I think Fresnillo is being more than a little opportunistic in their offer, considering they did not even present the token 30% premium to market in their pitch, and even that would be ridiculously cheap given that MAG is down by about 70% this year. So I do not assume that the offer represents a real benchmark on which to value other asset plays like ECU.

But there are some interesting notes on the MAG story. The company is committed to funding 44% of the development cap-ex at Juanicipio which will probably run into the hundreds of millions of dollars. With only $60 million in the bank, the JV could chew through that very quickly. And do not forget that MAG also has commitments to maintain at the rest of their projects. So MAG is likely in a financial crunch even though they are very well funded on paper.

My guess is that Fresnillo has gone with the hostile bid as an opening gambit. Then they can come back with a buyout offer for just the rest of Juanicipio that will appear very attractive, and let MAG go on with the business of exploring their other very attractive assets. JMHO...

As for ECU, lets be carefull what we wish for. I am happy that Fresnillo is chewing through their own cash reserves very quickly and hence they are unlikely to cast any envious glances at Velardena. We do not want to entertain any takeover issues at this stage of the market. My personal view is that the district will be consolidated by a major in the future. I have great respect for management and trust their judgement, but I do not believe the magnitude of this kind of project can be handled effectively by a small junior. My concern as an ECU shareholder is that we are given fair value for hanging in all these years while that potential is proven up by the drill bit.

cheers!

mike