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Message: ECU Silver Releases Second Quarter Results for 2011

in response to your valuation/notification of the Q2 results :

first i´m deeply holding shares of ecu since years. Following the board here, I mention

the same "faults" on the earnings. Therefore i e-mailed Mark Butler of ecu to get a

clearer view on this matter . Following you will find the several mails for your

information. please excuse the mad english, i´m - german - not a native speaker .

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Dear Sir ,
reading the last Q2-report, I mention that you operate well,
but unfortunately you didn´t sell everything you generate.
Please be so kind and explain the big differences between
the generated material and the shipment of material. There
are big differences which will at the end gives me (us -
we are several shareholder in Germany/Europe)a lot of headache
and stomachache.
At least this confusion is not very helpful for your neccessary
votum which is still infront of us. I mention too, that this
circumstances gives your shareholder the same stomachache.

Thank you in advance for a near-time answer

Answer from Mark Butler to this mail :

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Hi Michael, generated material would be ore that was fed into the mill but wasn't fully processed by the end of the quarter cut off.

For example: If we feed the mill with 8000 tonnes of ore between June 15Th and June 30Th that ore would not be processed in time for the June 30Th cut off. In or next quarterly report you would see that processed ore being reported as shipped.

Hope that helps.

Regards,

Mark Butler

ECU Silver Mining Inc.

Investor Relations

Additional question from my end :

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Hi Mark, thank´s for the quick answer.

Let me remark the following as an additional question :

The total Quarter 2 you generated approx AG 96 K ounces; shipment 62K, Difference 34 K

AU 1,6 K 1,1 K 0,5 K

PB 116 K pounds 0,0 K 116 K

ZN 212 K 98 K 113 K

I´m able to follow you by the argument that a quantity which was feed into production wasn´t fully processed by the end of the meaning quarter.

Please excuse my silly question : No pound of pb was shipped, at least only nearly half of ZN was shipped. 500 ounces of gold are not shipped; also 34K AU was not shipped.

If you announce the quarter generated …..; at the end that means to me that this material is fully processed. Otherwise it will be irritated that we have a mixed of products ready and not ready but processed.

I believe you be able to give a smart comment why not.

The reason why I questioning this, is the circumstance that we reported a loss ( and not a small one) knowing that we generated a lot of material which at the end gives us not the amount to tap the full potencial for a green quarter.

Thank´s in advance for your kind reply.

Mark answered :

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Michael here is an explanation from an engineering friend that broke down the quarter. This is about as good as it gets. Hope this works for you.

Tonnage milled at our oxide mill in Q2 actually increased 5% to 42,444 tonnes vs 40,291 in Q1. At the oxide mill, the milled gold grade increased about 6% to 1.90 g/t and the milled silver grade increased about 13% to 96 g/t. What killed us is that the oxide mill gold recovery rate dropped from 75% in Q1 to 56% in Q2 and the oxide mill silver recovery rate dropped from 65% in Q1 to 56% in Q2. My guess is that instead of reducing tonnage thruput at the oxide mill, we instead reduced the cynide concentration and this resulted in lower recovery rates.

Due to the lower recovery rates, we lost revenue of about $1.1 million worth of dore bar production. If we had sold everything we milled and had the same recovery rates we had in Q1, we would have had revenues of $7.3 million vs the $4.12 million we had and vs the $5.96 million in Q1.

Regards,

Mark Butler

ECU Silver Mining Inc.

Investor Relations

one question more :

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Hi Mark,

thank´s again fort he quick answer.

If I understood you right, than the “lost” material is in the companies stock, isn´t it ?

So the upcoming quarter (means Q3)will at least include approx. 3,1 million revenues

as a backlog from Q2 ? Is that correct ?

Thanks for another answer

Answer :

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Backlog is not the correct word when it come to the the reduced revenue in Q2 but your assumption is correct. The company didn't have sufficient amount of cyanide to extract the metals so our recoveries where down. Q3 should look more like Q1 all things being equal with metal prices.

Regards,

Mark Butler

ECU Silver Mining Inc.

Investor Relations

That´s to your information.

Infront of the merger the bride has to get pretty and the bride needs a dower.


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