(All figures in millions of constant pesos)

•Net sales in January-September 2007 totaled Ps33,298.7, rising +19.1% over the same period of 2006. Gross income was Ps8,279.8, up +7.7%, andEBITDA totaled Ps6,321.2, rising +6.0%. These are higher sales and results than any similar period in the company's history.
•Average prices on metals in January-September 2007 increased over the same period of last year, as follows: lead +101.2%, silver +17.2%, zinc +16.3% and gold +10.9%.
•Peñoles turned out 290,907 ounces of gold in the first nine months of the year, higher than in the same period of 2006 and a record for this company's history.
•Refined gold production of 1,295,015 ounces and refined silver production of 82.4 million ounces were also record levels for the January-September period.


1.- EXECUTIVE SUMMARY.

In January-September 2007, Peñoles reported billed sales--not including metals and FX hedge results--of Ps36,113.5 +21.5% higher than in the same nine months of 2006; gross income as Ps8,279.8 higher by +7.7%, andEBITDA was Ps6,321.2, up +6.0%.

In dollar terms, billed sales came to US$3,254.4 million, gross income wasUS$746.0,EBITDA was US$569.4 and operating income was US$457.3, all of them nine-month records.

Excluding extraordinary items in both periods, and primarily the March 2006 extraordinary gain on he sale of the Pinos Altos gold project in Chihuahua, net income in January-September 2007 was Ps2,983.9, an increase of +3.0% over the same period 2006; including extraordinaries, net income was Ps2,950.5, -10.5% below the amount reported in the first nine months of 2006.

The following are the operating and market aspects that favorably influenced the company's results in January-September 2007:

(i) Average prices of gold (US$666.21 per ounce), silver (US$13.11 per ounce),lead (US$1.0744 per pound) andzinc (US$1.5644 per pound) rose +10.9%, +17.2%, +101.2% and +16.3%, respectively, over the same period of 2006;
(ii) Record production volume of refined gold (1,295,015 ounces) and refined silver (82.4 million ounces);
(iii) Higher revenues at the metallurgical complex due to a rise in the volume of concentrates processed for third parties and higher treatment fees; y
(iv) Lower unit cost of energy, like metallurgical coke, -9.1% andnatural gas, -3.9%;
(v) Lower charges for employee profit-sharing (-Ps59.4) because of lower results (against a period that included the gains on the sale of the Pinos Altos project last year);
(vi) A lower devaluation of the peso against the dollar at the close of the period brought foreign-exchange losses (net) of Ps17.5, compared to an FX gain -net- of Ps74.2 in the same period of 2006; y
(vii) A higher net monetary position translated into net monetary position gains of Ps177.1, compared to a net result of Ps134.8 in the same period of 2006. The higher net monetary position gain was due primarily to the restructuring of long-term debt in April 2006.
(viii) Lower income tax provision (-Ps369.7) again because of comparison against a period in 2006 in which the company paid tax on the gains from the Pinos Altos sale.

The positive aspects listed above were offset in part by:

(a) Higher average unit cost of electrical energy (+8.9%) because the annual maintenance at the Peñoles Thermoelectric plant lasted longer than it did in 2006, as well as operating problems and a higher cost of excess electrical energy purchased from the Federal Electricity Commission (CFE). However, the cost in this period was US$32.9 million less than what Peñoles would have paid if it had purchased all of its required electrical energy from the (CFE).
(b) A higher amount paid out in minority interest because of better results from Minera Tizapa, a company in which Peñoles has minority partners.

The expiration of metals hedge positions brought an opportunity cost of Ps2,814.8, compared to Ps1,764.7 in January-September 2006, driven by a sharp rise in metals quotations during the period.The expired positions were taken out in the past to guarantee the company's future margins. In any case, because the unhedged portion of the mining input was greater than the hedged portion, the company reaped the benefits of higher metals prices on that volume.

The cost of goods sold rose +23.4% due to:
(a) Higher metals costs resulting from higher metals prices and a greater volume of metal purchased from third parties in the Met-Mex metallurgical complex, in order to make maximum use of production capacity;
(b) A rise in the production costs (+15.0%), due to higher costs for subcontractors, operating material, major maintenance and repairs, royalties, personnel costs and energy.In addition, this quarter included the costs of the new mining operations at Milpillas, which were not present in 2006.
Internal inflation for Peñoles in the first nine months of year, which is calculated based on a basket of its most important inputs, was 12.30%, higher than the rise in the National Consumer Price Index (2.22%). This substantial increase was due to the higher cost of explosives and reactives, tires, repair tools, equipment parts, and electrical energy.
(c) Higher treatment fees mitigated some of these cost pressures.

Depreciation of fixed assets rose +21.2% due to investments in fixed assets, particularly the startup of the Milpillas mine.

Investment in prospecting rose +38.6%, and was used to replace and augment reserves in the operating mines, as well as to identify and study new deposits in Mexico and South America (Peru and Chile).

Total financing cost declined -Ps39.8 due to:
1) Higher financial losses -net-, +Ps59.3 due primarily to an increased average liability position in long-term debt (US$13.88 million) resulting from the restructuring of debt by Industrias Peñoles in the second quarter of 2006; as well as an increase in short-term loans to finance working capital.
2) Lower net foreign-exchange gains, -Ps56.8 due to the slight depreciation against the dollar and a higher liability dollar position, comparing well against the foreign-exchange loss in the same period of 2006. At the close of the period, the exchange rate was Ps10.9203 per dollar, compared to Ps10.8755 at the close of 2006, a depreciation of +0.41%.
3) Higher net monetary gains, +Ps42.2, the result of a greater net liability monetary position.

The table below sums up the above information:

	Jan-Sep 2007 Jan-Sep 2006 % var.   Billed Sales $36,113.5 $29,729.4 +21.5%   Net Sales (*) 33,298.7 27,964.7 +19.1   Gross Income 8,279.8 7,684.8 +7.7   EBITDA 6,321.2 5,965.3 + 6.0   Operating Income 5,077.6 4,938.8 +2.8   Total Financing Cost 170.7 210.5 -18.9   Other Expenses (Proceeds) 468.6 (433.6) n/a   Net Income w /o Extraordinary Items (**) 2,983.9 2,896.7 +3.0   Net Income 2,950.5 3,298.7 -10.6

(*) Includes hedgings results.
(**) Includes extraordinary items, primarily the sale of projects .

The following sums up the highlights of the company's operations in the first nine months of 2007, compared to those of the same period of last year:

Mines: In general, metallic content of silver, lead and zinc was affected by lower production at La Ciénega, Fresnillo, and Bismark, due to lower grades.Content of silver, lead and zinc at Naica were affected by flooding at the start of the year which slowed the pace of production for four weeks. Naica has been operating normally and at capacity since the second quarter. The Sabinas unit temporarily cut back production for the startup of a new circuit of lead-copper concentrate separation in order to produce higher-quality concentrates. Gold content was basically unchanged due to higher production at La Herradura and higher grade and recovery at Tizapa.

The production of cathode copper at Milpillas was affected by the rainy season, which diluted the concentration of the solution.In addition, anchoring and footing activities are still underway to guarantee the stability of the mine and guarantee the safety of the personnel, so production at Milpillas is still not up to the expected level.

Metals: S the company set new production records for refined gold (1,295,015 ounces) and refined silver (82.4 million ounces) because of higher entries of concentrates from third parties and materials rich in precious metal content. The production of refined zinc was affected by shutdowns in order to conduct corrective maintenance on certain areas of the zinc refinery.

At the close of the period, Peñoles had a total debt equivalent to US$780.9 million. Its current debt load is made up primarily of the following long-term portions:
(i) US$92.5 million from a private placement in 1997;
(ii) US$377.0 million from a private placement of bonds in the second quarter of 2006; and
(iii) US$142.5 million in credit taken out at the end of 2004 to build the Milpillas copper project.

There is also US$164.6 million in short-term debt, used mainly to finance working capital.

At the close of the third quarter of 2007, the gross flow of cash generated by the company's operations came to Ps5,027.2, +33.1% more than in the same period of 2006. This amount, combined with the funds obtained through short-term bank loans, was used to finance:
(i) An increase of Ps1,589.3 in working capital, particularly:
(a) Higher inventories (Ps1,083.0) due to higher prices on metals and entry of a higher volume of materials with precious metal content, and lead and zinc concentrates from third parties.
(b) Reduction in suppliers (Ps526.2) due to payments to ore suppliers. These effects were offset in part by a reduction in Clients (Ps60.3) the result of recoveries in the export portfolio.
(ii) Investment in property, plant and equipment, Ps1,536.4, to replace equipment and projects primarily at Fresnillo, Met-Mex, Penmont, Tizapa, Química del Rey, La Ciénega and Exploraciones Mineras Parreña.
(iii) Payment of dividends to shareholders totaling Ps2,411.6.
(iv) Payment of short-term loans to IPSA and the short-term portion of a long-term credit taken out by Parreña to finance the Milpillas project, for Ps2,712.4.

Cash and temporary investments totaled Ps1,501.3. Some of these funds will be used to make deposits relating to Peñoles' debt and metals hedges.

At the El Saucito project, work moved ahead on construction of the shaft and prospecting ramp, which will allow us to directly determine the mineralization of the deposit, and to go about extracting the metal in the future.An additional vein has been discovered, and so far resources of more than 100 million ounces of silver have been discovered.As regards the Juanicipio project, in alliance with Mag Silver of Canada, mineral resources have been increased to more than 150 million ounces of silver. The Velardeña silver, zinc and lead project in Durango has yielded positive results, and reserves there increased.

2.- ECONOMIC CLIMATE AND METALS PRICES.

	3Q06 2Q07 3Q07   Inflation (%):   In the Period 1.80 (0.43) 1.62   12 months 4.10 3.99 3.80   FX rate (pesos/dollar):   Close 11.0502 10.7926 10.9203   Average 10.9637 10.8873 10.9599

	Gold ( US$/Oz) Silver ( US$/Oz) Lead ( US$cts/lb) Zinc ( US$cts/lb)     1st. quarter 2006 553.98 9.70 56.33 101.70     2nd. quarter 2006 627.40 12.22 49.91 149.33     3rd. quarter 2006 621.50 11.65 53.96 152.56     4th. quarter 2006 614.47 12.59 73.80 190.67     Average 2006 604.34 11.54 58.50 148.56     1st. quarter 2007 650.27 13.29 81.04 156.75     2nd. quarter 2007 667.24 13.32 98.70 166.18     3rd. quarter 2007 681.12 12.70 142.57 146.37     %Change. 3Q2007 vs 3Q2006 +9.6 +9.1 +164.2 -4.1     %Change. 3Q2007 vs 2Q2007 +2.1 -4.7 +44.5 -11.9     %Change. 3Q2007A vs 3Q2006A +10.9 +17.2 +101.2 +16.3

Highlights of the quarter:

Gold: Average quotations in the quarter rose +2.1% compared to the second quarter of 2007. Prices were driven higher by negative figures on the ISM manufacturing index, the Federal Reserve's reduction in the discount rate, interest among speculative funds and physical consumers, positive economic data from Germany, jitters over wage negotiations with South African minors and gold producers in the zone (Anglogold, Ashanti, Gold Fields and Harmony Gold), the strength of demand in markets like Turkey and Dubai, financial uncertainty on a global level, high prices of "soft commodities" and ETFinvestment.

Silver: average quotations fell -4.7% from the previous quarter, affected by selloffs among speculative buyers (flight to quality).

Lead:the average price of lead in the quarter rose +44.5% over the second quarter of 2007. Quotations were pushed up by strong demand for this metal in countries like China, Japan and India, repurchases by producers seeking to restructure hedge positions, positive economic data reported in various countries like Japan and Germany, high consumption for automobile batters in Europe, a prolonged suspension of production by Ivemania in Australia, a decline in inventories on the LME (London Metal Exchange) and purchases by mutual funds.

Zinc: during the quarter the average price of zinc fell -11.9% from the previous quarter. This metal was affected by jitters prompted by the U.S. mortgage crisis, equity market volatility, rising LME inventories, the IMF's downgrade of estimates on global growth, weak housing sale figures and unemployment data in the U.S.

3.- OPERATING RESULTS - PRODUCTION VOLUME.

		Production Volumes
	Unidad 3T06 2T07 3T07     Mining Division :     Milled Ore (Mton) 2,095 2,115 2,187     Deposited Ore (a) (Mton) 2,188 2,868 3,022     Gold (kg) 3,084 3,030 2,805     Silver (ton) 365.4 377.0 361.2     Lead (ton) 15,120 16,774 15,845     Zinc (ton) 47,730 47,589 50,328     (a) La Herradura:open- cut mine     Metals and Chemicals Division :     Gold (kg) 12,877 13,528 13,831     Silver (ton) 764.3 880.8 845.3     Lead (ton) 34,521 35,583 35,441     Zinc (ton) 65,742 60,396 58,272     Sodium sulfate (ton) 155,500 149,000 149,000     Magnesium oxide (ton) 19,402 19,346 14,892     Ammonium sulfate (ton) 45,596 45,493 43,649     Magnesium sulfate (ton) 9,600 9,150 8,050

Mining business (metallic content in concentrate and other materials):
* Change 3Q07 vs. 3Q06 YTD:
- Lead (-6.2%): lower grades at Naica, Fresnillo and La Ciénega and lower milled ore at Naica.
- Zinc (-4.8%): lower recovery and grades at La Ciénega, Naica, Fresnillo and Sabinas and lower milled ore at Naica.
- Silver (-4.7%): lower grade at Fresnillo, lower milled ore and grade at Naica and lower grade and recovery at La Ciénega, Bismark and Sabinas.

* Change 3Q07 vs. 3Q06:
- Zinc (+5.4%): higher milled ore, grade and recovery at Tizapa and Bismark.
- Lead (+4.8%): higher recovery at Sabinas, higher grade and milled ore at F.I Madero and higher recovery and milled ore at La Ciénega, Tizapa and Naica.
- Gold (-9.0%): lower grade and recovery at Penmont and lower grades at Fresnillo and La Ciénega.
- Silver (-1.1%): lower grades at Fresnillo, Bismark and Naica lower grade and lower grade and recovery at La Ciénega.

Metals and Chemicals Business (production of refined metal):
* Change 3Q07 vs. 3Q06 YTD:
- Silver (+10.9%): higher silver content in semi-processed materials from third parties (quarterly production record Apr-Jun).
- Gold (+8.7%): higher receipts of semi-processed materials from third parties and inventory reduction (quarterly production record in the July-September quarter).
- Zinc (-5.8%): lower content due to a shutdown for corrective maintenance in some areas of the zinc refinery.
- Lead (-2.7%): lower receipts of content in concentrates from company mines and third parties to the lead foundry.
- Ammonium sulfate (-14.3%): lower because production had been higher in 2006 due to a reduction of acid inventories and higher receipts of solution.
- Magnesium sulfate (-14.1%): lower because the solution was diluted by heavy rains and also due to corrective maintenance on the reactor.
- Magnesium oxide (-13.1%): lower due to heavy rains that diluted solution, and difficulties in certain areas of the plant.
- Sodium sulfate (-2.1%): problems with the supply of electrical energy from CFE to the plant.

* Change 3Q07 vs. 3Q06:
- Silver (+10.6%): higher receipts of semi-processed materials from third parties and inventory reduction.
- Gold (+7.4%): higher receipts of semi-processed materials from third parties to the refinery, and inventory reduction.
- Lead (+2.7%): higher entry of content in concentrates from third parties to the lead-zinc refinery, and inventory reduction.
-Zinc (-11.4%): shutdown for corrective maintenance in some areas of the zinc refinery.
- Magnesium oxide (-23.2%): dilution of solution due to low evaporation rates and heavy rain.
- Magnesium sulfate (-16.1%): low concentration of solution due to heavy rain.
- Ammonium sulfate (-4.3%): low availability of acid in the lead foundry.
- Sodium sulfate (-4.2%): lower due to problems with the supply of electrical energy from the CFE, and corrective maintenance.

4.- FINANCIAL RESULTS.

A) Comparison of the results for 3Q07 YTD vs. 3Q06 YTD:

	(Millons of pesos) 3Q07YTD 3Q06YTD Chge ($) % Chge.     Billed Sales (*) $33,298.7 $27,964.7 5,334.0 +19.1     Gross Income 8,279.8 7,684.8 595.0 +7.7     Gross Margin 24.9% 27.5%     EBITDA 6,321.2 5,965.3 356.0 +6.0     EBITDA Margin 19.0% 21.3%     Operating Income   5,077.6 4,938.8 138.8 +2.8     Operating Margin   15.2% 17.7%     Net Income   2,950.5 3,298.7 (348.2) (10.6)     net Margin 8.9% 11.8%

(*) Includes metals and FX hedging results.

The main changes are discussed below:
Higher net sales, +Ps5,334.0 (+19.1%) rising from Ps27,964.7 to Ps33,298.7. The increase breaks down as follows:
a) Higher sales volume +Ps1,596.2 due to higher sales of gold, silver, cathode copper and magnesium sulfate;
b) Higher prices +Ps5,059.4 on practically all the products sold;
c) Higher losses from metals and FX hedges -Ps1,050.1;
d) Higher average exchange rate +Ps116.1 (Ps10.9531 vs Ps10.9034 per dollar); and
e) Effects of restating figures of the past year in constant pesos of September 30, 2007, -Ps387.6.

In dollar terms, net sales came to US$3,000.6 million, made of a record level of (billed) sales of US$3,254.4 million and hedging losses of US$253.9 million.

The higher cost of goods sold, +Ps4,739.0 (+23.4%) was the result of:

a) Higher production costs, +Ps887.0(+15.0%) due to a higher cost of contractors, operating material and maintenance;
b) Higher cost of metal--net of treatment fees-- +Ps4,292.8 primarily because of higher prices and a greater volume purchased from third parties; and
c) Inventory movements, consolidation and restatement effects, -Ps440.8.

Because the rise in net sales (+Ps5,334.0) was greater than the increase in the cost of goods sold (+Ps4,739.0), the Ps8,279.8 in gross income was +Ps595.0 (+7.7%), higher and the gross margin (as a percentage of sales) rose to 26.0 24.9 percent.

Operating expenses--not including depreciation-- totaled Ps1,958.5, an increase of +Ps239.0 (+13.9%) due to:
a) Higher prospecting expenses, +Ps193.2 primarily because of a higher pace of exploration in the Herradura corridor and at Fresnillo, and a rise in international prospecting, primarily in South America; and
b) Higher SG&A expenses, +Ps45.8 due to an increase in personnel costs relating to special bonuses and salaries, and an increase in property rental and shipping.

The rise in gross income (+Ps595.0), more than offset the increase in operating expenses (+Ps239.0), so EBITDA came to Ps6,321.2, rising by +Ps356.0 (+6.0%), and the EBITDA margin (in proportion to sales) was 19 percent.

The rise in EBITDA (+Ps356.0) offset the increase in depreciation and amortization (+Ps217.2), so the operating income of Ps5,077.6 was higher by +Ps138.8 (+2.8%), and the operating margin (in proportion to sales) was 15.2 percent.

Total financing cost of Ps170.7, was lower than in 2006 by -Ps39.8; the change breaks down as follows:
a) Net FX losses of Ps17.5, compared to a loss of Ps74.3 in the same period of 2006. In 2007, the peso slipped 0.41% against the dollar, compared to a depreciation of 3.17% in 2006;
b) Higher net monetary position gains +Ps42.2 , resulting form a higher net liability monetary position, which offset the lower inflation rate, and
c) Higher net interest expense, +Ps59.3 mainly because of higher interest on bank loans due to the restructuring of debt in April 2006.

The other expenses (income) line showed a net outlay of Ps468.7 compared to a net gain of Ps433.6 in the previous year. In 2006, the company entered a profit on the sale of the Pinos Altos project to Agnico Eagle, while in 2007 those expenses were made up mainly of provisions for the retirement of fixed assets, restatement of mining works, and donations.

In addition, employee profit-sharing provisions dropped -15.0% from Ps395.2 in 2006 to Ps335.7 in 2007 due to the lower results.
Equity in the results of unconsolidated associates rose in this period, chiefly due to the recognition of profits among the companies in which Peñoles owns a minority stake, totaling Ps52.2, compared to a loss of -Ps51.5 reported in 2006.

The income tax and profit sharing (net) line contained a charge of Ps1,249.0, lower by -Ps369.7 than in the same period of the preceding year. This change was due to lower pretax income(Ps4,490.4) in 2007, compared to an income of Ps5,110.4 in 2006.

Minority interest in the first nine months of the year was Ps290.9, compared to Ps193.0 in 2006. The increased earnings came chiefly from better operating results at Tizapa.

B) Comparative analysis of results for 3Q07 vs. 3Q06:

	( Million pesos ) 3Q07YTD 3Q06YTD Chge($) % Chge.     Net sales (*) $11,445.8 $9,884.8 1,561.0 +15.8     Gross income 2,587.8 2,653.2 (65.4) (2.5)     Gross margin 22.6% 26.8%     EBITDA 1,866.5 2,032.5 (166.0) (8.2)     EBITDA margin 16.3% 20.6%     Operating income   1,419.1 1,646.3 (227.1) (13.8)     Operating margin   12.4% 16.7%     Net income   791.0 1,074.8 (283.99 (26.4)     Net margin 6.9% 10.9%

(*) Includes metals and FX hedging results.

The main changes are discussed below:

Net sales totaled Ps11,445.8, rising +Ps1,561.0 (+15.8%) due to the following elements:

a)Higher sales volume, +Ps300.9 primarily of gold, silver and magnesium sulfate;
b) Higher prices +Ps1,383.6 on most of the products sold, except zinc;
c) Lower average exchange rate (Ps10.9599 vs Ps10.9637 per dollar) -Ps3.2;
d) Higher metals and FX hedging losses, -Ps400.7; and
e) Effects of restating figures in constant pesos of the current quarter and others, +Ps280.4.

In dollar terms, net sales totaled US$1,001.7 million, made up of net (billed) sales of US$1,102.8 million and hedging losses of UUS$87.6 million.
The cost of goods sold rose +Ps1,626.4 due to the following changes:
a) Higher production costs, +Ps314.7 (+15.3%) due to higher costs of contractors, operating material and maintenance;
b) Higher cost of metal--net of treatment fees--+Ps1,194.0 because of an increase in the volume of metal purchased from outside sources; and
c) Inventory movements, consolidation and restatement effects, +Ps117.7.

Because the +Ps1,561.0 rise in net sales was slightly lower than the +Ps1,626.4 increase in the cost of goods sold, gross income fell -Ps65.4, and the gross margin (as a percentage of sales) sank to 22.6 percent.

Operating expenses--not including depreciation effects--came to Ps721.3, +Ps100.6 higher because of:
a) An increase of +Ps84.2 in prospecting expenses, primarily at the La Ciénega and La Herradura corridor units, and international prospecting in South America;
b) Higher administration & general expenses, +Ps16.5.

As a result of lower gross income (-Ps65.4) and higher operating expenses (+Ps100.6), EBITDA was Ps1,866.5,-Ps166.0 lo0wer (-8.2%), and the EBITDA margin was 16.3 percent.

Because of lower EBITDA (-Ps166.0), andhigher depreciation charges (+Ps61.1), operating income declined -Ps227.1, to 12.4% of sales.

In the period in question, total financing cost was Ps7.9, comparing poorly against the benefit of -Ps61.3 reported in the third quarter of 2006. The +Ps69.2 change breaks down as follows:
a) Lower net interest expense -Ps12.9 because of a higher return on investments.
b) Net foreign-exchange losses Ps50.1 compared to a profit of Ps60.8 in 2006, meaning a negative change of +Ps110.8; and
c) Higher net monetary gains of -Ps28.7 primarily due to a higher net liability monetary position;

The other expenses (income) line showed an expense of Ps206.7 compared toPs199.8 in the third quarter of last year. The 2007 charge was related to a greater adjustment in the valuation of fixed assets and mining work; offset in party by a lower profit-sharing provision, -Ps40.0 due to lower results.

Net income tax and profit-sharing provisions were negative by Ps339.1, lower by -Ps138.2 than in the same period of last year.

Equity in the income of unconsolidated associates was Ps1.7, -Ps113.3 lower than the year-earlier gain of Ps115.1, mainly because of a change in the results of the companies in which Peñoles owns a minority position.

Minority interest totaled gains of Ps76.2, compared to the 2Q06 figure of Ps70.8, due to better results obtained at Tizapa.

5.- PROJECTS.

At the El Saucito project, we moved ahead on construction of the shaft and prospecting ramp that will allow us to study mineralized bodies more precisely and extract the ore in the future. To date we have identified resources of more than 100 million equivalent ounces of silver.At the Juanicipio project, in partnership with Mag Silver of Canada, we have identified resources equivalent to more than 150 million ounces of silver.The Velardeña silver, zinc and lead project in Durango has yielded positive results, adding to the company's reserves.