MAG Silver Leaving Only High-Balls on the Menu

Canaccord Genuity's Morning Coffee (06/23/2009)
"Fresnillo plc, the senior partner on and operator of MAG Silver's 44%-owned Juanicipio silver project in Mexico, has formally withdrawn its proposed offer of US$4.54 per MAG Silver share, announced December 1, 2008. Canaccord Adams Senior Mining Analyst Eric Zaunscherb noted that despite the tumultuous market, MAG Silver's share price rarely traded below Fresnillo's offer price, termed a 'takeunder' by MAG Silver management.

The market never seemed to consider the offer 'fair' value. Zaunscherb had hoped that Fresnillo would increase its offer, but never counted on that in his valuation. Nor did he believe that a white knight would emerge with a competing bid given the minority 44% project ownership. Zaunscherb believes MAG Silver management will now be able to focus on exploration rather than OSC hearings, and will be able to deploy its $53 million in working capital in a fashion dictated by best practices, rather than a defensive posture. His valuation and recommendation were driven by fundamental value rather than in reaction to the 'low-ball' offer. He expects important catalysts, including incremental exploration results and a pre-scoping study over the next few weeks, which may have dramatic impacts on the market."

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