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Message: Additional drilling is also occurring on the joint venture San Diego property.

ECU Silver Chairman and CEO, Michel Roy, Provides Letter to Shareholders

TORONTO, ONTARIO, May 09, 2011 (MARKETWIRE via COMTEX News Network) --

ECU Silver Mining Inc. (TSX: ECU)

Dear Shareholders,

Gold and silver prices have surged since the beginning of 2011, despite a sharp correction this past week. However, most of the stocks in the mining sector, including both producers and explorers, have significantly underperformed the precious metal price escalation. Many analysts attribute this incongruity to an over-riding investment strategy implemented by many hedge funds in which they "hedge" the sector investment by collectively going long the metal and short the mining stocks.

Beyond this general sector underperformance, ECU's stock also appears to have received excessive pressure from trading patterns which appear designed to suppress the stock price. Management considers this to be a serious concern and is in discussions with legal counsel regarding the nature of this activity and potential recourse.

From an operational standpoint, much has already been accomplished in 2011 and as the year progresses, management anticipates numerous achievements which should enhance production and revenue, as well as the size and quality of the resource. Presumably, these accomplishments will positively impact the value of ECU's common stock.

Mine Operations

ECU has increased revenue over the past five consecutive quarters, enhanced by the successful negotiation of the sale of a 13,000 tonne stockpile of processed material containing gold pyrite. Revenue in Q4 '10 was over $6.4 million, almost 200% higher than the period five quarters earlier. Altogether in 2010, metal sales increased year over year by 250% for gold, 144% for silver, 568% for lead, and 375% for zinc. Although the sale and delivery of the gold pyrite stockpile has been completed, management expects revenue from production to improve when the company mines in recently-developed stopes containing significantly higher resource grades.

Oxide mineralized material continues to be extracted from the Santa Juana mine as three additional mines, San Juanes, Chicago, and Terneras West have been opened. An accelerated development program is underway to advance additional veins, and mining levels, to a stage where mineralized material can be extracted from more mining stopes, thereby increasing production.

As outlined in previous press releases, new veins and vein extensions have been discovered at Santa Juana. Most of these discoveries are sulphide material which contains good to excellent gold and silver grades higher than nearby areas that were recorded in the last resource report. Metallurgical testing has allowed us to develop a new procedure to enhance processing of the sulphide material. New high grade veins plus enhanced processing techniques will significantly increase the quality and quantity of the concentrates. Since sulphides represent over 97% of the mineral resource, this is a very important step towards the future development of the project.

Milling Operations

Both the flotation (sulphide) and the cyanide leach (oxide) mills have been fine-tuned with extra equipment and new circuits. Modifications were completed at the flotation mill to increase the precision of reagent additions and PH control. New lab and bulk metallurgical testing will help us refine the flotation process. These modifications will increase recoveries and improve the quality of the concentrates produced.

A new circuit to remove copper from the solutions was added to the oxide mill. Previously, copper interfered with gold and silver recoveries. So, after several months of testing and modifications, the company completed a copper removing continuous circuit which is now removing over 95% of the copper from the solutions. This enables the company to increase gold and silver recoveries, as well as produce a saleable copper concentrate.

With initiatives that have been in development over the past year, ECU expects to see an increase in quantity and quality of concentrates and dore bars over the next few months.


An underground high-performance drill is currently advancing to define the massive sulphide zone that was previously discovered with high grade sulphide intercepts from hole SJ-18-21. The drill will cut various holes at different angles (daughter holes) at depth, in order to intercept further high grade mineralization. This will help define the shape, size, and persistence of the mineralization in the massive sulphide zone. Geological modeling suggests that this zone could consist of large replacement type bodies or mantos style deposits.

As the high-performance drill re-entered the original drill hole, drilled nearly three years ago, it was realized that sections of the hole had filled in. As such, the drill bit was replaced with a smaller one, in order to avoid a deviation from the original hole. This precaution caused a slight delay but this portion of the work is nearly complete and the actual drilling for the first cut will start very soon.

Additional drilling is also occurring on the joint venture San Diego property.

Results from the two drilling programs will be published as they become available.

Property Expansion

ECU recently entered into contracts to acquire new properties. One is a newly-acquired mining claim immediately adjacent and now integrated into the Chicago property. We are currently exploring this area by underground ramping and drifting. Several new veins have been discovered in the Chicago property which extends onto the new claim.

A second property, the Flechas property, is being evaluated through underground exploration and development, along a known major vein. Results have been encouraging, justifying the continuation of our exploration and development work.

On another property, the Nazas property, an initial 1,700 tonne bulk sample of oxide material was processed which confirmed that grades and recoveries were highly suitable for the oxide mill. Additional work will be done in a key zone on this property to define the size and shape of the mineralization. The zone currently being examined is over 15 meters wide on surface and appears amenable to open pit mining. Other exploration projects on various properties (surface and underground) are also being evaluated.

Scoping Study

Since the changeover to a larger consulting firm, the work has progressed significantly. The new consultant is currently integrating real data from our mining stopes into their model. Since the company is currently extracting mineralized material from operations, several of the model parameters are "actual", thereby giving the scoping study a high level of accurateness and reliability. We will provide updates on the scoping study as we get nearer to its completion.


Management believes that the market value of ECU can be greatly enhanced by significantly increasing the size and quality of the company's mineral resource. As a result, major drilling campaigns are underway to define the massive sulphide zone in Santa Juana and further define the resource at San Diego. In addition, ongoing development work at several areas have already identified new veins and vein extensions. This information will be incorporated into an updated NI 43-101 mineral resource report. We expect the drilling campaign to be completed at the end of this year with the updated technical report shortly thereafter.

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