6-K

FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934

For: April 24 – May 19, 2006

MAG Silver Corp.

(SEC File No. 0-50437)

328 – 550 Burrard Street, Vancouver BC, V6C 2B5, CANADA

Address of Principal Executive Office

The registrant files annual reports under cover:

Form 20-F   [X]   Form 40-F   [    ]

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):  [    ]

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):  [    ]

Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934:   Yes  [    ]   No [X]

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-                   

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Exhibit List

32.1        CEO Certification

32.2        CFO Certification

99.1        Consolidated Financial Statements

99.2        Management's Discussion & Analysis

99.3        Notice of Meeting

99.4        Information Circular

99.5        Request for Financials Form

99.6        Proxy

Date: May 19, 2006

        “Dan MacInnis”                

DAN MACINNIS

President & Director

EX-32.1

FORM 52-109F1

CERTIFICATION OF ANNUAL FILINGS

I, Dan MacInnis, CEO of MAG Silver Corp. (the “Corporation”), certify that:

1.

I have reviewed the annual filings (as this term is defined in Multilateral Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings) of MAG Silver Corp., (the “issuer”) for the period ending December 31, 2005;

2.

Based on my knowledge, the annual filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the annual filings;

3.

Based on my knowledge, the annual financial statements together with the other financial information included in the annual filings fairly present in all material respects the financial condition, results of operations and cash flows of the issuer, as of the date and for the periods presented in the annual filings;

4.

The issuer’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures for the issuer, and we have:

a.

designed such disclosure controls and procedures, or caused them to be designed under our supervision, to provide reasonable assurance that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which the annual filings are being prepared; and

b.

evaluated the effectiveness of the issuer’s disclosure controls and procedures as of the end of the period covered by the annual filings and have caused the issuer to disclose in the annual MD&A our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by the annual filings based on such evaluation.

Date: April 28, 2006

“Dan MacInnis”

   President & CEO

EX-32.2

FORM 52-109F1

CERTIFICATION OF ANNUAL FILINGS

I, Frank R. Hallam, CFO of MAG Silver Corp. (the “Corporation”), certify that:

1.

I have reviewed the annual filings (as this term is defined in Multilateral Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings) of MAG Silver Corp., (the “issuer”) for the period ending December 31, 2005;

2.

Based on my knowledge, the annual filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the annual filings;

3.

Based on my knowledge, the annual financial statements together with the other financial information included in the annual filings fairly present in all material respects the financial condition, results of operations and cash flows of the issuer, as of the date and for the periods presented in the annual filings;

4.

The issuer’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures for the issuer, and we have:

a.

designed such disclosure controls and procedures, or caused them to be designed under our supervision, to provide reasonable assurance that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which the annual filings are being prepared; and

b.

evaluated the effectiveness of the issuer’s disclosure controls and procedures as of the end of the period covered by the annual filings and have caused the issuer to disclose in the annual MD&A our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by the annual filings based on such evaluation.

Date: April 28, 2006

   “Frank R. Hallam”

Chief Financial Officer

EX-99.1

Independent Auditors’ Report and Consolidated Financial Statements of

MAG SILVER CORP.

(An exploration stage company)

Deloitte & Touche LLP
2800 - 1055 Dunsmuir Street
4 Bentall Centre
P.O. Box 49279
Vancouver BC  V7X 1P4
Canada Tel: (604) 669-4466
Fax: (604) 685-0395
www.deloitte.ca

Report of Independent Registered Chartered Accountants

To the Shareholders of
MAG Silver Corp.
(an exploration stage company)

We have audited the consolidated balance sheets of MAG Silver Corp. (an exploration stage company) as at December 31, 2005 and 2004 and the consolidated statements of operations, shareholders’ equity and cash flows for each of the years in the three year period ended December 31, 2005 and the cumulative period from April 21, 1999 to December 31, 2005.  These financial statements are the responsibility of the Company’s management.  Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2005 and 2004 and the results of its operations and its cash flows for each of the years in the three year period ended December 31, 2005 and the cumulative period from April 21, 1999 to December 31, 2005 in accordance with Canadian generally accepted accounting principles.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.  Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.  Accordingly we express no such opinion.

(Signed) Deloitte & Touche LLP

Chartered Accountants
Vancouver, British Columbia
March 20, 2006

Comment by Independent Registered Chartered Accountants on Canada - United States of America Reporting Difference

The standards of the Public Company Accounting Oversight Board (United States) require the addition of an explanatory paragraph when the financial statements are affected by conditions and events that cast substantial doubt on the Company’s ability to continue as a going concern, such as those described in Note 1 to the financial statements.

Although we conducted our audits in accordance with both Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board, our report to the Shareholders dated March 20, 2006 is expressed in accordance with Canadian reporting standards which do not permit a reference to such conditions and events in the auditors’ report when these are adequately disclosed in the financial statements.

The standards of the Public Company Accounting Oversight Board (United States) require the addition of an explanatory paragraph (following the opinion paragraph) when there are changes in accounting principles that have a material effect on the comparability of the Company’s financial statements, such as the change described in Note 2 (h) to the financial statements or there has been a restatement of the financial statements as described in Note 12 (a) to the consolidated financial statements.  Our report to the shareholders dated March 20, 2006 is expressed in accordance with Canadian reporting standards which do not require a reference to such changes in accounting principles in the auditors’ report when the changes are properly accounted for and adequately disclosed in the financial statements.

(Signed) Deloitte & Touche LLP

Chartered Accountants
Vancouver, British Columbia
March 20, 2006

MAG SILVER CORP.
(An exploration stage company)
Consolidated Balance Sheets
	December 31,
		2005		2004
ASSETS
CURRENT
Cash and cash equivalents	$	7,560,193	$	1,866,360
Accounts receivable (Note 10)		105,071		520,776
Interest receivable		26,412		22,194
Prepaid expenses		22,237		12,850
TOTAL CURRENT ASSETS		7,713,913		2,422,180
EQUIPMENT AND LEASEHOLDS (Note 3)		39,914		41,403
MINERAL RIGHTS (Note 6)		4,858,108		3,276,550
DEFERRED EXPLORATION COSTS (Note 6)		5,463,471		4,034,164
TOTAL ASSETS	$	18,075,406	$	9,774,297
LIABILITIES
CURRENT
Accounts payable and accrued liabilities	$	393,621	$	61,837
TOTAL LIABILITIES		393,621		61,837
SHAREHOLDERS' EQUITY
Share capital (Note 4)
Authorized - 1,000,000,000 common shares,
without par value
Issued and outstanding at December 31, 2005
- 36,191,648 common shares (December 31, 2004 -
25,829,538)		20,812,185		11,632,368
Common shares allotted - not issued (9,191 common shares)
(Note 6 (d))		-		9,467
Contributed surplus		915,979		306,166
Deficit		(4,046,379)		(2,235,541)
TOTAL SHAREHOLDERS' EQUITY		17,681,785		9,712,460
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	18,075,406	$	9,774,297
CONTINUING OPERATIONS (Note 1)
ON BEHALF OF THE BOARD
(Signed) Dan MacInnis
Dan MacInnis, Director
(Signed) Michael Jones
Michael Jones, Director

See accompanying notes to the consolidated financial statements.

MAG SILVER CORP.
(An exploration stage company)
Consolidated Statements of Operations
								Cumulative
							amount from
								April 21,
		Year ended		Year ended		Year ended		1999 to
	December 31,		December 31,		December 31,		December 31,
		2005		2004		2003		2005
EXPENSES
Accounting and audit	$	127,959	$	126,837	$	142,437	$	446,082
Amortization		18,357		11,563		1,861		31,781
Bank charges and interest		1,827		3,021		16,285		21,133
Filing and transfer agent fees		42,254		41,163		54,924		178,586
Foreign exchange (gain) loss		(29,506)		48,349		45,487		64,330
Legal		167,005		71,493		108,517		432,150
Management and consulting fees		415,117		173,444		183,912		772,473
Property investigation expense		4,851		-		-		4,851
Shareholder relations		109,803		81,277		61,359		252,439
Stock compensation expense		611,353		-		75,308		686,661
Telephone and office		252,257		190,910		94,185		547,602
Travel		169,993		52,839		130,732		353,564
Write-off of advances		-		-		-		252,420
Write-off of computer software		-		-		-		2,673
		1,891,270		800,896		915,007		4,046,745
LOSS BEFORE THE FOLLOWING		(1,891,270)		(800,896)		(915,007)		(4,046,745)
INTEREST INCOME		80,432		66,999		77,468		248,494
NET LOSS FOR THE PERIOD	$ (1,810,838)		$	(733,897)	$	(837,539)	$ (3,798,251)
BASIC AND DILUTED
LOSS PER SHARE	$	(0.06)	$	(0.03)	$	(0.06)
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING		28,353,901		24,578,037		14,455,369

See accompanying notes to the consolidated financial statements.

MAG SILVER CORP.
(An exploration stage company)
Consolidated Statements of Shareholders' Equity
													Deficit
													accumulated
	Common shares					Shares	Special						during the	Total
	without par value			allotted but			warrants			Contributed			exploration	shareholders'
	Shares		Amount		not issued		Number		Amount		Surplus		stage	equity
Issued for cash	1,500,000	$	150,000	$		-	-	$	-	$	-	$	-	$ 150,000
Net loss	-		-			-	-		-		-		(4,279)	(4,279)
Balance, October 31, 1999	1,500,000		150,000			-	-		-		-		(4,279)	145,721
Net loss	-		-			-	-		-		-		(3,787)	(3,787)
Balance, December 31, 1999	1,500,000		150,000			-	-		-		-		(8,066)	141,934
Issued for cash	1,500,000		240,222			-	-		-		-		-	240,222
Net loss	-		-			-	-		-		-		(5,641)	(5,641)
Balance, December 31, 2000	3,000,000		390,222			-	-		-		-		(13,707)	376,515
Net loss	-		-			-	-		-		-		(279,639)	(279,639)
Balance, December 31, 2001	3,000,000		390,222			-	-		-		-		(293,346)	96,876
Issued for cash						-	2,400,000	375,000			-		-	375,000
Net loss	-		-			-	-		-		-		(122,631)	(122,631)
Balance, December 31, 2002	3,000,000		390,222			-	2,400,000	375,000			-		(415,977)	349,245
Issued for cash	11,500,000		5,109,766			-	-		-		-		-	5,109,766
Conversion of special warrants	2,400,000		375,000			-	(2,400,000)	(375,000)			-		-	-
Agent's administration
shares (Note 4 (a))	10,000		5,000			-	-		-		-		-	5,000
Finders' fee shares (Note 7 (a))	500,000		250,000			-	-		-		-		-	250,000
Issued to obtain mineral property
option rights	200,000		100,000			-	-		-		-		-	100,000
Issued on acquisition of
Lexington (Note 7 (b))	200,000		180,000			-	-		-		-		-	180,000
Warrants exercised	5,183,995		3,068,996			-	-		-		-		-	3,068,996
Stock options exercised	100,000		26,000			-	-		-		-		-	26,000
Stock options granted to
consultants	-		-			-	-		-		75,308		-	75,308
Net loss	-		-			-	-		-		-		(837,539)	(837,539)
Balance, December 31, 2003	23,093,995		9,504,984			-	-		-		75,308		(1,253,516)	8,326,776
Cumulative effect of change in
accounting policy (Note 2 (h))	-		-			-	-		-		248,128		(248,128)	-
Issued to obtain mineral property
option rights	1,358,793		1,578,752			-	-		-		-		-	1,578,752
Warrants exercised	1,236,750		480,562			-	-		-		-		-	480,562
Stock options exercised	140,000		68,070			-	-		-		(17,270)		-	50,800
Shares allotted to acquire mineral
property option rights	-		-			9,467	-		-		-		-	9,467
Net loss	-		-			-	-		-		-		(733,897)	(733,897)
Balance, December 31, 2004	25,829,538		11,632,368			9,467	-		-		306,166		(2,235,541)	9,712,460
Issued for cash (Note 4 (a))	7,201,176		6,771,672			-	-		-		-		-	6,771,672
Issued to obtain mineral property
option rights	1,654,679		1,337,289			(9,467)	-		-		-		-	1,327,822
Warrants exercised	1,400,755		1,046,566			-	-		-		-		-	1,046,566
Stock options exercised	105,500		24,290			-	-		-		(1,540)		-	22,750
Stock options granted	-		-			-	-		-		611,353		-	611,353
Net loss	-		-			-	-		-		-		(1,810,838)	(1,810,838)
Balance, December 31, 2005	36,191,648	$	20,812,185	$		-	-	$	-	$	915,979	$	(4,046,379)	$ 17,681,785

See accompanying notes to the consolidated financial statements.

MAG SILVER CORP.
(An exploration stage company)
Consolidated Statements of Cash Flows
								Cumulative
							amount from
								April 21,
		Year ended		Year ended		Year ended		1999 to
	December 31,		December 31,		December 31,		December 31,
		2005		2004		2003		2005
OPERATING ACTIVITIES
Loss for the period	$ (1,810,838)		$	(733,897)	$	(837,539)	$ (3,798,251)
Items not involving cash:
Write-off of computer software		-		-		-		2,673
Write-off of advances		-		-		-		252,420
Amortization		18,357		11,563		1,861		31,781
Non-cash compensation expense		611,353		-		75,308		686,661
Changes in operating assets and liabilities
Accounts receivable		415,705		(261,275)		(259,425)		(105,071)
Interest receivable		(4,218)		41,933		(64,127)		(26,412)
Prepaid expenses		(9,387)		(4,100)		(8,750)		(22,237)
Accounts payable and accrued liabilities		331,784		(146,181)		149,138		393,621
		(447,244)		(1,091,957)		(943,534)		(2,584,815)
INVESTING ACTIVITIES
Purchase of equipment and leasehold improvements		(16,868)		(18,592)		(32,653)		(74,368)
Advances to Minera Los Lagartos, S.A. de C.V.		-		-		-		(113,139)
Acquisition of Minera Los Lagartos, S.A. de C.V.
(Note 7 (a))		-		-		(7,500)		(7,500)
Acquisition of Lexington Capital Group Inc. (Note 7 (b))		-		-		(350,000)		(350,000)
Mineral rights		(253,736)		(373,653)		(202,132)		(908,271)
Deferred exploration costs		(1,429,307)		(1,976,622)		(2,052,897)		(5,496,628)
Other advances		-		-		-		(252,420)
		(1,699,911)		(2,368,867)		(2,645,182)		(7,202,326)
FINANCING ACTIVITIES
Issue of share capital		7,840,988		531,362		8,217,262		16,972,334
Issue of special warrants		-		-		-		375,000
		7,840,988		531,362		8,217,262		17,347,334
INCREASE (DECREASE) IN CASH		5,693,833		(2,929,462)		4,628,546		7,560,193
CASH AND EQUIVALENTS, BEGINNING OF		1,866,360		4,795,822		167,276		-
CASH AND EQUIVALENTS, END OF PERIOD
(Note 2 (d))	$	7,560,193	$	1,866,360	$	4,795,822	$	7,560,193
Interest paid	$	-	$	-	$	12,500	$	12,500
Non-cash investing and financing activities:
Issue of shares in connection with acquisition of Minera
Los Lagartos, S.A. de C.V. (Note 7 (a))	$	-	$	-	$	250,000	$	250,000
Issue of shares in exchange for mineral property
option rights	$	1,337,289	$	1,578,752	$	100,000	$	3,016,041
Issue of shares in connection with acquisition of
Lexington Capital Group Inc. (Note 7 (b))	$	-	$	-	$	180,000	$	180,000

See accompanying notes to the consolidated financial statements.

MAG SILVER CORP.

(An exploration stage company)

Year ended December 31, 2005, 2004 and 2003 and cumulative

    from April 21, 1999 to December 31, 2005

1.

CONTINUING OPERATIONS

The Company was incorporated under the Company Act (British Columbia) on April 21, 1999 and its shares were listed on the TSX Venture Exchange on April 21, 2000.

The Company is an exploration company conducting work on mineral properties it has staked or acquired by way of option agreement principally in Mexico. The Company has not yet determined whether the properties on which it is conducting exploration contain any ore reserves that are economically recoverable. The Company defers all acquisition, exploration and development costs related to the properties on which it is conducting exploration. The recoverability of these amounts is dependent upon the existence of economically recoverable reserves, the ability of the Company to obtain the necessary financing to complete the development of the interests, and future profitable production, or alternatively, upon the Company’s ability to dispose of its interests on a profitable basis.

These consolidated financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which assume that the Company will realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. The Company has incurred losses from inception and does not currently have the financial resources to sustain operations in the long-term. The Company’s ability to continue as a going concern is dependent upon its ability in the future to achieve profitable operations and, in the meantime, to obtain the necessary financing to meet its obligations and repay its liabilities when they become due. External financing, predominantly by the issuance of equity to the public, will be sought to finance the operations of the Company.

Although the Company has taken steps to verify title to the properties on which it is conducting exploration and in which it has an interest, in accordance with industry standards for the current stage of exploration of such properties, these procedures do not guarantee the Company’s title. Property title may be subject to unregistered prior agreements and non-compliance with regulatory requirements.

MAG SILVER CORP.

(An exploration stage company)

Year ended December 31, 2005, 2004 and 2003 and cumulative

    from April 21, 1999 to December 31, 2005

2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

These financial statements have been prepared in accordance with Canadian generally accepted accounting principles (“Canadian GAAP”) and include the following significant policies outlined below. These policies conform, in all material respects, with accounting principles generally accepted in the United States of America (“US GAAP”), except as described in Note 12.

(a)

Principles of consolidation

On January 15, 2003, the Company completed its acquisition of Minera Los Lagartos, SA de CV (Note 7 (a)) and on July 16, 2003, its acquisition of Lexington Capital Group Inc. (Note 7 (b)).  The financial statements of entities which are controlled by the Company through voting equity interests, referred to as subsidiaries, are consolidated.  Entities which are jointly controlled, referred to as joint ventures, are proportionately consolidated.  Variable interest entities (“VIEs”), which include, but are not limited to, special purpose entities, trusts, partnerships, and other legal structures, as defined by the Accounting Standards Board in Accounting Guideline (“AcG”) 15, Consolidation of Variable Interest Entities (“AcG 15”), are entities in which equity investors do not have the characteristics of a “controlling financial interest” or th ere is not sufficient equity at risk for the entity to finance its activities without additional subordinated financial support.  VIEs are subject to consolidation by the primary beneficiary who will absorb the majority of the entities’ expected losses and/or expected residual returns.  The Company does not believe that it has any VIEs subject to consolidation.  All significant intercompany balances and transactions have been eliminated upon consolidation.  The principal subsidiary at December 31, 2005 is Minera Los Lagartos, S.A. de C.V. which holds several properties in Mexico.

(b)

Measurement uncertainty

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenditures during the reported period. Significant estimates used in preparation of these financial statements include estimates of the net realizable value of mineral properties and deferred exploration costs, asset retirement obligations, stock based compensation, income tax provisions and contingencies. Actual results may differ from those estimated.

MAG SILVER CORP.

(An exploration stage company)

Year ended December 31, 2005, 2004 and 2003 and cumulative

    from April 21, 1999 to December 31, 2005

2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

(c)

Financial instruments

The carrying values of cash and cash equivalents, accounts receivable, interest receivable and accounts payable and accrued liabilities reflected in the balance sheet approximate their respective fair values.

Price risk is the risk that the value of the Company’s financial instruments will vary because of fluctuations in foreign exchange rates and the degree of volatility of these rates.  Certain of the Company’s accounts receivable, accounts payable and accrued liabilities are denominated in Mexican pesos.  The Company does not use any derivative instruments to reduce its exposure to fluctuations in foreign exchange rates.

(d)

Cash and cash equivalents

Cash and cash equivalents consist of cash and short-term money market instruments which are readily convertible into cash and have original maturities of 90 days or less.

Details of cash and cash equivalents are as follows:

		2005		2004		2003
Cash	$	6,210,193	$	66,360	$	495,822
Short-term deposits		1,350,000		1,800,000		4,300,000
	$	7,560,193	$	1,866,360	$	4,795,822

(e)

Mineral rights and deferred exploration costs

The Company is in the exploration stage with respect to its activities and accordingly follows the practice of capitalizing all costs relating to the acquisition, exploration and development of its mining rights and crediting all revenues received against the cost of the related interests. At such time as commercial production commences, these costs will be charged to operations on a units-of-production method based on proven and probable reserves. The carrying values related to abandoned interests are charged to operations at the time of any abandonment.

Mineral rights include costs to acquire options to acquire interests in unproven mineral properties.

Deferred exploration costs include direct exploration costs incurred by the Company in its effort to determine the existence of economically mineable ore including the cost of feasibility studies.

MAG SILVER CORP.

(An exploration stage company)

Year ended December 31, 2005, 2004 and 2003 and cumulative

    from April 21, 1999 to December 31, 2005

2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

(e)

Mineral rights and deferred exploration costs (continued)

Management reviews the carrying value of mineral rights and deferred exploration costs at least quarterly for evidence of impairment. This review is generally made with reference to the timing of exploration work, work programs proposed, exploration results achieved by the Company and by others in the related area of interest, and an assessment of the likely results to be achieved from performance of further exploration. When the results of this review indicate that a condition of impairment exists, the Company estimates the net recoverable amount of the deferred exploration costs and related mining rights by reference to the potential for success of further exploration activity and/or the likely proceeds to be received from sale or assignment of the rights. When the carrying values of mining rights or deferred exploration costs are estimated to exceed their net recoverable amounts, a provision is made for the decline in value.

(f)

Equipment and leaseholds

Equipment and leaseholds are recorded at cost and are amortized on the declining balance basis at the following annual rates:

Computer equipment and software

30%

Field equipment

30%

The leasehold improvements are depreciated on a straight-line basis to amortize the costs over the three year term of the related lease.

(g)

Income taxes

Future income taxes relate to the expected future tax consequences of differences between the carrying amount of balance sheet items and their corresponding tax values.  Future tax assets, if any, are recognized only to the extent that, in the opinion of management, it is more likely than not that the future income tax assets will be realized.  Future income tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment or substantive enactment.

MAG SILVER CORP.

(An exploration stage company)

Year ended December 31, 2005, 2004 and 2003 and cumulative

    from April 21, 1999 to December 31, 2005

2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

(h)

Stock-based compensation

Effective January 1, 2004, the Company adopted the amended recommendations of the CICA Handbook Section 3870, Stock-based Compensation and Other Stock-based Payments.  Under the amended standards of this Section, the fair value of all stock-based awards granted are estimated using the Black-Scholes model and are recorded in operations over their vesting periods.  The compensation cost related to stock options granted after January 1, 2002 is recorded in operations.

Previously, the Company provided note disclosure of pro forma net earnings and pro forma earnings per share as if the fair value based method had been used to account for share purchase options granted to employees, directors and officers after January 1, 2002.  The amended recommendations have been applied retroactively from January 1, 2002 without restatement of prior periods.  As a result, as of January 1, 2004, the deficit was increased by $248,128, and contributed surplus was increased by $248,128.

The total compensation expense recognized in the statement of operations for share purchase options granted in 2005 amount to $611,353.  Had the same basis been applied to share purchase options granted in 2004 and 2003, net earnings would have been as follows:

		2004		2003
Net loss	$	733,897	$	837,539
Additional compensation expense		-		248,128
Pro forma net loss	$	733,897	$	1,085,667
Pro forma basic and diluted loss per share	$	(0.03)	$	(0.08)

For the year ended December 31, 2003, stock-based compensation expense was determined using an option pricing model assuming no dividends are to be paid, a weighted average volatility of the Company’s share price of 63%, an annual risk free interest rate of 3.76% and expected lives of five years.  The weighted average fair value of share purchase options granted in 2003 was $0.25 per share.

No stock options were issued in the year ended December 31, 2004 and the fair value of the stock options issued in 2005 are described in Note 4 (b).

MAG SILVER CORP.

(An exploration stage company)

Year ended December 31, 2005, 2004 and 2003 and cumulative

    from April 21, 1999 to December 31, 2005

2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

(i)

Foreign exchange translation

The accounts of the Company’s foreign operations are considered to be integrated with the operations of the Company and are translated into Canadian dollars as follows:

·

monetary assets and liabilities at the rate prevailing at the balance sheet date;

·

non-monetary assets and liabilities at historical rates; and

·

income and expenses at the average rate in effect during the year.

The resulting translation adjustment is included as a component of foreign exchange (gain) loss on the statement of operations.

(j)

Earnings (loss) per common share

Basic earnings (loss) per share calculations are based on the weighted average number of common shares outstanding, after excluding the shares held in escrow for which the conditions for their release were not satisfied (Note 4 (d)).

The Company uses the treasury stock method for the calculation of diluted earnings per share. Diluted earnings per share are computed using the weighted average number of common and common equivalent shares outstanding during the year. Common equivalent shares consist of the incremental common shares upon the assumed exercise of stock options and warrants, but are excluded from the computation if their effect is anti-dilutive.

Potentially dilutive securities totalling 5,739,490 for the year ended December 31, 2005 (2,154,500 and 3,584,990 shares arising from outstanding and exercisable stock options and share purchase warrants, respectively) and 3,459,255 shares for the year ended December 31, 2004 (1,030,000 and 2,429,255 shares arising from outstanding exercisable stock options and share purchase warrants, respectively) were not included as their effect would be anti-dilutive.

(k)

Asset retirement obligations

The Company records the present value of asset retirement obligations including reclamation costs when the obligation is incurred and it is recorded as a liability with a corresponding increase in the carrying value of the related mining assets.  The carrying value is amortized over the life of the related mining asset on a units-of-production basis commencing with initial commercialization of the asset.  The liability is accreted to the actual liability on settlement through charges each period in the statement of operations.

MAG SILVER CORP.

(An exploration stage company)

Year ended December 31, 2005, 2004 and 2003 and cumulative

    from April 21, 1999 to December 31, 2005

2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

(l)

Comparative figures

Certain of the prior years’ comparative figures have been reclassified to conform with the classifications used in 2005.

3.

FIXED ASSETS AND LEASEHOLDS

				2005				2004
			Accumulated			Net book		Net book
		Cost	depreciation			value		value
Computer equipment
and software	$	21,889	$	9,589	$	12,300	$	10,698
Field equipment		34,806		15,942		18,864		16,955
Leasehold improvements		15,000		6,250		8,750		13,750
	$	71,695	$	31,781	$	39,914	$	41,403

4.

SHARE CAPITAL

(a)

Issued and outstanding

On December 22, 2005, the Company raised gross proceeds of $6,494,749 from the sale of 6,494,749 units at a price of $1.00 per unit in a brokered, non-brokered financing. Each unit consisted of one common share and one-half of one share purchase warrant, with each whole warrant entitling the holder to purchase one share at a price of $1.35 per share for a period of 18 months until June 21, 2007. The Agents were granted warrants to purchase up to 295,190 shares of the Company at a price of $1.35 in partial payment of services rendered in connection with their portion of the financing. The commission paid to the Agents was $295,190, equal to 7% of the gross proceeds of the Offering, comprising of $210,340 in cash and $84,850 in units of the offering.  Each unit consisted of one common share and one-half of one share purchase warrant.  Corporate finance fees, legal fees, TSX fees and related expenditures totalled $113,802. The net proceeds to the Company from the financing were $6,170,607.

On June 29, 2005, the Company issued 750,000 shares with a value of $607,500 to the former option holder of the Don Fippi property to complete the acquisition of the property.  See Note 6 (b).

On June 29, 2005, the Company issued 750,000 shares with a value of $607,500 to the former option holder of the Guigui property to complete the acquisition of the property.  See Note 6 (c).

MAG SILVER CORP.

(An exploration stage company)

Year ended December 31, 2005, 2004 and 2003 and cumulative

    from April 21, 1999 to December 31, 2005

4.

SHARE CAPITAL (Continued)

(a)

Issued and outstanding (continued)

On May 2, 2005 the Company closed the private placement subscribed to by Industrias Peñoles S.A. de C.V. (“Peñoles”) which consisted of 621,577 common shares of MAG Silver Corp. at $0.967. This equates to an investment of $601,065 (US$500,000). See Note 6 (a)(v).

On April 15, 2003, the Company raised gross proceeds of $5,750,000 from the sale of 11,500,000 units at a price of $0.50 per unit. Each unit consisted of one common share and one-half of one share purchase warrant, with each whole warrant entitling the holder to purchase one share at a price of $0.75 per share for a period of two years from the date of closing. The Agents were granted warrants to purchase up to 1,150,000 shares of the Company at the same price in partial payment of services rendered in connection with the financing. The commission paid to the Agents was $460,000, equal to 8% of the gross proceeds of the Offering, including the issue of 10,000 shares of the Company (the “Administration Shares”) as an administration fee in relation to the Offering, valued at $5,000. Corporate finance fees, legal fees and related expenditures totalled $175,234, of which $7,500 was incurred to December 31, 2002. Th e net proceeds to the Company from the financing were $5,109,766.

The prospectus issued in respect of the financing also qualified 2,400,000 common shares and non-transferable share purchase warrants to purchase up to 1,950,000 common shares of the Company issuable upon the exercise of special warrants issued by the Company in September and December, 2002, which shares and warrants have now been issued. The prospectus also qualified 500,000 finders’ fee shares issued in relation to property acquisitions, of which 200,000 common shares have been issued and 300,000 were initially issued in escrow.

(b)

Stock options

The Company has entered into Incentive Stock Option Agreements (“Agreements”) with directors, officers and employees. The maximum number of stock options which may be granted is limited to 10% of the issued and outstanding shares.

MAG SILVER CORP.

(An exploration stage company)

Year ended December 31, 2005, 2004 and 2003 and cumulative

    from April 21, 1999 to December 31, 2005

4.

SHARE CAPITAL (Continued)

(b)

Stock options (continued)

At the date the Agreements are entered into, the exercise price of each option is set at the fair value of the common shares at the date of grant.  The following table summarizes the Company’s options:

		Weighted			Weighted
	Year ended		average	Year ended		average
	December 31,		exercise	December 31,		exercise
	2005		price	2004		price
Balance outstanding,
beginning of year	1,030,000	$	0.54	1,170,000	$	0.52
Activity during the year
Options granted	1,240,000		1.03	-		-
Options cancelled	(10,000)		1.06	-		-
Options exercised	(105,500)		0.22	(140,000)		0.36
Balance outstanding,
end of year	2,154,500	$	0.84	1,030,000	$	0.54

The following table summarizes options outstanding and exercisable at December 31, 2005:

		Number outstanding	Weighted average		Weighted
		and exercisable at	remaining		average
	Exercise	December 31,	contractual life		exercise
	price	2005	(years)		price
$	0.50	569,500	2.29	$	0.50
	0.70	355,000	2.36		0.70
	0.75	90,000	4.60		0.75
	1.00	110,000	4.92		1.00
	1.02	25,000	4.95		1.02
	1.06	960,000	4.05		1.06
	1.14	45,000	4.76		1.14
		2,154,500	3.40	$	0.84

During the current year the Company granted 1,240,000 stock options, and later cancelled 10,000 of these. During the year ended December 31, 2004 no stock options were granted. The Company has recorded $611,353 (2004 - $Nil) of compensation expense relating to stock options granted to employees and consultants in the year ended December 31, 2005.

MAG SILVER CORP.

(An exploration stage company)

Year ended December 31, 2005, 2004 and 2003 and cumulative

    from April 21, 1999 to December 31, 2005

4.

SHARE CAPITAL (Continued)

(b)

Stock options (continued)

For the year ended December 31, 2005, stock-based compensation expense was determined using an option pricing model assuming no dividends are to be paid, a weighted average volatility of the Company’s share price of 80%, an annual risk free interest rate of 3.5% and expected lives of three years.  

(c)

Share purchase warrants

			Weighted
			average
	Number		exercise
	of warrants		price
Balance at December 31, 2003	3,666,005	$	0.63
Exercised and converted into common shares	(1,236,750)		0.39
Balance at December 31, 2004	2,429,255		0.75
Issued in connection with issuance of common
shares	3,584,990		1.35
Exercised and converted into common shares	(1,400,755)		0.75
Expired	(1,028,500)		0.75
Balance at December 31, 2005	3,584,990	$	1.35

The following table summarizes information about the warrants outstanding at December 31, 2005:

	Exercise	Warrants
	price	outstanding	Expiry date
$	1.35	3,584,990	June 21, 2007

(d)

Shares held in escrow

At December 31, 2005, 45,000 of the of the originally escrowed common shares issued in connection with the finders fee (Note 4 (a)) and 225,000 of the original 1,500,000 common shares issued to directors and officers of the company are still held in escrow and are scheduled to be released on April 21, 2006.  

MAG SILVER CORP.

(An exploration stage company)

Year ended December 31, 2005, 2004 and 2003 and cumulative

    from April 21, 1999 to December 31, 2005

5.

INCOME TAXES

The provision for income taxes reported differs from the amounts computed by applying the cumulative Canadian federal and provincial income tax rates to the pre-tax loss due to the following:

		2005		2004		2003
Statutory tax rates		34.87%		35.60%		37.60%
Recovery of income taxes computed at
statutory rates	$	631,439	$	261,267	$	314,915
Non-deductible expenses		(215,930)		(4,116)		(28,316)
Lower effective tax rate on loss in
foreign jurisdictions		(6,363)		(1,973)		(1,603)
Future tax benefits not recognized in
the period that the loss arose		(409,146)		(255,178)		(284,996)
	$	-	$	-	$	-

The approximate tax effect of each type of temporary difference that gives rise to the Company’s future income tax assets are as follows:

		2005		2004
Canadian operating loss carryforwards	$	1,023,908	$	651,097
Mexican operating loss carryforwards		1,669,599		1,223,600
Canadian capital losses carried forward		41,649		44,100
Share issuance costs		192,478		136,750
Total future income tax assets		2,927,634		2,055,547
Less valuation allowance		(1,130,648)		(831,947)
Net future income tax assets		1,796,986		1,223,600
Future income tax liability
Excess of book value of mineral rights and deferred
exploration costs over tax values		(1,796,986)		(1,223,600)
Net future income tax assets	$	-	$	-

At December 31, 2005, the Company has Canadian non-capital loss carryforwards aggregating $3,103,000, expiring between 2006 and 2015, available to offset future taxable income and capital loss carryforwards of $252,000 which are available only to offset future capital gains for tax purposes and may be carried forward indefinitely.

At December 31, 2005, the Company has Mexican tax loss carryforwards aggregating $5,962,000, expiring between 2012 and 2015, available to offset future taxable income.

MAG SILVER CORP.

(An exploration stage company)

Year ended December 31, 2005, 2004 and 2003 and cumulative

    from April 21, 1999 to December 31, 2005

6.

MINERAL RIGHTS AND DEFERRED EXPLORATION COSTS

	Year ended December 31, 2005
					Sierra de		Cinco de
	Juanicipio	Don Fippi	Guigui	Lagartos	Ramirez	Adargas	Mayo	Total
Acquisition costs
of mineral rights
Balance, beginning of year	$912,657	$801,068	$962,281	$39,629	$171,175	$198,613	$191,127	$3,276,550
Incurred during year	6,801	621,604	608,891	-	158,679	90,774	94,809	1,581,558
Balance, end of year	$919,458	$1,422,672	$1,571,172	$39,629	$329,854	$289,387	$285,936	$4,858,108
Deferred exploration costs
Camp costs	$10,855	$63,793	$12,865	$16,009	$2,630	$2,672	$9,637	$118,461
Drilling	5,521	119,296	243,972	4,056	-	-	-	372,845
Geochemical	650	2,228	3,724	21,728	-	-	10,039	38,369
Geological	43,462	166,045	59,028	66,586	11,820	19,382	72,605	438,928
Maps, fees and licenses	133,397	49,121	46,607	56,725	12,185	1,079	25,072	324,186
Travel	6,217	18,989	5,332	3,108	-	-	1,182	34,828
Transport and shipping	6,701	4,509	779	6,466	-	-	71	18,526
Site administration	43,682	21,834	10,704	3,537	663	1,178	1,566	83,164
	250,485	445,815	383,011	178,215	27,298	24,311	120,172	1,429,307
Balance, beginning of year	1,775,609	795,074	882,183	220,977	61,238	283,468	15,615	4,034,164
Balance, end of year	$2,026,094	$1,240,889	$1,265,194	$399,192	$88,536	$307,779	$135,787	$5,463,471

	Year ended December 31, 2004
					Sierra de		Cinco de
	Juanicipio	Don Fippi	Guigui	Lagartos	Ramirez	Adargas	Mayo	Total
Acquisition costs
of mineral rights
Balance, beginning of year	$894,379	$173,534	$181,812	$21,519	$43,434	$-	$-	$1,314,678
Incurred during year	18,278	627,534	780,469	18,110	127,741	198,613	191,127	1,961,872
Balance, end of year	$912,657	$801,068	$962,281	$39,629	$171,175	$198,613	$191,127	$3,276,550
Deferred exploration costs
Camp costs	$48,262	$55,355	$15,436	$-	$9,887	$13,232	$1,245	$143,417
Drilling	274,172	-	178,499	183,402	-	221,695	-	857,768
Geochemical	2,243	11,472	21,249	9,373	9,897	2,987	284	57,505
Geological	195,829	320,168	67,703	1,686	30,310	30,174	4,099	649,969
Maps, fees and licenses	51,530	22,479	34,889	8,555	4,408	4,958	249	127,068
Travel	24,907	29,347	58	-	1,509	5,185	9,738	70,744
Transport and shipping	216	-	-	-	36	11	-	263
Site administration	33,118	20,460	5,893	-	5,191	5,226	-	69,888
	630,277	459,281	323,727	203,016	61,238	283,468	15,615	1,976,622
Balance, beginning of year	1,145,332	335,793	558,456	17,961	-	-	-	2,057,542
Balance, end of year	$1,775,609	$795,074	$882,183	$220,977	$61,238	$283,468	$15,615	$4,034,164

MAG SILVER CORP.

(An exploration stage company)

Year ended December 31, 2005, 2004 and 2003 and cumulative

    from April 21, 1999 to December 31, 2005

6.

MINERAL RIGHTS AND DEFERRED EXPLORATION COSTS (Continued)

(a)

Juanicipio Property

The Company, through its subsidiary, Minera Los Lagartos, S.A. de C.V. (“Lagartos”), holds a 100% interest in an exploration concession on the Juanicipio property, located in the Fresnillo District, Zacatecas, Mexico.

On April 4, 2005 the Company announced the signing of a binding letter of agreement for the establishment of an exploration Joint Venture covering MAG’s wholly-owned 7,679 hectare Juanicipio Property in Zacatecas, Mexico with Industrias Peñoles, S.A. de C.V. (“Peñoles”).

The principal features of the agreement are:  

(i)

Peñoles can earn a 56% interest in Juanicipio upon completion of a US$5,000,000 exploration program on or before the end of year 4 of the agreement.

(ii)  

During the first year, Peñoles shall incur an obligatory work commitment expenditure of  at least US$750,000.  Year 1 expenditures must include a minimum of 3,000 metres of diamond drilling.  At  December 31, 2005, Peñoles had spent US$622,440 and had completed 5,747 metres of diamond drilling.

(iii)

A flexible and staged exploration program is included in the contract.  Exploration work will be supervised by a technical committee comprised of three representatives from Peñoles and two from MAG Silver.  Peñoles and MAG Silver are obliged to share their information in the district.  Part of the geological and exploration work will be conducted by MAG consultants and in-house personnel.   

(iv)

Exploration results from Juanicipio will be published as appropriate on an ongoing basis, with both companies to agree on the content.

(v)

Peñoles subscribed for US$500,000 for a total of 621,577 MAG shares, at a price of $0.967 on signing and in 2006 purchased an additional US$500,000 in MAG shares, at fair value, to continue the contract into the second year (Note 11 (d)).

MAG SILVER CORP.

(An exploration stage company)

Year ended December 31, 2005, 2004 and 2003 and cumulative

    from April 21, 1999 to December 31, 2005

6.

MINERAL RIGHTS AND DEFERRED EXPLORATION COSTS (Continued)

(b)

Don Fippi Property

Under the terms of an option agreement, the Company has the right to explore and acquire a 100% interest in mining concessions located in the Batapilas, Chihuahua district of Mexico.

In 2005, MAG negotiated a buyout of the original agreement. Under the terms of the buyout agreement MAG issued the underlying agreement holders a total of 750,000 common shares of MAG for the Don Fippi property. This purchase gives MAG an undivided 100% interest in the property and eliminates an obligation to make further cash payments of US$450,000, satisfy work expenditure commitments of approximately US$3.41 million, and issue 673,822 additional shares under the original terms of the option agreement. The property will remain subject to royalties and other terms of the original option agreement.

(c)

Guigui Property

Under the terms of an option agreement, the Company has the right to explore and acquire a 100% interest in mining concessions located in the Santa Eulalia, Chihuahua district of Mexico.

In 2005, MAG negotiated a buyout of the original agreement. Under the terms of the buyout agreement MAG issued the underlying agreement holders a total of 750,000 common shares of MAG for the Guigui property. This purchase gives MAG an undivided 100% interest in the property and eliminates an obligation to make further cash payments of US$450,000, satisfy work expenditure commitments of approximately US$1.84 million, and issue 604,003 additional shares under the original terms of the option agreement. The property will remain subject to royalties and other terms of the original option agreement.

(d)

Lagartos Property

The Company has acquired an exploration concession on mining claims on the Fresnillo trend to the northwest and southeast of the Juanicipio property. This exploration concession enables the Company to explore the mining claim covered by the concession to December 2009, subject to the Company paying any applicable annual tax or other regulatory charges.

MAG SILVER CORP.

(An exploration stage company)

Year ended December 31, 2005, 2004 and 2003 and cumulative

    from April 21, 1999 to December 31, 2005

6.

MINERAL RIGHTS AND DEFERRED EXPLORATION COSTS (Continued)

(e)

Sierra Ramirez Property

The Company has the right to explore and acquire a 100% interest in mining concessions located in the Sierra Ramirez district in Durango, Mexico. Under the terms of the related option agreement, the Company is obligated to:

(i)

make scheduled payments totalling US$1,505,000 plus applicable value added tax (of which US$230,000 has been paid) by December 14, 2008;

(ii)

incur exploration expenditures totalling US$750,000 by July 26, 2009 (of which US$70,000 has been incurred to December 31, 2005); and

(iii)

issue a finder’s fee of 25,000 common shares of the Company, of which the Company has issued a total of 21,637 common shares pursuant to the agreement approved by the TSX Venture exchange.

During the year ended December 31, 2004, the first tranche of 9,191 common shares were allotted and issued.  During the year ended December 31, 2005, the second tranche of 12,446 common shares were issued; and the third tranche of 3,363 shares will be issued during the year ended December 31, 2006.

(f)

Adargas Property

The Company has entered into an agreement which gives it the right to explore and acquire a 100% interest in the Adargas property (the “Adargas Property”), subject to a 2.5% net smelter returns royalty. Under the terms of the agreement, the Company is obligated to:

(i)

make scheduled payments totalling US$1,000,000 plus applicable value added tax (of which US$100,000 has been paid) by July 26, 2009;

(ii)

issue 75,000 common shares of the Company (all have been issued); and

(iii)

incur exploration expenditures totalling US$1,000,000 by July 26, 2009 (of which US$250,000 has been incurred to December 31, 2005).

During the year, MAG and Minera Los Lagartos, S.A. de C.V. and Minera Cascabel, S.A. de C.V. amended terms of an option agreement dated February 26, 2004 whereby MAG has an option to acquire a 100% interest in the Adargas property in Mexico. Under the terms, half of each of the remaining property payments totalling US$975,000 (on or before July 26, 2009) may be paid in shares at a deemed price per share equal to the average trading price of MAG for 30 calendar days prior to the date of payment. To that end MAG paid cash of US$37,500 and issued 59,830 shares for the property payment due July 26, 2005.

MAG SILVER CORP.

(An exploration stage company)

Year ended December 31, 2005, 2004 and 2003 and cumulative

    from April 21, 1999 to December 31, 2005

6.

MINERAL RIGHTS AND DEFERRED EXPLORATION COSTS (Continued)

(g)

Cinco de Mayo Property

The Company has entered into an agreement which gives it the right to explore and acquire a 100% interest in the Cinco de Mayo property (the “Cinco de Mayo Property”), subject to a 2.5% net smelter returns royalty. Under the terms of the agreement, the Company is obligated to:

(i)

make scheduled payments totalling US$1,000,000 plus applicable value added tax (of which US$100,000 has been paid) by July 26, 2009;

(ii)

issue 75,000 common shares of the Company (all have been issued); and

(iii)

incur exploration expenditures totalling US$1,000,000 by July 26, 2009 (of which US$110,000 has been incurred to December 31, 2005).

During the year, MAG and Minera Los Lagartos, S.A. de C.V. and Minera Cascabel, S.A. de C.V. amended terms of an option agreement dated February 26, 2004 whereby MAG has an option to acquire a 100% interest in the Cinco de Mayo property in Mexico. Under the terms, half of each of the remaining property payments totalling US$975,000 (on or before July 26, 2009) may be paid in shares at a deemed price per share equal to the average trading price of  MAG for 30 calendar days prior to the date of payment.  To that end MAG paid cash of US$37,500 and issued 59,830 shares for the property payment due July 26, 2005.

7.

ACQUISITIONS  

(a)

Minera Los Lagartos, S.A. de C.V. (“Lagartos”)

The Company announced on November 25, 2002 that it was proceeding with the acquisition of a 99% interest in the issued and outstanding common shares of Lagartos. This acquisition was completed by the Company on January 15, 2003.  The remaining 1% of Lagartos is held, in trust for the Company, by a director and officer of the Company. Upon acquisition by the Company, Lagartos held the interests in the Juanicipio concessions and the options to acquire interests in the Don Fippi and Guigui concessions.

The acquisition of Lagartos has been accounted for using the purchase method and the results of operations of Lagartos have been included in the Company’s results of operations from January 15, 2003.

MAG SILVER CORP.

(An exploration stage company)

Year ended December 31, 2005, 2004 and 2003 and cumulative

    from April 21, 1999 to December 31, 2005

7.

ACQUISITIONS (Continued)

(a)

Minera Los Lagartos, S.A. de C.V. (“Lagartos”) (continued)

The total purchase price of Lagartos and its allocation to the fair value of net assets acquired is as follows:

Cash advanced to Lagartos in respect of option on Juanicipio property
(US$50,000) paid in 2002	$78,750
Cash paid for the 100% interest in the common shares of Lagartos
(US$5,000)	7,500
Finders* fee	250,000
Advances to Lagartos prior to acquisition	113,139
	$449,389
The fair value of net assets acquired
Mineral rights	$449,389

The Company issued 500,000 common shares with a fair value of $0.50 per share in connection with the completion of the transaction as a finders’ fee to two officers and a company with directors and officers in common.

There were no other significant assets or liabilities acquired in this transaction. As such, the total of the acquisition of Lagartos has been allocated to acquired mineral rights being the right or the underlying right to explore a mining property.

(b)

Lexington Capital Group Inc. (“Lexington”)

On October 9, 2005 the assets of Lexington were merged with Lagartos, so that all indirect interests in the Juanicipio I claim were held by one company.

On July 16, 2003, the Company completed the acquisition of Lexington whose main asset is its indirect interest in the Juanicipio I claim that encompasses the Company’s Juanicipio Project near Fresnillo, Zacatecas, Mexico. Under the terms of the agreement, the Company paid the vendor US$250,000 (Cdn$350,000) and 200,000 common shares of the Company.

The acquisition was accounted for using the purchase method.  The allocation of the purchase price was as follows:

Cash	$350,000
200,000 common shares	180,000
	$530,000

MAG SILVER CORP.

(An exploration stage company)

Year ended December 31, 2005, 2004 and 2003 and cumulative

    from April 21, 1999 to December 31, 2005

7.

ACQUISITIONS (Continued)

(b)

Lexington Capital Group Inc. (“Lexington”) (continued)

Fair value of net assets acquired:

Cash	$4,219
Current liabilities	(13,196)
Mineral property interests	538,977
	$530,000

8.

RELATED PARTY TRANSACTIONS

For the year ended December 31, 2005 the Company’s president received $149,900 in compensation for management services (2004 - $93,870; 2003 - $97,325).

During the year ended December 31, 2003, the Company entered into an office services agreement with Platinum Group Metals Ltd. (“PTM”), a company with a common director and common officer. During the year ended December 31, 2005 the Company accrued or paid PTM $133,329 under the common service agreement (2004 - $147,437; 2003 - $89,131).

During the year ended December 31, 2004, the Company entered into an office lease agreement with Anthem Works Ltd. (“Anthem”), a company with a common director.  During the year ended December 31, 2005 the Company accrued or paid Anthem $62,333 under the office lease agreement (2004 - $15,583).

These transactions were incurred in the normal course of business and are measured at the exchange amount which was the consideration established and agreed to by the noted parties.

9.

CONTINGENCIES AND COMMITMENTS

The Company’s minimum payments under its office lease agreement which was entered into during the year ended December 31, 2004, is as follows:

2006	$    62,333
2007	46,750
	$   109,083

MAG SILVER CORP.

(An exploration stage company)

Year ended December 31, 2005, 2004 and 2003 and cumulative

    from April 21, 1999 to December 31, 2005

10.

AMOUNTS RECEIVABLE

		2005		2004
Goods and services tax recoverable	$	26,706	$	12,269
Mexican value added tax ("IVA") recoverable		75,499		508,507
Other		2,866		-
	$	105,071	$	520,776

11.

SUBSEQUENT EVENTS

Subsequent to December 31, 2005:

(a)

granted 25,000 stock options at a price of $1.55 to a consultant on January 10, 2006;

(b)

granted 650,000 stock options at a price of $3.00 to directors and officers on February 6, 2006;

(c)

the Company announced the appointment of Dr. Peter Megaw to its Board of Directors on February 6, 2006.  Dr. Megaw is a founder and partner in Cascabel/IMDEX, a mineral exploration consulting group in Mexico.  They are responsible for the generation and acquisition of several projects currently in MAG’s property portfolio and they also provide exploration services to MAG.  Cascabel/IMDEX is also a shareholder in the Company; and

(d)

on February 27, 2006 the Company closed the private placement subscribed to by Peñoles which consisted of 245,716 common shares of MAG at $2.35. This equates to an investment of $577,433 (US$500,000) (See Note 6 (a)(v)).

MAG SILVER CORP.

(An exploration stage company)

Year ended December 31, 2005, 2004 and 2003 and cumulative

    from April 21, 1999 to December 31, 2005

12.

DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY

ACCEPTED ACCOUNTING PRINCIPLES

These consolidated financial statements have been prepared in accordance with Canadian GAAP, which differs in certain respects from US GAAP.  The material differences between Canadian and US GAAP affecting the Company’s financial statements are summarized as follows:

Consolidated Balance Sheets

		December 31,
		2005		2004
			(Restated - See
				Note 12 (a))
Total assets under Canadian GAAP	$	18,075,406	$	9,774,297
Cumulative amortization of mineral rights (a), (b)		(601,000)		(601,000)
Deferred exploration costs (b)		(5,463,471)		(4,034,164)
Total assets under US GAAP	$	12,010,935	$	5,139,133
Total liabilities under Canadian and US GAAP	$	393,621	$	61,837
Shareholders' equity under Canadian GAAP		17,681,785		9,712,460
Cumulative amortization of mineral rights (a), (b)		(601,000)		(601,000)
Write-off of deferred exploration costs (b)		(5,463,471)		(4,034,164)
Shareholders' equity under US GAAP		11,617,314		5,077,296
Total liabilities and shareholders' equity under
US GAAP	$	12,010,935	$	5,139,133

MAG SILVER CORP.

(An exploration stage company)

Year ended December 31, 2005, 2004 and 2003 and cumulative

    from April 21, 1999 to December 31, 2005

12.

DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (Continued)

Consolidated Statements of Operations and Deficit

								Cumulative
								amount from
								April 21,
		Year ended		Year ended		Year ended		1999 to
	December 31,		December 31,		December 31,		December 31,
		2005		2004		2003		2005
Net loss under Canadian GAAP	$	(1,810,838)	$	(733,897)	$	(837,539)	$	(3,798,251)
Deferred exploration costs (b)		(1,429,307)		(1,976,622)		(2,019,740)		(5,463,471)
Amortization of mineral rights (b)		-		-		(601,000)		(601,000)
Compensation expense (c)		-		-		(600,000)		(600,000)
Stock-based compensation for
employees and directors (c)		482,659	-		-			482,659
Net loss under US GAAP	$	(2,757,486)	$	(2,710,519)	$	(4,058,279)	$	(9,980,063)
Basic and diluted loss per share under
US GAAP	$	(0.10)	$	(0.11)	$	(0.28)

MAG SILVER CORP.

(An exploration stage company)

Year ended December 31, 2005, 2004 and 2003 and cumulative

    from April 21, 1999 to December 31, 2005

12.

DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (Continued)

Consolidated Statements of Cash Flows

								Cumulative
							amount from
								April 21,
		Year ended		Year ended		Year ended		1999 to
	December 31,		December 31,		December 31,		December 31,
		2005		2004		2003		2005
Operating activities
Operating activities under
Canadian GAAP	$	(447,244)	$	(1,091,957)	$	(943,534)	$	(2,584,815)
Write-off of deferred exploration
costs (b)		(1,429,307)		(1,976,622)		(2,019,740)		(5,496,628)
Operating activities under US GAAP	$	(1,876,551)	$	(3,068,579)	$	(2,963,274)	$	(8,081,443)
Investing activities
Investing activities under
Canadian GAAP	$	(1,699,911)	$	(2,368,867)	$	(2,645,182)	$	(7,202,326)
Reclassification of deferred
exploration costs (b)		1,429,307		1,976,622		2,019,740		5,496,628
Investing activities under US GAAP	$	(270,604)	$	(392,245)	$	(625,442)	$	(1,705,698)
Financing activity
Financing activity under
Canadian and US GAAP	$	7,840,988	$	531,362	$	8,217,262	$ 17,347,334

(a)

In 2005 MAG Silver Corp. concluded that for US GAAP purposes the total assets as at December 31, 2004 should have been reduced by $601,000 representing the cumulative amortization of mineral rights recognized prior to the prospective adoption in 2004 of EITF 04-02, Whether Mineral Rights are Tangible or Intangible Assets, as described in Note 12 (b).  Consequently, total assets, and total liabilities and shareholders’ equity, under US GAAP as at December 31, 2004 have each been reduced by $601,000 with no change in prior years’ net loss or net loss per share.

(b)

Exploration expenditures and costs of acquired mineral rights

Canadian GAAP allows exploration costs to be capitalized during the search for a commercially mineable body of ore.  Under US GAAP, exploration expenditures can only be deferred subsequent to the establishment of economically exploitable reserves.  For US GAAP purposes the Company therefore expensed its exploration expenditures.

MAG SILVER CORP.

(An exploration stage company)

Year ended December 31, 2005, 2004 and 2003 and cumulative

    from April 21, 1999 to December 31, 2005

12.

DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (Continued)

(b)

Exploration expenditures and costs of acquired mineral rights (continued)

Previously, under US GAAP, the cost of acquisition of mineral property rights were generally classified as intangible assets and were amortized over their useful life, which in the case of a mineral right on a property without proven and probable reserves, was the lesser of the period to expiry of the right and the estimated period required to develop or further explore the mineral assets.  Under Canadian GAAP, costs of acquiring mineral rights are generally considered as tangible property.  As a result, for US GAAP purposes, the Company had previously amortized the cost of the mining rights acquired in the Lagartos and Lexington transactions on a straight line basis over the period that further exploration was expected to occur on the properties which varied from 15 months to 31 months.  In 2004 the Financial Accounting Standards Board in the U.S. concluded that mineral rights have the characteristics of tangible assets and issued EITF 04-02, Whether Mineral Rights are Tangible or Intangible Assets.  The effect of this new standard is that mineral rights are no longer required to be amortized to the extent they are considered tangible assets until such date as they are commercially exploited.  The Company adopted this standard effective January 1, 2004 on a prospective basis and is therefore no longer amortizing the cost of acquiring mineral property rights.

(c)

Accounting for stock-based compensation

Under Canadian GAAP, the Company’s shares issued with escrow restrictions are recorded at their issue price and are not revalued upon their release from escrow.  Under US GAAP, escrow shares which are released upon the Company meeting certain performance criteria are considered to be contingently issuable.  Under US GAAP, the Company recorded compensation expense of $Nil (2004 - $Nil; 2003 - $600,000) for the shares which are held in escrow based on completion of a qualifying transaction which satisfied the conditions for their release on April 15, 2003.  The compensation expense was determined based on the fair value of the shares on the date that they were no longer contingently issuable.

For US GAAP purposes, the Company accounts for stock based compensation to employees and directors under Accounting Principles Board Opinion No 25, Accounting for Stock Issued to Employees, (“APB No. 25”), using the intrinsic value based method whereby compensation costs was recorded for the excess, if any, of the quoted market price of the Company’s shares at the date granted over the exercise price.  As at December 31, 2005, no compensation cost has been recorded for any period under this method.

MAG SILVER CORP.

(An exploration stage company)

Year ended December 31, 2005, 2004 and 2003 and cumulative

    from April 21, 1999 to December 31, 2005

12.

DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (Continued)

(c)

Accounting for stock-based compensation (continued)

SFAS No. 123, Accounting for Stock-Based Compensation, requires the use of the fair value based method of accounting for stock options.  Under this method, compensation cost is measured at the grant date based on the fair value of the options granted and is recognized over the vesting period.  During the year ended December 31, 2005, the Company issued options to individuals other than employees and directors, which, under SFAS No. 123, resulted in $128,694 (2004 - $Nil; 2003 -  $75,308) of consulting expenses.

SFAS No. 123, however allows the Company to continue to measure the compensation cost of employees in accordance with APB No. 25.  The Company has adopted the disclosure-only provisions of SFAS No. 123.

The following pro forma financial information presents the net loss and the loss per share had the Company adopted SFAS No. 123 for all stock options issued to directors, officers and employees.

							Cumulative
							amount from
							April 21,
		Year ended		Year ended		Year ended	1999 to
	December 31,		December 31,		December 31,		December 31,
		2005		2004		2003	2005
Net loss for the period under
US GAAP	$	(2,757,486)	$	(2,710,519)	$	(4,058,279)	$ (9,980,036)
Stock based compensation
costs		(482,659)		-		(248,128)	(730,787)
Pro forma net loss	$	(3,240,145)	$	(2,710,519)	$	(4,306,407)	$ (10,710,823)
Pro forma basic and diluted
loss per share	$	(0.11)	$	(0.11)	$	(0.30)

MAG SILVER CORP.

(An exploration stage company)

Year ended December 31, 2005, 2004 and 2003 and cumulative

    from April 21, 1999 to December 31, 2005

12.

DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (Continued)

(c)

Accounting for stock-based compensation (continued)

The additional amounts for pro forma stock-based compensation have been determined using an option pricing model assuming no dividends are to be paid, a volatility of the Company’s share price of 80% (2004 - N/A; 2003 - 63%) and an annual risk free interest rate of 3.50% (2004 - N/A; 2003 - 3.76%).

(d)

Recent U.S. accounting pronouncements

In December 2004, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 123R, Share-Based Payment, which revised SFAS No. 123, Accounting for Stock-Based Compensation.  SFAS No. 123R will supersede APB Opinion 25, Accounting for Stock Issued to Employees.  SFAS No. 123R requires measurement and recording to the financial statements of the costs of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award, recognized over the period during which an employee is required to provide services in exchange for such award.  Additionally, SFAS No. 123R requires the benefits of tax deductions different from recognized compensation expense to be reported as a financing cash flow, rather than as an operating cash flow as required under current literature.  SFAS 123R will become effective for all registrants as of the first fiscal year beginning after June 15, 2005. Therefore, the required effective date is January 1, 2006.

In December 2004, the FASB issued SFAS 153, Exchanges of Non-Monetary Assets - An Amendment of APB Opinion No. 29.  The guidance in APB No. 29, Accounting for Non-Monetary Transactions, is based on the principle that exchanges of non-monetary assets should be measured based on the fair value of the assets exchanged.  The guidance in that Opinion, however, included certain exceptions to that principle.  This Statement amends APB No. 29 to eliminate the exception for exchanges of similar productive assets and replaces it with a general exception for exchanges of non-monetary assets that do not have commercial substance.  A non-monetary exchange has commercial substance if the future cash flows of the entity are expected to change significantly as a result of the exchange.  This Statement will be effective for fiscal periods beginning after June 15, 2005.  Earlier application is p ermitted for non-monetary asset exchanges incurred during fiscal years beginning after the date this Statement is issued.  The Company believes this Statement will have no impact on the financial statements of the Company once adopted.

MAG SILVER CORP.

(An exploration stage company)

Year ended December 31, 2005, 2004 and 2003 and cumulative

    from April 21, 1999 to December 31, 2005

12.

DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (Continued)

(d)

Recent U.S. accounting pronouncements (continued)

In March 2005, the SEC staff issued Staff Accounting Bulletin (“SAB”) No. 107, Share-Based Payment, which provides guidance on the interaction between SFAS No. 123R and certain SEC rules and regulations, as well as on the valuation of share-based payments. SAB No. 107 provides interpretive guidance related to valuation methods (including assumptions such as expected volatility and expected term), first time adoption of SFAS No. 123R in an interim period, the classification of compensation expense and disclosures subsequent to adoption of SFAS No. 123R.  We are currently evaluating the impact of SAB No. 107 on our consolidated financial statements.

In March 2005, the FASB ratified Emerging Issues Task Force Issue No. 04-6, Accounting for Stripping Costs Incurred during Production in the Mining Industry, (EITF 04-6) which addresses the accounting for stripping costs incurred during the production phase of a mine and refers to these costs as variable production costs that should be included as a component of inventory to be recognized in Costs Applicable to Sales in the same period as the revenue from the sale of inventory.  As a result, capitalization of stripping costs is appropriate only to the extent product inventory exists at the end of a reporting period and the carrying value is less than the net realizable value. Adoption of EITF 04-6 will have no impact.

In March 2005, the FASB issued Interpretation 47 (“FIN 47”), Accounting for Conditional Asset Retirement Obligations - an interpretation of FASB No. 143.  FIN 47 clarifies that the term “conditional asset retirement obligation” as used in SFAS No. 143 refers to a legal obligation to perform an asset retirement activity in which the timing and/or method of settlement are conditional on a future event that may or may not be within the control of the entity.  The obligation to perform the asset retirement activity is unconditional even though uncertainty exists about the timing and/or method of settlement. FIN 47 requires a liability to be recognized for the fair value of a conditional asset retirement obligation if the fair value of the liability can be reasonably estimated. FIN 47 was effective for fiscal years ending after December 15, 2005.  The adoption of FIN 47 did not have a material impact on our consolidated financial position, results of operations or cash flows.

In May 2005, the FASB issued SFAS Statement No. 154, Accounting Changes and Error Corrections (“SFAS 154”).  SFAS 154 is a replacement of Accounting Principles Board Opinion No. 20 (“APB 20”) and FASB Statement No. 3.  SFAS 154 provides guidance on the accounting for and reporting of accounting changes and error corrections. It establishes retrospective application, or the latest practicable date, as the required method for reporting a change in accounting principle and the reporting of a correction of an error.  SFAS 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005 and we will adopt this standard on January 1, 2006.  We do not expect that the adoption of SFAS 154 will have a material impact on our consolidated results of operations, financial condition and cash flows.

MAG SILVER CORP.

(An exploration stage company)

Year ended December 31, 2005, 2004 and 2003 and cumulative

    from April 21, 1999 to December 31, 2005

12.

DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (Continued)

(d)

Recent U.S. accounting pronouncements (continued)

In June 2005, the FASB issued Staff Position Paper (“FSP”) 115-1, The Meaning of Other-Than-Temporary Impairment and its Application to Certain Investments, superseding EITF 03-1.  FSP 115-1 will replace the accounting guidance on the determination of whether an investment is other-than-temporarily impaired as set forth in EITF 03-1 with references to existing other-than-temporary impairment guidance.  FSP 115-1 is effective for reporting periods beginning after December 15, 2005.  Adoption of FSP 115-1 is not expected to have a material impact on our consolidated financial position, results of operations or cash flows.

On July 14, 2005, the FASB issued an exposure draft of a proposed Interpretation, Accounting for Uncertain Tax Positions - an Interpretation of FASB Statement No. 109.  The proposed interpretation would require companies to recognize the best estimate of an uncertain tax position only if it is probable of being sustained on audit by the taxation authorities.  Subsequently, the tax benefit would be derecognized (by either recording a tax liability or decreasing a tax asset) when the probable threshold is no longer met and it is more likely than not that the tax position will not be sustained.  The proposed Interpretation would be effective for years ending after December 15, 2005 and treated as a change in accounting policy.  It would require companies to assess all uncertain tax positions and only those meeting the probable threshold at the transition date would continue to be recognized.   ;The difference between the amount previously recognized and the amount recognized after applying the proposed Interpretation would be recorded as the cumulative-effect adjustment in the 2005 statement of earnings (restatement is not permitted).  The comment period ended September 12, 2005.  The Company does not expect the proposed Interpretation to have a material impact on its results.

In October 2005, the FASB issued FASB Staff Position FAS 123(R)-2, Practical Accommodation to the Application of Grant Date as Defined in FAS 123(R) (“FSP 123(R)-2”).  FSP 123(R)-2 provides guidance on the application of grant date as defined in SFAS No. 123(R).  In accordance with this standard a grant date of an award exists if (a) the award is a unilateral grant and (b) the key terms and conditions of the award are expected to be communicated to an individual recipient within a relatively short time period from the date of approval. We will adopt this standard when we adopt SFAS No. 123(R), and do not anticipate that the implementation of this Statement will have a significant impact on our results of operations.

MAG SILVER CORP.

(An exploration stage company)

Year ended December 31, 2005, 2004 and 2003 and cumulative

    from April 21, 1999 to December 31, 2005

12.

DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (Continued)

(d)

Recent U.S. accounting pronouncements (continued)

In November 2005, the FASB issued FASB Staff Position FAS 123(R)-3, Transition Election Related to Accounting for the Tax Effects of Share-Based Payment Awards (“FSP 123(R)-3”). FSP 123(R)-3 provides an elective alternative method that establishes a computational component to arrive at the beginning balance of the accumulated paid-in capital pool related to employee compensation and a simplified method to determine the subsequent impact on the accumulated paid-in capital pool of employee awards that are fully vested and outstanding upon the adoption of SFAS No. 123(R).  We are currently evaluating this transition method.

EX-99.2

MAG SILVER CORP.
(An exploration stage company) Supplementary Information and MD&A
For the period
December 31, 2005 Filed: March 31, 2006

A copy of this report will be provided to any shareholder who requests it.

VANCOUVER OFFICE Suite 328 550 Burrard Street Vancouver, BC V6C 2B5
604 630 1399 phone 866 630 1399 toll free 604 484 4710 fax TSX.V:MAG
www.magsilver.com info@magsilver.com

MAG SILVER CORP.
(An exploration stage company)

Management Discussion & Analysis

March 21, 2006

1.

DESCRIPTION OF BUSINESS OF MAG SILVER CORP.

The Company was originally incorporated under the Company Act (British Columbia) on April 21, 1999 under the name "583882 B.C. Ltd.". On June 28, 1999, in anticipation of becoming a capital pool company, the Company changed its name to "Mega Capital Investments Inc.". On April 22, 2003, the Company changed its name to "MAG Silver Corp." to reflect its new business upon the completion of its Qualifying Transaction. The principal business of the Company is the acquisition, exploration and development of mineral properties.

The Company is a "reporting" company in the Provinces of British Columbia, Alberta and Ontario. The Company's Common Shares were listed and posted for trading on the TSX Venture Exchange (TSXV: MGA) on April 19, 2000. Concurrent with the Company's name change to MAG Silver Corp. on April 22, 2003, the trading symbol was changed to "MAG".

MAG Silver’s reporting currency is the Canadian dollar and all amounts in this discussion and in the consolidated financial statements are expressed in Canadian dollars, unless identified otherwise.  The company reports its financial position, results of operations and cash flows in accordance with Canadian generally accepted accounting principles (“Canadian GAAP”).  MAG Silver’s significant accounting policies are set out in Note 2 of the audited consolidated financial statements.  Differences between Canadian and United States generally accepted accounting principles that would have affected the Company’s reported financial results are set out in Note 12.

Except for historical information contained in this MD&A, the following disclosures are forward-looking statements within the meaning of the Private Securities Litigation reform Act of 1995 or are future oriented financial information and as such are based on an assumed set of economic conditions and courses of action.  These may include estimates of future production levels, expectations regarding mine production and development programs and capital costs, expected trends in mineral prices and statements that describe future plans, objectives or goals.  There is significant risk that actual results will vary, perhaps materially, from results projected depending on such factors as discussed under Risks and Uncertainties in this MD&A and other risk factors listed from time-to-time in the Company’s Annual Information Form.  Additional information about MAG Silver and its business activities is available on SEDAR at www.sedar.com

On April 15, 2003, concurrent with the completion of its Qualifying Transaction, the Company raised gross proceeds of $5,750,000 from the sale of 11,500,000 units at a price of $0.50 per unit.  Since that time the Company has received approximately $4,595,000 from the exercise of warrants from this financing, as well as warrants from previous financings. The Company remains in strong financial condition as a result of the April 15, 2003 financing and the exercise of share purchase warrants. The Company has generally followed its budgeted use of proceeds shown in the Company’s Prospectus dated March 31, 2003, but due to the extra money received, the Company acquired other mineral properties, and increased some mineral exploration activities.

On July 8, 2005, the Company established an exploration agreement with Industrias Peñoles, S.A. de C.V. (Peñoles) on our Juanicipio Property in Zacatecas State. This agreement was the culmination of extensive negotiations carried out during the first half of 2005, fuelled by MAG’s 2003 & 2004 explorations at Juanicipio and Peñoles exploration success at Juanicipio.  

MAG SILVER CORP.
(An exploration stage company)

Management Discussion & Analysis

March 21, 2006

Under the terms of the agreement Peñoles can earn a 56% interest in Juanicipio by spending $5,000,000 US over 4 years, including a $750,000 US expenditure commitment in year one (2005) with a minimum of 3,000 meters of diamond drilling by Peñoles. Under the terms of the agreement Peñoles agreed to make two $500,000 US investments in common shares of the Company. On May 2, 2005 the TSX Venture exchange approved the first Peñoles private placement, which consisted of 621,577 common shares at $0.967. On February 27, 2006 the second Peñoles private placement closed. Please see subsequent events.

To the end of the 2005 year Peñoles had completed 7 diamond drill holes for a total of about 5,747 meters of drilling.  In early 2006 the Company announced that a new, high grade silver / gold vein has been intersected in two holes at Juanicipio.  

On December 22, 2005, the Company raised gross proceeds of $6,494,749 from the sale of 6,494,749 units at a price of $1.00 per unit in a brokered, non-brokered financing. Each unit consisted of one common share and one-half of one share purchase warrant, with each whole warrant entitling the holder to purchase one share at a price of $1.35 per share for a period of 18 months until June 21, 2007. The Agents were granted warrants to purchase up to 295,190 shares of the Company at a price of $1.35 in partial payment of services rendered in connection with their portion of the financing. The commission paid to the Agents was $295,190, equal to 7% of the gross proceeds of the Offering, comprising of $210,340 in cash and $84,850 in units of the offering. Each unit consisted of one common share and one half share purchase warrant. Corporate finance fees, legal fees, TSX fees and related expenditures totalled $113,802. The net proceeds to the Company from the financing were $6,170,607.

During 2005 the Company renegotiated the property agreements at Don Fippi and Guigui.  Under the new terms of the property agreements MAG Silver purchased 100% interest in both properties through the issuance of 750,000 common shares per property.  As a result of the purchases MAG has extinguished the exposure to cash payments and work commitments on both properties and reduced the number of shares required to be issued under the previous agreement.  Both properties are a significant part of MAG’s portfolio of properties.

Various drill programs over the past two years (2003, 2004) at Juanicipio, Lagartos, Guigui and Adargas have been successful in moving these projects from conceptual exploration plays to new mineral and or epithermal system discoveries highly deserving of further follow up. Further drilling was carried out in 2005 at Guigui and results were considered encouraging with a number of narrow moderate-grade silver and base metal intersections.

Exploration programs at Don Fippi continue to expose realistic drill targets, and drilling began in November 2005 and is now underway at Don Fippi, after encouraging assay results from the November and December 2005 drill program.

New district scale targets have been identified at Lagartos NW, Lagartos SE, Cinco de Mayo and at Sierra de Ramirez.  Drilling is now underway at the Lagartos property. The Cinco de Mayo and Sierra de Ramirez projects are earmarked for drilling during 2006.

MAG SILVER CORP.
(An exploration stage company)

Management Discussion & Analysis

March 21, 2006

The Company has increased land positions in a number of areas (Lagartos, Cinco de Mayo and Sierra de Ramirez) and exploration programs continue on all of our land holdings to move these projects towards the drill phase.

2.

DISCUSSION OF OPERATIONS AND FINANCIAL CONDITION

a)

Results of Operations

During the year ended December 31, 2005 the Company earned interest income of $80,432 (2004 - $66,999) on short-term investments and cash on hand. Cash at December 31, 2005 amounted to $7,560,193 (2004 – $1,866,360).

General and administrative expenses amounted to $1,891,270 (2004 - $800,896) during the year, and after deducting interest earned of $80,432 (2004 - $66,999), resulted in an operating loss for the year of ($1,810,838) (2004 – ($733,897)).

General and administrative expenses in 2005 increased when compared to 2004 as the Company hired a full time President and VP of Corporate Development and has become more active.

Stock compensation expense, a non-cash item, amounted to $611,353 this year (2004 - $Nil). Office and telephone expense of $252,257 was higher than the amount of $190,910 in 2004. Travel and accommodation expenses for the year totaled $169,993 as compared with $52,839 in 2004 as management traveled to Mexico several times during the year, and attended trade shows. Management and consulting fees of $415,117 were higher than the $173,444 incurred in 2004 as more management personnel have been hired. Consulting and management fees have been paid to several individuals including directors and an officer. (See related party transactions).

Services have been provided by the company’s president, the company’s lawyer, and its consulting geologists and include project management, investor relations, legal, geological and administrative services. During the year ended December 31, 2005 legal fees amounted to $167,005 (2004 - $71,493), filing and transfer agent fees totaled $42,254 (2004 - $41,163), shareholder relations totaled $109,803 (2004 - $81,277) while accounting and audit expenses totaled $127,959 (2004 - $126,837). Accounting and audit expenses incurred include amounts incurred in connection with the Company’s United States Securities and Exchange Commission (“SEC”) Registration Form 20F.  Other smaller expense items account for the balance of general and administrative costs for the period. The Company now occupies office space and receives administrative services on a contract basis.

MAG SILVER CORP.
(An exploration stage company)

Management Discussion & Analysis

March 21, 2006

The following tables set forth selected financial data from the Company’s Audited Financial Statements and should be read in conjunction with these financial statements.

	Year ended Dec. 31, 2005	Year ended Dec. 31, 2004	Year Ended Dec. 31, 2003
Revenues	Nil	Nil	Nil
Net Loss	($1,810,838)	($733,897)	($837,539)
Net Loss per Share	($0.06)	($0.03)	($0.06)
Total Assets	$18,075,406	$9,774,297	$8,534,794
Long Term Debt	Nil	Nil	Nil
Dividends	Nil	Nil	Nil

Net loss during the year ended December 31, 2005 increased significantly as compared to the prior years as a result of increasing management personnel, and the granting of stock options by the Company.

The following table sets forth selected quarterly financial information for each of the last eight (8) quarters.

Quarter Ending	Revenue	Net Loss	Net Loss per share
December 31, 2005	Nil	(483,824)	(0.015)
September 30, 2005	Nil	(320,422)	(0.01)
June 30, 2005	Nil	(256,515)	(0.01)
March 31, 2005	Nil	(750,077)	(0.025)
December 31, 2004	Nil	(243,843)	(0.01)
September 30, 2004	Nil	(112,109)	(0.005)
June 30, 2004	Nil	(264,813)	(0.01)
March 31, 2004	Nil	(113,132)	(0.00)

During the quarter ended December 31, 2005 the Company was focused on its drilling program at Don Fippi (Batopilas), completing a financing, as well as preparing for the drilling program at the Lagartos property. The Company conducted exploration work in Mexico on its other properties and assessed past results in preparation for drill programs expected to begin in earnest in 2006.

The Company has not declared nor paid dividends on its common shares.  The Company has no intention of paying dividends on its common shares in the near future, as it anticipates that all available funds will be invested to finance the growth of its business.

b)

Trend Information

Other than the obligations under the Company's property option agreements set out in “Tabular Disclosure of Contractual Obligations”, there are no identifiable trends, demands, commitments, events or uncertainties that will result in, or that are reasonably likely to result in, the Company's liquidity either increasing or decreasing at present or in the foreseeable future.  The Company will require sufficient capital in the future to meet its acquisition payments and other obligations under property option agreements for those properties it considers worthy to incur continued holding and exploration costs upon.  The need to make such payments is a “Trend” as it is unlikely that all such obligations will be eliminated from the Company’s future business activities.  The Company intends to utilize cash on hand in order to meet its obligations under property option agreements until a t least March 31, 2008. It is unlikely that the Company will generate sufficient operating cash flow to meet these ongoing obligations in the foreseeable future. Accordingly the Company will likely need to raise additional capital by issuance of equity in the future.  At this time the Company has no plan or intention to issue any debt in order to raise capital for future requirements.

MAG SILVER CORP.
(An exploration stage company)

Management Discussion & Analysis

March 21, 2006

At the time of writing there is a noted favourable trend with regard to the market for metal commodities and related companies, however, it is the opinion of the Company that its own liquidity will be most affected by the results of its exploration activities.  The discovery of an economic mineral deposit on one of its mineral properties may have a favourable effect on the Company’s liquidity, and conversely, the failure to find one may have a negative effect.

c)

Risk Factors

The following is a brief discussion of those distinctive or special characteristics of the Company’s operations and industry that may have a material impact on, or constitute risk factors in respect of, the Company’s future financial performance.

The Company, and thus the securities of the Company, should be considered a highly speculative investment and investors should carefully consider all of the information disclosed in this Annual Report prior to making an investment in the Company.  In addition to the other information presented in this Annual Report, the following risk factors should be given special consideration when evaluating an investment in the Company’s securities.

General

Resource exploration and development is a speculative business, characterized by a number of significant risks including, among other things, unprofitable efforts resulting not only from the failure to discover mineral deposits but also from finding mineral deposits, which, though present, are insufficient in quantity and quality to return a profit from production.  

The Company’s business is subject to exploration and development risks

All of the Company’s properties are in the exploration stage of development and no known reserves have been discovered on such properties.  There is no certainty that the expenditures to be made by the Company or its joint venture partners in the exploration of its properties described herein will result in discoveries of precious metals in commercial quantities or that any of the Company’s properties will be developed.  Most exploration projects do not result in the discovery of precious metals and no assurance can be given that any particular level of recovery of precious metals will in fact be realized or that any identified resource will ever qualify as a commercially mineable (or viable) resource which can be legally and economically exploited.  Estimates of reserves, mineral deposits and production costs can also be affected by such factors as environmental permit regulations and requiremen ts, weather, environmental factors, unforeseen technical difficulties, unusual or unexpected geological formations and work interruptions. In addition, the grade of precious metals ultimately discovered may differ from that indicated by drilling results.  There can be no assurance that precious metals recovered in small-scale tests will be duplicated in large-scale tests under on-site conditions or in production scale.

MAG SILVER CORP.
(An exploration stage company)

Management Discussion & Analysis

March 21, 2006

Political and economic instability may affect the Company’s business

The Company’s activities in Canada and Mexico are subject to risks common to operations in the mining industry in general, as well as certain political and economic uncertainties related specifically to operating in Mexico.  The Company’s operations in general may also be affected in varying degrees by political and economic instability, terrorism, crime, extreme fluctuations in currency exchange rates and inflation.

The Company is subject to the risk of fluctuations in the relative values of the Canadian dollar as compared to the Mexican Peso

The Company may be adversely or favorably affected by foreign currency fluctuations.  The Company is primarily funded through equity investments into the Company denominated in Canadian Dollars.  Several of the Company’s options to acquire properties in Mexico may result in option payments by the Company denominated in Mexican Pesos or in U.S. dollars over the next three years.  Exploration and development programs to be conducted by the Company in Mexico will also be funded in Mexican Pesos or in U.S. dollars.  Fluctuations in the exchange rate between the Canadian dollar and both the U.S. dollar and Mexican Peso may have an adverse or favorable affect on the Company.

The Company’s properties are subject to title risks

The Company has investigated title to all of its mineral properties and, to the best of its knowledge, title to all of its properties, and properties that it has the right to acquire or earn an interest in, are in good standing.  However, the Company’s properties may be subject to prior unregistered agreements or transfers and title may be affected by undetected defects.  These defects could adversely affect the Company’s title to such properties or delay or increase the cost of the development of such properties.

The Company’s properties may also be subject to aboriginal or other historical rights that may be claimed on Crown properties or other types of tenure with respect to which mineral rights have been conferred.  The Company is not aware of any aboriginal land claims having been asserted or any legal actions relating to native issues having been instituted with respect to any of the mineral properties in which the Company has an interest.  The Company is aware of the mutual benefits afforded by co-operative relationships with indigenous people in conducting exploration activity and is supportive of measures established to achieve such co-operation.

MAG SILVER CORP.
(An exploration stage company)

Management Discussion & Analysis

March 21, 2006

Environmental Risk

Environmental legislation on a global basis is evolving in a manner that will ensure stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental assessment of proposed development and a higher level of responsibility for companies and their officers, directors and employees.  There is no assurance that future changes to environmental legislation in Canada or Mexico will not adversely the Company’s operations.  Environmental hazards may exist on properties in which the Company holds interests which are unknown at present and which have been caused by previous or existing owners or operators.  Furthermore, future compliance with environmental reclamation, closure and other requirements may involve significant costs and other liabilities.  In particular, the Company’s operations and exploration activities are subject to Canadian and Mexican national and provincial laws and regulations governing protection of the environment.  Such laws are continually changing and, in general, are becoming more restrictive.

The mineral exploration industry is extremely competitive

The resource industry is intensely competitive in all of its phases, and the Company competes with many companies possessing greater financial resources and technical facilities than itself.  Competition could adversely affect the Company’s ability to acquire suitable new producing properties or prospects for exploration in the future.  Competition could also affect the Company’s ability to raise financing to fund the exploration and development of its properties or to hire qualified personnel.

Metal prices affect the success of the Company’s business

The mining industry in general is intensely competitive and there is no assurance that, even if commercial quantities of mineral resources are developed, a profitable market will exist for the sale of such product.  Factors beyond the control of the Company may affect the marketability of any minerals discovered.  No assurance may be given that metal prices will remain stable.  Significant price fluctuations over short periods of time may be generated by numerous factors beyond the control of the Company, including domestic and international economic and political trends, expectations of inflation, currency exchange fluctuations, interest rates, global or regional consumption patterns, speculative activities and increased production due to improved mining and production methods.  The effect of these factors on the price of minerals and therefore the economic viability of any of the Company’s exploration projects cannot accurately be predicted.  As the Company is in the exploration stage, the above factors have had no material impact on present operations or income.

Off-Balance Sheet Arrangements

The Company has no off-balance sheet arrangements.

MAG SILVER CORP.
(An exploration stage company)

Management Discussion & Analysis

March 21, 2006

d)

Exploration Programs and Expenditures

During the year ended December 31, 2005 the Company incurred $1,581,558 in property acquisition costs, comprised of $253,736 in cash and $1,327,822 in shares issued. Issues were comprised of 13,382 common shares @ $0.95; 1,500,000 common shares @ $0.81; 119,660 common shares @ $0.764; and 12,466 common shares @ $0.70, (2004 - $1,961,872 ($373,653 in cash and $1,588,219 in shares, being 628,905 common shares @ $1.40; 150,000 common shares @ $2.00; 80,738 common shares @ $1.10; 499,150 common shares @ $0.62 and $9,467 in shares allotted but not issued (9,191 shares @ $1.030))) in property acquisition costs.  Exploration expenditures in cash for the period amounted to $1,429,307 (2004 - $1,976,622).

On April 4, 2005 the Company announced the signing of a binding letter agreement for the establishment of an exploration Joint Venture covering MAG’s wholly-owned 7,679 hectare Juanicipio Property in Zacatecas, Mexico with Peñoles. The formal agreement was signed in early October 2005 with the effective date and anniversary date of July 01, 2005.

The principal features of the agreement are:  

i)

Peñoles can earn a 56% interest in Juanicipio upon completion of a US$5,000,000 exploration program on or before the end of year 4 of the agreement.

ii)  

During the first year, Peñoles shall incur an obligatory work commitment expenditure of US$750,000.  Year 1 expenditures must include a minimum of 3,000 metres of diamond drilling. At December 31, 2005, Peñoles had spent US$622,440 and had completed 5,747 metres of diamond drilling.

 iii)

A flexible and staged exploration program is included in the contract.  Exploration work will be supervised by a technical committee comprised of three representatives from Peñoles and two from MAG Silver.  Peñoles and MAG Silver are obliged to share their information in the district.  Part of the geological and exploration work will be conducted by MAG consultants and in-house personnel.   

iv)

Exploration results from Juanicipio will be published as appropriate on an ongoing basis, with both companies to agree on the content.

v)

Peñoles subscribed for US$500,000 for a total of 621,577 MAG shares, at a price of $0.967 on signing and in 2006 purchased an additional US$500,000 in MAG shares, at fair value, to continue the contract into the second year. (See subsequent events note).

Peñoles initiated their exploration program in August of 2005 which included geophysical orientation surveys, geological and structural mapping programs and diamond drilling of seven holes for a total of about 5,747 metres of core recovery by December 31, 2005.  Results of this program include the significant discovery of a new high grade silver / gold vein, named the Valdecanes Vein.

MAG SILVER CORP.
(An exploration stage company)

Management Discussion & Analysis

March 21, 2006

Assay results from the second hole in the Valdecañes Vein discovery, Hole 16, returned high-grade Silver – Gold values over 6.35 meters (20.8 feet) (5.50 metres true thickness = 18 feet) of 1,798 grams per tonne Silver (57.8 ounces), 2.91 grams per tonne Gold, 3.43% Lead and 5.51% Zinc.  This includes 2.95 meters (9.6 feet) of 2,807 grams per tonne Silver (90.3 ounces), 3.27 grams per tonne Gold, 5.94% Lead and 9.14% Zinc. The new vein intersection lays approximately 1,000 metres north of the Juanicipio Vein, the initial vein discovery drilled by MAG Silver and recently confirmed by Peñoles

Hole 16 was drilled to intersect the new vein up dip on the same section from drill hole 13, the first hole to intersect the vein. Drill hole 13 returned: 8.65 meters (28 feet) of 116 grams per tonne Silver (3.7 ounces) and 0.26 grams per tonne Gold. There is a separate intercept of 1.05 meters (3.4 feet) at 447 grams per tonne Silver (14.4 ounces).  

The Company had spent a total of $2,026,094 in exploration costs at Juanicipio to December 31, 2005 (2004 - $1,775,609).

At Batopilas a ten-hole 2500 meter drill program was initiated in the fall of 2005 to test preliminary drill targets and help refine the exploration methods MAG is developing to explore their land holdings in the Batopilas silver district.

MAG reported in early January 2006 that drilling had made a new high grade silver discovery in Hole 02. The Don Juan Vein assayed 1.70 meters (5.6 feet) of 2,358 grams per tonne silver (75.8 ounces per ton). The intersection is part of a 3.0 meter (9.8feet) zone locally rich in the silver bearing mineral acanthite (argentite).

This program will represent the first surface holes ever drilled in the district and according to old reports; this style of high-grade acanthite-rich mineralization was found above the native silver rich ore shoots that yielded the bulk of Batopilas’ historic silver production of over 250 million ounces.

The Company had spent a total of $1,240,889 in exploration costs at Don Fippi (Batopilas) to December 31, 2005 (2004 - $795,074).

At Lagartos results received from a large and comprehensive biogeochemical survey has identified a number of long (up to eight kilometers) coincident silver, lead, zinc, copper and bismuth anomalies.  The geochemical anomalies lie outboard of a large area identified from ASTER imaging as having the same alteration signature identified at Juanicipio.  Geophysical surveys were carried out in the last quarter of 2005. A drill program was initiated in January of 2006.

The Company had spent a total of $399,192 in exploration costs at Lagartos to December 31, 2005 (2004 - $220,977).

At Guigui, the 2005 drill program followed up on the intersections of extensive alteration, structure and mineralization encountered in the 2004 program. (i.e. 131 ppm Ag over 8.30m or 4.2 opt Ag over 27 feet). The drill area is located about 1.2km south of Grupo Mexico’s operating San Antonio Mine and about 650m south of their nearest underground infrastructure. The target area is situated within the San Antonio Graben (SAG), a prominent N-S structural feature that hosts and controls the mineralization at the San Antonio Mine.

MAG SILVER CORP.
(An exploration stage company)

Management Discussion & Analysis

March 21, 2006

 Hole 07 cut the highest grade silver mineralization intersected to date within Guigui or 1.40 meters of 242 grams per tonne Silver (7.8 ounces).  The best values were associated with members of a felsite dike swarm that cores mineralization in Grupo Mexico’s San Antonio Mine approximately 1800 meters farther to the north along the same structure.  

The results from Hole 08 indicate that the dikes cut in holes 06 and 07 are sourced farther to the west within the Guigui property.  MAG also drilled a single hole into the upper zones of the East Fault of the graben (hole 09) and cut four narrow felsite dikes with anomalous silver values.   

We continue to cut strong indications of silver and base metal mineralization in the same structures and intrusions and within a broad alteration halo, not unlike the upper reaches of the East Camp deposits. This important development leads management to contend that these intersections demonstrate that mineralization similar to the rich deposits of the San Antonio Mine, just 1200 meters to the north of our drill area and East Camp can be traced to the south and onto MAG’s Guigui property.

The Company had spent a total of $1,265,194 in exploration costs at Guigui to December 31, 2005 (2004 - $882,183).

Cinco de Mayo, located in Chihuahua State, occurs proximal to the highly favorable western edge of the Chihuahua trough which hosts several large (all greater than 25 million tonnes), operating mining districts including Naica, Santa Eulalia and Bismarck. Biogeochemical sampling of creosote bush (a.k.a. greasewood or gobernadora) along the flanks of Cinco de Mayo Ridge has revealed strong linear anomalies in Zn and Cu.  Geophysical results for both surveys are pending.

The Company had spent a total of $135,787 in exploration costs at Cinco de Mayo to December 31, 2005 (2004 - $15,615).

At Adargas a total of 4 line kilometres of NSAMT geophysics was run in late 2005 to test a strong conductive anomaly revealed by a Down-Hole UTM geophysical survey run in MAG’s AD04-01 drill hole. The survey confirmed the presence of a conductive body below the level of current drilling.Management feels that the deeper targets, modeled on treating the surface mineralization as leakages from a larger system trapped beneath a relatively impermeable unit remain untested and viable targets.    

The Company had spent a total of $307,779 in exploration costs at Adargas to December 31, 2005 (2004 - $283,468).

At Sierra de Ramirez, located in Durango State, this 15,000 hectare property has seen little modern exploration.  A historical producer of high grade silver and base metals, this district is emerging for MAG Silver as a large scale CRD target.  Metal zoning studies have identified three mineralized zones where work is presently underway to better define these zones through mapping, geochemical sampling in tandem with structural and alteration studies.This resulted in the recognition that acquisition of additional land is desirable before higher profile exploration work can begin.  This acquisition was underway by year’s end.  

MAG SILVER CORP.
(An exploration stage company)

Management Discussion & Analysis

March 21, 2006

The Company had spent a total of $88,536 in exploration costs at Sierra de Ramirez to December 31, 2005 (2004 - $61,238).

All of the costs incurred on property acquisition and exploration to date have been deferred. There were no mineral properties written down during the year or in 2003 or 2004. A complete table of mineral property costs can be found in Note 6 of the Company’s Financial Statements for the year ended December 31, 2005.

e)

Administration Expenses

General and administrative expenses for the year totaled $1,891,270 (2004 - $800,896), before  interest income of $80,432 (2004 - $66,999). Shareholder relations expense, web site hosting and maintenance, investor calls, mail outs, printing and news releases totaled $109,803 (2004 - $81,277). Management and consulting fees to December 31, 2005 totaled $415,117 (2004 - $173,444). Office and telephone totaled $252,257 (2004 - $190,910). Stock compensation expense, a non-cash item, amounted to $611,353 for the year (2004 - $Nil). The increase in telephone and office costs is due to the Company moving into a new office in October 2004 with increased space and the Company having a services agreement with Platinum Group Metals Ltd. for the provision of full time office administration, effectively resulting in lower management and consulting fees, but higher administration costs.

During the year ended December 31, 2005 legal fees amounted to $167,005 (2004 - $71,493), and accounting and audit expenses totaled $127,959 (2004 - $126,837). Legal opinions and contract preparation for property acquisitions and joint ventures increased legal expenses in 2005 over 2004.  Accounting and audit expenses were similar in 2005 and 2004 and related to normal course of business audit and accounting work in Canada and Mexico as well as the preparation of the Company’s United States Securities and Exchange Commission (“SEC”) Registration (Form 20-F) in 2004 and 2005.

During the period year December 31, 2005 the Company paid stock exchange, filing fees and transfer agent fees of $42,254 (2004 - $41,163). A foreign exchange gain of $29,506 (2004 – $48,349 loss) was incurred during the same period, which is attributed to the fluctuations in the US dollar and Mexican pesos, which the Company uses to pay for acquisition and exploration expenditures through the Company’s Mexican subsidiary Minera Los Lagartos. Travel, lodging and related expenses for the management of the Company amounted to $169,993 (2004 - $52,839). Such costs are incurred for corporate, property and exploration related travel and for attendance at trade shows and conferences.

f)

Related Party Transactions

For the year ended December 31, 2005 the Company’s president received $149,900 in compensation for management services (2004 - $93,870).

MAG SILVER CORP.
(An exploration stage company)

Management Discussion & Analysis

March 21, 2006

During the year ended December 31, 2003, the Company entered into an office services agreement with Platinum Group Metals Ltd. (“PTM”), a company with a common director and common officer. During the year ended December 31, 2005 the Company accrued or paid PTM $133,329 under the common service agreement (2004 - $147,437).

During the year ended December 31, 2004, the Company entered into an office lease agreement with Anthem Works Ltd. (Anthem), a company with a common director. During the year ended December 31, 2005 the Company accrued or paid Anthem $62,333 under the office lease agreement (2004 - $15,583).

These transactions are in the normal course of business and are measured at the exchange amount which is the consideration established and agreed to by the noted parties.

g)

Shareholder Relations’ Expenses

Shareholder relations expense during the year totaled $109,803 (2004 - $81,277). The Company manages its shareholder relations as an internal function. The Company attends seminars and a conference related to its business and from time to time does visit brokers, market analysts and investors who request information about the Company’s business.

h)

Travel and Promotion Expenses

Travel and promotion expenses for the year amounted to $169,993 (2004 - $52,839). These activities relate to corporate business development, the supervision of ongoing exploration operations, new property investigations and meetings with potential joint venture partners and institutional and sophisticated investors.

i)

Property Acquisition Expenses

Property acquisition expenditures during the year totaled $1,581,558 (2004 - $1,961,872) in cash and shares.

During the year MAG negotiated a buyout of the original Batopilas (Don Fippi) agreement. Under the terms of the buyout agreement MAG issued the underlying agreement holders a total of 750,000 common shares of MAG Silver Corporation for the Don Fippi property. This purchase gives MAG Silver Corporation an undivided 100% interest in the property and eliminates the obligation to make further cash payments of US$450,000, satisfy work expenditure commitments of approximately US$3.41 million, and issue 673,822 additional shares under the original terms of the option agreement. The properties will remain subject to royalties and other terms of the original option agreement.

During the year MAG negotiated a buyout of the original Guigui (Santa Eulalia) agreement. Under the terms of the buyout agreement MAG issued the underlying agreement holders a total of 750,000 common shares of MAG Silver Corporation for the Guigui property. This purchase gives MAG Silver Corporation an undivided 100% interest in the property and eliminates the obligation to make further cash payments of US$450,000, satisfy work expenditure commitments of approximately US$1.84 million, and issue 604,003 additional shares under the original terms of the option agreement. The properties will remain subject to royalties and other terms of the original option agreement.

MAG SILVER CORP.
(An exploration stage company)

Management Discussion & Analysis

March 21, 2006

During the year ended December 31, 2005 MAG Silver Corp. and Minera Los Lagartos (MAG’s Mexican affiliate), S.A. de C.V. and Minera Cascabel S.A. de C.V. amended terms of an option agreement dated February 26, 2004 whereby MAG has an option to acquire a 100% interest in the Adargas property in Mexico. Under the terms, half of each of the remaining property payments totaling US$975,000 (on or before July 26, 2009) may be paid in shares at a deemed price per share equal to the average trading price of MAG for 30 calendar days prior to the date of payment. To that end MAG paid cash of US$37,500 and issued 59,830 shares for the property payment due July 26, 2005.

During the year ended December 31, 2005 MAG Silver Corp. and Minera Los Lagartos (MAG’s Mexican affiliate), S.A. de C.V. and Minera Cascabel S.A. de C.V. amended terms of an option agreement dated February 26, 2004 whereby MAG has an option to acquire a 100% interest in the Cinco de Mayo property in Mexico. Under the terms, half of each of the remaining property payments totaling US$ 975,000 (on or before July 26, 2009) may be paid in shares at a deemed price per share equal to the average trading price of MAG for 30 calendar days prior to the date of payment.  To that end MAG paid cash of US$37,500 and issued 59,830 shares for the property payment due July 26, 2005.

During 2003 the Company completed the acquisition of Lexington Capital Group Inc. (“Lexington”) whose main asset was its indirect interest in the Juanicipio I claim. Under the terms of the agreement MAG paid the vendor US$250,000 and issued 200,000 shares of its common stock. In addition to consolidating its ownership of the Juanicipio I claim, this acquisition saved the Company US$1,150,000 in option payments and US$2,500,000 in work commitments, and eliminated a net smelter return royalty obligation.

On October 9, 2005 the assets of Lexington were merged with Lagartos, so that all indirect interests in the Juanicipio I claim were held by one company.

The sum of all payments required to maintain all of the Company’s mineral rights are less than its currently available working capital. The Company evaluates its property interests on an ongoing basis and intends to abandon properties that fail to remain prospective. The Company is confident that it will be able to meet its earn-in obligations on those properties which management considers being of merit.

3.

CRITICAL ACCOUNTING POLICIES

The Company’s accounting policies are set out in Note 2 of its Consolidated Financial Statements for the period ended December 31, 2005.

The preparation of financial statements in conformity with Canadian GAAP requires Management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements, and the reported amounts of revenues and expenditures during the reporting period.  Management has identified (i) mineral property acquisition and exploration deferred costs (ii) provision for reclamation and closure, (iii) future income tax provision and (iv) stock based compensation as the main estimates for the following discussion.  Please refer to Note 2 of the Company’s consolidated financial statements for a description of all of the significant accounting policies.  

MAG SILVER CORP.
(An exploration stage company)

Management Discussion & Analysis

March 21, 2006

Under Canadian GAAP, the Company deferred all costs relating to the acquisition and exploration of its mineral properties. Any revenues received from such properties are credited against the costs of the property. When commercial production commences on any of the Company’s properties, any previously capitalized costs would be charged to operations using a unit-of-production method. The Company regularly reviews the carrying values of its properties to assess their recoverability and when the carrying value of a property exceeds the estimated net recoverable amount, provision is made for impairment in value.

The existence of uncertainties during the exploration stage and the lack of definitive empirical evidence with respect to the feasibility of successful commercial development of any exploration property does create measurement uncertainty concerning the estimate of the amount of impairment to the value of any mineral property. The Company relies on its own or independent estimates of further geological prospects of a particular property and also considers the likely proceeds from a sale or assignment of the rights before determining whether or not impairment in value has occurred.

Reclamation and closure costs have been estimated based on the Company’s interpretation of current regulatory requirements, however changes in regulatory requirements and new information may result in revisions to estimates.  The Company recognizes the fair value of liabilities for reclamation and closure costs in the period in which they are incurred.  A corresponding increase to the carrying amount of the related assets is generally recorded and depreciated over the life of the asst.

The future income tax provision is based on the liability method.  Future taxes arise from the recognition of the tax consequences of temporary differences by applying enacted or substantively enacted tax rates applicable to future years to differences between the financial statement carrying amounts and the tax bases of certain assets and liabilities.  The Company records a valuation allowance against any portion of those future income tax assets that it believes will, more likely than not, fail to be realized.

For its 2004 fiscal year, MAG Silver adopted CICA Handbook Section 3870 – Stock-Based Compensation and other Stock-Based Payments, which requires the fair value method of accounting for stock options.  Under this method, MAG Silver is required to recognize a charge to the income statement based on an option-pricing model based on the following assumption –no dividends were paid, a weighted average volatility of the Company’s share price of 80 per cent, a weighted average annual risk free rate of 3.5 per cent and an expected life of 3 years.  The resulting weighted average option related to an expense for stock options in 2005 of $611,353 (2004 - $Nil).  

MAG SILVER CORP.
(An exploration stage company)

Management Discussion & Analysis

March 21, 2006

4.

LIQUIDITY AND CAPITAL RESOURCES

The Company issued a total of 10,362,110 (2004 – 2,735,543) common shares during the year. Of these 8,707,431 shares (2004 – 1,376,750) were issued for cash proceeds of $7,840,988 (2004 - $531,362). A further 1,654,679 shares (2004 – 1,358,793) were issued for mineral properties for a value of $1,327,822 (2004 - $1,578,752). Cash proceeds are to be spent on mineral property acquisitions, exploration and development as well as for general working capital purposes. The Company’s primary source of capital has been from the sale of equity. At December 31, 2005 the Company had cash and cash equivalents on hand of $7,560,193 compared to cash and cash equivalents of $1,866,360 at December 31, 2004. The primary use of cash during the year was for acquisition and exploration expenditures, being approximately $1,683,043 (2004 - $2,350,275), management and consulting fees of $415,117 (2004 - $173,444) and othe r general and administrative expenses of $846,443 (2004 - $615,889). The Company had $7,320,292 in working capital as at December 31, 2005 compared to $2,360,343 at December 31, 2004.

Current liabilities of the Company at December 31, 2005 amounted to $393,621 (2004 - $61,837) mostly being attributable to accrued exploration expenses.

The Company currently has sufficient working capital to maintain all of its properties for the next three years, in management’s opinion; the Company is able to meet its ongoing current obligations as they become due. Based on exploration results the Company will select certain properties to complete purchase arrangements on. The Company expects to raise equity capital as it is needed.  However, there is no assurance that additional funding will be available to the Company and it may again become dependent upon the efforts and resources of its directors and officers for future working capital. Management refers the reader to the contents of the Audited Financial Statements for the year ended December 31, 2005, as well as the subsequent events section.

In the normal course of business the Company enters into transactions for the purchase of supplies and services denominated in Mexican Pesos. The Company also has cash and certain liabilities denominated in United States dollars. As a result, the Company is subject to foreign exchange risk from fluctuations in foreign exchange rates.

The following Table discloses the contractual obligations of the Company for optional mineral property acquisition payments, optional exploration work and committed lease obligations for office rent and equipment:

Tabular Disclosure of Contractual Obligations (Property expenditures in U.S. dollars, as per agreement)

Option Payments and Exploration Expenditures	Total	Less than 1 year	1-3 Years	3-5 Years	More than 5 years
Sierra Ramirez Property	$1,481,000	$206,000	$1,225,000	$50,000	Nil
Adargas Property	$1,650,000	$175,000	$875,000	$600,000	Nil
Cinco de Mayo Property	$1,790,000	$315,000	$875,000	$600,000	Nil
Total (US $)	$4,921,000	$696,000	$2,975,000	$1,250,000	Nil
Office Lease (Cdn $)	$109,083	$62,333	$46,750	Nil	Nil

MAG SILVER CORP.
(An exploration stage company)

Management Discussion & Analysis

March 21, 2006

Other Items

The Company is unaware of any undisclosed liabilities or legal actions against the Company and the Company has no legal actions or cause against any third party at this time. The Company is unaware of any condition of default under any debt, regulatory, exchange related or other contractual obligations.

5.

CORPORATE GOVERNANCE

A system of internal control is maintained by management to provide reasonable assurance that assets are safeguarded and financial information is accurate and reliable.  The Board of Directors approves the financial statements and ensures that management discharges its financial responsibilities.  The Board’s review is accomplished principally through the audit committee, which is composed of independent non-executive directors.  The audit committee meets periodically with management and auditors to review financial reporting and control matters.  The Board of Directors has also appointed a compensation committee composed of non-executive directors whose recommendations are followed with regard to executive compensation.  From time to time the Board may also form special sub-committees, which must investigate and report to the Board on specific topics.

6.

SUBSEQUENT EVENTS

Subsequent to December 31, 2005:

(a)

granted 25,000 stock options at a price of $1.55 to a consultant on January 10, 2006; and

(b)

granted 650,000 stock options at a price of $3.00 to a directors and officers on February 6, 2006; and

(c)

the Company announced the appointment of Dr. Peter Megaw to its Board of Directors on February 6, 2006. Dr. Megaw is a founder and partner in Cascabel/IMDEX, a mineral exploration consulting group in Mexico. They are responsible for the generation and acquisition of several projects currently in MAG Silver’s property portfolio and they also provide exploration services to MAG. Cascabel/IMDEX is also a shareholder in the Company; and

(d)

on February 27, 2006 the Company closed the private placement subscribed to by Peñoles, which consisted of 245,716 common shares of MAG Silver Corp. at $2.35. This equates to an investment of Cdn$577,433 (US$500,000).

EX-99.3

MAG SILVER CORP.

Suite 328, 550 Burrard Street
Vancouver, British Columbia  V6C 2B5

NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the annual general meeting (the “Meeting”) of shareholders of MAG Silver Corp. (the “Company”) will be held at 328 – 550 Burrard Street, Vancouver, British Columbia, Canada, V6C 2B5 at 2:00 p.m. (Pacific time) on Tuesday, June 13, 2006 for the following purposes:

1.

To receive the report of the directors of the Company;

2.

To receive the audited financial statements of the Company for the financial year ended December 31, 2005 and accompanying report of the auditor;

3.

To appoint Deloitte & Touche LLP, Chartered Accountants, as the auditor of the Company for the ensuing year at a remuneration to be fixed by the directors;

4.

To set the number of directors of the Company at five;

5.

To elect the directors of the Company for the ensuing year;

6.

To re-approve the Stock Option Plan of the Company as required by the TSX Venture Exchange; and

7.

To transact such other business as may properly come before the Meeting.

The accompanying Information Circular provides additional information relating to the matters to be dealt with at the Meeting and is supplemental to and expressly made a part of this Notice of Meeting.  A copy of the stock option plan may be inspected at the registered office of the Company, Suite 2100, 1075 West Georgia Street, Vancouver, BC, V6E 3G2 during normal business hours prior to the Meeting.

If you are a registered shareholder of the Company and unable to attend the Meeting in person, please complete, date and sign the accompanying form of proxy and deposit it with Pacific Corporate Trust Company, 3rd Floor, 510 Burrard Street, Vancouver, British Columbia, Canada V6C 3B9 by 2:00 p.m. (Pacific time) on Friday, June 9, 2006 or at least 48 hours (excluding Saturdays, Sundays and holidays) before the time that the Meeting is to be reconvened after any adjournment of the Meeting.

If you are a non-registered shareholder of the Company and received this Notice of Meeting and accompanying materials through a broker, a financial institution, a participant, a trustee or administrator of a self-administered retirement savings plan, retirement income fund, education savings plan or other similar self-administered savings or investment plan registered under the Income Tax Act (Canada), or a nominee of any of the foregoing that holds your security on your behalf (the “Intermediary”), please complete and return the materials in accordance with the instructions provided to you by your Intermediary.

DATED at Vancouver, British Columbia April 26, 2006.

MAG SILVER CORP.

“Daniel MacInnis”
_____________________________
Daniel MacInnis
President

EX-99.4

MAG SILVER CORP.

Suite 328 - - 550 Burrard Street
Vancouver, British Columbia  V6C 2B5

INFORMATION CIRCULAR

Dated as of April 26, 2006

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TABLE OF CONTENTS

Page

INTRODUCTION

3

PROXIES AND VOTING RIGHTS

3

Management Solicitation and Appointment of Proxies

3

Revocation of Proxies

5

Voting of Shares and Proxies and Exercise of Discretion by Proxyholders

6

Solicitation of Proxies

7

VOTING SECURITIES AND PRINCIPAL HOLDERS OF VOTING SECURITIES

7

RECEIPT OF DIRECTORS’ REPORT AND FINANCIAL STATEMENTS

7

APPOINTMENT OF AUDITOR

7

ELECTION OF DIRECTORS

7

Corporate Cease Trade Orders or Bankruptcies

9

Individual Bankruptcies

9

Audit Committee

9

Corporate Governance Disclosure

9

STATEMENT OF EXECUTIVE COMPENSATION

11

Executive Officers

11

Summary Compensation Table

11

Compensation of Directors

12

Options and Stock Appreciation Rights

13

Termination of Employment, Change in Responsibilities and Employment Contracts

13

Securities Authorized for Issuance under Equity Compensation Plans

14

INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS

14

MANAGEMENT CONTRACTS

14

INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS

14

INTEREST OF CERTAIN PERSONS OR COMPANIES  IN MATTERS TO BE ACTED UPON

15

PARTICULARS OF OTHER MATTERS TO BE ACTED UPON

15

Stock Option Plan

15

ADDITIONAL INFORMATION

18

APPROVAL OF THE BOARD OF DIRECTORS

18

Schedule “A”

19

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MAG SILVER CORP.

INFORMATION CIRCULAR

DATED AS OF APRIL 26, 2006

INTRODUCTION

This information circular accompanies the Notice of Annual General Meeting (the “Meeting”) of the shareholders of MAG Silver Corp. (the “Company”) to be held on Tuesday, June 13, 2006 at the time and place set out in the accompanying Notice of Meeting. This information circular is furnished in connection with the solicitation of proxies by management of the Company for use at the Meeting and at any adjournment of the Meeting.

PROXIES AND VOTING RIGHTS

Management Solicitation and Appointment of Proxies

Registered Shareholders

The persons named in the accompanying form of proxy are nominees of the Company’s management. A shareholder has the right to appoint a person (who need not be a shareholder) to attend and act for and on the shareholder’s behalf at the Meeting other than the persons designated as proxyholders in the accompanying form of proxy. To exercise this right, the shareholder must either:

(a)

on the accompanying form of proxy, strike out the printed names of the individuals specified as proxyholders and insert the name of the shareholder’s nominee in the blank space provided; or

(b)

complete another proper form of proxy.

To be valid, a proxy must be dated and signed by the shareholder or by the shareholder’s attorney authorized in writing. In the case of a corporation, the proxy must be signed by a duly authorized officer of or attorney for the corporation.

The completed proxy, together with the power of attorney or other authority, if any, under which the proxy was signed or a notarially certified copy of the power of attorney or other authority, must be delivered to Pacific Corporate Trust Company, 3^rd Floor, 510 Burrard Street, Vancouver, British Columbia, Canada V6C 3B9, by 2:00 p.m. (Pacific time) on Friday, June 9, 2006 or at least 48 hours (excluding Saturdays, Sundays and holidays) before the time that the Meeting is to be reconvened after any adjournment of the Meeting.

Non-Registered Shareholders

Only registered shareholders or duly appointed proxyholders for registered shareholders are permitted to vote at the Meeting. Shareholders who do not hold their shares in their own names (referred to herein as “Non-Registered Shareholders”) are advised that only proxies from shareholders of record can be recognized and voted at the Meeting.

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If shares are listed in an account statement provided to a shareholder by a broker, then in almost all cases those shares will not be registered in such shareholder’s name on the records of the Company. Such shares will more likely be registered under the name of the shareholder’s broker or an agent of that broker. Accordingly, most shareholders of the Company are “Non-Registered Shareholders” because the shares they own are not registered in their names but are instead registered in the name of the brokerage firm, bank or trust company through which they purchased the shares. More particularly, a person is a Non-Registered Shareholder in respect of shares which are held on behalf of that person, but which are registered either: (a) in the name of an intermediary (an “Intermediary”) that the Non-Registered Shareholder deals with in respect of the shares (Intermediaries include, a mong others, banks, trust companies, securities dealers or brokers and trustees or administrators of self-administered RRSPs, RRIFs, RESPs and similar plans); or (b) in the name of a clearing agency (such as The Canadian Depository for Securities Limited (“CDS”)) of which the Intermediary is a participant. In Canada, the vast majority of such shares are registered under the name of CDS, which company acts as nominee for many Canadian brokerage firms. Shares so held by brokers or their nominees can only be voted (for or against resolutions) upon the instructions of the Non-Registered Shareholder. Without specific instructions, brokers/nominees are prohibited from voting shares held for Non-Registered Shareholders. The directors and officers of the Company do not know for whose benefit the shares registered in the name of CDS or any other securities depositary firms or brokerage house are held.

In accordance with National Instrument 54-101 of the Canadian Securities Administrators, the Company has distributed copies of the Notice of Meeting, this Information Circular and the form of proxy (the “Meeting Materials”) to the clearing agencies and Intermediaries for onward distribution to Non-Registered Shareholders with a request for voting instructions. Applicable regulatory policy requires Intermediaries/brokers to seek voting instructions from Non-Registered Shareholders in advance of shareholders’ meetings unless the Non-Registered Shareholders have waived the right to receive meeting materials. Every Intermediary/broker has its own mailing procedures and provides its own return instructions, which should be carefully followed by Non-Registered Shareholders in order to ensure that their shares are voted at the Meeting. Often the request for voting instructions supplied to a Non-Registered Sh areholder by its broker is identical to the form of proxy provided by the Company to the registered shareholders. However, it is not a valid proxy; rather it is to be used as a means of instructing the registered shareholder how to vote on behalf of the Non-Registered Shareholder. Very often, Intermediaries will use service companies to forward the Meeting Materials to Non-Registered Shareholders. Generally, Non-Registered Holders who have not waived the right to receive Meeting Materials will either:

(a)

be given a form of proxy which has already been signed by the Intermediary (typically by a facsimile, stamped signature), which is restricted as to the number of shares beneficially owned by the Non-Registered Shareholder but which is otherwise not completed. Because the Intermediary has already signed the form of proxy, this form of proxy is not required to be signed by the Non-Registered Shareholder when submitting the proxy. In this case, the Non-Registered Shareholder who wishes to submit a proxy should otherwise properly complete the form of proxy and deliver it to the Company’s registrar and transfer agent, Pacific Corporate Trust Company, as provided above; or

(b)

more typically, be given a voting instruction form which is not signed by the Intermediary, and which, when properly completed and signed by the Non-Registered Shareholder and returned to the Intermediary or its service company, will constitute voting instructions (often called a “proxy authorization form”) which the Intermediary must follow. Typically, the proxy authorization form will consist of a one page pre-printed form. Sometimes, instead of the one page pre-printed form, the proxy authorization form will consist of a regular printed proxy form accompanied by a page of instructions, which contains a removable label containing a bar code and other information. In order for the form of proxy to validly constitute a proxy authorization form, the Non-Registered Shareholder must remove the label from the instructions and affix it to the form of proxy, properly complete and sign the form of proxy and ret urn it to the Intermediary or its service company in accordance with the instructions of the Intermediary or its service company.

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The majority of brokers now delegate responsibility for obtaining voting instructions from Non-Registered Shareholders to ADP Investor Communications Services (“ADP”). ADP typically supplies a special sticker to be attached to the proxy forms and asks Non-Registered Shareholders to return the completed proxy forms to ADP. ADP then tabulates the results of all instructions received and provides appropriate instructions respecting the voting of shares to be represented at the Meeting. A Non-Registered Shareholder receiving such a proxy from ADP cannot use that proxy to vote shares directly at the Meeting – the proxy must be returned to ADP well in advance of the Meeting in order to instruct ADP how to vote the shares.

In either case, the purpose of these procedures is to permit Non-Registered Shareholders to direct the voting of the shares of the Company which they beneficially own. Should a Non-Registered Shareholder who receives one of the above forms wish to vote at the Meeting in person (or have another person attend and vote on behalf of the Non-Registered Shareholder), the Non-Registered Shareholder should strike out the names of the Management Proxyholders and insert the name of the Non-Registered Shareholder (or such other person voting on behalf of the Non-Registered Shareholder) in the blank space provided or follow such other instructions as may be provided by their brokers/nominees. In either case, Non-Registered Shareholders should carefully follow the instructions of their Intermediary, including those regarding when and where the proxy or proxy authorization form is to be delivered.

All references to shareholders in this Information Circular and the accompanying Notice of Meeting and form of proxy are to registered shareholders of record unless specifically stated otherwise.

Revocation of Proxies

A shareholder who has given a proxy may revoke it at any time before the proxy is exercised:

(a)

by an instrument in writing that is:

(i)

signed by the shareholder, the shareholder’s attorney authorized in writing or, where the shareholder is a corporation, a duly authorized officer or attorney of the corporation; and

(ii)

delivered to Pacific Corporate Trust Company, 3rd Floor, 510 Burrard Street, Vancouver, British Columbia, Canada V6C 3B9 or to the registered office of the Company currently located at Suite 2100, 1075 West Georgia Street, Vancouver  British Columbia, Canada V6E 3G2 at any time up to and including the last business day preceding the day of the Meeting or any adjournment of the Meeting, or delivered to the Chair of the Meeting on the day of the Meeting or any adjournment of the Meeting before any vote on a matter in respect of which the proxy is to be used has been taken; or

(b)

in any other manner provided by law.

A revocation of a Proxy does not affect any matter on which a vote has been taken prior to the revocation.

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Voting of Shares and Proxies and Exercise of Discretion by Proxyholders

Voting By Show of Hands

Voting at the Meeting generally will be by a show of hands, where every person present who is a shareholder or proxy holder and entitled to vote on the matter has one vote.

Voting By Poll

Voting at the Meeting will be by poll only if a poll is:

(a)

requested by a shareholder present at the Meeting in person or by proxy;

(b)

directed by the Chair; or

(c)

required by law because the number of shares represented by proxy that are to be voted against the motion is greater than 5% of the Company’s issued and outstanding shares.

On a poll, every shareholder entitled to vote on the matter has one vote for each share entitled to be voted on the matter and held by that shareholder and may exercise that vote either in person or by proxy.

Approval of Resolutions

To approve a motion for an ordinary resolution, a simple majority of the votes cast in person or by proxy will be required; to approve a motion for a special resolution, a majority of not less than two-thirds of the votes cast on the resolution will be required.

Voting of Proxies and Exercise of Discretion By Proxyholders

A shareholder may indicate the manner in which the persons named in the accompanying form of proxy are to vote with respect to a matter to be acted upon at the Meeting by marking the appropriate space. If the instructions as to voting indicated in the proxy are certain, the shares represented by the proxy will be voted or withheld from voting in accordance with the instructions given in the proxy on any ballot that may be called for.

If the shareholder specifies a choice in the proxy with respect to a matter to be acted upon, then the shares represented will be voted or withheld from the vote on that matter accordingly. If no choice is specified in the proxy with respect to a matter to be acted upon, the proxy confers discretionary authority with respect to that matter upon the proxyholder named in the accompanying form of proxy. It is intended that the proxyholder named by management in the accompanying form of proxy will vote the shares represented by the proxy in favour of each matter identified in the proxy and for the nominees of the Company’s Board of Directors for directors and auditor.

The accompanying form of proxy also confers discretionary authority upon the named proxyholder with respect to amendments or variations to the matters identified in the accompanying Notice of Meeting and with respect to any other matters which may properly come before the Meeting. As of the date of this information circular, management of the Company is not aware of any such amendments or variations, or any other matters that will be presented for action at the Meeting other than those referred to in the accompanying Notice of Meeting. If, however, other matters that are not now known to management properly come before the Meeting, then the persons named in the accompanying form of proxy intend to vote on them in accordance with their best judgment.

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Solicitation of Proxies

It is expected that solicitations of proxies will be made primarily by mail and possibly supplemented by telephone or other personal contact by directors, officers and employees of the Company without special compensation. The Company may reimburse shareholders’ nominees or agents (including brokers holding shares on behalf of clients) for the costs incurred in obtaining authorization to execute forms of proxies from their principals. The costs of solicitation will be borne by the Company.

VOTING SECURITIES AND PRINCIPAL HOLDERS OF VOTING SECURITIES

Only shareholders of the Company who are listed on its Register of Shareholders on the record date of April 26, 2006 are entitled to receive notice of and to attend and vote at the Meeting or any adjournment of the Meeting (see “Voting of Shares and Proxies and Exercise of Discretion by Proxyholders” above).

As of April 26, 2006, the Company had 36,846,864 common shares issued and outstanding.

To the knowledge of the directors and executive officers of the Company, no person or company beneficially owns, directly or indirectly, or controls or directs, shares carrying more than 10% of the voting rights attached to all outstanding shares of the Company.

RECEIPT OF DIRECTORS’ REPORT AND FINANCIAL STATEMENTS

The Directors’ Report and the financial statements of the Company for the financial year ended December 31, 2005 and accompanying auditor’s report will be presented at the Meeting.

APPOINTMENT OF AUDITOR

The shareholders will be asked to vote for the appointment of Deloitte & Touche LLP, Chartered Accountants, as the auditor of the Company to hold office until the next annual general meeting of shareholders of the Company at a remuneration to be fixed by the directors. Deloitte & Touche LLP, was first appointed as auditor of the Company on March 1, 2000.

ELECTION OF DIRECTORS

The Company’s Board of Directors proposes to nominate the persons named in the table below for election as directors of the Company. Each director elected will hold office until the next annual general meeting of the Company or until his or her successor is duly elected or appointed, unless the office is earlier vacated in accordance with the Articles of the Company or the Business Corporations Act (British Columbia) or he or she becomes disqualified to act as a director.

The following table sets out the names of management’s nominees for election as directors, the place in which each is ordinarily resident, all offices of the Company now held by each of them, their principal occupations, the period of time during which each has been a director of the Company, and the number of common shares of the Company beneficially owned by each of them, directly or indirectly, or over which control or direction is exercised, as of the date of this information circular.

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Name, Place of Residence and Offices Held with the Company(1)	Principal Occupation or Employment for Last Five Years(1)	Periods during which has served as a Director	Number of Shares Owned(1)
Daniel MacInnis British Columbia, Canada President, CEO and Director	President and CEO of the Company since February 1, 2005. October 2003 to February 2005, VP Exploration, Sargold Resources Corp. Sardinia, Italy; from July 2004 to February 2005, Mr. MacInnis ran D. MacInnis Exploration and Consulting in Reno, Nevada.	February 1/05 to present	60,000
Eric H. Carlson (2) British Columbia, Canada Director	July 1994 to present, President and CEO, Anthem Properties (1993) Ltd.; July 1994 to present, President and CEO, Anthem Properties Corp.; 1992 to present, President of Kruger Capital Corp.	June 11/99 to present	1,278,300
R. Michael Jones (2) British Columbia, Canada Director	President of Platinum Group Metals Ltd. from February 2000 to present; previously Vice President of Corporate Development for Aber Resources Ltd. from September 1997 to September 1999.	March 31/03 to present	114,000
David G.S. Pearce (2) British Columbia, Canada Secretary and Director	President of Mega Capital Corp., an investment holding company with real estate and equity holdings in the United States and Canada. From 1999 to present, director of the Company; 1999 to April 2003, President of the Company; June 1995 to present, President of Function Gate Hardware Ltd. and Function Gate Holdings Ltd.; 1992 to present, director of Kruger Capital Corp.; 1990 to present, President of Palmer Beach Properties.	June 11/99 to present	437,600
Dr. Peter Megaw Arizona, USA Director	President of IMDEX/Cascabel and co-founder of Minera Cascabel S.A. de C.V. since 1988. Consulting geologist for the Company since 2003.	February 6/06 to present	716,157

Notes:

(1)

Information as to the place of residence, principal occupation and shares beneficially owned, directly or indirectly, or controlled or directed, has been furnished by the respective directors.

(2)

Member of the Company’s Audit Committee.

The Company does not have an Executive Committee.

The Company’s Board of Directors does not contemplate that any of its nominees will be unable to serve as a director. If any vacancies occur in the slate of nominees listed above before the Meeting, then the proxyholders named in the accompanying form of proxy intend to exercise discretionary authority to vote the shares represented by proxy for the election of any other persons as directors.

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Corporate Cease Trade Orders or Bankruptcies

During the ten years preceding the date of this Information Circular, no proposed director of the Company has, to the knowledge of the Company, been a director or executive officer of another issuer which, while such individual was acting in that capacity:

(a)

was the subject of a cease trade or similar order or an order that denied such other issuer access to any exemption under securities legislation, for a period of more than thirty consecutive days; or

(b)

was subject to an event that resulted, after the director or executive officer ceased to be a director or executive officer, in the company being the subject of a cease trade or similar order or an order that denied the relevant company access to any exemption under securities legislation, for a period of more than 30 consecutive days, or

(c)

within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold the assets of that person.

Individual Bankruptcies

During the ten years preceding the date of this Information Circular, no proposed director of the Company has, to the knowledge of the Company, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of that individual.

Audit Committee

Under Multilateral Instrument 52-110 – Audit Committee (“MI 52-110”), venture issuers are required to provide certain disclosure with respect to their audit committee, including the text of the audit committee’s charter, the composition of the audit committee and the fees paid to the external auditor. This information with respect to the Company is provided in Schedule “A”.

Corporate Governance Disclosure

Independence

The board of directors of the Company facilitates its exercise of independent supervision over management by having meetings of the Board of Directors, both with and without members of the Company’s management (including members of management who are also directors) being in attendance, and by having three independent directors on the Board of Directors, being Eric Carlson, Dr. Peter Megaw and R. Michael Jones. The directors of the Company who are not independent are Daniel MacInnis and Dave Pearce by reason of the fact that each of them is an officer of the Company.

Directorships

The following directors of the Company are also directors of the following other reporting issuers:

- 9 -

Name of Director	Names of Other Reporting Issuers
Daniel MacInnis	MAX Resource Corp.
Eric Carlson	Platinum Group Metals Ltd., Sydney Resource Corp., and MAX Resource Corp.
R. Michael Jones	Platinum Group Metals Ltd., and Jerico Exploration Inc.
David Pearce	MAX Resource Corp.
Peter Megaw	Candente Resource Corp.

Orientation and Continuing Education

The Company has not yet developed an official orientation or training program for directors. However, if and when a new director is added, they will have the opportunity to become familiar with the Company by meeting with the other directors and with officers and employees of the Company. As each director has a different skill set and professional background, orientation and training activities will be tailored to the particular needs and experience of each director.

Ethical Business Conduct

To encourage and promote a culture of ethical business conduct, the Board of Directors monitors the ethical conduct of the Company and ensures that it complies with applicable legal and regulatory requirements, such as those of relevant securities commissions and stock exchanges. The Board of Directors has found that fiduciary duties placed on individual directors by the Company’s governing corporate legislation and the common law, as well as the restrictions placed by applicable corporate legislation on the individual director’s participation in decisions of the Board of Directors in which the director has an interest, have been sufficient to ensure that the Board of Directors operated independently of management and in the best interests of the Company.

Nominations

The Board of Directors has not appointed a nominating committee. Rather, the Board as a whole is responsible for identifying and recommending new candidates, having regard to the appropriate size of the Board of Directors and the necessary competencies and skills of the Board of Directors as a whole and of each director individually. New nominees should have a track record in general business management, special expertise in an area of strategic interest to the Company, and the ability to devote the time required.

Compensation

The Board of Directors, upon recommendation from the Compensation Committee which consists of R. Michael Jones (chair), Eric Carlson and Dave Pearce, is responsible for determining all forms of compensation to be granted to the Chief Executive Officer of the Company and the directors, and for reviewing the President’s recommendations respecting compensation of the other senior executives of the Company, to ensure such arrangements reflect the responsibilities and risks associated with each position. When determining the compensation of its executive officers, the Board of Directors considers: (i) recruiting and retaining executives critical to the success of the Company and the enhancement of shareholder value; (ii) providing fair and competitive compensation compared to the remuneration paid by other reporting issuers similarly placed within the same business as the Company; (iii) balancing the interests of ma nagement and the Company’s shareholders; (iv) rewarding performance, both on an individual basis and with respect to operations in general. In order to achieve these objectives, the compensation paid to the Company’s executive officers consists of three components: (i) base salary; (ii) annual bonus based on actual performance relative to pre-set annual operation targets; and (iii) long-term incentive in the form of stock options.

- 10 -

Other Board Committees

The Company does not currently have any other committees of its board.

Assessments

The Board of Directors will annually review its own performance to satisfy itself that the Board of Directors, its committees, and its individual directors are performing effectively.

STATEMENT OF EXECUTIVE COMPENSATION

Executive Officers

For the purposes of this Information Circular, “executive officer” of the Company means an individual who at any time during the year was the Chair or a Vice-Chair of the Company; the President; any Vice-President in charge of a principal business unit, division or function including sales, finance or production; and any officer of the Company or of a subsidiary of the Company or any other individual who performed a policy-making function in respect of the Company.

The summary compensation table below discloses compensation paid to the following individuals:

(a)

each chief executive officer (“CEO”) of the Company;

(b)

each chief financial officer (“CFO”) of the Company;

(c)

each of the Company’s three most highly compensated executive officers, other than the CEO and CFO, who were serving as executive officers at the end of the most recently completed financial year and whose total salary and bonus exceeds $150,000 per year; and

(d)

any additional individuals for whom disclosure would have been provided under (c) except that the individual was not serving as an officer of the Company at the end of the most recently completed financial year,

(each, a “Named Executive Officer” or “NEO”).

The Company currently has two Named Executive Officers, Dan MacInnis, its President and Chief Executive Officer and Frank Hallam, its Chief Financial Officer.

Summary Compensation Table

The following table contains a summary of the compensation paid to the Named Executive Officers of the Company during the three most recently completed financial years.

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		Annual Compensation			Long Term Compensation
					Awards		Payouts
NEO Name and Principal Position	Year Ended	Salary ($)	Bonus ($)	Other Annual Compen-sation ($)	Securities Under Options/ SARs(1) Granted (#)	Shares or Units Subject to Resale Restrictions ($)	LTIP(2) Payouts ($)	All Other Compen-sation ($)
Daniel McInnis (3) President and CEO	2005/12/31	119,900	30,000	Nil	360,000	Nil	Nil	Nil
Frank Hallam (4) CFO	2005/12/31 2004/12/31 2003/12/31	Nil Nil 1,600	5,000 Nil Nil	Nil Nil Nil	100,000 Nil 75,000	Nil Nil Nil	Nil Nil Nil	Nil Nil Nil
George Young  (5) Former President and CEO	2004/12/31 2003/12/31	93,870 90,325	Nil 7,000	Nil Nil	Nil 225,000	Nil Nil	Nil Nil	Nil Nil

Notes:

(1)

“SAR” or “stock appreciation right” means a right, granted by the Company or any of its subsidiaries as compensation for employment services or office to receive cash or an issue or transfer of securities based wholly or in part on changes in the trading price of publicly traded securities of the Company.

(2)

“LTIP” or “long term incentive plan” means any plan providing compensation intended to motivate performance over a period greater than one financial year, but does not include option or stock appreciation right plans or plans for compensation through shares or units that are subject to restrictions on resale. 

(3)

Mr. MacInnis was appointed the Company’s President and CEO on February 1, 2005.

(4)

Mr. Hallam was appointed as the Company’s CFO on April 30, 2003.

(5)

Mr. Young resigned as President and CEO on December 31, 2005.

Compensation of Directors

The directors of the Company do not generally receive any cash compensation for services rendered in their capacity as directors of the Company, however R. Michael Jones did receive a cash bonus of $5,000 for his work with the Company during 2005.

During the fiscal year, the following stock options were granted to the Company’s directors:

Name	Date of Grant	# of Options Granted	Exercise Price	Expiration Date
Daniel MacInnis	Jan 12, 2005 Dec 1, 2005	250,000 110,000	$1.06 $1.00	Jan 12, 2010 Dec 1, 2010
Dave Pearce	Jan 12, 2005	75,000	$1.06	Jan 12, 2010
Eric Carlson	Jan 12, 2005	75,000	$1.06	Jan 12, 2010
R. Michael Jones	Jan 24, 2005	100,000	$1.06	Jan 24, 2010
George Young	Jan 24, 2005	75,000	$1.06	Jan 24, 2010

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Options and Stock Appreciation Rights

No stock appreciation rights were granted to any Named Executive Officer during the Company’s most recently completed financial year. The following table sets out stock options granted to the Named Executive Officers during the Company’s most recently completed financial year.

NEO Name	Securities, Under Options/SARs Granted (#)	Percent of Total Options/SARs Granted to Employees in Financial Year	Exercise or Base Price ($/Security)	Market Value of Securities Underlying Options/SARs on the Date of Grant ($/Security) (1)	Expiration Date
Daniel MacInnis	250,000 110,000	20% 9%	$1.06 $1.00	C$140,982 C$61,120	Jan 12, 2010  Dec 1, 2010
Frank Hallam	100,000	8%	$1.06	C$56,393	Jan 12, 2010

Notes:

(1)

The fair value of all stock based awards granted are estimated using the Black-Schols model and are recorded in operations over their vesting periods.

The following table sets out the incentive stock options and stock appreciation rights exercised by the Named Executive Officers during the Company’s most recently completed financial year and provides the values of the stock options and stock appreciation rights still held by the Named Executive Officers at year-end.

NEO Name	Securities Acquired on Exercise (#)	Aggregate Value Realized ($)	Unexercised Options/SARs at Financial YE (#) Exercisable/ Unexercisable	Value of Unexercised in-the-Money Options/SARs at Financial YE ($) Exercisable/ Unexercisable  (1)
Daniel MacInnis	Nil	Nil	360,000/Nil	$147,000/Nil
Frank Hallam	Nil	Nil	100,000/Nil	$39,000/Nil

Notes:

(1)

“In the money” options are those where the market value of the underlying securities at the fiscal year-end exceeds the exercise price of the option. Value is determined by calculating the difference between the closing price of the Company’s shares ($1.45) on December 31, 2005, and the exercise price of each option, and then multiplying the difference by the number of shares under option at the fiscal year end.

Termination of Employment, Change in Responsibilities and Employment Contracts

The Company has no compensatory plan, contract or arrangement whereby any Named Executive Officer may be compensated in an amount exceeding $100,000 in the event of that officer’s resignation, retirement or other termination of employment, or in the event of a change of control of the Company or a subsidiary or a change in the Named Executive Officer’s responsibilities following such a change of control.

- 13 -

Securities Authorized for Issuance under Equity Compensation Plans

Equity Compensation Plan Information

The following table sets forth details of the Company’s compensation plans under which equity securities of the Company are authorized for issuance at the end of the Company’s most recently completed financial year:

	Number of securities to be issued upon exercise of outstanding options, warrants and rights	Weighted-average exercise price of outstanding options, warrants and rights	Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
Plan Category	(a)	(b)	(c)
Equity compensation plans approved by securityholders(1)	2,655,000	$1.67	1,029,686
Equity compensation plans not approved by securityholders	Nil	Nil	Nil
Total	2,655,000		1,029,686

Notes:

(1)   Authorizes options to purchase up to 10% of the issued and outstanding shares of the Company

INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS

Other than routine indebtedness, no current or former executive officer, director or employee of the Company or any of its subsidiaries, or any proposed nominee for election as a director of the Company, or any associate or affiliate of any such executive officer, director, employee or proposed nominee, is or has been indebted to the Company or any of its subsidiaries, or to any other entity that was provided a guarantee, support agreement, letter of credit or other similar arrangement by the Company or any of its subsidiaries in connection with the indebtedness, at any time since the beginning of the most recently completed financial year of the Company.

MANAGEMENT CONTRACTS

Management functions of the Company or any subsidiary of the Company are not, to any substantial degree, performed by a person other than the directors or executive officers of the Company or its subsidiaries.

INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS

Other than as set forth in this information circular, no informed person of the Company, no proposed nominee for election as a director of the Company and no associate or affiliate of any such informed person or proposed nominee has had any material interest, direct or indirect, in any transaction since the commencement of the Company’s most recently completed financial year or in any proposed transaction that, in either case, has materially affected or will materially affect the Company or any of its subsidiaries, except as follows:

- 14 -

Dr. Peter Megaw became a member of the Board of Directors of the Company on February 6, 2006. Dr. Megaw is also a principal of Minera Bugambilias, S.A. de C.V. ("Bugambilias") and Minera Coralillo, S.A. de C.V. ("Coralillo"). The Company acquired the mineral claims of the Batopilas property from Bugambilias and Bugambilias has retained a net smelter royalty interest in that property. The Company acquired the mineral claims of the Guigui property from Coralillo and Coralillo has retained a net smelter royalty interest in that property.Dr. Megaw is also a principal of Minera Cascabel, S.A. de C.V. ("Cascabel"). The Company holds options from Cascabel to earn interests in the mineral claims of the Cinco de Mayo and Adargas properties.

Further, Cascabel has been and will continue to be retained by the Company as a consulting geological firm compensated at industry standard rates.

INTEREST OF CERTAIN PERSONS OR COMPANIES
IN MATTERS TO BE ACTED UPON

Other than as set forth in this information circular, no director or executive officer of the Company at any time since the beginning of the Company’s most recently completed financial year, no proposed nominee for election as a director of the Company and no associate or affiliate of any of such persons has any material interest, direct or indirect, by way of beneficial ownership of securities or otherwise, in any matter to be acted upon at the Meeting, except for any interest arising from the ownership of shares of the Company where the shareholder will receive no extra or special benefit or advantage not shared on a pro-rata basis by all holders of shares in the capital of the Company.

PARTICULARS OF OTHER MATTERS TO BE ACTED UPON

Stock Option Plan

Purpose

The TSX Venture Exchange (the “Exchange”) requires all Exchange listed companies to adopt stock options plans. Accordingly, the Company obtained the approval of its shareholders to the Company’s 2003 Stock Option Plan (the “Stock Option Plan”) at its meeting of shareholders held on March 31, 2003. As the Stock Option Plan limits the number of options which may be granted to 10% of the number of Common shares of the Company which are issued and outstanding at the relevant time, the Exchange requires that the shareholders of the Company re-approve the Stock Option Plan each year and management of the Company will be seeking such approval at the Meeting.

The Stock Option Plan is expected to benefit shareholders by enabling the Company to attract and retain high calibre personnel by offering to them an opportunity to share in any increase in value of the Common shares of the Company resulting from their efforts. The purpose of the Stock Option Plan is to provide incentive to the Company’s employees, officers, directors, and consultants responsible for the continued success of the Company. The following is a summary of the Stock Option Plan.

The Committee

The Stock Option Plan will be administered by a stock option committee (the “Committee”) of the Company’s board of directors (the “Board”) consisting of not less than 2 of its members. The Committee will administer the Stock Option Plan on behalf of the Board in accordance with such terms and conditions as the Board may prescribe in accordance with the Stock Option Plan. A majority of its members will constitute a quorum and all decisions of the Committee shall be approved by a majority of its quorum.

- 15 -

Description of Stock Option Plan

The effective date (the “Effective Date”) of the Stock Option Plan is the date the Board of Directors approve the Stock Option Plan (February 24, 2003), and it will terminate ten years from the Effective Date.

The Stock Option Plan provides that options may be granted to any employee, officer, director or consultant of the Company or a subsidiary of the Company.

The options issued pursuant to the Stock Option Plan will be exercisable at a price not less than the market value of the Company’s Common shares at the time the option is granted. “Market Value” means:

(a)

for each organized trading facility on which the Common shares are listed, Market Value will be the closing trading price of the Common shares on the day immediately preceding the grant date less any discounts permitted by the applicable regulatory authorities;

(b)

if the Company’s Common shares are listed on more than one organized trading facility, the Market Value shall be the Market Value as determined in accordance with subparagraph (a) above for the primary organized trading facility on which the Common shares are listed, as determined by the Committee, subject to any adjustments as may be required to secure all necessary Regulatory Approvals;

(c)

if the Company’s Common shares are listed on one or more organized trading facilities but have not traded during the ten trading days immediately preceding the grant date, then the Market Value will be determined by the Committee, subject to any adjustments as may be required to secure all necessary Regulatory Approvals; and

(d)

if the Company’s Common shares are not listed for trading on a stock exchange or over the counter market, the value which is determined by the Committee to be the fair value of the Company’s Common shares, taking into consideration all factors that the Committee deems appropriate, including, without limitation, recent sale and offer prices of the Company shares in private transactions negotiated at arms’ length.

Options under the Stock Option Plan will be granted for a term not to exceed five years from the date of their grant, provided that if the Company is then a “Tier 1” company listed on the Exchange, the term of the option will be not more than 10 years.

Options granted under the Stock Option Plan will be subject to such vesting schedule as the Committee may determine. In the event that an option is to be terminated prior to expiry of its term due to certain corporate events, all options then outstanding shall become immediately exercisable for 10 days after notice thereof, notwithstanding the original vesting schedule.

Options will also be non-assignable and non-transferable, provided that they will be exercisable by an optionee’s legal heirs, personal representatives or guardians for up to six months following the death or termination of an optionee due to disability, or up to six months following the death of an employee if the employee dies within 6 months of termination due to disability. All such options will continue to vest in accordance with their original vesting schedule.

- 16 -

The maximum number of Common shares to be reserved for issuance under the Stock Option Plan, including options currently outstanding, will not exceed 10% of the number of Common shares of the Company issued and outstanding on the applicable date of grant.

If a material alteration in the capital structure of the Company occurs as a result of a recapitalization, stock split, reverse stock split, stock dividend, or otherwise, the Committee shall make adjustments to the Stock Option Plan and to the options then outstanding under it as the Committee determines to be appropriate and equitable under the circumstances, unless the Committee determines that it is not practical or feasible to do so, in which event the options granted under the Stock Option Plan will terminate as set forth above.

A full copy of the Stock Option Plan will be available at the Meeting. Shareholders may obtain a copy of the Stock Option Plan in advance of the Meeting upon request to the Company, 328 - 550 Burrard Street, Vancouver, BC, V6C 2B5, attention of Dan MacInnis. The Company fax number is (604) 484-4710.

The Resolution

The rules of the Exchange require that the Stock Option Plan be approved by the affirmative vote of a majority of the votes cast at the Meeting. Accordingly, the shareholders of the Company will be asked to pass the following resolutions:

“BE IT RESOLVED THAT:

1.

the Stock Option Plan, in the form presented to this Meeting, is approved and is hereby directed to be attached to the Minutes of this Meeting as a Schedule thereto;

2.

the Company is authorized to grant stock options pursuant and subject to the terms and conditions of the Stock Option Plan entitling all of the optionholders in aggregate to purchase up to such number of Common shares of the Company as is equal to 10% of the number of Common shares of the Company issued and outstanding on the applicable grant date;

3.

any committee created pursuant to the Stock Option Plan is authorized to make such amendments to the Stock Option Plan from time to time as the Board may, in its discretion, consider to be appropriate, provided that such amendments will be subject to the approval of all applicable regulatory authorities and in certain cases, in accordance with the terms of the Stock Option Plan, the shareholders; and

4.

the approval of the Stock Option Plan by the Board of directors is hereby ratified and any one director of the Company is hereby authorized to execute any other documents as the director deems necessary to give effect to the transactions contemplated in the Stock Option Plan.”

Management of the Company recommends that shareholders vote in favour of the foregoing resolution, and the persons named in the enclosed form of proxy intend to vote for the approval of the foregoing resolution at the Meeting unless otherwise directed by the shareholders appointing them.

- 17 -

ADDITIONAL INFORMATION

Additional information relating to the Company is available on SEDAR at www.sedar.com.

Financial information is provided in the Company’s comparative financial statements and Management Discussion and Analysis for its most recently completed financial year. To request copies of the Company’s financial statements and Management Discussion and Analysis, please contact the secretary of the Company, David Pearce, at Suite 328 – 550 Burrard Street, Vancouver, British Columbia, V6C 2B5, telephone (604) 630-1399, facsimile (604) 484-4710, e-mail davepearce@telus.net.

APPROVAL OF THE BOARD OF DIRECTORS

The contents of this information circular have been approved, and the delivery of it to each shareholder of the Company entitled thereto and to the appropriate regulatory agencies has been authorized by the Board of Directors of the Company.

BY ORDER OF THE BOARD OF DIRECTORS OF

MAG Silver Corp.

Daniel MacInnis

President and Chief Executive Officer

- 18 -

SCHEDULE “A”

AUDIT COMMITTEE

The Audit Committee’s Charter

The following is the text of the current Charter for the Audit Committee as adopted by the Board on March 28, 2006.  Such Charter may be amended by the Board in the future in light of evolving corporate governance standards.

Overall Purpose / Objectives

The Audit Committee will assist the board of directors (the “Board”) in fulfilling its responsibilities. The Audit Committee will review the financial reporting process, the system of internal control and management of financial risks, the audit process, and the Company’s process for monitoring compliance with laws and regulations and its own code of business conduct. In performing its duties, the committee will maintain effective working relationships with the Board of Directors, management, and the external auditors and monitor the independence of those auditors. To perform his or her role effectively, each committee member will obtain an understanding of the responsibilities of committee membership as well as the Company’s business, operations and risks.

Authority

The Board authorizes the audit committee, within the scope of its responsibilities, to seek any information it requires from any employee and from external parties, to obtain outside legal or professional advice and to ensure the attendance of Company officers at meetings as appropriate.

Organization

Membership

The Audit Committee will be comprised of at least three members, a majority of which are not officers or employees of the Company, at least one of whom will have accounting or related financial management expertise

The chairman of the Audit Committee will be nominated by the committee from time to time.

A quorum for any meeting will be two members.

The secretary of the Audit Committee will be the Secretary of the Company, or other such person as may be nominated by the Chairman of, and approved by, the Audit Committee.

Attendance at Meetings

The Audit Committee may invite such other persons (e.g. the President or Chief Financial Officer) to its meetings, as it deems appropriate.

Meetings shall be held not less than four times a year. Special meetings shall be convened as required. External auditors may convene a meeting of the Audit Committee if they consider that it is necessary.

The proceedings of all meetings will be minuted.

- 19 -

Roles and Responsibilities

The Audit Committee will:

- Gain an understanding of whether internal control recommendations made by external auditors have been implemented by management.

- Gain an understanding of the current areas of greatest financial risk and whether management is managing these effectively.

- Review significant accounting and reporting issues, including recent professional and regulatory pronouncements, and understand their impact on the financial statements.

- Review any legal matters which could significantly impact the financial statements as reported on by the Company’s counsel and meet with outside independent counsel whenever deemed appropriate.

- Review the annual and quarterly financial statements, including Management’s Discussion and Analysis with respect thereto, and all annual and interim earnings press releases, prior to public dissemination, including any certification, report, opinion or review rendered by the external auditors and determine whether they are complete and consistent with the information known to committee members; determine that the auditors are satisfied that the financial statements have been prepared in accordance with generally accepted accounting principles.

- Pay particular attention to complex and/or unusual transactions such as those involving derivative instruments and consider the adequacy of disclosure thereof.

- Focus on judgmental areas, for example those involving valuation of assets and liabilities and other commitments and contingencies.

- Review audit issues related to the Company’s material associated and affiliated companies that may have a significant impact on the Company’s equity investment.

- Meet with management and the external auditors to review the annual financial statements and the results of the audit.

- Evaluate the fairness of the interim financial statements and related disclosures including the associated Management’s Discussion and Analysis, and obtain explanations from management on whether:

(a)

actual financial results for the interim period varied significantly from budgeted or projected results;

(b)

generally accepted accounting principles have been consistently applied;

(c)

there are any actual or proposed changes in accounting or financial reporting practices; or

(d)

there are any significant or unusual events or transactions which require disclosure and, if so, consider the adequacy of that disclosure.

- Review the external auditors’ proposed audit scope and approach and ensure no unjustifiable restriction or limitations have been placed on the scope.

- 20 -

- Review the performance of the external auditors and approve in advance provision of services other than auditing. Consider the independence of the external auditors, including reviewing the range of services provided in the context of all consulting services bought by the company. The Board authorizes the Chairman of the Audit Committee to approve any non-audit or additional audit work which the Chairman deems as necessary and to notify the other members of the Audit Committee of such non-audit or additional work.

- Make recommendations to the Board regarding the reappointment of the external auditors and the compensation to be paid to the external auditor.

- Review any significant disagreement among management and the external auditors in connection with the preparation of the financial statements.

- Review and approve the Company’s hiring policies regarding partners, employers and former partners and employees of the present and former external auditors of the Company.

- Establish a procedure for:

(a)

the confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters; and

(b)

the receipt, retention and treatment of complaints received by the Corporation regarding accounting, internal accounting controls, or auditing matters.

- Meet separately with the external auditors to discuss any matters that the committee or auditors believe should be discussed privately in the absence of management.

- Endeavour to cause the receipt and discussion on a timely basis of any significant findings and recommendations made by the external auditors.

- Ensure that the Board is aware of matters which may significantly impact the financial condition or affairs of the business.

- Perform other functions as requested by the full Board.

- If necessary, institute special investigations and, if appropriate, hire special counsel or experts to assist, and set the compensation to be paid to such special counsel or other experts.

- Review and recommend updates to the charter; receive approval of changes from the Board.

- With regard to the Company’s internal control procedures, the Audit Committee is responsible to:

(a)

review the appropriateness and effectiveness of the Company’s policies and business practices which impact on the financial integrity of the Company, including those related to internal auditing, insurance, accounting, information services and systems and financial controls, management reporting and risk management; and

(b)

review compliance under the Company’s business conduct and ethics policies and to periodically review these policies and recommend to the Board changes which the Audit Committee may deem appropriate; and

- 21 -

(c)

review any unresolved issues between management and the external auditors that could affect the financial reporting or internal controls of the Company; and

(d)

periodically review the Company’s financial and auditing procedures and the extent to which recommendations made by the internal audit staff or by the external auditors have been implemented.

Composition of the Audit Committee

Following the election of the directors pursuant to this Information Circular, it is intended that the following will be the members of the Audit Committee:

Eric Carlson

Independent⁽¹⁾

Financially literate⁽²⁾

R. Michael Jones

Independent⁽¹⁾

Financially literate⁽²⁾

Dave Pearce

Independent⁽¹⁾⁽³⁾

Financially literate⁽²⁾

Notes:

(1)

A member of an audit committee is independent if the member has no direct or indirect material relationship with the Company which could, in the view of the Board of Directors, reasonably interfere with the exercise of a member’s independent judgment.

(2)

An individual is financially literate if he has the ability to read and understand a set of financial statements that present a breadth of complexity of accounting issues that are generally comparable to the breadth and complexity of the issues that can reasonably be expected to be raised by the Company’s financial statements.

(3)

Mr. Dave Pearce is the Secretary of the Company, however as he is not remunerated as a member of management and as he acts in a manner independent of management, the Company believes that he is an Independent member of the Audit Committee.

Relevant Education and Experience

The education and experience of each Audit Committee member that is relevant to the performance of his responsibilities as a member of the Audit Committee are as follows:

Mr. Carlson is a Chartered Accountant and holds a Bachelor of Commerce degree from the University of British Columbia.

Mr. Jones has worked in the mining industry since 1985 and is currently the President and CEO of Platinum Group Metals Ltd, a Toronto Stock Exchange listed company. His experience includes exploration and mining development and production in public companies since 1985.

Dave Pearce has over twenty-five years experience as  CEO of various successful mid sized private operating companies and fourteen years experience as a director of publicly traded corporations.

Audit Committee Oversight

At no time since the commencement of the Company’s most recently completed financial year was a recommendation of the Audit Committee to nominate or compensate an external auditor not adopted by the Board.

- 22 -

Reliance on Certain Exemptions

At no time since the commencement of the Company’s most recently completed financial year has the Company relied on the exemption in Section 2.4 of MI 52-110 (De Minimis Non-audit Services), or an exemption from MI 52-110, in whole or in part, granted under Part 8 of MI 52-110.

Pre-Approval Policies and Procedures

The Audit Committee is authorized by the Board to review the performance of the Company’s external auditors and approve in advance provision of services other than auditing and to consider the independence of the external auditors, including reviewing the range of services provided in the context of all consulting services bought by the Company. The Chairman of the Audit Committee is authorized to approve any non-audit services or additional work which the Chairman deems as necessary and is required to notify the other members of the Audit Committee of such non-audit or additional work.

External Auditor Service Fees (By Category)

The aggregate fees billed by the Company’s external auditors in each of the last two fiscal years for audit fees are as follows:

Financial Year Ending	Audit Fees(1)	Audit-Related Fees(2)	Tax Fees(3)	All Other Fees(4)
2004	$42,849	$20,054	$7,700	Nil
2005(5)	$70,000	$Nil	$2,000	Nil

Notes:

(1)

The aggregate audit fees billed.

(2)

The aggregate fees billed for assurance and related services that are reasonably related to the performance of the audit or review of the Company’s financial statements which are not included under the heading “Audit Fees”, including assistance with the preparation of the Company’s Form 20F.

(3)

The aggregate fees billed for professional services rendered for tax compliance, tax advice and tax planning.

(4)

The aggregate fees billed for products and services other than as set out under the headings “Audit Fees”, “Audit Related Fees” and “Tax Fees”.

(5)

Estimated.

Exemption

The Company is relying upon the exemption in section 6.1 of the MI 52-110 – Audit Committees.

- 23 -

EX-99.5

Financial Statement Request Form

In accordance with the rules of National Instrument 51-102 “Continuous Disclosure Obligations”, effective March 30, 2004, a reporting issuer must send annually a request form to the registered holders and to the beneficial owners of its securities, that the registered holders and beneficial owners may use to request a copy of the reporting issuer’s annual financial statements and Management Discussion & Analysis (“MD & A”), the interim financial statements and MD & A, or both.  Please complete the form below if you wish to receive the statement(s) this year.

You will not automatically receive copies of the financial statement(s) unless this card is completed and returned.  Copies of all previously issued annual and quarterly financial statements and related MD & A are available to the public on the SEDAR website at www.sedar.com.

To use electronic methods for communication between issuers and their shareholders, we are requesting that you provide us with your email address and consent to electronic delivery.  In order to provide your consent, please complete our Consent to Electronic Delivery form at www.pctc.com/PCTCPortal/Public/ConsentForm.aspx. Holders that return this card in the mail and have requested delivery of statements via email must at some time prior to the mailing, complete the Consent Form at the above noted URL, or the statements will be sent via mail.

I, the undersigned, certify that I am the owner of the securities (other than debt instruments) of the Company shown below, and request that my name be placed on the Company’s Mailing List in respect of its quarterly and/or annual financial statements and MD & A for the ensuing financial year.

MAG SILVER CORP

.

Please select one or both of the following options:  

                   Annual Financial Statements & MD & A

                   Quarterly Financial Statements & MD & A

Name:                                                                                                                                                           &nbs p;                        

Address:                                                                                                                                                           &n bsp;                     

    Street Name & Number

Apt. or Suite

                                                                                                                                                                     &nbs p;                                                                                       

City

Province or State

Country

 Postal or Zip Code

Email Address:____________________________________________________________________________________     

Preferred Method of Communication: Email: _____or Mail: _________

*Signature:                                                                                                                                                                & nbsp;                                                                       

Date:

PLEASE RETURN YOUR COMPLETED REQUEST FORM BY MAIL TO:  

PACIFIC CORPORATE TRUST COMPANY

510 BURRARD ST, 3^RD FLOOR

VANCOUVER,  BC V6C 3B9

OR BY FAX TO:  604-689-8144

* At Pacific Corporate Trust Company, we respect your privacy and we are committed to protecting your information.  The personal information you are providing on this form will only be used for its intended purpose described above, and will be handled in accordance with our Privacy Policy, available on our website at www.pctc.com, or by writing to us at 510 Burrard St., 3rd Floor, Vancouver, BC, V6C 3B9. PCTC will use the information that you are providing on this form in order to process your request and will treat your signature(s) on this form as your consent to the above.

EX-99.6

Proxy

ANNUAL GENERAL MEETING (THE “MEETING”) OF SHAREHOLDERS OF	Resolutions (For full details of each item, please see the accompanying Notice of Meeting and Information Circular)
MAG SILVER CORP. (THE “COMPANY”) MEETING DATE: Tuesday, June 13, 2006 MEETING TIME: 2:00 p.m. (Pacific time) MEETING LOCATION: 328 – 550 Burrard Street, Vancouver, B.C., Canada The undersigned shareholder of the Company hereby appoints Daniel T. MacInnis, President and Chief Executive Officer of the Company, or failing this person, Frank R. Hallam, Chief Financial Officer of the Company, or in the place of the foregoing, _____________________________ (print the name), as proxyholder for and on behalf of the shareholder with the power of substitution to attend, act and vote for and on behalf of the shareholder in respect of all matters that may properly come before the Meeting and at every adjournment of the Meeting, to the same extent and with the same powers as if the undersigned shareholder were present at the Meeting or any adjournment of the Meeting. The undersigned Shareholder hereby revokes any proxy previously given to attend and vote at the Meeting or any adjournment of the Meeting. SIGN HERE:                                                                                                  Please Print Name:                                                                                         Date:                                                                                                               Number of Shares:                                                                                         This proxy form is not valid unless it is signed and dated. See important information and instructions on reverse side.
		For    Withhold
	1. To appoint Deloitte & Touche LLP, Chartered Accountants, as the auditor of the Company at a remuneration to be fixed by the directors.	[    ]              [    ]
		For    Withhold
	2. To set the number of directors of the Company at five.	[    ]              [    ]
	3. To elect the following persons as directors of the Company:	For   Withhold
	Daniel T. MacInnis	[    ]              [    ]
	David G. S. Pearce	[    ]              [    ]
	Eric H. Carlson	[    ]              [    ]
	R. Michael Jones	[    ]              [    ]
	Peter K. Megaw	[    ]              [    ]
		For    Withhold
	4. To re-approve the stock option plan of the Company as required by the TSX Venture Exchange.	[    ]              [    ]

INSTRUCTIONS FOR COMPLETION OF PROXY

1.

This proxy is solicited by the management of the Company.

2.

If someone other than the shareholder of the Company signs this proxy form on behalf of the named shareholder of the Company, documentation authorizing the signing person to execute the proxy form on the shareholder’s behalf that is acceptable to the Chairperson of the Meeting must be deposited with this proxy form in accordance with the instructions in the box below.

3.

If a shareholder cannot attend the Meeting but wishes to vote on the resolutions, the shareholder can appoint another person (who need not be a shareholder of the Company) to vote according to the shareholder’s instructions.  To appoint someone other than the person named in this proxy form, a shareholder must either:

a)

on the proxy form:

i)

strike out the printed names of the individuals specified as proxyholder;

ii)

insert the name of the shareholder’s nominee in the blank space provided;

iii)

complete, sign and date the proxy form; and

iv)

return the proxy form in accordance with the instructions in the box below; or

b)

complete another proper proxy form.

4.

If a shareholder cannot attend the Meeting but wishes to vote on the resolutions and to appoint one of the nominees of management specified in this proxy form, the shareholder must:

a)

leave the wording appointing a nominee as shown on the proxy form;

b)

complete, sign and date the proxy form; and

c)

return the proxy form in accordance with the instructions in the box below.

5.

If the instructions as to voting indicated in this proxy form are certain, the shares represented by the proxy form will be voted or withheld from voting in accordance with the instructions of the shareholder on any ballot that may be called for.  If the shareholder specifies a choice in the proxy form with respect to any resolution to be acted upon, then the shares represented will be voted or withheld from the vote on that resolution accordingly.  If no choice is specified in the proxy form with respect to any resolution to be acted upon, this proxy form confers discretionary authority with respect to that resolution upon the proxyholder appointed.  It is intended that the nominee of management acting as proxyholder will vote the shares represented by the proxy form in favour of each resolution identified in the proxy form and for the nominees specified for directors and audit or.  With respect to any amendments or variations to any of the resolutions identified in the proxy form or other matters that may properly come before the Meeting, the shares represented by the proxy form will be voted by the nominee of management acting as proxyholder in accordance with his best judgment.

6.

If a shareholder returns this or another proper proxy form, the shareholder may still attend the Meeting and vote in person if the shareholder later decides to do so.  To attend and vote at the Meeting, the shareholder must record his/her/its attendance with the Company’s scrutineer at the Meeting and revoke the previously completed, returned proxy form in writing.

To be presented at the Meeting, this proxy form must be received at the office of Pacific Corporate Trust Company by mail or by fax by 2:00 p.m. (Pacific time) on Friday, June 9, 2006 or at least 48 hours (excluding Saturdays, Sundays and holidays) before the time that the Meeting is to be reconvened after any adjournment of the Meeting.  The mailing address of Pacific Corporate Trust Company is 3^rd Floor, 510 Burrard Street, Vancouver, British Columbia, Canada, V6C 3B9, and its fax number is (604) 689-8144.