If you hold a beach ball underwater, you just might get smacked in the face when it surges through the surface.

London-listed silver miner Fresnillo attempted to hold joint-venture partner MAG Silver (AMEX:MVG) underwater with its "take-under" bid announced last month, but investors used dollars instead of ballots to cast an early vote against the deal. I believe that the deal is as good as dead now that the beach ball has slipped through Fresnillo's hands, but I also suspect that MAG shareholders haven't heard the last from Fresnillo.

Until last week, shares of MAG Silver remained anchored near the $4.54-per-share offer price, even as the broader sector enjoyed a phenomenal end-of-year rally. In fact, the entire precious metals mining sector had itself been pressed deep underwater by a combination of factors, including forced liquidations by hedge funds, a counterintuitive rally in the U.S. dollar, a deep correction in silver prices, and severe weakness among base metals like copper and zinc.

Thanks to the sectorwide recovery in recent weeks, gold miners like Kinross Gold (NYSE:KGC) and my top pick, Agnico-Eagle Mines (NYSE:AEM), are up well more than 100% from their lows of late 2008. Shares of Silver Wheaton (NYSE:SLW) rose sharply enough to become my best call of the year. MAG Silver shares, however, remained in a stranglehold.

The beach ball bounces
All that changed last week, when a press release from MAG Silver indicating yet another discovery of excellent high-grade ore provided the catalyst for the ball to surge out of the water and effectively quash the hostile bid. Shares launched to almost $6 on Friday, or 30% above the bid price, before settling back down toward the $5 mark this week.

While I believe the current bid from Fresnillo is clearly doomed now that investors have cast their vote with their capital, I expect Fresnillo to follow up with a second bid. With some very rich ore-bearing veins right in Fresnillo's backyard, MAG Silver is too precious for Fresnillo to ignore. With leading silver miners like Pan American Silver (NASDAQ:PAAS) and Coeur d'Alene Mines (NYSE:CDE) struggling to withstand a very challenging market, I see no other silver miner in a position to outbid Fresnillo for MAG.

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