SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549  FORM 10-KSB/A No. 1  [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2004 OR [  ] TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transaction period from  to  Commission file number 1-316  INDEPENDENCE LEAD MINES COMPANY (Exact name of registrant as specified on its charter)  ARIZONA 82-0131980 (State or other jurisdiction  (IRS Employer Identification No.) of incorporation)  P O BOX 717 WALLACE, IDAHO 83873 (Address of principal executive offices)  Registrants telephone number, including area code: (208) 753-2525  Securities registered pursuant to Section 12 (b) of the Act:  Common Non-Assessable Stock, Par Value $1.00 per Share None Title of each class Name of each exchange on which registered  Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  [X] No [   ]  As of March 24, 2005, the aggregate market value of the voting stock held by non-affiliates of the registrant was $2,467,446.  (APPLICABLE ONLY TO CORPORATE REGISTRANTS)  As of December 31, 2004, there were 4,675,793 shares outstanding of the registrants $1.00 par value common stock; authorized common shares of 5,000,000.  DOCUMENTS INCORPORATED BY REFERENCE  The following documents are incorporated by reference in the indicated parts of this Form 10-KSB: NONE      INDEPENDENCE LEAD MINES COMPANY Form 10-KSB/A No. 1 Annual Report For the year ended December 31, 2004   TABLE OF CONTENTS  PART I Page Item 1. Business . . . . . . . 1 Item 2. Properties . . . . . . . 2 Item 3. Legal Proceedings . . . . . . 3 Item 4. Submission of Matters to a Vote of Security Holders . . 3  PART II  Item 5. Market for the Registrants Common Stock and Related Stockholder Matters . . . . . 3 Item 6. Managements Discussion and Analysis of Financial . . . . Condition and Results of Operations 4 Item 7. Financial Statements. . . . 4 Item 8. Changes in and Disagreements on Accounting and Financial Disclosure 4 Item 8A. Controls and Procedures . . 4 Item 8B Other Information 5  PART III  Item 9. Directors and Executive Officers of the Registrant . . 5 Item 10. Executive Compensation . . . . . 5 Item 11. Security Ownership of Certain Beneficial Owners and Management . . . . . 6 Item 12. Certain Relationships and Related Transactions . . . 6  PART IV  Item 13. Exhibits and Reports on Form 8-K . . . . 6 Exhibit Index . . . . . . . 6 Item 14 Principal Accountants Fees and Services 6 Index to Financial Statements  . . . . 8  Signatures. . . . . . . 21     [The balance of this page has been intentionally left blank]     (i)


INDEPENDENCE LEAD MINES COMPANY Form 10-KSB/A No. 1 Annual Report For the year ended December 31, 2004  PART I  Item 1. Business.  Independence Lead Mines Company (the Company) is a corporation organized under the laws of the State of Arizona on September 16, 1929. The Company is the owner of fifteen patented and seventeen unpatented mining claims. This claim group (the property) is situated Northwest of Hecla Mining Companys Lucky Friday Mine in the Coeur dAlene Mining District, Shoshone County Idaho. Adjacent is the community of Mullan and U.S. Interstate Highway 90.  Pursuant to the terms of an agreement dated February 8, 1968, among Hecla Mining Company (Hecla), Day Mines, Inc. (Day), Abot Mining Company (Abot) and the Company (the Unitization Agreement), the Eastern portion of the Companys Property (approximately five-eighths of the total area of the Property) was unitized with certain adjoining and near-by properties owned by the Day and Abot into a unitized area, consisting of 55 claims, (known as the DIA Area). Under the terms of the Unitization Agreement, ores and minerals in place are owned by the parties thereto in the following percentages:  Day (now Hecla by merger) 47.70% Independence 46.30% Abot (now Hecla by purchase) 6.00%  By a second agreement also dated February 8, 1968, (the Lease Agreement), Hecla leased the DIA Area for a period of fifty (50) years, subject to a 30-year extension, for the purpose of conducting mineral exploration and development of the DIA Area and mining such commercial ore as may be discovered in the DIA Area by Hecla. In the seventies Hecla performed exploration from what is called the 4050 foot level. Hecla reentered this level in the early nineties performing additional exploration. This work led to a deeper exploration effort from the 4900 level. In mid 1995 a 4,500 foot tunnel was started from Heclas Silver Shaft to the mineral zone. The DIA Project was divided into Phase I, II and III. By December 31, 1996 Phase I and II had been completed and a promising deposit had been identified. The total cost of the project from the time of its inception was less than $16,000,000.  The Lease Agreement provides that all costs and expenses incurred in the exploration, development and operation of the DIA Area are to be paid by Hecla subject to the right of Hecla to be reimbursed for such costs and expenses, together with all advance royalties paid, out of any future net profits realized from the operation of the DIA Area. After recovery of Heclas costs and expenses and amounts paid as advance royalties, and the establishment of a three-month working capital reserve, net profit royalties are to be paid to the Company and the other property owners as follows:  Day (now Hecla by Merger) 19.08% Independence 18.52% Abot now Hecla by purchase)  2.40%  Hecla, as the lessee, will retain the remaining sixty percent (60%) of any net profits realized. Under the terms of the Unitization Agreement, one-half of the first net profit/royalties received by the Company are to be paid over to Day (now Hecla) until Day recovers the sum of $450,000. The relationship of the parties to the Agreement may, under certain circumstances, be converted to a joint venture at the option of the property owners, where after the property owners would become participating, non-operating working interest owners who would share profits and expenses in connection with the DIA Area in the same ratio as exists pursuant to lease arrangement with Hecla described above.  Page 1





Until Hecla commences to pay net profit royalties and during such period as the Lease Agreement is in effect, Hecla is obligated to pay an advance royalty to the Company of $750 per month subject to increase to $1,500 when production for the DIA Area exceeds 2,000 tons per month.  Pursuant to the terms of the February 8, 1968, agreements, Hecla will be obligated to pay a royalty of 18.52 percent of defined net profits after Hecla has recouped its costs to explore and develop this property from the new discovery to Independence Lead Mines Company.  The Company has no patents, licenses, franchises or concessions, which are considered by the Company to be of importance. The business is not of a seasonal nature. Since the potential products are traded in the open market, the Company has no control over the competitive conditions in the industry. There is no backlog of orders.  There are numerous Federal and State laws and regulation related to environmental protection, which have direct application to mining and milling activities. The more significant of these laws deal with mined land reclamation and wastewater discharge from mines and milling operations. The Company does not believe that these laws and regulations as presently enacted will have a direct material adverse effect on its operations.  The current officers and directors of the Company serve without compensation and are not considered by the Company to be employees.  The western portion of the Companys property is not under the DIA Area agreement. West Independence, as it is called, consists of 10 patented mining claims of which four (4) claims are partly included in the DIA Area agreement. Patented acres owned are listed below.  West Independence Acres 81.362 East Independence Acres 91.808 Total Acres 173.170  Since June 30, 1999 the Company has experienced substantial differences with the Lessee. In January 1997 Hecla chose to go forward with the DIA Projects Phase III and by June 1, 1998 the Project reached full production. In the first year of full production the Project lost $785,000 after mining and milling 257,605 tons. Independence requested Hecla to stop mining to prevent loss of the resource. Heclas management has refused all requests to act with prudence, and continues to mine at this writing. Since Hecla chose to go forward with Phase III, through the end of 2004 there have been approximately 1,428,000 tons mined and milled and all development costs have been lost. Request for prudence over the years have failed. During 2003 Hecla mined and milled 151,991 tons containing 15.76 oz. silver per ton, 9.05% lead, and 2.18% zinc, and during 2004 164,624 tons were mined and milled assaying 13.17 oz. silver per ton, 7.78% lead, and 2.36% zinc.  For the year 2003 the Project lost   $723,147 and for the year 2004 the Project lost $3,000,605. The DIA Project total cost at December 31, 2004 was $36,353,259. We believe the record indicates the DIA Project was not viable to undertake with the mining method chosen and the existing economic conditions, and did not justify the start-up of a large mining operation on the Lessors property.  In 1999 the Company acquired 38,436 shares of Independence Common Stock on the open market at an average price of $0.49 per share, and in 2000 the Company acquired 94,800 shares at an average price of $0.38 per share. These shares have been carried as treasury stock by the Company, and in December 2003, 72,000 shares of Treasury stock were sold for $0.70 per share.  The remainder of the treasury shares was sold in April 2004 at an average price of $0.98 per share.  Item 2. Properties  By an agreement dated February 8, 1968 among the Company and the owners of other adjacent or neighboring mining properties, the Company and the owners of the other properties entered into certain agreements, the general effect of which was to establish certain vertical boundaries between their respective properties and to  Page 2





waive certain existing or potential claims to extra-lateral rights to veins or ores found outside of the vertical boundaries of their respective properties. The Property of the Company is subject to this agreement. Pursuant to existing law, the Company is required to pay $125 per claim as a rental fee in order to maintain possessory title to such properties. This requirement has been performed by Hecla Mining Company under the terms of the February 8, 1968 agreements described in Item 1 of this report.  Further information regarding the Properties of the Company is set forth in this report under Item 1. Business and is incorporated herein by reference.  Item 3. Legal Proceedings  The Company has retained the Boise, Idaho law firm of Marcus, Merrick, Christian and Hardee.  As required by terms of a 1968 Lease Agreement with Hecla Mining Company, our Company gave notice of termination of that agreement in early March 2002. This agreement covered the DIA Project, which is Heclas principle operation at the Lucky Friday Mine near Mullan, Idaho. Both parties agreed to waive the arbitration requirement contained in the lease and agreed to a trial without a jury.  A nine-day trial was held from March 22nd through April 1st of 2004, and closing written arguments were submitted to the court by April 30th.  Further, the court required the parties to submit to the court a written rebuttal to the other partys closing arguments by May 17, 2004. On July 19, 2004 the court ruled in favor of Hecla Mining Company.  Independence is currently in the process of appealing the courts opinion to the Idaho Supreme Court.  Item 4. Submission of matter to a Vote of Security Holders  There was no shareholder meeting held in 2004.  PART II  Item 5.  Market for the Registrants Common Equity and Related Stockholder Matters.  (a) The market price ranges of the Companys common stock during the years 2004 and 2003, respectively, were as follows:  2004 2003  High Low High Low  Annual 1.65 0.35 0.95 0.17  (b) Approximate Number of Equity Security Holders.  Title of Class (1) Number of Record Holders December 31, 2004  Common non-assessable Approximately 2,100 (1) Capital stock, par value $1.00 per share --------------------------------------- (1) Included in the number of shareholders of record are shares held in nominee or street name.  (c) No dividends were paid by the Registrant in 2004 or 2003, and the Company has no plans to pay a dividend in the foreseeable future.      Page 3





Item 6.  Managements Discussion and Analysis or Plan of Operation.  Plan of Operation.  The Companys plan of operation for the next twelve months, subject to maintaining sufficient funds, is to pursue litigation with Hecla Mining Company over the operation of the Lucky Friday Mine, as described in Item 3, Legal Proceedings.  The Company is in the process of preparing an appeal of the adverse decision to the Idaho Supreme Court.  In order to finance the legal costs associated with the litigation and appeal, the Company has raised capital by selling unregistered shares of its common stock in a private placement offering.  The Company anticipates that the sale of additional shares of common stock will be required in the next twelve months to continue funding of its litigation.  If the Company is unable to raise additional capital, it may have to cease operations.  Due to the Companys lack of revenues, the Companys independent certified public accountants included a paragraph in the Companys 2004 financial statements relative to a going concern uncertainty.  The Company has financed its obligations during 2004 by its sale of 367,000 shares at an average price of $0.75 per share.  Results of Operations.  The Company had no operations in 2004 or 2003.  General and administrative costs in 2004 increased by $86,545 over 2003, primarily due to an increase of $109,174 in legal expenses related to litigation with Hecla Mining Company, partially offset by a decrease of $30,480 in consulting fees.  The Company reported a net loss of $265,831 in 2004, compared to a net loss of $177,827 in 2003.  General and administrative costs in 2003 increased by $146,468 over 2002, primarily due to an increase in legal fees of $87,477 and an increase in consulting fees of $58,874.  Both increases were attributable to litigation with Hecla Mining Company.  Off-Balance Sheet Arrangements.  The Company has no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Companys financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.  Item 7.  Financial Statements  The financial statements are presented following the Exhibits.  Item 8.  Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.  There have been no disagreements on accounting and financial disclosures through the date of this 10-KSB/A.  Item 8A.  Controls and Procedures.   The Companys principal executive officer and principal financial officer have evaluated the effectiveness of the Companys disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report.  Based on such evaluation, the Companys principal executive officer and principal financial officer have concluded that, as of the end of such period, the Companys disclosure control and procedures are effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act.   Page 4





Item 8B.  Other Information.  None.   PART III  Item 9   Directors, Executive Officers, Promoters and Control Persons  .Name of ExecutiveOfficers and DirectorsBrief profile ofAnd Position HeldAgeOfficers and DirectorsBernard C. Lannen68Semi RetiredPresident and DirectorDirector of LuckyFriday Extension Mining CompanyWayne L. Schoonmaker67Certified Public Accountant,Secretary/TreasurerSecretary/Treasurer of Metalline Mining Company, Accounting Manager of Revett Silver Companys Troy Mine.Forrest G. Godde88President of Corporate Ranches inDirectorCalifornia and Nevada, Director of Mineral Mountain MiningRobert Bunde66Semi retired farmer with investments inDirectorthe mining field.Gordon Berkhaug70Management of real estate investmentsDirectorwith experience in the mining field The by-laws of the Company provide that the Directors serve until the next annual meeting of shareholders or until their respective successors have been duly elected and qualified.  Officers serve at the discretion of the Board of Directors.  Item 10.  Executive Compensation  The directors and officers of this company are not considered employees. There was no remuneration paid to any of the directors and officers of this company during the fiscal year ended December 31, 2004, other than the payment of $850 to the Treasurer for accounting services.  No retirement benefit, bonus or other remuneration plans are in effect with respect to the Companys officers and directors.  The Company has no standard or other arrangements for compensating directors.     Page 5





Item 11. Security Ownership of Certain Beneficial Owners and Management  To the knowledge of the Company, one person beneficially owned more than five percent (5%) of any class of the Registrants voting securities as of December 31, 2004. There were 4,675,793 shares of common stock outstanding at December 31, 2004.  The following tabulation shows the beneficial ownerships of the Companys officers and directors in the securities of the Company as of March 1, 2005:  Shares ofApproximateCommon StockPercentage ofNameBeneficially OwnedClassBernard C. Lannen315,2926.74Wayne L. Schoonmaker4,0000.09Forrest G. Godde(1) 95,0002.03Robert Bunde(2) 199,5003.27Gordon Berkhaug82,2501.76 All directors and executive officers of the Company as a group (5 persons in a group) own 696,042 shares or approximately 14.89 percent of the Companys outstanding voting securities.  (1)  Includes 45, 000 shares that represent Mr. Goddes 50% interest in the Godde 1980 Trust. (2)  Includes 72,000 shares held by Mr. Bunde as guardian for minors.  Item 12. Certain Relationships and Related Transactions.  None.  PART IV  Item 13. Exhibits and Reports on Form 8-K.  (a) 1.  Financial Statements  See index to Financial Statements at page 8 of this report (b) The company filed its report on Form 8-K during the last quarter of 1992. (c) Exhibits  No additional exhibits are filed as a part of this report.  The Exhibit Index appears at Page 7 of this report.  Item 14. Principal Accountant Fees and Services.  Audit Fees: Aggregate fees billed to us for the year ended December 31, 2004, for professional services by LeMaster & Daniels PLLC, our principal accountant, for the audit of our annual financial statements were $10,240.  Audit-Related Fees: None.  Tax Fees: None.  Page 6





EXHIBIT INDEX  Exhibits  3.1 Articles of Incorporation of Independence Lead Mines, Inc., as amended, previously filed as Exhibit 3.1 to form 10-K for 1983 and incorporated by reference herein.  3.2 Bylaws of Independence Lead Mines Company, as amended, previously filed as Exhibit 3.2 to form 10-K for 1983 and incorporated by reference herein.  10.1 Agreement dated February 8, 1968 among Day Mines, Inc., Independence Lead Mines Company and Abot Mining Company, previously filed as Exhibit 10.1 to Form 10-K for 1983 and incorporated by reference herein.  10.2 Agreement dated February 8, 1968 among Hecla Mining Company, Day Mines, Inc., Independence Lead Mines Company and Abot Mining Company, previously filed Exhibit 10.2 to Form 10-K for 1983 and incorporated by reference herein.  10.3 Agreement dated February 8, 1968 among Independence Lead Mines Company, Day Mines, Inc., Abot Mining Company, Wall Street Mining Company, Hunter Creek Mining Company, Lucky Friday Extension Mining Company, Hecla Mining Company and the Bunker Hill Mining Company relating to extralateral and intralimital rights to mining claims, previously filed as Exhibit 10.7 to Form 10-K for 1983 and incorporated by reference herein.         [The balance of this page has been intentionally left blank.]                     Page 7





INDEX TO FINANCIAL STATEMENTS Filed as part of the Annual Report Form 10-KSB/A December 31, 2004  Page  FINANCIAL STATEMENTS:  Report of Independent Registered Public Accounting Firm F/S-1  Balance Sheets, December 31, 2004 and 2003 . . . . F/S-2  Statements of Operations, Years Ended December 31, 2004 and 2003 . . . . . F/S-3  Statements of Changes in Stockholders Equity, Years Ended December 31, 2004 and 2003 F/S-4  Statements of Cash flows, years ended December 31, 2004 and 2003 . . . . . F/S-5  Notes to Financial Statements . . . . . . F/S-6  Certifications . . . . . . . . F/S-11  Signatures . . . . . . . . F/S-16            [The balance of this page has been intentionally left blank.]              Page 8





Report of Independent Registered Public Accounting Firm    To the Board of Directors Independence Lead Mines Company Wallace, Idaho  We have audited the balance sheet of Independence Lead Mines Company as of December 31, 2004, and the related statements of operations, changes in stockholders equity, and cash flows for the year 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 audit.  We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  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 audit provided 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 Independence Lead Mines Company as of December 31, 2004, and the results of its  operations and its cash flows for the year then ended, in conformity with U.S. generally accepted accounting principles.  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 has incurred recurring losses from operations, and its total liabilities exceed its total assets.  This raises substantial doubt about the Company's ability to continue as a going concern.  Management's plans in regard to these matters are also described in Note 2 to the financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.  As discussed in Notes 2 and 6, the accompanying financial statements have been restated to correct certain errors discovered in previously issued financial statements.  /s/ LeMaster & Daniels PLLC  Spokane, Washington October 14, 2006       F/S-1





INDEPENDENCE LEAD MINES COMPANY   BALANCE SHEETS December 31, 2004 and 2003  A S S E T S CURRENT ASSETS20042003
(Unaudited)Cash and cash equivalents$      54,665$       72,300Royalties receivable1,5001,500Investment1,0061,006Prepaid expenses20,0000Total current assets77,17174,806Total Assets$      77,171$       74,806  LIABILITIES AND STOCKHOLDERS EQUITY  CURRENT LIABILITIESAccounts payable$        2,491$       35,736Total current liabilities2,49135,736DEFERRED INCOME410,000392,000Total liabilities412,491427,736STOCKHOLDERS EQUITY (DEFICIT)Common stock, $1.00 par value; authorized5,000,000 shares; issued 4,675,793 and4,308,793 shares, respectively4,675,7934,308,793Treasury stock,  61,436 shares, at cost, in 20030(25,482)Discount on common stock issued(196,742)(87,701)Accumulated deficit (restated)(4,814,371)(4,548,540)Total stockholders equity (deficit)(335,320)(352,930)Total Liabilities and Stockholders Equity$      77,171$       74,806The accompanying notes are an integral part of these financial Statements.         F/S-2





INDEPENDENCE LEAD MINES COMPANY  STATEMENTS OF OPERATIONS Years Ended December 31, 2004 and  2003   2004 2003 (Unaudited)   Revenue $             0 $             0  Expenses Management and Director fees 0 0 Licenses and fees 409 375 Office and administration 2,265 785 Office services 600 600 Shareholder relations 5,437 2,588 Consulting 39,181 69,661 Transportation 5,372 1,847 Accounting 850 887 Legal 211,519 102,345 Total expenses 265,633 179,088 Loss from Operations (265,633) (179,088)  Other Income and (Expense) Interest, net (198) 687  Loss before Income Taxes (265,831) (178,401) Provision for income taxes 0 (574)  Net Loss $(265,831) $(177,827) ======= =======  Loss Per Share $(0.06) $(0.04)  Weighted average number of common shares outstanding 4,456,226 4,181,357  The accompanying notes are an integral part of these financial statements.         F/S-3





INDEPENDENCE LEAD MINES COMPANY  STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY Years Ended December 31, 2004 and 2003   Common StockDiscountTreasury StockNumberon commonNumberof 
SharesAmountstock issuedof 
SharesAmountAccumulated DeficitTotalBalances, December 31, 2002, as restated4,308,793$4,308,793$(108,293)(133,436)$(55,290)$(4,370,713)$(225,503)Sale of treasury stock0020,59272,00029,808050,400Net loss for the year ended December 31, 2003, as restated00000(177,827)(177,827)Balances, December 31, 2003 - unaudited4,308,7934,308,793(87,701)(61,436)(25,482)(4,548,540)(352,930)Sale of treasury stock0028,95961,43625,482054,441Unrecorded shares presented for transfer1,0001,000(1,000)0000Common stock issued for services10,00010,000(2,000)0008,000Common stock sold356,000356,000(135,000)000221,000Net loss for the year ended December 31, 200400000(265,831)(265,831)Balances, December 31, 20044,675,793$4,675,793$(196,742)0$           0$(4,814,371)$(335,320)  The accompanying notes are an integral part of these financial statements.         F/S-4





INDEPENDENCE LEAD MINES COMPANY   STATEMENTS OF CASH FLOWS Years Ended December 31, 2004 and 2003  2004    2003 (Unaudited)  CASH FLOWS FROM OPERATING ACTIVITIES Net loss $(265,831) $(177,827) Adjustments to reconcile net loss to net cash used by operating activities: Common stock issued for services 8,000 0 Increase (decrease) in cash due to changes in assets and liabilities: Receivable 0 2,207 Accounts payable (33,245) 26,888 Deferred income 18,000 18,000 Prepaid expenses (20,000) 0 Net cash used by operating activities (293,076) (130,732)  CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from sale of common and treasury stock 275,441 50,400  Net (decrease) in cash and cash equivalents (17,635) (80,332) CASH AND CASH EQUIVALENTS, beginning of year 72,300 152,632 CASH AND CASH EQUIVALENTS, end of year $     54,665 $     72,300 ======= =======  SUPPLEMENTARY DISCLOSURE OF CASH FLOW INFORMATION  2004 2003  Interest paid $    198 $       0 Income taxes paid  State of Idaho 30 30 Federal 0 0  Noncash financing activities: Issuance of common stock for services 8,000 0  The accompanying notes are an integral part of these financial statements.          F/S-5





INDEPENDENCE LEAD MINES COMPANY  NOTES TO FINANCIAL STATEMENTS December 31, 2004 and 2003  Note 1  Organization and Description of Business  Independence Lead Mines Company (the Company) was incorporated in the State of Arizona on September 16, 1929 and was originally organized to explore, acquire and develop mineral properties and rights primarily in Idaho.  The Company is the owner of fifteen patented and seventeen unpatented mining claims.  This claim group (the property) is situated Northwest of Hecla Mining Companys Lucky Friday mine in the Coeur dAlene Mining District, Shoshone County Idaho.  Pursuant to agreements executed in 1968, Hecla leased the Companys property together with other properties for a period of 50 years, subject to a 30-year extension, for the purpose of conducting mineral exploration and development of the properties, and mining such commercial ore as may be discovered.  The lease agreements provide that all costs and expenses incurred in the exploration, development and operation of the properties are to be paid by Hecla, subject to the right of Hecla to be reimbursed for such costs and expenses, together with all advance royalties paid, out of any future net profits realized from the operation of the properties.  In accordance with the terms of the lease, the Company receives advance royalties of $1,500 per month.  The Company is currently in litigation with Hecla Mining Company over Heclas operation of the Lucky Friday Mine under the agreement covering the DIA Project.  A nine-day trial was held from March 22nd through April 1st of 2004, and on July 19, 2004 the court ruled in favor of Hecla Mining Company.  Independence has appealed the District Courts ruling to the Idaho Supreme Court, and on April 24, 2006, the court ruled against the Company. On May 26, 2006, the Company requested that the Court grant rehearing of the case.  As of October 14, 2006, there has been no ruling from the Court.  The Companys exploration activities never developed any commercial ore deposits and, effectively in 1968, Management decided to abandon or sell its mineral properties and rights, and favorably position itself to seek other profitable business opportunities.  Accordingly, the Company is not considered to be in the development stage.  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 U.S. and have been consistently applied in the preparation of the financial statements.  Accounting Method  The Companys financial statements are prepared using the accrual method of accounting.  Cash and Cash Equivalents  For purposes of the statement of cash flows, the Company considers all bank accounts, certificates of deposit, money market accounts and short-term debt securities purchased with a maturity of three months or less to be cash equivalents.  F/S-6





Investment  The investment in common stock of Hecla Mining Company is stated at its fair value, which approximates cost.  The investment is considered to be available-for-sale.  Mining Property and Unrecovered Exploration Costs  Costs of exploring, acquiring and developing mineral properties were capitalized by the Company in previous years.  In 2004, management evaluated the expected recovery and valuation of the mining property and related unrecovered exploration costs and determined that the assets were fully impaired and in all likelihood have been impaired for a number of years.  Accordingly, the costs of these assets were been written off in a restatement of opening accumulated deficit and the 2003 financial statements have been restated to reflect the write-off.  See Note 6.  Environmental Matters  The Company owns mineral property interests on certain public and private lands in Idaho.  The Companys properties have been subject to a variety of federal and state regulations governing land use and environmental matters.  The Companys management believes it has been in substantial compliance with all such regulations, and is unaware of any pending action or proceeding relating to regulatory matters that would affect the financial position of the Company.  The Companys management acknowledges, however, that the possibility exists that the Company may be subject to environmental liabilities associated with its prior activities in the unforeseeable future, although the likelihood of such is deemed remote and the amount and nature of the liabilities is impossible to estimate.  Deferred Income  Advance royalties received, subject to reimbursement to the payor under certain circumstances (as described above), are reported as deferred income in the accompanying financial statements.   Income Taxes  The Company accounts for income taxes using the liability method, which requires that deferred income taxes be recognized for temporary differences between the financial statement and income tax bases of assets and liabilities, as well as for net operating loss carryovers which may result in the recognition of income tax benefits in future years.  A valuation allowance is established for deferred tax assets when it is more likely than not that some or all of these deferred tax assets will not be realized.  Loss Per Share  Loss per share (basic) is computed by dividing net loss by the weighted average number of common shares outstanding during the year.  Loss per share (diluted) is computed by dividing net loss by the sum of the weighted average number of common shares outstanding and the additional common shares that would have been outstanding of potential common shares had been issued.  At December 31, 2004 and 2003, the Company had no potential common shares, and only loss per share (basic) is reported for the years then ended.      F/S-7





Fair Value of Financial Instruments  The carrying amounts of financial instruments, including cash and cash equivalents and payables approximated their fair values as of December 31, 2004 and 2003.  Use of Estimates  The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.  Going Concern  As shown in the accompanying financial statements, the Company has no revenues, has incurred a net loss of $265,831 for the year ended December 31, 2004, and has an accumulated deficit of $4,814,371.  These factors indicate that the Company may be unable to continue in existence.  The financial statements do not include any adjustments related 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.  The Companys management believes that future private placements of stock and continuing contracted agreements will generate sufficient cash for the Company to continue to operate based on expected expenses.  The Company is currently operating on the cash proceeds of a private placement and the continuing advance royalties of $1,500 per month.  Reclassification  Certain balances from prior year financial statements have been reclassified to conform with the current year presentation.  Recent Accounting Pronouncements  In May 2005, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 154 (SFAS No. 154), Accounting Changes and Error Corrections.  This statement requires entities that voluntarily make a change in accounting principle to apply that change retrospectively to prior periods financial statements, unless this would be impracticable.  SFAS No. 154 supersedes APB Opinion No. 20, Accounting Changes, which previously required that most voluntary changes in accounting principle be recognized by including in the current periods net income the cumulative effect of changing to the new accounting principle.  SFAS No. 154 also makes a distinction between retrospective application of an accounting principle and the restatement of financial statements to reflect the correction of an error.  SFAS No. 154 applies to accounting changes and error corrections that are made in fiscal years beginning after December 15, 2005.  Management believes the adoption of this statement will not have an immediate material impact on the financial statements of the Company.  In March 2005, the Financial Accounting Standards Board (FASB) issued FASB Interpretation No. 47 (FIN 47), Accounting for Conditional Asset Retirement Obligations.  FIN 47 clarifies that the term conditional asset retirement obligation, which as used in SFAS No. 143, Accounting for Asset   F/S-8





Retirement Obligations, refers to a legal obligation to perform an asset retirement activity in which the timing and (or) method of settlement are conditional on a future event that may or may not be within the control of the entity.  The entity must record a liability for a conditional asset retirement obligation if the fair value of the obligation can be reasonably estimated.  FIN 47 also clarifies when an entity would have sufficient information to reasonably estimate the fair value of an asset retirement obligation.  FIN 47 is effective no later than the end of fiscal years ending after December 15, 2005.  Management believes the adoption of this statement will not have an immediate material impact on the financial statements of the Company.  Note 3  Property  The Company has 15 patented and 17 unpatented claims situated in the Hunter Mining District, Shoshone County, Idaho.  On February 8, 1968, the Company entered into an agreement with Day Mines, Inc., Abot Mining Company and Hecla Mining Company. Certain properties of the four companies were combined for purposes of exploration and development. These properties were referred to as the DIA Area. The DIA Area consists of 9 patented and 14 unpatented claims of Independence Lead Mines Company. Hecla Mining Company is the exploring and developing company. The DIA agreement allows Hecla Mining Company to recover all of its exploration and development cost, advance royalties paid, and to build a three months reserve for working capital prior to splitting profits. Independence is to receive 18.52% of the profits, and under the terms of the DIA agreement the Company has been receiving an advance of $1,500 for each month 2,000 tons of ore is mined.  Note 4 - Income Taxes  At December 31, 2004 and 2003, the Company had deferred tax assets of approximately of $113,400                 and $47,400, respectively, arising from net operating loss carryovers.  Management has determined that it is more likely than not that these deferred tax assets will not be realized, and therefore a valuation allowance equal to the full amount of the deferred tax asset has been established at both December 31, 2004 and 2003.  For the years ended December 31, 2004 and 2003, the income tax provisions differed from the expected amounts using current federal statutory rates because of the effects of the change in the deferred tax asset valuation allowance each year.  At December 31, 2004, the Company has tax basis net operating loss carryovers totaling approximately $333,600, which expire in the years 2022 through 2024.  Note 5 - Related Party Transactions  During the year ended December 31, 2004 and 2003, accounting fees of $850 and $887, respectively, were paid or accrued to Wayne Schoonmaker, an officer, director, and shareholder of the Company.  In addition, payments of $600 were made in 2004 and 2003 to Mr. Schoonmaker for rental of office space for the corporate office.  Note 6 - Restatements  As discussed in Note 2, the Company has restated its financial statements to reflect a retroactive adjustment to write off the costs of previously impaired mining property ($2,945,407) and unrecovered exploration costs ($187,920).  The adjustment resulted in an increase of the balance of accumulated deficit at December 31, 2002, of $3,133,327 and corresponding reductions in the mining property and unrecovered exploration cost accounts at that date.  In addition, the 2004 and 2003 financial statements previously issued which incorrectly reported prepaid expenses and deposits resulting in overstated assets of $52,371at December 31, 2004, and incorrectly omitted accounts payable at December 31, 2003, totaling $32,342, have been restated to include these adjustments.  The restatements increased the previously reported 2004 and 2003 net loss by $52,321 and $32,342, respectively ($0.01 per share each year).  F/S-9





Note 7 - Common Stock  During the year ended December 31, 2004 the Company sold 356,000 shares of common stock at an average of $0.62 per share and issued 10,000 shares of common stock for services received at a price of $0.80 per share, representing the approximate trading price of shares at the issuance date.  In addition, the Company sold 61,436 shares of treasury stock at an average price of $0.88 per share.    [The balance of this page has been intentionally left blank.]                         F/S-10





Signatures   Pursuant to the requirement of Section 13 of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be sign on its behalf by the undersigned, thereunto duly authorized.  INDEPENDENCE LEAD MINES COMPANY  By: /s/ Bernard C. Lannen Bernard C. Lannen, its President and Chief Administrative Officer Dated: October 20, 2006  By: /s/ Wayne L. Schoonmaker Wayne L. Schoonmaker, its Principal Accounting Officer Dated: October 20, 2006