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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
 FORM 10-KSB þ
    
    ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934
  o
    
    TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934
   METALINE CONTACT MINES 
  Washington
    
    91-0779945(State or other jurisdiction or incorporation
    
    (I.R.S. Employer Identification No.)or organization)W. 3848 Turtle patch Road, Pine River, WI
    
    54965(Address of principal executive offices)
    
    (Zip Code)
 Issuers telephone number 920-987-5317 Securities registered under Section 12(b) of the Exchange Act:
None Securities registered under Section 12(g) of the Exchange Act:
Capital Common - $0.05 Par Value Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the
Exchange Act during the past 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
þ Yes o No Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B
contained in this form, and no disclosure will be contained, to the best of registrants knowledge,
in definitive proxy or information statements incorporated by reference in Part III of this Form
10-KSB or any amendment to this Form 10-KSB. o The registrants revenues for its most recent fiscal were $25,720.00. The aggregate market value of the voting and non-voting common equity held by non-affiliates of the
registrant, based on the average of the bid and ask prices on March 24, 2005, as reported by the
Over the Counter Bulletin Board was $326,630. The number of shares outstanding of each of the issuers classes of common equity, as of December
31, 2005 was 13,783,189. Transitional Small Business Disclosure Format (check one): Yes o No þ




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TABLE OF CONTENTS PART IItem 1. Description of Business
    
    
    3Item 2. Description of Property
    
    
    5Item 3. Legal Proceedings
    
    
    8Item 4. Submission of Matters to a Vote of Security Holders
    
    
    8PART IIItem 5. Market for Common Equity and Related Stockholder Matters
    
    
    9Item 6. Managements Discussion and Analysis or Plan of Operation
    
    
    10Item 7.
Financial Statements
    
    
    F-1Item 8. Changes In and Disagreements With Accountants on Accounting
And Financial Disclosure
    
    
    12PART IIIItem 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance With Section 16(a) of the Exchange Act
    
    
    14Item 10. Executive Compensation
    
    
    16Item 11. Security Ownership of Certain Beneficial Owners and Management
    
    
    17Item 12. Certain Relationships and Related Transactions
    
    
    18Item 13. Exhibits and Reports on Form 8-K
    
    
    18Item 14. Principal Accountant Fees and Services
    
    
    19EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2
  -2-




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PART I 
 Item 1. DESCRIPTION OF BUSINESS  Business DevelopmentWith the exception of historical matters, some of the information may contain certain
forward-looking statements within the meaning of the Private Securities Litigation Reform
Act of 1995 and involve risks and uncertainties that could cause actual results to differ
materially from projections or estimates contained herein. Factors that might cause such
differences include those discussed in Managements Discussion and Analysis of Financial
Condition and Results of Operations as well as those discussed elsewhere in this Form
10-KSB. Most of these factors are beyond the Companys ability to predict or control. The
Company disclaims any obligation to update any forward-looking statements made herein.
Readers are cautioned not to put undue reliance on forward-looking statements.GeneralThe Company was incorporated in the State of Washington on November 15, 1928, for the
purpose of engaging in the mineral exploration business, and all business appertaining
thereto. Subsequent its incorporation the Company began acquiring unpatented zinc-lead
mining claims and other mineral rights in the Metaline District, Pend Oreille County, in
the State of Washington.From 1928 to 1946, the Company was inactive, except for maintaining its mineral holdings,
and in 1946, leased its mineral holdings to Metaline Mining & Leasing Company for a period
of 25 years.In 1959, The Bunker Hill Company (Bunker Hill) began managing the Companys business
affairs and minerals holdings.On November 7, 1960, the Company entered into a Plan and Agreement of Reorganization and
Re-capitalization (the 1960 Reorganization Agreement) with Bunker Hill and Day Mines
Inc., who were large shareholders of the Company at that time, and the owners of other
mining properties in the Metaline District. The parties to the 1960 Reorganization
Agreement felt that by consolidating their respective mining properties under the common
ownership of the Company, the combined mining properties could be more advantageously
explored and, if warranted, developed and mined. In consideration of the additional mining
properties, and the cancellation of certain indebtedness, the Company issued 1,288,619
shares of its common stock to Bunker Hill, and 728,825 shares of its common stock to Day
Mines Inc.On April 14, 1976, the Company and Bunker Hill entered into an Exploration and Operating
Agreement (the 1976 Agreement) granting Bunker Hill the exclusive right to conduct
exploration, development and mining operations on the Companys mineral holdings.In 1982, Bunker Hill transferred its controlling interest in the Company to Bunker Limited
Partnership, who subsequently transferred the operating control of the 1976 Agreement to
Pintlar Corp., a subsidiary of Gulf Resources & Chemical, the parent company of Bunker
Hill. In 1990, Pintlar Corp. transferred operating control of the 1976 Agreement to
Resource Finance Inc., the U.S. subsidiary of RFC Resource Finance Corporation, Toronto,
Ontario, Canada. In 1996, Cominco American Incorporated acquired operating control of the
1976 Agreement. -3-




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In October of 1996, then-current management and majority shareholders of the Company
commenced a structured reorganization whereby the Company organized Metaline Contact Mines
LLC, a Delaware Limited Liability Company (MCMLLC), and assigned to MCMLLC all of the
surface rights to its private real property and timber thereon in exchange for a 99% equity
membership interest in MCMLLC. The Company became the Managing Member of MCMLLC.As a part of its reorganization, the Company retained ownership of all sub-surface mineral
rights to the assigned real property, and ownership of its unpatented mining claims and
attached mineral rights. The Company then offered its shareholders the opportunity to
exchange their shares of common stock in the Company for proportionate non-managing equity
membership interests in MCMLLC. A total of 19 shareholders accepted the exchange offer
resulting in MCMLLC owning 11,686,643 shares of common stock in the Company, representing
93% of the outstanding shares of the Company at the time of the reorganization.On September 1, 1997, the Company negotiated a new Mining Lease With Purchase Option with
Cominco American Incorporated (the New Cominco Lease) on the Companys mineral rights,
which New Cominco Lease superseded the 1976 Agreement in its entirety.On June 1, 1998, Nor-Pac Limited Company, an Idaho Limited Liability Company (Nor-Pac),
acquired the 93% non-managing equity membership interests in MCMLLC, and became the
indirect controlling shareholder of the Company through its majority ownership of MCMLLC.
Simultaneous therewith, the Companys Board of Directors resigned, Nor-Pac filled the
vacant Board with its slate of Directors. MCMLLC subsequently sold the assigned real
property and timber to an independent third party.On February 1, 2004, the Company acquired the Mining Lease and Agreement, and an
Exploration Agreement With Option to Lease with New Jersey Mining Company, on the Golden
Chest Mine, from Paymaster Resources Incorporated.Any Bankruptcy, Receivership or Similar ProceedingsThere have been no bankruptcy, receivership or similar proceedings.Any Material Reclassification, Merger, Consolidation, or Purchase or Sale of s Significant
Amount of Assets Not in the Ordinary Course of Business.The Company reacquired 748,065 of its shares, representing approximately 5.1% of its
outstanding stock, effective November 1, 2004. The shares were obtained through a
distribution made to the Company by MCMLLC. The Company owns a 7% equity membership
interest in the MCMLLC. The reacquired shares were returned to the treasury and became
authorized, but unissued, shares.BUSINESS OF THE COMPANYGeneral Description of the BusinessThe Company owns and acquires mineral rights and properties, and leases them to other
companies in exchange for royalty interests. Royalty interests are passive (non-operating)
interests that provide the Company the right to receive revenue and other consideration
from a particular project. The Company expects the majority of its revenues will continue
to be derived from royalty interests. Historically, the Company does not conduct
development or mining operations. -4-




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The Companys current interests are: (1) a 3% Net Smelter Return (NSR) royalty on its
Pend Oreille/Metaline Zinc Mines under lease to Teck Cominco American Incorporated; and (2)
a sliding-scale NSR royalty, and other consideration, on its Golden Chest Mine, leased from
J.W. Beasley Interests LLC, and operated by New Jersey Mining Company under an exploration
and option agreement.Number of Total Employees and Number of Full Time EmployeesThe Company has no employees.Reports To Security HoldersThe Company does not deliver an annual report to shareholders, but will provide
shareholders with a copy of this Form 10-KSB upon request.On July 14, 2000, the Company filed a Form 10-SB with the Securities and Exchange
Commission (SEC), which became effective on September 14, 2000. The Company has filed
the required annual Form 10-KSB reports, quarterly 10-QSB reports, and a Form 8-K report
since that time.The public may read and copy all materials the Company files with the SEC at the SECs
Public Reference Room at 450 Fifth Street N.W., Washington, D.C. 20549. The public may
also obtain information on the operation of the Public Reference Room by calling the SEC at
1-800-SEC-0330. The SEC maintains an Internet site (http://www.sec.gov) that will contain
reports, proxy and information statements and other information regarding the Company that
is filed electronically with the SEC.The Company maintains a website where other information can be found. A link to the
Companys filings with the SEC is provided on the Companys website at
www.metalinecontactmines.com. 
 Item 2. DESCRIPTION OF PROPERTIES  PEND OREILLE/METALINE ZINC MINESThe Company owns mineral rights and properties in the Metaline District, Pend Oreille
County, State of Washington, as follows: the mineral rights attached to 5,798 acres of fee
simple property; the mineral rights attached to 487 acres of patented mining claims, and
1,925 acres of unpatented mining claims. The unpatented claims are on federal land
administrated by the U.S. Bureau of Land Management. The Company has the right to use of
the surface of the fee simple property and patented mining claims for exploration purposes,
and the surface of the unpatented mining claims for exploration and, if warranted,
development and mining purposes.The Company refers to these mineral rights and properties collectively as the Pend
Oreille/Metaline Zinc Mines.HistoryEstablished in 1906, the Metaline District is a significant past-producer of zinc and lead,
having produced about 17.5 million tonnes of ore grading 2.52% zinc and 1.14% lead from the
Metaline Formation. The Pend Oreille Mine was the major producer in the Metaline District,
having yielded 14.8 million tonnes containing 2.3% zinc and 1.1% lead. -5-




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The zinc-lead mineralization of the Metaline Formation occurs primarily in two horizons 
the Josephine Horizon, and the deeper higher-grade Yellowhead Horizon. The Josephine
Horizon hosted most of the historic mining activity in the district. A recently identified
third horizon, the Yellowhead #2, positioned 500600 feet below the main Yellowhead
Horizon, has now been recognized for its economic potentialTeck Cominco American acquired the Pend Oreille Mine in 1996, and negotiated a new
long-term lease agreement on the Companys mineral rights and properties, effective
September 1997.In January of 2004, Teck Cominco American commenced the commercial production of zinc-lead
ores and concentrates from its 100% owned Pend Oreille Mine. Announced reserves in the
Pend Oreille Mine are 5,727,000 tonnes, grading 7.7% zinc and 1.4% lead. Planned
production is 2,000 tonnes per day, yielding 83,000 tonnes of zinc and 15,000 tonnes of
lead concentrates per year. The zinc-lead concentrates are being shipped approximately
50-miles north to Teck Comincos facilities in Trail, British Columbia, one of the largest
fully-integrated zinc and lead smelting and refining complexes in the world.In 2000, additional inferred resources, grading 7.0% zinc and 1.4% lead, were discovered
in the Washington Rock area, a portion of which are mineral rights owned by the Company.
Washington Rock is located approximately 1-mile south of the Pend Oreille Mine. These
additional resources increased the resource base allowing Teck Cominco American to make a
positive production decision on the project.The inferred resources identified in the Washington Rock area are located within Yellowhead
and Yellowhead #2 Horizons.New Cominco LeaseTeck Cominco American leases the Companys mineral rights and properties, and has been
exploring for zinc and lead ores from time-to-time thereon. The term of the lease is for 20
years, with an option for an additional 20-year period, and so long thereafter as there is
commercial production from the Companys mineral rights. Under the terms of the lease, the
Company receives an advance royalty of $3,000.00 per quarter for the first 5 years,
$4,000.00 per quarter for the next 5 years, and $5,500.00 per quarter thereafter. The
lease also provides a 3% Net Smelter Returns production royalty upon the commencement of
commercial production. During the first 3 years of production the royalty is fixed at
$150,000.00 per year. As of December 31, 2005, the Company has received $105,606 in
advanced royalty payments from Teck Cominco American.Under the terms of the lease, the Company is not responsible for or subject to any existing
or probable governmental approvals or regulations with regard to its mineral rights. In
the event, however, Teck Cominco is successful in placing the Companys mineral rights into
commercial production, federal, state and local governmental permits may be required in
which case obtaining any such permits is the responsibility of Teck Cominco.Additionally, under the lease, Teck Cominco is responsible for maintaining the Companys
unpatented mining claims. To maintain an unpatented mining claim, the claimant must pay a
$125 maintenance fee and incur $100 in assessment expenditures annually per claim. In the
event Teck Cominco failed to maintain the Companys unpatented mining claims, the Company
would be required to pay the annual maintenance fee and incur assessment expenditures in
order to maintain the claims in good standing. Any such failure by Teck Cominco could a
significant financial obligation of the Company. -6-




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Environmental IssuesIn 1995, McCulley Frick & Gilman Inc. (MF&G), an environmental consulting and engineering
services firm with offices in Wallace, Idaho, conducted a Phase I Environmental Site
Assessment (the ESA) of the Companys private landholdings. In December of 1997, the
Company obtained a down-date to the ESA, also authored by MF&G. Both assessments affirmed
that previous mining exploration activities conducted on the properties left no hazardous
substances or facilities, as defined in the Comprehensive Environmental, Response,
Compensation, and Liability Act (CERCLA), and pose no threat to human health, natural
resources, or the environment from the standpoint of releases of any potentially hazardous
substances to soil, groundwater, surface water or air. It is therefore managements
opinion that the Company would have minimal liability if named as a Potentially Responsible
Party (PRP) under CERCLA from any past mining-oriented activities. No hazardous
substances or facilities will be used or constructed on the Companys mineral holdings.
Nevertheless, the Company is listed in the chain-of-title of the properties and could be
named as a PRP in the future. It is managements opinion, however, that any such liability
from being named a PRP would be minimal, and defendable under 42 U.S.C. § 9607(b)(3).GOLDEN CHEST MINEOn January 10, 2004, the Company entered into an Agreement with Paymaster Resources
Incorporated (hereinafter Paymaster) to acquire Paymasters mineral lease on the Golden
Chest Mine, near Murray, Idaho (the Golden Chest Lease), and Paymasters exploration
agreement with New Jersey Mining Company (the New Jersey Exploration Agreement). The
Paymaster shareholders approved the Agreement at a special meeting on February 23, 2004.
The Company issued Paymaster 466,954 shares of its authorized, but unissued common stock.
In the event the properties subject to the Golden Chest Lease commence commercial
production during the tenure of the New Jersey Exploration Agreement, or any lease as a
result thereof, the Company will pay Paymaster an additional 1,000,000 shares of its
authorized, but unissued, common stock. Paymaster is considered a related party due to
common directors.HistoryThe Golden Chest Mine is the largest lode producer of gold in the Murray district producing
approximately 65,000 ounces of gold from narrow high-grade veins. Gold production from the
Murray district is estimated at 300,000 ounces, including 200,000 ounces from placers,
predominately in the late 1800s. The Company leases the Golden Chest Mine from J.W.
Beasley Interests LLC.In the late 1980s, Newmont Exploration Limited spent over $545,000 on an exploration
program at the Golden Chest Mine, which consisted of soil and rock sampling, surface and
underground mapping, and 11,133 feet of drilling. Newmonts work identified a potential
open pit with an inferred geologic resource of 230,000 ounces of gold, and the possible
faulted off-set of the Katie-Dora Vein, the principle producer of gold from the Golden
Chest Mine.Golden Chest LeaseThe Company has a Mining Lease and Agreement (the Golden Chest Lease), on the Golden
Chest Mine. The Golden Chest Lease continues until July 1, 2018, with options thereafter
so long as there is commercial production. The Company has no advance royalty payments,
work requirements, or other holding costs with regard to the lease, and is to pay the
underlying owner an in kind royalty of 50% of the consideration it receives from New
Jersey Mining Company. -7-




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New Jersey Exploration AgreementThe New Jersey Exploration Agreement, dated September 5, 2003, calls for a 2-1/2 year
exploration period during which New Jersey Mining issues the Company 10,000 shares of its
common stock each six-month period. If New Jersey Mining executes the option to lease it
will pay the Company 100,000 shares of its common stock, and a sliding scale net smelter
return royalty, which increases with the price of gold. The royalty is 3% up to a gold
price of $400/oz and then increases to a maximum of 6%. New Jersey Mining will also issue
the Company 50,000 additional shares for each 10,000 ounces of gold produced from the
Golden Chest Mine. As of December 31, 2004, the Company has received 20,000 shares of New
Jersey Mining stock.2004 Work ProgramDuring 2004, New Jersey Mining drove a 550 foot ramp that intercepted the Katie-Dora Vein,
and mined approximately 1,200 tonnes of development ore from the vein, at a cost of
approximately $340,000. A limited deep drilling program was also conducted at the Idaho
Vein that intercepted 17.6 meters assaying 4.83 grams per ton gold, including 5.9 meters
assaying 10.13 grams per ton gold. A new haul road was constructed, 3-phase power
installed to the ramp portal, and construction commenced on a new shop building with dry.Subsequent EventsOn December 17, 2004, New Jersey Mining Company notified the Company of its intentions to
exercise its lease option on the Golden Chest Mine. On January 3, 2005, the Company and
New Jersey Mining executed the lease agreement mentioned above. The Company received
100,000 shares of New Jersey Mining stock.Milling of the development ore mined from the Katie-Dora Vein during the 2004 ramp project
has been completed at New Jersey Minings mill in Kellogg, Idaho, and the gold concentrates
have been shipped to Barrick Goldstrike Mines Inc. near Carlin, Nevada, for sale under a
recently executed purchase order. Settlement from the sale is expected in the
2nd quarter, 2005. The Company will receive a 5% NSR royalty from the sale. 
 Item 3. LEGAL PROCEEDINGS  The Company is not currently involved in any legal proceedings and is not aware of any
pending or potential legal actions. 
 Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS  No matters were submitted to a vote of shareholders for the year ending December 31, 2004. -8-




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PART II 
 Item 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS  Market InformationThe Companys common stock trades on NASDs OTCBB under the symbol MTLI. The shares were
listed for trading in the third quarter of 2000. The range of high-low bid-ask information
for the last eight quarters is as follows: High
    
    
    Low1st Quarter, 2003
    
    $
    0.45
    
    
    $
    0.152nd Quarter, 2003
    
    $
    0.45
    
    
    $
    0.153rd Quarter, 2003
    
    $
    0.45
    
    
    $
    0.154th Quarter, 2003
    
    $
    0.45
    
    
    $
    0.151st Quarter, 2004
    
    $
    0.15
    
    
    $
    0.102nd Quarter, 2004
    
    $
    0.15
    
    
    $
    0.103rd Quarter, 2004
    
    $
    0.25
    
    
    $
    0.104th Quarter, 2004
    
    $
    0.15
    
    
    $
    0.10
  The quotations reflect inter-dealer prices, without retail mark-up, markdown or
commissions, and may not represent actual transactions.Management approved the reservation of 2,000,000 shares of the Companys common stock for
options pursuant to the 1999 Stock Option Plan (the Stock Option Plan). The Stock Option
Plan was approved at a Special Meeting of Shareholders on November 15, 1999. Immediately
thereafter, the Company issued options to its three directors and two independent
consultants, totaling 1,250,000 shares. The independent consultants are Gene George of
Spokane, Washington, and Nelson Robert Howard of Lewiston, Idaho. On July 23, 2004, the
Company issued two newly appointed directors 250,000 share options each.ShareholdersThere are approximately 293 shareholders of the Companys common stock at the date hereof.Dividend PolicyThe Company has never paid a dividend, and there are no plans to pay dividends in the
foreseeable future.Transfer AgentThe Companys transfer agent is Columbia Stock Transfer Company, 410 Sherman Avenue, Suite
207, Coeur dAlene, Idaho 83814.Recent Sales of Unregistered SecuritiesOn March 4, 2004, the Company issued 466,954 shares of its authorized, but unissued, common
stock to Paymaster as consideration for the purchase of the Golden Chest Lease and New
Jersey Exploration Agreement. The stock was issued in reliance on an exemption from
registration provided by Section 4(2) of the Securities Act of 1933, as amended. -9-




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Item 6. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS  Results of OperationsThe Company had revenues from operations of $25,720 in 2004, versus $15,520 in 2003. The
increase of $10,200 was due to royalties paid to the Company by New Jersey Mining Company
under the New Jersey Exploration Agreement on the Companys Golden Chest Mine. The advance
royalties the Company received from Teck Cominco American under the New Cominco Lease
remained constant at $15,520 in both 2003 and 2004.The Company experienced a significant increase in its operating loss to $76,949 in 2004
from $23,810 in 2003. The increase in operating loss of $53,139 was due to directors fees,
property expenses, and increased general and administrative expenses.The directors fees increased by $25,800, to $30,000 in 2004 from $4,200 in 2003. The
increase was attributable to the granting of stock options to two new directors. The
property expense is attributable to the expensing of $37,765 in the acquisition costs of
the Golden Chest Lease as there were no professional reports evidencing proven or probable
reserves.Management and consulting fees decreased to nil in 2004 from $5,500 in 2003, due to the
termination of the management and consulting agreement with Nor-Pac. Professional fees,
consisting of legal and accounting, decreased $110 to $15,609 in 2004 from $15,719 in 2003,
due to a slight decrease in accounting expenses. Administrative expenses increased $5,385
in 2004 to $19,296 from $13,911 in 2003. Transfer agent fees increased $1,319 to $2,689 in
2004 versus $1,370 in 2003 due to termination fees charged by the Companys former transfer
agent. Rent was $5,100 in 2004 versus nil in 2003. The rent increase of $5,100 was due to
royalties paid to the underlying property owner of the Golden Chest Mine. Travel increased
by $1,112 in 2004 versus nil in 2003. The increase of $1,112 was for travel to the Golden
Chest Mine in 2004 to inspect exploration and development work being conducted by New
Jersey Mining. Office Services expenses decreased by $4,850 to nil in 2004 from $4,850 in
2003 due to the termination of the Office Services Agreement. Advertising and promotion
expense in 2004 was $1,460 versus nil in 2003. The increase of $1,460 was due to issuance
of news releases on the progress of the Companys projects.The Companys other income increased by $924 in 2004 to $7,781 from $6,857 in 2003. The
increase was predominantly caused by the increase in dividend income earned on the
Companys money market account due to higher interest rates, and a decrease in loss from
its investment in Metaline Contact Mines LLC, from $1,174 in 2003 to $393 in 2004.Financial ConditionThe Company believes it can satisfy its cash requirements for the next two (2) years.
Current level of operations includes compliance with the New Cominco Lease, the Golden
Chest Lease, the New Jersey Exploration Agreement and Lease, and the reporting requirements
of the SEC. Thereafter, the Company may require additional capital for future operating
costs and working capital. Such additional capital could be obtained from either increased
revenues from operations (in the event the Companys mineral holdings or properties were
placed into commercial production), or from the sale of shares of the Companys authorized,
but unissued, common stock.Production decisions on the Companys mineral rights and properties are under the sole
discretion and control of third parties, namely Teck Cominco American and New Jersey
Mining. And, there are no assurances that the Company would be able to sell shares of
its authorized, but unissued, common stock on acceptable terms. -10-




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New Jersey Mining has, however, announced that in the 2nd quarter 2005, they
will commence a 50-tonne per day commercial mining operation at the Companys Golden Chest
Mine, from which the Company will receive a NSR production royalty. In addition, the
Company will receive a 5% NSR production royalty on approximately 1,200 tonnes of
development ore mined in 2004 by New Jersey Mining. These production royalties should have
a positive impact on the Companys future operating revenues, however, the exact amount of
any increase cannot be determined until such time as the royalties are received from New
Jersey Mining.Liquidity and Capital ResourcesHistorically, the Company has funded its capital requirements from revenues from
operations, and dividends and interest earned on its cash accounts. As of December 31,
2004, the Companys cash position was $90,652 as compared to $105,687 on December 31, 2003.
The Company has no debt, and does not expect to incur any debt in the immediate future.
The Companys most significant cash requirement is its SEC reporting requirements. -11-




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Item 7.  FINANCIAL
STATEMENTS  METALINE CONTACT MINES FINANCIAL STATEMENTS
December 31, 2004 Williams & Webster, P.S.Certified Public AccountantsBank of America Financial Center
601 W. Riverside, Suite 1940
Spokane, WA 99201
 F-1




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METALINE CONTACT MINES TABLE OF CONTENTS REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
    
    
    F-3FINANCIAL STATEMENTSBalance Sheets
    
    
    F-4Statements of Operations
    
    
    F-5Statement of Stockholders Equity
    
    
    F-6Statements of Cash Flows
    
    
    F-7NOTES TO FINANCIAL STATEMENTS
    
    
    F-8
 F-2




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The Board of Directors
Metaline Contact Mines
Murray, Idaho REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We have audited the accompanying balance sheets of Metaline Contact Mines as of December 31, 2004
and 2003, 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 audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides 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 Metaline Contact Mines as of December 31, 2004 and 2003, and
the results of its operations, stockholders equity and its cash flows for the years then ended in
conformity with accounting principles generally accepted in the United States of America. Williams & Webster, P.S.Certified Public Accountants
Spokane, Washington March 22, 2005 F-3




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METALINE CONTACT MINESBALANCE SHEETS 
 December 31,
    
    
    December 31,2004
    
    
    2003ASSETSCURRENT ASSETSCash and cash equivalents
    
    $
    90,652
    
    
    $
    105,687Total Current Assets
    
    
    90,652
    
    
    
    105,687OTHER ASSETSRelated party receivable
    
    
    109,413
    
    
    
    109,413Accrued
interest - related party receivable
    
    
    30,637
    
    
    
    22,978Investments
    
    
    5,100
    
    
    
    33,935Website, net of amortization
    
    
    917
    
    
    
    Prepaid expenses
    
    
    350
    
    
    
    Total Other Assets
    
    
    146,417
    
    
    
    166,326TOTAL ASSETS
    
    $
    237,069
    
    
    $
    272,013LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIESUnearned royalty income
    
    $
    3,880
    
    
    $
    3,880Total Current Liabilities
    
    
    3,880
    
    
    
    3,880COMMITMENTS AND CONTINGENCIES
    
    
    
    
    
    
    STOCKHOLDERS EQUITYCommon stock, $0.05 par value;
20,000,000 shares authorized, 13,783,189 and
14,064,300 issued and outstanding, respectively
    
    
    726,570
    
    
    
    703,222Additional paid-in capital
    
    
    283,040
    
    
    
    302,165Stock options
    
    
    47,907
    
    
    
    17,907Accumulated deficit
    
    
    (824,328
    )
    
    
    (755,161
    )Total Stockholders Equity
    
    
    233,189
    
    
    
    268,133TOTAL
LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    237,069
    
    
    $
    272,013
 The accompanying notes are an integral part of these financial statements. F-4




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METALINE CONTACT MINESSTATEMENTS OF OPERATIONS 
 Year EndedDecember 31,
    
    
    December 31,2004
    
    
    2003REVENUESRoyalty income
    
    $
    25,720
    
    
    $
    15,520GENERAL AND ADMINISTRATIVE EXPENSESConsulting and management fees
    
    
    
    
    
    
    5,500Directors fees
    
    
    30,000
    
    
    
    4,200Property expense
    
    
    37,765
    
    
    
    Professional fees
    
    
    15,609
    
    
    
    15,719Administrative expenses
    
    
    19,296
    
    
    
    13,911TOTAL EXPENSES
    
    
    102,669
    
    
    
    39,330OPERATING LOSS
    
    
    (76,949
    )
    
    
    (23,810
    )OTHER INCOME (EXPENSE)Dividend income
    
    
    516
    
    
    
    372Interest income
    
    
    7,658
    
    
    
    7,659Loss from investment in LLC
    
    
    (393
    )
    
    
    (1,174
    )TOTAL OTHER INCOME (EXPENSE)
    
    
    7,781
    
    
    
    6,857LOSS BEFORE TAXES
    
    
    (69,168
    )
    
    
    (16,953
    )INCOME TAX EXPENSE
    
    
    
    
    
    
    NET LOSS
    
    $
    (69,168
    )
    
    $
    (16,953
    )NET LOSS PER
COMMON SHARE, BASIC AND DILUTED
    
    $
    nil
    
    
    $
    nilWEIGHTED
AVERAGE NUMBER OF COMMON SHARES OUTSTANDING,
BASIC AND DILUTED
    
    
    14,395,862
    
    
    
    14,064,300
 The accompanying notes are an integral part of these financial statements. F-5




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##### Table of Contents



METALINE CONTACT MINESSTATEMENT OF STOCKHOLDERS EQUITY 
 Additional
    
    
    
    
    
    
    
    
    
    
    TotalCommon Stock
    
    
    Paid-in
    
    
    Stock
    
    
    Accumulated
    
    
    StockholdersShares
    
    
    Amount
    
    
    Capital
    
    
    Options
    
    
    Deficit
    
    
    EquityBalance, December 31, 2002
    
    
    14,064,300
    
    
    $
    703,222
    
    
    $
    302,165
    
    
    $
    17,907
    
    
    $
    (738,209
    )
    
    $
    285,085Net loss for the year ended
December 31, 2003
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (16,953
    )
    
    
    (16,953
    )Balance, December 31, 2003
    
    
    14,064,300
    
    
    
    703,222
    
    
    
    302,165
    
    
    
    17,907
    
    
    
    (755,161
    )
    
    
    268,133Common stock issued at $0.08 per share
for property expense
    
    
    466,954
    
    
    
    23,348
    
    
    
    14,417
    
    
    
    
    
    
    
    
    
    
    
    37,765Stock options issued for directors fees
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30,000
    
    
    
    
    
    
    
    30,000Reacquisition of common stock
    
    
    (748,065
    )
    
    
    
    
    
    
    (33,542
    )
    
    
    
    
    
    
    
    
    
    
    (33,542
    )Net loss for the year ended
December 31, 2004
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (69,168
    )
    
    
    (69,168
    )Balance, December 31, 2004
    
    
    13,783,189
    
    
    $
    726,570
    
    
    $
    283,040
    
    
    $
    47,907
    
    
    $
    (824,328
    )
    
    $
    233,189
 The accompanying notes are an integral part of these financial statements. F-6




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##### Table of Contents



METALINE CONTACT MINESSTATEMENTS OF CASH FLOWS 
 Year EndedDecember 31,
    
    
    December 31,2004
    
    
    2003CASH FLOWS FROM OPERATING ACTIVITIES:Net loss
    
    $
    (69,168
    )
    
    $
    (16,953
    )Adjustments to reconcile net loss to net cash
provided (used) by operating activities:Amortization expense
    
    
    83
    
    
    
    Loss in LLC investment
    
    
    393
    
    
    
    1,174Rent expense paid with NJMC stock
    
    
    5,100
    
    
    
    Royalty income received in NJMC stock
    
    
    (10,200
    )
    
    
    Common stock issued in payment of expenses
    
    
    37,765
    
    
    
    Stock options issued for directors fees
    
    
    30,000
    
    
    
    Changes in assets and liabilities:Increase in accrued interest receivable
    
    
    (7,658
    )
    
    
    (7,658
    )Increase in prepaid expenses
    
    
    (350
    )
    
    
    Net cash provided (used) by operating activities
    
    
    (14,035
    )
    
    
    (23,437
    )CASH FLOWS PROVIDED BY INVESTING ACTIVITIES:Cash advance to related party
    
    
    
    
    
    
    18,000Website
    
    
    (1,000
    )
    
    
    Net cash provided (used) by financing activities
    
    
    (1,000
    )
    
    
    18,000CASH FLOWS PROVIDED BY FINANCING ACTIVITIES:
    
    
    
    
    
    
    Net increase (decrease) in cash and cash equivalents
    
    
    (15,035
    )
    
    
    (5,437
    )Cash at beginning of period
    
    
    105,687
    
    
    
    111,124Cash at end of period
    
    $
    90,652
    
    
    $
    105,687SUPPLEMENTAL CASH FLOW DISCLOSURES:Income taxes paid
    
    $
    
    
    
    $
    Interest paid
    
    $
    
    
    
    $
    NON-CASH TRANSACTIONS:Common stock issued in payment of expenses
    
    $
    37,765
    
    
    $
    Stock options issued for directors fees
    
    $
    30,000
    
    
    $
    Reacquisition of common stock
    
    $
    33,542
    
    
    $
    Rent expense paid with NJMC stock
    
    $
    5,100
    
    
    $
    Royalty income received in NJMC stock
    
    $
    10,200
    
    
    $
    Investment in NJMC under exploration agreement
    
    $
    5,100
    
    
    $
    
 The accompanying notes are an integral part of these financial statements. F-7




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##### Table of Contents



METALINE CONTACT MINESNOTES TO THE FINANCIAL STATEMENTSDECEMBER 31, 2004 
 NOTE 1  ORGANIZATION AND DESCRIPTION OF BUSINESS Metaline Contact Mines (hereinafter Metaline or the Company) was incorporated in November of
1928 under the laws of the State of Washington for the purpose of engaging in mining and the buying
and selling of ores, metals, and minerals. The Company was reorganized and recapitalized in 1960 and its articles of incorporation were
amended to expand its business purposes to include various additional business activities. Metaline
has continued its operations since its formation and has historically acquired land, mineral
rights, patented lode mining claims, and timber in the Pacific Northwest. In the last quarter of 1996, Metaline transferred substantially all of its assets to a limited
liability company. See Note 4. The Companys fiscal year-end is December 31. NOTE 2  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This summary of significant accounting policies is presented to assist in understanding the
financial statements. The financial statements and notes are representations of the Companys
management, which is responsible for their integrity and objectivity. These accounting policies
conform to accounting principles generally accepted in the United States of America and have been
consistently applied in the preparation of the financial statements. Accounting Method
The Companys financial statements are prepared using the accrual basis of accounting in accordance
with accounting principles generally accepted in the United States of America. Basic and Diluted Net Loss Per Share
Net loss per share was computed by dividing the net loss by the weighted average number of shares
outstanding during the period. The weighted average number of shares was calculated by taking the
number of shares outstanding and weighting them by the amount of time that they were outstanding.
Outstanding options have been excluded from the calculation of diluted loss per share as they would
be antidilutive; accordingly, basic and diluted net loss per share are the same. Cash and Cash Equivalents
For purposes of the statements of cash flows, the Company considers all short-term debt with
original maturities of three months or less to be cash equivalents. Compensated Absences
Currently, the Company has no employees; therefore, no liability has been recorded in the
accompanying financial statements. The Companys policy will be to recognize the costs of
compensated absences when there are employees who earn such benefits. F-8




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##### Table of Contents



METALINE CONTACT MINESNOTES TO THE FINANCIAL STATEMENTSDECEMBER 31, 2004   NOTE 2  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Concentration of Risk
The Company maintains its cash in primarily one money market account, the funds of which are not
insured by the Federal Deposit Insurance Corporation. The balance in that account was $89,850 and
$105,215 at December 31, 2004 and December 31, 2003, respectively. Additionally, as of December
31, 2004, the Companys sole source of revenues is royalty income received under mineral property
lease agreements with Teck Cominco American, Inc. and New Jersey Mining Company. See Note 6. Derivative Instruments
The Financial Accounting Standards Board issued Statement of Financial Accounting Standards No.
133, Accounting for Derivative Instruments and Hedging Activities, (hereinafter SFAS No. 133)
as amended by SFAS No. 137, Accounting for Derivative Instruments and Hedging Activities 
Deferral of the Effective Date of FASB No. 133, and SFAS No. 138, Accounting for Certain
Derivative Instruments and Certain Hedging Activities and SFAS No. 149, Amendment of Statement
133 on Derivative Instruments and Hedging Activities. These statements establish accounting and
reporting standards for derivative instruments, including certain derivative instruments embedded
in other contracts, and for hedging activities. They require that an entity recognize all
derivatives as either assets or liabilities in the consolidated balance sheet and measure those
instruments at fair value. If certain conditions are met, a derivative may be specifically designated as a hedge, the
objective of which is to match the timing of gain or loss recognition on the hedging derivative
with the recognition of (i) the changes in the fair value of the hedged asset or liability that are
attributable to the hedged risk or (ii) the earnings effect of the hedged forecasted transaction.
For a derivative not designated as a hedging instrument, the gain or loss is recognized in income
in the period of change. Historically, the Company has not entered into derivatives contracts to hedge existing risks or for
speculative purposes. During the years ended December 31, 2004 and 2003, the Company has not engaged in any transactions
that would be considered derivative instruments or hedging activities. Fair Value of Financial Instruments
The carrying amounts for cash, receivables, investments, accounts payable and accrued liabilities
approximate their fair value. All instruments are accounted for on an historical cost basis, which,
due to the short maturity of these financial instruments, approximates fair value at December 31,
2004. Investments
The Company has two investments. It accounts for its investment in Metaline Contact Mines, LLC
using the equity method of accounting. See Note 3. The Company accounts for its investment in New
Jersey Mining Company using the cost method of accounting. See Note 4. F-9




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##### Table of Contents



METALINE CONTACT MINESNOTES TO THE FINANCIAL STATEMENTSDECEMBER 31, 2004   NOTE 2  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Recent Accounting Pronouncements
In December 2004, the Financial Accounting Standards Board issued Statement of Financial Accounting
Standards No. 153 (hereinafter SFAS No. 153). This statement addresses the measurement of
exchanges of nonmonetary assets. The guidance in APB Opinion No. 29, Accounting for Nonmonetary
Transactions, is based on the principle that exchanges of nonmonetary assets should be measured
based on the fair value of the assets exchanged. The guidance in that opinion, however, included
certain exceptions to that principle. SFAS No. 153 amends APB Opinion 29 to eliminate the
exception for nonmonetary exchanges of similar productive assets and replaces it with a general
exception for exchanges of nonmonetary assets that do not have commercial substance. A nonmonetary
exchange has commercial substance if the future cash flows of the entity are expected to change
significantly as a result of the exchange. This statement is effective for financial statements
for fiscal years beginning after June 15, 2005. Earlier application is permitted for nonmonetary
asset exchanges incurred during fiscal years beginning after the date of this statement is issued.
Management believes the adoption of this statement will not impact the financial statements of the
Company. In December 2004, the Financial Accounting Standards Board issued Statement of Financial Accounting
Standards No. 152, which amends SFAS Statement No. 66, Accounting for Sales of Real Estate, to
reference the financial accounting and reporting guidance for real estate time-sharing transactions
that is provided in AICPA Statement of Position (SOP) 04-2, Accounting for Real Estate
Time-Sharing Transactions. This statement also amends SFAS No. 67, Accounting for Costs and
Initial Rental Operations of Real Estate Projects, to state that the guidance for (a) incidental
operations and (b) costs incurred to sell real estate projects, does not apply to real estate
time-sharing transactions. The accounting for those operations and costs is subject to the
guidance in SOP 04-2. This statement is effective for financial statements for fiscal years
beginning after June 15, 2005. Management believes the adoption of this statement will not impact
the financial statements of the Company. In November 2004, the Financial Accounting Standards Board issued Statement of Financial Accounting
Standards No. 151, Inventory Costs an amendment of ARB No. 43, Chapter 4 (hereinafter SFAS No.
151). This statement amends the guidance in ARB No. 43, Chapter 4, Inventory Pricing, to
clarify the accounting for abnormal amounts of idle facility expense, freight, handling costs, and
wasted material (spoilage). Under some circumstances, SFAS No. 151 mandates that items such as
idle facility expense, excessive spoilage, double freight, and re-handling costs be recognized as
current-period charges. In addition, this statement requires that allocation of fixed production
overheads to the costs of conversion be based on the normal capacity of the production facilities.
This statement is effective for inventory costs incurred during fiscal years beginning after June
15, 2005. Management believes the adoption of this statement will not impact the financial
statements of the Company. F-10




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##### Table of Contents



METALINE CONTACT MINESNOTES TO THE FINANCIAL STATEMENTSDECEMBER 31, 2004   NOTE 2  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Recent Accounting
Pronouncements (continued)
In May 2003, the Financial Accounting Standards Board issued Statement of Financial Accounting
Standards No. 150, Accounting for Certain Financial Instruments with Characteristics of Both
Liabilities and Equity (hereinafter SFAS No. 150). SFAS No. 150 establishes standards for
classifying and measuring certain financial instruments with characteristics of both liabilities
and equity and requires that those instruments be classified as liabilities in statements of
financial position. Previously, many of those instruments were classified as equity. SFAS No. 150
is effective for financial instruments entered into or modified
after May 31, 2003 and otherwise is effective at the beginning of the first interim period
beginning after June 15, 2003. The adoption of SFAS No. 150 did not impact the financial position
or results of operations of the Company. In April 2003, the Financial Accounting Standards Board issued Statement of Financial Accounting
Standards No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities
(hereinafter SFAS No. 149). SFAS No. 149 amends and clarifies the accounting for derivative
instruments, including certain derivative instruments embedded in other contracts, and for hedging
activities under SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities. This
statement is effective for contracts entered into or modified after June 30, 2003 and for hedging
relationships designated after June 30, 2003. The adoption of SFAS No. 149 did not impact the
financial position or results of operations of the Company. Revenue Recognition Policy
The Company recognizes revenue when there is a mutually executed contract, the contract price is
fixed and determinable, delivery of the product or service has occurred, and collectibility of the
contract price is considered probable. Use of Estimates
The process of preparing financial statements in conformity with accounting principles generally
accepted in the United States of America requires the use of estimates and assumptions regarding
certain types of assets, liabilities, revenues, and expenses. Such estimates primarily relate to
unsettled transactions and events as of the date of the financial statements. Accordingly, upon
settlement, actual results may differ from estimated amounts. NOTE 3  INVESTMENT IN LLC On October 30, 1996, the Company organized a Delaware limited liability company, Metaline Contact
Mines, LLC (hereinafter The LLC). Upon organization of The LLC, the Company transferred
substantially all of its assets (primarily real property surface rights and timber) to The LLC. At
the time of The LLCs formation, the Company was the sole managing member in The
LLC, representing 100% ownership. In 1998, the majority of the Companys interest in The LLC was
expensed in connection with the sale of the majority of The LLCs assets. F-11




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##### Table of Contents



METALINE CONTACT MINESNOTES TO THE FINANCIAL STATEMENTSDECEMBER 31, 2004   NOTE 3  INVESTMENT IN LLC (continued) At the beginning of 1998, the Companys former shareholders acquired 93% of The LLC by transferring
their stock in the Company to The LLC in exchange for non-managing membership interests. See Note
7. At the conclusion of this share exchange, the Companys percentage of
ownership in The LLC was reduced to seven percent (7%). The Company wrote down its initial
investment by 93% to reflect its diluted investment in The LLC. After the write down of its
investment and net change in member capital during the year 1998, the value of the Companys
investment in The LLC was $45,440 at December 31, 1998. After the dilution of its investment in The LLC, the Company continued as the managing member of
The LLC. See Note 5. In the year ended December 31, 2004, the Company recorded a loss on its investment in The LLC of
$393. In November of 2004, the Company wrote down its recorded membership interest in The LLC in
consideration of the reacquisition of 748,065 shares of its common stock. As a result of this
transaction, the Companys investment in the LLC was reduced to $0 and The LLC capital account had
a negative balance at December 31, 2004. See Note 9. NOTE 4  MINERAL PROPERTIES In 1996, Metaline transferred timber and real property surface rights to The LLC but retained
underground mineral rights to the transferred real property and its mining claims, located in Pend
Oreille County in Washington State. The timber and real property surface rights were deemed by
management to have a value equal to their recorded cost and this cost was transferred to The LLC.
The related mineral rights are carried at no cost on Metalines books. In 1997, Metaline and The LLC jointly leased certain Pend Oreille County real estate and all
related mineral rights to a major mining company. See Note 6. In January 2004, the Company issued 466,954 shares of its common stock to Paymaster Resources
Incorporated (hereinafter Paymaster), a related party (due to common officers and directors), in
order to acquire Paymasters interest in the Golden Chest Mines minerals lease to patented mining
claims in Shoshone County, Idaho. In this transaction, the Company also acquired Paymasters
interest in an exploration agreement with New Jersey Mining Company which relates to the
aforementioned mining claims. Because there are no professional studies evidencing proven and
probable reserves, the Company recorded $37,765 of property expenses in connection with this
agreement. See Notes 6 and 8. F-12




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##### Table of Contents



METALINE CONTACT MINESNOTES TO THE FINANCIAL STATEMENTSDECEMBER 31, 2004   NOTE 4  MINERAL PROPERTIES (continued) In both June and December of 2004, the Company received 10,000 shares of New Jersey Mining Company
(hereinafter NJMC) common stock in accordance with the terms of the aforementioned exploration
agreement. The agreement requires NJMC to pay Metaline 10,000 shares of its common stock every six
months for the remaining one-year term. In the year ended December 31, 2004, the Company recorded
royalty income of $10,200 at the fair market value of the NJMC common stock received. The
agreement also requires the owner of the claims to receive one-half of the royalty payments in the
form of rent. Accordingly, $5,100 was recorded as rent expense in 2004 and the remaining $5,100
has been recorded as an investment at year-end. See Notes 6 and 10. NOTE 5  RELATED PARTY TRANSACTIONS In March 2002, the Company advanced $18,000 on a short-term, non-interest bearing, unsecured basis
to Murrayville Land Company, LLC, an affiliated company, to facilitate a real estate purchase.
This receivable was repaid in May 2003. During 1998, The LLC sold property for a net gain of $5,958,762. Metalines share of this
gain, before adjustments of the Companys investment from The LLCs operating results and write
down from its substantial decrease in ownership of The LLC, was $507,858. See Note 3. The
Company recorded a non-current, related party receivable of $109,413 for the balance of the
distribution. Due to uncertainty as to the date this receivable will be collected, this asset
together with accrued interest at the rate of 7 percent per annum is recorded as a non-current
asset at December 31, 2004 and December 31, 2003. Over the years, Metaline has executed agreements with Nor-Pac Limited Company (hereinafter
Nor-Pac), an affiliated company, for Nor-Pac to provide Metaline with management and consulting
services. Effective January 1, 2003, the management fee paid to Nor-Pac was $500 per month. As of
January 1, 2004, the management and consulting services agreement with Nor-Pac has been terminated.
For additional information on related parties, see Notes 3, 4, 6, and 8. In November of 2004, The LLC assigned its rights, title and interest in the Companys
aforementioned related party receivable of $109,413 and accrued interest to Nor-Pac. F-13




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##### Table of Contents



METALINE CONTACT MINESNOTES TO THE FINANCIAL STATEMENTSDECEMBER 31, 2004   NOTE 6  MINING LEASES AND RELATED AGREEMENTS Pend Oreille/Metaline Zinc Mines
On September 1, 1997, Metaline and The LLC acting jointly as lessors executed an agreement with
Cominco American Incorporated (hereinafter Cominco) wherein Cominco received the right to
explore, develop, and mine Metalines underground mineral rights in Pend Oreille County, Washington
for a period of twenty years with an option renewal period of the same length. Under this lease
agreement, Cominco obligated itself to pay the lessors $3,000 per quarter for the first five years
of the lease with ascending quarterly increments at each successive five year interval. The lease
characterizes the aforementioned quarterly disbursements as advance royalty payments which may be
fully offset against a three-percent production royalty retained by the lessors. The lease
agreement gives Cominco the option to purchase 200 surface acres of the leased property for fair
market value during the lease term. During 2001, Teck Cominco Limited was formed, following the acquisition of Cominco Limited by
another mining company, Teck Corporation. The former subsidiary of Cominco Limited, Cominco
American Incorporated, was renamed Teck Cominco American, Inc., and continues as lessee under the
original Cominco lease agreement. Effective March 15, 2002, the aforementioned lease agreement was amended, thereby reducing the
amount of acreage leased from the Company, and providing for an approximately three percent (3%)
decrease in royalty payments. From the inception of the lease through December 31, 2004, the Company has received $105,606 in
payments from Cominco and Teck. Golden Chest Mine
In January of 2004, the Company acquired from Paymaster a mining lease and agreement, as amended
(the Golden Chest Lease), on the Golden Chest Mine, Shoshone County, Idaho. The Golden Chest
Lease commenced on June 1, 1999, and continues until July 1, 2018, with options thereafter so long
as there is commercial production. The Company has no advance royalty payments, work requirements,
or other holding costs with regard to the lease, and is to pay the underlying property owner an in
kind royalty of 50% of the consideration it receives from New Jersey Mining Company (hereinafter
NJMC). An exploration agreement with
NJMC, dated September 5, 2003, calls for a 2 1/2 year exploration
period during which NJMC issues the Company 10,000 shares of its common stock each six-month
period. If NJMC executes the option to lease, it will pay the Company 100,000 shares of its common
stock and a sliding-scale net smelter return royalty, which increases with the price of gold.
Under the exploration agreement, NJMC will also issue additional shares to the Company for each
10,000 ounces of gold produced at the Golden Chest Mine. F-14




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##### Table of Contents



METALINE CONTACT MINESNOTES TO THE FINANCIAL STATEMENTSDECEMBER 31, 2004   NOTE 7  INCOME TAXES Income taxes are provided based upon the liability method of accounting pursuant to Statement of
Financial Accounting Standards No. 109, Accounting for Income Taxes (hereinafter SFAS No. 109).
Under this approach, deferred income taxes are recorded to reflect the tax consequences in future
years of differences between the tax basis of assets and liabilities and their financial reporting
amounts at each year-end. A valuation allowance is recorded against the deferred tax asset if
management does not believe the Company has met the more likely than not standard imposed by SFAS
No. 109 to allow recognition of such an asset. At December 31, 2004 and December 31, 2003, the Company had a net deferred tax asset of
approximately $226,000 and $212,000, respectively, principally arising from net operating loss
carryforwards for income tax purposes, which were calculated using a 34% tax rate. This resulted in
an increase to the net deferred tax asset of approximately $14,000 for the year ended December 31, 2004. As management of the Company cannot determine that it is more likely than not
that the Company will realize the benefit of the net deferred tax asset, a valuation allowance
equal to the net deferred tax asset has been established. At December 31, 2004, the Company has a net operating loss carryforward of approximately $664,000,
which will fully expire in the year 2024. NOTE 8  COMMON STOCK During the year ended December 31, 2004, the Company issued 466,954 shares of its common stock at
$0.08 per share for acquisition of mining claims (see Note 4). Additionally, the Company
reacquired 748,065 shares of its common stock through a distribution made to the Company by
Metaline Contact Mines LLC. The Company owns a 7% interest in the LLC (see Note 3). At December
31, 2004, the reacquired shares are considered authorized and unissued. During the year ended December 31, 2003, the Company did not engage in common stock transactions. NOTE 9  STOCK OPTIONS The Company has adopted Statement of Financial Accounting Standards No. 123, Accounting for
Stock-Based Compensation (hereinafter SFAS No. 123), which defines a fair value-based method of
accounting for stock options and other equity instruments. This method measures compensation costs
based on the estimated fair value of the award and recognizes that cost over the service period. F-15




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##### Table of Contents



METALINE CONTACT MINESNOTES TO THE FINANCIAL STATEMENTSDECEMBER 31, 2004   NOTE 9  STOCK OPTIONS (continued) On November 16, 1999, the Companys board of directors approved the Metaline Contact Mines 1999
Stock Option Plan. This plan allows the Company to distribute up to 2,000,000 shares of common
stock shares to officers, directors, employees and consultants through the authorization of the
Companys board of directors at an initial exercise price of $0.125, or $0.15, depending on the
terms of the option certificate. The options may be exercised until November 16, 2009, at which
time they expire. Summarized information about stock options outstanding and exercisable at December 31, 2004 is as
follows: Options Outstanding
    
    Options ExercisableWeightedAverageRemaining
    
    
    Weighted
    
    
    
    
    
    
    WeightedContractual
    
    
    Average
    
    
    
    
    
    
    AverageExercise
    
    Number
    
    
    Life
    
    
    Exercise
    
    
    Number
    
    
    ExercisePrice
    
    Outstanding
    
    
    (Years)
    
    
    Price
    
    
    Exercisable
    
    
    Price$        0.06
    
    
    500,000
    
    
    
    4.87
    
    
    $
    0.06
    
    
    
    500,000
    
    
    $
    0.060.125
    
    
    1,000,000
    
    
    
    4.87
    
    
    
    0.125
    
    
    
    1,000,000
    
    
    
    0.1250.15
    
    
    250,000
    
    
    
    4.87
    
    
    
    0.15
    
    
    
    250,000
    
    
    
    0.15$0.06-0.15
    
    
    1,750,000
    
    
    
    4.87
    
    
    $
    0.11
    
    
    
    1,750,000
    
    
    $
    0.11
 During the year ended December 31, 2004, the Company granted 500,000 options for directors fees.
No options were granted during 2003. The fair value of the options granted during 2004 was
estimated at $0.06 using the Black-Scholes Option Price Calculation. The following assumptions were
made to estimate fair value: the risk-free interest rate is 3.9%, volatility is 33%, and the
expected life of the options is five years. Accordingly, $30,000 of option expense was recorded in
the Companys financial statements as directors fees. In accordance with Financial Accounting
Standard No. 123 paragraph 115, this expense was deemed to be an estimate, subject to adjustment by
decreasing the expense in the period of forfeiture. F-16




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##### Table of Contents



METALINE CONTACT MINESNOTES TO THE FINANCIAL STATEMENTSDECEMBER 31, 2004   NOTE 9  STOCK OPTIONS (continued) Following is a summary of the Companys stock option activity during the years ended December 31,
2003 and 2004, respectively: WeightedAverageNumber of
    
    
    ExerciseShares
    
    
    PriceOutstanding, January 1, 2003
    
    
    1,250,000
    
    
    $
    0.13Granted
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    Expired
    
    
    
    
    
    
    Outstanding, December 31, 2003
    
    
    1,250,000
    
    
    $
    0.13Exercisable, December 31, 2003
    
    
    1,250,000
    
    
    $
    0.13Outstanding, January 1, 2004
    
    
    1,250,000
    
    
    $
    0.13Granted
    
    
    500,000
    
    
    
    0.08Exercised
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    Expired
    
    
    
    
    
    
    Outstanding, December 31, 2004
    
    
    1,750,000
    
    
    $
    0.11Exercisable, December 31, 2004
    
    
    1,750,000
    
    
    $
    0.11
 NOTE 10  SUBSEQUENT EVENTS In January of 2005, the Company executed a mining lease with New Jersey Mining Company on the
Companys Golden Chest Mine. See Note 6. The Company received 100,000 shares of New Jersey Mining
Company stock with a fair market value of $41,000. The terms of the lease require the owner of the
real property (mine) to receive one-half of the royalty payments in the form of rent. Accordingly,
during the first quarter of fiscal year 2005, $20,500 will be recorded as rent expense and the
remaining $20,500 recorded as an investment. F-17




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##### Table of Contents



Item 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE  There have been no changes in or disagreements with the Companys accountants and auditors
on accounting and financial disclosure during the Companys two most recent fiscal years. Item 8A. CONTROLS AND PROCEDURES  Annual Evaluation of the Companys Disclosure Controls and Internal ControlsWithin 90 days prior to the date of this Annual Report on Form 10-KSB, the Company
evaluated the effectiveness of the design and operation of its disclosure controls and
procedures (Disclosure Controls), and its internal controls and procedures for
financial reporting (Internal Controls). This evaluation (the Controls Evaluation)
was done under the supervision and with the participation of management, including the
Companys Chief Executive Officer (CEO) and Chief Financial Officer (CFO). Rules
adopted by the SEC require that in this section of the Annual Report the Company present
the conclusions of the CEO and the CFO about the effectiveness of its Disclosure Controls
and Internal Controls based on and as of the date of the Controls Evaluation.CEO and CFO CertificationsAppearing immediately following the Signatures section of this Annual Report there are two
separate forms of Certifications of the CEO and the CFO. The second form of
Certification is required in accord with Section 302 of the Sarbanes-Oxley Act of 2002 (the
Section 302 Certification). This section of the Annual Report, which you are currently
reading, is the information concerning the Controls Evaluation referred to in the Section
302 Certifications and this information should be read in conjunction with the Section 302
Certifications for a more complete understanding of the topics presented.Disclosure Controls and Internal ControlsDisclosure Controls are procedures that are designed with the objective of ensuring that
information required to be disclosed in our reports filed under the Securities Exchange Act
of 1934 (Exchange Act), such as this Annual Report, is recorded, processed, summarized
and reported within the time periods specified in the Securities and Exchange Commission
(SEC) rules and forms. Disclosure Controls are also designed with the objective of
ensuring that such information is accumulated and communicated to our management, including
the CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.
Internal Controls are procedures which are designed with the objective of providing
reasonable assurance that the Companys (1) transactions are properly authorized; (2)
assets are safeguarded against unauthorized or improper use; and (3) transactions are
properly recorded and reported, all to permit the preparation of our financial statements
in conformity with generally accepted accounting principles.Limitations of the Effectiveness of ControlsThe Companys management, including the CEO and CFO, does not expect that its Disclosure
Controls or its Internal Controls will prevent all error and all fraud. A control system,
no matter how well conceived and operated, can provide only reasonable, not absolute,
assurance that the objectives of the control system are met. Further, the design of a
control system must reflect the fact that there are resource constraints, and the benefits
of controls must be considered relative to their costs. Because of the inherent
limitations in all control systems, no evaluation of controls can provide absolute
assurance that all control issues and instances of fraud, if any, within the -12-




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Company have been detected. These inherent limitations include the realities that
judgments in decision-making can be faulty, and that breakdowns can occur because of simple
error or mistake. Additionally, controls can be circumvented by the individual acts of
some persons, by collusion of two or more people, or by management override of the control.
The design of any system of controls also is based in part upon certain assumptions about
the likelihood of future events, and there can be no assurance that any design will succeed
in achieving its stated goals under all potential future conditions; over time, control may
become inadequate because of changes in conditions, or the degree of compliance with the
policies or procedures may deteriorate. Because of the inherent limitations in a
cost-effective control system, misstatements due to error or fraud may occur and not be
detected.Scope of the Controls EvaluationThe CEO/CFO evaluation of the Companys Disclosure Controls and our Internal Controls
include a review of the controls objectives and design, the controls implementation by
the Company and the effect of the controls on the information generated for use in this
Annual Report. In the course of the Controls Evaluation, management sough to identify data
errors, controls problems or acts of fraud and to confirm that appropriate corrective
action, including process improvements, were being undertaken. This type of evaluation
will be done on a quarterly basis so that the conclusions concerning controls effectiveness
can be reported in the Companys Quarterly Reports on Form 10-QSB and Annual Report on Form
10-KSB. The Companys Internal Controls are also evaluated on an on-going basis by its
independent auditors in connection with their audit and review activities. The overall
goals of these various evaluation activities are to monitor our Disclosure Controls and our
Internal Controls and make modifications as necessary; our intent in this regard is that
the Disclosure Controls and the Internal Controls will be maintained as dynamic systems
that change (including the improvements and corrections) as conditions warrant.Among other matters, the Company sought in its evaluation to determine whether there were
any significant deficiencies or material weaknesses in the Companys Internal Controls,
or whether the Company had identified any acts of fraud involving personnel who have a
significant role in the Companys Internal Controls. This information was important both
for the Controls Evaluation generally and because items 5 and 6 in the Section 302
Certifications of the CEO and CFO require that the CEO and CFO disclose that information to
our Boards Audit Committee and to our independent auditors and to report on related
matters in this section of the Annual Report. In the professional auditing literature,
significant deficiencies are referred to as reportable conditions; these are control
issues that could have a significant adverse effect on the ability to record, process,
summarize and report financial data in the financial statements. A material weakness is
defined in the auditing literature as a particularly serious condition where the internal
control does not reduce to a relatively low level the risk that misstatements caused by
error or fraud may occur in amounts that would be material in relation to the financial
statements and may not be detected within a timely period by employees in the normal course
of performing their assigned functions. The Company also sought to deal with other
controls matters in the Controls Evaluation, and in each case if a problem was identified,
management considered what revision, improvement and/or correction to make in accord with
our on-going procedures.In accord with SEC requirements, the CEO and CFO note that, since the date of the Controls
Evaluation to the date of this Quarterly Report, there have been no significant changes in
Internal Controls or in other factors that could significantly affect Internal Controls,
including any corrective actions with regard to significant deficiencies and material
weaknesses. -13-




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##### Table of Contents



ConclusionsBased upon the Controls Evaluation, the Companys CEO and CFO have concluded that, subject
to the limitations noted above, its Disclosure Controls are effective to ensure that
material information relating to the Company is made known to management, including the CEO
and CFO, particularly during the period when its periodic reports are being prepared, and
that its Internal Controls are effective to provide reasonable assurance that the Companys
financial statements are fairly presented in conformity with generally accepted accounting
principles. 
 PART III 
 Item 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT  Directors are elected by shareholders at each annual shareholders meeting to hold office
until the next meeting of shareholders or until their respective successors are elected and
qualified.Richard L. Howell,age 70, is the President, Chief Executive Officer, and a Director of the
Company. From 1978 to 1995, Mr. Howell was the Personal Representative of the Estate of
Nelson R. Howard and Trustee of the Testamentary Trust created under the Will of Nelson R.
Howard. From 1995 to June 1, 2000, Mr. Howell was the Manager of Golconda Limited Company,
the successor to the Nelson Howard Trust. Mr. Howell serves as an officer, director,
and/or governor of a number of privately-owned land, timber, and junior resource companies.John W. Beasley,age 59, is the Secretary, Treasurer, and a Director of the Company. He
holds a Bachelor of Science degree in Agricultural Economics from the University of
California at Berkeley. From 1967 to 1975, Mr. Beasley was a professional athlete in the
National Football League. From 1976 to 1982, he held numerous management positions with
the Gulf Consolidated Services organization, including Vice President - Eastern Hemisphere
in London, England. From 1992 to the present, Mr. Beasley has been President and Manager of
J.W. Beasley Interests LLC. Mr. Beasley serves as an officer, director and/or governor of
a number of privately-owned of land, timber, and junior resource companies.Ed Pommerening,age 57, is a Director of the Company. He holds a Bachelor of Science
degree in Forestry from the University of Idaho. From 1974 to 1982, Mr. Pommerening was
the Forester for The Bunker Hill Company, and from 1982 to 1991 for the Bunker Limited
Partnership. From 1991 through 1993, Mr. Pommerening was the Forester for Pintlar Corp.
From 1993 to the present, Mr. Pommerening has been the President and Manager of Riverview
Timber Services LLC. Mr. Pommerening serves as an officer, director and/or governor for
several privately-owned timber and junior resource companies.Jack W. Kendrick,age 61, is a Director of the Company. He was the President and a
Director of the Company from 1980  1998. Mr. Kendrick holds a Bachelor of Science degree
in Accounting from the University of Montana. From 1977 to 1979, Mr. Kendrick was the
Chief Financial Officer, and from 1979 to 1982, the Chief Executive Officer of the Bunker
Hill Company. From 1982 to the present, Mr. Kendrick is the President and Chief Executive
Officer of BHP Properties Inc., the General Partner of Bunker Limited Partnership.David O. Baldwin,age 50, is a Director of the Company. He holds a Bachelor of Science
degree in Geology from the University of Montana, and a Masters degree in Hydrogeology
from Montana Tech of the University of Montana. Mr. Baldwin is a former exploration
geologist for Cominco American Incorporated, predecessor to Teck Cominco American
Incorporated. From 2000 to the present, Mr. Baldwin has been a Principal and Senior
Hydrologist for Water-Right Solutions Inc. -14-




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##### Table of Contents



Family RelationshipsThere are no family relationships among the Officers and Directors of the Company.Legal ProceedingsNo Director or Officer has been involved in any legal action involving the Company for the
past five years; is subject to a pending criminal proceeding; been, or is subject to any
order, judgment, or decree of any court of competent jurisdiction permanently or
temporarily enjoining, barring, suspending or limiting their involvement in any type of
business, securities or banking activities. None of the Officers and Directors of the
Company have violated any federal or state securities laws, or found by any court or the
Securities and Exchange Commission to have violated any such laws.Section16(a)Beneficial Ownership Reporting ComplianceBased solely upon a review of the requirements of Forms 3 and 4 and amendments thereto, and
Form 5 and amendments with respect to the most recent fiscal year, no person who at any
time during the fiscal year was a director, officer, or beneficial owner of more than ten
percent (10%) of any class of equity securities of the Company registered pursuant to
Section 12 of the Exchange Act, or any other person subject to Section 16 of the Exchange
Act with respect to the Company because of the requirements of Section 30 of the Investment
Company Act or Section 17 of the Public Utility Holding Company Act (A reporting person)
filed on a timely basis reports required by Section 16(a) of the Exchange Act during the
most recent fiscal year or prior years. These persons include: Richard L. Howell (Form 3,
one report, 0 transactions); John W. Beasley (Form 3, one report, 0 transactions); Ed
Pommerening (Form 3, one report, 0 transactions); Jack W. Kendrick (Form 3, one report, 0
transactions); David O. Baldwin (Form 3, one report, 0 transactions); Nelson Robert Howard
(Form 3, one report, 0 transactions); and Gene George (Form 3, one report, 0 transactions).Board CommitteeAt a Board of Directors meeting on July 23, 2004, the Directors approved an audit committee
comprised of Jack W. Kendrick and David O. Baldwin. Each member of the audit committee is
deemed to be an independent director as that term is defined in Rule 4200(a)(14) of the
NASDs listing standards. Mr. Kendrick is considered to be an audit committee financial
expert as the term is defined under applicable SEC rules. -15-




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##### Table of Contents



Item 10. EXECUTIVE COMPENSATION SUMMARY COMPENSATION TABLE Name
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other
    
    Restricted
    
    Securitiesand
    
    
    
    
    
    
    
    
    
    
    
    
    
    Annual
    
    Stock
    
    Underlying
    
    LTIP
    
    All OtherPrincipal
    
    
    
    
    
    Salary
    
    Bonus
    
    Comp
    
    Awards
    
    Options
    
    Payouts
    
    CompensationPosition
    
    Year
    
    ($)
    
    ($)
    
    ($)
    
    ($)
    
    (#)
    
    ($)
    
    ($)Richard
Howell,
President
and Director
    
    
    2002
2003
2004
    
    
    
    0
0
0
    
    
    
    0
0
0
    
    
    
    0
0
0
    
    
    
    0
0
0
    
    
    
    0
0
0
    
    
    
    0
0
0
    
    
    
    0
1,400
0John
Beasley,
Secretary
and Director
    
    
    2002
2003
2004
    
    
    
    0
0
0
    
    
    
    0
0
0
    
    
    
    0
0
0
    
    
    
    0
0
0
    
    
    
    0
0
0
    
    
    
    0
0
0
    
    
    
    0
1,400
0Ed
Pommerening
Director
    
    
    2002
2003
2004
    
    
    
    0
0
0
    
    
    
    0
0
0
    
    
    
    0
0
0
    
    
    
    0
0
0
    
    
    
    0
0
0
    
    
    
    0
0
0
    
    
    
    0
1,400Jack
Kendrick
    
    
    2004
    
    
    
    0
    
    
    
    0
    
    
    
    0

    
    
    
    0
    
    
    
    250,000
    
    
    
    0
    
    
    
    0David
Baldwin
    
    
    2004
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    250,000
    
    
    
    0
    
    
    
    0
 Option Grants Last Fiscal Year (a)
    
    (b)
    
    
    (c)
    
    
    (d)
    
    
    (e)Number of Securities
    
    
    % of Total Options
    
    
    Exercise orUnderlying Options
    
    
    Granted to Employees in Fiscal
    
    
    Base Price
    
    
    ExpirationName
    
    Granted
    
    
    Year
    
    
    ($/S)
    
    
    DateJack Kendrick
    
    
    250,000
    
    
    
    50
    %
    
    $
    .06
    
    
    
    11-16-09David Baldwin
    
    
    250,000
    
    
    
    50
    %
    
    $
    .06
    
    
    
    11-16-09
  Note:
    The Exercise Price, as specified in column d above is
subject to adjustment. In the event the Company issues or sells any common
stock for a per share consideration of less than the Exercise Price stated in
column d above, the Exercise Price shall be reduced to the price (calculated
to the nearest cent) determined by multiplying the Exercise Price in effect
immediately prior to the time of such issue or sale by a fraction (i) the
numerator of which shall be the sum of (x) the aggregate number of common shares outstanding immediately prior to such issue or sale plus (y) the
consideration received by the Company upon such issue or sale, and (ii) the
denominator of which shall be the product of (x) the aggregate number of
common shares outstanding immediately after the issue or sale, multiplied by
(y) the market price of the common shares immediately prior to such issue or
sale.No adjustment of the Exercise Price shall be made by reason of (i) the
issue, sale, or grant under any stock option plan or stock purchase plan of
the Company or under any individual arrangement or otherwise, to any
employee or director of the Company or any independent contractor, in
consideration of the rendering of services to the Company by such employee,
director, or independent contractor, of any common shares or rights to
subscribe for or to purchase, or options for the purchase of, common shares
or convertible securities or (ii) a change in the purchase price provided
for in any such right or option, in the additional consideration, if any,
payable upon the conversion or exchange of any such convertible securities,
or in the rate at which any such convertible securities are convertible or
exchangeable.  Aggregated Option Exercises and Fiscal Year-End Option Value Table  There were no options exercised during the most recent fiscal year. -16-




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The Company has no Long Term Incentive Plans. Directors of the Company receive
$175.00 for each regularly scheduled meeting of directors, and $350.00 for each specially
scheduled meeting, plus normal out-of-pocket expenses incurred to attend said meetings.
Except for the options granted to the Directors previously described, there are no other
arrangements to compensate directors. The Company has no employment contracts with its
executive officers, and no compensatory plan or arrangements with its executive officers in
the event of the resignation, retirement or any other termination of such executive
officers, nor does the Company have any arrangements with its executive officers in the
event of a charge in control of the Company. 
 Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets out the names and shareholdings of beneficial owners known to the
Company to own more than five percent (5%) of the common stock of the Company, each
director and officer of the Company, and the shareholdings of all directors and officers as
a group. (2)
    

(3)Name and
    
    Amount and
    
    
    
    
    
    (5)Address of
    
    Nature of
    
    
    
    
    
    
    Amount and (Percent)(1)
    
    Beneficial
    
    Beneficial
    

(4)
    
    
    of Class if All WarrantsTitle of Class
    
    Owner
    
    Owner
    
    Percent of Class
    
    
    are ExercisedCommon
    
    Nor-Pac Limited
Company
P.O. Box 387
Murray, ID 83874 (1)
    
    11,968,578
Direct Owner
    
    
    86.8
    %
    
    
    11,968,578
    
    
    
    (77.1
    %)Common
    
    Richard L. Howell
1 509 Hemlock
Lewiston, ID 83501
    
    2,992,145
Indirect Owner
    
    
    21.7
    %
    
    
    3,242,145
    
    
    
    (20.9
    %)Common
    
    Ed Pommerening
P.O. Box 369
Pinehurst, ID 83850
    
    2,992,145
Indirect Owner
    
    
    21.7
    %
    
    
    3,242,145
    
    
    
    (20.9
    %)Common
    
    John W. Beasley
P.O. Box 387
Murray, ID 83874
    
    1,496,072
Indirect Owner
    
    
    10.9
    %
    
    
    1,746,072
    
    
    
    (11.2
    %)Common
    
    Jack W. Kendrick
3910 E. 48th Ave.
Spokane, WA 99223
    
    0
    
    
    0
    
    
    
    250,000
    
    
    
    (1.6
    %)Common
    
    David O. Baldwin
81 Thunder Ridge
Clancy, MT 59634
    
    0
    
    
    0
    
    
    
    250,0
    
    
    
    (1.6
    %)Common
    
    Directors and
Executive Officers
as a group
    
    7,483,362
Indirect Owners
    
    
    54.3
    %
    
    
    8,730,363
    
    
    
    (56.2
    %)
  Note 1:
    Richard L. Howell is the Trustee of the R.L. and M.D. Howell Trust, owner of a
25% equity membership interest in Nor-Pac; Ed Pommerening is the owner of a 25% equity
membership interest in Nor-Pac; and John W. Beasley is the Manager of J.W. Beasley
Interests LLC, a member (as to 50%) of G.G.J.B. & K.G.P.B. Holdings Limited Company
(hereinafter GGJB). GGJB is the owner of a 25% equity membership interest in
Nor-Pac. By virtue of those entities interests in Nor-Pac, Messrs. Howell, Beasley
and Pommerening are considered as being indirect owners of the above shares.
There are no arrangements, written or oral, which may result in a change in control
of the Company. -17-




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##### Table of Contents



Item 12. CERTAIN RELATIONSHOPS AND RELATED TRANSACTIONS On January 10, 2004, the Company entered into an Agreement with Paymaster Resources
Incorporated (hereinafter Paymaster) to acquire Paymasters mineral lease on the Golden
Chest Mine, near Murray, Idaho (the Golden Chest Lease), and Paymasters exploration
agreement with New Jersey Mining Company (the New Jersey Exploration Agreement). The
Paymaster shareholders approved the Agreement at a special meeting on February 23, 2004.
The Company issued Paymaster 466,954 shares of its authorized, but unissued common stock.
In the event the properties subject to the Golden Chest Lease commence commercial
production during the tenure of the New Jersey Exploration Agreement, or any lease as a
result thereof, the Company will pay Paymaster an additional 1,000,000 shares of its
authorized, but unissued, common stock. Paymaster is considered a related party due to common directors. Because of their interests in Paymaster, Richard L. Howell, John W. Beasley and Ed
Pommerening may be deemed to have an indirect material interest in the transaction. Nor-Pac Limited Company, an Idaho limited liability company, owns 11,968,578 shares of the
Company representing 86.8% of its outstanding shares. The Company has not transacted any business with promoters, nor have any of its assets been or are
to be acquired from promoters. 
 Item 13. EXHIBITS AND REPORTS ON FORM 8-K  (a)
    Exhibits required by Item 601 of Regulation S-B: Exhibit No.
    
    Description31.1
    
    Certification Pursuant to Section 302 of the Saranes-Oxley Act of 2002.31.2
    
    Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 Omitted Exhibits are incorporated by reference to the Companys Registration
Statement on Form 10-SB; SEC File No. 0-31025.  (b)
    A Form 8-K was filed on November 5, 2004, announcing the appointment of 2 new
directors, Jack W. Kendrick and David O. Baldwin, and the Companys reacquisition of
748,065 of its outstanding shares. -18-




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##### Table of Contents



Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES Audit Fees The aggregate fees billed for professional services rendered by the Companys principal
accountant for the audit of the Companys annual financial statements for the fiscal years
ended December 31, 2004 and 2003, and the review for the financial statements included in
the Companys quarterly reports on Form 10-QSB during those fiscal years, were $15,000 and
$15,143 respectively. Audit Related Fees The Company incurred no fees during the last two fiscal years for assurance and related
services by the Companys principal accountant that were reasonably related to the
performance of the audit or review of the Companys financial statements, and not reported
under Audit Fees above. Tax Fees The aggregate fees billed for professional services rendered by the Companys principal
accountant for tax compliance, tax advice, and tax planning for the fiscal years ended
December 31, 2004 and 2003 were $607.50 and $575.75 respectively. All Other Fees The Company incurred no other fees during the last two fiscal years for products and
services rendered by the Companys principal accountant. 
 SIGNATURE In accordance with Section 13 or 15(d) of the Exchange Act, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized. METALINE CONTACT
MINESBy:
    
    /s/ Richard L. Howell
    
    
    
    Date: 3/24/05Richard L. Howell, President(Principal Executive Officer)By:
    
    /s/ John W. Beasley
    
    
    
    Date: 3/24/05John W. Beasley, Secretary/Treasurer(Principal Financial Officer)
 -19-




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##### Table of Contents



In accordance with the Exchange Act, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates indicated. By:
    
    /s/ Richard L. Howell
    
    
    
    Date: 3/24/05Richard L. HowellDirectorBy:
    
    /s/ John W. Beasley
    
    
    
    Date: 3/24/05John W. BeasleyDirectorBy:
    
    /s/ Ed Pommerening
    
    
    
    Date: 3/24/05Ed PommereningDirectorBy:
    
    /s/ Jack W. Kendrick
    
    
    
    Date: 3/24/05Jack W. KendrickDirectorBy:
    
    /s/ David O. Baldwin
    
    
    
    Date: 3/24/05David O. BaldwinDirector
 -20-