ECU Silver Mining Inc. (ECU-TSX)

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October 15, 2010 Issue

The Most Powerful Name In Corporate News and Information


With Four Different Mining Units Now In Production Getting Close To Their Initial Targets, ECO Silver Mining Inc. Is No Longer Just An Exploration Company

Company Profile:

ECU Silver Mining Inc. is focused on the exploration, development and mining of gold, silver and base metals at its Velardena District Properties in Durango, Mexico. The Company holds a NI 43-101 compliant mineral resource of 40 million silver equivalent ounces in the measured and indicated category and 391 million silver equivalent ounces in the inferred category. The Company also owns two mills with a combined capacity of 820 tonnes per day. ECU's mission is to become a pre-eminent silver and gold producer through the development of its existing and potential mineral resources at Velardena.

Michel Roy, Chairman and Chief Executive Officer

Mr. Roy joined ECU as President and CEO in 1999 and became Chairman in 2001 and CEO in 2007. He came to the Company with 25 years experience in international mining, in Mexico, Brazil and Canada. In 1977 he worked for PatiŮo Mines before moving to Camchib Resources where he worked from 1981 to 1986, supervising large exploration teams with multimillion dollar budgets. From 1986 to 1995, he worked as vice-president or President of various junior companies doing exploration work in Eastern Canada. During that time he started a small gold mining operation in the Rouyn-Noranda area. From 1995 to 1999, he was a consultant for several junior mining companies with properties in Canada, the USA, South Africa, Brazil and Mexico.

Mr. Roy earned his Bachelor of Science degree in Geology from the UQAM in Montreal in 1974. He later obtained a Masters degree in Project Management in 1997 from the UQUAT in Rouyn-Noranda.

Mining and Exploration

ECU Silver Mining Inc.
2nd Floor, 87 Front Street East
Toronto ON Canada M5E 1B8
Phone: 416-366-2428


Interview conducted by: Lynn Fosse, Senior Editor,, Published Ė October 15, 2010

CEOCFO: Mr. Roy, what first attracted you to ECU Silver Mining?

Mr. Roy: What first attracted me to ECU Silver Mining was the enormous potential of the mineralized system. I am a geologist, so normally what attracts me most is the geological part of a project. In this case, I am used to Canada where we are mining veins, but I have never seen such continuity in the vein in Canada as I saw here in Mexico at that project, that is what attracted me.


CEOCFO: What is happening on the ground today?

Mr. Roy: We went through a phase of reorganizing the company from an exploration company to a production company, and this took quite a bit more work than we thought originally for technical reasons mostly. We went from operating one mine to now operating four different mining units. In addition, we are getting close to our initial targets of production and this is all happening. The last changes started last June and we will be where we want to go in the month of October.


CEOCFO: What is coming out of the mines today?

Mr. Roy: What is coming out of our mines is we are producing gold sulphide and oxide, ore mineral, which are treated at one of our two mills. We have a mill to treat by flotation with sulphide ore to produce lead and zinc concentrates, as well as a pyrite gold concentrate. The other mill is a cyanide mill from which we produce dorť bars. These as well as the concentrates are commercialized and sold, generating sufficient revenues to cover all of our costs. Now we are thinking about what to do with the extra money, where we are going to go to reinitiate some exploration, which will also produce some growth.


CEOCFO: Would that be in the same area?

Mr. Roy: So far, we are concentrating all in the same area, but we are looking at several other projects, which are still in the same area, but we are talking about 30 to 100 kilometers from our actual installation. Right now we are focusing right on site, but in the near future you could hear news about new projects.


CEOCFO: Do you find that there are more projects available in the current economic times, or do you find any difference?

Mr. Roy: Right now because of the recent increase in the price of gold and silver and the general feeling about finding a market, I do not see more projects being available because more players want projects. But on the other hand, we are considered to be a Mexican company basically because there are only two non-Mexicans working in Mexico. So we have been approached by smaller miners with good properties, which seem to have gotten more confidence that we will treat them well.


CEOCFO: Would you tell us about some of the new vein discoveries?

Mr. Roy: In our latest press releases we are opening areas either that were not included in our resource estimates and the official report, or were included but in the inferred category with relatively low grade. What we have been finding is that the veins are more continuous and have better grades than indicated by the drilling, and I have been focusing on that. I want to demonstrate that most of our resources are very high quality resources, and that when we go there actually to mine, so far we have more than thirty examples, we have always found more gold by mining it than the drilling indicated.


CEOCFO: What is your mineral focus?

Mr. Roy: We are gold and silver precious metals, with lead/zinc being secondary. We have areas that are going to be more silver and some that are going to be more gold and we can adjust say for example if the price of silver was crazy tomorrow morning, we could shift our focus a little bit toward that side. If the price of gold was to fly and the price of silver remained stable, we could mine more from the gold-rich area.


CEOCFO: What is the most important thing you learned from getting this into production that you could translate to newer projects?

Mr. Roy: The biggest thing now for us because of the production is that we are financially independent, in the sense that now I donít have to rely on outside funding to pay for the cost to do new things, explore new areas, do some acquisitions. All that right now I can consider; whereas before I would have to do some financing; right now we are not planning to do any short-term financing.


CEOCFO: Is the investment community paying attention?

Mr. Roy: The investment community has not realized yet exactly how far we have progressed in the last few months. Quite a few people are waiting for the results of the 3rd Quarter to see the evolution. I think our shareholders are going to be pleasantly surprised. Some of the bigger investors will probably wait a little bit more to see the 3rd and the 4th Quarter. On our side we decided to keep everybody informed and you can see that we have been publishing quite a bit of press releases so that people know that we are doing things, and I think that lacked a little bit in the early months of this year.


CEOCFO: What is your resource base?

Mr. Roy: The actual resource base is about in silver equivalent about 50 million in the measure indicated and 380 million in the inferred. This is one thing that we plan to change in the short term. We plan to upgrade a significant portion of our inferred to the indicated category resources and I have been working on that now for a while. This is going to be one of the main undertakings in the future because the problem with our inferred is that at the time we didnít have enough information to classify them as indicated. However, now there is a significant portion of new information, so we can move to indicate it and this is going to change our position a lot.


CEOCFO: Tell us a little about the area of Mexico that you are in; it seems to be miner-friendly.

Mr. Roy: Mexico is mining friendly in most of the country, but especially the old mining areas like we are in Durango, and the area of VelardeŮa was a very active mining community in the late 1800ís. Mining dates back 500 years in that area. Most of my miners are from the immediate area around the mines; there are quite a few more available. The miners we have are very qualified, and the productivity level is what you can compare with other areas like Canada and the United States. Therefore, we have good productivity and the miners are available, which helps us a lot in keeping costs down. We have excellent mining and operating costs and we are maintaining them because of that. Also, if we talk more about the fact that there is a lot of publicity about Mexico, Canada and the United States right now about insecurity, but that has not affected us.


CEOCFO: What is your two-minute take on the whole commodity cycle and where we are as far as gold and silver today?

Mr. Roy: I am not an economist so I canít talk about the role of gold and silver and what it should be and what it is, but basically if you look at it as a commodity, there is a very strong shortage or a very important shortage in both silver and gold. The demand has been very strong now for years and the production is much less. For example, with gold the actual production would be 2500 tonnes per year and the consumption has been 4000 tonnes for quite a while with the 1,500 missing coming out from different sources. There are lots of publications on that. But right now, those sources are drying out, so you see the impact on both gold and silver prices. In addition, with all the insecurity about the economy on a world wide basis more and more people are turning to gold and silver as kind of refuge against potential collapse of currencies or whatever, so there is more demand now than there has been for a long time.


CEOCFO: In closing, why should potential investors consider ECU Silver Mining?

Mr. Roy: There are quite a few reasons investors should consider. First we are certainly one of the lowest cost producers in Mexico. Number two, we have a huge resource among the small companies. For our size company, we are the largest resource base. The resource we have has the potential to grow tremendously very simply because we have not reached the limit of our main mineralized systems. We have not reached the limit of depth or laterally, so there is still a large potential for growth there. Finally, I think that because of the past dealings that we have had with local miners there are smaller miners that have lots of confidence in us and have been approaching us with projects that are of interest to us. Therefore, we have first shot at a lot of things that the big ones donít have or the others wonít have because they donít have the contacts. All of that put together means that the company will continue to grow tremendously in the future.


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The biggest thing now for us because of the production is that we are financially independent, in the sense that now I donít have to rely on outside funding to pay for the cost to do new things, explore new areas, do some acquisitions. All that right now I can consider; whereas before I would have to do some financing; right now we are not planning to do any short-term financing. - Michel Roy

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