*** Ag/Au/Cu/Zn/Pb related post (ECU.V ~ ECUXF.PK) ***
From the 5-22 'edition' of GATA Bill Murphy's PM site, 'LeMetropole Cafe'
Café members:
It is very unusual I pay so much attention, or bring to your attention, to a stock such as ECU Silver. However, since I have believed it to be one of those stocks that is going to the moon, and is always the one everyone else owns but me, I am going overboard that it does not get swept through the cracks. The history on this home run:
*MIDAS visiting their property in 1999 and wrote: Indiana Jones and the Mine of Boom
Little did I know at the time, it was close to becoming the "Mine of Doom!"
*The stock was around 25 cents Cdn. It rose, then collapsed, as management screwed the deal up.
*The stock fell at one point to ½ cent. The CEO was fired. The plant manager, Michel Roy, became the new CEO.
*Michel is a class act, honorable, smart, and is known as a brilliant geologist.
*Michel came to Gold Rush 21 and ECU has been a substantial GATA supporter.
*When the stock was trading between 25 and 35 cents Cdn., Michel began to come up with incredible results. This was only 6 months ago. MIDAS began jumping up and down. Few cared. I could not comprehend why.
*Just the way it is I guess. So, I continue to jump up and down.
*Each to their own. If all goes as anticipated, this stock has a LONG way to go when the investment world wakes up. Its giant move higher will allow me to do whatever else I want to do in the future … sailing off into the sunset at my young age would be no fun.
*There is always a caveat in the precious metals mining world. Numerous things can kick in to cause a damper on what we expect to occur. However, if MIDAS is right, this is a rare one, that should become a super star. Already for 2006, it is the 3rd most successful Canadian stock, and it is only warming up.
*From my friend S.Y., one of ECU’s largest shareholders and a brilliant young man, who sent The Café the following:
ECU Silver
The ECU Silver express train gathered some serious steam last Friday afternoon and pulled off one of the most incredible intra day reversals of any stock I have ever owned. What was most impressive about the move was the fact that:1) HUI was still down for the day (although well off the lows) and, 2) that the reversal for ECU came on heavy volume on a Friday afternoon before the beginning of a long weekend for Canadians as Monday May 22nd is Victoria Day and markets are closed (you would have figured many left early for the day).
Although the PR that came out on Friday (will talk about that later) did have an impact on the rally, I think there were OTHER factors in play here that provided the bigger push for the sudden reversal:
1) ECU is ABOUT the ONLY PM stock (and yes that includes the Goldcorps and Newmonts of the world) that DID NOT break below its 50ma in this SAVAGE raid in the shares over the past two weeks;
2) ECU did touch its 50ma yesterday for about 30 seconds and once the mkt saw it held, it shot back up like a rocket;
3) Many people probably panicked/out smarted themselves and sold at $2.60 and $2.50 etc ..thinking that ECU was going back down to $2.00 and figured they would buy back at lower prices. Well, next thing you know the stock is back above $2.70 in a heartbeat. The sellers now panicked the “other way” and became buyers to get back in as they did not want to go home 100% out of their ECU position BEFORE a long weekend.
4) Many investors/Funds that missed the run up waiting on the side lines for an entry level were probably thinking lower prices might be possible(given the pressure the sector was under)decided to step up and bought with conviction once we crossed $2.50 and then again above $2.79;
5) ECU has built a nice "box" formation between $2.40 and $3.40 over the past 6 weeks. It was not by accident that both Thursday and Friday, the shares DID trade below $2.40 intra day but on both days we ended up closing ABOVE $2.40...Thur at $2.49 and Fri$2.95 a classic bear trap. Thus I can say with little doubt that once HUI firms up and ECU takes out $3.40, we will touch $4.00-$4.50;
6) ECU took out it’s down trend line of the past week at $2.79 and as soon as that happened, it was like wild fire out there on the buy side!!;
7) HUI is down 7 days(8 after today) in a row (and 11 of 14 trading days if u include today), even the bears can’t argue about the shares bouncing back over the next week or so, and ECU is one of the best companies to play that bounce back on. Last to fall and first to rally back, that is the MOST HEALTHY SIGN a stock can have and ECU has done that to perfection time and time again (the same thing happened early in the year when HUI went from 350 to 280, and ECU actually went up).
2006 Q-1Press Release
ECU has made such a GREAT habit of coming out with so many fantastic discoveries and assay results over the past 6 month, that most people have forgotten that ECU is also already in production. Milling at 300tpd might seem like a tiny amount to some, but you do not need more then 10 finger(if that) to count how many gold/silver companies actually produce anything in Mexico that like to compare themselves to ECU. There is some crazy number out there that something like ONLY 1 in 1000 exploration companies actually EVER ends up producing ANYTHING. I point that fact out because making money in the mining business has to be the MOST DIFFCULT sector on the planet to achieve a profit in.
ECU is already well on the way of being a viable operation and the table is set for them to substantially increase their production before the year is out which will separate them from the “pretenders’ even more.
--“The company generated an operating profit of $350,293 in the first quarter compared with a loss of $104,433 for the same period in 2005.” (While averaging only 195 tonnes per day production because they were upgrading the mill again)
---The company anticipates reaching its short-term goal of 340 tonnes per day by the end of May, 2006. (I will let you imagine what this will do to the bottom line considering what they did in the 1st quarter at 195 tpd)
They say “seeing is believing” so here is some pictures of the mill:
View of the conveyer belt where ore is moved into the cone crusher after it has passed through the jaw crusher
View of the cone crusher where ore passes after it has gone through the jaw crusher
Pyrite circuit testing update
For those that follow the company closely this was the BEST part of the new release:
“Although this process has taken more time then the company originally anticipated, it is pleased to report that it has received successful preliminary results from the pressure oxide leaching tests. Further tests are being currently conducted to fine tune the parameters, a final report is expected well before midyear. This was a critical step and the company wishes to point out the importance of this accomplishment as once the circuit is in full operation, the company will experience a significant impact on cash flows as this process will practically double the potential revenues from the pyrite concentrates”
This is a MAJOR critical step as the company is already sitting on approximately 15,000 ounces of gold and 150,000 ounces of silver just waiting to be processed .But until NOW, they had NOT PROVEN what was the right recovery method that would maximize the value, well now they got it!!! The company is talking about recovery rates of OVER 90% which will get them top $$ for their pyrite concentrate. Even at $600 gold we are talking about $9 000 000.00 (take away about 5% for refinery and that still leaves you with over $8.5 million) of revenue just waiting to be collected from the gold alone that is currently sitting in our tailing ponds (see photos below).
View of the upper level of tiered tailings View of the middle level of the tiered tailings
Guess this is why Mr. Roy stated the following:
“Now that the mill is ready to begin operating at an average of 340 tpd and with the implementation of the pyrite circuit, year-end operational results will easily be the company's best on record.”
Currently, the company is being valued 100% as an exploration company, but that will change soon enough as ECU is no longer just an exploration company.We have the perfect scenario taking place here:
1) the company is planning to increase production ;
2) at the same time they continue with the remaining 80% of their drilling program ,and;
3) Throw in the fact that their updated 43-101 is expected over next 6 weeks (which I bet will shock many people still in doubt) and we all agree that things are looking GREAT for the company.
Also, David Chapman from Union Securities, and one of Canada’s most renowned technical market experts, appeared on “Financial Friday”. A show on Rob’Tv (a national business TV station ala the USA’s MSNBC). I think it is a worth while 30 minutes show to watch as David’s view on Oil and Gold are very much in line of GATA’s thinking. $1,000.00 gold is only a question of “when” not “if” according to him. Also, towards the end of the Show, he picked ECU Silver as his top pick for the show and brilliantly explained why. He did not give a target but he stated that they have much higher targets for the stock then the current price. This mention on National TV will give ECU further major exposure and Tuesday could see a major “gap up” in the stock if the sector decides to take a break from this gut wrenching down draft.
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