UPDATE 1-MAG Silver decries Fresnillo "take-under" bid

(Adds details; in U.S. dollars unless noted)

By Susan Taylor

OTTAWA, Dec 4 (Reuters) - MAG Silver Corp (MAG.TO) (MVG.A) scoffed on Thursday at Fresnillo Plc's (FRES.L) hostile takeover attempt, calling it a "take-under" bid because it came in below MAG's stock price from the day before.

Fresnillo, which hiked its MAG stake to 19.8 percent in October, offered $4.54 a share on Monday for the stake it does not already own. On the previous trading day, MAG stock closed at $4.75 on Amex.

Mexico's Fresnillo said the offer represented a 12.3 percent premium to MAG's 20-day average share price and that it had no intention of amending the price.

Fresnillo owns a 56 percent stake in and is operator of the Minera Juanicipio silver project in Mexico, while MAG holds the remaining 44 percent.

The world's largest primary silver producer, Fresnillo has reported that the property has 237.8 million ounces of silver.

Vancouver, British Columbia-based MAG will form a special committee to assess the bid and likely will not respond until late January, Chief Executive Dan MacInnis said in an interview.

"It's opportunistic. The commodity sector has been hammered over the last several months with liquidation at all costs, any cost. And that, I think, is what has prompted the bid," said MacInnis. "We've been beaten up badly, as has everybody. We were trading at $15 a little less than year ago."

The price of spot silver XAG=, trading at just under $21 an ounce in March, was at $9.53 on Thursday. A deepening global financial crisis, waning demand and tough credit markets have forced many miners to shut operations and delay developments.

"We have at this moment about C$58 million in the kitty, so we're in good shape actually. We're not teetering on the edge by any means," MacInnis told Reuters.

"We have more than enough money to defend ourselves, if you like, and carry out our programs, meet all of our commitments for the next three years at least."

In October, MAG said it would study its strategic options after London-listed Fresnillo, the precious metals unit of Mexico's Penoles (PENOLES.MX), bought up more shares to nearly double its stake in the company.

A special committee has compiled a short list of potential suitors, which will be discussed at the company's next board meeting on Dec. 11, MacInnis said. MAG has had "informal contact" with those companies, he added.

Raymond James analyst Bart Jaworski said Fresnillo's offer significantly undervalues MAG, calling it a "stink bid".

"We encourage long-term investors to reject the offer and buy shares of MAG-TSX on budding buyout potential and exploration at Juanicipio and Cinco de Mayo," he said in a note.