IMDEX Inc.

Juanicipio

SIZE MATTERS… BUT

GRADE MATTERS MORE

Dr. Peter K.M. Megaw

IMDEX Inc. MAG Silver

Academy & Finance Geneva & Zurich, Switzerland June, 2012

Or: How to sleep at night during soft markets

The Market

INVESTING IN TODAYS MARKETS

It’s All About…Clearing the Bar…

Archie’s Rule

For a Project to be economic long-term you must

Recover Twice your all-in Production Costs

This Rule of Thumb Covers 1. Recovery of Capital Expenditures 2. Time value of investment 3. Depletion, Depreciation, Amortization 4. Buffer for metal price fluctuations 5. Increased costs 6. Minimum Profit Margin 7. Plus…A little breathing room

A Note on “Silver Equivalence”

Often Misleading… Moving Target Prices Used? Gold OK Lead and Zinc do NOT behave like Silver in the Market So why equate them? Call a By-Product a By-Product

High-Grade Underground vs Low-Grade Open Pit

Archie’s Rule: Underground

NSR = 2X ALL-IN COSTS

There Will Be Grade

9

0

200

400

600

800

1000

1200

4 $ 5 $ 6 $ 7 $ 8 $ 9 $ 10 $ 11 $ 12 $ 13 $ 14 $ 15 $ 16 $ 17 $ 18 $ 19 $ 20 $ 21 $ 22 $ 23 $ 24 $ 25$ 26$ 27$ 28$ 29$ 30$ 31$ 32$ 33$ 34$ 35$

Silv

er

Gra

de

in g

ram

s p

er

ton

NSR = 2 x Operating Cost

Silver Price 50 $ Operating Cost 60 $ Operating Cost

20% OPEX increase

Archie’s Rule: Open Pit

NSR = 2X ALL-IN COSTS

Clearing the Bar: But By How Much?

Archie’s Rule: Exploration

Working from what you have found …or expect to find Archie tells you what you must be able to extract it for… And how comfortably it flies

Archie’s Rule: Exploitation

Working from known costs and recovery parameters Archie tells you what grade you must be able to extract And how much leeway you have

Moving the Bar

Archie’s Rule: Underground

NSR = 2X ALL-IN COSTS

Archie’s Rule: Open Pit

NSR = 2X ALL-IN COSTS

Archie’s Rule: Everything

NSR = 2X ALL-IN COSTS

High-Grade Underground vs Low-Grade Open Pit

Grade…and Size…Best of All!

Strathcona Mineral Services - Global Resources

Resources Tonnes

Silver g/t (Ounces per

ton)

Silver

ounces (Millions)

Gold

g/t

Lead

%

Zinc

%

Lead

Mlbs.

Zinc

Mlbs.

NSR*

US$ /

tonne

Total

Indicated (includes Footwall

and Hanging Wall

Vein 1)

5.7 702 128 1.9 2.1 4.2 346 268

Total Inferred (includes Footwall 2,

Hanging Wall 1,

Stock-work and

Juanicipio Vein)

4.3 513 71 1.4 1.6 3.0 192 152

20

Juanicipio Project – 2011 Resource Estimation / 100 g/t Cut-off

64% of Silver ounces in indicated category, 36% in inferred category

Cautionary Note to Investors Concerning Estimates of Indicated Resources This presentation 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 presentation uses the term "Inferred Resources". MAG advises investors that although this term is recognized and required by Canadian regulations (under National

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

Ag - $23.39/oz; Au - $1,257 /oz; Pb - $0.95/lb; Zn - $0.91/lb

Archie’s Rule: Underground

21

0

200

400

600

800

1000

1200

4 $ 5 $ 6 $ 7 $ 8 $ 9 $ 10 $ 11 $ 12 $ 13 $ 14 $ 15 $ 16 $ 17 $ 18 $ 19 $ 20 $ 21 $ 22 $ 23 $ 24 $ 25$ 26$ 27$ 28$ 29$ 30$ 31$ 32$ 33$ 34$ 35$

Silv

er

Gra

de

in g

ram

s p

er

ton

NSR = 2 x Operating Cost

Silver Price 50 $ Operating Cost 60 $ Operating Cost

Valdecanas Grade 630 g/t Ag

$6.50 Spread

$1.0 Spread

20% OPEX increase

$3.50 Spread

How Big Can they Get? Market Cap vs Ounces

Clearing the Bar is EVERYTHING…Because

NOT Clearing the Bar…Is UNACCEPTABLE

But Closing the Bar…Has It’s Place Too!

IMDEX Inc.

Academy & Finance Geneva & Zurich, Switzerland June, 2012

Juanicipio

Peter K.M. Megaw

IMDEX Inc. MAG Silver

Thank You