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VANCOUVER, BRITISH COLUMBIA--(Marketwire - May 15, 2009) - MAG Silver Corp. (TSX:MAG)(NYSE Amex:MVG)
("MAG") announces the Company's unaudited financial results
for the three month period ended March 31, 2009. For complete details
of the First Quarter Interim Financial Statements and Management's
Discussion and Analysis please see the Company's filings on SEDAR (www.sedar.com) or on EDGAR (http://idea.sec.gov).
The Company's cash position at March 31, 2009 remained strong at $43.9
million. All amounts herein are reported in Canadian dollars unless
otherwise specified. The Company's cash is all invested with the Royal
Bank of Canada in guaranteed investment certificates or in an interest
bearing current account.
The Company holds 44% of Minera Juanicipio S.A. de C.V. ("Minera
Juanicipio") which in turn holds and
operates the Juanicipio property located in
the Fresnillo District, Zacatecas State,
Mexico. The Company is a party to a Shareholders Agreement with Penoles S.A. de C.V. ("Penoles")
which holds the other 56% of Minera Juanicipio through its majority interest in Fresnillo plc, a U.K.
domiciled subsidiary company listed May 9, 2008 by way of an IPO on the
London Stock Exchange.
On December 1, 2008, the Company was advised of the intention of Fresbal Investments Ltd., a subsidiary of its joint
venture partner, Fresnillo plc, to make an
unsolicited take-over bid for all of the Company's outstanding common
shares not currently held by Fresnillo and
its affiliates at an offer price of US$4.54 cash per share. Fresnillo, an insider by virtue of its approximately 19.8% interest in the Company,
triggered the requirement for a formal valuation by an independent valuator
under the supervision of an independent committee of the Company's
board of directors. On February 1, 2009 the Company announced that the
valuation had been suspended after the independent committee determined
that a proper valuation could not be completed without critical
information which is in the sole possession or control of Fresnillo and which Fresnillo
has refused or neglected to provide to the Company or the valuator. This
information relates to Fresnillo's publicly
disclosed plans to develop the Juanicipio
joint venture property, owned jointly by the Company (44%) and Fresnillo (56%), as part of its Fresnillo
II regional mine development plan.
On May 8, 2009 the Company announced that it has delivered a formal
application for a hearing before the Ontario Securities Commission to
compel Fresnillo to produce the critical
information required to complete the valuation. The Company has also
asked the Ontario Securities Commission to enjoin Fresnillo
from proceeding with its announced "take-under" bid if Fresnillo refuses to comply with any document
production order so as to finally put an end to this take-over bid
threat that has persisted since December 2008.
On May 8, 2009 the Company also announced that it had filed a formal
request for arbitration with the International Court of Arbitration of
the International Chamber of Commerce. The Company is seeking urgent
relief on the grounds that Fresnillo is
attempting to acquire control of the Company on a hostile basis in
breach of the standstill provisions contained in the shareholders
agreement governing the Juanicipio joint
venture. The Company is also seeking relief in relation to other
alleged violations by Fresnillo as operator
under the shareholders agreement.
The Company reiterates that it is taking the above actions to compel Fresnillo to comply with its legal and contractual
obligations to the Company and its minority shareholders which exist to
ensure the fair and equitable treatment in a change of control
transaction. These actions are directed exclusively at enabling the
minority shareholders of the Company to properly assess any bid by Fresnillo to acquire control of the company. Fresnillo, an insider of the Company, should not be
permitted to use its informational advantage opportunistically to
acquire MAG (and its interest in the Juanicipio
joint venture) at a price that does not reflect fair value and that
ignores or hides the distinctive material benefits that will accrue to Fresnillo if it succeeds in acquiring the Company.
Fresnillo has advised the Company that its
44% share of planned 2009 expenditures for Minera
Juanicipio will be US $1.98 million. To March
31, 2009 the Company has contributed approximately $8.2 million to Minera Juanicipio. At the
time of writing four drilling rigs are active on the Juanicipio property conducting a 25,000 metre
program including a definition program on the Valdecanas
Vein, a follow up program on the Juanicipio
Vein, and an 8,000 metre proposed drill program for 2009 for the Encino
Vein.
Accounts receivable at March 31, 2009 totalled $3,307,338 while
accounts payable and accrued liabilities amounted to $4,096,476. Accounts
receivable were comprised primarily of value added taxes repayable to
the Company in Mexico. Accounts payable were due mainly for drilling
conducted on the Company's Mexican projects other than the Juanicipio property. The Company spent $7,259,896
on the exploration of these projects during the period as compared to
$2,594,765 for the same period in 2008. From the total an amount of
$5,305,652 related to drilling on five projects where the Company holds
rights to a 100% interest; Lagartos SE
-$1,481,430; Sierra de Ramirez - $905,877; Salemex
- $624,790; Nuevo Mundo - $174,522; and
$2,119,033 for drilling at Cinco de Mayo
alone, where exploration activities continue property wide. The Company
currently has 2 drill rigs turning on Cinco
de Mayo, and one drilling at Largartos South
East.
The Company's loss for the three months ended March 31, 2009 amounted
to $5.2 million or $0.10 per share as compared to $2.8 million or $0.06
per share for the same period last year. The loss for the three months
ended March 31, 2009 includes the write off mineral property
acquisition costs and deferred exploration costs in the amount of
$3,150,255 ($1,169,411 for the same period in 2008). General overhead
and administration costs for the period amounted to $2.1 million
($832,595 for the same period in 2008). This included increased legal
costs at $625,473 ($71,100 in 2008), proxy solicitation costs of $203,859
(nil in 2008) and $233,077 for shareholder relations expense (2008:
$79,284) and travel costs resulting from efforts to deal with Fresnillo's intended hostile bid as described
above.
About MAG Silver Corp. (www.magsilver.com)
MAG is focused on district scale projects located within the Mexican
Silver Belt. Our mission is to become one of the premier companies in
the Silver Mining Industry. MAG and its partner Fresnillo
plc are delineating a significant new silver vein discovery on the Juanicipio property in Zacatecas State, Mexico. MAG
has also identified a new silver, lead and zinc discovery at its 100%
owned Cinco de Mayo property. MAG is based in
Vancouver, British Columbia, Canada. Its common shares trade on the TSX
under the symbol MAG and on NYSE Amex under the symbol MVG.
On behalf of the Board of MAG SILVER CORP.
Frank R. Hallam, Chief Financial Officer
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, 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.
Neither the Toronto Stock Exchange nor the American Stock Exchange has
reviewed or accepted responsibility for the accuracy or adequacy of
this news release, which has been prepared by management.
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