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Politics : Dutch Central Bank Sale Announcement Imminent? -- Ignore unavailable to you. Want to Upgrade?

To: jgibbs who wrote (2696)	12/17/1998 5:33:00 PM
From: Bill Murphy	Read Replies (1) \| Respond to of 80994

ECU- silver spendor For you jgibbs, Fleckenstein is one sharp fella, a very good mind and very articulate. Certainly we agree about silver, among other things. I had some requests from the SI thread to post my thoughts on ECU Gold Mining ( a silver play ). Since you contacted me on silver, I thought I would put it up here. What a shake your head day. All the best, Bill www.lemetropolecafe.com - Midas du Metropole - Dec. 17 It is no secret that quality silver plays are hard to find. There are only a handful of real silver plays around. Pan American, Hecla, Coeur d'Alene and Sunshine Mining are the most visible names to come to mind. Because there are so few silver plays, the valuations of these firms is generally very high. That is why many value players tend to shy away from them. What is even more taxing is these companies are not making any money with the silver price at $5.00 per ounce. ECU Gold Mining ( ECU ) on the Montreal Exchange is a different type of animal in our opinion. With what we see, it would be a great buy if it were a widget company instead of a silver producer. This is the down and dirty scoop: In this horrendous environment for the precious metals mining industry, many of the junior producers and exploration firms are not going to be around in the years to come unless prices start to move north in the near future. The financial stress is becoming too great. The number one criteria for our investment purposes now is to determine who is going to survive in the future or who has such undervalued assets that they will likely be bought out at a substantial premium to today's depressed prices. The mining game has changed a great deal over the past two years. At that time, reserves ruled the roost. Today, cash flow is king ( Ask Professor von Braun ). Andre St-Michel, President of ECU, is a shrewd mining man. He just secured a $2 million dollar loan ( no easy feat in this point in time ) that will allow ECU to go to a commercial production stage of processing 600 tonnes per day by the end of the first quarter of 1999. By then end of 1999, they will process 900 tonnes per day. Andre St-Michel projects a cash flow of $1 million per quarter by April of 1999 and $1 million per month by the end of 1999. The market cap is only $6 million US and the share price is 20 cents Cdn. For comparison purposes, Sunshine's market cap is $125 million. How can they do this? First, their Valardena gold and silver mine and other silver properties are located in Mexico. Thus, their costs are in pesos, not dollars. This gives them a competitive advantage to US producers, similar to what the Aussies and South Africans have in the gold area vis-a-vis US producers. One year ago it was 8 pesos to the dollar. Today it is 10. The peso is a depreciating currency so this trend should continue. Second, Williams Resources invested $20 million into the Valardena Mine. ECU took it over for a song and a dance. This means ECU will not have to incur large depreciation expenses over time. That means greater net profits. Third, they are now able to buy heavy mining equipment at 60 to 70% less than they would have had to pay just two years ago. Enormous savings here. Those savings go to the bottom line. And finally, the cash silver costs at the Valardena Mine are projected to be between $2 and $3 per ounce. That leaves a substantial profit margin. Not to be overlooked, is that this company is a virtual unknown. The 48 million shares outstanding are almost entirely owned by the French speaking community in Quebec and Paris. It is ECU Who? - in the Anglo world. This is a big positive. The markets love fresh meat. Much of the French backing are strong hand holders. As ECU goes to its commercial production stage and starts towards its impressive profit numbers, the word will get out. The undervaluation of ECU compared to the aforementioned other silver mining companies will become clear to mining analysts in the Anglo world. None of them have been burned by ECU. A new, wonderful story for them. The drooling begins. Andre has been smart in another way. They only have 2 to 3 years worth of reserves. How is that a positive? The name of the game today is cash flow. Finding reserves is fine, but that is only the means to an end, which is about making money. ECU has properties tied up around Valardena, which is located in the heart of elephant silver country. These properties will most likely prove up substantial reserves down the road anyway. If what we see pans out as we expect, the stock price is not staying down at these levels. The market cap should take off in a rather dramatic way. Success begets success. They will then have many ways to proceed from strength and can start to look to grow reserves by the third quarter of next year. ECU Gold Mining is a misnomer of sorts. The Valardena Mine is a polymetallic one that should have production that is 60% silver, 30% gold and 10% zinc. Expect a name change next spring to reflect the fact it is primarily a silver mining company. Midas loves this one. This is a blue collar mining company with low overhead and we think this is the beginning of something big. If all goes as expected and they cash flow $1 million per quarter, it is now trading at 1 1/2 to 2 times cash flow. It is not a stretch to say this should be $1 stock even at the conservative $1 million per quarter cash flow number. There are many, many quality junior golds out there and we own some of them. We think we will make some big bucks with them down the road when the price of gold starts its big move. This play is fairly unique, however. It is a winner today at $5 silver. We do not need a big silver move for this company to shine. Of course, if the price of silver starts towards the $8 to $10 level which is where we think it is going, ECU will be a gravy train. ECU closed today at 20 cents Cdn. For more detailed information, the company number is 819 762 2525 Midas