Keep your friends close, and your enemies closer.

Successful silver explorer MAG Silver (AMEX: MVG) doesn't have much choice but to follow that 2,500-year-old advice attributed to Chinese general Sun Tzu. Locked into a joint venture with former hostile bidder Fresnillo to develop its flagship Juanicipio property (which adjoins the world-leading silver mining camp that gave Fresnillo its name); MAG Silver could scarcely keep this enemy any closer.

Back in December 2008, when precious metals and related equities were just regaining their footing after a cavernous collapse, Fresnillo offered just $4.54 per share to purchase the 80.2% of MAG that it did not already hold. The market quickly dispensed its summary judgment of the so-called "take-under" bid, launching shares more than 30% higher in the ensuing weeks to slay the hostile action.

After watching MAG Silver's shares surge to a new 52-week high above $8 per share last week before settling back down, I can't help but speculate that a follow-up bid from Fresnillo may be in the works. Unfortunately for MAG Silver shareholders, since Fresnillo is listed in London, any forthcoming bid would likely be another all-cash affair.

Furthermore, I contend that MAG Silver's shares remain woefully undervalued relative to the company's treasure in ultra-high-grade ores and its strongly prospective exploration properties throughout Mexico. As a result, I am wary of what could well be another "take-under" scenario. Not only has the price of silver increased by more than 75% since the first salvo was launched, but in the interim, MAG Silver has also discovered an expansive, high-grade mineralized zone with solid potential to become a prolific molybdenum-gold project at its 100%-owned Cinco de Mayo property. MAG Silver boasts an impressive array of land packages dominating several historically prolific mining camps, including Batopilas, Guigui, and the Sierra Ramirez property.

Meanwhile, the inescapable challenge facing MAG Silver shareholders is the apparent absence of a viable candidate to outbid Fresnillo. The only possible white knight I can imagine would be Goldcorp (NYSE: GG), which ferociously outbid a joint venture between Fresnillo and Newmont Mining (NYSE: NEM) to purchase Canplats Resources for its Camino Rojo property. MAG Silver's 100%-owned Nuevo Mundo property lies adjacent to Camino Rojo, and Goldcorp has also shown some interest in silver with an ongoing development project in Guatemala.

If left alone, I believe that MAG Silver is destined for greatness. The bonanza-grade ores at Juanicipio are among the best this Fool has ever seen ... often reaching several thousands of grams of silver per ton. A 2009 scoping study determined that Juanicipio could stand apart from the adjacent Fresnillo camp as a mine with a 12.6 year mine life and a delectable 48.4% internal rate of return. Like the bonanza grades reported by nearby miners like Gammon Gold (NYSE: GRS) and Endeavor Silver, MAG Silver's exploration success is indicative of immense profit potential. The only outcome that I believe would leave shareholders out of that profit bonanza would be another underpriced cash bid from big bully Fresnillo.