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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-KSB

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

For the fiscal year ended December 31, 2006

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

For the transition period from _______ to _________

Commission file number ________________

SHOSHONE SILVER MINING COMPANY(Name of small business issuer in its
charter)

|Idaho                                                                | 82-0304993                          
|-------------------------------------------------------------------- | ------------------------------------
|(State or other jurisdiction of incorporation or
      organization) | (I.R.S. Employer Identification No.)
|                                                                     |                                     
|403 7thStreet, Suite 207, Wallace, Idaho                             | 83873                               
|(Address of principal executive offices)                             | (Zip Code)                          

Issuers telephone number (208) 752-1070

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)

Check whether the issuer is not required to file reports
pursuant to Section 13 or 15(d) of the Exchange Act.

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 [   ]  No [X]

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-KSB or any amendment to this Form 10-KSB. [  
]

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

State issuers revenues for its most recent fiscal year: $150

1

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On October 31, 2006, the aggregate market value of the voting
and non-voting common equity held by non-affiliates of the Registrant was
approximately $4,042,916 based upon the closing price on the Over the Counter
Bulletin Board reported for such date.

(ISSUERS INVOLVED IN BAKRUPTCY PROCEEDINGS DURING THE PAST
FIVE YEARS)

Check whether the issuer has filed all documents and reports
required to be filed by Section 12, 13 or 15(d) of the Exchange Act after
the distribution of securities under a plan confirmed by a court:
Yes [   ]   No [   ]

(APPLICABLE ONLY TO CORPORATE REGISTRANTS)

State the number of shares outstanding of each of the issuers
classes of common equity, as of the latest practicable date:
**18,243,797 shares outstanding as of December 31,
2006**

DOCUMENTS INCORPORATED BY REFERENCE

If the following documents are incorporated by reference,
briefly describe them and identify the part of the Form 10-KSB (e.g., Part
I, Part II, etc.) into which the document is incorporated: (1) any annual report
to security holders; (2) any proxy or information statement; and (3) any
prospectus filed pursuant to Rule 424(b) or (c) of the Securities Act of
1933 (Securities Act). The listed documents should be clearly described for
identification purposes.

Transitional Small Business Disclosure Format (check one): Yes
[X]   No [   ]

2

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FORM 10-KSBFor the Fiscal Year Ended December 31,
2006

TABLE OF CONTENTS

|           |                                                                   | Page #
|---------- | ----------------------------------------------------------------- | ------
|           |                                                                   |       
|PART I     |                                                                   | 4     
|           |                                                                   |       
|Item 1.    | Description of Business                                           | 4     
|           |                                                                   |       
|Item 2.    | Description of Properties                                         | 29    
|           |                                                                   |       
|Item 3.    | Directors, Executive Officers and Significant Employees           | 29    
|           |                                                                   |       
|Item 4.    | Remuneration of Directors and Officers                            | 30    
|           |                                                                   |       
|Item 5.    | Security Ownership of Certain Beneficial Owners and Management    | 30    
|           |                                                                   |       
|PART II    |                                                                   | 32    
|           |                                                                   |       
|Item 1.    | Market Price of Dividends on the Registrants Common
      Equity | 32    
|           |                                                                   |       
|Item 2.    | Legal Proceedings                                                 | 32    
|           |                                                                   |       
|Item 3.    | Changes In and Disagreements With Accountants                     | 32    
|           |                                                                   |       
|Item 4.    | Submission of Matters to a Vote of Security Holders               | 32    
|           |                                                                   |       
|Item 5.    | Compliance with Section 16(a) of the Exchange Act                 | 32    
|           |                                                                   |       
|Item 6.    | Financial Statements                                              | 34    
|           |                                                                   |       
|PART III   |                                                                   | 51    
|           |                                                                   |       
|Item 1.    | Index to Exhibits                                                 | 51    
|           |                                                                   |       
|Item 2.    | Description of Exhibits                                           | 51    
|           |                                                                   |       
|Signatures | 52                                                               

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WARNING CONCERNING FORWARD LOOKING STATEMENTS

This annual report on form 10-KSB for the year ended December
31, 2006, may contain forward looking statements. These include statements
regarding our intent, belief or expectations, or the intent, belief or
expectations of our directors or officers with respect to:

- Our ability to generate revenues or find alternative sources of capital;
- Our ability to successfully establish mining operations and profitably
  produce precious or platinum group or other metals at Shoshones properties;
- Our ability to maintain good title to our claims;
- Our ability to comply with existing laws and regulations relating to
  exploration and development, permitting procedures, safety precautions,
  property reclamation, employee health and safety, and environmental laws; and
- Our ability to retain key employees.

Also, whenever we use words such as believe, expect,
anticipate, intend, plan, estimate, predict or similar expressions, we
are making forward looking statements. Actual results may differ materially from
those contained in or implied by the forward looking statements as a result of
various factors. Such factors include, without limitation:

- Whether our properties are found to contain commercially viable quantities
  of minerals;
- The impact of changes in the economy, including the liquidity of precious
  metals markets;
- Changes in political and economic conditions in major metals producing
  regions;
- Inability to fund diligence work at Shoshones properties required to
  secure its rights under certain unpatented mining claims;
- Compliance with and changes to regulations within the exploration,
  development and mining industries, such as regulations relating to taxes,
  royalties, land tenure and land use;
- Compliance with and changes to environmental regulations;
- Challenges to the validity of Shoshones unpatented mining claims by the
  government or other third parties;
- Competition within the exploration, development and mining industries; and
- Changes in federal, state and local legislation.

These unexpected results could occur due to many different
circumstances, some of which are beyond Shoshones control, such as changes in
regulations and changes in the capital markets or the economy generally.

Forward looking statements are only expressions of our present
expectations and intentions. Forward looking statements are not guaranteed to
occur and they may not occur. You should not place undue reliance upon forward
looking statements. You should read the above cautionary statements as being
applicable to all forward looking statements wherever they appear. We assume no
obligation to update the forward looking statements or the reasons why actual
results could differ from those projected in the forward looking statements to
reflect events or circumstances after the date hereof.

PART I

ITEM 1. DESCRIPTION OF BUSINESS

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

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 initially Canada. In the late 1990's, the Company was unable to productively
  utilize its Lakeview property and elected to concentrate more on exploration
  activities in Idaho but also increasingly other western states and Mexico.

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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.

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 platinum group metals. We have identified and
commenced prospecting efforts in several areas in favorable geologic terrain in
Idaho, Montana, Arizona and Mexico. 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 Group        |  | Bonner County, Idaho       |  | 600   |  | 10      
|Shoshone Group              |  | Shoshone County, Idaho     |  | 79    |  | 5       
|Bullion Group               |  | Shoshone County, Idaho     |  | 173   |  | 7       
|Auxer Mine Property         |  | Bonner County, Idaho       |  | 40    |  | -       
|Lucky Joe                   |  | Bonner County, Idaho       |  | 40    |  | -       
|Regal Mine                  |  | Boundary County, Idaho     |  | 80    |  | -       
|Confed Claims Lease         |  | Bonner County, Idaho       |  | 240   |  | 6       
|Stillwater Extension Claims |  | Stillwater County, Montana |  | 200   |  | -       
|Montgomery Mine Group       |  | Boundary County, Idaho     |  | 500   |  | -       
|Arizona Goldfield Claims    |  | Mohave County, Arizona     |  | 80    |  | -       
|Gold Road Claims            |  | Mohave County, Arizona     |  | 320   |  | -       
|California Creek Properties |  | Elko County, Nevada        |  | 360   |  | -       
|Princeton Gultch Group      |  | Granite County, Montana    |  | 120   |  | -       
|Cerro Colorado Group        |  | Pima County, Arizona       |  | 60    |  | -       
|Bilbao-Mexico Property      |  | State of Zacatecas, Mexico |  | 3,284 |  | N/A     
|Other Mexican Properties    |  | State of Sonora, Mexico    |  |       |  | N/A     

Idaho Lakeview Group

The Company has a group of patented and unpatented properties
commonly referred to as the Idaho Lakeview Group located contiguously around an
area of Bonner County near the Shoshone milling facility.

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.

Land Status:

The Idaho Lakeview Group consists of the following:

- The Weber Group comprising six patented and five unpatented lode mining
  claims.

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- The Idaho Lakeview and Keep Cool Group comprising 4 patented and 10
  unpatented lode mining claims.

In 2003, the Company sent notice to the lessee of the
termination of the lease and evicted the tenant from the property due to
nonpayment of lease payments. In 2004, the Company commenced an action against
the lessee of the Lakeview mining property, alleging default of the lease and
seeking confirmation of the cancellation of the lease. During 2004, the lessee
made lease payments totaling $12,500 through the Companys attorney. In 2005,
the lessee was evicted from the property, the lease was canceled and the lessee
has no remaining rights to the property.

Geology:

The Lakeview 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.

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.

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 1400 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.

2006 Development Activities:

The Company planned and initiated renovation activities at the
Lakeview Mill. A preliminary study indicating overall good condition of mill
equipment was commissioned and completed. Electrical renovation of the mill was
completed and a well drilled to water supply for milling. Short stretches of
access roads were constructed that allow improved access by heavy equipment to
Shoshone property near the mill. Previously mined and stockpiled mineralized
material was moved to within working proximity to the mill. Metallurgical
testing of a limited number of samples from this stockpile found recoverable
silver and lead in the mineralized material.

Exploration and Development Plans:

Shoshone is planning renewed exploration for the Lakeview
District properties.

- Rehabilitation of the Idaho Lakeview Main level;

6

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- Underground drilling from the Idaho Lakeview main level to intercept
  high-grade vein discovered at depth by Sunshine Mining Company, to intersect
  and define high grade vein on the 700, 1200, and 1400 levels;
- Surface geophysics to locate additional surface supergene enriched zones
  that can be easily extracted and exploited for fast capital generation; and
- Regional airborne geophysics.

The completion of renovation activity at the Lakeview Mill is
planned for 2007 and milling is expected to commence in late summer to early
fall. Plans include drilling an additional well to supply water sufficient for
total mill capacity, a limited amount of mechanical and structural overhaul of
the mill facilities and additional metallurgical testing for optimized mill
processing.

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 the $68,472
was capitalized.

The deferred costs of $334,690 have not suffered impairment.
Accordingly, as of December 31, 2006, the Company does not consider a write-down
to the carrying cost necessary.

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:

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.

Land Status:

The Shoshone Group consists of 5 patented lode claims totaling
79.4 acres in the St. Joe Mining District.

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. In fact, USGS geologists then theorized
that the largest silver deposits in Idahos Silver Valley might be found in
its southeast corner.

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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.

Exploration Plans:

There are currently no plans to conduct any 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

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.

Land Status:

The Bullion Group consists of 7 patented lode claims totaling
172.5 acres.

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 2 unpatented Bullion
Group claims totaling 40 acres have been leased to Sterling Mining Company.
Lease terms stipulate a 4 year exploration program commencing within 5 years of
the lease date. Shoshone will receive 10% net profit from any mined minerals.

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

In 2002, Shoshone Silver Mining Company re-evaluated the
Bullion Group of claims.

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Exploration Plans:

There are no plans to conduct any 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 value of the property was included as
an exploration expense in a prior year.

Auxer Property

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 Sections20, 29, Township57 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.

Land Status:

The area covered by the Auxer claims is under Bureau of Land
  Management (BLM) jurisdiction.

The Auxer property consists of two contiguous unpatented mining
  claims covering 40 acres.

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. A grab sample taken from a 12 inch wide pyrite rich quartz lens assayed
1.2 oz/t gold and 4.0 oz/t silver. Only 50 feet of this vein has been explored
at the surface.

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.

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

9

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In September 2003, Shoshone Silver Mining 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.

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 December 31, 2006, the Company did not consider a write-down to
the carrying cost necessary.

Lucky Joe

Location and Access:

The Lucky Joe silver-gold property is located in Bonner County,
in Sections 1 and 6, Township55 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.

Land Status:

The property consists of 2 unpatented mining claims covering 40
acres of Bureau of Land Management (BLM) land.

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 Lucky Joe 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. 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. A report written by A.H. Burroughs,
Jr. for Armstead Mines, Inc. in 1921 lists the mines reserves at 84,510 tonnes
averaging 19.3 oz/t silver and 0.10 oz/t gold.

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.

10

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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 Lucky Joe 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.

Exploration Plans:

The following are recommended actions for the Lucky Joe 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
- Permit potential RC and diamond drill hole locations for surface drilling.

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 December 31, 2006, the Company did not consider a write-down to
the carrying cost necessary.

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.

Land Status:

The Regal property consists of four contiguous unpatented
mining claims that cover 80 acres of BLM property in the Moyie-Yaak Mining
District, Boundary County, Idaho.

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.

11

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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.

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.

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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 December 31, 2006, the Company did not consider a write-down to
the carrying cost necessary.

Confed Claims Lease

The Company has leased from Chester Mining a group of patented
and unpatented properties commonly referred to as the Confed Claims Lease 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 for consideration of 1,000,000 shares of Shoshone stock. The lease
stipulates payment of net smelter returns, the amount of which depends upon the
price of silver, or an advance royalty of $250 per month. Details may be found
in the attached lease.

Location and Access:

The 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.

Land Status:

The Confed Claims Group consists of 6 patented and 6 unpatented
lode claims totaling 240 acres.

Geology:

The Confed 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 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.

Exploration History:

The Idaho Bureau of Mines and Geology record 350 tons of
concentrate processed at the Bunker Hill Smelter from 1952 to 1954, averaging
approximately 91 oz/t gold and 4.5% lead. In the late 1950s and early 1960s,
Federal Resources extended the incline shaft to the 700-foot level, and 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. Sunshine
Mining Company unitized the Lakeview District during the 1970s and conducted
further exploration and development work, but did not produce any ore from
Conjecture.

Exploration Plans:

The lease allows Shoshone the exclusive rights to explore, develop,
  and mine the property.

Impairment:

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

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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)
including the Stillwater Mine and East Boulder Mines.

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.

Land Status:

In 2003, Shoshone Silver Mining Company purchased the
Stillwater Claims for $15,000. The Company controls 10 unpatented lode claims
covering 200 acres.

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.

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.

Impairment:

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

Montgomery Mine Group

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

Location and Access:

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.

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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 1800 of relief in the claim group.
  No additional claims are staked in the area.

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.

Exploration History:

The property has been explored by means of approximately 3500
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. 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.

Impairment:

The deferred costs of $43,557 were included in exploration
expenses in the year ended December 31, 2005.

Arizona Goldfield Claims

The Arizona Goldfield property consists of 4 unpatented lode
claims covering 80 acres within the Oatman Mining District of Mohave County,
Arizona.

Location and Access:

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

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 Arizona Goldfield Claims for
$15,000.

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.

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

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.

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:

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
Arizona Goldfield 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.

Land Status:

In 2003, Shoshone Silver Mining Company acquired the Arizona
Claims for $1,500.

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.

Exploration Plans:

The Company anticipates developing exploration plans in fiscal
2007.

Impairment:

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

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California Creek Properties

The company controls unpatented claims that cover and surround
the California Creek uranium deposit 90 miles north of Elko, Nevada.

Location and Access:

The claims are in Sections 34 & 35, Township 46 North,
Range 54 East. A geographic reference point for the claims is 41°49 57 North
and 115° 51 28 West.

The California Creek Group is located 90.5 miles north of Elko
Nevada. Access is 82.5 miles north on state route 225 to Patsville. Turn right
on Forest Service Road (FR)-016 1.5 miles north of Patsville. Turn left on
FR-015 at 5 miles. The property is 1.5 miles north on FR-015.

Land Status:

The California Creek Group consists of 18 unpatented lode
claims covering 360 acres of Forest Service land. The claims are located on the
Flood plain of California Creek with approximately 100 of relief in the claim
group.

Geology:

The deposit occurs in fluvial sediments along an unconformity
  between granitic basement rocks and overlying unconsolidated Tertiary sediments.
  Uranium bearing fluids migrated along this unconformity in the fluvial sediments
  and deposited U3O8 in locally reduced environments within
  the sediments.

Two different configurations of deposit have been identified on
the property. The first is lens and cigar shaped occurrences reflecting the
fluvial nature of the unconformity. The second is a tabular gently dipping
configuration reflecting deposition in volcanogenic beds. Overall thickness of
the deposit is around 80 at depths of up to 500 feet.

Exploration History:

There has been small scale historic production from a small pit
on the property. Limited drilling occurred in the 1980s and scintillometer
geophysics was conducted in 2006 by a lessee. Several anomalies were detected by
Geophysics.

Exploration Plans:

Additional claims should be staked to thoroughly cover all the
anomalies identified by geophysics. A limited drill program will be proposed to
test the anomalies.

Impairment:

The deferred costs of $2,970 were included in exploration
expenses in the year ended December 31, 2005.

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:

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.

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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.

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.

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.

Impairment:

The deferred purchase cost of $20,000 will be included in the
exploration expenses for the year ending December 31, 2006.

Cerro Colorado Group

The company controls 3 unpatented claims 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.

Land Status:

Cerro Colorado claim group consists of 3 unpatented lode claims
covering 60 acres. The claim group is located in the Cerro Colorado mining
district in the Cerro Colorado mountains of Southwest Arizona.

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 porphyry, rhyolite
and dioritic plugs and dikes.

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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 about 376,000 oz.
Ag, 460 oz. Au and minor Cu & Pb.

Exploration Plans:

These claims and the area around them will be geologically
mapped at 1:24,000. 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.

Impairment:

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

Bilbao-Mexico Property

The Company owns a group of unpatented properties commonly
referred to as Bilbao located in Mexico through its subsidiary.

Location and Access:

The Bilbao property is in the Panfilo Natera Mining District in
southeastern Zacatecas State, Mexico. The property is accessed by 35 miles of
paved and improved roads southeast of the city of Zacatecas.

Land Status:

The Bilbao property consists of 4 contiguous mineral
exploitation concessions covering 1,345 hectares (3,284 acres.) Historical
mining has left 2 glory hole excavations and some underground workings that
are accessible. These workings expose the deposit to a depth of 250 feet.

Geology:

The geology of the property consists of a northwesterly
trending anticline with a core of Tertiary granite. The granite batholith was
intruded into Jurassic-Cretaceous sedimentary rocks which have been covered by
co-genetic volcanics. The volcanics and alluvium obscure much of the base
geology.

The mineralization at Bilbao presents as a lead/zinc Pyroxene
skarn developed in sedimentary limestones that are found as roof pendants in the
granite batholith. In addition to the skarn, the property also exhibits
hydrothermal vein development in both the sedimentary and igneous rocks.

All mining has occurred within 250 of the surface and has been
in the oxidized zone. Below this depth the deposit is expected to pass into a
sulfide zone. The district has also exhibited a lateral zonation from
polymetallic Pyroxene skarn into Cu/Au Garnet skarn. To date only the oxidized
Pyroxene skarn has been identified and exploited at the Bilbao site.

Exploration History:

The Bilbao property has been exploited for its mineral content
since the 1600s. However, there is very little contemporary information
available for the concession. There is no evidence or record of any drilling on
the property. An inferred resource was calculated for the property (JORC
guidelines) in 1994. This resource was based on 1200 samples collected from the
existing workings on the property. The data from this sampling is unavailable at
present. Some minor geophysics studies have been conducted in limited areas on
the property but again the data is unavailable.

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Exploration Plans:

During 2005 Shoshone undertook initial exploration of the
Bilbao site. A three phase drill plan has been developed to further define the
oxide deposit described in the 1994 report and to locate the expected underlying
sulfide deposit.

2006 Exploration Activities:

In 2006 the Company entered into a joint venture and option
agreement with Minco, PLC for exploration and development of the Bilbao
property. Under direction of Shoshones joint venture partner, thirty one drill
holes totaling 7,315 meters were completed in 2006 with multiple holes
intersecting sulfide mineralization underlying the previously encountered oxide
zone. In December 2006, the Companys partner commissioned a (JORC standards)
resource analysis and pre-feasibility study, both due for completion in
2007.

Impairment:

The deferred costs of $80,000 were included in exploration
expenses in the year ended December 31, 2004.

Other Mexican Exploration Properties

Shoshone has an interest in several Mexican exploration
projects.

La Vibora

La Vibora is a gold-silver prospect in which Shoshone acquired
a 25% interest in the property in 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.

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 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.

Geology:

Distal from the La Vibora property is the La Morena Placer.
This property has had limited auger and assaying returning average grades of
0.03 oz/t gold. No resource estimate has been completed.

Mexican Silica Properties

During 1999 Shoshone acquired varying degrees of interest in
four silica properties in Mexico:

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- A 33.3% interest in the Santa Rita silica property
- A 25% interest in the Inez silica property
- A 49% interest in the Anna and the Three Brothers silica properties

Location and Access:

All four properties are located in Mazocahui in the State of
Sonora. They are accessed directly from Mexican Highway 17.

Exploration Plans:

No exploration plans have been developed for the properties.

Impairment:

During 2002, in light of the continuing lack of access to the
property, the Company elected to write-down the carrying costs of $413,000 to
$0. Also, $130,500 was expensed in prior years as an exploration expense. No
additional exploration has been conducted.

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
warrant 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.

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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.

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.

EMPLOYEES

The Company currently has 4 employees, 3 of whom are both
officers and directors.

RISK FACTORS

We Have Not Recently Mined Any Metals

While we were incorporated in 1969, the Company has no recent
history of producing metals. The Company has not developed or operated a mine
since the 1980s, and we have no recent operating history upon which an
evaluation of our future success or failure can be made. Our ability to achieve
and maintain profitable mining operations is dependent upon a number of factors,
including:

- our ability to locate an economically feasible mineral property; and
- our ability to successfully build and operate mines, processing plants and
  related infrastructure.

We are subject to all the risks associated with establishing
new mining operations and business enterprises. There can be no assurance that
we will successfully establish mining operations or profitably produce platinum
group or other metals at any of our properties.

We Expect Losses to Continue for at Least the Next Five
  Years

We expect to continue to incur additional losses for at least
the next five years due to expenses associated with the research, exploration
and development of our mineral properties. As of December 31, 2006, we had an
accumulated deficit of $3,133,563. There can be no assurance that we will
achieve or sustain profitability in the future, and our auditors expressed a
concern regarding our ability to continue as a going concern.

We are Subject to all of the Risks Inherent in the Mining
  Industry

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As an exploration and mining company, our work is highly
speculative and involves unique risks. There can be no assurance that any of our
properties contain a commercially viable ore body. We are subject to all of the
risks inherent in the mining industry, including, without limitation, the
following:

- Success in discovering and developing commercially viable quantities of
  minerals is the result of a number of factors, including the quality of
  management, the interpretation of geological data, the level of geological and
  technical expertise and the quality of land available for exploration.
- Exploration involves substantial risk and significant levels of expenditure
  on projects with no guarantee of discovery of an economically viable mineral
  deposit.
- Mineral exploration is highly speculative and involves risks, even when
  conducted on properties known to contain quantities of mineralization, and
  most exploration does not result in the discovery of commercially viable ore
  bodies.
- Mining operations are subject to a variety of existing laws and regulations
  relating to exploration and development, prices, taxes, royalties, land
  tenure, land use, importing and exporting of minerals, permitting procedures,
  safety precautions, property reclamation, employee health and safety, air and
  water quality standards, pollution and other environmental protection
  controls, all of which are subject to change.
- Fluctuations in metal prices and production costs.
- Once mineralization is discovered, it may take several years from the
  initial phases of drilling until production is possible, during which time the
  economic feasibility of production may change.
- Substantial expenditures are required to establish proven and probable ore
  reserves through drilling, to determine metallurgical processes to extract the
  metals from the ore and, in the case of new properties, to construct mining
  and processing facilities.
- If we proceed to development of a mining operation, our mining activities
  would be subject to substantial operating risks and hazards, including metal
  bullion losses, environmental hazards, industrial accidents, labor disputes,
  encountering unusual or unexpected geologic formations or other geological or
  grade problems, encountering unanticipated ground or water conditions,
  cave-ins, pit-wall failures, flooding, rock falls, periodic interruptions due
  to inclement weather conditions or other unfavorable operating conditions.
  Some of these risks and hazards are not insurable or may be subject to
  exclusion or limitation in any coverage which we obtain or may not be insured
  due to economic considerations.

Our Activities are Subject to Environmental Laws and
Regulations which may Materially Affect our FutureOperations

The Company, like other exploration companies doing business
worldwide, is subject to a variety of federal, provincial, state and local
statutes, rules and regulations designed:

- to protect the environment, including the quality of the air and water in
  the vicinity of exploration, development and mining operations;
- to remediate the environmental impacts of those exploration, development
  and mining operations;
- to protect and preserve wetlands and endangered species; and
- to mitigate negative impacts on certain archeological and cultural sites.

The Company is required to obtain various governmental permits
  to conduct exploration at its properties. Obtaining the necessary governmental
  permits is often a complex and time-consuming process involving numerous domestic
  and foreign government agencies. The duration and success of each permitting
  effort are contingent upon many variables not within the Companys control.

23

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In the context of permitting, including the approval of reclamation
  plans, the Company must comply with known standards, existing laws and regulations
  that may entail greater or lesser costs and delays depending on the nature of
  the activity to be permitted and the interpretation of the laws and regulations
  implemented by the permitting authority.

Currently, three or four months are generally required to
obtain the necessary permits required to conduct small-scale drilling
operations. New surface management regulations recently finalized by the BLM
will increase this period on lands it manages. The failure to obtain certain
permits, the adoption of more stringent permitting requirements or the
imposition of extensive conditions upon the implementation of certain permits
could have a material adverse effect on our results of operations and cash flow.

Federal legislation and implementing regulations adopted and
administered by the U.S. Environmental Protection Agency, Forest Service, Bureau
of Land Management, Fish and Wildlife Service, Army Corps of Engineers, Mine
Safety and Health Administration, and other federal agencies, and legislation
such as the federal Clean Water Act, Clean Air Act, National Environmental
Policy Act, Endangered Species Act and Comprehensive Environmental Response,
Compensation and Liability Act, have a direct bearing on U.S. exploration,
development and mining operations.

For example, on November 20, 2000, the Bureau of Land
Management finalized new surface management regulations applicable to activities
and operations on unpatented mining claims. Those new regulations make
small-scale (disturbing less than 5 acres of surface) exploration activities
more expensive by requiring bonding in the amount of 100% of the anticipated
reclamation costs. Larger-scale exploration activities (disturbing 5 acres of
surface or more) require the preparation and approval of a formal plan of
operations.

The enactment of these regulations has made the process for
preparing and obtaining approval of a plan of operations much more time
consuming, expensive, and uncertain. New plans of operation have been required
to (i) include detailed baseline environmental information, (ii) address how
detailed reclamation performance standards will be met, (iii) go through the
environmental assessment or impact process required under the National
Environmental Policy Act (which could cost $80,000 or more per large-scale
exploration program), and (iv) go through a 30-day public comment period prior
to approval. In addition, all activities for which plans of operation are
required are subject to review by the Bureau of Land Management, which must make
a finding that the conditions, practices or activities do not cause substantial
irreparable harm to significant scientific, cultural, or environmental resource
values that cannot be effectively mitigated.

Due to the uncertainties inherent in the permitting process,
and particularly as a result of the enactment of the new regulations, we cannot
be certain that we will be able to timely obtain required approvals for proposed
activities at any of our properties in a timely manner, or that our proposed
activities will be allowed at all.

These federal initiatives are often administered and enforced
through state agencies operating under parallel state statutes and regulations.
Although some mines continue to be approved for development in the United
States, the process is increasingly cumbersome, time-consuming, and expensive,
and the cost and uncertainty associated with the permitting process could have a
material effect on exploring, developing or mining our properties. Compliance
with statutory environmental quality requirements described above may require
significant capital outlays, significantly affect our earning power, or cause
material changes in our intended activities. No assurance can be given that
environmental standards imposed by the federal, state or local governments will
not be changed or become more stringent, which could materially and adversely
affect our results of operations and cash flow.

Title to our Mineral Properties may be Defective and may
  be Challenged

Our interests in our properties located in the United States
are in the form of unpatented mining claims. Unpatented mining claims are unique
property interests, in that they are subject to the paramount title of the
United States of America and rights of third parties to certain uses of the
surface and to non-locatable minerals within their boundaries, and are generally
considered to be subject to greater title risk than other real property
interests. The validity of all unpatented mining claims is dependent upon
inherent uncertainties and conditions. These uncertainties relate to matters
such as:

24

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- The existence and sufficiency of a discovery of valuable minerals, required
  under the U.S. 1872 Mining Law to establish and maintain a valid unpatented
  mining claim;
- Proper posting and marking of boundaries in accordance with the 1872 Mining
  Law and applicable state statutes;
- Whether the minerals discovered were properly locatable as a lode claim or
  a placer claim;
- Whether sufficient annual assessment work has been timely and properly
  performed; and
- Possible conflicts with other claims not determinable from descriptions of
  record.

The validity of an unpatented mining claim also depends on the
claim having been located on un-appropriated federal land open to appropriation
by mineral location, compliance with the 1872 Mining Law and applicable state
statutes in terms of the contents of claim location notices or certificates and
the timely filing and recording of the same, and timely payment of annual claim
maintenance fees (and the timely filing and recording of proof of such payment).
In the absence of a discovery of valuable minerals, the ground covered by an
unpatented mining claim is open to location by others unless the owner is in
actual possession of and diligently working the claim. There can be no assurance
that the unpatented mining claims we own or control are valid or that the title
to those claims is free from defects. There also can be no assurance that the
validity of our claims will not be contested by the federal government or
challenged by third parties.

Legislative and Administrative Changes to the Mining Laws
  could Materially Adversely Affect our FutureExploration,
  Development and/or Mining Activities

New laws and regulations, amendments to existing laws and
regulations, administrative interpretation of existing laws and regulations, or
more stringent enforcement of existing laws and regulations could have a
material adverse impact on our ability to conduct exploration, development and
mining activities.

For example, during the 1999 legislative session, legislation
was considered in the U. S. Congress which proposed a number of modifications to
the Mining Law of 1872, which governs the location and maintenance of unpatented
mining claims and related activities on federal land. Among these modifications
were proposals which would have imposed a royalty on production from unpatented
mining claims, increased the cost of holding and maintaining such claims, and
imposed more specific reclamation requirements and standards for operations on
such claims. None of these proposed modifications were enacted into law.

The same or similar proposals may be considered by Congress in
the future. In addition, as discussed above, BLM regulations govern surface
activities on unpatented mining claims (other than those located in a National
Forest, which are governed by separate, but similarly stringent, Forest Service
regulations). The BLM regulations are more stringent than the previous
regulations and have resulted in a more detailed analysis of and more challenges
to the validity of existing mining claims, have imposed more complex permitting
requirements earlier in the exploration process, and are more costly and
time-consuming to comply with than the previous regulations.

Use of the Surface of our Unpatented Mining Claims is
Subject to Regulation which could Materially AdverselyAffect our Activities

Any activities we conduct on the surface of our unpatented mining
  claims are subject to compliance with and may be constrained or limited by BLM
  or Forest Service surface management regulations (in addition to the environmental
  and other statutes and regulations discussed above). Further, there are limits
  to the uses of the surface of unpatented mining claims, particularly for the
  types of facilities which would be ancillary to our mining operations, and both
  the BLM and the Forest Service have some degree of discretion in allowing the
  use of federal lands that might adjoin any of our unpatented mining claims for
  surface activities which we would need for exploration, development and mining
  operations.

25

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Recently, for example, the Forest Service adopted a "Road-less
  Initiative" which prohibits the construction of new roads or the re-construction
  of existing roads in 43 million acres of inventoried road-less areas within
  the National Forest System. Most of our Idaho properties and our Montana and
  Arizona properties are located in the National Forest and may be impacted by
  this new policy. As a result, there can be no guarantee that we will be able
  to obtain the access necessary to conduct required exploration, development
  or ultimately mining activities on those properties. In addition, to the extent
  we progress towards the development of a mine at any of our properties, there
  can be no assurance that sufficient surface land will be available for the ancillary
  facilities necessary to develop the mine.

We cannot Insure Against all of the Risks Associated with
  Mining

We currently are not insured against most commercial losses or
liabilities that may arise from our exploration and other activities. Even if we
obtain additional insurance in the future, we may not be insured against all
losses and liabilities, which may arise from our activities, either because such
insurance is unavailable or because we have elected not to purchase such
insurance due to high premium costs or for other reasons.

We may not be able to Raise the Funds Necessary to Explore
  and Develop our Mineral Properties

We need to seek additional financing from the public or private
debt or equity markets to continue our business activities. We have borrowed
from our principal shareholders to fund certain of our activities. There can be
no assurance that our principal shareholders will continue to advance funds to
us or that our efforts to obtain financing will be successful. We will need to
seek additional financing to complete our exploration and development of any
target properties, should the exploration program prove a property to be worth
developing. Sources of such external financing include future debt and equity
offerings, and possible joint ventures with another exploration or mining
company. There can be no assurance that additional financing will be available
on terms acceptable to us. The failure to obtain such additional financing could
have a material adverse effect on our results of operations and financial
condition. There can be no assurance that we will be able to secure the
financing necessary to retain our properties or to sustain exploration
activities in the future.

We Compete Against Larger, Better Financed and More Experienced
  Companies

The exploration industry is very competitive. Exploration
companies compete to obtain and to evaluate exploration prospects for their
drilling, exploration, development, and, ultimately, mining potential. We
encounter competition from both larger, better-financed companies, and other
junior mining companies in connection with the acquisition of properties. There
can be no assurance that such competition, although customary in the industry,
will not result in delays, increased costs, or other types of negative
consequences affecting us, or that our planned exploration program will yield
commercially mine-able ore reserves.

We Depend on the Services of Key Personnel

The success of our exploration program will depend, in part, on
our ability to retain our existing employees, and on our ability to hire such
additional employees and consultants as are necessary to conduct our business.
No assurance can be given that we will be successful in our efforts in either of
these areas.

Our Profitability and Viability will be Affected by Changes
  in the Prices of Metals

To the extent we are able to identify ore reserves, our ability
to develop those reserves and conduct profitable mining operations will be
greatly influenced by metal prices. These prices fluctuate widely and are
affected by numerous factors beyond our control, including:

- expectations for inflation;
- the strength of the United States dollar;
- global and regional supply and demand; and
- political and economic conditions and production costs in major metal
  producing regions of the world.

26

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The aggregate effect of these factors on metals prices is
impossible for us to predict. Metal prices sometimes are subject to rapid
short-term and/or prolonged changes because of speculative activities. The
current demand for and supply of platinum group metals affect platinum group
metal prices, but not necessarily in the same manner as current supply and
demand affect the prices of other commodities. The supply of platinum group
metals primarily consists of new production from mining. If the prices of
platinum group metals are, for a substantial period, below our foreseeable cost
of production, we could determine that it is not economically feasible to
continue the development of our projects.

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures:

Shoshones principal executive officer and principal financial
officer are responsible for establishing and maintaining disclosure controls and
procedures for Shoshone. Such disclosure controls and procedures are designed to
ensure that material information relating to Shoshone are made known to the
officers who must certify that they have evaluated the effectiveness of the
disclosure controls and procedures within ninety days prior to the filing of
this annual report. Shoshones certifying officers have concluded that as of
December 31, 2006, the material information they use in evaluating Shoshones
performance and operations has been effectively provided by Shoshones
disclosure controls and procedures.

Changes in Internal Controls:

There have not been any significant changes in Shoshones
internal controls or in other factors that could significantly affect these
controls subsequent to the date of the certifying officers evaluation. The
certifying officers are not aware of any significant deficiencies or material
weaknesses; therefore, no corrective actions were taken.

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.

27

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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.

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.

28

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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.

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 2. DESCRIPTION OF PROPERTIES

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

The Companys executive offices are located at 403 Seventh
Street, Wallace, Idaho, 83873, and its telephone number is (208) 752-1070. The
Company leases its office space under a year-to-year lease for monthly rent
payments of $550.00.

ITEM 3. DIRECTORS, EXECUTIVE OFFICERS, AND SIGNIFICANT
EMPLOYEES

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

NAME
    AGE
    POSITIONLex Smith
    54
    President and DirectorCarol Stephan
    65
    Secretary and DirectorMelanie Farrand
    51
    Treasurer and DirectorSharon Jacobs
    49
    Director


29

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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. Additionally, she is currently serving as a
Director of Sterling Mining Company, a Director and Officer of Merger Mines
Corporation, a Director and Secretary of Shoshone Silver Mining Company and as a
Director and Officer of Silver Crest Mines. Her extensive experience in the
administration and management of mining companies has been gleaned from the many
years she has worked with and managed mining and timber companies in the western
United States. 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 five years as an administrative secretary and bookkeeper.
She also serves on the Board of Directors of several mining companies.
Previously she was the office 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.

Sharon Jacobswas elected to the Board of Directors
  in 2006. She has been the Office Manager for Silver Valley Capital, a Wallace,
  Idaho real estate development firm, since 2004. Prior to her employment with
  Silver Valley Capital, Sharon was an Appraiser for the Shoshone County Assessor
  for 18 years. Sharon retired from Shoshone County in 2003 as the Chief Deputy
  Treasurer after 25 years of combined employment.

ITEM 4. REMUNERATION OF DIRECTORS AND OFFICERS

The following table shows the total compensation that we paid
to each of our three four highest paid persons during forthe last fiscal year:

|Summary Compensation Table
|--------------------------
|Name                      
|Lex Smith                 
|Carol Stephan             
|Melanie Farrand           
|Sharon Jacobs             

Directors receive no compensation for their service with the
exception of Sharon Jacobs who received $2,250. 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 5. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table sets forth as of December 31, 2006 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 18,243,797 shares of our common
stock outstanding as of December 31, 2006.

30

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Number ofShares ofName and
    
    CommonAddress
    
    Stockof Beneficial
    
    Beneficially
    
    PercentageOwner
    
    Owned
    
    of SharesLex Smith
      
      72,000
      
      0.39%c/o Shoshone Silver Mining Company403 7thSt. Suite 207Wallace, ID 83873Carol Stephan
      
      551,900
      
      3.03%c/o Shoshone Silver Mining Company403 7thSt. Suite 207Wallace, ID 83873Melanie Farrand
      
      42,000
      
      0.23%c/o Shoshone Silver Mining Company403 7thSt. Suite 207Wallace, ID 83873Sharon Jacobs
      
      13,000
      
      0.07%c/o Shoshone Silver Mining Company403 7thSt. Suite 207Wallace, ID 83873All officers and directors as a group (4persons)
      
      678,900
      
      3.72%


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ITEM 6. INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN
TRANSCATIONS

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.

PART II

ITEM 1. MARKET PRICE OF DIVIDENDS ON THE REGISTRANTS COMMON
EQUITY AND OTHER SHAREHOLDER MATTERS

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.PK. Summary trading by quarter for fiscal 2006 and 2005 are as follows:

Fiscal Quarter
    
    High (1)
      
    
    Low (1)2006Fourth Quarter
    $
    0.29
    
    $
    0.17Third Quarter
    $
    0.33
    
    $
    0.16Second Quarter
    $
    0.40
    
    $
    0.16First Quarter
    $
    0.39
    
    $
    0.152005Fourth Quarter
    $
    0.20
    
    $
    0.12Third Quarter
    $
    0.23
    
    $
    0.12Second Quarter
    $
    0.33
    
    $
    0.16First Quarter
    $
    0.45
    
    $
    0.25


[1] These quotations reflect inter-dealer prices, without
retail mark-up, mark-down or commissions and may not represent actual
transactions.

As of December 31, 2006, the Company had approximately 1,614
holders of record of our common stock. The Company has no equity compensation
plan or plans.

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.

ITEM 2. LEGAL PROCEEDINGS

None.

ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS

None.

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

None.

ITEM 5. COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

Section 16(a) of the Securities Exchange Act of 1934 requires
  certain defined persons to file reports of and changes in beneficial ownership
  of a registered security with the Securities and Exchange Commission and the
  National Association of Securities Dealers in accordance with the rules and
  regulations promulgated by the Commission to implement the provisions of Section
  16. Under the regulatory procedure, officers, directors, and persons who own
  more than ten percent of a registered class of a Companys equity securities
  are also required to furnish the Company with copies of all Section 16(a) forms
  they file.

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None of the Companys officers, directors and greater than
  10% beneficial owners complied with the filing requirements of Section 16(a)
  since they have not filed Forms 3, 4 or 5. However, to the best of the Companys
  knowledge, there have been no transactions by officers, directors or greater
  than 10% beneficial owners that would require the filing of Form 4.

33

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ITEM 6. FINANCIAL STATEMENTS

Board of Directors Shoshone Silver Mining Company
Coeur dAlene, Idaho

REPORT OF REGISTERED INDEPENDENT PUBLIC ACCOUTING FIRM

We have audited the accompanying consolidated balance sheets of
Shoshone Silver Mining Company (an Idaho corporation) at December 31, 2006 and
2005, and the related consolidated statements of operations and comprehensive
income, stockholders equity and cash flows for the years then ended. 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
established by the Public Company Accounting Oversight Board. Those standards
require that we plan and perform the audits to obtain reasonable assurance about
whether the financial statements are free of material misstatement. 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 at December 31, 2006 and 2005, and the results of its
operations and its cash flows for the years then ended in conformity with
accounting principles generally accepted in the United States of America.

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



/s/ Williams & Webster, P.S.

Certified Public AccountantsSpokane, Washington
March 23, 2007

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SHOSHONE SILVER MINING COMPANY CONSOLIDATED BALANCE
SHEETS

|                                                              |   | December 31, |   |   | December 31, |  
|------------------------------------------------------------- | - | ------------ | - | - | ------------ | -
|                                                              |   | 2006         |   |   | 2005         |  
|                                                              |   |              |   |   |              |  
|ASSETS                                                        |   |              |   |   |              |  
|                                                              |   |              |   |   |              |  
|CURRENT ASSETS                                                |   |              |   |   |              |  
|Cash and cash equivalents                                     | $ | 193,639      |   | $ | 32,054       |  
|Receivable from related party                                 |   | 10,624       |   |   | 11,624       |  
|Deposits and prepaids                                         |   | 12,649       |   |   | 24,302       |  
|Supplies inventory                                            |   | 3,988        |   |   | 4,668        |  
|Total Current Assets                                          |   | 220,900      |   |   | 72,648       |  
|                                                              |   |              |   |   |              |  
|PROPERTY, PLANT AND EQUIPMENT                                 |   |              |   |   |              |  
|Property, plant and equipment                                 |   | 1,683,088    |   |   | 1,636,815    |  
|Accumulated depreciation                                      |   | (1,156,220   | ) |   | (1,119,977   | )
|Total Property Plant and
      Equipment                      |   | 526,868      |   |   | 516,838      |  
|                                                              |   |              |   |   |              |  
|MINERAL AND
      MINING PROPERTIES                           |   | 379,690      |   |   | 311,218      |  
|                                                              |   |              |   |   |              |  
|OTHER ASSETS                                                  |   |              |   |   |              |  
|Notes receivable from related parties                         |   | 207,305      |   |   | 67,558       |  
|Notes receivable                                              |   | 119,364      |   |   | -            |  
|Accrued interest receivable                                   |   | 9,523        |   |   | 1,327        |  
|Investments                                                   |   | 741,938      |   |   | 317,354      |  
|Total Other Assets                                            |   | 1,078,130    |   |   | 386,239      |  
|                                                              |   |              |   |   |              |  
|TOTAL ASSETS                                                  | $ | 2,205,588    |   | $ | 1,286,943    |  
|                                                              |   |              |   |   |              |  
|                                                              |   |              |   |   |              |  
|LIABILITIES AND STOCKHOLDERS' EQUITY                          |   |              |   |   |              |  
|                                                              |   |              |   |   |              |  
|CURRENT
      LIABILITIES                                     |   |              |   |   |              |  
|Accounts payable                                              | $ | 26,856       |   | $ | 1,461        |  
|Accrued expenses                                              |   | 2,354        |   |   | -            |  
|Total Current Liabilities                                     |   | 29,210       |   |   | 1,461        |  
|                                                              |   |              |   |   |              |  
|Note payable                                                  |   | 8,913        |   |   | -            |  
|Total Liabilities                                             |   | 38,123       |   |   | 1,461        |  
|                                                              |   |              |   |   |              |  
|COMMITMENTS AND
      CONTINGENCIES                           |   | -            |   |   | -            |  
|                                                              |   |              |   |   |              |  
|STOCKHOLDERS'
      EQUITY                                    |   |              |   |   |              |  
|Common stock, 20,000,000 shares authorized, $0.10 par value;  |   |              |   |   |              |  
|18,243,797 and 18,143,797 shares issued and
      outstanding |   | 1,824,380    |   |   | 1,814,380    |  
|Additional paid-in capital                                    |   | 3,151,142    |   |   | 3,142,306    |  
|Treasury stock                                                |   | (270,696     | ) |   | (296,180     | )
|Stock options                                                 |   | 12,221       |   |   | 12,221       |  
|Subscriptions receivable                                      |   | (18,844      | ) |   | (18,844      | )
|Accumulated deficit                                           |   | (3,133,563   | ) |   | (3,500,698   | )
|Accumulated other comprehensive income                        |   | 602,825      |   |   | 132,297      |  
|Total Stockholders' Equity                                    |   | 2,167,465    |   |   | 1,285,482    |  
|                                                              |   |              |   |   |              |  
|TOTAL LIABILITIES AND
      STOCKHOLDERS'                     |   |              |   |   |              |  
|EQUITY                                                        | $ | 2,205,588    |   | $ | 1,286,943    |  

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

---

SHOSHONE SILVER MINING COMPANYCONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

|                                                    |   | Years Ended December 31, |  
|--------------------------------------------------- | - | ------------------------ | -
|                                                    |   | 2006                     |  
|                                                    |   |                          |  
|REVENUES                                            | $ | 150                      |  
|                                                    |   |                          |  
|COST OF REVENUES                                    |   | 108                      |  
|                                                    |   |                          |  
|GROSS PROFIT                                        |   | 42                       |  
|                                                    |   |                          |  
|OPERATING EXPENSES                                  |   |                          |  
|General and administrative                          |   | 133,730                  |  
|Professional fees                                   |   | 114,516                  |  
|Consulting fees                                     |   | 135,140                  |  
|Depreciation                                        |   | 36,243                   |  
|Mining and exploration expenses                     |   | 88,016                   |  
|Total
      Operating Expenses                      |   | 507,645                  |  
|                                                    |   |                          |  
|LOSS FROM OPERATIONS                                |   | (507,603                 | )
|                                                    |   |                          |  
|OTHER INCOME (EXPENSES)                             |   |                          |  
|Net gain on sale of securities                      |   | 310,412                  |  
|Lease income                                        |   | 411,980                  |  
|Gain on sale of load claim                          |   | 133,907                  |  
|Dividend and interest income                        |   | 18,815                   |  
|Interest expense                                    |   | (376                     | )
|Total
      Other Income (Expenses)                 |   | 874,738                  |  
|                                                    |   |                          |  
|INCOME (LOSS) BEFORE INCOME TAXES                   |   | 367,135                  |  
|                                                    |   |                          |  
|INCOME TAXES                                        |   | 124,826                  |  
|DEFERRED TAX GAIN                                   |   | (124,826                 | )
|                                                    |   |                          |  
|NET INCOME (LOSS)                                   |   | 367,135                  |  
|                                                    |   |                          |  
|OTHER COMPREHENSIVE INCOME (LOSS)                   |   |                          |  
|Unrealized holding gain (loss)
      on investments |   | 470,528                  |  
|                                                    |   |                          |  
|NET COMPREHENSIVE INCOME (LOSS)                     | $ | 837,663                  |  
|                                                    |   |                          |  
|NET INCOME (LOSS) PER COMMON SHARE, BASIC           | $ | 0.02                     |  
|                                                    |   |                          |  
|                                                    |   |                          |  
|NET INCOME (LOSS) PER COMMON SHARE, BASIC           |   |                          |  
|AND
      DILUTED                                   | $ | 0.02                     |  
|                                                    |   |                          |  
|WEIGHTED AVERAGE NUMBER OF                          |   |                          |  
|COMMON STOCK SHARES OUTSTANDING,                    |   |                          |  
|BASIC                                               |   | 18,221,819               |  
|                                                    |   |                          |  
|WEIGHTED AVERAGE NUMBER OF                          |   |                          |  
|COMMON STOCK SHARES OUTSTANDING,                    |   |                          |  
|DILUTED                                             |   | 18,321,819               |  

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

---

SHOSHONESILVERMININGCOMPANY 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, 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 |  | $ | 3,151,142       |   | $ | (270,696 | ) | $ | 12,221        |  | $ | (18,844       | ) | $ | (3,133,563  | ) | $ | 602,825       |   | $ | 2,167,465     |  

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

---

SHOSHONE SILVER MINING COMPANY CONSOLIDATED STATEMENTS OF
CASH FLOWS

|                                                            |   | Years Ended December 31, |  
|----------------------------------------------------------- | - | ------------------------ | -
|                                                            |   | 2006                     |  
|                                                            |   |                          |  
|CASH FLOWS FROM OPERATING ACTIVITIES                        |   |                          |  
|Net income (loss)                                           |   | 367,135                  |  
|Adjustments to
      reconcile net income (loss) to net     |   |                          |  
|cash
      used by operations:                              |   |                          |  
|Depreciation and amortization expense                       |   | 36,243                   |  
|Common stock issued for services                            |   | -                        |  
|Common stock issued for mining and exploration expenses     |   | 24,000                   |  
|Treasury stock issued for services                          |   | 20,320                   |  
|Net gain on sale of lode claim                              |   | (120,000                 | )
|Net
      gain on sale of investments                       |   | (175,272                 | )
|Changes in
      assets and liabilities:                    |   |                          |  
|Decrease (increase) in receivable from related party        |   | 1,000                    |  
|Decrease increase in deposits and prepaids                  |   | 11,653                   |  
|Decrease in supplies inventory                              |   | 680                      |  
|Increase (decrease) in accrued interest receivable          |   | (8,196                   | )
|Increase in accrued liabilities                             |   |                          |  
|Increase (decrease) in accounts payable                     |   | 27,749                   |  
|Net
      cash used in operating activities                 |   | 185,312                  |  
|                                                            |   |                          |  
|CASH FLOWS FROM INVESTING ACTIVITIES                        |   |                          |  
|Purchases of investments                                    |   | (41,602                  | )
|Proceeds from sale of investments                           |   | 459,588                  |  
|Purchase of mineral and mining properties                   |   | (68,472                  | )
|Investments exchanged for services                          |   | -                        |  
|Purchase of fixed assets                                    |   | (37,360                  | )
|Net
      cash provided by investing activities             |   | 312,154                  |  
|                                                            |   |                          |  
|CASH FLOWS FROM FINANCING ACTIVITIES                        |   |                          |  
|Proceeds from sale of common stock                          |   | -                        |  
|Advances to related party                                   |   | (195,000                 | )
|Issuance of note receviable from related party              |   | (243,000                 | )
|Payments received notes receivable from related party       |   | 103,253                  |  
|Payment on notes receivable                                 |   | 636                      |  
|Payment of common stock subscriptions                       |   | -                        |  
|Payment made on long-term note payable                      |   | (1,770                   | )
|Net
      cash (used in) provided by financing activities   |   | (335,881                 | )
|                                                            |   |                          |  
|Net increase (decrease) in cash                             |   | 161,585                  |  
|                                                            |   |                          |  
|Cash, beginning of period                                   |   | 32,054                   |  
|                                                            |   |                          |  
|Cash, end of period                                         | $ | 193,639                  |  
|                                                            |   |                          |  
|                                                            |   |                          |  
|SUPPLEMENTAL CASH FLOW DISCLOSURES:                         |   |                          |  
|Interest expense paid                                       | $ | 376                      |  
|Income taxes
      paid                                     | $ | -                        |  
|                                                            |   |                          |  
|NON-CASH INVESTING AND FINANCING
      ACTIVITIES:          |   |                          |  
|Common stock issued for accounts
      payable              | $ | -                        |  
|Note receivable
      in connection with sale of lode claim | $ | 120,000                  |  
|Note issued in exchanged for
      vehicle                  | $ | 10,781                   |  
|Treasury stock
      acquired through sale of investment    | $ | -                        |  

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

---

NOTE 1: ORGANIZATION AND DESCRIPTION OF BUSINESS

Shoshone Silver Mining Company (the Company) was incorporated
under the laws of the State of Idaho on August 4, 1969, under the name of
Sunrise Mining Company and is 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 was broadened to include resource management and sales
of mineral and timber interests.

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.

The Companys year end is December 31.

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.

Recently Issued Accounting Pronouncements Not Yet
Adopted

In September 2006, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 157, Fair Value
Measurements (SFAS No. 157), which defines fair value, establishes a
framework for measuring fair value in generally accepted accounting principles
(GAAP), and expands disclosures about fair value measurements. Where applicable,
SFAS No. 157 simplifies and codifies related guidance within GAAP and does not
require any new fair value measurements. SFAS No. 157 is effective for financial
statements issued for fiscal years beginning after November 15, 2007, and
interim periods within those fiscal years. Earlier adoption is encouraged. The
Company does not expect the adoption of SFAS No. 157 to have a significant
effect on its financial position or results of operation.

In June 2006, the Financial Accounting Standards Board issued
FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes  an
interpretation of FASB Statement No. 109 (FIN 48), which prescribes a
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. FIN 48 also provides guidance on de-recognition, classification,
interest and penalties, accounting in interim periods, disclosure and
transition. FIN 48 is effective for fiscal years beginning after December 15,
2006. The Company does not expect the adoption of FIN 48 to have a material
impact on its financial reporting.

In March 2006, the Financial Accounting Standards Board issued
  Statement of Financial Accounting Standards No. 156, Accounting for Servicing
  of Financial Assetsan Amendment of FASB Statement No. 140. This
  statement requires an entity to recognize a servicing asset or servicing liability
  each time it undertakes an obligation to service a financial asset by entering
  into a servicing contract in any of the following situations: a transfer of
  the servicers financial assets that meets the requirements for sale accounting;
  a transfer of the servicers financial assets to a qualifying special-purpose
  entity in a guaranteed mortgage securitization in which the transferor retains
  all of the resulting securities and classifies them as either available-for-sale
  securities or trading securities in accordance with FASB Statement No. 115;
  or an acquisition or assumption of an obligation to service a financial asset
  that does not relate to financial assets of the servicer or its consolidated
  affiliates. The statement also requires all separately recognized servicing
  assets and servicing liabilities to be initially measured at fair value, if
  practicable, and permits an entity to choose either the amortization or fair
  value method for subsequent measurement of each class of servicing assets and
  liabilities. This statement is effective for fiscal years beginning after September
  15, 2006, with early adoption permitted as of the beginning of an entitys
  fiscal year. Management believes the adoption of this statement will not impact
  the Companys financial condition or results of operations.

39

---

In February 2006, the Financial Accounting Standards Board issued
  Statement of Financial Accounting Standards No. 155, Accounting for Certain
  Hybrid Financial Instruments, an Amendment of FASB Standards No. 133 and 140
  (SFAS No. 155). This statement established the accounting for certain
  derivatives embedded in other instruments. It simplifies accounting for certain
  hybrid financial instruments by permitting fair value remeasurement for any
  hybrid instrument that contains an embedded derivative that otherwise would
  require bifurcation under SFAS No. 133 as well as eliminating a restriction
  on the passive derivative instruments that a qualifying special-purpose entity
  (SPE) may hold under SFAS No. 140. This statement allows a public
  entity to irrevocably elect to initially and subsequently measure a hybrid instrument
  that would be required to be separated into a host contract and derivative in
  its entirety at fair value (with changes in fair value recognized in earnings)
  so long as that instrument is not designated as a hedging instrument pursuant
  to the statement. SFAS No. 140 previously prohibited a qualifying special-purpose
  entity from holding a derivative financial instrument that pertains to a beneficial
  interest other than another derivative financial instrument. This statement
  is effective for fiscal years beginning after September 15, 2006, with early
  adoption permitted as of the beginning of an entitys fiscal year. Management
  believes the adoption of this statement will have no immediate impact on the
  Companys financial condition or results of operations.

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. Although the financial
institutions are considered creditworthy and have not experienced any losses on
their deposits, at December 31, 2006 and 2005, the Companys cash balance
exceeded Federal Deposit Insurance Corporation (FDIC) limits by $57,845 and $0,
respectively.

Earnings Per Share

On January 1, 1998, the Company adopted Statement of Financial
Accounting Standards No. 128, 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. Although
there were 100,000 common stock options outstanding at December 31, 2006 and
2005, they were not included in the calculation of earnings per share at
December 31, 2005 because they would have been considered anti-dilutive.

Fair Value of Financial Instruments

The Company's financial instruments as defined by Statement of
Financial Accounting Standards No. 107, "Disclosures about Fair Value of
Financial Instruments," include cash and cash equivalents, accounts receivable,
deposits and pre-paids, 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 SFAS 115.

Going Concern

As shown in the accompanying financial statements, the Company
  has had limited revenues and incurred an accumulated deficit of $3,133,563 through
  December 31, 2006. These factors raise substantial doubt about the Companys
  ability to continue as a going concern. Management has established plans designed
  to increase the sales of the Companys products. Management intends to
  seek additional capital from new equity securities offerings that will provide
  funds needed to increase liquidity, fund internal growth and fully implement
  its business plan.

40

---

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 $150,000 is believed necessary to continue
operations and increase development through the next fiscal year. The timing and
amount of capital requirements will depend on a number of factors, including
demand for products and services.

Marketable Securities

The Company accounts for marketable securities in accordance
with the provisions of Statement of Financial Accounting Standards No. 115,
Accounting for Certain Investments in Debt and Equity Securities (SFAS No.
115). Under SFAS No. 115, debt securities and equity securities that have
readily determinable fair values are to be classified in three categories:

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 10: Investments for further details.

Mineral and Mining Properties

Costs of acquiring mineral properties are capitalized by
project area upon purchase of the associated claims. See Note 7. Costs to
maintain the mineral rights and leases are expensed as incurred. When a property
reaches the production stage, the related capitalized costs will be amortized,
using the units of production method on the basis of periodic estimates of ore
reserves.

Mineral properties are periodically assessed for impairment of
value and any diminution in value is charged to operations at the time of
impairment. Should a property be abandoned, its unamortized capitalized costs
are charged to operations.

Mineral Exploration and Development Costs

All exploration expenditures are expensed as incurred.
Significant property acquisition payments for active exploration properties are
capitalized. If no extractable 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
unit of production basis over proven and probable reserves.

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

The Company expenses the acquisition costs of certain mining
properties as mining exploration expenses. The total amounts expensed for
acquisitions were $57,000 and $91,746 for the years ended December 31, 2006 and
2005, respectively. See Note 7.

41

---

Principles of Consolidation

The consolidated financial statements include the accounts of
the Company and its wholly owned subsidiary, Shoshone Mexico, S.A. de C.V.,
after elimination of the inter-company accounts and transactions.

Property and Equipment

Property and equipment are stated at cost. Depreciation of
property and equipment 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 6.

Provision for Taxes

Income taxes are provided for based upon the liability method
of accounting pursuant to Statement of Financial Accounting Standards No. 109
Accounting for Income Taxes (SFAS No. 109). 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 SFAS No. 109 to allow recognition of such
an asset.

At December 31, 2006, the Company had deferred tax assets
calculated at an expected rate of 34% of approximately $550,000, principally
arising from net operating loss carry-forwards for income tax purposes. As
management of the Company cannot determine that it is more likely than not that
the Company will realize the benefit of the deferred tax asset, a valuation
allowance equal to the deferred tax asset has been established at December 31,
2006. The significant components of the deferred tax assets at December 31, 2006
and 2005 were as follows:

|                                       |   | Dec.
      31, 2006 |   |   | Dec.
      31, 2005 |  
|-------------------------------------- | - | ------------------- | - | - | ------------------- | -
|                                       |   |                     |   |   |                     |  
|Net operating loss carry forward       | $ | 1,617,000           |   | $ | 1,782,000           |  
|                                       |   |                     |   |   |                     |  
|Deferred tax asset                     | $ | 550,000             |   | $ | 606,000             |  
|Deferred tax asset valuation allowance |   | (550,000            | ) |   | (606,000            | )
|Net Deferred Tax Asset                 | $ | -                   |   | $ | -                   |  

At December 31, 2006 and 2005, the Company had net operating
loss carry-forwards ofapproximately $1,617,000 and $1,782,000,
respectively, which expire in the years 2020 through 2026. This decrease is due
to the Company utilizing net operating losses to offset their taxable income for
2006. The change in the valuation allowance account from December 31, 2005 to
December 31, 2006 was $56,000.

Reclamation Costs

Management believes reclamation costs at its mining sites will
be minimal. Posting of a reclamation bond has not been required at this
time.

Revenue Recognition and Cost of Sales

In 2003, the Company expanded its business focus to include resource
  management and sales of mineral and timber interests. The Company recognizes
  revenue from sales at the time payment for the timber is received. Sales in
  both fiscal 2005 and 2006 are primarily from the sale of medallions which are
  recorded when the coins are shipped to the customer. The Company has no revenues
  from its mineral exploration activities.

42

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Treasury Stock

The Company accounts 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.

During fiscal 2006, the Company reissued 80,000 treasury shares
at a deficit of $7,200 which was charged to additional paid-in capital. Also,
during fiscal 2006, the Company reissued 8,000 treasury shares with proceeds in
excess of cost of $1,040 which was credited to additional paid-in capital.

Use of Estimates

The process of preparing financial statements in conformity
with accounting principles generally accepted in the United States of America
requires the use of estimates and assumptions regarding certain types of assets,
liabilities, revenues, and expenses. Such estimates primarily relate to
unsettled transactions and events as of the date of the financial statements.
Accordingly, upon settlement, actual results may differ from estimated amounts.

NOTE 3: ACCOUNTS RECEIVABLE FROM RELATED PARTY

During the year ended December 31, 2005, the Company prepaid
$11,624 to a related party. The Company made the prepayment for certain
administrative services the related party was to provide. During fiscal 2005,
the Company ceased its business relationship with the related party and has
requested a refund of the entire prepaid amount. During fiscal 2006, the Company
received payments on this receivable of $1,000.

The Company has evaluated the credit risk associated with this
related party receivable to determine if a reserve is necessary. At December 31,
2006, no reserve was deemed necessary.

NOTE 4: DEPOSITS AND PREPAID EXPENSES

During 2004, the Company, through an attorney, received monthly
lease payments on the Lakeview property lease, which was disputed. The attorney
held these revenues for the Company and, with the Companys permission, deducted
expenses that the attorney incurred. During fiscal year 2005, this dispute was
settled and no additional lease payments are to be received by the attorney. The
balance of lease income, held in trust with this attorney, was $7,174 at
December 31, 2005. During the fiscal 2006 third quarter the Company received a
payment of $6,799 representing the total remaining amount. The remaining $375
was charged to operations during the fiscal 2006 third quarter.

During the fiscal year ended December 31, 2005, the Company
prepaid administrative services to be performed by a related mining company. The
remaining prepaid balance was $6,969 at December 31, 2006 and $7,916 at December
31, 2005.

During the fiscal 2006 second quarter, the Company made a
deposit of $5,000 toward the purchase of certain equipment. Upon delivery of
this equipment, the Company will pay an additional $6,000.

During 2004, the Company paid an attorney for work to be
performed. This attorney held these fees in trust and as expenses were incurred,
the deposit was reduced. At December 31, 2005, the balance held in trust was
$5,512. During 2006, the attorneys work was completed and the balance of $5,512
was returned to the Company.

NOTE 5: SUPPLIES INVENTORY

During the year ended December 31, 2004, the Company purchased
  500 one troy ounce silver medallions with the Companys logo on it 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 December 31, 2006, the Company sold 10 medallions at a total cost
  of $108 and revenue of $150. The Company also distributed 22 medallions with
  a cost of $232, for marketing purposes. At December 31, 2006, the Company had
  376 coins remaining in inventory with an historical cost basis of $3,988.

43

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NOTE 6: PROPERTY AND EQUIPMENT

Property and equipment are stated at cost. Depreciation is
provided using the straight-line method with a half-year convention over the
estimated useful lives of the assets. 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 December 31, 2006 and 2005:

|                              |   | Dec.
      31, 2006 |   |   | Dec.
      31, 2005 |  
|----------------------------- | - | ------------------- | - | - | ------------------- | -
|Equipment                     | $ | 632,748             |   | $ | 597,214             |  
|Plant assets                  |   | 1,050,339           |   |   | 1,039,601           |  
|Subtotal                      |   | 1,683,087           |   |   | 1,636,815           |  
|Less accumulated depreciation |   | (1,156,220          | ) |   | (1,119,977          | )
|                              | $ | 526,867             |   | $ | 516,838             |  

Depreciation expense was $36,243 for the year ended December
31, 2006 and $32,019 for the year ended December 31, 2005.

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 7: MINERAL AND MINING PROPERTIES

Northwestern United States

Silver Valley, Idaho

Shoshone GroupThis mineral property
grouping owned by the Company consists of five patented lode mining claims
situated in the St. Joe Mining District, Shoshone County, Idaho. The five
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 GroupSeven patented mining
claims were acquired in 1998 as part of a settlement of a promissory note owed
to the Company. The value of the property was included as an exploration expense
in a prior year.

Lakeview District, Idaho

Idaho Lakeview and Keep Cool GroupThe
Company acquired the Lakeview and Keep Cool mining properties consisting of 10
patented and 4 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.

44

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

Weber GroupThe Company acquired, for
100,000 shares of its common stock, six patented and five 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. 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.

Lucky JoeThe Company acquired, for
150,000 shares of its common stock, two unpatented lode mining claim 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.

Confed Claims LeaseThe Company
leased, for 1,000,000 shares of its common stock, six 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.

The lease expense for 2004 was $350,000, or $0.35 per share for
the 1,000,000 shares to be issued. The Company issued 350,000 shares in 2004 and
included $227,500 (the value of the remaining shares to be issued) in accounts
payable in the financial statements at December 31, 2004.

During 2005, the Company issued those shares owing as well as
an additional 100,000 shares valued at $20,000 ($0.20 per share) as the first
annual payment.

During fiscal 2006, the Company issued 100,000 shares valued at
$24,000 ($0.24 per share) for fiscal 2006 lease payment. See Note 12: Common
Stock and Note 18: Commitments and Contingencies for further details.

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 located in Boundary County, Idaho. The cost of
the properties is included in exploration expenses for the twelve-month period
ended December 31, 2005.

Stillwater Extension ClaimsThe
Company acquired, for 100,000 shares of its common stock, ten unpatented lode
mining claims 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 the
fiscal 2006 first quarter, 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 Granit Country,
Montana.

45

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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 fiscal 2006, the Company sold the Drumheller Group of
claims for $150,000 to an unrelated party. 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 $21,093 in
connection with this sale. See Note 9: Note Receivable for further
details.

Southwestern United States

Arizona Gold FieldThe Company
acquired, for 100,000 shares of stock, four unpatented lode mining claims
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 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 fiscal year 2004,
the Company acquired three unpatented lode claims covering 60 acres located in
the Cerro Colorado Mining District of Pima County, Arizona during 2004. The cost
of the properties, $1,500, has been expensed in prior years as an exploration
expense.

California Creek PropertiesDuring the
fiscal year ended December 31, 2005, the Company acquired, for $2,970, 18
unpatented lode claims located near Elko, Nevada. The cost of the properties is
included in exploration expenses for the twelve-month period ended December 31,
2005. In November 2005, the Company entered into a Letter of Intent with
International Arimex Resouces, Inc. (Arimex) that would allow Arimex to earn
up to 100% interest in these properties. At this time, no action under the
agreement has been taken. See Note 17: Option Agreements for further details.

Mexico Properties

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

Shoshone Mexico, S.A. de C.V., a subsidiary of Shoshone Silver
Mining Company, entered into an agreement with Minco, PLC, of Ireland on
February 22, 2006, under which Minco can earn a 75% interest in Shoshones
Bilbao Project by performing certain exploration, evaluation and, if feasible,
development of mineral resources within the Property.

Minco has thus far paid Shoshone $400,000 and nearly completed
its pre-feasibility work and analysis on the property. If Minco fulfills the
remainder of its obligations under the agreement, a new corporation will be
formed in which Shoshone shall carry a 25% interest.

Sugar Pit #2The Company paid $14,700
cash during 2001 to acquire a lease to explore this mineral property located in
Mexico. The six-year lease is renewable, subject to renegotiation of the price.
This property contains crystalline quartz mineralization. The entire cost of the
lease was expensed in 2001.

46

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Other Mexico Mining PropertiesThe
Company has paid, in cash, stock, and equipment $130,500 for five different
mining properties in locations in northern Mexico. The Company received
interests in these properties which vary from 20-25%, and is expecting to
receive those percentages of net sales once mines on the properties are
operative. At this time, these mines have not begun operations. The cost of the
properties, $130,500, was expensed in prior years as an exploration expense.

NOTE 8: NOTES RECEIVABLE FROM RELATED PARTIES

On February 4, 2004, the Company loaned to Shoshone Capital
Corporation, a related party, $40,000. The unsecured note bears interest at 7%
per annum, with principal and unpaid interest due on February 4, 2007. During
2006, a payment of $4,000 was received, of which $695 was applied to principal
and $3,305 was applied to accrued interest receivable. At December 31, 2006,
interest income of $229 had been accrued and is included in accrued interest
receivable in the financial statements.

On August 10, 2004, the Company loaned to Spring Creek Capital,
a related party, $53,214. The note bears interest at 7% per annum. During 2005,
a payment of $30,000 was received, of which $25,656 was applied to principal and
$4,344 was applied to accrued interest receivable. During 2006, a payment of
$26,875 was received, of which $24,882 was applied to principal and $1,992 was
applied to accrued interest receivable. The remaining principal balance of
$2,676 was written off against interest income during the fourth quarter of
fiscal 2006.

On September 1, 2006, the Company loaned Silver Valley Capital,
LLC $168,000 in exchange for a promissory note. The Companys President and its
Secretary are both members of Silver Valley Capital, LLC. Both these individuals
abstained from voting on the respective companies Board of Directors
Resolutions approving this loan. The note bears interest at 10.0% per annum and
stipulates that monthly payments of $822 are to be made until February 1, 2007.
On February 1, 2007, the remaining principal plus accrued interest becomes due
and payable. During fiscal 2006, a payment of $1,645 was received and was
applied to accrued interest receivable. At December 31, 2006, interest income of
$3,998 had been accrued and is included in accrued interest receivable in the
financial statements.

On October 12, 2006, the Company loaned Sterling Mining Company
$75,000 in exchange for a promissory note. Carol Stephan, a Director of the
Company, is also a Director of Sterling Mining Company. Ms. Stephan abstained
from voting on the respective Companies Board of Directors Resolutions
approving this loan. The note bears interest at 10% per annum and became due and
payable on December 31, 2006. The note stipulated that no interest would accrue
for the first month it was outstanding. During the fourth quarter of fiscal
2006, a payment of $75,625 was received, of which $75,000 was applied to
principal and $625 was applied to accrued interest receivable.

NOTE 9: NOTE RECEIVABLE

On January 23, 2006, the Company accepted a promissory note for
$120,000 from an unrelated party in conjunction with 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 2006 third quarter, the
Company received a payment of $5,089, of which $637 was applied toward principal
and $4,452 was applied to accrued interest receivable. At December 31, 2006,
interest income of $3,522 had been accrued and is included in accrued interest
receivable in the financial statements.

NOTE 10: INVESTMENTS

The Company has invested in various privately and publicly held
companies. At this time, the Company holds securities classified as available
for sale. Amounts are reported at fair value, with unrealized gains and losses
excluded from earnings and reported separately as a component of stockholders
equity.

Unrealized gains and losses are recorded on the income statement
  as other comprehensive income (loss) and also on the balance sheet as other
  accumulated comprehensive income.

47

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The following summarizes securities available for sale at December 31, 2006:

|                                  |  | # of      |  |   |         |  |   | Market  | 
|--------------------------------- |  | --------- |  | - | ------- |  | - | ------- | 
|Security                          |  | Shares    |  |   | Cost    |  |   | Value   | 
|Chester Mining Company            |  | 2,500     |  | $ | 12,567  |  | $ | 6,850   | 
|Gold Crest Mines                  |  | 848,100   |  |   | 3,900   |  |   | 415,569 | 
|Independence                      |  | 16,000    |  |   | 28,160  |  |   | 54,400  | 
|Kimberly Gold Mines               |  | 71,500    |  |   | 56,266  |  |   | 10,725  | 
|Merger Mines Corp                 |  | 15,000    |  |   | 9,458   |  |   | 8,250   | 
|Metropolitan Mines Limited        |  | 6,000     |  |   | 2,008   |  |   | 2,400   | 
|Mineral Mountain Mining & Milling |  | 5,000     |  |   | 3,866   |  |   | 2,000   | 
|Sterling Mining Company           |  | 76,776    |  |   | 44,774  |  |   | 241,744 | 
|                                  |  |           |  |   |         |  |   |         | 
|Balance, December 31, 2006        |  | 1,040,876 |  | $ | 160,999 |  | $ | 741,038 | 

The Company had an unrealized holding gain during the year
ended December 31, 2006 of $470,528. This is recorded on the income statement as
other comprehensive income (loss) and included on the balance sheet in other
accumulated comprehensive income.

The following summarizes securities available for sale at
December 31, 2005:

|                                  |  | # of      |  |   |         |  |   | Market  | 
|--------------------------------- |  | --------- |  | - | ------- |  | - | ------- | 
|Security                          |  | Shares    |  |   | Cost    |  |   | Value   | 
|Chester Mining Company            |  | 2,600     |  | $ | 13,163  |  | $ | 4,550   | 
|Kimberly Gold Mines               |  | 46,950    |  |   | 84,528  |  |   | 7,512   | 
|Merger Mines Corp                 |  | 15,500    |  |   | 9,951   |  |   | 6,200   | 
|Metropolitan Mines Limited        |  | 1,000     |  |   | 658     |  |   | 280     | 
|Mineral Mountain Mining & Milling |  | 5,000     |  |   | 3,866   |  |   | 1,750   | 
|Silver Crest Mines                |  | 1,158,000 |  |   | -       |  |   | -       | 
|Sterling Mining Company           |  | 93,976    |  |   | 72,265  |  |   | 294,145 | 
|Timberline Resources              |  | 7,100     |  |   | 626     |  |   | 2,917   | 
|                                  |  |           |  |   |         |  |   |         | 
|Balance, December 31, 2005        |  | 1,330,126 |  | $ | 185,057 |  | $ | 317,354 | 

The Company had an unrealized holding loss during the year
ended December 31, 2005 of $601,561. This is recorded on the income statement as
other comprehensive income (loss) and included on the balance sheet in other
accumulated comprehensive income.

NOTE 11: NOTE PAYABLE

On June 30, 2006, the Company acquired a vehicle for $19,782 by
paying $9,000 cash and signing a note for the remaining $10,781. The note has a
term of 60 months, bears interest at 8.99% and stipulates that payments of $249
be made monthly. The Company is making payments in the amount of $499 per month
and will pay off the note in 30 months. The outstanding balance on this note
payable was $8,913 at December 31, 2006.

NOTE 12: COMMON STOCK

The Company is authorized to issue 20,000,000 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.

During 2005, the Company issued 750,000 shares of common stock
for the leasing of a mining property (of which 650,000 shares had been owed at
December 32, 2004), for a total value of $247,500.

48

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During 2006, the Company issued 100,000 shares of common stock
for the leasing of a mining property valued at $24,000. See Note 18:
Commitments & Contingencies for further details.

NOTE 13: TREASURY STOCK

The Company held 845,926 and 1,125,986 shares of treasury stock
at December 31, 2006 and December 31, 2005, respectively.

During fiscal 2005, the Company issued 165,000 shares of
treasury stock for the payment of services totaling $29,000, and 80,000 shares
were issued for cash of $8,000. The Company also acquired 925,926 shares of
treasury stock with a value of $296,296 ($0.32 per share) in exchange for 65,844
shares of Sterling Mining Company.

During fiscal 2006, the Company issued 8,000 shares of treasury
stock for the payment of services totaling $1,920 and issued 80,000 shares of
treasury stock for the payment of services totaling $18,400.

NOTE 14: STOCK OPTIONS AND WARRANTS

On September 29, 1999, the Company granted stock options to its
attorney enabling him to purchase up to 100,000 shares of common stock at a
price of $0.01 per share. In accordance with Statement of Financial Accounting
Standard No. 123, the fair value of the options was estimated using the Black
Scholes Option Price Calculation. The following assumptions were made to value
the stock options: strike price at $0.01; risk free interest rate of 5%; an
expected life of 5 years; and volatility of 30%. During fiscal 2001, the Company
recorded $12,221 for these options. These stock options do not have an explicit
expiration date.

During the year ended December 31, 2004, the Company sold in
private placement 1,861,857 shares of common stock with one warrant attached.
The warrants were exercisable at $0.75 per share and expired one year from the
purchase date. On January 31, 2005, the options expired unexercised.

No new stock options or warrants were issued during the fiscal
years ended December 31, 2006 and December 31, 2005.

NOTE 15: SUBSCRIPTIONS RECEIVABLE

In fiscal 2004, the Company issued 101,123 shares of treasury
stock for subscriptions of $20,225. These subscriptions bear interest at 7% per
year until their due date in 2009. During 2005, the Company received payment
against this receivable totaling $3,988, of which $1,381 was applied to
principal and $2,607 was applied to interest. No payments were received during
2006. At December 31, 2006, interest income of $1,774 had been accrued and is
included in accrued interest receivable on the financial statements.

NOTE 16  REVENUES

Sales in both 2005 and 2006 are primarily from the sale of
medallions which are recorded when the coins are shipped to the customer. The
Company has no revenues from its mineral exploration activities. The revenues
for the years ended December 31, 2006 and 2005 were $150 and $1,373,
respectively.

NOTE 17: OPTION AGREEMENTS

On February 22, 2006, the Company entered into an option
agreement with an unrelated party under which the unrelated party may earn up to
a 75% interest in the Companys Bilbao-Mexico Property. In connection with this
agreement, the Company received $399,980 during 2006 as consideration for
allowing the other party to conduct exploration activities on the property. The
$399,980 was recorded as lease income.

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). In connection with this agreement, the Company received
$20,000 as consideration for allowing the unrelated party to conduct exploration
activities on the property. The $20,000 was recorded as lease income.

49

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Also, on November 9, 2005, in connection with the California
Creek Option Agreement, the Company entered into an agreement with two unrelated
parties to combine certain properties (the Agreement to Combine Properties).
During 2006, the Company paid $8,000 to these two unrelated parties as
consideration for their entry into the Agreement to Combine Properties. The
$8,000 was recorded as a reduction to lease income during the fiscal 2006 second
quarter.

NOTE 18  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 of any pending litigation or of any specific past or
prospective matters which could impair the value of its mining claims.

Leases

During 2004, the Company entered into a one-year lease for
office space located in Kellogg, Idaho at the rate of $250 per month. The lease
expired on October 31, 2005 and was not renewed. The Company subsequently
relocated to Wallace, Idaho.

On November 1, 2006, the Company entered into a one-year lease
for office space located in Wallace, Idaho at the rate of $550 per month. The
Company has the option to renew the lease for one additional year.

During 2004, the Company entered into a 25-year lease agreement
for a mining property in Shoshone County. The leases terms call 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. Future lease payments on the property are
100,000 shares of common stock per year which the Company paid in 2005 and
2006.The value of these future lease payments, based on the current
market value of the Companys common stock, would be approximately $20,000 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. The amounts expensed in
2006 and 2005 under this agreement were $24,000 and $20,000, respectively.

50

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PART III

ITEM 1. INDEX TO EXHIBITS

|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 #                                              
|      |                                                                                                                                                          
|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. (+)                                                         

|* | 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           

ITEM 2. DESCRIPTION OF EXHIBITS

Not Applicable

51

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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: May 18, 2007 | 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

52

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