An update on ECU Silver

Hello Bill!
ECU Silver released an operations update today on the progress to resume production from the new mill they have acquired. I am encouraged that the company has moved so quickly to refurbish the equipment and prepare to begin processing ore. There is a possibility that the company could be pouring gold and silver dore by next month. Getting a mill into operation is a fairly complex undertaking and I would imagine it will take at least three to six months to get the circuits tuned and achieve optimum efficiency but my expectation is the company will be able to realize positive cash flow very early in the learning curve.

Like most ECU shareholders I am somewhat puzzled by the continuous slide in the market value of the stock, regardless of the underlying fundamentals or the news flow. I have great confidence in the management team, and remain very optimistic that the company will continue to outline and define new resource blocks as the exploration programs continue. So what will it take to move the stock higher?

There is no question that the equity offerings completed by ECU during the last 2 years have undermined the performance of the stock, as each placement generated substantially increased shorting activity and contributed to ongoing weakness at a time when the entire sector has been under pressure. The share structure of the company has been diluted to more than double the float over this time. The money raised in these financings has been spent in an active exploration program along with the usual expenses for a junior mining company. In order to stabilize the stock I believe that the company must achieve positive cash flow and strong operating performance at the new mill. This will hopefully demonstrate to the market that the company will be able to underwrite the exploration program from internally generated revenues going forward, and therefore that the flow of new shares issued into the market will come to an end.

For the stock to move higher and regain a premium multiple in the market, I think the company will have to follow up on the exciting massive sulfide discovery zones that were presented late last year. At the end of the day ECU Silver will trade on the basis of the mineral inventory that can be proven up with high grade, bulk tonnage deposit areas. It is a luxury to have production from a small mill that can fund the future exploration work but this company is ultimately going to be valued as a development play that could support a much larger magnitude operation.

I think the stock is trading at a ridiculous price now relative to its peer group, and many other juniors with far less potential command a higher market cap in this depressed market. I fully expect that ECU will meet its objectives and within 6 months the company should be reporting this to the market. The treasury is now topped up and all the bar has been set with very achievable milestones for the rest of the year to prove for once and for all that our confidence to stay with this story was not misplaced. I cannot think of another stock trading below 50 cents a share with so much potential on the table. I believe we are very close to realising that potential and while there are still plenty of moving parts and we are not out of the woods yet, the days for ECU to trade as a penny stock may be coming to a close. I did not expect that it would take this much patience to get to the pot of gold at the end of the rainbow but I could make the same statement for the entire precious metals sector and I'll be damned if I will give up now this close to the finish line. We will not have to wait much longer.
Cheers!
MexicoMike