note that the most pessimistic estimate of the present value of the valdecanas vein alone is nearly twice the value of the fresnillo stink bid. and that is based on a resource estimate more than a year old, at today's relatively low silver price. fresnillo still has the capability to outbid anyone due to their inherent advantages, but they're going to have to do a heck of a lot better than $4.54.

this analysis is from brent cook:

BC: MAG Silver Corp. (TSX:MAG) (NYSE:MVG) . This is one of the few companies that has a silver deposit that is not reliant on base metal credits. This is a very high grade silver deposit. Their Valdecañas Vein on the Jaunicipio project, Zacatecas, Mexico, is probably the best silver discovery in quite some time.

They and their partner have drilled out current resources of 231 million ounces of silver, about 500,000 ounces of gold with lead and zinc as well. It averages over 1,000 grams of silver per ton. If you just look at the gross metal value per ton, it's nearly $500 a ton. So this is a fantastic deposit that they've found and within the property package they've got serious potential for additional discoveries. So I like MAG Silver and their partner, Fresnillo, is a Mexican silver company, probably the best silver company in the world. They're 56% owners and they operate. They've made an offer to purchase MAG Silver for the equivalent of $4.54 U.S. MAG's currently trading at $5.70, I believe, something in that order. From the beginning I expected a takeout offer from Fresnillo. I did not expect it to be lower than the actual price the stock was trading at, so I was half right.

I've got a model on the vein and I've used costs from the Fresnillo operations, which should be about the same—and I can come up with in the order of a discounted after tax net present value of a minimum $440 million up to $1.3 billion just for MAG's 44% of the deposit. The offer from Fresnillo values the company at about $230 million.

TGR: Why such a low-ball bid?

BC: The markets were collapsing at the time and I think Fresnillo felt that they could pull it off. I don't think they're going to. I know most of the major shareholders and none of them has indicated they're willing to sell the stock for that price. My subscribers, I think, if they believe what I say, are not going to sell it for that price either. Again, going back to who else might like it, Silver Wheaton should certainly take an interest in this. If I was Pan American Silver, I would be looking at it. If I was any major silver company, I'd be looking at this. This is a fantastic deposit that's going to generate a higher profit margin than any other deposit they own and you've got Fresnillo as the operator.

If Fresnillo had offered something above the current price, they may have pulled it off, but I don't think they're going to pull it off. Now legally MAG Silver has to produce an independent valuation to give to give to their shareholders so the shareholders can make a considered opinion on whether to tender their shares or not, so this is going to be a fairly long process. I bet it takes two months. And what's going to happen is an independent engineering firm and a financial group are going to go down and review all the data for this deposit plus all their other operations and come up with some sort of fair value for the deposit. And I suspect it's going to be considerably more than $4.54 a share.

TGR: That'd be good for your investment then.

BC: Yes.

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