Silver is undeniably one of the most favoured investment vehicles for the top minds in the industry. From its ability to rise with a growing economy, to a precious metals hedge against inflation, silver is a metal with many talents.

Right now, we're seeing history in the making for silver. 2012 will be a big year for silver and with it, my favourite way to play the precious metals boom: silver stocks. 

This may all sound familiar to you. That's because during the last few years, every silver company we featured showed our readers gains of 100% plus.    

So it's no wonder why our first report for 2012 involves a silver company that analysts are calling "one of the most important high grade silver projects on the planet."

More on this story in a bit.

Silver Set to Explode 

Just recently, Eric Sprott showed that the actual demand for silver, especially for investment, has been staggeringly underreported. Take a look:

His calculations show that more than 255 million ounces of silver demand was "missing" from figures for the decade-long stretch that ended in December 2009.  

Some of the smartest minds in the industry are already calling for $50, $75, $100, and even $150 dollar silver. While these numbers seem far off, critics also said the same when silver hit $20 a few years back, before it skyrocketed to nearly $50.   

In the last ten years, the price of silver has had four major crashes, yet it still increased five-fold. Take a look:

Every time silver crashed, it found a way to climb higher - much higher.

The net result? If you invested US$10,000 in silver at the start of 2004, it would now be worth $58,000 plus.

While silver saw a 48% correction last year, it is now poised to explode with clear signs the latest correction is finished. Not only does silver generally bottom at this time of year, it's starting to break above its 65 week moving average.

But that's not all.

While institutional and retail demand for physical silver is on the rise (and over 255 million ounces short, according to Eric Sprott), industrial demand is also growing at a staggering pace.  

Silver's use in industrial applications increased 20.7% last year to 487 million ounces. That means as much as 50% of silver's total annual production is for industrial use...and that number is expected to rise another 36% by 2015.  

But here's the shocker: Unlike gold, silver is 98% consumable. Of all the silver ever mined - about 46 billion ounces - experts estimate that only 1 billion ounces are left above ground in bullion form (of the 5 billion ounces of gold ever mined, about 2 billion are available above ground in bullion form.) So where's the rest of the silver? It's being consumed at an astronomical rate...   

Most silver, used in electronics including the billions of cell phones and millions of TV's around the world, is not recoverable.Once a cell phone or TV goes to the landfill, you can't get the silver in them back. It's no wonder silver miners are struggling to keep up with the demand. 

The amount of silver coming out of the ground is going down every year. Few discoveries have been announced in the last decade and most silver produced now is coming from the last stages of existing mines.  

Not only that, but the quality of silver mined is the lowest it's ever been and like most metals, silver is rarely mined in veins now. It takes many tons of earth and rock to process even a single ounce.  

And that's what makes the next company I am about to introduce so special.

One of the Highest Grade Silver Projects on the Planet 

Haywood Securities called this company's marquee project "one of the most important high grade silver projects globally."    

Canaccord Genuity views this company as "a likely acquisition target with a joint venture that hosts one of the richest and highest-grade silver deposits worldwide ...It's simply one of the most attractive undeveloped silver projects on the planet."

BMO Capital Markets says the company's "current resource and exploration upside at their (flagship project) together with the company's other 100%-owned district-scale holdings in Mexico comprise an attractive asset for any silver producer, not just (the world's largest primary silver producer in the world.) "

If you're looking for the next silver play and a potential takeover target, look no further than:

MAG Silver Corp (TSX: MAG) (NYSE.A: MVG)

We're not the only ones who think so.  

Experts at Raymond James and Canaccord Genuity both have strong buy ratings for MAG Silver Corp (TSX: MAG)(NYSE.A: MVG) (and all believe that MAG Silver may be the next potential takeover target - especially given the significant events that have occurred with MAG over the last few years.)  

Canaccord just upgraded MAG Silver Corp (TSX: MAG)(NYSE.A: MVG)  with a target price of $16.00, while Raymond James has a price target of $14.50. Target prices from large institutions are often very conservative, factoring in every possible risk. With the price of silver looking to explode again, these target prices will undoubtedly be raised to reflect that.    

But there's another significant reason why these target prices may soon be raised much higher.

MAG is about to announce something in the next few weeks that has the potential to make MAG Silver's NPV (Net Present Value) rise dramatically. Based on preliminary numbers by management, MAG's NPV could easily double from where it stands today - resulting in an even bigger discount to MAG Silver's current share price.  

More on this later.    

Simply One of the Most Attractive Undeveloped Silver Projects on the Planet: Juanicipio Joint Venture   

MAG Silver Corp's (TSX: MAG)(NYSE.A: MVG) flagship project is its Juanicipio Joint Venture with the world's largest primary silver producer, Fresnillo. It's located in the Juanicipio property, of which MAG owns 44% and Fresnillo the remainder 56%.

Juanicipio is an exceptionally high grade epithermal vein system that has the potential to produce up to 16 million ounces of silver per year. It is considered to be one of the richest silver discoveries in recent history, hosting an astounding:

Indicated resource of 6.2 million tonnes with an astounding average grade of 728 grams/t silver, 1.9 g/t gold, 1.9% lead, 3.9% zinc (containing 146 million ounces of silver)

and  

Inferred resource of 7.1 million tonnes with an average grade of 373 g/t silver, 1.6 g/t gold, 1.5% lead, and 2.6% zinc (containing 85 million ounces of silver)

That's not a typo. The Juanicipio Joint Venture contains an indicated resource of 146 million ounces with an average grade of 728 grams/t silver and 1.9 g/t gold and an inferred resource of 85 million ounces of silver with and average grade of 373 g/t silver and 1.6 g/t gold.

I know I am repeating myself. But these numbers are so spectacular that when I speak with industry experts, they find it hard to believe. These type of numbers simply don't exist anymore. 

The vast majority of the Juanicipio resource is hosted within the principal vein, the Valdecanas, which spans over 1600 metres in length with average vein width between 4 and 6 metres.  

If you look at the map, Fresnillo has already developed its Jarillas shaft and the Saucito mill within 800 metres of the Valdecanas vein on the JV property.   

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It's no wonder why analysts at Canaccord Genuity call Juanicipio, "simply one of the most attractive undeveloped silver projects on the planet."   

Crunching the Numbers

A scoping study was done a few years back and the numbers are truly remarkable - especially considering the low silver price used in the calculations ($12 silver).  

Based on a scoping study done in 2009, the NPV (Net Present Value) of the Juanicipio project is estimated at US$ 967M using a 5% discount rate and a silver price of US$12.32 per ounce. That means MAG's share at 44% is estimated at US$425.5M. The payback period is 2.3 years with an estimated CAPEX of US$ 217.0M.

Operating cost were estimated at US$ 42.28 per tonne milled, which means that the unit cost per ounce of accountable silver sits at only US$ 2.56. Considering silver is over US$33 /ounce today, that spells significant profits for MAG and anyone developing this project.  

If we were to use a higher silver price in our calculations, say US$15 /ounce, MAG's NPV would soar to over $1.1 billion. That means every dollar increase in the price of silver adds another $100 million plus to MAG's NPV. Just take a look:

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This scoping study is based on a stand-alone mine development, with a 3.5 year development timeline to advance ramp down to the Valdecanas mineralization. While there are no current studies for alternative development scenarios, much of the CAPEX costs could be reduced significantly and development timeline significantly shortened if MAG were to use Fresnillo's current infrastructure. By drifting over from the Jarillas shaft less than 1km away, the development timeline could potentially be reduced to 18 months, instead of the 3.5 years estimated in the scoping study.  

Furthermore, even if mine development were to commence without the use of Fresnillo's nearby infrastructure, the payback period given today's current silver price could be less than a year. Try finding another silver project like this.   

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In addition to Juanicipio, MAG Silver Corp (TSX: MAG)(NYSE.A: MVG) also has a strong portfolio of promising high grade silver district projects in Mexico. One of these projects is their 100% owned Cinco de Mayo, which contains a high grade Moly-Gold project that alone would be a major company maker.  

Cinco de Mayo, Pozo Seco & Jose Manto Projects    

The Cinco de Mayo property comprises 22,000 hectares and is the most advanced of MAG's five Carbonate Replacement Deposit ("CRD") style targets.   

MAG Silver Corp (TSX: MAG)(NYSE.A: MVG) has already outlined a 147 million pound high grade molybdenum deposit at Pozo Seco within Cinco de Mayo. The deposit is entirely oxidized and possess a very high average molybdenum grade of 0.13%.

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Over the next few months, MAG is expected to release - for the first time - a new PEA (Preliminary Economic Assessment) that should show the potential for their Pozo Seco high grade Moly project. That means more news and more milestones to come for the company that already has one of the most attractive undeveloped silver projects in the world.     

In addition, MAG continually intercepts significant massive sulphides in its on-going exploration drilling at Cinco de Mayo, including a most recent hole of 386 grams per tonne (g/t) (12.4 ounces per tonne (opt)) silver with 14.0% zinc and 8.2% lead over 3.98 metres (298.88 to 302.86 metres downhole) including a high grade core of 1,170 g/t (34.0 opt) silver with 13.7% zinc and 19.1% lead over 0.86 metres.  

Of course, like any smart explorer, MAG Silver Corp (TSX: MAG)(NYSE.A: MVG)  also has other significant and highly prospective projects in the Mexico Area.  You can read more about them below.

Combined with Juanicipio, MAG is on the way to a breakout year. Analysts from all over the nation are calling the Juanicipio project one of the richest and highest grade silver deposits in the world and simply one of the most attractive undeveloped silver projects on the planet.  

With such an amazingly high grade silver project, you may be asking yourself: "Why haven't I heard of MAG before and why isn't the company trading at much higher prices?"

Why MAG Silver is Under the Radar 

In 2008, Fresnillo, which owns 56% of the Juanicipio project, tried a low-balled hostile takeover offer of MAG for US$4.54 per share without any success. During that time, MAG filed a formal request for arbitration on the grounds that Fresnillo attempted to acquire control of MAG on a hostile basis, in breach of standstill provisions contained in the shareholders agreement governing the Juanicipio joint venture.  

Two years later, in 2011, the arbitration ruling was issued. And MAG had not only won, but ended up with a much easier path to success.  

The arbitration ruling stipulated that any deal would need to be friendly, any offer would need to be cash. Fresnillo must move the project forward with MAG in a reasonable time frame - meaning Fresnillo cannot hold back on moving the project forward to suppress MAG's progress. As a matter of fact, exploration budgets have already increased this year.  

As a result of the ruling, MAG's share prices rocketed to over $14 last year, only to be pulled back with the rest of the market. But with silver prices expected to climb in 2012, an updated PEA out within the next few weeks, and nearly $11 million of exploration underway for both Juanicipio and Cinco de Mayo, this could be the breakout year for MAG Silver.

It's Getting Crowded 

Silver is an asset whose consumption will exceed new production for many years. With just $50 billion of silver bullion above ground, the silver market is a very small market and gets crowded easily. The amount of silver stocks with strong assets are very limited and very few discoveries are being made worldwide.  

Over the next few years, we're going to see a lot of consolidation in the silver space - especially for companies with high grade projects.   

It's already happening...

Just last week, we saw the takeover of Minefinders by Pan American Silver for $1.6 billion.

So how does Minefinders' silver project compare to MAG's?

According to Morningstar:

Most of Minefinders' silver reserves and all of its current production come from its Dolores open-pit mine in northwest Mexico. Dolores is projected to produce more than 65,000 ounces of gold and 3.4 million ounces of silver in 2011 at cash costs of between $11 and $12 per silver-equivalent ounce (assuming a 41/1 gold to silver price ratio), but seems capable of supporting a much larger annual production rate given its sizable silver reserves.

Dolores' low cash costs should also help Pan American better control its production cost inflation, as the firm's existing silver mines are projected to reach cash costs of more than $18 per silver-equivalent ounces in 2011.    

Based on the 2009 scoping study, MAG's unit cost per ounce of accountable silver (net of by product credit and TTM* costs) is expected to be US$1.77 - a big difference to the US$11-12 cost of Minefinders and an even bigger difference to Pan American's US$18.   

Clearly you can now see why analysts are calling Juanicipio one of the most important high grade silver projects on the planet. 

Silver prices are near $35/oz and are expected to climb much higher. You can do the math.

Timing is Crucial

There's no doubt that MAG has one of the most promising silver projects in the world. But that's not the only reason I am about to buy their shares right now.  

Within the next few weeks, MAG is about to hit a critical milestone that could send share prices much higher than where it is today... 

MAG is about to announce an updated PEA using much higher silver prices than the PEA done in 2009. The upcoming PEA on one of the world's highest grade silver deposits is going to be a critical milestone for MAG as it will truly show the real value of what the Juanicipio project has to offer.

To give you an example of how big an impact an updated PEA can be, let's go back and look at Hathor - the company that hosted one of the world's richest uranium deposits.  

As you can remember, just a few weeks before Hathor announced their new PEA, not only did their share price soar, but takeover bids and rumours started to pour in with Cameco making the first unsuccessful bid.   

Once Hathor's new PEA was released, mining giant Rio Tinto made their move and bought Hathor at significantly higher prices.  

While in a different sector, the MAG story has many similarities. While Hathor had one of the richest uranium deposits in the world, MAG has one of the richest silver deposits in the world. Hathor received a failed low-balled takeover attempt by Cameco. MAG received a failed low-balled take-over attempt by Fresnillo.  

Once MAG's new PEA comes out in the next few weeks, you can be sure Fresnillo will be watching as other big shots in the silver space drool over MAG's asset. With the new PEA, the NPV for MAG would not only rise significantly based on higher silver prices, but it also means that Fresnillo would have to pay more for MAG if it wanted to buy MAG out.  

It's obvious that MAG is a likely acquisition target.  

Fresnillo has already boldly claimed that it has a goal of increasing its annual production to 65 million ounces of silver by 2018, up from a current production of around 42 million ounces.  

The Juanicipio project is expected to produce an average of 14 million ounces of silver annually. While 100% of Juanicipio would not likely get Fresnillo to its bold goals, it should certainly help the company along the way.  

It's apparent that Fresnillo would be the smartest and most economical suitor of the Juanicipio project. If Fresnillo were to use its existing infrastructure as I had already mentioned, not only would the CAPEX be significantly reduced, but the timeline would also be dramatically shortened (potentially down to 18 months from 3.5 years.) The reduced cost and shortened timeline makes a compelling and obvious reason why Fresnillo should make a move.   

Of course, the only thing that stands in the way is the recent past between MAG and Fresnillo. But at the end of the day, the courts have made their decision and any deal Fresnillo wants will not only have to be friendly, but have to be all cash. The only question is will Fresnillo come to a friendly agreement with MAG?  

If Fresnillo doesn't make a move soon, I wouldn't be surprised to see other suitors come to the table before MAG continues to increase its value via further exploration work on Juanicipio and its other properties. The big institutions feel the same way:

"If Fresnillo does intend to eventually acquire MAG`s interest in Juanicipio, with an increased in exploration budget from last year, an updated PA for the Juanicipio project, and new value to be created at its Cinco De Mayo and Pozo Seco projects, the potential cost of acquiring MAG is likely only to increase over time.  

The challenge of structuring a friendly deal between the two companies is obvious, but despite the history, the argument supporting the potential friendly bid for MAG appears compelling. Even without a bid from Fresnillo, we believe the outlook for MAG has improved, which could potentially attract other suitors." - Canaccord, January 22, 2012

Fresnillo is the biggest player in the primary silver space and you can bet they wouldn't want any partners on their home turf - especially when MAG is sitting right in their backyard.     

MAG is already undervalued based on a 0.75x multiple to Canaccord's peak silver price estimate of NAVPS (net asset value per share, 7.5% US$35/oz Ag). With an updated PEA on Juanicipio, an upcoming PEA on Pezo Seco, drill results coming from their other high grade silver projects, and the possibility of a takeover, MAG will undoubtedly be the focus of anyone in the silver space.    

MAG's management is top notch and their share structure is rock solid. Management has been able to turn MAG from a penny stock to where it trades today - all without diluting shareholders. They have over US$27 million in the bank and less than 60 million shares outstanding when fully diluted. That is an amazing task considering the progress MAG has made.   

The real silver boom is about to begin.

That is why I will be investing in "one of the most important high grade silver projects on the planet."  

That is why I will be investing in MAG Silver... 

MAG Silver Corp. 

Cdn Symbol: (TSX: MAG)

US Symbol: (NYSE.A: MVG)   

We're biased towards MAG Silver because they are an advertiser and we will be buying shares. You can do the math. Our reputation is built upon the companies we feature. That is why we invest in every company we feature in our Equedia Reports, including MAG Silver. It's your money to invest and we don't share in your profits or your losses, so please take responsibility for doing your own due diligence. Remember, past performance is not indicative of future performance. Just because many of the companies in our previous Equedia Reports have done well, doesn't mean they all will.  

Until next time,

Ivan Lo

Equedia Weekly  

Questions?

Call Us Toll Free: 1-888-EQUEDIA (378-3342)      

* Source "Wardrop - Valdeca�as Project - Scoping Study, NI 43-101 Technical Report",   

MAG Silver Corp. is focused on district scale projects located within the Mexican Silver Belt, with numerous growing assets including a 44% interest in one of the world's highest grade silver deposits on the planet.

Property Locations and Work Activity

Core Assets Location and Focus 

MAG holds a significant land package on the Fresnillo Silver Trend, which hosts the world's largest primary silver mine. Over 4.2 billion ounces of silver has been produced on this trend, representing more than 10% of the world's historical production.  

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Main Asset - 44% Interest in the Juanicipio Joint Venture

• Indicated Resource of 6.2M tonnes grading 728 g/t Ag  for 146M oz.
• Inferred Resource of 7.1M tonnes  grading  373 g/t Ag  for 85M oz.
• Updated PEA underway and tentatively scheduled for early Q1 2012 completion

• New high grade Ag / Pb/ Zn sulphide intercepts in the Jose Manto - Cinco Ridge mineralized corridor)
• Resource estimation on Jose Manto by Q3 2012     

Pozo Seco - Molybdenum / Gold Deposit (100%) 

• Indicated resource 29.07 M tonnes grading 0.147% Molybdenum and 0.25 g/t Gold (94M lbs Mo / 230K oz. Au)
• Inferred resource 23.38M tonnes grading 0.103% Molybdenum and 0.17 g/t Gold (53M lbs Mo / 129K oz. Au) 

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The Juanicipio JV property is located in Mexico's Fresnillo Silver Belt, which also hosts the Zacatecas, Fresnillo and Sombrete-San Martin silver districts. Collectively, these districts have produced an estimated 4.0 billion ounces silver (40% of Mexico's historic silver production) since mining there began in the 1500's.

MAG owns 44% of the JV, while 56% is owned by Fresnillo PLC, the world's largest primary silver producer, and operator of the JV. All expenditures are shared pro rata (44%/56%), and the JV is, in part, governed by supermajority whereby annual budgets and capital expenditures in excess of US$500,000 must have 60% majority approval. The technical committee overseeing project development consists of five members, two from MAG and three from Fresnillo.

Resources

The JV hosts one of richest and highest-grade silver deposits worldwide. The deposit consists of a series of northwest to southeast trending vein structures, including the Valdeca�as vein which is currently the largest in terms of tonnage and silver ounces contained, and the Juanicipio vein which was the original mineral discovery made at the
property by MAG in the late 1990s.

The JV's most recent mineral resource estimate was commissioned by MAG, and reported based on the drilling results completed on the property to September 8, 2010. The Juanicipio JV is now estimated to contain 110.8 million ounces of silver grading 662 g/t inthe Indicated category, and 93.3 million ounces of silver grading 376 g/t in the Inferred category. Besides silver, the deposit also contains substantial amounts of gold, silver and lead at meaningful grades.

Valdeca�as Scoping Study Demonstrates Robust Economics

In May of 2009 Wardrop, A Tetra Tech Company, was retained by Minera Juanicipio S.A. (MAG Silver Corp 44% and Fresnillo plc 56%) to carry out a Scoping Level Study on the Valdeca�as Vein Deposit.

The report was completed on the basis that the joint Mine/Mill project would be conducted on a "Stand Alone" basis, independent of any other regional mining operations or related infrastructure. It was also assumed that the most economical and efficient access to the mine would be via a ramp.

The study is authored by Wardrop, a Tetra Tech Company on behalf of the Joint Venture and is dated to the end of May 2009 and estimates are to an accuracy of + 35%. All costs are in $US and the Wardrop Base Case utilizes the Energy and Metals Consensus Forecasts (ECMF) quarterly reports in calculating Wardrop/ECMF prices.

Highlights - Valdeca�as Stand-Alone Scoping Study - 4 Year Trailing Silver Price Scenario*

Valdeca�as Vein	100%	MAG 44%
NPV (5%) (@ US$12.32 oz./Ag)	US$967M	$US425.5M
IRR (pretax)	48.4%
Payback	2.2 years
Pre Production / PP Capital	3.5 years / US$65M	US$28.6M
Mine Life / Mine Rate	12.6 years / 2,350tpd
Operating Costs	US$42.28 t / milled
CAPEX (Includes pre production)	US$217M	$US95.5M
Annual Production (Recovered Silver)	14.0 Million ounces (ave.)	6.2 M oz
Unit cost per ounce of accountable silver (net of by product credit and TTM* costs)	US$1.77

"One of the highest quality silver deposits in the world"

Though the SRK audited resource estimate released (but not published) by Fresnillo varies substantially from MAG's, it is important to emphasize that the Scott Wilson RP Valdeca�as resource estimate is NI-43-101 compliant and defines a truly world-class silver deposit. The average grade of our indicated resource is 879 grams silver per tonne, about twice the grade of Fresnillo's other producing mines in the district, making the Valdeca�as Vein one of the highest grade undeveloped silver resources in the world.

There is also substantial exploration upside elsewhere on the property with the largely untested Juanicipio Vein, our original discovery. Highlights from the Juanicipio Vein include a high grade gold and silver intercept in Hole 20P which returned 4.95 grams per tonne (g/t) gold, 115 g/t (3.4 ounces per ton (opt)) silver, 1.19% lead and 2.89% zinc over a width of 1.20 metres (0.92 metres true width). The gold values demonstrated here are significantly higher than that of the historic Fresnillo district and is similar to the average gold grade and approaching the average width of the Saucito Vein which our partner Fresnillo has recently brought into production about 2.5 kilometres to the east.

It appears that the Juanicipio property is host to an emerging vein field potentially representing generations of additional productive life for this historical mining district.

Juanicipio Project Background

MAG's exploration team, headed by Dr. Peter Megaw of the consultant group Minera Cascabel / IMDEX, first identified the Juanicipio Property in the late 1990's. Prior to acquisition by MAG there was no silver, gold or base metal mineralization identified on the Juanicipio Property. It was the extensive advanced argillic alteration and silicification of the tertiary volcanic and volcaniclastic rocks, that implied mineralization at depth. Drilling by MAG Silver from 2003 to 2005 on this working geological model, intersected new high grade silver and gold veins within one of the oldest and most significant silver districts in the world.

This success quickly attracted the attention of Industrias Pe�oles S.A. de C.V., the world's largest silver producer, to acquire an option to earn an interest in the property. Drilling by Pe�oles in late 2005 subsequently discovered the Valdeca�as Vein less than five kilometres from their main production headframe at Fresnillo.

MAG Silver's Juanicipio (almost 8,000 hectares) and Lagartos properties cover approximately 140,000 hectares in several large claim blocks along the "Fresnillo Trend" (350 km long), a regional structural corridor linking the famous Guanajuato, Zacatecas, Fresnillo and Sombrerete-San Martin silver districts. Combined, these four districts have produced over 4.0 billion ounces of silver (representing 40% of Mexico's historic silver production) and include Fresnillo, which produced 34 million ounces of silver in 2008.

Valdeca�as Vein Description

Valdeca�as lies 2.5 kilometres southwest from the San Carlos Vein, which is Fresnillo plc's principal production vein and 2.5 kilometres northwest from the El Saucito Vein, which is currently undergoing preproduction development with construction of a 600 metre shaft and a 2,200 metre decline. Also just completed is a 47-metre concrete headframe for the Jarillas/ Valdeca�as shaft 1,100 metres east of the Juanicipio property boundary.

Geologically and mineralogically the Valdeca�as Vein has affinities to Fresnillo plc's Santo Ni�o Vein, at one time the principal production vein at Fresnillo. The Santo Ni�o produced over 250 million ounces of silver from a four kilometre strike length.

Drilling to date clearly demonstrates that Valdeca�as is an epithermal vein typical of the Fresnillo District. However, the Valdeca�as and the Juanicipio (discovered by MAG in 2003) veins contain significantly higher gold grades (2-4 grams gold per tonne) than the average veins (0.5 grams gold per tonne) in the principal production parts of the district.

Mineralization observed in drill core consists of precious metal rich, banded or brecciated quartz-pyrargyrite-acanthite-polybasite-galena-sphalerite veins. The Valdeca�as Vein has undergone multiple mineralizing events as evidenced by various stages of brecciation and quartz sealing, local rhythmic microcrystalline quartzpyrargyrite banding and open-space cox-comb textures and vuggy silica. The vein exhibits the characteristic metal zoning of the principal veins at Fresnillo, observed as a change from silver and gold rich zones at the top to increased base metals in the deeper intersections. Notably, the gold rich mineralization cuts across the silver rich zones, which in turn cut earlier base-metal dominant stages indicating complex multi-stage mineralization seen separately in other parts of the district.

Overall, the precious metals rich zone is 350 metres high, which is typical of major producing veins in the district although it lies slightly lower in elevation than the comparable precious metal zones being mined elsewhere in the district. Within ten to twenty metres of the vein, the wall rocks are progressively and pervasively silicified and cut by quartz veinlets carrying pyrite-sphalerite-galena sulphide minerals. Alteration in the volcanoclastic / sedimentary host rock farther away from the vein is characterized by weak pyritization, moderate clay alteration, and calcite veining.

Juanicipio Vein

The Juanicipio Vein, first intersected by MAG in 2003, is located about 1,100 metres south of Valdeca�as and is one of the strongest indications of the existence of other significant vein sets on the property. Plans for the near term include drill testing and defining the Juanicipio Vein. Information from the Valdeca�as drill program suggests that the Juanicipio Vein intersection occurs at the very top of the high grade silver/gold Bonanza Zone. The Juanicipio Vein is open at depth and along strike.

The return of the gold-dominant Hole 20P in January 2009 was further indication that the presence of separate gold and silver dominant veins on the Juanicipio property resulted from a long-lived, multi-stage mineralization event with each vein having unique metal contents and depth of emplacement.

Las Venadas Vein - New Mineralized Structure

The Venadas Structure lies approximately mid-way between the Valdeca�as and Juanicipio Veins. Discovery of this new structure reinforces MAG's long-standing expectation that potential remains high for multiple vein discoveries within the Juanicipio Project area.

Joint Venture contractor and partner, Fresnillo plc ("Fresnillo"), reports that Drill Hole 43P has a structure intercept of 3.82 metres (true width) grading 491 grams per ton (g/t) silver (14.3 ounces per tonne (opt)) and 2.69 g/t gold, with negligible lead and zinc. Within the intercept is a higher grade zone reporting 1.52 metres (true width) grading 965 g/t silver (28.1 opt) and 6.39 g/t gold.

A further bore hole, Hole 44P, has cut 2.65 metres of visibly mineralized quartz structure deeper in the same section. Assays are pending for Hole 44P.

Collectively these three bore holes confirm the discovery of a new structure on the Juanicipio property. The significance of this new structure remains to be determined by further drilling. Initial indications are that the discovery of this third structure on the property is an important event in the evolution of the project.

The first hole into this south dipping structure was Hole 37P (in 2010) which cut a structure grading 490 g/t silver (14.3 opt), 0.94 g/t gold and negligible base metal values over an estimated 2.75 metre true width. Hole 43P, reported herein, intersected this new structure approximately and 100 metres deeper than the 37P intercept. Hole 44P was drilled on the same section as 43P to intersect the new structure 100 metres deeper than hole 43P and it intersected a quartz structure 2.65 metres wide containing visible acanthite (silver sulphide), pyrite, arsenopyrite and fluorite starting at 594.85 metres. The three holes mentioned are in the same section.


Exploration Results for the Juanicipio Vein

Drilling continues on the Juanicipio Vein, primarily in the area around the Inferred Resource mentioned above (see Longitudinal Section). The Juanicipio Vein lies 1.1 kilometers south of the Valdeca�as Vein and was discovered in the first hole drilled in the Juanicipio Claim by MAG Silver in 2003. Overall, the Juanicipio Vein behaves more erratically in width and grade than the Valdeca�as Vein, but the local extremely high grades maintain high exploration interest. The general textural and grade patterns of the Juanicipio Vein suggest that its Bonanza Zone lies deeper than that of the Valdeca�as Vein, which is consistent with well documented vertical and lateral shifts in the centres of mineralization over time in the Fresnillo District.

The best of the recent holes is Hole 18R, which cut 1.56 metres (true thickness) reporting 4,223 g/t (123.2 opt) silver, 2.97 g/t gold, 3.00% lead and 5.57% zinc. Hole 18.5R, drilled 125 metres west of 18R cut a wider (3.55 metre true width thickness) segment of the vein, with significant but lower grades (see Table 3). More importantly, hole 18.5R cut several hanging wall veins, the first seen along the Juanicipio Vein; the most important of these is 0.55 metre wide and carries 453 g/t (13.2 opt) silver. Hole 17.5 R is currently in progress to determine if the mineralization cut in 18.5R continues to depth.

Table 3- Juanicipio Vein Drilling Results

Hole Number	From m	To m	Gold (Au) g/t	Silver (Ag) g/t	Lead (Pb) %	Zinc (Zn) %	True Width (metres)
18P	627.60	628.2	1.47	4,100	2.02	4.07	*0.60
18R	754.70	756.5	2.97	4,223	3.00	5.57	1.56
18.5R HW	880.90	882.5	0.28	453	0.19	0.92	0.55
18.5R	889.65	894.0	0.43	548	0.34	1.20	3.55
18Q	719.85	720.7	0.27	55	1.54	2.00	*0.85
19R	921.60	922.2	2.09	731	10.50	7.66	0.52

 

Minera Juanicipio S.A. DE C.V.

This new company was established in December 2007 to own and operate the Juanicipio Joint Venture, MAG having a direct 44% interest and Fresnillo plc a direct 56% interest.

The Juanicipio Joint Venture owns the surface rights for Juanicipio and Valdeca�as and is operated by Fresnillo plc. While all expenditures are shared pro rata (44/56), the joint venture is conducted by super-majority whereby all major decisions (any expenditures of $500,000 or more) must have 60% majority approval. The joint venture's technical committee consists of five members, two from MAG Silver and three from Fresnillo plc.

Highlights

• Owned  44% MAG / 56% Fresnillo plc
• One of the richest and highest grade silver projects in the world 
• Main Asset - Valdeca�as Vein
• New Resource (RPA) Estimate (100%)
  Indicated 146Moz. Ag @ 728 g/t Ag
  Inferred 85 Moz. Ag @373 g/t Ag
• Emerging high grade ore shoot on Juanicipio Vein
• "Standalone" Updated PA Study underway (Q1 2012), incorporating higher grades, a larger resource, and higher silver prices 
• 3rd Vein Identified / Las Venadas
• US8.5 million, 36,000 metres of drilling planned 

Mojina Highlights

Past Production of:  125,000 tonnes grading   80 - 330 g/t (2.3 - 10 opt) silver, 2-4 g/t gold and 8-10% Lead from oxidized manto ores.

Drilling currently in progress 

Similarties to Pozo Seco:

• Same structural grain
• Same Regional Structure?
• Same Lithological Section
• Superb Infrastructure
• Easily explored from Cinco base camp 

• 60% interest in 19k ha
• Fresnillo/La Colorado silver trend
• Multiple epithermal vein system  
• 7 holes with a weighted average of 330 g/t Ag (9.6 opt) and 2.5% Pb + Zn/4.21 m  
• Drilling currently in progress 

Juanicipio Video Overview

Cinco de Mayo Video Overview

January 20, 2012 

MAG Silver Plans Increased Exploration at Juanicipio and Cinco de Mayo 

December 19, 2011   

MAG Silver Announces Additional Silver And Gold In Updated Juanicipio Resource Estimation By Roscoe Postle And Associates 

November 28, 2011  

MAG Silver Announces Seven New Silver / Lead/ Zinc Sulphide Intercepts at Cinco De Mayo  

November 10, 2011  

MAG Silver Announces Updated Juanicipio Resource Estimate Prepared on Behalf of the Minera Juanicipio Joint Venture 

September 1, 2011

MAG Silver Confirms New Structure in Drilling at Juanicipio 

April 7, 2011

Abzu Gold Acquires Rights to the U&N Concession in the Ashanti Region of Ghana  

July 19, 2011

MAG Silver Provides Update on Juanicipio Joint Venture

May 12, 2011    

 MAG Provides Update on Favourable ICC Arbitration Decision and Corrects Inaccuracies Disseminated by Fresnillo 

May 05, 2011       

MAG Reports on Favourable ICC Arbitration Decision

March 25, 2011       

Mag Silver Announces Silver-Zinc-Lead Sulphide Veins Near Skarn At Cinco De Mayo

February 28, 2011      

MAG Silver Announces High-Grade Juanicipio Vein Intercept

December 01, 2010       

 MAG Silver Announces Juanicipio Resource Estimation And Exploration Update  

November 10, 2010

Cinco De Mayo: Management Discussion and Analysis ("MD&A") excerpt, with full Assay Table and Illustrative Map 

August 04, 2010       

MAG Silver Announces First Resource Estimate For Pozo Seco

July 15, 2010       

MAG Silver Announces Commencement of Prefeasibility Study on Juanicipio Property

June 16, 2010      

Pozo Seco - Assay Highlights

June 04, 2010

April 19, 2010       

MAG Silver Drills Thickest Molybdenum-Gold Intercept to Date at Cinco De Mayo

March 26, 2010       

MAG Silver Extends Molybdenum-Gold Zone At Cinco De Mayo 

January 19, 2010      

MAG Silver Discovers Veta Grande Vein Extension & Cuts High-Grade Silver In Puerto Rico Vein At Lagartos, Zacatecas, Mexico

January 08, 2010      

MAG Silver Extends Molybdenum-Gold Zone At Cinco De Mayo 

November 10, 2009   

MAG Silver Expands High-Grade Molybdenum And Adds Significant Gold At Cinco De Mayo

September 23, 2009      

MAG Silver Discovers High Grade Molybdenum With Gold At Cinco De Mayo