Bilbo reacted to the gift of chain mail (Mithril) from Thorin by saying it is magnificent.
What is given to Bilbo?
Thorin gave Bilbo a coat that was forged by elves of a material called mithril which he admits that he fills "magnificent.
Therefore, he reacted to the gift of chain mail (Mithril) from Thorin by saying it is magnificent.
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