Echo Resources is an excellent example of why investors need to carefully differentiate between “compelling” mining project economics and attractive equity investments. Companies are one of the least likely sources of useful guidance. In essence, Echo Resources is trying to persuade investors that it can spend $2.9 million on its Julius gold project to get $47.4 million over just two years. This does sound compelling but, for a start, Echo’s claim of “positive cash flow of $47m” is factually incorrect. Its estimated $47 million EBITDA does not include $11 million in post-production capital spending, according to its own scoping study summary. Nor does it include necessary corporate expenses. On its own numbers, it must spend at least $13.9 million to get $47 million. However, its current market value of $38.8 million means equity investors are having to pay $52.7 million to get the elusive $47 million and that’s without any discount for risk or cash flow timing over 2017-19. The company will refer to exploration potential to justify an otherwise overpriced investment. But cheaper and higher quality exploration alternatives abound.