ECU Value Analysis

Bryant Blake

As an ECU shareholder, the companies poor share price performance over
the last 20 months has motivated me to examine the companies resource
value to see if the market is correct or not. As you will see in the
numbers below, the markets current valuation of ECU is extremely low
on a historical basis, and that ECU is at its best buy value since its
share price was less than 10 cents per share many years ago. Below is
a table listing relevant resource, share and price data for the dates
of 6/3/08 (current), 11/10/06 and 12/04/05. Each of these time data
points is exactly 4 months and 10 days past each of ECU's NI43-101
resource report news releases which were on 1/24/08, 6/30/06, and
7/25/05. These resource reports can be accessed on ECU's web site at
the following links:

http://www.ecu.ca/s/NewsReleases.asp...
Title=ECU-Silver-Doubles-NI-43-101-M... ...

http://www.ecu.ca/s/NewsReleases.asp...
Type=News-Releases&_Title=ECU-Si... ....

http://www.ecu.ca/s/NewsReleases.asp...
_Type=News-Releases&_Title=Techn... .

* Includes base metals. Base metals contributed 20% of the
MI&I resources and 16.02% of the potential resources.
** Dollars U.S.
From these tables, it is evident that ECU has added greatly to its
value over the last 3 years using MI&I. Both the companies silver
resource and the silver price have had substantial gains over this
time resulting in great increases in the companies silver resource
value. Although the companies' shares outstanding have increased
moderately, the multiple increases in the resource value have resulted
in the ratio of Resource/Market Cap increasing 4 fold between November
10, 2006 and the current time. Looking at the MI&I Ag equivalent
ounces, it can be found that between the companies 1st and 2nd
NI43-101's that the amount increased by 6.32 million ounces per month,
and between the 2nd and latest NI43-101's the amount increased by 6.29
million ounces per month. This shows that the company is consistently
adding over 75 million ounces of Ag equiv per year. This is much more
than the annual production of the world's top silver producer Penoles
which is about 50 million ounces per year and is nearly twice the
annual production of the world's largest silver mine, BHP's
Cannington, which is about 40 million ounces per year.

While the growth in the MI&I resource has been great, if we add in
potential ounces, then the resource growth has been simply phenomenal.
For calculation of the potential resource statistics, the upper range
value of potential resources was used from both NI43-101 reports. The
resource value including potential ounces has increased more than 10
fold in the last 19 months, during which time the companies share
price has dropped by 44%. Using a value basis including potential
ounces, the companies resource value divided by market cap has
increased 18 fold in the last 19 months from 3.07 to 57.87. Going back
to Jason Hummel's old stock value reports, my memory is that this
ratio for large caps and producers was generally 1 to 10, for juniors
were generally 10 to 40, and for highly speculative plays was
generally over 40. I consider ECU far from speculative because they
have permits, are currently mining, have full land claim ownership,
have no reported legal issues, have good management, and are in mine
friendly Mexico.

I like comparing ECU to Pan American Silver, mostly because both
companies are producers but their production is small relative to
their resource. I also like comparing to Pan American because I
consider it a well run company, it is profitable, and thus sets a good
company model to shoot for. According to Pan Americans 2007 annual
report, the companies total silver reserves plus MI&I resources are
561.612 million ounces. This does not include gold and base metals.
Pan Americans gold grades are generally low, but they do have some
fairly good base metal grades. I believe that a doubling of Pan
Americans silver reserve and resource would give a good to high
estimate of their silver plus gold and base metals. This would put Pan
Americans Ag equivalency at 1,123.224 million ounces or slightly below
ECU's total including potential reserves. Using the $16.90 per ounce
silver price in the above ECU study, this gives Pan American's reserve
and resource a value of $18,982.5 million dollars. Pan American's
current market cap is $2,591.85 million dollars. This gives the
company a resource value divided by market cap figure of 7.32. This is
below ECU's value of MI&I of 10.65 and is way below ECU's value
including potential ounces which is 57.87. Also, I would like to point
out that the silver resource used above for Pan American includes
148.217 million ounces which are classified historical or potential,
so using ECU's values including potential ounces is somewhat comparing
apples and apples. Based on Pan Americans stock valuation, ECU's share
price should be $2.03 using MI&I and should be $11.07 including
potential metal amounts. Please also keep in mind that Pan Americans
current valuation is depressed along with the entire junior market. I
believe that once ECU puts its potential ounces into MI&I, it will be
an $11 stock.

For value investors, ECU's current share price offers its best company
value in years. For investors who believe that the potential ounces
estimated in the latest NI43-101 by Micon are correct, the company is
currently at bargain prices and multiple price gains are just a matter
of time as the companies share price will reflect its resource. Should
ECU's resource value to market cap ratio ever get back down to 3 (a
level it was below in the past), its share price using MI&I would be
$4.97, and including potential metals its share price would be $27.01.
Regards,

-Bryant Blake, P.E

Post Notes:

- For you technical chartists, the accum/distribution volume has been
increasing while the share has been dropping, a Positive-Divergence.