I was able to speak with Steve today and asked a few questions about the performance at the mills that are operated by ECU. It has only been about a year since ECU recommenced production, and the new oxide mill has only been operational for a couple of quarters. So I am not surprised that the company is still testing different processing regimes to try and gain the maximum efficiency. Running poly-metallic sulphides and oxides through a recovery circuit is a very complex undertaking. I am happy that the company was able to get the new mill refurbished and running so quickly but the learning curve is what it is, and it may take more time to get the whole process up to optimum output. The current throughput level is around 600tpd, and that should be enough to earn positive cash flow in the future, especially with the spot market performance of the metals lately. So I think it is just a matter of time to get things tuned at the mills and then ECU should be able to report a regular stream of operating profits from the mills.

I have seen critical commentary coming from unreliable sources about the production, and to me these people are either ignorant on the reality of the learning curve for a new circuit, or they are deliberately misrepresenting the situation to support their own agenda and trading. For reference, look up the numbers reported by AGI a few years ago, and compare them to the operating performance reported today. The company is running the same ore through their operations, but it took several quarters to get the mill running up to design spec and achieve profitable production. This is common and nearly every other mine start-up in the last 4 years has gone through the same issues.

I also chatted with Steve about the necessity of getting exploration ramped up again to regain speculative interest in the stock. The company is lining up a drill contractor to get a deep drilling program underway, with an underground drill to target the skarn and MS zones at depth. This is the biggest upside potential for the stock, and positive results could attract a lot of new investors to the story. ECU is also considering doing more infill drilling to upgrade the current infered resource to M&I. All of this costs money, so back to my first paragraph to emphasize how important it is to get the mill efficiency improved as quickly as possible.

My overall outlook for ECU remains cautiously optimistic. I think the objectives are achievable and if so we can look for a much stronger market behaviour from the stock. But the clock is ticking and the risk level is high. The key to making this year a good one is to make it more risky for the shorts and more attractive for the longs. If we hear of positive operational improvements in the next few months, and guidance for a new drilling program, then I believe ECU will trade above a buck shortly thereafter.

These comments are strictly my personal opinion. I am biased, as a shareholder, and ECU is a paid advertiser on my website.

cheers!

mike