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VANCOUVER, BRITISH
COLUMBIA--(Marketwire - June 22, 2009) - MAG Silver Corp. (TSX:MAG)(NYSE
Amex:MVG) ("MAG") responded today to Fresnillo's announcement
that it has withdrawn its "take-under" bid for MAG.
In today's announcement Fresnillo suggested that its decision to not
proceed with its "take-under" bid was motivated by
uncertainty as to when or if the independent valuation of MAG's shares
would be completed. In MAG's view, Fresnillo's decision to withdraw was motivated
by much different considerations that Fresnillo has not been prepared
to publicly acknowledge.
As previously reported in MAG's press release of May 8, 2009, after
months of seeking to obtain from Fresnillo the critical information
that outlines the manner in which Fresnillo intends to integrate the
Juanicipio property (in which MAG owns a 44% interest) into Fresnillo's
much touted Fresnillo II regional development plan, MAG commenced
proceedings before the Ontario Securities Commission (the
"OSC"). In those proceedings, MAG sought to obtain an order
compelling Fresnillo to produce the requested documents so as to allow
MAG's independent valuator, TD Securities Inc., to complete its
independent valuation. MAG and its Independent Committee have indicated
to Fresnillo, to staff of the OSC and to the OSC itself many times that
MAG wanted the independent valuation completed as quickly as possible.
It has been enormously frustrating for MAG's Board and Independent
Committee to have had their good faith efforts stonewalled and rebuffed
by Fresnillo. Rather than cooperating with the independent valuation
process, Fresnillo instead attempted to subvert the process by
proposing to provide only a narrow subset of information relating to a
fictitious stand-alone development scenario that effectively ignores
the manner in which the very significant existing Fresnillo-owned
infrastructure immediately adjacent to the Juanicipio property and
resulting coordinated development will benefit the development of the
Juanicipio property.
In the view of MAG's Board and its Independent Committee, Fresnillo's
unwillingness to provide the requested information was motivated by a
desire to withhold from the independent valuator critical information
that would readily demonstrate the serious financial inadequacy of Fresnillo's
proposed cash offer price of US$4.54 per share. That price represented
a discount to the closing market price of MAG's shares on the trading
day prior to announcement of the Fresnillo offer and also represented a
discount to the closing price of MAG's shares on the NYSE Amex Exchange
on June 19, 2009, the last trading day prior to Fresnillo's withdrawal.
So what motivated Fresnillo to announce today that after almost seven
months, it is throwing in the towel? On Thursday, June 18, 2009, the
OSC issued an order that compels Fresnillo to provide to MAG extensive
discovery of documents and e-mail records that are germane to
Fresnillo's repeated assertions that the critical documents described
above do not exist. MAG has stated repeatedly that it believes those
assertions are wholly inaccurate and that, in fact, Fresnillo is in
possession or control of numerous documents that demonstrate the very
substantial economic benefits to both MAG and Fresnillo of
incorporating the Juanicipio property into the Fresnillo II regional
development plan. Rather than cooperate with the discovery order issued
by the OSC, Fresnillo chose to walk away from its announced offer.
Commented Dan MacInnis, MAG's CEO: "We were surprised by
Fresnillo's announcement. For many months we have told Fresnillo that
our Board would be happy to recommend to our shareholders an offer that
represents fair value for our shareholders. We also have repeatedly
indicated that a cornerstone for that determination is an independent
valuation that properly considers the manner in which our world class
asset actually will be developed, utilizing the vast existing
infrastructure in the Fresnillo area. Unfortunately, Fresnillo flat out
refused to give the independent valuator access to the highly relevant
information."
Continued Mr. MacInnis: "This has been a challenging episode in
the life of our company. Fresnillo bought almost 20% of our shares to
give it a tactical advantage in making its offer, but then refused to
comply with our good faith informational requests tied to the
independent valuation that the law required us to commission to
safeguard the interests of MAG's minority shareholders. Fresnillo has
put our Board, our Independent Committee and our minority shareholders
through the wringer and then walked away when ordered by the OSC to
comply with our request for discovery relating to the critical missing
information."
The future looks bright for MAG's shareholders. On the trading day
prior to the date Fresnillo announced its offer, MAG's shares closed at
a price of $5.91 (US$4.75) and the spot price of silver was US$10.30
per ounce. Since the announcement date, the silver price has increased
by approximately 53%, and the shares of a number of other Canadian
listed silver exploration/development companies have increased by an
average of approximately 160%.(1) In contrast, during the same period,
the shares of MAG are only approximately 12% higher. MAG's board
believes that this discrepancy is largely attributable to the capping
effect of the Fresnillo offer.
Commented Mr. MacInnis: "We are hopeful that our shareholders can
now benefit from the silver price rally that has occurred over the last
six to seven months. We intend to commence discussions with Fresnillo
regarding the best way to move forward with the development of our
jointly owned world class Juanicipio silver project. MAG also intends
to intensify its exploration activities on its promising portfolio of
Mexican exploration properties and to consider a number of other
business development initiatives that were put on hold in order to deal
with the Fresnillo offer. We believe there are substantial value
creation opportunities ahead for our shareholders and now is the time
to capture them, free from the distractions of the Fresnillo offer."
On behalf of the Board of MAG SILVER CORP.
Dan MacInnis, CEO & Director
(1) Trading data compares closing prices on the TSX/TSX-V on December
1, 2008 to closing prices on June 19, 2009. Companies included in this
comparison are Minco Silver Corporation, Aquiline Resources Inc., Orko
Silver Corp., ECU Silver Mining Inc., US Silver Corporation, Bear Creek
Mining Corporation and Sabina Silver Corporation; trading and silver
prices obtained from Bloomberg.
This release includes certain statements that may be deemed to be
"forward-looking statements" within the meaning of the US
Private Securities Litigation Reform Act of 1995. All statements in
this release, other than statements of historical facts are forward
looking statements, including statements that address future mineral
production, reserve potential, exploration drilling, exploitation
activities and events or developments. Forward-looking statements are
often, but not always, identified by the use of words such as
"seek", "anticipate", "plan", "continue",
"estimate", "expect", "may",
"will", "project", "predict",
"potential", "targeting", "intend",
"could", "might", "should",
"believe" and similar expressions. These statements involve
known and unknown risks, uncertainties and other factors that may cause
actual results or events to differ materially from those anticipated in
such forward-looking statements. Although MAG believes the expectations
expressed in such forward-looking statements are based on reasonable
assumptions, such statements are not guarantees of future performance
and actual results or developments may differ materially from those in
the forward-looking statements. Factors that could cause actual results
to differ materially from those in forward-looking statements include,
but are not limited to, changes in commodities prices, changes in
mineral production performance, exploitation and exploration successes,
continued availability of capital and financing, and general economic,
market or business conditions, political risk, currency risk and
capital cost inflation. In addition, forward-looking statements are
subject to various risks, including that data is incomplete and
considerable additional work will be required to complete further
evaluation, including but not limited to drilling, engineering and
socio-economic studies and investment. The reader is referred to the
Company's filings with the SEC and Canadian securities regulators for
disclosure regarding these and other risk factors. There is no
certainty that any forward looking statement will come to pass and
investors should not place undue reliance upon forward-looking
statements.
Cautionary Note to U.S. Investors: The U.S. Securities and Exchange
Commission permits U.S. mining companies, in their filings with the
SEC, to disclose only those mineral deposits that a company can
economically and legally extract or produce. We use certain terms in
this press release, such as "Inferred resources," that the
SEC guidelines prohibit U.S. registered companies from including in
their filings with the SEC.
Please Note:
Investors are urged to consider closely the disclosures in MAG's annual
and quarterly reports and other public filings, accessible through the
Internet at www.sedar.com
and www.sec.gov/edgar/searchedgar/companysearch.html /
http://www.sec.gov/EDGAR.
Neither the Toronto Stock Exchange nor the New York Stock Exchange Amex
US LLC has reviewed or accepted responsibility for the accuracy or
adequacy of this news release, which has been prepared by management.
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