Winzer,
This should explain the situation in relation to recent financing done by the Company and the net impact of the issuing of shares on the capitalization of the Company. Looks very exciting to me. The market cap of this company is way too low in regards with this type of production and profitability that will come down the road.
1. This financing was closed last January 14th. It started in September 1998 with the objective of closing approximately CA$ 1,000,000.
Most of it was closed prior to Christmas 1998, namely CA$ 783,000, the rest being done in early January. Actually, of the 5.3 M shares that were issued ultimately in relation to this financing, 3.9 M shares were sold between October 1st and December 1st, 1998.
When ECU started the negotiations with IIG, in May 1998, it was agreed that this CA$ 1,000,000 financing would be done to improve the cash position of the Company.
2. US$ 2,0 M Debt Financing
The final agreement with IIG was signed on December 2nd, 1998. It is a US$ 2,0 M loan and not a line of credit. The conditions of the loan implied that it would be given in four US$ 500,000 monthly installments, starting in December 1998.
As of now, US $ 1,5 M has been received. This financing has allowed the Company to continue the development of it's mines at Velardena as well as acquire new equipment to increase the daily production from 300 to 600 tonnes per day. No share was issued in relation to this financing.
3. Shares
Actually, 46.2 M shares are issued and the fully diluted capitalization is 59.8 M shares. If all the warrants were exercised, it would net CA$ 4.7 M to the Company.
4. Goodies
The Company does not intend to realize other financing by equity in the near or medium term.
The operations in Mexico are going well and the budget and timing are
respected. ECU is negotiating actually with a consulting firm to realize a bankable feasibility on the project of increasing the production from 600 to 1,200 tonnes per day. This would allow the financing of all our cash needs by debt.
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