We recently sat down with Mr. Stephen Altmann, President of ECU Silver Mining Inc. (TSX: ECU) to get a sense of what to expect in 2010. ECU Silver is well positioned for growth in 2010, having recently completed a financing, with expected significant results from operations in January, and a planned scoping study scheduled for completion in Q1 2010. In this exclusive BabyBulls interview, he discusses the Company’s mineral resource estimates, the Company’s milling capabilities, and highlights from 2009.

BabyBulls: Steve, to start things off could you give a brief description of your company’s history?

Stephen Altmann: Sure, we are a company that that has been around for several years now. The area was mined many decades ago by artisanal miners which, in this day and age, highlighted the area as a very lucrative exploration area. Over the past 12 years we’ve been focused on exploration essentially growing the mineral resource by over 1,600% over the past four years, in particular, where today we have identified a large 43-101 mineral resource and also have two operating mills on the site.

BB: Can you give us an overview of your primary properties?

SA: We have three properties right now – we have our main Velardena property and immediately adjacent to it we have the Chicago property and then further to the north, about eight miles away is our San Diego property, where we have a 50/50 joint venture with a junior exploration company. Our main focus of interest continues to be at the Velardena main property – where we have mining operations, milling operations and that’s where we’ve done the bulk of our exploration activities.

BB: So all of your active properties are in Mexico then?

SA: Yes, all of our properties are in Mexico and we are the registered title holder of all of the claims on our property.

BB: Over the last several years you have identified a significant indicated and inferred resource that’s primarily silver at your Velardena property. Will you continue your exploration efforts or do you see yourself transitioning your focus more over to the production side?

SA: Right now, as you’ve correctly point out, we have a large mineral resource. We have a resource of forty million ounces of silver equivalent in the measured and indicated range, and we have another three hundred and ninety one million ounces of silver equivalent in our inferred category. It’s important to note that our mineral resource is very continuous and we have a lot of confidence in our inferred resource due to the material continuity of our resource at depth and laterally. Given that we have a very bullish outlook for silver and gold prices going forward, we do want to ensure that our milling operations are running at their optimal levels. And so, as with any mining company, the focus of this Company is to eventually grow this into a mid to senior tier silver and gold producer. In our case, we have the opportunity to experience growth both on the mineral resource side and on the production side. The resource currently is large enough to provide feed for a very large production operation down the road, however the continuity of the veins that I mentioned earlier, give rise to the opportunity for very strong potential to materially enhance the size of our resource. So we’re in an attractive situation where we have a large resource, we have milling and mining operations on site and we have the opportunity and ability to significantly grow both, on the production side and on the mineral resource side.

BB: As you just mentioned, the Company acquired an oxide mill last March of 2009. Can you give us an overview of its capabilities and what’s happening on the property with that mill at this time?

SA: We acquired the oxide mill back in March of 2009 and during 2009 our focus was to ensure that we could have the mill operating as optimally as could be. The target capacity of that mill was slated to be 500 tons per day and today we are operating well above 500 tons per day – and we’re actually averaging around 650 tons per day which is a 30% increase over our target capacity of 500 tons per day. So clearly, the mill is running very well for us. We feel that 2010 will be very successful for us on the milling side in the oxides as well as at our second mill, the sulphide mill. The capability of the oxide mill has proven itself beyond its target and we’re very proud that we have a very strong technical team that’s able to have made those accomplishments.

BB: You just mentioned that you also have a sulphide mill. Could you give us a real brief description of the difference of the material that you run through each of those mills, and why you need to have two different ones on site?

SA: Sure, our resource is comprised of mineralized material that’s in an oxide type of environment and another that’s in a sulphide type of environment. Effectively the oxide material is generally the same material as the sulphide except that it’s been oxidized. It’s similar to what happens to the rusting of steel on an automobile for example. The oxidation process effectively rusts the metal of the car. What we have here is that over time, mother-nature has oxidized a portion of this sulphide material. The result is that we treat those two types of material differently. In an oxide environment you basically use a cyanide leach mill where the cyanide reagents leaches out the precious metals from the mineralized material. This is all done in accordance to strict environmental guidelines. In a sulphide mill, we float the minerals from the sulfide material. In our case, we would float a lead concentrate, then we would float a zinc concentrate and then a pyrite gold concentrate. Most of the growth opportunities on the production side will be on the sulphide resource as that forms the majority of our resource. So in the future we look to being able to generate more silver, gold, lead, and zinc – all through our large poly-metallic resource. The key for us, contrary to most exploration type companies, is that we have in place an excellent technical team that knows how to explore, develop, mine and operate both types of mills to handle oxide material and/or sulfide material.

BB: On January 28th, 2010 the Company had a press release that announced the metal yields for both gold and silver as well as silver equivalent numbers for the months of December and November. Can you comment on that a little bit, and tell us what is happening in terms of metal production at this time?

SA: To preface my answer I need to remind everyone that we are classified by the securities regulations as an exploration and development company, and as such we cannot provide production or cash flow forecasts. However, we can comment on what has been accomplished to date. In January, our silver in doré bars related to that month, based on the information that we have to date, is showing that it will be a much more successful month than either November and December, and in fact our target is to be near the November and December silver output in a combined manner. I think that is a very nice way to start the year and our plan is to build on that platform.

BB: Your December and November numbers showed a total silver equivalent number that averaged around 70,000 ounces, and on an annual basis that would equate to between 800,000 and 900,000 ounces. So what you’re saying is that number could be improved upon?

SA: I think the best answer to that is on the basis of mill throughput of around 650 tons per day we have experienced in January, we expect that throughput to continue throughout the year. However, it looks like everything is working very well for us right now, and our target is to continue to see the levels that we been generating in January throughout the year and always looking for ways to optimize that.

BB: As you look back on 2009 Steve, what are you most proud of in terms of your development?

SA: The timing was fortunate for us in our ability to acquire this oxide mill. The rise in commodity prices is going to reward those who are generating sales through production, and in our case our timing was right to acquire this mill as an exploration and development company where financing of exploration and development companies in this environment is becoming, and has become increasingly difficult. We have the luxury of being effectively one of the very, very few exploration and development companies that are actually generating sales through milling operations. So I think this acquisition was timely, we’re expecting a very significant movement, to the positive, for commodity prices, and this provides us with an excellent platform for leverage to increases in commodity prices. Also, this oxide mill provides a very strong platform for the future growth in our milling facilities.

BB: AS President of ECU Silver, what occupies your attention most on a day-to-day basis Steve?

SA: As President, what’s interesting is you essentially have to be a master of several fields, so it’s very important that I have a strong knowledge of operations, metallurgy, geology, exploration, law, capital markets, finance and investor relations. You need to be wearing several hats and because you wear several hats as President you’re involved in every aspect of the Company. On many days, there is not enough hours in a day to be able to fulfill all of those functions. So, really my day is comprised of all those aspects which help to determine, with our Chairman and CEO Michel Roy, the right strategy for the Company going forward.

BB: So what you saying is that you’re pretty busy right now, right?

SA: Well, there’s never a dull day in our lives. We have a lot on our plate and we’re pretty excited about what the future holds for the Company.

BB: Late last year you raised $12 million. What capital requirements do you see over the next 1 to 2 years and how will you meet those needs?

SA: Right now our focus is to minimize our need to go out to the equity capital markets. We don’t look forward to issuing equity. We only do it when we think we have a very good use of proceeds and in this particular case we raised the money in order to advance our operations and to strengthen our balance sheet. In terms of our capital requirements, we won’t know what are capital requirements are for a larger milling operation until we complete our scoping study, which is slated to be completed by the end of March – and once that has been determined we have options to determine which way we want to go forward. Whether or not we upgrade the scoping study or whether we look to finance a larger operation. In terms of financing a larger milling operation there are several opportunities available, including the equity capital markets but also the debt capital markets, bank debt, selling forward our lead and zinc concentrates, strategic partners. We’re looking at all those avenues in order to potentially fund our future growth on the production side.

BB: What does 2010 look like for you and what might be some milestones that investors can look for?

SA: I think the biggest milestones for us right now is to ensure profitability at our operations and to deliver the scoping study for a much larger operation. On that, our plan is to provide a scoping study on a 1,500 ton per day operation, which would represent only a portion of our overall mineral resource. And then we’ll investigate the opportunity to resume exploration of our rich massive sulphide at depth. We’re very excited about the potential of this massive sulfide because this could open up several new doors to opportunities for us. Those opportunities being the ability to bulk mine that area, which would allow for a very large milling operation – which is something that not only would we be interested in, but several players in the industry would be interested in.

BB: Do you feel the market accurately reflects the status of your Company right now?

SA: Not at all, based on the opportunity for us going forward, we have a significant resource and we have a strong platform of operations. I think the Company is extremely well placed and well poised to be a very significant producer in Mexico. There are not many Companies in Mexico with a resource our size. Nobody else has the platform, location, infrastructure, permitting in place that we have to get to that senior tier level. There are a lot of producers in Mexico, however their size is somewhat restricted based on their resource. In our case our size is not restricted. In fact we have a very large resource and the potential for that resource to get larger is very, very strong. So the opportunity to create the next senior mining company in Mexico is very limited to almost everyone except ourselves.

BB: Steve, that pretty much answers my next question which is what would investors see as the three of four primary strengths that distinguish ECU Silver as an investment today?

SA: I think that’s the key. I look at our company as an investment rather than a trade. A lot of people in the market right now are trading securities in mining companies to try to get the 1% or 2% return in a quick order. In our case we have the platform to become a senior mining company and as such I look at our stock as an investment as opposed to a stock that should be traded. So the quality, if you will, of our story is really for investment purposes. And I think over time a very, very small percentage of exploration companies really ever become a material producer. And many mid-tier or small producers stay as mid tier to small producers. As I mentioned before we have that platform, we have the opportunity, we have the ability to become one of the very few senior producers in the industry.

BB: So you feel that maybe the perception of ECU is somewhat misunderstood by the marketplace?

SA: I think so. I think that people don’t appreciate the continuity of our resource. There’s tremendous continuity of our resource. It’s very large. There are some misconceptions about the metallurgy. We’ve proved that the metallurgy works. We can generate all the metals in our mineral resource. We’ve proven that and we’re proving that every day as we generate gold, silver, lead and zinc concentrates.

BB: Is there anything you would like to add today that we didn’t cover?

SA: No I think that’s mainly it. The bottom line for ECU Silver is that the Company is a solid investment, with a platform that’s in place for tremendous growth both on the resource side and on the production side. Very few companies offer that type of long-term opportunity as well as near-term opportunity – particularly, with our operations right now, we have leverage to the growth in commodity prices through both our milling and mining operations as well as our resource. Clearly with the size of our resource and with our operations, any increase in commodity prices increases the value of both, our milling operations and our mineral resource. So again, I strongly believe we are currently undervalued. We’re not well understood in terms of the potential for the Company, and I think once people realize that we have that platform for substantive growth, then people will realize our stock is very undervalued.

BB: Steve, where can our listeners get more information about ECU Silver?

SA: We have a website www.ecu.ca which we are in the process of updating – so look forward to an updated website in the very near future. It will host a wealth of new information and of course our investors are always open to call either myself at our offices in Toronto or our partners at Torrey Hills Capital, and those numbers are listed on our website.