ECU Silver Mining Inc.
TSX VENTURE : ECU

ECU Silver Mining Inc.

November 28, 2006 09:00 ET

ECU Silver Mining Inc.-News Release

TORREON, COAHUILA--(CCNMatthews - Nov. 28, 2006) - ECU Silver Mining Inc. (TSX VENTURE:ECU)(the "Company") is pleased to announce that financial results for the quarter ended September 30th 2006 and corresponding Management Discussion & Analysis have been filed and are available on Sedar (sedar.com).

The Company is pleased to provide Shareholder's with the following financial highlights and operating results for the third quarter as well as the first nine months ending September 30th 2006. All numbers are in Canadian dollars unless otherwise mentioned.

Third quarter highlights:

- achieved increase of average daily mill production from 254 tpd to 294 tpd;

- Further exploration discoveries in Q3/06 on level 15 lead to bulk mining trial;

- Success of bulk mining/milling test exceeds expectations;

- Engaged Micon International to update the NI -43 101 compliant technical report to reflect some of the discoveries made in 2006 and do a scoping study for possible bulk mining and the corresponding mill expansion;

- The opening of a permanent office in Toronto, Canada;

- Purchase of two underground diamond drills in August;

- Drilling began on San Diego property.

Bulk mining testing in Third Quarter

During the 3rd Quarter, Management focused significantly not only on mine development and exploration activities but also on test-mining of wide stopes and milling the material produced to gather the information required for scoping and pre-feasibility studies evaluating a potential mill expansion based upon the employment of bulk mining methods.

The consideration of bulk mining is a direct result of the discoveries of wide mineral-bearing sections in the mine and represents a shift from the mining of narrow veins. Historically the Company has mined veins measuring 0.3 of a meter to 1 meter in thickness at its Velarde±a property. By contrast, recent exploration discoveries have uncovered wide mineralized sections up to 30 meters in width (Level 17.5 stockwork zone).

From one such wide stope on level 15 of the Santa Juana mine, averaging approximately 9 meters in width, the Company mined and processed 5,227 tonnes grading 2.23 g/t Au, 191 g/t Ag, 2.66% Pb and 3.27% Zn in the third quarter (Q/3).

As expected, the grades were lower than what has been typically mined at Velarde±a, when selectively mining the high grade narrow veins, since between 70 and 90% of the material mined came from the intervals between the veins during the bulk testing. What is most important to note here is that the grades achieved during this test were much higher than what would have been obtained should the material between the main veins had been totally without values.

Thus, productivity from this wide stope was an order of magnitude higher than what has been achieved historically from mining the narrow veins. The bulk mining/milling test represents a significant step forward in the preparation of economical models for the assessment of bulk mining methods and the scoping of the desirable mining capacity.

The reader is cautioned that until a pre-feasibility study is completed, there can be no assurances that bulk mining would be economical.

The bulk mining trial at the mill decreased Q/3 revenues because:

1) lower grades than usual were processed at the mill resulting in less metals produced;

2) the mill required modifications and re-calibration before and during the bulk tests which caus ed several producing days to be lost;

3) the remaining material processed at the mill was mostly from development headings, therefore lower in grades than the normal stope material.

It must be noted that despite the one-time effect of lower revenues and higher operation costs, the trial was an absolute success, exceeding management's expectations and proving several parameters for mining wide stopes and milling material from these stopes. The mining and metallurgical information which the Company gathered will be essential and invaluable in completing the scoping and pre-feasibility studies for bulk mining in the Santa Juana mine. Although the Company was pleased with the results, the reader is cautioned that until a pre-feasibility study is completed, there can be no assurances that bulk mining would be economical.

Financial Highlights for Third Quarter

Comparative Financial Highlights for the 3 month periods ended September 30th 2006 and 2005:



3 Months Ended 3 Months Ended
September 30 2006 September 30 2005
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REVENUE $ 784,214 $821,182
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NET INCOME (NET LOSS) ($2,116,894) ($232,185)
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CASH FLOW FROM OPERATION ($2,676,969) ($26,766)
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As a result of the bulk mining test and the lower grade materials being mined and milled, third quarter revenues decreased slightly to $784,214 compared with revenues of $821,182 for the third quarter of 2005.

As a result of significantly increased exploitation expenditures, due to increased development, made during the quarter totaling $1,334,966 compared to $796,368 a year earlier, as well as an increase in depreciation expense to $301,650 from $70,261 in 2005, due to a large increase in assets, the net loss for the quarter increased to $2,116,894, or $0.01 per share, compared with a $232,185 loss, or $ 0.002 per share, for the same period in 2005.

At September 30, 2006, as a result of the exercise of warrants and employee stock options, the Company has $3,054,459 in cash compared to $2,018,698 in 2005.

Comparative Financial Highlights for the 9-month period ended September 30th 2006 and 2005:



9 Months Ended 9 Months Ended
September 30 2006 September 30 2005
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REVENUE $3,187,802 $2,339,032
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NET INCOME (NET LOSS) ($3,693,113) ($2,420,366)
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CASH FLOW FROM OPERATION ($5,568,727) ($2,486,551)
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Summary of operating results for the third quarter and first nine months of 2006

For the third Quarter of 2006, the Company mined 20,117 tonnes grading 2.62g/t Au, 158g/t Ag, 1.15% Pb and 1.66% Zn from the sulfide zone of the Santa Juana mine. As for development, 6 meters of ramp, 394 meters of drifts, 106 meters of raises and 96 meters of cross-cuts were driven.

At the mill, 22,023 tonnes grading 3.26/t Au, 143g/t Ag, 0.73% Pb and 1.36% Zn were processed to produce 336 tonnes of lead concentrate grading 8.23g/t Au, 4,986g/t Ag and 22.8% Pb and 202 tonnes of zinc concentrate grading 1,156g/t Ag and 42.1% Zn. These concentrates contained 89 ounces of gold, 61,344 ounces of silver, 168,710 pounds of lead and 186,872 pounds of zinc. Furthermore, approximately 2,077 ounces of recoverable gold were stored in the tailings pond awaiting the completion of the flotation circuit necessary to produce the gold/pyrite concentrate.

The daily production for the quarter averaged 294 tonnes per day, a 16-per-cent increase over the average daily production of 254 tonnes of the second quarter. The Company expects to achieve another material increase in average daily production by the first quarter of 2007.

For the nine-month period ending September 30, 2006, the Company mined 56,733 tonnes grading 3.97g/t Au, 191g/t Ag, 0.93% Pb and 1.36% Zn from the sulfide zone of the Santa Juana mine. As for development, 39 meters of ramp, 961 meters of drifts, 300 meters of raises and 101 meters of cross-cuts were driven.

At the mill, 56,180 tonnes grading 5.08g/t Au, 221g/t Ag, 0.78% Pb and 1.28% Zn were processed to produce 852 tonnes of lead concentrate grading 7.93 g/t Au, 7,404 g/t Ag and 23.9% Pb and 602 tonnes of zinc concentrate grading 1,753 g/t Ag and 42.1% Zn. These concentrates contained 217 ounces of gold, 236,581 ounces of silver, 448,187 pounds of lead and 557,142 pounds of zinc.

Also, as of September 30th, 2006, there was a total of approximately 17,592 ounces of recoverable gold stored in the tailings pond awaiting the completion of the flotation circuit necessary to produce the gold/pyrite concentrate.

Corporate developments in the third quarter

Major discoveries:

During the third quarter, the Company announced several materially significant exploration discoveries at its Santa Juana mine. The key highlights of Q3 discoveries, as reported are:

August 19, 2006

Hole TA 17.5-10 returned:

- 14.8 metres (48.4 feet) grading 5.13 g/t Au, 22 g/t silver (Ag), 0.45 per cent lead (Pb) and 0.5 per cent zinc (Zn);

- included in the 14.8-metre intercept are six metres (19.7 feet) grading 7.78 g/t Au, 38 g/t Ag, 0.99 per cent Pb and 1.18 per cent Zn.

August 25, 2006

- Cross-cuts on level 15 averaged 5.88 meters of width (19.3 feet) grading 5.79 g/t Au, 194 g/t Ag, 1.89% Pb and 2.64% Zn over a 40 meters length(131 feet);

- Included was an intercept that averaged 6 meters (19.7 feet) of width grading 8.17 g/t Au, 304 g/t Ag, 2.07% Pb and 3.07% Zn;

- Possibility of vertical continuity of nearly 200 meters (656 feet) connecting Level 15 discovery to original Stockwork zone on levels 17.5 and 18.

September 12, 2006

- Sampling on level 15 averaged 5.25 meters of width (17.2 feet) grading 4.29 g/t Au, 161 g/t Ag, 1.37% Pb and 3.19% Zn over a 70 meters length (230 feet);

- Included was an intercept that averaged 6.55 meters (21.5 feet) of width grading 9.96 g/t Au, 300 g/t Ag, 1.92% Pb and 2.82% Zn.

The operational significance of the advancement of the discoveries made in Q3 2006, in addition to earlier discoveries made in 2006, have prompted the Company to update the current NI 43-101 compliant technical report and undertake a scoping study necessary to evaluate the size of any potential production increase. To that end, in Q/3 the Company engaged the services of Micon International to update our current NI-43 101 compliant technical report, in order to reflect some of the discoveries made thus far in 2006.

Originally, the Company was of the belief that it would first look to increase from a 320 tonnes per day (tpd) operation to a 1000 tpd operation. Based on the discoveries of Q1, Q2 and Q3, and the encouraging results of the bulk mining trial test at both the mine and mill, this increase no longer appears adequate. The Company is currently scoping mill expansion requirements that will be congruent with new discoveries made and information gathered to date.

In keeping with its corporate objective of mill expansion, the Company acquired a 35 hectares land package in Q2, including the land underlying the mine surface installations and the mill site. This was an important step for the Company as it now has sufficient surface rights to expand its mill and ancillary installations or to build a new mill, once a final decision has been made.

The opening of an ECU Toronto office

In efforts to continue to create:

A) Global awareness for the company;

B) Provide timely updates;

C) Become more readily accessible to large equity markets;

D) Have the building blocks in place to help meet planned future Company developments,

The Company was pleased to have hired Richard Buzbuzian as vice-president in Q/3. He now heads our Toronto office. Furthermore, the Company is currently working diligently to add to our senior management team, at the mine as well as at our Toronto office, given the larger scope of the planned development program it is about to embark on.

Corporate developments subsequent to September 30th, 2006

- Commissioning of pyrite circuit and purchase of second mill;

- Major discovery on Santa Juana level 18, of new, massive sulfide vein, 7.74 meters wide (or 25.4 feet) yielding 18.57 g/t gold and 41 g/t silver;

- Arrival of additional drills at the mine site;

- Two new exploration properties acquired.

Pyrite Circuit and purchase of a second mill

Subsequent to the Quarter ended September 30th, the Company's new pyrite circuit was completed and is now well into the commissioning stage. ECU's newly acquired mill, which can operate at approximately eighty tonnes per day (80 tpd) will be initially used to complete the processing of the material that has been stored in inventory since May, 2005 to recover and produce gold-silver-pyrite concentrates.

Although this mill has a capacity of approximately eighty tonnes per day (80 tpd), it is important to note here that the Company will be able to process approximately 300 tpd of the material in inventory with this new mill because that material has already been grounded and crushed and thus only one flotation step will be necessary to recover and produce the gold-silver-pyrite concentrates.

The Company has already ordered the extra flotation cells required to increase capacity to handle the gold and silver concentrates to be produced once the mill and cells are in operation. The Company anticipates that the delivery of the cells, and the refurbishments for the mill are to be complete by first quarter 2007 and, along with our larger mill, daily production should then reach the 600 tpd level.

Major discovery near Santa Juana level 18

A massive sulfide vein, 7.74 meters wide (or 25.4 feet) yielding 18.57 g/t gold and 41 g/t silver in drill hole TA 17.5 -11 was reported subsequent to the end of Q/3. The Company is currently in the process of driving drifts and cross-cuts on level 18 which will intercept this recently discovered 7.74 meters vein. Results will be released as they become available to the Company.

Addition of Four drills to Santa Juana drilling program

In an effort to significantly accelerate our current drilling program, the Company purchased two underground diamond drills in August from a Canadian manufacturing company. We are pleased to report the arrival of the two drills to the mine site, having cleared customs last week.

Furthermore, two additional surface drills were contracted in late October. The first drill has already arrived with the second drill scheduled to arrive shortly. With this new equipment, the Company will be able to access the deeper target zones that it deems to hold potential and will also significantly enhance and expedite the entire drilling process.

Completes transaction for purchase of two separate mining properties

As reported in the Company's press release dated November 15th, 2006, the Company acquired two separate mining properties, the San Agustin and the Denisse properties. Both properties are interesting from a geological point of view as the data collected to date encountered favorable geological features. The Company plans are:

1) To conduct further field work on the San Agustin claim that will become part of our Chicago property land package. A surface drill is being budgeted to begin drilling in early 2007;

2) To start a trenching program, in the near future, to evaluate the strength and continuity of the mineralization on the Denisse property. This will be followed by a drilling program if justified by the results of the trenching

Outlook

Although the Company believes and has every intention of growing revenues with our current additions of milling capacity and the pyrite circuit, the discoveries over the past few months have prompted the Company to assess whether bulk mining methods would better serve the Company in the future. As such, the Company, with the help of outside professional expertise, is closely assessing and fine-tuning economical models to choose the most efficient development strategy. Given the costs and time required to purchase and implement a significantly larger mill, the Company is taking every step to ensure that the right decision will be made. The reader is cautioned that until a pre-feasibility study is completed, there can be no assurances that bulk mining would be economical.

The Company feels it has placed itself in a prudent position with the increased and steady operations of the mill, the construction of the pyrite circuit now completed and the construction of our on-site laboratory. Furthermore, the Company continues accelerating its exploration program by contracting and purchasing additional drills. And, at the same time, we are also using our entire current milling and mining operations as a real, live "test pilot" for our future growth plans.

ECU Silver Mining Inc is a mid-tier Gold, Silver, Zinc and Lead producer in the prolific mining district of Velarde±a, Mexico where historically over 500,000 ounces of gold and 250,000,000 ounces of silver have been mined. Full scale production began in May 2005 at the Company's Santa Juana mine.

Statements in the release that are "forward-looking statements" are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ materially. We undertake no duty to update any forward-looking statement to conform the statements to actual results or changes in our expectations.

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • ECU Silver Mining Inc.
    Michel Roy
    President & CEO
    (416) 644-8640
    (416) 644-8801 (FAX)
    or
    ECU Silver Mining Inc.
    Richard Buzbuzian
    Vice President
    (416) 644-8640
    (416) 644-8801 (FAX)
    Website: www.ecu.ca