IKN

Yesterday evening around the cocktail hour, instead of getting on with the work I should have been doing your humble correspondent got into a conversation with someone we’ll call An Investor Friend (‘AIF’). It was in fact AIF that gave me an initial “hey look at the books of this dog” comment on ECU Silver (ECU.to) some moons ago and so the conversation turned to that stock. AIF regularly does something that I gave up doing a while ago, namely reading bullboards on stocks (for me a case of ‘too much noise, not enough info’ more than anything else). Anyway, my friend AIF started sending me links to comments made by ECU.to bulls recently written on the boards.

I was amazed. I had no idea.

There are, apparently, a whole army of self-appointed mining experts out there pushing this stock to the gullible and less informed. For sure this isn’t a new story and it goes without saying that in typical bullyboy style pointing out a few facts about this arch-dog of a silver miner is immediately called an idiot (and much worse), but the way that solid facts are ignored, abuse is heaped and the jam tomorrow story is pumped non-stop on an organized, relay-style basis between several old hands smacks of something far more sinister. So on reading the junk sent over by AIF I whacked a few simple charts together. Here are four that anyone even remotely considering ECU as a trade should consider. This stuff, ladies and gentlemen, is BASIC.

First, assets.
I look at this and laugh. The claims of fixed asset worth are the only thing that makes this company attractive, but if ECU had to sell land to raise cash the final prices wouldn’t be anywhere near the purely subjective numbers attached to its property assets as featured above. Pure smoke’n’mirrors. Meanwhile, real objective values in the form of current assets have been whittled to virtually nothing, this despite the BS hype over the cash flow that would be generated by the new oxide plant that’s been running since early ’09. And it’s worth reminding ourselves that ECU.to actually raised cash via share placement in 2009! The cash netted by selling over 43 million shares to a naive market has all-but disappeared into this money pit. ECU.to is running a $99m deficit since inception, fer chrissakes! WHERE HAS ALL THE MONEY GONE?

Now the debt load at ECU.to.
How much airtime to the pushers and shillers give to this part of ECU.to? The company has virtually no cash ok, but what’s with all the debt that comes due this year (and on which ECU paid $641k interest last quarter)? We hear all about the ridiculously hyped oxide mill (that’s running out of mineral feed so quickly that the company has seemingly taken to stealing from its own JV partner) but any cash generated is just being used to pay off interest on loans pacted at 15% annual. Not to mention how the majority of that principle is now due soon…how on earth are they going to pay it off without reaming the people holding stock?

From those two, here’s the utter trainwreck known as working capital.
What’s your definition of “we have no money”? What’s your definition of “we have squandered over $47m in cash since 2q07?”. That’s mine above. Let’s make this really simple; if ECU doesn’t raise at least $20m and soon, it won’t have enough money to do anything. Not pay wages, not release more BS news releases, not offer its directors free shares and undated loans. IT HAS NO MONEY. Got it? And how do you think it’s going to raise cash? Yep you got it, another bullshit dilutive financing. Right now I’d guess 50m shares at 40c (with the half warrant kicker, of course) but that could get much, much worse if the market wakes up to this stock and drives the PPS to where it belongs, because this company is also the living, breathing definition of “a sitting duck” right now.

And finally, just in case you think that the people running ECU.to are unfortunate victims of circumstance, here’s how they’ve awarded themselves $5.89m in stock options in the last seven quarters.
Yes, that’s right. Despite running the stock into the ground, getting way overburdened with debt due in less than 12 months and letting working capital swing from +$30m to -$17m in the space of just 18 months, the people that run ECU.to have awarded themselves a heap of bonus options; talk about a sense of entitlement (and that’s putting it as mildly as possible).

But this week’s coveted award doesn’t go to ECU.to management. It is reserved for the message board shillers and bullshitters that proclaim themselves experts. Just by taking one quick look at the books, anyone with an ounce of ken about miners and how they run can see that this company is a disaster movie with no happy ending. Therefore those self-proclaimed ‘experts’ that troll public (and private) message boards are either pig-ignorant about miners (perfectly possible) or they are fully aware of the major problems faced by ECU Silver in its very immediate future and refuse to mention them in their non-stop bullish postings. In which case they are simply liars. Either way there is precisely zero reason to take these people seriously, either about this stock or any other stock they might opine upon.

So therefore, ECU.to bullboard shillers and bullshitters, you collectively win this week’s coveted award. Waste your own money on this dog if you like, but what right do you have in trying to palm off a full scale trainwreck of mining company to those that read bullboards and hoodwink them into believing its a company with some bright future ahead. Your analyses are disgraceful and have the sole aim of conning other people and covering your own ego, back pocket, reputation or (most likely) a combination of the three. Your time is now up. Enjoy, dumbasses:

UPDATE: The hatemail has started already, so let’s point out here on the blog nice and clearly that I have no position whatsoever in ECU Silver (ECU.to). In fact I’ve never owned the stock. That’s also true for family and (as far as my knowledge goes) any friends. That clear enough for you?