PERSPECTIVES
Over the past few months, ECU has established a strong platform for its future growth. This platform consists of a significant mineral resource, an oxide mining and milling operation, a sulphide mining and milling operation, extensive infrastructure, and a work force of 430 people. While the main focus of the Company will continue to be the development of our mineral resources, we have entered the first stage of this growth by focusing on our mining and milling activities and ensuring a stable base of revenue from
these operations. The next step in our growth will be the completion of our scoping study which will define the parameters for mining and milling operations that are three times the size of our current operations.

With regard to our Oxide Mill, productivity has been excellent and the Oxide Mill has proved to have very robust capacity. We have been feeding the mill consistently at a rate greater than 500 tonnes per day. Material for the mill is being sourced from underground mining stopes, low-grade stockpiles, gold-rich tailings from the flotation mill and from roasted pyrite material from existing concentrate stockpiles. Grades and recoveries for the mineralized material from the Santa Juana, San Juanes and Chicago underground mines were very good considering an important portion of the material from the Santa Juana mine was from the Transition Zone which lies between the sulphide and oxide sections of the mine and thus contains sulphides that leach poorly. A portion of the tonnage that is being milled through the oxide mill comes from high-grade roasted pyrite/gold concentrate material. Results show that the recoveries for the roasted pyrite/gold concentrate material were extremely high, most likely above 90%, despite previous laboratory metallurgical tests that indicated potential recoveries between 50% and 75%. Test work on the roasted pyrite/gold concentrate material is continuing.

During the quarter, the Company milled a blend of mineralized material that included pyrite/gold tailings. These tailings are currently the source for the pyrite/gold concentrates which are generated from the sulphide mill. The recoveries for the gold contained in the tailings blend were approximately 55%, which is superior to the 50% that is achieved when milling the tailings through the Sulphide Mill. Consequently,
based on this positive news, a new circuit was designed and will be added to the Oxide Mill to permit the daily processing of 400 tonnes of pyrite/gold tailings, in addition to the 500 tonnes of mineralized material the Oxide Mill is currently treating.

We plan to further increase revenues in the next quarter with the recent re-activation of our second mill, the Sulphide Mill. The Company will therefore be operating two mills, the Oxide Mill and the Sulphide Mill. With the significant increase in lead and zinc prices, our sulphide stockpiles have become an attractive opportunity to enhance revenues. We also plan on increasing our mining fleet in order to boost underground productivity in the sulphide portion of our mines.