SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549





FORM
10-K





x ANNUAL REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE SECURITIES


EXCHANGE
ACT OF 1934





For the
fiscal year ended December 31, 2008





OR





o TRANSITION REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES


EXCHANGE
ACT OF 1934





For the
transition period from to





Commission
File No. 000-32429





GOLDSPRING,
INC.


(Exact
name of registrant as specified in its charter)





Nevada
            
            1081
            
            65-0955118(State
      or other jurisdiction of
              incorporation
      or organization)
            
            (Primary
      Standard Industrial
              Classification
      Code Number)
            
            (I.R.S.
      Employer Identification
              No.)





P.O. Box
1118


Virginia
City, NV 89440


(775)
847-5272


(Address,
including zip code, and telephone number,


including
area code, of registrant's principal executive offices)





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


Securities
Registered pursuant to Section 12(g) of the Act: Common Stock, par value
$.000666 per share





Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.


Yes  ̈  No x





Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act.


Yes  ̈  No x





Indicate
by check mark whether the issuer (1) has 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  ̈





Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. x





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer,” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.




Large
      accelerated filer  ̈
              Accelerated
      filerNon-accelerated
      filer  ̈
              Smaller
      reporting company x





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).


Yes  ̈  No x





The
aggregate market value of the 2,685,360,839 shares of voting stock held by
non-affiliates of the registrant based on the closing price on the Over the
Counter Bulletin Board on June 30, 2008 was $80,500,000.





Indicate
the number of shares outstanding of each of the registrant’s classes of common
stock, as of the latest practicable date.




Shares
      OutstandingTitle of Class
              March 20, 2009Common
      Stock
              3,477,847,312





DOCUMENTS
INCORPORATED BY REFERENCE





None








TABLE
OF CONTENTS





PART
      IITEM
      1
                            BUSINESS
                            
                            
                            3ITEM
      1A
                            RISK
      FACTORS
                            
                            
                            4ITEM
      2
                            PROPERTIES
                            
                            
                            10ITEM
      3
                            LEGAL
      PROCEEDINGS
                            
                            
                            36ITEM
      4
                            SUBMISSION
      OF MATTERS TO VOTE OF SECURITY HOLDERS
                            
                            
                            36PART
      IIITEM
      5
                            MARKET
      FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
      PURCHASES OF EQUITY SECURITIES
                            
                            
                            36ITEM
      7
                            MANAGEMENT'S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS
                            
                            
                            37ITEM
      8
                            FINANCIAL
      STATEMENTS AND SUPPLEMENTARY DATA
                            
                            
                            51ITEM
      9
                            CHANGES
      IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE
                            
                            
                            52ITEM
      9A(T)
                            CONTROLS
      AND PROCEDURES
                            
                            
                            52ITEM
      9B
                            OTHER
      INFORMATION
                            
                            
                            53PART
      IIIITEM
      10
                            DIRECTORS
      , EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
                            
                            
                            53ITEM
      11
                            EXECUTIVE
      COMPENSATION
                            
                            
                            55ITEM
      12
                            SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
      STOCKHOLDER MATTERS
                            
                            
                            57ITEM
      13
                            CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
      INDEPENDENCE
                            
                            
                            58ITEM
      14
                            PRINCIPAL
      ACCOUNTANT FEES AND SERVICES
                            
                            
                            58PART
      IVITEM
      15
                            EXHIBITS,
      FINANCIAL STATEMENT SCHEDULES
                            
                            
                            59SIGNATURES
                            
                            
                            60










Statement
Regarding Forward-Looking Statements





The
statements contained in this report on Form 10-K that are not purely historical
are forward-looking statements within the meaning of applicable securities laws.
Forward-looking statements include statements regarding our “expectations,”
“anticipation,” “intentions,” “beliefs,” or “strategies” regarding the future.
Forward looking statements also include statements regarding fluctuations in the
price of gold or certain other commodities, (such as silver, copper, diesel
fuel, and electricity); changes in national and local government legislation,
taxation, controls, regulations and political or economic changes in the United
States or other countries in which we may carry on business in the future;
business opportunities that may be presented to or pursued by us; our ability to
integrate acquisitions successfully; operating or technical difficulties in
connection with exploration or mining activities; the speculative nature of gold
exploration, including risks of diminishing quantities or grades of reserves;
and contests over our title to properties. All forward-looking statements
included in this report are based on information available to us as of the
filing date of this report, and we assume no obligation to update any such
forward-looking statements. Our actual results could differ materially from the
forward-looking statements. Among the factors that could cause actual results to
differ materially are the factors discussed in Item 1A, “Description of Business
- Risk Factors.”




2





PART
I





Item 1. Business





Overview





GoldSpring
Inc. (the Company) is a North American precious metals mining company, focused
in Nevada, with land holdings in the Comstock Gold-Silver District of Nevada.
The Company has located a deposit of mineralized material at the Hartford
Complex and has secured several of the key mining permits required to develop
the project. The Company is currently engaged in an aggressive exploration
program to define the extent of the Hartford deposit, assess other key
exploration targets on its large land package and push the project toward
production. The high-grade nature of the bulk tonnage Hartford deposit and its
favorable configuration has potentially positioned the Company to become a new
gold-silver producer in the future.





In early
2007, we temporarily closed our mining operation. This shutdown allowed the
Company to focus on the geology to gain a comprehensive understanding of the
mineralization at the Hartford complex at our Comstock project. The company
commenced a drilling program in December 2007 to further delineate the
mineralized material and to determine the most effective process for mining
operations. The goal has been to define and map the geology and to prepare
geologic cross sections to be utilized in mine planning and as a result, to be
able to build a new mine model using geostatistics and extensive drill hole
data.  There is also ongoing metallurgic testing to attempt to
maximize recovery of the high grade fraction of the mineralized material and to
determine optimum size to continue heap leaching.





The
exploration and developmental drilling program commenced at the Comstock project
in mid December 2007 and continued throughout 2008.  The Company as of
December 31, 2008 has drilled 130 holes at the Lucerne / Hartford Complex at its
Comstock Project. The Company intends to continue the exploration drilling
program throughout 2009; however, lack of adequate funding will impact the pace
of the drilling program.





We are
actively seeking financing to meet our working capital needs and fuel our
growth. If we are unable to secure such financing, we may be unable to continue
as a going concern.





The
following table sets forth certain information regarding our current
projects.




Name
            
            Location
            
            TypeComstock
      LodeGold and Silver Properties
            
            Storey
      and Lyon County, Nevada
            
            Gold
      and silver lode claimsComo
            
            Lyon
      County, Nevada
            
            Gold
      and silver lode claimsGold
      Canyon
            
            Lyon
      County, Nevada
            
            Placer
      gold claimsSpring
      Valley
            
            Lyon
      County, Nevada
            
            Placer
      gold claims





Our
Comstock Lode exploration project is located between Carson City and Virginia
City, Nevada, about 30 miles southeast of Reno in an area known as American
Flat. Our Gold Canyon and Spring Valley placer claims are located in Lyon
County, Nevada, five miles south of our Plum property, in American Flat / Gold
Hill, Nevada. Our Big Mike Copper property is located approximately two hours
east of Reno near Winnemucca, Nevada.





Our
Comstock exploration activities include open pit gold and silver test mining. As
defined by SEC Industry Guide 7, we have not yet established any proven or
probable reserves at this project. Therefore, all of our activities are
considered test mining and exploratory in nature. Test mining at Plum commenced
in the third quarter of 2004. We have not as yet explored or developed our Como
claims. We also have not completed any exploratory activities on our Gold
Canyon, Spring Valley, or Big Mike properties. We have not established reserves
on any of these properties. Therefore, there can be no assurance that we will be
able to produce sufficient gold to cover our investment and operating
costs.




3





Employees





We
approximately have 17 employees, including our managers, administrative staff,
engineers, geologists, lab technicians, and process operators. We use
consultants with specific skills to assist with various aspects of our
operation, including project evaluation, due diligence, and acquisition
initiatives.





Principal
Markets





We plan
to sell our production on world markets at prices established by market forces.
These prices are not within our control.





Government
Regulation





Mining
operations and exploration activities are subject to various national, state,
and local laws and regulations in the United States, which govern prospecting,
development, mining, production, exports, taxes, labor standards, occupational
health, waste disposal, protection of the environment, mine safety, hazardous
substances, and other matters. We have obtained or have pending applications for
those licenses, permits, and other authorizations currently required to conduct
our exploration and other programs. We believe that we are in compliance in all
material respects with applicable mining, health, safety, and environmental
statutes and regulations.





Reclamation





We are
generally required to mitigate long-term environmental impacts by stabilizing,
contouring, resloping, and revegetating various portions of a site after mining
and mineral processing operations are completed. These reclamation efforts are
conducted in accordance with detailed plans, which must be reviewed and approved
by the appropriate regulatory agencies.





The
Nevada Revised Statutes and regulations promulgated there under by the Nevada
State Environmental Commission and the Nevada Division of Environmental
Protection, Bureau of Mining and Reclamation require a surety bond to be posted
for mining projects to assure we will leave the site safe, stable and capable of
providing for a productive post-mining land use. Pursuant to the approved
Reclamation Plan for our Comstock project, we posted a surety bond in the amount
of $1,106,882, of which $776,768 was in the form of a cash deposit and the
balance was secured from a surety agent.





Competition





We
compete with other mineral exploration and mining companies in connection with
the acquisition of gold and other mineral properties. There may be competition
for gold acquisition opportunities, some of which may involve other companies
having substantially greater financial resources than we do.





Financing
Events




·
            In 2008, we financed operations
      through issuance of promissory notes and sales of our common stock, all in
      private placement transactions, which provided us with $5,520,000 in
      funding.





Item
1A.  Risk
Factors





An
investment in our common stock involves risk. You should carefully consider the
following risk factors, in addition to those discussed elsewhere in this report,
in evaluating our company, its business, and prospects. The following risks
could cause our business, financial condition, and operating results to be
materially and adversely affected.




4





We
have limited resources and our inability to obtain additional financing could
negatively affect our growth and success.





We have
incurred substantial losses since our inception, and we are currently
experiencing a cash flow deficiency from operations. Our current cash flow and
capital resources are limited, and we may require additional funds to pursue our
business. We may not be able to secure further financing in the future. If we
are not able to obtain additional financing on reasonable terms, we may not be
able to execute our business strategy, conduct our operations at the level
desired, or even to continue business.





We
have received a qualified report from our independent auditors





Our
independent auditors report on our financial statements indicates that our
recurring losses from operations and working capital deficit raise substantial
doubt about our ability to continue as a going concern





Inability
to raise sufficient funds to increase growth





Our
recent financings have only provided capital to continue existing operations but
not to continue significant exploration and growth. Without the ability to
attract sufficient amounts of capital at any one time, it is unlikely that we
can achieve profitability in the foreseeable future.





We have invested capital in high-risk
mineral projects where we have not conducted sufficient exploration and
engineering studies.





We have
invested capital in various mineral properties and projects in Nevada where we
may not have conducted sufficient exploration and engineering studies to
minimize the risk of project failure to the extent that is typical in the mining
industry. Our mineral projects involve high risks because we have not invested
substantial sums in the characterization of mineralized material, geologic
analysis, metallurgical testing, mine planning, and economic analysis to the
same extent that other mining companies might deem reasonable. Standard industry
practice calls for a mining company to prepare a formal mine plan and mining
schedule and have these documents reviewed by a third party specialist. We do
not have a formal mine plan that has been reviewed by a third party specialist.
Because we have not established proven or probable reserves, there can be no
assurance that we will be able to produce sufficient gold to recover our
investment and operating costs.





We
will not be successful unless we recover precious metals and sell them for a
profit.





Our
success depends on our ability to recover precious metals, process them, and
successfully sell them for more than the cost of production. The success of this
process depends on the market prices of metals in relation to our costs of
production. We may not always be able to generate a profit on the sale of gold
or other minerals because we can only maintain a level of control over our costs
and have no ability to control the market prices. The total cash costs of
production at any location are frequently subject to great variation from year
to year as a result of a number of factors, such as the changing composition of
the mineralized material , metallurgy, and exploration activities in response to
the physical shape and location of the deposit. In addition costs are affected
by the price of commodities, such as fuel and electricity. Such commodities are
at times subject to volatile price movements, including increases that could
make production at certain operations less profitable. A material increase in
production costs or a decrease in the price of gold or other minerals could
adversely affect our ability to earn a profit on the sale of gold or other
minerals.





We
do not have proven or probable reserves, and there is no assurance that the
quantities of precious metals we produce will be sufficient to recover our
investment and operating costs.





Our
success depends on our ability to produce sufficient quantities of precious
metals to recover our investment and operating costs. We do not have proven or
probable reserves. There can be no assurance that our exploration activities
will result in the discovery of sufficient quantities of mineralized material to
lead to a commercially successful operation.




5





The
cost of our exploration and acquisition activities is substantial, and there is
no assurance that the quantities of minerals we discover or acquire will justify
commercial operations or replace reserves established in the
future.





Mineral
exploration, particularly for gold and other precious metals, is highly
speculative in nature, involves many risks, and frequently is nonproductive.
There can be no assurance that our exploration and acquisition activities will
be commercially successful. Once gold mineralization is discovered, it may take
a number of years from the initial phases of drilling until production is
possible, during which time the economic feasibility of production may change.
Substantial expenditures are required to acquire existing gold properties, to
establish ore reserves through drilling and analysis, to develop metallurgical
processes to extract metal from the mineralized material, and in the case of new
properties, to develop the processing facilities and infrastructure at any site
chosen for mineral exploration. There can be no assurance that any mineralized
material that may be discovered or acquired in the future will be in sufficient
quantities or of adequate grade to justify commercial operations or that the
funds required for mineral production operation can be obtained on a timely or
reasonable basis. Mineral exploration companies must continually replace
mineralized material depleted by production. As a result, there can be no
assurance that we will be successful in replacing any mineralized material
acquired or established in the future.





The
price of gold fluctuates on a regular basis and a downturn in price could
negatively impact our operations and cash flow.





Our
operations are significantly affected by changes in the market price of gold.
Gold prices can fluctuate widely and may be affected by numerous factors, such
as expectations for inflation, levels of interest rates, currency exchange
rates, central bank sales, forward selling or other hedging activities, demand
for precious metals, global or regional political and economic crises, and
production costs in major gold-producing regions, such as South Africa and the
former Soviet Union. The aggregate effect of these factors, all of which are
beyond our control, is impossible for us to predict. The demand for and supply
of gold affect gold prices, but not necessarily in the same manner as supply and
demand affect the prices of other commodities. The supply of gold consists of a
combination of new mineral production and existing stocks of bullion and
fabricated gold held by governments, public and private financial institutions,
industrial organizations, and private individuals. As the amount produced in any
single year constitutes a small portion of the total potential supply of gold,
normal variations in current production do not have a significant impact on the
supply of gold or on its price. If gold prices decline substantially, it could
adversely affect the realizable value of our assets and potential future results
of operations and cash flow.





The
use of hedging instruments may not prevent losses being realized on subsequent
price decreases or may prevent gains being realized from subsequent price
increases.





We may
from time to time sell some future production of gold pursuant to hedge
positions. If the gold price rises above the price at which future production
has been committed under these hedge instruments, we will have an opportunity
loss. However, if the gold price falls below that committed price, our revenues
will be protected to the extent of such committed production. In addition, we
may experience losses if a hedge counterparty defaults under a contract when the
contract price exceeds the gold price. As of the date of filing of this report,
we have no open hedge positions.




6





Since
our business consists of exploring for or acquiring gold prospects, the drop in
the price of gold will negatively affect our asset values, cash flows, potential
revenues and profits.





We plan
to pursue opportunities to acquire properties with gold mineralized material and
exploration potential. The price that we pay to acquire these properties will be
influenced, in large part, by the price of gold at the time of the acquisition.
Our potential future revenues are expected to be derived from the production and
sale of gold from these properties or from the sale of some of these properties.
The value of any mineralized material, and the value of any potential mineral
production therefrom, will vary in direct proportion to variations in those
mineral prices. The price of gold has fluctuated widely as a result of numerous
factors beyond our control. The effect of these factors on the price of gold,
and therefore the economic viability of any of our projects, cannot accurately
be predicted. Any drop in the price of gold would negatively affect our asset
values, cash flows, potential revenues, and profits.





We
compete with other mineral exploration and mining companies





We
compete with other mineral exploration and mining companies or individuals,
including large, established mining companies with substantial capabilities and
financial resources, to acquire rights to mineral properties containing gold and
other minerals. There is a limited supply of desirable mineral lands available
for claim staking, lease, or other acquisition. There can be no assurance that
we will be able to acquire mineral properties against competitors with
substantially greater financial resources than we have.





Our
activities are inherently hazardous and any exposure may exceed our insurance
limits or may not be insurable.





Mineral
exploration and operating activities are inherently hazardous. Operations in
which we have direct or indirect interests will be subject to all the hazards
and risks normally incidental to exploration and production of gold and other
metals, any of which could result in work stoppages, damage to property, and
possible environmental damage. The nature of these risks is such that
liabilities might exceed any liability insurance policy limits. It is also
possible that the liabilities and hazards might not be insurable, or we could
elect not to insure ourselves against such liabilities because of the high
premium costs, in which event, we could incur significant costs that could have
a material adverse effect on our financial condition.





We
do not have proven or probable reserves, and our mineral calculations are only
estimates; any material change may negatively affect the economic viability of
our properties.





Substantial
expenditures are required to acquire existing gold properties with established
reserves or to establish proven or probable reserves through drilling and
analysis. We do not anticipate expending sums for additional drilling and
analysis to establish proven or probable reserves on our properties. We drill in
connection with our mineral exploration activities and not with the purpose of
establishing proven and probable reserves. Therefore, our activity must be
called exploration or test mining. While we estimate the amount of mineralized
material we believe exists on our properties, our calculations are estimates
only, subject to uncertainty due to factors, including the quantity and grade of
the material, metal prices, and recoverability of minerals in the mineral
recovery process. There is a great degree of uncertainty attributable to the
calculation of any mineralized material, particularly where there has not been
significant drilling, mining, and processing. Until the mineralized material
located on our properties is actually mined and processed, the quantity and
quality of the mineralized material must be considered as an estimate only. In
addition, the quantity of mineralized material may vary depending on metal
prices. Any material change in the quantity of mineralized material may
negatively affect the economic viability of our properties. In addition, there
can be no assurance that we will achieve the same recoveries of metals contained
in the mineralized material as in small-scale laboratory tests or that we will
be able to duplicate such results in larger scale tests under on-site conditions
or during production.





Our
operations are subject to strict environmental regulations, which result in
added costs of operations and operational delays.





Our
operations are subject to environmental regulations, which could result in
additional costs and operational delays. All phases of our operations are
subject to environmental regulation. Environmental legislation is evolving in
some countries and jurisdictions in a manner that may require stricter standards
and enforcement, increased fines and penalties for non-compliance, more
stringent environmental assessments of proposed projects, and a heightened
degree of responsibility for companies and their officers, directors, and
employees. There is no assurance that any future changes in environmental
regulation will not negatively affect our projects.




7





We
have no insurance for environmental problems.





Insurance
against environmental risks, including potential liability for pollution or
other hazards as a result of the disposal of waste products occurring from
exploration and production, has not been available generally in the mining
industry. We have no insurance coverage for most environmental risks. In the
event of a problem, the payment of environmental liabilities and costs would
reduce the funds available to us for future operations. If we are unable to fund
fully the cost of remedying an environmental problem, we might be required to
enter into an interim compliance measure pending completion of the required
remedy.





We
are subject to federal laws that require environmental assessments and the
posting of bonds, which add significant costs to our operations and delays in
our projects.





The
Bureau of Land Management requires that mining operations on lands subject to
its regulation obtain an approved plan of operations subject to environmental
impact evaluation under the National Environmental Policy Act. Any significant
modifications to the plan of operations may require the completion of an
environmental assessment or Environmental Impact Statement prior to approval.
Mining companies must post a bond or other surety to guarantee the cost of
post-mining reclamation. These requirements could add significant additional
cost and delays to any mining project undertaken by us. Our mineral exploration
operations are required to be covered by reclamation bonds deemed adequate by
regulators to cover these risks. We believe we currently maintain adequate
reclamation bonds for our operations.





Changes
in state laws, which are already strict and costly, can negatively affect our
operations by becoming stricter and costlier.





At the
state level, mining operations in Nevada are regulated by the Nevada Division of
Environmental Protection, or NDEP. Nevada state law requires our Nevada projects
to hold Nevada Water Pollution Control Permits, which dictate operating controls
and closure and post-closure requirements directed at protecting surface and
ground water. In addition, we are required to hold Nevada Reclamation Permits
required under Nevada law. These permits mandate concurrent and post-mining
reclamation of mines and require the posting of reclamation bonds sufficient to
guarantee the cost of mine reclamation. Other Nevada regulations govern
operating and design standards for the construction and operation of any source
of air contamination and landfill operations. Any changes to these laws and
regulations could have a negative impact on our financial performance and
results of operations by, for example, requiring changes to operating
constraints, technical criteria, fees or surety requirements.





Title
claims against our properties could require us to compensate parties, if
successful, and divert management’s time from operations.





There may
be challenges to our title in the properties in which we hold material
interests. If there are title defects with respect to any of our properties, we
might be required to compensate other persons or perhaps reduce our interest in
the effected property. The validity of unpatented mineral claims, which
constitute most of our holdings in the United States, is often uncertain and may
be contested by the federal government and other parties. The validity of an
unpatented mineral claim, in terms of both its location and its maintenance,
depends on strict compliance with a complex body of federal and state statutory
and decisional law. Although we have attempted to acquire satisfactory title to
our properties, we have not obtained title opinions or title insurance with
respect to the acquisition of the unpatented mineral claims. While we have no
pending claims or litigation pending contesting title to any of our properties,
there is nothing to prevent parties from challenging our title to any of our
properties. While we believe we have satisfactory title to our properties, some
risk exists that some titles may be defective or subject to challenge. Also, in
any such case, the investigation and resolution of title issues would divert
management’s time from ongoing exploration programs.




8





We
have never paid a cash dividend on our common stock and do not expect to pay
cash dividends in the foreseeable future.





We have
never paid cash dividends, and we do not plan to pay cash dividends in the
foreseeable future. Consequently, your only opportunity to achieve a return on
your investment in us will be if the market price of our common stock
appreciates and you sell your shares at a profit. There is no assurance that the
price of our common stock that will prevail in the market after this offering
will ever exceed the price that you pay.





Our
business depends on a limited number of key personnel, the loss of whom could
negatively affect us.





Robert
Faber, Chief Executive Officer, President and acting-Chief Financial Officer and
Jim Golden, our COO, are important to our success. If either becomes unable or
unwilling to continue in his present position, our business and financial
results could be materially negatively affected.





If we fail to adequately manage our
growth, we may not be successful in growing our business and becoming
profitable.





We plan
to expand our business and the number of employees over the next 12 months. In
particular, we intend to hire additional operational personnel. Our inability to
hire and retain additional qualified employees could have a negative impact on
our chances of success.





The
issuance of securities by us may not have complied with or violated federal and
state securities laws and, as a result, the holders of these shares and warrants
may have rescission rights.





Securities
issued by us may not have complied with applicable federal and state securities
laws, the result of which is that the holders of these securities may have
rescission rights that could require us to reacquire the
securities.





Outstanding
convertible securities and warrants may result in substantial
dilution.





At
December 31, 2008 we had outstanding 3, 380,948,371 shares of common stock. In
addition, we had outstanding convertible notes and related interest plus various
common stock purchase warrants. At December 31, 2008, these notes, related
interest and warrants were convertible into or exercisable for a total of
approximately 1.5 billion additional shares of our common stock, subject to
further anti-dilution provisions.





Our
stock is a penny stock and trading of our stock may be restricted by the SEC’s
penny stock regulations, which may limit a stockholder’s ability to buy and sell
our stock.





Our stock
is a penny stock. The Securities and Exchange Commission has adopted Rule 15g-9,
which generally defines “penny stock” to be any equity security that has a
market price (as defined) less than $5.00 per share or an exercise price of less
than $5.00 per share, subject to certain exceptions. Our securities are covered
by the penny stock rules, which impose additional sales practice requirements on
broker-dealers that sell to persons other than established customers and
“accredited investors.” The term “accredited investor” refers generally to
institutions with assets in excess of $5,000,000 or individuals with a net worth
in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly
with their spouse. The penny stock rules require a broker-dealer, prior to a
transaction in a penny stock not otherwise exempt from the rules, to deliver a
standardized risk disclosure document in a form prepared by the SEC, which
provides information about penny stocks and the nature and level of risks in the
penny stock market. The broker-dealer also must provide the customer with
current bid and offer quotations for the penny stock, the compensation of the
broker-dealer and its salesperson in the transaction, and monthly account
statements showing the market value of each penny stock held in the customer’s
account. The bid and offer quotations, and the broker-dealer and salesperson
compensation information, must be given to the customer orally or in writing
prior to effecting the transaction and must be given to the customer in writing
before or with the customer’s confirmation. In addition, the penny stock rules
require that, prior to a transaction in a penny stock not otherwise exempt from
these rules, the broker-dealer must make a special written determination that
the penny stock is a suitable investment for the purchaser and receive the
purchaser’s written agreement to the transaction. These disclosure requirements
may have the effect of reducing the level of trading activity in the secondary
market for the stock that is subject to these penny stock rules. Consequently,
these penny stock rules may affect the ability of broker-dealers to trade our
securities. We believe that the penny stock rules discourage investor interest
in and limit the marketability of our common stock. NASD sales practice
requirements may also limit a stockbroker’s ability to buy or sell our
stock.




9





In
addition to the “penny stock” rules promulgated by the Securities and Exchange
Commission, the NASD has adopted rules that require that in recommending an
investment to a customer, a broker-dealer must have reasonable grounds for
believing that the investment is suitable for that customer. Prior to
recommending speculative low priced securities to their non-institutional
customers, broker-dealers must make reasonable efforts to obtain information
about the customer’s financial status, tax status, investment objectives, and
other information. Under interpretation of these rules, the NASD believes that
there is a high probability that speculative low priced securities will not be
suitable for at least some customers. The NASD requirements make it more
difficult for broker-dealers to recommend that their customers buy our common
stock, which may limit your ability to buy or sell our stock and have an adverse
effect on the market for our shares.





Item 2. Properties





Comstock
Lode Project





Location,
Access, and Title to the Property





We own
the following mineral exploration projects: The Comstock gold and silver
exploration and test mining project and the Como mineral Claims. The Comstock
project is located in Storey and Lyon Counties, Nevada. The Plum property is
physically situated roughly three miles south of Virginia City, Nevada. Paved
state highways from Reno, Carson City, and Virginia City provide access to the
property. The Como mineral Claims are located in Lyon County, Nevada,
approximately 15 miles east of Carson City, and have not been explored or
developed by us.




10








11





OCCIDENTAL
LEASE:





Our
property rights to the mineral properties consist of several mineral leases,
unpatented mineral claims, and fee ownership of real property. We have a mineral
exploration and mining lease agreement with Claire Obester, Jim Obester, Alan
Obester, and Julian Smith dated May 1, 2008 covering mineral rights to six
patented claims located in Storey County.  The lease remains in effect
for 15 years as long as exploration, development, mining, or processing
operations are conducted on a continuous basis, without a lapse of activity for
more than 180 days. We agree to spend $100,000.00 on drilling and associated
costs within the first 36 months of the term.  We agree to pay
$10,000.00 upon execution of the lease.  We pay a monthly rent to the
lessor of $500 per month beginning April 2009 during the Exploration Term.
During the Development Term we pay a royalty of $1000 a month or a royalty
percentage on the amount received by us on the sale of the mineral products less
the costs incurred for marketing, distribution, processing and sales, commonly
referred to as a Net Smelter Return. The royalty percentage varies based on the
price of gold: 2% if gold is less than $501 per ounce, 3% if gold is at least
$501 per ounce but less than $801 per ounce, 4% if gold is at least $801 per
ounce but less than $901 per ounce, 5% if gold is at least $901 per ounce but
less than $1001, 6% if gold is at least $1001 per ounce but less than $1101 per
ounce, 7% if gold is at least $1101 per ounce but less than $1201 per ounce, 8%
if gold is at least $1201 per ounce but less than $1301 per ounce, 9 % if gold
is at least $1301 per ounce but less than $1401 per ounce and 10% if gold is
$1401 per ounce or greater. We are also responsible for payment and filing of
annual maintenance fees, if any, and taxes for these claims.





Obester
Patented Claims:


Claim
      Number
            
            Claim
      Name
            
            Position
            
            Land
      Source
            
            Acres800-001-010
            
            North
      Occidental
            
            Purchase
            
            Private
            
            7.2800-001-025
            
            East
      North Occidental
            
            Purchase
            
            Private
            
            12.2800-001-021
            
            Dean
      Parcel
            
            Purchase
            
            Private
            
            11800-001-024
            
            South
      Occidental
            
            Purchase
            
            Private
            
            20.6800-001-068
            
            Occidental
            
            Purchase
            
            Private
            
            7.8800-001-026
            
            Edwards
            
            Purchase
            
            Private
            
            17.8





BILLIE
THE KID LEASE:





Our
property rights to the mineral properties consist of several mineral leases,
unpatented mineral claims, and fee ownership of real property. We have a mineral
exploration and mining lease agreement with Claire Obester and the Estate of
Dorothy Obester dated January 1, 1997 covering mineral rights to five patented
claims located in both Storey and Lyon Counties, including the Billie the Kid
and Lucerne patented lode claims. The lease remains in effect for as long as
exploration, development, mining, or processing operations are conducted on a
continuous basis, without a lapse of activity for more than 180 days. We pay a
royalty to the lessor equal to the greater of $500 per month or a royalty
percentage on the amount received by us on the sale of the mineral products less
the costs incurred for marketing, distribution, processing and sales, commonly
referred to as a Net Smelter Return. The royalty percentage varies based on the
price of gold: 3% if gold is less than $400 per ounce, 4% if gold is at least
$400 per ounce but less than $500 per ounce, and 5% if gold is $500 or greater
per ounce. We are also responsible for payment and filing of annual maintenance
fees, if any, and taxes for these claims.





Obester
Patented Claims:


Claim
      Number
            
            Claim
      Name
            
            Position
            
            Land
      Source
            
            Acres800-001-009
            
            Green
            
            Purchase
            
            Private
            
            11800-001-11
            
            Echo
      Parcel
            
            Purchase
            
            Private
            
            7800-001-12
            
            Lucerne
            
            Purchase
            
            Private
            
            8800-001-08
            
            St.
      Louis Parcels
            
            Purchase
            
            Private
            
            7800-002-71
            
            Billie
      the Kid
            
            Purchase
            
            Private
            
            18




12





DONOVAN
LEASE:





We have a
second mineral exploration and mining lease agreement with the Donovan Silver
Hills, LLC dated September 1, 1999 covering seven patented claims and 13
unpatented claims located in Storey and Lyon Counties. The lease remains in
effect for as long as exploration, development, mining, or processing operations
are conducted on a continuous basis, without a lapse of activity for more than
180 days. We pay a royalty to the lessor amounting to the greater of $500 per
month or a royalty percentage of the Net Smelter Returns. The royalty percentage
varies based on the price of gold: 3% if gold is less than $400 per ounce, 4% if
gold is at least $400 per ounce but less than $500 per ounce, and 5% if gold is
$500 or greater per ounce. We are also responsible for payment and filing of
annual maintenance fees, if any, and taxes for these claims.





Donovan
Patented Claims:


Claim
      Number
            
            Claim
      Name
            
            Position
            
            Land
      Source
            
            Acres84
            
            Tarto
      Lode
            
            Lease
            
            Private
      Land
            
            186
            
            Hartford
            
            Lease
            
            Private
      Land
            
            141723
            
            Succor
      Lode
            
            Lease
            
            Private
      Land
            
            63760
            
            Olympia
            
            Lease
            
            Private
      Land
            
            64728
            
            Hardluck
            
            Lease
            
            Private
      Land
            
            64728
            
            Friendship
            
            Lease
            
            Private
      Land
            
            74728
            
            Brown
      Lode
            
            Lease
            
            Private
      Land
            
            8125
            
            Niagra
      Mining Claim
            
            Lease
            
            Private
      Land
            
            31066
            
            S.
      Comstock Mining Claim
            
            Lease
            
            Private
      Land
            
            12





Donovan
Unpatented Claims:


Serial
      #
            
            Claim
      Name
            
            Location
              Date
            
            Owner
      / Lease
              Holder
            
            Type
            
            Position
            
            Land
              Source
            
            AcresNMC416049
            
            Big
      Mike
            
            4/7/1987
            
            Donovan
            
            Lode
            
            Lease
            
            BLM
            
            20NMC416048
            
            Cliff
      House Fraction
            
            4/7/1987
            
            Donovan
            
            Lode
            
            Lease
            
            BLM
            
            4NMC416043
            
            Echo
      St. Louis Fraction
            
            4/7/1987
            
            Donovan
            
            Lode
            
            Lease
            
            BLM
            
            .30NMC416041
            
            Green
      St. Louis Fraction
            
            3/41987
            
            Donovan
            
            Lode
            
            Lease
            
            BLM
            
            7NMC676492
            
            Hartford
      Lucerne Fraction
            
            4/7/1987
            
            Donovan
            
            Lode
            
            Lease
            
            BLM
            
            0.9NMC416040
            
            Hartford
      South Extension
            
            4/7/1987
            
            Donovan
            
            Lode
            
            Lease
            
            BLM
            
            3NMC416042
            
            Hartford
      St. Louis Fraction
            
            4/7/1987
            
            Donovan
            
            Lode
            
            Lease
            
            BLM
            
            6.5NMC416044
            
            Justice
      Lucerne Fraction
            
            4/7/1987
            
            Donovan
            
            Lode
            
            Lease
            
            BLM
            
            1.7NMC416046
            
            Justice
      Woodville Fraction
            
            4/7/1987
            
            Donovan
            
            Lode
            
            Lease
            
            BLM
            
            3.1NMC416047
            
            New
      Deal Fraction
            
            4/7/1987
            
            Donovan
            
            Lode
            
            Lease
            
            BLM
            
            12NMC416045
            
            South
      Comstock St. Louis
            
            4/7/1987
            
            Donovan
            
            Lode
            
            Lease
            
            BLM
            
            1NMC416033
            
            Vindicator
      #8
            
            4/61987
            
            Donovan
            
            Lode
            
            Lease
            
            BLM
            
            20.7




13





FRED
GARRET LEASE:





We
entered into a mineral exploration and mining lease agreement with the Fred
Garret et al on April 1, 2008 covering one patented claim located in Storey,
Nevada. The lease remains in effect for as long as exploration, development,
mining, or processing operations are conducted on a continuous basis, without a
lapse of activity for more than 180 days. We pay a royalty to the lessor of $250
per month or a 3% Net Smelter Return, which ever is greater. We are also
responsible for payment and filing of annual maintenance fees, if any, and taxes
for these claims.





Garrett
Patented Claims:


Claim
      Number
            
            Claim
      Name
            
            Position
            
            Land
      Source
            
            Acres114
            
            Pride
      of Washoe
            
            Lease
            
            Private
      Land
            
            25.25





LEDA
RESOURCES LLC LEASE:





We have a
mineral lease agreement with Leda Resources LLC dated March 15, 2008 covering 3
unpatented mining claims located in Storey and Washoe Counties.  The
lease remains in effect for 20 years with automatic extensions so long as
conditions of the lease are met.  We are responsible for payment and
filing of Federal and State maintenance fees for any year in which this
agreement is in maintained in good standing after June 1, 2008.  We
are responsible for performing reclamation work on the Property as required by
Federal, State, and Local law for disturbances resulting from Goldspring’s
activities on the Property. The lease agreement includes a production royalty of
a 3.0% Net Smelter Return (NRS).  Also, we are required to make the
following advance royalty payments: upon execution $5,000, 1st
Anniversary $10,000, 2nd
Anniversary $10,000, 3rd
Anniversary $10,000, 4th
Anniversary $25,000, 5th
Anniversary $25,000, 6th
Anniversary & thereafter $25,000 annually.  Royalty advances are
to be adjusted to annual changes in the consumer price index (CPI) with 2008 as
the base year.  CPI adjustment commence on the 7th
Anniversary.  The agreement also provides for an option for a partial
Royalty Buy down, whereby we could purchase a 2% NSR for $5 million.
..  The mineral lease agreement also requires the issuance of 5 million
of our common shares; 1,000,000 common shares upon execution and 1,000,000
common shares on each anniversary starting with the first and ending with the
fourth.





Leda
Resources unpatented claims:


Serial
      #
            
            Claim
              Name
            
            Location
              Date
            
            Owner/
              Lease
              Holder
            
            Type
            
            Position
            
            Land
              Sources
            
            AcreNMC832220
            
            Checkup
      1
            
            
            
            Leda
      Resources
            
            Lease
            
            
            
            BLMNMC832220
            
            Checkup
      21 amended
            
            
            
            Leda
      Resources
            
            Lease
            
            
            
            BLMNMC832220
            
            Checkup
      22
            
            
            
            Leda
      Resources
            
            Lease
            
            
            
            BLM




14





KIM
DROSSULIS LEASE:





We have a
mineral lease agreement with Kim Drossulis dated January 15, 2008 covering 8
unpatented mining claims located in Storey County, Nevada.  The lease
remains in effect for 20 years with automatic extensions so long as conditions
of the lease are met.  We are responsible for payment and filing of
Federal and State maintenance fees for any year in which this agreement is in
maintained in good standing after June 1, 2008.  We are responsible
for performing reclamation work on the Property as required by Federal, State,
and Local law for disturbances resulting from Goldspring’s activities on the
Property. The lease agreement includes a production royalty of a 3.0% Net
Smelter Return (NRS).  Also, we are required to make the following
advance royalty payments: upon execution $5,000, 1st
Anniversary $10,000, 2nd
Anniversary $10,000, 3rd
Anniversary $10,000, 4th
Anniversary $25,000, 5th
Anniversary $25,000, 6th
Anniversary & thereafter $25,000 annually.  Royalty advances are
to be adjusted to annual changes in the consumer price index (CPI) with 2008 as
the base year.  CPI adjustment commence on the 7th
Anniversary.  The agreement also provides for an option for a partial
Royalty Buy down, whereby we could purchase a 2% NSR for $5 million.
..  The mineral lease agreement also requires the issuance of 5 million
of our common shares; 1,000,000 common shares upon execution and 1,000,000
common shares on each anniversary starting with the first and ending with the
fourth





Kim
Drossulis unpatented claims:


Serial
      #
            
            Claim
              Name
            
            Location
              Date
            
            Owner
      /
              Lease
              Holder
            
            Type
            
            Position
            
            Land
              Source
            
            AcresNMC823682
            
            SP
      #1
            
            
            
            Drossulis
            
            Lode
            
            Lease
            
            BL
      M
            
            20.7NMC823683
            
            SP
      #2
            
            
            
            Drossulis
            
            Lode
            
            Lease
            
            BL
      M
            
            20.7NMC911164
            
            SP
      #3
            
            
            
            Drossulis
            
            Lode
            
            Lease
            
            BL
      M
            
            20.7NMC911165
            
            SP
      #4
            
            
            
            Drossulis
            
            Lode
            
            Lease
            
            BL
      M
            
            20.7NMC911166
            
            SP
      #5
            
            
            
            Drossulis
            
            Lode
            
            Lease
            
            BL
      M
            
            20.7NMC911167
            
            SP
      #6
            
            
            
            Drossulis
            
            Lode
            
            Lease
            
            BL
      M
            
            20.7NMC911168
            
            SP
      #7
            
            
            
            Drossulis
            
            Lode
            
            Lease
            
            BL
      M
            
            20.7NMC911169
            
            SP
      #8
            
            
            
            Drossulis
            
            Lode
            
            Lease
            
            BL
      M
            
            20.7





MICHAEL
& KATHRYN S. DONDERO LEASE:





On
November 1, 2008 we entered into a mineral exploration and mining lease
agreement with the Michael & Kathryn S. Dondero covering seven patented
claims located in Lyon County. The lease remains in effect for as long as
exploration, development, mining, or processing operations are conducted on a
continuous basis, without a lapse of activity for more than 180 days. We pay a
royalty to the lessor amounting to the greater of $1,000 per month or a 3% Net
Smelter royalty. We are also responsible for payment and filing of annual
maintenance fees, if any, and taxes for these claims.  We also have an
option to purchase land and related patents for $900,000.





Dondero
Patented & Town Lots w/mineral rights Claims:


Claim
      Number
            
            Claim
      Name
            
            Position
            
            Land
      Source
            
            Acres16-121-10
            
            
            
            Lease
            
            Private
      Land
            
            2.916-121-11
            
            
            
            Lease
            
            Private
      Land
            
            1.0416-121-12
            
            
            
            Lease
            
            Private
      Land
            
            .0816-121-22
            
            
            
            Lease
            
            Private
      Land
            
            20.0316-121-23
            
            
            
            Lease
            
            Private
      Land
            
            2016-121-24
            
            
            
            Lease
            
            Private
      Land
            
            2016-121-25
            
            
            
            Lease
            
            Private
      Land
            
            20





JAMES
OBESTER LEASE:





We have a
second mineral exploration and mining lease agreement with the James Obester
dated August 1, 2008 covering one patented claim located in Storey County. The
lease remains in effect for as long as exploration, development, mining, or
processing operations are conducted on a continuous basis, without a lapse of
activity for more than 180 days. We pay a royalty to the lessor amounting to the
greater of $200 per month for two years and increase to $300 a month for three
years then increase to $500 with a royalty percentage of the Net Smelter
Returns. The royalty percentage is a 2% NSR when gold is $900 or less per ounce
and 3% NSR when gold is greater than $900 per ounce. We are also responsible for
payment and filing of annual maintenance fees, if any, and taxes for these
claims.




15





James
Obesters Unpatented Claims:


Serial
      #
            
            Claim
              Name
            
            Location
              Date
            
            Owner
      /
              Lease
              Holder
            
            Type
            
            Position
            
            Land
              Source
            
            AcresNMC275502
            
            Alta
      #5
            
            7/22/1983
            
            Obester
            
            Lode
            
            Lease
            
            BLM
            
            20.66NMC275503
            
            Alta
      #6
            
            7/22/1983
            
            Obester
            
            Lode
            
            Lease
            
            BLM
            
            20.66NMC275504
            
            Alta
      #7
            
            7/22/1983
            
            Obester
            
            Lode
            
            Lease
            
            BLM
            
            20.66NMC275505
            
            Alta
      #8
            
            7/22/1983
            
            Obester
            
            Lode
            
            Lease
            
            BLM
            
            12.71NMC275506
            
            Alta
      #9
            
            7/22/1983
            
            Obester
            
            Lode
            
            Lease
            
            BLM
            
            20.66NMC275507
            
            Alta
      #10
            
            7/22/1983
            
            Obester
            
            Lode
            
            Lease
            
            BLM
            
            20.66NMC276609
            
            Alta
      #12
            
            7/22/1983
            
            Obester
            
            Lode
            
            Lease
            
            BLM
            
            12.05NMC300858
            
            Brunswick
      #1
            
            12/24/1983
            
            Obester
            
            Lode
            
            Lease
            
            BLM
            
            20.66NMC300859
            
            Brunswick
      #2
            
            12/24/1983
            
            Obester
            
            Lode
            
            Lease
            
            BLM
            
            20.66NMC300860
            
            Brunswick
      #4
            
            12/24/1983
            
            Obester
            
            Lode
            
            Lease
            
            BLM
            
            20.66





In
addition to the mineral leases, we hold 100 unpatented mineral claims in Storey
County, hold eight unpatented mineral claims in Lyon County, and own title to 40
acres of land in Storey County. The W. Hughes Brockbank Living Trust has a lien
against and a security interest in these unpatented mineral claims and the 40
acres of land pursuant to a Deed of Trust dated October 31, 2003, entered into
with W. Hughes Brockbank Living Trust. The Deed of Trust was granted to secure a
promissory note, dated October 31, 2003, in the amount of $1 million for the
balance of the purchase price for the property. The non-interest bearing
promissory note requires ten quarterly payments of $100,000 each. As of December
31, 2007, the outstanding balance of the note was $250,000.  In 2007,
Winfield’s affiliates, Intergroup Corporation, Santa Fe Financial and Portsmouth
Square, purchased the note from the W. Hughes Brockbank Living
Trust.


Unpatented
Mineral Claims:





Serial
      #
            
            Claim
      Name
            
            Location
              Date
            
            Owner
      /
              Lease
              Holder
            
            Type
            
            Position
            
            Land
              Source
            
            AcresNMC821729
            
            Comstock
      #1
            
            10/16/2000
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC821739
            
            Comstock
      #11
            
            10/16/2000
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC821740
            
            Comstock
      #12
            
            10/16/2000
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            20.6NMC821741
            
            Comstock
      #13
            
            12/1/2000
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            20.6NMC821742
            
            Comstock
      #14
            
            10/16/2000
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC821743
            
            Comstock
      #15
            
            10/16/2000
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC821744
            
            Comstock
      #16
            
            10/16/2000
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC821745
            
            Comstock
      #17
            
            12/1/2000
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC821746
            
            Comstock
      #18
            
            12/1/2000
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            13.8




16




NMC821730
            
            Comstock
      #2
            
            10/16/2000
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC821731
            
            Comstock
      #3
            
            10/16/2000
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC821735
            
            Comstock
      #7
            
            10/16/2000
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC821736
            
            Comstock
      #8
            
            10/16/2000
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC821737
            
            Comstock
      #9
            
            10/16/2000
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC821492
            
            Comstock
      #115
            
            4/8/2004
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC821493
            
            Comstock
      #116
            
            4/8/2004
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC821494
            
            Comstock
      #117
            
            4/8/2004
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC821495
            
            Comstock
      #118
            
            4/8/2004
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC821496
            
            Comstock
      #119
            
            4/8/2004
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC821497
            
            Comstock
      #120
            
            4/8/2004
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC821498
            
            Comstock
      #121
            
            4/8/2004
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC821499
            
            Comstock
      #122
            
            4/8/2004
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC821500
            
            Comstock
      #123
            
            4/8/2004
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC821501
            
            Comstock
      #124
            
            4/8/2004
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC821502
            
            Comstock
      #125
            
            4/8/2004
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC821503
            
            Comstock
      #126
            
            4/8/2004
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC821504
            
            Comstock
      #127
            
            4/8/2004
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC821505
            
            Comstock
      #128
            
            4/8/2004
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            13.8NMC821506
            
            Comstock
      #129
            
            7/1/2004
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC821507
            
            Comstock
      #130
            
            7/1/2004
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC821508
            
            Comstock
      #131
            
            7/1/2004
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC821509
            
            Comstock
      #132
            
            7/1/2004
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC821510
            
            Comstock
      #133
            
            7/1/2004
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC821511
            
            Comstock
      #134
            
            7/1/2004
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC821512
            
            Comstock
      #135
            
            7/1/2004
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC821513
            
            Comstock
      #136
            
            7/1/2004
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC821514
            
            Comstock
      #137
            
            7/1/2004
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            20.7




17




NMC821515
            
            Comstock
      #138
            
            7/1/2004
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC821516
            
            Comstock
      #139
            
            7/1/2004
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            14.4NMC821517
            
            Comstock
      #140
            
            7/1/2004
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            18.3NMC821518
            
            Comstock
      #141
            
            7/1/2004
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC821519
            
            Comstock
      #142
            
            7/1/2004
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC965375
            
            Ghost
      #1
            
            9/30/2007
            
            GSPG
            
            Load
            
            Fee
            
            BLM
            
            20.7NMC965384
            
            Ghost
      #10
            
            9/30/2007
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC965385
            
            Ghost
      #11
            
            9/30/2007
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC965376
            
            Ghost
      #2
            
            9/30/2007
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC965377
            
            Ghost
      #3
            
            9/30/2007
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC965378
            
            Ghost
      #4
            
            9/30/2007
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC965379
            
            Ghost
      #5
            
            9/30/2007
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC965380
            
            Ghost
      #6
            
            9/30/2007
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC965381
            
            Ghost
      #7
            
            9/30/2007
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC965382
            
            Ghost
      #8
            
            9/30/2007
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC965383
            
            Ghost
      #9
            
            9/30/2007
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC810323
            
            Lee
      #2
            
            11/31/1999
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            19.8NMC810324
            
            Lee
      #3
            
            11/31/1999
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC810321
            
            Lee
      #5
            
            11/31/1999
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            19.4NMC814553
            
            Lee
      #8
            
            1/29/2000
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            19.5NMC814554
            
            Lee
      #9
            
            1/29/2000
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            19.2NMC704516
            
            Overman
      #1
            
            8/27/1994
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            1NMC884216
            
            Plum
            
            11/19/2004
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            20.4NMC1000122
            
            OMAHA
      FRACTION #1
            
            10/30/2008
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            7.2NMC1000123
            
            OMAHA
      FRACTION #2
            
            11/8/2008
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            0.9NMC1000124
            
            OMAHA
      FRACTION #3
            
            10/30/2008
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            1.6NMC1000125
            
            OMAHA
      FRACTION #4
            
            10/30/2008
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            0.2NMC1000126
            
            OMAHA
      FRACTION #5
            
            10/30/2008
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            0.2NMC1000127
            
            OMAHA
      FRACTION #6
            
            10/30/2008
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            1.8NMC1000128
            
            OMAHA
      FRACTION #7
            
            10/30/2008
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            2.3NMC1000129
            
            OMAHA
      FRACTION #8
            
            10/30/2008
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            0.3NMC1000130
            
            OMAHA
      FRACTION #9
            
            10/30/2008
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            6.5NMC1000131
            
            OMAHA
      FRACTION #10
            
            10/30/2008
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            0.8




18




NMC1000132
            
            OMAHA
      FRACTION #11
            
            10/30/2008
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            1.1NMC1000133
            
            OMAHA
      FRACTION #12
            
            10/30/2008
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            0.4NMC1000134
            
            OMAHA
      FRACTION #13
            
            10/30/2008
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            1.1NMC1000135
            
            OMAHA
      FRACTION #14
            
            10/30/2008
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            1.4NMC1000136
            
            OMAHA
      FRACTION #17
            
            10/30/2008
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            1.6NMC1000137
            
            OMAHA
      FRACTION #18
            
            10/30/2008
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            1.3NMC1000138
            
            OMAHA
      FRACTION #19
            
            10/30/2008
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            2.2NMC1000139
            
            OMAHA
      FRACTION #20
            
            10/30/2008
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            1.0NMC1000140
            
            OMAHA
      FRACTION #21
            
            10/30/2008
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            1.1NMC1000141
            
            OMAHA
      FRACTION #22
            
            10/30/2008
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            3.0NMC1000142
            
            OMAHA
      FRACTION #23
            
            10/30/2008
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            2.3NMC1000143
            
            OMAHA
      FRACTION #24
            
            10/30/2008
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            2.3NMC983353
            
            COMSTOCK
      LODE 100
            
            12/21/2007
            
            THE
      PLUM MINING CO LLC
            
            Lode
            
            Fee
            
            BLM
            
            16.0NMC983354
            
            COMSTOCK
      LODE 101
            
            12/21/2007
            
            THE
      PLUM MINING CO LLC
            
            Lode
            
            Fee
            
            BLM
            
            6.1NMC983355
            
            COMSTOCK
      LODE 102
            
            12/21/2007
            
            THE
      PLUM MINING CO LLC
            
            Lode
            
            Fee
            
            BLM
            
            5.4NMC983356
            
            COMSTOCK
      LODE 103
            
            12/21/2007
            
            THE
      PLUM MINING CO LLC
            
            Lode
            
            Fee
            
            BLM
            
            2.0




19




NMC983357
            
            COMSTOCK
      LODE 104
            
            12/21/2007
            
            THE
      PLUM MINING CO LLC
            
            Lode
            
            Fee
            
            BLM
            
            2.2NMC983358
            
            COMSTOCK
      LODE 105
            
            12/21/2007
            
            THE
      PLUM MINING CO LLC
            
            Lode
            
            Fee
            
            BLM
            
            1.1NMC983359
            
            COMSTOCK
      LODE 106
            
            12/21/2007
            
            THE
      PLUM MINING CO LLC
            
            Lode
            
            Fee
            
            BLM
            
            8.6NMC983360
            
            COMSTOCK
      LODE 107
            
            12/21/2007
            
            THE
      PLUM MINING CO LLC
            
            Lode
            
            Fee
            
            BLM
            
            12.7NMC983361
            
            COMSTOCK
      LODE 108
            
            12/21/2007
            
            THE
      PLUM MINING CO LLC
            
            Lode
            
            Fee
            
            BLM
            
            1.0NMC983362
            
            COMSTOCK
      LODE 109
            
            12/21/2007
            
            THE
      PLUM MINING CO LLC
            
            Lode
            
            Fee
            
            BLM
            
            2.3NMC983363
            
            COMSTOCK
      LODE 110
            
            12/21/2007
            
            THE
      PLUM MINING CO LLC
            
            Lode
            
            Fee
            
            BLM
            
            19.2NMC983364
            
            COMSTOCK
      LODE 111
            
            12/21/2007
            
            THE
      PLUM MINING CO LLC
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC983365
            
            COMSTOCK
      LODE 112
            
            12/21/2007
            
            THE
      PLUM MINING CO LLC
            
            Lode
            
            Fee
            
            BLM
            
            16.6NMC983366
            
            COMSTOCK
      LODE 113
            
            12/21/2007
            
            THE
      PLUM MINING CO LLC
            
            Lode
            
            Fee
            
            BLM
            
            17.1NMC983367
            
            COMSTOCK
      LODE 114
            
            12/21/2007
            
            THE
      PLUM MINING CO LLC
            
            Lode
            
            Fee
            
            BLM
            
            1.7




20




NMC983368
            
            COMSTOCK
      LODE 115
            
            12/21/2007
            
            THE
      PLUM MINING CO LLC
            
            Lode
            
            Fee
            
            BLM
            
            12.2NMC983369
            
            COMSTOCK
      LODE 116
            
            12/21/2007
            
            THE
      PLUM MINING CO LLC
            
            Lode
            
            Fee
            
            BLM
            
            20.4NMC983370
            
            COMSTOCK
      LODE 117
            
            12/21/2007
            
            THE
      PLUM MINING CO LLC
            
            Lode
            
            Fee
            
            BLM
            
            20.4NMC983371
            
            COMSTOCK
      LODE 118
            
            12/21/2007
            
            THE
      PLUM MINING CO LLC
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC983372
            
            COMSTOCK
      LODE 119
            
            12/21/2007
            
            THE
      PLUM MINING CO LLC
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC983373
            
            COMSTOCK
      LODE 120
            
            12/21/2007
            
            THE
      PLUM MINING CO LLC
            
            Lode
            
            Fee
            
            BLM
            
            1.1NMC983374
            
            COMSTOCK
      LODE 121
            
            12/21/2007
            
            THE
      PLUM MINING CO LLC
            
            Lode
            
            Fee
            
            BLM
            
            4.1NMC983375
            
            COMSTOCK
      LODE 122
            
            12/21/2007
            
            THE
      PLUM MINING CO LLC
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC983376
            
            COMSTOCK
      LODE 123
            
            12/21/2007
            
            THE
      PLUM MINING CO LLC
            
            Lode
            
            Fee
            
            BLM
            
            4.6NMC983377
            
            COMSTOCK
      LODE 124
            
            12/21/2007
            
            THE
      PLUM MINING CO LLC
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC983378
            
            COMSTOCK
      LODE 125
            
            12/21/2007
            
            THE
      PLUM MINING CO LLC
            
            Lode
            
            Fee
            
            BLM
            
            13.5




21




NMC983379
            
            COMSTOCK
      LODE 126
            
            12/21/2007
            
            THE
      PLUM MINING CO LLC
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC983380
            
            COMSTOCK
      LODE 127
            
            12/21/2007
            
            THE
      PLUM MINING CO LLC
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC983381
            
            COMSTOCK
      LODE 128
            
            12/21/2007
            
            THE
      PLUM MINING CO LLC
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC983382
            
            COMSTOCK
      LODE 129
            
            12/21/2007
            
            THE
      PLUM MINING CO LLC
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC983383
            
            COMSTOCK
      LODE 130
            
            12/21/2007
            
            THE
      PLUM MINING CO LLC
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC983384
            
            COMSTOCK
      LODE 131
            
            12/21/2007
            
            THE
      PLUM MINING CO LLC
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC983385
            
            COMSTOCK
      LODE 132
            
            12/21/2007
            
            THE
      PLUM MINING CO LLC
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC983386
            
            COMSTOCK
      LODE 133
            
            12/21/2007
            
            THE
      PLUM MINING CO LLC
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC983387
            
            COMSTOCK
      LODE 134
            
            12/21/2007
            
            THE
      PLUM MINING CO LLC
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC983388
            
            COMSTOCK
      LODE 135
            
            12/21/2007
            
            THE
      PLUM MINING CO LLC
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC983389
            
            COMSTOCK
      LODE 136
            
            12/21/2007
            
            THE
      PLUM MINING CO LLC
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC983390
            
            COMSTOCK
      LODE 137
            
            12/21/2007
            
            THE
      PLUM MINING CO LLC
            
            Lode
            
            Fee
            
            BLM
            
            20.7




22




NMC983391
            
            COMSTOCK
      LODE 138
            
            12/21/2007
            
            THE
      PLUM MINING CO LLC
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC983392
            
            COMSTOCK
      LODE 139
            
            12/21/2007
            
            THE
      PLUM MINING CO LLC
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC983393
            
            COMSTOCK
      LODE 140
            
            12/21/2007
            
            THE
      PLUM MINING CO LLC
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC983394
            
            COMSTOCK
      LODE 141
            
            12/21/2007
            
            THE
      PLUM MINING CO LLC
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC983395
            
            COMSTOCK
      LODE 142
            
            12/21/2007
            
            THE
      PLUM MINING CO LLC
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC983396
            
            COMSTOCK
      LODE 143
            
            12/21/2007
            
            THE
      PLUM MINING CO LLC
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC983397
            
            COMSTOCK
      LODE 144
            
            12/21/2007
            
            THE
      PLUM MINING CO LLC
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC983398
            
            COMSTOCK
      LODE 145
            
            12/21/2007
            
            THE
      PLUM MINING CO LLC
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC983399
            
            COMSTOCK
      LODE 146
            
            12/21/2007
            
            THE
      PLUM MINING CO LLC
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC983400
            
            COMSTOCK
      LODE 147
            
            12/21/2007
            
            THE
      PLUM MINING CO LLC
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC983401
            
            COMSTOCK
      LODE 148
            
            12/21/2007
            
            THE
      PLUM MINING CO LLC
            
            Lode
            
            Fee
            
            BLM
            
            20.7




23




NMC983402
            
            COMSTOCK
      LODE 149
            
            12/21/2007
            
            THE
      PLUM MINING CO LLC
            
            Lode
            
            Fee
            
            BLM
            
            20.5NMC983403
            
            COMSTOCK
      LODE 150
            
            12/21/2007
            
            THE
      PLUM MINING CO LLC
            
            Lode
            
            Fee
            
            BLM
            
            8.4NMC983404
            
            COMSTOCK
      LODE 151
            
            12/21/2007
            
            THE
      PLUM MINING CO LLC
            
            Lode
            
            Fee
            
            BLM
            
            14.5NMC983405
            
            COMSTOCK
      LODE 152
            
            12/21/2007
            
            THE
      PLUM MINING CO LLC
            
            Lode
            
            Fee
            
            BLM
            
            20.1NMC983406
            
            COMSTOCK
      LODE 153
            
            12/21/2007
            
            THE
      PLUM MINING CO LLC
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC983407
            
            COMSTOCK
      LODE 154
            
            12/21/2007
            
            THE
      PLUM MINING CO LLC
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC983408
            
            COMSTOCK
      LODE 155
            
            12/21/2007
            
            THE
      PLUM MINING CO LLC
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC983409
            
            COMSTOCK
      LODE 156
            
            12/21/2007
            
            THE
      PLUM MINING CO LLC
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC983410
            
            COMSTOCK
      LODE 157
            
            12/21/2007
            
            THE
      PLUM MINING CO LLC
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC983411
            
            COMSTOCK
      LODE 158
            
            12/21/2007
            
            THE
      PLUM MINING CO LLC
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC983412
            
            COMSTOCK
      LODE 159
            
            12/21/2007
            
            THE
      PLUM MINING CO LLC
            
            Lode
            
            Fee
            
            BLM
            
            20.7




24




NMC983413
            
            COMSTOCK
      LODE 160
            
            12/21/2007
            
            THE
      PLUM MINING CO LLC
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC983414
            
            COMSTOCK
      LODE 161
            
            12/21/2007
            
            THE
      PLUM MINING CO LLC
            
            Lode
            
            Fee
            
            BLM
            
            15.6NMC983415
            
            COMSTOCK
      LODE 162
            
            12/21/2007
            
            THE
      PLUM MINING CO LLC
            
            Lode
            
            Fee
            
            BLM
            
            19.5NMC983416
            
            COMSTOCK
      LODE 163
            
            12/21/2007
            
            THE
      PLUM MINING CO LLC
            
            Lode
            
            Fee
            
            BLM
            
            7.7NMC983417
            
            COMSTOCK
      LODE 164
            
            12/21/2007
            
            THE
      PLUM MINING CO LLC
            
            Lode
            
            Fee
            
            BLM
            
            12.8NMC983418
            
            COMSTOCK
      LODE 165
            
            12/21/2007
            
            THE
      PLUM MINING CO LLC
            
            Lode
            
            Fee
            
            BLM
            
            20.5NMC983419
            
            COMSTOCK
      LODE 166
            
            12/21/2007
            
            THE
      PLUM MINING CO LLC
            
            Lode
            
            Fee
            
            BLM
            
            6.3NMC983420
            
            COMSTOCK
      LODE 167
            
            12/21/2007
            
            THE
      PLUM MINING CO LLC
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC983421
            
            COMSTOCK
      LODE 168
            
            12/21/2007
            
            THE
      PLUM MINING CO LLC
            
            Lode
            
            Fee
            
            BLM
            
            16.2NMC992973
            
            COMSTOCK
      LODE 169
            
            7/10/2008
            
            THE
      PLUM MINING COMPANY
            
            Lode
            
            Fee
            
            BLM
            
            1.4NMC992974
            
            COMSTOCK
      LODE 172
            
            4/25/2008
            
            THE
      PLUM MINING COMPANY
            
            Lode
            
            Fee
            
            BLM
            
            20.7




25




NMC992975
            
            COMSTOCK
      LODE 173
            
            4/25/2008
            
            THE
      PLUM MINING COMPANY
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC992976
            
            COMSTOCK
      LODE 174
            
            4/25/2008
            
            THE
      PLUM MINING COMPANY
            
            Lode
            
            Fee
            
            BLM
            
            20.2NMC992977
            
            COMSTOCK
      LODE 175
            
            4/25/2008
            
            THE
      PLUM MINING COMPANY
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC992978
            
            COMSTOCK
      LODE 176
            
            4/25/2008
            
            THE
      PLUM MINING COMPANY
            
            Lode
            
            Fee
            
            BLM
            
            15.5NMC992979
            
            COMSTOCK
      LODE 177
            
            4/25/2008
            
            THE
      PLUM MINING COMPANY
            
            Lode
            
            Fee
            
            BLM
            
            19.0NMC992980
            
            COMSTOCK
      LODE 179
            
            4/25/2008
            
            THE
      PLUM MINING COMPANY
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC992981
            
            COMSTOCK
      LODE 180
            
            4/25/2008
            
            THE
      PLUM MINING COMPANY
            
            Lode
            
            Fee
            
            BLM
            
            20.7NMC992982
            
            COMSTOCK
      LODE 181
            
            4/25/2008
            
            THE
      PLUM MINING COMPANY
            
            Lode
            
            Fee
            
            BLM
            
            20.1NMC992983
            
            COMSTOCK
      LODE 182
            
            4/25/2008
            
            THE
      PLUM MINING COMPANY
            
            Lode
            
            Fee
            
            BLM
            
            10.3




26




NMC992984
            
            COMSTOCK
      LODE 183
            
            4/25/2008
            
            THE
      PLUM MINING COMPANY
            
            Lode
            
            Fee
            
            BLM
            
            19.8NMC992985
            
            COMSTOCK
      LODE 184
            
            4/25/2008
            
            THE
      PLUM MINING COMPANY
            
            Lode
            
            Fee
            
            BLM
            
            0.0NMC17092
            
            Como
      Comet 1
            
            8/28/1976
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            21.0NMC17093
            
            Como
      Comet 2
            
            8/28/1976
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            21.0NMC4439
            
            Como
      Comet 3
            
            4/26/1977
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            21.0NMC4440
            
            Como
      Comet 4
            
            4/26/1977
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            21.0NMC6121
            
            Como
      Comet 6
            
            4/30/1977
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            21.0NMC6122
            
            Como
      Comet 7
            
            5/15/1977
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            21.0NMC6123
            
            Como
      Comet 8
            
            5/15/1977
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            21.0NMC6124
            
            Como
      Comet 9
            
            5/15/1977
            
            GSPG
            
            Lode
            
            Fee
            
            BLM
            
            21.0




27








28








29








30





Present
Condition of Property and Work Performed





We have
not completed extensive characterization of mineralized material, geologic
analysis, metallurgical testing, mine planning, or economic analysis on the Plum
mineral assets. We have not established reserves on this property. Therefore,
any activity we perform on the property is considered exploratory in nature.
Part of our exploration includes operating a test mine. The purpose of the test
mine is to determine our capital and operating costs, metallurgical recoveries,
and other mining factors, and demonstrate that we can make a profit over and
above our capital and operating costs.





Description
of Equipment and other Infrastructure Facilities





Up until
the shutdown in mining in February 2007, GoldSpring used a mining contractor to
dig material from the Billie the Kid pit. The contractor used 50 ton Euclid haul
trucks to haul the mineralized materials from the Billie the Kid/Lucerne open
pit to the crushing and process facility located in the northeast corner of the
property. The mineralized material is crushed, and agglomerated in a
self-contained portable crushing plant. The mineralized material is fed to a
vibrating plate feeder by a front-end loader. The feeder provides a steady feed
to a Pioneer jaw crusher where material is crushed to -3” minus. Prior to
agglomeration, 10 pounds of Type II Portland Cement is added for every ton of
mineralized material and metered on to the pug mill feed conveyor which is then
transported to the leach pads. A dilute cyanide solution is then applied to the
mineralized material on the leach pads. Pregnant solution is accumulated from
the leach pad and is then pumped to the 300 gpm Merrill-Crowe recovery plant.
The resulting zinc precipitate collected in the presses is dried and smelted on
the property using an electric furnace to produce gold and silver
dore.





Our
third-party contract mining company owns and provided the haul trucks, front end
shovel, loaders and blade. We own the Merrill-Crowe gold precipitation plant,
the agglomerator, crushers, screen, water truck, generators, dozers, cement silo
with a screw feeder, and conveyors. The Merrill-Crowe gold precipitation plant
and the mineral processing equipment are less than four years old. The total
book value of our equipment associated with the Billie the Kid and the Lucerne
facilities is approximately $330,000.





Power
Utilization at the Plum Property:





We
completed the installation of the grid power line replacing a Caterpillar 3516
(1000 kilowatt) diesel generator. The change has reduced our crushing costs and
directly attributed to expanding our permit for tons crushed.





Geology,
Structure and Mineralization





Several
large low angle brecciate structural zones (faults) dominate the geology of the
Billie the Kid/Lucerne deposit. The thickness of these structural zones ranges
from 20 to 30 feet. Gold mineralization within the Billie the Kid/Lucerne
deposit is closely associated with dikes and sills that are composed of Alta
Andesite, a dark-colored, fine-grained volcanic rock, but these rocks are rarely
or weakly mineralized. Hartford Rhyolite, a fine-grained volcanic rock, hosts
approximately 70% to 80% of the gold mineralization and the remaining 20% to 30%
is associated with Alta Andesite.





Mineralized
Material





We have
not established any proven or probable reserves that meet the requirements of
SEC Industry Guide 7. Therefore, all of our activities are considered
exploratory in nature. Part of our exploration includes operating a test mine.
The purpose of the test mine is to determine our capital and operating costs,
metallurgical recoveries, and other mining factors, and demonstrate that we can
make a profit over and above our capital and operating cost. These test mining
activities will assist us with sufficient data to prepare a formal mine plan and
establish reserves in the future.




31





On June
10, 2008, our third-party engineer, Telesto Nevada, Inc. of Reno, Nevada,
released the Preliminary Resource Report for our Comstock Project based 450
drill holes from prior drill campaigns and 38 drill holes that we completed as
of the date of the report. The third-party Report indicated a mineralized
material volume of 4,926,000 tons grading 0.080 ounces per ton gold and
containing 392,000 ounces at a limiting grade of 0.030 ounces per
ton.  In September 2008, Telesto updated the estimate of the
mineralized material .  The updated Report, which included 19
additional holes not in the June 2008 Report, showed a mineralized material
volume of 7,179,984 tons grading 0.072 ounces per ton gold and containing
510,000 ounces of gold at a limiting grade of 0.030 ounces per
ton.  As of March 24, 2009, we have drilled a total of 179
holes.  We expect an updated estimate and scoping / feasibility report
to be released in the short term.





Future
Exploration Potential





We are
conducting an exploration program to test surface mineral targets as well as
deep underground bonanza targets by using geological mapping,
geochemical/geophysical investigations and drilling.





Gold
Canyon and Spring Valley (Placer Claims)





We own a
100% interest in the 25 federal unpatented placer claims located in Lyon County,
Nevada known as the Gold Canyon and Spring Valley claims. The 25 unpatented
placer claims cover approximately 850 acres and are located about 30 miles
southeast of Reno and six miles south of Virginia City, Nevada. We have not
completed any exploration activity on the Gold Canyon or Spring Valley
properties. The properties are undeveloped and do not contain any open-pit or
underground mines. We have not established any proven or probable reserves on
the mineral claims. All of our activities associated with these properties are
exploratory in nature. The processing plant is stored at our Plum Mining
property in American Flat, Nevada. We have no plans to begin test mining
operations on these properties in the near-term.





Lyon
County Unpatented Placer Claims:


Serial
      #
            
            Claim
      Name
            
            Location
      Date
            
            Type
            
            Lease
              Holder
            
            Position
            
            Land
              Source
            
            AcresNMC677117
            
            Harlesk
      #1
            
            3/8/1993
            
            Placer
            
            GSPG
            
            Fee
            
            BLM
            
            4.4NMC677118
            
            Harlesk
      #2
            
            3/8/1993
            
            Placer
            
            GSPG
            
            Fee
            
            BLM
            
            19.7NMC677119
            
            Harlesk
      #3
            
            3/8/1993
            
            Placer
            
            GSPG
            
            Fee
            
            BLM
            
            17.8NMC677120
            
            Harlesk
      #4
            
            3/8/1993
            
            Placer
            
            GSPG
            
            Fee
            
            BLM
            
            4.5NMC677121
            
            Harlesk
      #5
            
            3/8/1993
            
            Placer
            
            GSPG
            
            Fee
            
            BLM
            
            20.1NMC677122
            
            Harlesk
      #6
            
            3/8/1993
            
            Placer
            
            GSPG
            
            Fee
            
            BLM
            
            17.7NMC677123
            
            Harlesk
      #7
            
            3/8/1993
            
            Placer
            
            GSPG
            
            Fee
            
            BLM
            
            20.3NMC677124
            
            Harlesk
      #8
            
            3/8/1993
            
            Placer
            
            GSPG
            
            Fee
            
            BLM
            
            17.4NMC677125
            
            Harlesk
      #9
            
            3/8/1993
            
            Placer
            
            GSPG
            
            Fee
            
            BLM
            
            18.9NMC677126
            
            Harlesk
      #10
            
            3/8/1993
            
            Placer
            
            GSPG
            
            Fee
            
            BLM
            
            19.9NMC872176
            
            Harlesk
      #100
            
            4-19-2004
            
            Placer
            
            GSPG
            
            Fee
            
            BLM
            
            21.0NMC872177
            
            Harlesk
      #101
            
            4-19-2004
            
            Placer
            
            GSPG
            
            Fee
            
            BLM
            
            21.2NMC872178
            
            Harlesk
      #102
            
            4-19-2004
            
            Placer
            
            GSPG
            
            Fee
            
            BLM
            
            21.0NMC872179
            
            Harlesk
      #103
            
            4-19-2004
            
            Placer
            
            GSPG
            
            Fee
            
            BLM
            
            20.8NMC99064
            
            SD
      Placer
            
            9/30/1967
            
            Placer
            
            GSPG
            
            Fee
            
            BLM
            
            42.3NMC99065
            
            DS
      Placer
            
            9/30/1967
            
            Placer
            
            GSPG
            
            Fee
            
            BLM
            
            82.1NMC99066
            
            Trio
      Claims
            
            9/30/1967
            
            Placer
            
            GSPG
            
            Fee
            
            BLM
            
            41.5NMC99067
            
            Gold
      Star Placers
            
            7/18/1972
            
            Placer
            
            GSPG
            
            Fee
            
            BLM
            
            81NMC99068
            
            Badger
      Placer
            
            8/13/1966
            
            Placer
            
            GSPG
            
            Fee
            
            BLM
            
            21.0NMC99072
            
            EZ
      Placer
            
            2/6/1970
            
            Placer
            
            GSPG
            
            Fee
            
            BLM
            
            40.2NMC99075
            
            Nugget
      Placer
            
            9/1/1959
            
            Placer
            
            GSPG
            
            Fee
            
            BLM
            
            80.0NMC99076
            
            Star
      Placer
            
            11/12/1966
            
            Placer
            
            GSPG
            
            Fee
            
            BLM
            
            41.1NMC99078
            
            Stans
      Placer
            
            9/2/1969
            
            Placer
            
            GSPG
            
            Fee
            
            BLM
            
            80.3NMC99079
            
            Stangs
      Placer
            
            10/15/169
            
            Placer
            
            GSPG
            
            Fee
            
            BLM
            
            41NMC99074
            
            Mustang
            
            9/6/1969
            
            Placer
            
            GSPG
            
            Fee
            
            BLM
            
            38




32










The
“Big Mike” Copper Project





We own a
100% interest in the 17 unpatented lode claims and one placer claim covering a
total of approximately 310 acres in Pershing County, Nevada that comprise the
Big Mike Copper property. The Big Mike Copper property is located approximately
32 miles south of Winnemucca in Pershing County, Nevada. Access to this site is
available by way of Grass Valley Road, a county maintained paved and gravel
road, for 30 miles and then two miles on a BLM gravel road. The property is
situated at an elevation of 5,000 to 5,500 feet. We have not completed any
exploration activity or undertaken any geologic, engineering or economic studies
on the Big Mike Copper property. The property includes an open pit, mineralized
material in a stockpile, and waste dumps. As the site was previously mined,
there are also roads and graded areas on the property. Two cased water wells
with rights to two cubic feet per second are also present on the
property.




33




At the
end of September 2006, the Company entered into a ten year lease with a local
company, controlled by a former GoldSpring director, for a 10 year lease of all
of its mining claims for its Big Mike copper mine. The Lease calls for a $50,000
initial payment, to cover royalty payments due for the first two years of the
lease term. Additionally, the lessee must pay Goldspring $75,000 when a
production permit is awarded and $125,000 when commercial mining commences.
Additionally, the lessee agrees to a work expenditure of $300,000 for
environmental and engineering matters in the first thirty-six months of the
lease. During the term of the lease, Goldspring will also receive a production
royalty of between 3% and 5% of net returns from copper mining, dependent on the
price of copper.





Unpatented
Big Mike Claims:


Serial #
                
                Claim Name
                
                Location Date
                
                Type
                
                Lease
                  Holder
                
                Position
                
                Land
                  Source
                
                AcresNMC-87482
                
                Big
      Mike Lode
                
                6/18/1979
                
                Lode
                
                GSPG
                
                Fee
                
                BLM
                
                20.7NMC-87483
                
                Big
      Mike 4 Lode
                
                6/18/1979
                
                Lode
                
                GSPG
                
                Fee
                
                BLM
                
                20.7NMC-87484
                
                Big
      Mike 6 Lode
                
                6/18/1979
                
                Lode
                
                GSPG
                
                Fee
                
                BLM
                
                20.7NMC-87485
                
                Big
      Mike 7 Lode
                
                6/18/1979
                
                Lode
                
                GSPG
                
                Fee
                
                BLM
                
                20.7NMC-87486
                
                Big
      Mike 9 Lode
                
                6/18/1979
                
                Lode
                
                GSPG
                
                Fee
                
                BLM
                
                20.7NMC-87487
                
                Big
      Mike 10 Lode
                
                6/18/1979
                
                Lode
                
                GSPG
                
                Fee
                
                BLM
                
                20.7NMC-87488
                
                Big
      Mike 11 Lode
                
                6/18/1979
                
                Lode
                
                GSPG
                
                Fee
                
                BLM
                
                20.7NMC-87489
                
                Big
      Mike 12 Lode
                
                6/18/1979
                
                Lode
                
                GSPG
                
                Fee
                
                BLM
                
                20.7NMC-87490
                
                Big
      Mike 16 Lode
                
                6/18/1979
                
                Lode
                
                GSPG
                
                Fee
                
                BLM
                
                20.7NMC-87491
                
                Big
      Mike 20 Lode
                
                6/18/1979
                
                Lode
                
                GSPG
                
                Fee
                
                BLM
                
                20.7NMC-87492
                
                Big
      Mike 24 Lode
                
                6/18/1979
                
                Lode
                
                GSPG
                
                Fee
                
                BLM
                
                20.7NMC-87493
                
                Big
      Mike 30 Lode
                
                6/18/1979
                
                Lode
                
                GSPG
                
                Fee
                
                BLM
                
                20.7NMC-87494
                
                Big
      Mike Extension
                
                7/27/1979
                
                Lode
                
                GSPG
                
                Fee
                
                BLM
                
                17.7NMC-87495
                
                Big
      Mike Extension #1
                
                7/27/1979
                
                Lode
                
                GSPG
                
                Fee
                
                BLM
                
                17.7NMC-87496
                
                Big
      Mike Extension #2
                
                7/26/1979
                
                Lode
                
                GSPG
                
                Fee
                
                BLM
                
                17.7NMC-87497
                
                Brandi
      Placer
                
                6/18/1979
                
                Placer
                
                GSPG
                
                Fee
                
                BLM
                
                20.0NMC-510111
                
                Big
      Ron
                
                7/26/1979
                
                Lode
                
                GSPG
                
                Fee
                
                BLM
                
                20.0NMC510112
                
                Big
      Bruce
                
                7/26/1979
                
                Lode
                
                GSPG
                
                Fee
                
                BLM
                
                20.0


34







35





Item 3. Legal Proceedings




From time
to time, we are involved in lawsuits, claims, investigations and proceedings
that arise in the ordinary course of business. There are no matters pending that
we expect to have a material adverse impact on our business, results of
operations, financial condition or cash flows.





Item 4. Submission of Matters to a Vote of
Security Holders




None.




PART
II





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




PRICE
RANGE OF COMMON STOCK




Our
common stock is currently traded on the OTC Bulletin Board under the symbol
“GSPG:OB”. The following table sets forth, for the periods indicated, the high
and low inter-dealer closing prices per share of our common stock as reported on
the Over The Counter Bulletin Board, without retail mark-up, mark-down or
commission and may not represent actual transactions. As of December 31, 2008,
we had over 8,000 holders of our common stock. That does not include the number
of beneficial holders whose stock is held in the name of broker-dealers or
banks. At December 31, 2008, we had 3,380,948,371, shares of common stock issued
and outstanding.




The
following table sets forth the high and low bid prices for our common stock
since for the last two years.





Year
                        
                        Quarter
                        
                        High
                        
                        
                        Low2007
                        
                        First
                        
                        
                        .0047
                        
                        
                        
                        .00282007
                        
                        Second
                        
                        
                        .0035
                        
                        
                        
                        .0012007
                        
                        Third
                        
                        
                        .001
                        
                        
                        
                        .00052007
                        
                        Fourth
                        
                        
                        .015
                        
                        
                        
                        .00052008
                        
                        First
                        
                        
                        .022
                        
                        
                        
                        .0112008
                        
                        Second
                        
                        
                        .035
                        
                        
                        
                        .0172008
                        
                        Third
                        
                        
                        .06
                        
                        
                        
                        .0182008
                        
                        Fourth
                        
                        
                        .024
                        
                        
                        
                        .011




36




EQUITY
COMPENSATION PLAN INFORMATION




The
following table sets forth information with respect to our common stock that may
be issued upon the exercise of stock options under our incentive stock option
plans as of December 31, 2008




Plan Category
                              
                              (a)
                                Number of
                                Securities to
                                Be Issued Upon
                                Exercise of
                                Outstanding
                                Options,
                                Warrants, and
                                Rights
                              
                              (b)
                                Weighted-
                                Average
                                Exercise Price
                                of Outstanding
                                Options,
                                Warrants, and
                                Rights
                              
                              (c)
                                Number of
                                Securities
                                Remaining
                                Available for
                                Future Issuance
                                Under Equity
                                Compensation
                                Plans
                                (Excluding
                                Securities
                                Reflected in
                                Column (a))Equity
      Compensation Plans Approved byStockholders
                              
                              90,000,000
                              
                              $
                              .00963
                              
                              0Equity
      Compensation Plans Not Approved by Stockholders
                              
                              0
                              
                              $
                              0
                              
                              800,000,000Total
                              
                              90,000,000
                              
                              $
                              .00963
                              
                              0




Pursuant
to the Employment Agreement, Mr. Golden was granted 10,000,000 stock options
upon execution of his employment agreement in December 2007 and he earned the
90,000,000 of his eligible options during 2008.





Dividend
Policy





We have
never declared or paid any dividends on our common stock. We do not anticipate
paying any cash dividends on our common stock in the foreseeable future. We
currently intend to retain future earnings, if any, to finance operations and
the expansion of our business. Any future determination to pay cash dividends
will be at the discretion of the board of directors and will depend upon our
financial condition, operating results, capital requirements and other factors
the board of directors deems relevant, including the provisions of any
applicable credit agreements. We are restricted from declaring dividends under
the terms of the senior secured convertible debentures.





Item 7. Management’s Discussion and Analysis
of Financial Condition and Results of Operations





The
following discussion provides information that we believe is relevant to an
assessment and understanding of the consolidated results of operations and
financial condition of our company. It should be read in conjunction with the
Consolidated Financial Statements and accompanying Notes also included in this
10-K.





The
following discussion addresses matters we consider important for an
understanding of our financial condition and results of operations as of and for
the year ended December 31, 2008, as well as our future results.




Overview




GoldSpring,
Inc. is a North American precious metals mining company, focused in Nevada, with
extensive, contiguous property in the Comstock Lode District.  Our
Company was formed in mid-2003, and we acquired two properties in the Comstock
Lode before the end of that year.  We secured permits, built an
infrastructure and brought the exploration project into test mining production
within a year of its acquisition.  The Company, in 2005, began
consolidating the Comstock Lode by acquiring additional properties in the
district, expanding our footprint and creating opportunities for exploration and
mining.  We are an emerging company, looking to build on our success
through the acquisition of other mineral properties in the Comstock Lode
District with significant precious metals exploration potential.  The
Company's objectives are to increase its mineralized material inventory through
exploration, expand its footprint in the Comstock, resume mining, optimize its
production, and maximize shareholder value


37





Our
Company spent the majority of 2007 collecting and analyzing geological
information from our Comstock project in Nevada, with the objective of
developing an exploration and developmental drilling program.  Based
upon our review of geological information, including the assay results of
several prior drilling campaigns, we believed the Hartford / Lucerne Complex
provided the opportunity to identify significant precious metals mineralization
that would lead us to mine production.  We have also committed to
assembling a tier-one team of mining industry professionals.  In late
2007, we completed a drill plan based on the geological model for mineralization
in the Comstock Mining District.  In December 2007, we launched our
exploration and developmental drilling program, which was focused on surface
drilling at the Hartford / Lucerne Complex to delineate the zones of
mineralization.  The drill hole depth of this reverse circulation
drilling program typically varied between 600 to 1000 feet.  To date,
we have drilled 170 Reverse Circulation holes as part of the 2007-2009 drill
program.  We have received data from 128 of the 170 holes; the data
includes surveyed location, logged geology, and assays received from American
Assay Labs in Reno, Nevada.  We are currently awaiting data on the
remaining 42 holes.  Larry Martin leads GoldSpring’s team of
geologists in this exploration program.





In 2008,
the Company began to execute a mineral exploration and mine development business
model with all activities focused on resumption of mine production in late 2009
or 2010.   The most relevant steps taken are as
follows:





 ̈   Expanding
our footprint in the Comstock Region and other acquisition opportunities through
the entry into of two letters of intent to purchase rights, which upon
consummation, may allow the Company to amass one of the largest land positions
in the Comstock District.





 ̈   Further
exploration in the Comstock Region to accomplish the above, including a decision
to review the geology of the Hartford complex in a more detailed
manner





 ̈   Completion
of the Plum Mine preliminary feasibility report through a focus on infill
drilling to allow completion of the Report





 ̈   Expanding
the permitted drilling area and updating of the mine reclamation
bond





 ̈  
Consummation of loan agreement with major shareholder to borrow up to $2.5
million for completion of the drilling program, of which 100% has been funded as
of December 31, 2008 and efforts to secure further funding to enable
recommencement of mine production





In
addition to our exploration and drilling program, GoldSpring has added
additional surface and mineral rights to its portfolio in the Comstock Lode
Mining District through acquisitions and the staking of new
claims.  Our Company now controls over 3,500 acres of patented and
unpatented mining claims.  Approximately 2,000 acres of these holdings
have been added through staking new claims, at a cost of less than
$25,000.  Scott Jolcover, GoldSpring Director, and Joel Casburn, a
consulting land-man with 30 years of experience in managing and consolidating
mineral districts, are working to expand the Company’s portfolio of land and
mineral holdings.  Our exploration program is currently conducting
surface geochemistry, geology mapping, rock chip and shallow auger sampling that
have identified a number of favorable target areas.  We have
consolidated historic exploration and production records using Techbase software
to generate a computer model of the Comstock Mining District with the objective
of delineating additional geologic targets that were previously
untested.





Early
2009 Developments




In the
first quarter of 2009, a modification application to the Water Pollution Control
Permit was submitted to the Nevada Division of Environmental
Protection.  The permit modifications highlight the Company’s newly
designed processing facilities that will optimize recovery of the recently
discovered mill-grade gold and silver mineralized material at the Hartford
Complex.


38




The major
improvements to the processing facilities include the:





·      Construction and operation of two new
crushed material storage areas;





·      Implementation of a high-grade milling
circuit in a contained area;





·      Expansion of the leach solution pumping
systems;





·      Formation of a new pregnant solution
pond; and





·      Expansion of the Merrill Crowe
processing plant.





The
Nevada Division of Environmental Protection, Bureau of Mining Regulations and
Reclamation, has begun its review of the application.  Major
modification applications typically take nearly 180 days to
complete.  Under the modified permit, the Company initially plans to
mine and process at a rate of 720,000 tons of mineralized material per
year.  The portion  of the mineralized material that will be
processed in the milling circuit will have a high percentage of the contained
precious metals recovered because of efficiencies afforded by the milling
process.





Several
other operating permits are also being updated to allow operations to begin in
2010.  Dennis Anderson, Professional Mine Engineer, leads the mine
permitting efforts and is supported by the engineering consultants at Telesto
Nevada, LLC of Reno, Nevada.




In
anticipation of mining resumption, the Company has procured a 300 ton per day
ball mill and related equipment.  The ball mill is being added to
process the higher grade gold and silver mineralization, optimizing gold and
silver recovery.  Precious metal recovery using the ball mill and
grinding to 100 Mesh should be around 95% versus 75% for heap
leaching.




Assuming
sufficient funds are raised in a timely manner, the Company’s goal would be to
reopen the Mine during in 2010. In order to resume production, the Company must
complete a preliminary feasibility report certified by a qualified third party;
complete a comprehensive mine plan; and complete a mining schedule, all of which
are dependent upon ability to secure sufficient funds to procure the mining
fleet and related assets. In addition, we will need to construct the milling
facility, process ponds and expand the existing processing facilities. A haul
truck and shovel fleet, and ancillary mine production equipment will need to be
acquired and placed in service by the mine production team.





There are
also risks involved in the fact that one individual and his affiliates, as of
December 31, 2008, beneficially own in excess of 24% of our voting stock.
Pursuant to financing agreements, this convertible debt holder and his
affiliates with a 61 day notice can waive the 4.9% ownership restriction,
allowing him to convert 100% of his convertible debt and related interest, which
totals $10,404,773 at December, 2008, into our common shares. This group, if
they waive the ownership restriction and convert all convertible debt and
related interest into our voting common stock,may take actions that could
conflict with your interests.This includes the election of Company directors, approval of actions
generally requiring the approval of the holders of our voting stock, including
adopting amendments to our articles of incorporation and bylaws and approving
mergers, certain acquisitions or sales of all or substantially all of our
assets, which could delay or prevent someone from acquiring or merging with us
or limit the ability of our other stockholders to approve transactions that they
may deem to be in their best interests.


39


Results
of Operations and Operational Plan




Our
Comstock Lode Mine, which is located in Storey County, Nevada, went into test
mining production in late third quarter 2004. We have not established reserves
on this exploration project. Therefore, all of our activities on this property
are considered test mining or exploratory in nature. In November 2005, we
retained mining engineer Jim Golden, who became our COO in 2006, to conduct a
comprehensive review of all aspects of the Comstock Lode Mine operation,
including the overall mine plan, with the objective of further improving
efficiency, increasing production, and reducing costs. Furthermore, Techbase
International of Colorado, with the help of our consultants, has been retained
to complete a detailed mine plan and a mineralized material inventory for our
Comstock project.   We released our first Mineralized Material
Report in September 2008.  We believe that these steps coupled with
our exploratory drilling of the Hartford / Lucerne Complex will improve our
overall performance at the Comstock Lode Mine.





Among the
exploration and business development activities that are in
process:





·
            Mineralized
      Material delineation


·


·
            Completion
      of drilling results report





·
            Development
      of comprehensive mine plan from exploration
  results





·
            Increase
      of mineralized material inventory





·
            Augment
      ability to mine and operate at more efficient
  levels


·
              Intent
      to resume mine operations after completion of the scoping report and the
      comprehensive mine
plan.
 
 ·
              Expansion
      of existing footprint in the Comstock region (which was largely
      accomplished through the in process DWC and Sutro Tunnel
      transactions)
  Expansionof team of
      experts to study geology and metallurgy, as well as develop a mine plan,
      define recoveries, and complete a preliminary feasibility
      report




Secure funds
      to complete
drilling





The
Company hired Orbit Garant Drilling and George Delong Construction and
Drilling to perform exploration and developmental drilling at the Comstock
project. The Company also added several mining professionals and consultants in
2008 to its team to further augment its expertise in all facets of mining,
including metallurgy. In order to fund its exploration efforts, the Company, in
2008, raised $5,120,000 in capital to finance the developmental and exploratory
drilling.





2008
Developments





The
Company has drilled a total of 130 holes in its Phase 1 exploratory program
through December 2008 at the Hartford / Lucerne Complex. The purpose of this
program is to define the boundaries of the mineralized material and to produce a
comprehensive feasibility report and mine plan.  The total estimated
cost of this plan is $3,500,000 of which $3,443,000 has been expended to
date.  The assay results from this drill campaign have been
encouraging. The initial resource report released in September after obtaining
3rd
party assays on 38 of these drill holes plus assay results from 450 holes from
prior drill campaigns indicated a mineralized material volume of 4,926,000 tons
grading 0.080 ounces per ton gold containing 392,000 ounces at a limiting grade
of 0.030 ounces per ton. The material is highlighted by 930,000 tons grading
0.209 ounces per ton gold containing 194,000 ounces of gold using a 0.10 ounces
per ton gold limiting grade. A report is expected to be completed during the
second quarter 2009. The Company intends to expand the exploration program
beyond the Hartford Complex in 2009.


40





Summary
Exploratory Drilling Results Table




The chart
below details the results of the assay testing, which was conducted by an
independent third-party laboratory. The encouraging assay results received from
the drilling program have expanded the surface area and the depth of the
identified body of mineralized material in the Hartford Complex. To date, the
Company’s drilling program results at the Hartford Complex since December 2007
are summarized in the table below.




Drill Hole
                                                                        
                                                                        Intercept in Feet
                                                                        
                                                                        
                                                                        Gold Grade
                                                                        
                                                                        
                                                                        Silver GradeNumber
                                                                        
                                                                        From
                                                                        
                                                                        
                                                                        To
                                                                        
                                                                        
                                                                        (ounces per ton Au)
                                                                        
                                                                        
                                                                        (ounces per ton Ag)111
                                                                        
                                                                        
                                                                        0
                                                                        
                                                                        
                                                                        
                                                                        40
                                                                        
                                                                        
                                                                        
                                                                        0.049
                                                                        
                                                                        
                                                                        
                                                                        1.52105
                                                                        
                                                                        
                                                                        
                                                                        190
                                                                        
                                                                        
                                                                        
                                                                        0.029
                                                                        
                                                                        
                                                                        
                                                                        0.5205
                                                                        
                                                                        
                                                                        
                                                                        220
                                                                        
                                                                        
                                                                        
                                                                        0.039
                                                                        
                                                                        
                                                                        
                                                                        0.23110
                                                                        
                                                                        
                                                                        90
                                                                        
                                                                        
                                                                        
                                                                        105
                                                                        
                                                                        
                                                                        
                                                                        0.039
                                                                        
                                                                        
                                                                        
                                                                        0.47120
                                                                        
                                                                        
                                                                        
                                                                        130
                                                                        
                                                                        
                                                                        
                                                                        0.024
                                                                        
                                                                        
                                                                        
                                                                        0.14140
                                                                        
                                                                        
                                                                        
                                                                        160
                                                                        
                                                                        
                                                                        
                                                                        0.028
                                                                        
                                                                        
                                                                        
                                                                        0.12320
                                                                        
                                                                        
                                                                        
                                                                        340
                                                                        
                                                                        
                                                                        
                                                                        0.043
                                                                        
                                                                        
                                                                        
                                                                        0.7109
                                                                        
                                                                        
                                                                        0
                                                                        
                                                                        
                                                                        
                                                                        100
                                                                        
                                                                        
                                                                        
                                                                        0.04
                                                                        
                                                                        
                                                                        
                                                                        0.7165
                                                                        
                                                                        
                                                                        
                                                                        95
                                                                        
                                                                        
                                                                        
                                                                        0.102
                                                                        
                                                                        
                                                                        
                                                                        0.8108
                                                                        
                                                                        
                                                                        125
                                                                        
                                                                        
                                                                        
                                                                        145
                                                                        
                                                                        
                                                                        
                                                                        0.019
                                                                        
                                                                        
                                                                        
                                                                        1.34200
                                                                        
                                                                        
                                                                        
                                                                        215
                                                                        
                                                                        
                                                                        
                                                                        0.047
                                                                        
                                                                        
                                                                        
                                                                        1.62250
                                                                        
                                                                        
                                                                        
                                                                        265
                                                                        
                                                                        
                                                                        
                                                                        0.027
                                                                        
                                                                        
                                                                        
                                                                        0.87310
                                                                        
                                                                        
                                                                        
                                                                        400
                                                                        
                                                                        
                                                                        
                                                                        0.022
                                                                        
                                                                        
                                                                        
                                                                        1.05107
                                                                        
                                                                        
                                                                        115
                                                                        
                                                                        
                                                                        
                                                                        225
                                                                        
                                                                        
                                                                        
                                                                        0.028
                                                                        
                                                                        
                                                                        
                                                                        0.27125
                                                                        
                                                                        
                                                                        
                                                                        165
                                                                        
                                                                        
                                                                        
                                                                        0.058
                                                                        
                                                                        
                                                                        
                                                                        0.33106
                                                                        
                                                                        
                                                                        15
                                                                        
                                                                        
                                                                        
                                                                        50
                                                                        
                                                                        
                                                                        
                                                                        0.017
                                                                        
                                                                        
                                                                        
                                                                        0.49130
                                                                        
                                                                        
                                                                        
                                                                        140
                                                                        
                                                                        
                                                                        
                                                                        0.019
                                                                        
                                                                        
                                                                        
                                                                        0.33105
                                                                        
                                                                        
                                                                        235
                                                                        
                                                                        
                                                                        
                                                                        245
                                                                        
                                                                        
                                                                        
                                                                        0.052
                                                                        
                                                                        
                                                                        
                                                                        0.47104
                                                                        
                                                                        
                                                                        0
                                                                        
                                                                        
                                                                        
                                                                        190
                                                                        
                                                                        
                                                                        
                                                                        0.057
                                                                        
                                                                        
                                                                        
                                                                        1.1775
                                                                        
                                                                        
                                                                        
                                                                        190
                                                                        
                                                                        
                                                                        
                                                                        0.091
                                                                        
                                                                        
                                                                        
                                                                        1.98103
                                                                        
                                                                        
                                                                        0
                                                                        
                                                                        
                                                                        
                                                                        180
                                                                        
                                                                        
                                                                        
                                                                        0.034
                                                                        
                                                                        
                                                                        
                                                                        0.8360
                                                                        
                                                                        
                                                                        
                                                                        85
                                                                        
                                                                        
                                                                        
                                                                        0.123
                                                                        
                                                                        
                                                                        
                                                                        2.1102
                                                                        
                                                                        
                                                                        0
                                                                        
                                                                        
                                                                        
                                                                        35
                                                                        
                                                                        
                                                                        
                                                                        0.081
                                                                        
                                                                        
                                                                        
                                                                        2.28170
                                                                        
                                                                        
                                                                        
                                                                        290
                                                                        
                                                                        
                                                                        
                                                                        0.047
                                                                        
                                                                        
                                                                        
                                                                        0.55185
                                                                        
                                                                        
                                                                        
                                                                        220
                                                                        
                                                                        
                                                                        
                                                                        0.12
                                                                        
                                                                        
                                                                        
                                                                        0.78325
                                                                        
                                                                        
                                                                        
                                                                        390
                                                                        
                                                                        
                                                                        
                                                                        0.123
                                                                        
                                                                        
                                                                        
                                                                        2.23101
                                                                        
                                                                        
                                                                        20
                                                                        
                                                                        
                                                                        
                                                                        365
                                                                        
                                                                        
                                                                        
                                                                        0.118
                                                                        
                                                                        
                                                                        
                                                                        0.89125
                                                                        
                                                                        
                                                                        
                                                                        265
                                                                        
                                                                        
                                                                        
                                                                        0.243555
                                                                        
                                                                        
                                                                        
                                                                        570
                                                                        
                                                                        
                                                                        
                                                                        0.394
                                                                        
                                                                        
                                                                        
                                                                        0.48585
                                                                        
                                                                        
                                                                        
                                                                        595
                                                                        
                                                                        
                                                                        
                                                                        0.163
                                                                        
                                                                        
                                                                        
                                                                        2.26100
                                                                        
                                                                        
                                                                        0
                                                                        
                                                                        
                                                                        
                                                                        160
                                                                        
                                                                        
                                                                        
                                                                        0.05
                                                                        
                                                                        
                                                                        
                                                                        0.3999
                                                                        
                                                                        
                                                                        5
                                                                        
                                                                        
                                                                        
                                                                        30
                                                                        
                                                                        
                                                                        
                                                                        0.016
                                                                        
                                                                        
                                                                        
                                                                        0.4160
                                                                        
                                                                        
                                                                        
                                                                        90
                                                                        
                                                                        
                                                                        
                                                                        0.022
                                                                        
                                                                        
                                                                        
                                                                        0.37130
                                                                        
                                                                        
                                                                        
                                                                        285
                                                                        
                                                                        
                                                                        
                                                                        0.051
                                                                        
                                                                        
                                                                        
                                                                        0.4998
                                                                        
                                                                        
                                                                        35
                                                                        
                                                                        
                                                                        
                                                                        145
                                                                        
                                                                        
                                                                        
                                                                        0.044
                                                                        
                                                                        
                                                                        
                                                                        0.12240
                                                                        
                                                                        
                                                                        
                                                                        250
                                                                        
                                                                        
                                                                        
                                                                        0.025
                                                                        
                                                                        
                                                                        
                                                                        0.17270
                                                                        
                                                                        
                                                                        
                                                                        305
                                                                        
                                                                        
                                                                        
                                                                        0.026
                                                                        
                                                                        
                                                                        
                                                                        1.297
                                                                        
                                                                        
                                                                        105
                                                                        
                                                                        
                                                                        
                                                                        240
                                                                        
                                                                        
                                                                        
                                                                        0.041
                                                                        
                                                                        
                                                                        
                                                                        0.34




41










96
                                                                          
                                                                          
                                                                          80
                                                                          
                                                                          
                                                                          
                                                                          160
                                                                          
                                                                          
                                                                          
                                                                          0.032
                                                                          
                                                                          
                                                                          
                                                                          1.0895
                                                                          
                                                                          
                                                                          0
                                                                          
                                                                          
                                                                          
                                                                          60
                                                                          
                                                                          
                                                                          
                                                                          0.014
                                                                          
                                                                          
                                                                          
                                                                          0.33110
                                                                          
                                                                          
                                                                          
                                                                          145
                                                                          
                                                                          
                                                                          
                                                                          0.039
                                                                          
                                                                          
                                                                          
                                                                          0.16Hole
      94
                                                                          
                                                                          
                                                                          10
                                                                          
                                                                          
                                                                          
                                                                          40
                                                                          
                                                                          
                                                                          
                                                                          0.023
                                                                          
                                                                          
                                                                          
                                                                          0.6150
                                                                          
                                                                          
                                                                          
                                                                          65
                                                                          
                                                                          
                                                                          
                                                                          0.031
                                                                          
                                                                          
                                                                          
                                                                          0.2893
                                                                          
                                                                          
                                                                          20
                                                                          
                                                                          
                                                                          
                                                                          100
                                                                          
                                                                          
                                                                          
                                                                          0.017
                                                                          
                                                                          
                                                                          
                                                                          0.11130
                                                                          
                                                                          
                                                                          
                                                                          270
                                                                          
                                                                          
                                                                          
                                                                          0.029
                                                                          
                                                                          
                                                                          
                                                                          1.0592
                                                                          
                                                                          
                                                                          0
                                                                          
                                                                          
                                                                          
                                                                          55
                                                                          
                                                                          
                                                                          
                                                                          0.028
                                                                          
                                                                          
                                                                          
                                                                          0.34150
                                                                          
                                                                          
                                                                          
                                                                          165
                                                                          
                                                                          
                                                                          
                                                                          0.025
                                                                          
                                                                          
                                                                          
                                                                          0.15175
                                                                          
                                                                          
                                                                          
                                                                          195
                                                                          
                                                                          
                                                                          
                                                                          0.024
                                                                          
                                                                          
                                                                          
                                                                          0.32225
                                                                          
                                                                          
                                                                          
                                                                          280
                                                                          
                                                                          
                                                                          
                                                                          0.019
                                                                          
                                                                          
                                                                          
                                                                          0.7991
                                                                          
                                                                          
                                                                          40
                                                                          
                                                                          
                                                                          
                                                                          70
                                                                          
                                                                          
                                                                          
                                                                          0.026
                                                                          
                                                                          
                                                                          
                                                                          0.7590
                                                                          
                                                                          
                                                                          35
                                                                          
                                                                          
                                                                          
                                                                          90
                                                                          
                                                                          
                                                                          
                                                                          0.021
                                                                          
                                                                          
                                                                          
                                                                          0.1989
                                                                          
                                                                          
                                                                          0
                                                                          
                                                                          
                                                                          
                                                                          20
                                                                          
                                                                          
                                                                          
                                                                          0.013
                                                                          
                                                                          
                                                                          
                                                                          0.3160
                                                                          
                                                                          
                                                                          
                                                                          80
                                                                          
                                                                          
                                                                          
                                                                          0.017
                                                                          
                                                                          
                                                                          
                                                                          0.0890
                                                                          
                                                                          
                                                                          
                                                                          105
                                                                          
                                                                          
                                                                          
                                                                          0.019
                                                                          
                                                                          
                                                                          
                                                                          0.1888
                                                                          
                                                                          
                                                                          5
                                                                          
                                                                          
                                                                          
                                                                          20
                                                                          
                                                                          
                                                                          
                                                                          0.016
                                                                          
                                                                          
                                                                          
                                                                          0.33150
                                                                          
                                                                          
                                                                          
                                                                          165
                                                                          
                                                                          
                                                                          
                                                                          0.032
                                                                          
                                                                          
                                                                          
                                                                          0.14175
                                                                          
                                                                          
                                                                          
                                                                          215
                                                                          
                                                                          
                                                                          
                                                                          0.017
                                                                          
                                                                          
                                                                          
                                                                          0.258786
                                                                          
                                                                          
                                                                          
                                                                          
                                                                          
                                                                          
                                                                          
                                                                          
                                                                          
                                                                          No
                                                                          
                                                                          
                                                                          Mineralization8584
                                                                          
                                                                          
                                                                          45
                                                                          
                                                                          
                                                                          
                                                                          80
                                                                          
                                                                          
                                                                          
                                                                          0.03
                                                                          
                                                                          
                                                                          
                                                                          0.084170
                                                                          
                                                                          
                                                                          
                                                                          245
                                                                          
                                                                          
                                                                          
                                                                          0.036
                                                                          
                                                                          
                                                                          
                                                                          0.072295
                                                                          
                                                                          
                                                                          
                                                                          355
                                                                          
                                                                          
                                                                          
                                                                          0.046
                                                                          
                                                                          
                                                                          
                                                                          0.089455
                                                                          
                                                                          
                                                                          
                                                                          485
                                                                          
                                                                          
                                                                          
                                                                          0.028
                                                                          
                                                                          
                                                                          
                                                                          1.15183
                                                                          
                                                                          
                                                                          0
                                                                          
                                                                          
                                                                          
                                                                          20
                                                                          
                                                                          
                                                                          
                                                                          0.051
                                                                          
                                                                          
                                                                          
                                                                          0.877125
                                                                          
                                                                          
                                                                          
                                                                          415
                                                                          
                                                                          
                                                                          
                                                                          0.02
                                                                          
                                                                          
                                                                          
                                                                          0.4682
                                                                          
                                                                          
                                                                          0
                                                                          
                                                                          
                                                                          
                                                                          90
                                                                          
                                                                          
                                                                          
                                                                          0.01
                                                                          
                                                                          
                                                                          
                                                                          0.29790
                                                                          
                                                                          
                                                                          
                                                                          110
                                                                          
                                                                          
                                                                          
                                                                          0.031
                                                                          
                                                                          
                                                                          
                                                                          1.444110
                                                                          
                                                                          
                                                                          
                                                                          125
                                                                          
                                                                          
                                                                          
                                                                          0.014
                                                                          
                                                                          
                                                                          
                                                                          0.186160
                                                                          
                                                                          
                                                                          
                                                                          195
                                                                          
                                                                          
                                                                          
                                                                          0.021
                                                                          
                                                                          
                                                                          
                                                                          0.29381
                                                                          
                                                                          
                                                                          115
                                                                          
                                                                          
                                                                          
                                                                          265
                                                                          
                                                                          
                                                                          
                                                                          0.113
                                                                          
                                                                          
                                                                          
                                                                          0.90880
                                                                          
                                                                          
                                                                          180
                                                                          
                                                                          
                                                                          
                                                                          235
                                                                          
                                                                          
                                                                          
                                                                          0.015
                                                                          
                                                                          
                                                                          
                                                                          0.04370
                                                                          
                                                                          
                                                                          
                                                                          450
                                                                          
                                                                          
                                                                          
                                                                          0.049
                                                                          
                                                                          
                                                                          
                                                                          1.21179
                                                                          
                                                                          
                                                                          350
                                                                          
                                                                          
                                                                          
                                                                          390
                                                                          
                                                                          
                                                                          
                                                                          0.012
                                                                          
                                                                          
                                                                          
                                                                          0.13178
                                                                          
                                                                          
                                                                          5
                                                                          
                                                                          
                                                                          
                                                                          40
                                                                          
                                                                          
                                                                          
                                                                          0.011
                                                                          
                                                                          
                                                                          
                                                                          0.33745
                                                                          
                                                                          
                                                                          
                                                                          90
                                                                          
                                                                          
                                                                          
                                                                          0.029
                                                                          
                                                                          
                                                                          
                                                                          0.152100
                                                                          
                                                                          
                                                                          
                                                                          195
                                                                          
                                                                          
                                                                          
                                                                          0.065
                                                                          
                                                                          
                                                                          
                                                                          1.13977
                                                                          
                                                                          
                                                                          0
                                                                          
                                                                          
                                                                          
                                                                          15
                                                                          
                                                                          
                                                                          
                                                                          0.039
                                                                          
                                                                          
                                                                          
                                                                          0.3365
                                                                          
                                                                          
                                                                          
                                                                          185
                                                                          
                                                                          
                                                                          
                                                                          0.05
                                                                          
                                                                          
                                                                          
                                                                          1.05976
                                                                          
                                                                          
                                                                          0
                                                                          
                                                                          
                                                                          
                                                                          90
                                                                          
                                                                          
                                                                          
                                                                          0.041
                                                                          
                                                                          
                                                                          
                                                                          0.627105
                                                                          
                                                                          
                                                                          
                                                                          330
                                                                          
                                                                          
                                                                          
                                                                          0.12
                                                                          
                                                                          
                                                                          
                                                                          0.93775
                                                                          
                                                                          
                                                                          60
                                                                          
                                                                          
                                                                          
                                                                          65
                                                                          
                                                                          
                                                                          
                                                                          0.125
                                                                          
                                                                          
                                                                          
                                                                          0.296120
                                                                          
                                                                          
                                                                          
                                                                          125
                                                                          
                                                                          
                                                                          
                                                                          0.071
                                                                          
                                                                          
                                                                          
                                                                          0.372140
                                                                          
                                                                          
                                                                          
                                                                          185
                                                                          
                                                                          
                                                                          
                                                                          0.097
                                                                          
                                                                          
                                                                          
                                                                          0.195190
                                                                          
                                                                          
                                                                          
                                                                          195
                                                                          
                                                                          
                                                                          
                                                                          0.013
                                                                          
                                                                          
                                                                          
                                                                          0.063310
                                                                          
                                                                          
                                                                          
                                                                          405
                                                                          
                                                                          
                                                                          
                                                                          0.023
                                                                          
                                                                          
                                                                          
                                                                          0.394




42




74
                                                                                          
                                                                                          
                                                                                          0
                                                                                          
                                                                                          
                                                                                          
                                                                                          30
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.061
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.586140
                                                                                          
                                                                                          
                                                                                          
                                                                                          325
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.024
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.16273
                                                                                          
                                                                                          
                                                                                          0
                                                                                          
                                                                                          
                                                                                          
                                                                                          120
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.016
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.702140
                                                                                          
                                                                                          
                                                                                          
                                                                                          175
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.019
                                                                                          
                                                                                          
                                                                                          
                                                                                          1.03872
                                                                                          
                                                                                          
                                                                                          0
                                                                                          
                                                                                          
                                                                                          
                                                                                          15
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.017
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.23450
                                                                                          
                                                                                          
                                                                                          
                                                                                          85
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.052
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.937335
                                                                                          
                                                                                          
                                                                                          
                                                                                          345
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.062
                                                                                          
                                                                                          
                                                                                          
                                                                                          1.58671
                                                                                          
                                                                                          
                                                                                          50
                                                                                          
                                                                                          
                                                                                          
                                                                                          65
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.017
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.2180
                                                                                          
                                                                                          
                                                                                          
                                                                                          135
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.023
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.12165
                                                                                          
                                                                                          
                                                                                          
                                                                                          240
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.04
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.29260
                                                                                          
                                                                                          
                                                                                          
                                                                                          280
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.064
                                                                                          
                                                                                          
                                                                                          
                                                                                          1.7570
                                                                                          
                                                                                          
                                                                                          0
                                                                                          
                                                                                          
                                                                                          
                                                                                          65
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.02
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.48130
                                                                                          
                                                                                          
                                                                                          
                                                                                          175
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.029
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.4190
                                                                                          
                                                                                          
                                                                                          
                                                                                          245
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.027
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.3295
                                                                                          
                                                                                          
                                                                                          
                                                                                          380
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.029
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.3669
                                                                                          
                                                                                          
                                                                                          0
                                                                                          
                                                                                          
                                                                                          
                                                                                          35
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.061
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.059140
                                                                                          
                                                                                          
                                                                                          
                                                                                          325
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.024
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.1668
                                                                                          
                                                                                          
                                                                                          15
                                                                                          
                                                                                          
                                                                                          
                                                                                          35
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.045
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.7445
                                                                                          
                                                                                          
                                                                                          
                                                                                          55
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.029
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.2570
                                                                                          
                                                                                          
                                                                                          
                                                                                          80
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.041
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.8280
                                                                                          
                                                                                          
                                                                                          
                                                                                          90
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.031
                                                                                          
                                                                                          
                                                                                          
                                                                                          1.0790
                                                                                          
                                                                                          
                                                                                          
                                                                                          105
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.021
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.72105
                                                                                          
                                                                                          
                                                                                          
                                                                                          120
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.175
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.68120
                                                                                          
                                                                                          
                                                                                          
                                                                                          145
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.036
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.8145
                                                                                          
                                                                                          
                                                                                          
                                                                                          170
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.035
                                                                                          
                                                                                          
                                                                                          
                                                                                          1.45170
                                                                                          
                                                                                          
                                                                                          
                                                                                          185
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.024
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.6267
                                                                                          
                                                                                          
                                                                                          55
                                                                                          
                                                                                          
                                                                                          
                                                                                          260
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.064
                                                                                          
                                                                                          
                                                                                          
                                                                                          1.1766
                                                                                          
                                                                                          
                                                                                          0
                                                                                          
                                                                                          
                                                                                          
                                                                                          50
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.014
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.3550
                                                                                          
                                                                                          
                                                                                          
                                                                                          155
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.057
                                                                                          
                                                                                          
                                                                                          
                                                                                          1.05155
                                                                                          
                                                                                          
                                                                                          
                                                                                          185
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.016
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.3365
                                                                                          
                                                                                          
                                                                                          0
                                                                                          
                                                                                          
                                                                                          
                                                                                          50
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.017
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.11115
                                                                                          
                                                                                          
                                                                                          
                                                                                          130
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.039
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.11160
                                                                                          
                                                                                          
                                                                                          
                                                                                          320
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.025
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.14320
                                                                                          
                                                                                          
                                                                                          
                                                                                          420
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.156
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.62420
                                                                                          
                                                                                          
                                                                                          
                                                                                          500
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.024
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.1164
                                                                                          
                                                                                          
                                                                                          0
                                                                                          
                                                                                          
                                                                                          
                                                                                          25
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.057
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.51115
                                                                                          
                                                                                          
                                                                                          
                                                                                          420
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.044
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.363
                                                                                          
                                                                                          
                                                                                          125
                                                                                          
                                                                                          
                                                                                          
                                                                                          170
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.03
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.47300
                                                                                          
                                                                                          
                                                                                          
                                                                                          315
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.11
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.6962
                                                                                          
                                                                                          
                                                                                          100
                                                                                          
                                                                                          
                                                                                          
                                                                                          120
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.033
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.5661
                                                                                          
                                                                                          
                                                                                          0
                                                                                          
                                                                                          
                                                                                          
                                                                                          15
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.036
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.96210
                                                                                          
                                                                                          
                                                                                          
                                                                                          225
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.053
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.48240
                                                                                          
                                                                                          
                                                                                          
                                                                                          310
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.053
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.84385
                                                                                          
                                                                                          
                                                                                          
                                                                                          405
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.022
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.0260
                                                                                          
                                                                                          
                                                                                          275
                                                                                          
                                                                                          
                                                                                          
                                                                                          335
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.02
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.18375
                                                                                          
                                                                                          
                                                                                          
                                                                                          435
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.012
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.02665
                                                                                          
                                                                                          
                                                                                          
                                                                                          685
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.065
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.0859
                                                                                          
                                                                                          
                                                                                          105
                                                                                          
                                                                                          
                                                                                          
                                                                                          265
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.035
                                                                                          
                                                                                          
                                                                                          
                                                                                          0.56


43





300
                                                                              
                                                                              
                                                                              
                                                                              315
                                                                              
                                                                              
                                                                              
                                                                              0.019
                                                                              
                                                                              
                                                                              
                                                                              0.0758
                                                                              
                                                                              
                                                                              130
                                                                              
                                                                              
                                                                              
                                                                              285
                                                                              
                                                                              
                                                                              
                                                                              0.018
                                                                              
                                                                              
                                                                              
                                                                              0.4857
                                                                              
                                                                              
                                                                              90
                                                                              
                                                                              
                                                                              
                                                                              105
                                                                              
                                                                              
                                                                              
                                                                              0.018
                                                                              
                                                                              
                                                                              
                                                                              0.43135
                                                                              
                                                                              
                                                                              
                                                                              155
                                                                              
                                                                              
                                                                              
                                                                              0.023
                                                                              
                                                                              
                                                                              
                                                                              0.06270
                                                                              
                                                                              
                                                                              
                                                                              425
                                                                              
                                                                              
                                                                              
                                                                              0.017
                                                                              
                                                                              
                                                                              
                                                                              0.1856
                                                                              
                                                                              
                                                                              435
                                                                              
                                                                              
                                                                              
                                                                              445
                                                                              
                                                                              
                                                                              
                                                                              0.191
                                                                              
                                                                              
                                                                              
                                                                              0.1750
                                                                              
                                                                              
                                                                              
                                                                              765
                                                                              
                                                                              
                                                                              
                                                                              0.07
                                                                              
                                                                              
                                                                              
                                                                              0.0455
                                                                              
                                                                              
                                                                              345
                                                                              
                                                                              
                                                                              
                                                                              355
                                                                              
                                                                              
                                                                              
                                                                              0.104
                                                                              
                                                                              
                                                                              
                                                                              0.17385
                                                                              
                                                                              
                                                                              
                                                                              410
                                                                              
                                                                              
                                                                              
                                                                              0.016
                                                                              
                                                                              
                                                                              
                                                                              0.05450
                                                                              
                                                                              
                                                                              
                                                                              605
                                                                              
                                                                              
                                                                              
                                                                              0.026
                                                                              
                                                                              
                                                                              
                                                                              0.0254
                                                                              
                                                                              
                                                                              315
                                                                              
                                                                              
                                                                              
                                                                              355
                                                                              
                                                                              
                                                                              
                                                                              0.043
                                                                              
                                                                              
                                                                              
                                                                              0.93450
                                                                              
                                                                              
                                                                              
                                                                              470
                                                                              
                                                                              
                                                                              
                                                                              0.033
                                                                              
                                                                              
                                                                              
                                                                              0.08505
                                                                              
                                                                              
                                                                              
                                                                              520
                                                                              
                                                                              
                                                                              
                                                                              0.048
                                                                              
                                                                              
                                                                              
                                                                              0.23635
                                                                              
                                                                              
                                                                              
                                                                              675
                                                                              
                                                                              
                                                                              
                                                                              0.022
                                                                              
                                                                              
                                                                              
                                                                              0.0953
                                                                              
                                                                              
                                                                              0
                                                                              
                                                                              
                                                                              
                                                                              25
                                                                              
                                                                              
                                                                              
                                                                              0.018
                                                                              
                                                                              
                                                                              
                                                                              0.69225
                                                                              
                                                                              
                                                                              
                                                                              260
                                                                              
                                                                              
                                                                              
                                                                              0.033
                                                                              
                                                                              
                                                                              
                                                                              0.1352
                                                                              
                                                                              
                                                                              70
                                                                              
                                                                              
                                                                              
                                                                              90
                                                                              
                                                                              
                                                                              
                                                                              0.046
                                                                              
                                                                              
                                                                              
                                                                              0.16120
                                                                              
                                                                              
                                                                              
                                                                              170
                                                                              
                                                                              
                                                                              
                                                                              0.12
                                                                              
                                                                              
                                                                              
                                                                              0.52190
                                                                              
                                                                              
                                                                              
                                                                              255
                                                                              
                                                                              
                                                                              
                                                                              0.022
                                                                              
                                                                              
                                                                              
                                                                              0.35290
                                                                              
                                                                              
                                                                              
                                                                              325
                                                                              
                                                                              
                                                                              
                                                                              0.015
                                                                              
                                                                              
                                                                              
                                                                              1.1351
                                                                              
                                                                              
                                                                              55
                                                                              
                                                                              
                                                                              
                                                                              120
                                                                              
                                                                              
                                                                              
                                                                              0.041
                                                                              
                                                                              
                                                                              
                                                                              0.23175
                                                                              
                                                                              
                                                                              
                                                                              295
                                                                              
                                                                              
                                                                              
                                                                              0.024
                                                                              
                                                                              
                                                                              
                                                                              0.4650
                                                                              
                                                                              
                                                                              0
                                                                              
                                                                              
                                                                              
                                                                              50
                                                                              
                                                                              
                                                                              
                                                                              0.128
                                                                              
                                                                              
                                                                              
                                                                              0.43155
                                                                              
                                                                              
                                                                              
                                                                              275
                                                                              
                                                                              
                                                                              
                                                                              0.068
                                                                              
                                                                              
                                                                              
                                                                              0.83Bottom
      in high grade @ 27549
                                                                              
                                                                              
                                                                              0
                                                                              
                                                                              
                                                                              
                                                                              50
                                                                              
                                                                              
                                                                              
                                                                              0.018
                                                                              
                                                                              
                                                                              
                                                                              0.73165
                                                                              
                                                                              
                                                                              
                                                                              290
                                                                              
                                                                              
                                                                              
                                                                              0.025
                                                                              
                                                                              
                                                                              
                                                                              0.15310
                                                                              
                                                                              
                                                                              
                                                                              355
                                                                              
                                                                              
                                                                              
                                                                              0.119
                                                                              
                                                                              
                                                                              
                                                                              0.3748
                                                                              
                                                                              
                                                                              0
                                                                              
                                                                              
                                                                              
                                                                              90
                                                                              
                                                                              
                                                                              
                                                                              0.041
                                                                              
                                                                              
                                                                              
                                                                              0.8647
                                                                              
                                                                              
                                                                              0
                                                                              
                                                                              
                                                                              
                                                                              85
                                                                              
                                                                              
                                                                              
                                                                              0.04
                                                                              
                                                                              
                                                                              
                                                                              0.8146
                                                                              
                                                                              
                                                                              0
                                                                              
                                                                              
                                                                              
                                                                              15
                                                                              
                                                                              
                                                                              
                                                                              0.012
                                                                              
                                                                              
                                                                              
                                                                              0.5105
                                                                              
                                                                              
                                                                              
                                                                              115
                                                                              
                                                                              
                                                                              
                                                                              0.019
                                                                              
                                                                              
                                                                              
                                                                              0.06220
                                                                              
                                                                              
                                                                              
                                                                              305
                                                                              
                                                                              
                                                                              
                                                                              0.058
                                                                              
                                                                              
                                                                              
                                                                              0.46325
                                                                              
                                                                              
                                                                              
                                                                              350
                                                                              
                                                                              
                                                                              
                                                                              0.031
                                                                              
                                                                              
                                                                              
                                                                              0.0745
                                                                              
                                                                              
                                                                              90
                                                                              
                                                                              
                                                                              
                                                                              95
                                                                              
                                                                              
                                                                              
                                                                              0.257
                                                                              
                                                                              
                                                                              
                                                                              1.64165
                                                                              
                                                                              
                                                                              
                                                                              255
                                                                              
                                                                              
                                                                              
                                                                              0.012
                                                                              
                                                                              
                                                                              
                                                                              0.08255
                                                                              
                                                                              
                                                                              
                                                                              345
                                                                              
                                                                              
                                                                              
                                                                              0.077
                                                                              
                                                                              
                                                                              
                                                                              0.8244
                                                                              
                                                                              
                                                                              215
                                                                              
                                                                              
                                                                              
                                                                              275
                                                                              
                                                                              
                                                                              
                                                                              0.172
                                                                              
                                                                              
                                                                              
                                                                              1.19230
                                                                              
                                                                              
                                                                              
                                                                              235
                                                                              
                                                                              
                                                                              
                                                                              1.559
                                                                              
                                                                              
                                                                              
                                                                              6.35345
                                                                              
                                                                              
                                                                              
                                                                              430
                                                                              
                                                                              
                                                                              
                                                                              0.064
                                                                              
                                                                              
                                                                              
                                                                              0.06355
                                                                              
                                                                              
                                                                              
                                                                              370
                                                                              
                                                                              
                                                                              
                                                                              0.242
                                                                              
                                                                              
                                                                              
                                                                              0.243
                                                                              
                                                                              
                                                                              335
                                                                              
                                                                              
                                                                              
                                                                              410
                                                                              
                                                                              
                                                                              
                                                                              0.01
                                                                              
                                                                              
                                                                              
                                                                              0.4342
                                                                              
                                                                              
                                                                              615
                                                                              
                                                                              
                                                                              
                                                                              715
                                                                              
                                                                              
                                                                              Low
      grade
                                                                              
                                                                              
                                                                              Low
      grade41
                                                                              
                                                                              
                                                                              10
                                                                              
                                                                              
                                                                              
                                                                              25
                                                                              
                                                                              
                                                                              
                                                                              0.03
                                                                              
                                                                              
                                                                              
                                                                              0.17135
                                                                              
                                                                              
                                                                              
                                                                              155
                                                                              
                                                                              
                                                                              
                                                                              0.137
                                                                              
                                                                              
                                                                              
                                                                              0.61185
                                                                              
                                                                              
                                                                              
                                                                              270
                                                                              
                                                                              
                                                                              
                                                                              0.015
                                                                              
                                                                              
                                                                              
                                                                              0.04295
                                                                              
                                                                              
                                                                              
                                                                              405
                                                                              
                                                                              
                                                                              
                                                                              0.037
                                                                              
                                                                              
                                                                              
                                                                              0.61


44





540
                                                                            
                                                                            
                                                                            
                                                                            560
                                                                            
                                                                            
                                                                            
                                                                            0.025
                                                                            
                                                                            
                                                                            
                                                                            0.3140
                                                                            
                                                                            
                                                                            210
                                                                            
                                                                            
                                                                            
                                                                            260
                                                                            
                                                                            
                                                                            
                                                                            0.238
                                                                            
                                                                            
                                                                            
                                                                            0.16235
                                                                            
                                                                            
                                                                            
                                                                            240
                                                                            
                                                                            
                                                                            
                                                                            1.937
                                                                            
                                                                            
                                                                            
                                                                            0.7325
                                                                            
                                                                            
                                                                            
                                                                            340
                                                                            
                                                                            
                                                                            
                                                                            0.043
                                                                            
                                                                            
                                                                            
                                                                            0.6839
                                                                            
                                                                            
                                                                            0
                                                                            
                                                                            
                                                                            
                                                                            120
                                                                            
                                                                            
                                                                            
                                                                            0.031
                                                                            
                                                                            
                                                                            
                                                                            0.43120
                                                                            
                                                                            
                                                                            
                                                                            170
                                                                            
                                                                            
                                                                            
                                                                            0.009
                                                                            
                                                                            
                                                                            
                                                                            0.37170
                                                                            
                                                                            
                                                                            
                                                                            210
                                                                            
                                                                            
                                                                            
                                                                            0.04
                                                                            
                                                                            
                                                                            
                                                                            138
                                                                            
                                                                            
                                                                            0
                                                                            
                                                                            
                                                                            
                                                                            20
                                                                            
                                                                            
                                                                            
                                                                            0.087
                                                                            
                                                                            
                                                                            
                                                                            0.8360
                                                                            
                                                                            
                                                                            
                                                                            170
                                                                            
                                                                            
                                                                            
                                                                            0.025
                                                                            
                                                                            
                                                                            
                                                                            0.38190
                                                                            
                                                                            
                                                                            
                                                                            235
                                                                            
                                                                            
                                                                            
                                                                            0.031
                                                                            
                                                                            
                                                                            
                                                                            0.73400
                                                                            
                                                                            
                                                                            
                                                                            425
                                                                            
                                                                            
                                                                            
                                                                            0.021
                                                                            
                                                                            
                                                                            
                                                                            0.3537
                                                                            
                                                                            
                                                                            0
                                                                            
                                                                            
                                                                            
                                                                            155
                                                                            
                                                                            
                                                                            
                                                                            0.032
                                                                            
                                                                            
                                                                            
                                                                            0.5336
                                                                            
                                                                            
                                                                            95
                                                                            
                                                                            
                                                                            
                                                                            110
                                                                            
                                                                            
                                                                            
                                                                            0.191
                                                                            
                                                                            
                                                                            
                                                                            0.18175
                                                                            
                                                                            
                                                                            
                                                                            195
                                                                            
                                                                            
                                                                            
                                                                            0.019
                                                                            
                                                                            
                                                                            
                                                                            0.2205
                                                                            
                                                                            
                                                                            
                                                                            255
                                                                            
                                                                            
                                                                            
                                                                            0.044
                                                                            
                                                                            
                                                                            
                                                                            0.31285
                                                                            
                                                                            
                                                                            
                                                                            315
                                                                            
                                                                            
                                                                            
                                                                            0.025
                                                                            
                                                                            
                                                                            
                                                                            0.08330
                                                                            
                                                                            
                                                                            
                                                                            400
                                                                            
                                                                            
                                                                            
                                                                            0.025
                                                                            
                                                                            
                                                                            
                                                                            0.09410
                                                                            
                                                                            
                                                                            
                                                                            520
                                                                            
                                                                            
                                                                            
                                                                            0.173
                                                                            
                                                                            
                                                                            
                                                                            1.08585
                                                                            
                                                                            
                                                                            
                                                                            625
                                                                            
                                                                            
                                                                            
                                                                            0.01
                                                                            
                                                                            
                                                                            
                                                                            0.0435
                                                                            
                                                                            
                                                                            0
                                                                            
                                                                            
                                                                            
                                                                            15
                                                                            
                                                                            
                                                                            
                                                                            0.03
                                                                            
                                                                            
                                                                            
                                                                            0.63170
                                                                            
                                                                            
                                                                            
                                                                            190
                                                                            
                                                                            
                                                                            
                                                                            0.033
                                                                            
                                                                            
                                                                            
                                                                            0.16320
                                                                            
                                                                            
                                                                            
                                                                            380
                                                                            
                                                                            
                                                                            
                                                                            0.026
                                                                            
                                                                            
                                                                            
                                                                            0.16400
                                                                            
                                                                            
                                                                            
                                                                            420
                                                                            
                                                                            
                                                                            
                                                                            0.016
                                                                            
                                                                            
                                                                            
                                                                            0.35465
                                                                            
                                                                            
                                                                            
                                                                            560
                                                                            
                                                                            
                                                                            
                                                                            0.014
                                                                            
                                                                            
                                                                            
                                                                            0.5234
                                                                            
                                                                            
                                                                            0
                                                                            
                                                                            
                                                                            
                                                                            10
                                                                            
                                                                            
                                                                            
                                                                            0.055
                                                                            
                                                                            
                                                                            
                                                                            0.95195
                                                                            
                                                                            
                                                                            
                                                                            205
                                                                            
                                                                            
                                                                            
                                                                            0.025
                                                                            
                                                                            
                                                                            
                                                                            0.12305
                                                                            
                                                                            
                                                                            
                                                                            335
                                                                            
                                                                            
                                                                            
                                                                            0.021
                                                                            
                                                                            
                                                                            
                                                                            0.41365
                                                                            
                                                                            
                                                                            
                                                                            420
                                                                            
                                                                            
                                                                            
                                                                            0.029
                                                                            
                                                                            
                                                                            
                                                                            0.58540
                                                                            
                                                                            
                                                                            
                                                                            550
                                                                            
                                                                            
                                                                            
                                                                            0.02
                                                                            
                                                                            
                                                                            
                                                                            0.4433
                                                                            
                                                                            
                                                                            0
                                                                            
                                                                            
                                                                            
                                                                            15
                                                                            
                                                                            
                                                                            
                                                                            0.019
                                                                            
                                                                            
                                                                            
                                                                            0.1630
                                                                            
                                                                            
                                                                            
                                                                            40
                                                                            
                                                                            
                                                                            
                                                                            0.05
                                                                            
                                                                            
                                                                            
                                                                            0.21160
                                                                            
                                                                            
                                                                            
                                                                            170
                                                                            
                                                                            
                                                                            
                                                                            0.025
                                                                            
                                                                            
                                                                            
                                                                            0.72240
                                                                            
                                                                            
                                                                            
                                                                            250
                                                                            
                                                                            
                                                                            
                                                                            0.045
                                                                            
                                                                            
                                                                            
                                                                            0.08310
                                                                            
                                                                            
                                                                            
                                                                            325
                                                                            
                                                                            
                                                                            
                                                                            0.015
                                                                            
                                                                            
                                                                            
                                                                            0.5365
                                                                            
                                                                            
                                                                            
                                                                            380
                                                                            
                                                                            
                                                                            
                                                                            0.025
                                                                            
                                                                            
                                                                            
                                                                            0.02395
                                                                            
                                                                            
                                                                            
                                                                            420
                                                                            
                                                                            
                                                                            
                                                                            0.025
                                                                            
                                                                            
                                                                            
                                                                            0.0232
                                                                            
                                                                            
                                                                            0
                                                                            
                                                                            
                                                                            
                                                                            60
                                                                            
                                                                            
                                                                            
                                                                            0.039
                                                                            
                                                                            
                                                                            
                                                                            0.27195
                                                                            
                                                                            
                                                                            
                                                                            265
                                                                            
                                                                            
                                                                            
                                                                            0.026
                                                                            
                                                                            
                                                                            
                                                                            0.33295
                                                                            
                                                                            
                                                                            
                                                                            315
                                                                            
                                                                            
                                                                            
                                                                            0.019
                                                                            
                                                                            
                                                                            
                                                                            0.25420
                                                                            
                                                                            
                                                                            
                                                                            460
                                                                            
                                                                            
                                                                            
                                                                            0.02
                                                                            
                                                                            
                                                                            
                                                                            0.15555
                                                                            
                                                                            
                                                                            
                                                                            585
                                                                            
                                                                            
                                                                            
                                                                            0.017
                                                                            
                                                                            
                                                                            
                                                                            0.7431
                                                                            
                                                                            
                                                                            0
                                                                            
                                                                            
                                                                            
                                                                            15
                                                                            
                                                                            
                                                                            
                                                                            0.053
                                                                            
                                                                            
                                                                            
                                                                            1.67225
                                                                            
                                                                            
                                                                            
                                                                            370
                                                                            
                                                                            
                                                                            
                                                                            0.041
                                                                            
                                                                            
                                                                            
                                                                            0.12390
                                                                            
                                                                            
                                                                            
                                                                            420
                                                                            
                                                                            
                                                                            
                                                                            0.014
                                                                            
                                                                            
                                                                            
                                                                            0.06575
                                                                            
                                                                            
                                                                            
                                                                            635
                                                                            
                                                                            
                                                                            
                                                                            0.08
                                                                            
                                                                            
                                                                            
                                                                            0.5230
                                                                            
                                                                            
                                                                            0
                                                                            
                                                                            
                                                                            
                                                                            55
                                                                            
                                                                            
                                                                            
                                                                            0.037
                                                                            
                                                                            
                                                                            
                                                                            0.63280
                                                                            
                                                                            
                                                                            
                                                                            350
                                                                            
                                                                            
                                                                            
                                                                            0.017
                                                                            
                                                                            
                                                                            
                                                                            0.31375
                                                                            
                                                                            
                                                                            
                                                                            410
                                                                            
                                                                            
                                                                            
                                                                            0.06
                                                                            
                                                                            
                                                                            
                                                                            0.22570
                                                                            
                                                                            
                                                                            
                                                                            630
                                                                            
                                                                            
                                                                            
                                                                            0.02
                                                                            
                                                                            
                                                                            
                                                                            0.89




45





29
                                                                              
                                                                              
                                                                              0
                                                                              
                                                                              
                                                                              
                                                                              15
                                                                              
                                                                              
                                                                              
                                                                              0.04
                                                                              
                                                                              
                                                                              
                                                                              0.63405
                                                                              
                                                                              
                                                                              
                                                                              485
                                                                              
                                                                              
                                                                              
                                                                              0.113
                                                                              
                                                                              
                                                                              
                                                                              2.09495
                                                                              
                                                                              
                                                                              
                                                                              570
                                                                              
                                                                              
                                                                              
                                                                              0.017
                                                                              
                                                                              
                                                                              
                                                                              0.19600
                                                                              
                                                                              
                                                                              
                                                                              640
                                                                              
                                                                              
                                                                              
                                                                              0.078
                                                                              
                                                                              
                                                                              
                                                                              0.3228
                                                                              
                                                                              
                                                                              0
                                                                              
                                                                              
                                                                              
                                                                              15
                                                                              
                                                                              
                                                                              
                                                                              0.023
                                                                              
                                                                              
                                                                              
                                                                              0.7865
                                                                              
                                                                              
                                                                              
                                                                              210
                                                                              
                                                                              
                                                                              
                                                                              0.083
                                                                              
                                                                              
                                                                              
                                                                              0.63255
                                                                              
                                                                              
                                                                              
                                                                              290
                                                                              
                                                                              
                                                                              
                                                                              0.051
                                                                              
                                                                              
                                                                              
                                                                              0.6310
                                                                              
                                                                              
                                                                              
                                                                              410
                                                                              
                                                                              
                                                                              
                                                                              0.02
                                                                              
                                                                              
                                                                              
                                                                              0.6527
                                                                              
                                                                              
                                                                              0
                                                                              
                                                                              
                                                                              
                                                                              20
                                                                              
                                                                              
                                                                              
                                                                              0.044
                                                                              
                                                                              
                                                                              
                                                                              0.94140
                                                                              
                                                                              
                                                                              
                                                                              150
                                                                              
                                                                              
                                                                              
                                                                              0.063
                                                                              
                                                                              
                                                                              
                                                                              0.56175
                                                                              
                                                                              
                                                                              
                                                                              255
                                                                              
                                                                              
                                                                              
                                                                              0.044
                                                                              
                                                                              
                                                                              
                                                                              0.38315
                                                                              
                                                                              
                                                                              
                                                                              495
                                                                              
                                                                              
                                                                              
                                                                              0.04
                                                                              
                                                                              
                                                                              
                                                                              1.1326
                                                                              
                                                                              
                                                                              0
                                                                              
                                                                              
                                                                              
                                                                              25
                                                                              
                                                                              
                                                                              
                                                                              0.025
                                                                              
                                                                              
                                                                              
                                                                              0.88240
                                                                              
                                                                              
                                                                              
                                                                              375
                                                                              
                                                                              
                                                                              
                                                                              0.065
                                                                              
                                                                              
                                                                              
                                                                              0.41395
                                                                              
                                                                              
                                                                              
                                                                              435
                                                                              
                                                                              
                                                                              
                                                                              0.029
                                                                              
                                                                              
                                                                              
                                                                              0.6925
                                                                              
                                                                              
                                                                              0
                                                                              
                                                                              
                                                                              
                                                                              60
                                                                              
                                                                              
                                                                              
                                                                              0.033
                                                                              
                                                                              
                                                                              
                                                                              0.8135
                                                                              
                                                                              
                                                                              
                                                                              150
                                                                              
                                                                              
                                                                              
                                                                              0.034
                                                                              
                                                                              
                                                                              
                                                                              0.06165
                                                                              
                                                                              
                                                                              
                                                                              230
                                                                              
                                                                              
                                                                              
                                                                              0.029
                                                                              
                                                                              
                                                                              
                                                                              0.5315
                                                                              
                                                                              
                                                                              
                                                                              330
                                                                              
                                                                              
                                                                              
                                                                              0.014
                                                                              
                                                                              
                                                                              
                                                                              0.09525
                                                                              
                                                                              
                                                                              
                                                                              595
                                                                              
                                                                              
                                                                              
                                                                              0.015
                                                                              
                                                                              
                                                                              
                                                                              0.1424
                                                                              
                                                                              
                                                                              0
                                                                              
                                                                              
                                                                              
                                                                              25
                                                                              
                                                                              
                                                                              
                                                                              0.052
                                                                              
                                                                              
                                                                              
                                                                              0.64150
                                                                              
                                                                              
                                                                              
                                                                              235
                                                                              
                                                                              
                                                                              
                                                                              0.103
                                                                              
                                                                              
                                                                              
                                                                              0.54285
                                                                              
                                                                              
                                                                              
                                                                              420
                                                                              
                                                                              
                                                                              
                                                                              0.022
                                                                              
                                                                              
                                                                              
                                                                              1.0323
                                                                              
                                                                              
                                                                              75
                                                                              
                                                                              
                                                                              
                                                                              235
                                                                              
                                                                              
                                                                              
                                                                              0.058
                                                                              
                                                                              
                                                                              
                                                                              0.78260
                                                                              
                                                                              
                                                                              
                                                                              300
                                                                              
                                                                              
                                                                              
                                                                              0.03
                                                                              
                                                                              
                                                                              
                                                                              1.0422
                                                                              
                                                                              
                                                                              0
                                                                              
                                                                              
                                                                              
                                                                              20
                                                                              
                                                                              
                                                                              
                                                                              0.012
                                                                              
                                                                              
                                                                              
                                                                              0.2430
                                                                              
                                                                              
                                                                              
                                                                              40
                                                                              
                                                                              
                                                                              
                                                                              0.134
                                                                              
                                                                              
                                                                              
                                                                              1.5770
                                                                              
                                                                              
                                                                              
                                                                              140
                                                                              
                                                                              
                                                                              
                                                                              0.04
                                                                              
                                                                              
                                                                              
                                                                              0.4321
                                                                              
                                                                              
                                                                              210
                                                                              
                                                                              
                                                                              
                                                                              305
                                                                              
                                                                              
                                                                              
                                                                              0.046
                                                                              
                                                                              
                                                                              
                                                                              0.6120
                                                                              
                                                                              
                                                                              70
                                                                              
                                                                              
                                                                              
                                                                              75
                                                                              
                                                                              
                                                                              
                                                                              0.013
                                                                              
                                                                              
                                                                              
                                                                              0.04390
                                                                              
                                                                              
                                                                              
                                                                              395
                                                                              
                                                                              
                                                                              
                                                                              0.015
                                                                              
                                                                              
                                                                              
                                                                              0.0419
                                                                              
                                                                              
                                                                              0
                                                                              
                                                                              
                                                                              
                                                                              45
                                                                              
                                                                              
                                                                              
                                                                              0.01
                                                                              
                                                                              
                                                                              
                                                                              0.13140
                                                                              
                                                                              
                                                                              
                                                                              180
                                                                              
                                                                              
                                                                              
                                                                              0.045
                                                                              
                                                                              
                                                                              
                                                                              0.63205
                                                                              
                                                                              
                                                                              
                                                                              230
                                                                              
                                                                              
                                                                              
                                                                              0.013
                                                                              
                                                                              
                                                                              
                                                                              0.5618
                                                                              
                                                                              
                                                                              0
                                                                              
                                                                              
                                                                              
                                                                              40
                                                                              
                                                                              
                                                                              
                                                                              0.01
                                                                              
                                                                              
                                                                              
                                                                              0.29260
                                                                              
                                                                              
                                                                              
                                                                              265
                                                                              
                                                                              
                                                                              
                                                                              0.022
                                                                              
                                                                              
                                                                              
                                                                              1.6317
                                                                              
                                                                              
                                                                              60
                                                                              
                                                                              
                                                                              
                                                                              130
                                                                              
                                                                              
                                                                              
                                                                              0.031
                                                                              
                                                                              
                                                                              
                                                                              0.516
                                                                              
                                                                              
                                                                              290
                                                                              
                                                                              
                                                                              
                                                                              300
                                                                              
                                                                              
                                                                              
                                                                              0.088
                                                                              
                                                                              
                                                                              
                                                                              0.07385
                                                                              
                                                                              
                                                                              
                                                                              535
                                                                              
                                                                              
                                                                              
                                                                              0.047
                                                                              
                                                                              
                                                                              
                                                                              0.07555
                                                                              
                                                                              
                                                                              
                                                                              755
                                                                              
                                                                              
                                                                              
                                                                              0.032
                                                                              
                                                                              
                                                                              
                                                                              0.2515
                                                                              
                                                                              
                                                                              10
                                                                              
                                                                              
                                                                              
                                                                              25
                                                                              
                                                                              
                                                                              
                                                                              0.054
                                                                              
                                                                              
                                                                              
                                                                              1.74115
                                                                              
                                                                              
                                                                              
                                                                              320
                                                                              
                                                                              
                                                                              
                                                                              0.118
                                                                              
                                                                              
                                                                              
                                                                              1.32325
                                                                              
                                                                              
                                                                              
                                                                              365
                                                                              
                                                                              
                                                                              
                                                                              0.029
                                                                              
                                                                              
                                                                              
                                                                              3.5314
                                                                              
                                                                              
                                                                              10
                                                                              
                                                                              
                                                                              
                                                                              40
                                                                              
                                                                              
                                                                              
                                                                              0.034
                                                                              
                                                                              
                                                                              
                                                                              0.7255
                                                                              
                                                                              
                                                                              
                                                                              80
                                                                              
                                                                              
                                                                              
                                                                              0.109
                                                                              
                                                                              
                                                                              
                                                                              0.75210
                                                                              
                                                                              
                                                                              
                                                                              225
                                                                              
                                                                              
                                                                              
                                                                              0.082
                                                                              
                                                                              
                                                                              
                                                                              0.08290
                                                                              
                                                                              
                                                                              
                                                                              330
                                                                              
                                                                              
                                                                              
                                                                              0.091
                                                                              
                                                                              
                                                                              
                                                                              0.2313
                                                                              
                                                                              
                                                                              0
                                                                              
                                                                              
                                                                              
                                                                              70
                                                                              
                                                                              
                                                                              
                                                                              0.025
                                                                              
                                                                              
                                                                              
                                                                              0.34




46







12
                                        
                                        
                                        0
                                        
                                        
                                        
                                        60
                                        
                                        
                                        
                                        0.012
                                        
                                        
                                        
                                        0.18445
                                        
                                        
                                        
                                        460
                                        
                                        
                                        
                                        0.062
                                        
                                        
                                        
                                        0.1411
                                        
                                        
                                        175
                                        
                                        
                                        
                                        265
                                        
                                        
                                        
                                        0.043
                                        
                                        
                                        
                                        0.47285
                                        
                                        
                                        
                                        350
                                        
                                        
                                        
                                        0.076
                                        
                                        
                                        
                                        1.2810
                                        
                                        
                                        20
                                        
                                        
                                        
                                        400
                                        
                                        
                                        
                                        0.109
                                        
                                        
                                        
                                        0.6609
                                        
                                        
                                        10
                                        
                                        
                                        
                                        25
                                        
                                        
                                        
                                        0.054
                                        
                                        
                                        
                                        1.74115
                                        
                                        
                                        
                                        320
                                        
                                        
                                        
                                        0.118
                                        
                                        
                                        
                                        1.32325
                                        
                                        
                                        
                                        350
                                        
                                        
                                        
                                        0.03
                                        
                                        
                                        
                                        0.0208
                                        
                                        
                                        40
                                        
                                        
                                        
                                        55
                                        
                                        
                                        
                                        0.037
                                        
                                        
                                        
                                        0.1785
                                        
                                        
                                        
                                        150
                                        
                                        
                                        
                                        0.06
                                        
                                        
                                        
                                        1.0407
                                        
                                        
                                        15
                                        
                                        
                                        
                                        185
                                        
                                        
                                        
                                        0.068
                                        
                                        
                                        
                                        1.506
                                        
                                        
                                        35
                                        
                                        
                                        
                                        55
                                        
                                        
                                        
                                        0.029
                                        
                                        
                                        
                                        1.27120
                                        
                                        
                                        
                                        130
                                        
                                        
                                        
                                        0.164
                                        
                                        
                                        
                                        1.19135
                                        
                                        
                                        
                                        215
                                        
                                        
                                        
                                        0.033
                                        
                                        
                                        
                                        0.29245
                                        
                                        
                                        
                                        275
                                        
                                        
                                        
                                        0.037
                                        
                                        
                                        
                                        1.29275
                                        
                                        
                                        
                                        325
                                        
                                        
                                        
                                        0.003
                                        
                                        
                                        
                                        1.7105
                                        
                                        
                                        30
                                        
                                        
                                        
                                        65
                                        
                                        
                                        
                                        0.038
                                        
                                        
                                        
                                        0.9120
                                        
                                        
                                        
                                        265
                                        
                                        
                                        
                                        0.045
                                        
                                        
                                        
                                        1.2704
                                        
                                        
                                        50
                                        
                                        
                                        
                                        60
                                        
                                        
                                        
                                        0.006
                                        
                                        
                                        
                                        0.0903
                                        
                                        
                                        55
                                        
                                        
                                        
                                        90
                                        
                                        
                                        
                                        0.031
                                        
                                        
                                        
                                        0.8102
                                        
                                        
                                        160
                                        
                                        
                                        
                                        275
                                        
                                        
                                        
                                        0.074
                                        
                                        
                                        
                                        0.6901
                                        
                                        
                                        65
                                        
                                        
                                        
                                        135
                                        
                                        
                                        
                                        0.052
                                        
                                        
                                        
                                        0.64





All of
the assays referenced herein and the data derived there from have been performed
and analyzed by American Assay of Reno, Nevada, a certified independent
commercial laboratory, utilizing industry standard analytical
methods.




In
addition to the drilling program, the Company is continuing to work on the
completion of a comprehensive mine plan. The results of the drilling program,
combined with the mine plan, will form the basis for a preliminary feasibility
report. The Company completed its initial report in the third quarter 2008.
Completing the mine plan and the preliminary feasibility report and obtaining
the required funding are the key elements in the Company’s plan to return to
production. In determining the optimum time to resume production, the Company
will seek advice from its team of mining industry experts.





The
Company continued to expand its footprint in the Comstock Lode in the first nine
months of 2008. During the nine month period, the company acquired or staked
approximately 71 new claims, bringing its total claims in the area to
approximately 250. The average claim covers an area of 20 acres. In addition,
the Company acquired mineral leases on 16 unpatented mineral claims, 6 patented
mineral claims and 84 acres of mineral rights on private land. The Company
intends to acquire additional properties and claims in the Comstock Lode region
through the remainder of 2008 if suitable financing can be
arranged.





DWC Resources Letter of
Intent





On August
13, 2008, Goldspring, Inc. (the “Company”) entered into a binding letter of
intent to purchase certain property owned by DWC Resources, Inc. in Storey
County, Nevada.  The purchase price is $7,500,000, but is subject to
adjustment pursuant to the results of a fairness opinion and/or appraisal to be
obtained by the Company. The purchase price will be paid through issuance of a
$7,500,000 promissory note which shall bear interest at the rate of 9% per year
with quarterly interest payments due throughout the term of the note which is 5
years. The purchased assets include patented and unpatented lode mining claims
owned by DWC Resources, Inc. in the Comstock Lode district. The letter of intent
also provides for the payment of royalties ranging from 2% - 6% of “net smelter
returns” based upon the price of gold per ounce and a 1% royalty to be paid to
the party which sold the subject property to DWC Resources in 2007. There is
also a commitment to expend a minimum of $250,000 per year on exploration by the
Company for five years.


47





Sutro
Tunnel Sublease




The
Company simultaneously entered into a binding letter of intent to sublease the
Sutro Tunnel Lease dated January 1, 2008 between Sutro Tunnel Co. and John
Winfield or his nominee.  The purchase price for the sublease is
$2,000,000 (which is subject to adjustment upon receipt of a third party
fairness opinion/appraisal) payable pursuant to the issuance of a $2,000,000
promissory note which shall bear interest at the rate of 9%per year with
quarterly interest payments due throughout the term of the note which is 5
years. The letter of intent also provides for the payment of royalties ranging
from 6% - 8% of “net smelter returns” based upon the price of gold per ounce and
a 1% royalty to be paid to Winfield if Winfield provides an acceptable buyout of
the Sutro property. The Company is also required to fulfill lessee’s obligations
under the Sutro Tunnel Lease with regard to payment of royalties and exploration
expenditures.




With the
appointment of two new directors in the first quarter of 2008 (Rob Faber, the
Company’s CEO, and Scott Jolcover, a former Company employee with significant
mining experience in the region), the Company commenced the task of rebuilding
its Board, which lost several independent Directors in early
2007.  The Company further complemented its Board by the third quarter
appointments of independent directors, Jonathan Jaffrey and Robert
Reseigh.  Mr. Jaffrey’s strong financial background and Mr. Reseigh’s
strong mining background greatly augment the expansion in depth of expertise on
the Board and with their appointments; the Board is now comprised of a majority
of independent directors.





In early
March 2008, the Company appointed a new metallurgical team with resources and
expertise geared toward efficiency maximization in anticipation of
recommencement of production. The Company secured $4,500,000 in the first half
of 2008 for further drilling and general corporate expenses and $150,000 in the
second half of 2008 of which 100% has been funded as of December 31,
2008.





The
Company was also successful in extending several notes with Longview Fund,
LP.  On September 30, 2008, Longview extended the maturity date on
three promissory notes issued to it by either the Company or its subsidiary,
Plum Mine Special Purpose, LLC (“Plum Mine”), to September 30, 2010, with a
principal amount totaling approximately $1.0 million.




Comparative
Financial Information





Twelve Months
                  ended
                  December 31,
                  2008
                
                
                Twelve Months
                  ended
                  December 31,
                  2007
                  (Restated)
                
                
                DifferenceRevenue
                
                $
                0
                
                
                $
                395,541
                
                
                $
                (395,541
                )Depreciation,
      depletion & amortization
                
                
                148,466
                
                
                
                277,578
                
                
                
                (129,112
                )Reclamation,
      Exploration and Test Mining Expenses
                
                
                3,896,931
                
                
                
                473,594
                
                
                
                3,423,337Consulting
      and professional
                
                
                213,507
                
                
                
                297,531
                
                
                
                (84,024
                )General
      and administrative
                
                
                3,882,372
                
                
                
                535,739
                
                
                
                3,346,633Gain
      Extinguishment of debt
                
                
                (1,348,199
                )
                
                
                -
                
                
                
                (1,348,199
                )Financing
      costs – warrant issuances
                
                
                1,129,220
                
                
                
                -
                
                
                
                1,129,220Derivative
      change in fair value, net
                
                
                31,965
                
                
                
                -
                
                
                
                31,965Other,
      net
                
                
                (794,017
                )
                
                
                -
                
                
                
                (794,017
                )Interest
      Expense
                
                
                9,268,367
                
                
                
                3,247,094
                
                
                
                6,022,233Net
      Loss
                
                $
                (16,487,683
                )
                
                $
                (4,435,995
                )
                
                $
                9,881,688


48




In 2008,
we did not produce or sell any gold or silver at our Comstock Project in
Nevada.  In February 2007, we suspended mining activity to focus on
geology and exploration / developmental drilling.  During 2007 the
Merrill Crow process facility continued to operate at planned intervals and we
sold 531 ounces of gold at an average price of $744 per ounce during the
twelve-month period ended December 31, 2007.





Reclamation,
Exploration and Test Mining Expenses were $ 3,346,633 greater for the year ended
December 31, 2008 compared to the year ended December 31, 2007. The variance
reflects the commencement of our exploration and developmental drilling program
at our Comstock project in December 2007.





Consulting
and professional expenses for 2008 were $213,507 compared to $297,531 for 2007,
amounting to $84,024 year over year reduction.  This positive variance
stems from lower legal fees after the settlement of a vendor dispute with N.A.
Degerstrom in December 2007.





2008
General and administrative expenses increased by $3,346,633 from
2007.  The increase reflects $2.6 million of stock based compensation
expense realized in 2008 from the issuance of stock options and stock grants
(see Note 14 and Note 16 in the Notes to the Financial Statements section), the
cost of a third-party investor relation firm and increased labor costs from the
hiring of additional employees.





The Gain
on Extinguishment of Debt in of $1,348,199 in 2008 arises out of modification of
a conversion feature in two convertible note resulting in debt extinguishment
accounting guidance to be applied (refer to Note 20- “Extinguishment of Debt” in
the Notes to the Financial Statements section for a detailed
explanation).





The 2008
Financing cost – warrant issuance expense represents the fair value calculation
for the 84.2 million warrants issued in 2008 (see Note 18 – Stock Warrants in
the Notes to the Financial Statements section).  Other, net of
$794,017 in 2008 reflects an accrual adjustment to liquidated damages resulting
from the extinguishment of debt.





Interest
expense increased in 2008 by $6,022,223 from 2007. This increase reflects $6.3
million from the fair value calculation for convertible features (embedded
derivatives) contained in various notes (see Note 10 – “Convertible Notes
Payable -2008” and Note 20 “Extinguishment of Debt” in the Notes to the
Financial Statements section).





Our
Company is an Exploration Stage enterprise as defined by SEC Industry Guide 7,
and, in accordance with SEC Industry Guide 7, infrastructure expenditures such
as haul roads, leach pads and start-up costs and all drilling were
expensed.


49





Quarter ended
                  December 31,
                  2008
                
                
                Quarter ended
                  December 31,
                  2007
                  (Restated)
                
                
                DifferenceRevenue
                
                $
                0
                
                
                $
                44,946
                
                
                $
                (44,946
                )Reclamation,
      Exploration and Test Mining Expenses
                
                
                1,481,100
                
                
                
                (197,356
                )
                
                
                1,678,456Consulting
      and professional
                
                
                71,522
                
                
                
                116,865
                
                
                
                (45,353
                )General
      and administrative
                
                
                2,349,598
                
                
                
                231,373
                
                
                
                2,118,225Gain
      Extinguishment of debt
                
                
                (1,348,199
                )
                
                
                -
                
                
                
                (1,348,199
                )Financing
      costs – warrant issuances
                
                
                1,025,220
                
                
                
                -
                
                
                
                1,129,220Derivative
      change in fair value, net
                
                
                98,639
                
                
                
                -
                
                
                
                98,639Other,
      net
                
                
                (79,999
                )
                
                
                -
                
                
                
                (79,999
                )Interest
      Expense
                
                
                7,216,319
                
                
                
                868,368
                
                
                
                6,347,951Net
      Loss
                
                $
                (10,585,388
                )
                
                $
                (1,026,304
                )
                
                $
                9,549,191





During
the fourth quarter of 2008 we did not sell any precious metals compared to the
fourth quarter of 2007 when we sold 74 ounces of gold at an average price of
$607 per ounce. Reclamation, Exploration and Test Mining Expenses were $
1,481,100 for the fourth quarter 2008 compared to ($197,356) for the fourth
quart quarter 2007.  The variance reflects the reduction in accrued
contract mining liabilities of approximately $500,000 in the fourth quarter 2007
as a result reaching an agreement in the vendor dispute with N.A. Degerstrom and
the commencement of our exploration / developmental drill program in mid
December 2007 at our Comstock project.





Fourth
quarter 2008 General and administrative expenses increased by $2,118,225
compared to the fourth quarter of 2007.  The increase reflects $1.8
million of stock based compensation expense realized in 2008 from the issuance
of stock options and stock grants (see Note 14 and Note 16 in the Notes to the
Financial Statements section), and increased labor costs from the hiring of
additional employees in 2008.





The Gain
on Extinguishment of Debt of $1,348,199 in 2008 arises out of modification of a
conversion feature in two convertible note resulting in debt extinguishment
accounting guidance to be applied (refer to Note 20- “Extinguishment of Debt” in
the Notes to the Financial Statements section for a detailed
explanation).





The
fourth quarter 2008 Financing cost – warrant issuance expense of $1,025,220
represents the fair value calculation of warrants issued (see Note 18 – Stock
Warrants in the Notes to the Financial Statements section).





Interest
expense for the fourth quarter 2008 was $7,216,319 compared to $898,368 in the
fourth quarter 2007.  The increase in interest expenses of $6,347,951
primarily represents the $6.3 million fair value calculation for convertible
features (embedded derivatives) contained in various notes (see Note 10 –
“Convertible Notes Payable -2008” and Note 20 “Extinguishment of Debt” in the
Notes to the Financial Statements section).


50





Our
Company is an Exploration Stage enterprise as defined by SEC Industry Guide 7,
and, in accordance with SEC Industry Guide 7, infrastructure expenditures such
as haul roads, leach pads and start-up costs and all drilling were
expensed




Liquidity
and Capital Resources




We
recognize that our cash resources are limited. Our continued existence and plans
for future growth depend on our ability to obtain the capital necessary to
operate, through the generation of revenue or the issuance of additional debt or
equity. In 2008, we raised an aggregate of $5,520,000 through three financing
transactions. Through March 20, 2009, we received $450,000 in additional
funding. While this additional funding may meet our immediate working capital
needs, if we are not able to generate sufficient revenues and cash flows or
obtain additional or alternative funding, we will be unable to continue as a
going concern. We have yet to realize an operating profit at our Company. As
disclosed in the report of our independent registered public accounting firm in
our financial statements included in this Form 10-K for the year ended December
31, 2008, our recurring losses and negative cash flow from operations raise
substantial doubt about our ability to continue as a going concern.





As of
December 31, 2008, the Company is in default of the terms on several outstanding
notes payable with the Winfield Group totaling $10,669,987 of principal and
$2,946,385 of interest.  The Winfield Group consists of Mr. Winfield,
Sante Fe Financial Corporation, Portsmouth Square and InterGroup Corporation,
Combined, the Winfield Group represent the Company’s largest creditor and a
significant stockholder.  Mr. Winfield is affiliated with these
Companies through a direct controlling interest and/or as their Chairman of the
Board.  Because we are in default, the entire note balances of the
defaulted notes have been recorded as current liabilities.





Item 8. Financial Statements and
Supplementary Data




CONSOLIDATED
FINANCIAL STATEMENTS


DECEMBER
31, 2008 AND 2007




PageReport
      of Independent Registered Public Accounting Firm
                
                
                F-1Consolidated
      Balance Sheets
                
                
                F-2Consolidated
      Statements of Operations
                
                
                F-4Consolidated
      Statements of Changes in Stockholders’ Deficiency
                
                
                F-5Consolidated
      Statements of Changes in Cash Flows
                
                
                F-6Notes
      to Consolidated Financial Statements
                
                
                F-8


51


Report of
Independent Registered Public Accounting Firm




To the
board of directors and shareholders of


Goldspring,
Inc.





We have
audited the accompanying consolidated balance sheets of Goldspring, Inc. as of
December 31, 2008 and 2007 and the related consolidated statements of
operations, changes in shareholders’ deficiency and cash flows for the years
ended December 31, 2008 and 2007. These consolidated financial statements are
the responsibility of the Company’s management. Our responsibility is to express
an opinion on these financial statements based on our audits.





We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provided a
reasonable basis for our opinion.





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





These
financial statements have been prepared assuming that the Company will continue
as a going concern. As discussed in Note 2 to the financial statements, the
Company has operating and liquidity concerns, has incurred net losses
approximating $48,000,000 as of December 31, 2008. These factors raise
substantial doubt about the ability of the Company to continue as a going
concern. The financial statements do not include any adjustments that might
result from the outcome of these uncertainties. In this regard, Management is
proposing to raise any necessary additional funds through loans and additional
sales of its common stock. There is no assurance that the Company will be
successful in raising additional capital.





/s/ Jewett, Schwartz, Wolfe &
      AssociatesJewett,
      Schwartz, Wolfe & AssociatesHollywood,
      Florida
              April
      10, 2009


F-1





GOLDSPRING,
INC.


CONSOLIDATED
BALANCE SHEETS




December 31,
                          2008
                        
                        
                        December 31,
                          2007(Restated)ASSETSCURRENT
      ASSETSCash
      and cash equivalents
                        
                        $
                        322,938
                        
                        
                        $
                        174,996Deferred
      financing fees, net
                        
                        
                        -
                        
                        
                        
                        185,417Total
      Current Assets
                        
                        
                        322,938
                        
                        
                        
                        360,413MINERAL
      RIGHTS, PLANT AND EQUIPMENTMineral
      rights
                        
                        
                        1,530,547
                        
                        
                        
                        1,619,837Plant
      and equipment, net
                        
                        
                        489,236
                        
                        
                        
                        411,040Total
      Mineral Rights, Plant and Equipment
                        
                        
                        2,019,783
                        
                        
                        
                        2,030,877RECLAMATION
      BOND DEPOSIT
                        
                        
                        766,768
                        
                        
                        
                        377,169OTHER
      LONG-LIVED ASSETS
                        
                        
                        408,190
                        
                        
                        
                        -TOTAL
      ASSETS
                        
                        $
                        3,517,679
                        
                        
                        $
                        2,768,459





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


F-2


GOLDSPRING,
INC.


CONSOLIDATED
BALANCE SHEETS (Continued)




December 31,
                                    2008
                                  
                                  
                                  December 31,
                                    2007(Restated)LIABILITIES AND STOCKHOLDERS’
      DEFICIENCYCURRENT
      LIABILITIESAccounts
      payable
                                  
                                  $
                                  1,222,933
                                  
                                  
                                  $
                                  305,638Accrued
      expenses
                                  
                                  
                                  121,750
                                  
                                  
                                  
                                  2,429,326Accrued
      interest payable
                                  
                                  
                                  3,458,734
                                  
                                  
                                  
                                  3,205,813Convertible
      debentures
                                  
                                  
                                  10,187,966
                                  
                                  
                                  
                                  9,039,889Other
      debt
                                  
                                  
                                  2,660,565
                                  
                                  
                                  
                                  3,983,800Short-term
      lease obligations
                                  
                                  
                                  -
                                  
                                  
                                  
                                  42,459Total
      Current Liabilities
                                  
                                  
                                  17,651,948
                                  
                                  
                                  
                                  19,006,925LONG-TERM
      DEBT AND OTHER LONG-TERM LIABILITIESLong-term
      convertible debt obligation, net of current portion
                                  
                                  
                                  2,782,563
                                  
                                  
                                  
                                  -Long-term
      debt obligation, net of current portion
                                  
                                  
                                  500,000
                                  
                                  
                                  
                                  11,612Derivative
      liability
                                  
                                  
                                  5,368,333
                                  
                                  
                                  
                                  776,385Long-term
      reclamation liability
                                  
                                  
                                  1,105,342
                                  
                                  
                                  
                                  553,190Total
      Long-Term Debt and Other Long-Term Liabilities
                                  
                                  
                                  9,756,238
                                  
                                  
                                  
                                  1,341,187Total
      Liabilities
                                  
                                  
                                  27,408,186
                                  
                                  
                                  
                                  20,348,112STOCKHOLDERS’
      DEFICIENCYCommon
      stock, $.000666 par value 3,950,000,000 shares authorized, shares issued
      and outstanding were 3,380,948,371 (2008) and 2,743,508,248
      (2007)
                                  
                                  
                                  2,251,712
                                  
                                  
                                  
                                  1,827,177Additional
      paid-in capital
                                  
                                  
                                  22,721,504
                                  
                                  
                                  
                                  12,969,210Accumulated
      deficit
                                  
                                  
                                  (48,863,723
                                  )
                                  
                                  
                                  (32,376,040
                                  )Total
      Stockholders’ Deficiency
                                  
                                  
                                  (23,890,507
                                  )
                                  
                                  
                                  (17,579,653
                                  )TOTAL
      LIABILITIES AND STOCKHOLDERS’ DEFICIENCY
                                  
                                  $
                                  3,517,679
                                  
                                  
                                  $
                                  2,768,459





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


F-3





GOLDSPRING,
INC.


CONSOLIDATED
STATEMENTS OF OPERATIONS




Years Ended December 31,2008
                        
                        
                        2007(Restated)REVENUE
      FROM GOLD SALES, Net
                        
                        $
                        -
                        
                        
                        $
                        395,541COST
      AND EXPENSESDepletion,
      depreciation and amortization
                        
                        
                        148,466
                        
                        
                        
                        277,578Reclamation,
      exploration and test mining expenses
                        
                        
                        3,896,931
                        
                        
                        
                        473,594General
      and administrative
                        
                        
                        3,882,372
                        
                        
                        
                        535,739Consultants
      and professional fees
                        
                        
                        213,507
                        
                        
                        
                        297,531Total
      Cost and Expenses
                        
                        
                        8,141,276
                        
                        
                        
                        1,584,442LOSS
      FROM OPERATIONS
                        
                        
                        (8,141,276
                        )
                        
                        
                        (1,188,901
                        )OTHER
      INCOME (EXPENSE)Gain
      on extinguishment of debt
                        
                        
                        1,348,199
                        
                        
                        
                        -Financing
      cost – warrant issuances
                        
                        
                        (1,129,220
                        )
                        
                        
                        -Derivative
      Change in Fair Value
                        
                        
                        (31,965
                        )
                        
                        
                        -Other,
      net
                        
                        
                        735,906
                        
                        
                        
                        -Interest
      expense
                        
                        
                        (9,269,327
                        )
                        
                        
                        (3,247,094
                        )Total
      Other Expense
                        
                        
                        (8,346,407
                        )
                        
                        
                        (3,247,094
                        )NET
      LOSS
                        
                        $
                        (16,487,683
                        )
                        
                        $
                        (4,435,995
                        )Net
      loss per common share - basic
                        
                        $
                        (0.005
                        )
                        
                        $
                        (0.003
                        )Basic
      weighted average common shares outstanding
                        
                        
                        3,142,593,304
                        
                        
                        
                        1,590,580,692





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


F-4





GOLDSPRING,
INC.


STATEMENT
OF CHANGES IN STOCKHOLDERS’ DEFICIENCY


For
the Years Ended December 31, 2008 and 2007





(Common
Stock Par value, $.000666 per share; 3,950,000,000 shares
authorized


Preferred
Stock Par Value, per share; 50,000,000 shares authorized)





Common
                    Shares Issued
                  
                  
                  Par value
                    $.000666
                    per share
                  
                  
                  Additional
                    Paid-in
                    Capital
                  
                  
                  Accumulated
                    Deficit
                  
                  
                  TotalDecember
      31, 2006
                  
                  
                  958,938,940
                  
                  
                  $
                  638,653
                  
                  
                  $
                  11,603,560
                  
                  
                  $
                  (27,940,829
                  )
                  
                  $
                  (15,698,616
                  )Common
      stock issued for:Debenture
      principal
                  
                  
                  898,776,970
                  
                  
                  
                  598,585
                  
                  
                  
                  846,362
                  
                  
                  
                  -
                  
                  
                  
                  1,444,947Debenture
      interest
                  
                  
                  835,792,338
                  
                  
                  
                  556,639
                  
                  
                  
                  398,241
                  
                  
                  
                  -
                  
                  
                  
                  954,8801,734,569,308
                  
                  
                  
                  1,155,224
                  
                  
                  
                  1,244,603
                  
                  
                  
                  -
                  
                  
                  
                  2,399,827Liquidated
      damages
                  
                  
                  50,000,000
                  
                  
                  
                  33,300
                  
                  
                  
                  121,047
                  
                  
                  
                  -
                  
                  
                  
                  154,347Other
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  784
                  
                  
                  
                  784Net
      loss
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (4,435,995
                  )
                  
                  
                  (4,435,995
                  )December
      31, 2007 (Restated)
                  
                  
                  2,743,508,248
                  
                  
                  $
                  1,827,177
                  
                  
                  $
                  12,969,210
                  
                  
                  $
                  (32,376,040
                  )
                  
                  $
                  (17,579,653
                  )Common
      stock issued for:Debenture
      principal
                  
                  
                  196,155,028
                  
                  
                  
                  130,639
                  
                  
                  
                  1,949,634
                  
                  
                  
                  -
                  
                  
                  
                  2,080,273Debenture
      interest
                  
                  
                  151,961,857
                  
                  
                  
                  101,207
                  
                  
                  
                  1,456,497
                  
                  
                  
                  -
                  
                  
                  
                  1,557,704Mineral
      rights
                  
                  
                  3,866,667
                  
                  
                  
                  2,575
                  
                  
                  
                  76,983
                  
                  
                  
                  -
                  
                  
                  
                  79,558Consulting
      services
                  
                  
                  7,166,704
                  
                  
                  
                  4,773
                  
                  
                  
                  106,323
                  
                  
                  
                  -
                  
                  
                  
                  111,096Mining
      software
                  
                  
                  2,434,892
                  
                  
                  
                  1,622
                  
                  
                  
                  8,118
                  
                  
                  
                  -
                  
                  
                  
                  9,740Directors
                  
                  
                  20,000,000
                  
                  
                  
                  13,320
                  
                  
                  
                  221,080
                  
                  
                  
                  -
                  
                  
                  
                  234,400Employees
                  
                  
                  10,665,714
                  
                  
                  
                  7,103
                  
                  
                  
                  132,787
                  
                  
                  
                  -
                  
                  
                  
                  139,890Private
      placement
                  
                  
                  137,000,000
                  
                  
                  
                  91,242
                  
                  
                  
                  1,428,758
                  
                  
                  
                  -
                  
                  
                  
                  1,520,000529,250,862
                  
                  
                  
                  352,481
                  
                  
                  
                  5,380,180
                  
                  
                  
                  -
                  
                  
                  
                  5,732,661Warrant
      cost and stocked based option compensation
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  3,434,323
                  
                  
                  
                  -
                  
                  
                  
                  3,434,323Liquidated
      damages
                  
                  
                  108,189,261
                  
                  
                  
                  72,054
                  
                  
                  
                  937,791
                  
                  
                  
                  -
                  
                  
                  
                  1,009,845Net
      loss
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (16,487,683
                  )
                  
                  
                  (16,487,683
                  )December
      31, 2008
                  
                  
                  3,380,948,371
                  
                  
                  $
                  2,251,712
                  
                  
                  $
                  22,721,504
                  
                  
                  $
                  (48,863,723
                  )
                  
                  $
                  (23,890,507
                  )





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


F-5


GOLDSPRING,
INC.


CONSOLIDATED
STATEMENTS OF CASH FLOWS





Years Ended December
                      31,2008
                    
                    
                    2007(Restated)OPERATING
      ACTIVITIES:Net
      loss
                    
                    $
                    (16,487,683
                    )
                    
                    $
                    (4,435,995
                    )Adjustments
      to reconcile net loss to net cash used in operating
      activities:Depreciation
      and amortization
                    
                    
                    148,466
                    
                    
                    
                    277,578Stock
      warrants and stock based compensation and note accretion
                    
                    
                    3,681,113
                    
                    
                    
                    378,639Interest
      and liquidated damages paid through the issuance of stock
                    
                    
                    2,567,549
                    
                    
                    
                    954,877Interest
      from derivatives
                    
                    
                    6,512,462Payments
      through the issuance of company stock
                    
                    
                    120,836
                    
                    
                    
                    ―Extinguishment
      of debt
                    
                    
                    (1,348,199
                    )Net
      change in derivative fair value
                    
                    
                    31,965
                    
                    
                    
                    378,073Net
      loss adjusted for non-cash operating activities
                    
                    
                    (4,773,491
                    )
                    
                    
                    (2,446,828
                    )Changes
      in operating assets and liabilities:Prepaid
      and other current assets
                    
                    
                    185,417
                    
                    
                    
                    (24,607
                    )Other
      current assets
                    
                    
                    -
                    
                    
                    
                    (60,064
                    )Accounts
      payable
                    
                    
                    917,296
                    
                    
                    
                    (214,033
                    )Accrued
      expenses
                    
                    
                    (711,186
                    )
                    
                    
                    1,160,389Other
      operating assets and liabilities
                    
                    
                    ―
                    
                    
                    
                    ―Other
                    
                    
                    (130,052
                    )
                    
                    
                    87,078NET
      CASH USED IN OPERATING ACTIVITIES
                    
                    
                    (4,512,016
                    )
                    
                    
                    (1,498,065
                    )INVESTING
      ACTIVITIES:Reclamation
      bond deposit
                    
                    
                    (389,599
                    )
                    
                    
                    ―Mineral
      claims
                    
                    
                    (161,152
                    )
                    
                    
                    ―Acquisition
      / sale of plant and equipment
                    
                    
                    (158,630
                    )
                    
                    
                    20,000NET
      CASH (USED) PROVIDED BY INVESTING ACTIVITIES
                    
                    
                    (709,381
                    )
                    
                    
                    20,000FINANCING
      ACTIVITIES:Principal
      payments on Note Payable
                    
                    
                    (55,105
                    )
                    
                    
                    (44,439
                    )Net
      proceeds from the issuance of company stock
                    
                    
                    1,501,500
                    
                    
                    
                    ―Proceeds
      from the issuance of note payable to related party
                    
                    
                    3,922,944
                    
                    
                    
                    1,697,500NET
      CASH PROVIDED BY FINANCING ACIVITIES
                    
                    
                    5,369,339
                    
                    
                    
                    1,653,061INCREASE
      IN CASH AND CASH EQUIVALANTS
                    
                    
                    147,942
                    
                    
                    
                    174,996CASH
      AND CASH EQUIVALENTS, BEGINNING OF YEAR
                    
                    
                    174,996
                    
                    
                    
                    ―CASH
      AND CASH EQUIVALENTS, END OF YEAR
                    
                    $
                    322,938
                    
                    
                    $
                    174,996SUPPLEMENTAL
      CASH FLOW INFORMATION:INCOME
      TAXES
                    
                    $
                    ―
                    
                    
                    $
                    ―INTEREST
      PAID
                    
                    $
                    ―
                    
                    
                    $
                    ―


F-6


GOLDSPRING,
INC.


CONSOLIDATED
STATEMENTS OF CASH FLOWS (Continued)





Supplemental
      disclosure of non-cash investing and financing activities:Issuance
      of company stock for interest
                  
                  $
                  1,557,704
                  
                  
                  $
                  954,877Issuance
      of company stock for liquidated damages
                  
                  $
                  1,009,845
                  
                  
                  $
                  154,346Conversion
      of debt principal into company’s common shares
                  
                  $
                  2,080,273
                  
                  
                  $
                  1,444,947Issuance
      of company stock to employees
                  
                  $
                  139,890
                  
                  
                  $
                  ―Issuance
      of company stock for directors’ fees
                  
                  $
                  234,400
                  
                  
                  $
                  ―Issuance
      of company stock for software
                  
                  $
                  9,740
                  
                  
                  $
                  ―Issuance
      of company stock for consulting services
                  
                  $
                  111,096
                  
                  
                  $
                  ―Issuance
      of company shares for acquisition of mineral claims
                  
                  $
                  79,558
                  
                  
                  $
                  ―




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


F-7


GOLDSPRING,
INC.


NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS


For the
years ended December 31, 2008 and 2007





Note
1 — Nature of Business




We are a
North American precious metals mining company with an operating gold and silver
test mine in northern Nevada. Our Company refocused as a mining company, when we
acquired the Plum property in November 2003. In our relatively short history, we
secured permits, built an infrastructure and brought the Plum exploration
project into test mining production. Beginning in 2005, we started acquiring
additional properties around the Plum project in Northern Nevada, expanding our
footprint and creating opportunities for exploration. We are an emerging company
operating test mine, looking to build on our success through the acquisition of
other mineral properties in North America with reserves and exploration
potential that can be efficiently put into near-term production. Our objectives
are to re-open the Plum Mine and process facilities and increase its past
production rates; define reserves through exploration and acquisitions; expand
our footprint at the Plum Mine; and maximize value for our
shareholders.




Note
2 — Going Concern




The
accompanying consolidated financial statements have been prepared in conformity
with accounting principles generally accepted in the United States of America
which contemplate continuation of the Company as a going concern. However, the
Company has year end losses from operations and had minimal revenues from
operations in 2008. For the year ended December 31, 2008 the Company incurred
net loss approximating $16,400,000. Further, the Company has inadequate working
capital to maintain or develop its operations, and is dependent upon funds from
private investors and the support of certain stockholders.





These
factors raise substantial doubt about the ability of the Company to continue as
a going concern. The financial statements do not include any adjustments that
might result from the outcome of these uncertainties. In this regard, Management
is proposing to raise any necessary additional funds through loans and
additional sales of its common stock. There is no assurance that the Company
will be successful in raising additional capital.




Note
3 — Summary of Significant Accounting Policies




Terms
and Definitions




Company
            Goldspring,
      Inc. and SubsidiariesAPB
            Accounting
      Principles BoardARB
            Accounting
      Review BoardEITF
            Emerging
      Issues Task ForceFASB
            Financial
      Accounting Standards BoardFSP
            FASB
      Staff PositionPlum
      LLC
            Plum
      Mining Company, LLCSAB
            SEC
      Staff Accounting BulletinSEC
            Securities
      Exchange CommissionSFAS
      or FAS
            Statement
      of Financial Accounting StandardsSOP
            Statement
      of Position


F-8





Summarized
below are the significant accounting policies of Goldspring, Inc.




Principles
of Consolidation




The
consolidated financial statements include the accounts of our company and its
wholly owned subsidiaries: GoldSpring, LLC, Ecovat Copper Nevada, LLC, The Plum
Mining Company, LLC, and the Plum Mine Special Purpose Company LLC. All material
inter-company transactions and balances have been eliminated in
consolidation.  Certain reclassifications have been made in the 2007
results to conform to the presentation used in 2008.




Cash
and Cash Equivalents




We
consider all highly liquid debt securities purchased with original or remaining
maturities of three months or less to be cash equivalents. The carrying value of
cash equivalents approximates fair value.




Fair
Value of Financial Instruments




The
carrying amounts of cash and cash equivalents, accounts receivable, accounts
payable, and accrued expenses approximate fair market value because of the short
maturity of those instruments. Furthermore, convertible debenture and other
notes payable amounts approximate fair value at December 31, 2008 and
2007.




Credit
Risk




It is our
practice to place our cash equivalents in high-quality money market securities
with a major banking institution. Certain amounts of such funds are not insured
by the Federal Deposit Insurance Corporation. However, we consider our credit
risk associated with cash and cash equivalents to be minimal.




Impairment
of Long Lived Assets and Long Lived Assets to be Disposed Of




In August
2001, the FASB issued SFAS No. 144 “Accounting for the Impairment or
Disposal of Long-Lived Assets,” which supersedes both SFAS No. 121, “Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of” and the
accounting and reporting provisions of APB Opinion No. 30,“Reporting the Results of
Operations — Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and Transactions,”for the disposal of a segment of a business (as previously defined in
that opinion). This statement establishes the accounting model for long-lived
assets to be disposed of by sale and applies to all long-lived assets, including
discontinued operations. This statement requires those long-lived assets be
measured at the lower of carrying amount or fair value less cost to sell,
whether reported in continuing operations or discontinued
operations.




SFAS No.
144 retains the fundamental provisions of SFAS No. 121 for recognizing and
measuring impairment losses on long-lived assets held for use and long-lived
assets to be disposed of by sale, while also resolving significant
implementation issues associated with SFAS No. 121. We adopted SFAS No. 144 in
our evaluation of the fair value of certain assets described in Notes 2 and
3.




Revenue
Recognition




The
Company recognizes revenue in accordance with the provisions of SAB 104 “Revenue Recognition in Financial
Statements”, which states that revenue is realized or realizable and
earned when all of the following four criteria are met:




1)
            Persuasive
      evidence of an arrangement exists,




F-9




2)
            Delivery
      has occurred or services have been rendered,3)
            The
      seller’s price to the buyer is fixed or determinable,
  and


4)
            Collectability
      is reasonably assured.





Specifically
in our operations, sales of gold and silver dore are recorded when we issue a
sales order to our refiner, Johnson Matthey, to sell a specified quantity of
metals.  Sales orders are typically executed within 48 hours of
receipt.  Upon receipt of the sale order, Johnson-Matthey confirms
quantities available and executes the sale at the current market price of the
metals on the day and time of the sales order.  We record revenues on
the day the Sales order is issued based on the confirmed quantity of metal at
the confirmed market price.  Proceeds from the sale of metals are
typically wired to our bank within twenty-four hours.




Stock
Issued For Services




We base
the value of stock issued for services on the market value of our common stock
at the date of issue or our estimate of the fair value of the services received,
whichever is more reliably measurable.




Deferred
Financing Charges




During
2008 and 2007 we recorded deferred financing charges associated with the issue
of promissory notes payable totaling $0 and $110,000 respectively. We amortize
the charges over the respective lives of the promissory notes payable as
interest expense. During the year ended December 31, 2008 and 2007 we recognized
$83,708 and $166,939 respectively of interest expense related to the
amortization of deferred financing fees.





Plant
and Equipment




We state
plant and equipment at cost. We provide depreciation and amortization in amounts
sufficient to relate the cost of depreciable assets to operations over their
estimated service lives or productive value.




We
capitalize expenditures for renewals and improvements that significantly extend
the useful life of an asset. We charge expenditures for maintenance and repairs
to operations when incurred. When assets are sold or retired, the cost of the
asset and the related accumulated depreciation are removed from the accounts and
any gain or loss is recognized at such time. We use the straight-line method of
depreciation for financial reporting purposes, depreciating assets over useful
lives ranging from 3 to 10 years.




We review
the carrying value of our plant and equipment assets on a quarterly basis. Where
information and conditions suggest impairment, we write-down these assets to net
recoverable amount, based on estimated future cash flows that may be attained
from them.




Mineral
Rights




We defer
acquisition costs until we determine the viability of the property. Since we do
not have proven and probable reserves as defined by Industry Guide 7,
exploration expenditures are expensed as incurred.




We
expense holding costs to maintain a property on a care and maintenance basis as
incurred.




We review
the carrying value of our interest in each mineral claim on a quarterly basis to
determine whether impairment has incurred in accordance with the SFAS No. 144,
“Accounting for the Impairment or Disposal of Long-Lived
Assets.”


F-10





Where
information and conditions suggest impairment, we write-down these properties to
net recoverable amount, based on estimated future cash flows. Our estimate of
gold price, mineralized materials, operating capital, and reclamation costs are
subject to risks and uncertainties affecting the recoverability of our
investment in property, plant, and equipment. Although we have made our best
estimate of these factors based on current conditions, it is possible that
changes could occur in the near term that could adversely affect our estimate of
net cash flows expected to be generated from our operating properties and the
need for possible asset impairment write-downs.




Where
estimates of future net operating cash flows are not available and where other
conditions suggest impairment, we assess if carrying value can be recovered from
net cash flows generated by the sale of the asset or other means.




Reclamation
Liabilities and Asset Retirement Obligations




Minimum
standards for site reclamation and closure have been established by various
government agencies that affect certain of our operations. We calculate our
estimates of reclamation liability based on current laws and regulations and the
expected undiscounted future cash flows to be incurred in reclaiming, restoring,
and closing our operating mine sites. When we incur reclamation liabilities that
are not related to asset retirements we recognize the obligations in accordance
with SOP No. 96-1.




In August
2001, the FASB issued SFAS No. 143, “Accounting for Asset Retirement
Obligations.” SFAS No. 143 established a uniform methodology for
accounting for estimating reclamation and abandonment costs. The Standard
requires that the fair value of a liability for an asset retirement obligation
be recognized in the period in which it is incurred. SFAS No. 143 requires us to
record a liability for the present value of our estimated environmental
remediation costs and the related asset created with it when a recoverable asset
(long-lived asset) can be realized.


.


Share
Based Compensation





The
Company accounts for share based compensation in accordance with SFAS 123R,
“Share Based Payments.” Accordingly, the Company measures the cost of employee
services received in exchange for an award of equity instruments based on the
grant date fair value of the award and recognizes cost over the requisite
service period.




Earnings
Per Common Share




In
calculating earnings per common share, we compute basic earnings per share by
dividing net loss by the weighted average number of common shares outstanding,
excluding the dilutive effects of common stock equivalents. For the years ended
December 31, 2008 and 2007, we had net losses for which the affect of common
stock equivalents would be anti-dilutive. Accordingly only basic and dilutive
loss per share is presented.




Use
of Estimates




In
preparing financial statements in conformity with generally accepted accounting
principles, we are required to make estimates and assumptions that affect the
reported amounts of assets and liabilities and the disclosure of contingent
assets and liabilities at the date of the financial statements and revenues and
expenditures during the reported periods. Actual results could differ materially
from those estimates. Estimates may include those pertaining to the estimated
useful lives of property and equipment and software, determining the estimated
net realizable value of receivables, and the realization of deferred tax
assets.




Risks and
Uncertainties




We
regularly evaluate risks and uncertainties and, when probable that a loss or
expense will be incurred, record a charge to current period
operations.


F-11


Income
Taxes




We
recognize deferred tax assets and liabilities based on differences between the
financial reporting and tax bases of assets and liabilities using the enacted
tax rates and laws that are expected to be recovered. We provide a valuation
allowance for deferred tax assets for which we do not consider realization of
such assets to be more likely than not.





Recent
Authoritative Pronouncements




Recent
accounting pronouncements that the Company has adopted or will be required to
adopt in the future are summarized below.





Employers’
Disclosures about Postretirement Benefit Plan Assets





In
December 2008, the FASB issued FSP SFAS No. 132(R)-1, “Employers’ Disclosures about
Postretirement Benefit Plan Assets.”  This FSP amends SFAS No.
132(R), “Employers’
Disclosures about Pensions and Other Postretirement Benefits,” to provide
guidance on an employer’s disclosures about plan assets of a defined benefit
pension or other postretirement plan.  FSP SFAS No. 132(R)-1 also
includes a technical amendment to SFAS No. 132(R) that requires a nonpublic
entity to disclose net periodic benefit cost for each annual period for which a
statement of income is presented.  The required disclosures about plan
assets are effective for fiscal years ending after December 15,
2009.  The technical amendment was effective upon issuance of FSP SFAS
No. 132(R)-1.  The Company is currently assessing the impact of FSP
SFAS No. 132(R)-1 on its consolidated financial position and results of
operations.





Effective
Date of FASB Interpretation No. 48 for Certain Nonpublic
Enterprises





In
December 2008, the FASB issued FSP FIN No. 48-3, “Effective Date of FASB
Interpretation No. 48 for Certain Nonpublic Enterprises.”  FSP
FIN No. 48-3 defers the effective date of FIN No. 48, “Accounting for Uncertainty in
Income Taxes,” for certain nonpublic enterprises as defined in SFAS No.
109, “Accounting for Income
Taxes.”  However, nonpublic consolidated entities of public
enterprises that apply U.S. generally accepted accounting principles (GAAP) are
not eligible for the deferral.FSP FIN No. 48-3 was
effective upon issuance.  The impact of adoption was not material to
the Company’s consolidated financial condition or results of
operations.





Disclosures
by Public Entities (Enterprises) about Transfers of Financial Assets and
Interests in Variable Interest Entities





In
December 2008, the FASB issued FSP FAS No. 140-4 and FIN No. 46(R) -8, “Disclosures by Public Entities
(Enterprises) about Transfers of Financial Assets and Interests in Variable
Interest Entities.”  This FSP amends SFAS No. 140, “Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities,” to
require public entities to provide additional disclosures about transfers of
financials assets.  FSP FAS No. 140-4 also amends FIN No. 46(R)-8,
“Consolidation of Variable
Interest Entities,”to require public enterprises, including sponsors
that have a variable interest entity, to provide additional disclosures about
their involvement with a variable interest entity.  FSP FAS No. 140-4
also requires certain additional disclosures, in regards to variable interest
entities, to provide greater transparency to financial statement
users.  FSP FAS No. 140-4 is effective for the first reporting period
(interim or annual) ending after December 15, 2008, with early application
encouraged.  The Company is currently assessing the impact of FSP FAS
No. 140-4 on its consolidated financial position and results of
operations.





Accounting
for an Instrument (or an Embedded Feature) with a Settlement Amount That is
Based on the Stock of an Entity’s Consolidated Subsidiary


F-12





In
November 2008, the FASB issued FSP EITF No. 08-8, “Accounting for an Instrument (or an
Embedded Feature) with a Settlement Amount That is Based on the Stock of an
Entity’s Consolidated Subsidiary.”  EITF No. 08-8 clarifies
whether a financial instrument for which the payoff to the counterparty is
based, in whole or in part, on the stock of an entity’s consolidated subsidiary
is indexed to the reporting entity’s own stock.  EITF No. 08-8 also
clarifies whether or not stock should be precluded from qualifying for the scope
exception of SFAS No. 133, “Accounting for Derivative
Instruments and Hedging Activities,” or from being within the scope of
EITF No. 00-19, “Accounting
for Derivative Financial Instruments Indexed to, and Potentially Settled in, a
Company’s Own Stock.”  EITF No. 08-8 is effective for fiscal
years beginning on or after December 15, 2008, and interim periods within those
fiscal years.  The Company is currently assessing the impact of EITF
No. 08-8 on its consolidated financial position and results of
operations.





Accounting
for Defensive Intangible Assets





In
November 2008, the FASB issued EITF No. 08-7, “Accounting for Defensive Intangible
Assets.”  EITF No. 08-7 clarifies how to account for defensive
intangible assets subsequent to initial measurement.  EITF No. 08-7
applies to all defensive intangible assets except for intangible assets that are
used in research and development activities.  EITF No. 08-7 is
effective for intangible assets acquired on or after the beginning of the first
annual reporting period beginning on or after December 15, 2008.  The
Company is currently assessing the impact of EITF No. 08-7 on its consolidated
financial position and results of operations.





Equity
Method Investment Accounting Considerations





In
November 2008, the FASB issued EITF No. 08-6, “Equity Method Investment
Accounting Considerations.”  EITF No. 08-6 clarifies accounting for
certain transactions and impairment considerations involving the equity
method.  Transactions and impairment dealt with are initial
measurement, decrease in investment value, and change in level of ownership or
degree of influence.  EITF No. 08-6 is effective on a prospective
basis for fiscal years beginning on or after December 15, 2008.  The
Company is currently assessing the impact of EITF No. 08-6 on its consolidated
financial position and results of operations.





Determining
the Fair Value of a Financial Asset When the Market for That Asset is Not
Active





In
October 2008, the FASB issued FSP SFAS No. 157-3, “Determining the Fair Value of a
Financial Asset When the Market for That Asset is Not
Active.”  This FSP clarifies the application of SFAS No. 157,
“Fair Value
Measurements,” in a market that is not active.  The FSP also
provides examples for determining the fair value of a financial asset when the
market for that financial asset is not active.  FSP FAS No. 157-3 was
effective upon issuance, including prior periods for which financial statements
have not been issued.  The impact of adoption was not material to the
Company’s consolidated financial condition or results of
operations.





Issuer’s
Accounting for Liabilities Measured at Fair Value with a Third-Party Credit
Enhancement





In
September 2008, the FASB issued EITF No. 08-5, “Issuer’s Accounting for Liabilities
Measured at Fair Value with a Third-Party Credit
Enhancement.”  This FSP determines an issuer’s unit of
accounting for a liability issued with an inseparable third-party credit
enhancement when it is measured or disclosed at fair value on a recurring
basis.  FSP EITF No. 08-5 is effective on a prospective basis in the
first reporting period beginning on or after December 15, 2008.  The
Company is currently assessing the impact of FSP EITF No. 08-5 on its
consolidated financial position and results of operations.





Disclosures
about Credit Derivatives and Certain Guarantees: An Amendment of FASB Statement
No. 133 and FASB Interpretation No. 45; and Clarification of the Effective Date
of FASB Statement No. 161





In
September 2008, the FASB issued FSP SFAS No. 133-1, “Disclosures about Credit
Derivatives and Certain Guarantees: An Amendment of FASB Statement No. 133 and
FASB Interpretation No. 45; and Clarification of the Effective Date of FASB
Statement No. 161.”  This FSP amends SFAS No. 133, “Accounting for Derivative
Instruments and Hedging Activities,” to require disclosures by sellers of
credit derivatives, including credit derivatives embedded in a hybrid
instrument.  The FSP also amends FASB Interpretation No. 45, “Guarantor’s Accounting and
Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others,” to require and additional disclosure about the
current status of the payment/performance risk of a
guarantee.  Finally, this FSP clarifies the Board’s intent about the
effective date of SFAS No. 161, “Disclosures about Derivative
Instruments and Hedging Activities.”  FSP FAS No. 133-1 is
effective for fiscal years ending after November 15, 2008.  The
Company is currently assessing the impact of FSP FAS No. 133-1 on its
consolidated financial position and results of operations.


F-13





Endowments
of Not-for-Profit Organizations: Net Asset Classification of Funds Subject to an
Enacted Version of the Uniform Prudent Management of Institutional Funds Act,
and Enhanced Disclosures for all Endowment Funds





In August
2008, the FASB issued FSP SFAS No. 117-1, “Endowments of Not-for-Profit
Organizations: Net Asset Classification of Funds Subject to an Enacted Version
of the Uniform Prudent Management of Institutional Funds Act (“UPMIFA”), and
Enhanced Disclosures for all Endowment Funds.”  The intent of
this FSP is to provide guidance on the net asset classification of
donor-restricted endowment funds.  The FSP also improves disclosures
about an organization’s endowment funds, both donor-restricted and
board-designated, whether or not the organization is subject to the
UPMIFA.  FSP FAS No. 117-1 is effective for fiscal years ending after
December 31, 2008.  Earlier application is permitted provided that
annual financial statements for that fiscal year have not been previously
issued.  The Company is currently assessing the impact for FSP FAS No.
117-1 on its consolidated financial position and results of
operations.





Determining
Whether Instruments Granted in Share-Based Payment Transactions Are
Participating Securities





In
June 2008, the FASB issued EITF No. 03-6-1, “Determining Whether Instruments
Granted in Share-Based Payment Transactions Are Participating
Securities.” EITF No. 03-6-1 addresses whether instruments granted in
share-based payment transactions are participating securities prior to vesting
and, therefore, need to be included in the earnings allocation in computing
earnings per share under the two-class method. The EITF 03-6-1 affects entities
that accrue dividends on share-based payment awards during the awards’ service
period when the dividends do not need to be returned if the employees forfeit
the award. EITF 03-6-1 is effective for fiscal years beginning after
December 15, 2008. The Company is currently assessing the impact of EITF
03-6-1 on its consolidated financial position and results of
operations.





Determining
Whether an Instrument (or an Embedded Feature) Is Indexed to an entity's Own
Stock





In June
2008, the FASB ratified EITF No. 07-5, "Determining Whether an Instrument
(or an Embedded Feature) Is Indexed to an Entity's Own
Stock.”  EITF 07-5 provides that an entity should use a two
step approach to evaluate whether an equity-linked financial instrument (or
embedded feature) is indexed to its own stock, including evaluating the
instrument's contingent exercise and settlement provisions.  It also
clarifies on the impact of foreign currency denominated strike prices and
market-based employee stock option valuation instruments on the
evaluation.  EITF 07-5 is effective for fiscal years beginning after
December 15, 2008.  The Company is currently assessing the impact of
EITF 07-5 on its consolidated financial position and results of
operations.





Accounting
for Financial Guarantee Insurance Contracts—an interpretation of FASB Statement
No. 60





In May
2008, the FASB issued SFAS No. 163, “Accounting for Financial Guarantee
Insurance Contracts – an interpretation of FASB Statement No.
60”.  This statement requires that an insurance enterprise
recognize a claim liability prior to an event of default (insured event) when
there is evidence that credit deterioration has occurred in an insured financial
obligation.  SFAS No. 163 also clarifies how SFAS No. 60 applies to
financial guarantee insurance contracts, including the recognition and
measurement to be used to account for premium revenue and claim liabilities to
increase comparability in financial reporting of financial guarantee insurance
contracts by insurance enterprises.  SFAS No. 163 is effective for
financial statements issued for fiscal years beginning after December 15, 2008,
and all interim periods within those fiscal years, except for some disclosures
about the insurance enterprise’s risk-management activities of the insurance
enterprise be effective for the first period (including interim periods)
beginning after issuance of SFAS No. 163.  Except for those
disclosures, earlier application is not permitted.




F-14


Accounting
for Convertible Debt Instruments That May Be Settled in Cash upon Conversion
(Including Partial Cash Settlement)





In
May 2008, the FASB issued FSP APB Opinion No. 14-1, “Accounting for Convertible Debt
Instruments That May Be Settled in Cash upon Conversion (Including Partial
Cash Settlement).” The FSP clarifies the accounting for convertible debt
instruments that may be settled in cash (including partial cash settlement) upon
conversion.  The FSP requires issuers to account separately for the
liability and equity components of certain convertible debt instruments in a
manner that reflects the issuer's nonconvertible debt (unsecured debt) borrowing
rate when interest cost is recognized.  The FSP requires bifurcation
of a component of the debt, classification of that component in equity and the
accretion of the resulting discount on the debt to be recognized as part of
interest expense in our consolidated statement of operations.  The FSP
requires retrospective application to the terms of instruments as they existed
for all periods presented.  The FSP is effective for fiscal years
beginning after December 15, 2008 and early adoption is not
permitted.  The Company is currently evaluating the potential impact
of FSP APB 14-1 upon its consolidated financial statements.




The
Hierarchy of Generally Accepted Accounting Principles




In May
2008, the FASB issued SFAS No. 162, "The Hierarchy of Generally Accepted
Accounting Principles.”  SFAS No. 162 identifies the sources of
accounting principles and the framework for selecting the principles used in the
preparation of financial statements.  SFAS No. 162 is effective 60
days following the SEC's approval of the Public Company Accounting Oversight
Board amendments to AU Section 411, "The Meaning of Present Fairly in
Conformity with Generally Accepted Accounting Principles".  The
implementation of this standard will not have a material impact on the Company's
consolidated financial position and results of operations.




Determination
of the Useful Life of Intangible Assets




In April
2008, the FASB issued FSP SFAS No. 142-3, “Determination of the Useful Life of
Intangible Assets”, which amends the factors that should be considered in
developing renewal or extension assumptions used to determine the useful life of
intangible assets under SFAS No. 142 “Goodwill and Other Intangible
Assets”. The intent of this FSP is to improve the consistency
between the useful life of a recognized intangible asset under SFAS No. 142 and
the period of the expected cash flows used to measure the fair value of the
asset under SFAS No. 141 (revised 2007) “Business Combinations” and
other U.S. generally accepted accounting principles.    The
Company is currently evaluating the potential impact of FSP FAS No. 142-3 on its
consolidated financial statements.




Disclosure
about Derivative Instruments and Hedging Activities




In March
2008, the FASB issued SFAS No. 161, “Disclosure about Derivative
Instruments and Hedging Activities, an amendment of SFAS No. 133.” This
statement requires that objectives for using derivative instruments be disclosed
in terms of underlying risk and accounting designation. The Company is required
to adopt SFAS No. 161 on January 1, 2009. The Company is currently evaluating
the potential impact of SFAS No. 161 on the Company’s consolidated financial
statements.




Delay
in Effective Date




In
February 2008, the FASB issued FSP SFAS No. 157-2, “Effective Date of FASB Statement
No. 157”. This FSP delays the effective date of SFAS No. 157 for all
nonfinancial assets and nonfinancial liabilities, except those that are
recognized or disclosed at fair value on a recurring basis (at least annually)
to fiscal years beginning after November 15, 2008, and interim periods
within those fiscal years. The impact of adoption was not material to the
Company’s consolidated financial condition or results of
operations.


F-15


Business
Combinations





In
December 2007, the FASB issued SFAS No. 141(R) “Business
Combinations.”  This Statement replaces the original SFAS No.
141.  This Statement retains the fundamental requirements in SFAS
No. 141 that the acquisition method of accounting (which SFAS No. 141
called the purchase
method) be used for all business combinations and for an acquirer to be
identified for each business combination. The objective of SFAS No. 141(R) is to
improve the relevance, and comparability of the information that a reporting
entity provides in its financial reports about a business combination and its
effects. To accomplish that, SFAS No. 141(R) establishes principles and
requirements for how the acquirer:





a.
              Recognizes and measures in its
      financial statements the identifiable assets acquired, the liabilities
      assumed, and any noncontrolling interest in the
      acquiree.


b.
              Recognizes and measures the
      goodwill acquired in the business combination or a gain from a bargain
      purchase.


c.
              Determines what information to
      disclose to enable users of the financial statements to evaluate the
      nature and financial effects of the business
      combination.





This
Statement applies prospectively to business combinations for which the
acquisition date is on or after the beginning of the first annual reporting
period beginning on or after December 15, 2008 and may not be applied before
that date. The Company is unable at this time to determine the effect that its
adoption of SFAS No. 141(R) will have on its consolidated results of operations
and financial condition.





Noncontrolling
Interests in Consolidated Financial Statements—an amendment of ARB No.
51





In
December 2007, the FASB issued SFAS No. 160 “Noncontrolling Interests in
Consolidated Financial Statements – an amendment of ARB No.
51.”  This Statement amends the original ARB No. 51 “Consolidated Financial
Statements” to establish accounting and reporting standards for the
noncontrolling interest in a subsidiary and for the deconsolidation of a
subsidiary. It clarifies that a noncontrolling interest in a subsidiary is an
ownership interest in the consolidated entity that should be reported as equity
in the consolidated financial statements. This Statement is effective for fiscal
years and interim periods within those fiscal years, beginning on or after
December 15, 2008 and may not be applied before that date.  The
Company is unable at this time to determine the effect that its adoption of SFAS
No. 160 will have on its consolidated results of operations and financial
condition.





Fair
Value Option for Financial Assets and Financial Liabilities





In
February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial
Assets and Financial Liabilities – Including an amendment of SFAS No.
115,” which becomes effective for the Company on February 1, 2008,
permits companies to choose to measure many financial instruments and certain
other items at fair value and report unrealized gains and losses in earnings.
Such accounting is optional and is generally to be applied instrument by
instrument. The election of this fair-value option did not have a material
effect on its consolidated financial condition, results of operations, cash
flows or disclosures.





Fair
Value Measurements





In
September 2006, the FASB issued SFAS No. 157, "Fair Value
Measurements.”  SFAS No. 157 provides guidance for using fair
value to measure assets and liabilities.  SFAS No. 157 addresses the
requests from investors for expanded disclosure about the extent to which
companies’ measure assets and liabilities at fair value, the information used to
measure fair value and the effect of fair value measurements on earnings. SFAS
No. 157 applies whenever other standards require (or permit) assets or
liabilities to be measured at fair value, and does not expand the use of fair
value in any new circumstances. SFAS No. 157 is effective for financial
statements issued for fiscal years beginning after November 15, 2007 and was
adopted by the Company in the first quarter of fiscal year 2008. There was no
material impact on the Company’s consolidated results of operations and
financial condition due to the adoption of SFAS No. 157.


F-16


Accounting
for Uncertainty in Income Taxes





In July
2006, the FASB issued FIN No. 48, "Accounting for Uncertainty in
Income Taxes, an interpretation of FASB Statement No. 109". FIN 48
clarifies the accounting for uncertainty in income taxes by prescribing the
recognition threshold a tax position is required to meet before being recognized
in the financial statements. It also provides guidance on derecognition,
classification, interest and penalties, accounting in interim periods,
disclosure and transition. The cumulative effects, if any, of applying FIN 48
will be recorded as an adjustment to retained earnings as of the beginning of
the period of adoption. FIN 48 is effective for fiscal years beginning after
December 15, 2006, and the Company is required to adopt it in the first quarter
of fiscal year 2008. The adoption of FIN 48 did not have a material impact on
the consolidated results of operations and financial condition.





"The Fair Value Option for Financial
Assets and Financial Liabilities, including an amendment of FASB Statement No.
115".





In
February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for Financial
Assets and Financial Liabilities, including an amendment of FASB Statement No.
115". SFAS 159 permits companies to choose to measure many financial
instruments and certain other items at fair value and establishes presentation
and disclosure requirements designed to facilitate comparisons between companies
that choose different measurement attributes for similar types of assets and
liabilities. The provisions of SFAS 159 become effective as of the beginning of
our 2009 fiscal year. The adoption of SFAS 159 did not have a material impact on
its consolidated results of operations and financial condition.


F-17


Note
4—Restatement





During
the fourth quarter 2007, we made an error in our amortization of the note
discount originating from the determination of the fair value of the conversion
feature (embedded derivative) included in the debt. The impact of this error was
an understatement of 2007 interest expense of $378,639 and an overstatement in
the balance sheet account “Other - embedded derivatives”.  In
addition, the balance after the restatement of $528,350 in “Other – embedded
derivatives” has been classified as an adjustment to “Convertible Notes” to
offset the debt balance.





The
effect of the restatement on results of operations and financial position as of
and for the year ended December 31, 2007 are as follows:


As
      previouslyreported
                        
                        
                        RestatedTotal
      revenue
                        
                        $
                        395,541
                        
                        
                        $
                        395,541Loss
      from Operations
                        
                        
                        (1,188,901
                        )
                        
                        
                        (1,188,901
                        )Interest
      expense
                        
                        
                        (2,868,455
                        )
                        
                        
                        (3,247,094
                        )Net
      Loss
                        
                        
                        (4,057,356
                        )
                        
                        
                        (4,435,995
                        )Net
      loss per common share – basic
                        
                        
                        (0.003
                        )
                        
                        
                        (0.003
                        )Other
      – embedded derivative
                        
                        $
                        906,989
                        
                        
                        $
                        -Total
      assets
                        
                        
                        3,675,448
                        
                        
                        
                        2,768,459Convertible
      debt
                        
                        
                        9,568,239
                        
                        
                        
                        9,039,889Total
      Liabilities
                        
                        
                        20,876462
                        
                        
                        
                        20,348,112Stockholders’
      equity
                        
                        
                        (17,201,014
                        )
                        
                        
                        (17,579,653
                        )





Note
5 — Mineral Rights





Mineral
rights at December 31, 2008 and 2007 consisted of the following:




2008
                
                
                2007Comstock
      Placer Claims
                
                $
                100,000
                
                
                $
                100,000Big
      Mike Copper Claims
                
                
                69,138
                
                
                
                69,138Comstock
      Lode Claims
                
                
                1,271,409
                
                
                
                1,360,699Water
      rights
                
                
                90,000
                
                
                
                90,000$
                1,530,547
                
                
                $
                1,619,837





During
the year, the Company acquired additional claims in the Comstock Lode for a
total of $240,710 which was financed through cash and common stock.





Note
6 — Property and Equipment, net





Plant and
equipment at December 31, 2008 and 2007, consisted of the
following:


F-18





2008
                
                
                2007Land
      and Building
                
                $
                547,166
                
                
                $
                542,166Vehicle
      and Equipment
                
                
                302,094
                
                
                
                430,969Processing
      and Lab
                
                
                585,924
                
                
                
                449,550Furniture
      and Fixtures
                
                
                49,390
                
                
                
                50,6551,484,574
                
                
                
                1,473,340Less
      accumulated depreciation
                
                
                (995,338
                )
                
                
                (1,062,300
                )$
                489,236
                
                
                $
                411,040





Depreciation
expense for the years ended December 31, 2008 and 2007 was $80,434 and $277,578,
respectively.





Included
in plant, property and equipment at our Comstock location at December 31, 2008
and 2007, is equipment under capital lease of $0 and $156,292 respectively.
Lease payments for the related obligation under capital lease were $42,459 for
2008 and $32,772 for 2007.  All capital lease obligations were fully
settled in 2008. We recorded depreciation expense on equipment under capital
lease totaling $20,839 during the year ended December 31, 2008 and 2007
respectively.  We use the straight-line method of depreciation for
financial reporting purposes, depreciating buildings over 15 years and other
assets over useful lives ranging from 3 to 10 years.





Note
7 – Reclamation Bond Deposit





We are
generally required to mitigate long-term environmental impacts by stabilizing,
contouring, resloping, and revegetating various portions of a site after mining
and mineral processing operations are completed. These reclamation efforts are
conducted in accordance with detailed plans, which must be reviewed and approved
by the appropriate regulatory agencies.





The
Nevada Revised Statutes and regulations promulgated thereunder by the Nevada
State Environmental Commission and the Nevada Division of Environmental
Protection, Bureau of Mining and Reclamation require a surety bond to be posted
for mining projects to assure we will leave the site safe, stable and capable of
providing for a productive post-mining land use. Pursuant to the approved
Reclamation Plans we have posted surety bonds for the Comstock Mine Project we
posted a surety bond in the amount of $1,106,882 of which $766,768 was in the
form of a cash deposit and the balance was secured from a surety
agent.





Note
8 — Long-term Reclamation Liability





We have
an accrued a long-term liability of $1,105,342 and $553,190 as of December 31,
2008 and 2007 respectively, with regard to our obligations to reclaim our
Comstock Mine facility based on our reclamation plan submitted and approved by
the Nevada State Environmental Commission and Division of Environmental
Protection in 2008. Costs of future expenditures for environmental remediation
are discounted to their present value. Such costs are based on management’s
current estimate of amounts expected to be incurred when the remediation work is
performed within current laws and regulations. It is reasonably possible that,
due to uncertainties associated with the application of laws and regulations by
regulatory authorities and changes in reclamation or remediation technology, the
ultimate cost of reclamation and remediation could change in the future. We
periodically review accrued liabilities for such reclamation and remediation
costs as evidence becomes available indicating that our liabilities have
potentially changed.  The reclamation liability accretion expense for
2008 was $75,930 and the amortization of Long-lived assets was $68,032 for
2008.


F-19


Following
is a reconciliation of the aggregate retirement liability associated with on our
reclamation plan for our Comstock Project:


2008Long-term
      asset retirement obligation 1/1/2008
                  
                  $
                  553,190Additional
      obligations incurred
                  
                  
                  476,222Increase
      in present value of the reclamation obligation (accretion
      expense)
                  
                  
                  75,930Long-term
      asset retirement obligation 12/31/2008
                  
                  $
                  1,105,342





Note
9 - Notes Payable Stockholders





Mr.
Winfield and his affiliates (“Winfield Group”) held various notes and debentures
issued by the Company that are reported in several different liabilities
accounts at December 31, 2008, as follows:


Principal
                
                
                InterestConvertible
      Debentures Payable – Investors  (Note 10)
                
                $
                687,928
                
                
                $
                78,220Convertible
      Debentures Payable - Mandatory Redemption payment (Note
10)
                
                
                4,412,058
                
                
                
                1,013,492Convertible
      Notes Payable - 2006 & 2007 (Note 10)
                
                
                1,620,000
                
                
                
                764,665Promissory
      Notes – July Financing (Note 11)
                
                
                1,200,000
                
                
                
                950,550Promissory
      Notes – Plum Mine (Note 11)
                
                
                250,000
                
                
                
                50,000Convertible
      Notes Payable – 2008 (Note 10)
                
                
                2,500,000
                
                
                
                89,458$
                10,669,986
                
                
                $
                2,946,385





The
Winfield Group consists of Mr. Winfield and Santa Fe Financial Corporation,
Portsmouth Square and InterGroup Corporation, and combined, represent the
Company’s largest creditor and a significant stockholder.  Mr.
Winfield is affiliated with these Companies through a direct controlling
interest and/or as their Chairman of the Board.  As of December 31,
2008, the Company is in default of the terms on several outstanding notes
payable and accordingly the entire note balances of the defaulted notes have
been recorded as current liabilities.





Note
10 - Convertible Debentures





Convertible
debentures at December 31, 2008 and 2007 were as follows:


2008
                
                
                2007Convertible
      Debentures Payable-Investors
                
                $
                1,105,908
                
                
                $
                1,570,237Convertible
      Debentures Payable- Mandatory Redemption payment
                
                
                4,412,058
                
                
                
                5,737,058Convertible
      Debentures Payable- Failure to Deliver Shares
                
                
                -
                
                
                
                90,944Convertible
      Notes Payable – 2006 & 2007
                
                
                2,170,000
                
                
                
                2,170,000Convertible
      Notes Payable – 2008
                
                
                2,500,000
                
                
                
                -Embedded
      Derivatives (Note accretion)
                
                
                -
                
                
                
                (528,350
                )Total
                
                $
                10,187,966
                
                
                $
                9,039,889





Convertible Debentures
Payables - Investors





During
March 2004, we completed a private placement of securities transaction (the
“March Offering”), which generated $10 million in gross proceeds from a group of
accredited institutional and individual investors.


F-20


On
November 30, 2004, we restructured the March Offering and entered into a
new subscription agreement. We exchanged 21,739,129 shares of common stock and
21,739,129 warrants issued in the March Offering for:





a)
            8% convertible notes in the
      aggregate principal amount of approximately
      $11.1 million.   The principal amount of the
      convertible notes consist of the original $10.0 million investment
      plus approximately $1.1 million of accrued penalties associated with
      the delay in registration of the common stock held by the investors,
      and


b)
            warrants to purchase
      approximately 27.8 million shares of common stock at an exercise
      price of $0.20 per share, subject to anti-dilution adjustments, which
      expire in 4 years.





The 8%
convertible notes mature in November 2006 and call for monthly payments of
102% of 1/20th of the
initial principal amount, together with accrued interest. We have the option to
repay the notes with our common stock at a conversion rate of 85% of the average
of the five lowest closing bid prices during the preceding 20 trading days.
Further, the notes may be prepaid at 115% of their outstanding principal. Each
note may be converted by the holder into common stock at an initial conversion
price of $0.20 per share, which is subject to anti-dilution adjustments. During
the first 20 days following the closing date, the conversion price may be
reduced to 70% of the average of the five lowest closing prices during the 20
trading days preceding the closing date.





On April
1, 2005, we defaulted on our first monthly payment. On December 20, 2004, we
received notice from holders of approximately $3.8 million of convertible notes
of their intention to convert into shares of our common stock. The applicable
conversion rate was approximately $0.11 per share, and accordingly we were
obligated to issue 33,817,594 shares of common stock. Under the terms of the
subscription agreement, we had three business days following receipt of the
conversion notice (the “Delivery Date”) to deliver free-trading common stock
certificates. The shares were due to be delivered in December 2004, however,
they were not delivered until 2005. Our failure to deliver shares, subjected us
to liquidated damages of 1% of the note principal amount being converted for
each late business day.





Convertible Debentures
Payable - Mandatory Redemption Payment





In March
2005, because we did not deliver the share certificates within the period
required in the subscription agreement, John V. Winfield, a major shareholder
and note holder elected to demand payment of approximately $6.9 million pursuant
to the mandatory redemption payment provisions of the subscription agreement and
consequently forfeited his right to receive shares in lieu of
payment.





On March
31, 2005, we entered into a Settlement Agreement (“Settlement”) with the Mr.
Winfield and agreed to convert the mandatory redemption payment into nine
Convertible Debentures (“the Debentures”). Accordingly, we accrued a liability
for approximately $6.9 million and reduced our paid-in-capital account for
approximately $3.5 million. The Debentures are subject to various covenants and
conditions, including, but not limited to anti-dilution rights and protective
rights.  The Debentures accrue interest at 12% per annum and are
payable in monthly installments of principal and interest over a 24 month period
with the remaining entire balance of unpaid principal and interest due on March
31, 2007.   We are currently in default on this
note.





The
debentures are subject to the following terms:





Conversion
Rights


The
Debentures are convertible, in all or in part, into shares of our common stock
(“Conversion Shares”) at any time. The conversion price shall is equal to the
lesser of: (i) eighty-five percent (85%) of the average of the five (5) lowest
closing bid prices of the common stock as reported by Bloomberg L.P. for the
twenty (20) trading days preceding the date the Company was obligated to pay the
mandatory redemption Payment; and (ii) eighty-five percent (85%) of the average
of the five (5) lowest closing bid prices of the common stock as reported by
Bloomberg L.P. for the twenty (20) trading days preceding the date of any such
conversion; provided, however, until the effective date of the registration
statement (see below), the conversion price shall be fifty-percent (50%) of the
average of the five (5) lowest closing bid prices of the Common Stock as
reported by Bloomberg L.P. for the twenty (20) trading days preceding the date
of any such conversion. In no event shall the conversion price be higher than
(i) $0.1131 and (ii) the conversion price of the convertible notes (See Note 6),
as adjusted from time to time, whichever is lower.


F-21


Security
Agreement


Pursuant
to the terms of the Settlement Agreement, the Debentures are granted a priority
collateralized position, second only to our note payable to the Brockbank Trust
(See Note 7) in substantially all of our assets.





Convertible Debentures
Payable - Failure to Deliver Shares





In March
of 2005, and pursuant to our settlement with investors for our failure to
deliver shares of our common stock upon their conversion of debentures during
2004 (See above), we issued convertible notes payable that accrue interest at 8%
and are payable in equal monthly installments including interest beginning April
1, 2006. In the event of our default on the notes the interest rate increased to
15%.  In February 2008, we satisfied all obligations of these
notes.





Convertible
Notes Payable – 2006 & 2007





The
convertible notes payable as of December 31, 2008 are as follows:





Issued date
                
                
                Face amountWinfield
      Group Debenture Payable
                
                5/15/2006
                
                
                $
                300,000Winfield
      Group Debenture Payable
                
                6/21/2006
                
                
                
                300,000Winfield
      Group Debenture Payable
                
                8/23/2006
                
                
                
                300,000Longview
      Debenture Payable
                
                8/24/2006
                
                
                
                300,000Winfield
      Group Debenture Payable
                
                12/12/2006
                
                
                
                100,000Winfield
      Group Debenture Payable
                
                
                Q1
      2007
                
                
                
                331,120Winfield
      Group Debenture Payable
                
                
                Q2
      2007
                
                
                
                288,880Longview
      Debenture Payable
                
                3/27/2007
                
                
                
                250,000$
                2,170,000





On August
23 and 24, 2006, the Company formally entered into an agreement with several
investors to loan the Company $1,900,000, which was amended in March 2007,
increasing the loan amount to $2,200,000. The notes bear interest at 12% per
annum, payable on the first of each month commencing October 1, 2006, along with
1/24 of the face amount of such notes.  The notes are also convertible
into Common Stock at a 50% discount to market until the underlying shares are
registered and at a 15% discount to market thereafter. As additional
consideration, the investors were issued a total of 20,000,000 warrants to
purchase common stock at exercise prices based upon the same formulas for
conversion of the amounts due under the notes. The notes are secured by a lien
on the assets of Goldspring, Inc. and a pledge of all of the interests in Plum
Mine Special Purpose, LLC, which owns the Plum Mine operation. In connection
with this loan, the lender has agreed to acquire the existing mortgage on the
Plum Mine property from the Brockbank Trust. To date, $2,170,000 of the
$2,200,000 has been funded by the investors.  As of December 31, 2008,
we had failed to make any monthly payments on the notes and they are in
default.





On
February 20, 2008, as a result of the Company completing other financing
arrangements, a “favored nations” clause was triggered in the convertible notes,
which modified the notes conversion feature and effectively established a
maximum conversion rate of $0.01.  EITF 96-19 guidance provides that
debt extinguishment gain or loss is reported in situations where a substantial
modification in terms has occurred. Based on the guidance provided in EITF 96-19
and modified by EITF 05-7 and EITF 06-6 we determined that a substantial
modification in terms has occurred and therefore extinguishment of debt
accounting has been applied to account for the modification.  Pursuant
to the aforementioned accounting literature, the company realized a loss of
$400,703 from the extinguishment of debt.


F-22


The
“favored nations” rights in several existing notes were triggered by the
issuance of new notes. Since new warrants were not issued, no “favored nations”
rights were triggered in the existing warrants and therefore the accounting for
warrants will be unaffected.  The warrants conversion feature will be
evaluated and adjusted to fair value annually.





Convertible
Notes Payable –2008





In June
2008, the Company entered into a Loan Agreement with John Winfield and
affiliates (“Winfield”) pursuant to which Winfield has agreed to loan the
Company $2,500,000 no later than December 31, 2008 through issuance of a series
of secured notes (“Notes”). The Notes bear interest at the rate of 11% per
annum, and interest is payable quarterly in either cash or Company common stock,
at 85% of market price, at the Company’s option. The term of the Notes is two
years from the date of issuance, and the Notes are convertible into Company
common stock, at a conversion price of $.015 per share. The Notes are secured by
a lien on all of the Company’s assets. In each month, during the five months
ended December 2008, Winfield lent the Company $500,000 pursuant to the Loan
Agreement.





The
Convertible Notes Payable -2008 contained a nondetachable convertible option
that was “in the money” at the commitment dates.  Accordingly, we
applied the accounting guidance of EITF 98-5, EITF 00-27 and EITF 08-4 to
determine the methodology for calculating the value of this embedded conversion
option.   Pursuant to EITF 98-5 and EITF 00-27, we used the
intrinsic value calculation (the difference between the conversion price and the
quoted market price of our shares at the commitment date multiplied by the
number of shares into which the security is convertible) to determine the value
of the convertible feature.  The Convertible Notes provide the
following Conversion Right: “Each Lender shall have the right at any time, and
from time to time, on or prior to the Maturity Date to convert all or any part
of the outstanding unpaid amount of the Note into fully paid and non-assessable
shares of Common Stock.”   In general, the value of the
conversion option is recorded as a debt discount and amortized over the term of
the note, but since the Lender has the right to convert into common shares at
the issuance date, the entire amount was recorded to interest expense in this
reporting period.





Note Principal
                      
                      Unamortized
                        Debt Discount
                      
                      
                      Conversion
                        Price per
                        Share
                      
                      
                      Number of
                        Shares
                        Underlying
                        Convertible
                        Note
                      
                      
                      Interest
                        Expense
                      
                      
                      Effective
                        Interest Rate
                      
                      
                      Earnings per
                        Share Impact$2,500,000
                      
                      
                      -
                      
                      
                      $
                      0.015
                      
                      
                      
                      166,666,667
                      
                      
                      $
                      1,833,333
                      
                      
                      
                      47.6
                      %
                      
                      
                      0.0007





Note
11 —Other Debt





Other
Debt at December 31, 2008 and 2007 are as follows:





2008
                
                
                2007Promissory
      Notes Payable - 2005 through 2008
                
                $
                2,400,000
                
                
                $
                3,575,000Debt
      – Seller Note
                
                
                -
                
                
                
                147,200Debt
      – Plum Mine
                
                
                250,000
                
                
                
                250,000Equipment
      Financing - current portion
                
                
                10,565
                
                
                
                11,600$
                2,660,565
                
                
                $
                3,983,800





Promissory Notes Payable
–2005 through 2008





Promissory
Notes Payable at December 31, 2008 are as follows:




2008
                
                
                2007Promissory
      Notes Payable-July 2005 Financing
                
                $
                1,200,000
                
                
                $
                1,200,000Promissory
      Notes Payable-September 2005 Financing
                
                
                -
                
                
                
                300,000Promissory
      Notes Payable-December 2005 Financing
                
                
                -
                
                
                
                575,000Promissory
      Notes Payable-February 2006 Financing
                
                
                -
                
                
                
                250,000Promissory
      Notes Payable-March 2006 Financing
                
                
                -
                
                
                
                150,000Promissory
      Notes Payable-July 2007 Financing
                
                
                -
                
                
                
                300,000Promissory
      Notes Payable-October 2007 Financing
                
                
                
                
                
                
                200,000Promissory
      Notes Payable-December 2007 Financing
                
                
                600,000
                
                
                
                600,000Promissory
      Notes Payable-January 2008 Financing
                
                
                600,000
                
                
                
                -$
                2,400,000
                
                
                $
                3,575,000


F-23


Promissory Notes Payable -
July 2005 Financing





In July
of 2005, we borrowed $1.2 million from companies controlled by John V. Winfield,
a major investor. Proceeds from the notes were reduced by a 33.3% original issue
discount and other origination fees. Net proceeds received by the Company from
the borrowing were $740,000. The notes accrue interest at 15% per annum and are
payable in monthly installments of principal and interest over a 24 month period
with the remaining entire balance of unpaid principal and interest due on July
15, 2007.  The notes are collateralized by substantially all of the
Company’s assets subject to the security interest of the Brockbank Trust (See
Note 7). As of December 31, 2006 we had failed to make any monthly payments on
the notes and they are in default.





Promissory Notes Payable –
September 2005 through October 2007 Financing





In July
2008, the Company amended $2,175,000 principal amount of unsecured promissory
notes issued to Longview Fund, L.P. through the issuance of an Amended and
Restated Promissory Note issued by the Company in favor of Longview Fund,
L.P.  These amended notes have been reported as long-term debt (See
Note 10).





Promissory Notes Payable –
December 2007 Financing





In
December 2007, we completed a financing transaction with Mr. Winfield and his
affiliates which provided us with $500,000 in funding. In consideration for the
financing, we issued promissory notes with a face value of $600,000, reflecting
an original discount of sixteen and seventeen hundreds (16.17%) percent. The
notes evidencing the loan bear interest at the rate of 4.9% per annum, payable
on or prior to the one year anniversary of the respective loan
date.





Promissory Notes Payable –
January 2008 Financing





On
January 31, 2008, we completed a financing transaction with Mr. Winfield and his
affiliates which provided us with $500,000 in funding. In consideration for the
financing, we issued promissory notes with a face value of $600,000, reflecting
an original discount of sixteen and seventeen hundreds (16.17%) percent. The
notes evidencing the loan bear interest at the rate of 4.9% per annum, payable
on or prior to the one year anniversary of the respective loan
date.





Debt - Seller
Note





During
2005 we purchased certain mining leases that were near or contiguous to our Plum
Gold Property (See Note 4). In connection with the purchase we issued a note
payable of $160,000. The note was payable in quarterly installments of $16,000
and is payable in its entirety on or before June 2008. At December 31, 2008 and
2007 the note balance was $0 and $147,200 respectively.  All
obligations surrounding this note were satisfied during 2008.


F-24


Debt - Plum
Mine





We have a
non-interest bearing note payable note related to our purchase of the Plum
Mining property. The note does include, however, a clause for 5% annual interest
on all past due balances. The note was payable in ten quarterly payments through
June 2006. As of December 31, 2008 we still had a $250,000 note balance
due.





Note
12 — Long-term Convertible Debt Obligation





Convertible
debentures at December 31, 2008 and 2007 were as follows:


2008
                
                
                2007Long-term
      Convertible Notes Payable – July 2008 (Longview Amended and Restated
      Note)
                
                $
                2,782,563
                
                
                $
                -Less
      Current Portion
                
                
                -
                
                
                
                -Long-term
      Convertible Notes Payable, net of current portion
                
                $
                2,782,563
                
                
                $
                -





Long-Term Convertible Notes
– July 2008 (Longview Amended and Restated Note)





On July
10, 2008, the Company amended $2,175,000 principal amount of unsecured
promissory notes issued to Longview Fund, L.P. through the issuance of an
Amended and Restated Promissory Note issued by the Company in favor of Longview
Fund, L.P. The amended terms are as follows:




Expiration
      Date:
            July
      10, 2011Accrued
      Interest:
            Accrued
      interest at July 10, 2008 capitalized into the amended and revised
      note.Interest
      Rate:
            11%,
      payable in arrears in cash or stock (at a 15% discount to market price,
      calculated as a 5 day trailing
VWAP)


Conversion:
            The
      principal amount of the Note and interest thereon is convertible into
      Goldspring Common Stock at a price of $.0175 per share.Term:
            Three
      YearsAnti
      Dilution:
            Full
      ratchet





Longview
Amended and Revised Notes at December 31, 2008 are as follows:




Principal
                
                
                InterestPromissory
      Notes Payable-September 2005 Financing
                
                $
                300,000
                
                
                $
                172,870Promissory
      Notes Payable-December 2005 Financing
                
                
                375,000
                
                
                
                211,966Promissory
      Notes Payable-February 2006 Financing
                
                
                250,000
                
                
                
                98,164Promissory
      Notes Payable-March 2006 Financing
                
                
                150,000
                
                
                
                56,237Promissory
      Notes Payable-July 2007 Financing
                
                
                300,000
                
                
                
                58,526Promissory
      Notes Payable-October 2007 Financing
                
                
                200,000
                
                
                
                -Promissory
      Notes Payable-February 2008 Financing
                
                
                600,000
                
                
                
                9,800$
                2,175,000
                
                
                $
                607,563





On
February 29, 2008, we received the $500,000 balance of the financing from the
December 11, 2007 financing agreement. In consideration for the financing, we
issued promissory notes with a face value of $600,000, reflecting an original
discount of sixteen and seventeen hundredths (16.17%) percent. The notes
evidencing the loan bear interest at the rate of 4.9% per annum, payable on or
prior to the one year anniversary of the respective loan date. On July 10, 2008,
the Company amended its promissory note with Longview Fund, L.P., which had
outstanding principal of $2,175,000 and related outstanding interest of $607,563
through the issuance of an Amended and Restated Promissory Note in the aggregate
amount of $2,782,563 as summarized above.


F-25


Note
13 — Long-term Debt Obligation





Long-term
debt at December 31, 2008 and 2007 was as follows:


2008
                
                
                2007Long-term
      Debt - Winfield Debenture
                
                
                500,000
                
                
                
                -Long-term
      Debt - Equipment Financing
                
                
                10,565
                
                
                
                23,212Less
      current portion
                
                
                (10,565
                )
                
                
                (11,600
                )Long-term
      debt, net of current portion
                
                $
                500,000
                
                
                $
                11,612





Long-Term Debt – Winfield
Debenture





On
December 2, 2008, we completed a financing transaction with Mr. Winfield and his
affiliates which provided us with $500,000 in funding. In consideration for the
financing, we issued promissory notes with a face value of $500,000 bearing loan
interest of 11% per annum.  The term of loan is for two years
commencing from the date of the loan agreement.





Long-Term Debt - Equipment
Financing





During
2004, we purchased certain equipment and financed our purchases through GMAC and
Ford Motor Company credit agencies. Aggregated principal and interest due
pursuant to the financings is due monthly in equal installments of $1,054, at an
average interest rate of 7.2%. The equipment purchased is pledged as collateral
for the debt.





Principal
payments on long-term debt financing for the next four years are as
follows:




2009
                
                $
                10,5652010
                
                $
                -2011
                
                $
                -2012
      and thereafter
                
                $
                -Total
                
                $
                10,565


F-26


Note
14 — Stockholders’ Equity





Common
stock was issued during the year ended December 31, 2008 and December 31, 2007
for the following purposes:




2008 Share
                  Issuances
                
                
                Share Value
                
                
                2007 Share
                  Issuances
                
                
                Share ValueDebenture
      principal
                
                
                196,155,028
                
                
                $
                2,080,273
                
                
                
                898,776,970
                
                
                $
                1,444,947Debenture
      Interest
                
                
                151,961,857
                
                
                
                1,557,704
                
                
                
                835,792,338
                
                
                
                954,880Liquidated
      damages
                
                
                108,189,261
                
                
                
                1,009,845
                
                
                
                50,000,000
                
                
                
                154,347Private
      placements
                
                
                137,000,000
                
                
                
                1,520,000
                
                
                
                -
                
                
                
                -Mineral
      claims
                
                
                3,866,667
                
                
                
                79,558
                
                
                
                -
                
                
                
                -Mining
      software
                
                
                2,434,892
                
                
                
                9,740
                
                
                
                -
                
                
                
                -Consulting
                
                
                7,166,704
                
                
                
                111,096
                
                
                
                -
                
                
                
                -Employees
      and directors
                
                
                30,665,714
                
                
                
                374,290
                
                
                
                -
                
                
                
                -Total
                
                
                637,440,123
                
                
                $
                6,646,206
                
                
                
                1,784,569,308
                
                
                $
                2,554,174


F-27


Debenture Principal,
Debenture Interest and Liquidated Damages





The
following represents principal and interest payments on debt, made in 2008 with
the issuance of our common stock.


Note Description
                                  
                                  Principal
                                    Payment
                                    Number of
                                    Shares
                                  
                                  
                                  Value of
                                    Shares
                                  
                                  
                                  Interest
                                    Payment
                                    Number of
                                    shares
                                  
                                  
                                  Value of
                                    Shares
                                  
                                  See NoteConvertible
      Debentures Payable-Investors
                                  
                                  
                                  47,587,404
                                  
                                  
                                  $
                                  464,329
                                  
                                  
                                  
                                  20,880,311
                                  
                                  
                                  $
                                  193,339
                                  
                                  Note
      8Convertible
      Debentures Payable- Mandatory Redemption payment
                                  
                                  
                                  134,001,185
                                  
                                  
                                  
                                  1,325,000
                                  
                                  
                                  
                                  116,849,523
                                  
                                  
                                  
                                  1,113,785
                                  
                                  Note
      9Convertible
      Debentures Payable- Failure to Deliver Shares
                                  
                                  
                                  9,258,584
                                  
                                  
                                  
                                  90,944
                                  
                                  
                                  
                                  6,815,961
                                  
                                  
                                  
                                  66,942
                                  
                                  Note
      9Long-Term
      Convertible Notes – July 2008 (Longview Amended and Restated
      Note)
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  4,329,541
                                  
                                  
                                  
                                  67,338
                                  
                                  Note
      11Promissory
      Notes Payable-December 2005 Financing
                                  
                                  
                                  5,307,855
                                  
                                  
                                  
                                  200,000
                                  
                                  
                                  
                                  3,086,521
                                  
                                  
                                  
                                  116,300
                                  
                                  Note
      10196,155,028
                                  
                                  
                                  $
                                  2,080,273
                                  
                                  
                                  
                                  151,961,857
                                  
                                  
                                  $
                                  1,557,704





Liquidated
Damages





The
following represents liquidated damage payments on debt, made during 2008 with
the issuance of our common stock.


Note Description
                  
                  Liquidated
                    Damage
                    Payment
                    Number of
                    Shares
                  
                  
                  Value of
                    Shares
                  
                  
                  Total Shares
                    Issued
                  
                  
                  Total Value
                    of SharesConvertibleDebentures
      Payable-Investors
                  
                  
                  18,799,801
                  
                  
                  $
                  166,509
                  
                  
                  
                  87,267516
                  
                  
                  $
                  824,177Convertible
      Debentures Payable- Mandatory Redemption payment
                  
                  
                  87,686,922
                  
                  
                  
                  826,618
                  
                  
                  
                  338,537,630
                  
                  
                  
                  3,265,403Convertible
      Debentures Payable- Failure to Deliver Shares
                  
                  
                  1,702,538
                  
                  
                  
                  16,718
                  
                  
                  
                  17,777,083
                  
                  
                  
                  174,604Longview
      Amended and Restated Note - 2008
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  4,329,541
                  
                  
                  
                  67,338Promissory
      Notes Payable-December 2005 Financing
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  8,394,376
                  
                  
                  
                  316,300Total
                  
                  
                  108,189,261
                  
                  
                  $
                  1,009,845
                  
                  
                  
                  456,306,146
                  
                  
                  $
                  4,647,822





The
following represents principal and interest payments on debt, made in 2007 with
the issuance of our common stock.


Note
      Description
                      
                      Principal
                        Payment
                        Number
      of
                        Shares
                      
                      
                      Value
      of
                        Shares
                      
                      
                      Interest
                        Payment
                        Number
      of
                        shares
                      
                      
                      Value
      of
                        Shares
                      
                      See
      NoteConvertible
      Debentures Payable-Investors
                      
                      
                      458,230,322
                      
                      
                      $
                      1,030,543
                      
                      
                      
                      135,099,844
                      
                      
                      $
                      219,560
                      
                      Note
      8Convertible
      Debentures Payable- Mandatory Redemption payment
                      
                      
                      42,043,007
                      
                      
                      
                      149,000
                      
                      
                      
                      582,956,993
                      
                      
                      
                      656,905
                      
                      Note
      9Convertible
      Debentures Payable- Failure to Deliver Shares
                      
                      
                      398,503,641
                      
                      
                      
                      265,404
                      
                      
                      
                      117,735,501
                      
                      
                      
                      78,415
                      
                      Note
      9898,776,970
                      
                      
                      $
                      1,444,947
                      
                      
                      
                      835,792,338
                      
                      
                      $
                      954,880


F-28


Liquidated
Damages





The
following represents liquidated damage payments on debt, made during 2007 with
the issuance of our common stock.


Note
      Description
                  
                  Liquidated
                    Damage
                    Payment
                    Number
      of
                    Shares
                  
                  
                  Value
      of
                    Shares
                  
                  
                  Total
      Shares
                    Issued
                  
                  
                  Total
      Value
                    of
      SharesConvertible
      Debentures Payable-Investors
                  
                  
                  -
                  
                  
                  $
                  -
                  
                  
                  
                  583,829,290
                  
                  
                  $
                  1,250,103Convertible
      Debentures Payable- Mandatory Redemption payment
                  
                  
                  50,000,000
                  
                  
                  
                  154,347
                  
                  
                  
                  630,000,000
                  
                  
                  
                  960,252Convertible
      Debentures Payable- Failure to Deliver Shares
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  516,239,142
                  
                  
                  
                  343,819Total
                  
                  
                  50,000,000
                  
                  
                  $
                  154,347
                  
                  
                  
                  1,730,068,432
                  
                  
                  $
                  2,554,174





Private
Placements





The
following private placement transactions raised a total of $1,520,000 in
exchange for 137,000,000 shares of our unregistered Common stock, were place
with accredited investors.  In general, the proceeds were used to fund
exploratory drilling and for general working capital.





·
            In the first quarter 2008,
      $500,000 for 40,000,000 shares at $0.015 per
  share.





·
            During the second quarter 2008,
      $500,000 for 40,000,000 shares at $0.0125 per share and 40,000.000
      warrants.  The warrants have an exercise price of $.02 and a term of
      six years. .





·
            On July 18, 2008, $150,000 for
      10,000,000 shares at $0.015 per
share.





·
            In December 2008, $370,000 for
      37,000,000 shares at $0.01 per share and 32,000.000 warrants.  The
      warrants have an exercise price of $.015 and a term of six
      years.


F-29


Mineral
Claims





During
the nine month period ended September 30, 2008, 3,866,667 unregistered common
shares, valued at $79,558 or an average of $0.021 per share, were issued for the
acquisition of mining claims in the Comstock Lode District.





Computer
Software





Pursuant
to an agreement in late 2007, a vendor in March 2008 was issued 2,434,892 shares
valued at $9,740 or $0.004 per share, for computer modeling
software.





Consultants





During
2008, the following shares were issued to consultants for services
performed:





·
            In May 2008, a consultant was
      issued 5.53 million shares valued at $88,480 or $0.016 per share, for
      services.





·
            In August 2008, a consultant was
      issued 136,704 shares valued at $2,616 or $0.019 per share, for
      services





·
            In October 2008, a consultant was
      issued 500,000 shares valued at $10,000 or $0.02 per share, for
      services.





Employees and
directors





During
2008, the following shares were issued to employees and Company
directors:





·
            In January 2008, our two outside
      directors were issued, in aggregate, twenty million shares of our
      unregistered common stock as director compensation. The value of the
      common shares at the time of issuance was $234,400, averaging $0.012 per
      share.





·
            In March 2008, Dennis Anderson,
      the Company’s senior engineer, was issued a total of one million of our
      unregistered shares, valued at $18,690 or $0.01869 per share, for services
      performed.  In August 2008, Mr. Anderson, pursuant his employee
      agreement, was awarded 1.5 million unregistered shares valued at $24,900
      or $0.0167 per share for achieving various
    milestones.





·
            In August 2008, Mr. James Golden,
      the Chief Operating Officer, exercised 10,000,000 stock options at a price
      of $0.0525.  Mr. Golden elected the cashless exercise method and
      thus received a total of 8,165,714 unregistered shares of our common
      stock.  As of the date of this report, Mr. Golden has not sold
      any of these shares.





Note
15- Earnings Per Share





Basic
earnings per share is computed by dividing net income, after deducting preferred
stock dividends accumulated during the period, by the weighted average number of
shares of common stock outstanding. Diluted earnings per share is computed by
dividing net income, after deducting preferred stock dividends accumulated
during the period, by the weighted average number of shares of common stock and
dilutive common stock equivalent shares outstanding. The amount of preferred
stock dividends is zero in all periods presented. For the years ended December
31, 2008 and December 31, 2007, there were approximately 1,770 million and 2,059
million, respectively, of common stock equivalent shares excluded from the
dilutive earnings per share calculation because they were anti-dilutive. The
following is a reconciliation of the number of shares used in the basic and
diluted computation of net income per share (in millions):


F-30





For the Year Ended
                                  December 312008
                                
                                
                                2007Weighted
      average number of common shares outstanding – basic
                                
                                
                                3,143
                                
                                
                                
                                1,591Dilution
      from convertible debt, stock options and warrants
                                
                                
                                1,770
                                
                                
                                
                                2,059Weighted
      average number of common shares outstanding – diluted
                                
                                
                                4,913
                                
                                
                                
                                3,650





Note
16- Embedded Derivatives





“Derivative
liability” totaling $4,435,194 at December 31, 2008 represents the fair value of
the conversion feature (embedded derivatives) included in
debt.    SeeNote 9 - Convertible
Debentures: Embedded Derivatives and Note 11 — Long-term Convertible Debt
Obligation: Embedded Derivatives for additional information.





Note
17- Share Based Compensation





Effective
2006, the Company adopted a stock option and incentive plan (“2006 Plan”), which
provided for a maximum of 800,000,000 shares of common stock to be
issued.  Under the plan, stock options generally vest over three and
expire in ten years from the date of the grant.  Options are granted
to employees and non-employee directors at exercise prices equal to the fair
market value at the date of the grant.





As of
January 01, 2008, Goldspring Inc had 2,743,508,248 outstanding common shares and
10,000,000 outstanding Standard Employee Options and Warrants to acquire company
shares, of which 10,000,000 of these derivatives were vested and exercisable.
During the period ended December 31, 2008, 10,000,000 of these derivatives were
exercised. Standard Employee Options and Warrants outstanding at December 31,
2008 were 182,000,000. No Standard Employee Options and Warrants expired during
the period ended December 31, 2008. Outstanding common shares totaled
3,380,948,371 at December 31, 2008.





The
Company recognizes stock based compensation expense over the requisite service
period of the individual grant, which generally equals the vesting
period.  The plan entitles the holder to shares of common stock when
the award vests.   Awards generally vest ratably over three
years.  The fair value of the award is based upon the market price of
the underlying common stock as of the date of the grant and is amortized over
the applicable vesting period using the straight-line method.  The
Company uses newly issued shares of common stock to satisfy option exercises and
stock awards.





The fair
value of each grant was estimated at the date of the grant using the
Black-Scholes option pricing model.  Black-Scholes utilizes
assumptions related to volatility, the risk free interest rate, the dividend
yield (which is assumed to be zero, as the Company has not paid, nor anticipates
paying any, cash dividends and employee exercise behavior.  Expected
volatilities utilized in the model are based mainly on the historical volatility
of the Company’s stock price and other factors.





The
following is a summary of the assumptions used and the weighted average
grant-date fair value of the stock options granted during the fiscal years ended
December 31, 2008 and 2007.


2008
                
                
                2007Expected
      volatility
                
                
                199
                %
                
                
                206
                %Expected
      term (years)
                
                
                5.14
                
                
                
                5.70Risk
      free rate
                
                
                3.09
                %
                
                
                3.67
                %Dividend
      Yield
                
                
                0.0
                %
                
                
                0.0
                %Weighted
      average grant date fair value
                
                $
                0.01
                
                
                $
                0.01


F-31





Compensation
expense for stock options is recognized using the fair value when the stock
options are granted and is amortized over the options' vesting period. During
the 12 month ended December 31, 2008, $2,305,102 was recognized as compensation
expense in the consolidated statements of loss with a corresponding increase in
contributed surplus. As at December 31, 2008, 170,000,000 stock options were
exercisable and the weighted average years to expiration were 9.3
years.





A summary
of the option activity under the Company’s share base compensation plan for the
fiscal years ended December 31, 2008 and 2007 is as follows:


2008 Options
                  
                  
                  2008
                    Weighted
                    Average
                    Exercise
                    Price
                  
                  
                  2007
                    Options
                  
                  
                  2007
                    Weighted
                    Average
                    Exercise
                    PriceBalance,
      Beginning of year
                  
                  
                  10,000,000
                  
                  
                  $
                  0.00963
                  
                  
                  
                  0
                  
                  
                  
                  -Granted
                  
                  
                  182,000,000
                  
                  
                  $
                  0.011
                  
                  
                  
                  10,000,000
                  
                  
                  $
                  0.00963Exercised
                  
                  
                  (10,000,000
                  )
                  
                  $
                  0.00963
                  
                  
                  
                  0
                  
                  
                  
                  -Forfeited
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  0
                  
                  
                  
                  -Balance,
      end of year
                  
                  
                  182,000,000
                  
                  
                  $
                  0.011
                  
                  
                  
                  10,000,000
                  
                  
                  $
                  0.00963Exercisable
      at December 31,
                  
                  
                  170,000,000
                  
                  
                  $
                  0.0104
                  
                  
                  
                  10,000,000
                  
                  
                  $
                  0.00963





The
following table sets forth stock options outstanding at December 31,
2008.


Total
      Outstanding Options:
                
                
                182,000,000
                
                Total
      "in-the-money" Outstanding Options:
                
                
                170,000,000Average
      Price of Outstanding Options:
                
                $
                0.0110
                
                Average
      Price of "in-the-money" Outstanding Options:
                
                $
                0.0104Total
      Vested Options:
                
                
                170,000,000
                
                Total
      "in-the-money" Vested Options:
                
                
                170,000,000Average
      Price of Vested Options:
                
                $
                0.0104
                
                Average
      Price of "in-the-money" Vested Options:
                
                $
                0.0104Total
      Unvested Options:
                
                
                12,000,000
                
                Total
      "in-the-money" UN-Vested Options:
                
                
                0





Options
      Breakdown by Range as at 12/31/2008Outstanding
                
                
                VestedRange
                
                Outstanding Options
                
                
                Remaining
                  Contractual Life
                
                
                WA
                  Outstanding
                  Strike Price
                
                
                Vested Options
                
                
                Remaining Vested
                  Contractual Life
                
                
                WA Vested
                  Strike Price$0.000
      to $0.040
                
                
                182,000,000
                
                
                
                9.3819
                
                
                $
                0.0110
                
                
                
                170,000,000
                
                
                
                9.3555
                
                
                $
                0.0104$0.050
      to $0.090
                
                
                0
                
                
                
                0.0000
                
                
                $
                0.0000
                
                
                
                0
                
                
                
                0.0000
                
                
                $
                0.0000$0.100
      to $0.140
                
                
                0
                
                
                
                0.0000
                
                
                $
                0.0000
                
                
                
                0
                
                
                
                0.0000
                
                
                $
                0.0000$0.150
      to $0.190
                
                
                0
                
                
                
                0.0000
                
                
                $
                0.0000
                
                
                
                0
                
                
                
                0.0000
                
                
                $
                0.0000$0.200
      to $0.250
                
                
                0
                
                
                
                0.0000
                
                
                $
                0.0000
                
                
                
                0
                
                
                
                0.0000
                
                
                $
                0.0000$0.000 to $0.250
                
                
                182,000,000
                
                
                
                9.3819
                
                
                $
                0.0110
                
                
                
                170,000,000
                
                
                
                9.3555
                
                
                $
                0.0104





The total
options outstanding at December 31, 2008 had a weighted average remaining life
of 9.3 years and an average intrinsic value of $618,000 based upon the closing
price of the Company’s common stock of March 20, 2009.  The total
options exercisable at December 31, 2008 had a weighted average remaining life
of 9.3 years and an average intrinsic value of $618,000 based upon the closing
price of the Company’s common stock of March 20, 2009.  The options
exercised in 2008 were “cashless options”.  Because the Company
maintained a full valuation allowance on our deferred tax assets, it did not
recognize any tax benefit related to stock based compensation expense for the
year ended December 31, 2007.


F-32





The
Company had 12,000,000 unvested options outstanding at December 31, 2008 and -0-
at December 31, 2007.  The total fair value of options vested during
the fiscal years ended December 31, 2008 and 2007 was $2,269,533 and
$89,292.  As of December 31, 2008 the remaining unrecognized
compensation costs related to unvested options was $248,985.  The
weighted average remaining requisite service





On
December 13, 2007, the Company granted a stock option to Jim Golden, it’s COO,
as stipulated in his Executive Employment Agreement, which became effective on
that same date.   The Agreement carries a three year
term.  Pursuant to the Agreement, Mr. Golden was granted 10,000,000
stock options currently at a strike price of $0.00963, which was equal to the
current market price of its common shares on that date of the
grant.   The options may be exercised up to 10 years provided Mr.
Golden remains our employee, otherwise the agreement requires the stock options
to be exercised or canceled upon separation.


The
Agreement also provides for the issuance of additional grants of 10,000,000
stock options for each additional 100,000 ounces of gold resources, up to a
maximum of 90,000,000 total additional stock options.  Due to the
uncertainty involved in locating additional gold resources, we have determined
that the additional 90,000,000 stock options were not earned at December 31,
2007.  We determined the value of the 10,000,000 stock options granted
in 2007 by utilizing the Black-Scholes formula.  Our calculations were
based on a three year life (life of the employment agreement), a volatility of
225% and a risk free interest rate of 3.07%.  Our calculations
indicate that the value of the options granted were
immaterial.   At December 31, 2007, the Company did not have any
other options outstanding.





Note
18- Stock Warrants





As of
January 01, 2008, Goldspring Inc had 2,743,508,248 outstanding common shares and
47,800,000 outstanding Warrants to acquire company shares, of which 47,800,000
of these derivatives were vested and exercisable. During the period ended
December 31, 2008, 0 of these derivatives were exercised. Standard Employee
Options and Warrants outstanding at December 31, 2008 were 104,200,000. Warrants
totaling 27,800,000 at an average price of $0.20 expired during the period ended
December 31, 2008. Outstanding common shares totaled 3,380,948,371 at December
31, 2008.





The
Company recognizes warrant compensation expense over the requisite service
period of the individual grant, which generally equals the vesting
period.  The plan entitles the holder to shares of common stock when
the award vests.   Awards generally vest ratably over five
years.  The fair value of the award is based upon the market price of
the underlying common stock as of the date of the grant and is amortized over
the applicable vesting period using the straight-line method.  The
Company uses newly issued shares of common stock to satisfy option exercises and
stock awards.





The fair
value of each grant was estimated at the date of the grant using the
Black-Scholes option pricing model.  Black-Scholes utilizes
assumptions related to volatility, the risk free interest rate, the dividend
yield (which is assumed to be zero, as the Company has not paid, nor anticipates
paying any, cash dividends and employee exercise behavior.  Expected
volatilities utilized in the model are based mainly on the historical volatility
of the Company’s stock price and other factors.





The
following is a summary of the assumptions used and the weighted average
grant-date fair value of the stock options granted during the fiscal years ended
December 31, 2008 and 2007.


2008
                
                
                2007Weighted
      Average volatility
                
                
                149
                %
                
                
                206
                %Expected
      term (years)
                
                
                4.12
                
                
                
                3.70Risk
      free rate
                
                
                3.09
                %
                
                
                3.67
                %Dividend
      Yield
                
                
                0.0
                %
                
                
                0.0
                %Weighted
      average grant date fair value
                
                $
                0.01
                
                
                $
                0.01


F-33





Stock
warrant issuance is recognized using the fair value when the stock options are
granted and is amortized over the options' vesting period. During the 12 month
ended December 31, 2008, $1,129,220 was recognized as warrant expense in the
consolidated statements of loss with a corresponding increase in contributed
surplus. As at December 31, 2008, 104,200,000 warrants were exercisable and the
weighted average years to expiration were 5.1 years.





A summary
of the option activity under the Company’s share base compensation plan for the
fiscal years ended December 31, 2008 and 2007 is as follows:


2008 Options
                
                
                2008
                  Weighted
                  Average
                  Exercise
                  Price
                
                
                2007
                  Options
                
                
                2007
                  Weighted
                  Average
                  Exercise
                  PriceBalance,
      Beginning of year
                
                
                47,800,000
                
                
                $
                0.1440
                
                
                
                39,890,909
                
                
                $
                0.141Granted
                
                
                84,200,000
                
                
                $
                0.0173
                
                
                
                7,909,091
                
                
                $
                0.0094Exercised
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -Forfeited
                
                
                (27,800,000
                )
                
                $
                0.20
                
                
                
                -
                
                
                
                -Balance,
      end of year
                
                
                104,200,000
                
                
                $
                0.0169
                
                
                
                47,800,000
                
                
                $
                0.144Exercisable
      at December 31,
                
                
                104,200,000
                
                
                $
                0.0169
                
                
                
                47,800,000
                
                
                $
                0.144





A summary
of outstanding warrant issuances at December 31, 2008 is as
follows:


Note Description
                  
                  Issue Date
                  
                  
                  Number of
                    Warrants
                  
                  Original
                    Term
                  
                  Exercise
                    PriceConvertible
      Notes 2006 & 2007
                  
                  May
      06 –
                    June
      07
                  
                  
                  
                  20,000,000
                  
                  5
      years
                  
                  Variable
                    Exercise
      PricePrivate
      Placement Q2 2008
                  
                  
                  Q2
      2008
                  
                  
                  
                  40,000,000
                  
                  6
      years
                  
                  $
                  0.02Private
      Placement Q4 2008
                  
                  
                  Q4
      2008
                  
                  
                  
                  44,200,000
                  
                  6
      years
                  
                  
                  0.015Total
                  
                  
                  
                  
                  
                  
                  104,200,000





Variable Exercise
Price – The exercise price is equal to eighty-five percent (85%) of the
average of the five (5) lowest closing bid prices of the common stock as
reported by Bloomberg L.P. for the twenty (20) trading days upon day the
warrants are exercise.  These warrants have a "Cashless
Exercise".





The
following table sets forth warrants outstanding at December 31,
2008.


Total
      Outstanding Options:
                
                
                104,200,000
                
                Total
      "in-the-money" Outstanding Options:
                
                
                64,200,000Average
      Price of Outstanding Options:
                
                $
                0.0169
                
                Average
      Price of "in-the-money" Outstanding Options:
                
                $
                0.0150Total
      Vested Options:
                
                
                104,200,000
                
                Total
      "in-the-money" Vested Options:
                
                
                64,200,000Average
      Price of Vested Options:
                
                $
                0.0169
                
                Average
      Price of "in-the-money" Vested Options:
                
                $
                0.0150Total
      Unvested Options:
                
                
                0
                
                Total
      "in-the-money" Unvested Options:
                
                
                0




Options
      Breakdown by Range as at 12/31/2008Outstanding
                
                
                VestedRange
                
                Outstanding
                  Options
                
                
                Remaining
                  Contractual
                  Life
                
                
                WA
                  Outstanding
                  Strike
      Price
                
                
                Vested
                  Options
                
                
                Remaining
                  Vested
                  Contractual
      Life
                
                
                WA
      Vested
                  Strike
      Price$0.000
      to $0.040
                
                
                104,200,000
                
                
                
                5.2075
                
                
                $
                0.0169
                
                
                
                104,200,000
                
                
                
                5.2075
                
                
                $
                0.0169$0.050
      to $0.090
                
                
                0
                
                
                
                0.0000
                
                
                $
                0.0000
                
                
                
                0
                
                
                
                0.0000
                
                
                $
                0.0000$0.100
      to $0.140
                
                
                0
                
                
                
                0.0000
                
                
                $
                0.0000
                
                
                
                0
                
                
                
                0.0000
                
                
                $
                0.0000$0.150
      to $0.190
                
                
                0
                
                
                
                0.0000
                
                
                $
                0.0000
                
                
                
                0
                
                
                
                0.0000
                
                
                $
                0.0000$0.200
      to $0.250
                
                
                0
                
                
                
                0.0000
                
                
                $
                0.0000
                
                
                
                0
                
                
                
                0.0000
                
                
                $
                0.0000$0.000
      to $0.250
                
                
                104,700,000
                
                
                
                5.2075
                
                
                $
                0.0169
                
                
                
                104,700,000
                
                
                
                5.2075
                
                
                $
                0.0169


F-34





Note
19 – Extinguishment of Debt





The
following represents the reported gain from debt extinguishment resulting from a
change in an embedded conversion option or an amendment and restatement of a
note accounted for in accordance with the guidance offered in EITF 96-19 ”Accounting for a Modification or
Exchange of Debt Instruments” and EITF 06-6 “Debtor’s Accounting for a
Modification (or Exchange) of Convertible Debt Instruments”.


For
      the Year Ended
                                            December
      312008
                                          
                                          
                                          2007Convertible
      Notes Payable - 2006 & 2007
                                          
                                          $
                                          127,647
                                          
                                          
                                          $
                                          -Long-Term
      Convertible Notes – July 2008 (Longview Amended and Restated
      Note)
                                          
                                          
                                          1,220,552
                                          
                                          
                                          
                                          -Gain
      – Debt Extinguishment
                                          
                                          $
                                          1,348,199
                                          
                                          
                                          $
                                          -





Extinguishment
of Debt - Overview





The
Company performed an analysis to determine whether the change in an embedded
conversion option and the amendment and restatement of a note would be recorded
as an extinguishment of debt or a modification of debt.  Based on our
analysis, it was determined that the above change in an
embedded  conversion option and the amendment and restatement of a
note qualified as debt extinguishment under EITF 96-19, and we recorded a gain
of $1,348,199 in the fourth quarter of fiscal 2008.





Convertible
Notes Payable - 2006 & 2007





On
February 20, 2008, as a result of the Company completing other financing
arrangements, a “favored nations” clause was triggered in the 2006 and 2007
convertible notes, which changed the terms of the embedded conversion option and
effectively established a fixed conversion rate of $0.01.  Our
analysis indicated that the change in the embedded conversion option qualified
as a substantial modification, and accordingly extinguishment of debt accounting
should be applied.





Upon
issuance, the embedded conversion option was “in the money”.  We
recorded the note in accordance with EITF 98-5 regarding accounting for a
beneficial conversion feature.  Our calculation of the intrinsic value
of the new embedded conversion option was
$2,380,000.  However,  EITF 98-5 paragraph 6, limits the
allocation of proceeds to the conversion feature, to the face value of the note,
therefore we recorded the value of the embedded conversion option at the face
value of the note, which was $2,170,000.





Since the
modified notes provide for immediate conversion, subject to a 4.9% “blocking
feature”, the entire debt discount has been charged to interest expense in
accordance with the guidance offered in EITF 00-27. Debt discount results from
the allocation of note proceeds to the intrinsic value of the embedded
conversion option.





A gain on
Debt extinguishment of $127,647 was recorded as a result of the reduction in the
recorded value of the embedded conversion option prior to the change, compared
to the value of the embedded conversion option after the change.





The
following summarizes the convertible note;


Note Principal
                    
                    Unamortized
                      Debt Discount
                    
                    
                    Conversion
                      Price per Share
                    
                    
                    Number of
                      Shares
                      Underlying
                      Convertible
                      Note
                    
                    
                    Interest
                      Expense$2,170,000
                    
                    
                    -
                    
                    
                    $
                    0.01
                    
                    
                    
                    217,000,000
                    
                    
                    $
                    2,170,000





Long-Term
Convertible Notes – July 2008 (Longview Amended and Restated Note)





Debt
Extinguishment July 10, 2008





On July
10, 2008, the Company amended the terms of $2,175,000 of unsecured promissory
notes issued to Longview Fund, L.P. to (a) refinance the outstanding accrued
interest of $607,563 by adding it to the note balance, (b) extend the terms and
(c) to add a conversion feature.  The new debt instrument contained a
fixed rate conversion feature of $0.0175 per share which did not previously
exist in the group of original notes being restated.  Our analysis
indicated that the change in the terms along with the change in the embedded
conversion option qualified as a substantial modification, and accordingly
extinguishment of debt accounting should be applied.  We recorded the
note in accordance with EITF 98-5 pertaining to the beneficial conversion
feature.  Our calculation of the intrinsic value of the new embedded
conversion option was $2,305,552.  Since the amended and restated
convertible note provide for immediate conversion, subject to a 4.9% “blocking
feature”, the entire debt discount has been charged to interest expense in
accordance with the guidance offered in EITF 00-27. Debt discount results from
the allocation of note proceeds to the intrinsic value of the embedded
conversion option.


F-35





The
following summarizes the convertible note;


Note Principal
                  
                  Unamortized
                    Debt Discount
                  
                  
                  Conversion
                    Price per Share
                  
                  
                  Number of
                    Shares
                    Underlying
                    Convertible
                    Note
                  
                  
                  Interest
                    Expense$2,782,563
                  
                  
                  -
                  
                  
                  $
                  0.0175
                  
                  
                  
                  159,003,600
                  
                  
                  $
                  2,305,552





No gain
or loss on extinguishment was recorded.





Debt
Extinguishment December 22, 2008





The
Longview Amended and Restated Note  discussed above included a “full
ratcheting” provision which resets the stated conversion rate for all subsequent
stock issuances that are less then the conversion price that would be in effect
at that time.  On December 22, 2008, as a result of the Company
completing other financing arrangements at a lower conversion price, the reset
provision clause was triggered and established a new fixed conversion rate of
$0.01. Our analysis indicated that the change in the terms along with the change
in the embedded conversion option qualified as a substantial modification, and
accordingly extinguishment of debt accounting should be applied. The intrinsic
value of the convertible feature was determined to be
$1,085,000.    In accordance with accounting guidance for
extinguishment of debt, we recorded a gain of $1,220,552, representing the
difference between the July 10, 2008 valuation of the convertible feature and
the December 10, 2008 valuation of the convertible feature.





The
following table summarizes the Gain on Extinguishment of debt arising from the
Long-Term Convertible Notes – July 2008 (Longview Amended and Restated
Note)


2008Long-Term
      Convertible Notes – July 2008 (Longview Amended and Restated Note) –
      Valuation of convertible feature at July 10, 2008
                
                $
                2,305,552Long-Term
      Convertible Notes – July 2008 (Longview Amended and Restated Note) –
      Valuation of convertible feature at December 22, 2008
                
                
                1,085,000Gain
      – Debt Extinguishment
                
                $
                1,220,552





The
following summarizes the convertible note after the Change in the conversion
amount;


Note Principal
                  
                  Unamortized Debt
                    Discount
                  
                  
                  Conversion Price
                    per Share
                  
                  
                  Number of Shares
                    Underlying
                    Convertible Note$2,782,563
                  
                  
                  -
                  
                  
                  $
                  0.01
                  
                  
                  
                  278,256,300





Note
20 - Subsequent Events





On
January 27, 2009, the Company’s Board of Directors elected Jeffrey Pontius to
serve as an independent director of the Company.  On March 6, 2009,
Jeff Pontius resigned as a member of the Registrant’s Board of Directors. Mr.
Pontius’ reason for resignation is increased personal and business obligations
which would prevent him from devoting the necessary resources to perform his
duties as a Director for the Registrant.  To the knowledge of the
executive officers of the Registrant, this resignation was not the result of any
disagreement with the Company on any matter relating to the Company's
operations, policies or practices.





Note 21
— Income Taxes





The
provision (benefit) for income taxes from continued operations for the years
ended December 31, 2008 and 2007consist of the following:




2008
                
                
                2007Current:Federal
                
                $
                (14,300,000
                )
                
                
                (11,200,000
                )Deferred:
                
                
                -
                
                
                
                -Federal
                
                
                -
                
                
                
                -Increase
      in valuation allowance
                
                
                14,300,000
                
                
                
                11,200,000Benefit
      for income taxes, net
                
                $
                -
                
                
                
                -




December 31,2008 and 2007Statutory
      federal income tax rate
                
                
                35.0
                %Increase
      in valuation allowance
                
                
                (35.0
                )%Effective
      tax rate
                
                
                -
                %





Deferred
income taxes result from temporary differences in the recognition of income and
expenses for the financial reporting purposes and for tax purposes. The tax
effect of these temporary differences representing deferred tax asset and
liabilities result principally from the following:




December 31,
                
                
                December
                  31,2008
                
                
                2007Net
      operating loss carry-forwards
                
                $
                (14,300,000
                )
                
                $
                (11,200,000
                )





At
December 31, 2008 and 2007 the Company has a net operating loss carry-forward of
approximately $40.9 million and $32.0 million
respectively.   These operating loss carry-forwards begin to
expire in 2024 and can offset future taxable income, subject to certain
limitations under section 382 of the Internal Revenue Code of 1986, as amended,
and other limitations under state tax laws.


F-36





Item 9. Changes and Disagreements with
Accountants on Accounting and Financial Disclosure





Not
applicable.





ITEM
9A (T). CONTROLS AND PROCEDURES.





Evaluation
of Disclosure Controls and Procedures





As of the
end of the period covered by this Annual[Quarterly on Form 10-K, management
performed, with the participation of our Principal Executive Officer and
Principal Accounting Officer, an evaluation of the effectiveness of our
disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e)
of the Exchange Act. Our disclosure controls and procedures are designed to
ensure that information required to be disclosed in the report we file or submit
under the Exchange Act is recorded, processed, summarized, and reported within
the time periods specified in the SEC’s forms, and that such information is
accumulated and communicated to our management including our Principal Executive
Officer and our Principal Accounting Officer, to allow timely decisions
regarding required disclosures. Our Principal Executive Officer and our
Principal Accounting Officer concluded that, as of December 31, 2008, our
disclosure controls and procedures were effective.





Management's
Annual Report on Internal Control Over Financial Reporting.





Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting for the company in accordance with as defined
in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control
over financial reporting is designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted
accounting principles. Our internal control over financial reporting includes
those policies and procedures that:





(i)
pertain to the maintenance of records that, in reasonable detail, accurately and
fairly reflect the transactions and dispositions of our assets;





(ii)
provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements; and





(iii)
provide reasonable assurance regarding prevention or timely detection of
unauthorized transactions.





Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.





In making
this assessment, our management used the criteria set forth by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control - Integrated
Frameworkand Internal
Control over Financial Reporting-Guidance for Smaller Public
Companies.





We
believe that internal control over financial reporting is effective as of
December 31, 2008. This annual report does not include an attestation report of
the company's registered public accounting firm regarding internal control over
financial reporting. Management's report was not subject to attestation by the
Company's registered public accounting firm pursuant to temporary rules of the
SEC that permit the Company to provide only management's report in this annual
report.


52


There
have been no changes during the quarter ended December 31, 2008 in our Company's
internal control over financial reporting identified in connection with the
evaluation required by Exchange Act Rules 13a-15(d) and 15d-15(d) that have
material affected, or are reasonably likely to materially affect, our internal
controls over our financial reporting.





Item9B. Other Information





Not
applicable.





Item 10. Directors, Executive Officers and
Corporate Governance





The
following table sets forth certain information regarding our directors and
officers:




Name
            
            Age
            
            PositionWilliam
      J. Nance
            
            64
            
            DirectorRobert
      A. Reseigh
            
            63
            
            DirectorJonathan
      D. Jaffrey
            
            42
            
            DirectorScott
      H. Jolcover
            
            58
            
            DirectorRobert
      T. Faber
            
            49
            
            Director
      , President and CEOJames
      Golden
            
            50
            
            COO





William J. Nance has been a
director of our Company since October 2005. Mr. Nance is a Certified Public
Accountant and private consultant to the real estate and banking industries. He
is also President of Century Plaza Printers, Inc. Mr. Nance is also a Director
of Intergroup Corporation, Santa Fe and Portsmouth.





Robert Reseigh has been an
independent director of the Company since September 2008.  Mr. Reseigh
has over 35 years of experience in the mining and underground construction
industries. Mr. Reseigh, who holds an Engineer of Mines degree from the Colorado
School of Mines, is a mining and civil engineering executive who has overseen
over $1 billion in civil and mine construction projects during his career. Mr.
Reseigh spent nearly 20 years with the Peter Kiewit organization, which is a
recognized world leader in the mining industry. He held several positions there,
including Vice President and Area Manager for Precious Metals Mine Projects. Mr.
Reseigh also served as Executive Vice President of Atkinson Construction
Company, a subsidiary of Clark Construction, where he directed all construction
projects performed by the corporation. Mr. Reseigh is a frequent speaker at
mining and construction industry conferences and has published several
industry-specific papers. Mr. Reseigh has also been appointed as a member of the
Moles Association and the Beavers Association, East Coast- and West Coast- based
associations of prominent individuals in the heavy construction
industry.





Jonathan D. Jaffrey has been
an independent director of the Company since September 2008.  Mr.
Jaffrey is the President and a founding partner of Springbanc Philanthropy
Advisors, a nationally focused philanthropy consultancy. Mr. Jaffrey most
recently served as chief operating officer, chief financial officer, and member
of the investment committee for the W.M. Keck Foundation, a $1.4 billion private
foundation focusing on science and engineering research, medical research,
liberal arts, and community programs in Southern California. In addition to his
duties at the W.M. Keck Foundation, Mr. Jaffrey served as President of a
multigenerational family office serving the needs of a Los Angeles based Forbes
400 family. Mr. Jaffrey holds an M.B.A. from the University of Southern
California.





Scott H. Jolcover has served
as an independent director since January 2008. Mr. Jolcover served as Manager of
the Plum Mine prior to and after it was acquired by GoldSpring in November 2003.
Since leaving GoldSpring in 2006, Mr. Jolcover has worked as a
consultant.


53


Executive
Officers





Robert T. Faber,
CPA*President and Chief
Executive Officer


Mr. Faber
is an executive with 20 years of diverse senior financial and operational
management, business and acquisition experience, including 10 years of
international business experience. Mr. Faber was named Chief Executive Officer
and President of GoldSpring in September 2004. Prior to his appointment, he had
served as Chief Financial Officer since June 2003.  Prior to joining
GoldSpring, Inc., Mr. Faber served as Vice President of United Site Services,
Inc., from 2002 until 2003, a privately held service consolidator in the waste
service industry. Additionally, Mr. Faber served as an executive with Allied
Waste Industries from 2001 until 2002, overseeing a $1.2 billion multi-state
area and served as Chief Financial Officer with Frontier Waste Services, LLC
from 1999 until 2001. Prior to Frontier Waste, Mr. Faber spent 17 years with
Waste Management, Inc., a publicly traded environmental services company, during
which time he served in senior positions both internationally and domestically.
Mr. Faber’s positions included Director of Finance of Waste Management’s $1.4
billion multi-country International operations based in London, England and Vice
President and Controller for several $100 million plus multi-state market areas.
(*License inactive)





Jim Golden, Chief Operating
Officer


Mr.
Golden is a mining engineer with over twenty-five years of experience in the
mining industry before joining us in 2006.  Mr. Golden’s mining
experience includes ten years with Peter Kiewit's mining division, where he was
a district manager. A graduate of Montana Tech, Mr. Golden has owned his own
consulting firm since 1990, where he has provided consulting services throughout
the world for over 50 mining companies.





Information
Relating to Corporate Governance and the Board of Directors





Our Board
of Directors has determined, after considering all the relevant facts and
circumstances, that Mr. each of Bob Reseigh,  and Jonathan Jaffrey and
Scott Jolcover is an independent director, as “independence” is defined by
Nasdaq, because they have no relationship with us that would interfere with
their exercise of independent judgment.  Mr. Nance is not independent
due to his working relationship with John Winfield.





Our Board
of Directors had established three standing committees: an Audit Committee, a
Compensation Committee, and a Nominations and Corporate Governance Committee.
Due to the fact that Mr. Nance, who is not independent, was the sole Director
during most of 2007, those Committees had been inactive.  However, the
committees were revived effective January 1, 2009.  The following is a
summary of the members of each of the committees:





Audit
Committee:


William
Nance – Chairperson


Robert
Reseigh


Jonathan
Jaffrey





Compensation
Committee:


Jonathan
Jaffrey – Chairperson


William
Nance


Scott
Jolcover





Corporate
Governance and Nomination Committee


Robert
Faber – Chairperson


Jonathan
Jaffrey


Scott
Jolcover


54


Item
11. Executive Compensation





The
following table sets forth, for the periods indicated, the total compensation
for services provided to us in all capacities by our Chief Executive Officer. No
other executive officer received aggregate compensation exceeding $100,000
during 2008.





SUMMARY
COMPENSATION TABLE




Annual Compensation(1)
                                  
                                  
                                  Long-Term
                                    Compensation
                                    Awards
                                    Securities
                                  
                                  
                                  All OtherName and Principal
                                    Position
                                  
                                  Year
                                  
                                  Salary
                                    ($)
                                  
                                  
                                  Bonus
                                    ($)
                                  
                                  
                                  Underlying
                                    Options (#)
                                  
                                  
                                  Compensation
                                    ($)
                                  
                                  
                                  TOTALRobert
      T. Faber(1)(2)
                                  
                                  2008
                                  
                                  $
                                  180,000
                                  
                                  
                                  $
                                  -
                                  
                                  
                                  
                                  80,000,000
                                  
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  180,000Robert
      T. Faber(1)(2)
                                  
                                  2007
                                  
                                  
                                  180,000
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  $
                                  -
                                  
                                  
                                  
                                  180,000Robert
      T. Faber(2)
                                  
                                  2006
                                  
                                  
                                  147,500
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  $
                                  -
                                  
                                  
                                  
                                  147,500Robert
      T. Faber, President
                                    and
                                    Chief
      Executive Officer;
                                  
                                  2005
                                  
                                  
                                  120,000
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  $
                                  -
                                  
                                  
                                  
                                  120,000Chief
      Financial Officer
                                  
                                  2004
                                  
                                  
                                  115,000
                                  
                                  
                                  
                                  10,000
                                  
                                  
                                  
                                  -
                                  
                                  
                                  $
                                  -
                                  
                                  
                                  
                                  125,000Jim
      Golden, COO(3)
                                  
                                  2008
                                  
                                  
                                  150,000
                                  
                                  
                                  
                                  69,949
                                  
                                  
                                  
                                  -
                                  
                                  
                                  $
                                  -
                                  
                                  
                                  
                                  219,949Jim
      Golden, COO(3)
                                  
                                  2007
                                  
                                  
                                  150,000
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  100,000,000
                                  
                                  
                                  $
                                  -
                                  
                                  
                                  
                                  150,000Jim
      Golden, COO (3)
                                  
                                  2006
                                  
                                  
                                  150,000
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  $
                                  -
                                  
                                  
                                  
                                  150,000Dennis
      Anderson, Senior Engineer (4)
                                  
                                  2008
                                  
                                  $
                                  76,300
                                  
                                  
                                  $
                                  43,760
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  $
                                  120,060








(1)
            Mr. Faber has served as President
      and Chief Executive Officer since September 2004 and Chief Financial
      Officer since June 2003.





(2)
            $90,000 of Mr. Faber’s 2005 -
      2008 salary has not yet been paid. We intend to pay this amount in
      2009.





(3)
            Mr. Golden has served as Chief
      Operating Officer since October 2006. Prior to October 2006, Mr. Golden
      served as a consultant to our
Company





(4)
            Mr. Anderson is a part-time
      employee





Stock
Options





We did
Issues grant stock options two officers and four directors during 2008. There
were shares of common stock underlying unexercised stock options at December 31,
2008. This information is summarized herein below.


55


OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR END FOR 2008





Option Awards
                
                Stock AwardsName
                  and
                  Principal
                  Position
                
                Number of
                  Securities
                  Underlying
                  Unexercised
                  Options (#)
                  Exercisable
                
                Number of
                  Securities
                  Underlying
                  Unexercised
                  Options (#)
                  Unexercisable
                
                Number of
                  Securities
                  Underlying
                  Unexercised
                  Unearned
                  Options (#)
                
                Option
                  Exercise
                  Price
                
                Option
                  Expiration
                  Date
                
                Number
                  of
                  Shares
                  or Units
                  of
                  Stock
                  That
                  Have
                  Not
                  Vested
                
                Market
                  Value
                  of
                  Shares
                  or
                  Units
                  of
                  Stock
                  That
                  Have
                  Not
                  Vested
                
                Number
                  of
                  Unearned
                  Shares or
                  Other
                  Rights
                  That
                  Have
                  Not
                  Vested
                
                Market
                  Value or
                  Payout
                  Value of
                  Unearned
                  Shares,
                  Units or
                  Other
                  Rights
                  That
                  Have Not
                  VestedRobert
      T. Faber
                
                
                80,000,000
                
                -
                
                
                -
                
                .01119
                
                
                01/09/18
                
                -
                
                
                -
                
                -
                
                
                -Jim
      Golden
                
                
                90,000,000
                
                -
                
                
                -
                
                .00963
                
                
                12/13/17
                
                -
                
                
                -
                
                -
                
                
                -William
      Nance
                
                
                
                
                
                
                
                3,000,000
                
                .02
                
                
                9/30/18Robert
      Reseigh
                
                
                
                
                
                
                
                3,000,000
                
                .02
                
                
                9/30/18Jonathan
      Jaffrey
                
                
                
                
                
                
                
                3,000,000
                
                .02
                
                
                9/30/18Scott
      Jolcover
                
                
                
                
                
                
                
                3,000,000
                
                .02
                
                
                9/30/18





Employment
Agreements





Effective
as of November 27, 2006, the Company entered into an Executive Employment
Agreement with Robert T. Faber, its CEO. The Agreement carries a three year term
from August 15, 2006 and is retroactive to that date. During the term of the
Agreement, Mr. Faber’s base salary shall be $180,000 per year, with such
increases as may be determined by the Company’s Compensation Committee, with a
bonus not to exceed 50% of the base salary then in effect. Also pursuant to the
Agreement, Mr. Faber shall be granted 80,000,000 stock options currently with
exercise price per the terms of the Company’s 2006 Stock Option and Incentive
Plan. The Company granted Mr. Faber the options on January 2008. In the case of
a termination not for cause, Mr. Faber shall continue to receive his full base
salary for a period of one year from date of termination and upon a sale of the
Company, he shall receive a one time lump sum payment equal to 100% of his then
in effect base salary, with all options vesting immediately.





Effective
as of December 13, 2007, the Company entered into an Executive Employment
Agreement with Jim Golden, its COO. The Agreement carries a three year term from
December 13, 2007. During the term of the Agreement, Mr. Golden’s base salary
shall be $150,000 per year, with such increases as may be determined by the
Company’s Compensation Committee, with a bonus not to exceed 50% of the base
salary then in effect. Also pursuant to the Agreement, Mr. Golden shall be
granted 10,000,000 stock options currently and will be eligible for an
additional 10,000,000 options for each addition one hundred thousand ounces of
gold resource up to 90,000,000 options. All earned and vested options have an
exercise price of $0.00963. Mr. Golden shall continue to receive his full base
salary for a period of one year from date of termination and upon a sale of the
Company, he shall receive a one time lump sum payment equal to 100% of his then
in effect base salary, with all options vesting immediately.





Compensation
of Directors





During
the fiscal year ended, our Directors were/were not given compensation for
services rendered as Directors. The following table summarizes any compensation
given in 2008:


56


DIRECTOR
COMPENSATION TABLE





Name
                
                Fees
                  Earned
                  or
                  Paid in
                  Cash
                
                Stock
                  Awards
                
                Option
                  Awards
                
                Non-Equity
                  Incentive Plan
                  Compensation
                
                Nonqualified
                  Deferred
                  Compensation
                  Earnings
                
                All Other
                  Compensation
                
                TotalWilliam
      Nance
                
                $
                7,500
                
                15,000,000
                
                
                3,000,000
                
                -
                
                
                -
                
                -
                
                
                -Robert
      Reseigh
                
                
                4,834
                
                -
                
                
                3,000,000
                
                -
                
                
                -
                
                -
                
                
                -Jonathan
      Jaffrey
                
                
                5,667
                
                -
                
                
                3,000,000Scott
      Jolcover
                
                
                4,834
                
                5,000,000
                
                
                3,000,000Robert
      Faber
                
                $
                -
                
                -
                
                
                -





Item 12. Security Ownership of Certain
Beneficial Owners and Management and Related Stockholder
Matters





The
following table sets forth certain information regarding the beneficial
ownership of our common stock as of December 31, 2008 by (1) each person who is
known by us to be the beneficial owner of more than five percent of our issued
and outstanding shares of common stock, (2) each of our directors and executive
officers, and (3) all directors and officers as a group.




Shares Beneficially
                          OwnedName of Beneficial Owner
                        
                        Number(1)
                        
                        
                        Percent(2)Directors
      and Executive Officers:Robert
      T. Faber (1) (2) (4)
                        
                        
                        80,090,000
                        
                        
                        
                        2.3
                        %Jim
      Golden(1) (2)
                        
                        
                        98,265,714
                        
                        
                        
                        2.8
                        %William
      Nance(2)
                        
                        
                        15,750,000
                        
                        
                        
                        0.5
                        %Robert
      Reseigh (2) (3)
                        
                        
                        750,000
                        
                        
                        
                        0.1
                        %Jonathan
      Jaffrey (2) (3)
                        
                        
                        1,150,000
                        
                        
                        
                        0.1
                        %Scott
      Jolcover (1) (2) (4)
                        
                        
                        22,673,904
                        
                        
                        
                        0.7
                        %All
      directors and executive officers as a group (four persons)
                        
                        
                        218,679,618
                        
                        
                        
                        6.5
                        %5%
      Shareholders:Merriman
      Curhan Ford(5)
                        
                        
                        265,422,999
                        
                        
                        
                        7.9
                        %





(1)
            Includes, when applicable, shares
      owned of record by such person’s minor children and spouse and by other
      related individuals and entities over whose shares of common stock such
      person has custody, voting control, or power of disposition. Also includes
      shares of common stock that the identified person had the right to acquire
      within 60 days of December 31, 2008 by the exercise of vested stock
      options.





(2)
            The percentages shown include the
      shares of common stock that the person will have the right to acquire
      within 60 days of December 31, 2008. In calculating the percentage of
      ownership, all shares of common stock which the identified person will
      have the right to acquire within 60 days of December 31, 2008 upon the
      conversion of convertible notes or the exercise of warrants or stock
      options are deemed to be outstanding for the purpose of computing the
      percentage of shares of common stock owned by such person, but are not
      deemed to be outstanding for the purpose of computing the percentage of
      shares of common stock owned by any other
  person.


57




(3)
            .Appointed as a director in
      September 2008





(4)
            Appointed as Director in
      January  2008





(5)
            Merriman Curhan and Ford’s (MFC)
      address is 600 California Street, 9thFloor, San Francisco, California
      94108. Includes shares of common stock held by D. Jonathan , MCF’s Chief
      Executive Officer, and
spouse





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





Our Board
of Directors has determined, after considering all the relevant facts and
circumstances, that Mr. each of Bob Reseigh,  and Jonathan Jaffrey and
Scott Jolcover is an independent director, as “independence” is defined by
Nasdaq, because they have no relationship with us that would interfere with
their exercise of independent judgment.  Mr. Nance is not independent
due to his working relationship with John Winfield.





During
the first quarter 2009 Mr. Faber, on behalf of the Company, paid approximately
$45,000 to several vendors to meet Company obligations.  The Company
intends to repay Mr. Faber these monies during the second quarter
2009.





Item 14. Principal Accountants Fees and
Services





The
aggregate fees billed to our company by Jewett Schwartz, for the fiscal years
ended December 31, 2008 and December 31, 2007, are as follows:




2008
                
                
                2007Audit
      fees
                
                $
                52,500
                
                
                $
                37,500Audit-related
      fees
                
                $
                10,000
                
                
                $
                11,700Tax
      fees
                
                $
                10,000
                
                
                $
                10,000All
      other fees
                
                $
                0
                
                
                $
                0





Audit
Committee Pre-Approval Policies





The
charter of our Audit Committee provides that the duties and responsibilities of
our Audit Committee include the pre-approval of all audits, audit-related, tax,
and other services permitted by law or applicable SEC regulations (including fee
and cost ranges) to be performed by our independent auditor. Any pre-approved
services that will involve fees or costs exceeding pre-approved levels will also
require specific pre-approval by the Audit Committee. Unless otherwise specified
by the Audit Committee in pre-approving a service, the pre-approval will be
effective for the 12-month period following pre-approval. The Audit Committee
will not approve any non-audit services prohibited by applicable SEC regulations
or any services in connection with a transaction initially recommended by the
independent auditor, the purpose of which may be tax avoidance and the tax
treatment of which may not be supported by the Internal Revenue Code and related
regulations.





To the
extent deemed appropriate, the Audit Committee may delegate pre-approval
authority to the Chairman of the Audit Committee or any one or more other
members of the Audit Committee provided that any member of the Audit Committee
who has exercised any such delegation must report any such pre-approval decision
to the Audit Committee at its next scheduled meeting. The Audit Committee will
not delegate to management the pre-approval of services to be performed by the
independent auditor.


58





Our Audit
Committee requires that our independent auditor, in conjunction with our Chief
Financial Officer, be responsible for seeking pre-approval for providing
services to us and that any request for pre-approval must inform the Audit
Committee about each service to be provided and must provide detail as to the
particular service to be provided. Our Audit Committee Chair and Audit Committee
Financial Expert is Bill Nance.





Item 15. Exhibits Financial Statement
Schedules.




(a)
            The following documents are filed
      as part of this Report:




(1)
            Financial statements filed as
      part of this Report:




Report
      of Independent Registered Public Accounting Firm
                  
                  
                  F -
      1Consolidated
      Balance Sheet
                  
                  
                  F -
      2Consolidated
      Statements of Operations
                  
                  
                  F -
      4Consolidated
      Statements of Changes in Stockholders' Deficiency
                  
                  
                  F -
      5Consolidated
      Statements of Cash Flows
                  
                  
                  F -
      6Notes
      to Consolidated Financial Statements
                  
                  
                  F-8
      - 36




(2)
            Exhibits filed as part of this
      Report:




Exhibit
              Number
            
            Exhibit23.1
            
            Consent
      of Jewett, Schwartz Wolfe & Associates31.1
            
            Certification
      of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a),
      promulgated under the Securities Exchange Act of 1934, as
      amended.31.2
            
            Certification
      of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a),
      promulgated under the Securities Exchange Act of 1934, as
      amended.32.1
            
            Certification
      pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
      the Sarbanes-Oxley Act of 200232.2
            
            Certification
      pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
      the Sarbanes-Oxley Act of 2002





SIGNATURES





Pursuant
to the requirements of Section 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.


59





SIGNATURES





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





Goldspring,
      Inc./s/
      Robert T. FaberRobert
      T. FaberPresident
      andDirector
              (Principal
      Financial Officer)Date:
      March 5, 2010





Pursuant
to the requirements of Section 12 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.




Signature
            
            Title
            
            Date/s/  Robert
      T. Faber
            
            President,
      Chief Financial Officer and Director
            
            March
      5, 2010Robert
      T. Faber
            
            (Principal
      Executive Officer and Principal Financial Officer)/s/  scott
      h. jolcover
            
            Director
            
            March
      5, 2010Scott
      H. Jolcover/s/  William
      Nance
            
            Chairman
      of the Board and Director
            
            March
      5, 2010William
      Nance/s/  Robert
      a. reseigh
            
            Chief Executive
      Officer
            
            March
      5, 2010Robert
      A. Reseigh


60