BNN Commodities: June 25, 2009: Fresnillo Withdraws [06-25-06 11:40AM]
June 25, 2009 (version 1.02)

The transcript from the BNN show segment is presented below. The BBN show segment was viewed at BNN's Web site (viewed June 25 2009).

The GoldMinerPulse transcript of this interview is annotated by time into the call. For example, a (2m2s) denotes the 2 minute and 2 second mark of the call. The hyperlinks inserted into the transcript below are a GoldMinerPulse addition.

The GoldMinerPulse MAG Silver Corp. (NI) 43-101 Metal Valuation Report is located here.

Host Amanda Lang: Six months in, silver mining gaint Fresnillo has dropped its bid for MAG Silver (view Fresnillo's press release here). Those two companies are involved in a joint venture developing a silver properaty in Mexico. Now that one book has closed, what's next for MAG. Dan MacInnis is President and CEO of MAG Silver. Great to have you with us.

Dan (16s): Thanks for having me back Amanda. Its a pleasure to be here.

Host: Lets start with Fresnillo dropping it, I think we a take-under bid, not a take-over bid, why did they back away from it?

Dan (29s): I can't speculate on their motives as to why they would drop the bid but its. It was after an order by the OSC to produce documents that we felt were necessary to do a proper evaluation of the company, prior to Fresnillo actually making a formal bid. You have to keep in mind that this was just an intent to bid.

Host: And those documents relate to, my understanding is information about the property that you co-developed. Was that in order to establish the true value of what is in the ground there?

Dan (1m03s): Actually, it was, it had more to do with information related to the, I guess you'd call it the synergy values. They had always had plans and they were quite clear about that in many of their public documents that the Valdecañas Vein was going to be developed as part of a regional mine mill complex. And so there are certain synergy values of economies of scale and that, that should have been included in a proper valuation of the company to the benefit of the MAG shareholders and Fresnillo elected to not provide us, for what ever reason, access to that information. (host-interesting) And when ordered to do so by the OSC, ah, they ah, they ah, they elected to walk away.

Host: And they still do own though 20% stake of you, 56% stake in the joint venture you guys are running, so where does that leave you? Are you on good terms?

Dan (2m2s): I'd be, I'd be remiss if I were to say the relationship isn't strained. However, we've had 4 technical committee meetings through the last 6 months along with a board meeting of the joint venture company. And I's all been handled in a very professional way. The operation of the joint venture seems to have been by both parties handled in a professional way while the business turmoil went all the way around. We used to joke that we'd have these meetings and there would be an 800lb guerilla in the room and nobody would even talk about it. But the meetings and the day to day business, we are still working on the JV, there is drills turning, there is a scoping level study being carried out right now, so it is business as ususal, so I see no reason, at this point in time for that to a cease. It is still the best undeveloped silver deposit on the planet right now and it makes good business sense for both parties right now to try move the project forward in a timely and economic fashion.

Host: And analysist Raymond James said in some ways it maybe, but this kind of removes a cloud of uncertainty for MAG and you can focus on exploration. So you have this great potential in this project. What else are you doing when we talk about exploration and the money you are spending. Where is that going?

Dan (3m28s): We have a lot of our own 100% owned projects such as Cinco de Mayo and others. Most recently we published some fairly interesting, significant results, on two other projects, Salemex and Lagartos South East. Now we can go back to focusing on following up on those. And prior to this take under bid we were, you know, involved in the usual M&A type activity. We had, still have a fairly robust share price. Our share structure is solid. And looking at merger and acquistion activities as well. So now we can kick-start that. The market place has changed dramatically. There are opportunities and there's money available. The future for precious metals looks good. So, I am fairly confident of the future right now for MAG with this potential take-under bid that was really causing us a lot of grief. The expense and the amount of time that went into that is just ah, it was enormous and in many ways totally unnecessary.

Host: We should note that the same analyst Raymond James has a strong buy of $11.75 target, that is more than double where you are trading today. And they were pointing out there are some drill results coming up from a couple of Cinco de Mayo as well as your JV, that may be a catalyst to move your stock. Would you say that is accurate?

Dan (4m57s): Well the fact that, when you actually go back to when the bid was, or the intent to bid was placed, you can see that this had a dampering effect or a parachute was a drag on our share price. We did not respond to rising price of silver. When the bid went in, silver was at, below $10. It is now approaching $14 again. It has been as high as $16. Many of our peers have gone up over 100 to 160% where as we have only moved about 12% so you can see the effect that this bid had on our share price. There is plenty of up side here for us to rebound, just based on a much better, more robust silver price.

Host: Alright. Dan great to check in with you.

Dan: Thanks very much Amanda. All the best.

Host: Dan MacInnis is president and CEO MAG Silver.

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