Dear Clients,

Although the acquisition of the Hecla Mining Company mill will beneficially allow ECU Silver Mining, Inc. to extract gold (and silver) from their gold-pyrite concentrate and generate positive cash flow, ECU's stock price remained under pressure last week. Let me explain why.

After opening higher Monday morning, January 26 at C$.90/sh., the stock sold at C$.79 Monday afternoon as Blackmont Capital began the “pre-sale” process of this C$17.5 million offering of 25 million units (1 share and 1 warrant) at C$.70/unit (negotiated).

As the lead underwriter, Blackmont, who guaranteed ECU the price of C$.70/unit, continued to market the investment throughout the week, soliciting institutional investors including hedge funds.

Unfavorably in this instance, many hedge funds do a tremendous disservice to a stock by shorting it in an arbitrage transaction, driving the stock price lower before acquiring the offered units. Unfortunately, there is no way to prevent it; it is the (sleazy) nature of the beast as long as the regulators turn their backs on naked-shorting or fail to reinstate the “uptick rule.” Regarding the latter, there does appear to be a growing movement at the S.E.C. to restore this “uptick rule,” cutting off one of the tools of the unethical hedge funds. However, it won't help us immediately.

Perhaps some of these collusive hedge funds are the same players I have been attempting to single out in my ongoing formal complaints to Canadian regulators and five Canadian banks concerning the manipulative trading practices involving ECU common stock.

Once all of the 25 million units are sold, I expect the stock to stabilize and gradually begin to recover as the hedge funds slow their operation. In addition, shortly after the February 18th closing date, I predict that the two mining analysts at Blackmont Capital, Inc. and TD Securities, Inc. will issue favorable reviews on ECU and the mill acquisition. It was these two analysts who had positive comments regarding ECU's 43-101 mineral report in December, 2008. TD's analyst referred to ECU's resource as, “one of the largest undeveloped silver projects in the world,” while Blackmont's analyst stated that, “ECU has become a major precious metal system that we believe will attract the interest of the large gold and silver companies.”

Of utmost importance, once the mill is acquired and begins production, I predict that ECU will generate a healthy amount of free cash flow. This should go a long way toward the restoration of the necessary improvement in investor psychology--something that has languished for non- producing, exploration mining companies since the middle of 2008.

Once the mill is operating, also assisting ECU's stock price may be a continuation of the increase in gold and silver prices. As mentioned in the Bloomberg article of January 30th that accompanied my letter to you, titled, “Gold Rally Fills Vaults With Bullion as Bank Stimulus Increases,” there is an increasing recognition of a need for gold (and silver) among U.S. and global institutions. Also supporting higher prices is the following chart of World Gold Mine Supply:

Summarizing these points, ECU's stock price should begin to recover soon, as the company generates free cash flow and precious metal prices continue to climb. Merely six months ago, exploration companies received valuation for their resource or potential resource without a need for cash-generating production. However, times have changed amidst this credit crisis and ECU is responding accordingly.

Wistar W. Holt

January 31, 2009