# UNITED STATES 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 OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the Fiscal Year Ended December 31, 2008.

GOLDEN EAGLE
INTERNATIONAL, INC. (Exact name of the
Company as specified in its charter)

Colorado (State or other jurisdiction of incorporation or organization)

|                         |                                     
|------------------------ | ------------------------------------
|0-23726                  | 84-1116515                          
|(Commission File Number) | (I.R.S. Employer Identification No.)

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

(801) 619-9320         (Registrant's
telephone number, including zip code)

Securities registered pursuant to
Section 12(b) of the Exchange Act:
                                                      (None)

Securities registered pursuant to
Section 12(g) of the Exchange Act:
                                                        [X]

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

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

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

Indicate by check mark if disclosure
of delinquent filers pursuant to Item 405 of Regulation S-K is not contained in this
form, and will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. To the best of registrants' knowledge, there are no
disclosures of delinquent filers required in response to Item 405 of Regulation S-K. Yes
[X]         No [ ]

Indicate by check mark whether the
registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or
a smaller reporting company. See the definitions of "large accelerated filer",
"accelerated filer" and "small reporting company" in Rule 12b-2 of the Exchange Act.
(Check one): 

 Large accelerated filer [ ]   Accelerated filer [ ]   Non-accelerated filer [ ] Smaller reporting company [X]

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

As of April 14, 2009, the aggregate market value of the voting and nonvoting common equity held by non-affiliates
of Golden Eagle International, Inc. was approximately $2,807,220. This estimate is based on the last sale price
per share of $.0016 on April 14, 2008 on the OTCBB, and 1,754,512,251 shares estimated to be held by
non-affiliates.

Our revenues for our 2008 fiscal year were $596,443

The number of shares of the registrant's $.0001 par value common stock outstanding as of April 14, 2009 was
1,776,764,819.

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|                  |                                                                                                              |             
|----------------- | ------------------------------------------------------------------------------------------------------------ | ------------
|                  |                                                                                                              |             
|Table of Contents
|                  |                                                                                                              | Page No.    
|PART I           
|                  |                                                                                                              |             
|Item 1.           | Business                                                                                                     | 5           
|Item 1A.          | Risk Factors                                                                                                 | 19          
|Item 2.           | Properties                                                                                                   | 24          
|Item 3.           | Legal Proceedings                                                                                            | 30          
|Item 4.           | Submission of Matters to a Vote of Security Holders                                                          | 30          
|                  |                                                                                                              |             
|PART II          
|                  |                                                                                                              |             
|Item 5.           | Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 31          
|Item 6.           | Selected Consolidated Financial Data                                                                         | 36          
|Item 7.           | Management's Discussion and Analysis of Financial Condition and Results of Operation                         | 36          
|Item 7A.          | Quantitative and Qualitative Disclosures About Market Risk                                                   | 51          
|Item 8.           | Financial Statements and Supplementary Data                                                                  | 51          
|Item 9.           | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure                         | 51          
|Item 9A.          | Controls and Procedures                                                                                      | 51          
|Item 9B.          | Other Information                                                                                            | 53          
|                  |                                                                                                              |             
|PART III         
|                  |                                                                                                              |             
|Item 10.          | Directors, Executive Officers and Corporate Governance                                                       | 54          
|Item 11.          | Executive Compensation                                                                                       | 61          
|Item 12.          | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters               | 67          
|Item 13.          | Certain Relationships and Related Transactions, and Director Independence                                    | 73          
|Item 14.          | Principal Accountant Fees and Services                                                                       | 75          
|                  |                                                                                                              |             
|PART IV          
|                  |                                                                                                              |             
|Item 15.          | Exhibits, Financial Statement Schedules                                                                      | (F-1)-(F-28)
|                  | Signatures                                                                                                   | 78          

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# CAUTIONARY NOTE
REGARDING FORWARD-LOOKING STATEMENTS

The statements
contained in this annual report on Form 10-K that are not historical are
forward-looking statements that involve a number of risks and uncertainties.
These forward-looking statements include, among others, the following:

|o | our
business and growth strategies;
|- | -----------------------------------

|o | our
ability to successfully and economically explore for minerals;
|- | ------------------------------------------------------------------

|o | our
ability to obtain and maintain all necessary approvals for the operation of the Jerritt Canyon Mill;
|- | --------------------------------------------------------------------------------------------------------

|o | our
exploration and development prospects, projects and programs;
|- | -----------------------------------------------------------------

|o | anticipated
trends in our business;
|- | -----------------------------------

|o | our
future results of operations;
|- | ---------------------------------

|o | the
risk of operations in Bolivia, a country that is no longer supportive of foreign
investment, especially                   investment from the United States;
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------

|o | our
liquidity and ability to finance our activities;
|- | ----------------------------------------------------

|o | market
conditions in our industries; and
|- | ----------------------------------------

|o | the
impact of environmental and other governmental regulation.
|- | --------------------------------------------------------------

These
statements may be found under Risk Factors, Managements Discussion
and Analysis of Financial Condition and Results of Operation, Business and
Properties and other sections of this annual report. Forward-looking statements are
typically identified by use of terms such as may, will,
could, should, expect, plan,
project, intend, anticipate, believe,
estimate, predict, potential, pursue,
target or continue, the negative of such terms or other comparable
terminology, although some forward-looking statements may be expressed differently.

The
forward-looking statements contained in this annual report are largely based on our
expectations, which reflect estimates and assumptions made by our management. These
estimates and assumptions reflect our best judgment based on currently known market
conditions and other factors. Although we believe such estimates and assumptions to be
reasonable, they are inherently uncertain and involve a number of risks and uncertainties
that are beyond our control. In addition, managements assumptions about future
events may prove to be inaccurate. Management cautions all readers that the
forward-looking statements contained in this annual report are not guarantees of future
performance, and we cannot assure any reader that such statements will be realized or the
forward-looking events and circumstances will occur. Actual results may differ materially
from those anticipated or implied in the forward-looking statements due to a number of
factors, including:

|o | the
failure to obtain sufficient capital resources to fund our operations;
|- | --------------------------------------------------------------------------

|o | an
inability to obtain the necessary permits to conduct our operations;
|- | -----------------------------------------------------------------------

|o | unsuccessful
exploration activities;
|- | ------------------------------------

|o | a
decline in prices of the commodities that we may produce at the Jerritt Canyon mill (if
we are able to                   produce any);
|- | ----------------------------------------------------------------------------------------------------------------------------------------



|o | the
current worldwide economic climate which has reduced the availability of liquidity and
credit available                   to companies, especially those without revenues or
engaged in natural resources operations;
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|o | incorrect
estimates of required capital expenditures;
|- | -----------------------------------------------------

|o | unexpected
increases in the cost of our operations as a result of general economic conditions or
time delays;
|- | -------------------------------------------------------------------------------------------------------------

|o | impact
of environmental and other governmental regulation, including delays in obtaining
permits; and
|- | -----------------------------------------------------------------------------------------------------

|o | hazardous
and risky operations.
|- | -------------------------------

You
should also consider carefully the statements under Risk Factors and other
sections of this annual report, which address additional factors that could cause our
actual results to differ from those set forth in the forward-looking statements.

All
forward-looking statements speak only as of the date of this annual report. We do not
intend to publicly update or revise any forward-looking statements as a result of new
information, future events or otherwise. These cautionary statements qualify all
forward-looking statements attributable to us or persons acting on our behalf.

Golden
Eagle International, Inc. is referred to herein as we, our, or
us.

# PART 1

# Item 1. Business

# General

# 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, we changed our name to Golden Eagle International, Inc. Our subsidiaries are:

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



# Business Overview

Our corporate headquarters are in
Salt Lake City, Utah.

We are engaged in contract gold
milling operations in the state of Nevada in the United States. We have also been involved
in the business of minerals exploration, mining and milling operations in Bolivia through
our Bolivian-based wholly-owned subsidiary, Golden Eagle International, Inc. (Bolivia);
however, those operations are temporarily suspended pending changes in the
social/political and mine taxing environments in Bolivia.

We have entered into an agreement
with Queenstake Resources USA, Inc. (Queenstake USA) to operate the Jerritt
Canyon gold mill located 50 miles north of Elko, Nevada.

Additionally we own the following
gold mills:

|              |                                |       
|------------- | ------------------------------ | ------
|Mill          | Location                       | Status
|Gold Bar Mill | Eureka, Nevada                 | Owned 
|C Zone Mill   | Ascension de Guarayos, Bolivia | Owned 

As of the 2008 year-end, we owned the
following mineral prospects in Bolivia:

|                              |               |       
|----------------------------- | ------------- | ------
|Tipuani-Cangalli prospect (1) | Number Acres  | Status
|Cangalli claims               | 5,000 acres   | Owned 
|Tipuani prospect              | 7,000 acres   | Owned 
|                              |               |       
|Precambrian Shield (2)        |               |       
|Precambrian prospect          | 111,500 acres | Owned 
|Buen Futuro claim             | 2,500 acres   | Owned 
|Cobra claim                   | 22,500 acres  | Owned 

1On March 1, 2009, we elected not to renew our mining concessions for the
          Tipuani-Cangalli prospect in western Bolivia, which consisted of 12,000 acres in
          the Tipuani River Valley.

2On March 1, 2009, we elected to reduce our mining concessions in the
          Precambrian Shield in eastern Bolivia from 136,500 acres to 42,731 acres. We
          retained the Buen Futuro claims containing the A Zone on which we have generated
          the most drill and other sampling data, as well as the Gran Serpiente claims on
          which the C Zone gold mill and mine are located. We also retained the highly
          prospective Cobra claims on the northern end of the Ascension Gold-Copper Trend.



We entered into an agreement with
Queenstake USA to operate the Jerritt Canyon gold mill located 50 miles north of Elko,
Nevada on October 14, 2008. From mid September until March 23, 2009 we performed
maintenance and environmental regulatory compliance functions at the mill and assisted the
mill owner, Queenstake USA, in securing approval from the Nevada Division of Environmental
Protection (NDEP) to restart milling operations at Jerritt Canyon. On March 25, 2009
approval was granted by the NDEP to recommence operations at the Jerritt Canyon mill.

None of our mining prospects are
currently in the production stage. Our production operations on our Cangalli property
ceased in June 2004 as a result of a local farmers strike and certain legal issues
particular to Bolivia with which we were not associated. Since then, the Bolivian
government has become more hostile to investment from the United States, and we have
reduced our operations in Bolivia significantly.

We also discontinued mining and
milling operations on our C Zone mine and mill in December of 2009 due to the shortage of
diesel fuel, political instability and a substantial change in the Bolivian tax structure
for mining companies that severely limited our ability to become profitable at our
Bolivian operations.

For the years ended December 31, 2008
and 2007, we reported net losses of $1,696,382 and $6,377,636, respectively. Our financial
results over the past two years have been impacted by the shutdown of our production
operations as discussed under Item 7 in connection with our financial results for the
years ended December 31, 2008 and 2007.

# Business Development

i. The Jerritt Canyon
Gold Mill

As part of our program of
diversification into north-central Nevada, on October 14, 2008 we entered into a Mill
Operating Agreement (the Agreement) with Queenstake USA, the wholly-owned
subsidiary of Queenstake Resources, Ltd. and Yukon-Nevada Gold Corp., to operate the 4,000
ton-per-day (tpd) Jerritt Canyon CIL gold mill (the Mill) located 50 miles
north of Elko, Nevada. The Mill shut down in August 2008 due to certain mechanical and
labor issues, and in September 2008, initially pursuant to a verbal agreement, we
undertook the maintenance and environmental regulatory compliance operations at the Mill
pending bringing it back on-line in full operation. The Agreement to operate the Mill
contains two conditions that must be met before it becomes fully effective:

|o | first,
Queenstake USA must raise at least a net $17.5 million for operations and,
|- | ---------------------------------------------------------------------------------

|o | second,
Queenstake USA must receive permission from all relevant state and federal agencies to
re-start                   operations at the Jerritt Canyon mill.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------

Under a pre-operating provision in
the Agreement, we had18 full-time employees on-site at Jerritt Canyon, including our Chief
Operating Officer (COO), Blane W. Wilson, as well as a number of part-time employees at
any given moment through the period from mid September 2008 through March 25, 2009. On
March 25, 2009, the Nevada Division of Environmental Protection (NDEP) made a
determination authorizing the restart of Jerritt Canyons milling operations.
Queenstake USA had sufficient funding to initiate operations and we began hiring
additional personnel. As of April 15, 2009 we have 70 employees working for us at the
Jerritt Canyon mill.



Queenstake USA funded all costs of
the maintenance and regulatory environmental compliance operations during the
pre-operating period and is required by the Agreement to pay Golden Eagle an
administrative fee of 20% of those costs. However, due to the unexpected length of time
involved in the pre-operating period, and in solidarity with Queenstake USA, we agreed to
accept an 8% administrative fee on operational costs and defer the balance of the 20% fee
until the mill commenced full processing operations. We have accrued the 12% difference on
our financial statements as accounts receivable. Since March 25, 2009, through the date of
the filing of this report, we have continued to operate under the 20% cost-plus
administrative fee of the pre-operating provision of the Agreement. However, we project
that Queenstake USA will meet the Agreements condition precedent regarding funding,
or will waive that requirement due to the fact that the Mill will be in full operation, by
April 30, 2009.

Our COO, Blane Wilson, who is running
our operations at the Jerritt Canyon mill, has 24 years of experience managing milling and
processing operations. He was Corporate Operations Manager for the Jerritt Canyon gold
mine and mill prior to becoming our COO in April of 2008. Mr. Wilson worked
in the Jerritt Canyon operation for 19 years in various positions, including: Mill
Foreman, Process Superintendent and Process Manager. Since 1981 through its shutdown in
August 2008, the Jerritt Canyon mill processed more than 8 million troy ounces of gold. At
the Jerritt Canyon mine and mill, Mr. Wilson oversaw a $33 million annual budget and
managed a workforce of 154 personnel.

Under the Agreement, and once the
Mill is in full operation, we will be the Mill operator for a term of 5 years, which is
renewable at the option of Queenstake USA for an additional 5-year term. We will be
entitled to a fee of 8% of all operator costs, as well as a percentage fee or profit share
of 20% of the net profits from operations. Furthermore, under the Agreement we are also to
receive a $500,000 interest-free loan for initial operating capital from Queenstake USA,
payable in equal monthly installments by the Company over the first 5-year term of the
Agreement. Additionally, the Company is entitled to certain production bonuses if the
price of gold exceeds $900 per ounce; if costs can be decreased below projections; and, if
ore is processed that is not found in closely-located stockpiles, but must be hauled by
the Company from any remote location.

The Jerritt Canyon mill is accessible
by means of all-weather paved state roads from the nearest principal urban center, which
is Elko, Nevada.

ii. The Gold Bar Mill.



In 2004, we purchased the 3,500 to
4,500 tpd Gold Bar CIP gold mill (the Gold Bar Mill or the Mill)
located 25 miles northwest of Eureka, Nevada.  Initially, our plan was to disassemble
the Gold Bar Mill and transport it to Bolivia to be reconstructed on our A Zone project in
eastern Bolivia. Due to the current political climate and tax structure in Bolivia, we
have determined that the best course of action with regards to the Gold Bar Mill is to
leave it in place and explore our options related to the Mill in Nevada. In April 2008 we
hired Blane Wilson as our Chief Operating Officer (COO). Mr. Wilsons primary
responsibility was to help us determine the best course of action with regards to this
valuable asset and implement a Gold Bar strategy. We have entered into confidentiality
agreements and had detailed negotiations with various parties regarding the potential of
this Mill. These possibilities include (a) rehabilitating the Mill for toll refining
(which is defined as processing ore through our Mill for a fixed fee or toll that is
produced by a third-party mining company from its mine)on its current site; or (b)
joint venturing the Mill with other partners that may be able to produce ore from their
mines; or (c) an outright sale either for cash, or stock and other consideration, in
another mining venture. All of the foregoing is contingent on obtaining sufficient
financing and/or a willing joint venture partner or a suitable buyer. The Mill is
currently not operating and we do not currently have plans to commence any operations at
the Gold Bar Mill. It is easily accessible by well-maintained, all-weather gravel roads
for 15 miles off of all-weather paved state highways from the nearest urban center, which
is Eureka, Nevada.

iii The C Zone Gold Mill
and Mine.

During 2007 we completed exploration
and feasibility work on the gold mineralization of the C Zone of our Precambrian
properties in eastern Bolivia. The C Zone gold project is located approximately 5
kilometers (3.1 miles) from our A Zone Buen Futuro gold and copper project. Additionally,
between 2006 and 2007 we operated a pilot plant on the C Zone, which we used to refine the
metallurgical process on the mineralization in the Zone. During September of 2007, as a
result of environmental issues, we moved the location of our production mill (the C
Zone Mill or Mill)) from the pilot plant location approximately 700
meters (2,300 feet) to eliminate the potential impact on a nearby marshland and to permit
the potential capacity of our Mill to increase to 2,000 tpd from the original 1,000 tpd of
our original plant design. On November 30, 2007, we held a successful public hearing which
cleared the last regulatory hurdle in order to commence construction on the new production
plant. We commenced Mill operations on June 26, 2008.

However, beginning in July through
October 2008, many of the residents of five eastern Bolivia departments or states (Santa
Cruz, Pando, Beni, Tarija and Sucre) began a campaign of civil unrest to push for more
autonomy for those departments from Bolivias central government located in the city
and department of La Paz in western Bolivia. This civil unrest took the form of protest
marches and road blockades, which on some occasions became violent. The movement of
commerce on the roads in these departments was paralyzed during the period of unrest. As a
result, our operations at the C Zone were also paralyzed for lack of diesel fuel and other
critical supplies. Once the road blockades lifted, Bolivia immediately began to experience
a scarcity of diesel fuel throughout the country, but more acutely in the eastern
departments that had participated in the autonomy protests. Through this period of time,
we were only been able to get small lots of diesel fuel, which only allowed us to carry
out a simple maintenance program at our C Zone operations.



On September 11, 2008 the U.S.
Ambassador to Bolivia was declared persona non grata and on September 14, 2008 was
expelled from Bolivia. Subsequently, the U.S. Drug Enforcement Administration (DEA), the
U.S. Agency for International Development (USAID) and the Central Intelligence Agency
(CIA) also were expelled from Bolivia. The Peace Corps and several other U.S. affiliated
groups have voluntarily left Bolivia in light of current circumstances.

Bolivias current administration
has also enacted new taxes associated with the Bolivian Mining Code that we believed would
be rescinded due to social pressure from the strong mining interests in western Bolivia,
or would be invalidated by the Bolivian Supreme Court due to the manner in which the
Mining Code was legislatively modified. However, as of the date of the filing of this
report it appears that those changes will not be rescinded or invalidated. New taxes were
added to the existing tax regimen and those taxes were changed from being deductible
against gross revenues to not being deductible. Our analysis is that Bolivias
current mining tax structure, at current international prices for gold, effectively levies
a 35.5% non-deductible assessment on gross revenues before any costs may be paid. Once a
net revenue number has been reached after all permissible costs have been paid, then we
must pay the 25% Net Income Tax. If we desire to remit any of the remaining profits to
Golden Eagle as the U.S. parent company, we have an additional 12.5 % Remittance Tax.

Given the recent civil unrest (and
likelihood that it may arise in some form in the future), shortages of diesel fuel (which
the Bolivian government states will not be resolved until late 2009) and Bolivias
current public policy on mining taxes, we have temporarily suspended our operations in
Bolivia as of the date of the filing of this report to analyze our best course of action
for the future there. We did generate $19,307 in revenue from sales of gold from our C
Zone mine and plant during the quarter ended December 31, 2008. While we are currently not
conducting mining and milling operations at this time we continue to employ an onsite
security and maintenance staff. We have also entered into discussions with possible joint
venture partners to operate the mine and plant. On February 28, 2009 we paid the annual
claims fees and renewed our mining claims on which the C Zone mine sits for an additional
year.

The C Zone mine and mill are
accessible by all-weather asphalt roads to within 18 kilometers (11 miles), and then by
gravel roads that can present challenges to access during the rainy season (December
through April).

iv.    
          Mine Camp for A & C Zone Projects.

During 2007 and 2008 we completed
construction of our mine camp situated between our A Zone project and the C Zone mine and
mill in Bolivia. The mine camp includes dormitories, a dining hall, sanitation facilities,
administration buildings and warehouses and serves as camp for the construction and
operation of the C Zone mill, and the exploration and development of our A Zone project.
Activities in the mine camp are subject to the same political and economic issues
described in (iii) above. Access is the same of that described for the C Zone in iii
above.

v. A Zone Buen Futuro
Gold and Copper Project.



We are continuing to study the best
means of further developing the potential of the A Zone Buen Futuro gold and copper
project on our Precambrian properties, although our ability to do so (even assuming we had
adequate financing) is subject to the same political and economic issues described above.
During most of 2007 and 2008 we pursued this development by obtaining third-party advice
regarding our feasibility and exploration studies by a major independent mining and
engineering firm, Washington Group International, Inc. In February 2007 we entered into an
agreement with Washington Group International, Inc. (www.wgint.com) to carry out the
necessary due diligence work to advise us regarding our feasibility studies. In the future
we intend to begin securing final environmental permitting and any additional surface land
acquisitions that may be required as long as we conclude through our long term analysis of
the situation in Bolivia that further development is in our best interests. Additional
feasibility work is also dependent on our ability to raise sufficient funds to pay our
consultants and contractors. As a result of the political situation and the current tax
structure described in iii. C Zone Gold Operation,above, we have temporarily
suspended all exploration and development work on the A Zone Buen Futuro gold and copper
project. We have been in negotiations with various parties that may be willing to continue
exploration on the A Zone as joint venture partners. On February 28, 2009 we paid the
annual claims fees and renewed our mining claims on which the Gran Serpiente claims on
which the A Zone mineral prospect sits for an additional year.

Access to the A Zone Gold and Copper
Project is the same as that described for the C Zone in iii above.

vi.    
          Cangalli Gold Project.

After careful analysis of the current
political situation and the pending tax changes in Bolivia, as described in iii. C Zone
Gold Operation,above, we have determined to discontinue our efforts to develop our
Cangalli and Tipuani Valley gold project in western Bolivia. On March 1, 2009, we elected
not to renew our claims in this region. At some point in time should we attempt to
reestablish our operations at Cangalli, we would be required to negotiate with COMIBOL,
the Bolivian state mining company, as a joint venture partner.

vii. Summary of Plan of
Operations

To accomplish our strategy we intend
to carry out the steps in our Plan of Operations, which are detailed beginning on page 40,
and are summarized below:

|o | Commence
production at the Jerritt Canyon gold mill as the contract mill operator. As of the date
of this          filing, we employ 70 workers at Jerritt Canyon to operate the mill.  The
Mill Operating Agreement requires          that Queenstake Resources USA pays all
expenses and pays us an 8% cost-plus administrative fee, as well as a          20% fee on
profits. Furthermore, Queenstake USA must make a $500,000 operating loan to us.  Although
we have          received the necessary governmental approvals for the recommencement of
operations, certain steps are still          being taken to bring the Jerritt Canyon mill
into full-scale production.  Operations have begun at the Mill          and we project,
but cannot assure, that the Mill will be in full operation by April 30, 2009.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|o | Determine
if we will perform contract ore milling at the current Gold Bar site in Nevada, enter
into a joint          venture for milling ore at the Gold Bar site, or sell the mill to
another mining company for the purpose of          processing ore at the Gold Bar site.
Also, determine the direction to take with respect to the development          of the
Gold Bar mill. The region around our mill has recently experienced increased gold mining
activity as          a result of the current international price for gold.  We also
believe that there is a milling shortfall in          the region that may present us an
opportunity to recommence the Gold Bar mill operations on a contract basis          as a
tolling facility.  We are currently evaluating this possibility and the potential
benefits to us. We          estimate that it will take approximately $1 million to bring
the Gold Bar mill back online to accept          contract milling and processing work.
However, other costs that we have under evaluation, such as permitting          and new
tailings impoundment construction, could easily be significantly more expensive than the
mill          rehabilitation costs, and may exceed $15 million.  We currently do not have
sufficient financing available          for the Gold Bar mill and we are focusing our
efforts on the Jerritt Canyon gold mill as described above.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|o | We
will continue to monitor and evaluate the political and tax climate in Bolivia with
regards to          recommencing mining and milling operations at our C Zone mine and
mill.  We will also continue our          discussions with potential joint venture
partners that may be willing to provide funding and operate the C          Zone mine and
mill. However, we cannot guarantee at this time that those negotiations will result in
ongoing          arrangements in the future or that the political and tax climate will
improve adequately in Bolivia to          permit recommencement of operations (assuming
without assurance that we have the financing necessary for          those operations).
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|o | Obtain
estimated financing or income from our diversification of $200,000 for the remaining
costs pertaining          to the construction and operation of a 1,000-tpd processing
plant on our C Zone gold project and an          additional estimated $200,000 to
increase our capacity to 2,000 tpd. This financing or income would only be
         invested after the careful analysis that we currently have underway about
whether, and under what          conditions, we will want to operate the C Zone mill. We
also intend to secure between $600,000 and $1          million to continue our in-fill
drilling, metallurgical studies and final feasibility work for our Buen          Futuro A
Zone, as well as our B and C Zones. We have been in discussions with third-party mining
investors          from Europe and Bolivia regarding joint venture efforts for the final
exploration and feasibility work on          these gold and copper prospects. However, we
cannot guarantee at this time that those negotiations will          result in ongoing
arrangements in the future or that the political and tax climate will improve adequately
         in Bolivia to be attractive to potential joint venture partners and to permit
recommencement of operations          (assuming without assurance that we have [directly
or through joint venture partners] the financing          necessary for those operations).
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|o | We
intend to maintain our mining claims on the Buen Futuro 2,500-acre site as well as other
critical claims          in the Precambrian Shield surrounding the Buen Futuro claims not
included in the A Zone, as well as the          remainder of our 42,731-acre remaining
landholding as best we can, given our current lack of liquidity and          the current
political and tax climate in Bolivia as described above. We will continue to monitor and
         evaluate the political and tax climate in Bolivia and we may reestablish our
exploration and development          efforts at Buen Futuro should conditions in Bolivia
improve. We cannot however guarantee that we will          develop the Buen Futuro
project. We will continue to seek joint venture partners to develop the region. We
         estimate costs for this additional exploration work to total $1,000,000 over the
next two years.  We also          cannot guarantee at this time that negotiations with
joint possible joint venture partners will result in          the development of the Buen
Futuro project.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|o | Since
we currently have only a limited amount of cash on hand and a substantial working capital
deficit, our          ability to implement any or all of these planned strategies other
than fulfilling our contract to operate          the Jerritt Canyon mill requires
significant infusions of working and operating capital; however, we cannot
         assure we will be successful in raising capital through a secondary offering,
private placements or debt          financing to meet our cash needs.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In order to assist in financing our
planned operations, we will continue to seek joint venture partners, as well as merger and
acquisition candidates, or other industry participants who would enter into joint
development efforts on our Precambrian prospects or central Nevada milling possibilities;
however, there is no assurance that any potential joint-venture or merger partners will be
interested in evaluating these prospects or in negotiating an agreement with us on
reasonable or acceptable terms..

# Description of Business

# 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 that totaled
302,324 grams or 9,720 ounces. During this period we generated $3,370,667 in revenue from
gold sales. During 2008 we generated $19,307 in revenue from gold sales from our C Zone
mine in eastern Bolivia.

# Gold

During 2007 we had no gold sales and
during 2008 we sold $19,307 in gold. As of December 31, 2008 and 2007, we held no gold in
inventory. As of December 31, 2008, our gold production operations had ceased because of
the political and tax climate in Bolivia (where those operations were being conducted) and
because of our lack of adequate financial resources.

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



# Copper

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

# Distribution methods.

Gold produced in Bolivia was
primarily sold into the Bolivian gold market and then on the international market. If we
are able to again produce gold in Bolivia, we plan sell it into both the Bolivian and
international markets. Gold produced at the Jerritt Canyon mill will remain in the custody
of the mill owners, Queenstake USA Resources. Under the Mill Operating Agreement, we
expect to be paid a fee in excess of our costs and a portion of the profits directly by
Queenstake USA Resources, Inc. Gold produced in any of our other Nevada operations will be
sold into the international markets through refiners in Salt Lake City, Utah.

# Status of publicly
announced products or services.

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

# Competitive business
conditions.

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

# Sources and availability
of raw materials.

As of December 31, 2008, we required
no significant raw materials. The commencement of milling operations at the Jerritt Canyon
mill, and the potential operation of our Gold Bar mill, require numerous raw materials. As
a result of the numerous mining operations in the region most raw materials are available
on fairly short notice. Since both the Jerritt Canyon operation and the Gold Bar mill are
toll milling operations, the most critical raw material is gold bearing ore. Currently at
Jerritt Canyon there is a 1.2 million-ton stockpile which we will use to commence
operations. Negotiations are currently underway to replenish this stockpile. Any toll
operations at Gold Bar would require a reliable source of ore that we currently do not
have. Negotiations, however, are ongoing to acquire potential ore sources. Should the
owners of the Jerritt Canyon mill be unable to develop their own ore sources or ore from
third parties, our revenue from the Jerritt Canyon mill will be severely impacted or
eliminated.

If we are able to recommence
operations at the C Zone or bring our Buen Futuro A Zone operation into production, we
will require a large amount of electrical power and certain chemicals, which we will need
to source in the region and which may be in short supply.



# Dependence on one or a
few major customers.

Our primary source of revenue, our
agreement to operate the Jerritt Canyon mill, is dependent on one customer, the owner of
the mill, Queenstake Resources USA, Inc. Should Queenstake USA be unable to meet its
obligations under the Mill Operating Agreement to permit us to operate the mill for any
reason, or if for any unknown reason our contract with Queenstake cannot be enforced, our
ability to generate revenue and remain a going concern may be in doubt.

Should we in the future produce any
gold, copper, or other minerals for our own account in our Bolivian properties or through
the Gold Bar mill (of which there can be no assurance), our potential customers would
consist of consumers through the domestic Bolivian, United States, and international spot
gold and copper markets, and internationally for the jewelry industry. As a result, should
we be successful in bringing any of our prospects or the Gold Bar mill into gold and
copper production (of which there can be no assurance), we do not believe that we will be
dependent upon any single customer or even a few major customers.

# Patents, trademarks,
licenses, franchises and concessions.

We have no patents, trademarks,
licenses or franchises that are material to our business other than our agreement with
Queenstake Resources USA, Inc. to operate the Jerritt Canyon mill. We also have mining
claims that have been granted to us from the national Bolivian government, which are
discussed below under Item 2  Properties.

# Need for governmental
approval.

The Jerritt Canyon mill is subject to
governmental approval to operate the mill from the Nevada Department of Environmental
Protection (NDEP) and the USDA Forest Service, which is the landowner of the mine area.
Queenstake USA holds environmental permits for air, water, waste and surface reclamation
activities issued by the NDEP for the Jerritt Canyon mine. On March 25, 2009, the NDEP
made a determination authorizing the restart of Jerritt Canyons milling
operations. Following a year-long investigation into mercury emissions, in March 2008 the
NDEP ordered Queenstake USA to install new state-of-the-art emission control equipment at
Jerritt Canyon mill by the end of that year. Before the NDEPs order was satisfied,
Queenstake USA, by its own action, stopped mining and processing ore at the Jerritt Canyon
mine in August 2008. The facility has remained shut down while the new emission control
systems was designed and installed. Staff from Queenstake USA, Golden Eagle and the NDEP
worked together to resolve air emission issues related to the roasting operation. They
also worked diligently to ensure all water management systems were maintained and operated
properly during the shutdown. Queenstake USA has improved existing air emission control
systems in order to achieve an immediate, substantial reduction in mercury emissions. As
part of this effort, along with other interim operational changes, Queenstake USA
committed to install a state-of-the-art mercury control system by May 30, 2009. Failure to
comply with the order from NDEP may result in the shutdown of the Jerritt Canyon
operations.



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

In Bolivia the mining industry is
subject to government approval, including mining, environmental and other activities that
require permitting; harvesting of lumber for mine timbers; clearing of forested areas for
the construction of open pit mines, mills and tailings impoundments; transport and storage
of explosives; and the transport and storage of hazardous substances and chemicals. We
have operated under a conditional use permit for the operation of our pilot plant on our C
Zone gold project. Because we planed to operate a full production plant, we were required
to obtain additional permitting. While we obtained the required permits to operate in the
C Zone, we can offer no assurances that the required permits would be forthcoming if we
recommenced operations on both the A Zone Buen Futuro project, as well as the C Zone gold
project.

# Effect of existing or
probable governmental regulations.

As stated above, the Jerritt Canyon
mill is subject to governmental approval to operate the mill from the NDEP and the USDA
Forest Service, which is the landowner of the mine area. As also stated above, Queenstake
USA holds environmental permits for air, water, waste and surface reclamation activities
issued by the NDEP for the Jerritt Canyon mine. Changes in governmental regulation or the
requirements to operate the Jerritt Canyon mill may have a significant affect on our
ability to continue as contract mill operators.

Our plan to recommence milling
operations at our Gold Bar mill is contingent upon our ability to meet existing or future
governmental regulations. Any decision to recommence operations at Gold Bar is contingent
upon our ability to obtain approval from various governmental authorities. Failure to
obtain any or all approvals would curtail our ability refurbish or restart the mill.

Bolivias current administration
has also enacted new taxes associated with the Bolivian Mining Code that, as we have
previously stated, we believed would be rescinded due to social pressure from the strong
mining interests in western Bolivia, or would be invalidated by the Bolivian Supreme Court
due to the manner in which the Mining Code was legislatively modified. However, as of the
date of the filing of this report it appears that those changes will not be rescinded or
invalidated. New taxes were added to the existing tax regimen and those taxes were changed
from being deductible against gross revenues to not being deductible. The complete mining
tax structure is the following:



|Tax                   | Percentage                                                                                                              | Analysis                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|--------------------- | ----------------------------------------------------------------------------------------------------------------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Value Added Tax       | 13% (of gross sales or revenues)                                                                                        | This tax is not deductible from
                                                                                gross revenues to reach a net income
                                                                                number; however, a relatively small
                                                                                portion of this tax may be recovered
                                                                                from value added tax credits from
                                                                                other purchases that we make.                                                                                                                                                                        
|Transaction Tax       | 3% (of gross sales or revenues)                                                                                         | This tax is not deductible from
                                                                                gross revenues.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|Mining Royalty Tax    | 7% (of gross sales of gold or
                                                                                revenues) | This tax is not deductible from
                                                  gross revenues for purposes of
                                                                                reaching a net revenue number, but
                                                                                may vary based on whether sales are
                                                                                completed within  Bolivia and based
                                                                                on the international price of gold
                                                                                if it falls below $400 per troy
                                                                                ounce.
|Additional Income Tax | 12.5% (of gross sales or revenues)                                                                                      | This tax is not deductible from
                                                                                gross revenues.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|Net Income Tax        | 25% (of net revenues)                                                                                                   | This tax is calculated on net
                                                                                revenues after all
                                                                                production, capital and other
                                                                                permissible costs are deducted.                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Remittance Tax        | 12.5% (of any amount remitted)                                                                                          | This tax is levied against any
                                                                                amount that any   subsidiary sends
                                                                                to the parent company outside of
                                                                                Bolivia.                                                                                                                                                                                                                                                                                                                                                                                                                                          

Our analysis is that Bolivias
current mining tax structure, at current international prices for gold, effectively levies
a 35.5% non-deductible assessment on gross revenues before any costs may be paid. Once a
net revenue number has been reached after all permissible costs have been paid, then we
must pay the 25% Net Income Tax. If we desire to remit any of the remaining profits to
Golden Eagle as the U.S. parent company, we have an additional 12.5 % Remittance Tax.

The current administration has also
expressed a desire to increase the annual claim fees paid each year in mining patents for
mining concessions in Bolivia. In addition, the administration has expressed a desire to
change Bolivias mining law to require work to improve mining concessions as a
requirement to maintaining those concessions. Currently, under Bolivian mining law, if a
mining concession holder pays annual claim fees for patents there is no additional work
requirement. We are currently unsure whether these changes will take place in the near
future due to the public reaction from the Bolivian mining community to the
administrations proposed changes to the Bolivian Mining Code.

# Research and development
expenditures.

We have never assumed any research
and development expenses since our inception.

We have not engaged in, and do not intend
to engage in, any research and development activities outside of our traditional mining
exploration activities.



Effect of compliance with federal,
state, and local provisions for the protection of the environment.

As stated above in Need for
Governmental Approval at page 13 and Effect of Existing or Probable Governmental
Regulation at page 13, the Jerritt Canyon mill is subject to governmental approval to
operate the mill from the NDEP and the USDA Forrest Service, which is the landowner of the
mine area. Queenstake USA holds environmental permits for air, water, waste and surface
reclamation activities issued by the NDEP for the Jerritt Canyon mine. On March 25, 2009,
the NDEP made a determination authorizing the restart of the mines milling
operations. Following a year-long investigation into mercury emissions, in March 2008 the
NDEP ordered Queenstake USA to install new state-of-the-art emission control equipment at
Jerritt Canyon mine by the end of that year. Before the NDEPs order was satisfied,
Queenstake USA, by its own action, stopped mining and milling ore at Jerritt Canyon Mine
in August 2008. The facility has remained shut down while the new emission control systems
were designed and installed. Staff from Queenstake USA, Golden Eagle and the NDEP worked
together to resolve air emission issues related to the roasting operation. They also
worked diligently to ensure all water management systems were maintained and operated
properly during the shutdown. Queenstake Resources has improved existing air emission
control systems in order to achieve an immediate, substantial reduction in mercury
emissions. As part of this effort, along with other interim operational changes,
Queenstake USA has committed to install a state-of-the-art mercury control by May 30,
2009. Failure to comply with the order from NDEP may result in the shutdown of the Jerritt
Canyon operations.

We own Gold Bar mill and plant
located 25 miles northwest of Eureka, Nevada, which, as of December 31, 2008, was idle. We
do not own the ground on which this plant sits. The purchase agreement we entered into
when we purchased the plant requires the previous owner of the plant and the current
landowner, Atlas Precious Metals, Inc., to perform any required environmental remediation
on the site. We do not believe that we have any liability for environmental clean up on
this site or on any other site within the United States.

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

We are also required to maintain
environmental permits to explore operate pilot operations, mine, process ore and create
processing waste impoundments. We are required to provide the Bolivian Vice Ministry of
the Environment and Natural Resources with ongoing information regarding the environmental
impact of our operations. In addition, we have retained an engineering firm to monitor our
Bolivian based subsidiarys compliance with environmental laws in Bolivia and to
produce any necessary reporting and filing. Our ability to continue our mining activities
depends on our compliance with Bolivian law and with the conditions of our environmental
permitting.



We also secured permits from the
Departmental Prefecture (State Government) for the exploration of our C Zone gold prospect
and for the operation of our pilot recovery plant on our C Zone. On November 30, 2007 a
public hearing was held in the township of Ascension de Guarayos as the final step to
secure from the Bolivian Vice Ministry of the Environment and Natural Resources our full
environmental operating permit for expanding our pilot operations to full commercial
operations.

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

# Employees.

At December 31, 2008, we directly
employed 31 full-time employees, as follows: (a) 2 in our head offices in Salt Lake City,
Utah including our Chief Executive Officer and our Chief Financial Officer; (b) 6 in our
administrative offices in Santa Cruz, Bolivia; (c) 5 at Ascension de Guarayos involved in
our mine camp and mill maintenance and security,; and 18 at the Jerritt Canyon mill 50
miles north of Elko Nevada. We also routinely employ day workers at various times for
specific projects at our Bolivian mine sites and at Jerritt Canyon.

As of April 15, 2009 we have now
hired a total of 70 employees at the Jerritt Canyon mill, for a total of 83 full-time
employees company-wide.

# Reports to security
holders

# Annual report.

We are not required to deliver an
annual report to security holders and we will not be distributing an annual report.
However, this annual report on Form 10-K will be available through our website,
www.geii.com.

# Available information

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



# Item 1A. 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.

# FINANCIAL RISKS

Our history of losses and working
capital shortages has resulted in our auditor issuing an opinion on our financial
statements indicating substantial doubt about our ability to continue as a going concern.We have incurred substantial losses of $56,453,357 since our inception. Additionally,
we had negative working capital of $1,117,599 as of December 31, 2008. Our continued
operations are dependent upon receiving significant financing. On the basis of the
foregoing, our auditors have substantial doubt as of December 31, 2008 and 2007 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. Our agreement to
operate the Jerritt Canyon mill as based on the number of tons processed and not the price
of gold which limits our exposure to gold price volatility. We do however receive a bonus
of $2 per ton for every $50 that the price of gold exceeds $900 per ounce. Our ability to
refurbish and recommence operations at Gold Bar may be directly related to gold prices.

(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  | Low | Average
|1998 | 313   | 273 | 294    
|1999 | 326   | 253 | 279    
|2000 | 313   | 264 | 279    
|2001 | 293   | 256 | 271    
|2002 | 349   | 278 | 310    
|2003 | 416   | 320 | 363    
|2004 | 454   | 375 | 389    
|2005 | 536   | 411 | 445    
|2006 | 725   | 525 | 603    
|2007 | 806   | 631 | 695    
|2008 | 1,011 | 712 | 872    

Source of Data: Kitco



On April 13, 2009, the afternoon
fixing price for gold on the London Metals Exchange was $894 per ounce.

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

Our continued operations are
dependent upon receiving adequate financing. Our primary operational goals of
developing our Gold Bar mill and our Bolivian mining properties in the Precambrian Shield,
namely the B and C Zone gold projects and the Buen Futuro A Zone gold and copper project,
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 or
never occur and we will be subject to increasing losses.

Historically, cash shortages have
negatively affected our ability to explore and develop our properties and diluted our
common stock.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. Additionally,
should we issue additional securities in connection with equity or debt financing, the
value of your investment in our securities will be diluted.

We have significant debt
obligations and accounts payable that we may be unable to meet and/or may negatively
affect our operations. At December 31, 2008, we had debt
obligations totaling $1,585,991, consisting of: (a) $281,232 in accounts payable and
accrued expenses; (b) deferred wages of $205,092 (c) other notes payable in the
amount of $468,285; (c) notes payable to directors and officers for $57,525; (d)
debentures payable of $473,000; (e) accrued interest payable of $65,857; and (f)
contractual obligations totaling $35,000 payable in our common stock.



# OPERATIONS, DEVELOPMENT
AND MINING RELATED RISKS

Our future success is
dependent upon our existing management. Our future success is dependent upon
the continued participation of our current management who provide us with the key
technical and management aspects of our operations, including: (a) Terry C. Turner, our
Chairman of the Board, President and Chief Executive Officer who has 26 years of
exploration and mining experience; (b) Harlan McSpadden (Mac) DeLozier, a Director and our
Vice President for Bolivian Administration who has 21 years of exploration and mining
experience; (c) Blane W. Wilson, our Chief Operating Officer who has 20 years of mill and
plant operations experience; (d) Tracy A. Madsen, our Vice President for US Administration
and our Chief Financial Officer who has 22 years of finance and accounting experience; and
(e) Dr. Michael H. Biste, our Chief Consulting Geologist who has 31 years of exploration
and mining experience. 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. In particular, our agreement with Queenstake USA requires that during
the term of the agreement we will employ Blane W. Wilson, Operators Chief Operating
Officer, to spend the majority of his time at Jerritt Canyon. Failure to employ Mr. Wilson
would jeopardize our agreement with Queenstake USA to operate the Jerritt Canyon mill.

Enforceability of the
Queenstake USA Agreement Our primary focus is currently on the
operation of the Jerritt Canyon mill through our Agreement with Queenstake Resources USA,
Inc. (Queenstake USA) Should this Agreement for any reason be breached or voided, or
if we were unable to enforce the Agreements terms or obtain payment from Queenstake
USA, our ability to generate revenue may be severely reduced. We are also dependent upon
the financial stability of Queenstake USA, and its parent company, Yukon Nevada Gold Corp.
Queenstake USA has been unable to meet certain of its obligations to us to date, and we
have been required to amend the Agreement for its benefit. We have incurred numerous and
substantial expenses at Jerritt Canyon for which we have been reimbursed by Queenstake
USA, although they have not paid us certain portions of our fees earned to date or the
$500,000 loan which we anticipate. Under the Agreement, we expect to incur significant
additional expenses on an ongoing basis. If Queenstake USA is unable to meet its financial
obligations to us, we may be liable for payments to vendors and employees for materials
received and services performed and we may not have any recourse to a financially-viable
company. Queenstake USA is also subject to the need to obtain significant additional
financing and has offered us no assurance that it will be able to do so in a timely
fashion, if at all. While we believe this Agreement is valid and enforceable, we cannot
guarantee that we will be able to operate under this Agreement during its five-year term.

Regulatory issues Our continued operation of the
Jerritt Canyon mill is subject to approval of various environmental and regulatory
agencies including the Nevada Division of Environmental Protection (NDEP). Approval to
operate the Mill is subject to various commitments to add environmental control systems
and remain within strict environmental parameters. If we, or the Mill owner, are unable to
meet these strict requirements, approval to continue Jerritt Canyon operations may be
withdrawn.

Our business in Nevada and 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, our operations may be subject to fines or
restrictions on activities pertaining to our prospects and properties, which may
negatively affect our ability to conduct our operations.

Our Bolivia-based operations are
subject to inherent risks, including.

|o | Political
instability, civil unrest, or insurrection in Bolivia where all of our mining properties
and          prospects are located; with the exception of our Gold Bar mill and plant
located in Eureka, Nevada, and our          Jerritt Canyon mill operating agreement north
of Elko, Nevada;
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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



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

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

|o | The
higher costs of international operations; and
|- | -------------------------------------------------

|o | Changes
in the laws, regulations and tax structure of Bolivia.
|- | --------------------------------------------------------------

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.

# LEGAL, MARKET, AND
REGULATORY RISKS

Our officers and directors direct
and manage our corporate affairs, while our minority shareholders exercise little or no
control over the management of our affairs, which may negatively affect the voting power
of our minority shareholders and prevent a change in control. Our officers and directors direct our
corporate affairs, while our minority shareholders have little or no control over our
corporate affairs. For instance, our Board of Directors has the right to authorize the
issuance of blank check preferred stock with such designations, rights and
preferences, as they may determine. As such, our Board of Directors may issue, and has in
fact issued, shares of preferred stock with such rights and preferences without
shareholder approval, which could adversely affect the voting power or other rights of our
common shareholders. 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. This indemnification may require us 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, and 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, our operations and
acquisitions have been dependent upon our raising capital by: (a) selling substantial
amounts of our common stock shares; (b) issuing shares in connection with convertible
debentures; and (c) during 2006 and 2007, issuing shares of Series B convertible preferred
stock, which are convertible into our common stock; and (d) the issuance of convertible
debentures during 2008; and (e) the issuance in 2008 of our Series C convertible preferred
stock. The issuances of the securities in (a)  (e) are dilutive to the value of our
securities, especially since many of these securities were issued below the then-current
market prices. On September 14, 2007, we held a Shareholders Meeting at which the
shareholders voted to increase the number of authorized common shares to 2,000,000,000
shares.

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 2008, the price and trading volume of our common stock has been
volatile. Significant operating losses, the temporary suspension of our operations on our
Bolivian projects, political instability in Bolivia, the dilution of shareholders
stockholdings and other factors may have contributed to this volatility, and such factors
may continue to impact price and trading volume volatility.

We have not developed
independent corporate governance.We do not have independent directors.
Additionally, we have no audit, compensation, or nominating committees. This lack of
independence and independent controls over our corporate affairs may result in potential
or actual conflicts of interest between our officers, directors and our shareholders.
We have no policy to resolve such conflicts and these conflicts of interests may benefit
the interests of our officers and directors over that of our minority stockholders.

# Item 2. Our Properties

As described in Item 1, Business, we
own mining concessions in Bolivia and an idle mill and mineral processing plant 25 miles
northwest of Eureka, Nevada. These properties include:

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

|o | The
Tipuani-Cangalli properties (discussed in paragraph (d), below), and
|- | ------------------------------------------------------------------------

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

# (a) The Precambrian
properties.

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

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. On February 28, 2009 we elected not to renew the
claims on 83,733 acres of our Precambrian claims. We paid our patent fees and renewed our
claims rights on 18,031 acres which we believe to hold the greatest potential for
mineralization, and which contained our C Zone mine and mill. We paid $20,833 to renew
these claims.



# (b) Buen Futuro claim

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

|o | Payment
of $3,000 per month in cash and $2,000 per month in stock to Dr. Biste as a consulting
fee for          exploration and development of Buen Futuro.  This monthly fee was
payable for 60 months from the date of the          original agreement.  This consulting
agreement expired on May 31, 2008. As of December 31, 2008, we owed Dr.          Biste
$19,000 in cash and $10,000 in stock value under this agreement which has not been paid.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|o | Maintaining
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 is an expensive proposition.
 We are not currently seeking any funds or allocating any          significant amount of
capital to exploration operations in our Bolivian properties and, therefore, may not
         be in compliance with this requirement.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|o | Investing
$1 million in exploration by November 23, 2006. We have expended approximately $699,000
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 we are not currently seeking.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|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. On May 20, 2005, we entered into an          amended agreement with the
sellers whereby we agreed that if we were not in production at Buen Futuro by
         November 23, 2005 we were required to pay a penalty of $1,500 per month to the
sellers until we enter          production or until November 23, 2006. If by November 26,
2006 we were still not in production, the penalty          amount payable to the seller
increased to $3,000 per month. As of December 31, 2008, we owed $42,000 in
         production penalties which were past due and we have not entered into mineral
production or have met the          minimum expenditure requirement.
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

While we intend to pay all fees owed
to Dr. Biste and meet our other obligations under our agreements, and although Dr. Biste
has not yet notified us of default in our obligations under our agreements, there is no
assurance that he may not do so in the future. If he does so, it is not likely that, in
the current conditions and economic and Bolivian political climate, we will have or be
able to obtain sufficient financial resources to comply with these and other obligations
under this agreement.



There are no other stated penalties
for failure to comply with these commitments. We estimate that the initial build-out of
the gold plant on the Buen Futuro A Zone, and other infrastructure improvements, will
require a capital investment of approximately $10,000,000 to $30,000,000.

The Buen Futuro mining claim is
located squarely in the center of our landholding in a geological area within eastern
Bolivia known as the Precambrian Shield. This area, which resulted during a
geological time known as the Precambrian Era,is located 300 kilometers (180 miles)
north of Santa Cruz, Bolivia, and 18 kilometers (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 in the A Zone. We exercised our rights to purchase
the Buen Futuro property in June 2003. A private contract and recorded public contract
were signed and filed with the Superintendency of Mines of the Department of Santa Cruz on
December 12, 2003.

The Buen Futuro mineral deposits are
found in a gold oxide layer commencing at the surface and ranging to depths of 130 to 200
feet. Immediately beneath this surface oxide layer is a supergene, or copper-enriched
layer, extending from the bottom of the gold oxide zone to a depth of 320 feet, sitting on
top of a mineralization system that is known as a strata-bound volcanogenic massive
sulfide (VMS). Based on data gathered through a combined 44,000 feet of auger,
reverse circulation and diamond core drilling, as well as 8 miles of trenching, we
estimate a significant amount (in excess of 4 million tonnes) of mineralized material in
the gold oxide layer and 6.5 million tonnes of mineralized material in the copper-enriched
supergene layer beneath the gold oxide layer. Given the current economic and political
climate in Bolivia, we cannot offer any assurance that, even if we had adequate financing,
we would be able to extract the mineralization on a commercially viable basis. Particular
note should be made that mineralized material is not the equivalent of proven and probable
reserves, and that the area tested is less than one-half of one percent of our landholding
in eastern Bolivia.

Based on Dr. Michael Bistes
study, as detailed below, we believe that the Buen Futuro A Zone gold/copper deposits,
surrounded by our Precambrian claims, are just part of a much larger trend of VMS clusters
that run both northeast and southwest within our total landholding. A study was carried
out on the larger trend by Dr. Biste, our Chief Consulting Geologist, who is an expert on
the Precambrian geology of eastern Bolivia. The exploration data resulted from the
southwest portion of the Cobra claim. The Cobra claim covers the northern part of the
Ascension Gold-Copper Trend and the investigated ground comprised 23 square miles. Dr.
Biste prepared a remote sensing study consisting of an interpretation of satellite images,
aerial photographs, and open file airborne magnetic and radiometric data. He further
reexamined historic reconnaissance exploration data of the two claims and applied modern
computer based methods for an integrated data interpretation. In addition, Dr. Biste used
the results of geological mapping over 44 linear miles, magnetic ground surveys of over 9
miles and soil sampling over a distance of 18 miles, as well as Horizontal Loop
Electromagnetic (HLEM) data along two extensive test lines. Despite the wide line spacing
of 0.6 miles, Dr. Biste was able to identify a geological setting with characteristics
very similar to the host rock of the Buen Futuro VMS mineralization. Buen Futuro is
located 12 miles southwest of the investigated area. The HLEM survey so far has confirmed
three parallel striking conductors, which Dr. Biste believes represent a primary VMS
mineralization that is covered by an oxide layer at least 30 meters deep. The lateritic
soil at the surface carries geochemically anomalous values for gold, copper and zinc. Our
summary study covers 3.6 miles of the Trend and the remote sensing data shows that the
favorable VMS lithology strikes further to the northeast. We consider these findings to be
a significant step toward identifying new gold-copper mineralization similar to the Buen
Futuro ore bodies. Dr. Biste believes that fieldwork will continue to demonstrate that the
Ascension Gold-Copper Trend is now likely to extend over at least 21 linear miles within
our Precambrian properties. While we will use Dr. Bistes findings to guide our
further exploration of the Ascension Gold-Copper Trend, there are no assurances that our
additional studies will prove that commercially economical mineral deposits exist in the
Ascension Gold-Copper Trend.



We believe that our current
landholding in the Ascension Gold-Copper Trend provides us with several important
opportunities for future development; however, such opportunities are contingent upon our
ability to raise the needed development capital either through operations, equity funding,
debt financing or by entering into joint venture relationships.

We own the underlying mineral rights
on the Buen Futuro project through the purchase of mineral concession rights that had been
granted by the Bolivian government. 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.

On March 1, 2009 we paid $2,854 to
the Bolivian government to renew these claims for 2009.

# (c) Cobra claim

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

We secured the Cobra claim through a
Bolivian mining petition and paid initial claims fees of $10,000. On March 1, 2009 we paid
$25,685 to the Bolivian government to maintain these claims for 2009.



Total patent fees on all of our
Precambrian Shield claims that we retained, which include the Buen Futuro, Gran Serpiente
and Cobra claims for 2009, were $49,372 and were paid on March 1, 2009. No additional
patent fees are payable until the end of February 2010, which we estimate to be $49,372.

# (d) The Cangalli and
Tipuani Valley claims

In October 1995, we began reviewing
potential mining opportunities in Bolivia. 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 and claimed an additional 7,402 acres in the Tipuani
Valley resulting in total claims of 12,527 acres. We traditionally have paid $5,011 per
year to the Bolivian government in mining patent concession fees. The Bolivian Mining Code
provides that these annual government claims fees are our only obligation necessary to our
rights over the Cangalli claims in perpetuity. On March 1, 2009 we elected not to renew
our Cangalli and Tipuani Valley Claims. Should we desire to reinitiate operations on these
claims, we would be required to negotiate with COMIBOL, the Bolivian National Mining
Company, and enter into a joint venture with that company.

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

# (e) Gold
Bar mill and plant

On June 18, 2004, we entered into a
purchase agreement with Atlas Precious Metals, Inc. (Atlas) for the purchase
of the Gold Bar mill and gold recovery plant located 25 miles northwest of Eureka, Nevada.
In exchange for the Gold Bar mill and plant, we issued 30,000,000 shares of our restricted
common stock to Atlas Precious Metals for this mill and plant. The shares were valued at
$.12 per share based on the closing price of the stock on the closing date or an aggregate
shares value of $3,600,000. Our initial plans were, upon raising the necessary capital, to
dismantle ship and re-erect this plant on our Buen Futuro A Zone site in eastern Bolivia.

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



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

We are presently investigating the
possibility of rehabilitating the Gold Bar mill on its current site outside of Eureka,
Nevada and use it for toll processing of gold ore from neighboring sites owned by third
parties. We are also considering the possibility of entering into a joint venture with ore
producers who would want to use the mill, or the possibility of selling the mill to raise
money for the development of other projects. While we have not made a decision concerning
Gold Bar mill and any ability to rehabilitate and restate the mill will be subject to
additional financing, there is no guarantee that we will be able to obtain the financing
to commence a tolling project at its current location, which we estimate to be
approximately $1,000,000 to rehabilitate the mill. However, other costs that we have under
evaluation, such as permitting and new tailings impoundment construction, could easily be
significantly more expensive than the mill rehabilitation costs, and may exceed $15
million.

We cannot guarantee that we will be
able to obtain sufficient financing to create a suitable tailings impoundment; the
necessary permitting from state and federal agencies; and whether we would be able to
obtain the necessary customers to ensure a successful operation. We also cannot guarantee
that if we choose to sell the plant that we will be able to find a buyer or recover our
costs in the project. While Atlas continues to own the property on which the plant stands
and has allowed us sufficient time to remove our equipment, we can also offer no guarantee
that they will not sell the property to a buyer that will request that we sell the mill or
remove it from its current location.

# (f) Office leases

Our executive offices are located at
9661 South 700 East, Salt Lake City, Utah 84070. This suite of offices consists of three
executive offices, a conference room, reception space, filing areas and copy and faxing
facilities and our suitable for our needs. We pay $1,563 per month on the first year a
two-year lease option.  The option term expires in July 2009. We are allowed to
terminate the lease at any time for a $1,563 penalty plus a 30-day notice, which at this
stage of the lease is our only obligation.



We also lease 35 square meters of
office space located in Santa Cruz de la Sierra, Bolivia, which is our Bolivian
headquarters. This lease expires February 15, 2010. We pay $188 per month for this lease
as well as $200.00 per month for 360 square meters of warehouse space in Santa Cruz,
Bolivia. We believe that we would be released from both of our leases in Bolivia with
minimal notice.

|                               |                   |              |                  
|------------------------------ | ----------------- | ------------ | -----------------
|Location                       | Size              | Monthly rent | Lease Expiration 
|                              
|Salt Lake City                 | 1,183 square feet | $1,563       | July 31, 2009    
|Santa Cruz, Bolivia            | 35 square meters  | 188          | February 15, 2010
|Warehouse, Santa Cruz, Bolivia | 360 square meters | 200          | June 1, 2009     
|                              
|Total                          |                   | $            | 1,951            

# Item 3. Legal proceedings

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

We did not hold a meeting of our
security holders during the fourth quarter of our fiscal year ended December 31, 2008.

Contemplated
Shareholders Meeting

On January 15, 2009, we filed a
preliminary proxy statement, the sole purpose of which was to seek shareholder approval to
increase our capitalization. At the time of filing the preliminary proxy statement (and as
described above), our authorized capital was 2,000,000,000 shares, and we had
1,535,897,333 shares of common stock outstanding, 80,000 shares of Series B Convertible
Preferred Stock (convertible into 20,000,000 shares of common stock), and one share of
Series C Contingent Convertible Preferred Stock (convertible into 487,746,250 shares of
common stock). In addition, we have outstanding debentures convertible into 121,960,000
shares of common stock, and options exercisable at prices ranging from $$.002 to $.025As a
result, we do not have sufficient capitalization to meet our goals. The preliminary proxy
statement sought shareholder approval to effect a reverse stock split.

This is not an attempt to solicit a
proxy for the foregoing meeting of shareholders which has not yet been scheduled and the
proxy statement for that meeting has not yet been finalized. Certain of our directors and
executive officers may, under the rules of the SEC, be deemed to be
participants in the solicitation of proxies from its stockholders in
connection with the proposed transaction. Information concerning the interests of the
persons who may be participants in the solicitation is set forth in our most
recent annual report on Form 10-K (including any amendments thereto), previously filed
with the SEC.



The preliminary proxy statement is
available free of charge online through the EDGAR filings maintained by the Securities and
Exchange Commission at www.sec.gov, and any amendment thereto will be available
when filed. When the definitive proxy statement is available, we will also comply with the
SECs notice and accessfiling requirements. OUR SHAREHOLDERS SHOULD READ
THE ENTIRE PRELIMINARY PROXY STATEMENT AND THE DEFINITIVE PROXY STATEMENT (WHEN AVAILABLE)
AND THE ACCOMPANYING MATERIALS AS THEY CONTAIN (OR WILL CONTAIN) IMPORTANT INFORMATION. We
do not currently have any estimated time when we will attempt to finalize or mail the
proxy statement or hold the meeting.

# PART II

# Item 5. Market for
Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities

# Market Information

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

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

|                        |         |         
|----------------------- | ------- | --------
|2007                    | Low Bid | High Bid
|                       
|First Quarter           | $.006   | $.030   
|Second Quarter          | $.018   | $.030   
|Third Quarter           | $.011   | $.020   
|Fourth Quarter          | $.008   | $.016   
|                        |         |         
|2008                    | Low Bid | High Bid
|                       
|First Quarter           | $.008   | $.016   
|Second Quarter          | $.005   | $.009   
|Third Quarter           | $.004   | $.008   
|Fourth Quarter          | $.0013  | $.0035  
|                        |         |         
|2009 (through April 13) | Low Bid | High Bid
|                       
|                        | $.001   | $.0036  



# Holders

As of December 31, 2008, there were
approximately 1,195 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. Based on a search we
conducted for our September 14, 2007 shareholders meeting, we estimate an additional 4,000
shareholders.

# Outstanding shares

We are authorized to issue
2,000,000,000 common shares; as of December 31, 2008, we had 1,535,897,333 shares
outstanding. As of the date of this report we have 1,765,638,535 common shares
outstanding.

In addition, we are authorized to
issue 10,000,000 preferred shares, (a) we have designated 3.5 million as Series A shares,
none of which have been issued; (b) an additional 4,500,000 of our preferred shares were
designated as Series B preferred shares of which 80,000 are outstanding and convertible
into 20,000,000 common shares; and (c) and additional one of our preferred shares was
designated as a Series C preferred share which is outstanding and convertible into
487,746,250 common shares if and when sufficient shares are authorized and available for
conversion. We also have $473,000 in convertible debentures outstanding convertible into
121,960,000. By including all commitments for shares, including those that are subject to
the availability of authorized and unissued shares prior to conversion, the fully diluted
share total as of December 31, 2008 is 2,043,765,543 and the fully diluted share total as
of the date of this report is 2,342,653,029 shares.

The computation of diluted earnings
per common share is based on the weighted average number of shares outstanding during the
year plus the common stock equivalents as detailed in the following chart. The inclusion
of these shares would have resulted in a weighted average shares fully diluted number that
was anti-dilutive and as such they are excluded from the weighted average shares basic and
diluted calculation

|                                                      |               |              
|----------------------------------------------------- | ------------- | -------------
|Fully diluted shares for the years ended December 31, | 2008          | 2007         
|                                                     
|Basic shares outstanding                              | 1,535,897,333 | 1,602,510,490
|Series B conversion                                   | 20,000,000    | 86,490,500   
|Series C conversion                                   | 487,746,250   | -            
|Convertible debentures                                | 121,960,000   | 10,000,000   
|Convertible notes payable                             | -             | 22,368,720   
|                                                     
|Total                                                 | 2,043,765,543 | 1,721,369,710
|                                                      |              

# Dividends

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



# Securities authorized
for issuance under equity compensation plans

On June 4, 2008, we adopted the 2008
Employees and Consultants Stock Compensation Plan as reflected in the following table as
of December 31, 2008. 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 hocdeterminations 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

|                                                           |                                                                                                 |                                                                                |                                                                                                                                               
|---------------------------------------------------------- | ----------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------ | ----------------------------------------------------------------------------------------------------------------------------------------------
|                                                           |                                                                                                 |                                                                                |                                                                                                                                               
|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 issuance 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-                                                                                                                                           
|                                                           |                                                                                                 |                                                                                |                                                                                                                                               

As we reported in a Form 8-K dated
March 31, 2009, our board of directors adopted our 2009 Equity Incentive Plan and issued
options to various persons, including management and directors of the Company. The
effectiveness of the 2009 Equity Incentive Plan and the options granted are subject to
shareholder approval which must be obtained, if at all, before March 26, 2010.



# Unregistered sales of
equity securities and use of proceeds

On December 16, 2008, we issued
13,870,150 shares of our restricted common stock to Nestor Dimas Perez, a resident of
Bolivia, in exchange for a convertible debenture totaling $27,000 plus $740.30 in accrued
interest in accordance with the terms of the Debenture Agreement dated May 23, 2008. The
conversion was executed at $.002 per share.

On December 26, 2008, we sold
27,500,000 shares of our common stock to Livstar Management Services, inc. at $0.016 per
share or an aggregate of $27,500.

In every issuance described above we
relied upon Sections 4(2) and 4(6) of the Securities Act for the offer and sale. In
sixteen cases, as indicated above regarding residents of Bolivia, we also relied on
Regulation S promulgated under the Securities Act regarding non-residents of the United
States. We believed that Sections 4(2) and 4(6) were available because the offers and
sales did not involve a public offering, there was no general solicitation or general
advertising involved in the offers or sales and the purchasers were accredited investors.
Our reliance on Regulation S was based on the fact that ten of the purchasers were
non-residents of the United States. We placed restrictive legends on the certificates
representing these securities stating that the securities were not registered under the
Securities Act and are subject to restrictions on their transferability and resale.

# Preferred Stock

In March 2005, we authorized
3,500,000 shares of our Series A Convertible Preferred Stock, none of which are currently
issued or outstanding.

As of December 31, 2008 we had issued
total of 3,556,004 shares of Series B Preferred Stock. All issuances of Series B Preferred
Stock occurred in 2006 and 2007 with no new shares issued during 2008. The Series B
Preferred Stock referred to above has conversion rights that allow the holders to convert
each Series B preferred share into 250 restricted shares of our common stock. As of April
1, 2009, 98% or 3,476,004 of the outstanding Series B shares had been converted into
869,001,000 common shares, leaving 80,000 left to convert into 20,000,000 common shares.



On December 29, 2008 our board of
directors voted to approve a Certificate of Designation of the Preferences and Rights of
Series C Contingent Convertible Preferred Stock (Certificate of Designation).
That Certificate of Designation (which is an amendment to our articles of incorporation)
is attached as Exhibit to this Current Report. This act by our board designated one Series
C contingent convertible preferred share out of our 10 million preferred shares authorized
in our Articles of Incorporation. The Certificate of Designation made each share of Series
C Contingent Convertible Preferred Stock (the Series C Preferred) convertible
to 487,746,250 of our common shares. The conversion may only occur following the
occurrence of a Conversion Event as defined in the Certificate of Designation.
A Conversion Event will occur upon additional common shares being available after the
authorization by our shareholders of an increase in our number of common shares or the
reorganization of our common stock through a reverse split. Each share of Series C
Preferred votes with the common stock, and is entitled to as many votes as the shares of
common stock into which the Series C Preferred is convertible, assuming that a Conversion
Event has occurred. The Series C Preferred is entitled to dividends and distributions upon
liquidation as though it were fully converted to common stock.

On December 29, 2008 we received from
Golden Eagle Mineral Holdings, Inc. (GEMH) the tender of, and our board of
directors approved the receipt by us into treasury of, 487,746,250 shares of our common
stock owned by GEMH in exchange for one share of our Series C contingent convertible
preferred stock. As a result of the conversion of 487,746,250 common shares into one
Series C Preferred share we reduced the number of common shares outstanding by
487,746,250. Because a Conversion Event has not yet occurred, the Series C Preferred is
not convertible at the present time.

# Convertible Debentures

During the year ending December 31,
2008 we entered into 15 Convertible Debenture Agreements and issued 15 Convertible
Debentures totaling $363,500 which were reported in Forms 10-Q dated June 30, 2008 and
September 30, 2008. Each of these debentures carry an interest rate of 8% per annum
payable at maturity and mature two years from the date of the debenture. Each debenture,
and its accrued interest, is convertible into restricted shares of our common stock at any
time by the holder of the debenture. If converted into restricted common stock, the
conversion shall be at 50% of the average closing price of our common stock for the five
trading days prior to the date of the debenture, or 50% of the average closing price for
our common stock for the five trading days prior to the notice of conversion within the
first 120 days immediately following the purchase of the debenture, whichever is less
provided that the minimum conversion price is not less than $.002 per share. As of
December 31, 2008, $139,500 of these debentures had been converted into 64,062,754 common
shares leaving debentures totaling $224,000 convertible into 112,000,000 common shares.

As these debentures carry a
conversion price that was less than market price on the date of issuance, the rules of
beneficial conversion apply. The difference between the conversion rate and the market
rate is classified as a discount on the note and accreted over the term of the debenture,
which in this case is 24 months. The face amount of the nine outstanding debentures as of
December 31, 2008 is $224,000. On the balance sheet they have been discounted by $162,395
to $61,605. The discounted amount is accreted over the twenty-four month period or in its
entirety if the debenture is converted during the term. As of December 31, 2008, $173,298
has been accreted to financing costs.

Issuances of common stock after
our year-end of December 31, 2008 (not previously reported on Form 8K).

On January 28, 2009, we sold
29,100,000 restricted shares of our common stock to Dewey L. Williams and 29,100,000
restricted shares of our common stock to The Dewey L. Williams Profit Sharing Plan and
Trust at $0.0007 per share or an aggregate of $40,740. Of this amount $20,000 was in cash,
$20,000 was from the redemption of Convertible Debentures dated September 15, 2008 and
$740 was accrued interest. We relied upon Sections 4(2) and 4(6) of the Securities Act.

On January 28, 2009, we sold
182,000,000 shares of our common stock to Jose Edmundo Arauz, a resident of Bolivia, at
$0.0007 per share in exchange for $127,400 in debt.



On January 28, 2009, we sold
58,867,486 shares of our common stock to Nestor Dimas Perez, a resident of Bolivia, at
$0.0007 per share in exchange for $41,207 in debt.

In every issuance described above we
relied upon Sections 4(2) and 4(6) of the Securities Act for the offer and sale. In two
cases, as indicated above regarding residents of Bolivia, we also relied on Regulation S
promulgated under the Securities Act regarding non-residents of the United States. We
believed that Sections 4(2) and 4(6) were available because the offers and sales did not
involve a public offering, there was no general solicitation or general advertising
involved in the offers or sales and the purchasers were accredited investors. We placed
restrictive legends on the certificates representing these securities stating that the
securities were not registered under the Securities Act and are subject to restrictions on
their transferability and resale.

# Use of Proceeds

Not applicable. Although we received
proceeds from the sale of our private placement common stock and Series B Preferred Stock,
as described above and under the immediately above indicated exemptions, we did not file
any Registration Statement during our 2008 Fiscal Year, whereby we would receive proceeds
from the resale of our common stock by selling shareholders or sale of any securities by
us to the public.

# Purchases of Equity
Securities by the Issuer and Affiliated Purchasers

Not applicable. We made no
repurchases or our equity securities during our Fiscal Year 2008.

# Item 6. Selected
Financial Data

Because we meet the definition of a
smaller reporting company, as defined by Rule 229.10(f)(1) of Regulation S-K, we are not
required to provide the information required by this item in accordance with Item 301(c)
of Regulation S-K.

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



Overview

We are engaged in minerals industry
related operations in Bolivia and Nevada and seek to generate revenues, income and cash
flows from the sale of gold and copper and the operation of milling and processing
facilities. We generated $19,307 in gold sales from our C Zone mine and mill in Bolivia
during the quarter ending December 31, 2008. We also generated $577,136 in revenues from
the operation of the Jerritt Canyon mill during the four-month period ending December 31,
2008. Prior to the revenues here referenced, we had not generated any operating revenues
since November 2004. Since inception, our operations have been severely impacted from a
lack of working capital and financing. Additionally, our operations have experienced
additional cost and time delays due to the remote location of our Bolivian properties and
our headquarters being more than 4,000 miles from our corporate offices.

From our inception, we have not been
profitable. We have financed our operations through debt and equity placements to
accredited investors. These placements have diluted the interests of our existing
shareholders, but have allowed us to continue the development necessary to commence and
continue our production at our Cangalli claims and to acquire and maintain our other
prospects, in addition to allowing us to complete our administrative obligations. We have
at times encountered difficulties in meeting our obligations to pay our bills timely. To
the extent that we have been able to do so, we have paid most of our bills through the
present through equity and debt financing, with the exception of currently due obligations
and about $145,218 in obligations that are more than 60 days past due as of December 31,
2008.

# Uncertainties and Trends

Our revenues are dependent now, and
in the future, upon the following factors:

|o | Price
volatility in worldwide commodity prices, including gold, copper and other minerals,
which is          affected by: (a) interest rates; (b) currency exchange rates; (c)
currency exchange rates; (c) inflation          or deflation;  and (d) speculation;
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|o | Global
and regional supply and demand of  gold, copper and other minerals, including investment,
         industrial and jewelry demand;
|- | ----------------------------------------------------------------------------------------------------------------------------------------

|o | Political
and economic conditions of major gold, copper or other mineral-producing countries; and
|- | -------------------------------------------------------------------------------------------------

|o | Threatened
and actual changes to the Bolivia Mining Law and taxation scheme that may cause increased
         regulations, greater controls over our mining activities, or other unanticipated
consequences, and          related increased costs of conducting operations in Bolivia
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

(a)    
          Liquidity and capital resources  2008 and 2007



# (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, 2008 and 2007.

|                          |              |             
|------------------------- | ------------ | ------------
|Years ended December 31,  | 2008         | 2007        
|                         
|Current Assets            | $    209.392 | $   96,792  
|Current Liabilities       | (1,326,991)  | (913,735)   
|                         
|Working Capital (Deficit) | ($1,117,599) | ($  816,943)

Our current assets increased by
$112,601 from $96,792 as of December 31, 2007 to $209,392 for the comparable 2008 period.
The increase was due to a $52,141 increase in cash and a $24,022 decrease in prepaid
expenses and an increase of $84,482 in accounts receivable related to our Jerritt Canyon
operations.

Our working capital deficit increased
by $300,656 to $1,117,599 as of December 31, 2008, from $816,943 for the comparable 2007
period. Accounts payable and accrued expenses increased to $281,232 on December 31, 2008
from $193,558 on December 31, 2007. Accounts payable and accrued expenses increased
primarily as a result of our operations at Jerritt Canyon for which we expect to receive
reimbursement from Queenstake USA.

Other notes payable increased to
$468,285 as of December 31, 2008, from $214,111 on December 31, 2007. The increase was
primarily due to a new $220,000 note payable to Casco Credit which we incurred on December
24, 2008; we used the proceeds from this note for working capital, to pay salaries and to
reduce other debt instruments.

Related party debt decreased to
$57,525 as of December 31, 2008 from $92,350 on December 31, 2007.

A convertible debenture that we issued
in 2007 remained constant in 2008 at $249,000. This convertible debenture matured on May
2, 2008; however, we entered into an agreement with the debenture holder to extend the
maturity date until May 2, 2009. We are unsure whether we will be able to pay this
debenture and accrued interest when due. In order to do so, we will need additional
financing, which may consist of the $500,000 loan anticipated from Queenstake USA, or we
may have to seek other financing sources or negotiate with the creditor to extend again
the due date of the debenture.

As of December 31, 2008, we owed
$17,270 in past due interest on this debenture. We entered into an additional 15 debenture
agreements totaling $363,500 during 2008. As of December 31, 2008 $139,500 of these
debentures had converted into common stock during 2008 leaving an outstanding balance of
$224,000. These debentures have two year maturity dates from the date of the debenture and
mature between May and September of 2010 and may be converted into our common stock.

Accrued interest decreased to $65,857
as of December 31, 2008, from $110,187 as of December 31, 2007. The decrease was due to
the accrual of interest on the outstanding notes less payments in cash and the conversion
of interest into common stock.



Deferred wages for employees both in
the U.S. corporate offices and in Bolivia increased to $205,092 as of December 31, 2008,
from $54,529 as of December 31, 2007. We also owe past-due salary obligations to our
president, Terry C. Turner. Mr. Turner has, in the past years, waived certain salary
obligations without receiving any consideration from the Company:

|o | During
2008, Mr. Turner waived $60,000 of his salary accrual that was past due.
|- | -------------------------------------------------------------------------------

|o | On
December 31, 2004, 2005, and 2006, Mr. Turner waived $60,000 each year (a total of
$180,000); and
|- | ----------------------------------------------------------------------------------------------------

|o | In
2003 and 2001, Mr. Turner waived $36,457 and $443,772 respectively.
|- | ----------------------------------------------------------------------

We continue to owe Mr. Turner
$216,783 in back salary in addition to the foregoing waivers; however, he has agreed with
us that this liability bears no interest. During the period preceding the passage of the
Sarbanes-Oxley Act of 2002 and its included prohibition against loans to executive
officers, we loaned Mr. Turner $216,783 on an irregular basis to assist him in meeting his
personal obligations because we were not able to pay him his salary on a consistent basis.
The receivable from Mr. Turner and payable to Mr. Turner are netted out to a zero balance
and do not appear on our balance sheet.

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

# (a)(2) Property and
equipment

During 2008, we increased our
property and equipment net of depreciation and impairment by $261,834, or 5.6%, to
$5,914,522 at December 31, 2008 as compared to $5,652,688 at December 31, 2007. Mining
equipment increased by $138,163 to $733,353 as of December 31, 2008 from $595,190 as of
December 31, 2007. The majority of this increase came from the build out of our C Zone
gold processing mill in eastern Bolivia. Additionally, we impaired $246,845 of our
Precambrian property as a result of our decision on March 1, 2009 to allow certain of our
Precambrian claims to expire.

|                                                   |             |             
|-------------------------------------------------- | ----------- | ------------
|Years ended December 31,                           | 2008        | 2007        
|                                                  
|Mining equipment                                   | $   733,353 | $    595,190
|Gold Bar Mill and Plant - idle                     | 3,980,000   | 3,980,000   
|Mine development costs                             | 752,339     | 336,260     
|Mining properties                                  | 1,414,997   | 1,356,948   
|Office equipment                                   | 137,356     | 110,710     
|Vehicles                                           | 116,182     | 110,018     
|Accumulated depreciation, depletion and impairment | 1,219,705   | (836,438)   
|                                                  
|Fixed assets net                                   | $5,914,522  | $ 5,652,686 



# (a)(3) Capital
commitments

Our capital commitments are set out
below:

|                                      |             |                  |               |              
|------------------------------------- | ----------- | ---------------- | ------------- | -------------
|Contractual Cash Obligations          | Total       | Less than 1 year | 1 to 3 years  | 3 to 5 years 
|                                     
|Accounts payable and accrued expenses | $   281,232 | $   281,232      | $           - | $           -
|Deferred wages                        | 145,092     | 145,092          | -             | -            
|Other notes payable                   | 468,285     | 468,285          | -             | -            
|Related party payable                 | 57,525      | 57,525           | -             | -            
|Accrued interest                      | 65,857      | 65,857           | -             | -            
|Debentures payable                    | 473,000     | 249,000          | 224,000       | -            
|Exploration & production Buen Futuro  | 301,000     | -                | 301,000       | -            
|Production penalties consulting fees  | 180,000     | 36,000           | 72,000        | 72,000       
|Mining claim fees                     | 246,860     | 49,372           | 98,744        | 98,744       
|Building leases                       | 6,382       | 6,382            | -             | -            
|                                     
|Total contractual cash obligations    | $2,225,233  | $1,358,745       | $695,744      | $170,744     

We have material capital commitments
that will require us to obtain adequate financing to meet our obligations and are subject
to risks of default and forfeiture of property and mining claim rights. The occurrence of
any such risks will negatively affect our operations and potential revenues. These
commitments are:

|1. | Our
accounts payable and accrued expenses of $281,232, which include trade
               payables and general obligations. These obligations will either become due
               within the next month, are currently due, or are in some cases more than
90 days                past due. The increase in accounts payable is primarily related to
accounts and                wages payable at Jerritt Canyon.
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|2. | We
have notes payable, including:
|-- | ---------------------------------

|a. | A
note totaling $202,840 payable to a Bolivian resident with an interest rate of
               8% per annum maturing on December 31, 2009.
|-- | -------------------------------------------------------------------------------------------------------------------------------------------

|b. | A
note totaling $39,945 payable to a Bolivian resident with an interest rate of
               8% per annum maturing on December 31, 2009.
|-- | ------------------------------------------------------------------------------------------------------------------------------------------

|c. | A
note totaling $5,500 payable to Lonestar Equity Group with an interest rate of
               8% maturing on December 31, 2009.
|-- | ---------------------------------------------------------------------------------------------------------------------------------

|d. | A
note totaling $220,000 payable to Casco Credit with and interest rate of 12%
               maturing on March 24, 2009.In the event of default, this note at the
option of                the holder become due and payable and the amount due shall
accrue interest at a                default rate of 5% per month. This note is secured by
the Gold Bar mill located                25 miles north of Eureka, Nevada.
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|e. | On April
11, 2007, we entered into a convertible note with our Chief Financial           Officer
with an effective date of February 6, 2007, which represents the date we
          verbally made this commitment. The note covered the payment of contractual
          retention bonuses payable in our common shares to our Vice President for U.S.
          Administration, Tracy A. Madsen. This note was for $50,000, had a term of 2
          years, and was convertible into 5,555,555 shares of our common stock at the
          closing price for our common stock on February 6, 2007, which was $.009. As the
          market price and the conversion price on the date of commitment were the same,
          no beneficial conversion feature was applied. Our Board of Directors elected to
          use a convertible promissory note to meet this retention bonus commitment
          because we did not have sufficient common stock available and any grant of our
          Series B shares to this officer would have granted him a favorable treatment
and           a beneficial conversion interest that would have violated our Code of
Conduct           and Ethics. As of December 31, 2008 we accrued interest totaling
$7,559. On           February 6, 2009 this note was extended until May 9, 2009.
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3. | A
debenture payable to a shareholder, Aloha Holdings, Inc., in the amount of
               $249,000, which bears interest at 7% per annum with a default rate of 10%
per                annum which matured on May 2, 2007, and is convertible into our common
stock at                $0.025 per share.   We have elected to extend the maturity
date of this                note to May 2, 2009. We are currently in default on this note
due to the failure                to pay interest in a timely manner and as of December
31, 2008 we owe $17,270 in                accrued interest.
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4. | As
of December 31, 2008, we have 9 Convertible Debentures outstanding
               totaling $224,000. Each of these debentures carries an interest rate of 8%
per                annum payable at maturity and matures two years from the date of the
debenture.                Each debenture, and its accrued interest, is convertible into
restricted shares                of our common stock at any time by the holder of the
debenture. If converted                into restricted common stock, the conversion shall
be at 50% of the average                closing price of our common stock for the five
trading days prior to the date of                the debenture, or 50% of the average
closing price for our common stock for the                five trading days prior to the
notice of conversion within the first 120 days                immediately following the
purchase of the debenture, whichever is less provided                that the minimum
conversion price is not less than $.002 per share. These                debentures are
convertible into 112,000,000 shares of our restricted common                stock. As
these debentures carry a conversion rate that is less than market rate                the
rules of beneficial conversion apply. The difference between the conversion
               rate and the market rate is classified as a discount on the note and
accreted                over the term of the debenture, which in this case is 24 months.
The face amount                of the outstanding debentures is $224,000. On the balance
sheet they have been                discounted by $162,395 to $61,605. The discounted
amount is accreted over the                twenty-four month period or in its entirety if
the debenture is converted during                the term. As of December 31, 2008,
$222,554 has been accreted to financing                costs.
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|5. | Our
obligation to pay accrued interest on Items 1-4 in the amount of $65,857.
               Interest on these notes is expensed each quarter and accrued.
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------



|6. | On
December 29, 2008 we received from Golden Eagle Mineral Holdings, Inc.                (GEMH)
the tender of, and our board of directors approved the                receipt by us into
treasury of, 487,746,250 shares of our common stock owned by                GEMH in
exchange for one share of our Series C contingent convertible preferred
               stock. As a result of the conversion of 487,746,250 common shares into one
               Series C Preferred share we reduced the number of common shares
outstanding by                487,746,250.
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|7. | Our
obligation for monthly lease payments of $1,563 per month for our Salt Lake
               City, Utah office, which terminates on July 31, 2009. We have the option
of                canceling the remaining lease by paying of one additional months
rent.                Additionally, we have an obligation to make monthly lease payments
of $188 per                month for our Santa Cruz, Bolivia office until February 15,
2009. We are also                obligated to pay $200 per month for our Santa Cruz,
Bolivia warehouse rent until                June 1, 2009.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|8. | Our
obligation to pay to the Bolivian government mining claim fees for 2009
               through 2014. We paid the 2009 claim fees in February of 2009 in the
amount of                $49,372. We allowed some of our claims to lapse and we renewed
those claims                which we felt held the greatest potential for future
exploration and                development. A more detailed explanation of our properties
and which claims we                renewed can be found in Part 1, Item 2,Properties.
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|9. | Our
commitment to make $2 million in production expenditures for the Buen Futuro
               prospect by November 23, 2005. Because we were not in production by that
date,                we have paid a penalty of $3,000 per month and must continue to do
so until we                are in production at Buen Futuro. We were also required to pay
a consulting fee                of $3,000 per month in cash and $2,000 per month in
common stock to the seller                of the property as a consulting fee until May
31, 2008. As of December 31, 2008,                we owed $42,000 in production
penalties, $19,000 in management fees payable in                cash which are included
in our accounts payable. Additionally, we owe $10,000 in                management fees
payable in stock to Dr. Michael Biste, one of the co-sellers of                the
property.
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10. | Our
obligation incurred in connection with the acquisition of the Buen Futuro
               prospect to spend $1 million in exploration over the three-year period
ending                December 12, 2006. We believe our expenditures of $699,000 in the
region qualify                to be applied against this obligation, leaving a remaining
obligation of                $301,000.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|11. | Our
obligation to pay Livstar Management Services (Livstar), 5% of the
               compensation (not including reimbursement of expenses incurred) we receive
as a                result of our agreement with Queenstake Resources USA, Inc. through a
settlement                agreement entered into on October 31, 2008, which amended a
Consulting Agreement                entered into on June 2, 2007 which replaced an
earlier agreement dated April 18,                2007. As of December 31, 2008, we had
paid Livstar $5,000 under this agreement.                As this commission is contingent
upon revenues received from our agreement to                operate the Jerritt Canyon
Mill we have not included a commitment amount in the                forgoing chart.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|12. | Our
obligation to pay Blane Wilson, our Chief Operating Officer, 3% of the
               compensation (not including reimbursement of expenses incurred) we receive
as a                result of our agreement with Queenstake Resources USA, Inc. and 3% of
any                revenues that may be generated from our Gold Bar mill, as part of his
employment                contract. As of December 31, 2008, we owed Mr. Wilson $2,942
under this                agreement which is included in our accounts payable. As this
payment is                contingent upon revenues received from our agreement to operate
the Jerritt                Canyon Mill and the idle Gold Bar Mill we have not included a
commitment amount                in the forgoing chart.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# (a)(4) Derivative
liability

We have no derivative liabilities.

# (a)(5) Equity

Stockholders equity remained
approximately constant during our 2008 fiscal year, increasing by less than 3⁄4 of 1%
at December 31, 2008 when shareholders equity was $4,700,318 as compared to
$4,665,738 as of December 31, 2007.

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

We
have not entered into any transaction, agreement or other contractual arrangement with an
entity unconsolidated with us under whom we have;

|o | an
obligation under a guarantee contract,
|- | -----------------------------------------

|o | a
retained or contingent interest in assets transferred to the unconsolidated entity or
similar          arrangement that serves as credit, liquidity or market risk support to
such entity for such assets,
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|o | any
obligation, including a contingent obligation, under a contract that would be accounted
for as a          derivative instrument, or
|- | ---------------------------------------------------------------------------------------------------------------------------------------

|o | any
obligation, including a contingent obligation, arising out of a variable interest in an
         unconsolidated entity that is held by us and material to us where such entity
provides financing,          liquidity, market risk or credit risk support to, or engages
in leasing, hedging or research and          development services with us.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

We do not have any off-balance sheet
arrangements or commitments that have a current or future effect on its financial
condition, changes in financial condition, revenues or expenses, results of operations,
liquidity, capital expenditures, or capital resources that is material, other than those
which may be disclosed in this Managements Discussion and Analysis of Financial
Condition and the audited Consolidated Financial Statements and related notes.



# (a)(7) Results of
operations.

The following sets forth certain
information regarding our results of operations as of December 31, 2008 and 2007.

|                                            |                     |                      
|------------------------------------------- | ------------------- | ---------------------
|Years ended December 31,                    | 2008                | 2007                 
|Revenues                                    | $           596,443 | $                   -
|Production costs                            | (498,741            | -                    
|Exploration & development costs             | (174,710)           | (297,776)            
|General and administrative                  | (1,115,540)         | (1,218,035)          
|Depreciation and depletion                  | (21,381)            | (25,043)             
|Operating (loss)                            | (1,213,928)         | (1,540,855)          
|Interest expense                            | (156,193)           | (92,349)             
|Gain (Loss) on sale of fixed assets         | 13,096              | (1,509)              
|Asset impairment                            | (246,845)           | (107,425)            
|Financing costs                             | (222,554)           | (4,647,263)          
|Other income (loss)                         | 130,043             | 11,764               
|Net (loss)                                  | $(1,696,382)        | $(6,377,636)         
|Net (loss) per share - basic and diluted    | (.00)               | (.01)                
|Weighted average shares - basic and diluted | 1,898,367,966       | 830,814,298          

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

Revenue.    
          Revenue increased to $596,443 in 2008 from $0 in 2007. Revenue was generated
          during from two sources.

|(a) | We
generated $19,307 from the sale of gold during the quarter ending December 31, 2009. Gold
was                   generated from our C Zone mine and mill in eastern Bolivia. This
gold was mined and milled prior to                   the cessation of operations at the C
Zone in November, 2008.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(b) | We
generated $577,136 in revenue during the period September through December of 2008
through our                   contract with Queenstake Resources USA, Inc. to operate the
Jerritt Canyon mill located 50 miles                   north of Elko, Nevada. During this
period of time the mill was not in operation, however, we                   provided
maintenance services, regulatory environmental compliance and assistance in the
                  application process needed to gain approval to restart milling
operations at Jerritt Canyon.  We                   had no interest in the Jerritt Canyon
mill during 2007 and therefore recognized no revenues from                   its
operation.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Production costs. Production
costs incurred at

|(a) | the
C Zone mine and mill located in eastern Bolivia during the quarter ending December 31,
2008                   totaled $25,071; and
|--- | --------------------------------------------------------------------------------------------------------------------------------------

|(b) | Production
costs incurred from our Jerritt Canyon operations during the period September through
                  December 2008 totaled $473,670.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------

We incurred $0 production costs during
2007 as we generated $0 no revenue during that year. Any production costs associated with
the operation of our C Zone pilot plant were classified as Exploration and Development
costs.

Exploration & development.
Exploration and mine development costs decreased by $123,066, or 41%, to $174,710 during
2008 from $297,776 during 2007. The decrease in 2008 was the result of the transition of
our C Zone mine and plant from development and pilot operations to production during the
quarter ending September 30, 2008. Further decreases in exploration and development costs
resulted from the political climate in Bolivia and the cessation of all Bolivian
operations during the quarter ending December 31, 2008.

General and administrative
expenses. Our general and administrative expenses decreased by $102,495, or 8.4%, to
$1,115,540 during 2008 from $1,218,035 during 2007. We attribute the decrease in our
general and administrative expenses to the reduction of staff at our corporate offices and
offices in Bolivia, a reduction in legal expenses resulting from the settlement of legal
issues during 2008 and an increased emphasis on cost controls throughout the company.

Depreciation and depletion.
Depreciation and depletion decreased by $3,662 to $21,381 in 2008 from $25,043 in 2007.
The decrease in 2008 was the result the decrease in the amount of equipment being
depreciated through the sale and disposal of equipment in previous periods.

Operating expenses. During
2008, our operating expenses increased by $269,518 or 17% to $1,810,372 from $1,540,855
during 2007. The increase was the result of production costs incurred at Jerritt Canyon.

Interest expense. Interest
expense during 2008, increased by $63,844 to $156,193 from $92,349 during 2007. The
increase during 2008 was primarily the result of the elimination of increased debt and the
payment of penalty interest on past due notes.

Gain on sale of fixed assets.During 2008 we experienced a gain on sale of fixed assets in the amount of $13,096
compared to a loss of $1,509 during 2007. The gain was primarily the result of the sale of
certain pieces of equipment at our Gold Bar mill and plant that are not required for a
restart of plant operations. We also had sales of equipment in Bolivia during 2008,
however, the gain on the sale of certain items was offset by the loss on the sale of other
items which essentially netted out the gain and loss.



Asset impairment. During 2008,
we incurred an impairment expense of $246,845 related to the partial impairment of the
acquisition cost of our Precambrian properties. On February 28, 2009 we allowed our claims
on 87,733 acres of our Precambrian Shield properties in eastern Bolivia to lapse. We
renewed our claims on 18,031 acres which we believed to have the greatest potential for
gold and copper mineralization. As 82.28% of our Precambrian claims were not renewed, we
impaired 82.28% of our $300,000 acquisition cost from 2002. During 2007 we impaired
$107,425 which was related to our Cangalli mine. We have fully impaired all assets related
to our Cangalli operation with the exception of certain buildings located in Cangalli
which we are attempting to sell.

Financing costs. During 2008
we incurred financing costs of $222,554 related to the sale of debentures during 2008.
These debentures were convertible into our restricted common stock and carried a
conversion price less than the market price on the date if sale. As a result of this
discounted conversion price the rules of beneficial conversion applied. The difference
between market price and the conversion price was accounted for as a discount against each
individual debenture and the discount was amortized over the two year term of each
debenture. Additionally if a debenture was converted during the year the remaining amount
of the unamortized discount was expensed as a financing cost during the year. This
amortized amount was expensed as a financing cost and totaled $222,554 during 2008. During
2007 we incurred financing costs related the issuance of our Series B Convertible
Preferred stock in the amount of $4,647,263. This expense was the result of the issuance
of Series B preferred stock to debt holders and for cash consideration with a conversion
rate less than the market price on the date of issuance.

Net loss. Our net loss for
2008 decreased by $4,681,254 to ($1,696,382) compared to ($6,377,636) during 2007,
resulting in a basic per-share loss of $(.00) in 2008 as compared to $(.01) in 2007 based
on weighted average shares outstanding  basic of 1,898,367,966 and 830,814,298
respectively. The decrease in net loss was primarily related to the decrease in financing
costs of $4,424,709 with the remaining decrease resulting from the reduction of operating
costs.

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

# (a)(8) Cash flow

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, Item 5. By deducting certain other non-cash
expenses, we achieved net cash flows from operating activities of ($554,447) in 2008 and
($1,401,837) in 2007. We also invested $542,187 in property and equipment during 2008 and
$306,887 in property and equipment in 2007. Net cash flows provided by our financing
activities totaled $1,148,775 in 2008 and 1,710,039 in 2007. Cash increased to $54,883 as
of December 31, 2008 from $2,742 in 2007.



|                                                |              |             
|----------------------------------------------- | ------------ | ------------
|Net cash flows                                  |              |             
|Years ended December 31,                        | 2008         | 2007        
|                                               
|Net gain (loss)                                 | ($1,696,382) | ($6,377,636)
|Net cash flows used by operating activities     | (554,447)    | (1,401,837) 
|Cash flows from investing activities            | (542,187)    | (306,887)   
|Net cash flows provided by financing activities | 1,148,775    | 1,710,039   
|Net increase (decrease) in cash                 | 52,141       | 1,315       
|Cash beginning of period                        | 2,742        | 1,427       
|Cash end of period                              | $54,883      | $2,742      

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.

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

|o | $57,525
in notes payable to our current directors and officers
|- | --------------------------------------------------------------

|o | Our
officers and employees have also deferred payment of a portion of their 2008 salary until
funds are          available to pay these wages.  As of December 31, 2008 total deferred
salary from our officers and employees          was $205,092.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

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

No options have been issued during
the past three years. No options are outstanding as of December 31, 2008, although certain
options were issued in March 2009 (subject to shareholder approval).

# (c) Plan of operations

To accomplish our strategy we intend
to carry out the steps in our Plan of Operations, which are summarized below:



|o | Commence
production at the Jerritt Canyon gold mill as the contract mill operator. As of the date
of this filing, we employ 70 workers at Jerritt Canyon to operate the mill. The Mill
Operating Agreement requires that Queenstake Resources USA pays all expenses and pays us
an 8% cost-plus administrative fee, as well as a 20% fee on profits. Furthermore,
Queenstake USA must make a $500,000 operating loan to us. Although we have received the
necessary governmental approvals for the recommencement of operations, certain steps are
still being taken to bring the Jerritt Canyon mill into full-scale production. Operations
have begun at the Mill and we project, but cannot assure, that the Mill will be in full
operation by April 30, 2009.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|o | Determine
if we will perform contract ore milling at the current Gold Bar site in Nevada, enter
into a joint venture for milling ore at the Gold Bar site, or sell the mill to another
mining company for the purpose of processing ore at the Gold Bar site. Also, determine
the direction to take with respect to the development of the Gold Bar mill. The region
around our mill has recently experienced increased gold mining activity as a result of
the current international price for gold. We also believe that there is a milling
shortfall in the region that may present us an opportunity to recommence the Gold Bar
mill operations on a contract basis as a tolling facility. We are currently evaluating
this possibility and the potential benefits to us. We estimate that it will take
approximately $1 million to bring the Gold Bar mill back online to accept contract
milling and processing work. However, other costs that we have under evaluation, such as
permitting and new tailings impoundment construction, could easily be significantly more
expensive than the mill rehabilitation costs, and may exceed $15 million. We currently do
not have sufficient financing available for the Gold Bar mill and we are focusing our
efforts on the Jerritt Canyon gold mill as described above.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|o | We
will continue to monitor and evaluate the political and tax climate in Bolivia with
regards to recommencing mining and milling operations at our C Zone mine and mill. We
will also continue our discussions with potential joint venture partners that may be
willing to provide funding and operate the C Zone mine and mill. However, we cannot
guarantee at this time that those negotiations will result in ongoing arrangements in the
future or that the political and tax climate will improve adequately in Bolivia to permit
recommencement of operations (assuming without assurance that we have the financing
necessary for those operations).
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|o | Obtain
estimated financing or income from our diversification of $200,000 for the remaining
costs pertaining to the construction and operation of a 1,000-tpd processing plant on our
C Zone gold project and an additional estimated $200,000 to increase our capacity to
2,000 tpd. This financing or income would only be invested after the careful analysis
that we currently have underway about whether, and under what conditions, we will want to
operate the C Zone mill. We also intend to secure between $600,000 and $1 million to
continue our in-fill drilling, metallurgical studies and final feasibility work for our
Buen Futuro A Zone, as well as our B and C Zones. We have been in discussions with
third-party mining investors from Europe and Bolivia regarding joint venture efforts for
the final exploration and feasibility work on these gold and copper prospects. However,
we cannot guarantee at this time that those negotiations will result in ongoing
arrangements in the future or that the political and tax climate will improve adequately
in Bolivia to be attractive to potential joint venture partners and to permit
recommencement of operations (assuming without assurance that we have [directly or
through joint venture partners] the financing necessary for those operations).
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|o | We
intend to maintain our mining claims on the Buen Futuro 2,500-acre site as well as other
critical claims in the Precambrian Shield surrounding the Buen Futuro claims not included
in the A Zone, as well as the remainder of our 42,731-acre remaining landholding as best
we can, given our current lack of liquidity and the current political and tax climate in
Bolivia as described above. We will continue to monitor and evaluate the political and
tax climate in Bolivia and we may reestablish our exploration and development efforts at
Buen Futuro should conditions in Bolivia improve. We cannot however guarantee that we
will develop the Buen Futuro project. We will continue to seek joint venture partners to
develop the region. We estimate costs for this additional exploration work to total
$1,000,000 over the next two years. We also cannot guarantee at this time that
negotiations with joint possible joint venture partners will result in the development of
the Buen Futuro project.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|o | Since
we currently have only a limited amount of cash on hand and a substantial working capital
deficit, our ability to implement any or all of these planned strategies other than
fulfilling our contract to operate the Jerritt Canyon mill requires significant infusions
of working and operating capital; however, we cannot assure we will be successful in
raising capital through a secondary offering, private placements or debt financing to
meet our cash needs.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In order to assist in financing our
planned operations, we will continue to seek joint venture partners, as well as merger and
acquisition candidates, or other industry participants who would enter into joint
development efforts on our Precambrian prospects or central Nevada milling possibilities;
however, there is no assurance that any potential joint-venture or merger partners will be
interested in evaluating these prospects or in negotiating an agreement with us on
reasonable or acceptable terms.

# (d) Impact of
inflation and changing prices

We have not experienced any material
impact from the effects of inflation during the last two annual operating periods. We
have, however, seen a significant increase in the cost of diesel fuel, when we have been
able to obtain fuel in Bolivia. Such fuel cost increases will impact our operations as we
ramp up mining and recovery operations. We have been informed by our contract miner that
they intend to increase costs above that which was originally quoted to recover the
increased cost of fuel. We are currently evaluating the impact of these fuel cost
increases on our projected income.

# (e) Accounting policies



# (e)(1) Critical
accounting policies

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

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

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

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

SFAS No. 159 In February 2007, the
FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial
Liabilities  Including an Amendment of FASB Statement No. 115. This statements
objective is to improve financial reporting by providing the Company with the opportunity
to mitigate volatility in reported earnings caused by measuring related assets and
liabilities differently without having to apply complex hedge accounting provisions. This
statement is expected to expand the use of fair value measurement, which is consistent
with the FASBs long-term measurement objective for accounting for financial
instruments. The adoption of SFAS 159 did not have an impact on the Companys
financial statements. The adoption of SFAS No. 159 did not have an impact on the
Companys consolidated financial statements.

SFAS No. 160 In December 2007, the
FASB issued SFAS No. 160, No Controlling Interests in Consolidated Financial Statements-
An Amendment of ARB No 51. This statements objective is to improve the relevance,
comparability, and transparency of the financial information that a reporting entity
provides in its consolidated financial statements by establishing accounting and reporting
standards that require ownership interests in the subsidiaries held by parties other than
the parent be clearly identified. The adoption of SFAS 160 did not have an impact on the
Companys financial statements.

SFAS No. 141 (revised) In December
2007, the FASB issued SFAS No. 141 (revised), Business Combinations. This revision
statements objective is to improve the relevance, representational faithfulness, and
comparability of the information that a reporting entity provides in its effects on
recognizing identifiable assets and measuring goodwill. The adoption of SFAS 141 (revised)
did not have an impact on the Companys financial statements.

SFAS No. 161   In March
2008, the FASB issued Statement No. 161, Disclosures about Derivative Instruments and
Hedging Activities (SFAS 161), which is effective January 1, 2009. SFAS 161
requires enhanced     disclosures about derivative instruments and
hedging activities to allow for a better understanding of their effects on an
entitys financial position, financial performance, and cash flows. Among other
things, SFAS 161 requires disclosures of the fair values of derivative instruments and
associated gains and losses in a tabular formant. SFAS 161 is not currently applicable to
the Company since the Company does not have derivative instruments or hedging
activity.

SFAS No. 162   In May 8,
2008, the Financial Accounting Standards Board (FASB) issued Statement of Financial
Accounting Standards (SFAS) No. 162, The Hierarchy of Generally Accepted Accounting
Principles, which will provide framework for selecting accounting principles to be used in
preparing financial statements that are presented in conformity with U.S. generally
accepted accounting principles (GAAP) for nongovernmental entities. With the issuance of
SFAS No. 162, the GAAP hierarchy for nongovernmental entities will move from auditing
literature to accounting literature.  The Company is currently assessing the impact
of SFAS No. 162 on its financial position and results of operations.



SFAS No. 163   The FASB has
issued Statement of Financial Accounting Standards No. 163, Accounting for Financial
Guarantee Insurance Contracts. SFAS No. 163 clarifies how SFAS No. 60, Accounting and
Reporting by Insurance Enterprises, applies to financial guarantee insurance contracts
issued by insurance enterprises, and addresses the recognition and measurement of premium
revenue and claim liabilities. It requires expanded disclosures about contracts, and
recognition of claim liability prior to an event of default when there is evidence that
credit deterioration has occurred in an insured financial obligation. It also requires
disclosure about (a) the risk-management activities used by an insurance enterprise to
evaluate credit deterioration in its insured financial obligations, and (b) the insurance
enterprises surveillance or watch list. The Company is currently evaluating the
impact of SFAS No. 163.

# Item 7A. Quantitative
and Qualitative disclosures about Market Risk

Inapplicable.    
          We do not presently invest or otherwise engage in market risk sensitive
          instruments.

# Item 8. Financial
statements and supplementary data

The financial statements and
supplementary data required by this item are contained on pages F-1 through F-29.

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

There were no disagreements with our
accountants and auditors on any matters of accounting principles, practices or financial
statement disclosures during 2008 and 2007 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, 2008 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, 2008.

Changes in internal
controls.

We have made, and will need to
continue to make, substantial financial and man-power investments in order to assess our
internal controls over financial reporting and our internal controls over financial
reporting may be found to be deficient.Section 404 of the
Sarbanes-Oxley Act of 2002 requires management to assess our internal controls over
financial reporting and requires auditors to attest to that assessment. We have expanded
our use of outside consultants to prepare for the Section 404 requirements. If our
independent auditors are unable to provide an unqualified attestation report on such
assessment when such report is required, we may be required to change our internal control
over financial reporting to remediate deficiencies. In addition, investors may lose
confidence in the reliability of our financial statements causing our stock price to
decline.



# Managements Report
on Internal Control Over Financial Reporting.

Internal control over financial
reporting refers to the process designed by, or under the supervision of, our Chief
Executive Officer and Chief Financial Officer, and effected by our Board of Directors,
management and other personnel, 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, and includes those policies
and procedures that:

||X| | Pertain
 to the  maintenance  of  records  that  in  reasonable  detail  accurately  and  fairly
 reflect  the                  transactions and dispositions of our assets;
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

||X| | Provide
 reasonable  assurance that transactions are recorded as necessary to permit  preparation
of financial                  statements in accordance  with generally  accepted
 accounting  principles,  and that our receipts and                  expenditures are
being made only in accordance with authorization of our management and directors; and
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

||X| | Provide
reasonable  assurance regarding  prevention or timely detection of unauthorized
 acquisitions,  use or                  disposition of our assets that could have a
material effect on the financial statements.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Internal control over financial
reporting cannot provide absolute assurance of achieving financial reporting objectives
because of its inherent limitations.  It is a process that involves human diligence
and compliance and is subject to lapses in judgment and breakdowns resulting from human
failures.  It also can be circumvented by collusion or improper management override.

Because of such limitations, there is
a risk that material misstatements may not be prevented or detected on a timely basis by
internal control over financial reporting.  However, these inherent limitations are
known features of the financial reporting process.  Therefore, it is possible to
design into the process certain safeguards to reduce, though not eliminate, this
risk.  Management is responsible for establishing and maintaining adequate internal
control over our financial reporting.

Management has used the framework set
forth in the report entitled Internal Control  Integrated Framework published
by the Committee of Sponsoring Organizations of the Treadway Commission, known as COSO, to
evaluate the effectiveness of our internal control over financial reporting.  Based
upon this assessment, management has concluded that our internal control over financial
reporting was effective as of and for the year ended December 31, 2008.

We are not an accelerated
filer for the 2008 fiscal year because it is qualified as a small business
issuer. Hence, under current law, the internal controls certification and
attestation requirements of Section 404 of the Sarbanes-Oxley act will not apply to us.
This Annual Report on Form 10-K does not include an attestation report of our registered
public accounting firm regarding internal control over our financial reporting.
Managements report was not subject to an attestation by our registered public
accounting firm pursuant to the temporary rules of the Securities Exchange Commission that
permit us to provide only managements report in this Annual Report on Form 10-K.



# Item 9B Other information

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

# PART III

# Item 10. Directors,
Executive Officers and Corporate Governance

# (a) 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, 2009.

|Name                                                                                          | Age | Position                                                                                                                          | Term of Office                 
|--------------------------------------------------------------------------------------------- | --- | --------------------------------------------------------------------------------------------------------------------------------- | -------------------------------
|Terry C. Turner (1)                                                                           | 56  | Chairman of the Board of
                                    Directors, President & CEO                                           | 2/14/97-present                
|Alvaro Riveros                                                                                | 66  | Director                                                                                                                          | 1/5/04-present                 
|Harlan M. (Mac)
                                                             DeLozier, II (2) | 65  | Director
                    Vice President Bolivian Administration                                                               | 9/28/06- present3/1/97- present
|                                                                                              |     |                                                                                                                                   |                                
|Tracy A. Madsen(3)                                                                            | 47  | Secretary/Treasurer/CFO/
                                    Vice President US
                                    Administration | 2/13/03-present                
|Blane W. Wilson                                                                               | 46  | Chief Operating Officer                                                                                                           | 4/18/08-present                

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

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

(3)    
          Mr. Madsen resigned as our Corporate Secretary/Treasurer, Vice President for
          U.S. Administration and Chief Financial Officer on August 15, 2006. On November
          14, 2006, Mr. Madsen was reappointed to the same positions that he held prior to
          his resignation.

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



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

Directors hold office until the next
meeting of shareholders and until a successor is elected and qualified, or until their
resignation.

# Business experience

A 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:

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



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

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

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



Blane W. Wilson
was appointed Chief Operating Officer on April 18, 2008. Mr. Wilsons immediate focus
will be to serve as the mill manager of the Jerritt Canyon mill under our operating
agreement with Queenstake Resources USA, Inc. Additionally, he is responsible for the
development of various potential business opportunities for our Gold Bar CIP gold mill
located 25 miles northwest of Eureka, Nevada. Mr. Wilson has 24 years of experience
managing milling and processing operations in the mining industry. He previously was
Corporate Operations Manager for the Queenstake Resources USAs Jerritt Canyon gold
mine, which is located north of Elko, Nevada. Mr. Wilson was at the Jerritt Canyon
operation for 19 years in various positions, including: Mill Foreman, Process
Superintendent and Process Manager. Since 1981, the Jerritt Canyon mine has produced more
than 8 million troy ounces of gold. At the Jerritt Canyon mine, Mr. Wilson oversaw a $33
million annual budget and managed a workforce of 154 personnel. He also served on our
Technical Advisory Board since February of 2008 and advised us in the past on various
potential projects involving the Gold Bar mill.

# (b) Identification of
significant employees

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

# (c) Family relationships

No family relationships exist among
the officers and directors.

# (d) Involvement in
certain legal proceedings

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

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

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



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

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

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

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

# (g)       Code
of ethics

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

The Code has not been amended since
the filing. We have not granted any waivers to our code of ethics.

# (h) Nominating Procedures

We have not changed our nominating
procedures during the past fiscal year or subsequently. As described above, we do not have
a nominating committee and, as a result, the Board of Directors performs the functions of
the nominating committee and will direct and oversee the process by which individuals may
be nominated to our Board of Directors.

The functions performed by the Board
of Directors include identifying potential directors and making recommendations as to the
size, functions and composition of the Board and its committees. In making nominations,
our Board of Directors will consider candidates who have the highest personal and
professional integrity, who have demonstrated exceptional ability and judgment and who
shall be most effective, in conjunction with the other nominees to the Board of Directors,
in collectively serving the long-term interests of the shareholders.



The Board of Directors will consider
nominees proposed by our shareholders. To recommend a prospective nominee for the Board of
Directors consideration, you may submit the candidates name by delivering
notice in writing to the Board of Directors at t.turner@geii.com or via first class
U.S. mail, at the Companys address.

A shareholder nomination submitted to
the Board of Directors must include at least the following information (and can include
such other information the person submitting the recommendation desires to include), and
must be submitted to us by the date mentioned in the most recent proxy statement under the
heading Proposal From Shareholders as such date may be amended in cases
where the annual meeting has been changed as contemplated in SEC Rule 14a-8(e), Question
5:

|(i) | The
name, address, telephone number, fax number and e-mail address of the person submitting
the          recommendation;
|--- | ------------------------------------------------------------------------------------------------------------------------

|(ii) | The
number of shares and description of our voting securities held by the person submitting
the nomination          and whether such person is holding the shares through a brokerage
account (and if so, the name of the          broker-dealer) or directly;
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(iii) | The
name, address, telephone number, fax number and e-mail address of the person being
recommended to the          nominating committee to stand for election at the next annual
meeting (the "proposed nominee") together with          information regarding such
person's education (including degrees obtained and dates), business experience
         during the past ten years, professional affiliations during the past ten years,
and other relevant          information.
|----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(iv) | Information
regarding any family relationships of the proposed nominee as required by Item 401(d) of
SEC          Regulation S-K.
|---- | ---------------------------------------------------------------------------------------------------------------------------------

|(v) | Information
whether the proposed nominee or the person submitting the recommendation has (within the
ten          years prior to the recommendation) been involved in legal proceedings of the
type described in Item 401(f)          of SEC Regulation S-K (and if so, provide the
information regarding those legal proceedings required by Item          401(f) of
Regulation S-K).
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(vi) | Information
regarding the share ownership of the proposed nominee required by Item 403 of Regulation
S-K.
|---- | ---------------------------------------------------------------------------------------------------------

|(vii) | Information
regarding certain relationships and related party transactions of the proposed nominee as
         required by Item 404 of Regulation S-K.
|----- | ------------------------------------------------------------------------------------------------------------------------------------------------------

|(viii) | Information
regarding any material direct or indirect relationship between the person submitting the
         recommendation and the proposed nominee.
|------ | ------------------------------------------------------------------------------------------------------------------------------------------------------

|(ix) | The
signed consent of the proposed nominee in which he or she
|---- | -------------------------------------------------------------

|a. | consents
to being nominated as a director of Golden Eagle International, Inc., if selected by the
nominating                   committee;
|-- | -----------------------------------------------------------------------------------------------------------------------------------------

|b. | states
his or her willingness to serve as a director if elected for compensation not greater
than that                   described in the most recent proxy statement;
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------

|c. | states
whether the proposed nominee is "independent" as defined by New York Stock Exchange
Company Guide                 ss.303A.02; and
|-- | ----------------------------------------------------------------------------------------------------------------------------------------

|d. | attests
to the accuracy of the information submitted pursuant to paragraphs (i), (ii), (iii),
(iv), (v),                   (vi), (vii) and (viii), above.
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------



Although the information may be
submitted by fax, e-mail, mail or courier, the Board of Directors must receive the
proposed nominees signed consent, in original form, within ten days of making the
nomination.

When the information required above
has been received, the Board of Directors will evaluate the proposed nominee based on the
criteria described below, with the principal criteria being the needs of the Company and
the qualifications of such proposed nominee to fulfill those needs.

The process for evaluating a director
nominee is the same whether a nominee is recommended by a shareholder or by an existing
officer or director. The Board of Directors will:

|1. | Establish
criteria for selection of potential directors, taking into                consideration
the following attributes which are desirable for a member of our                Board of
Directors: leadership; independence; interpersonal skills; financial
               acumen; business experiences; industry knowledge; and diversity of
viewpoints.                We will periodically assess the criteria to ensure it is
consistent with best                practices and the goals of Isonics Corporation.
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|2. | Identify
individuals who satisfy the criteria for selection to the Board of
               Directors and, after consultation with the Chairman of the Board of
Directors,                make recommendations to the Board of Directors on new
candidates for Board of                Directors membership.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3. | Receive
and evaluate nominations for Board of Directors membership which are
               recommended by existing directors, corporate officers, or shareholders in
               accordance with policies set by the Board of Directors and applicable
laws.
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

We have not engaged the services of
or paid a fee to any third party or parties to identify or evaluate or assist in
identifying or evaluating potential nominees. Neither the Company nor the Board of
Directors has received a recommended nominee from any shareholder that beneficially own
more than 5% of our common stock or group of shareholders that beneficially own more than
5% of our common stock.

# (i) No Audit Committee

Inasmuch as the Company is not a
listed issuer, the Company has not appointed an audit committee and has not identified an
audit committee financial expert. Consequently, the board of directors performs the duties
of the audit committee.

Our common stock is quoted on the OTC
Bulletin Board; that trading medium does not have director independence requirements.
Under Item 407(a) of Regulation S-K, we have adopted the definition of independence used
by the NYSE Alternext US (formerly the American Stock Exchange, or AMEX), which may be
found in the New York Stock Exchange Company Guide at §303A.02. Under this
definition, none of our directors are independent, because our Board of Directors cannot
affirmatively determine that any of our directors do not have a relationship that would
interfere with the exercise of independent judgment in carrying out their responsibilities
of a director.



# (j) 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, 2008, with the exception of one late filing of a
Form 4 by Golden Eagle Mineral Holding, Inc. that was filed on April 15, 2008.

# Item 11. Executive
compensation

(a)    
          Summary compensation table (Items 402(l), (m) and (n))

The following table sets forth
information regarding compensation paid to our Executive Officers which received in excess
of $100,000 in compensation for the years ended December 31, 2006, 2007 and 2008. No other
person who is currently one of our executive officers 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. TurnerCEO, President, Chairman      |      |                     |             |                  |                                      |                       
|                                             | 2006 | $176,152(A)         | $60,000 (B) |                  |                                      |                       
|                                             | 2007 | $135,700(A)         | $60,000 (B) |                  |                                      |                       
|                                             | 2008 | $135,700(A)         | $60,000 (B) |                  |                                      |                       
|Tracy A. MadsenCFO, VP, Secretary &Treasurer |      |                     |             |                  |                                      |                       
|                                             | 2006 | $77,499(C)          |             | $22,612          |                                      | $22,755               
|                                             | 2007 | $104,918(C)         |             |                  |                                      | $50,000(F)            
|                                             | 2008 | $65,833(C)          |             | $25,000          |                                      |                       
|Harlan M. (Mac) DeLozierDirector/VP          |      |                     |             |                  |                                      |                       
|                                             | 2006 | $91,000(G)          |             |                  |                                      |                       
|                                             | 2007 | $99,101(G)          |             |                  |                                      | $50,000(H)            
|                                             | 2008 | $52,980(G)          |             |                  |                                      |                       
|Blane W. WilsonChief Operating Officer       |      |                     |             |                  |                                      |                       
|                                             | 2008 | 78,462(I)$          |             |                  | 150,000(J)                           |                       

(A)    
          During 2006, Mr. Turner received his annual compensation of $150,000 plus
          $26,152 in accrued salary that was owed to him from 2005. During 2007 Mr. Turner
          received his base salary of $150,000 plus $38,502 which was owed to him from
          previous years. Effective January 1, 2008 Mr. Turners salary was increased
          to $180,000 per year. Mr. Turner received payments against his accrued salary of
          $135,700. As of December 31, 2008, Mr. Turner was owed $44,300 in accrued salary
          that he deferred from 2008 that will be paid during 2009.

(B)    
          These bonus payments reflect non-cash debt forgiveness. At December 31, 2008,
          Mr. Turner owed us $216,783 in non-interest bearing loans he received from us
          prior to July 31, 2002; we also owed Mr. Turner $216,783 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 in accrued salary that Mr. Turner waived
          on December 31, 2001). During 2006, 2007 and 2008 Mr. Turner waived $60,000 of
          unpaid accrued salary each year. The board of directors has approved this
          arrangement on our behalf. There has been no material modification of the terms
          of either indebtedness since the enactment of Section 402 of the Sarbanes-Oxley
          Act of 2002. The cashless bonus for 2008 was deducted from the $216,783 that is
          owed to Mr. Turner and is included in the wages payable account.

(C)    
          During 2006 and 2007 Mr. Madsens annual salary was $91,000. During 2005 he
          deferred $16,833 of accrued salary to be paid when sufficient funds were
          available. During 2006 $9,249 of accrued salary was paid to him. As of December
          31, 2006, 7,584 in accrued salary was owed to him. During 2007 Mr. Madsen
          received his base salary plus $13,918 which was owed to him from previous
          periods. Effective January 1, 2008 Mr. Madsens salary was increased to
          $110,000 annually. During 2008, Mr. Madsen deferred $44,167 in salary to be paid
          during 2009.

(D)    
          On August 11, 2006, Mr. Madsen was granted 1,726,092 shares of S-8 common stock
          in accordance with his employment agreement in lieu of a cash payment for
          services provided during 2005. Shares were valued at $.0131 per share based on
          the closing price of the stock on the date of the grant. On April 5, 2008, Mr.
          Madsen was granted 3,205,128 shares of restricted stock in accordance with his
          employment agreement at price of $.0078 per share totaling $25,000.



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

(F)    
          On April 11, 2007, we entered into a convertible promissory note with Mr. Madsen
          with effective date of February 6, 2007. The note covered the payment of
          contractual retention bonuses payable in our common shares. This note was for
          $50,000, and had a term of 2 years, and is payable in cash or is convertible
          into shares of our common stock at the closing price for our common stock on
          February 6, 2007, which was $.009. On February 6, 2009 we extended the maturity
          date of this note until May 7, 2009.

(G)    
          During 2005 and 2006, Mr. DeLoziers annual salary was $91,000. Effective
          on January 1, 2008 Mr. DeLoziers salary was increased to $110,000
          annually. Mr. DeLozier was paid $52,980 during 2008 and agreed to defer $52,451
          in accrued salary until 2009.

(H)    
          On April 11, 2007, we entered into a convertible promissory note with Mr.
          DeLozier with effective date of February 6, 2007. The note covered the payment
          of contractual retention bonuses for 2005 and 2006 payable in our common shares.
          This note was for $50,000, and had a term of 2 years, and was convertible into
          shares of our common stock at the closing price for our common stock on February
          6, 2007, which was $.009. On February 4, 2008, Mr. DeLozier converted his note
          payable into 5,947,564 shares of common stock for the $50,000 note payable and
          accrued interest. Mr. DeLozier is still owed a contractual stock bonus of
          $25,000 for 2007.

(I)    
          On April 18, 2008 Mr. Wilson was appointed as our Chief Operating Officer. His
          employment agreement specifies a base salary of $120,000 per year.

(J)    
          As part of our employment agreement with Mr. Wilson we agreed to grant a signing
          bonus in the form of a $100,000 in options with a three year term, at an
          exercise price equal to the average of the closing sales price for the 10
          trading days prior to the date of the execution of the agreement, which was
          April 18, 2008. Additionally we agreed to grant a $25,000 quarterly bonus in the
          form of options with a three year term, at an exercise price equal to the
          average of the closing sales price for the 10 trading days prior to the last
          date of each 90 day period.

Mr. Wilsons employment contract stipulates that after he has been employed for
          a period greater than six months, he is entitled to severance compensation equal
          to one full year of his annualized base salary, payable within 45 days after the
          date of termination. We have no other 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.



(b)    
          Narrative Disclosure to Summary Compensation (Item 402(o))

The narrative description of the
material factors necessary to an understanding of the information disclosed in the Summary
Compensation Table is disclosed in the notes to the Table included above.

# (c) Outstanding Equity
Awards at Fiscal Year End

|                         |                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                       |                                                                                |                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                          
|------------------------ | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------ | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                         |                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                       |                                                                                |                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                          
|Stock Awards            
|Name                     | Number of
                                                    Securities
                                                    Underlying
                                                    Unexercised
                                                      Options
                                                        (#)
Exercisable | Number of
                                                    Securities
                                                    Underlying
                                                    Unexercised
                                                      Options
                                                        (#)
Un-exercisable | Option
                                                     Exercise
                                                       Price
($) | Option
                                                    Expiration
Date
($) | Number Of
                                                Shares or Units of
                                                    Stock That
                                                     Have Not
                                                      Vested
(#) | Market Value
                                                     Of Shares
                                                    Or Units of
                                                    Stock That
                                                     Have Not
                                                      Vested
($)
|(a)                      | (b)                                                                                                                                                                                                                                                                                                                                           | (c)                                                                                                                                                                                                                                                                                                                                              | (d)                                                                                                                                   | (e)                                                                            | (f)                                                                                                                                                                                                                                                                        | (g)                                                                                                                                                                                                                                                                                                                                      
|Terry C. Turner          | -                                                                                                                                                                                                                                                                                                                                             | -                                                                                                                                                                                                                                                                                                                                                | -                                                                                                                                     | -                                                                              | -                                                                                                                                                                                                                                                                          | -                                                                                                                                                                                                                                                                                                                                        
|Tracy Madsen             | -                                                                                                                                                                                                                                                                                                                                             | -                                                                                                                                                                                                                                                                                                                                                | -                                                                                                                                     | -                                                                              | -                                                                                                                                                                                                                                                                          | -                                                                                                                                                                                                                                                                                                                                        
|Harlan M. (Mac) DeLozier | -                                                                                                                                                                                                                                                                                                                                             | -                                                                                                                                                                                                                                                                                                                                                | -                                                                                                                                     | -                                                                              | -                                                                                                                                                                                                                                                                          | -                                                                                                                                                                                                                                                                                                                                        
|Blane Wilson             | 13,927,577                                                                                                                                                                                                                                                                                                                                    | -                                                                                                                                                                                                                                                                                                                                                | $      .00718                                                                                                                         | 4/18/2011                                                                      | -                                                                                                                                                                                                                                                                          | -                                                                                                                                                                                                                                                                                                                                        
|                         | 3,720,238                                                                                                                                                                                                                                                                                                                                     | -                                                                                                                                                                                                                                                                                                                                                | $      .00672                                                                                                                         | 7/17/2011                                                                      | -                                                                                                                                                                                                                                                                          | -                                                                                                                                                                                                                                                                                                                                        
|                         | 7,668,712                                                                                                                                                                                                                                                                                                                                     | -                                                                                                                                                                                                                                                                                                                                                | $      .00326                                                                                                                         | 10/15/2011                                                                     | -                                                                                                                                                                                                                                                                          | -                                                                                                                                                                                                                                                                                                                                        

# (d) Additional Narrative
Disclosure (Item 402(q))

As part of employment agreement with
Blane Wilson, our Chief Operating Officer dated April 18, 2008 we agreed to the following
options:



Signing Option. A grant of a signing
bonus in the form of an option (the Signing Option) on the date of the
execution of this Agreement, with a three-year term, to purchase from the Company the
number of shares of its common stock (the Common Stock) that could be
purchased with $100,000 at an exercise price equal to the average of the closing sales
prices for the 10 trading days prior to the date of the execution of this Agreement.
Provided, however, that the Employee understands and agrees that in the event that the
Company requires the use of its currently-authorized shares for financing purposes to
promote the best overall interests of the Company, then the Employee will accept shares of
the Companys Series C Contingent Convertible Preferred Stock (to be created)
convertible to a number of the Companys common shares offered through this Signing
Option if and when those shares are authorized by a meeting of the shareholders. The
Signing Option shall vest immediately upon the execution of this Agreement and shall
terminate upon the expiration of three years or after (i) any termination of the
Employment Period by the Company by reason of Cause, and (ii) upon any Change in Control
of the Company. For purposes of this Agreement, a Change of Control shall mean
any transaction or series of related transactions after the date hereof which result in
(A) a transfer of more than fifty percent (50%) of the Common Stock by one or more
shareholders of the Company, other than transfers pursuant to a merger or consolidation of
the Company, (B) any sale of all or substantially all of the assets of the Company, or (C)
any merger or consolidation of the Company with or into any other corporation, where more
than fifty percent (50%) of the equity securities of the surviving or resulting
corporation (by voting power) are directly or indirectly controlled by persons other than
shareholders of the Company immediately prior to such merger or consolidation. All
percentages referenced herein shall be determined on a fully diluted basis.

Quarterly Option Bonus.A
grant of quarterly bonus in the form of an option (the Quarterly Option) on
the date of the expiration of each 90-day period, or quarter, from the date of the
execution of this Agreement, while the Employee remains employed by the Company, said
Quarterly Option to have a three-year term, to purchase from the Company the number of
shares of its common stock (the Common Stock) that could be purchased with
$25,000 at an exercise price equal to the average of the closing sales prices for the 10
trading days prior to the last date of each 90-day period. Provided, however, that the
Employee understands and agrees that in the event that the Company requires the use of its
currently-authorized shares for financing purposes to promote the best overall interests
of the Company, then the Employee will accept shares of the Companys Series C
Contingent Convertible Preferred Stock (to be created) convertible to a number of the
Companys common shares offered through this Quarterly Option if and when those
shares are authorized by a meeting of the shareholders. The Quarterly Option shall vest
immediately upon the last day of each 90-day period that the Employee continues to be
employed by the Company and will terminate upon the expiration of three years or after (i)
any termination of the Employment Period by the Company by reason of Cause, and (ii) upon
any Change in Control of the Company as defined immediately above.

(e)
Compensation of Directors (Item 402(r))

We reimburse directors for travel and
related expenses associated with Board of Directors meetings. Effective January 1,
2007, we began compensating our non-employee director (being only Mr. Riveros) $1,000.00
per month for attending any Board of Directors meetings held within that month
telephonically or in person. The following table sets forth information regarding the cash
compensation paid to our directors during our year ended December 31, 2008:

|               |               |                  |                   |                                            |                                                 |                            |          
|-------------- | ------------- | ---------------- | ----------------- | ------------------------------------------ | ----------------------------------------------- | -------------------------- | ---------
|Name           | Fees earned   | Stock awards ($) | Option awards ($) | Non-equity incentive plan compensation ($) | Nonqualified deferred compensation earnings ($) | All other compensation ($) | Total ($)
|Alvaro Riveros | $       8,000 | -                | -                 | -                                          | -                                               | -                          | $8,000   

We currently have three directors on
our Board of Directors.



Alvaro Riveros received fees of
$11,000 during 2007 and $8,000 during 2008.

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

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

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.

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

We have an employment contract with
Tracy Madsen, our Chief Financial Officer and Vice President for US Administration,
requiring us to issue him a bonus of $25,000 in our restricted common stock for each year
of his employment which becomes due in February of the year after it is earned by
remaining employed by us.

We have an employment contract with
Harlan M. (Mac) DeLozier, a director and our Vice President for Bolivian Operations,
requiring us to issue him a bonus of $25,000 in our restricted common stock for each year
of his employment which becomes due in February of the year after it is earned by
remaining employed by us.

We have an employment contract with
Blane W. Wilson, our Chief Operating Officer, for the period commencing April 18, 2008
through April 11, 2011. We agreed grant a signing bonus in the form of a $100,000 in
options with a three year term, at an exercise price equal to the average of the closing
sales price for the 10 trading days prior to the date of the execution of the agreement
which was April 18, 2008. Additionally we agreed to grant a $25,000 quarterly bonus in the
form of options with a three year term, at an exercise price equal to the average of the
closing sales price for the 10 trading days prior to the last date of each 90 day period.

We also agree to pay a 3% override or
royalty payment on the net smelter return for the Gold Bar Mill if and when we are able to
bring the plant into production. We also agreed to pay 3% of the compensation (not
including reimbursement of expenses incurred) received as a result of our agreement with
Queenstake Resources USA, Inc. to operate the Jerritt Canyon Mill.

Mr.Wilsons employment contract stipulates that after he has been employed for
          a p eriod greater than six months he is entitled to severance compensation equal
          to one full year of his annualized base salary, payable within 45 days after the
          date of termination. Additional terms of this agreement may be found in our
          8Ks filed on April 22, 2008 and an amendment to this employment agreement
          included as an exhibit to this report.



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

# (g) Compensation
Committee Interlocks and Insider Participation (Item 407(e)(4))

The Company does not have a
compensation committee. In each case, compensation decisions are made by the Board of
Directors, and the only persons participating in the deliberations concerning executive
compensation were the directors. No executive officer who is not a director participated
in those deliberations.

None of our executive officers:

|o | served
as a member of the compensation committee (or other board committee performing equivalent
functions          or, in the absence of any such committee, the entire board of
directors) of another entity, one of whose          executive officers served on our
board of directors;
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|o | served
as a director of another entity, one of whose executive officers served on our board of
directors);          or
|- | ----------------------------------------------------------------------------------------------------------------------

|o | served
as a member of the compensation committee (or other board committee performing equivalent
functions          or, in the absence of any such committee, the entire board of
directors) of another entity, one of whose          executive officers served as one of
our directors.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# (h) Compensation
Committee Report

Not required, inasmuch as the Company
is a smaller reporting company.

# (i) Report on repricing
of options/SARs

Not applicable, as no options or SARs
were repriced during the fiscal year ended December 31, 2008 or subsequently.

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

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



At December 31, 2008, and
subsequently, we had only three classes of outstanding voting securities, (a) our common
stock (referred to herein as the Common Stock); (b) Series B Preferred Stock
which is convertible into restricted common shares if and when common shares are
available. Series B preferred shares have voting rights equivalent of the number of common
shares into which the preferred shares may at some point be converted; and (c) Series C
Preferred Stock which is convertible into common shares of our stock. We currently have
one share of Series C Convertible shares that may be converted into 487,746,250 shares of
our common stock if and when such shares may become available. The Series C shares carries
487,746,250 voting rights.

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

The following tables assume, based on
our stock records, that there are 1,535,897,333 shares of our common stock, $.0001 par
value, currently issued and outstanding making up our undiluted share total. Additionally,
there are 80,000 Series B Preferred Shares, at $.01 par value, issued and outstanding and
convertible into 20,000,000 common shares and 1 share of our Series C Preferred shares
which is convertible into 487,746,250 common shares if and when such shares become
available.

|o | The
Holders of the Series B Shares  presently  have the right to vote two hundred  fifty
(250)  common  shares               for every one (1) Series B share, and
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------

|o | the
holder of the Series C share has the right to  487,746,250  votes on all matters
 presented  to the common               stockholders.
|- | ------------------------------------------------------------------------------------------------------------------------------------------

The Series B and C Holders are not
required to convert their Series B shares into common stock prior to voting at any meeting
of the shareholders or on any matter presented to the common shareholders.

As of the date of this filing, Series
B and C Preferred shareholders are entitled to 507,746,250 votes or 23.44% percent of the
total shares of all classes entitled to vote on all matters presented to the common
stockholders at any meeting. Additionally, during 2008 we sold convertible debentures
totaling $363,500 convertible into 181,750,000 shares of our restricted common stock. As
of December 31, 2008, $139,500 of debentures had been converted into 64,062,754 restricted
common shares leaving $224,000 in convertible debentures that are eligible to be converted
into 121,960,000 common shares. These shares have been included in the fully diluted share
total but do not carry voting rights until they are converted into common shares. Fully
diluted share total for purposes of the following two charts as of December 31, 2008 was
2,043,765,543.



# SECURITY OWNERSHIP OF
BENEFICIAL OWNER

|                                                                                                              |                                                                                              |                                                                                                                                                       |                                                                                                                                                                                   
|------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Name and Address of Beneficial Owner                                                                          | Shares of
                                                   Common Stock
Beneficially Owned | Percent of
                                                     Undiluted
                                                   Common Stock
Outstanding | Percent of
                                                   Fully Diluted
                                                   Common Stock
(After Conversion of Preferred Shares)
|Golden Eagle Mineral Holdings, Inc.(1)Chancery Court, Leeward HighwayProvidenciales, Turks and Caicos Islands | 487,746,250                                                                                  | -%                                                                                                                                                    | 23.86%                                                                                                                                                                            
|Kevin Pfeffer (2)5307 Aerie Ct.Clarksville, MD, 21029                                                         | 115,944,494                                                                                  | 7.54%                                                                                                                                                 | 5.67%                                                                                                                                                                             
|Dewey L. Williams (3)6860 N. Dallas Pkwy, Suite 200Plano, TX 75024                                            | 106,191,750                                                                                  | 6.90%                                                                                                                                                 | 5.19%                                                                                                                                                                             
|Lone Star Equity Group LLC (4)Suite 540Houston, TX 77057                                                      | 105,662,500                                                                                  | 6.9%                                                                                                                                                  | 5.16%                                                                                                                                                                             
|Total                                                                                                         | 815,544,994                                                                                  | 21.34%                                                                                                                                                | 39.90%%                                                                                                                                                                           

(1)    
          Golden Eagle Mineral Holdings, Inc. converted 1,995,985 Series B Preferred
          shares into 498,996,250 common restricted shares on December 17, 2007. On
          December 29, 2008 we received from Golden Eagle Mineral Holdings, Inc.
          (GEMH) the tender of, and our board of directors approved the
          receipt by us into treasury of, 487,746,250 shares of our common stock owned by
          GEMH in exchange for one share of our Series C contingent convertible preferred
          stock. As a result of the conversion of 487,746,250 common shares into one
          Series C Preferred share we reduced the number of common shares outstanding by
          487,746,250. As such GEMH holds 0% of our common stock outstanding, but
          beneficially owns 487,746,250 shares, which is 22.52% of our fully diluted
          stock. Golden Eagle Mineral Holdings Inc. is not affiliated with Golden Eagle
          International Inc. as a subsidiary or through any other business relationship
          other than its greater than 10% ownership share in Golden Eagle International
          Inc.s common stock.

(2)    
          Kevin Pfeffer resigned as our Director on December 4, 2006. Mr. Pfeffer also
          received 57,608,593 shares of our common stock as settlement for $230,434 in
          outstanding debt, expenses that he had accrued as a director and penalties on
          January 25, 2008. The share total for Mr. Pfeffer was obtained from a Form 13D
          filed on March 16, 2009.

(3)    
          The share data includes, Dewey Williams, The Dewey Williams Profit Sharing Plan
          & Trust and The Dewey Williams Roth IRA. The data for Mr. Williams was
          obtained from a Form 13D filed on October 10, 2008.

(4)    
          Lone Star Equity Group, LLC, share information was obtained from a Form 4 filed
          on August 13, 2008.



The following table sets forth
information as of the date of this filing, with respect to the ownership of our common
stock for all directors, individually; all executive officers named in the compensation
table; all executive officers and directors as a group.

|                                                                                                       |                                                                                              |                                                                                                                                                       |                                                                                                                                            
|------------------------------------------------------------------------------------------------------ | -------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                       |                                                                                              |                                                                                                                                                       |                                                                                                                                            
|SECURITY OWNERSHIP OF MANAGEMENT                                                                      
|Name and Address of Director or Executive Officer                                                      | Shares of
                                                   Common Stock
Beneficially Owned | Percent of
                                                     Undiluted
                                                   Common Stock
Outstanding | Percent of
                                                   Fully Diluted
                                                   Common Stock
|Terry C. TurnerChief Executive Officer/President/Chairman9661 South 700 EastSalt Lake City, Utah 84070 | -                                                                                            | -                                                                                                                                                     | -                                                                                                                                          
|Harlan M. (Mac) DeLozierDirector/VP(1)9661 South 700 EastSalt Lake City, Utah 84070                    | 5,997,564                                                                                    | .004                                                                                                                                                  | .003%                                                                                                                                      
|Tracy A. Madsen (2)CFO/VP9661 S 700 ESandy, UT 84070                                                   | 5,128,720                                                                                    | .003                                                                                                                                                  | .002%                                                                                                                                      
|Alvaro RiverosDirector9661 South 700 EastSalt Lake City, Utah 84070                                    | -                                                                                            | -                                                                                                                                                     | .012%                                                                                                                                      
|Blane W. Wilson(3)Chief Operating Officer9661 S 700 ESandy, UT 84070                                   | 25,316,526                                                                                   | -                                                                                                                                                     | -                                                                                                                                          
|Officers and Directors as a Group                                                                      | 34,642,810                                                                                   | .007                                                                                                                                                  | .017%                                                                                                                                      

|(1) | Mr.
DeLozier received a convertible note payable representing 5,555,556 shares
               on February 6, 2007 as consideration for our contractual obligation to pay
him                $25,000 per year in stock representing two years. On February 4, 2008,
Mr.                Delozier converted this note into 5,997,564 which was the principal
amount of                the note and accrued interest. This total is included in all
categories of the                chart above.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Mr.
Madsen received 3,205,128 restricted shares on March 31, 2008 as part of his
               employment agreement for 2007. Mr. Madsen also holds a convertible note
payable                representing 5,555,556 shares on February 6, 2007 as consideration
for our                contractual obligation to pay him $25,000 per year in stock plus a
$25,000                bonus. As of the date of this report, Mr. Madsen had not converted
this note to                common stock and these shares are not included Shares of
Common Stock                Beneficially Owned number or the Percent of Undiluted Common
Stock Outstanding                calculation listed above. Total shares owned by Mr.
Madsen or to which Mr.                Madsen has a right to convert his note into as of
the date of this report are                10,684,276. As shares from the convertible
note are not in the money and since                the note can be paid in either shares
or stock at the election of the holder,                these shares are not included in
the fully diluted number.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(3) | Mr.
Wilson received options allowing him to purchase 25,316,256 shares of our
               common stock during 2008. For a more detail description of these options
see                Part III, Item 11 (c) and (d).
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

# (c) Changes in control

The holders of our Convertible Series
C Preferred share are entitled to 487,746,250 votes for each preferred share. If and when
the Series C preferred share is converted into common stock, the Series C preferred
shareholder will control 23.86% of our fully diluted common stock. Even before conversion,
the holder of the Series C Preferred Stock is entitled to vote at shareholders
meetings on an as converted basis and is, therefore, the shareholder with the
largest vote.

(d)    
          Securities authorized for issuance under equity compensation plans

As a subsequent event, on March 27,
2009 our Board of Directors approved the Golden Eagle International, Inc. 2009 Equity
Incentive Plan (the Plan). The Plan is intended to provide incentives to
officers, employees and other persons, including consultants and advisers, who contribute
to our success by offering them the opportunity to acquire an ownership interest in it or
increase their ownership interest. The Board of Directors believes that this also will
help to align the interests of our management and employees with the interests of its
shareholders.

The Plan provides for a maximum of
750,000,000 shares of common stock to be reserved to be issued upon the exercise of
options (Options) or the grant of restricted stock awards
(Bonuses). Adoption by the Board of Directors is contingent upon obtaining
shareholder approval by March 26, 2010. The Plan includes two types of Options. Options
intended to qualify as incentive stock options under Section 422 of the Internal Revenue
Code of 1986, as amended (the Code) are referred to as Incentive
Options. Options, which are not intended to qualify as Incentive Options are
referred to as Non-Qualified Options. Bonuses, which may also be granted under
the Plan, are the outright issuance of shares of Common Stock.

We plan to seek shareholder approval
of the Plan no later than the next annual shareholders meeting: (i) to satisfy the
contingency to the Board of Directors adoption of the Plan; and (ii) to permit the
issuance of Options which will qualify as Incentive Options pursuant to the Code.



The Plan is administered by the Board
of Directors since we have not appointed a Compensation Committee. In addition to
determining who will be granted Options or Bonuses, the Committee (or the Board in the
absence of the Committee) has the authority and discretion to determine when Options and
Bonuses will be granted and the number of Options and Bonuses to be granted. The Board
(or, if appointed, the Committee) also may determine a vesting and/or forfeiture schedule
for Bonuses and/or Options granted, the time or times when each Option becomes
exercisable, the duration of the exercise period for Options and the form or forms of the
agreements, certificates or other instruments evidencing grants made under the Plan. The
Board (or Committee) may determine the purchase price of the shares of common stock
covered by each Option and determine the Fair Market Value per share. The Board (or
Committee) also may impose additional conditions or restrictions not inconsistent with the
provisions of the Plan. The Board (or Committee) may adopt, amend and rescind such rules
and regulations as in its opinion may be advisable for the administration of the Plan. If
the number of shares reserved under the Plan is increased, shareholder approval must be
obtained on the amendment to increase the shares reserved.

The Board (or Committee) also has the
power to interpret the Plan and the provisions in the instruments evidencing grants made
under it, and is empowered to make all other determinations deemed necessary or advisable
for the administration of it.

The grant of Options or Bonuses under
the Plan does not confer any rights with respect to continuation of employment, and does
not interfere with the right of the recipient or the Company to terminate the
recipients employment, although a specific grant of Options or Bonuses may provide
that termination of employment or cessation of service as an employee, officer, or
consultant may result in forfeiture or cancellation of all or a portion of the Bonuses or
Options.

In the event a change, such as a
stock split, is made in our capitalization which results in an exchange or other
adjustment of each share of Common Stock for or into a greater or lesser number of shares,
appropriate adjustments will be made to unvested bonuses and in the exercise price and in
the number of shares subject to each outstanding Option. The Board (or, if appointed, the
Committee) also may make provisions for adjusting the number of bonuses or underlying
outstanding Options in the event we effect one or more reorganizations, recapitalizations,
rights offerings, or other increases or reductions of shares of our outstanding Common
Stock. Options and Bonuses may provide that in the event of the dissolution or liquidation
of the Company, a corporate separation or division or the merger or consolidation of the
Company, the holder may exercise the Option on such terms as it may have been exercised
immediately prior to such dissolution, corporate separation or division or merger or
consolidation; or in the alternative, the Board (or, if appointed, the Committee) may
provide that each Option granted under the Plan shall terminate as of a date fixed by the
Committee.

The exercise price of any Option
granted under the Plan must be no less than 100% of the fair market value of
our Common Stock on the date of grant. Any Incentive Stock Option granted under the Plan
to a person owning more than 10% of the total combined voting power of the Common Stock
shall be at a price of no less than 110% of the Fair Market Value per share on the date of
grant.



The exercise price of an Option may
be paid in cash, in shares of our Common Stock or other property having a fair market
value equal to the exercise price of the Option, or in a combination of cash, shares and
property. Unless otherwise stated by Board (or Committee) resolution, the Options can also
be exercised pursuant to net exercise procedures which permit the fair market
value of the Options (equal to the value of the underlying shares less the exercise price)
to be used to pay the exercise price. The Board (or Committee) shall determine whether or
not property other than cash or Common Stock or a net exercise may be used to purchase the
shares underlying an Option and shall determine the value of the property received. The
Plan provides that, unless otherwise provided by the Board (or the Committee), Options
granted under the Plan survive a Change of Control (as that term is defined in the Plan)
and for 18 months following a Change of Control if the holder is terminated as an employee
of the Company without cause following a Change of Control

At the time of adoption of the Plan,
the Board also granted certain options to a number of officers and key employees. The
Options were granted subject to shareholder approval, and if the shareholders do not
approve the Plan by March 26, 2010, the options granted to the officers and key employees
will be lost. Assuming that our shareholders approve the Plan when presented, the Options
granted have an exercise period of three years from the date of grant (that is, through
March 26, 2012) at an exercise price of $0.0018 per share (the average of the closing
price for the 10 trading days prior to March 27, 2009, plus an additional 25% above that
average price). The Board considered several factors in granting the options to our
executives and key employees such as length of service; sacrifices made during the period
of service, such as foregoing salary, personal operating loans made to us to allow us to
continue in operation, voluntary reductions in salary, forgiveness of significant salary
arrearages for the benefit of the Company, etc.; the past and ongoing contribution made to
maintaining the Company in operation despite significant challenges, and to its recent
successes in opening potential new avenues for progress. The following is a list of the
options granted executive officers under the Plan:

|                                                                                                               |             | 
|-------------------------------------------------------------------------------------------------------------- | ----------- | 
|Terry C. Turner, President, Chief Operating Officer and Chairman of the Board of Directors                     | 200,000,000
|Harlan (Mac) DeLozier, Vice President for Bolivian Operations and Director                                     | 100,000.000
|Tracy A. Madsen, Vice President for U.S. Operations, Chief Financial Officer, CorporateSecretary and Treasurer | 75,000,000 
|                                                                                                              
|Alvaro Riveros, Director                                                                                       | 10,000,000 
|Blane W. Wilson, Chief Operating Officer                                                                       | 80,000,000 

Options to acquire 36,500,000 shares
were granted on the same terms to persons who are neither executive officers nor directors
of the Company. The Plan will be presented in more detail in a Proxy Statement when the
shareholders consideration and approval for the Plan is sought at a future date.

# Item 13. Certain
Relationships and Related Transactions, and Director Independence

# (a) Indebtedness



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

On December 31, 2001, Mr. Turner
waived $443,772 of a total accrued balance of $990,012 owed to him. During 2002 and 2003,
Mr. Turner waived an additional$60,000 and $36,457 respectively. During 2004, 2005, 2006,
2007 and 2008 Mr. Turner waived an additional $60,000 each year respectively of the amount
owed to him. As of December 31, 2008, the total sum that we owed Mr. Turner was $216,783
in accrued compensation. Our indebtedness to Mr. Turner is non-interest bearing.

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

Repayment of Loan and Accrued
Compensation. The Board of Directors determined that Mr. Turner would
receive a $60,000 per year non-cash bonus that is used to pay down notes he owes to us.
All repayments are made with after tax dollars. Mr. Turner in turn forgives the portion of
the accrued salary that we owe to him in order to keep the note payable and the note
receivable in balance. These reductions have occurred in 2007 and 2008 and are expected to
continue until both the advances to Mr. Turner and the unpaid salary are reduced to zero.
As of December 31, 2008, the total amount owed by Mr. Turner was $216,783 and equaled the
amount that we owed to him. For purposes of the consolidated financial statements this
note payable and note receivable are netted out to $0.

Current Deferred Compensation.
As of December 31, 2008, we owed the following officers accrued compensation.

|                              |                           |         
|----------------------------- | ------------------------- | --------
|Officer Deferred Compensation | Position                  | Amount  
|Terry C. Turner               | Chief Executive Officer   | $104,300
|Tracy A. Madsen               | Chief Financial Officer   | 44,167  
|Harlan M. (Mac) DeLozier      | VP Bolivia Administration | 52,451  
|Total                         |                           | $200,918

# (b) Loans to Golden
Eagle from affiliates



In addition, as described elsewhere
in this report, our officers have advanced funds to us for operations in Bolivia and to
cover overhead in the US.

|     |                       |             |             |                                
|---- | --------------------- | ----------- | ----------- | -------------------------------
|     |                       |             |             |                                
|Date | Affiliated Lender     | Loan Amount | (Repayment) | Outstanding Balance at Year end
|2008 |                       |             |             |                                
|     | Harlan (Mac) DeLozier | $38,497     | $(49,847)   | $-                             
|     | Tracy Madsen(A)       | 27,000      | (98,000)    | -                              
|     | Marco Venegas         | 32,468      | (42,468)    | -                              
|     | Total                 | $  94,365   | $(168,965)  | $-                             
|2007 |                       |             |             |                                
|     | Terry Turner          | $245        | $(345)      | $-                             
|     | Harlan (Mac) DeLozier | 11,350      | (14,300)    | 11,350                         
|     | Tracy Madsen(A)       | 121,000     | (52,500)    | 71,000                         
|     | Marco Venegas         | 10,000      | -           | 10,000                         
|     | Total                 | $142,595    | $(67,145)   | $ 92,350                       

|(A) | Loans
from Mr. Madsen were made from Avcon Services, Inc. a company owned and
               controlled by him. Avcon Services, Inc. was paid $36,741 in interest for
loans                made to the company over the past two years.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# Item 14. Principal
accountants fees and services

Our Board of Directors selected the
independent accounting firm of Chisholm, Bierwolf & Nilson, LLC, Certified Public
Accountants, with respect to the audit of our consolidated financial statements for the
years ended December 31, 2008 and 2007. Our Bolivian Subsidiaries were audited by Pozo
& Asociados S.R.L., an independent member of Baker Tilly International.

Audit Fees. In connection with
professional services rendered for the audit of our annual financial statements reported
under Form 10-K for the year ended December 31, 2007 and the reviews of the first, second
and third quarters 2008 financial statements included in our quarterly reports filed
on Form 10-Q for that year, Chisholm Bierwolf & Nilson billed us fees in the aggregate
amount of approximately $31,371. Total fees paid to Chisholm, Bierwolf & Nilson for
the review of the quarterly financial statements included in reports filed under Form 10-Q
for 2007 and for the audit of the 2006 financial statements reported under Form 10-K were
$23,488. Total fees paid to Chisholm, Bierwolf & Nilson for the audit of the 2008
financial statements reported under Form 10-K are estimated to be approximately $28,000.
In connection with professional services rendered for the audit of our annual financial
statements reported under Form 10-K for the year ended December 31, 2007 and the reviews
of the 2008 quarterly financial statements included in our quarterly reports filed on Form
10-Q for that year, Pozo & Asociados S.R.L. billed us fees in the aggregate amount of
approximately $11,000. Total fees paid to Pozo & Asociados S.R.L. for the review of
the quarterly financial statements included in reports filed under Form 10-Q for 2007 and
for the audit of the 2006 financial statements reported under Form 10-K are estimated to
be approximately $11,000.

Audit Related Fees. There were
no fees billed in each of the last two fiscal years (ended December 31, 2008 and 2007) for
assurance and related services by the principal accountant that are reasonably related to
the performance of the audit or review of our financial statements that are not reported
under Audit Fees.



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

All Other Fees. During the
fiscal years ended December 31, 2008 and 2007, there were no other fees paid Chisholm,
Bierwolf & Nilson or Pozo & Asociados S.R.L. for any other auditing or accounting
services.

Total Fees.

|                                                                                  |        
|--------------------------------------------------------------------------------- | -------
|The total estimated fees charged for all services by Chisholm, Bierwolf & Nilson: |        
|                                                                                  |        
|During the fiscal year ended December 31, 2008:                                   | $31,371
|During the fiscal year ended December 31, 2007:                                   | $23,487
|                                                                                  |        
|The total fees charged for all services by Pozo & S.R.L.:                         |        
|                                                                                  |        
|During the fiscal year ended December 31, 2008:                                   | $11,000
|During the fiscal year ended December 31, 2007:                                   | $11,000
|                                                                                  |        
|                                                                                  |        

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

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

# PART IV



# Item 15. Exhibits and
financial statement schedules

# (a) Financial statements

|                                                                                                        |                 
|------------------------------------------------------------------------------------------------------- | ----------------
|The following documents are filed as part of this report:                                               | Page            
|                                                                                                        |                 
|Independent Auditors Report                                                                             | F-2 & F-3       
|                                                                                                        |                 
|Consolidated Balance Sheets as of December 31, 2008 and 2007                                            | F-4             
|                                                                                                        |                 
|Consolidated Statements of Operations for the years ended
 December 31, 2008 and 2007                   | F-5             
|                                                                                                        |                 
|Consolidated Statements of Cash Flows for the years ended
December 31, 2008 and 2007                    | F-6             
|                                                                                                        |                 
|Consolidated Statement of Stockholders' Equity (Deficit) for
the years ended December 31, 2008 and 2007 | 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 herein by the following references:

|     |                                                                                                                                                                                                                                                                    
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1  | Articles of Incorporation, as amended, incorporated by reference.                                                                                                                                                                                                  
|3.2  | Bylaws, incorporated by reference.                                                                                                                                                                                                                                 
|4.1  | Certificate of Designation for the Series B Convertible Preferred Stock, incorporated by reference.                                                                                                                                                                
|10.1 | Series B Convertible Preferred Stock Subscription Agreements, incorporated by reference.                                                                                                                                                                           
|14.1 | Code of Ethics, incorporated by reference.                                                                                                                                                                                                                         
|21.1 | Golden Eagle Bolivia Mining S.A., incorporated under the laws of Bolivia; Eagle Mining of Bolivia, Ltd.,
incorporated under the laws of Bolivia; Golden Eagle International, Inc. (Bolivia), incorporated under the laws of Bolivia, all incorporated by reference.
|     |                                                                                                                                                                                                                                                                    
|     |                                                                                                                                                                                                                                                                    
|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                                                                                                                                                                                          
|99.1 | Incorporated by reference from our registration statement on Form 10-SB that became effective June 17, 1994.                                                                                                                                                       
|99.2 | Proxy Statement, Definitive 14A dated August 6, 2007 filed with the SEC on August 6, 2007 (incorporated by reference)                                                                                                                                              
|    
|99.3 | Incorporated by reference from our Form 8-K reporting an event of February 7, 2008                                                                                                                                                                                 
|99.4 | Incorporated by reference from our Form 8-K reporting an event of April 22, 2008                                                                                                                                                                                   
|99.5 | Incorporated by reference from our Form 8-K reporting an event of December 30, 2008                                                                                                                                                                                
|99.6 | Incorporated by reference from our Form 8-KA reporting an event of January 1, 2009                                                                                                                                                                                 
|99.7 | Incorporated by reference from our Form 8-K reporting an event of January 15, 2009                                                                                                                                                                                 
|99.8 | Incorporated by reference from our Form 8-K reporting an event of February 5, 2009                                                                                                                                                                                 
|99.9 | Incorporated by reference from our Form 8-K reporting an event of March 31, 2009                                                                                                                                                                                   



# 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.

April 15, 2009

| |  | /s/ Terry C. Turner
Terry C. Turner, President
| |  | ------------------------------------------------------------

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

| |  | GOLDEN EAGLE
INTERNATIONAL, INC.By: /s/  Terry C. Turner
Terry C. TurnerChairman of the Board of Directors and Principal Executive OfficerDate: April 15, 2009
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | By: /s/Alvaro Riveros 
 Alvaro RiverosDirectorDate: April 15, 2009
| |  | --------------------------------------------------------------------------------

| |  | By: /s/ Harlan M. (Mac) Delozier
Harlan M. (Mac) DelozierDirectorDate: April 15, 2009
| |  | ---------------------------------------------------------------------------------------------------

| |  | By: /s/ Tracy A. Madsen
Tracy A. Madsen, Corporate Secretary, Treasurer and Principal Accounting OfficerDate: April 15, 2009
| |  | ------------------------------------------------------------------------------------------------------------------------------------------



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, 2008 of Golden Eagle International, Inc.;
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------

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

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

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

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

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

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

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

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

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

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

Date: April 15, 2009

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



Exhibit 31.2 Section 302
Certification

CERTIFICATION

I, Tracy A. Madsen, certify that:

| | 1. | I
have reviewed this Annual Report on Form 10-K for the period ended December
               31, 2008 of Golden Eagle International, Inc.;
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------

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

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

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

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

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

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

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

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

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

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

Date: April 15, 2009

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



Exhibit 32.1 Section 906
Certification

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

| | In
connection with the Annual Report of Golden Eagle International, Inc. (the Company)
on Form 10-K for the period ended December 31, 2008 as filed with the Securities and
Exchange Commission on the date hereof (the Report), I, Terry C. Turner,
Principal Executive Officer, certify, pursuant to 18 U.S.C. § 1350, as adopted
pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

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

Date: April 15, 2009

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

This certification accompanies this
Report pursuant to §906 of the Sarbanes-Oxley Act of 2002 and shall not, except to
the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the registrant
for the purposes of §18 of the Securities Exchange Act of 1934, as amended.  This
certification shall not be incorporated by reference into any filing under the Securities
Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.  This
certification shall not be incorporated by reference into any filing under the Securities
Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made
before or after the date of this Report), irrespective of any general incorporation
language contained in such filing.

A signed original of this written
statement required by §906 has been provided to the registrant and will be retained
by the registrant and furnished to the Securities and Exchange Commmission or its staff
upon request.



EXHIBIT 32.2 Section 906
Certification

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

| | In
connection with the Annual Report of Golden Eagle International, Inc. (the Company)
on Form 10-K for the period ended December 31, 2008 as filed with the Securities and
Exchange Commission on the date hereof (the Report), I, Tracy A. Madsen,
Principal Financial Officer, certify, pursuant to 18 U.S.C. § 1350, as adopted
pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

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

Date: April 15, 2009

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

This certification accompanies this
Report pursuant to §906 of the Sarbanes-Oxley Act of 2002 and shall not, except to
the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the registrant
for the purposes of §18 of the Securities Exchange Act of 1934, as amended.  This
certification shall not be incorporated by reference into any filing under the Securities
Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.  This
certification shall not be incorporated by reference into any filing under the Securities
Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made
before or after the date of this Report), irrespective of any general incorporation
language contained in such filing.

A signed original of this written
statement required by §906 has been provided to the registrant and will be retained
by the registrant and furnished to the Securities and Exchange Commmission or its staff
upon request.



REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

We
have audited the accompanying consolidated balance sheets of Golden Eagle International,
Inc. and subsidiaries as of December 31, 2008 and 2007, and the related statements of
operations, stockholders equity, and cash flows for the years then ended. These
financial statements are the responsibility of the Companys management. Our
responsibility is to express an opinion on these financial statements based on our audits.
We 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 28% and 30% of
total consolidated assets as of December 31, 2008 and 2007 respectively. Those financial
statements were audited by other auditors whose report has been furnished to us, and our
opinion insofar as it relates to the amounts included for Golden Eagle Bolivia Mining,
S.A., Golden Eagle International, Inc. (Bolivia) and Golden Eagle International
(unincorporated) as of December 31, 2008 and 2007 is based solely on the report of the
other auditors.

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

In
our opinion, the financial statements referred to above present fairly, in all material
respects, the financial position of Golden Eagle International, Inc. at December 31, 2008
and 2007, and the results of its operations and cash flows for the years then ended in
conformity with accounting principles generally accepted in the United States of America.

The
accompanying financial statements have been prepared assuming that Golden Eagle
International, Inc. will continue as a going concern. As discussed in Note A to the
financial statements, Golden Eagle International, Inc. has a significant working
capital deficit, has incurred significant losses since inception, and is dependent of
financing to continue operations. These issues raise substantial doubt about the
companys ability to continue as a going concern. Managements plans in regard
to these matters are also described in Note A. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.

/s/Chisholm, Bierwolf,
Nilson & Morrill

Chisholm, Bierwolf,
Nilson & Morrill, LLCBountiful, UTApril 14, 2009



# REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors
and ShareholdersGolden Eagle International, Inc. Bolivia

Salt Lake City, Utah

We have audited the accompanying
consolidated balance sheets of Golden Eagle International, Inc. Bolivia of December 31,
2008 and 2007 and the related consolidated statements of operations, cash flows and
changes in stockholders equity (deficit) for the years ended December 31, 2008 and
2007. 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, 2008 and
2007 and the results of its operations, changes in stockholders equity (deficit) and
its cash flows for the years ended December 31, 2008 and 2007, in conformity with
accounting principles generally accepted in the United States of America.

The financial statements for Golden
Eagle International, Inc. Bolivia have been prepared assuming that the Company will
continue as a going concern. 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. 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. The
financial statements do not include any adjustments that might result from the outcome of
this uncertainty.

# POZO & ASOCIADOS
C.P.A. S.R.L.

# NIT. 121611023

Lic.    
          Aud. Enrique Pozo Balderrama NIT. 271218014 MAT. PROF. No CAUB  0040

# La Paz, BoliviaJanuary
25, 2009



|                                                                             |                   |                 
|---------------------------------------------------------------------------- | ----------------- | ----------------
|                                                                            
|Golden Eagle International, Inc.                                             |                   |                 
|Consolidated Balance Sheets                                                 
|As of December 31, 2008 and 2007                                             | 2008              | 2007            
|                                                                            
|ASSETS                                                                      
|CURRENT ASSETS                                                              
|Cash & cash equivalents                                                      | $          54,833 | $          2,742
|Net accounts receivable                                                      | 84,482            | -               
|Prepaid expenses                                                             | 70,027            | 94,049          
|                                                                            
|Total current assets                                                         | 209,392           | 96,791          
|                                                                            
|PROPERTY AND EQUIPMENT                                                      
|Mining equipment and property                                                | 733,353           | 595,190         
|Plant and mill - idle                                                        | 3,980,000         | 3,980,000       
|Mine development costs                                                       | 752,339           | 336,260         
|Mineral properties                                                           | 1,414,997         | 1,356,948       
|Office equipment                                                             | 137,356           | 110,710         
|Vehicles                                                                     | 116,182           | 110,018         
|                                                                            
|                                                                             | 7,134,228         | 6,489,126       
|Less accumulated depreciation and impairment                                 | (1,219,705)       | (836,438)       
|                                                                            
|Total property and equipment                                                 | 5,914,522         | 5,652,688       
|                                                                            
|Total Assets                                                                 | $   6,123,913     | $   5,749,479   
|                                                                            
|LIABILITIES AND STOCKHOLDERS' EQUITY                                        
|CURRENT LIABILITIES                                                         
|Accounts payable and accrued expenses                                        | $      281,232    | $      193,558  
|Deferred wages                                                               | 205,092           | 54,529          
|Other notes payable                                                          | 468,285           | 214,111         
|Related party payable                                                        | 57,525            | 92,350          
|Covertible debenture                                                         | 249,000           | 249,000         
|Accrued interest payable                                                     | 65,857            | 110,187         
|                                                                            
|Total current liabilities                                                    | 1,326,991         | 913,735         
|                                                                            
|Convertible notes payable - net                                              | -                 | 109,006         
|Debentures (net)                                                             | 61,605            | -               
|                                                                            
|Total long term liabilities                                                  | 61,605            | 109,006         
|                                                                            
|Common Stock payable                                                         | 35,000            | 61,000          
|Commitments and contingencies                                                | -                 | -               
|                                                                            
|Total Liabilities                                                            | 1,423,596         | 1,083,741       
|                                                                            
|STOCKHOLDERS' EQUITY                                                        
|Preferred stock, par value $.01 per share; 10,000,000 shares authorized,    
|80,001 and 345,961 issued and outstanding respectively                       | 800               | 3,460           
|Common stock, par value $.0001 per share; 2,000,000,000 authorized shares;  
|1,535,897,333 and 1,602,510,490  issued and outstanding shares, respectively | 153,589           | 160,251         
|Additional paid-in capital                                                   | 60,999,285        | 59,259,002      
|Accumulated (deficit)                                                        | (56,453,357)      | (54,756,975)    
|                                                                            
|Total stockholders' equity                                                   | 4,700,318         | 4,665,738       
|                                                                            
|Total Liabilities and Stockholders Equity                                    | $   6,123,913     | $   5,749,479   
|                                                                            

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



|                                                        |                              |                    
|------------------------------------------------------- | ---------------------------- | -------------------
|                                                       
|Golden Eagle International, Inc.                        |                              |                    
|Consolidated Statements of Operations                  
|For the Years Ended December 31, 2008 and 2007         
|                                                       
|                                                        | 2008                         | 2007               
|                                                       
|REVENUES                                                | $                    596,443 | $                 -
|OPERATING EXPENSES                                     
|Production Costs                                        | 498,741                      | -                  
|Exploration and development                             | 174,710                      | 297,776            
|General and administration                              | 1,115,540                    | 1,218,035          
|Depreciation and depletion                              | 21,381                       | 25,043             
|                                                       
|Total operating expenses                                | 1,810,372                    | 1,540,854          
|                                                       
|OPERATING (LOSS)                                        | (1,213,928)                  | (1,540,854)        
|                                                       
|OTHER INCOME (EXPENSE)                                 
|Interest expense                                        | (156,193)                    | (92,349)           
|Gain (loss) on sale of assets                           | 13,096                       | (1,509)            
|Asset impairment                                        | (246,845)                    | (107,425)          
|Accretion of note discount                              | (222,554)                    | (4,647,263)        
|Other, net                                              | 130,043                      | 11,764             
|                                                       
|Total other income (expense)                            | (482,453)                    | (4,836,782)        
|                                                       
|Loss before income taxes                                | (1,696,382)                  | (6,377,636)        
|Income taxes                                            | -                            | -                  
|NET (LOSS)                                              | $(1,696,382)                 | $(6,377,636)       
|                                                       
|Basic and diluted (loss) per share                      | (0.00)                       | (0.01)             
|                                                       
|Weighted average shares outstanding - basic and diluted | 1,898,367,966                | 830,814,298        
|                                                       

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



|                                                          |  |  |  
|--------------------------------------------------------- |  |  | -
|Golden Eagle International, Inc.                          |  |  |  
|Consolidated Statements of Cash Flows                     |  | 
|For the Years Ended December 31, 2008 and 2007            |  | 
|                                                         
|                                                          |  |  |  
|                                                         
|CASH FLOWS FROM OPERATING ACTIVITIES                      |  | 
|Net (loss)                                                |  |  | $
|Adjustments to reconcile net (loss)                       |  | 
|to net cash (used) by operating activities:               |  | 
|Stock issued for services                                 |  |  |  
|Stock payable for services                                |  |  |  
|Stock issued for financing fees                           |  |  |  
|Stock issued for exploration and development              |  |  |  
|Stock issued for interest                                 |  |  |  
|Stock issued for payables                                 |  |  |  
|Depreciation                                              |  |  |  
|Impairment of assets                                      |  |  |  
|Accretion of note discount                                |  |  |  
|Financing costs - preferred stock                         |  |  |  
|Expensing of options                                      |  |  |  
|(Gain) loss on disposition of assets                      |  |  |  
|Changes in operating assets and liabilites                |  |  |  
|Decrease (increase) in accounts receivable                |  |  |  
|Decrease (increase) in prepaid expenses and other costs   |  |  |  
|Increase (decrease) in deferred wages                     |  |  |  
|Increase (decrease) in accounts payable                   |  |  |  
|Increase (decrease) in accrued interest                   |  |  |  
|                                                         
|Net cash flows (used by) operating activities             |  |  |  
|                                                         
|CASH FLOWS FROM INVESTING ACTIVITIES                      |  | 
|Investment in property and equipment                      |  |  |  
|                                                         
|Net cash flows provided by (used) in investing activities |  |  |  
|                                                         
|CASH FLOWS FROM FINANCING ACTIVITIES                      |  | 
|Borrowings from related parties                           |  |  |  
|Repayments to related parties                             |  |  |  
|Proceeds from other notes payable                         |  |  |  
|Repayments of other notes payable                         |  |  |  
|Proceeds from debentures                                  |  |  |  
|Preferred stock sold                                      |  |  |  
|Common stock sold                                         |  |  |  
|                                                         
|Net cash flows provided by financing activities           |  |  |  
|                                                         
|NET INCREASE (DECREASE) IN CASH                           |  |  |  
|CASH - BEGINNING OF PERIOD                                |  |  |  
|                                                         
|CASH - END OF PERIOD                                      |  |  | $
|                                                         
|SUPPLEMENTAL CASH FLOW INFORMATION                        |  |  |  
|Non cash financing and investing activities               |  |  |  
|Preferred stock issued for debt (see note e)              |  |  |  
|Account payable to convertible notes payable              |  |  |  
|                                                         
|Cash paid for                                             |  |  |  
|Interest                                                  |  |  |  
|Taxes                                                     |  |  |  
|                                                         

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



|Golden Eagle International, Inc.Consolidated Statement of Changes in Stockholders' Equity 
For the Period January 1, 2007 through December 31, 2008
|---------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                   
|                                                                                                                                                   
|                                                                                                                                                   
|Balance at January 1, 2007                                                                                                                         
|                                                                                                                                                   
|Issued for services ($.008 to $.011 per share)                                                                                                     
|Preferred stock issued for cash                                                                                                                    
|Preferred stock issued in exchange for debt                                                                                                        
|Preferred stock issued in exchange for interest                                                                                                    
|Preferred stock issued for service                                                                                                                 
|Preferred stock converted to common stock                                                                                                          
|Financing Costs                                                                                                                                    
|Net (loss)                                                                                                                                         
|                                                                                                                                                   
|Balance at December 31, 2007                                                                                                                       
|                                                                                                                                                   
|Stock issued for cash ($.0008 to $.005 per share)                                                                                                  
|Issued for services ($.008 to $.011 per share)                                                                                                     
|Issued for exp. and dev. ($.002 to $.0078) per share)                                                                                              
|Issued for debt ($.002 to $.01)                                                                                                                    
|Preferred stock converted to common stock                                                                                                          
|Common stock converted to Series C preferred                                                                                                       
|Value of options granted                                                                                                                           
|Discount on debentures                                                                                                                             
|Net (loss)                                                                                                                                         
|                                                                                                                                                   
|Balance at December 31, 2008                                                                                                                       
|                                                                                                                                                   

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



---

# Golden Eagle
International, Inc.

# Notes to Consolidated
Financial Statements

---

# Note A 
Organization and Business

Organization
and Nature of Business
Golden
Eagle International, Inc. (we, or Golden Eagle) was incorporated
in Colorado on July 21, 1988. We are engaged in contract gold milling operations in the
state of Nevada in the United States. We have also been involved in the business of
minerals exploration, mining and milling operations,in Bolivia through our Bolivian-based
wholly-owned subsidiary, Golden Eagle International, Inc. (Bolivia); however, those
operations are temporarily suspended pending changes in the social/political and mine
taxing environments in Bolivia.

We have entered into an agreement
with Queenstake Resources USA, Inc. (Queenstake USA) to operate the Jerritt
Canyon gold mill located 50 miles north of Elko, Nevada.

Additionally
we own the following gold mills which are not currently in operation:

|              |                                                                                        |       
|------------- | -------------------------------------------------------------------------------------- | ------
|Mill          | Location                                                                               | Status
|Gold Bar Mill | Eureka, Nevada                                                                         | Owned 
|C Zone Mill   | Ascension de Guarayos,
                                                        Bolivia | Owned 
|              |                                                                                        |       
|              |                                                                                        |       

As of the 2008 year-end, we owned
the following mineral prospects in Bolivia which are not currently in operation, but are
being maintained (except as set forth in notes 1 and 2, below):

|                              |               |       
|----------------------------- | ------------- | ------
|Tipuani-Cangalli prospect (1) | Number Acres  | Status
|Cangalli claims               | 5,000 acres   | Owned 
|Tipuani prospect              | 7,000 acres   | Owned 
|                              |               |       
|Precambrian Shield (2)        |               |       
|Precambrian prospect          | 111,500 acres | Owned 
|Buen Futuro claim             | 2,500 acres   | Owned 
|Cobra claim                   | 22,500 acres  | Owned 

1On March 1, 2009, we
elected not to renew our mining concessions for the Tipuani-Cangalli prospect in western
Bolivia, which consisted of 12,000 acres in the Tipuani River Valley.

2On March 1, 2009, we
elected to reduce our mining concessions in the Precambrian Shield in eastern Bolivia
from 136,500 acres to 42,731 acres. We retained the Buen Futuro claims containing the A
Zone on which we have generated the most drill and other sampling data, as well as the
Gran Serpiente claims on which the C Zone gold mill and mine are located. We also
retained the highly prospective Cobra claims on the northern end of the Ascension
Gold-Copper Trend.

We entered into an agreement with
Queenstake USA to operate the Jerritt Canyon gold mill located 50 miles north of Elko,
Nevada on October 14, 2008. From mid September until March 23, 2009 we performed
maintenance and environmental regulatory compliance functions at the mill and assisted
the mill owner, Queenstake USA, in securing approval from the Nevada Division of
Environmental Protection (NDEP) to restart milling operations at Jerritt Canyon. On March
25, 2009 approval was granted by the NDEP to recommence operations at the Jerritt Canyon
mill and we recommenced those operations on that day.

None of our mining prospects are
currently in the production stage. Our production operations on our Tipuani-Cangalli
prospect ceased in June 2004 as a result of a local farmersstrike and certain legal
issues particular to Bolivia with which we were not associated. Since then, the Bolivian
government has become more hostile to investment from the United States, and we have
reduced our operations in Bolivia significantly We also discontinued mining and milling
operations on our C Zone mine and mill in December of 2009 due to the shortage of diesel
fuel, political instability and a substantial change in the Bolivian tax structure for
mining companies that severely limited our ability to become profitable on our Bolivian
operations.



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

The accompanying financial
statements have been presented assuming we will continue as a going concern, which
contemplates the realization of assets and the satisfaction of liabilities in the normal
course of business. However, we had negative working capital of $1,117,599 as of December
31, 2008 and we have incurred substantial losses of $56,453,357 since our inception. In
addition, we discontinued operations at our Cangalli gold mine (in our former
Tipuani-Cangalli prospect) in 2004 and our C Zone mine and mill in December 2008. We can
provide no detailed time period as to if or when we may recommence operations at the C
Zone, and (in fiscal 2009) we elected not to renew our mining concessions for our
Tipuani-Cangalli prospect. As a result we have fully impaired all acquisition costs and
capitalized development costs of our Tipuani-Cangalli prospect and a portion of our
assets related to our Precambrian properties.

As a result of our discussion of our
operating challenges in Bolivia above in Organization and Nature of Business, there is
substantial doubt about our ability to continue as a going concern or, even if we are
able to continue as a going concern, there is substantial doubt about our ability to
operate our Bolivian properties given the current political, economic and tax
environment. 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 these
uncertainties.

We plan, but cannot assure that we
will be able, to obtain additional funds, including private placements, short-term loans,
suitable joint venture relationships and long-term debt financing from mining-related
financial institutions and international development agencies or investors for our
projects in Bolivia, if and when we elect to return to full operation there, as well as
for the development of our Gold Bar mill in Nevada.

# Note B  Summary of
Significant Accounting Policies

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

Use
of EstimatesPreparation 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 2007 have been reclassified to conform to the 2008 presentation. These
reclassifications were not material to the financial statements.

Foreign
Currency
The
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 Risk
Our
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 $250,000
federally insured limit. However, management believes that the financial institution is
financially sound and the risk of loss is low. Our prepaid expenses consist of value added
taxes refundable and amounts held by third parties pending settlement for purchase of
goods or services. We believe that the risk of realization is low. Current risk of any
trade receivables from sale of minerals is minimized by the short periods for which any
such receivables are outstanding. Of our total fixed assets net of depreciation and
impairment, $1,933,802, or 33%, are located in Bolivia with the $3,980,720, or 67%,
located in the United States.

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

Fair
Value of Financial Instruments
We
follow Statement of Financial Standard (SFAS) No. 157, Fair Value
Measurements. This statement defines fair value, establishes a framework for measuring
fair value in generally accepted accounting principles (GAAP), and expands disclosures
about fair value measurements. This Statement is effective for financial statements issued
for fiscal years beginning after November 15, 2007, and interim periods within those
fiscal years. The adoption of SFAS 157 did not have an impact on the Companys
consolidated financial statements. Due 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
Equivalents
For
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.

Accounts
Receivable and Allowance for Doubtful Accounts
Accounts
receivable is comprised of amounts billed and billable to customers, net of an allowance
for uncollectible amounts. During 2007 we had $0 accounts receivable and $0 allowance for
uncollectible amounts. During 2008 all of our receivables are from one customer and one
contract which are being paid. As we believe all current receivables are collectable we
have taken $0 allowance for uncollectible amounts during 2008. We continue to analyze our
receivables on a quarterly basis to determine if an allowance for uncollectible amounts is
warranted.



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

In-process inventories represent
gold ore that is currently in the process of being converted to a saleable product. The
conversion process is mill in-circuit, which converts the gold ore into gold concentrates
and doré. In-process inventories are valued at the lower of average production
cost or net realizable value. As of December 31, 2008 and 2007, there was no in-process
inventory.

Gold inventories represent processed
gold concentrates, doré and ingots. Gold inventories that are received as in-kind
payments of royalties are valued at fair value on the date the gold is transferred to us.
Gold inventory that results from our mining and processing activities is valued at the
lower of average production cost or net realizable value. At December 31, 2008 and 2007,
we held no gold in inventory.

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

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

Depreciation expense totaled $21,381
and $25,043 for the years ended December 31, 2008 and 2007, 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 probable 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 tonnes in proven and probable reserves in the property. Depletion for the
years 2008 and 2007 was $0, each year.

Mineral
interests and property
Mineral
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.

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.
As of December 31, 2008 we fully impaired our property acquisition costs of our
Tipuani-Cangalli prospect as well as the capitalized development cost as a result of our
discontinuation of mining operations. We also impaired a portion of our Precambrian
properties.



Revenue Recognition and
Production CostsWith respect to our contract milling operations at Jerritt Canyon,
revenue is generated in three manners; (a) Once we have incurred a cost on behalf of the
owner (Queenstake USA), it is obligated to reimburse us for those expenses; (b) the owner
is also obligated to pay us a percentage over the cost incurred; and (c) under our
agreement, we earn a portion of the net income attributable to the milling operations.
Revenues are recorded on the cost and the cost plus portion once the cost has been
incurred. Revenues are recorded on our portion of net income on a monthly basis after
total revenues and costs are calculated.

Revenue is recognized on our own
mining and milling operations in Bolivia (none of which are currently ongoing) when the
price is determinable, upon delivery and transfer of title of gold to the customer and
when the collectability 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. Revenue generated during 2008 and
2007 is as follows;

|                                               |           |     
|---------------------------------------------- | --------- | ----
|Revenues Sources                               | 2008      | 2007
|Gold Sales - Bolivia                           | $  19,307 | $-  
|Mill Operating Revenue - Expense Reimbursement | 474,878   | -   
|Mill Operating Revenue - Cost Plus Fee         | 102,258   | -   
|Mill Operating Revenue - Share of Net Income   | -         | -   
|Total                                          | $596,443  | $-  



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. As the
contract mill operator at Jerritt Canyon we have no environmental remediation
responsibilities.



Stock Based CompensationAs
of January 1, 2006, we elected to measure and record compensation cost relative to stock
option costs in accordance with SFAS 123 (Revised 2004), Accounting For Stock
Based Compensation, (SFAS 123(R)) which requires the company to use the
Black-Scholes pricing model to estimate the fair value of the options at the grant date.
No options were granted or outstanding as of December 31, 2007..

As part of employment agreement with
Blane Wilson, our Chief Operating Officer, dated April 18, 2008 we agreed to the
following options:



Signing option. A grant of a signing
bonus in the form of an option (the Signing Option) on the date of the
execution of this Agreement, with a three-year term, to purchase from the Company the
number of shares of its common stock (the Common Stock) that could be
purchased with $100,000 at an exercise price equal to the average of the closing sales
prices for the 10 trading days prior to the date of the execution of this Agreement.
Provided, however, that the Employee understands and agrees that in the event that the
Company requires the use of its currently-authorized shares for financing purposes to
promote the best overall interests of the Company, then the Employee will accept shares
of the Companys Series C Contingent Convertible Preferred Stock (to be created)
convertible to a number of the Companys common shares offered through this Signing
Option if and when those shares are authorized by a meeting of the shareholders. The
Signing Option shall vest immediately upon the execution of this Agreement and shall
terminate upon the expiration of three years or after (i) any termination of the
Employment Period by the Company by reason of Cause, and (ii) upon any Change in Control
of the Company. For purposes of this Agreement, a Change of Control shall
mean any transaction or series of related transactions after the date hereof which result
in (A) a transfer of more than fifty percent (50%) of the Common Stock by one or more
shareholders of the Company, other than transfers pursuant to a merger or consolidation
of the Company, (B) any sale of all or substantially all of the assets of the Company, or
(C) any merger or consolidation of the Company with or into any other corporation, where
more than fifty percent (50%) of the equity securities of the surviving or resulting
corporation (by voting power) are directly or indirectly controlled by persons other than
shareholders of the Company immediately prior to such merger or consolidation. All
percentages referenced herein shall be determined on a fully diluted basis.

Quarterly option bonus.A
grant of quarterly bonus in the form of an option (the Quarterly Option) on
the date of the expiration of each 90-day period, or quarter, from the date of the
execution of this Agreement, while the Employee remains employed by the Company, said
Quarterly Option to have a three-year term, to purchase from the Company the number of
shares of its common stock (the Common Stock) that could be purchased with
$25,000 at an exercise price equal to the average of the closing sales prices for the 10
trading days prior to the last date of each 90-day period. Provided, however, that the
Employee understands and agrees that in the event that the Company requires the use of
its currently-authorized shares for financing purposes to promote the best overall
interests of the Company, then the Employee will accept shares of the Companys
Series C Contingent Convertible Preferred Stock (to be created) convertible to a number
of the Companys common shares offered through this Quarterly Option if and when
those shares are authorized by a meeting of the shareholders. The Quarterly Option shall
vest immediately upon the last day of each 90-day period that the Employee continues to
be employed by the Company and will terminate upon the expiration of three years or after
(i) any termination of the Employment Period by the Company by reason of Cause, and (ii)
upon any Change in Control of the Company as defined immediately above. We expensed
$87,800 during 2008 in connection with the issuance of these options.

|          |          |              |             |           
|--------- | -------- | ------------ | ----------- | ----------
|Date      | Amount   | Option Price | Quantity    | Expiration
|4/18/2008 | $100,000 | $.00718      | 13,927,577  | 4/18/2011 
|7/17/2008 | 25,000   | .00672       | 3,720,238   | 7/17/2011 
|10/15/08  | 25,000   | .00326       | 7,668,712   | 10/15/2011
|Total     | $150,000 | $.01716      | $25,316,526 |           

Beneficial Conversion Feature of
Debentures and Convertible Notes PayableIn accordance with Emerging Issues Task Force
No. 98-5, Accounting for Convertible Securities withBeneficial Conversion
Features or Contingently Adjustable Conversion Ratios, and No. 00-27, Application
ofIssue 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.



During the year ending December 31,
2008 we entered into 15 Convertible Debenture Agreements and issued 15 Convertible
Debentures totaling $363,500 which were reported in Forms 10-Q dated June 30, 2008 and
September 30, 2008. Each of these debentures carry an interest rate of 8% per annum
payable at maturity and mature two years from the date of the debenture. Each debenture,
and its accrued interest, is convertible into restricted shares of our common stock at
any time by the holder of the debenture. If converted into restricted common stock, the
conversion shall be at 50% of the average closing price of our common stock for the five
trading days prior to the date of the debenture, or 50% of the average closing price for
our common stock for the five trading days prior to the notice of conversion within the
first 120 days immediately following the purchase of the debenture, whichever is less
provided that the minimum conversion price is not less than $.002 per share. As of
December 31, 2008, $139,500 of these debentures had been converted into 64,062,754 common
shares leaving debentures totaling $224,000 convertible into 112,000,000 common shares.
As these debentures carry a conversion price that was less than market price on the date
of issuance, the rules of beneficial conversion apply. The difference between the
conversion rate and the market rate is classified as a discount on the note and accreted
over the term of the debenture, which in this case is 24 months. The face amount of the
nine outstanding debentures as of December 31, 2008 is $224,000. On the balance sheet
they have been discounted by $162,395 to $61,605. The discounted amount is accreted over
the twenty-four month period or in its entirety if the debenture is converted during the
term. As of December 31, 2008, $173,298 has been accreted to financing costs.

We did, calculate a beneficial
feature on our Series B Convertible Preferred stock which we issued in 2007 and 2006. The
beneficial conversion was treated as a financing cost with the offsetting entry
classified as a derivative liability. During 2007, we issued a convertible note payable
in the amount of $45,030 to our former outside counsel, Burns, Figa & Will P.C. for
past due legal services which is convertible into our common stock. As the conversion
price of $.004 per share on the date of the note was less than the $.009 market price the
beneficial conversion feature applied to this note. The following table demonstrates the
accounting for debentures in 2008 and the convertible note payable issued during 2007.

Debentures
and Convertible notes payable

|                         |                            |                                |                |                             |                             
|------------------------ | -------------------------- | ------------------------------ | -------------- | --------------------------- | ----------------------------
|Payable to               | Debenture/note face amount | Discount beneficial conversion | Financing cost | Debenture amountoutstanding | Net amount of debenture/note
|2008                     |                            |                                |                |                             |                             
|Debentures               | $363,500                   | $162,395                       | $173,298       | $224,000                    | $61,605                     
|2007                     |                            |                                |                |                             |                             
|Convertible Note Payable | 45,030                     | 36,024                         | 49,256         | -                           | -                           
|Total                    | $408,530                   | $198,419                       | $222,554       |                             | $61,605                     



(Loss) Per ShareThe
computation of basic earnings (loss) per common share is based on the weighted average
number of shares outstanding during each year.

|                                                |               |            
|----------------------------------------------- | ------------- | -----------
|Loss per share for the years ended December 31, | 2008          | 2007       
|                                               
|Net Loss                                        | (1,96,382)    | (6,377,636)
|Weighted average shares outstanding - basic     | 1,847,498,030 | 830,814,298
|                                               
|Basic (loss) per share                          | (.00)         | (.01)      

The computation of diluted earnings
per common share is based on the weighted average number of shares outstanding during the
year plus the common stock equivalents as detailed in the following chart. The inclusion
of these shares would have resulted in a weighted average shares fully diluted number
that was anti-dilutive and as such they are excluded from the weighted average shares
basic and diluted calculation



|                                                      |               |              
|----------------------------------------------------- | ------------- | -------------
|Fully diluted shares for the years ended December 31, | 2008          | 2007         
|                                                     
|Basic shares outstanding                              | 1,535,897,333 | 1,602,510,490
|Series B conversion                                   | 20,000,000    | 86,490,500   
|Series C conversion                                   | 487,746,250   | -            
|Convertible debentures                                | 121,960,000   | 10,000,000   
|Convertible notes payable                             | -             | 22,368,720   
|                                                     
|Total                                                 | 2,043,765,543 | 1,721,369,710

Income
Taxes
We
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
2007 and 2006 we paid cash for interest of $21,551 and $33,027 respectively. Non-cash
investing and financing transactions during the periods consist of the following:

|                                                                              |               
|----------------------------------------------------------------------------- | --------------
|2008                                                                          |               
|                                                                             
|Stock issued for interest                                                     | $      92,129 
|Stock issued for debt                                                         | $    653,110  
|Stock issued for services                                                     | $    285,270  
|Stock issued for financing fees                                               | $      10,000 
|Stock issued for payables                                                     | $      81,603 
|Expensing of options                                                          | $      87,500 
|Financing cost of preferred stock/debentures                                  | $    222,554  
|                                                                             
|2007                                                                          |               
|                                                                             
|Accrued interest paid with preferred stock - recorded as derivative liability | $        3,846
|Debt paid with preferred stock - recorded as derivative liability             | $ 1,043,155   
|Preferred stock issued for services                                           | $      12,103 
|Preferred stock issued in exchange for common stock                           | $(3,210,042)  
|Financing cost of preferred stock - recorded as derivative liability          | $ 4,647,263   

Effect
of New Accounting Pronouncements
SFAS
No. 159 In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for
Financial Assets and Financial Liabilities  Including an Amendment of FASB Statement
No. 115. This statements objective is to improve financial reporting by providing the
Company with the opportunity to mitigate volatility in reported earnings caused by
measuring related assets and liabilities differently without having to apply complex hedge
accounting provisions. This statement is expected to expand the use of fair value
measurement, which is consistent with the FASBs long-term measurement objective for
accounting for financial instruments. The adoption of SFAS 159 did not have an impact on
the Companys financial statements. The adoption of SFAS No. 159 did not have an
impact on the Companys consolidated financial statements.

SFAS No. 160 In December 2007, the
FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements-
An Amendment of ARB No 51. This statements objective is to improve the relevance,
comparability, and transparency of the financial information that a reporting entity
provides in its consolidated financial statements by establishing accounting and
reporting standards that require ownership interests in the subsidiaries held by parties
other than the parent be clearly identified. The adoption of SFAS 160 did not have an
impact on the Companys financial statements.

SFAS No. 141 (revised) In December
2007, the FASB issued SFAS No. 141 (revised), Business Combinations. This revision
statements objective is to improve the relevance, representational faithfulness, and
comparability of the information that a reporting entity provides in its effects on
recognizing identifiable assets and measuring goodwill. The adoption of SFAS 141
(revised) did not have an impact on the Companys financial statements.



SFAS No. 161   In March
2008, the FASB issued Statement No. 161, Disclosures about Derivative Instruments and
Hedging Activities (SFAS 161), which is effective January 1, 2009. SFAS 161
requires enhanced     disclosures about derivative instruments and
hedging activities to allow for a better understanding of their effects on an entitys
financial position, financial performance, and cash flows. Among other things, SFAS 161
requires disclosures of the fair values of derivative instruments and associated gains
and losses in a tabular formant. SFAS 161 is not currently applicable to the Company
since the Company does not have derivative instruments or hedging activity.

SFAS No. 162   In May 8,
2008, the Financial Accounting Standards Board (FASB) issued Statement of Financial
Accounting Standards (SFAS) No. 162, The Hierarchy of Generally Accepted Accounting
Principles, which will provide framework for selecting accounting principles to be used
in preparing financial statements that are presented in conformity with U.S. generally
accepted accounting principles (GAAP) for nongovernmental entities. With the issuance of
SFAS No. 162, the GAAP hierarchy for nongovernmental entities will move from auditing
literature to accounting literature.  The Company is currently assessing the impact
of SFAS No. 162 on its financial position and results of operations.

SFAS No. 163   The FASB
has issued Statement of Financial Accounting Standards No. 163, Accounting for Financial
Guarantee Insurance Contracts. SFAS No. 163 clarifies how SFAS No. 60, Accounting and
Reporting by Insurance Enterprises, applies to financial guarantee insurance contracts
issued by insurance enterprises, and addresses the recognition and measurement of premium
revenue and claim liabilities. It requires expanded disclosures about contracts, and
recognition of claim liability prior to an event of default when there is evidence that
credit deterioration has occurred in an insured financial obligation. It also requires
disclosure about (a) the risk-management activities used by an insurance enterprise to
evaluate credit deterioration in its insured financial obligations, and (b) the insurance
enterprises surveillance or watch list. The Company is currently evaluating the
impact of SFAS No. 163.

# 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:

|                                                                 |              |             
|---------------------------------------------------------------- | ------------ | ------------
|                                                                 | 2008         | 2007        
|                                                                 |             
|Mine development costs                                           | $    752,339 | $    336,260
|Mineral properties                                               | 1,414,997    | 1,356,948   
|                                                                 |             
|Total mineral interests and development costs                    | 2,167,336    | 1,693,208   
|Less: accumulated impairment and depletion of development costs  | -            | -           
|Less: accumulated impairment and depletion of mineral properties | (791,845)    | (545,000)   
|                                                                 |             
|Net mine development costs                                       | $ 1,375,491  | $ 1,148,208 
|                                                                 |             
|Our mining equipment consists of the following:                 
|                                                                 | 2008         | 2007        
|                                                                 |             
|Machinery and equipment                                          | $    594,615 | $    469,728
|Replacement materials and parts                                  | 123,636      | 116,166     
|Tools                                                            | 15,102       | 9,296       
|Total mining equipment                                           | 733,353      | 595,190     
|Less: accumulated depreciation                                   | (237,709)    | (158,986)   
|                                                                 |             
|Net mining equipment                                             | $    495,644 | $    436,204
|                                                                 |             

During 2008 we impaired $246,845 of
our Precambrian property as a result of our decision on March 1, 2009 not to renew our
claims rights on certain of our Precambrian claims. We did not renew our claims on 67% of
our acreage on our Precambrian properties. As such, we impaired 67% of the $300,000
acquisition cost of these properties.



During the review of our December
31, 2007 financial statements we made the determination to eliminate both the asset
amount and the accumulated depreciation or impairment amount on those assets which had
been fully depreciated or impaired and which were not longer in service. This elimination
resulted in the elimination of $272,502 from mining equipment that was originally
depreciated during 2002 and a corresponding amount was listed under accumulated
depreciation. As these two amounts were netted each other the net impact on property and
equipment less accumulated depreciation was zero. As this equipment is no longer usable
the amount of $272,502 was removed from both the asset account and the accumulated
depreciation amount.

During the years 2004 through 2007
we fully impaired our mining assets associated with our Tipuani-Cangalli prospect. Prior
to this year we carried both the asset value and the accumulated impairment associated
with that asset and which netted out to zero. During 2007 we made the determination that
we would eliminate both the value of the asset and the accumulated impairment associated
with our Tipuani-Cangalli prospect. As a result, as of December 31, 2007 we eliminated
$490,423 from mine development costs and an equal amount form accumulated depreciation.
This total amount had been previously impaired.

Additionally, we increased mine
development costs by $297,065 for capitalized fees related to our development of our A
and C Zones at Buen Futuro. We also eliminated $417,047 from mineral properties and a
corresponding amount from accumulated impairment for the same reasons listed above. While
the net effect of these eliminations is zero we believe that it simplifies our internal
accounting and better reflects our current financial situation to the readers of this
report.

We continue to include $545,000 in
mineral properties which has been fully impaired and which a corresponding amount is
included in accumulated impairment for accounting purposes and which we feel accurately
portrays the financial condition of the company. The inclusion of this amount does not
impact the total assets of the company nor the total shareholders equity.

During 2006 we booked an impairment
in the amount of $286,867 of the remaining property acquisition costs of our
Tipuani-Cangalli prospect and mine site on that prospect as a result of our inability to
recommence operations at the Cangalli mine. This impairment is in addition to the
$1,165,603 impairment that we took in 2002 and 2004 as a result of issues that arose
among the United Gold Mining Cooperative, Ltd. that had sold us a 5,000-acre mining
concession, and FENCOMIN, the Bolivian governmental regulator of cooperatives, as well as
other Bolivian regulators. These legal disputes, while having nothing to do with us,
created an insecure atmosphere at our Cangalli mine and raised serious questions about
whether formal intervention would occur and substantially hamper operations. We elected
not to renew our mining concessions for the Tipuani-Cangalli prospect as of March 1, 2009
and, therefore, we have abandoned that prospect.

Our
mineral interests consist of the following specific properties:

|                                     |             |            
|------------------------------------ | ----------- | -----------
|                                     | 2008        | 2007       
|                                     |            
|Precambrian mineral properties(1)    | $   833,859 | $   758,810
|Tipuani-Cangalli mineral prospect(2) | 581,138     | 581,138    
|                                     |            
|Total                                | $1,414,997  | $1,356,948 
|                                     |            

1On March 1, 2009, we
elected not to renew our mining concessions for the Tipuani-Cangalli prospect in western
Bolivia, which consisted of 12,000 acres in the Tipuani River Valley.

2On March 1, 2009, we
elected to reduce our mining concessions in the Precambrian Shield in eastern Bolivia
from 136,500 acres to 42,731 acres. We retained the Buen Futuro claims containing the A
Zone on which we have generated the most drill and other sampling data, as well as the
Gran Serpiente claims on which the C Zone gold mill and mine are located. We also
retained the highly prospective Cobra claims on the northern end of the Ascension
Gold-Copper Trend.



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

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

The Buen Futuro property consists of
2,500 acres. We have met our obligations to pay $250,000 in cash and stock valued at
$175,000, although we are in default of certain of our other purchase agreement
obligations.

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. We are
currently evaluating the possibility of selling the plant as to fund operations in
Bolivia or recommence tolling operations at Gold Bar to process ore from other mining
companies. We currently do not have estimates for the cost of a tolling operation.

# Note D  Loans and
Notes Payable

We
have debt obligations outstanding at December 31, 2008 and 2007 as follows:

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |           |          
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | --------- | ---------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | 2008      | 2007     
|A note payable to a former officer and director of ours, secured by our
aircraft located in Bolivia, 12% interest per annum, due on demand.  On
December 21, 2008 we were informed that the debt had been purchased by RAF y
CIA and a demand was made for payment.  On February 5, 2008 we settled this
debt plus accrued interest and a settlement fee for 5,137,231 of our common
shares.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | -         | 32,002   
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|Three notes payable to Edmundo Arauz, a Bolivian resident, dated
December 5, 11, and 19, 2007. These notes carry an interest rate of 8%
per annum and mature on December 31, 2009. This note is carried in the
category "other notes payable."                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | 202,840   | 47,109   
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|An interest-bearing note payable to Kevin Pfeffer, a former director.
The note bears an interest rate of 8% per annum and is payable upon
demand.  Mr. Pfeffer resigned from the board on December 4, 2006 and on
December 19, 2006 demanded full payment of this note. As of December 31,
2007 we had been unable to pay this note and Mr. Pfeffer had threatened
legal action against us. As Mr. Pfeffer is no longer considered an
affiliate due to the fact that he is no longer a director and no longer
owns more than 10% of our outstanding stock, this note was carried as an
other note payable on December 31, 2007.  On January 25, 2008 we reached
a settlement agreement with Mr. Pfeffer wherein he accepted 57,608,593
shares of our common stock for full payment of this note, accrued
interest, other expenses he had incurred as a director and a penalty fee
which we carry in these financial statements under accrued interest. | -         | 135,000  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|During 2007 Avcon Services, Inc. loaned us $121,000 and received payments of
$52,500 leaving a balance of $71,000 due on December 31, 2007.  During 2008
Avcon loaned us an additional $27,000 and received payments of $98,000
leaving a balance owed of $0 principal and $7,258.36 in accrued interest on
December 31, 2008.This note carried an interest rate of 10% and a default
rate of 5% per month and was secured by the Gold Bar mill and plant.  Avcon
Services Inc. is a company owned by our Chief Financial Officer, Tracy
Madsen, and is carried as related party payable.                                                                                                                                                                                                                                                                                                                                                              | -         | 71,000   
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|Convertible  debenture to a current shareholder  maturing May 2, 2009 bearing
interest  at 7% per  annum  with a default  rate of 10%.  This  debenture  is
convertible  into our  restricted  common  stock at $.025 per share.  At this
time we do not know if the debenture  holder will convert the debenture  into
common  shares or require  payment of the  principal in cash. We have blocked
sufficient  shares  of  restricted  common  stock  for  a  conversion.  As of
December 31, 2008 we owed $17,270 in accrued interest on this debenture.                                                                                                                                                                                                                                                                                                                                                                                           | 249,000   | 249,000  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|A convertible note payable to our former counsel,  Burns, Figa & Will for
legal  services,  entered into on February 6, 2007.  This note carries an
interest rate and matures on February 6, 2012.  The note was  convertible
into our common stock at $.004 per share.  During 2008, Burns Figa & Will
converted $45,000 of this note into 11,250,000 of our common shares.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | -         | 45,030   
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|A convertible promissory note with Tracy Madsen, our Chief Financial
Officer, with effective date of February 6, 2007. The note covered the
payment of contractual retention bonuses payable in our common shares. This
note was for $50,000, and has a term of 2 years, and is convertible into
shares of our common stock at the closing price for our common stock on
February 6, 2007, which was $.009.  As of the date of this report, this note
has not been converted to common stock and is still outstanding.                                                                                                                                                                                                                                                                                                                                                                                                                                 | 50,000    | 50,000   
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|On April 11, 2007,  we entered into a  convertible  promissory  note with
 Harlan (Mac)  DeLozier,  our Vice  President and a member of our Board of
 Directors,  with effective date of February 6, 2007. The note covered the
 payment of  contractual  retention  bonuses for 2004 and 2005  payable in
 our common shares. This note was for $50,000,  and had a term of 2 years,
 and is  convertible  into shares of our common stock at the closing price
 for our common  stock on February 6, 2007,  which was $.009.  On February
 4, 2008, Mr.  DeLozier  converted his note payable into 5,947,564  shares
 of common stock for the $50,000 note payable and accrued interest.                                                                                                                                                                                                                                                             | -         | 50,000   
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|A note payable to Casco Credit with and interest rate of 12% maturing on
March 24, 2009.In the event of default, this note at the option of the
holder, become due and payable and the amount due shall accrue interest at a
default rate of 5% per month. This note is secured by the Gold Bar mill
located 25 miles north of Eureka, Nevada.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | 220,000   | -        
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|A note payable to Lonestar Equity Group with an interest rate of 8% maturing
       on December 31, 2009.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | 5,500     | -        
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|A debenture  payable to Robert Chramosta dated May 21, 2008,  maturing on
May 22, 2010 at 8 %(*)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | 50,000    | -        
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|A debenture  payable to Robert Chramosta dated May 21, 2008,  maturing on
May 22, 2010 at 8 %(*)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | 25,000    | -        
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|A  debenture  payable  to the John  Saunders  Trust  dated  July 7, 2008,
maturing on July 7, 2010 at 8% (*)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | 50,000    | -        
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|A debenture payable to Robert Richmeier dated July 18, 2008,  maturing on
May 16, 2010 at 8%(*)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | 4,000     | -        
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|A debenture  payable to Lonestar  Equity  Group  dated  August 12,  2008,
maturing on August 8, 2010 at 8%(*)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | 25,000    | -        
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|A debenture  payable to the  Virginia  Penrod  Trust dated  September  3,
2008, maturing on September 3, 2010 at 8%(*)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | 25,000    | -        
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|A  debenture  payable  to Dewey L.  Williams  and the  Dewey L.  Williams
Profit  Sharing  Plan & Trust  dated  September  19,  2008,  maturing  on
September 11, 2010 at 8%(*)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | 20,000    | -        
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|A debenture  payable to Meridian  International  Holdings dated September
17, 2008, maturing on September 15, 2010 at 8%(*)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | 25,000    | -        
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|Total Loans, notes and debentures                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | 991,285   | 700,491  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|Less: Current maturities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | (767,288) | (555,461)
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|Less: Discount on debentures                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | (162,395) | (36,024) 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |          
|Non-current maturities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | $ 61,605  | $ 109,006
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |          



* As of December 31, 2008, we have 9
Convertible Debentures outstanding totaling $224,000. Each of these debentures carries an
interest rate of 8% per annum payable at maturity and matures two years from the date of
the debenture. Each debenture, and its accrued interest, is convertible into restricted
shares of our common stock at any time by the holder of the debenture. If converted into
restricted common stock, the conversion shall be at 50% of the average closing price of
our common stock for the five trading days prior to the date of the debenture, or 50% of
the average closing price for our common stock for the five trading days prior to the
notice of conversion within the first 120 days immediately following the purchase of the
debenture, whichever is less provided that the minimum conversion price is not less than
$.002 per share. These debentures are convertible into 112,000,000 shares of our
restricted common stock. As these debentures carry a conversion rate that is less than
market rate the rules of beneficial conversion apply. The difference between the
conversion rate and the market rate is classified as a discount on the note and accreted
over the term of the debenture, which in this case is 24 months. The face amount of the
outstanding debentures is $224,000. On the balance sheet they have been discounted by
$162,395 to $61,605. The discounted amount is accreted over the twenty-four month period
or in its entirety if the debenture is converted during the term. As of December 31,
2008, $222,554 has been accreted to financing costs.

Deferred
salaryAs
of December 31, 2008 we owed the following officers accrued compensation.

|                              |                           |          |        
|----------------------------- | ------------------------- | -------- | -------
|Officer Deferred Compensation | Position                  | 2008     | 2007   
|                             
|Terry C. Turner               | Chief Executive Officer   | $104,300 | -      
|Tracy A. Madsen               | Chief Financial Officer   | 44,167   | -      
|Harlan M. (Mac) DeLozier      | VP Bolivia Administration | 52,451   | 25,478 
|Other employees               |                           | -        | 29,051 
|                              |                           |         
|Total                         |                           | $200.918 | $53,529
|                              |                           |         



# Note E  Income
Taxes

We have not recorded an income tax
provision for 2008 and 2007 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%.
| | ------------------------------------------------------------------------------------------------------------------------------------------------

|                                                   |            |             
|-------------------------------------------------- | ---------- | ------------
|                                                   | 2008       | 2007        
|                                                   |           
|Income tax (benefit) at the federal statutory rate | $(577,000) | $(2,168,000)
|State income taxes, net of federal benefits        | (16,000)   | (31,000)    
|Nondeductible expenses                             | 299,000    | 1,657,000   
|Non-U.S. taxes                                     | 116,000    | 193,000     
|Effect of net operating loss                       | 229,000    | 188,000     
|                                                   |           
|Net                                                | $       -  | $        -  
|                                                   |           

Deferred tax assets and liabilities
are as follows:

|                    |             |            
|------------------- | ----------- | -----------
|Deferred tax asset: | 2008        | 2007       
|                    |            
|Net operating loss  | $3,820,580  | $3,591,760 
|Valuation allowance | (3,820,580) | (3,591,760)
|                    |            
|Net                 | $        -  | $        - 
|                    |            

The
change in the deferred tax asset valuation allowance as of December 31, 2007 and 2006 is
as follows:

|                              |              |             
|----------------------------- | ------------ | ------------
|Valuation allowance:          | 2008         | 2007        
|                              |             
|Beginning valuation allowance | $(3,591,760) | $(3,403,740)
|Change in allowance           | 229,000      | 188,000     
|                              |             
|Ending valuation allowance    | $(3,820,580) | $(3,591,760)
|                              |             

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 $11.2 million and $10.5 million at December 31, 2008 and 2007,
respectively, which expire in 2009 through 2029. These NOLs are subject to annual
utilization limitations due to prior ownership changes.

# Note F 
Stockholders Equity



Common
Stock
During
2008, we issued a total of 421,133,091 shares of our common stock valued at $1,560,199.
This included, 66,331,877 shares of common stock were sold to various individuals in a
private placement at prices ranging from $.0008 to $.005 per share for total proceeds of
$172,125. We also granted,50,613,135 shares of common stock to various individuals for
services valued at the publicly traded stock prices on the day of grant ranging from $.002
to $.0078 for total value of $232,538. During 2008, 11,116,236 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 $.002
to $.0139 for a total value of $52,732.19. Additionally during 2008, we issued 226,581,345
in exchange for debt at prices between $.002 per share and $.01 per share for a total
value of $836,842.

During 2007, we issued a total of
812,510,500 shares of our common stock valued at $3,210,042. This included, 10,000,000
shares of common stock issued to various individuals for services valued at the publicly
traded stock prices on the day of grant ranging from $.008 to $.011 for total value of
$95,000. Additionally during 2008, we issued 802,510,500 shares of our restricted common
stock in exchange for shares of our Series B Preferred stock a price of $.004 per for a
total value of $3,210,042.

Common Stock issuances

|                                 |             |              |               
|-------------------------------- | ----------- | ------------ | --------------
|                                 |             |              |               
|2008                             | Shares      | Value        | Price         
|                                
|Private placements               | 66,331,877  | $   172,125  | $.0008 - .005 
|Services                         | 50,613,135  | 232,538      | $.002 - .0078 
|Exploration & development        | 11,116,236  | 52,732       | $.002 - .0139 
|Exchanged for debt               | 226,581,345 | 836,842      | $.002 - .01   
|                                
|Total 2008                       | 421,133,091 | $1,560,199   | $.0008 - .0139
|                                
|2007                             |            
|                                
|Services                         | 10,000,000  | $     95,000 | $.008 - .011  
|Exchanged for Series B Preferred | 802,510,500 | 3,210,042    | $         .004
|                                
|Total 2007                       | 812,510,500 | $3,305,042   | $.004 - .011  

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

Stock
Compensation Plan
On
June 4, 2008 we filed an S-8 registration statement with the SEC to issue up to 30 million
shares at the direction of the Board of Directors for compensation payable to employees
and consultants (not including officers, directors or others deemed to be insiders) by
issuing shares of common stock or options to purchase common stock.

Preferred
stock
We
have 10,000,000 shares of blank check preferred stock authorized. Subject to the
requirements of the Colorado Business Corporation Act, the Board of Directors may issue
the preferred stock in series with rights and preferences as the Board of Directors may
determine appropriate, without shareholder approval. The Board of Directors has authorized
the creation of three series of preferred stock as described below.

Series
A Convertible Preferred Stock
In
March 2005, we authorized 3,500,000 shares of our Series A Convertible Preferred Stock,
none of which are currently issued or outstanding.

Series
B Contingent Convertible Preferred Stock
During
the first quarter of 2007, we issued 461,301 shares of Series B Preferred Stock for cash
from investors and 12,103 shares of Series B Preferred Stock to 9 employees for services.
During the second quarter of 2007 we issued 963,960 shares of Series B Preferred Stock for
cash and for the conversion of debt. During the third quarter of 2007 we issued 130,041
shares of our Series B Preferred Stock for cash and the conversion of existing debt and
accrued interest. A total of 3,556,004 shares of Series B have been issued as of December
31, 2007. This preferred stock has conversion rights that allow the holders to convert
each Series B preferred share into 250 restricted shares of our common stock. On September
14, 2007 at a special meeting of our shareholders, our shareholders approved the increase
of our authorized common shares to 2,000,000,000 shares. On September 18, 2007 we amended
our articles of incorporation to reflect the increase in authorized common shares to
2,000,000,000 shares. At the time the articles of incorporation were amended we had
sufficient common shares available in which to convert all of our outstanding Series B
Preferred Shares t

As of April 13, 2009, 96% or
3,431,002 of the outstanding Series B shares had been converted into 857,750,500 common
shares, leaving 125,002 left to convert into 31,250,500 common shares. We currently have
943,996 Series B shares available for issue.



Series
C Contingent Convertible Preferred Stock
On
December 29, 2008 our board of directors voted to approve a Certificate of Designation of
the Preferences and Rights of Series C Contingent Convertible Preferred Stock
(Certificate of Designation). This act by our board designated one Series C
contingent convertible preferred share out of our 10 million preferred shares authorized
in our Articles of Incorporation. The Certificate of Designation made each share of Series
C Contingent Convertible Preferred Stock (the Series C Preferred) convertible
to 487,746,250 of our common shares. The conversion may only occur following the
occurrence of a Conversion Event as defined in the Certificate of Designation.
A Conversion Event will occur upon additional common shares being available after the
authorization by our shareholders of an increase in our number of common shares or the
reorganization of our common stock through a reverse split. Each share of Series C
Preferred votes with the common stock, and is entitled to as many votes as the shares of
common stock into which the Series C Preferred is convertible, assuming that a Conversion
Event has occurred. The Series C Preferred is entitled to dividends and distributions upon
liquidation as though it were fully converted to common stock.

On December 29, 2008 we received
from Golden Eagle Mineral Holdings, Inc. (GEMH) the tender of, and our board
of directors approved the receipt by us into treasury of, 487,746,250 shares of our
common stock owned by GEMH in exchange for one share of our Series C contingent
convertible preferred stock. As a result of the conversion of 487,746,250 common shares
into one Series C Preferred share we reduced the number of common shares outstanding by
487,746,250.

Convertible
Debentures
During
the year ending December 31, 2008 we entered into 15 Convertible Debenture Agreements and
issued 15 Convertible Debentures totaling $363,500 which were reported in Forms 10-Q dated
June 30, 2008 and September 30, 2008. Each of these debentures carry an interest rate of
8% per annum payable at maturity and mature two years from the date of the debenture. Each
debenture, and its accrued interest, is convertible into restricted shares of our common
stock at any time by the holder of the debenture. If converted into restricted common
stock, the conversion shall be at 50% of the average closing price of our common stock for
the five trading days prior to the date of the debenture, or 50% of the average closing
price for our common stock for the five trading days prior to the notice of conversion
within the first 120 days immediately following the purchase of the debenture, whichever
is less provided that the minimum conversion price is not less than $.002 per share. As of
December 31, 2008, $139,500 of these debentures had been converted into 64,062,754 common
shares leaving debentures totaling $224,000 convertible into 112,000,000 common shares. As
these debentures carry a conversion price that was less than market price on the date of
issuance, the rules of beneficial conversion apply. The difference between the conversion
rate and the market rate is classified as a discount on the note and accreted over the
term of the debenture, which in this case is 24 months. The face amount of the nine
outstanding debentures as of December 31, 2008 is $224,000. On the balance sheet they have
been discounted by $162,395 to $61,605. The discounted amount is accreted over the
twenty-four month period or in its entirety if the debenture is converted during the term.
As of December 31, 2008, $173,298 has been accreted to financing costs.



Derivative
liability
Due
to the fact that no common shares were available for conversion at the time the Series B
Preferred shares were issued, we classified these preferred shares as a derivative
liability of $3,556,004, rather than equity. Additionally, the preferred shares conversion
rate was at a discount on the date the preferred shares were issued. The market price on
the date of issuance ranged from $.008 per share to $.027 per share. If the Series B
preferred shares were converted on that same date they would have had a conversion value
of $.004 per common share. As this resulted in a beneficial conversion to the market rate
for the Series B preferred shares, the accounting rules of beneficial conversion applied.
As a result, we are required to expense the difference between the conversion price and
the market price as a financing expense. The offsetting entry is also carried as a
derivative liability in the amount of $6,639,786. As there is no time limit or period
designated for the conversion of the preferred shares, the entire amount of the beneficial
conversion is taken in the year incurred. The total amount of the derivative liability was
$10,195,790 after periodic reevaluation to market price pursuant to EITF-0019. On
September 14, 2007, at a special meeting of our shareholders, our shareholders approved
the increase of our authorized common shares to 2,000,000,000 shares. On September 18,
2007, we amended our articles of incorporation to reflect the increase in authorized
common shares to 2,000,000,000 shares. At the time the articles of incorporation were
amended we had sufficient common shares available in which to convert all of our
outstanding Series B Preferred Shares to common shares. As common shares were available
for conversion the entire amount of the derivative liability of $10,195,790 was
transferred to additional paid in capital which as a result caused out total
shareholders equity to increase to $4,665,738 as of December 31, 2007.

# Note G  Related
Party Transactions

From 1997 through July 31, 2002, we
made cumulative unsecured net advances to our president. As of December 31, 2007, the
outstanding balance of these advances totaled $216,783. However, as of December 31, 2008,
we also owed our president $216,783 of unpaid salary. Both amounts have been reduced by
offsetting amounts, which the president has recognized as compensation at $60,000 each
year in a cashless bonus and forgave $60,000 in accrued salary each year. These notes net
each other out and are not carried on the balance sheet

Our
officers and directors made the following loans to the company during 2008 and 2007;

|     |                       |             |             |                                
|---- | --------------------- | ----------- | ----------- | -------------------------------
|Date | Affiliated Lender     | Loan Amount | (Repayment) | Outstanding Balance at Year end
|    
|2008 | Harlan (Mac) DeLozier | 38,497      | (49,847)    | $-                             
|     | Tracy Madsen(A)       | 27,000      | (98,000)    | -                              
|     | Marco Venegas         | 32,468      | (42,468)    | -                              
|    
|     | Total                 | $  94,365   | $(190,315)  | $-                             
|     |                       |            
|     |                       |             |             |                                
|2007 | Terry Turner          | $245        | $(345)      | $-                             
|    
|     | Harlan (Mac) DeLozier | 11,350      | (14,300)    | 11,350                         
|     | Tracy Madsen(A)       | 121,000     | (52,500)    | 71,000                         
|     | Marco Venegas         | 10,000      | -           | 10,000                         
|    
|     | Total                 | $142,595    | $(67,145)   | $ 92,350                       
|     |                       |            

| | (A) | Loans from Mr. Madsen were made from Avcon Services, Inc., a company owned and
               controlled by him. Avcon Services, Inc. was paid $36,741 in interest for loans
               made to the company over the past two years.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# Note H 
Commitments and Contingencies

Office
Leases
Our
executive offices are located at 9661 South 700 East, Salt Lake City, Utah 84070. This
suite of offices consists of three executive offices, a conference room, reception space,
filing areas and copy and faxing facilities and our suitable for our needs. We pay $1,563
per month on the first year a two-year lease option.  The option term expires in July
2009. We are allowed to terminate the lease at any time for a $1,563 penalty plus a
30-day notice, which at this stage of the lease is our only obligation.

We also lease 35 square meters of
office space located in Santa Cruz de la Sierra, Bolivia, which is our Bolivian
headquarters. This lease expires February 15, 2010. We pay $188 per month for this lease
as well as $200.00 per month for 360 square meters of warehouse space in Santa Cruz,
Bolivia. We believe that we would be released from both of our leases in Bolivia with
minimal notice.



|                               |                   |              |                  
|------------------------------ | ----------------- | ------------ | -----------------
|Location                       | Size              | Monthly rent | Lease Expiration 
|Salt Lake City                 | 1,183 square feet | $1,563       | July 31, 2009    
|Santa Cruz, Bolivia            | 35 square meters  | 188          | February 15, 2010
|Warehouse, Santa Cruz, Bolivia | 360 square meters | 200          | June 1, 2009     
|Total                          |                   | $1,951       |                  

The following schedule shows the
composition of total remaining commitments for office leases.

|                          |       
|------------------------- | ------
|Years ending December 31, |       
|                         
|2009                      | $6,382
|2010                      | 376   
|2011                      | -     
|2012                      | -     
|Thereafter                | -     
|                         
|Total                     | $6,758

Rent expense for the years ended
December 31, 2008 and 2007 was approximately $26,308 and $25,672 respectively.

Other
Commitments
Under
our agreement with the seller of Buen Futuro, we agreed to maintain an exploration program
to replace mineral reserves as they are depleted through mining for as long as the
potential for feasible mineral reserves continues on the ore deposits found within the
Buen Futuro concession. We also agreed to invest $1 million in exploration of Buen Futuro
by 2006. We have expended approximately $699,000 under the agreement. Also in the
agreement, we committed to commence mineral production on the Buen Futuro concession by
May 23, 2005, and to expend a minimum of $2,000,000 to initiate that production. We
believe the purchase of the Gold Bar mill and plant during 2004 and 2005, which was
recorded in the amount of $3,980,000, satisfies this commitment, if and when we ultimately
commence production at Buen Futuro. On May 20, 2005 we entered into an amended agreement
with the seller whereby we agreed to pay a $1,500 per month production penalty if we were
not in production by November 23, 2005 and a $3,000 per month production penalty if we
were not in production by November 26, 2006. We also agreed to pay a geologist consulting
fee of $3,000 per month in cash and $2,000 per month in stock for 60 months. This
agreement expired on May 31, 2008.

# Note I  Subsequent
Events

Stock
issuances
On
January 28, 2009, we sold 29,100,000 restricted shares of our common stock to Dewey L.
Williams and 29,100,000 restricted shares of our common stock to The Dewey L. Williams
Profit Sharing Plan and Trust at $0.0007 per share or an aggregate of $40,740. Of this
amount $20,000 was in cash, $20,000 was from the redemption of Convertible Debentures
dated September 15, 2008 and $740 was accrued interest. We relied upon Sections 4(2) and
4(6) of the Securities Act.

On January 28, 2009, we sold
182,000,000 shares of our common stock to Jose Edmundo Arauz, a resident of Bolivia, at
$0.0007 per share in exchange for $127,400 in debt.

On January 28, 2009, we sold
58,867,486 shares of our common stock to Nestor Dimas Perez, a resident of Bolivia, at
$0.0007 per share in exchange for $41,207 in debt.



In every issuance described above we
relied upon Sections 4(2) and 4(6) of the Securities Act for the offer and sale. In two
cases, as indicated above regarding residents of Bolivia, we also relied on Regulation S
promulgated under the Securities Act regarding non-residents of the United States. We
believed that Sections 4(2) and 4(6) were available because the offers and sales did not
involve a public offering, there was no general solicitation or general advertising
involved in the offers or sales and the purchasers were accredited investors. We placed
restrictive legends on the certificates representing these securities stating that the
securities were not registered under the Securities Act and are subject to restrictions
on their transferability and resale.

Stock
Options
As
a subsequent event, on March 27, 2009 our Board of Directors approved the Golden Eagle
International, Inc. 2009 Equity Incentive Plan (the Plan). The Plan is
intended to provide incentives to officers, employees and other persons, including
consultants and advisers, who contribute to the success of the Company by offering them
the opportunity to acquire an ownership interest in it or increase their ownership
interest. The Board of Directors believes that this also will help to align the interests
of our management and employees with the interests of its shareholders.

The Plan provides for a maximum of
750,000,000 shares of common stock to be reserved to be issued upon the exercise of
options (Options) or the grant of restricted stock awards (Bonuses).
Adoption by the Board of Directors is contingent upon obtaining shareholder approval by
March 26, 2010. The Plan includes two types of Options. Options intended to qualify as
incentive stock options under Section 422 of the Internal Revenue Code of 1986, as
amended (the Code) are referred to as Incentive Options. Options,
which are not intended to qualify as Incentive Options are referred to as Non-Qualified
Options. Bonuses, which may also be granted under the Plan, are the outright
issuance of shares of Common Stock.

The Company plans to seek
shareholder approval of the Plan no later than the next annual shareholders meeting: (i)
to satisfy the contingency to the Board of Directorsadoption of the Plan; and (ii)
to permit the issuance of Options which will qualify as Incentive Options pursuant to the
Code.

The Plan is administered by the
Board of Directors since the Company has not appointed a Compensation Committee. In
addition to determining who will be granted Options or Bonuses, the Committee (or the
Board in the absence of the Committee) has the authority and discretion to determine when
Options and Bonuses will be granted and the number of Options and Bonuses to be granted.
The Board (or, if appointed, the Committee) also may determine a vesting and/or
forfeiture schedule for Bonuses and/or Options granted, the time or times when each
Option becomes exercisable, the duration of the exercise period for Options and the form
or forms of the agreements, certificates or other instruments evidencing grants made
under the Plan. The Board (or Committee) may determine the purchase price of the shares
of common stock covered by each Option and determine the Fair Market Value per share. The
Board (or Committee) also may impose additional conditions or restrictions not
inconsistent with the provisions of the Plan. The Board (or Committee) may adopt, amend
and rescind such rules and regulations as in its opinion may be advisable for the
administration of the Plan. If the number of shares reserved under the Plan is increased,
shareholder approval must be obtained on the amendment to increase the shares reserved.

The Board (or Committee) also has
the power to interpret the Plan and the provisions in the instruments evidencing grants
made under it, and is empowered to make all other determinations deemed necessary or
advisable for the administration of it.

The grant of Options or Bonuses
under the Plan does not confer any rights with respect to continuation of employment, and
does not interfere with the right of the recipient or the Company to terminate the
recipients employment, although a specific grant of Options or Bonuses may provide
that termination of employment or cessation of service as an employee, officer, or
consultant may result in forfeiture or cancellation of all or a portion of the Bonuses or
Options.



In the event a change, such as a
stock split, is made in our capitalization which results in an exchange or other
adjustment of each share of Common Stock for or into a greater or lesser number of
shares, appropriate adjustments will be made to unvested bonuses and in the exercise
price and in the number of shares subject to each outstanding Option. The Board (or, if
appointed, the Committee) also may make provisions for adjusting the number of bonuses or
underlying outstanding Options in the event we effect one or more reorganizations,
recapitalizations, rights offerings, or other increases or reductions of shares of our
outstanding Common Stock. Options and Bonuses may provide that in the event of the
dissolution or liquidation of the Company, a corporate separation or division or the
merger or consolidation of the Company, the holder may exercise the Option on such terms
as it may have been exercised immediately prior to such dissolution, corporate separation
or division or merger or consolidation; or in the alternative, the Board (or, if
appointed, the Committee) may provide that each Option granted under the Plan shall
terminate as of a date fixed by the Committee.

The exercise price of any Option
granted under the Plan must be no less than 100% of the fair market value of
our Common Stock on the date of grant. Any Incentive Stock Option granted under the Plan
to a person owning more than 10% of the total combined voting power of the Common Stock
shall be at a price of no less than 110% of the Fair Market Value per share on the date
of grant.

The exercise price of an Option may
be paid in cash, in shares of our Common Stock or other property having a fair market
value equal to the exercise price of the Option, or in a combination of cash, shares and
property. Unless otherwise stated by Board (or Committee) resolution, the Options can
also be exercised pursuant to net exerciseprocedures which permit the fair
market value of the Options (equal to the value of the underlying shares less the
exercise price) to be used to pay the exercise price. The Board (or Committee) shall
determine whether or not property other than cash or Common Stock or a net exercise may
be used to purchase the shares underlying an Option and shall determine the value of the
property received. The Plan provides that, unless otherwise provided by the Board (or the
Committee), Options granted under the Plan survive a Change of Control (as that term is
defined in the Plan) and for 18 months following a Change of Control if the holder is
terminated as an employee of the Company without cause following a Change of Control

At the time of adoption of the Plan,
the Board also granted certain options to a number of officers and key employees. The
options were granted subject to shareholder approval, and if the shareholders do not
approve the Plan by March 26, 2010, the options granted to the officers and key employees
will be lost. Assuming that the Companys shareholders approve the Plan when
presented, the Options granted have an exercise period of three years from the date of
grant (that is, through March 26, 2012) at an exercise price of $0.0018 per share (the
average of the closing price for the 10 trading days prior to March 27, 2009, plus an
additional 25% above that average price). The Board considered several factors in
granting the options to our executives and key employees such as length of service;
sacrifices made during the period of service, such as foregoing salary, personal
operating loans made to us to allow us to continue in operation, voluntary reductions in
salary, forgiveness of significant salary arrearages for the benefit of the Company,
etc.; the past and ongoing contribution made to maintaining the Company in operation
despite significant challenges, and to its recent successes in opening potential new
avenues for progress. The following is a list of the options granted executive officers
under the Plan:

|                                                                                                                |            
|--------------------------------------------------------------------------------------------------------------- | -----------
|Terry C. Turner, President, Chief Operating Officer and Chairman of the Board of Directors                      | 200,000,000
|Harlan (Mac) DeLozier, Vice President for Bolivian Operations and Director                                      | 100,000.000
|Tracy A. Madsen, Vice President for U.S. Operations, Chief Financial Officer, Corporate Secretary and Treasurer | 75,000,000 
|                                                                                                               
|Alvaro Riveros, Director                                                                                        | 10,000,000 
|Blane W. Wilson, Chief Operating Officer                                                                        | 80,000,000 

Options to acquire 36,500,000 shares
were granted on the same terms to persons who are neither executive officers nor
directors of the Company. The Plan will be presented in more detail in a Proxy Statement
when the shareholders consideration and approval for the Plan is sought at a future
date.

Abandonment
of Certain Properties.
As
described above, on March 1, 2009 March 1, 2009, we elected not to renew our mining
concessions for the Tipuani-Cangalli prospect in western Bolivia, which consisted of
12,000 acres in the Tipuani River Valley. On March 1, 2009, we also elected to reduce our
mining concessions in the Precambrian Shield in eastern Bolivia from 136,500 acres to
42,731 acres.



Contemplated Shareholders MeetingOn
January 15, 2009, we filed a preliminary proxy statement, the sole purpose of which was
to seek shareholder approval to increase our capitalization. At the time of filing the
preliminary proxy statement (and as described above), our authorized capital was
2,000,000,000 shares, and we had 1,535,897,333 shares of common stock outstanding, 80,000
shares of Series B Convertible Preferred Stock (convertible into 20,000,000 shares of
common stock), and one share of Series C Contingent Convertible Preferred Stock
(convertible into 487,746,250 shares of common stock). In addition, we have outstanding
debentures convertible into 121,960,000 shares of common stock, and options exercisable
at prices ranging from $$.002 to $.025As a result, we do not have sufficient
capitalization to meet our goals. The preliminary proxy statement sought shareholder
approval to effect a reverse stock split.

This is not an attempt to solicit a
proxy for the foregoing meeting of shareholders which has not yet been scheduled and the
proxy statement for that meeting has not yet been finalized. Certain of our directors and
executive officers may, under the rules of the SEC, be deemed to be participants in
the solicitation of proxies from its stockholders in connection with the proposed
transaction. Information concerning the interests of the persons who may be participants in
the solicitation is set forth in our most recent annual report on Form 10-K (including
any amendments thereto), previously filed with the SEC.

The preliminary proxy statement is
available free of charge online through the EDGAR filings maintained by the Securities
and Exchange Commission at www.sec.gov, and any amendment thereto will be
available when filed. When the definitive proxy statement is available, we will also
comply with the SECs notice and access filing requirements. OUR
SHAREHOLDERS SHOULD READ THE ENTIRE PRELIMINARY PROXY STATEMENT AND THE DEFINITIVE PROXY
STATEMENT (WHEN AVAILABLE) AND THE ACCOMPANYING MATERIALS AS THEY CONTAIN (OR WILL
CONTAIN) IMPORTANT INFORMATION. We do not currently have any estimated time when we will
attempt to finalize or mail proxy statements or hold the meeting.



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