ERIC ZAUNSCHERB, Canaccord Genuity (11/19/2008)
"MAG Silver Corp has reported the latest drill results from the 44%-owned Juanicipio high-grade silver project in Mexico. The partner and operator of the project is Fresnillo plc (FRES : LSE : 1.004 | BUY); Fresnillo has also taken a 19.8% interest in MAG.

Impact

Neutral to positive. Results are consistent with previous intersections and the known inferred resource. We view the growth potential for the main Valdeca as vein as excellent but limited within the Minera Juanicipio JV property. Of greatest import to us is the fact that drilling has resumed on the highly prospective parallel Juanicipio vein situated approximately one kilometre south of the Valdeca as vein...

We are maintaining our SPECULATIVE BUY rating and C$7.50 per share 12-month price target. We estimate a $451 million project NAV including a $398 million NPV(5%) for MAG Silver's 44% interest in Juanicipio with the remainder value being in the company's pipeline exploration interests. MAG Silver had $60.8 million in working capital at the end of Q3/08. The company is currently trading at 0.4x project NAVPS of $9.18 per basic share and 0.5x corporate NAV of $9.49 per adjusted fully diluted share. We apply a target project P/NAV multiple of 0.7x to generate our C$7.50 price target and we feel the 59% projected return continues to justify the SPECULATIVE BUY rating."

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