SECURITIES AND
EXCHANGE COMMISSION Washington, D.C. 20549

# FORM 10-KSB

(Mark One)

[ X] Annual report under Section 13 or 15(d) of the Securities Exchange Act of 1934 for
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
0-23726

# GOLDEN EAGLE
INTERNATIONAL, INC.

(Exact name of the
Company as specified in its charter)

|                         |                                     
|------------------------ | ------------------------------------
|Colorado                 | 84-1116515                          
|(State of incorporation) | (I.R.S. Employer Identification No.)

9661 South 700 East,
 Salt Lake City, Utah 84070         (Address
of principal executive offices) (Zip Code)

The
Companys telephone number, including area code: (801) 619-9320

|                                                            |     
|----------------------------------------------------------- | ----
|Securities registered pursuant to Section 12(b) of the Act: | None
|Name of each exchange on which registered:                  | None

Securities registered pursuant to
Section 12(g) of the Act:

$.0001 par value Common Stock
(Title of class)

Check whether the issuer (1) 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 Company was
required to file such reports), and (2) has been subject to the filing requirements for at
least the past 90 days. [ X ] Yes [ ] No

Check if there is no disclosure of
delinquent filers in response to Item 405 of Regulation S-B contained in this form, and no
disclosure will be contained, to the best of the Company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. [ ]

Our revenues for the most recent fiscal year   $0

Aggregate market value of the voting
stock held by non-affiliates of Golden Eagle International, Inc. as of April 13, 2007: was approximately $17,189,298.  This
estimate is based on the last sale price per share of $.026 on April 16, 2007 and 661,126,831 shares estimated to be held by
non-affiliates.

The following documents are
incorporated hereunder by reference: (1) Any annual report to security holders 
None; (2) Any proxy or information statement  None; (3) Any prospectus filed
pursuant to Rule 424(b) or (c) under the Securities Act of 1933  None.

---

# TABLE OF CONTENTS

# PARTI

|        |                                                                   |   
|------- | ----------------------------------------------------------------- | --
|ITEM 1. | BUSINESS                                                          | 5 
|(a)     | General                                                           | 5 
|(a)(1)  | How We Are Organized                                              | 6 
|(a)(2)  | Business Overview                                                 | 8 
|(b)     | Description of Business                                           | 11
|(b)(2)  | Distribution Methods                                              | 12
|(b)(1)  | Principal Products                                                | 11
|(b)(3)  | Status of Products and Segments                                   | 12
|(b)(4)  | Competitive Business Conditions                                   | 12
|(b)(5)  | Sources and Availability of Raw Materials                         | 12
|(b)(6)  | Dependence on One or a Few Major Customers                        | 13
|(b)(7)  | Importance and Duration of Patents, Trademarks, Licenses          | 13
|(b)(8)  | Need For Government Approval                                      | 13
|(b)(9)  | Effect of Existing of Probable Governmental Regulations           | 13
|(b)(10) | Research and Development Expenditures                             | 14
|(b)(11) | Effect of Compliance Provisions for the Protection of Environment | 14
|(b)(12) | Employees                                                         | 15
|(c)(1)  | Annual report                                                     | 15
|(c)(2)  | Filings                                                           | 15
|(c)(3)  | Available Information                                             | 15
|(d)     | Risk Factors                                                      | 16
|(d)(1)  | Financial Risks                                                   | 16
|(d)(2)  | Operations, Development and Mining Related Risks                  | 18
|(d)(3)  | Legal, Market and Regulatory Risks                                | 18
|ITEM 2. | PROPERTIES                                                        | 20
|(a)     | The Precambrian Properties                                        | 20
|(b)     | Buen Futuro Claim                                                 | 20
|(c)     | Cobra Claim                                                       | 21
|(d)     | The Cangalli Claims                                               | 23
|(d)(2)  | Production From our Cangalli Mine                                 | 24
|(e)     | Gold Bar Mill and Plant                                           | 25
|(f)     | Office Leases                                                     | 26
|ITEM 3. | LEGAL PROCEEDINGS                                                 | 26
|        |                                                                   |   
|ITEM 4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS               | 27

# PART II

|         |                                                                                       |       
|-------- | ------------------------------------------------------------------------------------- | ------
|ITEM 5.  | MARKET FOR
COMMON EQUITY AND RELATED STOCKHOLDER MATTERS                              | 27    
|(a)      | Market Information                                                                    | 27    
|(b)      | Holders                                                                               | 28    
|(c)      | Dividends                                                                             | 28    
|(d)      | Securities authorized for issuance                                                    | 28    
|(e)(1)   | Unregistered Sales of Securities                                                      | 29    
|(e)(2)   | Preferred Stock                                                                       | 29    
|(e)(3)   | Description of Agreements with Series B Holders                                       | 29    
|(e)(4)   | Issuance of Series B Preferred Stock after December 31, 2006                          | 32    
|(f)      | Purchases of Equity Securities by the Issuer and Affiliates                           | 33    
|ITEM 6.  | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 33    
|(a)      | Liquidity and Capital Resources                                                       | 34    
|(a)(1)   | Continuing Working Capital Deficit                                                    | 34    
|(a)(2)   | Property and Equipment                                                                | 35    
|(a)(3)   | Capital Commitments                                                                   | 37    
|(a)(4)   | Derivative Liability                                                                  | 37    
|(a)(5)   | Equity                                                                                | 38    
|(a)(6)   | Off Balance Sheet Arrangements                                                        | 38    
|(a)(7)   | Results of Operations                                                                 | 38    
|(a)(8)   | Cash Flow                                                                             | 42    
|(b)      | Special Non-Cash Impact Due to Options                                                | 43    
|(c)      | Plan of Operations                                                                    | 43    
|(d)      | Impact of inflation and Changing Prices                                               | 45    
|(e)      | Accounting Policies                                                                   | 46    
|(e)(1)   | Critical Accounting Policies                                                          | 46    
|(e)(2)   | Effect of New Accounting Pronouncements                                               | 47    
|ITEM 7.  | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                           | F1-F29
|ITEM 8.  | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS                                         | 48    
|ITEM 8A. | CONTROLS AND PROCEDURES                                                               | 48    
|ITEM 8B. | OTHER INFORMATION                                                                     | 48    

# PART III

|         |                                                                |   
|-------- | -------------------------------------------------------------- | --
|         |                                                                |   
|ITEM 9.  | DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY                | 48
|(a)      | Identification of Directors and Executive Officers             | 48
|(b)      | Identification of Significant Employees                        | 52
|(c)      | Family Relationships                                           | 53
|(d)      | Involvement In Certain Legal Proceedings                       | 53
|(e)      | Audit Committee Financial Expert                               | 54
|(f)      | Beneficial Reporting Compliance                                | 54
|(g)      | Code of Ethics                                                 | 55
|ITEM 10. | EXECUTIVE COMPENSATION                                         | 55
|(a)(b)   | Summary Compensation Table                                     | 55
|(c)      | Options/SAR Granted                                            | 57
|(d)      | Option/SAR Exercises                                           | 57
|(e)      | Long Term Incentive Plan                                       | 57
|(f)      | Defined Benefit or Actuarial Plan Disclosure                   | 57
|(g)      | Compensation of Directors                                      | 57
|(h)      | Employment Contracts                                           | 58
|(i)      | Report on Repricing of Options/SARs                            | 58
|(j)      | Compensation Committee Interlocks                              | 58
|(k)      | Board Compensation Committee Report                            | 58
|ITEM 11. | SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT | 58
|(a)(b)   | Security Ownership                                             | 58
|(c)      | Changes in Control                                             | 61
|(d)      | Securities Authorized for Equity Compensation Plan             | 61
|ITEM 12. | Certain                                                        | 61
|(a)      | Indebtedness                                                   | 61
|(b)      | Loans to the Company from Affiliates                           | 62
|ITEM 13. | Exhibits                                                       | 62
|ITEM 14. | PRINCIPAL ACCOUNTANTS FEES AND SERVICES                        | 62
|         |                                                                |   

# PART IV

|ITEM 15.   | EXHIBITS, FINANCIAL STATEMENT SCHEDULES
AND REPORTS ON FORM 8-K                                        | 64              
|---------- | ------------------------------------------------------------------------------------------------------ | ----------------
|(a)        | Financial Statements and Independent Auditors Report                                                   | F-1 through F-20
|           | Consolidated Balance
Sheets as of December 31, 2006 and 2005                                           | F-3             
|           | Consolidated Statements
of Operations for the years ended December 31, 2006 and 2005                   | F-4             
|           | Consolidated
Statements of Cash Flows for the years ended
December 31, 2006 and 2005                   | F-5             
|           | Consolidated Statement of Stockholders'
Equity (Deficit)for the years ended December 31, 2006 and 2005 | F-6             
|           | Notes to Consolidated Financial Statements                                                             | F-7 thru F-20   
|(b)        | Exhibits                                                                                               | 64              
|Signatures |                                                                                                        | 65              
|           |                                                                                                        |                 

---

Forward-Looking Statements

This Annual Report on Form 10-KSB,
including our Managements Discussion of Results of Operations on page
44, contains forward-looking statements that involve risks and uncertainties, as well as
assumptions that, if they never materialize or prove incorrect, could cause the results of
Golden Eagle International, Inc. (hereafter referred to below as we,
our or us) to differ materially from those expressed or implied by
such forward-looking statements. The words or phrases would be, will
allow, intends to, will likely result, are expected
to, will continue, is anticipated, estimate,
project, or similar expressions are intended to identify forward-looking
statements. Our operations are subject to significant risks and uncertainties,
including but not limited to certain risk factors, which are described in more detail
under Risk Factors beginning on page 16. All statements, other than statements
of historical fact, are statements that could be deemed forward-looking statements,
including any projections of revenue, gross margin, expenses, earnings or losses from
operations, synergies or other financial items, any statements of managements plans,
strategies and objectives for future operations, and any statement concerning
developments, plans, or performance. Unless otherwise required by applicable law, we do
not undertake, and we specifically disclaim any obligation to update, any forward-looking
statements to reflect occurrences, developments, unanticipated events or circumstances
after the date of such statement.

# PART 1

# Item 1. Business

# (a) General

# FILING STATUS

As of December 31, 2006 we determined
that we no longer met the conditions for filing under Regulation S-K and therefore this
report is filed under Regulation S-B. We believe that we qualify for S-B filing status
because we have met the following conditions for the past two years;

|o | we
had revenue less than $25,000,000;
|- | -------------------------------------

|o | we
are a US issuer;
|- | -------------------

|o | we
are not an investment company and
|- | ------------------------------------

|o | for
the past two years our public float  at 60 days prior to our fiscal year end was less
than $25,000,000.
|- | -----------------------------------------------------------------------------------------------------------

5 (a)(1) How We Are
Organized

We were formed as a Colorado
corporation on July 21, 1988 as Beneficial Capital Financial Services Corp. On February 2,
1995, our name was changed to Golden Eagle International, Inc. Our subsidiaries are:

|                                                                       |                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|---------------------------------------------------------------------- | ----------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Name (percent ownership)                                               | Jurisdiction (date) of Organization | Description of Activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|Golden Eagle International, Inc.Bolivia ("Golden Eagle Bolivia")(100%) | Bolivia (2001)                      | This subsidiary holds all
                                          concession-mining rights granted
                                          by the Bolivian government as
                                                                          described below in more detail.
                                                                          This subsidiary is also the owner
                                                                          of all of our assets in Bolivia,
                                                                          having received them from a
                                                                          related entity,  Golden Eagle
                                                                          Bolivia Mining, S.A during 2002
                                                                          in our  effort  to consolidate
                                                                          all interests, assets and
                                                                          operations into one wholly owned
                                                                          subsidiary.
|                                                                       |                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

# (a)(2) Business Overview

Our corporate headquarters are in
Salt Lake City, Utah

We are engaged in minerals industry
operations in Bolivia through our Bolivian based wholly owned subsidiary, Golden Eagle
International, Inc. (Bolivia). We have acquired the following mineral prospects in
Bolivia:

|                          |               |       
|------------------------- | ------------- | ------
|Tipuani-Cangalli prospect | Number Acres  | Status
|Cangalli claims           | 5,000 acres   | Owned 
|Tipuani prospect          | 7,000 acres   | Owned 
|                          |               |       
|Precambrian Shield       
|Precambrian prospect      | 111,500 acres | Owned 
|Buen Futuro claim         | 2,500 acres   | Owned 
|Cobra claim               | 22,500 acres  | Owned 

Additionally we own the following
gold processing and milling plant

|                        |                |       
|----------------------- | -------------- | ------
|Plant and Mill          | Location       | Status
|Gold Bar Plant and Mill | Eureka, Nevada | Owned 

5

None of our prospects are currently
in the production stage. Our production operations ceased on our Cangalli property in June
2004 as a result of a local farmers strike and certain legal issues with which we
are not associated. Our Precambrian B and C Zone prospects are in the development stage
and our Buen Futuro prospect is in the exploration stage.

For the years ended December 31, 2006
and 2005 , we reported net losses of $4,275,892 and $2,038,534, respectively. Our
financial results over the past two years have been impacted by the shutdown of our
production operations as discussed in more detail under Item 7 in connection with our
financial results for the years ended December 31, 2006 and 2005.

This map shows the location of our
prospects and properties.

The mining measures we use in this
report reflect accepted Bolivian mining weights and measures such as grams, troy ounces,
and metric tonnes that are not commonly used in the United States. We will use these
Bolivian based measures throughout this report. All references to ounces will
be to troy ounces whether or not so specified; all references to tonnes will be to metric
tonnes, whether or not so specified. The following conversion chart compares Bolivian
measures to United States commonly used weights.

7

|                                                                                                               |                                                                                                                      
|-------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------
|Commonly Used Weights in Gold Exploration                                                                      | Conversion into Avoirdupois Weights Commonly Used in the United States                                               
|1 troy ounce = 31.1035 grams32.15 troy ounces = 1 kilogram32,150 troy ounces = 1000 kilograms = 1 metric tonne | 1 troy ounce = 1.097 ounces14.583 troy ounces = 16 avoirdupois ounces = 1 pound29,166 troy ounces = 1 avoirdupois ton

# (a)(3) Business
Development

Our current strategy is to further
develop the potential of the A Zone of our Buen Futuro gold and copper project in eastern
Bolivia during 2007. In February 2007, we entered into an agreement with a major
independent mining and engineering firm, Washington Group International, Inc.
(www.wgint.com), to perform the necessary due diligence work to advise us regarding our
feasibility studies. Additionally, we may engage this engineering firm to determine if our
Gold Bar mill and plant should be moved to our A Zone Buen Futuro project in eastern
Bolivia, or if a new mill and plant should be built on site. During this period we will
also begin securing final environmental permitting and any additional surface land
acquisitions that may be required.

During 2006, we also performed
exploration and feasibility work on the gold prospects of the B and C Zones of our
Precambrian properties in eastern Bolivia. These zones are located approximately 3.2 miles
from the A Zone of our Buen Futuro project. Additionally, we built and operated a pilot
plant on the C Zone, which we have used to refine the metallurgical process on the
mineralized material in the zone. Once feasibility work and pilot plant operations are
completed, and if the final results are positive and we have obtained adequate financing,
we intend to implement the recommended mine plan, construct the recommended recovery
circuit, and enter into operations by mid to late 2007.

Finally, we intend to continue our
efforts to resolve issues impeding the development of our Cangalli mine; however, we will
not recommence operations at the Cangalli mine until we begin operations on our eastern
Bolivian Precambrian properties All of our plans are contingent upon receiving an
estimated $11.5 million of financing. We may, however, continue with a portion of these
plans if funds are available, as detailed below:

To accomplish our strategy we intend
to accomplish the steps in our Plan of Operations, which are detailed in Part II, Item 6,
(c).

# (b) Description of
Business

# (b)(1) Principal products

We have produced only a single
product, gold metal, which we extracted from our Cangalli mining claims from September
2002 through June 2004, and small quantities of gold prior to September 2002. Our revenues
prior to 2005 from operations have been derived solely from the sale of that gold.
Although our Buen Futuro prospect has copper and gold mineralization, we have only
produced a small amount of gold of negligible value from our C Zone pilot operations
during the fourth quarter of 2006 and the first quarter of 2007. We generated no revenues
from gold or copper production during 2005 and 2006.

8

# Gold

During
2006 and 2005, we had no sales of gold. Gold production and sales prior to 2005 totaled
9,720 troy ounces as reflected in the chart below titled, Activities at our Cangalli
claims to generate production.

Gold Uses. Gold has two main
categories of use: (a) product fabrication; and (b) investment. Fabricated gold has a
variety of end uses, including jewelry, electronics, dentistry, industrial and decorative
uses, medals, medallions, and official coins. Gold investors buy gold bullion, official
coins and high-karat jewelry, and make equity investments in gold and precious metal
exploration/production companies. .

# Copper

To date we have not produced any
copper. However, our exploration efforts at Buen Futuro indicate the potential of a
commercially significant amount of copper in the mineralized material found there.

# Activities at our
Cangalli claims to generate production

The following table sets forth our
gold production history from our Cangalli claims, which has been our only source of
revenue to date:

|                        |  |                            |   |  |                   |  |            | 
|----------------------- |  | -------------------------- | - |  | ----------------- |  | ---------- | 
|Years                   |  | Production/Inventory (g/oz | ) |  | Gradeg/T(m3)      |  | Revenues   | 
|                       
|1996-1999               |  | 21,000 g (675 oz           | ) |  | Exploration Stage |  | $161,000   | 
|2000-Third quarter 2002 |  | -                          |   |  | -                 |  | -          | 
|Fourth Quarter, 2002    |  | 43,847 g (1,410 oz         | ) |  | .475 (.950)       |  | 481,620    | 
|First Quarter, 2003     |  | 36,424 g (1,171 oz         | ) |  | .433 (.866)       |  | 137,196    | 
|Second quarter, 2003    |  | 37,841 g (1,217 oz         | ) |  | .424 (.848)       |  | 226,740    | 
|Third quarter, 2003     |  | 59,728 g (1,920 oz         | ) |  | .317 (.634)       |  | 631,325    | 
|Fourth quarter, 2003    |  | 39,246 g (1,262 oz         | ) |  | .403 (.806)       |  | 330,330    | 
|First quarter, 2004     |  | 30,493 g (980 oz           | ) |  | .412 (.824)       |  | 367,971    | 
|Second quarter, 2004    |  | 33,745 g (1,085 oz         | ) |  | .984 (1.97)       |  | 533,015    | 
|Third quarter, 2004     |  | -                          |   |  | -                 |  | 228,037    | 
|Fourth quarter, 2004    |  | -                          |   |  | -                 |  | 193,034    | 
|2005                    |  | -                          |   |  | -                 |  | -          | 
|2006                    |  | -                          |   |  | -                 |  | -          | 
|                       
|Total Production        |  | 302,324 g (9,720 oz        | ) |  | -                 |  | $3,270,667 | 
|                       
|                        |  |                            |   |  |                   |  |            | 

Gold inventory is stated on the
balance sheet at the lower of average cost or net realizable value. As of December 31,
2006 and 2005, we held no gold in inventory.

Gold production from our Cangalli
claims ceased in June 2004 because of a local farmers strike and then because of
legal issues that arose regarding parties not associated with us. We cannot guarantee that
production will ever recommence at our Cangalli gold mine, or that we will ever further
explore or work our Cangalli or Tipuani Valley mining claims.

9

# (b)(2) Distribution
methods.

Gold previously produced in Bolivia
was primarily sold into the Bolivian gold market and subsequently on the international
market. We anticipate that if we are able to again produce gold that it will be sold into
both the Bolivian and international markets. If we are able to commence copper production,
we anticipate that our product will be distributed to international markets through
Brazil, Chile and Peru.

(b)(3)    
          Status of publicly announced products or services.

We have not publicly announced any
products or services; our business has been limited to conducting minerals exploration.

# (b)(4) Competitive
business conditions.

The gold and copper mining business
is extremely competitive. Our competitors have substantially greater financial,
technological, and human resources, and therefore greater potential to conduct successful
mining operations and generate revenues.

# (b)(5) Sources and
availability of raw materials.

As of December 31, 2006, we required
no significant raw materials. When we have conducted mining operations in Bolivia in the
past, those operations have required significant quantities of mining equipment and
supplies. Such items are often in short supply and deliveries are occasionally impeded by
severe weather, political strife, such as road blockades by the Bolivian Central Workers
Union, the National Farmers Organization, or other organized groups, and primitive road
conditions. Nevertheless, to date, we were always able to meet our requirements. If we are
able to bring our Buen Futuro operation into production we will require a large amount of
electrical power and certain chemicals, which we will need to source in the region and
which may be in short supply.

(b)(6)    
          Dependence on one or a few major customers.

Our potential customers consist of
consumers through the domestic Bolivian and international spot gold and copper markets,
and an active gold and copper market in Bolivia and internationally for the jewelry
industry. As a result, should we be successful in bringing any of our prospects into gold
and copper production, we do not believe that we will be dependent upon any single
customer or even a few major customers.

(b)(7)    
          Importance and duration and effect of patents, trademarks, licenses,
          franchises and concessions.

We have no patents, trademarks,
licenses or franchises that are material to our business. However, we do have mining
claims that have been granted to us from the national Bolivian government, which are
discussed below under Item 2  Properties.

10

# (b)(8) Need for
governmental approval.

In Bolivia, the mining industry is
subject to government approval, including mining, environmental and other activities that
require permitting: harvesting of lumber for mine timbers; clearing of forested areas for
the construction of open pit mines, mills and tailings impoundments; transport and storage
of explosives; and the transport and storage of hazardous substances and chemicals. We
currently have a conditional use permit for the operation of a pilot plant on our C Zone
gold project. If we are able to move to a full production plant, we will be required to
obtain additional permitting that may be both time consuming and expensive. While we
believe that we can obtain the required permits to operate both in the B and C Zones, as
well as on our Buen Futuro A Zone property, we can offer no assurances that the required
permits will be forthcoming, or forthcoming in a timely manner.

Our Gold Bar mill and plant located
outside of Eureka, Nevada is currently inactive. If we were to commence a toll processing
operation at Gold Bar, we would be required to obtain numerous permits from both the
Federal government and the State of Nevada, which would be time consuming and expensive.
We cannot assure that any such permits would be forthcoming, or forthcoming in a timely
manner, even if we did decide to commence operations at Gold Bar.

(b)(9)    
          Effect of existing or probable governmental regulations.

During late 2006 and early 2007,
Bolivias current administration expressed a desire to increase the Complimentary
Mining Tax (Mining Tax), or minerals severance tax, on all minerals and metals
mined in Bolivia. The current Bolivian Mining Tax is assessed at the time of sale or
export of the mineral and is based on a sliding scale derived from the quote for a
particular mineral on the international markets over any 15-day period. Every 15 days the
Ministry of Mining and Metallurgy in Bolivia certifies the price at which each mineral
should be taxed. Bolivias current Mining Tax is reasonable by world standards. The
Mining Tax is then deductible from the companys Net Profits Tax (25% on net profits
after all deductions have been taken) at the end of a companys fiscal year. We
believe, but cannot assure, that an increase in the Mining Tax is unlikely in the
foreseeable future due to the public reaction from the Bolivian mining community to the
administrations proposed increase. The current commentary in Bolivia is that any
increase has been indefinitely suspended.

The current administration has also
expressed a desire to increase the annual claim fees paid each year in mining patents for
mining concessions in Bolivia. In addition, the administration has expressed a desire to
change Bolivias mining law to require work to improve mining concessions as a
requirement to maintaining those concessions. Currently, under Bolivian mining law, if a
mining concession holder pays annual claim fees for patents there is no additional work
requirement. We believe that these changes will not take place in the near future due to
the public reaction from the Bolivian mining community to the administrations
proposed changes to the Bolivian Mining Code.

11

# (b)(10) Research and
development expenditures.

We have never assumed any research
and development expenses since our inception. We have not engaged in, and do not intend to
engage in, any research and development activities.

(b)(11)    
          Effect of compliance with federal, state, and local provisions for the
          protection of the environment.

We are not engaged in significant
operations within the United States other than our ownership of the Gold Bar mill and
plant located 25 miles northwest of Eureka, Nevada, which, as of December 31, 2006, was
idle. We do not own the ground on which this plant sits. The purchase agreement we entered
into when we purchased the plant requires the previous owner of the plant and the current
landowner, Atlas Precious Metals, Inc., to perform any required environmental remediation
on the site. We do not believe that we have any liability for environmental clean up on
this site or on any other site within the United States.

In Bolivia, we engage in an industry
that is historically subject to extensive, time consuming, and expensive compliance with
environmental law. Because we have limited financial resources as well as limited
personnel, there is no assurance that we will be able to comply with environmental laws in
Bolivia; however, to date, we believe that we have complied with all environmental laws in
Bolivia.

We are also required to maintain
environmental permits to explore, operate pilot operations, mine, process ore and create
processing waste impoundments. From September 30, 2002 through March 2003, we mined in
Cangalli on the basis of conditional use permits. In March 2003, we received our permanent
environmental permits, which we intend to maintain in good standing. We are required to
provide the Bolivian Vice Ministry of the Environment and Natural Resources with ongoing
information regarding the environmental impact of our operations. In addition, we have
retained an engineering firm to monitor our Bolivian based subsidiarys compliance
with environmental laws in Bolivia and to produce any necessary reporting and filing. Our
ability to continue our mining activities depends on our compliance with Bolivian law and
with the conditions of our environmental permitting.

We have also secured permits from the
Departmental Prefecture (State Government) for the exploration of our C Zone gold prospect
and for the operation of a pilot recovery plant on our C Zone. We are applying to the
Bolivian Vice Ministry of the Environment and Natural Resources for our full environmental
operating permit for expanding our pilot operations to full commercial operations within
2007.

As part of our process to commence
gold and copper mining operations at our Buen Futuro A Zone, we have retained an
international engineering firm to evaluate our feasibility study and to provide feedback
on our exploration, metallurgy, mine plan, and permitting efforts. We are currently
working with this firm and awaiting their findings regarding our projected operations at
the A Zone so that we can apply for the necessary environmental permits to commence mining
and milling operations; however, there is no assurance that our permits will be
forthcoming, or forthcoming in a timely manner.

12

We
believe that our environmental permitting related efforts to adhere to applicable Bolivia
regulations and procedures will result in the required permits being issued in a timely
manner.

# (b)(12) Employees.

At December 31, 2006, we directly
employed 35 full-time employees, as follows: (a) three in our head offices in Salt Lake
City, Utah; and (b) seven in our administrative offices in Santa Cruz, Bolivia; and (c) 24
at Ascension de Guarayos, which are primarily involved in the exploration of the B and C
zones and preparing infrastructure for the Buen Futuro A Zone and B and C Zone projects.
We also have one employee engaged in security at our Cangalli mine site.

# (c) Reports to security
holders

# (c)(1) Annual report.

We are not required to deliver an
annual report to security holders and we will not be distributing an annual report, except
in connection with our proxy statement

# (c)(2) Filings.

We file all required reports with the
SEC including Forms 10-KSB, 10-QSB and Forms 8-K as required.

# (c)(3) Available
information

We are a Colorado corporation with
our principal executive offices located at 9661 South 700 East, Salt Lake City, Utah
84070. Our telephone number is: (801) 619-9320. Our fax number is: (801) 619-1747. Our
website address is www.geii.com. We file our annual, quarterly, and current reports
with the Securities and Exchange Commission (SEC), copies of which are available on our
website or from the SEC free of charge at www.sec.gov. The public may also read and
copy any materials, which we have filed with the SEC at the SECs Public Reference
Room at 450 Fifth Street N.W., Washington, D.C. 20549. Information on the Public Reference
Room may be obtained by calling: 1-800-SEC-0330. Our Code of Business Conduct and Ethics
is also available on our website or by faxing a request to us at: (801) 619-1747.

# (d) Risk Factors

The following risks and
uncertainties, along with other information contained in this Form 10-KSB, should be
carefully considered by anyone considering an investment in our securities. The occurrence
of any of the following risks could negatively affect our business, financial condition
and operating results.

13

# (d)(1) FINANCIAL RISKS

Our history of losses and working
capital shortages has resulted in our auditor issuing an opinion on our financial
statements indicating substantial doubt about our ability to continue as a going concern.We have incurred substantial losses of $48,374,340 since our inception. Additionally,
we had negative working capital of $782,095 as of December 31, 2006. Our continued
operations are dependent upon receiving significant financing. On the basis of the
foregoing, our auditors have substantial doubt as of December 31, 2006 and 2005 about our
ability to continue as a going concern.

Should we be successful in mining
gold and copper, our revenues may be negatively affected by price volatility of those
metals.Metals prices are subject to extreme price volatility, including gold and
copper, as evidenced by charts (a) and (b) below:

(a)    
          Gold Price.The following table presents the annual high, low and
          average afternoon fixing prices over the past ten years, expressed in U.S.
          dollars, for gold per troy ounce on the London Metals Exchange:

|                      |  |      | 
|--------------------- |  | ---- | 
|Year                  |  | High | 
|                     
|1996                  |  | $415 | 
|1997                  |  | 367  | 
|1998                  |  | 313  | 
|1999                  |  | 326  | 
|2000                  |  | 313  | 
|2001                  |  | 293  | 
|2002                  |  | 349  | 
|2003                  |  | 416  | 
|2004                  |  | 454  | 
|2005                  |  | 536  | 
|2006                  |  | 725  | 
|2007 through April 16 |  | $690 | 

Source of Data: Kitco and
Reuters.

On April 16, 2007, the afternoon
fixing price for gold on the London Metals Exchange was $690.00 per ounce.

14

(b)    
          Copper.The volatility of the copper market is illustrated by the following
          table, which shows the dollar per pound equivalent of the high, low and average
          prices of high-grade copper on the London Metal Exchange and COMEX in each of
          the last ten years.

|                     |       |       |        
|-------------------- | ----- | ----- | -------
|Year                 | High  | Low   | Average
|                     |       |       |        
|1996                 | $1.29 | $.83  | $1.04  
|1997                 | 1.23  | .77   | 1.03   
|1998                 | .85   | .65   | .75    
|1999                 | .84   | .61   | .71    
|2000                 | .91   | .73   | .82    
|2001                 | .83   | .60   | .72    
|2002                 | .77   | .64   | .71    
|2003                 | 1.05  | .70   | .81    
|2004                 | 1.54  | 1.06  | 1.29   
|2005                 | 2.18  | 1.39  | 1.68   
|2006                 | 3.99  | 2.06  | 3.06   
|2007 through April 5 | $3.58 | $2.38 | $2.68  

Source of Data: London
Metal Exchange and COMEX

On April 16, 2007, the closing spot
price of high-grade copper on the London Metal Exchange was equivalent to $3.53 per pound.

Metals prices are subject to factors
that are beyond our control, including speculation, political and economic conditions, and
inflation. Should gold and copper prices experience downward price trends, our revenues
and potential profitability will be negatively affected.



Our continued operations
are dependent upon receiving adequate financing.Our primary operational goals of
developing our Bolivian mining properties in the Precambrian shield, namely the B and C
Zones and the Buen Futuro A Zone, will require substantial debt or equity financing;
however, there is no assurance that we will be successful in receiving adequate financing.
Should we fail to receive adequate financing, any possible revenue generating operations
will be significantly delayed and we will be subject to increasing losses.



Historically, cash shortages have
negatively affected our ability to explore and develop our properties.From approximately November 1997 to
present, we have experienced significant cash shortages. We have been able to meet our
financial obligations only through equity and debt financing. We may continue to
experience cash shortages, which will cause delays in development of our prospects and any
possible revenue generating operations, and will otherwise negatively affect our financial
condition.

We have significant debt
obligations and accounts payable that we may be unable to meet and/or may negatively
affect our operations.At December 31, 2006, we have debt obligations totaling
$803,720, consisting of: (a)$327,184 in accounts payable and accrued expenses;
(b) other notes payable in the amount of $32,002; (c) a note payable to a former
director and officers for $151,900; (d) a debenture payable in the amount of $249,000 and
(e) accrued interest payable of $43,634. Should we be unable to meet these debt
obligations, our operations may be adversely affected.

15

# (d)(2) OPERATIONS,
DEVELOPMENT, AND MINING RELATED RISKS

Our future success is
dependent upon our existing management.

Our future success is dependent upon
the continued participation of our current management who provide us with the key
technical and management aspects of our operations, including: (a) Terry C. Turner, our
Chairman of the Board, President and Chief Executive Officer; (b) Harlan McSpadden (Mac)
Delozier, a Director and our Vice President for Bolivian Administration; and (c) Tracy A.
Madsen, our Vice President for US Administration and our Chief Financial Officer. (d) Dr.
Michael H. Biste, our Chief Consulting Geologist; Hugo Aparicio, our Project
Superintendent and Chief Mining Engineer. We have not obtained any key man life insurance
for any of these personnel. Should we lose the services of any of these personnel, our
operations may be negatively affected.

Our operations in Bolivia are
subject to inherent risks including:

|o | Possible
political volatility, instability, civil unrest, or insurrection in Bolivia where all of
our mining properties and          prospects are located, with the exception of our Gold
Bar mill and plant located in Eureka, Nevada;
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|o | Exchange
controls and currency fluctuations;
|- | --------------------------------------------

|o | Material
changes in the regulatory climate in Bolivia pertaining to permitting, licensing, mining,
and the environment;
|- | -----------------------------------------------------------------------------------------------------------------------

|o | Geographical,
climatic, and environmental conditions in Bolivia that may pose operational difficulties,
including          restricting access and development of our prospects; and
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|o | Risks
associated with mining, exploration, and development operations, including risks of
injury and death to workers,          environmental damage, unexpected rock formations or
metallurgical issues.
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The occurrence of any of these risks
could negatively affect our operations, including delays or stoppages in our mining,
exploration, and development work, negatively affect our financial condition, or
negatively affect the viability of our assets in Bolivia.

# (d)(3) LEGAL, MARKET,
AND REGULATORY RISKS



Our minority shareholders exercise
little control over our corporate affairs.Our officers and directors acting
together will have the ability to substantially influence matters submitted to
shareholders for approval, including election of directors or a merger, consolidation or
sale of our assets; as a result, our minority shareholders may have little or no influence
in the outcome of such matters. Additionally, our Board of Directors has the right to
authorize the issuance of blank check preferred stock with such designations,
rights and preferences, as they may determine. As such, our Board of Directors may issue
and has in fact issued shares of preferred stock with such rights and preferences without
shareholder approval, which could adversely affect the voting power or other rights of our
common stock holders. Additionally, such preferred stock issuances could have the effect
of discouraging, delaying or preventing a change in our control.

16

We have indemnified our officers
and directors to the full extent permitted by Colorado law, which could negatively affect
our financial condition.Our Articles of Incorporation and Bylaws provide for
indemnification of our officers and directors to the full extent permitted by Colorado
law. As a result of this indemnification, we may be required to pay judgments, fines, and
expenses incurred by an officer or director, as a result of actions or proceedings against
them. Funds or our securities paid in satisfaction of judgments, fines or expenses would
likely be funds that we would need for our operations and for the exploration and
development of our properties. Accordingly, such payments pertaining to claims against our
officers and directors may negatively affect our operations, financial condition, and/or
further dilute the value of our securities.

Our issuances of shares in the
past have caused substantial dilution to the value of our common stock and will continue
to do so in the future.During our past three fiscal years, we have
raised capital to finance our operations and acquisitions. We have raised this
capital by selling substantial shares of our common stock and issuing shares in connection
with convertible debentures. Additionally, we have issued shares in connection with the
acquisition of our properties. At the end of 2006, and during the first quarter of 2007,
we also issued shares of Series B convertible preferred stock, which are convertible into
our common stock. The issuances of these securities are dilutive to the value of our
securities, especially since many of these securities were issued below the then-current
market prices. Since our operations are currently dependent upon raising additional funds
through debt or equity financing, future issuances will further dilute the value of our
securities. We currently have no additional shares of common stock to issue, however, we
may hold a shareholder vote in which we may increase the number of shares available to
issue the outstanding common shares to allow us to continue to raise additional funds and
to permit us to convert the preferred shares outstanding into common shares. This action
will further dilute the shareholdings of the existing shareholders.

The public market for our common
stock is extremely volatile, both as to price and volume, and may continue to be volatile
in the future.During 2006, our common stock has been volatile as to price and volume.
Significant operating losses, the shutdown of our operations at our Cangalli claim in June
of 2004, our failure to recommence gold production, political instability in Bolivia, and
other factors may have contributed to the volatility of our shares. There is no assurance
that the volatile nature of our stock as to price and volume will not continue in the
future.



We face substantial
governmental regulation.Our business in Bolivia is subject to
extensive regulation pertaining to the development of our prospects and possible
production, environmental regulation, labor standards, mine safety and others. Should we
fail to abide by these regulations, are operations may be subject to fines or restrictions
on activities pertaining to our prospects and properties in Bolivia, which may negatively
effect our ability to conduct our operations.



We have not developed
independent corporate governance.At the present time we have only one
independent director, Alvaro Riveros. Additionally, currently we have no audit or
compensation committees. Our lack of independence and independent controls over our
corporate affairs may negatively affect our ability to comply with applicable securities
regulations, conduct oversight of our operations, and may result in potential or actual
conflicts of interest between our officers, directors and our shareholders.

17

# Item 2. Our Properties

As described in Item 1, Business, we
own mining concessions in Bolivia that we believe are prospectively valuable for mineral
operations. We also own an idle mill and mineral processing plant 25 miles northwest of
Eureka, Nevada. These properties include:

|o | The
Precambrian properties (discussed in paragraphs (a), (b) and (c), below).
|- | -----------------------------------------------------------------------------

|o | The
Tipuani-Cangalli properties (discussed in paragraphs (d), (e) and (f), below), and
|- | --------------------------------------------------------------------------------------

|o | The
Gold Bar mill and plant (discussed in paragraph (g) below).
|- | ---------------------------------------------------------------

# (a) The Precambrian
properties.

In June of 2001, we acquired four
mining claims in Bolivias Precambrian Shield with a total acreage of approximately
125,000 acres, as well as the existing reports on the area, for 10 million shares of our
common restricted stock then valued at $300,000 ($0.03 per share). These shares were
issued to persons who were not United States citizens or residents for investment purposes
in accordance with exemptions from registration found in Section 4(2) and 4(6) of the
Securities Act of 1933, and Regulation S.

We pay $57,000 per year to the
Bolivian government in mining patent fees (mining claims fees) for our Precambrian
properties. The Bolivian Mining Code provides that these annual government claims fees are
the only obligation that we have in order to maintain our rights over these properties in
perpetuity.

Our geologists explored these
prospects and found them to be highly prospective for extensive near surface gold
mineralization and deeper mineralized Volcanogenic Massive Sulphides (VMS)
systems containing gold and copper.

# (b) Buen Futuro claim

In June 2003, we purchased the Buen
Futuro claim, and all technical information that had been generated about the property,
from Celia Calla de Arraya, a Bolivian, and her son-in-law, Dr. Michael H. Biste, a
geologist who has worked extensively in the area. We then amended the purchase contract in
December 2003 and March 2005. The terms of the acquisition included a 3% net smelter
return, payments of $250,000 cash and 1,065,960 shares of our restricted common stock with
a total value of $175,000. As of December 31, 2006, we have made all required payments
under the contract with the exception of $6,500 in penalty interest that we intend to pay
during the second quarter of 2007., We have complied either partially or fully to
additional obligations under this agreement, including:

18

|o | Our
agreement to maintain an exploration program to replace mineral reserves as they are
depleted through mining as long as          the potential for feasible mineral reserves
continues on the ore deposits found within the Buen Futuro concession.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|o | Our
agreement to invest $1 million in exploration by November 23, 2006. We have expended
approximately $564,000 to date that          we believe may be applied to this
commitment.  We will only be able to meet the remainder of this commitment if we receive
a          significant amount of additional financing.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|o | Our
original agreement required us to enter into mineral production on the Buen Futuro
concession by May 23, 2005, and to          expend a minimum of $2,000,000 to initiate
that production. We believe that the acquisition of the Gold Bar mill and plant
         for $3,980,000 satisfies this investment requirement. On May 20, 2005, we
entered into an amended agreement with the sellers          whereby we agreed that if we
were not in production at Buen Futuro by November 23, 2005 we were required to pay a
penalty of          $1,500 per month to the sellers until we enter production or until
November 23, 2006. If by November 26, 2006 we were still          not in production, the
penalty amount payable to the seller increased to $3,000 per month. We are at this time
current in          the production delay payments due to the sellers.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

There is no assurance that claims
will not be brought against us in connection with this agreement or that we will have
sufficient financial resources to comply with these and other obligations under this
agreement.

There are no other stated penalties
for failure to comply with these commitments. We estimate that the initial build-out of
the gold plant on the Buen Futuro A Zone, and other infrastructure improvements, will
require a capital investment of approximately $10,000,000.

The Buen Futuro mining claim is
located squarely in the center of our 125,000-acre landholding in a geological area within
eastern Bolivia known as the Precambrian Shield. This area, which resulted
during a geological time known as the Precambrian Era, is located 180 miles
north of Santa Cruz, Bolivia, and 11 miles east of the town of Ascension de Guarayos. The
Buen Futuro claim consists of 2,500 acres and contains three well-identified gold/copper
ore bodies. We exercised our rights to purchase the Buen Futuro property in June 2003. A
private contract and recorded public contract were signed and filed with the
Superintendency of Mines of the Department of Santa Cruz on December 12, 2003.

The Buen Futuro mineral deposits are
found in a gold oxide layer commencing at the surface with ranges to depths of 130 to 200
feet. Immediately beneath this surface oxide layer is a supergene, or copper-enriched
layer, extending from the bottom of the gold oxide zone to a depth of 320 feet, sitting on
top of a mineralization system that is known as a strata-bound (VMS). Based on data gathered through a combined 44,000 feet of auger, reverse
circulation and diamond core drilling, as well as 8 miles of trenching, we estimate 4.36
million tonnes of mineralized material in the gold oxide layer with a gold grade of 1.23
g/t for a total of 172,000 troy ounces; and 6.5 million tonnes in the copper-enriched
supergene layer with a copper grade of 1.85% for a total of 120,000 fine tonnes (265
million pounds) of copper. Particular note should be made that mineralized material is not
the equivalent of proven and probable reserves, and the area tested is less than one-half
of one percent of our landholding in eastern Bolivia.

19

Based on Dr. Michael Bistes
study, as detailed below, we believe that the Buen Futuro gold/copper deposits, surrounded
by our Precambrian claims, are just part of a much larger trend of VMS clusters that run
both north and south within our total landholding of 136,500 acres. A study was carried
out on the larger trend by Dr.Biste, our Chief Consulting Geologist, who is an expert on the
Precambrian geology of eastern Bolivia. The exploration data resulted from the northern
part of our Dos Piyos claim, and the southwest portion of the Cobra claim. Both properties
cover the northern part of the Ascension Gold-Copper Trend and the investigated ground
comprised 23 square miles. Dr. Biste prepared a remote sensing study consisting of an
interpretation of satellite images, aerial photographs, and open file airborne magnetic
and radiometric data. He further reexamined historic reconnaissance exploration data of
the two claims and applied modern computer based methods for an integrated data
interpretation. In addition, Dr. Biste used the results of geological mapping over 44
linear miles, magnetic ground surveys of over 9 miles and soil sampling over a distance of
18 miles, as well as Horizontal Loop Electromagnetic (HLEM) data along two extensive test
lines. Despite the wide line spacing of 0.6 miles, Dr. Biste was able to identify a
geological setting with characteristics very similar to the host rock of the Buen Futuro
VMS mineralization. Buen Futuro is located 12 miles southwest of the investigated area.
The HLEM survey so far has confirmed three parallel striking conductors, which Dr. Biste
believes represent a primary VMS mineralization that is covered by an oxide layer at least
30 meters deep. The lateritic soil at the surface carries geochemically anomalous values
for gold, copper and zinc. Our summary study covers 3.6 miles of the Trend and the remote
sensing data shows that the favorable VMS lithology strikes further to the northeast. We
consider these findings to be a significant step toward identifying new gold-copper
mineralization similar to the Buen Futuro ore bodies. Dr. Biste believes that fieldwork
will continue to demonstrate that the Ascension Gold-Copper Trend is now likely to extend
over at least 21 linear miles within our Precambrian properties.

We believe that our current
landholding in the Ascension Gold-Copper Trend provides us with several important
opportunities for future development; however, such opportunities are contingent upon our
ability to raise the needed development capital either through operations, equity funding,
debt financing or by entering into joint venture relationships. We own the underlying
mineral rights on the Buen Futuro project through the purchase of mineral concession
rights that had been granted by the Bolivian government. Continuation of this concession
requires an annual patent fee of $2,174. However, we had to purchase the surface land
rights before we could actually begin to disturb the surface with mining and development
activities. We have purchased 585 acres of surface rights covering the areas that we
intend to mine in the Buen Futuro A Zone, as well as all areas necessary for the location
of our mill, recovery plant, fresh water ponds, tailings impoundments and mine camp site.
As other surface rights become necessary, we expect to acquire those rights under
reasonable terms also.

# (c) Cobra claim

On December 22, 2003, we completed
the acquisition of the Cobra claim, an additional 22,500 acres of prime ground in the
Ascension Gold-Copper Trend in eastern Bolivias Precambrian Shield. The Cobra claim
has proven positive for VMS deposits containing gold and copper, as well as near-surface
gold oxide deposits. Induced polarization (IP) and Horizontal Loop Electromagnetic (HLEM)
surveys, both of which are scientific tools that measure magnetic fields and are used by
geologists to identify possible mineralization within the earth, as well as scout auger
drilling, which is essentially a threaded drill that brings samples from a relatively
shallow depth to the surface for sampling, have yielded positive results in an area
extending to the northeast of our previous 111,500-acre landholding. Our total landholding
in the Precambrian Shield after this acquisition was 136,500 acres.

20

We secured the Cobra claim through a
Bolivian mining petition and paid initial claims fees of $10,000. To maintain the property
in perpetuity, we must pay annual concession patent fees to the Bolivian government of
$9,800.

Total patent fees on all of our
Precambrian Shield Claims for 2007 are estimated to total $56,989. After 2007, these
annual patent fees will increase to $102,063 in order to maintain all of our Precambrian
concessions.

# (d)(1) The Cangalli
claims

In October 1995, we began reviewing
potential mining opportunities in Bolivia. Thereafter, we conducted a site visit to the
Tipuani Gold Mining District, which is approximately 62 miles north of the Bolivian
capital of La Paz. Our representatives traveled to the town of Cangalli, approximately two
kilometers down river from the town of Tipuani, a well-known gold mining center in
Bolivia. We hired an independent geologist to evaluate the Cangalli area. This geologist
reported that the area merited further study and was highly prospective for sizeable gold
deposits. Based on this favorable report, along with other pre-existing reports on the
Tipuani/Cangalli area, in January 1996, through one of our now-inactive subsidiaries, we
entered into an agreement with United Cangalli Gold Mining Cooperative, Ltd. (United
Gold Mining Cooperative), a Bolivian cooperative consisting of 118 members. We
operated under this agreement from the date of its signing through July 2, 2002.

On July 2, 2002, we purchased 100% of
all right, title and interest in and to the mining concessions comprising the Cangalli
claims. In total, we purchased 5,125 acres. This purchase completely freed our Cangalli
properties from any royalty whatsoever. We paid $300,000 in cash, 3,944,500 shares of our
restricted common stock valued at $0.10 per share, and assumed $175,000 of United Gold
Mining Cooperatives existing debt payable by us over the course of 4 years. The
United Gold Mining Cooperative debt has been paid. We also agreed in a separate lease
agreement to lease the use of the 1,000-foot deep Cangalli shaft back to the United Gold
Mining Cooperative for a period of 99 years, with a 10% gross royalty on gold production
back to us, so that the United Gold Mining Cooperative members not working for us could
remain involved in gold mining in their own community.

The United Gold Mining Cooperative
leadership distributed 35,000 shares of our common stock to each of their members. This
distribution was accomplished in accordance with the provisions of Regulation S. During
2003, we issued the United Gold Mining Cooperative an additional 133,000 shares of our
common stock valued at $22,610 to satisfy additional claims.

We paid one-time transfer taxes of
$9,000 in the purchase. We also pay $4,512 per year to the Bolivian government in mining
patent concession fees. The Bolivian Mining Code provides that these annual government
claims fees are our only obligation necessary to our rights over the Cangalli claims in
perpetuity.

21

# (d)(2) Production from
our Cangalli mine

On September 30, 2002, we commenced
operations at our Cangalli gold mine at the rate of 1,000 tonnes per day from our open pit
operation. By November 2002, we had increased our production capacity to 2,000 tonnes per
day. By the end of the fourth quarter, December 31, 2002, we had processed 92,700 tonnes
of ore, and had recovered 43,847 grams, or 1,410 troy ounces, of gold.

On February 10, 2003, we announced
the conversion from our open pit operations to more cost-effective underground block
caving from our interior mine while maintaining a production capacity of 2,000 tonnes per
day.

In July 2003, we completed
construction of our 3,500 tonne per day plant and began processing material at an
increased rate. We had projected that once we had reached 3,500 tonnes per day on a
sustained basis, our Cangalli gold operation would reach and surpass the break even point,
and would enter into a sustained positive cash flow.

On June 25, 2004, we temporarily
ceased mining operations at our Cangalli mine and plant as a result of road blockades by
local citizens protesting various government policies in Caranavi, Bolivia, a town half
way between La Paz and our Cangalli mine. The roadblocks prevented the delivery of needed
supplies and materials to the mine for operations. The same blockade, approximately 80
miles from Cangalli, also hampered operations of the power sub-station in Guanay, Bolivia.
This sub-station provides electricity to our Cangalli operation, and the power failures
halted all mining and processing activities.

During
June 2004, before the strike issues were settled, we ceased gold mining operations at our
Cangalli property also as a result of issues that arose among the United Gold Mining
Cooperative that had sold us a 5,000-acre mining concession, and FENCOMIN, the Bolivian
governmental regulator of cooperatives, as well as other Bolivian regulators. The legal
issues involving the United Gold Mining Cooperative had nothing whatsoever to do with us,
but created an insecure atmosphere at our Cangalli gold mine and raised serious questions
about whether formal intervention would occur and substantially hamper operations.

We cannot assure that operations will
ever recommence at on our Cangalli or Tipuani Valley properties.

(e)    
          Gold Bar mill and plant

On June 18, 2004, we entered into a
purchase agreement with Atlas Precious Metals, Inc. for the purchase of the Gold Bar mill
and gold recovery plant located 25 miles northwest of Eureka, Nevada. In exchange for the
Gold Bar mill and plant, we issued 30,000,000 shares of our restricted common stock to
Atlas Precious Metals for this mill and plant. The shares were valued at $.12 per share
based on the closing price of the stock on the closing date or an aggregate shares value
of $3,600,000. Upon raising the necessary capital, we have always intended to dismantle,
ship and re-erect this plant on our Buen Futuro A Zone site in eastern Bolivia. We are
further evaluating our plans with respect to our Gold Bar mill. We estimate the time to
dismantle the plant, transport it to Bolivia and re-erect it on our Buen Futuro claim will
be approximately eight months to one year from the time we raise the necessary financing.
We estimate an approximate $3.5 million cost to dismantle, ship and re-erect the plant on
our Buen Futuro claim. However, we are also reviewing the possibility of rehabilitating
the Gold Bar mill on its current site and using it for toll processing of gold ore from
neighboring ore bodies. Presently, within a 50-mile radius of the Gold Bar mill there are
a number of identified and proven oxide gold deposits that could be subjected to milling
and gold recovery through the Gold Bar mill and plant. The status of the Gold Bar mill
will be indeterminate until we have had an opportunity to evaluate more information about
the possibilities that are currently being presented.

22

Prior to completing the purchase of
the Gold Bar mill, we received a fairness opinion prepared by H.E. Dunham &
Associates. The opinion from H.E. Dunham & Associates determined the economic fairness
of the Gold Bar mill transaction to our shareholders. The report estimated a replacement
value on the Gold Bar mill and plant at $12 million. This report also provided an
estimated cost to build a similar-sized new gold and copper recovery plant with its
associated new equipment, engineering and construction costs at between $45 million and
$50 million. The report also included three comparable acquisition transactions of similar
size and capacity, which were used as comparison to our acquisition of the Gold Bar mill
and plant. These included the Carr Fork facility located at Tooele, Utah, which sold for
$7.0 million and the Quintana facility, located at Truth or Consequences, New Mexico,
which sold for $8.5 million to OK Tedi Mining Company in 1986 dollars; while the 4,000
tonne per day Paradise Peak Gold Facility located at Gabbs, Nevada is currently on the
market for $18 million. The report stated that the acquisition of the Gold Bar Mill
is most beneficial to us at a good price. Finally, H.E. Dunham &
Associates expressed the opinion that the transaction is economically fair to Golden
Eagle International, Inc., Atlas and their shareholders. Atlas offered to sell the
Gold Bar plant to us, at what we believed was a discounted price, as a result of its
desire to participate in the mining of gold and copper at Buen Futuro. The Gold Bar plant
was suited to our needs and was not at the time processing ore from the Gold Bar mine.

In accordance with the original Asset
Purchase Agreement between Atlas and us, we agreed to move all Gold Bar assets of the
property located near Eureka, Nevada within twelve months from the date of the agreement;
however, it was apparent that we would not be able to remove the assets by this date, and
Atlas had the right to either allow us to store the assets on site or terminate the
agreement and return the purchase price to us. While we believed that Atlas did not intend
to terminate the agreement, such termination would force return of the assets, and we
could not guarantee that Atlas would not exercise its termination rights. Consequently, on
May 19, 2005 we completed an amended asset purchase agreement with Atlas which no longer
required us to remove t the Gold Bar Mill and plant from the site within a specified time
period, but required us to issue an additional purchase price of 20,000,000 shares of our
restricted common stock at $.019 per share or a total of $380,000, which we so issued.

We are presently evaluating the
status of Gold Bar. In addition to our plans to relocate the Gold Bar mill and plant to
our Buen Futuro project, we are also investigating the possibility of restarting the Gold
Bar mill and plant on its current site outside of Eureka, Nevada or the possibility of
selling the plant to raise money for future investment at Buen Futuro. While we have not
made a decision concerning Gold Bar, there is no guarantee that we could obtain the
financing to commence a tolling project at its current location, which we estimate to be
between $500,000 and $1,000,000 to rehabilitate the mill; a substantial, but yet
undetermined amount to create a suitable tailings impoundment; the necessary permitting
from state and federal agencies; and whether we would be able to obtain the necessary
customers to ensure a successful operation. We also cannot guarantee that if we choose to
sell the plant that we will be able to find a buyer or recover our costs in the project.
While Atlas Precious Metals continues to own the property on which the plant stands and
has allowed us sufficient time to remove our equipment, we can also offer no guarantee
that they will not sell the property to a buyer that will request that we sell the mill or
remove it from its current location.

23

# (f) Office leases

On August 1, 2005, we moved our
executive offices in Salt Lake City, Utah to 9661 South 700 East, Salt Lake City, Utah
84070. This suite of offices consists of four executive offices, reception space, filing
areas and copy and faxing facilities and our suitable for our needs. We pay $1,451 per
month on a three-year, renewable lease.  Although the lease expires in July 2008, we
are allowed to terminate the lease at the end of one year for a $2,790 penalty and at
the end of year two for a $1,395 penalty. July 31, 2007 will be the end of this two-year
period.

We also lease 150 square meters of
office space in Santa Cruz, Bolivia, which we consider our Bolivian headquarters. This
lease, which expires June 30, 2007, is for $500 per month.

|                    |                   |              |                 
|------------------- | ----------------- | ------------ | ----------------
|Location            | Size              | Monthly Rent | Lease Expiration
|                   
|Salt Lake City      | 1,183 square feet | $1,451       | July 31, 2008   
|Santa Cruz, Bolivia | 150 square meters | 500          | June 30, 2007   
|                   
|Total               |                   | $2,116       |                 
|                   

Our operating subsidiary, Golden
Eagle International Inc. Bolivia, owns the mining and processing equipment, which is
located on the Cangalli claim under its control, or at its warehouse in Santa Cruz,
Bolivia.

# Item 3. Legal proceedings

On September 1, 2006, our Chief
Executive Officer, Terry C. Turner, as the Plaintiff in a federal district court action,
filed an action against us, Kevin K. Pfeffer, H.E. Dunham, and William A. Jacobs
(the Defendants) in the United States District Court for the District of Utah
(the Court), Terry C. Turner v. Golden Eagle International, Inc., Kevin K.
Pfeffer, H.E. Dunham and William A. Jacobs, Civil Action No.2:06-cv-00738-TC (D. Utah;
2006). The Complaint sought a temporary restraining order enjoining the Defendants in
the action, until such time as a preliminary injunction hearing may be held, from the
following:  (a) publishing a proposed Form 8-K pertaining to the August 24, 2006
meeting of the Board of Directors; (b) preventing Defendants from violating Regulation FD
and the disclosure of insider information; (c) preventing Defendants from further breaches
of their fiduciary duty to Golden Eagle; (d) preventing Defendants from breaching Golden
Eagles Code of Ethics; (e) holding a Board of Directorsmeeting on
September 4, 2006, or any date thereafter;  and (f) publishing disparaging,
slanderous, libelous or defamatory comments regarding Plaintiff.  At the Courts
request, the Defendants agreed not to file the Form 8-K or hold a scheduled Board of
Directors meeting on September 4, 2006 until a hearing on Plaintiffs motion
for a temporary restraining order could be heard on September 5, 2006.  On September
5, 2006, such hearing was held and the Court denied Plaintiffs motion for temporary
restraining order since Plaintiff had achieved the purposes of his motion for such an
order.

24

On September 12, 2006, the
Plaintiff filed a motion voluntarily dismissing us as a defendant; on September 13,
2006, the Court granted Plaintiffs motion and dismissed us from the lawsuit. On
October 10, 2006 Plaintiff s motion was granted by the Court to voluntarily dismiss
Defendants H.E. Dunham and William A. Jacobs from the lawsuit. The case was subsequently
dismissed without prejudice on March 30, 2007.

We are not aware of any other legal
action pending or threatened against us.

# Item 4. Submission of
matters to a vote of security holders

No matters have been submitted to a
vote of security holders, through the solicitation of proxies or otherwise, during our
fiscal year ended December 31, 2006.

# PART II

# Item 5. Market for our
common equity, related stockholder matters, and issuer purchases of equity securities

# (a) Market information

Our common stock is quoted on the
Over-the-Counter (OTC) Bulletin Board under the trading symbol
MYNG.

25

The following table shows the high
and low bid for our common stock during the last two years and the current fiscal year.
These prices represent inter-dealer prices, without retail mark-up, markdown, or
commission, and may not represent actual transactions, and were derived from Knobias at
www.knobias.com:

|                        |         |         
|----------------------- | ------- | --------
|2005                    | Low Bid | High Bid
|                        |         |         
|First Quarter           | $.033   | $.059   
|Second Quarter          | $.018   | $.034   
|Third Quarter           | $.011   | $.024   
|Fourth Quarter          | $.013   | $.034   
|                        |         |         
|2006                    | Low Bid | High Bid
|                        |         |         
|First Quarter           | $.024   | $.037   
|Second Quarter          | $.017   | $.03    
|Third Quarter           | $.01    | $.017   
|Fourth Quarter          | $.008   | $.014   
|                        |         |         
|2007 (through April 16) | Low Bid | High Bid
|                        |         |         
|                        | $.007   | $.03    

# (b) Holders

As of December 31, 2006, there were
approximately 1,194 shareholders of record of our common stock based on information we
received from our transfer agent. This number does not include an undeterminable number of
beneficial holders who own their shares through broker-dealers, nominees, and otherwise.
We are authorized to issue 800,000,000 common shares; as of December 31, 2006, we had
issued 789,999,990 shares. In addition, we are authorized to issue 10,000,000 preferred
shares. Of this amount, 3.5 million are designated as Series A shares, none of which have
been issued. On December 29, 2006, 4,500,000 of our preferred shares were designated as
Series B preferred shares. Also on December 29, 2006, 1,988,588 shares of Series B
preferred shares were issued to four entities as described in section (e) below.

# (c) Dividends

We have never paid a cash dividend on
our common stock or on our preferred stock and have no present intention to declare or pay
cash dividends on our common or preferred stock in the foreseeable future. We intend to
retain any earnings that we may realize in the foreseeable future to finance our expanding
operations. Future dividends, if any, will depend on earnings, financing requirements and
other factors.

(d)    
          Securities authorized for issuance under equity compensation plans

During 2005, we adopted the 2005
Employees and Consultants Stock Compensation Plan as reflected in the following table as
of December 31, 2006. Our directors, officers and affiliates cannot participate in this
plan. As discussed below, we have compensated our officers and directors with stock
options and stock bonuses, but those are ad hoc determinations made by our board of
directors and are not pursuant to any plan. These ad hoc grants have not been
submitted to the shareholders for approval.

26

|Equity Compensation Plan Information                       
|-----------------------------------------------------------
|Plan Category and Description                              
|Equity compensations plans not approved by security holders
|Equity compensation plans not approved by security holders 
|Total                                                      
|                                                           

(e)(1)    
          Unregistered sales of equity securities and use of proceeds

During 2006, we issued 30,004,879
shares of restricted common stock to accredited investors in exchange for $287,341 at
prices that ranged from $.0075 to $.013. We also issued 12,308,063 shares for services
valued at $242,276 at prices that ranged from $.012 to $.0145. We also issued 2,999,530
shares for exploration and development valued at $80,750 at prices that ranged from $.0177 to $.0343. We
relied upon Sections 4(2) and 4(6) of the Securities Act of 1933, as amended
(Securities Act) for the offer and sale. We believed that Sections 4(2) and
4(6) were available because the offer and sale did not involve a public offering, there
was no general solicitation or general advertising involved in the offer or sale and the
purchaser was an accredited investor. All of these transactions were described
individually in greater detail in previous filings.

(e)(2)    
          Preferred StockThe following reflects issuances of our Contingent
          Convertible Series B Preferred stock during 2006.

(e)(3)    
          Description of Agreements with the Series B Holders

Since 1997, we have entered into loan
agreements (the Loan Agreements) (as described below) with Dewey L. Williams
and The Dewey L. Williams Profit Sharing Plan and Trust; Lone Star Equity Group, LLC; Mary
A. Erickson; the Betty Jane Seydler Trust/Herbert M. Seydler, Jr. Trust; and Golden Eagle
Mineral Holdings, Inc. (collectively referred to as the Lenders). We used the
proceeds from these loans for working capital and general corporate expenses. Because we
were in default or imminent default of our obligations to the Lenders and were unable to
pay the amounts due, it was necessary for us to re-negotiate our payment obligations. At
the time of our negotiations, we had insufficient common stock authorized to offer shares
of our common stock to the Lenders; as a result, they agreed to accept Series B Contingent
Convertible Preferred Shares in exchange for an aggregate amount of $1,988,598 that we
owed to them. Each Series B preferred share was valued at one dollar ($1.00).

27

Accordingly, on December 29, 2006 we
entered into four separate Series B Contingent Convertible Preferred Stock Subscription
Agreements (Subscription Agreement or Subscription Agreements)
with the Lenders, which obligate us to issue an aggregate of 1,988,599 shares of the
Series B Shares in exchange for the amounts that we then owed to the Lenders. The
Subscription Agreements terminate the loan agreements and debt obligations to the now
Series B Holders according to the conditions set forth in the Series B Certificate of
Designation. The Series B Certificate of Designation requires us to use our best efforts
to amend our Articles of Incorporation to increase our authorized common shares so that
the Series B Holders can convert their Series B Shares into shares of our common stock.
Our agreements with the Series B Holders also require us to use our best efforts to
increase our authorized common stock so that the Series B Holders can convert their Series
B Shares into shares of our common stock at a ratio of two hundred fifty (250) common
shares for every one (1) Series B Share held should they desire to do so. The certificates
representing the Series B Shares, as well as the shares of common stock issuable upon
conversion of the Series B Shares, will be restricted securities and certificates
representing the shares will bear a restrictive legend. Each Series B Holder is entitled
to two hundred fifty (250) votes per Series B Share for matters presented to a vote of our
common stockholders. Additionally, if we amend our Articles of Incorporation to increase
our authorized common stock, each Series B Share will be convertible into two hundred
fifty (250) shares of our common stock. Our agreements with each Series B Holder, which
was formerly one of our lenders, are discussed below.

We relied upon Sections 4(2) and 4(6)
of the Securities Act of 1933, as amended (Securities Act) for the offer and
sale. We believed that Sections 4(2) and 4(6) were available because the offer and sale
did not involve a public offering, there was no general solicitation or general
advertising involved in the offer or sale and the purchaser was an accredited investor. We
placed restrictive legends on the certificates representing these securities stating that
the securities were not registered under the Securities Act and are subject to
restrictions on their transferability and resale.

Loan agreements converted to Series B
convertible preferred stock:

Dewey L. Williams and The Dewey L. Williams Profit Sharing Plan and TrustOn August 16, 2006, we entered into a
Convertible Promissory Note with Dewey L. Williams and The Dewey L. Williams Profit
Sharing Plan and Trust (collectively the Williams Group), whereby we borrowed
the principal sum of $28,000 with an interest rate of ten percent (10%) per annum. This
loan was due three (3) months from the date of the note on November 16, 2006. From
November 16, 2006 until December 29, 2006, we were in default of our loan obligation to
the Williams Group.

As of December 29, 2006, we were
indebted to the Williams Group in the amount of $28,898.83, $28,000 of which was principal
and $898.83 of which was interest. On December 29, 2006, in accordance with our
Subscription Agreement with the Williams Group, we agreed to issue 28,899 Series B Shares
to the Williams Group in exchange for our indebtedness in the amount of $28,898.83 to the
Williams Group.



28

Mary A. EricksonOn or about October 11, 1999, we
entered into a verbal loan agreement with Mary A. Erickson, whereby we owed her unpaid
salary with the principal sum of $23,204.20 at a rate of eight percent (8%) per annum.
There was no due date in connection with this verbal loan agreement.

As of December 29, 2006, we owed Ms.
Erickson $25,959.65, $23,204.20 of which was principal and $2,755.45 of which was
interest. On December 29, 2006, in accordance with the terms of our Subscription Agreement
with Ms. Erickson, we agreed to issue 25,960 Series B Shares to Ms. Erickson in exchange
for the $25,959.65 that we owed to her.



Lone Star Equity Group,
LLCWe entered into the following
promissory note agreements with Loan Star Equity Group, LLC (Lone Star),
whereby we borrowed a total principal sum of $657,000 at a rate of eight percent (8%) per
annum, all such principal and interest of which was due and payable on December 31, 2006:
(a) March 24, 2006 agreement for a principal sum of $153,000; (b) May 1, 2006 agreement
for a principal sum of $200,000; (c) August 20, 2006 agreement for a principal sum of
$70,000; (d) October 3, 2006 agreement for a principal sum of $65,000; (e) October 6, 2006
agreement for a principal sum of $60,000; (f) November 3, 2006 agreement for a principal
sum of $30,000; (g) November 29, 2006 agreement for a principal sum of $40,000; and (h)
December 5, 2006 agreement for a principal sum of $39,000.

As of December 29, 2006, we owed Lone
Star $682,649.94, $657,000 of which was principal and $25,649.94 of which was interest. On
December 29, 2006, in accordance with the terms of our Subscription Agreement with Lone
Star, we agreed to issue 682,650 Series B Shares in exchange for the $682,649.94 that we
owed to Lone Star.



Golden Eagle Mineral
Holdings, Inc.Betty Jane Seydler Trust/Herbert M. Seydler, Jr. TrustFrost Bank On March 13, 1997, we entered into a
$1,000,000 promissory note with Frost National Bank located in Houston, Texas. This
promissory note was renewed, modified and extended on a yearly basis and we continued to
pay interest on this note on an annual basis through June 29, 2004. On June 29, 2004, we
executed an Extension, Modification and Renewal of Promissory note with Frost National
Bank in the amount of $995,623.66. This note had an interest rate of prime plus three
percent (3%) with an initial rate of seven percent (7%) per annum and was due on or before
December 28, 2004. On December 28, 2004, this note was assigned to the Herbert M. Seydler
Jr. Trust and the Betty Jane Seydler Trusts (collectively the Seydler Trust),
who were guarantors of the Frost Bank note. The new note of $995,373 carried a fixed
interest rate of eight and one half percent (8.5%) per annum and matured on December 29,
2005. The terms of this note required us to make quarterly principal reductions of
$250,000 prior to maturity, which we were unable to pay. On December 30, 2005, we were in
default on this note. The default conditions required a default interest rate of eighteen
percent (18%) per annum. On September 11, 2006, the Seydler Trust note was acquired by
Golden Eagle Mineral Holdings, Inc., a non-affiliated party, and we then owed Golden Eagle
Mineral Holdings, Inc. $1,251,089.78, $995,623.66 of which was principal and $255,466.12 of
which was accrued interest. On December 29, 2006, we agreed to issue 1,251,090 Series B
Shares in exchange for the $1,251,089.78 that we owed to Golden Eagle Mineral Holdings,
Inc.

29

(e)(4)    
          Issuances of Series B preferred stock after our year-end of December 31, 2006

On February 5, 2007, seven difference
accredited investors purchased 300,000 shares of our Contingent Convertible Series B
Preferred shares for a total of $300,000.

On February 6, 2007, we sold 83,401
Contingent Convertible Series B Preferred shares to Dewey Williams, at $1.00 per share or
an aggregate of $83,401.

On February 6, 2007, we granted
12,103 Contingent Convertible Series B Preferred shares to nine key employees (eight in
Bolivia and one in the U.S.) that were neither officers nor directors, as a retention
bonus at $1.00 per share or an aggregate of $12,103.

On March 27, 2007, we sold 30,000
Contingent Convertible Series B Preferred shares to Steve Olsen at $1.00 per share or an
aggregate of $30,000.

On March 28, 2007, we sold 25,000
Contingent Convertible Series B Preferred shares to Joseph Smith at $1.00 per share or an
aggregate of $25,000.

On March 30, 2007, we sold 25,000
Contingent Convertible Series B Preferred shares to Stuart Rubin at $1.00 per share or an
aggregate of $25,000.

In every case above we relied upon
Sections 4(2) and 4(6) of the Securities Act for the offer and sale. In one case we also
relied on Regulation S promulgated under the Securities Act regarding non-residents of the
United States. We believed that Sections 4(2) and 4(6) were available because the offer
and sale did not involve a public offering, there was no general solicitation or general
advertising involved in the offer or sale and the purchaser was an accredited investor.
Our reliance on Regulation S was based on the fact that some of the purchasers were
non-residents of the United States. We placed restrictive legends on the certificates
representing these securities stating that the securities were not registered under the
Securities Act and are subject to restrictions on their transferability and resale and
that no common shares, at the time of sale, were available for conversion.

(f)     Purchases
of equity securities by the issuer and affiliated purchasers

|                   |                                                 |                                            |                                                                                                 |                                                                                                                            
|------------------ | ----------------------------------------------- | ------------------------------------------ | ----------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------
|Period             | (a) Total Number of Shares (or Units) Purchased | (b) Average Price paid per Share (or Unit) | (c) Total Number of Shares (or Units) Purchased as Part of Publicly
Announced Plans or Programs | (d) Maximum Number (or Approximate Dollar Value)
of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs
|1/1/06 - 1/31/06   | -                                               | -                                          | -                                                                                               | -                                                                                                                          
|2/1/06 - 2/29/06   | 508,500(1)                                      | $.0275                                     | -                                                                                               | -                                                                                                                          
|3/1/06 - 3/31/06   | -                                               | -                                          | -                                                                                               | -                                                                                                                          
|4/1/06 - 4/3/06    | -                                               | -                                          | -                                                                                               | -                                                                                                                          
|5/1/06 - 5/31/06   | -                                               | -                                          | -                                                                                               | -                                                                                                                          
|6/1/06 - 6/30/06   | -                                               | -                                          | -                                                                                               | -                                                                                                                          
|7/1/06 - 7/31/06   | -                                               | -                                          | -                                                                                               | -                                                                                                                          
|8/1/06 - 8/31/06   | 1,726,092(2)                                    | $.0131                                     | -                                                                                               | -                                                                                                                          
|9/1/06 - 9/30/06   | -                                               | -                                          | -                                                                                               | -                                                                                                                          
|10/1/06 - 10/31/06 | -                                               | -                                          | -                                                                                               | -                                                                                                                          
|11/1/06 - 11/30/06 | -                                               | -                                          | -                                                                                               | -                                                                                                                          
|12/1/06 - 12/31/06 | -                                               | -                                          | -                                                                                               | -                                                                                                                          
|Total              | 2,234,592                                       | $.0163                                     | -                                                                                               | -                                                                                                                          

30

(1)    
          Eileen Shipes, our former Chairmans wife, received restricted common
          shares through an engineering contract with Western States Engineering, a
          company Mr. Shipes controls. Western States Engineering provided feasibility
          studies and engineering work related to the dismantling, transportation and
          shipment of the Gold Bar mill and plant from Eureka, Nevada to our Buen Futuro
          property. On May 5, 2006, Mr. Shipes resigned as Chairman of the Board of
          Directors and as a Director.

(2)    
          Tracy A. Madsen, our Chief Financial Officer, was granted 1,726,092 shares of
          S-8 stock on August 11, 2006 per his employment agreement and in lieu of a cash
          payment. The shares were valued at $.0131 per share, the closing price on the
          date of the grant. On August 15, 2006 Mr. Madsen resigned his position as Chief
          Financial Officer, Vice President of US Administration, Corporate Secretary and
          Treasurer. On November 14, 2006 Mr. Madsen was reappointed to these same
          positions.

# Item 6.
Managements discussion and analysis of financial condition and results of operations



Overview We are engaged in minerals industry
related operations in Bolivia and seek to generate revenues, income and cash flows from
the sale of gold and copper. We have generated no revenues since approximately November
2004. Since inception, our operations have been severely impacted from a lack of working
capital and financing. Additionally, our operations have experienced additional cost and
time delays due to the remote location of our Bolivian properties and our headquarters
being more than 4,000 miles from our corporate offices.

From our inception, we have not been
profitable. We have financed our operations through debt and equity placements to
accredited investors. These placements have diluted the interests of our existing
shareholders, but have allowed us to continue the development necessary to commence and
continue our production at our Cangalli claims and to acquire and maintain our other
prospects, in addition to allowing us to complete our administrative obligations. We have
at times encountered difficulties in meeting our obligations to pay our bills timely. We
currently have various obligations that are past due. We have paid most of our bills
through the present through equity and debt financing, with the exception of currently due
obligations.

31

The following discussion and
analysis should be read in conjunction with our Consolidated Financial Statements and
notes thereto.

# (a) Liquidity and
capital resources  2006 and 2005

# (a)(1) Continuing working
capital deficit

Our working capital deficit for at
least the past five years has limited our ability to expand our operations and pursue our
business plan. The following table sets forth our continuing working capital at December
31, 2006 and 2005.

|                          |              |             
|------------------------- | ------------ | ------------
|Years ended December 31,  | 2006         | 2005        
|                          |              |             
|Current Assets            | $   21,625   | $    223,368
|Current Liabilities       | (803,720)    | (1,694,777) 
|                          |              |             
|Working Capital (Deficit) | ($  782,095) | ($1,471,409)
|                          |              |             

Our current assets decreased by
$201,743 or 90% from $223,368 as of December 31, 2005 to $21,625 for the comparable 2006
period. The decrease was due to a $28,718 decrease in cash and a $171,598 decrease in
prepaid expenses.

Our working capital deficit decreased
by $689,314 or 47% to $782,095 as of December 31, 2006 from $1,471,409 for the comparable
2005 period, primarily due to the reduction in current liabilities. Accounts payable
decreased from $306,329 on December 31, 2005 to $298,128 on December 31, 2006. Accrued
expenses decreased to $29,056 for the year ended December 31, 2006 from $93,125. Accounts
payable and accrued expenses decreased as a result of our reduction of expenses and the
payment of outstanding bills. We also finished making the final payments for the purchase
of our Buen Futuro property in eastern Bolivia, which caused the current portion of
contract payable to decrease to $0 as of December 31, 2006, from $40,000 on December 31,
2005. The largest decrease in current liabilities was the result of the elimination of
$987,589 in other debt that was classified as a current liability and was converted to
preferred stock and recorded as a derivative liability as of December 31, 2006, the
details of which are discussed in Part II, Item 5(e) of this report. Related party debt
increased to $151,900 as of December 31, 2006 from $135,000 on December 31, 2005. This
debt results from loans from some of our officers and directors. The largest portion of
this debt is a note in the amount of $135,000 payable to Kevin Pfeffer, one of our former
directors. On December 19, 2006 Mr. Pfeffer made a demand that this note, plus any accrued
interest, be paid in full no later than January 12, 2007. As of the date of this filing we
have not repaid this note and we are unsure when we will repay this note. Current
liabilities did increase by $249,000 as a convertible debenture that matures on May 2,
2007 was reclassified as a current liability from a long-term liability as of December 31,
2006. Accrued interest declined to $43,634 as of December 31, 2006, from $100,731 as of
December 31, 2005. The decrease was primarily the conversion of accrued interest on other
notes payable for preferred stock with the transaction discussed above.

32

We also owe past-due salary
obligations to our president, Terry C. Turner. During 2006, Mr. Turner waived $60,000 of
his salary accrual that was past due. On December 31, 2006, 2005, 2004, 2003 and 2001, Mr.
Turner waived $ 60,000, $60,000, $60,000, $36,457 and $443,772 respectively of accrued
salary without receiving any consideration from us. We continue to owe Mr. Turner $336,783
in back salary; however, he has agreed that this liability bears no interest. A note
receivable from Mr. Turner in the amount of $336,783 that resulted during a period that we
were unable to consistently pay Mr. Turners salary and he relied on irregular loans
from us offsets this liability. That loan arrangement pre-dated the passage of the
Sarbanes-Oxley Act. The receivable from Mr. Turner and payable to Mr. Turner are netted
out to a zero balance and do not appear on our balance sheet.

Our working capital deficit during
2006 was also affected by the receipt and related expenditure of more than $287,340 from
the sale of our common stock to accredited investors. These funds permitted us to cover
other short-term obligations and reduced our working capital deficit.

We continue to focus on conserving
cash, setting priorities for our most important obligations and seeking other means to pay
or defer any obligations as necessary as a result of our continuing working capital
deficit.

# (a)(2) Property and
equipment

During 2006, we decreased our
property and equipment net of depreciation and impairment by $626,643 or 10% to $5,479,776
at December 31, 2006 as compared to $6,106,419 at December 31, 2005. Mining equipment
decreased by $404,318 to $978,703 as of December 31, 2006 from $1,383,021 as of December
31, 2005. The majority of this decrease came from the exchange of $161,446 in mining
equipment located at Cangalli, Bolivia to the United Cangalli Gold Mining Cooperative in
exchange for elimination of $71,113 in debt we owed to the cooperative. This equipment had
a book value of $122,320 and we booked a loss on the sale of assets in the amount of
$46,320. We were required by the cooperative to pay off this debt prior to removing any of
our equipment from the Cangalli mine site. We believed that this was the best course of
action to take in order to remove and protect additional equipment that we owned that was
located at the Cangalli mine. Following this agreement, we were able to remove the
remaining machinery and equipment from the site and we also eliminated $71,113 in debt.
Additionally, we sold some other equipment during the year to raise cash necessary to meet
certain obligations. We also returned our company aircraft to the United States from
Bolivia and sold it to the holder of the note on the aircraft for $61,100. The note was
reduced by this amount. A detail of our fixed assets is the following;

|                                                   |              |            
|-------------------------------------------------- | ------------ | -----------
|Years ended December 31,                           | 2006         | 2005       
|                                                   |              |            
|Mining equipment                                   | $    978,703 | $ 1,383,021
|Gold Bar Mill and Plant - idle                     | 3,980,000    | 3,980,000  
|Mine development costs                             | 529,618      | 529,618    
|Mining properties                                  | 1,814,501    | 1,821,451  
|Other (office, vehicles and aircraft)              | 205,573      | 195,602    
|Accumulated depreciation, depletion and impairment | (2,028,618)  | (1,803,272)
|                                                   |              |            
|Fixed assets net                                   | $ 5,479,726  | $ 6,106,419
|                                                   |              |            

33

The increase in accumulated
depreciation, depletion and impairment during 2006 is attributed primarily to an
impairment in the amount of $286,867 of the remaining property acquisition costs of our
Cangalli mine site as a result of our inability to recommence operations at that mine.
This impairment is in addition to the $1,165,603 impairment that we took in 2002 and 2004
as a result of issues that arose among the United Cangalli Gold Mining Cooperative that
had sold us a 5,000-acre mining concession, and FENCOMIN, the Bolivian governmental
regulator of cooperatives, as well as other Bolivian regulators. These legal disputes,
while unrelated to us, created an insecure atmosphere at our Cangalli gold mine and raised
serious questions about whether formal intervention would occur and substantially hamper
operations. While we continue to maintain our claims and may one day recommence mining and
processing operations at Cangalli, we can offer no assurance as to when or if we may be
able to begin mining and processing ore at Cangalli. We believe that our best course of
action is to put our efforts and financial resources into developing our Precambrian
properties in eastern Bolivia prior to ever attempting to recommence operations at
Cangalli. Furthermore, because we do not have a precise time frame for returning to
Cangalli, and we cannot guarantee that we will ever be able to recommence operations at
our Cangalli mine, we concluded that the most conservative course of action on an
accounting basis was to fully impair all acquisition costs and capitalized development
costs of our Cangalli property. A graphical illustration of our impairment is as follows:

|                                  |                    |                                       |                 |                
|--------------------------------- | ------------------ | ------------------------------------- | --------------- | ---------------
|Description                       | Amount capitalized | Accumulated depletion or depreciation | Impairment 2006 | Remaining value
|                                 
|Mine development costs (Cangalli) | $490,423           | $490,423                              | $-              | $-             
|                                 
|Property (Cangalli)               | $962,047           | $675,180                              | $286,867        | $-             

# (a)(3) Capital
commitments

Our capital commitments are set out
below:

|                                      |            |                  |              |             
|------------------------------------- | ---------- | ---------------- | ------------ | ------------
|Contractual Cash Obligations          | Total      | Less than 1 year | 1 to 3 years | 3 to 5 years
|                                     
|Accounts payable and accrued expenses | $327,184   | $327,184         | $-           | $-          
|Related party debt                    | 151,900    | 151,900;         | -            | -           
|Notes payable                         | 32,002     | 32,002           | -            | -           
|Accrued interest                      | 43,634     | 43,634           | -            | -           
|Debenture payable                     | 249,000    | 249,000          | -            | -           
|Exploration & production Buen Futuro  | 435,834    | -                | 435,834      | -           
|Production penalties consulting fees  | 300,000    | 60,000           | 120,000      | 120,000     
|Mining claim fees                     | 488,249    | 61,501           | 213,174      | 213,574     
|Building leases                       | 7,057      | 7,057            | -            | -           
|                                     
|Total contractual cash obligations    | $2,034,860 | $932,278         | $769,008     | $333,574    
|                                     

# (a)(4) Derivative
liability

34

As discussed in Part II , Item 5(e),
we issued 1,988,598 shares of Series B preferred stock on December 29, 2006 in exchange
for debt. This preferred stock has conversion rights that allow the holders to convert
each Series B preferred share into 250 common restricted shares if and when there are
common shares available in which to convert. As there are currently no common shares in
which to convert, and we can offer no assurances as to when and if there will be shares in
which to convert, we have classified these preferred shares as a derivative liability
rather than equity. Additionally, the preferred shares conversion rate was at a discount
on the date the preferred shares were issued. The market price on December 29, 2006 for
our common shares was $.008. If the Series B preferred shares were converted on that same
date they would have had a conversion value of $.004 per common share, or a 50% discount
to the current market price. As this resulted in a beneficial conversion to the market
rate for the Series B preferred shares, the accounting rules of beneficial conversion
applied. As a result, we are required to expense the difference between the conversion
price and the market price as a financing expense. The offsetting entry is also carried as
a derivative liability in the amount of $1,988,598. As there is no time limit or period
designated for the preferred shares, the entire amount of the beneficial conversion is
taken in the year incurred. The total amount of the derivative liability incurred during
2006 is $3,977,196. If and when these preferred shares are converted into common stock the
entire amount of the derivative liability of $3,977,196 will be transferred to equity and
will increase the amount of our stockholders equity. Additionally, if during 2007,
or beyond, any of the remaining 4,500,000 Series B preferred shares are sold, a similar
derivative liability will be incurred until which time they are converted into common
shares and transferred to equity.

# (a)(5) Equity

Stockholders equity declined to
$720,485 as of December 31, 2006 from $4,386,011 as of December 31, 2005. The primary
reason for the decline was the classification of the issuance of Series B preferred stock
and the resulting financing cost as a derivative liability. Should common shares become
available at some point for the conversion of the preferred shares, the derivative
liability would be reclassified as additional paid-in capital. Had the conversion occurred
in 2006 total stockholders equity would have been $4,697,681 or a $311,670 increase
over total stockholders equity as of December 31, 2005.

# (a)(6) Off-balance sheet
arrangements.

We do not have any off-balance sheet
financial arrangements.

# (a)(7) Results of
operations.

35

The following sets forth certain
information regarding our results of operations as of December 31, 2006 and 2005.

|                                   |                       |                      
|---------------------------------- | --------------------- | ---------------------
|Years ended December 31,           | 2006                  | 2005                 
|                                   |                       |                      
|Revenues                           | $                   - | $                   -
|Production costs                   | -                     | -                    
|Exploration & development costs    | (262,820)             | (433,958)            
|General and administrative         | (1,293,741)           | (1,445,258)          
|Depreciation and depletion         | (54,032)              | (73,542)             
|Operating (loss)                   | (1,610,594)           | (1,952,758)          
|Interest expense                   | (294,593)             | (130,270)            
|Loss on sale of fixed assets       | (109,495)             | -                    
|Asset impairment                   | (286,867)             | -                    
|Financing costs of preferred stock | (1,988,598)           | -                    
|Other income (loss)                | 14,616                | 44,494               
|Net (loss)                         | (4,275,892)           | (2,038,534)          
|Net (loss) per share - basic       | (.01)                 | (.00)                
|Net (loss) per share - diluted     | $             (.01)   | $             (.00)  
|Weighted average shares - basic    | 774,969,305           | 651,870,057          
|Weighted average shares - diluted  | 789,055,466           | 651,870,057          

Our operations have resulted in
significant losses and negative cash flow from operations during approximately the past
five years as we have invested in exploration on our mining concessions, and in property
acquisitions.

Revenue.    
          During both 2006 and 2005, our revenues were $0. We have generated no revenues
          from mine production since 2004 as a result of the shutdown of our Cangalli mine
          during that year. We anticipate that we will generate some production revenues
          through the sale of gold if we are able to bring our production plant on-line in
          our C Zone on our Precambrian properties in eastern Bolivia.

Production costs. Production
costs remained $0 during 2006 and 2005 compared to $979,419 in 2004. The elimination of
production costs in 2005 was the result of the continued cessation of mining operations at
Cangalli.

Exploration & development.
Exploration and mine development costs decreased by $171,138, or 39%, to $262,820 during
2006 from $433,958 during 2005 The decrease in 2006 was the result of reduced exploration
at our Buen Futuro A Zone project and the completion of the consulting contract with
Western States Engineering relating to the dismantling, shipment and re-erection of the
Gold Bar mill and plant on our Buen Futuro site. We did accomplish extensive exploration
work on our B and C Zones during 2006 as we brought a pilot plant on-line at the C Zone,
however these increases were offset by the significant decrease in engineering costs. The
majority of our exploration and development costs during 2005 were focused on our Buen
Futuro concession and preparation to move the Gold Bar mill and plant. We anticipate that
during 2007 our exploration and development costs will increase as we continue to develop
the B and C Zones and take the C Zone into full production. We also anticipate increased
exploration costs on our Buen Futuro A Zone project as we perform additional exploration
work on the site in order to complete a bankable feasibility study. We currently do not
have funds available to complete these projects and we cannot guarantee we will be able to
raise additional funds either through the issuance of equity or debt financing. .

36

General and administrative
expenses. Our general and administrative expenses decreased by $151,517, or 10%, to
$1,293,741 during 2006 from $1,445,258 during 2005. We attribute the continual decrease in
our general and administrative expenses to an ongoing cost control effort and to the
reduction in support staff as a result of the shut down of the Cangalli mine. While we
will continue our efforts to reduce these expenses, they may increase if we commence
construction and operation of C Zone production plant and continued exploration and
development of our Buen Futuro A Zone project.

Legal expenses in 2006 increased to
$236,535 from $95,543 in 2005. The increase in legal fees during 2006 was the result of
issuing our common stock for the payment of legal fees, which was discounted and resulted
in a higher payment, as well as legal fees for the preparation and filing of a preliminary
proxy statement in anticipation of holding our annual Shareholders Meeting, and for
our involvement in a lawsuit discussed elsewhere in this report in Part II, Item 3.

Accounting expenses in 2006 declined
to $56,521 from $79,638 in 2005. During 2005, we changed auditors to Chisholm, Bierwolf
and Nilson located in Salt Lake City, Utah.

Depreciation and depletion.
Depreciation and depletion decreased to $54,032 in 2006 from $73,542 in 2005. The decrease
in 2006 was the result the decrease in the amount of equipment being depreciated through
the sale of equipment for cash and for the exchange of debt as previously described in
Part II, Item 6, (a)(2).

Operating expenses. During
2006, our operating expenses decreased by $342,164 or 18% to $1,610,594 from $1,952,758
for 2005. The decrease was the result of a reduction of staff and an overall decrease in
general and administrative expenses and exploration and development expenses as well as
the elimination of production costs related to our Cangalli shutdown.

Interest expense. Interest
expense during 2006 increased to $294,953 from $130,270 during 2005. The increase during
2006 was the result of additional borrowings to cover capital commitments, exploration,
development and overhead. We also experienced an increase in interest expense, as nearly
$1,000,000 in debt, which we owed to an unaffiliated lender, was purchased by a third
party. This third party required us to pay the default rate on the note of 18% for almost
all of 2006. This note as well as most other borrowings and accrued interest totaling
$1,988,598 was converted to Series B preferred stock on December 29, 2006. A detailed
description of this transaction can be found in Part II, Item 5 (e). We anticipate that
our 2007 interest expense will be significantly lower as a result of the conversion of
most of our outstanding debt to Series B preferred shares which carry no interest.

37

Loss on sale of fixed assets.During 2006 we experienced a loss on sale of fixed assets in the amount of $109,495.
These sales were for the purpose of raising funds for working capital and for the exchange
of debt as described in Part II, Item 5 and Item 6(a)(2). While we do not anticipate the
sale of additional equipment during 2007, we may sell some equipment that is not necessary
for our current mining plan. We are also considering the sale of the Gold Bar mill and
plant after determining if we will send it to eastern Bolivia for re-erection on our Buen
Futuro A Zone project. A sale of Gold Bar during 2007 may either result in a loss on the
sale of assets or a gain depending on the final sales price. As we currently do not have
any offers we cannot determine if a sale will take place or at what price a sale could be
consummated.

Asset impairment. During 2006,
we incurred an impairment expense of $286,867 on the remaining amount of our Cangalli
propertys capitalized acquisition value. This was in addition to the $912,404
impairment that we incurred in 2002 and 2004 on this property and its capitalized
improvements. A more detailed description of this impairment can be found in Part II, Item
6(a)(2). As the Cangalli property is fully depreciated and we anticipate that we will
commence production on our Precambrian properties if we are able to obtain financing, we
do not anticipate additional impairment expense in 2007.

Financing costs. During 2006,
we incurred financing costs on the issuance of preferred stock in the amount of
$1,988,598. This expense was the result of the issuance of Series B preferred stock to
debt holders with a conversion rate less than the market price on the date of issuance. A
more complete description of this transaction can be found in Part II, Item 6(a)(4),
Derivative Liability. As there are 4,500,000 shares of Series B convertible stock
authorized and since we have during the first quarter of 2007 exchange shares of Series B
convertible stock for cash for operations, we anticipate that during 2007 there will be
additional financing costs incurred as the underlying common shares to which our preferred
shares could be converted would be at a discount to the market price of our common shares.
The Series B preferred shares carry a conversion provision, which allows each Series B
preferred share to be converted into 250 restricted common shares. While we currently have
no common shares available in which to convert the Series B preferred shares, if and when
shares are available and the conversion takes place, the derivative liability created by
the financing costs will be converted to equity.

Net loss. Our net loss for
2006 was ($4,275,892) compared to ($2,038,534) in 2005, resulting in a basic per-share
loss of $(.01) in 2006, $(.00) in 2005 based on weighted average shares outstanding 
basic of 774,969,305 and 651,870,057 respectively. On a fully diluted basis the net loss
per share was $(.01) in 2006 and $(.00) in 2005 based on weighted average shares
outstanding  diluted of 789,055,466 and 651,870,057 respectively. The difference in
the basic shares outstanding and the diluted shares outstanding results form the issuance
of preferred shares as discussed in Part II, Item 5, (e)(3).

Since commencing operations, our
general, administrative and other costs have exceeded the resources we have generated
through operations. As described above in Liquidity and Capital Resources, we
have been dependent on loans from affiliated and unaffiliated parties, and debt/equity
financing, to meet our working capital obligations and to finance our continuing operating
losses. Our current lack of production further complicates our ability to raise cash from
these sources. There can be no assurance that we will be able to continue to finance our
operating losses in such a manner. We have, however, been able to raise additional funds
in the past and we believe that we will be able to do so in the future.

# (a)(8) Cash flow

38

We have been able to meet our working
capital obligations and cover our net loss through the issuance of stock for cash and
services as referenced above in Part II (e). By deducting certain other non-cash expenses,
we achieved net cash flows from operating activities of ($1,175,901) in 2006 and
($850,154) in 2005. We also invested $72,889 in property and equipment and received
$236,838 during 2006 and invested $93,352 in 2005 in additional property, plant and
equipment. Net cash flows provided by our financing activities totaled $983,234 in 2006
and $922,071 in 2005. Cash decreased to $1,427 as of December 31, 2006 from $30,145 in
2005.

|                                                |                |              
|----------------------------------------------- | -------------- | -------------
|Net cash flows                                  |                |              
|Years ended December 31,                        | 2006           | 2005         
|                                                |                |              
|Net (loss)                                      | $(4,275,892)   | $(2,038,534) 
|Net cash flows used by operating activities     | (1,175,901)    | (850,154)    
|Cash flows from investing activities            | 163,949        | (93,252)     
|Net cash flows provided by financing activities | 983,234        | 922,071      
|Net increase (decrease) in cash                 | (28,718)       | (21,436)     
|Cash beginning of period                        | 30,145         | 51,580       
|Cash end of period                              | $        1,427 | $      30,145

We have used our equity to acquire
property, raise cash necessary to pay expenses, payment for services in lieu of cash
payments for services and to repay indebtedness. Our ability to continue to use our equity
for those purposes is dependent on the price and trading volume of our common stock, both
of which are volatile, and our ability to comply with federal and applicable state
securities laws. At present, we do not have any common shares available for sale and we
are only offering Series B preferred shares to accredited investors.

From time-to-time, as necessary, our
officers have deferred collection of their salaries and have advanced funds to us on a
short-term basis to conserve our cash for other purposes. We have also negotiated with
certain debt holders to accept equipment for outstanding debt or to convert debt to
preferred stock, including:

|o | $135,000
loan from one of our former directors
|- | ----------------------------------------------

|o | $16,900
of  loans from current directors and officers
|- | -----------------------------------------------------

|o | Our
officers have also deferred payment of a portion of their 2006 salary until funds are
available to pay these wages.  As          of December 31, 2006 a total deferred salary
from officers was $55,237.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Although we have been successful in
obtaining funds to date, there can be no assurance that we will be able to continue to be
successful in doing so. Our ability to finance our operations will, in the end, be
dependent on our ability to generate cash flow from operations, of which there can be no
assurance.

# (b) Special non-cash
impact due to options

No options have been issued during
the past three years. No options are currently outstanding.

39

# (c) Plan of operations

Our current strategy is to further develop
the potential of the A Zone of our Buen Futuro gold and copper project in eastern Bolivia
during 2007. We are pursuing this development by obtaining third party advice regarding
our feasibility and exploration studies by a major independent mining and engineering
firm. In February 2007 we entered into an agreement with Washington Group International,
Inc. (www.wgint.com) to carry out the necessary due diligence work to advise us regarding
our feasibility studies. We may ask this engineering firm to determine if our Gold Bar
mill and plant should be moved to our A Zone Buen Futuro project in eastern Bolivia, or if
a new mill and plant should be built on site. During this period we will also begin
securing final environmental permitting and any additional surface land acquisitions that
may be required.

During 2006, we have also been
performing exploration and feasibility work on the gold mineralization of the B and C
Zones of our Precambrian properties in eastern Bolivia, which are located approximately
3.2 miles from the A Zone of our Buen Futuro project. Additionally, we built and operated
a pilot plant on the C zone, which we have used to refine the metallurgical process on the
mineralization in the zone. Once feasibility work and pilot plant operations are
completed, and if the final results are positive, we intend to implement the recommended
mine plan, to construct the recommended recovery circuit and enter into operations by mid
to late 2007.

Finally, we intend to maintain our
Cangalli and Tipuani Valley properties. However, no efforts will be made to recommence
operations at the Cangalli mine in the foreseeable future. All of our efforts and
financial resources are focused on developing our Precambrian properties in eastern
Bolivia.

All of the foregoing, and related
plans stated below, are contingent upon receiving an estimated $11.5 million of financing.
We may, however, continue with some of these plans as funds are available which are
detailed as follows:

40

To accomplish our strategy we intend
to:

|o | Obtain
 estimated  financing of $1.0 million for the costs  pertaining to the  construction and
operation of a 1,000-tonne per          day  processing  plant on our C Zone gold
 project  and to  continue  our in-fill  drilling,  metallurgical  studies and final
         feasibility  work for our Buen Futuro A Zone, as well as our B and C Zones.  On
March 9, 2007 we announced  that we had signed          an  agreement  for a $1 million
 loan for the  expansion  of our C Zone pilot plant into a  full-scale  commercial
 production          plant.  We  plan to use the  loan  proceeds  to  incrementally
 expand  the  plant  capacity  to  five  hundred  cubic  meters          (approximately
 1,000 tonnes) per day on our C Zone gold project in eastern Bolivia.  Golden Eagle
received an initial deposit          of $100,000 in loan  proceeds,  with the  commitment
of the payment of  additional  sums  contingent on the  completion by the          lender
of due diligence at any time within the 60-day period  following the execution of the
lending  agreement.  In addition,          within this due diligence  period we must
provide the lender with a certification  regarding  final  feasibility of our C Zone
         expansion,  which is still  pending  before final  construction  could begin.
 As of the date of this filing we have  received          $64,384 under this commitment.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|o | Obtain
third party,  independent advice from Washington Group International,  Inc. regarding any
required  improvements to our          existing  reserve  report  and  feasibility  study
of our Buen  Futuro A Zone  project.  On  February  13,  2007 we  signed an
         agreement with Washington Group International for due diligence and an initial
evaluation of our feasibility work to date.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|o | Carry
out any  additional  feasibility,  exploration,  confirmation  and  engineering  work
 beyond the  initial  contract  as          recommended by the initial due diligence and
 evaluation  study being  performed by Washington  Group  International,  Inc. We
         anticipate  that  this  additional  work may cost  between  $500,000  and
 $1,000,000,  which we will  need to raise  for this          purpose.  Additional  work
may  include an in-fill  drilling  program  and  testing;  trench and pit  sampling;
 retesting  of          previously  obtained samples;  site inspections;  metallurgy and
plant  engineering.  We anticipate that this additional study          and confirmation
 work will help us determine if the Gold Bar mill and plant should be dismantled,
 shipped to eastern Bolivia          and re-erected on our Buen Futuro A Zone site, or if
a new plant should be built on-site.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|o | Determine,
 if and when the third party due diligence  and  evaluation  study  indicates  that a
 large-scale  gold and copper          mining and  processing  operation  should be
 commenced  on our Buen  Futuro A Zone,  whether to develop  the mine and build a
         milling and  processing  facility at our Buen Futuro A Zone.  Should further due
diligence,  evaluation and  feasibility  work          indicate  that the Gold Bar mill
and plant should be used in Bolivia,  we intend to  dismantle  the plant  located
 outside of          Eureka,  Nevada,  ship it to eastern  Bolivia,  and  re-erect  the
mill and plant on the Buen Futuro A Zone site.  We estimate          approximate  costs
of $10,000,000 to bring the Gold Bar mill and plant into  production in Bolivia,
 however,  those costs may          vary  significantly  depending on the findings of the
third party due diligence and evaluation  study.  We anticipate that all
         construction and mining may be subcontracted  to an  international  engineering
and mining firm with the necessary  experience          to complete the project.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|o | Determine,
 should the initial due diligence and  evaluation  study  indicate that a mill and
 processing  plant be built from          scratch on the Buen Futuro A Zone,  whether we
intend to either sell the Gold Bar mill and plant and use the  proceeds for new
         mill and plant  construction on the A Zone, or consider the possibility of
performing  contract  milling and processing at the          current Gold Bar site in
Nevada.  Cost  estimations  for potential  new mill  construction  at the A Zone are
being  evaluated          under the current due diligence and evaluation work being
performed.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|o | Determine,
 should the current Buen Futuro A Zone due diligence and  evaluation  study indicate that
it is not in the our best          interest to move the Gold Bar mill and plant to
Bolivia,  whether we should look  seriously at other  alternatives  to selling
         the facility in its entirety.  The region around our Gold Bar mill has recently
 experienced  increased  gold mining  activity          as a result of the current
 international  price for gold.  We also believe that there is a milling and  processing
 shortfall          in the region that may present us an  opportunity  to recommence
 Gold Bar mill and plant  operations on a contract basis as a          tolling  facility.
 We are currently  evaluating this  possibility and the potential  benefits to us. We
estimate that it will          take  approximately  $1,000,000 to bring Gold Bar mill
back online to accept contract  milling and processing  work.  However,          other
costs that we have under  evaluation,  such as permitting  and new tailings  impoundment
 construction,  could easily be          significantly more expensive than the mill
rehabilitation costs.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

41

|o | Maintain
our mining  claims on the  remainder of the Buen Futuro site not included in the A Zone,
 as well as the remainder of          our 134,000-acre  landholding in the Precambrian
 shield  surrounding the Buen Futuro claims. We intend to continue to perform
         exploration work on these  properties  since our existing  feasibility  studies
to date have  concentrated  principally on the          75-acre parcel that is the A
Zone. We anticipate  costs for this  additional  exploration  work to total  $1,000,000
 over the          next two years.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|o | Continue
our discussions with government officials in Bolivia's new administration, and others,
relative to the issues          impeding the development of our Cangalli gold mine and
Cangalli and Tipuani Valley mining claims.  We intend to maintain our          Cangalli
and Tipuani Valley claims, but cannot guarantee that they will ever be developed or that
operations will recommence          there.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# (d) Impact of
inflation and changing prices

We have not experienced any impact
from the effects of inflation during the last two operating periods: 2005 or 2006.
Bolivian inflation, while astronomical at points during the early 1980s, has been
relatively stable, at less than 10% since 1985, during the last two years has been less
than 4% per annum, and is projected to be less than 3% in 2007.

# (e) Accounting policies

# (e)(1) Critical
accounting policies

In accordance with Emerging Issues
Task Force No. 98-5, Accounting for Convertible Securities with Beneficial Conversion
Features or Contingently Adjustable Conversion Ratios, and No. 00-27, Application of Issue
No. 98-5 to Certain Convertible Instruments, we recognize the value of conversion rights
attached to convertible debt or preferred stock. These rights give the debt or preferred
stock holder the ability to convert the instruments into common stock at a price per share
that is less than the trading price to the public on the day the transaction occurs. The
beneficial value is calculated as the market price of the common stock at the commitment
date in excess of the conversion rate of the instruments and related accruing interest or
dividends is recorded as a discount to the related debt (increase in preferred dividends
for preferred stock) and addition to additional paid in capital. Debt discount is
amortized over the remaining outstanding period of related debt.

Stock based compensation: from time
to time, we issue shares of common stock as payment for services to consultants and
employees. Any stock issued for this purpose is priced and accounted for at the actual
closing market price on the day of issue. The total number of shares issued times the
closing stock price is booked as an expense.

Mineral exploration costs are
expensed as incurred. Mine infrastructure development costs incurred prior to establishing
proven and probably reserves are expensed. When it has been determined that a mineral
property can be economically developed, the costs incurred to develop such property,
including costs to further delineate the ore body and remove overburden to initially
expose the ore body, are capitalized as incurred and are amortized using the
units-of-production (UOP) method over the estimated life of the ore body based
on estimated recoverable ounces mined from proven and probable reserves. If no mineable
ore body is discovered, such costs are expensed. We continually review our assets to
determine if their value has become clouded or impaired. We will impair an asset if the
present value of the cash flow or the current market value of the asset does not exceed
the value carried on the balance sheet.

42

To the extent that development costs
benefit the entire ore body, they are amortized over the estimated life of the ore body.
Costs incurred to access specific ore blocks or areas that only provide benefit over the
life of that area are amortized over the estimated life of that specific area. The
capitalized cost bases subject to depletion expense are calculated on a formula based on
the number of tonnes of ore that are expected to be mined against the total tonnes in
proven and probable reserves and extrapolated to the number of tonnes in the area of
influence of the mine.

Mineral interests and other
intangible assets include acquired mineral rights and royalty interests in production,
development and exploration stage properties. The amount capitalized related to a mineral
or royalty interest represents its fair value at the time it was acquired.

(e)(2) Effect of new accounting
pronouncements

In February 2006, the FASB issued
SFAS No.155, Accounting for Certain Hybrid Financial Instruments an Amendment of FASB
Statements No. 133 and 140. This statement amends FASB No. 133, Accounting for Derivative
Instruments and Hedging Activities and No. 140, Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities. This statement resolves issues
addressed in Statement 133 Implementation Issued No. D1, Application of Statement
133 to Beneficial Interests in Securitized Financial Assets. The adoption of SFAS
No. 155 did not have an impact on our consolidated financial statements.

In March 2006, the FASB issued SFAS
No. 156, Accounting for Servicing of Financial Assets and Amendment of FASB Statement 140.
This statement amends FASB Statement No. 140, Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities, with respect to the accounting for
separately recognized servicing assets and servicing liabilities. The adoption of SFAS No.
156 did not have an impact on our consolidated financial statements.

In September 2006, the FASB issued
SFAS No. 157, Fair Value Measurements. This statement defines fair value, establishes a
framework for measuring fair value in generally accepted accounting principles (GAAP), and
expands disclosures about fair measurements. This statement is effective for financial
statements issued for fiscal years beginning after November 15, 2007, and interim periods
within those years. The adoption of SFAS 157 did not have an impact on our consolidated
financial statements

43

In September 2006, the FASB issued
SFAS No. 158, Employers Accounting for Defined Benefit Pension and Other Postretirement
Plans and Amendment of FASB Statements No 87, 88, 106 and 132(R). This statement improves
financial reporting by requiring an employer to recognize the over funded or under funded
status of a defined benefit postretirement plan (other than a multiemployer plan) as an
asset or liability in its statement of financial position and to recognize changes in that
funded status in the year in which the changes occur through comprehensive income of a
business entity or changes in unrestricted net assets of a not for profit organization.
The adoption of SFAS No. 158 did not have an impact on our consolidated financial
statements.

# Item 7. Financial
statements and supplementary data

Please refer to pages F-1 through
F-20.

# Item 8. Changes in and
disagreements with accountants on accounting and financial disclosure

Gordon,
Hughes & Banks, LLP.Gordon, Hughes & Banks, LLP, Certified Public
Accountants and Consultants, resigned as our auditors on July 20, 2005. On July 20, 2005,
our Board of Directors appointed Chisholm, Bierwolf & Nilson, LLC, Certified Public
Accounts, of Bountiful, Utah, as our new auditors.

There were no disagreements with our
accountants and auditors on any matters of accounting principles, practices or financial
statement disclosures during 2005 and 2006 through the present.

# Item 8A. Controls and
procedures

Our Chief Executive Officer and Chief
Financial Officer evaluated our disclosure controls and procedures on December 31, 2006 as
defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934. Based
on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that
our disclosure controls and procedures are effective in connection with our filing of our
annual report on Form 10-KSB for the year ended December 31, 2006.

Changes in internal controls. There
were no significant changes in our internal controls or in other factors that could
significantly affect these internal controls subsequent to the date of their evaluation.

# Item 8B Other information

We have disclosed all information
required to be disclosed in a report on Form 8-K during the fourth quarter of the year
covered by this report and subsequent to year-end.

# PART III

# Item 9. Directors and
executive officers of the Company and compliance with Section 16(a) of the Exchange Act

# (a) Identification of directors
and executive officers

44

The following table sets forth
certain information concerning our directors and executive officers (including of our
subsidiaries) as of March 31, 2006. (* Only these people continue to hold the stated
positions as of the filing of this report):

|                     |     |                                                     |                 
|-------------------- | --- | --------------------------------------------------- | ----------------
|Name                 | Age | Position                                            | Term of Office  
|                    
|*Terry C. Turner (1) | 54  | Chairman of the Board of Directors, President & CEO | 2/14/97-present 
|                     |     |                                                     |                 
|*Alvaro Riveros      | 64  | Director                                            | 1/5/04-present  
|                     |     |                                                     |                 
|*Harlan M. (Mac)     | 63  | Director                                            | 9/28/06- present
|Delozier, II (2)     |     | Vice President Bolivian Administration              | 3/1/97- present 
|                     |     |                                                     |                 
|*Tracy A. Madsen(3)  | 45  | Secretary/Treasurer/CFO/                            | 2/13/03-present 
|                     |     | Vice President US Administration                    | 3/1/97- present 
|                     |     |                                                     |                 
|H. Roy Shipes        | 63  | Chairman of the Board of Directors                  | 6/25/05-5/5/06  
|                     |     |                                                     |                 
|Gene Dunham          | 65  | Director                                            | 5/10/06-9/21/06 
|                     |     |                                                     |                 
|William A Jacobs     | 65  | Director                                            | 7/31/06-10/4/06 
|                     |     |                                                     |                 
|Kevin K. Pfeffer     | 46  | Director                                            | 1/23/03-12/4/06 

(1)    
          Director, President of Golden Eagle International, Inc. (Bolivia).

(2)    
          Vice President of Golden Eagle International, Inc. (Bolivia).

(3)    
          Mr. Madsen resigned as our Corporate Secretary/Treasurer, Vice President for
          U.S. Administration and Chief Financial Officer on August 15, 2006. On November
          14, 2006, Mr. Madsen was reappointed to the same positions that he held prior to
          his resignation. Executive officers are elected at annual meetings of the
          shareholders or are appointed by the board of directors. Each such officer holds
          office for one year or until a successor has been duly appointed, elected and
          qualified or until death, resignation or removal.

No arrangement exists between any of
the above officers and directors pursuant to which any one of those persons was elected to
such office or position.

Directors hold office until the next
meeting of shareholders and until a successor is elected and qualified, or until their
resignation. We have not held an annual meeting of our shareholders for more than the past
five years.

# Business experience

A brief summary of the business
experience of each person who is currently one of our officers or directors, and such
persons service with us, is as follows:

45

Terry C. Turner,
Chairman of the Board of Directors, President and Chief Executive Officer. Our Board of
Directors appointed Mr. Turner to the board and as our President and Chief Executive
Officer on February 14, 1997. In 1977, Mr. Turner received a B.A. in Political Science and
a B.A. in Spanish from the University of Utah. He received his Juris Doctorate in
1980 from Brigham Young University. He is a member of the Utah State Bar Association and
admitted to practice law in the State and Federal Courts of Utah, the 10th Circuit Court
of Appeals and the United States Supreme Court. Mr. Turner is also a member of the
District of Columbia Bar, the American Bar Association, the Inter-American Bar Association
and the International Bar Association. In addition, he is a member of the Bolivian College
of Lawyers (Bolivian Bar Association) and the State Bar Association of the State
(Department) of La Paz, Bolivia, and is the first and only American attorney admitted to
practice law in Bolivia. From 1980-1983, Mr. Turner was a partner in Day, Barney and
Tycksen, Attorneys, in Salt Lake City, Utah, with practice emphasis in mining and natural
resources, international law, business, and litigation. From 1983 to 1989, Mr. Turner was
President of High Andes Mining Co., La Paz, Bolivia. From 1989 to 1991, he was General
Counsel to Panworld Minerals International, Inc., a public company with mineral prospects
in South America. From 1991 to 1993, Mr. Turner was General Counsel to Tipuani Development
Company, S.A., La Paz, Bolivia a gold dredging company. From 1993 to 1995, he was Vice
President and General Counsel to Minas del Glaciar, S.A., La Paz, Bolivia, which was a
mineral exploration company. From 1995 to 1997, Mr. Turner was in private practice in La
Paz, Bolivia. From 1995 to November 2002, when he resigned those positions, Mr. Turner
served as President and a Director of Bolivian Copper Chemical Company, S.A., a private
Bolivian copper exploration and mining company located in La Paz, Bolivia. During the
entire period of 1983 through 1997, Mr. Turner was affiliated with and of
counsel to Cordero and Cordero, a La Paz, Bolivia law firm, dealing with mining and
international law. From January 1996, until his appointment with us in February 1997, Mr.
Turner was our corporate counsel in Bolivia. Mr. Turner was awarded the Medal of Civic
Merit by the Prefect (Governor) of the State of La Paz, Bolivia, during 1997 for his work
in promoting investment in the Bolivian mining industry, and for his contribution to the
progress within the La Paz state. The Medal of Civic Merit is the highest honor that can
be awarded by the state government in Bolivia. Mr. Turner was also named by the National
Register to its Whos Who of international attorneys and mining executives for 2003.

46

Alvaro Riveros, Director, was appointed as a member of our Board of Directors on January 5,
2004. Mr. Riveros received a Masters Degree in Electromechanical Engineering from
the Werner Siemens School of Engineering in Stuttgart, Germany. He is a registered
engineer in Bolivia whose firm, EDICOM, carried out the electromechanical engineering,
design and installation for our Cangalli gold recovery plant and mine. EDICOM specializes
in electromechanical engineering, design and installation work in mines, mineral recovery
plants and smelters in Bolivia, and Mr. Riveros was its president from 2002 to his
appointment on our board. Prior to that time, Mr. Riveros was appointed Vice Minister of
Industry and Commerce in the Ministry of Economic Development from 2000 to 2002. He was
appointed Vice Minister of Natural Resources in the Ministry of Agriculture from 1998 to
2000. From 1997 to 1998, he served as Vice Minister of Planning in the Ministry of
Sustainable Development and the Environment. From 1989 through 1997, Mr. Riveros was
president of Ximena Gold Mines, Ltd., a gold mining company with hard rock mines at the
headwaters of the Tipuani River in Bolivia. Earlier in his career, he had previously
served as EDICOMs president from 1978 to 1988. He was appointed Special Technical
Advisor to the President of Venezuela from 1975 to 1978. From 1972 through 1975, he served
as Director of Industrial Safety for the Ministry of Labor in Bolivia. Mr. Riveros also
worked for Siemens as a project engineer in Venezuela and supervised large industrial
projects in Brazil and Bolivia between 1965 and 1972.

Harlan M. (Mac) Delozier II,
Director,was appointed to the position of our Administrative Vice
President for Bolivian Administration on March 1, 1997. Mr. Delozier is a 1966 graduate of
Oklahoma State University, where he received B.A. degrees in Political Science, Foreign
Language and History. He served in the Peace Corps in Bolivia from 1966-1971 and was a
cattle rancher in Beni, Bolivia from 1972-1990. From 1976 to 1980 he was a representative
of Homeline/Textron in Bolivia, and from 1980-1981 was manager of gold mining operations
for Kerani, in the Murillo Province, La Paz, Bolivia. From 1981 to 1985, Mr. Delozier was
the purchasing agent for the U.S. Embassy Commissary in La Paz, Bolivia and was an
exporter for leather products to Chile and Peru from 1986-1988. From 1989 until 1997, Mr.
Delozier was an international sales representative for Toyota, Chevrolet, and Hyundai in
Bolivia. From May 1997 to November 2002, when he resigned his position, Mr. Delozier also
served as Executive Vice President of Bolivian Copper Chemical Company, S.A., a Bolivian
copper exploration and mining company located in La Paz, Bolivia.

Tracy A. Madsenwas appointed as Corporate Secretary/Treasurer and Chief Financial Officer
(CFO) on February 13, 2003. On November 12, 2003 he was also appointed Vice President US
Administration. Mr. Madsen received a B.A. in Finance from Boise State University, and an
MBA from the University of Nevada Las Vegas. Mr. Madsen has broad financial and executive
experience. From 1987 to 1990, he worked as a branch manager for First Interstate Bank of
Nevada. In 1990, and through 1996, Mr. Madsen became Vice President and CFO of Venada
Aviation, Inc. During that same period, Mr. Madsen served as President and Chairman of the
Board of three subsidiaries of Venada: Arena Aviation, Inc., Lancelot Leasing, Inc. and
Camelot Aviation Corporation. From 1996 to 2002, Mr. Madsen served as the CFO of a group
of five aviation-related corporations: Tracer Corporation; Trace Air International, Inc.;
Trade Air.com, Inc. and Tracer Aviation Services Canada. He was also an officer and a
partner of Miami Holdings, Inc. a commercial aircraft wheel and brake overhaul facility.

H.
          Roy Shipes,Chairman of the Board of Directors (resigned). Mr.
          Shipes was appointed to our Board of Directors on June 14, 2005 and elected
          Chairman of the Board on July 19, 2005 and resigned on May 5, 2006. Mr. Shipes
          worked as a smelter engineer and operation foreman for Phelps Dodge Corporation
          from 1972 to 1975. He served as vice president and general manager of operations
          for Southern Peru Copper Corporation, one of the largest copper producers in the
          world, between 1975 and 1985. He also served as the Chief Executive Officer and
          general manager of Ok Tedi Mining Ltd. in Papua New Guinea, where he developed
          one of the largest copper mines in the world without outside contractors, saving
          shareholders over $500 million between 1985 and 1987. Mr. Shipes founded and
          operated seven mining and mine services companies, including American Pacific
          Mining Company, AmPac Mining Southwest, Arimetco International, Suramco Metals,
          Transoceanic Trading Company, Western Gold Resources and Western Chemicals. All
          of these companies have been sold successfully to other mining interests from
          1987 to the present. He founded Western States Engineering to develop various
          mining projects and Western Capital Group to fund those projects. Mr Shipes is
          currently Chief Executive Officer, President and Chairman of the Board of Atlas
          Precious Metals, Inc. and American International Trading Company, Inc. based in
          Tucson, Arizona. Both of those companies have extensive operations in Bolivia,
          including tin, lead, zinc, silver and smelter operations.

47

H.E.    
          Gene Dunham, Director (resigned), was appointed as a director on
          May 10, 2006 and resigned on September 21, 2006. Mr. Dunham has thirty-five
          years of mining experience in base and precious metals production, engineering
          and project development management around the world. He has had a
          distinguished career with major global natural resource companies: Rio
          Tinto, Plc.; Phelps Dodge Corporation; Suramco Inc.; Anglo American Plc.;
          De Beers, Ltd.; Anglo Gold Plc.; Perez Companc Corporation and Atlas Precious
          Metals, Inc. Additionally, Mr. Dunham has extensive experience in the
          acquisition, financing and development of projects in Bolivia, North America,
          South America, Europe, Africa, Australia, New Guinea, and Asia
          Pacific.

William A. Jacobs, Director(resigned), was appointed as a board member on July
31, 2006 and resigned on October 4, 2006. Mr. Jacobs graduated with a degree in mechanical
engineering from the Missouri School of Mines and has over forty years of experience in
project development and the management of major projects in the mining, manufacturing and
chemical industries. His distinguished career in engineering and management has included
association with global companies, such as General Motors, Ford, Mattel and Monsanto, and
managing projects throughout the United States, Canada, Asia and Mexico. Additionally,
since 1995 Mr. Jacobs has been part-owner and project manager for ABK Services, LLC of
Tucson, Arizona, a firm engaged in the design and manufacture of process equipment for the
mining industry, as well as other engineering projects.

Kevin K. Pfeffer, Director(resigned),Mr. Pfeffer was appointed as a member of
our Board of Directors on January 23, 2003 and resigned on December 4, 2006. Mr. Pfeffer
received a B.A. in Economics in 1982, and an MBA in Finance and Marketing in 1984, both
from the University of Chicago. From 1985 through 1995, Mr. Pfeffer worked for Fannie Mae
in Washington, D.C., as the Director of Public Finance, negotiating, structuring and
closing structured financings involving income-producing real estate. Mr. Pfeffer closed
approximately $4 billion in financing transactions. From 1995 through 1998, Mr. Pfeffer
was a Senior Vice President at the merchant banking affiliate of Zurich Insurance and
Credit Suisse First Boston, located in New York, New York. Mr. Pfeffer was responsible for
the merchant banks reinsurance syndications involving mortgage and derivative
securities. Mr. Pfeffer retired in 1998 to manage his own investments as a private
investor in real estate and public company equities.

48

None of our directors is a director
of another company having securities registered under Section 12 of the Securities
Exchange Act of 1934 or a company registered under the Investment Company Act of 1940 with
the exception of H. Roy Shipes, our Chairman of the Board (resigned), has since September
7, 2001 been the Chairman of the Board and since June 2, 2004 the Chief Executive
Officer of Atlas Minerals, Inc., a Securities and Exchange Commission reporting company.

# (b) Identification of
significant employees

We have no significant employees
other than the officers named above.

# (c) Family relationships

No family relationships exist among
the officers and directors.

# (d) Involvement in
certain legal proceedings

On September 1, 2006, our CEO, Terry
C. Turner (the Plaintiff) filed an action against us, Kevin K. Pfeffer, H.E.
Dunham, and William A. Jacobs (the Defendants) in the United States District
Court for the District of Utah (the Court), Terry C. Turner v. Golden Eagle
International, Inc., Kevin K. Pfeffer, H.E. Dunham and William A. Jacobs, Civil Action
No.2:06-cv-00738-TC (D. Utah: 2006).  The Complaint sought a temporary restraining
order enjoining Defendants, until such time as a preliminary injunction hearing may be
held, from the following:  (a) publishing a proposed Form 8-K pertaining to the
August 24, 2006 meeting of the Board of Directors; (b) preventing Defendants from
violating Regulation FD and the disclosure of insider information; (c) preventing
Defendants from further breaches of their fiduciary duty to Golden Eagle; (d) preventing
Defendants from breaching Golden Eagles Code of Ethics; (e) holding a Board of
Directorsmeeting on September 4, 2006, or any date thereafter;  and (f)
publishing disparaging, slanderous, libelous or defamatory comments regarding
Plaintiff.  At the Courts request, the Defendants agreed not to file the Form
8-K or hold a scheduled Board of Directors meeting on September 4, 2006 until a
hearing on Plaintiffs motion for temporary restraining order could be heard on
September 5, 2006.  On September 5, 2006, such hearing was held and the Court denied
Plaintiffs motion for temporary restraining order since Plaintiff had achieved the
purposes of his motion for such an order.

On September 12, 2006 the
Plaintiff filed a motion voluntarily dismissing Golden Eagle as a defendant; on
September 13, 2006, the Court granted Plaintiffs motion and dismissed Golden Eagle
from the lawsuit. The Court postponed a Preliminary Injunction hearing on September 13,
2006 since many of the issues addressed in Plaintiffs Complaint had been resolved;
however, Plaintiff may seek a Preliminary Injunction hearing from the Court at a later
date.

On October 10, 2006 Plaintiffs
motion was granted by the Court to voluntarily dismiss Defendants H.E. Dunham and William
A. Jacobs from the lawsuit. The case was subsequently dismissed without prejudice on March
30, 2007.

49

None
of our executive officers or directors has been involved in or is subject to any of the
following legal proceedings:

1.    
          A petition under the Federal bankruptcy laws or any state insolvency law that
          was filed by or against, or a receiver, fiscal agent or similar officer was
          appointed by a court for the business or property of such person, or any
          partnership in which he was a general partner at or within two years before the
          time of such filing, or any corporation or business association of which he was
          an executive officer at or within two years before the time of such filing;

2.    
          No such person was convicted in a criminal proceeding or is a named subject of a
          pending criminal proceeding (excluding traffic violations and other minor
          offenses);

3.    
          No such person was the subject of any order, judgment, or decree, not
          subsequently reversed, suspended or vacated, of any court of competent
          jurisdiction, permanently or temporarily enjoining him from, or otherwise
          limiting, the following activities: Acting as a futures commission merchant,
          introducing broker, commodity trading advisor, commodity pool operator, floor
          broker, leverage transaction merchant, any other person regulated by the
          Commodity Futures Trading Commission, or an associated person of any of the
          foregoing, or as an investment adviser, underwriter, broker or dealer in
          securities, or as an affiliated person, director or employee of any investment
          company, bank, savings and loan association or insurance company, or engaging in
          or continuing any conduct or practice in connection with such activity; engaging
          in any type of business practice; or engaging in any activity in any activity in
          connection with the purchase or sale of any security or commodity or in
          connection with any violation of Federal or State securities laws or Federal
          commodities laws;

4.    
          No such person was the subject of any order, judgment or decree, not
          subsequently reversed, suspended or vacated, of any Federal or State authority
          barring, suspending or otherwise limiting for more than 60 days the right of
          such person to engage in any activity described in paragraph (f)(3)(i) of this
          section, or to be associated with persons engaged in any such activity; or

5.    
          No such person was found by a court of competent jurisdiction in a civil action
          or by the Commission to have violated any Federal or State securities law, and
          the judgment in such civil action or finding by the Commission has not been
          subsequently reversed, suspended, or vacated.

6.    
          No such person was found by a court of competent jurisdiction in a civil action
          or by the Commodity Futures Trading Commission to have violated any Federal
          commodities law, and the judgment in such civil action or finding by the
          Commodity Futures Trading Commission has not been subsequently reversed,
          suspended or vacated.

As a result of a civil action settled
in 1999, we consented to the issuance of an injunction not to violate certain securities
laws in the future. We were not assessed any civil or monetary penalty. None of our
current management was party to the settlement or is subject to the injunction.

(e)    
          Audit committee financial expert and Identification of Audit committee

We do
not have an audit committee or an audit committee financial expert.

# (f)     Section 16(a)
beneficial ownership reporting compliance

50

Section 16(a) of the Securities
Exchange Act of 1934, as amended (the Exchange Act), requires our officers and
directors, and persons who own more than 10% of a registered class of our equity
securities, to file reports of ownership and changes in ownership of our equity securities
with the Securities and Exchange Commission. Officers, directors and
greater-than-ten-percent shareholders are required by Securities and Exchange Commission
regulations to furnish us with copies of all Section 16(a) filings.

Based solely on our review of Forms
3, 4 and 5 available to us and, where applicable, written representations from directors,
officers and 10% stockholders that no form is required to be filed, we believe that no
director, officer or beneficial owner of more than 10% of its common stock failed to file
on a timely basis reports required pursuant to Section 16(a) of the Exchange Act with
respect to fiscal year ended December 31, 2006.

(g)    
          Code of ethics

We adopted a Code of Ethics on March
23, 2004, that applies to our principal executive officer, principal financial officer,
principal accounting officer or controlling persons, or persons performing similar
functions. A copy of the Code was included as an exhibit to this annual report for the
period ending December 31, 2003. In addition, our Code of Ethics is available on our web
site at www.geii.com under the caption Investor Relations: Code of
Ethics. A copy of our Code of Ethics is available to any person, without charge, by
faxing a request to our Chief Financial Officer at our corporate offices at (801)619-1747.

The Code has not been amended since
the filing.

# Item 10. Executive
compensation

# (a) and (b) Summary
compensation table

51

The following table sets forth
information regarding compensation paid to our Chief Executive Officer for the years ended
December 31, 2004, 2005 and 2006. No other person who currently one of our executive
officers, with the exception of our Chief Financial Officer, earned salary and bonus
compensation exceeding $100,000 during any of the last three years. The table below
includes all compensation paid to them during the years stated.

|                               |                     |             |            |                  |                                      |                       
|------------------------------ | ------------------- | ----------- | ---------- | ---------------- | ------------------------------------ | ----------------------
|                               |                     |             |            |                  |                                      |                       
|Long Term Compensation        
|                               | Annual Compensation | Awards     
|Name & Title                   | Year                | Salary      | Bonus      | Restricted Stock | Securities Underlying Options & SARS | All Other Compensation
|Terry C. Turner                |                     |             |            |                  |                                      |                       
|CEO, President                 |                     |             |            |                  |                                      |                       
|                               | 2004                | $240,000    | $60,000(A) | -                | -                                    | $5,247(D)             
|                               | 2005                | 120,083)(b) | $60,000(A) | -                | -                                    | -                     
|                               | 2006                | 176,152(b)  | $60,000(A) | -                | -                                    | -                     
|Tracy A. Madsen                |                     |             |            |                  |                                      |                       
|CFO, VP, Secretary & Treasurer | 2004                | $  91,000   | -          | $36,250(C)       | -                                    | $  2,063(D)           
|                              
|                               | 2005                | 74,167(E)   | -          | $25,000(C)       | -                                    | -                     
|                               | 2006                | 77,499(E)   | -          | $22,612(C)       | -                                    | $22,755(F)            

(A)These bonus payments reflect
non-cash debt forgiveness. At December 31, 2006, Mr. Turner owed us $336,783 in
non-interest bearing loans he received from us prior to July 31, 2002; we also owed Mr.
Turner $336,783 on a non-interest bearing basis as a result of salaries that accrued
without payment during 1997 through 2001 (in excess of the $443,772 that Mr. Turner waived
on December 31, 2001). During 2004, 2005 and 2006 Mr. Turner waived $60,000 of unpaid
accrued salary each year. The board of directors has approved this arrangement on our
behalf. There has been no material modification of the terms of either indebtedness since
the enactment of Section 402 of the Sarbanes-Oxley Act of 2002.

(B)During June 2005, Mr. Turner
voluntarily reduced his annual salary by 40% to $150,000 per year not including the
cashless bonus described in footnote (A). Additionally, Mr. Turner deferred $53,667 of
2005 salary to be paid when sufficient funds are available. During 2006, Mr. Turner
received his annual compensation of $150,000 plus $26,152 in accrued salary that was owed
to him from 2005. As of December 31, 2006 Mr. Turner was owed $27,514 in accrued salary.
Accrued salaries were expensed during 2005 and carried on the balance sheet under accounts
payable.

(C) On
November 12, 2003, Mr. Madsen was granted 250,000 shares of restricted stock           in
accordance with his employment agreement in lieu of a cash payment for           services
provided during 2003. Shares were valued at $.145 per share based on           the
closing price on the date of grant. These shares were issued on January 7,
          2004. On March 30, 2005 he was granted 965,251 shares of restricted common
stock           in accordance with his employment agreement in lieu of a cash payment for
          services provided during 2004. Shares were valued at $.0258 per share based on
          the closing price on the date of the grant. On August 11, 2006 he was granted
          1,726,092 shares of S-8 common stock in accordance with his employment
agreement           in lieu of a cash payment for services provided during 2005. Shares
were valued           at $.0131 per share based on the closing price of the stock on the
date of the           grant.

(D)         In
accordance with our long-standing policy of allowing spouses of our officers           to
accompany the officer on selected traveling assignments, we recorded an           expense
of $7,310 during 2004 and treated it as compensation to the employee.

52

(E)         Mr.
Madsens annual salary is $91,000. During 2005 he deferred $16,833 of
          accrued salary to be paid when sufficient funds were available. During 2006
          $9,249 of accrued salary was paid to him. As of December 31, 2006, 7,584
          in-accrued salary was owed to him. Deferred salaries were expensed during 2005
          and carried on the balance sheet under accounts payable.

(F)        Mr.
Madsen resigned as an officer on August 15, 2006 and was reappointed as an
          officer on November 14, 2006. During this period of time, we contracted with a
          company controlled by Mr. Madsen to provide accounting and administrative
          support. Total fees paid to Avcon services during 2006 were $22,755.

We have no plans that result in the
payment or accrual for payment of any amounts to any executive officer in connection with
his or her resignation, retirement, or other termination, or change of control or change
in the executive officers responsibilities.

(c)    
          Options/SAR granted during year ended December 31, 2006

None

(d)    
          Aggregated option/SAR exercises and fiscal year-end option/SAR value table

None

(e)    
          Long term incentive plan  awards in last fiscal year

We have no long-term incentive plans.

# (f)     Defined benefit or actuarial
plan disclosure

Since October 1998, we have paid
medical insurance premiums for our employees. We currently have no stock ownership or
other profit sharing, defined benefit, actuarial, or pension plans, nor life insurance or
any other benefit plan for our employees, but may adopt such plans in the future. We have
no retirement plans and, therefore, have made no contributions to any such plan on behalf
of the named officers.

# (g)     Compensation of
directors

We currently have three directors on
our Board of Directors. Directors fees were suspended in approximately June 2004 as
a result of the shutdown of our production operations at our Cangalli prospect.

Alvaro Riveros received fees of
$7,000 during 2006 reflecting additional services he provided to us as a consultant in
Bolivia.

Terry C. Turner is our president and
CEO and receives a salary for such duties as discussed above, but received no additional
compensation as a director.

Harlan M. (Mac) Delozier is our Vice
President for Bolivian Administration and receives salary for his duties and does not
receive additional compensation as a director.

H.E.           Gene Dunham,
Director,served as a director between May 10,           2006 and September 21, 2006. He
also served as our Vice President of Operations           during this period. Mr. Dunham
received compensation of $10,766 for his           services.

53

Except as described herein, none of
our officers or directors has been or is being paid any cash compensation, or is otherwise
subject to any deferred compensation plan, bonus plan or any other arrangement and
understanding whereby such person would obtain any cash compensation for his services for
and on our behalf.

(h)    
          Employment contracts and termination of employment and change-in-control
          arrangements

We have an employment contract with
Tracy Madsen, our Chief Financial Officer and Vice President for US Administration
requiring us to issue him $25,000 in our stock for each year of his employment.

We also had an agreement with Harlan
M. (Mac) Delozier, our Vice President for Bolivian Administration, to pay him a retention
bonus of 300,000 shares of our stock between the years of 1997 and 2003. Thereafter, we
had a verbal commitment to Mr. Delozier to pay him a retention bonus consistent with his
position as Vice President requiring us to issue him $25,000 in our stock each year of his
employment. This verbal commitment was ratified by the Board of Directors in December
2006. This bonus has not been paid and will be expensed when paid.

We have no other compensatory plan or
arrangement with respect to any executive officer which plan or arrangement results or
will result from the resignation, retirement or any other termination of such
individuals employment with us, or from a change in control of us or a change in the
individuals responsibilities following a change in control.

# (i)     Report on repricing
of options/SARs

Not applicable, as no options or SARs
were repriced during the fiscal year ended December 31, 2006 or subsequently.

(j)    
          Additional information with respect to compensation committee interlocks and
          insider participation on compensation decisions

We do not currently have a
compensation committee.

(k)    
          Board compensation committee report on executive compensation

We do not currently have a
compensation committee and no compensation committee report on executive compensation was
issued during 2006.

# Item 11. Security
ownership of certain beneficial owners and management

(a)
          and (b) Security ownership of certain beneficial owners and management

54

At December 31, 2006, and
subsequently, we had only two classes of outstanding voting securities, our common stock
(referred to herein as the Common Stock) and Series B Preferred Stock which is
convertible into restricted common shares if and when common shares area available. Series
B preferred shares have voting rights equivalent of the number of common shares into which
the preferred shares may at some point be converted.

The following tables set forth
information regarding the ownership of our outstanding common stock as of the filing of
this report by: (a) each person known by management to own, beneficially or of record,
more than five percent (5%) of our common stock; (b) each director; (c) each executive
officer named in the Compensation Table set forth later in this report; and (d) all of our
directors and executive officers as a group.

The following tables assume, based on
our stock records, that there are 789,999,990 shares of our common stock, $.0001 par
value, currently issued and outstanding, plus 10,000,000 shares reserved for the conversion of an outstanding debenture and 2,462,002 Series B Preferred Shares, $.01 par
value, issued and outstanding. The Holders of the Series B Shares presently have the right
to vote two hundred fifty (250) common shares for every one (1) Series B share held on all
matters presented to the common stockholders. The Series B Holders are not required to
convert their Series B shares into common stock prior to voting at any meeting of the
shareholders or on any matter presented to the common shareholders. As indicated above, as
of the filing of this report there are 2,462,002 Series B shares outstanding, which will
result in 615,500,598 votes by the Series B Holders or 43.8 percent of the total shares of
all classes entitled to vote on all matters presented to the common stockholders at any
meeting. As such, an aggregate of 1,405,493,830 shares will be allowed to vote at our
Shareholders Meeting as of the date of the date of the filing of this report. The
chart below, in the column titled Percent of Fully Diluted Common Stock (After Conversion
of Preferred Shares), is also indicative of the percentage of votes represented by the
Series B Shares that are entitled to vote at the Special Meeting even prior to the Series
B Shares being converted to shares of common stock.

55

|                                                                            |                                           |                                               |                                                                             
|--------------------------------------------------------------------------- | ----------------------------------------- | --------------------------------------------- | ----------------------------------------------------------------------------
|SECURITY OWNERSHIP OF BENEFICIAL OWNER                                     
|Name and Address of Beneficial Owner                                        | Shares of Common Stock Beneficially Owned | Percent of Undiluted Common Stock Outstanding | Percent of Fully Diluted Common Stock (After Conversion of Preferred Shares)
|                                                                           
|Kevin Pfeffer (1)5307 Aerie Ct.Clarksville, Maryland 21029                  | 124,820,685                               | 15.80%                                        | 8.88%                                                                       
|                                                                            |                                           |                                               |                                                                             
|Atlas Precious Metals, Inc.(2)8040 S. Kolb RoadTucson, Arizona 85706        | 50,000,000                                | 6.33%                                         | 3.56%                                                                       
|                                                                            |                                           |                                               |                                                                             
|Golden Eagle MineralHoldings, Inc.(3)910 Golden Beach Blvd.Venice, FL 34285 | -                                         | -                                             | 22.25%                                                                      
|                                                                            |                                           |                                               |                                                                             
|Lone Star Equity Group LLC (4)6222 Richmond Ave,Suite 540Houston, TX 77057  | -                                         | -                                             | 12.14%                                                                      
|                                                                            |                                           |                                               |                                                                             
|Total                                                                       | 174,820,685                               | 22.13%                                        | 46.83%                                                                      
|                                                                           

(1)    
          Kevin Pfeffer resigned as our Director on December 4, 2006.

(2)              H.
Roy Shipes, our former Chairman of the Board of Directors, is the President           of
Atlas Precious Metals, Inc., a Nevada corporation. Mr. Shipes resigned as
          Chairman of our Board of Directors on May 5, 2006.

(3)     Golden
Eagle Mineral           Holdings Inc. (GEMH), acquired 1,251,090 shares of
our Series B           preferred stock on December 29, 2007 through the conversion of
$1,251,090 of           debt and accrued interest.

(4)    
          Lone Star Equity Group, LLC (Lone Star), acquired 682,650 shares of
          our Series B preferred stock on December 29, 2007 through the conversion of
          $682,650 of debt and accrued interest. The following table sets forth
          information as of March 31, 2006, with respect to the ownership of the Common
          Stock for all directors, individually; all executive officers named in the
          compensation table; all executive officers and directors as a group; and all
          beneficial owners of more than five percent of the Common Stock.

56

|SECURITY OWNERSHIP OF MANAGEMENT                 
|-------------------------------------------------
|Name and Address of Director or Executive Officer
|                                                 
|Terry C. Turner                                  
|Chief Executive Officer/                         
|President/Chairman                               
|9661 South 700 East                              
|Salt Lake City, Utah 84070                       
|                                                 
|Tracy A. Madsen                                  
|Chief Financial Officer                          
|9661 South 700 East                              
|Salt Lake City, Utah 84070                       
|                                                 
|Harlan M. (Mac) DeLozier                         
|Director                                         
|9661 South 700 East                              
|Salt Lake City, Utah 84070                       
|                                                 
|Alvaro Riveros                                   
|Director                                         
|9661 South 700 East                              
|Salt Lake City, Utah 84070                       
|                                                 
|Officers  and  Directors  as  a                  
|Group                                            
|                                                 

As
used in this section, the term beneficial ownership with respect to a security is defined
by Rule 13d-3 under the Securities Exchange Act of 1934 as consisting of sole or shared
voting power (including the power to vote or direct the vote) and/or sole or shared
investment power (including the power to dispose or direct the disposition) with respect
to the security through any contract, arrangement, understanding, relationship or
otherwise.

# (c) Changes in control

The holders of our Contingent
Convertible Series B Preferred shares are entitled to 250 votes for each preferred share.
If all Series B preferred shares were issued, the Series B preferred shareholders as a
group would control 58.75% of our voting rights and if and when common stock became
available the would be entitled to convert into 58.75% of the common shares.

(d)    
          Securities authorized for issuance under equity compensation plans

See
Item 5 above for this disclosure.

# Item 12. Certain
relationships and related transactions

# (a)     Indebtedness

Accrued Compensation.During 1997 through 2001, we did not have the funds to pay salaries to our
president, Terry C. Turner. As a result, his salary accrued unpaid through a portion of
2002 when we paid only $103,000 of the $200,000 owed to him during that year.

On December 31, 2001, Mr. Turner
waived $443,772 of a total accrued balance of $990,012 owed to him. During 2002 and 2003,
Mr. Turner waived an additional $36,457. During 2004, 2005 and 2006 Mr. Turner waived an
additional $60,000 each year respectively of the amount owed to him. As of December 31,
2006 the total sum that we owed Mr. Turner was $336,783 in accrued compensation. Our
indebtedness to Mr. Turner is non-interest bearing.

Advances to Mr.
Turner. Because we were unable to pay him full salaries from 1997 through
the first part of 2002, we assisted Mr. Turner with certain financial obligations and
accounted for those payments as loans to him. At July 31, 2002 the total amount due to us
from Mr. Turner was $579,021 on a non-interest bearing basis, and no further amounts have
been advanced to him since that time, including since the enactment of Section 402 of the
Sarbanes-Oxley Act of 2002 that prohibits personal loans to executives or any material
modification thereof. There have been no material modifications in the terms of that loan
since that date.

Repayment of Loan and Accrued
Compensation. The Board of Directors determined that Mr. Turner would
receive a $60,000 per year non-cash bonus that is used to pay down notes he owes to us.
All repayments are made with after tax dollars. Mr. Turner in turn forgives the portion of
the accrued salary that we owe to him in order to keep the note payable and the note
receivable in balance. These reductions have occurred in 2005 and 2006 and are expected to
continue until both the advances to Mr. Turner and the unpaid salary are reduced to zero.
As of December 31, 2006 the total amount owed by Mr. Turner was $336,783 and equaled the
amount that we owed to him. For purposes of the consolidated financial statements this
note payable and note receivable are netted out to $0.

57

Current Deferred Compensation.
As of December 31, 2006 we owed the following officers accrued compensation that was
deferred during 2005.

|                              |                           |         
|----------------------------- | ------------------------- | --------
|Officer Deferred Compensation | Position                  | Amount  
|                             
|Terry C. Turner               | President & CEO           | $27,514 
|Harlan M. (Mac) Delozier      | VP Bolivia Administration | $20,139 
|Tracy A. Madsen               | CFO VP US Administration  | $  7,584

# (b) Loans to Golden
Eagle from affiliates

In addition, as described elsewhere
in this Annual Report, Mr. Turner, our President/Chief Executive Officer, and other
officers have advanced funds to us for operations in Bolivia and to cover overhead in the
US.

|     |                       |             |             |                                
|---- | --------------------- | ----------- | ----------- | -------------------------------
|Date | Affiliated Lender     | Loan Amount | (Repayment) | Outstanding Balance at Year end
|    
|2006 | Kevin Pfeffer         | $-          | $-          | $135,000                       
|     | Terry Turner          | 9,100       | (9,000)     | 100                            
|     | Harlan (Mac) Delozier | 14,300      | -           | 14,300                         
|     | Tracy Madsen          | 12,000      | (9,500)     | 2,500                          
|     |                       |             |            
|2005 | Kevin Pfeffer         | 135,000     | -           | 135,000                        
|     | Terry Turner          | 17,000      | (17,000)    | -                              
|     | Tracy Madsen          | 25,000      | (25,000)    | -                              

# Item 13. Exhibits

None

# Item 14. Principal
accountants fees and services

Our Board of Directors selected the
independent accounting firm of Chisholm, Bierwolf & Nilson, LLC, Certified Public
Accountants, with respect to the audit of our consolidated financial statements for the
years ended December 31, 2006 and 2005. Our Bolivian Subsidiaries were audited by Pozo
& Asociados S.R.L. an independent member of Baker Tilly International.

Audit
Fees. In connection with professional services rendered for the audit of our annual
financial statements reported under Form 10-K for the year ended December 31, 2005 and the
reviews of the second and third quarter 2005 financial statements included in our
quarterly reports filed on Form 10-Q for that year, Chisholm Bierwolf & Nilson billed
us fees in the aggregate amount of approximately $18,567. Total fees paid to Chisholm,
Bierwolf & Nilson for the review of the quarterly financial statements included in
reports filed under Form 10-Q for 2006 and for the audit of the 2006 financial statements
reported under Form 10-KSB are estimated to be $30,000. In connection with professional
services rendered for the audit of our annual financial statements reported under Form
10-K for the year ended December 31, 2005 and the reviews of the 2005 quarterly financial
statements included in our quarterly reports filed on Form 10-Q for that year, Pozo &
Asociados S.R.L. billed us fees in the aggregate amount of approximately $10,500. Total
fees paid to Pozo & Asociados S.R.L. for the review of the quarterly financial
statements included in reports filed under Form 10-Q for 2006 and for the audit of the
2006 financial statements reported under Form 10-K are estimated to be $10,800

58

In
connection with professional services rendered for the audit of our annual financial
statements for the years ended December 31, 2005, Gordon Hughes & Banks billed us fees
in the aggregate amount of approximately $5,000.

Audit
Related Fees. There were no fees billed in each of the last two fiscal years (ended
December 31, 2006 and 2005) for assurance and related services by the principal accountant
that are reasonably related to the performance of the audit or review of our financial
statements that are not reported under Audit Fees.

Financial
Information Systems Design and Implementation Fees. We did not pay any fees to
Chisholm, Bierwolf & Nilson or Pozo & Asociados S.R.L. for professional services
rendered for financial information systems design and implementation as that term is
defined in Rule 2-01(c)(4)(ii) of Regulation S-X.

Tax
Fees. The aggregate fees billed in 2005 for professional services rendered by RSG
Accounting Services for tax compliance, tax advice, and tax planning were approximately
$2,750. The nature of the services for which these fees were received was preparation of
tax returns. We estimate the fees to be charged By RSG Accounting Services for the
preparation of our 2006 tax returns to be approximately $3,500.

All
Other Fees. During the fiscal years ended December 31, 2006 and 2005, there were no
other fees paid Chisholm, Bierwolf & Nilson or Pozo & Asociados S.R.L. for any
other auditing or accounting services.

Total Fees.

| | The
total estimated fees charged for all services by Chisholm, Bierwolf & Nilson:During
the fiscal year ended December 31, 2006:               $30,000 During the fiscal year
ended December 31, 2005:                $18,567
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
total fees charged for all services by Pozo & Asociados S.R.L.: During the fiscal
year ended December 31, 2006:               $10,800     During the fiscal year ended December
31, 2005:               $10,500
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
total fees charged for all services by Gordon, Hughes & Banks: During the fiscal year
ended December 31, 2006:                $0  During the fiscal year ended December 31, 2005:
               $5,000
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Our
Board of Directors has considered the information described in Financial
Information Systems Design and Implementation Fees and All Other
Fees above and believes that it is compatible with maintaining the principal
accountants independence. In each case (commencing after August 1, 2002), the board
of directors pre-approved all such services.

Our
principal accountant (through its full time employees) performed all work regarding the
audit of our financial statements for the most recent two fiscal years.

59

# PART IV

# Item 15. Exhibits and
financial statement schedules

# (a) Financial statements

|The following documents are filed as part of this report:                                                                   |  | Page            
|--------------------------------------------------------------------------------------------------------------------------- |  | ----------------
|                                                                                                                            |  |                 
|Independent Auditors Report                                                                                                 |  | F-1 & F-2       
|                                                                                                                            |  |                 
|Consolidated Balance Sheets as of December 31, 2006 and
2005                                                                |  | F-3             
|                                                                                                                            |  |                 
|Consolidated Statements of Operations for the years ended
                                       December 31, 2006 and 2005 |  | F-4             
|                                                                                                                            |  |                 
|Consolidated Statements of Cash Flows for the years ended
                                       December 31, 2006 and 2005 |  | F-5             
|                                                                                                                            |  |                 
|Consolidated Statement of Stockholders' Equity (Deficit) for
the years ended December 31, 2006 and 2005                     |  | F-6             
|                                                                                                                            |  |                 
|Notes to Consolidated Financial Statements                                                                                  |  | F-7 through F-20
|                                                                                                                            |  |                 

60

# (b) Exhibits

The following exhibits are filed with
this Form 10-KSB or incorporated herein by the following references:

| |         |                                                                                                                                                                                                                                                                    
| | ------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 3.1     | Articles of Incorporation, as amended, incorporated by reference. (1)                                                                                                                                                                                              
| | 3.2     | Bylaws, incorporated by reference.                                                                                                                                                                                                                                 
| | 10.1    | Series B Convertible Preferred Stock Subscription Agreements, incorporated by reference.                                                                                                                                                                           
| | 14.1    | Code of Ethics, incorporated by reference.                                                                                                                                                                                                                         
| | 21.1    | Golden Eagle Bolivia Mining S.A., incorporated under the laws of Bolivia; Eagle Mining of Bolivia, Ltd., incorporated under the laws of Bolivia; Golden Ealge
International, Inc. (Bolivia), incorporated under the laws of Bolivia, all incorporated by reference.
| | 31.1    | Certification by the Principal Executive oficer pursuat to Rule 13a-13(a)/15d-14(a)                                                                                                                                                                                
| | 32.2    | Certification by the Principal Executive oficer pursuat to Rule 13a-13(a)/15d-14(a)                                                                                                                                                                                
| | 32.1    | Certification by the Principal Executive Officer pursuant to Section 1350                                                                                                                                                                                          
| | 32.2    | Certification by the Principal Financial Officer pursuant to Section 1350                                                                                                                                                                                          
| | 99.1    | Incorporated by reference from our registration statement on Form 10-SB that became effective June 17, 1994.                                                                                                                                                       
| | 99.2    | Incorporated  by  reference  from our Form 8-K  reporting  an event of March 8,
                           2007.                                                                                                                                                   
| | 99.3  . | Incorporated by reference from our Form 8-K(1) reporting an event of February 5, 2007                                                                                                                                                                              
| | 99.4    | Incorporated by reference from our Form 8-K(2) reporting an event of February 5, 2007.                                                                                                                                                                             
| | 99.5    | Incorporated by reference from our Form 8-K reporting an event of January 12, 2007.                                                                                                                                                                                
| | 99.6    | Incorporated  by  reference  from our Form 8-K  reporting  an event of December 29, 2006.                                                                                                                                                                          
| | 99.7    | Incorporated  by  reference  from our Form 8-K  reporting  an event of December 4, 2006.                                                                                                                                                                           
| | 99.8    | Incorporated  by  reference  from our Form 8-K  reporting  an event of October 10, 2006.                                                                                                                                                                           
| | 99.9    | Incorporated  by  reference  from our Form 8-K  reporting  an event of October 4, 2006.                                                                                                                                                                            
| | 99.10   | Incorporated  by  reference  from our Form 8-K  reporting  an event of September 21, 2006.                                                                                                                                                                         
| | 99.11   | Incorporated  by  reference  from our Form 8-K  reporting  an event of September 11, 2006.                                                                                                                                                                         
| | 99.12   | Incorporated  by  reference  from our Form 8-K  reporting  an event of August 24, 2006.                                                                                                                                                                            
| | 99.13   | Incorporated  by  reference  from our Form 8-K  reporting  an event of August 15, 2006.                                                                                                                                                                            
| | 99.14   | Incorporated  by  reference  from our Form 8-K  reporting  an event of July 27, 2006.                                                                                                                                                                              
| | 99.15   | Incorporated  by  reference  from our Form 8-K  reporting  an event of May 5, 2006.                                                                                                                                                                                
| | 99.16   | Incorporated  by  reference  from our Form 8-K  reporting  an event of January 5, 2006.
                           .                                                                                                                                               
| | 99.17   | Incorporated  by  reference  from our Form 8-K  reporting  an event of January 3, 2006.                                                                                                                                                                            
| |         |                                                                                                                                                                                                                                                                    
| |         |                                                                                                                                                                                                                                                                    

61

# Signatures.

Pursuant to the requirements of
Section 13 or 15(d) of the Securities Exchange Act of 1934, Golden Eagle International,
Inc. has duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.

# 

| |  | GOLDEN EAGLE
INTERNATIONAL, INC.By: /s/ Terry C. Turner
Terry C. TurnerPresidentDate: April 16, 2007
| |  | ------------------------------------------------------------------------------------------------------------------

Pursuant to the Securities Exchange
Act of 1934, this report has been signed below by the following persons on behalf of
Golden Eagle International, Inc. and in the capacities and on the dates indicated.

# 

| |  | GOLDEN EAGLE
INTERNATIONAL, INC.By: /s/  Terry C. Turner
Terry C. TurnerChairman of the Board of Directors and Principal Executive OfficerDate: April 16, 2007
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | By: /s/Alvaro Riveros 
 Alvaro RiverosDirectorDate: April 16, 2007
| |  | --------------------------------------------------------------------------------

| |  | By: /s/ Harlan M. (Mac) Delozier
Harlan M. (Mac) DelozierDirectorDate: April 16, 2007
| |  | ---------------------------------------------------------------------------------------------------

| |  | By: /s/ Tracy A. Madsen
Tracy A. MadsenMBA, Corporate Secretary- Treasurer, Principal                                 Financial
Officer and Principal Accounting OfficerDate: April 16, 2007
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Exhibit 31.1 Section 302
Certification

62

CERTIFICATION

I, Terry C. Turner, certify that:

| | 1. | I
have reviewed this Annual Report on Form 10-KSB for the period ended December
               31, 2006 of Golden Eagle International, Inc.;
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------

| | 2. | Based
on my knowledge, this report does not contain any untrue statement of a
               material fact or omit to state a material fact necessary to make the
statements                made, in light of the circumstances under which such statements
were made, not                misleading with respect to the period covered by this
report;
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3. | Based
on my knowledge, the financial statements, and other financial information
               included in this report, fairly present in all material respects the
financial                condition, results of operations and cash flows of the
registrant as of, and                for, the periods presented in this report;
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 4. | The
registrants other certifying officer(s) and I are responsible for
               establishing and maintaining disclosure controls and procedures (as
defined in                Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial                reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the                registrant and have:
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (a) | Designed such
disclosure controls and procedures, or caused such disclosure           controls and
procedures to be designed under our supervision, to ensure that           material
information relating to the registrant, including its consolidated
          subsidiaries, is made known to us by others within those entities, particularly
          during the period in which this report is being prepared;
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b) | Designed
such internal control over financial reporting, or caused such internal control over
          financial reporting to be designed under our supervision, to provide reasonable
          assurance regarding the reliability of financial reporting and the preparation
          of financial statements for external purposes in accordance with generally
          accepted accounting principles;
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (c) | Evaluated
the effectiveness of the           registrants disclosure controls and procedures
and presented in this           report our conclusions about the effectiveness of the
disclosure controls and           procedures, as of the end of the period covered by this
report based on such           evaluation; and
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (d) | Disclosed
in this report any change in the registrants           internal control over
financial reporting that occurred during the           registrants most recent
fiscal quarter (the registrants fourth           fiscal quarter in the case of an
annual report) that has materially affected, or           is reasonably likely to
materially affect, the registrants internal           control over financial
reporting; and
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 5. | The
registrants other certifying officer(s) and I have disclosed, based on
               our most recent evaluation of internal control over financial reporting,
to the                registrants auditors and the audit committee of the registrants
               board of directors (or persons performing the equivalent functions):
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (a) | All significant
deficiencies and material weaknesses in the design or operation           of internal
control over financial reporting which are reasonably likely to           adversely
affect the registrants ability to record, process, summarize and           report
financial information; and
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b) | Any
fraud, whether or not material, that           involves management or other employees who
have a significant role in the           registrants internal control over
financial reporting.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

63

Date: April 16, 2007

| |  | By: /s/ Terry C. Turner
Terry C. TurnerPrincipal Executive Officer
| |  | --------------------------------------------------------------------------------

Exhibit 31.2 Section 302
Certification

CERTIFICATION

I, Tracy A. Madsen, certify that:

| | 1. | I
have reviewed this Annual Report on Form 10-KSB for the period ended December
               31, 2006 of Golden Eagle International, Inc.;
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------

| | 2. | Based
on my knowledge, this report does not contain any untrue statement of a
               material fact or omit to state a material fact necessary to make the
statements                made, in light of the circumstances under which such statements
were made, not                misleading with respect to the period covered by this
report;
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3. | Based
on my knowledge, the financial statements, and other financial information
               included in this report, fairly present in all material respects the
financial                condition, results of operations and cash flows of the
registrant as of, and                for, the periods presented in this report;
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 4. | The
registrants other certifying officer(s) and I are responsible for
               establishing and maintaining disclosure controls and procedures (as
defined in                Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial                reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the                registrant and have:
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (a) | Designed
such disclosure controls and procedures, or caused such disclosure           controls and
procedures to be designed under our supervision, to ensure that           material
information relating to the registrant, including its consolidated
          subsidiaries, is made known to us by others within those entities, particularly
          during the period in which this report is being prepared;
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b) | Designed
such           internal control over financial reporting, or caused such internal control
over           financial reporting to be designed under our supervision, to provide
reasonable           assurance regarding the reliability of financial reporting and the
preparation           of financial statements for external purposes in accordance with
generally           accepted accounting principles;
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (c) | Evaluated
the effectiveness of the           registrants disclosure controls and procedures
and presented in this           report our conclusions about the effectiveness of the
disclosure controls and           procedures, as of the end of the period covered by this
report based on such           evaluation; and
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (d) | Disclosed
in this report any change in the registrants           internal control over
financial reporting that occurred during the           registrants most recent
fiscal quarter (the registrants fourth           fiscal quarter in the case of an
annual report) that has materially affected, or           is reasonably likely to
materially affect, the registrants internal           control over financial
reporting; and
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

64

| | 5. | The
registrants other certifying officer(s) and I have disclosed, based on
               our most recent evaluation of internal control over financial reporting,
to the                registrants auditors and the audit committee of the registrants
               board of directors (or persons performing the equivalent functions):
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (a) | All
significant deficiencies and material weaknesses in the design or operation           of
internal control over financial reporting which are reasonably likely to
          adversely affect the registrants ability to record, process, summarize
and           report financial information; and
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b) | Any
fraud, whether or not material, that           involves management or other employees who
have a significant role in the           registrants internal control over
financial reporting.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Date: April 16, 2007

| |  | By: /s/ Tracy A. Madsen
Tracy A. MadsenPrincipal Financial Officer
| |  | --------------------------------------------------------------------------------

Exhibit 32.1 Section 906
Certification

# CERTIFICATION PURSUANT
TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION
906 OF THE SARBANES-OXLEY ACT OF 2002

| | In
connection with the Annual Report of Golden Eagle International, Inc. (the Company)
on Form 10-K for the period ended December 31, 2006 as filed with the Securities and
Exchange Commission on the date hereof (the Report), I, Terry C. Turner,
Principal Executive Officer, certify, pursuant to 18 U.S.C. § 1350, as adopted
pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (1)              The
Report fully complies with the requirements of section 13(a) or 15(d) of the Securities
Exchange Act of 1934; and
| | --------------------------------------------------------------------------------------------------------------------------------------

| | (2)              The
information contained in the Report fairly presents, in all material respects, the
financial condition and result of operations of the Company.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------

Date: April 16, 2007

| |  | By: /s/ Terry C. Turner
Terry C. TurnerPrincipal Executive Officer
| |  | --------------------------------------------------------------------------------

65

EXHIBIT 32.2 Section 906
Certification

# CERTIFICATION PURSUANT
TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION
906 OF THE SARBANES-OXLEY ACT OF 2002

| | In
connection with the Annual Report of Golden Eagle International, Inc. (the Company)
on Form 10-K for the period ended December 31, 2006 as filed with the Securities and
Exchange Commission on the date hereof (the Report), I, Tracy A. Madsen,
Principal Financial Officer, certify, pursuant to 18 U.S.C. § 1350, as adopted
pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (1)              The
Report fully complies with the requirements of section 13(a) or 15(d) of the Securities
Exchange Act of 1934; and
| | --------------------------------------------------------------------------------------------------------------------------------------

| | (2)              The
information contained in the Report fairly presents, in all material respects, the
financial condition and result of operations of the Company.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------

Date: April 16, 2007

| |  | By: /s/ Tracy A. Madsen
Tracy A. MadsenPrincipal Financial Officer
| |  | --------------------------------------------------------------------------------

66

REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors
and Stockholders of Golden Eagle International, Inc.

We have audited the accompanying
consolidated balance sheet of Golden Eagle International, Inc. and subsdiaries as of
December 31, 2006 and 2005 and the related consolidated statements of operations,
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 consolidated financial statements based on our audit. We
did not audit the financial statements of Golden Eagle Bolivia Mining, S.A., Golden Eagle
International, Inc. (Bolivia) or Golden Eagle International (unincorporated) 93%, 100% and
100% owned subsidiaries, respectively, which statements reflect 30% and 24% of total consolidated
assets as of December 31, 2006 and 2005 respectively. Those financial statements were audited by other auditors
whose report has been furnished to us, and our opinion, insofar as it relates to the
amounts included for Golden Eagle Bolivia Mining, S.A., Golden Eagle International, Inc.
(Bolivia) and Golden Eagle International (unincorporated) as of December 31, 2006 and is
based solely on the report of the other auditors.

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

In our opinion, the consolidated
financial statements referred to above present fairly, in all material respects, the
consolidated financial position of Golden Eagle International, Inc. and subsdiaries as of
December 31, 2006 and 2005 and the results of its operations and cash flows for the year then ended
in conformity with U.S. generally accepted accounting principles.

The accompanying consolidated
financial statements have been prepared assuming that the Company will continue as a going
concern. As discussed in Note A, the Company has negative working capital and has incurred
substantial losses since its inception. The Company currently has no mineral production
and requires significant additional financing to satisfy its outstanding obligations and
resume and expand mining production. In addition, the Companys ability to conduct
operations remains subject to other risks, including operating in isolated regions of
Bolivia and the concentration of operations in a single undeveloped area. Unless the
Company successfully obtains suitable significant additional financing and can resume and
expand its production, there is substantial doubt about the Companys ability to
continue as a going concern. Managements plans in those matters are also described
in Note A. The consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.

Chisholm, Bierwolf &
Nilson, LLC Bountiful,UT  March 9, 2007

F-1

# REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors
and ShareholdersGolden Eagle Bolivia Mining S.A. Golden Eagle International, Inc.
Bolivia Golden Eagle International, Inc.

Salt Lake City, Utah

We have audited the accompanying
consolidated balance sheets of Golden Eagle Bolivia Mining S.A., Golden Eagle
International, Inc. Bolivia and Golden Eagle International as of December 31, 2006 and
2005 and the related consolidated statements of operations, cash flows and changes in
stockholders equity (deficit) for the years ended December 31, 2006 and 2005.
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 Public Company Accounting Oversight Board (United States). 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 accompanying
consolidated financial statements referred to above present fairly, in all material
respects, the financial position of Golden Eagle Bolivia Mining S.A., Golden Eagle
International, Inc. Bolivia and Golden Eagle International, Inc. at December 31, 2006 and 2005
and the results of its operations, changes in stockholders equity (deficit) and its
cash flows for the years ended December 31, 2006 and 2005, in conformity with
accounting principles generally accepted in the United States of America.

POZO & ASOCIADOS
C.P.A. S.R.L. NIT. 121611023 Lic.
          Aud. Enrique Pozo Balderrama NIT. 271218014 MAT. PROF. No CAUB  0040

La Paz, Bolivia January 31,
2007

F-2

|                                                                         |  | 
|------------------------------------------------------------------------ |  | 
|                                                                        
|Golden Eagle International, Inc.                                         |  | 
|Condensed Consolidated Balance Sheets                                    |  | 
|As of December 31, 2006 and 2005                                         |  | 
|                                                                        
|                                                                         |  | 
|                                                                        
|ASSETS                                                                   |  | 
|CURRENT ASSETS                                                           |  | 
|Cash & cash equivalents                                                  |  | 
|Prepaid expenses                                                         |  | 
|                                                                        
|Total current assets                                                     |  | 
|                                                                        
|PROPERTY AND EQUIPMENT                                                   |  | 
|Mining equipment and property                                            |  | 
|Plant and mill - idle                                                    |  | 
|Mine development costs                                                   |  | 
|Mineral properties                                                       |  | 
|Office equipment                                                         |  | 
|Vehicles and aircraft                                                    |  | 
|                                                                        
|                                                                         |  | 
|Less accumulated depreciation and impairment                             |  | 
|                                                                        
|Total property and equipment                                             |  | 
|                                                                        
|Total Assets                                                             |  | 
|                                                                        
|LIABILITIES AND STOCKHOLDERS' EQUITY                                     |  | 
|                                                                         |  | 
|                                                                         |  | 
|                                                                        
|CURRENT LIABILITIES                                                      |  | 
|Accounts payable                                                         |  | 
|Accrued expenses                                                         |  | 
|Deferred wages                                                           |  | 
|Current portion of contract payable                                      |  | 
|Other notes payable                                                      |  | 
|Related party payable                                                    |  | 
|Convertible debenture                                                    |  | 
|Accrued interest payable                                                 |  | 
|                                                                        
|Total current liabilities                                                |  | 
|                                                                        
|Convertible debenture                                                    |  | 
|                                                                        
|Total long-term liabilities                                              |  | 
|                                                                        
|Derivative liability-preferred stock                                     |  | 
|Commitments and contingencies                                            |  | 
|                                                                        
|Total Liabilities                                                        |  | 
|                                                                        
|STOCKHOLDERS' EQUITY                                                     |  | 
|Preferred stock, par value $.01 per share; 10,000,000 shares authorized  |  | 
|1,988,598 and none issued and outstanding respectively                   |  | 
|Common stock, par value $.0001 per share; 800,000,000 authorized shares; |  | 
|789,999,990 and 744,687,518 issued and                                   |  | 
|outstanding shares, respectively                                         |  | 
|Additional paid-in capital                                               |  | 
|Accumulated (deficit)                                                    |  | 
|                                                                        
|Total stockholders' equity                                               |  | 
|                                                                        
|                                                                         |  | 
|                                                                        

The footnotes are an integral part
of these financial statements F-3

---

|                                                |  |  |  
|----------------------------------------------- |  |  | -
|                                               
|Golden Eagle International, Inc.                |  |  |  
|Condensed Consolidated Statements of Operations |  | 
|For the Years Ended December 31, 2006 and 2005  |  | 
|                                               
|                                                |  |  |  
|                                               
|REVENUES                                        |  |  | $
|                                                |  | 
|OPERATING EXPENSES                              |  | 
|Exploration and development                     |  |  |  
|General and administration                      |  |  |  
|Depreciation and depletion                      |  |  |  
|                                               
|Total operating expenses                        |  |  |  
|                                               
|OPERATING (LOSS)                                |  |  |  
|                                               
|OTHER INCOME (EXPENSE)                          |  | 
|Interest expense                                |  |  |  
|Loss on sale of fixed assets                    |  |  |  
|Asset impairment                                |  |  |  
|Financing costs preferred stock                 |  |  |  
|Other income                                    |  |  |  
|                                               
|Total other income (expense)                    |  |  |  
|                                               
|Loss before income taxes                        |  |  |  
|Income Taxes                                    |  |  |  
|                                                |  |  |  
|NET (LOSS)                                      |  |  | $
|                                               
|Basic (loss) per share                          |  |  | $
|Diluted (loss) per share                        |  |  | $
|                                               
|Weighted average shares outstanding - basic     |  |  |  
|Weighted average shares outstanding - diluted   |  |  |  
|                                               

The footnotes are an integral part
of these financial statements F-4

---

|                                                          |  |  |  
|--------------------------------------------------------- |  |  | -
|Golden Eagle International, Inc.                          |  |  |  
|Condensed Consolidated Statements of Cash Flows           |  | 
|For the Years Ended December 31, 2006 and 2005            |  | 
|                                                         
|                                                          |  |  |  
|                                                         
|CASH FLOWS FROM OPERATING ACTIVITIES                      |  | 
|Net (loss)                                                |  |  | $
|Adjustments to reconcile net (loss)                       |  | 
|to net cash (used) by operating activities:               |  | 
|Stock issued for services                                 |  |  |  
|Stock issued for exploration and development              |  |  |  
|Services payable in stock                                 |  |  |  
|Depreciation                                              |  |  |  
|Loss on sale of assets                                    |  |  |  
|Asset Impairment                                          |  |  |  
|Assets written off                                        |  |  |  
|Stock issued for interest                                 |  |  |  
|Preferred stock issued for interest                       |  |  |  
|Financing costs - preferred stock                         |  |  |  
|Changes in operating assets and liabilities               |  |  |  
|Decrease (increase) in prepaid expense and other costs    |  |  |  
|Increase (decrease) in accrued expenses                   |  |  |  
|Increase (decrease) in accounts payable and accrued wages |  |  |  
|Increase (decrease) in accrued interest                   |  |  |  
|                                                         
|Net cash flows (used by) operating activities             |  |  |  
|                                                         
|CASH FLOWS FROM INVESTING ACTIVITIES                      |  | 
|Investment in property and equipment                      |  |  |  
|Proceeds from sales of fixed assets                       |  |  |  
|                                                         
|CASH FLOWS FROM FINANCING ACTIVITIES                      |  | 
|Borrowings from related parties                           |  |  |  
|Repayments to related parties                             |  |  |  
|Proceeds from other notes payable                         |  |  |  
|Repayments of other notes payable                         |  |  |  
|Payment of contract payable                               |  |  |  
|Proceeds from convertible debentures                      |  |  |  
|Common stock sold                                         |  |  |  
|                                                         
|Net cash flows provided by financing activities           |  |  |  
|                                                         
|NET (DECREASE) IN CASH                                    |  |  |  
|CASH - BEGINNING OF PERIOD                                |  |  |  
|                                                         
|CASH - END OF PERIOD                                      |  |  | $
|                                                         
|SUPPLEMENTAL CASH FLOW INFORMATION                        |  |  |  
|Cash paid for                                             |  |  |  
|Interest                                                  |  |  |  
|Taxes                                                     |  |  |  
|                                                         

The footnotes are an integral part
of these financial statements F-5

---

|Golden Eagle International, Inc.Consolidated Statement of Changes in Stockholders' Equity 
For the Period January 1, 2005 through December 31, 2006
|---------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                   
|                                                                                                                                                   
|                                                                                                                                                   
|Balance at January 1, 2005                                                                                                                         
|                                                                                                                                                   
|Issued for cash ($.0075 to $.025 per share)                                                                                                        
|Issued for services ($.013 to $.046 per share)                                                                                                     
|Issued for exploration and development ($.0187 to $.05 per share)                                                                                  
|Issued for financing fee ($.012 to $.06 per share)                                                                                                 
|Issued for acquisition of gold bar and mill ($.06 to $.12 per share)                                                                               
|Issued for contract payablee ($.164 per share)                                                                                                     
|Issued for settlement of lawsuit($.041 per share)                                                                                                  
|Reclassification of value of common stock issued for mill                                                                                          
|Net (loss)                                                                                                                                         
|                                                                                                                                                   
|Balance at December 31, 2005                                                                                                                       
|                                                                                                                                                   
|Issued for cash ($.0075 to $.013 per share)                                                                                                        
|Issued for services ($.012 to $.0145 per share)                                                                                                    
|Issued for exploration and development ($.01767 to $.03433 per share)                                                                              
|Preferred stock issued in exchange for debt                                                                                                        
|Preferred stock issued in exchange for interest                                                                                                    
|Net (loss)                                                                                                                                         
|                                                                                                                                                   
|Balance at December 31, 2006                                                                                                                       
|                                                                                                                                                   

The footnotes are an integral part
of these financial statements F-6

---

# Golden Eagle
International, Inc.

# Notes to Consolidated
Financial Statements

---

# Note A 
Organization and Business

| | Organization
and Nature of BusinessGolden
Eagle International, Inc. (we, or Golden Eagle) was incorporated
in Colorado on July 21, 1988. Our mining and exploration activities have been in two areas
in the Republic of Bolivia. The first area consists of the combined Cangalli and Tipuani
Valley gold properties covering 12,000 acres in western Bolivia and contains our recent
Cangalli gold mining operations (October 2002 to June 2004). The second area consists of
our aggregate Precambrian properties covering 136,500 acres in eastern Bolivia and
contains our Buen Futuro A Zone gold and copper project, as well as our B and C Zone gold
projects.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Starting
in the fourth quarter 2002, we began mining gold bearing ore and selling gold from our
Cangalli property. Prior to fourth quarter 2003, we were a mining enterprise in the
exploration stage as set forth in Statement of Financial Accounting Standards,
SFAS No. 7, Accounting and Reporting by Development Stage
Enterprises and Industry Guide 7 of the Securities and Exchange
Commissions Guides for the Preparation of Registration Statements and with the
Society for Mining, Metallurgy and Explorations Guide for Reporting
Exploration Information, Mineral Resources, and Mineral Reserves dated March 1,
1999.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
June 2004, we discontinued the gold mining operations at our Cangalli property because of
a dispute between the United Cangalli Gold Mining Cooperative, Ltd. (UCL), which sold us
the Cangalli property, and FENCOMIN, the Bolivian governmental regulator of cooperatives
and other Bolivian governmental regulators. The dispute between UCL and the Bolivian
government regulators involves a claim by the government that UCL is in arrears on past
contributions to the National Mining Pension Fund and that UCL had failed to observe
certain legal formalities regarding its formation and ongoing operation. We, and our
Bolivian counsel, do not believe the dispute between UCL and the Bolivian government
involves Golden Eagle. However, as a legal safeguard against a possible claim or
intervention in our mining operation, we halted our mining activity. We currently do not
have an expectation for the recommencement of mining activities at our Cangalli gold mine
and cannot assure that those activities will ever recommence.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Our
current priorities are to develop our Precambrian properties in eastern Bolivia. We are
currently operating a pilot gold plant on our C Zone property for the purposes of
confirming our exploration efforts to date and determining the correct metallurgy in the
zone. We hope to upgrade the C Zone pilot plant to a production plant and begin producing
gold for sale during 2007. The construction of a production plant on the C Zone is
dependant upon raising capital for construction, which we cannot guarantee at this time.
We also continue to develop our Buen Futuro A Zone gold and copper prospect, which is also
located in the middle of our Precambrian properties. We are currently working with an
engineering company to determine what additional information or exploration may be
required to potentially upgrade our Buen Futuro A Zone feasibility study to the status of
a bankable feasibility study which we hope will enable us to raise sufficient financing to
construct a gold and copper mine and production facility on site and to begin full scale
operations. We are unable to offer any assurances that we will be able to complete a
bankable feasibility study or raise the necessary financing to construct a mine and plant
at Buen Futuro.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Organization
of Subsidiaries and Bolivian Mining ActivitiesIn
January 1996, we organized two Bolivian corporations, Golden Eagle Bolivia Mining, S.A.
(GEBM) and Eagle Mining of Bolivia, Ltd. (EMB), to acquire mining
rights to 5,000 acres from United Cangalli Gold Mining Cooperative, Ltd.
(UCL). We own a majority interest in those companies. In 2001, Golden Eagle
formed a wholly owned Bolivian corporation, Golden Eagle International, Inc. Bolivia
(GEII Bolivia) to conduct all continuing operations in Bolivia. In 2002, we
transferred substantially all agreements, obligations, assets and mining rights in Bolivia
to GEII Bolivia. GEBM and EMB are currently inactive.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
accompanying financial statements have been presented assuming we will continue as a going
concern, which contemplates the realization of assets and the satisfaction of liabilities
in the normal course of business. However, we had negative working capital of $782,095 as
of December 31, 2006 and we have incurred substantial losses of $48,379,340 since our
inception. In addition, we discontinued operations at our Cangalli gold mine in 2004. We
can provide no detailed time period as to if or when we may recommence operations at
Cangalli. As a result we have fully impaired all acquisition costs and capitalized
development costs of our Cangalli prospect. We are also developing our Precambrian
prospects, which will require significant additional financing or equity funding.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-7

| | We
estimate that we will need to raise approximately $10 million to develop our Buen Futuro A
Zone project prior to production under our existing business plan. As a result, there is
substantial doubt about our ability to continue as a going concern. The financial
statements do not include any adjustments to reflect the possible future effect on the
recoverability and classification of assets or the amounts and classification of
liabilities that may result from the outcome of this uncertainty.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | We
plan, but cannot assure that we will be able, to obtain additional funds, including
private placements of preferred stock, short-term loans, suitable joint venture
relationships and long-term debt financing from international development agencies or
investors for our Buen Futuro A Zone project.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# Note B  Summary of
Significant Accounting Policies

| |  | Principles
of ConsolidationThefinancial statements include the accounts of Golden Eagle International, Inc. and its
subsidiaries Golden Eagle Bolivia Mining, S.A. (inactive), Eagle Mining of Bolivia, Ltd.
(inactive), Golden Eagle International, an unincorporated Bolivian entity, and Golden
Eagle International, Inc. (Bolivia). All inter-company transactions and balances have been
eliminated. Minority interests are not presented since they are not obligated to fund
operating losses.
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Use
of EstimatesPreparationof 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 amounts reported in the financial statements and accompanying notes. Significant areas
requiring the use of management estimates include the determination of mineral ore
quantities and the depletion expense calculation, useful lives of property and equipment
for depreciation, impairment valuations and calculation of any deferred taxes. Actual
results may differ from those estimates, and such differences may be material to the
financial statements.
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | ReclassificationsCertain
amounts in 2005 have been reclassified to conform to the 2006 presentation. These
reclassifications were not material to the financial statements.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Foreign
CurrencyThe
functional currency for our foreign subsidiaries is U.S. dollars. The financial
transactions, records and statements of these foreign subsidiaries are all measured in
U.S. dollars using the effective daily exchange rate. As a result, we have no material
currency translation gains or losses. Where the local currency is used to record
transactions, any material currency translation gains or losses would be included as an
element of comprehensive income in the statement of operations and in the equity section
of the balance sheet.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Concentration
of Credit RiskOur
cash equivalents and prepaid expenses (and trade receivables when recorded) are exposed to
concentrations of credit risk. We manage and control risk by maintaining cash with a major
financial institution. The amount on deposit may occasionally exceed the $100,000
federally insured limit. However, management believes that the financial institution is
financially sound and the risk of loss is low. Our prepaid expenses consist of value added
taxes refundable and amounts held by third parties pending settlement for purchase of
goods or services. We believe that the risk of realization is low. Current risk of any
trade receivables from sale of minerals is minimized by the short periods for which any
such receivables are outstanding. Of our total assets net of depreciation and impairment,
$1,493,432 or 27% are located in Bolivia with the $4,007,969 or 73% located in the United
States.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-8

| | Concentrations
and Economic Vulnerability Concentrations
and economic vulnerability include reliance on two areas containing our mining prospects
in isolated regions of a foreign country, limited financial capacity of related parties
and/or others to continue funding operations and inability to rely on the future stability
of the local, regional and national governments in Bolivia. If we are successful in
achieving sustained, profitable commercial levels of production in Bolivia, we will need
significant quantities of mining equipment and supplies that are presently in short supply
or which may be locally unavailable. Weather may also impact mining operations and
transportation of heavy mining equipment in many regions of Bolivia. In addition, we sell
substantially all of our gold to one buyer; however, gold is marketable throughout the
world.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Fair
Value of Financial InstrumentsDue
to their short-term nature, the carrying value of our current financial assets and
liabilities approximates their fair values. The fair value of our borrowings, if
recalculated based on current interest rates, would not significantly differ from the
recorded amounts.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Cash and Cash
EquivalentsFor
the statement of cash flows, any liquid investments with a maturity of three months or
less at the time of acquisition are considered to be cash equivalents.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | InventoryInventories,
if any, consist of in-process ore and gold inventories.
| | -----------------------------------------------------------------------------

| | In-process
inventories represent gold ore that is currently in the process of being converted to a
saleable product. The conversion process is mill in-circuit, which converts the gold ore
into gold concentrates and doré. In-process inventories are valued at the lower of
average production cost or net realizable value. As of December 31, 2006 and 2005, there
was no in-process inventory.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Gold
inventories represent processed gold concentrates, doré and ingots. Gold
inventories that are received as in-kind payments of royalties are valued at fair value on
the date the gold is transferred to us. Gold inventory that results from our mining and
processing activities is valued at the lower of average production cost or net realizable
value. At December 31, 2006 and 2005, we held no gold in inventory.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Property, Equipment
and Mineral DevelopmentProperty
and equipment are recorded at cost. Maintenance and repair costs are charged to expense as
incurred, and renewals and improvements that extend the useful life of assets are
capitalized. Depreciation on property and equipment is computed using the straight-line
method over the assets estimated useful lives as follows:
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                 |           
|---------------- | ----------
|Mining equipment | 7-8 years 
|Vehicles         | 5 years   
|Office equipment | 4-10 years

| | Depreciation
expense totaled $54,032 and $73,542 for the years ended December 31, 2006 and 2005,
respectively.
| | --------------------------------------------------------------------------------------------------------------

| | Costs
associated with the acquisition and development of mining prospects are capitalized on a
property-by-property basis. Mineral exploration costs are expensed as incurred. Mine
infrastructure development costs incurred prior to establishing proven and probably
reserves are expensed. When it otherwise becomes probable that infrastructure costs will
not be recoverable, they are impaired. When it has been determined that a mineral property
can be economically developed, the costs incurred to develop such property, including
costs to further delineate the ore body and remove overburden to initially expose the ore
body, are capitalized as incurred. These costs are amortized using the units-of-production
(UOP) method over the estimated life of the ore body based on estimated
recoverable ounces of proven and probable reserves.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-9

| | To
the extent that any development costs benefit an entire mineralized property, they are
amortized over the estimated life of the property. The specific capitalized cost bases
subject to depletion are calculated on a formula based on the number of tonnes of ore that
are expected to be mined divided by the total tonnes in proven and probable reserves in
the property. Depletion for the years 2006 and 2005 was $0, each year.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Mineral
interests and propertyMineral
interests include the costs of acquired mineral rights and royalty interests in
production, development and exploration stage properties.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Production
stage mineral interests represent interests in operating properties that contain proven
and probable reserves. Development stage mineral interests represent interests in
properties under development that contain proven and probable reserves. Exploration stage
mineral interests represent interests in properties that are believed to potentially
contain mineralized material.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Our
royalty interest consists of a 10% gross royalty on gold production from a single shaft
mine operation, which was leased back to UCL with the purchase of the Cangalli properties.
As a result of issues that have arisen between the UCL and Bolivian governmental
regulators, the UCL is currently enjoined from mining the shaft. We have not allocated any
cost to our current royalty interest.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Mineral
interests related to mining properties in the production stage are amortized over the life
of the related property using the UOP method in order to match the amortization with the
expected underlying future cash flows. Development stage mineral interests are not
amortized until such time as the underlying property is converted to the production stage.
Exploration stage mineral interests associated with adjacent production stage property are
amortized on a straight-line basis over the period that we expect to convert, develop or
further explore the underlying properties.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Long-Lived Assets We
follow Statement of Financial Standard (SFAS) No. 144, Accounting for
the Impairment and Disposal of Long-Lived Assets, which requires that long-lived
assets to be held and used be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be recoverable. An
impairment loss would be recognized when the estimated future cash flows are less than the
carrying amount of the asset and would be calculated based on discounted cash flows. As of
December 31, 2006 we fully impaired our property acquisition costs of our Cangalli
property as well as the capitalized development cost as a result of our discontinuation of
mining operations. See note C for a full description of our impairment.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Revenue Recognition
and Production CostsRevenue
is recognized when the price is determinable, upon delivery and transfer of title of gold
to the customer and when the collectibility of sales proceeds is assured. Production costs
of gold sold include labor and related direct and indirect costs of mine and plant
operations. Production costs are charged to operations as incurred. In September 2002, we
began mining operations at our Cangalli gold mine. In June 2004, operations were suspended
at the Cangalli gold mine due to the previously discussed issues that had arisen between
the UCL and Bolivian governmental regulators. As of December 31, 2006 and 2005, no
revenues or production costs were recorded.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Reclamation
and Remediation Costs (Asset Retirement Obligations) We have
adopted SFAS No. 143, Accounting for Asset Retirement Obligations. SFAS No.
143 addresses financial accounting and reporting for obligations associated with the
retirement of tangible long-lived assets and the associated asset retirement costs. In our
current Bolivian operations, we do not have a legal or contractual obligation for
reclamation or remediation of our mines after mining has ceased. As a result, the adoption
of SFAS No. 143 does not currently have a material impact on our financial position,
results of operations or cash flows. However, once development of our Buen Futuro property
begins, we expect to incur asset retirement obligations based on the metal extraction
methods planned.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-10

| | Stock Based
CompensationAs
of January 1, 2006, we elected to measure and record compensation cost relative to stock
option costs in accordance with SFAS 123 (Revised 2004), Accounting For Stock
Based Compensation, (SFAS 123(R)) which requires the company to use the
Black-Scholes pricing model to estimate the fair value of the options at the grant date.
No options were granted or outstanding as of December 31, 2006 and 2005.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Beneficial
Conversion Feature of DebenturesIn
accordance with Emerging Issues Task Force No. 98-5, Accounting for Convertible
Securities with Beneficial Conversion Features or Contingently Adjustable
Conversion Ratios, and No. 00-27, Application of Issue No. 98-5 to Certain
Convertible Instruments, we recognize the advantageous value of conversion rights
attached to convertible debt. Such rights give the debt holder the ability to convert his
debt into common stock at a price per share that is less than the trading price to the
public on the day the loan is made to us. The beneficial value is calculated as the
intrinsic value (the market price of the stock at the commitment date in excess of the
conversion rate) of the beneficial conversion feature of debentures and related accruing
interest is recorded as a discount to the related debt and an addition to additional paid
in capital. The discount is amortized over the remaining outstanding period of related
debt using the interest method. The conversion price of the outstanding debenture was in
excess of the market price on the date the debenture was entered into and as such, we
believe no beneficial conversion feature applies to this debenture.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | (Loss)
Per ShareThecomputation of basic earning (loss) per common share is based on the weighted average
number of shares outstanding during each year.
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
computation of diluted earnings per common share is based on the weighted average number
of shares outstanding during the year plus the common stock equivalents, which would arise
from the conversion of preferred stock to common stock and from the exercise of stock
options and warrants outstanding using the treasury stock method and the average market
price per share during the year. No options or warrants to purchase common shares were
outstanding at December 31, 2006 and 2005.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
following table is a reconciliation of basic and diluted weighted average shares for the
years ended December 31, 2006 and 2005:
| | ------------------------------------------------------------------------------------------------------------------------------------

|                                              |                |               
|--------------------------------------------- | -------------- | --------------
|For the years ended December 31,              | 2006           | 2005          
|                                             
|Net Loss                                      | ($  4,275,892) | ($  2,038,534)
|Weighted average shares outstanding - basic   | 774,969,305    | 651,870,057   
|Weighted average shares outstanding - diluted | 789,055,466    | 651,870,057   
|                                             
|Basic (loss) per share                        | (.01)          | (.00)         
|Diluted (loss) per share                      | ($        .01) | ($        .00)
|                                              |                |               

| | The
following table is a reconciliation of basic and diluted weighted average shares for the
years ended December 31, 2006 and 2005:
| | ------------------------------------------------------------------------------------------------------------------------------------

|                                                            |             |            
|----------------------------------------------------------- | ----------- | -----------
|For the years ended December 31,                            | 2006        | 2005       
|                                                           
|Basic-weighted average shares outstanding                   | 774,969,305 | 651,870,057
|Common stock equivalent-convertible preferred stock         | 497,149,555 | -          
|Common stock equivalent-convertible debenture               | 10,000,000  | -          
|Total common stock equivalent-convertible shares            | 597,149,155 | -          
|Weighted average common stock equivalent-convertible shares | 14,086,161  | -          
|                                                           
|Diluted - weighted average shares outstanding               | 789,055,466 | 651,870,057
|                                                            |             |            

| | Income
TaxesWe
use the liability method of accounting for income taxes under which deferred tax assets
and liabilities are recognized for the future tax consequences of temporary differences
between the accounting basis and the tax basis of our assets and liabilities. The deferred
tax assets and liabilities are computed using enacted tax rates in effect for the year in
which the temporary differences are expected to reverse.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-11

| | Statement
of Cash Flows Information and Supplemental Non-Cash Financing Activities During
2006 and 2005 we paid cash for interest of $33,027 and $19,826 respectively. Non-cash
investing and financing transactions during the periods consist of the following:
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                            |          
|--------------------------------------------------------------------------- | ---------
|2006                                                                        |          
|Accrued interest paid with preferred stock-recorded as derivative liability | 282,015  
|Debt paid with preferred stock-recorded as derivative liability             | 1,706,583
|Financing cost of preferred stock-recorded as derivative liability          | 1,988,598
|                                                                            |          
|2005                                                                        |          
|Accrued interest paid with common stock                                     | 5,700    
|Stock issued for Gold Bar mill and plant                                    | 380,000  

| | Effect
of New Accounting PronouncementsIn
February 2006, the FASB issued SFAS No.155, Accounting for Certain Hybrid Financial
Instruments an Amendment (FIN 48) of FASB Statements No. 133 and 140. This statement
aments FASB No. 133 Accounting for Derivative instruments and Hedging Activities and No.
140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities. This statement resolves issues addressed in Statement 133 Implementation
Issued No. D1, Application of Statement 133 to Beneficial Interests in Securitized
Financial Assets. The adoption of SFAS No. 155 did not have an impact on our
consolidated financial statements.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
March 2006, the FASB issued SFAS No. 156. Accounting for Servicing of Financial Assets and
Amendment of FASB Statement 140. This statement amends FASB Statement No. 140, Accounting
for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, with
respect to the accounting for separately recognized servicing assets and servicing
liabilities. The adoption of SFAS No. 156 did not have an impact on our consolidated
financial statements.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
September 2006, the FASB issued SFAS No. 157, Fair Value Measurements. This statement
defines fair value, establishes a framework for measuring fair value in generally accepted
accounting principles (GAAP), and expands disclosures about fair measurements. This
statement is effective for financial statements issued for fiscal years beginning after
November 15, 2007, and interim periods within those years. The adoption of SFAS 157 did
not have an impact on our consolidated financial statements
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
September 2006, the FASB issued SFAS No. 158, Employers Accounting for Defined Benefit
Pension and Other Postretirement Plans and Amendment of FASB Statements No 87, 88, 106 and
132(R). This statement improves financial reporting by requiring an employer to recognize
the over funded or under funded status of a defined benefit postretirement plan (other
than a multi-employer plan) as an asset or liability in its statement of financial
position and to recognize changes in that funded status in the year in which the changes
occur through comprehensive income of a business entity or changes in unrestricted net
assets of a not for profit organization. The adoption of SFAS No. 158 did not have an
impact on our consolidated financial statements.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# Note C  Mineral
Interests and Mining Assets

| | Our
mine development costs and mineral interests are presented on the balance sheet with the
total of related depletion and impairment aggregated for mining and equipment assets. An
analysis of our mining properties follows:
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                |              |             
|--------------------------------------------------------------- | ------------ | ------------
|                                                                | 2006         | 2005        
|Mine development costs                                          | $    529,618 | $    529,618
|Mineral interests                                               | 1,814,501    | 1,827,301   
|                                                                |              |             
|Total mineral interests and development costs                   | 2,344,119    | 2,356,919   
|Less: accumulated impairment and depletion of development costs | (490,423)    | (490,423)   
|Less: accumulated impairment and depletion of mineral interests | (962,047)    | (675,180)   
|                                                                |              |             
|Net mine development costs                                      | $    891,641 | $    970,997
|                                                                |              |             
|Our mining equipment consists of the following:                
|                                                                | 2006         | 2005        
|Machinery and equipment                                         | $    803,421 | $ 1,198,337 
|Replacement materials and parts                                 | 163,146      | 174,770     
|Tools                                                           | 12,136       | 9,914       
|                                                                |              |             
|Total mining equipment                                          | 978,703      | 1,383,021   
|Less: accumulated depreciation                                  | (450,757)    | (535,045)   
|                                                                |              |             
|Net mining equipment                                            | $    527,946 | $    653,697
|                                                                |              |             

F-12

| | During
2006 we booked an impairment in the amount of $286,867 of the remaining property
acquisition costs of our Cangalli mine site as a result of our inability to recommence
operations at the Cangalli mine. This impairment is in addition to the $1,165,603
impairment that we took in 2002 and 2004 as a result of issues that arose among the United
Gold Mining Cooperative, Ltd. that had sold us a 5,000-acre mining concession, and
FENCOMIN, the Bolivian governmental regulator of cooperatives, as well as other Bolivian
regulators. These legal disputes, while having nothing to do with us, created an insecure
atmosphere at our Cangalli gold mine and raised serious questions about whether formal
intervention would occur and substantially hamper operations. While we continue to
maintain our claims and may recommence mining and processing operations at Cangalli at
some point in the future, we can offer no precise date as to when we may be able to or
will begin mining and processing ore at Cangalli. We believe that our best course of
action is to put our efforts and financial resources into developing our Precambrian
properties in eastern Bolivia prior to recommencing operations at Cangalli. As we do not
have a precise time frame for returning to Cangalli, and we cannot guarantee that we will
ever be able to recommence operations at our Cangalli mine, we believed the most
conservative course of action on an accounting basis was to fully impair all acquisition
costs and capitalized development costs of our Cangalli property.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Our
mineral interests consist of the following specific properties:
| | -------------------------------------------------------------------

|                               |             |            
|------------------------------ | ----------- | -----------
|                               | 2006        | 2005       
|Precambrian mineral properties | $   736,500 | $   736,500
|Cangalli mineral properties    | 1,078,001   | 1,084,951  
|                               |             |            
|Total                          | $1,814,501  | $1,821,451 
|                               |             |            

| | On
July 2, 2002, we acquired the Cangalli mining property from UCL, a mining cooperative.
 The purchase price, capitalized as mineral properties, includes the following
components:
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                              |  |         
|------------------------------------------------------------- |  | --------
|Cash                                                          |  | $300,000
|Obligations assumed and payable over approximately four years |  | 175,000 
|                                                              |  |         
|Prior contract payments                                       |  | 70,000  
|Common stock issued                                           |  | 417,047 
|                                                              |  |         
|Total                                                         |  | $962,047
|                                                              |  |         

| | As
part of the purchase agreement we agreed to take on certain debt owed by the cooperative.
As of December 31, 2005 this obligation totaled $77,359. During 2006 we eliminated this
obligation by transferring $161,446 in mining equipment located at Cangalli to the United
Cangalli Gold Mining Cooperative, Ltd. in exchange for elimination of $71,113 in debt we
owed to the cooperative. This equipment had a book value of $122,320 and we booked a loss
on the sale of assets in the amount of $46,320. We were required by the cooperative to pay
off this debt prior to removing any of our equipment from the Cangalli mine site.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
June 2003, we acquired 100% of the Buen Futuro mining property located adjacent to Golden
Eagles other landholdings in the Precambrian Shield. The purchase price was
capitalized as mineral properties and includes the following components:
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                         |         
|------------------------ | --------
|Cash paid                | $250,000
|Contract payable in cash | 40,000  
|Common stock issued      | 175,000 
|                         |         
|Total                    | $425,000
|                         |         

F-13

| | The
Buen Futuro property consists of 2,500 acres. We have met our obligations to pay $250,000
in cash and stock valued at $175,000.. We also were obligated pay an additional $40,000 in
cash plus $10,000 in penalty interest in consideration for amending the original agreement
and extending the terms of payment. As of December 31, 2006 we owed $6,500 in penalty
interest.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
June 2004 we acquired the Gold Bar mill and plant (currently not operating) to be shipped
to Bolivia and used to process gold and copper ore at the Buen Futuro prospect. We
exchanged 30,000,000 shares of common stock for the mill and valued the transaction at
$3.6 million based on the trading price of the stock on the day of closing. In May of 2005
we issued an additional 20,000,000 shares of stock valued at $380,000 in order to amend
the original sales agreement which required us to remove the plant from the site outside
Eureka, Nevada by June 2005. The amended agreement eliminates this requirement. We
estimate that dismantling; shipping and re-erecting the plant at Buen Futuro will cost
approximately $3.5 million. We are currently evaluating the possibility of selling the
plant as to fund operations in Bolivia or recommence tolling operations at Gold Bar to
process ore from other mining companies. We currently do not have estimates for the cost
of a tolling operation.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# Note D  Loans
and Notes Payable

F-14

| | We
have debt obligations outstanding at December 31, 2006 and 2005 as follows:
| | ------------------------------------------------------------------------------

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |         |            
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------- | -----------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |         |            
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |         |            
|On March 13, 1997,  we entered into a $1,000,000  promissory  note with Frost  National Bank located in
Houston,  Texas.  This  promissory  note was  renewed,  modified  and extended on a yearly basis and we
continued to pay interest on this note on an annual basis  through June 29, 2004.  On June 29, 2004, we
executed an  Extension,  Modification  and Renewal of Promissory  note with Frost  National Bank in the
amount of $995,623.66.  This note had an interest rate of prime plus three percent (3%) with an initial
rate of seven percent (7%) per annum and was due on or before  December 28, 2004. On December 28, 2004,
this  note was  assigned  to the  Herbert  M.  Seydler  Jr.  Trust and the Betty  Jane  Seydler  Trusts
(collectively  "the  Seydler  Trust"),  who were  guarantors  of the Frost Bank  note.  The new note of
$995,373  carried a fixed  interest rate of eight and one half percent  (8.5%) per annum and matured on
December  29,  2005.  The terms of this note  required us to make  quarterly  principal  reductions  of
$250,000  prior to maturity,  which we were unable to pay. On December 30, 2005,  we were in default on
this note.  The default  conditions  required a default  interest  rate of eighteen  percent  (18%) per
annum.  On September 11, 2006,  the Seydler  Trust note was acquired by Golden Eagle Mineral  Holdings,
Inc.,  a  non-affiliated  party,  and we then owed Golden  Eagle  Mineral  Holdings,  Inc.  $1,251,090,
$995,373 of which was  principal and $255,466 of which was accrued  interest.  On December 29, 2006, we
agreed to issue  1,251,090  Series B Shares in exchange for the $1,251,089 that we owed to Golden Eagle
Mineral Holdings, Inc. As of December 31, 2006 the balance of this note was $0 | $-      | $995,624   
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |         |            
|Interest bearing payable to a former officer and director of ours, secured by our aircraft located in
Bolivia, 12% interest per annum, due on demand. During 2006 the aircraft was disassembled, shipped to
the United States and reassembled by the note holder. The costs of the transfer as well as other costs
relating to the aircraft were added to the note during 2006 in the amount of $69,135. In October 2006
the aircraft was sold to the note holder for $61,100 and the sales price was deducted from the amount
due.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | 32,002  | 23,967     
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |         |            
|An interest-bearing note payable to Kevin Pfeffer, a former director.  The note bears an interest
rate of 8% per annum and is payable upon demand.  Mr. Pfeffer resigned from the board on December
4, 2006 and on December 19, 2006 demanded full payment of this note no later than January 12,
2007.  As of the date of this report we have not repaid this note and we do not know when we will
repay it.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | 135,000 | 135,000    
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |         |            
|A note payable to Terry Turner our Chairman and Chief Executive Officer at 0% interest Funds loaned to
us during the year totaled $9,100 with repayments of $9,000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | 100     | -          
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |         |            
|A note payable to Harlan (Mac) Delozier our director and Vice President of Bolivian Administration at
0% interest.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | 14,300  | -          
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |         |            
|A note payable to Tracy Madsen our Chief Financial Officer at 0% interest Funds loaned to us during
the year totaled $12,000 with repayments of $9,500.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | 2,500   | -          
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |         |            
|Convertible  debenture to a current shareholder  maturing May 2, 2007 bearing interest at 7% per annum.
Debenture is convertible  into our restricted  common stock at $.025 per share.  At this time we do not
know if the debenture  holder will convert the debenture  into common shares or require  payment of the
principal in cash.  We have blocked sufficient shares of restricted common stock for a conversion.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | 249,000 | 249,000    
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |         |            
|Total Loans and Notes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | 432,902 | 1,403,591  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |         |            
|Less: Current maturities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | 432,902 | (1,154,591)
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |        
|Non-current maturities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | $-      | $249,000   
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |        

| | Deferred salaryAs
of December 31, 2006 we owed the following officers accrued compensation that was deferred
during 2005.
| | -------------------------------------------------------------------------------------------------------------------------

|                              |                           |        
|----------------------------- | ------------------------- | -------
|Officer Deferred Compensation | Position                  | Amount 
|                              |                           |        
|Terry C. Turner               | President & CEO           | $27,514
|Harlan M. (Mac) Delozier      | VP Bolivia Administration | 20,139 
|Tracy A. Madsen               | CFO VP US Administration  | 7,584  
|                              |                           |        
|Total deferred salary         |                           | $55,237
|                              |                           |        

# Note E  Income
Taxes

| | We
have not recorded an income tax provision for 2006 and 2005 due to continued net
operating losses.
| | -----------------------------------------------------------------------------------------------------

F-15

| | The
following is a reconciliation of the provision for income taxes to income before income
taxes computed at the federal statutory rate of 34%:
| | ------------------------------------------------------------------------------------------------------------------------------------------------

|                                                   |                  |              
|-------------------------------------------------- | ---------------- | -------------
|                                                   | 2006             | 2005         
|Income tax (benefit) at the federal statutory rate | $(1,454,000)     | $(693,000)   
|State income taxes, net of federal benefits        | (37,000)         | (27,000)     
|Nondeductible expenses                             | 805,000          | 182,000      
|Non-U.S. taxes                                     | 267,000          | 228,000      
|Effect of net operating loss                       | 419,000          | 310,000      
|                                                   |                  |              
|                                                   |                  |              
|Net                                                | $             -- | $          --
|                                                   |                  |              

| | Deferred
tax assets and liabilities are as follows:
| | ---------------------------------------------------

|                    |                  |                 
|------------------- | ---------------- | ----------------
|Deferred tax asset: | 2006             | 2005            
|Net operating loss  | $ 3,685,940      | $ 3,304,120     
|Valuation allowance | (3,685,940)      | (3,304,120)     
|                    |                  |                 
|Net                 | $             -- | $             --
|                    |                  |                 

| | The
change in the deferred tax asset valuation allowance as of December 31, 2006 and 2005 is
as follows:
| | --------------------------------------------------------------------------------------------------------

|                              |              |             
|----------------------------- | ------------ | ------------
|Valuation allowance:          | 2006         | 2005        
|Beginning valuation allowance | $(3,304,120) | $(3,929,500)
|Change in allowance           | 381,820      | 625,380     
|                              |              |             
|Ending valuation allowance    | $(3,685,940) | $(3,304,120)
|                              |              |             

| | The
valuation allowance has been established due to the uncertainty of future taxable income,
which is necessary to realize the benefits of the net operating loss (NOL)
carry forward. We had NOLs of approximately $10.2 million and $9.7 million at
December 31, 2006 and 2005, respectively, which expire in 2007 through 2027. These
NOLs are subject to annual utilization limitations due to prior ownership changes.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# Note F 
Stockholders Equity

| | Common
StockDuring
2005, 63,755,666 shares of common stock were sold to various individuals in a private
placement at prices ranging from $.0075 to $.025 per share for total proceeds of $698,071.
During 2005, 27,876,287 shares of common stock were granted to various individuals for
services valued at the publicly traded stock prices on the day of grant ranging from $.013
to $.046 for total value of $523,853. During 2005, 17,733,906 shares of common stock were
granted to various individuals and companies for mineral exploration and development
services valued at the publicly traded stock prices on the day of grant ranging from
$.0187 to $.05 for total value of $451,093. During 2005, we issued 350,000 shares of
common stock at a prices ranging from $.012 to 06 per share to an individual in exchange
for accrued interest of $7,400. During, 2005, we issued 20,000,000 shares at a price of
$.019 per share for a total of $380,000 for additional acquisition costs of the Gold Bar
mill and plant located outside of Eureka, Nevada, which we anticipate we will move to our
Buen Futuro claim in Bolivia. During 2005, we issued 609,756 shares at a price of $.164
for a total value of $100,000 as part of the contract payment for acquisition of the Buen
Futuro claim. During 2005 we issued 50,000,000 shares of stock as settlement of a lawsuit
at a price of $.041 per share valued at $2,050,000. This settlement was expensed in 2004
but the shares were not issued until 2005.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | During
2006, 30,004,879 shares of common stock were sold to various individuals in a private
placement at prices ranging from $.0075 to $.013 per share for total proceeds of $287,341.
During 2006, 12,308,063 shares of common stock were granted to various individuals for
services valued at the publicly traded stock prices on the day of grant ranging from $.012
to $.0145 for total value of $242,276. During 2006, 2,999,530 shares of common stock were
granted to various individuals and companies for mineral exploration and development
services valued at the publicly traded stock prices on the day of grant ranging from
$.01767 to $.03433 for total value of $80,750.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-16

| | Stock Compensation PlanOn
November 4, 2005 we filed an S-8 registration statement with the SEC to issue up to 30
million shares at the direction of the Board of Directors for compensation payable to
employees and consultants (not including officers, directors or others deemed to be
insiders) by issuing shares of common stock or options to purchase common stock.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Preferred stockOn
December 29, 2006, our board approved and adopted a resolution establishing the rights,
preferences, privileges and restrictions of, and the number of shares comprising, our
Series B Contingent Convertible Preferred Stock. This series consists of 4,500,000 shares
of Preferred Stock of the Corporation and was designated the Series B Contingent
Convertible Preferred Stock (Series B Stock). The Series B Certificate of
Designation requires us to use our best efforts to amend our Articles of Incorporation to
increase our authorized common shares so that the Series B Holders can convert their
Series B Shares into shares of our common stock. Our agreements with the Series B Holders
also require us to use our best efforts to increase our authorized common stock so that
the Series B Holders can convert their Series B Shares into shares of our common stock at
a ratio of two hundred fifty (250) common shares for every one (1) Series B Share held
should they desire to do so. The certificates representing the Series B Shares, as well as
the shares of common stock issuable upon conversion of the Series B Shares, will be
restricted securities and certificates representing the shares will bear a restrictive
legend. Each Series B Holder is entitled to two hundred fifty (250) votes per Series B
Share for matters presented to a vote of our common stockholders. Additionally, if we
amend our Articles of Incorporation to increase our authorized common stock, each Series B
Share will be convertible into two hundred fifty (250) shares of our common stock.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Since
1997, we have entered into loan agreements (the Loan Agreements) (as described
below) with Dewey L. Williams and The Dewey L. Williams Profit Sharing Plan and Trust;
Lone Star Equity Group, LLC; Mary A. Erickson; the Betty Jane Seydler Trust/Herbert M.
Seydler, Jr. Trust; and Golden Eagle Mineral Holdings, Inc. (collectively referred to as
the Lenders). We used the proceeds from these loans for working capital and
general corporate expenses. Because we were in default or imminent default of our
obligations to the Lenders and were unable to pay the amounts due, it was necessary for us
to re-negotiate our payment obligations. At the time of our negotiations, we had
insufficient common stock authorized to offer shares of our common stock to the Lenders;
as such, they agreed to accept Series B Shares in exchange for an aggregate amount of
$1,988,598, which we owed to them. Each Series B Share was valued at one dollar ($1.00).
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Accordingly,
on December 29, 2006, we entered into four separate Series B Contingent Convertible
Preferred Stock Subscription Agreements (Subscription Agreement or
Subscription Agreements) with the Lenders, which obligate us to issue an
aggregate of 1,988,599 shares of the Series B Shares in exchange for the amounts that we
then owed to the Lenders. The Subscription Agreements terminate the loan agreements and
debt obligations to the now Series B Holders according to the conditions set forth in the
Series B Certificate of Designation.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | We
relied upon Sections 4(2) and 4(6) of the Securities Act of 1933, as amended
(Securities Act) for the offer and sale. We believed that Sections 4(2) and
4(6) were available because the offer and sale did not involve a public offering, there
was no general solicitation or general advertising involved in the offer or sale and the
purchaser was an accredited investor. We placed restrictive legends on the certificates
representing these securities stating that the securities were
not registered under the Securities Act and are subject to restrictions on their
transferability and resale.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Derivative LiabilityAs
there are currently no common shares in which to convert and we can offer no assurances
as to when and if there will be shares in which to convert we have classified these
preferred shares as a derivative liability rather than equity. Additionally, the
preferred shares conversion rate was at a discount on the date the preferred shares were
issued. The market price on December 29, 2006 for our common shares was $.008. If the
Series B preferred shares were converted on that same date they would have had a
conversion value of $.004 per common share. As this resulted in a beneficial conversion
to the market rate for the Series B preferred shares the accounting rules of beneficial
conversion applied. As a result, we expensed the difference between the conversion price
and the market price as a financing expense. The offsetting entry is also carried as a
derivative liability in the amount of $1,988,598. As there is no time limit or period
designated for the preferred shares the entire amount of the beneficial conversion is
taken in the year incurred. The total amount of the derivative liability incurred during
2006 is $3,977,196. If and or when these preferred shares are converted into common stock
the entire amount of the derivative liability of $3,977,196 will be transferred to equity
and will increase the amount of stockholders equity. Additionally if during 2007 or
beyond any of the remaining 4,500,000 series B common shares are sold a similar
derivative liability will be incurred until which time they are converted into common
shares and transferred to equity.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-17

# Note G  Related
Party Transactions

| | From
1997 through July 31, 2002, we made cumulative unsecured net advances to our president. As
of December 31, 2006, the outstanding balance of these advances totaled $336,783. However,
as of December 31, 2006, we also owed our president $336,783 of unpaid salary. Both
amounts have been reduced by offsetting amounts, which the president has recognized as
compensation at $60,000 each year in a cashless bonus and forgave $60,000 in accrued
salary each year. These notes net each other out and are not carried on the balance sheet
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
2003, we purchased the Buen Futuro property from a relative of our consultant and
principal consulting geologist.
| | --------------------------------------------------------------------------------------------------------------------

| | Our
officers and directors made the following loans to the company during 2006;
| | -------------------------------------------------------------------------------

|                      |             |              |                                
|--------------------- | ----------- | ------------ | -------------------------------
|Affiliated Lender     | Loan Amount | (Repayments) | Outstanding Balance at Year End
|                      |             |              |                                
|Terry Turner          | $9,100      | $(9,000)     | $100                           
|Harlan (Mac) Delozier | 14,300      | -            | 14,300                         
|Tracy Madsen          | 12,000      | (9,500)      | 2,500                          
|                      |             |              |                                
|Total                 | $35,400     | $(18,500)    | $16,900                        
|                      |             |              |                                

# Note H 
Commitments and Contingencies

| | Office LeasesOur
executive offices in Salt Lake City, Utah are located 9661 South 700 East, Salt Lake City,
Utah 84070. This suite of offices consists of four executive offices, reception space,
filing areas and copy and faxing facilities. We pay $1,451 per month on a three-year,
renewable lease that expires in July 2008. Our lease, however, does allow us to terminate
at the end of one year for a $2,790 penalty and at the end of year two for a $1,395
penalty.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | We
also lease 150 square meters of office space in Santa Cruz, Bolivia, which we consider our
Bolivian headquarters. This lease, which expires October 31, 2006, is for $500.00 per
month. Additionally we lease a warehouse in Santa Cruz, Bolivia totaling 360 square meters
for $165.00 per month, which expires on July 31, 2007. Prior to 2006 we leased office
space in La Paz, Bolivia as our Bolivian headquarters. During 2006 we closed our last
remaining office space in La Paz and moved all Bolivian administrative activities to Santa
Cruz, Bolivia.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-18

| | Our
leases are summarized as follows:
| | -------------------------------------

|                              |                   |               |                 
|----------------------------- | ----------------- | ------------- | ----------------
|Location                      | Size              | Monthly Rent  | Lease Expiration
|                              |                   |               |                 
|Salt Lake City, UT            | 1,183 square feet | July 31, 2008 | $1,451          
|Santa Cruz, Bolivia           | 150 square meters | June 30, 2007 | 500             
|Warehouse Santa Cruz, Bolivia | 360 square meters | July 31, 2007 | 165             
|                              |                   |               |                 
|                              |                   |               | $2,075          
|                              |                   |               |                 

| |  | The following schedule shows the composition of total remaining commitments for office leases
as of December 31, 2006
| |  | ---------------------------------------------------------------------------------------------------------------------

|                          |       
|------------------------- | ------
|Years ending December 31, |       
|2007                      | $5,310
|2008                      | -     
|2009                      | -     
|2010                      | -     
|2011                      | -     
|                          |       
|Total                     | $5,310
|                          |       

| | Rent
expense for the years ended December 31, 2006 and 2005 was approximately $26,169 and
$21,632 respectively.
| | ---------------------------------------------------------------------------------------------------------------

| | Other
CommitmentsUnder
our agreement with the seller of Buen Futuro, we agreed to maintain an exploration program
to replace mineral reserves as they are depleted through mining for as long as the
potential for feasible mineral reserves continues on the ore deposits found within the
Buen Futuro concession. We also agreed to invest $1 million in exploration of Buen Futuro
by 2006. We have expended approximately $140,000 under the agreement. Also in the
agreement, we committed to commence mineral production on the Buen Futuro concession by
May 23, 2005, and to expend a minimum of $2,000,000 to initiate that production. We
believe the purchase of the Gold Bar mill and plant during 2004 and 2005, which was
recorded in the amount of $3,980,000, satisfies this commitment, if and when we ultimately
commence production at Buen Futuro. On May 20, 2005 we entered into an amended agreement
with the seller whereby we agreed to pay a $1,500 per month production penalty if we were
not in production by November 23, 2005 and a $3,000 per month production penalty if we
were not in production by November 26, 2006.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
order to relocate the Gold Bar mill and plant to Buen Futuro and to develop Buen Futuro to
the point it can begin production, we estimate we will need to raise and spend
approximately $10,000,000. At this point in time we have no immediate plans to return our
Cangalli mine to full production. If and when we are able to recommence operations at
Cangalli, we estimate the costs to be approximately $300,000 to $500,000.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# Note I  Subsequent
Events

| | Subsequent
to December 31, 2006, we entered into the following transactions regarding our Series B
Contingent Convertible Preferred Stock and commitments regarding our common stock:
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
February 5, 2007 on Form 8-K we disclosed the purchase of 300,000 shares of our Contingent
Convertible Series B Preferred shares to seven different accredited investors for
$300,000.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
February 6, 2007, we sold 81,274 Contingent Convertible Series B Preferred shares to Dewey
Williams, at $1.00 per share or an aggregate of $81,274.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
February 6, 2007, we granted 12,103 Contingent Convertible Series B Preferred shares to
nine key employees (eight in Bolivia and one in the U.S.), that were neither officers nor
directors, as a retention bonus at $1.00 per share or an aggregate of $12,103.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
February 6, 2007, we converted a promissory note dated January 3, 2007 for $60,000 into
60,000 Contingent Convertible Series B Preferred shares for the benefit of Lone Star
Equity Group, LLC, at $1.00 per share or an aggregate of $60,000.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-19

| | On
March 27, 2007, we sold 30,000 Contingent Convertible Series B Preferred shares to Steve
Olsen at $1.00 per share or an aggregate of $30,000.
| | ------------------------------------------------------------------------------------------------------------------------------------------------

| | On
March 28, 2007, we sold 25,000 Contingent Convertible Series B Preferred shares to Joseph
Smith at $1.00 per share or an aggregate of $25,000.
| | -------------------------------------------------------------------------------------------------------------------------------------------------

| | On
March 30, 2007, we sold 25,000 Contingent Convertible Series B Preferred shares to Stuart
Rubin at $1.00 per share or an aggregate of $25,000.
| | -------------------------------------------------------------------------------------------------------------------------------------------------

| | In
every case above we relied upon Sections 4(2) and 4(6) of the Securities Act for the
offer and sale. In one case we also relied on Regulation S promulgated under the
Securities Act regarding non-residents of the United States. We believed that Sections
4(2) and 4(6) were available because the offer and sale did not involve a public
offering, there was no general solicitation or general advertising involved in the offer
or sale and the purchaser was an accredited investor. Our reliance on Regulation S was
based on the fact that some of the purchasers were non-residents of the United States. We
placed restrictive legends on the certificates representing these securities stating that
the securities were not registered under the Securities Act and are subject to
restrictions on their transferability and resale and that no common shares, at the time
of sale, were available for conversion.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
April 11, 2007, we entered into two convertible promissory notes with two of our officers
with effective dates of February 6, 2007 on which date we had verbally entered into
commitments with these officers. The notes covered the payment of contractual retention
bonuses payable in our common shares to our Vice President for Bolivian Administration,
Harlan M. (Mac) Delozier; and a contractual retention bonus and award bonus to our Vice
President for U.S. Administration, Tracy A. Madsen. The notes in each case were for
$50,000, have a term of 2 years and were convertible to our common stock at the closing
price for our common stock on February 6, 2007 of $.009, if and when our shareholders
authorize additional shares of common stock. Our Board of Directors elected to use
convertible promissory notes to meet our commitment to these officers for retention
bonuses in common stock because we did not have common stock available and any grant of
our Series B Contingent Convertible Preferred Stock to these officers would have granted
them a favorable treatment and a beneficial conversion interest that would not have been
in accordance with our Code of Conduct and Ethics.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
March 9, 2007 we announced that we had signed an agreement for a $1 million loan for the
expansion of our C Zone pilot plant into a full-scale commercial production plant. We plan
to use the loan proceeds to incrementally expand the plant capacity to five hundred cubic
meters (approximately 1,000 tonnes) per day on our C Zone gold project in eastern Bolivia.
Golden Eagle received an initial deposit of $100,000 in loan proceeds, with the commitment
of the payment of additional sums contingent on the completion by the lender of due
diligence at any time within the 60-day period following the execution of the lending
agreement. In addition, within this due diligence period we must provide the lender with a
Certification Regarding Final Feasibility of our C Zone expansion, which is still pending
before final construction could begin. As of the date of this filing we have received
$64,384 under this commitment.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-20

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