OBJECTIVES
The main objective of ECU Silver is to become a primary gold and silver producer. The Company has important growth objectives and plans to realize them through the development of its projects and the acquisition of new projects in the Velardeña mining district and elsewhere in Mexico.

MINING PROPERTIES
The Company owns three properties located in the Velardeña mining district, within the municipality of Cuencamé, in the northeast quadrant of the State of Durango, Mexico. These properties, collectively known as the Velardeña District Properties, are centered approximately 95 km southwest of the city of Torreón in the State of Coahuila and 140 km northeast of the city of Durango, capital of the State of Durango, and are comprised of the Velardeña Property, the Chicago Property and the San Diego Property. The results of the exploration efforts to date at on each of the Company’s properties are summarized in the Company’s December 31, 2008 MD&A under the caption “43-101 Resource Update”.

Velardeña Property
The Velardeña Property is approximately centred at 25° 4' 30" North and 103° 41' 46" West. This property contains the Santa Juana mine, which has been the focus of ECU Silver’s mining efforts since 1995, as well as the historical Terneras, San Juanes and San Mateo mines. The property consists of 20 contiguous mineral concessions totalling 233.2 hectares.

During the three month period ended March 31, 2009 the Company primary focused on completing the acquisition of a 500 tonnes-per-day gold and silver recovery plant (the "Plant") located adjacent to its properties near the town of Velardeña and on both preparing for the re-commissioning of the Plant and on the mine development work needed to feed it. As such, it is not currently involved in exploration work on the Velardeña Property. The Company was also treating some of the mineralized material mined from the property through its flotation mill situated near the town of Velardeña. The Company incurred development costs totalling $1,613,821, including depreciation of plant and equipment in the amount of $278,823. These costs were offset by revenues totalling $60,976, which result from settlement adjustments on previous shipments of concentrates, for a net deferred cost of $1,840,927. Mining and milling results are presented later in this report under the caption “Mining and Milling Results”.

The Company plans to use the Plant to treat its existing oxide mineral resource and expects to operate the Plant at an initial rate of 300 tonnes-per-day and gradually ramp-up to 500 tonnes-per-day. The Company plans to continue its exploration activities once the Plant is operating and providing a reliable cash flow. The Company has not completed an economic study related to the processing of its oxide resource through the Plant and therefore cannot provide assurances that its operation will be economic.

Chicago Property
The Chicago Property is located approximately 2 km south of the Velardeña Property. This property contains the historical Los Muertos-Chicago mine and consists of 8 contiguous mineral concessions, totalling 315.88 hectares. During the period the Company was not active in exploration and development of the property as a result of its focus on the Plant and plans to continue exploration of the Chicago Property following commissioning of the Plant.

San Diego Property The San Diego Property is situated approximately 9 km northeast of the Velardeña Property. This property contains the historical La Cruz-La Rata and El Trovador mines as well as a number of other shallower shafts which were sunk on narrower veins such as the Cantarranas, Montanez and El Jal. The property is comprised of 4 contiguous mineral concessions totalling 91.65 hectares. The Company is exploring the San Diego Property under the terms of a joint venture agreement with Golden Tag Resources Ltd. pursuant to which each party pays a 50% share of the exploration and development expenditures. The current drilling program of the San Diego Property has been completed and the Company expects that the parties to the joint venture will decide to continue exploration of the property later in 2009.

OVERALL PERFORMANCE

Financings
During the quarter the Company undertook the following financing activities:

 In February 2009 we received gross proceeds of $17,500,000 in connection with a “bought deal” financing which was sold to the public through a short form prospectus. In connection with that financing the company issued 25,000,000 shares and warrants at $0.70 per share and warrant. Each warrant entitles its holder to acquire one additional share at a price of $0.95 per share at any time until February 20, 2014. From the net proceeds of the offering, the Company paid US$8,000,000 to acquire the Plant previously discussed. The Company also issued to the vendor an aggregate of 750,000 common shares in payment of the balance of the purchase price for the Plant.

We reached agreements with the holders of our outstanding 12% convertible debentures maturing on July 31, 2013, to convert the principal and accrued interest owing, amounting to $7,348,048 in total, into commonshares and warrants. A similar agreement with the holder of a demand promissory note to convert $362,357 in principal and accrued interest into common Shares and warrants was also reached. Under the terms of such debt conversions, in March 2009 the Company issued an aggregate of 11,014,867 common shares and warrants in full repayment of the Debentures and the Note. The common Shares and warrants were issued on the basis of one common Share and one warrant for each $0.70 of indebtedness, being the identical price at which the Company issued common shares and warrants pursuant to its short form prospectus offering which closed in February, 2009. Each warrant entitles its holder to acquire one common share at a price of $0.95 at any time on or before February 20, 2014.

Working Capital and Cash Flows At March 31, 2009 the Company had a working capital deficit of $9,166,306 compared to $7,259,527 at December 31, 2008. The change of $1,906,779 reflects mainly an increase of $5,232,635 in the current portion of long-term debt, which becomes due in the current year, net of the increase of $1,606,251 in the cash position. During the quarter the Company used cash of $2,402,760 in operations compared to $2,168,163 in the same period in the prior year, an increase of $234,597.

CAPITAL RESOURCES
The Company’s ability to raise additional funds from the equity markets will largely depend upon general market conditions, as well as the Company’s ability to successfully re-commission the newly-acquired Plant, and the Company’s ability to achieve its exploration milestones and to acquire new properties. The Company had no significant commitments to capital spending as at period end.

CHANGES TO ACCOUNTING POLICIES
During the first quarter of 2009, the Company continued to analyze, on an on-going basis, the impact of the International Financial Reporting Standards (“IFRS”) pronouncements that may affect its consolidated financial statements upon adoption of IFRS.

FIRST QUARTER RESULTS
OPERATIONS
Loss
The loss for the first quarter 2009 was $3,646,717 versus a loss of $2,665,412 for the same period in 2008.

Expenses Expenses totaled $3,646,717 in the first quarter of 2009 an increase of $981,305 over the same quarter in 2008. Interest on long term debt increased $234,490 reflecting the increased amount of debt outstanding, including the convertible debentures that were not in existence in the prior period. The foreign exchange loss moved from $96,411 in 2008 to $712,140 in the current period mainly because of the effect of the volatility of the US dollar on our long-term-debt. In accordance with its policy to record pyrite/gold material in-process at a net realizable value of zero until such time as the method to further process the material is proven and sales contacts are in place, the Company wrote down inventory investment of $288,082 in the current quarter and $97,754 in the comparable quarter in the previous year.

BALANCE SHEET
Assets
Total assets were $77,704,580 as at March 31, 2009 compared to $63,596,834 as at December 31, 2008. During the quarter the Company paid $10,712,487 to acquire the Plant.

Liabilities
Liabilities totaled $25,488,695 as at March 31, 2009 compared to $30,313,558 as at December 31, 2008 a decrease of $4,824,863. The arrangement to convert the convertible debentures and note payable into equity represents a decrease of $5,775,377 from the balance at December 31. During the quarter the Company drew US$750,000 against its debt facility representing an increase in liabilities of $932,475. Currency changes on the US dollar denominated long-term debt produced an increase in the Canadian dollar equivalent of $663,000 over the quarter.

Shareholders’ equity
Shareholders’ equity totaled $52,215,885 as at March 31, 2009 compared with a balance of $33,283,276 at the end of 2008. The change reflects the operating loss for the period reduced by the stock based compensation component as it is offset by a charge to contributed surplus. The gross proceeds from the prospectus offering increased shareholders’ equity by $17,500,000. Shareholders’ equity increased by $5,963,992 as a result of the transaction to convert the convertible debentures and note payable into equity. The increase is made up of an increase of $5,243,077 in share capital and $2,467,330 in contributed surplus reflecting the fair value of the shares and warrants issued, less the amount of $869,014 eliminated as the equity component of convertible debentures, and less $877,401 charged to deficit to reflect the excess of the consideration given for the equity component of the convertible debentures over the fair value.

As at March 31, 2009 ECU Silver had 279,374,424 shares outstanding, 15,480,000 options outstanding granted under its stock purchase plan at a weighted average exercise price of $1.88 each, and 45,060,117 warrants outstanding at a weighted average exercise price of $1.13 each.

CONSOLIDATED CASH FLOWS
Cash used in operating activities

Cash used in operations for the quarter ended March 31, 2009 was $2,402,760 compared to $2,168,163 in the prior year. This change reflects an increase in interest costs related to the higher level of debt as well as the higher cost of that US Dollar denominated payment as a result of fluctuations in the US Dollar. The change also reflects a higher level of foreign exchange loss that resulted from fluctuations in the US Dollar.

Cash used in investing activities
In the first quarter of 2009, cash used for mining properties was $1,524,787 and $10,484,163 for the acquisition of property, plant and equipment. This compares to $2,932,134 and $469,544 respectively in the comparable quarter in 2008. The current quarter’s figure for property, plant and equipment includes $10,337,487 paid in cash towards the acquisition of the Plant.

Cash from financing activities During the quarter the Company completed an offering of 25,000,000 subscription receipts at a purchase price of $0.70 per subscription receipt, for an aggregate gross proceeds of $17,500,000. In connection with the offering the Company issued to the subscribers 25,000,000 common shares and 25,000,000 common share purchase warrants. Each warrant entitles its holder to acquire one additional common share at a price of $0.95 per share at any time until February 20, 2014. The gross proceeds of the offering were assigned $11,900,000 to common shares and $5,600,000 to warrants. During the quarter the Company paid $1,854,537 in share issuance costs in relation to its financing activities.

Cash and cash equivalents As of March 31, 2009, the Company held cash and cash equivalents in the amount of $2,144,466 compared to $538,215 at year-end in 2008.

RELATED PARTY TRANSACTIONS
During the three months ended March 31, 2009 there were no related party transactions.

GENERAL INFORMATION
Commitments and contingency

The Company is a party to a lawsuit regarding the title to four of the mineral concessions comprising the Velardeña property, in respect of which a third party has alleged to have an undivided 30% ownership interest. This matter is currently being litigated before the courts in Mexico, the Company havingappealed the latest decision rendered as to title. The Company is not able at this time to predict the outcome of such appeal or to estimate the potential amount of any loss that may result from an unfavourable ruling. In parallel to these court proceedings, the Company continues to pursue a negotiated settlement with such third party and, to such end, has made a good faith deposit of funds to be applied toward any future settlement.

Risk and uncertainties
The Company is subject to various risks factors including the following:

Resource exploration, development and operations are highly speculative and characterized by a number of significant risks including, among other things, unprofitable efforts resulting not only from the failure to discover mineral deposits, but from finding mineral deposits which, though present, are insufficient in quantity and quality to be mined profitability. Few properties that are explored are ultimately developed into producing mines. There is no assurance that the Company’s mineral exploration and development programs will result in any discoveries of bodies of commercial mineralization. There is also no assurance that even if commercial quantities of mineralization are discovered, a mineral property will be brought into commercial production. Furthermore, the Velardeña District Properties are the only source of the Company’s mineral resources. The potential for the Company to generate revenue in the future depends principally upon the Velardeña District Properties. Any adverse development affecting the progress of the Velardeña District Properties may have a material adverse effect on the Company’s operations and financial condition. Substantial expenditures are required to establish and upgrade mineral resources, to establish mineral reserves, to develop metallurgical processes to extract metals from mineral resources and, in the case of new properties, to develop the mining and processing facilities and infrastructure at any site chosen for mining. No assurance can be given that the funds required for development can be obtained on a timely basis. Whether a mineral deposit will be commercially viable depends on a number of factors, some of which are: the particular attributes of the deposit, such as size and grade; metal prices which are highly cyclical; and government regulations, including regulations relating to prices, taxes, royalties, land tenure, land use, importing and exporting of minerals and environmental protection. Unsuccessful exploration and development programs could have a material adverse impact on the Company’s operations and financial condition. The Company is subject to various operational hazards and risks. The Company maintains insurance against risks in the operation of its business in amounts that it believes to be reasonable. Such insurance, however, contains exclusions and limitations on coverage and the Company's insurance may not cover all potential risks associated with a company with operations of the nature of those of the Company. There can be no assurance that any such insurance will continue to be available, will be available at economically acceptable premiums or will be adequate to cover any resulting liability. In some cases, such as with respect to environmental risks, coverage is not available or considered too expensive relative to the perceived risk. Losses resulting from any uninsured events may cause the Company to incur significant costs that could have a material adverse effect on the Company's operations and financial condition. The Company incurs exploration expenses in Mexican Pesos and financing charges in U.S. dollars while generating revenue in U.S. dollars. The financial statements of the Company are prepared in accordance with Canadian GAAP. The majority of the Company’s revenue is generated from the sale of gold, silver, lead and zinc. Prices for such metals fluctuate on a daily basis, have historically been subject to wide fluctuations, and are affected by numerous factors beyond the control of the Company, such as interest rates, inflation, currency values, speculative activities, global supply of and demand for precious and base metals, metal stock levels maintained by producers and others and international and political conditions. Consequently, fluctuations in metal prices and the exchange rate of the American and Mexican currencies in relation to the Canadian dollar could have a significant adverse effect on the Company's earnings, halt or delay development of new projects and reduce funds available for further mineral exploration. The Company’s currency risk is somewhat mitigated through the offsetting US dollar streams of metal sales in US dollars and interest and other expenses in US dollars. Further exploration on, and development of, the Velardeña District Properties may require significant additional financing. Accordingly, the continuing development of the Company's properties will depend upon the Company's ability to generate cash flows and/or to obtain financing through equity financing, debt financing, the joint venturing of projects or other external sources. Failure to obtain sufficient financing may result in a delay or an indefinite postponement of exploration, development or production on any or all of the Company’s properties, or even a loss of property interest, or have a material adverse impact on the Company’s future cash flows, earnings, results of operations and financial condition or result in the substantial dilution of its interests in its properties. There can be no assurance that additional capital or other types of financing will be available if needed or that, if available, the terms of such financing will be favourable to the Company. Debt financing will expose the Company to the risk of leverage, while equity financing may cause existing shareholders to suffer dilution. There can be no assurance that the Company will be successful in overcoming these risks or any other problems encountered in connection with such financings.

A comprehensive list of risk factors that may affect the Company is set out in the Company’s Annual Information Form.

Auditors
The auditors have not performed an audited the Interim Financial Statements for the three months ended March 31, 2009.