The management discussion gives a better breakdown of the operating results:

http://www.ecu.ca/pressreleases/2010/ECU%20MD&A%20Dec%202010.pdf

About half way through the report a table is posted that demonstrates ECU was able to accelerate mine production in Q4 and that accounted for increase on the quarterly average, but the grades for the quarter were below the quarterly average for the full year. This was even more pronounced in the sulphide ore.

Also note that in Q$-2010 ECU mined less ore but the grades were much higher. So the question is, did the new development this year occur in lower grade zones of the mine, or is the company struggling to control dilution as they process larger quantities? This is the kind of question that is very important for shareholders and where I was going with my previous post.

I wanted to see more detailed breakdown. For example in Q4, the company reported processing a total of 231,056 tons with an avg grade of 2.54 g/t gold. By my math that works out to about 18,870 ounces of gold in the rock, and yet only 9,961 of gold was carried in the metals produced. Thats an efficiency of just 53% and there is plenty of room for improvement. As an investor, I want to see that information clearly presented. I can work it out myself but I wonder how many others will take the time to do so. Surely we can expect better things from the company going forward, and to me the best reason to buy shares in a junior is if you are confident the company will record improved operating performance in the near future.

Production efficiency is still low compared to other peer companies. I suspect the metallurgical issues are also related to the sulphide ore, and ECU will not be the first Mexico producer to have copper bugger up the leach circuit. It is a problem that can be resolved and I suspect the company will do so.

We have seen numerous posted zones of the mines where the grades are much higher than the average run of mill material, even accounting for dilution across mining widths. That is the second key area to focus attention on. Again, ECU is not the first Mexico junior to have a challenge getting high grade ore mined efficiently across a very narrow interval. IPT and GCU have both worked hard to get their mines running more efficiently and it can be done.

I do not want to give the appearance that I am slamming the company. I am not, and I stated that I have bought more shares today. I could easily sell and quietly move on if I did not have confidence. I think the board is more functional if real issues are discussed and my opinion is presented with full honesty on that basis. If people do not agree then post a different point of view, I will be happy to reconsider my opinion.

cheers!

mike