ECU Silver Mining Inc.

ECU Silver Mining Inc.

September 18, 2007 17:52 ET

ECU Silver Announces Acquisition of Title and Ownership of Key Velardena Mineral Claims

TORONTO, ONTARIO--(Marketwire - Sept. 18, 2007) - ECU Silver Mining Inc. (TSX:ECU)("ECU Silver" or the "Company") is pleased to announce that it has exercised an option (the "Option Agreement") to acquire, through its wholly-owned subsidiary Minera William S.A de C.V., ownership and title of certain key mineral claims and leases on the Velardena Property (the "Velardena Claims") in Durango Mexico.

The Company believes the benefits of this transaction include:

- Direct ownership of key mineral claims and leases on the Velardena

- Long-term access to mineral rights versus a limited 10-year term defined in
the Option Agreement.

Michel Roy, chief executive officer and chairman, stated: "We are delighted with the completion of this milestone transaction. The Company strongly believed that it was in the best interest of our shareholders to exercise our option at this time given the positive outlook we have for the precious metals sector, as well as the Company's upcoming expansion plans. We have now secured long-term access to mineral rights that will give the Company excellent flexibility in all its future developments.'

There are 18 claims on the Velardena property. After giving effect to the exercise of the Option Agreement, ECU's ownership will be 100% on 14 of the mineral claims and 70% on the four remaining mineral claims. The terms of the transaction are provided below.

With the exercise of the Option Agreement, ECU Silver obtains ownership and title to the Velardena Claims and is no longer required to make royalty payments pursuant to the Option Agreement as described below. In addition, ECU is no longer limited to a fixed term whereby it had the right to mine the mineral resources up until 2014.

Stephen Altmann, President, added: "Given that the potential mineral resource at Velardena may support mining well after 2014, the elimination of a fixed term to 2014 is essential in securing long term value for ECU shareholders."

Under the old agreement, title to certain mineral claims and leases on the Velardena property were registered and held by Procesadora de Minerales de Durango S.A. de C.V., a company incorporated in Mexico. The agreement provided an option whereby ECU Silver, through its subsidiary Minera Williams, could acquire ownership and title to the Velardena Claims for a purchase price of US$15,000,000 (the "Option Price") payable on or before November 8, 2008. The terms of this Option Agreement required that the Company pay royalties on mineral production from its Velardena mining property corresponding to US$2.00 per tonne with a minimum of US$25,000 per month for a period of 5 years and renewable for another 5 years. The royalty was payable in the event the Company had not exercised the Option Agreement through the payment of the Option Price. Under the terms of the Option Agreement, ECU had the right to operate the mines for a period of 10 years until November 2014.

The Company recently exercised the Option Agreement for a payment of US$4,500,000 and the issuance of 4,790,000 units (the "Units"). The number of units to be issued is based on an agreed price per Unit of $2.30. Each Unit is comprised of one ECU Silver common share (a "Common Share") and one-half of one Common Share purchase warrant (each whole warrant a "Warrant"). Each Warrant entitles its holder to acquire one Common Share at a price of $2.85 at any time on or before June 4, 2009. However, if the closing price of the Common Shares is equal to, or greater than, $3.75 for a period of 20 consecutive trading days any time after October 5, 2007, ECU may give notice to the holders of the Warrants and thereby accelerate the expiry date of the Warrants to the 30th day following the date on which such notice is given.

Closing of this transaction is subject to the receipt of all applicable regulatory approvals.

Contact Information

  • ECU Silver Mining Inc.
    Stephen Altmann
    (416) 644-8640
    (416) 644-8801 (FAX)