(Figures in millions of pesos)

	The year-to-date results for all sales, gross income, EBITDA and operating income have been good.
	Peñoles also set production records for the nine-month period (1.3 million ounces of refined gold, 88.2 million ounces of refined silver, and 33,000 metric tons of magnesium sulfate).

1.- OVERVIEW.

Sales--not including metals and FX hedging results--totaled Ps42,780.6 (US$4,064.9 million) and were the highest ever recorded by this company in a nine-month period.  This is +16.9% higher than the YTD results for the same period of 2007.

We also set a record for gross income, of Ps9,548.3 (US$909.5 million), EBITDA  Ps7,465.0 (US$711.0 million) and operating income Ps6,155.8 (US$586.3 million). These were all higher than in the year-earlier period, +13.8%, +16.6% and +19.7%, respectively.

The operating and market aspects that favorably influenced the results were:

(a) The average prices of gold (US$897.4 per ounce), silver (US$16.6 per ounce) and copper (US$3.6164 per pound) were +34.7%, +26.4% and +12.4% higher than in the same period of 2007, respectively;
(b) Higher sales volume of refined gold +9.1%, refined silver +10.5%, refined lead +7.3%, refined zinc +12.2%, cathode copper +123.1%, Sodium sulfate +4.8% and magnesium sulfate +6.4%;
(c) Record production volume of refined gold (1.3 million ounces), refined silver (88.2 million ounces) and magnesium sulfate (33,000 metric tons);
(d) The expiration of metal hedge positions yielded an opportunity cost of Ps1,354.4, comparing well against Ps2,856.0 in the first nine months of 2007; and
(e) The weighted average unit cost of electrical energy received from Termoeléctrica Peñoles (TEP) was US$0.0562 per kwh, which was, compared to US$0.0559 in the same period of last year, an increase of.54%; if we were to purchase the energy on the open market, the weighted average cost per kWh would have been US$0.1060 and US$0.0881 for the same periods of 2008 and 2007 respectively.

Among the factors that negatively influenced the company's results in the period were:

(a) The average price of zinc in the first nine months of the year (US$0.9546 per pound) was -39.0%. lower than in the first half of 2007.  Zinc and silver have the greatest impact on Peñoles' results.

(b) 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;

(c) Production of refined zinc in the metals business declined -7.2% against the same period of last year, due to lower grades in the bodies of ore exploited at Francisco I. Madero;
(d) Production of refined zinc in the metals business (164,247 metric tons) declined -4.6% 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;

(e)Higher unit cost of gas natural +44.6% and metal coke +26.5%; and

(f) Lower average exchange rate (-4.0%) because our revenues are denominated mainly in dollars.

Sales rose by Ps6,189.7 (+16.9%), due mainly to: higher average prices in the period on gold, silver, copper and chemical products, and higher sales volume of gold, silver, lead, zinc, cathode copper, sodium sulfate, refractory magnesium oxide, magnesium sulfate and ammonium sulfate. This volume includes the product sold by our new subsidiary Bal Holdings, which sells products in the United States and whose results are consolidated into those of Peñoles starting in this quarter.

These effects were offset in part by the following: a lower average exchange rate (-4.0%), lower average quotations on zinc (-39.0%), lower zinc production in the Mining Business--which was affected by lower grade at Francisco I. Madero--and reduced production of refined zinc in the metals business due to shutdowns to prepare for a possible strike relating to wage revisions, combined with the prolongation of the shutdown for programmed maintenance.

Metals and FX hedging had a favorable impact of Ps1,501.6 (+52.6%). 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

The cost of goods sold rose by Ps6,531.2 (+25.8%), as a result of:

(a) Higher cost of metals contained in concentrates and other materials purchased from third parties, which are fed into the Met-Mex metal complex to complement production out of Peñoles' own mines ($3,471.3).

(b) Inclusion of the cost of goods sold from Bal Holdings (Ps1,977.3), which corresponds to the cost of the products that this company sells. The financial statements of Bal Holdings are consolidated into those of Peñoles starting in this fiscal year.

(c) Higher production costs (Ps637.9) relating to items like personnel, operating materials, major maintenance and repairs, energy (mainly gas and metal coke) and contractors. Average internal inflation for Peñoles, which is calculated based on a basket of its most important inputs, was 9.50%, much higher than the rise in the National Consumer Price Index.

As a result, gross earnings for the first nine months of 2008 were Ps1,160.1 (+13.8%) higher than in the same period of last year, also a new record for the company.

Peñoles' disciplined exercise of administrative expenses is beginning to show its effects, and comparing the first nine months of 2008 against the same period of 2007 we have reduced this line by -1.28%.

Prospecting investment rose +16.4%. This line includes the resources allocated to replenishing and expanding the reserves of Peñoles' operating mines and to study new deposits in both Mexico and in South America (Peru and Chile).

Total financing cost rose +Ps114.1 due to:

(1) Lower financial losses (net), -Ps173.3 primarily because of a greater amount of financial gains in the current quarter, stemming from interest on the investment of the proceeds from the primary and secondary offering of Fresnillo Plc., as was reported at the time.

(2) Higher net foreign exchange-losses of +Ps108.1.  As of the month of May, which is when the proceeds from the primary and secondary offerings of stock in Fresnillo Plc were entered, the company's position in foreign currency went from a net liability to a net asset. Despite this, in the period reported, Peñoles reported a loss on this position due to the following factors: a) the peso's appreciation against the dollar,  +0.0743 at the close of the nine months covered by this report; and b) the difference between the exchange rates at the time the proceeds of those offerings were received and at the close of the reporting period.

3) In 2007, the company entered a monetary position gain of +Ps179.4; due to changes in the financial information reporting standards (eliminating Bulletin B-10, inflation effects), the results do not include any such amount in this quarter.

Income taxes were +186.4% higher due mainly to the profit on the secondary offering of Fresnillo shares.

Because of the placement of 22.9% of the capital of Fresnillo, Plc, the stake of minority shareholders rose, regardless of the results.

The following table sums up the year-to-date data as of third quarters of 2008 and 2007, respectively.

	2008 2007 %chge.     Billed sales $42,780.6 $36,590.9 +16.9     Net sales (*) $41,426.2 $ 33,734.9 +22.8     Gross income 9,548.3 8,388.2 +13.8     EBITDA 7,465.0 6,404.4 +16.6     Operating income 6,155.8 5,144.1 +19.7     Total Fin. Cost 287.1 173.0 +66.0     Other Expenses (Proceeds) 751.9 474.8 +58.4     Net income 8,180.9 2,989.1 +173.7

(*) Includes hedging results

Comparing the operating results for the first nine 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 (-7.2%) 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 +5,823 metric tons (+133.0%).

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 declined -4.6% because of 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 first nine months of 2008, the gross flow of cash from operations totaled Ps7,338.3, in addition to the net proceeds from the offering of Fresnillo Plc, which totaled Ps17,358.1. Among the main uses of funds in operations were the following:

(i) Cash flow used in operations totaling Ps2,875.4, the main components of which were:
  (a) An increase in accounts receivable (Ps182.6) which resulted from the rise in prices, which meant higher sales and consequently a larger portfolio of accounts receivable.
  (b) A decline in inventories (Ps1,316.7) originating from the metallurgical complex, primarily of materials rich in precious metal content and in lead and zinc concentrates.
  (c) An increase in other accounts receivable (Ps221.8) which included advance payments to vendor and contractors, and recoverable VAT.
  (d) A decline in other liabilities (Ps1,425.5) corresponding mainly to employee profit-tax payments (Ps521.8) and payments to ore shippers (Ps853.6).
  (e) Profit taxes paid (Ps2,305.6) including income tax, both provisional and definitive, and IETU.
(ii) Investment in property, plant and equipment, Ps2,740.7 to replace equipment and projects mainly at Met-Mex, Milpillas, the wind energy generation project in the Oaxaca area (50 megawatts), Tizapa, Francisco I. Madero, Velardeña, Fresnillo Plc  and Química del Rey.

The organizational restructuring begun on May 14 with the change in the company's CEO is now almost complete.  Qualified personnel have been placed in key positions of the company, with extensive experience in their field of responsibility. This sold and renewed management team gives us a substantial competitive advantage.

This report reflects a favorable climate and price conditions in the first nine months of the year, as well as the operating discipline and our ability to take advantage of opportunities in costs and expenses--all features that have characterized Peñoles since its beginnings.  It is clear, however, that the company will be affected by the worldwide decline in metals prices and the negative global climate taking shape in the wake of recent events in the financial markets.  We are already evaluating plans of action that will help us to mitigate these effects.

The volatility of the financial markets in the early weeks of October has had a significant impact on peso-dollar parity and on European currencies as well.  Most of this company's revenues are already denominated in foreign currency, however, which creates a natural hedge against this type of event.  In addition, the company has no significant bank debt coming due in the next 2 years, its hedge positions are controlled and consistent with a philosophy of risk management, with volume and amounts congruent with the needs and size of the covered risks; and they are sufficiently disclosed in the public information issued.

As a complement to the above, the company is working on a program of rationalizing cost and investments, and ensuring prudent operation of the business in keeping with these circumstances.

2.- ECONOMIC CLIMATE AND METALS PRICES.

	2Q07 1Q08 2Q08   Inflation (%):   ..In the period 1.62 0.53 1.83   ..12 months 3.80 5.25 5.47   FX rate (peso/dollar):   ..Close 10.9203 10.2841 10.7919   ..Average 10.9599 10.4374 10.3113

	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 quarter 2007 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     2nd quarter 2008 895.95 17.17 104.64 95.86     3rd quarter 2008 869.58  14.92 86.74  80.30                   % Chge. 3Q08 vs 3Q07   +27.7  +17.5 39.2 -45.1     % Chge. 3Q08 vs 3Q07   -2.9  13.1  17.1 -16.2     % Chge. 3Q08A vs 3Q07YTD +34.7 +26.4  +0.2  -39.0

Highlights of the quarter:

Gold: The average quotation on gold in the quarter was -2.9% lower than in the second quarter of the year. This metal was effected by speculators' settlement of some long positions, the dollar's strength against the euro, the decline in crude oil prices and lower demand among consumers.

Silver: Average quotations were down -13.1% from the second to the third quarter. Silver was affected by the downtrend in gold prices and weak fundamentals.

Lead: The average quarterly price of lead fell -17.1% from the second quarter of the year.  Quotations were affected by a resumption of work by striking Peruvian workers, settlement of some long positions by speculative investors, the strength of the U.S. dollar and weak fundamentals.

3.- OPERATING RESULTS: PRODUCTION VOLUME.

	2Q07 1Q08 2Q08 3Q08     Mining Business:       Milled ore (000 Tonnes) 2,115 2,078 2,148 2,139     Deposited ore (000 Tonnes) 2,868 3,373 3,813 3,828     Gold (kg) 3,030 3,136 3,130 2,749     Silver (kg) 377.0 348.6 369.7 362.3     Lead (tonnes) 16,744 15,070 15,531 15,356     Zinc (tonnes) 47,589 45,664 46,004 45,229     (a) Milpillas. La Herradura (open-cut mine)       Metals Business:       Gold (kg) 13,528 14,315 14,260 13,059     Silver (ton) 880.8 852.0 929.9 960.8     Lead (ton) 35,583 35,788 36,168 34,243     Zinc (ton) 60,396 49,774 57,330 57,143      Chemicals business:       Sodium sulfate (ton) 149,000 154,000 153,000 154,000     Magnesium oxide (ton) 19,346 13,291 21,460 22,291     Ammonium sulfate (ton) 45,493 44,046 50,319 49,856     Magnesium sulfate (ton) 9,150 9,450 11,750 11,800

Mining Business (metal content in concentrates and other materials):
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*Change 3Q08 vs. 3Q07 YTD:
------------------------------------
- Lead (+1.3%): higher milled ore and recovery at Fresnillo Plc and Tizapa, higher recovery and grade at Sabinas and higher recovery, grade and milled ore at Bismark.
- Zinc (-7.2%): lower grade, milled ore and recovery at Francisco I. Madero, lower grade at Bismark and lower grade and recovery at Fresnillo Plc and Naica.

*Change 3Q08 vs. 3Q07:
-------------------------
- Zinc (-10.1%): lower grade, milled ore and recovery de Francisco I. Madero and Naica, lower milled ore at Bismark, lower grade at Fresnillo Plc, lower recovery and grade at Tizapa and lower grade and milled ore at Sabinas.
- Lead (-3.1%): lower milled ore, grade and recovery at Naica, lower grade at Fresnillo Plc, lower milled ore and recovery at Francisco I. Madero and lower recovery at Tizapa.
- Gold (-2.0%): lower grade at Fresnillo Plc.

*Change 3Q08 vs. 2Q08:
-------------------------
- Gold (-11.2%): lower grade and recovery de Fresnillo Plc.
- Silver (-2.0%): lower grade and recovery at Francisco I. Madero, lower grade at Fresnillo Plc, lower grade, milled ore and recovery at Bismark and lower recovery at Tizapa.
- Zinc (-1.7%): lower grade at Francisco I. Madero and Fresnillo Plc.
- Lead (-1.1%): lower grade at Fresnillo Plc and lower recovery and grade at Francisco I. Madero.

Metal Business (production of refined metal):
----------------------------------------------
*Change 3Q08 vs. 3Q07 YTD:
------------------------------------
- Silver (+7.0%): higher due to an increase in direct entries of doré and anodic clay, inventory reduction, increased receipts of direct materials, and operating continuity.
- Gold (+3.4%): higher than the year before due to the emptying of cells in the section as part of the preventive shutdown of the plant in advance of a possible strike.
- Lead (+1.0%): last year less lead bullion was received from the foundry and treatment was lower because of a fire at sack house no. 7.
- Zinc (-4.6%): lower because of a prolongation of the programmed maintenance shutdown after roaster package 4 fell on the boiler support; also because of production halts at the toasting-acid plant due to electrical failure and acid leaks, a normalization of operations after preventive plant shutdowns in advance of a possible strike over wages; a change in the radiation changer of the no. 2 roaster boiler, and stabilization of the leaching-purification process.   

*Change 3Q08 vs. 3Q07:
-------------------------
- Silver (+13.7%): higher due to increased receipts of direct materials reach in metal content in this quarter, and lower entries of silver bullion in the third quarter of last year.
- Gold (-5.6%): lower because of higher entries of doré and precipitates to the refinery, and inventory reduction, in the year-earlier period; also, in the third quarter of 2008 there were lower receipts of direct materials and bullion from the lead foundry.
- Lead (-3.4%): lower due to inventory replacement and lower bullion treatment.
- Zinc (-3.1%): lower because of damage to the furnace due to a change in the radiation chamber, a dilution in the circuit due to rainfall, little evaporation because of higher humidity in the atmosphere, and filter maintenance.

*Change 3Q08 vs. 2Q08:
-------------------------
- Silver (+3.3%): higher due to increased entries of materials rich in precious  metal content.
- Gold (-8.4%): lower entries of semi-processed materials in the third quarter of 2008, and lower inventories in the preceding quarter.
- Lead (-5.3%): due to lower receipts and treatment of bullion and for inventory replacement.

Chemical business (production of chemical products):
----------------------------------------------
*Change 3Q08 vs. 3Q07 YTD:
------------------------------------
- Magnesium sulfate (+35.8%): higher because of greater product availability.  In 2007 a corrective maintenance was programmed for the hydroxide reactor, and problems arose due to low PCR in the bring at the no. 6 dam.
- Magnesium oxide (+11.0%): higher because of operating continuity in the dry area, and greater inventory availability.  In 2007 there had been problems with the No. 1 reactor and with a dilution in the system caused by a lack of evaporation and brine.
- Ammonium sulfate (+10.6%): in response to higher demand.
- Sodium sulfate (+3.1%): in 2007 there were problems with CFE supply of electricity to the plant, low availability of hose for cleaning the calenders, and an early start to the preventive maintenance on the no. 45 dryer.  In 2008, however, the area benefited from operating continuity and improvements that allowed it to process a higher volume of product.

*Change 3Q08 vs. 3Q07:
-------------------------
- Magnesium oxide (+49.7%): higher due to operating continuity in the dry area.  In 2007 there had been a dilution in the system due to a low rate of solar evaporation and heavy rainfall.
- Magnesium sulfate (+46.6%): higher because of greater product availability in 3Q08, and low magnesium concentrate in the brine in 3Q07.
- Ammonium sulfate (+14.2%): in response to higher demand.
- Sodium sulfate (+3.4%): higher because of problems with the supply of electricity and operating failures in boilers and compressors in 3Q07.

*Change 3Q08 vs. 2Q08:
-------------------------

1. Magnesium oxide (+3.9%): higher due to ongoing operating continuity.

4.- FINANCIAL RESULTS.

A) Comparative analysis 3Q08 vs. 3Q07

	Million de pesos) 2Q08 2Q07 Chge. (Ps) % chge.     Net sales (*) $12,495.6 $11,209.0 1,286.6 11.5     Gross income $12,495.6 2,520.9 672.2 26.7     Gross margin 25.6% 22.5%     EBITDA 2,469.6 1,812.3 657.3 36.3     EBITDA margin 19.8% 16.2%     Operating income 1,990.9 1,373.0 617.9 45.0     Operating margin 15.9% 12.2%     Net income 901.2 763.1 138.1 18.1     Net margin 7.2% 6.8%

(*) Includes the results of metals and FX hedging activities.

The most important changes are discussed before:

Net sales totaled Ps12,495.6 rising +1,286.6 (+11.5%), which breaks down as follows:
a) Higher sales volume, primarily of silver and lead;
b) Higher prices on some of the products sold, particularly gold and silver
c) Lower average exchange rate (Ps10.3113 vs. Ps10.9599 per dollar);

In dollar terms, net sales came to US$1,214.1 million, which breaks down into billed sales of US$1,245.8 million and hedging losses of US$31.7 million.

The Cost of goods sold rose +Ps614.4 because of the following elements:
a) Higher Production costs (+12.5%) due to the higher cost of fuel, personnel and raw materials; and
b) Higher Metals costs –net of treatment fees- due to higher prices.

Because the +Ps1,286.6 increase in net sales was greater than the increase in the cost of goods sold, which was +Ps614.4, gross income rose by +Ps672.2.

Operating expenses totaled Ps723.6, excluding depreciation, which was an increase of +Ps14.9 resulting from:
a) Higher prospecting expenses +Ps19.9 and
b) Lower SG&A expenses -Ps5.0

Because of the rise in Gross income (+Ps672.2) and the slight increase in operating expenses (+Ps14.9), EBITDA was Ps2,469.6, an increase of +Ps657.3 (+36.3%), and the EBITDA margin was 19.8 percent.

With EBITDA higher (+Ps657.3) and depreciation also rising slightly (+Ps39.4), operating income gained +Ps617.9, coming in at 15.9% of sales.

In the period in question, total financing cost was Ps39.8, which is higher than the charge of Ps5.1 reported in the same quarter of the preceding year.  The +Ps34.7 change is the result of the following:

a) A net financial gain of Ps68.9 in the third quarter of 2008, compared to  a net charge of Ps99.8 in the same period of last year, which was a positive change of +Ps168.7, mainly because of lower commissions and interest on bank loans, and higher yields on investment of the proceeds of the Fresnillo offering.
b) Higher net FX losses, +Ps57.4 more than in 2007; and
c) due to changes in the financial information reporting standards, monetary position effect was not entered this year--last year in the same period, this item brought a net monetary gain of +Ps145.9.

The other expenses (proceeds) line showed a charge of Ps90.0, compared to a charge of Ps116.9 in the third quarter of the preceding year.  Allocations to the profit-sharing reserve were a charge of Ps201.7, +Ps113.6 more than in the year-earlier period.

Equity in the earnings of unconsolidated affiliates was Ps26.6, an improvement of +Ps25.7 over the Ps0.9 figure entered one year earlier. This came primarily from the entry of results of companies in which Peñoles owns a minority stake.

The net income tax provision represented a charge of Ps642.9, +Ps315.5 higher than in the same period of last year, because pretax earnings were higher in 3Q08 than in 3Q07.

Finally, the minority interest line showed  again of Ps141.9, compared to the 3Q07 figure of Ps73.4, because of an increase in minority interest stemming from the placement of Fresnillo Plc.

5.- PROJECTS.

In this period, Peñoles continued to invest heavily in exploring new deposits in Mexico, Peru, and Chile, in project development, and in extending its mineral resources in the areas of influence surrounding its current mining operations.

In Velardeña, Durango, we are carrying out mining work and an intense drilling program of 90,000m in the Antares and Santa María bodies to define whether there is enough zinc ore present to begin a new mining unit.

The projects at Comanjilla, Guanajuato (lead and zinc), Ortega, Zacatecas (lead, zinc and copper) and Racaycocha (copper and gold) in Peru are also being studied in detail to determine their mining potential.

From bore prospecting in the areas of influence surrounding the Milpillas unit in
Sonora, and Madero in Zacatecas, the company has increased its inventory of mineral resources necessary to guarantee the continuity of its operations and possibly expand production.

6.- DIVIDEND PAYMENT

As was announced at the appropriate time, in accordance with the faculties assigned by the General Ordinary Shareholders' Meeting of Industrias Peñoles, S.A.B. de C.V.,  held March 31, 2008, the Board of Directors agreed to pay a cash dividend of Ps17.00 pesos (seventeen pesos 00/100) on every one of the 397,475,747 shares issued and outstanding, as of July 23, 2008; the dividend was paid out of the net fiscal earnings (CUFIN) account.