SECURITIES AND
EXCHANGE COMMISSION Washington, D.C. 20549

# FORM 10-K

(Mark One)

[ X] Annual report under Section 13 or 15(d) of the Securities Exchange Act of 1934 for
fiscal year ended

December 31, 2005

[      ]     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 thereto. [ ]

Indicate by checkmark whether the
registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2) Yes ___ No X

Aggregate market value of the voting
stock held by non-affiliates of Golden Eagle International, Inc. as of the last business day of the registrant's most recently completed second fiscal quarter (June 30, 2005): was approximately
$9,849,260.  This estimate is based on the last sale price per share ($.02 on June 30, 2005) and 492,463,020 shares estimated to be held by non-affiliates.  Total free trading shares as of December 31, 2005 was 360,189,804 shares.

At December 31, 2005 there were
744,787,518 shares of common stock outstanding. At March 30, 2006 there were 768,163,8442
shares of common stock outstanding.

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                                            | 6 
|(a)         >General                                           |                                                     | 6 
|(b)          >Industry Segments                                |                                                     | 10
|(c)         >Narrative Description of Business                 |                                                     | 10
|(c)(1)    Principal Products                                   |                                                     | 10
|(c)(2)    Status of Products and Segments                      |                                                     | 11
|(c)(3)    The Sources and Availability of Raw Materials        |                                                     | 11
|(c)(4)    Importance and duration of patents                   |                                                     | 11
|(c)(5)    Seasonality of our business                          |                                                     | 12
|(c)(6)    Our practices relating to working capital            |                                                     | 12
|(c)(7)    Dependence on one or a few major customers           |                                                     | 12
|(c)(8)    Backlog orders                                       |                                                     | 12
|(c)(9)    Portion of business subject to renegotiation         |                                                     | 12
|(c)(10)  Competitive conditions.                               |                                                     | 12
|(c)(11)  Research and development expenditures.                |                                                     | 13
|(c)(12)  Environmental protection legislation                  |                                                     | 13
|(c)(13)  Employees                                             |                                                     | 13
|(d)        Financial Information about Geographic Areas        |                                                     | 13
|(e)        Available information.                              |                                                     | 16
|(f)         Risks.                                             |                                                     | 17
|(f)(1)         Financial Risks.                                |                                                     | 17
|(f)(2)         Operating Development and Mining Related Risks. |                                                     | 19
|(f)(3)         Legal, Market and Regulatory Risks.             |                                                     | 19
|ITEM 2.                                                        | PROPERTIES                                          | 21
|(a)       The Cangalli Properties                              |                                                     | 21
|(a)(1)       Contract for Exploration and Mining               |                                                     | 21
|(a)(2)       Purchase of the Cangalli Properties               |                                                     | 21
|(a)(3)       Production Cangalli Mine                          |                                                     | 21
|(a)(4)       Cangalli Reserves                                 |                                                     | 23
|(b)        The Tipuani Prospects                               |                                                     | 24
|(c)       History of the Gold Mining District of Bolivia       |                                                     | 24
|(d)       The Precambrian Prospect                             |                                                     | 25
|(e)       Buen Futuro                                          |                                                     | 25
|(e)(1)       Buen Futuro Acquisition                           |                                                     | 25
|(e)(2)       Buen Futuro Mining Claim                          |                                                     | 26
|(e)(3)       Buen Futuro Gold and Copper Reserves              |                                                     | 28
|(f)       Gold Bar Mill and Plant                              |                                                     | 28
|(g)        Cobra Claim                                         |                                                     | 29
|(h)        Rio Mojos Concession                                |                                                     | 30
|(i)       Office Leases                                        |                                                     | 30
|                                                               |                                                     |   
|                                                               |                                                     |   
|ITEM 3.                                                        | LEGAL PROCEEDINGS                                   | 31
|                                                               |                                                     |   
|ITEM 4.                                                        | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS | 28

# PART II

|                                                                 |                                                                                       |   
|---------------------------------------------------------------- | ------------------------------------------------------------------------------------- | --
|ITEM 5.                                                          | MARKET FOR
COMMON EQUITY AND RELATED STOCKHOLDER MATTERS                              | 31
|(a)      Market Information                                      |                                                                                       | 31
|(b)      Holders                                                 |                                                                                       | 32
|(c)      Dividends                                               |                                                                                       | 32
|(d)      Securities authorized for issuance                      |                                                                                       | 32
|(e)      Unregistered sells of securities                        |                                                                                       | 32
|(f)      Purchased of equity securities by issuer and affiliates |                                                                                       | 41
|ITEM 6.                                                          | SELECTED FINANCIAL DATA                                                               | 42
|                                                                 |                                                                                       |   
|ITEM 7.                                                          | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 43
|                                                                 |                                                                                       |   
|(a)        Liquidity and Capital Resources                       |                                                                                       | 43
|(a)(1)   Continuing Working Capital Deficit                      |                                                                                       | 43
|(a)(2)   Contract Obligations                                    |                                                                                       | 44
|(a)(3)   Property and Equipment                                  |                                                                                       | 45
|(a)(4)   Cash flow                                               |                                                                                       | 46
|(a)(5)   Capital Commitments                                     |                                                                                       | 47
|(a)(6)   Off Balance Sheet Arrangements                          |                                                                                       | 47
|(b)       Results of Operations                                  |                                                                                       | 47
|(b)(1)   Special Non-Cash Impact Due to Options                  |                                                                                       | 51
|(c)        Plan of Operations                                    |                                                                                       | 51
|(d)        Impact of Inflation and Changing Prices               |                                                                                       | 52
|(e)         Accounting Policies                                  |                                                                                       | 52
|(e)(1)   Critical Accounting Policies                            |                                                                                       | 52
|(e)(2)   Effect of New Accounting Pronouncements                 |                                                                                       | 52
|ITEM 7A.                                                         | QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK                             | 54
|ITEM 8.                                                          | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                           | 55
|ITEM 9.                                                          | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS                                         | 55
|ITEM 9A.                                                         | CONTROLS AND PROCEDURES                                                               | 55
|ITEM 9B.                                                         | OTHER INFORMATION                                                                     | 55

# PART III

|                                                                 |                                                                |   
|---------------------------------------------------------------- | -------------------------------------------------------------- | --
|                                                                 |                                                                |   
|ITEM 10.                                                         | DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY                | 56
|(a)(b)   Identification of Directors and Executive Officers      |                                                                | 56
|(c)       Identification of Significant Employees                |                                                                | 57
|(d)       Family Relationships                                   |                                                                | 57
|(e)       Business Experience                                    |                                                                | 57
|(f)        Involvement In Certain Legal Proceedings              |                                                                | 59
|(g)       Promoters and Control Persons                          |                                                                | 60
|(h)(i)       Audit Committee Financial Expert                    |                                                                | 60
|(j)        Material Changes to Shareholder Nomination Procedures |                                                                | 61
|(k)       Beneficial Reporting Compliance                        |                                                                | 61
|(l)        Code of Ethics                                        |                                                                | 61
|                                                                 |                                                                |   
|ITEM 11.                                                         | EXECUTIVE COMPENSATION                                         | 61
|(a)(b)   Summary Compensation Table                              |                                                                | 61
|(c)        Options/SAR Granted                                   |                                                                | 63
|(d)       Option/SAR Table                                       |                                                                | 63
|(e)        Long Term Incentive Plan-                             |                                                                | 63
|(f)        Defined Benefit or Actuarial Plan Disclosure          |                                                                | 63
|(g)       Compensation of Directors                              |                                                                | 63
|(h)       Employment Contracts                                   |                                                                | 64
|(i)        Report on Repricing of Options/SARs                   |                                                                | 64
|(j)        Compensation Committee                                |                                                                | 64
|(k)       Board Compensation Committee Report                    |                                                                | 64
|(l)        Performance Graph                                     |                                                                | 64
|                                                                 |                                                                |   
|ITEM 12.                                                         | SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT | 65
|(a)(b)   Security Ownership                                      |                                                                | 65
|(c)   Changes in Control                                         |                                                                | 67
|(d)   Securities Equity Compensation Plan                        |                                                                | 67
|                                                                 |                                                                |   
|ITEM 13.                                                         | CERTAIN RELATIONSHIPS AND
 RELATED TRANSACTIONS                | 67
|(a)       Indebtedness                                           |                                                                | 67
|(b)       Loans to the Company from Affiliates                   |                                                                | 68
|ITEM 14.                                                         | PRINCIPAL ACCOUNTANTS FEES AND SERVICES                        | 69
|                                                                 |                                                                |   

# PART IV

|ITEM 15.                                                                                                                         | EXHIBITS, FINANCIAL STATEMENT SCHEDULES
AND REPORTS ON FORM 8-K | 67           
|-------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------- | -------------
|(a)      Financial Statements and Independent Auditors     
      Report                                                         |                                                                 | F-1 thru F-3 
|Consolidated Balance
Sheets as of December 31,           2005 and 2004                                                           |                                                                 | F-4          
|Consolidated Statements
of Operations for the           years ended December 31, 2005, 2004 and 2003                             |                                                                 | F-5          
|Consolidated
Statements of Cash Flows for the           years ended
December 31, 2005 and 2004                                   |                                                                 | F-6          
|Consolidated Statement of Stockholders'
Equity           (Deficit)for the years ended December 31, 2005,           2004 and 2003 |                                                                 | F-7          
|Notes to Consolidated Financial Statements                                                                                       |                                                                 | F-8 thru F-25
|(b)     Exhibits                                                                                                                 |                                                                 | 71           
|Signatures                                                                                                                       |                                                                 | 72           
|                                                                                                                                 |                                                                 |              

---

Forward-Looking Statements

This Annual Report on Form 10-K,
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. (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 limited to certain risk factors of which are described in more detail under
Risk Factors beginning on page 17. 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 the plans, strategies and objectives
of management 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

5

# 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 ("GEII Bolivia") (100%)        | Bolivia (2001)                      | This subsidiary holds all mining rights purchased from the United Cangalli Gold Mining Cooperative on July 2, 2002, and all
concession mining rights granted by the Bolivian government, which are described below in more detail.  This subsidiary is also the owner of all of our assests, having received them from
Golden Eagle Bolivia Mining,S.A. during 2002 in an effort by the company to consolidate all interests, assets and operations into one wholly owned subsidiary.
|Golden Eagle Bolivia Mining, S.A. ("Golden Eagle Bolivia Mining") (93%) | Bolivia (1996)                      | This subsidiary is inactive following the transfer of its rights to Golden Eagle Bolivia Mining during 2002.                                                                                                                                                                                                                                                                                                                                                                         
|Eagle Mining of Bolivia, Ltd. (84%)                                     | Bolivia (1996)                      | This subsidiary has been inactive since 2001.                                                                                                                                                                                                                                                                                                                                                                                                                                        

# BUSINESS OVERVIEW

We are engaged in minerals industry
related operations in Bolivia through our Bolivian based wholly owned subsidiary, Golden
Eagle International, Inc. (Bolivia). Our corporate headquarters are in Salt Lake City,
Utah. 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                        
|                          |               |                              
|Rio Mojos                 | 7,163 acres   | Joint Venture (post 12-31-05)

6

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. Certain of our prospects are in the development and exploration
stages.

For the years ended December 31,
2005, 2004, and 2003, we reported net losses of $2,038,534, $5,877,950, and $6,519,054
respectively. Our financial results over the past three years have been impacted by the
shutdown of our production operations. A comprehensive discussion of our financial results
for the years ended December 31, 2005, 2004, and 2003, can be found in Item 7 under
Managements Discussion and Analysis of Financial Condition and Results of
Operations as well as in our Consolidated Financial Statements and attached Notes .

The following map shows the location
of our prospects and properties.

7

The mining industry in Bolivia uses
weights and measures that are not commonly used in the United States, including grams,
troy ounces, and metric tonnes, and we will use these 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
chart explains the relationship of these measures, and relates them to the weights
commonly used in the United States.

|                                                                                                                          |                                                                                                                                
|------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------
|Commonly Used Weights in Gold Exploration                                                                                 | Conversion  into  Avoirdupois  Weights  Commonly Used in
                                                     the United States
|1 troy ounce = 31.1035 grams 
32.15 troy ounces = 1 kilogram   
32,150  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          

# STRATEGY

Our current strategy is to further
develop the potential of our Buen Futuro gold and copper project in eastern Bolivia during
2006 by carrying out a program of in-fill drilling, performing additional metallurgical
studies, securing final environmental permitting, and improving and finalizing our
feasibility work performed there to date. We also intend to finish our exploration and
feasibility work on the gold deposits 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, by September of 2006. Once that feasibility work is completed, and if it
is positive, we intend to implement the recommended mine plan, to construct the
recommended recovery circuit and enter into operations by year-end 2006. In addition, we
intend to complete the necessary exploration and feasibility work on our Rio Mojos gold
project in western Bolivia by April 2007 and determine our best course of action there.
Moreover, we intend to implement the results of our feasibility work by carrying out a
well defined mine plan and constructing the most appropriate milling and mineral recovery
facilities on these two projects. Finally, we intend to continue our efforts to resolve
those issues impeding the development of our Cangalli mine. All of the foregoing, and
related plans stated below, are contingent upon receiving an estimated $11.5 million of
financing detailed as follows:

To accomplish our strategy we intend
to:

|o | Obtain
estimated financing of $1.5 million for the costs pertaining to our in-fill drilling,
metallurgical studies and final          feasibility work for our Buen Futuro (A Zone), B
& C Zone and Rio Mojos projects.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|o | Carry
out an in-fill drilling program using reverse circulation and auger drilling that would
be under the supervision of          Dr. Michael H. Biste, our geologist on the Buen
Futuro project, as well as under the supervision of an internationally
         experienced geological engineering firm. Our "in-fill" drilling program will
entail drilling in between our existing grid of          drill holes, and trench and pit
sampling sites, so that our computer modeling can more accurately project the grade and
         quantity of existing gold and copper mineralization for our feasibility study.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|o | Carry
out detailed metallurgical studies at our Buen Futuro project on the sampling that
results from our in-fill drilling          program under the supervision of our
metallurgical team in Bolivia, as well as under the supervision of an internationally
         experienced geological engineering firm, to ensure the most efficient and
economical treatment of our gold and copper ore.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

8

|o | Obtain
an estimated $3.5 million for the dismantling of our Gold Bar Mill and Plant located in
Eureka, Nevada, and for          shipping it and re-erecting it on our Buen Futuro site
in eastern Bolivia.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|o | Finalize
our environmental permitting and feasibility study on our Buen Futuro project and obtain
an estimated $6.5 million          to implement the recommended mine plan, and milling
and recovery circuit, to put the project into operation.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|o | Explore
the gold deposits on the B and C Zones on our Precambrian properties in eastern Bolivia;
perform metallurgical          testing; secure our environmental permitting; finalize our
feasibility study; implement our mining plan and construct our          recovery plant,
by year-end 2006.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|o | Secure
our environmental exploration permit for our Rio Mojos project, finalize mapping and
topographical work that is          currently in process, and carry out field
exploration, metallurgical testing and other work necessary to produce a final
         feasibility study and mine plan by April of 2007.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|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.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# (b) Financial
Information about Industry Segments

Our business involves only a single
industry segment relating to the exploration for, development of, and mining of minerals
in Bolivia, which is accomplished solely through our Bolivian-based subsidiaries, Golden
Eagle International Inc. Bolivia and Golden Eagle Bolivia Mining (see Item 1(a)), as all
of our mineral prospects are in Bolivia. See, Item 1(d) for information regarding
our industry segment.

# (c) Description of
Business

# (c)(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
from operations have been derived solely from the sale of the gold. Although our Buen
Futuro prospect has copper and gold reserves, we have not started production of any gold
or copper from our Buen Futuro prospect.

# Gold

Gold Sales. During 2005, we
had no sales of gold. Gold production and sales prior to 2005 totaled 9,720 ounces and are
listed 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, in addition to stocks in companies exploring for and
producing gold and other precious metals.

9

# Copper

Copper Production.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, our only source of revenues to date:

|                     |  |  |                            
|-------------------- |  |  | ---------------------------
|                    
|Years                |  |  | Production/Inventory (g/oz)
|                     |  | 
|                    
|1996-1999            |  |  | 21,000 g (675 oz)          
|                    
|2000-9/30/2002       |  |  | -                          
|                    
|Fourth quarter, 2002 |  |  | 43,847 g (1,410 oz)        
|                    
|First quarter, 2003  |  |  | 36,424 g (1,171 oz)        
|                    
|Second quarter, 2003 |  |  | 37,841 g (1,217 oz)        
|                    
|Third quarter, 2003  |  |  | 59,728 g (1,920 oz)        
|                    
|Fourth quarter 2003  |  |  | 39,246 g (1,262 oz)        
|                    
|First quarter, 2004  |  |  | 30,493 g (980 oz)          
|                    
|Second quarter, 2004 |  |  | 33,745 g (1,085 oz)        
|                    
|Third quarter, 2004  |  |  | -                          
|                    
|Fourth quarter, 2004 |  |  | -                          
|                    
|2005                 |  |  | -                          
|                    
|Total Production     |  |  | 302,324 g (9,720 oz)       
|                    

Gold inventory is stated on the
balance sheet at the lower of average cost or net realizable value. On December 31, 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 and parties not associated with us. In our effort to reinitiate production
from our Cangalli claims, we will attempt to resolve this issue with the other unrelated
parties, including the Bolivian authorities and the United Cangalli Gold Mining
Cooperative, Ltd. (United Gold Mining Cooperative), a Bolivian cooperative
from whom we purchased the Cangalli claims in 2002.

# (c)(2) Status of
products and segments.

As described above, our principal
products are gold and copper. As of the date of this report, we are not engaged in any
production operations of gold from our Tipuani-Cangalli prospects or gold and copper from
our claims in the Precambrian Shield. Our plans for recommencing operations at our
Cangalli claims and for operations at our Buen Futuro prospect are described in more
detail in Item 2  Properties, below.

10

# (c)(3) Sources and
availability of raw materials

As of December 31, 2005, 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 online 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.

(c)(4)    
          Importance and duration and effect of patents, trademarks, licenses,
          franchises and concessions

We have no patents, trademarks,
licenses, franchises or concessions that are material to our business. We do own certain
rights to own and mine from our mineral properties that are described under Item 2 
properties below.

# (c)(5) Seasonality of
our business

The Bolivian climate is occasionally
harsh in our work areas, often depending on the rainy seasons length and severity.
Although internal transportation within Bolivia is generally good, access to our
properties may become difficult for short periods during the rainy season, which generally
occurs from November to March. During this period, production can be more difficult, and
access to the properties may be limited. The impact of rains should lessen and the terrain
less impacted by weather as we move to our Buen Futuro operation, which is located on
ground that is significantly flatter than the areas in which we have operated at Cangalli.

(c)(6)    
          Our practices relating to working capital items

Our practices relating to working
capital items throughout our entire operational history have been characterized by having
to incur working capital and cash-flow shortages. We are not required to carry any
specific amounts of inventory to meet customer demands. Additionally, we do not provide
extended payment terms when we have sold our gold to third parties.

(c)(7)    
          Dependence on one or a few major customers.

Our potential customers consist of
the spot gold and copper market and an active gold and copper market in Bolivia and
internationally of the jewelry industry; as such, should we be successful in bringing any
of our prospects into gold and/or copper production, we do not plan on being dependent
upon one single customer or just a few customers.

11

# (c)(8) Backlog orders.

Our business does not require
purchase orders from customers, but rather is primarily accomplished through the ready
spot market for gold and copper production; accordingly, we do not have now or expect in
the future any backlog of orders.

(c)(9)    
          Material portion of business that may be subject to renegotiation of profits
          or termination of contracts at the election of the government.

No part of our business is subject to
renegotiation of contracts at the election of the government of the United States or
Bolivia.

# (c)(10) Competitive
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.

(c)(11)    
          Research and development expenditures.

We have not and do not intend to
engage in any research and development activities.

(c)(12)    
          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; therefore, we have no material compliance obligations
with respect to federal, state, and local provisions enacted in the United States for the
protection of the environment.

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.

Some activities that we engage in
require permitting, such as the harvesting of lumber for mine timbers and the transport of
explosives. We have all permits required for these activities.

We are also required to have
environmental permits to mine, process ore and create mine 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 as they continue into the future. In addition, we
have retained an engineering firm to monitor our 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.

12

As part of our process to commence
gold and copper mining operations at Buen Futuro, we are currently obtaining the necessary
environmental permits to commence mining and milling operations; however, there is no
assurance that we will be successful in doing so.

# (c)(13) Employees.

At December 31, 2005, we directly
employed 11 full-time employees, as follows: (a) 3 in our head offices in Salt Lake City,
Utah; and (b) 8 in our administrative offices in La Paz, Bolivia and Santa Cruz, Bolivia
and our administrative field offices in Cangalli, Bolivia. Additionally, we employ
11-contract full time employees that are primarily employed for security, maintenance and
hospital services.

# (d) Financial
information about geographic areas

We operate in two geographic areas
 the United States and Bolivia. The financial information about our geographic areas
as required by Item 101(d) of Regulation S-K is described in the charts and notes below.

The following sets forth certain
information regarding our results of operations for our Bolivian subsidiaries as of
December 31, 2005 compared with the same period in 2004.

|Bolivian Subsidiaries      | Years ended December 31
|-------------------------- | -----------------------
|Revenues                   | $                      
|Production costs           |                        
|Production taxes           |                        
|Exploration & development  |                        
|General and administrative |                        
|Depreciation and depletion |                        
|Impairment                 |                        
|Operating loss             |                        
|Interest expense           |                        
|Legal Settlement           |                        
|Other Income (loss)        |                        
|Net (loss)                 | $                      
|                           |                        

This data only represents our
Bolivian subsidiarys activities. For complete financial information see Item 7-
Managements Discussion and Analysis of Financial Condition and Results of
Operations.

Revenue.No revenue from gold sales was generated by our Bolivian subsidiary in 2005
          as a result of the cessation of operations at Cangalli in June of 2004. Revenue,
          production costs and production taxes are exactly the same for our Bolivian
          subsidiary as they are in our consolidated statement of operations. Exploration
          and development costs in our subsidiary are significantly less than those
          reflected in our consolidated statement of operations since the United States
          parent corporation pays most of our exploration and development costs in common
          stock to consultants. These costs are attributable to the United States parent.

13

Exploration and Development.
Exploration and development costs decreased in the subsidiary to $22,806 in 2005 from
$62,061 in 2004. The decrease in 2005 is the result of carrying the majority of
exploration costs on the US corporate books as stock was issued for services, as well as
the decrease in exploration and development at Cangalli as a result of the shut down.
Additionally, there were no exploration and development cost incurred at Cangalli during
2005.

General and Administrative
Expenses. General and administrative costs in our Bolivian subsidiary increased to
$627,568 in 2005 from $454,722 in 2004. This increase is the result of the reallocation of
all production resources at Cangalli to general and administrative expenses during 2005.
During 2004, costs related to Cangalli were applied as production costs. True general and
administrative costs declined during 2005 due to a reduction in staff, office size and
general cost controls as a result of the shut down of our Cangalli operation.

Depreciation and depletion.
Depreciation and depletion decreased to $58,925 in 2005 from $254,172 in 2004. The
decrease was due to the removal of mine and plant equipment from production during which
time this equipment was not being depreciated.

Impairment.    
          During 2004, we recognized a $322,404 impairment on the capitalized improvements
          of the Cangalli mine. We impaired substantially all of the mine development
          costs previously capitalized when the Cangalli mine was classified as a
          production property. Based on our inspection, during the period the Cangalli
          mine has been shut down, some of the internal mine improvements appear to be
          deteriorating and may require additional funds to bring them back up to
          standard. Since we have no definitive time period at which we may recommence
          operations, we determined that we should impair the mine improvements. As a
          result, we continue to show these improvements as an asset on our books, however
          we have also booked a corresponding impairment which results in a net asset
          value of $-0- on our books.

Net loss. The subsidiary net
loss decreased to $671,755 in 2005 from $898,907 in 2004. The decrease in the net loss was
due to the cessation of operations at Cangalli and the corresponding reduction in staff
and other production costs. We did not incur any additional impairment during 2005, as we
believe the impairment taken during 2004 is sufficient to accurately reflect the condition
of our mining properties and equipment.

The following sets forth certain
information regarding our results of operations for our United States corporate activities
as of December 31, 2005, compared with the same period in 2004 and 2003.

|US Corporate Activities    | Years ended December 31
|-------------------------- | -----------------------
|                           | 2005                   
|Revenues                   | $                      
|Production costs           |                        
|Production taxes           |                        
|Exploration & development  |                        
|General and administrative |                        
|Depreciation and depletion |                        
|Impairment                 |                        
|Operating loss             |                        
|Interest expense           |                        
|Other Income (loss)        |                        
|Net (loss)                 | $                      
|                           |                        

14

This data only represent the U.S.
Corporate activities. For complete financial information see Item 7,
Managements Discussion and Analysis of Financial Condition and Results of
Operations..

Revenue.    
          All revenue is generated by our Bolivian subsidiary; accordingly, there are no
          production costs allocated or production taxes paid by our US corporate entity.

Exploration and development.
Exploration and development costs decreased on a US corporate level to $411,152 in 2005
from $773,264 in 2004. All of the exploration and development costs during 2005 for our US
corporate entity were directed at our Buen Futuro mining concession and the proposed
dismantling and re-erection of our Gold Bar Mill and Plant on the Buen Futuro site in
Bolivia. The majority of these costs were paid with our stock issued at market price on
the date of grant. All stock issuances are accounted for on a corporate basis even though
they may have been issued to consultants or employees in Bolivia. During 2005, we issued
17,733,906 shares of our common stock valued at $451,903 to pay consultants,
metallurgists, geologists and contractors for exploration and development work on our
prospects within the Precambrian Shield (which we also refer to herein as the Buen
Futuro project).

General and Administrative
Expenses. General and administrative expenses declined to $817,690 in 2005 from
$1,324,596 in 2004. Included in general and administrative expenses is stock issued for
services to consultants, and employees both in the US and in Bolivia. We issued 27,876,287
shares valued at $523,853 for general and administrative services during 2005. The decline
in general and administrative expenses represents a reduction in staff and operations as
well as our ongoing efforts to control costs.

Depreciation and Depletion.Depreciation and depletion declined to $14,617 in 2005 from $17,765. This decline
results from the previous full depreciation of some of our fixed assets. Once a fixed
asset has been fully depreciated, no additional depreciation is taken. We have also
purchased few if any additional fixed assets during the past two years that would cause
depreciation to increase.

Impairment.    
          As a result of FASB 144 during 2004, we incurred an impairment of $912,404 on
          various assets primarily relating to our suspended Cangalli operation. This
          impairment included $322,404 of capitalized mine development costs, $470,000 on
          the Cangalli property and $120,000 on mining equipment related to Cangalli.
          While we still own and maintain this property and equipment, its value has been
          impaired to a level equal to the present value of its future cash flows or to a
          level at which we feel it could be sold on the market. We did not incur any
          additional impairment during 2005, as we believe the impairment taken during
          2004 is sufficient to accurately reflect the condition of our mining properties
          and equipment.

15

Interest expense. Interest
expense declined to $130,270 in 2005 from $224,034 in 2004 and $2,909,462 in 2003. This
decrease in interest expense was directly related to the conversion of debentures and
other debt to common stock during 2003 and 2004.

# (e)Available
information.

We are a Colorado corporation with
our principal executive offices located at 9661 South 700 East, Salt Lake City, Utah. Our
telephone number is (801) 619-9320. Our website address is www.geii.com. We file
our annual, quarterly, and current reports with the Securities and Exchange Commission,
copies of which are available on our website or from the SEC free of charge at
www.sec.gov. Our Code of Business Conduct and Ethics is also available on our
website or by faxing a request to us at (801)619-9320.

# (f) Risk Factors

The following risks and
uncertainties, along with other information contained in this Form 10-K, 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.

# (f)(1) FINANCIAL RISKS

Our history of losses and working
capital shortages have 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 $44,103,448 since our inception. Additionally,
we had negative working capital of $1,471,409 as of December 31, 2005. Our continued
operations are dependent upon receiving significant financing. On the basis of the
foregoing, our auditors have substantial doubt at December 31, 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 | 
|                     
|1995                  |  | 396  | 
|                     
|1996                  |  | 415  | 
|                     
|1997                  |  | 367  | 
|                     
|1998                  |  | 313  | 
|                     
|1999                  |  | 326  | 
|                     
|2000                  |  | 313  | 
|                     
|2001                  |  | 293  | 
|                     
|2002                  |  | 349  | 
|                     
|2003                  |  | 416  | 
|                     
|2004                  |  | 454  | 
|                     
|2005                  |  | $536 | 
|                     
|2006 through March 31 |  | $584 | 

16

Source of Data: Kitco and
Reuters.

On March 31, 2006, the afternoon
fixing price for gold on the London Metals Exchange was $$582 per ounce.

(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 |    
|                     
|1995                  |  | 1    | .47
|                     
|1996                  |  | 1    | .29
|                     
|1997                  |  | 1    | .23
|                     
|1998                  |  |      | .85
|                     
|1999                  |  |      | .84
|                     
|2000                  |  |      | .91
|                     
|2001                  |  |      | .83
|                     
|2002                  |  |      | .77
|                     
|2003                  |  | 1    | .05
|                     
|2004                  |  | 1    | .54
|                     
|2005                  |  | $2   | .18
|                     
|2006 through March 31 |  | $2   | .51
|                     

Source of Data: London
Metal Exchange and COMEX

On March 31, 2006, the closing spot
price of high-grade copper on the London Metal Exchange was equivalent to $2.49 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
restarting and further developing the Cangalli mine and to develop the Precambrian Shield
prospects 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.

17

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 that we may be unable to meet and/or may negatively affect our operations.At December 31, 2005, we had $1,694,777 in current liabilities, including monies due
in connection with the purchase of the Buen Futuro prospect in the amount of
$40,000, other notes payable in the amount of $1,019,591, a note payable to one
of our directors for $135,000, and funds owed to trade creditors in the amount of
$399,454. Should we be unable to meet these debt obligations, we may lose the Buen Futuro
prospect and/or our operations may be adversely affected.

# (f)(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 members of our current management who provide us with the
key technical and management aspects of our operations, including: (a) H. Roy Shipes, our
Chairman of the Board; (b) Terry C. Turner, our President/Chief Executive Officer; (c)
Harlan C. Delozier, our Administrative Vice President in Bolivia; and (d) Tracy A. Madsen,
our Vice President for our US Administration and our Chief Financial Officer. 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.Our operations in Bolivia are subject to various risks,
including:

|o | Possible
political volatility, instability, civil unrest, or insurrection in Bolivia where all of
our properties and          prospects are located;
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------

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

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

|o | Geographical,
climate, 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.
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

18

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.

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

Our minority shareholders exercise
little control over our corporate affairs.Officers and directors beneficially
own more than 25% of our outstanding shares as of March 31, 2006. Accordingly, 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 or consolidation or sale of our assets, and 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 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.

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
acquisition of our properties. The issuances of these securities are dilutive to the value
of our securities, especially since many of these securities issuances were 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.

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 2005, our common stock has been volatile as to price and volume.
Significant operating losses, the shut-down of our operations at our Cangalli claim, 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.

19

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.

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

Unresolved Staff Comments

None

# Item 2. Our Properties

As described in Item 1, Business, we
own mineral prospects in Bolivia that we believe are prospectively valuable for mineral
operations. These include:

The
Tipuani-Cangalli prospects (discussed in paragraphs (a) and (b), below), and

The Precambrian
Shield properties (discussed in paragraphs (d), (e) and (f), below).

The
Rio Mojos properties (obtained subsequent to December 31, 2005) are discussed in paragraph
(j) below.

# (a) 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.

(a)(1)    
          Contract for exploration and mining on the Cangalli properties

20

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 contract from the date of
its signing through July 2, 2002.

(a)(2)    
          Purchase of the Cangalli properties from the United Gold Mining Cooperative

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 now been paid down to $77,359. These shares were
issued for investment purposes to persons who were neither citizens nor residents of the
United States in accordance with exemptions from registration found in Sections 4(2) and
4(6) of the Securities Act of 1933 and Regulation S.

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 $2,075 per year to the Bolivian government in mining
patent concession fees. In accordance with the Bolivian Mining Code, these annual
government claims fees are our only obligation to be able to maintain our rights over the
Cangalli claims in perpetuity.

# (a)(3) Production from
our Cangalli mine

We received an investment of $1.3
million in early 2002 to initiate a 1,000-tonne per day plant and to build out our
interior mine infrastructure. 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.

21

During the second quarter of 2003, we
received the necessary funding in the amount of approximately $600,000 to expand our
production capacity from 2,000 tonnes per day to 3,500 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. While we reached full capacity of
3,500 tonnes per day on a limited basis, we were unable to continue to produce at that
level as a result of weather delays during the fourth quarter of 2003. We also encountered
a phenomenon in the cemented conglomerate above the draw points in our block caving known
as doming in which the ore would form large domes and cease to flow evenly to
the draw points for extraction.

During the fourth quarter of 2003, we
employed many different blasting techniques in an attempt to solve the issues involved
with doming. However, due to the danger associated with the potential collapse of the
domed areas while miners were working within them and because our studies have shown that
the bedded paystreaks in the paleo-placer conglomerate deposits contain a higher gold
grade per tonne of ore, we elected to focus our attention on the development of a more
targeted mine plan.

During the first two quarters of 2004
we implemented a mining technique similar to a technique from the coal mining industry
known as longwall mining where the high-grade portions of the gold deposit were mined
along the plane. Initially, this mining took place along a 25-meter work face, and as the
work face advances, the roof behind was allowed to collapse, or subside, in a controlled
manner similar to longwalling now being used in the coal industry. During the first two
quarters of 2004, we experienced a shakeout period on longwall production and we
consistently achieved grades in the range of 3 grams per tonne. We made significant
progress in developing this mining method and steadily increased longwall production. Our
gold production at our Cangalli mine increased by nearly 11% from the first quarter 2004
to the second quarter 2004 as a result of the increase in our recovered grade from
longwall mining.

On June 25, 2004, we announced we had
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.
The most pressing legal dispute between the United Gold Mining Cooperative and the
Bolivian governmental regulators involved the United Gold Mining Cooperatives
mandatory contributions to the National Mining Pension Fund that were in arrears and the
failure of the United Gold Mining Cooperative to observe legal formalities regarding its
formation, registration and ongoing operation. 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.

22

Although the issues surrounding the
local farmers strike have been settled, the issues relating to the United Gold
Mining Cooperative continue to be a threat to our ability to continue mining operations on
our Cangalli claim. To date, no court in Bolivia has ruled on these issues.

# (a)(4) Cangalli reserves

As a result of the suspension of
operations at our Cangalli mine and our inability to reasonably forecast when or if we
will be able to resume operations at Cangalli, we will no longer estimate proven and
probable gold reserves on our Cangalli claims. If at some point we are able to resume
operations at Cangalli, we hope to be able to again estimate reserves. We can however,
offer no guarantee that in the future we will be able to estimate reserves on our
Tipuani-Cangalli claims.

# (b) The Tipuani prospect

In November 1999 and October 2000, we
acquired four mining claims in the Tipuani Gold Mining District, surrounding our Cangalli
claims, 62 miles north of La Paz, Bolivia, with a total acreage of approximately 69,000
acres. Our initial geological studies conducted in 2000 indicated that these properties
were highly prospective for gold deposits similar to that found on the Cangalli
Properties. In exchange for the mining claims, we committed to pay to the Bolivian
government annual fees of $27,825. In accordance with the Bolivian Mining Code, these
annual government claims fees are our only obligation to be able to maintain our rights
over these properties in perpetuity.

During 2004, we announced that as a
result of geological reconnaissance work further identifying and mapping the gold bearing
conglomerate material in the paleochannel of the ancient Tipuani River basin, we reduced
our landholdings in the Tipuani properties from 74,000 acres (116 square miles) to 49,900
acres (78 square miles). As a result of this reduction, we reduced our obligation to pay
concession patent fees, and we now have a more focused approach to its exploration
activities in the pay streaks in the paleochannel found on its gold concessions in the
area. We do not believe that the reduction in acreage resulted in the loss of any valuable
mineralized area.

At December 31, 2004, we also owned
44,900 acres in the Tipuani prospect (not including the 5,000-acre Cangalli claim)
covering an 18-mile section of the ancient paleo-channel of the Tipuani River system. This
area is not affected by the dispute between the United Gold Mining Cooperative and the
Bolivian government and we are investigating the possibility of moving our recovery plant
to an alternate site on our property. If we were to abandon our current mine site, we may
have to write off certain mining claims and development costs. Should we ever be able to
resume mining on the 5,000-acre Cangalli claim, we will incur substantial startup costs,
for which we currently do not have sufficient funding.

23

To maintain our claim to the mineral
rights on the property under our control, we must pay the government approximately $.40
per acre per year in mining claims fees. In order to reduce costs we studied the minimum
amount of acreage we must maintain on our Tipuani-Cangalli claims in order to maintain the
integrity of our deposit and mine plans. As a result of this study, we reduced our claims
to approximately 7,000 acres, which results in a claim fee of approximately $3,000 per
year. We have maintained a portion of our claims in the paleo-channel, which we intend to
mine and we do not believe that this reduction will limit our production if and when we
are able to resume mining in the Tipuani-Cangalli area. The acreage on which we reduced
our claims is primarily a buffer zone that would insulate us from any adjacent claims.
During 2006, we made all mining claim payments for 2006.

(c)    
          History of the Cangalli and the Tipuani Gold Mining District of Bolivia

Gold mining in the Tipuani Gold
Mining District, in which the Cangalli and Tipuani properties are found, can be traced
back to pre-Inca times (1000 to 1500 A.D.) During the Inca dominion, natives worked gold
placers in the Tipuani River and her tributary rivers, the Ancoma and Yani, and also in
the gold-bearing quartz veins of the Cordillera in the high Andes Mountains.

Gold mining continued in the Tipuani
Gold Mining District after the Spanish Conquest up through modern times.Due to the
perceived near-exhaustion of the best-known deposits of river gravels, many people have
abandoned the Tipuani area. Lately, others have been trying to work the remaining river
areas and terraces, while making some technical improvements such as deeper shafts and
better underground workings. Historical sources have estimated that the total production
of gold from the Tipuani District may reach figures close to 200 tonnes of gold for each
of the 16th, 17th, and 18th centuries. It was near 200 tonnes for the 19th century and
about 500 tonnes for the 20th century. For its known history of almost 1,000 years of
mining, according to these historical sources, the Tipuani District may have produced no
less than 1,000 metric tonnes of gold, or more than 32 million troy ounces

# (d) The Precambrian
prospect.

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 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. The size of our holding in the Precambrian
Shield of Bolivia has decreased as we have reduced the size of our concessions with the
Bolivian government, and increased as we have acquired new prospects.

We pay $54,600 per year to the
Bolivian government in mining patent fees for our Precambrian Prospect. In accordance with
the Bolivian Mining Code, these annual government claims fees are our only obligation we
have to be able to maintain our rights over these properties in perpetuity.

24

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.

# (e) Buen Futuro claim

# (e)(1) Acquisition

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, in June 2003. We amended the contract in December 2003 and
March 2005. The terms of the acquisition included a 3% net smelter return, payments of
$50,000 cash and shares of our restricted common stock valued at $75,000, and a promise to
make the following additional payments:

|                | Payable  | Paid     | Remaining
|--------------- | -------- | -------- | ---------
|Due 2005 Cash   | $200,000 | $160,000 | $40,000  
|Due 2005 Shares | $100,000 | $100,000 | $0       

As of December 31, 2005, we have made
all required payments under the contract with the exception of $40,000 that we intend to
pay during the first quarter of 2006.Under the agreement with Mrs. Calla de Arraya
and Dr. Biste, we undertook several obligations in addition to the payment obligations
described above. These obligations included:

|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, which cannot be assured.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|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 $3,600,000 will satisfy this investment requirement if we are able to obtain
financing and begin construction. On May          20, 2005 we entered into an amended
agreement with the seller 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 seller until we enter production or          until November 23, 2006. If by
November 26, 2006 we are still not in production, the penalty amount payable to the
seller          increases to $3,000 per month.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

There are no other stated penalties
for failure to comply with these commitments. The initial build-out of the gold plant and
other infrastructure improvements will require a capital investment of approximately
$10,000,000. As the sellers of the property are now major shareholders, we believe that
they may assist us in bringing the claim into production.

25

# (e)(2) The Buen Futuro
Mining Claim.

On May 30, 2003, we signed a Letter
of Intent to acquire 100% of the Buen Futuro mining claim 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 located162 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. These ore bodies
are found in an oxide zone 130 to 200 feet thick, as well as a layer known in geological
terms as a supergene, which is acopper-enriched zone extending from
the oxide zone to a depth of 320 feet, sitting on top of a mineral deposit enriched in
sulphide minerals by volcanic activity controlled on both sides by harder material, which
is referred to in geological terms as VMS mineralization. We exercised our
rights to purchase the Buen Futuro property in June 2003. A private contract, as well as a
recorded public contract, were signed and filed with the Superintendency of Mines of the
Department of Santa Cruz on December 12, 2003.

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 136,500 acres. A recent
study was carried out on the prospect by Dr. Michael Biste, one of our consultants who is
an expert on the Precambrian geology of eastern Bolivia. The exploration data resulted
from the northern part of the companys 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 (formerly Miguela) volcanogenic massive sulfide (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 this acquisition, and
our current landholding in the Ascension Gold-Copper Trend, provide 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.

26

The Buen Futuro VMS mineralization
was initially identified by Dr. Biste through geochemical surveys, and subsequently
confirmed using Induced Polarization (IP) and (HLEM) surveys. Eventually, between 1993 and
1997, 800 miles of exploration trails were cut through the jungle to take a total of
21,000 samples on the Buen Futuro and surrounding areas. A total of 8,400 feet of auger
drilling was performed initially, with 11,000 feet of additional reverse circulation
drilling and 27,000 feet of diamond core drilling. A total of 8 miles of trenches were dug
and 5,500 trench samples were taken and analyzed.

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. 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.

# (e)(3) Buen Futuro
reserves

In February of 2004 we announced
estimated mineral reserves on our Buen Futuro prospect in eastern Bolivia. A component of
that reserve estimation pursuant to Securities and Exchange Commission Industry Guide 7
was that a mineral reserve is that part of a mineral deposit which could be
economically and legally extracted or produced at the time of the reserve
determination. During the third quarter of 2005, we received an inquiry from the
Securities and Exchange Commission questioning the validity of continuing to classify the
mineralization on the Buen Futuro prospect as reserves due to the perception that our
resource and reserve report on this prospect may not reach the level of a feasibility
report.

We have determined that in connection
with our Securities and Exchange Commission reporting obligations, we will no longer
estimate proven and probable gold and copper reserves on our Buen Futuro prospect until it
is economically feasible for us to project with a high degree of certainty when we will be
able to extract or produce those reserves based on our ability to finance such operations.
We cannot offer any assurance when, if ever, we will obtain the necessary financing to
complete the development of the Buen Futuro prospect which will enable us to commence
production.

(f)    
          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 27 miles northeast of Eureka, Nevada. In exchange for the
Gold Bar mill and plant, we issued to Atlas Precious Metals 30,000,000 shares of our
restricted common stock valued at $.12 per share based on the closing price of the stock
on the closing date or a total purchase price of $3,600,000. Upon raising the necessary
capital, we intend to dismantle, ship and re-erect this plant on our Buen Futuro site in
eastern Bolivia. 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 from the time we
raise the necessary financing. We estimate the cost to dismantle, ship and re-erect the
plant on our Buen Futuro claim to be approximately $3.5 million.

27

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 reported 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 in todays dollars. 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 the Company 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 feel
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 a perfect fit for 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.
As it was apparent that we were to fail to remove the assets by this date, 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, we could not guarantee that they would not do so. As a result of the
possibility of the termination of the agreement and the return of the assets to Atlas, we
moved the $3,600,000 purchase price of the plant from property and equipment to a
non-operating non-current asset section on the December 31, 2004 balance sheet. We also
moved the $3,600,000 that we issued in stock from the additional paid in capital to a
mezzanine liability section. On May 19, 2005 we entered into an amended asset purchase
agreement with Atlas in order to remove from the original purchase agreement the
requirement that the Gold Bar Mill and plant be removed from the site within a specified
time period. Under this agreement, we issued an additional 20,000,000 shares of restricted
common stock at $.019 per share or $380,000 as an addition to the purchase price of the
Gold Bar mill and plant. By means of this agreement, we removed any cloud relating to our
ownership of the Gold Bar mill and plant. As a result, during the second quarter 2005, we
reclassified the Gold Bar mill and plant as a fixed asset and reclassified the stock
issued as well as the additional shares granted under the amended agreement as additional
paid in capital.

28

# (g) 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 volcanogenic massive sulphide (VMS) deposits
containing gold and copper, as well as near-surface gold oxide deposits. Induced
polarization (IP) and Horizontal Loop Electromagnetic (HLEM) surveys, as well as scout
auger drilling, have yielded positive results in an area extending to the northeast of our
previous 111,500-acre landholding.

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
$9,000.

# (h) Rio Mojos concession

After our 2005 year-end, on January
3, 2006, we announced that we had signed a joint-venture contract for the development of
the Rio Mojos gold project 250 miles north of La Paz, Bolivia. We will own 94% of the
joint-venture project, while the landowner will own the other 6%, which will entitle him
to a 6% net smelter return on minerals recovered. The Rio Mojos gold project will become
our third major project in Bolivia, building on our relationships and knowledge base in
the country. The Rio Mojos gold project area covers 7,163 acres along a 25-mile section of
the Mojos River. Based on existing geological studies, three distinct types of
mineralization occur within the project area: gold bearing alluvial gravels in the current
river channel, beaches and terraces; gold bearing cemented conglomerates in ancient
terraces formed above the current river system; and, primary quartz and pyrite gold
deposits at the headwaters of the Mojos River.

# (i) 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. We pay $1,395 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. This lease results in a reduction of our monthly lease rate to $1,395 per month
from $1,920 per month. We have also entered into a short-term lease on a new smaller
office in La Paz, Bolivia for $180 per month, which expires in July 2006. 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 per month.

|Location            |  | Size              |  | Monthly Rent |  | Lease Expiration
|------------------- |  | ----------------- |  | ------------ |  | ----------------
|Salt Lake City, UT  |  | 1,183 square feet |  | $1,395       |  | July 31, 2008   
|Santa Cruz, Bolivia |  | 150 square meters |  | 500          |  | July 10, 2006   
|La Paz Bolivia      |  | 42 square meters  |  | 180          |  | October 31, 2006
|                    |  |                   |  |              |  |                 
|                    |  |                   |  | $2,075       |  |                 
|                    |  |                   |  |              |  |                 

29

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 El Alto, Bolivia,
15 kilometers from its La Paz offices and in Santa Cruz, Bolivia. This equipment includes
heavy earthmoving equipment and general support equipment for the mining industry. In
addition, Golden Eagle Bolivia owns equipment acquired from the United Gold Mining
Cooperative, which includes mining equipment, real property in proximity to the Cangalli
shaft, as well as the dwellings found thereon, two warehouses, the mine shaft head frame,
a mine hoist, assorted pumps, an electric generating set, all electrical installations, an
inventory of parts, assorted tools, mine rail and cars, two double-deck shaker screens,
and various other pieces of mining equipment. Golden Eagle Bolivia also owns various
support vehicles and trucks. We believe that all of this equipment and the vehicles are in
good condition, suitable for use in our mining operations in Cangalli or Buen Futuro.

# Item 3. Legal proceedings

During 2004, we became a defendant in
Geiger v. Golden Eagle International, Inc. and Ronald A. Knittle, Civil Action No.
03CV9390, a civil lawsuit filed in the District Court for the City and County of Denver,
Colorado. The complaint alleged that Mr. Knittle, while acting as our president at the
time, did not meet securities regulation requirements in clearing restricted shares of our
common stock that Mr. Geiger sold as a registered securities broker, which ultimately
resulted in SEC sanctions against Mr. Geiger, including barring him from acting as a
securities broker. The acts alleged in the complaint that purportedly damaged the
plaintiff in this action took place prior to the appointment of any currently serving
officer or director. This matter was settled by mutual agreement of the parties, which was
approved by the court on February 3, 2005, and the case was dismissed with prejudice. The
settlement agreement provided for payment of 50 million shares of our restricted common
stock to the plaintiff in this matter, payment of which was made on or about February 7,
2005.

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, 2005.

# 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.

30

The following table shows the high
and low bid of 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.

|2004           | Low Bid | High Bid | Average Daily Volume
|-------------- | ------- | -------- | --------------------
|First Quarter  | $.155   | $.265    | 869,469 shares      
|Second Quarter | $.09    | $.18     | 581,636 shares      
|Third Quarter  | $.053   | $.104    | 625,276 shares      
|Fourth Quarter | $.037   | $.07     | 779,339 shares      
|Total 2004     | $.037   | $.265    | 713,745 shares      
|               |         |          |                     

|2005           | Low Bid | High Bid | Average Daily Volume
|-------------- | ------- | -------- | --------------------
|First Quarter  | $.033   | $.059    | 677,411 shares      
|Second Quarter | $.018   | $.034    | 963,276 shares      
|Third Quarter  | $.011   | $.024    | 1,635,131 shares    
|Fourth Quarter | $.013   | $.034    | 1,603,566 shares    
|Total 2005     | $.011   | $.059    | 1,217,927 shares    
|               |         |          |                     

|2006 (through March 31) | Low Bid | High Bid | Average Daily Volume
|----------------------- | ------- | -------- | --------------------
|                        | $.025   | $.037    | 2,898,958 shares    

# (b)Holders

As of December 31, 2005, there were
approximately 1,205 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, of which we have issued 744,787,518
shares as of December 31, 2005. In addition, we are authorized to issue 10,000,000
preferred shares, no shares of which are outstanding.

We have not issued any shares of
preferred stock. However, on March 10, 2005, we entered into a Series A Subscription
Agreement with Polion do Brasil, S.A. (Polion), a Brazilian venture capital firm, to
purchase 3.5 million preferred shares, with the first payment due no later than April 1,
2005. We did not receive any funds under this agreement, however, during 2005 we received
$95,000 from Polion under a private placement.

# (c) Dividends

We have never paid a cash dividend on
our common stock and have no present intention to declare or pay cash dividends on our
common 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.

31

(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, 2005. 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.

|                                                           |                                                                                                 |                                                                                  |                                                                                                                                               
|---------------------------------------------------------- | ----------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------
|Equity Compensation Plan Information                      
|Plan Category and Description                              | Number of Securities to be issued upon exercise of outstanding options,
warrants, and rights(a) | Weighted - average exercise price of outstanding options, warrants and rights(b) | Number of securities remaining available for future isuance under equity
 compensation plans (excluding securities reflected in column (a))(c)
|Equity compensation plans approved by security holders     | -0-                                                                                             | -0-                                                                              | -0-                                                                                                                                           
|Equity compensation plans not approved by security holders | 30,000,000                                                                                      | -0-                                                                              | -0-                                                                                                                                           
|Total                                                      | 30,000,000                                                                                      | -0-                                                                              | -0-                                                                                                                                           

(e)    
          Unregistered sales of equity securities and use of proceedsThe
          following reflects issuances of our restricted common stock during 2005.

On January 3, 2005, we sold 400,000
shares of our common stock to Dewey Williams at $0.025 per share or an aggregate of
$10,000. 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 issued to Dewey Williams stating that the securities were
not registered under the Securities Act and are subject to restrictions on their
transferability and resale.

32

On January 3, 2005, we sold 140,000
shares of our common stock to the Williams Roth IRA at $0.025 per share or an aggregate of
$3,500. We relied upon Section 4(2) and 4(6) of the 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 issued to the
Williams Roth IRA stating that the securities were not registered under the Securities Act
and are subject to restrictions on their transferability and resale.

On January 6, 2005, we sold 150,000
shares of our common stock to Caesar and Donna Cardamone at $0.025 per share or an
aggregate of $3,750. We relied upon Sections 4(2) and 4(6) of the 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 purchasers were accredited investors. We
placed restrictive legends on the certificates representing these securities issued to
Caesar & Donna Cardamone stating that the securities were not registered under the
Securities Act and are subject to restrictions on their transferability and resale.

On January 18, 2005, we sold 410,000
shares of our common stock to Avalon Productions, at $0.025 per share or an aggregate of
$10,250. We relied upon Sections 4(2) and 4(6) of the Securities Act and Regulation S 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
issued to Avalon Productions stating that the securities were not registered under the
Securities Act and are subject to restrictions on their transferability and resale.

On January 18, 2005, we sold 500,000
shares of our common stock to Kuehne Development at $0.025 per share or an aggregate of
$12,500. We relied upon Sections 4(2) and 4(6) of the Securities Act and Regulation S 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
issued to Kuehne Development stating that the securities were not registered under the
Securities Act and are subject to restrictions on their transferability and resale.

On January 25, 2005, we sold 140,000
shares of our common stock to Williams Roth IRA 2005 at $0.025 per share or an aggregate
of $3,500. We relied upon Sections 4(2) and 4(6) of the 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 issued to
Williams Roth IRA 2005 stating that the securities were not registered under the
Securities Act and are subject to restrictions on their transferability and resale.

33

On January 25, 2005, we sold
3,200,000 shares of our common stock to Derrick Monroy at $0.025 per share or an aggregate
of $80,000. We relied upon Sections 4(2) and 4(6) of the Securities Act and Regulation S
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
issued to Derrick Monroy stating that the securities were not registered under the
Securities Act and are subject to restrictions on their transferability and resale.

On January 28, 2005, we issued, in
lieu of interest, 50,000 shares of our common stock to Jack Woods at $0.06 per share or an
aggregate of $3,000 for interest we owed to Jack Woods in accordance with terms of a
promissory note. We relied upon Section 4(2) and 4(6) of the 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 issued to
Jack Woods stating that the securities were not registered under the Securities Act and
are subject to restrictions on their transferability and resale.

On February 27, 2005, we issued
50,000,000 shares of our common stock to Gene Geiger at $0.041 per share or an aggregate
of $2,050,000 as settlement for a lawsuit. We relied upon Section 3(a)(10) of the
Securities Act of 1933 for the issuance. We believed that Section 3(a)(10) was available
because the offer and sale did not involve a public offering and there was no general
solicitation or general advertising involved in the offer or sale. We also believed that
Mr. Geiger was an accredited investor. We placed restrictive legends on the certificates
representing these securities issued to Gene Geiger stating that the securities were not
registered under the Securities Act and are subject to restrictions on their
transferability and resale.

On February 28, 2005, we issued
152,439 shares of our common stock to Michael Biste at $0.164 per share or an aggregate of
$25,000 as part of a contractual payment related to the purchase of property. We relied
upon Sections 4(2) and 4(6) of the Securities Act and Regulation S 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 issued to Michael
Biste stating that the securities were not registered under the Securities Act and are
subject to restrictions on their transferability and resale.

On March 17, 2005, we sold 50,000
shares of our common stock to Harry Hall at $0.025 per share or an aggregate of $1,250. We
relied upon Sections 4(2) and 4(6) of the 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 issued to Harry Hall
stating that the securities were not registered under the Securities Act and are subject
to restrictions on their transferability and resale.

34

On March 30, 2005, we issued 965,251
shares of our common stock to Tracy Madsen ,our Chief Financial Officer, at $0.0258 per
share or an aggregate of $24,903. These shares were issued in connection with Mr.
Madsens employment agreement with us, in lieu of salary. We relied upon Sections
4(2) and 4(6) of the 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 issued to Tracy Madsen stating that the
securities were not registered under the Securities Act and are subject to restrictions on
their transferability and resale.

On March 30, 2005, we sold 250,000
shares of our common stock to Donald Fox, at $0.02 per share or an aggregate of $5,000. We
relied upon Sections 4(2) and 4(6) of the 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 issued to Donald Fox
stating that the securities were not registered under the Securities Act and are subject
to restrictions on their transferability and resale.

On April 22, 2005, we sold 1,930,502
shares of our common stock to the Terry C. Turner, our president and chief executive
officer, at $0.0259 per share or an aggregate of $50,000. We relied upon Sections 4(2) and
4(6) of the 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 issued to Terry Turner stating that the securities were not
registered under the Securities Act and are subject to restrictions on their
transferability and resale.

On June 8, 2005, we issued, in lieu
of interest, 50,000 shares of our common stock to Jack Woods at $0.020 per share or an
aggregate of $2,000 for accrued and prepaid interest and in return for an extension of
payment of funds we owe to Jack Woods in accordance with terms of a promissory note we
have with Jack Woods. We relied upon Sections 4(2) and 4(6) of the 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 issued to
Jack Woods stating that the securities were not registered under the Securities Act and
are subject to restrictions on their transferability and resale.

On June 21, 2005, we issued
20,000,000 shares of our common stock to Atlas Precious Metals, Inc. at $0.019 per share
or an aggregate of $380,000. These shares were issued as an additional purchase price
related to the acquisition of the Gold Bar mill and plant. As a result of this issuance, a
requirement to move the plant from its site in Eureka, Nevada was removed from the
purchase agreement. We relied upon Sections 4(2) and 4(6) of the 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 issued to
Atlas Precious Metals stating that the securities were not registered under the Securities
Act and are subject to restrictions on their transferability and resale.

35

On June 27, 2005, we sold 3,000,000
shares of our common stock to Western Consolidated Resources, at $0.010 per share or an
aggregate of $30,000. We relied upon Sections 4(2) and 4(6) of the 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 issued to
Western Consolidated Resources stating that the securities were not registered under the
Securities Act and are subject to restrictions on their transferability and resale.

On June 30, 2005, we sold 5,000,000
shares of our common stock to Mary Ann Kohler, at $0.010 per share or an aggregate of
$50,000. We relied upon Sections 4(2) and 4(6) of the 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 issued to
Mary Ann Kohler stating that the securities were not registered under the Securities Act
and are subject to restrictions on their transferability and resale.

On July 5, 2005, we sold 1,000,000
shares of our common stock to Samuel Depe at $0.01 per share or an aggregate of $10,000.
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 issued to Samuel Depe stating that the securities were not
registered under the Securities Act and are subject to restrictions on their
transferability and resale.

On July 5, 2005, we sold 500,000
shares of our common stock to Donald Fox at $0.01 per share or an aggregate of $5,000. We
relied upon Sections 4(2) and 4(6) of the 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 issued to Donald Fox
stating that the securities were not registered under the Securities Act and are subject
to restrictions on their transferability and resale.

36

On July 5, 2005, we sold 1,000,000
shares of our common stock to Dewey Williams at $0.01 per share or an aggregate of
$10,000. We relied upon Sections 4(2) and 4(6) of the 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 issued to
Dewey Williams stating that the securities were not registered under the Securities Act
and are subject to restrictions on their transferability and resale.

On July 5, 2005, we sold 5,200,000
shares of our common stock to the Williams PSP&T, a trust, at $0.01 per share or an
aggregate of $52,000. We relied upon Sections 4(2) and 4(6) of the 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 issued to
Williams PSP&T stating that the securities were not registered under the Securities
Act and are subject to restrictions on their transferability and resale.

On July 12, 2005, we sold 400,000
shares of our common stock to David Geoffroy at $0.01 per share or an aggregate of $4,000.
We relied upon Sections 4(2) and 4(6) of the 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 issued to David
Geoffroy stating that the securities were not registered under the Securities Act and are
subject to restrictions on their transferability and resale.

On August 23, 2005, we issued 457,317
shares of our common stock to Michael Biste at $0.164 per share or an aggregate of $75,000
as part of a contractual payment for the purchase of the Buen Futuro mining claim. We
relied upon Sections 4(2) and 4(6) of the Securities Act and Regulation S 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 issued to
Michael Biste stating that the securities were not registered under the Securities Act and
are subject to restrictions on their transferability and resale.

On August 25, 2005, we sold 50,000
shares of our common stock to Harry Hall at $0.01 per share or an aggregate of $500. We
relied upon Sections 4(2) and 4(6) of the 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 issued to Harry Hall
stating that the securities were not registered under the Securities Act and are subject
to restrictions on their transferability and resale.

On September 13, 2005, we issued, in
lieu of interest, 200,000 shares of our common stock to Jack Woods at $0.012 per share or
an aggregate of $2,400 for accrued and prepaid interest and in return for an extension of
payment of funds we owe to Jack Woods in accordance with terms of a promissory note we
have with Jack Woods. We relied upon Sections 4(2) and 4(6) of the 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 issued to
Jack Woods stating that the securities were not registered under the Securities Act and
are subject to restrictions on their transferability and resale.

37

On September 15, 2005, we sold
3,000,000 shares of our common stock to Dewey Williams at $0.0075 per share or an
aggregate of $22,500. We relied upon Sections 4(2) and 4(6) of the 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 issued to
Dewey Williams stating that the securities were not registered under the Securities Act
and are subject to restrictions on their transferability and resale.

On September 15, 2005, we sold
2,500,000 shares of our common stock to Williams PSP&T, a trust, at $0.0075 per share
or an aggregate of $18,750. We relied upon Sections 4(2) and 4(6) of the 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 and there was no general solicitation or
general advertising involved in the offer or sale. We placed restrictive legends on the
certificates representing these securities issued to Williams PSP&T stating that the
securities were not registered under the Securities Act and are subject to restrictions on
their transferability and resale.

On September 15, 2005, we sold
2,709,406 shares of our common stock to the Williams Roth IRA, at $0.0075 per share or an
aggregate of $20,320. We relied upon Sections 4(2) and 4(6)of the 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 issued to
Williams Roth IRA stating that the securities were not registered under the Securities Act
and are subject to restrictions on their transferability and resale.

On September 30, 2005, we sold
2,000,000 shares of our common stock to Stewart Rubin, at $0.0075 per share or an
aggregate of $15,000. We relied upon Sections 4(2) and 4(6) of the 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 issued to
Stewart Rubin stating that the securities were not registered under the Securities Act and
are subject to restrictions on their transferability and resale.

On October 28, 2005, we sold
5,000,000 shares of our common stock to Jack Woods, at $0.010 per share or an aggregate of
$50,000. We relied upon Sections 4(2) and 4(6) of the 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 issued to
Jack Woods stating that the securities were not registered under the Securities Act and
are subject to restrictions on their transferability and resale.

38

On November 1, 2005, we sold
1,600,000 shares of our common stock to Stewart Rubin, at $0.010 per share or an aggregate
of $16,000. We relied upon Section 4(2) and 4(6) of the 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 issued to
Stewart Rubin stating that the securities were not registered under the Securities Act and
are subject to restrictions on their transferability and resale.

On November 15, 2005, we sold
12,667,667 shares of our common stock to Polion Do Brasil, at $0.0075 per share or an
aggregate of $95,000. We relied upon Sections 4(2) and 4(6) of the Securities Act and
Regulation S 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 issued to Polion Do Brasil stating that the securities were
not registered under the Securities Act and are subject to restrictions on their
transferability and resale.

On November 23, 2005, we sold
2,000,000 shares of our common stock to William PSP&T, a trust, at $0.0075 per share
or an aggregate of $50,000. We relied upon Sections 4(2) and 4(6) of the 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
issued to William PSP&T, a trust stating that the securities were not registered under
the Securities Act and are subject to restrictions on their transferability and resale.

On December 8, 2005, we sold
2,909,091 shares of our common stock to Edmundo Arauz, at $0.011 per share or an aggregate
of $32,000. We relied upon Sections 4(2) and 4(6) of the Securities Act and Regulation S
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
issued to Edmundo Arauz stating that the securities were not registered under the
Securities Act and are subject to restrictions on their transferability and resale.

On December 12, 2005, we sold
1,500,000 shares of our common stock to Kuhne Development, at $0.012 per share or an
aggregate of $18,000. We relied upon Sections 4(2) and 4(6) of the Securities Act and
Regulation S 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 issued to Kuhne Development stating that the securities were
not registered under the Securities Act and are subject to restrictions on their
transferability and resale.

39

On December 12, 2005, we sold
1,500,000 shares of our common stock to Avalon Productions, at $0.012 per share or an
aggregate of $18,000. We relied upon Sections 4(2) and 4(6) of the Securities Act and
Regulation S 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 issued to Avalon Productions stating that the securities
were not registered under the Securities Act and are subject to restrictions on their
transferability and resale.

# Issuances after our year
end of December 31, 2005

On January 17, 2006, we sold
4,127,273 shares of our common stock to Edmundo Arauz, at $0.011 per share or an aggregate
of $45,400. We relied upon Sections 4(2) and 4(6) and Regulation S of the Securities Act
and Regulation S 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 issued to Edmundo Arauz stating that the securities were not
registered under the Securities Act and are subject to restrictions on their
transferability and resale.

On January 19, 2006, we issued, for
legal services, 252,900 shares of our common stock to Hamilton, Lehrer & Dargan P.A.,
at $0.020 per share or an aggregate of $5,058. We relied upon Section 4(2) of the
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 issued to Hamilton, Lehrer & Dargan P.A., stating that
the securities were not registered under the Securities Act and are subject to
restrictions on their transferability and resale.

On March 20, 2006, we sold 846,154
shares of our common stock to Ron Dove, at $0.013 per share or an aggregate of $11,000. We
relied upon Sections 4(2) and 4(6) of the 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 issued to Ron Dove
stating that the securities were not registered under the Securities Act and are subject
to restrictions on their transferability and resale.

40

(f)    
          Item 703 of Regulation SK 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 (0r Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs
|------------------ | ----------------------------------------------- | ------------------------------------------ | ----------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------
|1/1/04 - 1/31/04   | -                                               | -                                          |                                                                                                 |                                                                                                                            
|2/1/04 - 2/29/04   | -                                               | -                                          |                                                                                                 |                                                                                                                            
|3/1/04 - 3/31/04   | 965,251(2)                                      | $.026                                      |                                                                                                 |                                                                                                                            
|4/1/04 - 4/3/04    | 1,930,502(3)                                    | -                                          |                                                                                                 |                                                                                                                            
|5/1/04 - 5/31/04   | -                                               | -                                          |                                                                                                 |                                                                                                                            
|6/1/04 - 6/30/04   | -                                               | -                                          |                                                                                                 |                                                                                                                            
|7/1/04 - 7/31/04   | -                                               | -                                          |                                                                                                 |                                                                                                                            
|8/1/04 - 8/31/04   | 734,500(1)                                      | $.019                                      |                                                                                                 |                                                                                                                            
|9/1/04 - 9/30/04   | -                                               | -                                          |                                                                                                 |                                                                                                                            
|10/1/04 - 10/31/04 | -                                               | -                                          |                                                                                                 |                                                                                                                            
|11/1/04 - 11/30/04 | 734,500(1)                                      | $.013                                      |                                                                                                 |                                                                                                                            
|12/1/04 - 12/31/04 | -                                               | -                                          |                                                                                                 |                                                                                                                            
|Total              | 4,364,753                                       | $.023                                      |                                                                                                 |                                                                                                                            

(1)    
          H. Roy Shipes and his wife Eileen Shipes received restricted common shares
          through an engineering contract with a company controlled by Mr. Shipes by the
          name of Western States Engineering. Western States Engineering is providing
          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. Mr. Shipes and/or his wife received 3,103,500
          shares under this contract during 2005; however, only 1,469,000 of these shares
          were granted after he had been elected to our Board of Directors.

(2)    
          Tracy A. Madsen, our Chief Financial Officer, was granted 965,251 shares of
          restricted common stock on March 30, 2005 per his employment agreement and in
          lieu of a cash payment. The shares were valued at $.0258 per share the closing
          price on the date of the grant.

(3)    
          Terry C. Turner, our Chief Executive Officer, purchased 1,930,502 under a
          private placement on April 22, 2005. Mr. Turner purchased the shares at $.0259
          per share, the closing market price on the date of the purchase.

41

# Item 6. Selected
Financial Data

|Selected Financial Data      
|-----------------------------
|                             
|                             
|                             
|Gold Sales                   
|                             
|Net (loss)                   
|                             
|Net (loss) per diluted share 
|                             
|Dividends per diluted share  
|                             
|Total assets                 
|                             
|Current liabilities          
|                             
|Non current liabilities      
|                             
|Stockholders equity (deficit)
|                             

# Item 7.
Managements discussion and analysis of financial condition and results of operations



OverviewWe 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. For at least five years, 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, including a principal reduction and
past due interest payable to the Seydler Trusts. We have paid most of our bills through
the present through equity and debt financing, with the exception of currently due
obligations.

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

(a)    
          Liquidity and capital resources  2005 and 2004

42

# (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, 2005 and 2004.

|                          |              |             
|------------------------- | ------------ | ------------
|                         
|Years Ended               | December 31,
|                          | 2005         | 2004        
|                         
|Current Assets            |              | $    223,368
|                         
|Current Liabilities       |              | 1,694,777   
|                         
|Working Capital (Deficit) |              | ($1,471,409 
|                         

Our current assets increased by
$37,177 or 20% from $186,191 as of December 31, 2004 to $223,368 for the comparable 2005
period. The increase was due to a $21,435 decrease in cash and a $58,612 increase in
prepaid expenses.

Our working capital deficit increased
by $141,771 or 11% to $1,471,409 as of December 31, 2005 from $1,329,638 for the
comparable 2004 period because of the decrease in cash, the increase in prepaid expenses
and a $178,948 increase in current liabilities. The increase in current liabilities was
the result of a $198,348 increase in accounts payable, an $111,033 increase in related
party debt, and a $96,030 increase in accrued interest payable. This was partially offset
by a $260,000 reduction in contracts payable resulting from payments that we made per the
contract for the Buen Futuro concession.

We also owe past-due salary
obligations to our president, Terry C. Turner. During 2005, Mr. Turner waived $60,000. On
December 31, 2004, 2003 and 2001, Mr. Turner waived $60,000, $36,457 and $443,772
respectively of accrued salary without receiving any consideration from us. We continue to
owe Mr. Turner $396,783 in back salary; however, he has agreed that this liability bears
no interest. A note receivable from Mr. Turner in the amount of $396,783 offsets this
liability. The receivable and payable are netted out to a zero balance and do not appear
on our balance sheet.

Our working capital deficit during
2005 was also affected by the receipt and related expenditure of more than $698,071 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 and 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) Contract
obligations

Our long-term contract obligations
during 2005 and 2004 are reflected in the following table:

|Years Ended                       | December 31
|--------------------------------- | -----------
|                                  | 2005       
|Contract payable (net of current) | 40,000     
|                                  |            

43

The contract currently payable at
December 31, 2004 relates to the purchase of the Buen Futuro mine. The non-current portion
has become current and was due during 2005 on the following schedule.

|              |         |               
|------------- | ------- | --------------
|              | Cash    | Shares (Value)
|December 2005 | $40,000 | $0            
|              |         |               

We have negotiated an extension for
the December 2005 payment by agreeing to pay an additional $7,500, for a total of $47,500.
We anticipate that these payments will be made during the first two quarters of 2006.

# (a)(3) Property and
equipment

During 2005, we increased our
property and equipment net of depreciation, depletion and impairment by approximately
$3,999,553 or 189% to $6,106,419 at December 31, 2005 as compared to $2,106,866 at
December 31, 2004; however, we reclassified the Gold Bar mill and plant as a fixed asset
from a non operating non current asset following the execution of an agreement with the
seller to remove a clause from the sales agreement which would allow the seller to
terminate the agreement if the plant is not moved from the property prior to 12 months
from the date of the sales agreement. The agreement required us to issue an additional 20
million shares to the seller valued at $380,000 which was applied to the value of the Gold
Bar mill and plant. We have reported property and equipment, including the Gold Bar mill
and plant, of $7,909,692 with depreciation, depletion and impairment of $1,803,272. By
excluding Gold Bar, fixed assets increased by approximately $38,000 as the result of
certain spare parts and equipment purchased for the Buen Futuro project.

|                                                           |             |            
|---------------------------------------------------------- | ----------- | -----------
|Years Ended                                                | December 31
|                                                           | 2005        | 2004       
|Mining equipment                                           | $1,383,021  | $1,294,403 
|Gold Bar Mill and Plant-idle                               | 3,980,000   | -          
|Mine development costs                                     | 529,618     | 529,618    
|Mining properties                                          | 1,821,451   | 1,827,301  
|Other (office, vehicles and aircraft)                      | 195,602     | 240,600    
|Accumulated   depreciation  and  depletion  and Impairment | (1,803,272) | (1,785,056)
|Fixed assets net                                           | 6,106,419   | 2,106,866  
|Gold Bar mill and plant                                    | -           | 3,600,000  

The increase in accumulated
depreciation, depletion and impairment during 2005 resulted from the scheduled
depreciation of equipment held in Bolivia and the United States. The increase in 2004 was
primarily the result of an impairment in the amount of $912,404 of the capitalized mine
improvements at our Cangalli underground mine in the amount of $322,404, the Cangalli
property of $470,000 and machinery and equipment of $120,000. The impairment was the
result of the cessation of operations at Cangalli and our inability to estimate if and
when we will be able to recommence operations in addition to our current cash flow
shortages and the threat that it extends over our ability to meeting our operating
objectives. Total 2004 impairment was $912,404. A graphical illustration of our 2004
impairment is as follows:

44

|Description                        | Amount capitalized | Accumulated depletion or depreciation | Impairment (2002 and 2004) | Remaining value
|---------------------------------- | ------------------ | ------------------------------------- | -------------------------- | ---------------
|                                  
|Mine development  costs (Cangalli) |                    | $   490,424                           |                            | $  83,760      
|                                  
|Property (Cangalli)                |                    | 1,054,001                             |                            | 88,906         
|                                  
|Machinery & Equipment              |                    | 1,294,403                             |                            | 520,706        
|                                  

Our outside counsel in Bolivia
advised us in 2004 that at that time we had an 80% probability of resuming production
within five years. As a result of the impairment, we reduced the carrying costs related to
the mine to a fair value based on discounted expected cash flows from expected revenues
based on our remaining reserves less carrying and additional development costs to bring
the mine back into production.

We impaired our mining machinery and
equipment based on discounted estimated comparable values by $120,000.

# (a)(4) Cash flow

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 ($850,154) in 2005 and
($1,207,550). We also invested $93,352 in 2005 and $346,667 in 2004 in additional
property, plant and equipment. Net cash flows provided by our financing activities totaled
$922,071 in 2005 and $1,478,036 in 2004. Cash at December 31, 2005 decreased by $21,436
from $51,580 at the beginning of the period to $30,144 at the end of the period.

|                                                |             |             |     
|----------------------------------------------- | ----------- | ----------- | ----
|Net cash flows                                  | December 31
|                                                | 2005        | 2004        | 2003
|                                               
|Net (Loss)                                      |             | $(2,038,534 | )   
|                                               
|Net cash flows used by operating activities     |             | (850,155    | )   
|                                               
|Cash flows from investing activities            |             | (93,252     | )   
|                                               
|Net cash flows provided by financing activities |             | 922,071     |     
|                                               
|Net increase (decrease) in cash                 |             | (21,436     | )   
|                                               
|Cash beginning of period                        |             | 51,580      |     
|                                               
|Cash end of period                              |             | $30,144     |     
|                                               

45

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 are only offering 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 refinance outstanding debt or to convert debt to common stock,
including:

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

|o | Our
officers have deferred payment of a portion of their 2005 salary until funds are
available to pay these wages.  As of          December 31, 2005, total deferred salaries
from officers was $89,866.  These deferred salaries are included in accounts
         payable.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|o | We
have also continued to complete private placements during the first quarter of 2006 with
three accredited investors.          Through March 30, 2006, we had received $56,400 in
private placement proceeds in exchange for 4,973,427 shares of restricted          common
stock.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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.

# (a)(5) Capital
commitments

Our capital commitments are set out
below:

|                                      |  |  |   |          
|------------------------------------- |  |  | - | ---------
|                                     
|                                      |  |  |   |          
|Contractual Cash Obligations          |  |  |   | Total    
|                                     
|Accounts Payable and Accrued Expenses |  |  | $ | 399,454  
|                                     
|Related Party Debt                    |  |  |   | 135,000  
|                                     
|Notes Payable                         |  |  |   | 1,019,591
|                                     
|Contracts Payable                     |  |  |   | 40,000   
|                                     
|Exploration & Production Buen Futuro  |  |  |   | 435,834  
|                                     
|UCL Assumed Debt                      |  |  |   | 77,359   
|                                     
|Mining Claim Fees                     |  |  |   | 282,010  
|                                     
|Building Leases                       |  |  |   | 17,855   
|                                     
|Accrued Interest                      |  |  |   | 100,731  
|                                     
|Debenture                             |  |  |   | 249,000  
|                                     
|Total Contractual Cash Obligations    |  |  | $ | 2,756,834
|                                     
|                                      |  | 

46

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

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

# (b) Results of
operations.

The following sets forth certain
information regarding our results of operations as of December 31, 2005, compared with the
same periods in 2004 and 2003.

|                                        |  |  |                        
|--------------------------------------- |  |  | -----------------------
|                                       
|Consolidated                            |  |  | Years Ended December 31
|                                       
|                                        |  |  |                        
|                                       
|Revenues                                |  |  |                        
|                                       
|Production costs                        |  |  |                        
|                                       
|Production taxes                        |  |  |                        
|                                       
|Exploration & development costs         |  |  |                        
|                                       
|General and administrative              |  |  |                        
|                                       
|Non-cash stock option comp              |  |  |                        
|                                       
|Asset impairment                        |  |  |                        
|                                       
|Depreciation and depletion              |  |  |                        
|                                       
|Operating (loss)                        |  |  |                        
|                                       
|Interest expense                        |  |  |                        
|                                       
|Gain (loss) on settlement of litigation |  |  |                        
|                                       
|Other income (loss)                     |  |  |                        
|                                       
|Net (loss)                              |  |  |                        
|                                       
|Net (loss) per Share                    |  |  |                        
|                                       
|Weighted average shares                 |  |  |                        
|                                       

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. Although our operating losses during 2004 were not materially different
compared to 2003, we suspended production during 2004 for seven months of the year and
currently we are generating no cash flow from operations.

Revenue.    
          During 2005, our revenues decreased by $1,322,057 or 100%, having generated no
          revenues from mine production for the period ending December 31, 2005 compared
          to $1,322,057 in 2004. Our revenues only differed by $3,534,or less than 1%,
          from 2004 to 2003 from $1,322,057 during 2004 to $1,325,591 during 2003.
          Revenues, however, during 2004 were generated through only 5 months of
          production compared to 12 months of production during 2003.

47

Production Costs. Production
costs decreased by $979,419 or 100% to $0 during 2005 compared to $979,419 in 2004.
Production costs during 2003 were $962,910, a decrease of only $16,509 from 2004. The
elimination of production costs in 2005 was the result of the continued cessation of
mining operations at Cangalli. Certain costs related to Cangalli and production continue
to be paid and are classified as general and administrative expenses. These costs totaled
$109,000 during 2005.

Exploration & Development.
Exploration and mine development costs decreased by $402,367 or 48% from $835,325 in 2004
to $433,958 during 2005. Exploration and mine development costs decreased by $296,860 or
24% to $836,325 in 2004 from $1,106,185 during 2003. The decrease in 2005 was due to
having eliminated exploration and development at Cangalli pending the outcome of the
dispute between the (UCL) and the Government of Bolivia. 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 continue to incur exploration and
development costs at Buen Futuro as we prepare the shipment of the Gold Bar mill and plant
to Bolivia and the start up of operations. These activities have been limited as a result
of the shortage of funds available to complete the project. As we continue to develop the
Precambrian prospects towards production, and as we expand our reserve estimations,
exploration and development costs will increase. Any exploration and development at Buen
Futuro will require us to raise additional funds either through the issuance of equity or
debt financing, which cannot be assured.

General and Administrative
Expenses. Our general and administrative expenses for 2005 decreased by $334,060 or
approximately 19% from $1,779,318 during 2004 to $1,445,258 during 2005 and decreased by
approximately 31% during 2004 from $2,594,692 in 2003. 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 our Buen Futuro mine.

Legal expenses in 2005 decreased to
$95,543 from $132,231 in 2004 and increased from $28,000 in 2003. This decrease was the
result of being named as a defendant in Geiger v. Golden Eagle International, Inc. and
Ronald A. Knittle, Civ. No. 03CV9390, and our defense and preparation for trial that
was expensed during 2004. During February 2005 we settled this suit. Additionally, we
retained a new law firm during 2005. Under an agreement with this firm, we paid our legal
retainer in S8 stock that caused our cost for services to be higher than if we had paid
with cash.

Accounting expenses in 2005 remained
constant at $79,638, compared with accounting costs of $83,364 in 2004 and $80,000 in
2003. During 2005, we changed auditors to a Chisholm, Bierwolf and Nilson located in Salt
Lake City, Utah.

Depreciation and Depletion.
Depreciation and depletion decreased to $73,542 in 2005 from $271,937 in 2004 and $154,853
during 2003. The decrease in 2005 was the result of the cessation of operations at
Cangalli and the subsequent impairment. As production equipment is currently in storage,
limited depreciation was taken. The increase during 2004 was due to the acquisition of
additional mine and plant equipment during 2003 and an increase in monthly gold production
during the first five months of 2004, for which we depleted some of our capitalized
assets.

48

During 2005, we did not incur any
additional impairment expense, as we believe that the impairment that we recognized in
2004 was sufficient to cover the shut down of our Cangalli operations and the continued
delay at Buen Futuro. During 2004, we recognized a $912,404 impairment primarily on the
capitalized improvements of the Cangalli mine. We impaired substantially all of the mine
development costs previously capitalized when the Cangalli mine was classified as a
production property. We also impaired $470,000 relating to the acquisition costs of the
Cangalli property and $120,000 in machinery and equipment. As of December 31, 2004, we had
been shut down at Cangalli for approximately seven months. As some of the internal mine
improvements may be deteriorating and may require additional funds to bring them back up
to standard, and since we have no definitive time period in which we may recommence
operations, we determined that we should impair the mine improvements. We continue to show
these improvements as an asset on our books; however, we have also booked a corresponding
impairment.

Operating expenses. During
2005, our operating expenses decreased by $2,974,275 or 60% to $1,952,758 for 2005 from
$4,927,033 during 2004. Our operating expenses were not materially different in 2004
compared to 2003, having decreased by $63,859 from $4,990,892 in 2003 to $4,927,033 in
2004. The decrease was the result of a reduction of staff and an overall decrease in
general and administrative expenses as well as the elimination of production costs related
to our Cangalli shutdown.

Interest expense. Interest
expense declined to $130,270 during 2005 following a dramatic decrease during 2004 to
$224,034 from $2,909,462 in 2003. This decrease in interest expense was directly related
to the conversion of debentures and other debt to common stock during 2003 and 2004.

Legal.    
          As discussed above in Item 3, Legal Proceedings, during 2004 we became party to
          a lawsuit filed in the District Court for the City and County of Denver,
          Colorado, entitled: Geiger v. Golden Eagle International, Inc. and Ronald A.
          Knittle, Civ. No. 03CV9390. The subject matter of that suit is stock
          transactions that took place at the end of 1995 and the beginning of 1996, which
          were authorized by Ronald A. Knittle, as former officer and director. The
          alleged acts that purportedly damaged the plaintiff took place well prior to the
          appointment of any currently serving officer or director.

In order to avoid the uncertainty
attendant with all litigation, and to eliminate the continued cash outflow for legal fees,
we chose to settle with the plaintiff to ameliorate any potential finding of liability and
a damages award. On February 8, 2005, we issued 50 million shares of our restricted common
stock to one accredited investor, the plaintiff, in accordance with the terms of a
settlement agreement. The parties filed a stipulated motion to dismiss the case with
prejudice. The settlement agreement was approved by the court on February 3, 2005. The
case was dismissed, with prejudice, on March 9, 2005. Even though the settlement occurred
in 2005, the condition relating to the settlement was in place during 2004. As a result,
we expensed this settlement during 2004 in the amount of $2,050,000, which is 50,000,000
shares of our common stock multiplied by the closing price of our stock on January 3, 2005
of $.041 per share. The offsetting entry was a liability for the legal settlement payable
in the amount of $2,050,000. This liability was recorded as equity during the first
quarter of 2005 and resulted in a $2,050,000 increase in total stockholders equity.

49

Net Loss. Our net loss for
2005 was ($2,038,534) compared to ($5,877,951) in 2004 and ($6,519,054) in 2003, resulting
in a decreased per-share loss of $(.003) in 2005, $(.01) in 2004, versus $(.02) in 2003.

Since commencing operations at our
Cangalli mine in 2002, 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.

# (b)(1) Special non-cash
impact due to options

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

# (c) Plan of operations

Our current Plan of Operations does
not differ significantly from our Strategy as discussed in Part II, Item 1 at page 8
above, which is to further develop the potential of our Buen Futuro gold and copper
project in eastern Bolivia during 2006 by carrying out a program of in-fill drilling,
performing additional metallurgical studies, securing final environmental permitting, and
improving and finalizing our feasibility work performed there to date. We also intend to
finish our exploration and feasibility work on the gold deposits 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, by September of 2006. Once that feasibility
work is completed, and if it is positive, we intend to implement the recommended mine
plan, to construct the recommended recovery circuit and enter into operations by year-end
2006. In addition, we intend to complete the necessary exploration and feasibility work on
our Rio Mojos gold project in western Bolivia by April 2007 and determine our best course
of action there. Moreover, we intend to implement the results of our feasibility work by
carrying out a well defined mine plan and constructing the most appropriate milling and
mineral recovery facilities on these two projects. Finally, we intend to continue our
efforts to resolve those issues impeding the development of our Cangalli mine. All of the
foregoing, and related plans stated below, are contingent upon receiving an estimated
$11.5 million of financing detailed as follows:

To accomplish our Plan of Operations
we intend to:

|o | Obtain
estimated financing of $1.5 million for the costs pertaining to our in-fill drilling,
metallurgical studies and final          feasibility work for our Buen Futuro (A Zone), B
& C Zone and Rio Mojos projects.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

50

|o | Carry
out an in-fill drilling program using reverse circulation and auger drilling that would
be under the supervision of          Dr. Michael H. Biste, our geologist on the Buen
Futuro project, as well as under the supervision of an internationally
         experienced geological engineering firm. Our "in-fill" drilling program will
entail drilling in between our existing grid of          drill holes, and trench and pit
sampling sites, so that our computer modeling can more accurately project the grade and
         quantity of existing gold and copper mineralization for our feasibility study.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|o | Carry
out detailed metallurgical studies at our Buen Futuro project on the sampling that
results from our in-fill drilling          program under the supervision of our
metallurgical team in Bolivia, as well as under the supervision of an internationally
         experienced geological engineering firm, to ensure the most efficient and
economical treatment of our gold and copper ore. o        Obtain estimated $3.5 million
for the dismantling of our Gold Bar Mill and Plant located in Eureka, Nevada, and for
shipping          it and re-erecting it on our Buen Futuro site in eastern Bolivia.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|o | Finalize
our environmental permitting and feasibility study on our Buen Futuro project and obtain
estimated $6.5 million to          implement the recommended mine plan, and milling and
recovery circuit, to put the project into operation.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|o | Explore
the gold deposits on the B and C Zones on our Precambrian properties in eastern Bolivia;
perform metallurgical          testing; secure our environmental permitting; finalize our
feasibility study; implement our mining plan and construct our          recovery plant,
by year-end 2006.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|o | Secure
our environmental exploration permit for our Rio Mojos project; finalize mapping and
topographical work that is          currently in process; and carry out field
exploration, metallurgical testing and other work necessary to produce a final
         feasibility study and mine plan by April of 2007.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|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.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

(d)
Impact of inflation and changing prices

We have not experienced any impact
from the effects of inflation during the last three operating periods, 2003, 2004 or 2005.
Bolivian inflation, while astronomical at points during the early 1980s, has been
relatively stable, at less than 10% since 1985, and during the last three years has been
less than 8% per annum. In 2004, inflation was less than 5% per annum in Bolivia.

# (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.

51

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.

Non-cash impact of share-for-share
options exchange: our Board of Directors may occasionally grant options to our officers.
The vesting period for options granted is one year and a non-cash option expense is booked
at the time the options are granted. At the time options are exercised, the grantee may
exercise shares in a like-kind, share-for-share exchange for net stock issued to them at
the market price of the stock on the date of the transaction. The price is multiplied by
the total net number of shares that are received to come up with the compensation 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 minerable
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.

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 March 2005, the SEC staff issued
Staff Accounting Bulletin (SAB) No. 107, Share-Based Payment,
which provides guidance on the interaction between SFAS No. 123R and certain SEC
rules and regulations, as well as on the valuation of share-based payments. SAB
No. 107 provides interpretive guidance related to valuation methods (including
assumptions such as expected volatility and expected term), first time adoption of SFAS
No. 123R in an interim period, the classification of compensation expense and
disclosures subsequent to adoption of SFAS No. 123R. We are currently evaluating the
impact of SAB No. 107 on our consolidated financial statements.

52

In March 2005, the FASB ratified
Emerging Issues Task Force Issue No. 04-6, Accounting for Stripping Costs
Incurred during Production in the Mining Industry, (EITF 04-6) which addresses the
accounting for stripping costs incurred during the production phase of a mine and refers
to these costs as variable production costs that should be included as a component of
inventory to be recognized inCosts applicable to sales in the same period as the
revenue from the sale of inventory. As a result, capitalization of stripping costs is
appropriate only to the extent product inventory exists at the end of a reporting period.
We will adopt the provisions of EITF 04-6 on January 1, 2006 or at the commencement
of mining operations if applicable. Adoption of EITF 04-6 will have no impact on the
Companys cash position.

In March 2005, the FASB issued
Interpretation 47 (FIN 47), Accounting for Conditional Asset Retirement
Obligationsan interpretation of FASB No. 143. FIN 47 clarifies that the
term conditional asset retirement obligation as used in SFAS No. 143
refers to a legal obligation to perform an asset retirement activity in which the timing
and/or method of settlement are conditional on a future event that may or may not be
within the control of the entity. The obligation to perform the asset retirement activity
is unconditional even though uncertainty exists about the timing and/or method of
settlement. FIN 47 requires a liability to be recognized for the fair value of a
conditional asset retirement obligation if the fair value of the liability can be
reasonably estimated. We are currently analyzing the impact of this pronouncement however;
we believe that it will not immediately have a material impact on our consolidated
financial position, results of operations or cash flows.

In May 2005 the FASB issued SFAS
No. 154, Accounting Changes and Error Corrections. SFAS No. 154
established new standards on accounting for changes in accounting principles. SFAS
No. 154 requires all such changes to be accounted for by retrospective application to
the financial statements of prior periods unless it is impracticable to do so. SFAS
No. 154 is effective for accounting changes and error corrections made in fiscal
years beginning after December 15, 2005. Adoption of SFAS No. 154 is not
expected to have a material impact on our consolidated financial position, results of
operations or cash flows.

In June 2005, the FASB issued FASB
Staff Position Paper (FSP) 115-1, The Meaning of Other-Than-Temporary
Impairment and its Application to Certain Investments, superseding EITF 03-1. FSP
115-1 will replace the accounting guidance on the determination of whether an investment
is other-than-temporarily impaired as set forth in EITF 03-1 with references to existing
other-than-temporary impairment guidance. FSP 115-1 is effective for reporting periods
beginning after December 15, 2005. Adoption of FSP 115-1 is not expected to have a
material impact on our consolidated financial position, results of operations or cash
flows.

53

# Item 7A. Quantitative
and qualitative disclosure about market risk

We do not have any market risk
sensitive instruments. Since operations in Bolivia are in dollar denominated accounts, we
do not believe that we have any material foreign currency risk. Our principal market risk
is due to fluctuating gold prices, which directly affect our revenues. The volatility of
the market price for our shares directly impacts our ability to raise the capital we need
to continue operations and to finance our operating losses. We manage the volatility of
gold prices by holding some of our gold production for sale at a later time when we
believe that prices will increase. We have not used futures contracts or other methods of
hedging to protect ourselves from price fluctuations, and we have no intention of doing so
in the near future.

# Item 8. Financial
statements and supplementary data

Please refer to pages F-1 through
F-29.

# Item 9. Changes in and
disagreements with accountants on accounting and financial disclosure

Resignation of Gordon, Hughes &
Banks, LLP.Gordon, Hughes & Banks, LLP, Certified Public Accountants and
Consultants (Gordon, Hughes & Banks), resigned as our auditors on July 20,
2005.

Appointment of Chisholm, Bierwolf
& Nilson, LLC.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 through the present.

# Item 9A. Controls and
procedures

Our
Chief Executive Officer and Chief Financial Officer evaluated our disclosure controls and
procedures on December 31, 2005 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-K for the year
ended December 31, 2005.

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 9B. Other information

54

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

(a)
          and (b) Identification of directors and executive officers

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

|Name                           | Age | Position                                                  | Term of Office 
|------------------------------ | --- | --------------------------------------------------------- | ---------------
|H. Roy Shipes                  | 63  | Chairman of the Board of Directors                        | 6/25/05-present
|                               |     |                                                           |                
|Terry C. Turner1               | 53  | President, Chairman and CEO                               | 2/14/97-present
|                               |     |                                                           |                
|Kevin K. Pfeffer               | 46  | Director                                                  | 1/23/03-present
|                               |     |                                                           |                
|Alvaro Riveros                 | 63  | Director                                                  | 1/5/04-present 
|                               |     |                                                           |                
|Harlan M. (Mac) Delozier III 2 | 62  | Administrative Vice President (Bolivia)                   | 3/1/97- present
|                               |     |                                                           |                
|Tracy A. Madsen                | 44  | Secretary/Treasurer/CFO/
Vice President US
Administration | 2/13/03-present

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

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

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. 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, 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.

55

Executive officers are elected at
annual meetings of the board of directors. Each such officer holds office for one year or
until a successor has been duly elected and qualified or until death, resignation or
removal.

# (c) Identification of
significant employees

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

# (d) Family relationships

No family relationships exist among
the officers and directors.

# (e) 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:

H.    
          Roy Shipes,Chairman of the Board of Directors. Mr. Shipes was
          appointed to our Board of Directors on June 14, 2005 and elected Chairman of the
          Board on July 19, 2005. 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.

Terry C. Turner,
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 Bachelor of Arts Degree in Political Science and a Bachelor of Arts
Degree 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 admitted to the
District of Columbia Bar and is a member of the American Bar Association and the
Inter-American 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 mineral 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.

56

Kevin K. Pfeffer, Director.Mr. Pheffer was appointed as a member of our Board of Directors on January 23,
2003. Mr. Pfeffer received a Bachelor of Arts Degree in Economics in 1982, and a Master of
Business Administration 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.

Alvaro Riveros, Director.Mr. Riveros 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 mine and recovery plant. 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.

57

Harlan M. (Mac) Delozier
II was appointed to the position of our Administrative Vice President for
Bolivian Operations 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.

# (f) Involvement in
certain legal proceedings

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;

58

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.

# (g) Promoters and
control persons

Not applicable.

59

(h)    
          and (i) Audit committee financial expert and Identification of Audit
          committee

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

(j)    
          Material changes to shareholder nomination procedures

We have
not held a shareholders meeting in more than the past five years. Our bylaws set forth the
procedures for nomination of directors, and there have been no changes to those
procedures.

(k)    
          Section 16(a) beneficial ownership reporting compliance

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, 2005 with the exception
of the following:

H.    
          Roy Shipes was appointed as a director on June 25, 2005. Mr. Shipes filed his
          Form 3 and Form 5 in March 2006.

(l)    
          Code of ethics

We adopted a Code of Ethics on March
23, 2004, meeting the requirements of Item 406 of Regulation S-K 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
vailable 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 11. Executive
compensation

# (a) and (b) Summary
compensation table

60

The following table sets forth
information regarding compensation paid to our Chief Executive Officer for the years ended
December 31, 2003, 2004 and 2005. 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,                |      |                     |             |                  |                                      |                       
|                               | 2003 | $240,666 (A)        | $60,000(A)  | -                | -(B)                                 | -                     
|                               | 2004 | $260,000            | $60,000 (A) | -                | -                                    | $5,247 (D)            
|                               | 2005 | $120,083 (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)      | -                                    | -                     

(A)    
          These bonus payments reflect non-cash debt forgiveness. At December 31, 2005,
          Mr. Turner owed us $396,783 in non-interest bearing loans he received from us
          prior to July 31, 2002; we also owed Mr. Turner $396,783 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 2003, 2004 and 2005 Mr. Turner waived $36,457, $60,000 and
          $60,000, respectively. 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. Deferred salaries were expensed during 2005 and
          carried on the balance sheet under accounts payable.

61

(C)    
          On November 12, 2003, Mr. Madsen was granted a 250,000 share restricted stock
          bonus 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. Shares were issued on January 7, 2004.
          On March 30, 2005, Mr. Madsen 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.

(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.

(E)    
          Mr. Madsen deferred $16,833 of 2005 salary to be paid when sufficient funds are
          available. Deferred salaries were expensed during 2005 and carried on the
          balance sheet under accounts payable.

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, 2005

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 four 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.

62

Alvaro Riveros received
directors fees of $5,000 during 2005 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.

Ronald L Atwood, Ph.D. was our
director and Chief Operating Officer from January 2004 until June 8, 2005, when he
resigned from that capacity. During this period of time, Dr. Atwood was paid a salary. A
portion of the accrued salary is still outstanding and owed to him.

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 no 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, 2005 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 2005.

# Performance graph.

63

# Item 12. Security ownership of certain
beneficial owners and management

On December 31, 2005, our stock
traded at  $.027 per share and on December 31, 2004, our stock closed
at  $.042 per common share.

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

At December 31, 2005, and
subsequently, we had only one class of outstanding voting securities, our common stock
(referred to herein as the Common Stock).

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.

|Name of beneficial owner   | Shares owned beneficially (1) | Percent of class
|-------------------------- | ----------------------------- | ----------------
|                           |                               |                 
|                           |                               |                 
|Kevin Pfeffer              |                               |                 
|9661 S. 700 E.             |                               |                 
|Salt Lake City, UT 84070   |                               |                 
|                           |                               |                 
|H. Roy Shipes              |                               |                 
|8040 S. Kolb Rd.           |                               |                 
|Tucson, AZ 85706           |                               |                 
|                           |                               |                 
|                           |                               |                 
|Terry C. Turner            |                               |                 
|9661 S. 700 E.             |                               |                 
|Salt Lake City, UT 84070   |                               |                 
|                           |                               |                 
|                           |                               |                 
|Tracy A. Madsen            |                               |                 
|9661 S. 700 E.             |                               |                 
|Salt Lake City, Utah 84070 |                               |                 
|                           |                               |                 
|Harlan M. (Mac) Delozier   |                               |                 
|9661 S. 700 E.             |                               |                 
|Salt Lake City, Utah 84070 |                               |                 
|                           |                               |                 
|Alvaro Riveros             |                               |                 
|9661 S. 700 E.             |                               |                 
|Salt Lake City, Utah 84070 |                               |                 
|                           |                               |                 
|All officers and directors |                               |                 
|as a group                 |                               |                 
|                          

64

(1)    
          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. Unless otherwise
          indicated, beneficial ownership is of record and consists of sole voting and
          investment power.

(2)    
          Mr. Pfeffer also serves as a director of Golden Eagle.

(3)    
          Included in the total number of shares owned beneficially by Mr. Shipes is
          50,000,000 shares owned by Atlas Precious Metals, Inc. obtained through the sale
          of the Gold Bar mill and plant to us. Mr. Shipes owns a controlling interest in
          Atlas Precious Metals, Inc. Mr. Shipes is also our Chairman of the Board.

(4)    
          Mr. Turner is the president and Chief Executive Officer of the company.

(5)    
          Tracy A Madsen is the Corporate Secretary, Treasurer, Chief Financial Officer
          and Vice President of US operations. During 2005, Mr. Madsen was granted 965,251
          restricted shares per his employment agreement in lieu of a cash payment.

(6)    
          Harlan (Mac) Delozier is Vice President of Bolivian Administration.

(c)    
          Changes in control

65

We know of no arrangement, the
operation of which may, at a subsequent date, result in change in control.

(d)    
          Securities authorized for issuance under equity compensation plans

See
Item 5 herein for this disclosure.

# Item 13. 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 (Mr. Turner) and to our former president (Mary Erickson, who also was formerly
our Secretary/Treasurer and who is one of our significant shareholders). As a result,
their salaries accrued unpaid. This accrual ceased for Ms. Erickson when she resigned in
October 1999. Mr. Turners salary continued to partially accrue in 2002, and we paid
only $103,000 of the $200,000 owed to him during 2002.

On December 31, 2001, Mr. Turner
waived $443,772 of a total accrued balance of $990,012 owed to him, and Ms. Erickson
waived her entire accrued balance of $462,114. On December 31, 2003, 2004 and 2005, Mr.
Turner waived an additional $36,457, $60,000 and $60,000 respectively, owed to him.

The total of these waivers was a
reduction of $1,062,343 in liabilities on our balance sheet. As a result of these waivers,
and offsets against advances to Mr. Turner during 2002 and previous periods, at December
31, 2005 the total sum that we owed Mr. Turner was $396,783 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 during 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 (being the date of enactment of Section 402 of the
Sarbanes-Oxley Act of 2002 which 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. and the Board of Directors has determined that Mr. Turner
will continue to 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 2003 and 2004, and are
expected to continue until both the advances to Mr. Turner and the unpaid salary are
reduced to zero.

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

66

|                                   |  | 
|---------------------------------- |  | 
|                                  
|2005 Officer Deferred Compensation |  | 
|                                  
|Terry C. Turner                    |  | 
|                                  
|Harlan M. (Mac) Delozier           |  | 
|                                  
|Tracy A. Madsen                    |  | 
|                                  

# (b) Loans to Golden
Eagle from affiliates

In addition, as described elsewhere
in this Annual Report, Mr. Turner (our president and CEO) and other officers have advanced
funds to us for operations in Bolivia and to cover overhead in the US. These funds had all
been repaid as of December 31, 2004.

|Date | Affiliated Lender                 | Loan Amount | (Repayment) | Outstanding Balance at Year end
|---- | --------------------------------- | ----------- | ----------- | -------------------------------
|2005 | Kevin Pfeffer                     | $135,000    | $-          | $135,000                       
|     | Terry Turner                      | 17,000      | (17,000)    | -                              
|     | Tracy Madsen                      | 25,000      | (25,000)    | -                              
|    
|2004 | Mary Erickson (1)                 | -           | (23,204)    | -                              
|     | Ms. Erickson's Family member (2)  | -           | (450,000)   | -                              
|    
|2003 | Terry C. Turner (3)               | -           | (28,482)    | -                              
|     | Mary Erickson (1)                 | -           | (18,000)    | 23,204                         
|     | Ms. Erickson's family members (4) | -           | (629,062)   | 450,000                        
|     | Ronald Atwood                     | $-          | $(61,954)   | $-                             

(1)    
          During 2004 we received a legal opinion that Ms. Erickson should no longer be
          considered an affiliated person with respect to the company. In addition, during
          2004, Ms. Erickson converted the principal balance of her note in the amount of
          $23,204, and accrued interest of $2,755, to 576,881 shares of restricted common
          stock at $.45 per share.

(2)    
          During 2004, we received a legal opinion that Ms. Betty Jane Seydler, the last
          remaining family member of Mary Erickson to whom the company owed money, should
          no longer be considered an affiliated person with respect to the company. In
          addition, during 2004, Ms. Seydler converted the principal balance of her note
          in the amount of $450,000 and accrued interest of $597,296 to 23,273,252 shares
          of restricted common stock at $.45 per share.

(3)    
          In 2003 and 2004 and 2005, respectively, Mr. Turner waived $36,457and $60,000and
          $60,000 of the unpaid salary owed to him. With total offsets for advances, Mr.
          Turner was owed $0 at year-end 2003. Mr. Turner is paid $60,000 per year as a
          cashless bonus. These funds are applied to the amount owed to us by Mr. Turner.
          As the note from Mr. Turner is paid down with the cashless bonus, he will
          continue to forgive accrued salary.

67

(4)    
          A note payable in the amount of $629,062 plus accrued interest due to Ravia
          Seydler was converted to common stock at $.19 per share.

In April 1997, Frost National Bank
loaned us $1 million pursuant to a revolving line of credit agreement. The loan was
guaranteed by Golden Eagle Mineral Holdings, Inc., a Colorado corporation in which Mary
Erickson owned a controlling interest, and by Mary Erickson personally, including a pledge
of 13,500,000 shares of our restricted common stock owned by Golden Eagle Mineral
Holdings, Inc. The loan was further secured by certain assets of Ms. Ericksons
family members and all of our assets. We issued a total of 20,000,000 shares of our
restricted common stock to her family members as a fee for their guarantees of the $1
million loan.

This note would have matured on
December 28, 2004. However, the Herbert Seydler Jr. Trust and the Betty Jane Seydler
Trust, both of which were guarantors of the note, agreed to pay off the Frost note. In
exchange, we agreed to enter into a $995,624 promissory note at 8% interest with the two
trusts. This note matured on December 28, 2005. We paid the trusts a loan origination fee
of $10,000 and issued 1,000,000 shares of our restricted common stock to them as
compensation for relieving us of the obligation to the bank. We also agreed to make
quarterly principal payments of $250,000, the first payment of which was due on March 31,
2005. As a result of our cash shortages, we were unable to pay any principal reduction
during 2005. Furthermore, as a result of our failure to pay, certain of our shares owned
by Golden Eagle Mineral Holdings, the corporation controlled by Mary Erickson, and pledged
as collateral, were sold to the trusts in a private transaction and the note amount was
reduced by $209,250. We continue to show a short-term liability in the amount of $995,624,
a portion of which is payable to the Seydler Trusts ($786,374), and the balance of which
we have listed as a contingent liability. Interest continues to accrue on both amounts.

# Item 14.Principal
accountants fees and services

Our Board of Directors selected the
independent accounting firm of Chisholm, Bierwolf & Nilson, with respect to the audit
of our consolidated financial statements for the year ended December 31, 2005. Chisholm,
Bierwolf and Nilson replaced Gordon Hughes & Banks, LLP, which had completed the 2004
audit.

Audit
Fees. In connection with professional services rendered for the audit of our annual
financial statements for the year ended December 31, 2004 and the reviews of the first
quarter 2005 financial statements included in our quarterly reports filed on Form 10-Q for
those years, Gordon Hughes & Banks billed us fees in the aggregate amount of
approximately $52,440. We estimate that fees paid to Chisholm, Bierwolf & Nilson for
the review of the financial statements related to the financial statements included in the
second and third quarter 2005 reports filed under form 10-Q and the audit of the 2005
financial statements reported under form 10-K to be approximately $41,000.

68

Audit
Related Fees. There were no fees billed in each of the last two fiscal years (ended
December 31, 2005 and 2004) 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 Gordon
Hughes & Banks 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 2004 for professional services rendered by Gordon
Hughes & Banks for tax compliance, tax advice, and tax planning were approximately
$3,650. The nature of the services for which these fees were received was preparation of
tax returns. We have not yet retained a firm for the preparation of our 2005 tax returns.

All
Other Fees. During the fiscal years ended December 31, 2005 and 2004, there were no
other fees paid Gordon Hughes & Banks 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, 2005                          $40,737
| | -------------------------------------------------------------------------------

| | The
total fees charges for all services by Gordon, Hughes & Banks were:
| | -----------------------------------------------------------------------

| | During
the fiscal year ended December 31, 2005:                         $11,290          During the fiscal
year ended December 31, 2004:                         $73,952
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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 fiscal year.

# PART IV

# Item 15. Exhibits and
financial statement schedules

# (a) Financial statements

69

|    |                                                                                                                                          |                 
|--- | ---------------------------------------------------------------------------------------------------------------------------------------- | ----------------
|(a) | Financial statements                                                                                                                     |                 
|    | The following documents are filed a part of this report:                                                                                 | Page            
|    | Independent Auditors Report                                                                                                              | F-2 & F-3       
|    | Consolidated Balance Sheets as of December 31, 2005, 2004 and 2003                                                                       | F-4             
|    | Consolidated Statements of Operations for the years ended
                                       December 31, 2005, 2004 and 2003        | F-5             
|    | Consolidated Statements of Cash Flows for the years ended
                                       December 31, 2005 and 2004              | F-6             
|    | Consolidated Statement of Stockholders' Equity (Deficit) for
                           the years ended December 31, 2005, 2004 and 2003 | F-7             
|    | Notes to Consolidated Financial Statements                                                                                               | F-8 through F-33
|    |                                                                                                                                          |                 

(b)     Exhibits

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

| |        |                                                                                                                                                                                                                                                                                         
| | ------ | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 3.1    | Articles of Incorporation, as amended (1)                                                                                                                                                                                                                                               
| | 3.2    | Certificate of Designation for the Series A Convertible Preferred Stock (5)                                                                                                                                                                                                             
| | 3.3    | Bylaws (1)                                                                                                                                                                                                                                                                              
| | 10.1   | Mineral Concession with the United Cangalli Gold Mining Cooperative, Ltd. (2)                                                                                                                                                                                                           
| | 10.2   | Contract for the Purchase of  Concessions  and Contract  Mining Rights  (translated
                           from the original Spanish) (3)                                                                                                                                           
| | 10.3   | Convertible  Debenture and Convertible  Debenture Agreement dated October 18, 2002,
                           as of February 6, 2002, executed by and between GEII and Mr. Pfeffer (4)                                                                                                 
| | 10.4   | Buen Futuro purchase  agreement  dated June 2003 executed  between GEII and Michael
                           Biste and Ms. Calla de Arraya                                                                                                                                            
| | 10.5   | Series A Convertible Preferred Stock Subscription Agreement (5)                                                                                                                                                                                                                         
| | 10.6   | Settlement and Release Agreement in Geiger v. Golden Eagle International,  Inc. and
                           Ronald A. Knittle,  Civ. No. 03CV9390  (District Court for Denver City and County),
                           dated January 5, 2005 (6)                                 
| | 10.7   | Stock Purchase Agreement in Geiger v. Golden Eagle  International,  Inc. and Ronald
                           A. Knittle,  Civ. No. 03CV9390  (District Court for Denver City and County),  dated
                           January 5, 2005 (6)                                       
| | 10.8   | Asset  Purchase  Agreement  dated  June  18,  2004,  by and  among  Atlas  Precious
                           Metals, Inc. as Seller and Golden Eagle International, Inc.  (7)                                                                                                         
| | 10.9   | Extension,  Modification  and Renewal of Promissory Note dated December 29, 2004 by
                           Golden Eagle  International Inc. and the Herbert M. Seydler Jr. Trust and the Betty
                           Jane Seydler Trust                                        
| | 14.1   | Code of Ethics                                                                                                                                                                                                                                                                          
| | 22.1   | Golden Eagle Bolivia Mining S.A., incorporated under the laws of Bolivia;
                           Eagle Mining of Bolivia, Ltd., incorporated under the laws of Bolivia
                           Golden Eagle International, Inc. (Bolivia), incorporated under the laws of Bolivia
| | 31.1   | Certification   by   the   Principal    Executive    Officer   pursuant   to   Rule
                           13a-14(a)/15d-14(a)                                                                                                                                                      
| | 31.2   | Certification   by   the   Principal    Financial    Officer   pursuant   to   Rule
                           13a-14(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                                                                                                                                                                                                               
| | (1)    | Incorporated  by  reference  from our  registration  statement  on Form  10-SB that
                           became effective June 17, 1994.                                                                                                                                          
| | (2)    | Incorporated  by  reference  from our Form 8-K  reporting  an event of December 19,
                           1996.                                                                                                                                                                    
| | (3)  . | Incorporated by reference from our Form 8-K reporting an event of July 2, 2002                                                                                                                                                                                                          
| | (4)    | Incorporated by reference from our Form 8-K reporting an event of November 1, 2002.                                                                                                                                                                                                     
| | (5)    | Incorporated by reference from our Form 8-K reporting an event of March 10, 2005.                                                                                                                                                                                                       
| | (6)    | Incorporated  by  reference  from our Form 8-K  reporting  an event of February 16,
                           2005.                                                                                                                                                                    
| |        |                                                                                                                                                                                                                                                                                         
| |        |                                                                                                                                                                                                                                                                                         

70

# 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 14, 2006
| |  | ------------------------------------------------------------------------------------------------------------------

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.

5

| |  | GOLDEN EAGLE INTERNATIONAL, INC.By: /s/ Terry C. Turner
Terry C. TurnerDirector and Principal Executive OfficerDate: April 14, 2006
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------

| |  | By: /s/ H. Roy Shipes
H. Roy ShipesH. Roy ShipesChairman of the Board of DirectorsDate: April 14, 2006
| |  | --------------------------------------------------------------------------------------------------------------------

| |  | By: /s/ Kevin K. Pfeffer
Kevin K. PfefferMBA, DirectorDate: April 14, 2006
| |  | ----------------------------------------------------------------------------------------

| |  | By: /s/ Alvaro Riveros
Alvaro RiverosDirectorDate: April 14, 2006
| |  | -------------------------------------------------------------------------------

| |  | By: /s/ Tracy A. Madsen
Tracy A. Madsen  Corporate  Secretary-  Treasurer,  Principal  Financial Officer
and Principal Accounting OfficerDate: April 14, 2006
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------

71

Exhibit 31.1 Section 302
Certification

CERTIFICATION

I, Terry C. Turner, certify that:

| | 1. | I
have reviewed this Annual Report on Form 10-K for the period ended December           31,
2005 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
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

72

| | 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.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | By: /s/ Terry C. Turner
Terry C. TurnerPrincipal Executive OfficerDate: April 14, 2006
| |  | ----------------------------------------------------------------------------------------------------

Exhibit 31.2 Section 302
Certification

CERTIFICATION

I, Tracy A. Madsen, certify that:

| | 1. | I
have reviewed this Annual Report on Form 10-K for the period ended December           31,
2005 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:
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

73

| | (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) | significant
 All 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.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | By: /s/ Tracy A. Madsen
Tracy A. MadsenPrincipal Financial OfficerDate: April 14, 2006
| |  | ----------------------------------------------------------------------------------------------------

Exhibit 32.1 Section 906
Certification

# CERTIFICATION PURSUANT
TO18 U.S.C. SECTION 1350,

74

# AS ADOPTED PURSUANT TOSECTION
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, 2005 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.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | By: /s/ Terry C. Turner
Terry C. TurnerPrincipal Executive OfficerDate: April 14, 2006
| |  | ----------------------------------------------------------------------------------------------------

EXHIBIT 32.2 Section 906
Certification

# CERTIFICATION PURSUANT
TO18 U.S.C. SECTION 1350,

# AS ADOPTED PURSUANT TOSECTION
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, 2005 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.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | /s/ Tracy A. Madsen
Tracy A. MadsenPrincipal Financial OfficerDate:  April 14, 2006
| |  | -----------------------------------------------------------------------------------

75

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, 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 24% of total consolidated
assets as of December 31, 2005. 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, 2005 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, 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 19, 2006

F-1

# REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors
Golden Eagle International, Inc. Salt Lake City, Utah

We have audited the accompanying
consolidated balance sheets of Golden Eagle International, Inc. and subsidiaries as of
December 31, 2004, and the related consolidated statements of operations, cash flows and
changes in stockholders equity (deficit) for the two years ended December 31, 2004
and 2003. 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 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 25% of total consolidated assets as of December 31, 2004. 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, 2004 and 2003 and for the two years ended December 31,
2004 and 2003 is based solely on the report of the other auditors.

We conducted our audits in accordance
with the standards of the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audits to obtain reasonable assurance about
whether the financial statements are free of material misstatement. The Company has
determined that it is not required to have, nor were we engaged to perform, an audit of
its internal control over financial reporting.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 International, Inc. at December 31, 2004,
and the results of its operations and its cash flows for the two years ended December 31,
2004 and 2003, in conformity with accounting principles generally accepted in the United
States of America.

The accompanying consolidated
financial statements have been presented assuming that the Company will continue as a
going concern, which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. As discussed in Note A to the financial
statements, the Company had a significant working capital (deficit) as of December 31,
2004 and has incurred substantial losses since its inception. The Company presently 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 regard
to these matters are also discussed in Note A. 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.

Gordon,
Hughes & Banks, LLP

Greenwood Village,
Colorado March 4, 2005

F-2

# 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, 2005 and
2004 and the related consolidated statements of operations, cash flows and changes in
stockholders equity (deficit) for the years ended December 31, 2005, 2004 and 2003.
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, 2005, and 2004
and the results of its operations, changes in stockholders equity (deficit) and its
cash flows for the years ended December 31, 2005, 2004 and 2003, 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 March 31,
2005

F-3

|                                                      |  | 
|----------------------------------------------------- |  | 
|                                                     
|Golden Eagle International, Inc.                      |  | 
|Consolidated Balance Sheets                           |  | 
|As of December 31, 2005 and 2004                      |  | 
|                                                     
|                                                      |  | 
|                                                     
|ASSETS                                                |  | 
|CURRENT ASSETS                                        |  | 
|Cash                                                  |  | 
|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 depletion           |  | 
|                                                     
|Total property and equipment                          |  | 
|                                                     
|                                                      |  | 
|Plant and mill - idle                                 |  | 
|                                                     
|Total Assets                                          |  | 
|                                                     
|LIABILITIES AND STOCKHOLDERS' EQUITY                  |  | 
|                                                      |  | 
|                                                      |  | 
|CURRENT LIABILITIES                                   |  | 
|Accounts payable                                      |  | 
|Accrued expenses                                      |  | 
|Current portion of contract payable                   |  | 
|Other notes payable                                   |  | 
|Related party payable                                 |  | 
|Accrued interest payable                              |  | 
|                                                     
|Total current liabilities                             |  | 
|                                                     
|Convertible debenture                                 |  | 
|Redeemable common stock                               |  | 
|Legal settlement payable                              |  | 
|Services payable in stock                             |  | 
|                                                     
|Total liabilities                                     |  | 
|                                                     
|Commitments and contingencies                         |  | 
|                                                      |  | 
|STOCKHOLDERS' EQUITY                                  |  | 
|Preferred stock, par value $.01 per share;            |  | 
|10,000,000 shares authorized, none issued             |  | 
|Common stock, par value $.0001 per share; 800,000,000 |  | 
|authorized shares;                                    |  | 
|744,687,518 and 564,361,903 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-4

---

|                                                     |  |  |  
|---------------------------------------------------- |  |  | -
|                                                    
|Golden Eagle International, Inc.                     |  |  |  
|Consolidated Statements of Operations                |  | 
|For the Years Ended December 31, 2005, 2004 and 2003 |  | 
|                                                    
|                                                     |  |  |  
|                                                    
|REVENUES                                             |  |  | $
|                                                     |  | 
|OPERATING EXPENSES                                   |  | 
|Production                                           |  |  |  
|Production taxes                                     |  |  |  
|Exploration and development                          |  |  |  
|General and administration                           |  |  |  
|Asset impairment                                     |  |  |  
|Depreciation and depletion                           |  |  |  
|                                                    
|Total operating expenses                             |  |  |  
|                                                    
|OPERATING (LOSS)                                     |  |  |  
|                                                    
|OTHER INCOME (EXPENSE)                               |  | 
|Interest expense                                     |  |  |  
|Gain (loss)  on settlement of litigation             |  |  |  
|Other, net                                           |  |  |  
|                                                    
|Total other income (expense)                         |  |  |  
|                                                    
|Loss before income taxes                             |  |  |  
|Income Taxes                                         |  |  |  
|                                                     |  |  |  
|NET (LOSS)                                           |  |  | $
|                                                    
|BASIC AND DILUTED (LOSS) PER SHARE                   |  |  | $
|                                                    
|WEIGHTED AVERAGE SHARES OUTSTANDING                  |  |  |  
|                                                    

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

---

|                                                     |  |  |  
|---------------------------------------------------- |  |  | -
|Golden Eagle International, Inc.                     |  |  |  
|Consolidated Statements of Cash Flows                |  | 
|For the Years Ended December 31, 2005, 2004 and 2003 |  | 
|                                                    
|                                                     |  |  |  
|                                                    
|CASH FLOWS FROM OPERATING ACTIVITIES                 |  | 
|Net (loss)                                           |  |  | $
|Adjustments to reconcile net (loss)                  |  | 
|to net cash (used) by operating activities:          |  | 
|Stock issued for services                            |  |  |  
|Services payable in stock                            |  |  |  
|Stock issued for exploration and development         |  |  |  
|Amortization of beneficial conversion discount       |  |  |  
|Depreciation and depletion                           |  |  |  
|Loss on sale of assets                               |  |  |  
|Expensing of mine development costs                  |  |  |  
|Impairment                                           |  |  |  
|Assets written off                                   |  |  |  
|Stock issued for interest                            |  |  |  
|Amortization of deferred compensation                |  |  |  
|(Gain)loss on settlement of litigation               |  |  |  
|Changes in operating assets and liabilities          |  |  |  
|Decrease in accounts receivable                      |  |  |  
|Decrease in prepaid expense and other costs          |  |  |  
|Decrease (Increase) in inventory                     |  |  |  
|Increase (Decrease) in accrued expenses              |  |  |  
|Decrease in accounts payable                         |  |  |  
|Decrease in related party payable                    |  |  |  
|Increase in accrued interest                         |  |  |  
|                                                    
|Net cash flows (used by) operating activities        |  |  |  
|                                                    
|CASH FLOWS FROM INVESTING ACTIVITIES                 |  | 
|Investment in property and equipment                 |  |  |  
|                                                    
|CASH FLOWS FROM FINANCING ACTIVITIES                 |  | 
|Borrowings from related parties                      |  |  |  
|Repayments to related parties                        |  |  |  
|Proceeds from 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                                 |  |  | $
|                                                    

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

---

|Golden Eagle International, Inc.Consolidated Statement of Changes in Stockholders' Equity (Deficit)For the Years Ended December 31, 2005, 2004 and 2003
|-------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                       
|                                                                                                                                                       
|                                                                                                                                                       
|                                                                                                                                                       
|Balance at December 31, 2002                                                                                                                           
|                                                                                                                                                       
|Issued for cash ($.08 to $.15 per share)                                                                                                               
|Issued for services ($.12 to $.255 per share)                                                                                                          
|Issued for exploration and development ($.14 to $.217 per share)                                                                                       
|Issued for interest ($.235 per share)                                                                                                                  
|Issued for acquisition of mining property                                                                                                              
|Cashless excercise of stock options by related party                                                                                                   
|Conversion of debt($.03 to $.19 per share)                                                                                                             
|Conversion of accrued interest($.03 to $.19 per share)                                                                                                 
|Amortization of deferred compensation                                                                                                                  
|Intrinsic value of debentures beneficial conversion interest                                                                                           
|Net (loss)                                                                                                                                             
|                                                                                                                                                       
|Balance at December 31, 2003                                                                                                                           
|                                                                                                                                                       
|Issued for cash ($.025 to $.11 per share)                                                                                                              
|Issued for services ($.042 to $.177) per share)                                                                                                        
|Issued for exploration and development ($.043 to $.185 per share)                                                                                      
|Issued for financing fee (.042 per share)                                                                                                              
|Issued for acquisition of gold bar and mill ($.06 to $.12 per share)                                                                                   
|Conversion of debt ($.045)                                                                                                                             
|Conversion of accrued interest ($.042 to $.045 per share)                                                                                              
|Shares recorded in prior year but not issued                                                                                                           
|Return of stock by director                                                                                                                            
|Reclassification of common stock issued for mill                                                                                                       
|Net (loss)                                                                                                                                             
|                                                                                                                                                       
|Balance at December 31, 2004                                                                                                                           
|                                                                                                                                                       
|Issued for cash ($.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 $.12 per share)                                                                                   
|Issued for contract payable ($.164)                                                                                                                    
|Issued for settlement of lawsuit ($.041 per share)                                                                                                     
|Reclassification of value of common stock issued for mill                                                                                              
|Net (loss)                                                                                                                                             
|                                                                                                                                                       
|Balance at December 31, 2005                                                                                                                           
|                                                                                                                                                       

The footnotes are an integral part
of these financial statements F-7

---

---

# 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 in western Bolivia and contains our recent gold mining
operations. The second area consists of our aggregate Buen Futuro properties in the
Precambrian Shield area of eastern Bolivia. Starting in the fourth quarter 2002, we began
mining gold bearing ore and selling gold. 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 temporarily stopped 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 have halted our mining activity. In addition, we
are taking legal action to clarify the governments position and to prevent any
intervention with future mining on the property. We are also asking the Bolivian Court for
a declaratory judgment definitively establishing our rights to mine the Cangalli property
without encumbrance.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 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.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
July 2002, we acquired ownership of the Cangalli mining concessions from UCL. The purchase
price consisted of $300,000 cash, 3,944,500 shares of Golden Eagle common stock valued at
$394,450 ($.10 per share), and the assumption of $175,000 of UCL obligations maturing over
four years. During 2003, an additional 133,000 shares of common stock valued at $22,610
were issued to UCL members to satisfy additional claims.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Going Concern
ConsiderationsThe
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 $1,471,409
as of December 31, 2005 and we have incurred substantial losses of $44,103,448 since our
inception. In addition, we temporarily ceased operations at our Cangalli mine in 2004. We
believe we will restart operations within five years, however, we cannot guarantee such an
outcome. Even so, to restart and further develop the Cangalli mine and to develop the
Precambrian Shield prospects, we will require significant additional financing or equity
funding. Should we not be able to raise sufficient funds to pay for these costs, the
values of our investments in the Cangalli and Buen Futuro projects currently amounting to
an aggregate of $2,351,069 less an impairment of $792,404, may be subject to substantial
impairment in a future period.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-8

| | We
estimate that we will need to raise approximately $10 million to develop our Buen Futuro
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.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Managements
plans to obtain additional funds, including private placements of stock, a possible
Regulation D offering, obtaining short-term loans, seeking suitable joint venture
relationships and obtaining long-term debt financing from international development
agencies for our Buen Futuro project.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# Note B  Summary of
Significant Accounting Policies

| |  | Principles
of Consolidation
The financial statements include the accounts of Golden Eagle International, Inc. and its
subsidiaries Golden Eagle Bolivia Mining, S.A., Eagle Mining of Bolivia, Ltd., 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 Estimates Preparation of financial statements in conformity with accounting principles generally accepted in the
United States of America requires management to make estimates and assumptions that affect
the 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.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Reclassifications Certain
amounts in 2003 have been reclassified to conform to the 2004 presentation.
| |  | -----------------------------------------------------------------------------------------------------

| | 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.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Concentrations
and Economic VulnerabilityConcentrations
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.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-9

| | 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 dore. In-process inventories are valued at the lower of average
production cost or net realizable value. As of December 31, 2005 and 2004, there was no
in-process inventory.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Gold
inventories represent processed gold concentrates, dore 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, 2005 and 2004, we held no gold.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 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
totaled $73,542, $150,122 and $113,243 for the years ended December 31, 2005, 2004 and
2003, 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.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 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 tonness in proven and probable reserves in
the property. Depletion for the years 2005, 2004, and 2003 was $0, $121,814 and $29,133,
respectively.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 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.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-10

| | 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 AssetsWe
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.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 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.  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.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 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.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Stock Based
CompensationWe
account for stock-based compensation using Accounting Principles Board Opinion No. 25
(APB No. 25) for employee and directors. Under APB No. 25, compensation
expense is recognized for stock options with an exercise price that is less than the
market price on the grant date of the option. For stock options granted to employees and
directors with exercise prices at or above the market value of the stock on the grant
date, we adopted the disclosure-only provisions of Accounting for Stock Based
Compensation, SFAS No. 123 as amended by SFAS No. 148, Accounting for Stock-Based
Compensation  Transition and Disclosure  an amendment of FASB Statement No.
123". For equity instruments granted to consultants, we apply fair value accounting
as prescribed by SFAS No. 123.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
2005, 2004 and 2003, no options were issued. For purposes of pro forma disclosures, the
estimated fair value of the options is amortized to expense over the options vesting
period, if any.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-11

| | 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. By December 31, 2003, all debenture holders had exercised
the conversion provision of their securities and converted outstanding principal and
interest in the amount of $5,368,312 into 142,435,310 of restricted common shares of
Golden Eagle stock. As of December 31, 2005, there were no debentures or accrued interest
on debentures outstanding.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Income
(Loss) Per ShareBasic
net income (loss) per share is computed by dividing net income (loss) attributable to the
common shareholders by the weighted average number of common shares outstanding during the
reporting period. Diluted net income per common share includes the potential dilution that
could occur upon exercise of the options to acquire common stock computed using the
treasury stock method. The treasury stock method assumes that the increase in the number
of diluting shares is reduced by any shares, which could have been repurchased by us with
the proceeds from the exercise of the options. Options have not been included in the
computation of diluted income (loss) per share during all periods because their inclusion
would have been anti-dilutive.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                      |  |             |            
|------------------------------------- |  | ----------- | -----------
|Basic Earnings per share              |  | 2005        | 2004       
|                                      | 
|Net loss (numerator)                  |  | $2,038,534  | $5,877,950 
|Weighted average shares (denominator) |  | 651,870,057 | 493,963,645
|                                      | 
|Net loss per share                    |  | $.003       | $.01       
|                                      | 
|                                      |  |             |            
|                                      |  |             |            
|                                      |  |             |            

| | 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.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Statement of Cash Flows Information and Supplemental Non-Cash Financing Activities During 2005, 2004 and 2003, we paid cash for interest of $19,826, $79,188
and $58,331 respectively. Non-cash investing and financing transactions during the periods
consist of the following:
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                            |  |   |          
|----------------------------------------------------------- |  | - | ---------
|2005                                                        |  |   |          
|Accrued interest paid in stock                              |  | $ | 5,700    
|Stock issued for mill and plant                             |  |   | 380,000  
|                                                            |  |   |          
|2004                                                        |  |   |          
|Accrued interest converted to stock                         |  | $ | 600,066  
|Principal amount of notes converted to stock                |  |   | 473,204  
|Stock issued for mill and plant                             |  |   | 3,600,000
|Refinance of debt                                           |  |   | 995,800  
|                                                            |  |   |          
|2003                                                        |  |   |          
|Beneficial conversion interest added to equity              |  | $ | 337,186  
|Accrued interest converted to stock                         |  |   | 902,925  
|Principal amount of debentures and notes converted to stock |  |   | 4,465,387
|Stock issued for mineral prospect                           |  |   | 97,610   

F-12

| | Certain
Equity InstrumentsIn
June 2003, the FASB approved SFAS No. 150, Accounting for Certain Financial
Instruments with Characteristics of Both Liabilities and Equity. SFAS No. 150
establishes standards for how an issuer classifies and measures certain financial
instruments with characteristics of both liabilities and equity. We have adopted SFAS No.
150. As a result, stock to be issued in the purchase of Buen Futuro mineral interest has
been included in liabilities as a contract payable.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Comprehensive
IncomeThere
are no adjustments necessary to the net loss as presented in the accompanying statement of
operations or statement of stockholders equity to derive comprehensive income in
accordance with SFAS No. 130, Reporting Comprehensive Income.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Effect
of New Accounting PronouncementsIn
December 2004, the Financial Accounting Standards Board, or FASB, issued SFAS 123R
Share-Based Payment, a revision to FASB No. 123. SFAS 123R replaces existing
requirements under SFAS No. 123 and APB Opinion No. 25, and requires public companies to
recognize the cost of employee services received in exchange for equity instruments, based
on the grant-date fair value of those instruments, with limited exceptions. SFAS 123R also
affects the pattern in which compensation cost is recognized, the accounting for employee
share purchase plans, and the accounting for income tax effects of share-based payment
transactions. For small-business filers, SFAS 123R will be effective for interim periods
beginning after December 15, 2005. The Company is currently determining what impact the
proposed statement would have on its results of operations and financial position.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
March 2005, the SEC staff issued Staff Accounting Bulletin (SAB) No. 107,
Share-Based Payment, which provides guidance on the interaction between SFAS
No. 123R and certain SEC rules and regulations, as well as on the valuation of
share-based payments. SAB No. 107 provides interpretive guidance related to valuation
methods (including assumptions such as expected volatility and expected term), first time
adoption of SFAS No. 123R in an interim period, the classification of compensation
expense and disclosures subsequent to adoption of SFAS No. 123R. We are currently
evaluating the impact of SAB No. 107 on our consolidated financial statements.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
March 2005, the FASB ratified Emerging Issues Task Force Issue No. 04-6,
Accounting for Stripping Costs Incurred during Production in the Mining
Industry, (EITF 04-6) which addresses the accounting for stripping costs incurred
during the production phase of a mine and refers to these costs as variable production
costs that should be included as a component of inventory to be recognized inCosts
applicable to sales in the same period as the revenue from the sale of inventory. As a
result, capitalization of stripping costs is appropriate only to the extent product
inventory exists at the end of a reporting period. We will adopt the provisions of EITF
04-6 on January 1, 2006 or at the commencement of mining operations if applicable.
Adoption of EITF 04-6 will have no impact on the Companys cash position.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
March 2005, the FASB issued Interpretation 47 (FIN 47), Accounting for
Conditional Asset Retirement Obligationsan interpretation of FASB
No. 143. FIN 47 clarifies that the term conditional asset retirement
obligation as used in SFAS No. 143 refers to a legal obligation to perform an
asset retirement activity in which the timing and/or method of settlement are conditional
on a future event that may or may not be within the control of the entity. The obligation
to perform the asset retirement activity is unconditional even though uncertainty exists
about the timing and/or method of settlement. FIN 47 requires a liability to be recognized
for the fair value of a conditional asset retirement obligation if the fair value of the
liability can be reasonably estimated. We are currently analyzing the impact of this
pronouncement however; we believe that it will not immediately have a material impact on
our consolidated financial position, results of operations or cash flows.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
May 2005 the FASB issued SFAS No. 154, Accounting Changes and Error
Corrections. SFAS No. 154 established new standards on accounting for changes
in accounting principles. SFAS No. 154 requires all such changes to be accounted for
by retrospective application to the financial statements of prior periods unless it is
impracticable to do so. SFAS No. 154 is effective for accounting changes and error
corrections made in fiscal years beginning after December 15, 2005. Adoption of SFAS
No. 154 is not expected to have a material impact on our consolidated financial
position, results of operations or cash flows.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-13

| | In
June 2005, the FASB issued FASB Staff Position Paper (FSP) 115-1, The
Meaning of Other-Than-Temporary Impairment and its Application to Certain
Investments, superseding EITF 03-1. FSP 115-1 will replace the accounting guidance
on the determination of whether an investment is other-than-temporarily impaired as set
forth in EITF 03-1 with references to existing other-than-temporary impairment guidance.
FSP 115-1 is effective for reporting periods beginning after December 15, 2005.
Adoption of FSP 115-1 is not expected to have a material impact on our consolidated
financial position, results of operations or cash flows.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# 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:
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                  |  | 
|------------------------------------------------- |  | 
|                                                  |  | 
|                                                  | 
|Mine development costs                            |  | 
|Mineral interests                                 |  | 
|                                                  | 
|Total mineral interests and development costs     |  | 
|Less: accumulated impairment of development costs |  | 
|Less: accumulated impairment of mineral interests |  | 
|Less: accumulated depletion                       |  | 
|                                                  | 
|Net                                               |  | 
|                                                  | 

| | Our mining equipment consists of the following:
| | -----------------------------------------------

|                                 |  | 
|-------------------------------- |  | 
|                                 |  | 
|                                 | 
|Machinery and equipment          |  | 
|Replacement  materials and parts |  | 
|Tools                            |  | 
|                                 | 
|Total mining equipment           |  | 
|Less: accumulated depreciation   |  | 
|Less: accumulated impairment     |  | 
|                                 | 
|Net                              |  | 
|                                 | 

| | Our
Cangalli mine costs consist of infrastructure development costs and the processing plant
as follows:
| | --------------------------------------------------------------------------------------------------------

|                                         |  | 
|---------------------------------------- |  | 
|                                         |  | 
|                                         | 
|Mine development costs                   |  | 
|Processing plant and land                |  | 
|Less: accumulated impairment & depletion |  | 
|                                         | 
|Net                                      |  | 
|                                         | 

| | Mine
development costs consist primarily of the block caving, longwall and mine infrastructure
costs. These costs were being amortized as depletion expense based on the ratio of tonnes
of ore mined divided by estimated tons of ore accessible by currently developed mine
infrastructure.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
2004, we recorded an impairment in the amount of $322,404 in mine development costs and
$470,000 of mineral interests relating to the temporary cessation of operations at our
Cangalli mine. Our outside Bolivian counsel has advised us that we have an 80% probability
of resuming production within five years. As a result of the impairment, we reduced the
carrying costs related to the mine to a fair value based on discounted expected cash flows
from expected revenues based on our remaining reserves less carrying and additional
development costs to bring the mine back into production. In addition, we impaired our
mining machinery and equipment based on discounted estimated comparable values by
$120,000. Total impairment charge was $0, $912,404and $-0- for the years ended December
31, 2005, 2004 and 2003, respectively. We have concluded through analysis that no further
impairment is required in 2005.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-14

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

|                              |  | 
|----------------------------- |  | 
|                              |  | 
|                              | 
|Precambrian mineral interests |  | 
|Cangalli mineral interests    |  | 
|                              | 
|Total                         |  | 
|                              | 

| | Our
mineral interests are in the following stages:
| | --------------------------------------------------

|                  |  | 
|----------------- |  | 
|                  |  | 
|                  | 
|Mineral interest: |  | 
|Production stage  |  | 
|Development stage |  | 
|Exploration stage |  | 
|                  | 
|Total             |  | 
|                  | 

| | Our
mineral interests adjacent to the Cangalli mine have been subject to amortization. The
amortization was $0 in 2005, $72,703 in 2004 and $12,477 in 2003 based on the allocated
value of $876,867 amortizable over 34 years, the originally expected development life.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 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 :
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                     | 
|------------------------------------ | 
|Cash                                 | 
|Obligations assumed and payable over | 
|approximately four years             | 
|Prior contract payments              | 
|Common stock issued                  | 
|                                     | 
|Total                                | 
|                                     | 

| | The
remaining amount of obligation at December 31, 2005 is $77,359.
| | -------------------------------------------------------------------

| | 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                | 
|Contract payable in cash | 
|Common stock issued      | 
|                         | 
|Total                    | 
|                         | 

| | The
Buen Futuro property consists of 2,500 acres. We have paid cash of $210,000 and stock
valued at $175,000 through 2005. We are obligated to 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, $12,500 was past due with the remaining
amount due in monthly installments of $12,500 per month until the balance is paid in full.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-15

| | The
amounts of cash and common stock due on Cangalli and Buen Futuro as of December 31, 2004
are as follows:
| | ------------------------------------------------------------------------------------------------------------

|      | 
|----- | 
|2005  | 
|2006  | 
|      | 
|Total | 
|      | 

| | 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. Our
engineers estimate that dismantling; shipping and re-erecting the plant at Buen Futuro
will cost approximately $3.5 million.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# Note D  Loans and
Notes Payable

We
have debt obligations outstanding at December 31, 2004 and 2003 as follows:

|                                                                                                                                                                                                                                                                                                                                                                           |  | 2005        |  | 2004            
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------- |  | ----------------
|Note
payable to the Seydler Trusts, interest at 8% per annum, payable $995,624 $995,624
monthly, unsecured by us but guaranteed with our stock owned by certain outside
shareholders, quarterly principal reductions of $250,000 beginning March 31, 2005, until
paid in full. No principal payments were made on this note during 2005. The note is
currently in default. |  | $995,624    |  | $995,624        
|                                                                                                                                                                                                                                                                                                                                                                           |  |             |  |                 
|Interest
bearing payable to a former officer and director of ours, secured 23,967 23,967 by our
aircraft located in Bolivia, 12% interest per annum, due on demand. During the first
quarter 2006 the aircraft was shipped to the US.                                                                                                                                      |  | 23,967      |  | 23,967          
|                                                                                                                                                                                                                                                                                                                                                                           |  |             |  |                 
|Interest
bearing payable to a former officer and director of ours, secured 135,000  by our
aircraft located in Bolivia, 12% interest per annum, due on demand. During the first
quarter 2006 the aircraft was shipped to the US.                                                                                                                                          |  | 135,000     |  | -               
|                                                                                                                                                                                                                                                                                                                                                                           |  |             |  |                 
|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                                                                                                                                                       |  | 249,000     |  | -               
|                                                                                                                                                                                                                                                                                                                                                                           |  |             |  |                 
|                                                                                                                                                                                                                                                                                                                                                                           |  |            
|Total Loans and Notes                                                                                                                                                                                                                                                                                                                                                      |  | 1,403,591   |  | 1,469,004       
|                                                                                                                                                                                                                                                                                                                                                                           |  |             |  |                 
|Less: Current maturities                                                                                                                                                                                                                                                                                                                                                   |  | (1,154,591) |  | (1,469,004)     
|                                                                                                                                                                                                                                                                                                                                                                           |  |            
|                                                                                                                                                                                                                                                                                                                                                                           |  |             |  |                 
|Non-current maturities                                                                                                                                                                                                                                                                                                                                                     |  | $249,000    |  | $              -
|                                                                                                                                                                                                                                                                                                                                                                           |  |            
|                                                                                                                                                                                                                                                                                                                                                                           |  |             |  |                 

F-16

|                                          |          | 
|----------------------------------------- | -------- | 
|Long-term debt maturities are as follows: |          | 
|Years ending December 31,                 |          | 
|2006                                      | $-       | 
|2007                                      | 249,000  | 
|2008                                      | -        | 
|                                          |         
|Total                                     | $249,000 | 
|                                          |         
|                                          |          | 

| | Our
officers made various other short-term loans with weighted average interest rates of 15%
per annum. Amounts loaned and repaid during 2005 amounted to $177,000. Of the amount
loaned, $42,000 was repaid during the year with an outstanding balance of $135,000 bearing
interest at 8%. We were unable to make any principal payments on a note to the Seydler
Trusts during 2005. We are currently in default on this note and the trustee made claim
against the guarantors of this note, which are non-affiliated parties. Certain Golden
Eagle stock owned by the guarantors was sold in a private sale to the Trusts to reduce the
principal balance. We continue to book the entire amount on the balance sheet as a note
payable as to the portion of the note that remains owing to the Trusts and as a contingent
liability as to the portion that was reduced by the execution on the collateral. The
entire amount continues to accrue interest. No additional claim has been made by the
Trusts to pay off the note nor has claim been made on us by the guarantors. We continue to
work with both of these parties to extend the payment of this note. We cannot guarantee
however, that we will continue to be successful in extending their claims.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# Note E  Income
Taxes

| | We
have not recorded an income tax provision for 2005, 2004 or 2003 due to continued net
operating losses.
| | ----------------------------------------------------------------------------------------------------------

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

|                                                                                                |                    |  |                    |  |                  
|----------------------------------------------------------------------------------------------- | ------------------ |  | ------------------ |  | -----------------
|                                                                                                | 2005               |  | 2004               |  | 2003             
|Income tax (benefit) at the federal statutory rate                                              | $(693,000)         |  | $(1,999,000)       |  | $(2,200,000)     
|State income taxes, net of federal benefits                                                     | (27,000)           |  | (133,000)          |  | (261,000)        
|(Deductible) nondeductible expenses                                                             | 182,000            |  | 322,000            |  | (709,000)        
|Non-U.S. taxes                                                                                  | 228,000            |  | 306,000            |  | 239,000          
|Effect of net operating loss                                                                    | 310,000            |  | 1,504,000          |  | 2,931,000        
|                                                                                                |                    |  |                    |  |                  
|Net                                                                                             | $               -  |  | $               -  |  | $               -
|                                                                                                |                    |  |                    |  |                  
|                                                                                                |                    |  |                    |  |                  
|Deferred tax assets and liabilities are as follows:                                             |                    |  |                    |  |                  
|                                                                                                | 2005               |  | 2004               |  |                  
|Deferred tax asset:                                                                             |                    |  |                    |  |                  
|Net operating loss                                                                              | $3,304,120         |  | $3,929,500         |  |                  
|Valuation allowance                                                                             | (3,304,120)        |  | (3,929,500)        |  |                  
|                                                                                                |                    |  |                    |  |                  
|Net                                                                                             | $                - |  | $                - |  |                  
|                                                                                                |                    |  |                    |  |                  
|                                                                                                |                    |  |                    |  |                  
|The change in the deferred tax asset valuation allowance as of December 31, 2004 is as follows: |                    |  |                    |  |                  
|                                                                                                |                    |  |                    |  |                  
|Valuation allowance:                                                                            | 2005               |  | 2004               |  |                  
|Beginning valuation allowance                                                                   | $(3,929,500)       |  | $(4,821,000)       |  |                  
|Change in allowance                                                                             | 625,380            |  | (892,000)          |  |                  
|                                                                                                |                    |  |                    |  |                  
|Ending valuation allowance                                                                      | $(3,304,120)       |  | $(3,929,500)       |  |                  
|                                                                                                |                    |  |                    |  |                  

F-17

| | 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 $9.7 million, $8.9 million and $7.5 million at
December 31, 2005, 2004 and 2003, respectively, which expire in 2006 through 2025.
These NOLs are subject to annual utilization limitations due to prior ownership changes.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# Note F 
Stockholders Equity

| | Preferred
StockOur
articles of incorporation authorize the issuance of up to 10,000,000 shares of preferred
stock. In 2005, we designated 3,500,000 shares stock as non-voting Series A convertible
preferred stock. Dividends accrue at 8% per year. Preferred shares and accrued interest
are convertible into common stock at the rate that is contingent upon the future trading
price of common shares. We may redeem at its election after December 31, 2006 any or all
of the Series A preferred shares at $1.00 per share. No preferred shares have been issued.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Common
StockDuring
2003, 23,697,207 shares of common stock were sold to various individuals in a private
placement at prices ranging from $.08 to $.15 per share for total proceeds of $2,149,888.
During 2003, 8,297,073 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 $.12
to $.255 for total value of $1,394,114. During 2003, 4,362,562 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 $.14
to $.217 for total value of $691,809. During 2003, we issued 11,346,956 shares of common
stock at prices from $.03 to $.19 per share to individuals in exchange for accrued
interest of $926,425 and issued 131,188,355 shares ranging from $.03 and $.19 to
individuals for the conversion of debentures and notes payable to common stock valued at
$4,465,387. During, 2003, an additional 133,000 shares of common stock was issued to the
various owners of the UCL cooperative to satisfy additional claims related to the
acquisition of the Cangalli mining interest at $.17 per share in the amount of $22,610. We
also issued 456,204 shares at a price of $.164 per share for the acquisition of the Buen
Futuro mining claim valued at $75,000. During 2003, 12,264,456 shares were issued to our
CEO and President and a former officer of Golden Eagle at $.186 per share for the cashless
exercising of options valued at $2,281,188; however, this amount was expensed during 2002
under variable accounting rules applicable to certain stock compensation transactions.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | During
2004, 35,364,384 shares of common stock were sold to various individuals in a private
placement at prices ranging from $.025 to $.11 per share for total proceeds of $1,479,069.
During 2004, 4,812,312 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 $.042
to $.177 for total value of $253,268. During 2004, 9,207,623 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 $.043
to $.185 for total value of $643,960. During 2004, we issued 13,334,484 shares of common
stock at a price of $.045 per share to individuals in exchange for accrued interest of
$600,066 and issued 10,515,649 shares at $.045 to individuals for the conversion of notes
payable to common stock valued at $473,204. We also issued 1,000,000 shares at a price of
$.042 as a loan renewal fee valued at $42,000. During, 2004, we issued 30,000,000 shares
at a price of $.12 per share for a total of $3,600,000 for the acquisition 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. Since the stock was redeemable in exchange for the return of
the mill, the value of the stock was reclassified outside of the stockholders equity
until the redemption feature was extinguished. During 2005 we reached an agreemnt with the
seller eliminating the requirement to move the plant within a defined time period, as
result, the shares were reclassified as shareholders equity. During 2004, we recorded a
reduction of shares that had been recorded as services in error in prior years but never
issued. During 2004, an officer voluntarily returned shares that had been recorded as
expense in 2003.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-18

| | During
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 350,00
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.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Stock
Compensation PlanOn
June 1, 2000, our Board of Directors adopted the Golden Eagle International, Inc.
2000 Employee and Consultant Stock Compensation Plan, (the Plan) which
provides 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. The Plan reserves the right to issue up to 20 million shares in the
discretion of the Board of Directors.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
August 9, 2004 we filed an S-8 registration statement with the SEC to issue up to 20
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.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
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.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Non-qualified
stock optionsAs
described in part above, on March 22, 2002, we adopted a non-qualified stock option plan
for our president and former president under which we granted options to purchase
25,000,000 and 20,000,000 shares of common stock, respectively. A total of $2,098,000 in
compensation was recorded at the time of the granting of the options. The options were
exercisable for $.075 per share for a period of one year. The Plan provided that the
recipients could elect to pay for the shares in cash or from proceeds of the sale of a
portion of the shares acquired from the exercise of options (cashless exercise). On
December 30, 2002, the recipients exercised their options to purchase an aggregate of
24,456,523 shares of our common stock. To pay for the shares, the individuals exchanged,
in a like-kind, share-for-share exchange, a total of 6,456,523 shares at a price of $0.284
per share for a total of $1,833,653. The net effect was the issuance of 18,000,000 shares
of common stock to the individuals for which we recorded compensation of $5,112,000. On
March 20, 2003, the recipients exercised their options to purchase an aggregate of
20,543,477 shares of our common stock. To pay for the shares, the individuals exchanged,
in a like-kind, share-for-share exchange, a total of 8,279,021 shares at a price of $0.284
per share for a total of $2,351,242. The net effect was the issuance of 12,264,456 shares
of common stock for which we recorded compensation of $2,281,183. This additional
compensation was recorded in 2002 though the shares were issued in 2003.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | No
options were granted, exercised or outstanding during 2004 or 2005. Total amounts expensed
to compensation for the issuance of options were $-0-, $-0-and $-0- for the years ended
December 31, 2005, 2004 and 2003, respectively.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# Note G  Related
Party Transactions

| | From
1994 through 1999, a former officer and current major stockholder advanced funds to us on
an unsecured basis at 8%. On December 31, 2004, this individual agreed to convert all
outstanding principal of $23,304 and accrued interest of $2,755 to common stock at $.045
per share that was the closing market price on the day the stock was purchased in the form
of a private placement for 576,881 shares.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-19

| | During
1996, notes payable totaling $450,000 at an interest rate of 101⁄2%, were issued to a
relative of a former officer. The notes were unsecured but personally guaranteed by the
former officer and spouse. On December 31, 2004, this individual agreed to convert all
outstanding principal of $450,000 and accrued interest of $597,296 to 23,273,252 shares of
common stock at $.045 per share, which was the closing market price on that day.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | From
1995 through 1999, relatives of a former officer advanced funds to us on an unsecured
basis at 12%. On December 1, 2003, the holder of the note agreed to convert all
outstanding principal of $629,062 and accrued interest of $436,292 to 5,607,129 shares of
common stock at $.19 per share, the closing market price on that day.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | From
1997 through July 31, 2002, we made cumulative unsecured net advances to our president. As
of December 31, 2004, the outstanding balance of these advances totaled $396,783. However,
as of December 31, 2005, we also owed the president $396,783 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. Additionally, in 2001 the
president had forgiven $443,772 in compensation that was due to him. Additionally, during
2003, 2004 and 2005, the president forgave $36,457, $60,000 and $60,000 respectively.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

# Note H 
Commitments and Contingencies

| | Contingencies
Resulting from Litigation
| | ---------------------------------------

| | Litigation
in USDuring
2004, we became party to a lawsuit filed in the District Court for the City and County of
Denver, Colorado, entitled: Geiger v. Golden Eagle International, Inc. and Ronald A.
Knittle, Civ. No. 03CV9390. The subject matter of that suit involved stock
transactions that took place at the end of 1995 and the beginning of 1996, which were
authorized by Ronald A. Knittle, a former officer and director.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
March 2, 2004, we filed a Motion to Dismiss plaintiffs complaint. Two out of three
of plaintiffs causes of action were dismissed at that time. Subsequently, the Court
granted the plaintiffs Motion to Amend the Complaint and allowed plaintiff to add
two additional causes of action, increasing Golden Eagles potential exposure in the
lawsuit.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
order to avoid further litigation, we settled the suit with the plaintiff on January 5,
2005. Subsequently, we issued 50 million shares of our restricted common stock to the
plaintiff. In 2004, we recorded the value of the stock on the day of settlement,
$2,050,000, as a liability and expense.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Office
Leases
| | -------------

| | On
August 1, 2005 we moved our executive offices in Salt Lake City, Utah from our previous
location 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. We pay $1,395 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
have also entered into a short-term lease on a new smaller office in La Paz, Bolivia for
$180 per month, which expires in July 2006. 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.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

F-20

|Location            |  | Size              |  | Monthly Rent |  | Lease Expiration
|------------------- |  | ----------------- |  | ------------ |  | ----------------
|Salt Lake City, UT  |  | 1,183 square feet |  | $1,395       |  | July 31, 2008   
|Santa Cruz, Bolivia |  | 150 square meters |  | 500          |  | July 10, 2006   
|La Paz Bolivia      |  | 42 square meters  |  | 180          |  | October 31, 2006
|                    |  |                   |  |              |  |                 
|                    |  |                   |  | $2,075       |  |                 
|                    |  |                   |  |              |  |                 

| | The
following schedule shows the composition of total remaining commitments for office leases
as of December 31, 2005.
| | ----------------------------------------------------------------------------------------------------------------------

|                          |  |        
|------------------------- |  | -------
|Years ending December 31, |  |        
|2006                      |  | $21,820
|2007                      |  | 17,692 
|2008                      |  | 10,549 
|2009                      |  | -      
|2010                      |  | -      
|                          |  |        
|Total                     |  | $50,561
|                          |  |        

| | Rent
expense for the years ending December 31, 2005, 2004 and 2003 was approximately $21,632,
$22,733 and $22,574 respectively.
| | -------------------------------------------------------------------------------------------------------------------------------

| | Under
our agreement with the seller of Buen Futuro, Golden Eagle has 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. To date, Golden Eagle has also agreed to invest $1
million in exploration of Buen Futuro by 2006.November 23, 2006. Golden Eagle has expended
approximately $140,000 under the agreement. Also in the agreement, Golden Eagle has
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. 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 that if we were not in production at Buen Futuro by November 23, 2005 we are
required to pay a penalty of $1,500 per month to the seller until we enter production or
until November 23, 2006. If by November 26, 2006 we are still not in production, the
penalty amount payable to the seller increases to $3,000 per month.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 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 As part of those costs, we entered into an agreement with
Western States Engineering to provide engineering services relating to the dismantling,
shipping and re-erection of the Gold Bar mill and plant on our Buen Futuro concession in
Bolivia. Employees of Western States agreed to accept 5 million shares of Golden
Eagles common stock registered pursuant to Regulation S-8 under the Securities Act
of 1933 and in accordance with the Golden Eagle International Inc. 2004 Employee and
Consultants Stock Compensation Plan. As of December 31, 2004, we had issued 2,730,000
shares under this to engineers as part of this agreement. The value of these shares of
$192,010 was expensed as development costs. Western States estimated that approximately
50% of its work had been completed as of December 31, 2004. An additional 2,270,000 shares
under this agreement was issued during 2005. On May 19, 2005 we entered into a separate
agreement with Western States for additional engineering work related to Buen Futuro and
the relocation of the Gold Bar mill and plant. We agreed to grant 10,000,000 shares in
four equal installments beginning on June 1, 2005. As of December 31, 2005, 5,000,000
shares had been issued under this agreement. An additional $5,000,000 shares is to be
issued during the first two quarters of 2006
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | We
plan to return Cangalli to full production if possible and we estimate the cost will
approximate $300,000.
| | -------------------------------------------------------------------------------------------------------------

| | Should
we not be able to raise sufficient funds to pay for these costs, the values of our
investments in the Cangalli and Buen Futuro projects currently amounting to an aggregate
of 2,351,069, less an impairment of $792,404, may be subject to additional impairment in a
future period.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# Note I  Subsequent
Events (Unaudited)

| | Private
Placements Subsequent to Year-End We
sold private placements of common stock during the first quarter of 2006 to tw accredited
investors. Through March 31, 2005, we received $56,400 in private placement proceeds in
exchange for 4,973,426 shares of restricted common stock ($.011 to $.013 per share). In
addition, in 2006, we issued 2,752,900 shares of common stock to 5 individuals as
compensation for services at prices of $.02 to $.0275 per share valued at $73,808. The
shares were valued at the closing market price of our stock on the date of grant.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-21

# Note J Quarterly
Data (Unaudited)

| | The following
is a summary of selected quarterly financial information for 2005 and 2004.
| | -----------------------------------------------------------------------------------------

|                                       | 2005              
|-------------------------------------- | ------------------
|                                       | Three Months Ended
|                                       | March 31,         
|Revenue                                | $0                
|Operating (loss)                       | (662,906)         
|Net (loss)                             | (688,367)         
|Basic and diluted net (loss) per share | (.001)            
|Weighted average shares outstanding    | 604,472,262       
|Closing price of common stock          | $.033             

|                                       | 2004              
|-------------------------------------- | ------------------
|                                       | Three Months Ended
|                                       | March 31,         
|Revenue                                | $367,971          
|Operating (loss)                       | (526,288)         
|Net (loss)                             | (570,011)         
|Basic and diluted net (loss) per share | (.00)             
|Weighted average shares outstanding    | 465,752,440       
|Closing price of common stock          | $.155             

F-22