Juanicipio

JUANICIPIO PROPERTY
MUNICIPIO FRESNILLO ZACATECAS, MEXICO

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September 2008

Significance of Valdecañas Vein discovery taking shape

On June 18, 2008, an important stage in the development of our Juanicipio property was reached with announcement of our first mineral resource estimate on the Valdecañas Vein.

Our partner Fresnillo plc reported a total inferred resource of 237.8 million ounces of silver, with MAG's 44% interest in the Juanicipio Joint Venture equating to 104.5 million ounces. (For details access news release links at the bottom of this page.)

The resource estimate also includes 480,000 ounces of gold and one billion pounds of combined lead and zinc.

The following day MAG reported further high-grade returns from drilling on Valdecañas not included in the resource estimate. Hole QE intersected 1,198 g/t (34.9 opt) silver, 0.24 g/t gold, 2.75% lead and 5.15% zinc over a true width of 4.70 metres. Included was a higher-grade intercept of 1,820 g/t (53.1 opt) silver, 0.16 g/t gold, 4.01% lead and 6.74% over a true width of 2.82 metres.

Hole QE was an especially important intercept for the Juanicipio Joint Venture because it fills in a major gap of almost 500 metres and pushes the high-grade "bonanza" zone to almost 400 metres east of the discovery section.


Valdecañas "World Class"

These consistently high silver grades and strong widths suggest a mineral endowment that will continue to grow and confirms Valdecañas as a truly world class silver deposit.

Moreover, Valdecañas is in the middle of the most productive silver district in the world, less than five (5) kilometres from the main production headframe of the world's largest primary silver mine at Fresnillo. With our partner, Fresnillo plc, we are delineating a very high grade silver, lead and zinc epithermal vein system that may prove to be the best of the 32 veins known in the 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 were 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 Peñoles S.A. de C.V., the world's largest silver producer, to acquire an option to earn an interest in the property. Drilling by Peñoles in late 2005 subsequently discovered the Valdecañas Vein less than 5 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" a regional structural corridor linking the famous Zacatecas, Fresnillo and Sombrerete-San Martin Silver Districts of Zacatecas, Mexico. Combined, these three districts have produced over 3.0 billion ounces of silver (representing 30% of Mexico's historic silver production) and include Fresnillo, which produced 33.5 million ounces of silver in 2007.


Valdecañas Drilling 2007-08

To date this new gold and silver rich vein has exhibited exceptional width and grade. The successful drilling of the discovery progressed through 2006-07 and so far into 2008 and continues to return strong results. (For details access the links at the bottom of this page.)

The substantial resources and expertise of our joint venture partner Peñoles, reorganized recently as Fresnillo plc, has quickly moved the project from discovery, to a drill intensive delineation program, and to our first mineral resource estimate.

Drilling on Valdecañas totalled 13,500 metres in 2007. By the end of 2007 a vein of approximately 1,500 metres long averaging 5.8 metres wide and having a dip length of almost 450 metres was outlined by a series of 20 holes that intersected the vein.

Drilling to fully delineate the vein is still in progress and a total 25,000 metres is scheduled for completion by the end of 2008.


Valdecañas Vein Description

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

Drilling to date clearly demonstrates that Valdecañas is an epithermal vein typical of the Fresnillo District. However, the Valdecañas 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 Valdecañas 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 stage indicating complex multi-stage mineralization combining stages seen separately in other parts of the district.

Overall, the precious metals rich zone is 350 metre 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 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 Valdecañas and is the strongest indication of the existence of another significant vein set on the property. Plans for the future include drill testing and defining the Juanicipio Vein. Information from the Valdecañas drill program suggests that the Juanicipio Vein intersection occurs at the very top of the high grade silver/gold Bonanza Zone. Fresnillo also intersected this vein in 2005 almost 100 metres to the east but at an elevation now known to be well above the Bonanza Zone. The Juanicipio Vein is open at depth and along strike.

Success at Juanicipio will confirm our thesis that the Juanicipio property is host to an emerging vein field very much akin to the main district adjoining the property to the north and east.

A review of past drilling by the Joint Venture in the context of the Valdecañas Vein discovery has revived interest in Hole VP-02 drilled in 2006. This hole is located on the Juanicipio property 1,200 metres to the west of Valdecañas Vein section G. This reported a one-metre section of 7.70 g/t gold and 4.0 g/t silver, 700 metres below surface.

The presence of strong gold values in this intersection and its relative proximity to the Valdecañas Vein is considered highly significant, and the exploration program will examine this structure with drilling in the near future.


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 Frenillo plc a direct 56% interest.

In 2007 the joint venture purchased more land west of the Valdecañas Vein discovery tied directly to the west of land purchased the previous year. The Joint Venture has uninterrupted covereage of 4.5 kilometres of the strike projection of the Valdecañas Vein from east to west.

Also in late 2007 the joint venture purchased over 2.5 kilometres of surface rights along the strike projection of the Juanicipio Vein, underscoring the importance the joint venture places on Juanicipio Vein.


Resource Disclaimer

Inferred and indicated Resources are reported herein. The US Securities and Exchange Commission does not recognize the reporting of Indicated and Inferred Resources. These resources are reported under Canadian National Instrument 43-101 and have a great amount of uncertainty and risk as to their existence and economic and legal feasibility. It cannot be assumed that all or any part of Indicated and Inferred Resources will ever be upgraded to a higher category. Under Canadian Rules estimates of Indicated and Inferred Mineral Resources may not form the sole basis of feasibility studies or pre-feasibility studies. US INVESTORS AND ALL INVESTORS ARE CAUTIONED NOT TO ASSUME THAT PART OR ALL OF AN INFERRED RESOURCE EXISTS, OR ARE ECONOMICALLY OR LEGALLY MINEABLE. We advise US Investors and all investors that while the term "inferred" and "indicated" resources is recognized and required by Canadian regulations, the US Securities and Exchange Commission does not recognize these. U.S. INVESTORS AND ALL INVESTORS ARE CAUTIONED NOT TO ASSUME THAT ANY PART OF OR ALL OF MINERAL DEPOSITS IN THESE CATEGORIES WILL EVER BE CONVERTED INTO RESERVES. U.S. investors are urged to consider closely the disclosure in our Form 20-F which may be obtained from us, or from the SEC's website at: http://sec.gov/edgar.shtml.

Resources refer to the independent resource estimates of SRK (Canada) Consulting under the supervision of Dr. Jean-François Couture QP, contained in a Press Release June 18, 2008 and Technical Report to be filed. Please see the risk factors and other information in the Disclaimer Statement on the press release dated June 18, 2008 and available on this website. The determination of grade, cut-off, metallurgical recovery factors, assay quality control and assurance, data verification and metal price assumptions are detailed in the press release disclosure. All of these factors are preliminary and have considerable risk.

Related Articles:
Epithermal Vein Story (PDF, 299 Kb)

Related News Releases:

June 19, 2008	MAG Silver Reports Further High Grade Silver on Valdecañas Vein
June 18, 2008	MAG Silver Reports First Resource of 237.8 Million Ounces Silver on the Valdecañas Vein
April 16, 2008	MAG Silver & Fresnillo Intersect High Grade Silver on Juanicipio Vein