What's MAG worth? Well, it depends on what you're looking at. If you're like Ovis, only a 43-101 compliant resource is worth considering. If you're like me, you might think a conservative estimate of the Valdecanas value, plus some value for blue sky and the other properties is warranted. Or, you might prefer to base your estimate on what you think the whole Juanicipio JV is likely worth, plus some value for the other properties. Or you can do all three and make up your own mind.

Based on the 43-101, MAG's share of the JV contains 3.2M tonnes of ore grading 1,011 g/t Ag, 2.06 g/t Au, 2.31% Pb, and 3.94% Zn for a total of 104.5M oz Ag, 211.2 koz Au, 163.8 klbs Pb and 279.3 klbs Zn, with a 4g/t gold equivalent cutoff grade. (I don't know many companies that would throw away 1/8 oz/t gold, but apparently, Fresnillo does.)

Assuming the whole 7.3M tonnes of ore (Fres+MAG) takes 10 years to mine, they would be milling ~2000 t/day, which is a totally feasible amount. From Penoles' releases, their mining costs appear to be around $40/t. Let's use $50, because we're being pessimistic, and there are other costs to be considered (smelter rates, etc.). MAG has ~$55M in the bank right now, and are going to spend $17M this year, so that gives us an idea of their cash position for the next two years.

We now need to make some other assumptions: stable metal prices at today's levels (I'm betting on inflation); 2 year ramp-up with production starting in 2011 ramping, up to 730,000 oz in full swing; production ending in 2022 (yeah, right); and of course, the assumption that they are not going to find a single ounce more Silver, Gold, Lead or Zinc there on the property (again - yeah, right). Pop in today's metal prices, add up the production over the years and bring the production of each year back to the present (discount it, in accountant-speak) and you've got your Net Present Value of MAG Silver, based on their 43-101 alone. Your risk tolerance may vary, so I've done it for several discount rates. Also, we must assign a value to MAG's other properties, and add a little blue sky for additional finds on the Juanicpio JV. I'm a pessimist, so I'll roll that all into $CD1, which is ludicrously low, but what the heck.

Metal Prices:
Silver $14/oz Lead $0.48/lb
Gold $980/oz Zinc $0.49/lb

$CD = 0.80 $USD, MAG Shares Outstanding: 49,210,566 f/d

MAG Silver Net Present Value (CD$):
$12.69 15% Discount Rate
$18.64 10% DR
$23.77 7% DR
$28.14 5% DR

Remember: this is, at minimum, 92% based on the value of the metal in the 43-101 of the Valdecanas vein ALONE.

I don't know from what hat Fresnillo got their offer of ~CD$5.68/share, but it wasn't from any sort of valid economic assesment of the property.