(Cifras en millones de pesos constantes)

* Billed sales, gross income, EBITDA and operating income all reached record levels in the company's history.
* Production of refined gold (918,675 ounces), refined silver (57.3 million de ounces) and magnesium sulfate (21,200 metric tons) also set six-month records.
* On May 14, Peñoles subsidiary Fresnillo Plc officially began listing its shares on the London Stock Exchange.
* The Board of Directors agreed to pay a cash dividend of Ps17.00 per share starting July 23, 2008.

1.- EXECUTIVE SUMMARY.

Billed sales -not including the results of metal and FX hedging- came to Ps29,956.9 (US$2,819.1 million) and rose +23.5% against the first half of 2007.  This record level was due primarily to higher average quotations on gold, silver, lead, copper and chemical products, as well as higher sales volume of gold, silver, lead, zinc, cathode copper, sodium sulfate, refractory magnesium oxide and magnesium sulfate.  These volume figures include those corresponding to the subsidiary Bal Holdings, the results of which were consolidated starting in this fiscal period.

But a lower average exchange rate (-3.0%), lower average quotations on zinc      (-36.2%), lower production of zinc in the mining business--affected by lower grades at some mines--and lower production of refined zinc in the metals business-due to preventive shutdowns in advance of possible strikes over wage reviews, and a prolongation of programmed maintenance shutdown--erased some of those positive effects.

Gross income was Ps6,355.1 (US$599.4 million), EBITDA was Ps4,995.4 (US$471.3 million) and operating income totaled Ps4,164.9 (US$392.9 million) all higher than in the year-earlier period, by +8.3%, +8.8% and +10.4%, respectively.

Among the operating and market factors that favorably impacted the results were:
(i) Average prices of gold (US$911.4 per ounce), silver (US$17.4 per ounce), lead (US$1.1806 per pound) and  copper (US$3.6829 per pound) were higher than in 2007 by +38.3%, +30.7%, +31.4% and +19.6%, respectively;
(ii) Higher sales volume of refined gold +14.2%, refined silver +13.0%, refined lead +9.6%, refined zinc +11.3%, cathode copper +219.7%, Sodium sulfate +8.1% and magnesium sulfate 12.8%;
(iii) Record production volume of refined gold (918,675 ounces), refined silver (57.3 million de ounces) and magnesium sulfate (21,200 metric tons);
(iv) Expiration of metal hedge positions yielded an opportunity cost of Ps1,026.3, comparing well against Ps1,721.3 in the first half 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$0.0542 per kwh, which was -5.2% lower than the average in the first half of 2007. 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).

Among the factors that negatively influenced the company's results in the period were:
 (i) The average price of zinc (US$1.0304 per pound) was -36.2% lower than in the first half of 2007.  Zinc and silver have the greatest impact on Peñoles' results. 
(ii) Lower revenues from treatment fees in the metallurgical complex due to a lower volume treated--due to preventive shutdowns in advance of possible strikes and a prolongation of a programmed maintenance shutdown at the zinc refinery, combined with the negative effect of the zinc price scale, due to the reduction in the average price of this metal;
(iii) Production of zinc in the mining business was -5.8% lower than in the first half of lat year, due to lower grades in the bodies of ore exploited at Bismark and Francisco I. Madero;
(iv) Production of refined zinc in the metals business (107,104 metric tons) declined -5.9% against the year-earlier period due to preventive shutdowns in advance of possible strikes and a prolongation of a programmed maintenance shutdown at the zinc refinery;
(v) Higher unit cost of natural gas +34.3% and metal coke +20.1%; and
(vi) Lower average exchange rate (-3.0%) due to the peso's continuing strength against the dollar.

The Cost of goods sold rose +35.5% because of:
(a) Higher cost of metals contained in concentrates and other materials purchased from third parties (+23.6%), which are fed into the Met-Mex metal complex to complement production out of Peñoles' own mines.
Internal inflation for Peñoles, which is calculated based on a basket of its most important inputs, was 7.12%, much higher than the rise in the National Consumer Price Index (1.98%).
(b) Higher Production costs (+8.8%), the result of higher costs of contractors, maintenance, and repairs, operating materials and personnel costs.
(c) The entry of the cost of goods sold in the Bal Holdings deal (Ps1,704.4); this cost refers to the sale of purchase/sale of materials from this company, which is being consolidated into the results starting in this fiscal period.

Investment in prospecting rose +22.1%; the funds were used to replace and expand reserves in operating mines, and to study new deposits in Mexico and in South America (Peru and Chile).

As was reported at the time, on May 14 the shares of Peñoles subsidiary Fresnillo Plc began listing on the London Stock Exchange. Fresnillo Plc ran all of the previous metals businesses (gold and silver) for Peñoles, was incorporated under the laws of the United Kingdom, and with tax residence in Mexico. The placement involved the offering of 82,890,159 new shares issued by Fresnillo (primary offering) and 81,674,809 existing shares sold by Industrias Peñoles (secondary placement. The starting quotation price was £5.55 per share.  The gross amount of proceeds from the primary offering (Fresnillo) was US$900.6 million, and for the secondary offering (Industrias Peñoles) it was US$886.8 million, so the total amount of cash raised in the transaction came to US$1,786.8 million.

The proceeds, net of cost of goods sold, commissions and expenses relating to the secondary offering, were Ps7,176.1, and the net cash flow not counting the sales cost of the shares, was Ps8,229.1.  So the net cash flow from the primary offering was Ps9,183.7.

This offering involved 22.9% of the equity of Fresnillo Plc, so Industrias Peñoles has a stock position of 77.1% in that company, and will continue to consolidate the results of the precious metals operations. This transaction represents the first offering by a Mexican company on the London Stock Exchange, and Fresnillo will be included in the stock index of that exchange (the FTSE 100).

Total financing cost rose +Ps79.5 as a result of:
(1) Lower net financial loss -Ps4.8;
(2) Net FX losses of +Ps17.2 vs. a net FX gain of Ps33.6 in the same period of last year, a change of Ps50.8. Although the peso appreciated Ps0.5385 against the dollar in that period, the quarterly loss was due to the difference between the exchange rate in effect at the time of the placements of shares in Fresnillo Plc, and the FX rate in effect at the close of the period. This entry of resources caused the net FX position to turn around from a liability to an asset position in that period; and
(3) In 2007, the company entered net monetary position gains of Ps33.5.  In 2008 no effect whatsoever was entered on this line because of a change in financial information accounting standards (Bulletin B-10, inflation effects).

Because of the company's gains on the secondary offering, income tax rose Ps2,043.4.  Similarly, minority interest was higher due to the placement of the shares of Fresnillo Plc.

The following table sums up all these effects:

	2008 2007 % Chge.     Billed sales              Ps 29,956.9 Ps 24,247.2 +25.3%     Net sales (*)             28,930.6 22,525.9 +28.4     Gross income                 6,355.1 5,867.3 +8.3     EBITDA  4,995.4 4,592.0 +8.8     Operating income             4,164.9 3,771.1 +10.4     Costo Integral de Financiamiento 247.3 167.8 +47.4     Other Expenses (Proceeds)           460.3 270.0 +190.3     Net income                   7,279.7 2,226.1 +227.0

(*)Includes revenues from hedging activity.

Comparing the operating results for the first six months of 2008 against those of the same period of 2007, we note the following changes:

In the Mining business, metal contents of gold, silver and lead were similar to those of last year.  In zinc, however, production was lower than in 2007 (-5.8%) because of lower grade in the areas exploited, and lower recovery of metals at Francisco I. Madero and Bismark.  The company is currently preparing new areas for development in these mines, which should return them to their normal pace of production.  In the case of cathode copper, greater operating continuity in the Milpillas mine allowed for a production increase of +4,043 metric tons.

In the Metals Business, thanks to the reduction in inventories in process and higher entries of concentrates and semi-processed materials rich in metal content,, production of refined gold and refined silver increased to record levels, while production of refined lead in the metal complex was slightly higher than the preceding year.  However, production of refined zinc was affected by preventive shutdowns at the zinc refinery due to the possibility of a strike over wage reviews, which fortunately did not take place, as well a prolongation of the programmed shutdown for annual maintenance.

In the second quarter the company completed the process of securing a bank loan for the equivalent of US$530.0 million. With this financing, it paid off private placements in 1997 (US$380.0 / 8.39% million Structured Silver Payable Notes) and in 2006 (US$377.0 8.39%/6.55% Series A senior notes; 6.55% Series B senior notes; y 6.65% Series C senior notes).  This new financing was syndicated with 15 local and international banks, and has a term of 3 years. With this new financing, as well as the debt rolled over, the total long-term debt of Industrias Peñoles, S.A.B. de C.V. and its Subsidiaries went from US$591.6 million to US$666.6 million.

In the first half of 2008, Gross Cash Flow from Operation totaled Ps4,560.6. Among the primary uses of these resources were:
(i) Cash flow used in operations, Ps1,917.0 mainly:
  (a) Increase in accounts receivable (Ps320.1) primarily because of an increase in portfolio resulting from higher sales.
  (b) A decrease in inventories at the metal complex (Ps1,633.5) of materials rich in precious metal content and concentrates of lead and zinc and finished products at Bal Holdings. 
  (c) Increase in other accounts receivable (Ps244.7) primarily recoverable VAT taxes--and a decrease in suppliers (Ps138.3).
  (d) Decline in other liabilities (Ps1,104.7) corresponding primarily to profit-sharing payments (Ps521.8) and payments to ore suppliers (Ps497.6).
  (e) Income taxes paid (Ps1,742.7), including provisional and definitive income tax payments and corporate flat tax (IETU)
(ii) Investment in property, plant and equipment, totaling Ps1,683.2 to  replace equipment, and projects, mainly at Met-Mex, Penmont, Milpillas, El Saucito, Velardeña, Química of Rey, Fresnillo and Fuerza Eólica.

Peñoles continued to invest heavily in exploring new deposits and developing mining projects.  At the Velardeña project, located in the state of Coahuila, it has developed an intense systematic drilling program to define mineralized bodies in detail, with the aim of generating enough zinc ore resources in 2009 to start a new mining operation. Zinc and copper operations in Sonora, lead and zinc en Guanajuato, lead, zinc and copper in Zacatecas and copper and gold in Chile, are all the object of detailed studies to determine their mining potential.

From prospecting in the areas of influence surrounding the Naica mining unit in Chihuahua, and Francisco I. Madero in Zacatecas, the company has increased its inventory of mineral resources necessary to guarantee the continuity of its operations and possibly expand production. Diamond bit drilling at Fresnillo II, a gold and silver project, has made considerable progress.  Meanwhile, drilling at the Jarillas and Valdecañas vein has successfully identified mineralized zones.  Peñoles is continuing diamond-bit drilling and prospecting at the Soledad and Dipolos, San Julián, Orysivo and San Juan. 

In accordance with the faculties delegated in the General Ordinary Shareholders' Meeting of Industrias Peñoles, S.A.B. de C.V., held on March 31, 2008, the Board of Directors agreed to pay a cash dividend of Ps17.00 (seventeen thousand Mexican pesos 00/100) per share on each of the 397,475,747 shares issued and outstanding payable as of Wednesday, July 23, 2008. This dividend was paid out of the net fiscal earnings (CUFIN) account.

2.- ECONOMIC CLIMATE AND METALS PRICES.

	2Q07 1Q08 2Q08   Inflation (%):   ..In the period                             (0.41) 1.49 0.53   ..12 months                                 4.01 4.24 5.25   FX rate (peso/dollar):   ..Close                                  10.7926 10.6962 10.2841   ..Average                                10.8873 10.8101 10.4374

	Gold ( US$/Oz) Silver ( US$/Oz) Lead ( US$cts/lb) Zinc ( US$cts/lb)     1Q 2007                       650.27 13.29 81.04 156.75     2Q 2007   667.24 13.32 98.70 166.18     3Q 2007   681.12 12.70 142.57 146.37     4Q 2007   788.02 14.24 145.81 118.99     Average 2007 696.66 13.39 117.03 147.07     1Q 2008 926.78 17.62 131.49 110.22     2Q 2008 895.95 17.17 104.64 95.86     % Chge. 2Q08 vs 2Q07 +34.3 +28.8 +6.0 -42.3     % Chge. 2Q08 vs 1Q08 -3.3 -2.6 -20.4 -13.0     % Chge. 2Q08A vs 2Q07A +38.3 +30.7 +31.4 -36.2

Highlights of the quarter:

Gold: average quotations in the quarter dropped -3.3% compared to the first quarter of the year. The price of this metal was affected by an announcement by the International Monetary Fund (IMF) on the sale of some of its gold reserves, the settlement of long positions in Exchange Traded Funds (ETFs), a 21% reduction in demand for gold for the manufacture of jewelry, and a 50% decline in demand from India, which is the largest consumer in the world, lower demand from Turkey, and increasing concerns over inflation risks in the United States.
 
Silver: in the second quarter, average quotations slipped -2.6% compared to the immediately preceding quarter. Silver was affected by the slide in financial markets, weak fundamentals, and increase in production by the Coeur D'Alene mining company.

Lead: the average quarterly price of this metal fell by -20.4% from the first quarter of the year. Quotations were affected by a rise in inventories on the London Metal Exchange (LME) and the settlement of long positions by mutual funds in response to the lack of a clear trend, and fundamental news. 

Zinc: the average quotation declined -13.0% from its first-quarter level. The price of this metal was affected by a selloff among mutual funds and high inventories on the LME. Analysts expressed pessimism over zinc due to the large quantity of new mines and expansions that will begin operating over the course of this year, in addition to weak demand due to a  slowdown in the galvanized steel industry.

3.- OPERATING RESULTS - PRODUCTION VOLUME.

	Unidad 2Q07 1Q08 2Q08     Mining Division:     Milled ore         (000 tonnes) 2,115 2,078 2,148     Deposited ore (a) (000 tonnes) 2,868 3,373 3,813     Gold (kg) 3,030 3,136 3,130     Silver (tonnes) 377.0 348.6 369.7     Lead (tonnes) 16,744 15,070 15,531     Zinc (tonnes) 47,589 45,664 46,004     (a) La Herradura: open-cut mine. Milpillas     Metals  Division:     Gold (kg) 13,528 14,315 14,260     Lead  (tonnes) 880.8 852.0 929.9     Zinc (tonnes) 35,583 35,788 36,168     Zinc (tonnes) 60,396 49,774 57,330     Chemicals Division:     Sodium sulfate (tonnes) 149,000 154,000 153,000     Magnesium oxide (tonnes) 19,346 13,291 21,460     Ammonium sulfate (tonnes) 45,493 44,046 50,319     Magnesium sulfate (tonnes) 9,150 9,450 11,750

Mining Business (metal content in concentrates and other materials)

*Change 2Q08 vs. 2Q07 YTD:

- Lead (+3.6%): higher recovery at Tizapa, Bismark and Sabinas, higher milled ore at Tizapa and Naica and higher grade, recovery and milled ore at La Ciénega.
- Zinc (-5.8%): lower grade at Bismark and Naica, lower grade and recovery at Fresnillo and lower grade, milled ore and recovery at Francisco I. Madero.

*Change 2Q08 vs. 2Q07:

- Gold (+3.3%): higher milled/deposited ore and recovery at Tizapa and Penmont and higher milled ore at La Ciénega, Fresnillo and Naica.
- Lead (-7.4%): lower grade and recovery at Sabinas, Fresnillo and Naica, lower grade at Tizapa and Bismark and lower grade, milled ore and recovery at Francisco I. Madero.
- Zinc (-3.3%): lower grade at Tizapa and Bismark, lower grade and recovery at Naica and Fresnillo and lower grade, milled ore and recovery at Francisco I. Madero.

*Change 2Q08 vs. 1Q08:

- Silver (+6.1%): higher milled/deposited ore at Fresnillo, Naica and Penmont, higher grade, milled ore and recovery at Sabinas, higher milled ore and grade at Tizapa and higher recovery at La Ciénega.
- Lead (+3.1%): higher milled ore at Naica and Fresnillo and higher grade and milled ore at La Ciénega and Sabinas.

Metals Business (production of refined metal):

*Change 2Q08 vs. 2Q07 YTD:

- Gold (+8.0%): increase due to preparations for shutting down the plant in anticipation of a possible strike, and greater inflows of semi-processed materials, plus inventory reduction.
- Silver (+3.8%): higher due to increased entries of materials rich in precious metal content, and inventory reduction.
- Lead (+3.3%): because last year there were lower receipts and treatment of lead in concentrates at the foundry.
- Zinc (-10.9%): lower because of a prolongation of the programmed shutdown due to difficulties with the boiler, shutdowns at the toasting plant (electrical failures) and normalization of operations after the plant was shut down in advance of a threatened strike over wage reviews.

*Change 2Q08 vs. 2Q07:

- Silver (+5.6%): higher due to a reduction inventory reductions and preparations for a preventive plant shutdown in advance of a possible strike.
- Gold (+5.4%): higher entries of semi-processed materials and inventory reduction.
- Lead (+1.6%): higher because of a lower amount of semi-processed material received and treated from the lead foundry the previous year.
- Zinc (-10.0%): lower due to problems in the toasting area, the leaching and filtering area, and prolongation of the programmed shutdown for major maintenance.

*Change 2Q08 vs. 1Q08:

- Zinc (+15.4%): higher due to a programmed shutdown to deal with damage in the footing of the boiler, shutdowns at the toasting plant and a normalization of operations after plant shutdowns two prepare for a possible strike in the first quarter.
- Silver (+9.1%): higher due to inventory reduction.

Chemicals Business (production of chemical products):

*Change 2Q08 vs. 2Q07 YTD:

- Magnesium sulfate (+30.5%): The increase was due to greater product availability. In 2007 corrective maintenance was performed on the hydroxide reactor and there were problems with low concentration in the brine.
- Ammonium sulfate (+8.8%): higher due to an increase in demand.
- Sodium sulfate (+3.0%): in 2007 there were problems with supply of electricity to the plant from the CFE and the preventive maintenance as moved up; in 2008, however, the plant benefited from operating continuity and improvements made to process a higher volume of production
- Magnesium oxide (-4.8%): reduced to give preference to production of flame retardant, to adjust to sales needs, and corrective maintenance to the rotating furnace.

*Change 2Q08 vs. 2Q07:

- Magnesium sulfate (+28.4%): higher because of greater product availability.
- Magnesium oxide (+10.9%): higher because of operating continuity and increased inventory availability.
- Ammonium sulfate (+10.6%): higher due to an increase in demand.
- Sodium sulfate (+2.7%): higher due to operating continuity and difficulties with electrical energy supply in 2007.

*Change 2Q08 vs. 1Q08:

- Magnesium oxide (+61.5%): higher due to a recovery of production following failures in the rotating furnace.
- Magnesium sulfate (+24.3%): increased because in the first quarter of 2008 there had been delays in the supply of sulfuric acid and failures in the hydroxide reactor.
 - Ammonium sulfate (+14.2%): higher due to low inventories of solution in the first quarter of 2008.

4.- FINANCIAL RESULTS.

A) Comparative analysis 2Q08 vs. 2Q07:

	(Millions of pesos) 2Q08 2Q07 Chge (Ps)   % Chge.     Net sales (*) Ps 14,165.5 Ps 11,641.4 2,524.1 21.7     Gross income 3,503.4 2,981.2 522.2 17.5     Gross margin 24.7 % 25.6 %     EBITDA 2,791.9 2,306.4 485.5 21.1     EBITDA margin 19.7 % 19.8 %     Operating income 2,340.0 1,880.4 459.6 24.4     Operating margin 16.5 % 16.2 %     Net income 6,260.6 1,204.6 5,056.0 419.7     Net margin 44.2% 10.3 %

(*) Includes revenues from metal and FX hedges.

The main changes are discussed below:

Net sales totaled Ps14,165.5 rising +Ps2,524.1 (+21.7%). The growth breaks down as follows:
a) Higher sales volume, primarily of gold, silver, and lead;
b) Higher prices on practically all the products sold except zinc;
c) Lower average FX rate (Ps10.4374 vs Ps10.8873 per dollar);

In dollar terms, net sales came to US$1,357.4 million, made of (billed) sales of US$1,397.1 million and hedging losses of US$39.7 million.

El Cost of goods sold rose +Ps2,001.9, due to the following:
a) Higher Production costs (+14.4%)  because of a higher cost of shipping, spare parts and personnel; and
b) Higher Metals costs -net of treatment fees- due to higher prices.

Because the +Ps2,524.1 rise in sales exceeded the increase of +Ps2,001.9 in the cost of goods sold, Gross income rose by +Ps522.2.

Operating expenses--excluding depreciation--rose by Ps711.5, were higher by +Ps36.7 driven by:
a) Higher Prospecting expenses +Ps47.6 mainly at the Francisco I. Madero, Fresnillo, Naica and Tizapa mines, and higher international prospecting expenses (Peru and Chile); and
b) Lower SG&A expenses -Ps10.9

As a result of the higher Gross income (+Ps522.2) and a slight rise in operating expenses (+Ps36.7), EBITDA was Ps2,791.9, an increase of +Ps485.5 (+21.1%), and the EBITDA margin was 19.7 percent.

With the rise in EBITDA (+Ps485.5) and a slight decline in depreciation (+Ps25.9), Operating income rose +Ps459.6, to 16.5% of sales.

In the period in question, total financing cost came to Ps193.5, higher than the charge of Ps86.5 reported in the first half of 2007.  The change of +Ps107.0 breaks down as follows:
a) Lower net interest expense -Ps23.3 due to lower interest on bank loans and lower commissions.
b) Net FX loss of Ps95.5 compared to a 2007 gain of Ps78.2, meaning a negative change of -Ps173.6; and
c) Net monetary loss of +Ps43.3 in 2007; beginning in 2008, this line was eliminated under the new rules on financial accounting.

The Other Expenses (Proceeds) line showed a charge of Ps171.0 compared to a benefit of Ps83.5 in the same period of last year.  Profit-sharing provisions cost the company Ps139.6, which was +Ps7.6 more than in the year-earlier period.

Equity in the earnings of associated companies totaled Ps1.2, a change of -Ps55.8 over the previous year's gain of Ps56.9, chiefly due to the recognition of profits among the companies in which Peñoles owns a minority stake.

The net income tax provision line showed a charge of Ps2,526.6, +Ps2,035.8 higher than in the same period of last year. This change was due to a rise in pretax earnings, which totaled Ps1,877.3 in the second quarter of 2008, resulting from the secondary placement of shares in Fresnillo Plc; the profit in the same period of 2007 was a much lower Ps1,877.3.

The minority interest line showed a gain of Ps226.0, compared to the 2Q07 profit of Ps107.0, the result of recognition of the minority position in Fresnillo Plc.

B) Comparative analysis of results for 2Q08 vs. 1Q08:

	(Millones de pesos) 2Q08 1Q08 Chge (Ps) % Chge.     Net sales (*) $ 14,165.5 $ 14,765. -599.6 -4.1     Gross income 3,503.4 2,851.7 651.8 22.9     Gross margin 24.7 % 19.3 %     EBITDA 2,791.9 2,203.5 588.5 26.7     EBITDA margin 19.7 % 14.9 %     Operating income 2,340.0 1,824.9 515.0 +28.2     Operating margin 16.5% 12.4 %     Net income 6,260.6 1,019.0 5,241.6 514.4     Net margin 44.2 % 6.9 %

(*)Includes metals and FX hedging results.

The main changes are discussed below:

Net sales totaled Ps14,165.5 declining by -Ps599.6 (-4.1%) due to lower sales volume of ammonium sulfate and lower prices on most of the products sold.

The Cost of goods sold declined by -Ps1,251.3, primarily due to lower metals costs( (although quotations were higher, production costs declined particularly in contractors, shipping, insurance and bonding).

The cost of goods sold declined by -Ps1,251.3, which made up for the sales decline of -Ps599.6), so gross income rose +Ps651.8.

Operating expenses -excluding depreciation charges- totaled Ps711.5, a rise of +Ps63.3 resulting from:

a) Higher Prospecting expenses +Ps42.6, mainly because of an increased pace of exploration at Tizapa, Fresnillo, Naica and in Peru.
b) Higher SG&A expenses, +Ps20.7.

Combining the increase in gross income (+Ps651.8) and the rise in Operating expenses (+Ps63.3), EBITDA went from Ps2,203.5 to Ps2,791.9, an increase of Ps588.5, and the EBITDA margin, in proportion to sales, was 19.7 percent.

Total financing cost was Ps193.5 in the quarter. The -Ps139.7 change breaks down as follows:
a) Lower net interest expenses, -Ps98.1 compared to -Ps132.1 in the previous quarter, due to a higher yield on investment and lower interest paid on bank loans;
b) A rise of +Ps173.7 in net FX charges because of an FX loss of Ps95.5, compared to a gain of Ps78.3 in the first quarter of 2008.

The "other expenses" line showed a charge of Ps171.0 compared to a loss of Ps28.0 in the prior quarter, due to the secondary placement of shares in Fresnillo Plc.  At the same time, the profit-sharing provision rose to Ps13.95, comparing negatively against the first-quarter 2008 charge of Ps121.7.

The income-tax provision represented an outlay of Ps2,526.6, compared to Ps454.8 in the previous quarter. The increase in the charge from the first to the second quarter (+Ps2,071.7) was due to higher pretax earnings, a total of Ps9,151.6, compared to Ps1,743.1 in the previous quarter.

Equity in the earnings of associate companies brought a slight benefit of PS12, but this was still better than the first-quarter loss of Ps9.6, because of the recognition of results in companies in which Peñoles owns a minority stake.

Minority interest brought a gain of Ps226.0, compared to the first-quarter profit of Ps138.0; this was because of higher profits at Tizapa.

5.- PROJECTS.

Peñoles continued to invest heavily in exploring new deposits and developing mining projects.  At the Velardeña project, located in the state of Coahuila, it has developed an intense systematic drilling program to define mineralized bodies in detail, with the aim of generating enough zinc ore resources in 2009 to start a new mining operation. Zinc and copper operations in Sonora, lead and zinc en Guanajuato, lead, zinc and copper in Zacatecas and copper and gold in Chile, are all the object of detailed studies to determine their mining potential.

From prospecting in the areas of influence surrounding the Naica mining unit in Chihuahua, and Francisco I. Madero in Zacatecas, the company has increased its inventory of mineral resources necessary to guarantee the continuity of its operations and possibly expand production. Diamond bit drilling at Fresnillo II, a gold and silver project, has made considerable progress.  Meanwhile, drilling at the Jarillas and Valdecañas vein has successfully identified mineralized zones.  Peñoles is continuing diamond-bit drilling and prospecting at the Soledad and Dipolos, San Julián, Orysivo and San Juan. 

6.- DIVIDEND PAYMENT.

In accordance with the faculties delegated in the General Ordinary Shareholders' Meeting of Industrias Peñoles, S.A.B. de C.V., held on March 31, 2008, the Board of Directors approved a cash dividend of Ps17.00 (seventeen thousand Mexican pesos 00/100) per share on each of the 397,475,747 shares issued and outstanding payable as of Wednesday, July 23, 2008. This dividend was paid out of the net fiscal earnings (CUFIN) account.

In the second quarter the company completed the process of securing a bank loan for the equivalent of US$530.0 million. With this financing, it paid off private placements in 1997 (US$380.0 / 8.39% million Structured Silver Payable Notes) and in 2006 (US$377.0 8.39%/6.55% Series A senior notes; 6.55% Series B senior notes; y 6.65% Series C senior notes).  This new financing was syndicated with 15 local and international banks, and has a term of 3 years. With this new financing, as well as the debt rolled over, the total long-term debt of Industrias Peñoles, S.A.B. de C.V. and its Subsidiaries went from US$591.6 million to US$666.6 million.  In addition to this debt, Minera La Parreña, a wholly owned subsidiary of Industrias Peñoles, and a balance of US$132.2 million of a loan taken out to build the Milpillas copper project.