ECU drills 3.66 g/t Au, 295 g/t Ag, 7.87% over 12.04 m

2009-04-01 07:32 ET - News Release

Mr. Michel Roy reports

ECU SILVER FILES FISCAL 2008 ANNUAL FINANCIAL STATEMENTS AND PROVIDES OUTLOOK

ECU Silver Mining Inc. has released its audited consolidated financial statements for the year ended Dec. 31, 2008, and the related management's discussion and analysis of financial position and results of operations. Stephen Altmann has also filed its annual information form in respect of the year ended Dec. 31, 2008.

Since the last report to shareholders, ECU has achieved several significant milestones, including:

• Discovery of massive sulphide mineralization;
• Significant increase in silver equivalent mineral resources to 40 million ounces of measured and indicated and 391 million ounces of inferred;
• Completion of a $17.5-million financing; and
• Purchasing a gold and silver recovery plant.

Discovery of massive sulphide mineralization

In July, 2008, ECU was very excited to announce that ECU had confirmed grades from two massive sulphide veins intercepted at depth.

The first drill intercept yielded 3.66 grams per tonne, 295 grams per tonne silver, 7.87 per cent lead and 12.07 per cent Zn over a core length of 12.04 metres (40 feet) (17 grams per tonne equivalent or 1,100 grams per silver equivalent).

ECU Silver Mining has intercept yielded 7.90 grams per tonne, 550 grams per tonne gold, 11.25 per cent lead and 27.68 per cent zinc over a core length of 1.75 metres (six feet) (33 grams per tonne equivalent or 2,180 grams per tonne silver equivalent).

The key points regarding the two massive sulphide veins (the M-S veins) are:

• The grades in the M-S veins, are substantially higher than the Santa Juana NI 43-101 inferred resource grades;
• Drilling has entered a zone where a multiple number of massive sulphide lenses may be found;
• The extent of the alteration zone is unknown as drilling has not yet reached the intrusive;
• These drill results for the M-S veins are considered to be extremely significant as they provide a high level of confidence to the geological model, which suggests the potential for the discovery of additional deep-seated massive sulphide replacement (Mantos-type) deposits. These antos-type sulphide deposits represent major sources of precious and base metals in a high-grade, high-tonnage ratio.

Significant increase in silver equivalent mineral resources

In December, ECU released results of the fourth National Instrument 43-101 (NI has 43-101)-compliant mineral resource estimate on the Velardena district properties in Durango state, Mexico. The results confirmed a silver equivalent increase in measured and indicated resources of 6 per cent to 40 million ounces and an inferred resource increase of 118 per cent to 391 million ounces of silver equivalent.

The objective of the exploration campaign was to convert some of the mineral potential into the inferred category. This was successfully done and ECU now has a mineral inventory that establishes Velardena among the larger silver and gold projects in Mexico. This increase in the mineral resources is the largest in the history of the company. After only 3.5 years, the exploration team has increased the mineral inventory by over 18 times.

The growth of the mineral resource has shown remarkable advance. Exploration efforts at Velardena have consistently yielded excellent results with several veins still open laterally and at depth, and this has been quantified and reported by way of the mineral potential.

Completion of a $17.5-million financing

In February, 2009, ECU completed an equity offering of 25 million subscription receipts at a price of 70 cents per subscription receipt for total gross proceeds of $17.5-million. The subscription receipts were purchased and resold to the public by way of a short-form prospectus filed in all provinces of Canada on a bought-deal basis by a syndicate of underwriters led by Blackmont Capital Inc. and including TD Securities Inc.

Each subscription receipt entitles its holder to receive one common share of the company and one common share purchase warrant. Each warrant entitles its holder to acquire one additional common share at a price of 95 cents per share at any time until Feb. 20, 2014.

Purchasing a gold and silver recovery plant

In March, 2009, ECU completed the acquisition of a gold and silver recovery plant in consideration of a cash payment of $8-million (U.S.) and the issuance of 750,000 common shares of ECU to Hecla.

The oxide plant is a conventional cyanide leach, Merrill Crowe, precipitation circuit. It is ideally suited to treat ECU's oxide material and gold-pyrite concentrate inventory. The company expects to generate a gold and silver precipitate or dore bars from the mill, either of which can be sold to a third party refinery. The oxide plant has a capacity to process mineralized material at 500-tonnes per day.

The plant is located only two kilometres from the company's Santa Juana mine site and immediately adjacent to its Chicago property. The close proximity of the plant to ECU's mining operations will give the company a significant advantage with respect to transportation.

The acquisition of this plant will provide ECU with an opportunity to generate a gold and silver dore bar, and sell these to a refinery without the need to enter into smelter contracts.

Outlook

The near-term objective for 2009 is to minimize our financial risk through the operation of the oxide plant. This will be achieved by treating the mineralized oxide material and sending the product to a refinery for payment. In addition, ECU looks forward to further testing the massive sulphide showings at depth later on in the year. Thirdly, ECU plans on completing an economic study on the sulphide mineral resource.

Looking ahead, ECU believes the prospects for commodity prices will remain strong, and that ECU will see a recovery in base metal prices. ECU plans on ensuring that it is well positioned to capitalize on these trends by having an operation to treat the oxide resource as well as ensuring ECU are positioned to run the sulphide mill when lead and zinc prices recover.

The primary focus this year will be on milling operations, however, the majority of the value of the company remains on the significant current mineral resource and its continuing exploration potential.