• Billed sales (Ps15,376.4) were higher than in any other quarter in the company's history.
•Production of refined gold (460,235 ounces) and sales of refined gold (518,849 ounces), refined silver (30.6 million de ounces) and sodium sulfate (160,419 metric tonnes) also hit quarterly records.
• In the general ordinary meeting, shareholders approved a cash dividend of Ps4.86 pesos per share.

1.- EXECUTIVE SUMMARY.

Billed sales -not including results of metal and FX hedging- came to Ps15,376.4 (US$1,421.9 million) and rose +32.3% against the first quarter of 2007.This record level was due primarily to higher sales volume and quotations on gold, silver, lead, copper and chemical products.

Higher average prices on gold, silver and lead had a positive impact on the quarterly results.Nevertheless, the lower average price of zinc and a decline in zinc production in the Mining Business--which was hurt by a strike at Naica and lower grades in some mines--as well as lower production of refined zinc (preventive shutdowns to prepare for the possible strike and maintenance to the zinc refinery--neutralized the favorable impact of the above-mentioned rise in prices.

However, Gross income of Ps2,851.7 (US$263.7 million) did not reflect all the benefits of the rise in sales volume and prices, so the result was basically unchanged from its 2007 level.

Among the factors that negatively influenced the company's results in the period were:
(i) The average price of zinc (US$1.1022 per pound) declined by -29.7% from the first quarter of 2007--zinc and silver are the most significant components of Peñoles' results;
(ii) Lower revenues from treatment fees in the metal complex because the annual programmed maintenance at the zinc refinery was carried out in the first quarter of 2008, while in 2007 it was performed in July.There was also the negative impact from the zinc price scale, with the decline in the average price of this metal;
(iii) Zinc production in the mining business was -8.1% lower than in the first quarter of the previous year due to lower grade at Bismark, Francisco I. Madero and Sabinas;
(iv) quarterly production of refined zinc (49,774 tonnes) declined -6.8% from the same period of 2007 because of preventive shutdowns at the plant to prepare for the possibility of a strike (workers demanding higher wages) along with the above-mentioned maintenance shutdown at the zinc refinery;
(v) Higher unit cost of gas natural +22.6% and metal coke +11.0%; and
(vi) Lower average FX rate (-1.8%) due to the peso's ongoing strength against the dollar.

The Cost of goods sold rose +48.9% because of:
(a) The higher cost of metal contained in concentrates, and other materials purchased from outside parties (+47.6%), which are fed into the Met-Mex metal complex to complement production from our own mines .
(b) Higher Production costs (+6.4%) due to higher costs for subcontractors, increased maintenance and repair costs, and a rise in the cost of operating material .
Internal inflation for Peñoles, which is calculated based on a basket of its most important inputs, was 11.3%, much higher than the rise in the National Consumer Price Index (1.49%).

Meanwhile, the following operating and market aspects favorably affected the company's operating results:
(i) The average prices of gold (US$926.8 per ounce), silver (US$17.6 per ounce), and el lead (US$1.3149 per pound) were higher than in 2007 by +42.5%, +32.6% and +62.3%, respectively;
(ii) Higher sales volume of refined gold +22.6%, refined zinc +16.7%, refined silver +14.8%, refined lead +12.5% and Sodium sulfate +2.5%.Sales of copper cathode from Milpillas totaled 2,466 metric tonnes;
(iii) Record production volume of refined gold (460,235 ounces);
(iv) Expiration of metal hedge positions yielded an opportunity cost of Ps611.3, comparing well against Ps739.0 in the first quarter of 2007. The hedges that expired were taken out in the past to guarantee the company's future margins. In any case, because more of its mining production was unhedged, the company enjoyed the benefits of rising metal prices on that unhedged volume; and
(v) The average unit cost of electrical energy received from Termoeléctrica Peñoles (TEP) was US$0.0615 per kwh, which was -7.9% lower than the average in the first quarter of 2007.This was because the programmed annual maintenance at TEP in the first quarter of 2007 took a little longer than expected.The cost in the period was Ps172.1 lower than if Peñoles had purchased all of its electrical energy from the Comisión Federal de Electricidad (CFE).

Investment in prospecting rise +24.6%; those resources were used to replace and augment reserves in the operating mines and to identify and study new deposits in Mexico and South America.

Total financing cost declined -Ps27.5 due to:
1) Higher financial losses -net-, +Ps18.5 due mainly to higher interest on short-term bank loans.
2) Net foreign-exchange gains of +Ps78.3 resulting from the peso's appreciation against the dollar and a higher dollar liability position.At the close of the period the exchange rate was Ps10.6962 per dollar compared to Ps11.0507 at the close of 2007; this was an appreciation of 1.56% compared to a depreciation 1.61% in the first quarter of 2007.
3) In 2007 Peñoles entered net monetary gains of de +Ps76.8.In 2008, however, the MPE line was eliminated to changes in financial reporting standards relating to the recognition of inflation effects.

The table below sums up the above information:

	1Q2008 1Q2007 % de Chge.     Billed sales $ 15,376.4 $ 11,623.5 +32.3%     Net sales (*) $ 14,765.1 $ 10,884.5 +35.7     Gross income 2,851.7 2,886.0 -1.2     EBITDA 2,203.4 2,285.5 -3.6     Operating income 1,824.9 1,890.8 -3.5     Total Fin. Cost 53.8 81.3 -33.8     Other Expenses (Proceeds) 149.7 221.6 -32.4     Net income 1,019.0 1,021.4 -0.2

(*) Includes hedging results.

The following sums up the highlights of the company's operations in January-March 2008, compared to those of the same period of last year.

In the Mining Business, metallic content of gold and silver was similar to the 1Q07 level.For lead, production in the first quarter was 18.1% higher, due primarily to higher grades and recovery at Sabinas and La Ciénega, as well as higher grades at Naica and F.I. Madero.Note that the rise in production at Sabinas was the result of operations at the new lead-copper concentrate separation plant, which allowed for a gradual rise in output.In zinc, production was lower than last yea because of lower grades at F.I. Madero, Bismark and Sabinas; while at Naica production was hampered by a strike that lasted from January 15 to February 8 as workers demanded higher wages.The mine is now operating at normal capacity.

In the Metals Business, thanks to higher entries of concentrates and of semi-processed materials rich in metal content, production of refined gold reached a record (+10.9%), while production of refined silver and lead in the metal complex was slightlyhigher than the year before.Nevertheless, production of refined zinc was lower because a preventive shutdown of the refinery to prepare for a possible strike for higher wages, which fortunately did not take place; as well as for programmed annual maintenance.

At the close of the period, Peñoles had a total debt load equivalent to US$874.1 million.Its current debt is made up primarily of the following long-term debt segments :
(i) US$87.7 million from a private placement in 1997 .
(ii) US$377.0 million from a private placement of bonds in the second quarter of 2006 .
(iii) US$142.5 million in credit taken out at the end of 2004 to build the Milpillas copper project .

In the first quarter of 2008, cash flow generated by the company's operations totaled Ps2,065.4, which is +32.4% higher than in the same period of 2007.Among the main uses of the resources were:

(i) An increase of Ps1,514.9 in working capital, as follows:
(a) An increase in accounts receivable (Ps1,436.6) primarily because the portfolio itself was larger due to increased sales.
(b) A decline in inventories of materials rich in precious metal content and of lead and zinc concentrate at themetal complex (Ps414.2).
(c) A decline in other liabilities (Ps389.2) due to the settlement of an outstanding balance from the sale of stock in the related company Bal Holdings Inc. in the United States.
(ii) Investment in property, plant and equipment, totaling Ps553.2 toreplace equipment, and projects at Met-Mex, Penmont, Milpillas, El Saucito, Velardeña, Química del Rey and Fresnillo.

S Prospecting continued in the Fresnillo District in Zacatecas.Specifically, two new veins were identified at the El Saucito project: Madroño and Mezquite; while at the Juanicipio project, new areas of high-grade mineralization have been discovered.
In the Soledad y Dipolos project (Sonora) adjacent to the La Herradura mine, work continued on definition of the construction project.

In the General Ordinary Shareholders' Meeting held March 31, 2008, a dividend of Ps4.86 pesos per share was declared for each of the 397,475,747 shares outstanding.

2.- ECONOMIC CLIMATE AND METALS PRICES.

	1Q07 4Q07 1Q08   Inflation (%):   In the period 1.04 1.52 1.49   12 months 4.24 3.77 4.24   FX rate (peso/dollar):   Close 11.0507 10.8662 10.6962   Average 11.0121 10.8503 10.8101

	Gold ( US$/Oz) Silver ( US$/Oz) Lead ( US$cts/lb) Zinc ( US$cts/lb)     1st quarter 2007 650.27 13.29 81.04 156.75     2nd quarter2007 667.24 13.32 98.70 166.18     3rd quarter 2007 681.12 12.70 142.57 146.37     4th quarter 2007 788.02 14.24 145.81 118.99     Average 2007 696.66 13.39 117.03 147.07     1st quarter 2008 926.78 17.62 131.49 110.22     % Chge. 1Q08 vs 1Q07 +42.5 +32.6 +62.3 -29.7     %Var. 1Q08vs 4Q07 +17.6 +23.7 -9.8 -7.4

Highlights of the quarter:

Gold: Average quotations in the quarter rose +17.6% over the fourth quarter of last year. The yellow metal benefited from statements by the Newcrest mining company regarding its ongoing buyback of hedge positions, higher crude oil prices, interest among speculative funds, lower production at some of the mines owned by Goldfields, Anglogold Ashanti and Harmony, high prices on some soft commodities, and the financial scandal at Bear Stearns.

Silver: Average quotations in the quarter rose +23.7% over the preceding quarter.La silver prices rose in the wake of rising gold quotations, an increase in crude oil prices, interest among investors, and the weakness of the dollar.

Lead: The average quarterly price of this metal dropped -9.8% from the fourth quarter of 2007.Quotations were affected by disappointing economic data in the United States and Europe, which set off a downturn in battery consumption, and the report from Ivernia about resuming exports of lead concentrates through the port of Fremantle.

Zinc: Average prices fell -7.4% from the preceding quarter.Quotations of zinc were affected by high inventory levels on the LME, weak fundamentals, disappointing economic reports from the United States, higher mining production as various new projects began operations and other mines expanded operations, and heavy losses on Asian and European securities markets.

3.- OPERATING RESULTS - PRODUCTION VOLUME.

	Unidad 1Q07 4Q07 1Q08     Mining Division:     Milled ore (Mton) 2,029 2,129 2,078     Deposited ore (a) (Mton) 2,925 3,005 3,373     Gold (kg) 3,213 3,037 3,136     Silver (ton) 343.2 337.0 348.6     Lead (ton) 12,764 16,706 15,070     Zinc (ton) 49,657 46,483 45,644     (a) La Herradura: open-cut mine     MetalsDivision:     Gold (kg) 12,921 13,911 14,315     Silver (ton) 836.5 861.6 852.0     Lead (ton) 34,105 35,389 35,788     Zinc (ton) 53,428 57,015 49,774     Sodium sulfate (ton) 149,000 158,000 154,000     Magnesium oxide (ton) 17,138 20,312 13,291     Ammonium sulfate (ton) 41,238 45,601 44,046     Magnesium sulfate (ton) 7,100 9,600 9,450

Mining Business (metal content in concentrates and other materials) :
* Change 1Q08 vs.1Q07:
- Lead (+18.1%): higher recovery at Sabinas, higher grade and recovery at La Ciénega, and higher grades at Naica, Francisco I. Madero and Fresnillo.
- Zinc (-8.1%): lower grade and recovery at Francisco I. Madero and Bismark, lower grade at Naica and Sabinas and lower grade, milled ore and recovery en Fresnillo.
- Gold (-2.4%): lower grade at La Ciénega and lower recovery, grade and milled ore en Fresnillo.

* Change 1Q08 vs.4Q07:
- Gold(+3.2%): higher milled ore and grade at Penmont.
- Lead(-9.8%): lower milled ore, grade and recovery at Naica and Tizapa and lower grade at La Ciénega.
- Silver(-5.0%): lower milled ore and recovery en Fresnillo, lower milled ore and grade at Naica and Tizapa, lower grade and recovery at Sabinas and lower grade at La Ciénega.

Metals Business (production of refined metal):
* Change 1Q08 vs.1Q07:
- Gold (+10.8%): higher entries of semi-processed materials and inventory reduction (quarterly production level).
- Lead (+4.9%): higher receipts and treatment of lead in concentrates at the foundry.
- Zinc (-6.8%): declined due to a plant shutdown in preparation fora possible strike for higher wages.

* Change 1Q08 vs.4Q07:
- Gold (+2.9%): higher entries of semi-processed materials, and inventory reduction in preparation for the possible strike.
- Zinc (-12.7%): lower because the plant was shut down to prepare for a possible strike.

Chemicals Business (production of chemical products):

*Change 1Q08 vs.1Q07:
- Magnesium sulfate (+33.1%): higher production of dams.Also, production was lower in 2007 due to maintenance on the hydroxide reactor and low brine concentration .
- Ammonium sulfate (+6.8%): higher production due to excess demand at the start of the year as clients stocked up early amid fears of a price increase .
- Sodium sulfate (+3.4%): higher due to operating continuity .
- Magnesium oxide (-22.4%): because of corrective maintenance to the rotating furnace, and an adjustment to sales needs.

*Change 1Q08 vs.4Q07:

- Magnesium Oxide (-34.6%): lower production due to maintenance of the rotating furnace, compared to greater operating continuity in the preceding quarter.
-Ammonium sulfate (-3.4%): due to lower receipts of solution at the lead foundry.

4.- FINANCIAL RESULTS.

A) Comparative analysis of results for 1Q08 vs. 1Q07:

	( Millions of pesos ) 1Q08 1Q07 Chge ($) Chge (%)     Net sales (*) $ 14,765.1 $ 10,884.5 3,880.6 35.7     Gross income 2,851.7 2,886.0 -34.4 -1.2     Gross margin 19.3 % 26.5%     EBITDA 2,203.5 2,285.5 -82.1 -3.6     EBITDA margin 14.9% 21.0%     Operating income 1,824.9 1,890.8 -65.8 -3.5     Operating margin 12.4% 17.4%     Net income 1,019.0 1,021.4 - 2.4 - 0.2     Net margin 6.9% 9.4%

(*) Includes metals and FX hedging results.

The main changes are discussed below:

Net sales totaled Ps14,765.1 an increase of +Ps3,880.6 (+35.7%). The growth breaks down as follows:
a) Higher sales volume +Ps2,077.2 primarily of gold, silver, lead, zinc, copper cathode, sodium sulfate and ammonium sulfate;
b) Higher prices +Ps2,312.3 on practically all the products sold except zinc;
c) Lower average FX rate (Ps10.8101 vs. Ps11.0121 per dollar) -Ps187.6;
d) Lower losses from metals and FX hedges +Ps127.7; and
e) Effects of restating figures of the past year in constant pesos of December 31, 2007 and other effects, -Ps449.0.

In dollar terms, net sales came to US$1,365.2 million, made of (billed) sales of US$1,421.9 million and hedging losses of US$56.7 million.

The higher cost of goods sold, +Ps3,914.9 was the result of:
a) Higher Production costs +Ps141.0 (+6.4%) due to a rise in the cost of contractors, equipment maintenance within the mine, and operating material;
b) Higher Metals costs –net of treatment fees- +Ps3,463.2 due to a rise in the price and volume of metal purchased from outside parties; and
c) Inventory movements, consolidation and restatement effects +Ps310.7.

Because the rise in net sales (+Ps3,880.6) was lower than the increase in the cost of goods sold (+Ps3,914.9), gross income declined by -Ps34.4.

Operating expenses--not including depreciation-- totaled Ps648.3, up +Ps47.7 due to:
a) Higher Prospecting expenses +Ps47.6 Primarily at the La Ciénega, Fresnillo, Bismark, Francisco I. Madero and Tizapa mines; at the El Saucito and Velardeña projects, and international prospecting;
b) Higher SG&A expenses +Ps0.1.

The drop in gross income (-Ps34.4) and the rise in operating expenses (+Ps47.7), brought EBITDA to Ps2,203.5, a decline of -Ps82.1 (-3.6%), and the EBITDA margin was 14.9 percent.

Due to lower EBITDA (-Ps82.1) and lower depreciation charges (-Ps16.3), operating income was off by -Ps65.8, coming in at 12.4% of sales.

Peñoles reported a total financing cost of Ps53.8 in the first quarter, improving against the 1Q07 loss of Ps81.3.The change of +Ps27.5 breaks down as follows:
a) Higher financial losses -net-, +Ps18.5 due mainly to higher interest on short-term bank loans;
b) Net foreign-exchange gains of +Ps78.3 resulting from the peso's appreciation against the dollar and a higher dollar liability position.At the close of the period the exchange rate was Ps10.6962 per dollar compared to Ps11.0507 at the close of 2007; this was an appreciation of 1.56% compared to a depreciation 1.61% in the first quarter of 2007; y
c) In 2007 Peñoles entered net monetary gains of de +Ps76.8.In 2008, however, the MPE line was eliminated to changes in financial reporting standards relating to the recognition of inflation effects;

The Other Expenses (Proceeds) line showed a charge of Ps28.0 compared to a charge of Ps101.4 in the first quarter of last year. In addition, employee profit-sharing provisions rose to Ps121.7, up by +Ps1.5 over the year-earlier period.

Equity in the results of unconsolidated associates was Ps9.6, rising by +Ps4.6 over the year-earlier loss of Ps4.9, chiefly due to the recognition of profits among the companies in which Peñoles owns a minority stake.

The income tax and profit sharing (net) line contained a charge of Ps454.8, higher by +Ps7.6 than in the same period of the preceding year. This change was due to higher pretax income--Ps1,611.8 in the first quarter of 2008, compared to Ps1,583.0 In the same period of 2007.

Minority interest in 2007 was Ps138.0, compared to Ps114.3 in 1Q07, due to better results from the La Herradura mine.

B) Comparative analysis of results for 1Q08 vs. 4Q07:

	(Millions of pesos) 1Q08 4Q07 Chge ($) Chge (%)     Net sales (*) $ 14,765.1 $ 11,431.8 3,333.3 29.2     Gross income 2,851.7 2,796.9 54.8 2.2     Gross margin 19.3 % 24.5 %     EBITDA 2,203.5 2,055.4 148.1 7.2     EBITDA margin 14.9 % 18.0 %     Operating income 1,824.9 1,576.9 248.1 15.7     Operating margin 12.4 % 13.8 %     Net income 1,019.0 918.9 100.2 10.9     Net margin 6.9 % 8.0 %

(*) Includes metals and FX hedging results.

The main changes are discussed below:

Net sales totaled Ps14,765.1 rising +Ps3,333.3 (+29.2%) which breaks down as follows:
a) Higher sales volume +Ps1,524.0 primarily of gold, silver, lead, zinc and sodium sulfate;
b) Higher prices +Ps1,390.3 on most of the products sold, except lead and zinc;
c) Lower average FX rate -Ps42.8 (Ps10.8101 vs.Ps10.8503 per dollar);
d) Lower metals and FX hedging losses +Ps361.8;
e) Others, +Ps100.0.

The cost of goods sold rose +Ps3,278.5, primarily due to a rise in the cost of purchase metals due to higher quotations and greater volume purchased from outside parties (+Ps3,257.1); offset partially by lower production costs, particularly in the areas of contactors, shipping, insurance and bonding, and reactives.

The rise in Net sales (+Ps3,333.3) was great than the increase in the cost of goods sold (+Ps3,278.5), which means Gross income was up by +Ps54.8.

Operating expenses--not including depreciation effects--came to Ps648.2, declining -Ps93.3 because of:
a) Lower SG&A expenses en -Ps56.5.
b) Lower Prospecting expenses -Ps36.8, primarily due to lower exploration in regional zones.

Because of higher gross income (+Ps54.8) and lower operating expenses (-Ps93.3), EBITDA went from Ps2,055.4 to Ps2,203.5, an increase of Ps148.0, and the EBITDA margin (in proportion to sales) was 14.9 percent.

In the quarter total financing cost came to Ps53.8.The change of +Ps53.8 was the product of:
a) Lower net financial losses, -Ps132.1 compared to -Ps118.3 in the preceding quarter, the result of higher interest on short-term bank loans;
b) A change of -Ps72.6 in net foreign-exchange result,because of an FX gain of Ps78.3 in the period, compared to Ps5.7 in the preceding quarter; and
c) Net monetary position effect of +Ps112.5 in the 4th quarter of 2007, which disappeared in the first quarter of 2008 under the new financial information reporting standards.

The other expenses (proceeds) line showed an expense of Ps28.0 compared to Ps39.7 in the preceding quarter; the profit-sharing reserve totaled Ps121.7, an improvement from the 4Q07 charge of Ps193.6.

The income tax provision showed a charge of Ps454.8 compared to Ps425.4 in the preceding quarter. The higher charge in the first quarter (+Ps29.4) was due to an increase in pretax income to Ps1,611.8, compared to Ps1,430.6 in the preceding quarter.

Equity in the income of unconsolidated associates was a loss of Ps9.6, comparing poorly against the gain reported in the last quarter of 2007, which totaled Ps87.1 and was due to results of the companies in which Peñoles owns a minority position.

Minority interest totaled gains of Ps138.0 compared to the Ps86.4 reported in the preceding quarter, due to higher profits from Tizapa and La Herradura.

5.- PROJECTS.

Prospecting continued in the Fresnillo District in Zacatecas.Specifically two new veins were identified at the El Saucito project: Madroño and Mezquite; while at the Juanicipio project, new areas of high-grade mineralization have been discovered.

In the Soledad y Dipolos project (Sonora) adjacent to the La Herradura mine, work continued on definition of the construction project.

6.- SHAREHOLDERS' MEETING.

In the General Ordinary Shareholders' Meeting held March 31, 2008, a dividend of Ps4.86 pesos per share was declared for each of the 397,475,747 shares outstanding, payable as of Monday, April 14, 2008.