##### Table of Contents



U.S. SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
 FOR THE QUARTERLY PERIOD ENDEDJuly 31, 2008.
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
 FOR THE TRANSITION PERIOD OF  TO.
 Commission File Number: 001-33125
 METALLINE MINING COMPANY
 (Exact name of registrant as specified in its charter)
 Nevada
    
    91-1766677State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization
    
    Identification No.)
 1330 E. Margaret Ave., Coeur dAlene, ID 83815  (Address of principal executive offices, including zip code)
 (208) 665-2002
 þ o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
    
    Smaller reporting Company o
 o þ




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##### 



PART I  FINANCIAL INFORMATION
 ITEM 1. FINANCIAL STATEMENTS
 METALLINE MINING COMPANY
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JULY 31, 2008
 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 PAGEConsolidated Financial Statements:
    
    
    
    

Consolidated Balance Sheets as of July 31, 2008 and October 31, 2007
    
    
    2Consolidated Statements of Operations for the three and nine months ended
July 31, 2008 and July 31, 2007 and for the period from inception
(November 8, 1993) to July 31, 2008
    
    
    3Consolidated Statements of Cash Flows for the nine months ended 
July 31, 2008 and July 31, 2007, and for the period from inception
(November 8, 1993) to July 31, 2008
    
    
    4-5Condensed Notes to Consolidated Financial Statements
    
    
    6-16Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
    1




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##### Table of Contents



METALLINE MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
 
 CONSOLIDATED BALANCE SHEETS
 July 31,
    
    
    October 31,2008
    
    
    2007(Unaudited)ASSETSCURRENT ASSETSCash and cash equivalents
    
    $
    4,082,319
    
    
    $
    1,434,487Marketable securities
    
    
    
    
    
    
    7,900,000Value-added tax receivable
    
    
    917,866
    
    
    
    401,341Other receivables
    
    
    26,725
    
    
    
    23,993Prepaid expenses
    
    
    40,658
    
    
    
    17,827Total Current Assets
    
    
    5,067,568
    
    
    
    9,777,648PROPERTY CONCESSIONSSierra Mojada District (Note 4)
    
    
    4,839,743
    
    
    
    4,536,111EQUIPMENTOffice and mining equipment, net of accumulated depreciation
of $587,680 and 407,457, respectively (Note 5)
    
    
    1,627,585
    
    
    
    919,420TOTAL ASSETS
    
    $
    11,534,896
    
    
    $
    15,233,179LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIESAccounts payable
    
    $
    343,892
    
    
    $
    84,634Accounts payable  related parties (Note 7)
    
    
    
    
    
    
    68,460Income tax payable
    
    
    56,058
    
    
    
    55,331Accrued liabilities and expenses
    
    
    239,958
    
    
    
    92,133Other liabilities
    
    
    82,701
    
    
    
    100,766Total Current Liabilities
    
    
    722,609
    
    
    
    401,324COMMITMENTS AND CONTINGENCIES (Note 10)
    
    
    
    
    
    
    STOCKHOLDERS EQUITY (Note 7)Common stock, $0.01 par value; 160,000,000 shares authorized,
39,677,027 and 39,144,977 shares issued and outstanding, respectively
    
    
    396,770
    
    
    
    391,450Additional paid-in capital
    
    
    51,352,635
    
    
    
    49,273,440Deficit accumulated during exploration stage
    
    
    (40,247,885
    )
    
    
    (34,746,393
    )Other comprehensive loss
    
    
    (689,233
    )
    
    
    (86,642
    )Total Stockholders Equity
    
    
    10,812,287
    
    
    
    14,831,855TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    11,534,896
    
    
    $
    15,233,179
   2




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##### Table of Contents



METALLINE MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 November 8,1993(Inception)Three months ended
    
    
    Nine months ended
    
    
    toJuly 31,
    
    
    July 31,
    
    
    July 31,2008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    2008REVENUES
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    EXPLORATION AND PROPERTY HOLDING COSTSExploration and property holding costs
    
    
    927,369
    
    
    
    963,245
    
    
    
    2,315,044
    
    
    
    2,100,838
    
    
    
    15,149,167Depreciation and asset write-off
    
    
    50,092
    
    
    
    40,874
    
    
    
    156,295
    
    
    
    183,520
    
    
    
    639,618TOTAL EXPLORATION AND PROPERTY
HOLDING COSTS
    
    
    977,461
    
    
    
    1,004,119
    
    
    
    2,471,339
    
    
    
    2,284,358
    
    
    
    15,788,785GENERAL AND ADMINISTRATIVE EXPENSESSalaries and payroll expenses
    
    
    467,434
    
    
    
    266,733
    
    
    
    1,574,977
    
    
    
    598,745
    
    
    
    11,401,459Office and administrative expenses
    
    
    91,550
    
    
    
    86,769
    
    
    
    380,662
    
    
    
    346,158
    
    
    
    2,371,895Professional services
    
    
    816,083
    
    
    
    491,841
    
    
    
    1,687,914
    
    
    
    2,148,564
    
    
    
    9,637,365Directors fees
    
    
    143,205
    
    
    
    76,920
    
    
    
    467,127
    
    
    
    225,720
    
    
    
    2,742,458Depreciation
    
    
    5,671
    
    
    
    11,112
    
    
    
    18,647
    
    
    
    18,682
    
    
    
    194,034TOTAL GENERAL AND ADMINISTRATIVE
EXPENSES
    
    
    1,523,943
    
    
    
    933,375
    
    
    
    4,129,327
    
    
    
    3,337,869
    
    
    
    26,347,211LOSS FROM OPERATIONS
    
    
    (2,501,404
    )
    
    
    (1,937,494
    )
    
    
    (6,600,666
    )
    
    
    (5,622,227
    )
    
    
    (42,135,996
    )OTHER INCOME (EXPENSES)Interest and investment income
    
    
    16,932
    
    
    
    172,112
    
    
    
    139,285
    
    
    
    309,893
    
    
    
    824,249Foreign currency transaction gain
    
    
    697,637
    
    
    
    
    
    
    
    1,023,511
    
    
    
    
    
    
    
    1,121,518Miscellaneous ore sales, net of expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    134,242VAT tax refunds
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    132,660Miscellaneous income
    
    
    
    
    
    
    
    
    
    
    17
    
    
    
    2,814
    
    
    
    82,352Interest and financing expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (289,230
    )TOTAL OTHER INCOME (EXPENSE)
    
    
    714,569
    
    
    
    172,112
    
    
    
    1,162,813
    
    
    
    312,707
    
    
    
    2,005,791LOSS BEFORE INCOME TAXES
    
    
    (1,786,835
    )
    
    
    (1,765,382
    )
    
    
    (5,437,853
    )
    
    
    (5,309,520
    )
    
    
    (40,130,205
    )INCOME TAXES
    
    
    23,447
    
    
    
    
    
    
    
    63,639
    
    
    
    
    
    
    
    117,680NET LOSS
    
    $
    (1,810,282
    )
    
    $
    (1,765,382
    )
    
    $
    (5,501,492
    )
    
    $
    (5,309,520
    )
    
    $
    (40,247,885
    )OTHER COMPREHENSIVE LOSS  Foreign
Currency translation adjustments
    
    
    (404,143
    )
    
    
    
    
    
    
    (602,591
    )
    
    
    
    
    
    
    (689,233
    )COMPREHENSIVE LOSS
    
    $
    (2,214,425
    )
    
    $
    (1,765,382
    )
    
    $
    (6,104,083
    )
    
    $
    (5,309,520
    )
    
    $
    (40,937,118
    )BASIC AND DILUTED NET LOSS PER COMMON SHARE
    
    $
    (0.05
    )
    
    $
    (0.05
    )
    
    $
    (0.14
    )
    
    $
    (0.15
    )BASIC AND DILUTED WEIGHTED AVERAGE NUMBER
OF COMMON SHARES OUTSTANDING
    
    
    39,644,979
    
    
    
    37,720,244
    
    
    
    39,551,259
    
    
    
    34,953,913
   3




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##### Table of Contents



METALLINE MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 Period fromNovember 8,Nine months ended
    
    
    1993 (Inception)July 31,
    
    
    to July 31,2008
    
    
    2007
    
    
    2008CASH FLOWS FROM OPERATING ACTIVITIES:Net loss
    
    $
    (5,501,492
    )
    
    $
    (5,309,520
    )
    
    $
    (40,247,885
    )Adjustments to reconcile net loss to net cash used by
operating activities:Depreciation and equipment write-off
    
    
    175,071
    
    
    
    202,202
    
    
    
    835,790Noncash expenses
    
    
    
    
    
    
    
    
    
    
    126,864Foreign currency transaction loss (gain)
    
    
    (1,004,633
    )
    
    
    
    
    
    
    (1,102,641
    )Common stock issued for services
    
    
    
    
    
    
    211,559
    
    
    
    1,237,047Common stock issued for compensation
    
    
    82,840
    
    
    
    
    
    
    
    1,059,946Stock options issued for compensation
    
    
    1,263,425
    
    
    
    79,229
    
    
    
    6,057,614Common stock issued for directors fees
    
    
    231,000
    
    
    
    244,260
    
    
    
    537,180Stock options 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
    
    
    30,689
    
    
    
    1,094,950
    
    
    
    1,883,409(Increase) decrease in:Accounts receivable
    
    
    
    
    
    
    35,934
    
    
    
    Value added tax receivable
    
    
    (462,436
    )
    
    
    (313,425
    )
    
    
    (855,671
    )Other receivables
    
    
    (1,234
    )
    
    
    (37,794
    )
    
    
    (24,906
    )Prepaid expenses
    
    
    (22,467
    )
    
    
    (11,812
    )
    
    
    (40,255
    )Increase (decrease) in:Accounts payable
    
    
    259,075
    
    
    
    (213,230
    )
    
    
    343,577Accounts payable  related parties
    
    
    (68,460
    )
    
    
    (63,540
    )
    
    
    Income tax payable
    
    
    (2,811
    )
    
    
    
    
    
    
    51,403Accrued liabilities and expenses
    
    
    134,771
    
    
    
    (60,792
    )
    
    
    226,585Other liabilities
    
    
    (23,431
    )
    
    
    (10,000
    )
    
    
    75,300Net cash used by operating activities
    
    
    (4,910,093
    )
    
    
    (4,151,979
    )
    
    
    (26,718,519
    )CASH FLOWS FROM INVESTING ACTIVITIES:Purchase of investments
    
    
    
    
    
    
    (15,200,000
    )
    
    
    (21,609,447
    )Proceeds from investment sales
    
    
    7,900,000
    
    
    
    12,225,000
    
    
    
    21,609,447Equipment purchases
    
    
    (788,249
    )
    
    
    (298,103
    )
    
    
    (2,325,086
    )Mining property acquisitions
    
    
    
    
    
    
    (27,708
    )
    
    
    (4,632,037
    )Net cash provided by (used by) investing activities
    
    
    7,111,751
    
    
    
    (3,300,811
    )
    
    
    (6,957,123
    )CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from sales of common stock
    
    
    
    
    
    
    5,671,893
    
    
    
    33,379,207Proceeds from sales of options and warrants
    
    
    
    
    
    
    
    
    
    
    949,890Proceeds from exercise of warrants
    
    
    476,563
    
    
    
    2,172,188
    
    
    
    3,447,966Proceeds from shareholder loans
    
    
    
    
    
    
    
    
    
    
    30,000Payment of note payable
    
    
    
    
    
    
    
    
    
    
    (15,783
    )Net cash provided by financing activities:
    
    
    476,563
    
    
    
    7,844,081
    
    
    
    37,791,280Effect of exchange rates on cash
    
    
    (30,389
    )
    
    
    (27,459
    )
    
    
    (33,319
    )Net increase in cash and cash equivalents
    
    
    2,647,832
    
    
    
    363,832
    
    
    
    4,082,319Cash and cash equivalents beginning of period
    
    
    1,434,487
    
    
    
    689,994
    
    
    
    Cash and cash equivalents end of period
    
    $
    4,082,319
    
    
    $
    1,053,826
    
    
    $
    4,082,319
   4




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##### Table of Contents



METALLINE MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
 Period fromNovember 8,Nine months ended
    
    
    1993 (Inception)July 31,
    
    
    to July 31,2008
    
    
    2007
    
    
    2008SUPPLEMENTAL CASH FLOW DISCLOSURES:Income taxes paid
    
    $
    66,655
    
    
    $
    
    
    
    $
    66,655Interest paid
    
    $
    
    
    
    $
    
    
    
    $
    286,771NON-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
   5




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##### Table of Contents



NOTE 1  ORGANIZATION AND DESCRIPTION OF BUSINESS
     NOTE 2  BASIS OF PRESENTATION
     6




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##### Table of Contents



NOTE 3  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  Reclassifications
  Concentration of Risk
  Earnings Per Share
  Exploration Costs
  Foreign Operations
  IVA Tax Receivable
   7




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##### Table of Contents



NOTE 3  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
 Marketable Securities
 Accounting for
Certain Investments in Debt and Equity Securities
  Income Taxes
   Recent Accounting Pronouncements
 Fair Value Measurements
 The Fair Value Option for Financial Assets and
Financial Liabilities  including an amendment of FASB Statement No. 115
  8




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NOTE 3  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
 Business Combinations
 , Noncontrolling Interests in Consolidated Financial
Statements
 , Disclosures about Derivative Instruments and Hedging
Activities  an amendment of FASB Statement No. 133
 The Hierarchy of Generally Accepted Accounting
Principles
 Accounting for Financial Guarantee Insurance Contracts
- An interpretation of FASB Statement No. 60
  9




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##### Table of Contents



NOTE 4  CONCESSIONS IN THE SIERRA MOJADA DISTRICT
 Sierra Mojada Mining Concessions
    AcquisitionConcession
    
    Method
    
    
    Date
    
    
    Hectares
    
    
    Cost BasisSierra Mojada
    
    Purchased
    
    
    5/30/2000
    
    
    
    4,767.32
    
    
    $
    17,009Mojada 3
    
    Purchased
    
    
    5/30/2000
    
    
    
    722.00
    
    
    
    Unificacion Mineros Nortenos
    
    Purchased
    
    
    8/30/2000
    
    
    
    336.79
    
    
    
    3,945,818Vulcano
    
    Purchased
    
    
    8/30/2000
    
    
    
    4.49
    
    
    
    Esmeralda 1
    
    Purchased
    
    
    8/20/2001
    
    
    
    95.50
    
    
    
    193,915Esmeralda
    
    Purchased
    
    
    3/20/1997
    
    
    
    117.50
    
    
    
    273,907La Blanca
    
    Purchased
    
    
    8/20/2001
    
    
    
    33.50
    
    
    
    131,528Fortuna
    
    Claim Filed
    
    
    12/8/1999
    
    
    
    13.96
    
    
    
    82,205Mojada 2
    
    Claim Filed
    
    
    7/17/2006
    
    
    
    3,500.00
    
    
    
    El Retorno
    
    Purchased
    
    
    4/10/2006
    
    
    
    817.65
    
    
    
    16,520Los Ramones
    
    Purchased
    
    
    4/10/2006
    
    
    
    8.60
    
    
    
    299El Retorno Fracc. 1
    
    Purchased
    
    
    4/20/2006
    
    
    
    5.51
    
    
    
    100Dormidos
    
    Claim Filed
    
    
    4/9/2007
    
    
    
    2,326.10
    
    
    
    Agua Mojada
    
    Claim Filed
    
    
    1/26/2007
    
    
    
    2,900.00
    
    
    
    6,540Alote(1)
    
    Claim Filed
    
    
    5/17/2007
    
    
    
    3,749.00
    
    
    
    6,501Volcan Dolores
    
    Purchased
    
    
    9/24/2007
    
    
    
    10.49
    
    
    
    165,40119,408.41
    
    
    $
    4,839,743
 
 (1)
    
    Title for this concession is pending.  10




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##### Table of Contents



NOTE 5  PROPERTY AND EQUIPMENT
  July 31,
    
    
    October 31,2008
    
    
    2007Mining equipment
    
    $
    1,609,111
    
    
    $
    838,635Well equipment
    
    
    40,711
    
    
    
    Communication equipment
    
    
    9,497
    
    
    
    8,902Buildings and structures
    
    
    170,328
    
    
    
    153,590Vehicles
    
    
    156,934
    
    
    
    172,449Computer equipment and software
    
    
    192,511
    
    
    
    145,167Office equipment
    
    
    13,342
    
    
    
    8,134Assets under construction
    
    
    22,831
    
    
    
    2,215,265
    
    
    
    1,326,877Less: Accumulated depreciation
    
    
    (587,680
    )
    
    
    (407,457
    )$
    1,627,585
    
    
    $
    919,420
  NOTE 6  SHAREHOLDER RIGHTS PLAN
   NOTE 7  COMMON STOCK
 th
  11




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##### Table of Contents



NOTE 8  STOCK OPTIONS
   Nine months endedJuly 31,Options
    
    2008
    
    
    2007Expected volatility
    
    
    73
    %
    
    
    75
    %Risk-free interest rate
    
    
    3.4
    %
    
    
    5.1
    %Dividend yield
    
    
    
    
    
    
    Expected term (in years)
    
    
    8.05
    
    
    
    8.70
   WeightedWeighted
    
    
    AverageAverage
    
    
    Remaining
    
    
    AggregateExercise
    
    
    Contractual
    
    
    IntrinsicOptions
    
    Shares
    
    
    Price
    
    
    Life (Years)
    
    
    ValueOutstanding at October 31, 2007
    
    
    3,650,000
    
    
    $
    2.63Granted
    
    
    750,004
    
    
    
    2.19Exercised
    
    
    
    
    
    
    Forfeited or Expired
    
    
    
    
    
    
    Outstanding at July 31, 2008
    
    
    4,400,004
    
    
    $
    2.56
    
    
    
    7.36
    
    
    $
    Vested or Expected to Vest at
July 31, 2008
    
    
    4,400,004
    
    
    $
    2.56
    
    
    
    7.36
    
    
    $
    Exercisable at July 31, 2008
    
    
    3,533,333
    
    
    $
    2.49
    
    
    
    7.17
    
    
    $
    
  12




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##### Table of Contents



NOTE 8  STOCK OPTIONS (continued)
   Options Outstanding
    
    
    Options ExercisableWeightedAve.
    
    
    Weighted
    
    
    
    
    
    
    WeightedRemaining
    
    
    Average
    
    
    
    
    
    
    AverageExercise
    
    Number
    
    
    Contractual
    
    
    Exercise
    
    
    Number
    
    
    ExercisePrice
    
    Outstanding
    
    
    Life (Years)
    
    
    Price
    
    
    Exercisable
    
    
    Price$1.25-1.32
    
    
    200,000
    
    
    
    1.60
    
    
    $
    1.29
    
    
    
    200,000
    
    
    $
    1.292.15-2.85
    
    
    3,950,004
    
    
    
    7.55
    
    
    
    2.51
    
    
    
    3,283,333
    
    
    
    2.534.30
    
    
    250,000
    
    
    
    8.89
    
    
    
    4.30
    
    
    
    50,000
    
    
    
    4.30$1.25-4.30
    
    
    4,400,004
    
    
    
    7.36
    
    
    $
    2.56
    
    
    
    3,533,333
    
    
    $
    2.49
  Weighted-AverageGrant-DateNonvested Shares
    
    Shares
    
    
    Fair ValueNonvested at October 31, 2007
    
    
    400,000
    
    
    $
    2.79Granted
    
    
    750,004
    
    
    
    1.62Vested
    
    
    (283,333
    )
    
    
    1.56Forfeited
    
    
    
    
    
    
    Nonvested at July 31, 2008
    
    
    866,671
    
    
    $
    2.18
      13




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##### Table of Contents



NOTE 9  WARRANTS
   WeightedWeighted
    
    
    AverageAverage
    
    
    Remaining
    
    
    AggregateExercise
    
    
    Contractual
    
    
    IntrinsicWarrants
    
    Shares
    
    
    Price
    
    
    Life (Years)
    
    
    ValueOutstanding at October 31, 2007
    
    
    14,380,147
    
    
    $
    1.44Issued with private placement
    
    
    
    
    
    
    Issued for services
    
    
    100,000
    
    
    
    2.00Exercised
    
    
    (381,250
    )
    
    
    1.25Forfeited or expired
    
    
    (152,333
    )
    
    
    1.88Outstanding at July 31, 2008
    
    
    13,946,564
    
    
    $
    1.45
    
    
    
    2.49
    
    
    $
    
  Warrants Outstanding and ExercisableWeighted Ave.Remaining
    
    
    WeightedNumber
    
    
    Contractual
    
    
    AverageExercise Price
    
    Outstanding
    
    
    Life (Years)
    
    
    Exercise Price$1.25 - $1.75
    
    
    11,985,169
    
    
    
    2.46
    
    
    $
    1.25$2.00 - $2.63
    
    
    1,461,395
    
    
    
    2.44
    
    
    
    2.39$3.40 - $5.00
    
    
    500,000
    
    
    
    3.43
    
    
    
    3.40$1.25 - $5.00
    
    
    13,946,564
    
    
    
    2.49
    
    
    $
    1.45
     14




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##### Table of Contents



NOTE 9  WARRANTS (continued)
  NOTE 10  COMMITMENTS AND CONTINGENCIES
 Compliance with Environmental Regulations
  Employment Agreements
   Royalty Agreement
  Mining Concessions
  NOTE 11  INCOME TAXES
 Provision for Taxes
    15




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##### Table of Contents



NOTE 11  INCOME TAXES (continued)
 Adoption of FIN 48  Accounting for Uncertainty in Income Taxes
     United States:
    
    1993 and all following yearsMexico:
    
    1997 and all following years
   NOTE 12  SEGMENT INFORMATION
   July 31,
    
    
    October 31,2008
    
    
    2007Identifiable assetsMexico
    
    $
    7,675,000
    
    
    $
    6,063,000United States
    
    
    3,860,000
    
    
    
    9,170,000$
    11,535,000
    
    
    $
    15,233,000
 November 8,1993 (Inception)For the nine months ended
    
    
    toJuly 31,
    
    
    July 31,2008
    
    
    2007
    
    
    2008Net loss for the periodMexico
    
    $
    1,343,000
    
    
    $
    2,071,000
    
    
    $
    8,962,000United States
    
    
    4,158,000
    
    
    
    3,239,000
    
    
    
    31,286,000$
    5,501,000
    
    
    $
    5,310,000
    
    
    $
    40,248,000
  16




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##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
  Cautionary Statement about Forward-Looking Statements
 
 
    
    The amount and nature of future capital, development and exploration expenditures;
    
    The timing of exploration activities; and
    
    Business strategies and development of our business plan.
   Plan of Operation
  Feasibility Study- Oxide Zinc Mineralization
   17




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##### Table of Contents



Test Mining
   18




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##### Table of Contents



Continued Improvement of the Sierra Mojada Infrastructure
  
    
    The Company purchased one additional drill and has hired and trained additional
personnel to operate this equipment. The additional diamond drilling capabilities not only
eliminated dependence on outside contractors, but also increased our ability to quickly
respond to any additional drilling requirements for the feasibility study and has allowed
for continued exploration of the Silver Polymetallic Mineralization.
    
    An onsite sample laboratory was completed at Sierra Mojada and is being used to get
immediate feedback on drilling results and reduce outside sampling and assaying costs. All
samples that will be incorporated in mineral resource models will be assayed in duplicate
by the outside laboratory.
    
    A water pipeline was completed to provide water for increased drilling activities,
accommodate test mining and reduce our water costs.
 Exploration of Silver Polymetallic Mineralization
   Cautionary Note
   19




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##### Table of Contents



Results of Operation
 Three Months Ended July 31, 2008
  Exploration and property holding costs
  General and Administrative Costs
     Other Income (Expense)
   20




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##### Table of Contents



Nine months ended July 31, 2008
  Exploration and property holding costs
 in-fill
 General and Administrative Costs
     Other Income (Expense)
   21




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##### Table of Contents



Liquidity and Capital Resources
    3-6 months
  Recent Accounting Pronouncements
  Fair Value Measurements
 The Fair Value Option for Financial Assets and
Financial Liabilities  including an amendment of FASB Statement No. 115
  22




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##### Table of Contents



Business Combinations
 , Noncontrolling Interests in Consolidated Financial
Statements
 , Disclosures about Derivative Instruments and Hedging
Activities  an amendment of FASB Statement No. 133
  Accounting for Financial Guarantee Insurance Contracts
- An interpretation of FASB Statement No. 60
 Critical Accounting Policies
   23




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##### Table of Contents



Property Concessions
   Deferred tax assets and liabilities
  Estimates
  Foreign Currency Translation
   24




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##### Table of Contents



Accounting for Stock Options and Warrants Granted to Employees and Non-employees
 Share-Based
   Impairment of Long-Lived Assets
  Environmental Matters
    25




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##### Table of Contents



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Foreign Currency Exchange Risk
 
 ITEM 4T. CONTROLS AND PROCEDURES
 (a) Evaluation of Disclosure Controls and Procedures.
   (b) Changes In Internal Controls Over Financial Reporting.
    26




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##### Table of Contents



PART II  OTHER INFORMATION
 Item 1. LEGAL PROCEEDINGS
  Item 1A. RISK FACTORS
  Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND PROCEEDS
 Recent Sales of Unregistered Securities
   Item 3. DEFAULT UPON SENIOR SECURITIES
  Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  Item 5. OTHER INFORMATION
   27




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##### Table of Contents



Item 6. EXHIBITS
 3.1
    (a)
    
    Articles of Incorporation.13.1
    (b)
    
    Certificate of Amendment to Articles of Incorporation.23.2
    
    
    Bylaws.231.1
    
    
    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 adopted pursuant 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 to Section 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.  28




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##### Table of Contents



SIGNATURES
  METALLINE MINING COMPANYDate: September 10, 2008
    By:
    /s/ Merlin BinghamMerlin Bingham,President and Principal Executive OfficerDate: September 10, 2008
    By:
    /s/ Robert DeversRobert Devers,Chief Financial Officer and 
Principal Accounting Officer  29




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##### Table of Contents



EXHIBIT INDEX
 ExhibitNo.
    
    Description31.1
    
    
    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 adopted pursuant 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 to Section 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.
  30