Mexico City, April 30th, 2009 – Industrias Peñoles, S.A.B. de C.V. (“Peñoles” or the “Company”) (BMV ticker symbol: PE&OLES), a mining group with integrated operations in smelting and refining non-ferrous metals and producing chemical products, presents its consolidated results for the quarter ended on March 31st, 2009.

In the first quarter of 2009 (1Q09), the prices of the precious metals produced and sold by Industrias Peñoles S.A.B. de C.V. recovered from the levels registered in the fourth quarter of 2008.  In contrast, industrial metal prices continued to decline due to worldwide economic instability.

The 66-day strike at the Lead-Silver Refinery, which is part of the Met-Mex metallurgical complex in Torreón, Coahuila, hampered the Company’s production and sale of refined gold, silver and lead. The strike began on February 8th and ended on April 14th; currently the lead-silver refinery is back to normal operations.

OVERVIEW

Sales – not including metal and foreign exchange hedging results – totaled $9,850.5 in the quarter, 35.9% lower than in the same period of last year.  Gross Income, EBITDA and Operating Income also declined, -32.3%, -43.2% and -65.0%, respectively.

Among the main operating and market factors that negatively impacted the Company’s results were the following:

In 1Q09 the average prices of the main metals that Peñoles produces and sells were lower than in 1Q08: gold (-1.9%), silver (-28.3%), lead (-60.1%) and zinc (-51.8%).

In the Metallurgical Operations quarterly output of refined gold (-59.5%), silver (-57.3%) and lead (-61.6%) was lower than in the same quarter of last year, due to the strike at the Lead-Silver Refinery.

In the Mining Operations gold production (-2.5%) was slightly lower than in 1Q08.

Quarterly sales volume of gold, silver, lead and zinc were lower by -44.0%, -36.0%, -52.0% and -21.0%, respectively. In the case of gold, silver and lead this was because of the lack of available refined metal for sale, due to the afore-mentioned strike, offset partially by inventory consumption; and in the case of zinc, because of a reduction in demand as a result of the global economic slowdown.

The factors that favorably impacted the Company’s results for the quarter included:

The average exchange rate in 1Q08 was +32.9% higher than in the same period of the preceding year.

In the Mining Operations output of metal contents of silver (+9.5%), lead (+3.7%) and zinc (+2.7%) was higher than in the first quarter of 2008.

In the Metallurgical Operations production of refined zinc rose +22.2% over 1Q08.

FINANCIAL RESULTS:

In 2008, the Mexican Financial Reporting Standards (FRS) B-10, B-2, D-3 and B-15 were modified. The FRS B-15, “Foreign Currency Translation” establishes that companies must identify their recording and functional currency, and define their reporting currency. In the case of Peñoles the Mexican peso was defined as the recording and reporting currency, and the U.S. dollar as its functional currency. Therefore, the financial information for the fourth quarter of 2008 presented to the Mexican Stock Exchange on February 24th 2008 incorporates the annual effects of the application of FRS B-15.  This must be taken into consideration when comparing the financial figures of this year against the previous year. In this report, the 1Q09 results are compared against those originally reported in 1Q08, in million of pesos (reporting currency) unless otherwise stated.

		1Q09	1Q08	% chg.
	Sales (*)	$9,850.5	$15,376.4	-35.9
	Net sales (*)	$9,541.2	$14,765.1	-35.9
	Gross income	$1,931.0	$ 2,851.7	-32.3
	EBITDA	1,250.9	2,203.4	-43.2
	Operating income	638.6	1,824.9	-65.0
	Total Fin. Cost.	389.5	53.8	+623.8
	Net income	-254.6	1,019.0	-125.0

                                                            

(*)Includes metal and foreign exchange hedging results.

Sales – not including metal and foreign exchange hedging results–  totaled $9,850.5, -35.9% lower than what was reported in the same period of 2008, primarily because of the lower price of gold (-1.9%), silver (-28.3%), lead (-60.1%), zinc (-51.8%) and copper (-56.0%), combined with lower sales volume of refined, gold, silver and lead, due to the strike and lower sales volume of zinc and magnesium oxide due to a reduction in demand. This was partially offset by a higher average foreign exchange rate (+32.9%) and increased prices of the chemical products the Company produces and sells.

Metal and foreign exchange hedging results represented an opportunity cost of $309.3 in the quarter, which compares favorably against the $611.3 figure reported in 1Q08. The hedging program is intended to guarantee the company’s future margins. Only a part of the sales volume of the Company is hedged, so Peñoles would be able to benefit from an improvement in the average prices of metals.

In dollar terms, net sales totaled US$670.5, comprised by sales of US$691.7 and hedging losses of US$21.2

The Cost of Goods Sold declined -$4,303.3 because of:

A -$4,349.4 reduction in the cost of metal contained in the concentrates and other materials purchased from third parties, which is fed into the Met-Mex metallurgical complex in order to complement the production of concentrates from our own mines, due  to a lower volume of purchases related to the strike, and lower metal prices. This was partially offset by a higher average exchange rate.

Higher Production Cost +$221.1, mainly in operating material, energy, personnel costs and contractors. Average internal inflation for Peñoles, which is calculated based on a basket of its basic inputs, was 5.34%, well above the National Consumer Price Index. Peñoles continued to benefit from the operation of Termoeléctrica Peñoles. Its unitary cost was 19% lower than what the Company would have paid to the national utility. This represented US$6.5 million in savings.

Inventory movements, consolidation effects and others: -$175.0

Since the reduction in the Cost of Goods Sold (-$4,303.3) was unable to offset the reduction in net sales (-$5,223.9), Gross Income declined by $920.6.

Operating expenses, excluding depreciation, totaled $680.1, an increase of +$31.90 over the same period of last year, due to:

A rise in SG&A Expenses (+$69.1) in 1Q08, primarily because of the creation of Servicios Administrativos Fresnillo S.A de C.V., a subsidiary of Fresnillo plc, which is a subsidiary of the Company.

Lower Exploration Expenses (-$37.2), mainly at the F.I. Madero, Bismark and Sabinas mines and at the Velardeña project. 

Because of lower the Gross Income (-$920.6) and higher Operating Expenses (+31.90), EBITDA was $1,250.9, declining -$952.5 (-43.2%) from last year’s.

Due to the decline in EBITDA (-$952.5) and a higher depreciation charge (+$233.7), Operating income fell by -$1,186.3.

The Integral Cost of Financing rose +$335.7  as a result of:

Lower financial expenses, net -$51.9, due to higher financial income mainly due to the interests earned on the investment of the proceeds raised in the primary and secondary offering of Fresnillo Plc., reported in 2Q08.

Exchange Loss of $309.4, which compares to a gain of $78.3 registered in 1Q08, generating a negative variation of -$387.7. The exchange gain registered in 1Q08 resulted from the peso’s appreciation against the U.S. Dollar in that period. At that time the Company’s liabilities in dollars exceeded its assets on that currency. On the other hand, the 1Q09 loss resulted from the adoption of the U.S. Dollar as the functional currency and the Mexican peso as the recording and reporting currency, as established in FRB B-15, and it is generated by the Company’s assets in British Pounds (GBP), and the net balance of assets and liabilities in Mexican Pesos.

Due to the changes to FRS B-10 “Effects of Inflation,” neither in 2009 nor in 2008 economic conditions met the necessary criteria for the Company to register a monetary result as part of the integral cost of financing.

The Other Expenses (Income) line shows an expense of $81.6, which is higher than the $28.0 figure recorded in 1Q08.  The increase of +$53.6 was primarily due to an expense which resulted from terminating a concentrate purchase commitment with an ore vendor, and also from the reclassification of costs due to unused production capacity at Mex-Mex during the strike. Profit-sharing provisions  totaled $57.8 million, -$63.9 lower than the figure from the same period of last year, mainly because of the impact that lower prices and lower sales volume (as commented above) have had on the Company’s results.

Equity interest in net income of associated companies totaled -$5.2 million, which represents an improvement over the -$9.6 loss reported in 1Q08 and is due to the recognition of the results in companies in which Peñoles has a minority interest.

  Provisions for income tax were -$263.7 lower, because of lower profit before taxes of $104.5 in 1Q09, compared to $1,611.8 in the same quarter of 2008. The minority interest line rose by $29.9 due primarily to the increase in the minority interest as a result of the Fresnillo plc offering.

   As a result of the afore-mentioned factors, Net income declined by -$1,273.6 (-125.0%) from the year-earlier quarter.

CASH FLOW:

At the end of March 2009, the Company had Cash and Equivalents totaling $13,369.2, a decline of -$1,372.1 from the end of 2008.

The main concepts are described as follows:

Net cash flow from operating activities totaled -$285.5 in 1Q09, a decline from the $718.5 figure reported in the same period of last year, and comprised  of items related directly to operation, including working capital, income tax, and employee profit-sharing (PTU).

Net cash flow from investment activities totaled -$1,004.2 in 1Q09, which compares negatively to the -$140.6 reported in the first quarter of 2008, and is comprised mainly of -$1,000.1 in investment in property, plant, and equipment, mainly in operations and projects of Fresnillo plc, in the Met-Mex metallurgical complex, the Sabinas and Milpillas mines, and the Velardeña  project.

Net cash flows from financing activities, -$82.4 which compares unfavorably to the +$1,905.4 recorded in the year-ago quarter, and is comprised basically by interests of $78.9 paid in the period.

II ECONOMIC ENVIRONMENT AND METAL PRICES:

The main variables that had an important impact on the Company’s results were:

		1Q09	1Q08	4Q08
	Inflation (%):
	In the period	1.3	1.49	2.53
	12 months	6.04	4.24	6.52
	FX rate (peso/dollar)
	Close	14.3317	10.6962	13.5383
	Average	14.3623	10.8101	12.9859

                                                            

		Gold (US$/Oz)	Silver ( US$/Oz)	Lead ( US$cts/lb)	Zinc ( US$cts/lb)
	1Q08	926.78	17.62	131.49	110.22
	2Q08	895.95	17.17	104.64	95.86
	3Q08	869.58	14.92	86.74	80.30
	4Q08	794.52	10.15	56.46	53.75
	Average 2008	871.71	14.97	94.83	85.04
	1Q09	908.71	12.63	52.50	53.16
	Average 2009	908.71	12.63	52.50	53.16
	% Chge.1Q09 vs 1Q08	-1.9	-28.3	-60.1	-51.8
	% Chge.1Q09 vs 4Q08	+14.4	+24.4	-7.0	-1.1

Gold: Its average price in 1Q09 was -1.9% lower than in 1Q08. Interest among investors who considered it a good hedge against the weakness of other financial assets amid current volatile economic climate, and the instability of the U.S. dollar, were the main factors that helped gold prices to hold at similar levels to those registered in 1Q08. In 1Q09, gold’s price rose +14.4% over the last quarter of the previous year.

Silver: In 1Q09, silver prices recovered substantially over the preceding quarter, (+24.4%), but remained -28.3% below their 1Q08 level, influenced by the steep decline in other industrial metals.  The recent recovery was driven mainly by a rise in the price of gold and in investor demand.

Lead: The decline in industrial activity around the world, primarily in the automotive industry, has had a considerable impact on the price of this metal, which in 1Q09 was -60.1% lower than in the same period of 2008.

Zinc: Like other industrial metals, zinc has been heavily affected by the slowdown in industrial activity, mainly construction and automotive production, and also by high levels of inventories in public markets like the London Metal Exchange (LME).  In 1Q09, zinc prices were -51.8% lower than in 1Q08.
 

III OPERATING RESULTS:

The following are the main aspects that influenced the variations in operating results between 1Q08 and 1Q09.

MINING OPERATIONS: The production of metal contents of silver, lead and zinc was higher than it the year-ago period, while gold output was slightly lower.

		Unidad	1Q09	1Q08	4Q08
	Division Minas:
	Milled ore	(Mton)	2,145	2,078	2,096
	Deposited Ore	(Mton)	4,176	3,373	4,000
	Gold	(kg)	3,056	3,136	2,917
	Silver	(ton)	381.7	348.6	351.8
	Lead	(ton)	15,632	15,070	15,339
	Zinc	(ton)	46,879	45,644	45,978
	(a) Herradura (open pit) and Milpillas
	División Metales y Químicos:
	Gold/td>	(kg)	5,791	14,315	14,628
	Silver	(ton)	364.1	852.0	935.7
	Lead	(ton)	13,755	35,788	35,196
	Zinc	(ton)	60,819	49,774	60,983
	Sodium sulfate	(ton)	149,000	154,000	157,000
	Magnesium oxide	(ton)	11,093	13,291	20,216
	Ammonium sulfate	(ton)	58,381	44,046	55,697
	Magnesium sulfate	(ton)	9,700	9,450	10,100

Sodium sulfate (-3.2%): Lower due to the cleaning of four evaporation plants, electrical energy failures, and operating difficulties.

Magnesium oxide (-16.5%): Production was adjusted because of a drop in sales.

Ammonium sulfate (+32.5%): Higher due to rising demand from fertilizer consumers.

IV PROJECTS

One of our most important projects is Velardeña, located in the state of Durango, where the first phase of prospecting concluded with the identification of 36 million metric tons of mineral resources. This project is now in the pre-feasibility study phase.  We also continued with the development of nine prospects in the states of Sonora, Zacatecas, Chihuahua, Durango and Guerrero, and in selected regions of Chile and Peru.  Additionally, we have evaluated three projects owned by third parties in Sonora, Zacatecas and Peru, which have been of interest to the Company.  Because it owns a 77.1% stake in the subsidiary Fresnillo plc., Peñoles consolidates the results of several of its projects in Mexico: Soledad and Dipolos, Saucito, Juanicipio and San Julián, all of which offer significant potential. Peñoles also participates in the other projects operated by that subsidiary.

For more information on the development of Fresnillo’s plc projects, please visit www.fresnilloplc.com.

V HIGHLIGHTS

On February 8th, 2009 section 64 of the Mexican Mining Union, began a strike at the Lead-Silver Refinery of the Met-Mex metallurgical complex in Torreón, Coahuila. The strike took place because of a lack of agreement between the parties on the re-negotiation of the collective labor contract. Later, on March 13th, the Company declared “force majeure” as it was temporally forced to suspend its purchase and sale obligations with its suppliers and clients on all products related to the Lead-Silver Refinery.  Also, for its own mines the Company announced that it would be selling some of their production to various counterparties. The mines along with the Lead Smelter and the Zinc Refinery at Met-Mex continued to operate regularly.  In February and March, the company sold some of its lead bullion to the Korea Zinc refinery and other refineries in Europe. Finally, on April 14th, workers accepted the company’s’ original offer, which included a 6% direct wage increase plus a 1% increase in benefits and a 1% one-time bonus with which the strike ended. Currently operations at the metallurgical complex are fully back to normal.

VI SHAREHOLDERS’ MEETING

On February 24th during the Annual Shareholders’ Meeting shareholders decided by a majority vote that the accumulated profits to December 31st 2008 will by applied on the terms and form agreed upon by the Board of Directors. The Shareholders Meeting authorized the Board of Directors to apply those resources in the way it considers most convenient, including the payment of dividends or capitalization, without having to call for Shareholders’ Meeting.

ABOUT INDUSTRIAS PEÑOLES S.A.B DE C.V.

Peñoles was founded in 1887. It is a mining group with integrated operations in smelting and refining non-ferrous metals, and producing chemicals. Peñoles is the world’s top producer of refined silver and metallic bismuth. It is among the leading Latin American producers of refined gold, lead and zinc and is one of the main sodium sulfate producers worldwide.

Peñoles’s shares have traded on the Mexican Stock Exchange since 1968 under the ticker PE&OLES.