Tuesday, February 16, 2010

ECU Silver Mining: As Good As It Gets!

I haven't tended to recommend individual stocks on Marko's Take since we usually focus more on "big picture" issues.  In addition, this is a free site, not a "for pay" newsletter and there are many excellent newsletters out there that provide specific recommendations (http://markostake.blogspot.com/2010/01/looking-for-great-gold-newsletter.html).

Today, I'm going to depart from my tradition in honor of today's 99th Marko's Take and discuss an individual company that I think is so juicy that I hope you're in a position to take advantage of it.

First off, the requisite disclosures:  I own many shares of this stock and I have recommended it privately to friends, who are mature enough to know that it, like other stocks, carries risk.  Second, I AM NOT currently being paid to recommend this stock by anyone, including the company.  Third, I am NO LONGER a Registered Investment Advisor and therefore, not licensed to be making official recommendations such as your personal financial advisor or financial planner.

That said, let's talk ECU!

First off, you might want to start by visiting the company's website (http://www.ecu.ca/) which is loaded with information.  I've spoken to company management and found them very approachable.  No harm in trying that if you have questions.

But before you go into that level of detail, which I recommend you do, I'll give you an overview as to why this company is so worthwhile.

ECU Silver Mining, as the name suggests, is primarily engaged in exploring for and producing silver.  However, the company also produces Gold, Lead and Zinc.  The company's production of Gold and Silver are in the midst of a significant ramp up and ECU appears to be "cash flow positive", which is amazing given its low valuation.  Now, it's important that I remind you that I said "appears" because the accounting conventions employed by miners is very complicated and one has to have a certain level of experience to understand the rules they're bound by.

On the Company's website, an excellent overview can be found here 
This is where things get really exciting:  The stock closed Friday at 60 cents per share and has a market capitalization of about $200 million.   Compare that to any other company with similar merits and you'll witness market caps well in excess of $1 billion!!!

I am unaware of ANY miner, that is generating cash, having massive reserves and selling for anything near $200 million.  ECU could easily justify a valuation, even at current Gold and Silver prices of TEN TIMES that amount!

So, why is the company so cheap?  Well, it has gone through some hiccups in its history and did sell for a much higher amount in recent years.  In early 2007, ECU sold for nearly $3 per share, well before a spate of new discoveries were made and the company was producing!  Since then, the news has been excellent and ECU has suffered both from some difficult market conditions and being unknown.

Undoubtedly, investors have gotten tired of holding this company and have moved on. I owned it back in 2007, and rode it down substantially. I can completely relate to the frustration.

I hope, upon reviewing the information provided coupled with your own research, you find this company the undervalued gem that I do and are able to hop aboard the train.

Comments?  Other gems you like or would like me to cover in the future?  TAKE ME ON!

Marko's Take


  1. Marko:

    This is an interesting company and the information presented is intriguing. However, you need to understand that the key term used, in all cases by the company, is "resource". A resource, in mining terms, is a gross quantity that includes both economically recoverable material (ores) and uneconomic materials that contain metals. All ores are resources, but not all resources are ores.

  2. Scott:

    I appreciate the comment, but honestly don't see how it is relevant to the article. By all means feel free to elaborate, readers are not resource mavens and would undoubtedly appreciate more input!



  3. Marko:

    I am taking you on because you mention the company has massive reserves. Reserves are materials that can be mined at a profit. The company information indicates they have large resources. Resources are materials that are believed to contain metals but which may or may not be attractive to mine. There is an enormous difference in the meaning of these terms, both technically and from an investment standpoint.

  4. the websites you direct me to are not working for me. what do you suggest? these are the websites in the above article on ecu!

    i own it too!

  5. Hey Anon:

    Company changed its link and the piece has been updated accordingly!


  6. What do you think about this highly negative article about ECU?


    Kind regards. Thanks for your excellent blog!


  7. HFJ

    The article is factually wrong. There is production and was at the time it was written. I didn't read the whole thing, as the author lost his credibility. My piece was thoroughly researched, I spoke to the company, and read the financial statements in their entirety.

    Caveat emptor.

    Thanks for the nice comment, HFJ


  8. Thanks a lot for the quick and precious comments! Your blog is an absolute "to praise"! HFJ

  9. Isn't some of the downward rip on ECU that much(?) of their silver is in sulfide form and will be much(?) more expensive to mill and smelt once they get it above ground from the rather deep pit where it sits?

  10. Hi foghorn!

    I honestly don't think that the form of silver in the mill is THE issue. ECU just announced a $2MM sales month. Investors shouldn't care what form the silver is in. The big picture is that this company is rare: Profitable, a huge asset base and dirt cheap!

    I think that is all one needs to know.

    Thanks for the comment


  11. I have owned this company through thick and thin and in the recent year have only purchased more of it. I've been out of all other "junior" resource companies since the market termoil started but if you can average your cost down on this stock, you'll be glad you did. It's just a matter of time before things take off for ECU. This is a fantasticly managed company with excellent production and profit.


Take me on!