A Coach post on ECU from CD's thread
Today we got the official news released with the updated resource estimate for ECU Silver, and I just wanted to share a couple of comments of interest. More silver is produced from mines in Mexico than any other country in the world, yet most of the juniors active in that country do not get much respect from the analysts. The reason is that mines there are typically narrow vein epithermal deposits, and despite centuries of production, such deposits are very difficult and expensive to document a large tonnage of resources in order to be compliant within NI43-101 standards. ECU is a case study of this, with very high grade silver, gold, and base metals values concentrated into veins that often only measure a couple of feet or less in width. There have been many respected analysts that either cannot understand their production model, or state doubts that the company can be profitable working in such a challenging operating environment.
This latest news release is tangible evidence that ECU has proven the experts wrong. The magnitude of the mineral inventory defined so far is astounding. Just counting the resources outlined in the indicated and inferred categories, the company has reported 7.7 million tons proven up. Since these numbers do not even include the latest results from their drilling program, it is very likely that the total tonnage for just the near surface, narrow vein system will eventually amount to over 10 million tons.
To put that in perspective, there are more than 85 junior mining companies currently active in Mexico, and many of them are now in production. ECU Silver now has defined more NI43-101 compliant tonnage of epithermal vein material than all of the other juniors in production put together.
During the ECU AGM this week, Michel Roy stated that the company would like to increase the production capacity at the mill and recovery plant, and indicated that a 1300 ton per day operation would generate upwards of $70 million a year in cash flow. Again, that number blows away the forward cash flow estimates of all the other juniors in Mexico, and even challenges some of the mid-tiers that are working larger projects. But consider that at even 1300 tpd, working full capacity for 350 days per year, it would take 17 years to exhaust the mineral inventory we have already defined. Again, there is no other junior miner in Mexico that even comes close.
Combined, all categories of resources detailed in the report amount to over 100 million ounces of silver equivalent. What is even more astonishing is that ECU did not even factor in a value of significant base metals production in those numbers, which currently account for about 30% of the production revenue. Also, the company used a cutoff grade of 150 grams per ton silver equivalence and does not even consider zones of the deposit for the resource estimate that fall below that grade. So the impressive numbers that we have to work with now can be seen as conservative.
All of the above would elevate ECU head and shoulders above the other juniors in Mexico, some of which are also excellent companies, but the real kicker in all of this is that we have not even touched on the home run potential represented by the bulk tonnage mineralization at depth. ECU reported wide intervals of stockwork mineralization, some of which is already accessable with current underground development. This stockwork zone could contribute well above a million tons of ore to the mix. Also, we have already had reported several wide zones of skarn mineralization below that. My assumption is that the skarn zone will prove to be enormous, since they have hit it with every drill core to punch down that deep, and since the grades they have been reporting continue to increase with depth. It is very unlikely in my opinion that the company would have hit the very best intercept at random in the first drilling program to test for it. Other skarn systems in that district have amounted to tens of millions of tons of mineralization, and I would suggest that the early indications are that ECU will hit at least as much, if not more, by the time they have put a serious drilling program together targeting deeper structures.
All of the information that is now on the public record should be enough to prompt the skeptics to take a good, long look at ECU Silver. The company is clearly the class of the field, and as they continue to build value for shareholders, the share price should increase to many multiples of the current range.
Cheers!
COACH247 |
