First Majestic Initiates NAFTA Arbitration Process Against Mexico for Violating International Law

VANCOUVER, British Columbia, May 13, 2020 (GLOBE NEWSWIRE) -- FIRST MAJESTIC SILVER CORP. (the "Company" or “First Majestic”) announced today that the Mexican tax authority, the Servicio de Administracion Tributaria (“SAT”), has by its various actions exhibited a total disregard for the applicable provisions of three separate double taxation treaties that it has entered into with Canada, Barbados and Luxembourg, which are relevant to First Majestic and its subsidiaries.

SAT has repeatedly and unilaterally chosen to reject requests for dispute resolution procedures, known as mutual agreement procedures (“MAPs”), contained within those three treaties designed for addressing differences in interpretation and application of those treaties. According to the Company’s advisors, such action is unprecedented not only for Mexico but internationally. In addition, notwithstanding Mexican law and the 2012 Advance Pricing Agreement negotiated and finalized between the SAT and Primero Empresa Minera, S.A. de C.V. (“Primero”), its Mexican subsidiary, confirming Primero’s basis for paying taxes on the price Primero realized for silver sales between 2010 and 2014, the SAT has unlawfully opted to ignore the legal existence of this Advance Pricing Agreement.

While the Company has made several attempts to seek to resolve its differences with the SAT using both local administrative and legal procedures and those contained within the treaties for avoidance of double taxation, and as well through diplomatic discussions, all such efforts have been met with actions of SAT intended to intimidate the Company, its subsidiaries and its employees, including notifications to Primero to secure amounts it claims are owed pursuant to its reassessments issued in violation of the terms of the Advance Pricing Agreement. These notifications impose restrictions on Primero’s ability to deal with its fixed assets until this matter is resolved.

The Company has challenged SAT’s intimidation tactics through all Mexican domestic means available to it, including a constitutional challenge (called an “amparo”) before a District Court, and a complaint before Mexico’s Federal Taxpayer Defense Attorney's Office (known as “PRODECON”), which proceedings have yet to be resolved and, due to the ongoing COVID-19 crisis, the other remaining Mexican courts are currently unavailable for further hearings on these matters. The Company believes that, in addition to being contrary to various provisions of the Federal Constitution of the United Mexican States and Mexican domestic law, and Mexican court decisions, SAT’s actions contravene international law principles. In the Company’s view, these actions are neither fair nor equitable, are discriminatory against the Company as a foreign investor and amount to a denial of justice under international law. The Company is extremely disappointed that the unwarranted actions and threats of SAT, have continued at a time when the Company is focussed on protecting and preserving the employment and livelihood in Mexico of thousands of employees during the COVID-19 worldwide pandemic crisis. The Company’s immediate concern during the COVID-19 pandemic has been focussed on ensuring the health, safety and welfare of its employees and their families.