First off, I agree with current board sentiment that the merger will be good for ECU. Only in the last few posts have people expressed that it will be good for Golden Minerals also. GM has had a dropping share price since the beginning of December 2010 and has been burning thru their bank account at a rapid rate. They too need the cash flow that a ramped up Velerdena mine will produce. Although ECU had a losing Q1 of 2011, the mine operation turned a $2 million profit and revenues were 50% higher than mine costs. The good news is we have some short term improvements in revenues and thanks to the merger there will be large inprovements in a year or so also. The short term improvements are higher grade ore now being fed into our mills and the 25 to 30% improvement in recoveries now that we have added the copper circuit to the oxide mill.

GWR posted today that the plan will likely be for a 2000 tpd sulphide mill and an increase of the oxide mill to 1000 to 1200 tpd. Lets assume total production will be 3000 tpd. One area for great improvement in revenue other than tonnage increases will be when we have a sulphide mill which also pulls the gold out of the gold pyrite. Up until now we have had to pay shipping up to the states and pay a 35 to 40% cut to someone else for them to treat the gold pyrite. I expect this problem will be solved by the addition of a circuit in the proposed 2000 tpd sulphide mill.

The average grades in our 2008 resource report were as follows:

Gold = 2.10 g/t

Silver = 153 g/t

Lead = 1.60%

Zinc = 1.95%

The current metal prices are as follows:

Gold = $1,510

Silver = $34.80

Lead = $1.17/lb

Zinc = $1.03/lb

Using these prices, the average value of our ore is $358.72/tonne. If we use an average recovery of 70% and a 10% smelter fee, revenues will be $226/tonne. Last quarter the average of our mining and milling tonage was 55,880 tonnes (621 tpd). Total cash operating and development costs were $3,831,890 for the quarter which is $68.57/tonne. Thus our potential profit at current prices is 226 - 68.57 = $157.42/tonne.

Now for the good part. 3,000 tpd x 90 days/quarter x $157.42 profit/tonne = $42,500,000. Annualized this is $170 million dollars profit. Even if corporate costs are $10 million per quarter, this is $130 million profit per year or $4 per share on 32.5 million shares. This my friends is why Golden Minerals is willing to spend their precious millions on us and is why they need us too.