Hope this piece in Todays Midas doesn't cause the silver bullion banks (JPMorgan/HSBC) to further punish ECU to get at Bill Murphy.

ECU Silver (51 cents Cdn) is one of GATA’s staunchest supporter and remains my largest holding and has been ever since I went to their Velardena mine in 1999. Bryant Blake went to great lengths to present the following analysis, which may be of interest to the number of Café members who own the stock…

The last few ECU news releases and Sedar postings have supplied us with a lot of valuable information from which we can project future precious metal production and cash flow. My estimate is based on the following assumptions and factual data:

-Current gold price = $940/ounce

-Current silver price = $14/ounce

-The latest news release said that the maximum recoveries from the oxide mill are 80% for Au and 75% for Ag and that 50% of the unrecovered metals can and will be recovered by a slow leach process. If we assume average Au recovery of 75% and average Ag recovery of 65% and add half of the unrecovered metal, the total average recoveries will be 87.5% for the Au and 82.5% for the Ag.

-ECU's NI43-101 M&I oxide resource contains 1,075,000 tonnes grading an average of 2.95 g/tonne Au and 162 g/tonne Ag

-In July, ECU's oxide mill processed an average of 498 tonnes per day. I will assume an average processing rate of 500 tpd going forward.

-ECU's pyrite concentrate consists of 13,825 tonnes grading 20.6 g/tonne Au and 151 g/tonne Ag. According to GWR, ECU has another 21,000 tonnes of pyrite in the tailings pond. The total tonnage of pyrite concentrate is thus 34,825 tonnes.

-The recently constructed roaster can oxidize 30 tonnes per day of the pyrite concentrate.

If ECU going forward blends the 30 tonnes per day of the roasted pyrite with 470 tonnes per day of the oxide ore and the assumed recoveries listed above are used, the monthly dore production will contain the following amounts of precious metals:

Au per 30 day month = 1692 troy ounces

Ag per 30 day month = 64,198 troy ounces

The monthly revenue from these metals assuming a 3% refinery fee and the above metal prices = $2,414,574

Quarterly this = $7,243,723 (this compares to revenue of $2,699,247 in Q2 - 2009)

Annually this = $28,974,893

Since ECU's operating cost was $3,528,753 last quarter, it is reasonable to assume that costs will increase somewhat due to operating the roaster to say $4 million per quarter. This will result in a quarterly profit of $3,243,723 which is $12,974,892 per year or about 4 cents per share which at the current S&P PE ratio of 100 gives us a price of $4 per share.

The 34,825 tonnes of pyrite concentrate is enough to last 3.18 years at a feed rate of 30 tonnes per day. I also suspect that the quantity of pyrite concentrate will increase as ECU processes sulphides in the future.

The 1,075,000 tonnes of oxide ore are enough to last 6.27 years at the feed rate of 470 tonnes per day. There is also an additional 379,000 tonnes of infered oxides grading 1.68 g/tonne Au and 186 g/tonne Ag, plus some vein discoveries which were not included in the latest NI43-101.

ECU has done more than anyone could have hoped for given current market conditions and the companies relatively small size. I think this major cash flow increase will enable them to pay off their accounts receivable which will calm down Golden Tag. This will give ECU a two rocket booster lift off. If we get the hoped for $1200 gold and $30 silver we are up to three boosters!
Regards,
BB