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 
http://www.ecu.ca/images/stories/ECUInvestorPresentation-January2010.pdf
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