**U.S.      SECURITIES AND EXCHANGE COMMISSION**

**Washington,      D.C. 20549**

**FORM      10-KSB**

**(Mark      One)**

| **x** | **ANNUAL                REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF                1934                FOR THE FISCAL YEAR ENDED****October                31, 2006****.** |
|-------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **o** | **TRANSITION                REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE                ACT OF                1934 FOR THE TRANSITION PERIOD OF _________ TO                _________.** |
|-------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Commission      File Number: **
**0-27659**

**METALLINE      MINING COMPANY**

**(Name      of small business issuer in its charter)**

| **Nevada**                                      | **91-1766677**                       |
|-------------------------------------------------|--------------------------------------|
| State                  or other jurisdiction of | (I.R.S.                  Employer    |
| incorporation                  or organization  | Identification                  No.) |

**1330      E. Margaret Ave., Coeur d’Alene, ID 83815**

**(208)      665-2002**

**Common      Stock, $0.01 Par Value**

** **

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**PART      I**

**Item      1. **
**DESCRIPTION      OF BUSINESS **

**Background      and Corporate Structure**

**General      Development of the Business**

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*Exploration      Stage Mining Company With No History of Operation*

*Due      to Our History of Operating Losses, We are Uncertain That We Will Be Able to      Maintain Sufficient Cash to Accomplish Our Business Objectives*

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*No      Commercially Mineable Ore Body; Resources and Reserves*

*Our      Business Plan is Highly Speculative and its Success Depends on Mineral      Development in the Sierra Mojada Concessions *

*Risks      Inherent in the Mining Industry*

|   | · |   | competition                  from a large number of companies, many of which are significantly                  larger                  than the Company, in the acquisition, exploration, and development                  of                  mining properties;                                                                                                                                        |
|--------|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |   |                                                                                                                                                                                                                                                                                                                                                                                                      |
|   | · |   | the                  Company, the concession holder, might not be able raise enough                  money to                  pay the fees, taxes and perform labor necessary to maintain the                  concessions in good force                                                                                                                                                                 |
|   |   |   |                                                                                                                                                                                                                                                                                                                                                                                                      |
|   | · |   | exploration                  for minerals is highly speculative and involves substantial risks,                  even                  when conducted on properties known to contain significant quantities                  of                  mineralization, and most exploration projects do not result in                  the                  discovery of commercially mineable deposits of ore; |

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|   | · |   | the                  probability of an individual prospect ever having reserves that                  meet the                  requirements of Securities Act Industry Guide 7 is extremely remote,                  and                  in all probability the properties do not contain any reserves,                  and any                  funds spent on exploration will probably be lost;                                                                                         |
|--------|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   | · |   | operations                  are subject to a variety of existing laws and regulations relating                  to                  exploration and development, permitting procedures, safety precautions,                  property reclamation, employee health and safety, air quality standards,                  pollution and other environmental protection controls and the Company                  may                  not be able to comply with these regulations and controls; |
|   |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   | · |   | a                  large number of factors beyond the control of the Company, including                  fluctuations in metal prices, inflation, and other economic conditions,                  will affect the economic feasibility of mining;                                                                                                                                                                                                                                             |
|   |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   | · |   | mining                  activities are subject to substantial operating hazards some of                  which are                  not insurable or may not be insured due to economic considerations;                  and                                                                                                                                                                                                                                                                  |
|   |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   | · |   | the                  availability of water, which is essential to mining and milling                  operations.                                                                                                                                                                                                                                                                                                                                                                             |

*Nature      of Zinc Exploration and Development*

*Fluctuating      Price for Metals*

*Mining      Concessions *

*Title      to Our Mineral Properties May be Challenged*

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*Our      Activities are in Mexico, which is Subject to Political and Economic      Instability*

|   | · |   | political                  instability and violence;                        |
|--------|--------|--------|-----------------------------------------------------------------------------|
|   |   |   |                                                                        |
|   | · |   | war                  and civil disturbance;                                 |
|   |   |   |                                                                        |
|   | · |   | expropriation                  or nationalization;                          |
|   |   |   |                                                                        |
|   | · |   | changing                  fiscal regimes;                                   |
|   |   |   |                                                                        |
|   | · |   | fluctuations                  in currency exchange rates;                   |
|   |   |   |                                                                        |
|   | · |   | high                  rates of inflation;                                   |
|   |   |   |                                                                        |
|   | · |   | underdeveloped                  industrial and economic infrastructure; and |
|   |   |   |                                                                        |
|   | · |   | unenforceability                  of contractual rights.                    |

|   | · |   | production                  restrictions;        |
|--------|--------|--------|--------------------------------------------------|
|   |   |   |                                             |
|   | · |   | price                  controls;                 |
|   |   |   |                                             |
|   | · |   | export                  and import controls;     |
|   |   |   |                                             |
|   | · |   | income                  and other taxes;         |
|   |   |   |                                             |
|   | · |   | maintenance                  of claims;          |
|   |   |   |                                             |
|   | · |   | environmental                  legislation;      |
|   |   |   |                                             |
|   | · |   | foreign                  ownership restrictions; |
|   |   |   |                                             |
|   | · |   | labor;                                           |
|   |   |   |                                             |
|   | · |   | welfare                  benefit policies;       |
|   |   |   |                                             |
|   | · |   | land                  use;                       |
|   |   |   |                                             |
|   | · |   | land                  claims of local residents; |
|   |   |   |                                             |
|   | · |   | water                  use; and                  |
|   |   |   |                                             |
|   | · |   | mine                  safety.                    |

*Environmental      Controls*

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*Availability      of Water; Shortages of Supplies and Materials.*

*Operational      Hazards; Uninsured Risks*

*Capital      Requirements and Liquidity; Need for Subsequent Funding*

*Need      for Additional Key Personnel; Reliance on Officers and      Directors*

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*Indemnification      of Officers and Directors for Securities Liabilities*

*No      Dividends Anticipated*

*Our      Stock Price Can Be Extremely Volatile*

**Item      2.**
**DESCRIPTION      OF PROPERTY**

| Concession                                  |   |        |                               | Title                No. |   | hectares |   |
|---------------------------------------------|--------|--------|------------------------------------|--------------------------|--------|----------|--------|
|                                        |   |   |                               |                     |   |     |   |
| Sierra                Mojada                |   |   |                               |                     |   | 198513   |   |   | 4,767.3154 |   |
| Mojada                2*                    |   |   |                               |                     |   | 227585   |   |   | 3,500.0000 |   |
| El                Retorno*                  |   |   |                               |                     |   | 216681   |   |   | 817.6548 |   |
| Mojada                3                     |   |   | new                title (reduced) |                          |   | 226756   |   |   | 772.0000 |   |
| Unificacion                Mineros Nortenos |   |   |                               |                     |   | 169343   |   |   | 336.7905 |   |
| Esmeralda                I (97.6839)        |   |   |                               |                     |   | 187776   |   |   | 145.0000 |   |
| Esmeralda                                   |   |   |                               |                     |   | 212169   |   |   | 117.5025 |   |
| La                Blanca                    |   |   |                               |                     |   | 220569   |   |   | 33.5044 |   |
| Fortuna                                     |   |   |                               |                     |   | 160461   |   |   | 13.9582 |   |
| Los                Ramones*                 |   |   |                               |                     |   | 223093   |   |   | 8.6039 |   |
| El                Retorno Fracc. 1*         |   |   |                               |                     |   | 223154   |   |   | 5.5071 |   |
| Vulcano                                     |   |   |                               |                     |   | 83507    |   |   | 4.4094 |   |
|                                        |   |   |                               |                     |   |     |   |   |   |   |
| Total                                       |   |   |                               |                     |   |     |   |   | 10,522.2462 |   |

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| * | Documentation                of the acquisition of these concessions was not available until fiscal                year beginning November 1, 2006. Total cost for these concessions                was                approximately $32,000 in the                aggregate. |
|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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**Glossary      of Common Terms**
** **

| Concession |   | A                grant of a tract of land made by a government or other controlling                authority in return for stipulated services or a promise that the                land                will be used for a specific                purpose. |
|------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| Exploration                expenditures               |   | Costs                incurred in identifying areas that may warrant examination and in                examining specific areas that are considered to have prospects that                may                contain mineral deposit reserves.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|-------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                  |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| Mineralized                Material                   |   | Zinc                bearing material that has been physically delineated by one or more                of a                number of methods including drilling, underground work, surface trenching                and other types of sampling. This material has been found to contain                a                sufficient amount of mineralization of an average grade of metal                or metals                to have economic potential that warrants further exploration evaluation.                While this material is not currently or may never be classified as                reserves, it is reported as mineralized material only if the potential                exists for reclassification into the reserves category. This material                cannot be classified in the reserves category until final technical,                economic and legal factors have been determined. Under the United                States                Securities and Exchange Commission’s standards, a mineral deposit does not                qualify as a reserve unless the recoveries from the deposit are expected                to be sufficient to recover total cash and non-cash costs for the                mine and                related facilities and make a profit. |
|                                                  |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| Ore,                Ore Reserve, or Mineable Ore Body |   | The                part of a mineral deposit which could be economically and legally                extracted or produced at the time of the reserve                determination.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                  |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| Reserves                                              |   | Estimated                remaining quantities of mineral deposit and related substances anticipated                to be recoverable from known accumulations, from a given date forward,                based on: (a)                analysis of drilling, geological, geophysical and engineering                data; (b)                the use of established technology; and (c)                specified economic conditions, which are generally accepted as being                reasonable, and which are disclosed.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                                                  |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| Resources                                             |   | Those                quantities of mineral deposit estimated to exist originally in naturally                occurring accumulations. Resources                are, therefore, those quantities estimated on a particular date to                be                remaining in known accumulations plus those quantities already produced                from known accumulations plus those quantities in accumulations yet                to be                discovered.Resources                are divided into: (a)                discovered resources, which are limited to known accumulations;                and (b)                undiscovered resources.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                                                  |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| Stratigraphic                units                    |   | A                body of rock established as a distinct entity, geologically classified,                based on any of the properties or attributes or combinations thereof                that                rocks possess.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                                                  |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| Tonne                                                 |   | A                metric ton which is equivalent to 2,200 pounds.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                                                  |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| Unproved                property                      |   | A                property or part of a property to which no reserves have been specifically                attributed.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |

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**Item      3. **
**LEGAL      PROCEEDINGS**
** **

**Item      4. **
**SUBMISSION      OF MATTERS TO A VOTE OF SECURITY HOLDERS**

| **Proposal                #1 -Increase Authorized Common Stock**                                                                                                                                                                               |   | **For** |       | **Against** |   | **Abstain** |   | **Broker                Non-Votes** |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------|------------|-------------|--------|-------------|--------|-------------------------------------|--------|
|                                                                                                                                                                                                                                           |   |    |       |        |   |        |   |                                |   |
| Approval                of an amendment to the Company's Articles                of Incorporation to increase                the authorized                shares of Common Stock from 50,000,000                shares to 160,000,000 shares. |   |    | 22,781,856 |        |   | 677,562     |   |                                | 39,463 |   |   | — |   |

**PART      II**

**Item      5. **
**MARKET      FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS**

*http://finance.yahoo.com*
*http://bigcharts.marketwatch.com*

|                                                                  |   | **Fiscal                Quarter** |                                                                                                                                                                                                                                                                                      | **High                Bid Price** |   | **Low                Bid Price** |   |
|-----------------------------------------------------------------------|--------|-----------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------|--------|----------------------------------|--------|
|                                                                  |   |                              |                                                                                                                                                                                                                                                                                      |                              |   |                             |   |   |   |   |
| **Fiscal                Year End****October                31, 2006** |   |                              | 4th                Quarter                (8/1/06 –                10/31/06)3rd                Quarter                (5/1/06 – 7/31/06)2nd                Quarter                (2/1/06 – 4/30/06)1st                Quarter                (11/1/05 – 1/31/06) |                         | $$$$   | 3.245.672.972.39                 |   | $$$$ | 1.512.451.820.72 |   |
|                                                                  |   |                              |                                                                                                                                                                                                                                                                                      |                              |   |                             |   |   |   |   |
| **Fiscal                Year End****October                31, 2005** |   |                              | 4th                Quarter                (8/1/05 – 10/31/05)3rd                Quarter                (5/1/05 – 7/31/05)2nd                Quarter                (2/1/05 – 4/30/05)1st                 Quarter                (11/1/04 – 1/31/05)          |                              | $$$$   | 1.251.452.092.31                 |   | $$$$ | 0.840.901.351.55 |   |

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| **Plan                Category**                                                                       |   | **Number                of securities to be****issued                upon exercise of****outstanding                options, warrants****and                rights** |   | **Weighted                average exercise****price                of outstanding****options,                warrants and rights** |   | **Number                of securities****remaining                available for****future                issuance** |
|--------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------|
|                                                                                                   |   |                                                                                                                                                                 |   |                                                                                                                               |   |                                                                                                                |
| Equity                compensation plans                approved by security                holders    |   |  3,360,000(1)                                                                                                                                                   |   |  $2.41                                                                                                                        |   |  2,426,000(2)                                                                                                  |
|                                                                                                   |   |                                                                                                                                                                 |   |                                                                                                                               |   |                                                                                                                |
| Equity                compensation plans                not approved bysecurity                holders |   |  227,353(3)                                                                                                                                                     |   |  $1.25                                                                                                                        |   | —                                                                                                             |
|                                                                                                   |   |                                                                                                                                                                 |   |                                                                                                                               |   |                                                                                                                |
| Total                                                                                                  |   | 3,587,353                                                                                                                                                            |   | $2.34                                                                                                                              |   | 2,426,000                                                                                                           |

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|   | (1) | Includes:                (i) options to acquire 610,000 shares of Common Stock under the Company’s                2000 Equity Incentive Plan; and (ii) options to acquire 2,750,000                shares                of common stock under the Company’s 2006 Stock Option Plan. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | Includes:                (i) 230,000 shares of Common Stock under the Company’s 2000 Equity                Incentive Plan; and (ii) 2,196,000 shares of common stock under the                Company’s 2006 Stock Option Plan. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (3) | Includes                (i) warrants to purchase 6,103 shares of Common Stock as compensation                for                services to Tomlinson Programs Inc., (ii) warrants to purchase 204,000                shares of Common Stock as compensation for services to Aegis Capital                Inc.,                and (iii) warrants to purchase 17,250 shares of Common Stock to an                independent director of the                Company. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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**Item      6. **
**MANAGEMENT'S      DISCUSSION AND ANALYSIS OR PLAN OF OPERATION**

*Cautionary      Statement about Forward-Looking Statements*

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

|   | · | The                timing of exploration activities; |
|--------|--------|------------------------------------------------------|

|   | · | Business                strategies and development of our business plan;                and |
|--------|--------|---------------------------------------------------------------------------------------------|

**Plan      of Operation **

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*Cautionary      Note*

**Results      of Operations **

*.*
** **
* *

**Liquidity      and Capital Resources **

** **

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**Critical      Accounting Policies **

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**Item      7. **
**FINANCIAL      STATEMENTS AND SUPPLEMENTARY DATA**

| **Item                8.** | **CHANGES                  IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL                  DISCLOSURE** |
|----------------------------|----------------------------------------------------------------------------------------------------------------------------|

**Item      8A.**
**Controls      and Procedures **

**ITEM      8B. Other Information**

**PART      III**

| **Item              9.** | **DIRECTORS,                EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH                SECTION                16(A) OF THE EXCHANGE ACT**  |
|--------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**MANAGEMENT**

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| **Name                of Director or Officer****and                Position in the Company**       |   | **Officer                or****Director                Since** |   | **Age**  |   | **Office(s)                Held and Other Business Experience**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|----------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------|--------|----------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  Merlin                BinghamPresident                and Chairman of the Board of Directors |   |  1996                                                     |   |  73 |   |  Since                October 1996, Mr. Bingham has been the President and Chairman of                the Board                of Directors of the Company. From 1963 to 1983 Mr. Bingham worked                in                exploration for mining and oil companies in the western U.S. and                Alaska,                Zambia, the United Arab Emirates, Ecuador and Mexico. From 1983 to                1996,                Mr. Bingham has been a consulting geologist. Mr. Bingham received                a B.S.                degree in Mineralogy from the University of Utah in                1963                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|                                                                                               |   |                                                           |   |     |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| Roger                Kolvoord, Executive                Vice President and                Director |   | Director                since 2002; Officer since 2003         |   | 67       |   | Dr.                Kolvoord has been a director of the Company since August 2002 and                was                appointed Vice President, Business in April 2003. Dr. Kolvoord has                a B.S.                degree in geology from the University of Michigan, a M.S. in Mineralogy                form the University of Utah, and a Ph.D. in geochemistry from the                University of Texas at Austin. He worked in exploration and exploration                research for Kennecott Copper Company, Ranchers Exploration and                Development Corporation, and ARCO, and operated a services company                providing field services to oil and gas and mining companies. He                has                extensive mining and energy exploration experience. He was a manager                with                the Boeing Company for 14 years, working mainly in program management                and                new business development capacities in information systems and in                remote                sensing and geospatial information (mapping) ventures. An Associate                Technical Fellow of the Boeing Company, he returned to private consulting                practice in 2000. Mr. Kolvoord is an active member of the American                Association of Petroleum Geologists and the Society of Mining Engineers.                He resides in the Puget Sound region of                Washington. |

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| **Name                  of Director or Officer****and                  Position in the Company** |   | **Officer                  or****Director                  Since** |   | **Age** |   | **Office(s)                  Held and Other Business Experience**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|--------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------|--------|---------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                             |   |                                                               |   |    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| Wesley                  Pomeroy, Director                                                   |   | 2005                                                               |   | 52      |   | Mr.                  Pomeroy was appointed to the Board of Directors in September 2005.                  Mr. Pomeroy is currently President of The Joe Dandy Mining Company,                  which has had gold properties in Cripple Creek, Colorado since                  1887. He is                  a member of the Front Range Oil and Gas LLC and the POMOCO LLC                  (Pomeroy                  Oil Company). He is also currently a consulting geologist with                  Vortex                  Petroleum Inc. and has been associated since 1977 with various                  exploration                  and oil and gas companies. Also since 1977 Mr. Pomeroy has been                  a member                  in good standing of the American Association of Petroleum Geologists                  and                  the Rocky Mountain Association of Geologists. Mr.                  Pomeroy received a Bachelor of Science degree in geology from Colorado                  State University in 1977 and an MBA from the University of Colorado                  in                  1990. Mr. Pomeroy is a registered Professional Geologist for the                  State of                  Wyoming. He resides in the Denver, Colorado area.                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                             |   |                                                               |   |    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| Robert                  Kramer, Director                                                         |   | 2006                                                               |   | 60      |   | Robert                  Kramer, C.A., was elected to the Board of Directors in July 2006.                   Mr. Kramer is the co-founder and Chief Executive Officer of Current                  Technology Corporation (OTCBB:CRTCF). The company was formed in                  1987 to                  research, develop and commercialize electrotherapeutic products                  for the                  treatment of hair loss. An entrepreneur by nature, with a particular                  interest in the financial sector, he has been a founder/principal                  of a                  number of private companies offering commercial mortgages, venture                  capital                  and tax driven investments. Prior to co-founding Current Technology,                  he                  was a joint venture partner in an enterprise that raised funding                  for                  approximately 20 public mining companies conducting exploration                  activities                  in Western Canada. A graduate of the University of California,                  Berkeley                  with a degree in economics, Mr. Kramer has been a member of the                  Canadian                  Institute of Chartered Accountants and the Institute of Chartered                  Accountants of British Columbia for over 30 years. Mr. Kramer is                  a                  Registered  Certified Public Accountant in the State of                  Illinois.  In 2005 he was admitted as a Fellow to The Institute of                  Chartered Securities and Administrators. |

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| **Name                  of Director or Officer****and                  Position in the Company** |   | **Officer                  or****Director                  Since** |   | **Age** |   | **Office(s)                  Held and Other Business Experience**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|--------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------|--------|---------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                             |   |                                                               |   |    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| Terry                  Brown, Vice                  President-Operations                         |   | 2005                                                               |   | 47      |   | Mr.                  Brown was appointed Vice President-Operations in September 2005.                  Mr.                  Brown has 22 years experience in the mining industry in the United                  States,                  Mexico and Chile and has most recently been active as a consulting                  geologist in Mexico. His background is in exploration and project                  management, mine development and feasibility studies, and mining                  operations. Mr. Brown is a Certified Professional Geologist and                  is a                  member of the American Institute of Professional Geologists and                  the                  Society of Economic Geologists. He received a Bachelor of Science                  degree                  in geology from the New Mexico Institute of Mining & Technology in                  1983. Mr. Brown resides in Chihuahua, Mexico.                                                                                                                                                                                                                                                                          |
|                                                                                             |   |                                                               |   |    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| Wayne                  Schoonmaker, Treasurer and Secretary                                      |   | 1997                                                               |   | 69      |   | Mr.                  Schoonmaker was appointed Secretary & Treasurer of the Company in                  August 1997 and has held that position since that time. He is also                  Secretary & Treasurer and Director of Independence Lead Mines Company                  of Wallace, Idaho. During the period of 1979 through 1993, Mr.                  Schoonmaker                  was employed at Asarco Incorporated as Chief Accountant of the                  Troy Mine                  and as Financial Manager of Asarco's Northwest Mining Department.                  From                  July 1978 to December 1978, Mr. Schoonmaker was Assistant Treasurer                  of the                  Bunker Hill Mining Company, and from 1964 to 1978, he was Assistant                  Secretary of Hecla Mining Company. Mr. Schoonmaker received a Bachelor                  of                  Science degree in Accounting from the University of Montana in                  1962 and an                  MBA from the University of Idaho in 1987. Mr. Schoonmaker is a                  Certified                  Public Accountant in the states of Idaho and                  Montana. |

----

**Item      10.**
**EXECUTIVE      COMPENSATION **

**SUMMARY        COMPENSATION TABLE**

| **FISCAL                YEAR COMPENSATION**                          |   | **LONG                TERM COMPENSATION** |         |
|----------------------------------------------------------------------|--------|-------------------------------------------|--------------|
|                                                                 |   |                                      |         |   |   |   |   |   |   | **Awards** |   | **Payouts** |   |
| **Name                and****Principal****Position**                 |   | **Year**                                  |         | **Salary****($)** |   | **Bonus****($)** |   | **Other****Annual****Compensation****(4)** |   | **Securities****Underlying****Option/SARs****Granted** |   | **Restricted                Shares****or                Restricted Share****Units** |   | **LTIP                Payouts****($)** |   | **All                other****Compensation****($)** |   |
|                                                                 |   |                                      |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Merlin                Bingham, President                             |   |                                      | 20062005     |   | $$ | 206,000201,563 |   | $$ | 00 |   | $$ | 00 |  |   | 1,000,0000 |   |   | 00 |   |   | 00 |   |   | 00 |   |
|                                                                 |   |                                      | 2004         |   | $ | 101,563 |   | $ | 0 |   | $ | 60,938 | (1) |   | 0 |   |   | 0 |   |   | 0 |   |   | 0 |   |
|                                                                 |   |                                      |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Roger                Kolvoord, Executive Vice President              |   |                                      | 20062005     |   | $$ | 187,00081,250 |   | $$ | 00 |   | $$ | 00 |  |   | 750,0000 |   |   | 00 |   |   | 00 |   |   | 00 |   |
|                                                                 |   |                                      | 2004         |   | $ | 118,750 |   | $ | 0 |   | $ | 74,479 | (1) |   | 0 |   |   | 0 |   |   | 0 |   |   | 0 |   |
|                                                                 |   |                                      |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Terry                Brown,Vice                President, Operations |   |                                      | 200620052004 |   | $$ | 125,00056,1600 |   | $$$ | 000 |   | $$$ | 000 |   |   | 250,00000 |   |   | 000 |   |   | 000 |   |   | 000 |   |

----

| (1) | Represents                the value of the shares of the Company’s Common Stock issued as                compensation for services rendered, based on the fair market value                of such                shares on the date of issuance. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Merlin      Bingham*

----

*Roger      Kolvoord*

*Terry      Brown*

**OPTION/SAR      GRANTS IN PREVIOUS YEAR - 2006**

**INDIVIDUAL      GRANTS**

| **Name**                      |   | **Number                of****Securities****Underlying****Options/SARs****Granted                (#)** |      | **%                of Total****Options/SARs****Granted                to****Employees                in****Fiscal                Year** |   | **Exercise                or****Base                Price ($)** |   | **Expiration                Date** |   |
|-------------------------------|--------|--------------------------------------------------------------------------------------------------------|-----------|-----------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------|--------|------------------------------------|--------|
|                          |   |                                                                                                   |      |                                                                                                                                    |   |                                                            |   |                               |   |   |   |   |   |
| Merlin                Bingham |   |                                                                                                   | 1,000,000 |                                                                                                                                    |   | 50                                                              | %      | $                                  | 2.59   |   |   | May                1, 2016 |   |
|                          |   |                                                                                                   |      |                                                                                                                                    |   |                                                            |   |                               |   |   |   |   |   |
| Roger                Kolvoord |   |                                                                                                   | 750,000   |                                                                                                                                    |   | 37.5                                                            | %      | $                                  | 2.59   |   |   | May                1, 2016 |   |
|                          |   |                                                                                                   |      |                                                                                                                                    |   |                                                            |   |                               |   |   |   |   |   |
| Terry                Brown    |   |                                                                                                   | 250,000   |                                                                                                                                    |   | 12.5                                                            | %      | $                                  | 2.59   |   |   | May                1, 2016 |   |

----

**AGGREGATED      OPTION/SAR EXERCISED IN LAST FINANCIAL YEAR**

**AND      FISCAL YEAR-END OPTION/SAR VALUES.**

| **Name**                      |   | **Shares                Acquired on****Exercise                (#)** |   | **Value                Realized ($)** |   | **Number                of Securities Underlying Unexercised Options/SARs at FY-End                (#)****Exercisable/****Unexercisable** |   | **Value                of****Unexercised                Options/SARs at****FY-End                ($)****Exercisable/****Unexercisable** |   |
|-------------------------------|--------|----------------------------------------------------------------------|--------|---------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------|--------|
|                          |   |                                                                 |   |                                  |   |                                                                                                                                      |   |                                                                                                                                    |   |   |   |   |   |
| Merlin                Bingham |   |                                                                 | Nil    |                                  |   | Nil                                                                                                                                       |   |                                                                                                                                    | Nil    |   |   | Nil |   |
|                          |   |                                                                 |   |                                  |   |                                                                                                                                      |   |                                                                                                                                    |   |   |   |   |   |
| Roger                Kolvoord |   |                                                                 | Nil    |                                  |   | Nil                                                                                                                                       |   |                                                                                                                                    | Nil    |   |   | Nil |   |
|                          |   |                                                                 |   |                                  |   |                                                                                                                                      |   |                                                                                                                                    |   |   |   |   |   |
| Terry                Brown    |   |                                                                 | Nil    |                                  |   | Nil                                                                                                                                       |   |                                                                                                                                    | Nil    |   |   | Nil |   |

----

**Item      11.**
**SECURITY      OWNERSHIP OF BENEFICIAL OWNERS AND MANAGEMENT**

| **Name                and Address of Beneficial Owner**                                                                                      |   | **Position**                                         |   | **Amount                and Nature of Metalline****Beneficial                Ownership** |   | **Percent                of Metalline****Common                stock** |
|----------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------|--------|------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------|
|                                                                                                                                         |   |                                                 |   |                                                                                     |   |                                                                   |
| Merlin                Bingham1330                E. Margaret Ave.Coeur                d’Alene, ID 83815                                |   | President                and Director                |   | 2,445,639(1)                                                                             |   | 6.9%                                                                   |
|                                                                                                                                         |   |                                                 |   |                                                                                     |   |                                                                   |
| Roger                Kolvoord1330                E. Margaret Ave. Coeur                d’Alene, ID 83815                               |   | Executive                Vice President and Director |   | 1,210,406(2)                                                                             |   | 3.5%                                                                   |
|                                                                                                                                         |   |                                                 |   |                                                                                     |   |                                                                   |
| Wayne                Schoonmaker1330                E. Margaret Ave. Coeur                d’Alene, ID 83815                            |   | Treasurer,                Secretary                  |   | 89,568                                                                                   |   | *                                                                      |
|                                                                                                                                         |   |                                                 |   |                                                                                     |   |                                                                   |
| Wesley                Pomeroy1330                E. Margaret Ave. Coeur                d’Alene, ID 83815                               |   | Director                                             |   | 592,000(3)                                                                               |   | 1.7%                                                                   |
|                                                                                                                                         |   |                                                 |   |                                                                                     |   |                                                                   |
| Terry                Brown1330                E. Margaret Ave. Coeur                d’Alene, ID 83815                                  |   | Vice                President-Operations             |   | 312,500(4)                                                                               |   | *                                                                      |
|                                                                                                                                         |   |                                                 |   |                                                                                     |   |                                                                   |
| Robert                Kramer1330                E. Margaret Ave. Coeur                d’Alene, ID 83815                                |   | Director                                             |   | 529,250(5)                                                                               |   | 1.5%                                                                   |
|                                                                                                                                         |   |                                                 |   |                                                                                     |   |                                                                   |
| All                current directors, executive officers and named executive officers                as a                group (six persons) |   |                                                 |   | 5,179,363(6)                                                                             |   | 13.9%                                                                  |

----

----

| **Plan                Category**                                                                        |   | **Number                of securities to be****issued                upon exercise of****outstanding                options, warrants****and                rights** |   | **Weighted                average exercise****price                of outstanding****options,                warrants and rights** |   | **Number                of securities****remaining                available for****future                issuance** |
|---------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------|
|                                                                                                    |   |                                                                                                                                                                 |   |                                                                                                                               |   |                                                                                                                |
| Equity                compensation plans                approved by security                holders     |   |  3,360,000(1)                                                                                                                                                   |   |  $2.41                                                                                                                        |   |  2,426,000(2)                                                                                                  |
|                                                                                                    |   |                                                                                                                                                                 |   |                                                                                                                               |   |                                                                                                                |
| Equity                compensation plans                not approved by security                holders |   |  227,353(3)                                                                                                                                                     |   |  $1.25                                                                                                                        |   |  —                                                                                                       |
|                                                                                                    |   |                                                                                                                                                                 |   |                                                                                                                               |   |                                                                                                                |
| Total                                                                                                   |   | 3,587,353                                                                                                                                                            |   | $2.34                                                                                                                              |   | 2,426,000                                                                                                           |

----

|   | (1) | Includes:                (i) options to acquire 610,000 shares of Common Stock under the Company’s                2000 Equity Incentive Plan; and (ii) options to acquire 2,750,000                shares                of common stock under the Company’s 2006 Stock Option Plan. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | Includes:                (i) 230,000 shares of Common Stock under the Company’s 2000 Equity                Incentive Plan; and (ii) 2,196,000 shares of common stock under the                Company’s 2006 Stock Option Plan. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (3) | Includes                (i) warrants to purchase 6,103 shares of Common Stock as compensation                for                services to Tomlinson Programs Inc., (ii) warrants to purchase 204,000                shares of Common Stock as compensation for services to Aegis Capital                Inc.,                and (iii) warrants to purchase 17,250 shares of Common Stock to an                independent director of the Company. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Item      12.**
**CERTAIN      RELATIONSHIPS AND RELATED TRANSACTIONS**

----

**PART      IV**

| **Item                  13.** |   | **EXHIBITS**                                                                                                                                                                                                    |
|-------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                          |   |                                                                                                                                                                                                            |
| (a)                           |   | Exhibits                                                                                                                                                                                                        |
|                          |   |                                                                                                                                                                                                            |
| 3.1(a)                        |   | Articles                  of Incorporation.1                                                                                                                                                                    |
|                          |   |                                                                                                                                                                                                            |
| 3.1(b)                        |   | Certificate                  of Amendment to Articles of Incorporation,2                  and                  enclosed herewith.                                                                               |
|                          |   |                                                                                                                                                                                                            |
| 3.2                           |   | Bylaws.2                                                                                                                                                                                                        |
|                          |   |                                                                                                                                                                                                            |
| 4.1                           |   | 2000                  Equity Incentive Plan, enclosed herewith.                                                                                                                                                 |
|                          |   |                                                                                                                                                                                                            |
| 4.2                           |   | 2006                  Stock Option Plan, enclosed herewith.                                                                                                                                                     |
|                          |   |                                                                                                                                                                                                            |
| 10.1                          |   | Subscription                  Agreement between the Company and subscribers, dated March 6,                  2006.3                                                                                             |
|                          |   |                                                                                                                                                                                                            |
| 10.2                          |   | Employment                  Agreement with Merlin Bingham, effective January 1, 2007, enclosed                  herewith.                                                                                       |
|                          |   |                                                                                                                                                                                                            |
| 10.3                          |   | Employment                  Agreement with Roger Kolvoord, effective January 1, 2007, enclosed                  herewith.                                                                                       |
|                          |   |                                                                                                                                                                                                            |
| 10.4                          |   | Employment                  Agreement with Terry Brown, effective January 1, 2007, enclosed                  herewith.                                                                                          |
|                          |   |                                                                                                                                                                                                            |
| 14                            |   | Code                  of Ethics, enclosed herewith.                                                                                                                                                             |
|                          |   |                                                                                                                                                                                                            |
| 21.1                          |   | Subsidiaries                  of the Registrant, enclosed herewith.                                                                                                                                             |
|                          |   |                                                                                                                                                                                                            |
| 31.1                          |   | Certification                  of CEO Pursuant to Exchange Act Rules 13a-14 and 15d-14, as adopted                  pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed                  herewith. |
|                          |   |                                                                                                                                                                                                            |
| 31.2                          |   | Certification                  of CFO Pursuant to Exchange Act Rules 13a-14 and 15d-14, as adopted                  pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed                  herewith. |
|                          |   |                                                                                                                                                                                                            |
| 32.1                          |   | Certification                  of CEO Pursuant to 18 U.S.C. Section 1350, as adopted pursuant                  to Section                  906 of the Sarbanes-Oxley Act of 2002, filed herewith.               |
|                          |   |                                                                                                                                                                                                            |
| 32.2                          |   | Certification                  of CFO Pursuant to 18 U.S.C. Section 1350, as adopted pursuant                  to Section                  906 of the Sarbanes-Oxley Act of 2002, filed herewith.               |
|                          |   |                                                                                                                                                                                                            |
| 99.1                          |   | Sierra                  Mojada location map.4                                                                                                                                                                   |

----

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

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

|   |   |
|--------|--------|
| (3) | Incorporated                by reference from Form 8-K, filed March 6,                2006. |
|-----|---------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|
| (4) | Incorporated                by reference from Form 10-KSB, filed January 31,                2006. |
|-----|---------------------------------------------------------------------------------------------------|

----

**Item      14.**
**PRINCIPAL      ACCOUNTANT FEES AND SERVICES.**

*de      minimis*

|   | · | Preapprove                all audit services that the auditor may provide to us or any subsidiary                (including, without limitation, providing comfort letters in connection                with securities underwritings or statutory audits) as required by                §10A(i)(1)(A) of the Exchange Act (as amended by the Sarbanes-Oxley                Act of                2002). |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Preapprove                all non-audit services (other than certain *de                minimis*                services described in §10A(i)(1)(B) of the Exchange Act (as amended by the                Sarbanes-Oxley Act of 2002)) that the auditors propose to provide                to us or                any of our subsidiaries. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**SIGNATURES**

|                                        |                                                                                    |                                       |
|---------------------------------------------|-----------------------------------------------------------------------------------------|--------------------------------------------|
|                                        | METALLINE                MINING COMPANY                                                 |
|                                   |                                                                               |                                  |
| Date:                January 31, 2007  | By:                                                                           | /s/ Merlin              Bingham  |
|                                        | Merlin                Bingham, President and Principal Executive                Officer |

|                                        |                                                                                        |                                          |
|---------------------------------------------|---------------------------------------------------------------------------------------------|-----------------------------------------------|
|                                   |                                                                                   |                                     |
| Date:                January 31, 2007  | By:                                                                               | /s/ Wayne              Schoonmaker  |
|                                        | Wayne                Schoonmaker, Secretary and Principal Accounting                Officer |

|                                        |                                    |                                       |
|---------------------------------------------|-----------------------------------------|--------------------------------------------|
|                                   |                               |                                  |
| Date:                January 31, 2007  | By:                           | /s/ Merlin              Bingham  |
|                                        | Merlin                Bingham, Director |

|                                          |                                        |                                    |
|-----------------------------------------------|---------------------------------------------|-----------------------------------------|
|                                          |                                   |                               |
| Date:                  January 31, 2007  | By:                               | /s/                Roger Kolvoord  |
|                                          | Roger                    Kolvoord, Director |

|                                              |                                            |                                                           |
|---------------------------------------------------|-------------------------------------------------|----------------------------------------------------------------|
|                                              |                                       |                                                      |
| Date:                      January 31, 2007  | By:                                   | /s/                    Wesley                    Pomeroy  |
|                                              | Wesley                        Pomeroy, Director |

|                                                  |                                                                          |                                              |
|-------------------------------------------------------|-------------------------------------------------------------------------------|---------------------------------------------------|
|                                                  |                                                                     |                                         |
| Date:                          January 31, 2007  | By:                                                                 | /s/ Robert                      Kramer  |
|                                                  | Robert                            Kramer,                            Director |

----

**METALLINE      MINING COMPANY**

|                                                                            |   | PAGE                NO.  |
|---------------------------------------------------------------------------------|--------|--------------------------|
| Report                of Independent Registered Public Accounting Firm          |   | F-1                      |
|                                                                            |   |                     |
| Financial                Statements:                                            |   |                     |
|                                                                            |   |                     |
| Consolidated                Balance Sheets                                      |   | F-2                      |
|                                                                            |   |                     |
| Consolidated                Statements of Operations                            |   | F-3                      |
|                                                                            |   |                     |
| Consolidated                Statements of Changes in Stockholders’ Equity |   | F-4                - F-6 |
|                                                                            |   |                     |
| Consolidated                Statements of Cash Flows                            |   | F-7                      |
|                                                                            |   |                     |
| Notes                to Consolidated Financial Statements                       |   | F-8                      |

----

**REPORT      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

*Certified      Public Accountants*

----

**METALLINE        MINING COMPANY**

**(AN        EXPLORATION STAGE COMPANY)**

**CONSOLIDATED        BALANCE SHEETS**

|                                                                                                              |   | October                    31, |        | October                    31, |   |
|-------------------------------------------------------------------------------------------------------------------|--------|--------------------------------|-------------|--------------------------------|--------|
|                                                                                                              |   | 2006                           |        | 2005                           |   |
| ASSETS                                                                                                            |   |                           |        |                           |   |   |   |
|                                                                                                              |   |                           |        |                           |   |   |   |
| CURRENT                    ASSETS                                                                                 |   |                           |        |                           |   |   |   |
| Cash                    and cash equivalents                                                                      |   | $                              | 689,994     |                           | $      | 213,369 |   |
| Marketable                    securities                                                                          |   |                           | 5,925,000   |                           |   | - |   |
| Accounts                    receivable                                                                            |   |                           | 35,934      |                           |   | 23,620 |   |
| Prepaid                    expenses                                                                               |   |                           | 14,288      |                           |   | 13,242 |   |
| Employee                    advances                                                                              |   |                           | -           |                           |   | 9,560 |   |
|  Total                    Current Assets                                                                     |   |                           | 6,665,216   |                           |   | 259,791 |   |
|                                                                                                              |   |                           |        |                           |   |   |   |
| PROPERTY                    CONCESSIONS                                                                           |   |                           |        |                           |   |   |   |
| Sierra                    Mojada, Mojada 3                                                                        |   |                           | 15,875      |                           |   | 15,875 |   |
| Fortuna                                                                                                           |   |                           | 76,725      |                           |   | 76,725 |   |
| Esmeralda                                                                                                         |   |                           | 255,647     |                           |   | 255,647 |   |
| Esmeralda                    I                                                                                    |   |                           | 180,988     |                           |   | 180,988 |   |
| U.M.                    Nortenos, Vulcano                                                                         |   |                           | 3,682,772   |                           |   | 3,682,772 |   |
| La                    Blanca                                                                                      |   |                           | 122,760     |                           |   | 122,760 |   |
|  Total                    Property Concessions                                                               |   |                           | 4,334,767   |                           |   | 4,334,767 |   |
|                                                                                                              |   |                           |        |                           |   |   |   |
| EQUIPMENT                                                                                                         |   |                           |        |                           |   |   |   |
| Office                    and mining equipment, net                                                               |   |                           | 611,966     |                           |   | 490,884 |   |
|  Total                    Equipment                                                                          |   |                           | 611,966     |                           |   | 490,884 |   |
|                                                                                                              |   |                           |        |                           |   |   |   |
| TOTAL                    ASSETS                                                                                   |   | $                              | 11,611,949  |                           | $      | 5,085,442 |   |
|                                                                                                              |   |                           |        |                           |   |   |   |
| LIABILITIES                    AND STOCKHOLDERS' EQUITY                                                           |   |                           |        |                           |   |   |   |
|                                                                                                              |   |                           |        |                           |   |   |   |
| CURRENT                    LIABILITIES                                                                            |   |                           |        |                           |   |   |   |
| Accounts                    payable                                                                               |   | $                              | 238,198     |                           | $      | 86,189 |   |
| Accounts                    payable - Related Parties                                                             |   |                           | 125,460     |                           |   | - |   |
| Accrued                    liabilities and expenses                                                               |   |                           | 116,162     |                           |   | 189,046 |   |
| Other                    liabilities                                                                              |   |                           | 10,000      |                           |   | 15,873 |   |
| Note                    payable, current portion                                                                  |   |                           | -           |                           |   | 4,209 |   |
|  Total                    Current Liabilities                                                                |   |                           | 489,820     |                           |   | 295,317 |   |
|                                                                                                              |   |                           |        |                           |   |   |   |
| LONG-TERM                    LIABILITIES                                                                          |   |                           |        |                           |   |   |   |
| Note                    payable, net of current portion                                                           |   |                           | -           |                           |   | 7,365 |   |
|                                                                                                              |   |                           |        |                           |   |   |   |
| COMMITMENTS                    AND CONTINGENCIES                                                                  |   |                           | -           |                           |   | - |   |
|                                                                                                              |   |                           |        |                           |   |   |   |
| STOCKHOLDERS'                    EQUITY                                                                           |   |                           |        |                           |   |   |   |
| Common                    stock, $0.01 par value; 160,000,000 shares authorized,                                  |   |                           |        |                           |   |   |   |
| 34,207,912                    and 20,404,585 shares issued and outstanding,                    respectively  |   |                           | 342,079     |                           |   | 204,047 |   |
| Additional                    paid-in capital                                                                     |   |                           | 26,831,539  |                           |   | 19,852,673 |   |
| Stock                    options and warrants                                                                     |   |                           | 11,763,347  |                           |   | 1,347,839 |   |
| Deficit                    accumulated during exploration stage                                                   |   |                           | (27,814,836 | )                              |   | (16,621,799 | ) |
|  Total                    Stockholders' Equity                                                               |   |                           | 11,122,129  |                           |   | 4,782,760 |   |
|                                                                                                              |   |                           |        |                           |   |   |   |
| TOTAL                    LIABILITIES AND STOCKHOLDERS' EQUITY                                                     |   | $                              | 11,611,949  |                           | $      | 5,085,442 |   |
|                                                                                                              |   |                           |        |                           |   |   |   |
|                                                                                                              |   |                           | (0          | )                              |   |   |   |

----

**METALLINE        MINING COMPANY **

**(AN        EXPLORATION STAGE COMPANY)**

**CONSOLIDATED        STATEMENTS OF OPERATIONS**

|                                                         |   |                           |        |                           |   | November                    8, |   |
|--------------------------------------------------------------|--------|--------------------------------|-------------|--------------------------------|--------|--------------------------------|--------|
|                                                         |   |                           |        |                           |   | 1993                           |   |
|                                                         |   |                           |        |                           |   | (Inception)                    |   |
|                                                         |   | Years                    Ended |        | to                             |   |
|                                                         |   | October                    31, |        | October                    31, |   | October                    31, |   |
|                                                         |   | 2006                           |        | 2005                           |   | 2006                           |   |
|                                                         |   |                           |        |                           |   |                           |   |
| REVENUES                                                     |   | $                              | -           |                           | $      | -                              |   | $ | - |   |
|                                                         |   |                           |        |                           |   |                           |   |   |   |   |
| GENERAL                    AND ADMINISTRATIVE EXPENSES       |   |                           |        |                           |   |                           |   |   |   |   |
| Salaries                    and payroll expenses             |   |                           | 5,558,746   |                           |   | 797,104                        |   |   | 8,796,363 |   |
| Office                    and administrative expenses        |   |                           | 415,281     |                           |   | 309,483                        |   |   | 1,404,227 |   |
| Taxes                    and fees                            |   |                           | 307,919     |                           |   | 95,353                         |   |   | 797,360 |   |
| Professional                    services                     |   |                           | 1,017,180   |                           |   | 328,954                        |   |   | 5,384,852 |   |
| Directors                    fees                            |   |                           | 1,836,165   |                           |   |                           |   |   | 1,836,165 |   |
| Property                    expenses                         |   |                           | 113,962     |                           |   | 186,057                        |   |   | 2,058,065 |   |
| Depreciation                                                 |   |                           | 89,355      |                           |   | 83,557                         |   |   | 431,245 |   |
| Exploration                    and research                  |   |                           | 2,078,777   |                           |   | 1,666,884                      |   |   | 7,412,863 |   |
| TOTAL                    GENERAL AND ADMINISTRATIVE EXPENSES |   |                           | 11,417,385  |                           |   | 3,467,392                      |   |   | 28,121,139 |   |
|                                                         |   |                           |        |                           |   |                           |   |   |   |   |
| LOSS                    FROM OPERATIONS                      |   |                           | (11,417,385 | )                              |   | (3,467,392                     | )      |   | (28,121,139 | ) |
|                                                         |   |                           |        |                           |   |                           |   |   |   |   |
| OTHER                    INCOME (EXPENSES)                   |   |                           |        |                           |   |                           |   |   |   |   |
| Miscellaneous                    ore sales, net of expenses  |   |                           | (30,896     | )                              |   | 7,964                          |   |   | 134,242 |   |
| VAT                    tax refunds                           |   |                           | 13,045      |                           |   | 119,615                        |   |   | 132,660 |   |
| Rental                    income                             |   |                           | 85,500      |                           |   | 8,500                          |   |   | 94,000 |   |
| Miscellaneous                    income (expense)            |   |                           | (14,484     | )                              |   | -                              |   |   | (14,484 | ) |
| Interest                    and investment income            |   |                           | 174,698     |                           |   | 29,758                         |   |   | 250,171 |   |
| Interest                    and financing expense            |   |                           | (3,515      | )                              |   | (606                           | )      |   | (290,286 | ) |
| TOTAL                    OTHER INCOME                        |   |                           | 224,348     |                           |   | 165,231                        |   |   | 306,302 |   |
|                                                         |   |                           |        |                           |   |                           |   |   |   |   |
| LOSS                    BEFORE INCOME TAXES                  |   |                           | (11,193,037 | )                              |   | (3,302,161                     | )      |   | (27,814,836 | ) |
|                                                         |   |                           |        |                           |   |                           |   |   |   |   |
| INCOME                    TAXES                              |   |                           | -           |                           |   | -                              |   |   | - |   |
|                                                         |   |                           |        |                           |   |                           |   |   |   |   |
| NET                    LOSS                                  |   | $                              | (11,193,037 | )                              | $      | (3,302,161                     | )      | $ | (27,814,836 | ) |
|                                                         |   |                           |        |                           |   |                           |   |   |   |   |
| BASIC                    AND DILUTED NET LOSS PER            |   |                           |        |                           |   |                           |   |   |   |   |
| COMMON                    SHARE                              |   | $                              | (0.36       | )                              | $      | (0.16                          | )      |   |   |   |
|                                                         |   |                           |        |                           |   |                           |   |   |   |   |
| BASIC                    AND DILUTED                         |   |                           |        |                           |   |                           |   |   |   |   |
| WEIGHTED                    AVERAGE NUMBER                   |   |                           |        |                           |   |                           |   |   |   |   |
| OF                    COMMON SHARES OUTSTANDING              |   |                           | 30,748,662  |                           |   | 20,014,313                     |   |   |   |   |

----

**METALLINE        MINING COMPANY **

**(AN        EXPLORATION STAGE COMPANY) **

**CONSOLIDATED        STATEMENT OF STOCKHOLDERS' EQUITY **

|                                                               |   | Common                    Stock             |      |        |   |                                                 |   |                                                       |      |                                                                     |   |                                                                                                                    |   |
|--------------------------------------------------------------------|--------|---------------------------------------------|-----------|--------|--------|-------------------------------------------------|--------|-------------------------------------------------------|-----------|--------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------|--------|
|                                                               |   | Number                      of  Shares |      | Amount |   | Additional                      Paid-in Capital |   | Stock                        Subscriptions Receivable |      | Stock                        Options                        and Warrants |   | Accumulated                          Deficit                          During Exploration                          Stage |   | Total |   |
| Common                    stock issuance                           |   |                                        |      |   |   |                                            |   |                                                  |      |                                                                     |   |                                                                                                                    |   |   |   |   |   |   |   |   |   |   |
| prior                    to inception (no value)                   |   |                                        | 960,800   |   | $      | 9,608                                           |   | $                                                     | (9,608    | )                                                                        | $      | -                                                                                                                       |   | $ | - |   | $ | - |   | $ | - |   |
|                                                               |   |                                        |      |   |   |                                            |   |                                                  |      |                                                                     |   |                                                                                                                    |   |   |   |   |   |   |   |   |   |   |
| 1:5                    reverse common stock split                  |   |                                        | (768,640  | )      |   | (7,686                                          | )      |                                                  | 7,686     |                                                                     |   | -                                                                                                                       |   |   | - |   |   | - |   |   | - |   |
|                                                               |   |                                        |      |   |   |                                            |   |                                                  |      |                                                                     |   |                                                                                                                    |   |   |   |   |   |   |   |   |   |   |
| Net                    loss for the year ended October 31, 1994    |   |                                        | -         |   |   | -                                               |   |                                                  | -         |                                                                     |   | -                                                                                                                       |   |   | - |   |   | (8,831 | ) |   | (8,831 | ) |
| Balances,                    October 31, 1994                      |   |                                        | 192,160   |   |   | 1,922                                           |   |                                                  | (1,922    | )                                                                        |   | -                                                                                                                       |   |   | - |   |   | (8,831 | ) |   | (8,831 | ) |
|                                                               |   |                                        |      |   |   |                                            |   |                                                  |      |                                                                     |   |                                                                                                                    |   |   |   |   |   |   |   |   |   |   |
| 3:1                    common stock split                          |   |                                        | 384,320   |   |   | 3,843                                           |   |                                                  | (3,843    | )                                                                        |   | -                                                                                                                       |   |   | - |   |   | - |   |   | - |   |
|                                                               |   |                                        |      |   |   |                                            |   |                                                  |      |                                                                     |   |                                                                                                                    |   |   |   |   |   |   |   |   |   |   |
| Net                    loss for the year ended October 31, 1995    |   |                                        | -         |   |   | -                                               |   |                                                  | -         |                                                                     |   | -                                                                                                                       |   |   | - |   |   | (7,761 | ) |   | (7,761 | ) |
| Balances,                    October 31, 1995                      |   |                                        | 576,480   |   |   | 5,765                                           |   |                                                  | (5,765    | )                                                                        |   | -                                                                                                                       |   |   | - |   |   | (16,592 | ) |   | (16,592 | ) |
|                                                               |   |                                        |      |   |   |                                            |   |                                                  |      |                                                                     |   |                                                                                                                    |   |   |   |   |   |   |   |   |   |   |
| Issuances                    of common stock as follows:           |   |                                        |      |   |   |                                            |   |                                                  |      |                                                                     |   |                                                                                                                    |   |   |   |   |   |   |   |   |   |   |
| -                    for par value at transfer of ownership        |   |                                        | 2,000     |   |   | 20                                              |   |                                                  | -         |                                                                     |   | -                                                                                                                       |   |   | - |   |   | - |   |   | 20 |   |
| -                    for cash at an average of $0.11 per share     |   |                                        | 1,320,859 |   |   | 13,209                                          |   |                                                  | 133,150   |                                                                     |   | -                                                                                                                       |   |   | - |   |   | - |   |   | 146,359 |   |
| -                    for services at an average of $0.08 per share |   |                                        | 185,000   |   |   | 1,850                                           |   |                                                  | 12,600    |                                                                     |   | -                                                                                                                       |   |   | - |   |   | - |   |   | 14,450 |   |
| -                    for computer equipment at $0.01 per share     |   |                                        | 150,000   |   |   | 1,500                                           |   |                                                  | 13,500    |                                                                     |   | -                                                                                                                       |   |   | - |   |   | - |   |   | 15,000 |   |
| -                    for mineral property at $0.01 per share       |   |                                        | 900,000   |   |   | 9,000                                           |   |                                                  | -         |                                                                     |   | -                                                                                                                       |   |   | - |   |   | - |   |   | 9,000 |   |
|                                                               |   |                                        |      |   |   |                                            |   |                                                  |      |                                                                     |   |                                                                                                                    |   |   |   |   |   |   |   |   |   |   |
| Net                    loss for the year ended October 31, 1996    |   |                                        | -         |   |   | -                                               |   |                                                  | -         |                                                                     |   | -                                                                                                                       |   |   | - |   |   | (40,670 | ) |   | (40,670 | ) |
| Balances,                    October 31, 1996                      |   |                                        | 3,134,339 |   |   | 31,344                                          |   |                                                  | 153,485   |                                                                     |   | -                                                                                                                       |   |   | - |   |   | (57,262 | ) |   | 127,567 |   |
|                                                               |   |                                        |      |   |   |                                            |   |                                                  |      |                                                                     |   |                                                                                                                    |   |   |   |   |   |   |   |   |   |   |
| Issuances                    of common stock as follows:           |   |                                        |      |   |   |                                            |   |                                                  |      |                                                                     |   |                                                                                                                    |   |   |   |   |   |   |   |   |   |   |
| -                    for cash at an average of $0.61 per share     |   |                                        | 926,600   |   |   | 9,266                                           |   |                                                  | 594,794   |                                                                     |   | -                                                                                                                       |   |   | - |   |   | - |   |   | 604,060 |   |
| -                    for services at an average of $0.74 per share |   |                                        | 291,300   |   |   | 2,913                                           |   |                                                  | 159,545   |                                                                     |   | -                                                                                                                       |   |   | - |   |   | - |   |   | 162,458 |   |
| -                    for payment of a loan at $0.32 per share      |   |                                        | 100,200   |   |   | 1,002                                           |   |                                                  | 30,528    |                                                                     |   | -                                                                                                                       |   |   | - |   |   | - |   |   | 31,530 |   |
|                                                               |   |                                        |      |   |   |                                            |   |                                                  |      |                                                                     |   |                                                                                                                    |   |   |   |   |   |   |   |   |   |   |
| Options                    issued as follows:                      |   |                                        |      |   |   |                                            |   |                                                  |      |                                                                     |   |                                                                                                                    |   |   |   |   |   |   |   |   |   |   |
| -                    300,000 options for cash                      |   |                                        | -         |   |   | -                                               |   |                                                  | 3,000     |                                                                     |   | -                                                                                                                       |   |   | - |   |   | - |   |   | 3,000 |   |
|                                                               |   |                                        |      |   |   |                                            |   |                                                  |      |                                                                     |   |                                                                                                                    |   |   |   |   |   |   |   |   |   |   |
| Net                    loss for the year ended October 31, 1997    |   |                                        | -         |   |   | -                                               |   |                                                  | -         |                                                                     |   | -                                                                                                                       |   |   | - |   |   | (582,919 | ) |   | (582,919 | ) |
| Balances,                    October 31, 1997                      |   |                                        | 4,452,439 |   |   | 44,525                                          |   |                                                  | 941,352   |                                                                     |   | -                                                                                                                       |   |   | - |   |   | (640,181 | ) |   | 345,696 |   |
|                                                               |   |                                        |      |   |   |                                            |   |                                                  |      |                                                                     |   |                                                                                                                    |   |   |   |   |   |   |   |   |   |   |
| Issuances                    of common stock as follows:           |   |                                        |      |   |   |                                            |   |                                                  |      |                                                                     |   |                                                                                                                    |   |   |   |   |   |   |   |   |   |   |
| -                    for cash at an average of $1.00 per share     |   |                                        | 843,500   |   |   | 8,435                                           |   |                                                  | 832,010   |                                                                     |   | -                                                                                                                       |   |   | - |   |   | - |   |   | 840,445 |   |
| -                    for cash and receivables at $1.00 per share   |   |                                        | 555,000   |   |   | 5,550                                           |   |                                                  | 519,450   |                                                                     |   | (300,000                                                                                                                | )      |   | - |   |   | - |   |   | 225,000 |   |
| -                    for services at an average of $0.53 per share |   |                                        | 41,800    |   |   | 418                                             |   |                                                  | 21,882    |                                                                     |   | -                                                                                                                       |   |   | - |   |   | - |   |   | 22,300 |   |
| -                    for mine data base at $1.63 per share         |   |                                        | 200,000   |   |   | 2,000                                           |   |                                                  | 323,000   |                                                                     |   | -                                                                                                                       |   |   | - |   |   | - |   |   | 325,000 |   |
|                                                               |   |                                        |      |   |   |                                            |   |                                                  |      |                                                                     |   |                                                                                                                    |   |   |   |   |   |   |   |   |   |   |
| Options                    issued or granted as follows:           |   |                                        |      |   |   |                                            |   |                                                  |      |                                                                     |   |                                                                                                                    |   |   |   |   |   |   |   |   |   |   |
| -                    1,200,000 options for cash                    |   |                                        | -         |   |   | -                                               |   |                                                  | 120,000   |                                                                     |   | -                                                                                                                       |   |   | - |   |   | - |   |   | 120,000 |   |
| -                    for financing fees                            |   |                                        | -         |   |   | -                                               |   |                                                  | -         |                                                                     |   | -                                                                                                                       |   |   | 60,000 |   |   | - |   |   | 60,000 |   |
| -                    for consulting fees                           |   |                                        | -         |   |   | -                                               |   |                                                  | -         |                                                                     |   | -                                                                                                                       |   |   | 117,000 |   |   | - |   |   | 117,000 |   |
|                                                               |   |                                        |      |   |   |                                            |   |                                                  |      |                                                                     |   |                                                                                                                    |   |   |   |   |   |   |   |   |   |   |
| Warrants                    issued for services                    |   |                                        | -         |   |   | -                                               |   |                                                  | -         |                                                                     |   | -                                                                                                                       |   |   | 488,980 |   |   | (488,980 | ) |   | - |   |
|                                                               |   |                                        |      |   |   |                                            |   |                                                  |      |                                                                     |   |                                                                                                                    |   |   |   |   |   |   |   |   |   |   |
| Net                    loss for the year ended October 31, 1998    |   |                                        | -         |   |   | -                                               |   |                                                  | -         |                                                                     |   | -                                                                                                                       |   |   | - |   |   | (906,036 | ) |   | (906,036 | ) |
| Balance,                    October 31, 1998                       |   |                                        | 6,092,739 |   | $      | 60,928                                          |   | $                                                     | 2,757,694 |                                                                     | $      | (300,000                                                                                                                | )      | $ | 665,980 |   | $ | (2,035,197 | ) | $ | 1,149,405 |   |

----

**METALLINE        MINING COMPANY **

**(AN        EXPLORATION STAGE COMPANY) **

**CONSOLIDATED        STATEMENT OF STOCKHOLDERS' EQUITY (CONTINUED) **

|                                                                 |   | Common                  Stock       |       |        |   |                                                                      |   |                                                                          |       |                                                                 |   |                                                                                                              |   |
|----------------------------------------------------------------------|--------|-------------------------------------|------------|--------|--------|----------------------------------------------------------------------|--------|--------------------------------------------------------------------------|------------|----------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------|--------|
|                                                                 |   | Number                    of Shares |       | Amount |   | Additional                      Paid-in                      Capital |   | Stock                      Subscriptions                      Receivable |       | Stock                      Options                      and Warrants |   | Accumulated                        Deficit                        During Exploration                        Stage |   | Total |   |
| Balance,                  October 31, 1998                           |   |                                | 6,092,739  |   | $      | 60,928                                                               |   | $                                                                        | 2,757,694  |                                                                 | $      | (300,000                                                                                                          | )      | $ | 665,980 |   | $ | (2,035,197 | ) | $ | 1,149,405 |   |
|                                                                 |   |                                |       |   |   |                                                                 |   |                                                                     |       |                                                                 |   |                                                                                                              |   |   |   |   |   |   |   |   |   |   |
| Issuances                  of common stock as follows:               |   |                                |       |   |   |                                                                 |   |                                                                     |       |                                                                 |   |                                                                                                              |   |   |   |   |   |   |   |   |   |   |
| -                  for cash at an average of $1.04 per share         |   |                                | 818,800    |   |   | 8,188                                                                |   |                                                                     | 842,712    |                                                                 |   | -                                                                                                                 |   |   | - |   |   | - |   |   | 850,900 |   |
| -                  for drilling fees at $0.90 per share              |   |                                | 55,556     |   |   | 556                                                                  |   |                                                                     | 49,444     |                                                                 |   | -                                                                                                                 |   |   | - |   |   | - |   |   | 50,000 |   |
|                                                                 |   |                                |       |   |   |                                                                 |   |                                                                     |       |                                                                 |   |                                                                                                              |   |   |   |   |   |   |   |   |   |   |
| Stock                  option and warrant activity as follows:       |   |                                |       |   |   |                                                                 |   |                                                                     |       |                                                                 |   |                                                                                                              |   |   |   |   |   |   |   |   |   |   |
| -                  exercise of options at $0.90 per share            |   |                                | 250,000    |   |   | 2,500                                                                |   |                                                                     | 267,500    |                                                                 |   | -                                                                                                                 |   |   | (45,000 | ) |   | - |   |   | 225,000 |   |
| -                  issuance of options for financing fees            |   |                                | -          |   |   | -                                                                    |   |                                                                     | -          |                                                                 |   | -                                                                                                                 |   |   | 216,000 |   |   | - |   |   | 216,000 |   |
| -                  expiration of options                             |   |                                | -          |   |   | -                                                                    |   |                                                                     | 60,000     |                                                                 |   | -                                                                                                                 |   |   | (60,000 | ) |   | - |   |   | - |   |
|                                                                 |   |                                |       |   |   |                                                                 |   |                                                                     |       |                                                                 |   |                                                                                                              |   |   |   |   |   |   |   |   |   |   |
| Stock                  subscription received                         |   |                                | -          |   |   | -                                                                    |   |                                                                     | -          |                                                                 |   | 300,000                                                                                                           |   |   | - |   |   | - |   |   | 300,000 |   |
|                                                                 |   |                                |       |   |   |                                                                 |   |                                                                     |       |                                                                 |   |                                                                                                              |   |   |   |   |   |   |   |   |   |   |
| Net                  loss for the year ended October 31, 1999        |   |                                | -          |   |   | -                                                                    |   |                                                                     | -          |                                                                 |   | -                                                                                                                 |   |   | - |   |   | (1,423,045 | ) |   | (1,423,045 | ) |
| Balance,                  October 31, 1999                           |   |                                | 7,217,095  |   |   | 72,172                                                               |   |                                                                     | 3,977,350  |                                                                 |   | -                                                                                                                 |   |   | 776,980 |   |   | (3,458,242 | ) |   | 1,368,260 |   |
|                                                                 |   |                                |       |   |   |                                                                 |   |                                                                     |       |                                                                 |   |                                                                                                              |   |   |   |   |   |   |   |   |   |   |
| Stock                  option and warrant activity as follows:       |   |                                |       |   |   |                                                                 |   |                                                                     |       |                                                                 |   |                                                                                                              |   |   |   |   |   |   |   |   |   |   |
| Exercise                  of options at $0.86 per share              |   |                                | 950,000    |   |   | 9,500                                                                |   |                                                                     | 1,090,750  |                                                                 |   | -                                                                                                                 |   |   | (288,000 | ) |   | - |   |   | 812,250 |   |
| Warrants                  issued for services                        |   |                                | -          |   |   | -                                                                    |   |                                                                     | -          |                                                                 |   | -                                                                                                                 |   |   | 55,000 |   |   | - |   |   | 55,000 |   |
|                                                                 |   |                                |       |   |   |                                                                 |   |                                                                     |       |                                                                 |   |                                                                                                              |   |   |   |   |   |   |   |   |   |   |
| Issuances                  of common stock as follows:               |   |                                |       |   |   |                                                                 |   |                                                                     |       |                                                                 |   |                                                                                                              |   |   |   |   |   |   |   |   |   |   |
| -                  for cash at an average of $2.77 per share         |   |                                | 1,440,500  |   |   | 14,405                                                               |   |                                                                     | 3,972,220  |                                                                 |   | -                                                                                                                 |   |   | - |   |   | - |   |   | 3,986,625 |   |
| -                  for services at $1.28 per share                   |   |                                | 120,000    |   |   | 1,200                                                                |   |                                                                     | 152,160    |                                                                 |   | -                                                                                                                 |   |   | - |   |   | - |   |   | 153,360 |   |
| -                  for equipment at $1.67 per share                  |   |                                | 15,000     |   |   | 150                                                                  |   |                                                                     | 24,850     |                                                                 |   | -                                                                                                                 |   |   | - |   |   | - |   |   | 25,000 |   |
|                                                                 |   |                                |       |   |   |                                                                 |   |                                                                     |       |                                                                 |   |                                                                                                              |   |   |   |   |   |   |   |   |   |   |
| Net                  loss for the year ended October 31, 2000        |   |                                | -          |   |   | -                                                                    |   |                                                                     | -          |                                                                 |   | -                                                                                                                 |   |   | - |   |   | (882,208 | ) |   | (882,208 | ) |
| Balances,                  October 31, 2000                          |   |                                | 9,742,595  |   |   | 97,427                                                               |   |                                                                     | 9,217,330  |                                                                 |   | -                                                                                                                 |   |   | 543,980 |   |   | (4,340,450 | ) |   | 5,518,287 |   |
|                                                                 |   |                                |       |   |   |                                                                 |   |                                                                     |       |                                                                 |   |                                                                                                              |   |   |   |   |   |   |   |   |   |   |
| Stock                  option and warrant activity as follows:       |   |                                |       |   |   |                                                                 |   |                                                                     |       |                                                                 |   |                                                                                                              |   |   |   |   |   |   |   |   |   |   |
| -                  Warrants exercised at $0.75 per share             |   |                                | 20,000     |   |   | 200                                                                  |   |                                                                     | 25,560     |                                                                 |   | -                                                                                                                 |   |   | (10,760 | ) |   | - |   |   | 15,000 |   |
| -                  Options issued for consulting fees                |   |                                | -          |   |   | -                                                                    |   |                                                                     | -          |                                                                 |   | -                                                                                                                 |   |   | 740,892 |   |   | - |   |   | 740,892 |   |
| -                  Warrants issued for consulting fees               |   |                                | -          |   |   | -                                                                    |   |                                                                     | -          |                                                                 |   | -                                                                                                                 |   |   | 144,791 |   |   | - |   |   | 144,791 |   |
|                                                                 |   |                                |       |   |   |                                                                 |   |                                                                     |       |                                                                 |   |                                                                                                              |   |   |   |   |   |   |   |   |   |   |
| Issuances                  of common stock as follows:               |   |                                |       |   |   |                                                                 |   |                                                                     |       |                                                                 |   |                                                                                                              |   |   |   |   |   |   |   |   |   |   |
| -                  for cash at $2.00 per share                       |   |                                | 250,000    |   |   | 2,500                                                                |   |                                                                     | 494,076    |                                                                 |   | -                                                                                                                 |   |   | 3,424 |   |   | - |   |   | 500,000 |   |
| -                  for cash of $210 and services at $2.07 per share  |   |                                | 21,000     |   |   | 210                                                                  |   |                                                                     | 43,260     |                                                                 |   | -                                                                                                                 |   |   | - |   |   | - |   |   | 43,470 |   |
| -                  for cash of $180 and services at $2.05 per share  |   |                                | 18,000     |   |   | 180                                                                  |   |                                                                     | 36,720     |                                                                 |   | -                                                                                                                 |   |   | - |   |   | - |   |   | 36,900 |   |
| -                  for services at $2.45 per share                   |   |                                | 6,000      |   |   | 60                                                                   |   |                                                                     | 14,640     |                                                                 |   | -                                                                                                                 |   |   | - |   |   | - |   |   | 14,700 |   |
| -                  for services at $1.50 per share                   |   |                                | 12,000     |   |   | 120                                                                  |   |                                                                     | 17,880     |                                                                 |   | -                                                                                                                 |   |   | - |   |   | - |   |   | 18,000 |   |
|                                                                 |   |                                |       |   |   |                                                                 |   |                                                                     |       |                                                                 |   |                                                                                                              |   |   |   |   |   |   |   |   |   |   |
| Net                  loss for the year ended October 31, 2001        |   |                                | -          |   |   | -                                                                    |   |                                                                     | -          |                                                                 |   | -                                                                                                                 |   |   | - |   |   | (2,069,390 | ) |   | (2,069,390 | ) |
| Balance,                  October 31, 2001                           |   |                                | 10,069,595 |   |   | 100,697                                                              |   |                                                                     | 9,849,466  |                                                                 |   | -                                                                                                                 |   |   | 1,422,327 |   |   | (6,409,840 | ) |   | 4,962,650 |   |
|                                                                 |   |                                |       |   |   |                                                                 |   |                                                                     |       |                                                                 |   |                                                                                                              |   |   |   |   |   |   |   |   |   |   |
| Issuances                  of common stock as follows:               |   |                                |       |   |   |                                                                 |   |                                                                     |       |                                                                 |   |                                                                                                              |   |   |   |   |   |   |   |   |   |   |
| -                  for cash at $2.00 per share                       |   |                                | 50,000     |   |   | 500                                                                  |   |                                                                     | 99,500     |                                                                 |   | -                                                                                                                 |   |   | - |   |   | - |   |   | 100,000 |   |
| -                  for cash and warrants at $1.50 per share          |   |                                | 96,000     |   |   | 960                                                                  |   |                                                                     | 134,400    |                                                                 |   | -                                                                                                                 |   |   | 8,640 |   |   | - |   |   | 144,000 |   |
| -                  for cash and warrants at $1.50 per share          |   |                                | 66,667     |   |   | 667                                                                  |   |                                                                     | 93,333     |                                                                 |   | -                                                                                                                 |   |   | 6,000 |   |   | - |   |   | 100,000 |   |
| -                  for compensation at an average of $1.23 per share |   |                                | 86,078     |   |   | 861                                                                  |   |                                                                     | 104,014    |                                                                 |   | -                                                                                                                 |   |   | - |   |   | - |   |   | 104,875 |   |
|                                                                 |   |                                |       |   |   |                                                                 |   |                                                                     |       |                                                                 |   |                                                                                                              |   |   |   |   |   |   |   |   |   |   |
| Stock                  option activity as follows:                   |   |                                |       |   |   |                                                                 |   |                                                                     |       |                                                                 |   |                                                                                                              |   |   |   |   |   |   |   |   |   |   |
| -                  for compensation at $0.61 per share               |   |                                | -          |   |   | -                                                                    |   |                                                                     | -          |                                                                 |   | -                                                                                                                 |   |   | 61,000 |   |   | - |   |   | 61,000 |   |
|                                                                 |   |                                |       |   |   |                                                                 |   |                                                                     |       |                                                                 |   |                                                                                                              |   |   |   |   |   |   |   |   |   |   |
| Net                  loss for the year ended October 31, 2002        |   |                                | -          |   |   | -                                                                    |   |                                                                     | -          |                                                                 |   | -                                                                                                                 |   |   | - |   |   | (765,765 | ) |   | (765,765 | ) |
| Balance,                  October 31, 2002                           |   |                                | 10,368,340 |   | $      | 103,685                                                              |   | $                                                                        | 10,280,713 |                                                                 | $      | -                                                                                                                 |   | $ | 1,497,967 |   | $ | (7,175,605 | ) | $ | 4,706,760 |   |

----

**METALLINE        MINING COMPANY **

**(AN        EXPLORATION STAGE COMPANY) **

**CONSOLIDATED        STATEMENT OF STOCKHOLDERS' EQUITY (CONTINUED) **

|                                                                              |   |                            |       |    |   |          |   |                           |       |        |   | Accumulated                       |   |   |       |
|-----------------------------------------------------------------------------------|--------|---------------------------------|------------|---------|--------|---------------|--------|--------------------------------|------------|-------------|--------|-----------------------------------|--------|--------|------------|
|                                                                              |   |                            |       |    |   | Additional    |   | Stock                          |       | Stock       |   | Deficit                    During |   |   |       |
|                                                                              |   | Common                    Stock |       | Paid-in |   | Subscriptions |   | Options                    and |       | Exploration |   |                              |   |
|                                                                              |   | Shares                          |       | Amount  |   | Capital       |   | Receivable                     |       | Warrants    |   | Stage                             |   | Total  |       |
|                                                                              |   |                            |       |    |   |          |   |                           |       |        |   |                              |   |   |       |
| Balance,                    October 31, 2002                                      |   |                            | 10,368,340 |    | $      | 103,685       |   | $                              | 10,280,713 |        | $      | -                                 |   | $      | 1,497,967  |   | $ | (7,175,605 | ) | $ | 4,706,760 |   |
|                                                                              |   |                            |       |    |   |          |   |                           |       |        |   |                              |   |   |       |   |   |   |   |   |   |   |
| Issuances                    of common stock as follows:                          |   |                            |       |    |   |          |   |                           |       |        |   |                              |   |   |       |   |   |   |   |   |   |   |
| -                    for cash at $2.00 per share                                  |   |                            | 100,000    |    |   | 1,000         |   |                           | 199,000    |        |   | -                                 |   |   | -          |   |   | - |   |   | 200,000 |   |
| -                    for cash at an average of $0.98 per share                    |   |                            | 849,000    |    |   | 8,489         |   |                           | 821,510    |        |   | -                                 |   |   | -          |   |   | - |   |   | 829,999 |   |
| -                    for cash and warrants at $1.50 per share                     |   |                            | 7,000      |    |   | 70            |   |                           | 9,847      |        |   | -                                 |   |   | 583        |   |   | - |   |   | 10,500 |   |
| -                    for compensation at an average of $1.25 per share            |   |                            | 391,332    |    |   | 3,913         |   |                           | 487,275    |        |   | -                                 |   |   | -          |   |   | - |   |   | 491,188 |   |
| -                    for services at an average of $1.23 per share                |   |                            | 91,383     |    |   | 914           |   |                           | 119,320    |        |   | -                                 |   |   | -          |   |   | - |   |   | 120,234 |   |
| -                    for subscriptions receivable at $1.00 per share              |   |                            | 38,000     |    |   | 380           |   |                           | 37,620     |        |   | (38,000                           | )      |   | -          |   |   | - |   |   | - |   |
|                                                                              |   |                            |       |    |   |          |   |                           |       |        |   |                              |   |   |       |   |   |   |   |   |   |   |
| Net                    loss for the year ended October 31, 2003                   |   |                            | -          |    |   | -             |   |                           | -          |        |   | -                                 |   |   | -          |   |   | (1,107,228 | ) |   | (1,107,228 | ) |
|                                                                              |   |                            |       |    |   |          |   |                           |       |        |   |                              |   |   |       |   |   |   |   |   |   |   |
| Balance,                    October 31, 2003                                      |   |                            | 11,845,055 |    |   | 118,451       |   |                           | 11,955,285 |        |   | (38,000                           | )      |   | 1,498,550  |   |   | (8,282,833 | ) |   | 5,251,453 |   |
|                                                                              |   |                            |       |    |   |          |   |                           |       |        |   |                              |   |   |       |   |   |   |   |   |   |   |
| Issuances                    of common stock as follows:                          |   |                            |       |    |   |          |   |                           |       |        |   |                              |   |   |       |   |   |   |   |   |   |   |
| -                    for cash at $1.00 per share, less issuance costs of $698,863 |   |                            | 7,580,150  |    |   | 75,802        |   |                           | 6,805,485  |        |   | -                                 |   |   | -          |   |   | - |   |   | 6,881,287 |   |
| -                    for compensation at an average of $1.26 per share            |   |                            | 120,655    |    |   | 1,207         |   |                           | 151,064    |        |   | -                                 |   |   | -          |   |   | - |   |   | 152,271 |   |
| -                    for services at various prices                               |   |                            | 141,286    |    |   | 1,413         |   |                           | 153,801    |        |   | -                                 |   |   | -          |   |   | - |   |   | 155,214 |   |
|                                                                              |   |                            |       |    |   |          |   |                           |       |        |   |                              |   |   |       |   |   |   |   |   |   |   |
| Stock                    subscription received                                    |   |                            | -          |    |   | -             |   |                           | -          |        |   | 38,000                            |   |   | -          |   |   | - |   |   | 38,000 |   |
|                                                                              |   |                            |       |    |   |          |   |                           |       |        |   |                              |   |   |       |   |   |   |   |   |   |   |
| Miscellaneous                    corrections and adjustments                      |   |                            | 64,263     |    |   | 643           |   |                           | (643       | )           |   | -                                 |   |   | -          |   |   | - |   |   | - |   |
|                                                                              |   |                            |       |    |   |          |   |                           |       |        |   |                              |   |   |       |   |   |   |   |   |   |   |
| Net                    loss for the year ended October 31, 2004                   |   |                            | -          |    |   | -             |   |                           | -          |        |   | -                                 |   |   | -          |   |   | (5,036,805 | ) |   | (5,036,805 | ) |
|                                                                              |   |                            |       |    |   |          |   |                           |       |        |   |                              |   |   |       |   |   |   |   |   |   |   |
| Balance,                    October 31, 2004                                      |   |                            | 19,751,409 |    |   | 197,515       |   |                           | 19,064,992 |        |   | -                                 |   |   | 1,498,550  |   |   | (13,319,638 | ) |   | 7,441,419 |   |
|                                                                              |   |                            |       |    |   |          |   |                           |       |        |   |                              |   |   |       |   |   |   |   |   |   |   |
| Common                    stock issued for cash at an average of $0.98 per        |   |                            |       |    |   |          |   |                           |       |        |   |                              |   |   |       |   |   |   |   |   |   |   |
| share                    with attached warrants valued at an average of           |   |                            |       |    |   |          |   |                           |       |        |   |                              |   |   |       |   |   |   |   |   |   |   |
| $0.28                    per share                                                |   |                            | 476,404    |    |   | 4,764         |   |                           | 329,806    |        |   | -                                 |   |   | 132,159    |   |   | - |   |   | 466,729 |   |
|                                                                              |   |                            |       |    |   |          |   |                           |       |        |   |                              |   |   |       |   |   |   |   |   |   |   |
| Common                    stock issued for compensation at an average             |   |                            |       |    |   |          |   |                           |       |        |   |                              |   |   |       |   |   |   |   |   |   |   |
| of                    $1.00 per share                                             |   |                            | 176,772    |    |   | 1,768         |   |                           | 175,005    |        |   | -                                 |   |   | -          |   |   | - |   |   | 176,773 |   |
|                                                                              |   |                            |       |    |   |          |   |                           |       |        |   |                              |   |   |       |   |   |   |   |   |   |   |
| Expiration                    of stock warrants                                   |   |                            | -          |    |   | -             |   |                           | 282,870    |        |   | -                                 |   |   | (282,870   | ) |   | - |   |   | - |   |
|                                                                              |   |                            |       |    |   |          |   |                           |       |        |   |                              |   |   |       |   |   |   |   |   |   |   |
| Net                    loss for the year ended October 31, 2005                   |   |                            | -          |    |   | -             |   |                           | -          |        |   | -                                 |   |   | -          |   |   | (3,302,161 | ) |   | (3,302,161 | ) |
|                                                                              |   |                            |       |    |   |          |   |                           |       |        |   |                              |   |   |       |   |   |   |   |   |   |   |
| Balance,                    October 31, 2005                                      |   |                            | 20,404,585 |    | $      | 204,047       |   | $                              | 19,852,673 |        | $      | -                                 |   | $      | 1,347,839  |   | $ | (16,621,799 | ) | $ | 4,782,760 |   |
|                                                                              |   |                            |       |    |   |          |   |                           |       |        |   |                              |   |   |       |   |   |   |   |   |   |   |
| Common                    stock issued for cash at an average of $0.80 per        |   |                            |       |    |   |          |   |                           |       |        |   |                              |   |   |       |   |   |   |   |   |   |   |
| share                    with attached warrants valued at $0.29 per share         |   |                            | 13,374,833 |    |   | 133,748       |   |                           | 7,153,399  |        |   |                              |   |   | 3,924,480  |   |   |   |   |   | 11,211,627 |   |
|                                                                              |   |                            |       |    |   |          |   |                           |       |        |   |                              |   |   |       |   |   |   |   |   |   |   |
| Common                    stock issued for services at $0.80 per share            |   |                            |       |    |   |          |   |                           |       |        |   |                              |   |   |       |   |   |   |   |   |   |   |
| with                    attached warrants valued at $0.29 per share               |   |                            | 73,650     |    |   | 736           |   |                           | 36,855     |        |   |                              |   |   | 21,358     |   |   |   |   |   | 58,949 |   |
|                                                                              |   |                            |       |    |   |          |   |                           |       |        |   |                              |   |   |       |   |   |   |   |   |   |   |
| Stock                    option and warrant activity as follows:                  |   |                            |       |    |   |          |   |                           |       |        |   |                              |   |   |       |   |   |   |   |   |   |   |
| -                    Options issued for compensation at $2.18 per share           |   |                            |       |    |   |          |   |                           |       |        |   |                              |   |   | 4,360,000  |   |   |   |   |   | 4,360,000 |   |
| -                    warrants issued for services at $1.92 per share              |   |                            |       |    |   |          |   |                           | (403,215   | )           |   |                              |   |   | 403,215    |   |   |   |   |   | - |   |
| -                    Options & warrants for directors fees at an average of   |   |                            |       |    |   |          |   |                           |       |        |   |                              |   |   |       |   |   |   |   |   |   |   |
| $2.17                    per share                                                |   |                            |       |    |   |          |   |                           |       |        |   |                              |   |   | 1,665,705  |   |   |   |   |   | 1,665,705 |   |
|                                                                              |   |                            |       |    |   |          |   |                           |       |        |   |                              |   |   |       |   |   |   |   |   |   |   |
| Modification                    of options                                        |   |                            |       |    |   |          |   |                           |       |        |   |                              |   |   | 48,000     |   |   |   |   |   | 48,000 |   |
|                                                                              |   |                            |       |    |   |          |   |                           |       |        |   |                              |   |   |       |   |   |   |   |   |   |   |
| Common                    stock issued for compensation at an average             |   |                            |       |    |   |          |   |                           |       |        |   |                              |   |   |       |   |   |   |   |   |   |   |
| of                    $0.80 per share                                             |   |                            | 248,593    |    |   | 2,486         |   |                           | 154,389    |        |   |                              |   |   |       |   |   |   |   |   | 156,875 |   |
|                                                                              |   |                            |       |    |   |          |   |                           |       |        |   |                              |   |   |       |   |   |   |   |   |   |   |
| Exercise                    of warrants at $1.25 per share                        |   |                            | 25,000     |    |   | 250           |   |                           | 38,250     |        |   |                              |   |   | (7,250     | ) |   |   |   |   | 31,250 |   |
|                                                                              |   |                            |       |    |   |          |   |                           |       |        |   |                              |   |   |       |   |   |   |   |   |   |   |
| Adjustment                    of private placement selling price                  |   |                            | 81,251     |    |   | 812           |   |                           | (812       | )           |   |                              |   |   |       |   |   |   |   |   | - |   |
|                                                                              |   |                            |       |    |   |          |   |                           |       |        |   |                              |   |   |       |   |   |   |   |   |   |   |
| Net                    loss for the year ended October 31, 2006                   |   |                            | -          |    |   | -             |   |                           | -          |        |   | -                                 |   |   | -          |   |   | (11,193,037 | ) |   | (11,193,037 | ) |
|                                                                              |   |                            |       |    |   |          |   |                           |       |        |   |                              |   |   |       |   |   |   |   |   |   |   |
| Balance,                    October 31, 2006                                      |   |                            | 34,207,912 |    | $      | 342,079       |   | $                              | 26,831,539 |        | $      | -                                 |   | $      | 11,763,347 |   | $ | (27,814,836 | ) | $ | 11,122,129 |   |

----

**METALLINE        MINING COMPANY**

**(AN        EXPLORATION STAGE COMPANY)**

**CONSOLIDATED        STATEMENTS OF CASH FLOWS**

|                                                                    |   |                           |        |                           |   | Period                    from      |   |
|-------------------------------------------------------------------------|--------|--------------------------------|-------------|--------------------------------|--------|-------------------------------------|--------|
|                                                                    |   |                           |        |                           |   | November                    8, 1993 |   |
|                                                                    |   |                           |        |                           |   | (Inception)                         |   |
|                                                                    |   | Years                    Ended |        |                           |   | to                                  |   |
|                                                                    |   | October                    31, |        | October                    31, |   | October                    31,      |   |
|                                                                    |   | 2006                           |        | 2005                           |   | 2006                                |   |
|                                                                    |   |                           |        |                           |   |                                |   |
| CASH                    FLOWS FROM OPERATING ACTIVITIES:                |   |                           |        |                           |   |                                |   |   |   |   |
| Net                    loss                                             |   | $                              | (11,193,037 | )                              | $      | (3,302,161                          | )      | $ | (27,814,836 | ) |
| Adjustments                    to reconcile net loss to net cash used   |   |                           |        |                           |   |                                |   |   |   |   |
| by                    operating activities:                             |   |                           |        |                           |   |                                |   |   |   |   |
| Depreciation                                                            |   |                           | 89,355      |                           |   | 83,557                              |   |   | 431,245 |   |
| Noncash                    expenses                                     |   |                           | -           |                           |   | -                                   |   |   | 126,864 |   |
| Common                    stock issued for services                     |   |                           | 58,949      |                           |   | -                                   |   |   | 1,025,487 |   |
| Common                    stock issued for compensation                 |   |                           | 156,875     |                           |   | 176,772                             |   |   | 977,106 |   |
| Options                    issued for compensation                      |   |                           | 4,360,000   |                           |   |                                |   |   | 4,360,000 |   |
| Options                    and warramts issued for directors fees       |   |                           | 1,665,705   |                           |   |                                |   |   | 1,665,705 |   |
| Stock                    options issued for services                    |   |                           | 48,000      |                           |   | -                                   |   |   | 849,892 |   |
| Stock                    options issued for financing fees              |   |                           | -           |                           |   | -                                   |   |   | 276,000 |   |
| Common                    stock issued for payment of expenses          |   |                           | -           |                           |   | -                                   |   |   | 326,527 |   |
| Stock                    warrants issued for services                   |   |                           | -           |                           |   | -                                   |   |   | 688,771 |   |
| (Increase)                    decrease in:                              |   |                           |        |                           |   |                                |   |   | - |   |
| Accounts                    receivable                                  |   |                           | (12,314     | )                              |   | 64,544                              |   |   | (35,934 | ) |
| Prepaid                    expenses                                     |   |                           | (1,046      | )                              |   | (11,190                             | )      |   | (14,288 | ) |
| Employee                    advances                                    |   |                           | 9,560       |                           |   | 24,462                              |   |   | - |   |
| Increase                    (decrease) in:                              |   |                           |        |                           |   |                                |   |   | - |   |
| Related                    party payable                                |   |                           | 125,460     |                           |   | -                                   |   |   | 125,460 |   |
| Accounts                    payable                                     |   |                           | 152,009     |                           |   | 28,959                              |   |   | 238,198 |   |
| Contracts                    payable                                    |   |                           | (4,209      | )                              |   | -                                   |   |   | - |   |
| Accrued                    liabilities and expenses                     |   |                           | (78,757     | )                              |   | 59,474                              |   |   | 126,162 |   |
| Net                    cash used by operating activities                |   |                           | (4,623,450  | )                              |   | (2,875,583                          | )      |   | (16,647,641 | ) |
|                                                                    |   |                           |        |                           |   |                                |   |   |   |   |
| CASH                    FLOWS FROM INVESTING ACTIVITIES:                |   |                           |        |                           |   |                                |   |   |   |   |
| Marketable                    securities                                |   |                           | (5,925,000  | )                              |   | 1,250,000                           |   |   | (5,925,000 | ) |
| Purchase                    of investments                              |   |                           | -           |                           |   | -                                   |   |   | (484,447 | ) |
| Proceeds                    from investments                            |   |                           | -           |                           |   | -                                   |   |   | 484,447 |   |
| Equipment                    purchases                                  |   |                           | (210,437    | )                              |   | (7,598                              | )      |   | (987,405 | ) |
| Mining                    property acquisitions                         |   |                           | -           |                           |   | -                                   |   |   | (4,452,631 | ) |
| Net                    cash used by investing activities                |   |                           | (6,135,437  | )                              |   | 1,242,402                           |   |   | (11,365,036 | ) |
|                                                                    |   |                           |        |                           |   |                                |   |   |   |   |
| CASH                    FLOWS FROM FINANCING ACTIVITIES:                |   |                           |        |                           |   |                                |   |   |   |   |
| Proceeds                    from sales of common stock                  |   |                           | 11,211,627  |                           |   | 466,729                             |   |   | 27,581,814 |   |
| Proceeds                    from sales of options and warrants          |   |                           | 31,250      |                           |   | -                                   |   |   | 981,140 |   |
| Deposits                    for sale of stock                           |   |                           | -           |                           |   | -                                   |   |   | 125,500 |   |
| Proceeds                    from shareholder loans                      |   |                           | -           |                           |   | -                                   |   |   | 30,000 |   |
| Payment                    of note payable                              |   |                           | (7,365      | )                              |   | (4,209                              | )      |   | (15,783 | ) |
| Net                    cash provided by financing activities:           |   |                           | 11,235,512  |                           |   | 462,520                             |   |   | 28,702,671 |   |
|                                                                    |   |                           |        |                           |   |                                |   |   |   |   |
| Net                    increase (decrease) in cash and cash equivalents |   |                           | 476,625     |                           |   | (1,170,661                          | )      |   | 689,994 |   |
| Cash                    and cash equivalents beginning of period        |   |                           | 213,369     |                           |   | 1,384,030                           |   |   | - |   |
|                                                                    |   |                           |        |                           |   |                                |   |   |   |   |
| Cash                    and cash equivalents end of period              |   | $                              | 689,994     |                           | $      | 213,369                             |   | $ | 689,994 |   |
| -                                                                       |   |                           |        |                           |   |                                |   |   |   |   |
|                                                                    |   |                           |        |                           |   |                                |   |   |   |   |
| SUPPLEMENTAL                    CASH FLOW DISCLOSURES:                  |   |                           |        |                           |   |                                |   |   |   |   |
|                                                                    |   |                           |        |                           |   |                                |   |   |   |   |
| Income                    taxes paid                                    |   | $                              | -           |                           | $      | -                                   |   | $ | - |   |
| Interest                    paid                                        |   | $                              | 3,515       |                           | $      | 606                                 |   | $ | 286,771 |   |
|                                                                    |   |                           |        |                           |   |                                |   |   |   |   |
| NON-CASH                    INVESTING AND FINANCING ACTIVITIES:         |   |                           |        |                           |   |                                |   |   |   |   |
|                                                                    |   |                           |        |                           |   |                                |   |   |   |   |
| Common                    stock issued for equipment                    |   | $                              | -           |                           | $      | -                                   |   | $ | 25,000 |   |
| Common                    stock options issued for financing fees       |   | $                              | -           |                           | $      | -                                   |   | $ | 276,000 |   |

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**METALLINE      MINING COMPANY**

**(AN      EXPLORATION STAGE COMPANY)**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS**

**OCTOBER      31, 2006**

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

**NOTE      2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

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**METALLINE      MINING COMPANY**

**(AN      EXPLORATION STAGE COMPANY)**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS**

**OCTOBER      31, 2006**

**NOTE      2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)**

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**METALLINE      MINING COMPANY**

**(AN      EXPLORATION STAGE COMPANY)**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS**

**OCTOBER      31, 2006**

**NOTE      2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)**

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**METALLINE      MINING COMPANY**

**(AN      EXPLORATION STAGE COMPANY)**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS**

**OCTOBER      31, 2006**

**NOTE      2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)**

----

**METALLINE      MINING COMPANY**

**(AN      EXPLORATION STAGE COMPANY)**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS**

**OCTOBER      31, 2006**

**NOTE      2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)**

|                                                  |   | October                31, |       |  October                31, |   |
|-------------------------------------------------------|--------|----------------------------|------------|----------------------------------|--------|
|                                                  |   | 2006                       |       |  2005                       |   |
| Net                operating loss carryforward        |   | $                          | 19,100,000 |                             | $      | 14,900,000 |   |
|                                                  |   |                       |       |                             |   |   |   |
| Deferred                tax asset                     |   | $                          | 6,500,000  |                             | $      | 5,000,000 |   |
| Deferred                tax asset valuation allowance |   | $                          | (6,500,000 | )                                | $      | (5,000,000 | ) |

----

**METALLINE      MINING COMPANY**

**(AN      EXPLORATION STAGE COMPANY)**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS**

**OCTOBER      31, 2006**

**NOTE      2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)**

*,      *

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**METALLINE      MINING COMPANY**

**(AN      EXPLORATION STAGE COMPANY)**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS**

**OCTOBER      31, 2006**

**NOTE      3 - PROPERTY AND EQUIPMENT**

|                                          |   | 2006   |      | 2005   |   |
|-----------------------------------------------|--------|--------|-----------|--------|--------|
| Communication                Equipment        |   | $      | 10,179    |   | $      |  |   |
| Mining                equipment               |   |   | 589,751   |   |   | 514,855 |   |
| Buildings                and structures       |   |   | 141,061   |   |   | 141,061 |   |
| Land                - non mineral             |   |   | 15,839    |   |   | 15,839 |   |
| Vehicles                                      |   |   | 152,030   |   |   | 42,068 |   |
| Computer                equipment             |   |   | 120,664   |   |   | 88,787 |   |
| Office                equipment               |   |   | 9,446     |   |   | 4,183 |   |
| Furniture                and fixtures         |   |   | 888       |   |   | 8,185 |   |
|                                          |   |   | 1,039,858 |   |   | 807,380 |   |
| Less:                Accumulated depreciation |   |   | (427,892  | )      |   | (324,094 | ) |
|                                          |   | $      | 611,966   |   | $      | 490,884 |   |

**NOTE      4 - PROPERTIES—CONCESSIONS**

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**METALLINE      MINING COMPANY**

**(AN      EXPLORATION STAGE COMPANY)**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS**

**OCTOBER      31, 2006**

**NOTE      4 - PROPERTIES—CONCESSIONS (continued)**

**NOTE      5 - LONG-TERM LIABILITIES**

|                                                   |   |  2006 |   |  2005 |   |
|--------------------------------------------------------|--------|------------|--------|------------|--------|
| Note                payable to bank, due July of 2008, |   |       |   |       |   |   |   |
| monthly                principal and interest payments |   |       |   |       |   |   |   |
| at                4.94%, collateralized by a vehicle   |   | $          | 0      |       | $      | 11,574 |   |
|                                                   |   |       |   |       |   |   |   |
| Less:                Current portion                   |   |       | 0      |       |   | (4,209 | ) |
|                                                   |   | $          | 0      |       | $      | 7,365 |   |

| The                Loan balances were paid off in the year ended October 31, 2006. |
|------------------------------------------------------------------------------------|

**NOTE      6 - RELATED PARTY TRANSACTIONS**

**NOTE      7 - COMMON STOCK **

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**METALLINE      MINING COMPANY**

**(AN      EXPLORATION STAGE COMPANY)**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS**

**OCTOBER      31, 2006**

**NOTE      7 - COMMON STOCK (continued) **

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**METALLINE      MINING COMPANY**

**(AN      EXPLORATION STAGE COMPANY)**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS**

**OCTOBER      31, 2006**

**NOTE      7 - COMMON STOCK (Continued)**

**NOTE      8 - STOCK OPTIONS**

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**METALLINE      MINING COMPANY**

**(AN      EXPLORATION STAGE COMPANY)**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS**

**OCTOBER      31, 2006**

**NOTE        8 - STOCK OPTIONS (continued)**

|                                                   |   | Shares |      |  Weighted                Average Exercise Price |   |
|--------------------------------------------------------|--------|--------|-----------|------------------------------------------------------|--------|
|                                                   |   |   |      |                                            |   |
| Options                outstanding at November 1, 2004 |   |   | 670,000   |                                                 | $      | 1.58 |   |
| Granted                                                |   |   | -         |                                                 |   | - |   |
| Canceled                                               |   |   | -         |                                                 |   | - |   |
| Exercised                                              |   |   | -         |                                                 |   | - |   |
| Options                outstanding at October 31, 2005 |   |   | 670,000   |                                                 |   | 1.58 |   |
| Granted                                                |   |   | 2,750,000 |                                                 |   | 2.59 |   |
| Canceled                                               |   |   | (60,000   | )                                                    |   | 1.32 |   |
| Exercised                                              |   |   | -         |                                                 |   | - |   |
| Options                outstanding at October 31, 2006 |   |   | 3,360,000 |                                                 | $      | 2.56 |   |

|  Options                Outstanding |      | Options                Exercisable |   |
|------------------------------------------|-----------|------------------------------------|--------|
|  Exercise                Price      |      | Number                Outstanding  |   | Weighted                Average Remaining Contractual Life (Years) |   | Weighted                Average Exercise Price |   | Number                Exercisable |   | Weighted                Average Exercise Price |   |
| $                                        | 1.30      |                               |   | 100,000 |   |   | 2.77 |   | $ | 1.30 |   |   | 100,000 |   | $ | 1.30 |   |
|                                     | 1.32      |                               |   | 310,000 |   |   | 3.93 |   |   | 1.32 |   |   | 310,000 |   |   | 1.32 |   |
|                                     | 2.59      |                               |   | 2,750,000 |   |   | 9.50 |   |   | 2.59 |   |   | 2750,000 |   |   | 2.59 |   |
|                                     | 2.15      |                               |   | 200,000 |   |   | 3.33 |   |   | 2.15 |   |   | 200,000 |   |   | 2.15 |   |
| $                                        | 1.30-2.59 |                               |   | 3,360,000 |   |   | 8.40 |   | $ | 2.41 |   |   | 3,360,000 |   | $ | 2.41 |   |

----

**METALLINE      MINING COMPANY**

**(AN      EXPLORATION STAGE COMPANY)**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS**

**OCTOBER      31, 2006**

**NOTE      9 - WARRANTS**

**NOTE      10 - COMMITMENTS AND CONTINGENCIES**

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**METALLINE      MINING COMPANY**

**(AN      EXPLORATION STAGE COMPANY)**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS**

**OCTOBER      31, 2006**

**NOTE      10 - COMMITMENTS AND CONTINGENCIES (continued)**

**NOTE      11 - JOINT VENTURE AGREEMENTS**

**NOTE      12 - SUBSEQUENT EVENTS**

----

**METALLINE      MINING COMPANY**

**(AN      EXPLORATION STAGE COMPANY)**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS**

**OCTOBER      31, 2006**

**NOTE      12 - SUBSEQUENT EVENTS (continued)**

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