Interview with ECU Silver Mining

November 30, 2009


With a massive resource and two operating mills, ECU Silver Mining Inc. (TSX: ECU) is a junior mining company poised to exploit the current and future investor demand for gold and silver.  The Company’s mission is to become a “Self-Funding Exploration Company” with the goal of growing its mineral resource to more than one billion silver equivalent ounces.  ECU, which is focusing on the exploration and development of gold, silver, and base metals at its Velardeña District Properties in Durango, Mexico, has a recent NI 43-101 compliant technical report identifying (i) a measured and indicated resource of 40 million silver equivalent ounces and (ii) an inferred resource of 391 million silver equivalent ounces.  In addition, the Company owns two mills with a combined capacity of 800 tonnes per day, with a plan to complete a scoping study for a 1,500 tonne per day operation that will ultimately increase to 5,000 tonnes per day, or larger.  We had the opportunity to speak with ECU’s management team about its recent results and expectations going forward, an excerpt of which can be found below.

In March of this year, the Company acquired an oxide mill, can you bring us up to speed in terms of its production?

We are currently treating more than 500 tonnes per day (tpd) of oxide material grading between 3 and 4 grams per tonne (gpt) gold and between 90 and 150 gpt silver through our oxide mill.  We treated 15,694 tonnes of mineralized material over 30 days during the month of October, which translates into approximately 523 tpd.  We also have a second mill, a sulphide mill, which was restarted just last month with a capacity to treat 320 tpd.  Our sulphide mill was operational for four days in October during which time it treated 1,220 tonnes of mineralized material.

Why doesn’t the Company report revenue?

Under Canadian Accounting rules we report as an exploration and development company and as such are prohibited from reporting mineral sales as revenue.  Rather than booking revenue, mineral sales are recorded as an offset against mining properties and exploration costs.

What does the Company need to do in order to report mineral sales as revenue?

We would need to do one of two things.  Either produce an economic study such as a prefeasibility or feasibility study which demonstrates the economics of mine production, or in the absence of a study, grow mineral sales to a level of significance, which we believe to be approximately $30 million.

Is the Company planning to develop an economic study, either a prefeasibility study or a scoping study?

The Company is working on a preliminary economic assessment, a scoping study, where we will define the parameters for a 1,500 tpd operation. We expect to complete the study in the first quarter of 2010. The scoping study differs from a pre-feasibility or feasibility study in that the scoping study incorporates certain inferred mineral resources into its analysis. It cannot be used to call ourselves a producer.  The main benefit of our scoping study is that it will provide the first level of study on our mineral deposit to measure its economic viability.

What do “Deferred costs for the Velardeña property” refer to?

In much the same way and for the same reason we don’t book revenue on the income statement, we also don’t book exploration and development expenses on the income statement either.  Our exploration and development costs are categorized as deferred costs and are therefore capitalized.  We will continue to report this way until we are considered a “producer,” at which time exploration and development costs will be expensed.

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Geovic Mining Corp. Due Diligence Luncheon (Part 1)

November 30, 2009

Earlier this month, we had the opportunity and privilege to host a due diligence luncheon for Geovic Mining Corp. (OTCBB: GVCM; TSX: GMC) in what has come to be known as America’s Finest City, San Diego, California.  And we decided that it would be a heck of a lot cheaper for us to bring the Company to you than to bring you to the Company.  To this end, we are pleased to provide you with Part one of a three part series featuring Jack Sherborne, the Company’s CEO and Andrew Hoffman, the Company’s Vice President, Investor Relations.  

At the end of the third video, Jack summarizes the opportunity quite nicely as follows, “As you can see, we have  no debt and we have cash in the bank, and we have a project that we’re very happy to talk about, and frankly it’s hard to find a whole lot of opportunities out there where you could have such a dominant potential mining project and basically can get it for not much more than the money that’s in the bank.”  Enjoy Part 1, Part 2 will be available shortly.  Click on the picutre below to watch the video.

How and Why China Will Flood the Gold Market

November 30, 2009

As you read this, the Chinese government is doing an extraordinary thing. . .something nearly unheard of in the modern world.

It is encouraging citizens to put at least 5% of their savings into precious metals.

The Chinese government is telling people gold and silver are good investments that will safeguard their wealth. After last year’s meltdown in the stock market, people believe it. After all, Chinese citizens don’t receive government retirement money. . .and they don’t have company pension plans like people in many other countries do.

This is why folks in China are lining up outside of banks, post offices, and the new official mint stores to buy gold and silver (they especially like silver because it’s cheaper per ounce).

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Dubai Woes Give China Chance to Buy Oil, Gold

November 30, 2009

BEIJING (Reuters) – Dubai’s debt crisis could be China’s opportunity to snap up gold and oil assets, a senior Chinese official said in remarks published on Monday.

No Chinese banks have yet reported exposure to debt from Dubai World, a flagship firm that last week said it was seeking to delay debt payments by six months. Some Chinese real estate and construction firms have limited exposure to projects in the emirate, state television reported this weekend.

China’s $2.27 trillion in foreign exchange reserves are mostly parked in U.S. treasuries, despite calls from some in China to invest the reserves in oil and other natural resources that the fast-growing Chinese economy will need in future.

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Gold Acquires New Investment Aura

November 30, 2009

Although HSBC has decided to stop retail investors depositing the shiny stuff at its New York vaults in favour of storing gold for higher paying institutional customers, it has not stopped the rest of the world from clamouring to join the gold rush.

From the Indian central bank – rumoured to be buying another 200 tonnes from the International Monetary Fund – to hedge fund manager John Paulson – in the process of setting up a new gold only fund – everyone is buying gold. Even Harrods is getting in on the act by selling gold bars. Changed days from the end of the last decade when the UK joined other parts of the world in ending the “gold standard”.

In spite of HSBC’s actions, one of the fastest growing areas of gold investment is ordinary investors buying actual bars of gold. Data from the World Gold Council shows that the number of retail investors buying gold in its physical form – as opposed to investing in gold futures contracts or gold miners – rose by 11pc in the three months to September, compared to the previous three months.

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Benign Neglect May Turn Dollar from Safe Haven to Dangerous Place

November 30, 2009

The trade deficit of the world’s biggest economy also remains huge. How much longer can the dollar defy gravity?

Last week, America’s currency fell to a 15-month low against the euro, cutting through $1.5050. Against a trade-weighted currency basket, the dollar was also at its weakest since July 2008. The greenback plunged to parity with the rock-solid Swiss franc, then hit a 14-year low against the yen.

The dollar’s weakness is based on fundamentals – not least America’s jaw-dropping debt. It’s a long-term trend. From the start of 2002 until the middle of last year, the dollar lost 30pc on a trade-weighted basis.

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Interview with Andrew Hoffman of Geovic Mining

November 27, 2009

Andrew Hoffman is Vice President, Investor Relations for Geovic Mining (OTCBB: GVCM; GMC: TSX), a publicly listed cobalt mining company.  He is a Chartered Financial Analyst (CFA) and has a diverse history in the financial markets, specializing for the past decade in the Energy and Precious Metals sectors.  In this interview, Andrew discusses the highlights of Geovic’s cobalt, nickel, and manganese project in Cameroon, Africa as well as the overall commodities market.

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