**FORM
      10-QSB**





**[X]
      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF**


**THE
      SECURITIES EXCHANGE ACT OF 1934**


For
      the
      quarterly period ended April 30, 2007





**[  
      ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF**


**THE
      SECURITIES EXCHANGE ACT**


For
      the
      transition period from _____________ to _____________





Commission
      file number: 000-27667


**Metalline
      Mining Company**


(Exact
      name of small business issuer as specified in its charter)





Nevada
              91-1766677(State
                  or other jurisdiction
                of
                  incorporation or
                  organization)
              (IRS
                  Employer Identification
                  No.)


1330
      E.
      Margaret Ave.


Coeur
      d'Alene, ID 83815


(Address
      of principal executive offices)





Issuer's
      telephone number, including area code: (208) 665-2002








Check
      whether the issuer (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Securities Exchange Act of 1934 during the 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.
      Yes x  No
o





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





There
      were 37,053,733 shares of the issuer's common stock, par value $0.01,
      outstanding as of June 12, 2007.





Transitional
      Small Business Disclosure Format (Check one): Yes o No x










**METALLINE
      MINING COMPANY**


**QUARTERLY
      REPORTON FORM 10-QSB**


**FOR
      THE QUARTERLY PERIOD ENDED APRIL 30, 2007**





**INDEX
      TO CONSOLIDATED FINANCIAL STATEMENTS**





**PAGE**Consolidated
                  Financial Statements:Consolidated
                  Balance Sheets as of April 30, 2007 and October 31, 2006
              F-2Consolidated
                  Statements of Operations for the six-month periods ended April
                  30, 2007
                  and April 30, 2006 and for the period from inception (November
                  8, 1993) to
                  April 30, 2007
              F-3Consolidated
                  Statements of Cash Flow for the six-month periods ended April 30,
                  2007 and
                  April 30, 2006, and for the period from inception (November 8,
                  1993) to
                  April 30, 2007
              F-4Condensed
                  Notes to Consolidated Financial Statements
              F-9




F-1


**METALLINE
        MINING COMPANY**
 **(AN
        EXPLORATION STAGE COMPANY)**
 **CONSOLIDATED
        BALANCE SHEETS**
 
 April
                  30,
              
              October
                  31,2007
              
              2006ASSETS
              
              (Unaudited)CURRENT
                  ASSETSCash
                  and cash equivalents
              
              $
              6,844,346
              
              $
              689,994Marketable
                  securities
              
              
              2,500,000
              
              
              5,925,000Accounts
                  receivable
              
              
              32,640
              
              
              35,934Tax
                  refunds receivable
              
              
              501,032
              
              
              -Other
                  receivables
              
              
              29,343
              
              
              -Employee
                  advances
              
              
              1,903
              
              
              -Prepaid
                  expenses
              
              
              29,855
              
              
              14,288Total
                  Current Assets
              
              
              9,939,119
              
              
              6,665,216PROPERTY
                  CONCESSIONSSierra
                  Mojada, Mojada 3
              
              
              15,875
              
              
              15,875Fortuna
              
              
              76,725
              
              
              76,725Esmeralda
              
              
              255,647
              
              
              255,647Esmeralda
                  I
              
              
              180,988
              
              
              180,988U.M.
                  Nortenos, Vulcano
              
              
              3,682,772
              
              
              3,682,772La
                  Blanca
              
              
              122,760
              
              
              122,760Total
                  Property Concessions
              
              
              4,334,767
              
              
              4,334,767EQUIPMENTOffice
                  and mining equipment, net
              
              
              592,533
              
              
              611,966Total
                  Equipment
              
              
              592,533
              
              
              611,966TOTAL
                  ASSETS
              
              $
              14,866,419
              
              $
              11,611,949LIABILITIES
                  AND STOCKHOLDERS' EQUITYCURRENT
                  LIABILITIESAccounts
                  payable
              
              $
              100,096
              
              $
              238,198Accounts
                  payable - related parties
              
              
              55,800
              
              
              125,460Accrued
                  liabilities and expenses
              
              
              82,854
              
              
              116,162Other
                  liabilities
              
              
              10,000
              
              
              10,000Total
                  Current Liabilities
              
              
              248,750
              
              
              489,820LONG-TERM
                  LIABILITIES
              
              
              -
              
              
              -COMMITMENTS
                  AND CONTINGENCIES
              
              
              -
              
              
              -STOCKHOLDERS'
                  EQUITYCommon
                  stock, $0.01 par value; 160,000,000 shares authorized,
                36,885,733
                  and 34,207,912 shares issued and outstanding, respectively
              
              
              368,857
              
              
              342,079Additional
                  paid-in capital
              
              
              45,607,786
              
              
              38,594,886Deficit
                  accumulated during exploration stage
              
              
              (31,358,974
              )
              
              (27,814,836
              )Total
                  Stockholders' Equity
              
              
              14,617,669
              
              
              11,122,129TOTAL
                  LIABILITIES AND STOCKHOLDERS' EQUITY
              
              $
              14,866,419
              
              $
              11,611,949


The
      accompanying notes are an integral part of these
      consolidated financial statements.




F-2


**METALLINE
        MINING COMPANY**
 **(AN
        EXPLORATION STAGE COMPANY)**
 **CONSOLIDATED
        STATEMENTS OF OPERATIONS**
 
 November
                  8,1993(Inception)Three
                  Months Ended
              
              Six
                  Months Ended
              
              toApril
                  30,
              
              April
                  30,
              
              April
                  30,
              
              April
                  30,
              
              April
                  30,2007
              
              2006
              
              2007
              
              2006
              
              2007(Unaudited)
              
              (Unaudited)
              
              (Unaudited)
              
              (Unaudited)
              
              (Unaudited)REVENUES
              
              $
              -
              
              $
              -
              
              
              -
              
              $
              -
              
              $
              -GENERAL
                  AND ADMINISTRATIVE EXPENSESSalaries
                  and payroll expenses
              
              
              168,614
              
              
              707,418
              
              
              332,012
              
              
              838,114
              
              
              9,128,375Office
                  and administrative expenses
              
              
              88,640
              
              
              114,610
              
              
              420,447
              
              
              165,483
              
              
              1,824,674Taxes
                  and fees
              
              
              122,342
              
              
              54,136
              
              
              123,487
              
              
              173,678
              
              
              920,847Professional
                  services
              
              
              303,777
              
              
              505,538
              
              
              1,656,722
              
              
              611,889
              
              
              7,041,604Directors
                  fees
              
              
              70,800
              
              
              
              
              
              148,800
              
              
              -
              
              
              1,984,964Property
                  expenses
              
              
              -
              
              
              135,492
              
              
              15,318
              
              
              145,427
              
              
              2,073,383Depreciation
              
              
              3,785
              
              
              20,843
              
              
              7,570
              
              
              41,443
              
              
              438,785Exploration
                  and research
              
              
              621,391
              
              
              53,710
              
              
              978,209
              
              
              71,862
              
              
              8,391,073TOTAL
                  GENERAL AND ADMINISTRATIVE EXPENSES
              
              
              1,379,349
              
              
              1,591,747
              
              
              3,682,565
              
              
              2,047,896
              
              
              31,803,705LOSS
                  FROM OPERATIONS
              
              
              (1,379,349
              )
              
              (1,591,747
              )
              
              (3,682,565
              )
              
              (2,047,896
              )
              
              (31,803,705
              )OTHER
                  INCOME (EXPENSES)Miscellaneous
                  ore sales, net of expenses
              
              
              -
              
              
              -
              
              
              -
              
              
              (41,537
              )
              
              134,242VAT
                  tax refunds
              
              
              -
              
              
              -
              
              
              -
              
              
              13,045
              
              
              132,660Miscellaneous
                  income
              
              
              2,718
              
              
              61,500
              
              
              2,814
              
              
              61,500
              
              
              (11,670
              )Interest
                  and investment income
              
              
              67,148
              
              
              (3,292
              )
              
              137,781
              
              
              14,434
              
              
              387,952Interest
                  and financing expense
              
              
              (830
              )
              
              (520
              )
              
              (2,167
              )
              
              (855
              )
              
              (292,453
              )Rental
                  income
              
              
              -
              
              
              -
              
              
              -
              
              
              
              
              
              94,000TOTAL
                  OTHER INCOME
              
              
              69,036
              
              
              57,688
              
              
              138,428
              
              
              46,587
              
              
              444,731LOSS
                  BEFORE INCOME TAXES
              
              
              (1,310,313
              )
              
              (1,534,059
              )
              
              (3,544,137
              )
              
              (2,001,309
              )
              
              (31,358,974
              )INCOME
                  TAXES
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -NET
                  LOSS
              
              $
              (1,310,313
              )
              $
              (1,534,059
              )
              
              (3,544,137
              )
              $
              (2,001,309
              )
              
              (31,358,974
              )BASIC
                  AND DILUTED NET LOSS PER
                COMMON
                  SHARE
              
              $
              (0.04
              )
              $
              (0.05
              )
              
              (0.10
              )
              $
              (0.07
              )BASIC
                  AND DILUTEDWEIGHTED
                  AVERAGE NUMBEROF
                  COMMON SHARES OUTSTANDING
              
              
              35,650,954
              
              
              32,770,130
              
              
              34,915,983
              
              
              27,209,376
 The
          accompanying notes are an integral part of these
          consolidated financial statements.
  F-3
 **METALLINE
              MINING COMPANY**
 **(AN
              EXPLORATION STAGE COMPANY)**
 **CONSOLIDATED
              STATEMENTS OF CASH FLOWS**
 
  Period
                          fromNovember
                          8, 1993(Inception)Six
                          Months Ended
                      
                      toApril
                          30
                      
                      April
                          30
                      
                      April
                          302007
                      
                      2006
                      
                      2007(Unaudited)
                      
                      (Unaudited)
                      
                      (Unaudited)CASH
                          FLOWS FROM OPERATING ACTIVITIES:Net
                          loss
                      
                      $
                      (3,544,137
                      )
                      $
                      (2,001,309
                      )
                      $
                      (31,358,973
                      )Adjustments
                          to reconcile net loss to net cash used by operating
                          activities:Depreciation
                      
                      
                      44,277
                      
                      
                      41,443
                      
                      
                      475,522Noncash
                          expenses
                      
                      
                      
                      
                      
                      -
                      
                      
                      126,864Common
                          stock issued for services
                      
                      
                      -
                      
                      
                      -
                      
                      
                      1,025,487Common
                          stock issued for compensation
                      
                      
                      -
                      
                      
                      668,715
                      
                      
                      977,106Options
                          issued for compensation
                      
                      
                      -
                      
                      
                      -
                      
                      
                      4,360,000Common
                          stock issued for directors fees.
                      
                      
                      188,460
                      
                      
                      
                      
                      
                      188,460Options
                          and warrants issued for directors fees
                      
                      
                      -
                      
                      
                      
                      
                      
                      1,665,705Stock
                          options issued for services
                      
                      
                      -
                      
                      
                      -
                      
                      
                      849,892Stock
                          options issued for financing fees
                      
                      
                      -
                      
                      
                      -
                      
                      
                      276,000Common
                          stock issued for payment of expenses
                      
                      
                      -
                      
                      
                      -
                      
                      
                      326,527Stock
                          warrants issued for services
                      
                      
                      1,094,950
                      
                      
                      -
                      
                      
                      1,783,721(Increase)
                          decrease in:Accounts
                          receivable
                      
                      
                      3,294
                      
                      
                      (1,673
                      )
                      
                      (32,640
                      )Tax
                          refunds receivable
                      
                      
                      (501,032
                      )
                      
                      
                      
                      
                      (501,032
                      )Other
                          receivables
                      
                      
                      (29,343
                      )
                      
                      
                      
                      
                      (29,343
                      )Prepaid
                          expenses
                      
                      
                      (15,567
                      )
                      
                      (24,857
                      )
                      
                      (29,855
                      )Employee
                          advances
                      
                      
                      (1,903
                      )
                      
                      (6,791
                      )
                      
                      (1,903
                      )Increase
                          (decrease) in:Related
                          party payable
                      
                      
                      (69,660
                      )
                      
                      -
                      
                      
                      55,800Accounts
                          payable
                      
                      
                      (138,102
                      )
                      
                      25,947
                      
                      
                      100,096Accrued
                          liabilities and expenses
                      
                      
                      (33,308
                      )
                      
                      (22,199
                      )
                      
                      92,854Net
                          cash used by operating activities
                      
                      
                      (3,002,071
                      )
                      
                      (1,320,724
                      )
                      
                      (19,649,712
                      )CASH
                          FLOWS FROM INVESTING ACTIVITIES:Marketable
                          securities
                      
                      
                      3,425,000
                      
                      
                      -
                      
                      
                      (2,500,000
                      )Purchase
                          of investments
                      
                      
                      -
                      
                      
                      -
                      
                      
                      (484,447
                      )Proceeds
                          from investments
                      
                      
                      -
                      
                      
                      -
                      
                      
                      484,447Equipment
                          purchases
                      
                      
                      (24,845
                      )
                      
                      (2,424
                      )
                      
                      (1,012,250
                      )Mining
                          property acquisitions
                      
                      
                      -
                      
                      
                      -
                      
                      
                      (4,452,631
                      )Net
                          cash used by investing activities
                      
                      
                      3,400,155
                      
                      
                      (2,424
                      )
                      
                      (7,964,881
                      )CASH
                          FLOWS FROM FINANCING ACTIVITIES:Proceeds
                          from sales of common stock
                      
                      
                      5,671,893
                      
                      
                      10,758,737
                      
                      
                      33,253,707Proceeds
                          from sales of options and warrants
                      
                      
                      84,375
                      
                      
                      -
                      
                      
                      1,065,515Deposits
                          for sale of stock
                      
                      
                      -
                      
                      
                      -
                      
                      
                      125,500Proceeds
                          from shareholder loans
                      
                      
                      -
                      
                      
                      -
                      
                      
                      30,000Payment
                          of note payable
                      
                      
                      -
                      
                      
                      (2,105
                      )
                      
                      (15,783
                      )Net
                          cash provided by financing activities:
                      
                      
                      5,756,268
                      
                      
                      10,756,632
                      
                      
                      34,458,939Net
                          increase (decrease) in cash and cash equivalents
                      
                      
                      6,154,352
                      
                      
                      9,433,484
                      
                      
                      6,844,346Cash
                          and cash equivalents beginning of period
                      
                      
                      689,994
                      
                      
                      213,369
                      
                      
                      -Cash
                          and cash equivalents end of period
                      
                      $
                      6,844,346
                      
                      $
                      9,646,853
                      
                      $
                      6,844,346SUPPLEMENTAL
                          CASH FLOW DISCLOSURES:Income
                          taxes paid
                      
                      $
                      -
                      
                      $
                      -
                      
                      $
                      -Interest
                          paid
                      
                      $
                      2,167
                      
                      $
                      855
                      
                      $
                      288,938NON-CASH
                          INVESTING AND FINANCING ACTIVITIES:Common
                          stock issued for equipment
                      
                      $
                      -
                      
                      $
                      -
                      
                      $
                      25,000Common
                          stock options issued for financing fees
                      
                      $
                      -
                      
                      $
                      -
                      
                      $
                      276,000Common
                          stock options issued for non-cash
                          options
                      
                      $
                      59,220
                      
                      $
                      -
                      
                      $
                      59,220
 The
                accompanying notes are an integral part of these
                consolidated financial statements.
  F-4
 **METALLINE
                    MINING COMPANY**
 **(AN
                    EXPLORATION STAGE COMPANY)**
 **CONSOLIDATED
                    STATEMENT OF STOCKHOLDERS' EQUITY**
 
 AccumulatedCommon
                              Stock
                          
                          Additional
                          
                          Stock
                          
                          Stock
                          
                          Deficit
                              DuringNumber
                              of
                          
                          
                          
                          Paid-in
                          
                          Subscriptions
                          
                          Options
                              and
                          
                          ExplorationShares
                          
                          Amount
                          
                          Capital
                          
                          Receivable
                          
                          Warrants
                          
                          Stage
                          
                          TotalCommon
                              stock issuance prior to inception (no value)
                          
                          
                          960,800
                          
                          $
                          9,608
                          
                          $
                          (9,608
                          )
                          $
                          -
                          
                          $
                          -
                          
                          $
                          -
                          
                          $
                          -1:5
                              reverse common stock split
                          
                          
                          (768,640
                          )
                          
                          (7,686
                          )
                          
                          7,686
                          
                          
                          -
                          
                          
                          -
                          
                          
                          -
                          
                          
                          -Net
                              loss for the year ended October 31, 1994
                          
                          
                          -
                          
                          
                          -
                          
                          
                          -
                          
                          
                          -
                          
                          
                          -
                          
                          
                          (8,831
                          )
                          
                          (8,831
                          )Balances,
                              October 31, 1994
                          
                          
                          192,160
                          
                          
                          1,922
                          
                          
                          (1,922
                          )
                          
                          -
                          
                          
                          -
                          
                          
                          (8,831
                          )
                          
                          (8,831
                          )3:1
                              common stock split
                          
                          
                          384,320
                          
                          
                          3,843
                          
                          
                          (3,843
                          )
                          
                          -
                          
                          
                          -
                          
                          
                          -
                          
                          
                          -Net
                              loss for the year ended October 31, 1995
                          
                          
                          -
                          
                          
                          -
                          
                          
                          -
                          
                          
                          -
                          
                          
                          -
                          
                          
                          (7,761
                          )
                          
                          (7,761
                          )Balances,
                              October 31, 1995
                          
                          
                          576,480
                          
                          
                          5,765
                          
                          
                          (5,765
                          )
                          
                          -
                          
                          
                          -
                          
                          
                          (16,592
                          )
                          
                          (16,592
                          )Issuances
                              of common stock as follows:-
                              for par value at transfer of ownership
                          
                          
                          2,000
                          
                          
                          20
                          
                          
                          -
                          
                          
                          -
                          
                          
                          -
                          
                          
                          -
                          
                          
                          20-
                              for cash at an average of $0.11 per share
                          
                          
                          1,320,859
                          
                          
                          13,209
                          
                          
                          133,150
                          
                          
                          -
                          
                          
                          -
                          
                          
                          -
                          
                          
                          146,359-
                              for services at an average of $0.08 per share
                          
                          
                          185,000
                          
                          
                          1,850
                          
                          
                          12,600
                          
                          
                          -
                          
                          
                          -
                          
                          
                          -
                          
                          
                          14,450-
                              for computer equipment at $0.01 per share
                          
                          
                          150,000
                          
                          
                          1,500
                          
                          
                          13,500
                          
                          
                          -
                          
                          
                          -
                          
                          
                          -
                          
                          
                          15,000-
                              for mineral property at $0.01 per share
                          
                          
                          900,000
                          
                          
                          9,000
                          
                          
                          -
                          
                          
                          -
                          
                          
                          -
                          
                          
                          -
                          
                          
                          9,000Net
                              loss for the year ended October 31, 1996
                          
                          
                          -
                          
                          
                          -
                          
                          
                          -
                          
                          
                          -
                          
                          
                          -
                          
                          
                          (40,670
                          )
                          
                          (40,670
                          )Balances,
                              October 31, 1996
                          
                          
                          3,134,339
                          
                          
                          31,344
                          
                          
                          153,485
                          
                          
                          -
                          
                          
                          -
                          
                          
                          (57,262
                          )
                          
                          127,567Issuances
                              of common stock as follows:-
                              for cash at an average of $0.61 per share
                          
                          
                          926,600
                          
                          
                          9,266
                          
                          
                          594,794
                          
                          
                          -
                          
                          
                          -
                          
                          
                          -
                          
                          
                          604,060-
                              for services at an average of $0.74 per share
                          
                          
                          291,300
                          
                          
                          2,913
                          
                          
                          159,545
                          
                          
                          -
                          
                          
                          -
                          
                          
                          -
                          
                          
                          162,458-
                              for payment of a loan at $0.32 per share
                          
                          
                          100,200
                          
                          
                          1,002
                          
                          
                          30,528
                          
                          
                          -
                          
                          
                          -
                          
                          
                          -
                          
                          
                          31,530Options
                              issued as follows:-
                              300,000 options for cash
                          
                          
                          -
                          
                          
                          -
                          
                          
                          3,000
                          
                          
                          -
                          
                          
                          -
                          
                          
                          -
                          
                          
                          3,000Net
                              loss for the year ended October 31, 1997
                          
                          
                          -
                          
                          
                          -
                          
                          
                          -
                          
                          
                          -
                          
                          
                          -
                          
                          
                          (582,919
                          )
                          
                          (582,919
                          )Balances,
                              October 31, 1997
                          
                          
                          4,452,439
                          
                          
                          44,525
                          
                          
                          941,352
                          
                          
                          -
                          
                          
                          -
                          
                          
                          (640,181
                          )
                          
                          345,696Issuances
                              of common stock as follows:-
                              for cash at an average of $1.00 per share
                          
                          
                          843,500
                          
                          
                          8,435
                          
                          
                          832,010
                          
                          
                          -
                          
                          
                          -
                          
                          
                          -
                          
                          
                          840,445-
                              for cash and receivables at $1.00 per share
                          
                          
                          555,000
                          
                          
                          5,550
                          
                          
                          519,450
                          
                          
                          (300,000
                          )
                          
                          -
                          
                          
                          -
                          
                          
                          225,000-
                              for services at an average of $0.53 per share
                          
                          
                          41,800
                          
                          
                          418
                          
                          
                          21,882
                          
                          
                          -
                          
                          
                          -
                          
                          
                          -
                          
                          
                          22,300-
                              for mine data base at $1.63 per share
                          
                          
                          200,000
                          
                          
                          2,000
                          
                          
                          323,000
                          
                          
                          -
                          
                          
                          -
                          
                          
                          -
                          
                          
                          325,000Options
                              issued or granted as follows:-
                              1,200,000 options for cash
                          
                          
                          -
                          
                          
                          -
                          
                          
                          120,000
                          
                          
                          -
                          
                          
                          -
                          
                          
                          -
                          
                          
                          120,000-
                              for financing fees
                          
                          
                          -
                          
                          
                          -
                          
                          
                          -
                          
                          
                          -
                          
                          
                          60,000
                          
                          
                          -
                          
                          
                          60,000-
                              for consulting fees
                          
                          
                          -
                          
                          
                          -
                          
                          
                          -
                          
                          
                          -
                          
                          
                          117,000
                          
                          
                          -
                          
                          
                          117,000Warrants
                              issued for services
                          
                          
                          -
                          
                          
                          -
                          
                          
                          -
                          
                          
                          -
                          
                          
                          488,980
                          
                          
                          (488,980
                          )
                          
                          -Net
                              loss for the year ended October 31, 1998
                          
                          
                          -
                          
                          
                          -
                          
                          
                          -
                          
                          
                          -
                          
                          
                          -
                          
                          
                          (906,036
                          )
                          
                          (906,036
                          )Balance,
                              October 31, 1998
                          
                          
                          6,092,739
                          
                          $
                          60,928
                          
                          $
                          2,757,694
                          
                          $
                          (300,000
                          )
                          $
                          665,980
                          
                          $
                          (2,035,197
                          )
                          $
                          1,149,405
 The
                      accompanying notes are an integral part of these
                      consolidated financial statements.
  F-5
 **METALLINE
                          MINING COMPANY**
 **(AN
                          EXPLORATION STAGE COMPANY)**
 **CONSOLIDATED
                          STATEMENT OF STOCKHOLDERS' EQUITY (CONTINUED)**
 
 AccumulatedCommon
                                    Stock
                                
                                Additional
                                
                                Stock
                                
                                Stock
                                
                                Deficit
                                    DuringNumber
                                    of
                                
                                
                                
                                Paid-in
                                
                                Subscriptions
                                
                                Options
                                    and
                                
                                ExplorationShares
                                
                                Amount
                                
                                Capital
                                
                                Receivable
                                
                                Warrants
                                
                                Stage
                                
                                TotalBalance,
                                    October 31, 1998
                                
                                
                                6,092,739
                                
                                $
                                60,928
                                
                                $
                                2,757,694
                                
                                $
                                (300,000
                                )
                                $
                                665,980
                                
                                $
                                (2,035,197
                                )
                                $
                                1,149,405Issuances
                                    of common stock as follows:-
                                    for cash at an average of $1.04 per share
                                
                                
                                818,800
                                
                                
                                8,188
                                
                                
                                842,712
                                
                                
                                -
                                
                                
                                -
                                
                                
                                -
                                
                                
                                850,900-
                                    for drilling fees at $0.90 per share
                                
                                
                                55,556
                                
                                
                                556
                                
                                
                                49,444
                                
                                
                                -
                                
                                
                                -
                                
                                
                                -
                                
                                
                                50,000Stock
                                    option and warrant activity as follows:-
                                    exercise of options at $0.90 per share
                                
                                
                                250,000
                                
                                
                                2,500
                                
                                
                                267,500
                                
                                
                                -
                                
                                
                                (45,000
                                )
                                
                                -
                                
                                
                                225,000-
                                    issuance of options for financing fees
                                
                                
                                -
                                
                                
                                -
                                
                                
                                -
                                
                                
                                -
                                
                                
                                216,000
                                
                                
                                -
                                
                                
                                216,000-
                                    expiration of options
                                
                                
                                -
                                
                                
                                -
                                
                                
                                60,000
                                
                                
                                -
                                
                                
                                (60,000
                                )
                                
                                -
                                
                                
                                -Stock
                                    subscription received
                                
                                
                                -
                                
                                
                                -
                                
                                
                                -
                                
                                
                                300,000
                                
                                
                                -
                                
                                
                                -
                                
                                
                                300,000Net
                                    loss for the year ended October 31, 1999
                                
                                
                                -
                                
                                
                                -
                                
                                
                                -
                                
                                
                                -
                                
                                
                                -
                                
                                
                                (1,423,045
                                )
                                
                                (1,423,045
                                )Balance,
                                    October 31, 1999
                                
                                
                                7,217,095
                                
                                
                                72,172
                                
                                
                                3,977,350
                                
                                
                                -
                                
                                
                                776,980
                                
                                
                                (3,458,242
                                )
                                
                                1,368,260Stock
                                    option and warrant activity as follows:Exercise
                                    of options at $0.86 per share
                                
                                
                                950,000
                                
                                
                                9,500
                                
                                
                                1,090,750
                                
                                
                                -
                                
                                
                                (288,000
                                )
                                
                                -
                                
                                
                                812,250Warrants
                                    issued for services
                                
                                
                                -
                                
                                
                                -
                                
                                
                                -
                                
                                
                                -
                                
                                
                                55,000
                                
                                
                                -
                                
                                
                                55,000Issuances
                                    of common stock as follows:-
                                    for cash at an average of $2.77 per share
                                
                                
                                1,440,500
                                
                                
                                14,405
                                
                                
                                3,972,220
                                
                                
                                -
                                
                                
                                -
                                
                                
                                -
                                
                                
                                3,986,625-
                                    for services at $1.28 per share
                                
                                
                                120,000
                                
                                
                                1,200
                                
                                
                                152,160
                                
                                
                                -
                                
                                
                                -
                                
                                
                                -
                                
                                
                                153,360-
                                    for equipment at $1.67 per share
                                
                                
                                15,000
                                
                                
                                150
                                
                                
                                24,850
                                
                                
                                -
                                
                                
                                -
                                
                                
                                -
                                
                                
                                25,000Net
                                    loss for the year ended October 31, 2000
                                
                                
                                -
                                
                                
                                -
                                
                                
                                -
                                
                                
                                -
                                
                                
                                -
                                
                                
                                (882,208
                                )
                                
                                (882,208
                                )Balances,
                                    October 31, 2000
                                
                                
                                9,742,595
                                
                                
                                97,427
                                
                                
                                9,217,330
                                
                                
                                -
                                
                                
                                543,980
                                
                                
                                (4,340,450
                                )
                                
                                5,518,287Stock
                                    option and warrant activity as follows:-
                                    Warrants exercised at $0.75 per share
                                
                                
                                20,000
                                
                                
                                200
                                
                                
                                25,560
                                
                                
                                -
                                
                                
                                (10,760
                                )
                                
                                -
                                
                                
                                15,000-
                                    Options issued for consulting fees
                                
                                
                                -
                                
                                
                                -
                                
                                
                                -
                                
                                
                                -
                                
                                
                                740,892
                                
                                
                                -
                                
                                
                                740,892-
                                    Warrants issued for consulting fees
                                
                                
                                -
                                
                                
                                -
                                
                                
                                -
                                
                                
                                -
                                
                                
                                144,791
                                
                                
                                -
                                
                                
                                144,791Issuances
                                    of common stock as follows:-
                                    for cash at $2.00 per share
                                
                                
                                250,000
                                
                                
                                2,500
                                
                                
                                494,076
                                
                                
                                -
                                
                                
                                3,424
                                
                                
                                -
                                
                                
                                500,000-
                                    for cash of $210 and services at $2.07 per share
                                
                                
                                21,000
                                
                                
                                210
                                
                                
                                43,260
                                
                                
                                -
                                
                                
                                -
                                
                                
                                -
                                
                                
                                43,470-
                                    for cash of $180 and services at $2.05 per share
                                
                                
                                18,000
                                
                                
                                180
                                
                                
                                36,720
                                
                                
                                -
                                
                                
                                -
                                
                                
                                -
                                
                                
                                36,900-
                                    for services at $2.45 per share
                                
                                
                                6,000
                                
                                
                                60
                                
                                
                                14,640
                                
                                
                                -
                                
                                
                                -
                                
                                
                                -
                                
                                
                                14,700-
                                    for services at $1.50 per share
                                
                                
                                12,000
                                
                                
                                120
                                
                                
                                17,880
                                
                                
                                -
                                
                                
                                -
                                
                                
                                -
                                
                                
                                18,000Net
                                    loss for the year ended October 31, 2001
                                
                                
                                -
                                
                                
                                -
                                
                                
                                -
                                
                                
                                -
                                
                                
                                -
                                
                                
                                (2,069,390
                                )
                                
                                (2,069,390
                                )Balance,
                                    October 31, 2001
                                
                                
                                10,069,595
                                
                                
                                100,697
                                
                                
                                9,849,466
                                
                                
                                -
                                
                                
                                1,422,327
                                
                                
                                (6,409,840
                                )
                                
                                4,962,650Issuances
                                    of common stock as follows:-
                                    for cash at $2.00 per share
                                
                                
                                50,000
                                
                                
                                500
                                
                                
                                99,500
                                
                                
                                -
                                
                                
                                -
                                
                                
                                -
                                
                                
                                100,000-
                                    for cash and warrants at $1.50 per share
                                
                                
                                96,000
                                
                                
                                960
                                
                                
                                134,400
                                
                                
                                -
                                
                                
                                8,640
                                
                                
                                -
                                
                                
                                144,000-
                                    for cash and warrants at $1.50 per share
                                
                                
                                66,667
                                
                                
                                667
                                
                                
                                93,333
                                
                                
                                -
                                
                                
                                6,000
                                
                                
                                -
                                
                                
                                100,000-
                                    for compensation at an average of $1.23 per share
                                
                                
                                86,078
                                
                                
                                861
                                
                                
                                104,014
                                
                                
                                -
                                
                                
                                -
                                
                                
                                -
                                
                                
                                104,875Stock
                                    option activity as follows:-
                                    for compensation at $0.61 per share
                                
                                
                                -
                                
                                
                                -
                                
                                
                                -
                                
                                
                                -
                                
                                
                                61,000
                                
                                
                                -
                                
                                
                                61,000Net
                                    loss for the year ended October 31, 2002
                                
                                
                                -
                                
                                
                                -
                                
                                
                                -
                                
                                
                                -
                                
                                
                                -
                                
                                
                                (765,765
                                )
                                
                                (765,765
                                )Balance,
                                    October 31, 2002
                                
                                
                                10,368,340
                                
                                $
                                103,685
                                
                                $
                                10,280,713
                                
                                $
                                -
                                
                                $
                                1,497,967
                                
                                $
                                (7,175,605
                                )
                                $
                                4,706,760
 The
                            accompanying notes are an integral part of these
                            consolidated financial statements.
  F-6
 **METALLINE
                                MINING COMPANY**
 **(AN
                                EXPLORATION STAGE COMPANY)**
 **CONSOLIDATED
                                STATEMENT OF STOCKHOLDERS' EQUITY (CONTINUED)**
 
 AccumulatedAdditional
                                      
                                      Stock
                                      
                                      Stock
                                      
                                      Deficit
                                          DuringCommon
                                          Stock
                                      
                                      Paid-in
                                      
                                      Subscriptions
                                      
                                      Options
                                          and
                                      
                                      ExplorationShares
                                      
                                      Amount
                                      
                                      Capital
                                      
                                      Receivable
                                      
                                      Warrants
                                      
                                      Stage
                                      
                                      TotalBalance,
                                          October 31, 2002
                                      
                                      
                                      10,368,340
                                      
                                      $
                                      103,685
                                      
                                      $
                                      10,280,713
                                      
                                      $
                                      -
                                      
                                      $
                                      1,497,967
                                      
                                      $
                                      (7,175,605
                                      )
                                      $
                                      4,706,760Issuances
                                          of common stock as follows:-
                                          for cash at $2.00 per share
                                      
                                      
                                      100,000
                                      
                                      
                                      1,000
                                      
                                      
                                      199,000
                                      
                                      
                                      -
                                      
                                      
                                      -
                                      
                                      
                                      -
                                      
                                      
                                      200,000-
                                          for cash at an average of $0.98 per share
                                      
                                      
                                      849,000
                                      
                                      
                                      8,489
                                      
                                      
                                      821,510
                                      
                                      
                                      -
                                      
                                      
                                      -
                                      
                                      
                                      -
                                      
                                      
                                      829,999-
                                          for cash and warrants at $1.50 per share
                                      
                                      
                                      7,000
                                      
                                      
                                      70
                                      
                                      
                                      9,847
                                      
                                      
                                      -
                                      
                                      
                                      583
                                      
                                      
                                      -
                                      
                                      
                                      10,500-
                                          for compensation at an average of $1.25
                                          per share
                                      
                                      
                                      391,332
                                      
                                      
                                      3,913
                                      
                                      
                                      487,275
                                      
                                      
                                      -
                                      
                                      
                                      -
                                      
                                      
                                      -
                                      
                                      
                                      491,188-
                                          for services at an average of $1.23 per
                                          share
                                      
                                      
                                      91,383
                                      
                                      
                                      914
                                      
                                      
                                      119,320
                                      
                                      
                                      -
                                      
                                      
                                      -
                                      
                                      
                                      -
                                      
                                      
                                      120,234-
                                          for subscriptions receivable at $1.00 per
                                          share
                                      
                                      
                                      38,000
                                      
                                      
                                      380
                                      
                                      
                                      37,620
                                      
                                      
                                      (38,000
                                      )
                                      
                                      -
                                      
                                      
                                      -
                                      
                                      
                                      -Net
                                          loss for the year ended October 31, 2003
                                      
                                      
                                      -
                                      
                                      
                                      -
                                      
                                      
                                      -
                                      
                                      
                                      -
                                      
                                      
                                      -
                                      
                                      
                                      (1,107,228
                                      )
                                      
                                      (1,107,228
                                      )Balance,
                                          October 31, 2003
                                      
                                      
                                      11,845,055
                                      
                                      
                                      118,451
                                      
                                      
                                      11,955,285
                                      
                                      
                                      (38,000
                                      )
                                      
                                      1,498,550
                                      
                                      
                                      (8,282,833
                                      )
                                      
                                      5,251,453Issuances
                                          of common stock as follows:-
                                          for cash at $1.00 per share, less issuance
                                          costs of $698,863
                                      
                                      
                                      7,580,150
                                      
                                      
                                      75,802
                                      
                                      
                                      6,805,485
                                      
                                      
                                      -
                                      
                                      
                                      -
                                      
                                      
                                      -
                                      
                                      
                                      6,881,287-
                                          for compensation at an average of $1.26
                                          per share
                                      
                                      
                                      120,655
                                      
                                      
                                      1,207
                                      
                                      
                                      151,064
                                      
                                      
                                      -
                                      
                                      
                                      -
                                      
                                      
                                      -
                                      
                                      
                                      152,271-
                                          for services at various prices
                                      
                                      
                                      141,286
                                      
                                      
                                      1,413
                                      
                                      
                                      153,801
                                      
                                      
                                      -
                                      
                                      
                                      -
                                      
                                      
                                      -
                                      
                                      
                                      155,214Stock
                                          subscription received
                                      
                                      
                                      -
                                      
                                      
                                      -
                                      
                                      
                                      -
                                      
                                      
                                      38,000
                                      
                                      
                                      -
                                      
                                      
                                      -
                                      
                                      
                                      38,000Miscellaneous
                                          corrections and adjustments
                                      
                                      
                                      64,263
                                      
                                      
                                      643
                                      
                                      
                                      (643
                                      )
                                      
                                      -
                                      
                                      
                                      -
                                      
                                      
                                      -
                                      
                                      
                                      -Net
                                          loss for the year ended October 31, 2004
                                      
                                      
                                      -
                                      
                                      
                                      -
                                      
                                      
                                      -
                                      
                                      
                                      -
                                      
                                      
                                      -
                                      
                                      
                                      (5,036,805
                                      )
                                      
                                      (5,036,805
                                      )Balance,
                                          October 31, 2004
                                      
                                      
                                      19,751,409
                                      
                                      
                                      197,515
                                      
                                      
                                      19,064,992
                                      
                                      
                                      -
                                      
                                      
                                      1,498,550
                                      
                                      
                                      (13,319,638
                                      )
                                      
                                      7,441,419Common
                                          stock issued for cash at an average of
                                          $0.98 per share with attached
                                          warrants valued at an average of $0.28
                                          per share
                                      
                                      
                                      476,404
                                      
                                      
                                      4,764
                                      
                                      
                                      329,806
                                      
                                      
                                      -
                                      
                                      
                                      132,159
                                      
                                      
                                      -
                                      
                                      
                                      466,729Common
                                          stock issued for compensation at an averageof $1.00 per share
                                      
                                      
                                      176,772
                                      
                                      
                                      1,768
                                      
                                      
                                      175,005
                                      
                                      
                                      -
                                      
                                      
                                      -
                                      
                                      
                                      -
                                      
                                      
                                      176,773Expiration
                                          of stock warrants
                                      
                                      
                                      -
                                      
                                      
                                      -
                                      
                                      
                                      282,870
                                      
                                      
                                      -
                                      
                                      
                                      (282,870
                                      )
                                      
                                      -
                                      
                                      
                                      -Net
                                          loss for the year ended October 31, 2005
                                      
                                      
                                      -
                                      
                                      
                                      -
                                      
                                      
                                      -
                                      
                                      
                                      -
                                      
                                      
                                      -
                                      
                                      
                                      (3,302,161
                                      )
                                      
                                      (3,302,161
                                      )Balance,
                                          October 31, 2005
                                      
                                      
                                      20,404,585
                                      
                                      $
                                      204,047
                                      
                                      $
                                      19,852,673
                                      
                                      $
                                      -
                                      
                                      $
                                      1,347,839
                                      
                                      $
                                      (16,621,799
                                      )
                                      $
                                      4,782,760Common
                                          stock issued for cash at an average of
                                          $0.80 pershare with
                                          attached warrants valued at $0.29 per share
                                      
                                      
                                      13,374,833
                                      
                                      
                                      133,748
                                      
                                      
                                      7,153,399
                                      
                                      
                                      
                                      
                                      
                                      3,924,480
                                      
                                      
                                      
                                      
                                      
                                      11,211,627Common
                                          stock issued for services at $0.80 per
                                          sharewith attached warrants
                                          valued at $0.29 per share
                                      
                                      
                                      73,650
                                      
                                      
                                      736
                                      
                                      
                                      36,855
                                      
                                      
                                      
                                      
                                      
                                      21,358
                                      
                                      
                                      
                                      
                                      
                                      58,949Stock
                                          option and warrant activity as follows:-
                                          Options issued for compensation at $2.18
                                          per share
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      4,360,000
                                      
                                      
                                      
                                      
                                      
                                      4,360,000-
                                          warrants issued for services at $1.92 per
                                          share
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      (403,215
                                      )
                                      
                                      
                                      
                                      
                                      403,215
                                      
                                      
                                      
                                      
                                      
                                      --
                                          Options & warrants for directors fees at an average
                                          of$2.17
                                          per share
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      1,665,705
                                      
                                      
                                      
                                      
                                      
                                      1,665,705Modification
                                          of options
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      48,000
                                      
                                      
                                      
                                      
                                      
                                      48,000Common
                                          stock issued for compensation at an averageof $0.63 per
                                          share
                                      
                                      
                                      248,593
                                      
                                      
                                      2,486
                                      
                                      
                                      154,389
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      156,875Exercise
                                          of warrants at $1.25 per share
                                      
                                      
                                      25,000
                                      
                                      
                                      250
                                      
                                      
                                      38,250
                                      
                                      
                                      
                                      
                                      
                                      (7,250
                                      )
                                      
                                      
                                      
                                      
                                      31,250Adjustment
                                          of private placement selling price
                                      
                                      
                                      81,251
                                      
                                      
                                      812
                                      
                                      
                                      (812
                                      )
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      -Net
                                          loss for the year ended October 31, 2006
                                      
                                      
                                      -
                                      
                                      
                                      -
                                      
                                      
                                      -
                                      
                                      
                                      -
                                      
                                      
                                      -
                                      
                                      
                                      (11,193,037
                                      )
                                      
                                      (11,193,037
                                      )Balance,
                                          October 31, 2006
                                      
                                      
                                      34,207,912
                                      
                                      $
                                      342,079
                                      
                                      $
                                      26,831,539
                                      
                                      $
                                      -
                                      
                                      $
                                      11,763,347
                                      
                                      $
                                      (27,814,836
                                      )
                                      $
                                      11,122,129Stock
                                          warrants issued for services at $1.86 per
                                          share
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      928,750
                                      
                                      
                                      
                                      
                                      
                                      928,750Stock
                                          warrants issued for services at $1.66 per
                                          share
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      166,200
                                      
                                      
                                      
                                      
                                      
                                      166,200Net
                                          loss for the 3 months ended January 31,
                                          2007
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      (2,233,824
                                      )
                                      
                                      (2,233,824
                                      )Balance,
                                          January 31, 2007
                                      
                                      
                                      34,207,912
                                      
                                      $
                                      342,079
                                      
                                      $
                                      26,831,539
                                      
                                      $
                                      -
                                      
                                      $
                                      12,858,297
                                      
                                      $
                                      (30,048,660
                                      )
                                      $
                                      9,983,255
 The
                                  accompanying notes are an integral part of these
                                  consolidated financial statements.
 F-7
 **METALLINE
                                      MINING COMPANY**
 **(AN
                                      EXPLORATION STAGE COMPANY)**
 **CONSOLIDATED
                                      STATEMENT OF STOCKHOLDERS' EQUITY (CONTINUED)**
 
 AccumulatedAdditional
                                            
                                            Stock
                                            
                                            Stock
                                            
                                            Deficit
                                                DuringCommon
                                                Stock
                                            
                                            Paid-in
                                            
                                            Subscriptions
                                            
                                            Options
                                                and
                                            
                                            ExplorationShares
                                            
                                            Amount
                                            
                                            Capital
                                            
                                            Receivable
                                            
                                            Warrants
                                            
                                            Stage
                                            
                                            TotalBalance,
                                                January 31, 2007
                                            
                                            
                                            34,207,912
                                            
                                            $
                                            342,079
                                            
                                            $
                                            26,831,539
                                            
                                            $
                                            -
                                            
                                            $
                                            12,858,297
                                            
                                            $
                                            (30,048,660
                                            )
                                            $
                                            9,983,255Common
                                                stock issued for cash at $4.70 per
                                                unit of 2 shares with attached warrants
                                                valued at $3.49 per share
                                            
                                            
                                            2,413,571
                                            
                                            
                                            24,136
                                            
                                            
                                            1,437,284
                                            
                                            
                                            -
                                            
                                            
                                            4,210,473
                                            
                                            
                                            -
                                            
                                            
                                            5,671,893Cashless
                                                exercise of options valued at $0.47
                                                per share
                                            
                                            
                                            126,000
                                            
                                            
                                            1,260
                                            
                                            
                                            57,960
                                            
                                            
                                            -
                                            
                                            
                                            (59,220
                                            )
                                            
                                            -
                                            
                                            
                                            -Cancellation
                                                of options valued at $0.47 per share
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            39,480
                                            
                                            
                                            -
                                            
                                            
                                            (39,480
                                            )
                                            
                                            -
                                            
                                            
                                            -Common
                                                stock issued for directors' fees
                                                at an average of $2.62 per share
                                            
                                            
                                            72,000
                                            
                                            
                                            720
                                            
                                            
                                            187,740
                                            
                                            
                                            
                                            
                                            
                                            -
                                            
                                            
                                            -
                                            
                                            
                                            188,460Exercise
                                                of warrants at $1.30 per share
                                            
                                            
                                            31,250
                                            
                                            
                                            312
                                            
                                            
                                            49,375
                                            
                                            
                                            
                                            
                                            
                                            (9,062
                                            )
                                            
                                            
                                            
                                            
                                            40,625Exercise
                                                of warrants at $1.25 per share
                                            
                                            
                                            35,000
                                            
                                            
                                            350
                                            
                                            
                                            53,550
                                            
                                            
                                            
                                            
                                            
                                            (10,150
                                            )
                                            
                                            
                                            
                                            
                                            43,750Net
                                                loss for the 3 months ended April
                                                30, 2007
                                            
                                            
                                            -
                                            
                                            
                                            -
                                            
                                            
                                            -
                                            
                                            
                                            -
                                            
                                            
                                            -
                                            
                                            
                                            (1,310,313
                                            )
                                            
                                            (1,310,313
                                            )Balance,
                                                April 30, 2007
                                            
                                            
                                            36,885,733
                                            
                                            
                                            368,857
                                            
                                            
                                            28,656,928
                                            
                                            
                                            -
                                            
                                            
                                            16,950,858
                                            
                                            
                                            (31,358,973
                                            )
                                            
                                            14,617,670
 The
                                        accompanying notes are an integral part of
                                        these
                                        consolidated financial statements.


F-8


**NOTE
      1 –
      ORGANIZATION AND DESCRIPTION OF BUSINESS**





Metalline
      Mining Company ("the Company") was incorporated in the State of Nevada on
      November 8, 1993 as the Cadgie Company for the purpose of acquiring and
      developing mineral concessions. The Cadgie Company was a spin-off from its
      predecessor, Precious Metal Mines, Inc. On June 28, 1996, at a special directors
      meeting, the Company's name was changed to Metalline Mining Company. The
      Company's fiscal year-end is October 31.





The
      Company expects to engage in the business of mining. The Company currently
      owns
      concessions located in a mining region known as the Sierra Mojada District
      that
      is located in the municipality of Sierra Mojada, Coahuila, Mexico. The Company
      conducts its operations in Mexico through its wholly owned subsidiary
      corporation, Minera Metalin S.A. de C.V. ("Minera Metalin") and Contratistas
      de
      Sierra Mojada S.A. de C.V.





The
      Company’s efforts have been concentrated in expenditures related to exploration
      properties, principally in the Sierra Mojada project located in Coahuila,
      Mexico. The Company has not determined whether the exploration properties
      contain ore reserves that are economically recoverable. The ultimate realization
      of the Company’s investment in exploration properties is dependent upon the
      success of future property sales, the existence of economically recoverable
      reserves, the ability of the Company to obtain financing or make other
      arrangements for development, and upon future profitable production. The
      ultimate realization of the Company’s investment in exploration properties
      cannot be determined at this time, and accordingly, no provision for any asset
      impairment that may result, in the event the Company is not successful in
      developing or selling these properties, has been made in the accompanying
      financial statements.





The
      Company is actively seeking additional capital and management believes its
      properties can ultimately be sold or developed to enable the Company to continue
      its operations. However, there are inherent uncertainties in mining operations
      and management cannot provide assurances that it will be successful in this
      endeavor. Furthermore, the Company is in the exploration stage, as it has not
      realized any revenues from its planned operations.




**NOTE
      2 – BASIS OF PRESENTATION**





The
      foregoing unaudited interim financial statements have been prepared in
      accordance with generally accepted accounting principles for interim financial
      information and with the instructions to Form 10-QSB and Regulation S-B as
      promulgated by the Securities and Exchange Commission ("SEC"). Accordingly,
      these financial statements do not include all of the disclosures required by
      generally accepted accounting principles in the United States of America for
      complete financial statements. These unaudited interim financial statements
      should be read in conjunction with the audited financial statements for the
      year
      ended October 31, 2006. In the opinion of management, the unaudited interim
      financial statements furnished herein include all adjustments, all of which
      are
      of a normal recurring nature, necessary for a fair statement of the results
      for
      the interim period presented.





The
      preparation of financial statements in accordance with generally accepted
      accounting principles in the United States of America requires the use of
      estimates and assumptions that affect the reported amounts of assets and
      liabilities, disclosure of contingent assets and liabilities known to exist
      as
      of the date the financial statements are published, and the reported amounts
      of
      revenues and expenses during the reporting period. Uncertainties with respect
      to
      such estimates and assumptions are inherent in the preparation of the Company's
      financial statements; accordingly, it is possible that the actual results could
      differ from these estimates and assumptions and could have a material effect
      on
      the reported amounts of the Company's financial position and results of
      operations.





F-9


Operating
      results for the six-month period ended April 30, 2007 are not necessarily
      indicative of the results that may be expected for the year ending October
      31,
      2007.




Concentration
      of Risk


The
      Company maintains its domestic cash in two commercial depository accounts.
      One
      of these accounts is insured by the Federal Deposit Insurance Corporation (FDIC)
      for up to $100,000. The other account consists of money market funds,
      certificates of deposit and preferred securities (including treasury inflation
      protected securities and auction rate preferred securities), all of which are
      not insured. The Company also maintains cash in banks in Mexico. These accounts,
      which had U.S. dollar balances of $53,017 and $42,477 at April 30, 2007 and
      April 30, 2006, respectively, are denominated in pesos and are considered
      uninsured. Additionally, the Company maintained a petty cash balance of $157
      at
      April 30, 2006. At April 30, 2007, the Company’s cash balances and marketable
      securities included $9,244,346 which was not federally insured.





Exploration
      Costs


In
      accordance with accounting principles generally accepted in the United States
      of
      America, the Company expenses exploration costs as incurred. Exploration costs
      expensed during the six months ended April 30, 2007 and 2006 were $978,209
      and
      $71,862, respectively. The exploration costs expensed during the Company’s
      exploration stage amount to $8,391,073.





Foreign
      Operations


The
      accompanying balance sheet at January 31, 2007 contains Company assets in
      Mexico, including: $4,334,767 in property concessions; $846,941 (before
      accumulated depreciation) of mining equipment; and $53,017 of cash. Although
      this country is considered economically stable, it is always possible that
      unanticipated events in foreign countries could disrupt the Company’s
      operations. The Mexican government does not require foreign entities to maintain
      cash reserves in Mexico.




**NOTE
      3 – RECENT ACCOUNTING PRONOUNCEMENTS**





In
      February 2007, the Financial Accounting Standards Board issued Statement of
      Financial Accounting Standards No. 159, “The Fair Value Option for Financial
      Assets and Financial Liabilities - Including an amendment of FASB Statement
      No.
      115” (hereinafter “SFAS No. 159”). This statement permits entities to choose to
      measure many financial instruments and certain other items at fair value. The
      objective is to improve financial reporting by providing entities with the
      opportunity to mitigate volatility in reported earnings caused by measuring
      related assets and liabilities differently without having to apply complex
      hedge
      accounting provisions. This Statement is expected to expand the use of fair
      value measurement, which is consistent with the Board’s long-term measurement
      objectives for accounting for financial instruments. This statement is effective
      as of the beginning of an entity’s first fiscal year that begins after November
      15, 2007, although earlier adoption is permitted. Management has not determined
      the effect that adopting this statement would have on the Company’s financial
      condition or results of operation.




In
      September, 2006, the Financial Accounting Standards Board issued Statement
      of
      Financial Accounting Standards No. 158, “Employers’ Accounting for Defined
      Benefit Pension and Other Postretirement Plans - an amendment of FASB Statements
      No. 87,88,106, and 132(R)” (hereinafter :SFAS No. 158”). This statement requires
      an employer to recognize the overfunded or underfunded positions of a defined
      benefit postretirement plan (other than a multiemployer plan) as an asset or
      liability in its statement of financial position and to recognize changes in
      that funded status in the year in which the changes occur through comprehensive
      income of a business entity or changes in unrestricted net assets of a not
      for
      profit organization. This statement also requires an employer to measure the
      funded status of a plan as of the date of its year end statement of financial
      position, with limited exceptions. The adoption of this statement had no
      immediate material effect on the Company’s financial condition or results of
      operations.





F-10





**NOTE
      4 – CONCESSIONS IN THE SIERRA MOJADA DISTRICT**





Sierra
      Mojada Mining Concessions


During
      the period of August 23, 1996 to July 18, 2000, the Company executed six
      separate agreements for the acquisition of eight concessions in the mining
      region known as the Sierra Mojada District located in Sierra Mojada, Coahuila,
      Mexico. Each agreement enabled the Company to explore the underlying concession
      in consideration for the payment of stipulated annual payments. Each of the
      concession agreements included an option to purchase the concession and the
      annual payments, which were applied in full toward the contracted purchase
      price
      of the related concession.





The
      Company subsequently completed the purchase of the eight concessions, as
      follows: Esmeralda, consisting of approximately 118 hectares, on March 20,
      1997;
      Fortuna, consisting of approximately 14 hectares, on December 8, 1999; Sierra
      Mojada and Mojada 3, consisting of approximately 4,767 and 1,689 hectares,
      respectively, on May 30, 2000; Unificacion Mineros Nortenos and Vulcano,
      consisting of approximately 337 and 4 hectares, respectively, on August 30,
      2000; Esmeralda I, consisting of approximately 98 hectares, on August 20, 2001;
      and La Blanca, consisting of approximately 34 hectares, on August 20, 2001.
      The
      Company has recorded the concessions at acquisition cost.





All
      of
      the concessions were acquired by purchase agreements with Mexican entities
      and/or Mexican individuals and all of the concessions were paid for in cash.
      In
      the acquisition of Sierra Mojada and Mojada 3 there was one purchase agreement
      for both concessions. Also, in the acquisition of Unificacion Mineros Nortenos
      and Vulcano, there was one purchase agreement for both concessions.





Because
      all eight concessions are located in the same mining region and in close
      proximity to one another, the concessions are routinely treated as one major
      prospect area and are collectively referred to as the Sierra Mojada Project.
      The
      primary work performed on the Company's concessions has consisted of geologic
      mapping, sampling, and drilling. This work has resulted in establishing the
      presence of mineralized material (zinc) of sufficient quantity and grade to
      justify in the Company's opinion a feasibility study which commenced in
      2005.




**NOTE
      5 – PROPERTY AND EQUIPMENT**





The
      following is a summary of the Company's property and equipment at April 30,
      2007
      and October 31, 2006, respectively:





April
                30, 2007
            
            October
                31, 2006Mining
                equipment
            
            $
            634,793
            
            $
            589,751Communication
                Equipment
            
            
            10,179
            
            
            10,179Buildings
                and structures
            
            
            141,061
            
            
            141,061Land
                - non mineral
            
            
            15,839
            
            
            15,839Vehicles
            
            
            125,311
            
            
            152,030Computer
                equipment
            
            
            125,191
            
            
            120,664Office
                equipment
            
            
            9,446
            
            
            9,446Furniture
                and fixtures
            
            
            888
            
            
            8881,062,708
            
            
            1,039,858Less:
                Accumulated depreciation
            
            
            (470,175
            )
            
            (427,892
            )$
            592,533
            
            $
            611,966




Depreciation
      expense for the periods ended April 30, 2007 and 2006 was $44,277 and $41,443,
      respectively. Depreciation charges of $36,707 in the six months ended April
      30,
      2007 were included in exploration costs.





F-11





**NOTE
      6 – CAPITAL STOCK**





Common
      Stock


In
      March
      2005, the Company's board of directors authorized a private placement of up
      to
      5,333,334 shares of the Company's restricted common stock at a price of $1.125
      per share for total proceeds of $6,000,000. Purchasers of these shares also
      received a warrant to purchase one share of the Company's common stock at an
      exercise price of $2.00 per share with an exercise period of five years. In
      September 2005, a modification of the private placement terms was authorized.
      The modified terms allow for the issuance of shares of common stock at a price
      of $0.80 per share, a warrant exercise price of $1.25 per share and an exercise
      period of five years. During the year ended October 31, 2006, the Company issued
      13,456,084 shares of common stock under the aforementioned private placement,
      for cash consideration at $0.80 per share with attached warrants valued at
      an
      average of $0.29 per share. In addition, warrants were exercised for 25,000
      shares of common stock for cash consideration at an average of $1.25 per share.
      There were also 54,000 shares of common stock granted as stock bonuses to the
      Company’s independent directors at an average value of $2.32 per share for
      services received under the 2006 Plan, described below. In addition to the
      common stock issued through the private placement, 248,593 shares of common
      stock were issued for prior compensation at an average of $0.63 per
      share.





In
      March
      2007, the Company’s board of directors authorized an amended private placement
      of 2,413,571 shares of the Company’s restricted common stock and warrants to
      purchase 1,206,785 shares of common stock exercisable at $2.42 per share for
      four years, at a price of $4.70 per unit, which consists of two shares of common
      stock and one warrant. During the six months ended April 30, 2007, the Company
      issued 2,413,571 shares of the Company’s restricted common stock and warrants to
      purchase 1,206,785 shares of common stock under the terms of the private
      placement. The attached warrants were valued at an average of $3.49 per share.
      In addition, warrants were exercised for 66,250 shares of common stock for
      cash
      consideration at an average of $1.27 per share. Options for 210,000 shares
      of
      the Company’s common stock granted under the Company’s 2000 Equity Incentive
      Plan were exercised under the “cashless exercise” provision of the Plan, whereby
      recipients elected to receive 126,000 shares without payment of the exercise
      price, and the remaining options for 84,000 shares were cancelled. Also during
      the six months ended April 30, 2007 the Company issued 72,000 shares of the
      Company’s common stock at an average of $2.62 per share to its independent
      directors as compensation for services received.





Stock
      Options


On
      July
      7, 2006, the Company’s shareholders approved a qualified stock option plan (the
“2006 Plan”), which provides for non-statutory and incentive stock options for
      employees, directors and consultants, and has reserved a total of 5,000,000
      shares of common stock for issuance pursuant to the Plan.





F-12


On
      March
      1, 2001, the Company's shareholders approved a qualified stock option plan
      (the
“2001 Plan”), which provides for non-statutory and incentive stock options for
      employees, directors and consultants, and has reserved a total of 1,000,000
      shares of common stock for issuance pursuant to the Plan. Summarized information
      about stock options outstanding and exercisable at April 30, 2007 is as follows:





Options
                Outstanding
            
            Options
                ExercisableExercise
              Price
            
            Number
              Outstanding
            
            Weighted
              Avg
              Remaining
              Contractual
              Life
                (Years)
            
            Weighted
              Average
              Exercise
              Price
            
            Number
              Exercisable
            
            Weighted
              Average
              Exercise
              Price$
            1.30
            
            100,000
            
            2.27
            $
            1.30
            
            100,000
            $
            1.301.32
            
            110,000
            
            3.43
            
            1.32
            
            110,000
            
            1.322.59
            
            2,750,000
            
            9.00
            
            2.59
            
            2,750,000
            
            2.592.15
            
            200,000
            
            2.83
            
            2.15
            
            200,000
            
            2.15$
            1.30-2.59
            
            3,160,000
            
            8.20
            $
            2.41
            
            3,160,000
            $
            2.48





Warrants


During
      the six months ended April 30, 2007, for professional services received, the
      Company issued warrants for 500,000 common shares, exercisable at $3.40 per
      share. A value of $1.86 per warrant was allocated to these warrants with a
      total
      allocated value of $928,750. The Company also issued warrants for 100,000 common
      shares, exercisable at $2.63 per share. A value of $1.66 per share was allocated
      to these warrants with a total allocated value of $166,200. In connection with
      the private placement completed during the six-month period ended April 30,
      2007, there were warrants issued for the purchase of 1,206,785 shares of common
      stock at an exercise price of $2.42 per share. The warrants were valued at
      $3.49
      per share for a total allocated value of $4,210,473.





**NOTE
      7 – INCOME TAXES**





At
      April
      30, 2007, the Company had net deferred tax assets calculated at an expected
      rate
      of 34% of approximately $7,300,000, principally arising from net operating
      loss
      carryforwards for income tax purposes. 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, there is a valuation allowance equal
      to
      the net deferred tax asset.





The
      significant components of the deferred tax assets at April 30, 2007 and October
      31, 2006 are as follows:





April
                30,
            
            October
                31,2007
            
            2006Net
                operating loss carryforward
            
            $
            21,600,000
            
            $
            19,100,000Deferred
                tax asset
            
            $
            7,300,000
            
            $
            6,500,000Deferred
                tax asset valuation allowance
            
            $
            (7,300,000
            )
            $
            (6,500,000
            )





As
      of
      April 30, 2007, the Company had net operating loss carryforwards of
      approximately $21,600,000, which expire in the years 2008 through 2027. The
      Company has recognized approximately $1,095,000 of losses from the issuance
      of
      stock options and warrants for services in the six months ended April 30, 2007,
      which were not deductible for tax purposes. The change in the allowance account
      from October 31, 2006 to April 30, 2007 was $800,000. The Company has immaterial
      temporary differences resulting from differences in tax depreciation of
      equipment.





F-13





**NOTE
      8 – SUBSEQUENT EVENTS**





In
      May,
      2007 the Company issued 18,000 shares of common stock to independent directors
      of the Company for services received in the three months ended April 30, 2007.
      The Company has accrued $55,800 of costs associated with these shares as of
      April 30, 2007. Also in May, 2007, two warrants were exercised for 150,000
      shares of common stock at an exercise price of $1.25 per share.




In
      June, 2007, the Company's board of directors
      appointed a chief financial officer effective June 18, 2007. The new
      officer's compensation includes options to acquire 250,000 shares of the
      Company's common stock, subject to vesting over the next three
      years.




Also
        in June, 2007, the Company adopted a
        shareholders right plan. To effect the shareholders rights plan Company
        declared a distribution of one common stock purchase right to each outstanding
        share of common stock, payable to shareholders of record on June 22, 2007. 
This right will be attached to the underlying common share and remain with
        the
        common share should the common share be sold or transferred.





F-14




**ITEM
              2.**
            **Management's
                Discussion and Analysis of Financial Condition and Results of
                Operations.**




*Cautionary
      Statement about Forward-Looking Statements*




This
      Quarterly Report on Form 10-QSB includes certain statements that may be deemed
      to be "forward-looking statements." All statements, other than statements of
      historical facts, included in this Form 10-QSB that address activities, events
      or developments that our management expects, believes or anticipates will or
      may
      occur in the future are forward-looking statements. Such forward-looking
      statements include discussion of such matters as:




·
            The
                amount and nature of future capital, development and exploration
                expenditures;




·
            The
                timing of exploration activities;




·
            Business
                strategies and development of our business plan;
                and




Forward-looking
      statements also typically include words such as "anticipate", "estimate",
      "expect", "potential", "could" or similar words suggesting future outcomes.
      These statements are based on certain assumptions and analyses made by us in
      light of our experience and our perception of historical trends, current
      conditions, expected future developments and other factors we believe are
      appropriate in the circumstances. Such statements are subject to a number of
      assumptions, risks and uncertainties, including such factors as the volatility
      and level of zinc prices, currency exchange rate fluctuations, uncertainties
      in
      cash flow, expected acquisition benefits, exploration mining and operating
      risks, competition, litigation, environmental matters, the potential impact
      of
      government regulations, and other matters discussed Company's Annual Report
      on
      Form 10-KSB for the fiscal year ended October 31, 2006 under the caption
      "Risk Factors," many of which are beyond our control. Readers are cautioned
      that
      forward-looking statements are not guarantees of future performance and that
      actual results or developments may differ materially from those expressed or
      implied in the forward-looking statements.




The
      Company is under no duty to update any of these forward-looking statements
      after
      the date of this report. You should not place undue reliance on these
      forward-looking statements.




**Plan
      of Operation**




The
      Company is an exploration stage company, formed under the laws of the state
      of
      Nevada on August 20, 1993, to engage in the business of mining. The Company
      currently owns mining concessions, which are located in the municipality of
      Sierra Mojada, Coahuila, Mexico as described below (the “Property”). The
      Company's objective is to define sufficient mineral reserves on the Property
      to
      justify the development of a mechanized mining operation (the "Project"). The
      Company conducts its operations in Mexico through its wholly owned Mexican
      subsidiaries, Minera Metalin S.A. de C.V. (“Minera”) and Contratistas de Sierra
      Mojada S.A. de C.V.





1


The
        Company owns the following mining concessions, including the buildings and
        equipment located thereon:






Concession
1
                
                Title
                    No.
                
                HectaresSierra Mojada
                
                198513
                
                4,767.3154Mojada
                  3
                
                226756
                
                722.0000Unificacion
                  Mineros Nortenos
                
                169343
                
                336.7905Esmeralda 1
                
                211158
                
                95.4977Esmeralda
                
                212169
                
                117.5025La
                  Blanca
                
                220569
                
                33.5044Fortuna
                
                160461
                
                13.9582Vulcano
                
                83507
                
                4.4904Total
                
                
                
                6,091.0591




______________________


1 These
        concessions are disclosed on the company's consolidated balance sheet for
        the
        six months ended April 30, 2007.







The
      Company also owns, or is in the process
      of acquiring, the following mining concessions, including the buildings and
      equipment located thereon:




Concession1
              
              Title
                  No.
              
              HectaresMojada 2
              
              227585
              
              3,500.0000El Retorno
              
              216681
              
              817.6548Los Ramones
              
              223093
              
              8.6039El Retorno Fracc. 1
              
              223154
              
              5.5071Dormidos
              
              229323
              
              2,326.0953Agua Mojada2
              
              E-07/16743
              
              2,900.0000Alote2,3
              
              --
              
              3,749.0000Total
              
              
              
              13,306.8611




______________________ 1
              These concessions were acquired during 2006
                  and
                  2007.  Since documentation of the acquisition of these concessions is
                  not available, they are not
                recorded on the Company's consolidated balance
                  sheet for the six months ended April 30,
                  2007.
 2
              Title for these concessions is
                  pending.
 3
              The Alote concession was acquired after the
                  period ended
                  April 30, 2007


The
      fifteen concessions total 19,397.9202 hectares (about 47,930 acres). The Company
      owns, or is in the process of acquiring, the fifteen concessions pursuant to
      purchase agreements with the previous owners. A number of prior established
      concessions that are not owned by the Company are located within the largest
      concession, the Sierra Mojada concession. The Company holds title to its
      concessions subject to its obligation to maintain and conduct work on the
      concessions, record evidence of the work with the Mexican Ministry of Mines
      and
      pay a semi-annual fee to the Mexican government. Annual assessment work in
      excess of statutory requirements can be carried forward to apply against the
      work required for future years. The value of our accumulated carry forwards
      on
      our concessions would meet future requirements for many years.





The
      Company’s primary focus has been to explore the Sierra Mojada concessions to
      identify available mineral deposits, securing a legal right to exploit the
      deposit and defining a resource. From 1999 through early 2005 an oxide zinc
      mineralization has been defined that management has determined contains
      sufficient estimated zinc metal to justify a study of the mineralized material.
      A feasibility study has been initiated for the Company by Green Team
      International of Johannesburg, South Africa as the prime contractor. The
      Company’s plan of operation for the next 12 months is to continue work on the
      feasibility study to determine whether a mining operation may be profitably
      conducted on the Company's concessions. The study is a detailed engineering
      and
      economic valuation of the iron oxide and smithsonite manto mineralized material.
      The study consists of six major elements: Resource Model, Metallurgy, Mine
      Plan,
      Extraction, Reduction and Water Development.





The
      Resource Model has been revised and it will be used interactively with the
      mining and concentrator team to optimize the baseline business case for the
      study. Another revision of the Resource Model incorporating improved geological
      constraints is expected to be completed by mid-June, 2007. The Resource Model
      will then be subjected to a technical audit.





The
      Company has performed a technical audit of its sample collecting, sample
      preparation, and data logging technical processes and is improving its technical
      processes, facilities, and procedures. It has acquired improved geological
      information requested by its engineers in completing their studies. The
      geotechnical study involving diamond drilling, structural mapping, in situ and
      laboratory measurements of rock strength and other testing to confirm the
      applicability of various mining methods to the rocks at Sierra Mojada are in
      progress. The Company is analyzing a large sampling of rocks from within the
      boundaries of the current Resource Model grade shell for other metals that
      might
      be recovered as coproducts of mining zinc. The elements being considered include
      silver, cadmium, indium, gallium, germanium, and cobalt.





2


Metallurgical
      studies were completed with an objective of improving the design of the
      concentrator circuit for processing of zinc. Samples to evaluate the existing
      circuit as applied to the recovery of silver have been shipped to South Africa
      for study. The scoping study phase of the Mine Plan will be completed by
      evaluating interactions and optimizations between Mine Plan, concentrator and
      refinery sizing, and the Resource Model. On completion of this activity, the
      basic mine method(s) and project capacities will be frozen and mine planning
      will be carried to the next level of detail. The location of the refinery,
      the
      extraction and reduction plant will then be finalized, using the results of
      a
      previously performed alternatives analysis, and the details of refinery location
      and design will be attacked. GTI has previously completed fairly mature
      concentrator and refinery designs.





The
      Mine
      Plan studies contract has been awarded to the firm of Pincock, Allen and Holt.
      The Mine Plan studies involve three stages of progressively more definitive
      work. These are a scoping stage, a preliminary design phase, and a detailed
      design phase. The scoping stage of Mine Plan studies has evaluated methods
      to
      mine the deposit. Geotechnical results are required to determine the optimum
      method to mine the deposit, the associated capital and mining costs and feasible
      production rates. The production rate for the project is determined through
      an
      economic evaluation that seeks to optimize the expected return on investment
      based on consideration of the Resource Model and interactions with the mining
      method, the extraction and reduction plants in the context of the expected
      capital and operating costs of the entire system. A baseline design case using
      concentration of oxide zinc minerals and refining the concentrate using solvent
      extraction and electrowinning (SXEW) is used to compare the economic efficiency
      of various engineering alternatives. After the optimum approach is determined,
      the engineering design is developed in stages of increasing complexity and
      detail. Throughout this process, standard engineering practices are employed
      to
      progressively reduce the engineering and economic uncertainties.





A
      contract will be issued to Agapito Associates Inc., of Golden, Colorado, to
      perform geotechnical and rock mechanics studies at the site in support of mine
      planning activities. In mid-May 2007, a drilling program was initiated to obtain
      large diameter core samples for testing in Agapito laboratories. **** This
      drilling will use one of the Company’s diamond drill units. As of June, 2007
      seven holes have been completed, the cores exhaustively logged for geotechnical
      purposes, and samples selected for laboratory measurements of rock strength.
      A
      borehole shear strength tester (BST) will be used to determine in situ rock
      strength in these, and other, bore holes. Structural mapping is complete in
      both
      surface and underground localities. The geotechnical work is approximately
      on
      the planned schedule.





Water
      Development is in progress and consists of drilling for a groundwater supply
      capable of producing water for the mine and plant in volumes adequate to meet
      water supply requirements estimated by the engineering groups performing the
      feasibility study. Water Development will be completed, several wells will
      be
      completed and tested, and application will be made to the appropriate agency
      (the Comisión Nacional de Agua) to grant the Company water rights.
      Environmental, Social, and permitting studies will be continued and completed
      by
      our consultants. Weather-, noise-, and air-quality-monitoring will be performed.
      A documented community out-reach program is already underway and will be
      continued with our workers, the local community, the local government and
      appropriate agencies in State and Federal governments. All of this work will
      be
      done to comply with Mexican regulations, laws, and norms and with sustainable
      development considerations as described in the International Finance
      Corporations “Performance Standards on Social and Environmental Sustainability”
and the Environment Assessment required by the World Bank’s “Equator
      Principles”.





3


In
      order
      to finance the feasibility study and the business operations described above
      for
      corporate overhead through completion of the feasibility study, the Company
      has
      raised capital by selling unregistered shares of its common stock as described
      below in “Liquidity and Capital Resources.” The
      Company estimates that completion of a feasibility study will cost an additional
      $4.2 million and the Company expects that it will take an additional 18 months
      to complete all aspects of the study.  Spending
      on the feasibility study during the six months ended April 30, 2007 was $933,
      846,which is $400,000 less than expected. This amount includes payments to
      third
      parties for goods and services, and does not include expenses for general
      corporate purposes or to support the feasibility study by our employees in
      Mexico. Following the completion of a successful feasibility study, the Company
      would then proceed to secure financing for the construction of a mine and
      related infrastructure pursuant to a Mine Plan developed specifically for the
      Company's concessions and for Concentration and Reduction plants to extract
      metal from the ore that would be mined. The Company estimates that construction
      of a mine and extraction and reduction plant would cost approximately $400
      million and take approximately two to three years to complete after completion
      of the feasibility study, assuming sufficient funding is available. The Company
      intends to finance construction costs by seeking a combination of equity and
      debt. In addition the Company may seek joint venture partners or other
      alternative financing sources as necessary to complete development of the
      project.





The
      Company is improving its general business capabilities in Mexico so that it
      is
      capable of performing the ramp up in activity required by our business
      objectives. We are selectively improving the quality of our workforce at all
      levels. We will become fully compliant with labor registration, safety, health
      and training requirements, and environmental registration. Until that time,
      we
      do not have to comply in these areas because we were grandfathered into
      compliance.





Some
      overarching business objectives in our activities are: to systematically reduce
      the significant risk factors listed earlier in this document; to reach the
      level
      of certainty required to comply with SEC Industry Guide 7; and to meet the
      level
      of quality required for our feasibility study to be acceptable to financial
      institutions to support funding decisions. Two disciplines help us to reach
      these objectives. First, generally accepted international engineering practice
      is based on methodology to achieve progressive reduction of risk and progressive
      reduction in economic uncertainties as studies progress. Second, outside
      technical/engineering auditors are retained to insure that work is done to
      the
      quality required by the engineering norms.





The
      Company will continue its program to explore for new mineralization. This effort
      is most intensely focused on areas of silver-copper mineralization close to
      mine
      workings that might be constructed to access and work the zinc oxide manto.
      The
      purpose of this work is both to identify areas that might be mined as well
      as to
      insure that contemplated mine workings do not render mineralization unmineable
      that might otherwise be exploited. The Company is aware of other areas within
      its concessions that it believes may have significant exploration potential.
      As
      resources are available, or specific opportunities are identified, such areas
      may receive exploration attention.





In
      the
      past the Company has evaluated various opportunities for generating near-term
      revenues from small scale mining from its concessions, and it will continue
      to
      do so in the future. However, it will only engage in such operations if 1)
      they
      are not diversionary to the task of completing the feasibility study; 2) they
      are safe for our workers; 3) the business risk is low; 4) the opportunity is
      affordable; 5) the profit potential is significant to a company of our size.
      We
      have no current plans to enter any such venture.




*Subsequent
      Events*




Subsequent
      to the six month period ended April 30, 2007,
      the Company's board of directors appointed Robert J. Devers as Chief Financial
      Officer effective June 18, 2007.  As part of Mr. Devers compensation, he
      received options to acquire 250,000 shares of the Company's common stock,
      subject to vesting over the next three years.




On
      June 11, 2007, the Company's board of directors
      adopted a shareholders right plan.  The rights are designed to have certain
      anti-takeover effects and as such they will cause substantial dilution to a
      person or group that attempts to acquire the Company without conditioning the
      offer on a substantial number of rights being acquired, or in a manner or on
      terms not approved by the board of directors of Company. The rights, however,
      should not deter any prospective offer or willingness to negotiate in good
      faith
      with the board of directors, nor should the rights interfere with any merger
      or
      other business combination approved by the board of directors. To effect
      the shareholders rights plan Company declared a distribution of one common
      stock
      purchase right to each outstanding share of common stock, payable to
      shareholders of record on June 22, 2007.  This right will be attached to
      the underlying common share and remain with the common share should the common
      share be sold or transferred.





4


*Cautionary
      Note*





The
      Company is an exploration stage company and does not currently have any known
      reserves and cannot be expected to have reserves unless and until a feasibility
      study is completed for the Sierra Mojada concessions that shows proven and
      probable reserves. There can be no assurance that the Company's concessions
      contain proven and probable reserves and investors may lose their entire
      investment in the Company. See “Risk Factors” in the Company's Annual Report on
      Form 10-KSB for the fiscal year ended October 31, 2006.





**Results
      of Operations**





During
      the six months ended April 30, 2007, the Company realized other income of
      $138,428 as compared to $46,587 for the six month period ending April 30, 2006.
      General and administrative expenses increased to $3,682,565 for the six month
      period ended April 30, 2007 as compared to $2,047,896 for the six months ended
      April 30, 2006. The increase is primarily due to an increase in professional
      services of $1,044,833 resulting from expensing of warrants issued in the first
      quarter for services rendered by outside consultants, an increase in exploration
      and research of $906,347, an increase of office and administrative expenses
      of
      $254,964, and an increase in directors fees of $148,800. The total increase
      in
      general and administrative expenses is partially offset by the decrease in
      salaries and payroll ** expenses
      of $506,102. The decrease in salaries and payroll expense is due to the payment
      of bonuses and additional salaries paid in the six months ended April 30, 2006
      which were not paid in the six months ended April 30, 2007. The **** increased
      expenditures were due to increased exploration and feasibility expenditures
      following completion of the private placement of the Company’s common stock in
      the prior fiscal year. For the six months ** ended
      April 30, 2007, the Company experienced a loss of $3,544,137, or $0.10 per
      share, compared to a loss of $2,001,309, or $0.07 per share, during the
      comparable period in the previous year.





**Liquidity
      and Capital Resources**





The
      Company financed its obligations during the six months ended April 30, 2007
      from
      cash on hand. At April 30, 2007, the Company's cash, cash equivalents and
      marketable securities increased by $2,729,352 compared to the year ended October
      31, 2006. This increase is due to the private offering that closed on March
      6,
      2007, as described below. Also during this period, the Company used $3,002,071
      in operating activities, principally in connection with maintaining the
      property, continuation of a surface exploration drilling program and continued
      feasibility study funding, which includes the water development drilling.





During
      the six month period ended April 30, 2007, the Company completed a private
      offering of 2,413,571 shares of the Company’s common stock and warrants to
      purchase 1,206,785 shares of common stock, exercisable at $2.42 per share and
      expiring on March 6, 2011 (the “Securities”). The Securities were purchased at a
      price of $4.70 per Unit, which consists of two shares of common stock and one
      warrant for an aggregate gross proceeds of $5,671,893. As
      of April
      30, 2007, the Company’s liquid resources, consisting of cash, cash equivalents
      and marketable securities, was $9,344,346.





The
      Company’s current operating expenses total $350,000 per month, for an expected
      operating expense of $4.2 million in the next 12 months. The Company continues
      to maintain a sampling and drilling program that is budgeted at approximately
      $50,000 per month, not including analytical costs which can vary from $20,000
      to
      $40,000 per month. As discussed previously, assuming adequate funding is
      available, the Company estimates that it will cost about $4.2 million in
      additional spending to complete the feasibility study, but there can be no
      assurance that this estimate will not be revised upward. The portions of the
      study that relate to the mine and concentrator in Mexico should be largely
      complete by the end of 2007, but we expect that work on the refinery and
      preparation of the final study documents will not be completed until October
      of
      2008. If at any time we think we have insufficient cash, we will adjust our
      program and expenditures appropriately.





5


The
      Company's management believes that private placements of its shares have
      provided sufficient cash for the Company to continue to operate for at least
      the
      next twelve months based on current expense projections. Following the
      completion of a successful feasibility study, the Company would then proceed
      to
      the construction phase, which would entail construction of a mine and related
      infrastructure pursuant to a mine plan developed specifically for the Company's
      concessions, and construction of an extraction plant to extract metal from
      the
      ore that would be mined. In order to proceed with the construction phase, the
      Company would need to rely on additional equity or debt financing, or the
      Company may seek joint venture partners or other alternative financing
      sources.





**Critical
      Accounting Policies**





The
      preparation of financial statements in conformity with generally accepted
      accounting principles requires management to make a variety of estimates and
      assumptions that affect (i) the reported amounts of assets and liabilities
      and
      disclosure of contingent assets and liabilities as of the date of the financial
      statements and (ii) the reported amounts of revenues and expenses during the
      reporting periods covered by the financial statements.




Our
      management routinely makes judgments and estimates about the effect of matters
      that are inherently uncertain. As the number of variables and assumptions
      affecting the future resolution of the uncertainties increase, these judgments
      become even more subjective and complex. Although we believe that our estimates
      and assumptions are reasonable, actual results may differ significantly from
      these estimates. Changes in estimates and assumptions based upon actual results
      may have a material impact on our results of operation and/or financial
      condition. We have identified certain accounting policies that we believe are
      most important to the portrayal of our current financial condition and results
      of operations. Our significant accounting policies are disclosed in Note 2
      to
      the Consolidated Financial Statements included in the Company's Annual Report
      on
      Form 10-KSB for the fiscal year ended October 31, 2006.





Property
      Concessions


Costs
      of
      acquiring property concessions are capitalized by project area upon purchase
      or
      staking of the associated claims. Costs to maintain the property concessions
      and
      leases are expensed as incurred. When a property concession reaches the
      production stage, the related capitalized costs will be amortized, using the
      units of production method on the basis of periodic estimates of ore reserves.
      To date no concessions have reached production stage.




Property
      concessions are periodically assessed for impairment of value and any diminution
      in value is charged to operations at the time of impairment. Should a property
      concession be abandoned, its capitalized costs are charged to operations. The
      Company charges to operations the allocable portion of capitalized costs
      attributable to property concessions sold. Capitalized costs are allocated
      to
      property concessions abandoned or sold based on the proportion of claims
      abandoned or sold to the claims remaining within the project area.





Deferred
      tax assets and liabilities


The
      Company recognizes the expected future tax benefit from deferred tax assets
      when
      the tax benefit is considered to be more likely than not of being realized.
      Assessing the recoverability of deferred tax assets requires management to
      make
      significant estimates related to expectations of future taxable income.
      Estimates of future taxable income are based on forecasted cash flows and the
      application of existing tax laws in each jurisdiction. To the extent that future
      cash flows and taxable income differ significantly from estimates, the ability
      of the Company to realize deferred tax assets could be impacted. Additionally,
      future changes in tax laws in the jurisdictions in which the Company operates
      could limit the Company’s ability to obtain the future tax
      benefits.





6


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.





Foreign
      Currency Translation


While
      the
      Company’s functional currency is the U.S. dollar, the majority of its operations
      are in Mexico. The assets and liabilities relating to Mexican operations are
      exposed to exchange rate fluctuations. The Company has adopted Financial
      Accounting Standard No. 52. Monetary assets and liabilities denominated in
      foreign currencies are translated into United States dollars at rates of
      exchange in effect at the balance sheet date, and revenue and expenses are
      translated at the average exchange rate during the period. Realized gains or
      losses are included in income for the year as a result of operations.
      Non-monetary assets, liabilities and items recorded in income arising from
      transactions denominated in foreign currencies are translated at rates of
      exchange in effect at the date of the transaction.





Accounting
      for Stock Options and Warrants Granted to Employees and Non-employees


The
      Company currently reports stock issued to employees under the rules of SFAS
      No.
      123 and therefore, the Company’s accounting for stock options and warrants are
      not affected by the issuance of SFAS No. 123R, except for how it relates to
      modification of existing options.





In
      December 2004, the Financial Accounting Standards Board revised SFAS No. 123
      and
      issued SFAS No. 123R.





Warrants
      were valued using the Black-Scholes option pricing model. The assumptions used
      were as follows: volatility of 80%, a risk-free interest rate of 5% and an
      exercise term of from two to five years.





The
      fair
      value of options was determined using the Black-Scholes option pricing model
      using a risk free interest rate of 5% and a volatility of 80%.





Impairment
      of Long-Lived Assets


We
      review
      the net carrying value of all facilities, including idle facilities, on a
      periodic basis. We estimate the net realizable value of each property based
      on
      the estimated undiscounted future cash flows that will be generated from
      operations at each property, the estimated salvage value of the surface plant
      and equipment and the value associated with property interests. These estimates
      of undiscounted future cash flows are dependent upon the estimates of metal
      to
      be recovered from proven and probable ore reserves and mineral resources
      expected to be converted into mineral reserves, future production cost estimates
      and future metals price estimates over the estimated remaining mine life. If
      undiscounted cash flows are less than the carrying value of a property, an
      impairment loss is recognized based upon the estimated expected future cash
      flows from the property discounted at an interest rate commensurate with the
      risk involved.




Environmental
      Matters


When
      it
      is probable that costs associated with environmental remediation obligations
      will be incurred and they are reasonably estimable, we accrue such costs at
      the
      most likely estimate. Accruals for estimated losses from environmental
      remediation obligations generally are recognized no later than completion of
      the
      remedial feasibility study for such facility and are charged to provisions
      for
      closed operations and environmental matters. We periodically review our accrued
      liabilities for such remediation costs as evidence becomes available indicating
      that our remediation liability has potentially changed. Costs of future
      expenditures for environmental remediation are not discounted to their present
      value unless subject to a contractually obligated fixed payment schedule. Such
      costs are based on our current estimate of amounts that are expected to be
      incurred when the remediation work is performed within current laws and
      regulations. Recoveries of environmental remediation costs from other parties
      are recorded as assets when their receipt is deemed probable.





7


Future
      remediation costs for inactive mines are accrued based on management’s best
      estimate at the end of each period of the undiscounted costs expected to be
      incurred. Such costs estimates include, where applicable, ongoing care,
      maintenance and monitoring costs. Changes in estimates are reflected in earnings
      in the period an estimate is revised.





Accounting
      for reclamation and remediation obligations requires management to make
      estimates unique to each mining operation of the future costs the Company will
      incur to complete the reclamation and remediation work required to comply with
      existing laws and regulations. Actual costs incurred in future periods could
      differ from amounts estimated. Additionally, future changes to environmental
      laws and regulations could increase the extent of reclamation and remediation
      work required. Any such increases in future costs could materially impact the
      amounts charged to earnings. At October 31, 2006 the Company has no accrual
      for
      reclamation and remediation obligations because management cannot make a
      reasonable estimate. Any reclamation or remediation costs related to abandoned
      concessions has been previously expensed.




**ITEM
              3.**
            **Controls
                and Procedures.**




*Disclosure
      Controls and Procedures.*




The
      Company's principal executive officer and principal financial officer have
      evaluated the effectiveness of the Company's disclosure controls and procedures
      (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange
      Act) as of the end of the period covered by this report. Based on such
      evaluation, the Company's principal executive officer and principal financial
      officer have concluded that, as of the end of such period, the Company's
      disclosure control and procedures are effective in recording, processing,
      summarizing and reporting, on a timely basis, information required to be
      disclosed by the Company in the reports that it files or submits under the
      Exchange Act.





The
      Company's management has also concluded that the Company's disclosure controls
      and procedures are effective to ensure that information required to be disclosed
      in the Company's reports filed under the Exchange Act is accumulated and
      communicated to management, including the principal executive officer and
      principal financial officer, to allow timely decisions regarding required
      disclosure.




*Changes
      in Internal Control Over Financial Reporting.*




There
      was
      no change in the Company's internal control over financial reporting that
      occurred during the fiscal quarter to which this report relates that has
      materially affected, or is reasonably likely to materially affect, the Company's
      internal control over financial reporting.





8




**PART
      II - OTHER INFORMATION**





**ITEM
              2.**
            **Unregistered
                Sales of Equity Securities and Use of
                Proceeds.**





Other
      than as described in our Form 8-K filed on March 12, 2007, the Company has
      not
      had any recent sales of unregistered equity securities.





**ITEM
              6.**
            **Exhibits.**





3.1
            Articles
                of Incorporation.(1), (2), (3)





3.2
            Bylaws,
                as amended.(3)





10.1
            Common
                Stock and Warrant Purchase Agreement, dated February 16, 2007, filed
                herewith.





31.1
            Certification
                of CEO Pursuant to Exchange Act Rules 13a-14 and 15d-14, as adopted
                pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed
                herewith.





31.2
            Certification
                of CFO Pursuant to Exchange Act Rules 13a-14 and 15d-14, as adoptedpursuant
                to Section 302 of the Sarbanes-Oxley Act of 2002, filed
                herewith.





32.1
            Certification
                of CEO Pursuant to 18 U.S.C. Section 1350, as adopted pursuant toSection
                906 of the Sarbanes-Oxley Act of 2002, filed
                herewith.





32.2
            Certification
                of CFO Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
                Section
                906 of the Sarbanes-Oxley Act of 2002, filed
                herewith.





(1)
            Incorporated
                by reference from Form 10-SB, filed October 15,
                1999.


(2)
            Incorporated
                by reference from Form 10-QSB, filed September 19,
                2006.


(3)
            Incorporated
                by reference from Form 10-KSB, filed January 31,
                2007.





9


**METALLINE
      MINING COMPANY**


**An
      Exploration Stage Company**








**SIGNATURES**




In
      accordance with Section 12, 13 or 15(d) of the Securities Exchange Act of 1934,
      the registrant has duly caused this report to be signed on its behalf by the
      undersigned, thereunto duly authorized.






METALLINE MINING COMPANYJune
                  17, 2007
              
              By:
              /s/
                Merlin BinghamDate
              
              
              Merlin Bingham, President andChief Executive OfficerJune
                  17, 2007
              
              By:
              /s/
                Wayne L. SchoonmakerDate
              
              
              Wayne L. Schoonmaker,Principal Financial Officer and
                Chief Accounting
                  Officer






10