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**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**








**FORM
      10-KSB**








x
            ANNUAL
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934




**For
      the fiscal year ended October 31, 2005**





o
            TRANSITION
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934




For
      the
      transition period from _____________ to _____________





Commission
      file number: **000-27667**





**Metalline
      Mining Company**


(Name
      of
      small business issuer in its charter)





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


**1330
      E. Margaret Ave.**


**Coeur
      d'Alene, ID 83815**


(Address
      of principal executive offices, Zip Code)





Issuer's
      telephone number: **(208)
      665-2002**





Securities
      registered under Section 12 (b) of the Exchange Act: None





Securities
      registered under Section 12 (g) of the Exchange Act:





Common
      Stock


(Title
      of
      class)





Check
      whether the issuer is not required to file reports pursuant to Section 13 or
      15(d) of the Exchange Act. o




Check
      whether the issuer (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Exchange Act during the past 12 months (or for such shorter period
      that the registrant was required to file such reports), and (2) has been subject
      to such filing requirements for the past 90 days.


Yes x 
No o





Check
      if
      there is no disclosure of delinquent filers in response to Item 405 of
      Regulation S-B contained in this form, and no disclosure will be contained,
      to
      the best of registrant's knowledge, in definitive proxy or information
      statements incorporated by reference in Part III of this Form 10-KSB or any
      amendment to this Form 10-KSB. x


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


Yes o 
No x


State
      issuer's revenues for its most recent fiscal year. None.





The
      aggregate market value of the voting and non-voting common equity held by
      non-affiliates computed by reference to the price at which the common equity
      was
      sold, as of January 4, 2006 was $16,447,793.





The
      number of shares of common stock outstanding as of January 4, 2006 was
      20,954,585.





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









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**METALLINE
      MINING COMPANY ANNUAL REPORT**


**ON
      FORM 10-KSB FOR THE FISCAL YEAR**


**ENDED
      OCTOBER 31, 2005**





TABLE
                OF CONTENTS
            PageFORWARD-LOOKING
                STATEMENTS
            iPART
                IItem
                1: Description of Business
            1Item
                2: Description of Property
            7Item
                3: Legal Proceedings
            9Item
                4: Submission of Matters to a Vote of Security
                Holders
            9PART
                IIItem
                5: Market for Common Equity and Related Stockholder
                Matters
            10Item
                6: Management's Discussion and Analysis or Plan of
                Operation
            11Item
                7: Financial Statements
            11Item
                8: Changes in and Disagreements with Accountants on
                Accounting and Financial Disclosure
            12Item
                8A: Controls and Procedures
            12Item
                8B: Other Information
            12PART
                IIIItem
                9: Directors and Executive Officers, Promoters and
                Control Persons; Compliance with Section 16(a) of the Exchange
                Act
            12Item
                10: Executive Compensation
            14Item
                11: Security Ownership of Certain Beneficial Owners
                and Management and Related Stockholder Matters
            15Item
                12: Certain Relationships and Related
                Transactions
            17Item
                13: Exhibits
            17Item
                14: Principal Accountant Fees and
                Services
            17Signatures
            18Index
                to Consolidated Financial
                Statements
            F/S-iExhibit
                Index
            E-1








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**METALLINE
      MINING COMPANY ANNUAL REPORT**


**ON
      FORM 10-KSB FOR THE FISCAL YEAR**


**ENDED
      OCTOBER 31, 2005**








**FORWARD-LOOKING
      STATEMENTS**





This
      annual report on Form 10-KSB contains forward-looking statements regarding
      future events and Metalline Mining Company's (the "Company's") future results
      that are subject to the safe harbors created under the Securities Act of 1933
      (the "Securities Act") and the Securities Exchange Act of 1934 (the "Exchange
      Act"). These statements are based on current expectations, estimates, forecasts,
      and projections about the industry in which the Company operates and the beliefs
      and assumptions of the Company's management. Words such as "expects,"
      "anticipates," "targets," "goals," "projects," "intends," "plans," "believes,"
      "seeks," "estimates," "continues," "may," variations of such words, and similar
      expressions are intended to identify such forward-looking statements. In
      addition, any statements that refer to projections of the Company's future
      financial performance, the Company's anticipated growth and potentials in its
      business, and other characterizations of future events or circumstances are
      forward-looking statements. Readers are cautioned that these forward-looking
      statements are only predictions and are subject to risks, uncertainties, and
      assumptions that are difficult to predict, including those identified elsewhere
      herein, including under "Risk Factors." Therefore, actual results may differ
      materially and adversely from those expressed in any forward-looking statements.
      The Company undertakes no obligation to revise or update any forward-looking
      statements for any reason.




-i-
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**METALLINE** **MINING COMPANY ANNUAL REPORT**


**ON
      FORM 10-KSB FOR THE FISCAL YEAR**


**ENDED
      OCTOBER 31, 2005**





**PART
      I**





**ITEM
      1.****DESCRIPTION
      OF BUSINESS.**





**Overview**





Metalline
      Mining Company (the "Company") is an exploration stage enterprise, formed under
      the laws of the state of Nevada on August 20, 1993, to engage in the business
      of
      mining. The Company currently owns eight concessions, which are located in
      the
      municipality of Sierra Mojada, Coahuila, Mexico. The Company's objective is
      to
      define sufficient mineral reserves on the Property to justify the development
      of
      a mechanized mining operation (the "Project"). The Company conducts its
      operations in Mexico through its wholly owned Mexican subsidiary, Minera Metalin
      S.A. de C.V. The **** Company
      currently has a total of five employees, including four full-time
      employees.





Mining
      operations are typically developed in phases. These phases include: 1) exploring
      to identify available mineral deposits and define a resource; 2) conducting
      a
      feasibility study to determine whether deposits may be profitably extracted;
      and
      3) eventually developing mining operations. The Company has already conducted
      extensive exploration and identification of the mineralization located on the
      concessions that it possesses in the Sierra Mojada mining district, or the
      District. The Company has also initiated a feasibility study. If the results
      of
      the feasibility study are positive and the Company is able to secure sufficient
      financing, then the Company would proceed to the development stage, leading
      eventually to the operation of a mine on the concessions.





Thus
      far,
      the Company has spent a total of approximately $13 million during the
      exploration phase and continues to maintain a sampling and drilling program
      that
      is budgeted at approximately $50,000 per month, not including analytical costs,
      which can vary from $20,000 to $40,000 per month. The Company estimates that
      completion of a feasibility study will cost approximately $5 million and the
      Company expects that it will take approximately 12 months to complete. Following
      the completion of a successful feasibility study, the Company would then proceed
      to the construction phase, which would entail construction of a mine and related
      infrastructure pursuant to a mine plan developed specifically for the Company's
      concessions, and construction of an extraction plant to extract metal from
      the
      ore that would be mined.





Much
      of
      the infrastructure required for a mine, including access to roads, electricity
      and rail lines, is already in place due to the historical mining operations
      conducted in the District. Results from mapping, sampling, drilling and
      inspection of existing workings indicate that large mineralized resources can
      be
      developed within and adjacent to the existing workings and in unexplored
      stratigraphic units outside of and below the existing mine workings. The Company
      anticipates that it would also build additional infrastructure, including mine
      access, a tailings pond and an extraction plant. The Company would also enter
      into agreements with the landowners of the concessions' surface rights upon
      completion of a feasibility study and finalization of a mine plan for the
      Project. The Company estimates that construction of a mine and extraction plant
      would cost approximately $400 million and take approximately two to three years
      to complete.





A
      description of work completed in the exploration phase and initiated in the
      feasibility phase follows:





In
      1997
      the Company initiated exploration of the concessions by collecting and analyzing
      historical data from previous mining operations, surveying the locations of
      the
      mines, geological mapping, and sampling of the surface and some of the existing
      mines. Based on the information gained from this work, the Company has been
      exploring the tabular, nearly horizontal bodies of mineralized material located
      on the concessions that are known as mantos.




-1-
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Exploration
      from 1997 to 1999 concentrated on the polymetallic copper, silver, zinc, lead
      mineralization north of the Sierra Mojada Fault. The Veta Rica, Once, San Jose
      and other mines located in the western part of the district were mapped and
      channel sampled. In the eastern part of the District in the Encantada and
      Fronteriza mines, copper, silver, zinc, lead mineralization has been mapped,
      channel sampled and drilled and is known as the Polymetallic Manto. Work on
      the
      polymetallic mineralization was put on standby in 1999 when the Company
      recognized the potential of the oxide zinc mineralization as a result of a
      positive feasibility study conducted on the Skorpion Mine located in Namibia,
      Africa, that demonstrated that the use of the solvent extraction electrowinning
      ("SXEW) process could make it profitable to mine oxide zinc deposits that would
      otherwise be unfeasible. Now that the Company's work on the oxide zinc
      mineralization is in the feasibility study stage, the Company anticipates
      continued exploration of the polymetallic mineral system north of the Sierra
      Mojada Fault. However, the Company has not yet allocated financial resources
      nor
      established a timeline for when it expects to initiate such additional
      exploration.





In
      September 1999, the Company entered into a joint venture agreement with North
      Ltd. of Australia. North Ltd. conducted a surface reverse circulation drill
      program that drilled 26 holes to explore the oxide zinc mineralization south
      of
      the Sierra Mojada Fault. North Ltd. was purchased by Rio Tinto for its iron
      ore
      holdings and in October 2000 Rio Tinto terminated the joint venture with the
      Company. Rio Tinto did not retain an interest in the Sierra Mojada
      concessions.





In
      November 2001, the Company entered into a joint venture agreement with Servios
      Industriales Penoles ("Penoles"), Mexico's second largest mining company.
      Penoles conducted exploration of the oxide zinc mineralization that included:
      channel sampling; driving raises vertically through the mineralized mantos;
      and
      surface and underground drilling. In November 2003, Penoles and the Company
      terminated their joint venture agreement by mutual consent. Penoles did not
      retain an interest in the concessions.





The
      Company initiated a diamond drill program in January 2004, and drilled over
      30,000 meters in 2004 and 2005. In addition, over 9,000 meters of percussion
      drill and over 12,000 meters of channel samples of the oxide zinc mineralization
      in the San Salvador, Encantada and Fronteriza mines has been completed by the
      Company and its joint venture partners. This work has defined a body of oxide
      zinc mineralization extending 1,500 meters in an east-west direction, 100 to
      200
      meters in a north-south direction, and 20 to 100 meters vertically. The Company
      intends to continue the drill program into the Esmeralda mine, the next mine
      to
      the west of the San Salvador, to further define the extent of the Iron Oxide
      Manto and the Smithsonite Manto.





Prior
      mining of oxide zinc mineralization has occurred intermittently over a distance
      in excess of 5 kilometers from the Oriental Mine located in the east end of
      the
      District to the Vasquez Tres Mine located in the west end of the District.
      Holes
      drilled 2,000 meters west of the San Salvador Mine intersected oxide zinc
      mineralization that is up to 140 meters (460 feet) thick and 10 meters (33
      feet)
      below the surface. Drilling has also intersected oxide zinc mineralization
      intermittently over the 2,000 meters between the Fronteriza mine and the
      Oriental mine.





In
      2004,
      the Company retained Reserva International, LLC, an independent contractor
      specializing in resource evaluation, to generate a block model evaluation based
      upon the data compiled from the Company's and its joint venture partner's
      accumulated database to determine the size and grade of the mineralization
      of
      the Iron Oxide Manto and the Smithsonite Manto. Based on the estimates generated
      from the block model evaluation, the Company has determined that the estimated
      mineralization justifies a feasibility study of the Iron Oxide
      Manto.





Although
      the Company is of the opinion that sufficient mineralized material has been
      defined to justify construction of a mine, extraction plant and refinery, the
      Company still must complete a feasibility study to determine whether a mining
      operation may be profitably conducted. This study will consist of a detailed
      engineering and economic valuation of the Iron Oxide Manto mineralized material
      to determine the viability and profitability of the potential
      operation.





The
      Company initiated the feasibility study in 2004, retaining Green Team
      Consultants Internation cc ("GTI"), of Johannesburg, South Africa. GTI was
      selected, in part, due to GTI's experience conducting the feasibility study
      for
      the Skorpion Mine in Namibia, Africa. GTI supervised the design, construction
      and training of the Skorpion Zinc personnel, and operated the mine and
      extraction plant through initial production and until the mine and plant were
      90% of capacity, at which point operation of the mine and plant was turned
      over
      to Skorpion Zinc, a subsidiary of Anglo American Corporation PLC.




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The
      Skorpion Mine is the first, and to date only, mine in the world using the SXEW
      process for extracting zinc from oxide zinc ore and produces a refined product,
      Super High Grade zinc which is 99.995% zinc. SXEW is a hydrometallurgical
      process that has about a 30% lower cost for extracting zinc than the
      pyrometallurgical process used at smelters by essentially all other mining
      operations around the world. The Company anticipates that using the SXEW process
      will enable the Company to extract zinc more efficiently and economically than
      its competitors.





GTI,
      as
      general contractor for the feasibility study, has retained TWP Consulting (pty)
      Ltd. ("TWP") to prepare the mine plan as part of the feasibility study for
      the
      Project. TWP is a large South African mining consulting company that has worked
      on large mining projects in South Africa and internationally, including the
      mine
      plan at the Skorpion Mine.





GTI
      has
      also retained Min-Tek, a South African consulting company specializing in
      mineral and metallurgical research and development, to complete the
      metallurgical work for the Project. Min-Tek performed the metallurgical work
      for
      the Skorpion feasibility studies.





GTI
      has
      also retained SRK Consulting ("SRK") as the auditing engineering firm for the
      feasibility study. SRK is a world-wide engineering consulting company that
      was
      the auditing engineering firm for the feasibility study of the Skorpion
      Mine.





Principals
      of GTI, TWP and SRK have completed a tour and examination of the Sierra Mojada
      Property, reviewed the project data, conducted underground examination of the
      Iron Oxide, Smithsonite and Polymetallic Mantos, and selected surface locations
      for the mine and extraction plant facilities.





On
      July
      12, 2005, the Company released the results of Mint-Tek's metallurgical test
      work. The test work focused on demonstrating the viability of using a
      combination of dense media separation ("DMS") and flotation processes to
      successfully produce a zinc oxide concentrate from a variety of samples taken
      from the Sierra Mojada mineralization. The report included a conceptual block
      flow diagram showing the key DMS and flotation steps followed by conventional
      zinc refining using leach, solvent extraction and electrowinning. The Company
      believes that the ability to produce a concentrate which can be shipped
      economically would be a major contributing factor to the potential success
      of
      the Project because it would allow the Company to choose the best site for
      a
      refinery based upon the tax regime, cost of power and other capital and
      operating cost inputs available at various locations. In addition, the report
      noted that acid-consuming mineral such as limestone and dolomite would be
      discarded in the concentration process, which would reduce sulphuric acid
      consumption in the refinery process.





Min-Tek's
      test work of the Sierra Mojada samples indicated that a zinc oxide concentrate
      with a zinc content of 30% can be produced at an overall concentrator zinc
      recovery of 75%-80%. The concentrate produced responded well to atmospheric
      leaching with dilute sulphuric acid, and refinery leach extraction efficiency
      was above 98%. The concentrator operating cost is expected to be approximately
      $5-$8 per ton of ore treated, which is offset by the fact that the sulphuric
      acid consumption in the refinery leach step is expected to be 70% less than
      that
      achievable with direct leaching of the ore.





The
      Company expects to continue to optimize the concentrating process route by
      conducting further test work to confirm key aspects of the flowsheet and to
      enhance overall recovery and concentrate grade. In particular, the incorporation
      of cleaner and scavenger steps in the flotation circuit and the potential to
      recover zinc from slimes produced in the process (currently considered to be
      discarded) provides further upside potential.





Feasibility
      study work continues to determine the mining method and its related costs and
      to
      determine the production rate. Drilling continues to explore the Iron Oxide
      Manto mineralization to the west in the San Salvador and La Esmeralda mines.
      In
      addition, surveying, mapping and channel sampling is being conducted in the
      La
      Esmeralda mine to determine the location of historic workings. No historic
      data
      is available for the La Esmeralda mine, which produced ore from the Lead Manto
      south of the Sierra Mojada Fault and the copper, silver, polymetallic
      mineralization north of the Sierra Mojada Fault. The Company expects that the
      decline to access the Iron Oxide Manto mineralization will enter through ground
      upon which La Esmeralda is located, and the location of the existing workings
      must be determined as part of the mine plan for the feasibility study. Channel
      samples in these workings have been collected and have produced a few thousand
      samples of mineralized material, which consist of north side copper-silver
      mineralization and south side oxide zinc mineralization. These samples have
      been
      prepared for assay and results will be announced when available.




-3-
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The
      Company has had a mining operation in the Smithsonite Manto that has been
      shipping zinc carbonate ore to Cameron Chemical Company, for use as a
      micronutrient for the fertilizer industry. During the period ended October
      31,
      2005, the Company realized other income from the sale of the zinc carbonate
      ore.
      The Company has ceased mining zinc carbonate ore, but anticipates continued
      sales from the existing inventory of mined ore until the inventory is
      depleted.





**Cautionary
      Note**





The
      Company is an exploration stage company and does not currently have any known
      reserves and cannot be expected to have reserves unless and until a feasibility
      study is completed for the Sierra Mojada concessions that shows proven and
      probable reserves. There can be no assurance that the Company's concessions
      contain proven and probable reserves and investors may lose their entire
      investment in the Company.





Set
      forth
      below and elsewhere in this Annual Report on Form 10-KSB and in other
      documents we file with the Securities and Exchange Commission are risks and
      uncertainties that could cause actual results to differ materially from the
      results contemplated by the forward-looking statements contained in this Annual
      Report on Form 10-KSB.





**Risk
      Factors**





**Exploration
      stage mining company with no history of operation.**





The
      Company is in its exploration stage, has no operating history, and is subject
      to
      all the risks inherent in a new business enterprise. The likelihood of success
      of the Company must be considered in light of the problems, expenses,
      difficulties, complication, and delays frequently encountered in connection
      with
      a new business, and the competitive and regulatory environment in which the
      Company will operate.





**No
      commercially mineable ore body.**





No
      commercially mineable ore body has been delineated on the properties, nor have
      any reserves been identified.





**Risks
      inherent in the mining industry.**





The
      Company is subject to all of the risks inherent in the mining industry
      including, without limitation, the following: 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 concession
      holder must pay fees and perform labor on the concessions to maintain the
      concessions title; 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; 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; 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 milling operations.




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**Nature
      of the industry.**





Exploration,
      development, and mining of mineral properties is highly speculative and involves
      unique and greater risks than are generally associated with other businesses.
      The Company's operations will be subject to all the operating hazards and risks
      normally incident to the exploration, development, and mining of mineral
      properties, including risks enumerated above and below.





**Fluctuating
      price for metals.**





The
      Company's operations will be greatly influenced by the prices of silver, copper,
      lead, zinc, and other metals. These prices fluctuate widely and are affected
      by
      numerous factors beyond the Company's control, including expectations for
      inflation, the strength of the United States dollar, global and regional demand
      and political and economic conditions and production costs in major metal
      producing regions of the world.





**Mining
      concessions.**





The
      Company holds mining concessions in Mexico. The Company holds title to the
      concessions that it owns subject to its obligation to maintain the concessions
      by conducting work on the concessions, recording evidence of the work with
      the
      Mexican Ministry of Mines and paying a semi-annual fee to the Mexican
      government. Ownership
      of the concessions provides the Company with exclusive exploration and
      exploitation rights of all minerals located on the concessions, but does not
      include the surface rights to the real property. Therefore, the Company will
      need to negotiate the necessary agreements, as needed, with the appropriate
      surface landowners if the Company determines that a mining operation is feasible
      for the concessions. The Company currently anticipates that it will build mining
      infrastructure needed on land owned by the local municipality. Initial
      communications with the municipality officials indicate that they will be
      willing to negotiate the necessary agreements, but there can be no assurance
      that an agreement that is satisfactory to the Company will be
      reached.





**Environmental
      controls.**





Compliance
      with statutory environmental quality requirements may necessitate significant
      capital outlays, may materially affect the earning power of the Company, or
      may
      cause material changes in the Company's intended activities. No assurance can
      be
      given that environmental standards imposed by either federal or state
      governments will not be changed or become more stringent, thereby possibly
      materially adversely affecting the proposed activities of the
      Company.





**Governmental
      regulation and environmental controls.**





The
      Company's activities are subject to extensive Mexican laws and regulations
      controlling not only the exploration for and development of mineral properties,
      but also the possible effect of such activities upon the environment. In its
      mining operations, the Company will use certain equipment, which will subject
      the Company to Mexican safety and health regulations. While the Company intends
      to act in compliance with all such regulations, any adverse ruling under any
      regulations, any imposition of a fine, or any imposition of more stringent
      regulations could require the Company to make additional capital expenditures
      that could impair its operations.





**Availability
      of water; shortages of supplies and materials.**





Water
      is
      essential in all phases of the exploration and development of mineral
      properties. It is used in such processes as exploration, drilling, leaching,
      placer mining, dredging, testing, and hydraulic mining. Any water that may
      be
      found will be subject to acquisition pursuant to appropriate governing laws.
      The
      Company has not determined the availability of water at Sierra Mojada, except
      to
      note that adequate water supplies are generally developed by drilling, but
      has
      not determined the cost of acquisition. Both the lack of available water and
      the
      cost of acquisition may make an otherwise viable project economically impossible
      to complete. The mineral industry has experienced from time to time shortages
      of
      certain supplies and materials necessary in the exploration for and evaluation
      of mineral deposits. The prices at which such supplies and materials are
      available have also greatly increased. There is a possibility that planned
      operations may be subject to delays due to such shortages and that further
      price
      escalations will increase the costs of the Company.




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**Uninsured
      risks.**





The
      Company may not be insured against all losses or liabilities, which may arise
      from operations, either because such insurance is unavailable or because the
      Company has elected not to purchase such insurance due to high premium costs
      or
      other reasons.





**Need
      for subsequent funding.**





The
      Company has an immediate need for additional funds in order to finance its
      proposed business operations. The Company's continued operations therefore
      will
      depend upon the availability of cash flow, if any, from its operations or its
      ability to raise additional funds through equity or debt financing. There is
      no
      assurance that the Company will be able to obtain additional funding when
      needed, or that such funding, if available, can be obtained on terms acceptable
      to the Company. If the Company cannot obtain needed funds, it may be forced
      to
      curtail or cease its activities.





**Need
      for additional key personnel.**





At
      the
      present, the Company employs four full-time and one part-time employee. The
      success of the Company's proposed business will depend, in part, upon the
      ability to attract and retain qualified employees. The Company believes that
      it
      will be able to attract competent employees, but no assurance can be given
      that
      the Company will be successful in this regard. If the Company is unable to
      engage and retain the necessary personnel, its business would be materially
      and
      adversely affected.





**Reliance
      upon directors and officers.**





The
      Company is wholly dependent, at the present, upon the personal efforts and
      abilities of its officers and directors who will exercise control over the
      day
      to day affairs of the Company. While the Company may solicit business through
      its officers, there can be no assurance as to the volume of business, if any,
      which the Company may succeed in obtaining, nor that its proposed operations
      will prove to be profitable. As of the date hereof, the Company does not have
      any commitments regarding its proposed operations and there can be no assurance
      that any commitments will be forthcoming.





**Non-arms'
      length transaction.**





The
      number of shares of common stock issued to certain shareholders of the Company
      for cash was arbitrarily determined and may not be considered the product of
      arm's length transactions.





**Indemnification
      of officers and directors for securities liabilities.**





The
      Bylaws of the Company provide that the Company may indemnify any director,
      officer, agent, and/or employee as to those liabilities and on those terms
      and
      conditions as are specified in the Nevada Business Corporation Act. Further,
      the
      Company may purchase and maintain insurance on behalf of any such persons
      whether or not the corporation would have the power to indemnify such person
      against the liability insured against. The foregoing could result in substantial
      expenditures by the Company and prevent any recovery from such officers,
      directors, agents, and employees for losses incurred by the Company as a result
      of their actions. Further, the Company has been advised that in the opinion
      of
      the Securities and Exchange Commission, indemnification is against public policy
      as expressed in the Securities Act of 1933, as amended, and is, therefore,
      unenforceable.




-6-
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                to Financial Statements**


**Competition.**





The
      Company believes that it will have competitors and potential competitors, many
      of whom may have considerably greater financial and other resources than the
      Company.





**Public
      market for securities.**





At
      present, the Company's common stock is traded under the symbol MMGG on the
      OTC
      Bulletin Board operated by the National Association of Securities Dealers,
      Inc.
      This market is a thinly traded market and lacks the liquidity of other public
      markets with which some investors may have more experience.





**Cumulative
      voting, preemptive rights and control.**





There
      are
      no preemptive rights in connection with the Company's common stock. The
      Company's shareholders may be further diluted in their percentage
      ownership of the Company in the event additional shares are issued by the
      Company in the future. Cumulative voting in the election of directors is not
      provided for. Accordingly, the holders of a majority of the shares of common
      stock, present in person or by proxy, will be able to elect all of the Company's
      Board of Directors.


**Sales
        of Unregistered Securities**
 
 The
        Company has financed its obligations to date by selling shares of its common
        stock in transactions that have not been registered under the Securities
        Act or
        registered or qualified under any applicable state or foreign securities
        laws.
        The Company has attempted to limit its sales to accredited investors in
        compliance with the exemptions from registration provided by the Securities
        Act
        and various state securities laws for private placement transactions. There
        can
        be no assurance, however, that the Company's sales will be deemed to be exempt
        by securities regulators. The Company is currently reviewing its sales of
        unregistered securities to determine whether these sales have complied with
        the
        appropriate exemptions for the states in which the Company has sold securities.
        A finding that the Company is liable for damages for past securities sales
        could
        have a material adverse effect on the Company.
 
 **Lack
        of Formal Market Study**
 
 The
        Company has not requisitioned a formal marketing study by an independent
        marketing organization to evaluate the demand for mineral resources that
        the
        Company intends to develop. The Company has conducted in-house evaluation
        of
        market factors to support its assessment of the mining industry and the demand
        for zinc, but there can be no assurance that there is sufficient demand to
        support the development of the Project and the sale of zinc or other metals
        that
        the Company may mine as part of the Project.




**No
      dividends anticipated.**





At
      the
      present time the Company does not anticipate paying dividends, cash or
      otherwise, on its common stock in the foreseeable future. Future dividends
      will
      depend on earnings, if any, of the Company, its financial requirements and
      other
      factors. There can be no assurance that the Company will pay
      dividends.





**ITEM
      2.****DESCRIPTION
      OF PROPERTY.**





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





Concession
            
            Title
                No.
            
            HectaresSierra
                Mojada
            
            
            198513
            
            
            4,767.3154Mojada
                3
            
            
            199246
            
            
            1,689.2173Esmeralda
            
            
            188765
            
            
            117.5025Esmeralda
                1
            
            
            187776
            
            
            97.6839Unificación
                Mineros Nortenos
            
            
            169343
            
            
            336.7905La
                Blanca
            
            
            188326
            
            
            33.5044Fortuna
            
            
            160461
            
            
            13.9582Vulcano
            
            
            83507
            
            
            4.4904Total
            
            
            
            
            
            7,060.4626





The
      eight
      concessions total 7,060 hectares (17,445 acres). The Company owns 100% of the
      eight concessions pursuant to purchase agreements with the previous owners.
      A
      number of prior established concessions that are not owned by the Company are
      located within the largest concession, the Sierra Mojada concession. The Company
      holds title to the concessions that it owns subject to its obligation to
      maintain the concessions by conducting work on the concessions, recording
      evidence of the work with the Mexican Ministry of Mines and paying a semi-annual
      fee to the Mexican government.





Ownership
      of a concession provides the owner with exclusive exploration and exploitation
      rights of all minerals located on the concessions, but does not include the
      surface rights to the real property. Therefore, the Company will need to
      negotiate the necessary agreements, as needed, with the appropriate surface
      landowners if the Company determines that a mining operation is feasible for
      the
      concessions. The Company currently anticipates that it will build mining
      infrastructure needed on land owned by the local municipality. Initial
      communications with the municipality officials indicate that they will be
      willing to negotiate the necessary agreements.




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 **Index
                to Financial Statements**


The
      concessions are located within a mining district known as the Sierra Mojada
      District (the "District"). The District is located in the west central part
      of
      the state of Coahuila, Mexico, near the Coahuila-Chihuahua state border
      approximately 200 kilometers south of the Big Bend of the Rio Grande River.
      See
      Exhibit 99.1 attached hereto and incorporated herein by reference for a map
      showing the location of the mine. The principal mining area extends for some
      5
      kilometers in an east-west direction along the base of the precipitous, 1,000
      meter high, Sierra Mojada Range. The District has high voltage electric power
      supplied by the national power company, Comision Federal de Electricidad, C.F.E.
      and is supplied water by the municipality of Sierra Mojada. The District is
      accessible from Torreon by vehicle via 250 kilometers of paved road. There
      is a
      well maintained, 1,100 meter, gravel airstrip in the District as well as a
      railroad connecting with the National Railway at Escalon and
      Monclova.





Over
      45
      mines have produced ore from underground workings throughout the approximately
      five kilometer by two kilometer area that comprises the District. The Company
      estimates that since its discovery in 1879, the District has produced about
      10
      million tons of high grade ore that was shipped directly to smelters. The
      District has never had a mill to concentrate ore and all mining conducted thus
      far has been limited to selectively mined ore of sufficient grade to direct
      ship
      to smelters. The Company believes that mill grade mineralization that was not
      mined remains available for extraction. The Company anticipates exploring and
      potentially developing the mill grade mineralization and the unexplored portions
      of the concessions.





The
      concessions contain two distinct mineral systems separated by the Sierra Mojada
      Fault which trends east-west along the base of the range. North of the fault
      mineralization composed of silver, copper, zinc, lead sulfide and oxide
      minerals. South of the fault the mineralization is oxide zinc and oxide lead
      minerals.





The
      sediments in the District are predominantly limestone and dolomite with some
      conglomerate, sandstone and shale and the bedding attitudes are near horizontal.
      The mines are dry and the rocks are competent. The thickness and attitude of
      the
      mineralized material is amenable to high volume mechanized mining methods and
      low cost production.





Much
      of
      the infrastructure required for a mine, including access to roads, electricity
      and rail lines, is already in place due to the historical mining operations
      conducted in the District. Results from mapping, sampling, drilling and
      inspection of existing workings indicate that large mineralized resources can
      be
      developed within and adjacent to the existing workings and in unexplored
      stratigraphic units outside of and below the existing mine workings. The Company
      anticipates that it would also build additional infrastructure, including mine
      access, a tailings pond and an extraction plant. The Company would also enter
      into agreements with the landowners of the concessions' surface rights upon
      completion of a feasibility study and finalization of a mine plan for the
      Project. The Company estimates that construction of a mine and extraction plant
      would cost approximately $400 million and take approximately two to three years
      to complete. The Company intends to finance this cost with a combination of
      equity and debt. In addition the Company may seek joint venture partners or
      other alternative financing sources as necessary to complete development of
      the
      Project.





The
      Company's corporate offices are located at 1330 East Margaret Avenue, Coeur
      d'Alene, Idaho 83815, and its telephone number is (208) 665-2002 and FAX is
      (208) 665-0041. The Company's facilities in Mexico include offices, residences,
      shops, warehouse buildings and mining equipment located at Calle Maria #1,
      La
      Esmeralda, Coahuila, Mexico. The Company's telephone and FAX number in Mexico
      is
      52 872 761 5129. Electric power has been upgraded to 13,200 volts and lines
      run
      to the compound, the shops and the San Salvador and Encantada mines. The San
      Salvador and the Encantada mines have been electrified and the main levels
      are
      wired. San Salvador and Encantada head frames and hoists have been rebuilt
      and
      upgraded. In management's opinion, the Company's properties may not be
      adequately covered by insurance. The Company has chosen not to obtain such
      insurance for the Company's properties in Mexico because it would be difficult
      to obtain and the cost of such insurance would outweigh its value. In
      management's opinion, the Company's plant and equipment are in good condition
      and well maintained.




-8-
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                to Table of Contents**
 **Index
                to Financial Statements**


**ITEM
      3.****LEGAL
      PROCEEDINGS.**





The
      Company is not currently a party to any legal proceedings.





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





There
      were no matters submitted to a vote of security holders during the fourth
      quarter of the fiscal year covered by this report.




-9-
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 **Index
                to Financial Statements**


**PART
      II**





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





The
      Company's shares are traded on the Over-the-Counter Bulletin Board operated
      by
      the National Association of Securities Dealers, Inc. under the trading symbol
      "MMGG." The Company's shares began trading on November 19, 1996. A summary
      of
      trading by quarter for 2005, 2004, and 2003 follows:





Fiscal
                Quarter
            
            High
                Bid(1)
            
            Low
                Bid(1)2005Fourth
                Quarter
            
            
            1.25
            
            
            0.84Third
                Quarter
            
            
            1.45
            
            
            0.90Second
                Quarter
            
            
            2.09
            
            
            1.35First
                Quarter
            
            
            2.31
            
            
            1.552004Fourth
                Quarter
            
            
            2.10
            
            
            1.57Third
                Quarter
            
            
            3.25
            
            
            1.64Second
                Quarter
            
            
            2.45
            
            
            1.75First
                Quarter
            
            
            3.21
            
            
            1.602003Fourth
                Quarter
            
            
            2.00
            
            
            1.18Third
                Quarter
            
            
            1.35
            
            
            1.10Second
                Quarter
            
            
            1.40
            
            
            1.01First
                Quarter
            
            
            1.45
            
            
            1.20





(1)
            These
                quotations reflect inter-dealer prices, without retail markup, markdown,
                or commissions, and may not represent actual
                transactions.





As
      of
      October 31, 2005, the Company had approximately 300 holders of record of its
      common stock.





The
      Company has not paid any dividends since its inception and does not anticipate
      paying any dividends on its common stock in the foreseeable future.





During
      the year ended October 31, 2003, the Company sold 7,000 common stock units
      with
      an ascribed cash value of $10,500. The Company also sold 849,000 shares (without
      warrants) at an average price of $0.98 per share. The Company also issued
      100,000 shares of common stock under the Penoles agreement for cash, at $2.00
      per share (see Note 12). Additionally, 373,925 shares of common stock valued
      at
      $468,771 were issued as compensation for officers. These shares were issued
      in
      private placement transactions without registration under the Securities Act
      in
      reliance upon the exemptions from the registration requirements provided by
      Section 4(2) and Rule 506 of Regulation D under the Securities Act.





During
      the year ended October 31, 2004, the Company issued a total of 7,580,150 shares
      of common stock to accredited investors for cash at $1.00 per share, realizing
      $6,881,287 after private placement costs of $698,863. Additionally, 141,286
      shares of common stock valued at an aggregate of $155,214 were issued for
      services and 120,655 shares of common stock valued at an aggregate of $152,271
      were issued as compensation to officers. These shares were issued in private
      placement transactions without registration under the Securities Act in reliance
      upon the exemptions from the registration requirements provided by Section
      4(2)
      and Rule 506 of Regulation D under the Securities Act.





During
      the year ended October 31, 2005, the Company issued 476,404 shares of common
      stock for cash at an average of $0.98 per share, for a total received of
      $466,729. In connection with the sale of these shares, for each share sold
      the
      Company also issued a warrant to purchase one additional share of common stock
      at an exercise price of $1.25 per share. In addition, 176,772 shares of common
      stock valued at an aggregate of $176,772 were issued as compensation to officers
      and employees. These securities were issued in private placement transactions
      without registration under the Securities Act in reliance upon the exemptions
      from the registration requirements provided by Section 4(2) and Rule 506 of
      Regulation D under the Securities Act.




-10-
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 **Index
                to Financial Statements**


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





**Plan
      of Operation**





The
      Company's plan of operation for the next twelve months, subject to maintaining
      sufficient funds, is to conduct a feasibility study for the Company's Sierra
      Mojada Project to determine whether a mining operation may be profitably
      conducted on the Company's concessions. The study is expected to include a
      detailed engineering and economic valuation of the Iron Oxide Manto mineralized
      material with continued geologic mapping of the surface and underground
      workings, sampling and drilling to explore for additional mineralization, and
      compilation of the data into a computer data base for reserve calculation to
      determine whether a mining operation can be economically conducted on the
      Company's Sierra Mojada concessions. See "Description of Business."





In
      order
      to finance the initiation of the feasibility study, the Company has raised
      capital by selling unregistered shares of its common stock in a private
      placement offering. The Company anticipates that the funds that it has raised
      will be sufficient to maintain operations for the next twelve months, but there
      can be no assurance that the Company has sufficient funds to complete the
      feasibility study. If the Company is unable to raise additional capital, it
      may
      have to cease operations.





Due
      to
      the Company's lack of revenues, the Company's independent certified public
      accountants included a paragraph in the Company's 2005 financial statements
      relative to a going concern uncertainty. The Company has financed its
      obligations during the 2004-2005 fiscal year by its sale of 476,404 shares
      at an
      average price of $0.98 per share.





**ITEM
      7.****FINANCIAL
      STATEMENTS.**





The
      selected financial data set forth below has been derived from, and should be
      read in conjunction with the Company's financial statements and the notes
      thereto, and Item 6 of this report entitled "Management's Discussion and
      Analysis or Plan of Operation. The selected financial data for the two years
      ended October 31, 2005 have been derived from the Company's audited consolidated
      financial statements beginning on page F/A-1, and incorporated by reference
      herein.





The
      selected financial data should be read in conjunction with and is qualified
      by
      such financial statements and the notes thereto.





**Selected
      Financial Data**





2005
            
            2004Summary
                of Balance Sheets:Working
                capital
            
            $
            (35,526
            )
            $
            2,551,383Current
                assets
            
            
            259,791
            
            
            2,758,268Total
                assets
            
            
            5,085,442
            
            
            7,659,878Current
                liabilities
            
            
            295,317
            
            
            206,885Long-term
                obligation
            
            
            7,365
            
            
            11,574Total
                liabilities
            
            
            302,682
            
            
            218,459Stockholder's
                equity
            
            
            4,782,760
            
            
            7,441,419Summary
                of Statements of Operations:Revenues
            
            
            0
            
            
            0Net
                loss (1)
            
            
            (3,302,161
            )
            
            (5,036,805
            )Net
                loss per share
            
            
            (0.16
            )
            
            (0.30
            )





(1)
            Cumulative
                losses for period from inception (Nov. 8, 1993) through October 31,
                2005
                were $16,611,799.






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 **Index
                to Financial Statements**


**ITEM
      8.****CHANGES
      IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.**





There
      have been no disagreements on accounting and financial disclosures through
      the
      date of this 10-KSB.




**ITEM
      8A.****CONTROLS
      AND PROCEDURES.**





**Disclosure
      Controls and Procedures.**





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





**Changes
      in Internal Control Over Financial Reporting.**




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





**ITEM
      8B.****OTHER
      INFORMATION.**





Not
      Applicable.





**PART
      III**





**ITEM
      9.****DIRECTORS,
      EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION
      16(a)
      OF THE EXCHANGE ACT.**





The
      officers and directors of the Company are as follows:





Name
            
            Age
            
            PositionMerlin
                Bingham
            
            72
            
            President
                and Chairman of the Board of DirectorsRoger
                Kolvoord
            
            65
            
            Vice
                President-Business and Member of the Board of DirectorsWesley
                A. Pomeroy
            
            51
            
            Member
                of the Board of DirectorsTerry
                J. Brown
            
            46
            
            Vice
                President-OperationsWayne
                Schoonmaker
            
            68
            
            Secretary
                & Treasurer





All
      directors hold office until the next annual meeting of shareholders or until
      their successors have been elected and qualified. The Company's officers are
      elected by the Board of Directors at the annual meeting and hold office until
      their death, or until they resign.





The
      Company's Board of Directors is responsible for the oversight and management
      of
      the Company. The Board does not have a separately-designated standing audit
      committee because the entire Board of Directors acts as the Company's audit
      committee. The Board has not designated an audit committee financial expert,
      as
      that term is defined in the Exchange Act rules promulgated by the SEC, because
      of the size of the Board and because the Company is still an exploration stage
      company.




-12-
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 **Index
                to Financial Statements**


**Officer
      and Director Biographies:**





Merlin
      Bingham, President, and Chairman of the Board of Directors





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. Since 1983, 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 - Vice President-Business and Director





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. An
      active member of the American Association of Petroleum Geologists, he served
      two
      terms as the Pacific Section Councilor of the Energy Minerals Division and
      is
      currently Chair of the Geospatial Information Committee. He resides in the
      Puget
      Sound region of Washington.





Wesley
      A.
      Pomeroy - Director





Mr.
      Pomeroy was appointed to the Board of Directors in September 2005 to fill an
      existing vacancy. Mr. Pomeroy is currently President of The Joe Dandy
      Mining Company, with gold properties in Cripple Creek, Colorado, and 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. 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.


He
      resides in the Denver, Colorado area.





Terry
      J.
      Brown - Vice President-Operations





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 - Secretary & Treasurer





Mr.
      Schoonmaker was appointed Secretary & Treasurer of the Company in August
      1997 and has held that position since that time. He is also currently Secretary
      & Treasurer of Hanover Gold Company, Inc. of Spokane, Washington and
      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.




-13-
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                to Table of Contents**
 **Index
                to Financial Statements**


**Section
      16(a) Beneficial Ownership Reporting Compliance**





Under
      Section 16(a) of the Securities Exchange Act of 1934, and the rules and
      regulations promulgated thereunder, the Company's directors, executive officers
      and beneficial owners of more than 10% of any registered class of the Company's
      equity securities are required to file reports of their ownership of the
      Company's securities and any changes in that ownership with the SEC. Based
      solely on its review of copies of these reports and on written representations
      from such reporting persons, the Company believes that during 2005 such filing
      requirements were complied with.





**Code
      of Ethics**





The
      Company has not yet adopted a code of ethics that applies to the Company's
      principal executive officer, and principal financial officer because of the
      limited size of the Company and its management team, and because the Company
      is
      still an exploration stage company.





**ITEM
      10.****EXECUTIVE
      COMPENSATION.**





**Summary
      Compensation Table**





The
      following table sets forth information concerning compensation received from
      the
      Company by each of the executive officers for services in all capacities to
      the
      Company and its subsidiaries for the last four years. This information includes
      the dollar value of base salaries, bonus awards and number of stock options
      granted, and certain other compensation, if any.




**Long-Term
                Compensation****Annual
                Compensation**
            
            **Awards****Fiscal**
            
            
            
            
            
            **Other
                Annual**
            
            **Securities**
            
            **All
                Other****Year**
            
            **Salary**
            
            **Bonus**
            
            **Compensation**
            
            **Underlying**
            
            **Compen****sation****Name
                and Principal Position**
            
            **ended**
            
            **(US$)**
            
            **(US$)**
            
            **(US$)**
            
            **Options
                (#)**
            
            **(US$)**Merlin
                Bingham
            
            
            2005
            
            
            201,563
            
            
            0
            
            
            0
            
            
            0
            
            
            0President
            
            
            2004
            
            
            101,563
            
            
            0
            
            
            60,938(1
            )
            
            0
            
            
            02003
            
            
            33,854
            
            
            0
            
            
            135,417(1
            )
            
            0
            
            
            02002
            
            
            48,000
            
            
            0
            
            
            40,625(1
            )
            
            0
            
            
            0Roger
                Kolvoord
            
            
            2005
            
            
            81,250
            
            
            0
            
            
            0
            
            
            0
            
            
            0Vice
                President
            
            
            2004
            
            
            118,750
            
            
            0
            
            
            74,479(1
            )
            
            0
            
            
            02003
            
            
            33,854
            
            
            0
            
            
            155,729(1
            )
            
            0
            
            
            02002
            
            
            0
            
            
            
            
            
            0
            
            
            100,000
            
            
            0Wayne
                Schoonmaker
            
            
            2005
            
            
            20,250
            
            
            0
            
            
            0Secretary,
                Treasurer
            
            
            2004
            
            
            20,250
            
            
            0
            
            
            18,563(1
            )
            
            0
            
            
            02003
            
            
            8,438
            
            
            0
            
            
            35,438(1
            )
            
            0
            
            
            02002
            
            
            12,000
            
            
            0
            
            
            10,125(1
            )
            
            0
            
            
            0Terry
                Brown
            
            
            2005
            
            
            56,160
            
            
            0
            
            
            0
            
            
            0
            
            
            0Vice
                President
            
            
            2004
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            02003
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            02002
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0





(1)
            Represents
                the value of 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.






-14-
 **Back
                to Table of Contents**
 **Index
                to Financial Statements**


There
      are
      no other stock option plans, retirement, pension, or profit sharing plans for
      the benefit of the Company's officers and directors.





**Option
      Grants in 2005.**





During
      the fiscal year ended October 31, 2005, the Company did not grant common
      stock options.





**Aggregated
      Year-End Option Values**





The
      following table sets forth information on unexercised options at October 31,
      2005. None of the executive officers exercised any stock option during fiscal
      2005.





**Number
                of Unexercised Securities Underlying Options (#)**
            
            **Value
                of Unexercised In-the-Money Options(US$)(1)****Name**
            
            **Exercisable**
            
            **Unexercisable**
            
            **Exercisable**
            
            **Unexercisable**Merlin
                Bingham
            
            
            100,000
            
            
            0
            
            
            0
            
            
            0Roger
                Kolvoord
            
            
            100,000
            
            
            0
            
            
            0
            
            
            0Wayne
                Schoonmaker
            
            
            50,000
            
            
            0
            
            
            0
            
            
            0





(1)
            Because
                there was no positive spread between the respective exercise prices
                of
                outstanding stock options and the closing price of the Company's
                common
                stock on October 31, 2005 ($0.83), none of the options were
                in-the-money.





**Long-Term
      Incentive Plan Awards** .





The
      Company's shareholders approved a Qualified Stock Option Plan at the annual
      meeting of shareholders held March 1, 2001. During the years ended October
      31,
      2001 and 2002, options for 350,000 shares and 100,000 shares, respectively,
      were
      granted to officers and directors of the Company. There were no options granted
      during the years ended October 31, 2003, 2004 and 2005. Options for 100,000
      shares granted to Daniel E. Gorski expired upon his resignation in September
      2004.





**Compensation
      of Directors.**





In
      general, the directors do not receive any compensation for serving as members
      of
      the Board of Directors. There are no contractual arrangements with any member
      of
      the Board of Directors.





**ITEM
      11.****SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
      MATTERS.**





The
      following table sets forth the common stock ownership of each person known
      by
      the Company to be the beneficial owner of five percent or more of the Company's
      common stock, each director individually, and all officers and directors of
      the
      Company as a group. Each person has sole voting and investment power with
      respect to the shares of common stock shown, unless otherwise noted, and all
      ownership is of record and beneficial.





**Amount
                and****nature
                of****beneficial**
            
            **%
                of Outstanding****Name
                and Address of Beneficial
                owner**
            
            **ownership**
            
            **Shares**Merlin
                Bingham
            
            
            1,296,285
            
            
            6.35
            %1330
                E. Margaret Ave.Coeur
                d'Alene, ID 83815Roger
                Kolvoord
            
            
            356,891
            
            
            1.75
            %1330
                E. Margaret Ave.Coeur
                d'Alene, ID 83815Wayne
                Schoonmaker
            
            
            73,116
            
            
            *1330
                E. Margaret Ave.Coeur
                d'Alene, ID 83815Wesley
                Pomeroy
            
            
            50,000
            
            
            *1330
                E. Margaret Ave.Coeur
                d'Alene, ID 83815Terry
                Brown
            
            
            0
            
            
            *1330
                E. Margaret Ave.Coeur
                d'Alene, ID 83815All
                officers and directors as a group (5 persons)
            
            
            1,549,520
            
            
            8.46
            %Britannia
                Holdings
            
            
            3,190,500
            
            
            15.64
            %King's
                House The GrangeSt.
                Peter Port Guernsey Channel Islands





*
            Less
                than 1%.






-15-
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                to Table of Contents**
 **Index
                to Financial Statements**


**EQUITY
      COMPENSATION PLAN INFORMATION**





The
      following table provides information about the Company's common stock that
      may
      be issued upon the exercise of options, warrants and rights under the Company's
      equity compensation plans as of October 31, 2005.





**Plan
                Category**
            
            **(a)
                Number of Securities to be Issued Upon Exercise of Outstanding Options,
                Warrants and Rights**
            
            **(b)
                Weighted Average Exercise Price of Outstanding Options, Warrants
                and
                Rights**
            
            **Securities
                Remaining Available for Future Issuance Under Equity Compensation
                Plans
                (Excluding Securities Reflected in Column (a))**Equity
                compensation plans approved by shareholders:
            
            
            670,000
            
            $
            1.56
            
            
            0Equity
                compensation plans not approved by shareholders:
            
            
            1,163,887
            
            $
            2.02
            
            
            0Total:
            
            
            2,008,053
            
            $
            1.87
            
            
            0





**Equity
      Compensation Plans Not Approved by Security Holders**





*Warrants*





Thirty-three
      warrants to non-employees remained outstanding as of October 31, 2005. Such
      warrants were granted pursuant to the terms of a form warrant agreement, with
      each such grant authorized by the Board. These warrants have not been approved
      by the shareholders of the Company. The warrants have exercise prices ranging
      from $0.75 per share to $5.00 per share and have expiration dates ranging from
      June 2006 to January 2011.




-16-
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                to Table of Contents**
 **Index
                to Financial Statements**


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





The
      Company receives rent-free office space in Coeur d'Alene, Idaho from its
      president. The value of the space is not considered materially significant
      for
      financial reporting purposes. The Company also has given $9,560 in cash advances
      for travel to two of its officers at October 31, 2005 under an accountable
      plan
      per IRS Regulation Section 1.62.





**ITEM
      13.****EXHIBITS.**





The
      exhibits filed as part of this report and the exhibits incorporated herein
      by
      reference are listed


in
      the
      Exhibit Index at page E-1.





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





*Audit
      Fees* :
      The
      aggregate fees and expenses billed by Williams & Webster, P.S. for
      professional services rendered for the audit of the Company's annual financial
      statements and the review of the financial statements included in the Company's
      periodic reports filed with the SEC on Forms 10-Q, were $18,409 and $21,647
      for
      the fiscal years ended October 31, 2004 and 2005,
      respectively.




*Audit
      Related Fees* :
      There
      were no fees billed by Williams & Webster, P.S. for audit related services
      rendered during fiscal 2004 and 2005.




*Tax
      Fees* :
      There
      were no fees billed by Williams & Webster, P.S. for tax services rendered
      during fiscal 2004 and 2005.




*All
      Other Fees* :
      There
      were no other services provided by Williams & Webster, P.S. during fiscal
      2004 and 2005.




-17-
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                to Table of Contents**
 **Index
                to Financial Statements**


METALLINE
      MINING COMPANY


An
      Exploration Stage Company


October
      31, 2005











SIGNATURES





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







METALLINE
      MINING COMPANY




By: /s/
      Merlin Bingham


Merlin
      Bingham, its


President


Date:
      January 30, 2006




By: /s/
      Wayne
      Schoonmaker


Wayne
      Schoonmaker, its


Principal
      Accounting Officer


Date:
      January 30, 2006











In
      accordance with the Exchange Act, this report has been signed below by the
      following persons on behalf of the registrant and in the capacities and on
      the
      dates indicated.




By:
            /s/
              Merlin Bingham
            
            By:
            /s/
              Roger KolvoordMerlin Bingham
            
            
            Roger KolvoordPresident/Director
            
            
            Vice President-Business/DirectorDate: January 30, 2006
            
            
            Date: January 30, 2006By:
            /s/
              Wayne Schoonmaker
            
            By:
            /s/
              Wesley PomeroyWayne Schoonmaker
            
            
            Wesley PomeroySecretary/Treasurer
            
            
            DirectorDate: January 30, 2006
            
            
            Date: January 30,
              2006






-18-
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                to Financial Statements**


METALLINE
      MINING COMPANY





INDEX
      TO CONSOLIDATED FINANCIAL STATEMENTS





PAGEReport
                of Independent Certified Public
                Accountants
            F/S-1Financial
                Statements:Consolidated
                Balance Sheets as of October 31, 2005 and October
                31, 2004
            F/S-2Consolidated
                Statements of Operations for the Years Ended
                October 31, 2005 and 2004, and for the period from inception (November
                8,
                1993) to October 31, 2005
            F/S-3Consolidated
                Statements of Changes in Stockholders' Equity for
                the period from inception (November 8, 1993) to October 31,
                2005
            F/S-4Consolidated
                Statements of Cash Flow for the Years Ended
                October 31, 2005 and 2004, and for the period from inception (November
                8,
                1993) to October 31, 2005
            F/S-7Notes
                to Financial Statements
            F/S-8








[The
      balance of this page has been intentionally left blank.]




F/S-i
 **Back
                to Table of Contents**
 **Index
                to Financial Statements**


The
      Board
      of Directors


Metalline
      Mining Company


Coeur
      d'Alene, Idaho





**REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
      FIRM**





We
      have
      audited the accompanying consolidated balance sheets of Metalline Mining Company
      (a Nevada corporation and an exploration stage company) as of October 31, 2005
      and 2004, and the related consolidated statements of operations, stockholders'
      equity and cash flows for the years then ended, and for the period from November
      8, 1993 (inception) to October 31, 2005. These consolidated financial statements
      are the responsibility of the Company's management. Our responsibility is to
      express an opinion on these financial statements based on our
      audit.





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





In
      our
      opinion, the consolidated financial statements referred to above present fairly,
      in all material respects, the financial position of Metalline Mining Company
      as
      of October 31, 2005 and 2004, and the results of its operations, stockholders'
      equity and its cash flows for the years then ended, and for the period from
      November 8, 1993 (inception) to October 31, 2005 in conformity with accounting
      principles generally accepted in the United States of America.





The
      accompanying consolidated financial statements have been prepared assuming
      that
      the Company will continue as a going concern. As discussed in Note 2 to the
      financial statements, the Company's significant operating losses raise
      substantial doubt about its ability to continue as a going concern. Management's
      plans regarding those matters also are described in Note 2. The financial
      statements do not include any adjustments that might result from the outcome
      of
      this uncertainty.





/s/
      Williams & Webster, P.S.





Williams
      & Webster, P.S.


*Certified
      Public Accountants*


Spokane,
      Washington


January
      27, 2006




F/S-1
 **Back
                to Table of Contents**
 **Index
                to Financial Statements**




**METALLINE
                  MINING COMPANY****(AN
                  EXPLORATION STAGE COMPANY)****CONSOLIDATED
                  BALANCE SHEETS**October
                  31,
              
              October
                  31,2005
              
              2004ASSETSCURRENT
                ASSETSCash
                  and cash equivalents
              
              $
              213,369
              
              $
              1,384,030Marketable
                  securities
              
              
              —
              
              
              1,250,000Accounts
                  receivable
              
              
              23,620
              
              
              88,164Prepaid
                  expenses
              
              
              13,242
              
              
              2,052Employee
                  advances
              
              
              9,560
              
              
              34,022Total
                  Current Assets
              
              
              259,791
              
              
              2,758,268PROPERTY
                  CONCESSIONSSierra
                  Mojada, Mojada 3
              
              
              15,875
              
              
              15,875Fortuna
              
              
              76,725
              
              
              76,725Esmeralda
              
              
              255,647
              
              
              255,647Esmeralda
                  I
              
              
              180,988
              
              
              180,988U.M.
                  Nortenos, Vulcano
              
              
              3,682,772
              
              
              3,682,772La
                  Blanca
              
              
              122,760
              
              
              122,760Total
                  Property Concessions
              
              
              4,334,767
              
              
              4,334,767EQUIPMENTOffice
                  and mining equipment, net
              
              
              490,884
              
              
              566,843Total
                  Equipment
              
              
              490,884
              
              
              566,843TOTAL
                  ASSETS
              
              $
              5,085,442
              
              $
              7,659,878LIABILITIES
                  AND STOCKHOLDERS' EQUITYCURRENT
                  LIABILITIESAccounts
                  payable
              
              $
              86,189
              
              $
              57,231Accrued
                  liabilities and expenses
              
              
              189,046
              
              
              145,445Other
                  liabilities
              
              
              15,873
              
              
              —Note
                  payable, current portion
              
              
              4,209
              
              
              4,209Total
                  Current Liabilities
              
              
              295,317
              
              
              206,885LONG-TERM
                  LIABILITIESNote
                  payable, net of current portion
              
              
              7,365
              
              
              11,574COMMITMENTS
                  AND CONTINGENCIES
              
              
              —
              
              
              —STOCKHOLDERS'
                  EQUITYPreferred
                  stock, $0.01 par value; 1,000,000 shares authorized, no shares
                  outstanding
              
              
              —
              
              
              —Common
                  stock, $0.01 par value; 50,000,000 shares authorized, 20,404,585
                  and
                  19,751,409 shares issued and outstanding,
                  respectively
              
              
              204,047
              
              
              197,515Additional
                  paid-in capital
              
              
              19,852,673
              
              
              19,064,992Stock
                  options and warrants
              
              
              1,347,839
              
              
              1,498,550Deficit
                  accumulated during exploration stage
              
              
              (16,621,799
              )
              
              (13,319,638
              )Total
                  Stockholders' Equity
              
              
              4,782,760
              
              
              7,441,419TOTAL
                  LIABILITIES AND STOCKHOLDERS' EQUITY
              
              $
              5,085,442
              
              $
              7,659,878


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




F/S-2
 **Back
                to Table of Contents**
 **Index
                to Financial Statements**




**METALLINE
                MINING COMPANY****(AN
                EXPLORATION STAGE COMPANY)****CONSOLIDATED
                STATEMENTS OF OPERATIONS**November
                8,1993(Inception)Years
                Ended
            
            toOctober
                31,
            
            October
                31,
            
            October
                31,2005
            
            2004
            
            2005REVENUES
            
            $
            —
            
            $
            —
            
            $
            —GENERAL
                AND ADMINISTRATIVE EXPENSESSalaries
                and payroll expenses
            
            
            797,104
            
            
            633,019
            
            
            3,237,617Office
                and administrative expenses
            
            
            309,483
            
            
            299,172
            
            
            988,946Taxes
                and fees
            
            
            95,353
            
            
            108,220
            
            
            489,441Professional
                services
            
            
            328,954
            
            
            516,015
            
            
            4,367,642Property
                expenses
            
            
            186,057
            
            
            233,148
            
            
            1,944,103Depreciation
            
            
            83,557
            
            
            63,045
            
            
            341,920Exploration
                and research
            
            
            1,666,884
            
            
            3,374,049
            
            
            5,334,086TOTAL
                GENERAL AND ADMINISTRATIVE EXPENSES
            
            
            3,467,392
            
            
            5,226,667
            
            
            16,703,754LOSS
                FROM OPERATIONS
            
            
            (3,467,392
            )
            
            (5,226,667
            )
            
            (16,703,754
            )OTHER
                INCOME (EXPENSES)Miscellaneous
                ore sales, net of expenses
            
            
            7,964
            
            
            170,217
            
            
            165,138VAT
                tax refunds
            
            
            119,615
            
            
            —
            
            
            119,615Miscellaneous
                income
            
            
            8,500
            
            
            —
            
            
            8,500Interest
                and investment income
            
            
            29,758
            
            
            20,251
            
            
            75,473Interest
                and financing expense
            
            
            (606
            )
            
            (606
            )
            
            (286,771
            )TOTAL
                OTHER INCOME
            
            
            165,231
            
            
            189,861
            
            
            81,954LOSS
                BEFORE INCOME TAXES
            
            
            (3,302,161
            )
            
            (5,036,805
            )
            
            (16,621,799
            )INCOME
                TAXES
            
            
            —
            
            
            —
            
            
            —NET
                LOSS
            
            $
            (3,302,161
            )
            $
            (5,036,805
            )
            $
            (16,621,799
            )BASIC
                AND DILUTED NET LOSS PER COMMON SHARE
            
            $
            (0.16
            )
            $
            (0.30
            )BASIC
                AND DILUTED WEIGHTED AVERAGE NUMBER OF COMMON SHARES
                OUTSTANDING
            
            
            20,014,313
            
            
            17,025,631


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






F/S-3
 **Back
                to Table of Contents**
 **Index
                to Financial Statements**




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





F/S-4
 **Back
                to Table of Contents**
 **Index
                to Financial Statements**




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


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






F/S-5
 **Back
                to Table of Contents**
 **Index
                to Financial Statements**




**METALLINE
                MINING COMPANY****(AN
                EXPLORATION STAGE COMPANY)****CONSOLIDATED
                STATEMENT OF STOCKHOLDERS' EQUITY (CONTINUED)**AccumulatedAdditional
            
            Stock
            
            Stock
            
            Deficit
                DuringCommon
                Stock
            
            Paid-in
            
            Subscriptions
            
            Options
                and
            
            ExplorationShares
            
            Amount
            
            Capital
            
            Receivable
            
            Warrants
            
            Stage
            
            TotalBalance,
                October 31, 2002
            
            
            10,368,340
            
            $
            103,685
            
            $
            10,280,713
            
            $
            —
            
            $
            1,497,967
            
            $
            (7,175,605
            )
            $
            4,706,760Issuances
                of common stock as follows:-
                for cash at $2.00 per share
            
            
            100,000
            
            
            1,000
            
            
            199,000
            
            
            —
            
            
            —
            
            
            —
            
            
            200,000-
                for cash at an average of $0.98 per share
            
            
            849,000
            
            
            8,489
            
            
            821,510
            
            
            —
            
            
            —
            
            
            —
            
            
            829,999-
                for cash and warrants at $1.50 per share
            
            
            7,000
            
            
            70
            
            
            9,847
            
            
            —
            
            
            583
            
            
            —
            
            
            10,500-
                for compensation at an average of $1.25 per share
            
            
            391,332
            
            
            3,913
            
            
            487,275
            
            
            —
            
            
            —
            
            
            —
            
            
            491,188-
                for services at an average of $1.23 per share
            
            
            91,383
            
            
            914
            
            
            119,320
            
            
            —
            
            
            —
            
            
            —
            
            
            120,234-
                for subscriptions receivable at $1.00 per share
            
            
            38,000
            
            
            380
            
            
            37,620
            
            
            (38,000
            )
            
            —
            
            
            —
            
            
            —Net
                loss for the year ended October 31, 2003
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            (1,107,228
            )
            
            (1,107,228
            )Balance,
                October 31, 2003
            
            
            11,845,055
            
            
            118,451
            
            
            11,955,285
            
            
            (38,000
            )
            
            1,498,550
            
            
            (8,282,833
            )
            
            5,251,453Issuances
                of common stock as follows:-
                for cash at $1.00 per share, less issuance costs of$698,863
            
            
            7,580,150
            
            
            75,802
            
            
            6,805,485
            
            
            —
            
            
            —
            
            
            —
            
            
            6,881,287-
                for compensation at an average of $1.26 per share
            
            
            120,655
            
            
            1,207
            
            
            151,064
            
            
            —
            
            
            —
            
            
            —
            
            
            152,271-
                for services at various prices
            
            
            141,286
            
            
            1,413
            
            
            153,801
            
            
            —
            
            
            —
            
            
            —
            
            
            155,214Stock
                subscription received
            
            
            —
            
            
            —
            
            
            —
            
            
            38,000
            
            
            —
            
            
            —
            
            
            38,000Miscellaneous
                corrections and adjustments
            
            
            64,263
            
            
            643
            
            
            (643
            )
            
            —
            
            
            —
            
            
            —
            
            
            —Net
                loss for the year ended October 31, 2004
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            (5,036,805
            )
            
            (5,036,805
            )Balance,
                October 31, 2004
            
            
            19,751,409
            
            
            197,515
            
            
            19,064,992
            
            
            —
            
            
            1,498,550
            
            
            (13,319,638
            )
            
            7,441,419Common
                stock issued for cash at an average of $0.98 per share with attached
                warrants valued at an average of $0.28 per share
            
            
            476,404
            
            
            4,764
            
            
            329,806
            
            
            —
            
            
            132,159
            
            
            —
            
            
            466,729Common
                stock issued for compensation at an average of $1.00 per share
            
            
            176,772
            
            
            1,768
            
            
            175,005
            
            
            —
            
            
            —
            
            
            —
            
            
            176,773Expiration
                of stock warrants
            
            
            —
            
            
            —
            
            
            282,870
            
            
            —
            
            
            (282,870
            )
            
            —
            
            
            —Net
                loss for the year ended October 31, 2005
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            (3,302,161
            )
            
            (3,302,161
            )Balance,
                October 31, 2005
            
            
            20,404,585
            
            $
            204,047
            
            $
            19,852,673
            
            $
            —
            
            $
            1,347,839
            
            $
            (16,621,799
            )
            $
            4,782,760


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






F/S-6
 **Back
                to Table of Contents**
 **Index
                to Financial Statements**




**METALLINE
                  MINING COMPANY****(AN
                  EXPLORATION STAGE COMPANY)****CONSOLIDATED
                  STATEMENTS OF CASH FLOWS**Period
                  fromNovember
                  8, 1993(Inception)Years
                  Ended
              
              toOctober
                  31,
              
              October
                  31,
              
              October
                  31,2005
              
              2004
              
              2005CASH
                  FLOWS FROM OPERATING ACTIVITIES:Net
                  loss
              
              $
              (3,302,161
              )
              $
              (5,036,805
              )
              $
              (16,621,799
              )Adjustments
                  to reconcile net loss to net cash used by operating
                  activities:Depreciation
              
              
              83,557
              
              
              63,045
              
              
              341,920Noncash
                  expenses
              
              
              —
              
              
              —
              
              
              126,864Common
                  stock issued for services
              
              
              —
              
              
              155,214
              
              
              966,538Common
                  stock issued for compensation
              
              
              176,772
              
              
              152,271
              
              
              820,231Stock
                  options issued for services
              
              
              —
              
              
              —
              
              
              801,892Stock
                  options issued for financing fees
              
              
              —
              
              
              —
              
              
              276,000Common
                  stock issued for payment of expenses
              
              
              —
              
              
              —
              
              
              326,527Stock
                  warrants issued for services
              
              
              —
              
              
              —
              
              
              688,771(Increase)
                  decrease in:
              
              
              
              
              
              
              
              
              —Foreign
                  property tax refund receivable
              
              
              —
              
              
              —
              
              
              —Marketable
                  securities
              
              
              1,250,000
              
              
              (1,250,000
              )
              
              —Accounts
                  receivable
              
              
              64,544
              
              
              (88,164
              )
              
              (23,620
              )Prepaid
                  expenses
              
              
              (11,190
              )
              
              (1,926
              )
              
              (13,242
              )Employee
                  advances
              
              
              24,462
              
              
              (13,122
              )
              
              (9,560
              )Increase
                  (decrease) in:Accounts
                  payable
              
              
              28,959
              
              
              (53,667
              )
              
              86,189Contracts
                  payable
              
              
              —
              
              
              —
              
              
              4,209Accrued
                  liabilities and expenses
              
              
              59,474
              
              
              137,484
              
              
              220,703Net
                  cash used by operating activities
              
              
              (1,625,583
              )
              
              (5,935,671
              )
              
              (12,008,378
              )CASH
                  FLOWS FROM INVESTING ACTIVITIES:Purchase
                  of investments
              
              
              —
              
              
              —
              
              
              (484,447
              )Proceeds
                  from investments
              
              
              —
              
              
              —
              
              
              484,447Equipment
                  purchases
              
              
              (7,598
              )
              
              (328,746
              )
              
              (792,781
              )Mining
                  property acquisitions
              
              
              —
              
              
              —
              
              
              (4,452,631
              )Net
                  cash used by investing activities
              
              
              (7,598
              )
              
              (328,746
              )
              
              (5,245,412
              )CASH
                  FLOWS FROM FINANCING ACTIVITIES:Proceeds
                  from sales of common stock
              
              
              466,729
              
              
              6,881,287
              
              
              16,370,187Proceeds
                  from sales of options and warrants
              
              
              —
              
              
              —
              
              
              949,890Deposits
                  for sale of stock
              
              
              —
              
              
              38,000
              
              
              125,500Proceeds
                  from shareholder loans
              
              
              —
              
              
              —
              
              
              30,000Payment
                  of note payable
              
              
              (4,209
              )
              
              (4,209
              )
              
              (8,418
              )Net
                  cash provided by financing activities:
              
              
              462,520
              
              
              6,915,078
              
              
              17,467,159Net
                  increase (decrease) in cash and cash equivalents
              
              
              (1,170,661
              )
              
              650,661
              
              
              213,369Cash
                  and cash equivalents beginning of period
              
              
              1,384,030
              
              
              733,369
              
              
              —Cash
                  and cash equivalents end of period
              
              $
              213,369
              
              $
              1,384,030
              
              $
              213,369SUPPLEMENTAL
                  CASH FLOW DISCLOSURES:Income
                  taxes paid
              
              $
              —
              
              $
              —
              
              $
              —Interest
                  paid
              
              $
              606
              
              $
              606
              
              $
              286,771NON-CASH
                  INVESTING AND FINANCING ACTIVITIES:Common
                  stock issued for services
              
              $
              
              
              $
              155,214
              
              $
              966,538Common
                  stock issued for compensation
              
              $
              176,772
              
              $
              152,271
              
              $
              820,231Common
                  stock issued for payment of expenses
              
              $
              —
              
              $
              —
              
              $
              326,527Common
                  stock issued for equipment
              
              $
              —
              
              $
              —
              
              $
              25,000Common
                  stock options issued for financing fees
              
              $
              —
              
              $
              —
              
              $
              276,000Options
                  issued for services
              
              $
              —
              
              $
              —
              
              $
              801,892Warrants
                  issued for services
              
              $
              —
              
              $
              —
              
              $
              688,771Noncash
                  expenses
              
              $
              —
              
              $
              —
              
              $
              126,864
 The
      accompanying notes are an integral part of these consolidated financial
      statements








F/S-7
 **Back
                to Table of Contents**
 **Index
                to Financial Statements**


**METALLINE
                MINING COMPANY****(AN
                EXPLORATION STAGE COMPANY)****NOTES
                TO THE CONSOLIDATED FINANCIAL STATEMENTS OCTOBER 31,
                2005**


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





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





The
      Company expects to engage in the business of mining. The Company currently
      owns
      concessions located in Sierra Mojada, Coahuila, Mexico. The Company conducts
      its
      operations in Mexico through its wholly owned subsidiary corporation, Minera
      Metalin S.A. de C.V. ("Minera Metalin").





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





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





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





This
      summary of significant accounting policies is presented to assist in
      understanding the financial statements. The financial statements and notes
      are
      representations of the Company's management, which is responsible for their
      integrity and objectivity. These accounting policies conform to accounting
      principles generally accepted in the U.S. and have been consistently applied
      in
      the preparation of the financial statements.





Accounting
      Method


The
      Company's financial statements are prepared using the accrual method of
      accounting.





Accounts
      Receivable


The
      Company carries its accounts receivable at cost. On a periodic basis, the
      Company evaluates its accounts receivable and determines if an allowance for
      doubtful accounts is necessary, based on a history of past write-offs and
      collections and current credit conditions.





The
      Company has not yet established a policy regarding accruing interest on trade
      receivables. Accounts will be written off as uncollectible when it is determined
      that collection will be unlikely.





Cash
      and Cash Equivalents


For
      purposes of the statement of cash flows, the Company considers all bank
      accounts, certificates of deposit, money market accounts and short-term debt
      securities purchased with a maturity of three months or less to be cash
      equivalents.




F/S-8
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 **Index
                to Financial Statements**




**METALLINE
                  MINING COMPANY****(AN
                  EXPLORATION STAGE COMPANY)****NOTES
                  TO THE CONSOLIDATED FINANCIAL STATEMENTS OCTOBER 31,
                  2005**
 Compensated
      Absences


The
      Company's policy is to recognize the cost of compensated absences when actually
      paid to employees. If the amount were estimatible, it would not be currently
      recognized as the amount would be deemed immaterial.





Concentration
      of Risk


The
      Company maintains its domestic cash in two commercial depository accounts.
      One
      of these accounts is insured by the Federal Deposit Insurance Corporation (FDIC)
      for up to $100,000. The other account consists of money market funds,
      certificates of deposit and preferred securities, all of which are not insured.
      The Company also maintains cash in banks in Mexico. These accounts, which had
      U.S. dollar balances of $30,110 and $61,616 at October 31, 2005 and 2004,
      respectively, are denominated in pesos and are considered uninsured.
      Additionally, the Company maintained Mexican petty cash balances of $428 and
      $4,864 at October 31, 2005 and 2004, respectively. At October 31, 2005, the
      Company's cash balances included $114,965 which was not federally insured.





Derivative
      Instruments


The
      Financial Accounting Standards Board issued Statement of Financial Accounting
      Standards No. 133, "Accounting for Derivative Instruments and Hedging
      Activities," (hereinafter "SFAS No. 133") as amended by SFAS No. 137,
      "Accounting for Derivative Instruments and Hedging Activities - Deferral of
      the
      Effective Date of FASB No. 133", and SFAS No. 138, "Accounting for Certain
      Derivative Instruments and Certain Hedging Activities" and SFAS No. 149,
      "Amendment of Statement 133 on Derivative Instruments and Hedging Activities."
      These statements establish accounting and reporting standards for derivative
      instruments, including certain derivative instruments embedded in other
      contracts, and for hedging activities. They require that an entity recognize
      all
      derivatives as either assets or liabilities in the consolidated balance sheet
      and measure those instruments at fair value.





If
      certain conditions are met, a derivative may be specifically designated as
      a
      hedge, the objective of which is to match the timing of gain or loss recognition
      on the hedging derivative with the recognition of (i) the changes in the fair
      value of the hedged asset or liability that are attributable to the hedged
      risk
      or (ii) the earnings effect of the hedged forecasted transaction. For a
      derivative not designated as a hedging instrument, the gain or loss is
      recognized in income in the period of change.





Historically,
      the Company has not entered into derivatives contracts to hedge existing risks
      or for speculative purposes.





During
      the years ended October 31, 2005 and 2004, the Company has not engaged in any
      transactions that would be considered derivative instruments or hedging
      activities.





Earnings
      Per Share


The
      Company has adopted Statement of Financial Accounting Standards No. 128, which
      provides for calculation of "basic" and "diluted" earnings per share. Basic
      earnings per share includes no dilution and is computed by dividing net income
      available to common shareholders by the weighted average common shares
      outstanding for the period. Diluted earnings per share reflect the potential
      dilution of securities that could share in the earnings of an entity similar
      to
      fully diluted earnings per share. Although there were common stock equivalents
      outstanding October 31, 2005 and 2004, they were not included in the calculation
      of earnings per share because they would have been considered anti-dilutive.
      Common stock equivalents outstanding were 1,833,887  and
      1,647,665 at October 31, 2005 and 2004, respectively.




F/S-9
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 **Index
                to Financial Statements**




**METALLINE
                  MINING COMPANY****(AN
                  EXPLORATION STAGE COMPANY)****NOTES
                  TO THE CONSOLIDATED FINANCIAL STATEMENTS OCTOBER 31,
                  2005**
 Use
      of
      Estimates


The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United States of America requires management to make
      estimates and assumptions that affect the reported amounts of assets and
      liabilities and disclosure of contingent assets and liabilities at the date
      of
      the financial statements and the reported amounts of revenues and expenses
      during the reporting period. Actual results could differ from those
      estimates.





Exploration
      Costs


In
      accordance with accounting principles generally accepted in the United States
      of
      America, the Company expenses exploration costs as incurred. Exploration costs
      expensed during the year ended October 31, 2005 and 2004 were $1,666,884 and
      $3,374,049, respectively. The exploration costs expensed during the Company's
      exploration stage amount to $5,334,086.





Exploration
      Stage Activities


The
      Company has been in the exploration stage since November 8, 1993 and has no
      revenues from operations. The Company is primarily engaged in the acquisition
      and exploration of property concessions. Should the Company locate a
      commercially minable reserve, the Company would expect to actively prepare
      the
      site for extraction.





Fair
      Value of Financial Instruments


The
      Company's financial instruments as defined by Statement of Financial Accounting
      Standards No. 107, "Disclosures about Fair Value of Financial Instruments,"
      include cash and cash equivalents, marketable securities, receivables, advances
      to employees, accounts payable and accrued expenses. All instruments are
      accounted for on a historical cost basis, which, due to the short maturity
      of
      these financial instruments, approximates fair value at October 31, 2005 and
      2004.





Foreign
      Currency Translation


Assets
      and liabilities of the Company's foreign operations are translated into U.S.
      dollars at the year-end exchange rates, and revenue and expenses are translated
      at the average exchange rates during the period. Exchange differences arising
      on
      translation are disclosed as a separate component of shareholders' equity.
      Realized gains and losses from foreign currency transactions are reflected
      in
      the results of operations.





Foreign
      Operations


The
      accompanying balance sheet at October 31, 2005 contains Company assets in
      Mexico, including: $4,334,767 in property concessions; $514,855 (before
      accumulated depreciation) of mining equipment; and $30,538 of cash. Although
      this country is considered economically stable, it is always possible that
      unanticipated events in foreign countries could disrupt the Company's
      operations. The Mexican government does not require foreign entities to maintain
      cash reserves in Mexico.





Going
      Concern


As
      shown
      in the accompanying financial statements, the Company has no revenues, has
      incurred a net loss of $3,302,161 for the year ended October 31, 2005 and has
      an
      accumulated deficit of $16,621,799. These factors indicate that the Company
      may
      be unable to continue in existence. The financial statements do not include
      any
      adjustments related to the recoverability and classification of recorded assets,
      or the amounts and classification of liabilities that might be necessary in
      the
      event the Company cannot continue in existence.





The
      Company's management believes that significant and imminent private placements
      of stock and continuing contracted agreements will generate sufficient cash
      for
      the Company to continue to operate based on current expense projections. The
      Company is currently operating on the cash proceeds of a private placement
      offering currently in progress.






F/S-10
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 **Index
                to Financial Statements**




**METALLINE
                MINING COMPANY****(AN
                EXPLORATION STAGE COMPANY)****NOTES
                TO THE CONSOLIDATED FINANCIAL STATEMENTS OCTOBER 31,
                2005**


Marketable
      Securities


Pursuant
      to Statement of Financial Accounting Standards No. 115, the Company classifies
      marketable securities as trading, available-for-sale, or held-to-maturity.
      During the year ended October 31, 2004, the Company invested $1,250,000 in
      total-return mutual funds consisting of equities, convertible debt and
      high-yield securities, and classified them as trading. During the year ended
      October 31, 2005, these securities were sold and the proceeds were used in
      the
      operations of the Company. The Company did not hold marketable securities at
      October 31, 2005.





Principles
      of Consolidation


The
      consolidated financial statements include the accounts of the Company and its
      wholly owned subsidiary, after elimination of intercompany accounts and
      transactions. The wholly owned subsidiary of the Company is listed in Note
      1.





Property
      Concessions


Costs
      of
      acquiring property concessions are capitalized by project area upon purchase
      or
      staking of the associated claims. Costs to maintain the property concessions
      and
      leases are expensed as incurred. When a property concession reaches the
      production stage, the related capitalized costs will be amortized, using the
      units of production method on the basis of periodic estimates of ore
      reserves.





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





Property
      and Equipment


Property
      and equipment are recorded at cost. Major additions and improvements are
      capitalized. Minor replacements, maintenance and repairs that do not increase
      the useful life of the assets are expensed as incurred. Depreciation of property
      and equipment is determined using the straight-line or accelerated methods
      over
      the expected useful lives of the assets. See Note 3.





Provision
      for Taxes


Income
      taxes are provided based upon the liability method of accounting pursuant to
      Statement of Financial Accounting Standards No. 109, "Accounting for Income
      Taxes" (hereinafter "SFAS No. 109"). Under this approach, deferred income taxes
      are recorded to reflect the tax consequences in future years of differences
      between the tax basis of assets and liabilities and their financial reporting
      amounts at each year-end. A valuation allowance is recorded against deferred
      tax
      assets if management does not believe the Company has met the "more likely
      than
      not" standard imposed by SFAS No. 109 to allow recognition of such an
      asset.





At
      October 31, 2005, the Company had net deferred tax assets calculated at an
      expected rate of 34% of approximately $4,618,000, principally arising from
      net
      operating loss carryforwards for income tax purposes. As management of the
      Company cannot determine that it is more likely than not that the Company will
      realize the benefit of the net deferred tax asset, there is a valuation
      allowance equal to the net deferred tax asset.




F/S-11
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 **Index
                to Financial Statements**





**METALLINE
                MINING COMPANY****(AN
                EXPLORATION STAGE COMPANY)****NOTES
                TO THE CONSOLIDATED FINANCIAL STATEMENTS OCTOBER 31,
                2005**


The
      significant components of the deferred tax assets at October 31, 2005 and 2004
      were as follows:





October
                31,
            
            October
                31,2005
            
            2004Net
                operating loss carryforward
            
            $
            13,582,000
            
            $
            10,456,000Deferred
                tax asset
            
            $
            4,618,000
            
            $
            3,555,000Deferred
                tax asset valuation allowance
            
            $
            (4,618,000
            )
            $
            (3,555,000
            )




At
      October 31, 2005, the Company has net operating loss carryforwards of
      approximately $13,582,000, which expire in the years 2008 through 2025. The
      Company has recognized approximately $1,491,000 of losses from the issuance
      of
      stock options and warrants for services through fiscal 2005, which were not
      deductible for tax purposes. The change in the allowance account from October
      31, 2004 to 2005 was $1,063,000. The Company has immaterial temporary
      differences resulting from differences in tax depreciation of
      equipment.





During
      2005, the Company received value added tax refunds from the Mexican government
      in the amount of $119,615.





Recent
      Accounting Pronouncements


In
      May
      2005, the Financial Accounting Standards Board issued Statement of Financial
      Accounting Standards No. 154 ("SFAS No. 154"), "Accounting Changes and
      Error Corrections." This statement requires entities that voluntarily make
      a
      change in accounting principle to apply that change retrospectively to prior
      periods' financial statements, unless this would be impracticable. SFAS No.
      154
      supersedes APB Opinion No. 20, "Accounting Changes," which previously required
      that most voluntary changes in accounting principle be recognized by including
      in the current period's net income the cumulative effect of changing to the
      new
      accounting principle. SFAS No. 154 also makes a distinction between
      "retrospective application" of an accounting principle and the "restatement"
      of
      financial statements to reflect the correction of an error. SFAS No. 154 applies
      to accounting changes and error corrections that are made in fiscal years
      beginning after December 15, 2005. Management believes the adoption of this
      statement will not have an immediate material impact on the financial statements
      of the Company.





In
      March
      2005, the Financial Accounting Standards Board (FASB) issued FASB Interpretation
      No. 47 ("FIN 47"), "Accounting for Conditional Asset Retirement Obligations."
      FIN 47 clarifies that the term "conditional asset retirement obligation," which
      as used in SFAS No. 143, "Accounting for Asset Retirement Obligations," refers
      to a legal obligation to perform an asset retirement activity in which the
      timing and (or) method of settlement are conditional on a future event that
      may
      or may not be within the control of the entity. The entity must record a
      liability for a "conditional" asset retirement obligation if the fair value
      of
      the obligation can be reasonably estimated. FIN 47 also clarifies when an entity
      would have sufficient information to reasonably estimate the fair value of
      an
      asset retirement obligation. FIN 47 is effective no later than the end of fiscal
      years ending after December 15, 2005. Management believes the adoption of this
      statement will not have an immediate material impact on the financial statements
      of the Company.





In
      December 2004, the Financial Accounting Standards Board issued Statement of
      Financial Accounting Standards No. 153. This Statement addresses the measurement
      of exchanges of nonmonetary assets. The guidance in APB Opinion No. 29,
      "Accounting for Nonmonetary Transactions," is based on the principle that
      exchanges of nonmonetary assets should be measured based on the fair value
      of
      the assets exchanged. The guidance in that Opinion, however, included certain
      exceptions to that principle. This statement amends Opinion 29 to eliminate
      the
      exception for nonmonetary exchanges of similar productive assets and replaces
      it
      with a general exception for exchanges of nonmonetary assets that do not have
      commercial substance. A nonmonetary exchange has commercial substance if the
      future cash flows of the entity are expected to change significantly as a result
      of the exchange. This statement is effective for financial statements for fiscal
      years beginning after June 15, 2005. Earlier application is permitted for
      nonmonetary asset exchanges incurred during fiscal years beginning after the
      date of this statement is issued. Management believes the adoption of this
      statement will not impact the financial statements of the Company.




F/S-12
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                to Financial Statements**




**METALLINE
                MINING COMPANY****(AN
                EXPLORATION STAGE COMPANY)****NOTES
                TO THE CONSOLIDATED FINANCIAL STATEMENTS OCTOBER 31,
                2005**


In
      December 2004, the Financial Accounting Standards Board issued Statement of
      Financial Accounting Standards No. 152, which amends SFAS Statement No. 66,
      "Accounting for Sales of Real Estate," to reference the financial accounting
      and
      reporting guidance for real estate time-sharing transactions that is provided
      in
      AICPA Statement of Position (SOP) 04-2, "Accounting for Real Estate Time-Sharing
      Transactions." This statement also amends SFAS No. 67, "Accounting for Costs
      and
      Initial Rental Operations of Real Estate Projects," to state that the guidance
      for (a) incidental operations and (b) costs incurred to sell real estate
      projects, does not apply to real estate time-sharing transactions. The
      accounting for those operations and costs is subject to the guidance in SOP
      04-2. This statement is effective for financial statements for fiscal years
      beginning after June 15, 2005. Management believes the adoption of this
      Statement will not impact the financial statements of the Company.





Revenue
      Recognition Policy


The
      Company recognizes revenue when there is a mutually executed contract, the
      contract price is fixed and determinable, delivery of the product has occurred,
      and collectibility of the contract price is considered probable. As of October
      31, 2005, the Company has not recognized revenues.





Stock-Based
      Compensation


Statement
      of Financial Accounting Standards No. 123, "Accounting for Stock-Based
      Compensation" (hereinafter "SFAS No. 123") *,* defines
      a
      fair value-based method of accounting for stock options and other equity
      instruments. The Company has adopted this method, which measures compensation
      costs based on the estimated fair value of the award and recognizes that cost
      over the service period.




**NOTE
      3 - PROPERTY AND EQUIPMENT**





Property
      and equipment are stated at cost. Depreciation is provided using the
      straight-line or accelerated methods over the estimated useful lives of the
      assets. The useful lives of property, plant and equipment for purposes of
      computing depreciation are five to seven years for equipment, and 39 years
      for
      buildings.




F/S-13
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**METALLINE
                  MINING COMPANY****(AN
                  EXPLORATION STAGE COMPANY)****NOTES
                  TO THE CONSOLIDATED FINANCIAL STATEMENTS OCTOBER 31,
                  2005**
 The
      following is a summary of property, equipment, and accumulated depreciation
      at
      October 31, 2005 and 2004:





2005
            
            2004Mining
                equipment
            
            $
            514,855
            
            $
            507,257Buildings
                and structures
            
            
            141,061
            
            
            141,061Land
                - non mineral
            
            
            15,839
            
            
            15,839Vehicles
            
            
            42,068
            
            
            42,068Computer
                equipment
            
            
            88,787
            
            
            88,787Office
                equipment
            
            
            4,183
            
            
            4,183Furniture
                and fixtures
            
            
            8,185
            
            
            8,185814,978
            
            
            807,380Less:
                Accumulated depreciation
            
            
            (324,094
            )
            
            (240,537
            )$
            490,884
            
            $
            566,843


Depreciation
      expense for the years ended October 31, 2005 and 2004 was $83,557 and $63,045,
      respectively. The Company evaluates the recoverability of property and equipment
      when events and circumstances indicate that such assets might be impaired.
      The
      Company determines impairment by comparing the undiscounted future cash flows
      estimated to be generated by these assets to their respective carrying amounts.
      Maintenance and repairs are expensed as incurred. Replacements and betterments
      are capitalized. The cost and related reserves of assets sold or retired are
      removed from the accounts, and any resulting gain or loss is reflected in
      results of operations.





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





Sierra
      Mojada Mining Concessions


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





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





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




F/S-14
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**METALLINE
                  MINING COMPANY****(AN
                  EXPLORATION STAGE COMPANY)****NOTES
                  TO THE CONSOLIDATED FINANCIAL STATEMENTS OCTOBER 31,
                  2005**


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





**NOTE
      5 - LONG-TERM LIABILITIES**





The
      Company's long-term liabilities at October 31, 2005 and 2004 are as
      follows:





2005
            
            2004Note
                payable to bank, due July of 2008, monthly principal and interest
                payments
                at 4.94%, collateralized by a vehicle
            
            $
            11,574
            
            $
            15,783Less:
                Current portion
            
            
            (4,209
            )
            
            (4,209
            )$
            7,365
            
            $
            11,574




Loan
      maturities for each of the five years following October 31, 2005 are as follows:


2006
            
            $
            4,2092007
            
            
            4,5372008
            
            
            2,8282009
            
            
            —2010
            
            
            —$
            11,574








**NOTE
      6 - RELATED PARTY TRANSACTIONS**





The
      Company receives rent-free office space in Coeur d'Alene, Idaho from its
      president. The value of the space is not considered materially significant
      for
      financial reporting purposes. The Company also has given $9,560 in cash advances
      for travel to two of its officers at October 31, 2005 under an accountable
      plan
      per IRS Regulation Section 1.62.





**NOTE
      7 - PREFERRED STOCK**





At
      its
      March 1, 2001 annual shareholders meeting, the Company approved a change to
      its
      articles of incorporation whereby the Company is authorized to issue 1,000,000
      shares of $0.01 par value preferred stock. The specific features of the
      preferred stock are to be determined by the Company's board of directors. At
      October 31, 2005, there were no shares of preferred stock issued or
      outstanding.




F/S-15
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**METALLINE
                  MINING COMPANY****(AN
                  EXPLORATION STAGE COMPANY)****NOTES
                  TO THE CONSOLIDATED FINANCIAL STATEMENTS OCTOBER 31,
                  2005**
 **NOTE
      8 - COMMON STOCK**





In
      March
      2005, the Company's board of directors authorized a private placement of up
      to
      5,333,334 shares of the Company's restricted common stock at a price of $1.125
      per share for total proceeds of $6,000,000. Purchasers of these shares will
      also
      receive a warrant to purchase one share of the Company's common stock at an
      exercise price of $2.00 per share with an exercise period of five years. In
      September 2005, a modification of the private placement terms was authorized.
      The modified terms allow for the issuance of 7,500,000 shares of common stock
      at
      a price of $0.80 per share, a warrant exercise price of $1.25 per share and
      an
      exercise period of five years.





During
      the year ended October 31, 2005, the Company issued 476,404 shares of common
      stock, under the aforementioned private placement, for cash consideration at
      an
      average of $0.98 per share with attached warrants valued at an average of $0.28
      per share (see Note 10). In addition, 176,772 shares of common stock were issued
      to officers and employees of the Company at an average of $1.00 per share in
      consideration for accrued wages.





During
      the year ended October 31, 2004, the Company issued 7,580,150 shares of common
      stock for cash consideration at $1.00 per share less issuance costs of $698,863.
      Officers of the Company were issued 120,655 shares at an average of $1.26 per
      share in payment of accrued wages. The Company also issued 141,286 shares in
      exchange for services received. See Note 13.





During
      the year ended October 31, 2003, the Company sold 7,000 common stock units
      with
      an ascribed cash value of $10,500. The Company also sold 849,000 shares at
      an
      average price of $0.98 per share. The Company also issued 100,000 shares of
      common stock under the Penoles agreement for cash, at $2.00 per share.
      Additionally, 373,925 shares of common stock valued at $468,771 were issued
      as
      compensation to officers.





During
      the year ended October 31, 2002, the Company sold 162,667 common stock units
      with an ascribed cash value of $229,360 for common stock, and $14,640 for
      warrants. The Company also issued 50,000 shares of common stock under the
      Penoles agreement for cash at $2.00 a share. (See Note 12.) Additionally, 86,078
      shares of common stock valued at $104,875 were issued as compensation to
      officers. On May 20, 2002, the Company authorized the offering of 1,000,000
      common stock units, with each unit consisting of one share of common stock
      and
      one warrant equal to 1/3 of a share of common stock.





During
      the year ended October 31, 2001, the Company issued 20,000 shares of common
      stock for the exercise of warrants valued at $10,760 and for cash of $15,000.
      Additionally, 57,000 shares of common stock were issued for services valued
      at
      $112,680 and for cash of $390, and 250,000 shares of common stock with 125,000
      warrants attached were issued for $500,000 in cash.





During
      the year ended October 31, 2000, the Company sold 1,440,500 shares of its common
      stock for $3,968,625 cash, issued 120,000 shares of common stock for services
      valued $153,360, issued 15,000 shares of common stock for equipment valued
      at
      $25,000 and issued 950,000 shares of common stock for options exercised at
      $0.86
      per share.





During
      the year ended October 31, 1999, the Company sold 1,068,800 shares of common
      stock for $1,075,900 cash. In addition the Company received $37,500 as a deposit
      toward the purchase of 50,000 shares (this stock was issued in December 1999)
      and $300,000 for payment of subscriptions receivable. The Company also issued
      55,556 shares for payment of drilling expenses valued at $50,000.





In
      February 1998, 200,000 shares of common stock were issued for a mine database.
      The shares were valued at $1.625 per share, resulting in a transaction valued
      at
      $325,000. Services valued at $22,300 were paid with 41,800 shares of common
      stock. An additional 1,398,500 shares of common stock were issued for $1,065,445
      cash and receivables, and a subscription receivable of $300,000, between
      February and October 1998.




F/S-16
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**METALLINE
                MINING COMPANY****(AN
                EXPLORATION STAGE COMPANY)****NOTES
                TO THE CONSOLIDATED FINANCIAL STATEMENTS OCTOBER 31,
                2005**


In
      April
      1997, 250,000 common stock shares were issued for cash of $87,500 and 133,800
      shares of common stock were issued for services valued at $45,583. In May and
      June 1997, 181,600 shares of common stock were issued for $63,560 cash and
      62,500 shares of common stock were issued for services valued at $21,875. In
      August and October 1997, 420,000 and 75,000 shares of common stock were issued
      for cash of $378,000 and $75,000, respectively. Additionally, during August
      1997, 100,200 shares of common stock were issued for debt of $31,530 and 95,000
      shares of common stock were issued for services valued at $95,000.





During
      November 1995, the Company's directors approved the issuance of 45,000 shares
      of
      common stock for services rendered at $0.01 per share. During June 1996, the
      Company issued 900,000 shares of common stock for the assignment of mineral
      rights in the Sierra Mojada Project in Coahuila, Mexico valued at $0.01 per
      share to Messrs. John Ryan, Merlin Bingham, and Daniel Gorski, who had formed
      a
      partnership to advance development of the mining concession located in Coahuila,
      Mexico. The partnership had an informal joint venture agreement with USMX,
      Inc.
      covering the mining concessions. By acquiring the partnership interest, the
      Company was able to negotiate and sign a formal joint venture agreement with
      USMX in July 1996.





During
      the year ended October 31, 1996, Metalline Mining Company issued 1,320,859
      shares of common stock for $146,359 in cash. During October 1996, the Company
      issued 150,000 shares of common stock for computer equipment valued at $15,000.
      Also during October 1996, the Company issued 120,000 shares of common stock
      to
      Mr. Gorski and an additional 20,000 shares of common stock to Mr. Ryan for
      services rendered valued at $14,000.





In
      January 1996, Mr. Carmen Ridland, in a private sale, sold a controlling interest
      in the corporation to Mr. Howard Crosby. On January 12, 1996, Mr. Ridland
      transferred control of Cadgie Co. to Mr. Crosby and Mr. Robert
      Jorgensen.





On
      August
      4, 1995 the directors of Cadgie Co. declared a 3:1 forward stock split of the
      outstanding Cadgie Co. shares, thus increasing the number of outstanding shares
      from 192,160 to 576,480.





On
      August
      31, 1994, the directors of Cadgie Co. declared a 1:5 reverse stock split of
      the
      outstanding Cadgie Co. shares, thus reducing the number of outstanding shares
      from 960,800 to 192,160 shares.





The
      Company (Cadgie Co.) was formed in August of 1993 and incorporated in November
      1993 by Mr. Carman Ridland of Las Vegas, Nevada as a spin-off from its
      predecessor, Precious Metal Mines, Inc. The Company issued 960,800 of its $0.01
      par value shares to Precious Metal Mines, Inc. for 16 unpatented mining claims
      located near Philipsburg, Montana comprising the Kadex property group. Precious
      Metal Mines, Inc. distributed the 960,800 shares of Cadgie Company to its
      shareholders. One share of Cadgie Co. was exchanged for each share of Precious
      Metal Mines, Inc. held by holders of record as of August 31, 1993.





**NOTE
      9 - STOCK OPTIONS**





During
      the years ended October 31, 2005 and 2004, the Company did not grant common
      stock options.





In
      2002,
      the Company granted 100,000 options with an exercise price of $1.25 and an
      expiration of seven years. The fair value of these options was determined using
      the Black-Scholes option pricing model using a risk free interest rate of 3.25%
      and a volatility of 42.49%. The total value was calculated at
      $61,000.




F/S-17
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                to Financial Statements**




**METALLINE
                  MINING COMPANY****(AN
                  EXPLORATION STAGE COMPANY)****NOTES
                  TO THE CONSOLIDATED FINANCIAL STATEMENTS OCTOBER 31,
                  2005**
 Following
      is a summary of the Company's stock option activity during the years ending
      October 31, 2005 and 2004:





Shares
            
            Weighted
                Average Exercise PriceOptions
                outstanding at November 1, 2003
            
            
            770,000
            
            $
            1.67Granted
            
            
            —
            
            
            —Canceled
            
            
            (100,000
            )
            
            2.15Exercised
            
            
            —
            
            
            —Options
                outstanding at October 31, 2004
            
            
            670,000
            
            
            1.56Granted
            
            
            —
            
            
            —Canceled
            
            
            —
            
            
            —Exercised
            
            
            —
            
            
            —Options
                outstanding at October 31, 2005
            
            
            670,000
            
            $
            1.56




On
      March
      1, 2001, the Company's shareholders approved a qualified stock option plan
      (the
      "Plan"), which provides for non-statutory and incentive stock options for
      employees, directors and consultants, and has reserved a total of 1,000,000
      shares of common stock for issuance pursuant to the Plan.




Summarized
      information about stock options outstanding and exercisable at October 31,
      2005
      is as follows:





Options
                Outstanding
            
            Options
                ExercisableExercise
                Price
            
            Number
              Outstanding
            
            Weighted
                Average Remaining Contractual Life (Years)
            
            Weighted
                Average
              Exercise
                Price
            
            Number
              Exercisable
            
            Weighted
                Average
              Exercise
                Price$1.25
            
            
            100,000
            
            
            3.77
            
            $
            1.25
            
            
            100,000
            
            $
            1.251.32
            
            
            370,000
            
            
            0.93
            
            
            1.32
            
            
            370,000
            
            
            1.322.15
            
            
            200,000
            
            
            4.33
            
            
            2.15
            
            
            200,000
            
            
            2.15$1.25-2.15
            
            
            670,000
            
            
            2.37
            
            $
            1.56
            
            
            670,000
            
            $
            1.56








**NOTE
      10 - STOCK WARRANTS**





During
      the year ended October 31, 2005, the Company issued 476,404 common stock units
      that consisted of 476,404 shares of common stock and warrants to purchase an
      additional 476,404 shares of common stock. As part of the total cash purchase,
      the warrants were valued at $132,159. The warrants were valued using the
      Black-Scholes option pricing model. The assumptions used were as follows:
      volatility of 58%, a risk-free interest rate of 3% and an exercise term of
      five
      years. During 2005, 290,182 stock warrants expired. As of October 31, 2005,
      1,163,887 stock warrants were outstanding and exercisable.





During
      2004, the Company did not issue stock warrants. At October 31, 2004, 977,665
      stock warrants were outstanding and exercisable.




F/S-18
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**METALLINE
                MINING COMPANY****(AN
                EXPLORATION STAGE COMPANY)****NOTES
                TO THE CONSOLIDATED FINANCIAL STATEMENTS OCTOBER 31,
                2005**


During
      the year ended October 31, 2003, the Company issued 7,000 common stock units
      that consisted of 7,000 shares of common stock and warrants to purchase an
      additional 2,333 shares of common stock. As part of the total cash purchase,
      the
      warrants were valued at $583.





During
      the year ended October 31, 2002, the Company issued 162,667 common stock units
      that were made up of 162,667 shares of common stock and warrants to purchase
      an
      additional 54,222 shares of common stock. As part of the total cash purchase,
      the warrants were valued at $14,640.





During
      the year ended October 31, 2001, the Company issued 250,000 shares of stock
      with
      125,000 warrants attached. These warrants were valued at $3,424. Additionally
      20,000 warrants were exercised for $15,000 in cash and services valued at
      $10,760. The Company also issued 80,000 warrants for services, which were valued
      at $144,791.





**NOTE
      11 - COMMITMENTS AND CONTINGENCIES**





Compliance
      with Environmental Regulations


The
      Company's mining activities are subject to laws and regulations controlling
      not
      only the exploration and mining of property concessions, but also the effect
      of
      such activities on the environment. Compliance with such laws and regulations
      may necessitate additional capital outlays, affect the economics of a project,
      and cause changes or delays in the Company's activities.





**NOTE
      12 - JOINT VENTURE AGREEMENTS**





Penoles
      Agreement


On
      November 15, 2001, the Company entered into an agreement with Compania Minera
      La
      Parrena S.A. de C.V. ("Penoles") whereby Penoles may earn the right to acquire
      a
      60% interest in certain mining concessions located in the Sierra Mojada region
      of Coahuila, Mexico. The earn-in right was contingent upon the following:
      delivery by Penoles within four years of a pre-feasibility study, completion
      by
      Penoles of $1,000,000 of qualified expenditures on the aforementioned mining
      concessions, and Penoles purchase of up to 250,000 shares of Metalline's common
      stock $2.00 per share. As of October 31, 2003, Penoles had purchased 150,000
      shares of common stock under this agreement. See Note 8.





During
      the year ended October 31, 2003, the Company received reimbursement of $151,536
      from Penoles for expenses incurred by Metalline, which were applied toward
      an
      aggregate $85,712 of qualified expenditures incurred by Penoles. In November
      2003, the agreement between the Company and Minas Penoles was terminated by
      the
      Company.





Northern
      Limited


On
      October 7, 1999, the Company announced that it entered into a five-year
      "earn-in" type of a joint venture agreement with North Limited. The agreement
      gives North Limited the right to earn into 60% of the Company's Sierra Mojada
      Project by providing all funds necessary to complete a feasibility study
      delivered in no more than five years that is acceptable to international banking
      institutions for lending development capital. North Limited is a large
      Australian mining company based in Melbourne, Australia and was known as North
      Broken Hill Peko before a name change in 1994. In August 2000, Rio Tinto Limited
      purchased North Limited for its iron ore holdings and subsequently terminated
      North Limited's agreement with the Company.




F/S-19
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**EXHIBIT
      INDEX**





EXHIBIT
                NO.
            
            EXHIBIT3.1
            
            Articles
                of Incorporation of Metalline Mining Company. Filed as an exhibit
                to the
                registrant's registration statement on Form 10-SB (Commission File
                No.
                000-27667) and incorporated by reference herein.3.2
            
            Amended
                and Restated Bylaws of Metalline Mining Company. Filed as an exhibit
                to
                the registrant's current report on Form 8-K filed on September 14,
                2005
                and incorporated by reference herein.3.3
            
            Articles
                of Amendment to the Articles of Incorporation. Filed as an exhibit
                to the
                registrant's registration statement on Form 10-SB and incorporated
                by
                reference herein.4.1
            
            Reference
                is made to Exhibits 3.1, 3.2 and 3.3.21.1
            
            Subsidiaries
                of Metalline Mining Company. Filed herewith.23.1
            
            Consent
                of Williams & Webster, P.S. Filed herewith31.1
            
            Certification
                of Principal Executive Officer pursuant to Rule 13a-14(a) of the
                Exchange
                Act. Filed herewith.31.2
            
            Certification
                of Principal Financial Officer pursuant to Rule 13a-14(a) of the
                Exchange
                Act. Filed herewith.32.1
            
            Certification
                of Principal Executive Officer pursuant to 18 U.S.C. Section 1350.
                Furnished herewith.32.2
            
            Certification
                of Principal Financial Officer pursuant to 18 U.S.C. Section 1350.
                Furnished herewith.99.1
            
            Sierra
                Mojada location map. Filed
                herewith.








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