer.



RAYMOND POLMAN, B. SC. (ECON), CA
Chief Financial Officer	Mr. Polman has over 30 years of public accounting and corporate finance experience in the Canadian and US financial markets and has been Chief Financial Officer of the Company since February 2007. In the six years prior to joining First Majestic in 2007, Mr. Polman acted as Chief Financial Officer for a number of publicly traded high technology companies, prior to which he served several years as the Director of Finance for Rescan Environmental, a large privately owned company serving the global mining community. Mr. Polman also brings eight years of prior public accounting experience with Deloitte LLP. Mr. Polman has a Bachelor of Science (Economics) Degree from the University of Victoria and he is a member of the Institute of Chartered Accountants of British Columbia.



MARTIN PALACIOS, MBA, CMC
Chief Transformation Officer	Mr. Palacios brings over 20 years of information technology experience to First Majestic, including over three years with Goldcorp, a senior gold producer, where he held the position of Director of Global Applications and IT (Mexico Region). During his tenure at Goldcorp, he created and implemented the global applications framework for most of Goldcorp's sites, standardized and automated consolidation process. Mr. Palacios was also responsible for prototyping Goldcorp's business intelligence strategy. In addition to his experience with Goldcorp, Mr. Palacios has consulted for Gemcom Software (a mining solution vendor), provided advisory services to the Jimmy Pattison Group across their portfolio of companies and led the western region IT effectiveness practice for KPMG. He was also previously the Chief Information Officer of Pivotal Corporation and the Vice President of Information Technology for Seagate Software.



CONNIE LILLICO, B.A.
Corporate Secretary	Ms. Lillico has been Corporate Secretary of the Company since August 2007. She has worked in public company management and administration since 2000. Ms. Lillico was previously the Corporate Secretary of several publicly traded mining and oil and gas companies for three years, prior to which she was a paralegal with a publicly traded software company for 2 ½ years. Prior to her industry experience, Ms. Lillico worked in as a corporate and securities paralegal with a large national law firm for eight years. Ms. Lillico has a Bachelor of Arts degree from Simon Fraser University and a paralegal certification from Capilano College.

Compensation Discussion & Analysis

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The Compensation and Nominating Committee directs the design and provides oversight of the Company’s executive compensation program and has overall responsibility for recommending levels of executive compensation that are competitive and motivating in order to attract, hold and inspire senior officers. The Compensation and Nominating Committee’s principal functions are to:


•	recommend compensation levels and programs for the Company’s CEO to the independent members of the Board of Directors;


•	recommend compensation levels and programs for all other executive officers to the full Board of Directors; and


•	administer the Company’s stock option plan (the “Stock Option Plan”).

The Company’s CEO participates in executive compensation decisions by making recommendations to the Compensation and Nominating Committee regarding the following:


•	executive officer base salary, annual bonus awards and stock option grants;


•	annual and long-term quantitative goals and the annual qualitative goals for the executive officers; and


•	participation in the Stock Option Plan and amendments to the Stock Option Plan, as necessary.

The Compensation and Nominating Committee reviews the basis for these recommendations and can exercise its discretion in modifying any of the recommendations prior to making its recommendations to the Board of Directors as a whole.

The following executive compensation principles guide the Compensation and Nominating Committee in fulfilling its roles and responsibilities in the design and ongoing administration of the Company’s executive compensation program:


•	Compensation levels and opportunities should be sufficiently competitive to facilitate recruitment and retention of qualified and experienced executives, while being fair and reasonable to shareholders;


•	Compensation should reinforce the Company’s business strategy by communicating key metrics and operational performance objectives (both annual and long-term) in its incentive plans and by emphasizing incentives in the total compensation mix;


•	Incentive compensation should be responsive to the Company’s commodity-based cyclical business environment by emphasizing operational performance over performance measures that are more directly influenced by metals prices; and


•	Compensation programs should align executives’ long-term financial interests with those of shareholders by providing equity-based incentives.

The Company reviews the compensation practices of comparable entities to ensure the compensation that it is paying to its executive officers is competitive with those other entities. The Company has also received benchmark market data from a compensation consultant in the past, but did not obtain such information for the 2014, and 2015

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years because it did not retain its compensation consultant due to economic conditions. The Company engaged Korn Ferry Hay Group in October 2016 to provide specific advice to it on executive, director and employee compensation matters. This advice consisted of:


(i)	the provision of general market observations with respect to market trends and issues, and

(ii)

The Company’s general executive compensation philosophy is to, whenever possible, pay its executive officers “base” compensation in the form of salaries that are competitive in comparison to those earned by executive officers holding comparable positions with other Canadian publicly traded entities similar to the Company while at the same time providing its executive officers with the opportunity to earn above average “total” compensation through the potential attainment of annual incentive bonuses and through the Stock Option Plan.

Individual executive compensation consists primarily of: base salary, annual incentive bonus, stock option grants and benefits and perquisites. Each component of compensation has a specific role with respect to supporting the goals of the Company’s executive compensation program and is structured to reinforce specific job and organizational requirements. Compensation guidelines with respect to these components are established for particular positions based on job responsibilities and within the context of the Company’s overall executive compensation program.

Specific compensation amounts are recommended to the Board of Directors by the Compensation and Nominating Committee after discussion amongst the members of the Compensation and Nominating Committee. Each component of compensation and the decisions of the Compensation and Nominating Committee about each component have an impact on the Committee’s decisions regarding other compensation components. For example, if a Named Executive Officer far exceeded his individual goals and objectives, this may affect the amount of compensation paid and/or options granted. All of the compensation components together are intended to meet the Company’s compensation objectives, which are intended to allow the Company to attract and retain qualified and experienced senior management who are motivated to achieve the Company’s business plans, strategies and goals on an annual and long-term basis, in order to increase shareholder value.

Among other factors, in designing its compensation program, setting objectives and making incentive awards, the Board and the Compensation and Nominating Committee carefully consider potential risks. A number of business risks were mapped to decision-makers and compensation programs, including:


•	Achievement of annual production and cost targets in balance with long-term development requirements at its operations;


•	Achievement of cash flow from operations objectives for corporate and for operating units;


•	Not exceeding targets for total cash costs per payable silver ounces of production on a consolidated basis and on a per operating unit basis;


•	Achievement of targets for consolidated net income before taxes;

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•	Managing capital expenditures within planned project budgets; and


•	Achieving safety results and meeting environmental requirements.

The Board did not identify any compensation practices that are reasonably likely to have a material adverse effect on the Company. The Board of Directors, on the advice of the Compensation and Nominating Committee, has determined to structure compensation arrangements tailored to the specific circumstances of its senior management. The Board of Directors has accordingly determined that compensation paid to Mr. Neumeyer, who is resident outside of Canada, should be structured as a services arrangement. Please see “Summary Compensation Table” and “Services Agreement - Keith Neumeyer”.

The Company has adopted a policy that prohibits officers, directors and employees from purchasing or selling financial instruments that are designed to hedge or offset a decrease in the market value of equity securities granted as compensation.

The Company’s Say-on-Pay Policy is an important element in the Company’s process for continuous review of executive compensation. See “Business of the Meeting - Say-on-Pay Vote” for more information.

Base Salary

A Named Executive Officer’s base salary is intended to remunerate the Named Executive Officer for discharging job responsibilities and reflects the executive’s performance over time. Individual salary adjustments take into account performance contributions in connection with their specific duties. The base salaries for the Named Executive Officers are set out in their employment or service agreements, the terms of which are described below. The base salary of each executive officer is determined by the Board of Directors based on an assessment by the Compensation and Nominating Committee of his or her sustained performance and consideration of competitive compensation levels for the markets in which the Company operates. In making its recommendations to the Board of Directors, the Compensation and Nominating Committee also considers the particular skills and experience of the individual as well as a consideration of the Company’s immediate cash requirements with a view to providing competitive salaries without sacrificing opportunity for growth or placing undue reliance on variable compensation. A final determination on executive compensation, including salary, is made by the Board of Directors in its sole discretion based on the recommendations of the Compensation and Nominating Committee and its knowledge of the industry and geographic markets in which the Company operates. While the CEO is requested to provide to the Compensation and Nominating Committee his recommendation on the Named Executive Officers’ annual base salaries, the Compensation and Nominating Committee and the Board make the final determination on the annual base salaries of the Named Executive Officers. The CEO does not make a recommendation with respect to his own salary. The Compensation and Nominating Committee does not use any type of quantitative formula to determine the base salary level of any of the Named Executive Officers.

The Company has entered into an employment or service agreement with each of its Named Executive Officers. The agreements specify the terms and conditions of employment, the duties and responsibilities of the executive during the term of employment or service, the compensation and benefits to be provided by the Company in exchange for the executive’s services, the compensation and benefits to be provided by the Company in the event of a qualifying termination of employment not preceded by a change in control of the Company, and the compensation and benefits to be provided by the Company in the event of a qualifying termination of employment that is preceded by a change in control of the Company. The Committee believes that such agreements benefit the Company by clarifying the terms of employment and ensuring the Company is protected by non-compete and nondisclosure provisions.

Following are the significant terms of each of the Named Executive Officers’ employment and services agreements:

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Services Agreement – Keith Neumeyer

The Company’s subsidiary, FMS Trading AG entered into a Services Agreement effective December 8, 2011 (as subsequently amended) with Mr. Neumeyer which agreement replaces all other previous employment and service agreements with Mr. Neumeyer. Pursuant to the Services Agreement, Mr. Neumeyer is engaged as President for an unspecified term at a current fee of $900,000 per annum plus benefits and the granting of stock options and the awarding of annual bonuses which will be determined at the absolute discretion of the Board of Directors or a committee of the Board. For the year ended December 31, 2016, Mr. Neumeyer was paid a fee of $850,000 and a bonus of $550,000. The Services Agreement may be terminated by the Company, without cause, by payment of 12 months’ base payment plus benefits. This amount would increase by two months for each additional year of engagement from 2003. The Services Agreement may be terminated by Mr. Neumeyer with 90 days’ written notice. In the event of a change of control, the Company may terminate the Services Agreement without cause, or Mr. Neumeyer shall have 60 days to elect to terminate the agreement, and upon such termination the Company is required to make severance payments to Mr. Neumeyer totaling 12 months’ base payments plus benefits set out as follows:


(i)	A market compensation review shall be conducted by an independent human resources consultant for President and CEO positions of peer organizations that meet the following selection criteria:


•	production stage mining companies similar in size to the peer group with operations in international locations;


•	mining organizations with similar annual revenues to the peer group’s most recent annual revenues; and


•	mining organizations with market capitalization levels similar to the peer group.


(ii)	The 12 months’ base payments shall be determined as 75% of the median percentile of President and CEO positions.

This termination payment to Mr. Neumeyer shall increase by two months for each additional year of service from September 26, 2003.

Employment Agreement – Salvador Garcia

The Company entered into an Employment Agreement effective July 1, 2014 and amended on May 21, 2015, pursuant to which Mr. Garcia was employed as Chief Operating Officer for an unspecified term at a salary of $350,000 per annum plus benefits and the granting of stock options and the awarding of annual bonuses to be determined at the absolute discretion of the President, CEO and Compensation and Nominating Committee. The Employment Agreement was amended March 1, 2017 pursuant to which Mr. Garcia is currently employed as Country Manager (Mexico) for an unspecified term at a salary of $315,000. For the year ended December 31, 2016, Mr. Garcia was paid a salary of $350,000 and no bonus was paid. The Employment Agreement may be terminated by Mr. Garcia with 60 days’ written notice or by the Company, at any time, without cause, by payment of 12 months’ base salary plus benefits and this payment shall increase by two months for each year of employment to a maximum total of 24 months base salary. In the event of a change of control and termination, the Company is required to make severance payments to Mr. Garcia totaling 12 months’ base salary and this payment amount to Mr. Garcia shall increase by two months for each year of employment to a maximum total of 24 months base salary.

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Employment Agreement – Raymond Polman

The Company entered into an Employment Agreement effective February 1, 2007 and subsequently amended (most recently on January 1, 2017) pursuant to which Mr. Polman is employed as Chief Financial Officer for an unspecified term at a current salary of C$415,000 per annum plus benefits and the granting of stock options and the awarding of annual bonuses to be determined at the absolute discretion of the President, CEO and Compensation and Nominating Committee. For the year ended December 31, 2016, Mr. Polman was paid a salary of C$400,000 and a bonus of C$120,000. The Employment Agreement may be terminated by Mr. Polman with 60 days’ written notice or by the Company, at any time, without cause, by payment of 12 months’ base salary plus benefits and this payment shall increase by two months for each year of employment to a maximum total of 24 months base salary. In the event of a change of control and termination, the Company is required to make severance payments to Mr. Polman totaling 12 months’ base salary and this payment amount to Mr. Polman shall increase by two months for each year of employment to a maximum total of 24 months base salary.

Employment Agreement – Martin Palacios

The Company entered into an Employment Agreement effective January 1, 2012 and subsequently amended (most recently on January 1, 2017) pursuant to which Mr. Palacios is employed as Chief Transformation Officer for an unspecified term at a current salary of C$400,000 per annum plus benefits and the granting of stock options and the awarding of annual bonuses to be determined at the absolute discretion of the President, CEO and Compensation and Nominating Committee. For the year ended December 31, 2016, Mr. Palacios was paid a salary of C$300,000 and a bonus of C$105,000. The Employment Agreement may be terminated by Mr. Palacios with 60 days’ written notice or by the Company, at any time, without cause, by payment of 12 months’ base salary plus benefits and this payment shall increase by two months for each year of employment to a maximum total of 24 months base salary. In the event of a change of control and termination, the Company is required to make severance payments to Mr. Palacios totaling 12 months’ base salary and this payment amount to Mr. Palacios shall increase by two months for each year of employment to a maximum total of 24 months base salary.

Employment Agreement – Connie Lillico

The Company entered into an Employment Agreement effective July 3, 2007 and subsequently amended (most recently on January 1, 2017) pursuant to which Ms. Lillico is employed as Corporate Secretary for an unspecified term at a current salary of C$260,000 per annum plus benefits and the granting of stock options and the awarding of annual bonuses to be determined at the absolute discretion of the President, CEO and Compensation and Nominating Committee. For the year ended December 31, 2016, Ms. Lillico was paid a salary of C$250,000 and a bonus of C$62,500. The Employment Agreement may be terminated by Ms. Lillico with 60 days’ written notice or by the Company, at any time, without cause, by payment of 12 months’ base salary plus benefits and this payment shall increase by two months for each year of employment to a maximum total of 24 months base salary. In the event of a change of control and termination, the Company is committed to making severance payments to Ms. Lillico totaling 12 months’ base salary and this payment amount to Ms. Lillico shall increase by two months for each year of employment to a maximum total of 24 months base salary.

Discretionary Bonus Payments

Named Executive Officers may receive discretionary bonuses which are at the sole discretion of the Company’s Board of Directors, the majority of whom are independent of management of the Company. In granting these bonus payments, the Board considers factors such as performance and contributions. The maximum annual bonus payment to the CEO and Chief Operating Officer is limited to 70% of salary and the maximum annual bonus payment to the CFO, the Chief Transformation Officer, the Corporate Secretary and Vice-Presidents is limited to 35% of salary. For the year ending December 31, 2016, the CEO was paid a bonus of $550,000, the COO was not paid a bonus, the CFO was paid a bonus of C$120,000, the CTO was paid a bonus of C$105,000 and the Corporate Secretary was paid a bonus of C$62,500. See “Information Respecting the Company – Executive

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Compensation – Summary Compensation Table” for information on the actual annual incentive bonus paid to each of the Named Executive Officers for the most recently completed financial year.

Option Based Awards

The stock option component of the Named Executive Officers’ compensation is intended to advance the interests of the Company by encouraging the directors, officers, employees and consultants of the Company to remain associated with the Company and furnishing them with additional incentive in their efforts on behalf of the Company in the conduct of its affairs. Grants under the Stock Option Plan are intended to provide long-term awards linked directly to the market value performance of the Company’s shares, thereby aligning the short-term performance goals of Company personnel that are based on operational and financial results with the long-term increase in shareholder value that results from the achievement of the short-term performance goals. The Compensation and Nominating Committee reviews management’s recommendations and itself recommends to the Board of Directors the granting of stock options to directors, officers, employees and consultants of the Company and its subsidiaries. Stock options are granted according to the specific level of responsibility of the particular executive and the number of options for each level of responsibility is determined by the Compensation and Nominating Committee. The number of outstanding options and previous grants is also considered by the Compensation and Nominating Committee when determining the number of options to be granted in any particular year due to the limited number of options which are available for grant under the Stock Option Plan.

Benefits and Perquisites

The primary purpose of providing benefits and limited perquisites to the Company's executives is to attract and retain the talent to manage the Company. The Company intends that the type and value of benefits and perquisites offered are to be competitive to overall market practices. Details of the benefits and perquisites provided to the Named Executive Officers are disclosed in the All Other Compensation column of the Summary Compensation Table set forth in this Information Circular. The primary benefits for the Company’s executives include participation in the Company’s health and dental coverage, various company-paid insurance plans, including disability and life insurance, paid time off and paid holidays. In general, the Company will provide a specific perquisite only when the perquisite provides competitive value and promotes retention of executives, or when the perquisite provides shareholder value by increasing the efficiency of its executives, or their effectiveness in achieving their individual and corporate goals. The limited perquisites the Company provides its executives may include a parking stall and Spanish or English lessons.

Incentive Compensation Clawback Policy

As a measure of accountability and to ensure that incentive compensation paid by the Company is based on accurate financial data, the Board may require reimbursement or forfeiture of any overpayment (including option grants) received by an officer, director or employee in the event that there is a restatement or correction to the Company’s financial statements and the Board determines that a lower amount of compensation would have been paid based on the restated financial results such that the individual received an excess amount of compensation. In determining whether to require reimbursement or forfeiture of the overpayment, the Board may take into account a variety of considerations and recovery may be made regardless of any wrong-doing that gave rise to the restatement or correction.

Retirement Policy

The Company does not have a retirement policy for its executive officers.

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Review / Modifications

The Company’s executive compensation program is reviewed and considered at least annually by the Compensation and Nominating Committee to determine if the objectives of the executive compensation program are being achieved and whether any modifications to that program are required. This includes a review of base salaries payable, potential bonuses payable and entitlement and participation in equity related incentive plans for all executive officers. It also includes a review of the metrics used to assess performance, the targets established with respect to those performance metrics, whether previously established targets have been achieved and to what degree, and whether the performance metrics and targets are still appropriate in light of the then current industry, stock market and general economic conditions. The Compensation and Nominating Committee considers the establishment of new performance metrics and related targets to be used to assess executive officer performance and determine executive officer compensation on a go-forward basis. In completing this review, the Compensation and Nominating Committee considers the recommendations of management and the CEO in particular. Upon completion of that review, the Compensation and Nominating Committee in turn makes its recommendations with respect to the Company’s executive compensation program to the full Board of Directors. The Board of Directors then approves the executive compensation program, including the individual components thereof, subject to any modifications it deems necessary.

The Compensation and Nominating Committee is comprised of three independent directors. The current members of the Compensation and Nominating Committee are Tony Pezzotti, David Shaw and Robert McCallum. In order to comply with the Company’s Director Tenure Policy, Mr. Pezzotti will not be standing for re-election at the Meeting and will cease to be a director of the Company as of the closing of the Meeting. Management anticipates that Mr. Penrose will be appointed to the Compensation and Nominating Committee in place of Mr. Pezzotti following closing of the Meeting. The Board believes that the Compensation and Nominating Committee has the knowledge, experience and background required to fulfill its mandate. All of the members of the Compensation and Nominating Committee have direct experience in both public and private sector executive compensation. The Compensation and Nominating Committee is responsible for recommending levels of executive compensation that are competitive and motivating in order to attract, hold and inspire senior officers.

The Company engaged Korn Ferry Hay Group in October 2016 to provide specific advice to it on executive, director and employee compensation matters. This advice consisted of:


(i)	the provision of general market observations with respect to market trends and issues, and

(ii)

Executive Compensation-Related Fees

During the year ended December 31, 2016, the Company engaged Korn Ferry Hay Group to provide advice on directors, executive officers and employees compensation. A total of $61,180 was paid, of which $33,344 was paid in 2016 and a total of $27,836 was paid in 2017.

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Performance Graph

The following graph compares the percentage change in the cumulative total shareholder return for C$100 invested in common shares of the Company on January 1, 2012 against the cumulative total shareholder return of the S&P/TSX Composite Index for five years through December 31, 2016, assuming reinvestment of all dividends. The graph also depicts total annual compensation for the Named Executive Officers in each particular year from 2011 to 2016 for comparative purposes. The performance graph shows a general trend that compensation paid to the Company’s executives correlates to the Company’s total shareholder return. The change from 2011 to 2012 reflects, in part, the inclusion of a new officer, being the Chief Transformation Officer.

Summary Compensation Table

The following table sets forth compensation information for the fiscal year ended December 31, 2016 for the (a) President and Chief Executive Officer of the Company; (b) the Chief Operating Officer of the Company; (c) the Chief Financial Officer of the Company; (d) the Chief Transformation Officer and (e) the Corporate Secretary, who are collectively the “Named Executive Officers” for the purposes of this Information Circular.

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					Non-equity incentive plan compensation ($)
Name and principal position	Year	Salary ($)	Share - based awards ($)	Option - based awards ($)⁽⁴⁾	Annual incentive plans⁽⁵⁾	Long term incentive plans	Pension value ($)	All other compensation ($)	Total compensation ($)
Keith Neumeyer CEO⁽¹⁾	2016	$850,000	Nil	$960,092	$550,000	Nil	Nil	$24,872⁽⁶⁾	$2,384,964
	2015	$850,000	Nil	$437,471	Nil	Nil	Nil	$43,986⁽⁶⁾	$1,331,457
	2014	$836,667	Nil	$402,724	Nil	Nil	Nil	$80,026⁽⁶⁾	$1,319,417
Salvador Garcia COO⁽²⁾	2016	$350,000	Nil	$151,154	Nil	Nil	Nil	$24,500⁽⁷⁾	$525,655
	2015	$363,860	Nil	$235,690	Nil	Nil	Nil	$25,838⁽⁷⁾	$625,388
	2014	$299,449	Nil	$820,655	Nil	Nil	Nil	$15,193⁽⁷⁾	$1,135,297
Raymond Polman CFO⁽³⁾	2016	$301,747	Nil	$480,046	$90,524	Nil	Nil	$8,222⁽⁸⁾	$880,539
	2015	$312,797	Nil	$196,408	Nil	Nil	Nil	$8,406⁽⁸⁾	$517,611
	2014	$362,074	Nil	$201,362	Nil	Nil	Nil	$7,829⁽⁸⁾	$571,265
Martin Palacios CTO⁽³⁾	2016	$226,310	Nil	$901,474	$79,209	Nil	Nil	$8,222⁽⁹⁾	$1,215,215
	2015	$229,635	Nil	$196,408	Nil	Nil	Nil	$8,406⁽⁹⁾	$434,449
	2014	$248,926	Nil	$201,362	Nil	Nil	Nil	$8,783⁽⁹⁾	$459,071
Connie Lillico Corporate Secretary⁽³⁾	2016	$188,592	Nil	$449,815	$47,148	Nil	Nil	$8,222⁽¹⁰⁾	$693,777
	2015	$195,498	Nil	$157,127	Nil	Nil	Nil	$8,406⁽¹⁰⁾	$361,031
	2014	$226,296	Nil	$201,362	Nil	Nil	Nil	$4,050⁽¹⁰⁾	$431,708


(1)	Amounts paid as salary to Mr. Neumeyer are paid in Swiss Francs and are reflected here based on the average rates of $1.00 equaling CHF0.9876 in 2016, $1.00 equaling CHF1.0271 in 2015 and $1.00 equaling CHF1.0906 in 2014.


(2)	Amounts paid as salary to Mr. Garcia are paid in Mexican Pesos and are reflected here based on the average rates of $1.00 equaling MXN18.6345 in 2016, $1.00 equaling MXN15.8713 in 2015 and $1.00 equaling MXN13.3071 in 2014.


(3)	Amounts paid as salary to Mr. Polman, Mr. Palacios and Ms. Lillico are paid in Canadian dollars and are reflected here based on the average rates of $1.00 equaling C$1.3256 in 2016, C$1.2788 in 2015 and $1.00 equaling C$1.1047 in 2014.


(4)	Option based awards are calculated in Canadian dollars and are reflected here based on the average rates of $1.00 equaling C$1.3256 in 2016, C$1.2788 in 2015 and $1.00 equaling C$1.1047 in 2014.

The value of the option based awards was calculated using the Black-Scholes Option Pricing Model with the following assumptions:



Year	Weighted Average Fair Value at Grant Date	Expected Dividend Yield	Average Risk-Free Interest Rate	Expected Life	Expected Volatility
2016	$2.10	--	0.67%	3.38	49.0%
2015	$1.53	--	1.11%	3.38	44.2%
2014	$3.02	--	1.45%	3.38	41.0%

This was the calculation under IFRS 2 as the Black-Scholes Option Pricing Model is an industry accepted model for valuing share-based payments.


(5)	Includes amounts pursuant to the Company’s Performance Bonus Plan, as well as discretionary bonuses awarded in Canadian dollars and reflected here based on the average rate of $1.00 equaling C$1.3256 in 2016.


(6)	Represents the cost of insurance premiums paid or payable by the Company for personal insurance, medical expenses, parking, apartment compensation and an executive retreat for Mr. Neumeyer.


(7)	Represents the cost of insurance premiums paid or payable by the Company for personal insurance, housing compensation, automobile, personal travel costs and an executive retreat for Mr. Garcia.


(8)	Represents the cost of parking and an executive retreat for Mr. Polman.


(9)	Represents the cost of parking and an executive retreat for Mr. Palacios.


(10)	Represents the cost of parking and executive retreat for Ms. Lillico.

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Incentive Plan Awards

Outstanding share-based awards and option-based awards

The following table sets forth the outstanding share-based awards and option-based awards granted to the Named Executive Officers during the most recently completed financial year:



	Option-based Awards				Share-based Awards
Name	Number of securities underlying unexercised options (#)	Option exercise price ($)⁽¹⁾	Option expiration date	Value of unexercised in-the-money options ($)⁽²⁾	Number of shares or units of shares that have not vested (#)	Market or payout value of share based awards that have not vested ($)	Market or payout of value vested share- based awards not paid out or distributed ($)
Keith Neumeyer, CEO	250,000 200,000	$3.58 $8.63	4-Jan-21 10-Dec-21	$1,016,652 Nil	Nil Nil	Nil Nil	Nil Nil
Salvador Garcia, COO	125,000	$3.58	4-Jan-21	$508,326	Nil	Nil	Nil
Raymond Polman, CFO	125,000 100,000	$3.58 $8.63	4-Jan-21 10-Dec-21	$508,326 Nil	Nil Nil	Nil Nil	Nil Nil
Martin Palacios, CTO	200,000 200,000	$3.58 $8.72	4-Jan-21 22-Nov-21	$813,322 Nil	Nil Nil	Nil Nil	Nil Nil
Connie Lillico, Corporate Secretary	100,000 100,000	$3.58 $8.63	4-Jan-21 10-Dec-21	$406,661 Nil	Nil Nil	Nil Nil	Nil Nil


(1)	The option exercise prices were converted to U.S. dollars at the exchange rate of C$1.00 = $0.7448, being the noon exchange rate quoted by the Bank of Canada on December 31, 2016.


(2)	This amount is the aggregate dollar amount of in-the-money unexercised options held at the end of the 2016 year based on the per share price at December 31, 2016 as reported by the TSX of C$10.26 or $7.64.

Value Vested or Earned During the Year

The following table sets forth details of the value vested or earned for all incentive plan awards during the most recently completed financial year by each Named Executive Officer:



Name	Option-based awards – Value vested during the year⁽¹⁾ ($)	Share-based awards –Value vested during the year ($)	Non-equity incentive plan compensation – Value earned during the year⁽²⁾ ($)
Keith Neumeyer, CEO	$809,747	Nil	$550,000
Salvador Garcia, COO	$666,317	Nil	Nil
Raymond Polman, CFO	$500,906	Nil	$90,524
Martin Palacios, CTO	$402,592	Nil	$79,209
Connie Lillico, Corporate Secretary	$438,948	Nil	$47,148

(1)

This amount is based on the aggregate dollar value that would have been realized if the options under the option-based award had been exercised on the vesting date. It was computed using the dollar value that would have been realized by determining the difference between the market price of the underlying securities at exercise and the exercise or base price of the options under the option-based award on the vesting date. All option-based awards are made in Canadians dollars. The value vested or earned during the year have been translated at the December 31, 2016 noon rate of $0.7448.


(2)	Includes amounts pursuant to the bonus plan.

During the most recently completed financial year, an aggregate of 725,000 options held by Named Executive Officers vested under the Stock Option Plan and an aggregated of 50,000 options were exercised by Named Executive Officers.

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Option-Based Awards – Outstanding at Year End

The following table sets forth for each Named Executive Officer, the number of options that were outstanding as at December 31, 2016 and includes the exercise price, expiration date and the value of such options as at December 31, 2016.



Name	Number of Securities Underlying Unexercised Options (#)	Option Exercise Price⁽²⁾ ($)	Option Expiration Date	Value of Unexercised In-the Money Options⁽¹⁾ ($)
Keith Neumeyer,	200,000	$16.72	28-Nov-17		$0.00
CEO	140,000	$7.77	2-Jan-19		$0.00
	200,000	$4.57	5-Jan-20		$613,715.00
	100,000	$3.49	11-Dec-20		$414,854
	250,000	$3.58	4-Jan-21		$1,016,652
	200,000	$8.63	10-Dec-21		$0.00
Total	1,090,000				$2,045,221

Salvador Garcia	100,000	$15.57	2-Jan-18		$0.00
COO	70,000	$7.77	2-Jan-19		$0.00
	180,000	$8.59	1-Jul-19		$0.00
	150,000	$4.57	5-Jan-20		$450,286
	125,000	$3.58	4-Jan-21		$508,326
Total	625,000				$968,612

Raymond Polman,	100,000	$16.72	28-Nov-17		$0.00
CFO	100,000	$7.91	11-Dec-18		$0.00
	70,000	$7.77	2-Jan-19		$0.00
	125,000	$4.57	5-Jan-20		$383,572
	125,000	$3.58	4-Jan-21		$508,326
	100,000	$8.63	10-Dec-21		$0.00
	620,000				$891,898

Martin Palacios,	100,000	$16.72	28-Nov-17		$0.00
CTO	40,000	$7.77	2-Jan-19		$0.00
	105,000	$4.57	5-Jan-20		$322,200
	200,000	$3.58	4-Jan-21		$813,322
	200,000	$8.7	22-Nov-21		$0.00
Total	645,000				$1,135,522

Connie Lillico,	100000	$16.72	28-Nov-17		$0.00
Corporate Secretary	100000	$7.91	11-Dec-18		$0.00
	70,000	$7.77	2-Jan-19		$0.00
	100000	$4.57	5-Jan-20		$306,858
	100000	$3.58	4-Jan-21		$406,661
	100000	$8.63	10-Dec-21		$0.00
Total	570,000				$713,518


(1)	This amount is the aggregate dollar amount of in-the-money unexercised options held at the end of the 2016 financial year using the per share price at December 31, 2016 as reported by the TSX of C$10.26 or $7.64.


(2)	The option exercise prices were converted to U.S. dollars at the exchange rate of C$1.00 = $0.7448, being the noon exchange rate quoted by the Bank of Canada on December 31, 2016.

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Termination and Change of Control Benefits

Each of the Named Executive Officers have termination and change of control benefits provided for in their respective employment or services agreements. The terms of each of the Named Executive Officers’ employment and services agreements is contained in this Information Circular under the heading “Statement of Executive Compensation – Compensation Discussion and Analysis”.

The following table sets out the maximum amount the Company could be obligated to pay in the event that a Named Executive Officer was terminated without cause as of December 31, 2016. The Company would also be obligated to pay the Named Executive Officer’s actual accrued base salary and expenses up to the date of termination and continue the Named Executive Officer’s health benefits and option entitlements for the period set out in their respective employment or services agreements.



Name	Base Salary During Period	Bonus During Period	Vacation Pay During Period	Total Gross Payment
Keith Neumeyer⁽¹⁾, CEO	$2,588,813	Nil	$170,507	$2,759,320
Salvador Garcia⁽²⁾, COO	$525,000	Nil	$0.00	$525,000
Raymond Polman⁽³⁾, CFO	$595,840	Nil	$66,081	$661,921⁽⁶⁾
Martin Palacios⁽⁴⁾, CTO	$372,502	Nil	$3,813	$376,315⁽⁶⁾
Connie Lillico⁽⁵⁾, Corporate Secretary	$372,400	Nil	$49,013	$421,413⁽⁶⁾


(1)	On a termination without cause or following a change of control, Mr. Neumeyer’s services agreement provide that he will be entitled to payment of 12 months’ base salary plus benefits. This amount will increase by two months for each additional year of employment from September 26, 2003 and is subject to a market compensation review.


(2)	On a termination without cause or following a change of control, Mr. Garcia’s employment agreement provides that he will be entitled to payment of 12 months’ base salary plus benefits. This amount will increase by two months for each additional year of employment to a maximum of 24 months.


(3)	On a termination without cause or following a change of control, Mr. Polman’s employment agreement provides that he will be entitled to payment of 12 months’ base salary plus benefits. This amount will increase by two months for each additional year of employment to a maximum total of 24 months base salary.


(4)	On a termination without cause or following a change of control, Mr. Palacios’ employment agreement provides that he will be entitled to payment of 12 months’ base salary plus benefits. This amount will increase by two months for each additional year of employment to a maximum total of 24 months base salary.


(5)	On a termination without cause or following a change of control, Ms. Lillico’s employment agreement provides that she will be entitled to payment of 12 months’ base salary plus benefits. This amount will increase by two month for each additional year of employment to a maximum total of 24 months base salary.


(6)	Amounts to Mr. Polman, Mr. Palacios and Ms. Lillico are converted to U.S. dollars at the exchange rate of C$1.00 = $0.7448, being the noon exchange rate quoted by the Bank of Canada on December 31, 2016.

PART 6

OTHER INFORMATION

Normal Course Issuer Bid

In March 2013, the board of directors approved a share repurchase program (the “Share Repurchase”) pursuant to a normal course issuer bid in the open market through the facilities of the TSX or alternative Canadian market places over the ensuing 12 months. The Share Repurchase was renewed in March of each year from 2014 to 2017. Pursuant to the renewed Share Repurchase, the Company may repurchase up to 8,249,204 common shares of the Company which represent 5% of the 164,984,089 issued and outstanding shares of the Company as of

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March 10, 2017. For the year ended December 31, 2016, the Company did not repurchase any shares under the Share Repurchase.

Securities Authorized for Issuance Under Equity Compensation Plans

The following table sets out, as of December 31, 2016, the information required with respect to compensation plans under which equity securities of the Company are authorized for issuance:



Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)	Weighted-average exercise price of outstanding options, warrants and rights⁽¹⁾ (b)	Number of securities remaining available for issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
Equity compensation plans approved by securityholders	9,599,270	$7.27	6,846,887
Equity compensation plans not approved by securityholders	N/A	N/A	N/A
Totals	9,599,270	$7.27	6,846,887


(1)	The option exercise prices were converted to U.S. dollars at the exchange rate of C$1.00 = $0.7448, being the noon exchange rate quoted by the Bank of Canada on December 31, 2016.

Indebtedness of Directors and Senior Officers to the Company

No director or senior officer of the Company or any associate or affiliate of any such director or senior officer is or has been indebted to the Company or any of its subsidiaries at any time during the Company's last completed financial year.

Interest of Informed Persons in Material Transactions

Other than as set forth in this Information Circular, none of the persons who were directors or executive officers of the Company or a subsidiary of the Company at any time during the Company's last financial year, no person or company who beneficially owns, directly or indirectly, or who exercises control or direction over (or a combination of both) more than 10% of the issued and outstanding common shares of the Company, nor any associate or affiliate of any such person, has any material interest, direct or indirect, by way of beneficial ownership of securities or otherwise, in any transaction since the commencement of the Company's most recently completed financial year or in any proposed transaction, which has materially affected or would materially affect the Company.

Management Contracts

The management functions of the Company are not to any substantial degree performed by any person other than the senior officers and the Board of Directors of the Company.

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Audit Committee

As required by National Instrument 52-110 - Audit Committees, information about the Company’s Audit Committee is provided in the Company’s most recent Annual Information Form (“AIF”) under “Directors and Officers”. In order to comply with the Company’s Director Tenure Policy, Mr. Pezzotti will not be standing for re-election at the Meeting and will cease to be a director of the Company as of the closing of the Meeting. Management anticipates that Ms. Co will be appointed to the Audit Committee in place of Mr. Pezzotti following closing of the Meeting. The AIF may be obtained from the Company’s disclosure documents available on the Company’s website at www.firstmajestic.com or under the Company’s profile on SEDAR at www.sedar.com.

Additional Information

Financial information concerning the Company is also provided in the Company’s audited consolidated financial statements and management discussion & analysis for the year ended December 31, 2016.

Shareholders may obtain a copy of the Company’s financial statements and management’s discussion and analysis upon request to the Company at Suite 1800 – 925 West Georgia Street, Vancouver, BC, V6C 3L2 or can view them on the Company’s website at www.firstmajestic.com.

Additional information relating to the Company can be found under the Company’s profile on SEDAR at www.sedar.com.

Approval of the Board of Directors

The contents of this Information Circular have been approved, and the delivery of it to each shareholder of the Company entitled thereto and to the appropriate regulatory agencies has been authorized by the Board of Directors.

Certificate

The foregoing contains no untrue statement of a material fact and does not omit to state a material fact that is required to be stated or that is necessary to make a statement not misleading in the light of the circumstances in which it was made.

DATED at Vancouver, British Columbia the 17^th day of April, 2017.



“Keith Neumeyer”
Keith Neumeyer, President and Chief Executive Officer

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APPENDIX “A”

BOARD OF DIRECTORS’ MANDATE

(Adopted by the Board of Directors of First Majestic Silver Corp. (the “Company”) with immediate effect on November 28, 2013)

INTRODUCTION

The board of directors (the “Board”) of the Company is responsible for the overall stewardship of the Company and its primary objective is to enhance and preserve long-term shareholder value. In pursuing this primary objective and in the performance of its functions, the Board should also take into account the legitimate interests of its other stakeholders, such as its employees and the communities and the environment in which it operates.

The Board is responsible for the management or supervising the management of the Company’s business and affairs. In supervising the conduct of the business, the Board, through the Chief Executive Officer (the “CEO”), sets the standards of conduct for the Company.

This mandate is prepared to assist the Board and management in clarifying responsibilities and ensuring effective communication between the Board and management.

COMPOSITION OF THE BOARD

Each director must be qualified to serve as a director pursuant to, and meet the requirements of, the Business Corporations Act (British Columbia) (the “Act”), all applicable securities laws and the rules, instruments, policies, regulations and guidelines of all applicable securities regulatory authorities, including without limitation the securities commissions in each of the provinces of Canada, and all stock exchanges on which the Company’s securities are listed, including without limitation the Toronto Stock Exchange and the New York Stock Exchange (collectively, “Applicable Laws”).


2.	A minimum of two-thirds of directors comprising the Board must qualify as “independent” as determined by Applicable Laws.


3.	Nominees for directors are approved by the Board and elected annually at the Company’s annual general meeting of shareholders. The Compensation and Nominating Committee selects, reviews and

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recommends to the Board candidates for director nominees. In selecting, reviewing, and accepting candidates for nomination as directors, as applicable, the Board and the Compensation and Nominating Committee must consider and evaluate the composition of the Board as a whole, including considering and making a determination as to the independence of each director nominee under Applicable Laws, and consider the existence and the impact of any Board Interlocks or Committee Interlocks on director independence and the functioning and independence of the Board as a whole. For the purposes of this Mandate, the term “Board Interlock” means when two or more directors of the Company sit together on the board (or equivalent) of another reporting issuer, and the term “Committee Interlock” means when a Board Interlock exists, and in addition, the relevant two or more directors also sit together on a board committee of the Company or the other reporting issuer.

No director of the Company may serve as a director (a “Directorship”) on a board (or equivalent) of more than five reporting issuers (excluding the Board) without the prior approval of the Board. In determining to recommend or accept, as applicable, a candidate for nomination as a director who holds more than five Directorships, the Board and the Compensation and Nominating Committee must consider whether or not the number of Directorships a nominee holds will prevent such director from devoting sufficient time and resources to his or her duties as a member of the Board.


5.	The Company must disclose in its management information circular for each general meeting of shareholders at which directors are nominated for election to the Board, the following:


(a)	all Board Interlocks, Committee Interlocks and Directorships held by nominee directors;


(b)	the Board’s judgment as to whether any Board Interlocks or Committee Interlocks exist which could impact the independence of those directors or their ability to act in the best interests of the Company; and


(c)	if a director nominee holds more than five Directorships, the Board’s judgment as to whether or not such director can devote sufficient time and resources to his or her duties as a member of the Board.


6.	During the period between annual shareholder meetings, directors must advise the Compensation and Nominating Committee of their intention to join or be nominated for election to the board (or equivalent) or any committee thereof of another reporting issuer.

ADMINISTRATION, DUTIES AND RESPONSIBILITIES


1.	Meetings of the Board


(a)	The Board will meet a minimum of four times per year and may also hold additional meetings as considered necessary.


(b)	Each director of the Company is expected to use all reasonable efforts to attend a minimum of 75% of all regularly scheduled Board and applicable committee meetings, except to the extent that any absence is due to medical or other valid reasons.


(c)	The members of the Board who are “independent” as determined by Applicable Laws may hold in camera sessions at each Board meeting.

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2.	Managing the Affairs of the Board

The Board operates by delegating certain of its responsibilities and authority, including spending authorizations, to management, and by reserving certain powers to itself. Certain of the powers that the Board retains may be delegated to committees of the Board, pursuant to the policies, mandates, charters and terms of reference of such committees as approved by the Board.

The legal obligations of the Board are described below under the heading “General Legal Obligations of the Board of Directors”. Subject to these legal obligations and to the Articles of the Company, the Board retains the responsibility for managing its own affairs, including:


(a)	annually reviewing the skills and experience represented on the Board in light of the Company’s strategic direction and approving a Board composition plan recommended by the Compensation and Nominating Committee;


(b)	annually, following each annual general meeting of shareholders:


(i)	electing a Chair of the Board and appointing the President and CEO of the Company,


(ii)	on the recommendation of the CEO, appointing the senior officers of the Company, and


(iii)	appointing committees of the Board, including an Audit Committee, Corporate Governance Committee, Compensation and Nominating Committee, and any other standing committee the Board determines is necessary or advisable from time to time, and determining the composition of those committees, within the following parameters:


(A)	all members of committees of the Board must be “independent” as determined by Applicable Laws; and


(B)	directors who are also officers of the Company shall not participate in determining the composition of the Compensation and Nominating Committee and no more than 1/3 of the members of that committee may be the CEO or President of another reporting issuer;


(c)	establishing from time to time, as determined necessary or advisable by the Board, special committees of the Board;


(d)	periodically setting and updating (from time to time as determined to be necessary by the Board) the policies, mandates, charters and terms of reference of the committees of the Board, as applicable;


(e)	determining and implementing an appropriate process for assessing the effectiveness of the Board, the Chair of the Board, each committee of the Board and each individual director in fulfilling their respective responsibilities;


(f)	periodically assessing the adequacy and form of director compensation;


(g)	assuming responsibility for the Company’s governance practices;


(h)	establishing new director orientation and ongoing director education processes;

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(i)	ensuring that the independent directors meet regularly without executive directors and management present;


(j)	to the extent feasible, satisfying itself as to the integrity of the Board as a whole;


(k)	setting the terms of reference for the Board; and


(l)	appointing the secretary to the Board.


3.	Human Resource Matters

The Board has the responsibility to:


(a)	provide advice and counsel to the CEO in the execution of the CEO’s duties;


(b)	appoint and discharge the CEO and plan CEO succession;


(c)	set terms of reference for the CEO;


(d)	annually approve corporate goals and objectives that the CEO is responsible for meeting;


(e)	monitor and, at least annually, review the CEO’s performance against agreed upon annual objectives;


(f)	set the CEO’s compensation including salary, incentives, benefits and pension plans and review and approve employment or consulting agreements, as applicable, between the Company and the CEO;


(g)	approve the CEO’s acceptance of significant public service commitments or outside directorships;


(h)	approve decisions relating to senior management, including:


(i)	review senior management structure including such duties and responsibilities to be assigned to each of the officers of the Company;


(ii)	on the recommendation of the CEO, appoint and discharge the officers of the Company;


(iii)	review compensation plans for senior management including salary, incentives, benefit and pension plans; and


(iv)	employment contracts, termination and other special arrangements with executive officers;


(i)	to the extent feasible, satisfy itself as to the integrity of the CEO and other senior officers, and that the CEO and other senior officers create a culture of integrity throughout the Company;


(j)	approve certain matters relating to the Company’s employees in general, including:


(i)	the Company’s broad compensation strategy and philosophy; and


(ii)	new benefit programs or material changes to existing programs; and

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(k)	ensure succession planning programs are in place, including programs to train and develop management.


4.	Strategy and Plans

The Board has the responsibility to:


(a)	adopt and periodically review a strategic planning process for the Company;


(b)	participate with management in the development of and annually approve a strategic plan for the Company that takes into consideration, among other things, the risks and opportunities of the business;


(c)	approve annual capital and operating budgets that support the Company’s ability to meet its strategic objectives;


(d)	direct management to develop, implement and maintain a reporting system that accurately measures the Company’s performance against its business plans;


(e)	approve the entering into, or withdrawing from, lines of business that are, or are likely to be, material to the Company;


(f)	approve material acquisitions and divestitures;


(g)	conduct periodic reviews of human, technological and capital resources required to implement the Company’s strategic plan;


(h)	conduct periodic reviews of the environmental and social, cultural or governmental constraints of the business of the Company; and


(i)	review regularly any recent developments that may affect the Company’s business and its strategic plan, and advise management on emerging trends and issues.


5.	Financial and Corporate Matters

The Board has the responsibility to:


(a)	take reasonable steps to ensure the implementation and integrity of the Company’s internal control and management information systems;


(b)	review and approve release by management of any materials reporting on the Company’s financial performance or providing guidance on future results to its shareholders;

(c)

ensure the Company’s public disclosure is disseminated on a timely and regular basis in accordance with Applicable Law, accurately and fairly reflects the state of affairs of the Company, and is in accordance with generally accepted accounting principles, including quarterly results press releases and quarterly financial statements, any guidance provided by the Company on future results, Company information circulars, annual information forms, annual reports, offering memoranda, prospectuses and registration statements;

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(d)	ensure the CEO and CFO certify the Company's annual and interim financial statements, annual and interim MD&A and Annual Information Form, and that the content of the certification meets all legal and regulatory requirements;


(e)	declare dividends if and when the Board deems it to be appropriate;


(f)	approve financings, issuances and repurchases of shares, issuances of debt securities, listings of shares and other securities, issuances of commercial paper, and related offering memoranda, prospectuses or registration statements; and recommend changes in the Company’s authorized share capital to shareholders for their approval;


(g)	approve the incurrence of any material debt by the Company outside the ordinary course of business;


(h)	approve the commencement or settlement of litigation that may have a material impact on the Company; and


(i)	recommend to the Company’s shareholders the appointment of external auditors and, if so authorized by the Company’s shareholders, approve auditors’ fees.


6.	Business and Risk Management

The Board has the responsibility to:


(a)	ensure management identifies the principal risks of the Company’s business and implements appropriate systems to manage these risks;


(b)	evaluate and assess information provided by committees of the Board, management and others about principal risks of the Company’s business and the effectiveness of risk management systems in place;


(c)	approve any plans to hedge mineral sales; and


(d)	review the adequacy of security of information, information systems and recovery plans.


7.	Corporate Communications and Compliance Reporting

The Board has the responsibility to:


(a)	ensure the Company has in place effective communication processes with shareholders, management, employees and other stakeholders and financial, regulatory and other recipients;


(b)	ensure all communications with shareholders and information otherwise disseminated by the Company adheres to the requirements of the Company’s Disclosure of Information, Confidentiality and Restrictions on Trading Policy;


(c)	ensure the Board has measures in place to receive feedback from shareholders;


(d)	approve interaction with shareholders on all items requiring shareholder response or approval;


(e)	ensure timely reporting of any other developments that have a significant and material effect on the Company in accordance with Section 5(b)-(d) above, as applicable; and

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(f)	report annually to the shareholders on the Board's stewardship for the preceding year.


8.	Company Policies

The Board has the responsibility to:


(a)	direct management to ensure the Company operates at all times within applicable laws and regulations and to the highest ethical and moral standards;


(b)	approve and monitor, through management, compliance with all significant policies and procedures that govern the Company’s operations; and


(c)	approve and periodically review the following:


(i)	the Company’s Code of Ethical Conduct;


(ii)	the Company’s Whistle Blower Policy;


(iii)	the Company's Disclosure of Information, Confidentiality and Restrictions on Trading Policy; and


(iv)	the Company’s policies with respect to corporate social responsibility and environmental health and safety.

GENERAL LEGAL OBLIGATIONS OF THE BOARD OF DIRECTORS


1.	The Board is responsible for the management of or supervising the management of the business and affairs of the Company and directing management to ensure legal requirements have been met and documents and records have been properly prepared, approved and maintained.


2.	The Act requires that each director:


(a)	acts honestly and in good faith with a view to the best interests of the Company, including the duty:


(i)	to disclose conflicts of interest;


(ii)	not to appropriate or divert corporate opportunities;


(iii)	to maintain confidential information of the Company and not use such information for personal benefit; and


(iv)	to disclose information vital to the business of the Company in the possession of a director;


(b)	exercises the care, diligence and skill that a reasonably prudent individual would exercise in comparable circumstances; and


(c)	acts in accordance with the Act and the Company’s Articles.

FIRST MAJESTIC SILVER CORP. - 2017 MANAGEMENT INFORMATION CIRCULAR

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EFFECTIVE DATE

This Mandate was approved and adopted by the Board on November 28, 2013 (the “Effective Date”) and is and shall be effective and in full force and effect in accordance with its terms and conditions from and after such date.

GOVERNING LAW

This Mandate shall be interpreted and enforced in accordance with the laws of the Province of British Columbia and the federal laws of Canada applicable in that province.

FIRST MAJESTIC SILVER CORP. - 2017 MANAGEMENT INFORMATION CIRCULAR

Exhibit 99.3

NOTICE AND ACCESS NOTIFICATION

Annual General Meeting of Shareholders to be held on May 25, 2017

This notification is being provided to the shareholders of First Majestic Silver Corp. (the “Company”) under the notice and access rules for the delivery of meeting materials in respect of its Annual General Meeting of shareholders to be held on May 25, 2017 (the “Meeting”). Under notice and access, instead of receiving printed copies of the Company’s management information circular for the year ended December 31, 2016 (the “Information Circular”), and, if requested, the financial statements and management’s discussion and analysis for the year ended December 31, 2016 (collectively, with the Information Circular, the “Meeting Materials”), the Company is providing shareholders this notice with information on how they may access the applicable Meeting Materials electronically. However, together with this notification, shareholders continue to receive a form of proxy or voting instruction form, as applicable, enabling them to vote at the Meeting. The Company is adopting this alternative means of delivery in order to further its commitment to environmental sustainability and reduce its printing and mailing costs. It is important that, prior to voting, all shareholders review the contents of the Information Circular.

Meeting Date and Location:



When:	Thursday, May 25, 2017 10:00 a.m. (Vancouver time)	Where:	The Sutton Place Hotel 845 Burrard Street Vancouver, BC V6Z 2K6

Matters to be Considered at the Meeting:


•	Financial Statements: To receive and consider the audited annual consolidated financial statements of the Company for the year ended December 31, 2016 and report of auditors thereon. See the section entitled “Business of the Meeting - Receiving Consolidated Financial Statements” in the Information Circular.


•	Election of Directors: To set the number of directors at five and to elect the directors of the Company for the ensuing year. See the section entitled “Business of the Meeting - Election of Directors” in the Information Circular.


•	Appointment of Auditors: To appoint Deloitte LLP, Independent Registered Public Accounting Firm, as auditors of the Company for the ensuing year and to authorize the directors to fix their remuneration. See the section entitled “Business of the Meeting - Appointment of Auditors” in the Information Circular.


•	Approval of the Amended and Restated Stock Option Plan: To approve the Amended and Restated Stock Option Plan of the Company. See the section entitled “Business of the Meeting -

- 2 -

Other Matters to be Acted Upon – Approval of the Amended and Restated Stock Option Plan” in the Information Circular.


•	Advisory Resolution on Executive Compensation: To vote on an advisory resolution with respect to the Company’s approach to executive compensation. See the section entitled “Business of the Meeting - Other Matters to be Acted Upon - Say on Pay Advisory Vote” in the Information Circular.


•	Other Business: To transact such other business as may properly come before the Meeting or any adjournment or adjournments thereof.

Shareholders are reminded to view the Information Circular prior to voting.

Websites Where the Materials are Posted

The applicable Meeting Materials can be viewed under the Company’s SEDAR profile at www.sedar.com or at the Company’s website at www.firstmajestic.com/s/AGM.asp.

How to Obtain Paper Copies of the Meeting Materials

Requests for paper copies must be received by May 12, 2017 in order to receive the applicable Meeting Materials in advance of the proxy deposit deadline for the Meeting. Shareholders who wish to receive paper copies of the applicable Meeting Materials may request copies from the Company by calling toll free 1-866-529-2807. Meeting Materials will be sent to shareholders within three business days of their request if such requests are made before the Meeting.

Shareholders may request paper copies of the applicable Meeting Materials be sent to them by postal delivery at no cost to them. Requests may be made up to one year from the date the Information Circular was filed on SEDAR by email at [email protected] or contacting the Corporate Secretary toll free number at 1-866-529-2807. Meeting Materials will be sent to shareholders within ten calendar days of their request if such requests are made after the Meeting.

The Company has determined that those shareholders with existing instructions on their account to receive a paper copy of the Company’s meeting materials will receive paper copies of the applicable Meeting Materials with this notification.

Voting

If you are a registered shareholder of the Company and are unable to attend the Meeting in person, please read, sign and date the accompanying form of proxy for the Meeting and deposit it with Computershare Investor Services Inc. by courier or mail at 100 University Avenue, 9th Floor, Toronto, Ontario, M5J 2Y1, Attention: Proxy Department, or by facsimile at 1-866-249-7775 (toll free in North America) or 1-416-263-9524 (international). Alternatively, registered shareholders may vote by telephone (1-866-732-8683) or online (www.investorvote.com) using the control number listed on the accompanying form of proxy. Proxies must be deposited by 10:00 a.m. (Vancouver, British Columbia time) on Tuesday, May 23, 2017 or at least 48 hours (excluding Saturdays, Sundays and holidays) before any postponement or adjournment of the Meeting.

If you are a non-registered shareholder of the Company, please complete and return the voting instruction form (or other accompanying form) in accordance with the instructions for completion and deposit. Note that if you are a non-registered shareholder, your nominee will need your voting instructions sufficiently in advance of the proxy deposit deadline to enable your nominee to act on your instructions prior to the deadline.

Exhibit 99.4

Security Class

Holder Account Number

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Form of Proxy - Annual Meeting to be held on May 25, 2017

This Form of Proxy is solicited by and on behalf of Management.

Notes to proxy


1.	Every holder has the right to appoint some other person or company of their choice, who need not be a holder, to attend and act on their behalf at the meeting or any adjournment or postponement thereof. If you wish to appoint a person or company other than the persons whose names are printed herein, please insert the name of your chosen proxyholder in the space provided (see reverse).


2.	If the securities are registered in the name of more than one owner (for example, joint ownership, trustees, executors, etc.), then all those registered should sign this proxy. If you are voting on behalf of a corporation or another individual you must sign this proxy with signing capacity stated, and you may be required to provide documentation evidencing your power to sign this proxy.


3.	This proxy should be signed in the exact manner as the name(s) appear(s) on the proxy.


4.	If this proxy is not dated, it will be deemed to bear the date on which it is mailed by Management to the holder.


5.	The securities represented by this proxy will be voted as directed by the holder, however, if such a direction is not made in respect of any matter, this proxy will be voted as recommended by Management.


6.	The securities represented by this proxy will be voted in favour or withheld from voting or voted against each of the matters described herein, as applicable, in accordance with the instructions of the holder, on any ballot that may be called for and, if the holder has specified a choice with respect to any matter to be acted on, the securities will be voted accordingly.


7.	This proxy confers discretionary authority in respect of amendments or variations to matters identified in the Notice of Meeting or other matters that may properly come before the meeting or any adjournment or postponement thereof.


8.	This proxy should be read in conjunction with the accompanying documentation provided by Management.

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Exhibit 99.5

April 17, 2017

Dear Shareholder:

FIRST MAJESTIC SILVER CORP.
(the “Company”)

Request for Printed Copies of Annual and Interim Financial Statements and MD&A

In accordance with National Instrument 51-102, Continuous Disclosure Obligations, the registered and beneficial owners of our shares may request without charge a copy of our annual financial statements and management discussion and analysis (“MD&A”) for the annual financial statements, our interim financial statements and MD&A for the interim financial statements, or both.

If you wish to receive printed copies of any of these documents, please indicate your request by completing this form and returning it to:

FIRST MAJESTIC SILVER CORP.
Suite 1800 – 925 West Georgia Street
Vancouver, BC, Canada
V6C 3L2

As an alternative to receiving these financial statements and MD&As by mail, you may view them on the Company’s profile on SEDAR at www.sedar.com.

REQUEST TO RECEIVE ANNUAL AND INTERIM FINANCIAL STATEMENTS AND MD&A
OF FIRST MAJESTIC SILVER CORP. (the “Company”)


o	A. Please send me the annual financial statements and MD&A.


o	B. Please send me the interim financial statements and MD&A.


o	C. Please send me both A and B.

I confirm that I am a registered and/or beneficial holder of shares of the Company.




	Signature


	Name of Shareholder - Please Print


	Address


	Postal Code


	Name and title of person signing, if different from name above

FIR S T M AJE S TIC S ILVE R C O R P. 20 1 6 AN N U AL R E P O R T CHALLENGES MET, OBJECTIVES BEING REALIZED.

Vancouver-based First Majestic Silver Corp. owns and operates six silver mines in Mexico with two advanced-stage projects in our development pipeline. Our primary goal is to reach annual silver production exceeding 20 million ounces. Over the Company’s 14-year history, First Majestic has forged a reputation for exceptional management, rapid growth and industry innovation while passionately supporting the communities and regions that host our operations. We owe our success to the First Majestic Family, a close-knit team that includes some of the industry’s top talent in mining, geology, technology and human resources. ABOUT THE COVER: Our cover diagram represents the atomic structure of silver—a metal optimized for electrical and thermal conductivity. The First Majestic logo sits at the centre, or nucleus, where the atom contains 47 protons and electrons thus giving silver its atomic number of 47. Surrounding the nucleus are 61 electrons situated in five shells, or energy levels. It is this configuration that gives silver its attractiveness, rarity and optimum properties for industry and technology. This is what makes silver so valuable today and so essential for the future of a rapidly changing world.

[ TABLE OF CONTENTS ] OUR VISION02 CORPORATE MESSAGES 04MILESTONES AND HIGHLIGHTS 03 TARGETS FOR 2017 10 FIRST MAJESTIC LEADERSHIP 12 MINES AND PROJECTS 16COMMUNITY AND SUSTAINABILITY 14 RESERVES AND RESOURCES 32 SILVER BULLION STORE 34 MANAGEMENT DISCUSSION AND ANALYSIS 77AUDITED CONSOLIDATED FINANCIAL STATEMENTS 38 CORPORATE INFORMATION 116 TABLE OF CONTENTS FIRST MAJESTIC S ILVER CORP. ANNUAL REPORT 2016 01

TRANSFORMATION – A Commitment to Change in the face of industry headwinds • Since 2011, cash costs reduced by 28% to $5.92 per ounce • Innovation for exceptional efficiency throughout our operations • Employed industry-leading technology to track and measure financial and operational metrics • Streamlined and optimized management and reporting hierarchies OPTIMIZATION – Challenges met, now we optimize our operations • New and substantial investment in exploration and development • Investing in plant improvements, and modernization • Attracting specialized, industry-leading talent for new initiatives • Alignment with value-driven, collaborative culture throughout the organization REALIZATION – Our blueprint for the next five years • 20 million ounces annual silver production • New mines in production • Achieve manufacturing-level efficiency • Realize top-tier margins, earnings, and All-In Sustaining Cost OUR VISION FIRST MAJESTIC SILVER CORP. ANNUAL REPORT 2016 02 OUR VIS ION Maximize margins, minimize risk by achieving manufacturing-level efficiency while generating steady growth and increasing shareholder value.

MILESTONES 2016 [ MILESTONE 01 ] Record silver production: 11.9M ounces [ MILESTONE 02 ] Record silver equivalent production: 18.7M ounces [ MILESTONE 03 ] Record gold production: 62,436 ounces [ MILESTONE 04 ] Revenues increased by 27% over 2015 [ MILESTONE 05 ] Net Earnings of $8.6M in 2016, compared with a net loss in 2015 [ MILESTONE 06 ] Completed 49,428 metres of mine development and 97,576 metres of diamond drilling, up 32% and 170%, respectively, over 2015 [ MILESTONE 07 ] Ended 2016 with record cash and cash equivalents of $129M, up from $51M in 2015 HIGHLIGHTS “First Majestic’s greatly improved performance reflects decisions made five years ago.” All dollar amounts in this report are US$ unless otherwise indicated OPERATING 2016 2015 2014 2013 2012 Silver equivalent ounces produced 18,669,800 16,086,272 15,257,958 12,791,527 9,110,452 Silver ounces produced 11,853,438 11,142,109 11,748,721 10,641,465 8,260,434 Gold ounces produced 62,436 25,467 12,283 10,040 4,221 Payable silver ounces produced 11,553,271 10,755,381 11,528,362 10,087,254 7,990,492 Total cash costs per ounce of silver $ 5.92 $ 7.87 $ 9.58 $ 9.35 $ 9.08 All-In Sustaining Costs per ounce of silver $ 10.79 $ 13.43 $ 17.71 NA NA FINANCIAL 2016 2015 2014 2013 2012 (Millions except per share amounts) Revenues $ 278.1 $ 219.4 $ 245.5 $ 251.3 $ 247.2 Mine Operating Earnings $ 49.2 $ 8.7 $ 30.2 $ 92.3 $ 142.0 Net Earnings (Loss) $ 8.6 $ (108.4) $ (61.4) $ (38.2) $ 88.9 Earnings (Loss) per Share $ 0.05 $ (0.84) $ (0.52) $ (0.33) $ 0.80 Cash Flow per Share $ 0.67 $ 0.46 $ 0.63 $ 1.17 $ 1.35 MILESTONES AND HIGHLIGHTS FIRST MAJESTIC S ILVER CORP. ANNUAL REPORT 2016 03

MESSAGE FROM THE PRESIDENT AND CEO To Our Shareholders: Reinvesting for Growth Performance, efficiency and a better long-term outlook provide good reasons why “optimization” was the right, if not perfect, theme for this year’s annual report. Following five years of very challenging market environments, along with cutbacks at just about every level, we are enjoying much improved cash flows. As a result, we are now reinvesting for growth while continuing to optimize operations throughout the company. With revenues climbing and a return to profitability, we have increased exploration by 100% in just the last two quarters. Our mine development budget is up 50% over last year, with capital expenditures forecast to reach $124 million in 2017—an increase of more than 88% over 2016. We are bringing in new, industry-leading talent to manage new initiatives, and we continue to invest heavily in technology to modernize and streamline our operations. Silver production, at 11.9 million ounces, increased by 6% over 2015. The higher numbers reflect a full year of output from our newly acquired Santa Elena mine, plus higher silver grades, throughput rates and recoveries. All of this reflects important decisions made as far back as 2012, when the market environment began to deteriorate. It was then apparent to management that crucial action was necessary to maintain a healthy balance sheet, or perhaps even to survive, if conditions prevailed—which they did for the next four years. One of our primary mandates was to use the downturn to our advantage. This meant substantially transforming First Majestic from a growth-oriented company to a much more efficient, manufacturing-based model. We dramatically cut costs, and we invested whatever spare capital we had to develop better tracking systems and technology that would empower staff to spend wisely and make better decisions. MESSAGE FROM THE PRESIDENT AND CEO FIRST MAJESTIC SILVER CORP. ANNUAL REPORT 2016 04 Today we see the results of our transformative efforts. All-In Sustaining Costs (AISC) have dropped from $17.71 per ounce in 2014 (the first year we employed this metric) to $10.79 per ounce in 2016—an improvement of 39% and one of the industry’s lowest. The low costs, combined with higher production and improved metals markets, allowed us to generate net income of $8.6 million in 2016, compared with losses in the three previous years. Optimization also means that, with First Majestic once again in a position of strength, we are focused on efforts that will make us even more productive and efficient. We have more cash now than at any time in the history of the company. We will use these funds to improve our mines and plants, streamline our decision-making processes and management systems, rebuild reserves and resources and essentially take First Majestic to our next major goals. With expanded production from existing mines, plus expected new production from projects in the pipeline, I believe we are at the beginning of several years of further growth. “We have more cash now than at any time in the history of the company.” MUCH HIGHER CASH FLOWS INVESTING IN TECHNOLOGY MANUFACTURING EFFICIENCY MODEL BALANCE SHEET STRENGTH RECRUITING TOP TALENT

“My view of optimization is that, after four years of managing principally to survive headwinds and drastically cut costs, we’re now putting money to work again. We’re still very much focused on bringing costs down further, but cash flows are to the point where we can start expanding the business again. This is an exciting turn for us—and for our shareholders.” MESSAGE FROM PRESIDENT AND CEO FIRST MAJESTIC S ILVER CORP. ANNUAL REPORT 2016 05 It’s very refreshing for me to report on such a positive year and to do so with such optimism looking ahead to 2017 and beyond. None of this would be possible without the team we have built at First Majestic. I extend my thanks and congratulations to everyone in the First Majestic Family. I look forward to celebrating the many accomplishments to come. Keith Neumeyer President and CEO @keith_neumeyer

MESSAGE FROM THE COO FIRST MAJESTIC SILVER CORP. ANNUAL REPORT 2016 06 MESSAGE FROM THE CH IEF OPERATING OFFICER Fresh Investment in Technology and Training As First Majestic continues its steady path of transformation, I’m excited and grateful to be part of this optimization phase and help the Company become one of the world’s leading pure silver mining companies. I have always been a builder of things, and having this chance to build upon the hard work of my predecessors represents a dream opportunity. First Majestic has enjoyed an exceptional history, growing from a one-mine operation into a 12 million ounce per year silver producer in a little over a decade. We now operate six mines with multiple exploration and growth projects showing consistent growth, even in challenging times. With the recent strengthening in the silver price, 2017 represents a recovery year where we can invest more in our operations and begin to unlock their full value for the future. Following many cost optimization projects, today we are able to realize our potential through fresh investments in technology and training. We have formed a new branch of the company called “Operational Excellence” which focuses on optimizing our employees’ skills and capabilities. By combining training, safety, labour relations and operational discipline, we can create high calibre miners while maximizing safe production. Last year we launched an in-house Engineer-in-Training (EIT) program for recent Mining, Metallurgy, Geological and Mechanical engineering graduates to receive specialized training throughout our operations. These young engineers will gain exposure to different technical levels of the business as well as cross-discipline and miner training to position them for success to become the leaders of tomorrow in our operations. We know that a safe mine is an efficient mine. Following on the success of our EIT program, we have created the Miner-in-Training (MIT) program which aims to train multi-skilled, highly-productive miners who will have the abilities to safely exceed current production capabilities. Apart from hands-on technical training, they will also have significant exposure to safety and environmental spill training to ensure that incidents are properly reported and contained. Given the success that other mining companies have had with these programs, I’m certain they will strengthen our operational and safety performance. Combining technology, training and innovation, we will position the company to continue on its growth plan, producing cost-efficient ounces with minimal impact on our people and environment. Again, I offer my thanks to Senior Management, the Board of Directors and everyone on the First Majestic team for their confidence and support to lead the operations into their next phase and achieve operational excellence. Working together as a team, we will build a better future for all our stakeholders. Dustin VanDoorselaere, B.Sc., B.Eng. Chief Operating Officer “From an operations standpoint, optimization means we are strengthening investment in our most important asset—the First Majestic Family. In particular, we have established focused training and education programs that will position our miners and engineers to become the leaders of tomorrow in our operations.” “We have formed a new branch of the company called “Operational Excellence” which focuses on optimizing our employees’ skills and capabilities.”

MESSAGE FROM THE CH IEF F INANCIAL OFFICER A Commitment to Change Financially, the past year was a time of regeneration for First Majestic. Following the working capital crunches of 2014 and 2015, better cash flows in 2016 provided breathing room and allowed us to bring strength to our balance sheet. Through the efforts of our financial team and help from our banking relationships, we were able to restructure the company’s debt and raise more than C$57 million through a private placement. Our cash position at year end totaled $129 million, a significant improvement over the previous four years. These efforts were part of a fresh campaign to optimize the company’s financial situation. We have a long way to go, but the efforts are underway and bearing fruit. During the year we launched an in-depth review to assess revenues, expected revenues, costs and margins, along with an analysis of where best to allocate available working capital. With our situation improving, we chose to make significant investments in exploration and development, which of course is the lifeblood for any mining company’s growth and long-term future. We also transformed the way we manage our finances, with head office taking over fiscal responsibility of our operations in Mexico. This move has proved extremely effective, giving us much more transparency and control over both revenues and expenses. We are hiring highly qualified talent to inject fresh energy and innovation into the company. New hires included a senior tax employee in Mexico City who built a tax team to help us become far more efficient in how much we pay in taxes and how much we collect in refunds owing. When we acquired SilverCrest Mines in 2015, they had two years of value-added taxes outstanding. Our team cleared up this entire tax balance, adding over $10 million to our treasury. Optimization also includes assessing current contracts and expenditures. For example, through a process of tendering and negotiating, we cut our smelting and refining charges to less than half of what they were last year. Going forward, our operations will only get more effective with these types of measures and controls. We have set ourselves up to reap the benefits of improving silver prices with much more efficient operations. I think one of our key advantages is our ability to respond to challenges quickly and take advantage of opportunities as they arise. Exceptional talent throughout the company makes us more nimble than our competitors. We have worked hard at maintaining this responsiveness, and it will be a key part of our vision going forward. In closing, I believe all of us at First Majestic are optimistic going into 2017. The gold/silver ratio points to higher silver prices, as do the supply and demand fundamentals. To me it feels like we are coming out of a financial winter and entering a spring. I look forward to seeing the company grow again as a result of our hard work and determination. Raymond Polman, CPA, CA Chief Financial Officer “Financial optimization has meant significant improvements in revenues, cash flow, debt and cost containment. We have cleaned up the company’s balance sheet, giving us a position of strength and flexibility. As a result, we are once again investing for growth—but with much lower costs than before.” MESSAGE FROM THE CFO FIRST MAJESTIC S ILVER CORP. ANNUAL REPORT 2016 07 “With our situation improving, we chose to make significant new investments in exploration and development.”

MESSAGE FROM THE CH IEF TRANSFORMATION OFFICER Changing our Corporate DNA We enter 2017 with a company-wide commitment for change and improvement. Change equals transformation; transformation leads to optimization. This is my mandate as Chief Transformation Officer. We have made enormous progress with this directive, but truly we are just getting started. The challenges we faced over the past five years delivered setbacks, but they also produced a number of positive outcomes and initiatives. Our most important initiative has been a wholesale change in the way we manage this company. In fact I would hesitate to call this simply an “initiative,” because we are in effect changing First Majestic’s corporate DNA. What this means is that we are unifying the company’s various levels of operation into one work force, operating as efficiently as possible to achieve our goals. We want to align all components of our corporate “engine” so that the machinery runs much more smoothly and powerfully. We are in Phase II of this process, which is our optimization phase. This will take time, and it will take reinforcement. From top to bottom, we are reforming our corporate culture into one of measurement, optimization and accountability. Measurement leads to understanding, which leads to Root Cause Analysis (RCA), which is identifying the root causes of problems. That guides us to improvements, to doing things better and more efficiently. Repeat this cycle over and over, and you begin to optimize the operation. We give each manager measurable outcomes to achieve. If they don’t reach these numbers, we analyze why. Then we find solutions to help them. This is optimization, and it is accountability. It involves a process of planning, analyzing, changing, refining and then doing it all over again. We are giving management at all levels autonomy to achieve their objectives, in effect giving them the “why” and the room to learn, and crucially the freedom to make mistakes and fail. We are telling them, “question everything, because nothing is sacred.” That is how we will all learn and improve and find innovative solutions. As it was through all of last year, our optimization efforts for 2017 are centered around mining operations and production costs. Through better measurement and management of our dilution and recoveries, we are seeing very encouraging results. Margins and All-In Sustaining Costs have improved significantly. Some of this is the result of a devalued peso, but a great deal of the improvement is our own hard work and measurement and problem-solving. This work will continue, I assure you, and we anticipate more major improvements over the long term. Martin Palacios, MBA, CMC Chief Transformation Officer MESSAGE FROM THE CTO FIRST MAJESTIC SILVER CORP. ANNUAL REPORT 2016 08 “I see our optimization as effecting a wholesale cultural change at First Majestic. This is part of our transformation to a manufacturing-based model, where we are empowering employees and giving them the tools to both measure and manage their outcomes. In effect, we are offering them room to learn and grow, giving them permission to fail and try innovative solutions.” “We are unifying the company’s various levels of operation into one work force, operating as efficiently as possible to achieve our goals.”

“It’s apparent that First Majestic is enjoying a surge in creativity and energy.” MESSAGE FROM THE COUNTRY MANAGER I take great pride and honour in assuming this new role of First Majestic’s Country Manager of Mexico. In this position, I am responsible for government relations and ensuring that all of our operations in Mexico adhere to First Majestic’s corporate policies and high standards. This role is essential to ensure that we maintain both sustainable and profitable operations in the different states and regions where the company operates. Optimization means that we continually find better ways to address the needs of all stakeholders in Mexico. In particular, the new federal tax regime in Mexico has created different dynamics in how we interact with and serve communities, so one of my key mandates is to make sure this process is efficient and responsive. We are fortunate to be working here for many reasons, and we remain here only because the communities where we operate support us. Optimization means that we listen, we cooperate and we respect how the people of these communities want to share in our prosperity while maintaining their cultural values and civic identities. Our new plan to expand First Majestic’s community and social relations represents a major step towards realizing these goals. Through my many meetings and discussions with our mine managers in Mexico and executive team in Vancouver, it’s apparent that First Majestic is enjoying a surge in creativity and energy—all aimed at taking this company to the next levels of efficiency, growth, profitability and sustainability. That’s optimization. That’s how we will continue to grow and reach our overall objectives. It’s also how we will become leaders in social representation and environmental responsibility. We are benefiting from improved markets, of course. But a strong, vital company finds ways to move forward during the entire spectrum of market conditions—which will always be with us. I am both pleased and proud to be part of a team that has so creatively and industriously found opportunity through the good times and the bad. I look forward to playing an essential role in this evolution and growth, and I am grateful for the opportunity. Salvador Garcia, Ing. Country Manager of Mexico MESSAGE FROM THE COUNTRY MANAGER FIRST MAJESTIC S ILVER CORP. ANNUAL REPORT 2016 09 “The theme of optimization provides a perfect foundation for our overall approach in Mexico. While we have enjoyed a successful year from an operations standpoint, we believe that good corporate citizenship in Mexico is equally crucial for the company’s long-term viability.”

TARGETS FOR 2017 FIRST MAJESTIC SILVER CORP. ANNUAL REPORT 2016 10 TARGETS [ FOR 2017 ] [ TARGET 01 ] Silver production: 11.1M to 12.4M ounces [ TARGET 02 ] Silver equivalent production: 16.6M to 18.5M ounces [ TARGET 03 ] All-In Sustaining Costs (WGC definition): $11.96 to $12.88 per ounce of silver [ TARGET 04 ] All-In Sustaining Costs (WGC definition excluding non-cash items): $11.36 to $12.21 per ounce of silver

TARGETS FOR 2017 FIRST MAJESTIC S ILVER CORP. ANNUAL REPORT 2016 11

FIRST MAJESTIC LEADERSHIP We continue to strengthen our team with industry leaders in all aspects of mining leadership. In both Canada and Mexico, our focus is to establish an effective blend of senior experience and perspective with a new generation of creative energy and ideas. FIRST MAJESTIC LEADERSHIP FIRST MAJESTIC SILVER CORP. ANNUAL REPORT 2016 12

FIRST MAJESTIC LEADERSHIP FIRST MAJESTIC S ILVER CORP. ANNUAL REPORT 2016 13 Andrew Poon VP of Finance Adam McEniry VP of Corporate Affairs & Sustainability Connie Lillico Corporate Secretary Karen Liu VP of Treasury & Corporate Controller Ramon Mendoza VP of Technical Services Todd Anthony VP of Investor Relations Jill Arias VP of Marketing

COMMUNITY AND SUSTAINABIL ITY “On the CSR side, optimization means we’re striving towards global Best Practices in the industry. The first step is to understand the socio-economic conditions in the communities and regions where we operate. The second step is to set up protocols and systems whereby locals feel comfortable approaching our offices with questions and concerns.” Nathalie Poznanski, Sustainability Manager COMMUNITY AND SUSTAINABILITY FIRST MAJESTIC SILVER CORP. ANNUAL REPORT 2016 14

COMMUNITY AND SUSTAINABILITY FIRST MAJESTIC S ILVER CORP. ANNUAL REPORT 2016 15 S A N T A E L E N A At Santa Elena we rolled out a communication plan to inform local communities about our mining activities and continue dialogue with stakeholders in the region. During the Christmas season, mine employees donated 50 presents to children in the nearby community of Banámichi. L A G U I T A R R A At the La Guitarra Mine, we conducted a study of social and economic conditions in the region of Temascaltepec and San Simon de Guerrero. This process included engagement with communities near future project development at La Guitarra, helping us appreciate stakeholder concerns, needs, culture, values, social and economic environment. We will incorporate those considerations into project strategies and protocols. S A N M A R T I N CSR activities at San Martin included a socio-economic study in the region of San Martin de Bolaños to better understand area working and living conditions. We also collaborated with the municipality of San Martin de Bolaños to support its Municipal Development Plan. This strategic collaboration is a result of dialogue with the municipality regarding the new Mining Tax in Mexico, of which municipalities are at the receiving end. D E L T O R O The Chalchihuites Community House, run by Del Toro Community Relations, enjoyed an active and successful year with engagement of area children and youth. Ongoing cultural and applied skills classes include youth orchestra, carpentry, applied arts, and technical drawing. First Majestic’s Del Toro continues to support the local archaeological site and museum, Alta Vista, an important aspect of cultural heritage in the municipality of Chalchihuites. L A P A R R I L L A Community Relations at La Parrilla Mine continued its collaboration with a committee comprised of local leaders from various community stakeholder groups. For 2016, the committee focused on identifying strategic projects and submitting proposals regarding application of the new Mining Tax at the municipal level. We also provided a computer class instructor to support area primary schools. L A E N C A N T A D A At La Encantada, First Majestic conducted a comprehensive study to develop a strategy for modernizing the mine camp. Due to La Encantada’s relatively remote location, the Company is working to increase sustainability and competitiveness of the facility by investing in quality of life for all of its personnel. New Program Optimizing our CSR Response and Engagement First Majestic’s Social Responsibility Department aligns its activities with the company’s prime directive: “Extracting profitable ounces, maximizing cash flows while achieving zero harm to our people and the environment and adding value for all stakeholders” – Adam McEniry, VP of Corporate Affairs & Sustainability The past year marked the first steps towards a three year plan to expand and optimize First Majestic’s community and social relations. This enhanced CSR program will provide better monitoring of our impacts on communities and the environment, improve how we respond to local concerns and inquiries and ensure that we adhere to local values and hire from the communities whenever possible. This new framework is expected to meet a number of global Best Practices standards within the professional field of CSR. It includes a Community Grievance System that we expect to roll out in Q2 2017 at selected mine sites on a test basis. This mechanism offers communities a simple, accessible and welcoming means for locals to connect with us regarding any concerns or questions. One of our key objectives is to raise the communities’ understanding of what we do, how we do it, and how we operate with good environmental stewardship. The more communities interact with us and know about our operations, the more we can work with them and strive for win-win outcomes. Following are highlights of our CSR initiatives in 2016.

MINES AND PROJECTS Since its inception, First Majestic has remained focused on Mexico as its base of operations. Why? Because we believe Mexico is one of the best places in the world for mining and exploration. Mexico provides political and financial stability, vast geological potential, a modern and growing infrastructure, an educated and skilled labour force and communities eager to prosper and build better lives. MINES AND PROJECTS FIRST MAJESTIC SILVER CORP. ANNUAL REPORT 2016 16 1 2 3 7 4 5 6

MINES AND PROJECTS FIRST MAJESTIC S ILVER CORP. ANNUAL REPORT 2016 17 SANTA ELENA SILVER/GOLD MINE 181 SAN MARTIN SILVER MINE 265 LA PARRILLA SILVER MINE 223 LA ENCANTADA SILVER MINE 202 LA GUITARRA SILVER MINE 286 DEL TORO SILVER MINE 244 PLOMOSAS SILVER PROJECT 307

[ SONORA STATE, MEXICO ] S A N T A E L E N A S I L V E R / G O L D M I N E SANTA ELENA SILVER/GOLD MINE FIRST MAJESTIC SILVER CORP. ANNUAL REPORT 2016 18 OWNERSHIP 100% 2016 SILVER PRODUCTION [OUNCES] 2,598,537 2016 SILVER EQUIVALENT PRODUCTION [OUNCES] 6,185,945 2016 CASH COSTS PER OUNCE $[2.09] 2016 ALL- IN SUSTAINING COSTS PER OUNCE $1.75 2016 PRODUCTION COSTS PER TONNE $42.00 2016 HIGHLIGHTS 2017 PROJECTED CASH COSTS PER OUNCE $0.90–$1.46 2017 PROJECTED SILVER PRODUCTION [OUNCES] 2,600,000–2,900,000 2017 PROJECTED ALL- IN SUSTAINING COSTS PER OUNCE $6.22–$7.24 2017 PROJECTED SILVER EQUIVALENT PRODUCTION [OUNCES] 5,400,000–6,000,000

OUR LARGEST AND MOST EFFIC IENT OPERATION The Santa Elena Silver Mine, acquired through the purchase of SilverCrest Mines in 2015, is the largest of First Majestic’s six mines based on production. Santa Elena’s production represents approximately 36% of First Majestic’s annual silver equivalent output. The mine covers 51,172 hectares of concessions and includes a 3,000 tpd processing plant that produces 100% gold and silver doré bars. The operation blends ore from the remaining heap leach pad with underground resources. During the year production shifted towards more underground ore with higher grades and recoveries. For the year, silver recoveries averaged approximately 89%. Development in 2016 focused on the new 2,300-metre San Salvador ramp, with 1,486 metres completed by year end, or 65% of the total distance. The new ramp is targeted to connect to the Main Vein along level 575 by April 2017. Once completed, the ramp is expected to improve underground productivity by reducing trucking bottlenecks. Project-wide underground development at Santa Elena totaled over 10,800 metres in 2016. We completed 12,566 metres of exploration drilling in 2016, highlighted by the new Ermitaño West discovery located only 3.5 kilometres southeast of the Santa Elena mill. SANTA ELENA SILVER/GOLD MINE FIRST MAJESTIC S ILVER CORP. ANNUAL REPORT 2016 19

[ COAHUILA STATE, MEXICO ] L A E N C A N T A D A S I L V E R M I N E LA ENCANTADA SILVER MINE FIRST MAJESTIC SILVER CORP. ANNUAL REPORT 2016 20 OWNERSHIP 100% 2016 SILVER PRODUCTION [OUNCES] 2,706,516 2016 SILVER EQUIVALENT PRODUCTION [OUNCES] 2,713,372 2016 CASH COSTS PER OUNCE $11.21 2016 ALL- IN SUSTAINING COSTS PER OUNCE $12.76 2016 PRODUCTION COSTS PER TONNE $33.11 2016 HIGHLIGHTS 2017 PROJECTED CASH COSTS PER OUNCE $9.83–$10.17 2017 PROJECTED SILVER PRODUCTION [OUNCES] 2,600,000–2,900,000 2017 PROJECTED ALL- IN SUSTAINING COSTS PER OUNCE $12.35–$12.90 2017 PROJECTED SILVER EQUIVALENT PRODUCTION [OUNCES] 2,600,000–2,900,000

OUR LARGEST S ILVER PRODUCER The La Encantada Silver Mine, part of First Majestic’s asset portfolio since 2006, was once the company’s largest silver producer. The site encompasses 4,076 hectares of mining rights and 1,343 hectares of surface rights. The facility includes a crushing and grinding circuit built in 2015 with a capacity of 3,000 tpd, and a 4,000 tpd cyanidation leaching circuit equipped to process fresh underground ore and old tailings which produces 100% silver doré bars. Construction of a roasting circuit to reprocess tailings is expected to begin early 2017 with completion by end of the year. Site preparations and civil works for the plant commenced in early 2017. The estimated capital investment for the new plant and satellite facilities is estimated at approximately $8.8 million. Once in full production, the company expects to recover an additional 1.5 million ounces of silver per year from the reprocessing of above-ground tailings. During the year First Majestic completed a 1,297 kilometre, high resolution, airborne magnetic survey covering over 8,700 hectares at La Encantada. This geophysical work will support the surface exploration activities by defining geophysical anomalies for targeting additional mineralization. A new Technical Report for La Encantada was released in 2016. The report includes updated reserve and resource estimates and is available for viewing on the company’s website. Underground development at La Encantada totaled 3,766 metres in 2016, compared with 7,260 metres in 2015. Exploration drilling totaled 10,940 metres, compared with 11,267 metres in 2015. LA ENCANTADA SILVER MINE FIRST MAJESTIC S ILVER CORP. ANNUAL REPORT 2016 21

LA PARRILLA SILVER MINE FIRST MAJESTIC SILVER CORP. ANNUAL REPORT 2016 22 LA PARRILLA S I L V E R M I N E [ DURANGO STATE, MEXICO ] 2016 HIGHLIGHTS OWNERSHIP 100% 2016 SILVER PRODUCTION [OUNCES] 2,220,874 2016 SILVER EQUIVALENT PRODUCTION [OUNCES] 3,388,434 2016 CASH COSTS PER OUNCE $7.58 2016 ALL- IN SUSTAINING COSTS PER OUNCE $10.47 2016 PRODUCTION COSTS PER TONNE $38.85 2017 PROJECTED CASH COSTS PER OUNCE $6.45–$6.84 2017 PROJECTED SILVER PRODUCTION [OUNCES] 1,900,000–2,100,000 2017 PROJECTED ALL- IN SUSTAINING COSTS PER OUNCE $10.79–$11.55 2017 PROJECTED SILVER EQUIVALENT PRODUCTION [OUNCES] 2,900,000–3,200,000

UNDERE XPLORED, V ERY L A RGE L A ND PACK AGE Representing First Majestic’s largest land-package consisting of 69,780 hectares, the exploration potential at La Parrilla Silver Mine is likely the greatest within the company’s portfolio. Since opening the mine in 2004, First Majestic has developed La Parrilla into an interconnected, multiple-mine complex. The underground operations at the Rosarios/La Rosa and La Blanca mines are connected via underground workings while the San Marcos, Vacas and Quebradillas mines are connected by above-ground gravel roads. The La Parrilla complex includes a 2,000 tpd dual-circuit processing plant consisting of a 1,000 tpd cyanidation circuit and a 1,000 tpd flotation circuit. The underground ore haulage and electric rail system project, which started in 2012, includes a 5 kilometre underground rail system which will connect all five mines to a 2,000 tpd hoisting shaft at the La Rosarios mine nearest the mill. This project was halted due to low silver prices in the past few years, but is now being reinstated. Once completed, the new ore transportation system is expected to significantly improve operational efficiencies thereby reducing overall operating costs. Underground development at La Parrilla totaled 9,417 metres in 2016, compared with 7,371 metres in 2015, while 15,327 metres of exploration drilling were completed compared to 9,307 metres in 2015. LA PARRILLA SILVER MINE FIRST MAJESTIC S ILVER CORP. ANNUAL REPORT 2016 23

HIGHE R T HROUGHP U T A ND S ILV E R GR A DES IN 2016 The Del Toro Silver Mine, which opened in early 2013, is located just 60 kilometres southeast of First Majestic’s La Parrilla mine. Del Toro consolidates the historic Perseverancia, San Juan and Dolores mines. The three operations feed a 2,000 tpd flotation circuit. A 2,000 tpd cyanidation circuit is currently in care and maintenance. Current production originates from four different underground areas: San Juan, Perseverancia, San Nicolas and Dolores. Del Toro achieved higher throughput rates and average silver grades in 2016, both attributed to an increase in underground development in the San Juan and Perseverancia mines, which provided new high grade production stopes. Continuous improvements in dilution control and in mining and milling activities also contributed to better silver grades and recoveries during the year. First Majestic is currently advancing development into higher grade areas of the Santa Teresa and San Nicolas veins which are expected to have a positive impact on future production. In September 2016, the company entered into two agreements to acquire 1,223 hectares of mining concessions adjacent to the mine. The total purchase price amounted to $3.6 million in cash, of which $1.2 million has been paid, $1.0 million is due in 2017, $1.0 million in 2018 and $0.4 million in 2019, respectively. In October 2016, the company entered into an agreement to acquire 7,205 hectares of adjacent mining concessions. The total purchase price amounted to $1.5 million, payable over six equal payments every six months. As of December 31, 2016, $0.3 million has been paid. Underground development at Del Toro totaled 7,659 metres in 2016, compared with 6,050 metres in 2015. Exploration drilling for the year totaled 14,839 metres compared with 9,470 metres in 2015. DEL TORO SILVER MINE FIRST MAJESTIC SILVER CORP. ANNUAL REPORT 2016 24

DEL TORO SILVER MINE FIRST MAJESTIC S ILVER CORP. ANNUAL REPORT 2016 25 DEL TORO S I L V E R M I N E [ ZACATECAS STATE, MEXICO ] 2016 HIGHLIGHTS OWNERSHIP 100% 2016 SILVER PRODUCTION [OUNCES] 1,500,951 2016 SILVER EQUIVALENT PRODUCTION [OUNCES] 2,649,326 2016 CASH COSTS PER OUNCE $5.73 2016 ALL- IN SUSTAINING COSTS PER OUNCE $8.62 2016 PRODUCTION COSTS PER TONNE $51.67 2017 PROJECTED CASH COSTS PER OUNCE $4.90–$5.35 2017 PROJECTED SILVER PRODUCTION [OUNCES] 1,300,000–1,400,000 2017 PROJECTED ALL- IN SUSTAINING COSTS PER OUNCE $10.38–$11.30 2017 PROJECTED SILVER EQUIVALENT PRODUCTION [OUNCES] 2,300,000–2,600,000

SAN MARTIN SILVER MINE FIRST MAJESTIC SILVER CORP. ANNUAL REPORT 2016 26 SAN MARTIN S I L V E R M I N E [ JALISCO STATE, MEXICO ] 2016 HIGHLIGHTS OWNERSHIP 100% 2016 SILVER PRODUCTION [OUNCES] 1,902,963 2016 SILVER EQUIVALENT PRODUCTION [OUNCES] 2,209,035 2016 CASH COSTS PER OUNCE $7.07 2016 ALL- IN SUSTAINING COSTS PER OUNCE $9.40 2016 PRODUCTION COSTS PER TONNE $58.64 2017 PROJECTED CASH COSTS PER OUNCE $8.31–$8.66 2017 PROJECTED SILVER PRODUCTION [OUNCES] 1,800,000–2,000,000 2017 PROJECTED ALL- IN SUSTAINING COSTS PER OUNCE $11.77–$12.41 2017 PROJECTED SILVER EQUIVALENT PRODUCTION [OUNCES] 2,000,000–2,200,000

IMP ROV EMEN TS ONGOING T HROUGH 2016 The San Martin Silver Mine is an underground mine located near the town of San Martin de Bolaños in the Bolaños River valley, in the northern portion of the State of Jalisco, Mexico. The mine’s 1,300 tpd mill and processing plant consists of crushing, grinding and conventional cyanidation by agitation in tanks which produces 100% doré bars containing mostly silver with some gold. The mine has undergone several improvements since the site was acquired by First Majestic in 2006. The most recent mill expansion (from 950 tpd to 1,300 tpd) was completed in October 2013. Elements of the modernization program included two new induction furnaces and lime feed automation. These improvements have raised overall production and quality of doré while lowering total cash costs. Further improvements over the past two years also included new leaching tanks and new thickeners. A construction project for the dry stack filter press installation started in late 2016 with completion of the foundations. At of the end of 2016, the project was 33% complete. Filter presses, which are designed to recover and re-use tailings solution and to save on water consumption, are expected to be installed and undergo testing in Q1 2017. Underground development at San Martin totaled 10,120 metres in 2016, compared with 7,680 metres in 2015. Exploration drilling for the year totaled 22,135 metres, compared with 3,640 metres in 2015. SAN MARTIN SILVER MINE FIRST MAJESTIC S ILVER CORP. ANNUAL REPORT 2016 27

LA GUITARRA SILVER MINE FIRST MAJESTIC SILVER CORP. ANNUAL REPORT 2016 28 LA GUITARRA S I L V E R M I N E [ MEXICO STATE, MEXICO ] 2016 HIGHLIGHTS OWNERSHIP 100% 2016 SILVER PRODUCTION [OUNCES] 923,597 2016 SILVER EQUIVALENT PRODUCTION [OUNCES] 1,523,688 2016 CASH COSTS PER OUNCE $7.23 2016 ALL- IN SUSTAINING COSTS PER OUNCE $13.33 2016 PRODUCTION COSTS PER TONNE $77.43 2017 PROJECTED CASH COSTS PER OUNCE $6.35–$6.75 2017 PROJECTED SILVER PRODUCTION [OUNCES] 900,000–1,100,000 2017 PROJECTED ALL- IN SUSTAINING COSTS PER OUNCE $14.37–$15.45 2017 PROJECTED SILVER EQUIVALENT PRODUCTION [OUNCES] 1,400,000–1,600,000

INCRE A SING IN V ES T MEN T IN DE V E LOPMEN T & E XP LOR AT ION IN A N T IC IPAT ION OF F U T URE E XPA NSION The La Guitarra Silver Mine is located in the Temascaltepec Mining District in the State of Mexico, near Toluca, Mexico, approximately 130 kilometres southwest of Mexico City. The property covers 39,714 hectares. Production occurs mainly at the La Guitarra mine and the newly developed El Coloso mine. The past-producing Nazareno, Mina de Agua and El Rincón areas are being explored and developed for the future. Operations at La Guitarra consist of a 500 tpd flotation mill with a ball mill, flotation cells, buildings and related infrastructure. Approximately 31% of 2016 production came from the Coloso area. The remaining 69% was extracted from the La Guitarra area. An 800-metre drift from Coloso to the Nazareno vein was completed in Q4, extending into the Soledad vein system. Underground development at La Guitarra totaled 7,581 metres in 2016, compared with 7,581 metres in 2015. Exploration drilling totaled 21,771 metres in 2016, compared with 2,504 metres in 2015. LA GUITARRA SILVER MINE FIRST MAJESTIC S ILVER CORP. ANNUAL REPORT 2016 29

PLOMOSAS PROJECT [ SINALOA STATE, MEXICO ] E XP LOR AT ION DR IL L ING, DE V ELOPMEN T TO ACCEL ER AT E IN 2017 The Plomosas Silver Project, acquired as part of our 2012 Silvermex acquisition, consists of 13 mining concessions covering 6,896 hectares. Holdings include the adjacent Rosario and San Juan historic mines located in the Sinaloa State, Mexico. The key areas of interest at Plomosas are the historic operations of the old Grupo Mexico operation known as Rosario and the neighbouring San Juan mine. Extensive facilities and infrastructure are in place, including a fully functional mining camp for 120 persons, a 20-year surface rights agreement in good standing, a 30-year water use permit, a 60 kilometre, 33 kilovolt power line, an infirmary, offices, shops and warehouses, and an assay lab. Extensive, pre-existing underground development at both the Rosario and San Juan mines will allow for easy access to mineralized zones and allow First Majestic to accelerate exploration and development in the future. First Majestic has equipped three underground drilling stations, including underground infrastructure, dewatering and ventilation. Drilling began in the fourth quarter, along with development of 520 metres of new crosscuts for further underground drilling in 2017. Looking ahead, First Majestic plans a high-resolution airborne magnetic survey of the entire property as well as a Light Detection and Ranging (LiDar) survey on 2,300 hectares in order to define new exploration targets. Permitting is underway for additional surface drilling in 2017 as well. Future plans include preparation of a NI 43-101 Technical Report with resource estimates and a Preliminary Economic Assessment planned for release in 2018. PLOMOSAS PROJECT FIRST MAJESTIC SILVER CORP. ANNUAL REPORT 2016 30

PLOMOSAS PROJECT FIRST MAJESTIC S ILVER CORP. ANNUAL REPORT 2016 31

RESERVES AND RESOURCES FIRST MAJESTIC SILVER CORP. ANNUAL REPORT 2016 32 MEASURED AND INDICATED MINERAL RESOURCES (with an effective date of December 31, 2016) (update prepared under the supervision of Jesus M. Velador Beltran, MMSA, QP Geology for First Majestic) Mine/Project Category Mineral Type k tonnes Ag (g/t) Au (g/t) Pb (%) Zn (%) Ag-Eq (g/t) Ag (k Oz) Ag-Eq (k Oz) La Encantada Measured (UG) Oxides 305 269 — — — 269 2,637 2,637 Indicated (UG) Oxides 894 297 — — — 297 8,518 8,518 Indicated (UG) Oxides – Flotation 734 246 — 4.07 — 325 5,795 7,662 Indicated (Tailings) Oxides 4,222 110 — — — 110 14,931 14,931 Total Measured and Indicated (UG) Oxides + Tailings 6,154 161 — 0.49 — 171 31,881 33,748 La Parrilla Measured (UG) Oxides 207 225 0.13 — — 235 1,497 1,564 Indicated (UG) Oxides 674 180 0.06 — — 185 3,900 4,003 Total Measured and Indicated (UG) Oxides 881 191 0.08 — — 197 5,397 5,567 Measured (UG) Sulphides 420 224 0.01 1.99 1.88 337 3,024 4,553 Indicated (UG) Sulphides 596 240 0.04 2.31 2.32 378 4,600 7,229 Total Measured and Indicated (UG) Sulphides 1,016 233 0.03 2.18 2.14 361 7,624 11,782 Total Measured and Indicated (UG) Oxides + Sulphides 1,897 213 0.05 1.17 1.14 284 13,021 17,349 San Martin Measured (UG) Oxides 1,009 266 0.27 — — 285 8,632 9,254 Indicated (UG) Oxides 1,631 254 0.14 — — 264 13,292 13,822 Total Measured and Indicated (UG) Oxides 2,639 258 0.19 — — 272 21,923 23,075 Del Toro Measured (UG) Transition + Sulphides 980 220 0.07 4.13 1.97 361 6,925 11,362 Indicated (UG) Transition + Sulphides 1,321 205 0.25 3.63 3.07 350 8,690 14,884 Total Measured and Indicated (UG) Transition + Sulphides 2,301 211 0.17 3.84 2.60 355 15,616 26,246 La Guitarra Measured (UG) Sulphides 83 204 1.61 — — 305 547 818 Indicated (UG) Sulphides 992 291 1.51 — — 385 9,273 12,289 Total Measured and Indicated (UG) Sulphides 1,075 284 1.52 — — 379 9,821 13,107 Santa Elena Indicated (UG) Sulphides 2,629 131 2.03 — — 259 11,083 21,859 Indicated (Pad) Oxides 1,882 31 0.62 — — 70 1,857 4,230 Total Indicated (UG + Pad) Oxides + Sulphides 4,511 89 1.44 — — 180 12,940 26,089 Total Measured and Indicated All mineral types 18,577 176 0.49 0.76 0.44 234 105,202 139,614 (1) Mineral Resources have been classified in accordance with the CIM Definition Standards on Mineral Resources and Mineral Reserves, whose definitions are incorporated by reference into NI 43-101. (2) In all cases, metal prices considered for Mineral Resource estimates were $19.00/oz Ag, $1,300/oz Au, $1.00/lb Pb, and $1.20/lb Zn. (3) The Mineral Resources information provided above for La Parrilla, Del Toro and San Martin is based on internal estimates prepared as of December 31, 2016. The information provided was reviewed and validated by the Company’s internal Qualified Person, Mr. Jesus M. Velador Beltran, MMSA, QP Geology, who has the appropriate relevant qualifications, and experience in geology and resource estimation. (4) Mineral Resource estimates for La Guitarra are based on information contained in the 2015 Technical Report compiled by First Majestic with contribution of Amec Foster Wheeler Americas Ltd. which were updated by First Majestic with information to December 31, 2016. (5) Mineral Resource estimates for La Encantada are based on information contained in the 2016 Technical Report compiled by First Majestic with contribution of Amec Foster Wheeler Americas Ltd. which were updated by First Majestic with information to December 31, 2016. (6) Mineral Resource estimates for Santa Elena are internal estimates based on the 2014 Update to Santa Elena Pre-Feasibility Study Technical Report compiled by SilverCrest and re-addressed to First Majestic in October, 2015. These estimates were reviewed and validated by the Company’s internal Qualified Person, Mr. Jesus M. Velador Beltran, MMSA, QP Geology. (7) Silver-equivalent grade is estimated considering: metal price assumptions, metallurgical recovery for the corresponding mineral type/mineral process and the metal payable of the corresponding contract of each mine. Estimation details are listed in each mine section of the 2016 Annual Information Form (“AIF”). (8) The cut-off grades for Mineral Resources are different for all mines. The cut-off grades are listed in each mine section of the AIF. (9) Measured and Indicated Mineral Resources are reported inclusive of Mineral Reserves. (10) The technical reports from which the above-mentioned information is derived are cited under the heading “Current Technical Reports for Material Properties” of the AIF. RESER V ES A ND RESOURCES

INFERRED MINERAL RESOURCES (with an effective date of December 31, 2016) (update prepared under the supervision of Jesus M. Velador Beltran, MMSA, QP Geology for First Majestic) Mine/Project Category Mineral Type k tonnes Ag (g/t) Au (g/t) Pb (%) Zn (%) Cu (%) Ag-Eq (g/t) Ag (k Oz) Ag-Eq (k Oz) La Encantada Inferred Total (UG) Oxides – Flotation 35 292 — 0.78 — — 305 325 340 Inferred (UG) Oxides 728 232 — — — — 232 5,430 5,430 Inferred Total (UG) Oxides 762 235 — 0.04 — — 235 5,756 5,770 La Parrilla Inferred (UG) Oxides 1,478 229 0.04 — — — 232 10,868 11,001 Inferred (UG) Sulphides 2,967 224 — 2.32 2.42 — 362 21,415 34,520 Inferred Total (UG) Oxides + Sulphides 4,445 226 0.01 1.55 1.62 — 319 32,282 45,521 San Martin Inferred Total (UG) Oxides 3,918 259 — — — — 259 32,592 32,592 Del Toro Inferred Total (UG) Transition + Sulphides 4,637 164 0.12 3.30 3.37 — 293 24,397 43,753 La Guitarra Inferred Total (UG) Sulphides 679 290 1.44 — — — 380 6,322 8,285 Santa Elena Inferred Total (UG) Sulphides 591 103 2.04 — — — 232 1,966 4,408 La Joya Inferred Total (OP) Sulphides 27,927 58 0.28 — — 0.47 103 51,646 92,907 Total Inferred All mineral types 42,960 112 0.25 0.52 0.53 0.31 169 154,961 233,237 (1) Mineral Resources have been classified in accordance with the CIM Definition Standards on Mineral Resources and Mineral Reserves, whose definitions are incorporated by reference into NI 43-101. (2) In all cases, metal prices considered for Mineral Resource estimates were $19.00/oz Ag, $1,300/oz Au, $1.00/lb Pb, and $1.20/lb Zn. (3) The Mineral Resources information provided above for La Parrilla, Del Toro and San Martin is based on internal estimates prepared as of December 31, 2016. The information provided was reviewed and validated by the Company’s internal Qualified Person, Mr. Jesus M. Velador Beltran, MMSA, QP Geology, who has the appropriate relevant qualifications, and experience in geology and resource estimation. (4) Mineral Resource estimates for La Guitarra are based on information contained in the 2015 Technical Report compiled by First Majestic with contribution of Amec Foster Wheeler Americas Ltd. which were updated by First Majestic with information to December 31, 2016. (5) Mineral Resource estimates for La Encantada are based on information contained in the 2016 Technical Report compiled by First Majestic with contribution of Amec Foster Wheeler Americas Ltd. which were updated by First Majestic with information to December 31, 2016. (6) Mineral Resource estimates for Santa Elena are internal estimates based on the 2014 Update to Santa Elena Pre-Feasibility Study Technical Report compiled by SilverCrest and re-addressed to First Majestic in October 2015. These estimates were reviewed and validated by the Company’s internal Qualified Person, Mr. Jesus M. Velador Beltran, MMSA, QP Geology. (7) Silver-equivalent grade is estimated considering: metal price assumptions, metallurgical recovery for the corresponding mineral type/mineral process and the metal payable of the corresponding contract of each mine. Estimation details are listed in each mine section of the 2016 Annual Information Form (“AIF”). (8) The cut-off grades for Mineral Resources are different for all mines. The cut-off grades are listed in each mine section of the AIF. (9) Inferred Mineral Resource estimates for La Joya Project are based on the 2013 Preliminary Economic Assessment Technical Report compiled for SilverCrest. (10) The technical reports from which the above-mentioned information is derived are cited under the heading “Current Technical Reports for Material Properties” of the AIF. PROVEN AND PROBABLE MINERAL RESERVES (as of December 31, 2016) (update prepared under the supervision of Ramon Mendoza Reyes, P.Eng, QP Mining for First Majestic) Mine/Project Category Mineral Type k tonnes Ag (g/t) Au (g/t) Pb (%) Zn (%) Ag-Eq (g/t) Ag (k Oz) Ag-Eq (k Oz) La Encatada Proven (UG) Oxides 289 239 — — — 239 2,222 2,222 Probable (UG) Oxides 1,516 213 — — — 213 10,372 10,372 Probable (UG) Oxides – Flotation 809 147 — 2.35 — 196 3,817 5,093 Probable (Tailings) Oxides 4,138 110 — — — 110 14,633 14,633 Total Proven and Probable (UG) Oxides + Tailings 6,751 143 — 0.28 — 149 31,043 32,319 La Parrilla Proven (UG) Oxides 181 200 0.12 — — 210 1,164 1,220 Probable (UG) Oxides 671 161 0.05 — — 164 3,469 3,546 Total Proven and Probable (UG) Oxides 852 169 0.06 — — 174 4,633 4,766 Proven (UG) Sulphides 410 185 0.01 1.67 1.55 280 2,442 3,687 Probable (UG) Sulphides 649 209 0.04 2.01 2.01 328 4,370 6,853 Total Proven and Probable (UG) Sulphides 1,059 200 0.02 1.88 1.83 310 6,812 10,539 Total Proven and Probable (UG) Oxides + Sulphides 1,910 186 0.04 1.04 1.02 249 11,445 15,305 San Martin Proven (UG) Oxides 880 246 0.28 — — 267 6,973 7,561 Probable (UG) Oxides 1,311 243 0.16 — — 255 10,220 10,728 Total Proven and Probable (UG) Oxides 2,191 244 0.21 — — 260 17,193 18,289 Del Toro Proven (UG) Transition + Sulphides 708 211 0.09 4.12 1.87 352 4,800 8,010 Probable (UG) Transition + Sulphides 647 233 0.26 4.39 2.94 401 4,846 8,349 Total Proven and Probable (UG) Transition + Sulphides 1,356 221 0.17 4.25 2.38 375 9,646 16,360 La Guitarra Proven (UG) Sulphides 88 179 1.47 — — 273 509 775 Probable (UG) Sulphides 1,041 256 1.34 — — 341 8,577 11,423 Total Proven and Probable (UG) Sulphides 1,129 250 1.35 — — 336 9,086 12,198 Santa Elena Probable (UG) Sulphides 2,597 110 1.63 — — 215 9,208 17,927 Probable (PAD) Oxides Spent Ore 1,882 31 0.62 — — 71 1,857 4,275 Total Probable Oxides + Sulphides 4,479 77 1.21 — — 154 11,065 22,202 Total Proven and Probable All mineral types 17,816 156 0.43 0.54 0.29 204 89,479 116,674 (1) Mineral Reserves have been classified in accordance with the Canadian Institute of Mining, Metallurgy and Petroleum (“CIM”) Definition Standards on Mineral Resources and Mineral Reserves, whose definitions are incorporated by reference into NI 43-101. (2) Metal prices considered for Mineral Reserves estimates were $18.00/oz Ag, $1,250/oz Au, $1.00/lb Pb, and $1.15/lb Zn. (3) The Mineral Reserves information provided above is based on internal estimates prepared as of December 31, 2016. The information provided was reviewed and validated by the Company’s internal Qualified Person, Mr. Ramon Mendoza Reyes, P.Eng., who has the appropriate relevant qualifications, and experience in mining and reserves estimation practices. (4) Silver-equivalent grade is estimated considering: metal price assumptions, metallurgical recovery for the corresponding mineral type/mineral process and the metal payable of the corresponding contract of each mine. Estimation details are listed in each mine section of the 2016 Annual Information Form (“AIF”). (5) The cut-off grades and modifying factors used to convert Mineral Reserves from Mineral Resources are different for all mines. The cut-off grades and factors are listed in each mine section of the AIF. (6) The technical reports from which the above-mentioned information is derived are cited under the heading “Current Technical Reports for Material Properties” of the AIF. RESERVES AND RESOURCES FIRST MAJESTIC S ILVER CORP. ANNUAL REPORT 2016 33

Buy our silver bars, ingots, medallion sets and rounds online, directly and securely. If you love silver like we do, why not experience the satisfaction of buying directly from the source? First Majestic offers a variety of 0.999% pure silver products mined from our facilities in Mexico. In fact we are the only mining company offering our own pure silver bullion for sale directly to shareholders and silver investors through our own online store. You’ll find all of our silver products at the First Majestic Bullion Store, www.store.firstmajestic.com. We offer silver bars, ingots, medallion sets and rounds in various sizes, all made in the USA. Make your purchases 24/7 through our secure, easy-to-use interface. To serve customers worldwide, the store accepts payments by credit card, in both Canadian and U.S. dollars. We provide fast, global delivery, and all shipments are insured. Product prices are determined by First Majestic management, based on market trends, and do not follow hourly and daily market fluctuations. Subscribe and follow our store on Facebook and Twitter to receive silver bullion news, store discounts and product updates: FACEBOOK: facebook.com/FirstMajesticSilverBullion TWITTER: twitter.com/FMBullion. AVAILABLE FOR PURCHASE AT OUR ONLINE STORE ROUNDS – ½ ounce, 1 ounce (now available in tubes of 20) INGOTS – 5 ounce, 10 ounce POURED BARS – 1 kg, 50 ounce COINS – 5 ounce, 10 ounce MEDALLION SETS – 18 ounce THE FIRST MAJESTIC SILVER BULL ION STORE SILVER BULLION STORE FIRST MAJESTIC SILVER CORP. ANNUAL REPORT 2016 34

MANAGEMENT’S RESPONSIBILITIES OVER FINANCIAL REPORTING FIRST MAJESTIC S ILVER CORP. ANNUAL REPORT 2016 35 F I R S T M A J E S T I C S I LV E R C O R P. A N N U A L R E P O R T 2 0 16 Contact First Majestic Silver Corp. 1800 – 925 West Georgia St Vancouver • BC • Canada V6C 3L2 Tel 604.688.3033 Fax 604.639.8873 Toll-Free 1.866.529.2807 Email [email protected] Web www.firstmajestic.com The consolidated financial statements of First Majestic Silver Corp. (the “Company”) are the responsibility of the Company’s management. The consolidated financial statements are prepared in accordance with International Financial Reporting Standards 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 fulfils its responsibilities. The Audit Committee reviews the results of the audit and the annual consolidated financial statements prior to their submission to the Board of Directors for approval. The consolidated financial statements have been audited by Deloitte LLP and their report outlines the scope of their examination and gives their opinion on the consolidated financial statements. Raymond Polman, CPA, CA Chief Financial Officer February 21, 2017 Keith Neumeyer President & CEO February 21, 2017 M A N AGEMEN T ’S RESPONSIBIL I T IES OV ER F IN A NCI A L REPOR T ING

REPORT OF INdEPENdENT REGISTEREd PUBLIC ACCOUNTING FIRM FIRST MAJESTIC SILVER CORP. ANNUAL REPORT 2016 36 REPOR T OF INdEPENdEN T REGIS T EREd PUBL IC ACCOUN T ING F IRM TO THE BOARd OF dIRECTORS ANd SHAREHOLdERS OF FIRST MAJESTIC SILVER CORP. We have audited the accompanying consolidated financial statements of First Majestic Silver Corp. and subsidiaries (the “Company”), which comprise the consolidated statements of financial position as at December 31, 2016 and December 31, 2015, and the consolidated statements of earnings (loss), consolidated statements of comprehensive income (loss), consolidated statements of changes in equity, and consolidated statements of cash flows for the years then ended, and a summary of significant accounting policies and other explanatory information. Management’s Responsibility for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of First Majestic Silver Corp. and subsidiaries as at December 31, 2016 and December 31, 2015, and their financial performance and their cash flows for the years then ended in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board. Other Matter We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of December 31, 2016, based on the criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 21, 2017 expressed an unmodified / unqualified opinion on the Company’s internal control over financial reporting. Chartered Professional Accountants February 21, 2017 Vancouver, Canada

REPORT OF INdEPENdENT REGISTEREd PUBLIC ACCOUNTING FIRM FIRST MAJESTIC S ILVER CORP. ANNUAL REPORT 2016 37 REPOR T OF INdEPENdEN T REGIS T EREd PUBL IC ACCOUN T ING F IRM TO THE BOARd OF dIRECTORS ANd SHAREHOLdERS OF FIRST MAJESTIC SILVER CORP. We have audited the internal control over financial reporting of First Majestic Silver Corp. and subsidiaries (the “Company”) as of December 31, 2016, based on the criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. A company's internal control over financial reporting is a process designed by, or under the supervision of, the company's principal executive and principal financial officers, or persons performing similar functions, and effected by the company's board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements. Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2016, based on the criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. We have also audited, in accordance with Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements as of and for the year ended December 31, 2016 of the Company and our report dated February 21, 2017 expressed an unmodified / unqualified opinion on those financial statements. Chartered Professional Accountants February 21, 2017 Vancouver, Canada

The accompanying notes are an integral part of the audited consolidated financial statements. CONSOLIdATEd STATEMENTS OF EARNINGS (LOSS) FIRST MAJESTIC SILVER CORP. ANNUAL REPORT 2016 38 CONSOLIdATEd STATEMENTS OF EARNINGS (LOSS) FOR THE YEARS ENdEd dECEMBER 31, 2016 ANd 2015 (in thousands of US dollars, except share and per share amounts) The Consolidated Statements of Earnings (Loss) provide a summary of the Company’s financial performance and net earnings or loss over the reporting periods. YEAR ENDED DECEMBER 31, Note 2016 2015 Revenues 6 $ 278,077 $ 219,444 Mine operating costs Cost of sales 7 149,281 135,674 Depletion, depreciation and amortization 79,593 75,039 228,874 210,713 Mine operating earnings 49,203 8,731 General and administrative expenses 8 17,747 17,004 Share-based payments 4,403 4,926 Impairment of non-current assets 17 — 108,421 Acquisition costs 4 — 2,054 Foreign exchange gain (1,192) (3,266) Operating earnings (loss) 28,245 (120,408) Investment and other income (loss) 9 5,209 (34) Finance costs 10 (7,963) (5,810) Earnings (loss) before income taxes 25,491 (126,252) Income taxes Current income tax expense 23 8,346 2,200 Deferred income tax expense (recovery) 23 8,544 (20,028) 16,890 (17,828) Net earnings (loss) for the year $ 8,601 $ (108,424) Earnings (loss) per common share Basic 11 $ 0.05 $ (0.84) Diluted 11 $ 0.05 $ (0.84) Weighted average shares outstanding Basic 11 160,874,038 129,117,653 Diluted 11 164,257,563 129,117,653 APPROVED BY THE BOARD OF DIRECTORS Keith Neumeyer, DIRECTOR Douglas Penrose, B.Comm., CPA, CA, DIRECTOR

The accompanying notes are an integral part of the audited consolidated financial statements. CONSOLIdATEd STATEMENTS OF COMPREHENSIVE INCOME (LOSS) FIRST MAJESTIC S ILVER CORP. ANNUAL REPORT 2016 39 CONSOLIdATEd STATEMENTS OF COMPREHENSIVE INCOME (LOSS) FOR THE YEARS ENdEd dECEMBER 31, 2016 ANd 2015 (in thousands of US dollars) The Consolidated Statements of Comprehensive Income (loss) 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. YEAR ENDED DECEMBER 31, Note 2016 2015 Net earnings (loss) for the year $ 8,601 $ (108,424) Other comprehensive loss Items that may be subsequently reclassified to profit or loss: Unrealized loss on fair value of available for sale investments 14 (2,217) — Other comprehensive loss (2,217) — Total comprehensive income (loss) for the year $ 6,384 $ (108,424)

The accompanying notes are an integral part of the audited consolidated financial statements. CONSOLIdATEd STATEMENTS OF CASH FLOwS FIRST MAJESTIC SILVER CORP. ANNUAL REPORT 2016 40 CONSOLIdATEd STATEMENTS OF CASH FLOwS FOR THE YEARS ENdEd dECEMBER 31, 2016 ANd 2015 (in thousands of US dollars) The Consolidated Statements of Cash Flows provide a summary of movements in cash and cash equivalents during the reporting years by classifying them as operating, investing or financing activities. YEAR ENDED DECEMBER 31, Note 2016 2015 Operating Activities Net earnings (loss) for the year $ 8,601 $ (108,424) Adjustments for: Depletion, depreciation and amortization 80,352 75,822 Share-based payments 4,403 4,926 Impairment of non-current assets 17 — 108,421 Income tax expense (recovery) 23 16,890 (17,828) Finance costs 10 7,963 5,810 Other 26 (10,934) (8,988) Operating cash flows before movements in working capital and taxes 107,275 59,739 Net change in non-cash working capital items 26 (2,544) 735 Income taxes paid (4,719) (4,380) Cash generated by operating activities 100,012 56,094 Investing Activities Expenditures on mining interests (43,770) (41,985) Acquisition of property, plant and equipment (18,690) (14,952) Deposits paid for the acquisition of non-current assets (521) (732) Purchase of marketable securities (3,653) — Proceeds from sale of marketable securities 48 388 Cash acquired from SilverCrest, net of cash consideration 4 — 28,202 Cash received on settlement of derivatives — 396 Cash used in investing activities (66,586) (28,683) Financing Activities Proceeds from private placement, net of share issue costs 24(a) 42,716 22,968 Proceeds from exercise of stock options 22,371 — Proceeds from term loan, net of issuance cost 19(a) 33,709 — Proceeds from revolving credit facility, net of issuance cost 19(b) 16,161 — Repayment of prepayment facilities 20 (31,604) (22,969) Repayment of debt facilities 19(b) (21,363) — Repayment of lease obligations (10,239) (11,755) Finance costs paid (6,925) (4,026) Cash provided by (used in) financing activities 44,826 (15,782) Effect of exchange rate on cash and cash equivalents held in foreign currencies (221) (956) Increase in cash and cash equivalents 78,252 11,629 Cash and cash equivalents, beginning of the year 51,018 40,345 Cash and cash equivalents, end of year $ 129,049 $ 51,018 Cash $ 91,498 $ 40,463 Short-term investments 37,551 10,555 Cash and cash equivalents, end of year $ 129,049 $ 51,018 Supplemental cash flow information 26

The accompanying notes are an integral part of the audited consolidated financial statements. CONSOLIdATEd STATEMENTS OF FINANCIAL POSITION FIRST MAJESTIC S ILVER CORP. ANNUAL REPORT 2016 41 CONSOLIdATEd STATEMENTS OF FINANCIAL POSITION AS AT dECEMBER 31, 2016 ANd 2015 (In thousands of US dollars, except share and per share amounts) The Consolidated Statements of Financial Position provide a summary of assets, liabilities and equity, as well as their current versus non-current nature, as at the reporting date. Note December 31, 2016 December 31, 2015 Assets Current assets Cash and cash equivalents $ 129,049 $ 51,018 Trade and other receivables 12 16,473 24,491 Inventories 13 20,254 22,204 Other financial assets 14 13,688 5,701 Prepaid expenses and other 735 1,371 Total current assets 180,199 104,785 Non-current assets Mining interests 15 390,409 387,337 Property, plant and equipment 16 237,638 259,741 Deposits on non-current assets 783 3,484 Deferred tax assets 23 48,146 34,353 Total assets $ 857,175 $ 789,700 Liabilities and Equity Current liabilities Trade and other payables 18 $ 28,194 $ 41,899 Unearned revenue 2,539 2,231 Current portion of debt facilities 19 12,378 15,000 Current portion of lease obligations 21 6,078 9,594 Current portion of prepayment facilities 20 — 19,859 Income taxes payable 383 618 Total current liabilities 49,572 89,201 Non-current liabilities Debt facilities 19 31,560 — Lease obligations 21 2,108 7,357 Decommissioning liabilities 22 11,315 15,592 Other liabilities 2,741 1,334 Prepayment facilities 20 — 11,383 Deferred tax liabilities 23 138,178 120,114 Total liabilities $ 235,474 $ 244,981 Equity Share capital 628,565 557,477 Equity reserves 56,354 59,061 Accumulated deficit (63,218) (71,819) Total equity $ 621,701 $ 544,719 Total liabilities and equity $ 857,175 $ 789,700 Commitments (Note 15, Note 25(c)); Subsequent events (Note 30)

The accompanying notes are an integral part of the audited consolidated financial statements. CONSOLIdATEd STATEMENTS OF CHANGES IN EqUITY FIRST MAJESTIC SILVER CORP. ANNUAL REPORT 2016 42 CONSOLIdATEd STATEMENTS OF CHANGES IN EqUITY FOR THE YEARS ENdEd dECEMBER 31, 2016 ANd 2015 (in thousands of US dollars, except share and per share amounts) The Consolidated Statements of Changes in Equity summarizes movements in equity, including common shares, share capital, equity reserves and retained earnings or accumulated deficit. Share Capital Equity Reserves Shares Amount Share-based payments(a) Available for sale revaluation(b) Foreign currency translation(c) Total equity reserves Retained earnings (Accumulated deficit) Total equity 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 — — — — — — (108,424) (108,424) Share-based payments — — 4,926 — — 4,926 — 4,926 Shares issued for: Acquisition of SilverCrest (Note 4) 33,141,663 103,248 795 — — 795 — 104,043 Private placement 4,620,000 22,968 — — — — — 22,968 Acquisition of mining interests 173,519 500 — — — — — 500 Settlement of liabilities 62,260 228 — — — — — 228 Shares cancelled (3,844) (55) — — — — — (55) Balance at December 31, 2015 155,588,238 $ 557,477 $ 59,369 $ — $ (308) $ 59,061 $ (71,819) $ 544,719 Net earnings — — — — — — 8,601 8,601 Other comprehensive loss — — — (2,217) — (2,217) — (2,217) Total comprehensive income — — — (2,217) — (2,217) 8,601 6,384 Share-based payments, net of tax — — 4,758 — — 4,758 — 4,758 Shares issued for: Private placement (Note 24(a)) 5,250,900 42,716 — — — — — 42,716 Exercise of stock options (Note 24(b)) 3,505,679 27,619 (5,248) — — (5,248) — 22,371 Acquisition of mining interests 41,466 500 — — — — — 500 Settlement of liabilities 75,284 253 — — — — — 253 Balance at December 31, 2016 164,461,567 $ 628,565 $ 58,879 $ (2,217) $ (308) $ 56,354 $ (63,218) $ 621,701 (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, plus related tax benefits of $0.4 million (2015 – $nil). (b) The available for sale revaluation reserve principally records the unrealized fair value gains or losses related to available-for-sale financial instruments, net of amount reclassed as impairment. (c) Foreign currency translation reserve represents exchange differences arising on the translation of non-US dollar functional currency operations within the Company into the US dollar presentation currency. All of the Company’s entities have the US dollar as their functional currency and, thus, there were no changes in the foreign currency translation reserve.

NOTES TO AUdITEd CONSOLIdATEd FINANCIAL STATEMENTS FIRST MAJESTIC S ILVER CORP. ANNUAL REPORT 2016 43 1. 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 six producing silver mines: the Santa Elena Silver/Gold Mine, 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. 2. BASIS OF PRESENTATION These audited consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”). The significant accounting policies, estimates and judgments applied in preparing these consolidated financial statements are summarized in Note 3 of the consolidated financial statements and have been consistently applied throughout all periods presented. These audited 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 25(a)) and marketable securities (Note 14). All dollar amounts presented are in thousands of United States dollars unless otherwise specified. These audited 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 subsidiaries (see Note 28). Intercompany balances, transactions, income and expenses are eliminated on consolidation. These audited consolidated financial statements of First Majestic Silver Corp. for the years ended December 31, 2016 and 2015 were approved and authorized for issue by the Board of Directors on February 21, 2017. 3. SIGNIFICANT ACCOUNTING POLICIES, ESTIMATES ANd JUdGMENTS The preparation of audited consolidated financial statements in conformity with IFRS 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 consolidated financial statements for the years ended December 31, 2016 and 2015, the Company applied the following significant accounting policies and associated significant estimates and critical judgements: BUSINESS COMBINATIONS (NOTE 4) Accounting Policy: Acquisitions of businesses are accounted for using the acquisition method. The consideration of each business combination is measured, at the date of the exchange, as the aggregate of the fair value of assets given, liabilities incurred or assumed and equity instruments issued by the Company to the former owners of the acquiree in exchange for control of the acquiree. Acquisition-related costs incurred for the business combination are expensed. The acquiree’s identifiable assets, liabilities and contingent liabilities are recognized at their fair value at the acquisition date. Goodwill arising on acquisition is recognized as an asset and initially measured at cost, being the excess of the consideration of the acquisition over the Company’s interest in the fair value of the net identifiable assets, liabilities and contingent liabilities recognized. If the Company’s interest in the fair value of the acquiree’s net identifiable assets, liabilities and contingent liabilities exceeds the cost of the acquisition, the excess is recognized in earnings or loss immediately. Goodwill may also arise as a result of the requirement under IFRS to record a deferred tax liability on the excess of the fair value of the acquired assets over their corresponding tax bases, with the corresponding offset recorded as goodwill. Accounting Estimates and Judgments: Determination of a Business Determination of whether a set of assets acquired and liabilities assumed constitute a business may require the Company to make certain judgments, taking into account all facts and circumstances. A business consists of inputs, including non-current assets and processes, including operational processes, that when applied to those inputs have the ability to create outputs that provide a return to the Company and its shareholders. In 2015, the Company concluded that SilverCrest Mines Inc. ("SilverCrest") met the definition of a business and, accordingly, the acquisition was accounted for as a business combination (Note 4). NO T ES T O AUdI T Ed CONSOL IdAT Ed F IN A NCI A L S TAT EMEN T S (Tabular amounts are expressed in thousands of US dollars)

NOTES TO AUdITEd CONSOLIdATEd FINANCIAL STATEMENTS FIRST MAJESTIC SILVER CORP. ANNUAL REPORT 2016 44 3. SIGNIFICANT ACCOUNTING POLICIES, ESTIMATES ANd JUdGMENTS (continued) BUSINESS COMBINATIONS (NOTE 4) (continued) Accounting Estimates and Judgments: (continued) Fair Value Estimates In business combinations, it generally requires time to obtain the information necessary to identify and measure the following as of the acquisition date: (i) The identifiable assets acquired and liabilities assumed; (ii) The consideration transferred in exchange for an interest in the acquiree; (iii) The resulting goodwill. If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Company reports in its consolidated financial statements provisional amounts for the items for which the accounting is incomplete. During the measurement period, the Company will retrospectively adjust the provisional amounts recognized at the acquisition date to reflect new information obtained about facts and circumstances that existed as of the acquisition date and, if known, would have affected the measurement of the amounts recognized as of that date. During the measurement period, the Company will also recognize additional assets or liabilities if new information is obtained about facts and circumstances that existed as of the acquisition date and, if known, would have resulted in the recognition of those assets and liabilities as of that date. The measurement period ends as soon as the Company receives the information it was seeking about facts and circumstances that existed as of the acquisition date or learns that more information is not obtainable and shall not exceed one year from the acquisition date. During 2016, the Company finalized the acquisition date fair value of the assets and liabilities acquired from SilverCrest with no changes to the original purchase price allocation disclosed in 2015. GOODWILL Accounting Policy: Goodwill arising on the acquisition of a business is carried at cost as established at the date of the acquisition less accumulated impairment losses, if any. As at December 31, 2016, the Company had $nil goodwill (2015 – $nil). Goodwill is allocated to each of the Company’s cash-generating units that is expected to benefit from the synergies of the acquisition. A cash-generating unit to which goodwill has been allocated is tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata based on the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognized directly in profit and loss in the consolidated statements of earnings or loss. An impairment loss recognized for goodwill is not reversed in subsequent periods. INVESTMENT IN ASSOCIATES Accounting Policy: An associate is an entity over which the Company has significant influence with the power to participate in the financial and operating policy decisions of the associate but does not have control or joint control over those policies. The Company accounts for its investments in associates using the equity method. Under the equity method, the Company’s investment in an associate is initially recognized at cost and subsequently increased or decreased to recognize the Company's share of earnings and losses of the associate, after any adjustments necessary to give effect to uniform accounting policies. The Company’s share of an associate’s losses that are in excess of its investment in the associate are recognized only to the extent that the Company has incurred legal or constructive obligations or made payments on behalf of the associate. The Company's share of earnings and losses of associates are recognized in net earnings during the period. Intercompany balances and interest expense and income arising on loans and borrowings between the Company and its associates are not eliminated. As at December 31, 2016 and 2015, the Company had no investment in associates. FOREIGN CURRENCY Accounting Policy: The consolidated financial statements are presented in U.S. dollars. The individual financial statements of each entity are presented in their functional currency, which is the currency of the primary economic environment in which the entity operates. Transactions in foreign currencies are translated into the entities’ functional currencies at the exchange rates at the date of the transactions. Monetary assets and liabilities of the Company’s operations denominated in a currency other than the U.S. dollar are translated using exchange rates prevailing at the date of the statement of financial position. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates on the dates of the transactions. Revenue and expense items are translated at the exchange rates in effect at the date of the underlying transaction, except for depletion and depreciation related to non-monetary assets, which are translated at historical exchange rates. Exchange differences are recognized in the statements of earnings or loss in the period in which they arise. Accounting Estimates and Judgments: Determination of Functional Currency The functional currency for each of the Company’s subsidiaries is the currency of the primary economic environment in which the entity operates. The Company has determined that the functional currency of each entity is the U.S. dollar. Determination of functional currency may involve certain judgments to determine the primary economic environment and the Company reconsiders the functional currency of its entities if there is a change in events and conditions which determined the primary economic environment.

NOTES TO AUdITEd CONSOLIdATEd FINANCIAL STATEMENTS FIRST MAJESTIC S ILVER CORP. ANNUAL REPORT 2016 45 3. SIGNIFICANT ACCOUNTING POLICIES, ESTIMATES ANd JUdGMENTS (continued) REVENUE RECOGNITION (NOTE 6) Accounting Policy: Revenue is recognized upon delivery when the following conditions are met: • control, risk and rewards of ownership of products passes to the buyer; • the amount of revenue and costs related to the transaction can be measured reliably; and • it is probable that the economic benefits associated with the transaction will flow to the Company. This occurs when significant risks and rewards of ownership have passed to the buyer, which is when insurance risk has passed to the customer and when the goods have been delivered to a contractually agreed location. Revenue from the sale of precious metals, including by-products, is recorded net of charges for smelting and refining. Metals in doré sold to third parties are priced on delivery. Final weights and assays are adjusted on final settlement which is approximately one month after delivery. Metals in concentrate sold to third-party smelters are provisionally priced and settled on a predetermined future date, typically one month after delivery to the customer, based on the market price at that time. The contracts provide for provisional payment on delivery based upon provisional assays and quoted metal prices. Revenues are recorded under these contracts at the time risks and rewards of ownership pass from the Company to the buyer based on spot price on date of delivery, and subsequently adjusted to market price based on the expected date of the final settlement. As a result, the values of the Company’s concentrate receivables change as the underlying commodity market prices vary. This component of the contract is an embedded derivative, which is recorded at fair value with changes in fair value recorded in revenues and trade receivables. Adjustments to revenue for metal prices are recorded monthly and other adjustments related to the final settlement of impurity penalties, weights and assays are recorded on final settlement. Revenue from the sale of coins, ingots and bullion is recorded when the products have been shipped and funds have been received. When cash has been received from customers prior to shipping of the related silver coins, ingots and bullion, the amounts are recorded as unearned revenue until the products are shipped. INVENTORIES (NOTE 13) Accounting Policy: Mineral inventories, including stockpiled ore, work in process and finished goods, are valued at the lower of weighted average cost and estimated net realizable value. Cost includes all direct costs incurred in production including direct labour and materials, freight, depreciation and amortization and directly attributable overhead costs. Net realizable value is calculated as the estimated price at the time of sale based on prevailing and future metal prices less estimated future production costs to convert the inventories into saleable form. Any write-downs of inventory to net realizable value are recorded as cost of sales. If there is a subsequent increase in the value of inventories, the previous write-downs to net realizable value are reversed to the extent that the related inventory has not been sold. Stockpiled ore inventory represents ore that has been extracted from the mine and is available for further processing. Costs added to stockpiled ore inventory are valued based on current mining cost per tonne incurred up to the point of stockpiling the ore and are removed at the weighted average cost per tonne. Stockpiled ore tonnage is verified by periodic surveys and physical counts. Work in process inventory includes precipitates, inventories in tanks and in the milling process. Finished goods inventory includes metals in their final stage of production prior to sale, including primarily doré and dried concentrates at our operations and finished goods in-transit. Materials and supplies inventories are valued at the lower of weighted average cost and net realizable value. Costs include acquisition, freight and other directly attributable costs. EXPLORATION AND EVALUATION EXPENDITURES (NOTE 15) Accounting Policy: Exploration and evaluation activity involves the search for mineral resources, the determination of technical feasibility and the assessment of commercial viability of an identified resource. Exploration and evaluation activity includes: • acquiring the rights to explore; • researching and analyzing historical exploration data; • gathering exploration data through topographical, geochemical and geophysical studies; • exploratory drilling, trenching and sampling; • determining and examining the volume and grade of the resource; • surveying transportation and infrastructure requirements; and • compiling pre-feasibility and feasibility studies. Capitalization of exploration and evaluation expenditures commences on acquisition of a beneficial interest or option in mineral rights. Capitalized costs are recorded as mining interests at cost less impairment charges, if applicable. No amortization is charged during the exploration and evaluation phase as the asset is not available for use.

NOTES TO AUdITEd CONSOLIdATEd FINANCIAL STATEMENTS FIRST MAJESTIC SILVER CORP. ANNUAL REPORT 2016 46 3. SIGNIFICANT ACCOUNTING POLICIES, ESTIMATES ANd JUdGMENTS (continued) EXPLORATION AND EVALUATION EXPENDITURES (NOTE 15) (continued) Accounting Policy: (continued) The majority of the Company’s exploration and evaluation expenditures focus on mineral deposits in proximity to its existing mining operations. Where the Company is acquiring a new property, the Company makes a preliminary evaluation to determine that the property has significant potential to develop an economic ore body. Exploration and evaluation expenditures are transferred to development or producing mining interests when technical feasibility and commercial viability of the mineral resource have been demonstrated. Factors taken into consideration include: • there is sufficient geological certainty of converting the mineral deposit into proven and probable reserves; • life of mine plan and economic modeling support the economic extraction of such reserves and resources; • for new properties, a scoping study and/or feasibility study demonstrates that the additional reserves and resources will generate a positive economic outcome; and • operating and environmental permits exist or are reasonably assured as obtainable. Exploration and evaluation expenditures remain as exploration mining interests and do not qualify as producing mining interests until the aforementioned criteria are met. Exploration and evaluation expenditures are transferred to development or producing mining interests when the technical feasibility and commercial viability of a mineral resource has been demonstrated according to the above mentioned factors. Accounting Estimates and Judgments: Economic recoverability and probability of future economic benefits of exploration, evaluation and development costs Management has determined that exploratory drilling, evaluation, development and related costs incurred which were capitalized have potential future economic benefits and are potentially economically recoverable, subject to impairment analysis. Management uses several criteria in its assessments of economic recoverability and probability of future economic benefit including geologic and metallurgic information, history of conversion of mineral deposits to proven and probable reserves, scoping and feasibility studies, accessible facilities, existing permits and life of mine plans. MINING INTERESTS (NOTE 15) Accounting Policy: Exploration, development and field support costs directly related to mining interests are deferred until the property to which they directly relate is placed into production, sold, abandoned or subject to a condition of impairment. The deferred costs are amortized over the useful life of the ore body following commencement of production, or written off if the property is sold or abandoned. Administration costs and other exploration costs that do not relate to any specific property are expensed as incurred. Upon commencement of commercial production, mining interests 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 to be extracted in current and future periods based on reserves and resources considered to be highly probable to be economically extracted over the life of mine. 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. From time to time, the Company acquires or disposes of properties pursuant to the terms of option agreements. Options are exercisable entirely at the discretion of the optionee with no obligation or sale until exercised or expired and, accordingly, are recorded as mineral property costs or recoveries when the payments are made or received.

NOTES TO AUdITEd CONSOLIdATEd FINANCIAL STATEMENTS FIRST MAJESTIC S ILVER CORP. ANNUAL REPORT 2016 47 3. SIGNIFICANT ACCOUNTING POLICIES, ESTIMATES ANd JUdGMENTS (continued) MINING INTERESTS (NOTE 15) (continued) Accounting Estimates and Judgments: Depletion Rate for Mining Interests Depletion expenses are allocated based on estimated useful life of the asset. Should the expected asset life and associated depletion rate differ from the initial estimate, the change in estimate would be made prospectively in the consolidated statements of earnings or loss. Mineral Reserve and Resource Estimates Mineral reserve and resource estimates affect the determination of recoverable value used in impairment assessments, the depletion and depreciation rates for non-current assets using the units of production method and the expected timing of reclamation and closure expenditures. The figures for mineral reserves and mineral resources are determined in accordance with National Instrument 43-101 ("NI 43-101") Technical Report standards. There are numerous uncertainties inherent in estimating mineral reserves and mineral resources, including many factors beyond the Company’s control. Such estimation is a subjective process and the accuracy of any mineral reserve or mineral resource estimate is a function of the quantity and quality of available data and of the assumptions made and judgments used in engineering and geological interpretation. Differences between management’s assumptions including economic assumptions such as metal prices and market conditions could have a material effect in the future on the Company’s financial position, results of operation and cash flows. PROPERTY, PLANT AND EQUIPMENT (NOTE 16) Accounting Policy: Property, plant and equipment are recorded at cost less accumulated depreciation and accumulated impairment losses. The cost of an item of property, plant and equipment includes the purchase price or construction cost, any costs directly attributable to bringing the asset to the location and condition necessary for its intended use, an initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located, and borrowing costs related to the acquisition or construction of qualifying assets. 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 it becomes available for use. Depreciation commences when the asset is in the condition and location necessary for it to operate in the manner intended by management. Depreciation charges on assets that are directly related to mineral properties are allocated to those mineral properties. The Company conducts an annual review of residual balances, useful lives and depreciation methods utilized for property, plant and equipment. Any changes in estimate that arise from this review are accounted for prospectively. Accounting Estimates and Judgments: Depreciation and Amortization Rates for Property, Plant and Equipment Depreciation and amortization expenses are allocated based on estimated useful life of the asset. Should the expected asset life and associated depreciation rates differ from the initial estimate, the change in estimate would be made prospectively in the consolidated statements of earnings or loss. Commencement of Commercial Production Prior to reaching commercial production levels intended by management, costs incurred are capitalized as part of the related mine or mill and proceeds from mineral sales are offset against costs capitalized. Depletion of capitalized costs for mining properties and depreciation and amortization of property, plant and equipment begin when operating levels intended by management have been reached. Determining when a mine or mill is in the condition necessary for it to be capable of operating in the manner intended by management is a matter of judgment dependent on the specific facts and circumstances. The following factors may indicate that commercial production has commenced: • substantially all major capital expenditures have been completed to bring the asset to the condition necessary to operate in the manner intended by management; • the mine or mill has reached a pre-determined percentage of design capacity; • the ability to sustain a pre-determined level of design capacity for a significant period of time (i.e. the ability to process ore continuously at a steady or increasing level); • the completion of a reasonable period of testing of the mine plant and equipment; • the ability to produce a saleable product (i.e., the ability to produce concentrate within required sellable specifications); • the mine or mill has been transferred to operating personnel from internal development groups or external contractors; and • mineral recoveries are at or near the expected production levels.

NOTES TO AUdITEd CONSOLIdATEd FINANCIAL STATEMENTS FIRST MAJESTIC SILVER CORP. ANNUAL REPORT 2016 48 3. SIGNIFICANT ACCOUNTING POLICIES, ESTIMATES ANd JUdGMENTS (continued) BORROWING COSTS Accounting Policy: Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset that takes a substantial period of time to get ready for its intended use are capitalized as part of the cost of the asset until the asset is substantially ready for its intended use. Other borrowing costs are recognized as an expense in the period incurred. As at December 31, 2016 and 2015, the Company does not have any qualifying assets under construction. IMPAIRMENT OF NON-CURRENT ASSETS (NOTE 17) Accounting Policy: At each statement of financial position date, the Company reviews the carrying amounts of its non-current assets to determine whether there is any indication that those assets are impaired. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment, if any. Where the asset does not generate independent cash inflows, the Company estimates the recoverable amount of the cash generating unit (“CGU”) to which the asset belongs. If the recoverable amount of the asset or CGU is determined to be less than its carrying amount, the carrying amount of the asset or CGU is reduced to its recoverable amount and an impairment loss is recognized as an expense in the consolidated statements of loss. Recoverable amount is the higher of fair value less costs of disposal (“FVLCD”) and value in use (“VIU”). FVLCD is determined as the amount that would be obtained from the sale of the asset or CGU in an arm’s length transaction between knowledgeable and willing parties. The Company considers the use of a combination of its internal discounted cash flow economic models and in-situ value of reserves, resources and exploration potential of each CGU for estimation of its FVLCD. These cash flows are discounted by an appropriate post-tax discount rate to arrive at a net present value of the asset. VIU is determined as the present value of the estimated cash flows expected to arise from the continued use of the asset or CGU in its present form and its eventual disposal. VIU is determined by applying assumptions specific to the Company’s continued use and does not take into account future development. Where an impairment loss subsequently reverses, the carrying amount of the asset or CGU is increased to the revised estimate of its recoverable amount, so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment been recognized for the asset or CGU in prior periods, adjusted for additional amortization which would have been recorded had the asset or CGU not been impaired. A reversal of an impairment loss is recognized as a gain in the statements of earnings or loss. Accounting Estimates and Judgments: Indications of Impairment and Reversal of Impairment Management considers both external and internal sources of information in assessing whether there are any indications that the Company’s property, plant and equipment and mining interests are impaired or previous impairments should be reversed. External sources of information management considers include changes in the market, economic and legal environment in which the Company operates that are not within its control and affect the recoverable amount of its property, plant and equipment and mining interests. Internal sources of information management consider include the manner in which mining properties and plant and equipment are being used or are expected to be used and indications of economic performance of the assets. For exploration and evaluation assets, indications include but are not limited to expiration of the right to explore, substantive expenditure in the specific area is neither budgeted nor planned, and if the entity has decided to discontinue exploration activity in the specific area. Fair Value Estimates In determining the recoverable amounts of the Company’s property, plant and equipment and mining interests, management makes estimates of the discounted future cash flows expected to be derived from the Company’s mining properties, costs of disposal of the mining properties and the appropriate discount rate. Reductions in metal price forecasts, increases in estimated future costs of production, increases in estimated future capital expenditures, reductions in the amount of recoverable reserves, resources, and exploration potential, and/or adverse current economics can result in an impairment of the carrying amounts of the Company’s non-current assets. Conversely, favourable changes to the aforementioned factors can result in a reversal of previous impairments.

NOTES TO AUdITEd CONSOLIdATEd FINANCIAL STATEMENTS FIRST MAJESTIC S ILVER CORP. ANNUAL REPORT 2016 49 3. SIGNIFICANT ACCOUNTING POLICIES, ESTIMATES ANd JUdGMENTS (continued) SHARE-BASED PAYMENT TRANSACTIONS (NOTE 24(b)) Accounting Policy: Employees (including directors and officers) of the Company may receive a portion of their remuneration in the form of stock options which are share‐based payment transactions (“share-based payments”). Stock options issued to employees are measured by reference to their fair value using the Black-Scholes model at the date on which they were granted. Forfeitures are estimated at grant date and adjusted prospectively based on actual forfeitures. Share-based payments expense, for stock options that are forfeited or cancelled prior to vesting, is reversed. The costs of share-based payments are recognized, together with a corresponding increase in the equity reserve, over the period in which the services and/or performance conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (“the vesting date”). On exercise by the employee, the associated option value in the equity reserve is reclassified to share capital. In situations where equity instruments are issued to non-employees, the share-based payments are measured at the fair value of goods or services received. If some or all of the goods or services received by the Company as consideration cannot be specifically identified, they are measured at the fair value of the share‐based payment. Accounting Estimates and Judgments: Valuation of Share-based Payments The Company uses the Black-Scholes Option Pricing Model for valuation of share-based payments. Option pricing models require the input of subjective assumptions including expected price volatility, interest rate and forfeiture rate. Changes in the input assumptions can materially affect the fair value estimate and the Company’s earnings and equity reserves. TAXATION (NOTE 23) Accounting Policy: Current and deferred tax are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income or directly in equity, in which case they are recognized in other comprehensive income or directly in equity. Current income tax is based on taxable earnings for the year. The tax rates and tax laws to compute the amount payable are those that are substantively enacted in each tax regime at the date of the statement of financial position. Deferred income tax is recognized, using the liability method, on temporary differences between the carrying value of assets and liabilities in the statement of financial position, unused tax losses, unused tax credits and the corresponding tax bases used in the computation of taxable earnings, based on tax rates and tax laws that are substantively enacted at the date of the statement of financial position and are expected to apply when the related deferred tax asset is realized or the deferred tax liability is settled. Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries, and interests in joint ventures, except where the timing of the reversal of the temporary difference is controlled by the Company and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets are recognized for all deductible temporary differences to the extent that the realization of the related tax benefit through future taxable earnings is probable. Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset the current tax assets against the current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis. Accounting Estimates and Judgments: Recognition of Deferred Income Tax Assets In assessing the probability of realizing income tax assets recognized, management makes estimates related to expectations of future taxable income, applicable tax opportunities, expected timing of reversals of existing temporary differences and the likelihood that tax positions taken will be sustained upon examination by applicable tax authorities. In making its assessments, management gives additional weight to positive and negative evidence that can be objectively verified. Estimates of future taxable income are based on forecasted cash flows from operations and the application of existing tax laws in each jurisdiction. Forecasted cash flows from operations are based on life of mine projections internally developed, reviewed by management and are consistent with the forecasts utilized for business planning and impairment testing purposes. Weight is attached to tax planning opportunities that are within the Company’s control, and are feasible and implementable without significant obstacles. The likelihood that tax positions taken will be sustained upon examination by applicable tax authorities is assessed based on individual facts and circumstances of the relevant tax position evaluated in light of all available evidence. Where applicable tax laws and regulations are either unclear or subject to ongoing varying interpretations, it is reasonably possible that changes in these estimates can occur that materially affect the amounts of income tax assets recognized. At the end of each reporting period, the Company reassesses recognized and unrecognized income tax assets.

NOTES TO CONSOLIdATEd FINANCIAL STATEMENTS FIRST MAJESTIC SILVER CORP. ANNUAL REPORT 2016 50 NO T ES T O CONSOL IdAT Ed F IN A NCI A L S TAT EMEN T S (tabular amounts are expressed in thousand of United States dollars, unless otherwise stated) 3. SIGNIFICANT ACCOUNTING POLICIES, ESTIMATES ANd JUdGMENTS (continued) TAXATION (NOTE 23) (continued) Accounting Estimates and Judgments: (continued) Tax Contingencies The Company’s operations involve dealing with uncertainties and judgments in the application of tax regulations in multiple jurisdictions. The final taxes paid are dependent upon many factors, including negotiations with tax authorities in various jurisdictions and resolution of disputes arising from tax audits. The Company recognizes potential liabilities and records tax liabilities for anticipated tax audit issues based on its estimate of whether, and the extent to which, additional taxes will be due. The Company adjusts these liabilities in light of changing facts and circumstances; however, due to the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from the Company’s current estimate of the tax liabilities. If the Company’s estimate of tax liabilities proves to be less than the ultimate assessment, an additional charge to expense would result. If the estimate of tax liabilities proves to be greater than the ultimate assessment, a tax benefit would result. FINANCIAL ASSETS Accounting Policy: All financial assets are initially recorded at fair value and designated upon inception into one of the following four categories: held to maturity, available for sale (“AFS”), loans and receivables, or fair value through profit or loss (“FVTPL”). Financial assets classified as loans and receivables and held to maturity are measured at amortized cost using the effective interest method less any allowance for impairment. The effective interest method is a method of calculating the amortized cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial asset, or, where appropriate, a shorter period. Financial assets classified as AFS are measured at fair value with unrealized gains and losses recognized in other comprehensive income (loss) except for losses in value that are considered other than temporary due to a significant or prolonged decline in the fair value of that investment below its cost which are recognized through profit and loss in the statements of earnings or loss. Financial assets classified as FVTPL are measured at fair value with unrealized gains and losses recognized through profit and loss in the statements of earnings or loss. Transactions costs associated with FVTPL financial assets are expensed as incurred, while transaction costs associated with all other financial assets are included in the initial carrying amount of the asset. FINANCIAL LIABILITIES Accounting Policy: All financial liabilities are initially recorded at fair value and designated upon inception as FVTPL or other financial liabilities. Financial liabilities classified as other financial liabilities are initially recognized at fair value less directly attributable transaction costs. After initial recognition, other financial liabilities are subsequently measured at amortized cost using the effective interest method. The effective interest method is a method of calculating the amortized cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period. Financial liabilities classified as FVTPL include financial liabilities held for trading and financial liabilities designated upon initial recognition as FVTPL. Derivatives, including separated embedded derivatives, are also classified as held for trading unless they are designated as effective hedging instruments. Financial instruments and non-financial contracts may contain embedded derivatives, which are required to be accounted for separately at fair value as derivatives when the risks and characteristics of the embedded derivatives are not closely related to those of their host contract and the host contract is not carried at fair value. The Company regularly assesses its financial instruments and non-financial contracts to ensure that any embedded derivatives are accounted for in accordance with its policy. Transaction costs on financial liabilities classified as FVTPL are expensed as incurred. At the end of each reporting period subsequent to initial recognition, financial liabilities at FVTPL are measured at fair value, with changes in fair value recognized directly in profit or loss in the period in which they arise. PROVISIONS (NOTE 22) Accounting Policy: Provisions are recognized when the Company has a present legal or constructive obligation as a result of a past event, it is probable that the Company will be required to settle the obligation, and a reliable estimate of the obligation can be made. The amount recognized as a provision is the present value of the expenditures expected to be required to settle the obligation using a pre-tax discount rate that reflects current market assessment of the time value of money and the risks specific to the obligation. The increase in the provision due to the passage of time is recognized as finance costs.

NOTES TO CONSOLIdATEd FINANCIAL STATEMENTS FIRST MAJESTIC S ILVER CORP. ANNUAL REPORT 2016 51 3. SIGNIFICANT ACCOUNTING POLICIES, ESTIMATES ANd JUdGMENTS (continued) PROVISIONS (NOTE 22) (continued) Accounting Estimates and Judgments: Estimated Reclamation and Closure Costs The Company’s provision for decommissioning liabilities represents management’s best estimate of the present value of the future cash outflows required to settle estimated reclamation and closure costs at the end of mine’s life. The provision reflects estimates of future costs, inflation, movements in foreign exchange rates and assumptions of risks associated with the future cash outflows, and the applicable risk-free interest rates for discounting the future cash outflows. Changes in the above factors can result in a change to the provision recognized by the Company. Changes to reclamation and closure cost obligations are recorded with a corresponding change to the carrying amounts of related mining properties. Adjustments to the carrying amounts of related mining properties can result in a change to future depletion expense. CASH AND CASH EQUIVALENTS Accounting Policy: Cash in the statement of financial position includes cash on hand and held at banks and cash equivalents include short-term guaranteed investment certificates redeemable within three months or less at the date of purchase. FINANCE LEASES (NOTE 21) Accounting Policy: Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases. Assets held under finance leases are initially recognized as assets of the Company at their fair value at the inception of the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in the consolidated statement of financial position as a finance lease obligation. Finance costs are recognized immediately in profit or loss, unless they are directly attributable to qualifying assets, in which case they are capitalized in accordance with the Company’s general policy on borrowing costs. EARNINGS OR LOSS PER SHARE (NOTE 11) Accounting Policy: Basic earnings or loss per share for the period is calculated by dividing the earnings or loss attributable to equity holders of the Company by the weighted average number of shares outstanding during the reporting period. Diluted earnings or loss per share is calculated by adjusting the weighted average number of shares outstanding to assume conversion of all potentially dilutive share equivalents, such as stock options and share purchase warrants, and assumes the receipt of proceeds upon exercise of the options to determine the number of shares assumed to be purchased at the average market price during the period. FUTURE CHANGES IN ACCOUNTING POLICIES NOT YET EFFECTIVE AS AT DECEMBER 31, 2016 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 applying this standard, primarily reviewing its doré and concentrate sales agreements. The Company does not anticipate any changes in the gross amounts of revenue but the timing of revenue recognized may differ under the new standard if the timing of transfer of control to customers is deferred and/or if there are additional performance obligations which are currently not recognized separately, such as shipping and insurance services arranged by the Company on behalf of its customers. 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 applying this standard. The expected impact of applying this standard include the potential designation of equity securities as financial assets at fair value through other comprehensive income, resulting in changes in fair value recognized in other comprehensive income. The new expected credit loss impairment model and reformed approach to hedge accounting is not expected to have a significant impact on the Company’s consolidated financial statements.

NOTES TO CONSOLIdATEd FINANCIAL STATEMENTS FIRST MAJESTIC SILVER CORP. ANNUAL REPORT 2016 52 3. SIGNIFICANT ACCOUNTING POLICIES, ESTIMATES ANd JUdGMENTS (continued) FUTURE CHANGES IN ACCOUNTING POLICIES NOT YET EFFECTIVE AS AT DECEMBER 31, 2016 (continued) Leases In January 2016, the IASB published a new accounting standard, IFRS 16 – Leases (“IFRS 16”) which supersedes IAS 17 – Leases. IFRS 16 specifies how to recognize, measure, present and disclose leases. The standard provides a single lessee accounting model, requiring the recognition of assets and liabilities for all leases, unless the lease term is 12 months or less or the underlying asset has a low value. The standard is effective for annual periods beginning on or after January 1, 2019, with early adoption permitted if IFRS 15 has also been applied. Upon the adoption of IFRS 16, the Company expects to record a material balance of lease assets and associated lease liabilities related to leases with a term of 12 months or more previously classified as operating leases on the Consolidated Statements of Financial Position at January 1, 2019. Due to the recognition of additional lease assets and liabilities, a higher amount of depreciation expense and interest expense on lease liabilities will be recorded under IFRS 16 compared to the current standard. Additionally, a corresponding reduction in production costs is expected. Lastly, the Company expects a positive impact on operating cash flows with a corresponding increase in financing cash outflows under IFRS 16. The Company has not quantified these impacts at this time. 4. ACqUISITION OF SILVERCREST MINES INC. DESCRIPTION OF THE TRANSACTION On October 1, 2015, the Company completed the arrangement agreement to acquire all of the issued and outstanding common shares of SilverCrest Mines Inc. for a consideration of 0.2769 common shares of First Majestic (the “Exchange Ratio”) and CAD$0.0001 in cash per common share of SilverCrest. Pursuant to closing of the transaction, First Majestic issued 33,141,663 common shares, 2,647,147 replacement stock options based on the Exchange Ratio, and a nominal amount of cash for the acquisition. The transaction added the Santa Elena Silver/Gold Mine as the Company’s sixth producing asset in Mexico. Santa Elena is located approximately 150 km northeast of Hermosillo, Sonora, Mexico, with a 3,000 tpd milling operation. The transaction also strengthened the Company’s consolidated statements of financial position by contributing $29.4 million in working capital at the acquisition date. PURCHASE PRICE ALLOCATION As management concluded that SilverCrest constitutes a business, the acquisition is accounted for in accordance with IFRS 3 – Business Combinations. Total consideration for the acquisition was valued at $104.1 million at the acquisition date and the purchase price allocation was estimated as follows: Total Consideration 33,141,663 First Majestic shares at $3.12 (CAD$4.13) per share $ 103,248 2,647,147 First Majestic replacement options (Note 24(b)) 795 Cash paid 9 $ 104,052 Net Assets Acquired Cash and cash equivalents $ 28,211 Trade and other receivables(1) 9,088 Inventories 10,971 Property, plant and equipment 64,819 Mining interests 15,951 Other working capital items (3,905) Debt facility (15,000) Decommissioning liabilities (2,634) Deferred tax liabilities (3,449) $ 104,052 (1) The fair value of acquired trade and other receivables is assumed to equal to its contractual value.

NOTES TO CONSOLIdATEd FINANCIAL STATEMENTS FIRST MAJESTIC S ILVER CORP. ANNUAL REPORT 2016 53 4. ACqUISITION OF SILVERCREST MINES INC. (continued) PURCHASE PRICE ALLOCATION (continued) In 2009, Nusantara de Mexico, S.A. de C.V. (“Nusantara”), a subsidiary of SilverCrest entered into a definitive purchase agreement with Sandstorm Gold Ltd. (“Sandstorm”) to sell 20% of its future gold production from the Santa Elena Silver Mine, up to a total of 50,000 ounces, for consideration of an upfront deposit of $12.0 million and 3.5 million common shares of Sandstorm, valued at $1.4 million at that time, plus a payment per ounce of gold equal to the lesser of $350 or the prevailing market price, subject to an increase of 1% per annum. The agreement was subsequently amended in 2014 to include 20% of Santa Elena’s life of mine gold production from a designated area of its underground operation, for an additional consideration of $10.0 million in cash plus, upon fulfillment of the original 50,000 ounces, a payment per ounce of gold equal to the lesser of $450 or the prevailing market price, subject to an inflating increase of 1% per annum. The expected cash flows associated with the sale of gold to Sandstorm at a price lower than market price have been reflected in the determination of the fair value of the mining interest recorded upon acquisition of SilverCrest. The Company has presented the value of any expected future cash flows from the sale of future gold production to Sandstorm as part of mining interests, as the Company did not receive any of the original upfront payment provided by Sandstorm to SilverCrest. Further, the Company does not believe that the agreement to sell to Sandstorm meets the definition of a liability as the delivery obligation only arises upon production of the gold. Total transaction costs of $2.1 million related to the acquisition were expensed in 2015. Financial and operating results of SilverCrest are included in the Company’s consolidated financial statements effective October 1, 2015. During the year ended December 31, 2015, the acquisition of SilverCrest contributed revenues of $26.7 million and $3.3 million to the Company’s net earnings. Had the business combination been effected at January 1, 2015, pro forma revenues and net loss of the Company for the year ended December 31, 2015 would have been $279.6 million and $101.8 million, respectively. 5. SEGMENTEd INFORMATION For the year ended December 31, 2016, the Company had eight reporting segments (December 31, 2015 – eight), including six operating segments located in Mexico, one retail market segment in Canada and one metal marketing segment in Europe. “Others” consists primarily of the Company’s other development and exploration properties (Note 15), debt facilities (Note 19), prepayment facilities (Note 20), intercompany eliminations, and corporate expenses which are not allocated to operating segments. All of the Company’s operations are within the mining industry and its major products are precious metals doré and precious and base metals concentrates which are refined or smelted into pure silver, gold, lead and zinc and sold to global metal brokers. 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. Therefore, other income and expense items are not allocated to the segments. Houston

NOTES TO CONSOLIdATEd FINANCIAL STATEMENTS FIRST MAJESTIC SILVER CORP. ANNUAL REPORT 2016 54 5. SEGMENTEd INFORMATION (continued) YEAR ENDED DECEMBER 31, 2016 AT DECEMBER 31, 2016 Revenue Cost of sales Depletion, depreciation and amortization Mine operating earnings (loss) Capital expenditures Total assets Total liabilities Mexico Santa Elena(1) $ 94,995 $ 42,721 $ 16,425 $ 35,849 $ 15,245 $ 111,291 $ 17,868 La Encantada 44,338 29,708 17,487 (2,857) 9,989 94,497 13,323 La Parrilla 44,891 25,742 18,786 363 11,077 172,663 43,160 Del Toro 34,976 19,522 14,202 1,252 11,548 157,684 26,774 San Martin 37,201 18,784 6,854 11,563 6,357 86,519 25,085 La Guitarra 21,620 12,822 5,517 3,281 9,042 68,065 13,819 Canada Coins and Bullion Sales 922 873 — 49 — 960 4 Europe Silver Sales 17,737 14,254 — 3,483 — 7,460 774 Others (18,603) (15,145) 322 (3,780) 2,616 158,036 94,667 Consolidated $ 278,077 $ 149,281 $ 79,593 $ 49,203 $ 65,874 $ 857,175 $ 235,474 (1) Santa Elena was acquired on October 1, 2015. YEAR ENDED DECEMBER 31, 2015 AT DECEMBER 31, 2015 Revenue Cost of sales Depletion, depreciation and amortization Mine operating earnings (loss) Capital expenditures Total assets Total liabilities Mexico Santa Elena(1) $ 26,655 $ 15,131 $ 4,155 $ 7,369 $ 3,003 $ 136,713 $ 20,773 La Encantada 39,712 32,111 26,633 (19,032) 13,784 101,092 38,857 La Parrilla 43,292 30,362 17,360 (4,430) 14,041 179,108 29,506 Del Toro 47,584 27,406 12,125 8,053 12,670 165,587 27,164 San Martin 43,067 20,789 8,706 13,572 9,058 86,291 28,226 La Guitarra 17,335 9,688 6,715 932 7,775 56,351 11,920 Canada Coins and Bullion Sales 546 666 22 (142) — 282 1 Europe Silver Sales 90,894 90,863 — 31 — 7,413 2,394 Others (89,641) (91,342) (677) 2,378 1,911 56,863 86,140 Consolidated $ 219,444 $ 135,674 $ 75,039 $ 8,731 $ 62,242 $ 789,700 $ 244,981 (1) Santa Elena was acquired on October 1, 2015. During the year ended December 31, 2016, the Company had six (December 31, 2015 – five) customers that account for 100% of its doré and concentrate sales revenue. The Company had three major customers that accounted for 32%, 29%, and 24% of total revenue in 2016 (2015 – 50%, 30% and 16%, respectively).

NOTES TO CONSOLIdATEd FINANCIAL STATEMENTS FIRST MAJESTIC S ILVER CORP. ANNUAL REPORT 2016 55 6. REVENUES Revenues from sale of metal, including by-products, are recorded net of smelting and refining costs. Precious metals contained in doré form are sold and priced on delivery to the customer. Metals in concentrate form are sold and provisionally priced on delivery. Final settlements are based on market price at a predetermined future date, typically one month after delivery. Revenues for the period are summarized as follows: YEAR ENDED DECEMBER 31, 2016 2015 Gross revenue from payable metals: Silver $ 199,942 $ 172,268 Gold 64,039 28,754 Lead 27,208 33,031 Zinc 8,902 13,666 Gross revenue 300,091 247,719 Less: smelting and refining costs (22,014) (28,275) Revenues $ 278,077 $ 219,444 Silver as % of gross revenue 67% 70% The Santa Elena mine has a purchase agreement with Sandstorm Gold Ltd. (“Sandstorm”), which requires the Company to sell 20% of its gold production over the life of mine from a designated area of its underground operations. The selling price is based on the lower of the prevailing market price or $350 per ounce until fulfillment of 50,000 ounces, after which the price will increase to the lower of the prevailing market price or $450 per ounce, subject to a 1% annual inflation commencing in April 2014. During the year ended December 31, 2016, the Company delivered 9,992 (2015 – 2,062) ounces of gold to Sandstorm under the purchase agreement at an average price of $360 (2015 – $357) per ounce , compared to the average market price of $1,251 (2015 – $1,104) per ounce. As at December 31, 2016, the Santa Elena mine has delivered 42,722 (2015 – 32,730) cumulative ounces of gold to Sandstorm. 7. 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: YEAR ENDED DECEMBER 31, 2016 2015 Consumables and materials $ 35,762 $ 41,846 Labour costs 63,444 52,779 Energy 28,246 22,335 Other costs 13,881 8,503 Production costs 141,333 125,463 Transportation and other selling costs 3,756 5,237 Workers participation costs 1,907 468 Environmental duties and royalties 1,389 1,150 Inventory changes 560 2,326 Other costs 336 1,030 $ 149,281 $ 135,674

NOTES TO CONSOLIdATEd FINANCIAL STATEMENTS FIRST MAJESTIC SILVER CORP. ANNUAL REPORT 2016 56 8. 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: YEAR ENDED DECEMBER 31, 2016 2015 Corporate administration $ 3,819 $ 4,185 Salaries and benefits 9,387 8,149 Audit, legal and professional fees 2,656 2,835 Filing and listing fees 441 320 Directors fees and expenses 685 731 Depreciation 759 784 $ 17,747 $ 17,004 9. INVESTMENT ANd OTHER INCOME (LOSS) The Company’s investment and other income (loss) income are comprised of the following: YEAR ENDED DECEMBER 31, 2016 2015 Gain (loss) from investment in marketable securities (Note 14) $ 6,281 $ (1,030) Loss from fair value adjustment of prepayment facilities (Note 20) (1,255) (1,202) Interest income and other 183 1,123 Equity loss on investment in associates — 679 Gain from investment in derivatives — 396 $ 5,209 $ (34) 10. FINANCE COSTS Finance costs are primarily related to interest and accretion expense on the Company’s prepayment facilities, debt facilities and finance leases. The Company’s finance costs in the period are summarized as follows: YEAR ENDED DECEMBER 31, 2016 2015 Debt facilities (Note 19) $ 2,218 $ 141 Finance leases (Note 21) 845 1,480 Prepayment facilities (Note 20) 261 3,060 Loss on early settlement of prepayment facilities (Note 20) 3,506 — Accretion of decommissioning liabilities 830 835 Silver sales and other 303 294 $ 7,963 $ 5,810

NOTES TO CONSOLIdATEd FINANCIAL STATEMENTS FIRST MAJESTIC S ILVER CORP. ANNUAL REPORT 2016 57 11. EARNINGS (LOSS) PER SHARE Basic net earnings (loss) per share is the net earnings (loss) available to common shareholders divided by the weighted average number of common shares outstanding during the period. Diluted net earnings (loss) per share adjusts basic net earnings per share for the effects of dilutive potential common shares. The calculations of basic and diluted earnings (loss) per share for the periods ended December 31, 2016 and 2015 are based on the following: YEAR ENDED DECEMBER 31, 2016 2015 Net earnings (loss) for the year $ 8,601 $ (108,424) Weighted average number of shares on issue – basic 160,874,038 129,117,653 Adjustment for stock options 3,383,525 — Weighted average number of shares on issue – diluted(1) 164,257,563 129,117,653 Earnings (loss) per share – basic $ 0.05 $ (0.84) Earnings (loss) per share – diluted $ 0.05 $ (0.84) (1) Diluted weighted average number of shares excludes 2,880,893 (2015 – 10,360,874) options that were anti-dilutive for the year ended December 31, 2016. 12. TRAdE ANd OTHER RECEIVABLES Trade and other receivables of the Company are comprised of: DECEMBER 31, DECEMBER 31, 2016 2015 Trade receivables $ 6,353 $ 3,249 Value added taxes and other taxes receivable 9,534 19,674 Other 586 1,568 $ 16,473 $ 24,491 At December 31, 2015, value added taxes (“VAT”) receivable included $11.1 million of VAT filings of Nusantara, a subsidiary of the recently acquired SilverCrest, that were delayed due to a prior audit from the Mexican tax authorities. During the year ended December 31, 2016, the Company was able to fully collect these outstanding VAT balances. As at December 31, 2016, the Company has a $0.3 million (December 31, 2015 – $1.1 million) promissory notes receivable from First Mining Finance Corp., a related party, which will be fully settled by June 2017.

NOTES TO CONSOLIdATEd FINANCIAL STATEMENTS FIRST MAJESTIC SILVER CORP. ANNUAL REPORT 2016 58 13. 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 weighted average cost or net realizable value. Inventories of the Company are comprised of: DECEMBER 31, DECEMBER 31, 2016 2015 Finished goods – doré and concentrates $ 3,014 $ 3,194 Work-in-process 1,327 1,282 Stockpile 122 93 Silver coins and bullion 405 212 Materials and supplies 15,386 17,423 $ 20,254 $ 22,204 The amount of inventories recognized as an expense during the year was $220.9 million (2015 – $200.5 million), equivalent to total production costs plus depletion, depreciation and amortization for the period. As at December 31, 2016, mineral inventories, which consist of stockpile, work-in-process and finished goods, include $0.5 million (December 31, 2015 – $0.8 million) write-down which was recognized in cost of sales during the year. 14. OTHER FINANCIAL ASSETS As at December 31, 2016, other financial assets consist primarily of the Company’s investment in marketable securities and foreign exchange derivatives. Marketable securities are classified as financial assets. Changes in fair value of marketable securities designated as fair value through profit and loss (“FVTPL”) are recorded through profit or loss, while changes in fair value of marketable securities designated as available for sale (“AFS”) are recorded through other comprehensive income. DECEMBER 31, DECEMBER 31, 2016 2015 Fair Value through Profit and Loss First Mining Finance Corp. (TSX.V: FF) $ 9,819 $ 3,564 Sprott Physical Silver Trust (NYSE: PSLV) 2,432 2,108 Others — 29 $ 12,251 $ 5,701 Available for sale marketable securities 1,437 — Total marketable securities $ 13,688 $ 5,701 During the year ended December 31, 2016, the Company recognized a gain of $6.3 million (2015 – loss of $1.0 million), related to fair value adjustments to its FVTPL marketable securities. During the year ended December 31, 2016, the Company recognized an unrealized loss of $2.2 million (2015 – $nil), or $1.9 million net of tax, on marketable securities through other comprehensive income.

NOTES TO CONSOLIdATEd FINANCIAL STATEMENTS FIRST MAJESTIC S ILVER CORP. ANNUAL REPORT 2016 59 15. 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. The Company’s mining interests are comprised of the following: DECEMBER 31, DECEMBER 31, 2016 2015 Producing properties $ 319,213 $ 309,295 Exploration properties (non-depletable) 71,196 78,042 $ 390,409 $ 387,337 Producing properties are allocated as follows: Producing properties Santa Elena La Encantada La Parrilla Del Toro San Martin La Guitarra Total Cost At December 31, 2014 $ — $ 72,491 $ 125,559 $ 61,913 $ 67,327 $ 66,259 $ 393,549 Acquired from SilverCrest 15,519 — — — — — 15,519 Additions 2,240 5,002 9,115 8,427 5,115 6,340 36,239 Change in decommissioning liabilities (105) (195) (406) (3) (34) (119) (862) Transfer from exploration properties — 4,177 7,656 17,606 7,588 17,397 54,424 At December 31, 2015 $ 17,654 $ 81,475 $ 141,924 $ 87,943 $ 79,996 $ 89,877 $ 498,869 Additions 9,067 1,502 4,211 2,256 2,753 4,639 24,428 Change in decommissioning liabilities (202) (446) 54 (567) (860) (342) (2,363) Transfer from exploration properties 1,110 3,298 — 10,046 4,425 6,826 25,705 At December 31, 2016 $ 27,629 $ 85,829 $ 146,189 $ 99,678 $ 86,314 $ 101,000 $ 546,639 Accumulated depletion and impairment At December 31, 2014 $ — $ (14,549) $ (24,816) $ (12,402) $ (30,687) $ (34,696) $ (117,150) Depletion and amortization (544) (15,019) (7,287) (5,898) (2,953) (5,509) (37,210) Impairment — (12,543) (5,803) (2,212) — (14,656) (35,214) At December 31, 2015 $ (544) $ (42,111) $ (37,906) $ (20,512) $ (33,640) $ (54,861) $ (189,574) Depletion and amortization (2,860) (9,288) (11,069) (6,762) (3,714) (4,159) (37,852) At December 31, 2016 $ (3,404) $ (51,399) $ (48,975) $ (27,274) $ (37,354) $ (59,020) $ (227,426) Carrying values At December 31, 2015 $ 17,110 $ 39,364 $ 104,018 $ 67,431 $ 46,356 $ 35,016 $ 309,295 At December 31, 2016 $ 24,225 $ 34,430 $ 97,214 $ 72,404 $ 48,960 $ 41,980 $ 319,213

NOTES TO CONSOLIdATEd FINANCIAL STATEMENTS FIRST MAJESTIC SILVER CORP. ANNUAL REPORT 2016 60 15. MINING INTERESTS (continued) Exploration properties are allocated as follows: Exploration properties Santa Elena La Encantada La Parrilla Del Toro San Martin La Guitarra Other Total Cost At December 31, 2014 $ — $ 8,345 $ 15,261 $ 35,310 $ 15,175 $ 34,794 $ 37,379 $ 146,264 Acquired from SilverCrest — — — — — — 432 432 Exploration and evaluation expenditures — 1,879 1,188 2,046 461 380 1,308 7,262 Change in decommissioning liabilities — — — — — — (266) (266) Impairment — (1,456) (463) (635) — (5,233) (13,439) (21,226) Transfer to producing properties — (4,177) (7,656) (17,606) (7,588) (17,397) — (54,424) At December 31, 2015 $ — $ 4,591 $ 8,330 $ 19,115 $ 8,048 $ 12,544 $ 25,414 $ 78,042 Exploration and evaluation expenditures 2,138 1,264 2,298 7,743 2,478 2,092 952 18,965 Change in decommissioning liabilities — — — — — — ($106) ($106) Transfer to producing properties (1,110) (3,298) — (10,046) (4,425) (6,826) — (25,705) At December 31, 2016 $ 1,028 $ 2,557 $ 10,628 $ 16,812 $ 6,101 $ 7,810 $ 26,260 $ 71,196 (a) Santa Elena Silver/Gold Mine, Sonora State The Santa Elena Mine has a gold streaming agreement with Sandstorm, which requires the mine to sell 20% of its life of mine gold production from a designated area of its underground operations to Sandstorm. The selling price is based on the lower of the prevailing market price or $350 per ounce until fulfillment of 50,000 ounces, after which the price will increase to the lower of the prevailing market price or $450 per ounce, adjusted for a 1% annual inflation commencing in April 2014. As at December 31, 2016, the Santa Elena mine has delivered 42,722 (2015 – 32,730) cumulative ounces of gold to Sandstorm. In December 2016, the Company entered into an option agreement with Compania Minera Dolores, S.A. de C.V., a subsidiary of Pan American Silver Corp., to acquire 5,802 hectares of mining concessions adjacent to the Santa Elena mine. In exchange, First Majestic has agreed to incur $1.6 million in exploration costs on the property over four years, a 2.5% NSR royalty on the related concessions, and to pay $1.4 million in cash, of which $0.1 million was due on or before the date of agreement (paid), $0.2 million in December 2017, $0.2 million in December 2018, $0.3 million in December 2019 and $0.7 million in December 2020, respectively. (b) Del Toro Silver Mine, Zacatecas State In September 2016, the Company entered into two agreements to acquire 1,223 hectares of mining concessions adjacent to the Del Toro Silver Mine. The total purchase price amounted to $3.6 million in cash, of which $1.2 million has been paid, $1.0 million is due in 2017, $1.0 million in 2018 and $0.4 million in 2019, respectively. In October 2016, the Company entered into an agreement to acquire 7,205 hectares of mining concessions adjacent to the Del Toro Silver Mine. The total purchase price amounted to $1.5 million, payable over six equal payments every six months. As at December 31, 2016, $0.3 million has been paid. (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 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 December 31, 2016, the Company has paid $4.4 million, consisting of $0.2 million in cash and $4.2 million in common shares. The remaining balance of $1.0 million will be settled in two equal annual payments in September 2017 and 2018 based on the Company’s volume weighted average market price at the time of the payments.

NOTES TO CONSOLIdATEd FINANCIAL STATEMENTS FIRST MAJESTIC S ILVER CORP. ANNUAL REPORT 2016 61 16. PROPERTY, PLANT ANd EqUIPMENT The majority of the Company’s property, plant and equipment are used in the Company’s six 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. 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, 2014 $ 120,635 $ 238,317 $ 21,206 $ 11,636 $ 391,794 Acquired from SilverCrest 703 64,116 — — 64,819 Additions 415 4,412 13,499 415 18,741 Transfers and disposals 6,531 9,203 (16,820) 331 (755) At December 31, 2015 $ 128,284 $ 316,048 $ 17,885 $ 12,382 $ 474,599 Additions 73 5,399 16,475 534 22,481 Transfers and disposals 4,765 3,783 (12,545) 234 (3,763) At December 31, 2016 $ 133,122 $ 325,230 $ 21,815 $ 13,150 $ 493,317 Accumulated depreciation, amortization and impairment At December 31, 2014 $ (29,574) $ (88,632) — $ (6,550) $ (124,756) Depreciation and amortization (4,976) (29,791) — (1,533) (36,300) Transfers and disposals (423) (1,356) — (42) (1,821) Impairment (25,536) (26,395) — (50) (51,981) At December 31, 2015 $ (60,509) $ (146,174) — $ (8,175) $ (214,858) Depreciation and amortization (5,230) (35,641) — (1,174) (42,045) Transfers and disposals (243) 1,453 — 14 1,224 At December 31, 2016 $ (65,982) $ (180,362) — $ (9,335) $ (255,679) Carrying values At December 31, 2015 $ 67,775 $ 169,874 $ 17,885 $ 4,207 $ 259,741 At December 31, 2016 $ 67,140 $ 144,868 $ 21,815 $ 3,815 $ 237,638 (1) Included in land and buildings is $5.9 million (December 31, 2015 – $8.2 million) of land which is not subject to depreciation. (2) Included in property, plant and equipment is $17.5 million (December 31, 2015 $25.5 million) of equipment under finance lease (Note 21).

NOTES TO CONSOLIdATEd FINANCIAL STATEMENTS FIRST MAJESTIC SILVER CORP. ANNUAL REPORT 2016 62 16. 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: Santa Elena La Encantada La Parrilla Del Toro San Martin La Guitarra Other Total Cost At December 31, 2014 $ — $ 100,359 $ 92,872 $ 113,329 $ 44,485 $ 20,732 $ 20,017 $ 391,794 Acquired from SilverCrest 64,819 — — — — — — 64,819 Additions 763 6,903 3,738 2,197 3,482 1,055 603 18,741 Transfers and disposals — 1,815 (325) (433) (2,362) 542 8 (755) At December 31, 2015 $ 65,582 $ 109,077 $ 96,285 $ 115,093 $ 45,605 $ 22,329 $ 20,628 $ 474,599 Additions 4,040 7,223 4,568 1,549 1,126 2,311 1,664 22,481 Transfers and disposals (252) 623 (6,160) 486 (852) 1,111 1,281 (3,763) At December 31, 2016 $ 69,370 $ 116,923 $ 94,693 $ 117,128 $ 45,879 $ 25,751 $ 23,573 $ 493,317 Accumulated depreciation and amortization and impairment At December 31, 2014 $ — $ (36,939) $ (28,542) $ (24,684) $ (18,390) $ (12,056) $ (4,145) $ (124,756) Depreciation and amortization (2,935) (11,546) (8,809) (5,456) (5,003) (1,205) (1,346) (36,300) Transfers and disposals — (283) (619) (776) 280 (412) (11) (1,821) Impairment — (14,545) (3,687) (24,580) — (2,549) (6,620) (51,981) At December 31, 2015 $ (2,935) $ (63,313) $ (41,657) $ (55,496) $ (23,113) $ (16,222) $ (12,122) $ (214,858) Depreciation and amortization (12,959) (8,178) (7,766) (7,402) (3,137) (1,344) (1,259) (42,045) Transfers and disposals 24 (522) 2,857 (336) 468 (781) (486) 1,224 At December 31, 2016 $ (15,870) $ (72,013) $ (46,566) $ (63,234) $ (25,782) $ (18,347) $ (13,867) $ (255,679) Carrying values At December 31, 2015 $ 62,647 $ 45,764 $ 54,628 $ 59,597 $ 22,492 $ 6,107 $ 8,506 $ 259,741 At December 31, 2016 $ 53,500 $ 44,910 $ 48,127 $ 53,894 $ 20,097 $ 7,404 $ 9,706 $ 237,638 17. IMPAIRMENT OF NON-CURRENT ASSETS Non-current assets are tested for impairment when events or changes in circumstances indicate that the carrying amount may not be recoverable. At December 31, 2016, the Company assessed the recoverable value of the La Parrilla mine due to a decrease in Reserves and Resources and concluded that the carrying value of the mine remains recoverable and no impairment charge was recorded. The Company also determined there were no significant events or changes in circumstances to indicate that the carrying amount of its non-current assets may not be recoverable, nor indicators that the recoverable amount of its previously impaired assets will exceed its carrying value. As such, no impairment or impairment reversal were recognized during the year ended December 31, 2016.

NOTES TO CONSOLIdATEd FINANCIAL STATEMENTS FIRST MAJESTIC S ILVER CORP. ANNUAL REPORT 2016 63 17. IMPAIRMENT OF NON-CURRENT ASSETS (continued) At December 31, 2015, the Company determined there were several indicators of potential impairment on its non-current assets, including the decline in the Company’s market capitalization, reduction in market consensus on long-term silver price forecasts during the year and the consequential impact on the Company’s reserves and resources. Based on the Company’s assessment at December 31, 2016 and 2015, the Company concluded that the following mines and properties had estimated recoverable value, based on their FVLCD, below their carrying value and impairment charges were required: YEAR ENDED DECEMBER 31, 2016 2015 La Encantada Silver Mine $ — $ 28,544 Del Toro Silver Mine — 27,427 La Guitarra Silver Mine — 22,438 La Luz Silver Project — 13,973 La Parrilla Silver Mine — 9,953 Plomosas Project — 6,086 Impairment of non-current assets $ — $ 108,421 Deferred income tax recovery — (38,218) Impairment of non-current assets, net of tax $ — $ 70,203 The impairment charge recognized for the year ended December 31, 2015 in respect of each operating segment or project was as follows: Mining Interests Producing Exploration Property, Plant and Equipment Total La Encantada Silver Mine $ 12,543 $ 1,456 $ 14,545 $ 28,544 Del Toro Silver Mine 2,212 635 24,580 27,427 La Guitarra Silver Mine 14,656 5,233 2,549 22,438 La Luz Silver Project — 7,353 6,620 13,973 La Parrilla Silver Mine 5,803 463 3,687 9,953 Plomosas Project — 6,086 — 6,086 Impairment of non-current assets $ 35,214 $ 21,226 $ 51,981 $ 108,421 Recoverable values are determined with internal discounted cash flow economic models projected using management’s best estimate of recoverable mineral reserves and resources, future operating costs and capital expenditures, and long-term foreign exchange rates. For mineral resources that were not valued using internal discounted cash flow economic models, FVLCD were estimated based on in-situ value of their resources and exploration potential derived from comparable market transactions. Metal price assumptions used to determine the recoverable amounts at December 31, 2015 are summarized in the following table: DECEMBER 31, 2015 Commodity Prices 2016-2019 Average Long-term Silver (per ounce) $ 17.19 $ 18.50 Gold (per ounce) $ 1,213 $ 1,250 Lead (per pound) $ 0.89 $ 0.90 Zinc (per pound) $ 0.98 $ 1.00 A discount rate of 8.5%, equivalent to the Company’s weighted average cost of capital at December 31, 2015, was used to determine FVLCD based on internal discounted cash flow economic models of each CGU. The internal discounted cash flow economic models and in-situ values used to determine FVLCD are significantly affected by changes in key assumptions for future metal prices, capital expenditures, production cost estimates and discount rates. Management’s estimate of FVLCD is classified as level 3 in the fair value hierarchy. There was no material change in the valuation techniques utilized to determine FVLCD in the year ended December 31, 2015.

NOTES TO CONSOLIdATEd FINANCIAL STATEMENTS FIRST MAJESTIC SILVER CORP. ANNUAL REPORT 2016 64 18. 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 usually between 30 to 90 days. Trade and other payables are comprised of the following items: DECEMBER 31, 2016 DECEMBER 31, 2015 Trade payables $ 10,752 $ 28,291 Trade related accruals 12,015 8,616 Payroll and related benefits 3,209 2,705 Environmental duty 1,149 789 Other accrued liabilities 1,069 1,498 $ 28,194 $ 41,899 19. dEBT FACILITIES In February 2016, the Company entered into an agreement with The Bank of Nova Scotia and Investec Bank PLC for a senior secured debt facility (the “Debt Facilities”) consisting of a $35.0 million term loan and a $25.0 million revolving credit facility. The debt facilities are guaranteed by certain subsidiaries of the Company and are also secured by a first priority charge against the assets of the Company, and a first priority pledge of shares of the Company’s subsidiaries. The Debt Facilities include financial covenants, to be tested quarterly on a consolidated basis, requiring First Majestic to maintain the following: (a) a leverage ratio based on total debt to rolling four quarters adjusted EBITDA less 50% of sustaining capital expenditures of not more than 3.00 to 1.00; (b) an interest coverage ratio, based on rolling four quarters adjusted EBITDA divided by interest payments, of not less than 4.00 to 1.00; and (c) tangible net worth of not less than $436.0 million plus 80% of its positive earnings subsequent to December 31, 2015. The Debt Facilities also provide for negative covenants customary for these types of facilities and allows the Company to enter into capital leases up to $30.0 million. Details of the Debt Facilities are as follow: (a) Term loan The $35.0 million term loan is repayable in 11 equal quarterly instalments of $3.2 million in principal plus related interest, with the first instalment paid in August 2016. It bears an interest rate of LIBOR plus an applicable range from 3.25% to 4.00%, depending on certain financial parameters of the Company. During the year ended December 31, 2016, the Company incurred $1.6 million in interest (2015 – $nil) related to the term loan at an effective interest rate of 6.3%. Proceeds from the term loan were primarily used to settle the prepayment facilities (Note 20). (b) Revolving credit facility The $25.0 million revolving credit facility matures in three years on February 8, 2019 and bears the same interest rate as the term loan plus a relevant standby fee from 0.81% to 1.00% from the undrawn portion of the facility. Proceeds from the revolving credit facility were used to replace the prior SilverCrest’s $15.0 million credit facility that was due to expire in June 2016. As at December 31, 2016, $16.1 million has been drawn from the facility, leaving $8.9 million available for withdrawal. During the year ended December 31, 2016, the Company incurred $0.6 million in interest (2015 – $0.1 million) related to the revolving credit facility.

NOTES TO CONSOLIdATEd FINANCIAL STATEMENTS FIRST MAJESTIC S ILVER CORP. ANNUAL REPORT 2016 65 19. dEBT FACILITIES (continued) The movement in debt facilities during the year ended December 31, 2016 and 2015 are comprised of the following: Producing properties Term Loan Revolving Credit Facility Total Balance at December 31, 2014 $ — $ — $ — Acquired from SilverCrest (Note 4) — 15,000 15,000 Interest and accretion expense — 141 141 Repayments — (141) (141) Balance at December 31, 2015 $ — $ 15,000 $ 15,000 Net proceeds from debt financing 33,709 16,161 49,870 Interest and accretion expense 1,586 632 2,218 Repayments (7,574) (15,576) (23,150) Balance at December 31, 2016 $ 27,721 $ 16,217 $ 43,938 Statements of Financial Position Presentation Current portion of debt facilities $ 12,322 $ 56 $ 12,378 Non-current portion of debt facilities 15,399 16,161 31,560 Balance at December 31, 2016 $ 27,721 $ 16,217 $ 43,938 20. PREPAYMENT FACILITIES In February 2016, the Company settled its prepayment facilities with Bank of America Merrill Lynch (“BAML”) for $31.6 million. As a result of the early settlement, the Company incurred $3.5 million in accelerated interest and option payments. During the year ended December 31, 2016, prior to the early settlement, the Company recorded an unrealized loss of $1.3 million (2015 – loss of $1.2 million) on the prepayment facilities and $0.3 million (2015 – $3.1 million) in interest expense. 21. 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 5.6% to 7.5%. 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: DECEMBER 31, 2016 DECEMBER 31, 2015 Less than one year $ 6,432 $ 10,441 More than one year but not more than five years 2,195 7,700 Gross payments 8,627 18,141 Less: future finance charges (441) (1,190) Present value of minimum lease payments $ 8,186 $ 16,951 Statements of Financial Position Presentation Current portion of lease obligations $ 6,078 $ 9,594 Non-current portion of lease obligations 2,108 7,357 Present value of minimum lease payments $ 8,186 $ 16,951 During the year ended December 31, 2016, the Company recognized $0.8 million (2015 – $1.5 million) in finance costs related to its lease obligations.

NOTES TO CONSOLIdATEd FINANCIAL STATEMENTS FIRST MAJESTIC SILVER CORP. ANNUAL REPORT 2016 66 22. dECOMMISSIONING LIABILITIES The Company has an obligation to undertake decommissioning, restoration, rehabilitation and environmental work when environmental disturbance is caused by the development and ongoing production of a mining operation. Movements in decommissioning liabilities during the year ended December 31, 2016 and 2015 are allocated as follow: Santa Elena La Encantada La Parrilla Del Toro San Martin La Guitarra La Luz Total Balance at December 31, 2014 $ — $ 4,236 $ 2,782 $ 3,064 $ 2,725 $ 1,927 $ 750 $ 15,484 Movements during the year: Acquired from SilverCrest (Note 4) 2,634 — — — — — — 2,634 Change in rehabilitation provision (105) (195) (406) (3) (34) (119) (266) (1,128) Interest or accretion expense 93 213 152 150 148 79 — 835 Foreign exchange gain — (629) (414) (454) (405) (262) (69) (2,233) Balance at December 31, 2015 $ 2,622 $ 3,625 $ 2,114 $ 2,757 $ 2,434 $ 1,625 $ 415 $ 15,592 Movements during the year: Change in rehabilitation provision (202) (446) 54 (567) (860) (342) (106) (2,469) Interest or accretion expense 139 200 128 146 135 82 — 830 Foreign exchange gain (452) (626) (366) (475) (420) (255) (44) (2,638) Balance at December 31, 2016 $ 2,107 $ 2,753 $ 1,930 $ 1,861 $ 1,289 $ 1,110 $ 265 $ 11,315 A provision for decommissioning liabilities is estimated based on management’s interpretation of current regulatory requirements and is recognized at the present value of such costs. The expected timing of cash flows in respect of the provision is based on the estimated life of the mining operations. The discount rate is a risk-free rate determined based on Mexican pesos default swap rates ranging between 7.61% to 8.32% (2015 – 5.8% to 7.0%) for the respective estimated life of the operations. The inflation rate used is based on historical Mexican inflation rate of 3.5% (2015 – 3.5%). The present value of reclamation liabilities may be subject to change based on changes to cost estimates, remediation technologies or applicable laws and regulations. Changes in decommissioning liabilities are recorded against mining interests.

NOTES TO CONSOLIdATEd FINANCIAL STATEMENTS FIRST MAJESTIC S ILVER CORP. ANNUAL REPORT 2016 67 23. INCOME TAXES The following is a reconciliation of income taxes calculated at the combined Canadian federal and provincial statutory tax rate to the income tax expense for the year ended December 31, 2016 and 2015: YEAR ENDED DECEMBER 31, 2016 2015 Net earnings (loss) before tax $ 25,491 $ (126,252) Combined statutory tax rate 26.00% 26.00% Income tax expense (recovery) computed at statutory tax rate 6,628 (32,826) Reconciling items: Effect of different foreign statutory tax rates on earnings of subsidiaries (257) (7,805) Impact of foreign exchange on deferred income tax assets and liabilities (7,786) 2,142 Forfeited loss carryforwards due to deconsolidation tax liability credit(1) 16,949 — Change in unrecognized deferred income tax asset(1) (4,279) 20,171 7.5% mining royalty in Mexico 3,174 (6,220) Other non-deductible expenses 2,607 3,629 Impact of inflationary adjustments 1,338 2,957 Other (1,484) 124 Income tax expense (recovery) $ 16,890 $ (17,828) Statements of Earnings Presentation Current income tax expense $ 8,346 $ 2,200 Deferred income tax expense (recovery) 8,544 (20,028) Income tax expense (recovery) $ 16,890 $ (17,828) Effective tax rate 66% 14% (1) In November 2015, the Mexican Tax Authorities enacted a new 2016 Mexican Tax Reform which introduced a provision that enables companies to settle a portion of its tax deconsolidation liability against past loss carryforwards that were reinstated by virtue of the Mexican Tax Reform of 2013. To claim this credit, the Company had to apply its past loss carryforwards at a discounted rate of 15% as compared to the Mexican corporate tax rate of 30%. In March 2016, the Company elected to apply this new provision to reduce its deconsolidation tax liability by $14.7 million. The Company recognized a one-time deferred tax expense of $6.7 million, consisting of forfeiture of $16.9 million in gross value of loss carryforwards, net of $10.2 million that was not previously valued. During the years ended December 31, 2016 and 2015, the movement in deferred tax assets and deferred tax liabilities is shown as follows: Deferred tax assets Losses Provisions Deferred tax asset not recognized Other Total At December 31, 2014 $ 85,597 $ 9,093 $ (4,462) $ 415 $ 90,643 Acquired from SilverCrest 5,228 — (2,926) — 2,302 Benefit (expense) to income statement 23,057 (1,005) (20,172) (12) 1,868 At December 31, 2015 $ 113,882 $ 8,088 $ (27,560) $ 403 $ 94,813 (Expense) benefit to income statement (23,292) 2,104 7,181 414 (13,593) At December 31, 2016 $ 90,590 $ 10,192 $ (20,379) $ 817 $ 81,220

NOTES TO CONSOLIdATEd FINANCIAL STATEMENTS FIRST MAJESTIC SILVER CORP. ANNUAL REPORT 2016 68 23. INCOME TAXES (continued) Deferred tax liabilities Property, plant and equipment and mining interests Effect of Mexican tax deconsolidation Other Total At December 31, 2014 $ 145,611 $ 35,288 $ 20,005 $ 200,904 Acquired from SilverCrest 2,832 — 2,919 5,751 (Benefit) expense to income statement (26,828) (2,433) 5,842 (23,419) Reclassed to current income taxes payable — (2,662) — (2,662) At December 31, 2015 $ 121,615 $ 30,193 $ 28,766 $ 180,574 Expense (benefit) to income statement 10,057 (16,407) (1,353) (7,703) Reclassed to current income taxes payable — (1,619) — (1,619) At December 31, 2016 $ 131,672 $ 12,167 $ 27,413 $ 171,252 Statements of Financial Position Presentation Deferred income tax assets $ 34,353 Deferred income tax liabilities 120,114 At December 31, 2015 $ 85,761 Deferred income tax assets $ 48,146 Deferred income tax liabilities 138,178 At December 31, 2016 $ 90,032 At December 31, 2016, the Company recognized $48.1 million (2015 – $34.4 million) of net deferred tax assets in entities that have had a loss for tax purposes in either 2016 or 2015, or both. In evaluating whether it is probable that sufficient taxable income will be generated to realize the benefit of these deferred tax assets, the Company considered all available evidence, including approved budgets, forecasts and business plans and, in certain cases, tax planning opportunities. The aggregate amount of taxable temporary differences associated with investments in subsidiaries for which deferred taxes have not been recognized, as at December 31, 2016 is $489.1 million (2015 – $192.7 million).

NOTES TO CONSOLIdATEd FINANCIAL STATEMENTS FIRST MAJESTIC S ILVER CORP. ANNUAL REPORT 2016 69 23. INCOME TAXES (continued) As at December 31, 2016 and 2015, the Company has available Canadian, Swiss and Mexican non-capital tax losses, which if not utilized will expire as follows: Year of expiry Canadian non-capital losses Swiss non-capital losses Mexican non-capital losses DECEMBER 31, 2016 DECEMBER 31, 2015 2016 $ — $ — $ — $ — $ 4,213 2017 — — 6,055 6,055 14,659 2018 — — 10,198 10,198 24,510 2019 — — 1,569 1,569 11,609 2020 — — 246 246 1,306 2021 — 13,421 3,938 17,359 29,251 2022 — — 5,526 5,526 47,415 2023 — — 8,572 8,572 32,227 2024 — — 58,575 58,575 83,565 2025 — — 93,938 93,938 112,909 2026 — — 82,794 82,794 — 2028 — — — — 2,094 2032 — — — — 1,437 2035 4,519 — — 4,519 5,913 Total $ 4,519 $ 13,421 $ 271,411 $ 289,351 $ 371,108 Unrecognized losses $ — $ — $ 51,570 $ 51,570 $ 77,735 24. 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 consolidated statements of changes in equity. In May 2016, the Company closed a private placement with a syndicate of underwriters by issuing an aggregate of 5,250,900 common shares at a price of CAD$10.95 per common share for gross proceeds of $44.7 million (CAD$57.5 million), or net proceeds of $42.7 million after share issuance costs. 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 are subject to vesting with 25% vesting on first anniversary from the date of grant, and 25% vesting each six months thereafter.

NOTES TO CONSOLIdATEd FINANCIAL STATEMENTS FIRST MAJESTIC SILVER CORP. ANNUAL REPORT 2016 70 24. SHARE CAPITAL (continued) (b) Stock options (continued) The following table summarizes information about stock options outstanding as at December 31, 2016: 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$/Share) Weighted Average Remaining Life (Years) 2.01 – 5.00 2,799,914 4.78 4.00 31,250 4.56 3.93 5.01 – 10.00 2,599,773 6.38 2.80 1,430,127 6.42 2.52 10.01 – 15.00 2,320,867 11.03 3.26 1,284,617 10.66 2.07 15.01 – 20.00 567,500 17.28 2.21 297,500 17.97 0.04 20.01 – 25.40 1,311,216 21.57 0.98 1,303,716 21.57 0.96 9,599,270 9.76 2.98 4,347,210 12.99 1.76 The movements in stock options issued during the year ended December 31, 2016 and the year ended December 31, 2015 are summarized as follows: YEAR ENDED DECEMBER 31, 2016 YEAR ENDED DECEMBER 31, 2015 Number of Options Weighted Average Exercise Price (CAD$/Share) Number of Options Weighted Average Exercise Price (CAD$/Share) Balance, beginning of the year 10,416,254 11.05 6,084,458 15.24 Granted 4,283,502 7.22 5,346,702 6.35 Exercised (3,505,679) 8.30 — — Cancelled or expired (1,594,807) 14.60 (1,014,906) 11.43 Balance, end of the year 9,599,270 9.76 10,416,254 11.05 During the year ended December 31, 2016, the aggregate fair value of stock options granted was CAD$11.0 million (2015 – CAD$6.5 million), or a weighted average fair value of CAD$2.57 per stock option granted (2015 – CAD$1.21). 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 YEAR ENDED DECEMBER 31, 2016 YEAR ENDED DECEMBER 31, 2015 Risk-free interest rate (%) Yield curves on Canadian government zero-coupon bonds with a remaining term equal to the stock options’ expected life 0.62 0.80 Expected life (years) Average of the expected vesting term and expiry term of the option 3.38 2.40 Expected volatility (%) Historical and implied volatility of the precious metals mining sector 47.83 45.07 Expected dividend yield (%) Annualized dividend rate as of the date of grant — — The weighted average closing share price at date of exercise for the year ended December 31, 2016 was CAD$16.55. No options were exercised during the year ended December 31, 2015.

NOTES TO CONSOLIdATEd FINANCIAL STATEMENTS FIRST MAJESTIC S ILVER CORP. ANNUAL REPORT 2016 71 25. 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 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 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 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 Debt facilities Assumed to approximate carrying value as discount rate on these instruments approximate the Company’s credit risk The following table presents the Company’s fair value hierarchy for financial assets and financial liabilities that are measured at fair value: DECEMBER 31, 2016 DECEMBER 31, 2015 Fair value measurement Fair value measurement Carrying value Level 1 Level 2 Carrying value Level 1 Level 2 Financial assets Trade receivables $ 4,827 $ — $ 4,827 $ 2,233 $ — $ 2,233 Marketable securities 13,688 13,688 — 5,701 5,701 — Financial liabilities Prepayment facilities — — — 31,242 (1,750) 32,992 There were no transfers between levels 1, 2 and 3 during the year ended December 31, 2016 and year ended December 31, 2015.

NOTES TO CONSOLIdATEd FINANCIAL STATEMENTS FIRST MAJESTIC SILVER CORP. ANNUAL REPORT 2016 72 25. FINANCIAL INSTRUMENTS ANd RELATEd RISK MANAGEMENT (continued) (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 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 or accumulated deficit), debt facilities, prepayment facilities, lease obligations, net of cash and cash equivalents as follows: DECEMBER 31, 2016 DECEMBER 31, 2015 Equity $ 621,701 $ 544,719 Debt facilities 43,938 15,000 Lease obligations 8,186 16,951 Less: cash and cash equivalents (129,049) (51,018) Prepayment facilities — 31,242 $ 544,776 $ 556,894 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 debt facilities (Note 19). As at December 31, 2016 and December 31, 2015, the Company was in compliance with these covenants. (c) Financial risk management The Company thoroughly examines the various financial instruments and risks to which it is exposed and assesses the impact and likelihood of those risks. These risks may include credit risk, liquidity risk, currency risk, commodity price risk, and interest rate risk. Where material, these risks are reviewed and monitored by the Board of Directors. Credit risk Credit risk is the risk of financial loss if a customer or counterparty fails to meet its contractual obligations. The Company’s credit risk relates primarily to trade receivables in the ordinary course of business and VAT and other receivables (Note 12). The Company sells and receives payment upon delivery of its silver doré and by-products primarily through four international customers. Additionally, silver-lead concentrates and related base metal by-products are sold primarily through two international organizations with good credit ratings. Payments of receivables are scheduled, routine and fully received within 60 days of submission; therefore, the balance of trade receivables owed to the Company in the ordinary course of business is not significant. The carrying amount of financial assets recorded in the consolidated financial statements represents the Company’s maximum exposure to credit risk. With the exception to the above, the Company believes it is not exposed to significant credit risk.

NOTES TO CONSOLIdATEd FINANCIAL STATEMENTS FIRST MAJESTIC S ILVER CORP. ANNUAL REPORT 2016 73 25. FINANCIAL INSTRUMENTS ANd RELATEd RISK MANAGEMENT (continued) (c) Financial risk management (continued) 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 following table summarizes the maturities of the Company’s financial liabilities and commitments as at December 31, 2016 based on the undiscounted contractual cash flows: Carrying Amount Contractual Cash Flows Less than 1 year 1 to 3 years 4 to 5 years After 5 years Trade and other payables $ 28,194 $ 28,194 $ 28,194 $ — $ — $ — Debt facilities 43,938 51,587 14,545 37,042 — — Finance lease obligations 8,186 8,627 6,432 2,127 68 — Other liabilities 2,741 2,741 — 2,741 — — $ 83,059 $ 91,149 $ 49,171 $ 41,910 $ 68 $ — At December 31, 2016, the Company had working capital of $130.6 million (December 31, 2015 – $15.6 million). 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. 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 or loss. 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 or loss and comprehensive income or loss 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: December 31, 2016 Cash and cash equivalents Trade and other receivables Other financial assets Trade and other payables Foreign exchange derivative Net assets (liabilities) exposure Effect of +/– 10% change in currency Canadian dollar $ 44,239 $391 $ 11,255 $ (1,558) $ — $ 54,327 $ 5,433 Mexican peso 7,877 9,729 — (10,916) 14,000 20,690 2,069 $ 52,116 $ 10,120 $ 11,255 $ (12,474) $ 14,000 $ 75,017 $ 7,502 December 31, 2015 Cash and cash equivalents Trade and other receivables Other financial assets Trade and other payables Foreign exchange derivative Net assets (liabilities) exposure Effect of +/– 10% change in currency Canadian dollar $ 1,980 $ 1,297 $ — $ (1,027) $ — $ 2,250 $ 225 Mexican peso 1,894 20,643 — (18,258) 3,675 7,954 795 $ 3,874 $ 21,940 $ — $ (19,285) $ 3,675 $ 10,204 $ 1,020

NOTES TO CONSOLIdATEd FINANCIAL STATEMENTS FIRST MAJESTIC SILVER CORP. ANNUAL REPORT 2016 74 25. FINANCIAL INSTRUMENTS ANd RELATEd RISK MANAGEMENT (continued) (c) Financial risk management (continued) 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. The following table summarizes the Company’s exposure to commodity price risk and their impact on net earnings: DECEMBER 31, 2016 Effect of +/– 10% change in metal prices Silver Gold Lead Zinc Total Metals subject to provisional price adjustments $ 468 $ 94 $ 223 $ 37 $ 822 Metals in doré and concentrates inventory 196 160 7 4 367 $ 664 $ 254 $ 230 $ 41 $ 1,189 DECEMBER 31, 2015 Effect of +/– 10% change in metal prices Silver Gold Lead Zinc Total Metals subject to provisional price adjustments $ 428 $ 44 $ 201 $ 77 $ 750 Metals in doré and concentrates inventory 174 198 36 18 426 Prepayment facilities — — (2,833) (480) (3,313) $ 602 $ 242 $ (2,596) $ (385) $ (2,137) Interest rate risk The Company is exposed to interest rate risk on its short-term investments and debt facilities. The Company monitors its exposure to interest rates and has not entered into any derivative contracts to manage this risk. The Company’s interest bearing financial assets comprise of cash and cash equivalents which bear interest at a mixture of variable and fixed rates for pre-set periods of time. As at December 31, 2016, the Company’s exposure to interest rate risk on interest bearing liabilities is limited to its debt facilities. The Company’s finance leases bear interest at fixed rates. Based on the Company’s interest rate exposure at December 31, 2016, a change of 25 basis points increase or decrease of market interest rate does not have a significant impact on net earnings or loss.

NOTES TO CONSOLIdATEd FINANCIAL STATEMENTS FIRST MAJESTIC S ILVER CORP. ANNUAL REPORT 2016 75 26. SUPPLEMENTAL CASH FLOw INFORMATION YEAR ENDED DECEMBER 31, 2016 2015 Adjustments to reconcile net earnings to operating cash flows before movements in working capital: (Gain) loss from silver derivatives and marketable securities 14 $ (6,281) $ 634 Loss (gain) on fair value adjustment on prepayment facilities 20 586 (2,713) Equity gain on investment in associates — (679) Unrealized foreign exchange gain and other (5,239) (6,230) $ (10,934) $ (8,988) Net change in non-cash working capital items: Decrease (increase) in trade and other receivables $ 7,362 $ (1,922) Decrease in inventories 2,828 6,415 Decrease in prepaid expenses and other 638 428 (Decrease) increase in income taxes payable (4,903) 2,109 Decrease in trade and other payables (8,469) (6,295) $ (2,544) $ 735 YEAR ENDED DECEMBER 31, 2016 2015 Non-cash investing and financing activities: Assets acquired by finance lease $ (1,475) $ (1,823) Acquisition of mining interests (500) (500) Settlement of liabilities (253) — Transfer of share-based payments reserve upon exercise of options 5,248 — $ 3,020 $ (2,323) 27. 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 December 31, 2016. 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 uncollected amount of approximately $60.7 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 recovered 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 December 31, 2016, the Company has not accrued any of the remaining $60.7 million (CAD$81.5 million) unpaid judgment in favour of the Company.

NOTES TO CONSOLIdATEd FINANCIAL STATEMENTS FIRST MAJESTIC SILVER CORP. ANNUAL REPORT 2016 76 28. SUBSIdIARIES The consolidated financial statements of the Company include the following significant subsidiaries as at December 31, 2016 and 2015 as follows: Name of subsidiary Operations and Projects Location 2016 % Ownership 2015 % Ownership First Majestic Silver Corp. Parent company and bullion sales Canada 100% 100% Corporación First Majestic, S.A. de C.V. Holding company Mexico 100% 100% First Majestic Plata, S.A. de C.V. La Parrilla Silver Mine Mexico 100% 100% Minera El Pilón, S.A. de C.V. San Martin Silver Mine Mexico 100% 100% Minera La Encantada, S.A. de C.V. La Encantada Silver Mine Mexico 100% 100% La Encantada Procesadora de Minerales, S.A. de C.V. La Encantada Silver Mine Mexico 100% 100% Nusantara de Mexico, S.A. de C.V. Santa Elena Silver/Gold Mine Mexico 100% 100% First Majestic Del Toro, S.A. de C.V. Del Toro Silver Mine Mexico 100% 100% La Guitarra Compañia Minera, S.A. de C.V. La Guitarra Silver Mine Mexico 100% 100% Majestic Services, S.A. de C.V. Service company Mexico 100% 100% Santa Elena Oro y Plata, S.A. de C.V. Service company Mexico 100% 100% FMS Trading AG Metals trading company Mexico 100% 100% 29. KEY MANAGEMENT COMPENSATION YEAR ENDED DECEMBER 31, 2016 2015 Salaries, bonuses, fees and benefits Independent members of the Board of Directors $ 665 $ 705 Other members of key management 2,791 2,096 Share-based payments Independent members of the Board of Directors 615 480 Other members of key management 1,761 1,604 $ 5,832 $ 4,885 30. SUBSEqUENT EVENTS The following significant events occurred subsequent to December 31, 2016: a) 2,563,140 stock options with a five year expiry and an average exercise price of CAD$10.87 were granted; b) 505,897 stock options were exercised for proceeds of CAD$2.9 million; and c) 356,250 stock options were cancelled. Pursuant to the above subsequent events, the Company has 164,967,464 common shares outstanding as at the date on which these consolidated financial statements were approved and authorized for issue by the Board of Directors.

MANAGEMENT'S dISCUSSION ANd ANALYSIS FIRST MAJESTIC S ILVER CORP. ANNUAL REPORT 2016 77 MANAGEMENT’S dISCUSSION ANd ANALYSIS OF RESULTS OF OPERATIONS ANd FINANCIAL CONdITION This Management’s Discussion and Analysis of Results of Operations and Financial Condition (“MD&A”) should be read in conjunction with the audited consolidated financial statements of First Majestic Silver Corp. (“First Majestic” or “the Company”) for the year ended December 31, 2016, which are prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”). All dollar amounts are expressed in United States (“US”) dollars and tabular amounts are expressed in thousands of US dollars, unless otherwise indicated. Certain amounts shown in this MD&A may not add exactly to total amounts due to rounding differences. This MD&A contains “forward-looking statements” that are subject to risk factors set out in a cautionary note contained at the end of this MD&A. All information contained in this MD&A is current and has been approved by the Board of Directors of the Company as of February 21, 2017 unless otherwise stated. COMPANY OVERVIEW First Majestic is a mining company focused on silver production in Mexico and is aggressively pursuing the development of its existing mineral property assets and acquiring new assets which contribute to the Company achieving its corporate growth objectives. During the year ended December 31, 2016, the Company owned and operated six producing silver mines: the Santa Elena Silver/Gold Mine, 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 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”. 1 2 7 3 4 5 6 1 SANTA ELENA SILVER/GOLD MINE 2 LA ENCANTADA SILVER MINE 3 LA PARRILLA SILVER MINE 4 DEL TORO SILVER MINE 5 SAN MARTIN SILVER MINE 6 LA GUITARRA SILVER MINE 7 PLOMOSAS SILVER PROJECT M A N AGEMEN T 'S dISCUSSION A Nd A N A LYSIS For the year and quarter ended December 31, 2016

MANAGEMENT'S dISCUSSION ANd ANALYSIS FIRST MAJESTIC SILVER CORP. ANNUAL REPORT 2016 78 M A N AGEMEN T 'S dISCUSSION A Nd A N A LYSIS For the year and quarter ended December 31, 2016 MANAGEMENT’S dISCUSSION ANd ANALYSIS OF RESULTS OF OPERATIONS ANd FINANCIAL CONdITION (continued) 2016 ANNUAL HIGHLIGHTS Key Performance Metrics 2016 2015 2014 Change ’16 vs ’15 Operational Ore Processed / Tonnes Milled 3,270,162 2,852,655 2,613,411 15% Silver Ounces Produced 11,853,438 11,142,109 11,748,721 6% Silver Equivalent Ounces Produced 18,669,800 16,086,271 15,257,958 16% Cash Costs per Ounce(1) $ 5.92 $ 7.87 $ 9.58 (25%) All-in Sustaining Cost per Ounce(1) $ 10.79 $ 13.43 $ 17.71 (20%) Total Production Cost per Tonne(1) $ 43.22 $ 43.98 $ 51.53 (2%) Average Realized Silver Price per Ounce(1) $ 17.16 $ 16.06 $ 18.69 7% Financial (in $millions) Revenues $ 278.1 $ 219.4 $ 245.5 27% Mine Operating Earnings(2) $ 49.2 $ 8.7 $ 30.2 464% Earnings (Loss) before Income Taxes $ 25.5 $ (126.3) $ (80.9) 120% Net Earnings (Loss) $ 8.6 $ (108.4) $ (61.4) 108% Operating Cash Flows before Working Capital and Taxes(2) $ 107.3 $ 59.7 $ 74.4 80% Cash and Cash Equivalents $ 129.0 $ 51.0 $ 40.3 153% Working Capital (Deficit)(1) $ 130.6 $ 15.6 $ (2.9) 737% Shareholders Earnings (Loss) per Share (“EPS”) – Basic $ 0.05 $ (0.84) $ (0.52) 106% Adjusted EPS(1) $ 0.12 $ (0.11) $ 0.07 212% Cash Flow per Share(1) $ 0.67 $ 0.46 $ 0.63 44% (1) The Company reports non-GAAP measures which include cash costs per ounce produced, all-in sustaining cost per ounce, total production cost per tonne, average realized silver price per ounce sold, working capital, adjusted EPS and cash flow per share. These measures are widely used in the mining industry as a benchmark for performance, but do not have a standardized meaning and may differ from methods used by other companies with similar descriptions. See “Non-GAAP Measures” on pages 107 to 113 for a reconciliation of non-GAAP to GAAP measures. (2) The Company reports additional GAAP measures which include mine operating earnings and operating cash flows before working capital and taxes. These additional financial measures are intended to provide additional information and do not have a standardized meaning prescribed by IFRS. See “Additional GAAP Measures” on page 113. Annual Production Summary Santa Elena La Encantada La Parrilla Del Toro San Martin La Guitarra Consolidated Ore Processed / Tonnes Milled 988,060 881,075 610,509 337,020 297,802 155,696 3,270,162 Silver Ounces Produced 2,598,537 2,706,516 2,220,874 1,500,951 1,902,963 923,597 11,853,438 Silver Equivalent Ounces Produced 6,185,945 2,713,372 3,388,434 2,649,326 2,209,035 1,523,688 18,669,800 Cash Costs per Ounce $ (2.09) $ 11.21 $ 7.58 $ 5.73 $ 7.07 $ 7.23 $ 5.92 All-in Sustaining Cost per Ounce $ 1.75 $ 12.76 $ 10.46 $ 8.62 $ 9.40 $ 13.33 $ 10.79 Total Production Cost per Tonne $ 42.00 $ 33.11 $ 38.85 $ 51.67 $ 58.64 $ 77.43 $ 43.22 0 2 4 6 8 10 12 0 5 10 15 20 0 2 4 6 8 10 0 5 10 15 20 11.7 11.1 11.9 15.3 16.1 18.7 $9.58 $7.87 $5.92 $17.71 $13.43 $10.79 2014 2015 20162014 2015 20162014 2015 20162014 2015 2016 Silver Production (M Oz) Silver Equivalent Production (M Oz) Cash Cost per Ounce ($/Oz) AISC per Ounce ($/Oz)

MANAGEMENT'S dISCUSSION ANd ANALYSIS FIRST MAJESTIC S ILVER CORP. ANNUAL REPORT 2016 79 MANAGEMENT’S dISCUSSION ANd ANALYSIS OF RESULTS OF OPERATIONS ANd FINANCIAL CONdITION (continued) OPERATIONAL • Record annual silver production: The Company produced a record 11,853,438 ounces of silver in 2016, near the high end of our 2016 guidance and represents an increase of 6% compared to 11,142,109 ounces produced in the previous year. The increase was primarily attributed to the addition of the Santa Elena mine for the full year, partially offset by lower production from Del Toro and San Martin, both of which lowered throughput to focus on mining profitable ounces. • Record annual silver equivalent production: Total production in 2016 reached a record of 18,669,800 silver equivalent ounces, also near the high end of our 2016 guidance, representing an increase of 16% compared to the previous year. The increase in production was primarily attributed to incremental production from Santa Elena, partially offset by lower by-product production from Del Toro and La Parrilla. • Significant reduction in cash cost per ounce: Cash cost per ounce in the year was $5.92, a decrease of 25% or $1.95 per ounce compared to the previous year and within the Company’s 2016 guidance. The decrease in cash cost per ounce was attributed to ongoing company‐wide cost reduction efforts and a focus on producing profitable ounces, a decrease in smelting and refining costs as a result of renegotiated sales agreements that were effective on July 1, 2016, and weakening of the Mexican pesos against U.S. dollars. • Annual all-in sustaining cost (“AISC”) well below guidance: AISC per ounce in 2016 was $10.79, a decrease of 20% or $2.64 per ounce compared to the previous year and is below the revised annual guidance of $11.50 to $12.35 per ounce. The decrease in AISC per ounce was reflective of the Company’s ongoing effort to reduce production costs, weakening of the Mexican pesos against the U.S. dollars, as well as the addition of the Santa Elena mine to the Company’s portfolio of assets, which became the Company’s lowest cost mine. FINANCIAL • Strengthened cash position and liquidity: Cash and cash equivalents increased from $51.0 million to $129.0 million during the year, while working capital improved from $15.6 million to $130.6 million, an improvement of $115.0 million. • Generated record annual revenue: In 2016, the Company generated record annual revenues of $278.1 million, an increase of 27% compared to 2015. The record revenue was achieved through a 16% increase in silver equivalent ounces sold and a 7% increase in average realized silver price. • Improved mine operating earnings: The Company recognized mine operating earnings of $49.2 million compared to $8.7 million in 2015. The increase in mine operating earnings was primarily driven by record-breaking production, lower production costs and higher silver prices. • Strong cash flow from operations: Cash flow from operations before movements in working capital and income taxes during the year was $107.3 million ($0.67 per share) compared to $59.7 million ($0.46 per share) in 2015. • Annual net earnings: The Company generated net earnings of $8.6 million (earnings per share of $0.05) in 2016 compared to a net loss of $108.4 million (loss per share of 0.84) in 2015. Adjusted EPS (see “non-GAAP measures”), normalized for non-cash or unusual items such as share-based payments, deferred income tax expense or recovery and impairment of non-current assets, for the year ended December 31, 2016 was $0.12, compared to a loss of $0.11 in 2015. CORPORATE DEVELOPMENTS • Successful Debt Restructuring: In February 2016, the Company closed a $60.0 million debt financing agreement, consisting of a $35.0 million term loan and a $25.0 million revolving credit facility. Proceeds from the term loan were used primarily to settle the remaining balance of the Company’s prepayment facilities and associated call options. The debt financing added approximately $32.0 million to the Company’s working capital by deferring $28.5 million in 2016 debt repayments and adding $3.5 million to treasury after early settlement of the prepayment facilities. • Completion of Private Placement: On May 12, 2016, the Company closed a CAD$57.5 million bought-deal private placement with a syndicate of underwriters for the issuance of 5,250,900 common shares at a price of CAD$10.95 per common share.

M A N AGEMEN T 'S DISCUSSION A ND A N A LYSIS For the year and quarter ended December 31, 2016 MANAGEMENT'S dISCUSSION ANd ANALYSIS FIRST MAJESTIC SILVER CORP. ANNUAL REPORT 2016 80 2016 FOURTH qUARTER HIGHLIGHTS Key Performance Metrics 2016–Q4 2016–Q3 Change Q4 vs Q3 2015–Q4 Change Q4 vs Q4 Operational Ore Processed / Tonnes Milled 844,155 838,233 1% 883,377 (4%) Silver Ounces Produced 2,819,708 3,114,627 (9%) 3,055,442 (8%) Silver Equivalent Ounces Produced 4,380,477 4,524,619 (3%) 4,820,408 (9%) Cash Costs per Ounce(1) $ 6.49 $ 5.84 11% $ 6.04 7% All-in Sustaining Cost per Ounce(1) $ 12.90 $ 10.52 23% $ 11.28 14% Total Production Cost per Tonne(1) $ 42.13 $ 43.11 (2%) $ 41.44 2% Average Realized Silver Price per Ounce(1) $ 17.10 $ 19.72 (13%) $ 15.21 12% Financial (in $millions) Revenues $ 66.2 $ 79.3 (17%) $ 66.0 —% Mine Operating Earnings(2) $ 9.9 $ 20.0 (50%) $ 3.9 156% Net Earnings (Loss) $ 1.8 $ 8.1 (78%) $ (103.0) 102% Operating Cash Flows before Working Capital and Taxes(2) $ 23.4 $ 35.4 (34%) $ 17.5 34% Cash and Cash Equivalents $ 129.0 $ 122.5 5% $ 51.0 153% Working Capital(1) $ 130.6 $ 143.8 (9%) $ 15.6 737% Shareholders Earnings (Loss) per Share (“EPS”) – Basic $ 0.01 $ 0.05 (78%) $ (0.66) 102% Adjusted EPS(1) $ (0.01) $ 0.07 (112%) $ (0.02) 57% Cash Flow per Share(1) $ 0.14 $ 0.22 (34%) $ 0.11 26% (1) The Company reports non-GAAP measures which include cash costs per ounce produced, all-in sustaining cost per ounce, total production cost per tonne, average realized silver price per ounce sold, working capital, adjusted EPS and cash flow per share. These measures are widely used in the mining industry as a benchmark for performance, but do not have a standardized meaning and may differ from methods used by other companies with similar descriptions. See “Non-GAAP Measures” on pages 107 to 113 for a reconciliation of non-GAAP to GAAP measures. (2) The Company reports additional GAAP measures which include mine operating earnings and operating cash flows before working capital and taxes. These additional financial measures are intended to provide additional information and do not have a standardized meaning prescribed by IFRS. See “Additional GAAP Measures” on page 113. Fourth Quarter Production Summary Santa Elena La Encantada La Parrilla Del Toro San Martin La Guitarra Consolidated Ore Processed / Tonnes Milled 257,771 235,039 153,309 82,767 76,848 38,422 844,155 Silver Ounces Produced 660,207 567,930 497,466 343,894 510,423 239,788 2,819,708 Silver Equivalent Ounces Produced 1,470,612 569,504 699,497 680,802 573,349 386,713 4,380,477 Cash Costs per Ounce $ (1.43) $ 13.87 $ 10.22 $ 2.80 $ 6.94 $ 7.74 $ 6.49 All-in Sustaining Cost per Ounce $ 1.64 $ 16.53 $ 15.34 $ 8.43 $ 10.01 $ 15.99 $ 12.90 Total Production Cost per Tonne $ 37.57 $ 32.96 $ 41.92 $ 52.45 $ 56.70 $ 78.31 $ 42.13 OPERATIONAL • In the fourth quarter, the Company produced 2,819,708 ounces of silver, a decrease of 9% compared to the previous quarter, primarily attributed to a 9% decrease in average silver grade. The decrease in silver grades is primarily due to lower grades at Del Toro in the month of October due to limited production at the high grade Dolores mine. As a result, the Company increased production rates at the San Juan mine to offset the decrease. Beginning in November, production at the Dolores mine returned to normal operating levels. Average silver grade at La Encantada also decreased 9% compared to the prior quarter primarily due to the continued blending of ore from old stopes, stockpiles and the recovery of pillars. Grades are expected to improve towards the end of 2017 following the start of block caving production within the San Javier Breccia. • Total silver equivalent production in the fourth quarter was 4,380,477 ounces, a minor decrease of 3% compared to the third quarter of 2016, primarily attributed to lower silver production.

MANAGEMENT'S dISCUSSION ANd ANALYSIS FIRST MAJESTIC S ILVER CORP. ANNUAL REPORT 2016 81 2016 FOURTH qUARTER HIGHLIGHTS (continued) OPERATIONAL (continued) • Cash cost per ounce in the quarter was $6.49, an increase of 11% or $0.65 per ounce compared to the previous quarter. The increase in cash cost per ounce was primarily the result of lower silver grades leading to lower silver production and higher mining contractor costs attributed to ore development activities at the Santa Elena mine. Total tonnes milled and production cost per tonne remained relatively unchanged when compared to the previous quarter. • All-in sustaining cost per ounce (“AISC”) in the fourth quarter was $12.90, an increase of 23% or $2.38 per ounce compared to the previous quarter. The increase in AISC was primarily attributed to an increase in sustaining capital expenditures to catch up with program targets in addition to higher cash cost per ounce. • The Company’s underground development in the fourth quarter consisted of 14,918 metres, reflecting a 17% increase compared to 12,764 metres completed in the previous quarter. The Company also completed 35,247 metres of diamond drilling in the quarter, representing a marginal increase compared to 36,290 metres in the prior quarter. A substantial portion of the current drilling and development is to support the annual updating of Mineral Reserves and Resources which the Company expects to release in late March 2017. In addition, updated National Instrument 43-101 (“NI 43-101”) Technical Reports for San Martin, Del Toro and La Parrilla are expected to be released in the first half of 2017. FINANCIAL • Generated revenues of $66.2 million in the quarter, almost unchanged compared to the fourth quarter of 2015. • The Company recognized mine operating earnings of $9.9 million compared to mine operating loss of $3.9 million in the fourth quarter of 2015. The increase in mine operating earnings was driven by a 12% increase in silver prices, partially offset by a 9% decrease in production. • The Company generated net earnings of $1.8 million (EPS of $0.01) compared to a net loss of $103.0 million (loss per share of $0.66) in the fourth quarter of 2015. In 2015, the Company recorded an impairment charge of $108.4 million, or $70.2 million net of tax, on certain operations and development projects due to the decline in market consensus on long-term silver price forecasts during 2015 and the consequential impact on the Company’s Reserves and Resources. • Cash flow from operations before movements in working capital and income taxes in the quarter was $23.4 million ($0.14 per share) compared to $17.5 million ($0.11 per share) in the fourth quarter of 2015. 2017 PROdUCTION OUTLOOK ANd COST GUIdANCE UPdATE This section provides management’s production outlook and cost guidance for 2017. These are forward-looking estimates and are subject to the cautionary note regarding the risks associated with relying on forward-looking statements at the end of this MD&A. Actual results may vary based on production throughputs, grades, recoveries and changes in economic circumstances. The Company anticipates 2017 silver production will range between 11.1 to 12.4 million ounces (or 16.6 to 18.5 million silver equivalent ounces), representing consistent silver production compared to 2016 and a slightly lower production of silver equivalent ounces primarily due to decreased by-product credits expected at Santa Elena and La Parrilla. A mine-by-mine breakdown of the 2017 production guidance is included in the table below. Cash cost and AISC guidance is shown per payable silver ounce. Metal price and foreign currency assumptions for calculating silver equivalent ounces are: silver: $16.50/oz, gold: $1,200/oz, lead: $1.00/lb, zinc: $1.20/lb, MXN:USD 20:1. Mine Silver Oz (M) Silver Eqv Oz (M) Cash Costs ($) AISC ($) Santa Elena 2.6 – 2.9 5.4 – 6.0 0.90 – 1.46 6.22 – 7.24 La Encantada 2.6 – 2.9 2.6 – 2.9 9.83 – 10.17 12.35 – 12.90 La Parrilla 1.9 – 2.1 2.9 – 3.2 6.45 – 6.84 10.79 – 11.55 Del Toro 1.3 – 1.4 2.3 – 2.6 4.90 – 5.35 10.38 – 11.30 San Martin 1.8 – 2.0 2.0 – 2.2 8.31 – 8.66 11.77 – 12.41 La Guitarra 0.9 – 1.1 1.4 – 1.6 6.35 – 6.75 14.37 – 15.45 Consolidated 11.1 – 12.4 16.6 – 18.5 $6.06 – $6.48 $11.96 – $12.88 *Certain amounts shown may not add exactly to the total amount due to rounding differences. *Consolidated AISC includes general and administrative cost estimates and non-cash costs of $1.99 to $2.20 per payable silver ounce.

M A N AGEMEN T 'S DISCUSSION A ND A N A LYSIS For the year and quarter ended December 31, 2016 MANAGEMENT'S dISCUSSION ANd ANALYSIS FIRST MAJESTIC SILVER CORP. ANNUAL REPORT 2016 82 2017 PROdUCTION OUTLOOK ANd COST GUIdANCE UPdATE (continued) The Company is projecting its 2017 AISC, as defined by the World Gold Council (“WGC”), to be within a range of $11.96 to $12.88 consolidated on a per payable silver ounce basis. Excluding non-cash items, the Company anticipates its 2017 AISC to be within a range of $11.36 to $12.21 per payable silver ounce. An itemized AISC cost table is provided below: All-In Sustaining Cost Calculation FY 2017 ($/oz) Total Cash Costs per Payable Silver Ounce(1) 6.06 – 6.48 General and Administrative Costs 1.38 – 1.53 Sustaining Development Costs 1.94 – 2.10 Sustaining Property, Plant and Equipment Costs 1.53 – 1.66 Sustaining Exploration Costs 0.45 – 0.48 Share-based Payments (non-cash) 0.53 – 0.59 Accretion of Reclamation Costs (non-cash) 0.07 – 0.08 All-In Sustaining Costs: (WGC definition) $11.96 – $12.88 All-In Sustaining Costs: (WGC excluding non-cash items) $11.36 – $12.21 (1) The cash cost per payable silver ounce includes estimated royalties and 0.5% mining environmental fee of $0.12 per ounce. In 2017, the Company plans to invest a total of $124.0 million on capital expenditures consisting of $46.2 million for sustaining requirements and $77.8 million for expansionary projects. This represents a 40% increase compared to the 2016 capital budget and is aligned with the Company’s future growth strategy of developing additional mine production levels at each of the Company’s operations, preparing for the upcoming expansion at La Guitarra, completing the roasting circuit and preparing for block caving at La Encantada, in addition to the exploration work at Plomosas which is expected to result in a new Preliminary Economic Assessment (“PEA”) in 2018. The Company is planning to complete a total of 74,850 metres of underground development in 2017, representing a 51% increase compared to 49,428 metres completed in 2016. In addition, the Company is planning to complete a total of 183,000 metres of exploration drilling in 2017, representing an 85% increase compared to 98,678 metres completed in 2016. The 2017 drilling program will consist of approximately 43,000 metres of diamond drilling intended to upgrade Resources to Reserves at La Parrilla, Del Toro, La Guitarra and Santa Elena; approximately 100,000 metres of diamond drilling intended to increase or add new Measured & Indicated or Inferred Resources at the six operating mines, with a focus at Nazareno in La Guitarra and the Ermitaño West project in Santa Elena; and drill approximately 40,000 metres at the Plomosas Silver Project. The 2017 annual budget includes capital investments totalling $53.3 million to be spent on underground development, $33.2 million towards property, plant and equipment, $27.0 million in exploration and $10.5 million towards corporate automation and efficiency projects. Management has the option to make adjustments to the budget should metal prices have any dramatic price changes throughout 2017.

MANAGEMENT'S dISCUSSION ANd ANALYSIS FIRST MAJESTIC S ILVER CORP. ANNUAL REPORT 2016 83 OVERVIEw OF OPERATING RESULTS Selected Production Results for the Past Eight Quarters 2016 2015 Production Highlights Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Ore processed/tonnes milled La Encantada 235,039 247,858 209,039 189,140 242,109 252,377 189,811 167,270 La Parrilla 153,309 147,414 157,871 151,916 149,504 166,815 178,736 172,647 Del Toro 82,767 86,646 80,739 86,869 111,448 124,093 162,089 157,934 San Martin 76,848 75,228 69,863 75,863 83,442 87,883 89,506 88,362 La Guitarra 38,422 39,092 34,917 43,265 42,249 43,864 42,494 45,396 Santa Elena 257,771 241,996 245,753 242,539 254,625 — — — Consolidated 844,155 838,233 798,182 789,591 883,377 675,032 662,637 631,609 Silver equivalent ounces produced La Encantada 569,504 687,841 623,070 832,957 716,023 669,994 605,299 548,124 La Parrilla 699,497 739,026 948,552 1,001,359 1,051,679 919,167 985,107 1,080,445 Del Toro 680,802 707,524 682,443 578,556 586,672 750,458 1,159,484 1,327,628 San Martin 573,349 562,096 492,669 580,922 576,675 766,733 696,580 682,071 La Guitarra 386,713 397,627 375,464 363,884 382,953 451,684 356,089 267,002 Santa Elena 1,470,612 1,430,506 1,559,410 1,725,417 1,506,405 — — — Consolidated 4,380,477 4,524,619 4,681,608 5,083,095 4,820,408 3,558,035 3,802,558 3,905,270 Silver ounces produced La Encantada 567,930 685,478 622,321 830,787 714,057 668,124 602,869 544,735 La Parrilla 497,466 547,913 599,526 575,969 605,605 585,414 620,839 622,237 Del Toro 343,894 446,137 399,520 311,400 331,225 424,413 664,969 841,026 San Martin 510,423 500,441 411,686 480,413 485,227 642,473 597,328 571,937 La Guitarra 239,788 263,235 206,262 214,312 245,358 272,885 230,499 196,920 Santa Elena 660,207 671,423 605,615 661,292 673,969 — — — Consolidated 2,819,708 3,114,627 2,844,930 3,074,173 3,055,442 2,593,309 2,716,503 2,776,855 Cash cost per ounce La Encantada $ 13.87 $ 11.20 $ 12.41 $ 8.49 $ 11.00 $ 12.64 $ 14.65 $ 14.27 La Parrilla $ 10.22 $ 7.70 $ 7.33 $ 5.39 $ 7.18 $ 10.11 $ 10.72 $ 7.75 Del Toro $ 2.80 $ 3.41 $ 7.90 $ 9.52 $ 9.25 $ 8.91 $ 4.34 $ 5.09 San Martin $ 6.94 $ 7.05 $ 8.67 $ 5.83 $ 7.20 $ 5.62 $ 6.25 $ 6.29 La Guitarra $ 7.74 $ 6.93 $ 5.93 $ 8.27 $ 7.02 $ 3.62 $ 6.74 $ 11.28 Santa Elena $ (1.43) $ (0.81) $ (2.86) $ (3.34) $ (2.84) $ — $ — $ — Consolidated $ 6.49 $ 5.84 $ 6.41 $ 5.00 $ 6.04 $ 8.77 $ 8.74 $ 8.22 All-in sustaining cost per ounce La Encantada $ 16.53 $ 12.81 $ 13.85 $ 9.33 $ 14.29 $ 16.01 $ 18.32 $ 17.85 La Parrilla $ 15.34 $ 10.65 $ 9.43 $ 7.06 $ 9.98 $ 14.43 $ 14.48 $ 12.58 Del Toro $ 8.43 $ 6.01 $ 10.05 $ 10.76 $ 11.30 $ 11.89 $ 6.97 $ 7.25 San Martin $ 10.01 $ 9.92 $ 10.20 $ 7.52 $ 9.83 $ 8.87 $ 9.62 $ 8.69 La Guitarra $ 15.99 $ 13.60 $ 10.34 $ 12.91 $ 14.24 $ 9.68 $ 13.32 $ 17.71 Santa Elena $ 1.64 $ 1.82 $ 1.81 $ 1.68 $ 1.44 $ — $ — $ — Consolidated $ 12.90 $ 10.52 $ 10.97 $ 8.97 $ 11.28 $ 14.41 $ 14.49 $ 13.88 Production cost per tonne La Encantada $ 32.96 $ 30.18 $ 35.13 $ 34.91 $ 30.92 $ 31.93 $ 44.21 $ 43.96 La Parrilla $ 41.92 $ 41.20 $ 37.12 $ 35.29 $ 38.99 $ 40.61 $ 46.49 $ 42.64 Del Toro $ 52.45 $ 48.15 $ 52.95 $ 53.30 $ 45.22 $ 47.58 $ 42.99 $ 47.87 San Martin $ 56.70 $ 59.39 $ 65.75 $ 53.32 $ 54.22 $ 58.71 $ 56.09 $ 58.06 La Guitarra $ 78.31 $ 79.68 $ 87.01 $ 66.88 $ 57.02 $ 52.92 $ 54.58 $ 48.88 Santa Elena $ 37.57 $ 44.75 $ 43.89 $ 42.05 $ 44.45 $ — $ — $ — Consolidated $ 42.13 $ 43.11 $ 44.97 $ 42.72 $ 41.44 $ 41.81 $ 46.80 $ 46.90

M A N AGEMEN T 'S DISCUSSION A ND A N A LYSIS For the year and quarter ended December 31, 2016 MANAGEMENT'S dISCUSSION ANd ANALYSIS FIRST MAJESTIC SILVER CORP. ANNUAL REPORT 2016 84 OPERATING RESULTS – CONSOLIdATEd OPERATIONS Key Performance Metrics 2016–Q4 2016–Q3 2016–Q2 2016–Q1 2016 2015 Change Q4 vs Q3 Change ’16 vs ’15 Production Ore processed/tonnes milled 844,155 838,233 798,182 789,591 3,270,162 2,852,655 1% 15% Average silver grade (g/t) 137 150 148 161 149 168 (9%) (11%) Recovery (%) 76% 77% 75% 75% 76% 72% (1%) 6% Total silver ounces produced 2,819,708 3,114,627 2,844,930 3,074,173 11,853,438 11,142,109 (9%) 6% Total payable silver ounces produced 2,755,180 3,041,841 2,762,703 2,993,547 11,553,271 10,755,381 (9%) 7% Gold ounces produced 14,743 14,452 16,371 16,870 62,436 25,467 2% 145% Pounds of lead produced 7,684,876 8,038,206 8,825,234 8,637,429 33,185,745 40,149,170 (4%) (17%) Pounds of zinc produced 1,190,713 1,519,143 3,837,301 4,030,810 10,577,967 17,524,223 (22%) (40%) Total production – ounces silver equivalent 4,380,477 4,524,619 4,681,608 5,083,095 18,669,800 16,086,271 (3%) 16% Underground development (m) 14,918 12,764 11,738 10,007 49,428 37,578 17% 32% Diamond drilling (m) 35,247 36,290 19,342 6,697 97,576 36,098 (3%) 170% Costs Mining cost per ounce $ 4.79 $ 4.14 $ 4.71 $ 4.10 $ 4.42 $ 4.17 16% 6% Milling cost per ounce 5.27 5.29 5.63 5.07 5.31 5.20 0% 2% Indirect cost per ounce 2.85 2.44 2.65 2.10 2.50 2.30 17% 9% Total production cost per ounce $ 12.91 $ 11.87 $ 12.99 $ 11.27 $ 12.23 $ 11.67 9% 5% Transport and other selling costs per ounce 0.23 0.26 0.40 0.40 0.33 0.49 (12%) (33%) Smelting and refining costs per ounce 1.63 1.53 2.31 2.16 1.91 2.63 7% (27%) Environmental duty and royalties per ounce 0.12 0.13 0.12 0.11 0.12 0.11 (8%) 9% Cash cost per ounce before by-product credits $ 14.89 $ 13.79 $ 15.83 $ 13.94 $ 14.59 $ 14.89 8% (2%) Deduct: By-product credits (8.41) (7.96) (9.41) (8.95) (8.67) (7.02) 6% 24% Cash cost per ounce $ 6.49 $ 5.84 $ 6.41 $ 5.00 $ 5.92 $ 7.87 11% (25%) Workers’ Participation 0.29 0.18 0.14 0.04 0.17 0.05 61% 240% General and administrative expenses 1.68 1.43 1.56 1.22 1.47 1.51 17% (3%) Share-based payments 0.40 0.35 0.39 0.38 0.38 0.46 14% (17%) Accretion of decommissioning liabilities 0.07 0.07 0.08 0.07 0.07 0.08 0% (13%) Sustaining capital expenditures 3.97 2.64 2.38 2.25 2.79 3.47 50% (20%) All-In Sustaining Costs per ounce $ 12.90 $ 10.52 $ 10.97 $ 8.97 $ 10.79 $ 13.43 23% (20%) Mining cost per tonne $ 15.62 $ 15.01 $ 16.31 $ 15.54 $ 15.62 $ 15.73 4% (1%) Milling cost per tonne 17.21 19.49 19.50 19.21 18.77 19.59 (12%) (4%) Indirect cost per tonne 9.30 8.60 9.16 7.97 8.83 8.67 8% 2% Total production cost per tonne $ 42.13 $ 43.11 $ 44.97 $ 42.72 $ 43.22 $ 43.98 (2%) (2%)

MANAGEMENT'S dISCUSSION ANd ANALYSIS FIRST MAJESTIC S ILVER CORP. ANNUAL REPORT 2016 85 OPERATING RESULTS – CONSOLIdATEd OPERATIONS (continued) PRODUCTION In 2016, the Company achieved record production of 18,669,800 silver equivalent ounces, comprising of 11,853,438 ounces of silver, 62,436 ounces of gold, 33,185,745 pounds of lead and 10,577,967 pounds of zinc. Total production increased 16% compared to the previous year primarily due to the addition of the Santa Elena mine in the fourth quarter of 2015, partially offset by lower by-product production from Del Toro and La Parrilla. Total production for the quarter was 4,380,477 silver equivalent ounces, consisted of 2,819,708 ounces of silver, 14,743 ounces of gold, 7,684,876 pounds of lead and 1,190,713 pounds of zinc. Compared to the third quarter, silver production decreased 9% primarily attributed to a 9% decrease in average silver grade. CASH COST PER OUNCE Cash cost per ounce for the year was $5.92, a 25% decrease from $7.87 per ounce in the prior year. The decrease in cash cost per ounce was attributed to ongoing company‐wide cost reduction efforts and a focus on producing profitable ounces, a decrease in smelting and refining costs as a result of renegotiated sales agreements that were effective on July 1, 2016, weakening of the Mexican pesos against the U.S. dollars, as well as the addition of the Santa Elena Silver/Gold Mine which became the lowest cost mine in the Company’s portfolio. Cash cost per ounce (after by-product credits) for the quarter was $6.49 per payable ounce of silver, an increase of 11% from $5.84 per ounce in the third quarter of 2016. The increase in cash cost per ounce was primarily the result of lower silver grades leading to lower silver production and higher mining contractor costs attributed to ore development activities at the Santa Elena mine. Total tonnes milled and production cost per tonne remained relatively unchanged when compared to the previous quarter. ALL-IN SUSTAINING COST PER OUNCE AISC per ounce in 2016 was $10.79, a decrease of 20% or $2.64 per ounce compared to the previous year. The decrease in AISC per ounce was reflective of the Company’s ongoing effort to reduce production costs and capital expenditures, the weakening of the Mexican pesos against the U.S. dollars, as well as the addition of the Santa Elena mine. AISC in the fourth quarter was $12.90, an increase of 23% or $2.38 per ounce compared to the previous quarter. The increase in AISC was primarily attributed to increase in sustaining capital expenditures to catch up with program targets and higher cash cost per ounce. HEAD GRADES AND RECOVERIES The overall silver head grade in 2016 was 149 grams per tonne (“g/t”), an 11% decrease compared to 168 g/t in the previous year, primarily due to Santa Elena’s reprocessing lower grade heap leach material blended with freshly mined underground ore. The lower silver head grades were offset by higher by-product credits from gold grades at Santa Elena. The overall average silver head grade for the quarter was 137 g/t, a decrease of 9% from 150 g/t in the third quarter of 2016. The slight decrease in silver grades is primarily due to lower grades at Del Toro in the month of October due to limited production at the high grade Dolores mine. As a result, the Company increased production rates at the San Juan mine to offset the decrease in ore production from Dolores. Beginning in November, production at the Dolores mine returned to normal operating levels. Average silver grade at La Encantada also experienced a 9% decrease compared to the prior quarter primarily due to the continued blending of ore from old stopes, stockpiles and the recovery of pillars. Grades are expected to improve towards the end of 2017 following the start of block caving production within the San Javier Breccia. Silver recoveries for the year also improved to 76%, compared to 72% in the previous year. Improvements in recoveries were primarily attributed to full year of operations from Santa Elena with higher recoveries as well as higher recoveries at San Martin due to improvements in mining dilution control and continuous optimization of metallurgical processes. Combined recoveries of silver for all mines in the quarter was 76% which were consistent with the previous quarter. DEVELOPMENT AND EXPLORATION During 2016, the Company expanded its development program to support underground mining activities. As a result, a total of 49,428 metres of underground development was completed, a 32% increase from 37,578 metres developed in 2015. A total of 14,918 metres of underground development was completed during the quarter, compared to 12,764 metres developed in the previous quarter. The increase in mine development compared to the previous quarter was due to acceleration of development activities to catch up with program targets. At the end of the year, a total of 19 drill rigs were active at the Company’s six operating mines compared to seven in 2015. During 2016, a total of 97,576 metres were drilled compared to 36,098 metres in 2015. In the fourth quarter, a total of 35,247 metres were drilled compared to 36,290 metres drilled in the third quarter of 2016. A substantial portion of the current drilling and development is for the purpose of updating Mineral Reserves and Resources which the Company expects to release in late March 2017. In addition, updated NI 43-101 Technical Reports for San Martin, Del Toro and La Parrilla are expected to be released in the first half of 2017.

M A N AGEMEN T 'S DISCUSSION A ND A N A LYSIS For the year and quarter ended December 31, 2016 MANAGEMENT'S dISCUSSION ANd ANALYSIS FIRST MAJESTIC SILVER CORP. ANNUAL REPORT 2016 86 OPERATING RESULTS – CONSOLIdATEd OPERATIONS (continued) SANTA ELENA SILVER/GOLD MINE, SONORA, MEXICO The Santa Elena Silver/Gold Mine is located approximately 150 km northeast of the city of Hermosillo, Sonora, Mexico and is comprised of mining concessions over a total of 51,172 hectares. First Majestic acquired the Santa Elena mine with the acquisition of SilverCrest Mines Inc. (“SilverCrest”) on October 1, 2015. The operating plan for Santa Elena involves the processing of ore in the 3,000 tpd cyanidation circuit from a combination of underground reserves, remaining reserves in the open pit, and spent ore from the previous heap leach pad. The Company owns 100% of the Santa Elena mine. SANTA ELENA 2016–Q4 2016–Q3 2016–Q2 2016–Q1 2016 2015 Change Q4 vs Q3 Change ’16 vs ’15 Production Ore processed/tonnes milled 257,771 241,996 245,753 242,539 988,060 254,625 7% 288% Average silver grade (g/t) 89 95 86 98 92 96 (6%) (4%) Recovery (%) 89% 91% 89% 87% 89% 86% (2%) 3% Total silver ounces produced 660,207 671,423 605,615 661,292 2,598,537 673,969 (2%) 286% Total payable silver ounces produced 659,216 670,416 604,707 660,300 2,594,639 672,959 (2%) 286% Gold ounces produced 11,430 11,156 12,704 13,383 48,674 11,110 2% 338% Total production – ounces silver equivalent 1,470,612 1,430,506 1,559,410 1,725,417 6,185,945 1,506,405 3% 311% Underground development (m) 3,029 2,444 2,931 2,480 10,885 1,738 24% 526% Diamond drilling (m) 5,391 3,520 3,509 146 12,566 198 53% 6,246% Cost Mining cost per ounce $ 6.28 $ 5.69 $ 6.27 $ 4.75 $ 5.74 $ 6.02 10% (5%) Milling cost per ounce 6.17 8.48 9.58 9.02 8.29 8.60 (27%) (4%) Indirect cost per ounce 2.24 1.98 1.99 1.68 1.97 2.20 13% (10%) Total production cost per ounce $ 14.69 $ 16.15 $ 17.84 $ 15.44 $ 15.99 $ 16.82 (9%) (5%) Transport and other selling costs per ounce 0.12 0.16 0.17 0.15 0.15 0.14 (25%) 7% Smelting and refining costs per ounce 0.26 0.25 0.24 0.33 0.27 0.46 4% (41%) Environmental duty and royalties per ounce 0.18 0.19 0.20 0.19 0.19 0.21 (5%) (10%) Cash cost per ounce before by-product credits $ 15.26 $ 16.75 $ 18.45 $ 16.12 $ 16.61 $ 17.63 (9%) (6%) Deduct: By-product credits (16.69) (17.56) (21.31) (19.46) (18.70) (20.47) (5%) (9%) Cash cost per ounce $ (1.43) $ (0.81) $ (2.86) $ (3.34) $ (2.09) $ (2.84) 77% (26%) Accretion of decommissioning liabilities 0.05 0.05 0.06 0.06 0.05 0.14 —% (64%) Sustaining capital expenditures 3.18 2.58 4.62 4.96 3.81 4.14 23% (8%) All-In Sustaining Costs per ounce $ 1.64 $ 1.82 $ 1.81 $ 1.68 $ 1.75 $ 1.44 (10%) 22% Mining cost per tonne $ 16.05 $ 15.77 $ 15.43 $ 12.92 $ 15.06 $ 15.90 2% (5%) Milling cost per tonne 15.78 23.48 23.57 24.56 21.76 22.73 (33%) (4%) Indirect cost per tonne 5.74 5.50 4.89 4.56 5.18 5.82 4% (11%) Total production cost per tonne $ 37.57 $ 44.75 $ 43.89 $ 42.05 $ 42.00 $ 44.45 (16%) (6%)

MANAGEMENT'S dISCUSSION ANd ANALYSIS FIRST MAJESTIC S ILVER CORP. ANNUAL REPORT 2016 87 OPERATING RESULTS – CONSOLIdATEd OPERATIONS (continued) SANTA ELENA SILVER/GOLD MINE, SONORA, MEXICO (continued) During Santa Elena’s first full year under First Majestic’s management, the mine produced a record 2,598,537 silver ounces and 48,674 ounces of gold for an annual production of 6,185,945 silver equivalent ounces and has become the Company’s largest operation. The mill processed a total of 988,060 tonnes during the year, consisting of 570,722 tonnes of underground ore (58%) and 417,338 tonnes from the above ground heap leach pad (42%). Full year cash cost for Santa Elena was negative $2.09 per ounce, an increase of $0.75 compared to the prior year. The increase was primarily due to lower by-product credits, partially offset by lower production costs. During the fourth quarter, Santa Elena produced 660,207 silver ounces and 11,430 ounces of gold for a total quarterly production of 1,470,612 silver equivalent ounces, an increase of 3% compared to 1,430,506 silver equivalent ounces in the previous quarter. Silver grade and recoveries were 89 g/t and 89%, respectively, down from 95 g/t and 91%, respectively, compared to the previous quarter. Gold grades and recoveries averaged 1.45 g/t and 95%, respectively, compared to 1.51 g/t and 95% in the previous quarter. Compared to the previous quarter, silver grades decreased slightly due to mining of lower grade pockets within the ore body as part of the planned mining sequence. The decrease in recoveries were attributed to lower head grades. The mill processed a total of 257,771 tonnes during the quarter, consisting of 172,061 tonnes (1,870 tpd) of underground ore and 85,710 tonnes (932 tpd) from the above ground heap leach pad, representing an increase of 7% compared to the prior quarter. During the third quarter, the Company modified the production ratio of underground ore to the reprocessing of ore from the heap leach pad with the intent of achieving higher production rates from the Alejandra vein. As a result, production of underground ore increased to a rate of 1,750 tpd while reducing heap leach production to 1,000 tpd. Cash cost in the fourth quarter was negative $1.43 per payable silver ounce compared to negative $0.81 per payable silver ounce in the previous quarter, primarily due to an increase of $1.5 million in diesel credits issued by the Mexican tax authorities. The diesel credits are only available to the extent of income taxes payable to the Mexican tax authorities. Prior to the fourth quarter, the majority of income taxes payable by Santa Elena was offset by prior years’ tax losses carry-forward. Also, cash cost benefited from the weakening of the Mexican pesos against U.S. dollars. A total of 3,029 metres of underground development was completed in the fourth quarter compared to 2,444 metres of development in the previous quarter. At the end of the quarter, total development of the new San Salvador ramp reached 1,486 metres, or 65% of the 2,300 metre development plan. The new ramp is scheduled to connect to the Main Vein area along level 575 by April 2017. Once the ramp is completed, it is expected to improve underground production capacity by reducing haulage bottlenecks. One surface and one underground drill rig were active on the Santa Elena property during the quarter with 5,391 metres drilled compared to 3,520 metres drilled in the previous quarter. The Company received assay results from the first four holes of a ten hole diamond drill program at the Ermitaño West property during the quarter. The results confirm the target structure was intersected in all four holes. Highlights include: Hole 16-04 intersected 17.9 metres averaging 11.4 g/t gold and 86 g/t silver, including 3.3 metres of 34.6 g/t gold and 242 g/t silver, at a depth of 194 metres below surface. True thickness is estimated to be 70% – 90% of reported intervals. This new discovery is located only 3.5 kilometres southeast of the Santa Elena mine. The Company anticipates the results from the remaining six drill holes by the end of March 2017. The Santa Elena mine has a gold streaming agreement with Sandstorm Gold Ltd. (“Sandstorm”), which requires the mine to sell 20% of its gold production from a designated area of its underground operations over the life of mine to Sandstorm. The selling price is based on the lower of the prevailing market price or $350 per ounce until fulfillment of 50,000 ounces, after which the price will increase to the lower of the prevailing market price or $450 per ounce, adjusted for a 1% annual inflation commencing in April 2014. As at December 31, 2016, the Santa Elena mine has delivered 42,722 cumulative ounces of gold to Sandstorm. In December 2016, the Company entered into an option agreement with Compania Minera Dolores, S.A. de C.V., a subsidiary of Pan American Silver Corp., to acquire 5,802 hectares of mining concessions adjacent to the Santa Elena mine. In exchange, First Majestic has agreed to incur $1.6 million in exploration costs on the property over four years, a 2.5% NSR royalty on the related concessions, and to pay $1.4 million in cash, of which $0.1 million was due on or before the date of agreement (paid), $0.2 million in December 2017, $0.2 million in December 2018, $0.3 million in December 2019 and $0.7 million in December 2020, respectively.

M A N AGEMEN T 'S DISCUSSION A ND A N A LYSIS For the year and quarter ended December 31, 2016 MANAGEMENT'S dISCUSSION ANd ANALYSIS FIRST MAJESTIC SILVER CORP. ANNUAL REPORT 2016 88 OPERATING RESULTS – CONSOLIdATEd OPERATIONS (continued) LA PARRILLA SILVER MINE, DURANGO, MEXICO The La Parrilla Silver Mine, located approximately 65 kilometres southeast of the city of Durango, Durango State, Mexico, is a complex of producing underground operations consisting of the Rosarios, La Rosa and La Blanca mines which are inter-connected through underground workings, and the San Marcos, Vacas and Quebradillas mines which are connected via above-ground gravel roads. The total mining concessions consist of 69,478 hectares. The Company owns 45 hectares and leases an additional 69 hectares of surface rights, for a total of 114 hectares of surface rights. La Parrilla includes a 2,000 tpd dual-circuit processing plant consisting of a 1,000 tpd cyanidation circuit and a 1,000 tpd flotation circuit, a central laboratory, buildings, offices and associated infrastructure. The Company owns 100% of the La Parrilla Silver Mine. L A PARRILL A 2016–Q4 2016–Q3 2016–Q2 2016–Q1 2016 2015 Change Q4 vs Q3 Change ’16 vs ’15 Production Ore processed/tonnes milled 153,309 147,414 157,871 151,916 610,509 667,702 4% (9%) Average silver grade (g/t) 130 146 143 144 140 145 (11%) (3%) Recovery (%) 78% 79% 83% 82% 81% 78% (1%) 4% Total silver ounces produced 497,466 547,913 599,526 575,969 2,220,874 2,434,095 (9%) (9%) Total payable silver ounces produced 466,385 515,961 553,123 527,922 2,063,392 2,231,443 (10%) (8%) Gold ounces produced 260 296 230 223 1,009 1,161 (12%) (13%) Pounds of lead produced 1,856,882 2,129,908 2,894,123 3,767,247 10,648,161 10,441,510 (13%) 2% Pounds of zinc produced 1,190,713 1,519,143 3,837,301 4,030,810 10,577,967 17,524,223 (22%) (40%) Total production – ounces silver equivalent 699,497 739,026 948,552 1,001,359 3,388,434 4,036,398 (5%) (16%) Underground development (m) 3,181 2,612 1,834 1,790 9,416 7,371 22% 28% Diamond drilling (m) 5,665 5,115 3,030 1,517 15,326 9,750 11% 57% Cost Mining cost per ounce $ 6.04 $ 4.95 $ 4.45 $ 4.38 $ 4.92 $ 4.93 22% —% Milling cost per ounce 4.46 4.15 3.83 3.88 4.07 5.30 7% (23%) Indirect cost per ounce 3.28 2.67 2.31 1.90 2.51 2.44 23% 3% Total production cost per ounce $ 13.78 $ 11.77 $ 10.60 $ 10.15 $ 11.50 $ 12.67 17% (9%) Transport and other selling costs per ounce 0.29 0.35 0.58 0.85 0.53 0.90 (17%) (41%) Smelting and refining costs per ounce 2.85 2.86 4.77 6.24 4.23 5.33 —% (21%) Environmental duty and royalties per ounce 0.16 0.20 0.15 0.12 0.16 0.16 (20%) —% Cash cost per ounce before by-product credits $ 17.08 $ 15.19 $ 16.09 $ 17.36 $ 16.42 $ 19.06 12% (14%) Deduct: By-product credits (6.86) (7.49) (8.76) (11.97) (8.84) (10.11) (8%) (13%) Cash cost per ounce $ 10.22 $ 7.70 $ 7.33 $ 5.39 $ 7.58 $ 8.95 33% (15%) Workers’ Participation 0.14 0.13 0.36 — 0.16 — 8% 100% Accretion of decommissioning liabilities 0.06 0.06 0.06 0.06 0.06 0.07 —% (14%) Sustaining capital expenditures 4.91 2.76 1.67 1.61 2.66 3.85 78% (31%) All-In Sustaining Costs per ounce $ 15.34 $ 10.65 $ 9.43 $ 7.06 $ 10.47 $ 12.88 44% (19%) Mining cost per tonne $ 18.38 $ 17.32 $ 15.61 $ 15.22 $ 16.62 $ 16.48 6% 1% Milling cost per tonne 13.57 14.53 13.42 13.48 13.74 17.72 (7%) (22%) Indirect cost per tonne 9.97 9.34 8.09 6.59 8.49 8.15 7% 4% Total production cost per tonne $ 41.92 $ 41.20 $ 37.12 $ 35.29 $ 38.85 $ 42.35 2% (8%)

MANAGEMENT'S dISCUSSION ANd ANALYSIS FIRST MAJESTIC S ILVER CORP. ANNUAL REPORT 2016 89 OPERATING RESULTS – CONSOLIdATEd OPERATIONS (continued) LA PARRILLA SILVER MINE, DURANGO, MEXICO (continued) Total production for the year was 3,388,434 silver equivalent ounces, a decrease of 16% compared to 4,036,398 equivalent ounces of silver in the previous year, primarily due to lower zinc production. During the year, the flotation circuit processed 416,572 tonnes with an average silver grade of 152 g/t and an 86% recovery and the cyanidation circuit processed 193,937 tonnes with an average silver grade of 115 g/t and a 66% recovery. The decrease in production was primarily attributed to lower zinc production from the flotation circuit due to the depletion of sulphide reserves in the Rosario mine and delay in the preparation of new sulphide stopes in the Quebradillas mine. Cash cost for the year was $7.58 per ounce, a 15% decrease compared to $8.95 in the prior year. The improvement in cash costs was attributed to a decrease in smelting and refining costs as a result of renegotiated sales agreements that were effective on July 1, 2016 and management’s decision to focus on mining profitable ounces, leaving higher cost ounces in the ground. The decision has resulted in the planned reduction of throughput in the cyanidation circuit and significant savings in contractor, electricity, reagents and maintenance costs. In the fourth quarter, total production from the La Parrilla mine was 699,497 silver equivalent ounces, a decrease of 5% compared to 739,026 equivalent ounces of silver in the previous quarter. During the quarter, the flotation circuit processed 98,546 tonnes (1,071 tpd) with an average silver grade of 138 g/t and an 83% recovery while the cyanidation circuit processed 54,762 tonnes (595 tpd) with an average silver grade of 114 g/t and a 68% recovery. During the quarter, the lead circuit processed an average lead grade of 1.2% with recoveries of 74% for a total lead production of 1,856,882 pounds, representing a 13% decrease compared to the previous quarter. The zinc circuit processed an average zinc grade of 1.0% with recoveries of 54% for a total zinc production of 1,190,713 pounds, representing a 22% decrease compared to the previous quarter. The decrease in lead and zinc production are primarily attributed to lower head grades. Cash cost in the quarter was $10.22 per ounce, an increase of 33% compared to the previous quarter. The increase in cash costs was primarily attributed to increase in shotcreting to improve safety conditions in the Quebradillas and San Marcos areas, as well as lower by-product credits from reduced lead and zinc production. A total of 3,181 metres of underground development was completed in the quarter, compared to 2,612 metres in the third quarter of 2016. A total of 5,665 metres of diamond drilling was completed in the quarter compared to 5,115 metres of diamond drilling in the third quarter of 2016. Three underground drill rigs were active during the quarter as the focus of the 2016 exploration program is on the Quebradillas mine, Intermedia veins and the San Nicolas system, where drilling results have indicated potential for the lateral and in-depth extension of known structures.

M A N AGEMEN T 'S DISCUSSION A ND A N A LYSIS For the year and quarter ended December 31, 2016 MANAGEMENT'S dISCUSSION ANd ANALYSIS FIRST MAJESTIC SILVER CORP. ANNUAL REPORT 2016 90 OPERATING RESULTS – CONSOLIdATEd OPERATIONS (continued) LA ENCANTADA SILVER MINE, COAHUILA, MEXICO The La Encantada Silver Mine is an underground mine located in the northern Mexico State of Coahuila, 708 kilometres northeast of Torreon. The mine is comprised of 4,076 hectares of mining rights and surface land ownership of 1,343 hectares. La Encantada consists of a 4,000 tpd cyanidation plant, a village with 180 houses as well as administrative offices, laboratory, general store, hospital, schools, church, airstrip and the infrastructure required for such an operation. The mine is accessible via a 1.5 hour flight from Torreon, Coahuila to the mine’s private airstrip or via a mostly paved road from the closest town, Muzquiz, which is 225 kilometres away. The Company owns 100% of the La Encantada Silver Mine. L A ENCANTADA 2016–Q4 2016–Q3 2016–Q2 2016–Q1 2016 2015 Change Q4 vs Q3 Change ’16 vs ’15 Production Ore processed/tonnes milled 235,039 247,858 209,039 189,140 881,075 851,567 (5%) 3% Average silver grade (g/t) 132 145 169 224 164 161 (9%) 2% Recovery (%) 57% 59% 55% 61% 58% 57% (3%) 2% Total silver ounces produced 567,930 685,478 622,321 830,787 2,706,516 2,529,785 (17%) 7% Total payable silver ounces produced 565,659 682,736 619,832 827,464 2,695,690 2,519,666 (17%) 7% Gold ounces produced 22 35 10 27 94 131 (37%) (28%) Total production – ounces silver equivalent 569,504 687,841 623,070 832,957 2,713,372 2,539,440 (17%) 7% Underground development (m) 1,015 519 1,043 1,189 3,767 7,258 96% (48%) Diamond drilling (m) 4,197 3,681 3,062 — 10,939 11,266 14% (3%) Cost Mining cost per ounce $ 2.80 $ 2.17 $ 2.95 $ 2.13 $ 2.47 $ 3.53 29% (30%) Milling cost per ounce 8.01 6.60 6.40 4.15 6.10 6.44 21% (5%) Indirect cost per ounce 2.89 2.18 2.49 1.70 2.25 2.45 33% (8%) Total production cost per ounce $ 13.69 $ 10.95 $ 11.85 $ 7.98 $ 10.82 $ 12.42 25% (13%) Transport and other selling costs per ounce (0.01) 0.04 0.27 0.20 0.13 0.22 (125%) (41%) Smelting and refining costs per ounce 0.20 0.21 0.29 0.31 0.26 0.36 (5%) (28%) Environmental duty and royalties per ounce 0.04 0.04 0.04 0.03 0.04 0.05 0% (20%) Cash cost per ounce before by-product credits $ 13.92 $ 11.25 $ 12.45 $ 8.53 $ 11.25 $ 13.05 24% (14%) Deduct: By-product credits (0.05) (0.05) (0.04) (0.04) (0.04) (0.04) 0% 0% Cash cost per ounce $ 13.87 $ 11.20 $ 12.41 $ 8.49 $ 11.21 $ 13.01 24% (14%) Workers’ Participation 0.01 0.12 0.17 0.05 0.09 0.08 (92%) 13% Accretion of decommissioning liabilities 0.08 0.07 0.08 0.06 0.07 0.08 14% (13%) Sustaining capital expenditures 2.57 1.41 1.19 0.73 1.39 3.30 82% (58%) All-In Sustaining Costs per ounce $ 16.53 $ 12.81 $ 13.85 $ 9.33 $ 12.76 $ 16.47 29% (23%) Mining cost per tonne $ 6.74 $ 5.99 $ 8.75 $ 9.32 $ 7.56 $ 10.44 13% (28%) Milling cost per tonne 19.27 18.17 18.99 18.17 18.66 19.05 6% (2%) Indirect cost per tonne 6.95 6.02 7.40 7.42 6.89 7.26 15% (5%) Total production cost per tonne $ 32.96 $ 30.18 $ 35.13 $ 34.91 $ 33.11 $ 36.75 9% (10%)

MANAGEMENT'S dISCUSSION ANd ANALYSIS FIRST MAJESTIC S ILVER CORP. ANNUAL REPORT 2016 91 OPERATING RESULTS – CONSOLIdATEd OPERATIONS (continued) LA ENCANTADA SILVER MINE, COAHUILA, MEXICO (continued) For the year, a total of 2,713,372 equivalent ounces of silver were produced by La Encantada, an increase of 7% compared to 2,539,440 equivalent ounces of silver in 2015. The increase in production was primarily due to a 3% increase in tonnes milled and modest improvements in average silver grade and recoveries. Cash cost per ounce for the year was $11.21, a 14% reduction compared to $13.01 in the previous year. The decrease in cash cost per ounce was primarily attributed to savings in mining contractor costs, as the Company focused on mining profitable ounces by blending ore from old stopes, stockpiles, recovery of pillars and a portion of high grade narrow veins. Total production cost per tonne for the year was $33.11, which was 10% lower than the prior year. During the fourth quarter, a total of 569,504 equivalent ounces of silver were produced by the La Encantada processing plant. Production in the quarter decreased by 17% compared to the third quarter of 2016, primarily due to a 5% decrease in tonnes milled and a 9% decrease in silver grades. Silver grades averaged 132 g/t during the quarter, a 9% decrease compared to the previous quarter primarily due to the continued blending of ore from old stopes, stockpiles and the recovery of pillars. Grades are expected to improve towards the end of 2017 following the start of block caving production within the San Javier Breccia. Cash cost per ounce for the quarter was $13.87 compared to $11.20 in the previous quarter. The increase in cash cost per ounce compared to the previous quarter was primarily due to lower silver production. Total production cost per tonne for the quarter was $32.96, which was 9% higher than the third quarter of 2016. The roasting project advanced in the fourth quarter with the completion of site preparations and civil works. The excavation work for the installation of the foundations is expected to begin in February 2017. Manufacturing of the new roasting kiln is now 32% complete and initial equipment shipments to site for assembly are expected to begin before the end of March 2017. The Company continues to anticipate the completion of this circuit by the fourth quarter of 2017. Once in full production, the Company expects to recover an additional 1.5 million ounces of silver per year from the reprocessing of above ground tailings. The Company estimates that there is a total of 4.1 million tonnes of tailings with an average silver grade of 110 g/t. A total of 1,015 metres were developed underground in the quarter compared to 1,015 metres in the third quarter of 2016. Mine development efforts are currently focused on the preparation of block caving at the San Javier Breccia and access to old back-fill areas in order to increase production of low-cost profitable ounces. A total of 4,197 metres were drilled in the fourth quarter compared to 3,681 metres in the previous quarter. Three drill rigs are currently operating at La Encantada with focus on areas in close proximity to current operating areas. During the quarter, the Company completed a high resolution airborne magnetic survey covering over 8,000 metres at La Encantada. The geophysical work is currently being analyzed in preparation of additional brownfields and near mine exploration targets around the mine.

M A N AGEMEN T 'S DISCUSSION A ND A N A LYSIS For the year and quarter ended December 31, 2016 MANAGEMENT'S dISCUSSION ANd ANALYSIS FIRST MAJESTIC SILVER CORP. ANNUAL REPORT 2016 92 OPERATING RESULTS – CONSOLIdATEd OPERATIONS (continued) DEL TORO SILVER MINE, ZACATECAS, MEXICO The Del Toro Silver Mine is located 60 kilometres to the southeast of the Company’s La Parrilla mine and consists of 14,251 hectares of mining claims and 209 hectares of surface rights. The Del Toro operation represents the consolidation of three historical silver mines, the Perseverancia, San Juan and Dolores mines, which are approximately one and three kilometres apart, respectively. Del Toro includes a 2,000 tpd flotation circuit and a 2,000 tpd cyanidation circuit which is currently in care and maintenance. First Majestic owns 100% of the Del Toro Silver Mine. DEL TORO 2016–Q4 2016–Q3 2016–Q2 2016–Q1 2016 2015 Change Q4 vs Q3 Change ’16 vs ’15 Production Ore processed/tonnes milled 82,767 86,646 80,739 86,869 337,020 555,564 (4%) (39%) Average silver grade (g/t) 157 195 192 143 171 172 (19%) (1%) Recovery (%) 82% 82% 80% 78% 81% 74% 0% 9% Total silver ounces produced 343,894 446,137 399,520 311,400 1,500,951 2,261,633 (23%) (34%) Total payable silver ounces produced 326,209 422,965 378,405 294,943 1,422,523 2,142,105 (23%) (34%) Gold ounces produced 70 81 96 97 344 413 (14%) (17%) Pounds of lead produced 5,827,994 5,908,297 5,931,111 4,870,181 22,537,583 29,707,660 (1%) (24%) Total production – ounces silver equivalent 680,802 707,524 682,443 578,556 2,649,326 3,824,241 (4%) (31%) Underground development (m) 2,377 2,328 1,754 1,201 7,659 6,050 2% 27% Diamond drilling (m) 3,614 6,643 3,306 1,278 14,839 9,470 (46%) 57% Cost Mining cost per ounce $ 5.45 $ 4.23 $ 4.98 $ 7.76 $ 5.44 $ 4.87 29% 12% Milling cost per ounce 4.38 3.14 3.47 4.54 3.80 4.81 39% (21%) Indirect cost per ounce 3.48 2.50 2.85 3.40 3.00 2.21 39% 36% Total production cost per ounce $ 13.31 $ 9.87 $ 11.30 $ 15.70 $ 12.24 $ 11.89 35% 3% Transport and other selling costs per ounce 0.70 0.60 0.77 0.92 0.73 0.78 17% (6%) Smelting and refining costs per ounce 5.86 4.41 6.80 6.35 5.78 5.14 33% 12% Environmental duty and royalties per ounce 0.09 0.11 0.09 0.09 0.10 0.09 (18%) 11% Cash cost per ounce before by-product credits $ 19.96 $ 14.99 $ 18.96 $ 23.05 $ 18.85 $ 17.90 33% 5% Deduct: By-product credits (17.16) (11.58) (11.06) (13.53) (13.13) (11.71) 48% 12% Cash cost per ounce $ 2.80 $ 3.41 $ 7.90 $ 9.52 $ 5.73 $ 6.19 (18%) (7%) Workers’ Participation 1.27 0.08 — — 0.35 — 1,488% 100% Accretion of decommissioning liabilities 0.11 0.09 0.10 0.13 0.10 0.07 22% 43% Sustaining capital expenditures 4.25 2.44 1.92 1.11 2.44 2.37 74% 3% All-In Sustaining Costs per ounce $ 8.43 $ 6.01 $ 10.05 $ 10.76 $ 8.62 $ 8.63 40% 0% Mining cost per tonne $ 21.47 $ 20.65 $ 23.32 $ 26.33 $ 22.95 $ 18.77 4% 22% Milling cost per tonne 17.27 15.32 16.25 15.41 16.04 18.55 13% (14%) Indirect cost per tonne 13.71 12.18 13.38 11.56 12.68 8.53 13% 49% Total production cost per tonne $ 52.45 $ 48.15 $ 52.95 $ 53.30 $ 51.67 $ 45.85 9% 13%

MANAGEMENT'S dISCUSSION ANd ANALYSIS FIRST MAJESTIC S ILVER CORP. ANNUAL REPORT 2016 93 OPERATING RESULTS – CONSOLIdATEd OPERATIONS (continued) DEL TORO SILVER MINE, ZACATECAS, MEXICO (continued) In 2016, Del Toro produced a total of 2,649,326 silver equivalent ounces, a 31% decrease compared to 3,824,241 ounces produced in the previous year. The mine processed 337,020 tonnes of ore with an average silver grade of 171 g/t during the year. Tonnes milled decreased by 39% year over year, as mining occurred in narrow veins of the Perseverancia mine and Lupita vein, as well as the lack of production from San Juan orebody #3 due to soft ground conditions and the presence of excess water. The decrease in throughput was partially offset by continuous improvements in dilution control and in mining and milling activities which contributed to a 9% increase in recoveries during the year. For the year, cash cost per ounce was $5.73, a 7% decrease compared to $6.19 per ounce in the previous year. The improvement in cash cost per ounce was primarily attributed to headcount reduction and weakening of the Mexican pesos against U.S. dollars. During the fourth quarter, the Del Toro mine produced a total of 680,802 silver equivalent ounces, a 4% decrease compared to 707,524 ounces produced in the previous quarter, primarily due to lower average silver grades. The mine processed 82,767 tonnes of ore with an average silver grade of 157 g/t during the quarter. In the month of October, due to limited production at the high grade Dolores mine, the Company increased production rates at the San Juan mine to offset the decrease in ore production from Dolores. Beginning in November, production at the Dolores mine returned to normal operating levels. Lead grades and recoveries averaged 4.6% and 70%, respectively, producing a total of 5,827,994 pounds of lead, consistent with the previous quarter. Cash cost per ounce for the quarter was $2.80, an 18% reduction compared to $3.41 per ounce in the previous quarter. The improvement in cash cost per ounce was primarily attributed to an increase in by-product credits due to a 15% increase in lead prices compared to the previous quarter, as well as weakening of the Mexican pesos against U.S. dollars. Total underground development at Del Toro in the current quarter was 2,377 metres, consistent with 2,328 metres in the third quarter of 2016. At quarter end, three drill rigs were active at Del Toro and a total of 3,614 metres were completed compared to 6,643 metres in the previous quarter, a 46% decrease due to early completion of the 2016 drill program. In September 2016, the Company entered into two agreements to acquire 1,223 hectares of mining concessions adjacent to the Del Toro Silver Mine. The total purchase price amounted to $3.6 million in cash, of which $1.2 million has been paid, $1.0 million is due in 2017, $1.0 million in 2018 and $0.4 million in 2019, respectively. In October 2016, the Company entered into an agreement to acquire an additional 7,205 hectares of mining concessions near the Del Toro Silver Mine. The total purchase price amounted to $1.5 million, payable over six equal payments every six months. As at December 31, 2016, $0.3 million has been paid.

M A N AGEMEN T 'S DISCUSSION A ND A N A LYSIS For the year and quarter ended December 31, 2016 MANAGEMENT'S dISCUSSION ANd ANALYSIS FIRST MAJESTIC SILVER CORP. ANNUAL REPORT 2016 94 OPERATING RESULTS – CONSOLIdATEd OPERATIONS (continued) SAN MARTIN SILVER MINE, JALISCO, MEXICO The San Martin Silver Mine is an underground mine located near the town of San Martin de Bolaños in the Bolaños River valley, in the northern portion of the State of Jalisco, Mexico. The mine comprises of 33 contiguous mining concessions in the San Martin de Bolaños mining district that cover mineral rights for 37,518 hectares, including the application to acquire two new mining concessions covering 29,676 hectares which are in the process of registration. In addition, the mine owns 160 hectares of surface land where the processing plant, camp, office facilities, maintenance shops, and tailings dams are located, and an additional 1,296 hectares of surface rights. The newly expanded 1,300 tpd mill and processing plant consists of crushing, grinding and conventional cyanidation by agitation in tanks and a Merrill-Crowe doré production system. The mine can be accessed via small plane, 150 kilometres by air or 250 kilometres by paved road north of Guadalajara City. The San Martin mine is 100% owned by the Company. SAN MARTIN 2016–Q4 2016–Q3 2016–Q2 2016–Q1 2016 2015 Change Q4 vs Q3 Change ’16 vs ’15 Production Ore processed/tonnes milled 76,848 75,228 69,863 75,863 297,802 349,193 2% (15%) Average silver grade (g/t) 254 246 219 243 241 260 3% (7%) Recovery (%) 81% 84% 84% 81% 83% 79% (4%) 5% Total silver ounces produced 510,423 500,441 411,686 480,413 1,902,963 2,296,965 2% (17%) Total payable silver ounces produced 509,913 499,941 411,274 479,933 1,901,060 2,293,525 2% (17%) Gold ounces produced 888 907 1,078 1,261 4,134 5,745 (2%) (28%) Total production – ounces silver equivalent 573,349 562,096 492,669 580,922 2,209,035 2,722,059 2% (19%) Underground development (m) 2,696 2,807 2,524 2,093 10,120 7,680 (4%) 32% Diamond drilling (m) 7,069 7,817 4,137 3,113 22,135 3,640 (10%) 508% Cost Mining cost per ounce $ 3.01 $ 3.11 $ 4.17 $ 2.97 $ 3.28 $ 3.06 (3%) 7% Milling cost per ounce 3.35 3.55 4.13 3.71 3.66 3.93 (6%) (7%) Indirect cost per ounce 2.18 2.28 2.88 1.75 2.25 1.65 (4%) 36% Total production cost per ounce $ 8.54 $ 8.94 $ 11.17 $ 8.43 $ 9.19 $ 8.65 (4%) 6% Transport and other selling costs per ounce 0.15 0.20 0.29 0.26 0.22 0.19 (25%) 16% Smelting and refining costs per ounce 0.19 0.20 0.23 0.24 0.22 0.24 (5%) (8%) Environmental duty and royalties per ounce 0.10 0.10 0.10 0.10 0.10 0.10 0% 0% Cash cost per ounce before by-product credits $ 8.99 $ 9.44 $ 11.79 $ 9.02 $ 9.72 $ 9.18 (5%) 6% Deduct: By-product credits (2.05) (2.39) (3.12) (3.19) (2.66) (2.90) (14%) (8%) Cash cost per ounce $ 6.94 $ 7.05 $ 8.67 $ 5.83 $ 7.07 $ 6.29 (2%) 12% Workers’ Participation 0.68 0.49 0.03 0.19 0.36 0.15 39% 140% Accretion of decommissioning liabilities 0.06 0.07 0.08 0.07 0.07 0.06 (14%) 17% Sustaining capital expenditures 2.33 2.32 1.42 1.42 1.90 2.73 0% (30%) All-In Sustaining Costs per ounce $ 10.01 $ 9.92 $ 10.20 $ 7.52 $ 9.40 $ 9.22 1% 2% Mining cost per tonne $ 19.98 $ 20.68 $ 24.52 $ 18.77 $ 20.91 $ 20.09 (3%) 4% Milling cost per tonne 22.24 23.58 24.30 23.48 23.38 25.84 (6%) (10%) Indirect cost per tonne 14.48 15.13 16.93 11.07 14.35 10.87 (4%) 32% Total production cost per tonne $ 56.70 $ 59.39 $ 65.75 $ 53.32 $ 58.64 $ 56.80 (5%) 3%

MANAGEMENT'S dISCUSSION ANd ANALYSIS FIRST MAJESTIC S ILVER CORP. ANNUAL REPORT 2016 95 OPERATING RESULTS – CONSOLIdATEd OPERATIONS (continued) SAN MARTIN SILVER MINE, JALISCO, MEXICO (continued) In 2016, San Martin produced 1,902,963 silver ounces and 4,134 ounces of gold for a total production of 2,209,035 silver equivalent ounces. Total production decreased 19% compared to the prior year primarily due to a 15% decrease in tonnes milled and a 7% decrease in silver grade, partially offset by a 5% increase in silver recoveries. Cash cost per ounce for the year was $7.07, a 12% increase from the prior year primarily due to lower production. For the quarter, the San Martin mine processed a total of 76,848 tonnes compared to 75,228 tonnes in the previous quarter. The average silver head grade was 254 g/t, an increase of 3% compared to the previous quarter. The increase in silver grades compared to the previous quarter were primarily the result of higher grade ore from the development of the La Hedionda vein. During the quarter, San Martin produced 510,423 silver ounces and 888 ounces of gold for a total production of 573,349 silver equivalent ounces. Total production increased 2% compared to the prior quarter primarily due to a 3% increase in silver grade and a 2% increase in tonnes milled. Silver recovery in the quarter was 81%, a decrease of 4% compared to the previous quarter due to the increase in ore feed from the Veladora vein which has lower metallurgical recoveries. Following successful lab tests, the Company has begun the installation of oxygen injectors and lead nitrate into the processing leach tanks which is expected to increase metallurgical recoveries in 2017. Cash cost per ounce of $6.94 in the fourth quarter was almost unchanged compared to $7.05 per ounce in the previous quarter. The construction project for the dry stack filter press installation continued during the quarter. Detailed engineering work for the installation of the tailings filter presses were completed in the third quarter and the foundations were completed in the fourth quarter. At of the end of 2016, the project was 33% complete. The filter presses, which are designed to recover and re-use tailings solution and to save on water consumption, are expected to be installed and undergo testing in late March 2017. A total of 2,696 metres of underground development was completed in the quarter compared to 2,807 metres of development in the previous quarter. During the quarter, a total of 7,069 metres of diamond drilling were completed compared with 7,817 metres drilled in the previous quarter. At year end, two drill rigs were active at the San Martin property, focusing on upgrading and expanding resources in the Rosario, Guitarrona, Hedionda, Huichola and La Veladora veins. The 2017 exploration program will be focused on Rosario Norte, Intermedia, Huichola Norte and Pitayo veins.

M A N AGEMEN T 'S DISCUSSION A ND A N A LYSIS For the year and quarter ended December 31, 2016 MANAGEMENT'S dISCUSSION ANd ANALYSIS FIRST MAJESTIC SILVER CORP. ANNUAL REPORT 2016 96 OPERATING RESULTS – CONSOLIdATEd OPERATIONS (continued) LA GUITARRA SILVER MINE, MEXICO STATE, MEXICO The La Guitarra Silver Mine is located in the Temascaltepec Mining District in the State of Mexico, near Toluca, Mexico, approximately 130 kilometres southwest from Mexico City. The La Guitarra mine covers 39,714 hectares of mining claims and consists of a 500 tpd flotation processing plant, buildings and related infrastructure. The Company owns 100% of the La Guitarra mine. L A GUITARRA 2016–Q4 2016–Q3 2016–Q2 2016–Q1 2016 2015 Change Q4 vs Q3 Change ’16 vs ’15 Production Ore processed/tonnes milled 38,422 39,092 34,917 43,265 155,696 174,003 (2%) (11%) Average silver grade (g/t) 246 252 228 189 228 201 (2%) 13% Recovery (%) 79% 83% 81% 82% 81% 84% (5%) (4%) Total silver ounces produced 239,788 263,235 206,262 214,312 923,597 945,662 (9%) (2%) Total payable silver ounces produced 227,798 249,822 195,361 202,985 875,967 895,684 (9%) (2%) Gold ounces produced 2,073 1,977 2,253 1,878 8,181 6,907 5% 18% Total production – ounces silver equivalent 386,713 397,627 375,464 363,884 1,523,688 1,457,728 (3%) 5% Underground development (m) 2,620 2,055 1,652 1,254 7,581 7,481 27% 1% Diamond drilling (m) 9,315 9,515 2,298 643 21,771 2,767 (2%) 687% Cost Mining cost per ounce $ 5.84 $ 5.63 $ 6.84 $ 6.66 $ 6.19 $ 3.88 4% 60% Milling cost per ounce 3.12 2.70 3.45 3.00 3.05 3.03 16% 1% Indirect cost per ounce 4.24 4.14 5.27 4.59 4.52 3.44 2% 31% Total production cost per ounce $ 13.20 $ 12.47 $ 15.55 $ 14.25 $ 13.76 $ 10.35 6% 33% Transport and other selling costs per ounce 0.56 0.49 0.57 0.49 0.53 0.53 14% 0% Smelting and refining costs per ounce 3.86 3.58 3.84 3.54 3.70 4.01 8% (8%) Environmental duty and royalties per ounce 0.15 0.16 0.17 0.14 0.15 0.13 (6%) 15% Cash cost per ounce before by-product credits $ 17.77 $ 16.70 $ 20.14 $ 18.42 $ 18.15 $ 15.02 6% 21% Deduct: By-product credits (10.04) (9.77) (14.21) (10.15) (10.92) (8.16) 3% 34% Cash cost per ounce $ 7.73 $ 6.93 $ 5.93 $ 8.27 $ 7.23 $ 6.86 12% 5% Workers’ Participation (0.16) 0.65 0.12 — 0.17 — (125%) 100% Accretion of decommissioning liabilities 0.08 0.08 0.11 0.10 0.09 0.09 0% 0% Sustaining capital expenditures 8.33 5.94 4.19 4.53 5.85 6.48 40% (10%) All-In Sustaining Costs per ounce $ 15.98 $ 13.60 $ 10.34 $ 12.91 $ 13.33 $ 13.42 18% (1%) Mining cost per tonne $ 34.65 $ 35.97 $ 38.25 $ 31.25 $ 34.84 $ 19.96 (4%) 75% Milling cost per tonne 18.53 17.23 19.29 14.08 17.14 15.58 8% 10% Indirect cost per tonne 25.14 26.47 29.47 21.55 25.45 17.73 (5%) 44% Total production cost per tonne $ 78.31 $ 79.68 $ 87.01 $ 66.88 $ 77.43 $ 53.27 (2%) 45%

MANAGEMENT'S dISCUSSION ANd ANALYSIS FIRST MAJESTIC S ILVER CORP. ANNUAL REPORT 2016 97 OPERATING RESULTS – CONSOLIdATEd OPERATIONS (continued) LA GUITARRA SILVER MINE, MEXICO STATE, MEXICO (continued) During the year, La Guitarra produced 923,597 silver ounces and 8,181 gold ounces for a total annual production of 1,523,688 silver equivalent ounces, consistent with the prior year as a 13% increase in average silver grades was offset by an 11% decrease in tonnes milled. For the year, cash cost was $7.23 per ounce, a 5% increase compared to the previous year. The increase in cash cost from the previous year was primarily attributed to an increase in mining costs related to development of narrow veins structures, partially offset by higher by-product credits from gold. During the fourth quarter, La Guitarra produced a total of 386,713 silver equivalent ounces, consisting of 239,788 silver ounces and 2,073 gold ounces. Compared to the previous quarter, total production decreased by 3% due to a 2% decrease in average silver grades and a 2% decrease in tonnes milled. Cash cost in this quarter was $7.74 per ounce, a 12% increase compared to the previous quarter. The increase in cash cost from the previous quarter was primarily attributed to lower by-product credits from decreased gold production. A total of 2,620 metres of underground development was completed during the quarter compared to 2,055 metres in the previous quarter. The 800 metre drift connecting the Soledad 1 and 2 veins, Nazareno vein and Coloso was completed. This newly completed drift will allow for further exploration drilling and development along these structures. During the quarter, six drill rigs were active at the La Guitarra property and 9,315 metres of diamond drilling were completed compared to 9,515 metres during the previous quarter. The drilling program is currently focused on in-fill drilling at the Jessica and Joya Larga veins in order to confirm high grade resources both laterally and at depth to assist underground mining activities and further delineate Reserves and Resources, while the expansionary drilling program is focused on the Nazareno and Soledad veins. 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 was to be settled in common shares of First Majestic and $0.2 million in cash. As at December 31, 2016, the Company has paid the $0.2 million and has issued $4.2 million in common shares. The remaining balance of $1.0 million in common shares will be issued in two equal annual payments in September 2017 and 2018, respectively, based on the Company’s five days volume weighted average market price at the time of the payments. dEVELOPMENT ANd EXPLORATION PROJECTS PLOMOSAS SILVER PROJECT, SINALOA, MEXICO The Plomosas Silver Project consists of 13 mining concessions covering 6,896 hectares, which includes the adjacent Rosario and San Juan historic mines located in the Sinaloa State, Mexico. The two key areas of interest within the property’s boundaries are the historic operations of the Rosario and San Juan mines. Extensive facilities and infrastructure are in place on the property, including a fully functional mining camp facility for 120 persons, a 20 year surface rights agreement in good standing, a 30 year water use permit, a 60 kilometre 33 kilovolt power line, an infirmary, offices, shops and warehouses, and an assay lab. Extensive underground development pre-existing at the Rosario and San Juan mines will allow for easy access to mineralized zones. This existing development is expected to allow First Majestic to accelerate exploration and development in the future. The Company is preparing the underground infrastructure, including dewatering and ventilation, in order to access and equip the three underground drilling stations. The Company completed 1,055 metres of diamond drilling at the Plomosas Silver Project during the fourth quarter, and will begin development of 520 metres of new crosscuts to prepare underground drilling stations to be used in 2017. Additionally, a high resolution airborne magnetic survey on the property was completed in order to define new exploration targets. A Light Detection and Ranging survey on 2,300 hectares will be carried out in order to define a high-resolution terrain elevation model. The Company is working toward obtaining permits for additional drilling on surface beginning in 2017. Future plans include drilling and development in order to prepare a NI 43-101 Technical Report with resource estimates and a Preliminary Economic Assessment.

M A N AGEMEN T 'S DISCUSSION A ND A N A LYSIS For the year and quarter ended December 31, 2016 MANAGEMENT'S dISCUSSION ANd ANALYSIS FIRST MAJESTIC SILVER CORP. ANNUAL REPORT 2016 98 dEVELOPMENT ANd EXPLORATION PROJECTS (continued) LA LUZ SILVER PROJECT, SAN LUIS POTOSI, MEXICO The La Luz Silver Project is located 25 kilometres west of the town of Matehuala in San Luis Potosi State, Mexico, near the village of Real de Catorce. The Company owns 100% of the La Luz project and all of the associated mining claims of what was historically known as the Santa Ana Mine and consists of 36 mining concessions covering 4,977 hectares, with estimated historical production of 230 million ounces between 1773 and 1990. In July 2013, the Company completed the acquisition of an additional 21 hectares of surface rights covering 29 adjacent properties for $1.0 million. The total surface rights on different properties at La Luz amount to 26 hectares. To date, the Company has completed a Baseline Study and the Geo-hydrologic Study. However, there has been opposition to mining in the La Luz area from certain indigenous people (Huicholes) and non-government organizations (“NGOs”). An injunction was placed by the Company to defend against the indigenous people’s attempts to obtain a constitutional decree to declare certain areas in San Luis Potosi as natural protected areas, including areas within which the La Luz mine has been duly granted mining concessions. The Company is currently addressing these constitutional legal matters in the Mexican courts. Three different legal orders to obtain approvals to present its final permit applications were submitted and one positive resolution was obtained, while the other orders remain in front of the court. There is currently no estimate of when a final resolution can be expected. The Company is ready to submit the Environmental Impact Statement, the Risk Study and the Change of Use of Land Studies to government authorities once the courts resolve the outstanding constitutional matters. The Company is unable at this time to estimate when these legal constitutional matters will be resolved. OVERVIEw OF FINANCIAL PERFORMANCE For the quarters ended December 31, 2016 and 2015 (in thousands of dollars, except for per share amounts): Fourth Quarter 2016 Fourth Quarter 2015 Variance % Revenues $ 66,170 $ 66,012 —% (1) Mine operating costs Cost of sales 37,346 39,479 (5)% (2) Depletion, depreciation and amortization 18,881 22,651 (17)% (3) 56,227 62,130 (10)% Mine operating earnings 9,943 3,882 156% (4) General and administrative expenses 4,842 4,558 6% Share-based payments 1,097 766 43% Impairment of non-current assets — 108,421 (100)% (5) Acquisition costs — 2,054 (100)% (6) Foreign exchange loss 794 475 67% Operating earnings (loss) 3,210 (112,392) 103% Investment and other loss (633) (2,051) (69)% (7) Finance costs (1,045) (1,445) (28)% (8) Earnings (loss) before income taxes 1,532 (115,888) 101% Current income tax expense 4,934 659 649% Deferred income tax recovery (5,216) (13,586) (62)% Income tax recovery (282) (12,927) (98)% (9) Net earnings (loss) for the period $ 1,814 $ (102,961) 102% (10) Earnings (loss) per share (basic and diluted) $ 0.01 $ (0.66) 102% (10)

MANAGEMENT'S dISCUSSION ANd ANALYSIS FIRST MAJESTIC S ILVER CORP. ANNUAL REPORT 2016 99 OVERVIEw OF FINANCIAL PERFORMANCE (continued) 1. Revenues in the quarter had a marginal increase compared to the same quarter of the previous year primarily attributed to: • average realized silver price of $17.10 per ounce in the quarter, an increase of 12% compared to $15.21 per ounce in the same quarter of the prior year; and • smelting and refining costs decreased from $6.8 million ($2.28 per ounce) to $4.5 million ($1.63 per ounce). The savings were attributed to the new smelting and refining agreements effective July 1, 2016; offset by: • a 13% decrease in silver equivalent ounces sold compared to the fourth quarter of 2015, primarily attributed to lower production from the La Encantada mine and the La Parrilla mine. 2. Cost of sales in the quarter decreased by 5% compared to the same quarter of the previous year as a result of the following factors: • weakening of the Mexican pesos against the U.S. dollar, as a significant portion of the Company’s operating costs are incurred in Mexican pesos, which weakened by 18% against the U.S. dollar compared to the fourth quarter of 2015; and • the Company’s ongoing effort to reduce costs through headcount reductions, renegotiating contractors and suppliers contracts, and realizing efficiencies, which resulted in cost reductions in mining contractors, mineral haulage, diesel and explosives. 3. The decrease in depletion, depreciation and amortization was attributed to a combination of the following: • Impairment charge on non-current assets recognized in the fourth quarter of 2015, which resulted in an $87.2 million decrease in depletable mining interests and depreciable property, plant and equipment, which results in lower depletion, depreciation and amortization in subsequent periods; partially offset by: • Revisions to life of mines at the end of 2015 accelerated depletion and depreciation rates applied to mining interests and property, plant and equipment depreciated under the units-of-production method. Life of mine estimates were reduced at the end of 2015 to reflect lower Reserves and Resources estimates with higher cut-off grades based on lower metal prices. 4. Mine operating earnings during the quarter increased $6.1 million from the fourth quarter of 2015 due to a $2.1 million decrease in cost of sales and $3.8 million lower depletion, depreciation and amortization expense. 5. In the fourth quarter of 2015, as a result of a decline in silver prices and the consequent adverse effect on the Company’s Reserves and Resources, an impairment loss of $108.4 million was recognized on certain of the Company’s operating mines and exploration projects. 6. Acquisition costs incurred in the fourth quarter of 2015 related to due diligence costs and closing fees associated with the acquisition of SilverCrest Mines Inc., which closed on October 1, 2015. 7. The changes to investment and other income or loss is primarily comprised of the following: • $0.4 million loss on investment in marketable securities, compared to a loss of $0.8 million in the fourth quarter of 2015; • $0.2 million loss on interest income and other compared to an income of $0.9 million; and • In the prior year there was a loss of $3.3 million on the fair value adjustment of prepayment facilities and a $1.1 million equity loss on investment in associates. 8. Finance costs decreased $0.4 million compared to the fourth quarter of 2015, primarily due to lower debt financing costs subsequent to the early settlement of BAML prepayment facilities in February 2016. 9. During the quarter, the Company recorded an income tax recovery of $0.3 million compared to an income tax recovery of $12.9 million in the fourth quarter of 2015. The $12.6 million reduction in income tax recovery was attributed to an increase in earnings before tax of $117.4 million, primarily related to a $108.4 million impairment loss recognized in the same quarter of the prior year. 10. As a result of the foregoing, net earnings for the quarter was $1.8 million (EPS of $0.01) compared to a loss of $103.0 million (Loss per share of $0.66) in the same quarter of the prior year.

M A N AGEMEN T 'S DISCUSSION A ND A N A LYSIS For the year and quarter ended December 31, 2016 MANAGEMENT'S dISCUSSION ANd ANALYSIS FIRST MAJESTIC SILVER CORP. ANNUAL REPORT 2016 100 OVERVIEw OF FINANCIAL PERFORMANCE (continued) For the year ended December 31, 2016 and 2015 (in thousands of dollars, except for per share amounts): Annual 2016 Annual 2015 Annual 2014 Variance % 2016 vs 2015 Revenues $ 278,077 $ 219,444 $ 245,473 27% (1) Mine operating costs Cost of sales 149,281 135,674 154,843 10% (2) Depletion, depreciation and amortization 79,593 75,039 60,466 6% (3) 228,874 210,713 215,309 Mine operating earnings 49,203 8,731 30,164 464% (4) General and administrative 17,747 17,004 19,393 4% Share-based payments 4,403 4,926 7,320 (11%) Impairment of non-current assets — 108,421 101,950 (100%) (5) Acquisition costs — 2,054 — (100%) (6) Foreign exchange gain (1,192) (3,266) (6,312) (64%) Operating earnings (loss) 28,245 (120,408) (92,187) 123% Investment and other income (loss) 5,209 (34) 18,627 15,421% (7) Finance costs (7,963) (5,810) (7,377) 37% (8) Earnings (loss) before income taxes 25,491 (126,252) (80,937) 120% Current income tax expense 8,346 2,200 7,682 279% Deferred income tax expense (recovery) 8,544 (20,028) (27,171) 143% Income tax expense (recovery) 16,890 (17,828) (19,489) 195% (9) Net earnings (loss) for the year $ 8,601 $ (108,424) $ (61,448) 108% (10) Earnings (loss) per share (basic and diluted) $ 0.05 $ (0.84) $ (0.52) 106% (10) Cash and cash equivalents $ 129,049 $ 51,018 $ 40,345 Total assets $ 857,175 $ 789,700 $ 771,342 Non-current liabilities $ 185,902 $ 155,780 $ 172,587 1. Revenues in the year ended December 31, 2016 increased 27% compared to the previous year due to the following significant contributors: • Silver equivalent ounces sold increased by 16% compared to 2015, primarily attributed to incremental production from the Santa Elena mine, which was acquired in October 2015; • Average realized silver price increased by 7% from $16.06 per ounce in 2015 to $17.16 per ounce in the current year; and • Smelting and refining costs decreased from $28.3 million ($2.63 per ounce) to $22.0 million ($1.91 per ounce), despite a 16% increase in silver equivalent ounces sold. The savings were attributed to the new smelting and refining agreements effective July 1, 2016. 2. Cost of sales in the year increased 10% compared to 2015 as a result of the following factors: • Santa Elena Mine’s first full year of operations under First Majestic, compared to only one quarter in 2015. In 2016, Santa Elena produced 6.2 million silver equivalent ounces and added $42.7 million to the Company’s cost of sales; partially offset by: • weakening of the Mexican pesos against the U.S. dollar, as a significant portion of the Company’s operating costs are incurred in Mexican pesos, which weakened by 18% against the U.S. dollar compared to the prior year; and • the Company’s ongoing effort to reduce costs through headcount reductions, renegotiating contractors and suppliers contracts, and realizing efficiencies, which resulted in significant cost reductions in mining contractors, mineral haulage, diesel and explosives.

MANAGEMENT'S dISCUSSION ANd ANALYSIS FIRST MAJESTIC S ILVER CORP. ANNUAL REPORT 2016 101 OVERVIEw OF FINANCIAL PERFORMANCE (continued) 3. The increase in depletion, depreciation and amortization was attributed to a combination of the following: • full year of depletion, depreciation and amortization from the Santa Elena mine, compared to only one quarter in 2015. Santa Elena contributed $16.4 million to depletion, depreciation and amortization during the year ended December 31, 2016 compared to $4.2 million in the previous year; • Revisions to life of mines at the end of 2015 accelerated depletion and depreciation rates applied to mining interests and property, plant and equipment depreciated under the units-of-production method. Life of mine estimates were reduced at the end of 2015 to reflect lower Reserves and Resources estimates with higher cut-off grades based on lower metal prices; partially offset by: • Impairment charge on non-current assets recognized in the fourth quarter of 2015, which resulted in an $87.2 million decrease in depletable mining interests and depreciable property, plant and equipment, which results in lower depletion, depreciation and amortization in subsequent periods. 4. Mine operating earnings during the year ended December 31, 2016 increased $40.5 million from 2015 due to a $58.6 million increase in revenue, partially offset by a $13.6 million increase in cost of sales and $4.6 million higher depletion, depreciation and amortization. 5. In 2015, as a result of a decline in silver prices and the consequent adverse effect on the Company’s Reserves and Resources, the Company recognized an impairment loss of $108.4 million on certain of the Company’s operating mines and exploration projects. 6. Acquisition costs incurred in 2015 was related to due diligence costs and closing fees associated with the acquisition of SilverCrest Mines Inc., which closed on October 1, 2015. 7. The Company’s investment and other income or loss is primarily comprised of gains or losses on the following: • $6.3 million gain on investment in marketable securities; • $0.2 million in interest income and other; offset by: • $1.3 million loss on fair value adjustment of prepayment facilities, which contains commodity price swaps and call options on a portion of the Company’s lead and zinc production, prior to early settlement in February 2016. 8. Finance costs increased $2.2 million during the year ended December 31, 2016 compared to 2015, primarily due to a $3.5 million loss related to prepayment of interest expenses embedded in the early settlement of BAML prepayment facilities in February 2016, which resulted in accelerated interest and accretion expense plus call option payments. The debt restructuring improved the Company’s working capital by approximately $32.0 million at the time of the transaction. 9. During the year ended December 31, 2016, the Company recorded an income tax expense of $16.9 million compared to an income tax recovery of $17.8 million in the same period of 2015. The increase in income tax expense was attributed to: • a $151.7 million increase in earnings before income taxes, primarily due to a $108.4 million impairment loss recognized in the prior year; and • In November 2015, the Mexican Tax Authorities introduced a provision which enable companies to settle a portion of its tax deconsolidation liability against past loss carryforwards at a discounted rate of 15% as compared to the Mexican corporate tax rate of 30%. In March 2016, the Company elected to apply this new provision to reduce its deconsolidation tax liability by $14.7 million. As the Company was previously carrying these tax loss carryforwards as a deferred tax asset valued at $21.4 million, this effectively resulted in a one-time net $6.7 million deferred tax expense related to the value of tax loss carryforwards being written off during the period. Without the effect of this one-time adjustment, the Company’s income tax expense for the year ended December 31, 2016 was $9.4 million. 10. As a result of the foregoing, net earnings for the year ended December 31, 2016 was $8.6 million (EPS of $0.05), compared to a loss of $108.4 million (Loss per share of $0.84) in the prior year.

M A N AGEMEN T 'S DISCUSSION A ND A N A LYSIS For the year and quarter ended December 31, 2016 MANAGEMENT'S dISCUSSION ANd ANALYSIS FIRST MAJESTIC SILVER CORP. ANNUAL REPORT 2016 102 SUMMARY OF qUARTERLY RESULTS The following table presents selected financial information for each of the most recent eight quarters: 2016 2015 Selected Financial Information Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Revenue $ 66,170 $ 79,326 $ 66,072 $ 66,509 $ 66,012 $ 44,673 $ 54,190 $ 54,569 Cost of sales $ 37,346 $ 38,421 $ 36,252 $ 37,262 $ 39,479 $ 30,545 $ 33,314 $ 32,336 Depletion, depreciation and amortization $ 18,881 $ 20,955 $ 19,879 $ 19,878 $ 22,651 $ 17,716 $ 17,435 $ 17,237 Mine operating earnings (loss) $ 9,943 $ 19,950 $ 9,941 $ 9,369 $ 3,882 $ (3,588) $ 3,441 $ 4,996 Net earnings (loss) after tax $ 1,814 $ 8,115 $ 6,105 $ (7,433) $ (102,961) $ (1,780) $ (2,578) $ (1,105) Earnings (loss) per share (basic) $ 0.01 $ 0.05 $ 0.04 $ (0.05) $ (0.66) $ (0.01) $ (0.02) $ (0.01) Earnings (loss) per share (diluted) $ 0.01 $ 0.05 $ 0.04 $ (0.05) $ (0.66) $ (0.01) $ (0.02) $ (0.01) During the fourth quarter of 2016, mine operating earnings decreased to $9.9 million compared to $20.0 million in the previous quarter. The decrease was primarily attributed to a 13% decrease in average realized silver price compared to the previous quarter. Net earnings after tax for the quarter was $1.8 million, a decrease of 78% compared to the previous quarter primarily due to the decrease in mine operating earnings. LIqUIdITY, CAPITAL RESOURCES ANd CONTRACTUAL OBLIGATIONS LIQUIDITY As at December 31, 2016, the Company’s treasury included cash and cash equivalents of $129.0 million compared to $51.0 million at December 31, 2015. Cash and cash equivalents is primarily comprised of cash held with reputable financial institutions and is invested in cash accounts and in highly liquid short-term investments with maturities of three months or less. The funds are not exposed to liquidity risk and there are no restrictions on the ability of the Company to use these funds to meet its obligations. As at December 31, 2016, total available liquidity, including $8.8 million of undrawn revolving credit facility, was $139.4 million. Cash and cash equivalents increased by $78.0 million during the year. The Company’s cash flows from operating, investing and financing activities during the year are summarized as follows: • Cash provided from operating activities of $100.0 million; • Cash provided by financing activities of $44.8 million, including: – $42.7 million net proceeds from the private placement completed in May 2016; – $49.9 million net proceeds from the new debt financing closed in February 2016; – $22.4 million proceeds from exercise of stock options; offset by – $31.6 million on repayment of prepayment facilities; – $15.0 million on repayment of SilverCrest’s credit facility; – $10.2 million on repayment of lease obligations; – $6.9 million on financing costs; and – $6.3 million on repayment of debt facilities. • Cash used in investing activities of $66.6 million, primarily related to: – $43.8 million spent on mine development and exploration activities; – $18.7 million spent on purchase of property, plant and equipment; and – $3.7 million spent on purchase of marketable securities. Working capital as at December 31, 2016 was $130.6 million compared to $15.6 million at December 31, 2015. To improve the Company’s working capital position and advance various expansionary projects, the Company completed a CAD$57.5 million private placement in May 2016 and closed a $60.0 million debt financing agreement in February 2016, consisting of a $35.0 million three year term loan and a $25.0 million revolving credit facility with a three year expiry. Additional improvement in working capital can also be attributed to improving metal prices and lower operating costs, which resulted in $107.3 million in operating cash flows generated before movements in working capital and taxes during the year ended December 31, 2016.

MANAGEMENT'S dISCUSSION ANd ANALYSIS FIRST MAJESTIC S ILVER CORP. ANNUAL REPORT 2016 103 LIqUIdITY, CAPITAL RESOURCES ANd CONTRACTUAL OBLIGATIONS (continued) CAPITAL RESOURCES The Company’s objective when managing capital is to maintain financial flexibility to continue as a going concern while optimizing growth and maximizing returns of investments from shareholders. 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 Company is not subject to any externally imposed capital requirements with the exception of complying with covenants defined in the debt facilities. As at December 31, 2016 and December 31, 2015, the Company was fully in compliance with these covenants. CONTRACTUAL OBLIGATIONS AND COMMITMENTS As at December 31, 2016, the Company’s contractual obligations and commitments are summarized as follows: Contractual Cash Flows Less than 1 year 1 to 3 years 4 to 5 years After 5 years Trade and other payables $ 28,194 $ 28,194 $ — $ — $ — Debt facilities 51,587 14,545 37,042 — — Finance lease obligations 8,627 6,432 2,127 68 — Other liabilities 2,741 — 2,741 — — Purchase obligations and commitments 2,777 1,577 500 700 — $ 93,926 $ 50,748 $ 42,410 $ 768 $ — Management is of the view that the above contractual obligations and commitments will be sufficiently funded by current working capital, future operating cash flows, and available debt facilities as at the date of this MD&A. MANAGEMENT OF RISKS ANd UNCERTAINTIES The Company thoroughly examines the various financial instruments and risks to which it is exposed and assesses the impact and likelihood of those risks. These risks may include credit risk, liquidity risk, currency risk, commodity price risk, and interest rate risk. Where material, these risks are reviewed and monitored by the Board of Directors. CREDIT RISK Credit risk is the risk of financial loss if a customer or counterparty fails to meet its contractual obligations. The Company’s credit risk relates primarily to trade receivables in the ordinary course of business and VAT and other receivables (Note 12). The Company sells and receives payment upon delivery of its silver doré and by-products primarily through four international customers. Additionally, silver-lead concentrates and related base metal by-products are sold primarily through two international organizations with good credit ratings. Payments of receivables are scheduled, routine and fully received within 60 days of submission; therefore, the balance of trade receivables owed to the Company in the ordinary course of business is not significant. The carrying amount of financial assets recorded in the consolidated financial statements represents the Company’s maximum exposure to credit risk. With the exception to the above, the Company believes it is not exposed to significant credit risk. 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. Based on the Company’s current operating plan, 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. If commodity prices in the metal markets were to decrease significantly, or the Company was to deviate significantly from its operating plan, the Company may need further injection of capital to address its cash flow requirements.

M A N AGEMEN T 'S DISCUSSION A ND A N A LYSIS For the year and quarter ended December 31, 2016 MANAGEMENT'S dISCUSSION ANd ANALYSIS FIRST MAJESTIC SILVER CORP. ANNUAL REPORT 2016 104 MANAGEMENT OF RISKS ANd UNCERTAINTIES (continued) 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 or loss. 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 or loss and comprehensive income or loss 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: December 31, 2016 Cash and cash equivalents Trade and other receivables Other financial assets Trade and other payables Foreign exchange derivative Net assets (liabilities) exposure Effect of +/– 10% change in currency Canadian dollar $ 44,239 $ 391 $ 11,255 $ (1,558) $ — $ 54,327 $ 5,433 Mexican peso 7,877 9,729 — (10,916) 14,000 20,690 2,069 $ 52,116 $ 10,120 $ 11,255 $ (12,474) $ 14,000 $ 75,017 $ 7,502 December 31, 2015 Cash and cash equivalents Trade and other receivables Other financial assets Trade and other payables Foreign exchange derivative Net assets (liabilities) exposure Effect of +/– 10% change in currency Canadian dollar $ 1,980 $ 1,297 $ — $ (1,027) $ — $ 2,250 $ 225 Mexican peso 1,894 20,643 — (18,258) 3,675 7,954 795 $ 3,874 $ 21,940 $ — $ (19,285) $ 3,675 $ 10,204 $ 1,020 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. The following table summarizes the Company’s exposure to commodity price risk and their impact on net earnings: December 31, 2016 Effect of +/– 10% change in metal prices Silver Gold Lead Zinc Total Metals subject to provisional price adjustments $ 468 $ 94 $ 223 $ 37 $ 822 Metals in doré and concentrates inventory 196 160 7 4 367 $ 664 $ 254 $ 230 $ 41 $ 1,189 December 31, 2015 Effect of +/– 10% change in metal prices Silver Gold Lead Zinc Total Metals subject to provisional price adjustments $ 428 $ 44 $ 201 $ 77 $ 750 Metals in doré and concentrates inventory 174 198 36 18 426 Prepayment facilities — — (2,833) (480) (3,313) $ 602 $ 242 $ (2,596) $ (385) $ (2,137)

MANAGEMENT'S dISCUSSION ANd ANALYSIS FIRST MAJESTIC S ILVER CORP. ANNUAL REPORT 2016 105 MANAGEMENT OF RISKS ANd UNCERTAINTIES (continued) POLITICAL AND COUNTRY RISK First Majestic currently conducts foreign operations primarily in Mexico, and as such the Company’s operations are exposed to various levels of political and economic risks by factors outside of the Company’s control. These potential factors include, but are not limited to: royalty and tax increases or claims by governmental bodies, expropriation or nationalization, foreign exchange controls, high rates of inflation, extreme fluctuations in foreign currency exchange rates, import and export tariffs and regulations, cancellation or renegotiation of contracts and environmental and permitting regulations. The Company currently has no political risk insurance coverage against these risks. The Company is unable to determine the impact of these risks on its future financial position or results of operations. Changes, if any, in mining or investment policies or shifts in political attitude in foreign countries may substantively affect the Company’s exploration, development and production activities. ENVIRONMENTAL AND HEALTH AND SAFETY RISKS The Company’s activities are subject to extensive laws and regulations governing environmental protection and employee health and safety. Environmental laws and regulations are complex and have tended to become more stringent over time. The Company is required to obtain governmental permits and in some instances air, water quality, and mine reclamation rules and permits. The Company has complied with environmental taxes applied to the use of certain fossil fuels according to the Kyoto Protocol. Although the Company makes provisions for reclamation costs, it cannot be assured that these provisions will be adequate to discharge its future obligations for these costs. Failure to comply with applicable environmental and health and safety laws may result in injunctions, damages, suspension or revocation of permits and imposition of penalties. While the health and safety of our people and responsible environmental stewardship are our top priorities, there can be no assurance that First Majestic has been or will be at all times in complete compliance with such laws, regulations and permits, or that the costs of complying with current and future environmental and health and safety laws and permits will not materially and adversely affect the Company’s business, results of operations or financial condition. CLAIMS AND LEGAL PROCEEDINGS RISKS The Company is subject to various claims and legal proceedings covering a wide range of matters that arise in the ordinary course of business activities. 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: availability of time on court calendars in Canada and elsewhere; the recognition of Canadian judgments under Mexican law; the possibility of settlement discussions; the risk of appeal of judgment; and the insufficiency of the defendant’s assets to satisfy the judgment amount. Each of these matters is subject to various uncertainties and it is possible that some of these matters may be resolved unfavourably to the Company. First Majestic carries liability insurance coverage and establishes provisions for matters that are probable and can be reasonably estimated. In addition, the Company may be involved in disputes with other parties in the future which may result in a significant impact on our financial condition, cash flow and results of operations. Although the Company has taken steps to verify ownership and legal title to mineral properties in which it has an interest, according to the usual industry standards for the stage of mining, development and exploration of such properties, these procedures do not guarantee the Company’s title. Such properties may be subject to prior agreements or transfers, and title may be affected by undetected defects. However, management is not aware of any such agreements, transfers or defects. 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 $62.1 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 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 December 31, 2016, the Company has not accrued any of the remaining $62.1 million (CAD$81.5 million) unrecovered judgment in favour of the Company.

M A N AGEMEN T 'S DISCUSSION A ND A N A LYSIS For the year and quarter ended December 31, 2016 MANAGEMENT'S dISCUSSION ANd ANALYSIS FIRST MAJESTIC SILVER CORP. ANNUAL REPORT 2016 106 OTHER FINANCIAL INFORMATION SHARE REPURCHASE PROGRAM The Company has an ongoing share repurchase program to repurchase up to 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 and alternative Canadian marketplaces. No shares were repurchased during the year ended December 31, 2016 and year ended December 31, 2015 OFF-BALANCE SHEET ARRANGEMENTS At December 31, 2016, the Company had no material off-balance sheet arrangements such as contingent interest in assets transferred to an entity, derivative instruments obligations or any obligations that generate financing, liquidity, market or credit risk to the Company, other than contingent liabilities and vendor liability and interest, as disclosed in this MD&A and the consolidated financial statements and the related notes. RELATED PARTY DISCLOSURES Amounts paid to related parties were incurred in the normal course of business and measured at the exchange amount, which is the amount agreed upon by the transacting parties and on terms and conditions similar to non-related parties. As at December 31, 2016, the Company has a $0.3 million (December 31, 2015 – $1.1 million) promissory notes receivable from First Mining Finance Corp., a related party, which was previously repayable on demand with an interest rate of 9% per annum. In July 2016, the Company entered into a settlement agreement with First Mining to settle $0.5 million of the balance in common shares of First Mining with a fair market value of $0.7 million, and the remaining balance in twelve equal monthly cash payments terminating in June 2017. There were no other significant transactions with related parties outside of the ordinary course of business during the year ended December 31, 2016. SUBSEqUENT EVENTS The following significant events occurred subsequent to December 31, 2016: a) 2,563,140 stock options with a five year expiry and an average exercise price of CAD$10.87 were granted; b) 505,897 stock options were exercised for proceeds of CAD$2.9 million; and c) 356,250 stock options were cancelled. Pursuant to the above subsequent events, the Company has 164,967,464 common shares outstanding as at the date on which this MD&A was approved and authorized for issue by the Board of Directors. ACCOUNTING POLICIES, JUdGMENTS ANd ESTIMATES CRITICAL ACCOUNTING JUDGMENTS AND ESTIMATES The preparation of consolidated financial statements in conformity with IFRS as issued by IASB 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 amount, events or actions, actual results may differ from these estimates. Our significant accounting policies and accounting estimates are contained in the consolidated financial statements. Certain of these policies, such as, capitalization and depreciation of property, plant and equipment and mining interests, derivative instruments, decommissioning liabilities provisions, and business combinations involve critical accounting estimates because they require us to make subjective or complex judgments about matters that are inherently uncertain and because of the likelihood that materially different amounts could be reported under different conditions or using different assumptions. FUTURE CHANGES IN ACCOUNTING POLICIES NOT YET EFFECTIVE AS AT DECEMBER 31, 2016 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 applying this standard, primarily reviewing its doré and concentrate sales agreements. The Company does not anticipate any changes in the gross amounts of revenue but the timing of revenue recognized may differ under the new standard if the timing of transfer of control to customers is deferred and/or if there are additional performance obligations which are currently not recognized separately, such as shipping and insurance services arranged by the Company on behalf of its customers. 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 applying this standard.

MANAGEMENT'S dISCUSSION ANd ANALYSIS FIRST MAJESTIC S ILVER CORP. ANNUAL REPORT 2016 107 FUTURE CHANGES IN ACCOUNTING POLICIES NOT YET EFFECTIVE AS AT DECEMBER 31, 2016 (continued) Financial instruments (continued) The expected impact of applying this standard includes the potential designation of equity securities as financial assets at fair value through other comprehensive income, resulting in changes in fair value recognized in other comprehensive income. The new expected credit loss impairment model and reformed approach to hedge accounting is not expected to have a significant impact on the Company’s consolidated financial statements. Finance leases In January 2016, the IASB published a new accounting standard, IFRS 16 – Leases (“IFRS 16”) which supersedes IAS 17 – Leases. IFRS 16 specifies how to recognize, measure, present and disclose leases. The standard provides a single lessee accounting model, requiring the recognition of assets and liabilities for all leases, unless the lease term is 12 months or less or the underlying asset has a low value. The standard is effective for annual periods beginning on or after January 1, 2019, with early adoption permitted, if IFRS 16 – Revenue from Contracts with Customers, has also been applied. Upon the adoption of IFRS 16, the Company anticipates to record a material balance of lease assets and associated lease liabilities related to leases with a term of 12 months or more previously classified as operating leases on the Consolidated Balance Sheet at January 1, 2019. Due to the recognition of additional lease assets and liabilities, a higher amount of depreciation expense and interest on lease liabilities will be recorded under IFRS 16 compared to the current standard. Additionally, a corresponding reduction in production costs is expected. Lastly, the Company expects a positive impact on operating cash flows with a corresponding increase in financing cash outflows under IFRS 16. The Company has not quantified these impacts at this time. NON-GAAP MEASURES The Company has included certain non-GAAP measures including “Cash costs per ounce”, “Production cost per tonne”, “All-in sustaining costs per ounce”, “Average realized silver price”, “Adjusted earnings per share”, “Cash flow per share” and “Working capital” to supplement its consolidated financial statements, which are presented in accordance with IFRS. The terms IFRS and generally accepted accounting principles (“GAAP”) are used interchangeably throughout this MD&A. The Company believes that these measures, together with measures determined in accordance with IFRS, provide investors with an improved ability to evaluate the underlying performance of the Company. Non-GAAP measures do not have any standardized meaning prescribed under IFRS, and therefore they may not be comparable to similar measures employed by other companies. The data is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. CASH COST PER OUNCE, ALL-IN SUSTAINING COST PER OUNCE AND PRODUCTION COST PER TONNE Cash costs per ounce and total production cost per tonne are non-GAAP measures used by the Company to manage and evaluate operating performance at each of the Company’s operating mining units, and are widely reported in the mining industry as benchmarks for performance, but do not have a standardized meaning and are disclosed in addition to IFRS measures. All-in sustaining cost (“AISC”) is a non-GAAP measure and was calculated based on guidance provided by the World Gold Council (“WGC”) in June 2013. WGC is not a regulatory industry organization and does not have the authority to develop accounting standards for disclosure requirements. Other mining companies may calculate AISC differently as a result of differences in underlying accounting principles and policies applied, as well as differences in definitions of sustaining versus development capital expenditures. AISC is a more comprehensive measure than cash cost per ounce for the Company’s consolidated operating performance by providing greater visibility, comparability and representation of the total costs associated with producing silver from its current operations. The Company defines sustaining capital expenditures as, “costs incurred to sustain and maintain existing assets at current productive capacity and constant planned levels of productive output without resulting in an increase in the life of assets, future earnings, or improvements in recovery or grade. Sustaining capital includes costs required to improve/enhance assets to minimum standards for reliability, environmental or safety requirements. Sustaining capital expenditures excludes all expenditures at the Company’s new projects and certain expenditures at current operations which are deemed expansionary in nature.” Consolidated AISC includes total production cash costs incurred at the Company’s mining operations, which forms the basis of the Company’s total cash costs. Additionally, the Company includes sustaining capital expenditures, corporate general and administrative expense, share-based payments and reclamation cost accretion. AISC by mine does not include certain corporate and non-cash items such as general and administrative expense and share-based payments. The Company believes this measure represents the total sustainable costs of producing silver from current operations, and provides additional information of the Company’s operational performance and ability to generate cash flows. As the measure seeks to reflect the full cost of silver production from current operations, new project and expansionary capital at current operations are not included. Certain other cash expenditures, including tax payments, dividends and financing costs are also not included.

M A N AGEMEN T 'S DISCUSSION A ND A N A LYSIS For the year and quarter ended December 31, 2016 MANAGEMENT'S dISCUSSION ANd ANALYSIS FIRST MAJESTIC SILVER CORP. ANNUAL REPORT 2016 108 NON-GAAP MEASURES (continued) The following tables provide a detailed reconciliation of these measures to cost of sales, as reported in notes to our consolidated financial statements. ( expressed in thousands of U.S. dollars, except ounce and per ounce amounts) THREE MONTHS ENDED DECEMBER 31, 2016 Santa Elena La Encantada La Parrilla Del Toro San Martin La Guitarra Consolidated Production cost (A) $ 9,685 $ 7,746 $ 6,427 $ 4,341 $ 4,357 $ 3,010 $ 35,566 Add: transportation and other selling cost 81 (4) 134 227 78 128 644 Add: smelting and refining cost 170 111 1,330 1,913 99 880 4,503 Add: environmental duty and royalties cost 120 22 77 31 50 34 334 Total cash cost before by-product credits (B) $ 10,056 $ 7,875 $ 7,968 $ 6,512 $ 4,584 $ 4,052 $ 41,047 Deduct: By-product credits attributed to Gold by-product credits (11,002) (27) (235) — (1,044) (2,288) (14,596) Lead by-product credits — — (1,767) (5,596) — — (7,363) Zinc by-product credits — — (1,199) — — — (1,199) Total by-product credits $ (11,002) $ (27) $ (3,201) $ (5,596) $ (1,044) $ (2,288) $ (23,158) Total cash cost (C) $ (946) $ 7,848 $ 4,767 $ 916 $ 3,540 $ 1,764 $ 17,889 Workers’ Participation — 6 65 414 344 (37) 793 General and administrative expenses — — — — — — 4,639 Share-based payments — — — — — — 1,097 Accretion of decommissioning liabilities 32 46 30 34 32 19 193 Sustaining capital expenditures 2,096 1,452 2,292 1,385 1,186 1,897 10,925 All-In Sustaining Costs (D) $ 1,182 $ 9,352 $ 7,154 $ 2,749 $ 5,102 $ 3,643 $ 35,536 Payable silver ounces produced (E) 659,216 565,659 466,385 326,209 509,913 227,798 2,755,180 Tonnes milled (F) 257,771 235,039 153,309 82,767 76,848 38,422 844,155 Total cash cost per ounce, before by-product credits (B/E) $ 2.81 $ 13.88 $ 11.77 $ 6.73 $ 7.49 $ 10.34 $ 15.82 Total cash cost per ounce (C/E) $ (1.43) $ 13.87 $ 10.22 $ 2.80 $ 6.94 $ 7.73 $ 6.49 All-in sustaining cost per ounce (D/E) $ 1.79 $ 16.53 $ 15.34 $ 8.42 $ 10.01 $ 15.98 $ 12.90 Production cost per tonne (A/F) $ 37.57 $ 32.96 $ 41.92 $ 52.45 $ 56.70 $ 78.31 $ 42.13 Gold by-product credits per ounce $ (4.24) $ (0.01) $ (0.11) $ — $ (0.55) $ (2.61) $ (1.26) Lead by-product credits per ounce — — (0.86) (3.93) — — (0.64) Zinc by-product credits per ounce — — (0.58) — — — (0.10) Total by-product credits per ounce $ (4.24) $ (0.01) $ (1.55) $ (3.93) $ (0.55) $ (2.61) $ (2.00)

MANAGEMENT'S dISCUSSION ANd ANALYSIS FIRST MAJESTIC S ILVER CORP. ANNUAL REPORT 2016 109 NON-GAAP MEASURES (continued) ( expressed in thousands of U.S. dollars, except ounce and per ounce amounts) THREE MONTHS ENDED DECEMBER 31, 2015 Santa Elena La Encantada La Parrilla Del Toro San Martin La Guitarra Consolidated Production cost (A) $ 11,318 $ 7,487 $ 5,829 $ 5,042 $ 4,523 $ 2,408 $ 36,607 Add: transportation and other selling cost 92 146 574 282 110 111 1,315 Add: smelting and refining cost 307 218 3,422 1,828 107 888 6,771 Add: environmental duty and royalties cost 144 — 59 25 39 28 295 Total cash cost before by-product credits (B) $ 11,861 $ 7,851 $ 9,884 $ 7,177 $ 4,779 $ 3,435 $ 44,988 Deduct: By-product credits attributed to Gold by-product credits (13,773) (24) (160) — (1,291) (1,802) (17,050) Lead by-product credits — — (2,803) (4,270) — — (7,073) Zinc by-product credits — — (2,932) — — — (2,932) Total by-product credits $ (13,773) $ (24) $ (5,895) $ (4,270) $ (1,291) $ (1,802) $ (27,055) Total cash cost (C) $ (1,912) $ 7,827 $ 3,989 $ 2,907 $ 3,488 $ 1,633 $ 17,933 Workers’ Participation — (2) — — 65 — 63 General and administrative expenses — — — — — — 4,334 Share-based payments — — — — — — 766 Accretion of decommissioning liabilities 93 51 36 36 36 18 270 Sustaining capital expenditures 2,786 2,286 1,519 606 1,172 1,657 10,141 All-In Sustaining Costs (D) $ 967 $ 10,162 $ 5,544 $ 3,549 $ 4,761 $ 3,308 $ 33,507 Payable silver ounces produced (E) 672,959 711,201 555,539 313,720 484,742 232,391 2,970,551 Tonnes milled (F) 254,625 242,109 149,504 111,448 83,442 42,249 883,377 Total cash cost per ounce, before by-product credits (B/E) $ 17.63 $ 11.03 $ 17.79 $ 22.87 $ 9.86 $ 14.77 $ 15.15 Total cash cost per ounce (C/E) $ (2.84) $ 11.00 $ 7.18 $ 9.25 $ 7.20 $ 7.02 $ 6.04 All-in sustaining cost per ounce (D/E) $ 1.44 $ 14.29 $ 9.98 $ 11.30 $ 9.83 $ 14.24 $ 11.28 Production cost per tonne (A/F) $ 44.45 $ 30.92 $ 38.99 $ 45.22 $ 54.22 $ 57.02 $ 41.44 Gold by-product credits per ounce $ (20.47) $ (0.03) $ (0.29) $ — $ (2.66) $ (7.75) $ (5.74) Lead by-product credits per ounce — — (5.04) (13.62) — — (2.38) Zinc by-product credits per ounce — — (5.28) — — — (0.99) Total by-product credits per ounce $ (20.47) $ (0.03) $ (10.61) $ (13.62) $ (2.66) $ (7.75) $ (9.11)

M A N AGEMEN T 'S DISCUSSION A ND A N A LYSIS For the year and quarter ended December 31, 2016 MANAGEMENT'S dISCUSSION ANd ANALYSIS FIRST MAJESTIC SILVER CORP. ANNUAL REPORT 2016 110 NON-GAAP MEASURES (continued) ( expressed in thousands of U.S. dollars, except ounce and per ounce amounts) YEAR ENDED DECEMBER 31, 2016 Santa Elena La Encantada La Parrilla Del Toro San Martin La Guitarra Consolidated Production cost (A) $ 41,503 $ 29,172 $ 23,725 $ 17,418 $ 17,460 $ 12,055 $ 141,333 Add: transportation and other selling cost 386 362 1,083 1,045 419 461 3,756 Add: smelting and refining cost 703 700 8,735 8,221 411 3,244 22,014 Add: environmental duty and royalties cost 497 95 333 140 189 135 1,389 Total cash cost before by-product credits (B) $ 43,089 $ 30,329 $ 33,876 $ 26,824 $ 18,479 $ 15,895 $ 168,492 Deduct: By-product credits attributed to Gold by-product credits (48,509) (119) (795) — (5,052) (9,565) (64,040) Lead by-product credits — — (8,536) (18,672) — — (27,208) Zinc by-product credits — — (8,902) — — — (8,902) Total by-product credits $ (48,509) $ (119) $ (18,233) $ (18,672) $ (5,052) $ (9,565) $ (100,150) Total cash cost (C) $ (5,420) $ 30,210 $ 15,643 $ 8,152 $ 13,427 $ 6,330 $ 68,342 Workers’ Participation $ — $ 238 $ 332 $ 499 $ 689 $ 149 $ 1,907 General and administrative expenses — — — — — — 16,988 Share-based payments — — — — — — 4,403 Accretion of decommissioning liabilities 139 200 128 146 135 81 829 Sustaining capital expenditures 9,891 3,753 5,493 3,472 3,611 5,120 32,264 All-In Sustaining Costs (D) $ 4,610 $ 34,401 $ 21,596 $ 12,269 $ 17,862 $ 11,680 $ 124,733 Payable silver ounces produced (E) 2,594,639 2,695,690 2,063,392 1,422,523 1,901,060 875,967 11,553,271 Tonnes milled (F) 988,060 881,075 610,509 337,020 297,802 155,696 3,270,162 Total cash cost per ounce, before by-product credits (B/E) $ 16.61 $ 11.25 $ 16.42 $ 18.85 $ 9.73 $ 18.15 $ 14.59 Total cash cost per ounce (C/E) $ (2.09) $ 11.21 $ 7.58 $ 5.72 $ 7.07 $ 7.23 $ 5.92 All-in sustaining cost per ounce (D/E) $ 1.78 $ 12.76 $ 10.47 $ 8.61 $ 9.40 $ 13.33 $ 10.79 Production cost per tonne (A/F) $ 42.00 $ 33.11 $ 38.85 $ 51.67 $ 58.64 $ 77.43 $ 43.22 Gold by-product credits per ounce $ (18.70) $ (0.04) $ (0.39) $ — $ (2.66) $ (10.92) $ (5.54) Lead by-product credits per ounce — — (4.14) (13.13) — — (2.36) Zinc by-product credits per ounce — — (4.31) — — — (0.77) Total by-product credits per ounce $ (18.70) $ (0.04) $ (8.84) $ (13.13) $ (2.66) $ (10.92) $ (8.67)

MANAGEMENT'S dISCUSSION ANd ANALYSIS FIRST MAJESTIC S ILVER CORP. ANNUAL REPORT 2016 111 NON-GAAP MEASURES (continued) ( expressed in thousands of U.S. dollars, except ounce and per ounce amounts) YEAR ENDED DECEMBER 31, 2015 Santa Elena La Encantada La Parrilla Del Toro San Martin La Guitarra Consolidated Production cost (A) $ 11,319 $ 31,292 $ 28,276 $ 25,474 $ 19,834 $ 9,268 $ 125,463 Add: transportation and other selling cost 92 552 2,008 1,668 442 475 5,237 Add: smelting and refining cost 307 909 11,903 11,003 561 3,591 28,274 Add: environmental duty and royalties cost 144 121 350 198 222 115 1,150 Total cash cost before by-product credits (B) $ 11,862 $ 32,874 $ 42,537 $ 38,343 $ 21,059 $ 13,449 $ 160,124 Deduct: By-product credits attributed to Gold by-product credits (13,773) (99) (934) — (6,642) (7,306) (28,754) Lead by-product credits — — (7,957) (25,074) — — (33,031) Zinc by-product credits — — (13,666) — — — (13,666) Total by-product credits $ (13,773) $ (99) $ (22,557) $ (25,074) $ (6,642) $ (7,306) $ (75,451) Total cash cost (C) $ (1,911) $ 32,775 $ 19,980 $ 13,269 $ 14,417) $ 6,143 $ 84,673 Workers’ Participation — 197 — — 336 — 533 General and administrative expenses — — — — — — 16,221 Share-based payments — — — — — — 4,926 Accretion of decommissioning liabilities 93 213 152 150 149 79 836 Sustaining capital expenditures 2,786 8,315 8,601 5,070 6,250 5,802 37,289 All-In Sustaining Costs (D) $ 968 $ 41,500 $ 28,733 $ 18,489 $ 21,152 $ 12,024 $ 144,478 Payable silver ounces produced (E) 672,958 2,519,666 2,231,444 2,142,105 2,293,524 895,684 10,755,381 Tonnes milled (F) 254,625 851,567 667,702 555,564 349,193 174,003 2,852,654 Total cash cost per ounce, before by-product credits (B/E) $ 17.63 $ 13.05 $ 19.06 $ 17.90 $ 9.19 $ 15.02 $ 14.89 Total cash cost per ounce (C/E) $ (2.84) $ 13.01 $ 8.95 $ 6.19 $ 6.29 $ 6.86 $ 7.87 All-in sustaining cost per ounce (D/E) $ 1.44 $ 16.47 $ 12.88 $ 8.63 $ 9.22 $ 13.42 $ 13.43 Production cost per tonne (A/F) $ 44.45 $ 36.75 $ 42.35 $ 45.85 $ 56.80 $ 53.27 $ 43.98 Gold by-product credits per ounce $ (20.47) $ (0.04) $ (0.42) $ — $ (2.90) $ (8.16) $ (2.67) Lead by-product credits per ounce — — (3.57) (11.71) — — (3.08) Zinc by-product credits per ounce — — (6.12) — — — (1.27) Total by-product credits per ounce $ (20.47) $ (0.04) $ (10.11) $ (11.71) $ (2.90) $ (8.16) $ (7.02)

M A N AGEMEN T 'S DISCUSSION A ND A N A LYSIS For the year and quarter ended December 31, 2016 MANAGEMENT'S dISCUSSION ANd ANALYSIS FIRST MAJESTIC SILVER CORP. ANNUAL REPORT 2016 112 NON-GAAP MEASURES (continued) AVERAGE REALIZED SILVER PRICE PER OUNCE Revenues are presented as the net sum of invoiced revenues related to delivered shipments of silver doré bars and concentrates, including associated metal by-products of gold, lead and zinc after having deducted refining and smelting charges, and after elimination of intercompany shipments of silver, silver being minted into coins, ingots and bullion products. The following is an analysis of the gross revenues prior to refining and smelting charges, and shows deducted smelting and refining charges to arrive at the net reportable revenue for the period per IFRS. Gross revenues are divided into payable equivalent silver ounces sold to calculate the average realized price per ounce of silver equivalents sold. THREE MONTHS ENDED DECEMBER 31, YEAR ENDED DECEMBER 31, 2016 2015 2016 2015 Revenues as reported $ 66,170 $ 66,012 $ 278,077 $ 219,444 Add back: smelting and refining charges 4,502 6,771 22,014 28,275 Gross revenues 70,672 72,783 300,091 247,719 Less: Sandstorm gold revenues (798) (736) (3,592) (736) Gross revenues, excluding Sandstorm (A) $ 69,874 $ 72,047 $ 296,499 $ 246,983 Payable equivalent silver ounces sold 4,245,091 4,890,237 18,015,866 15,534,860 Less: Payable equivalent silver ounces sold to Sandstorm (158,228) (154,196) (739,246) (154,196) Payable equivalent silver ounces sold, excluding Sandstorm (B) 4,086,863 4,736,041 17,276,620 15,380,664 Average realized price per ounce of silver sold (A/B)(1) $ 17.10 $ 15.21 $ 17.16 $ 16.06 Average market price per ounce of silver per COMEX $ 17.12 $ 14.75 $ 17.10 $ 15.68 (1) Average realized price per ounce of silver sold in each reporting period is affected by mark-to-market adjustments and final settlements on concentrate shipments in prior periods. Concentrates sold to fourth-party smelters are provisionally priced and the price is not settled until a predetermined future date, typically one month after delivery to the customer, based on the market price at that time. The mark-to-market adjustments do not apply to doré sales. ADJUSTED EARNINGS PER SHARE (“ADJUSTED EPS”) The Company uses the financial measure “Adjusted EPS” to supplement information in its consolidated financial statements. The Company believes that, in addition to conventional measures prepared in accordance with IFRS, the Company and certain investors and analysts use this information to evaluate the Company’s performance. The Company excludes non-cash and unusual items from net earnings to provide a measure which allows the Company and investors to evaluate the operating results of the underlying core operations. The presentation of Adjusted EPS is not meant to be a substitute for EPS presented in accordance with IFRS, but rather should be evaluated in conjunction with such IFRS measure. The following table provides a detailed reconciliation of net earnings as reported in the Company’s consolidated financial statements to adjusted net earnings and Adjusted EPS. THREE MONTHS ENDED DECEMBER 31, YEAR ENDED DECEMBER 31, 2016 2015 2016 2015 Net earnings (loss) as reported $ 1,814 $ (102,961) $ 8,601 $ (108,424) Adjustments for non-cash or unusual items: Impairment of mining interests and goodwill — 108,421 — 108,421 Deferred income tax (recovery) expense (5,216) (13,586) 8,544 (20,028) Share-based payments 1,097 766 4,403 4,926 Loss (gain) from investment in derivatives and marketable securities 411 838 (6,281) 634 Loss from fair value adjustment of prepayment facilities — 3,264 1,255 1,202 Recovery (write-down) of mineral inventory 520 504 (374) (525) Gain from value added tax settlement — (270) — (270) Loss on early settlement of prepayment facilities — — 3,506 — Adjusted net (loss) earnings $ (1,374) $ (3,024) $ 19,654 $ (14,064) Weighted average number of shares on issue – basic 164,395,202 155,202,963 160,874,038 129,117,653 Adjusted EPS $ (0.01) $ (0.02) $ 0.12 $ (0.11)

MANAGEMENT'S dISCUSSION ANd ANALYSIS FIRST MAJESTIC S ILVER CORP. ANNUAL REPORT 2016 113 NON-GAAP MEASURES (continued) CASH FLOW PER SHARE Cash Flow per Share is determined based on operating cash flows before movements in working capital and income taxes, as illustrated in the consolidated statements of cash flow, divided by the weighted average shares outstanding during the period. THREE MONTHS ENDED DECEMBER 31, YEAR ENDED DECEMBER 31, 2016 2015 2016 2015 Operating Cash Flows before Working Capital and Taxes $ 23,430 $ 17,541 $ 107,275 $ 59,739 Weighted average number of shares on issue – basic 164,395,202 155,202,963 160,874,038 129,117,653 Cash Flow per Share $ 0.14 $ 0.11 $ 0.67 $ 0.46 WORKING CAPITAL AND AVAILABLE LIQUIDITY Working capital is determined based on current assets and current liabilities as reported in the Company’s consolidated financial statements. The Company uses working capital as a measure of the Company’s short-term financial health and operating efficiency. Available liquidity includes the Company’s working capital and undrawn revolving credit facility. DECEMBER 31, 2016 DECEMBER 31, 2015 Current Assets $ 180,199 $ 104,785 Less: Current Liabilities (49,572) (89,201) Working Capital $ 130,627 $ 15,584 Available Undrawn Revolving Credit Facility 8,782 — Available Liquidity $ 139,409 $ 15,584 AddITIONAL GAAP MEASURES The Company uses additional financial measures which should be evaluated in conjunction with IFRS. It is intended to provide additional information and should not be considered in isolation or as a substitute for measures prepared in accordance with IFRS. The following additional GAAP measures are used: MINE OPERATING EARNINGS Mine operating earnings represents the difference between revenue less mine operating costs. Management believes that mine operating earnings provides useful information to investors because mine operating earnings excludes expenses not directly associated with commercial production. OPERATING CASH FLOWS BEFORE WORKING CAPITAL AND TAXES Operating cash flows before working capital and taxes represents cash flows generated from operations before changes in working capital and income taxes paid. Management believes that this measure allows investors to evaluate the Company’s pre-tax cash flows generated from operations adjusted for fluctuations in non-cash working capital items due to timing issues and the Company’s ability to service its debt. The terms described above do not have a standardized meaning prescribed by IFRS, therefore the Company’s definitions may not be comparable to similar measures presented by other companies. MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING DISCLOSURE CONTROLS AND PROCEDURES The Company’s management, with the participation of its President and Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), has evaluated the effectiveness of the Company’s disclosure controls and procedures. Based upon the results of that evaluation, the Company’s CEO and CFO have concluded that, as of December 31, 2016, the Company’s disclosure controls and procedures were effective to provide reasonable assurance that the information required to be disclosed by the Company in reports it files is recorded, processed, summarized and reported, within the appropriate time periods and is accumulated and communicated to management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.

M A N AGEMEN T 'S DISCUSSION A ND A N A LYSIS For the year and quarter ended December 31, 2016 MANAGEMENT'S dISCUSSION ANd ANALYSIS FIRST MAJESTIC SILVER CORP. ANNUAL REPORT 2016 114 MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING (continued) INTERNAL CONTROL OVER FINANCIAL REPORTING The Company’s management, with the participation of its CEO and CFO, is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in the rules of the United States Securities and Exchange Commission and the Canadian Securities Administrators. The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS as issued by the IASB. The Company’s internal control over financial reporting includes policies and procedures that: • maintain records that accurately and fairly reflect, in reasonable detail, the transactions and dispositions of assets of the Company; • provide reasonable assurance that transactions are recorded as necessary for preparation of financial statements in accordance with IFRS; • provide reasonable assurance that the Company’s receipts and expenditures are made only in accordance with authorizations of management and the Company’s Directors; and • provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the Company’s consolidated financial statements. The Company’s internal control over financial reporting may not prevent or detect all misstatements because of inherent limitations. Additionally, projections of any evaluation of effectiveness for future periods are subject to the risk that controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with the Company’s policies and procedures. The Company’s management evaluated the effectiveness of our ICFR based upon the Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on management’s evaluation, our CEO and CFO concluded that our ICFR was effective as of December 31, 2016. The Company’s independent registered public accounting firm, Deloitte LLP, have audited the Consolidated Annual Financial Statements included in this annual report and have issued an attestation report dated February 21, 2017 on the Company’s internal control over financial reporting based on the criteria set forth in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. There has been no change in the Company’s internal control over financial reporting during the year ended December 31, 2016 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting. LIMITATIONS OF CONTROLS AND PROCEDURES The Company’s management, including the President and Chief Executive Officer and Chief Financial Officer, believes that any disclosure controls and procedures or internal control over financial reporting, no matter how well conceived and operated, may not prevent or detect all misstatements because of inherent limitations. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, they cannot provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been prevented or detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by unauthorized override of the control. The design of any control system also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Accordingly, because of the inherent limitations in a cost effective control system, misstatements due to error or fraud may occur and not be detected. CAUTIONARY STATEMENTS CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS Certain information contained herein this MD&A constitutes forward-looking statements. Forward-looking statements are frequently characterized by words such as “plan”, “expect”, “forecast”, “project”, ”intend”, ”believe”, ”anticipate”, “outlook” and other similar words, or statements that certain events or conditions “may” or “will” occur. Forward-looking statements are based on the opinions and estimates of management at the dates the statements are made, and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. These factors include, without limitation: the inherent risks involved in the mining, exploration and development of mineral properties, the uncertainties involved in interpreting drilling results and other geological data, fluctuating metal prices, the possibility of project delays or cost overruns or unanticipated excessive operating costs and expenses, uncertainties related to the necessity of financing, the availability of and costs of financing needed in the future, and other factors described in the Company’s Annual Information Form under the heading “Risk Factors”. The Company undertakes no obligation to update forward-looking statements if circumstances or management’s estimates or opinions should change other than as required by securities laws. The reader is cautioned not to place undue reliance on forward-looking statements.

MANAGEMENT'S dISCUSSION ANd ANALYSIS FIRST MAJESTIC S ILVER CORP. ANNUAL REPORT 2016 115 CAUTIONARY STATEMENTS (continued) CAUTIONARY NOTE REGARDING RESERVES AND RESOURCES Mineral reserves and mineral resources are determined in accordance with National Instrument 43-101 (“NI 43-101”), issued by the Canadian Securities Administrators. This National Instrument lays out the standards of disclosure for mineral projects including rules relating to the determination of mineral reserves and mineral resources. This includes a requirement that a certified Qualified Person (“QP”) (as defined under the NI 43-101) supervises the preparation of the mineral reserves and mineral resources. Ramon Mendoza, P. Eng., Vice President of Technical Services and Jesus Velador, Ph.D., Director of Exploration, are certified QPs for the Company. Ramon Mendoza has reviewed this MD&A for QP technical disclosures. All NI 43-101 technical reports can be found on the Company’s website at www.firstmajestic.com or on SEDAR at www.sedar.com. CAUTIONARY NOTE TO UNITED STATES INVESTORS CONCERNING ESTIMATES OF MINERAL RESERVES AND RESOURCES This Management’s Discussion and Analysis has been prepared in accordance with the requirements of the securities laws in effect in Canada, which differ in certain material respects from the disclosure requirements of United States securities laws. The terms “mineral reserve”, “proven mineral reserve” and “probable mineral reserve” are Canadian mining terms as defined in accordance with Canadian NI 43-101 Standards of Disclosure for Mineral Projects and the Canadian Institute of Mining, Metallurgy and Petroleum (the “CIM”) – CIM Definition Standards on Mineral Resources and Mineral Reserves, adopted by the CIM Council, as amended. These definitions differ from the definitions in the disclosure requirements promulgated by the Securities and Exchange Commission (the “Commission”) and contained in Industry Guide 7 (“Industry Guide 7”). Under Industry Guide 7 standards, a “final” or “bankable” feasibility study is required to report mineral reserves, the three-year historical average price is used in any mineral reserve or cash flow analysis to designate mineral reserves and the primary environmental analysis or report must be filed with the appropriate governmental authority. In addition, the terms “mineral resource”, “measured mineral resource”, “indicated mineral resource” and “inferred mineral resource” are defined in and required to be disclosed by NI 43-101. However, these terms are not defined terms under Industry Guide 7 and are not permitted to be used in reports and registration statements of United States companies filed with the Commission. Investors are cautioned not to assume that any part or all of the mineral deposits in these categories will ever be converted into mineral reserves. “Inferred mineral resources” have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of feasibility or pre-feasibility studies, except in rare cases. Investors are cautioned not to assume that all or any part of an inferred mineral resource exists or is economically or legally mineable. Disclosure of “contained ounces” in a mineral resource is permitted disclosure under Canadian regulations. In contrast, the Commission only permits U.S. companies to report mineralization that does not constitute “mineral reserves” by Commission standards as in place tonnage and grade without reference to unit measures. Accordingly, information contained in this Management’s Discussion and Analysis may not be comparable to similar information made public by U.S. companies subject to the reporting and disclosure requirements under the United States federal securities laws and the rules and regulations of the Commission thereunder. ADDITIONAL INFORMATION Additional information on the Company, including the Company’s Annual Information Form and the Company’s audited consolidated financial statements for the year ended December 31, 2016 , is available on SEDAR at www.sedar.com and on the Company’s website at www.firstmajestic.com.

CORPORATE INFORMATION FIRST MAJESTIC SILVER CORP. ANNUAL REPORT 2016 116 CORPORATE INFORMATION BOARd OF dIRECTORS ANd OFFICERS KEITH NEUMEYER President, Chief Executive Officer & Director dUSTIN VANdOORSELAERE, B.SC., B.ENG. Chief Operating Officer RAYMONd POLMAN, CPA, CA Chief Financial Officer MARTIN PALACIOS, MBA, CMC Chief Transformation Officer CONNIE LILLICO, BA Corporate Secretary SALVAdOR GARCIA, B.MIN. ING. Country Manager dOUGLAS PENROSE, B.COMM., CPA, CA1,3 Chairman & Director ROBERT MCCALLUM, B.SC., P.ENG. 1,2,3 Director TONY PEZZOTTI 1,2 Director dAVId A. SHAw, PH.d 2,3 Director MARJORIE CO, B.SC., LLB, MBA Director 1. Audit Committee 2. Compensation and Nominating Committee 3. Corporate Governance Committee CORPORATE HEAdqUARTERS #1800 – 925 West Georgia Street Vancouver, B.C., Canada V6C 3L2 tel: 604.688.3033 fax: 604.639.8873 toll free: 1.866.529.2807 [email protected] www.firstmajestic.com TRANSFER AGENT Computershare Trust Company of Canada 510 Burrard Street, 3rd Floor, Vancouver, B.C. Canada V6C 3B9 tel: 604.661.9400 fax: 604.661.9401 LEGAL AdVISORS McCullough O’Connor Irwin LLP 2600 Oceanic Plaza 1066 West Hastings Street Vancouver, B.C. Canada V6E 3X1 ANNUAL GENERAL MEETING Date: Thursday, May 25, 2017 Time: 10:00 am, The Sutton Place Hotel 845 Burrard Street Vancouver, B.C. Canada V6Z 2K6 INdEPENdENT AUdITORS Deloitte LLP P.O. Box 49279, Four Bentall Centre 2800 – 1055 Dunsmuir Street Vancouver, B.C. Canada V7X 1P4 INVESTOR RELATIONS CONTACT [email protected] tel: 604.688.3033 toll free: 1.866.529.2807 (North America only) TOdd ANTHONY, MBA Vice President of Investor Relations JILL ARIAS Vice President of Marketing l @FMSilverCorp BULLION SALES [email protected] l @FMBullion MARKET INFORMATION TRAdING SYMBOLS TSX FR FSE FMV NYSE AG BMV AG

FIR S T M AJE S TIC S ILVE R C O R P. 20 1 6 AN N U AL R E P O R T CHALLENGES MET, OBJECTIVES BEING REALIZED.

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