40-F

            UNITED STATES

                SECURITIES AND EXCHANGE COMMISSION

             Washington, D.C.  20549

            FORM 40-F

[Check one]

o REGISTRATION STATEMENT PURSUANT TO SECTION 12 OF THESECURITIES EXCHANGE ACT OF 1934

OR

                xANNUAL REPORT PURSUANT TO SECTION 13(a) OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended             December 31, 2008   .	Commission File Number   001-33574    .
MAG SILVER CORP.
(Exact name of Registrant as specified in its charter)
Not Applicable
(Translation of Registrant's name into English (if applicable))
BRITISH COLUMBIA
(Province or other jurisdiction of incorporation or organization)
1040
(Primary Standard Industrial Classification Code Number (if applicable))
Not Applicable
(I.R.S. Employer Identification Number (if applicable))
#328 – 550 BURRARD STREET, VANCOUVER, BC V6C 2B5  Tel: 604-630-1399
(Address and telephone number of Registrant's principal executive offices)
John L. Mericle, Harris, Mericle & Wakayama, 999 Third Avenue, Suite 3210, Seattle, Washington 98104, Tel: 206-621-1818
(Name, address (including zip code) and telephone number (including area code) Of agent for service in the United States)

Securities registered or to be registered pursuant to Section 12(b) of the Act.

Title of each class	Name of each exchange on which registered
Common Shares, without par value	NYSE Alternext US

Securities registered or to be registered pursuant to Section 12(g) of the Act.

None

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

None

(Title of Class)

For annual reports, indicate by check mark the information filed with this Form:

    x   Annual information form     x   Audited annual financial statements

Indicate the number of outstanding shares of each of the Registrant’s classes of capital or common stock as of the close of the period covered by the annual report.   49,155,566 outstanding shares of the Registrant’s common stock as of the fiscal year ended December 31, 2008.

Indicate by check mark whether the Registrant by filing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934 (the “Exchange Act”). If”Yes” is marked, indicate the file number assigned to the Registrant in connection with such Rule.

Yes o 82-____ No x

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d)of the Exchange Act during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

Yes  x No  o

PRINCIPAL DOCUMENTS

The following documents have been filed as part of this Annual Report on Form 40-F:

A. Annual Information Form

For the Registrant’s Annual Information Form (“AIF”) for the fiscal year ended December 31, 2008,  see Exhibit 99.1 of this Annual Report on Form 40-F.

B. Audited Annual Financial Statements and accompanying Management’s Discussion and Analysis

For the Registrant’s Consolidated Audited Annual Financial Statements and accompanying Management’s Discussion and Analysis for fiscal year ended December 31, 2008, including the report of Independent Registered Chartered Accountants with respect thereto, see Exhibit 99.2 of this Annual Report on Form 40-F. The Registrant’s Consolidated Audited Annual Financial Statements have been prepared in accordance with Canadian generally accepted accounting principles (“Canadian GAAP”) and reconciled to United States generally accepted accounting principles (“US GAAP”) - see Note 16 of the Notes to Consolidated Financial Statements of the Registrant’s Consolidated Audited Annual Financial Statements, reconciling the material differences between Canadian and US GAAP.

FORWARD-LOOKING STATEMENTS

This Annual Report on Form 40-F contains forward-looking statements and information, within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Exchange Act, relating to the Registrant that are based on the beliefs and estimates of management as well as assumptions made by and information currently available to the Registrant.

Such forward-looking statements and information include, but are not limited to:

The future price of silver;

The estimation of mineral reserves and mineral resources;

Estimates of the time and amount of future silver production for specific operations;

Estimated future exploration expenditures and other expenses for specific operations;

Permitting time lines;

Requirements for additional capital;

Litigation risks;

Currency fluctuations; and

Environmental risks and reclamation cost.

When used in this Annual Report on Form 40-F and the documents incorporated by reference herein, any statements that express or involve discussions with respect to predictions, beliefs, plans, projections, objectives, assumptions or future events of performance (often but not always using words or phrases such as “anticipate”, “believe”, “estimate”, “expect”, “intend”, “plan”, “strategy”, “goals”, “objectives”, “project”, “potential” or variations thereof or stating that certain actions, events, or results “may”, “could”, “would”, “might” or “will” be taken, occur, or be achieved, or the negative of any of these terms and similar expressions) as they relate to the Registrant or management, are intended to identify forward-looking statements and information.

Such statements reflect the Registrant’s current views with respect to future events and are subject to certain known and unknown risks, uncertainties and assumptions.

Many factors could cause actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements and information, including, among others:

• risks relating to the Registrant’s ability to finance the exploration and development of its mineral properties;

• risks relating to the Registrant’s ability to obtain all necessary licenses and permits that may be required to carry out exploration and development of its mineral properties and business activities;

• risks and uncertainties relating to the interpretation of exploration results, geology, grade and continuity of the Registrant’s mineral deposits;

• commodity price fluctuations (particularly gold and silver commodities);

• currency fluctuations and inflation pressures;

• risks related to governmental regulations, including environmental regulations;

• the Registrant’s ability to attract and retain qualified management and the Registrant’s dependence upon such management in the development of its mineral properties;

• increased competition in the exploration industry;

• the Registrant’s lack of infrastructure; and

• the Registrant’s history of losses and expectation of future losses.

Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described Annual Report on Form 40-F and the documents incorporated by reference herein. This list is not exhaustive of the factors that may affect any of the Registrant’s forward-looking statements and information. Forward-looking statements are statements about the future and are inherently uncertain, and actual achievements of the Registrant or other future events or conditions may differ materially from those reflected in the forward-looking statements and information due to a variety of risks, uncertainties and other factors, including without limitation, those referred to in the AIF under the heading “Risk Factors” and elsewhere. The Registrant’s forward-looking statements and information are based on the reasonable beliefs, expectations and opinions of management on the date the statements are made, and the Registrant does not assume any obligation to update forward-looking statements and information if circumstances or management’s beliefs, expectations or opinions should change.

For the reasons set forth above, investors should not attribute undue certainty to or place undue reliance on forward-looking statements and information.

The staff of the United States Securities and Exchange Commission takes the position that mining companies, in their filings with the SEC, should describe only those mineral deposits that the companies themselves can economically and legally extract or produce.  The AIF incorporated herein as Exhibit 99.1 to this Annual Report on Form 40-F contains information regarding adjacent properties on which we have no right to explore or mine, and is considered by management to be of material importance to the Registrant and its land holdings in the area.  Investors are cautioned that mineral deposits on adjacent properties are not necessarily probative of the existence, nature or extent of mineral deposits on our properties.

Please consult the Registrant's public filings at http://www.sedar.com/search/search_form_pc_en.htm and

http://idea.sec.gov/idea/searchidea/companysearch_idea.html for further, more detailed information concerning these matters.

DISCLOSURE CONTROLS AND PROCEDURES

After evaluating the effectiveness of the Registrant’s disclosure controls and procedures as required by paragraph (b) of Exchange Act Rule 13a-15 or 15d-15, the Chief Executive Officer and Chief Financial Officer of the Registrant have concluded that, as of the end of the period covered by this Annual Report on Form 40-F, the Registrant’s disclosure controls and procedures were effective to ensure that material information required to be disclosed by the Registrant in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms, and accumulated and communicated to the Registrant’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

MANAGEMENT’S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Exchange Act Rule 13a-15(f).  The Registrant’s system of internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles in Canada and the United States.

Management recognizes that effective internal control over financial reporting may nonetheless not prevent or detect all possible misstatements or frauds. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies or procedures may deteriorate.

Management has evaluated the effectiveness of the Registrant's internal control over financial reporting as of the end of the Registrant’s fiscal year ended December 31, 2008 based on the framework in “Internal Control – Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).  Based on this evaluation, management concluded that, as of the end of the Registrant’s fiscal year ended December 31, 2008, the Registrant maintained effective internal control over financial reporting.

Deloitte & Touche LLP, the independent registered public accounting firm that audited the Registrant's Consolidated Audited Annual Financial Statements for the Registrant’s fiscal year ended December 31, 2008, has expressed its opinion on the effectiveness of the Registrant’s internal control over financial reporting as of the end of the Registrant’s fiscal year ended December 31, 2008.  A copy of Deloitte & Touche LLP’s attestation report on internal control over financial reporting is included in the Registrant’s Consolidated Audited Annual Financial Statements, which is attached as Exhibit 99.2 of this Annual Report on Form 40-F.

ATTESTATION REPORT OF THE REGISTERED PUBLIC ACCOUNTING FIRM

This information is provided in the Registrant's Consolidated Audited Annual Financial Statements, which is attached as Exhibit 99.2 of this Annual Report on Form 40-F.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

During the period covered by this Annual Report on Form 40-F, no changes occurred in the Registrant’s internal control over financial reporting that were identified in connection with the evaluation required by paragraph (d) of Exchange Act Rule 13a-15 or Rule 15d-15 that materially affected, or are reasonably likely to materially affect, the Registrant’s internal control over financial reporting.

NOTICES PURSUANT TO REGULATION BTR

“Not applicable.”

     AUDIT COMMITTEE FINANCIAL EXPERT

The Registrant’s Board of Directors has determined that it has at least one Audit Committee financial expert serving on its Audit Committee. Derek White has been determined by the Registrant’s Board of Directors to meet the “audit committee financial expert” criteria prescribed by the Securities and Exchange Commission and is “independent”, as that term is defined by the NYSE-Alternext US’s listing standards applicable to the Registrant. Mr. White holds an undergraduate degree in Geological Engineering and is a Chartered Accountant.  The SEC has indicated that the designation of Derek White as an audit committee financial expert does not make him an “expert” for any purpose, impose any duties, obligations or liability on him that are greater than those imposed on members of the Audit Committee and Board of Directors who do not carry this designation, or affect the duties, obligations or liability of any other member of the Audit Committee.

CODE OF ETHICS FOR CHIEF EXECUTIVE OFFICER, CHIEF FINANCIAL OFFICER, AND OFFICERS AND DIRECTORS

The Registrant has adopted Codes of Ethics for its Chief Executive Officer, Chief Financial Officer, directors and officers. The Registrant has previously filed the latest version of its Codes of Ethics with the SEC on January 14, 2008 as Exhibit 11.1 to its Annual Report on Form 20-F/A-1 for fiscal year ended December 31, 2006. Shareholders may obtain a copy upon request, addressed to The Secretary, MAG Silver Corp., #328-550 Burrard Street, Vancouver, BC  V6C 2G5.  The Registrant has also posted its Codes of Ethics on its internet website at www.magsilver.com. All amendments to the Codes of Ethics and all waivers of the Codes of Ethics with respect to any of the persons covered by them will be filed with the SEC and posted on the SEC’s Interactive Data Electronic Applications (IDEA) system at http://idea.sec.gov.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

The aggregate fees billed by the Company’s current external auditor, Deloitte & Touche LLP, in each of the last two fiscal years are as follows.

	Year ended December 31, 2008		Year ended December 31, 2007
Audit Fees	$	125,500	$	118,000
Tax Fees(1)	$	19,500	$	31,000
Total	$	145,000	$	149,000

Notes:

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

The nature of the services provided by Deloitte & Touche LLP under each of the categories indicated in the table is described below.

Audit Fees

Audit fees are those incurred for professional services rendered by Deloitte & Touche LLP for the audit of the Registrant’s annual financial statements and services provided in connection with statutory and regulatory filings or engagements.

Tax Fees

Tax fees are those incurred for tax compliance, tax advice and tax planning professional services.  These services consisted of: tax compliance including the review of tax returns, and tax planning and advisory services relating to common forms of domestic and international taxation (i.e. income tax, capital tax, goods and services tax, payroll tax and value added tax).

PRE-APPROVAL POLICIES AND PROCEDURES

It is within the mandate of the Registrant’s Audit Committee to approve all audit and non-audit related fees. The Audit Committee is informed routinely as to the non-audit services actually provided by the auditor pursuant to this pre-approval process.  The auditors also present the estimate for the annual audit related services to the Audit Committee for approval prior to undertaking the annual audit of the financial statements.  

OFF-BALANCE SHEET ARRANGEMENTS

None.

TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2008

(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)	$	6,021,700	$	493,750	$	2,427,950	$	3,100,000	Nil
Cinco de Mayo Property (2)	$	350,000	$	350,000	Nil		Nil		Nil
Sello Property	$	2,180,000	$	220,000	$	1,300,000		1,300,000	Nil
Other Properties	$	470,000	$	50,000	Nil		Nil		Nil
Total (US $)	$	9,021,700	$	1,113,750	$	4,400,000	$	4,400,000	Nil

Notes:

(1) Of the final payment in the amount of US$650,000 for the original property option, due January 14, 2011, up to US$500,000 may be paid in common shares of the Company.  In 2007 and 2008, the Company acquired options on five other mineral rights packages surrounding the original block, resulting in the combined optional payments shown for the Sierra Ramirez Property.

 (2) Comprised of US$350,000 in option payments. Half of the remaining $350,000 option payment may be paid in common shares at a deemed price per share equal to the average trading price of MAG’s common shares for 30 calendar days prior to the date of the payment. 

IDENTIFICATION OF THE AUDIT COMMITTEE

The Registrant has a separately designated standing Audit Committee. The members of the Audit Committee are:

Chair:	Derek White
Members:	Eric Carlson
	R. Michael Jones

UNDERTAKING

The Registrant undertakes to make available, in person or by telephone, representatives to respond to inquiries made by the Commission staff, and to furnish promptly, when requested to do so by the Commission staff, information relating to: the securities registered pursuant to Form 40-F; the securities in relation to which the obligation to file an annual report on Form 40-F arises; or transactions in said securities.

SIGNATURES

Pursuant to the requirements of the Exchange Act, the Registrant certifies that it meets all of the requirements for filing on Form 40-F and has duly caused this Annual Report on Form 40-F to be signed on its behalf by the undersigned, thereto duly authorized.

Registrant:                      MAG Silver Corp.

By:                      /s/ “Daniel T. MacInnis”

Name:  Daniel T. MacInnis

Title:   President and Chief Executive Officer

Dated:  March 13, 2009

EXHIBITS

23.1 Consent of Independent Registered Chartered Accountants, Deloitte & Touche LLP.

23.2 Consent of Clancy Wendt, P.Geo.

23.3 Consent of Stephen W. Wetherup, BSc., P.Geo.

23.4 Consents of Dominic Chartier, P.Geo., Glen Coe, P.Geo. and Jean-Francois Couture, Ph.D., P.Geo.

23.5 Consents of Brad Leonard, M.Sc., P.Geo. and Julie Selway, Ph.D., P.Geo.

23.6 Consents of William E. Roscoe, Ph.D. P.Eng. and David Ross, P.Geo.

31.1 Certification by the Chief Executive Officer of the Registrant pursuant to Rule 13a-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2 Certification by the Chief Financial Officer of the Registrant pursuant to Rule 13a-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1 Certification by the Chief Executive Officer of the Registrant pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2 Certification by the Chief Financial Officer of the Registrant pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

99.1 Registrant’s Annual Information Form for the fiscal year ended December 31, 2008.

99.2 Registrant’s Consolidated Annual Audited Financial Statements and accompanying Management’s Discussion and Analysis for the fiscal year ended December 31, 2008.

EX-23.1

EXHIBIT 23.1

CONSENT OF INDEPENDENT REGISTERED CHARTERED ACCOUNTANTS, DELOITTE & TOUCHE LLP.

We consent to the incorporation by reference in this Annual Report on Form 40-F of MAG Silver Corp. (the “Registrant”) to, and to the use of, our reports dated March 12, 2009 relating to the consolidated financial statements of the Registrant for the fiscal year ended December 31, 2008 (which report expresses an unqualified opinion and includes a separate report titled Comments by Independent Registered Chartered Accountants on Canada-United States of America Reporting Differences relating to the effect of changes in accounting principles and the existence of conditions and events that raise substantial doubt on the Registrant’s ability to continue as a going concern) and the effectiveness of the Registrant’s internal control over financial reporting as of December 31, 2008, each of which is incorporated herein by reference as Exhibit 99.2 to this Annual Report on Form 40-F.

March 12, 2009                                              /s/ “Deloitte & Touche LLP”

Vancouver, BC, Canada        Independent Registered Chartered Accountants

EX-23.2

EXHIBIT 23.2

CONSENT OF CLANCY WENDT, P.GEO.

I refer to the technical report prepared by Pincock, Allen and Holt entitled “The Geology and Exploration Potential of the Don Fippi Project, Chihuahua State, Mexico” dated November 19, 2002 (the “Technical Report”) that is referenced in the Annual Information Form (“AIF”) of MAG Silver Corp. for the fiscal year ended December 31, 2008 incorporated herein as Exhibit 99.1 to this Annual Report on Form 40-F to be filed with the United States Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended.  I was responsible for preparing and certifying the Technical Report.

I hereby consent to references to my name and to the use of the Technical Report within the AIF incorporated herein to this Annual Report on Form 40-F.

Sincerely,

/s/“Clancy Wendt”

Clancy Wendt, P.Geo.

Former Principal Geologist, Pincock Allen & Holt

Reno, Nevada, U.S.A.

March 11, 2009.

EX-23.3

EXHIBIT 23.3

CONSENT OF STEPHEN W. WETHERUP, BSc., P.Geo.

I refer to the technical report prepared by Caracle Creek International Consulting Inc. entitled “Independent Technical Report – Juanicipio Silver Project, Zacatecas State, Mexico”, dated July 5, 2006 (the “Technical Report”) that is referenced in the Annual Information Form (“AIF”) of MAG Silver Corp. for the fiscal year ended December 31, 2008 incorporated herein as Exhibit 99.1 to this Annual Report on Form 40-F to be filed with the United States Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended. I authored and certified the Technical Report.

I hereby consent to references to my name and to the use of the Technical Report within the AIF incorporated herein to this Annual Report on Form 40-F.

Sincerely,

/s/      “Stephen W. Wetherup”

Stephen W. Wetherup, BSc., P.Geo. (APEGBC)

Operations Manager – Western Division

Vancouver, British Columbia, Canada

March 13, 2009

EX-23.4

EXHIBIT 23.4

CONSENTS OF DOMINIC CHARTIER, P.Geo., GLEN COLE, P.Geo. and JEAN-FRANCOIS COUTURE, Ph.D., P.Geo.

We refer to the technical report prepared by SRK Consulting entitled “Mineral Resource Estimation Valdecañas Silver-Gold Project Zacatecas State, Mexico” dated July 25, 2008 (the “Technical Report”) that is referenced in the Annual Information Form (“AIF”) of MAG Silver Corp. for the fiscal year ended December 31, 2008, incorporated herein as Exhibit 99.1 to this Annual Report on Form 40-F, to be filed with the United States Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended.  We were jointly responsible for preparing and certifying the Technical Report.

We hereby consent to references to our names and to the use of the Technical Report within the AIF incorporated herein to this Annual Report on Form 40-F.

Sincerely,

/s/“Dominic Chartier”

Dominic Chartier, P.Geo.

Consulting Geologist

March 13, 2009

/s/“Glen Cole”

Glen Cole, P.Geo.

Principle Resource Geologist

March 13, 2009

/s/“Jean-Francois Couture”

Jean-Francois Couture, Ph.D, P.Geo.

Principle Geologist

March 13, 2009

EX-23.5

EXHIBIT 23.5

CONSENTS OF BRAD LEONARD, M.Sc., P.Geo. and JULIE SELWAY, Ph.D., P.Geo.

We refer to the technical report prepared by Caracle Creek International Consulting Inc. entitled “Independent Technical Report Cinco de Mayo Property, Chihuahua State, Mexico” dated October 15, 2008 (the “Technical Report”) that is referenced in the Annual Information Form (“AIF”) of MAG Silver Corp. for the fiscal year ended December 31, 2008, incorporated herein as Exhibit 99.1 to this Annual Report on Form 40-F, to be filed with the United States Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended.  We were jointly responsible for preparing, authoring and certifying the Technical Report.

We hereby consent to references to our names and to the use of the Technical Report within the AIF incorporated herein to this Annual Report on Form 40-F.

Sincerely,

/s/“Brad Leonard”

Brad Leonard, M.Sc., P.Geo.

March 11, 2009

/s/“Julie Selway”

Julie Selway, Ph.D, P.Geo.

March 11, 2009

EX-23.6

EXHIBIT 23.6

CONSENTS OF WILLIAM E. ROSCOE, Ph.D., P.Eng. and DAVID ROSS, P.Geo.

We refer to technical information prepared by Scott Wilson Roscoe Postle Associates Inc. (the “Technical Information”) and contained in two news releases issued by MAG Silver Corp. (the “Registrant”) on February 24, 2009 and March 4, 2009. We were jointly responsible for preparing the Technical Information.

The Technical Information is referenced and included in the Registrant’s Annual Information Form (“AIF”) for the fiscal year ended December 31, 2008, incorporated herein as Exhibit 99.1 to this Annual Report on Form 40-F, to be filed with the United States Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended.

We hereby consent to references to our names and to the disclosure of the Technical Information contained in the AIF incorporated herein to this Annual Report on Form 40-F.

Sincerely,

/s/“William E. Roscoe”

William E. Roscoe, Ph.D., P.Eng.

March 13, 2009

/s/“David A. Ross”

David Ross, P.Geo.

March 13, 2009

EX-31.1

EXHIBIT 31.1

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

CEO CERTIFICATION

I, Daniel T. MacInnis, certify that:

1. I have reviewed this annual report on Form 40-F of MAG Silver Corp.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report;

4. The issuer’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the issuer and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure 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 this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the issuer’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the issuer’s internal control over financial reporting; and

5. The issuer’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer’s auditors and the audit committee of the issuer’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the issuer’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer’s internal control over financial reporting.

Date: March 13, 2009

/s/ “Daniel T. MacInnis”

Daniel T. MacInnis

Chief Executive Officer

EX-31.2

EXHIBIT 31.2

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

CFO CERTIFICATION

I, Frank R. Hallam, certify that:

1. I have reviewed this annual report on Form 40-F of MAG Silver Corp.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report;

4. The issuer’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the issuer and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure 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 this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the issuer’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the issuer’s internal control over financial reporting; and

5. The issuer’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer’s auditors and the audit committee of the issuer’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the issuer’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer’s internal control over financial reporting.

Date: March 13, 2009

/s/ “Frank R. Hallam”                                          

Frank R. Hallam

Chief Financial Officer

EX-32.1

EXHIBIT 32.1

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

CEO CERTIFICATION

In connection with the annual report of MAG Silver Corp. (the “Registrant”) on Form 40-F for the fiscal year ending December 31, 2008 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Daniel T. MacInnis, Chief Executive Officer of the Registrant, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

1.  The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2.  The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

­­­­/s/ Daniel T. MacInnis

Name: Daniel T. MacInnis

Title: Chief Executive Officer

March 13, 2009

EX-32.2

EXHIBIT 32.2

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

CFO CERTIFICATION

In connection with the annual report of MAG Silver Corp. (the “Registrant”) on Form 40-F for the fiscal year ending December 31, 2008 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Frank R. Hallam, Chief Financial Officer of the Registrant, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

1.  The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2.  The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

­­­­/s/ Frank R. Hallam

Name: Frank R. Hallam

Title: Chief Financial Officer

March 13, 2009

EX-99.1

Annual Information Form of MAG Silver Corp.

For the fiscal year ended December 31, 2008

Dated: March 13, 2009

Table of Contents

Common Shares 

Shareholder Rights Plan

Stock Options 

Preliminary Notes

In this Annual Information Form (“AIF”), unless the context otherwise requires, the terms “the Company” and “MAG” refer to MAG Silver Corp.

Date of Information

All information in this AIF is as of December 31, 2008 unless otherwise indicated.

Currency and Exchange Rates

All dollar amounts in this AIF are expressed in Canadian dollars unless otherwise indicated. MAG’s accounts are maintained in Canadian dollars. All references to “US dollars” or to “US$” are to United States dollars. All references to “pesos” are to Mexican Pesos.

The following table sets forth the rate of exchange for the Canadian dollar expressed in United States dollars in effect at the end of the periods indicated, the average of exchange rates in effect on the last day of each month during such periods, and the high and low exchange rates during such periods based on the noon rate of exchange as reported by the Bank of Canada for conversion of Canadian dollars into United States dollars.

	Year Ended December 31
Canadian Dollars to US dollars	2008		2007		2006
Rate at end of period	$	US0.8166	$	US1.0120	$	US0.8581
Average rate for period	$	US0.9371	$	US0.9310	$	US0.8815
High for period	$	US1.0289	$	US1.0905	$	US0.9099
Low for period	$	US0.7711	$	US0.8437	$	US0.8528

The noon rate of exchange on March 12, 2009 as reported by the Bank of Canada for the conversion of Canadian dollars into United States dollars was Canadian $1.00 equals US$0.77.

Metric Equivalents

For ease of reference, the following factors for converting Imperial measurements into metric equivalents are provided:

To convert from Imperial	To metric	Multiply by
Acres	Hectares		0.404686
Feet	Metres		0.30480
Miles	Kilometres		1.609344
Tons	Tonnes		0.907185
Ounces (troy)/ton	Grams/Tonne		34.2857

Terms used and not defined in this AIF that are defined in National Instrument 51-102 - Continuous Disclosure Obligations (“NI 51-102”) shall bear that definition. Other definitions are set out in National Instrument 14-101 - Definitions.

Forward Looking Statements

This Annual Information Form contains forward-looking statements and information within the meaning of Canadian and U.S. Securities laws relating to the Company that are based on the beliefs and estimates of management as well as assumptions made by and information currently available to the Company. Such forward-looking statements and information include, but are not limited to:

·The future price of silver;

·The estimation of mineral reserves and mineral resources;

·Estimates of the time and amount of future silver production for specific operations;

·Estimated future exploration expenditures and other expenses for specific operations;

·Permitting time lines;

·Requirements for additional capital;

·Litigation risks;

·Currency fluctuations; and

·Environmental risks and reclamation cost.

When used in this document, any statements that express or involve discussions with respect to predictions, beliefs, plans, projections, objectives, assumptions or future events of performance (often but not always using words or phrases such as “anticipate”, “believe”, “estimate”, “expect”, “intend”, “plan”, “strategy”, “goals”, “objectives”, “project”, “potential” or variations thereof or stating that certain actions, events, or results “may”, “could”, “would”, “might” or “will” be taken, occur, or be achieved, or the negative of any of these terms and similar expressions), as they relate to the Company or management, are intended to identify forward-looking statements and information.

Such statements reflect the Company’s current views with respect to future events and are subject to certain known and unknown risks, uncertainties and assumptions.

Many factors could cause actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements and information, including, among others:

• risks relating to the Company’s ability to finance the exploration and development of its mineral properties;

• risks relating to the Company’s ability to obtain all necessary licenses and permits that may be required to carry out exploration and development of its mineral properties and business activities;

• risks and uncertainties relating to the interpretation of exploration results, geology, grade and continuity of the Company’s mineral deposits;

• commodity price fluctuations (particularly gold and silver commodities);

• currency fluctuations and inflationary pressures;

• risks related to governmental regulations, including environmental regulations;

• the Company’s ability to attract and retain qualified management and the Company’s dependence upon such management in the development of its mineral properties;

• increased competition in the exploration industry;

• the Company’s lack of infrastructure; and

• the Company’s history of losses and expectation of future losses.

Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described herein. This list is not exhaustive of the factors that may affect any of the Company’s forward-looking statements and information. Forward-looking statements are statements about the future and are inherently uncertain, and actual achievements of the Company or other future events or conditions may differ materially from those reflected in the forward-looking statements and information due to a variety of risks, uncertainties and other factors, including without limitation, those referred to in this document under the heading “Risk Factors” and elsewhere. The Company’s forward-looking statements and information are based on the reasonable beliefs, expectations and opinions of management on the date the statements are made, and the Company does not assume any obligation to update forward-looking statements and information if circumstances or management’s beliefs, expectations or opinions should change.

For the reasons set forth above, investors should not attribute undue certainty to or place undue reliance on forward-looking statements and information.

Adjacent Property Disclosure

The staff of the United States Securities and Exchange Commission takes the position that mining and mineral exploration companies, in their filings with the SEC, should describe only those mineral deposits that the companies themselves can economically and legally extract or produce.  This Annual Information Form contains information regarding adjacent properties on which we have no right to explore or mine, and is considered by management to be of material importance to the Company and its land holdings in the area.  Investors are cautioned that mineral deposits on adjacent properties does not necessarily indicate and certainly does not prove the existence, nature or extent of mineral deposits on our properties.

Cautionary Note to Investors Concerning Estimates of Indicated Resources

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

Cautionary Note to Investors Concerning Estimates of Inferred Resources

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

Technical Information

Unless otherwise indicated, scientific or technical information in this AIF relating to mineral reserves or mineral resources is based on information prepared by employees of MAG or its joint venture partners, as applicable, under the supervision of, or has been reviewed by, Dr. Peter Megaw, who is a “Qualified Person” as defined in National Instrument 43-101. A “Qualified Person” means an individual who is an engineer or geoscientist with at least five years of experience in mineral exploration, mine development or operation or mineral project assessment, or any combination of these, has experience relevant to the subject matter of the mineral project, and is a member in good standing of a professional association.

Passive Foreign Investment Company

The Company believes it is a Passive Foreign Investment Company (“PFIC”), as that term is defined in Section 1297 of the Internal Revenue Code of 1986, as amended, and believes it will be a PFIC for the foreseeable future.  Consequently, this classification may result in adverse tax consequences for U.S. holders of the Company’s Common Shares. For an explanation of these effects on taxation, U.S. shareholders and prospective U.S. holders of the Company’s Common Shares are encouraged to consult their own tax advisers.

Please consult the Company's public filings at www.sedar.com and http://idea.sec.gov for further, more detailed information concerning these matters.

CORPORATE STRUCTURE

Incorporation

MAG Silver Corp.’s head office is located at:

328 – 550 Burrard Street

Vancouver, British Columbia

Canada, V6C 2B5

The Company’s registered office is located at:

2900 – 550 Burrard Street

Vancouver, British Columbia

Canada, V6C 0A3

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.  Effective March 29, 2004, the Company Act (British Columbia) was replaced by the Business Corporations Act (British Columbia). Accordingly, on July 27, 2005, the Company adopted new Articles and concurrently increased its authorized capital from 1,000,000,000 Common Shares to an unlimited number of Common Shares without par value and an unlimited number of Preferred Shares without par value.

Our North American office and principal place of business is located at Suite 328, 550 Burrard Street, Vancouver, British Columbia, Canada, V6C 2B5 (phone:  604-630-1399).

The Company is a “reporting issuer” 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 (formerly CDNX) on April 19, 2000 under the symbol “MGA”.  Concurrent with the Company’s name change to MAG Silver Corp. on April 22, 2003, the trading symbol was changed to “MAG”.  On July 9, 2007, the Company listed on the American Stock Exchange (now the NYSE Alternext US) under the symbol “MVG”.  On October 5, 2007, the Company delisted from the TSX Venture Exchange concurrent with its listing on the Toronto Stock Exchange, with the Company’s Common Shares continuing to trade under the symbol “MAG”.

Intercorporate Relationships

The Company is the registered owner of 99% of the issued Class I shares of Minera Los Lagartos, S.A. DE C. V. (“Lagartos”). The remaining 1% of the issued Class I shares of Lagartos are held by Dan MacInnis, President, CEO and a director of the Company, in trust for the Company. The Company effectively has 100% beneficial ownership of Lagartos. The registered and records office of Lagartos is located at Paseo de Los Tamarindos 60, Bosques de Las Lomas, 05120 Mexico, D.F., Mexico.

The Company’s subsidiary, Lagartos, is the registered owner of a 44% interest in Minera Juanicipio, S.A. DE C.V. (“Minera Juanicipio”) and Fresnillo plc (“Fresnillo”), a London Stock Exchange listed company that is controlled by Industrias Peñoles, S.A. DE C.V. (“Peñoles”) holds a 56% interest.  In December 2007, Lagartos and Peñoles established Minera Juanicipio to hold and operate all mineral and surface rights related to the Juanicipio property located in Zacatecas State, Mexico.  Minera Juanicipio is governed by a shareholders agreement dated October 10, 2005 (the “Shareholders Agreement”).  Pursuant to the Shareholders Agreement each shareholder is to provide funding to Minera Juanicipio pro rata to its interest in Minera Juanicipio, with Fresnillo contributing 56% and MAG, through Lagartos, contributing 44% respectively. See more detail at “Description of the Business – The Juanicipio Property” below.  The registered and records office of Minera Juanicipio is located at Carretera A Francisco I. Madero 1, Col. Cieneguillas, Zacatecas, ZAC, C.P. 98171.

The following table lists the subsidiary of the Company and a company in which MAG holds a significant interest, together with the jurisdiction of incorporation and the direct or indirect percentage ownership by the Company of each such company:

Name	Jurisdiction of Organization	Percentage of Voting Securities Owned or Controlled
Minera Los Lagartos, S.A. DE C.V.	Mexican Republic	100% (1)
Minera Juanicipio, S.A. DE C.V.	Mexican Republic	44% (2)

Notes:

(1) On October 9, 2005 the assets of Lexington Capital Group Inc., previously a subsidiary of the Company, were merged with Lagartos, so that all of the Company’s indirect interests in the Juanicipio claim are held by Lagartos.

(2) Owned by Lagartos, which in turn is owned by the Company.

GENERAL DEVELOPMENT OF THE BUSINESS

Background

MAG is a company based in Vancouver, British Columbia, Canada and is focused on the acquisition, exploration and development of district scale projects located in the Mexican Silver Belt.  The Company’s common shares trade on the Toronto Stock Exchange under the symbol MAG and on the New York Stock Exchange Alternext US (formerly AMEX) under the symbol MVG.  The Company is a “reporting issuer” in the Provinces of British Columbia, Alberta and Ontario.

The Company’s two most material properties at the date of this AIF are the Company’s 44% joint venture interest in the Juanicipio propertyand the 100% owned Cinco de Mayo property.The 100% owned, less advanced, Lagartos (NW and SE) propertyis considered a principal property at this time.  Of these three, the Juanicipio property is by far the most significant to MAG and the exploration of this property has been the most important valuation factor for the Company.

The roughly 8,000 hectare Juanicipio property is located in Zacatecas State, Mexico just outside the mining town of Fresnillo. The Juanicipio property lies 6 kilometres west from the principal production head-frame of the Fresnillo Mine and 2.5 kilometres west from the Saucito Vein, owned by Industrias Peñoles, S.A. de C.V. (“Peñoles”) and currently undergoing production development. The Fresnillo mine area has been in continuous silver production since the 1500’s and today is host to the world’s largest producing silver mine operated by Peñoles.

The Company initially acquired a 100% interest in the Juanicipio property in 2002 for a series of payments totalling $919,458 and consisting of $486,125 in cash and $433,333 for the issue of 366,667 common shares.  From 2005 to 2007, Peñoles acquired a 56% interest in the Juanicipio property by conducting US$5,000,000 of exploration on the property over four years and purchasing US$1,000,000 of Common Shares of the Company at market price.

 The Cinco de Mayo property is located approximately 190 kilometres northwest of the city of Chihuahua, in northern Chihuahua State, Mexico. Cinco de Mayo was acquired by way of an option agreement dated February 26, 2004.  The property is subject to a 2.5% net smelter returns royalty.  Under the terms of the agreement, as later amended, the Company was obligated to make scheduled cash and share payments together worth US$1,000,000 and incur exploration expenditures totalling US$1,000,000 by July 26, 2009. To December 31, 2008 the Company has paid US$550,000 in cash, issued 165,670 common shares at a value of $266,630 and completed approximately $10,773,036 in exploration costs on the project. Cinco de Mayo is the most advanced of MAG’s five Carbonate Replacement Deposit (“CRD”) style targets.

The Company acquired the 135,000 hectare Lagartos exploration concessions by staking in 2006.  The two claim groups, Lagartos NW and Lagartos SE, lay northwest and southeast of the Juanicipio property, along the “Fresnillo Silver Trend”, a large regional structural zone hosting world class Guanajuato, Zacatecas and Fresnillo epithermal silver-gold vein districts.

Three Year History

2006

Drilling was re-started at Juanicipio in August 2006 on a series of holes located 1.8 km west of discovery hole JI-05-16.  In August 2006 Peñoles and MAG announced that surface rights to an area covering the east-west projection of the Valdecañas Vein had been purchased for approximately US$1.40M.  Drilling on the discovery itself resumed in October 2006 and continued into the first quarter of 2007 with four operating drill rigs.  At December 31, 2006, Peñoles had spent US$3,360,000 on the Juanicipio property and had completed 18,320 metres of diamond drilling.

The Company executed exploration programs on a number of its own 100% owned projects in Mexico during 2006.  MAG continued to enlarge its land position at Lagartos and elsewhere in Mexico in 2005 and 2006 by claiming strategically located properties as they became eligible for acquisition.  MAG initiated a drill program in January of 2006 at Lagartos and by year end had expended $1,798,168 in exploration costs for the project area.

The Batopilas property was of higher priority to the Company in 2006 and earlier than it is at present.  The Company acquired a 100% interest in the project, subject to a 4.5% Net Smelter Return royalty, in exchange for a series of cash and share payments totalling $1.42 million.  It covers 4,500 hectares and is located deep within the famous Copper Canyon country of south western Chihuahua State, Mexico. A ten-hole 2,500 metre drill program was initiated at Batopilas in the fall of 2005 to test preliminary drill targets and help refine exploration methods for the property.  MAG later announced in January, 2006 that a single high-grade silver mineralization had been intersected in initial drilling at Batopilas. Hole 02 intersected the Don Juan Vein with 1.70 metres (5.6 feet) of 2,358 grams per tonne silver (75.8 ounces per ton).

For the year ending December 31, 2006 the Company incurred $646,029 in property acquisition costs and $3,896,504 in exploration expenditures on its 100% owned properties.  For the year ended December 31, 2006, the Company incurred no costs in respect of the Juanicipio property for its 44% share of costs because all costs for the period were paid for by Peñoles as a part of their required US $5.0 million earn in.

On March 2, 2006 the Company closed a private placement for 245,716 common shares at a price of $2.35 per share.   Gross proceeds to the Company totaled $577,433.

2007

By May of 2007, Peñoles had fulfilled its expenditure commitment to earn a 56% interest in the Juanicipio property and in December of 2007, the Company and Peñoles incorporated a joint venture company, Minera Juanicipio S.A. de C.V. (“Minera Juanicipio”), to operate the joint venture, with the Company holding 44% of the shares of Minera Juanicipio through its 100% owned Mexican subsidiary, Lagartos, and Peñoles holding a 56% interest in Minera Juanicipio.  It was agreed that Peñoles would be the operator of the project and both parties would fund on-going and future programs in proportion to their pro rata interests.

To capitalize Minera Juanicipio, the Company invested 63.40 million pesos ($6.025 million) into Minera Juanicipio while Peñoles invested 80.69 million pesos ($7.668 million). MAG then received a payout from Minera Juanicipio of 26.41 million pesos ($2.510 million) against its contribution of the Juanicipio mineral rights while Peñoles received 70.28 million pesos against its contribution of surface rights and the Company’s 44% share of exploration costs incurred by Peñoles in the period subsequent to completion of their earn-in.

During 2007, the Minera Juanicipio completed two additional land purchases totaling USD$5,077,939 and then held uninterrupted coverage of 4.5 kilometres of the strike projection of the Valdecañas Vein from east to west and covering a 2.5 kilometre westerly strike projection of the Juanicipio Vein.

By December 31, 2007, the Valdecañas Vein averaged almost 5.8 metres in width with a down dip length in excess of 400 metres and had been traced for 1,500 metres along strike.  The average grade of 14 holes drilled by Peñoles to December 31, 2007 (out of 17) that were within the high grade silver, gold zone was 1,292 grams per tonne silver, 2.50 g/t gold and 8.4% combined lead and zinc.

Work in 2007 at Batopilas included: underground topographic surveys of the old workings; a detailed 590 line-kilometre airborne geophysical survey; a detailed stream sediment and ridge and spur soil sampling program; and a detailed geological re-mapping of the entire project area.  A drill rig was remobilized for the next phase of drilling in mid February 2007. A total of 12 holes were drilled for an additional 3,025 metres of drilling.

During 2007 the Company spent $1.56 million in exploration work on the Cinco de Mayo property, of which $1.05 million related to drilling.

By December 31, 2007, the Company had incurred $120,853 in exploration costs on the Lagartos NW property and $4,220,148 in exploration costs on the Lagartos SE property, including surface, geophysical and drilling work.

For the year ending December 31, 2007 the Company incurred $931,891 in property acquisition costs and $5,987,128 in exploration expenditures on its 100% owned properties, including exploration on the Batopilas, Cinco de Mayo and Lagartos land packages.

In February 2007, the Company closed private placements for 2.76 million units for gross proceeds of $20 million.  Each unit consisted of one common share and one-half common share purchase warrant, with each whole warrant exercisable for one common share at a price of $10.00 for a period of 12 months expiring in February 2008.  All warrants were exercised for gross proceeds to the Company of $13.8 million.

On November 27, 2007 the Company closed a bought deal private placement for 3.0 million common shares of the Company at a price of $15.50 per share for gross proceeds of $46.5 million. 

The company successfully upgraded its market exposure in 2007 by listing on the American Stock Exchange (AMEX) under the symbol MVG (now the NYSE Alternext US) and with its graduation from the TSX Venture Exchange to the Toronto Stock Exchange (TSX) under the symbol MAG.

2008

For the year ended December 31, 2008, the Company incurred $1,926,488 in property acquisition costs and $13,336,644 in exploration expenditures on its own 100% held properties.

For the year ended December 31, 2008, the Company invested $8,166,747 in Minera Juanicipio to fund its 44% share of exploration expenditures on the Juanicipio property.A total 26,050 metres of diamond drilling was completed on the Valdecañas Vein and 2,810 metres on the Juanicipio Vein in 2008.

On June 18, 2008, the Company announced a resource estimate for the Valdecañas Vein (see news release dated June 18, 2008). The resource estimate was prepared by Fresnillo and audited by SRK Consulting.  A National Instrument 43-101 (“NI 43-101”) technical report was filed by the Company in support of the estimate.  The total inferred resource estimate was 237.8 million ounces of silver of which MAG’s 44% interest equates to 104.5 million ounces and Peñoles 56% interest equates to 133.2 million ounces.  In addition to the silver, the resource estimate also contained inferred resources of 480,000 ounces of gold and almost 1 billion pounds of combined lead and zinc (457,700 tonnes).

During 2008 Peñoles announced the spin-off of its silver assets into a subsidiary company named Fresnillo.  In May 2008, Fresnillo was listed on the London Stock Exchange, while the majority interest in the company remained under the control and ownership of Peñoles.  Later, in September and October 2008, Fresnillo acquired in the market 9,746,193 of the issued and outstanding shares of MAG, which together with its existing shares of MAG represents a 19.83% interest. MAG announced on October 15, 2008 that the Company had established a Special Committee of the Board of Directors to consider “strategic alternatives” in response to Fresnillo’s acquisition of a material interest in MAG shares.

On December 1, 2008 the Company was advised of the intention of Fresbal Investments Ltd., a wholly-owned subsidiary of Fresnillo, to make an unsolicited take-over bid for all of the outstanding shares of MAG for US$4.54 per share.

As a result of the Fresnillo announcement and its position as an “insider” of MAG as a result of its 19.83% shareholding, applicable securities law require that an independent valuation of the Company be prepared under the supervision of an Independent Committee of the board of directors of MAG prior to Fresnillo commencing its takeover bid. MAG appointed an Independent Committee and by year-end, TD Securities was engaged as independent valuator and Scott Wilson Roscoe Postle Associates Inc. (“Scott Wilson RPA”) was engaged as independent technical consultant. By the first week of January 2009, the independent valuator was on site at Juanicipio to begin the valuation.  The independent valuation process was ongoing until February 1, 2009, when the Independent Committee suspended the valuation work because Fresnillo neglected or refused to provide the valuator with critical information in the sole possession of Fresnillo that the Independent Committee considers critical to the completion of a reliable valuation.  As of the date of this AIF, the valuation process remains suspended pending a review by the Ontario Securities Commission as requested by Fresnillo.

The 2009 exploration program for the Juanicipio property includes 25,000 metres of drilling to further define the Valdecañas Vein, to extend the Juanicipio Vein and the newly interpreted Encino Vein and to test other prospective targets. At the time of writing, four drills were turning on Juanicipio.

An updated NI 43-101 compliant resource estimate was completed in late February 2009 (see press releases dated February 24, 2009 and March 4, 2009 and see the section titled “Juanicipio Property” below in this document).

The Company has budgeted an aggregate $17.0 million in 2009 for expenditures related to its 44% interest in the Juanicipio property and high-priority targets on four of its wholly-owned properties in Mexico.  A 25,000 metre drilling program is scheduled for Juanicipio while a further 30,000 metres of diamond drilling is planned for the Company’s own projects.

Drilling at Cinco de Mayo in 2008 intersected widespread and high grades of silver/lead/zinc mineralization and exploration to date has defined a coherent massive sulphide sheet, or manto, of at least 2,000 metres strike length that remains open, suggesting the presence of a large system characteristic of many of the large CRD mines in the Chihuahua Trough.

Highlights from 2008 drilling included six holes reported on July 8, 2008, Holes 29 and 35 through 39, which extended the José Manto to an area of at least 300 metres by 400 metres and mineralization in outlying Hole 32 suggested an extension of an additional 600 metres to the southeast. The best new intercept was Hole 08-39, which cut 3.46 metres of 612 grams per tonne (g/t) silver (17.8 ounces per ton (opt), 11.59% lead and 13.20% zinc: including 2.36 metres of 772 g/t silver (22.5 opt), 13.42% lead and 16.39% zinc.

Assay results reported on September 18, 2008 from an additional 15 diamond drill holes (08-40 to 08-54), ten of which encountered mineralization, confirmed extension of the Jose Manto to a strike length of at least 2,000 metres, which remains open along strike and to the southwest. Returns were notable for high grades of zinc and lead, along with the high grade silver; latest results also show significant gold values, with Hole 08-48 returning 1.50 metres of 6.89 g/t (0.20 opt) gold, 370 g/t (10.8 opt) silver, 19.15% lead and 9.46% zinc. The latest holes also contain appreciable amounts of scheelite (tungsten) bearing skarn, suggesting proximity to the source of the mineralization.

The Company spent a cumulative total of $10,773,036 in exploration costs at Cinco de Mayo to December 31, 2008 (2007: $2,775,679, 2006: $1,213,474). Exploration programs at Cinco de Mayo by the Company for 2008 were budgeted for approximately $2.4 million. However, results warranted accelerated and expanded programs.

Drilling continues at Cinco de Mayo in 2009 with 3 rigs currently turning, part of a proposed 15,000 metre drill operation to follow up on last year’s significant intersections.  The Company is currently undertaking a preliminary resource calculation for the project.

Work on the Batopilas Project in 2008 was scaled back from 2007. There was no new drilling after the spring floods in June. On May 5, 2008, MAG announced that its 2008 exploration program on its 100% owned Batopilas Native Silver District encountered a broad zone of silver/lead and zinc mineralization in Hole BA08-21 located in the Animas area. The zone starts immediately beneath the casing at 9.02 metres down hole and extends to 70.87 metres for a total core length of 61.2 metres grading 20.5 g/t silver, 0.66% lead and 0.84% zinc.  In addition to the Animas Hole, drill holes were also completed at the Escondido, and Santo Domingo targets.

At Lagartos NW, a 5,000-metre drill program was conducted early in 2008, designed to test the depth of the alluvial cover on the eastern boundary of the claim block. Test drilling indicated that the depth of the alluvial cover exceeds 800 metres, not at all practical to consider further exploration in this area.  Focus then turned to Lagartos SE, the Company’s holdings cover the eastern and western extensions of the major past producing vein sets such as the Veta Grande and the Mala Noche Veins.

Initial surface reconnaissance work at Lagartos SE located a series of previously worked veins on the eastern side of the Zacatecas district and sampling returned high grade silver. Subsequent geological and geophysical work identified six (6) drill targets that were part of a 4,000 metre drill program which commenced in late October 2008. As of February 2009, two drills were still turning. Results are pending.

The Company had spent a cumulative total of $6,535,390 in exploration costs at Lagartos to December 31, 2008 (2007 – $4,341,001; 2006 - $2,197,361).

Significant Acquisitions

No significant acquisitions for which disclosure is required under Part 8 of NI 51-102 were completed by the Company during its most recently completed financial year.

DESCRIPTION OF THE BUSINESS

General

The Company is in the mineral acquisition, exploration and development business. The Company is in the exploration stage and there is no assurance that a commercially viable mineral deposit exists on any of our properties. Further exploration will be required before a final evaluation as to the economic and legal feasibility of any of the Company’s properties is determined. Even if the Company completes its exploration program and is successful in identifying a mineral deposit, it will have to spend substantial funds on further drilling and engineering studies before it will know if it has a commercially viable mineral deposit or reserve.

Employees

The Company’s business is administered from its head office in Vancouver, British Columbia, Canada.  At December 31, 2008, the Company had 5 full time employees and 2 part time employees.

Carrying on Business in Mexico

The Company’s property interests are located in Mexico.  A summary of the regulatory regime material to the business and affairs of the Company is provided below.

Mining Regulation

The exploration and exploitation of minerals in Mexico may be carried out by Mexican citizens or Mexican companies incorporated under Mexican law by means of obtaining concessions (currently covering exploration and exploitation).  Concessions are granted by the Mexican federal government for a period of fifty years from the date of their recording in the Public Registry of Mining.  The term of mining concessions previously issued by the Mexican federal government (for exploration and/or exploitation) was automatically extended by the enactment of the recent amendments to the Mexican mining law.  Likewise, due to such amendments, the holders of mining concessions for exploration were automatically authorized to carry out not only exploration work, but also exploitation works.

Holders of concessions may, within the five years prior to the expiration of such concessions, apply for their renewal for the same period of time.  Failure to apply prior to the expiration of the term of the concession will result in termination of the concession.  Concessions are subject to annual work requirements and payment of surface taxes which are assessed and levied on a semi-annual basis.  Such concessions may be transferred or assigned by their holders, but such transfers or assignments must comply with the requirements established by the Mexican Mining Law and be registered before the Public Registry of Mining in order to be valid against third parties.

Mineral concessions may also be obtained by foreign citizens or foreign corporations, in this latter case, through the establishment of a branch or subsidiary in Mexico, and in the case of foreign citizens, provided that they comply with certain requirements set forth in the Law of Foreign Investment.  Foreign citizens are required to apply for the corresponding authorization before the Ministry of Foreign Affairs and register their investment in the National Registry of Foreign Investment.  In the case of a branch of foreign corporations, in addition to registration in the National Registry of Foreign Investment, additional authorization from the Ministry of Economy is required in order to obtain subsequent registration in the corresponding local Public Registry of Commerce.

Mexican mining law does not require payment of finder’s fees or royalties to the Government, except for a discovery premium in connection with national mineral reserves and claims or allotments contracted directly from the Mexican Geological Service.  None of the property interests held by Lagartos are under such fee regime.  However, holders of exploitation concessions are required to pay surface taxes which are assessed and levied on a semi-annual basis.

Foreign Investment Regulation

Foreign investment regulation in Mexico is primarily governed by the Law of Foreign Investment and its Regulations.  Foreign investment of up to 100% in Mexican mining companies is freely permitted.  Foreign companies or companies with foreign investment in their capital stock must be registered with the National Registry of Foreign Investment which is maintained by the Ministry of Economy.

Environmental Regulation

Mexico has federal, state and municipal laws and regulations relating to the protection of the environment and natural resources (“Environmental Laws”), including laws and regulations concerning water pollution, air pollution, noise pollution, hazardous substances and forest protection.  The principal federal environmental law in Mexico is the Ley General del Equilibrio Ecológico y la Protección al Ambiente (the “General Law of Ecological Balance and Environmental Protection” or the “General Law”), pursuant to which general environmental rules and policies have been promulgated addressing air pollution, hazardous substances and environmental impact among various others.

Another federal law particularly relevant for the mining sector is the Ley General para la Gestión Integral de los Residuos and its recently enacted regulations the Reglamento de la Ley General para la Prevención y Gestión Integal de los Residuos,which regulate the generation, handling, transportation, storage and final disposal of hazardous waste, as well as the import and export of hazardous materials and hazardous wastes, and assigns liability for ownership and possession of contaminated sites and for contaminating activities.   The Ley General de Desarrollo Forestal Sustentable and its regulations (the “Forestry Protection Laws”) are also relevant, as they address reforestation obligations and compensation measures on projects which may have a deforestation impact, such as certain mining projects.

Applicable Environmental Laws foresee the creation and regulation of Natural Protected Areas (Areas Naturales Protegidas) which along with Ecological Ordinance Programs (Programas de Ordenamiento Ecológico) constitute two of the main instruments that will regulate the use of land in the areas within their jurisdiction, including restrictions on certain activities and sectors, such as the mining sector.

Additionally, there are a series of “Mexican Official Norms” which are technical standards issued by competent regulatory authorities, pursuant to the Ley General de Metrología y Normalización and to other laws that include the aforementioned environmental laws, which establish standards relating to air emissions, waste water discharges, the generation, handling and disposal of hazardous wastes and noise control, among others. There are Mexican Official Norms regarding soil contamination (mainly with total petroleum hydrocarbons and heavy metals) and waste management (the “Ecological Standards”). Of particular importance to the mining sector are Mexican Official Norms NOM-120-SEMARNAT-1997 regulating environmental protection of mining activities in certain zones, and NOM-141-SEMARNAT-2003 which addresses certain aspects of tailings (jales de minería) from mining activities, among other Ecological Standards applicable to mining activities.

The Secretaría de Medio Ambiente y Recursos Naturales (the “Ministry of the Environment and Natural Resources” or “SEMARNAT” for its initials in Spanish) is the federal agency in charge of enacting and overseeing environmental regulation at the federal level, including the General Law and federal statutes and the Environmental Laws, as well as the Ecological Standards.  On enforcement matters the SEMARNAT acts mainly through the “Procuraduría Federal de Protección al Ambiente” (the “Federal Bureau of Environmental Protection” or “PROFEPA” for its initials in Spanish) and in certain cases through other governmental entities under its control, such as the Comisión Nacional del Agua (or National Water Commission).

Environmental Laws also regulate environmental protection in the mining industry in Mexico.  In order to comply with these laws, a series of permits, licences and authorizations must be obtained by a concession holder during the exploration and exploitation stages of a mining project.  Generally, these permits and authorizations are issued on a timely basis after the completion of an application by a concession holder. Additionally, periodic reporting of hazardous wastes and federal air emissions and federal waste water discharges to Federal authorities is required under the Environmental Laws.   To the best of the Company’s knowledge, all of the Company’s property interests are currently in compliance with the Environmental Laws.

In the exploration stage, the cost of complying with such Environmental Laws is included in the exploration budget. Until such time as the Company conducts larger more invasive procedures, such as trenching or bulk sampling, there is only nominal cost associated with compliance with the Environmental Laws. The Company’s programs are not yet sufficiently advanced to allow an estimate of the future cost of such environmental compliance.

Currency

The official monetary unit of Mexico is the peso. The currency exchange rate freely floats and the country has no currency exchange restrictions.  Nevertheless, following the devaluation of the Mexican peso in December, 1994, uncertainties continue with respect to the financial situation of Mexico.  See “Describe the Business - Risk Factors”, specifically those risk factors dealing with currency fluctuation and inflation.

The following table presents a five-year history of the average annual exchange rates to convert one Canadian dollar into Mexican pesos, calculated by using the average of the exchange rates on the last day of each month during the given year.

Year	Average Exchange Rate
2008		10.4302
2007		10.1784
2006		9.6025
2005		8.9927
2004		8.6711

Value Added Tax

In Mexico, VAT is charged on all goods and services at a rate of 15% percent.  Proprietors selling goods or services must collect VAT on behalf of the government.  Goods or services purchased incur a credit for VAT paid.  The resulting net VAT is then remitted to, or collected from, the Government of Mexico through a formalized filing process.

Trend Information

See the discussion regarding trends in the general market below under “Economic and political instability may affect the Company’s business”. The Company’s funding obligations under the Company's property option agreements are set out in “Disclosure of Contractual Obligations”. 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 to fund exploration costs on such properties.  The Company intends to utilize cash on hand in order to meet its obligations under property option agreements until at least March 31, 2010.

The scale and scope of the Juanicipio property could change this timeline as exploration progresses. 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.

Economic and political instability may affect the Company’s business

Since mid-2008 there has been a negative trend with regard to the market for many metal commodities and related products as a result of global economic uncertainty, reduced confidence in financial markets, bank failures and credit availability concerns.  These macro-economic events have negatively affected the mining and mineral exploration sectors in general.  The Company’s market capitalization has been significantly reduced.  Although these circumstances are expected to improve over the longer term, they could have a negative impact upon the Company’s liquidity and its ability to raise the capital required to execute its business plans going forward.  As a result the Company will consider its plans and options carefully in 2009.

The Company has assessed the carrying values of its mineral properties as a result of the market downturn.  Based on current and expected metals prices and cost structures, management has determined that the values of the Company’s mineral properties have not been impaired at this time. However, should current market conditions and commodity prices worsen and/or persist for a prolonged period of time, an impairment of mineral properties may be required.

The Company carries on its primary business activities in Mexico and to date this jurisdiction has been stable and favourable.  However there have recently been reports of increased political unrest, police and military enforcement action against drug cartels and a corresponding increase in violent crime in Mexico.  The Company’s interests have not been affected by such events to date.   The Company’s interests could be adversely affected by risks and uncertainties beyond its control.  These risks and uncertainties include, but are not limited to, exchange controls, currency fluctuations, changes in taxation laws or policies, changes in mining or investment policies, shifts in political attitude, terrorism, hostage taking, military repression, expropriation and nationalization, labour unrest, or the risk of civil unrest or civil war.  Operations could also be negatively affected by changes in various governmental regulations such as, environmental legislation, land use, land claims of local people, water use and mine safety legislation.

Risk Factors

The Company’s securities should be considered a highly speculative investment and investors should carefully consider all of the information disclosed in the Company’s Canadian and U.S. regulatory filings prior to making an investment in the Company. Without limiting the foregoing, the following risk factors should be given special consideration when evaluating an investment in the Company’s securities.

General

1. The Company has a lack of cash flow, which may affect its ability to continue as a going concern.  The Company’s activities are currently funded from its cash and cash equivalents, which are the proceeds of previous equity financings.

2. Values attributed to the Company’s assets may not be realizable, the Company has no proven history and its ability to continue as a going concern depends upon a number of significant variables. The amounts attributed to the Company’s exploration concessions in its financial statements represent acquisition and exploration costs and should not be taken to represent realizable value. Further, the Company has no proven history of performance, revenues, earnings or success. As such, the Company’s ability to continue as a going concern is dependent upon the existence of economically recoverable resources, the ability of the Company to obtain the necessary financing to complete the development of its interests and future profitable production or, alternatively, upon the Company’s ability to dispose of its interests on a profitable basis.

3. The Company is dependent on its key personnel, some of whom have not entered into written agreements with the Company and whom are not insured by the Company.  The Company is dependent upon the continued availability and commitment of its key management, employees and consultants, whose contributions to immediate and future operations of the Company are of central importance.  The Company relies on its President & CEO, Dan MacInnis, and its other officers, most of whom have entered into written employment agreements with the Company, for the day-to-day operation of the Company, its projects and the execution of the Company’s business plan.  The Company also relies heavily on Dr. Peter Megaw for the planning, execution and assessment of the Company’s exploration programs.  Dr. Megaw, formerly an arm’s length consultant, is a director of and consultant to the Company and he is paid a fee for his consulting services based on fair market rates and his submission of invoices for services rendered. The Company has not obtained “key man” insurance for any of its management or consultants. The loss of either Dan MacInnis or Dr. Megaw may have a temporary negative impact on the Company until they were replaced.

4. The Company does not pay dividends. Payment of dividends on the Company’s Common Shares is within the discretion of the Company’s Board and will depend upon the Company’s future earnings, its capital requirements and financial condition, and other relevant factors.  The Company has no present intention of paying dividends on its common shares, as it anticipates that all available funds will be invested to finance the growth of its business.

5. The Company’s directors and officers may have conflicts of interest which may not be resolved in favour of the Company, which in turn may adversely affect the Company. Most of the Company’s directors and officers do not devote their full time to the affairs of the Company. All of the directors and some of the officers of the Company are also directors, officers and shareholders of other natural resource or public companies, as a result of which they may find themselves in a position where their duty to another company conflicts with their duty to the Company.  None of the Company’s constating documents or any of its other agreements contains any provisions mandating a procedure for addressing such conflicts of interest. There is no assurance that any such conflicts will be resolved in favour of the Company.  If any of such conflicts are not resolved in favour of the Company, the Company may be adversely affected. See “Directors and Officers” for details of other companies that the Company’s officers and directors are involved with.

Risk Factors Relating to Title

6. Title to the properties in which the Company has an interest may be in doubt and any challenge to the title to any of such properties may have a negative impact on the Company.  A full investigation of legal title to the Company’s property interests has not been carried out at this time.  Accordingly, title to these property interests may be in doubt.  Other parties may dispute title or access to the properties in which the Company has an interest.  The Company’s property interests may also be subject to prior unregistered agreements or transfers or land claims and title may be affected by undetected defects.  Any challenge to the title or access to any of the properties in which the Company has an interest may have a negative impact on the Company as the Company will incur delay and expenses in defending such challenge and, if the challenge is successful, the Company may lose any interest it may have in the subject property.

7. Title opinions provide no guarantee of title and any challenge to the title to any of such properties may have a negative impact on the Company.  Although the Company has or will receive title opinions for any concessions in which it has or will acquire a material interest, there is no guarantee that title to such concessions will not be challenged or impugned.  In Mexico, a title opinion does not provide absolute comfort that the holder has unconditional or absolute title.  Any challenge to the title or access to any of the properties in which the Company has an interest may have a negative impact on the Company as the Company will incur expenses in defending such challenge and, if the challenge is successful, the Company may lose any interest it may have in the subject property.

8. Titles to the properties in which the Company has an interest are not registered in the name of the Company, which may result in potential title disputes having a negative impact on the Company. All of the agreements under which the Company may earn interests in properties have either been registered or been submitted for registration with the Mexican Public Registry of Mining, but title relating to the properties in which the Company may earn its interests are held in the names of parties other than the Company. Any of such properties may become the subject of an agreement which conflicts with the agreement pursuant to which the Company may earn its interest, in which case the Company may incur expenses in resolving any dispute relating to its interest in such property and such a dispute could result in the delay or indefinite postponement of further exploration and development of properties with the possible loss of such properties.

Risk Factors Relating to the Company’s Property Interests

9. Minority Ownership of Minera Juanicipio. The terms of the Shareholders Agreement governing the operation of Minera Juanicipio provides effective control to Fresnillo over many of the activities of Minera Juanicipio since it holds a majority (56%) of the shares of Minera Juanicipio. While a limited number of decisions of the shareholders or the directors of Minera Juanicipio require a special majority of 60%, and in one instance 75%, giving the Company an effective veto over any such decisions, the Company is a minority shareholder of Minera Juanicipio and is dependent on Fresnillo to manage the affairs of Minera Juanicipio and to do so in compliance with the Shareholders Agreement, the Articles of Minera Juanicipio and applicable law.

The Shareholders Agreement calls for adjustments to the interests of the shareholders in Minera Juanicipio where either shareholder fails to fund cash calls within certain specified periods. If the Company fails to fund cash calls, it risks having its interest reduced, may lose its effective veto power over certain decisions and ultimately could be diluted out of Minera Juanicipio altogether.  Fresnillo is a much larger entity with far greater access to financial resources than the Company.

10. Mineral exploration is a highly competitive industry.  The mineral exploration industry is intensely competitive and the Company must compete in all aspects of its operations with a substantial number of large established mining companies with substantial capabilities and greater financial and technical resources than the Company.  The Company may be unable to acquire additional attractive mineral properties on terms it considers to be acceptable.  The inability of the Company to acquire attractive mineral properties would result in difficulties in it obtaining future financing and profitable operations.

11. The properties in which the Company has an interest are in the exploration stage, and most exploration projects do not result in the discovery of commercially mineable deposits.  All of the Company’s property interests are at the exploration stage only and there are no known commercial quantities of minerals on such properties.  Most exploration projects do not result in the discovery of commercially mineable deposits of ores. Estimates of reserves, mineral deposits and production costs can be affected by such factors as environmental permit regulations and requirements, 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. The probability of an individual prospect ever having reserves is extremely remote. If a property does not contain any reserves, any funds spent on exploration of that property will be lost. The failure of the Company to find an economic mineral deposit on any of its exploration concessions will have a negative effect on the Company.

12. The properties in which the Company has an interest are in Mexico.  The Company’s property interests are located in Mexico.  Any changes in governmental laws, regulations, economic conditions or shifts in political attitudes or stability in Mexico are beyond the control of the Company and may adversely affect its business. See “Description of the Business – General - Carrying on Business in Mexico”.

13. There is no guarantee that licenses and permits required by the Company will be obtained, which may result in the Company losing its interest in the subject property. The Company’s ability to explore and exploit the property interests is subject to ongoing approval of local governments.  The operations of the Company may require licenses and permits from various governmental authorities.  The Company may not be able to obtain all necessary licenses and permits that may be required to carry out exploration, development and mining operations at its projects.  Failure to obtain such licenses and permits may adversely affect the Company’s business as the Company would be unable to legally conduct its intended exploration work, which may result in it losing its interest in the subject property.

14. Environmental regulations are becoming more onerous to comply with, and the cost of compliance with environmental regulations and changes in such regulations may reduce the profitability of the Company’s operations. The Company’s operations are subject to environmental regulations promulgated by government agencies from time to time.  Environmental legislation provides for restrictions and prohibitions of spills, release or emission of various substances produced in association with certain mining industry operations, such as seepage from tailing disposal areas, which could result in environmental pollution.  Failure to comply with such legislation may result in the imposition of fines and penalties.  In addition, certain types of operations require submissions to and approval of environmental impact assessments.  Environmental legislation is evolving in a manner which means stricter standards and enforcement, fines and penalties for non-compliance are more stringent.  Environmental assessments of proposed projects carry a heightened degree of responsibility for companies and directors, officers and employees.  The cost of compliance with environmental regulations and changes in such regulations may reduce the profitability of the Company’s operations. See “Description of the Business – General – Carrying on Business in Mexico – Environmental Regulation”.

15. Mexican Foreign Investment and Income Tax Laws apply to the Company. Under the Foreign Investment Law of Mexico, there is presently no limitation on foreign capital participation in mining operations; however, the applicable laws may change in a way which may adversely impact the Company and its ability to repatriate profits.  Under Mexican Income Tax Law, dividends paid out of “previously taxed net earnings” are not subject to Mexican taxes.  Otherwise, such dividends paid are subject to the Mexican income tax at the corporate level, which presently is 28 percent over a gross up basis (amount of the dividend times 1.3889), payable by the Mexican company as an advance of its annual income tax.  Currently, there is no withholding tax on dividends paid by a Mexican company.

16. Foreign currency fluctuations and inflationary pressures may have a negative impact on the Company’s financial position and results.  The Company’s property interests in Mexico make it subject to foreign currency fluctuations and inflationary pressures which may adversely affect the Company’s financial position and results. 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 US dollars over the next few years. Exploration and development programs to be conducted by the Company in Mexico will also be funded in Mexican Pesos or in US dollars. As the Company maintains its accounts in Canadian and US dollars, any appreciation in Mexican currency against the Canadian or US dollar will increase our costs of carrying out operations in Mexico.  Further, any decrease in the US dollar against the Canadian dollar will result in a loss on our books to the extent we hold funds in US dollars.  The steps taken by management to address foreign currency fluctuations may not eliminate all adverse effects and, accordingly, the Company may suffer losses due to adverse foreign currency fluctuations. The Company also bears the risk of incurring losses occasioned as a result of inflation in Mexico.

17. None of the properties in which the Company has an interest has any mineral reserves. Currently, there are no mineral reserves for any of the properties in which the Company has an interest.

Risk Factors Relating to Mineral Exploration Generally

18. Mineral exploration and development is a speculative business and most exploration projects do not result in the discovery of commercially mineable deposits.  Exploration for minerals is a speculative venture necessarily involving substantial risk. The expenditures made by the Company described herein may not result in discoveries of commercial quantities of minerals. The failure to find an economic mineral deposit on any of the Company’s exploration concessions will have a negative effect on the Company.

19. Mining operations generally involve a high degree of risk and potential liability.  Hazards such as unusual or unexpected formations and other conditions are involved in mining.  The Company may become subject to liability for pollution, fire, explosions, cave-ins or hazards against which it cannot insure or against which it may elect not to insure.  The incurrence of any such liabilities may have a material negative effect on the Company’s financial position.

20. Mineral prices and marketability fluctuate and any decline in mineral prices may have a negative effect on the Company.  Mineral prices, including gold and silver prices, have fluctuated widely in recent years.  The marketability and price of any minerals that may be acquired by the Company may be affected by numerous factors beyond the control of the Company.  These other factors include delivery uncertainties related to the proximity of its reserves to processing facilities and extensive government regulation relating to price, taxes, royalties, allowable production land tenure, the import and export of minerals and many other aspects of the mining business.  Declines in mineral prices may have a negative effect on the Company.

21. Surface access.  The majority of the Company’s mineral properties are located in remote and relatively uninhabited areas.  Some properties, like Juanicipio and Lagartos, are near towns and other habitations, but there are currently no areas of interest to the Company within its mineral concessions that are overlain by significant habitation or industrial users.  Notwithstanding this there are potential overlapping surface usage issues in some areas.  Some surface rights are owned by local communities or “Ejidos” and some surface rights are owned by private ranching or residential interests.  The Company will be required to negotiate the acquisition of surface rights in those areas where it may wish to develop mining operations.  Exploration activities are not materially impacted by competing surface rights issues, although in some areas the Company has been required to negotiate compensation for surface rights holders in order to secure right of access.

Risk Factors Relating to Financing

22. Adequate funding may not be available, resulting in the possible loss of the Company’s interests in its properties.  Sufficient funding may not be available to the Company for further exploration and development of its property interests or to fulfil its obligations under applicable agreements.  The Company may not be able to obtain adequate financing in the future or favourable terms or at all.  Failure to obtain such additional financing could result in delay or indefinite postponement of further exploration and development of properties, with the possible loss of such properties.  The Company will require new capital to continue to operate its business and to continue with exploration on its properties, and additional capital may not be available when needed, if at all.

23. Funding and property commitments will result in dilution to the Company’s shareholders.  It is likely any additional capital required by the Company as described in Risk Factor #22 above will be raised through the issuance of additional equity which may result in dilution to the Company’s shareholders. Further, the Company, from time to time, may issue Common Shares to earn its interests in properties. Such property share issuances may also result in dilution to the Company’s shareholders.

24. Substantial expenditures are required for commercial operations and if financing for such expenditures is not available on acceptable terms, the Company may not be able to justify commercial operations.  If mineable deposits are discovered, substantial expenditures are required to establish reserves through drilling, to develop processes to extract the resources and, in the case of new properties, to develop the extraction and processing facilities and infrastructure at any site chosen for extraction.  Although substantial benefits may be derived from the discovery of a major deposit, resources may not be discovered in sufficient quantities to justify commercial operations or the funds required for development may not be obtained at all or on terms acceptable to the Company.

25. Lack of funding to satisfy contractual obligations may result in the Company’s loss of property interests.  The Company may, in the future, be unable to meet its share of costs incurred under agreements to which it is a party and the Company may have its property interests subject to such agreements reduced as a result or even face termination of such agreements.  The Company has options to acquire interests in properties in Mexico and in order to obtain ownership of such properties, it must make payments to the current owners and incur certain exploration expenditures on those properties. In order to secure ownership of these properties, additional financing will be required. Failure of the Company to make the requisite payments in the prescribed time periods will result in the Company losing its entire interest in the subject property and the Company will no longer be able to conduct certain aspects of its business as described in this AIF. The Company may not have sufficient funds to: (a) make the minimum expenditures to maintain its properties in good standing under Mexican law; and (b) make the minimum expenditures to earn its interest in such properties.  In such event, in respect of any of the properties, the Company may seek to enter into a joint venture or sell the subject property or elect to terminate its option.

Miscellaneous Risk Factors

26. The price of the Company’s Common Shares is volatile.  Publicly quoted securities are subject to a relatively high degree of price volatility.  In recent years, the securities markets in the United States and Canada have experienced a high level of price and volume volatility, and the market price of many companies, particularly those considered exploration or development stage companies, have experienced wide fluctuations in price which have not necessarily been related to the operating performance, underlying asset values or prospects of such companies. In particular, the per share price of the Company’s common shares on the TSX fluctuated between a high of $14.09 and a low of $3.52 and on the NYSE Alternext US (formerly the American Stock Exchange) between a high of US$14.25 and a low of US$3.12 within the twelve month period preceding the date of this Annual Information Form. There can be no assurance that contined fluctuations in price will not occur.

27. There is an absence of a liquid trading market for the Company’s Common Shares.  Shareholders of the Company may be unable to sell significant quantities of Common Shares into the public trading markets without a significant reduction in the price of their Common Shares, or at all.  There can be no assurance that the Company will continue to meet the listing requirements of the TSX or the NYSE Alternext US or achieve listing on any other public listing exchange.

28. Classification as a Passive Foreign Investment Company has adverse income tax consequences for United States shareholders.  The Company believes it is a Passive Foreign Investment Company (“PFIC”), as that term is defined in Section 1297 of the Internal Revenue Code of 1986, as amended, and believes it will be a PFIC in the foreseeable future. Consequently, this classification will result in adverse tax consequences for U.S. holders of the Company’s Common Shares. For an explanation of these U.S. tax consequences, shareholders and prospective US holders of the Company’s Common Shares are encouraged to consult their own tax advisers.

29. The Company and its principals and assets are located outside of the United States, which makes it difficult to effect service of process or enforce within the United States any judgments obtained against the Company or its officers or directors.  Substantially all of the Company’s assets are located outside of the United States and the Company does not currently maintain a permanent place of business within the United States.  In addition, most of the directors and officers are nationals and/or residents of countries other than the United States, and all or a substantial portion of such persons’ assets are located outside the United States.  As a result, it may be difficult for investors to effect service of process or enforce within the United States any judgments obtained against the Company or its officers or directors, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state thereof.  In addition, there is uncertainty as to whether the courts of Canada, Mexico and other jurisdictions would recognize or enforce judgments of United States courts obtained against the Company or its directors and officers predicated upon the civil liability provisions of the securities laws of the United States or any state thereof, or be competent to hear original actions brought in Canada, Mexico or other jurisdictions against the Company or its directors and officers predicated upon the securities laws of the United States or any state thereof. Further, any payments as a result of judgments obtained in Mexico should be in pesos and service of process in Mexico must be effectuated personally and not by mail.

30. The Company has outstanding stock options which, if exercised, could cause dilution to existing shareholders.  At March 13, 2009, the Company had 3,257,407 stock options issued and outstanding with a weighted average exercise price of $6.59 per share. Stock options are likely to be exercised when the market price of the Company’s common shares exceeds the exercise price of such stock options.  The exercise of such stock options and the subsequent resale of such common shares in the public market could adversely affect the prevailing market price and the Company’s ability to raise equity capital in the future at a time and price which it deems appropriate. The Company may also enter into commitments in the future which would require the issuance of additional common shares and the Company may grant additional share purchase warrants and stock options.  Any share issuances from the Company’s treasury will result in immediate dilution to existing shareholders percentage interest in the Company.

Companies with Asset-backed Securities Outstanding

The Company has no asset-backed securities outstanding. 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.

Companies with Mineral Projects

All of the Company’s mining claims are located in Mexico and are issued by the Federal Government. As of the date of this AIF, the Company does not own any surface lands on any of its properties other than the Juanicipio property, where Minera Juanicipio, a joint venture company owned 44% by MAG and 56% by Fresnillo, has acquired some surface lands overlying the Valdecañas and Juanicipio Veins.

The majority of the Company’s mineral properties are located in remote and relatively uninhabited areas.  There are currently no areas of interest to the Company within its mineral concessions that are overlain by significant habitation or industrial users.  Notwithstanding this there are potential overlapping surface usage issues in some areas.  Some surface rights are owned by local communities or “Ejidos” and some surface rights are owned by private ranching or dwelling interests.  The Company will be required to negotiate the acquisition of surface rights in those areas where it may wish to develop mining operations.  Exploration activities are not materially impacted by competing surface rights issues, although in some areas the Company has been required to negotiate compensation for surface rights holders in order to secure right of access.

In some of the more remote property locations the access to water, power and basic infrastructure is limited or non-existent.  Any mining operations undertaken in such areas will need to take the supply of such requirements into consideration.  For the Juanicipio, Lagartos and Cinco de Mayo properties, the available supply or the ability to establish supply, of water, power and infrastructure is considered to be adequate or manageable.

To maintain 50-year mining concessions the Company must pay semi-annual taxes and file an annual work report. If the Company files for an extension before the term of the concession expires an additional 50-year extension of the mining concession can be granted.

The concessions listed in the following table are 100% owned by the Company with the exception of the Juanicipio property which is owned by Minera Juanicipio, thereby affecting a holding of 44% indirectly by the Company and 56% by Fresnillo.

Claim	File			Title	Start Date	Expiry Date	Area	Rights to Pay
							(Hectares)	Jan-09
								(PESOS)
MINERA LOS LAGARTOS S.A. DE C.V
ZACATECAS PROJECT
LAGARTOS  I	93/		26834	220667	9-Sep-2003	8-Sep-2050	11,206.7018	176,170
LAGARTOS II	93/		26857	221035	13-Nov-2003	12-Nov-2050	3,720.0000	58,479
LAGARTOS III  (REDUCCION)	93/		26865	221355	27-Jan-2004	26-Jan-2052	36,995.1738	189,368
LAGARTOS IV (REDUCCION)	93/		26898	221805	26-Mar-2004	25-Mar-2052	63,184.3347	420,645
LAGARTOS  V	93/		26951	222761	27-Aug-2004	26-Aug-2052	7,092.6638	Abandoned
LAGARTOS  VI	93/		27344	228340	8-Nov-2006	7-Nov-2056	3,638.0752	27,650
LAGARTOS  VII	93/		27345	224097	31-Mar-2005	30-Mar-2054	234.0000	Abandoned
LAGARTOS  VIII	93/		27346	224098	31-Mar-2005	30-Mar-2054	540.0000	Abandoned
LAGARTOS  9	93/		27391	225009	6-Jul-2005	5-Jul-2054	8,000.0000	Abandoned
LAGARTOS X	93/		27998	228253	17-Oct-2006	16-Oct-2056	22,767.9220	173,037
LAGARTOS XI	93/		27611	In progress			363.6348
LAGARTOS XII	93/		28006	228569	8-Dec-2006	7-Dec-2056	2,854.9938	21,698
LAGARTOS XIII	93/		27927	228633	15-Dec-2006	14-Dec-2056	12.5392	96
LAGARTOS XIV	93/		28056	228767	23-Jan-2007	22-Jan-2057	719.7292	5,470
GEMINIS XIII	93/		27357	224581	20-May-2005	19-May-2005	86.6423	1,363
GEMINIS XXIII	93/		27788	227962	15-Sep-2006	14-Sep-2056	94.3131	1,483
CUMBRES I	93/		27360	224582	20-May-2005	19-May-2055	331.6280	5,214
SAN MARTINITO	321.1/8		250	196156	16-Jul-1993	15-Jul-2043	12.0000	1,336
LA CONSTANCIA	8/1.3		1992	196319	16-Jul-1993	15-Jul-2043	25.9648	2,890
PAULINA	8/1.3		1157	217496	16-Jul-2002	15-Jul-2052	7.6958	244
LA CAMOCHA 2	93/		27397	224841	14-Jun-2005	13-Jun-2055	8.3405	132
LAS MARIAS	93/		25713	215229	14-Feb-2002	13-Feb-2052	73.5433	2,326
SAN MIGUEL	93/		25598	215509	22-Feb-2002	21-Feb-2052	16.1263	510
SAN FERNANDO	93/		11369	162437	12-Jun-1978		20.6911	2,303
AMPL. A SAN FERNANDO	93/		11501	162400	12-Jan-1978	11-Jan-2028	65.2211	7,258
PREDILECTA	93/		9747	164960	3-Aug-1979		32.0000	3,561
EL GRANO DE ORO	93/		26833	221128	2-Dec-2003	1-Dec-2053	14.0000	221
LAG	93/		27992	In progress			2,468.7166
LAG F-1	93/		27992	In progress			387.2650
LAG F-2	93/		27992	In progress			1,813.5911
LAG F-3	93/		27992	In progress			6.4567
LAG F-4	93/		27992	In progress			8.4830
LAG F-5	93/		27992	In progress			1.2925
LAG F-6	93/		27992	In progress			8.8846
LAG F-7	93/		27992	In progress			19.7332
LAG F-8	93/		27992	In progress			3.8895
LAG F-9	93/		27992	In progress			67.0928
LAGF-10	93/		27992	In progress			95.6858
LAG F-11	93/		27992	In progress			1.3324
LAG F-12	93/		27992	In progress			1.0981
LAG F-13	93/		27992	In progress			0.9569
LAG 5	93/		28235	230023	10-Jul-2007	9-Jul-2057	8,747.6164	44,438
							TOTAL:	1,145,892
JUANICIPIO PROJECT
JUANICIPIO 1	8/		1-1706	226339	13-Dec-2005	12-Dec-2055	7,679.2106	58,362
							TOTAL:	58,362
BATOPILAS PROJECT
DON FIPPI	1/1/		1358	222629	3-Aug-2004	2-Aug-2054	3,160.5780	49,685
DON FIPPI FRAC. 1	10/		22430	In progress			12.9315
DON FIPPI 2	16/		30103	215474	22-Feb-2002	21-Feb-2048	152.0234	4,807
DON FIPPI 3	16/		30953	215481	22-Feb-2002	21-Feb-2048	56.0000	1,771
DON FIPPI 4	16/		30952	217251	2-Jul-2002	1-Jul-2048	10.0000	317
SANTO DOMINGO	16/		29872	214671	30-Oct-2001	29-Oct-2046	26.6062	842
SAN MARTIN	16/		29873	214672	30-Oct-2001	29-Oct-2046	2.1536	70
PASTRANA	16/		31077	217467	16-Jul-2002	15-Jul-2048	82.6803	2,615
ANEXO A SAN MARTIN	16/		31801	220044	3-Jun-2003	2-Jun-2049	6.7443	214
TESCALAMA	16/		32058	220927	28-Oct-2003	27-Oct-2049	12.0000	189
ROSALINDA	16/		32057	220926	28-Oct-2003	27-Oct-2049	25.6222	403
							TOTAL:	60,913
GUIGUI PROJECT
GUIGUI	1-1.3/		938	217493	16-Jul-2002	15-Jul-2052	4,009.0334	126,766
GUIGUI 2	16/		27991	219640	28-Mar-2003	27-Mar-2050	489.1300	15,467
GUIGUI 3 FRAC. 1	16/		29944	219648	28-Mar-2003	27-Mar-2050	17.0200	539
GUIGUI 3 FRAC. 2	16/		29944	219649	28-Mar-2003	27-Mar-2050	1.5200	49
GUIGUI 4	16/		30320	219650	28-Mar-2003	27-Mar-2050	3.0000	95
EL FAISAN	1/1.3		1182	214631	26-Oct-2001	25-Oct-2051	16.0000	506
LOS ARENALES	1/1.3		1011	214622	26-Oct-2001	25-Oct-2051	18.0000	570
							TOTAL:	143,992
CINCO DE MAYO PROJECT
DON JOSE	1		1300	222251	22-Jun-2004	21-Jun-2054	1,640.0000	25,781
DON JOSE II	1		1391	207171	8-May-1998	7-May-2048	2,462.9828	Cancelled
DON JOSE III	1		1492	224331	26-Apr-2005	25-Apr-2055	78.7872	1,239
DON JOSE III FRAC. 2	16/		24502	209293	30-Mar-1999	29-Mar-2049	32.7879	3,649
DON JOSE IV        T-212524 PASO A	16/		24773	218474	31-Oct-2000	30-Oct-2050	348.5547	22,036
DON JOSE V	16/		24789	212878	13-Feb-2001	12-Feb-2046	47.7166	3,017
DON ROBERTO	1		1462	224252	22-Apr-2005	21-Apr-2055	453.4431	7,129
CINCO DE MAYO	16/		31459	216086	9-Apr-2002	8-Apr-2048	65.0000	2,056
DANIEL	16/		33396	229222	27-Mar-2007	26-Mar-2057	1,653.9137	12,570
DANIEL 1	16/		34715	229249	28-Mar-2007	27-Mar-2057	4.8630	37
INDEPENDENCIA	16/		34753	229744	13-Jun-2007	12-Jun-2057	17,096.9082	129,937
LA MARY	16/		35303	230455	4-Sep-2007	3-Sep-2057	12.0000	61
LA AMISTAD	16/		34983	230454	4-Sep-2007	3-Sep-2057	11.4935	59
EL PLOMO	16/		35374	230475	6-Sep-2007	5-Sep-2057	20.0000	102
LA FORTUNA	16/		34744	228746	18-Jan-2007	17-Jan-2057	132.9008	1,010
LA SINFOROSA	16/		34746	228747	18-Jan-2007	17-Jan-2057	192.5727	1,464
EL CHINACATE	16/		34714	228723	17-Jan-2007	16-Jan-2057	651.9335	4,955
							TOTAL:	215,102
SIERRA DE RAMIREZ PROJECT
BUENOS AIRES	25/		31061	220223	25-Jun-2003	24-Jun-2050	4,443.4510	140,502
BUENOS AIRES 2 (REDUCCION)	25/		31492	224623	25-May-2005	24-May-2055	11,044.0597	102,370
BUENOS AIRES 3	25/		32816	228842	9-Feb-2007	8-Feb-2057	10.0000	76
BUENOS AIRES 4	25/		32867	229714	8-Jun-2007	7-Jun-2057	62.0644	472
LA MIA	2/1.3		2081	218361	5-Nov-2002	4-Nov-2052	7.9641	252
LAS CUMBRES	9/		10299	147709	18-May-1967	17-May-2017	8.2731	921
EL TRIUNFO	9/		5853	170047	15-Mar-1982	14-May-2032	7.8098	870
LA AZTECA	9/		2125	167702	5-Dec-1980	4-Dec-2030	6.0000	668
AMPL. DEL FUNDADOR	9/		12803	163903	14-Dec-1978	13-Dec-2028	11.7929	1,313
EL CONSUELO	9/		9590	167701	5-Dec-1980	4-Dec-2030	12.0000	1,336
PLATEROS	9/		56	177825	29-Apr-1986	28-Apr-2011	2.0000	223
LA PUERTA	9/		10878	180619	13-Jul-1987	12-Jul-2037	3.0000	334
SAN PABLO	9/		1099	180584	13-Jul-1987	12-Jul-2037	4.0000	446
AREA "EL PAVO"
HERCULES	9/		11876	164365	7-May-1979	6-May-2029	14.8928	1,658
UNIFICACION SANTA RITA	321.42		959	170680	11-Jun-1982	10-Jun-2032	24.3516	2,710
LA CIMA	EXT		87	75632	1-Jan-1961	31-Dec-2014	9.7032	1,080
SAN ELOY	9/		2734	114713	10-Jun-1950	9-Jun-2000*	18.9060	2,104
SAN ELIGIO	25/		2148	104099	25-Jan-1994	24-Jan-2011	3.0000	334
EL TUNEL	25/		2151	105012	28-Mar-1944	27-Mar-2011	6.4504	718
UNIFICACION SAN PEDRO	*		958	170679	11-Jun-1982	10-Jun-2032	48.0242	5,344
AMPL. DE LA ESCUADRA	9/		459	82608	27-Jan-1936	26-Jan-2011	11.0000	1,224
UNIFICACION LA GARIFA	*		960	170596	2-Jun-1982	1-Jun-2032	52.1095	5,799
SEGUNDA AMPLIACION DE LA ESCUADRA	25/		1	83962	25-Jun-1936	24-Jun-2011	4.1783	465
TERCERA AMPLIACION DE LA ESCUADRA	25/		1	88105	24-Jan-1937	25-Nov-1987*	22.5652	2,511
CUARTA AMPLIACION DE LA ESCUADRA		*	*	115235	*	*	4.0000	446
LA VIA	25/		2147	104098	25-Jan-1961	24-Jan-2011	21.0000	2,337
LOS COLORADOS	25/		3161	115041	5-Jul-1950	4-Jul-2000	40.0000	4,451
AMPLIACION NORTE DE VERDUN	25/		1	111892	23-Nov-1948	22-Nov-2011	4.9282	549
SAN LUIS	7/		8057	139973	21-Oct-1959	20-Oct-2011	8.0000	891
AMPLIACION DE VERDUN	2/		322.2-594	73731	11-May-1932	2-Jan-1982*	5.2926	589
ARTURO	25/		2895	113690	9-Sep-1949	8-Sep-1999*	8.8462	985
PROVIDENCIA	*		*	4118	*	*	3.0000	334
EL CAMBIO	*		*	4996	*	*	13.6137	1,515
LA ESCUADRA	*		*	81507	*	*	12.3351	1,373
GUADIANA	*		*	98321	*	*	8.3278	927
UNIFICACION SAN AGUSTIN	321.42/		957	170595	2-Jun-1982	1-Jun-2032	67.5088	7,512
LA CHAPA	9/		1953	177824	29-Apr-1986	28-Apr-2036	20.6736	2,301
LA LLAVE	9/		1952	103722	22-Dec-1943	21-Dec-2011	8.4385	939
							TOTAL:	298,879
LA PICUCHA PROJECT
LA PICUCHA	16/		32820	225522	20-Sep-2005	19-Sep-2011	1,665.0892	12,655
EL APACHE	16/		25690	212632	17-Nov-2000	16-Nov-2050	61.0000	3,857
LA PICUCHA 2	16/		35906	In progress			6,937.1842
							TOTAL:	16,512
LORENA PROJECT
LA LORENA	31/		9397	229687	6-Jun-2007	5-Jun-2057	19,856.0470	150,906
LORENITA (REDUCCION)	31/		9424	232085	13-Jun-2008	12-Jun-2058	86,034.6063	50,747
							TOTAL:	201,653
NUEVO MUNDO PROJECT
NUEVO MUNDO II	67/		21304	231949	23-May-2008	22-May-2058	3,682.2300	18,706
NUEVO MUNDO II FRACCION I (REDUCCION)	67/		21304	231950	23-May-2008	22-May-2058	9,672.3490	40,922
CAMINO DURO	93/		28477	232243	8-Jul-2008	7-Jul-2058	19,760.0000	100,381
AMPL. NUEVO MUNDO II	67/		21318	In progress
							TOTAL:	160,009
							GRAND TOTAL:	2,301,314

* Applications are in process to renew these titles.

Juanicipio Property

The information contained herein is prepared by the Company and contains summarized information drawn from its own results and news releases as well as from certain technical reports.  Readers are encouraged to read the following technical reports and documents, from which portions of the discussions below in this section are derived:

1.   Filed on SEDAR April 2, 2003: a NI 43-101 technical report, dated November 19, 2002, entitled “The Geology and Exploration Potential of the Juanicipio property, Fresnillo District, Zacatecas, Mexico” prepared by Qualified Person, Clancy J. Wendt, P.G., of Pincock, Allen and Holt, of Lakewood, Colorado;

2.   Filed on SEDAR December 27, 2006: a NI 43-101 technical report, dated July 5, 2006, entitled “Independent Technical Report, Juanicipio Silver Project, Zacatecas State, Mexico” prepared by Qualified Person, Stephen Wetherup, B.Sc., P.Geo., of Caracle Creek International Consulting Inc. of Vancouver, British Columbia.

3.   Filed on SEDAR August 1, 2008: a NI 43-101 technical report, dated July 25, 2008, entitled “Mineral Resource Estimation, Valdecañas Silver-Gold Project, Zacatecas State, Mexico” prepared by Qualified Persons Dominic Chartier, P.Geo, Consulting Geologist, Glen Cole, P.Geo, Principal Resource Geologist and Jean-Francois Couture, Ph.D, P.Geo, Principal Geologist of SRK Consulting (CANADA) Inc. of Toronto, Ontario.

4.   News releases dated February 24, 2009 and March 4, 2009 – Independent Resource Estimate, filed on SEDAR and pending NI 43-101 technical report (to be filed on SEDAR before April 10, 2009), prepared by Qualified Persons William E. Roscoe, PH.D, P.Eng. & David Ross, P.Geo, of Scott Wilson Roscoe Postle Associates Inc.

Introduction

The Juanicipio property covers approximately 7,679 hectare (18,967 acres) and is located in Zacatecas State, Mexico, just outside the mining town of Fresnillo. The Fresnillo mine area has been in continuous silver production since the 1500’s and today is host to the world’s largest producing silver mine, operated by Fresnillo.  The Juanicipio property lies 6 kilometres west of the principal production head-frame of the Fresnillo Mine and 2.5 kilometres west of the Saucito Vein, currently under preproduction construction as part of Fresnillo’s regional plan.

Juanicipio: Background of a Significant Silver Discovery

Juanicipio is the most important project in the Company’s portfolio of properties.  The Juanicipio property is host to a significant discovery of a high grade silver, gold vein.  The Valdecañas Vein was discovered in December of 2005 and continues to undergo an intensive drill campaign to delineate its full potential. Five rigs were operating on the Valdecañas Vein at the end of 2008 to complete a planned 28,000 metre drill program for 2008. This program was focused on defining the Valdecañas Vein on a 100 by 100 metre grid, with the goal of moving as much of the inferred resource as possible to an indicated resource by early 2009. 

Recent results continue to add intercepts in areas beyond previously published resource limits and also confirm the continuity of the main vein and the mineralized zone within the vein. The western part of the Valdecañas Vein remains open down-dip and the eastern part remains open up-dip. Drilling also encountered good grade and continuity in hanging wall and footwall veins intersected outside the main Valdecañas Vein.

The Juanicipio property and its potential were first recognized by a consultant in the late 1990’s.   Subsequently the Company was presented with an opportunity to acquire the Juanicipio property.  In a series of business transactions involving shares and cash between July 18th, 2002 and July 16th, 2003, the Company through its 100% owned Mexican subsidiary, Lagartos, acquired a 100% beneficial interest in the Juanicipio property.

A series of nine drill holes were drilled by the Company between April 2003 and December 2004.  Significant intercepts of silver and gold were encountered in this early stage drill program. During this period of drilling the Company was approached by Peñoles, a major Mexican mining company, which effective July 1, 2005 was granted an option to earn a 56% interest in the Juanicipio property for conducting staged exploration expenditures totalling US$5,000,000 over four years and purchasing US$1,000,000 of securities of the Company.

Peñoles made a significant epithermal vein discovery at depth called the Valdecañas vein, carrying high grade values of silver, gold, lead and zinc.  By May of 2007, Peñoles had fulfilled their expenditure commitment to earn a 56% interest in the Juanicipio property and in December of 2007, the Company and Peñoles incorporated a joint venture company, Minera Juanicipio, to operate the joint venture. Minera Juanicipio is held 44% by the Company through its 100% owned Mexican subsidiary, Lagartos, and Fresnillo holds a 56% interest in Minera Juanicipio.  Fresnillo is the operator of the project and both parties fund pro-rata all exploration and development programs.

Project Description and Location

The Juanicipio property is located in the Fresnillo District, Zacatecas, Mexico, and approximately 6 kilometres west of the city of Fresnillo (see Figure 1).

The Juanicipio property covers approximately 7,679 hectares (18,967 acres) and is in the northeastern part of the Sierra Valdecañas, a 13 kilometre by 30 kilometre long mountain range that lies immediately west of Fresnillo.  The property lies on the western edge of the Mexican Altiplano or “Mesa Central”.  The Altiplano is that portion of central northern Mexico lying north of the Trans-Mexico Volcanic Belt, between the Sierra Madre Oriental and Sierra Madre Occidental.

Water is abundant at depth. The Mexican Mining Law states: Article 19 - Mining Concessions grants the right to:

V.  Utilize the waters emanating from the works in the mines for their exploration or exploitation, the beneficiation of minerals or substances obtained and the domestic use of personnel employed thereat;

VI. Obtain a preferential right for a concession on the mine waters for any use other than those indicated in the preceding paragraphs, in terms of the applicable law.

Power is located a few miles from the main part of the Juanicipio property and is available.

Figure 1 - - Juanicipio property, Zacatecas State (roads in black, December 31, 2008)

Accessibility

Paved highways on the eastern, northern and western sides surround the Sierra Valdecañas, with a good-quality unpaved road linking the paved roads across the southern end of the range.  This southern road is in the process of being paved.  Despite the ruggedness of the central part of the Sierra Valdecañas, access to the northeastern area, where the Juanicipio property is located, is good.  A high quality dirt road runs about 1.5 kilometres up the Linares Canyon from the village of Presa Linares.  This provides access to the extreme northeastern corner of the Juanicipio property.  A separate road proceeds from Fresnillo to the village of Valdecañas, and from there to a pass that allows access to Linares Canyon, some 4 kilometres south of the village of Presa Linares.  Despite this road access, principal access to the bulk of the area of maximum interest is by foot.  One major drill target should be accessible from existing roads; others will require road building up Linares Canyon.  The routes for these roads have already been approved by the Mexican environmental agency.  There is now a network of dirt roads providing ready access to most of the northeastern corner of the Juanicipio claim.

Ownership

Pursuant to an agreement dated July 18, 2002 as amended December 19, 2002 between Lagartos and Ing. Martin Bernardo Sutti Courtade I (“Sutti”), of Zacatecas, Mexico (the “Juanicipio Agreement”), Sutti granted to the Company’s Mexican subsidiary Lagartos an option (the “Juanicipio Option”) to acquire a 100% interest in the Juanicipio property in exchange for cash payments and a work commitment.  Sutti subsequently assigned his interest to Minera Venus, S.A. DE C.V.

Minera Venus, S.A. DE C.V. was owned as to 99% by Lexington Capital Group Inc. and as to 1% by attorney Jose Ruiz Lopez. Lexington Capital Group Inc. was owned as to 100% by Strategic Investments Resources Ltd.  Pursuant to a stock purchase agreement dated May 29, 2003 between the Company and Strategic Investments Resources Ltd., on July 16, 2003, for consideration of US$250,000 and 200,000 Common Shares of the Company at a price of $0.90 per share for a deemed value of $180,000, the Company acquired 100% of the issued shares of Lexington Capital Group Inc., thereby acquiring 99% ownership of the Juanicipio property (with the remaining 1% later being transferred to the ownership of a director of the Company in trust).  The Company subsequently merged and amalgamated Minera Venus, S.A. DE C.V. into Lagartos, wound up Lexington Capital Group Inc. and terminated the Juanicipio Agreement, thereby eliminating its obligations under the original Juanicipio Option to make any further option payments, fulfill any further work commitments or pay any royalty.

Pursuant to a letter of intent dated March 17, 2005 and a formal agreement effective July 1, 2005 (the “Agreement”) with Peñoles, the Company and Lagartos granted to Peñoles or any of its subsidiaries an option to earn a 56% interest in the Juanicipio property in Mexico in consideration for Peñoles: (a) conducting US$5,000,000 of exploration on the property over four years as follows: (i) minimum US$750,000 in year 1, including a minimum of 3,000 metres of diamond drilling; (ii) US$1,000,000 in year 2; (iii) US$1,250,000 in year 3; and (iv) US$2,000,000 in year 4; and (b) Peñoles purchasing US$500,000 of Common Shares of the Company within 30 business days after the Agreement becomes effective at a price calculated based on the average closing price of the Company’s Common Shares for the 10 trading days prior to the purchase; and (c) Peñoles purchasing US$500,000 of Common Shares of the Company within 30 business days after the first anniversary of the execution of the Agreement, taking into account the average closing price of the Company’s Common Shares for the 10 trading days prior to such purchase.

By May of, 2007, Peñoles had met all of the earn-in requirements of the Agreement.

In December 2007, Lagartos and Peñoles established Minera Juanicipio to hold and operate all mineral and surface rights related to the Juanicipio property located in Zacatecas State, Mexico.  At the date of this AIF, Minera Juanicipio is governed by a shareholders agreement dated October 10, 2005 between Lagartos and Peñoles (subsequently assigned to Fresnillo).  Under the Shareholders Agreement each shareholder is to provide funding to Minera Juanicipio pro rata to its interest in Minera Juanicipio, with Peñoles (now Fresnillo) contributing 56% and MAG, through Lagartos, contributing 44% respectively. Fresnillo has effective control over many of the activities of Minera Juanicipio since it holds a majority (56%) of the shares of Minera Juanicipio. However a limited number of decisions of the shareholders or the directors of Minera Juanicipio require a special majority of 60%, and in one instance 75%, giving the company an effective veto over any such decisions.

The special matters comprise the following:

a) The execution of any credit, lease, purchase or sale agreement regarding any fixed asset valued at more than US$500,000;

b) The transfer or encumbrance of any assets in order to guarantee third party obligations;

c) The approval of the annual exploration budget or any of its amendments;

d) The authorization of any expense or investment that exceeds 10% of total assets that has not been included in an approved budget, except for such temporary operations that may be approved at a shareholders meeting;

e) The acquisition of assets by the shareholders, through any legal means, which may result in a change of control of the corporation or of any subsidiary or affiliate;

f) Any amendment to the attendance or voting quorum requirements established by the By-Laws;

g) Any change dividing the corporation’s capital or addressing a merger, transformation or amendment of the By-Laws will require the approval of at least 75% of the shareholders.  

To capitalize Minera Juanicipio the Company invested 63.40 million pesos ($6.025 million) into Minera Juanicipio while Peñoles invested 80.69 million pesos ($7.668 million). MAG then received a payout from Minera Juanicipio of 26.41 million pesos ($2.510 million) against its contribution of the Juanicipio mineral rights while Peñoles received 70.28 million pesos ($6.68 million) against its contribution of surface rights and a payment for the Company’s 44% share of exploration costs incurred by Peñoles in the period subsequent to the completion of their earn-in earlier in 2007. In 2008, MAG invested a further 25.08 million pesos ($2.405 million) in Minera Juanicipio.

In March 2008, Peñoles’ interest in Minera Juanicipio was acquired by Fresnillo, which subsequently completed its initial public offering, with its common shares being listed on the London Stock Exchange.  To the knowledge of MAG, approximately 77% of the common shares of Fresnillo are owned by Peñoles or its affiliates.

As at December 31, 2008, MAG has invested a total of $9,187,983 on the Juanicipio property and contributions to Minera Juanicipio.  A cumulative foreign currency translation adjustment of ($1,021,236) and a net investment of $8,166,747 have been recorded by MAG at December 31, 2008.

At December 31, 2008 the assets of Minera Juanicipio consisted of cash and short term investments in the amount of 18.67 million pesos ($1.65 million), value added taxes (“IVA”) receivables in the amount of 7.74 million pesos ($0.68 million) and mineral and surface rights at a deemed value of 175.35 million pesos ($15.52 million).  Payables to Peñoles for exploration work amounted to 0.66 million pesos ($58,800) while shareholders equity was 201.09 million pesos ($17.80 million).

History

The Juanicipio property has seen sporadic, small-scale prospecting by unknown individuals over the last several hundred years, but has seen no production.  Previous work by Sunshine Mining and the Consejo de Recursos Minerales (the Mexican Geologic Survey) has produced geologic maps, geochemical data bases, alteration and geologic maps, geophysical maps, Landsat images, topographic and structure maps.

Geological Setting

District Geology

The Fresnillo District section consists of the lower Cretaceous rocks composed of limestones.  The limestones are overlain (perhaps in over thrust contact) by the Chilitos Formation, composed of marine volcanic derived sediments and volcanic flows and mafic intrusive bodies.  The section is capped by the Tertiary age conglomerates and volcanic derived sediments and overlying rhyolite ash-flow tuffs.  Everything older than the Fresnillo Formation is intruded by intermediate dikes and a quartz-monzonite porphyry. The pre-Tertiary section has been folded, tilted (N55W, 30SW) and complexly thrust faulted.

Juanicipio Geology

The stratigraphy of the Juanicipio area is very similar to that of the adjacent Fresnillo District.  The rocks exposed appear similar to the upper Valdecañas Sediments of the Proaño Group as seen in the main portion of the Fresnillo District.

The next oldest rocks are thinly bedded sediments and volcanic rocks. These rocks are poorly resistant to weathering and crop out sparingly beneath materials sloughed off the bold outcrops of volcanic rocks along Linares Canyon and at Piedras.  This surface is buried by Tertiary age alluvium, surface debris, and a variety of volcanic ash flows.

Environmental Surveys

Environmental surveys done on the Juanicipio property to date are those required for drill permitting.  These surveys involve preparing inventories of floral and faunal species and assessments of the impact of road building for drilling.

The only previous surface disturbances on the Juanicipio property were small prospect pits from which there has been no production.  Reconnaissance coverage indicates that there are no inherited environmental liabilities from these disturbances.

Mineral Resources and Reserves

2008 Resource Estimate

On June 18, 2008, Minera Juanicipio announced a resource estimate for the Valdecañas Vein (“Mineral Resource Statement, Valdecañas Silver Deposit, Zacatecas, Mexico, SRK Consulting, December 31, 2007”).  The Company later filed a NI 43-101 technical report, dated July 25, 2008, entitled “Mineral Resource Estimation, Valdecañas Silver-Gold Project, Zacatecas State, Mexico” prepared by Qualified Persons Dominic Chartier, P.Geo, Consulting Geologist, Glen Cole, P.Geo, Principal Resource Geologist and Jean-Francois Couture, Ph.D, P.Geo, Principal Geologist of SRK Consulting (CANADA) Inc. of Toronto, Ontario, in support of this resource estimate.  The total inferred resource estimate on a 100% basis was 237.8 million ounces of silver.  In addition to the silver, the resource estimate also contained inferred resources of 480,000 ounces of gold and almost 1 billion pounds of combined lead and zinc (457,700 tonnes).

2009 Independent Resource Estimate

On February 24, 2009 the Company announced an updated Valdecañas Vein resource estimate which was restated on March 4, 2009 to correct an error made by the consulting firm that prepared the earlier February 24th estimate (as restated, that “2009 Independent Resources Estimate”).  The 2009 Independent Resource Estimate that was prepared by Scott Wilson Roscoe Postle Associates (“Scott Wilson RPA”) confirms Valdecañas as a world class deposit, with the first Indicated Resource for the Valdecañas Vein (including the Hanging Wall Vein) of 2.95 million tonnes of 879 grams per tonne (g/t) silver, 2.22 g/t gold, 2.39% lead and 4.15% zinc.  The Inferred Resource (Valdecañas, Footwall and Hanging Wall Veins and the Stockwork Zone) reports 7.21 million tonnes of 458 grams g/t silver, 1.54 g/t gold, 1.89% lead and 3.14% zinc.

The following table presents the 2009 Independent Resource Estimate announced March 4, 2009 for Minera Juanicipio’s Valdecañas, Footwall, and Hanging Wall Veins and the Stockwork Zone.

Minera Juanicipio is owned 44% by a subsidiary of MAG and 56% by Fresnillo.

Resource Category and Zone	Tonnes millions	Ag g/t	Au g/t	Pb %	Zn %	NSR US$/ tonne	Contained Metal
							Ag M  oz	Au K  oz	Pb M  lbs	Zn M  lbs
Indicated
Valdecañas Vein	2.54	900	2.10	2.56	4.42	368	73	171	144	247
Hanging Wall Vein	0.41	750	2.94	1.29	2.46	317	10	38	12	22
Total Indicated	2.95	879	2.22	2.39	4.15	361	83	210	155	269
Inferred
Valdecañas Vein	5.81	523	1.56	2.19	3.61	228	98	292	281	463
Footwall Vein	0.48	339	1.43	0.60	0.64	142	5	22	6	7
Hanging Wall Vein	0.11	549	0.43	0.64	1.48	199	2	2	2	4
Stockwork Zone	0.80	45	1.57	0.67	1.39	52	1	41	12	25
Total Inferred	7.21	458	1.54	1.89	3.14	202	106	356	301	498

Notes:

(1)         CIM Definition Standards have been followed for classification of mineral resources.

(2) Mineral resource blocks are within wireframes constructed with a minimum true thickness of 1.5 metres and a minimum NSR value of US$50 per tonne, which is the effective cut-off. All blocks within the wireframes are reported as mineral resource. Approximately 2% of the indicated tonnes and 6% of the inferred tonnes have values less than US$50 per tonnes but are included for continuity. Much of the Stockwork Zone has NSR values less than US$50 per tonne, but it is included as mineral resource because it represents incremental tonnage adjacent to the Valdecañas and Footwall Veins.

(3) NSR values are calculated in US$ using factors of $0.33 per g/t Ag, $17.04 per g/t Au, $4.01 per % Pb and $5.57 per % Zn. These factors are based on metal prices of US$12.50/oz Ag, US$800/oz Au, $0.45/lb Pb and $0.70/lb Zn and estimated recoveries and smelter terms.

(4) The mineral resource estimate uses drill hole data available as of January 29, 2009.

(5) Mineral resources are not mineral reserves and do not have demonstrated economic viability. All figures are rounded to reflect the relative accuracy of the estimates; as a result column totals may not add.

Scott Wilson RPA, estimated the mineral resources for the Juanicipio property using results of 52 diamond drill holes available as of January 29, 2009.  3D wireframe models were constructed for the main Valdecañas Vein, the Footwall (also known as Desprendido) Vein, a newly interpreted Hanging Wall Vein, and a newly interpreted Stockwall Zone using a minimum grade of US$50 per tonne and minimum true thickness of 1.5 metres.  For the main Valdecañas Vein, wireframes were extended up and down dip approximately 40 to 60 metres from the nearest drill holes with greater than US$50/tonne NSR.  A wireframe was not constructed for the Encino Vein since it is represented by a single drill hole to date.  Silver, gold, lead and zinc grades were interpolated into blocks with dimensions of 25 metres (along strike) by 10 metres by 10 metres using an inverse distance cubed algorithm.    Block tonnages were derived using average density factors for each zone which are based on numerous specific gravity determinations.  The factors are 2.90 t/m3 for the main Valdecañas Vein, 2.80 t/m3 for the Footwall Vein, 2.70 t/m3 for the Hanging Wall Vein, and 2.70 t/m3 for the Stockwork Zone.

The total contained metals in the Indicated Resource are 83 million ounces of silver, 210,000 ounces of gold and 155 million pounds of lead and 269 million pounds of zinc. The Inferred Resources contain an additional 106 million ounces of silver, 356,000 ounces of gold and 301 million pounds of lead and 498 million pounds of zinc.

This discussion uses the terms "Indicated Resources" and “Inferred Resources”. See “Cautionary Note to Investors Concerning Estimates of Inferred Resources” and “Cautionary Note to Investor Concerning Estimates of Indicated Resources” on page 5 of this AIF.  Investors are cautioned not to assume part or all of any “Indicated Resource” will ever be converted into reserves or that part or all of an “Inferred Resource” exists, or is economically or legally mineable.

Qualified Person

The mineral resources in the 2009 Independent Resource Estimate for the Juanicipio property disclosed in this document have been estimated by Dr. William Roscoe, P.Eng and Mr. David Ross, P.Geo., both employees of Scott Wilson RPA and independent of MAG.  By virtue of their education and relevant experience Dr. Roscoe and Mr. Ross are "Qualified Persons" for the purpose of NI 43-101.  The mineral resources have been classified in accordance with CIM Definition Standards for Mineral Resources and Mineral Reserves (December 2005).  Dr. Roscoe, P.Eng., and Mr. Ross, P.Geo. have read and approved the contents of this document as it pertains to the disclosed mineral resource estimate.

Past Exploration Programs

Prior to drilling in 2003 and 2004, no silver, gold or base metal mineralization had been documented on the Juanicipio property, only the extensive clay alteration and silicification of the Tertiary rocks, which alluded to mineralization at depth. Drilling by the Company during its 2003 and 2004 drilling campaign directed toward geophysically delineated structures changed this when it encountered significant high-grade silver (Ag), gold, (Au) and lead (Pb) and zinc (Zn) mineralization at depth.

Mineralization observed in the drill core consists of either base metal sphalerite-galena veins or precious metal, banded or brecciated quartz-Pyrargyrite (silver mineral)-acanthite (silver mineral)-polybasite (silver mineral)-galena (lead mineral)-sphalerite (zinc mineral) veins. Alteration in the sedimentary host rock is limited to silicification, weak pyritization, and weak clay alteration. Within a metre of the veins silicification and disseminated sulphide minerals increase significantly (generally pyrite-sphalerite-galena).

In late 2005 during their earn-in phase, Peñoles discovered high-grade silver-gold mineralization in the Valdecañas Vein when Hole 16 intercepted 1,798 g/t Ag, 2.91 g/t gold, 3.43% Pb, and 5.51% Zn over 6.35 metres. Since then, Peñoles obtained the permitting for definition drilling and road construction and has completed approximately 20 diamond drill holes on the Valdecañas Vein discovery. The mineralization is now known to strike for more than 1500 metres and extend from 300 metres to 750 metres below surface for an approximate down-dip distance of 450 metres. Mineralized intercepts average 5.8 metres true width.

At the end of 2007 the vein averaged 5.8 metres wide, with a down dip length in excess of 400 metres and was traced for 1,500 metres along strike. The average grade of 14 holes (out of 17) that are within the high grade silver/gold zone was 1,292 g/t silver, 2.50 g/t gold and 8.7 % combined lead and zinc.

Minera Juanicipio also purchased surface rights over the northeastern corner of the Juanicipio claim, which combined with purchases from 2006 and 2007 give uninterrupted coverage of 4.5 kilometres of the strike projection of the Valdecañas Vein from east to west and over 2.5 kilometres of surface rights along the strike projection of the Juanicipio Vein.

These land purchases became assets of Minera Juanicipio, which was established to own and operate the Juanicipio property.

2008 Exploration Program Results

A total 26,050 metres of diamond drilling was completed on the Valdecañas Vein and 2,810 metres on the Juanicipio Vein in 2008. The drill program continued to yield high grade returns.

Assay results for holes J1-07-GY and GZ were released at the end of February 2008. These holes were on the most westerly section G and were targeted to intersect the Valdecañas Vein near the top of the high grade gold silver zone.  Hole GZ intersected 1.4 metres (true width) of 769 grams per tonne (g/t) (22.4 ounces per ton (opt)) silver, 2.11 g/t gold with minimal values of lead and zinc.  Hole GY intersected 0.7 metres of 121 g/t (3.5 opt) silver and 0.61 g/t gold. These intersections combined to show the high grade silver gold zone to have a vertical height of almost 500 metres (see table below).

Mid-April 2008 the joint venture announced high grade results from drilling on the Juanicipio Vein, Hole 18P intersecting 4,100 g/t (119.5 opt) silver over 0.60 metres, with 1.47 g/t gold, 2.02% lead and 4.07% zinc.  Hole 17P intersected 130 g/t (3.8 opt) silver over 0.6 metres, with 0.34 g/t gold, 0.06% lead and 0.08% zinc.  Hole 18P intersected the Juanicipio Vein 110 metres west and 80 metres vertically below Hole JI-03-01 (2.0 metres of 689 g/t silver and 11.43 g/t gold, 40% core recovery) and 115 metres west and 45 metres above Hole 17P. Hole 17P intersected the Juanicipio Vein on the same section as and 110 metres vertically below Hole JI-03-01. The results of Holes 17P and 18P confirmed the continuity and the presence of a second high grade vein on the Juanicipio property.

On June 19, 2008 Minera Juanicipio reported further high grade silver on Valdecañas Vein, including 1,198 g/t (34.9 opt) silver, 0.24 g/t gold, 2.75% lead and 5.15% zinc over 4.70 metres (true width) from Hole QE. This hole began to fill in the central portion of the eastern half of the Valdecañas Vein where there had been a significant gap between drill intercepts. The new hole extended the high grade “bonanza” zone to almost 400 metres east of the discovery section “M”.

On July 16, 2008, MAG announced a deep intersection of high grade silver on Valdecañas Vein from Hole GE of 1,179 g/t (34.4 opt) silver, 1.98 g/t gold, 3.01% lead and 2.21% zinc over 4.71 metres (true width). Hole GE is one of the deepest holes to test the Valdecañas Vein to the west and this intersection remains open down-dip.

At the end of July MAG reported that Hole QF returned 578 grams per tonne (g/t) (16.8 ounces per ton (opt)) silver, 3.85 g/t gold, 5.55% lead and 6.36% zinc over 6.20 metres (true width). This included a high grade gold intercept of 271 g/t (7.9 opt) silver, 9.13 g/t gold, 0.99% lead and 4.41% zinc over 1.96 metres (true width). Hole QF, is almost 80 metres vertically below hole QE which returned 1,198 g/t (34.9 opt) silver, 0.21 g/t gold, 2.75% lead and 5.15% zinc over 4.70 metres (true width). Hole OF reported an intersection of 224 g/t (6.5 opt) silver, 1.77 g/t gold, 0.92% lead and 2.63% zinc over 4.71 metres (true width). Included is a higher grade intercept of 349 g/t (10.2 opt) silver, 1.78 g/t gold, 0.74% lead and 3.28% zinc over 2.62 metres (see the longitudinal section at the end of the Valdecañas section).

All three holes reported on July 28th, QF, QE and OF, were outside of the initial inferred resource estimate for the Valdecañas Vein and help define the vein at depth to the east.

MAG announced on October 16,2008 that new assay results from drilling along the Valdecañas Vein confirmed the anticipated decrease of high grade silver with depth and add intercepts in areas beyond the published resource limits. Drilling continued with four drills operating.

Holes HE and HF cut a pair of high-grade silver and gold vein splays above the main Valdecañas Vein in an area that shows both structural complexity and multiple veins with distinctly different gold and silver values.

Further high grade assays from the Valdecañas Vein were reported from holes JI-08-NE and JI-08-RD on November 19, 2008 of 1,338 g/t (39.0 opt) silver, 3.56 g/t gold, 1.63% lead and 7.37% zinc over 3.37 metres and 842 g/t (24.5 opt) silver, 1.20 g/t gold, 2.19% lead and 6.40% zinc over 8.02 metres respectively.

Additional information from the 2008 drill program was released in early January 2009. MAG reported the discovery of the new high grade “Encino” Vein at Juanicipio with assays of 1,843 g/t (53.7 opt) silver, 4.43 g/t gold, 3.54% lead and 5.96% zinc over 3.41 metres.

The new high grade Encino Vein appears to have been discovered as a result of detailed drilling in the vicinity of the Valdecañas Vein.  Re-interpretation of a previously reported intersection of high grade gold and silver in Hole JI-06-IE, (1,843 g/t (53.7 opt) silver, 4.43 g/t gold, 3.54% lead and 5.96% zinc over a true width of 3.41 metres) showed that this is a new and separate north-dipping veinand not the down-dip extension of the Valdecañas as previously believed. This new interpretation indicates that JI-06-IE did not intersect the Valdecañas Vein, so the Valdecañas Vein at this time remains open down-dip.

The final results from the 2008 drill program, reported on January 23, 2009, provided additional high grade intercepts on the Valdecañas Vein.  Hole JI-08-LE2 reported an intercept of 10.2 metres (7.81 metres true width) grading 1,068 grams per tonne (g/t) (31.1 ounces per ton (opt)) silver, 1.25 g/t gold, 0.69% lead and 3.53% zinc including an internal high grade gold and silver zone with a true width of 3.06 metres which graded 2,268 g/t (66.1 opt) silver, 2.27 g/t gold, 0.97% lead and 4.19% zinc.

These new results continue to add intercepts in areas beyond areas included in previously published resource estimates and also confirm the lateral and vertical continuity of the mineralized zone within the Valdecañas Vein. Remaining untested areas with the potential for additional new resource ounces include the down-dip area of the western part of the Valdecañas Vein on sections G, I and F and the up-dip area of the eastern part of the Valdecañas Vein in the vicinity of sections R, S and T.

Figure 2 - - Juanicipio property, vertical longitudinal section

Interpretation and Conclusions

The 2008 drill campaign on the Valdecañas Vein completed over 28,000 metres of definition drilling. This program was focused on defining the Valdecañas Vein on a 100 by 100 metre grid with the goal of moving as much of the reported inferred resource as possible to an indicated resource by early 2009. Three rigs were operating on the Valdecañas Vein, in December and one on the Juanicipio Vein, to complete the metre drill campaign for 2008.

Recent results continue to add intercepts in areas beyond previously published resource limits and also confirm the continuity of the main vein and the bonanza zone within the vein. The western part of the Valdecañas Vein remains open down-dip and the eastern part remains open up-dip. Drilling also encountered good grade and continuity in hanging wall and footwall veins intersected outside the main Valdecañas Vein.

The joint venture also reported that drilling resumed on the Juanicipio Vein one kilometre south of Valdecañas. Initial drill intercepts in the Juanicipio Vein including 2 metres of 689 grams per tonne (g/t) silver and 11.4 g/t gold (Hole JI03-01) and 0.6 metres of 4,100 g/t silver and 1.4 g/t gold (Hole 18-M) have characteristics indicating they lie above the elevation of a bonanza zone comparable to that in the Valdecañas Vein.

Valdecañas lies 2.5 kilometres southwest from the principal production San Carlos Vein and 2.5 kilometres northwest from the Saucito Vein, currently undergoing preproduction development. Geologically and mineralogically the Valdecañas Vein has affinities to the Santo Niño Vein, at one time the principal production vein at Fresnillo.

The drilling to date clearly demonstrates that Valdecañas is an epithermal vein typical of the Fresnillo District. However, the Valdecañas Vein and the Juanicipio Vein (discovered by MAG in 2003) contain significantly higher gold grades (2-4 grams gold per tonne) than the average veins in the principal production parts of the district which run approximately 0.05 grams gold per tonne.

The Valdecañas Vein has undergone multiple mineralizing events as evidenced by various stages of brecciation and quartz sealing. The vein exhibits the characteristic metal zoning of the principal veins at Fresnillo, observed as a change from silver and gold rich zones at the top to increased base metals in the deeper intersections. Notably, the gold rich mineralization cuts across the silver rich zones, which in turn cut earlier base-metal dominant stage indicating complex multi-stage mineralization combining stages seen separately in other parts of the district.   Overall, the precious metals rich zone has an interval of 350 metres in vertical height, which is typical of major producing veins in the district although it lies slightly lower in elevation than the comparable precious metals zones being mined elsewhere in the district. Within ten to twenty metres of the vein, the wall rocks are progressively and pervasively silicified and cut by quartz veinlets carrying pyrite-sphalerite-galena sulphide minerals. Alteration in the volcanic/sedimentary host rock farther away from the vein is characterized by weak pyritization, moderate clay alteration, and calcite veining.

At a Technical Committee meeting of Minera Juanicipio on December 18, 2008 an initial 2009 exploration program was proposed.  This initial program totaled $US 4.0 million for 2009 with the focus on drilling the Valdecañas Vein, the Encino Vein, the Juanicipio Vein and other vein targets within the Juanicipio property.  Later. on January 20, 2009, Fresnillo and MAG through a board of directors meeting for Minera Juanicipio approved the 2009 exploration program based on the recommendation of the Technical Committee totaling US $4.0 million and also approved a preliminary engineering budget of US $500,000.  The Company’s 44% share of the total 2009 budget will be US$1.98 million.  Since December 2007 until March 10, 2009 the Company has advanced approximately US $7.3 million in to Minera Juanicipio for its 44% share of costs.

Work Program for 2009

The Juanicipio work program for 2009 approved by the technical committee of Minera Juanicipio S.A. de C.V. is as follows:

Objective Strategy:Drilling will continue to be directed to the delineation of the Valdecañas Vein.  Work will continue to test the Juanicipio Vein located 1.0 kilometre to the south of Valdecañas. Exploration will also focus on the new Encino Vein and other areas in the search for additional deeply buried veins on the Juanicipio property.  Preliminary engineering will investigate underground development strategies and approaches.

Work Program: There will be a minimum of 4 drills operating in 2009.

Metallurgical sampling and testing is ongoing and results are expected in early 2009.

Sampling, Analysis & Security of Samples

Fresnillo is the world’s largest producer of primary silver and they follow a specific set of QA/QC procedures.  Fresnillo geological personnel oversee the logging of all core and the selection and collection of all core samples.  Core samples are shipped from the point of collection on the project directly in security-sealed bags to ALS-Chemex Laboratories preparation facility in Guadalajara, Jalisco, Mexico (Certification ISO 9001). Samples shipped also include intermittent standards and blanks. Pulp samples are subsequently shipped to ALS-Chemex Laboratories in North Vancouver, Canada for analysis. Two extra pulp samples are also prepared and are analyzed by SGS Laboratories (Certification ISO 9001) and Inspectorate Laboratories (Certification ISO 9001) (or other recognized lab). The bulk reject is subsequently sent to CIDT (Center for Investigation and Technical Development) of Peñoles in Torreon, Mexico for metallurgical testing where a fourth assay for each sample is analyzed and a calculated head grade is received on the basis of a concentrate balance. The CIDT also does a full microscopic, XRF and XRD mineralogical analysis.

Cinco de Mayo Property

Readers are encouraged to read the following technical report, from which portions of the discussions below in this section are derived:

1.   Filed on SEDAR January 6, 2009: a NI 43-101 technical report, dated October 15, 2008, entitled “Independent Technical Report Cinco de Mayo Property, Chihuahua State, Mexico” prepared by Qualified Persons, Brad Leonard, M.Sc., P.Geo. and Julie Selway, Ph.D, P.Geo. of Caracle Creek International Consulting Inc., of Sudbury, Ontario.

Introduction

The Cinco de Mayo property is located approximately 190 kilometres northwest of the city of Chihuahua, in northern Chihuahua Sate, Mexico. Major highways lead to the town of Benito Juarez and from there dirt roads and tracks lead to the Cinco de Mayo property.  Cinco de Mayo is one of MAG’s four Carbonate Replacement Deposit (“CRD”) style targets.

CRDs have contributed 40% of Mexico’s historic silver production, making them second only to epithermal veins in total ounces of silver produced in Mexico. CRDs can be very large systems ranging from 25 to 100 million tons of high-grade silver/lead/zinc ores. Mexico’s CRDs occur along the intersection of the Mexican Thrust Belt and the Tertiary age volcanic plateau of the Sierra Madre Occidental, a zone where structurally prepared limestone host rocks were invaded by metals-rich intrusive bodies.

The acquisition of the Cinco de Mayo property evolved from a review of data collected during 15 years of systematic exploration and a study of the geologic characteristics of the CRDs prospects in Chihuahua. There is virtually no outcrop at Cinco de Mayo save for the prominent range-front jasperoid outcrops and a narrow limestone ridge containing two small historic mines.

MAG began preliminary regional geologic mapping and sampling at Cinco de Mayo in mid-2004.

The work program continued in early 2005 with MAG executing an orientation biogeochemical survey that revealed strong linear zinc and copper anomalies along trend from strongly anomalous structures exposed in limited outcrop.

The results from the first nine holes (3,975 metres) drilled at Cinco de Mayo in 2006/2007 were noteworthy. Six of the nine holes were drilled over a strike length of 2.0 kilometres along a very prominent NW trending fault zone that cuts strongly folded massive limestone and limestone-rich sedimentary rocks.  Structurally controlled replacement style massive to semi-massive sulphide mineralization occurring within broad mineralized and altered zones was intercepted in all six of the holes. Mineralization is open in all directions. At least trace mineralization was encountered in the remaining three holes.

MAG’s 2006 and 2007 drill program at Cinco de Mayo continued to confirm that a significant Carbonate Replacement silver, lead and zinc system underlies the alluvium covering 75% of the Cinco de Mayo property area. All of the mineralization intersected in drilling to date was initially identified as buried (blind) geophysical and geochemical anomalies that were consistent with MAG’s exploration model.

In November 2007 a drill hole (CM07-20) collared to intersect the northeast side of a coincident 2,000 metre by 750 metre aeromagnetic low and string of weak electromagnetic conductors cut 6.8 metres (estimated true thickness) of galena and sphalerite-rich massive sulphides grading 254 grams per tonne (g/t) (7.4 ounces/ton (opt)) silver, 6.4% lead and 7.0% zinc at a vertical depth of 380 metres. This included a compositionally distinct interval, 2.12 metres thick, grading 512 g/t (15.9 opt) silver, 12.15% lead and 13.10% zinc. Assays were not received from the lab until February 2008 and were reported in a press release dated February 7th. Hole CM07-20 is considered to be the discovery hole.

Drilling in 2008 intersected widespread and high grades of silver/lead/zinc mineralization and was successful in establishing the district-scale extent and zoning of the mineralization and demonstrating the Jose “Manto” (blanket or sheet) is part of a large CRD system. Sufficient drilling (approximately 44,500 metres to date) has been conducted and is budgeted for 2009 to undertake a preliminary resource calculation during the current year.

Property Description and Location

Cinco de Mayo is a 5,000 hectare CRD prospect located in Chihuahua State. It is located  proximal to the highly favourable 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.

The property lies on the western bounding fault of the Chihuahua Trough which hosts major CRDs like Santa Eulalia (MAG’s Guigui Property), Naica, San Pedro Corralitos and Terrazas. This gives rise to a thick carbonate section amenable to host mineralization and a major regional zone of weakness for both ground preparation and intrusive emplacement. These are essential elements of the mineralization model.

Figure 3 – Cinco de Mayo property, Chihuahua State (roads in black, December 31, 2008)

Accessibility

The Cinco de Mayo property is located approximately 190 kilometres northwest of the city of Chihuahua. Major highways lead to the town of Benito Juarez and from there dirt roads and tracks lead to the Cinco de Mayo property. Year round access is good.

Ownership

Pursuant to an arm’s length agreement dated as of April 15, 2004 between the Company, Minera Lagartos and Minera Cascabel, “Cascabel” granted to Lagartos an option to acquire a 100% interest in the 23,928 hectare (59,125 acre) Cinco de Mayo property subject to a 2.5% net smelter returns royalty.

Under the terms of the agreement, as later amended, MAG was obligated to make scheduled cash and share payments together worth US$1,000,000 (US$650,000 in cash and share payments made) and incur certain exploration expenditures totalling US$1,000,000 by July 26, 2009 (incurred).

During the year ended December 31, 2008, the Company acquired 100% interest in certain mining concessions internal to the Cinco de Mayo property from two separate vendors. The Company made a one-time payment of US$350,000 for these mining concessions.

As at December 31, 2008 the Company had paid a total US$550,000 in cash, issued 165,670 common shares at a value of $266, 630 and completed approximately $10,773,036 in exploration costs with respect to the Cinco de Mayo property.

History

The acquisition of the Cinco de Mayo property evolved from a review of data collected during 15 years of systematic exploration and a study of the geologic characteristics of the CRDs prospects in Chihuahua by Minera Cascabel. This compilation revealed key features that set the important CRD systems like Santa Eulalia, Naica, Bismark, and San Pedro Corralitos apart from the numerous small CRD showings and Mississippi Valley Deposits that occur elsewhere in the region. There is virtually no outcrop at Cinco de Mayo save for the prominent range-front jasperoid outcrops and a narrow limestone ridge containing two small historic mines.

Regional Setting

CRDs form a spectrum ranging from stock contact skarns, through dike and sill contact skarns and massive sulphides, to massive sulphide chimneys and mantos, with large systems ranging from 25 to 100 million tons of high-grade ores. Mexico’s CRDs occur along the intersection of the Mexican Thrust Belt and the Tertiary age volcanic plateau of the Sierra Madre Occidental, a zone where structurally prepared carbonate host rocks were invaded by metals-rich intrusive bodies.

Local Geology

The Sierra Cinco de Mayo is an elongate limestone ridge, about 1 kilometres wide and 4.5 kilometres long flanked by broad alluvium mantled valleys. PEMEX data and outcrop reconnaissance indicate that the alluvial cover is very thin and that a very thick section of favourable carbonate host rocks lies immediately beneath the cover. The ridge is cut by NE-SW and NW-SE structures that host both mineralization and metal-bearing jasperoid alteration.  Little is known of the historic mining at Cinco de Mayo, but there are several old mines on the property that probably produced small amounts of high-grade silver and base metal ores.  The jasperoids were the focus of a systematic mapping and sampling program in 1998. This program revealed a number of geochemical “hot-spots” along certain structural corridors leading towards the adjacent covered areas that are in turn underlain by highly favourable host rocks.

Locally, there is abundant evidence that the western bounding fault of the Chihuahua Trough has functioned more recently as a major shear zone, with strands passing along the immediate flanks of the north-northwest-elongate Cinco de Mayo Ridge. At Cinco de Mayo, there are numerous mineralization and alteration occurrences associated with this fault. These include the prospects Abundancia, Celia and Orientales and a host of unnamed occurrences dominated by iron rich jasperoids with strongly anomalous Pb-Zn-Ag-As (Au) signatures, particularly along the ridge.

Environmental Surveys

Environmental surveys done on the Cinco de Mayo Property to date are those required for drill and road building permitting.  These surveys involve preparing inventories of floral and faunal species and assessments of the impact of road building for drilling.

Several small and inconsequential old workings and prospect pits are found in and around the Cinco de Mayo Property.  Reconnaissance and detail SEMARNAT coverage indicates that there are no inherited environmental liabilities from these workings.

At present the construction of drill roads and drill pads are the only “modern” disturbances found at Cinco de Mayo. Active programs of road reclamation are being conducted by the Company and are monitored under the auspices of SEMARNAT and the Mexican National permitting process.

To date all permits and reclamation efforts are valid and in compliance with the environmental regulations of Mexico.

Mineral Resources and Reserves

The property is in the early exploration phase. Not enough data has been obtained to provide reserve or resource estimates but, with stepped-up drilling (three drills currently turning) budgeted for early 2009, it is anticipated a preliminary resource calculation will be completed during 2009.

Exploration Programs to Date

Exploration work in the alluvium covered areas is essentially “blind” and necessitates using geophysical techniques and geological extrapolation to trace mineralization beneath the thin (approximately 6 to 12 metres) cover.  The mineralization is known to contain magnetic pyrrhotite and the aeromagnetic survey has proven to be very useful.  Other high powered geophysical methods were tested in an attempt to delineate deeper structures. Induced polarization/apparent resistivity, of the tested ground techniques, appear to show the most promise. Mapping of hornfels and skarn mineralization has been an effective tool to lead us towards mineralization centres.

MAG began preliminary regional geologic mapping and sampling at Cinco de Mayo in mid-2004.  Unfortunately, unusually heavy summer and fall rains deluged the region, washing out dams and cutting road access to the property.

The work program continued in early 2005 with MAG executing an orientation biogeochemical survey that revealed strong linear zinc and copper anomalies along trend from strongly anomalous structures exposed in limited outcrop.  These results were encouraging enough to justify a 30 line-kilometre Audio-magnetotelluric (AMT) geophysical survey testing historically exploited mineralization, geological features identified in nearby outcrop and through cover utilizing a biogeochemical survey.

MAG contracted a 450 line-kilometre airborne magnetic and electromagnetic survey which was completed in late 2006.  The results are considered very significant and were an important guide to further drilling in 2007 after they were integrated with previous work and the recent drill information.

MAG developed a series of drill targets by combining the geological, geochemical, biogeochemical and geophysical data, and completing an integrated property interpretation.

The results from the first nine holes (3,975 metres) drilled at Cinco de Mayo in 2007 were noteworthy. Six of the nine holes were drilled over a strike length of 2.0 kilometres along a very prominent NW trending fault zone that cuts strongly folded massive limestone and limestone-rich sedimentary rocks.  Structurally controlled replacement style massive to semi-massive sulphide mineralization occurring within broad mineralized and altered zones was intercepted in all six of the holes. (e.g. Hole CDM-01 had 6.11 metres of 5.7% zinc, 1.4% lead and 22.5 grams per tonne silver). Mineralization is open in all directions. At least trace mineralization was encountered in the remaining three holes.

The intersections occur within broader zones of dispersed lead, zinc and iron sulphides developed in the surrounding sedimentary rocks. Several holes were drilled on a geophysical anomaly detected in the initial processing of a 450 line-kilometre airborne electromagnetic and magnetic survey. This structure can be traced for at least 3,000 metres with this detailed magnetic survey. Early interpretation indicates that the airborne survey can detect buried mineralization and their related igneous heat sources and can be a valuable ingredient in focusing ongoing exploration programs.

Early systematic regional exploration work and the results of this first phase drill program clearly show that Cinco de Mayo has many geological and mineralogical characteristics in common with the largest CRDs in Mexico.

Drilling in mid to late 2007 was targeted on newly discovered mineralization identified in the first pass program completed in January of 2007.

The Company announced assay results from the 2007, 12 hole, 6,316 metre program completed late last year on the Cinco de Mayo property.  The highlight from this program of widely spaced holes was Hole 07-20 which intersected 6.8 metres (estimated true thickness) of galena and sphalerite-rich massive sulphides grading 254 g/t (7.4 ounces per ton (opt)) silver, 6.4% lead and 7.0% zinc. This includes a compositionally distinct interval, 2.12 metres thick, grading 512 g/t (15.9 opt) silver, 12.15% lead and 13.10% zinc.

The first two 50 metre step-outs from the discovery intercept intersected mineralization in the same relatively flat-lying structure. Hole 08-22, a 50 metre down-dip offset, hit 7.1 metres of multi-stage massive sulphide breccia cut by calcite veins. From 401.1 to 403.88m (estimated true thickness) the hole intersected 209 g/t (6.1 opt) silver, 6.15% lead and 6.55% zinc. Hole 08-23, a 50 metre offset to the northwest, hit 0.73 metres of banded massive sulphides that graded 464 g/t (13.5 opt) silver, 13.0% lead and 13.2% zinc at a vertical depth of 382 metres. These first three intercepts lie at about 400 metres vertical depth and appear to define a coherent massive sulphide manto ("blanket") developed within a low-angle fault cutting strongly folded limestone. Textural evidence for multiple mineralization stages is strong. Mineralization was open in all directions.

By mid-summer 2008 MAG had three drill rigs turning on the project. The exploration budget was increased in response to the successful results. By the end of 2008 drill holes CM08-22 to CM08-85 were completed. Most encountered massive sulphide mineralization and by the end of the year a zone, now referred to as the José Manto, was traced for over 2 kilometres along the principal northwest trending structural corridor.  The second to last hole of the 2008 program, hole CM08-84, cut a 2.72 metre zone grading 462 g/t (13.5 opt) silver, 10.06% lead and 13.62% zinc within an overall 12.37 metre thick mineralized zone.

MAG’s exploration has defined major NW and NE structural and stratigraphic controls on silver-lead-zinc (gold) sulphide mineralization.  Recent drilling results reveal coherent zoning (developed for over 2 kilometres) along the principal northwest José Manto structural corridor: from massive silver-lead-zinc sulphide mantos to silver-gold-lead-zinc mineralized tungsten (scheelite) bearing skarn.  The strongest skarn is associated with felsite dikes that show distinctive brecciation, silicification and sericitization and are overall very similar to mineralization-related felsites in major CRDs throughout the region.  Mineralization also appears to thicken along this trend, as does the number of individual mantos and the number of carbonate units that are mineralized. This zoning is precisely what is predicted by MAG’s CRD exploration model and provides strong exploration vectoring.

The skarn and felsite intercepts appear to cluster around the intersection of the northwest structural corridor with the strong northeast-trending Leones Fault that cuts across the limestones of the Sierra Santa Lucia to the southwest.   The Leones Fault is locally marked by strong marble and other high-temperature alteration styles indicating gradually increasing proximity to an intrusive heat source.  Drilling is currently underway on both ends of this structure:  on the east side to determine the geometry of the felsite dikes and associated mineralization and alteration; and on the west side of the range to determine if the large magnetic anomaly shown on Mexican government regional geophysical maps marks a major magmatic center.

Work Program for 2009

Drilling from 2006 to 2008 intersected widespread silver/lead and zinc mineralization along a major structure and hosted in limestones.  The majority of holes drilled in 2008 intersected replacement style massive sulphide carrying significant grades of silver, lead and zinc.

The target remains a large buried Carbonate Replacement Deposit. We have confirmed that our geological concepts and targeting methods are reliable. MAG’s ability to test the system with large drilling step outs is testimony to the widespread nature and potential size of this CRD system. MAG is focused on determining the overall extent of the CRD system, so on-going exploration will attempt to track this zoning towards the system source with a combination of drilling and geophysics.

Drilling is continuing in 2009, with 3 rigs drilling a proposed 15,000 metre drill operation to follow up on the significant intersections in 2008.

Figure 4 – Cinco de Mayo property, interpreted alteration zone (December 31, 2008)

CINCO DE MAYO	Units		Cost ($)		Total ($)
Land / Payments / Tax		x		x		384,016.00
Geology		250.00		600.00		150,000.00
Geophysics/BHG		50.00		2,500.00		125,000.00
Geochemistry		500.00		30.00		15,000.00
Geophysics/INTG		50.00		800.00		40,000.00
Labour/ Contract		300.00		250.00		75,000.00
Land Deals / Purchases		1.00		250,000.00		250,000.00
Drilling		15,000.00		185.00		2,775,000.00
GIS/Map/Processing		45.00		400.00		18,000.00
Airborne Geophysics		1,000.00		125.00		125,000.00
Miscellaneous		25.00		2,500.00		62,5000.00
TOTAL						4,019,516.00

Sampling, Analysis & Security of Samples

The Company has implemented a quality control program to ensure best practices in sampling and analysis of core samples. The Company’s geological staff first log and then split the core in half during the sampling process with the remaining half being retained for verification and reference purposes. Duplicates, standards and blanks are inserted randomly into the sample stream.  The samples are delivered directly in security sealed bags to ALS-Chemex Laboratories preparation facility in either Chihuahua, Chihuahua or Hermosillo, Sonora (Certification ISO 9001). Sample pulps are shipped from there to ALS-Chemex Laboratories in North Vancouver, Canada for analysis by ICP techniques. Metallic screen fire analyses for silver are also regularly run as an additional QA/QC check.

Lagartos Property

The Company’s intention is to complete a NI 43-101 technical report on the Lagartos Property in 2009.

Figure 1 Lagartos SE and NW Location map

Introduction

Through acquisition and staking, MAG has secured two very large claim groups lying northwest and southeast of the town of Fresnillo, Zacatecas State, Mexico.  The properties flank the Juanicipio property to the northwest and southeast.

Lagartos NW covers the immediate northwestern projection of the geology and structure of the Fresnillo Mining District into a broad alluvial valley punctuated by volcanic outcrops showing high-level alteration styles and mercury showings virtually identical to those that led to the Juanicipio discovery.

Over the last 3 years, MAG has completed extensive regional reconnaissance mapping and sampling in the Lagartos NW and SE claim blocks, largely to define potential target areas, but also to “condemn” areas where potential is limited.

Both properties lie along the Fresnillo Silver Trend (FST), a large regional structural zone that hosts the Guanajuato, Zacatecas and Fresnillo epithermal silver-gold vein districts.  All of the historic deposits of the FST were found in outcrop by indigenous people in pre-Colonial times and aggressively exploited by the Spaniards during the 350 to 450 years after the Conquest.  Over 60% of the FST is masked by alluvial soils and/or young volcanic rocks and MAG hopes to repeat its Juanicipio success by applying the expertise and knowledge garnered there to buried targets at Lagartos NW and SE.

Accessibility

The Lagartos SE property is located immediately north of the city of Zacatecas, in Zacatecas State, Mexico. Access to the property is excellent. A major highway lies on the west side of the property and secondary roads and provide access elsewhere.

The Lagartos NW property is located 10 km northwest of the historic silver mining town of Fresnillo, also in the State of Zacatecas. The drive from Zacatecas to Fresnillo is approximately 50 km on paved highway.  Most of the drive to the property, from Fresnillo, is on paved highway with secondary roads and tracks providing access for the last couple of kilometres.

A modern airport is located roughly one third of the way between Zacatecas and Fresnillo. Railway lines serve both areas.

Ownership

Both properties are 100% owned by MAG. The 750 km2 Lagartos SE land package surrounds the famous Zacatecas Mining District, one of the oldest and most productive silver mining districts in the world.

Abandoning ground is encouraged by the holding tax structure of the Mexican Mining Law, which imposes higher rates for older claims.  The 2008 work allowed MAG to abandon 70,149 hectares of low-potential ground in the Lagartos III, IV, VII, VIII and 9 claims.  This reduction is calculated to save MAG approximately 1.2 million pesos in the first semester of 2009.

History

The Lagartos SE claims surround the Zacatecas Silver District, where a series of six major vein swarms have produced over a billion ounces of silver since 1546 when Juan de Tolosa, a Basque nobleman, founded a small mining camp in the area.   MAG’s claims completely encompass the district on the north, west and east and include the on-strike projection of most of the district’s major vein swarms.  In addition, MAG has acquired claims within and flanking some of the major historic producing mining zones.

Regional Setting

The Lagartos SE and Lagartos NW properties comprise two large and separate claim groups lying along a southeast to northwest mineralized silver trend centered on Fresnillo. The properties lay along the "Fresnillo Silver Trend" a large regional structural zone hosting the world class Guanajuato, Zacatecas, and Fresnillo Epithermal Silver-Gold vein districts. Although all of the known deposits were found in outcrop between 350 and 500 years ago, MAG believes that significant epithermal silver vein systems lie covered by recent alluvial soils that mask over 60% of the trend. It has been shown that modern exploration technology can locate mineralization beneath this cover.

Local Geology

MAG has identified a number of broad hydrothermal alteration and structural zones, up to 4 kilometres long and ten's of metres wide. Within the associated alteration halo there are quartz veins containing iron oxides and sulphides of zinc, lead and silver. In addition there are other veins and zones characterized by iron rich carbonates, druzy quartz, iron oxides and sulphides of lead and zinc. These zones have returned anomalous silver values ranging from one half ounce up to 2.3 kilograms silver (67 ounces) in selected grab samples from a number of old pit workings and low lying outcrop. These zones are also characterized by a suite of highly anomalous metal values for arsenic, mercury and antimony. These zones are thought to represent an upper level manifestation of a deeper epithermal vein system very much like those found in the Zacatecas and Fresnillo (Juanicipio) districts.

Environmental Surveys

Environmental surveys done on the Lagartos SE and NW properties to date are those required for drill and road building permits. These surveys involve preparing inventories of floral and faunal species and assessments of the impact of road building for drilling.

Many old workings are found in close proximity to the Lagartos SE property but the ground held by MAG has extensive alluvial cover and little to no evidence of previous work.

Programs of road reclamation are conducted by MAG and monitored under the auspices of SEMARNAT and the Mexican National permitting process.

To date all permits and reclamation efforts are valid and in compliance with the environmental regulations of Mexico.

Mineral Reserves and Resources

These properties are in the early exploration phase. Not enough data has been collected to provide reserve or resource estimates.

Program results: 2008

Lagartos SE

Geological and geophysical work conducted in 2008 identified six drill targets in and around the historic Zacatecas Silver District and focused on the eastern and western extensions of the historically important Veta Grande and Mala Noche Vein swarms.  These are broad zones laced by multiple vein strands with similar strike and depth of exposure, typically named for the largest vein within the swarm.  Exploitation of these veins was relatively shallow and the areas have not been the object of modern, focused exploration methods.

Figure 2 Lagartos SE east side

MAG’s exploration program on Lagartos SE includes the La Luz and Morelos SW areas along the NW extensions of the Veta Grande and Mala Noche, respectively (see location map above),  and Las Majadas /El Pajaro Hill and Puerto Rico covering the southeast extensions of the Mala Noche and Veta Grande, respectively.   Predilicta is a vein in the Veta Grande within the historic mining area.

The first 8 months of 2008 were devoted to field mapping, sampling, target identification and drill permitting.  Between mid-October and the end of the year, four holes totaling 2189.95 metres were drilled in the La Luz area seeking the extension of veins of the Veta Grande system under alluvium.  Structural projection was based on geological and geophysical data.  Alluvium was found to range from 150 to over 250m thick, thickening to the southeast.  Several major fault structures with strong alteration were encountered in the underlying bedrock, but none contained mineralized veins.

The first hole was begun at Las Majadas in December, 2008 on a broad stockwork zone lying along the southeastern projection of the Malanoche vein system.  The area is laced with numerous mineralized quartz stringers and at least 3 narrow high-grade veins with historic production.   The hole reached 549 metres before being shut down for the holidays.  No major intercepts were made in this portion of the hole.

Although there has been limited success in MAG’s Lagartos SE program to date, a number of viable targets remain to be drilled. Two examples are the extensions of the Las Majadas and Veta Puerto Rico veins under alluvial cover. One drill rig is expected to keep drilling in the area in 2009.

2009 Budget Proposal

Lagartos SE EXPLORATION	Units		Cost ($)		Total ($)
Land / Payments / Tax		x		x		224,472.67
Geology		200.00		450.00		90,000.00
Geophysics/INTG		50.00		800.00		40,000.00
Geochemistry		500.00		30.00		15,000.00
Trenching / Roads						0.00
Labour/ Contract		150.00		250.00		37,500.00
Drilling		3,000.00		160.00		480,000.00
GIS/Map/Processing		25.00		400.00		10,000.00
AEM		0.00				0.00
Miscellaneous		10.00		2,500.00		25,000.00
TOTAL						921,972.67

Project Results 2008

Lagartos NW

Lagartos NW is a core asset and targets extensions of the Fresnillo district and the Juanicipio vein discoveries towards the northwest. It is host to Cerro Cacalote, an area where SWIR/ASTER satellite imagery has identified a large area 35 km from Juanicipio with alteration signatures similar to those observed at Valdecañas. Narrow intercepts of gold and silver along with elevated arsenic, mercury, antimony and tin values have been recorded in the area.

During 2008, 6 holes totaling 4611.90 metres were drilled on targets in Lagartos northwest.  The first two, totaling 1152.9 metres, were drilled along the eastern claim border to determine if major projected structures could be found under alluvium in the area.  In both cases the alluvium was too deep and the holes abandoned.  It has been interpreted that these were drilled very close to a major regional fault that has dropped the basement block deeper than can be realistically reached.   The remaining four holes, totaling 3459 metres were drilled along the western and eastern flanks of Cerro Cacalote on alteration, geochemical and structural targets.  The first two cut an extensive breccia that carried no economic values and the remaining two cut thick alluvium and volcanic sections.  The final hole (LW0806) had highly elevated mercury values, indicating that it was still very high in the epithermal alteration zoning.

Although there has been limited success in MAG’s Lagartos NE program to date, the strength and extent of high-level epithermal alteration and mineralization, combined with its proximity and similarity to that seen at Juanicipio indicate that this very large claim continues to have significant exploration potential.  2009 work is expected to initially involve a broadly based ground magnetic survey, focused on areas where our drilling has shown a range of depths to alluvium (25 to 400 metres) to determine if depth to bedrock can be reliably determined.  If this is successful, the magnetics will be expanded to seek elevated basement blocks where alluvium is shallow and the epithermal system may be exposed at a deeper level.   No drilling is contemplated in advance of this survey.

Figure 3 Lagartos NW drilling map

2009 Budget proposal

Lagartos NW EXPLORATION	Units		Cost ($)		Total ($)
Land / Payments / Tax		x		x		210,457.67
Geology		100.00		450.00		45,000.00
Geophysics/INTG		50.00		1,000.00		50,000.00
Geochemistry						0.00
Trenching / Roads						0.00
Labour/ Contract		50.00		250.00		12,500.00
Drilling		0.00		185.00		0.00
GIS/Map/Processing		20.00		400.00		8,000.00
AEM		0.00		175.00		0.00
Miscellaneous		5.00		2,500.00		12,500.00
TOTAL						338,457.67

Sampling, Analysis & Security of Samples

MAG has implemented a quality control program to ensure best practices in sampling and analysis of drill cores. The Company’s geological staff first log and then split the core in half during the sampling process with the remaining half being retained for verification and reference purposes. Duplicates, standards and blanks are inserted randomly into the sample stream.  The samples are delivered directly in security sealed bags to ALS-Chemex Laboratories preparation facility in either Chihuahua, Chihuahua or Hermosillo, Sonora (Certification ISO 9001). Sample pulps are shipped from there to ALS-Chemex Laboratories in North Vancouver, Canada for analysis by ICP techniques. Metallic screen fire analyses for silver are also regularly run as an additional QA/QC check.

Program results: 2007

Initial drilling of Lagartos SE in 2006 totalled 7,066 metres in 20 holes. The objective was to test at shallow depth a number of vein and structural targets traceable for strike lengths of 600 to 1,000 metres to determine which targets offer the best opportunity to host significant mineralization at depth.

The best hole intercepted 6.0 metres of 42.5 g/t silver and 0.34 g/t gold with strongly anomalous arsenic and antimony values. Six other holes also reported anomalous silver values with highly anomalous arsenic. This silver-gold-arsenic combination is comparable to what is seen in the highest portions of epithermal veins found in the Zacatecas district and Juanicipio area of the Fresnillo district.

Program results: 2006

Work in 2006 focused on the Lagartos Northwest area on a zoned alteration centre, very similar to that seen at Juanicipio, surrounded by alluvial cover. Biogeochemical and ground magnetic surveys of the flanking cover areas revealed linear magnetic anomalies parallel to the Fresnillo Silver Trend with overlapping and concentric biogeochemical silver, lead, zinc and copper anomalies. These structures and their associated metal anomalies can be traced for distances approaching eight kilometres. The drill program was designed to test structural intersections and geochemical anomalies in settings similar to those found at Juanicipio and Fresnillo.

A 13-hole, 7,364-metre drill program was carried out on these anomalies in 2006. All of the holes encountered strongly altered volcanic rocks under shallow alluvial cover, and three intersected the "Guerrero Terrane" rocks that host the veins at Fresnillo and Juanicipio. One hole, drilled through alluvial cover four kilometres from the nearest outcrop, cut 3.5 metres grading 14 to 49 g/t (0.5 to 1.5 opt) silver.

The Lagartos Southeast block covers the broad plain lying between Fresnillo and the historic Zacatecas mining district. In 2006 MAG staked all of the open ground surrounding Zacatecas and purchased numerous claims over past producing veins within the district. This gives MAG the potential projections of the E-W trending district veins as well as the San Gabriel vein field in the northernmost part of the district.

Other Properties

The Company has several other exploration properties.  At this time the Company is focused primarily on epithermal vein exploration along the Fresnillo Silver Trend and on CRD exploration along the western edge of the Chihuahua Trough. The Company is constantly looking for other opportunities that could offer us the potential to meet our exploration objectives.

The Company has identified and acquired a number of new project areas throughout our targeted regions and will be directing these projects through the exploration process in order to identify drill targets. Three of these properties, CRD prospects Salemex and Sierra Ramirez, and Lagartos SE, an epithermal vein prospect in the vicinity of Juanicipio, will be subject to drilling programs in 2009.

None of these properties are advanced enough to be able to identify any resource or reserve figures.

DIVIDENDS

The Company has neither declared nor paid dividends on its Common Shares. The Company has no present intention of paying dividends on its Common Shares, as it anticipates that all available funds will be invested to finance the growth of its business.

DESCRIPTION OF CAPITAL STRUCTURE

Common Shares

Our authorized capital consists of an unlimited number of Common Shares without par value and an unlimited number of Preferred Shares without par value, of which 49,210,566 Common Shares were issued and outstanding and no Preferred Shares were issued and outstanding as at March 13, 2009. All of the issued shares are fully paid and non-assessable. Our Company does not own any of its own shares.

The shareholders are entitled to one vote for each Common Share on all matters to be voted on by the shareholders. Each Common Share is equal to every other Common Share and all Common Shares participate equally on liquidation, dissolution or winding up of our Company, whether voluntary or involuntary, or any other distribution of our assets among our shareholders for the purpose of winding up our affairs after we have paid out our liabilities. The shareholders are entitled to receive pro rata such dividends as may be declared by the board of directors out of funds legally available therefore and to receive pro rata the remaining property of our Company upon dissolution. No shares have been issued subject to call or assessment. There are no pre-emptive or conversion rights, and no provisions for redemption, retraction, purchase or cancellation, surrender, sinking fund or purchase fund. Provisions as to the creation, modification, amendment or variation of such rights or such provisions are contained in the Business Corporations Act (British Columbia) and the articles of the Company.

Shareholder Rights Plan

On January 18, 2008 the shareholders of the Company approved a Shareholder Rights Plan (“Plan”).  The Plan was adopted to ensure the fair treatment of shareholders in connection with any take-over bid for Common Shares of the Company.  The Rights Plan was not adopted in response to any proposal to acquire control of the Company.  The Rights Plan will expire at the end of the third annual general meeting of the Company’s shareholders following this approval, unless renewed by the shareholders. A copy of the Plan may be obtained by request in writing to the Company at Suite 328 – 550 Burrard Street, Vancouver, BC V6C 2B5 or viewed in electronic format at www.sedar.com and at http://idea.sec.gov.

On February 22, 2009, the board of directors of the Company approved certain amendments (the "Amendments") to the Rights Plan in the form of an amended and restated shareholder rights plan agreement (the "Amended and Restated Rights Plan").  The Amendments will not, however, take effect unless and until they are approved by the Toronto Stock Exchange and at the Annual and Special Meeting of Shareholders on March 24, 2009.  If the Amended and Restated Rights Plan is not approved by the shareholders at the Annual and Special Meeting or by the TSX, then the Rights Plan will continue in full force and effect, unamended.

The purpose, rationale and a description of, the Amendments are set out in the Company's Management Information Circular dated February 23, 2009, which can be found at www.sedar.com and http://idea.sec.gov.  The draft Amended and Restated Rights Plan was filed on SEDAR at www.sedar.com on February 25, 2009 is approved by the shareholders of the Company the Amended and Restated Rights Plan will also be filed and available at www.sedar.com and http://idea.sec.gov after March 24, 2009.

Stock Options

The Exchange requires all Exchange listed companies to adopt stock options plans. 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 Company has a stock option plan in place that was approved by Shareholders on May 9, 2007. The maximum number of Common Shares to be reserved for issuance under the Stock Option Plan will not exceed 10% of the number of Common Shares of the Company issued and outstanding on the applicable date of grant. A copy of the Plan may be viewed in electronic format at www.sedar.com and at http://idea.sec.gov.

MARKET FOR SECURITIES

Trading Price and Volume

The following table provides information as to the high and low prices of the Company’s Common Shares during the 12 months of the most recently completed financial year as well as the volume of shares traded for each month:

Toronto Stock Exchange – MAG
Month	High	Low	Volume
February, 2009	7.79	5.46	2,897,059
January, 2009	8.00	5.33	2,300,837
December, 2008	6.02	4.93	1,746,537
November, 2008	6.04	4.30	1,486,223
October, 2008	6.10	3.95	6,143,549
September, 2008	7.86	3.52	11,561,668
August, 2008	10.00	7.40	2,231,243
July, 2008	10.49	8.70	3,238,591
June, 2008	11.85	9.65	1,620,360
May, 2008	13.17	10.51	2,200,256
April, 2008	13.05	10.54	3,547,335
March, 2008	14.97	12.62	1,726,100

New York Stock Exchange Alternext US (formerly the American Stock Exchange) - MVG
Month	High	Low	Volume
February, 2009	6.49	4.50	1,266,531
January, 2009	6.50	4.41	1,505,691
December, 2008	5.24	4.00	1,443,950
November, 2008	4.90	3.36	725,375
October, 2008	5.75	3.12	1,710,271
September, 2008	7.61	3.27	1,832,889
August, 2008	9.71	7.00	572,167
July, 2008	10.45	8.63	738,825
June, 2008	11.91	9.50	624,107
May, 2008	13.14	10.27	761,137
April, 2008	12.94	10.53	506,292
March, 2008	15.17	11.68	533,577

Prior Sales

As of March 13, 2009, there are no securities of the Company issued but not listed on the Toronto Stock Exchange or the NYSE Alternext US.

ESCROWED SECURITIES

As of March 13, 2009, there are no securities of the Company held in escrow or subject to a contractual restriction on transfer.

DIRECTORS AND OFFICERS

Name, Occupation and Security Holding

Name &  Position(1)	Principal Occupation or Employment during the past 5 years	No. of Shares(5)(6)	No. of Options/price
DANIEL T. MACINNIS President, CEO, Director (since Feb 1/05) British Columbia, Canada	President and CEO of the Company since February 1, 2005; VP Exploration, Sargold Resources Corp., Sardinia, Italy, a gold exploration company from October 2003 to February 2005; principal of D. MacInnis Exploration and Consulting in Reno, Nevada from July 2004 to February 2005.  Mr. MacInnis is also a director of MAX Resources Corp.	75,100	25,000/$12.91 17,500/$10.01 100,000/$5.36 90,000/$2.46 100,000/$3.00 60,000/$1.00 250,000/$1.06
PETER K. MEGAW Director (since Feb 6/06) British Columbia, Canada	President of IMDEX/Cascabel and co-founder of Minera Cascabel S.A. DE C.V. since 1988, a geological consulting company; consulting geologist for the Company since 2003.  Mr. Megaw is also a director of Candente Resources Corp.	697,021	20,000/$12.91 15,000/$10.01 50,000/$5.36 100,000/$3.00
R. MICHAEL JONES(2)(3)(4) Director (since Mar 31/03) British Columbia, Canada	President and Director of Platinum Group Metals Ltd. since February 2000, a platinum focused company with a deposit interest in South Africa and exploration properties in Canada; director and advisor to West Timmins Mining Inc. from 2006; Mr. Jones is also a director of Jerico Explorations Inc. and Nextraction Energy Corp. (formerly Kruger Capital Corp.)	201,502	10,000/$12.91 16,250/$10.01 50,000/$5.36 75,000/$3.00 100,000/$1.06
ERIC H. CARLSON(2)(3)(4) Director (since Jun 11/99) British Columbia, Canada	July 1994 to present, President and CEO, Anthem Properties (1993) Ltd. (formerly Anthem Properties Corp.), a property development company; 1992 to present, President of Kruger Capital Corp.  Mr. Carlson is also a director of Platinum Group Metals Ltd., West Timmins Mining Inc. and Anthem Ventures Capital Corp., Anthem Works Ltd. and Nextraction Energy Corp. (formerly Kruger Capital Corp.)	1,125,500(7)	10,000/$12.91 27,500/$10.01 50,000/$5.36 75,000/$3.00 75,000/$1.06
JONATHAN A. RUBENSTEIN(3)(4) Director (Since Feb 26/07) British Columbia, Canada	Practiced law until 1994 and has been a mining executive since that time; formerly a director of Aurelian Resources September 2006 to August 2008; formerly a director of Cumberland Resources Ltd. from 1983 to 2007; formerly a director of Redcorp Ventures, from 2000 to 2007; formerly a director, Vice President and Corporate Secretary of Canico Resources from 2002 to 2005.  Mr. Rubenstein is also a director of Troon Ventures Ltd.	Nil	15,000/$12.91 21,250/$10.01 200,000/$8.80
RICHARD M. COLTERJOHN Director (since Oct 16/07) Ontario, Canada	President and CEO of Centenario Copper, since March 2004. Managing Partner at Glencoban Capital Management Inc., a merchant banking firm sincer 2002. Mr. Colterjohn is also a director of Centenario Copper Corporation.	10,000	7,500/$12.91 200,000/$14.15
DEREK C. WHITE(2) Director (since Oct 16/07) British Columbia, Canada	Executive Vice President - Corporate Development of Quadra Mining Limited since September 2007; previously the CFO of Quadra Mining commencing in April 2004; formerly from January 2003 to February 2004.  Mr. White holds an undergraduate degree in Geological Engineering and is a Chartered Accountant.  Mr. White is also a director of Oro Silver Resources Limited; Magellan Mineral Limited and Laurentian Goldfields Ltd.	Nil	7,500/$12.91 4,375/$10.01 200,000/$14.15
GORDON K. NEAL Vice President, Corporate Development British Columbia, Canada	December 1, 2003 to present, Vice-President, Corporate Development of the Company; from 2006 to present, a director of Zappa Resources; previously President of Neal MacInerney Investor Relations.  Mr. Neal is a director of Zappa Resources.	5,200	29,250/$12.91 29,469/$10.01 75,000/$5.36 55,000/$2.46 55,000/$3.00
FRANK R. HALLAM CFO British Columbia, Canada	Chief Financial Officer of the Company since April 30, 2003; 2002 to present, Chief Financial Officer and Director of Platinum Group Metals Ltd., a platinum focused company with a deposit interest in South Africa and exploration properties in Canada; 2005 to present, Director of Jerico Resources Inc.; 1996 to present, CFO Callinan Mines Ltd.; 1994 to 2002, Chief Financial Officer and Director of Tan Range Exploration Corp., a gold exploration company focused on East Africa; 1998 to 2004, Chief Financial Officer and Director of Derek Resources Corporation; previously Chartered Accountant with Coopers and Lybrand (now PricewaterhouseCoopers).  Mr. Hallam is a director of Platinum Group Metals Ltd., Jerico Resources Inc. and West Timmins Mining Inc.	49,400	98,750/$12.91 74,063/$10.01 75,000/$5.36 100,000/$3.00
JODY L. HARRIS Corporate Secretary British Columbia, Canada	Corporate Secretary of the Company since May 8, 2007;  Investor Relations Specialist of PAKIT Inc. from February 2006 to March 2007; Administrator/Office Manager of Silverado Gold Mines Ltd. from March 2004 to October 2005.	Nil	15,000/$12.91 7,500/$10.01 45,000/$9.40

Notes:

(1)      Each director’s term of office expires at the next annual general meeting of shareholders of the Company.

(2)      Member of Audit Committee.

(3)      Member of Compensation Committee.

(4)      Member of Corporate Governance and Nomination Committee.

(5)      Includes beneficial, direct and indirect shareholdings.

(6)      Does not include stock options and other rights to purchase or acquire shares.

(7)   Of these shares, 916,300 shares are held by Carmax Enterprises Corporation, a private company owned by Mr. Carlson.

There are 49,210,566 shares of Common Stock issued and outstanding as of the date of this AIF.  As of March 13, 2009, directors and officers of the Company as a group own or control approximately 2,163,723 Common Shares of the Company representing approximately 4.4% of its issued and outstanding Common Shares.

Conflicts of Interest

The Company’s directors and officers may serve as directors or officers of other companies or have significant shareholdings in other resource companies and, to the extent that such other companies may participate in ventures in which the Company may participate, the directors of the Company may have a conflict of interest in negotiating and concluding terms respecting the extent of such participation. In the event that such a conflict of interest arises at a meeting of the Company’s directors, a director who has such a conflict will disclose his interest in the matter and abstain from voting for or against the approval of such participation or such terms. From time to time several companies may participate in the acquisition, exploration and development of natural resource properties thereby allowing for their participation in larger programs, permitting involvement in a greater number of programs and reducing financial exposure in respect of any one program. It may also occur that a particular company will assign all or a portion of its interest in a particular program to another of these companies due to the financial position of the company making the assignment. In accordance with the laws of British Columbia, the directors of the Company are required to act honestly, in good faith and in the best interests of the Company. In determining whether or not the Company will participate in a particular program and the interest therein to be acquired by it, the directors will primarily consider the degree of risk to which the Company may be exposed and its financial position at that time.

The directors and officers of the Company are aware of the existence of laws governing the accountability of directors and officers for corporate opportunity and requiring disclosures by the directors of conflicts of interest and the Company will rely upon such laws in respect of any directors’ and officers’ conflicts of interest or in respect of any breaches of duty by any of its directors and officers. All such conflicts will be disclosed by such directors or officers in accordance with the laws of British Columbia and they shall govern themselves in respect thereof to the best of their ability in accordance with the obligations imposed upon them by law. The directors and officers of the Company are not aware of any such conflicts of interests.

Code of Ethics

The Company has adopted a Code of Business Conduct and Ethics (the “Code”) that applies to all of its directors, officers and employees, including the Chief Executive Officer and Chief Financial Officer. The Code includes provisions covering conflicts of interest, ethical conduct, compliance with applicable government laws, rules and regulations, and accountability for adherence to the Code. A copy of the Code is posted on the Company’s website, at www.magsilver.com.

Audit Committee

The Audit Committee is responsible for reviewing the Company’s financial reporting procedures, internal controls and the performance of the Company’s external auditors.  See Audit Committee Charter attached hereto as Schedule “A”.

Audit Committee Composition and Background

The Audit Committee is comprised of Derek White (Chairman), Eric Carlson and R. Michael Jones. All three members of the Audit Committee are independent and financially literate, meaning they are able to read and understand the Company’s financial statements and to understand the breadth and level of complexity of the issues that can reasonably be expected to be raised by the Company’s financial statements. In addition to each member’s general business experience, the education and experience of each member of the Audit Committee that is relevant to the performance of his responsibilities as a member of the Audit Committee are set forth below:

Derek White, Chartered Accountant – Mr. White has over 20 years of financial experience in the mining and metals industry. Mr. White is presently the Executive Vice President - Corporate Development of Quadra Mining Limited and previously held the position as the Quadra's CFO commencing in April 2004. From January 2003 to February 2004, he held the position of CFO of International Vision Direct Ltd.

Eric H. Carlson, B.Comm, Chartered Accountant - Mr. Carlson has over 19 years of real estate investment, development and management experience and he has been the President of Anthem Properties Corp. since July 1994. Anthem is an investment group that specializes in the acquisition and management of Class B retail, multi family residential and office properties in high growth markets in Canada and the USA.

R. Michael Jones, P.Eng. - Experience as senior executive in several public companies managing operations, listings and capital raising since 1987. Mr. Jones is President and CEO of Platinum Group Metals Ltd., a public exploration company.

The Board of Directors has determined that each of the Audit Committee members are an “audit committee financial expert” within the meaning of the regulations promulgated by the United States Securities and Exchange Commission and is “independent” within the meaning of the rules contained in the NYSE Alternext US Company Guide.

Reliance on Certain Exemptions

At no time since the commencement of the Company’s most recently completed financial year has the Company relied on any of the exemptions in Section 2.4, 3.2, 3.3(2), 3.4, 3.5 or 3.6 of NI 52-110, or an exemption from NI 52-110, in whole or in part, granted under Part 8 of NI 52-110 or on section 3.8 of NI 52-110. No non-audit services were approved pursuant to a de minimis exemption to the pre-approval requirement.

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 of Directors.

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

The aggregate fees billed by the Company’s current external auditor, Deloitte & Touche LLP, in each of the last two fiscal years are as follows.

	Year ended December 31, 2008		Year ended December 31, 2007
Audit Fees	$	125,500	$	118,000
Tax Fees(1)	$	19,500	$	31,000
Total	$	145,000	$	149,000

Notes:

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

Compensation Committee

The Compensation Committee is comprised of Jonathan Rubenstein (Chairman), Eric Carlson and R. Michael Jones. The primary objective of this committee is to discharge the Board’s responsibilities relating to compensation and benefits of the executive officers and directors of the Company. The Compensation Committee Charter may be obtained under the Company’s profile at www.sedar.com and at http://idea.sec.gov.

Corporate Governance and Nomination Committee

The Corporate Governance and Nomination Committee is comprised of Jonathan Rubenstein (Chairman), Eric Carlson and R. Michael Jones. The primary objective of this committee is to assist the Board in fulfilling its oversight responsibilities by (a) identifying individuals qualified to become board and board committee members, and recommending to the Board director nominees for appointment or election to the Board, and (b) developing and recommending to the Board corporate governance guidelines for the Company and making recommendations to the Board with respect to corporate governance practices. The Corporate Governance and Nomination Committee Charter may be obtained under the Company’s profile at www.sedar.com and at http://idea.sec.gov.

Disclosure Committee

The Disclosure Committee is comprised of Daniel MacInnis (Chairman), R. Michael Jones and Frank Hallam. The primary objective of this committee is to ensure the Company and all applicable persons meet their obligations under the provisions of securities laws and stock exchange rules by establishing a process for the timely disclosure of all material information, ensuring that all applicable persons understand their obligations to preserve the confidentiality of undisclosed material information and ensuring that all appropriate parties who have undisclosed material information know they are prohibited from insider trading and tipping under applicable law, stock exchange rules and this Policy. The Disclosure Committee Charter may be obtained under the Company’s profile at www.sedar.com and at http://idea.sec.gov.

LEGAL PROCEEDINGS AND REGULATORY ACTIONS

There are no pending or contemplated legal proceedings to which our Company is a party or of which any of our properties is the subject other than the following:

In November 2008, the Company notified Fresnillo of various concerns arising under the Shareholders Agreement which governs the Minera Juanicipio joint venture.  One such concern is that Fresnillo is attempting to acquire control of the Company on an unsolicited basis in breach of the provisions of the Shareholders Agreement.  MAG has now triggered the dispute resolution provisions of the Shareholder's Agreement with the result that, if matters are not resolved with Fresnillo, the disputes will be referred to arbitration.

Separately, on December 1, 2008, the Company was advised of the intention by a subsidiary of Fresnillo plc to make an unsolicited take-over bid for all of the outstanding shares of the Company not already owned by Fresnillo and its affiliates at a price US$4.54 per share.  As a result of Fresnillo's share ownership, it is considered an insider of the Company under applicable securities laws.  Accordingly, a valuation is required to be obtained at Fresnillo's expense under the supervision of an Independent Committee of the Company's directors.

The independent valuation process was commenced in December 2008 with the formation of an independent committee of directors and the hiring of TD Securities and Scott Wilson Roscoe Postle Associates as independent valuator and independent technical advisor, respectively.  On February 1, 2009, the Company's Independent Committee suspended the valuation after determining that a proper valuation could not be completed without critical information which is in the sole possession or control of Fresnillo and which Fresnillo refused or neglected to provide to the Company or the Independent Valuator.  Fresnillo has since asked the Ontario Securities Commission to review this decision to suspend the valuation and the matter is still pending.

INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS

No director, executive officer or principal shareholder of the Company, or any associate or affiliate of the foregoing, has had any material interest, direct or indirect, in any transaction within the three most recently completed financial years or during the current financial year prior to the date of this AIF that has materially affected or is reasonably expected to materially affect the Company, except as otherwise disclosed in this AIF and as follows:

Dr. Peter Megaw, of Arizona, USA, 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 an option from Cascabel to earn an interest in the mineral claims of the Cinco de Mayo Property and the Salamex Property. Further, Cascabel has been and will continue to be retained by the Company as a consulting geological firm compensated at industry standard rates. For 2008, the Company accrued or paid Cascabel and IMDEX consulting, administration and travel fees totaling $194,590 (2007 - $134,720) and exploration costs totaling $2,504,237 (2007 - $1,312,826) under the Field Services Agreement.

TRANSFER AGENTS AND REGISTRARS

The Company’s transfer agent and registrar for its Common Shares is:

Computershare Investor Services Inc.

3rd floor – 510 Burrard Street

Vancouver, British Columbia

Canada  V6C 3B9

MATERIAL CONTRACTS

There are no contracts of the Company other than contracts entered into in the ordinary course of business of the Company, that are material to the Company and that were entered into within the most recently completed financial year of the Company or before the most recently completed financial year of the Company but which are still in effect, other than the Shareholders Agreement dated October 10, 2008 between the Company, Peñoles and others relating to Minera Juanicipio.

INTERESTS OF EXPERTS

Names of Experts

Deloitte & Touche LLP, is the independent auditor of the Company within the meaning of the Rules of Professional Conduct of the Institute of the Chartered Accountants of British Columbia.

Clancy Wendt, P.Geo., has provided NI 43-101 reports for the Company (Batopilas Jan. 2007 and Apr. 2003)

Stephen W. Wetherup, BSc., P.Geo., has provided NI43-101 reports for the Company.

William E. Roscoe, Ph.D, P.Eng. & David Ross, P.Geo, Scott Wilson Roscoe Postle Associates Inc., - March 4, 2009 – Independent Resource Estimate – A National Instrument 43-101 technical report documenting the mineral resource estimate will be filed on SEDAR before April 10, 2009.

Julie Selway, Ph.D, P.Geo. & Brad Leonard, M.Sc.,P.Geo., Caracle Creek International Consulting Inc. (Cinco de Mayo Oct. 2008)

Dominic Chartier, P.Geo, Glen Cole, P.Geo and Jean-Francois Couture, Ph.D, P.Geo, SRK Consulting (CANADA) Inc. (July 25 Resource Estimate Valdecañas)

The Company’s technical reports are available on the SEDAR website at www.sedar.com and on the SEC’s IDEA website at http://idea.sec.gov/ ..

Interests of Experts

The Company’s auditors, Deloitte & Touche LLP, have prepared the audit report attached to the Company’s audited consolidated financials statements for the most recent year end. The Company’s auditors have reported that they are independent of the Company in accordance with the rules of professional conduct of the Institute of Chartered Accountants of British Columbia.

To the knowledge of the Company, having made reasonable enquiry, none of the other experts listed above, or any “designated professional” of such expert, has any registered or beneficial interest, direct or indirect, in any securities or other property of the Company or any of its associates or affiliates.

ADDITIONAL INFORMATION

Additional information, including details as to directors’ and officers’ remuneration, principal holders of the Company’s shares, options to purchase Company shares and certain other matters, is contained in the Company’s Information Circular for the Annual General and Special Meeting of Shareholders to be held on March 24, 2009. The Circular is available on SEDAR, on the SEC’s IDEA website and on the Company’s.

Additional information is provided in the Company’s consolidated financial statements and management’s discussion and analysis for the year ended December 31, 2008, which will be filed on the websites below on or before March 13, 2009.

Copies of the above may be obtained, when available, on the Company’s website www.magsilver.com; on the SEDAR website at www.sedar.com; on the SEC’s IDEA website at http://idea.sec.gov/ or by calling the Company’s investor relations personnel at 604-630-1399.

Schedule “A”

MAG SILVER CORP.

(the “Corporation”)

AUDIT COMMITTEE CHARTER

1.   General

The Board of Directors of the Corporation (the “Board”) has established an Audit Committee (the “Committee”) to assist the Board in fulfilling its oversight responsibilities.  The Committee will review and oversee the financial reporting and accounting process of the Corporation, the system of internal control and management of financial risks, the external audit process, and the Corporation’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, 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 Corporation’s business, operations and risks.

The Corporation’s independent auditor is ultimately accountable to the Board and to the Committee. The Board and Committee, as representatives of the Corporation’s shareholders, have the ultimate authority and responsibility to evaluate the independent auditor, to nominate annually the independent auditor to be proposed for shareholder approval, to determine appropriate compensation for the independent auditor, and where appropriate, to replace the outside auditor.  In the course of fulfilling its specific responsibilities hereunder, the Committee must maintain free and open communication between the Corporation’s independent auditors, Board and Corporation management.  The responsibilities of a member of the Committee are in addition to such member’s duties as a member of the Board.

2.   Members

The Board will in each year appoint a minimum of three (3) directors as members of the Committee.  All members of the Committee shall be non-management directors and shall be independent within the meaning of all applicable U.S. and Canadian securities laws and the rules of the Toronto Stock Exchange and the NYSE Alternext US, unless otherwise exempt from such requirements.

None of the members of the Committee may have participated in the preparation of the financial statements of the Corporation or any current subsidiary of the Corporation at any time during the past three years.

All members of the Committee shall be able to read and understand fundamental financial statements and must be financially literate within the meaning of all applicable U.S. and Canadian securities laws or become financially literate within a reasonable period of time following his or her appointment.  Additionally, at least one member of the Committee shall be financially sophisticated and shall have past employment experience in finance or accounting, requisite professional certification in accounting, or any other comparable experience or background which results in the individual’s financial sophistication, which may include being or having been a chief executive officer, chief financial officer, or other senior officer with financial oversight responsibilities.

3.   Duties

The Committee will have the following duties:

·   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 Corporation’s counsel and engage outside independent counsel and other advisors whenever as deemed necessary by the Committee to carry out its duties.

·   Review the Corporation’s 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 Corporation’s material associated and affiliated companies that may have a significant impact on the Corporation’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:

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

·   generally accepted accounting principles have been consistently applied;

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

·   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.

·   Recommend to the Board an external auditor to be nominated for appointment by the Corporation’s shareholders.  Subject to the appointment of the Corporation’s external auditor by the Corporation’s shareholders, the Committee will be directly responsible for the appointment, compensation, retention and oversight of the work of external auditor engaged for the purpose of preparing or issuing an auditor’s report or performing other audit, review or attest services for the Corporation, including the resolution of disagreements between management and the external auditor regarding financial reporting.  The Corporation’s external auditor shall report directly to the Committee.

·   Review with the Corporation’s management, on a regular basis, the performance of the external auditors, the terms of the external auditor’s engagement, accountability and experience.

·   Pre-approve all non-audit services to be provided to the Corporation or its subsidiary entities by the external auditor.

·   Consider at least annually the independence of the external auditors, including reviewing the range of services provided in the context of all consulting services obtained by the Corporation, including:

·   insuring receipt from the independent auditor of a formal written statement delineating all relationships between the independent auditor and the Company, consistent with the Independence Standards Board Standard No. 1 and related Canadian regulatory body standards;

·   considering and discussing with the independent auditor any relationships or services, including non-audit services, that may impact the objectivity and independence of the independent auditor; and

·   as necessary, taking, or recommending that the Board take, appropriate action to oversee the independence of the independent auditor.

·   Ensure that adequate procedures are in place for the review of the Corporation’s public disclosure of financial information extracted or derived from the Corporation’s financial statements, other than the public disclosure contained in the Corporation’s financial statements, Management’s Discussion and Analysis and annual and interim earnings press releases; and must periodically assess the adequacy of those procedures.

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

·   Review and approve the Corporation’s hiring policies regarding partners, employees and former partners and employees of the present and former external auditors of the Corporation.

·   Establish a procedure for:

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

·   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.

·   Review and oversee all related party transactions.

·   Perform other functions as requested by the 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 re-assess annually the adequacy of this Charter and recommend updates to this charter; receive approval of changes from the Board.

·   With regard to the Corporation’s internal control procedures, the Committee is responsible to:

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

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

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

·   periodically review the Corporation’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.

·   Comply with Rule 10A – 3(b)(2), (3), (4) and (5) under the Securities Exchange Act of 1934.

4.   Chair

The Committee will in each year appoint the Chair of the Committee from among the members of the Committee.  In the Chair’s absence, or if the position is vacant, the Committee may select another member as Chair. The Chair will not have a casting vote.

5.   Meetings

The Committee will meet at least once every calendar quarter.  Special meetings shall be convened as required.  Notices calling meetings shall be sent to all members of the Committee, all Board members and the external auditor.  The external auditor of the Corporation must be given reasonable notice of, and has the right to appear before and to be heard at, each meeting of the Committee.  At the request of the external auditor, the Committee must convene a meeting of the Committee to consider any matter that the external auditor believes should be brought to the attention of the Board or shareholders of the Corporation.

The Committee may invite such other persons (e.g. without limitation, the President or Chief Financial Officer) to its meetings, as it deems appropriate.

6.   Quorum

A majority of members of the Committee, present in person, by teleconferencing, or by videoconferencing, or by any combination of the foregoing, will constitute a quorum.

7.   Removal and Vacancy

A member may resign from the Committee, and may also be removed and replaced at any time by the Board, and will automatically cease to be a member as soon as the member ceases to be a director of the Corporation.  The Board will fill vacancies in the Committee by appointment from among the directors in accordance with Section 2 of this Charter.  Subject to quorum requirements, if a vacancy exists on the Committee, the remaining members will exercise all of the Committee’s powers.

8.   Authority

The Committee may:

·   engage independent counsel and other advisors as it determines necessary to carry out its duties.

·   set and pay the compensation for any advisors employed by the Committee; and

·   communicate directly with the internal and external auditors.

The Committee may also, within the scope of its responsibilities, 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 Corporation officers at meetings as appropriate.

9.   Secretary and Minutes

The Chair of the Committee will appoint a member of the Committee or other person to act as Secretary of the Committee for purposes of a meeting of the Committee.  The minutes of the Committee meetings shall be in writing and duly entered into the books of the Corporation, and will be circulated to all members of the Board.

10.   Funding

The Corporation shall provide for appropriate funding, as determined by the Committee, for payment of (a) compensation to any registered public accounting firm engaged for the purposes of preparing or issuing an audit report or performing other audit, review or attest services for the Corporation; (b) compensation to any advisers employed by the Committee; and (c) ordinary administrative expenses of the Committee that are necessary or appropriate in carry out its duties.

Schedule “B”

Glossary

The following is a glossary of certain terms used in this AIF.

"Ag" is the elemental symbol for silver.

“alluvium” is unconsolidated surficial sediments deposited by water.

“alteration” usually refers to chemical reactions in a rock mass resulting from the passage of hydrothermal fluids.

“andesite” is volcanic rock, low in quartz content, generally fine grained and moderately dark coloured.

“anomalous” is a value, or values, in which the amplitude is statistically between that of a low contrast anomaly and a high contrast anomaly in a given data set.

“Batopilas property”, also known as the Don Fippi Property, is described commencing on page 32 of this AIF.

“basalt” is volcanic rock, low in quartz content, generally fine grained and dark coloured.

“calcite” refers to calcium carbonate mineral.  It is a common constituent of many rock types as well as occurring in veins and alteration assemblages.

“carbonate” refers to minerals which have the formula “X”CO3.   Calcite is the most common carbonate mineral.  Also rocks composed dominantly of carbonate minerals such as calcite.

“Cascabel” is Minera Cascabel, S.A. DE C.V., a company incorporated pursuant to the laws of the Mexican Republic.

“Cinco de Mayo” is described commencing on page 38 of this AIF.

“Common Shares” is the Common Shares without par value in the capital stock of the Company.

“Company” is MAG Silver Corp., a company under the Business Corporations Act (British Columbia).

“Conglomerate” is sedimentary rock composed of gravel and coarser fragments.

“concession” is a defined area for which mineral tenure has been granted by the Mexican government for a period of 50 years to allow exploration and exploitation and may be renewed for another 50 years.

“CRD” refers to Carbonate Replacement Deposit.

“Cretaceous” is the geological period extending from 135 million to 63 million years ago.

“CSAMT” refers to Controlled Source Audio Magneto Tellurics.

“diorites” are medium-coloured intrusive igneous rocks of intermediate composition.

“Exchange” refers to the Toronto Stock Exchange.

“Exchange Act” means the United States Securities Exchange Act of 1934;

“exploitation” isworks aimed at preparation and development of the area comprised by the mineral deposit, as well as work aimed at detaching and extracting the minerals products or substances existing therein.

“exploration” isworks performed on land aimed at identifying deposits of minerals or substances, as well as quantifying and evaluating the economically utilizable reserves they contain.

 “fault” is a fracture in rock where there has been displacement of the two sides.

“flow” is volcanic rock comprised of flow lava.

“fracture” refer to breaks in a rock, usually due to intensive folding or faulting.

“g/t” refers to grams per tonne (31.1 g/T = 1.0 troy ounce/tonne).

“gangue” are minerals incorporated in an orebody other than those of economic interest.

“grade” refers to the concentration of each ore metal in a rock sample, usually given as weight percent.  Where extremely low concentrations are involved, the concentration may be given in grams per tonne (g/t) or ounces per ton (oz/t).  The grade of an ore deposit is calculated, often using sophisticated statistical procedures, as an average of the grades of a very large number of samples collected from throughout the deposit.

“greywacke” refers to sandstone composed largely of sand-sized rock fragments.

“hydrothermal” refer to hot fluids, usually mainly water, in the earth’s crust which may carry metals and other compounds in solution to the site of ore deposition or wall rock alteration.

“igneous” is a rock formed by the cooling of molten silicate material.

“intrusive” is a rock mass formed below the earth’s surface from magma which has intruded into a pre-existing rock mass.

“Juanicipio property” is the Juanicipio property described commencing on page 22 of this AIF.

“Lagartos” is Minera Los Lagartos, S.A. DE C.V., a company incorporated pursuant to the laws of the Mexican Republic, the principal of which is the Company.

“MAG” is MAG Silver Corp., a company governed by the Business Corporations Act (British Columbia).

“magma” refers to molten rock formed within the crust or upper mantle of the earth.

“manto” refers to a deposit type that is stratabound, irregular to rod shaped, and which occurs usually in a horizontal or near horizontal attitude.

“mill” refers to a facility for processing ore to concentrate and recover valuable minerals.

“Minera Juanicipio” is Minera Juanicipio, S.A. DE C.V., a company incorporated pursuant to the laws of the Mexican Republic, the principals of which are Fresnillo and the Company.

“mineral reserve” is that part of a mineral deposit which could be economically and legally extracted or produced at the time of the reserve determination. The economically mineable part of a measured or indicated mineral resource demonstrated by at least a preliminary feasibility study.  The study must include adequate information on mining, processing, metallurgical, economic and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified.  A mineral reserve includes diluting materials and allowances for losses that may occur when the material is mined.

“mineral resource” is a concentration or occurrence of natural, solid, inorganic or fossilized organic material in or on the Earth’s crust in such form and quantity and of such a grade or quality that it has reasonable prospects for economic extraction.  The location, quantity, grade, geological characteristics and continuity of a mineral resource are known, estimated or interpreted from specific geological evidence and knowledge. Industry Guide 7 does not provide for the disclosure of “mineral resource estimates”.

“mineralization” usually implies minerals of value occurring in rocks.

“monzonite” is an intermediate intrusive rock related to granite.

“net smelter returns royalty” or “NSR” refers to payment of a percentage of mining revenues after deducting applicable smelter charges.

“NSAMT” is Natural Source Audio-frequency Magneto Tellurics.

“ore” is a natural aggregate of one or more minerals which may be mined and sold at a profit, or from which some part may be profitably separated.

“outcrop” is an exposure of rock at the earth’s surface.

“oz/t” refer to troy ounces per tonne.

“porphyry” refer to rock type with mixed crystal sizes, i.e., containing larger crystals of one or more minerals.

“portal” is the entrance from surface into an underground development.

“pyrite” is iron sulphide mineral.

“quartz” refers to Si02, a common constituent of veins, especially those containing gold and silver mineralization.

“replacement” refers to the process whereby one mineral is chemically substituted by a later mineral.

“rhyolite” refers to volcanic rock high in quartz content, generally fine grained and light coloured.

“SEC” is the Securities and Exchange Commission of the United States of America.

“serpentinite” is a rock composed of serpentine, typically formed from the alteration of mafic igneous rocks.

“silicification” refers to the replacement of the constituents of a rock by quartz.

“skarn” refers to the alteration of carbonate rocks near an intrusion dominated by garnet and pyroxene minerals.

“tailings” is the material rejected from a mill after recoverable valuable minerals have been extracted.

“Tertiary” is the geological period extending from 63 million to 2 million years ago.

“tonne” or “T” is the Metric ton = 1,000 kilograms or 1,000,000 grams.

“tuffs” refer to volcanic rocks composed of ash, crystal and rock fragments ejected from a volcano.  May become “welded” (tightly compacted and lithified) during cooling.

“VAT” is an acronym for “Value Added Tax” which, in Mexico, is charged on all goods and services at a rate of 15%.  Proprietors selling goods or services must collect VAT on behalf of the government.  Goods or services purchased incur a credit for VAT paid.  The resulting net VAT is then remitted to, or collected from the Government of Mexico through a formalized filing process. (In Mexico it is referred to as “IVA”).

“veinlets” are small veins, generally measuring only a few millimetres in thickness, filling fractures in rocks.

“veins” refer to the mineral deposits that are found filling openings in rocks created by faults or replacing rocks on either side of faults.

“volcaniclastic” refer to the coarse-grained sedimentary rocks (sandstone or conglomerate) composed of fragments of volcanic rocks.

EX-99.2

     MAG SILVER CORP.  (An exploration stage company)    Independent Auditors' Report and
 Consolidated Financial Statements  For the year ended December 31, 2008
 Dated: March 13, 2009

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:MAG NYSE-A:MVG www.magsilver.com info@magsilver.com

Management’s responsibility for the Financial Statements

The preparation and presentation of the accompanying consolidated financial statements, Management’s Discussion and Analysis (“MD&A”) and all financial information in the Annual Report are the responsibility of management and have been approved by the Board of Directors.

The consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles. Financial statements, by nature, are not precise since they include certain amounts based upon estimates and judgments. When alternative methods exist, management has chosen those it deems to be the most appropriate in the circumstances. The financial information presented elsewhere in the Annual Report is consistent with that in the consolidated financial statements.

Management, under the supervision, and with the participation of, the Chief Executive Officer and the Chief Financial Officer, have a process in place to evaluate disclosure controls and procedures and internal control over financial reporting as required by Canadian and U.S. securities regulations. We, as Chief Executive Officer and Chief Financial Officer, will certify our annual filings with the CSA and SEC as required in Canada by Multilateral Instrument 52-109 and in the United States as required by the Securities Exchange Act of 1934.

The board of Directors is responsible for ensuring that management fulfills its responsibilities for financial reporting and is ultimately responsible for reviewing and approving the consolidated financial statements. The Board carries out this responsibility principally through its Audit Committee, which is independent from management.

The Audit Committee is appointed by the Board of Directors and reviews the consolidated financial statements and MD&A, considers the report of the external auditors; assesses the adequacy of our internal controls, including management’s assessment described below, examines and approves the fees and expenses for the audit services, and recommends the independent auditors to the Board for the appointment by the shareholders. The independent auditors have full and free access to the Audit Committee and meet with it to discuss their audit work, our internal control over financial reporting and financial reporting matters. The Audit Committee reports its findings to the Board for consideration when approving the consolidated financial statements for issuance to the shareholders and management’s assessment of the internal control over financial reporting.

Management’s Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting.

Management has assessed the effectiveness of our internal control over financial reporting as of December 31, 2008 using criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management concluded that our internal control over financial reporting was effective as of December 31, 2008.

/s/ “Daniel MacInnis”                                                                                                /s/ “Frank Hallam”

Daniel MacInnis                                                                                     Frank Hallam

Chief Executive Officer                                                                                                           Chief Financial Officer

March 13, 2009

Report of Independent Registered Chartered Accountants

To the Board of Directors and Shareholders of

MAG Silver Corp.

(An exploration stage company)

We have audited the accompanying consolidated balance sheets of MAG Silver Corp. and subsidiaries (an exploration stage company) (the “Company”) as at December 31, 2008 and 2007, and the related consolidated statements of loss and comprehensive loss, shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2008 and the cumulative period from incorporation

April 21, 1999 to December 31, 2008. 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). These standards require that we plan and perform the audit to obtain reasonable assurance about 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 MAG Silver Corp. and subsidiaries as at December 31, 2008 and 2007, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2008 and the cumulative period from incorporation April 21, 1999 to December 31, 2008 in accordance with Canadian generally accepted accounting principles.

We have also audited, in accordance with the standards of the Public Accounting Oversight Board

(United States), the Company’s internal control over financial reporting as of December 31, 2008, based on the criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 12, 2009 expressed an unqualified opinion on the Company’s internal control over financial reporting.

/s/ "Deloitte & Touche LLP"

Independent Registered Chartered Accountants

Vancouver, Canada

March 12, 2009

Comments by Independent Registered Chartered Accountants on Canada - United States of America Reporting Differences

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 changes described in Note 2 to the consolidated financial statements. In addition, 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 raise substantial doubt on the Company's ability to continue as a going concern, such as those described in Note 1 to the consolidated 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 (United States), our report to the Board of Directors and Shareholders dated March 12, 2009 is expressed in accordance with Canadian reporting standards which do not require a reference to such changes in accounting principles or permit a reference to such conditions and events in the auditors’ report when these matters are properly accounted for and adequately disclosed in the financial statements.

/s/ "Deloitte & Touche LLP"

Independent Registered Chartered Accountants

Vancouver, Canada

March 12, 2009

Report of Independent Registered Chartered Accountants

To the Board of Directors and Shareholders of

MAG Silver Corp.

(An exploration stage company)

We have audited the internal control over financial reporting of MAG Silver Corp. and subsidiaries (an exploration stage company) (the “Company”) as of December 31, 2008, based on the criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Report of Management on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2008, based on the criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements as of and for the year ended December 31, 2008 and the cumulative period from incorporation April 21, 1999 to December 31, 2008 of the Company and our report dated March 12, 2009 expressed an unqualified opinion on those financial statements and included a separate report titled Comments by Independent Registered Chartered Accountants on Canada-United States of America Reporting Differences referring to changes in accounting principles, and conditions and events that raise substantial doubt on the Company’s ability to continue as a going concern.

/s/ "Deloitte & Touche LLP"

Independent Registered Chartered Accountants

Vancouver, Canada

March 12, 2009

MAG SILVER CORP.
(An exploration stage company)
Consolidated Balance Sheets
(expressed in Canadian dollars)				December 31,
	2008			2007
ASSETS
CURRENT
Cash and cash equivalents	$	52,262,561		$	60,147,307
Accounts receivable (Note 3)		2,339,204			647,027
Interest receivable		81,934			173,308
Marketable securities (Note 4)		4,116			-
Prepaid expenses		110,151			49,668
TOTAL CURRENT ASSETS		54,797,966			61,017,310
EQUIPMENT AND LEASEHOLDS (Note 5)		66,539			22,116
INVESTMENT IN MINERA JUANICIPIO S.A. DE C.V. (Note 6)		8,166,747			5,948,361
MINERAL RIGHTS (Note 7)		6,879,060			5,071,407
DEFERRED EXPLORATION COSTS (Note 7)		25,237,198			13,002,738
TOTAL ASSETS	$	95,147,510		$	85,061,932
LIABILITIES
CURRENT
Accounts payable and accrued liabilities	$	1,503,417		$	637,180
SHAREHOLDERS' EQUITY
Share capital (Note 8)
Authorized - unlimited common shares,
without par value
Issued and outstanding at Dec. 31, 2008 - 49,155,566
common shares (Dec.31, 2007 - 46,954,196)		107,023,016			91,105,640
Common share purchase warrants		-			2,218,444
Contributed surplus		9,583,860			7,879,650
Accumulated other comprehensive loss		(1,027,690	)		(716,778	)
Deficit		(21,935,093	)		(16,062,204	)
TOTAL SHAREHOLDERS' EQUITY		93,644,093			84,424,752
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	95,147,510		$	85,061,932
CONTINUING OPERATIONS (Note 1)
ON BEHALF OF THE BOARD
/s/ "Derek White"
Derek White, Director
/s/ "R. Michael Jones"
R. Michael Jones, Director

See accompanying notes to the consolidated financial statements.

MAG SILVER CORP.
(An exploration stage company)
Consolidated Statements of Loss and Comprehensive Loss
(expressed in Canadian dollars)
										Cumulative
										amount from
										April 21,
	Year ended			Year ended			Year ended			1999 to
	December 31,			December 31,			December 31,			December 31,
	2008			2007			2006			2008
EXPENSES
Accounting and audit	$	415,647		$	319,896		$	211,168		$	1,392,793
Amortization		39,945			13,909			16,820			102,455
Bank charges and interest		3,343			2,466			2,214			29,156
Filing and transfer agent fees		148,886			405,844			48,782			782,098
Foreign exchange (gain) loss		(96,596	)		260,598			12,479			240,811
Legal		884,000			232,980			89,810			1,638,940
Management and consulting fees		1,528,630			778,228			485,993			3,565,324
Mineral property costs written off		1,221,019			763,434			-			1,984,453
Property investigation expense		7,432			43,464			-			55,747
Shareholder relations		404,776			354,075			288,687			1,299,977
Stock compensation expense		2,539,011			5,256,566			2,341,159			11,071,525
Telephone and office		506,332			389,980			365,880			1,809,794
Travel		235,144			243,422			212,168			1,044,298
Other write-offs		-			-			-			255,093
		7,837,569			9,064,862			4,075,160			25,272,464
LOSS BEFORE THE FOLLOWING		(7,837,569	)		(9,064,862	)		(4,075,160	)		(25,272,464	)
INTEREST INCOME		1,964,680			915,604			208,593			3,337,371
NET LOSS FOR THE PERIOD	$	(5,872,889	)	$	(8,149,258	)	$	(3,866,567	)	$	(21,935,093	)
OTHER COMPREHENSIVE LOSS
CURRENCY TRANSLATION ADJUSTMENT		(304,458	)		(716,778	)		-			(1,021,236	)
UNREALIZED LOSS ON MARKETABLE
SECURITIES		(6,454	)		-			-			(6,454	)
COMPREHENSIVE LOSS FOR THE PERIOD	$	(6,183,801	)	$	(8,866,036	)	$	(3,866,567	)	$	(22,962,783	)
BASIC AND DILUTED
LOSS PER SHARE	$	(0.12	)	$	(0.19	)	$	(0.10	)
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING		48,791,348			42,411,815			37,055,631

See accompanying notes to the consolidated financial statements.

MAG SILVER CORP.
(An exploration stage company)
Consolidated Statements of Shareholders' Equity
(expressed in Canadian dollars)																	Deficit
														Accumulated			accumulated
	Common shares				Common share									other			during the			Total			Total
	without par value				purchase warrants						Contributed			comprehensive			exploration			Deficit			shareholders'
	Shares		Amount		Number			Amount			Surplus			loss ("AOCL")			stage			and "AOCL"			equity
Balance, December 31, 2005		36,191,648	$	20,812,185		-		$	-		$	915,979		$	-		$	(4,046,379	)	$	(4,046,379	)	$	17,681,785
Issued for cash		245,716		577,433		-			-			-			-			-			-			577,433
Issued to obtain mineral property
option rights		85,043		204,431		-			-			-			-			-			-			204,431
Warrants exercised		944,503		1,275,079		-			-			-			-			-			-			1,275,079
Stock options exercised		461,700		564,814		-			-			(197,944	)		-			-			-			366,870
Stock options expense		-		-		-			-			2,341,159			-			-			-			2,341,159
Net loss		-		-		-			-			-			-			(3,866,567	)		(3,866,567	)		(3,866,567	)
Balance, December 31, 2006		37,928,610		23,433,942		-			-			3,059,194			-			(7,912,946	)		(7,912,946	)		18,580,190
Issued for cash (Note 8 (a))		5,760,000		59,955,443		1,380,000			2,692,571			-			-			-			-			62,648,014
Warrants exercised		2,883,486		6,468,783		(243,000	)		(474,127	)		-			-			-			-			5,994,656
Stock options exercised		382,100		1,247,472		-			-			(436,110	)		-			-			-			811,362
Stock options expense		-		-		-			-			5,256,566			-			-			-			5,256,566
Translation adjustment		-		-		-			-			-			(716,778	)		-			(716,778	)		(716,778	)
Net loss		-		-		-			-			-			-			(8,149,258	)		(8,149,258	)		(8,149,258	)
Balance, December 31, 2007		46,954,196		91,105,640		1,137,000			2,218,444			7,879,650			(716,778	)		(16,062,204	)		(16,778,982	)		84,424,752
Issued for cash		-		11,936		-			-			-			-			-			-			11,936
Warrants exercised		1,137,000		13,588,444		(1,137,000	)		(2,218,444	)		-			-			-			-			11,370,000
Stock options exercised		1,064,370		2,316,996		-			-			(834,801	)		-			-			-			1,482,195
Stock options expense		-		-		-			-			2,539,011			-			-			-			2,539,011
Translation adjustment		-		-		-			-			-			(304,458	)		-			(304,458	)		(304,458	)
Unrealized loss on marketable
securities		-		-		-			-			-			(6,454	)		-			(6,454	)		(6,454	)
Net loss		-		-		-			-			-			-			(5,872,889	)		(5,872,889	)		(5,872,889	)
Balance, December 31, 2008		49,155,566	$	107,023,016		-		$	-		$	9,583,860		$	(1,027,690	)	$	(21,935,093	)	$	(22,962,783	)	$	93,644,093

See accompanying notes to the consolidated financial statements.

MAG SILVER CORP.
(An exploration stage company)
Consolidated Statements of Cash Flows
(expressed in Canadian dollars)
				Cumulative
				amount from
				April 21,
	Year ended	Year ended	Year ended	1999 to
	December 31,	December 31,	December 31,	December 31,
	2008	2007	2006	2008
OPERATING ACTIVITIES
Net loss for the period	$   (5,872,889)	$   (8,149,258)	$ (3,866,567)	$(21,686,965)
Items not involving cash:
Other write-offs	-	-	-	255,093
Amortization	39,945	13,909	16,820	102,455
Mineral property costs written off (Note 7)	1,221,019	763,434	-	1,984,453
Non-cash stock compensation expense	2,539,011	5,256,566	2,341,159	11,071,525
Changes in operating assets and liabilities
Accounts receivable	(1,692,177)	(373,992)	(167,963)	(2,339,203)
Interest receivable	91,374	(58,081)	(88,815)	(81,934)
Prepaid expenses	(60,483)	(8,703)	(18,729)	(110,152)
Accounts payable and accrued liabilities	605,237	(52,188)	(43,253)	903,417
	(3,128,963)	(2,608,313)	(1,827,348)	(9,901,311)
INVESTING ACTIVITIES
Purchase of equipment and leasehold improvements	(84,368)	(4,693)	(8,238)	(171,667)
Purchase of marketable securities	(10,570)	-	-	(10,570)
Advances to Minera Los Lagartos, S.A. de C.V.	-	-	-	(113,139)
Acquisition of Minera Los Lagartos, S.A. de C.V.	-	-	-	(357,500)
Investment in Juanicipio JV	(2,522,844)	(3,620,630)	(98,957)	(9,104,650)
Mineral rights	(2,025,488)	(819,789)	(441,598)	(3,359,021)
Deferred exploration costs	(12,976,644)	(5,760,230)	(3,896,504)	(26,103,912)
Other	-	-	-	(252,420)
	(17,619,914)	(10,205,342)	(4,445,297)	(39,472,879)
FINANCING ACTIVITIES
Issue of share capital	12,864,131	69,454,032	2,219,382	101,509,879
Issue of special warrants	-	-	-	375,000
	12,864,131	69,454,032	2,219,382	101,884,879
INCREASE (DECREASE) IN CASH	(7,884,746)	56,640,377	(4,053,263)	52,510,689
CASH AND EQUIVALENTS, BEGINNING OF PERIOD	60,147,307	3,506,930	7,560,193	-
CASH AND EQUIVALENTS, END OF PERIOD
(Note 2 (e))	$  52,262,561	$  60,147,307	$   3,506,930	$  52,510,689
Interest paid	$                 -	$                 -	$               -	$         12,500
Non-cash investing and financing activities:
Issue of shares in connection with acquisitions	$                 -	$                 -	$               -	$       430,000
Issue of shares in exchange for mineral property
option rights	$                 -	$                 -	$      204,431	$    3,220,472

See accompanying notes to the consolidated financial statements.

MAG SILVER CORP.

(An exploration stage company)

Notes to the Consolidated Financial Statements

1.           CONTINUING OPERATIONS

MAG Silver Corp (“the Company” or “MAG”) was incorporated on April 21, 1999 under the Company Act of the Province of British Columbia and its shares were listed on the TSX Venture Exchange on April 21, 2000. On October 5, 2007, the Company moved to the TSX.  Unless the context requires otherwise, references in these consolidated financial statements to the Company include the subsidiaries of the Company whose financial results are consolidated in these financial statements.

The Company is an exploration company working on mineral properties it has staked or acquired by way of option agreement, principally in Mexico. The Company has not yet determined whether these mineral properties contain any economically recoverable ore reserves. 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 any revenue generating operations. 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. If the going concern assumption was not appropriate, the financial statements would require revision and restatement on a liquidation basis.

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.

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 16 to these consolidated financial statements.

(a)           Principles of consolidation

The financial statements of entities which are controlled by the Company through voting equity interests, referred to as subsidiaries, are 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 there 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, 2008 is Minera Los Lagartos, S.A. de C.V. (“Lagartos”) which holds several properties in Mexico.

Investments where the Company has the ability to exercise significant influence, generally where the Company has a 20% to 50% equity interest, are accounted for using the equity method. Under this method, the Company’s share of the investee’s earnings or losses is included in operations and its investments therein are adjusted by a like amount. Dividends received from these investments are credited to the investment accounts.

The Company’s 44% interest in the Juanicipio Joint Venture (Note 6) is recorded using the equity method.

(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.

(c)           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.

(d)           Financial instruments

The carrying values of cash and cash equivalents, accounts receivable, interest receivable, accounts payable, and accrued liabilities reported 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.

(e)           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.  The Company holds no asset backed commercial paper.

Details of cash and cash equivalents are as follows:

	Dec. 31, 2008		Dec. 31, 2007
Cash	$	52,262,561	$	912,205
Short-term deposits		-		59,235,102
	$	52,262,561	$	60,147,307

(f)           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.

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.

(g)           Equipment and leaseholds

Equipment and leaseholds are recorded at cost and are amortized at the following annual rates:

Computer equipment and software                                30% declining balance

Field equipment                                                                30% declining balance

Leasehold improvements                                                  2 years straight line

 (h)           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 substantive enactment.

(i) Translation of foreign currencies

The Company’s functional currency is the Canadian dollar. For integrated foreign operations, monetary assets and liabilities are translated at year end exchange rates and other assets and liabilities are translated at historical rates. Revenues, expenses and cash flows are translated at average exchange rates. Gains and losses on translation of monetary assets and monetary liabilities are charged to operations.

The accounts of self-sustaining foreign operations are translated at year end exchange rates, and revenues and expenses are translated at average exchange rates. Differences arising from these foreign currency translations are recorded in accumulated other comprehensive income as a cumulative translation adjustment until they are realized by a reduction in the investment.

(j)           Stock-based compensation

The fair value of all stock-based compensation and other stock-based payments are estimated using the Black-Scholes-Merton option valuation model and are recorded in operations over their vesting periods.

The total compensation expense recognized in the statement of operations for share purchase options granted during the year ended December 31, 2008 amount to $2,539,011 (2007 - $5,256,566). Please refer to Note 8 (b) for a summary of stock options granted in the current year and the related valuation assumptions.

(k)           Earnings (loss) per common share

Basic earnings (loss) per share calculations are based on the weighted average number of common shares outstanding.

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.

For the year ended December 31, 2008, the Company had 3,312,407 (2007 – 4,942,700) common share equivalents consisting of the common shares issuable upon the exercise of outstanding exercisable stock options and share purchase warrants.  These common share equivalents were not included for the purpose of calculating fully diluted earnings per share as their effect would be anti-dilutive.

(l)           Comparative figures

Certain of the prior years’ comparative figures have been reclassified to conform with the classifications used in 2008. The Mineral Rights and Deferred Exploration costs table in Note 7 and the Differences between Canadian and United States Generally Accepted Accounting Principles disclosure in Note 16 have been reclassified.

(m)           Comprehensive Income

Effective January 1, 2007, the Company adopted CICA Handbook Section 1530, Comprehensive Income, CICA Handbook Section 3861, Financial Instrument Presentation and Disclosure, CICA Handbook Section 3855, Financial Instruments – Recognition and Measurement, CICA Handbook Section 3865, Hedges, and CICA Handbook Section 3251, Equity.  These new Handbook Sections provide comprehensive requirements for the recognition and measurement of financial instruments, transaction costs incurred on financial instruments, as well as standards on when and how hedge accounting may be applied.  CICA Handbook Section 1530 also introduces a new component of equity referred to as other accumulated comprehensive income. Comprehensive income includes changes in shareholders’ equity during a period arising from non-owner sources and, for the Company, other comprehensive income includes currency translation adjustments on its net investment in self sustaining foreign operations. The new standards also require all derivatives to be recorded on the balance sheet at fair value and establish new accounting requirements for hedges. The Company has adopted these standards effective January 1, 2007. The adoption of these new standards had no material effect on the financial position or opening account balances on January 1, 2007. 

In accordance with these new standards, the Company now classifies all financial instruments as either held-to-maturity, available-for-sale, held-for-trading, loans and receivables, or other financial liabilities.  Financial assets held to maturity, loans and receivables and financial liabilities other than those held for trading, are measured at amortized cost.  Available-for-sale instruments are measured at fair value with unrealized gains and losses recognized in other comprehensive income.  Instruments classified as held for trading are measured at fair value with unrealized gains and losses recognized in the statement of operations.  Transaction costs are expensed as incurred.

Upon adoption of these new standards, the Company has designated its cash and cash equivalents as held-for-trading, which are measured at fair value.  Accounts receivable and other are classified as loans and receivables, which are measured at amortized cost.  Accounts payable and accrued liabilities, property and mining taxes payable, convertible debentures, notes payable, and accrued site closure costs are classified as other liabilities, which are measured at amortized cost.

The impact of adoption of these new standards on the results of operations for the year ended December 31, 2007 and financial position as at that date was the reporting of a currency translation loss of $716,778 recognized on December 31, 2007 as an item of other comprehensive loss for the year and the inclusion of that balance in accumulated other comprehensive loss within a separate component of shareholders’ equity.

(n) Adoption of new accounting pronouncements

On January 1, 2008, the Company adopted four new presentation and disclosure standards that were issued by the Canadian Institute of Chartered Accountants: Handbook Section 1535, Capital Disclosures ("Section 1535"), Handbook Section 3031, Inventories – (“Section 3031”), Handbook Section 3862, Financial Instruments - Disclosures ("Section 3862") and Handbook Section 3863, Financial Instruments - Presentation ("Section 3863").

 (i)           Capital disclosures – Section 1535

Section 1535, Capital Disclosures, establishes disclosure requirements regarding an entity’s capital, including (i) an entity’s objectives, policies, and processes of managing capital; (ii) quantitative data about what the entity regards as capital; (iii) whether the entity has complied with any externally imposed capital requirements; and (iv) if it has not complied, the consequences of such non-compliance. The new standard has had no impact on the consolidated financial position or results of operations for the year ended December 31, 2008.

(ii)           Inventories – Section 3031

Section 3031, Inventories, provides more guidance on the measurement and disclosure requirements for inventories. Specifically, the new pronouncement requires inventories to be measured at the lower of cost or net realizable value, and provides guidance on the determination of cost and its subsequent recognition as an expense, including any write-down to net realizable value. The new standard has had no impact on the consolidated financial position or results of operations for the year ended December 31, 2008.

(iii)           Financial instruments – Sections 3862 and 3863

Section 3862, Financial Instruments – Disclosures and Section 3863 Financial Instruments – Presentation replace Section 3861 Financial Instruments – Disclosure and Presentation. These new sections revise and enhance disclosure requirements while leaving presentation requirements unchanged. These new sections place increased emphasis on disclosures about the nature and extent of risks arising from financial instruments and how the entity manages those risks. The new standards have had no impact on the consolidated financial position or results of operations for the year ended December 31, 2008. Refer to the additional sensitivity disclosure in Note 10.

(iv)           Business Combinations

In January 2009, the CICA issued Section 1582, Business Combinations, Section 1601, Consolidations, and Section 1602, Non-controlling Interest. These new standards are harmonized with International Financial Reporting Standards (IFRS). Section 1582 specifies a number of changes, including: an expanded definition of a business, a requirement to measure all business acquisitions at fair value, a requirement to measure non-controlling interests at fair value, and a requirement to recognize acquisition-related costs as expenses. Section 1601 establishes the standards for preparing consolidated financial statements. Section 1602 specifies that non-controlling interests be treated as a separate component of equity, not as a liability or other item outside of equity. The new standards will become effective in 2011 but early adoption is permitted. The Company is evaluating the attributes of early adoption of this standard and its potential effects if events or transactions occurred that this standard applies to.

 (o) Recent Accounting Pronouncements

(i)           Goodwill and Intangible Assets

In February 2008, the CICA issued Section 3064, Goodwill and Intangible Assets, replacing Section 3062, Goodwill and Other Intangible Assets and Section 3450, Research and Development Costs. The new pronouncement establishes standards for the recognition, measurement, presentation, and disclosure of goodwill subsequent to its initial recognition and of intangible assets by profit-oriented enterprises. Standards concerning goodwill are unchanged from the standards included in the previous Section 3062. This Section is effective in the first quarter of 2009, and the Company is currently evaluating the impact of the adoption of this new Section on its consolidated financial statements.

(ii)           Convergence with International Financial Reporting Standards

In February 2008, the Canadian Accounting Standards Board confirmed that publicly accountable enterprises will be required to adopt IFRS for fiscal years beginning on or after January 1, 2011, with earlier adoption permitted. Accordingly, the conversion to IFRS will be applicable to the Company’s reporting no later than in the first quarter of 2011, with restatement of comparative information presented. The conversion to IFRS will impact the Company’s accounting policies, information technology and data systems, internal control over financial reporting, and disclosure controls and procedures. The transition may also impact business activities, such as foreign currency activities, certain contractual arrangements, capital requirements and compensation arrangements. The Company is currently evaluating the future impact of IFRS on its financial statements and will continue to invest in training and additional resources to ensure a timely conversion.

3.           ACCOUNTS RECEIVABLE

	Dec. 31, 2008		Dec. 31, 2007
Goods and services tax recoverable	$	44,633	$	50,314
Mexican value added tax ("IVA") recoverable		2,190,188		596,713
Other		104,383		-
	$	2,339,204	$	647,027

4.   MARKETABLE SECURITIES

At December 31, 2008, the Company has the following marketable securities:

Available-for-sale securities	Number of Shares		Cost ($)		Accumulated Unrealized Losses ($)		Fair Value ($)
Fresnillo PLC		1,000		10,570		6,454		4,116

During the year ended December 31, 2008 the Company recognized an unrealized loss of $6,454 (2007 - $nil) on marketable securities designated as available-for-sale instruments in other comprehensive income. Management believes that the change in fair value of its marketable security is only temporary.

Fresnillo PLC

In 2008 the Company purchased 1,000 shares of Fresnillo plc, a company which holds a 56% interest in Minera Juanicipio, S.A. de C.V. (Note 6).

5.   EQUIPMENT AND LEASEHOLDS

	December 31, 2008
			Accumulated		Net book
	Cost		depreciation		value
Computer equipment
and software	$	60,709	$	33,018	$	27,691
Field equipment		67,201		38,135		29,066
Leasehold improvements		26,084		16,302		9,782
	$	153,994	$	87,455	$	66,539

	December 31, 2007
			Accumulated		Net book
	Cost		depreciation		value
Computer equipment
and software	$	33,755	$	21,152	$	12,603
Field equipment		35,191		25,678		9,513
Leasehold improvements		15,680		15,680		-
	$	84,626	$	62,510	$	22,116

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 two year term of the related lease.

6.           INVESTMENT IN MINERA JUANICIPIO S.A. DE C.V.

Pursuant to an original option agreement dated July 18, 2002 and subsequent corporate acquisitions the Company acquired a 100% interest in the Juanicipio Property in exchange for total consideration of $919,458. Of this amount, $656,125 was paid in cash and 366,667 common shares of the Company were issued at a value of $263,333.

Pursuant to a letter of intent dated March 17, 2005 and a formal agreement effective July 1, 2005 (the “Agreement”) with Industrias Peñoles, S.A. de C.V. (“Peñoles”), the Company granted to Peñoles or any of its subsidiaries an option to earn a 56% interest in the Juanicipio Property in Mexico in consideration for Peñoles conducting US$5,000,000 of exploration on the property over four years and Peñoles purchasing US$1,000,000 of Common Shares of the Company in two tranches for US$500,000 each.

In mid 2007, Peñoles met all of the earn-in requirements of the Agreement.  In December 2007, the Company and Peñoles created an operating company named Minera Juanicipio, S.A. de C.V. (“Minera Juanicipio”) for the purpose of holding and operating the Juanicipio Property. In 2008, Peñoles restructured and transferred its 56% interest of Minera Juanicipio into a new company called Compania Fresnillo S.A. de C.V., which then transferred its interest to Fresnillo plc (“Fresnillo”) pursuant to a statutory merger.  Minera Juanicipio is held as to 56% by Fresnillo and 44% by the Company.  In December 2007 all mineral rights and surface rights relating to the Juanicipio project held by the Company and Peñoles, respectively, were ceded into Minera Juanicipio.  Minera Juanicipio is currently governed by a shareholders agreement.  All costs relating to the project and Minera Juanicipio are required to be shared by the Company and Fresnillo pro-rata based on their ownership interests in Minera Juanicipio.

To capitalize Minera Juanicipio, the Company invested 63.40 million pesos ($6.025 million) into Minera Juanicipio while Peñoles invested 80.69 million pesos ($7.668 million). MAG then received a payout from Minera Juanicipio of 26.41 million pesos ($2.510 million) against its contribution of the Juanicipio mineral rights while Peñoles received 70.28 million pesos ($6.679 million) against its contribution of surface rights and the Company’s 44% share of exploration costs incurred by Peñoles subsequent to the completion of their earn-in and up to December 31, 2007.

The Company has recorded its investment in Minera Juanicipio using the equity basis of accounting. The cost of the investment includes the carrying value of the deferred exploration and mineral and surface rights costs incurred by the Company on the Juanicipio Property and contributed to Minera Juanicipio plus the required net cash investment to establish its 44% interest.

Effective December 31, 2007 the Company concluded that the functional currency of Minera Juanicipio was the Mexican peso as expenditures in Minera Juanicipio were principally being incurred in pesos and funded by advances from the venturers which were denominated in pesos. The Company translates its net investment in Minera Juanicipio using the current rate method with translation gains and losses recorded in other comprehensive loss which is a component of shareholders’ equity, until there is a realized reduction in the net investment.

The Company owns a 44% interest in Minera Juanicipio. The Company’s historical investment relating to its interest in the Juanicipio property and Minera Juanicipio are detailed as follows:

	Dec. 31, 2008	Dec. 31,2007
Camp costs	$         14,024	$         13,108
Geological	78,452	66,190
Geophysical	8,163	10,905
Gov't fees and licenses	10,131	8,764
Travel	5,736	3,906
Site administration	1,667	2,292
Cash contributions to the Minera Juanicipio	2,404,671	6,025,018
	2,522,844	6,130,183
Balance, beginning of year	5,948,361	3,044,509
	$    8,471,205	$    9,174,692
Recoveries	-	(2,509,553)
Translation adjustment	(304,458)	(716,778)
Balance, end of year	$    8,166,747	$    5,948,361

Summary of the Audited Statements of Minera Juanicipio

At December 31, 2008 the assets of Minera Juanicipio consisted of cash and short term investments in the amount of 18.67 million pesos ($1.65 million), value added taxes recoverable and other receivables in the amount of 7.74 million pesos ($0.68 million) and mineral, surface rights and exploration expenditures in the amount of 175.35 million pesos ($15.52 million).  Payables to Peñoles and other vendors for exploration work amounted to 0.66 million pesos ($58,800) while shareholders equity was 201.09 million pesos ($17.80 million).

7.           MINERAL RIGHTS AND DEFERRED EXPLORATION COSTS

          For the year ended December 31, 2008

	(Batopilas)								Sierra de		Cinco de
	Don Fippi		Guigui		Lagartos NW		Lagartos SE		Ramirez		Mayo		Sello			Other		Total
Acquisition costs of
mineral rights
Bal., beginning of year	$	1,422,672	$	1,571,172	$	50,032	$	-	$	800,736	$	610,448	$	105,852		$	510,495	$	5,071,407
Incurred during year		-		-		-		36,458		559,011		762,968		12,983			555,068		1,926,488
Less amounts written off		-		-		-		-		-		-		(118,835	)		-		(118,835	)
Balance, end of year	$	1,422,672	$	1,571,172	$	50,032	$	36,458	$	1,359,747	$	1,373,416	$	-		$	1,065,563	$	6,879,060
Deferred exploration costs
Camp costs	$	92,205	$	-	$	22,855	$	79,831	$	19,892	$	322,858	$	13,429		$	65,541	$	616,611
Drilling		913,389		-		778,171		537,063		-		6,084,484		485,327			458,376		9,256,810
Geochemical		59,362		-		4,623		45,229		847		384,988		13,584			19,432		528,065
Geological		260,151		-		93,775		209,652		55,298		807,465		48,665			258,769		1,733,775
Geophysical		63,829		-		8,162		3,398		2,063		214,263		-			-		291,715
Gov't fees and licenses		9,774		12,529		162,886		204,838		37,440		77,380		27,424			101,617		633,888
Site administration		14,863		-		6,453		12,120		4,426		44,452		2,535			13,252		98,101
Travel		36,988		-		6,377		17,522		10,677		58,062		6,696			33,694		170,016
Transport and shipping		2,623		-		805		629		-		3,405		50			151		7,663
		1,453,184		12,529		1,084,107		1,110,282		130,643		7,997,357		597,710			950,832		13,336,644
Bal., beginning of year		3,344,413		1,450,400		120,853		4,220,148		434,628		2,775,679		504,474			152,143		13,002,738
Less amounts written off		-		-		-		-		-		-		(1,102,184	)		-		(1,102,184	)
Balance, end of year	$	4,797,597	$	1,462,929	$	1,204,960	$	5,330,430	$	565,271	$	10,773,036	$	-		$	1,102,975	$	25,237,198

              For the year ended December 31, 2007

	(Batopilas)								Sierra de					Cinco de
	Don Fippi		Guigui		Lagartos NW		Lagartos SE		Ramirez		Adargas			Mayo		Sello		Other			Total
Acquisition costs of
mineral rights
Bal., beginning of year	$	1,422,672	$	1,571,172	$	50,032	$	-	$	527,645	$	432,061		$	428,610	$	28,143	$	124,344		$	4,584,679
Incurred during year		-		-		-		-		273,091		-			181,838		77,709		399,253			931,891
Less amounts written off		-		-		-		-		-		(432,061	)		-		-		(13,102	)		(445,163	)
Balance, end of year	$	1,422,672	$	1,571,172	$	50,032	$	-	$	800,736	$	-		$	610,448	$	105,852	$	510,495		$	5,071,407
Deferred exploration costs
Camp costs	$	126,424	$	439	$	1,596	$	65,246	$	2,814	$	-		$	76,692	$	14,942	$	9,112		$	297,265
Drilling		477,758		-		-		1,367,777		-		-			1,048,855		385,505		-			3,279,895
Geochemical		54,735		-		299		51,220		-		-			54,195		8,316		-			168,765
Geological		398,558		8,469		7,517		169,436		31,323		-			229,781		47,994		43,852			936,930
Geophysical		117,382		50,890		36,666		206,199		205,468		875			56,175		36,606		-			710,261
Gov't fees and licenses		6,495		12,320		73,381		128,604		35,500		882			58,327		3,105		96,767			415,381
Site administration		27,449		1,136		831		18,085		658		-			14,897		2,842		1,061			66,959
Travel		51,445		226		563		13,110		9,735		-			23,283		5,164		1,406			104,932
Transport and shipping		1,322		627		-		3,110		-		1,681			-		-		-			6,740
		1,261,568		74,107		120,853		2,022,787		285,498		3,438			1,562,205		504,474		152,198			5,987,128
Bal., beginning of year		2,082,845		1,376,293		-		2,197,361		149,130		314,778			1,213,474		-		-			7,333,881
Less amounts written off		-		-		-		-		-		(318,216	)		-		-		(55	)		(318,271	)
Balance, end of year	$	3,344,413	$	1,450,400	$	120,853	$	4,220,148	$	434,628	$	-		$	2,775,679	$	504,474	$	152,143		$	13,002,738

(a)         Don Fippi (Batopilas) Property

The Company has a 100% interest in the Don Fippi mining concessions located in the Batopilas, Chihuahua district of Mexico, subject to a royalty of 4.5% of the Net Smelter returns obtained from the property. To December 31, 2008, the Company has incurred $4,797,597 in exploration costs on the property.

(b)           Guigui Property

The Company has a 100% interest in mining concessions located in the Santa Eulalia (Guigui), Chihuahua district of Mexico, subject to a royalty of 2.5% of the Net Smelter returns obtained from the property. To December 31, 2008, the Company has incurred $1,462,929 in exploration costs on the property.

(c)           Lagartos Properties

The Company has acquired a 100% interest in exploration concessions on mining claims (Lagartos) 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.

During the year ended December 31, 2008, the Company entered into an option agreement to acquire a 100% interest in certain mining concessions internal to the Lagartos SE property. The Company is obligated to make scheduled cash payments totalling US$500,000 (of which $ 36,458 (US$30,000) has been paid) to June 10, 2011.

To December 31, 2008, the Company has incurred $1,204,960 in exploration costs on the Lagartos NW property and $5,330,430 in exploration costs on the Lagartos SE property.

(d)           Sierra Ramirez Property

Under a 2003 agreement, as later amended in 2006, the Company has an option to acquire a 100% interest in certain mining concessions located in the Sierra Ramirez district in Durango, Mexico. Under the amended terms, the Company will issue Minera Rio Tinto S.A. de C.V. 20,000 common shares ($55,000) of the Company (issued) and make scheduled cash payments totalling US$1,300,000 (of which US$375,000 has been paid or accrued) to December 14, 2010, with a final payment of US$650,000 of which up to US$500,000 may be paid in the common shares of the Company.  The Company also paid a finder’s fee of 25,000 common shares ($25,746) of the Company in relation to this property.  To December 31, 2008, the Company has incurred $565,271 in exploration costs on the property.

During the year ended December 31, 2007, the Company entered into five separate option agreements to acquire a 100% interest in certain mining concessions all of which are internal to the Sierra Ramirez property. The Company is obligated to make scheduled cash payments totalling US$5,537,325 (of which $485,749 (US$415,625) has been paid) to December 31, 2013.

      (e)           Adargas Property

On February 14, 2004, the Company entered into an option agreement to acquire a 100% interest in the Adargas property. During the period ended June 30, 2007 the Company terminated its option agreement, and consequently, total deferred acquisition and exploration costs of $750,277 were written-off.

 (f)           Cinco de Mayo Property

On February 26, 2004, the Company entered into an option agreement to 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, as later amended, the Company was obligated to make scheduled cash and share payments together worth US$1,000,000 (US$650,000 in cash and share payments made) and incur certain exploration expenditures totalling US$1,000,000 by July 26, 2009 (incurred). To December 31, 2008, the Company paid $661,721(US$550,000) in cash, issued 165,670 common shares at a value of $266,630 and completed approximately $10,773,036 in exploration costs.

During the year ended December 31, 2008, the Company acquired a 100% interest in certain mining concessions internal to the Cinco de Mayo property from two separate vendors. The Company made a one-time payment of $445,065 (US$350,000) for these mining concessions.

(g) Sello Property

On December 8, 2006, the Company entered into an agreement to acquire a 100% interest in the Sello and Sello Uno claims located in Zacatecas State, by making scheduled option payments totalling US$1,000,000 plus applicable value added tax over a three year period (of which $52,816 (US$50,000) has been paid to March 31, 2008). During the current year the Company entered into an agreement to acquire a 100% interest in the El Oro claims located in Zacatecas State, by making scheduled option payments totalling US$125,000 plus applicable value added tax over one year (of which $66,019 (US$62,500) was paid to March 31, 2008). It was decided in April 2008 that the Company would terminate these option agreements, and consequently, total deferred acquisition and exploration costs of $1,221,019 were written-off as of June 30, 2008.

(h)           Other Properties

During the years ending December 31, 2006 to December 31, 2008, the Company optioned other exploration concessions on several mining claims in Mexico. To December 31, 2008, the Company has paid $1,065,563 in acquisition costs. The Company is obligated to make additional scheduled cash payments totalling US$2,180,000 to October 31, 2013 if it plans to maintain these concessions.

The other properties consist of the Zacatecas claims, the La Lorena claims, the Nuevo Mundo claims, the Camino Duro claims, and the Salemex claim options. During the year ended December 31, 2008, the Company completed approximately $812,814 in exploration costs including $458,376 in drilling costs on the La Lorena claims. Another $138,018 in exploration costs were spent on the remaining other properties.

8.           SHARE CAPITAL

(a)           Issued and outstanding

At December 31, 2008, there were 49,155,566 shares outstanding.

During the year ended December 31, 2008, 1,137,000 share purchase warrants were exercised for proceeds of $11,370,000 and 1,064,370 stock options were exercised for cash proceeds of $1,482,195.

During the year ended December 31, 2007, 2,883,486 share purchase warrants were exercised for proceeds of $5,994,656 and 382,100 stock options were exercised for cash proceeds of $811,362.

On November 27, 2007, the Company closed a brokered private placement for 3,000,000 common shares of the Company at a price of $15.50 per share for gross proceeds of $46,500,000. The Company paid a 5.0% commission to the underwriters on this placement. Legal, syndicate, and filing costs totaled an additional $208,484.

On February 14, 2007, the Company closed a brokered private placement for 2,550,000 units at $7.25 a unit for gross proceeds of $18,487,500. Each unit was comprised of one common share and one-half of one common share purchase warrant, with each whole warrant exercisable for one common share at a price of $10.00 until February 14, 2008. Of the gross proceeds, $15,999,799 was assigned to the common shares included in the units and $2,487,701 to the warrants. The Company paid a 6.0% cash commission to the underwriters on this placement. Legal, syndicate, and filing costs totaled an additional $127,902.

On February 14, 2007, the Company closed a non-brokered private placement for 195,000 units, while a further 15,000 units were closed February 15, 2007 for a total of 210,000 at $7.25 a unit for gross proceeds of $1,522,500. Each unit is comprised of one common share and one-half of one common share purchase warrant, with each whole warrant exercisable for one common share at a price of $10.00 until February 14, 2008 (and in some cases February 15, 2008).  Of the gross proceeds, $1,317,630 was assigned to the common shares included in the units and $204,870 to the warrants. The Company paid a 6.0% finder’s fee on this placement comprised of $91,350 in cash.

 (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.  The Company has proposed an amendment to the existing plan for approval by Shareholders at the upcoming Annual General and Special Meeting which includes fixing the maximum number of stock options which may be granted to 4,921,056 (10% of the current issued and outstanding common shares of the Company).  For more information on the current Stock Option Plan or the Amendments to the Stock Option Plan go to www.sedar.com.

The following table summarizes options outstanding at December 31, 2008:

		Number		Weighted average		Weighted
		outstanding at		remaining		average
Exercise		Dec. 31,		contractual life		exercise
price		2008		(years)		price
$	1.00		60,000		1.92		1.00
	1.06		525,000		1.05		1.06
	1.14		15,000		1.76		1.14
	2.00		50,000		2.46		2.00
	2.46		145,000		2.56		2.46
	3.00		505,000		2.10		3.00
	3.12		18,000		2.67		3.12
	3.56		13,000		2.22		3.56
	4.04		152,830		2.25		4.04
	5.36		477,500		2.95		5.36
	7.56		35,000		3.07		7.56
	7.62		50,000		4.73		7.62
	8.80		200,000		3.15		8.80
	9.40		45,000		3.25		9.40
	10.01		241,202		4.50		10.01
	12.91		279,875		4.12		12.91
	13.75		25,000		3.77		13.75
	14.15		425,000		3.79		14.15
	14.70		50,000		3.59		14.70
			3,312,407		2.81	$	6.59

At December 31, 2008 a total of 3,269,907 of the outstanding share options were exercisable, having a weighted average remaining contractual life of 2.80 years and a weighted average exercise price of $6.55.

At the date the Agreements are entered into, the exercise price of each option is set no lower than the fair value of the common shares at the date of grant.

  The following table summarizes the Company’s options:

	Period ended			Weighted		Period ended			Weighted
	Dec. 31,			average		Dec. 31,			average
	2008			exercise		2007			exercise
				price					price
Balance outstanding,
beginning of year		3,805,700		$	4.44		3,352,800		$	2.31
Activity during the period
Options granted		578,765			11.23		835,000			11.93
Options forfeited		(7,688	)		11.75		-			-
Options exercised		(1,064,370	)		1.39		(382,100	)		2.12
Balance outstanding,
end of period		3,312,407		$	6.59		3,805,700		$	4.44

During the year ended December 31, 2008, the Company granted 578,765 stock options, of which 7,688 were later cancelled, (December 31, 2007 – 835,000 granted and nil cancelled). The Company has recorded $2,539,011 (December 31, 2007 - $5,256,566) of compensation expense relating to stock options vested to employees and consultants in the year ended December 31, 2008.

For the year ended December 31, 2008, 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 49%, an annual risk free interest rate of 3.37% and on expected remaining term to expiry of three years.  (December 31, 2007 – assuming: no dividends are to be paid, a weighted average volatility of the Company’s share price of 81.5%, an annual risk free interest rate of 4.27% and an expected remaining term to expiry of three years.)

 (c)           Share purchase warrants

				Weighted
				average
	Number			exercise
	of warrants			price
Balance at December 31, 2006		2,640,486			1.35
Issued in connection with issuance of common
shares		1,380,000			10.00
Exercised and converted into common shares		(2,883,486	)		2.08
Balance at December 31, 2007		1,137,000		$	10.00
Exercised and converted into common shares		(1,137,000	)		10.00
Balance at December 31, 2008		-		$	-

9.           CAPITAL RISK MANAGEMENT

The Company’s objectives in managing its liquidity and capital are to safeguard the Company’s ability to continue as a going concern and to provide financial capacity to meet its strategic objectives. The capital structure of the Company consists of equity attributable to common shareholders, comprising of issued share capital, common share purchase warrants, contributed surplus, accumulated other comprehensive loss and accumulated deficit.

The Company manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust the capital structure, the Company may attempt to issue new shares, issue new debt, acquire or dispose of assets.

In order to facilitate the management of its capital requirements, the Company prepares annual expenditure budgets that are updated as necessary depending on various factors, including successful capital deployment and general industry conditions. The annual and updated budgets are approved by the Board of Directors. The Company does not pay out dividends.

As at December 31, 2008, the Company does not have any long-term debt and is not subject to any externally imposed capital requirements.

The Company expects its current capital resources will be sufficient to carry its exploration and development plans and operations through its current operating period.

10.           FINANCIAL RISK MANAGEMENT

The Company’s operations consist of the acquisition, exploration and development of district scale projects in the Mexican silver belt. The Company examines the various financial risks to which it is exposed and assesses the impact and likelihood of occurrence. These risks may include credit risk, liquidity risk, currency risk, interest rate risk and other price risks. Where material, these risks are reviewed and monitored by the Board of Directors.

(a)           Credit risk

Counterparty credit risk is the risk that the financial benefits of contracts with a specific counterparty will be lost if a counterparty defaults on its obligations under the contract. This includes any cash amounts owed to the Company by those counterparties, less any amounts owed to the counterparty by the Company where a legal right of set-off exists and also includes the fair values of contracts with individual counterparties which are recorded in the financial statements.

(i)           Trade credit risk

The Company is in the exploration stage and has not yet commenced commercial production or sales. Therefore, the Company is not exposed to significant credit risk and overall, the Company’s credit risk has not changed significantly from the prior year.

  (ii)           Cash and cash equivalents

In order to manage credit and liquidity risk the Company’s policy is to invest only in highly rated investment grade instruments that have maturities of three months or less. Limits are also established based on the type of investment, the counterparty and the credit rating. At year end there were no cash equivalents.

(iii)         Derivative financial instruments

As at December 31, 2008, the Company has no derivative financial instruments. MAG may in the future enter into derivative financial instruments in order to manage credit risk. Only derivative financial instruments with highly rated investment grade counterparties will be considered.

   (iv) Mexcian value added tax

 At year end the Company had a receivable of $2,190,188 from the Mexican government for value added tax. Although full recovery is expected by management, recoveries to date have been intermittent.

The Company’s maximum exposure to credit risk on its Mexican operations at December 31, 2008 is as follows:

	Dec. 31, 2008		Dec. 31, 2007
Cash	$	414,359	$	2,409,429
Accounts Receivable		2,294,571		596,713
	$	2,708,930	$	3,006,142

(b)           Liquidity risk

The Company has in place a planning and budgeting process to help determine the funds required to support the Company's normal operating requirements and its exploration and development plans. The annual budget is approved by the Board of Directors. The Company ensures that there are sufficient cash balances to meet its short-term business requirements.

The Company's overall liquidity risk has not changed significantly from the prior year.

(c)           Currency risk

The Company’s functional currency is the Canadian dollar and therefore the Company's net earnings and other comprehensive earnings are impacted by fluctuations in the value of foreign currencies in relation to the Canadian dollar. The Company's foreign currency exposures comprise limited amounts of cash and cash equivalents and accounts payable and accrued liabilities denominated in Mexican pesos and United States 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 United States dollars. The Company does not use any derivative instruments to reduce its exposure to fluctuations in foreign exchange rates.  Appreciation in the Mexican peso or the United States dollar against the Canadian dollar will increase our cost of operations. A decrease in the United States dollar or the Mexican peso against the Canadian dollar will result in a loss on our books to the extent we hold funds in either currency. The Company is also exposed to inflation risk in Mexico.

The most significant foreign exchange impact on the Company’s net income is the translation of foreign currency based earnings into Canadian dollars in each reporting period. All of the Company’s foreign subsidiaries report their operating results in currencies other than the Canadian dollar. Therefore, exchange rate movements in the Mexican peso relative to the Canadian dollar will impact the consolidated results of the Mexican operations in Canadian dollar terms.

The sensitivity of the Company's net loss and other comprehensive loss for the year ended December 31, 2008 due to changes in the exchange rate for the Mexican peso in relation to the Canadian dollar is summarized in the following table expressed as the increase in the net loss and comprehensive loss for each 10% appreciation in the Canadian dollar:

Net Loss	$                                1,853,288
Other comprehensive loss	507,662
Comprehensive loss	$                                2,360,950

A 10% depreciation in the Canadian dollar against the Mexican peso would have a similar decrease in net loss.

 (d)           Interest rate risk

The Company’s interest revenue earned on cash and cash equivalents and on short term investments is exposed to interest rate risk. A continued decrease in interest rates as was seen at the end of 2008 would result in lower interest income in 2009.

11.           FAIR VALUE DISCLOSURES

The carrying values of cash and cash equivalents, marketable securities and accounts payable reported in the consolidated balance sheet approximate their respective fair values.

12.           SEGMENTED INFORMATION

The Company operates in one segment, being the exploration of mineral properties in Mexico. Substantially all of the Company’s long term assets are located in Mexico and the Company’s executive and head office is located in Canada.

13.           RELATED PARTY TRANSACTIONS

For the year ended December 31, 2008, a private company controlled by an officer of the Company received $170,424 in compensation for consulting services (2007 - $163,840). During the year ended December 31, 2008, the officer became an employee of the Company and received $72,085 in compensation as salary and bonus for management services (2007 - $Nil).

The Company paid or accrued non-executive directors fees of $305,750 during the year ended December 31, 2008 (2007 - $138,895).

The Company is party to a Field Services Agreement, whereby it has contracted exploration services in Mexico with MINERA CASCABEL S.A. de C.V. (“Cascabel”) and IMDEX Inc. (“Imdex”).  As of January 2006, these companies have a common director with the Company.  During the period ended December 31, 2008, the Company accrued or paid Cascabel and Imdex consulting, administration and travel fees totaling $194,590 (2007 - $134,720) and exploration costs totaling $2,504,237 (2007 - $1,312,826) under the Field Services Agreement.

During the year ended December 31, 2003, the Company entered into an office services agreement with Platinum Group Metals Ltd., a company with two common directors and common officer. During the year ended December 31, 2008, the Company accrued or paid Platinum Group Metals Ltd. $135,777 under the office service agreement (2007 - $136,374).

During the year ended December 31, 2007, the Company entered into a new two year office lease agreement with Anthem Works Ltd. (“Anthem”), a company with a common director.  During the year ended December 31, 2008, the Company accrued or paid Anthem $83,556 under the office lease agreement (2007 - $79,312).

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.

14.           CONTINGENCIES AND COMMITMENTS

The Company’s minimum payments under its office lease agreement which was entered into during the year ended December 31, 2007, are as follows:

2009		64,917
2010		-
	$	64,917

15.   INCOME TAXES

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

	2008			2007			2006
Statutory tax rates		31.00	%		34.12	%		34.12	%
Recovery of income taxes computed at statutory rates	$	1,820,596		$	2,771,112		$	1,319,273
Non-deductible expenses		(790,232	)		(1,780,305	)		(804,815	)
Lower effective tax rate on loss in foreign jurisdictions		(42,223	)		(48,648	)		(7,443	)
Change in valuation allowance		(832,445	)		(1,601,926	)		(397,481	)
Other		(155,696	)		659,767			(109,534	)
Future income tax recovery	$	-		$	-		$	-

The approximate tax effect of each item that gives rise to the Company’s future income tax assets at December 31, 2008 and 2007 are as follows:

	2008			2007
Canadian operating loss carryforwards	$	2,616,778		$	2,025,892
Mexican operating loss carryforwards		8,646,430			3,278,237
Canadian capital losses carried forward		65,629			39,125
Share issuance costs and other		749,501			928,651
Total future income tax assets		12,078,338			6,271,905
Less valuation allowance		(3,962,500	)		(3,130,055	)
Net future income tax assets		8,115,838			3,141,850
Future income tax liability
Excess of book value of mineral rights and deferred
exploration costs over tax values		(8,115,838	)		(3,141,850	)
Net future income tax assets	$	-		$	-

At December 31, 2008, the Company has non-capital loss carryforwards aggregating $10,064,000, which expire over the period between 2009 and 2028, available to offset future taxable income and capital loss carryforwards of $252,000, which are available only to offset future capital gains for Canadian tax purposes and may be carried forward indefinitely.

At December 31, 2008, the Company has tax loss carryforwards in Mexico aggregating $30,880,000, which expire between 2012 and 2018, available to offset future taxable income.

16.           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 and from practices prescribed by the United States Securities and Exchange Commission (“SEC”).

Consolidated Balance Sheets

The significant measurement differences between Canadian GAAP and U.S. GAAP with respect to the Company’s consolidated balance sheets as at December 31, 2008 and 2007 are as follows:

As at December 31	2008			2007
Total assets under Canadian GAAP		95,147,510			85,061,932
Adjustment to exploration expenditures (a)		(25,237,198	)		(13,002,738	)
Cumulative adjustment to mineral and surface rights (b)		(601,000	)		(601,000	)
Adjustment to investment in JVV (c)		(1,296,023	)		(1,263,075	)
Total assets under US GAAP		68,013,289			70,195,119
Total liabilities under Canadian and US GAAP		1,503,417			637,180
Shareholders' equity under Canadian GAAP		93,644,093			84,424,752
Cumulative mineral properties adjustment (a)		(25,237,198	)		(13,002,738	)
Cumulative adjustment to mineral and surface rights (b)		(601,000	)		(601,000	)
Cumulative share of loss in significantly influenced
investment (c)		(1,822,207	)		(1,746,642	)
Cumulative adjustment to accumulated other
comprehensive income (c)		526,184			483,567
Shareholders' equity under US GAAP		66,509,872			69,557,939
Total liabilities and shareholders' equity under
US GAAP		68,013,289			70,195,119

Consolidated Statement of Loss and Comprehensive Loss

				Cumulative
				amount from
				April 21,
				1999 to
				December 31,
Years ended December 31	2008	2007	2006	2008
Net loss under Canadian GAAP	(5,872,889)	(8,149,258)	(3,866,567)	(21,935,093)
Deferred exploration costs (a)	(12,234,460)	(5,668,857)	(3,896,404)	(25,237,198)
Amortization of mineral rights (a)	-	-	-	(601,000)
Equity in significantly influenced
investment (c)	(75,565)	378,409	(99,057)	(1,822,207)
Compensation expense (d)	-	-	-	(600,000)
Stock-based compensation for
employees and directors (d)	-	-	-	482,659
Net loss under US GAAP	(18,182,914)	(13,439,706)	(7,862,028)	(49,712,839)
Other comprehensive income under
Canadian GAAP	(310,912)	(716,778)	-	(1,027,690)
Adjustment to other comprehensive
Loss under US GAAP (c)	42,617	483,567	-	526,184
Comprehensive loss under US GAAP	(18,451,209)	(13,672,917)	(7,862,028)	(50,214,345)
Basic and diluted loss per share under
US GAAP	$             (0.38)	$             (0.32)	$             (0.21)

Consolidated Statement of Cash Flows

										Cumulative
										amount from
										April 21,
										1999 to
										December 31,
Years ended December 31	2008			2007			2006			2008
Operating activities
Operating activities under
Canadian GAAP	$	(3,128,963	)	$	(2,608,313	)	$	(1,827,348	)	$	(10,149,439	)
Reclassification of deferred exploration
costs (a)		(12,976,644	)		(5,760,230	)		(3,896,504	)		(26,103,912	)
Operating activities under US GAAP	$	(16,105,607	)	$	(8,368,543	)	$	(5,723,852	)	$	(36,253,351	)
Investing activities
Investing activities under
Canadian GAAP	$	(17,619,914	)	$	(10,205,342	)	$	(4,445,297	)	$	(39,472,879	)
Reclassification of deferred
exploration costs (a)		12,976,644			5,760,230			3,896,504			26,103,912
Investing activities under US GAAP	$	(4,643,270	)	$	(4,445,112	)	$	(548,793	)	$	(13,368,967	)
Financing activity
Financing activity under
Canadian and US GAAP	$	12,864,131		$	69,454,032		$	2,219,382		$	101,884,879

(a)            Exploration expenditures

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.

(b)           Mineral and surface rights acquisition costs

Previously, under US GAAP, the costs 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 prior years 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)           Equity in significantly influenced investment

Under Canadian GAAP, the investment in the Juanicipio Joint Venture is accounted for under the equity method for which there is no material difference from US GAAP, except that the underlying results of operations are adjusted to conform with US GAAP prior to the calculation of the Company’s share of equity income (loss).  The significant conforming adjustment to the operating results relates to the accounting for mineral exploration expenditures. The adjustment to earnings for US GAAP purposes also impacts the cumulative translation adjustment recorded in accumulated other comprehensive income.

(d)           Accounting for stock-based compensation

On January 1, 2006, the Company adopted Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payment” (SFAS 123 (R)), which requires the recognition of compensation expense for all share-based payment awards. SFAS 123 (R) requires the Company to measure the cost of services received in exchange for an award of equity instruments based on the grant-date fair value of the award. The cost of such award will be recognized over the period during which services are provided in exchange for the award, generally the vesting period. The Company adopted SFAS 123 (R) using the modified prospective transition method. Under this method, compensation expense recognition provisions are applicable to new awards and to any awards modified, repurchased or cancelled after the adoption date. Additionally, for any unvested awards outstanding at the adoption date, compensation cost is recognized over the remaining service period. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Prior periods are not restated for comparative purposes.

Prior to the adoption of SFAS 123 (R), the Company recognized stock-based compensation using the intrinsic value method prescribed by Accounting Principles Board Opinion No. 25 (APB 25) “Accounting for Stock Issued to Employees” and applied the disclosure provisions of SFAS 123, “Accounting for Stock-Based Compensation” as if the Company had applied the fair value method to measuring stock- based compensation expense.

e)           Uncertain tax positions

Effective January 1, 2007, the Company adopted SFASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes (“FIN 48”). FIN 48 prescribes a recognition and measurement model for tax positions taken or expected to be taken in a tax return, and provides guidance on the de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. The adoption of FIN 48 had no impact on the Company’s consolidated financial statements prepared under U.S. GAAP.

f)            Fair value measurements

In September 2006, the SFASB issued SFAS No. 157 “Fair Value Measurements”, which defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. FAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years, and was applicable to the Company beginning in the first quarter of 2008. Prospective application is required for the Company. The Company is currently evaluating the impact of SFAS 157.

g)           Recent U.S. Accounting Pronouncements

              i) SFAS No. 162, The Hierarchy of Generally Accepted Accounting Principles (“SFAS 162”)

In May 2008, the SFASB issued SFASB Statement No. 162, which identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of nongovernmental entities that are presented in conformity with GAAP. FAS 162 is effective 60 days following the Security and Exchange Commission’s (“SEC”) approval of the Public Company Accounting Oversight Board amendments to AU Section 411, “The Meaning of Present Fairly in Conformity with GAAP.” The Company does not expect the adoption of FAS 162 to have and impact on the Company’s consolidated financial position, results of operations or cash flows.

             ii) SFAS No. 141 R, Business Combinations (“SFAS 141R”)

In November 2007, the FASB issued SFAS 141R which establishes principles and requirements for how the acquirer of a business recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree. SFAS 141R also provides guidance for recognizing and measuring the goodwill acquired in the business combination and determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. SFAS 141R is effective for the Company’s fiscal year beginning January 1, 2009. Management is currently evaluating the requirements of SFAS No. 141R and has not yet determined the impact on its financial statements.

              iii) SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements (“SFAS 160”)

In November 2007, the FASB issued SFAS 160, Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51. SFAS 160 will change the accounting and reporting for minority interests, which will be recharacterized as noncontrolling interests and classified as a component of equity. SFAS 160 is effective for the Company’s

fiscal year beginning January 1, 2009. SFAS 160 requires retroactive adoption of the presentation and disclosure requirements for existing minority interests. All other requirements of SFAS 160 will be applied prospectively. Management is currently evaluating the requirements of SFAS No. 160 and has not yet determined the impact on its financial statements.

Consolidated schedule of share capital since inception

	Number		Price		Amount
For cash		1,500,000	$	0.10	$	150,000
Balance, December 31, 1999		1,500,000				150,000
For cash		1,500,000		0.16		240,222
Balance, December 31, 2000, 2001, 2002		3,000,000				390,222
For cash		11,500,000		0.50		5,109,766
Conversion of special warrants		2,400,000		0.16		375,000
Agent's administration		10,000		0.50		5,000
For finders' fee		500,000		0.50		250,000
For mineral property		200,000		0.50		100,000
Issuance to acquire Lexington		200,000		0.90		180,000
For cash on exercise of warrants		5,183,995		0.20 - 0.75		3,068,996
For cash on exercise of stock options		100,000		0.20 - 0.50		26,000
Balance, December 31, 2003		23,093,995				9,504,984
For mineral property		1,358,793		0.62 - 2.00		1,578,752
For cash on exercise of warrants		1,236,750		0.20 - 0.75		480,562
For cash on exercise of stock options		140,000		0.20 - 0.77		68,070
Balance, December 31, 2004		25,829,538				11,632,368
For cash		7,201,176		0.94		6,771,672
For mineral property		1,654,679		0.70 - 0.95		1,337,289
For cash on exercise of warrants		1,400,755		0.50 - 0.75		1,046,566
For cash on exercise of stock options		105,500		0.20 - 0.50		24,290
Balance, December 31, 2005		36,191,648				20,812,185
For cash pursuant to private placement		245,716		2.35		577,433
For mineral property		85,043		2.25 - 2.75		204,431
For cash on exercise of warrants		944,503		1.35		1,275,079
For cash and contributed surpluson exercise of stock options		461,700		0.50 - 4.04		564,814
Balance, December 31, 2006		37,928,610				23,433,942
For cash pursuant to private placement		5,760,000		7.25 - 15.50		59,955,443
For cash and contributed surplus on exercise of warrants		2,883,486		1.35 - 10.00		6,468,783
For cash and contributed surpluson exercise of stock options		382,100		0.50 - 9.40		1,247,472
Balance, December 31, 2007		46,954,196			$	91,105,640
For cash and contributed surplus on exercise of warrants		1,137,000		10.00		13,588,444
For cash and contributed surpluson exercise of stock options		1,064,370		0.50 - 5.36		2,328,932
Balance, December 31, 2008		49,155,566				107,023,016

	MAG SILVER CORP.  (An exploration stage company)  Annual Management Discussion & Analysis  For the year ended  December 31, 2008
	Dated: March 13, 2009

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: MAG NYSE-A: MVG www.magsilver.com info@magsilver.com

MAG SILVER CORP.

(An exploration stage company)

Annual Management Discussion & Analysis

For the year ended December 31, 2008

MAG Silver Corp. (“we”, “MAG” or the “Company”) is a company focused on the acquisition, exploration and development of district scale projects located in the Mexican silver belt.  We are based in Vancouver, British Columbia, Canada.  Our common shares trade on the Toronto Stock Exchange under the symbol MAG and on the New York Stock Exchange Alternext US (formerly AMEX) under the symbol MVG.  The Company is a “reporting issuer” in the Provinces of British Columbia, Alberta and Ontario.

The following management discussion and analysis (“MD&A”) of MAG focuses on the financial condition and results of operations of the Company for the years ended December 31, 2008 and 2007.  It is prepared as of March 13, 2009 and should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2008 and the audited consolidated financial statements of the Company for the year ended December 31, 2007, together with the notes thereto.  All dollar amounts referred to in this MD&A are expressed in Canadian dollars except where indicated otherwise.

The global economic environment has deteriorated significantly since the filing of the Company’s last MD&A dated November 13, 2008.  Lower commodity prices, currency fluctuations, banking and institutional failures, restricted credit availability and a general reduction in the availability of equity financing create a more uncertain environment for the Company’s securities.  The Company remains financially strong and will monitor the risks and opportunities of the current environment carefully. Other risks and uncertainties faced by the Company are listed under “Risks and Uncertainties” below and under “Risk Factors” in the Company’s Annual Information Form (“AIF”).

The Company believes it is a Passive Foreign Investment Company (“PFIC”), as that term is defined in Section 1297 of the Internal Revenue Code of 1986, as amended, and believes it will be a PFIC for the foreseeable future.  Consequently, this classification may result in adverse tax consequences for U.S. holders of the Company’s Common Shares. For an explanation of these effects on taxation, U.S. shareholders and prospective U.S. holders of the Company’s common shares are encouraged to consult their own tax advisers.

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 and forward-looking statements listed in the Company’s AIF.  More information about the Company including its AIF and recent financial reports are available on SEDAR at www.sedar.com and on SEC’s IDEA website at http://idea.sec.gov.

Unless otherwise specifically noted herein, all scientific or technical information in this MD&A, including reserve estimates was based upon information prepared by or under the supervision of Dr. Peter Megaw, Ph.D., C.P.G., a certified professional geologistwho is a “Qualified Person” for purposes of National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“National Instrument 43-101”).

Cautionary Note to Investors Concerning Estimates of Indicated Resources

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

Cautionary Note to Investors Concerning Estimates of Inferred Resources

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

HIGHLIGHTS FOR 2008

·   At December 31, 2008, the Company's cash position was $52.26 million.  The Company’s cash is invested with the Royal Bank of Canada in guaranteed investment certificates or in a current account.  The Company has no debt.

·   For the year ended December 31, 2008, the Company incurred $1,926,488 (2007: $931,891) in property acquisition costs and $13,336,644 (2007 - $5,987,128) in exploration expenditures on 100% held properties.

·   The Company has budgeted an aggregate $17.0 million in 2009 for the Juanicipio Joint Venture and high-priority targets on four of its wholly-owned properties in Mexico.  A 25,000 metre drilling program is scheduled for Juanicipio while a further 30,000 metres of diamond drilling is planned for the Company’s wholly-owned projects.

·   On December 1, 2008, the Company was advised of the intention of Fresbal Investments Ltd., a subsidiary of its joint venture partner, Fresnillo plc, to make an unsolicited take-over bid for all of the Company's outstanding common shares not currently held by Fresnillo and its affiliates at an offer price of US$4.54 cash per share. Fresnillo, an insider by virtue of its approximately 19.83% interest in the Company, triggered the requirement for a formal valuation by an independent valuator under the supervision of an independent committee of the Company's board of directors.  On February 1, 2009 the Company announced that the valuation had been suspended after the independent committee determined that a proper valuation could not be completed without critical information which is in the sole possession or control of Fresnillo and which Fresnillo has refused or neglected to provide to MAG or the valuator.  Fresnillo has asked the Ontario Securities Commission ("OSC") to review this decision.  A determination by the OSC is still pending.

SELECTED ANNUAL INFORMATION AND FINANCIAL PERFORMANCE

The following table summarizes selected financial data for the Company’s three most recently completed financial years.  The information set forth below should be read in conjunction with the consolidated audited financial statements and related notes thereto.

	Year ended Dec. 31, 2008			Year ended Dec. 31, 2007			Year ended Dec. 31, 2006
Revenues(1)	$	1,964,680		$	915,604		$	208,593
Net Loss(2)	$	(5,872,889	)	$	(8,149,258	)	$	(3,866,567	)
Net Loss per Share	$	(0.12	)	$	(0.19	)	$	(0.10	)
Total Assets	$	95,147,510	(3)	$	85,061,932	(3)	$	18,930,558	(3)
Long Term Debt	Nil			Nil			Nil
Dividends	Nil			Nil			Nil

Notes:

(1) The Company’s only source of revenue during the years ending December 31, 2006 to 2008 was interest revenue from GIC’s held by the Company.  The amount of interest revenue earned correlates directly to the amount of cash on hand during the year referenced.

(2) Excluding the stock compensation expense which totalled $2,539,011in 2008, $5,256,566 in 2007 and $2,341,159 in 2006, the Company’s net loss has been increasing during the years ending December 31, 2006 to 2008 due to several factors.   When one removes the effect of stock compensation expense from the recorded annual net loss, the amounts become $3,333,878; $2,892,692 and $1,525,408 for 2008, 2007 and 2006 respectively.  The general year-on-year increase in this modified loss value is explained by the growth in the Company and its activities as described under “Financial Performance” below.

(3) Total assets have been increasing year-on-year primarily as a result of the Company’s cash balance, interest revenue and continued investment in mineral properties.  At the end of 2008, the Company held $52,262,561 in cash and cash equivalents compared to $60,147,307 at December 31, 2007 and $3,506,930 at December 31, 2006.

The Company’s revenues are higher for 2008 compared to 2007 due to interest earned on larger cash balances throughout the entire year.  The net loss for 2008 is lower than in the prior year due to lower filing and transfer agent fees, a gain in foreign exchange and lower stock based compensation calculated on options granted during the year.  Stock based compensation expense is a non-cash charge which decreased in 2008 primarily due to lower volatility in the Company’s share price.

The Company has not declared or 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 used to finance the growth of its business.

FINANCIAL PERFORMANCE

At December 31, 2008, the Company had cash and cash equivalents on hand of $52,262,561 versus $60,147,307 for the period ended December 31, 2007.  The Company’s cash and cash equivalents are largely due to a financing completed late in 2007 and warrant exercises completed early in 2008.  On November 27, 2007, the Company closed a bought deal private placement of 3.0 million common shares of the Company at a price of $15.50 per share for gross proceeds of $46.5 million.  In February 2008 all outstanding warrants were exercised for gross proceeds of $11.37 million.

After deducting interest earned for the year ended December 31, 2008 of $1,964,680 compared to interest earned of $915,604 for the year ended December 31, 2007, the operating loss for the year ended December 31, 2008 was $5,872,889 compared to an operating loss for the same period in 2007 of $8,149,258.

The current year loss includes a mineral property write-off of $1,221,019 (2007: $763,434) and $2,539,011 (2007: 5,256,566) as a non-cash charge for stock compensation expense. In 2008 the Company wrote off $1,221,019 in respect of its Sello property due to the Company’s decision to terminate its option agreements in respect of this property.  Excluding the mineral property write-off and stock compensation expenses, the net loss for 2008 would be $2,112,859 (2007: $2,129,258).  See Notes 7 and 8(b) to the Company’s December 31, 2008 audited financial statements for additional details.

Stock compensation expense is one of the Company’s largest administration expenses.  The fair value of all stock-based compensation for the Company is estimated using the Black-Scholes-Merton option valuation model and is recorded in operations or capitalized against properties over the vesting period of the options.  This option pricing model uses various data inputs such as: if dividends are paid, the weighted average volatility of the Company’s shares price, an annual risk-free interest rate, an expected term of the option, as well as the market price of the Company’s shares.  As the Company’s share price decreased from a high of the $16 range in 2007 to the $5 range in 2008, the calculated fair value of options granted in 2007 also decreased compared to options granted in 2008.

General and administrative expenses for the year ended December 31, 2008, not including mineral property write-offs or stock compensation expenses, amounted to $4,077,539 (2007: $3,044,862).  Increases occurred in audit and accounting fees (2008: $415,647 versus 2007: $319,896) due to regulatory compliance work in Canada and the United States and as a result of management’s decision to implement quarterly review engagements by the Company’s auditors.  The Company is also required to comply with Sarbanes-Oxley legislation in the United States resulting in additional costs for the review, assessment and documentation of the Company’s internal and disclosure controls as well as costs relating to an independent review and assessment of the Company’s findings.  Filing and transfer agent fees decreased in the period (2008: $148,866 versus 2007: $405,844) as 2007 included $345,554 in application and listing fees for the Company’s advancement to the Toronto Stock Exchange and its listing on the American Stock Exchange..  Telephone and office expenses in the aggregate amount of $506,332 for 2008 (2007: $389,980) increased due to higher activity levels and an increase in office rental costs.  Management and consulting fees increased to $1,528,630 (2007: $778,228) due to the hiring of additional employees and an increase in the number of directors in late 2007, resulting in higher non-executive directors fees and higher salaries and bonuses paid in 2008.

During the year ended December 31, 2008 the Company entered into new or amended employment agreements with three officers and three key employees.  These new or amended agreements include change of control provisions.  Should a change of control of the Company occur in the next two years, the change of control compensation for these six employees would amount to an aggregate of approximately $1.5 million.  During the year ended December 31, 2008, the Company also entered into retention agreements with five directors of the Company.  These agreements include change of control provisions.  Should a change of control of the Company occur in the next two years, as at December 31, 2008, the change of control compensation for these five directors would amount to an aggregate of approximately $160,000.

Other smaller items account for the balance of general and administrative costs for the period.  The Company occupies office space and receives administrative services on a contract basis.

REVIEW OF OPERATION AND PROJECTS

During the year ended December 31, 2008, the Company incurred $1,926,488 in property acquisition costs (2007: $931,891).  Exploration expenditures for the same period amounted to $13,336,644 (2007: $5,987,128).  Exploration results to date have warranted expanded drilling programs on the Cinco de Mayo property (see property reviews below), accounting for most of the increase in exploration expenditures for the current period.

The following discussion is a summary of, and an update to, disclosure in documentation filed with regulatory agencies and available for viewing under MAG’s profile on the SEDAR website at www.sedar.com and on SEC’s IDEA website at http://idea.sec.gov.

Juanicipio Property

The Company holds 44% of Minera Juanicipio S.A. DE C.V. (“Minera Juanicipio”) which owns and operates the Juanicipio property located in the Fresnillo District, Zacatecas State, Mexico.  Fresnillo plc holds the remaining 56% interest in the joint venture.  The Juanicipio property comprises three key silver veins: the Valdecañas Vein, the Juanicipio Vein and the Encino Vein.

A total 26,050 metres of diamond drilling was completed on the Valdecañas Vein and 2,810 metres on the Juanicipio Vein in 2008. The drill program continued to yield high grade returns.  A total of 57 bore holes have been completed on the property since drilling began in 2003 through December 31, 2008.  Collectively these intersections combined to show the high grade silver gold zone to have a vertical height of almost 500 metres and have established a strike length for this zone of approximately 1,500 metres.  The holes drilled in 2008 helped to fill in the central portion of the eastern half of the Valdecañas Vein where there had previously been a significant gap between drill intercepts.  They also began to fill in areas to the west at depth.  Most of the holes reported in 2008 were outside of the 2008 initial inferred resource estimate for the Valdecañas Vein.

Results from two holes in 2008, holes 17P and 18P, confirmed the continuity and the presence of a second high grade vein on the Juanicipio property named the Juanicipio Vein.  A re-interpretation of drilling results in 2008 also indicated the presence of an antithetic vein to the Valdecañas Vein named the Encino Vein.  Such vein geometry is not uncommon in the Fresnillo district and the Encino Vein has the potential to add significant tonnage to the currently known deposit.  This newly interpreted high grade silver vein will be one of several drilling targets to be further delineated in 2009.

Remaining untested areas with the potential for additional new resource ounces include the down-dip area of the western part of the Valdecañas Vein on sections G, I and F and the up-dip area of the eastern part of the Valdecañas Vein in the vicinity of sections R, S and T.   Many of these areas will be drilled as a part of the 2009 drill campaign on the property.

On June 18, 2008, Minera Juanicipio announced a resource estimate for the Valdecañas Vein. The total inferred resource estimate was 237.8 million ounces of silver.  In addition to the silver, the resource estimate also contains inferred resources of 480,000 ounces of gold and almost 1 billion pounds of combined lead and zinc (457,700 tonnes).  Details of this resource estimate can be found in the Company’s press release dated June 18, 2008 which is available www.sedar.com and http://idea.sec.gov.

SRK Consulting (Canada), Inc. (“SRK”) was commissioned by MAG to prepare an updated technical report for the Valdecañas deposit.  National Instrument 43-101 is a rule developed by the Canadian Securities Administrators which established standards for certain public disclosure of scientific and technical information concerning mineral projects. The requirements of National Instrument 43-101 are not the same as those of the SEC.

A 2009 exploration program agreed to by the Juanicipio Joint Venture includes 25,000 metres of drilling to further define the Valdecañas Vein and to extend the Juanicipio and Encino veins and test of prospective targets. At the time of writing, four drills were turning on Juanicipio.  The Company expects to contribute US $1.76 million as its 44% of the cost of the 2009 exploration program for the Juanicipio Joint Venture.

An updated National Instrument 43-101 compliant resource estimate was completed in March 2009 by Scott Wilson Roscoe Postle Associates Inc. (the “Updated Resource Estimate”).  The Updated Resource Estimate confirms Valdecañas as a world class deposit, with the first Indicated Resource for the Valdecañas Vein (including the Hanging Wall Vein) of 2.95 million tonnes of 879 grams per tonne (g/t) silver, 2.22 g/t gold, 2.39% lead and 4.15% zinc.  The Inferred Resource (Valdecañas, Footwall and Hanging Wall Veins and the Stockwork Zone) reports 7.21 million tonnes of 458 grams g/t silver, 1.54 g/t gold, 1.89% lead and 3.14% zinc.

The total contained metals in the Indicated Resource are 83 million ounces of silver, 210,000 ounces of gold and 155 million pounds of lead and 269 million pounds of zinc. The Inferred Resources contain an additional 106 million ounces of silver, 356,000 ounces of gold and 301 million pounds of lead and 498 million pounds of zinc.

A description of the methodology used for the Updated Resource Estimate and full details thereof can be found in the Company’s press releases dated February 24, 2009 and March 4, 2009, both of which are available on SEDAR at www.sedar.com and on the SEC’s IDEA website at http://idea.sec.gov.

Qualified Person

The updated mineral resources for the Juanicipio Joint Venture disclosed in the discussion above have been estimated by Dr. William Roscoe, P.Eng and Mr. David Ross, P.Geo., both employees of Scott Wilson RPA and independent of MAG.  By virtue of their education and relevant experience Dr. Roscoe and Mr. Ross are "Qualified Persons" for the purpose of National Instrument 43-101.  The mineral resources have been classified in accordance with CIM Definition Standards for Mineral Resources and Mineral Reserves (December 2005).  Dr. Roscoe, P.Eng., and Mr. Ross, P.Geo. have read and approved the contents of this MD&A as it pertains to the March 2009 mineral resource estimate by Scott Wilson Roscoe Postle Associates Inc.  A National Instrument 43-101 technical report documenting the mineral resource estimate will be filed on SEDAR before April 10, 2009.

The Company has advanced Minera Juanicipio a cumulative cash total of $8,429,689 for its 44% of acquisition and exploration costs to December 31, 2008 (2007 - $6,025,018).  From the total advanced to December 31, 2007 the Company received an amount of $2,509,553 back as a repayment from Minera Juanicipio for the Company’s contribution of mineral rights.  Costs incurred by the Company prior to the formation of Minera Juanicipio in December 2007 were comprised of acquisition costs of $919,458 and exploration costs of $2,230,216.  None of these costs or advances discussed herein takes into account subsequent currency translation adjustments.

Cinco de Mayo Property

The Cinco de Mayo property is located approximately 190 kilometres north of the city of Chihuahua, in northern Chihuahua Sate, Mexico. Cinco de Mayo is the most advanced of MAG’s five Carbonate Replacement Deposit (“CRD”) style targets.  Approximately 44,553 metres were drilled at Cinco de Mayo in 2008.  Historically to December 31, 2008 the Company has drilled approximately 55,556 metres on the property.  The Company is currently undertaking a preliminary resource calculation for the project.

Drilling in 2008 intersected widespread and high grades of silver/lead/zinc mineralization and exploration to date has defined a coherent massive sulphide sheet, or manto, of at least 2,000 metres strike length that remains open, suggesting the presence of a large system characteristic of many of the large CRD mines in the Chihuahua Trough. MAG’s focus is to determine the overall extent of the CRD system and drilling will be split between following the José Manto towards its source, and seeking both the source and additional mineralization centres elsewhere on the property.

Highlights from 2008 drilling included six holes reported on July 8, 2008, Holes 29 and 35 through 39, which extended the José Manto to an area of at least 300 metres by 400 metres and mineralization in outlying Hole 32 suggested an extension of an additional 600 metres to the southeast. The best new intercept was Hole 08-39, which cut 3.46 metres of 612 grams per tonne (g/t) silver (17.8 opt), 11.59% lead and 13.20% zinc: including 2.36 metres of 772 g/t silver (22.5 opt), 13.42% lead and 16.39% zinc.

Assay results reported on September 18, 2008 from an additional 15 diamond drill holes (08-40 to 08-54), ten of which encountered mineralization, confirmed extension of the José Manto to a strike length of at least 2,000 metres, which remains open along strike and to the southwest. Returns were notable for high grades of zinc and lead, along with the high grade silver; latest results also show significant gold values, with Hole 08-48 returning 1.50 metres of 6.89 g/t (0.20 opt) gold, 370 g/t (10.8 opt) silver, 19.15% lead and 9.46% zinc. The latest holes also contain appreciable amounts of scheelite (tungsten) bearing skarn, suggesting proximity to the source of the mineralization.

The company continues to refine its geological model, employing a variety of geophysical methods to “see through” the alluvial cover and improve drill target vectoring. Gravity and induced polarization surveys completed in late spring and early fall proved to be effective techniques that complement the airborne surveys which successfully spotted the original discovery hole in late 2007.

Drilling continues in 2009 with 3 rigs currently turning as part of a proposed 15,000 metre drill operation to follow up on last year’s significant intersections.

The Company spent $7,997,357 in exploration costs at Cinco de Mayo in 2008 (2007; $1,562,205).  The Company has spent historical totals of $10,773,036 in exploration costs $1,373,416 in acquisition costs at Cinco de Mayo to December 31, 2008.  Exploration programs at Cinco de Mayo by the Company for 2008 were budgeted for approximately $2.4 million.  However, results warranted accelerated and expanded programs. The Company’s budgeted exploration programs at Cinco de Mayo for 2009 are approximately $4,000,000.

The Batopilas (Don Fippi) Property

The 100%-owned Batopilas project area covers 4,800 hectares in the historic Batopilas Silver District in southwestern Chihuahua, which produced some 300 million ounces of silver between 1632 and 1912. The Batopilas land package, assembled in 2003 by MAG, represents 94% of the Batopilas Native Silver District and the first-ever consolidation of the district’s 70-plus mines and mineral occurrences. Drilling to date has returned numerous high-grade silver intercepts and encountered widespread lower grade silver lead and zinc mineralization.

The first half of 2008 was active with a total of eight holes successfully drilled for a total of 3,721 metres between January and late June, 2008. An additional hole was abandoned after three attempts to set casing totaling 103 metres failed to engage bedrock. Three kilometres of trenching/road building and sampling were also completed in the Animas Area.

The 2008 drill program was designed to address three major objectives: (1) test geologic concepts developed from the 2007 mapping program, most importantly the link between mineralization and district zoning with respect to a major dike and vein confluence (the Asterisk) on the south flank of Animas Ridge; (2) test geophysical targets generated by the 2007 airborne Mag-EM survey; and (3) prepare the holes for a proposed pulse electromagnetic down hole survey.

Results were highlighted by returns from Hole BA08-21 in the Animas Ridge area which encountered a broad zone of silver-lead-zinc mineralization, a total core length of 61.2 metres grading 20.5 g/t silver, 0.66% lead and 0.84% zinc.

Drill testing in the 2008 program proved to be consistent with a new geologic model being developed by the Company. Overall, mineralization, structural density and diking appear to increase to the SW, which strongly supports the model interpretation that a major intrusion center with radial diking and mineralized veining that may be the center of district zoning.  The results of the 2008 program combined with past results strongly suggest that additional exploration be directed towards the south side of the Las Animas ridge.

Work on the property was largely curtailed in the third-quarter period and remained so for the balance of the year, partly as a cost-saving measure, and also to allow time for revaluation of data and planning future programs on this large, complex project.

The Company spent $1,453,184 in exploration costs at Batopilas in 2008 (2007: $1,261,568) and has spent historical totals of $4,797,597 in exploration costs and $1,422,672 in acquisition costs to December 31, 2008.  The Company’s budgeted exploration programs at Batopilas for 2009 are approximately $200,000.

Lagartos Land Package

The Company owns a 135,000 hectare land package called Lagartos surrounding the Juanicipio property. Two claim groups, Lagartos NW and Lagartos SE, northwest and southeast of the Juanicipio Joint Venture, lay along the “Fresnillo Silver Trend”, a large regional structural zone hosting the world class Guanajuato, Zacatecas and Fresnillo epithermal silver-gold vein districts.

At Lagartos NW, a 5,000-metre drill program was conducted early in 2008, designed to test the depth of the alluvial cover on the eastern boundary of the claim block. Test drilling indicated that the depth of the alluvial cover exceeds 800 metres, not at all practical to consider further exploration in this area.  Focus then turned to Lagartos SE. The Company’s holdings cover the eastern and western extensions of the major past producing vein sets such as the Veta Grande and the Mala Noche Veins.

Initial surface reconnaissance work at Lagartos SE located a series of previously worked veins on the eastern side of the Zacatecas district and sampling returned high grade silver. Subsequent geological and geophysical work identified six drill targets that were part of a 4,000 metre drill program which commenced in late October 2008. As of February 2009, two drills were still turning. Results are pending.

The Company spent $2,194,389 in exploration costs on the combined Lagartos land package in 2008 (2007: $2,143,640) and has spent historical totals of $6,535,390 in exploration costs and $86,490 in acquisition costs to December 31, 2008.  The Company’s budgeted exploration programs at Lagartos for 2009 are approximately $1,300,000.

Guigui Property

Guigui is a 100%-owned 4,500-hectare property in the Santa Eulalia Mining District, home to the world’s largest CRD camp, producing nearly 450 million ounces of silver and substantial amounts of lead and zinc over the nearly 300-year period from 1702-2001.

Past work on the property has included airborne electromagnetic and magnetic surveys which combined with a substantial database accumulated since 2006 will inform planning of future exploration. However, only minimal work was done on maintaining the Guigui project during 2008.

The Company spent $12,529 in exploration costs on the Guigui property in 2008 (2007: $74,107) and has spent historical totals of $1,462,929 in exploration costs and $1,571,172 in acquisition costs to December 31, 2008.  The Company’s budgeted exploration programs at Guigui for 2009 are approximately $135,000.

Sierra de Ramirez Property

Sierra Ramirez is another large 100%-owned CRD prospect (65 square kilometres) within the Sierra Ramirez District in eastern Durango State, approximately 80 kilometres west of the famous Providencia-Concepcion del Oro, Zacatecas District. Historically, this district has produced high-grade silver ores (1-3 kg/t) from Spanish colonial times to the 1960s.

Work to date since 2004 has included district-scale mapping and sampling, magnetic and electromagnetic surveying, and structural and geological mapping completed in the current year. Scheduled drilling for 2008 was delayed up until year-end due to budgetary and market considerations.

However, subsequent to year-end, drilling began at Sierra Ramirez as part of the 2009 exploration program approved by the Board, focused on MAG’s most immediately prospective projects. At the time of writing, two drills were turning at Sierra Ramirez.

The Company spent $130,643 in exploration costs on the Sierra de Ramirez property in 2008 (2007: $285,498) and has spent historical totals of $565,271 in exploration costs and $1,359,747 in acquisition costs to December 31, 2008.  The Company’s budgeted exploration programs at Sierra de Ramirez for 2009 are approximately $870,000.

Other Properties

Five new 100% owned projects have been established in the last few years.  Most of these projects are in the early exploration stage.  Notable amongst these five new properties are:

Salemex Property

The Salemex property comprises three claim blocks optioned in June and November of 2008 covering 8,663 hectares in the state of Chihuahua. A CRD prospect, Salemex is located within the Santa Eulalia Mining District, the world’s leading CRD producer, and approximately 30 kilometres north of Grupo Mexico’s San Antonio Mine. During the fourth-quarter 2008, drill targets were prepared for the property and by January 2009, two drills were turning. Results are pending.  The Company’s budgeted exploration programs at Salamex for 2009 are approximately $885,000.

Nuevo Mundo

The Nuevo Mundo property is in the eastern Zacatecas State and is geologically located along the structural trend known to host CRDs and all of our CRD projects (Sierra Ramirez, Guigui and Cinco de Mayo). It is also not far from Peñasquito and ties onto the eastern boundary of the Camino Rojo gold discovery of Canplats Resources. Reconnaissance work has been carried out and results are pending.  The Company’s budgeted exploration programs at Nuevo Mundo for 2009 are approximately $165,000.

La Lorena

The La Lorena property is located just north of the Guanajuato Silver Mining District within the Fresnillo Silver Trend and was identified from field work as a Juanicipio look-alike and staked in early 2008. Lorena displays similar surface alteration and trace element geochemistry is of the same magnitude that defined the active structures drilled at Juanicipio and Valdecañas. A past producing kaolin (clay) pit forms the centre of the target and clearly marks the top of a hydrothermal system common to the genesis of the majority of the producing veins of the Fresnillo Silver Trend. Several areas have been targeted for follow-up.  Drilling was initiated in late October 2008 and 3,151 metres had been drilled to December 31, 2008. Results were inconclusive.  The Company’s budgeted exploration programs at La Lorena for 2009 are approximately $140,000.

OUTLOOK

The Company continues to explore its properties in Mexico and, although the Company’s working capital position remains strong, the Company will execute its business plan cautiously into 2009.  Given the intended takeover bid announced by Fresnillo plc in December 2008, the Company is pursuing an aggressive exploration program in early 2009 in order to establish as much value as possible in the Company’s non-Juanicipio land package.  The Company has assessed the carrying values of its mineral properties as a result of current market conditions.  Based on current and expected metals prices and cost structures, management has determined that the values of the Company’s mineral properties have not been impaired at this time. However, should current market conditions and commodity prices worsen and/or persist for a prolonged period of time, an impairment of mineral properties may be required.

In January 2009, Fresnillo and MAG approved a 2009 exploration program based on the recommendation of Minera Juanicipio’s Technical Committee totaling US $4.0 million and an engineering budget of US $500,000 for Minera Juanicipio.  To March 4, 2009, the Company has advanced approximately US $7.3 million in total to Minera Juanicipio.

MAG has approved an exploration budget of its own for approximately $17.0 million for 2009. Of this amount, $2.50 million (approx. US$1.98 million) is allotted for the Company’s 44% share of Minera Juanicipio’s 2009 total budget of US$4.0 million for exploration plus US$500,000 for preliminary exploration.  The balance of approximately $14.5 million is earmarked for ten MAG-owned properties in Mexico.  Planned expenditures include the diamond drilling of almost 30,000 metres of core on five separate properties, air and ground based geophysical surveys, trenching, road building, mapping, sampling, geological modeling, surface rights acquisitions, taxes and land payments and overhead costs.  Diamond drilling is expected to continue on the "José Manto" at Cinco de Mayo where MAG is outlining a new and potentially significant sulphide silver/lead/zinc carbonate replacement discovery. Drilling is also planned for 2009 at Sierra Ramirez/El Pavo, Lagartos SE and Salemex. Drilling at Juanicipio by operator Fresnillo plc is expected to continue at roughly the same level in 2009 as it did in 2008 at approximately 25,000 metres.  Presently, MAG has three drills operating at Cinco de Mayo and two drills at each of Lagartos SE and Sierra Ramirez.  Single drills are turning at Salamex and Neuvo Mundo.  At Juanicipio, four drills in total are operating.

OUTSTANDING SHARE DATA

The Company’s authorized capital consists of an unlimited number of common shares without par value.  As at March 13, 2009, the following common shares and stock options were outstanding:

	Number of	Exercise	Remaining
	Shares	Price ($)	Life (mos/years)
Capital Stock	49,210,566
Stock Options	3,253,407	$1.06 - $14.70	12 mos to 5 years
Diluted	52,463,973

SUMMARY OF QUARTERLY RESULTS

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

Quarter Ending	Revenue(1)		Net Loss(2)			Net Loss per share
December 31, 2008	$	313,847	$	(1,610,743	)	$	(0.04	)
September 30, 2008	$	446,078	$	(381,128	)	$	(0.01	)
June 30, 2008	$	545,586	$	(1,091,881	)	$	(0.02	)
March 31, 2008	$	659,169	$	(2,789,137	)	$	(0.05	)
December 31, 2007	$	387,939	$	(3,364,017	)	$	(0.07	)
September 30, 2007	$	211,108	$	(351,375	)	$	(0.01	)
June 30, 2007	$	200,002	$	(2,181,524	)	$	(0.05	)
March 31, 2007	$	116,555	$	(2,252,342	)	$	(0.06	)

Notes:

(1) The Company’s primary source of revenue during the quarters listed above was interest revenue from GIC’s held by the Company.  The amount of interest revenue earned correlates directly to the amount of cash on hand during the period referenced.

(2) Net losses by quarter are often materially affected by the timing and recognition of large non-cash expenses or write-offs.  When adjusting these non-cash charges the results for the quarters listed show a more consistent trend, with a general growth in expenses over time that is consistent with the Company’s increased exploration and corporate activities over the periods as described above at “Financial Performance”.

FOURTH QUARTER

During the fourth-quarter period ended December 31, 2008, three drills were turning on the Juanicipio property. These drills targeted the Valdecañas Vein on a 100 by 100 metre grid in a program designed to upgrade resource figures from inferred to indicated as part of an updated 43-101 compliant resource estimate scheduled for completion in early 2009. Several more high-grade intercepts were returned in later 2008, further confirming continuity of  the high-grade bonanza zone; Hole NE in the central portion of the Valdecañas Vein returned 1,338 g/t (39.0 opt), 3.56 g/t gold, 1.63% lead and 7.37% zinc over a true width of 3.37 metres.

Additionally, the discovery of a new high-grade vein, called the Encino Vein, was reported as the result of a reinterpretation of a hole drilled in 2007 (returning 1,843 g/t (53.7 opt) silver, 4.43 g/t gold, 3.54% lead and 5.96% zinc over a true width of 3.41 metres). This hole was initially labeled as a down-dip extension of the Valdecañas Vein. Subsequent nearby intercepts of the Valdecañas Vein indicate that the Encino is a separate north-dipping vein about 200 metres above the south dipping Valdecañas. Such closely-spaced vein sets with opposing dips are common in the Fresnillo Silver District and the Encino discovery represents significant new exploration potential, with the Valdecañas remaining open down-dip, the Encino open along strike in both directions, and its intersection with the Valdecañas providing a highly prospective target.

In December 2008, a meeting of the Technical Committee of Minera Juanicipio (owned 44% MAG and 54% by Fresnillo) was convened and a budget for 25,000 metres of drilling on the Juanicipio property was approved.   This approved drilling program resulted in an exploration budget of US$4.0 million in 2009 for Minera Juanicipio.  In January 2009, the Board of Directors of Minera Juanicipio approved this exploration budget and further approved a US$500,000 budget for preliminary engineering studies.

During the fourth-quarter, drilling activity on the 100% owned Cinco de Mayo property in northern Chihuahua State was reduced from three rigs to two. This was a cost-saving measure in response to the dramatic market downturn in the final quarter of 2008.

Assay results from nine holes drilled on the Cinco de Mayo property during the period, focused on establishing the district-scale extent, zoning and geological controls on mineralization in what is emerging as a large Carbonate Replacement system, were reported in December. Highlights included high-grade intercepts of  487 g/t (14.2 opt) silver, 8.97% lead and 16.45% zinc over 5.57 metres, and 236.6 g/t (6.9 opt) silver, 1.19 g/t gold, 2.23% lead and 13.35% zinc over 2.52 metres. Results continued to demonstrate the expected transition from the massive sulphides of the José Manto to higher temperature silver-lead-zinc (gold) mineralization and alteration styles leading towards the system's source.

At the 100% owned Lagartos SE property, the Company’s holdings cover the eastern and western extensions of the major past producing vein sets such as the Veta Grande and the Mala Noche Veins.  Initial surface reconnaissance work at Lagartos SE located a series of previously worked veins on the eastern side of the Zacatecas district and sampling returned high grade silver. Subsequent geological and geophysical work identified six drill targets that were part of a 4,000 metre drill program which commenced in late October 2008. As of February 2009, two drills were still turning. Results are pending.

La Lorena is located just north of the Guanajuato Silver Mining District within the Fresnillo Silver Trend and was identified from field work as a Juanicipio look-alike and staked in early 2008. Drilling, to total 3,000 metres, was initiated in late October and 1,081 metres had been drilled to the end of October. Drilling continues and results are pending.

Proposed Fresnillo Offer

On October 15, 2008, the Company announced that it had established a Special Committee of the Board of Directors to consider strategic alternatives in response to the acquisition by Fresnillo plc of 19.83% of the Company's shares. On December 1, 2008, the Company was advised of the intention by a subsidiary of Fresnillo plc to make an unsolicited take-over bid for all of the outstanding shares of the Company not already owned by Fresnillo and its affiliates at a price US$4.54 per share.  This price represents a discount of approximately 4.5% to the closing price of the common shares on the NYSE Alternext on the day preceding Fresnillo's announcement.  As a result of Fresnillo's share ownership, it is considered an insider of the Company under applicable securities laws.  Accordingly, a valuation is required to be obtained at Fresnillo’s expense under the supervision of an Independent Committee of the Company's directors.

The independent valuation process was commenced in December 2008 with the formation of an independent committee of directors and the hiring of TD Securities and Scott Wilson Roscoe Postle Associates as independent valuator and independent technical advisor, respectively.  On February 1, 2009, the Company's Independent Committee suspended the valuation after determining that a proper valuation could not be completed without critical information which is in the sole possession or control of Fresnillo and which Fresnillo refused or neglected to provide to the Company or the Independent Valuator.  Fresnillo has since asked the OSC to review this decision to suspend the valuation and the matter is still pending.

LIQUIDITY AND CAPITAL RESOURCES

At March 13, 2009 the Company had 49,210,566 issued and outstanding common shares.  At December 31, 2008 the Company had 49,155,566 common shares issued and outstanding.  The Company issued a total of 2,201,370 common shares during the year ended December 31, 2008 for cash proceeds of $12,864,131 (2007: 9,025,586 for cash proceeds of $69,454,032). In the years ended December 31, 2008 and 2007 there were no shares issued for mineral properties.  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, 2008 the Company had cash and cash equivalents on hand of $52,262,561 (2007: $60,147,307). The primary use of cash during the period was for mineral property acquisition and exploration expenditures of $15,263,132 (2007: $6,919,019) and investment in the Juanicipio project of $2,522,844 (2007: $3,620,630), management and consulting fees of $1,528,630 (2007: $778,228) and other general and administrative expenses of $2,548,909 (2007: $2,266,634). The Company had $53,294,549 in working capital as at December 31, 2008 compared to $60,380,130 at December 31, 2007.

Current liabilities of the Company at December 31, 2008 amounted to $1,503,417 (2007: $637,180), mostly attributable to accrued exploration (drilling) expenses.

The Company currently has sufficient working capital to maintain all of its properties and planned programs for a period in excess of two 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 Notes 9 and 10 of the annual financial statements for the year ended December 31, 2008.

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.

Contractual Obligations

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:

(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)	$	6,021,700	$	493,750	$	2,427,950	$	3,100,000	Nil
Cinco de Mayo Property (2)	$	350,000		350,000	Nil		Nil		Nil
Salemex Property	$	2,180,000	$	220,000	$	660,000	$	1,300,000	Nil
Other Properties	$	470,000		50,000	$	420,000	Nil		Nil
Total (US $)	$	9,021,700	$	1,113,750	$	3,507,950	$	4,400,000	Nil

Notes:

(1) Of the final payment in the amount of US$650,000 for the original property option, due January 14, 2011, up to US$500,000 may be paid in common shares of the Company.  In 2007 and 2008, the Company acquired options on five other mineral rights packages surrounding the original block, resulting in the combined optional payments shown for the Sierra Ramirez Property.

 (2) Comprised of US$350,000 in option payments. Half of the remaining $350,000 option payment may be paid in common shares at a deemed price per share equal to the average trading price of MAG’s common shares for 30 calendar days prior to the date of the payment. 

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 other than as follows.

In November 2008, the Company notified Fresnillo of various concerns arising under the Shareholders Agreement dated October 10, 2005 which governs the Minera Juanicipio joint venture (the "Shareholders Agreement").  One such concern is that Fresnillo is attempting to acquire control of the Company on an unsolicited basis in breach of the provisions of the Shareholders Agreement.  MAG has now triggered the dispute resolution provisions of the Shareholders Agreement with the result that, if matters are not resolved with Fresnillo, the disputes are expected to be referred to arbitration.

The Company is unaware of any condition of default under any debt, regulatory, exchange related or other contractual obligation.

Subsequent to December 31, 2008 the Company issued 55,000 common shares between $1.06 and $5.36 on the exercise of stock options for proceeds of $153,800.

ADDITIONAL DISCLOSURE

Trend Information

Other than the obligations under the Company's property option agreements, there are no 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 at least March 31, 2010.

The scale and scope of the Juanicipio project could require development capital in the years ahead exceeding the Company’s on hand cash resources.  It is unlikely that the Company will generate sufficient operating cash flow to meet these ongoing obligations in the foreseeable future. Accordingly the Company may 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 equity or any debt in order to raise capital.

RISKS AND UNCERTAINTIES

The Company’s securities should be considered a highly speculative investment and investors should carefully consider all of the information disclosed in the Company’s Canadian and U.S. regulatory filings prior to making an investment in the Company, including the risk factors discussed under the heading “Risk Factors” in the Company’s annual information form available on SEDAR at www.sedar.com and http://idea.sec.gov/idea.

Since mid calendar 2008 there has been a negative trend with regard to the market for metal commodities and related products as a result of global economic uncertainty, reduced confidence in financial markets, bank failures and credit availability concerns.  These macro-economic events have negatively affected the mining and minerals sectors in general.  The Company’s market capitalization has been significantly reduced.  Although these circumstances may improve over the longer term, the short term impact upon the Company’s liquidity and its ability to raise the capital required to execute its business plans going forward will be negative.  As a result the Company will consider its business plans and options carefully going forward into 2009.  The Company’s intends to preserve its cash balances where possible.

At December 31, 2008, the Company had a receivable of $2,190,188 from the Mexican government for value added tax (“IVA”).  Although full recovery is expected by management, recoveries to date have been intermittent.  The Company has discussed its outstanding IVA receivables with the Mexican authorities and there is no reason to believe these amounts will not be received in the current year.

Off-Balance Sheet Arrangements

The Company has no off-balance sheet arrangements.

Related Party Transactions

For the year ended December 31, 2008, a private company controlled by Gordon Neal, an officer of the Company received $170,424 (2007: $163,840) in compensation for consulting services.  During the year ended December 31, 2008, the Mr. Neal became an employee of the Company and received $72,085 (2007: $Nil) in compensation as salary and bonus for management services.

The Company paid or accrued non-executive directors fees of $300,750 (2007: 138,895) during the year ended December 31, 2008 (2007: $138,895).

The Company is party to a Field Services Agreement, whereby it has contracted exploration services in Mexico with MINERA CASCABEL S.A. DE C.V. (“Cascabel”) and IMDEX Inc. (“Imdex”).  Since January 2006, Peter Megaw, has been a director of MAG and a director of Cascabel and Imdex.  During the year ended December 31, 2008 the Company accrued or paid Cascabel and Imdex consulting, administration and travel fees totaling $194,500 (2007: $134,720) and exploration costs totaling $2,504,237 (2007: $1,312,826) under the Field Services Agreement.

During the year ended December 31, 2007, the Company entered into a new two year office lease agreement with Anthem Works Ltd. (“Anthem”).  Eric Carlson is a director of MAG and Anthem.  During the year ended December 31, 2008, the Company accrued or paid Anthem $83,556 (2007: $79,312) under the office lease agreement.

During the year ended December 31, 2003, the Company entered into an office services agreement with Platinum Group Metals Ltd.  R. Michael Jones is a director of MAG and Platinum Group Metals Ltd.  During the year ended December 31, 2008, the Company accrued or paid Platinum Group Metals Ltd. $135,777 (2007: $136,374) under the office services agreement.

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.

CRITICAL ACCOUNTING ESTIMATES

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 Audited consolidated financial statements for a description of all of the significant accounting policies.

Under Canadian GAAP, the Company defers 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 reviews when events or changes in circumstances indicate 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 asset.

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 2005 fiscal year, The Company 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, the Company is required to recognize a charge to the income statement based on an option-pricing model based on certain assumptions. For the year ended December 31, 2008 the assumptions were as follows; no dividends were paid, a weighted average volatility of the Company’s share price of 49%, a weighted average annual risk free rate of 3.37 per cent and an expected life of three years. The resulting weighted average option pricing resulted in an expense for stock options in the year ended December 31, 2008 of $2,539,011 (2007 - $5,256,566).

CHANGES IN ACCOUNTING POLICIES

On January 1, 2008, the Company adopted four new presentation and disclosure standards that were issued by the Canadian Institute of Chartered Accountants: Handbook Section 1535, Capital Disclosures ("Section 1535"), Handbook Section 3031, Inventories – (“Section 3031”), Handbook Section 3862, Financial Instruments - Disclosures ("Section 3862") and Handbook Section 3863, Financial Instruments - Presentation ("Section 3863").

 (i)           Capital disclosures – Section 1535

Section 1535, Capital Disclosures, establishes disclosure requirements regarding an entity’s capital, including (i) an entity’s objectives, policies, and processes of managing capital; (ii) quantitative data about what the entity regards as capital; (iii) whether the entity has complied with any externally imposed capital requirements; and (iv) if it has not complied, the consequences of such non-compliance. The new standard has had no impact on the consolidated financial position or results of operations for the year ended December 31, 2008.

 (ii)           Inventories – Section 3031

Section 3031, Inventories, provides more guidance on the measurement and disclosure requirements for inventories. Specifically, the new pronouncement requires inventories to be measured at the lower of cost or net realizable value, and provides guidance on the determination of cost and its subsequent recognition as an expense, including any write-down to net realizable value. The new standard has had no impact on the consolidated financial position or results of operations for the year ended December 31, 2008.

(iii)           Financial instruments – Sections 3862 and 3863

Section 3862, Financial Instruments – Disclosures and Section 3863 Financial Instruments – Presentation replace Section 3861 Financial Instruments – Disclosure and Presentation. These new sections revise and enhance disclosure requirements while leaving presentation requirements unchanged. These new sections place increased emphasis on disclosures about the nature and extent of risks arising from financial instruments and how the entity manages those risks. The new standards have had no impact on the consolidated financial position or results of operations for the year ended December 31, 2008. Refer to the additional sensitivity disclosure in Note 10 of the audited consolidated financial statements for the year ended December 31, 2008.

 (iv)           Business Combinations

In January 2009, the CICA issued Section 1582, Business Combinations, Section 1601, Consolidations, and Section 1602, Non-controlling Interest. These new standards are harmonized with International Financial Reporting Standards (“IFRS”). Section 1582 specifies a number of changes, including: an expanded definition of a business, a requirement to measure all business acquisitions at fair value, a requirement to measure non-controlling interests at fair value, and a requirement to recognize acquisition-related costs as expenses. Section 1601 establishes the standards for preparing consolidated financial statements. Section 1602 specifies that non-controlling interests be treated as a separate component of equity, not as a liability or other item outside of equity. The new standards will become effective in 2011 but early adoption is permitted. The Company is evaluating the attributes of early adoption of this standard and its potential effects if events or transactions occurred that this standard applies to.

(v)           Goodwill and Intangible Assets

In February 2008, the CICA issued Section 3064, Goodwill and Intangible Assets, replacing Section 3062, Goodwill and Other Intangible Assets and Section 3450, Research and Development Costs. The new pronouncement establishes standards for the recognition, measurement, presentation, and disclosure of goodwill subsequent to its initial recognition and of intangible assets by profit-oriented enterprises. Standards concerning goodwill are unchanged from the standards included in the previous Section 3062. This Section is effective in the first quarter of 2009, and the Company is currently evaluating the impact of the adoption of this new Section on its consolidated financial statements.

(vi)           Convergence with International Financial Reporting Standards

In February 2008, the Canadian Accounting Standards Board confirmed that publicly accountable enterprises will be required to adopt IFRS for fiscal years beginning on or after January 1, 2011, with earlier adoption permitted. Accordingly, the conversion to IFRS will be applicable to the Company’s reporting no later than in the first quarter of 2011, with restatement of comparative information presented. The conversion to IFRS will impact the Company’s accounting policies, information technology and data systems, internal control over financial reporting, and disclosure controls and procedures. The transition may also impact business activities, such as foreign currency activities, certain contractual arrangements, capital requirements and compensation arrangements. The Company is currently evaluating the future impact of IFRS on its financial statements and will continue to invest in training and additional resources to ensure a timely conversion.

RECONCILIATION BETWEEN CANADIAN AND UNITED STATES GAAP

The Company’s differences between Canadian and United States Generally Accepted Accounting Principles are set out in Note 16 of the audited Consolidated Annual Financial Statements for the year ended December 31, 2008.

CORPORATE GOVERNANCE

The Company maintains a set of disclosure controls and procedures designed to ensure that information required to be disclosed in filings made pursuant to Multilateral Instrument 52-109 is recorded, processed, summarized and reported in the manner specified by the relevant securities laws applicable to the Company.  The consolidated Company operates in both Canada and Mexico and work is ongoing to improve and modernize these controls and to ensure that they remain consistently applied in both jurisdictions.  The Chief Executive Officer and the Chief Financial Officer have evaluated, or caused to be evaluated under their supervision, the effectiveness of the Company’s disclosure control procedures as of December 31, 2007 and December 31, 2008 and quarterly during 2008 through inquiry, review, and testing, as well as by drawing upon their own relevant experience.  The Company retained an independent third party specialist in 2008 to assist in the assessment of its disclosure control procedures.  The Chief Executive Officer and the Chief Financial Officer have concluded that the Company’s disclosure control procedures are effective.

The Company also maintains a system of internal controls over financial reporting, as defined by Multilateral Instrument 52-109 - Certification of Disclosure in Issuers’ Annual and Interim Filings in order to provide reasonable assurance that assets are safeguarded and financial information is accurate and reliable and in accordance with Canadian GAAP.  The Company retained an independent third party specialist in 2006, 2007 and 2008 to assist in the assessment of its internal control procedures.  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.

The Chief Executive Officer and Chief Financial Officer have evaluated, or caused to be evaluated under their supervision, the effectiveness of the Company’s normal control over financial reporting as of December 31, 2008 and have concluded that the Company’s internal control over financial reporting is effective.  There have been no changes in internal control over financial reporting during the year ended December 31, 2008 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Subsequent Information

Subsequent events are described elsewhere in relation to relevant sections of this document.