I spoke with Steve Altmann this morning. He has confirmed much of what I already expected but its good to know there are no hidden dangers lurking in the weeds.

The PP is a bought deal and is fully allocated. The syndicate of TD and Blackmont have bought the stock at 70 cents as per the offering price and ECU will get every dollar of that money. After the 30 day distribution period the underwriters can sell any unsold shares at whatever price they choose, even below 70 cents, but that does not affect the price that ECU gained. That extra measure of security is the reason why ECU priced the deal so cheaply and added a full warrant. So the money is in the bag, the deal is done, and there is no market force that can cancel the deal or affect the pricing from here.

The new mill should be fully operational within 3 months. It was on care and maintenance, and they have inspected the equipment and confirmed that it is all there and in good condition. They will have to order reagents and supplies, train staff, and recommission the equipment, tune the bearings, etc. But from then on they are in business.

The floatation cirucit at Velardena is running sulphides. The lead/silver and zinc cons that are produced from this go to a smelter and the netback right now is very low. Instead of mining and processing sulphides, ECU will shift their operation to mine high grade oxide ore, which can be shipped directly to the new mill. The Velardena mill can then just run tailings material to produce a gold pyrite concentrate, which can then be processed at the new mill in a blend with the oxides. This will end up producing a higher grade gold product.

The new mill runs a merrill-crowe cyanide recovery circuit that produces a silver-gold dore product. This can be shipped directly to a refiner and yields a much higher netback. So at the end of the day, within a few months ECU will be producing at a higher rate, with a higher value product, for which they receive much higher net percentage revenues.

The mill is only 2km by road from the mine, even closer than the existing Velardena mill. There are going to be cost savings all around.

It is probable that the stock has taken the big hit in the market because people are shorting the stock and will cover with the units of the placement. The hedge funds and institutional traders are all over this stock. Sadly, it appears they have shaken out some retail longs in the process. It sure looks like the market knows something is amiss and that would account for the dismal sentiment levels. But I am confident that I have been told the truth of what is going on, and from every angle I can see as a long time shareholder of ECU, this deal is going to be a great part of the story and we may have finally turned the corner to become a significant, profitable gold-silver producer. In the future, as conditions change and the value of the base metals goes back up, then the floatation cell process at Velardena can resume running the sulphide ore. But for now, we can be happy that we have a means to unlock the gold value in the tailings and build stronger revenues to carry the ball from here.

cheers!

mike

PS: I post the above as a shareholder, and ECU is a paid advertiser on my website but I do not presume to speak on behalf of the company. People should call the ECU office if they have questions of their own.