Feb 7, 2009

The MAG Silver-Fresnillo shotgun wedding goes in front of the judge

MAG's independent committee suspended the formal valuation by the

independent valuator this week. The committee claims that joint venture

partner Fresnillo is not providing all the technical and engineering data needed

to fully and legally place a value on MAG's 44% of the Juanicipio property.

Specifically they believe Fresnillo has detailed costs and mine plans that

incorporate the Valdecanas Vein into their Fresnillo II development project. In

part, this is based on the construction of a shaft and ramp (pictured below)

between the Jarillas and Valdecanas veins.

(Photo of shaft and portal development adjacent to MAG/Fresnillo joint venture)

Fresnillo on the other hand claims they have complied with their obligations and

that the evaluator has all relevant information. They have requested that the

OSC review MAG's independent committee's decision.

From my perspective it makes economic sense for Fresnillo to mine the higher

grade Valdecanas Vein as quickly as possible- especially if they own it all. Given

that the development shaft and ramp are well positioned to do so I have to

believe Fresnillo has completed engineering and cost studies. If so, this

information is very important to ascribing a fair and accurate value on MAG's

44% of the joint venture company. I do not however know what information

MAG is in receipt of and therefore cannot comment on the legitimacy of their

claim or Fresnillo's counter claim. We will wait on the OSC and in the meantime

hope for the discovery of another vein.