The low ball bids are starting to roll in folks. I'm sure many more to come with the suppressed PM markets.

Mag Silver to receive $4.54 (U.S.) bid from Fresnillo

2008-12-01 18:12 ET - News Release

Mr. Jaime Lomelin of Fresnillo reports

FRESNILLO PLC INTENDS TO ACQUIRE MAG SILVER

Fresbal Investments Ltd., a subsidiary of Fresnillo PLC, has informed Mag Silver Corp. that Fresbal intends to make a formal offer to Mag Silver shareholders for all of the outstanding common shares of Mag Silver not owned by Fresnillo PLC and its affiliates for $4.54 (U.S.) per share in cash. Fresnillo PLC and its affiliates currently own approximately 19.8 per cent of the outstanding common shares of Mag Silver.

The offer price represents a 12.38-per-cent premium to the 20-day volume-weighted average trading price of Mag Silver shares on the American Stock Exchange for the period ending Nov. 28, 2008.

Pursuant to applicable Canadian law, a formal independent valuation is required to be obtained by Mag Silver prior to mailing the offer to Mag Silver shareholders. Fresbal has requested in writing that Mag Silver retain a valuator to complete such valuation. Fresbal intends to mail its takeover bid circular to Mag Silver shareholders as soon as practicable upon receipt of the completed valuation.

Fresbal does not intend to amend the offer price based on future discussions with Mag Silver or based upon the results of the valuation.

Fresbal will have sufficient funds available and the closing of the offer will not be conditioned on obtaining financing. This will not preclude Fresbal from obtaining financing from third parties.

The offer will be subject to customary conditions, such as a minimum tender and the waiver of Mag's shareholders rights plan. If the offer is completed, Fresbal intends to acquire any remaining common shares not owned by it or its affiliates at the price per common share paid in the offer by means of the applicable statutory second step transaction. Details of the terms and conditions of the offer will be provided in Fresbal's takeover bid circular, when filed.

On Nov. 13, Macquarie Capital Markets Canada Ltd., acting as adviser to the special committee of Mag Silver, outlined a conceptual transaction involving Mag Silver's interest in the Juanicipio project to Fresnillo's financial advisers, Scotia Capital. After considering the merits of this proposal, Fresnillo concluded that the proposal did not address its interests. Fresnillo has informed Mag Silver of this conclusion.

Pursuant to the requirements of applicable Canadian and United States securities laws, Fresnillo will update its previous early warning report dated Oct. 8, 2008, filed with the Canadian provincial securities authorities and amend the Schedule 13D on file with the United States Securities and Exchange Commission to reflect Fresbal's intention to make the offer.

This news release is for informational purposes only and is not an offer to buy or the solicitation of an offer to sell any securities. Mag shareholders and other interested parties are urged to read Fresbal Investments' takeover bid circular and other relevant documents filed with the applicable Canadian and United States securities authorities when they become available.

The following letter was delivered to Mag Silver by Fresbal Investments on Dec. 1, 2008.

QUOTE

December 1, 2008

Dan MacInnis

President and CEO

Mag Silver Corp

Dear Dan,

Fresbal Investments Ltd., a subsidiary of Fresnillo Plc. intends to make a formal offer for all of the outstanding shares of Mag Silver Corp not owned by Fresnillo or its affiliates for US$4.54 per share in cash. The offer will provide Mag shareholders with a liquidity option and the price represents a 12.38% premium to the 20 day volume weighted average trading price of Mag Silver shares on the American Stock Exchange for the period ending November 28, 2008.

Fresbal will have sufficient funds available and the closing of the offer will not be conditioned on obtaining financing. This will not preclude Fresbal from obtaining financing from third parties. The offer will be subject to customary conditions, such as a minimum tender and the waiver of Mag's Shareholders Rights Plan.

Multi-Lateral Instrument 61-101 requires an independent valuation prior to mailing this offer to Mag shareholders. Pursuant to section 2.3 of MI 61-101, we are formally requesting that an independent committee of Mag's board of directors retain a valuator and supervise the preparation of a valuation in a timely manner.

Based on your press release dated October 15, 2008, we understand that Mag has created an independent committee of directors, which has been considering Mag's strategic alternatives, and retained financial advisors and legal counsel, which should help to expedite this request. Our advisors have informed us that we should reasonably expect the valuation to be completed within 30 days.

The best interests of the shareholders of Mag will be met by providing the valuation as soon as possible, as Fresbal intends to mail its formal takeover bid circular to Mag shareholders as soon as practicable upon receipt of the completed valuation.

We have given considerable thought to the price that we are prepared to offer for the Mag shares and have no intention of amending the price based on discussions with Mag or based upon the results of the formal valuation. That said, we would be happy to discuss the timing and logistics of the bid process with you at your earliest convenience, so as to ensure that Mag shareholders may receive this liquidity option in the most timely manner.

Sincerely,

Fresbal Investments Ltd.

Jaime Lomelin

CEO

UNQUOTE