Juanicipio

JUANICIPIO PROPERTY
MUNICIPIO FRESNILLO ZACATECAS, MEXICO

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January 2010

Valdecañas 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 Valdecañas 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 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 - Valdecañas Stand-Alone Scoping Study -- 4 Year Trailing Silver Price Scenario*

• NPV at 5% Discount Rate and 4 year average silver price (US$12.32 per ounce) estimated at US$ 967M (MAG's share at 44% estimated at US$425.5M).

• 2.2 year payback period.

• Pre-Tax Internal Rate of Return (IRR) estimated at 48.4%.

• 3.5 year pre-development period.

• 12.6 year mine life (at 2,350 tpd mine rate)

• CAPEX estimated at US$ 217.0M.

• Operating Cost US$ 42.28 per tonne milled.

• Unit Cost per ounce of accountable silver, US$ 1.77 (Net of by product credits and TTM* costs)

PROJECT ECONOMICS
Pre-Tax Net Present Value (NPV) Estimates*



"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 Valdecañas 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 Valdecañas 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, and the recently discovered Encino Vein. The latest results from the Juanicipio Vein were two holes begun in late 2008 and completed in January 2009. The best intersection was 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 high gold value is characteristic of veins in the new Fresnillo II district which typically have much higher gold grades than veins in 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 is bringing 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 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 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.

Drilling 2008/09

Drilling on Valdecañas totalled 25,000 metres in 2008. Much of that activity was infill drilling on a 100 metre by 100 metre grid. These holes returned consistently high grades and strong widths, confirming the continuity of the Bonanza Zone and affording an upgrade of approximately three million tonnes of the resource from inferred to indicated. Results also confirmed expectations of the Vein for high silver grades and lower base metal content in the upper portion, while the east and central portion of the vein still has a poorly defined open limit and remains a source of additional ounces and resource upgrade. Decreasing silver grades from drilling at depth helped define the lower limitations of the Bonanza Zone about 800 metres below surface.

Currently four drills are turning on the Juanicipio property as part of a 25,000 metre program budgeted for 2009. Drills are currently testing the Juanicipio Vein and the Valdecañas. Drilling is expected to begin on the Encino Vein by the end of March.

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. Also just completed is a 47-metre concrete headframe for the Jarillas/ Valdecañas shaft 1,100 metres east of the Juanicipio property boundary.

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 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 Valdecañas 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 Valdecañas 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.

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 Valdecañas 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.

Information Concerning Estimates of Mineral Resources

Cautionary Note to Investors Concerning Estimates of Indicated Resources

*This table uses the term "Indicated Resources". MAG advises investors that although this term is recognized and required by Canadian regulations (under National Instrument 43-101 Standards of Disclosure for Mineral Projects), the U.S. Securities and Exchange Commission does not recognize this term. Investors are cautioned not to assume that any part or all of mineral deposits in this category will ever be converted into reserves.

Cautionary Note to Investors Concerning Estimates of Inferred Resources

*This table uses the term "Inferred Resources". MAG advises investors that although this term is recognized and required by Canadian regulations (under National Instrument 43-101 Standards of Disclosure for Mineral Projects), the U.S. Securities and Exchange Commission does not recognize this term. Investors are cautioned not to assume that any part or all of the mineral deposits in this category will ever be converted into reserves. In addition, "Inferred Resources" have a great amount of uncertainty as to their existence, and economic and legal feasibility. It cannot be assumed that all or any part of an Inferred Mineral Resource will ever be upgraded to a higher category. Under Canadian rules, estimates of Inferred Mineral Resources may not form the basis of feasibility or pre-feasibility studies, or economic studies except for Preliminary Assessment as defined under Canadian National Instrument 43-101. Investors are cautioned not to assume that part or all of an Inferred Resource exists, or is economically or legally mineable.

Qualified Persons

The mineral resources for the Juanicipio Joint Venture disclosed in this table* have been estimated by Dr. William Roscoe, P.Eng and Mr. David Ross, P.Geo., both employees of Scott Wilson RPA and independent of MAG. By virtue of their education and relevant experience Dr. Roscoe and Mr. Ross are "Qualified Persons" for the purpose of National Instrument 43-101. The mineral resources have been classified in accordance with CIM Definition Standards for Mineral Resources and Mineral Reserves, (December 2005). Dr. Roscoe, P.Eng., and Mr. Ross, P.Geo. have read and approved the contents of the disclosed mineral resource estimate. A National Instrument 43-101 technical report documenting the mineral resource estimate will be filed on SEDAR within 45 days.

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

Related News Releases:

July 10, 2009	MAG Silver Reports on the Juanicipio Joint Venture
May 20, 2009	MAG Silver Reports Excellent Metallurgical Recoveries
March 13, 2009	MAG Silver Reports New Silver / Gold Intercepts on Valdecañas Vein
March 04, 2009	MAG Silver Reports Restated Valdecañas Mineral Resource to Correct Estimation Error