A subsidiary of Fresnillo (FNLPF-O, FRES-l) is making an unsolicited takeover bid for MAG Silver (MAG-T, MVG-X), its joint-venture partner on the Juanicipio project in Mexico’s Zacatecas state.
Fresnillo is offering US$4.54 cash for all of MAG Silver’s outstanding shares that aren’t already held by Fresnillo or its affiliates.
News of the bid in Toronto sent MAG’s shares up 78¢ apiece, or 15.73%, to close at $5.74. In New York, the Vancouver-based company’s shares rose 58¢, or 14.43%, to close at US$4.60 per share.
The first hint that a bid might be in the offing came on Oct. 15, when Fresnillo acquired about 19.8% of MAG’s shares.
Dan MacInnis, MAG’s chief executive, did not return phone calls requesting comment on the takeover bid. But in a prepared statement the company’s management said MAG’s board of directors will meet with its advisors to consider an appropriate response.
MAG holds a 44% stake in the joint-venture project while Fresnillo owns 56%.
The partners released a resource estimate on the Valdecanas Vein on the Juanicipio property in June, which indicated it held 7.3 million tonnes in the inferred category grading 1,011 grams silver per tonne, 2.06 grams gold per tonne, 2.31% lead and 3.94% zinc. Those numbers equate to about 237.8 million oz. silver, 480,000 oz. gold and 1 billion lbs. of combined lead and zinc.
Subsequent assay results released last month continue to demonstrate high-grade silver intercepts. Drill hole NE from the central part of the Valdecanas Vein, for example, cut 3 metres grading 1,338 grams silver, 3.56 grams gold, 1.63% lead and 7.37% zinc. Another hole to the east, QH, struck 5 metres grading 1,134 grams silver, 0.48 gram gold, 2.51% lead and 6.75% zinc.
The joint-venture’s Juanicipio property is adjacent to Fresnillo’s famous Fresnillo mine, the largest primary silver mine in the world.
The Valdecenas Vein lies 2.5 km southwest from the San Carlos Vein, Fresnillo’s principal production vein.
According to MAG’s third-quarter results, the company’s cash position remained strong at C$59.1 million on Sept. 30.
But MAG posted a loss for the first nine months of the year of C$4.3 million, or $0.08 per share, compared to a loss of C$4.8 million, or $0.12 per share, for the same period last year.
MAG is focused on projects in Mexico’s silver belt, including its 100%-owned Cinco de Mayo property in Chihuahua state, which is a new silver, lead and zinc discovery.
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