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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-K /A

Amendment 1

[X] ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended September 30, 2009

[   ] TRANSITION REPORT UNDER SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to _________

Commission file number 000-31184

SHOSHONE SILVER MINING
COMPANY(Name of registrant in its charter)

|Idaho                                                                | 82-0304993                          
|-------------------------------------------------------------------- | ------------------------------------
|(State or other jurisdiction of incorporation or
      organization) | (I.R.S. Employer Identification No.)
|                                                                     |                                     
|3714 W Industrial Loop., Coeur dAlene, ID                           | 83815                               
|(Address of principal executive offices)                             | (Zip Code)                          
|                                                                     |                                     
|Issuers telephone number (208) 664-0620                             |                                     

Securities registered under Section 12(b) of the Exchange Act:

|Title of each class | Name of each exchange on which registered
|------------------- | -----------------------------------------
|None                |                                          

Securities registered under Section 12(g) of the Exchange
Act:Common Stock, par value $0.10(Title of Class)

Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined in Rule 405 of the Securities Act. YES [ 
 ]    NO [X]

Indicate by check mark if the registrant is not required to file
reports pursuant to Section 13 or Section 15(d) of the Act. YES
[   ]    NO [X]

Check whether the issuer: (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past 12 months
(or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past
90 days. YES [X]    NO [   ]

Check if there is no disclosure of delinquent filers in response
to Item 405 of Regulation S-B is not contained in this form, and no
disclosure will be contained, to the best of registrants knowledge, in
definitive proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K.

Indicate by check mark whether the Registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer or a
smaller reporting company. See the definitions of large accelerated filer,
accelerated filer and smaller reporting company in Rule 12b-2 of the
Exchange Act.

1

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|Large Accelerated Filer [   ] | Accelerated Filer [   ] | Non-accelerated Filer [   ] | Smaller reporting company [X]
|----------------------------- | ----------------------- | --------------------------- | -----------------------------

Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Act). YES [   ]   
NO [X]

The aggregate market value of the voting and non-voting common
equity held by non-affiliates of the registrant on March 31, 2009, the last
business day of the registrants most recently completed second quarter,
based on the last reported trading price of the registrants common stock on the
Over the Counter Bulletin Board was approximately $3,347,603.

There were 37,468,887 shares of the registrants $0.10 par value
common stock outstanding on December 15, 2009.

2

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EXPLANATORY NOTE:

On January 12, 2010, we filed an Annual Report on Form 10-K for the year ended September 30, 2009 (the Original Report) with the Securities and Exchange Commission (the SEC).  On April 1, 2010, we received comments from the SEC on our Original Report.  We are filing this amendment to incorporate our responses to these comments.  Disclosures in this Form 10-K/A affected by our responses to the SECs comments and amended by this filing are:

| | 1. | Managements Discussion and Analysis of Financial Condition and Results of Operations; Liquidity and Capital Resources  to conform to amended presentation in the Statements of Cash Flows;      
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 2. | Report of Independent Registered Public Accounting Firm  to correct all period references;                                                                                                       
| | 3. | Statement of Cash Flows  to conform with ASC 230-10-20 by classifying as investing activities disbursements and collections related to loans made;                                               
| | 4. | Statements of Cash Flows -  to create more descriptive language for Note Receivable in Connection with Sale of Mexican Mining Concession in the Non-Cash Investing and Financing Activities; and
| | 5. | Notes to the Consolidated Financial Statements  to add explanatory language regarding the various adjustments to the financial statements.                                                       

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FORM 10-K /AFor the Fiscal Year Ended September 30,
2009

TABLE OF CONTENTS

|                                                                                                                                 | 
|-------------------------------------------------------------------------------------------------------------------------------- | 
|                                                                                                                                 | 
|PART I                                                                                                                           | 
|                                                                                                                                 | 
|Item 1. Business                                                                                                                 | 
|                                                                                                                                 | 
|Item 1A. Risk Factors                                                                                                            | 
|                                                                                                                                 | 
|Item 1B. Unresolved
      Staff Comments                                                                                         | 
|                                                                                                                                 | 
|Item 2. Properties                                                                                                               | 
|                                                                                                                                 | 
|Item 3. Legal
      Proceedings                                                                                                  | 
|                                                                                                                                 | 
|Item 4: Submission of
      Matters to a Vote of Security Holders                                                                | 
|                                                                                                                                 | 
|PART II                                                                                                                          | 
|                                                                                                                                 | 
|Item 5. Market for
      Registrants Common Equity, Related Stockholder Matters and Issuer
      Purchases of Equity Securities | 
|                                                                                                                                 | 
|Item 6. Selected
      Financial Data                                                                                            | 
|                                                                                                                                 | 
|Item 7. Managements
      Discussion and Analysis of Financial Condition and Results of Operations                              | 
|                                                                                                                                 | 
|Item 7A. Quantitative
      and Qualitative Disclosures About Market Risk                                                        | 
|                                                                                                                                 | 
|Item 8. Consolidated
      Financial Statements and Supplementary Data                                                           | 
|                                                                                                                                 | 
|Item 9. Changes in and
      Disagreements with Accountants on Accounting and Financial Disclosure                               | 
|                                                                                                                                 | 
|Item 9A(T). Controls and
      Procedures                                                                                        | 
|                                                                                                                                 | 
|Item 9B. Other
      Information                                                                                                 | 
|                                                                                                                                 | 
|PART III                                                                                                                         | 
|                                                                                                                                 | 
|Item 10. Directors and
      Executive Officers of the Registrant                                                                | 
|                                                                                                                                 | 
|Item 11. Executive
      Compensation                                                                                            | 

3

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|Item
      12. Security Ownership of Certain Beneficial Owners and Management and
      Related Stockholder Matters
|-------------------------------------------------------------------------------------------------------------------
|                                                                                                                   
|Item
      13. Certain Relationships and Related Transactions and Director
      Independence                      
|                                                                                                                   
|Item
      14. Principal Accounting Fees and Services                                                              
|                                                                                                                   
|PART
      IV                                                                                                      
|                                                                                                                   
|Part
      15. Exhibits, Financial Statement Schedules                                                             

4

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PART I

ITEM 1. BUSINESS

As used in this registration statement, "Shoshone Mining,"
"Shoshone," "our Company," "the Company, "we," and "our" refer to Shoshone
Silver Mining Company.

Overview

Shoshone Silver Mining Company is an Idaho corporation founded
as Sunrise Mining Company on August 4, 1969, and subsequently changed its name
to Shoshone Silver Mining Company on January 22. 1970. The Company was formed to
explore, develop and produce precious metals with a focus on northern Idaho and
Canada. In the late 1990's, the Company was unable to productively utilize its
Lakeview (Idaho) property and elected to expand its exploration activities
throughout Idaho and also increasingly in other western states and Mexico.

In 2004, we formed a wholly owned subsidiary in Mexico,
Shoshone Mexico, S.A. de C.V, for the purposes of facilitating our Mexico
property explorations and future operations. On August 11, 2008, we sold 100% of
the common stock of our wholly owned subsidiary to Xtierra Resources, Ltd. Our
four exploration mineral concessions covering 1,345 hectares located in
Zacatecas, Mexico were included in this sale.

On March 12, 2009, we acquired certain assets from Kimberly
Gold Mines, Inc. (Kimberly) in a transaction where we issued 12,145,306 shares
of our common stock and other consideration in exchange for 100% of Kimberlys
common stock. Kimberly has ceased to exist as a separate company.

We are an exploration stage company, and our activities have
been limited to exploring and acquiring rights to explore properties which we
believe are prospective for silver, gold, platinum group and base metals along
with uranium. We have identified and commenced prospecting efforts in several
areas in Idaho, Montana and Arizona. There can be no assurance that any of our
properties contain a commercially viable ore body or reserves. None of our
properties are in production, and consequently we have no operating income.

EXPLORATION PROPERTIES

|                           |  |                        |  |  |       |  |  | Claims   | 
|-------------------------- |  | ---------------------- |  |  | ----- |  |  | -------- | 
|Project                    |  | Location               |  |  | Acres |  |  | Patented | 
|                           |  |                        |  |  |       |  |  |          | 
|Idaho Lakeview District    |  | Bonner County, Idaho   |  |  |       |  |  |          | 
|Conjecture                 |  |                        |  |  | 240   |  |  | 6        | 
|Idaho Lakeview & Keep Cool |  |                        |  |  | 780   |  |  | 15       | 
|Millsite                   |  |                        |  |  | 13    |  |  |          | 
|Drumheller                 |  |                        |  |  | 111   |  |  | 6        | 
|Auxer                      |  |                        |  |  | 40    |  |  | -        | 
|Talache                    |  |                        |  |  | 40    |  |  | -        | 
|Subtotal                   |  |                        |  |  | 1,224 |  |  | 27       | 
|                           |  |                        |  |  |       |  |  |          | 
|Silver Valley              |  | Shoshone County, Idaho |  |  |       |  |  |          | 
|Shoshone                   |  |                        |  |  | 96    |  |  | 5        | 
|Bullion                    |  |                        |  |  | 138   |  |  | 7        | 
|North Osburn               |  |                        |  |  | 300   |  |  | -        | 
|Subtotal                   |  |                        |  |  | 534   |  |  | 12       | 
|                           |  |                        |  |  |       |  |  |          | 
|Central Idaho              |  |                        |  |  |       |  |  |          | 
|Rescue                     |  |                        |  |  | 1,720 |  |  | -        | 

5

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|Iola                        |  |                         |  |  | 70    |  |  | 5   |  |  | -   | 
|--------------------------- |  | ----------------------- |  |  | ----- |  |  | --- |  |  | --- | 
|Silver King                 |  |                         |  |  | 174   |  |  | 12  |  |  | -   | 
|Kimberly                    |  |                         |  |  | 480   |  |  | -   |  |  | 24  | 
|Subtotal                    |  |                         |  |  | 2,444 |  |  | 17  |  |  | 108 | 
|                            |  |                         |  |  |       |  |  |     |  |  |     | 
|North Idaho                 |  | Boundary County, Idaho  |  |  |       |  |  |     |  |  |     | 
|Montgomery                  |  |                         |  |  | 500   |  |  | -   |  |  | 25  | 
|Regal                       |  |                         |  |  | 80    |  |  | -   |  |  | 4   | 
|                            |  |                         |  |  | 580   |  |  | -   |  |  | 29  | 
|                            |  |                         |  |  |       |  |  |     |  |  |     | 
|Montana                     |  | Montana                 |  |  |       |  |  |     |  |  |     | 
|Stillwater Extension Claims |  | Stillwater County       |  |  | 200   |  |  | -   |  |  | 10  | 
|Princeton Gulch Group       |  | Granite County          |  |  | 120   |  |  | -   |  |  | 6   | 
|Subtotal                    |  |                         |  |  | 320   |  |  | -   |  |  | 16  | 
|                            |  |                         |  |  |       |  |  |     |  |  |     | 
|Arizona Gold                |  | Arizona                 |  |  |       |  |  |     |  |  |     | 
|Arizona Goldfield           |  | Mohave County           |  |  | 240   |  |  | -   |  |  | 13  | 
|Western Gold                |  | Mohave County           |  |  | 320   |  |  | -   |  |  | 16  | 
|Cerro Colorado              |  | Pima County             |  |  | 60    |  |  | -   |  |  | 3   | 
|Subtotal                    |  |                         |  |  | 620   |  |  | -   |  |  | 32  | 
|                            |  |                         |  |  |       |  |  |     |  |  |     | 
|Washington                  |  |                         |  |  |       |  |  |     |  |  |     | 
|Shaft Claims                |  |                         |  |  | 380   |  |  | -   |  |  | 19  | 
|                            |  |                         |  |  |       |  |  |     |  |  |     | 
|Mexico Properties           |  | Mexico                  |  |  |       |  |  |     |  |  |     | 
|Other Mexican Properties    |  | State of Sonora, Mexico |  |  | N/A   |  |  | N/A |  |  | N/A | 

Idaho Lakeview District Holdings

The Company has a group of patented and unpatented properties
located in Bonner County near the Shoshone milling facility commonly referred to
as the Idaho Lakeview District Properties. This group includes the Conjecture,
Idaho Lakeview, Weber, Keep Cool, Auxer and Talache properties.

Conjecture

The Company has leased from Chester Mining a group of patented
and unpatented properties commonly referred to as the Conjecture Group that
surround the Conjecture Mine located in Bonner County, Idaho near the Shoshone
milling facility. The 25 year lease, with a 25 year extension option, was
obtained on March 25, 2004, for consideration of 1,000,000 shares of Shoshone
stock.

Effective March 1, 2008, the terms of the Conjecture Lease were
renegotiated to obtain more favorable terms for the Company. Beginning March 1,
2008 the Company is required to:

| |  | annually deliver 50,000 shares of Shoshone restricted
      common shares to Chester Mining;                                                                                                                          
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | pay to Chester Mining an advance royalty of $125.00 per
      month until such time as net smelter returns (NSR) are payable;
    and                                                                               
| |  | pay net smelter returns to Chester Mining equal to a
      sliding percentage of total NSR received during that calendar quarter from
      the operations on the property, subject to minimum royalty
    provisions.
| |   | o                                                                                                                                                                                                                     
| |   |                                                                                                                                                                                                                       
| |   |                                                                                                                                                                                                                       

6

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| |  | 2.5% with silver $10.00 and
      above.
| | - | ----------------------------------------

Details of the original lease agreement may be found in the
exhibit 10.2 which was filed as an exhibit to the Companys Annual Report on
Form 10-KSB filed with the Commission on August 3, 2006.

Location and Access:

The Conjecture Group claims are in Section 15 of Township 53
North, Range 1 West. From the city of Coeur d'Alene, Idaho, the claims can be
reached via 36 miles of paved and well-graded gravel roads. Approximately 16
miles north of Coeur d'Alene near the town of Athol on U.S. Highway 95 is the
intersection with Bunco Road, which becomes U.S. Forest Service Road #332. Bunco
Road traverses the Lakeview Mining District 18-22 miles from the highway. Many
secondary roads lead from Bunco Road to the mines and prospects of the Lakeview
Mining District. Commercial electrical power is available on the property. Water
supply is unknown.

A map showing the Conjecture Mine Claims may be found in
Exhibit 99.1 which was filed as an exhibit to the Companys Annual Report on
Form 10-KSB/A filed with the Commission on December 3, 2007, File
No.000-31184.

Land Status:

The Conjecture Group consists of 6 patented and 6 unpatented
lode claims totaling 240 acres. The bulk of the holding (240 acres including all
patented lode claims) were obtained under a lease with Chester Mining Company.
Rights to the property are maintained by making payments as stipulated in the
lease.

Improvements to the property include the Conjecture Mines
hoist house, a concrete structure that has not been updated by Shoshone. Both
the primary shaft and secondary shaft, usable as a secondary escape way, are
open as far as may be seen from the surface. The status of underground workings
is not known.

During 2007, reclamation work conducted under the direction of
the EPA led to the destruction of the hoist house, and the filling of both the
primary and secondary shafts. The Company is currently assessing the economic
damage arising from the loss of improvements to the property. The Company
believes that, as a lessee of the property, it will not be liable for any
possible future costs associated with the reclamation work.

In order to retain the unpatented claims in the Conjecture
Group, the company must pay annual Bureau of Land Management Maintenance Fees
totaling $840 ($140 per claim, for the 6 unpatented claims).

Geology:

The Conjecture Group lies within the Lakeview Mining District.
The Lakeview mining district is predominantly underlain by Precambrian
metasedimentary rocks of the Belt Super-group represented by the Wallace
Formation. The Wallace formation consists of black or grey, very thinly
laminated argillites and siltites containing interbedded blue-grey dolomite or
limestone horizons. Total thickness of the Wallace formation is in excess of
5,000 ft. The Conjecture Mine is hosted by the Calcareous member of the
PreCambrian  Lower Wallace Formation. Exploration work during the midtolate
1950s revealed that rocks of the St. Regis Formation were also found.
Lead-zinc-silver mineralization occurs, in shoots, along the Conjecture Shear
Zone, the main structural feature in the mine. It is a zone of variable width
trending approximately N30°E and dips about 65°NW. Mineralization consists of
galena, tetrahedrite, rhodochrosite, pyrite, arsenopyrite and quartz that fill
fractures in the brecciated, host rocks. The North-South trending Spider Fault
offsets the Conjecture Shear Zone and Lamprophyre dikes were seen during
exploration of the lowest level.

The property currently is without known reserves and the
proposed program, as described below, is exploratory in nature.

Exploration History:

7

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In the late 1950s and early 1960s, Federal Resources, a
previous owner, extended the Conjecture Mines incline shaft to the 700-foot
level, added a 200 foot vertical shaft, and developed the 700, 1000, 1600 and
2000-foot levels along 2500 feet of strike, totaling over 13,000 feet of
workings. The Sunshine Mining Company unitized the Lakeview District during the
1970s and conducted further exploratory drilling and development work within
the Conjecture Mine and associated Confed property currently under Shoshones
control.

Impairment:

The acquisition costs of the property of $350,000 were included
in exploration expenses in a prior year.

Idaho Lakeview, Keep Cool and Weber

The Idaho Lakeview, Weber and Keep Cool groups are located
contiguously around an area of Bonner County near Shoshones Idaho Lakeview
Mill.

Location and Access:

The claims are in Sections 15, 22, 26, 27, 28, 29, 32, 33, 34,
and 35 of Township 53 North, Range 1 West. From the city of Coeur d'Alene,
Idaho, the claims can be reached via 36 miles of paved and well-graded gravel
roads. Approximately 16 miles north of Coeur d'Alene near the town of Athol on
U.S. Highway 95 is the intersection with Bunco Road, which becomes U.S. Forest
Service Road #332. Bunco Road traverses the Lakeview Mining District 18-22 miles
from the highway. Many secondary roads lead from Bunco Road to the mines and
prospects of the Lakeview Mining District. Commercial electricity is available
on the property. Water is supplied via wells and through water rights to a
nearby creek.

A map of the Idaho Lakeview, Keep Cool and Weber properties is
contained in Exhibit 99.1 which was filed as an exhibit to the Companys Annual
Report on Form 10-KSB/A filed with the Commission on December 3, 2007, File
No.000-31184.

Land Status:

The Idaho Lakeview and Keep Cool Groups comprise 9 patented and
14 unpatented lode mining claims. The Weber Group is comprised of 6 patented and
10 unpatented lode mining claims. An additional 7 unpatented lode mining claims
were staked by the company in 2007. The Idaho Lakeview Millsite consists of a
mill and water treatment facility on 12.5 patented acres.

In order to retain title to the Idaho Lakeview, Weber and Keep
Cool, the company must pay annually assessed property taxes to Bonner County,
Idaho on the 15 patented claims within the group and annual Bureau of Land
Management Maintenance Fees totaling $3,360 ($140 per claim, for the 24
unpatented claims).

Geology:

These properties lie within the Lakeview Mining District. The
Lakeview mining district is predominantly underlain by Precambrian
metasedimentary rocks of the Belt Super-group represented by the Wallace
Formation. The Wallace formation consists of black or grey, very thinly
laminated argillites and siltites containing interbedded blue-grey dolomite or
limestone horizons. Total thickness of the Wallace formation is in excess of
5,000 ft.

The property currently is without known reserves.

Exploration History:

Initial discoveries of mineralization in the Lakeview District
were made in 1888 near the site of the Weber Mine. Additional discoveries were
made throughout the Pend Oreille Lake region and the Lakeview District was at
that time included in the Pend Oreille Mining district, and so early production
records are unknown.

8

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In 1924, the Venezwela Group of claims was taken over by the
Hewer Mining Company and became what is now known as the Lakeview Mine. An
internal shaft was eventually sunk to the 1,400 ft level and between 1923 and
1943 the Lakeview mine produced 24,500 tons of ore.

In 1962, Sunshine Mining Company became interested in the
district, and signed an agreement with Idaho Lakeview Mines, the successor to
Hewer Mining Company, and acquired a 50% interest in the Keep Cool and Idaho
Lakeview mines. The combined properties became the Lakeview Consolidated Silver
Mines, Inc.

Sunshine, in order to maintain its interest, conducted
assessment work on the properties, including surface excavations, drill holes
and underground work.

In 1978, a bulldozer trenching discovered another surface zone
of mineralization 2,000 ft northeast of the Weber Pit. It exposed a vein 10-12
ft wide and 135 ft long. This vein was mined during the early 1980s.

In 1987, Shoshone rehabilitated the Keep Cool Mine, and drove
200 ft of new workings towards a vein drilled by Sunshine Mining Company in
1970.

A limited amount of material was removed from the Weber Pit in
the late 1970s, early 1980s. Exact quantities are unknown.

The company conducted exploration drilling from the surface in
2008

Development Activities:

In 2008, the Company completed the refurbishment of the
Lakeview Mill. This refurbishment included repairs and updates to the existing
equipment and electrical infrastructure and installation of a new water
management system. The mill has since been processing previously mined and
stockpiled mineralized material. Concentrates from milling activities are
being stored at the mill facility.

Exploration and Development Plans:

During 2008, the Company conducted trenching and sampling on a
portion of the Weber Shear between the Weber and Keep Cool Mines. Also, during
2008, the Company conducted exploration drilling from the surface over a portion
of the properties.

Production Plans:

The Company will continue milling previously mined and
stockpiled mineralized materials in 2010 when snow no longer makes the roads
impassable. Additionally, Shoshone plans to engage in limited surface mining in
the Weber shear as it extends from the Weber to the Keep Cool on its patented
ground provided initial drilling substantiates the continued mineralization of
the shear at or near the surface.

Mineralized material that may be obtained from this mining
activity will be processed at the Lakeview Mill. The company will be stockpiling
concentrates from milling at its facilities until a sufficient quantity of
concentrates are held to make shipping and smelting economically advantageous.
Planned production activities will continue while roads are passable by heavy
equipment.

Impairment:

During 2006, the Company paid fees to make improvements to the
land to be more accessible as well as usable. The total amount of $68,472 was
capitalized.

The Company believes that, when compared to the market value of
the property, the deferred costs of $334,690 have not suffered impairment.
Accordingly, at September 30, 2009, the Company did not consider a write-down to
the carrying cost necessary.

9

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Drumheller Group

The Company owns 6 patented claims consisting of 110.82 acres
which are adjoining and lying south of the Idaho Lakeview calims on a extension
of the Hewer vein. The company issued 109,141 shares of its common stock to
acquire these claims in February 1984.

Auxer Group

The Auxer Mine is a formerly producing precious metal mine
located in Bonner County, Idaho.

Location and Access:

The Auxer Mine property is located in Bonner County, Idaho,
about 3.5 miles northeast of East Hope, Idaho and about 10 miles north of Clark
Fork, Idaho within Sections 20, 29, Township 57 North, Range 02 East.

The property can be accessed by logging roads leading north
from Clark Fork, Idaho along Lightning Creek for 11 miles; then by four miles of
logging roads and mine access road to the headwaters of Wellington Creek. The
property can also be accessed by five miles of gravel roads leading north from
East Hope, Idaho along Strong Creek. The current electrical and water supply to
the land are unknown.

A map showing the Auxer Property may be found in Exhibit 99.3
which was filed as an exhibit to the Companys Annual Report on Form 10-KSB/A
filed with the Commission on December 3, 2007, File No.000-31184.

Land Status:

The area covered by the Auxer claims is under Bureau of Land
Management (BLM) jurisdiction. The Auxer property consists of 2 contiguous
unpatented mining claims covering 40 acres. Title to the property is maintained
by annual payment of BLM Maintenance Fees of $280. The Company has not made
improvements to the property.

Geology:

The Auxer Mines area is located on the north slope of the Auxer
Basin, a glacial cirque, at elevations that range from 5,200 to 6,000 feet above
sea-level. Vegetation consists of dense stands of conifers, with areas of talus
cover on the northwesterly portions of the claim area. Soil depth on the
property ranges from bedrock exposure to roughly ten inches deep.

Argillaceous quartzites of the Pre-Cambrian Belt Series
intruded by granodiorite underlie the claims. The Prichard formation is exposed
in talus material along the northwesterly boundary of the claims.

There are two main gold bearing quartz veins, the Boston and
Chicago Veins. The Boston Vein can be traced for several thousand feet on the
surface. It is a 14-15 foot wide shear zone at the surface, but widens to 25
feet at a depth of 200 feet. The quartz vein contains gold, associated with the
pyrite.

The Chicago Vein is located 500 feet south of the Boston Shaft
and occurs within a shear zone parallel to the Boston Vein. The vein is of the
same character as the Boston Vein, but has not been explored on the surface. A
40 inch wide channel sample was taken on the surface by John Plats in 1936,
assaying 0.60 oz/t gold.

The property is currently without known reserves and the
proposed program, as defined below, is exploratory in nature.

Exploration History:

E.U. Philbrick staked the main Auxer claims in 1905. In 1925,
Auxer Gold Mines was organized, and by 1933 most of the Auxer claims were deeded
to Auxer Gold Mines.

In 1968, Auxer Gold Mines was purchased by Spokane National
Mines, Inc. In 1972, the property was sold to Idora

10

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Silver Mines, Inc. and later relinquished its interest.
Ashington Mining Company staked two claims in 1999.

In September 2003, the Company acquired the property from
Ashington Mining Company for $7,500.

Exploration Plans:

The following are recommended for the exploration of the Auxer
claims:

- Surface geological mapping of surface exposure of veins;
- Geochemical sampling of surface and underground vein exposures;
- Underground geological mapping of mine workings (if accessible);
- Systematic sampling of underground vein exposures (if accessible); and
- Location of surface and underground drill sites.

No timetable for exploration has been set and costs for the
recommended exploration have not been determined.

Impairment:

The Company believes that, when compared to the market value of
the property, the deferred costs of $7,500 have not suffered impairment.
Accordingly, at September 30, 2009, the Company did not consider a write-down to
the carrying cost necessary.

Talache Group

Location and Access:

The Talache silver-gold property is located in Bonner County,
in Sections 1 and 6, Township 55 North, Range 1 West. These holdings are located
approximately 1 mile northwest of Talache Landing, and 12 miles southeast of
Sandpoint, via U.S. Highway 95 and Mirror Lake Road. The current status of
electric and water supply to the property are unknown.

A map showing the Talache Group may be found in Exhibit 99.4
which was filed as an exhibit to the Companys Annual Report on Form 10-KSB/A
filed with the Commission on December 3, 2007, File No.000-31184.

Land Status:

The property consists of 2 unpatented mining claims covering 40
acres of Bureau of Land Management (BLM) land. Title to the property is
maintained by annual payment of BLM Maintenance Fees of $280. The Company has
not improved the property.

Geology:

Steep slopes that are heavily timbered characterize the
topography of the area. Altitudes vary from 2,060 feet on the shore of Pend
Oreille Lake to more than 4,100 feet in the northwestern portion of the
property. The property is dominated by coniferous forest, with large areas of
open meadow grassland in areas where soil cover is too thin to support conifer
trees.

The rocks exposed in the vicinity of the property consist of
argillites, silites, and quartizes of the Precambrian Belt Super-group. In the
vicinity of the Talache Group property, the rocks display an overall tendency to
become less calcareous and more clastic with depth. The property is situated on
the west limb of a syncline whose axis strikes nearly due north. Two prominent
fracture directions are observed within the property boundaries. These include a
set that strikes nearly north-south and dips from 80 degrees west to 45 degrees
east and a set which strikes approximately east-west and dips from 45 degrees
south to 45 degrees north. Most of the prominent mineralization in the area
follows north-striking fractures.

Mineralization of economic significance occurs as veins
contained in numerous faults and shear zones within the area.

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The veins occur as lenses and pipes that shoot within the
faults and vary considerably in size, grade, and continuity. They improve in
width and grade where they are cut and offset by east-west striking cross
faults.

Exploration History:

The first claims were staked in the area in the early 1890s.
In 1922, the Talache Mine was developed and production was initiated and
continued until late 1926. Although no accurate record exists of total
production, it has been estimated that the Talache Mine produced approximately
two million ounces of silver and some gold, lead, and copper. Zinc, although
present, was not recovered. The operation may have ceased due to the decreasing
silver price and the fact that the mineralized zone was found to extend off of
the Talache property along strike.

In 1964, the Silver Butte Mining Co. was formed to explore the
Talache area, and approximately 2,300 feet of drifting and cross-cutting and
2,400 feet of diamond drilling were carried out approximately 1 mile to the
north of the current Talache Group Claims.

In 1969, Silver Butte and Imperial Silver leased the property
to Cominco American, Inc. Cominco held the properties through 1971 and completed
approximately 5,000 feet of diamond drilling. Subsequently all claims were
dropped.

In 1999, two claims covering 40 acres were staked for Ashington
Mining Corporation.

In 2003, the Company acquired the property from Ashington for
$22,500.

The property is currently without known reserves and the
proposed program is exploratory in nature.

Exploration Plans:

The following are recommended actions for the Talache
Property:

- Rehabilitate the Talache 400 level portal;
- Conduct systematic channel sampling of vein exposures on the Talache 400
  level;
- Underground geological mapping of the Talache 400 level;
- Surface geological mapping to identify surface expression of faults and
  veins;
- Surface sampling of vein and fault exposures to extend laterally the
  mineralization; and
- Locate potential reverse circulation and diamond drill hole locations for
  surface drilling.

No timetable for exploration has been set and costs for the
recommended exploration have not been determined.

Impairment:

The Company believes that, when compared to the market value of
the property, the deferred costs of $22,500 have not suffered impairment.
Accordingly, at September 30, 2009, the Company did not consider a write-down to
the carrying cost necessary.

Silver Valley Holdings

Shoshone has three holdings in Idahos Silver Valley: the
Shoshone, Bullion and North Osburn Groups.

Shoshone Group

The Company has a group of patented lode claims commonly
referred to as the Shoshone Group located contiguously around an area within the
St. Joe Mining District in Shoshone County, Idaho.

Location and Access:

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The claims are in Sections 13, 14, and 15 of Township 47 North,
Range 5 East. From the city of Coeur d'Alene, Idaho, travel approximately 45
miles East on Interstate 90, to Exit # 63. Turn south onto Willow Creek Road.
Travel south of Willow Creek Road for 1 mile. Several secondary roads access
this property. Commercial power is available on Willow Creek Road. The current
status of the water supply is unknown.

A map showing the Shoshone Group may be found in Exhibit 99.2
which was filed as an exhibit to the Companys Annual Report on Form 10-KSB/A
filed with the Commission on December 3, 2007, File No.000-31184.

Land Status:

The Shoshone Group consists of 5 patented lode claims totaling
96 acres in the St. Joe Mining District. Title to the property is maintained by
payment of annually assessed property taxes to Shoshone County, Idaho. During
2009, the Company paid $61 in property taxes on this property. The Company has
not made improvements to the property.

Geology:

The rocks in the claim group belong to the Precambrian lower
Wallace formation, consisting of light-grey dolomitic quartzite inter-bedded
with greenish-grey argillites. Ripple marks and mud cracks are visible on
bedding surfaces. The rocks are intruded by Tertiary aged diabase dikes.

The claim group is located within a fault block bounded by the
Osburn Fault to the north and the Placer Creek Fault to the south, and covers
three vein structures known as the Champion, Helena and Link Veins.

The Champion Vein extends from the Springfield Mine to the
Bullion Mine six miles to the east, passing through both the Shoshone and
Bullion properties.

Exploration History:

The Shoshone Group is located in the St. Joe Mining District of
eastern Shoshone County, along the Montana border. This property covers several
prospect pits and other historic mine workings.

The Shoshone Group was the subject of considerable interest and
speculation in the early 1980s as Anaconda Minerals drilled the property.
Surface outcrop, including a vein structure 7,000 feet long and up to 80 feet
wide, along with enormous geological anomalies shown in soil and vegetation
sampling by the USGS, led geologists to believe that substantial silver
mineralization might be found at depth.

Anaconda drilled four exploratory holes near the property
boundary shared with Stevens Peak Mining, in an effort to locate a site for
deeper drilling. One of the holes was sufficiently encouraging to justify its
continuation and was planned to extend to depths reaching 6,000 feet, targeting
the Champion Vein, deep in the Revett formation. However, the planned hole was
collared at just over 3,000 feet and although core samples confirmed earlier
projections about geology and structure at depth, the program was never
completed.

Bear Creek Mining Company leased the Shoshone Group in 1981.
The Company conducted surface geological and geo-chemical surveying.

The property is currently without known reserves and the
proposed program is exploratory in nature.

Exploration Plans:

There are currently no plans to conduct exploration on the
Companys Shoshone properties.

Impairment:

The deferred costs of this property totaled $17,500, which was
written-off in prior years as an exploration expense.

Bullion Group

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The Company has a group of patented properties commonly
referred to as the Bullion Group located contiguously within the St. Joe Mining
District in eastern Shoshone County, Idaho.

Location and Access:

The claims are in Sections 20 and 21 of Township 47 North,
Range 6 East. From the city of Coeur d'Alene, Idaho, travel approximately 50
miles east on Interstate 90, to Exit # 1 (TAFT Exit). Turn onto USFS Road 507,
following it for 7 miles. The Bullion Group is accessed by newly cut logging
roads from USFS Road 507. Current electrical and water supplies are unknown. A
map showing the Bullion Group may be found in Exhibit 99.2 which was filed as an
exhibit to the Companys Annual Report on Form 10-KSB/A filed with the
Commission on December 3, 2007, File No.000-31184.

Land Status:

The Bullion Group consists of 7 patented lode claims totaling
138 acres. Title to the property is maintained by payment of annually
assessed property taxes to Shoshone County, Idaho. During 2009, the Company paid
$100 in property taxes on this property. The Company has not made improvements
to the property.

Geology:

The rocks in the Bullion Group are the same geologic setting as
for the Shoshone Group of claims belonging to the Precambrian lower Wallace
formation.

The Bullion Group, as is the case of the Shoshone Group, is
located within a fault block bounded by the Osburn Fault to the north and the
Placer Creek Fault to the south, and covers three vein structures known as the
Champion, Helena and Link Veins.

The Bullion Group covers the Bullion Mine workings located on
the Champion Vein.

Exploration History:

The Bullion Group is located in the St. Joe Mining District of
eastern Shoshone County, along the Montana Border. The two unpatented Bullion
Group claims totaling 40 acres have been leased to Sterling Mining Company.
Lease terms stipulate a 4 year exploration program commencing within five years
of the lease date. Shoshone will receive 10% net profit from any mined
minerals.

This lease agreement may be found in Exhibit 10.4 which was
filed as an exhibit to the Companys Annual Report on Form 10-KSB filed with the
Commission on December 4, 2006.

Bear Creek Mining Company leased the Bullion Group in 1981. The
company conducted surface geological and geochemical surveying.

The property is currently without known reserves and the
proposed program is exploratory in nature.

Exploration Plans:

There are no plans to conduct exploration on the Shoshones
Bullion Group until a due diligence study is completed.

Impairment:

This property was acquired as part of a settlement of a
promissory note owed to the Company. The cost of the property was included as an
exploration expense in a prior year.

North Osburn Group

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The Company has a group of unpatented properties known as the
North Osburn Group located within the Silver Valley in Shoshone County, Idaho.

Location and Access:

The claims are in Sections 28, 48, 30, 31, 32 and 36 of
Township 49 North, Range 3 and 4 East. From the city of Coeur d'Alene, Idaho,
travel approximately 40 miles east on Interstate 90, to Exit # 54 (Big Creek
Exit). Turn north from I-90, then turn west on the access road and travel half a
mile. Turn north on Forest Road 1599 then travel northeast for 3 miles. The road
ends at the north end of the North Osburn Group.

A map showing the North Osburn Group is contained in Exhibit
99.13 which was filed as an exhibit to the Companys Annual Report on Form 10-K
filed with the Commission on April 14, 2008, File No.000-31184.

Land Status:

The North Osburn Group consists of 15 unpatented lode claims
totaling approximately 300 acres. Title to the property is maintained by annual
payment of BLM fees in the amount of $2,100. The Company has not made
improvements to the property. The current electrical and water supply to the
property is unknown.

Geology:

The claims are located on rocks of the Belt metasediments,
which includes the Revett, Burke and Prichard Formations. The Revett Formation
consists of vitreous pure quartzite beds ranging from one to six feet in
thickness. Fine dark laminae are common in some of the quartzite beds. The Burke
Formation consists of interbedded impure to pure quartzite, siliceous argillite
and minor amounts of argillite. The most prevalent variety is a greenish-grey
quartzite that is generally formed in beds less than six inches thick. The
Prichard Formation consists of a succession of medium to dark-gray quartzose
argillite that grade into similar appearing impure quartzite. Pyrite is found
concentrated within the darker laminae or along bedding planes or argillitic
rocks and irregular grains about one millimeter in size.

Exploration History:

Although the property is located in the heart of the Silver
Valley, this area has seen only modest exploration. The Burke-Prichard
Transition Zone is a favorable host for silver-bearing base metal ores elsewhere
in the district, and should be thoroughly tested in the North Osburn area.

The property is currently without known reserves and the
proposed program is exploratory in nature.

Exploration Plans:

There are no current plans to conduct exploration on the
Shoshones North Osburn Group.

Impairment:

The cost to acquire this property of $1,875 was expensed during
2007.

Central Idaho Holdings

Warren District

Rescue Gold Mine

Location and Access:

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From Coeur dAlene, Idaho, drive south on State Highway 95 to
New Meadows, Idaho. Turn onto State Highway 55; drive south on State Highway 55
to McCall, Idaho, you will enter the town of McCall on its northern edge. As you
enter the city, there will be a highway sign on the right that says Warren Wagon
Road and an arrow directing you to turn left. Turn left as directed and you will
be on a paved road that runs along the north side of Payette Lake. This paved
road extends into the Payette National Forest for a distance of 28 miles. At the
end of the pavement is a U.S. F.S. sign with directions to Burgdorf, Secesh,
Warren and several other areas of interest. The road to Warren is a wide,
graveled road that is easy to follow. From the end of pavement to Warren is a
distance of 17 miles plus. After traveling 16 miles, you will come to a wide
area, with roads forking off in several directions. Stay on the better road and
cross Warren Creek on a single lane concrete bridge.

As you enter Warren, the road makes a 90 degree left turn, goes
one short block and makes a 90 degree right turn. Continue through Warren on
this road. You will pass the Back Country Bed & Board on your left and very
quickly pass a small saw mill on your right. Slow down, because as soon as you
pass the little sawmill, you will leave the main road and turn right onto the
access road to the mine. As you turn right, straight ahead you will see a gated
bridge over Warren Creek, and a large 4 x 8 sign advertising Shoshone Silver
Mining Company. Signs posted will direct you to the mill office. A map of the
Rescue Gold Mine is contained in Exhibit 99.14.

Land Status:

The Company holds 82 unpatented mining claims and 2 unpatented
mill-site claims covering 1,720 acres in central Idaho. There is a 120 ton per
day mill complete with a Knelson Gold Concentrator on the mill-site claims.
There is a 43-101 Report which was completed in 2008.

Exploration and Development plans

42 unpatented claims were staked in the Warren District by
Shoshone in the summer of 2009; as a result, Shoshone now holds 84 unpatented
claims in the Warren District. During 2009, the Company conducted additional
exploration activities.

Iola Claims

The Company leases 5 patented mining claims in central Idaho
covering 70 acres. A map of the Iola Claims Lease is contained in Exhibit 99.14.

Silver King Claims

The Company leases 12 patented mining claims in central Idaho
covering 174 acres. A map of the Silver King Lease is contained in Exhibit
99.14.

Marshall Mountain District

Kimberly Gold Mine

Location and Access:

Following the directions to reach the Rescue Mine, at the end
of pavement will be a U.S.F.S. sign that directs you to turn left on a good
gravel road to Burgdorf. Approximately 5 miles past Burgdorf will be a U.S.F.S.
sign that directs you to turn right to reach the Kimberly Mine. This Forest
Service road is best traveled in a high clearance vehicle and is identified on
U.S.F.S. maps as road #318. After traveling 8 plus miles, a small sign on the
right hand side of the road will say Sherman Howe Mine, turn right and stay on
the main road and in 3⁄4 of a mile you will be in the old Kimberly mine camp. As a
warning, very few U.S.F.S. roads are identified with their numerical
designation. A map of the Kimberly Gold Mine is contained in Exhibit 99.14.

Land Status:

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The Company holds 24 unpatented mining claims covering 480
acres in central Idaho. The mine consists of 10 separate tunnels which explore
7,500 feet of previously producing workings. There is a 43-101 Report which was
completed in 2008.

North Idaho Holdings

The Company has two holdings in Boundary County, Idaho: the
Regal and Montgomery Mines.

Regal Mine

The Regal Mine is a formerly producing base and precious metal
mine located in the Moyie-Yaak Mining District, Boundary County, Idaho.

Location and Access:

The Regal Mine property is located 10 miles north of Bonners
Ferry, Idaho, and 0.5 miles northeast of Camp Nine on Meadow Creek, Section 31,
64N, R2E, Boise Meridian.

The property can be accessed by traveling 7.5 miles north on
Highway 95 from Bonners Ferry, then taking USFS Road 397 six miles to an access
road that leads to the mine. The property is accessible year round. The current
electrical and water supply to the property is unknown.

A map showing the Regal Mine may be found in Exhibit 99.5 which
was filed as an exhibit to the Companys Annual Report on Form 10-KSB/A filed
with the Commission on December 3, 2007, File No.000-31184.

Land Status:

The Regal property consists of 4 contiguous unpatented mining
claims that cover 80 acres of BLM property in the Moyie-Yaak Mining District,
Boundary County, Idaho. Title to the property is maintained by annual payment of
BLM Maintenance Fees of $560. The company has made no improvements to the
property, and the state of historic underground workings is unknown.

Geology:

The Regal Mine is located on the west slope of Wall Mountain
(elevation 5,160 feet). The topography is mountainous with steep sided valleys.
Elevations within the property range from 3,500 to 4,400 feet above sea-level.
The property is largely covered by coniferous forest, with large areas of meadow
grassland. Soil depth on the property ranges from bedrock exposure to roughly
ten inches deep.

The Regal property is underlain by the Pre-cambrian Belt Group,
which is intruded by a series of dioritic sills. Both the sills and the Belt
rocks have been folded and faulted and subsequently intruded by granites of the
Nelson Batholith of British Columbia. The Regal gold-silver-lead-zinc veins are
exposed in granite rocks of the Nelson Batholith, which is locally fractured by
regional structures.

There are two parallel N 60-70 degrees E striking veins on the
Regal property, the North Vein and the South Vein. Both veins dip between 50-60
degrees southeasterly. Vein minerals are galena, sphalerite, pyrite,
arsenopyrite, siderite and quartz. The gold mineralization appears to be
associated with pyrite and arsenopyrite. The mineralization resembles
lead-zinc-siderite veins of the Coeur dAlene Mining District; the main
difference is that the Regal Mine veins also contain considerable arsenopyrite
with important gold values introduced during the later stages of mineralization.
The Regal Mine is developed on 3 main levels connected by a vertical shaft. The
upper most levels (No. 1 and No. 2) are accessible from the surface. Total
development exceeds 3,800 feet. There is no indication of mining below the
lowermost (No. 3) level. However, old mine maps indicate that both the north and
south mineral zones continue to depth.

The property is currently without known reserves and the
proposed program is exploratory in nature.

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Exploration History:

The Regal Mine was known as the Commercial Mine until 1935 when
it was leased to Silver Crescent Mining Company. Silver Crescent performed
exploration and development work on the property through 1945, including
construction of a 100 ton per day flotation mill that was subsequently sold in
1948.

In 1968, an unknown amount of ore was sent to the Bunker Hill
Smelter. The assay results indicated 0.47 oz/t gold, 15.51 oz/t silver, 32.5%
lead, 29.8% zinc, and 0.42% copper.

In 1971, Silver Dollar Mining Company submitted a 39.8 - ton
(wet weight) shipment to the East Helena Smelter, Montana. The concentrate
sample assayed 0.41 oz/t gold, 4.8 oz/t silver, 6.6% lead, and 6.7% zinc. The
property has been largely inactive since that time except for a widening of the
Number 2 adit level and re-timbering of the portal in the early 1990s.

Shoshone Silver Mining Company acquired the claims in 2003 from
Ashington Mining Company for $15,000.

Exploration Plans:

The Regal Mine has the potential to host economically
extractable ore containing gold, silver, lead and zinc on a modest scale.
Historical mine maps indicate high-grade mineralization continuing below the
Number 3 level. Surface geological mapping will identify any lateral extent of
the mineralization, and if there are any parallel mineralized structures.

The following are recommended actions for the rehabilitation of
the Regal Mine:

- Rehabilitate the surface shaft opening and cover all open workings to
  prevent water access;
- Rehabilitate Number 2 level portal to drain the number 2 level workings;
- Stabilize mine workings with rock bolting and roof support in essential
  areas;
- Conduct systematic channel sampling of vein exposures on the Number 1 and
  2 levels (if accessible);
- Perform underground geological mapping of the Number 2 level;
- Perform surface geological mapping to identify surface expression of
  faults and veins;
- Conduct surface stream sediment sampling program to identify additional
  areas of mineralization;
- Conduct ground magnetic survey to identify possible veins and structures;
- Stake additional claims to cover lateral extensions of mineralized
  structures;
- Locate potential RC and diamond drill-hole locations for surface drilling;
  and
- Reconnaissance work on prospects located along strike of the structures
  controlling mineralization in the Regal Mine.

No timetable for exploration has been set and costs for the
recommended exploration have not been determined.

Impairment:

The Company believes that when compared to the market value of
the property, the deferred costs of $15,000 have not suffered impairment.
Accordingly, at September 30, 2008, the Company did not consider a write-down to
the carrying cost necessary.

Montgomery Mine Group

The company controls unpatented claims that cover and surround
the Montgomery Mine near Copeland in Boundary County, Idaho.

Location and Access:

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The claims are in Section 30, Township 65 North, Range 1 East.
A geographic reference point for the claims is 48°57 19 North and 116° 23 02
West.

The property is reached via 2 miles of access road from County
Road 49 3.7 miles north on State Highway 1 from the intersection of State
Highway 1 and U.S. Highway 95, approximately 12 miles north of Bonners Ferry,
Idaho. The Montgomery Mine is accessible year round.

A map showing the Montgomery Mine may be found in Exhibit 99.7
which was filed as an exhibit to the Companys Annual Report on Form 10-KSB/A
filed with the Commission on December 3, 2007, File No.000-31184.

Land Status:

Montgomery Mine claim group consists of 25 unpatented lode
claims covering 500 acres of BLM land. The claims are located on the southwest
slope of Hall Mountain with approximately 1,800 feet of relief in the claim
group. No additional claims are staked in the area. The claims are maintained by
annual payment of BLM Maintenance Fees of $3,500. The Company has not made
improvements to the property. Commercial power is available on County Road 49.
Water access is unknown.

Geology:

The area is underlain by the Prichard and Allrich formations of
the lower Belt series. The quartzites and impure quartzites of the Prichard and
Allrich formations have been locally intruded by diorite sills. These sills
strike northwest across the property and dip gently to the northeast.

The Diorite sills exhibit anomalous Platinum Group Metals (PGM)
values that may have economic potential. The sills also host prominent quartz
veins that exhibit significant copper, lead, silver, and gold values that
provide an additional economic potential to the property.

The property is currently without known reserves and the
proposed program is exploratory in nature.

Exploration History:

The property has been explored by means of approximately 3,500
feet of drift development in 3 primary tunnels and 4 smaller tunnels. This
development appears to establish lateral continuity of the sills and veins. In
addition to drifting there have been several diamond drill holes completed and
at least one surface geophysics survey has been run on the property.

Records from this historic work are incomplete or unavailable,
therefore results from this work are considered unreliable for resource analysis
or interpretation.

Exploration Plans:

These claims require the rehabilitation of the 3 primary
tunnels. The current condition of these tunnels is unknown. Once access is
available the sills and veins will be mapped and sampled underground. In
addition the property should have a new surface geophysics survey performed.

Results from these efforts will be analyzed and used to develop
a comprehensive drill program. Completion of these activities could produce a
mineralized material resource that can then be subjected to a feasibility study
prior to production development.

No timetable for exploration has been set and costs of the
recommended exploration have not been determined.

Impairment:

The acquisition costs of $43,557 were included in exploration
expenses in a prior year.

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Montana Holdings

Shoshone has two property groups in Montana: the Stillwater
Extension Claims and the Princeton Gulch Group.

Stillwater Extension Claims

The Stillwater Extension property consists of 10 unpatented
lode claims covering 200 acres of the Stillwater Complex of south central
Montana. The Stillwater Complex is a mafic-ultramafic layered intrusive that
includes the 28-mile long J-M Reef, which hosts Platinum Group Metals (PGM).

Location and Access:

The Stillwater Extension claims are located approximately five
miles southeast of the Stillwater Mine and cover a projected eastern extension
of J-M Reef. The claims are located in Sections 2, 3, 11, T6S, R16E.

A map showing the Stillwater Extension Claims may be found in
Exhibit 99.6 which was filed as an exhibit to the Companys Annual Report on
Form 10-KSB/A filed with the Commission on December 3, 2007, File
No.000-31184.

Land Status:

In 2003, Shoshone Silver Mining Company purchased the
Stillwater Claims for $15,000. The claims are maintained by annual payment of
BLM Maintenance Fees of $1,400. The company has made no improvements to the
property. Power and water status are unknown.

Geology:

The Stillwater Extension Claims are located within the
Stillwater mafic-ultramafic layered intrusive complex. The uniquely PGM-enriched
J-M Reef and its characteristic host rock package represent one such layer in
the sequence. The PGM in the J-M Reef consist primarily of palladium, platinum
and a minor amount of rhodium. The reef also contains approximately 3 percent
iron, copper and nickel sulfides, plus trace amounts of gold and silver.

The property currently is without known reserves and the
proposed program is exploratory in nature.

Exploration History:

The Johns Manville Corporation discovered palladium and
platinum along the J-M Reef of the Stillwater Complex in the early 1970s. In
1979, a Manville subsidiary partnered with Chevron to develop the property.
Underground operations at the Stillwater Mine commenced in 1986.

Exploration Plans:

The Company plans an evaluation program including geologic
mapping, rock chip and soil geochemical surveys, and interpretation of public
domain geophysical data. The program will be conducted to determine the
suitability of a joint venture partner. No timetable for exploration has been
set and costs for the recommended evaluation program have not been determined.

Impairment:

The deferred costs of $15,000 were included in exploration
expenses in a prior year.

Princeton Gulch Group

The Company controls unpatented claims that cover and surround
the Princeton Gulch placer in Granite County in south central Montana.

Location and Access:

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The Princeton Gulch claims are located in Sections 20 & 21
of Township 8 North, Range 12 West, 7 miles northeast of the town of Maxville,
Montana. Access is provided by county roads east of State Highway 10A at
Maxville, Montana. Turn east on the Maxville/Princeton Road at Maxville for 4.5
miles. Turn northeast on County Road 1500 for 2.5 miles. The claim group
occupies the mountain valley running to the east from this point.

A map showing the Princeton Gulch Group may be found in Exhibit
99.10 which was filed as an exhibit to the Companys Annual Report on Form
10-KSB/A filed with the Commission on December 3, 2007, File No.000-31184.

Land Status:

This claim group consists of 4 unpatented placer claims
covering 80 acres and 2 unpatented load claims covering 40 acres, for a total of
120 acres. The claims are maintained by annual payment of BLM Maintenance Fees
of $840. The company has not improved the property. Electrical status is
unknown. Water is available via streams running through the property. Three
holding/settling ponds, approved by the State of Montana as harmless to Bull
Trout found in the area, have been constructed.

Geology:

This claim group lies in mountainous terrain on the east slope
of the Deerlodge Range. The country rocks are folded and faulted marbles,
phyllites and quartzites of Jurassic/Cretaceous age. The Royal stock outcrops
less than 1 mile east of this claim group. The metamorphism is a result of the
emplacement of the Royal stock and other nearby stocks and batholiths.

The claims host placer deposits within 18 of bedrock along the
floor of the gulch. The load claims could potentially host fissure veins found
and exploited on adjacent claims and properties; however, there are no reports
of veining on this property.

The property is currently without known reserves and the
proposed program is exploratory in nature.

Exploration History:

The claims have been worked sporadically by small scale
owner/operators for a number of years. The claims have only been placer mined in
the valley bottom. No additional exploration work has been done. The Princeton
Mining District has had several past producers, both lode and placer in the late
1800s and first half of the 1900s.

Exploration Plans:

The claim group will benefit from detailed geologic mapping,
sampling and trenching. Beyond this basic exploration, modern geophysics and
remote sensing should be applied to the claim group. No timetable for
exploration has been set and costs of the recommended exploration have not been
determined.

Impairment:

The acquisition costs of $13,000 were included in the
exploration expenses for the year ending December 31, 2006.

Arizona Gold Holdings

The Company holds two claim groups in the Oatman Mining
District: the Western Gold and Gold Road Claims along with the Cerro Colorado
Group in Pima County, AZ.

Western Gold Claims

The Western Gold property consists of 13 unpatented lode claims
covering 240 acres within the Oatman Mining District of Mohave County, Arizona.

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Location and Access:

The Western Gold claims are located approximately 1 mile West
of Gold Road Mine & 1 mile North of United Western Mine.

A map showing the Western Gold Claims may be found in Exhibit
99.8 which was filed as an exhibit to the Companys Annual Report on Form
10-KSB/A filed with the Commission on December 3, 2007, File No.000-31184.

Land Status:

The Oatman District lies on the western flank of the Black
Mountains, a fault-bounded tertiary volcanic series. In 2003, the Company
acquired the Western Gold Claims for $15,000. The claims are maintained by
annual payment of BLM Maintenance Fees of $1,820. The Company has made no
improvements to the property. Power and water sources are unknown.

Geology:

Gold deposition appears to be a late feature associated with
the Moss porphyry intrusion. The gold bearing ore bodies of the Oatman District
are located along northwest trending veins and faults. The main mineralized
structures within the property are the United and Middle veins. These veins were
mined at the United Western and United Eastern Mines.

Electrum is the predominant ore mineral. Gangue minerals
include quartz, calcite, adularia, minor fluorite, and trace amounts of pyrite,
marcasite, and chalcopyrite.

The property is currently without known reserves and the
proposed program is exploratory in nature.

Exploration History:

Gold was first discovered in the Oatman District in 1863.
Between 1897 and 1942, the Oatman District produced 2.2 million ounces of gold
and 800,000 ounces of silver at an average grade of 0.58 opt gold and 0.17 opt
silver.

From 1979 to 1982, Hecla Mining Company and Canadian Natural
Resources conducted exploration. Extensive geological mapping and diamond
drilling was conducted on the Tom Reed Vein System before the project was
terminated in 1982.

Exploration Plans:

The exploration plans for the Arizona Project are to conduct
surface geological mapping, surface soil and rock sampling programs and conduct
IP and magnetic surveys of the claim areas to identify orientation of the
sub-surface United Western Vein.

No timetable for exploration has been set and costs of the
recommended exploration have not been determined.

Impairment:

The deferred costs of $15,000 were included in exploration
expenses in a prior year.

Gold Road Claims

The Arizona property consists of 16 unpatented lode claims
located in Mohave County, Arizona covering 320 acres of the Oatman mining
district of northwest Arizona.

Location and Access:

22

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The Gold Road claims are divided into two groups. The KO group
of 7 claims is located in S14 T19N R20W approximately 3000 ft southwest of the
Western Gold claims, approximately 0.9 miles west of the Gold Road Mine and 0.8
miles north of the United Western Mine. The TS group of 9 claims is located in
S12 T19N R20W approximately 6000 ft east of the Arizona Gold field claims and
5000 feet east northeast of the KO group of claims. County Hwy 10 travels
through the TS group.

A map showing the Western Gold Claims may be found in Exhibit
99.8 which was filed as an exhibit to the Companys Annual Report on Form
10-KSB/A filed with the Commission on December 3, 2007, File No.000-31184.

Land Status:

In 2003, Shoshone Silver Mining Company acquired the Arizona
Claims for $1,500. The claims are maintained by annual payment of BLM
Maintenance Fees of $2,240. The company has not improved the property. Power and
water sources are unknown.

Geology:

The KO group follows the easterly trend of the Mallory Fault
line and covers the down dip extension of the Kokomo vein. The TS group follows
the southeasterly extension of the Gold Ore Vein.

The property is currently without known reserves and the
proposed program is exploratory in nature.

Exploration Plans:

The Company anticipates developing exploration plans in fiscal
2009.

Impairment:

The deferred costs of $1,500 were included in exploration
expenses in a prior year.

Cerro Colorado Group

The company controls 3 unpatented claims covering 60 acres in
the Cerro Colorado Mining District 35 miles southwest of Tucson, Arizona.

Location and Access:

From Tucson take I-19 south towards Nogales approximately 33
miles to Exit 48. The claim group is 15 miles west on Arivaca Rd from Exit 48.
The claims are in Section 22, Township 20S, Range 10E. A geographic reference
point for the claims is 31°39'32"North, 111°16'19"West.

A map of the property may be found in Exhibit 99.11 which was
filed as an exhibit to the Companys Annual Report on Form 10-KSB/A filed with
the Commission on December 3, 2007, File No.000-31184.

Land Status:

The claim group is located in the Cerro Colorado mining
district in the Cerro Colorado Mountains of Southwest Arizona. The claims are
maintained by annual payment of BLM Maintenance Fees of $420. The Company has
not improved the property. Power and water sources are unknown.

Geology:

Mineralization in the district is epithermal quartz-fissure
veins with minor base metal sulfides and mercury-bearing tetrahedrite. Silver
and gold enrichment occur in oxidized zones. Host rocks are a complex of
Cretaceous quartz latite and andesite porphyry flows and tuff with some
interbedded sedimentary beds, invaded by Laramide andesite

23

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porphyry, rhyolite and dioritic plugs and dikes.

The property is currently without known reserves and the
proposed program is exploratory in nature.

Exploration History:

This mining district is one of the oldest producing areas in
Arizona with scattered small, and relatively shallow, mines and prospects active
intermittently from at least the 1770's to about 1950. Total estimated and
recorded production has been some 4,500 tons of ore containing approximately
376,000 ounces silver, 460 ounces gold and small amounts of copper and lead.

Exploration Plans:

These claims and the area around them will be geologically
mapped. This mapping will emphasize vein intensity, rock type, and alteration.
In addition to the mapping, limited ground magnetic surveys should be run to
help identify any geophysical anomalies. The results of this initial work will
guide follow up geophysics and/or drilling.

No timetable for exploration has been set and costs of the
recommended exploration have not been determined.

Impairment:

The deferred costs of $1,500 were included in exploration
expenses in a prior year.

California Creek Uranium

On July 24, 2008, we entered into an agreement to
acquire 200,000 shares of common stock of Bayswater Uranium Corporation, a
Canadian company (Bayswater), in exchange for our 43 unpatented mining claims
in Elko County, Nevada. This exchange was valued at $60,000 based on the market
price of Bayswaters common stock on July 24, 2008.

Washington Holdings

The Company controls 19 unpatented mining claims covering
380 acres in the heart of the Wenatchee Gold Belt located in central
Washington.

Shaft Claims

Location and Access:

Entering Wenatchee from the north, you will be traveling south
on State Route #2 and #97, at the stop light on the northern edge of town, SR #2
and #97 veers to the right and crosses the Columbia River, you will continue
south, or straight ahead, on SR #28 until you reach exit 285 N and then turn
right and cross the Columbia River on the old bridge span. After crossing the
Columbia River, you will travel about 0.5 mile and will come to Mission Street,
turn left on Mission Street for 1.5 miles. At this point Mission Street becomes
Squilchuck Road and you will continue on Squilchuck Road for another 3.5 miles
when you will encounter a road sign directing you to take a left hand turn onto
Cranmer Drive and also be heading to the Wenatchee heights subdivision. Travel
less that 1 mile on Cranmer Drive and you will come to the Wenatchee Heights
Road, turn left on Wenatchee Heights Road and travel 1 mile until you come to a
fork in the road, take the left hand fork and you will be on Loop Road. The
Shaft claims are located to the east of Loop Road. A map showing the Shaft
Claims may be found in Exhibit 99.15

Land Status:

24

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The Company holds 19 unpatented mining claims covering 380
acres in central Washington. The claims are located within the heart of the
Wenatchee Gold Belt. The Company has not improved the property. Power and water
sources are unknown.

Mexico Properties

Bilbao

On August 11, 2008, we sold 100% of the common stock of our
wholly owned subsidiary in Mexico, Shoshone Mexico, S.A. de C.V, to Xtierra
Resources, Ltd (Xtierra). Shoshones interest in the Bilbao concessions in
Zacatecas, Mexico was included in this sale. In exchange for our interest in the
Bilbao concessions we received net proceeds of $2,497,990 and a note receivable
(net of discount) for $1,865,363.

Other Mexican Exploration Properties

Shoshone has an interest in several other Mexican exploration
projects which the Company does not currently consider to be material.

La Vibora

La Vibora is a gold-silver prospect in which Shoshone acquired
a 25% interest in the property in the year 2000. No exploration has been
conducted on the property since the Companys acquisition. The property is
located seven miles west of Mexican Highway 17, approximately 22 miles south of
the city of Esquida. The Company has made no improvements to the property. Power
and water status is unknown.

Geology:

The project area is underlain by granodiorites and quartz
monzonites of upper Cretaceous age. Mineralization is associated with the
granites.

The property covers three sub-parallel veins that have an
apparent length of approximately 1,000 ft. The veins are fracture-filling,
dipping approximately 70 degrees to the SW and are characterized by the presence
of sulfides (dominantly pyrite) that have been locally oxidized. Gangue is
dominated by quartz and calcite.

Sampling conducted in 1994 reported a 75 foot wide bulk sample
that had an average grade of 0.20 oz/t gold. Four samples that were taken on the
No. 1 vein, over a 5 foot (adjusted) width averaged 0.29 oz/t gold.

The property is currently without known reserves and the
proposed program is exploratory in nature.

Exploration Plans:

The Company currently has no exploration plans for La
Vibora.

The La Morena Placer

The property is located adjacent to the La Vibora prospect
south of the city of Esquida in the State of Sonora. The property is a gold
silver placer deposit. There has been no systematic exploration of the La Morena
Placer. Shoshone acquired a 25% interest in the property in 2000. The Company
has not made improvements to the property. Power and water supplies are unknown.

Exploration History:

Distal from the La Vibora property is the La Morena Placer.
This property has had limited auger and assaying

25

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returning average grades of 0.03 oz/t gold. No resource
estimate has been completed and the property is currently without known
reserves.

Exploration Plans:

The Company currently has no exploration plans for La Morena
Placer.

OUR EXPLORATION PROCESS

Our exploration program is designed to acquire, explore and
evaluate exploration properties in an economically efficient manner. We have not
at this time identified or delineated any metals reserves on any of our
properties.

Our current focus is primarily on the acquisition of additional
exploration properties. Subject to our ability to raise the necessary funds, we
intend to implement an exploration program that may cover some or all of our
other properties at various times as we deem prudent.

We expect our exploration work on a given property to proceed
generally in three phases.

The first phase is intended to determine whether a prospect
warrants further exploration and involves:

- researching the available geologic literature;
- interviewing geologists, mining engineers and others familiar with the
  prospect sites;
- conducting geologic mapping, geophysical testing and geochemical testing;
- examining any existing workings, such as trenches, prospect pits, shafts
  or tunnels;
- digging 150 foot long and 10-to-20 foot wide trenches that allow for an
  examination of surface vein structure as well as for efficient reclamation,
  re-contouring and re-seeding of disturbed areas; and
- analyzing samples for minerals that are known to have occurred in the test
  area.

Subject to obtaining the necessary permits in a timely manner,
the first phase can typically be completed on an individual property in several
months at a cost of less than $200,000. We have completed research on and
examination of each of our properties, and have commenced geophysical work and
sampling on some of our properties.

The second phase is intended to identify any mineral deposits
of potential economic importance and would involve:

- examining underground characteristics of mineralization that were
  previously identified;
- conducting more detailed geologic mapping;
- conducting more advanced geochemical and geophysical surveys;
- conducting more extensive trenching; and
- conducting exploratory drilling.

Subject to obtaining the necessary permits in a timely manner,
the second phase can typically be completed on an individual property in six to
nine months at a cost of less than $1 million. None of our properties has
reached the second phase.

The third phase is intended to precisely define depth, width,
length, tonnage and value per ton of any deposit that has been identified and
would involve:

- drilling to develop the mining site;
- conducting metallurgical testing; and
- obtaining other pertinent technical information required to define an ore
  reserve and complete a feasibility study.

Depending upon the nature of the particular deposit, the third
phase on any one property could take one to five years or more and cost up to
$20,000,000 or more. None of our properties has reached the third phase.

26

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We intend to explore and develop our properties ourselves,
although our plans could change depending on the terms and availability of
financing and the terms or merits of any joint venture proposals.

ENVIRONMENTAL COMPLIANCE

Our primary cost of complying with applicable environmental
laws during exploration is likely to arise in connection with the reclamation of
drill holes and access roads. Drill holes typically can be reclaimed for nominal
costs, although the BLM recently promulgated new surface management regulations
which may significantly increase those costs on BLM lands. Access road
reclamation may cost up to $50,000 to $100,000 if road building has been done,
and those costs, too, are likely to increase as the result of the new BLM
regulations. As we are currently in the exploration stage on all of our
properties, reclamation costs have not yet been incurred, and cannot be
reasonably estimated for each property.

EMPLOYEES

The Company currently has 12 employees, 3 of whom are both
officers and directors and one of which is an officer.

GLOSSARY OF TERMS

AMPHIBOLITE: granular metamorphic rocks.

ANOMALY: a deviation from uniformity or regularity in
geophysical or geochemical quantities.

ANTICLINE: layered rock formations structurally folded into a
convex structure with a core that hosts the oldest rocks.

ARCHEAN: geologic age older than 2,500,000 years.

BATHOLITH: a large emplacement of igneous intrusive or plutonic
rock that forms from cooled magma within the Earth's crust.

BLEBS: a vesicle, blister or bubble.

BRECCIA: rock in which angular fragments are surrounded by a
mass of fine-grained minerals.

CHALCOPYRITE: the main copper ore, which is widely occurring
and found mainly in veins.

CIRCULATION DRILL: a rotary drill or rotary percussion drill in
which the drilling fluid and cuttings return to the surface through the drill
pipe, minimizing contamination.

CRETACEOUS AGE: the geologic age period dating from
approximately 68 million years to 142 million years.

CROSS CUTS: a horizontal opening driven from a shaft and (or
near) right angles to the strike of a vein or other ore body.

DIAMOND DRILL: a type of rotary drill in which the cutting is
done by abrasion rather than by percussion. The hollow bit of the drill cuts a
core of rock, which is recovered in long cylindrical sections.

DISSEMINATED: fine particles of mineral dispensed through the
enclosing rock.

DEVELOPMENT: work carried out for the purpose of opening up a
mineral deposit and making the actual extraction possible.

27

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DIKES: a tabular igneous intrusion that cuts across the
structures of surrounding rock.

DIP: the angle at which a vein, structure or rock bed is
inclined from the horizontal as measured at right angles to the strike.

DRIFTS: a horizontal passage underground that follows along the
length of a vein or mineralized rock formation.

EXPLORATION: work involved in searching for ore by geological
mapping, geochemistry, geophysics, drilling and other methods.

GABBRO: Dark colored basic intrusive rocks. Intrusive
equivalent of volcanic basalt. GEOCHEMISTRY: study of variation of chemical
elements in rocks or soils. GEOPHYSICS: study of the earth by quantitative
physical methods.

GNEISS: a layered or banded crystalline metamorphic rock the
grains of which are aligned or elongated into a roughly parallel arrangement.

HYDROTHERMAL: pertaining to hot water, especially with respect
to its action in dissolving, re-depositing, and otherwise producing mineral
changes within the earth's crust.

INTRUSION/INTRUSIVE: a volume of igneous rock that was
injected, while still molten, into the earth's crust or other rocks.

LITHOLOGY: The character of a rock described in terms of its
structure, color, mineral composition, grain size and arrangement of its
component parts.

MAFIC: Pertaining to or composed dominantly of the
ferromagnesian rock-forming silicates; used to describe some igneous rocks and
their constituent minerals.

METAMORPHISM: The mineralogical and structural changes in solid
rock that have been caused by heat and pressure at depth over time.

MINERALIZATION: the concentration of metals and their compounds
in rocks, and the processes involved therein.

NORITE: a course grained igneous rock formed at great depth.

ORE: material that can be economically mined and processed.

ORE BODY: a continuous, well-defined mass of material of
sufficient ore content to make extraction economically feasible.

OUTCROP: the part of a rock formation that appears at the
earth's surface, often protruding above the surrounding ground.

PYRITE: the most widespread sulfide mineral.

PYROXENITE: any group of minerals.

QUARTZITE: a sedimentary rock consisting mostly of silica sand
grains that have been welded together by heat and compaction.

RECLAMATION: the restoration of a site after exploration
activity or mining is completed.

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SCHIST: a foliated metamorphic rock the grains of which have a
roughly parallel arrangement.

SEDIMENTARY ROCKS/SEDIMENTS: rocks resulting from the
consolidation of loose sediments of older rock transported from its source and
deposited.

SHEAR OR SHEARING: The deformation of rocks by lateral movement
along numerous parallel planes, generally resulting from pressure and producing
such metamorphic structures as cleavage and schistosity.

SILLS: a near horizontal flat-bedded stratum of intrusive rock.

SKARN: the formation resulting from the reaction of two
adjacent rock types exchanging elements and fluids during regional and/or
contact metamorphosis.

SULFIDE: a metallic mineral containing reduced sulphur.

STRIKE: the course or bearing of a vein or a layer of rock.

ULTRAMAFIC: said of an igneous rock composed chiefly of mafic
materials.

UNPATENTED MINING CLAIM: a parcel of property located on
federal lands pursuant to the U.S. General Mining Law of 1872 and the
requirements of the state in which the unpatented claim is located, the
paramount title of which remains with the federal government. The holder of a
valid, unpatented lode mining claim is granted certain rights including the
right to explore and mine such claim.

VEIN: an epigenetic mineral filling the fault or other
fracture, in tabular or sheet like form, often with associated replacement of
the host rock, or a mineral deposit of this form or origin.

ITEM 1A. RISK FACTORS

We are a smaller reporting company as defined by the Exchange
Act and are not required to provide the information required under this item.

ITEM 1B. UNRESOLVED STAFF COMMENTS

We are a smaller reporting company as defined by the Exchange
Act and are not required to provide the information required under this item.

ITEM 2. PROPERTIES

The Companys interests in its exploration properties are
described in Item 1.

On September 10, 2008, we acquired for $150,000 a 50% interest
in a commercial office building in Coeur dAlene, Idaho. We paid $100,000 at the
signing of the purchase agreement and paid the remaining $50,000 in October
2008. This building contains our executive offices and is located at 3714 W
Industrial Loop, Coeur dAlene, ID, 83815. Our telephone number is (208)
664-0620.

Effective September 30, 2008, the Companys refurbished
Lakeview Mill with a cost of $499,681 was placed into service and will begin to
be depreciated over 31.5 years starting on October 1, 2008.

On March 12, 2009, the Company acquired certain assets from
Kimberly Gold Mines, Inc. (Kimberly) in a transaction where the Company issued
12,145,306 shares of common stock and other consideration in exchange for 100%
of Kimberlys common stock. This transaction was valued at $2,185,126 and was
originally recorded entirely to Mineral Properties. Of this amount, a value of
$224,475 has been attributed to a building at the Rescue Mine.

29

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ITEM 3. LEGAL PROCEEDINGS

We are, from time to time, involved in various legal
proceedings incidental to the conduct of business. In the opinion of management,
our gross liability, if any, and without any consideration given to the
availability of insurance or other indemnification, under any pending litigation
or administrative proceedings, including that discussed below, would not
materially affect our consolidated financial position, results of operations or
cash flows.

On November 17, 2008, the United States Environmental
Protection Agency (EPA) filed a civil action against us in the United States
District Court for the District of Idaho. The civil action seeks recovery of
funds paid by the EPA in response to alleged releases of hazardous substances at
our Idaho Lakeview mine and mill site in Bonner County, Idaho. We and the EPA
have reached a tentative agreement whereby we would pay $50,000 and agree not to
conduct activities on the ground that would disturb the cleanup work in place at
the properties subject to the civil action. Accordingly, we recorded a $50,000
liability during the fiscal year ended September 30, 2009, related to this suit.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS

None.

EXECUTIVE OFFICERS OF THE REGISTRANT

The following table sets forth information concerning the
Companys directors and executive officers.

NAME
    AGE
    POSITIONLex Smith
    57
    President and DirectorCarol Stephan
    68
    Secretary and Chairman of the BoardMelanie Farrand
    54
    Treasurer and DirectorEdward Lehman
    52
    Director


Set forth below is certain additional information with respect
to the directors and executive officers.

Lex Smith holds a BA in political science from
Drake University, an associate degree in business systems management and an
associate degree in paralegal studies. Additionally, for the last 13 years, he
has been a business consultant and project manager in the United States for the
Lehman, Lee & Xu Law Firm in Beijing, China, and has served as a consultant
to the Firms Mining Law Department for the past 2 years. Mr. Smith entered the
mining business in 1993 as the field manager and owner of multiple mining claims
in Montana and has subsequently been closely involved with several mining
companies and mining projects in the Pacific Northwest. Further, Mr. Smith has
served as the President of the Silver Valley Mining Association since 2003, and
currently also serves as President of Natural Resources Education Outreach, an
Idaho non-profit corporation.

Carol Stephan has over 30 years of experience in
the mining and timber industries. She currently serves as a Director and
Secretary of Shoshone, as well as Secretary and Treasurer of several small
mining companies. In addition, Ms. Stephan currently owns and operates several
successful businesses in Idaho.

Melanie Farrand has been working in the mining
industry for the past six years as an administrative secretary and bookkeeper.
She also serves on the Board of Directors of several mining companies.
Previously she was the office

30

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manager for a Land Surveying company for ten years, responsible
for payroll, bookkeeping and research. Ms. Farrand is currently serving as a
Director and Officer of Shoshone Silver Mining Company.

Edward Lehman is the Managing Director of Lehman,
Lee & Xu Law Firm (www.lehmanlaw.com), one of the top 3 commercial law firms
in China, with offices throughout mainland China and branches in Hong Kong,
Macau, and Mongolia. Based in Beijing, Mr. Lehman specializes in the legal
aspects of doing business in China. He advises foreign companies on joint
ventures, wholly owned subsidiaries and holding companies, technology,
licensing, engineering and construction projects, and the financing of such
projects, as well as the protection of intellectual property rights in
transactions and projects in China, and on mining law. Among other degrees and
certificates, Mr. Lehman holds a Juris Doctor degree from Loyola University of
Chicago. Mr. Lehman was admitted to the Illinois bar in 1986, and has been
admitted to the Illinois Supreme Court; U.S. Court of International Trade; U.S.
Court of Appeals for the Armed Forces; U.S. Tax Court; U.S. Supreme Court, U.S.
District Court, and U.S. Court of Appeals.

PART II

ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED
STOCKHOLDER MATTERS AND ISSER PURCHASES OF EQUITY SECURITIES

The Companys shares are traded on the OTC Pink Sheets operated
by the National Association of Securities Dealers, Inc. (NASD) under the trading
symbol SHSH.OB. Summary trading by quarter for the twelve-month period ended
September 30, 2009 and the nine-month period ended September 30, 2008, are as
follows:

Fiscal Quarter
    
    High (b)
    
    
    Low (b)2009Fourth Quarter
    $
    0.18
    
    $
    0.08Third Quarter
    $
    0.12
    
    $
    0.07Second Quarter
    $
    0.15
    
    $
    0.05First Quarter
    $
    0.18
    
    $
    0.042008Fourth Quarter (a)
    $
    -
    
    $
    -Third Quarter
    $
    0.20
    
    $
    0.10Second Quarter
    $
    0.23
    
    $
    0.13First Quarter
    $
    0.32
    
    $
    0.19


(a) On September 29, 2008, the Companys board of directors
approved a change in the Companys fiscal year end from December 31st
to September 30th, effective on September 30, 2008. This table covers
the nine-month transition period of January 1, 2008 through September 30, 2008.

(b) These quotations reflect inter-dealer prices, without
retail mark-up, mark-down or commissions and may not represent actual
transactions.

As of September 30, 2009, the Company had approximately 1,675
holders of record of our common stock.

The Company has not paid any dividends since our inception and
do not anticipate paying any dividends on its common stock in the foreseeable
future. There are no restrictions which preclude the payment of dividends.

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The Company has no equity compensation plan or plans.

Unregistered Sales of Equity Securities

None.

Purchases of Equity Securities by the Issuer

None.

ITEM 6. SELECTED FINANCIAL DATA

Not Applicable.

ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

This report contains forward-looking
statementsFrom time to time, Shoshone and its senior
managers have made and will make forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. Such statements are
contained in this report and may be contained in other documents that Shoshone
files with the Securities and Exchange Commission. Such statements may also be
made by Shoshone and its senior managers in oral or written presentations to
analysts, investors, the media and others. Forward-looking statements can be
identified by the fact that they do not relate strictly to historical or current
facts. Also, forward-looking statements can generally be identified by words
such as may, could, should, would, believe, anticipate, estimate,
seek, expect, intend, plan and similar expressions.

Forward-looking statements provide our expectations or
predictions of future conditions, events or results. They are not guarantees of
future performance. By their nature, forward-looking statements are subject to
risks and uncertainties. As such, our actual future results, performance or
achievements may differ materially from the results expressed in, or implied by,
our forward-looking statements.

Our forward-looking statements speak only as of the date they
are made. We do not undertake to update forward-looking statements to reflect
the impact of circumstances or events that arise after the date the
forward-looking statements were made.

Managements Discussion and Analysis of Financial Condition and
Results of Operations should be read in conjunction with the Consolidated
Financial Statements and Notes presented elsewhere in this report.

Fiscal Year End ChangeReferences to a fiscal
year refer to the calendar year in which such fiscal year commences.
Historically, our fiscal year ended on December 31st. However, on
September 29, 2008, our board of directors approved a change in our fiscal year
end from December 31st to September 30th, effective on
September 30, 2008. As a result of this change in our fiscal year end, the
fiscal year ending September 30, 2008, was a nine-month transition period.

Plan of OperationEffective September 30,
2008, we completed the refurbishment of the mill at our Lakeview property. The
total capitalized cost of this refurbishment was $499,681 which began
depreciating on October 1, 2008. During the three-month period ended June 30,
2009, we temporarily ceased operations at our Lakeview property to comply with
and update to current federal regulations. This cessation of operations included
terminating the employment of three full

32

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time employees. We currently employ two full-time persons at
our Lakeview property whose primary goal is to oversee the property and
equipment and to continue crushing stockpiled ore for processing.

On March 12, 2009, we acquired certain assets from Kimberly
Gold Mines, Inc. (Kimberly) in a transaction where the Company issued
12,145,306 shares of common stock and other consideration in exchange for 100%
of Kimberlys common stock. Included in this acquisition were 127 unpatented
mining claims located primarily in Idaho and Washington as well as a mill in
need of refurbishing and various pieces of equipment. See Note 18. Acquisition
of Assets from Kimberly Gold Mines, Inc. to our consolidated financial
statements for further details.

Our primary plan of operations includes raising sufficient
capital to continue operations at our Lakeview property. Due to the high costs
of operating during the winter, we will suspend operations at out Lakeview
property until the Spring. At that time, we will continue to process previously
stockpiled ore. Our long-term goal is to mine and mill both silver and gold.

On June 30, 2009, we entered into an agreement with the
Xtierra, now known as Orca Minerals Limited (Orca). Pursuant to this
agreement, we granted Orca a $50,000 discount on the $500,000 due on August 11,
2009, provided Orca made the revised $450,000 payment on or before July 7, 2009.
On July 7, 2009, we received the $450,000 which we used primarily to refurbish
the mill at our newly acquired Rescue Mine. We hired an additional five full
time employees to meet these goals.

Please refer to our discussion regarding our ability to
continue as a going concern below for further details.

Going Concern As shown in the accompanying
financial statements, we have had limited revenues and incurred an accumulated
deficit of $1,541,035 from inception through September 30, 2009. These factors
raise substantial doubt about our ability to continue as a going concern. We
intend to seek additional capital from new equity securities offerings that will
provide funds needed to increase liquidity and fully implement our business
plan. The financial statements do not include any adjustments relating to the
recoverability and classification of recorded assets, or the amounts and
classification of liabilities that might be necessary in the event we cannot
continue in existence.

Historically, we have generally funded our operations with proceeds
  from the sale of available-for-sale investments, royalty and option
  agreement payments, and from the sale of our common stock. Should we be unsuccessful
  in any of the initiatives or matters discussed above and unable to raise capital
  through future private placements, our business, and, as a result, our financial
  position, results of operations and cash flow will likely be materially adversely
  impacted. As such, substantial doubt as to our ability to continue as a going
  concern remains as of the date of these financial statements.

The financial statements do not include any adjustments
relating to the recoverability and classification of recorded assets, or the
amounts and classification of liabilities that might be necessary in the event
we cannot continue in existence. An estimated $2,000,000 is believed necessary
to continue operations and increase development through the next twelve months.
Currently, we anticipate raising the majority of the $2,000,000 through the
issuance of common stock to private investors. The timing and amount of capital
requirements will depend on a number of factors, including demand for products
and services.

Comparison of the Twelve-Month Period Ended September 30,
2009 to the Nine-Month Period Ended September 30, 2008:

Results of Operations

Please note that the following discussions compare the
twelve-month period ended September 30, 2009 (fiscal 2009) the nine-month period
ended September 30, 2008 (fiscal 2008). Fiscal 2008 is a nine-month transition
period attributable to the change in our fiscal year end. On September 29, 2008,
our board of directors approved a change in our fiscal year end from December
31st to September 30th, effective on September 30, 2008.

33

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The following table sets forth certain information regarding
the components of our Consolidated Statements of Operations for fiscal 2009 as
compared to fiscal 2008. This table is provided to assist in assessing
differences in our overall performance:

|                                                        |   | Fiscal
      Year Ended |   |   |           |   |   |            |  
|------------------------------------------------------- | - | ----------------------- | - | - | --------- | - | - | ---------- | -
|                                                        |   | 2009                    |   |   | 2008      |   | $ | Change     |  
|                                                        |   |                         |   |   |           |   |   |            |  
|Revenues                                                | $ | -                       |   | $ | -         |   | $ | -          |  
|Cost of Revenues                                        |   | -                       |   |   | -         |   |   | -          |  
|Gross Profit                                            |   | -                       |   |   | -         |   |   | -          |  
|General and administrative                              |   | 1,065,247               |   |   | 490,770   |   |   | 574,477    |  
|Professional fees                                       |   | 283,243                 |   |   | 189,342   |   |   | 93,901     |  
|Depreciation                                            |   | 130,743                 |   |   | 44,392    |   |   | 86,351     |  
|Mining and exploration
      expenses                   |   | 270,722                 |   |   | 68,404    |   |   | 202,318    |  
|Net gain on sale of load claim                          |   | -                       |   |   | (60,000   | ) |   | 60,000     |  
|Total Operating Expenses                                |   | 1,749,955               |   |   | 732,908   |   |   | 1,017,047  |  
|Loss from Operations                                    |   | (1,749,955              | ) |   | (732,908  | ) |   | (1,017,047 | )
|Other Income (Expense)                                  |   |                         |   |   |           |   |   |            |  
|Net gain (loss) on sale of securities                   |   | 2,225                   |   |   | (7,840    | ) |   | 10,065     |  
|Other-than-temporary impairment
      of investments    |   | (101,479                | ) |   | -         |   |   | (101,479   | )
|Dividend and interest income                            |   | 115,022                 |   |   | 22,637    |   |   | 92,385     |  
|Net gain on the sale of
      Mexican mining concession |   | -                       |   |   | 4,363,353 |   |   | (4,363,353 | )
|Interest expense                                        |   | (2,398                  | ) |   | (3,250    | ) |   | 852        |  
|Other income (expense)                                  |   | (43,391                 | ) |   | 3,366     |   |   | (46,757    | )
|Total Other Income
      (Expense)                      |   | (30,021                 | ) |   | 4,378,266 |   |   | (4,408,287 | )
|Net (Loss) Income                                       | $ | (1,779,976              | ) | $ | 3,645,358 |   | $ | (5,425,334 | )

The following table, which sets forth our unaudited results of
operations for the three-months ended December 31, 2007, is provided to assist
the reader in assessing the differences in our overall fiscal 2009 and 2008
performance.

Three-MonthPeriod EndedDecember 31, 2007(unaudited)Revenues
    $
    180Cost of Revenue
    
    96Gross Profit
    
    84Operating ExpensesGeneral and administrative
    
    91,661Professional fees
    
    54,775Depreciation
    
    12,642Mining and exploration
      expenses
    
    19,307Total Operating Expenses
    
    178,385Loss From Operations
    
    (178,301
    )


34

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Other Income (Expenses)Net gain on sale of securities
    
    41,424Lease income
    
    2,514Other income
    
    1,407Dividend and interest
      income
    
    6,005Interest expense
    
    (479
    )Total Other Income
    
    50,871Net Loss Before Income Taxes
    $
    (127,430
    )Net Loss Per Common Share, Basic and
      Diluted
    $
    (0.01
    )


Overview of Operating Results

The realization of a net loss for fiscal 2009 as compared to
the net income realized in fiscal 2008 was primarily the result of the fiscal
2008 net gain on the sale of our interest in the Bilbao concessions in
Zacatecas, Mexico. In exchange for our interest in the Bilbao concessions we
received net proceeds of $2,497,990 and a non-interest bearing note receivable
for $2,500,000. The deferred costs of $80,000 related to these concessions were
included in exploration expenses in a prior year.

Since the note does not bear interest, we imputed interest at a
rate of 5%. Accordingly, we recorded a note discount of $634,637. During fiscal
2009, $91,573 of interest income was realized through the amortization of this
note discount compared to $7,773 during fiscal 2008.

Also, affecting the change in the results of operations from
fiscal 2008 to fiscal 2009 was an increase in operating expenses of $1,017,047,
or 138.8% . This increase was broadly attributable to our limited milling of
stockpiled ore at our newly refurbished mill at our Lakeview property.
Additionally, the fiscal 2009 operating expenses include expenditures related to
repairing equipment and facilities at our Rescue Mill which was acquired from
Kimberly Gold Mines, Inc. during fiscal 2009.

Operating Expenses

Operating expenses increased $1,017,047, or 138.8% during the
twelve-month fiscal 2009 compared with nine-month fiscal 2008. This increase is
somewhat smaller than it may appear due to the fact that fiscal 2008 was a
nine-month transitional period. Had fiscal 2008 been a twelve-month period it
would have included the three-month period ended December 31, 2007 and fiscal
2008s operating expenses would have been $178,385 higher.

The increase in operating expenses during fiscal 2009 was
primarily attributable to an increase of $281,054, or 138.0%, in employee
compensation expense. This increase was related to a net increase of six new
employees during fiscal 2009 as well as an average increase of 94% in the wages
paid to employees who were paid in both fiscal 2008 and 2009. However, during
the three-month period ended June 30, 2009, we terminated the employment of
three employees related to the suspension of operations at our Lakeview
property. This mitigated the negative impact of increased payroll expenses
during fiscal 2009.

Also contributing to the increase in operating expenses during
fiscal 2009 was an increase in exploration expenses of $188,528, or 857%. This
increase was primarily due to $140,527 in drilling expenses we incurred on our
Lakeview property. Also, we recorded to exploration expenses a $50,000 accrual
related a civil action filed by the United States Environmental Protection
Agency (EPA). This civil action seeks recovery of funds paid by the EPA in
response to alleged releases of hazardous substances at our Idaho Lakeview mine
and mill site in Bonner County, Idaho. See

35

---

Note 20: Commitment & Contingencies  Civil Action
Filed to our consolidated financial statements for further details.

Partially offsetting these adverse impacts on our operating
expenses was the fiscal 2008 compensation expense of $78,500 associated with a
settlement agreement entered into by the Company with its former Chief Executive
Officer. There was no comparable compensation paid during fiscal 2009. See Note
13. Accounts Payable- Settlement Agreement with Former Chief Executive
Officer to our consolidated financial statements for further details.

Other Income (Expenses)

The decrease in other (loss) income during fiscal 2009 from
fiscal 2008 was primarily the result of the fiscal 2008 net gain on the sale of
our interest in the Bilbao concessions in Zacatecas, Mexico. In exchange for our
interest in the Bilbao concessions we received net proceeds of $2,497,990 and a
non-interest bearing note receivable for $2,500,000. The deferred costs of
$80,000 related to these concessions were included in exploration expenses in a
prior year.

Since the note does not bear interest, we imputed interest at a
rate of 5%. Accordingly, we recorded a note discount of $634,637. During fiscal
2009, $91,573 of interest income was realized through the amortization of this
note discount compared to $7,773 during fiscal 2008.

Also contributing to the decrease in other income during fiscal
2009 was a $50,000 discount for early payment on a note receivable granted to
Orca Minerals Limited. The discount was granted on the $500,000 due on August
11, 2009, provided Orca made the revised $450,000 payment on or before July 7,
2009. The discount of $50,000 was included in our Consolidated Statements of
Operations as an Other Expense and as a corresponding reduction to the current
portion of the note receivable on our Consolidated Balance Sheets. On July 7,
2009, we received the $450,000 due under the revised terms of the note
receivable from Orca.

Also contributing to the decrease in other income during fiscal
2009 was an impairment charge of $101,479. At September 30, 2009, we determined
that certain of our available-for-sale securities had experienced an impairment
that was other-than-temporary.

Partially offsetting these negative impacts was the recognition
of imputed interest income of $91,573 during fiscal 2009 compared with $7,773
during fiscal 2008.

Overview of Financial Position

At September 30, 2009, we had cash of $23,566 and total
liabilities of $254,657. During 2009, we received a $450,000 installment
payment, net of a $50,000 early payment discount, related to the fiscal 2008
sale of our interest in the Bilbao concessions in Zacatecas, Mexico. These
proceeds, combined with our beginning cash balance of $1,570,066, were used
primarily to begin exploration activities at our Lakeview property, to continue
refining our milling process at that same location and to begin refurbishing our
newly acquired mill building at our Rescue mine.

Property, Plant and Equipment

At September 30, 2009, property, plant and equipment before
accumulated depreciation totaled $3,386,270, an increase of $801,175 from
$2,585,095 from the balance at September 30, 2008. This increase was primarily
related to the acquisition from Kimberly Mines, Inc., of various pieces of
mining and office equipment valued $275,525 and a mill building valued at
224,475. Also, during fiscal 2009, we expended $72,600 to have a staging
building erected on our Rescue Mine property.

See Note 8. Property, Plant and Equipment to our consolidated
financial statements for further details.

Notes Receivable

36

---

On September 30, 2009, we had current and long-term notes
receivable, net of discount, of $1,464,709 compared with $2,198,023 at September
30, 2008.

This decrease is primarily due to the receipt on July 7, 2009,
of $450,000 due under the revised terms of the note receivable from Orca and, to
a lesser extent, the de-recognition of a $215,000 note receivable from Kimberly
Gold Mines Inc (Kimberly) and inclusion in the purchase price of Kimberly. On
March 12, 2009, we acquired 100% of Kimberlys common stock.

Also, contributing to the decrease in the notes receivable
balance year-to-year was our repossessing the property that was the collateral
for the note receivable related to the sale of a lode claim in 2006. Due to
non-payment, we demanded and received a Quitclaim Deed releasing the subject
property. We determined the fair value of the reclaimed property to be $131,553
which was the sum of the balances in the related note receivable and accrued
interest receivable.

See Note 11. Notes Receivable to our consolidated financial
statements for further details.

Investments

Shoshones investment portfolio at September 30, 2009 was
$266,938, a decrease of $89,885 from the September 30, 2008 balance of $356,823.
This decrease was primarily the result of the de-recognition of 321,500 shares
of Kimberlys common stock with a cost basis of $38,035. This cost basis was
allocated to the purchase price of the Kimberly. Also, contributing to the
decrease were lower stock prices related to the recent downturn in the economy.

At September 30, 2009, we determined that certain of our
available-for-sale securities had experienced an impairment that was
other-than-temporary. In connection with this determination, we recognized an
impairment charge of $101,479. This impairment charge is presented under the
caption Other-than-temporary impairment of investments on our Consolidated
Statements of Operations.

See Note 12: Investments to our consolidated financial
statements for further details.

Accounts Payable

Our accounts payable were $159,623 at September 30, 2009, which
included $72,887 that we assigned to certain liabilities assumed in connection
with the acquisition of assets from Kimberly. This balance also included $24,600
related to the construction of a building on our Rescue Mine property. The total
cost of this building was $72,600.

The September 30, 2008 accounts payable balance included
$48,500 in compensation expense associated with a settlement agreement entered
into by us with our former Chief Executive Officer, and included $50,000
associated with our acquisition of a 50% interest in a commercial office
building in Coeur dAlene, Idaho.

Accrued Expenses

Our accrued expenses were $79,151 at September 30, 2009,
compared with $10,288 at September 30, 2009. The increase was primarily due to
the accrual of $50,000 related a civil action filed by the United States
Environmental Protection Agency (EPA). This civil action seeks recovery of funds
paid by the EPA in response to alleged releases of hazardous substances at our
Idaho Lakeview mine and mill site in Bonner County, Idaho.

Stockholders Equity

37

---

Shoshones total stockholders equity was $5,714,797 at
September 30, 2009, an increase of $73,777 from $5,641,020 at September 30,
2008. The increase in total stockholders equity was primarily due to the
issuance of 12,145,306 shares of common stock and other consideration in
exchange for 100% of Kimberlys common stock. This transaction was valued at
$2,185,126. Partially offsetting this positive impact was a net loss of
$1,780,116 realized during fiscal 2009.

See Note 12: Investments to our consolidated financial
statements for further details.

Liquidity and Capital Resources

Operating Activities

During fiscal 2009, our operating activities used $1,587,167
and used $605,015 during fiscal 2008. This reduction was primarily the result of
the realization of a net loss of $1,779,976 during fiscal 2009 period compared
to net income of $3,645,358 realized last year. Mitigating the change between
the years was the fact that the 2008 sale of the Mexican mining properties was
not treated as an operating activities but, rather, as an investing activity.

Investing Activities

During fiscal 2009, our investing activities provided $94,370 and
provided $1,919,082 during fiscal 2008. This decrease was primarily the result
of $2,497,990 in net proceeds from the fiscal 2008 sale of the Mexican mining
properties.

Financing Activities

During fiscal 2009, our financing activities used, $53,703
and contributed $241,967 during fiscal 2008. This decrease was primarily due the fiscal 2008 net proceeds from the sale of common stock.

Off-Balance Sheet Arrangements

The Company is not currently a party to any off-balance sheet
arrangements as they are defined in the regulations promulgated by the
Securities and Exchange Commission.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK

Not applicable

38

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

To the Board of Directors and Stockholders 
Shoshone Silver Mining Company

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We have audited the accompanying consolidated balance sheets of Shoshone Silver Mining Company and subsidiaries as of September 30, 2009 and 2008, and the related consolidated statements of operations and comprehensive income (loss), stockholders equity and cash flows for the year ended September 30, 2009 and the nine-month period ended September 30, 2008 and for the period from January 1, 2000 (inception of exploration stage) to September 30, 2009. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Companys internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Shoshone Silver Mining Company and subsidiaries as of September 30, 2009 and 2008, and the results of its operations and its cash flows for the year ended September 30, 2009 and the nine-month period ended September 30, 2008 and for the period from January 1, 2000 (inception of exploration stage) to September 30, 2009 in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Companys accumulated deficit and lack of revenues raise substantial doubt about its ability to continue as a going concern. Managements plans regarding the resolution of this issue are also discussed in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/BehlerMick PS

BehlerMick PS

Spokane, Washington
  January 8, 2010, except for Note 2, which is dated May 19, 2010

39

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SHOSHONE SILVER MINING COMPANY 
  (an Exploration Stage
  Company)
  CONSOLIDATED BALANCE SHEETS

|                                                                                                                                                  |   | September 30, |   |   | September 30, |  
|------------------------------------------------------------------------------------------------------------------------------------------------- | - | ------------- | - | - | ------------- | -
|                                                                                                                                                  |   | 2009          |   |   | 2008          |  
|                                                                                                                                                  |   |               |   |   |               |  
|ASSETS                                                                                                                                            |   |               |   |   |               |  
|                                                                                                                                                  |   |               |   |   |               |  
|CURRENT ASSETS                                                                                                                                    |   |               |   |   |               |  
|Cash and cash equivalents                                                                                                                         | $ | 23,566        |   | $ | 1,570,066     |  
|Note
      receivable (net of discount) - current portion                                                                                         |   | 426,765       |   |   | 422,277       |  
|Receivables from related parties (net of allowance)                                                                                               |   | -             |   |   | 9,624         |  
|Deposits and prepaids                                                                                                                             |   | 4,375         |   |   | 4,806         |  
|Supplies inventory                                                                                                                                |   | 2,195         |   |   | 2,821         |  
|Total Current Assets                                                                                                                              |   | 456,901       |   |   | 2,009,594     |  
|                                                                                                                                                  |   |               |   |   |               |  
|PROPERTY, PLANT AND EQUIPMENT                                                                                                                     |   |               |   |   |               |  
|Property, plant and equipment                                                                                                                     |   | 3,386,270     |   |   | 2,585,095     |  
|Accumulated depreciation                                                                                                                          |   | (1,374,968    | ) |   | (1,244,225    | )
|Total Property Plant and
      Equipment                                                                                                          |   | 2,011,302     |   |   | 1,340,870     |  
|                                                                                                                                                  |   |               |   |   |               |  
|MINERAL AND
      MINING PROPERTIES                                                                                                               |   | 2,196,369     |   |   | 379,690       |  
|                                                                                                                                                  |   |               |   |   |               |  
|OTHER ASSETS                                                                                                                                      |   |               |   |   |               |  
|Notes receivable from related parties                                                                                                             |   | -             |   |   | 203,716       |  
|Notes receivable (net of discount)                                                                                                                |   | 1,037,944     |   |   | 1,572,030     |  
|Accrued interest receivable                                                                                                                       |   | -             |   |   | 10,739        |  
|Investments                                                                                                                                       |   | 266,938       |   |   | 356,823       |  
|Total Other Assets                                                                                                                                |   | 1,304,882     |   |   | 2,143,308     |  
|                                                                                                                                                  |   |               |   |   |               |  
|TOTAL ASSETS                                                                                                                                      | $ | 5,969,454     |   | $ | 5,873,462     |  
|                                                                                                                                                  |   |               |   |   |               |  
|                                                                                                                                                  |   |               |   |   |               |  
|LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                                              |   |               |   |   |               |  
|                                                                                                                                                  |   |               |   |   |               |  
|CURRENT
      LIABILITIES                                                                                                                         |   |               |   |   |               |  
|Accounts payable                                                                                                                                  | $ | 159,623       |   | $ | 195,507       |  
|Accrued expenses                                                                                                                                  |   | 79,151        |   |   | 10,288        |  
|Notes payable - current portion                                                                                                                   |   | 11,615        |   |   | 18,526        |  
|Total Current Liabilities                                                                                                                         |   | 250,389       |   |   | 224,321       |  
|                                                                                                                                                  |   |               |   |   |               |  
|Note payable - noncurrent portion                                                                                                                 |   | 4,268         |   |   | 8,121         |  
|Total Liabilities                                                                                                                                 |   | 254,657       |   |   | 232,442       |  
|                                                                                                                                                  |   |               |   |   |               |  
|COMMITMENTS AND CONTINGENCIES                                                                                                                     |   | -             |   |   | -             |  
|                                                                                                                                                  |   |               |   |   |               |  
|STOCKHOLDERS' EQUITY                                                                                                                              |   |               |   |   |               |  
|Common stock, 200,000,000 shares authorized, $0.10 par value; 
                   
       34,302,487 and 22,063,179 shares issued and outstanding |   | 3,430,249     |   |   | 2,206,318     |  
|Additional paid-in capital                                                                                                                        |   | 4,089,450     |   |   | 3,522,385     |  
|Treasury stock                                                                                                                                    |   | (252,653      | ) |   | (309,853      | )
|Accumulated earnings in exploration stage                                                                                                         |   | 126,447       |   |   | 1,906,423     |  
|Accumulated deficit prior to exploration stage                                                                                                    |   | (1,667,482    | ) |   | (1,667,482    | )
|Accumulated other comprehensive loss                                                                                                              |   | (11,214       | ) |   | (16,771       | )
|Total Stockholders' Equity                                                                                                                        |   | 5,714,797     |   |   | 5,641,020     |  
|                                                                                                                                                  |   |               |   |   |               |  
|**TOTAL LIABILITIES AND STOCKHOLDERS'** **EQUITY**                                                                                                | $ | 5,969,454     |   | $ | 5,873,462     |  

The accompanying notes are an integral part of these
  consolidated financial statements.

40

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SHOSHONE SILVER MINING COMPANY 
  (an Exploration Stage
  Company)CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
    INCOME (LOSS)

|                                                                          |   |               |   |   |               |   |   | Period from           |  
|------------------------------------------------------------------------- | - | ------------- | - | - | ------------- | - | - | --------------------- | -
|                                                                          |   | 12-Months     |   |   | 9-Months      |   |   | January 1, 2000       |  
|                                                                          |   | Ended         |   |   | Ended         |   |   | (beginning of         |  
|                                                                          |   | September 30, |   |   | September 30, |   |   | exploration stage)    |  
|                                                                          |   | 2009          |   |   | **2008 (a)**  |   |   | to September 30, 2009 |  
|                                                                          |   |               |   |   |               |   |   |                       |  
|                                                                          |   |               |   |   |               |   |   |                       |  
|REVENUES                                                                  | $ | -             |   | $ | -             |   | $ | 141,589               |  
|                                                                          |   |               |   |   |               |   |   |                       |  
|COST OF REVENUES                                                          |   | -             |   |   | -             |   |   | 228,828               |  
|                                                                          |   |               |   |   |               |   |   |                       |  
|GROSS PROFIT                                                              |   | -             |   |   | -             |   |   | (87,239               | )
|                                                                          |   |               |   |   |               |   |   |                       |  
|OPERATING EXPENSES                                                        |   |               |   |   |               |   |   |                       |  
|General and administrative                                                |   | 1,065,247     |   |   | 490,770       |   |   | 2,536,441             |  
|Professional fees                                                         |   | 283,243       |   |   | 189,342       |   |   | 1,058,865             |  
|Depreciation                                                              |   | 130,743       |   |   | 44,392        |   |   | 464,039               |  
|Mining and exploration expenses                                           |   | 270,722       |   |   | 68,404        |   |   | 1,831,029             |  
|Net gain on sale of load claim                                            |   | -             |   |   | (60,000       | ) |   | (193,907              | )
|Total Operating Expenses                                                  |   | 1,749,955     |   |   | 732,908       |   |   | 5,696,467             |  
|                                                                          |   |               |   |   |               |   |   |                       |  
|LOSS FROM OPERATIONS                                                      |   | (1,749,955    | ) |   | (732,908      | ) |   | (5,783,706            | )
|                                                                          |   |               |   |   |               |   |   |                       |  
|OTHER INCOME (EXPENSES)                                                   |   |               |   |   |               |   |   |                       |  
|Lease income                                                              |   | -             |   |   | -             |   |   | 444,044               |  
|Net (loss) gain on sale of
      investments                              |   | 2,225         |   |   | (7,840        | ) |   | 1,132,433             |  
|Other-than-temporary impairment of investments                            |   | (101,479      | ) |   | -             |   |   | (101,479              | )
|Dividend and interest income                                              |   | 115,022       |   |   | 22,637        |   |   | 206,322               |  
|Loss on abandonment of asset                                              |   | -             |   |   | -             |   |   | (20,000               | )
|Gain on sale of fixed asset                                               |   | -             |   |   | -             |   |   | 12,200                |  
|Unrealized holding loss on marketable securities                          |   | -             |   |   | -             |   |   | (380,827              | )
|Gain on settlement of note receivable                                     |   | -             |   |   | -             |   |   | 64,206                |  
|Gain on sale of Mexican mining concession                                 |   | -             |   |   | 4,363,353     |   |   | 4,363,353             |  
|Interest expense                                                          |   | (2,398        | ) |   | (3,250        | ) |   | (7,306                | )
|Other income/(expense)                                                    |   | (43,391       | ) |   | 3,366         |   |   | 197,207               |  
|Total Other Income
      (Expenses)                                       |   | (30,021       | ) |   | 4,378,266     |   |   | 5,910,153             |  
|                                                                          |   |               |   |   |               |   |   |                       |  
|INCOME (LOSS) BEFORE INCOME TAXES                                         |   | (1,779,976    | ) |   | 3,645,358     |   |   | 126,447               |  
|                                                                          |   |               |   |   |               |   |   |                       |  
|INCOME TAXES                                                              |   | -             |   |   | -             |   |   | 124,826               |  
|DEFERRED TAX GAIN                                                         |   | -             |   |   | -             |   |   | (124,826              | )
|                                                                          |   |               |   |   |               |   |   |                       |  
|NET INCOME (LOSS)                                                         |   | (1,779,976    | ) |   | 3,645,358     |   |   | 126,447               |  
|                                                                          |   |               |   |   |               |   |   |                       |  
|OTHER COMPREHENSIVE INCOME (LOSS)                                         |   |               |   |   |               |   |   |                       |  
|Unrealized holding gain (loss) on
      investments                       |   | 5,557         |   |   | (200,114      | ) |   | (11,214               | )
|                                                                          |   |               |   |   |               |   |   |                       |  
|                                                                          |   |               |   |   |               |   |   |                       |  
|NET COMPREHENSIVE INCOME (LOSS)                                           | $ | (1,774,419    | ) | $ | 3,445,244     |   | $ | 115,233               |  
|                                                                          |   |               |   |   |               |   |   |                       |  
|                                                                          |   |               |   |   |               |   |   |                       |  
|NET INCOME (LOSS) PER COMMON SHARE, BASIC                                 | $ | (0.06         | ) | $ | 0.17          |   |   |                       |  
|                                                                          |   |               |   |   |               |   |   |                       |  
|NET INCOME (LOSS) PER COMMON SHARE, DILUTED                               | $ | (0.06         | ) | $ | 0.17          |   |   |                       |  
|                                                                          |   |               |   |   |               |   |   |                       |  
|WEIGHTED AVERAGE NUMBER OF COMMON STOCK
      SHARES OUTSTANDING, BASIC   |   | 28,478,030    |   |   | 20,935,677    |   |   |                       |  
|                                                                          |   |               |   |   |               |   |   |                       |  
|WEIGHTED AVERAGE NUMBER OF COMMON STOCK
      SHARES OUTSTANDING, DILUTED |   | 28,478,030    |   |   | 20,935,677    |   |   |                       |  

Note (a): Fiscal 2008 is a nine-month transition period
  attributable to the Company's decision to change its fiscal year end.

The accompanying notes are an integral part of these
  consolidated financial statements.

41

---

SHOSHONE SILVER MINING COMPANY 
  (an Exploration Stage
  Company) 
  CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                                                             |   |               |   |   |               |   |   | Period from           |  
|-------------------------------------------------------------------------------------------- | - | ------------- | - | - | ------------- | - | - | --------------------- | -
|                                                                                             |   | 12-Months     |   |   | 9-Months      |   |   | January 1, 2000       |  
|                                                                                             |   | Ended         |   |   | Ended         |   |   | (beginning of         |  
|                                                                                             |   | September 30, |   |   | September 30, |   |   | exploration stage)    |  
|                                                                                             |   | 2009          |   |   | **2008 (a)**  |   |   | to September 30, 2009 |  
|                                                                                             |   | (restated)    |   |   | (restated)    |   |   | (restated)            |  
|CASH FLOWS FROM OPERATING ACTIVITIES                                                         |   |               |   |   |               |   |   |                       |  
|Net income (loss)                                                                            | $ | (1,779,976    | ) | $ | 3,645,358     |   | $ | 126,447               |  
|Adjustments to reconcile net income
      (loss) to net                                      |   |               |   |   |               |   |   |                       |  
|cash used
      by operations:                                                               |   |               |   |   |               |   |   |                       |  
|Depreciation and
      amortization expense                                                  |   | 130,743       |   |   | 44,392        |   |   | 464,039               |  
|Adjustment to balance of note receivable                                                     |   | (766          | ) |   | -             |   |   | (906                  | )
|Amortization of note
      receivable discount                                               |   | (91,573       | ) |   | (7,773        | ) |   | (99,346               | )
|Available-for-sale securities issued in exchange for services                                |   | -             |   |   | -             |   |   | 135,140               |  
|Available-for-sale silver
      investment issued in exchange for services                   |   | 240           |   |   | -             |   |   | 240                   |  
|Bad debt
      expense                                                                       |   | 9,624         |   |   |               |   |   | 9,624                 |  
|Common stock issued for
      mining and exploration expenses                                |   | -             |   |   | 22,000        |   |   | 285,500               |  
|Common
      stock issued for services                                                       |   | 9,900         |   |   | 2,400         |   |   | 203,726               |  
|Common stock issued in
      settlement of agreement with former CEO                         |   | -             |   |   | 20,000        |   |   | 20,000                |  
|Discount
      given on early payment on note receivable                                     |   | 50,000        |   |   | -             |   |   | 50,000                |  
|Gain on sale of fixed
      asset                                                            |   | -             |   |   | -             |   |   | (12,200               | )
|Gain on
      settlement of note receivable                                                  |   | -             |   |   | -             |   |   | (64,206               | )
|Impairment of mining
      expenses                                                          |   | -             |   |   | -             |   |   | 413,000               |  
|Loss on
      abandonment of investment                                                      |   | -             |   |   | -             |   |   | 20,000                |  
|Net gain on sale of lode
      claim                                                         |   | -             |   |   | (60,000       | ) |   | (193,907              | )
|Net gain
      on sale of Mexican mining concession                                          |   | -             |   |   | (4,363,353    | ) |   | (4,363,353            | )
|Net loss (gain) on sale
      of investments                                                 |   | (2,225        | ) |   | 7,840         |   |   | (1,132,433            | )
|Loss
      recognized on other-than-termporary impairment of investments                     |   | 101,479       |   |   | -             |   |   | 101,479               |  
|Treasury stock issued for
      services                                                     |   | 7,000         |   |   | -             |   |   | 27,320                |  
|Unrealized holding loss on marketable securities                                             |   | -             |   |   | -             |   |   | 380,827               |  
|Changes in assets and liabilities:                                                           |   |               |   |   |               |   |   |                       |  
|Change in
      receivable from related party                                                |   | -             |   |   | -             |   |   | (9,624                | )
|Change in other current
      assets                                                         |   | -             |   |   | -             |   |   | (4,819                | )
|Change in
      deposits and prepaids                                                        |   | 16,370        |   |   | 15,080        |   |   | 27,009                |  
|Change in supplies
      inventory                                                           |   | 626           |   |   | 127           |   |   | 10,537                |  
|Change in
      accrued interest receivable                                                  |   | (9,516        | ) |   | (6,472        | ) |   | (20,255               | )
|Change in accrued
      liabilities                                                          |   | 68,863        |   |   | 8,533         |   |   | 75,167                |  
|Change in
      accounts payable                                                             |   | (97,956       | ) |   | 66,853        |   |   | 8,959                 |  
|Change in stock to issue                                                                     |   | -             |   |   | -             |   |   | 230,680               |  
|Net cash
      used in operating activities                                                  |   | (1,587,167    | ) |   | (605,015      | ) |   | (3,311,355            | )
|                                                                                             |   |               |   |   |               |   |   |                       |  
|CASH FLOWS FROM INVESTING
      ACTIVITIES                                                   |   |               |   |   |               |   |   |                       |  
|Advances on notes
      receivable                                                           |   | (15,000       | ) |   | (202,808      | ) |   | (111,022              | )
|Advances
      to related party                                                              |   | -             |   |   | -             |   |   | (395,000              | )
|Issuance of note
      receviable from related party                                         |   | -             |   |   | -             |   |   | (243,000              | )
|Payments
      received on notes receivable                                                  |   | 452,808       |   |   | -             |   |   | 582,846               |  
|Payments received on
      notes receivable from related party                               |   | -             |   |   | 132,464       |   |   | 332,498               |  
|Proceeds
      from sale of fixed assets                                                     |   | -             |   |   | -             |   |   | 12,200                |  
|Proceeds from sale of
      investments                                                      |   | 10,682        |   |   | 13,450        |   |   | 4,582,900             |  
|Proceeds
      from sale of lode claim                                                       |   | -             |   |   | -             |   |   | 13,907                |  
|Proceeds from sale of
      Mexican mining concession                                        |   | -             |   |   | 2,497,990     |   |   | 2,497,990             |  
|Proceeds
      from short-term loans                                                         |   | -             |   |   | -             |   |   | 160,760               |  
|Purchase of fixed assets                                                                     |   | (293,351      | ) |   | (261,991      | ) |   | (1,007,309            | )
|Purchase
      of mineral and mining properties                                              |   | (8,000        | ) |   | -             |   |   | (76,472               | )
|Purchases of investments                                                                     |   | (52,769       | ) |   | (260,023      | ) |   | (4,059,939            | )
|Net cash
      provided by investing activities                                              |   | 94,370        |   |   | 1,919,082     |   |   | 2,290,359             |  
|                                                                                             |   |               |   |   |               |   |   |                       |  
|CASH FLOWS FROM FINANCING
      ACTIVITIES                                                   |   |               |   |   |               |   |   |                       |  
|Common shares repurchased
      for treasury                                                 |   | (20,000       | ) |   | (21,220       | ) |   | (41,220               | )
|Net
      proceeds from sale of common stock                                                 |   | -             |   |   | 295,985       |   |   | 1,242,570             |  
|Payment made on long-term
      note payable                                                 |   | (33,703       | ) |   | (32,798       | ) |   | (237,002              | )
|Payment
      of common stock subscriptions                                                  |   | -             |   |   | -             |   |   | 20,225                |  
|Net cash (used in)
      provided by financing activities                                    |   | (53,703       | ) |   | 241,967       |   |   | 984,573               |  
|                                                                                             |   |               |   |   |               |   |   |                       |  
|Net increase (decrease) in cash                                                              |   | (1,546,500    | ) |   | 1,556,034     |   |   | (36,423               | )
|                                                                                             |   |               |   |   |               |   |   |                       |  
|Cash, beginning of period                                                                    |   | 1,570,066     |   |   | 14,032        |   |   | 59,989                |  
|                                                                                             |   |               |   |   |               |   |   |                       |  
|Cash, end of period                                                                          | $ | 23,566        |   | $ | 1,570,066     |   | $ | 23,566                |  
|                                                                                             |   |               |   |   |               |   |   |                       |  
|                                                                                             |   |               |   |   |               |   |   |                       |  
|SUPPLEMENTAL CASH FLOW
      DISCLOSURES:                                                    |   |               |   |   |               |   |   |                       |  
|Interest expense paid                                                                        | $ | 2,398         |   | $ | 3,250         |   | $ | 7,309                 |  
|Income taxes paid                                                                            | $ | -             |   | $ | -             |   | $ | -                     |  
|                                                                                             |   |               |   |   |               |   |   |                       |  
|NON-CASH INVESTING AND
      FINANCING ACTIVITIES:                                           |   |               |   |   |               |   |   |                       |  
|Accounts payable issued in exchange for
      partial payment on office building             | $ | -             |   | $ | 50,000        |   | $ | 50,000                |  
|Common stock issued for
      accounts payable                                               | $ | -             |   | $ | -             |   | $ | 227,500               |  
|Common stock issued for finders' fee                                                         | $ | -             |   | $ | -             |   | $ | 1,000                 |  
|Common stock issued for
      mining and exploration expenses                                | $ | -             |   | $ | -             |   | $ | 222,500               |  
|Common stock issued for purchase of
      equipment                                          | $ | -             |   | $ | 95,340        |   | $ | 95,340                |  
|Common stock issued for
      purchase of mining properties                                  | $ | -             |   | $ | -             |   | $ | 45,000                |  
|Common Stock issued for services                                                             | $ | -             |   | $ | -             |   | $ | 88,333                |  
|Deposit utilized to
      purchase fixed asset                                               | $ | -             |   | $ | -             |   | $ | 5,000                 |  
|Equipment received in exchange for
      settlement of note recievable                       | $ | 4,139         |   | $ | -             |   | $ | 4,139                 |  
|Marketable securities
      received in lieu of note receivable                              | $ | -             |   | $ | -             |   | $ | 104,273               |  
|Mineral properties acquired in exchange
      for common stock and other consideration       | $ | 1,677,126     |   | $ | -             |   | $ | 1,677,126             |  
|Office equipment
      acquired in exchange for common stock and other consideration         | $ | 15,525        |   | $ | -             |   | $ | 15,525                |  
|Mining equipment acquired in exchange
      for common stock and other consideration         | $ | 260,000       |   | $ | -             |   | $ | 260,000               |  
|Mill building acquired
      in exchange for common stock and other consideration            | $ | 224,475       |   | $ | -             |   | $ | 224,475               |  
|Mineral property reacquired upon
      default                                               | $ | 131,553       |   | $ | -             |   | $ | 131,553               |  
|Note issued in
      exchanged for vehicle                                                   | $ | -             |   | $ | -             |   | $ | 53,658                |  
|Note payable issued in exchange for
      prepaid asset                                      | $ | 15,939        |   | $ | -             |   | $ | 31,565                |  
|Note payable issued in
      exchange for equipment                                          | $ | 7,000         |   | $ | -             |   | $ | 7,000                 |  
|Note receivable (net of discount) in
      connection with sale of Mexcian Mining Concession | $ | -             |   | $ | 1,865,363     |   | $ | 1,865,363             |  
|Note receivable in
      connection with sale of lode claim                                  | $ | -             |   | $ | -             |   | $ | 120,000               |  
|Stock received in exchange for lode
      claim                                              | $ | -             |   | $ | 60,000        |   | $ | 60,000                |  
|Treasury stock acquired
      through sale of investment                                     | $ | -             |   | $ | -             |   | $ | 296,296               |  
|Treasury stock issued in exchange for
      fixed asset                                      | $ | 7,500         |   | $ | -             |   | $ | 7,500                 |  

Note (a): Fiscal 2008 is a nine-month transition period
  attributable to the Company's decision to change its fiscal year end.

The accompanying notes are an integral part of these
  consolidated financial statements.

42

---

SHOSHONESILVERMININGCOMPANY(anExplorationStageCompany)CONSOLIDATEDSTATEMENTOFSTOCKHOLDERS'EQUITY

|                                                                                       |  |                 |  |   |           |  |   |                 |   |   |          |   |   |                     |  |   |               |   |   |             |   |   | Accumulated   |   |   |               |  
|-------------------------------------------------------------------------------------- |  | --------------- |  | - | --------- |  | - | --------------- | - | - | -------- | - | - | ------------------- |  | - | ------------- | - | - | ----------- | - | - | ------------- | - | - | ------------- | -
|                                                                                       |  | Common Stock    |  |   |           |  |   |                 |   |   |          |   |   |                     |  |   |               |   |   | Other       |   |   | Total         |  
|                                                                                       |  | Number          |  |   |           |  |   | Additional      |   |   | Treasury |   |   |                     |  |   | Subscriptions |   |   | Accumulated |   |   | Comprehensive |   |   | Stockholders' |  
|                                                                                       |  | of
      Shares |  |   | Amount    |  |   | Paid-in Capital |   |   | Stock    |   |   | Stock
      Options |  |   | Receivable    |   |   | Deficit     |   |   | Income        |   |   | Equity        |  
|Balance December 31, 1999 as originally
      stated                                   |  | 9,030,660       |  | $ | 903,066   |  | $ | 1,597,425       |   | $ | (65,733  | ) | $ | -                   |  | $ | -             |   | $ | 21,834      |   | $ | -             |   | $ | 2,456,592     |  
|Net adjustments for the following:                                                     |  |                 |  |   |           |  |   |                 |   |   |          |   |   |                     |  |   |               |   |   |             |   |   |               |   |   |               |  
|Overstated mining property
      investments                                           |  | -               |  |   | -         |  |   | -               |   |   | -        |   |   | -                   |  |   | -             |   |   | (905,981    | ) |   | -             |   |   | (905,981      | )
|Understated property, net of depreciation                                              |  | -               |  |   | -         |  |   | 990,000         |   |   | -        |   |   | -                   |  |   | -             |   |   | (345,465    | ) |   | -             |   |   | 644,535       |  
|Repaid loan incorrectly written off
      to expenses                                  |  | -               |  |   | -         |  |   | -               |   |   | -        |   |   | -                   |  |   | -             |   |   | 50,000      |   |   | -             |   |   | 50,000        |  
|Treasury stock, not properly recognized                                                |  | 533,669         |  |   | 53,367    |  |   | -               |   |   | -        |   |   | -                   |  |   | -             |   |   | (53,367     | ) |   | -             |   |   | -             |  
|Stock issuances not recorded                                                           |  | 410,000         |  |   | 41,000    |  |   | 48,500          |   |   | -        |   |   | -                   |  |   | -             |   |   | (89,500     | ) |   | -             |   |   | -             |  
|Stock options and payables for unrecorded attorney
      fees                          |  | -               |  |   | -         |  |   | -               |   |   | -        |   |   | 12,221              |  |   | -             |   |   | (22,221     | ) |   | -             |   |   | (10,000       | )
|Cost of mining properties expensed                                                     |  | -               |  |   | -         |  |   | -               |   |   |          |   |   |                     |  |   |               |   |   | (491,282    | ) |   |               |   |   | (491,282      | )
|Note receivable not recorded, net of accrued interest                                  |  | -               |  |   | -         |  |   | -               |   |   | -        |   |   | -                   |  |   | -             |   |   | 168,500     |   |   | -             |   |   | 168,500       |  
|Balance December 31, 1999, as restated                                                 |  | 9,974,329       |  | $ | 997,433   |  | $ | 2,635,925       |   | $ | (65,733  | ) | $ | 12,221              |  | $ | -             |   | $ | (1,667,482  | ) | $ | -             |   | $ | 1,912,364     |  
|Issuance of stock for services at a price of $0.20 per
      share                     |  | 5,000           |  |   | 500       |  |   | 500             |   |   | -        |   |   | -                   |  |   | -             |   |   | -           |   |   | -             |   |   | 1,000         |  
|Net loss for year ending December 31, 2000                                             |  | -               |  |   | -         |  |   | -               |   |   | -        |   |   | -                   |  |   | -             |   |   | (212,048    | ) |   | -             |   |   | (212,048      | )
|Balance, December 31, 2000, as restated                                                |  | 9,979,329       |  | $ | 997,933   |  | $ | 2,636,425       |   | $ | (65,733  | ) | $ | 12,221              |  | $ | -             |   | $ | (1,879,530  | ) | $ | -             |   | $ | 1,701,316     |  
|Net loss for year ending December 31, 2001                                             |  | -               |  |   | -         |  |   | -               |   |   | -        |   |   | -                   |  |   | -             |   |   | (228,159    | ) |   | -             |   |   | (228,159      | )
|Balance, January 1, 2002                                                               |  | 9,979,329       |  | $ | 997,933   |  | $ | 2,636,425       |   | $ | (65,733  | ) | $ | 12,221              |  | $ | -             |   | $ | (2,107,689  | ) | $ | -             |   | $ | 1,473,157     |  
|Treasury stock issued for services at a
      price of $0.10 per share                 |  | -               |  |   | -         |  |   | (1,080          | ) |   | 11,880   |   |   | -                   |  |   | -             |   |   |             |   |   | -             |   |   | 10,800        |  
|Treasury stock issued for services at a price of $0.10 per
      share                 |  | -               |  |   | -         |  |   | (195            | ) |   | 495      |   |   | -                   |  |   | -             |   |   |             |   |   | -             |   |   | 300           |  
|Issuance of stock for services at a price
      of $0.03 perp share                    |  | 800,000         |  |   | 80,000    |  |   | (53,066         | ) |   | -        |   |   | -                   |  |   | -             |   |   |             |   |   | -             |   |   | 26,934        |  
|Issuance of stock for legal fees at a price of $0.10 per
      share                   |  | 100,000         |  |   | 10,000    |  |   | -               |   |   | -        |   |   | -                   |  |   | -             |   |   |             |   |   | -             |   |   | 10,000        |  
|Net loss for year ending December 31, 2002                                             |  | -               |  |   | -         |  |   | -               |   |   | -        |   |   | -                   |  |   | -             |   |   | (641,951    | ) |   | -             |   |   | (641,951      | )
|Balance, January 1, 2003                                                               |  | 10,879,329      |  | $ | 1,087,933 |  | $ | 2,582,084       |   | $ | (53,358  | ) | $ | 12,221              |  | $ | -             |   | $ | (2,749,640  | ) | $ | -             |   | $ | 879,240       |  
|Stock issued for cash at $0.03 per share                                               |  | 2,902,778       |  |   | 290,278   |  |   | (204,278        | ) |   | -        |   |   | -                   |  |   | -             |   |   |             |   |   | -             |   |   | 86,000        |  
|Issuance of stock for services at a price of $0.10 per
      share                     |  | 620,833         |  |   | 62,083    |  |   | -               |   |   | -        |   |   | -                   |  |   | -             |   |   |             |   |   | -             |   |   | 62,083        |  
|Issuance of stock for mining properties at
      a price of $0.15 per share            |  | 510,000         |  |   | 51,000    |  |   | 25,500          |   |   | -        |   |   | -                   |  |   | -             |   |   |             |   |   | -             |   |   | 76,500        |  
|Stock issued for cash at $0.10 per share                                               |  | 119,000         |  |   | 11,900    |  |   | -               |   |   | -        |   |   | -                   |  |   | -             |   |   |             |   |   | -             |   |   | 11,900        |  
|Unrealized holding gain in investments                                                 |  | -               |  |   | -         |  |   | -               |   |   | -        |   |   | -                   |  |   | -             |   |   |             |   |   | 1,328,462     |   |   | 1,328,462     |  
|Net loss for year ending December 31, 2003                                             |  | -               |  |   | -         |  |   | -               |   |   | -        |   |   | -                   |  |   | -             |   |   | (99,292     | ) |   | -             |   |   | (99,292       | )
|Balance, December 31, 2003                                                             |  | 15,031,940      |  | $ | 1,503,194 |  | $ | 2,403,306       |   | $ | (53,358  | ) | $ | 12,221              |  | $ | -             |   | $ | (2,848,932  | ) | $ | 1,328,462     |   | $ | 2,344,893     |  
|Stock issued for cash and warrants at $0.35 per share, net
      of costs of $64,465   |  | 1,861,857       |  |   | 186,186   |  |   | 400,999         |   |   | -        |   |   | -                   |  |   | -             |   |   |             |   |   | -             |   |   | 587,185       |  
|Issuance of stock for services at an
      average price of $0.14 per share            |  | 25,000          |  |   | 2,500     |  |   | 1,000           |   |   | -        |   |   | -                   |  |   | -             |   |   |             |   |   | -             |   |   | 3,500         |  
|Issuance of stock for services at price of $0.35 per share                             |  | 25,000          |  |   | 2,500     |  |   | 6,250           |   |   | -        |   |   | -                   |  |   | -             |   |   |             |   |   | -             |   |   | 8,750         |  
|Issuance of stock for mining property lease
      at a price of $0.35 per share        |  | 350,000         |  |   | 35,000    |  |   | 87,500          |   |   | -        |   |   | -                   |  |   | -             |   |   |             |   |   | -             |   |   | 122,500       |  
|Issuance of stock for mining properties at a price of $0.35
      per share            |  | 100,000         |  |   | 10,000    |  |   | 25,000          |   |   | -        |   |   | -                   |  |   | -             |   |   |             |   |   | -             |   |   | 35,000        |  
|Treasury stock issued for mining properties
      at a price of $0.35 per share        |  | -               |  |   | -         |  |   | 24,000          |   |   | 11,000   |   |   | -                   |  |   | -             |   |   |             |   |   | -             |   |   | 35,000        |  
|Treasury stock issued for subscriptions receivable at a
      price of $0.35 per share |  | -               |  |   | -         |  |   | 9,101           |   |   | 11,124   |   |   | -                   |  |   | (20,225       | ) |   |             |   |   | -             |   |   | -             |  
|Treasury stock issued for services at a
      price of $0.35 per share                 |  | -               |  |   | -         |  |   | 9,600           |   |   | 4,400    |   |   | -                   |  |   | -             |   |   |             |   |   | -             |   |   | 14,000        |  
|Unrealized holding loss in investments                                                 |  | -               |  |   | -         |  |   | -               |   |   | -        |   |   | -                   |  |   | -             |   |   |             |   |   | (594,605      | ) |   | (594,605      | )

The accompanying notes are an integral part of these
  consolidated financial statements.

43

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SHOSHONESILVERMININGCOMPANY(anExplorationStageCompany)CONSOLIDATEDSTATEMENTOFSTOCKHOLDERS'EQUITY

|                                                                                      |  |                 |  |   |           |  |   |                 |   |   |          |   |   |                     |   |   |               |   |   |             |   |   | Accumulated   |   |   |               |  
|------------------------------------------------------------------------------------- |  | --------------- |  | - | --------- |  | - | --------------- | - | - | -------- | - | - | ------------------- | - | - | ------------- | - | - | ----------- | - | - | ------------- | - | - | ------------- | -
|                                                                                      |  | Common Stock    |  |   |           |  |   |                 |   |   |          |   |   |                     |   |   |               |   |   | Other       |   |   | Total         |  
|                                                                                      |  | Number          |  |   |           |  |   | Additional      |   |   | Treasury |   |   |                     |   |   | Subscriptions |   |   | Accumulated |   |   | Comprehensive |   |   | Stockholders' |  
|                                                                                      |  | of
      Shares |  |   | Amount    |  |   | Paid-in Capital |   |   | Stock    |   |   | Stock
      Options |   |   | Receivable    |   |   | Deficit     |   |   | Income        |   |   | Equity        |  
|                                                                                      |  |                 |  |   |           |  |   |                 |   |   |          |   |   |                     |   |   |               |   |   |             |   |   |               |   |   |               |  
|Net loss for year ending December 31, 2004                                            |  | -               |  |   | -         |  |   | -               |   |   | -        |   |   | -                   |   |   | -             |   |   | (567,085    | ) |   | -             |   |   | (567,085      | )
|Balance, December 31, 2004                                                            |  | 17,393,797      |  | $ | 1,739,380 |  | $ | 2,966,756       |   | $ | (26,834  | ) | $ | 12,221              |   | $ | (20,225       | ) | $ | (3,416,017  | ) | $ | 733,857       |   | $ | 1,989,138     |  
|Issuance of stock for accounts payable at a
      price $0.35 per share               |  | 650,000         |  |   | 65,000    |  |   | 162,500         |   |   | -        |   |   | -                   |   |   | -             |   |   | -           |   |   | -             |   |   | 227,500       |  
|Issuance of stock for mining property expenses at a price
      $0.20 per share       |  | 100,000         |  |   | 10,000    |  |   | 10,000          |   |   | -        |   |   | -                   |   |   | -             |   |   | -           |   |   | -             |   |   | 20,000        |  
|Treasury stock issued for services at a
      price of $0.20 per share                |  | -               |  |   | -         |  |   | 4,950           |   |   | 6,050    |   |   | -                   |   |   | -             |   |   | -           |   |   | -             |   |   | 11,000        |  
|Treasury stock issued for cash and services at price of
      $0.10 per share         |  | -               |  |   | -         |  |   | (1,900          | ) |   | 20,900   |   |   | -                   |   |   | -             |   |   | -           |   |   | -             |   |   | 19,000        |  
|Treasury stock acquired by sale of
      investments                                  |  | -               |  |   | -         |  |   | -               |   |   | (296,296 | ) |   | -                   |   |   | -             |   |   | -           |   |   | -             |   |   | (296,296      | )
|Receipt of subscription receivable                                                    |  | -               |  |   | -         |  |   | -               |   |   | -        |   |   | -                   |   |   | 1,381         |   |   | -           |   |   | -             |   |   | 1,381         |  
|Unrealized holding loss in investments                                                |  | -               |  |   | -         |  |   | -               |   |   | -        |   |   | -                   |   |   | -             |   |   | -           |   |   | (601,560      | ) |   | (601,560      | )
|Net loss for year ending December 31, 2005                                            |  | -               |  |   | -         |  |   | -               |   |   | -        |   |   | -                   |   |   | -             |   |   | (84,681     | ) |   | -             |   |   | (84,681       | )
|Balance, December 31, 2005                                                            |  | 18,143,797      |  | $ | 1,814,380 |  | $ | 3,142,306       |   | $ | (296,180 | ) | $ | 12,221              |   | $ | (18,844       | ) | $ | (3,500,698  | ) | $ | 132,297       |   | $ | 1,285,482     |  
|Issuance of stock for exploration expenses at a price $0.24
      per share           |  | 100,000         |  |   | 10,000    |  |   | 14,000          |   |   | -        |   |   | -                   |   |   | -             |   |   | -           |   |   | -             |   |   | 24,000        |  
|Treasury stock issued for services at an
      average price of $0.25 per share       |  | -               |  |   | -         |  |   | (5,164          | ) |   | 25,484   |   |   | -                   |   |   | -             |   |   | -           |   |   | -             |   |   | 20,320        |  
|Unrealized holding gain on investments                                                |  | -               |  |   | -         |  |   | -               |   |   | -        |   |   | -                   |   |   | -             |   |   | -           |   |   | 470,528       |   |   | 470,528       |  
|Net income for year ending December 31,
      2006                                    |  | -               |  |   | -         |  |   | -               |   |   | -        |   |   | -                   |   |   | -             |   |   | 367,135     |   |   | -             |   |   | 367,135       |  
|Balance, December 31, 2006                                                            |  | 18,243,797      |  | $ | 1,824,380 |  | $ | 3,151,143       |   | $ | (270,696 | ) | $ | 12,221              |   | $ | (18,844       | ) | $ | (3,133,563  | ) | $ | 602,825       |   | $ | 2,167,465     |  
|Expiration of stock options                                                           |  | -               |  |   | -         |  |   | 12,221          |   |   | -        |   |   | (12,221             | ) |   | -             |   |   | -           |   |   | -             |   |   | -             |  
|Stock issued for cash at $0.18 per share, net of costs of $18,000                     |  | 1,000,000       |  |   | 100,000   |  |   | 62,000          |   |   | -        |   |   | -                   |   |   | -             |   |   | -           |   |   | -             |   |   | 162,000       |  
|Stock issued for cash at $0.20 per share                                              |  | 200,000         |  |   | 20,000    |  |   | 20,000          |   |   | -        |   |   | -                   |   |   | -             |   |   | -           |   |   | -             |   |   | 40,000        |  
|Stock issued for cash at $0.20 per share                                              |  | 250,000         |  |   | 25,000    |  |   | 25,000          |   |   | -        |   |   | -                   |   |   | -             |   |   | -           |   |   | -             |   |   | 50,000        |  
|Issuance of stock for exploration expenses
      at a price of $0.27 per share        |  | 100,000         |  |   | 10,000    |  |   | 17,000          |   |   | -        |   |   | -                   |   |   | -             |   |   | -           |   |   | -             |   |   | 27,000        |  
|Issuance of stock in exchange for services                                            |  | 6,000           |  |   | 600       |  |   | 1,320           |   |   | -        |   |   | -                   |   |   | -             |   |   | -           |   |   | -             |   |   | 1,920         |  
|Adjustments to common stock and treasury
      stock to adjust to actual. See Note 2. |  | 47,382          |  |   | 4,739     |  |   | 16,388          |   |   | (21,127  | ) |   | -                   |   |   | -             |   |   | -           |   |   | -             |   |   | -             |  
|Receipt of subscription receivable                                                    |  | -               |  |   | -         |  |   | -               |   |   | -        |   |   | -                   |   |   | 18,844        |   |   | -           |   |   | -             |   |   | 18,844        |  
|Issuance of treasury stock for expenses
      incurred in the prior year              |  | -               |  |   | -         |  |   | 3,190           |   |   | 3,190    |   |   | -                   |   |   | -             |   |   | -           |   |   | -             |   |   | 6,380         |  
|Unrealized holding gain on investments                                                |  | -               |  |   | -         |  |   | -               |   |   | -        |   |   | -                   |   |   | -             |   |   | -           |   |   | (419,483      | ) |   | (419,483      | )
|Net income for the year ending December 31,
      2007                                |  | -               |  |   | -         |  |   | -               |   |   | -        |   |   | -                   |   |   | -             |   |   | (272,854    | ) |   | -             |   |   | (272,854      | )
|Balance, December 31, 2007                                                            |  | 19,847,179      |  | $ | 1,984,719 |  | $ | 3,308,262       |   | $ | (288,633 | ) | $ | -                   |   | $ | -             |   | $ | (3,406,417  | ) | $ | 183,342       |   | $ | 1,781,272     |  
|Issuance of stock in exchange for services                                            |  | 12,000          |  |   | 1,200     |  |   | 1,200           |   |   | -        |   |   | -                   |   |   | -             |   |   | -           |   |   | -             |   |   | 2,400         |  
|Stock issued for cash at $0.20 per share, net of costs of
      $10,000               |  | 350,000         |  |   | 35,000    |  |   | 25,000          |   |   | -        |   |   | -                   |   |   | -             |   |   | -           |   |   | -             |   |   | 60,000        |  
|Unrealized holding gain on investments                                                |  | -               |  |   | -         |  |   | -               |   |   | -        |   |   | -                   |   |   | -             |   |   | -           |   |   | -             |   |   | -             |  
|Stock issued for cash at $0.20 per share, net of costs of
      $4,016                |  | 450,000         |  |   | 45,000    |  |   | 40,984          |   |   | -        |   |   | -                   |   |   | -             |   |   | -           |   |   | -             |   |   | 85,984        |  
|Stock issued for cash at $0.20 per share                                              |  | 250,000         |  |   | 25,000    |  |   | 25,000          |   |   | -        |   |   | -                   |   |   | -             |   |   | -           |   |   | -             |   |   | 50,000        |  
|Issuance of stock for exploration expenses at a price of
      $0.22 per share        |  | 100,000         |  |   | 10,000    |  |   | 12,000          |   |   | -        |   |   | -                   |   |   | -             |   |   | -           |   |   | -             |   |   | 22,000        |  
|Stock issued in exchange for heavy
      equipement                                   |  | 454,000         |  |   | 45,400    |  |   | 49,940          |   |   | -        |   |   | -                   |   |   | -             |   |   | -           |   |   | -             |   |   | 95,340        |  
|Stock issued for cash at $0.20 per share                                              |  | 250,000         |  |   | 25,000    |  |   | 25,000          |   |   |          |   |   |                     |   |   |               |   |   |             |   |   |               |   |   | 50,000        |  
|Stock issued for cash at $0.20 per share                                              |  | 250,000         |  |   | 25,000    |  |   | 25,000          |   |   |          |   |   |                     |   |   |               |   |   |             |   |   |               |   |   | 50,000        |  
|Stock issued in settlement of an agreement with the
      Company's former CEO        |  | 100,000         |  |   | 10,000    |  |   | 10,000          |   |   |          |   |   |                     |   |   |               |   |   |             |   |   |               |   |   | 20,000        |  
|Acquisition of 50,000 shares of treasury
      stock at $0.12 per share               |  |                 |  |   |           |  |   |                 |   |   | (6,100   | ) |   |                     |   |   |               |   |   |             |   |   |               |   |   | (6,100        | )

The accompanying notes are an integral part of these
consolidated financial statements.

44

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SHOSHONESILVERMININGCOMPANY(anExplorationStageCompany)CONSOLIDATEDSTATEMENTOFSTOCKHOLDERS'EQUITY

|                                                                                                                             |  |                 |  |  |           |  |  |                 |   |  |          |   |  |                     |  |  |               |  |  |             |   |  | Accumulated   |   |  |               |  
|---------------------------------------------------------------------------------------------------------------------------- |  | --------------- |  |  | --------- |  |  | --------------- | - |  | -------- | - |  | ------------------- |  |  | ------------- |  |  | ----------- | - |  | ------------- | - |  | ------------- | -
|                                                                                                                             |  | Common Stock    |  |  |           |  |  |                 |   |  |          |   |  |                     |  |  |               |  |  | Other       |   |  | Total         |  
|                                                                                                                             |  | Number          |  |  |           |  |  | Additional      |   |  | Treasury |   |  |                     |  |  | Subscriptions |  |  | Accumulated |   |  | Comprehensive |   |  | Stockholders' |  
|                                                                                                                             |  | of
      Shares |  |  | Amount    |  |  | Paid-in Capital |   |  | Stock    |   |  | Stock
      Options |  |  | Receivable    |  |  | Deficit     |   |  | Income        |   |  | Equity        |  
|                                                                                                                             |  |                 |  |  |           |  |  |                 |   |  |          |   |  |                     |  |  |               |  |  |             |   |  |               |   |  |               |  
|Acquisition of 126,000 shares of treasury stock at $0.12
      per share                                                     |  |                 |  |  |           |  |  |                 |   |  | (15,120  | ) |  |                     |  |  |               |  |  |             |   |  |               |   |  | (15,120       | )
|Unrealized holding gain on investments                                                                                       |  | -               |  |  | -         |  |  | -               |   |  | -        |   |  | -                   |  |  | -             |  |  | -           |   |  | (200,114      | ) |  | (200,114      | )
|Net income for nine-month period ended September 30, 2008                                                                    |  | -               |  |  | -         |  |  | -               |   |  | -        |   |  | -                   |  |  | -             |  |  | 3,645,358   |   |  | -             |   |  | 3,645,358     |  
|                                                                                                                             |  | 22,063,179      |  |  | 2,206,319 |  |  | 3,522,386       |   |  | (309,853 | ) |  | -                   |  |  | -             |  |  | 238,941     |   |  | (16,772       | ) |  | 5,641,020     |  
|Common stock issued at $0.10 per share in exchange for
      services                                                        |  | 10,000          |  |  | 1,000     |  |  | -               |   |  | -        |   |  | -                   |  |  | -             |  |  | -           |   |  | -             |   |  | 1,000         |  
|Common stock Issued at $0.11 per share in
      exchange for services                                                        |  | 50,000          |  |  | 5,000     |  |  | 500             |   |  | -        |   |  | -                   |  |  | -             |  |  | -           |   |  | -             |   |  | 5,500         |  
|50,000 shares of treasuary stock issued at $0.11 per share
      in exchange for Equipment                                   |  | -               |  |  | -         |  |  | 2,000           |   |  | 5,500    |   |  | -                   |  |  | -             |  |  | -           |   |  | -             |   |  | 7,500         |  
|Common stock issued at $0.15 per share to
      acquire 100% of the common stock of Kimberly Gold Mines, Inc                 |  | 12,145,306      |  |  | 1,214,530 |  |  | 607,264         |   |  | -        |   |  | -                   |  |  | -             |  |  | -           |   |  | -             |   |  | 1,821,794     |  
|100,000 shares treasuary stock repurchased at $0.20 per
      share                                                          |  | -               |  |  | -         |  |  | -               |   |  | (20,000  | ) |  | -                   |  |  | -             |  |  | -           |   |  | -             |   |  | (20,000       | )
|70,000 shares of treasury stock issued at
      $0.10 per share in exchange for services                                     |  |                 |  |  |           |  |  | (700            | ) |  | 7,700    |   |  | -                   |  |  | -             |  |  | -           |   |  | -             |   |  | 7,000         |  
|200,000 shares of treasury stock issued at $0.08 per share
      in connection with acquisition of Kimberly Gold Mines, Inc. |  | -               |  |  | -         |  |  | (42,000         | ) |  | 64,000   |   |  | -                   |  |  | -             |  |  | -           |   |  | -             |   |  | 22,000        |  
|Common stock issued at $0.10 per share in
      exchange for directors services                                              |  | 20,000          |  |  | 2,000     |  |  | -               |   |  | -        |   |  | -                   |  |  | -             |  |  | -           |   |  | -             |   |  | 2,000         |  
|Common stock issued at $0.10 per share in exchange for
      services                                                        |  | 4,000           |  |  | 400       |  |  | -               |   |  | -        |   |  | -                   |  |  | -             |  |  | -           |   |  | -             |   |  | 400           |  
|Common stock issued at $0.10 per share in
      exchange for directors services                                              |  | 10,000          |  |  | 1,000     |  |  | -               |   |  | -        |   |  | -                   |  |  | -             |  |  | -           |   |  | -             |   |  | 1,000         |  
|Reconciliation adjustment to common stock                                                                                    |  | 2               |  |  | -         |  |  | -               |   |  | -        |   |  | -                   |  |  | -             |  |  | -           |   |  | -             |   |  | -             |  
|Unrealized holding gain on investments                                                                                       |  | -               |  |  | -         |  |  | -               |   |  | -        |   |  | -                   |  |  | -             |  |  | -           |   |  | 5,558         |   |  | 5,558         |  
|Net income for twelve-month period ended September 30, 2009                                                                  |  | -               |  |  | -         |  |  | -               |   |  | -        |   |  | -                   |  |  | -             |  |  | (1,779,976  | ) |  | -             |   |  | (1,779,976    | )
|                                                                                                                             |  | 34,302,487      |  |  | 3,430,249 |  |  | 4,089,450       |   |  | (252,653 | ) |  | -                   |  |  | -             |  |  | (1,541,035  | ) |  | (11,214       | ) |  | 5,714,796     |  

The accompanying notes are an integral part of these
  consolidated financial statements.

45

---

NOTE 1: ORGANIZATION AND DESCRIPTION OF BUSINESS

Shoshone Silver Mining Company (an Exploration Stage Company)
(the Company or Shoshone) was incorporated under the laws of the State of
Idaho on August 4, 1969, under the name of Sunrise Mining Company and was
engaged in the business of mining. On January 22, 1970, the Company's name was
changed to Shoshone Silver Mining Company. During 2003, the Companys focus
broadened to include resource management and sales of mineral and timber
interests.

Beginning in fiscal 2000, the Company entered into an
exploration stage. The Company has acquired several mining properties since
entering the exploration stage.

The Companys year-end is September 30th.

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

This summary of significant accounting policies is presented to
assist in understanding the financial statements. The financial statements and
notes are representations of the Companys management, which is responsible for
their integrity and objectivity. These accounting policies conform to accounting
principles generally accepted in the United States of America and have been
consistently applied in the preparation of the financial statements.

Accounting Methods

The Companys financial statements are prepared using the
accrual basis of accounting in accordance with accounting principles generally
accepted in the United States of America.

Cash and Cash Equivalents

For purposes of its statements of cash flows, the Company
considers all highly liquid investments with original maturities of three months
or less to be cash equivalents. Cash equivalents also include money market
accounts.

Concentration of Credit Risk

The Company maintains its cash in several commercial accounts
at major financial institutions and brokerage houses. The brokerage accounts
contain cash and securities. Balances are insured up to $500,000 (with a limit
of $100,000 for cash) by the Securities Investor Protection Corporation (SIPC).
Although the financial institutions are considered creditworthy and have not
experienced any losses on their deposits, at September 30, 2009 and September
30, 2008, the Companys cash balance exceeded Federal Deposit Insurance
Corporation (FDIC) and SIPC limits by $0 and $1,296,921, respectively.

Earnings Per Share

On January 1, 1998, the Company adopted the provisions of Topic
260 in the Accounting Standards Codification (ASC 260) (previously SFAS No. 128,
Earnings per Share) which provides for calculation of "basic" and "diluted"
earnings per share. Basic earnings per share includes no dilution and is
computed by dividing net income (loss) available to common shareholders by the
weighted average common shares outstanding for the period. Diluted earnings per
share reflect the potential dilution of securities that could share in the
earnings of an entity similar to fully diluted earnings per share.

At September 30, 2009, there were 725,000 common stock warrants
outstanding which were not included in the calculation of earnings (loss) per
share at September 30, 2009, because they would have been anti-dilutive.

46

---

At September 30, 2008, there were 1,500,000 common stock
warrants outstanding which were not included in the calculation of earnings
(loss) per share at September 30, 2008, because they would have been
anti-dilutive.

Fair Value of Financial Instruments

The Company's financial instruments as defined in Topic 825 in
the Accounting Standards Codification (ASC 825) (previously SFAS No. 107,
"Disclosures about Fair Value of Financial Instruments,") include cash and cash
equivalents, accounts receivable, deposits and prepaid expenses, inventory,
investment in available-for-sale securities, accounts payable and short-term
borrowings. All instruments other than the investment in available-for-sale
securities are accounted for on an historical cost basis, which, due to the
short maturity of these financial instruments, approximates fair value at the
reporting dates. Investments in available-for-sale securities are recorded at
fair value at the reporting dates in accordance with ASC Topic 825 (previously
SFAS No. 115, Accounting for Certain Investments in Debt and Equity
Securities).

Fair Value Measurements

Effective January 1, 2008, the Company adopted the provisions
of Topic 820 in the Accounting Standards Codification (ASC 820) (previously SFAS
No. 157, Fair Value Measurements. ASC 820 defines fair value,
establishes a framework for measuring fair value in generally accepted
accounting principles and expands disclosures about fair value measurements. ASC
820 applies whenever other standards require (or permit) assets or liabilities
to be measured at fair value but does not expand the use of fair value in any
new circumstances. In this standard, the FASB clarifies the principle that fair
value should be based on the assumptions market participants would use when
pricing the asset or liability. In support of this principle, ASC 820
establishes a fair value hierarchy that prioritizes the information used to
develop those assumptions. The fair value hierarchy is as follows:

Level 1 inputs  Unadjusted quoted process in active markets
for identical assets or liabilities that the entity has the ability to access at
the measurement date.

Level 2 inputs  Inputs other than quoted prices included in
Level 1 that are observable for the asset or liability, either directly or
indirectly. These might include quoted prices for similar assets and liabilities
in active markets, and inputs other than quoted prices that are observable for
the asset or liability, such as interest rates and yield curves that are
observable at commonly quoted intervals.

Level 3 inputs  Unobservable inputs for determining the fair
values of assets or liabilities that reflect an entitys own assumptions about
the assumptions that market participants would use in pricing the assets or
liabilities.

Securities classified as available for sale are reported at
fair value utilizing Level 1 inputs. For these securities, the Company obtains
fair value from active markets.

The Companys Note Receivable (net of discount) is reported at
fair value utilizing Level 2 inputs. The discounting of this note receivable
utilized interest rates.

The following table presents information about the Companys
assets measured at fair value on a recurring basis as of September 30, 2009, and
indicates the fair value hierarchy of the valuation techniques utilized by the
Company to determine such fair value.

47

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|                                    |  |   |                    |  |   | Fair Value Measurements            | 
|----------------------------------- |  | - | ------------------ |  | - | ---------------------------------- | 
|                                    |  |   |                    |  |   | At September
      30, 2009, Using | 
|                                    |  |   |                    |  |   | Quoted Prices                      | 
|                                    |  |   |                    |  |   | In Active                          | 
|                                    |  |   |                    |  |   | Markets for                        | 
|                                    |  |   | Fair Value         |  |   | Identical Assets                   | 
|Description                         |  |   | September 30, 2009 |  |   | (Level 1)                          | 
|Available-for-Sale Securities       |  | $ | 266,938            |  | $ | 266,938                            | 
|Note Receivable (net of discount)   |  |   | 1,464,709          |  |   | -                                  | 
|Total Assets Measured at Fair Value |  | $ | 1,731,647          |  | $ | 266,938                            | 

Fiscal Periods

References to a fiscal year refer to the calendar year in which
such fiscal year ends. Historically, the Companys fiscal year ended on December
31st. However, on September 29, 2008, the Companys board of
directors approved a change in the Companys fiscal year end from December
31st to September 30th, effective on September 30, 2008.
As a result of this change in the Companys fiscal year end, the fiscal year
ending September 30, 2008, was a nine-month transition period.

Going Concern

As shown in the accompanying financial statements, the Company
has had limited revenues and incurred an accumulated deficit of $1,541,035 from
inception through September 30, 2009. These factors raise substantial doubt
about the Companys ability to continue as a going concern. Management intends
to seek additional capital from new equity securities offerings that will
provide funds needed to increase liquidity and fully implement its business
plan. The financial statements do not include any adjustments relating to the
recoverability and classification of recorded assets, or the amounts and
classification of liabilities that might be necessary in the event the Company
cannot continue in existence.

Historically, the Company has generally funded its operations
  with proceeds from the sale of available-for-sale investments, royalty
  and option agreement payments, and from the sale of the Companys common
  stock. Should the Company be unsuccessful in any of the initiatives or matters
  discussed above and unable to raise capital through future private placements,
  its business, and, as a result, its financial position, results of operations
  and cash flow will likely be materially adversely impacted. As such, substantial
  doubt as to the Companys ability to continue as a going concern remains
  as of the date of these financial statements.

The financial statements do not include any adjustments
relating to the recoverability and classification of recorded assets, or the
amounts and classification of liabilities that might be necessary in the event
the Company cannot continue in existence. An estimated $2,000,000 is believed
necessary to continue operations and increase development through the next
twelve months. Currently, the Company anticipates raising the majority of the
$2,000,000 through the issuance of common stock to private investors. The timing
and amount of capital requirements will depend on a number of factors, including
demand for products and services, capital expenditures and revenues
generated.

Investments

The Company accounts for marketable securities and investments
in silver bars and coins (not inclusive of Shoshone logo coins held as inventory
for resale) in accordance with the provisions of ASC Topic 320 (previously SFAS
No. 115, Accounting for Certain Investments in Debt and Equity Securities).
Under ASC Topic 320, debt securities and equity securities that have readily
determinable fair values are to be classified in three categories:

48

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Held to Maturity  the positive intent and ability to hold to
maturity. Amounts are reported at amortized cost, adjusted for amortization of
premiums and accretion of discounts.

Trading Securities  bought principally for purpose of selling
them in the near term. Amounts are reported at fair value, with unrealized gains
and losses included in earnings.

Available for Sale  not classified in one of the above
categories. Amounts are reported at fair value, with unrealized gains and losses
excluded from earnings and reported separately as a component of stockholders
equity.

At this time, the Company holds securities classified as
available for sale. See Note 12.

Investment securities are reviewed for impairment in accordance
with ASC 320-10 Investments - Debt and Equity Securities. The Company
periodically reviews our investments for indications of other-than-temporary
impairment considering many factors, including the extent and duration to which
a security's fair value has been less than its cost, overall economic and market
conditions, and the financial condition and specific prospects for the issuer.
Impairment of investment securities results in a charge to income when a market
decline below cost is other-than-temporary.

Mining Properties, Land and Water Rights

Costs of acquiring and developing mining properties, land and
water rights are capitalized as appropriate by project area. Exploration and
related costs and costs to maintain mining properties, land and water rights are
expensed as incurred while the property is in the exploration and evaluation
stage. Development and related costs and costs to maintain mining properties,
land and water rights are capitalized as incurred while the property is in the
development. When a property reaches the production stage, the related
capitalized costs are amortized using the units-of-production basis over proven
and probable reserves. Mining properties, land and water rights are periodically
assessed for impairment of value, and any subsequent losses are charged to
operations at the time of impairment. If a property is abandoned or sold, a gain
or loss is recognized and included in the consolidated statement of operations.
See Note 8.

Mineral Exploration and Development Costs

All exploration expenditures are expensed as incurred.
Significant property acquisition payments for active exploration properties are
capitalized. If no economic ore body is discovered, previously capitalized costs
are expensed in the period the property is abandoned. Expenditures to develop
new mines, to define further mineralization in existing ore bodies, and to
expand the capacity of operating mines, are capitalized and amortized on a
units-of-production basis over proven and probable reserves.

Should a property be abandoned, its capitalized costs are
charged to operations. The Company charges to the consolidated statement of
operations the allocable portion of capitalized costs attributable to properties
sold. Capitalized costs are allocated to properties sold based on the proportion
of claims sold to the claims remaining within the project area. See Note 8.

Notes Receivable

The Companys policy for notes receivable is to continue
accruing interest income until it becomes likely that the note is uncollectible.
At that time, an allowance for bad debt would be established and interest would
stop accruing.

Principles of Consolidation

The Companys consolidated financial statements include the
accounts of the Company and its one wholly owned subsidiary, Lakeview
Consolidated Silver Mines, Inc. The inter-company accounts and transactions are
eliminated upon consolidation.

49

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In 2004, the Company incorporated a wholly owned subsidiary in
Mexico, Shoshone Mexico, S.A. de C.V, for the purposes of facilitating its
Mexico property explorations and future operations. On August 11, 2008, the
Company sold 100% of the common stock of its wholly owned subsidiary to Xtierra
Resources, Ltd. See Note 11.

Property and Equipment

Property and equipment are stated at cost. Depreciation of
property and equipment begins on the date the asset is place in service and is
calculated using the straight-line method over the estimated useful lives of the
assets, which range from three to thirty-one and one half years. See Note 8.

Provision for Taxes

In June 2006, the Financial Accounting Standards Board issued
authoritative guidance prescribing recognition threshold and measurement
attribute for the financial statement recognition and measurement of a tax
position taken or expected to be taken in a tax return. This guidance is set
forth in Topic 740 in the Accounting Standards Codification (ASC 740)
(previously FASB Interpretation No. 48, Accounting for Uncertainty in Income
Taxes  an interpretation of FASB Statement No. 109). ASC 740 also provides
guidance on de-recognition, classification, interest and penalties, accounting
in interim periods, disclosure and transition. At September 30, 2009, the
Company had taken no tax positions that would require disclosure under ASC 740.

Pursuant to ASC 740, income taxes are provided for based upon
the liability method of accounting. Under this approach, deferred income taxes
are recorded to reflect the tax consequences on future years of differences
between the tax basis of assets and liabilities and their financial reporting
amounts at each year-end. A valuation allowance is recorded against deferred tax
assets if management does not believe the Company has met the more likely than
not standard imposed by ASC 740 to allow recognition of such an asset.

The significant components of the deferred tax assets at
September 30, 2009 and September 30, 2008 were as follows:

|                                           |   | September 30, |   |   | September 30, |  
|------------------------------------------ | - | ------------- | - | - | ------------- | -
|                                           |   | 2009          |   |   | 2008          |  
|Deferred Tax Assets                        |   |               |   |   |               |  
|                                           |   |               |   |   |               |  
|Net operating loss carry-forward           | $ | 456,870       |   | $ | 47,924        |  
|Recognized impairment of
      investments |   | 34,503        |   |   | -             |  
|Net deferred tax assets                    |   | 491,373       |   |   | 47,924        |  
|                                           |   |               |   |   |               |  
|Deferred Tax Liabilities                   |   |               |   |   |               |  
|Installment income                         |   | (605,323      | ) |   | (744,188      | )
|Depreciation                               |   | (2,794        | ) |   | (2,588        | )
|Net deferred tax
      liabilities         |   | (608,118      | ) |   | (746,776      | )
|                                           |   |               |   |   |               |  
|Net deferred tax liabilities               | $ | (116,745      | ) | $ | (698,852      | )
|                                           |   |               |   |   |               |  
|Valuation allowance                        |   | 116,745       |   |   | 698,852       |  
|Net deferred tax liabilities               | $ | -             |   | $ | -             |  

As management of the Company cannot determine that it is more
likely than not that the Company will realize the cost of the deferred tax
liability, valuation allowances equal to both the deferred tax liability and
deferred tax asset have been established at September 30, 2009. At September 30,
2009 and September 30, 2008, the Company had net

50

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operating loss carry-forwards ofapproximately
$1,344,000 and $141,000, respectively, which expire in the years 2023 through
2029.

At September 30, 2009, the Company had a total deferred tax
liability of $608,118. Of this amount $605,323 represents the total estimated
taxes payable on the income from the note receivable on the sale of Bilbao
concessions that is recognized under the full accrual method for financial
statement purposes and the installment sale method for income tax purposes. See
Note 11.

The Company has a total deferred tax asset of $491,373. Of this
amount $34,503 represents impairment charge on available-for-sale securities
recognized for financial reporting purposes in according with ASC 820. For
income tax purposes, gain or loss recognized upon the disposition of the
security will be recognized in the year of disposition. The remaining $456,870
relates to the Companys net operating loss carry-forward of $1,343,736.

Recently Adopted Accounting Pronouncements

In April 2009, the FASB issued authoritative guidance for
estimating fair value when the volume and level of activity for the asset or
liability have significantly decreased and for identifying circumstances that
indicate a transaction is not orderly. This guidance is set forth in Topic 820
in the Accounting Standards Codification (ASC 820) (previously FSP No. FAS
157-4, Determining Fair Value When the Volume and Level of Activity for the
Asset or Liability Have Significantly Decreased and Identifying Transactions
That Are Not Orderly). ASC 820 became effective for interim and annual
reporting periods ending after June 15, 2009, and is to be applied
prospectively. The Company adopted ASC 820 without a material effect on its
results of operations and financial position.

In April 2009, the FASB amended the other-than-temporary
impairment guidance in U.S. GAAP for debt securities to make the guidance more
operational and to improve the presentation and disclosure of
other-than-temporary impairments on debt and equity securities in the financial
statements. This guidance is set forth in Topic 320 in the Accounting Standards
Codification (ASC 320) (previously FSP No. FAS 115-2 and FAS 124-2 Recognition
and Presentation of Other- Than-Temporary Impairments). ASC 320 does not amend
existing recognition and measurement guidance related to other-than-temporary
impairments of equity securities. ASC 320 became effective for interim and
annual reporting periods ending after June 15, 2009. The Company adopted ASC 320
and, at September 30, 2009, determined that certain of its available-for-sale
securities had experienced an other-than-temporary impairment. See Note 12.

In April 2009, the FASB amended Topic 825 in the Accounting
Standards Codification (ASC 825) (previously FASB Statement No. 107,
Disclosures about Fair Value of Financial Instruments) to require disclosures
about fair value of financial instruments for interim reporting periods of
publicly traded companies as well as in annual financial statements. This
guidance is also set forth in ASC 825 in (previously FAS 107-1 and APB 28-1
Interim Disclosures about Fair Value of Financial Instruments). ASC 825 became
effective for interim reporting periods ending after June 15, 2009. The Company
adopted ASC 825 without a material effect on its financial position or results
of operations.

In May 2009, the FASB issued authoritative guidance related to
subsequent events, which establishes general standards of accounting for and
disclosure of events that occur after the balance sheet date but before the
financial statements are issued or are available to be issued. This guidance is
set forth in Topic 855 in the Accounting Standards Codification (ASC 855)
(previously FASB Statement No. 165, Subsequent Events). ASC 855 provides
guidance on the period after the balance sheet date during which management of a
reporting entity should evaluate events or transactions that may occur for
potential recognition or disclosure in the financial statements, the
circumstances under which an entity should recognize events or transactions
occurring after the balance sheet date in its financial statements and the
disclosures that an entity should make about events or transactions that
occurred after the balance sheet date. ASC 855 became effective for interim or
annual periods ending after June 15, 2009. The Company adopted ASC 855 without a
material effect on its financial position or results of operations.

In June 2009, the FASB issued Update No. 2009-01, which
establishes the FASB Accounting Standards Codification (the Codification) as
the source of authoritative accounting principles recognized by the FASB to be
applied by nongovernmental entities in the preparation of financial statements
in conformity with generally accepted

51

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accounting principles (GAAP). The Codification became effective
for interim and annual periods ending after September 15, 2009. The Company
adopted the Codification when referring to GAAP in this quarterly report on Form
10-Q for the fiscal period ending September 30, 2009. The adoption of the
Codification did not have an impact on our consolidated results.

Reclamation and Remediation

Expenditures for ongoing compliance with environmental
regulations that relate to current operations are expensed or capitalized as
appropriate. Expenditures resulting from the remediation of existing conditions
caused by past operations that do not contribute to future revenue generations
are expensed. Liabilities are recognized when environmental assessments indicate
that remediation efforts are probable and the costs can be reasonably estimated.

Estimates of such liabilities are based upon currently
available facts, existing technology and presently enacted laws and regulations
taking into consideration the likely effects of inflation and other societal and
economic factors, and include estimates of associated legal costs. These amounts
also reflect prior experience in remediating contaminated sites, other
companies clean-up experience and data released by The Environmental Protection
Agency or other organizations. Such estimates are by their nature imprecise and
can be expected to be revised over time because of changes in government
regulations, operations, technology and inflation. Recoveries are evaluated
separately from the liability and, when recovery is assured, the Company records
and reports an asset separately from the associated liability.

Reclassifications

Certain previously reported amounts have been reclassified to
conform to the current presentation.

Restatement of Previously Disclosed Financial Information

On January 12, 2010, the Company filed an Annual Report on Form 10-K for the year ended September 30, 2009 (the Original Report) with the Securities and Exchange Commission (the SEC).  On April 1, 2010, the Company received comments from the SEC on its Original Report.  In response to these comments the Company made the following changes to its consolidated financial statements:

| | 1. | The Company reclassified disbursements and collections related to loans from financings activities to investing activities to conform to ASC 230-10-20.  As a result the Companys Consolidated Statements of Cash Flows were adjusted as follows:
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                     |   | Twelve-Months  |   |   |             |   |   | Twelve-Months  |  
|------------------------------------ | - | -------------- | - | - | ----------- | - | - | -------------- | -
|                                     |   | Ended          |   |   |             |   |   | Ended          |  
|                                     |   | Sept. 30, 2009 |   |   | Adjustments |   |   | Sept. 30, 2009 |  
|                                     |   | (as previously |   |   |             |   |   |                |  
|                                     |   | stated)        |   |   |             |   |   | (as restated)  |  
|Cash Flows From Investing Activities | $ | (343,438       | ) | $ | 437,808     |   | $ | 94,370         |  
|Cash Flows From Financing Activities | $ | 384,105        |   | $ | (437,808    | ) | $ | (53,703        | )

|                                     |   | Nine-Months    |  |   |             |   |   | Nine-Months    | 
|------------------------------------ | - | -------------- |  | - | ----------- | - | - | -------------- | 
|                                     |   | Ended          |  |   |             |   |   | Ended          | 
|                                     |   | Sept. 30, 2008 |  |   | Adjustments |   |   | Sept. 30, 2008 | 
|                                     |   | (as previously |  |   |             |   |   |                | 
|                                     |   | stated)        |  |   |             |   |   | (as restated)  | 
|Cash Flows From Investing Activities | $ | 1,989,426      |  | $ | (70,344     | ) | $ | 1,919,082      | 
|Cash Flows From Financing Activities | $ | 171,623        |  | $ | 70,344      |   | $ | 241,967        | 

|                                     |   | Period from            |  |   |          |   |   | Period from            | 
|------------------------------------ | - | ---------------------- |  | - | -------- | - | - | ---------------------- | 
|                                     |   | January , 2000         |  |   |          |   |   | January , 2000         | 
|                                     |   | (beginning of          |  |   |          |   |   | (beginning of          | 
|                                     |   | exploration stage)     |  |   |          |   |   | exploration stage)     | 
|                                     |   | to
      Sept.30, 2009 |  |   |          |   |   | to
      Sept.30, 2009 | 
|                                     |   | (as previously         |  |   |          |   |   |                        | 
|                                     |   | stated)                |  |   |          |   |   | (as restated)          | 
|Cash Flows From Investing Activities | $ | 1,963,277              |  | $ | 327,082  |   | $ | 2,290,359              | 
|Cash Flows From Financing Activities | $ | 1,311,655              |  | $ | (327,082 | ) | $ | 984,573                | 

| | 2. | The Company changed the caption in the Non-Cash Investing
      and Financing Activities section of the Consolidated Statements of Cash
      flows:
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                     
| |    | a.                                                                                                                                                  
| |    | b.                                                                                                                                                  

There was no change to net loss for the twelve-month period
  ended September 30, 2009 or the nine-month period ended September 30, 2008 as a
result of these changes.

Revenue Recognition

The Company has no revenues from its mineral exploration
activities. The Company generates limited income from timber sales, sales of
Company logo silver medallions and the processing of ore for other companies.
The Company recognizes income from timber sales at the time payment for the
timber is received. Company recognizes income from the sales of Company logo
silver medallions when the coins are shipped to the customer. The Company
recognizes income from the processing of ore for other companies when the ore
has been processed. The net income from these sources are included under the
caption Other Income (Expense) on the Companys Consolidated Statements of
Operations and Comprehensive Income (Loss).

Treasury Stock

The Company accounts for its treasury stock under the cost
method. Under the cost method, the gross cost of the shares reacquired is
charged to a contra equity account (i.e., treasury stock). The equity accounts
that were credited for the original share issuance (i.e., common stock,
additional paid-in capital, etc.) remain intact. When the treasury shares are
reissued, proceeds in excess of cost are credited to a paid-in capital account.
See Note 16.

Use of Estimates

The preparation of financial statements in accordance with
accounting principles generally accepted in the United States of America
requires the use of estimates and assumptions that affect the reported amounts
of assets and liabilities, disclosure of contingent assets and liabilities known
to exist as of the date the financial statements are published, and the reported
amounts of revenues and expenses during the reporting period. Uncertainties with
respect to such estimates and assumptions are inherent in the preparation of the
Companys financial statements; accordingly, it is possible that the actual
results could differ from these estimates and assumptions, which could have a
material effect on the reported amounts of Shoshones financial position and
results of operations.

NOTE 3: FISCAL YEAR CHANGE

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On September 29, 2008, the Companys board of directors
approved a change in the Companys fiscal year end from December 31st
to September 30th, effective on September 30, 2008. The table below
summarizes selected unaudited financial data for the three-month period ended
December 31, 2007.

Three-MonthPeriod EndedDecember 31, 2007Revenues
    $
    -Cost of Revenue
    
    -Gross Profit
    
    -Operating ExpensesGeneral and administrative
    
    91,661Professional fees
    
    54,775Depreciation
    
    12,642Mining and exploration
      expenses
    
    19,307Total Operating
      Expenses
    
    178,385Loss From Operations
    
    (178,385
    )Other Income (Expenses)Net gain on sale of
      securities
    
    41,424Lease income
    
    2,514Other income
    
    1,491Dividend and interest income
    
    6,005Interest expense
    
    (479
    )Total
      Other Income
    
    50,955Net Loss Before Income Taxes
    $
    (127,430
    )Net Loss Per Common Share, Basicand Diluted
    $
    (0.01
    )


NOTE 4: CHANGE IN ESTIMATE

During the three-month period ended September 30, 2009, the
Company obtained more accurate information regarding the equipment and buildings
acquired from Kimberly Gold Mines, Inc. Accordingly, the Company has
reclassified a total of $500,000 from Mineral and Mining Properties to fixed
assets. The components of the $500,000 were $15,525 to office equipment,
$260,000 to mining equipment and $224,475 to buildings. See Note 18.

NOTE 5: ACCOUNTS RECEIVABLE FROM RELATED PARTY

During the year ended December 31, 2005, the Company prepaid
$11,624 to a related party for certain administrative services. During the
fiscal year ended December 31, 2005, the Company ceased its business
relationship with the related party and has requested a refund of the entire
prepaid amount. The Company received payments on this receivable totaling
$2,000. During the fiscal year ended September 30, 2009, the Company deemed the
entire $9,264 balance of this receivable to be uncollectible and established an
allowance for this doubtful account.

53

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On November 4, 2008, the Company purchased silver coins and
bars as well as various dies for making coins from a related party. The cost to
the Company of the silver and the dies was $56,452. However, the Company paid
$110,000 and has recorded a receivable from the related party of $53,548. The
Companys Chairman is also a member of the board of directors of this related
party. On March 3, 2009, this related party filed a voluntary petition for
reorganization relief under Chapter 11 of the United States Bankruptcy Code in
the United States Bankruptcy Court for the District of Idaho. Based on this
filing, the Company created an allowance for this note receivable in the amount
of $53,548.

NOTE 6: DEPOSITS AND PREPAID EXPENSES

In December 2008, the Company purchased for $21,752 a one-year
liability insurance policy covering its Lakeview mill (the Policy). The Policy
was purchased with a cash payment of $5,813 with the balance of $15,939 settled
with a promissory note. The Company recorded prepaid insurance of $21,335 and a
related entry to record a $15,939 note payable. During the fiscal year ended
September 30, 2009, $18,127 of the prepaid insurance was amortized into General
& Administrative Expenses, respectively. The balance of this prepaid
insurance was $3,625 at September 30, 2009. See Note 14.

On August 27, 2008, the Company amended a lease agreement with
Chester Mining Company originally entered into on March 25, 2004 (the Amended
Lease). The Amended Lease includes a provision that requires the Company to pay
a royalty of $125 per month until net smelter returns (as defined in the
Amended Lease) are payable. During the fiscal year ended September 30, 2009, the
Company paid Chester Mining Company a second advance royalty payment of $1,500.
During the fiscal year ended September 30, 2009, $1,625 of the advance royalty
payment was amortized into General & Administrative Expenses, respectively.
At September 30, 2009, the unamortized balance of this advance royalty payment
was $750.

NOTE 7: SUPPLIES INVENTORY

During 2004, the Company purchased 500 one troy ounce silver
medallions with the Companys logo for $5,303. This purchase was recorded as
supplies inventory and the medallions are expected to be used substantially for
marketing purposes. During the fiscal year ended September 30, 2009, the Company
sold three medallions and distributed 27 for marketing purposes. At September
30, 2009, the Company had 207 coins remaining in inventory with an historical
cost basis of $2,195.

NOTE 8: PROPERTY AND EQUIPMENT

Property and equipment are stated at cost. Depreciation begins
on the date an asset is placed in service using the straight-line method over
the assets estimated useful life.

The useful lives of property, plant and equipment for purposes
of computing depreciation are three to thirty-one and one-half years. The
following is a summary of property, equipment, and accumulated depreciation at
September 30, 2009 and September 30, 2008:

September 30, 2009
    
    
    September 30, 2008Equipment
    $
    1,338,952
    
    $
    882,638Refurbished Lakeview Mill
    
    499,681
    
    
    499,681Office Building & Furniture
    
    162,000
    
    
    150,000Rescue Mill Building
    
    224,475
    
    
    -Property & Mill
    
    1,088,562
    
    
    1,052,776Staging Building
    
    72,600
    
    
    -3,386,270
    
    
    2,585,095Less accumulated depreciation
    
    (1,374,968
    )
    
    (1,244,225
    )Property, Plant & Equipment, net
    $
    2,011,302
    
    $
    1,340,870


54

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On March 12, 2009, the Company acquired certain assets from
Kimberly Gold Mines, Inc. (Kimberly) in a transaction where the Company issued
12,145,306 shares of common stock and other consideration in exchange for 100%
of Kimberlys common stock. This transaction was valued at $2,185,126 and was
originally recorded entirely to Mineral Properties. Kimberly has ceased to exist
as a separate company. See Note 18.

During the three-month period ended September 30, 2009, the
Company obtained more accurate information regarding the equipment and buildings
acquired coincident with the purchase of 100% of the common stock of Kimberly
Gold Mines, Inc. Accordingly, the Company has reclassified a total of $500,000
from Mineral and Mining Properties to fixed assets. The components of the
$500,000 were $15,525 to office equipment, $260,000 to mining equipment and
$224,475 to buildings. See Note 18.

During the three-month period ended September 30, 2009, the
Company received computers and maintenance tools in full settlement of note
receivable from Silver Valley Capital, a related party. The Company valued these
assets at $4,139 which was the sum of the $3,716 note receivable balance and the
$423 accrued interest receivable balance. See Note 10.

During the three-month period ended September 30, 2009, the
Company expended $72,600 to have a building erected on its Rescue Mine property.

Depreciation expense was $130,743 for the twelve-month fiscal
  year ended September 30, 2009, and $44,392 for the nine-month fiscal year ended
  September 30, 2008.

The Company evaluates the recoverability of property and
equipment when events and circumstances indicate that such assets might be
impaired. The Company determines impairment by comparing the undiscounted future
cash flows estimated to be generated by these assets to their respective
carrying amounts.

Maintenance and repairs are expensed as incurred. Replacements
and betterments are capitalized. The cost and related reserves of assets sold or
retired are removed from the accounts, and any resulting gain or loss is
reflected in results of operations.

NOTE 9: MINERAL AND MINING PROPERTIES

The Company currently has interests in 309 properties or
claims, which are the primary focus of operations.

Northwestern United States

Silver Valley, Idaho

Shoshone GroupThis mineral property grouping owned
by the Company consists of 5 patented lode mining claims covering 60 acres
situated in the St. Joe Mining District, Shoshone County, Idaho. The 5 patented
claims were acquired in 1970 from an outside party for $2,500 in cash and
100,000 shares of common stock. The cost of the property, $17,500, was expensed
in prior years as an exploration expense.

Bullion GroupThis mineral property group owned by
the Company consists of 7 patented mining claims were acquired in 1998. The cost
of the property was included as an exploration expense in a prior year.

North OsburnThe Company has a group of 15
unpatented properties known as the North Osburn Group located within the Silver
Valley in Shoshone County, Idaho.

Lakeview District, Idaho

Idaho Lakeview, Keep Cool Group and Weber Group

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The Company acquired the Lakeview and Keep Cool mining
properties consisting of 9 patented and 14 unpatented lode claims through the
issuance of 3,126,700 shares of its common stock during 1985. The total cost of
the properties, $334,690, is included in the financial statements under mining
properties.

During 2006, the Company made make improvements to the land to
be more accessible as well as usable. The total cost of the $68,472 was
capitalized. This amount is a component of the total cost of the properties of
$334,690 discussed above.

The Company acquired, for 100,000 shares of its common stock, 6
patented and 10 unpatented lode mining claims located in the Lakeview Mining
District, Bonner County, Idaho in 1999. In addition, $125 cash was paid and 100
shares of common stock were issued to acquire a pit fraction within the same
location. This includes 7 unpatented mining claims acquired in 2007. The cost of
the property, $125,000, was expensed in prior years as an exploration
expense.

Auxer MineThe Auxer Mine, consisting of 2
unpatented claims covering 40 acres, was acquired by the Company in 2003 for
50,000 shares of common stock. The cost of the property, $7,500, is included in
the financial statements under mining properties until such time as the
Companys outside study on the propertys reserves, if any, is completed.

Talache GroupThe Company acquired, for 150,000 shares
of its common stock, 2 unpatented lode mining claim covering 40 acres during
2003. The cost of the former mining property, $22,500, is included in the
financial statements under Mining Properties until such time as the Companys
outside study on the related propertys reserves, if any, is completed.

Regal MineThe Company acquired, for 100,000 shares
of its common stock, four contiguous unpatented lode mining claims covering 80
acres located in the Moyie-Yaak Mining District of Boundary County, Idaho during
2003. The cost of the former mining property, $15,000, is included in the
financial statements under Mining Properties until such time as the Companys
outside study on the related propertys reserves, if any, is completed.

ConjectureThe Company leased, for 1,000,000 shares
of its common stock, 13 unpatented lode mining claims and six patented lode
mining claims located in Shoshone County, Idaho during 2004. The lease allows
the Company exclusive rights to explore, develop and mine the property; to
extract, mill, and market ore or concentrates.

Effective March 1, 2008, the terms of the Conjecture Lease were
renegotiated to obtain more favorable terms for the Company. Beginning March 1,
2008 the Company is required to:

| | • | annually deliver 50,000 shares of Shoshone restricted
      common shares to Chester Mining;                                                                                                                          
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | • | pay to Chester Mining an advance royalty of $125.00 per
      month until such time as net smelter returns (NSR) are payable;
    and                                                                               
| | • | pay net smelter returns to Chester Mining equal to a
      sliding percentage of total NSR received during that calendar quarter from
      the operations on the property, subject to minimum royalty
    provisions.
| |   | o                                                                                                                                                                                                                     
| |   |                                                                                                                                                                                                                       
| |   |                                                                                                                                                                                                                       
| |   |                                                                                                                                                                                                                       

Warren District, Idaho

Rescue Gold MineThe Company holds 82 unpatented
mining claims and 2 unpatented mill-site claims covering 1,720 acres in central
Idaho.. There is a 120 ton per day mill complete with a Knelson Gold
Concentrator on the mill-site claims. There is a 43-101 Report which was
completed in 2008.

56

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42 unpatented claims were staked in the Warren District by
Shoshone in the summer of 2008; as a result, Shoshone has 84 unpatented claims
in the Warren District.

Iola Claims The Company leases 5 patented mining
claims in central Idaho covering 70 acres.

Silver King Claims The Company leases 12 patented
mining claims in central Idaho covering 174 acres.

Marshall Mountain District, Idaho

Kimberly Gold Mine The Company holds 24 unpatented
mining claims covering 480 acres in central Idaho. The mine consists of 10
separate tunnels which explore 7,500 feet of previously producing workings.
There is a 43-101 Report which was completed in 2008.

Other North Idaho and Montana

Montgomery Mine GroupDuring the fiscal year ended
December 31, 2005, the Company acquired, for $43,557 in cash, 25 unpatented lode
mining claims covering 500 acres located in Boundary County, Idaho. The cost of
the properties was expensed in prior years as an exploration expense.

Stillwater Extension ClaimsThe Company acquired,
for 100,000 shares of its common stock, ten unpatented lode mining claims
covering 200 acres located along the J-M Reef of the Stillwater Complex of south
central Montana during 2003. The cost of the properties, $15,000, has been
expensed in prior years as an exploration expense.

Princeton Gulch ClaimsDuring 2006, the Company made
a partial payment of $13,000 toward the purchase of four unpatented placer
claims and two unpatented lode claims. These claims in aggregate cover 120 acres
and are located in Granite County, Montana. The payment of $13,000 was included
in exploration expenses during 2006.

Drumheller GroupThe Company owned six patented
claims consisting of 110.82 acres which are adjoining and lying south of the
Idaho Lakeview claims on an extension of the Hewer vein. The Company issued
109,141 shares of its common stock to acquire these claims in February 1984.

During 2006, the Company sold the Drumheller Group of claims to
an unrelated party in exchange for cash of $30,000 and a promissory note for
$120,000. The cost of the property, $218,282, was expensed in prior years as an
exploration expense. Consequently, the Company had no basis in the property but
did incur selling expenses of $16,093 in connection with this sale. See Note
11.

During the fiscal year ended September 30, 2009, due to
non-payment of the note receivable, the Company received a Quitclaim Deed
releasing the property that was the collateral of the note receivable. The
Company determined the fair value of the reclaimed property to be $131,553 which
is included in the financial statements under mining properties.

Wenatchee District, Washington

Shaft Claims The Company holds 19 unpatented mining
claims covering 380 acres in central Washington. The claims are located within
the heart of the Wenatchee Gold Belt.

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Southwestern United States

Western GoldThe Company acquired, for 100,000 shares
of stock, 13 unpatented lode mining claims covering 240 acres located in the
Oatman Mining District of Mojave County, Arizona during 2003. The cost of the
properties, $15,000, has been expensed in prior years as an exploration expense.

Gold Road ClaimsThe Company acquired, for 10,000
shares of stock, 16 unpatented lode mining claims covering 320 acres located in
Mohave County, Arizona during 2003. The cost of the properties, $1,500, has been
expensed in prior years as an exploration expense.

Cerro Colorado Group During 2004, the Company
acquired three unpatented lode claims covering 60 acres located in the Cerro
Colorado Mining District of Pima County, Arizona. The cost of the properties,
$1,500, has been expensed in prior years as an exploration expense.

California Creek PropertiesDuring 2005, the Company
acquired, for $2,970, 18 unpatented lode claims located near Elko, Nevada. The
cost of the properties was expensed in 2005 as an exploration expense. During
2007, the Company acquired an additional 25 unpatented lode claims.

During the fiscal year ended September 30, 2008, the Company
entered into an agreement to sell these 43 unpatented lode claims to Bayswater
Uranium Corporation, a Canadian Company (Bayswater). In exchange for these
claims, the Company received 200,000 shares of Bayswater common stock which is
traded on the Toronto Stock Exchange. This transaction was valued at $60,000
based on the then market value of Bayswater stock of $0.30 per share.

Mexico Properties

Bilbao-Mexico PropertyThe Company acquired, for
$80,000 cash, four exploration mineral concessions covering 1,345 hectares
located in Zacatecas, Mexico during 2004. The cost of the former mining property
was included in exploration expense in the financial statements for 2004.
Additional expenses of $13,000 and $25,220 were included in exploration expense
in the financial statements for 2006 and 2005, respectively.

On August 11, 2008, the Company sold 100% of the common stock
of its wholly owned subsidiary in Mexico, Shoshone Mexico, S.A. de C.V, to
Xtierra Resources, Ltd (Xtierra). The Companys interest in the Bilbao
concessions in Zacatecas, Mexico was included in this sale. In exchange for its
interest in the Bilbao concessions the Company received net proceeds of
$2,497,990 and a non-interest bearing note receivable, net of discount, for
$1,865,363.

Sonora Mexico Mining Properties Shoshone has an
interest in several other Mexican exploration projects which the Company does
not currently consider to be material.

NOTE 10: NOTES RECEIVABLE FROM RELATED PARTIES

Silver Valley CapitalIn September
2006, the Company loaned Silver Valley Capital, LLC $168,000 in exchange for a
promissory note. The Companys President and its Secretary were both members of
Silver Valley Capital, LLC at the time the receivable was originated. Both these
individuals abstained from voting on the respective companies Board of
Directors Resolutions approving this loan. The note bore interest at 10.0% per
annum and stipulated that monthly payments of $822 were to

58

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be made until February 1, 2007. On February 1, 2007, the
remaining principal plus accrued interest was to become due and payable.

In July 2007, the Company entered into a new loan agreement
with Silver Valley Capital, LLC. The note bears interest at 10.0% per annum and
stipulates that monthly payments of $822 are to be made until the due date. The
due date was changed to February 1, 2008 from February 1, 2007. During the
fiscal year ended September 30, 2009, no payments were received and the accrued
interest income receivable was increased by $392.

Since the inception of the promissory note, the Company has
received principal payments totaling $164,284, leaving an unpaid balance of
$3,716. During the three-month period ended September 30, 2009, the Company
received computers and maintenance tools in full settlement of note receivable
from Silver Valley Capital. The Company valued these assets at $4,139 which was
the sum of the $3,716 note receivable balance and the $423 accrued interest
receivable balance.

Kimberly Gold MinesOn August 28,
2008, the Company advanced Kimberly $200,000 and an additional $15,000 on
December 4, 2008, in exchange for a promissory note. Kimberly used these funds
to reduce their outstanding obligations. The notes bore interest at 6.0% per
annum and were payable on demand. Further, until the principal and accrued
interests were paid, the notes were secured by sufficient shares of Kimberly
common stock at an agreed value of $0.06 per share. Interest income of $6,408
was accrued during the year ended September 30, 2009. The balance of this note
was $0 at September 30, 2009.

In March 2009, the Company acquired certain assets from
Kimberly Gold Mines, Inc. (Kimberly) in a transaction where the Company issued
12,145,306 shares of common stock and other consideration in exchange for 100%
of Kimberlys common stock. The $215,000 note receivable and accrued interest of
$7,408 from Kimberly were derecognized and included in the purchase price of the
acquired mineral properties. See Note 18.

NOTE 11: NOTES RECEIVABLE

Sale of Lode ClaimDuring the first
quarter of fiscal 2006, the Company accepted cash of $30,000 and a promissory
note for $120,000 from an unrelated party related to the sale of a lode claim
for $150,000. The promissory note bears interest at 7.0% per annum and
stipulates that payments of $5,089 are to be paid semi-annually until January
23, 2011. On January 11, 2011, the remaining principal plus accrued interest
becomes due and payable in full.

During the fiscal year ended September 30, 2009, the Company
received no payments on this note receivable and, due to this non-payment,
demanded and received a Quitclaim Deed releasing the property that was the
collateral of the note receivable. The Company determined the fair value of the
reclaimed property to be $131,553 which was the sum of the balances in the
related note receivable and accrued interest receivable.

Mexican ConcessionsOn August 11,
2008, the Company sold 100% of the common stock of its wholly owned subsidiary
in Mexico, Shoshone Mexico, S.A. de C.V, to Xtierra Resources, Ltd (Xtierra).
The Companys interest in the Bilbao concessions in Zacatecas, Mexico was
included in this sale. In exchange for its interest in the Bilbao concessions
the Company received net proceeds of $2,497,990 and a non-interest bearing note
receivable for $2,500,000.

The note does not bear interest and stipulates that a payment
of $500,000 was due on August 11, 2009. The remaining balance of $2,000,000 is
to be paid in four consecutive equal installments to begin at the time of the
commencement of construction of any mine developed on the Bilbao concessions but
in any event will be due and payable no later than August 11, 2019. Since the
note does not bear interest, the Company imputed interest at a rate of 5%.
Accordingly the Company recorded a note discount of $634,637. During the fiscal
year ended September 30, 2009, $91,573 of interest income was realized through
the amortization of this note discount.

59

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On June 30, 2009, the Company entered into an agreement with
the Xtierra, now known as Orca Minerals Limited (Orca). Pursuant to this
agreement, the Company granted Orca a $50,000 discount on the $500,000 payment
due on August 11, 2009, provided Orca made the revised $450,000 payment on or
before July 7, 2009. The discount of $50,000 was included in the Companys
Consolidated Statements of Operations as an Other Expense and as a
corresponding reduction to the current portion of the note receivable on the
Companys Consolidated Balance Sheets. On July 7, 2009, the Company received the
$450,000 due under the revised terms of the note receivable from Orca.

The balance on this note receivable (net of discount) was
$1,464,709 at September 30, 2009.

Signal Silver-Gold, Inc.On August 27,
2008, the Company advanced Signal Silver-Gold, Inc. (Signal) $2,808 in
exchange for a promissory note. The note bears interest at 6% per annum and is
payable on demand. On October 16, 2008, the Company received a payment of
$2,850. Of this amount $2,808 was applied towards satisfaction of the principal
amount owing and $42 was applied toward accrued interest.

The following tables set forth the components of the Notes
Receivable  Mexican Concessions (net of discount) and the Other Assets  Notes
Receivable (net of discount) caption on the Companys consolidated balance
sheets.

|                                                              |   | September 30, |  |   | September 30, | 
|------------------------------------------------------------- | - | ------------- |  | - | ------------- | 
|                                                              |   | 2009          |  |   | 2008          | 
|Note receivable - Mexican Concessions (net
      of discount) |   |               |  |   |               | 
|Current portion                                               | $ | 426,765       |  | $ | 422,277       | 
|Non-current portion                                           |   | 1,037,944     |  |   | 1,450,858     | 
|Total                                                         | $ | 1,464,709     |  | $ | 1,873,135     | 
|                                                              |   |               |  |   |               | 
|                                                              |   |               |  |   |               | 
|Other Assets - notes receivable (net of
      discount)       |   |               |  |   |               | 
|Mexican Concessions, non-current (net
      of discount)      | $ | 1,037,944     |  | $ | 1,450,858     | 
|Sale of Lode Claim                                            |   | -             |  |   | 118,364       | 
|Signal Silver-Gold, Inc.                                      |   | -             |  |   | 2,808         | 
|Total                                                         | $ | 1,037,944     |  | $ | 1,572,030     | 

NOTE 12: INVESTMENTS

The Company has invested in various privately and publicly held
companies and silver coins and bars. At this time, the Company holds securities
classified as available for sale. Amounts are reported at fair value as
determined by quoted market prices, with unrealized gains and losses excluded
from earnings and reported separately as a component of stockholders equity.
The cost of securities sold is based on the specific identification method.

Unrealized gains and losses are recorded on the statements of
operations as other comprehensive income (loss) and on the balance sheet as
other accumulated comprehensive income.

The following summarizes the investments at September 30,
2009:

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|                                  |  |           |  |   |         |  |   | Market  | 
|--------------------------------- |  | --------- |  | - | ------- |  | - | ------- | 
|Investment                        |  | Quantity  |  |   | Cost    |  |   | Value   | 
|                                  |  |           |  |   |         |  |   |         | 
|Available for Sale Securities:    |  |           |  |   |         |  |   |         | 
|Bayswater Uranium Corporation     |  | 200,000   |  | $ | 60,000  |  | $ | 22,000  | 
|Chester Mining Company            |  | 2,500     |  |   | 12,567  |  |   | 1,125   | 
|Gold Crest Mines                  |  | 617,600   |  |   | 3,900   |  |   | 9,264   | 
|Lucky Friday Extension            |  | 5,000     |  |   | 1,100   |  |   | 250     | 
|Merger Mines                      |  | 929,299   |  |   | 216,499 |  |   | 130,102 | 
|Metropolitan Mines Limited        |  | 6,000     |  |   | 2,008   |  |   | 360     | 
|New Jersey Mining                 |  | 142,875   |  |   | 34,290  |  |   | 35,719  | 
|Vindicator Mines                  |  | 88,000    |  |   | 17,600  |  |   | 16,720  | 
|Subtotal                          |  | 1,991,274 |  |   | 347,964 |  |   | 215,540 | 
|                                  |  |           |  |   |         |  |   |         | 
|Silver Coins &
      Bars         |  | 3,115     |  |   | 31,804  |  |   | 51,398  | 
|                                  |  |           |  |   |         |  |   |         | 
|Total at September 30,
      2009 |  | 1,994,389 |  | $ | 379,768 |  | $ | 266,938 | 

The Company had an unrealized holding loss during the fiscal
year ended September 30, 2009 $(93,696). This is recorded on the statements of
operations as other comprehensive income (loss) and included on the balance
sheet in other accumulated comprehensive income.

The Company recognized $2,225 of net gain previously included
in accumulated other comprehensive income on the sale of investments during the
fiscal year ended September 30, 2009.

At September 30, 2009, the Company determined that certain of
its available-for-sale securities had experienced an impairment that was
other-than-temporary. Key factors used in determining whether or not the
impairment was other-than-temporary included the length of time and the extent
to which the market value of the securities had been below their cost. In
connection with this determination, the Company recognized an impairment charge
of $101,479. This impairment charge is presented under the caption
Other-than-temporary impairment of investments on the Companys Consolidated
Statements of Operations.

The following table presents certain details related to
investments for which the Company determined the impairment was
other-than-temporary:

|                           |  |         |  |   |          |  |   | Market     |  |   |            |  
|-------------------------- |  | ------- |  | - | -------- |  | - | ---------- |  | - | ---------- | -
|                           |  | # of    |  |   | Original |  |   | Value      |  |   | Recognized |  
|Investment                 |  | Shares  |  |   | Cost     |  |   | at 9/30/09 |  |   | Impairment |  
|Chester Mining Company     |  | 2,500   |  | $ | 12,567   |  | $ | 1,125      |  | $ | (11,442    | )
|Gold Crest Mines           |  | 65,000  |  |   | 3,900    |  |   | 975        |  |   | (2,925     | )
|Lucky Friday Extension     |  | 5,000   |  |   | 1,100    |  |   | 250        |  |   | (850       | )
|Merger Mines               |  | 840,138 |  |   | 202,233  |  |   | 117,619    |  |   | (84,614    | )
|Metropolitan Mines Limited |  | 6,000   |  |   | 2,008    |  |   | 360        |  |   | (1,648     | )
|Total                      |  |         |  | $ | 221,808  |  | $ | 120,329    |  | $ | (101,479   | )

At September 30, 2009, the Company made the determination that
certain of its available-for-sale securities had experienced an impairment that
was temporary. This determination was made for certain investments because
the

61

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decline in value had persisted for less than twelve months and
was not extensive. Key factors used in determining whether or not the impairment
was other-than-temporary included the length of time and the extent to which the
market value of the securities had been below their cost. Additionally,
subsequent to September 30, 2009, the Bayswater Uranium Corporation investment
has reached market prices in intra-day trading that exceed the per share cost to
the Company.

The following table presents certain details related to
investments for which the Company determined the impairment was temporary:

|                              |  |         |  |   |          |  |   | Market     |  |   |              |  
|----------------------------- |  | ------- |  | - | -------- |  | - | ---------- |  | - | ------------ | -
|                              |  | # of    |  |   | Original |  |   | Value      |  |   | Unrecognized |  
|Investment                    |  | Shares  |  |   | Cost     |  |   | at 9/30/09 |  |   | Impairment   |  
|Bayswater Uranium Corporation |  | 200,000 |  | $ | 60,000   |  | $ | 22,000     |  | $ | (38,000      | )
|Merger Mines                  |  | 89,161  |  |   | 14,266   |  |   | 12,483     |  |   | (1,783       | )
|Vindicator Mines              |  | 88,000  |  |   | 17,600   |  |   | 16,720     |  |   | (880         | )
|Total                         |  |         |  | $ | 91,866   |  | $ | 51,203     |  | $ | (40,663      | )

On September 17, 2008, the Company began acquiring shares of
Merger Mines, Inc. At September 30, 2009, the Company had acquired 929,299
shares of Merger Mines common stock. This represented approximately 24% of
Merger Mines, Inc.s outstanding shares. The Company believes that, given the
current economic environment, it is more likely than not that the Company will
have to sell much of its investment in Merger Mines in order to fund operations.
Accordingly, the Company has accounted for this investment as
available-for-sale.

In connection with the purchase of assets from Kimberly Gold
Mines, Inc. (Kimberly), the Company derecognized 321,500 shares of Kimberlys
common stock with a cost basis of $38,035 and allocated this amount to the
purchase price of the acquired mineral properties. See Note 18.

The following summarizes the securities available for sale at
September 30, 2008:

|                              |  | # of      |  |   |               |  |   | Market  | 
|----------------------------- |  | --------- |  | - | ------------- |  | - | ------- | 
|Security                      |  | Shares    |  |   | Original Cost |  |   | Value   | 
|Chester Mining Company        |  | 2,500     |  | $ | 12,567        |  | $ | 550     | 
|Bayswater Uranium Corporation |  | 200,000   |  |   | 60,000        |  |   | 28,000  | 
|Gold Crest Mines              |  | 617,600   |  |   | 3,900         |  |   | 21,516  | 
|Kimberly Gold Mines           |  | 321,500   |  |   | 38,035        |  |   | 23,275  | 
|Lucky Friday Extension        |  | 5,000     |  |   | 1,100         |  |   | 1,200   | 
|Merger Mines                  |  | 840,138   |  |   | 202,233       |  |   | 226,837 | 
|Metropolitan Mines Limited    |  | 6,000     |  |   | 2,008         |  |   | 1,200   | 
|New Jersey Mining             |  | 142,875   |  |   | 34,290        |  |   | 51,435  | 
|Sterling Mining               |  | 5,000     |  |   | 2,000         |  |   | 1,050   | 
|Vindicator Mines              |  | 88,000    |  |   | 17,600        |  |   | 1,760   | 
|                              |  |           |  |   |               |  |   |         | 
|Balance, September 30, 2008   |  | 2,228,613 |  | $ | 373,733       |  | $ | 356,823 | 

The Company had an unrealized holding loss during the fiscal
year ended September 30, 2008 $(207,954). This is recorded on the income
statement as other comprehensive income (loss) and included on the balance sheet
in other accumulated comprehensive income.

62

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The Company recognized $7,840 of loss previously included in
accumulated other comprehensive income on the sale of investments in nine-month
fiscal year ended September 30, 2008.

On July 24, 2008, the Company entered into an agreement to
acquire 200,000 shares of common stock of Bayswater Uranium Corporation, a
Canadian company (Bayswater), in exchange for the Companys 43 unpatented
mining claims in Elko County, Nevada. This exchange was valued at $60,000 based
on the market price of Bayswaters common stock on July 24, 2008.

NOTE 13: ACCOUNTS PAYABLE

Settlement Agreement with Former Chief Executive
OfficerOn June 12, 2008, the Company entered into a
settlement agreement with its former Chief Executive Officer, Conrad Houser. The
terms of the agreement required the Company to pay Mr. Houser $10,000 on June
12, 2008, the date of the agreement. The agreement also required the Company to
pay an additional $48,500 on or before December 31, 2008.

The $48,500 was included under the caption Accounts Payable
on the Companys Consolidated Balance Sheets as of September 30, 2008. Further,
the agreement required the Company to issue 100,000 shares of common stock to
Mr. Houser by July 12, 2008. These shares were issued to Mr. Houser on July 3,
2008.

On December 28, 2008, the Company paid $48,500 in satisfaction
of its contractual agreement, and on December 28, 2008, the Company re-purchased
for $20,000 the 100,000 common shares from Mr. Houser at a price of $0.20 per
share. This obligation was exercisable at Mr. Housers sole discretion. See Note
16.

Acquisition of assets from Kimberly Gold Mines,
Inc.In connection with the acquisition of assets from
Kimberly Gold Mines, Inc. (Kimberly), the Company assumed liabilities with a
fair value of $72,887. The balance of this liability at September 30, 2009, was
$69,418. See Note 18.

NOTE 14: NOTES PAYABLE

During the third quarter of 2007, the Company acquired
equipment for $55,000 by paying $27,500 cash and signing a note for the
remaining $27,500. The note has a term of 24 months, bears interest at 8.50%
annually and stipulates that payments of $1,250 be made monthly. The outstanding
balance on this note payable was $1,241 at September 30, 2009 and is payable
within twelve months. The purchased equipment which serves as collateral for
this note payable had a carrying amount of $39,157 at September 30, 2009.

In December 2007, the Company purchased equipment for $15,377
in exchange for a note. The note has a term of 43 months, bears interest at
3.90% annually and stipulates that payments of $384 be made monthly. The lender
has the right to increase the interest rate to 19.8% in the event of a violation
of the terms of the loan agreement. The outstanding balance on this note payable
was $8,131 at September 30, 2009. Of this amount $4,374 is payable within twelve
months. The purchased equipment which serves as collateral for this note payable
had a carrying amount of $11,412 at September 30, 2009.

In August 2008, the Company purchased equipment for $9,000 by
paying $2,000 in cash and signing a note for the remaining $7,000. The note has
a term of fourteen months, bears interest at 4.00% annually and stipulates that
payments of $513 are to be made monthly. The outstanding balance on this note
payable was $6,511 at September 30, 2009, of which $6,000 is payable within
twelve months. The purchased equipment which serves as collateral for this note
payable had a carrying amount of $8,849 at September 30, 2009.

NOTE 15: COMMON STOCK

On May 28, 2009, the shareholders of the Company approved an
amendment to the Companys Articles of

63

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Incorporation to increase the number of authorized shares from
80,000,000 to 200,000,000.

The Company is authorized to issue 200,000,000 shares of $0.10
par value common stock. All shares have equal voting rights, are non-assessable
and have one vote per share. Voting rights are not cumulative and, therefore,
the holders of more than 50% of the common stock could, if they choose to do so,
elect all of the directors of the Company.

Fiscal 2009 Issuances

During the fiscal year ended September 30, 2009, the Company
issued 90,000 shares of common in exchange for the services of its Board of
Directors valued at $9,500.

During the fiscal year ended September 30, 2009, the Company
acquired certain assets from Kimberly Gold Mines, Inc. (Kimberly) in a
transaction where the Company issued 12,145,306 shares of common stock and other
consideration in exchange for 100% of Kimberlys common stock. This transaction
was valued at $2,185,126. See Note 18.

During the fiscal year ended September 30, 2009, the Company
issued 4,000 shares in exchange for consulting services valued at $400.

Fiscal 2008 Issuances

During the fiscal year ended September 30, 2008, the Company
issued 8,000 common shares in exchange for the services of its Board of
Directors. These services were valued at $1,600.

During the fiscal year ended September 30, 2008, the Company
issued 4,000 common shares in exchange for consulting services. These services
were valued at $800.

During the fiscal year ended September 30, 2008, the Company
issued 100,000 shares of the common stock in settlement of the $22,000 the
Company had accrued during the 2008 first quarter for the leasing of a mining
property.

During the fiscal year ended September 30, 2008, the Company
issued 454,000 shares of common stock in exchange for three pieces of heavy
equipment. The transaction was valued at $95,340 based on a stock price of $0.21
per common share on June 6, 2008. See Note 8.

During the fiscal year ended September 30, 2008, the Company
entered into a settlement agreement with its former Chief Executive Officer,
Conrad Houser. The terms of the agreement included the requirement that the
Company issue to Mr. Houser 100,000 shares of common stock by July 12, 2008. On
July 3, 2008, the Company issued 100,000 to Mr. Houser in satisfaction of its
obligation under the settlement agreement. The Company may be required to
repurchase the stock at a price of $0.20 per share from Mr. Houser at Mr.
Housers sole discretion if the common stock is tendered for sale between
December 15, 2008 and December 31, 2008. See Note 13.

During the fiscal year ended September 30, 2008, the Company
issued 1,050,000 shares of common stock to eight investors for a total of
$210,000. For every two shares purchased the investor received one warrant to
purchase one share of common stock. The warrants were exercisable at $0.40 per
share and expired on January 26, 2009. The Company incurred $14,016 in issuance
costs in connection with these private placements. These costs were recorded as
a reduction to additional-paid-in-capital.

During the fiscal year ended September 30, 2008, the Company
issued 500,000 shares of common stock to two investors for a total of $100,000.
For every two shares purchased the investor received one warrant to purchase one
share of common stock. The warrants were exercisable at $0.40 per share and
expired on June 9, 2009. The Company did not incurred issuance costs in
connection with these private placements.

NOTE 16: TREASURY STOCK

64

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The Company held 963,986 and 1,183,986 shares of treasury stock
at September 30, 2009 and September 30, 2008, respectively.

Fiscal 2009 Activity

During the fiscal year ended September 30, 2009, the Company
acquired equipment valued at $12,500 in exchange for $5,000 in cash and 50,000
shares of treasury stock valued at $7,500, or $0.15 per share, with a cost of
$5,500, or $0.11 per share. The difference between the cost and the value of the
treasury shares was recorded as an increase to Additional Paid-In Capital.

During the fiscal year ended September 30, 2009, the Company
repurchased for treasury 100,000 common shares at a price of $20,000, or $0.20
per share. These common shares were repurchased in connection with a settlement
agreement with its former Chief Executive Officer, Conrad Houser. See Note 13.

During the fiscal year ended September 30, 2009, the Company
issued 70,000 treasury shares in exchange for consulting services. The treasury
shares were valued at $7,000, or $0.10 per share, with a cost of $7,700, or
$0.11 per share. The difference between the cost and the value of the treasury
shares was recorded as a reduction to Additional Paid-In Capital.

During the fiscal year ended September 30, 2009, the Company
issued 200,000 treasury shares with a value of $22,000, or $0.11 per share, with
a cost of $64,000, or $0.32 per share, in connection with its acquisition of
100% of Kimberlys common stock. The difference between the cost and the value
of the treasury shares was recorded as a reduction to Additional Paid-In
Capital. See Note 18.

Fiscal 2008 Activity

During the fiscal year ended September 30, 2008, the Company
repurchased for treasury 176,000 shares of treasury stock at a price of $0.12
per share for a total cost of $21, 220.

NOTE 17: STOCK OPTIONS AND WARRANTS

During fiscal 2007, the Company issued 725,000 warrants to
purchase an equal number of the Companys common stock in connection with the
issuance of 1,450,000 shares in private placements. The warrants are exercisable
at $0.50 per share and expire on December 31, 2009.

During fiscal 2008, the Company issued 775,000 warrants to
purchase an equal number of the Companys common stock in connection with the
issuance of 1,550,000 shares in private placements. The warrants are exercisable
at $0.40 per share. 525,000 of these warrants expired on January 26, 2009, and
250,000 expired on June 9, 2009. See Note 15.

NOTE 18: ACQUISITION OF ASSETS FROM KIMBERLY GOLD MINES,
INC.

On March 12, 2009, the Company acquired certain assets from
Kimberly Gold Mines, Inc. (Kimberly) in a transaction where the Company issued
12,145,306 shares of common stock and other consideration in exchange for 100%
of Kimberlys common stock. This transaction was valued at $2,185,126 and was
originally recorded entirely to Mineral Properties. Kimberly has ceased to exist
as a separate company. However, during the three-month period ended September
30, 2009, the Company obtained more accurate information regarding the equipment
and buildings acquired coincident with the purchase of 100% of Kimberlys common
stock. Accordingly, the Company has reclassified a total of $500,000 from
Mineral and Mining Properties to fixed assets. The components of the $500,000
were $15,525 to office equipment, $260,000 to mining equipment and $224,475 to
buildings. See Note 4.

The value of $2,185,126 consisted of the Companys common stock
valued at $1,821,796, a note receivable from Kimberly valued at $222,408,
Kimberlys common stock previously held for investment by the Company valued at
$38,035, certain accounts payable assumed by the Company valued at $72,887, the
issuance of 200,000 shares of treasury stock valued at $22,000 and a cash
payment of $8,000 made to a former vendor of Kimberly.

65

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Included in this acquisition were 127 unpatented mining claims
located primarily in Idaho and Washington as well as a mill in need of
refurbishing and various pieces of equipment. The Company allocated the entire
purchase price to the mining claims and all other assets were allocated no value
in this transaction.

NOTE 19: OPTION AGREEMENTS

Minco PLC

On February 22, 2006, the Company entered into an option
agreement with Minco, PLC, under which the unrelated party may earn up to a 75%
interest in the Companys Bilbao-Mexico Property.

On August 11, 2008, the Company sold 100% of the common stock
of its wholly owned subsidiary in Mexico, Shoshone Mexico, S.A. de C.V, to
Xtierra Resources, Ltd (Xtierra). The Companys interest in the Bilbao
concessions in Zacatecas, Mexico was included in this sale. In exchange for its
interest in the Bilbao concessions the Company received net proceeds of
$2,497,990 and a non-interest bearing note receivable, net of discount for
$1,865,633. See Note 9.

California Creek Properties

On November 9, 2005, the Company entered into an option
agreement with an unrelated party under which the unrelated party may earn a
100% interest in the Companys California Creek Property (the California Creek
Option Agreement). During 2007, the California Creek Option Agreement
terminated due to lack of performance by the unrelated party.

On July 24, 2008, the Company acquired 200,000 shares of common
stock of Bayswater Uranium Corporation, a Canadian company (Bayswater), in
exchange for the Companys 43 unpatented mining claims in Elko County, Nevada.
This exchange was valued at $60,000 based on the market price of Bayswaters
common stock on July 24, 2008.

NOTE 20: COMMITMENTS & CONTINGENCIES

Environmental Issues

The Company is engaged in mineral mining and may become subject
to certain liabilities as they relate to environmental cleanup of mining sites
or other environmental restoration.

Although the minerals exploration and mining industries are
inherently speculative and subject to complex environmental regulations, the
Company is unaware, with the exception detailed below under the caption
Civil Action Filed, of any pending litigation or of any specific past
or prospective matters which could impair the value of its mining claims.

Chester Mining Company Lease

During 2004, the Company entered into a 25-year lease agreement
for a mining property in Shoshone County. The leases terms called for a first
year payment of 1,000,000 shares of common stock, which the Company valued at
the fair market value of $350,000.

Yearly lease payments on the property were 100,000 shares of
common stock valued at the current market value of the Companys common stock,
would be approximately $30,000 per year. The valuation of these payments may
fluctuate each year with the change in the fair market value of the Companys
trading stock.

On August 27, 2008, the Company amended a lease agreement with
Chester Mining Company originally entered into on March 25, 2004 (the Amended
Lease). The Amended Lease includes a provision that changes the number of
shares to be payable each year to 50,000 from 100,000. During the fiscal year
ended September 30, 2008, the Company issued 100,000 shares of its common stock
in satisfaction of the 2008 and 2009 share amounts due.

66

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Bullion Group Claims Lease

On January 24, 2004, the Company leased two unpatented mining
claims located in Shoshone County, Idaho, to Sterling Mining Company. The lease
stipulates a four year exploration program commencing within five years of the
lease date. The lease further stipulates that Shoshone would receive a
production royalty equal to 10% of the net proceeds from the production of
minerals from the property. This lease agreement may be found in Exhibit No.
10.4 which was filed as an exhibit to the Companys Annual Report on Form 10-KSB
filed with the Commission on December 4, 2006.

Iola Group Claims Lease

On September 22, 2008, Kimberly Gold Mines, Inc. (Kimberly),
which the Company acquired on March 12, 2009, entered into a lease agreement
with Iola Corporation whereby the Company leases certain mining claims known as
the Iola Claim Group located in the Warren Mining District, Idaho. The lease
stipulates that the Company pay annual rent of $10,000 and pay a net smelter
royalty of 4%-8% depending upon the price of gold. Further, the lease grants the
Company an option to purchase the claims for $750,000 at any time. This lease
agreement is filed as Exhibit No. 10.8.

Silver King LTD Lease

On July 19, 2007, Kimberly Gold Mines, Inc. (Kimberly), which
the Company acquired on March 12, 2009, entered into a lease agreement with
Silver King LTD whereby the Company leases certain patented mining claims
totaling 174 patented acres located in the Warren Mining District, Idaho. The
lease stipulates that the Company pay annual rent of $10,000 for two years and
pay a net smelter royalty of 5%. Further the lease grants the Company an option
to purchase the 174 patented claims for $1,000,000. This lease agreement is
filed as Exhibit No. 10.9.

Civil Action Filed

On November 17, 2008, the United States Environmental
Protection Agency (EPA) filed a civil action against the Company in the United
States District Court for the District of Idaho. The civil action seeks recovery
of funds paid by the EPA in response to alleged releases of hazardous substances
at the Companys Idaho Lakeview mine and mill site in Bonner County, Idaho. The
Company and the EPA have reached a tentative agreement whereby the Company would
pay $50,000 and agree not to conduct activities on the ground that would disturb
the cleanup work in place at the properties subject to the civil action.
Accordingly, the Company recorded a $50,000 liability during the fiscal year
ended September 30, 2009, related to this suit.

Certain Annual Fees

The Company incurs certain annual fees, which may vary,
associated with maintaining its various claims and properties as follows:

|                                                    |  |   | Claim |  |   | Property |  |   | Lease    | 
|--------------------------------------------------- |  | - | ----- |  | - | -------- |  | - | -------- | 
|Property                                            |  |   | Fees  |  |   | Taxes    |  |   | Payments | 
|Conjecture                                          |  | $ | 1,820 |  | $ | 1,996    |  | $ | -        | 
|Idaho Lakeview, Weber, Keep Cool &
      Drumheller |  |   | 2,380 |  |   | 8,969    |  |   | -        | 
|Auxer                                               |  |   | 280   |  |   | -        |  |   | -        | 
|Talache                                             |  |   | 280   |  |   | -        |  |   | -        | 
|Shoshone                                            |  |   | -     |  |   | 61       |  |   | -        | 
|Bullion                                             |  |   | -     |  |   | 100      |  |   | -        | 
|North Osburn                                        |  |   | 2,100 |  |   | -        |  |   | -        | 
|Montgomery                                          |  |   | 3,500 |  |   | -        |  |   | -        | 
|Regal                                               |  |   | 560   |  |   | -        |  |   | -        | 
|Stillwater Extension Claims                         |  |   | 1,400 |  |   | -        |  |   | -        | 
|Princeton Gulch Group                               |  |   | 840   |  |   | -        |  |   | -        | 
|Western Gold                                        |  |   | 1,820 |  |   | -        |  |   | -        | 
|Gold Road                                           |  |   | 2,240 |  |   | -        |  |   | -        | 
|Cerro Colorado                                      |  |   | 420   |  |   | -        |  |   | -        | 
|California Creek Uranium                            |  |   | -     |  |   | -        |  |   | -        | 
|Iola Group Claims                                   |  |   | -     |  |   | -        |  |   | 10,000   | 
|Silver King LTD Claims                              |  |   | -     |  |   | -        |  |   | 10,000   | 

67

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|Rescue Gold Mine Claims   |   | 11,760 |  |   | -      |  |   | -      | 
|------------------------- | - | ------ |  | - | ------ |  | - | ------ | 
|Kimberly Gold Mine Claims |   | 3,360  |  |   | -      |  |   | -      | 
|Shaft Claims              |   | 2,660  |  |   | -      |  |   | -      | 
|                          | $ | 35,420 |  | $ | 11,126 |  | $ | 20,000 | 

NOTE 21: SUBSEQUENT EVENTS

Subsequent to September 30, 2009, the Company issued 3,160,000
shares of its common stock, generating net proceeds of $316,000. In connection
with these private placements, the Company issued 3,160,000 warrants to purchase
an equal number of shares of common stock at an exercise price of $0.20 per
common share. These warrants are immediately exercisable and terminate on August
6, 2011 at 5:00 PM Pacific time.

Subsequent events have been evaluated through January 8, 2010,
the date that the financial statements were available to be issued.

68

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANICAL DISCLOSURE

None

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and
Procedures

In connection with the preparation of this annual report on
Form 10-K, an evaluation was carried out by Shoshone Silver Mining Companys
management, with the participation of the Chief Executive Officer and the Chief
Financial Officer, of the effectiveness of the Companys disclosure controls and
procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934 (Exchange Act)) as of September 30, 2009. Disclosure
controls and procedures are designed to ensure that information required to be
disclosed in reports filed or submitted under the Exchange Act is recorded,
processed, summarized, and reported within the time periods specified in the SEC
rules and forms and that such information is accumulated and communicated to
management, including the Chief Executive Officer and the Chief Financial
Officer, to allow timely decisions regarding required disclosures.

Based on that evaluation, the Companys management concluded,
as of the end of the period covered by this report, that the Companys
disclosure controls and procedures were not effective in recording, processing,
summarizing, and reporting information required to be disclosed, within the time
periods specified in the Securities and Exchange Commissions rules and forms.

Managements Report on Internal Control Over Financial
  Reporting

Management of Shoshone Silver Mining Company is responsible for
establishing and maintaining adequate internal control over financial reporting.
The Companys internal control over financial reporting is a process, under the
supervision of the Chief Executive Officer and the Chief Financial Officer,
designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of the Companys financial statements for external
purposes in accordance with United States generally accepted accounting
principles (GAAP). Internal control over financial reporting includes those
policies and procedures that:

- Pertain to the maintenance of records that in reasonable detail accurately
  and fairly reflect the transactions and dispositions of the Companys assets;
- Provide reasonable assurance that transactions are recorded as necessary
  to permit preparation of the financial statements in accordance with generally
  accepted accounting principles, and that receipts and expenditures are being
  made only in accordance with authorizations of management and the Board of
  Directors; and
- Provide reasonable assurance regarding prevention or timely detection of
  unauthorized acquisition, use, or disposition of the Companys assets that
  could have a material effect on the financial statements.

Because of its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject to the risk
that controls may become inadequate because of changes in conditions or that the
degree of compliance with the policies or procedures may deteriorate.

The Companys management conducted an assessment of the
effectiveness of the Companys internal control over financial reporting as of
September 30, 2009, based on criteria established in Internal Control 
Integrated Frameworkissued by the Committee of Sponsoring Organizations of
the Treadway Commission (COSO). As a result of this assessment, management
identified a material weakness in internal control over financial reporting.

A material weakness is a deficiency, or a combination of
deficiencies, in internal control over financial reporting such that there is a
reasonable possibility that a material misstatement of the Companys annual or
interim financial statements will not be prevented or detected on a timely
basis.

69

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The material weakness identified is described below.

The Company has limited accounting personnel to prepare its
financial statements. The insufficiency of accounting resources led to the
identification by the auditors of required material adjustments to the Companys
financial statements.

As a result of the material weakness in internal control over
financial reporting described above, the Companys management has concluded
that, as of September 30, 2009, the Companys internal control over financial
reporting was not effective based on the criteria in Internal Control 
Integrated Framework issued by COSO.

This annual report does not include an attestation report of
our independent registered public accounting firm regarding internal control
over financial reporting. We were not required to have, nor have we, engaged our
independent registered public accounting firm to perform an audit of internal
control over financial reporting pursuant to the rules of the Securities and
Exchange Commission that permit us to provide only managements report in this
annual report.

Changes in Internal Control Over Financial Reporting

As of the end of the period covered by this report, there have
been no changes in internal control over financial reporting (as defined in Rule
13a-15(f) of the Exchange Act) during the quarter ended September 30, 2009, that
materially affected, or are reasonably likely to materially affect, the
Companys internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

None.

70

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PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

For information with respect to the executive officers and
directors of the Registrant, See Item 4Directors and Executive Officers at
the end of Part I of this report.

ITEM 11. EXECUTIVE COMPENSATION

During the twelve-month period ended September 30, 2009, we
paid our principal executive officer $40,267. No executive officers were paid in
excess of $100,000.

During the twelve-month period ended September 30, 2009, three
of our directors each received 5,000 shares of our common stock at a price of
$0.11 as compensation for their service. One director received 10,000 shares of
our common stock at a price of $0.10 as compensation for his service.

The Company has no stock option plans and has not issued any
options or warrants to any of its employees or directors. The Company has no
employment agreements with any of its officers.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table sets forth as of September 30, 2009, the
common stock ownership of the directors, executive officers and each person
known by us to be the beneficial owner of five percent or more of our common
stock. The percentage of ownership is based on 34,303,887 shares of our common
stock outstanding as of September 30, 2009.

|                                         |  | Number of    |  |  |            | 
|---------------------------------------- |  | ------------ |  |  | ---------- | 
|                                         |  | Shares of    |  |  |            | 
|Name and                                 |  | Common       |  |  |            | 
|Address                                  |  | Stock        |  |  |            | 
|of Beneficial                            |  | Beneficially |  |  | Percentage | 
|Owner                                    |  | Owned        |  |  | of Shares  | 
|Lex Smith                                |  | 85,000       |  |  | 0.25%      | 
|C/o Shoshone Silver Mining Company       |  |              |  |  |            | 
|P.O. Box 2011                            |  |              |  |  |            | 
|Coeur d'Alene, ID 83816                  |  |              |  |  |            | 
|                                         |  |              |  |  |            | 
|Carol Stephan                            |  | 668,856      |  |  | 1.95%      | 
|C/o Shoshone Silver
      Mining Company |  |              |  |  |            | 
|P.O. Box 2011                            |  |              |  |  |            | 
|Coeur d'Alene, ID 83816                  |  |              |  |  |            | 
|                                         |  |              |  |  |            | 
|Melanie Farrand                          |  | 64,000       |  |  | 0.19%      | 
|C/o Shoshone Silver Mining Company       |  |              |  |  |            | 
|P.O. Box 2011                            |  |              |  |  |            | 
|Coeur d'Alene, ID 83816                  |  |              |  |  |            | 
|                                         |  |              |  |  |            | 
|Ed Lehman                                |  | 10,000       |  |  | 0.03%      | 
|C/o Shoshone Silver
      Mining Company |  |              |  |  |            | 
|P.O. Box 2011                            |  |              |  |  |            | 

71

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|Coeur d'Alene, ID 83816                                 |  |         |  |  |       | 
|------------------------------------------------------- |  | ------- |  |  | ----- | 
|                                                        |  |         |  |  |       | 
|All officers and directors as
      a group (4 persons) |  | 827,856 |  |  | 2.41% | 

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

During the previous two fiscal years there have been no
transactions between us, or the Companys subsidiary on the one hand, and any
officer, director or principal shareholder on the other.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

The Company paid audit and review fees to BehlerMick PS of $54,298
  during the twelve-month period ended September 30, 2009 and $48,435 during the
  nine-month period ended September 30, 2008.

72

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PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(A) Documents filed as part of this report are as follows:

1. Financial Statements.

See listing of financial statements
included as part of this Form 10-K in Item 8 of Part II.

2. Financial Statement Schedules:

Financial statement schedules are
omitted because they are not applicable or the required information is shown in
the consolidated financial statements or notes thereto.

3. Exhibits:

The following list of exhibits
includes exhibits submitted with this Form 10-K as filed with the SEC and those
incorporated by reference to other filings.

|2.1.1 | Articles of Incorporation. (*)                                                                                                                       
|----- | -----------------------------------------------------------------------------------------------------------------------------------------------------
|2.1.2 | Certificate of Amendment of Articles of Incorporation
      dated January 21, 1970 (*)                                                               
|2.1.3 | Certificate of Amendment of Articles
      of Incorporation dated November 17, 1969 (*)                                                              
|2.1.4 | Articles of Amendment to the Articles of Incorporation
      dated August 28, 1983 (*)                                                               
|2.1.5 | Articles of Amendment to the Articles
      of Incorporation dated May 15, 1998 (*)                                                                  
|2.2   | Bylaws. (*)                                                                                                                                          
|10.1  | Office Lease between the Company and
      Shoshone Business Center, Inc. dated November 1, 2004. ($)                                                
|10.2  | Mining Lease and Agreement between the Company and Chester
      Mining Company, Inc. dated March 25, 2004. ($)                                      
|10.3  | Martin Sutti declaration of conditional
      transfer of certain mining concessions dated May 12, 2004. ($)                                         
|10.4  | Mining Lease and Agreement between the Company and Sterling
      Mining Company dated January 19, 2004 (#)                                          
|10.5  | Bilbao Indemnity and Guarantee Agreement
      (&)                                                                                                   
|10.6  | Bilbao Stock Purchase Agreement (&)                                                                                                                  
|10.7  | The Amending
      Agreement to the Stock Purchase Agreement and Indemnity and Guarantee
      Agreement (@)                                         
|10.8  | Iola Corporation Lease and
      Option Agreement (@)                                                                                                
|10.9  | Silver King
      LTD Lease and Option Agreement (@)                                                                                                 
|23.1  | Consent of Independent Registered Public Accounting Firm (+)                                                                                         
|31.1  | Certification of Principal
      Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities
      Exchange Act of 1934, as amended. (+)
|31.2  | Certification
      of Principal Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a) of
      the Securities Exchange Act of 1934, as amended. (+)
|32.1  | Certification of the Principal
      Executive Officer Pursuant to 18 U.S.C. Section 1350. (+)                                                       
|32.2  | Certification
      of the Principal Financial Officer Pursuant to 18 U.S.C. Section 1350.
      (+)                                                 
|99.1  | Map of Lakeview Group (^)                                                                                                                            
|99.2  | Map of Shoshone Group and Bullion Group
      (^)                                                                                                    
|99.3  | Map of Auxer Property (^)                                                                                                                            
|99.4  | Map of Lucky Joe Property (^)                                                                                                                        
|99.5  | Map of Regal Mine (^)                                                                                                                                
|99.6  | Map of Stillwater Extension Claims (^)                                                                                                               
|99.7  | Map of Montgomery Mine (^)                                                                                                                           
|99.8  | Map of Arizona Gold Fields Claims (^)                                                                                                                
|99.9  | Map of California Creek Property (^)                                                                                                                 
|99.10 | Map of Princeton Gulch Group (^)                                                                                                                     
|99.11 | Map of Cerro Colorado Group (^)                                                                                                                      
|99.12 | Map of Bilbao-Mexico Property (^)                                                                                                                    
|99.13 | Map of North Osburn Property (>)                                                                                                                     
|99.14 | Maps of Iola
      Group Claims Lease, Silver King LTD Lease, Rescue Gold Mine and Kimberly
      Gold Mine (@)                                      

73

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|99.15 | Map
      of Shaft Claims (@)
|----- | -----------------------------

|* | Incorporated by reference to the Company’s
      Registration Statement on Form 10-SB, filed with the Commission on February
      15, 2001, File No. 000-31965.     
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------
|$ | Incorporated by reference to the
      Companys Annual Report on Form 10-KSB, filed with the Commission on
      August 3, 2006, File No. 000-31184                 
|+ | Filed herewith.                                                                                                                                                      
|# | Incorporated by reference to the
      Companys Annual Report on Form 10-KSB, filed with the Commission on
      December 4, 2006, File No.000-31184                
|^ | Incorporated by reference to the
      Companys Annual Report on Form 10-KSB/A Amendment 1, filed with the
      Commission  on December 3, 2007, File No. 000-31184
|> | Incorporated by reference to the
      Companys Annual Report on Form 10-K, filed with the Commission on April
      14, 2008, File No. 000-31184.                  
|& | Incorporated by reference to the
      Companys Annual Report on Form 10-K, filed with the Commission on January
      13, 2009, File No. 000-31184.                
|@ | Incorporated by reference to the
      Companys Annual Report on Form 10-K, filed with the Commission on January
      12, 2010, File No. 000-31184.                

74

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SIGNATURES

In accordance with Section 13 or 15 (d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

|                     | SHOSHONE SILVER MINING COMPANY
|-------------------- | ------------------------------
|                     |                               
|                     |                               
|                     |                               
|Dated: June 3,  2010 | By:                           
|                     |                               
|                     |                               

In accordance with the Exchange Act, this report has been
signed by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.

| | By: | /s/ Lex Smith                                  
| | --- | -----------------------------------------------
| |     | Lex Smith                                      
| |     | President and Principal Executive
      Officer
| |     |                                                
| |     |                                                
| | By: | /s/ Melanie Farrand                            
| |     | Melanie Farrand                                
| |     | Treasurer and Principal Financial
      Officer

75

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