~*~Mining and Metals Du Jour~*~

[basserdan]

From the Agoracom ECU Silver board.....

Posted by coach247

Re: News!!
in response to News!! by mooseslayer
posted on Jul 13, 10 12:33PM

I spoke with Stephen Altmann today. The conversation was limited in terms of what he could comment on, but I will also make a few 'educated guesses' of my own in terms of how the dots appear to be lined up.

The gold pyrite concentrates (#msg-52225782) behave very similar to Carlin style ore, in terms of refractory metallurgy. There are two majors that currently have processing operations that can handle that kind of feed efficiently. Altmann would not specifically identify whom they are working with, but I am confident the concentrates are being shipped to Nevada. They plan to ship at least 1500 tpm, by rail to this processing plant, and they are paid by a large metals trading house. Steve did not disclose the terms, but I will speculate they will receive a portion of the payment on delivery in Nv with a subsequent final payment pending the net processing costs and total gold ounces smelted.

So by agreeing to this deal, they are maximizing the revenues they can secure, plus they will generate a monthly income. There is the potential to renew the deal once the stockpile has been exhausted. I would imagine both parties will want to do so, and ECU can certainly maintain the gold pyrite production, while still generating a dore operation from ongoing processing of the oxides at Velardena.

Now this is all important because the company is now just above break-even for their operations. They have a modest processing capacity that is slated to produce about 1 million equivalent ounces of silver per year, sufficient at current prices to pay operating costs, and service the current debt load, but not much else. IMO, by securing this additional revenue stream from the pyrite cons, this will put ECU over the top to generate revenues to sustain the next phase of development for the company.

I would like to see a budget for additional discovery drilling, and perhaps see the company build a cash slush fund to use for additonal infrastructure improvements at the mill. I would like to see some pay down of the debt load. There are lots of places they could put this money that would make a big improvement in the financial strength for the company.

The main consideration of this news in my opinion is that the company is now moving ahead to realize the goal of being self-funding. Assuming they can achieve shipments of roughly 1,000 oz gold per month, and generate an average of $1100 per ounce, that puts $1.1 million of additiona cash in the treasury. It is already paid for, since it is sitting in stockpiles, so it is all gravy on top of the revenues they are already generating.

Altmann says they are confident they can maintain the current production rate. Development work is always ongoing to develop underground access points to sustain production. The company should not be stretched to support this new level of cash flow, in other words.

To me this is a very big step forward for the financial viability of the company. The usual detractors will find reasons to complain, as they always do, but to my mind the future looks very much brighter now that this deal is done. I have stated that ECU needs to achieve recurring positive cash flow to make this stock worth owning, and it appears they have accomplished this now.

ECU is a paid advertiser on my website, and I own shares.

Cheers!
mike
http://tinyurl.com/33wfxlo
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Posted by Argoz

Numbers for gold pyrite sales
posted on Jul 13, 10 11:13PM

When I talked to our new IR person last month he said that ECU had several offers to buy our gold pyrite concentrate at 50% to 60% of metal value and that these bids were unacceptable to ECU. Baised on those numbers, my guess is that agreed rate is close to 70% of value. Since we already have concentrate with 8500 ounces of gold and probably 50,000 ounces of silver, at current prices and a 70% return, its value is $7,843,850. This will add revenue of $1.3 million per month if spread over 6 months.

In the 1st quarter of 2010, ECU milled sulphides at the rate of 154 tpd. This means we can double processing since the sulfide mill has a capacity of 320 tpd. In Q1, our pyrite concentrate production contained 718 ounces of gold and 4746 ounces of silver. At a 70% sales rate this is $223,082 per month of additional income. If the sulfide mill is run at 308 tpd, pyrite sales would be $446,164 per month. All this is additional income and has the long term potential to increase monthly revenue fron $2 million per month to $2.5 million per month. Anytime you can increase revenue 25% without any increase in costs, the effect is huge.

Now that we have a decent rate for sale of the pyrite con, the scoping study for the proposed 1500 tpd sulphide mill can proceed.

Based on Q1 metal production, and the above assumptions, if we add a new 1500 tpd sulphide mill to the mix, revenues should rise to about $7 million per month. http://tinyurl.com/26sczyv