With the new (revised) resource estimate put out with MAG, it makes sense to repeat the analysis performed in Part One.

Again, this is a Net Present Value calculation based on several factors. MAG's independently produced revised resource estimate for the JV property has a total resource of 10.16 million tonnes of ore, grading 580 g/t Ag, 1.74 g/t Au, 2.04% Pb and 3.43% Zn. MAG's share of this resource is, of course, 44%. MAG still has $55 million in the bank, and their burn rate is approximately $17 million/year.

Metal prices were yesterday's closing prices as posted on Kitco. I believe they are going higher, and that MAG is going to find more silver, both on this property and their others, marking this estimate as a lower bound. Mining/milling costs were set at $50/tonne, which is a conservative estimate based on Penoles' published value of ~$40/tonne. The milling rate is a conservative 2000 t/d, which results in a mine life of 16 years, beginning in 2011. MAG shares are set at 49,210,566 fully diluted as per their website, and MAG's share of the startup costs (which I neglected to list in the Part One details) are estimated to be $125,000,000. I valued all of MAG's other properties (Cinco de Mayo, Batopilas, Lagartos, etc.) at $1/share, since exploration plays, even ones with significant results as those above have, aren't getting a lot of love in the marketplace these days.

Using these values to estimate cash flows over the mine life, and discounting them to the present, I then calculated MAG's NPV/share based on several Discount Rates:

NPV/share CD$:
$9.44 20% DR
$11.32 15% DR
$17.08 10% DR
$21.42 7% DR
$25.31 5% DR

Since Fresnillo's offer price is considerably below any of those values, I sincerely doubt their "offer" will be accepted by the board or the major shareholders.