By Melissa Pistilli-Exclusive to Silver Investing News

Fresnillo Plc has asked the Ontario Securities Commission to review MAG Silver’s [TSX: MAG] decision to halt valuation proceedings. The Mexican mining giant is calling the suspension “an inappropriate delaying tactic” towards its takeover bid.

In December, the world’s largest primary silver producer announced a $4.54 a share cash bid for its junior partner, of which it already owns 19.8 per cent. MAG rejected what has been called by many a “low-ball offer”, a “take-under” and a “stink bid.” The junior miner is now ramping up its exploration work to catch a white knight offer or a higher bid from Fresnillo.

On February 1, MAG suspended the valuation process, an important component of takeover proceedings, because, as it alleged, Fresnillo was withholding key information on its joint venture Juanicipio property. Fresnillo denied the allegation.

MAG claims the information being withheld was crucial for the valuation process because it related to the development of the property as part of the Fresnillo II region, “the engineering and planning information that would support the level development evident immediately east of the joint venture property” and “goes to the heart of the value of MAG’s shares.”

This is a serious issue of contention since the 44 per cent interest MAG holds in the Juanicipio property is the junior miner’s principal asset. “To proceed in these circumstances would require MAG’s minority shareholders to decide whether to sell their MAG shares without the ability to assess the fair value of their company and, in the Independent Committee’s view, would be abusive of the Canadian capital markets,” said Derek White, Chairman of the Independent Committee of MAG that is overseeing the valuation process.

In a recent interview with The Gold Report, Brent Cook, Editor of Exploration Insights newsletter, weighed in on the Fresnillo-MAG takeover. Cook said he had expected a takeover bid from Fresnillo; however, he did not expect the offer would be lower than MAG’s actual share price. “I have got a model on the vein and I have 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 per cent of the deposit,” he explained. “The offer from Fresnillo values the company at about $230 million.”

When asked why he thought the mining giant had made such a low-ball offer, Cook said he believed at the time the “markets were collapsing” and Fresnillo probably “felt they could pull it off.” But, he does not think they have a shot. “I know most of the major shareholders and none of them has indicated they’re willing to sell the stock for that price,” he said “My subscribers, I think, if they believe what I say, are not going to sell it for that price either.”

Cook predicts the valuation process will be long and the results will place MAG’s value much higher than the $4.54 a share bid. According to Cook, also a well-respected geologist, the Valdecañas Vein on the Jaunicipio property is a “very high grade silver deposit” and “probably the best silver discovery in quite some time.” Monday, shares of MAG Silver were trading at $7.29 12 pm PST, down from a 52-week high of $15.42.

MAG is hoping a white knight bid will come to the rescue. Cook points to Silver Wheaton [TSX: SLW] and Pan American Silver [TSX: PAA] as potential suitors. “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 would be looking at this.”