There have been some comments expressed here and elsewhere questioning the profitability of the mining operations, and how quickly they can be restarted. This ties in with the questions regarding the potential for a future financing, and I think the issue is also related to the management competancy, so I will touch on all of these points.

Before the magnitude of the MC was realized, ECU was working to achieve profitability from mining operations, and also to expand their production capacity. Profit is dependant on having stable production from the mines, and also from having efficient processing operations at the mill. If either is not running at the optimum, then a profit is unlikely for a small volume operation.

The last quarter for commercial operations ended in Q2 2006. At that time the mill was running only about 250 tonnes per day. Gold was below $650. Silver was below $11. Lead was about 50 cents a pound. Each of these metals produced at Velardena is much higher in price today. Only zinc is currently in about the same price range.

Now with sharply lower metals than the current levels, and much less underground development, ECU was still able to report a net PROFIT of over $1 million in that quarter.

http://www.ecu.ca/s/NewsReleases.asp... ...

Subsequently, the company went on to increase production capacity to above 300 tpd. However, the decision was made to focus on bulk testing with mill, and commercial operations were halted.

Fast forward to the current time frame. With a vastly stronger operating capacity and an additional 2 years of metallurgical data to improve the efficiency of the recovery circuits, I would expect that the company is capable of delerving much higher overall production at Velardena. Factor in the higher metals prices, and my expectation is that ECU is capable of generating a net profit once again, perhaps as high as $3 million per quarter.

The current burn rate for ECU is about $1 million per month, or $3 million per quarter. Cash reserves in the treasury will hold until around the end of the year. The burn rate will increase as production levels are ramped up, but so will the net profit. So I would not rule out that ECU could become self-financing at least to continue on as a small volume operation, while the dirlling work continues to define a larger deposit area.

I expect that the company is working now to define areas where mining can resume without compromising the bulk tonnage potential. I also expect that ECU will make an announcement as early as next month that they are going back to commercial production. It will not take much time to put that plan in effect, since operations have never ceased. The mill was still running on a daily basis, and the staff were still employed, but during the last year and a bit the company was running material for the purposes of data collection and the production numbers were lower.

As for a potential financing, I have no doubt that another round will occur. However, I also have no doubt that management is aware of the need to restrain further dilution, and they will wait for more optimum market conditions before doing a deal. With a profitable quarter or two in 2008, we could go the rest of the year without any equity offering at all. In the meantime, ECU could recover very nicely just on the bullish news of quarterly profits, and from the results of ongoing exploration. So when the next financing is announced, it could very easily be priced at $3 or even above $5, depending on the market conditions at the time.

Now I understand that the stock has behaved poorly and many people feel that is due to management indifference to the stock price. But I would suggest people consider that there is only so much that management can do to affect the trading of a stock in the short term, and frankly its not the first priority of a management team to respond on a daily basis to the market anyway. These people are compensated with options to direct the company to longer term prosperity, and long term decisions may not have the effect of goosing a stock in the short term as many impatient investors would like to see.

For all the weeping and wailing that has gone on at various forums, ECU is in exactly within the same trading range as the entire sector, and the stock is behaving exactly as one would expect for a corrective phase after gains of several hundred percent. This has nothing to do with management. People are free to express themselves on a BB anyway they wish, but complaining about management is pretty lame. If you do not have confidence in a group, then sell your shares and find somewhere that you are bullish to invest. And if management WAS willing to do backflips every time investors started whining, then I would sell my shares and move on, because that would be entirely inappropriate and it would be a red flag.

I think the strategy to manage cash resources while moving forward with exploration is the right one. I think ECU has done exactly what I wanted as an investor for the 3 years: move forward to prove up a world class resource. The market has not responded. Yet. It will...

I am disgusted with the intensity of slander and lies that certain scumbags have resorted to, for their own personal profit. I am frustrated by a challenging market that has tested the limits of my confidence and patience on occasion. But I am not discouraged with the results that have been achieved so far by this company, and I will continue to remain invested, awaiting better performance in the market.

The above represents my opinion, and I too have the right to express it, just as everyone else on this forum. I do not have an obligation to say nice things about the company. I do not require special qualifications to post an opinion. And if my attitude comes off as condescending, then people can deal with it, or ignore me. I do not care. Feel free to post any rebuttle to my comments. But if the only avenue for discussion is to attack me personaly then be it

mike